485BPOS

'33 Act File No. 333-31725

'40 Act File No. 811-8301

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-6

REGISTRATION UNDER THE SECURITIES ACT OF 1933                                                                                                                                o

Pre-effective Amendment No. ___                                                                                                                     o

Post-effective Amendment No. 24                                           þ

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT

COMPANY ACT OF 1940                                                                                                            o

Amendment No. 116                           þ

(Check appropriate box or boxes.)

NATIONWIDE VLI SEPARATE ACCOUNT-4

(Exact Name of Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Name of Depositor)

One Nationwide Plaza

Columbus, Ohio 43215

(Address of Depositor’s Principal Executive Offices)  (Zip Code)

Depositor’s Telephone Number, including Area Code:  (614) 249-7111

Thomas E. Barnes, VP and Secretary

One Nationwide Plaza

Columbus, Ohio 43215-2220

(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: May 1, 2007

It is proposed that this filing will become effective (check appropriate box)

o Immediately upon filing pursuant to paragraph (b)

þ On May 1, 2007 pursuant to paragraph (b)

o 60 days after filing pursuant to paragraph (a)(1)

o On (date) pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

o      This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

The Best of America Next Generation ® FPVUL

The Best of America ® Choice Life SM FPVUL

Flexible Premium Variable Universal Life Insurance Policies

Issued By

Nationwide Life Insurance Company

Through

Nationwide VLI Separate Account-4

The Date Of This Prospectus Is May 1, 2007

PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.

Variable life insurance is complex, and this prospectus is designed to help you become as fully informed as possible in making your decision to purchase or not to purchase the variable life insurance policy it describes.  Prior to your purchase, we encourage you to take the time you need to understand the policy, its potential benefits and risks, and how it might or might not benefit you.  In consultation with your financial advisor, you should use this prospectus to compare the benefits and risks of this policy versus those of other life insurance policies and alternative investment instruments.

Please read this entire prospectus and consult with a trusted financial advisor.  If you have policy specific questions or need additional information, contact us.  Also, contact us for free copies of the prospectuses for the mutual funds available under the policy.

Telephone:	1-800-547-7548
TDD:	1-800-238-3035
Internet:	www.nationwide.com
U.S. Mail:	Nationwide Life Insurance Company
	5100 Rings Road, RR1-04-D4
	Dublin, OH 43017-1522

You should read your policy along with this prospectus.

These securities have not been approved or disapproved by the SEC nor has the SEC passed upon the accuracy or adequacy of the prospectus.  Any representation to the contrary is a criminal offense.

This policy is NOT: FDIC or NCUSIF insured; a bank deposit; available in every state; or insured or endorsed by a bank or any federal government agency.

This policy MAY decrease in value to the point of being valueless.

This prospectus is not an offering in any jurisdiction where such offering may not lawfully be made.

The purpose of this policy is to provide life insurance protection for the beneficiary you name.  If your primary need is not life insurance protection, then purchasing this policy may not be in your best interests.  We make no claim that the policy is in any way similar or comparable to a systematic investment plan of a mutual fund.

In thinking about buying this policy to replace existing life insurance, please carefully consider its advantages versus those of the policy you intend to replace, as well as any replacement costs.  As always, consult your financial advisor.

Not all terms, conditions, benefits, programs, features and investment options are available or approved for use in every state.

We offer a variety of variable universal life policies.  Despite offering substantially similar features and investment options, certain policies may have lower overall charges than others, including this policy.  These differences in charges may be attributable to differences in sales and related expenses incurred in one distribution channel versus another.

Table of Contents	Page
In Summary: Policy Benefits	1
In Summary: Policy Risks	3
In Summary: Variable Universal Life Insurance And The Policy	4
In Summary: Fee Tables	5
Policy Investment Options	9
The Fixed Investment Option
Variable Investment Options
Allocation of Net Premium and Cash Value
Valuation of Accumulation Units
How Sub-Account Investment Experience is Determined
Cash Value
Transfers Among and Between Policy Investment Options	14
Sub-Account Portfolio Transfers
Fixed Account Transfers
Modes to Make a Transfer
The Policy	16
Policy Owner
The Beneficiaries
To Purchase
Coverage
Coverage Effective Date
Temporary Insurance Coverage
To Cancel (Examination Right)
To Change Coverage
To Exchange
To Terminate (Surrender)
To Assign
Proceeds Upon Maturity
Reminders, Reports And Illustrations
Errors Or Misstatements
Incontestability
If We Modify The Policy
Riders	20
Adjusted Sales Load Life Insurance Rider
Children's Insurance Rider
Long-term Care Rider
Spouse Life Insurance Rider
Accidental Death Benefit Rider
Premium Waiver Rider
Change Of Insured Rider
Additional (insurance) Protection Rider
Deduction (of fees and expenses) Waiver Rider
Policy Guard Rider
Premium                                                                                                                                         ;	23
Initial Premium
Subsequent Premiums

Table of Contents (continued)	Page
Charges                                                                                                                                        60;	24
Sales Load
Premium Taxes
Surrender Charges
Partial Surrender Fee
Short-Term Trading Fees
Cost Of Insurance
Mortality And Expense Risk
Administrative
Policy Loan Interest
Adjusted Sales Load Life Insurance Rider
Children's Insurance Rider
Long-term Care Rider
Spouse Life Insurance Rider
Accidental Death Benefit Rider
Premium Waiver Rider
Additional Protection Rider
Deduction (of fees and expenses) Waiver Rider
Policy Guard Rider
Reduction Of Charges
A Note On Charges Information of Underlying Mutual Fund Payments
The Death Benefit	313130
Calculation Of The Death Benefit Proceeds
Death Benefit Options
The Minimum Required Death Benefit
Changes In The Death Benefit Option
Suicide
Surrenders	323332
Full Surrender
Partial Surrender
Reduction Of Specified Amount On A Partial Surrender
The Payout Options	333433
Interest Income
Income For A Fixed Period
Life Income With Payments Guaranteed
Fixed Income For Varying Periods
Joint And Survivor Life
Alternate Life Income
Policy Owner Services	343534
Dollar Cost Averaging
Asset Rebalancing
Policy Loans	353635
Loan Amount And Interest
Collateral And Interest
Repayment
Net Effect Of Policy Loans
Lapse                                                                                                                                         ;	363635
Guaranteed Policy Continuation Provision
Grace Period
Reinstatement

Table of Contents (continued)	Page
Taxes                                                                                                                                         ;	373736
Types Of Taxes
Buying The Policy
Investment Gain In The Policy
Periodic Withdrawals, Non-Periodic Withdrawals And Loans
Surrender Of The Policy
Withholding
Exchanging The Policy For Another Life Insurance Policy
Taxation Of Death Benefits
Terminal Illness
Special Considerations For Corporations
Taxes And The Value Of Your Policy
Business Uses Of The Policy
Non-Resident Aliens and Other Persons Who are not Citizens of the United States
Tax Changes
Nationwide Life Insurance Company	424342
Nationwide VLI Separate Account-4	424342
Organization, Registration And Operation
Addition, Deletion, Or Substitution Of Mutual Funds
Voting Rights
Legal Proceedings	434443
Nationwide Life Insurance Company
Nationwide Investment Services Corporation
Financial Statements	464746
Appendix A: Sub-Account Information	474847
Appendix B: Definitions	596059

In Summary: Policy Benefits

Appendix B defines certain words and phrases we use in this prospectus.

Death Benefit

The primary benefit of your policy is life insurance coverage. While the policy is In Force, we will pay the Proceeds to your beneficiary when the Insured dies.

Your Choice Of Death Benefit Options

ü Option One: The Death Benefit is the greater of the Specified Amount or the minimum required Death Benefit under federal tax law.

ü Option Two: The Death Benefit is the greater of the Specified Amount plus the Cash Value or the minimum required Death Benefit under federal tax law.

ü Option Three: The Death Benefit is the greater of the Specified Amount plus accumulated Premium payments (less any partial surrenders) or the minimum required Death Benefit under federal tax law.

For more information, see "The Death Benefit," beginning on page 313130.

Your Or Your Beneficiary's Choice Of Policy Proceeds

You or your beneficiary may choose to receive the Policy Proceeds in a lump sum, or there are a variety of options that will pay out over time.  For more information, see "The Payout Options," beginning on page 333433.

Coverage Flexibility

Subject to conditions, you may choose to:

ü Change the Death Benefit option;

ü Increase or decrease the Specified Amount;

ü Change your beneficiaries; and

ü Change who owns the policy.

For more information, see: "Changes In The Death Benefit Option," beginning on page 323231; "To Change Coverage," beginning on page 17; "The Beneficiaries," beginning on page 16; and "To Assign," beginning on page 18.

Continuation Of Coverage Is Guaranteed

During the Guaranteed Policy Continuation period, your policy will remain In Force so long as you pay the Policy Continuation Premium Amount.  For more information, see "Guaranteed Policy Continuation Provision," beginning on page 363736.

Access To Cash Value

Subject to conditions, you may choose to borrow against, or withdraw, the Cash Value of your policy:

ü Take a policy loan of an amount no greater than 90% of the Sub-Account portfolios and 100% of the fixed account, less any surrender charges.  The minimum amount is $200.  For more information, see "Policy Loans," beginning on page 353635.

ü Take a partial surrender of no less than $200.  For more information, see "Partial Surrender," beginning on page 323332.

ü Surrender the policy at any time while the Insured is alive.  The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans and surrender charges.  You may choose to receive the Cash Surrender Value in a lump sum, or you will have available the same payout options as if it constituted a Death Benefit.  For more information, see "Full Surrender," beginning on page 323332 and "The Payout Options," beginning on page 333433.

Premium Flexibility

While we would like you to select a Premium payment plan, you will not be required to make your Premium payments accordingly.  Within limits, you may vary the frequency and amount, and you might even be able to skip needing to make a Premium payment.  For more information, see "Premium," beginning on page 23.

1

Investment Options

You may choose to allocate your Premiums after charges to a fixed or variable investment options in any proportion:

ü The fixed investment option will earn interest daily at an annual effective rate of at least 3%.

ü The variable investment options constitute the limitedly available mutual funds, and we have divided Nationwide VLI Separate Account-4 into an equal number of Sub-Account portfolios, identified in the "Appendix A-Sub-Account Information" section, to account for your allocations.  Your Investment Experience will depend on the market performance of the Sub-Account portfolios you have chosen.

For more information, see "Appendix A-Sub-Account Information," beginning on page 474847 and "Allocation of Net Premium and Cash Value," beginning on page 12.

Transfers Between And Among Investment Options

You may transfer between the fixed and variable investment options, subject to conditions.  You may transfer among the Sub-Account portfolios of the variable investment option within limits.   We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-Account Investment Experience.  For more information, see "Sub-Account Portfolio Transfers," beginning on page 14 and "Modes To Make A Transfer," beginning on page 1615.  We also offer dollar cost averaging, an automated investment strategy that spreads out transfers over time to try to reduce the investment risks of market fluctuations.  For more information, see "Dollar Cost Averaging," beginning on page 343534.

Taxes

Unless you make a withdrawal, generally, you will not be taxed on any earnings.  This is known as tax deferral.  For more information, see "The Minimum Required Death Benefit," beginning on page 313231.  Also, your beneficiary generally will not have to include the Proceeds as taxable income.  For more information, see "Taxes," beginning on page 373736.  Unlike other variable insurance products Nationwide offers, these Flexible Premium Variable Universal Life Insurance Policies do not require distributions to be made before the death of the Insured.

Assignment

You may assign the policy as collateral for a loan or another obligation while the Insured is alive.  For more information, see "To Assign," beginning on page 18.

Examination Right

For a limited time, you may cancel the policy, and you will receive a refund.  For more information, see "To Cancel (Examination Right)," beginning on page 17.

Riders

You may purchase any of the available Riders (except for both the Premium Waiver and Deduction Waiver Riders, simultaneously) to suit your needs.  Availability will vary by state, and there may be an additional charge.

ü Adjusted Sales Load Life Insurance Rider

ü Children’s Insurance Rider

ü Long-term Care Rider

ü Spouse Life Insurance Rider

ü Accidental Death Benefit Rider

ü Premium Waiver Rider

ü Change Of Insured Rider (There is no charge for this Rider.)

ü Additional (insurance) Protection Rider

ü Deduction (of fees and expenses) Waiver Rider

ü Policy Guard Rider

For more information, see "Riders," beginning on page 20.

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In Summary: Policy Risks

Improper Use

Variable universal life insurance is not suitable as an investment vehicle for short-term savings.  It is designed for long-term financial planning.  You should not purchase the policy if you expect that you will need to access its Cash Value in the near future because substantial surrender charges will apply in the first several years from the Policy Date.

Unfavorable Investment Experience

The variable investment options to which you have chosen to allocate Net Premium may not generate a sufficient, let alone a positive, return, especially after the deductions for policy and Sub-Account portfolio charges.  Besides Premium payments, Investment Experience will impact the Cash Value, and poor Investment Experience (in conjunction with your flexibility to make changes to the policy and deviate from your chosen premium payment plan) could cause the Cash Value of your policy to decrease, resulting in a Lapse of insurance coverage, sooner than might have been foreseen, and, potentially, even without value.

Effect Of Partial Surrenders And Policy Loans On Investment Returns

Partial surrenders or policy loans may accelerate a Lapse because the amount of either or both will no longer be available to generate any investment return.  A partial surrender will proportionately reduce the amount of Cash Value allocated among the Sub-Account portfolios you have chosen, and to the fixed account, too, if there is not enough Cash Value in the Sub-Account portfolios.  As collateral for a policy loan, we will transfer an equal amount of Cash Value to the policy loan account, which will also reduce the Cash Value allocated between and among your chosen investment options.  Thus, the remainder of your policy's Cash Value is all that would be available to generate enough of an investment return to cover policy and Sub-Account portfolio charges and keep the policy In Force, at least until you repay the policy loan or make another Premium payment.  There will always be a Grace Period, and the opportunity to reinstate insurance coverage.  Under certain circumstances, however, the policy could terminate without value, and insurance coverage would cease.

Reduction Of The Death Benefit

A partial surrender could, and a policy loan would, decrease the policy’s Death Benefit, depending on how the Death Benefit option relates to the policy’s Cash Value.

Adverse Tax Consequences

Existing federal tax laws that benefit this policy may change at any time.  These changes could alter the favorable federal income tax treatment the policy enjoys, such as the deferral of taxation on the gains in the policy's Cash Value and the exclusion from taxable income of the Proceeds we pay to the policy's Beneficiary.  Partial and full surrenders from the policy may be subject to taxes.  The income tax treatment of the surrender of Cash Value is different in the event the policy is treated as a modified endowment contract under the Code.  Generally, tax treatment on modified endowment contracts will be less favorable when compared to having the policy treated as a life insurance contract.  Consult a qualified tax adviseradvisor on all tax matters involving your policy.

Fixed Account Transfer Restrictions And Limitations

We will not honor a request to transfer Cash Value to or from the fixed account until after the first year.  Then, we will only honor a transfer request from the fixed account that is made within 30 days of the end of a calendar quarter, but not within 12 months of a previous request.  We may also limit what percentage of Cash Value you will be permitted to transfer to or from the fixed account.

Sub-Account Portfolio Limitations

Frequent trading among the Sub-Accounts may dilute the value of your Sub-Account units, cause the Sub-Account to incur higher transaction costs, and interfere with the Sub-Accounts' ability to pursue its stated investment objective.  This disruption to the Sub-Account may result in lower Investment Experience and Cash Value.  We have instituted procedures to minimize disruptive transfers, including, but not limited to, transfer restrictions and short-term trading fees.  For more information, see "Sub-Account Portfolio Transfers," beginning on page 14, "Modes To Make A Transfer," beginning on page 1615.  While we expect these procedures to reduce the adverse effect of disruptive transfers, we cannot assure you that we have eliminated these risks.

Sub-Account Portfolio Investment Risk

A comprehensive discussion of the risks of the mutual funds held by each Sub-Account portfolio may be found in that mutual fund’s prospectus. You should read the mutual fund’s prospectus carefully before investing.

3

In Summary: Variable Universal Life Insurance And The Policy

Variable Universal Life Insurance, in general, may be important to you in two ways.

ü It will provide economic protection to a beneficiary.

ü It may build Cash Value.

Why would you want to purchase this type of life insurance?  How will you allocate the Net Premium among the variable and the fixed investment options?  Your reasons and decisions will affect the insurance and Cash Value aspects.

While variable universal life insurance is designed primarily to provide life insurance protection, the Cash Value of a policy will be important to you in that it may impair (with poor investment results) or enhance (with favorable investment results) your ability to pay the costs of keeping the insurance In Force.

Apart from the life insurance protection features, you will have an interest in maximizing the value of the policy as a financial asset.

It is similar to, but also different from, universal life insurance.

ü You will pay Premiums for life insurance coverage on the Insured.

ü The policy will provide for the accumulation of a Cash Surrender Value if you were to surrender it at any time while the Insured is alive.

ü The Cash Surrender Value could be substantially lower than the Premiums you have paid.

What makes the policy different than universal life insurance is your opportunity to allocate Premiums after charges to the Sub-Account portfolios you have chosen (and the fixed account).  Also, that its Cash Value will vary depending on the market performance of the Sub-Account portfolios, and you will bear this risk.

From the time we issue the policy through the Insured’s death, here is a basic overview.  (But please read the remainder of this prospectus for the details.)

ü At issue, the policy will require a minimum initial Premium payment.

Among other considerations, this amount will be based on: the Insured’s age and sex; the underwriting class; any substandard ratings; the Specified Amount; the Death Benefit option; and the choice of any Riders.

ü At the time of a Premium payment, we will deduct some charges.  We call these charges transaction fees.

ü You will then be able to allocate the Premium net of transaction fees, or Net Premium, between and among a fixed and the variable investment options.

ü From the policy’s Cash Value, on a periodic basis, we will deduct other charges to help cover the mortality risks we assumed, and the sales and administrative costs.

ü You may be able to vary the timing and amount of Premium payments.

So long as there is enough Cash Surrender Value to cover the policy's periodic charges as they come due, the policy will remain In Force.

ü After the first year from the Policy Date, you may request to increase or decrease the policy’s Specified Amount.

This flexibility will allow you to adjust the policy to meet your changing needs and circumstances, subject to: additional underwriting (for us to evaluate an increase of risk); confirmation that the policy’s tax status is not jeopardized; and confirmation that the minimum and maximum insurance amounts remain met.

ü The policy will pay a Death Benefit to the beneficiary.  You have a choice of one of three Death Benefit options.

As your insurance needs change, you may be able to change Death Benefit options, rather than buying a new policy, or terminating this policy.

ü Prior to the Insured’s death, you may withdraw all, or a portion (after the first year from the Policy Date), of the policy’s Cash Surrender Value.  Or you may borrow against the Cash Surrender Value.

Withdrawals and policy loans are subject to restrictions, may reduce the Death Benefit and increase the likelihood of the policy Lapsing.  There also could be adverse tax consequences.

4

In Summary: Fee Tables

The following tables describe the fees and expenses that you will pay when buying, owning and surrendering the policy.  Fees in this table may be rounded to the hundredth decimal.  The first table describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy or transfer Cash Value between investmentoptions.

For more information, see "Charges," beginning on page 24.

Transaction Fees
Charge	When Charge Is Deducted	Amount Deducted
Sales Load(1)	Upon Making A Premium Payment	Maximum Guaranteed	Currently
		$25	$5
		Per $1,000 Of Premium Payment
Premium Taxes(1)	Upon Making A Premium Payment	$35 Per $1,000 Of Premium Payment
Surrender Charges(2), (3), (4) Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $500,000 And Death Benefit Option One	Upon Full Surrender; Upon policy Lapse; Upon a decrease to the Specified Amount	Maximum (5)		Minimum (6)
		$25,590		$2,337
		Representative (7)
		$3,408
		Proportionately From The Policy’s Cash Value
Illustration Charge (8)	Upon Requesting An Illustration	Maximum Guaranteed			Currently
		$25			$0
Partial Surrender Fee (9)	Upon A Partial Surrender	Maximum Guaranteed(10)			Currently
		$25			$0
		From The Policy's Available Cash Value(11)
Short-Term Trading Fee(12)	Upon transfer of sub-account value out of a sub-account within 60 days after allocation to that sub-account	1% of the amount transferred from the sub-account within 60 days of allocation to that sub-account

^{_______________________________________}

⁽¹⁾ We deduct one charge composed of the sales load and premium taxes.  On the Policy Data Page, we call the combined charge a Premium Load.

⁽²⁾ This charge is comprised of two components.  There is an underwriting component, which is based on the Insured's age (when the policy was issued).  There is also a sales expense component, which is based on and varies by the Insured's sex, age (when the policy was issued) and underwriting class.  The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date.  For example, by the ninth year, the amount is 30% of the surrender charge, and, thereafter, there is no charge for a full surrender.  A surrender charge will apply if you surrender or lapse the policy, or if you request to decrease the Specified Amount.  We will calculate a separate surrender charge based on the Specified Amount, and each increase in the Specified Amount, which, when added together, will amount to your surrender charge.  For more information, see "Surrender Charges," beginning on page 2524.

⁽³⁾ To be able to present dollar amounts of this charge here, for a full surrender occurring in the first year from the Policy Date, we assume an aggregate first year Premium in excess of the surrender target premium.  The surrender target premium is an assumed Premium payment amount we use in calculating the surrender charge.  The surrender charge is based on the lesser of the surrender target premium and the Premiums you pay in the first year from the Policy Date.  The surrender target premium varies by: the Insured's sex; age (when the policy was issued); underwriting class and the Specified Amount (and any increases).  The surrender charge for decreases in the Specified Amount will be a fraction of the charge for a full surrender.

5

⁽⁴⁾ Ask for an illustration, or see the Policy Data Page for more information on your cost.

⁽⁵⁾ The amount is based on a male who is age 85 or older and uses tobacco (representing our greatest underwriting risk).  We assume a policy with a Specified Amount of $500,000 and Death Benefit Option One.  The stated surrender charge is for a surrender occurring in the first year from the Policy Date.

⁽⁶⁾ The amount is based on a female who is age 0.  We assume a policy with a Specified Amount of $500,000 and Death Benefit Option One.  The stated surrender charge is for a surrender occurring in the first year from the Policy Date.

⁽⁷⁾ This amount may not be representative of your cost.

⁽⁸⁾ If we begin to charge for illustrations, you will be expected to pay the charge in cash directly to us at the time of your request.  This charge will not be deducted from the policy's Cash Value.

⁽⁹⁾ You may request a partial surrender at any time after the first year from the Policy Date so long as the policy is In Force.

⁽¹⁰⁾ The maximum charge is the lesser of $25 or 2% of the dollar amount of the partial surrender.

⁽¹¹⁾ Besides this charge, remember that the Cash Value available for a partial surrender is subject to any outstanding policy loans.

⁽¹²⁾ Short-term trading fees are only assessed in connection with Sub-Accounts that correspond to an underlying mutual fund that assesses a short-term trading fee.  See "Total Annual Sub-Account Portfolio Operating Expenses" for a list of mutual funds that assess a short-term trading fee.

The next table describes the fees and expenses that you will pay periodically during the time that you own the policy, not including Sub-Account portfolio operating expenses.

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses
Charge	When Charge Is Deducted	Amount Deducted From Cash Values
Cost Of Insurance (13), (14)  Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $500,000 And Death Benefit Option One	Monthly	Minimum	Maximum		Representative (15)
		$0.04	$83.33		$0.14
		Per $1,000 Of Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options
Mortality And Expense Risk	Monthly	Maximum Guaranteed
		An annualized rate of $0.50 Per $1,000 Of Cash Value taken proportionally from the Sub-Accounts.(16)
		Proportionately From Your Chosen Variable Investment Options
Administrative	Monthly	Maximum Guaranteed		Currently
		$10		$10 (17)
		Proportionately From Your Chosen Variable And Fixed Investment Options
Policy Loan Interest (18), (19), (20)	Annually	Maximum Guaranteed		Currently
		$39		$39
		Per $1,000 Of An Outstanding Policy Loan

^{_______________________________________}

⁽¹³⁾ This charge varies by: the Insured's sex; age; underwriting class; any substandard ratings; the year from the Policy Date and the Specified Amount.  Cost of Insurance charges are taken from the policy's Cash Value at the beginning of the month starting with the Policy Date and we will not pro rate the monthly fee should the Policy terminate before the beginning of the next month.

⁽¹⁴⁾ Ask for an illustration, or see the Policy Data Page for more information on your cost.

⁽¹⁵⁾ This amount may not be representative of your cost.

6

⁽¹⁶⁾ On a current basis,during policy years one through fifteen, the charge is $0.50 per $1,000 on the first $25,000 of CashValue, and $0.25 per $1,000 on Cash Values of $25,001 up to $250,000.  For Cash Values above $250,000, the charge is $0.08 per $1,000.  Beginning in the policy year sixteen, the change is $0.50 per $1,000 on the first $25,000 of Cash Value allocated to variable investment options, and $0.08 per $1,000 of Cash Value over $25,000 allocated to variable investment options.

⁽¹⁷⁾ During the first year from the Policy Date, the monthly maximum guaranteed amount is $10, and the monthly current amount is $10.  Thereafter, the monthly maximum guaranteed amount is $7.50, and the monthly current amount is $5.

⁽¹⁸⁾ On the amount of an outstanding loan, we not only charge, but also credit, interest, so there is a net cost to you.  Also, there are ordinary and preferred loans on which interest rates vary.  For more information, see "Policy Loans," beginning on page 353635.

⁽¹⁹⁾ We charge a 3.9% interest per annum on the outstanding balance, which accrues daily and becomes due and payable at the end of the year from the Policy Date, or we add it to your loan.  Meanwhile, we credit interest daily, too, on the portion of your policy's Cash Value corresponding to, and serving as collateral or security to ensure repayment of, the loan.  During years one through ten, it is 3.0% (guaranteed 3.0% minimally), and, thereafter, 3.9% per annum currently (guaranteed 3.65% minimally).

⁽²⁰⁾ Your net cost for a loan through years one through ten from the Policy Date is 0.9% per annum currently.  Thereafter, there is no cost (a net zero cost) for a loan currently.  For more information, see "Collateral and Interest," beginning on page 353635.

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses For Riders
Optional Charge(21)	When Optional Charge Is Deducted	Amount Deducted From Cash Value
Adjusted Sales Load Life Insurance Rider	Monthly	$0.14
		Per $1,000 Of Aggregate Monthly Premiums And 1% Of Premium Load – Waived Proportionately From Your Chosen Variable And Fixed Investment Options
Children’s Insurance Rider	Monthly	$0.43 Per $1,000 Of Rider Specified Amount - Proportionately From Your Chosen Variable And Fixed Investment Options
Long-term Care Rider (22) Representative - For An Age 35 Male Non-tobacco Preferred With A Long-term Care Specified Amount Of $500,000 And Death Benefit Option One	Monthly	Minimum	Maximum	Representative
		$0.02	$28.65	$0.02
		Per $1,000 Of Rider Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options
Spouse Life Insurance Rider (23) Representative Spouse - For An Age 35 Female Non-tobacco With A Spouse Life Specified Amount Of $100,000	Monthly	Minimum	Maximum	Representative
		$0.10	$10.23	$0.11
		Per $1,000 Of Spouse Death Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Accidental Death Benefit Rider (24) Representative - For An Age 35 Male Non-tobacco Preferred With An Accidental Death Benefit Of $100,000	Monthly	Minimum	Maximum	Representative
		$0.05	$0.75	$0.06
		Per $1,000 Of Accidental Death Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Premium Waiver Rider (25) (26) Representative - For An Age 35 Male Non-tobacco Preferred	Monthly	Minimum	Maximum	Representative
		$42	$315 (27)	$42
		Per $1,000 Of Premium Waiver Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options

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Periodic Charges Other Than Sub-Account Portfolio Operating Expenses For Riders
Optional Charge(21)	When Optional Charge Is Deducted	Amount Deducted From Cash Value
Additional (insurance) Protection Rider (28) Representative - For An Age 35 Male Non-tobacco Preferred With Additional Death Benefit Of $250,000	Monthly	Minimum	Maximum	Representative
		$0.01	$83.33	$0.04
		Per $1,000 of Rider Net Amount at Risk - Proportionately From Your Chosen Variable And Fixed Investment Options
Deduction (of fees and expenses) Waiver Rider (29) Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $500,000 And Death Benefit Option One	Monthly	Minimum	Maximum	Representative
		$90	$860	$90
		Per $1,000 Of Deduction Waiver Benefit - Proportionately From Your Chosen Variable and Fixed Investment Options
Policy Guard Rider (30) Representative – The Insured Is Attained Age 85 With a Cash Value of $500,000 and Indebtedness of $480,000	Upon Invoking The Rider	Minimum	Maximum	Representative
		$6.50	$46.00	$37.00
		Deducted From Each $1,000 Of The Policy’s Cash Value

^{_______________________________________}

⁽²¹⁾ You may elect any of these Riders (except for both the Premium Waiver and Deduction Waiver Riders, simultaneously).  Rider charges are taken from the policy's Cash Value at the beginning of the month starting with the Policy Date and we will not pro rate the monthly fee should the Rider terminate before the beginning on the next month.  There is also a Change of Insured Rider you may elect for no charge.  The continuation of a Rider is contingent on the policy being In Force.  The amounts presented here may not be representative of your cost.  Ask for an illustration, or see the Policy Data Page, for more information on your cost.

⁽²²⁾ This charge varies by: the Insured's sex; age; underwriting class; any substandard ratings; and the Specified Amount of the Rider.

⁽²³⁾ This charge varies by: the spouse's sex; age; underwriting class; any substandard ratings; and the Specified Amount of the Rider.

⁽²⁴⁾       This charge varies by: the Insured's Attained Age; any substandard ratings; and the Specified Amount of the Rider.

⁽²⁵⁾ To be able to present dollar amounts of this charge here, we assume monthly Premium payments of $1,000, the waiver of which would occur in the event of the Insured's total disability for six consecutive months.

⁽²⁶⁾ This charge varies by: the Insured's sex; Attained Age; underwriting class; any substandard ratings and the Specified Amount of the Rider.

⁽²⁷⁾ For policies issued before July 13, 2006, the maximum charge for this Rider is $105.

⁽²⁸⁾ This charge varies by: the Insured's sex; Attained Age; and any substandard ratings.  The monthly charge is a product of the Rider’s monthly cost of insurance charge and the Rider Death Benefit.

⁽²⁹⁾ To be able to present dollar amounts of this charge here, we assume total monthly periodic charges of $1,000 (not including this Rider's cost, and any loan amount interest (which are meant to be excluded)).  These charges would be waived in the event of the Insured's total disability for six consecutive months.

⁽³⁰⁾ You may invoke this Rider only when certain conditions are met that include: 1) the Insured attains age 75; 2) the policy has been In Force 15 years from the Policy Date; 3) the policy's Cash Value is at least $100,000; 4) the policy qualifies as life insurance using the guideline premium/cash value corridor tax test; and 5) the entire cost basis for tax purposes has been withdrawn from the policy.  For more information, see "Policy Guard Rider," beginning on page 2322.  The level of Indebtedness

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as a percentage of Cash Value that will allow you to invoke the Rider will vary with the attained age of the Insured.  Generally, the higher the Insured's attained age, the higher the level of Indebtedness must be to invoke the Rider.

The next item shows the minimum and maximum total operating expenses, as of December 31, 2006, charged by the Sub-Account portfolios that you may pay periodically during the time that you own the policy.  The table does not reflect Short-Term Trading Fees.  More detail concerning each Sub-Account portfolio’s fees and expenses is contained in the prospectus for the mutual fund that corresponds to the Sub-Account portfolio.  Please contact us, at the telephone numbers or address on the cover page of this prospectus, for free copies of the prospectuses for the mutual funds available under the policy.

Total Annual Sub-Account Portfolio Operating Expenses
Total Annual Sub-Account Portfolio Operating Expenses	Maximum	Minimum
(expenses that are deducted from the Sub-Account portfolio assets, including management fees, distribution (12b-1) fees, and other expenses)	11.49%	0.10%

The following mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of allocation to that Sub-Account (see "Short-Term Trading Fees"):

· American Century Variable Portfolios, Inc. – American Century VP International Fund: Class III

· Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Service Class R

· Fidelity Variable Insurance Products Fund – VIP Overseas Portfolio: Service Class R

· Fidelity Variable Insurance Products Fund IV – VIP Energy Portfolio: Service Class 2

· Franklin Templeton Insurance Products Trust – Templeton Developing Markets Securities Fund: Class 3

· Franklin Templeton Insurance Products Trust – Templeton Foreign Securities Fund: Class 3

· Franklin Templeton Insurance Products Trust – Templeton Global Income Securities Fund: Class 3

· Nationwide Variable Insurance Trust – Federated NVIT High Income Bond Fund: Class III

· Nationwide Variable Insurance Trust – Gartmore NVIT Emerging Markets Fund: Class III

· Nationwide Variable Insurance Trust – Gartmore NVIT Global Health Sciences Fund: Class III

· Nationwide Variable Insurance Trust – Gartmore NVIT Global Technology and Communications Fund: Class III

· Nationwide Variable Insurance Trust – NVIT International Index Fund: Class VI

· Nationwide Variable Insurance Trust – NVIT International Value Fund: Class III

· Janus Aspen Series – International Growth Portfolio: Service II Shares

· Neuberger Berman Advisers Management Trust – AMT International Portfolio: S Class

· Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA: Class 3

· Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA: Class 3

Policy Investment Options

When you apply for the policy, you choose how your Net Premium will be allocated among the available Sub-Accounts once the free look period expires.  When this actually happens depends on the right to examine law of the state in which you live.  Or you may choose to allocate all or a portion of your Net Premium to the fixed investment option, and we will allocate it when we receive it.

Based on the right to examine law, some states require that we refund the initial Premium if you exercise your right to cancel the policy.  Others require that we return the Cash Value.  If yours is a state that requires us to refund the initial Premium, we will hold the initial Net Premium in the available money market Sub-Account until the free-look period expires.  Once your examination right ends, we will transfer the variable account Cash Value to your Sub-Account allocations in effect at the time of the transfer.  If yours is a state that requires us to refund the Cash Value, we will allocate all of the initial Net Premium to available money market Sub-Account.  On the next Valuation Period, we will allocate all of the Cash Value to the designated Sub-Accounts based on the allocation instructions in effect at the time.  Any initial Net Premium designated to be allocated to fixed investment options will be so allocated immediately upon receipt.

The Fixed Investment Option

The Net Premium you allocate to the fixed investment option is held in the fixed account, which is part of our general account.  The general account contains all of our assets other than those in the separate accounts and funds the fixed investment option.  These assets are subject to our general liabilities from business operations.  The general account is used to support our insurance and annuity obligations.  Any amounts in excess of the separate account liabilities are deposited into our general account.  We bear the full investment risk for all amounts allocated to the fixed account.

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We guarantee that the amounts you allocate to the fixed investment option will be credited interest daily at a net effective annual interest rate of no less than the stated interest crediting rate on the Policy Data Page.  We will credit any interest in excess of the guaranteed interest crediting rate at our sole discretion.  You assume the risk that the actual rate may not exceed the guaranteed interest crediting rate.

The amounts you allocate to the fixed investment option will not share in the investment performance of our general account.  Rather, the investment income you earn on your allocations will be based on varying rates we set.

The general account is not subject to the same laws as the separate account, and the SEC has not reviewed the disclosures in this prospectus relating to the fixed account.  However, information about the fixed account is subject to federal securities laws relating to the accuracy and completeness of the statements made by prospectus disclosure.

Interest rates are set at the beginning of each calendar quarter.  You may receive a different interest rate depending on the rates in effect when you purchase the policy.  The rate may also vary for Net Premiums versus a transfer of Units from a Sub-Account portfolio.  In honoring your request to transfer an amount out of the fixed account, we will do so on a last-in, first out basis (LIFO).  Interest we credit to the fixed investment option may not increase the Cash Surrender Value enough to cover the policy’s charges.  If not, the policy may Lapse.  For more information, see "Lapse," beginning on page 363635.

Variable Investment Options

The variable investment options constitute the limitedly available mutual funds, and we have divided the separate account into an equal number of Sub-Account portfolios to account for your allocations.  Each Sub-Account portfolio invests in a mutual fund that is registered with the SEC.  (This registration does not involve the SEC's supervision of the management or investment practices or policies of these mutual funds.)  The "Appendix A: Sub-Account Information" section identifies the available mutual funds, by name, investment type and advisor.  Your choices and any changes will appear on the Policy Data Page.

Each Sub-Account portfolio’s assets are held separately from the assets of the other Sub-Account portfolios, and each Sub-Account portfolio has investment objectives and policies that are different from those of the other Sub-Account portfolios.  Thus, each Sub-Account portfolio operates as a separate investment fund, and the income or losses of one Sub-Account portfolio generally have no effect on the Investment Experience of any other Sub-Account portfolio.

The Sub-Accounts available through this policy are listed below.  For more information about the mutual funds, please refer to “Appendix A: Sub-Account Information” and/or the applicable mutual fund’s prospectus.

AIM Variable Insurance Funds

· AIM V.I. Basic Value Fund: Series I Shares

· AIM V.I. Capital Appreciation Fund: Series I Shares

· AIM V.I. Capital Development Fund: Series I Shares

American Century Variable Portfolios, Inc.

· American Century VP International Fund: Class III†

· American Century VP Mid Cap Value Fund: Class I

· American Century VP Value Fund: Class I*

· American Century VP Vista Fund: Class I

American Century Variable Portfolios II, Inc.

· American Century VP Inflation Protection Fund:

Class II

Dreyfus

· Dreyfus Investment Portfolios - Small Cap Stock Index Portfolio: Service Shares

· Dreyfus Stock Index Fund, Inc.: Initial Shares

· Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

Federated Insurance Series

· Federated Market Opportunity Fund II: Service Shares

· Federated Quality Bond Fund II: Primary Shares

Fidelity Variable Insurance Products Fund

· VIP Equity-Income Portfolio: Service Class*

· VIP Growth Portfolio: Service Class

· VIP Overseas Portfolio: Service Class R†

Fidelity Variable Insurance Products Fund II

· VIP Contrafund® Portfolio: Service Class

· VIP Investment Grade Bond Portfolio: Service Class*

Fidelity Variable Insurance Products Fund III

· VIP Mid Cap Portfolio: Service Class

Fidelity Variable Insurance Products Fund IV

· VIP Energy Portfolio: Service Class 2†

· VIP Freedom Fund 2010 Portfolio: Service Class

· VIP Freedom Fund 2020 Portfolio: Service

Class

· VIP Freedom Fund 2030 Portfolio: Service Class

Franklin Templeton Variable Insurance Products Trust

· Franklin Income Securities Fund: Class 2

· Franklin Small Cap Value Securities Fund: Class 1

· Templeton Developing Markets Securities Fund:

Class 3†

· Templeton Foreign Securities Fund: Class 3†

· Templeton Global Income Securities Fund: Class 3†

Janus Aspen Series

· Forty Portfolio: Service Shares

· INTECH Risk-Managed Core Portfolio: Service Shares

· International Growth Portfolio: Service II Shares†

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Lehman Brothers Advisers Management Trust (formerly, Neuberger Berman Advisers Management Trust)

· AMT Short Duration Bond Portfolio: I Class* (formerly, AMT Limited Maturity Bond Portfolio: I Class)

MFSÒ Variable Insurance Trust

· MFS Value Series: Initial Class

Nationwide Variable Insurance Trust ("NVIT") (formerly Gartmore Variable Insurance Trust (“GVIT”))

· American Funds NVIT Asset Allocation Fund: Class II

· American Funds NVIT Bond Fund: Class II

· American Funds NVIT Global Growth Fund: Class II

· American Funds NVIT Growth Fund: Class II

· American Funds NVIT Growth-Income Fund: Class II

· Federated NVIT High Income Bond Fund: Class III †*

· Gartmore NVIT Emerging Markets Fund: Class III†

· Nationwide Multi-Manager NVIT Small Cap Growth Fund: Class I (formerly, GVIT Small Cap Growth Fund)

· Nationwide Multi-Manager NVIT Small Cap Value Fund: Class I (formerly, GVIT Small Cap Value Fund)

· Nationwide Multi-Manager NVIT Small Company Fund: Class I (formerly, GVIT Small Company Fund)

· Nationwide NVIT Global Health Sciences Fund:

Class III†

· Nationwide NVIT Global Technology and Communications Fund: Class III†

· Nationwide NVIT Government Bond Fund: Class I

· Nationwide NVIT Investor Destinations Funds: Class II

· Nationwide NVIT Investor Destinations Conservative Fund: Class II

· Nationwide NVIT Investor Destinations Moderately Conservative Fund: Class II

· Nationwide NVIT Investor Destinations Moderate Fund: Class II

· Nationwide NVIT Investor Destinations Moderately Aggressive Fund: Class II

· Nationwide NVIT Investor Destinations Aggressive Fund: Class II

· Nationwide NVIT Mid Cap Growth Fund: Class I

· Nationwide NVIT Money Market Fund: Class I

· Nationwide NVIT U.S. Growth Leaders Fund: Class I

· NVIT International Index Fund: Class VI†

· NVIT International Value Fund: Class III†

· NVIT Mid Cap Index Fund: Class I

· NVIT Nationwideâ Fund: Class I

· Van Kampen NVIT Comstock Value Fund: Class I*

· Van Kampen NVIT Multi Sector Bond Fund: Class I*

Neuberger Berman Advisers Management Trust

· AMT Fasciano Portfolio:  S Class*

· AMT International Portfolio: S Class†

· AMT Regency Portfolio: I Class

Neuberger Berman Socially Responsive Fund: Trust Class

Oppenheimer Variable Account Funds

· Oppenheimer Capital Appreciation Fund/VA: Non-Service Shares

· Oppenheimer Global Securities Fund/VA: Class 3†

· Oppenheimer High Income Fund/VA: Class 3†*

· Oppenheimer Main Street Fund®/VA:

Non-Service Shares

· Oppenheimer Main Street Small Cap Fund®/VA:

Non-Service Shares

T. Rowe Price Equity Series, Inc.

· T. Rowe Price Blue Chip Growth Portfolio: Class II

· T. Rowe Price Equity Income Portfolio: Class II

· T. Rowe Price Limited Term Bond Portfolio: Class II

Van Kampen

The Universal Institutional Funds, Inc.

· Core Plus Fixed Income Portfolio: Class I*

· U.S. Real Estate Portfolio: Class I

This sub-account is only available in policies issued before May 1, 2007.

American Century Variable Portfolios, Inc.

· American Century VP Ultra Fund: Class I

These sub-accounts are only available in policies issued before May 1, 2006.

Fidelity Variable Insurance Products Fund III

· VIP Value Strategies Portfolio: Service Class

Franklin Templeton Variable Insurance Products Trust

· Franklin Rising Dividends Securities Fund: Class 1

MFSÒ Variable Insurance Trust

· MFS Investors Growth Stock Series: Initial Class

These sub-accounts are only available in policies issued before May 1, 2005.

American Century Variable Portfolios, Inc.

· American Century VP International Fund: Class I

Nationwide Variable Insurance Trust

· Nationwide NVIT Global Health Sciences Fund: Class I

· NVIT International Value Fund: Class I

Oppenheimer Variable Account Funds

· Oppenheimer Global Securities Fund/VA: Non-Service Shares

Putnam Variable Trust

· Putnam VT Growth and Income Fund: Class IB

· Putnam VT Voyager Fund: Class IB

These sub-accounts are only available in policies issued before May 1, 2004.

AllianceBernstein Variable Products Series Fund, Inc.

· AllianceBernstein Growth and Income Portfolio:

Class A

· AllianceBernstein Small/Mid Cap Value Portfolio: Class B

American Century Variable Portfolios, Inc.

· American Century VP Income & Growth Fund: Class I

Dreyfus

· Dreyfus Variable Investment Fund - Developing Leaders Portfolio: Initial Shares

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Federated Insurance Series

· Federated American Leaders Fund II: Primary Shares

· Federated Capital Appreciation Fund II: Primary Shares

Janus Aspen Series

· Balanced Portfolio: Service Shares

Nationwide Variable Insurance Trust

· Gartmore NVIT Global Utilities Fund: Class I

· Nationwide NVIT Global Financial Services Fund:

Class I

Neuberger Berman Advisers Management Trust

· AMT Mid-Cap Growth Portfolio: I Class

Putnam Variable Trust

· Putnam VT International Equity Fund: Class IB

Van Kampen

The Universal Institutional Funds, Inc.

· Emerging Markets Debt Portfolio: Class I

These sub-accounts are only available in policies issued before May 1, 2003.

Dreyfus

· Dreyfus Socially Responsible Growth Fund, Inc.:

Initial Shares

Fidelity Variable Insurance Products Fund

· VIP High Income Portfolio: Service Class R†*

Janus Aspen Series

· Global Technology Portfolio: Service Shares

Nationwide Variable Insurance Trust

· Gartmore NVIT International Growth Fund: Class I

· Gartmore NVIT Worldwide Leaders Fund: Class I

· J.P. Morgan NVIT Balanced Fund: Class I

· Nationwide NVIT Growth Fund: Class I

· NVIT Nationwideâ Leaders Fund: Class I

Neuberger Berman Advisers Management Trust

· AMT Guardian Portfolio: I Class

· AMT Partners Portfolio: I Class

Oppenheimer Variable Account Funds

· Oppenheimer MidCap Fund/VA: Non-Service Shares

Wells Fargo Advantage Variable Trust

· Wells Fargo Advantage VT Opportunity Fund

These sub-accounts are only available in policies issued before May 1, 2002.

Fidelity Variable Insurance Products Fund III

· VIP Growth Opportunities Portfolio: Service Class

Van Eck Worldwide Insurance Trust

· Worldwide Emerging Markets Fund: Initial Class

· Worldwide Hard Assets Fund: Initial Class

Van Kampen

The Universal Institutional Funds, Inc.

· Mid Cap Growth Portfolio: Class I

This sub-account is only available in policies issued before May 1, 2000.

Credit Suisse Trust

· Large Cap Value Portfolio

These sub-accounts are only available in policies issued before September 27, 1999.

Credit Suisse Trust

· Global Small Cap Portfolio

· International Focus Portfolio

These sub-accounts are no longer available to receive transfers or new premium payments effective May 1, 2007.

Fidelity Variable Insurance Products Fund

· VIP High Income Portfolio: Service Class*

Oppenheimer Variable Account Funds

· Oppenheimer High Income Fund/VA: Non-Service Shares*

This sub-account is no longer available to receive transfers or new premium payments effective June 1, 2006.

Janus Aspen Series

· International Growth Portfolio: Service Shares

These sub-accounts are no longer available to receive transfers or new premium payments effective May 1, 2005.

Fidelity Variable Insurance Products Fund

· VIP Overseas Portfolio: Service Class

Franklin Templeton Variable Insurance Products Trust

· Templeton Foreign Securities Fund: Class 1

Nationwide Variable Insurance Trust

· Federated NVIT High Income Bond Fund:Class I*

· Gartmore NVIT Emerging Markets Fund: Class I

· Nationwide NVIT Global Technology and Communications Fund: Class I

†These underlying mutual funds assess a short-term trading fee.

*These underlying mutual funds may invest in lower quality debt securities commonly referred to as junk bonds.

Allocation Of Net Premium And Cash Value

We allocate your Net Premium payments to Sub-Accounts or the fixed account per your instructions.  You must specify your Net Premium payments in whole percentages.  The sum of allocations must equal 100%.

Valuation of Accumulation Units

We will price Accumulation Units on any day the New York Stock Exchange (NYSE) is open for business, unless we are closed.

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We will not price Accumulation Units on these recognized holidays.

·

· New Year's Day

· Martin Luther King, Jr. Day

· Presidents’ Day

· Good Friday

· Memorial Day

· Independence Day

· Labor Day

· Thanksgiving

· Christmas

In addition, we will not price Accumulation Units if:

· trading on the New York Stock Exchange is restricted;

· an emergency exists making disposal or valuation of securities held in the separate account impracticable; or

· the SEC, by order, permits a suspension or postponement for the protection of security holders.

SEC rules and regulations govern when the conditions described above exist.  Any transaction you try to effect when we are closed will not happen until the next day the NYSE and we are both open for business.

We will process transactions we receive after the close of the NYSE on the next Valuation Period that we are open.

How Sub-Account Investment Experience Is Determined

Though the number of Accumulation Units will not change as a result of Investment Experience, changes in the net investment factor, as described below, may cause the value of an Accumulation Unit to increase or decrease from Valuation Period to Valuation Period.  Changes in the net investment factor may not be directly proportional to changes in the NAV of the mutual fund shares.

We determine the change in Sub-Account values at the end of a Valuation Period.  The Accumulation Unit value for a Valuation Period is determined by multiplying the Accumulation Unit value as of the prior Valuation Period by the net investment factor for the Sub-Account for the current Valuation Period.

We determine the net investment factor for any Valuation Period by dividing (a) by (b) where:

(a)   is the sum of:

1. the NAV per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period; and

2. the per share amount of any dividend or income distributions made by the mutual fund (if the date of the dividend or income distribution occurs during the current Valuation Period); plus or minus

3. a per share charge or credit for any taxes reserved for as a result of the Sub-Account's investment operations if changes to the law result in a modification to the tax treatment of the separate account; and

(b)           is the NAV per share of the mutual fund determined as of the end of the immediately preceding Valuation Period.

Cash Value

The policy has a Cash Value.  There is no guaranteed Cash Value.  Rather, it will be based on the values, and vary with the Investment Experience of the Sub-Account portfolios to which you have allocated Net Premium, as well as the values of, and any daily crediting of interest to, the policy loan (if you have taken a policy loan) and fixed accounts.  It will also vary because we deduct the policy's periodic charges from the Cash Value.  So, if the policy's Cash Value is part of the Death Benefit option you have chosen, then your Death Benefit will fluctuate.

We will determine the value of the assets in the separate account at the end of each Valuation Period.  We will determine the Cash Value at least monthly. To determine the number of Accumulation Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Accumulation Unit value for the Sub-Account (using the next Valuation Period following when we receive the Premium).

If you surrender part or all of the policy, we will deduct a number of Accumulation Units from the separate account and an amount from the fixed account that corresponds to the surrendered amount.  Thus, your policy’s Cash Value will be reduced by the surrendered amount.  Similarly, when we assess charges or deductions, a number of Accumulation Units from the separate account and an amount from the fixed account that corresponds with the charge or deduction will be deducted from the policy’s Cash Value.  We make these deductions in the same proportion that your interests in the separate account and the fixed account bear to the policy’s total Cash Value.

The Cash Value in the policy loan and fixed accounts will be credited interest daily at the guaranteed minimum annual effective rate stated on the Policy Data Page.  For there to be Cash Value in the policy loan account, you must have taken a policy loan.  We may decide to credit interest in excess of the guaranteed minimum annual effective rate.  For the fixed account, we will guarantee the current rate in effect through the end of the calendar quarter.  Upon request, we will inform

13

you of the current applicable rates for each account. For more information, see "The Fixed Investment Option," beginning on page 9 and "Policy Loan Interest," beginning on page 2726.

On any date during the policy year, the Cash Value equals the Cash Value on the preceding Valuation Period, plus any Net Premium applied since the previous Valuation Period, minus any policy charges, plus or minus any investment results, and minus any partial surrenders.

Transfers Among and Between Policy Investment Options

Sub-Account Portfolio Transfers

We will determine the amount you have available for transfers among the Sub-Account portfolios in Accumulation Units based on the Net Asset Value (NAV) per share of the mutual fund in which a Sub-Account portfolio invests.  The mutual fund will determine its NAV once daily as of the close of the regular business session of the New York Stock Exchange (usually 4:00 p.m. Eastern time).  An Accumulation Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests, however, because the Accumulation Unit value will reflect the deduction for any transaction fees and periodic charges.  For more information, see "In Summary: Fee Tables," beginning on page 5, and "How Sub-Account Investment Experience is Determined" beginning on page 13.

Policy owners may request transfers to or from the Sub-Accounts once per valuation day, subject to the terms and conditions of the policy and the mutual funds.

Neither the policies nor the mutual funds are designed to support active trading strategies that require frequent movement between or among Sub-Accounts (sometimes referred to as "market-timing" or "short-term trading").  If you intend to use an active trading strategy, you should consult your registered representative and request information on other Nationwide policies that offer mutual funds that are designed specifically to support active trading strategies.

We discourage (and will take action to deter) short-term trading in this policy because the frequent movement between or among Sub-Accounts may negatively impact other investors in the policy.  Short-term trading can result in:

· the dilution of the value of the investors' interests in the mutual fund;

· mutual fund managers taking actions that negatively impact performance (i.e., keeping a larger portion of the mutual fund assets in cash or liquidating investments prematurely in order to support redemption requests); and/or

· increased administrative costs due to frequent purchases and redemptions.

To protect investors in this policy from the negative impact of these practices, we have implemented, or reserve the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies.  We cannot guarantee that our attempts to deter active trading strategies will be successful.  If active trading strategies are not successfully deterred by our actions, the performance of Sub-Accounts that are actively traded will be adversely impacted.

Redemption Fees.  Some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to the Sub-Account.  The fee is assessed against the amount transferred and is paid to the mutual fund.  Redemption fees compensate the mutual fund for any negative impact on fund performance resulting from short-term trading.

U.S. Mail Restrictions.  We monitor transfer activity in order to identify those who may be engaged in harmful trading practices.  Transaction reports are produced and examined.  Generally, a policy may appear on these reports if the policy owner (or a third party acting on their behalf) engages in a certain number of "transfer events" in a given period.  A "transfer event" is any transfer, or combination of transfers, occurring in a given Valuation Period.  For example, if a policy owner executes multiple transfers involving 10 Sub-Accounts in 1 day, this counts as 1 transfer event.  A single transfer occurring in a given Valuation Period that involves only 2 Sub-Accounts (or one Sub-Account if the transfer is made to or from a fixed investment option) will also count as 1 transfer event.

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As a result of this monitoring process, we may restrict the form in which transfer requests will be accepted.  In general, we will adhere to the following guidelines:

Trading Behavior	Nationwide's Response
6 or more transfer events in one calendar quarter	Nationwide will mail a letter to the policy owner notifying them that: 1.they have been identified as engaging in harmful trading practices; and 2.if their transfer events exceed 11 in 2 consecutive calendar quarters or 20 in one calendar year, the policy owner will be limited to submitting transfer requests via U.S. mail.
More than 11 transfer events in 2 consecutive calendar quarters OR More than 20 transfer events in one calendar year	Nationwide will automatically limit the policy owner to submitting transfer requests via U.S. mail.

Each January 1^st, we will start the monitoring anew, so that each policy starts with 0 transfer events each January 1.  See, however, the "Other Restrictions" provision below.

Managers of Multiple Contracts.  Some investment advisors/representatives manage the assets of multiple Nationwide contracts pursuant to trading authority granted or conveyed by multiple policy owners.  These multi-contract advisors will be required by Nationwide to submit all transfer requests via U.S. mail.

Other Restrictions.  We reserve the right to refuse or limit transfer requests, or take any other action we deem necessary, in order to protect policy owners and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some policy owners (or third parties acting on their behalf).  In particular, trading strategies designed to avoid or take advantage of Nationwide's monitoring procedures (and other measures aimed at curbing harmful trading practices) that are nevertheless determined by us to constitute harmful trading practices, may be restricted.

Any restrictions that we implement will be applied consistently and uniformly.

Underlying Mutual Fund Restrictions and Prohibitions.  Pursuant to regulations adopted by the SEC, we are required to enter into written agreements with the underlying mutual funds which allow the underlying mutual funds to:

(1) request the taxpayer identification number, international taxpayer identification number, or other government issued identifier of any of our policy owners;

(2) request the amounts and dates of any purchase, redemption, transfer or exchange request (“transaction information”); and

(3) instruct us to restrict or prohibit further purchases or exchanges by policy owners that violate policies established by the underlying mutual fund (whose policies may be more restrictive than our policies).

We are required to provide such transaction information to the underlying mutual funds upon their request.  In addition, we are required to restrict or prohibit further purchases or exchange requests upon instruction from the underlying mutual fund.  We and any affected policy owner may not have advance notice of such instructions from an underlying mutual fund to restrict or prohibit further purchases or exchange requests.  If an underlying mutual fund refuses to accept a purchase or exchange request submitted by us, we will keep any affected policy owner in their current underlying mutual fund allocation.

We may add new underlying mutual funds, or new share classes of currently available underlying mutual funds, that assess short-term trading fees.  In the case of new share class additions, your subsequent allocations may be limited to that new share class.  Short-term trading fees are a charge assessed by an underlying mutual fund when you transfer out of a Sub-Account within 60 days of the date of allocation to the Sub-Account.  The separate account will collect the short-term trading fees at the time of the transfer by reducing the amount transferred.  We will remit all such fees to the underlying mutual fund.

Fixed Account Transfers

Prior to the policy’s Maturity Date, you may also make transfers involving the fixed account.  These transfers will be in dollars, and we reserve the right to limit their timing and amount, including that you may not request a transfer involving the fixed account before the end of the first year from the Policy Date.  Also, you may not make more than one transfer every 12 months.

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On transfers to the fixed account, we may not permit you to transfer over 20% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period.  We reserve the right to refuse any transfer to the fixed account if the fixed account’s Cash Value comprises more than 30% of the policy’s Cash Value.

On transfers from the fixed account, we may not permit you to transfer over 20% of the Cash Value of the fixed account as of the end of the previous policy year (subject to state restrictions).

Modes To Make A Transfer

To make a transfer, send your written request to us at our Home Office via first class U.S. mail.  Upon receipt, we will process a transfer request at the end of the current Valuation Period.  We may also permit you to use other modes of communication, subject to limitations.

Our contact information is on the cover page of this prospectus.

We will employ reasonable procedures to confirm that instructions are genuine, including:

· requiring forms of personal identification before acting upon instructions;

· providing you with written confirmation of completed transactions; and/or

· tape recording telephone instructions.

If we follow these procedures, we will not be liable for any loss, damage, cost or expense from complying with what we reasonably believe to be genuine instructions.  Rather, you will bear the risk of loss.

Any computer system or telephone, whether it is yours, your service provider’s, your representative’s, or ours, can experience slowdowns or outages for a variety of reasons.  These slowdowns or outages may delay or prevent our ability to process your request.  Although we have taken precautions to help our system handle heavy usage, we cannot promise complete reliability under all circumstances.  If you are experiencing problems, you should make your request in writing.

The Policy

The policy is a legal contract between you and us.  Any change must be in writing, signed by our president and corporate secretary, and attached to or endorsed on the policy.  You may exercise all policy rights and options while the Insured is alive.  You may also change the policy, but only in accordance with its terms.

Generally, the policy is available for an insured between the ages of 0 and 85 (although these ages may vary in your state).  It is nonparticipating, meaning we will not be contributing any operating profits or surplus earnings toward the Proceeds from the policy.  The policy will comprise and be evidenced by: a written contract; any Riders; any endorsements; Policy Data Pages; and the application, including any supplemental application.  We will consider the statements you make in the application as representations.  We will rely on them as being true and complete.  However, we will not void the policy or deny a claim unless a statement is a material misrepresentation.

In order to comply with the USA Patriot Act and rules promulgated thereunder, Nationwide will implement procedures designed to prevent policies described in this prospectus from being used to facilitate money laundering or the financing of terrorist activities.

Policy Owner

The policy belongs to the owner named in the application.  You may also name a contingent owner.  A contingent owner will become the owner if the owner dies before any Proceeds become payable.  Otherwise, ownership will pass to the owner’s estate, if the owner is not the Insured.  To the extent permitted by law, policy benefits are not subject to any legal process for the payment of any claim, and no right or benefit will be subject to claims of creditors (except as may be provided by assignment).  You may name different owners or contingent owners (so long as the Insured is alive) by submitting your written request to our Home Office, which will become effective when signed rather than the date on which we received it.  There may be adverse tax consequences.  For more information, see "Taxes," beginning on page 373736.

The Beneficiaries

The principal right of a beneficiary is to receive Proceeds constituting the Death Benefit upon the Insured's death.  So long as the Insured is alive, you may: name more than one beneficiary; designate primary and contingent beneficiaries; change or add beneficiaries; and provide for another distribution than the following.

If a primary beneficiary dies before the Insured, we will pay the Death Benefit to the remaining primary beneficiaries.  We will pay multiple primary beneficiaries in equal shares.  A contingent beneficiary will become the primary beneficiary if all primary beneficiaries die before the Insured, and before any Proceeds become payable.  You may name more than one contingent beneficiary.  We will also pay multiple contingent beneficiaries in equal shares.  To change or add beneficiaries,

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you must submit your written request to us at our Home Office, which will become effective when signed, rather than the date on which we received it.  The change will not affect any payment we made, or action we took, before we recorded the change.

To Purchase

To purchase the policy, you must submit to us a completed application and an initial Premium payment.

We must receive evidence of insurability that satisfies our underwriting standards (this may require a medical examination) before we will issue a policy.  We can provide you with the details of our underwriting standards.  We reserve the right to reject an application for any reason permitted by law.  Also, we reserve the right to modify our underwriting standards at any time.

The minimum initial Specified Amount in most states is $50,000 for non-preferred policies.  For preferred policies, the minimum initial Specified Amount is $100,000.  The basic distinction between the non-preferred and preferred underwriting classifications is that we expect the Insured under a preferred policy to live longer.  We reserve the right to modify our minimum Specified Amount at any time.

Coverage

We will issue the policy only if the underwriting process has been completed, we have approved the application and the proposed Insured is alive and in the same condition of health as described in the application.  However, full insurance coverage will take effect only after you have paid the minimum initial Premium.  We begin to deduct monthly charges from your policy Cash Value on the Policy Date.

Coverage Effective Date

Insurance coverage will begin and be In Force on the Policy Date shown on the Policy Data Page.  For a change in the Specified Amount, the effective date will be on the next monthly anniversary from the Policy Date after we have approved your request.  It will end upon the Insured's death, once we begin to pay the Proceeds, or when the policy matures.  It could end if the policy were to Lapse.

Temporary Insurance Coverage

Temporary insurance coverage, equal to the Specified Amount up to $1,000,000, may be available for no charge before full insurance coverage takes effect.  You must submit a temporary insurance agreement and make an initial Premium payment.  The amount of the initial Premium will depend on the initial Specified Amount, and your choice of Death Benefit option and any Riders, for purposes of the policy.  During this time, we will deposit your initial Premium payment into an interest bearing checking account.  Temporary insurance coverage will remain In Force for no more than 60 days from the date of the temporary insurance agreement.  Before then, temporary insurance coverage will terminate on the date full insurance coverage takes effect, or five days from the date we mail a termination notice (accompanied by a refund equal to the Premium payment you submitted).  If we issue the policy, what we do with the Net Premium depends on the right to examine law of the state in which you live.

To Cancel (Examination Right)

You may cancel your policy during the free look period.  The free look period expires ten days after you receive the policy or longer if required by state law.  If you decide to cancel during the free look period, return the policy to the sales representative who sold it to you, or to us at our Home Office, along with your written cancellation request.  Within seven days, we will refund the amount prescribed by the law of the state in which we issued the policy.  Depending on the right to examine law of the state in which you live, this amount will be your initial premium or the policy's Cash Value.  We will treat the policy as if we never issued it.  For more information, see "Policy Investment Options," beginning on page 9.

To Change Coverage

After the first year from the Policy Date, you may request to change the Specified Amount; however, no change will take effect unless the new Cash Surrender Value would be sufficient to keep the policy In Force for at least three months.  Changes to the Specified Amount will alter the Death Benefit.  For more information, see "Changes In The Death Benefit Option," beginning on page 323231.

You may request to increase the Specified Amount, by at least $10,000, which will increase the Net Amount At Risk.  Because the cost of insurance charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will also cause the policy's cost of insurance charge to increase.  As a result, there will be a corresponding increase in the periodic charges we deduct from the policy's Cash Value.  Also, an increase in the Specified Amount may cause an increase to the amount of your subsequent Premium payments and the likelihood that the entire policy is at risk of lapsing sooner.  For more information, see "Lapse," beginning on page 363635.

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You may request to decrease the Specified Amount.  We first apply decreases to the amount of insurance coverage as a result of any prior Specified Amount increases, starting with the most recent.  Then we will decrease the initial Specified Amount.  We will deny a request, however, to reduce the amount of your coverage below the minimum initial Specified Amount.  For more information, see "To Purchase," beginning on page 1716.  Also, we will deny a request that would disqualify the policy as a contract for life insurance.  For more information, see "The Minimum Required Death Benefit," beginning on page 313231.

To change the Specified Amount, you must submit your written request to us at our Home Office.  You must provide us with evidence of insurability that satisfies our underwriting standards. The Insured must be 85 or younger.  Changes will become effective on the next monthly anniversary from the Policy Date after we approve the request.  We reserve the right to limit the number of changes to one each year from the Policy Date.

To Exchange

You have an exchange right under the policy.  At any time within the first 24 months of coverage from the Policy Date, you may surrender this policy and use the Cash Surrender Value to purchase a new policy on the Insured’s life without evidence of insurability.  Afterwards, you may also surrender the policy and use the Cash Surrender Value to purchase a new policy on the same Insured’s life, but subject to evidence of insurability that satisfies our underwriting standards.

The new policy may be one of our available flexible premium adjustable life insurance policies.  It may not have a greater Death Benefit than that of this policy immediately prior to the exchange date.  It will have the same Specified Amount, Policy Date, and issue age.  We will base Premiums on our rates in effect for the same sex, Attained Age and Premium class of the Insured on the exchange date.  You may transfer Indebtedness to the new policy, subject to the minimum and maximum loan amounts of the new policy.

You must make your request on our official forms to the Home Office.  The policy must be In Force and not in a Grace Period.  You must pay a surrender charge.  For more information, see "In Summary: Fee Tables," beginning on page 5.  The exchange may have tax consequences.  For more information, see "Exchanging The Policy For Another Life Insurance Policy," beginning on page 404039.  The new policy will take effect on the exchange date only if the Insured is alive.  This policy will terminate when the new policy takes effect.

To Terminate (Surrender)

You have the right to terminate (surrender) the policy.  Or you may surrender the policy for its Cash Surrender Value.  The policy will automatically terminate when the Insured dies, the policy matures, or the Grace Period ends.  For more information, see "Surrenders," beginning on page 323332.

Generally, if the policy has a Cash Surrender Value in excess of the Premiums you have paid, upon surrender the excess will be included in your income for federal tax purposes.  For more information, see "Surrender Of The Policy," beginning on page 393938.  The Cash Surrender Value will be reduced by the outstanding amount of a policy loan.  For more information, see "Policy Loans," beginning on page 353635.

To Assign

You may assign any rights under the policy while the Insured is alive.  If you do, your beneficiary’s interest will be subject to the person(s) to whom you have assigned rights.  Your assignment must be in writing, and it must be recorded at our Home Office before it will become effective.  Your assignment will be subject to any outstanding policy loans.  For more information, see "Policy Loans," beginning on page 353635.

Proceeds Upon Maturity

If the policy is In Force on the Maturity Date, we will pay you the Proceeds.

Normally, we will pay the Proceeds within seven days after we receive your written request at our Home Office.  The payment will be postponed, however, when: the New York Stock Exchange is closed; the SEC restricts trading or declares an emergency; the SEC permits us to defer it for the protection of our policy owners; or the Proceeds are to be paid from the fixed account.  The Proceeds will equal the policy's Cash Value minus any Indebtedness.  After we pay the Proceeds, the policy is terminated.

We may offer to extend the Maturity Date to coincide with the Insured's death, after which we will pay the Proceeds to your beneficiary.  During this time, you will still be able to request partial surrenders, and you will still have in effect the Long-term Care Rider (though you will not be charged for it), the termination of benefits under which will coincide with the policy's extended Maturity Date (unless you decide otherwise).  The Maturity Date extension will either be for the policy value (as defined below), or for the Specified Amount (subject to the law of the state in which you lived at the time you purchased the policy).  It is your choice, and, in any event, your policy will be endorsed so that:

· no changes to the Specified Amount will be allowed;

· no additional Premium payments will be allowed;

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· no additional periodic charges will be deducted;

· 100% of the policy value will be transferred to the fixed account;

· to extend for the Cash Value, your policy's Death Benefit will become the Cash Value, irrespective of your previous Death Benefit option choice; or

· to extend for the Specified Amount, the Specified Amount will be adjusted to what it was when the Insured reached Attained Age 70, but excluding any coverage provided by the Additional Protection Rider and subject to any partial surrenders, which will affect the Specified Amount of a policy with Death Benefit Option One, based on the Insured's Attained Age at the time the request for a partial surrender is made in the case that you extend for the Specified Amount.  While the Insured is between the Attained Ages of 71 and 90, a partial surrender will decrease the Specified Amount proportionately.  If the Insured is Attained Age 91, a partial surrender will reduce the Proceeds by an amount proportionate to the ratio of the partial surrender to the Cash Value prior to the partial surrender.  Notwithstanding, the Proceeds will be the greater of the policy's Specified Amount or Cash Value, unless you have invoked the Policy Guard Rider, in which case the Proceeds may be reduced.

The Maturity Date will not be extended, however, beyond when the policy would fail the definition of life insurance under the Code.  For more information, see "The Payout Options," beginning on page 333433 and "The Death Benefit," beginning on page 313130.

Reminders, Reports And Illustrations

On request, we will send you scheduled Premium payment reminders and transaction confirmations.  We will also send you semi-annual and annual reports that show:

· the Specified Amount

· the current Cash Value

· minimum monthly Premiums

· the Cash Surrender Value

· Premiums paid

· outstanding Indebtedness

· all charges since the last report

You may receive information faster from us and reduce the amount of mail you receive by signing up for our eDelivery program.  We will notify you by e-mail when important documents, like statements and prospectuses, are ready for you to view, print, or download from our secure server.  If you would like to choose this option, go to www.nationwide.com/login.

We will send these reminders and reports to the address you provide on the application, or to another you may specify.

At any time, you may ask for an illustration of future benefits and values under the policy.  While we do not at present, we may charge if you ask for more than one illustration per year from the Policy Date.

IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS

When multiple copies of the same disclosure document(s), such as prospectuses, supplements, proxy statements and semi-annual and annual reports are required to be mailed to your household, we will mail only one copy of each document, unless notified otherwise by you.  Household delivery will continue for the life of the contracts.  Please call 1-866-223-0303 to resume regular delivery.  Please allow 30 days for regular delivery to resume.

Errors Or Misstatements

If you make an error or misstatement in completing the application, then we will adjust the Death Benefit and Cash Value accordingly.

To determine the adjusted Death Benefit, we will multiply the Net Amount At Risk at the time of the Insured’s death by the ratio of the monthly cost of insurance applied at the true age and sex in the policy month of death and the monthly cost of insurance that should have been applied at the true age and sex in the policy month of death.  We will then add this adjusted amount that reflects the true age and sex of the Insured to the Cash Value of the policy at the Insured’s death.  The Cash Value will also be adjusted to reflect the cost of insurance charges based on the Insured's correct age and sex from the Policy Date.

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Incontestability

We will not contest payment of the Death Benefit based on the initial Specified Amount after the policy has been In Force during the Insured's lifetime for two years from the Policy Date.  For any change in Specified Amount requiring evidence of insurability, we will not contest payment of the Death Benefit based on such an increase after it has been In Force during the Insured's lifetime for two years from its effective date.

If We Modify The Policy

Any modification (or waiver) of our rights or requirements under the policy must be in writing and signed by our president or corporate secretary.  No agent may bind us by making any promise not contained in the policy.

We may modify the policy, our operations, or the separate account’s operations to meet the requirements of any law (or regulation issued by a government agency) to which the policy, our company, or the separate account is subject.  We may modify the policy to assure that it continues to qualify as a life insurance contract under the federal tax laws.  We will notify you of all modifications, and we will make appropriate endorsements to the policy.

Riders

Riders are available for you to purchase to design the policy to meet your specific needs.  You may purchase any of them (except for both the Premium Waiver and Deduction Waiver Riders, simultaneously).  Once the policy is In Force, to add a Rider, we may require further evidence of insurability.  You may only elect the Adjusted Sales Load Life Insurance Rider when purchasing the policy.  Availability will vary by state.  You will be charged for a Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; or you decide you no longer need the benefit and let us know in writing at our Home Office.  For more information on the costs of the Riders, see "In Summary: Fee Tables," beginning on page 5, and "Charges," beginning on page 24.

Adjusted Sales Load Life Insurance Rider

This Rider is only available to purchase when you purchase the policy.  The benefit is replacing the Premium Load we would otherwise deduct before allocating your Net Premiums with the Rider's monthly charge, which depends on whether you want to replace all or a portion of the Premium Load.  We will deduct the Rider's charge from the policy's Cash Value over a period of up to fifteen years, but this depends on the number of years over which the Premium payments you plan to make will be covered by this Rider (a whole number up to seven years from the Policy Date).  This deduction will continue to be deducted for nine years after the lesser of:

· the number of years (from one to seven) you choose to have the Rider apply to your Premium payments; or

· the number of years in this period during which you actually make Premium payments.

So, say you want to replace all of the Premium Load on each of your Premium payments for five years, but the last Premium payment you make while the Rider is in effect is within the third year from the Policy Date.  Instead of for fourteen years, we will deduct the Rider's charge through the twelfth year.  Also, if you terminate your policy during the first ten years from the Policy Date, we will reduce your Cash Surrender Value.  The more Premium Load you elect to replace, the higher the Rider's charge will be.  If you purchase this Rider, you should expect that its charge, in the aggregate, would amount to more than if we had deducted the Premium Load from each of your Premium payments covered by it.  To better understand how this Rider might benefit you, ask for an illustration of future benefits and rights under the policy with and without the purchase of this Rider.

Children’s Insurance Rider

You may purchase term life insurance on any of the Insured's children at any time.  Before an expiration date, the policy pays a benefit to the named beneficiary upon the insured child’s death.  As long as the policy is In Force, the insurance coverage for each child will continue until the earlier of: 1) the anniversary of the policy on or after the date that the child turns age 22; or 2) the anniversary of the policy on or after the date that the Insured turns age 65.

Subject to certain conditions specified in the Rider, the Rider may be converted into a policy on the life of the insured child without evidence of insurability.  You will be charged for this Rider: so long as the policy remains In Force and the Rider’s term has not expired; until we have paid the benefit; or you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Otherwise, the benefit of this Rider and the Death Benefit are independent of one another.

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Long-term Care Rider

You may purchase this Rider at any time, but if you purchase it after issue, we will require evidence of insurability.  Upon meeting the eligibility requirements, the Insured is paid a monthly benefit after 90 days of being confined to a care facility (other than a hospital) or provided personal assistance at home while under a physician's care.  The requirements include confinement to a care facility (other than a hospital) or provision of personal assistance at home while under a physician’s care.  The care must be necessary.  The Insured must either be unable to do 2 of the following activities: dress, eat, bathe, be continent, use toilet facilities, move to/from beds and chairs; or be cognitively impaired.  The benefit may not cover all your prospective long-term care costs.  The benefit will not cover your retrospective long-term care costs.  The benefits paid under the Rider are intended to be "qualified long-term care insurance" under federal tax law, and, generally, the benefits may not be taxable to the policyholder.  See your tax advisor about the use of this Rider in your situation.  The benefit will end if you invoke the Policy Guard Rider.  You will be charged for this Rider: so long as the policy remains In Force through maturity; until we have paid the benefit; until you invoke the Policy Guard Rider; or until you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Also, the benefits paid under this Rider will reduce the Cash Surrender Value if you were to surrender the policy while the Insured is alive.  More importantly, though, the benefits paid under this Rider will impact your policy's Death Benefit.  The Proceeds payable upon the Insured's death will be adjusted to account for the benefits paid under this Rider.  There is a free look period for this Rider.  Within 30 days of receipt, you may return this Rider to the sales representative who sold it to you, or to us at our Home Office, and we will void this Rider and refund the related charges.

Spouse Life Insurance Rider

You may purchase this Rider at any time.  The benefit is a death benefit payable to the beneficiary you designate upon the Insured’s spouse’s death; otherwise, the benefit is payable to the Insured.  The benefit continues until the anniversary of the Rider on or next following the year in which the Insured's spouse turns age 70, you invoke the Policy Guard Rider, or the policy matures, whichever is earlier.  You will be charged for this Rider: so long as the policy remains In Force and the Rider’s term has not expired; until we have paid the benefit; until you invoke the Policy Guard Rider; or until you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Otherwise, the benefit of this Rider and the Death Benefit are independent of one another.  This Rider has a conversion right.  The Insured's spouse may exchange this Rider's benefit for a level premium, level benefit plan or whole life or endowment insurance, subject to limitations.

Accidental Death Benefit Rider

You may purchase this Rider at any time.  The Rider pays a benefit, in addition to the Death Benefit, to the named beneficiary upon the Insured’s accidental death.  The benefit continues until the Insured reaches Attained Age 70.  You will be charged for this Rider: so long as the policy remains In Force and the Rider’s term has not expired; until we have paid the benefit or you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Otherwise, the benefit of this Rider and the Death Benefit are independent of one another.

Premium Waiver Rider

You may purchase this Rider at any time.  The benefit is a monthly credit to the policy upon the Insured’s total disability for six consecutive months.  The amount is the lesser of:

· the Premium you specified, or

· the average actual Premiums you paid over the thirty-six months before the total disability.

However, the monthly credit may not be enough to allow you to rely on this Rider alone.  While the benefit is payable, you may also need to pay additional Premium to keep your policy from Lapsing.  Notwithstanding, purchasing this Rider could help to preserve the Death Benefit.

The benefit continues until the Insured turns age 65, or for two years for an Insured who is age 63 or older, at the time of the total disability.  You will be charged for this Rider so long as the policy remains In Force and the Rider’s term has not expired unless we are paying a benefit under the Rider or you decide you no longer need the benefit and let us know in writing at our Home Office.

Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  The benefit payable under this Rider appears to be the same as the benefit payable under the Deduction (of fees and expenses) Waiver Rider during the first three years from the Policy Date.  However, there are two distinctions.  If the benefit under the Deduction (of fees and expenses) Waiver Rider becomes payable during the first three years from the Policy Date, the monthly credit will be sufficient to keep the

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policy from Lapsing.  Thereafter, or if the benefit becomes payable after three years from the Policy Date, the benefit will be the waiver of your policy's charges on a monthly basis.  If you choose this Rider, you may not also choose the Deduction (of fees and expenses) Rider.

Change Of Insured Rider

You may elect this Rider for no charge at any time.  You may change the Insured for a new Insured, subject to insurability and other conditions.  The costs and benefits under the policy after the change will be based on, and could change with, the underwriting classification and characteristics of the new Insured, but this Rider's benefit will have no impact on the policy's Death Benefit.

Additional (insurance) Protection Rider

The benefit associated with the Additional (insurance) Protection Rider is term life insurance on the Insured, in addition to the Death Benefit, payable to the beneficiary upon the Insured’s death.

You may purchase this Rider at any time while the policy is In Force until the Insured reaches age 85.  The Rider benefit amount may vary monthly and is based on the chosen Death Benefit.  You may renew coverage annually until the Insured reaches Attained Age 100, when this Rider’s term expires.

Before deciding whether to purchase the Additional (insurance) Protection Rider it is important for you to know that when you purchase this Rider, the compensation received by your registered representative and his or her firm is less than when compared to purchasing insurance coverage under the base policy.  As a result of this compensation reduction, the charges assessed for the cost of insurance under this Rider will be lower for a significant period of time.  There are instances where the Additional (insurance) Protection Rider may require lower Premium to maintain the total death benefit over the life of the policy or may require increased Premium when compared to not purchasing the Rider at all.

There are also some distinct disadvantages to purchasing the Rider, such as not being able to extend the Maturity Date for coverage under the Rider (resulting in a loss of coverage at maturity).   Another disadvantage is the Rider only allows coverage under the Guaranteed Policy Continuation Provision for the first five policy years.  In comparison, the base policy allows longer coverage for issue ages under 70.  See the Guaranteed Policy Continuation Provision in the Lapse section of this prospectus.

If you have questions about whether the Rider is appropriate for you, please consult your registered representative for more specific information on this Rider and its potential benefits.  Your registered representative can answer your questions and provide you with illustrations demonstrating the impact of purchasing coverage under the Rider.

Because we deduct the Rider charge from the Cash Value, purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on the Cash Value.

Deduction (of fees and expenses) Waiver Rider

You may purchase this Rider at any time so long as the policy is In Force and it is before the Policy Date on or following when the Insured reaches age 65.  If an Insured becomes disabled, as defined in this Rider, for six consecutive months within the first three years from the Policy Date, the benefit is a credit to your policy in an amount necessary to keep the policy In Force.  The benefit for subsequent years, however, is a waiver of your policy's monthly charges.  So, say you become totally disabled for six consecutive months two years and eight months from the Policy Date.  For the first four months, the benefit would be a credit equal to the amount necessary to keep the policy In Force.  After that, the Rider's benefit is a waiver of your policy's monthly charges.

After the first three years from the Policy Date, this Rider's benefit may not be enough to keep your policy from Lapsing without needing to pay additional Premium.  Thereafter, with this Rider, it will cost you less, on a monthly basis, to keep the policy In Force.

For how long the benefit lasts depends on the Insured's age when total disability begins.  Before age 60, the benefit continues for as long as the Insured is totally disabled (even if that disability extends past when the Insured reaches age 65).  Between ages 60 and 63, the benefit continues until the Insured turns age 65.  From age 63, the benefit lasts only for two years.  The benefit will end if you invoke the Policy Guard Rider.

Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  For the first three years from the Policy Date, the benefit payable under this Rider appears to be the same as the benefit payable under the Premium Waiver Rider; however, the monthly credit will be sufficient to keep the policy from Lapsing.  Thereafter, or if the benefit becomes payable after the three years from the Policy Date, it will cost you less, on a monthly basis, to keep the policy In Force.  Meanwhile, the benefit payable under the Premium Waiver Rider will remain a monthly credit of Premium.  If you choose this Rider, you may not also choose the Premium Waiver Rider.

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Policy Guard Rider

The Policy Guard Rider prevents the policy from Lapsing due to Indebtedness by providing a guaranteed paid-up insurance benefit.  The Rider is dormant until specifically invoked by the policy owner, at which time the policy is assessed a one-time charge.  Invocation of the Rider enables the policy owner of a substantially depleted policy (due to outstanding loans) to avoid the negative tax consequences associated with lapsing a life insurance policy (consult a qualified tax advisor for more details).

The policy owner is eligible to invoke the Policy Guard Rider when outstanding Indebtedness reaches a certain percentage of the policy's Cash Value.  This percentage varies based on the Insured’s Attained Age.  The first time the policy's outstanding Indebtedness reaches the percentage that makes the policy eligible for invocation of the Rider, Nationwide will send a letter to the policy owner notifying them of the policy's eligibility to invoke the Rider.  The letter will also describe the Rider, its cost, and its guaranteed benefits.

In addition, the following conditions must be met in order to invoke the Rider:

· the Insured is Attained Age 75 or older,

· the policy has been In Force for at least 15 years,

· the policy's Cash Value is at least $100,000,

· at the time of policy issuance, you selected the guideline premium/cash value corridor tax test to qualify the policy for life insurance, and

· based on our records of your Premium payments, the entire cost basis of the policy (for tax purposes) has been withdrawn.

The policy owner need not invoke the Rider immediately upon notification of eligibility.  The Rider may be invoked at any time, provided that the above conditions are met and the policy remains In Force.

After Nationwide receives the policy owner's request to invoke the Rider, Nationwide will adjust the policy, as follows:

1. If not already in effect, the Death Benefit option will be changed to Death Benefit Option One.

2. The Specified Amount will be adjusted to equal the lesser of: (1) the Specified Amount immediately before you invoked the Rider, or (2) the Specified Amount that will cause the Death Benefit to equal the minimum required death benefit.

3. Any non-loaned Cash Value (after deduction of the Policy Guard Rider charge) will be transferred to the fixed account, where it will earn the guaranteed fixed interest rate of the base policy (shown on the Policy Data Page).

After the above adjustments are made, the loan balance will continue to grow at the policy's loan charge rate, and the amount in the collateral loan account will continue to earn interest at the policy's loan crediting rate.  No policy charges will be assessed.  No further loans may be taken from the policy and no withdrawals may be taken from the policy (except for a full policy surrender).  Cash Value may not be transferred out of the Fixed Account.  Both the charges and benefits of the Long-term Care Rider, Spouse Life Insurance Rider, and Deduction (of fees and expenses) Waiver Rider will terminate.  The Death Benefit will be the lesser of the Specified Amount or the minimum required death benefit.  The policy will remain as described above for the duration of the policy.

Invocation of the Policy Guard Rider is irrevocable.

Premium

This policy does not require a scheduled payment of Premium to keep it In Force.  The policy will remain in effect as long as the conditions that cause the policy to Lapse do not exist.  Upon request, we will furnish Premium receipts.

Initial Premium

The amount of your initial Premium will depend on the initial Specified Amount of insurance, the Death Benefit option, and any Riders you select.  Generally, the higher the required initial Specified Amount, the higher the initial Premium will be.  Similarly, because Death Benefit Options Two and Three provide for a potentially greater Death Benefit than Death Benefit Option One, Death Benefit Options Two and Three may require a higher amount of initial Premium.  Also, the age, health, and activities of the Insured will affect our determination of the risk of issuing the policy.  In general, the greater this risk, the higher the initial Premium will be.

Whether we will issue full insurance coverage depends on the Insured meeting all underwriting requirements, you paying the initial Premium, and our delivery of the policy while the Insured is alive.  We will not delay delivery of the policy to increase the likelihood that the Insured is not still living.  Depending on the outcome of our underwriting process, more or less

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Premium may be necessary for us to issue the policy.  We also retain the right to not issue the policy, after which, if we exercise this right, we will return your payment within two business days thereafter.

You may pay the initial Premium to our Home Office or to our authorized representative.  The initial Premium payment must be at least $50. The initial Premium payment will not be applied to the policy until the underwriting process is complete.

Subsequent Premiums

You may make additional Premium payments at any time while the policy is In Force, subject to the following:

· We may require satisfactory evidence of insurability before accepting any additional Premium payment that results in an increase in the policy’s Net Amount At Risk;

· We will refund Premium payments that exceed the applicable Premium limit established by the IRS to qualify the policy as a contract for life insurance.  As discussed in the "Taxes" section of this prospectus, additional Premium payments or other changes to the policy may jeopardize the policy's non-modified endowment status.  We will monitor Premiums paid and other policy transactions and will notify you when the policy’s non-modified endowment contract status is in jeopardy; and

· We may require that policy Indebtedness be repaid prior to accepting any additional Premium payments.  Some, but not all, of the situations when we might exercise this right include when interest rates are low, when your policy loans exceed 90% of the Cash Value of your Sub-Account portfolio allocations, or when a Premium payment may alter the character of the policy for tax purposes.  For more information, see "Lapse," beginning on page 363635.  We will let you know ahead of time.

We will send scheduled Premium payment reminder notices to you according to the Premium payment method shown on the Policy Data Page.  If you decide to make a subsequent Premium payment, you must send it to our Home Office.  Each Premium payment must be at least $50.

Charges

Please read and consider the following, which we intend to be an amplification (but it may also be duplicative), in conjunction with the fee tables, and the accompanying footnotes, appearing earlier in the prospectus.  See "In Summary: Fee Tables," beginning on page 5.  Also, see the policy, including the Policy Data Page, and the Riders, for more information.

We will make deductions under the policy to compensate us for: the services and benefits we provide; the costs and expenses we incur; and the risks we assume.  Every time you make a Premium payment, we will charge against that Premium payment a Premium Load, which is composed of the sales load and premium taxes.  If we begin to charge for illustrations, you will be expected to pay the charge in cash at the time of your request.  We will not deduct this charge from your policy's Cash Value.  However, we will deduct all other charges from the policy’s Cash Value (rather than a Premium payment), except for morality and expense risk and loan amount interest, in proportion to the balances of your Sub-Account portfolio, and the fixed account, allocations.  We will only deduct the mortality and expense risk charge from the Cash Value of the Sub-Account portfolios.  We will transfer the loan interest charge from your investment options to the loan account.  We take the monthly periodic charges in advance and we will not pro rate any monthly Rider charge should the Rider terminate before the beginning of the next month.

There are also operating charges associated with the Sub-Account portfolios.  While you will not pay them directly, they will affect the value of the assets in the Sub-Account portfolios.  On a daily basis, the manager of each mutual fund that comprises the policy’s available variable investment options deducts operating charges from that mutual fund’s assets before calculating the NAV.  (We use NAV to calculate the value of your corresponding Sub-Account portfolio allocation in Accumulation Units.)  In addition, some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to that Sub-Account.  The fee is assessed against the amount transferred and is paid to the mutual fund.  For more information on the operating charges and short-term trading fees assessed by the mutual funds held by the Sub-Account portfolios, please see the prospectus for the mutual fund and "Short-Term Trading Fees" in this prospectus.  More detail about these charges is contained in the prospectus for the mutual fund.

Sales Load

Currently, the sales load portion of the Premium Load charge is $5 per $1,000 of Premium and covers our sales expenses.  The guaranteed maximum sales load is $25 per $1,000 of Premium.

Premium Taxes

The current (and guaranteed) Premium taxes portion of the Premium Load charge is $35 per $1,000 of Premium and reimburses us for state and local Premium taxes (at the estimated rate of 2.25%), and for federal premium taxes (at the estimated rate of 1.25%).  This amount is an estimated amount.  If the actual tax liability is more or less, we will not adjust the charge, so we may profit from it.

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Surrender Charges

A surrender charge will apply if you surrender or lapse the policy.  A surrender charge may apply if you request to decrease the Specified Amount.  There are two components of the surrender charge meant to cover our policy underwriting (the underwriting component) and sales expenses (the sales component), including for: processing the application; conducting any medical exams; determining insurability (and the Insured’s underwriting class); and establishing policy records.  The surrender charge equals the underwriting component and 26.5% of the sales component.  We will deduct the surrender charge based on the following schedule:

During Policy Year	Percentage Of Initial Surrender Charge
1	100%
2	100%
3	90%
4	80%
5	70%
6	60%
7	50%
8	40%
9	30%
After 9	0

The underwriting component is the product of the Specified Amount, divided by 1,000, and the administrative target premium.  The administrative target premium is actuarially derived, and we use it to figure out how much to charge per Premium payment for underwriting expenses.  The administrative target premium varies by the Insured's age when the policy was issued.

The sales expense component is the lesser of the following two amounts.   The first amount is the product of the Specified Amount, divided by 1,000, and the surrender target premium.  The surrender target premium is actuarially derived, and we use it to figure out how much to charge per Premium payment for sales expenses.  The surrender target premium varies by: the Insured's sex; age (when the policy was issued); and the underwriting class.  The second amount is the sum of all Premium payments you made during the first year from the Policy Date.

We will calculate a separate surrender charge based on the initial Specified Amount and each increase in the Specified Amount, which are, respectively, Specified Amount segments.  The surrender charge for each segment, when added together, will amount to your total surrender charge.  A surrender charge will also apply when the aggregate surrenders exceed 25% of a segment's Specified Amount.  We defer and accrue the charge on partial surrenders that do not exceed 25% of the segment's Specified Amount.  Once partial surrenders exceed 25%, we assess the current and accrued charge against your Cash Value.  In determining the 25% level, we use a last in-first out method, so that the latest segment reaches the 25% level first.  We reserve the right to change this practice and assess the surrender charge against all partial surrenders.  We will calculate the surrender charge for a decrease in the Specified Amount as if you surrendered the policy, though we will only deduct a portion of it from your policy's Cash Value.  The amount of surrender charge we deduct will be a product of the surrender charge and the decrease in Specified Amount divided by the Specified Amount before the decrease.

All things being equal, the surrender charge will be greater for a policy with: an older Insured; a male insured; a higher Specified Amount; more first year Premium; or a higher-risk Insured.  If you change the Death Benefit option, and it does not change our Net Amount At Risk, we will not deduct a surrender charge.  If you change the Death Benefit option, and the change does not result in a different Net Amount At Risk, we will not deduct a surrender charge.

We will waive the surrender charge of your policy if you elect to surrender it in exchange for a plan of permanent fixed life insurance offered by us subject to the following:

· the exchange and waiver may be subject to your providing us new evidence of insurability and our underwriting approval; and

·             you have not elected any of these Riders;

1.         Premium Waiver Rider,

2.         Deduction (of fees and expenses Waiver Rider) or  

3.         Long-term Care Rider. 

We may impose a new surrender charge on the policy received in the exchange.

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Partial Surrender Fee

You may request a partial surrender after the first year from the Policy Date while the policy is In Force, and we may charge a $25 partial surrender fee to compensate us for the administrative costs in calculating and generating the surrender amount.  However, currently, there is no charge for a partial surrender.

Short-Term Trading Fees

Some mutual funds may assess (or reserve the right to assess) a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of allocation to the Sub-Account.

Short-term trading fees are intended to compensate the mutual fund (and policy owners with interests allocated in the mutual fund) for the negative impact on fund performance that may result from frequent, short-term trading strategies.  Short-term trading fees are not intended to affect the large majority of policy owners not engaged in such strategies.

Any short-term trading fee assessed by any mutual fund available in conjunction with the policies described in this prospectus will equal 1% of the amount determined to be engaged in short-term trading.  Short-term trading fees will only apply to those Sub-Accounts corresponding to mutual funds that charge such fees.  Please refer to the prospectus for each Sub-Account portfolio for more detailed information.  Policy owners are responsible for monitoring the length of time allocations are held in any particular Sub-Account.  We will not provide advance notice of the assessment of any applicable short-term trading fee.

For a list of available sub-accounts that assess short-term trading fees, see "Total Annual Sub-Account Portfolio Operating Expenses" earlier in this prospectus.

If a short-term trading fee is assessed, the mutual fund will charge the separate account 1% of the amount determined to be engaged in short-term trading.  The separate account will then pass the short-term trading fee on to the specific policy owner that engaged in short-term trading by deducting an amount equal to the fee from that policy owner’s sub-account value.  All such fees will be remitted to the mutual fund; none of the fee proceeds will be retained by us or the separate account.

Transfers will be considered to be made on a first in/first out (FIFO) basis for purposes of determining short-term trading fees.  In other words, units held the longest time will be treated as being transferred first, and units held for the shortest time will be treated as being transferred last.

Some transactions are not subject to short-term trading fees.  Transactions that are not subject to short-term trading fees include:

· scheduled and systematic transfers, such as Dollar Cost Averaging and Asset Rebalancing;

· policy loans or surrenders; or

· payment of the Death Benefit proceeds upon the Insured's death.

New share classes of currently available mutual funds may be added as investment options under the policy.  These new share classes may require the assessment of short-term trading fees.  When these new share classes are added, new Premium payments and exchange reallocations to the mutual funds in question may be limited to the new share class.

Cost Of Insurance

The cost of insurance charge compensates us for underwriting insurance protection.  The cost of insurance charge is the product of the Net Amount At Risk and the cost of insurance rate.

We base the cost of insurance rate on our expectations as to future mortality and expense experience.  The cost of insurance rate will vary by: the Insured’s sex; age; underwriting class; any substandard ratings; for how long the policy has been In Force and the Specified Amount.  There will be a separate cost of insurance rate for the initial Specified Amount and any increases.  The cost of insurance rates will never be greater than those shown on the Policy Data Page.

We will uniformly apply a change in any cost of insurance rate for Insureds, of the same age, sex, underwriting class and any substandard ratings, on whom policies with the same Specified Amount have been In Force for the same length of time.  The change could increase your cost of insurance charge, which, accordingly, would decrease your policy’s Cash Value, and the converse is true, too.  In contrast, you could cause your cost of insurance charge to decrease with a request to reduce the Specified Amount that also reduces the Net Amount At Risk.

Mortality And Expense Risk

Though the maximum guaranteed mortality and expense risk charge is higher, currently, we deduct this monthly charge according to the following schedule. During the first through fifteenth years from the Policy Date, the charge is $0.50 per $1,000 on the first $25,000 of Cash Value, and $0.25 per $1,000 on $25,001 up to $250,000 of Cash Value.  This charge is $0.08 per $1,000 of Cash Value over $250,000.  Beginning in Policy year sixteen, this charge is: $0.50 per $1000 on the first

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$25,000 of the Cash Value in the variable investment options, and $0.08 per $1,000 of the Cash Value in the variable investment options over $25,000.  This charge compensates us for assuming risks associated with mortality and expense costs, and we may profit from it.  The mortality risk is that the Insured does not live as long as expected.  The expense risk is that the costs of issuing and administering the policy are more than expected.

Administrative

Currently, we deduct $10 per month through the first year from the Policy Date, which is also the maximum guaranteed administrative charge.  Thereafter, we currently deduct $5 per month, and the maximum guaranteed administrative charge is $7.50 per month.  This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping.

Policy Loan Interest

We will charge interest on the amount of an outstanding policy loan, at the rate of 3.9% per annum, which will have accrued daily and become due and payable at the end of the year from the Policy Date.  If left unpaid, we will add it to the loan amount.  As collateral or security for repayment, we will transfer an equal amount of Cash Value to the policy loan account, on which interest will accrue and be credited daily.  During years one through ten from the Policy Date, current interest crediting rate is 3.0% (guaranteed minimum of 3.0%).  Thereafter, the current interest crediting rate is 3.9% per annum for all loans (guaranteed minimum of 3.65%).  Accordingly, your net cost for an ordinary loan during years one through ten from the Policy Date is 0.9% per annum currently.  Thereafter, there is no cost (a net cost of zero) for a loan currently.  For more information, see "Collateral and Interest," beginning on page 353635.

Adjusted Sales Load Life Insurance Rider

The charge for this Rider replaces the Premium Load to cover our sales expenses and premium taxes.  You will pay a Premium Load on any amount that you do not elect to be covered by the Rider.  Especially since this premium taxes portion is an estimated amount not subject to adjustment for the actual tax liability, we may profit from it.  The charge is the product of: your aggregate monthly Premiums since the Policy Date; the portion of Premium Load you choose to replace (expressed as a whole percentage of Premium paid); and the factor of 0.0001345.

The Rider's charge may vary.  Each Premium payment you make during the selected waiver period will cause the Rider's charge to increase.  The length of time of the charge will also vary (up to fifteen years).  The length of time will be nine years after the lesser of:

· the number of years (from one to seven) you choose to have the Rider apply to your Premium payments; and

· the number of years during this period which you actually made Premium payments.

For example, if you had chosen to have this Rider apply to your Premium payments for five years, but you only made Premium payments for three years while the Rider was in effect.  We would adjust the number of years over which we would deduct this charge from fourteen to twelve years.

If the policy terminates within the first ten years from the Policy Date, we will recover a portion of the Premium Load replaced by the Rider, based on the following schedule:

Years Policy Has Been In Force	Percentage
1	100%
2	90%
3	80%
4	70%
5	60%
6	50%
7	40%
8	30%
9	20%
10	10%
11+	0

This deduction is equal to the amount of Premium Load actually replaced by the Rider multipled by the percentage from the table above that corresponds to the number of years the policy has been In Force.  For example, say you terminate your policy during the fifth year from the Policy Date, on which you had chosen to replace the entire Premium for seven years.  Assume that you paid $10,000 of Premium during this time.  The Premium Load the Rider has replaced is $400, and 60% of

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this amount is $240, which we will deduct from your Cash Surrender Value.  This deduction allows us to cover a portion of our sales expenses and premium taxes for which the Rider's charge would have compensated us had the policy remained In Force.

Children’s Insurance Rider

The charge for this Rider is $0.43 per $1,000 of Specified Amount of the Rider.  This charge compensates us for providing term insurance on the life of each child of the Insured.  We will charge for the Rider so long as the policy is In Force and the Rider is in effect.  The cost will remain the same, even if you request to change the number of children covered under the Rider.  However, we may decline your request to add another child based on our underwriting standards.

Long-term Care Rider

This charge for this Rider compensates us for providing long-term care coverage once the Insured meets the eligibility requirements.  The charge is the product of the Net Amount At Risk of the Rider and a long-term care cost of insurance rate.  Because this Rider has no Cash Value, we define its Net Amount At Risk as the lesser of the Specified Amount of the Rider and the Net Amount At Risk of the policy.  We base the long-term care cost of insurance rate on our expectations as to your need for long-term care over time.  The long-term care cost of insurance rate will vary by: the Insured's sex; Attained Age; underwriting class; and any substandard ratings.

Spouse Life Insurance Rider

This charge for this Rider compensates us for providing term insurance on the life of the Insured’s spouse.  The charge is the product of the Specified Amount of this Rider and the spouse life insurance cost of insurance rate.  We base the spouse life insurance cost of insurance rate on our expectations as to the mortality of the Insured's spouse.  The spouse life insurance cost of insurance rate will vary by: the spouse's sex; Attained Age; underwriting class; any substandard ratings; and Specified Amount of the Rider.

Accidental Death Benefit Rider

This charge for this Rider compensates us for providing coverage in the event of the Insured’s accidental death, meaning the Insured’s death as a result of bodily injury caused by external, violent and accidental means from a cause other than a risk not assumed.  The charge is the product of the Specified Amount of this Rider and the accidental death benefit cost of insurance rate.  We base the accidental death benefit cost of insurance rate on our expectations as to the likelihood of the Insured's accidental death.  The accidental death benefit cost of insurance rate will vary by: the Insured's sex; Attained Age; underwriting class; and any substandard ratings.

Premium Waiver Rider

This charge for this Rider compensates us for crediting your policy the amount of scheduled due and payable Premium payments upon the Insured’s total disability for six consecutive months.  The benefit will amount to the lesser of the Premium you specified and the average actual Premiums you paid over the thirty-six months before the total disability.  The charge is the product of the benefit of this Rider and the premium waiver cost rate.  We base the premium waiver cost rate on our expectations as to likelihood of the Insured's total disability for six consecutive months.  The premium waiver cost rate will vary by: the Insured's sex; Attained Age; underwriting class; and any substandard ratings.  If you choose this Rider, you may not also choose the Deduction Waiver Rider.

Additional (insurance) Protection Rider

This charge for this Rider compensates us for providing term life insurance on the Insured.  The monthly cost of insurance charge for this Rider is determined by multiplying the Rider monthly cost of insurance rate by the Rider Death Benefit.  The Rider Death Benefit is the death benefit option elected by you.  We base the additional protection cost of insurance rate on our expectation as to the Insured's mortality.  The additional protection cost of insurance rate will vary by: the Insured's sex; Attained Age; underwriting class; any substandard ratings; and the total Specified Amount of the base policy plus the Additional Protection Rider Specified Amount.

Deduction (of fees and expenses) Waiver Rider

This charge for this Rider compensates us for waiving monthly charges (excluding this Rider's charge) upon the Insured’s total disability, as defined in this Rider, for six consecutive months.  However, during the first three years from the Policy Date, we will instead credit your policy with the minimum monthly Premium payment due during the Insured's total disability.  The charge is the product of the amount of periodic charges deducted from the policy on a monthly basis (excluding the cost for this Rider) and the deduction waiver cost rate.  We base the deduction waiver cost rate on our expectations as to the likelihood of the Insured's total disability for six consecutive months.  The deduction waiver cost rate varies by: the Insured's sex; Attained Age; underwriting class; and any substandard ratings.  If you choose this Rider, you may not also choose the Premium Waiver Rider.

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Policy Guard Rider

We take a one-time charge at the time you invoke this Rider.  The charge is the product of the policy's Cash Value and an age-based factor shown in the Rider (based on the age of the Insured).  If the policy's non-loaned Cash Value is insufficient to pay the Rider's charge, you must make loan repayments sufficient to cover the Rider's charge.  The Rider's charge covers the administrative costs associated with the rider and compensates us for the risk of the Rider's guaranteed paid-up death benefit.  We may profit from the charge.

Reduction of Charges

In addition to sales to individuals, the policy may be purchased by corporations and other entities.  Nationwide may reduce or eliminate certain charges (sales load, surrender charge, monthly administrative charge, monthly cost of insurance charge, or other charges) where the size or nature of the group allows us to realize savings with respect to sales, underwriting, administrative or other costs.

We determine the eligibility and the amount of any reduction by examining a number of factors, including: the number of policies owned with different insureds; the total premium we expect to receive; total Cash Value of commonly owned policies; the nature of the relationship among individual insureds; the purpose for which the policies are being purchased; the length of time we expect the individual policies to be In Force; and any other circumstances which are rationally related to the expected reduction in expenses.  We may lower commissions to the selling broker-dealer and/or increase charge back of commissions paid for policies sold with reduced or eliminated charges.  If you have questions about whether your policy is eligible for reduction of any charges, please consult with your registered representative for more specific information.  Your registered representative can answer your questions and where appropriate can provide you with illustrations demonstrating the impact of any reduced charges for which you may be eligible.

We may change both the extent and the nature of the reductions.  We make the reductions in charges in a way that is not unfairly discriminatory to policy owners and reflects the differences in costs of services we provide.

Entities considering purchasing the policy should note that in 1983, the U.S. Supreme Court held in Arizona Governing Committee v. Norris that certain annuity benefits provided by employers' retirement and fringe benefit programs may not vary between men and women on the basis of sex.  The policies are based upon actuarial tables which distinguish between men and women unless the purchaser is an entity and requests that we use sex non-distinct tables.  Thus the policies generally provide different benefits to men and women of the same age.  Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of Norris on any employment related insurance or benefit program before purchasing this policy.

A Note on Charges

During a policy's early years, the expenses we incur in distributing and establishing the policy exceed the deductions we take.  Nevertheless, we expect to make a profit over time because variable life insurance is intended to be a long-term financial investment.  Accordingly, we have designed the policy with features and investment options that we believe support and encourage long-term ownership.

We make many assumptions and account for many economic and financial factors when we establish the policy's fees and charges.  The following is a discussion of some of the factors that are relevant to the policy's pricing structure.

Distribution, Promotional, and Sales Expenses.  Distribution, promotional and sales expenses include amounts we pay to broker-dealer firms as commissions, expense allowances and marketing allowances.  We refer to these expenses collectively as "total compensation." The maximum total compensation we pay to any broker-dealer firm in conjunction with policy sales is 99% of first year premiums and 3% of renewal premium after the first year.

We have the ability to customize the total compensation package of our broker-dealer firms.  We may vary the form of compensation paid or the amounts paid as commission, expense allowance or marketing allowance; however, the total compensation will not exceed the maximum (99% of first year premiums and 3% of renewal premium after the first year).  Commission may also be paid as an asset-based amount instead of a premium based amount.  If an asset-based commission is paid, it will not exceed 0.25% of the non-loaned cash value per year.

The actual amount and/or forms of total compensation we pay depend on factors such as the level of premiums we receive from respective broker-dealer firms and the scope of services they provide.  Some broker-dealer firms may not receive maximum total compensation.

Individual registered representatives typically receive a portion of the commissions/total compensation we pay, depending on their arrangement with their broker-dealer firm.  If you would like to know the exact compensation arrangement associated with this product, you should consult your registered representative.

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Information on Underlying Mutual Fund Payments

Our Relationship with the Underlying Mutual Funds.  The underlying mutual funds incur expenses each time they sell, administer, or redeem their shares.  The separate account aggregates policy owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each underlying mutual fund daily.  The separate account (not the policy owners) is the underlying mutual fund shareholder.  When the separate account aggregates transactions, the underlying mutual fund does not incur the expense of processing individual transactions it would normally incur if it sold its shares directly to the public.  We incur these expenses instead.

We also incur the distribution costs of selling the policy (as discussed above), which benefit the underlying mutual funds by providing policy owners with Sub-Account options that correspond to the underlying mutual funds.  

An investment advisor or subadvisor of an underlying mutual fund or its affiliates may provide us or our affiliates with wholesaling services that assist in the distribution of the policy and may pay us or our affiliates to participate in educational and/or marketing activities.  These activities may provide the advisor or subadvisor (or their affiliates) with increased exposure to persons involved in the distribution of the policy.

Types of Payments We Receive.  In light of the above, the underlying mutual funds or their affiliates make certain payments to us or our affiliates (the “payments”).  The amount of these payments is typically based on a percentage of assets invested in the underlying mutual funds attributable to the policies and other variable policies we and our affiliates issue, but in some cases may involve a flat fee.  These payments may be used by us for any corporate purpose, which include reducing the prices of the policies, paying expenses that we or our affiliates incur in promoting, marketing, and administering the policies and the underlying mutual funds, and achieving a profit.

We or our affiliates receive the following types of payments:

· Underlying mutual fund 12b-1 fees, which are deducted from underlying mutual fund assets;

· Sub-transfer agent fees or fees pursuant to administrative service plans adopted by the underlying mutual fund, which may be deducted from underlying mutual fund assets; and

· Payments by an underlying mutual fund’s advisor or subadvisor (or its affiliates).  Such payments may be derived, in whole or in part, from the advisory fee, which is deducted from underlying mutual fund assets and is reflected in mutual fund charges.

Furthermore, we benefit from assets invested in our affiliated underlying mutual funds (i.e., Nationwide Variable Insurance Trust) because our affiliates also receive compensation from the underlying mutual funds for investment advisory, administrative, transfer agency, distribution, and/or other services.  Thus, we may receive more revenue with respect to affiliated underlying mutual funds than unaffiliated underlying mutual funds.

We took into consideration the anticipated payments from the underlying mutual funds when we determined the charges imposed under the policies (apart from fees and expenses imposed by the underlying mutual funds).  Without these payments, we would have imposed higher charges under the policy.

Amount of Payments We Receive.  For the year ended December 31, 2006, the underlying mutual fund payments we and our affiliates received from the underlying mutual funds did not exceed 0.50% (as a percentage of the average daily net assets invested in the underlying mutual funds) offered through this policy or other variable policies that we and our affiliates issue.  Payments from investment advisors or subadvisors to participate in educational and/or marketing activities have not been taken into account in this percentage.

Most underlying mutual funds or their affiliates have agreed to make payments to us or our affiliates, although the applicable percentages may vary from underlying mutual fund to underlying mutual fund and some may not make any payments at all.  Because the amount of the actual payments we or our affiliates receive depends on the assets of the underlying mutual funds attributable to the policy, we and our affiliates may receive higher payments from underlying mutual funds with lower percentages (but greater assets) than from underlying mutual funds that have higher percentages (but fewer assets).

For additional information related to the amount of payments Nationwide receives, go to www.nationwide.com.

Identification of Underlying Mutual Funds.   We may consider several criteria when identifying the underlying mutual funds, including some or all of the following:  investment objectives, investment process, investment performance, risk characteristics, investment capabilities, experience and resources, investment consistency, and fund expenses.  Another factor we consider during the identification process is whether the underlying mutual fund’s advisor or subadvisor is one of our affiliates or whether the underlying mutual fund, its advisor, its subadvisor(s), or an affiliate will make payments to us or our affiliates.

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There may be underlying mutual funds with lower fees, as well as other variable policies that offer underlying mutual funds with lower fees.  You should consider all of the fees and charges of the policy in relation to its features and benefits when making your decision to invest.  Please note that higher policy and underlying mutual fund fees and charges have a direct effect on your investment performance.

The Death Benefit

Calculation Of The Death Benefit Proceeds

We will calculate the Death Benefit and pay it to the beneficiary when we receive at our Home Office proof that the Insured has died, as well as other customary information.  We will not dispute the payment of the Death Benefit after the policy has been In Force for two years from the Policy Date.  The Death Benefit may be subject to an adjustment if you make an error or misstatement upon application, or if the Insured dies by suicide.

While the policy is In Force, the Death Benefit (exclusive of any outstanding indebtedness) will never be less than the Specified Amount. The Death Benefit will depend on which option you have chosen and the tax test you have elected, as discussed in greater detail below.  Also, the Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and take into account any insurance provided by Riders, as well as outstanding Indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period.

Death Benefit Options

There are three Death Benefit options under the policy.  You may choose one.

If you do not choose one of the following Death Benefit options, we will assume that you intended to choose Death Benefit Option One.

Death Benefit Option One

The Death Benefit will be the greater of the Specified Amount or the minimum required Death Benefit.

Death Benefit Option Two

The Death Benefit will be the greater of the Specified Amount plus the Cash Value as of the date of death, or the minimum required Death Benefit.

Death Benefit Option Three

The Death Benefit will be the greater of the Specified Amount plus the accumulated premium account (which consists of all Premium payments minus all partial surrenders to the date of death) or the minimum required Death Benefit.  The amount of the accumulated premium account will be based on the Option Three Interest Rate stated on the Policy Data Page, which will be no less than zero or more than the Option Three Maximum Increase also stated on the Policy Data Page.

For any Death Benefit option, the calculation of the minimum required Death Benefit is shown on the Policy's Data Page.  Not all Death Benefit options are available in all states.

The Minimum Required Death Benefit

The policy has a minimum required Death Benefit.  The minimum required Death Benefit is the lowest Death Benefit that will qualify the policy as life insurance under Section 7702 of the Code.

The tax tests for life insurance generally require that the policy has a significant element of life insurance and not be primarily an investment vehicle.  At the time we issue the policy, you irrevocably elect one of the following tests to qualify the policy as life insurance under Section 7702 of the Code:

· the cash value accumulation test; or

· the guideline premium/cash value corridor test.

The cash value accumulation test determines the minimum required Death Benefit by multiplying the account value by a percentage determined by methodology set out in the federal tax regulations. The percentages depend upon the Insured's age, sex and underwriting classification.  Under the cash value accumulation test, there is no limit to the amount that may be paid in premiums as long as there is sufficient Death Benefit in relation to the account value at all times.

The guideline premium/cash value corridor test determines the minimum required Death Benefit by comparing the Death Benefit to an applicable percentage of the Cash Value.  These percentages are set out in the Code, but the percentage varies only by the Attained Age of the Insured.

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Regardless of which test you elect, we will monitor compliance to assure that the policy meets the statutory definition of life insurance for federal tax purposes.  As a result, the Proceeds payable under a policy should be excludable from gross income of the beneficiary for federal income tax purposes.  Conversely, if in the unlikely event that the policy did not qualify as life insurance because your Death Benefit failed to amount to the minimum required Death Benefit, the Proceeds payable under the policy would be includible in the gross income of the beneficiary for federal income tax purposes.  Because of this adverse consequence, we may refuse additional Premium payments or return the gross Premium payments to you so that the policy continues to meet the Code's definition of life insurance.  For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 383938.

If you do not elect a test, we will assume that you intended to elect the guideline premium/cash value corridor test.

Changes In The Death Benefit Option

After the first year from the Policy Date, you may elect to change the Death Benefit option under the policy from either Option One to Option Two, or from Option Two to Option One.  You may not change from or to Option Three.  We will permit only one change of Death Benefit option per policy year.  The effective date of a change will be the monthly anniversary date following the date we approve the change.

For any change in the Death Benefit option to become effective, the Cash Surrender Value after the change must be sufficient to keep the policy In Force for at least three months.

We will adjust the Specified Amount so that the Net Amount At Risk remains constant before and after the Death Benefit option change.  Because your Net Amount At Risk remains the same, changing the Death Benefit option by itself does not alter the policy’s cost of insurance. The policy’s charges going forward, however, will be based on a new Specified Amount that will change the calculation of those charges.  Depending on changes in factors such as fluctuations in the policy's Cash Value, these charges may increase or decrease after the reduction.  Notwithstanding, we will refuse a Death Benefit option change that would reduce the Specified Amount to a level where the Premium you have already paid would exceed any premium limit under the tax tests for life insurance.

Where the policy owner has selected the guideline premium/cash value corridor test, a change in Death Benefit option will not be permitted if it results in the total Premiums paid exceeding the maximum premium limitations under Section 7702 of the Code.

Suicide

If the Insured dies by suicide, while sane or insane, within two years from the Policy Date, we will pay no more than the sum of the Premiums paid, less any Indebtedness, and less any partial surrenders.  Similarly, if the Insured dies by suicide, while sane or insane, within two years from the date we accept an application for an increase in the Specified Amount, we will pay no more than the Death Benefit associated with the initial Specified Amount, plus the cost of insurance charges associated with the increase in Specified Amount.

Surrenders

Full Surrender

You may surrender the policy for the Cash Surrender Value at any time while the Insured is alive.  We calculate the Cash Surrender Value based on the policy's Cash Value.  For more information, see "Cash Value," beginning on page 13.  To derive the Cash Surrender Value, we will deduct from the Cash Value Indebtedness and the surrender charge.  The effective date of a surrender will coincide with the date on which we receive the policy and your written request at our Home Office.  We reserve the right to postpone payment of that portion of the Cash Surrender Value attributable to the fixed account for up to six months.

Partial Surrender

After the policy has been In Force for one year, you may request, in writing to our Home Office, a partial surrender of the policy’s Cash Surrender Value.  We may charge a $25 partial surrender fee.  Currently, however, there is no charge.  During the first ten policy years, the amount of a partial surrender cannot exceed 10% of the Cash Surrender Value as of the beginning of the policy year.  When a partial surrender is taken, we will reduce the Cash Value by the partial surrender amount.  We will also reduce the Specified Amount by the amount necessary to prevent an increase in the Net Amount at Risk.  However, the reduction to the Specified Amount will not be greater than the excess of the partial surrender amount over the preferred partial surrender amount. (A preferred partial surrender is a partial surrender that occurs before the 15^th policy anniversary and does not exceed 10% of the Cash Surrender Value as of the beginning of the policy year.)  In any event, a partial surrender will reduce the Cash Value in each Sub-Account the same proportion as your current allocations, unless you instruct otherwise.

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We reserve the right to limit partial surrenders to one per year from the Policy Date.  The minimum amount of any partial surrender request is $200.  A partial surrender cannot cause the total Specified Amount to be reduced below the minimum Specified Amount indicated on the Policy Data Page, and after any partial surrender, the policy must continue to qualify as life insurance under Section 7702 of the Code.  Partial surrenders may be subject to income tax penalties.  They could also cause your policy to become a "modified endowment contract" under the Code, which could change the income tax treatment of any distribution from the policy.  For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 383938.

Reduction Of Specified Amount On A Partial Surrender

We will reduce the Cash Value of the policy by the amount of any partial surrender in the same proportion as how you have allocated Cash Value among the Sub-Accounts.  We will only reduce the Cash Value attributable to the fixed account when that of the Sub-Accounts is insufficient to cover the amount of the partial surrender.

When you take a partial surrender, we may reduce the Specified Amount to ensure that the Net Amount At Risk does not increase.  Because your Net Amount At Risk is the same before and after the reduction, a partial surrender by itself does not alter the policy’s cost of insurance.  The policy’s charges going forward will be based on a new Specified Amount that will change the calculation of those charges.  Depending on changes in variables such as the Cash Value, these charges may increase or decrease after the reduction in Specified Amount.  However, we will not reduce the Specified Amount when you take a preferred partial surrender.  We consider a partial surrender as preferred that you request before the fifteenth year from the Policy Date, the maximum aggregate annual amount of which is no more than 10% of the policy's Cash Surrender Value as of the beginning of that year.

Any reduction we make to the Specified Amount will be made in the following order:

· against the most recent increase in the Specified Amount;

· against the next most recent increases in the Specified Amount in succession; and

· against the Specified Amount under the original application.

While we reserve the right to deduct a partial surrender fee of up to $25, we currently deduct none.  We deduct a surrender charge on certain partial surrenders.  For more information, see "Surrender Charges," beginning on page 2524.  Partial surrenders may be subject to income tax penalties.  They could also cause your policy to become a "modified endowment contract" under the Code, which would change the income tax treatment of any distributions from the policy.  For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals, and Loans," beginning on page 383938.

The Payout Options

You have a number of options of receiving Proceeds, besides in a lump sum, which you may elect upon application.  You may elect one or a combination of options.  We will pay the Proceeds from our general account.  If you do not make an election, when the Insured dies, the beneficiary may do so.  If the beneficiary does not make an election, we will pay the Proceeds in a lump sum.  Normally, we will make the lump sum payment within seven days after we receive your written request at our Home Office.  We will postpone any payment of Proceeds, however, on the days we are unable to price Accumulation Units.  For more information, see "Allocation of Net Premium and Cash Value," beginning on page 12.  To elect more than one payout option, you must apportion at least $2,000 per option, which would amount to a payment, at specified intervals, of at least $20.  At any time before Proceeds become payable, you may request to change your payout option in writing to our Home Office.  Changing the beneficiary of the policy will revoke the payout options in effect at that time.  Proceeds are neither assignable nor subject to claims of creditors or legal process.

Please note that for the remainder of The Payout Options section, "you" means the person we are obligated to pay.

Interest Income

You keep the Proceeds with us to earn interest at a specified rate.  The interest can be paid at the end of twelve-, six-, three- or one-month intervals or left to accumulate.  You may withdraw any outstanding balance by making a written request of us at our Home Office.  We will pay interest on the outstanding balance at a rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  Upon your death, we will pay any outstanding balance to your estate.

Income For A Fixed Period

You keep the Proceeds with us, but are paid at specified intervals over a number of years (no more than 30).  Each payment will consist of a portion of the Proceeds plus interest at a stated rate.  The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals.  You may withdraw any outstanding balance by making a written request of us at our

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Home Office.  We will pay interest at an annually determined rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  Upon your death, we will pay any outstanding balance to your estate.

Life Income With Payments Guaranteed

We pay you the Proceeds at specified intervals for a guaranteed period (10, 15 or 20 years), and, then, for the rest of your life, if you outlive the guaranteed period.  The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals.  During the guaranteed period, we will pay interest on the outstanding balance at a rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin.  If you die before the guaranteed period has elapsed, we will make the remaining payments to your estate.  If you die after the guaranteed period has elapsed, we will make no payments to your estate.

Fixed Income For Varying Periods

You keep the Proceeds with us, but are paid a fixed amount at specified intervals until principal and interest have been exhausted.  The total amount payable each year may not be less than 5% of the original Proceeds.  The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals.  You may withdraw any outstanding balance by making a written request of us at our Home Office.  We will pay interest on the outstanding balance at a rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  Upon your death, we will pay any outstanding balance to your estate.

Joint And Survivor Life

We pay you the Proceeds in equal payments at specified intervals for the life of the last surviving payee.  The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals.  As the payments are based on the lifetimes of the payees, you cannot withdraw any amount you designate to this option after payments begin.  Also, payments will cease upon the death of the last surviving payee.  We will make no payments to the last surviving payee's estate.

Alternate Life Income

We use the Proceeds to purchase an annuity with the payee as annuitant.  The amount payable will be 102% of our current individual immediate annuity purchase rate on the date of the Insured's death, the Maturity Date, or the date the policy is surrendered, as applicable.  The Proceeds can be paid at the end of twelve-, six-, three- or one-month intervals.  As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin.  Also, payments will cease upon your death.  We will make no payments to your estate.

Policy Owner Services

Dollar Cost Averaging

You may elect to participate in a dollar cost averaging program.  Dollar cost averaging is an investment strategy designed to reduce the investment risks associated with market fluctuations, which will promote a more stable Cash Value and Death Benefit over time.  The strategy spreads the allocation of your Premium among the Sub-Account portfolios and the fixed investment option over a period of time to allow you to potentially reduce the risk of investing most of your Premium into the Sub-Accounts at a time when prices are high.  There is no charge for dollar cost averaging, but it does count as a transfer event.  For more information regarding transfer events, see "Modes To Make A Transfer," beginning on page 1615.

On a monthly basis (or another frequency we may permit), a specified dollar amount of your Premium is systematically and automatically transferred from the fixed account to a Sub-Account portfolio.  You may also have Premium transferred from the: Federated Insurance Series – Federated Quality Bond Fund II: Primary Shares; Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Service Class (available only for policies issued prior to May 1, 2003); NVIT Nationwide NVIT Government Bond Fund: Class I; NVIT Federated NVIT High Income Bond Fund: Class III; and NVIT Nationwide NVIT Money Market Fund: Class I.

We will continue to process transfers until there is no more value left in the fixed account or the originating mutual fund(s).  You may also instruct us in writing to stop the transfers.  If you have Premium transferred from the fixed account, the amount must be no more than 1/30^th of the fixed account value at the time you elect to participate in the program.  Either you elect to participate in the dollar cost averaging program upon application or by submitting an election form before the beginning of the month.

Periodically, we may offer enhanced dollar cost averaging programs on initial Premiums, participation in which will earn you interest on the Cash Value of the fixed account that is covered under the enhanced dollar cost averaging program.  The interest we credit daily may be different than the net effective annual interest rate we credit on the Cash Value of the fixed

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account that is outside of the enhanced dollar cost averaging program.  These programs will last for one year, and your Premium will be systematically and automatically transferred based on the following schedule:

Beginning of Month	Fraction Of Remaining Cash Value Transferred
2	1/11
3	1/10
4	1/9
5	1/8
6	1/7
7	1/6
8	1/5
9	1/4
10	1/3
11	1/2
12	Remaining Amount

A dollar cost averaging program may not be available in all states.  We do not assure the success of these strategies; success depends on market trends.  We cannot guarantee that dollar cost averaging will result in a profit or protect against loss.  You should carefully consider your financial ability to continue these programs over a long enough period of time to purchase Accumulation Units when their value is low, as well as when their value is high.  We may modify, suspend or discontinue these programs at any time.  We will notify you in writing 30 days before we do so.

Asset Rebalancing

You may elect to set up asset rebalancing.  To do so, you must complete the Asset Rebalancing Program Form and submit it to our Home Office.  (You will use the same form to change your investment allocation choices, or terminate asset rebalancing, too.)  Thereafter, automatically, on a periodic basis, the Cash Value of your chosen Sub-Account portfolios (up to 20), having fluctuated with Investment Experience, will be rebalanced in proportion to your investment allocation choices.  There is no charge for asset rebalancing, but it does count as a transfer event.  For more information, see "Modes To Make A Transfer," beginning on page 1615.  You can schedule asset rebalancing to occur every three, six, or twelve months on days when we price Accumulation Units.  For more information, see "Valuation of Accumulation Units," beginning on page 12.

Unless you elect otherwise, asset rebalancing will not affect the allocation of Net Premiums you pay after beginning the program.  Manual transfers will not automatically terminate the program.  Termination of Asset Rebalancing program will only occur as a result of your specific instruction to do so. Asset Rebalancing is not available for the Long Term Fixed Account.  We reserve the right to modify, suspend or discontinue asset rebalancing at any time.

Policy Loans

After the expiration of the free-look period and while the policy is In Force, you may take an advance of money from the Cash Value otherwise only available upon surrender or maturity, or upon payment of the Death Benefit.  We call this advance a policy loan.  You must make your request in writing at our Home Office.  You may increase your risk of Lapse if you take a policy loan.  There also may be adverse tax consequences.  You should obtain competent tax advice before you decide to take a policy loan.

Loan Amount And Interest

The minimum policy loan you may take is $200.  You may take no more than the maximum loan value.  The maximum loan value is based on your Cash Surrender Value less 10% of your Cash Value allocated to the Sub-Accounts.  For more information, see "Full Surrender," beginning on page 323332.  We charge interest, at the maximum guaranteed rate of 3.9% per annum, on the amount of an outstanding loan, which will accrue daily and be payable at the end of each year from the Policy Date.  If left unpaid, we will add the interest to the loan amount.

Collateral And Interest

As collateral or security, we will transfer a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations, unless you instruct otherwise.  You may request that we transfer this amount from specific Sub-Account portfolios. We will only make a transfer from the fixed investment option if the loan amount exceeds 90% of the Cash Value you have allocated to Sub-Account portfolios.  On this amount, we will credit interest daily based on the current rate in effect, which will not be less than the guaranteed interest crediting rates shown on the Policy Data Page.  We may credit interest in excess of the guaranteed interest crediting rate.  Currently, the interest crediting rate is 3.0% per annum during years one through ten from the Policy Date, and 3.9% per annum thereafter.

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Repayment

You may repay all or part of a policy loan at any time while your policy is In Force during the Insured’s lifetime.  The minimum repayment is $50.  Interest on the loan amount will be due and payable at the end of each year from the Policy Date.  If left unpaid, we will add it to the loan amount by transferring a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations.  While your policy loan is outstanding, we will continue to treat any payments that you make as a Premium payment, unless you instruct otherwise.  Similarly, we will apply a loan repayment in the same proportion as your current Sub-Account allocations, unless you instruct otherwise.

Net Effect Of Policy Loans

We will charge interest on the loan amount at the same time as the collateral amount will be credited interest.  In effect, we will net the loan amount interest rate against the interest crediting rate, so that your actual cost of a policy loan will be less than the loan amount interest rate.  For more information, see "In Summary: Fee Tables," in particular, the footnotes, beginning on page 5.  Nevertheless, keep in mind that the Cash Value we transferred to the loan account will neither be affected by the Investment Experience of the Sub-Account portfolios, nor credited with the interest rates accruing on the fixed account.  Whether repaid, a policy loan will affect the policy, the net Cash Surrender Value and the Death Benefit.  If your total Indebtedness ever exceeds the policy's Cash Value, your policy may Lapse.  Repaying a policy loan will cause the Death Benefit and net Cash Surrender Value to increase accordingly.

Lapse

The policy is at risk of Lapsing when the Cash Surrender Value is insufficient to cover the monthly deduction of periodic charges.  However, it will not Lapse under the guaranteed policy continuation provision so long as you have at least paid the Policy Continuation Premium Amount, irrespective of poor investment results from your Net Premium allocation choices, or that the Cash Surrender Value is less than the amount of the policy's periodic charges deduction (or both).  Subject to its conditions, you may also invoke the Policy Guard Rider to prevent the policy from Lapsing due to Indebtedness.  For more information, see "Policy Guard Rider," beginning on page 2322.  In any event, there is a Grace Period before your policy will Lapse.  Also, you may reinstate a policy that has Lapsed, subject to conditions.

Guaranteed Policy Continuation Provision

The policy will not Lapse if you have at least paid the Policy Continuation Premium Amount during the guaranteed policy continuation period, as stated on the Policy Data Page.  The Policy Continuation Premium Amount will vary by: the Insured's age; sex; underwriting class; any substandard ratings; the Specified Amount, including increases; and the Riders purchased.  The Policy Continuation Premium Amount will not account, however, for any subsequent increases in the Specified Amount, policy loans or partial surrenders.  For no charge, you may request that we determine whether your Premium payments, less policy loans and partial surrenders, are sufficient to keep the guaranteed policy continuation provision in effect at any time, and you should do so especially after you have: requested an increase in the Specified Amount; taken a policy loan; or requested a partial surrender.

The guaranteed policy continuation period will begin when we issue the policy and continue for the lesser of 30 years, or the number of years until the Insured reaches Attained Age 65, from the Policy Date.  For policies issued to ages greater than 55, the guaranteed policy continuation period is ten years.  When the guaranteed policy continuation period ends, if the Cash Surrender Value remains insufficient to cover the monthly deductions of periodic charges, the policy is at risk of Lapsing, and a Grace Period will begin.  The guaranteed policy continuation provision is subject to state insurance restrictions and may be different in your state and for your policy.  There is no charge for the guaranteed policy continuation provision.

Grace Period

We will send you a notice when the Grace Period begins.  The notice will state an amount of Premium required to avoid Lapse that is equal to four times the current monthly deductions or, if it is less, the Premium that will bring the guaranteed policy continuation provision back into effect.  If you do not pay this Premium within 61 days, the policy and all Riders will Lapse.  The Grace Period will not alter the operation of the policy or the payment of Proceeds.

Reinstatement

You may reinstate a Lapsed policy by:

· submitting a written request at any time within three years after the end of the Grace Period and prior to the Maturity Date;

· providing further evidence of insurability we may require that is satisfactory to us;

· paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period;

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· paying sufficient Premium to keep the policy In Force for three months from the date of reinstatement, or, if the policy is in the guaranteed policy continuation period, paying the lesser of (a) and (b) where:

(a) is Premium sufficient to keep the policy In Force for three months from the date of reinstatement; and

(b) is Premium sufficient to bring the guaranteed policy continuation provision into effect; and

· paying or reinstating any Indebtedness against the policy which existed at the end of the Grace Period.

At the same time, you may also reinstate any Riders, but subject to evidence of insurability satisfactory to us.

The effective date of a reinstated policy, including any Riders, will be the monthly anniversary date on or next following the date we approve the application for reinstatement.  If the policy is reinstated, the Cash Value on the date of reinstatement, will be set equal to the lesser of:

· the Cash Value at the end of the Grace Period; or

· the surrender charge for the year from the Policy Date in which the policy was reinstated.

We will then add any Premiums or loan repayments that you made to reinstate the policy.

The allocations to the Sub-Accounts in effect at the start of the Grace Period will be reinstated, unless you provide otherwise.

Taxes

The tax treatment of life insurance policies under the Code is complex and the tax treatment of your policy will depend on your particular circumstances.   Seek competent tax advice regarding the tax treatment of the policy given your situation.  The following discussion provides an overview of the Code’s provisions relating to certain common life insurance policy transactions.  It is not and cannot be comprehensive, and it cannot replace personalized advice provided by a competent tax professional.

Types of Taxes

Federal Income Tax.  Generally, the United States assesses a tax on income, which is broadly defined to include all items of income from whatever source, unless specifically excluded.  Certain expenditures can reduce income for tax purposes and correspondingly the amount of tax payable.  These expenditures are called deductions.  While there are many more income tax concepts under the Code, the concepts of "income" and "deduction" are the most fundamental to the federal income tax treatment that pertains to this policy.

Federal Transfer Tax.  In addition to the income tax, the United States also assesses a tax on some or all of the value of certain transfers of wealth made by gift while a person is living (the federal gift tax), and by bequest or otherwise at the time of a person’s death (the federal estate tax).

The federal gift tax is imposed on the value of the property (including cash) transferred by gift.  Each donor is allowed to exclude an amount (in 2007, up to $12,000 per recipient) from the value of present interest gifts.  In addition, each donor is allowed a credit against the tax on the first million dollars in lifetime gifts (calculated after taking into account the $12,000 exclusion amount).  An unlimited marital deduction may be available for certain lifetime gifts made by the donor to the donor's spouse.  Unlike the estate tax, the gift tax is not scheduled to be repealed.

In general, in 2007, an estate of less than $2,000,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability.  The $2 million amount increases to $3.5 million in 2009.  The federal estate tax (but not the federal gift tax) is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the estate tax is scheduled to be reinstated with respect to decedents who die after December 31, 2010.  If the estate tax is reinstated and Congress has not acted further, the size of estates that will not incur an estate tax will revert to $1 million.

An unlimited marital deduction may be available for federal estate tax purposes for certain amounts that pass to the surviving spouse.

If the transfer is made to someone two or more generations younger than the transferor, the transfer may be subject to the federal generation-skipping transfer tax ("GSTT").  The GSTT provisions generally apply to the same transfers that are subject to estate or gift taxes.  The tax is imposed at a flat rate equal to the maximum estate tax rate (for 2007, 45%), and there is a provision for an aggregate $1 million exemption.  The GSTT tax is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011 at a rate of 55%.

State and Local Taxes.  State and local estate, inheritance, income and other tax consequences of ownership or receipt of Policy Proceeds depend on the circumstances of each policy owner or beneficiary.  While these taxes may or may not be substantial in your case, state by state differences of these taxes preclude a useful description of them in this prospectus.

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Buying the Policy

Federal Income Tax.  Generally, the Code treats life insurance Premiums as a personal expense.  This means that under the general rule you cannot deduct from your taxable income the Premiums paid to purchase the policy.

Federal Transfer Tax.  Generally, the Code treats the payment of Premiums on a life insurance policy as a gift when the Premium payment benefits someone else (such as when premium payments are paid by someone other than  the policy owner).  Gifts are not generally included in the recipient’s taxable income.  If you (whether or not you are the Insured) transfer ownership of the policy to another person, the transfer may be subject to a federal gift tax.

Investment Gain in the Policy

The income tax treatment of changes in the policy’s Cash Value depends on whether the policy is "life insurance" under the Code.  If the policy meets the definition of life insurance, then the increase in the policy’s Cash Value is not included in your taxable income for federal income tax purposes unless it is distributed to you before the death of the Insured.

To qualify as life insurance, the policy must meet certain tests set out in Section 7702 of the Code.  We will monitor the Policy’s compliance with Code Section 7702, and take whatever steps are necessary to stay in compliance.

Diversification.  In addition to meeting the tests required under Section 7702, Section 817(h) of the Code requires that the investments of the separate account be adequately diversified.  Regulations under Code Section 817(h) provide that a variable life policy that fails to satisfy the diversification standards will not be treated as life insurance unless such failure was inadvertent, is corrected, and the policy owner or the issuer pays an amount to the IRS.  If the failure to diversify is not corrected, the income and gain in the contract would be treated as taxable ordinary income for federal income tax purposes.

We will also monitor compliance with Code Section 817(h) and the regulations applicable to Section 817(h) and, to the extent necessary, will change the objectives or assets of the Sub-Account investments to remain in compliance.  Thus, the policy should receive federal income tax treatment as life insurance.

Representatives of the IRS have informally suggested, from time to time, that the number of underlying mutual funds available or the number of transfer opportunities available under a variable product may be relevant in determining whether the product qualifies for the desired tax treatment.  In 2003, the IRS issued formal guidance, in Revenue Ruling 2003-91, that indicates that if the number of underlying mutual funds available in a variable insurance product does not exceed 20, the number of funds alone would not cause the policy to not qualify for the desired tax treatment.  The IRS has also indicated that exceeding 20 investment options may be considered a factor, along with other factors including the number of transfer opportunities available under the policy, when determining whether the policy qualifies for the desired tax treatment.  The revenue ruling did not indicate the number of fund options, if any, that would cause the policy to not provide the desired tax treatment.  Should the U.S. Secretary of the Treasury issue additional rules or regulations limiting: the number of underlying mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in the investment objectives of underlying mutual funds such that the policy would no longer qualify as life insurance under Section 7702 of the Code, we will take whatever steps are available to remain in compliance.

Periodic Withdrawals, Non-Periodic Withdrawals and Loans

The tax treatment described in this section applies to withdrawals and loans you choose to take from the policy.  It also applies to Premiums we accept but then return to meet the Code's definition of life insurance.

The income tax treatment of distributions of cash from the policy depends on whether the policy is also a "modified endowment contract" under the Code. Generally, the income tax consequences of owning a life insurance contract that is not a modified endowment contract are more advantageous than the tax consequences of owning a life insurance contract that is a modified endowment contract.

The policies offered by this prospectus may or may not be issued as modified endowment contracts.  If a contract is issued as a modified endowment contract, it will always be a modified endowment contract; a contract that is not issued as a modified endowment contract can become a modified endowment contract due to subsequent transactions with respect to the contract, such as payment of additional Premiums.  If the contract is not issued as a modified endowment contract, we will monitor it and advise you if  the payment of a Premium, or other transaction, may cause the contract to become a modified endowment contract.

When the Policy is Life Insurance that is a Modified Endowment Contract.  Section 7702A of the Code defines modified endowment contracts as those life insurance policies issued or materially changed on or after June 21, 1988 on which the total Premiums paid during the first seven years exceed the amount that would have been paid if the policy provided for paid up benefits after seven level annual Premiums.  Under certain conditions, a policy may become a modified endowment contract, or may become subject to a new 7 year testing period as a result of a "material change" or a "reduction in benefits" as defined by Section 7702A(c) of the Code.

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All modified endowment contracts issued to the same owner by the same company during a single calendar year are required to be aggregated and treated as a single contract for purposes of determining the amount that is includible in income when a distribution occurs.

The Code provides special rules for the taxation of surrenders, partial surrenders, loans, collateral assignments and other pre-death distributions from modified endowment contracts.  Under these special rules, such transactions are taxable to the extent that at the time of the transaction the Cash Value of the policy exceeds the investment in the contract (generally, the Premiums paid for the policy).  In addition, a 10% tax penalty generally applies to the taxable portion of such distributions unless the policy owner is over age 59½ or disabled, or the distribution is part of a series of substantially equal periodic payments as defined in the Code.

When the Policy is Life Insurance that is NOT a Modified Endowment Contract.  If the policy is not issued as a modified endowment contract, we will monitor Premiums paid and will notify the policy owner when the policy is in jeopardy of becoming a modified endowment contract.  If a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in Death Benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Code.  You should carefully consider this potential tax ramification and seek further information before requesting any changes in the terms of the policy.

Distributions from life insurance contracts that are not modified endowment contracts generally are treated as being from the investment in the contract (generally, the Premiums paid for the contract), and then from the income in the contract.  Because Premium payments are generally nondeductible, distributions not in excess of investment in the contract are generally not includible in income; instead, they reduce the owner’s investment in the contract.

However, if a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued that causes a reduction in Death Benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Code.  You should carefully consider this potential tax ramification and seek further information before requesting any changes in the terms of the policy.

In addition, a loan from a life insurance contract that is not a modified endowment contract is not taxable when made, although it can be treated as a distribution if it is forgiven during the owner’s lifetime.  Distributions from contracts that are not modified endowment contracts are not subject to the 10% early distribution penalty tax.

Surrendering the Policy

A full surrender, cancellation of the policy by Lapse, or the maturity of the policy on its Maturity Date may have adverse tax consequences.  If the amount you receive plus total policy Indebtedness exceeds the investment in the contract (generally, the Premiums paid into the policy), then the excess generally will be treated as taxable ordinary income, regardless of whether or not the policy is a modified endowment contract.  In certain circumstances, for example when the policy Indebtedness is very large, the amount of tax could exceed the amount distributed to you at surrender.

Withholding

Distributions of income from a life insurance policy, including a life insurance policy that is a modified endowment contract, are subject to federal income tax withholding.  Generally, the recipient may elect not to have the withholding taken from the distribution.  We will withhold income tax unless you advise us, in writing, of your request not to withhold.  If you request that taxes not be withheld, or if the taxes withheld are insufficient, you may be liable for payment of an estimated tax.

A distribution of income from a life insurance policy may be subject to mandatory back-up withholding.  Mandatory backup withholding means that we are required to withhold taxes on a distribution, at the rate established by Section 3406 of the Code, and the recipient cannot elect to receive the entire distribution at once.  Mandatory backup withholding may arise if we have not been provided a taxpayer identification number, or if the IRS notifies us that back-up withholding is required.

In certain employer-sponsored life insurance arrangements, participants may be required to report for income tax purposes, one or more of the following:

· the value each year of the life insurance protection provided;

· an amount equal to any employer-paid Premiums; or

· some or all of the amount by which the current value exceeds the employer’s interest in the policy; or

· interest that is deemed to have been forgiven on a loan that we deemed to have been made by the employer.

Participants in an employer-sponsored plan relating to this policy should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal advisor, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements.

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Exchanging the Policy for Another Life Insurance Policy

Generally, you will pay taxes on amounts that you receive in excess of your Premium payments when you completely surrender the policy.  If, however, you exchange the policy for another life insurance policy, modified endowment contract, or annuity contract, you will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035.  To meet Section 1035 requirements, the Insured named in the policy must be the Insured for the new policy or contract and the new policy or contract cannot extend the Maturity Date or otherwise delay a distribution that would extend the time that tax would be payable.  Generally, the new policy or contract will be treated as having the same issue date and tax basis as the old policy or contract.

If the policy or contract is subject to a policy Indebtedness that is discharged as part of the exchange transaction, the discharge of the Indebtedness may be taxable.  Owners should consult with their personal tax or legal advisors in structuring any policy exchange transaction.

Taxation of Death Benefits

Federal Income Tax.  The Death Benefit is generally excludable from the beneficiary's gross income under Section 101 of the Code.  However, if the policy is transferred to a new policy owner for valuable consideration, a portion of the Death Benefit may be includible in the beneficiary’s gross income when it is paid.

The payout option selected by your beneficiary may affect how the payments received by the beneficiary are taxed.  Under the various payout options, the amount payable to the beneficiary may include earnings on the Death Benefit, which will be taxable as ordinary income.  For example, if the beneficiary elects to receive interest only, then the entire amount of the interest payment will be taxable to the beneficiary; if a periodic payment (whether for a fixed period or for life) is selected, then a portion of each payment will be taxable interest income, and a portion will be treated as the nontaxable payment of the Death Benefit.  Your beneficiaries should consult with their tax advisors to determine the tax consequences of electing a payout option, based on their individual circumstances.

Special federal income tax considerations for life insurance policies owned by employers.   In 2006, President Bush signed the Pension Protection Act of 2006, which contains new Code Sections 101(j) and 6039I, which affect the tax treatment of life insurance contracts owned by the employer of the Insured.  These provisions are generally effective for life insurance contracts issued after August 17, 2006,  If a life insurance policy was issued on or before August 17, 2006, but materially modified after that date, it will be treated as having been issued after  that date for purposes of section 101(j).  Contracts issued after August 17, 2006 pursuant to a Section 1035 exchange generally are excluded from the operation of these new provisions, provided that the contract received in the exchange does not have a material increase in death benefit or other material change with respect to the old contract.

New Section 101(j) provides the general rule that, with respect to an employer-owned life insurance contract, the amount of death benefit payable directly or indirectly to the employer that may be excluded from income cannot exceed the sum of Premiums and other payments paid by the policyholder for the contract.  Consequently, under this general rule, the entire death benefit, less the cost to the policyholder, will be taxable.  Although Section 101(j) is not clear, if lifetime distributions from the contract are made as a nontaxable return of premium, it appears that the reduction would apply for Section 101(j) purposes and reduce the amount of Premiums for this purpose.

There are 2 exceptions to this general rule of taxability, provided that statutory notice, consent, and information requirements are satisfied.  These requirements are as follows:  Prior to the issuance of the company, (a) the employee is notified in writing that the employer intends to insure the employee's life, and the maximum face amount for which the employee could be Insured at the time that the contract is issued; (b) the employee provides written consent to being insured under the contract and that such coverage may continue after the Insured terminates employment; and (c) the employee is informed in writing that the employer will be a beneficiary of any proceeds payable upon the death of the employee.  If the employer fails to meet all of those requirements, then neither exception can apply.

The 2 exceptions are as follows.  First, if proper notice and consent are given and received, and if the Insured was an employee at any time during the 12-month period before the Insured’s death, then new Section 101(j) would not apply.

Second, if proper notice and consent are given and received and, at the time that the contract is issued, and the Insured is either a director, a “highly compensated employee” (within the meaning of Section 414(q) of the Code without regard to paragraph (a)(B)(ii) thereof), or a “highly compensated individual” (within the meaning of Section 105(h)(5), except “35%” is substituted for “25%” in paragraph (C) thereof), then the new Section 101(j) would not apply.

Code Section 6039I requires any policyholder of an employer-owned contract to file an annual return showing (a) the number of employees of the policyholder, (b) the number of such employees insured under employee-owned contracts at the end of the year, (c) the total amount of insurance in force with respect to those contracts at the end of the year, (d) the name, address, taxpayer identification number and type of business of the policyholder, and (e) that the policyholder has a valid consent for each Insured (or, if all consents are not obtained, the number of insured employees for whom such consent was not obtained).  Proper recordkeeping is also required by this section.

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It is your responsibility to (a) provide the proper notice to each Insured, (b) obtain the proper consent from each Insured, (c) inform each Insured in writing that you will be the beneficiary of any proceeds payable upon the death of the Insured, and (d) file the annual return required by Section 6039I.  If you fail to provide the necessary notice and information, or fail to obtain the necessary consent, the death benefit will be taxable to you when received.  If you fail to file a properly completed return under Section 6039I, you could be required to pay a penalty.

Federal Transfer Taxes.  When the Insured dies, the Death Benefit will generally be included in the Insured's federal gross estate if: (1) the Proceeds were payable to or for the benefit of the Insured's estate; or (2) the Insured held any "incident of ownership" in the policy at death or at any time within 3 years of death.  An incident of ownership, in general, is any right that may be exercised by the policy owner, such as the right to borrow on the policy or the right to name a new beneficiary.

If the beneficiary is two or more generations younger than the Insured, the Death Benefit may be subject to the GSTT.  Pursuant to regulations issued by the U.S. Secretary of the Treasury, we may be required to withhold a portion of the Proceeds and pay them directly to the IRS as the GSTT tax payment.

If the policy owner is not the Insured or a beneficiary, payment of the Death Benefit to the beneficiary will be treated as a gift to the beneficiary from the policy owner.

Terminal Illness

Certain distributions made under a policy on the life of a “terminally ill individual” or a “chronically ill individual,” as those terms are defined in the Code, are treated as death proceeds.  See, “Taxation of Death Benefits,” above.

Special Considerations for Corporations

Section 264 of the Code imposes a number of limitations on the interest and other business deductions that may otherwise be available to businesses that own life insurance policies.  In addition, the Premium paid by a business for a life insurance policy is not deductible as a business expense or otherwise if the business is directly or indirectly a beneficiary of the policy.

For purposes of the alternative minimum tax ("AMT") that may be imposed on corporations, the death benefit from a life insurance policy, even though excluded from gross income for normal tax purposes, is included in "adjusted current earnings" for AMT purposes.  In addition, although increases to the Cash Surrender Value of a life insurance policy are generally excluded from gross income for normal income tax purposes, such increases are included in adjusted current earnings for income tax purposes.

Due to the complexity of these rules, and because they are affected by your facts and circumstances, you should consult with legal and tax counsel and other competent advisors regarding these matters.

Federal appellate and trial courts have examined the economic substance of transactions involving life insurance policies owned by corporations.  These cases involved relatively large loans against the policy’s Cash Value as well as tax deductions for the interest paid on the policy loans by the corporate policy owner to the insurance company.  Under the particular factual circumstances in these cases, the courts determined that the corporate policy owners should not have taken tax deductions for the interest paid.  Accordingly, the court determined that the corporations should have paid taxes on the amounts deducted.  Corporations should consider, in consultation with tax professionals familiar with these matters, the impact of these decisions on the corporation’s intended use of the policy.

See, also, Business Uses of the Policy, below.

Taxes and the Value of Your Policy

For federal income tax purposes, a separate account is not a separate entity from the company.  Thus, the tax status of the separate account is not distinct from our status as a life insurance company.  Investment income and realized capital gains on the assets of the separate account are reinvested and taken into account in determining the value of Accumulation Units.  As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies.

At present, we do not expect to incur any federal income tax liability that would be chargeable to the Accumulation Units.  Based upon these expectations, no charge is being made against your Accumulation Units for federal income taxes.  If, however, we determine that taxes may be incurred, we reserve the right to assess a charge for these taxes.

We may also incur state and local taxes (in addition to those described in the discussion of the Premium Taxes) in several states.  At present, these taxes are not significant.  If they increase, however, charges for such taxes may be made that would decrease the value of your Accumulation Units.

Business Uses of the Policy.

The life insurance policy may be used in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans, and others.  The tax consequences of these plans may vary depending on the particular facts and circumstances of each individual arrangement.  The IRS has also recently issued new guidance on split dollar insurance plans.  In addition, Internal Revenue Code Section

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 409A, which sets forth new rules for taxation of nonqualified deferred compensation, was added to the Code for deferrals after December 31, 2004.  Therefore, if you are contemplating using the Policy in any arrangement the value of which depends in part on its tax consequences, you should be sure to consult a tax advisor as to tax attributes of the arrangement.

Non-Resident Aliens and Other Persons Who are not Citizens of the United States

Special income tax laws and rules apply to non-resident aliens of the United States including certain withholding requirements with respect to pre-death distributions from the policy.  In addition, foreign law may impose additional taxes on the policy, the Death Benefit, or other distributions and/or ownership of the policy.

In addition, special gift, estate and GSTT laws and rules may apply to non-resident aliens, and to transfers to persons who are not citizens of the United States, including limitations on the marital deduction if the surviving or donee spouse is not a citizen of the United States.

If you are a non-resident alien, or a resident alien, or if any of your beneficiaries (including your spouse) are not citizens of the United States, you should confer with a competent tax professional with respect to the tax treatment of this policy.

If you, the Insured, the beneficiary, or other person receiving any benefit or interest in or from the policy, are not both a resident and citizen of the United States, there may be a tax imposed by a foreign country that is in addition to any tax imposed by the United States.  The foreign law (including regulations, rulings, treatiers with the United States, and case law) may change and impose additional or increased taxes on the policy, payment of the Death Benefit, or other distributions and/or ownership of the policy.

Tax Changes

The foregoing discussion, which is based on our understanding of federal tax laws as currently interpreted by the IRS, is general and is not intended as tax advice.

The Code has been subjected to numerous amendments and changes, and it is reasonable to believe that it will continue to be revised.  The United States Congress has, in the past, considered numerous legislative proposals that, if enacted, could change the tax treatment of life insurance policies.  It is reasonable to believe that such proposals, and future proposals, may be enacted into law.  The U.S. Treasury Department may amend existing regulations, issue new regulations, or adopt new interpretations of existing law that may be different from its current positions on these matters.  In addition, current state law (which is not discussed herein) and future amendments to state law may affect the tax consequences of the policy.

In 2001, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) was enacted into law.  EGTRRA contained numerous changes to the federal income, gift, estate and generation skipping transfer taxes, many of which are not scheduled to become effective until a future date.  Among other matters, EGTRRA provides for the repeal of the federal estate and generation-skipping transfer taxes after 2009; however, unless Congress and the President enact additional legislation, EGTRRA also provides that all of those changes will "sunset" after 2010, and the estate and generation skipping transfer taxes will be reinstated as if EGTRRA had never been enacted.

The foregoing is a general explanation as to certain tax matters pertaining to insurance policies.  It is not intended to be legal or tax advice.  You should consult your independent legal, tax and/or financial advisor.

Any or all of the foregoing may change from time to time without any notice, and the tax consequences arising out of a policy may be changed retroactively.  There is no way of predicting if, when, or to what extent any such change may take place.  We make no representation as to the likelihood of the continuation of these current laws, interpretations, and policies.

Nationwide Life Insurance Company

We are a stock life insurance company organized under Ohio law.  We were founded in March, 1929 and our Home Office is One Nationwide Plaza, Columbus, Ohio 43215.  We provide long-term savings products by issuing life insurance, annuities and other retirement products.

Nationwide VLI Separate Account–4

Organization, Registration And Operation

Nationwide VLI Separate Account-4 is a separate account established under Ohio law.  We own the assets in this account, and we are obligated to pay all benefits under the policies.  We may use the account to support other variable life insurance policies we issue.  It is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 ("1940 Act") and qualifies as a "separate account" within the meaning of the federal securities laws.  This registration, however, does not involve the SEC’s supervision of this account’s management or investment practice or policies.

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It is divided into Sub-Accounts that may invest in shares of the available Sub-Account portfolios.  We buy and sell the Sub-Account portfolio shares at NAV.  Any dividends and distributions from a Sub-Account portfolio are reinvested at NAV in shares of that Sub-Account portfolio.

Income, gains, and losses, whether or not realized, from the assets in the account will be credited to, or charged against, the account without regard to our other income, gains, or losses.  Income, gains, and losses credited to, or charged against, a Sub-Account reflect the Sub-Account’s own Investment Experience and not the Investment Experience of our other assets.  Its assets are held separately from our other assets and are not part of our general account.  We may not use the separate account’s assets to pay any of our liabilities other than those arising from the policies.  If the separate account’s assets exceed the required reserves and its other liabilities, we may transfer the excess to our general account.  The separate account may include other Sub-Accounts that are not available under the policies, and are not discussed in this prospectus.

If investment in the mutual funds or a particular portfolio is no longer possible, in our judgment becomes inappropriate for the purposes of the policy, or for any other reason in our sole discretion, we may substitute another mutual fund or portfolio without your consent.  The substituted mutual fund or portfolio may have different fees and expenses.  Substitution may be made with respect to existing investments or the investments of future Premium, or both.  We will comply with federal securities laws to effect a substitution.  Furthermore, we may close Sub-Accounts to allocations of Premiums or policy value, or both, at any time in our sole discretion.  The mutual funds, which sell their shares to the Sub-Accounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Sub-Accounts.

In addition, we reserve the right to make other structural and operational changes affecting this separate account.

We do not guarantee any money you place in this separate account.  The value of each Sub-Account will increase or decrease, depending on the investment performance of the corresponding portfolio.  You could lose some or all of your money.

Addition, Deletion Or Substitution Of Mutual Funds

Where permitted by applicable law, we reserve the right to:

· remove, combine, or add Sub-Accounts and make new Sub-Accounts available;

· substitute shares of another mutual fund, which may have different fees and expenses, for shares of an existing mutual fund;

· transfer assets supporting the policies from one Sub-Account to another or from one separate account to another;

· combine the separate account with other separate accounts, and/or create new separate accounts;

· deregister the separate account under the 1940 Act, or operate the separate account as a management investment company under the 1940 Act, or as any other form permitted by the law; and

· modify the policy provisions to reflect changes in the Sub-Accounts and the separate account to comply with applicable law.

Voting Rights

Unless there is a change in existing law, we will vote our shares only as you instruct on all matters submitted to shareholders of the portfolios.

Before a vote of a portfolio’s shareholders occurs, you will have the right to instruct us based on the number of portfolio shares that corresponds to the amount of policy account value you have in the portfolio (as of a date set by the portfolio).  We will vote shares for which no instructions are received in the same proportion as those that are received.  What this means to you is that when only a small number of policy owners vote, each vote has a greater impact on, and may control the outcome of the vote.

The number of shares which a policy owner may vote is determined by dividing the Cash Value of the amount they have allocated to an underlying mutual fund by the NAV of that underlying mutual fund. We will designate a date for this determination not more than 90 days before the shareholder meeting.

Legal Proceedings

Nationwide Life Insurance Company

Nationwide is a party to litigation and arbitration proceedings in the ordinary course of its business. It is often not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and Nationwide does not have sufficient information to make an assessment of the plaintiffs’ claims for

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liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. Nationwide does not believe, based on information currently known by management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on Nationwide’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on Nationwide’s consolidated financial results in a particular quarterly or annual period.

In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements against life insurers other than Nationwide.

The financial services industry, including mutual fund, variable annuity, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past few years. Numerous regulatory agencies, including the SEC, the National Association of Securities Dealers and the New York State Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues. Nationwide has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by Nationwide. Nationwide has cooperated with these investigations. Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by Nationwide and its affiliates in December 2003 and June 2005, respectively, and no further information requests have been received with respect to these matters.

In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, the use of side agreements and finite reinsurance agreements, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives. Related investigations and proceedings may be commenced in the future. Nationwide and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, the use of side agreements and finite reinsurance agreements, and funding agreements backing the Nationwide’s MTN program. Nationwide is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. These proceedings also could affect the outcome of one or more of Nationwide’s litigation matters. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on Nationwide in the future.

On November 15, 2006, Nationwide was named in a lawsuit filed in the United States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The Class Period is from January 1, 1996 until the Class Notice is provided. The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, Nationwide filed a motion to dismiss.  Nationwide intends to defend this lawsuit vigorously.

On February 11, 2005, Nationwide was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees. On February 2, 2006, the Court granted the plaintiff’s motion for class certification on the breach of contract and unjust

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enrichment claims. The Court certified a class consisting of all residents of the United States and the Virgin Islands who, during the Class Period, paid premiums on a modal basis to Nationwide for term life insurance policies issued by Nationwide during the Class Period that provide for guaranteed maximum premiums, excluding certain specified products. Excluded from the class are Nationwide; any parent, subsidiary or affiliate of Nationwide; all employees, officers and directors of Nationwide; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The Class Period is from February 10, 1990 through February 2, 2006, the date the class was certified. On January 26, 2007, the plaintiff filed a motion for summary judgment. Nationwide continues to defend this lawsuit vigorously.

On April 13, 2004, Nationwide was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. Nationwide removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed a First Amended Complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of a Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The First Amended Complaint purports to disclaim, with respect to market timing or stale price trading in Nationwide’s annuities sub-accounts, any allegation based on Nationwide’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of Nationwide annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if Nationwide is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to Nationwide’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The First Amended Complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 1, 2006, the District Court granted Nationwide’s motion to dismiss the plaintiff’s complaint. On November 29, 2006, the plaintiff filed its appellate brief with the Fourth Circuit Court of Appeals contesting the District Court’s dismissal. Nationwide continues to defend this lawsuit vigorously.

On January 21, 2004, Nationwide was named in a lawsuit filed in the United States District Court for the Northern District of Mississippi entitled United Investors Life Insurance Company v. Nationwide Life Insurance Company and/or Nationwide Life Insurance Company of America and/or Nationwide Life and Annuity Insurance Company and/or Nationwide Life and Annuity Company of America and/or Nationwide Financial Services, Inc. and/or Nationwide Financial Corporation, and John Does A-Z. In its complaint, the plaintiff alleges that Nationwide and/or its affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Companies. The plaintiff raises claims for (1) violations of the Federal Lanham Act, and common law unfair competition and defamation; (2) tortious interference with the plaintiff’s contractual relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W&R Insurance Agency, Inc., or with the plaintiff’s contractual relationships with its variable policyholders; (3) civil conspiracy; and (4) breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, a constructive trust and costs and disbursements, including attorneys’ fees. On December 30, 2005,Nationwide filed a motion for summary judgment. On June 15, 2006, the District Court granted Nationwide’s motion for summary judgment on all grounds and dismissed the plaintiff’s entire case with prejudice. The plaintiff appealed the District Court’s decision to the Fifth Circuit Court of Appeals. The appeal has been fully briefed, and Nationwide is awaiting a decision. Nationwide continues to defend this lawsuit vigorously.

On August 15, 2001, Nationwide was named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from Nationwide. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that Nationwide breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by Nationwide, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class. Nationwide’s motion to dismiss the plaintiffs’ fifth amended complaint is currently pending before the court. Nationwide continues to defend this lawsuit vigorously.

Nationwide Investment Services Corporation

The general distributor, Nationwide Investment Services Corporation, is not engaged in litigation of a material nature.

45

Financial Statements

The Statement of Additional Information (SAI) contains consolidated financial statements of Nationwide Life Insurance Company and subsidiaries and financial statements of Nationwide VLI Separate Account – 4.  You may obtain a copy of the SAI FREE OF CHARGE by contacting us at the address or telephone number on the first page of this prospectus.  You should distinguish the consolidated financial statements of the company and subsidiaries from the financial statements of the separate account.  Please consider the consolidated financial statements of the company only as bearing on our ability to meet the obligations under the policy.  You should not consider the consolidated financial statements of the company and subsidiaries as affecting the investment performance of the assets of the separate account.

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Appendix A: Sub-Account Information

The Sub-Accounts listed below invest in corresponding mutual funds that are designated primarily as investments for variable annuity contracts and variable life insurance policies issued by insurance companies.  There is no guarantee that the investment objective will be met.  You have voting rights with respect to the Sub-Accounts.  For more information, see “Voting Rights,” beginning on page 58.

Please refer to the prospectus for each underlying mutual fund for more detailed information

AIM Variable Insurance Funds - AIM V.I. Basic Value Fund: Series I Shares

Investment Adviser:                      AIM Advisors, Inc.

Investment Objective:                    Long-term growth of capital.

AIM Variable Insurance Funds - AIM V.I. Capital Appreciation Fund: Series I Shares

Investment Adviser:                       AIM Advisors, Inc.

Investment Objective:                     Growth of capital.

AIM Variable Insurance Funds - AIM V.I. Capital Development Fund: Series I Shares

Investment Adviser:                        AIM Advisors, Inc.

Investment Objective:                      Long-term capital growth.

AllianceBernstein Variable Products Series Fund, Inc. - AllianceBernstein Growth and Income Portfolio: Class A

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                         AllianceBernstein L.P.

Investment Objective:                       Long-term growth of capital.

AllianceBernstein Variable Products Series Fund, Inc. - AllianceBernstein Small/Mid Cap Value Portfolio: Class B

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                          AllianceBernstein L.P.

Investment Objective:                        Long-term growth of capital.

American Century Variable Portfolios, Inc. - American Century VP Income & Growth Fund: Class I

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                           American Century Investment Management, Inc.

Investment Objective:                         Capital growth by investing in common stocks.

American Century Variable Portfolios, Inc. - American Century VP International Fund: Class I

This sub-account is only available in policies issued before May 1, 2005

Investment Adviser:                            American Century Global Investment Management, Inc.

Investment Objective:                          Capital growth.

American Century Variable Portfolios, Inc. - American Century VP International Fund: Class III

Investment Adviser:                             American Century Global Investment Management, Inc.

Investment Objective:                           Capital growth.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

American Century Variable Portfolios, Inc. - American Century VP Mid Cap Value Fund: Class I

Investment Adviser:                American Century Investment Management, Inc.

Investment Objective:              Long-term capital growth.

American Century Variable Portfolios, Inc. - American Century VP Ultra Fund: Class I

This sub-account is only available in policies issued before May 1, 2007

Investment Adviser:                 American Century Investment Management, Inc.

Investment Objective:               Long-term capital growth.

American Century Variable Portfolios, Inc. - American Century VP Value Fund: Class I

Investment Adviser:                  American Century Investment Management, Inc.

Investment Objective:                Long-term capital growth with income as a secondary objective.

American Century Variable Portfolios, Inc. - American Century VP Vista Fund: Class I

Investment Adviser:                American Century Investment Management, Inc.

Investment Objective:             Long-term capital growth.

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American Century Variable Portfolios II, Inc. - American Century VP Inflation Protection Fund: Class II

Investment Adviser:              American Century Investment Management, Inc.

Investment Objective:            Long-term total return using a strategy that seeks to protect against U.S.  inflation.

 

Credit Suisse Trust - Global Small Cap Portfolio

This sub-account is only available in policies issued before September 27, 1999

Investment Adviser:                Credit Suisse Asset Management, LLC

Sub-adviser:                              Credit Suisse Asset Management Limited

Investment Objective:              Long-term growth of capital.

Credit Suisse Trust - International Focus Portfolio

This sub-account is only available in policies issued before September 27, 1999

Investment Adviser:                                                         Credit Suisse Asset Management, LLC

Sub-adviser:                                                         Credit Suisse Asset Management Limited

Investment Objective:                                                         Long-term capital appreciation.

Credit Suisse Trust - Large Cap Value Portfolio

This sub-account is only available in policies issued before May 1, 2000

Investment Adviser:                                                         Credit Suisse Asset Management, LLC

Investment Objective:                                                         Long-term growth of capital and income.

Dreyfus Investment Portfolios - Small Cap Stock Index Portfolio: Service Shares

Investment Adviser:                                                         The Dreyfus Corporation

Investment Objective:                                                         To match performance of the S&P SmallCap 600 Index®.

Dreyfus Socially Responsible Growth Fund, Inc.: Initial Shares

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         The Dreyfus Corporation

Investment Objective:                                                         Capital growth with current income as a secondary goal.

Dreyfus Stock Index Fund, Inc.: Initial Shares

Investment Adviser:                                                         The Dreyfus Corporation

Investment Objective:                                                         To match performance of the S&P 500.

Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

Investment Adviser:                                                         The Dreyfus Corporation

Investment Objective:                                                         Long-term capital growth consistent with the preservation of capital.

Dreyfus Variable Investment Fund - Developing Leaders Portfolio: Initial Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         The Dreyfus Corporation

Investment Objective:                                                         Capital growth.

Federated Insurance Series - Federated American Leaders Fund II: Primary Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Federated Equity Management Company of Pennsylvania

Investment Objective:                                                         Long-term capital growth, and secondarily income.

Federated Insurance Series - Federated Capital Appreciation Fund II: Primary Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Federated Equity Management Company of Pennsylvania

Investment Objective:                                                         Capital appreciation.

Federated Insurance Series - Federated Market Opportunity Fund II: Service Shares

Investment Adviser:                                                         Federated Equity Management Company of Pennsylvania

Sub-adviser:                                                         Federated Investment Management Company

Investment Objective:                                                         To provide moderate capital appreciation and high current income.

Federated Insurance Series - Federated Quality Bond Fund II: Primary Shares

Investment Adviser:                                                         Federated Investment Management Company

Investment Objective:                                                         Current income.

Fidelity Variable Insurance Products Fund - VIP Equity-Income Portfolio: Service Class

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Reasonable income.

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Fidelity Variable Insurance Products Fund - VIP Growth Portfolio: Service Class

Investment Adviser:                                                         Fidelity Management & Research Company

Sub-adviser:                                                         FMR Co., Inc.

Investment Objective:                                                         Capital appreciation.

Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Service Class

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2007

Investment Adviser:                                                         Fidelity Management & Research Company

Sub-adviser:                                                         FMR Co., Inc.

Investment Objective:                                                         High level of current income.

Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Service Class R

This Portfolio is only available in Policies issued before May 1, 2003

Investment Adviser:                                                         Fidelity Management & Research Company

Sub-adviser:                                                         FMR Co., Inc.

Investment Objective:                                                         High level of current income.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: Service Class

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Long-term capital growth.

Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: Service Class R

Investment Adviser:                                                         Fidelity Management & Research Company

Sub-adviser:                                                         FMR Co., Inc.

Investment Objective:                                                         Long-term capital growth.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Fidelity Variable Insurance Products Fund II - VIP Contrafund® Portfolio: Service Class

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Long-term capital appreciation.

Fidelity Variable Insurance Products Fund II - VIP Investment Grade Bond Portfolio: Service Class

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Investments Money Management, Inc.

Investment Objective:                                                         High level of current income.

Fidelity Variable Insurance Products Fund III - VIP Growth Opportunities Portfolio: Service Class

This sub-account is only available in policies issued before May 1, 2002

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Capital growth.

Fidelity Variable Insurance Products Fund III - VIP Mid Cap Portfolio: Service Class

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Long-term growth of capital.

Fidelity Variable Insurance Products Fund III - VIP Value Strategies Portfolio: Service Class

This sub-account is only available in policies issued before May 1, 2006

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Capital appreciation.

Fidelity Variable Insurance Products Fund IV - VIP Energy Portfolio: Service Class 2

Investment Adviser:                                                         Fidelity Management & Research Company

Sub-adviser:                                                         FMR Co., Inc.

Investment Objective:                                                         Capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

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Fidelity Variable Insurance Products Fund IV - VIP Freedom Fund 2010 Portfolio: Service Class

Investment Adviser:                                                         FMR

Investment Objective:                                                         High total return with a secondary objective of principal preservation as the

fund approaches its target date and beyond.

The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and

international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds

(underlying Fidelity funds).  Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly

bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund.  Please refer to the prospectus for

the Fidelity VIP Freedom Funds for more information.

Fidelity Variable Insurance Products Fund IV - VIP Freedom Fund 2020 Portfolio: Service Class

Investment Adviser:                                                         Fidelity Management & Research Company

Investment Objective:                                                         High total return with a secondary objective of principal preservation as the

fund approaches its target date and beyond.

The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and

international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds

(underlying Fidelity funds).  Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly

bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund.  Please refer to the prospectus for

the Fidelity VIP Freedom Funds for more information.

Fidelity Variable Insurance Products Fund IV - VIP Freedom Fund 2030 Portfolio: Service Class

Investment Adviser:                                                         Fidelity Management & Research Company

Investment Objective:                                                         High total return with a secondary objective of principal preservation as the

fund approaches its target date and beyond.

The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and

international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds

(underlying Fidelity funds).  Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly

bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund.  Please refer to the prospectus for

the Fidelity VIP Freedom Funds for more information.

Franklin Templeton Variable Insurance Products Trust - Franklin Income Securities Fund: Class 2

Investment Adviser:                                                         Franklin Advisors, Inc.

Investment Objective:                                                         Maximum income while maintaining prospects for capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Rising Dividends Securities Fund: Class 1

This sub-account is only available in policies issued before May 1, 2006

Investment Adviser:                                                         Franklin Advisory Services, LLC

Investment Objective:                                                         Long-term capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Small Cap Value Securities Fund: Class 1

Investment Adviser:                                                         Franklin Advisory Services, LLC

Investment Objective:                                                         Long-term total return.

Franklin Templeton Variable Insurance Products Trust - Templeton Developing Markets Securities Fund: Class 3

Investment Adviser:                                                         Templeton Asset Management, Ltd.

Investment Objective:                                                         Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 1

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Adviser:                                                         Templeton Investment Counsel, LLC

Investment Objective:                                                         Long-term capital growth.

Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 3

Investment Adviser:                                                         Templeton Investment Counsel, LLC

Investment Objective:                                                         Long-term capital growth.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

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Franklin Templeton Variable Insurance Products Trust - Templeton Global Income Securities Fund: Class 3

Investment Adviser:                                                         Franklin Advisors, Inc.

Investment Objective:                                                         High current income, with preservation of capital.  Capital appreciation is a

secondary consideration.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Janus Aspen Series - Balanced Portfolio: Service Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Janus Capital Management LLC

Investment Objective:                                                         Long-term growth of capital, consistent with preservation of capital and

balanced by current income.

Janus Aspen Series - Forty Portfolio: Service Shares

Investment Adviser:                                                         Janus Capital Management LLC

Investment Objective:                                                         Long-term growth of capital.

Janus Aspen Series - Global Technology Portfolio: Service Shares

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Janus Capital Management LLC

Investment Objective:                                                         Long-term capital growth.

Janus Aspen Series - INTECH Risk-Managed Core Portfolio: Service Shares

Investment Adviser:                                                         Janus Capital Management LLC

Sub-adviser:                                                         Enhanced Investment Technologies, LLC

Investment Objective:                                                         Long-term growth of capital.

Janus Aspen Series - International Growth Portfolio: Service II Shares

Investment Adviser:                                                         Janus Capital Management LLC

Investment Objective:                                                         Long-term capital growth.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Janus Aspen Series - International Growth Portfolio: Service Shares

This sub-account is no longer available to receive transfers or new premium payments effective June 1, 2006

Investment Adviser:                                                         Janus Capital Management LLC

Investment Objective:                                                         Long-term capital growth.

Lehman Brothers Advisers Management Trust - AMT Short Duration Bond Portfolio: I Class

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Highest available current income consistent with liquidity and low risk to

principal and, secondarily, total return.

MFS® Variable Insurance Trust - MFS Investors Growth Stock Series: Initial Class

This sub-account is only available in policies issued before May 1, 2006

Investment Adviser:                                                         Massachusetts Financial Services Company

Investment Objective:                                                         Long-term capital growth and future income.

MFS® Variable Insurance Trust - MFS Value Series: Initial Class

Investment Adviser:                                                         Massachusetts Financial Services Company

Investment Objective:                                                         Capital appreciation and reasonable income.

Nationwide Variable Insurance Trust - American Funds NVIT Asset Allocation Fund: Class II

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         Seeks to provide high total return (including income and capital gains)

consistent with the preservation of capital.

Nationwide Variable Insurance Trust - American Funds NVIT Bond Fund: Class II

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         Income and more price stability than stocks, and capital preservation over

the long term.  Seeks to maximize an investor’s level of current income and

preserve the investor’s capital.

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Nationwide Variable Insurance Trust - American Funds NVIT Global Growth Fund: Class II

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         Capital appreciation through stocks.

Nationwide Variable Insurance Trust - American Funds NVIT Growth Fund: Class II

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         Capital appreciation principally through investment in stocks.

Nationwide Variable Insurance Trust - American Funds NVIT Growth- Income Fund: Class II

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         The fund seeks to make shareholders' investments grow and provide income

over time by investing primarily in common stock of companies or other

securities that demonstrate the potential for appreciation and/or dividends.

Nationwide Variable Insurance Trust - Federated NVIT High Income Bond Fund: Class I

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Federated Investment Management Company

Investment Objective:                                                         High current income.

Nationwide Variable Insurance Trust - Federated NVIT High Income Bond Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Federated Investment Management Company

Investment Objective:                                                         High current income.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Nationwide Variable Insurance Trust - Gartmore NVIT Emerging Markets Fund: Class I

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth by investing primarily in equity securities of

companies located in emerging market countries.

Nationwide Variable Insurance Trust - Gartmore NVIT Emerging Markets Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth by investing primarily in equity securities of

companies located in emerging market countries.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Nationwide Variable Insurance Trust - Gartmore NVIT Global Utilities Fund: Class I

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth.

Nationwide Variable Insurance Trust - Gartmore NVIT International Growth Fund: Class I

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth by investing primarily in equity securities of

companies in Europe, Australasia, the Far East and other regions, including

developing countries.

Nationwide Variable Insurance Trust - Gartmore NVIT Worldwide Leaders Fund: Class I

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth.

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Nationwide Variable Insurance Trust - J.P. Morgan NVIT Balanced Fund: Class I

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         J.P. Morgan Investment Management Inc.

Investment Objective:                                                         High total return from a diversified portfolio of equity and fixed income

securities.

Nationwide Variable Insurance Trust - Nationwide Multi-Manager NVIT Small Cap Growth Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Oberweis Asset Management, Inc.; Waddell & Reed Investment Management

 Company

Investment Objective:                                                         Capital growth.

Nationwide Variable Insurance Trust - Nationwide Multi-Manager NVIT Small Cap Value Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Epoch Investment Partners, Inc.; J.P. Morgan Investment Management Inc.

Investment Objective:                                                         Capital appreciation.

Nationwide Variable Insurance Trust - Nationwide Multi-Manager NVIT Small Company Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         American Century Investment Management Inc.; Franklin Portfolio

Associates LLC; Gartmore Global Partners; Morgan Stanley Investment

Management Inc.; Neuberger Berman, LLC; Waddell & Reed Investment

Management Company

Investment Objective:                                                         Long-term growth of capital.

Nationwide Variable Insurance Trust - Nationwide NVIT Global Financial Services Fund: Class I

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth.

Nationwide Variable Insurance Trust - Nationwide NVIT Global Health Sciences Fund: Class I

This sub-account is only available in policies issued before May 1, 2005

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

Nationwide Variable Insurance Trust - Nationwide NVIT Global Health Sciences Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Nationwide Variable Insurance Trust - Nationwide NVIT Global Technology and Communications Fund: Class I

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

Nationwide Variable Insurance Trust - Nationwide NVIT Global Technology and Communications Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Nationwide Variable Insurance Trust - Nationwide NVIT Government Bond Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         To provide a high level of income as is consistent with the preservation of

capital.

Nationwide Variable Insurance Trust - Nationwide NVIT Growth Fund: Class I

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

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Nationwide Variable Insurance Trust - Nationwide NVIT Investor Destinations Aggressive Fund: Class II

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         To maximize growth of capital consistent with a more aggressive level of

risk as compared to the other Investor Destinations Funds.

The Nationwide NVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several

types of investments and asset classes, primarily by investing in underlying funds.  Therefore, a proportionate share of the

fees and expenses of the underlying funds are indirectly borne by investors.  Please refer to the prospectus for Nationwide NVIT Investor Destinations Funds for more information.

Nationwide Variable Insurance Trust - Nationwide NVIT Investor Destinations Conservative Fund: Class II

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of return consistent with a conservative level of risk compared to

 the other Investor Destinations Funds.

The Nationwide NVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several

types of investments and asset classes, primarily by investing in underlying funds.  Therefore, a proportionate share of the

fees and expenses of the underlying funds are indirectly borne by investors.  Please refer to the prospectus for Gartmore Nationwide NVIT Investor Destinations Funds for more information.

Nationwide Variable Insurance Trust - Nationwide NVIT Investor Destinations Moderate Fund: Class II

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of total return consistent with a moderate level of risk as

compared to other Investor Destinations Funds.

The Nationwide NVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several

types of investments and asset classes, primarily by investing in underlying funds.  Therefore, a proportionate share of the

fees and expenses of the underlying funds are indirectly borne by investors.  Please refer to the prospectus for Nationwide NVIT Investor Destinations Funds for more information.

Nationwide Variable Insurance Trust - Nationwide NVIT Investor Destinations Moderately Aggressive Fund: Class II

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Growth of capital, but also seeks income consistent with a moderately

aggressive level of risk as compared to the other Investor Destinations Funds.

The Nationwide NVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several

types of investments and asset classes, primarily by investing in underlying funds.  Therefore, a proportionate share of the

fees and expenses of the underlying funds are indirectly borne by investors.  Please refer to the prospectus for Nationwide NVIT Investor Destinations Funds for more information.

Nationwide Variable Insurance Trust - Nationwide NVIT Investor Destinations Moderately Conservative Fund: Class II

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of total return consistent with a moderately conservative level of

risk.

The Nationwide NVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several

types of investments and asset classes, primarily by investing in underlying funds.  Therefore, a proportionate share of the

fees and expenses of the underlying funds are indirectly borne by investors.  Please refer to the prospectus for Nationwide NVIT Investor Destinations Funds for more information.

Nationwide Variable Insurance Trust - Nationwide NVIT Mid Cap Growth Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

Nationwide Variable Insurance Trust - Nationwide NVIT Money Market Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of current income as is consistent with the preservation of capital

 and maintenance of liquidity.

Nationwide Variable Insurance Trust - Nationwide NVIT U.S. Growth Leaders Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term growth of capital.

54

Nationwide Variable Insurance Trust - NVIT International Index Fund: Class VI

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Fund Asset Management, LP

Investment Objective:                                                         To match the performance of the Morgan Stanley Capital International

Europe, Australasia and Far East Index ("MSCI EAFE® Index") as closely as

possible before the deduction of Fund expenses.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Nationwide Variable Insurance Trust - NVIT International Value Fund: Class I

This sub-account is only available in policies issued before May 1, 2005

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         The Boston Company Asset Management LLC

Investment Objective:                                                         Long-term capital appreciation.

Nationwide Variable Insurance Trust - NVIT International Value Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         The Boston Company Asset Management LLC

Investment Objective:                                                         Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Nationwide Variable Insurance Trust - NVIT Mid Cap Index Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Fund Asset Management, LP

Investment Objective:                                                         Capital appreciation.

Nationwide Variable Insurance Trust - NVIT Nationwide® Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Total return through a flexible combination of capital appreciation and

current income.

Nationwide Variable Insurance Trust - NVIT Nationwide® Leaders Fund: Class I

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High total return from a concentrated portfolio of U.S. securities.

Nationwide Variable Insurance Trust - Van Kampen NVIT Comstock Value Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Van Kampen Asset Management

Investment Objective:                                                         Seeks capital growth and income through investments in equity securities,

including common stocks and securities convertibles into common stocks.

Nationwide Variable Insurance Trust - Van Kampen NVIT Multi Sector Bond Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Van Kampen Asset Management

Investment Objective:                                                         Above average total return over a market cycle of three to five years.

Neuberger Berman Advisers Management Trust - AMT Fasciano Portfolio: S Class

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Long-term capital growth.

Neuberger Berman Advisers Management Trust - AMT Guardian Portfolio: I Class

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Neuberger Berman Management Inc.

Investment Objective:                                                         Long-term capital growth and, secondarily, current income.

55

Neuberger Berman Advisers Management Trust - AMT International Portfolio: S Class

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Long-term growth of capital by investing primarily in common stocks of

foreign companies.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Neuberger Berman Advisers Management Trust - AMT Mid-Cap Growth Portfolio: I Class

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Capital growth.

Neuberger Berman Advisers Management Trust - AMT Partners Portfolio: I Class

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Capital growth.

Neuberger Berman Advisers Management Trust - AMT Regency Portfolio: I Class

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Growth of capital.

Neuberger Berman Socially Responsive Fund: Trust Class

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Long-term growth of capital by investing primarily in securities of

companies that meet certain financial criteria and social policy.

Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund/VA: Non-Service Shares

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         Capital appreciation by investing in securities of well-known, established

companies.

Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA: Class 3

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         Long-term capital appreciation by investing a substantial portion of its

assets in securities of foreign issuers, "growth-type" companies, cyclical

industries and special situations that are considered to have appreciation that

 are considered to have appreciation possibilities.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA: Non-Service Shares

This sub-account is only available in policies issued before May 1, 2005

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         Long-term capital appreciation by investing a substantial portion of its

assets in securities of foreign issuers, "growth-type" companies, cyclical

industries and special situations that are considered to have appreciation

Oppenheimer Variable Account Funds - Oppenheimer High Income Fund/VA: Class 3

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         High level of current income.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this

prospectus).

Oppenheimer Variable Account Funds - Oppenheimer High Income Fund/VA: Non-Service Shares

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2007

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         High level of current income.

56

Oppenheimer Variable Account Funds - Oppenheimer Main Street Fund®/VA: Non-Service Shares

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         High total return which includes growth in the value of its shares as well as

current income from equity and debt securities.

Oppenheimer Variable Account Funds - Oppenheimer Main Street Small Cap Fund®/VA: Non-Service Shares

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         Capital appreciation.

Oppenheimer Variable Account Funds - Oppenheimer MidCap Fund/VA: Non-Service Shares

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         Capital appreciation by investing in "growth type" companies.

Putnam Variable Trust - Putnam VT Growth and Income Fund: Class IB

This sub-account is only available in policies issued before May 1, 2005

Investment Adviser:                                                         Putnam Investment Management, LLC

Investment Objective:                                                         Capital growth and current income.

Putnam Variable Trust - Putnam VT International Equity Fund: Class IB

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Putnam Investment Management, LLC

Investment Objective:                                                         Capital appreciation.

Putnam Variable Trust - Putnam VT Voyager Fund: Class IB

This sub-account is only available in policies issued before May 1, 2005

Investment Adviser:                                                         Putnam Investment Management, LLC

Investment Objective:                                                         Capital appreciation.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Blue Chip Growth Portfolio: Class II

Investment Adviser:                                                         T. Rowe Price Investment Services

Investment Objective:                                                         Long-term capital growth and, secondarily, income.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Equity Income Portfolio: Class II

Investment Adviser:                                                         T. Rowe Price Investment Services

Investment Objective:                                                         Substantial dividend income as well as long-term growth of capital through

investments in the common stocks of established companies.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Limited Term Bond Portfolio: Class II

Investment Adviser:                                                         T. Rowe Price Investment Services

Investment Objective:                                                         High level of income consistent with moderate price fluctuation.

The Universal Institutional Funds, Inc. - Core Plus Fixed Income Portfolio: Class I

Investment Adviser:                                                         Morgan Stanley Investment Management Inc.

Investment Objective:                                                         Above-average total return over a market cycle of three to five years by

investing primarily in a diversified portfolio of fixed income securities.

The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio: Class I

This sub-account is only available in policies issued before May 1, 2004

Investment Adviser:                                                         Morgan Stanley Investment Management Inc.

Investment Objective:                                                         High total return by investing primarily in fixed income securities of

government and government-related issuers and, to a lesser extent, of

corporate issuers in emerging market countries.

The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio: Class I

This sub-account is only available in policies issued before May 1, 2002

Investment Adviser:                                                         Morgan Stanley Investment Management Inc.

Investment Objective:                                                         Long-term capital growth by investing primarily in common stocks and

other equity securities.

The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio: Class I

Investment Adviser:                                                         Morgan Stanley Investment Management Inc.

Investment Objective:                                                         Above average current income and long-term capital appreciation by

investing primarily in equity securities of companies in the U.S. real estate

industry, including real estate investment trusts.

57

Van Eck Worldwide Insurance Trust - Worldwide Emerging Markets Fund: Initial Class

This sub-account is only available in policies issued before May 1, 2002

Investment Adviser:                                                         Van Eck Associates Corporation

Investment Objective:                                                         Long-term capital appreciation by investing primarily in equity securities in

emerging markets around the world.

Van Eck Worldwide Insurance Trust - Worldwide Hard Assets Fund: Initial Class

This sub-account is only available in policies issued before May 1, 2002

Investment Adviser:                                                         Van Eck Associates Corporation

Investment Objective:                                                         Long-term capital appreciation by investing primarily in hard asset

securities.  Income is a secondary consideration.

Wells Fargo Advantage Variable Trust - Wells Fargo Advantage VT Opportunity Fund

This sub-account is only available in policies issued before May 1, 2003

Investment Adviser:                                                         Wells Fargo Funds Management, LLC

Sub-adviser:                                                         Wells Capital Management Incorporated

Investment Objective:                                                         Long-term capital appreciation.

58

Appendix B: Definitions

Accumulation Unit– The measure of your investment in, or share of, a Sub-Account after we deduct for transaction fees and periodic charges.  Initially, we set the Accumulation Unit value at $10 for each Sub-Account.

Attained Age– The Insured’s age upon the issue of full insurance coverage plus the number of full years since the Policy Date.

Cash Surrender Value– The Cash Value, subject to Indebtedness and the surrender charge.

Cash Value– The total of the Sub-Accounts you have chosen, which will vary with Investment Experience, and the policy loan and fixed accounts, to which interest will be credited daily.  We will deduct partial surrenders and the policy's periodic charges from the Cash Value.

Code– The Internal Revenue Code of 1986, as amended.

Death Benefit– The amount we pay to the beneficiary upon the Insured’s death, before payment of any unpaid outstanding loan balances or charges.

FDIC – Federal Deposit Insurance Corporation.

Grace Period– A 61-day period after which the Policy will Lapse if you do not make a sufficient payment.

Home Office– Our Home Offices are located at One Nationwide Plaza, Columbus, Ohio 43215.

In Force– The insurance coverage is in effect.

Indebtedness – The total amount of all outstanding policy loans, including principal and interest due.

Insured – The person whose life we insure under the policy, and whose death triggers the Death Benefit.

Investment Experience– The performance of a mutual fund in which a Sub-Account portfolio invests.

Lapse – The policy terminates without value.

Maturity Date– The policy anniversary on or next following the Insured's 100^th birthday.

NCUSIF – National Credit Union Share Insurance Fund.

Net Amount At Risk– The policy’s base Death Benefit minus the policy’s Cash Value.

Net Asset Value (NAV) – The price each share of a mutual fund in which a Sub-Account portfolio invests.  It is calculated by subtracting the mutual fund’s liabilities from its total assets, and dividing that figure by the number of shares outstanding.  We use NAV to calculate the value of Accumulation Units.  NAV does not reflect deductions we make for charges we take from Sub-Accounts.  Accumulation Unit values do reflect these deductions.

Net Premium– Premium after transaction charges, but before any allocation to an investment option.

Policy Continuation Premium Amount – The amount of Premium, on a monthly basis from the Policy Date, stated on the Policy Data Page, that you must pay, in the aggregate, to keep the policy In Force under the Guaranteed policy continuation provision; however, this amount does not account for any increases in the Specified Amount, policy loans or partial surrenders, so you should anticipate paying more if you intend to request an increase in Specified Amount; take a policy loan; or request a partial surrender.

Policy Data Page(s)– The Policy Data Page contains more detailed information about the policy, some of which is unique and particular to the owner, the beneficiary and the Insured.

59

Policy Date– The date the policy takes effect as shown on the Policy Data Page.  Policy years and months are measured from this date.

Policy Proceeds or Proceeds– Policy Proceeds may constitute the Death Benefit, or the amount payable if the policy matures or you choose to surrender the policy adjusted to account for any unpaid charges or policy loans and Rider benefits.

Premium – The amount of money you pay to begin and continue the policy.

Premium Load – The aggregate of the sales load and premium tax charges.

Rider– An optional benefit you may purchase under the policy.

SEC – The Securities and Exchange Commission.

Specified Amount– The dollar or face amount of insurance coverage the owner selects.

Sub-Accounts– The mechanism we use to account for your allocations of Net Premium and cash value among the policy’s variable investment options.

Us, we, our or the company– Nationwide Life Insurance Company.

Valuation Period– The period during which we determine the change in the value of the Sub-Accounts.  One Valuation Period ends and another begins with the close of trading on the New York Stock Exchange.

You, your or the policy owner or Owner– The person named as the owner in the application, or the person assigned ownership rights.

60

Outside back cover page

To learn more about this policy, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus.  For a free copy of the SAI, to receive personalized illustrations of Death Benefits, net Cash Surrender Values, and Cash Values, and to request other information about this policy please call our Service Center at 1-800-547-7548 (TDD: 1-800-238-3035) or write to us at our Service Center at Nationwide Life Insurance Company, 5100 Rings Road, RR1-04-D4, Dublin, OH 43017-1522.

The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SEC maintains an Internet website (http://www.sec.gov) that contains the SAI and other information about us and the policy.  Information about us and the policy (including the SAI) may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 100 F Street NE, Washington, D.C. 20549.. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090.

Investment Company Act of 1940 Registration File No. 811-8301.

Securities Act of 1933 Registration File No. 333-31725

Nationwide VLI Separate Account-4

(Registrant)

Nationwide Life Insurance Company

(Depositor)

5100 Rings Road, RR1-04-D4

Dublin, OH 43017-1522

1-800-547-7548

TDD: 1-800-238-3035

STATEMENT OF ADDITIONAL INFORMATION

Flexible Premium Variable Universal Life Insurance Policies

This Statement of Additional Information ("SAI'') contains additional information regarding the individual flexible premium variable universal life insurance policy offered by us, Nationwide Life Insurance Company. This SAI is not a prospectus and should be read together with the policy prospectus dated May 1, 2007 and the prospectuses for the variable investment options. The prospectus is incorporated by reference in this SAI. You may obtain a copy of these prospectuses by writing or calling us at our address or phone number shown above.

The date of this Statement of Additional Information is May 1, 2007.

Table of Contents

Nationwide Life Insurance Company	1	Maximum Surrender Charge Calculation	3
Nationwide VLI Separate Account-4	1	Illustrations	5
Nationwide Investment Services Corporation (NISC)	1	Advertising	5
Services	2	Tax Definition of Life Insurance	5
Underwriting Procedure	2	Financial Statements	8

Nationwide Life Insurance Company

We are a stock life insurance company organized under the laws of the State of Ohio in March 1929 with our Home Office at One Nationwide Plaza, Columbus, Ohio 43215.  We provide life insurance, annuities and retirement products.  We are admitted to do business in all states, the District of Columbia and Puerto Rico.  Nationwide is a member of the Nationwide group of companies and all of our common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company.  NFS has two classes of common stock outstanding with different voting rights enabling Nationwide Corporation (the holder of all of the outstanding Class B Common Stock) to control NFS.  Nationwide Corporation is a holding company, as well.  All of the common stock is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), the ultimate controlling persons of the Nationwide group of companies.  The Nationwide group of companies is one of America’s largest insurance and financial services family of companies, with combined assets of over $160 billion as of December 31, 2006.

Nationwide VLI Separate Account-4

Nationwide VLI Separate Account-4 is a separate account that invests in mutual funds offered and sold to insurance companies and certain retirement plans.  We established the separate account on May 21, 1998 pursuant to Ohio law.  Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 the SEC does not supervise our management or the management of the variable account. We serve as the custodian of the assets of the variable account.

Nationwide Investment Services Corporation (NISC)

The policies are distributed by NISC, located at One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide.  For contract issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation.

The policies will be sold on a continuous basis by licensed insurance agents in those states where the policies may lawfully be sold.  Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the National Association of Securities Dealers, Inc. ("NASD").

SAI 1

Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 99% of the target premium plus 3% of any excess premium payments.  We pay gross renewal commissions in years 2 through 10 on the sale of the policies provided by NISC that will not exceed 3% of actual premium payment, and that will not exceed 2% in policy years 11 and thereafter.

We have paid no underwriting commissions to NISC for each of this separate account's last three fiscal years.

Services

We have responsibility for administration of the policies and the variable account.  We also maintain the records of the name, address, taxpayer identification number, and other pertinent information for each policy owner and the number and type of policy issued to each policy owner and records with respect to the policy value of each policy.

We are the custodian of the assets of the variable account.  We will maintain a record of all purchases and redemption of shares of the mutual funds.

The financial statements of Nationwide VLI Separate Account-4 and the consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.  The audit report of KPMG LLP covering the December 31, 2006 consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries adopted the American Institute of Certified Public Accountants' Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, in 2004.  KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Underwriting Procedure

We underwrite the policies issued through Nationwide VLI Separate Account-4.  The policy's cost of insurance depends upon the Insured's sex, issue age, risk class, and length of time the policy has been In Force.  The rates will vary depending upon tobacco use and other risk factors.  Monthly cost of insurance rates will not exceed those guaranteed in the policy.  Guaranteed cost of insurance rates for policies issued on Specified Amounts less than $100,000 are based on the 1980 Commissioners’ Extended Term Mortality Table, Age Last Birthday (1980 CET).  Guaranteed cost of insurance rates for policies issued on Specified Amounts $100,000 or more are based on the 1980 Commissioners’ Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO).  Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the standard guaranteed cost of insurance rate on a standard basis.  That is, standard guaranteed cost of insurance rates for substandard risks are guaranteed cost of insurance rates for standard risks times a percentage greater than 100%.  These mortality tables are sex distinct.  In addition, separate mortality tables will be used for tobacco and non-tobacco.  We may deduct a "flat extra" which is an additional constant charge per $1,000 of Specified Amount for certain activities or medical conditions of the Insured.  We apply the same flat extra to all Insured that engage in the same activity or have the same medical condition irrespective of their sex, issue age, underwriting class, or substandard rating, if any.

Mortality tables are unisex for:

· policies issued in the State of Montana; and

· group or sponsored arrangements (including our employees and their family members).

The rate class of an insured may affect the cost of insurance rate.  We currently place insureds into both standard rate classes and substandard rate classes that involve a higher mortality risk.  In an otherwise identical policy, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks.  Any change in the cost of insurance rates will apply to all insureds of the same age, gender, risk class and whose policies have been in effect for the same length of time.  The cost of insurance rates, policy charges, and payment options for policies issued in some states or in connection with certain employee benefit arrangements may be issued on a gender-neutral (unisex) basis.  The unisex rates will be higher than those applicable to females and lower than those applicable to males.  If the rating class for any increase in the Specified Amount of insurance coverage is not the same as the rating class at issue, the cost of insurance rate used after such increase will be a composite rate based upon a weighted average of the rates of the different rating classes.  The actual charges made during the policy year will be shown in the annual report delivered to policy owners.

SAI 2

Maximum Surrender Charge Calculation

The maximum surrender charge under the policy is based on the following calculation.

Maximum Surrender Charge                                                      26.50% multiplied by the lesser of (a) or (b),where:

(a) = the Specified Amount multiplied by the rate indicated on the chart "Surrender Target Factor" below divided by 1,000; and

(b) = Premiums paid by the policy owner during the first two policy years

Plus (c) multiplied by (d) where:

(c) = the Specified Amount divided by 1,000; and

(d) = the applicable rate from the "Administrative Target Factor" chart below.

The Surrender Target Factor allows the company to account for the probability that our costs incurred in the sales process will not be recouped.  The Administrative Target Factor allows the company to account for the probability (at various ages) that death will occur and no CDSC will be recouped.

Surrender Target Factor

Age	Male Non-Tobacco	Female Non-Tobacco	Male Tobacco	Female Tobacco
0	0.00	3.35	0.00	2.54
1	0.00	3.38	0.00	2.57
2	0.00	3.50	0.00	2.66
3	0.00	3.64	0.00	2.75
4	0.00	3.78	0.00	2.86
5	0.00	3.93	0.00	2.96
6	0.00	4.09	0.00	3.08
7	0.00	4.27	0.00	3.20
8	0.00	4.45	0.00	3.34
9	0.00	4.65	0.00	3.47
10	0.00	4.87	0.00	3.62
11	0.00	5.09	0.00	3.78
12	0.00	5.33	0.00	3.94
13	0.00	5.57	0.00	4.12
14	0.00	5.82	0.00	4.30
15	0.00	6.07	0.00	4.48
16	0.00	6.31	0.00	4.67
17	0.00	6.55	0.00	4.87
18	5.11	6.80	4.27	5.08
19	5.30	7.05	4.45	5.29
20	5.50	7.32	4.64	5.52
21	5.71	7.60	4.83	5.76
22	5.93	7.90	5.04	6.01
23	6.17	8.22	5.26	6.28
24	6.42	8.57	5.49	6.56
25	6.69	8.94	5.73	6.86
26	6.99	9.34	5.99	7.17
27	7.30	9.77	6.25	7.50
28	7.63	10.22	6.54	7.85
29	7.98	10.71	6.84	8.22
30	8.36	11.23	7.16	8.61
31	8.76	11.79	7.49	9.02
32	9.19	12.38	7.85	9.45
33	9.64	13.01	8.22	9.91
34	10.12	13.67	8.62	10.39
35	10.63	14.38	9.04	10.90
36	11.16	15.12	9.48	11.44
37	11.73	15.92	9.95	12.01
38	12.34	16.75	10.44	12.60
39	12.97	17.64	10.96	13.22
40	13.65	18.58	11.50	13.87
41	14.36	19.56	12.07	14.55

SAI 3

Age	Male Non-Tobacco	Female Non-Tobacco	Male Tobacco	Female Tobacco
42	15.12	20.6	12.67	15.26
43	15.93	21.7	13.3	16.01
44	16.78	22.87	13.97	16.79
45	17.68	24.09	14.68	17.6
46	18.65	25.39	15.42	18.47
47	19.67	26.76	16.21	19.37
48	20.76	28.21	17.05	20.33
49	21.92	29.76	17.93	21.34
50	23.15	31.4	18.87	22.4
51	24.47	33.13	19.87	23.53
52	25.87	34.98	20.93	24.72
53	27.37	36.93	22.05	25.97
54	28.97	38.99	23.25	27.3
55	30.67	41.17	24.51	28.7
56	32.49	43.48	25.86	30.18
57	34.42	45.92	27.31	31.76
58	36.49	48.52	28.86	33.46
59	38.71	51.28	30.52	35.28
60	41.09	54.23	32.32	37.25
61	43.63	57.36	34.26	39.37
62	46.36	60.7	36.35	41.65
63	49.28	64.24	38.59	44.09
64	52.4	67.98	40.99	46.69
65	55.75	71.92	43.56	49.46
66	59.32	76.1	46.32	52.41
67	63.16	80.52	49.3	55.57
68	67.28	85.23	52.52	58.99
69	71.73	90.27	56.04	62.72
70	76.52	95.66	59.88	66.8
71	81.69	101.41	64.08	71.26
72	87.24	107.54	68.67	76.11
73	93.18	114.01	73.64	81.35
74	99.5	120.81	79.03	86.97
75	106.21	127.9	84.84	92.97
76	113.33	135.27	91.1	99.39
77	120.92	142.94	97.88	106.27
78	129.04	150.99	105.24	113.68
79	137.79	159.53	113.28	121.73
80	147.23	168.6	122.07	130.49
81	147.23	168.6	122.07	130.49
82	147.23	168.6	122.07	130.49
83	147.23	168.6	122.07	130.49
84	147.23	168.6	122.07	130.49
85	147.23	168.6	122.07	130.49

Administrative Target Factor

Issue Age	Administrative Target Component With Specified Amount Less Than $100,000	Administrative Target Component With Specified Amount Of $100,000 And More
0 through 35	6.00	4.00
36 through 55	7.50	5.00
56 through 85	7.50	6.50

SAI 4

Illustrations

Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insured's age and premium class, the Death Benefits option, face amount, planned periodic Premiums, and Riders requested.  We reserve the right to charge a reasonable fee of no more than $25 for this service to persons who request more than one policy illustration during a policy year.

Advertising

Rating Agencies

Independent financial rating services, including Moody's, Standard & Poor's and A.M. Best Company rank and rate us.  The purpose of these ratings is to reflect the financial strength or claims-paying ability of Nationwide.  The ratings are not intended to reflect the Investment Experience or financial strength of the variable account.  We may advertise these ratings from time to time.  In addition, we may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend us or the policies.  Furthermore, we may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions.

Money Market Yields

We may advertise the "yield" and "effective yield" for the money market sub-account.  Yield and effective yield are annualized, which means that it is assumed that the underlying mutual fund generates the same level of net income throughout a year.

Yield is a measure of the net dividend and interest income earned over a specific seven-day period (which period will be stated in the advertisement) expressed as a percentage of the offering price of the underlying mutual fund’s units.  The effective yield is calculated similarly, but reflects assumed compounding, calculated under rules prescribed by the SEC.  Thus, effective yield will be slightly higher than yield, due to the compounding.

Historical Performance of the Sub-Accounts

We will advertise historical performance of the sub-accounts in accordance with SEC prescribed calculations.  Please note that performance information is annualized.  However, if a sub-account has been available in the variable account for less than one year, the performance information for that sub-account is not annualized.  Performance information is based on historical earnings and is not intended to predict or project future results.

Additional Materials.  We may provide information on various topics to you and prospective policy owners in advertising, sales literature or other materials.

Tax Definition of Life Insurance

Section 7702(b)(1) of the Internal Revenue Code provides that if one of two alternate tests is met, a policy will be treated as life insurance for federal tax purposes.  The two tests are referred to as the Cash Value Accumulation Test and the Guideline Premium/Cash Value Corridor Test.  Both tests are available to flexible premium policies such as this one.

The tables below show, numerically, the requirements for each test.

Guideline Premium/Cash Value Corridor Test

Table of Applicable Percentages of Cash Value

Attained Age of Insured	Percentage of Cash Value
0-40	250%
41	243%
42	236%
43	229%
44	222%
45	215%
46	209%
47	203%
48	197%
49	191%
50	185%

SAI 5

Attained Age of Insured	Percentage of Cash Value
51	178%
52	171%
53	164%
54	157%
55	150%
56	146%
57	142%
58	138%
59	134%
60	130%
61	128%
62	126%
63	124%
64	122%
65	120%
66	119%
67	118%
68	117%
69	116%
70	115%
71	113%
72	111%
73	109%
74	107%
75	105%
76	105%
77	105%
78	105%
79	105%
80	105%
81	105%
82	105%
83	105%
84	105%
85	105%
86	105%
87	105%
88	105%
89	105%
90	105%
91	104%
92	103%
93	102%
94	101%
95	101%
96	101%
97	101%
98	101%
99	101%
100	100%

Cash Value Accumulation Test

The Cash Value Accumulation Test also requires the Death Benefit to exceed an applicable percentage of the cash value.  These applicable percentages are calculated by determining net single premiums, as defined in Code Section 7702(b), for each policy year given a set of actuarial assumptions.  The relevant material assumptions include an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Revenue Code Section 7702 for the Cash Value Accumulation Test.  The resulting net

SAI 6

single premiums are then inverted (i.e., multiplied by 1/net single premium) to give the applicable cash value percentages.  These premiums vary with the ages, sexes, and risk classifications of the Insureds.

The table below provides an example of applicable percentages for the Cash Value Accumulation Test.  This example is for a male non-tobacco preferred issue age 55.

Policy Year	Percentage of Cash Value
1	302%
2	290%
3	279%
4	269%
5	259%
6	249%
7	240%
8	231%
9	223%
10	215%
11	207%
12	200%
13	193%
14	186%
15	180%
16	174%
17	169%
18	164%
19	159%
20	154%
21	150%
22	146%
23	142%
24	139%
25	136%
26	133%
27	130%
28	127%
29	125%
30	123%
31	121%
32	119%
33	118%
34	116%
35	115%
36	113%
37	112%
38	111%
39	110%
40	108%
41	107%
42	106%
43	104%
44	103%
45	102%

SAI 7

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

    Contract Owners of Nationwide VLI Separate Account-4:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide VLI Separate Account-4 (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2006, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights 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, 2006, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Accounts as of December 31, 2006, and the results of their operations, changes in contract owners’ equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Columbus, Ohio

March 9, 2007

NATIONWIDE VLI SEPARATE ACCOUNT–4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2006

Assets:
Investments at fair value:
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I (AIMBValue) 641,761 shares (cost $7,746,543)	$	8,573,932
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I (AIMCapAp) 59,531 shares (cost $1,365,024)		1,560,911
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares (AIMCapDev) 685,921 shares (cost $11,216,226)		12,641,516
AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I (AIMIntGr) 668,117 shares (cost $16,204,413)		19,662,694
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A (AlVPGrIncA) 734,058 shares (cost $17,570,653)		19,959,024
AllianceBernstein Variable Products Series Fund, Inc. – International Value Portfolio – Class A (AlVPIntlValA) 492,079 shares (cost $10,827,944)		12,282,295
AllianceBernstein Variable Products Series Fund, Inc. – Small-Mid Cap Value Portfolio – Class A (AlVPSmMdCpA) 187,235 shares (cost $3,072,162)		3,385,214
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I (ACVPIncGr) 3,403,175 shares (cost $21,788,199)		29,369,401
American Century Variable Portfolios, Inc. – Inflation Protection Fund – Class II (ACVPInfPro2) 620,755 shares (cost $6,397,394)		6,257,213
American Century Variable Portfolios, Inc. – International Fund – Class I (ACVPInt) 4,871,695 shares (cost $33,082,381)		49,301,553
American Century Variable Portfolios, Inc. – International Fund – Class III (ACVPInt3) 791,444 shares (cost $6,337,268)		8,009,412
American Century Variable Portfolios, Inc. – Mid Cap Value Fund – Class I (ACVPMdCpV) 89,844 shares (cost $1,150,515)		1,211,993
American Century Variable Portfolios, Inc. – Ultra®Fund – Class I (ACVPUltra) 400,702 shares (cost $4,017,182)		4,023,048
American Century Variable Portfolios, Inc. – Value Fund – Class I (ACVPVal) 8,613,430 shares (cost $66,622,286)		75,281,381
American Century Variable Portfolios, Inc. – VistaSM Fund – Class I (ACVPVista) 22,131 shares (cost $348,342)		348,349
Baron Capital Funds Trust – Baron Capital Asset Fund – Insurance Shares (BCFTCpAsset) 400,378 shares (cost $11,463,419)		12,932,203
BlackRock International Index Portfolio – Class II (BRIntIndex) 139,917 shares (cost $1,644,964)		1,464,934
BlackRock Large Cap Core V.I. Fund – Class II (BRLrgCp) 61,284 shares (cost $1,979,482)		1,972,125
Calvert Variable Series, Inc. – Social Equity Portfolio (CalVSSoEq) 6,726 shares (cost $118,588)		131,020
Credit Suisse Trust – Global Small Cap Portfolio (CSTGlSmCp) 55,300 shares (cost $608,828)		810,701
Credit Suisse Trust – International Focus Portfolio (CSTIntFoc) 147,699 shares (cost $1,237,053)		2,029,384

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

Credit Suisse Trust – Large Cap Value Portfolio (CSTLCapV) 107,862 shares (cost $1,397,319)	$	1,833,659
Dreyfus Investment Portfolios – Mid Cap Stock Index Portfolio – Initial Shares (DryIPMidCap) 63,167 shares (cost $1,116,854)		1,098,481
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap) 1,314,107 shares (cost $21,495,262)		24,429,251
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The (DrySRGro) 542,239 shares (cost $12,804,628)		15,426,696
Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx) 10,679,822 shares (cost $295,158,994)		386,075,551
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares (DryVIApp) 819,171 shares (cost $27,813,949)		34,855,721
Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares (DryVIDevLd) 19,757 shares (cost $807,824)		830,384
Dreyfus Variable Investment Fund – International Value Portfolio – Initial Shares (DryVIIntVal) 2,085,158 shares (cost $35,066,552)		40,660,588
DWS Variable Series II – DWS Dreman High Return Equity VIP – Class B (DWSVHghRtrn) 11,376 shares (cost $167,847)		170,863
Federated Insurance Series – Federated American Leaders Fund II – Primary Shares (FedAmLead) 16,810 shares (cost $329,299)		362,257
Federated Insurance Series – Federated Capital Appreciation Fund II – Primary Shares (FedCapAp) 63,070 shares (cost $362,551)		427,618
Federated Insurance Series – Federated Market Opportunity Fund II – Service Shares (FedMrkOp) 3,915 shares (cost $40,089)		41,185
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares (FedQualBd) 4,532,541 shares (cost $51,303,856)		51,172,391
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class (FidVIPEIS) 4,394,193 shares (cost $99,138,348)		114,732,373
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Service Class (FidVIPGrS) 2,825,006 shares (cost $82,313,010)		100,909,227
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Service Class (FidVIPHIS) 3,797,291 shares (cost $24,979,415)		23,998,878
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class (FidVIPOvS) 1,983,800 shares (cost $34,191,454)		47,333,468
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class R (FidVIPOvSR) 610,029 shares (cost $12,114,735)		14,536,987
Fidelity® Variable Insurance Products Fund II – Contrafund®Portfolio – Service Class (FidVIPConS) 6,267,438 shares (cost $160,780,598)		196,672,210
Fidelity® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class (FidVIPIGBdS) 867,477 shares (cost $10,942,088)		10,999,603
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class (FidVIPGrOpS) 722,147 shares (cost $10,169,915)		13,099,743
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class (FidVIPMCapS) 843,942 shares (cost $27,026,227)		29,191,938
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class (FidVIPVaIS) 600,775 shares (cost $7,806,058)		8,062,398
Fidelity® Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2 (FidVIPEnergyS2) 405,978 shares (cost $8,448,366)		7,705,457

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio – Service Class (FidVIPFree10S) 58,190 shares (cost $649,448)	$	673,841
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio – Service Class (FidVIPFree20S) 112,088 shares (cost $1,265,128)		1,355,144
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio – Service Class (FidVIPFree30S) 56,400 shares (cost $661,146)		701,611
Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund – Class 2 (FrVIPIncSec2) 75,971 shares (cost $1,274,033)		1,318,850
Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund – Class 1 (FrVIPRisDiv) 753,083 shares (cost $13,368,144)		15,724,376
Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 1 (FrVIPSmCapV1) 537,877 shares (cost $9,018,262)		10,257,309
Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 2 (FrVIPSmCapV2) 190,767 shares (cost $3,354,636)		3,584,521
Franklin Templeton Variable Insurance Products Trust – Templeton Developing Markets Securities Fund – Class 3(FrVIPDevMrk3) 369,433 shares (cost $4,256,333)		5,090,790
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1 (FrVIPForSec) 194,917 shares (cost $2,729,853)		3,701,478
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 2 (FrVIPForSec2) 1,018,673 shares (cost $16,315,933)		19,069,549
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 3 (FrVIPForSec3) 311,683 shares (cost $4,989,179)		5,822,234
Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund – Class 3 (FrVIPGlInc3) 99,793 shares (cost $1,468,512)		1,545,790
Gartmore GVIT – American Funds GVIT Asset Allocation Fund – Class II (GVITAstAll2) 94,329 shares (cost $1,701,829)		1,752,640
Gartmore GVIT – American Funds GVIT Bond Fund – Class II (GVITBnd2) 63,492 shares (cost $735,161)		744,129
Gartmore GVIT – American Funds GVIT Global Growth Fund – Class II (GVITGlobGr2) 70,030 shares (cost $1,534,922)		1,635,198
Gartmore GVIT – American Funds GVIT Growth Fund – Class II (GVITGrowth2) 26,945 shares (cost $1,676,683)		1,746,604
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I (GVITIntValI) 167,400 shares (cost $2,596,126)		3,110,287
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class III (GVITIntVal3) 436,930 shares (cost $7,270,397)		8,096,321
Gartmore GVIT – Emerging Markets Fund – Class I (GVITEmMrkts) 1,705,805 shares (cost $22,349,758)		29,885,712

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

Gartmore GVIT – Emerging Markets Fund – Class III (GVITEmMrkts3) 743,222 shares (cost $10,439,607)	$	13,013,811
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I (GVITFHiInc) 3,172,543 shares (cost $25,502,785)		25,316,897
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class III (GVITFHiInc3) 1,026,381 shares (cost $8,105,617)		8,180,255
Gartmore GVIT – Global Financial Services Fund – Class I (GVITGlFin) 368,859 shares (cost $4,829,535)		4,887,382
Gartmore GVIT – Global Health Sciences Fund – Class I (GVITGlHlth) 332,459 shares (cost $3,551,558)		3,530,719
Gartmore GVIT – Global Health Sciences Fund – Class III (GVITGlHlth3) 220,491 shares (cost $2,337,156)		2,346,019
Gartmore GVIT – Global Technology and Communications Fund – Class I (GVITGlTech) 1,317,579 shares (cost $4,838,072)		5,639,238
Gartmore GVIT – Global Technology and Communications Fund – Class III (GVITGlTech3) 431,760 shares (cost $1,728,502)		1,860,887
Gartmore GVIT – Global Utilities Fund – Class I (GVITGlUtl) 339,355 shares (cost $3,928,329)		4,353,923
Gartmore GVIT – Government Bond Fund – Class I (GVITGvtBd) 8,664,406 shares (cost $101,938,328)		98,341,002
Gartmore GVIT – Growth Fund: Class I (GVITGrowth) 1,380,194 shares (cost $12,737,491)		16,769,352
Gartmore GVIT – International Growth Fund – Class I (GVITIntGro) 800,207 shares (cost $7,530,865)		9,658,502
Gartmore GVIT – International Index Fund – Class VI (GVITIntIdx6) 20,638 shares (cost $206,790)		223,099
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II (GVITIDAgg2) 1,851,870 shares (cost $21,541,580)		25,018,761
Gartmore GVIT – Investor Destinations Conservative Fund – Class II (GVITIDCon2) 1,250,759 shares (cost $12,986,761)		13,095,442
Gartmore GVIT – Investor Destinations Moderate Fund – Class II (GVITIDMod2) 5,052,656 shares (cost $55,769,695)		62,046,616
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II (GVITIDModAg2) 5,165,455 shares (cost $58,984,026)		67,667,455
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II (GVITIDModCon2) 2,297,679 shares (cost $25,001,270)		26,078,662
Gartmore GVIT – J.P. Morgan GVIT Balanced Fund: Class I (GVITJPBal) 1,582,261 shares (cost $14,812,430)		17,404,872
Gartmore GVIT – Mid Cap Growth Fund – Class I (GVITMdCpGr) 583,834 shares (cost $14,497,239)		17,421,611
Gartmore GVIT – Mid Cap Index Fund – Class I (GVITMdCpIdx) 4,369,987 shares (cost $70,866,815)		81,238,063
Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt) 115,461,952 shares (cost $115,461,952)		115,461,952
Gartmore GVIT – Money Market Fund – Class V (GVITMyMkt5) 331,551,882 shares (cost $331,551,882)		331,551,882
Gartmore GVIT – Nationwide® Fund – Class I (GVITNWFund) 39,694,136 shares (cost $407,064,317)		528,725,885
Gartmore GVIT – Nationwide® Leaders Fund – Class I (GVITNWLead) 112,479 shares (cost $1,516,696)		1,545,460

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

Gartmore GVIT – Small Cap Growth Fund – Class I (GVITSmCapGr) 1,397,403 shares (cost $20,776,850)	$	22,931,384
Gartmore GVIT – Small Cap Value Fund – Class I (GVITSmCapVal) 6,450,836 shares (cost $75,850,088)		80,312,903
Gartmore GVIT – Small Company Fund – Class I (GVITSmComp) 4,055,439 shares (cost $93,935,239)		101,345,430
Gartmore GVIT – U.S. Growth Leaders Fund – Class I (GVITUSGro) 620,618 shares (cost $6,916,554)		6,541,317
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I (GVITVKVal) 1,086,122 shares (cost $12,107,828)		13,619,970
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I (GVITMltSec) 1,889,444 shares (cost $18,700,219)		18,535,448
Gartmore GVIT – Worldwide Leaders Fund – Class I (GVITWLead) 361,149 shares (cost $4,169,092)		5,742,265
Goldman Sachs Variable Insurance Trust – Goldman Sachs VIT Mid Cap Value Fund (GSVMdCpV) 4,334,754 shares (cost $68,919,597)		69,746,193
Janus Aspen Series – Balanced Portfolio – Service Shares (JanBal) 220,678 shares (cost $5,973,951)		6,362,145
Janus Aspen Series – Forty Portfolio – Service Shares (JanForty) 1,498,305 shares (cost $34,247,492)		44,814,299
Janus Aspen Series – Global Technology Portfolio – Service Shares (JanGlTech) 3,874,051 shares (cost $12,780,250)		16,542,197
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JanRMgCore) 42,218 shares (cost $558,977)		536,163
Janus Aspen Series – International Growth Portfolio – Service II Shares (JanIntGroS2) 172,800 shares (cost $7,535,221)		8,778,232
Janus Aspen Series – International Growth Portfolio – Service Shares (JanIntGroS) 1,202,260 shares (cost $34,389,454)		60,846,373
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio 1 (JPMMidCapGr) 186,972 shares (cost $3,678,340)		3,975,025
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio 1 (JPMMidCapV) 18,509 shares (cost $293,453)		307,804
Lord Abbett Series Mid Cap Value Fund – Class VC (LAMidCapV) 30,695 shares (cost $671,467)		668,544
MFS® Variable Insurance Trust – Investors Growth Stock Series – Initial Class (MFSInvGrStl) 420,753 shares (cost $3,915,870)		4,481,019
MFS® Variable Insurance Trust – Value Series – Initial Class (MFSValueI) 253,212 shares (cost $3,257,729)		3,676,633
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S (NBAMTFasc) 106,530 shares (cost $1,501,732)		1,547,881
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares (NBAMTGuard) 707,237 shares (cost $10,512,073)		13,939,650
Neuberger Berman Advisers Management Trust – International Portfolio – Class S (NBAMTInt) 142,966 shares (cost $1,809,583)		2,042,985
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I (NBAMTLMat) 761,477 shares (cost $9,761,133)		9,716,452
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares (NBAMTMCGr) 1,806,470 shares (cost $27,018,604)		42,018,501

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I (NBAMTPart) 978,518 shares (cost $19,050,352)	$	20,705,440
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class I (NBAMTRegI) 26,040 shares (cost $409,838)		422,116
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S (NBAMTRegS) 46,494 shares (cost $790,840)		806,676
Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio®– Class I (NBAMTSocRes) 163,205 shares (cost $2,420,411)		2,727,161
Oppenheimer Global Securities Fund/VA – Class 3 (OppGlSec3) 458,259 shares (cost $14,922,739)		16,950,987
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares (OppCapAp) 2,971,299 shares (cost $99,367,749)		123,100,924
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares (OppGlSec) 1,948,941 shares (cost $56,623,557)		71,701,536
Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA – Non-Service Shares (OppHighInc) 517,182 shares (cost $4,234,120)		4,421,910
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares (OppMSt) 1,786,786 shares (cost $33,583,588)		44,276,545
Oppenheimer Variable Account Funds – Oppenheimer Main Street Small Cap Fund®/VA – Non-Service Shares (OppMStSCap) 235,721 shares (cost $3,927,088)		4,514,056
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares (OppMidCap) 937,676 shares (cost $37,096,758)		47,680,845
PIMCO Variable Insurance Trust – PIMCO VIT All Asset Portfolio – Administrative Shares (PVITAllAst) 131,681 shares (cost $1,542,958)		1,536,715
PIMCO Variable Insurance Trust – PIMCO VIT Low Duration Portfolio – Administrative Shares (PVITLowDur) 4,025,170 shares (cost $40,862,629)		40,493,211
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares (PVITRealRet) 3,611,424 shares (cost $45,959,037)		43,084,286
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares (PVITTotRet) 12,271,879 shares (cost $126,339,431)		124,191,419
Pioneer Variable Contracts Trust – Pioneer High Yield VCT Portfolio – Class I (PioHiYield) 1,242,048 shares (cost $13,771,348)		13,674,952
Putnam Variable Trust – Putnam VT Growth and Income Fund – IB Shares (PVTGroIncIB) 45,422 shares (cost $1,117,108)		1,333,587
Putnam Variable Trust – Putnam VT International Equity Fund – IB Shares (PVTIntEqIB) 235,183 shares (cost $4,035,222)		4,854,171
Putnam Variable Trust – Putnam VT Voyager Fund – IB Shares (PVTVoyIB) 13,279 shares (cost $356,622)		399,304
Royce Capital Fund – Micro Cap (RCFMicroCap) 3,401,475 shares (cost $44,327,178)		48,981,238
T. Rowe Price Blue Chip Growth Portfolio – II (TRoeBlChip2) 139,079 shares (cost $1,362,968)		1,447,816
T. Rowe Price Equity Income Portfolio – II (TRowEqInc2) 3,661,397 shares (cost $82,754,741)		90,802,651

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

T. Rowe Price Limited Term Bond Portfolio – Class II (TRowLtdTBd2) 110,939 shares (cost $539,063)	$	543,601
T. Rowe Price Mid Cap Growth Fund – II (TRowMidCap2) 960,746 shares (cost $23,741,289)		22,712,038
T. Rowe Price New America Growth Portfolio (TRowNewAmGr) 525,438 shares (cost $10,575,171)		11,307,436
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class (VEWrldEMkt) 802,182 shares (cost $13,715,199)		20,038,504
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class (VEWrldHAs) 646,373 shares (cost $18,093,371)		21,142,859
Van Kampen – The Universal Institutional Funds, Inc. – Core Plus Fixed Income Portfolio – Class I (VKCorPlus) 193,244 shares (cost $2,203,897)		2,202,976
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I (VKEmMkt) 1,239,586 shares (cost $10,806,879)		11,057,110
Van Kampen – The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio – Class I (VKMidCapG) 477,081 shares (cost $5,945,767)		5,953,967
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I (VKUSRealEst) 3,427,634 shares (cost $67,012,332)		100,635,320
W&R Target Funds, Inc. – Growth Portfolio (WRGrowth) 2,355 shares (cost $22,205)		23,034
W&R Target Funds, Inc. – Real Estate Securities Portfolio (WRRealEstS) 5,316 shares (cost $42,450)		46,660
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM (WFAVTOpp) 1,187,655 shares (cost $24,586,942)		28,527,468
Total Investments		4,464,356,693
Accounts Receivable		85,675
Total Assets		4,464,442,368
Accounts Payable		–
Contract Owners Equity (note 7)	$	4,464,442,368

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS

Year Ended December 31, 2006

Investment activity:	Total			AIMBValue		AIMCapAp		AIMCapDev		AIMIntGr		AlVPGrIncA		AlVPIntlValA		AlVPSmMdCpA
Reinvested dividends	$	76,672,957		32,041		861		–		181,003		242,130		40,289		15,779
Mortality and expense risk charges (note 3)		(5,541,637	)	(6,338	)	–		(23,827	)	(54,749	)	(41,644	)	(13,250	)	–
Net investment income (loss)		71,131,320		25,703		861		(23,827	)	126,254		200,486		27,039		15,779
Proceeds from mutual fund shares sold		1,140,316,057		1,312,530		149,409		5,068,843		10,649,205		4,235,798		907,194		1,348,047
Cost of mutual fund shares sold		(973,419,401	)	(1,187,147	)	(126,912	)	(4,136,768	)	(8,352,632	)	(3,616,448	)	(1,003,049	)	(1,175,240	)
Realized gain (loss) on investments		166,896,656		125,383		22,497		932,075		2,296,573		619,350		(95,855	)	172,807
Change in unrealized gain (loss) on investments		167,698,301		446,439		64,228		577,441		1,887,880		1,156,397		1,454,350		2,419
Net gain (loss) on investments		334,594,957		571,822		86,725		1,509,516		4,184,453		1,775,747		1,358,495		175,226
Reinvested capital gains		96,963,068		354,271		–		214,763		–		880,352		52,921		260,883
Net increase (decrease) in contract owners’ equity resulting from operations	$	502,689,345		951,796		87,586		1,700,452		4,310,707		2,856,585		1,438,455		451,888
Investment activity:	ACVPIncGr			ACVPInfPro2		ACVPInt		ACVPInt3		ACVPMdCpV		ACVPUltra		ACVPVal		ACVPVista
Reinvested dividends	$	519,756		222,068		739,624		85,854		7,230		–		994,811		–
Mortality and expense risk charges (note 3)		(12,859	)	–		(56,549	)	–		–		(4,670	)	(50,875	)	(376	)
Net investment income (loss)		506,897		222,068		683,075		85,854		7,230		(4,670	)	943,936		(376	)
Proceeds from mutual fund shares sold		4,648,196		2,252,459		9,940,290		494,584		887,042		4,235,748		20,855,281		80,964
Cost of mutual fund shares sold		(3,088,338	)	(2,337,933	)	(6,294,596	)	(387,875	)	(847,196	)	(3,886,034	)	(16,727,267	)	(75,406	)
Realized gain (loss) on investments		1,559,858		(85,474	)	3,645,694		106,709		39,846		349,714		4,128,014		5,558
Change in unrealized gain (loss) on investments		2,321,259		(15,319	)	6,143,566		1,216,942		69,490		(515,226	)	598,190		(3,442	)
Net gain (loss) on investments		3,881,117		(100,793	)	9,789,260		1,323,651		109,336		(165,512	)	4,726,204		2,116
Reinvested capital gains		–		–		–		–		36,808		–		6,275,420		410
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,388,014		121,275		10,472,335		1,409,505		153,374		(170,182	)	11,945,560		2,150

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	BCFTCpAsset			BRIntIndex		BRLrgCp		CalVSSoEq		CSTGlSmCp		CSTIntFoc		CSTLCapV		DryIPMidCap
Reinvested dividends	$	–		52,652		14,810		–		–		19,749		15,350		3,849
Mortality and expense risk charges (note 3)		(37,388	)	(2,405	)	(5,231	)	(194	)	(325	)	(222	)	(122	)	(2,586	)
Net investment income (loss)		(37,388	)	50,247		9,579		(194	)	(325	)	19,527		15,228		1,263
Proceeds from mutual fund shares sold		7,498,261		63,114		1,037,974		5,399		249,680		266,153		477,831		1,649,229
Cost of mutual fund shares sold		(6,787,398	)	(55,033	)	(969,795	)	(4,952	)	(131,828	)	(176,919	)	(390,984	)	(1,669,226	)
Realized gain (loss) on investments		710,863		8,081		68,179		447		117,852		89,234		86,847		(19,997	)
Change in unrealized gain (loss) on investments		1,013,385		(180,415	)	(10,146	)	10,994		(23,716	)	224,640		203,991		(77,469	)
Net gain (loss) on investments		1,724,248		(172,334	)	58,033		11,441		94,136		313,874		290,838		(97,466	)
Reinvested capital gains		–		331,284		213,679		–		–		–		–		164,113
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,686,860		209,197		281,291		11,247		93,811		333,401		306,066		67,910
Investment activity:	DryIPSmCap			DrySRGro		DryStkIx		DryVIApp		DryVIDevLd		DryVIIntVal		DWSVHghRtrn		FedAmLead
Reinvested dividends	$	87,107		15,965		6,273,092		505,780		3,628		453,326		–		4,783
Mortality and expense risk charges (note 3)		(38,112	)	(2,670	)	(573,852	)	(38,526	)	–		(90,105	)	(84	)	–
Net investment income (loss)		48,995		13,295		5,699,240		467,254		3,628		363,221		(84	)	4,783
Proceeds from mutual fund shares sold		4,827,780		1,764,978		88,226,557		6,938,954		312,992		11,269,703		276		32,187
Cost of mutual fund shares sold		(4,215,687	)	(1,820,385	)	(76,329,079	)	(5,358,553	)	(293,787	)	(8,828,263	)	(260	)	(28,531	)
Realized gain (loss) on investments		612,093		(55,407	)	11,897,478		1,580,401		19,205		2,441,440		16		3,656
Change in unrealized gain (loss) on investments		1,659,449		1,370,321		35,413,947		3,002,962		(67,857	)	1,821,727		3,015		3,909
Net gain (loss) on investments		2,271,542		1,314,914		47,311,425		4,583,363		(48,652	)	4,263,167		3,031		7,565
Reinvested capital gains		494,024		–		–		–		75,020		2,561,432		6,415		39,581
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,814,561		1,328,209		53,010,665		5,050,617		29,996		7,187,820		9,362		51,929

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	FedCapAp			FedMrkOp		FedQualBd		FidVIPEIS		FidVIPGrS		FidVIPHIS		FidVIPOvS		FidVIPOvSR
Reinvested dividends	$	2,870		–		3,773,553		3,262,586		272,851		1,783,894		394,047		70,073
Mortality and expense risk charges (note 3)		–		–		(100,419	)	(104,689	)	(80,921	)	(14,496	)	(74,633	)	–
Net investment income (loss)		2,870		–		3,673,134		3,157,897		191,930		1,769,398		319,414		70,073
Proceeds from mutual fund shares sold		42,635		206		53,280,307		13,139,607		14,310,827		5,105,015		15,201,025		1,212,670
Cost of mutual fund shares sold		(38,472	)	(202	)	(56,249,561	)	(9,185,768	)	(13,896,757	)	(5,335,038	)	(11,129,986	)	(929,691	)
Realized gain (loss) on investments		4,163		4		(2,969,254	)	3,953,839		414,070		(230,023	)	4,071,039		282,979
Change in unrealized gain (loss) on investments		51,818		1,096		1,422,971		(784,378	)	5,487,027		928,822		2,726,908		1,463,144
Net gain (loss) on investments		55,981		1,100		(1,546,283	)	3,169,461		5,901,097		698,799		6,797,947		1,746,123
Reinvested capital gains		–		–		–		12,637,235		–		–		306,743		52,656
Net increase (decrease) in contract owners’ equity resulting from operations	$	58,851		1,100		2,126,851		18,964,593		6,093,027		2,468,197		7,424,104		1,868,852
Investment activity:	FidVIPConS			FidVIPIGBdS		FidVIPGrOpS		FidVIPMCapS		FidVIPVaIS		FidVIPEnergyS2		FidVIPFree10S		FidVIPFree20S
Reinvested dividends	$	2,047,582		297,433		92,847		61,912		36,774		45,935		11,056		19,492
Mortality and expense risk charges (note 3)		(211,275	)	(1,085	)	(4,206	)	(12,308	)	(135	)	–		–		–
Net investment income (loss)		1,836,307		296,348		88,641		49,604		36,639		45,935		11,056		19,492
Proceeds from mutual fund shares sold		29,978,822		515,297		4,134,859		6,009,399		1,090,045		2,595,083		122,743		76,109
Cost of mutual fund shares sold		(18,278,897	)	(535,244	)	(3,493,942	)	(4,571,315	)	(1,056,473	)	(2,352,583	)	(115,515	)	(69,962	)
Realized gain (loss) on investments		11,699,925		(19,947	)	640,917		1,438,084		33,572		242,500		7,228		6,147
Change in unrealized gain (loss) on investments		(9,318,194	)	100,550		(47,920	)	(1,316,944	)	(146,173	)	(797,228	)	19,784		71,282
Net gain (loss) on investments		2,381,731		80,603		592,997		121,140		(112,601	)	(554,728	)	27,012		77,429
Reinvested capital gains		15,541,966		18,136		–		2,795,083		1,229,164		1,001,993		2,850		12,045
Net increase (decrease) in contract owners’ equity resulting from operations	$	19,760,004		395,087		681,638		2,965,827		1,153,202		493,200		40,918		108,966

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	FidVIPFree30S			FrVIPIncSec2		FrVIPRisDiv		FrVIPSmCapV1		FrVIPSmCapV2		FrVIPDevMrk3		FrVIPForSec		FrVIPForSec2
Reinvested dividends	$	8,990		329		169,336		70,843		23,455		51,034		52,262		199,321
Mortality and expense risk charges (note 3)		–		–		–		–		(9,728	)	–		–		(50,795	)
Net investment income (loss)		8,990		329		169,336		70,843		13,727		51,034		52,262		148,526
Proceeds from mutual fund shares sold		65,452		129,161		2,043,331		1,699,219		2,019,376		1,120,842		1,025,895		6,710,883
Cost of mutual fund shares sold		(58,793	)	(124,095	)	(1,727,549	)	(1,267,977	)	(1,779,049	)	(909,770	)	(765,817	)	(5,319,858	)
Realized gain (loss) on investments		6,659		5,066		315,782		431,242		240,327		211,072		260,078		1,391,025
Change in unrealized gain (loss) on investments		31,837		44,817		1,648,834		535,635		154,996		648,770		419,827		1,461,209
Net gain (loss) on investments		38,496		49,883		1,964,616		966,877		395,323		859,842		679,905		2,852,234
Reinvested capital gains		6,386		44		68,181		298,012		131,249		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	53,872		50,256		2,202,133		1,335,732		540,299		910,876		732,167		3,000,760
Investment activity:	FrVIPForSec3			FrVIPGlInc3		GVITAstAll2		GVITBnd2		GVITGlobGr2		GVITGrowth2		GVITIntValI		GVITIntVal3
Reinvested dividends	$	58,304		29,118		28,982		2,413		1,684		10,186		65,708		123,878
Mortality and expense risk charges (note 3)		–		–		–		–		–		–		–		–
Net investment income (loss)		58,304		29,118		28,982		2,413		1,684		10,186		65,708		123,878
Proceeds from mutual fund shares sold		770,445		367,698		35,153		9,429		72,853		88,718		850,592		1,569,833
Cost of mutual fund shares sold		(639,925	)	(350,001	)	(35,500	)	(9,429	)	(73,063	)	(90,919	)	(728,806	)	(1,347,260	)
Realized gain (loss) on investments		130,520		17,697		(347	)	–		(210	)	(2,201	)	121,786		222,573
Change in unrealized gain (loss) on investments		667,348		73,043		50,812		8,969		100,276		69,921		262,686		496,243
Net gain (loss) on investments		797,868		90,740		50,465		8,969		100,066		67,720		384,472		718,816
Reinvested capital gains		–		–		–		–		–		–		202,934		403,845
Net increase (decrease) in contract owners’ equity resulting from operations	$	856,172		119,858		79,447		11,382		101,750		77,906		653,114		1,246,539

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	GVITEmMrkts			GVITEmMrkts3		GVITFHiInc		GVITFHiInc3		GVITGlFin		GVITGlHlth		GVITGlHlth3		GVITGlTech
Reinvested dividends	$	173,849		71,767		1,789,146		475,086		82,129		–		–		–
Mortality and expense risk charges (note 3)		(48,942	)	–		(27,257	)	–		(3,414	)	(3,910	)	–		(7,319	)
Net investment income (loss)		124,907		71,767		1,761,889		475,086		78,715		(3,910	)	–		(7,319	)
Proceeds from mutual fund shares sold		6,470,923		2,724,119		5,306,340		1,596,636		831,679		1,641,657		1,235,737		1,764,226
Cost of mutual fund shares sold		(4,271,953	)	(2,293,879	)	(5,369,110	)	(1,611,819	)	(744,558	)	(1,600,845	)	(1,329,111	)	(1,695,917	)
Realized gain (loss) on investments		2,198,970		430,240		(62,770	)	(15,183	)	87,121		40,812		(93,374	)	68,309
Change in unrealized gain (loss) on investments		4,849,580		2,317,091		711,651		168,615		41,527		68,815		104,691		460,052
Net gain (loss) on investments		7,048,550		2,747,331		648,881		153,432		128,648		109,627		11,317		528,361
Reinvested capital gains		275,455		116,408		–		–		557,756		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	7,448,912		2,935,506		2,410,770		628,518		765,119		105,717		11,317		521,042
Investment activity:	GVITGlTech3			GVITGlUtl		GVITGvtBd		GVITGrowth		GVITIntGro		GVITIntIdx6		GVITIDAgg2		GVITIDCon2
Reinvested dividends	$	–		81,320		4,446,214		8,651		54,417		2,038		437,711		391,302
Mortality and expense risk charges (note 3)		–		(1,074	)	(171,857	)	(2,159	)	(2,750	)	–		(15,916	)	(11,395	)
Net investment income (loss)		–		80,246		4,274,357		6,492		51,667		2,038		421,795		379,907
Proceeds from mutual fund shares sold		1,410,326		835,865		52,330,913		1,430,837		1,306,433		16,301		3,167,832		2,565,439
Cost of mutual fund shares sold		(1,333,461	)	(835,853	)	(56,485,655	)	(1,324,800	)	(908,396	)	(16,454	)	(2,525,304	)	(2,580,152	)
Realized gain (loss) on investments		76,865		12		(4,154,742	)	106,037		398,037		(153	)	642,528		(14,713	)
Change in unrealized gain (loss) on investments		104,554		680,567		2,016,604		848,404		1,594,606		16,309		1,918,101		238,962
Net gain (loss) on investments		181,419		680,579		(2,138,138	)	954,441		1,992,643		16,156		2,560,629		224,249
Reinvested capital gains		–		232,606		841,510		–		11,773		–		295,325		123,826
Net increase (decrease) in contract owners’ equity resulting from operations	$	181,419		993,431		2,977,729		960,933		2,056,083		18,194		3,277,749		727,982

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	GVITIDMod2			GVITIDModAg2		GVITIDModCon2		GVITJPBal		GVITMdCpGr		GVITMdCpIdx		GVITMyMkt		GVITMyMkt5
Reinvested dividends	$	1,360,211		1,331,756		669,778		426,226		–		891,863		5,084,140		11,460,488
Mortality and expense risk charges (note 3)		(32,713	)	(15,383	)	(40,367	)	(9,847	)	(4,698	)	(110,551	)	(26,225	)	(603,177	)
Net investment income (loss)		1,327,498		1,316,373		629,411		416,379		(4,698	)	781,312		5,057,915		10,857,311
Proceeds from mutual fund shares sold		4,262,118		7,165,706		3,903,298		5,633,377		2,420,730		21,192,088		46,839,425		161,956,036
Cost of mutual fund shares sold		(3,300,097	)	(5,279,014	)	(3,435,331	)	(4,282,829	)	(1,917,648	)	(13,141,753	)	(46,839,425	)	(161,956,036	)
Realized gain (loss) on investments		962,021		1,886,692		467,967		1,350,548		503,082		8,050,335		–		–
Change in unrealized gain (loss) on investments		3,146,924		4,291,540		474,133		439,493		1,011,753		(3,099,405	)	–		–
Net gain (loss) on investments		4,108,945		6,178,232		942,100		1,790,041		1,514,835		4,950,930		–		–
Reinvested capital gains		502,972		725,912		317,513		–		–		1,086,719		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	5,939,415		8,220,517		1,889,024		2,206,420		1,510,137		6,818,961		5,057,915		10,857,311
Investment activity:	GVITNWFund			GVITNWLead		GVITSmCapGr		GVITSmCapVal		GVITSmComp		GVITUSGro		GVITVKVal		GVITMltSec
Reinvested dividends	$	5,353,612		7,659		–		365,644		109,739		18,585		216,872		722,676
Mortality and expense risk charges (note 3)		(451,840	)	(228	)	(23,290	)	(83,613	)	(171,261	)	(4,486	)	(1,141	)	(19,720	)
Net investment income (loss)		4,901,772		7,431		(23,290	)	282,031		(61,522	)	14,099		215,731		702,956
Proceeds from mutual fund shares sold		7,831,584		406,874		13,304,567		32,381,732		41,341,579		2,067,982		2,446,309		5,309,683
Cost of mutual fund shares sold		(6,429,339	)	(406,136	)	(11,168,294	)	(20,312,718	)	(28,211,862	)	(2,136,302	)	(1,834,717	)	(5,294,952	)
Realized gain (loss) on investments		1,402,245		738		2,136,273		12,069,014		13,129,717		(68,320	)	611,592		14,731
Change in unrealized gain (loss) on investments		56,960,310		83,224		(1,500,638	)	(5,079,969	)	(3,983,920	)	(200,490	)	499,983		51,097
Net gain (loss) on investments		58,362,555		83,962		635,635		6,989,045		9,145,797		(268,810	)	1,111,575		65,828
Reinvested capital gains		–		113,501		–		6,169,351		2,239,910		130,686		577,219		38,017
Net increase (decrease) in contract owners’ equity resulting from operations	$	63,264,327		204,894		612,345		13,440,427		11,324,185		(124,025	)	1,904,525		806,801

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	GVITWLead			GSVMdCpV		JanBal		JanForty		JanGlTech		JanRMgCore		JanIntGroS2		JanIntGroS
Reinvested dividends	$	46,359		621,541		159,786		61,155		–		677		75,317		1,035,189
Mortality and expense risk charges (note 3)		(1,399	)	(174,173	)	(18,830	)	(41,598	)	(4,761	)	–		–		(47,359	)
Net investment income (loss)		44,960		447,368		140,956		19,557		(4,761	)	677		75,317		987,830
Proceeds from mutual fund shares sold		1,316,353		14,591,447		7,262,058		11,584,344		3,242,307		229,916		32,369		14,879,293
Cost of mutual fund shares sold		(918,807	)	(13,064,165	)	(6,543,076	)	(7,532,018	)	(2,514,799	)	(236,085	)	(32,201	)	(6,333,432	)
Realized gain (loss) on investments		397,546		1,527,282		718,982		4,052,326		727,508		(6,169	)	168		8,545,861
Change in unrealized gain (loss) on investments		800,472		565,343		(247,691	)	(196,228	)	489,592		21,541		1,243,011		10,808,316
Net gain (loss) on investments		1,198,018		2,092,625		471,291		3,856,098		1,217,100		15,372		1,243,179		19,354,177
Reinvested capital gains		–		6,847,239		–		–		–		42,380		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,242,978		9,387,232		612,247		3,875,655		1,212,339		58,429		1,318,496		20,342,007
Investment activity:	JPMMidCapGr			JPMMidCapV		LAMidCapV		MFSInvGrStl		MFSValueI		NBAMTFasc		NBAMTGuard		NBAMTInt
Reinvested dividends	$	–		7,753		3,175		–		24,098		–		107,565		3,750
Mortality and expense risk charges (note 3)		(10,359	)	(1,589	)	(923	)	–		–		(1,815	)	(11,914	)	–
Net investment income (loss)		(10,359	)	6,164		2,252		–		24,098		(1,815	)	95,651		3,750
Proceeds from mutual fund shares sold		1,702,801		819,944		131,349		498,780		520,990		878,956		5,255,264		468,773
Cost of mutual fund shares sold		(1,471,657	)	(815,609	)	(127,781	)	(438,872	)	(416,201	)	(800,314	)	(3,009,402	)	(404,385	)
Realized gain (loss) on investments		231,144		4,335		3,568		59,908		104,789		78,642		2,245,862		64,388
Change in unrealized gain (loss) on investments		(10,397	)	(30,208	)	1,310		247,242		286,163		(36,527	)	(418,853	)	183,156
Net gain (loss) on investments		220,747		(25,873	)	4,878		307,150		390,952		42,115		1,827,009		247,544
Reinvested capital gains		109,584		98,910		49,476		–		68,117		45,103		–		13,829
Net increase (decrease) in contract owners’ equity resulting from operations	$	319,972		79,201		56,606		307,150		483,167		85,403		1,922,660		265,123

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	NBAMTLMat			NBAMTMCGr		NBAMTPart		NBAMTRegI		NBAMTRegS		NBAMTSocRes		OppGlSec3		OppCapAp
Reinvested dividends	$	272,797		–		145,279		1,603		3,419		3,512		109,643		492,032
Mortality and expense risk charges (note 3)		–		(22,024	)	(8,489	)	(873	)	–		–		–		(202,004	)
Net investment income (loss)		272,797		(22,024	)	136,790		730		3,419		3,512		109,643		290,028
Proceeds from mutual fund shares sold		1,679,761		4,158,296		9,014,252		185,941		422,457		427,871		1,586,318		31,207,155
Cost of mutual fund shares sold		(1,696,908	)	(2,254,637	)	(6,078,285	)	(200,746	)	(414,879	)	(343,792	)	(1,369,633	)	(24,649,134	)
Realized gain (loss) on investments		(17,147	)	1,903,659		2,935,967		(14,805	)	7,578		84,079		216,685		6,558,021
Change in unrealized gain (loss) on investments		113,979		3,585,864		(2,822,988	)	12,278		8,407		177,186		1,264,016		2,466,146
Net gain (loss) on investments		96,832		5,489,523		112,979		(2,527	)	15,985		261,265		1,480,701		9,024,167
Reinvested capital gains		–		–		2,237,618		22,223		47,400		24,933		573,997		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	369,629		5,467,499		2,487,387		20,426		66,804		289,710		2,164,341		9,314,195
Investment activity:	OppGlSec			OppHighInc		OppMSt		OppMStSCap		OppMidCap		PVITAllAst		PVITLowDur		PVITRealRet
Reinvested dividends	$	783,099		258,840		454,051		4,810		–		137,089		1,681,826		1,704,599
Mortality and expense risk charges (note 3)		(129,203	)	–		(15,084	)	–		(45,719	)	(8,507	)	(105,255	)	(117,653	)
Net investment income (loss)		653,896		258,840		438,967		4,810		(45,719	)	128,582		1,576,571		1,586,946
Proceeds from mutual fund shares sold		22,784,327		3,629,272		5,548,846		713,142		11,086,192		3,064,536		13,164,309		9,633,598
Cost of mutual fund shares sold		(13,970,780	)	(3,647,900	)	(3,585,596	)	(556,974	)	(7,115,910	)	(3,001,558	)	(13,483,942	)	(9,963,661	)
Realized gain (loss) on investments		8,813,547		(18,628	)	1,963,250		156,168		3,970,282		62,978		(319,633	)	(330,063	)
Change in unrealized gain (loss) on investments		(1,859,919	)	119,146		3,463,093		210,349		(2,446,101	)	(54,520	)	210,497		(2,320,724	)
Net gain (loss) on investments		6,953,628		100,518		5,426,343		366,517		1,524,181		8,458		(109,136	)	(2,650,787	)
Reinvested capital gains		4,090,534		–		–		94,934		–		3,877		–		1,140,949
Net increase (decrease) in contract owners’ equity resulting from operations	$	11,698,058		359,358		5,865,310		466,261		1,478,462		140,917		1,467,435		77,108

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	PVITTotRet			PioHiYield		PVTGroIncIB		PVTIntEqIB		PVTVoyIB		RCFMicroCap		TRoeBlChip2		TRowEqInc2
Reinvested dividends	$	4,529,999		678,616		18,028		12,530		389		84,130		2,764		1,073,160
Mortality and expense risk charges (note 3)		(280,433	)	(32,699	)	–		–		–		(139,651	)	–		(208,820	)
Net investment income (loss)		4,249,566		645,917		18,028		12,530		389		(55,521	)	2,764		864,340
Proceeds from mutual fund shares sold		26,174,855		2,477,738		197,400		1,536,330		59,294		23,927,519		386,177		30,121,040
Cost of mutual fund shares sold		(26,924,213	)	(2,618,082	)	(161,769	)	(1,160,522	)	(52,368	)	(19,647,182	)	(366,047	)	(26,662,690	)
Realized gain (loss) on investments		(749,358	)	(140,344	)	35,631		375,808		6,926		4,280,337		20,130		3,458,350
Change in unrealized gain (loss) on investments		(291,320	)	323,000		102,959		520,130		12,151		1,284,180		75,614		7,085,486
Net gain (loss) on investments		(1,040,678	)	182,656		138,590		895,938		19,077		5,564,517		95,744		10,543,836
Reinvested capital gains		654,903		171,999		28,081		–		–		2,562,710		–		2,346,470
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,863,791		1,000,572		184,699		908,468		19,466		8,071,706		98,508		13,754,646
Investment activity:	TRowLtdTBd2			TRowMidCap2		TRowNewAmGr		VEWrldEMkt		VEWrldHAs		VKCorPlus		VKEmMkt		VKMidCapG
Reinvested dividends	$	13,800		–		5,033		92,327		12,151		77,741		1,349,346		–
Mortality and expense risk charges (note 3)		–		(70,941	)	(41,086	)	(7,389	)	(16,284	)	–		(18,687	)	(9,401	)
Net investment income (loss)		13,800		(70,941	)	(36,053	)	84,938		(4,133	)	77,741		1,330,659		(9,401	)
Proceeds from mutual fund shares sold		141,187		15,288,789		10,060,186		3,430,052		10,778,845		442,354		10,392,600		3,313,020
Cost of mutual fund shares sold		(142,752	)	(12,870,125	)	(9,891,776	)	(2,146,049	)	(6,215,920	)	(450,957	)	(10,439,043	)	(2,533,317	)
Realized gain (loss) on investments		(1,565	)	2,418,664		168,410		1,284,003		4,562,925		(8,603	)	(46,443	)	779,703
Change in unrealized gain (loss) on investments		5,730		(4,201,040	)	86,063		2,758,263		(1,696,211	)	542		(428,311	)	(658,265	)
Net gain (loss) on investments		4,165		(1,782,376	)	254,473		4,042,266		2,866,714		(8,061	)	(474,754	)	121,438
Reinvested capital gains		–		2,767,140		140,937		1,453,634		1,034,045		10,330		293,124		414,443
Net increase (decrease) in contract owners’ equity resulting from operations	$	17,965		913,823		359,357		5,580,838		3,896,626		80,010		1,149,029		526,480

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	VKUSRealEst			WRGrowth		WRRealEstS		WFAVTOpp
Reinvested dividends	$	890,502		–		313		–
Mortality and expense risk charges (note 3)		(102,412	)	(1,761	)	(67	)	(26,293	)
Net investment income (loss)		788,090		(1,761	)	246		(26,293	)
Proceeds from mutual fund shares sold		11,297,939		1,000,430		5,588		7,384,959
Cost of mutual fund shares sold		(5,052,860	)	(1,074,726	)	(5,108	)	(4,366,298	)
Realized gain (loss) on investments		6,245,079		(74,296	)	480		3,018,661
Change in unrealized gain (loss) on investments		14,169,666		829		4,210		(2,833,629	)
Net gain (loss) on investments		20,414,745		(73,467	)	4,690		185,032
Reinvested capital gains		5,346,275		–		1,120		3,200,397
Net increase (decrease) in contract owners’ equity resulting from operations	$	26,549,110		(75,228	)	6,056		3,359,136

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2006 and 2005

	Total					AIMBValue				AIMCapAp				AIMCapDev
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	71,131,320		53,182,934		25,703		(2,946	)	861		242		(23,827	)	(16,945	)
Realized gain (loss) on investments		166,896,656		116,451,853		125,383		537,711		22,497		31,267		932,075		528,321
Change in unrealized gain (loss) on investments		167,698,301		34,976,679		446,439		(107,374	)	64,228		67,254		577,441		442,622
Reinvested capital gains		96,963,068		61,380,612		354,271		76,238		–		–		214,763		–
Net increase (decrease) in contract owners’ equity resulting from operations		502,689,345		265,992,078		951,796		503,629		87,586		98,763		1,700,452		953,998
Equity transactions:
Purchase payments received from contract owners (note 6)		573,057,603		715,520,140		1,176,451		1,360,376		237,149		212,666		1,353,692		1,247,716
Transfers between funds		–		–		296,702		3,869,968		201,737		295,260		1,319,907		8,121,858
Surrenders (note 6)		(387,471,327	)	(534,517,966	)	(218,710	)	(4,766,502	)	(63,473	)	(29,876	)	(524,411	)	(4,134,776	)
Death benefits (note 4)		(9,884,896	)	(5,693,704	)	(23,642	)	(9,522	)	(152	)	–		(6,487	)	(5,288	)
Net policy repayments (loans) (note 5)		(17,332,223	)	(20,641,828	)	(49,371	)	(79,638	)	(32,507	)	(11,600	)	(22,732	)	(7,148	)
Deductions for surrender charges (note 2d)		(7,673,977	)	(8,904,284	)	(25,638	)	(27,640	)	(11,034	)	(4,456	)	(7,078	)	(5,342	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(129,174,617	)	(135,001,808	)	(375,194	)	(398,236	)	(88,470	)	(81,872	)	(457,957	)	(268,490	)
Asset charges (note 3):
FPVUL & VEL contracts		(6,179,710	)	(5,334,262	)	(20,591	)	(14,696	)	(4,559	)	(3,125	)	(12,480	)	(8,692	)
MSP contracts		(268,091	)	(228,393	)	(331	)	(195	)	(52	)	(17	)	(272	)	(132	)
SL contracts		(1,272,062	)	(1,248,349	)	(2,357	)	(1,327	)	(1,757	)	(334	)	(744	)	(539	)
Adjustments to maintain reserves		53,319		61,021		462		112		10		17		8,280		92
Net equity transactions		13,854,019		4,010,567		757,781		(67,300	)	236,892		376,663		1,649,718		4,939,259
Net change in contract owners’ equity		516,543,364		270,002,645		1,709,577		436,329		324,478		475,426		3,350,170		5,893,257
Contract owners’ equity beginning of period		3,947,899,004		3,677,896,359		6,865,070		6,428,741		1,236,552		761,126		9,299,865		3,406,608
Contract owners’ equity end of period	$	4,464,442,368		3,947,899,004		8,574,647		6,865,070		1,561,030		1,236,552		12,650,035		9,299,865
CHANGES IN UNITS:
Beginning units		302,538,590		304,571,400		445,372		441,082		85,976		57,596		556,838		222,592
Units purchased		72,274,994		162,253,438		109,212		503,212		29,998		38,251		220,422		693,638
Units redeemed		(67,050,776	)	(164,286,248	)	(62,908	)	(498,922	)	(13,870	)	(9,871	)	(127,092	)	(359,392	)
Ending units		307,762,808		302,538,590		491,676		445,372		102,104		85,976		650,168		556,838

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	AIMIntGr					AlVPGrIncA				AlVPIntlValA			AlVPSmMdCpA
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	126,254		67,480		200,486		189,608		27,039		–	15,779		21,803
Realized gain (loss) on investments		2,296,573		119,622		619,350		1,171,785		(95,855	)	–	172,807		67,366
Change in unrealized gain (loss) on investments		1,887,880		1,425,222		1,156,397		(642,982	)	1,454,350		–	2,419		(1,411	)
Reinvested capital gains		–		–		880,352		–		52,921		–	260,883		141,546
Net increase (decrease) in contract owners’ equity resulting from operations		4,310,707		1,612,324		2,856,585		718,411		1,438,455		–	451,888		229,304
Equity transactions:
Purchase payments received from contract owners (note 6)		2,185,394		1,596,162		1,332,130		1,709,656		526,879		–	475,185		488,538
Transfers between funds		2,244,556		8,876,650		(847,376	)	2,819,960		11,770,029		–	(661,700	)	35,444
Surrenders (note 6)		(4,336,178	)	(5,190	)	(267,171	)	(2,418,228	)	(1,408,723	)	–	(159,244	)	(61,736	)
Death benefits (note 4)		(15,626	)	–		(8,311	)	(79,996	)	–		–	(2,134	)	–
Net policy repayments (loans) (note 5)		(196	)	(1,274	)	(46,911	)	(31,234	)	–		–	(50,912	)	(41,662	)
Deductions for surrender charges (note 2d)		–		–		(13,479	)	(7,968	)	–		–	(6,312	)	(5,048	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(306,400	)	(132,822	)	(361,822	)	(419,302	)	(44,346	)	–	(131,298	)	(129,630	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(13,967	)	(12,386	)	–		–	(10,153	)	(7,401	)
MSP contracts		–		–		(171	)	(165	)	–		–	(292	)	(288	)
SL contracts		–		–		(1,569	)	(1,265	)	–		–	(4,482	)	(4,426	)
Adjustments to maintain reserves		6,023		33		967		45		78		–	49		13
Net equity transactions		(222,427	)	10,333,559		(227,680	)	1,559,117		10,843,917		–	(551,293	)	273,804
Net change in contract owners’ equity		4,088,280		11,945,883		2,628,905		2,277,528		12,282,372		–	(99,405	)	503,108
Contract owners’ equity beginning of period		15,580,476		3,634,593		17,331,334		15,053,806		–		–	3,484,800		2,981,692
Contract owners’ equity end of period	$	19,668,756		15,580,476		19,960,239		17,331,334		12,282,372		–	3,385,395		3,484,800
CHANGES IN UNITS:
Beginning units		1,111,978		305,044		1,125,026		1,022,336		–		–	198,030		181,154
Units purchased		398,004		935,817		155,838		590,374		1,233,682		–	27,715		34,807
Units redeemed		(411,730	)	(128,883	)	(172,970	)	(487,684	)	(148,582	)	–	(57,609	)	(17,931	)
Ending units		1,098,252		1,111,978		1,107,894		1,125,026		1,085,100		–	168,136		198,030

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	ACVPIncGr					ACVPInfPro2				ACVPInt				ACVPInt3
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	506,897		517,495		222,068		279,396		683,075		528,468		85,854		(585	)
Realized gain (loss) on investments		1,559,858		2,059,029		(85,474	)	(4,576	)	3,645,694		5,155,451		106,709		6,347
Change in unrealized gain (loss) on investments		2,321,259		(1,421,747	)	(15,319	)	(187,807	)	6,143,566		(425,258	)	1,216,942		455,203
Reinvested capital gains		–		–		–		3,210		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		4,388,014		1,154,777		121,275		90,223		10,472,335		5,258,661		1,409,505		460,965
Equity transactions:
Purchase payments received from contract owners (note 6)		2,980,810		3,346,398		928,163		839,206		2,241,271		5,271,738		2,336,741		1,927,016
Transfers between funds		(2,604,445	)	(2,526,656	)	324,789		1,691,412		(3,443,452	)	(11,462,744	)	705,137		2,041,846
Surrenders (note 6)		(952,973	)	(2,944,928	)	(348,613	)	(201,380	)	(2,510,699	)	(6,422,696	)	(331,029	)	(63,830	)
Death benefits (note 4)		(318,302	)	(40,254	)	(22,996	)	(15,492	)	(37,490	)	(119,826	)	(49,540	)	(188	)
Net policy repayments (loans) (note 5)		(226,058	)	(214,658	)	(327,756	)	(1,112,108	)	(339,142	)	(357,330	)	132,448		58,528
Deductions for surrender charges (note 2d)		(112,887	)	(108,542	)	(19,201	)	(22,322	)	(94,716	)	(95,250	)	(36,083	)	(3,346	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(1,246,462	)	(1,457,492	)	(319,214	)	(306,238	)	(1,524,282	)	(1,868,954	)	(404,972	)	(139,062	)
Asset charges (note 3):
FPVUL & VEL contracts		(79,777	)	(76,840	)	(21,467	)	(17,180	)	(70,652	)	(76,063	)	(23,569	)	(6,536	)
MSP contracts		(5,628	)	(5,473	)	(814	)	(334	)	(2,348	)	(2,615	)	(307	)	(134	)
SL contracts		(14,084	)	(13,750	)	(2,931	)	(2,370	)	(12,441	)	(11,828	)	(3,162	)	(1,093	)
Adjustments to maintain reserves		(11	)	40		767		151		1,869		(278	)	44		180
Net equity transactions		(2,579,817	)	(4,042,155	)	190,727		853,345		(5,792,082	)	(15,145,846	)	2,325,708		3,813,381
Net change in contract owners’ equity		1,808,197		(2,887,378	)	312,002		943,568		4,680,253		(9,887,185	)	3,735,213		4,274,346
Contract owners’ equity beginning of period		27,561,408		30,448,786		5,946,060		5,002,492		44,623,339		54,510,524		4,274,346		–
Contract owners’ equity end of period	$	29,369,605		27,561,408		6,258,062		5,946,060		49,303,592		44,623,339		8,009,559		4,274,346
CHANGES IN UNITS:
Beginning units		1,931,714		2,272,060		535,932		457,932		3,726,960		5,026,876		366,150		–
Units purchased		217,280		461,365		119,512		224,700		281,367		1,632,214		251,977		384,151
Units redeemed		(370,848	)	(801,711	)	(100,204	)	(146,700	)	(654,241	)	(2,932,130	)	(69,345	)	(18,001	)
Ending units		1,778,146		1,931,714		555,240		535,932		3,354,086		3,726,960		548,782		366,150

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	ACVPMdCpV					ACVPUltra				ACVPVal				ACVPVista
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	7,230		5,225		(4,670	)	(11,798	)	943,936		517,787		(376	)	(33	)
Realized gain (loss) on investments		39,846		5		349,714		195,293		4,128,014		2,697,392		5,558		2,478
Change in unrealized gain (loss) on investments		69,490		(8,011	)	(515,226	)	(34,075	)	598,190		(6,420,369	)	(3,442	)	3,449
Reinvested capital gains		36,808		14,612		–		–		6,275,420		6,692,806		410		–
Net increase (decrease) in contract owners’ equity resulting from operations		153,374		11,831		(170,182	)	149,420		11,945,560		3,487,616		2,150		5,894
Equity transactions:
Purchase payments received from contract owners (note 6)		171,210		31,964		709,134		681,334		7,141,601		9,914,772		37,713		4,440
Transfers between funds		293,492		625,256		(386,691	)	722,844		(3,927,338	)	2,547,944		236,263		86,262
Surrenders (note 6)		(1,899	)	–		(2,621,454	)	(517,410	)	(10,120,839	)	(5,497,446	)	(10,557	)	–
Death benefits (note 4)		–		–		(47	)	(27,894	)	(279,435	)	(38,326	)	–		–
Net policy repayments (loans) (note 5)		(5,739	)	(8,410	)	(101,504	)	(31,416	)	(950,746	)	(377,446	)	(786	)	–
Deductions for surrender charges (note 2d)		(370	)	(2	)	(7,518	)	(8,196	)	(188,437	)	(213,186	)	(462	)	–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(42,240	)	(12,338	)	(252,783	)	(313,308	)	(2,646,918	)	(2,929,280	)	(10,111	)	(1,678	)
Asset charges (note 3):
FPVUL & VEL contracts		(2,707	)	(959	)	(10,529	)	(8,003	)	(173,079	)	(159,138	)	(648	)	(103	)
MSP contracts		(68	)	–		(93	)	(56	)	(4,929	)	(4,268	)	–		–
SL contracts		(392	)	(12	)	(1,283	)	(1,095	)	(38,866	)	(42,173	)	(31	)	–
Adjustments to maintain reserves		73		49		(45,021	)	94		(54	)	(1,211	)	62		57
Net equity transactions		411,360		635,548		(2,717,789	)	496,894		(11,189,040	)	3,200,242		251,443		88,978
Net change in contract owners’ equity		564,734		647,379		(2,887,971	)	646,314		756,520		6,687,858		253,593		94,872
Contract owners’ equity beginning of period		647,379		–		6,866,248		6,219,934		74,525,122		67,837,264		94,872		–
Contract owners’ equity end of period	$	1,212,113		647,379		3,978,277		6,866,248		75,281,642		74,525,122		348,465		94,872
CHANGES IN UNITS:
Beginning units		57,178		–		607,908		562,336		4,162,374		3,973,728		8,278		–
Units purchased		36,199		59,177		79,816		373,913		433,039		1,249,834		21,632		10,582
Units redeemed		(4,385	)	(1,999	)	(324,362	)	(328,341	)	(1,057,677	)	(1,061,188	)	(1,942	)	(2,304	)
Ending units		88,992		57,178		363,362		607,908		3,537,736		4,162,374		27,968		8,278

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	BCFTCpAsset					BRIntIndex 2005				BRLrgCp				CalVSSoEq
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(37,388	)	(34,154	)	50,247		138		9,579		8,726		(194	)	(32	)
Realized gain (loss) on investments		710,863		1,664,897		8,081		29		68,179		3,475		447		5,207
Change in unrealized gain (loss) on investments		1,013,385		(1,287,251	)	(180,415	)	385		(10,146	)	2,790		10,994		(6,255	)
Reinvested capital gains		–		–		331,284		26		213,679		82,926		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,686,860		343,492		209,197		578		281,291		97,917		11,247		(1,080	)
Equity transactions:
Purchase payments received from contract owners (note 6)		2,174,399		2,101,360		90,420		–		190,017		179,756		19,620		14,494
Transfers between funds		(3,550,948	)	4,985,406		1,182,552		10,510		(455,857	)	1,769,830		64,665		(82,468	)
Surrenders (note 6)		(370,871	)	(6,355,608	)	(9,132	)	–		(50,505	)	(15,532	)	–		–
Death benefits (note 4)		(1,669	)	(2,882	)	–		–		–		–		–		(122	)
Net policy repayments (loans) (note 5)		(7,288	)	(15,062	)	–		–		–		–		–		–
Deductions for surrender charges (note 2d)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(204,306	)	(242,616	)	(19,146	)	(48	)	(16,166	)	(8,628	)	(934	)	(220	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		–		–		–		–		–		–
MSP contracts		–		–		–		–		–		–		–		–
SL contracts		–		–		–		–		–		–		–		–
Adjustments to maintain reserves		(588	)	54		257		32		(119	)	26		–		18
Net equity transactions		(1,961,271	)	470,652		1,244,951		10,494		(332,630	)	1,925,452		83,351		(68,298	)
Net change in contract owners’ equity		(274,411	)	814,144		1,454,148		11,072		(51,339	)	2,023,369		94,598		(69,378	)
Contract owners’ equity beginning of period		13,206,106		12,391,962		11,072		–		2,023,369		–		36,456		105,834
Contract owners’ equity end of period	$	12,931,695		13,206,106		1,465,220		11,072		1,972,030		2,023,369		131,054		36,456
CHANGES IN UNITS:
Beginning units		812,598		785,776		952		–		174,834		–		2,606		7,916
Units purchased		133,650		729,676		101,770		957		35,154		175,601		6,249		5,197
Units redeemed		(255,480	)	(702,854	)	(2,206	)	(5	)	(60,964	)	(767	)	(315	)	(10,507	)
Ending units		690,768		812,598		100,516		952		149,024		174,834		8,540		2,606

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	CSTGlSmCp					CSTIntFoc				CSTLCapV				DryEuroEq
Investment activity:	2006			2005		2006		2005		2006		2005		2006	2005
Net investment income (loss)	$	(325	)	(346	)	19,527		14,784		15,228		13,123		–	–
Realized gain (loss) on investments		117,852		120,331		89,234		80,800		86,847		79,118		–	–
Change in unrealized gain (loss) on investments		(23,716	)	(5,473	)	224,640		179,361		203,991		52,097		–	–
Reinvested capital gains		–		–		–		–		–		–		–	–
Net increase (decrease) in contract owners’ equity resulting from operations		93,811		114,512		333,401		274,945		306,066		144,338		–	–
Equity transactions:
Purchase payments received from contract owners (note 6)		74,146		69,444		112,031		132,944		143,156		191,256		–	(4	)
Transfers between funds		(58,140	)	(20,400	)	(13,728	)	(42,562	)	2,425		14,246		–	(40	)
Surrenders (note 6)		(42,970	)	(196,296	)	(163,836	)	(268,566	)	(332,188	)	(632,242	)	–	–
Death benefits (note 4)		(18,844	)	–		–		(4,126	)	(14,371	)	(3,994	)	–	–
Net policy repayments (loans) (note 5)		(11,747	)	(22,918	)	(2,352	)	1,996		(1,495	)	(10,964	)	–	42
Deductions for surrender charges (note 2d)		(869	)	(4,434	)	(3,086	)	(6,958	)	(6,014	)	(8,048	)	–	–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(32,002	)	(35,482	)	(74,131	)	(75,276	)	(66,132	)	(81,400	)	–	–
Asset charges (note 3):
FPVUL & VEL contracts		(2,756	)	(2,737	)	(6,351	)	(5,753	)	(5,227	)	(5,663	)	–	–
MSP contracts		(16	)	(13	)	(556	)	(467	)	(585	)	(539	)	–	–
SL contracts		(281	)	(218	)	(1,730	)	(1,336	)	(1,820	)	(1,195	)	–	–
Adjustments to maintain reserves		(9	)	16		(16	)	3		54		(49	)	–	2
Net equity transactions		(93,488	)	(213,038	)	(153,755	)	(270,101	)	(282,197	)	(538,592	)	–	–
Net change in contract owners’ equity		323		(98,526	)	179,646		4,844		23,869		(394,254	)	–	–
Contract owners’ equity beginning of period		810,417		908,943		1,849,769		1,844,925		1,809,887		2,204,141		–	–
Contract owners’ equity end of period	$	810,740		810,417		2,029,415		1,849,769		1,833,756		1,809,887		–	–
CHANGES IN UNITS:
Beginning units		64,818		87,902		139,456		165,614		119,654		166,610		–	–
Units purchased		4,646		7,102		8,937		12,021		13,626		22,281		–	5
Units redeemed		(13,402	)	(30,186	)	(19,379	)	(38,179	)	(31,060	)	(69,237	)	–	(5	)
Ending units		56,062		64,818		129,014		139,456		102,220		119,654		–	–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	DryIPMidCap					DryIPSmCap				DrySRGro				DryStkIx
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	1,263		(2,170	)	48,995		(25,790	)	13,295		(2,904	)	5,699,240		5,480,723
Realized gain (loss) on investments		(19,997	)	77,325		612,093		1,458,278		(55,407	)	(445,744	)	11,897,478		2,229,250
Change in unrealized gain (loss) on investments		(77,469	)	(46,328	)	1,659,449		(665,187	)	1,370,321		966,426		35,413,947		9,063,983
Reinvested capital gains		164,113		2,846		494,024		37,946		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		67,910		31,673		2,814,561		805,247		1,328,209		517,778		53,010,665		16,773,956
Equity transactions:
Purchase payments received from contract owners (note 6)		204,487		263,970		2,929,214		2,669,734		1,957,145		2,444,830		30,357,131		51,850,362
Transfers between funds		85,266		(442,534	)	806,840		(2,940,962	)	(882,076	)	(1,127,874	)	3,805,115		(4,788,950	)
Surrenders (note 6)		(1,816	)	(412,780	)	(1,228,153	)	(1,560,060	)	(906,318	)	(1,663,566	)	(67,888,901	)	(30,480,010	)
Death benefits (note 4)		(247	)	(402	)	(25,726	)	(42,562	)	(79,789	)	(80,700	)	(962,593	)	(385,986	)
Net policy repayments (loans) (note 5)		–		–		172,200		(148,542	)	(66,827	)	(260,846	)	(1,978,995	)	(1,897,464	)
Deductions for surrender charges (note 2d)		–		–		(38,750	)	(27,048	)	(78,414	)	(94,148	)	(694,033	)	(875,598	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(15,087	)	(19,546	)	(671,685	)	(596,578	)	(1,052,968	)	(1,198,256	)	(11,797,426	)	(13,073,310	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(31,087	)	(23,013	)	(59,616	)	(61,643	)	(524,708	)	(505,553	)
MSP contracts		–		–		(252	)	(135	)	(2,467	)	(2,320	)	(18,172	)	(19,098	)
SL contracts		–		–		(11,644	)	(4,694	)	(5,025	)	(5,597	)	(234,237	)	(278,004	)
Adjustments to maintain reserves		(27	)	(22	)	(416	)	73		1,725		95		2,962		(880	)
Net equity transactions		272,576		(611,314	)	1,900,541		(2,673,787	)	(1,174,630	)	(2,050,025	)	(49,933,857	)	(454,491	)
Net change in contract owners’ equity		340,486		(579,641	)	4,715,102		(1,868,540	)	153,579		(1,532,247	)	3,076,808		16,319,465
Contract owners’ equity beginning of period		758,043		1,337,684		19,713,952		21,582,492		15,274,960		16,807,207		383,002,885		366,683,420
Contract owners’ equity end of period	$	1,098,529		758,043		24,429,054		19,713,952		15,428,539		15,274,960		386,079,693		383,002,885
CHANGES IN UNITS:
Beginning units		46,536		89,464		1,435,892		1,681,072		1,397,018		1,614,668		31,982,494		31,386,290
Units purchased		24,949		135,958		323,159		810,428		182,190		261,126		4,117,062		9,299,094
Units redeemed		(8,757	)	(178,886	)	(202,013	)	(1,055,608	)	(287,582	)	(478,776	)	(8,051,494	)	(8,702,890	)
Ending units		62,728		46,536		1,557,038		1,435,892		1,291,626		1,397,018		28,048,062		31,982,494

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	DryVIApp					DryVIDevLd				DryVIIntVal				DWSVHghRtrn
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	467,254		(31,481	)	3,628		(344	)	363,221		(72,554	)	(84	)	–
Realized gain (loss) on investments		1,580,401		619,610		19,205		16,986		2,441,440		2,757,657		16		–
Change in unrealized gain (loss) on investments		3,002,962		723,885		(67,857	)	28,507		1,821,727		(437,900	)	3,015		–
Reinvested capital gains		–		–		75,020		–		2,561,432		474,426		6,415		–
Net increase (decrease) in contract owners’ equity resulting from operations		5,050,617		1,312,014		29,996		45,149		7,187,820		2,721,629		9,362		–
Equity transactions:
Purchase payments received from contract owners (note 6)		4,078,265		4,752,850		171,060		170,934		2,541,484		4,143,686		–		–
Transfers between funds		(2,345,604	)	1,650,370		(137,147	)	(158,998	)	3,545,051		7,340,800		161,696		–
Surrenders (note 6)		(1,732,303	)	(6,431,926	)	(49,066	)	(9,112	)	(2,320,877	)	(15,432,158	)	–		–
Death benefits (note 4)		(93,179	)	(78,188	)	–		–		(15,539	)	(30,600	)	–		–
Net policy repayments (loans) (note 5)		(182,056	)	(133,510	)	(13,508	)	(5,332	)	(119	)	(4	)	–		–
Deductions for surrender charges (note 2d)		(81,826	)	(125,688	)	(7,669	)	(4,386	)	–		–		–		–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(1,296,162	)	(1,377,854	)	(47,214	)	(55,464	)	(459,041	)	(390,206	)	(196	)	–
Asset charges (note 3):
FPVUL & VEL contracts		(72,977	)	(67,353	)	(3,269	)	(2,882	)	–		–		–		–
MSP contracts		(1,654	)	(1,517	)	(2	)	–		–		–		–		–
SL contracts		(12,673	)	(14,153	)	(453	)	(342	)	–		–		–		–
Adjustments to maintain reserves		133		(53	)	2		10		1,429		23		23		–
Net equity transactions		(1,740,036	)	(1,827,022	)	(87,266	)	(65,572	)	3,292,388		(4,368,459	)	161,523		–
Net change in contract owners’ equity		3,310,581		(515,008	)	(57,270	)	(20,423	)	10,480,208		(1,646,830	)	170,885		–
Contract owners’ equity beginning of period		31,545,441		32,060,449		887,752		908,175		30,181,919		31,828,749		–		–
Contract owners’ equity end of period	$	34,856,022		31,545,441		830,482		887,752		40,662,127		30,181,919		170,885		–
CHANGES IN UNITS:
Beginning units		2,474,314		2,677,138		58,416		63,226		1,760,980		2,072,622		–		–
Units purchased		365,532		848,585		9,815		11,297		420,700		1,288,366		15,198		–
Units redeemed		(430,488	)	(1,051,409	)	(15,569	)	(16,107	)	(242,022	)	(1,600,008	)	(18	)	–
Ending units		2,409,358		2,474,314		52,662		58,416		1,939,658		1,760,980		15,180		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FedAmLead					FedCapAp				FedMrkOp			FedQualBd
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	4,783		4,577		2,870		3,696		–		–	3,673,134		3,185,853
Realized gain (loss) on investments		3,656		15,968		4,163		9,843		4		–	(2,969,254	)	1,258,569
Change in unrealized gain (loss) on investments		3,909		(6,278	)	51,818		(6,170	)	1,096		–	1,422,971		(3,953,905	)
Reinvested capital gains		39,581		–		–		–		–		–	–		573,294
Net increase (decrease) in contract owners’ equity resulting from operations		51,929		14,267		58,851		7,369		1,100		–	2,126,851		1,063,811
Equity transactions:
Purchase payments received from contract owners (note 6)		30,290		58,906		75,660		87,266		1,073		–	7,570,046		13,737,160
Transfers between funds		(8,439	)	(35,976	)	(11,524	)	(75,044	)	39,280		–	(25,553,825	)	2,793,926
Surrenders (note 6)		(4,011	)	(1,036	)	(4,403	)	(5,448	)	–		–	(24,601,230	)	(15,016,478	)
Death benefits (note 4)		(256	)	(964	)	–		–		–		–	(620,801	)	(169,066	)
Net policy repayments (loans) (note 5)		(2,610	)	(10,902	)	(8,462	)	(1,812	)	–		–	(113,944	)	(194,668	)
Deductions for surrender charges (note 2d)		(1,591	)	(414	)	(1,112	)	(858	)	–		–	(146,590	)	(110,776	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(16,466	)	(18,050	)	(25,262	)	(28,736	)	(236	)	–	(2,059,972	)	(2,608,400	)
Asset charges (note 3):
FPVUL & VEL contracts		(1,273	)	(1,076	)	(1,215	)	(1,062	)	(31	)	–	(77,916	)	(73,832	)
MSP contracts		–		–		–		–		–		–	(3,452	)	(3,399	)
SL contracts		(214	)	(207	)	(380	)	(340	)	–		–	(54,285	)	(79,302	)
Adjustments to maintain reserves		(18	)	2		22		(9	)	21		–	380		(1,850	)
Net equity transactions		(4,588	)	(9,717	)	23,324		(26,043	)	40,107		–	(45,661,589	)	(1,726,685	)
Net change in contract owners’ equity		47,341		4,550		82,175		(18,674	)	41,207		–	(43,534,738	)	(662,874	)
Contract owners’ equity beginning of period		314,973		310,423		345,527		364,201		–		–	94,707,696		95,370,570
Contract owners’ equity end of period	$	362,314		314,973		427,702		345,527		41,207		–	51,172,958		94,707,696
CHANGES IN UNITS:
Beginning units		21,684		22,444		26,192		28,136		–		–	6,767,940		6,900,038
Units purchased		1,993		4,332		5,706		7,244		3,990		–	558,517		2,511,786
Units redeemed		(2,323	)	(5,092	)	(4,000	)	(9,188	)	(26	)	–	(3,820,603	)	(2,643,884	)
Ending units		21,354		21,684		27,898		26,192		3,964		–	3,505,854		6,767,940

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPEIS					FidVIPGrS				FidVIPHIS				FidVIPOvS
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	3,157,897		1,369,839		191,930		315,755		1,769,398		3,622,550		319,414		180,586
Realized gain (loss) on investments		3,953,839		2,118,437		414,070		(2,666,458	)	(230,023	)	1,862,736		4,071,039		2,861,790
Change in unrealized gain (loss) on investments		(784,378	)	(1,838,486	)	5,487,027		7,486,842		928,822		(4,923,157	)	2,726,908		4,281,500
Reinvested capital gains		12,637,235		3,438,952		–		–		–		–		306,743		220,424
Net increase (decrease) in contract owners’ equity resulting from operations		18,964,593		5,088,742		6,093,027		5,136,139		2,468,197		562,129		7,424,104		7,544,300
Equity transactions:
Purchase payments received from contract owners (note 6)		11,154,923		15,756,584		10,773,886		15,865,266		1,731,392		2,969,550		3,018,320		5,876,826
Transfers between funds		(1,222,766	)	(7,412,500	)	(4,832,624	)	(13,195,054	)	(1,845,924	)	(9,516,732	)	748,578		(1,608,848	)
Surrenders (note 6)		(4,730,061	)	(11,971,226	)	(4,190,231	)	(15,708,500	)	(745,502	)	(4,072,626	)	(9,482,188	)	(5,320,332	)
Death benefits (note 4)		(297,737	)	(255,046	)	(300,161	)	(271,136	)	(156,750	)	(66,840	)	(109,513	)	(29,950	)
Net policy repayments (loans) (note 5)		(715,261	)	(744,550	)	(973,193	)	(658,242	)	(68,547	)	(134,236	)	(259,760	)	(288,352	)
Deductions for surrender charges (note 2d)		(218,615	)	(361,920	)	(318,657	)	(491,654	)	(37,870	)	(41,476	)	(92,201	)	(95,482	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(3,938,665	)	(4,347,476	)	(4,709,990	)	(5,448,834	)	(936,225	)	(1,018,984	)	(1,240,859	)	(1,535,702	)
Asset charges (note 3):
FPVUL & VEL contracts		(227,733	)	(206,659	)	(243,847	)	(237,148	)	(45,759	)	(45,982	)	(58,040	)	(61,931	)
MSP contracts		(9,452	)	(8,604	)	(8,061	)	(8,323	)	(2,117	)	(1,974	)	(1,764	)	(1,786	)
SL contracts		(39,619	)	(33,932	)	(33,457	)	(34,472	)	(7,564	)	(7,344	)	(26,278	)	(33,543	)
Adjustments to maintain reserves		517		(12	)	(357	)	(4,612	)	36		(7	)	4,520		(102	)
Net equity transactions		(244,469	)	(9,585,341	)	(4,836,692	)	(20,192,709	)	(2,114,830	)	(11,936,651	)	(7,499,185	)	(3,099,202	)
Net change in contract owners’ equity		18,720,124		(4,496,599	)	1,256,335		(15,056,570	)	353,367		(11,374,522	)	(75,081	)	4,445,098
Contract owners’ equity beginning of period		96,013,017		100,509,616		99,652,762		114,709,332		23,645,712		35,020,234		47,413,264		42,968,166
Contract owners’ equity end of period	$	114,733,141		96,013,017		100,909,097		99,652,762		23,999,079		23,645,712		47,338,183		47,413,264
CHANGES IN UNITS:
Beginning units		6,711,838		7,385,638		8,629,460		10,540,460		2,215,374		3,219,284		3,443,834		3,624,196
Units purchased		860,926		2,743,364		1,461,572		3,205,097		151,651		544,012		467,094		1,273,529
Units redeemed		(840,252	)	(3,417,164	)	(1,701,690	)	(5,116,097	)	(337,317	)	(1,547,922	)	(917,870	)	(1,453,891	)
Ending units		6,732,512		6,711,838		8,389,342		8,629,460		2,029,708		2,215,374		2,993,058		3,443,834

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPOvSR					FidVIPConS				FidVIPIGBdS				FidVIPGrOpS
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	70,073		(711	)	1,836,307		92,541		296,348		150,542		88,641		119,420
Realized gain (loss) on investments		282,979		27,717		11,699,925		4,136,516		(19,947	)	(23,034	)	640,917		86,856
Change in unrealized gain (loss) on investments		1,463,144		959,109		(9,318,194	)	18,430,598		100,550		(108,323	)	(47,920	)	1,056,050
Reinvested capital gains		52,656		–		15,541,966		23,808		18,136		94,116		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,868,852		986,115		19,760,004		22,683,463		395,087		113,301		681,638		1,262,326
Equity transactions:
Purchase payments received from contract owners (note 6)		3,546,542		2,056,868		17,548,803		16,394,398		1,251,199		1,026,212		1,310,585		1,754,880
Transfers between funds		3,202,427		4,639,972		17,996,364		30,213,612		2,768,214		3,150,406		(2,918,008	)	(1,134,170	)
Surrenders (note 6)		(395,114	)	(74,592	)	(16,106,681	)	(13,859,172	)	(266,480	)	(245,338	)	(708,659	)	(1,844,984	)
Death benefits (note 4)		(55,623	)	(9,904	)	(461,959	)	(234,250	)	(48,217	)	(6,042	)	(67,362	)	(16,488	)
Net policy repayments (loans) (note 5)		(132,023	)	(133,300	)	(958,341	)	(1,233,364	)	(69,270	)	(12,548	)	(81,816	)	(147,918	)
Deductions for surrender charges (note 2d)		(29,900	)	(6,544	)	(333,435	)	(357,934	)	(24,824	)	(9,022	)	(49,983	)	(81,292	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(660,377	)	(207,510	)	(6,277,815	)	(6,103,102	)	(401,450	)	(319,270	)	(717,100	)	(844,658	)
Asset charges (note 3):
FPVUL & VEL contracts		(40,373	)	(9,862	)	(366,059	)	(299,334	)	(24,573	)	(14,938	)	(44,252	)	(46,453	)
MSP contracts		(458	)	(66	)	(10,744	)	(8,483	)	(1,910	)	(1,062	)	(1,936	)	(1,949	)
SL contracts		(6,533	)	(1,707	)	(58,385	)	(42,938	)	(7,214	)	(5,038	)	(8,107	)	(8,096	)
Adjustments to maintain reserves		35		203		9,345		(3,799	)	22		49		(354	)	20
Net equity transactions		5,428,603		6,253,558		10,981,093		24,465,634		3,175,497		3,563,409		(3,286,992	)	(2,371,108	)
Net change in contract owners’ equity		7,297,455		7,239,673		30,741,097		47,149,097		3,570,584		3,676,710		(2,605,354	)	(1,108,782	)
Contract owners’ equity beginning of period		7,239,673		–		165,940,781		118,791,684		7,429,173		3,752,463		15,704,853		16,813,635
Contract owners’ equity end of period	$	14,537,128		7,239,673		196,681,878		165,940,781		10,999,757		7,429,173		13,099,499		15,704,853
CHANGES IN UNITS:
Beginning units		579,174		–		9,413,026		7,531,262		683,006		352,046		1,475,652		1,727,558
Units purchased		513,057		620,775		2,097,457		4,559,276		361,673		369,222		129,102		206,267
Units redeemed		(106,241	)	(41,601	)	(1,390,619	)	(2,677,512	)	(74,483	)	(38,262	)	(444,614	)	(458,173	)
Ending units		985,990		579,174		10,119,864		9,413,026		970,196		683,006		1,160,140		1,475,652

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPMCapS					FidVIPVaIS				FidVIPEnergyS2				FidVIPFree10S
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	49,604		(8,369	)	36,639		(3,084	)	45,935		11,036		11,056		715
Realized gain (loss) on investments		1,438,084		249,701		33,572		115,688		242,500		107,447		7,228		1,380
Change in unrealized gain (loss) on investments		(1,316,944	)	2,420,458		(146,173	)	(133,755	)	(797,228	)	54,320		19,784		4,610
Reinvested capital gains		2,795,083		151,660		1,229,164		181,130		1,001,993		145,810		2,850		–
Net increase (decrease) in contract owners’ equity resulting from operations		2,965,827		2,813,450		1,153,202		159,979		493,200		318,613		40,918		6,705
Equity transactions:
Purchase payments received from contract owners (note 6)		3,825,936		2,951,232		644,976		1,385,438		1,203,767		340,846		18,583		9,194
Transfers between funds		6,536,971		9,715,822		(349,532	)	947,812		3,319,981		3,045,578		473,105		151,812
Surrenders (note 6)		(3,816,678	)	(674,746	)	(184,507	)	(875,876	)	(165,467	)	(57,482	)	3		–
Death benefits (note 4)		(40,786	)	(1,216	)	–		(5,316	)	(808	)	–		–		–
Net policy repayments (loans) (note 5)		(330,065	)	10,872		(39,625	)	(59,056	)	(112,544	)	(299,276	)	(1,201	)	–
Deductions for surrender charges (note 2d)		(67,158	)	(36,688	)	(25,372	)	(27,204	)	(7,584	)	(7,448	)	(280	)	–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(1,213,577	)	(881,710	)	(323,644	)	(338,404	)	(291,800	)	(46,042	)	(20,727	)	(2,716	)
Asset charges (note 3):
FPVUL & VEL contracts		(76,557	)	(43,826	)	(21,447	)	(17,472	)	(20,518	)	(3,121	)	(1,085	)	(296	)
MSP contracts		(2,316	)	(1,247	)	(329	)	(260	)	(312	)	(65	)	(107	)	(7	)
SL contracts		(12,247	)	(6,080	)	(972	)	(1,356	)	(3,452	)	(610	)	(43	)	(18	)
Adjustments to maintain reserves		(99	)	102		78		33		67		96		3		32
Net equity transactions		4,803,424		11,032,515		(300,374	)	1,008,339		3,921,330		2,972,476		468,251		158,001
Net change in contract owners’ equity		7,769,251		13,845,965		852,828		1,168,318		4,414,530		3,291,089		509,169		164,706
Contract owners’ equity beginning of period		21,422,831		7,576,866		7,209,802		6,041,484		3,291,089		–		164,706		–
Contract owners’ equity end of period	$	29,192,082		21,422,831		8,062,630		7,209,802		7,705,619		3,291,089		673,875		164,706
CHANGES IN UNITS:
Beginning units		1,032,350		431,128		520,574		448,246		243,526		–		15,242		–
Units purchased		453,110		681,060		46,790		261,816		287,424		274,541		44,856		15,528
Units redeemed		(235,270	)	(79,838	)	(66,376	)	(189,488	)	(42,010	)	(31,015	)	(3,294	)	(286	)
Ending units		1,250,190		1,032,350		500,988		520,574		488,940		243,526		56,804		15,242

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPFree20S					2005 FidVIPFree30S				FrVIPIncSec2			FrVIPRisDiv
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	19,492		3,112		8,990		1,394		329		–	169,336		106,370
Realized gain (loss) on investments		6,147		206		6,659		1,749		5,066		–	315,782		262,438
Change in unrealized gain (loss) on investments		71,282		18,735		31,837		8,629		44,817		–	1,648,834		56,160
Reinvested capital gains		12,045		–		6,386		–		44		–	68,181		66,316
Net increase (decrease) in contract owners’ equity resulting from operations		108,966		22,053		53,872		11,772		50,256		–	2,202,133		491,284
Equity transactions:
Purchase payments received from contract owners (note 6)		364,597		103,284		212,287		13,316		28,203		–	2,325,102		2,098,686
Transfers between funds		349,965		467,838		224,497		247,296		1,254,211		–	625,796		1,800,778
Surrenders (note 6)		9		–		(426	)	–		(1	)	–	(423,784	)	(315,366	)
Death benefits (note 4)		–		–		–		–		–		–	(21,819	)	(95,850	)
Net policy repayments (loans) (note 5)		(6,616	)	–		(8,603	)	1,516		(6	)	–	(81,403	)	32,678
Deductions for surrender charges (note 2d)		(568	)	–		(361	)	–		(109	)	–	(38,911	)	(22,302	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(42,888	)	(6,724	)	(42,662	)	(8,108	)	(12,723	)	–	(734,377	)	(722,572	)
Asset charges (note 3):
FPVUL & VEL contracts		(2,148	)	(319	)	(1,547	)	(238	)	(517	)	–	(50,546	)	(37,083	)
MSP contracts		(1,174	)	(29	)	(821	)	(126	)	(45	)	–	(1,633	)	(1,504	)
SL contracts		(922	)	(182	)	(54	)	–		(419	)	–	(6,758	)	(5,009	)
Adjustments to maintain reserves		29		33		22		52		75		–	51		126
Net equity transactions		660,284		563,901		382,332		253,708		1,268,669		–	1,591,718		2,732,582
Net change in contract owners’ equity		769,250		585,954		436,204		265,480		1,318,925		–	3,793,851		3,223,866
Contract owners’ equity beginning of period		585,954		–		265,480		–		–		–	11,930,685		8,706,819
Contract owners’ equity end of period	$	1,355,204		585,954		701,684		265,480		1,318,925		–	15,724,536		11,930,685
CHANGES IN UNITS:
Beginning units		52,700		–		23,432		–		–		–	840,480		635,954
Units purchased		60,994		53,370		35,898		24,209		118,860		–	201,976		293,265
Units redeemed		(4,682	)	(670	)	(4,596	)	(777	)	(1,270	)	–	(99,116	)	(88,739	)
Ending units		109,012		52,700		54,734		23,432		117,590		–	943,340		840,480

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FrVIPSmCapV1					FrVIPSmCapV2				FrVIPDevMrk3				FrVIPForSec
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	70,843		50,625		13,727		(3,748	)	51,034		457		52,262		65,505
Realized gain (loss) on investments		431,242		312,333		240,327		40,902		211,072		7,969		260,078		331,176
Change in unrealized gain (loss) on investments		535,635		164,953		154,996		74,889		648,770		185,687		419,827		5,302
Reinvested capital gains		298,012		36,068		131,249		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,335,732		563,979		540,299		112,043		910,876		194,113		732,167		401,983
Equity transactions:
Purchase payments received from contract owners (note 6)		1,306,229		1,077,760		235,901		196,696		452,732		209,176		(315	)	326,330
Transfers between funds		1,453,376		2,336,672		482,348		2,137,536		2,114,894		1,691,242		(573,189	)	(482,022	)
Surrenders (note 6)		(469,855	)	(172,148	)	(20,907	)	(41,170	)	(163,461	)	(24,274	)	(206,312	)	(116,026	)
Death benefits (note 4)		(23,451	)	(4,942	)	–		–		–		–		(16,748	)	(6,452	)
Net policy repayments (loans) (note 5)		(35,601	)	(95,420	)	–		–		(82,360	)	(2,038	)	(73,172	)	(43,528	)
Deductions for surrender charges (note 2d)		(27,685	)	(27,576	)	–		–		(1,910	)	(892	)	(9,844	)	(6,634	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(445,862	)	(391,454	)	(43,957	)	(14,272	)	(164,247	)	(26,054	)	(121,456	)	(199,476	)
Asset charges (note 3):
FPVUL & VEL contracts		(30,065	)	(19,615	)	–		–		(11,541	)	(1,466	)	(11,567	)	(12,250	)
MSP contracts		(936	)	(590	)	–		–		(662	)	(37	)	(490	)	(389	)
SL contracts		(3,931	)	(1,864	)	–		–		(3,092	)	(212	)	(2,351	)	(2,432	)
Adjustments to maintain reserves		52		60		(11	)	27		152		60		15		9
Net equity transactions		1,722,271		2,700,883		653,374		2,278,817		2,140,505		1,845,505		(1,015,429	)	(542,870	)
Net change in contract owners’ equity		3,058,003		3,264,862		1,193,673		2,390,860		3,051,381		2,039,618		(283,262	)	(140,887	)
Contract owners’ equity beginning of period		7,199,539		3,934,677		2,390,860		–		2,039,618		–		3,984,911		4,125,798
Contract owners’ equity end of period	$	10,257,542		7,199,539		3,584,533		2,390,860		5,090,999		2,039,618		3,701,649		3,984,911
CHANGES IN UNITS:
Beginning units		398,540		237,384		210,812		–		159,292		–		228,680		261,568
Units purchased		132,665		201,690		108,814		213,805		179,373		163,904		2		38,499
Units redeemed		(47,143	)	(40,534	)	(48,868	)	(2,993	)	(28,443	)	(4,612	)	(54,130	)	(71,387	)
Ending units		484,062		398,540		270,758		210,812		310,222		159,292		174,552		228,680

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FrVIPForSec2					FrVIPForSec3				FrVIPGlInc3				GVITAstAll2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	148,526		87,022		58,304		6,397		29,118		5,901		28,982		–
Realized gain (loss) on investments		1,391,025		1,534,763		130,520		55,569		17,697		(6,244	)	(347	)	–
Change in unrealized gain (loss) on investments		1,461,209		(600,489	)	667,348		165,707		73,043		4,235		50,812		–
Reinvested capital gains		–		–		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		3,000,760		1,021,296		856,172		227,673		119,858		3,892		79,447		–
Equity transactions:
Purchase payments received from contract owners (note 6)		1,607,395		2,131,210		1,016,358		601,634		149,898		16,304		129,152		–
Transfers between funds		2,089,207		2,125,994		1,824,194		2,105,088		1,036,967		529,856		1,596,575		–
Surrenders (note 6)		(594,945	)	(3,701,404	)	(165,303	)	(21,206	)	(222,510	)	(11,680	)	(17,173	)	–
Death benefits (note 4)		(10,158	)	(18,098	)	(4,801	)	(78	)	–		–		–		–
Net policy repayments (loans) (note 5)		(13,754	)	(32,960	)	(180,431	)	(152,176	)	(9,774	)	(582	)	(568	)	–
Deductions for surrender charges (note 2d)		–		–		(10,743	)	(2,554	)	(5,959	)	(774	)	(308	)	–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(318,638	)	(248,898	)	(183,405	)	(67,610	)	(46,237	)	(9,576	)	(31,978	)	–
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(12,978	)	(3,636	)	(2,905	)	(565	)	(2,072	)	–
MSP contracts		–		–		(109	)	(6	)	(61	)	(3	)	(187	)	–
SL contracts		–		–		(3,195	)	(681	)	(364	)	(37	)	(247	)	–
Adjustments to maintain reserves		3,496		71		43		135		41		69		74		–
Net equity transactions		2,762,603		255,915		2,279,630		2,458,910		899,096		523,012		1,673,268		–
Net change in contract owners’ equity		5,763,363		1,277,211		3,135,802		2,686,583		1,018,954		526,904		1,752,715		–
Contract owners’ equity beginning of period		13,309,809		12,032,598		2,686,583		–		526,904		–		–		–
Contract owners’ equity end of period	$	19,073,172		13,309,809		5,822,385		2,686,583		1,545,858		526,904		1,752,715		–
CHANGES IN UNITS:
Beginning units		821,632		814,750		237,992		–		53,324		–		–		–
Units purchased		232,395		577,671		230,149		261,576		109,281		55,698		172,330		–
Units redeemed		(81,773	)	(570,789	)	(43,495	)	(23,584	)	(23,965	)	(2,374	)	(6,306	)	–
Ending units		972,254		821,632		424,646		237,992		138,640		53,324		166,024		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITBnd2				GVITGlobGr2			GVITGrowth2			GVITIntValI
Investment activity:	2006			2005	2006		2005	2006		2005	2006		2005
Net investment income (loss)	$	2,413		–	1,684		–	10,186		–	65,708		55,001
Realized gain (loss) on investments		–		–	(210	)	–	(2,201	)	–	121,786		382,048
Change in unrealized gain (loss) on investments		8,969		–	100,276		–	69,921		–	262,686		(201,407	)
Reinvested capital gains		–		–	–		–	–		–	202,934		164,802
Net increase (decrease) in contract owners’ equity resulting from operations		11,382		–	101,750		–	77,906		–	653,114		400,444
Equity transactions:
Purchase payments received from contract owners (note 6)		24,483		–	78,774		–	76,929		–	3,238		427,864
Transfers between funds		715,789		–	1,478,713		–	1,631,125		–	(551,440	)	(1,727,918	)
Surrenders (note 6)		–		–	(70	)	–	(414	)	–	(116,109	)	(166,130	)
Death benefits (note 4)		–		–	–		–	–		–	–		(1,214	)
Net policy repayments (loans) (note 5)		82		–	(122	)	–	(9,701	)	–	(27,720	)	(64,012	)
Deductions for surrender charges (note 2d)		(212	)	–	(112	)	–	(109	)	–	(5,448	)	(14,418	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(6,887	)	–	(21,893	)	–	(26,707	)	–	(132,330	)	(249,934	)
Asset charges (note 3):
FPVUL & VEL contracts		(429	)	–	(1,462	)	–	(1,844	)	–	(10,702	)	(14,294	)
MSP contracts		(30	)	–	(128	)	–	(75	)	–	(455	)	(419	)
SL contracts		(49	)	–	(252	)	–	(502	)	–	(1,562	)	(1,722	)
Adjustments to maintain reserves		41		–	72		–	67		–	(192	)	(6,014	)
Net equity transactions		732,788		–	1,533,520		–	1,668,769		–	(842,720	)	(1,818,211	)
Net change in contract owners’ equity		744,170		–	1,635,270		–	1,746,675		–	(189,606	)	(1,417,767	)
Contract owners’ equity beginning of period		–		–	–		–	–		–	3,299,855		4,717,622
Contract owners’ equity end of period	$	744,170		–	1,635,270		–	1,746,675		–	3,110,249		3,299,855
CHANGES IN UNITS:
Beginning units		–		–	–		–	–		–	175,520		281,276
Units purchased		71,349		–	153,273		–	172,788		–	76		30,182
Units redeemed		(737	)	–	(2,447	)	–	(4,262	)	–	(40,734	)	(135,938	)
Ending units		70,612		–	150,826		–	168,526		–	134,862		175,520

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITIntVal3					GVITEmMrkts				GVITEmMrkts3				GVITFHiInc
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	123,878		27,628		124,907		62,640		71,767		5,044		1,761,889		2,109,153
Realized gain (loss) on investments		222,573		12,994		2,198,970		262,189		430,240		82,878		(62,770	)	322,559
Change in unrealized gain (loss) on investments		496,243		329,682		4,849,580		2,255,101		2,317,091		257,113		711,651		(2,006,710	)
Reinvested capital gains		403,845		44,172		275,455		1,416,338		116,408		436,362		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,246,539		414,476		7,448,912		3,996,268		2,935,506		781,397		2,410,770		425,002
Equity transactions:
Purchase payments received from contract owners (note 6)		1,490,965		804,678		2,047,791		1,063,272		1,520,378		918,556		2,723,130		6,373,758
Transfers between funds		1,415,870		3,739,026		4,726,439		2,726,062		3,261,982		4,881,610		(1,664,758	)	(6,839,472	)
Surrenders (note 6)		(199,484	)	(30,996	)	(900,293	)	(927,718	)	(263,722	)	(74,868	)	(244,854	)	(14,345,400	)
Death benefits (note 4)		(19,679	)	(4,740	)	(146,656	)	(8,862	)	(26,594	)	–		(19,579	)	(65,406	)
Net policy repayments (loans) (note 5)		(88,948	)	(175,306	)	6,408		(200,718	)	(124,005	)	(242,554	)	(435,512	)	(785,914	)
Deductions for surrender charges (note 2d)		(10,673	)	(5,070	)	(28,669	)	(23,722	)	(15,025	)	(3,340	)	(19,998	)	(57,228	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(320,567	)	(127,042	)	(508,763	)	(517,360	)	(409,734	)	(87,142	)	(579,721	)	(1,041,276	)
Asset charges (note 3):
FPVUL & VEL contracts		(22,271	)	(6,801	)	(23,414	)	(22,865	)	(28,192	)	(4,316	)	(28,257	)	(37,212	)
MSP contracts		(303	)	(37	)	(835	)	(673	)	(598	)	(36	)	(1,365	)	(1,470	)
SL contracts		(2,726	)	(598	)	(2,994	)	(2,600	)	(4,669	)	(798	)	(22,279	)	(25,315	)
Adjustments to maintain reserves		48		87		1,285		(79	)	110		78		65		(3	)
Net equity transactions		2,242,232		4,193,201		5,170,299		2,084,737		3,909,931		5,387,190		(293,128	)	(16,824,938	)
Net change in contract owners’ equity		3,488,771		4,607,677		12,619,211		6,081,005		6,845,437		6,168,587		2,117,642		(16,399,936	)
Contract owners’ equity beginning of period		4,607,677		–		17,268,062		11,187,057		6,168,587		–		23,199,517		39,599,453
Contract owners’ equity end of period	$	8,096,448		4,607,677		29,887,273		17,268,062		13,014,024		6,168,587		25,317,159		23,199,517
CHANGES IN UNITS:
Beginning units		402,348		–		939,440		804,812		462,520		–		1,577,566		2,744,224
Units purchased		224,783		434,685		391,752		529,950		308,894		493,064		258,754		789,445
Units redeemed		(51,151	)	(32,337	)	(135,754	)	(395,322	)	(57,306	)	(30,544	)	(281,078	)	(1,956,103	)
Ending units		575,980		402,348		1,195,438		939,440		714,108		462,520		1,555,242		1,577,566

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITFHiInc3					GVITGlFin				GVITGlHlth				GVITGlHlth3
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	475,086		183,162		78,715		45,006		(3,910	)	(4,508	)	–		(107	)
Realized gain (loss) on investments		(15,183	)	1,336		87,121		88,039		40,812		204,903		(93,374	)	2,277
Change in unrealized gain (loss) on investments		168,615		(93,976	)	41,527		(184,975	)	68,815		(259,358	)	104,691		(95,828	)
Reinvested capital gains		–		–		557,756		289,878		–		503,492		–		125,938
Net increase (decrease) in contract owners’ equity resulting from operations		628,518		90,522		765,119		237,948		105,717		444,529		11,317		32,280
Equity transactions:
Purchase payments received from contract owners (note 6)		2,365,950		1,495,072		252,871		281,046		244,547		481,804		514,644		366,960
Transfers between funds		1,328,322		2,962,702		1,118,235		225,740		(629,374	)	(403,358	)	615,233		1,012,502
Surrenders (note 6)		(347,150	)	(50,746	)	(355,946	)	(256,480	)	(235,027	)	(924,374	)	(73,648	)	(15,840	)
Death benefits (note 4)		(120,074	)	(14	)	(4,905	)	(2,932	)	(49,442	)	(5,272	)	(18,809	)	–
Net policy repayments (loans) (note 5)		118,992		134,332		(45,529	)	(32,252	)	(27,307	)	(59,736	)	31,729		16,666
Deductions for surrender charges (note 2d)		(15,799	)	(4,498	)	(9,913	)	(3,222	)	(11,144	)	(17,834	)	(9,427	)	(1,140	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(280,933	)	(94,782	)	(151,301	)	(115,474	)	(105,361	)	(222,078	)	(94,826	)	(31,544	)
Asset charges (note 3):
FPVUL & VEL contracts		(15,308	)	(4,684	)	(6,565	)	(5,550	)	(6,834	)	(9,417	)	(6,493	)	(1,584	)
MSP contracts		(190	)	(17	)	(16	)	(54	)	(214	)	(228	)	(12	)	–
SL contracts		(8,008	)	(2,149	)	(1,782	)	(1,022	)	(1,413	)	(1,895	)	(1,618	)	(395	)
Adjustments to maintain reserves		(6	)	303		118		(9	)	(38	)	53		22		108
Net equity transactions		3,025,796		4,435,519		795,267		89,791		(821,607	)	(1,162,335	)	956,795		1,345,733
Net change in contract owners’ equity		3,654,314		4,526,041		1,560,386		327,739		(715,890	)	(717,806	)	968,112		1,378,013
Contract owners’ equity beginning of period		4,526,041		–		3,327,285		2,999,546		4,246,789		4,964,595		1,378,013		–
Contract owners’ equity end of period	$	8,180,355		4,526,041		4,887,671		3,327,285		3,530,899		4,246,789		2,346,125		1,378,013
CHANGES IN UNITS:
Beginning units		429,384		–		202,412		203,038		319,476		404,734		128,282		–
Units purchased		366,115		462,157		81,896		165,679		25,905		147,634		108,396		134,867
Units redeemed		(93,799	)	(32,773	)	(36,934	)	(166,305	)	(86,139	)	(232,892	)	(24,020	)	(6,585	)
Ending units		701,700		429,384		247,374		202,412		259,242		319,476		212,658		128,282

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITGlTech					GVITGlTech3				GVITGlUtl				GVITGvtBd
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(7,319	)	(6,698	)	–		(86	)	80,246		60,298		4,274,357		4,759,437
Realized gain (loss) on investments		68,309		(525,154	)	76,865		21,549		12		253,457		(4,154,742	)	(2,242,014	)
Change in unrealized gain (loss) on investments		460,052		56,940		104,554		27,832		680,567		(476,164	)	2,016,604		1,197,817
Reinvested capital gains		–		–		–		–		232,606		343,590		841,510		236,680
Net increase (decrease) in contract owners’ equity resulting from operations		521,042		(474,912	)	181,419		49,295		993,431		181,181		2,977,729		3,951,920
Equity transactions:
Purchase payments received from contract owners (note 6)		287,298		714,700		440,135		385,176		296,736		356,450		12,600,167		21,911,980
Transfers between funds		94,884		(4,730,636	)	356,995		723,270		1,100,262		(175,202	)	(12,812,837	)	(5,115,464	)
Surrenders (note 6)		(180,565	)	(507,860	)	(60,392	)	(42,726	)	(163,364	)	(722,856	)	(35,315,367	)	(21,786,506	)
Death benefits (note 4)		(4,826	)	(4,632	)	(584	)	–		(141	)	(760	)	(473,758	)	(133,674	)
Net policy repayments (loans) (note 5)		(60,942	)	(53,680	)	(50,683	)	15,336		(32,111	)	(43,628	)	1,302,396		(502,924	)
Deductions for surrender charges (note 2d)		(9,272	)	(13,206	)	(10,362	)	(2,848	)	(11,689	)	(3,230	)	(204,806	)	(187,848	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(157,767	)	(249,672	)	(87,361	)	(28,138	)	(99,654	)	(116,492	)	(3,202,073	)	(4,017,174	)
Asset charges (note 3):
FPVUL & VEL contracts		(7,600	)	(9,991	)	(5,542	)	(1,371	)	(7,464	)	(6,287	)	(118,452	)	(114,859	)
MSP contracts		(332	)	(361	)	(70	)	(6	)	(487	)	(462	)	(14,367	)	(15,592	)
SL contracts		(789	)	(824	)	(577	)	(151	)	(995	)	(1,553	)	(61,790	)	(87,766	)
Adjustments to maintain reserves		(448	)	(1	)	35		166		33		42		506		85
Net equity transactions		(40,359	)	(4,856,163	)	581,594		1,048,708		1,081,126		(713,978	)	(38,300,381	)	(10,049,742	)
Net change in contract owners’ equity		480,683		(5,331,075	)	763,013		1,098,003		2,074,557		(532,797	)	(35,322,652	)	(6,097,822	)
Contract owners’ equity beginning of period		5,158,177		10,489,252		1,098,003		–		2,279,588		2,812,385		133,664,356		139,762,178
Contract owners’ equity end of period	$	5,638,860		5,158,177		1,861,016		1,098,003		4,354,145		2,279,588		98,341,704		133,664,356
CHANGES IN UNITS:
Beginning units		1,635,356		3,306,446		89,142		–		153,292		201,304		9,534,524		10,130,786
Units purchased		281,687		673,755		69,527		95,265		85,389		68,084		969,433		3,838,241
Units redeemed		(303,167	)	(2,344,845	)	(22,655	)	(6,123	)	(25,833	)	(116,096	)	(3,716,401	)	(4,434,503	)
Ending units		1,613,876		1,635,356		136,014		89,142		212,848		153,292		6,787,556		9,534,524

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITGrowth					GVITIntGro				GVITIntIdx6			GVITIDAgg2
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	6,492		10,461		51,667		25,055		2,038		–	421,795		289,190
Realized gain (loss) on investments		106,037		(40,719	)	398,037		268,998		(153	)	–	642,528		615,352
Change in unrealized gain (loss) on investments		848,404		1,040,630		1,594,606		343,491		16,309		–	1,918,101		12,811
Reinvested capital gains		–		–		11,773		7,948		–		–	295,325		327,252
Net increase (decrease) in contract owners’ equity resulting from operations		960,933		1,010,372		2,056,083		645,492		18,194		–	3,277,749		1,244,605
Equity transactions:
Purchase payments received from contract owners (note 6)		2,372,877		2,709,490		395,774		267,878		25,584		–	4,170,763		3,447,214
Transfers between funds		(862,076	)	(440,902	)	4,150,649		1,185,928		183,642		–	1,559,482		2,915,728
Surrenders (note 6)		(642,622	)	(868,508	)	(276,718	)	(313,778	)	(17	)	–	(759,549	)	(787,234	)
Death benefits (note 4)		(126,564	)	(43,706	)	(847	)	(2	)	–		–	(32,296	)	(3,628	)
Net policy repayments (loans) (note 5)		(183,520	)	(177,162	)	(34,525	)	(2,814	)	(300	)	–	(141,702	)	(96,544	)
Deductions for surrender charges (note 2d)		(74,252	)	(77,088	)	(3,557	)	(5,918	)	(158	)	–	(140,694	)	(131,596	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(1,233,859	)	(1,345,570	)	(177,826	)	(90,300	)	(3,539	)	–	(1,304,561	)	(1,180,948	)
Asset charges (note 3):
FPVUL & VEL contracts		(70,082	)	(68,772	)	(12,673	)	(4,638	)	(246	)	–	(64,191	)	(43,587	)
MSP contracts		(2,065	)	(2,172	)	(372	)	(245	)	–		–	(1,766	)	(477	)
SL contracts		(7,477	)	(7,459	)	(1,302	)	(190	)	(61	)	–	(3,840	)	(4,658	)
Adjustments to maintain reserves		804		19		77		39		72		–	(82	)	146
Net equity transactions		(828,836	)	(321,830	)	4,038,680		1,035,960		204,977		–	3,281,564		4,114,416
Net change in contract owners’ equity		132,097		688,542		6,094,763		1,681,452		223,171		–	6,559,313		5,359,021
Contract owners’ equity beginning of period		16,638,165		15,949,623		3,563,893		1,882,441		–		–	18,459,692		13,100,671
Contract owners’ equity end of period	$	16,770,262		16,638,165		9,658,656		3,563,893		223,171		–	25,019,005		18,459,692
CHANGES IN UNITS:
Beginning units		2,151,666		2,195,790		354,044		243,720		–		–	1,368,528		1,046,694
Units purchased		314,518		485,451		408,362		189,792		21,043		–	521,691		573,546
Units redeemed		(424,474	)	(529,575	)	(41,694	)	(79,468	)	(709	)	–	(300,459	)	(251,712	)
Ending units		2,041,710		2,151,666		720,712		354,044		20,334		–	1,589,760		1,368,528

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITIDCon2					GVITIDMod2				GVITIDModAg2				GVITIDModCon2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	379,907		234,921		1,327,498		897,528		1,316,373		938,989		629,411		416,545
Realized gain (loss) on investments		(14,713	)	219,555		962,021		744,897		1,886,692		1,254,258		467,967		353,988
Change in unrealized gain (loss) on investments		238,962		(329,049	)	3,146,924		(103,063	)	4,291,540		122,125		474,133		(382,105	)
Reinvested capital gains		123,826		199,790		502,972		708,206		725,912		999,754		317,513		319,252
Net increase (decrease) in contract owners’ equity resulting from operations		727,982		325,217		5,939,415		2,247,568		8,220,517		3,315,126		1,889,024		707,680
Equity transactions:
Purchase payments received from contract owners (note 6)		1,151,953		2,136,868		9,853,038		9,144,332		11,456,107		11,048,024		5,966,130		2,403,516
Transfers between funds		2,758,814		6,892,036		5,612,064		8,129,376		5,087,005		9,653,958		(1,087,071	)	5,932,492
Surrenders (note 6)		(435,324	)	(7,199,914	)	(1,896,681	)	(1,604,592	)	(4,308,782	)	(3,544,782	)	(331,084	)	(961,250	)
Death benefits (note 4)		(73,137	)	(16,968	)	(134,336	)	(33,088	)	(7,042	)	(6,712	)	(475	)	(275,142	)
Net policy repayments (loans) (note 5)		(24,239	)	(24,024	)	(223,847	)	(582,182	)	(775,310	)	(262,200	)	(47,914	)	(28,104	)
Deductions for surrender charges (note 2d)		(33,334	)	(19,818	)	(266,778	)	(197,606	)	(389,030	)	(354,622	)	(36,396	)	(73,072	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(580,940	)	(585,678	)	(3,236,018	)	(3,021,900	)	(3,731,750	)	(3,441,332	)	(926,995	)	(860,714	)
Asset charges (note 3):
FPVUL & VEL contracts		(22,125	)	(15,957	)	(169,493	)	(116,128	)	(220,543	)	(144,086	)	(42,604	)	(29,899	)
MSP contracts		(6,270	)	(4,901	)	(19,056	)	(10,823	)	(10,524	)	(7,326	)	(8,059	)	(5,848	)
SL contracts		(4,480	)	(5,037	)	(22,344	)	(14,565	)	(25,375	)	(14,989	)	(6,535	)	(7,150	)
Adjustments to maintain reserves		(4	)	(1	)	(879	)	185		216		77		(347	)	178
Net equity transactions		2,730,914		1,156,606		9,495,670		11,693,009		7,074,972		12,926,010		3,478,650		6,095,007
Net change in contract owners’ equity		3,458,896		1,481,823		15,435,085		13,940,577		15,295,489		16,241,136		5,367,674		6,802,687
Contract owners’ equity beginning of period		9,636,698		8,154,875		46,610,859		32,670,282		52,372,408		36,131,272		20,710,809		13,908,122
Contract owners’ equity end of period	$	13,095,594		9,636,698		62,045,944		46,610,859		67,667,897		52,372,408		26,078,483		20,710,809
CHANGES IN UNITS:
Beginning units		823,092		719,758		3,688,566		2,721,654		3,969,980		2,932,166		1,697,008		1,186,558
Units purchased		415,079		939,743		1,222,494		1,591,266		1,222,174		1,784,437		509,644		879,817
Units redeemed		(180,433	)	(836,409	)	(496,766	)	(624,354	)	(711,508	)	(746,623	)	(229,654	)	(369,367	)
Ending units		1,057,738		823,092		4,414,294		3,688,566		4,480,646		3,969,980		1,976,998		1,697,008

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITJPBal					GVITMdCpGr				GVITMdCpIdx				GVITMyMkt
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	416,379		381,003		(4,698	)	(7,156	)	781,312		623,730		5,057,915		3,194,754
Realized gain (loss) on investments		1,350,548		984,632		503,082		3,895,659		8,050,335		2,511,390		–		–
Change in unrealized gain (loss) on investments		439,493		(887,239	)	1,011,753		(3,047,260	)	(3,099,405	)	545,209		–		–
Reinvested capital gains		–		–		–		–		1,086,719		4,400,544		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		2,206,420		478,396		1,510,137		841,243		6,818,961		8,080,873		5,057,915		3,194,754
Equity transactions:
Purchase payments received from contract owners (note 6)		1,369,428		2,349,346		1,834,830		2,403,218		8,244,490		9,342,156		36,245,767		59,551,946
Transfers between funds		(1,657,342	)	(1,165,522	)	(417,382	)	(11,690,018	)	2,100,457		3,263,140		(20,282,149	)	(42,927,020	)
Surrenders (note 6)		(2,865,306	)	(1,832,352	)	(632,057	)	(3,225,070	)	(9,627,323	)	(6,689,850	)	(14,591,642	)	(15,681,862	)
Death benefits (note 4)		(62,754	)	(218,846	)	(20,321	)	(17,596	)	(172,854	)	(139,284	)	(430,692	)	(412,398	)
Net policy repayments (loans) (note 5)		(69,838	)	(125,112	)	(142,757	)	(195,112	)	(485,363	)	(429,490	)	(682,250	)	(6,812	)
Deductions for surrender charges (note 2d)		(119,984	)	(50,382	)	(56,726	)	(68,996	)	(148,453	)	(128,538	)	(850,181	)	(1,280,192	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(757,970	)	(930,210	)	(903,004	)	(977,532	)	(2,197,872	)	(2,271,002	)	(7,954,613	)	(9,684,038	)
Asset charges (note 3):
FPVUL & VEL contracts		(42,576	)	(42,879	)	(53,009	)	(48,945	)	(113,884	)	(98,800	)	(370,746	)	(384,378	)
MSP contracts		(2,310	)	(2,511	)	(1,510	)	(1,022	)	(1,996	)	(1,704	)	(31,321	)	(25,514	)
SL contracts		(11,159	)	(9,929	)	(7,634	)	(6,129	)	(37,493	)	(40,622	)	(84,568	)	(80,260	)
Adjustments to maintain reserves		317		(697	)	43		(2	)	(231	)	72		(5,168	)	149,406
Net equity transactions		(4,219,494	)	(2,029,094	)	(399,527	)	(13,827,204	)	(2,440,522	)	2,806,078		(9,037,563	)	(10,781,122	)
Net change in contract owners’ equity		(2,013,074	)	(1,550,698	)	1,110,610		(12,985,961	)	4,378,439		10,886,951		(3,979,648	)	(7,586,368	)
Contract owners’ equity beginning of period		19,418,437		20,969,135		16,311,235		29,297,196		76,859,666		65,972,715		119,443,228		127,029,596
Contract owners’ equity end of period	$	17,405,363		19,418,437		17,421,845		16,311,235		81,238,105		76,859,666		115,463,580		119,443,228
CHANGES IN UNITS:
Beginning units		1,645,674		1,828,006		1,253,052		2,993,638		3,939,766		3,680,328		9,499,298		10,347,602
Units purchased		120,149		503,846		140,282		432,791		779,224		1,562,959		2,837,447		5,033,223
Units redeemed		(450,159	)	(686,178	)	(175,494	)	(2,173,377	)	(818,706	)	(1,303,521	)	(3,553,307	)	(5,881,527	)
Ending units		1,315,664		1,645,674		1,217,840		1,253,052		3,900,284		3,939,766		8,783,438		9,499,298

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITMyMkt5					GVITNWFund				GVITNWLead				GVITSmCapGr
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	10,857,311		8,508,706		4,901,772		2,693,622		7,431		10,016		(23,290	)	(26,072	)
Realized gain (loss) on investments		–		–		1,402,245		651,321		738		78,658		2,136,273		1,655,433
Change in unrealized gain (loss) on investments		–		–		56,960,310		22,877,449		83,224		(134,132	)	(1,500,638	)	(103,778	)
Reinvested capital gains		–		–		–		–		113,501		131,530		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		10,857,311		8,508,706		63,264,327		26,222,392		204,894		86,072		612,345		1,525,583
Equity transactions:
Purchase payments received from contract owners (note 6)		174,454,959		206,045,210		5,631,009		6,624,320		95,367		81,950		3,156,568		4,919,556
Transfers between funds		(26,589,546	)	(318,477,526	)	(1,739,199	)	204,038,642		422,280		280,028		500,782		(4,744,034	)
Surrenders (note 6)		(19,445,282	)	(90,778,732	)	(2,132,968	)	(3,009,076	)	(2,965	)	(283,570	)	(6,177,383	)	(3,131,300	)
Death benefits (note 4)		(68,864	)	(118,810	)	(332,227	)	(251,798	)	–		(2	)	(55,315	)	(22,744	)
Net policy repayments (loans) (note 5)		217,926		(677,190	)	(752,529	)	(648,492	)	(1,611	)	39,324		(131,546	)	(230,390	)
Deductions for surrender charges (note 2d)		–		–		(193,180	)	(263,592	)	(480	)	(4,038	)	(46,363	)	(69,526	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(4,077,600	)	(5,512,548	)	(5,735,389	)	(5,077,432	)	(32,855	)	(33,634	)	(863,076	)	(964,198	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(193,484	)	(184,722	)	(2,578	)	(1,679	)	(51,213	)	(45,750	)
MSP contracts		–		–		(14,263	)	(13,351	)	–		–		(1,246	)	(793	)
SL contracts		–		–		(15,690	)	(15,435	)	(714	)	(49	)	(11,542	)	(14,601	)
Adjustments to maintain reserves		10,439		(1,022	)	4,424		2,184		27		4		(6,453	)	(2,405	)
Net equity transactions		124,502,032		(209,520,618	)	(5,473,496	)	201,201,248		476,471		78,334		(3,686,787	)	(4,306,185	)
Net change in contract owners’ equity		135,359,343		(201,011,912	)	57,790,831		227,423,640		681,365		164,406		(3,074,442	)	(2,780,602	)
Contract owners’ equity beginning of period		196,203,033		397,214,945		470,939,668		243,516,028		864,230		699,824		26,005,927		28,786,529
Contract owners’ equity end of period	$	331,562,376		196,203,033		528,730,499		470,939,668		1,545,595		864,230		22,931,485		26,005,927
CHANGES IN UNITS:
Beginning units		18,911,688		39,192,402		41,489,502		22,700,198		62,358		55,742		1,555,282		1,863,398
Units purchased		20,441,450		27,053,095		444,215		19,832,722		48,609		32,344		349,644		618,362
Units redeemed		(8,778,248	)	(47,333,809	)	(863,645	)	(1,043,418	)	(14,997	)	(25,728	)	(574,870	)	(926,478	)
Ending units		30,574,890		18,911,688		41,070,072		41,489,502		95,970		62,358		1,330,056		1,555,282

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITSmCapVal					GVITSmComp				GVITTGroFoc				GVITUSGro
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	282,031		(51,701	)	(61,522	)	(170,116	)	–		–		14,099		(3,737	)
Realized gain (loss) on investments		12,069,014		3,010,666		13,129,717		3,737,587		–		–		(68,320	)	97,675
Change in unrealized gain (loss) on investments		(5,079,969	)	(10,694,552	)	(3,983,920	)	(4,647,318	)	–		–		(200,490	)	(551,367	)
Reinvested capital gains		6,169,351		9,974,530		2,239,910		12,618,912		–		–		130,686		967,114
Net increase (decrease) in contract owners’ equity resulting from operations		13,440,427		2,238,943		11,324,185		11,539,065		–		–		(124,025	)	509,685
Equity transactions:
Purchase payments received from contract owners (note 6)		7,852,968		11,548,638		11,006,301		13,189,146		(314	)	582		700,449		618,688
Transfers between funds		(11,917,583	)	(6,831,554	)	(18,838,133	)	6,068,378		(158	)	(3,206	)	123,032		2,635,942
Surrenders (note 6)		(11,019,125	)	(9,258,820	)	(6,025,856	)	(8,628,358	)	–		–		(590,255	)	(800,512	)
Death benefits (note 4)		(625,733	)	(134,276	)	(260,687	)	(173,698	)	–		–		(26,342	)	(4,592	)
Net policy repayments (loans) (note 5)		(465,834	)	(447,176	)	(364,919	)	(121,272	)	45		–		(46,269	)	(31,166	)
Deductions for surrender charges (note 2d)		(175,861	)	(227,778	)	(139,993	)	(151,950	)	–		–		(14,853	)	(8,178	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(2,819,571	)	(3,327,252	)	(3,096,872	)	(3,277,318	)	427		2,568		(244,363	)	(212,052	)
Asset charges (note 3):
FPVUL & VEL contracts		(167,018	)	(164,326	)	(158,429	)	(138,233	)	–		54		(13,600	)	(9,349	)
MSP contracts		(5,158	)	(5,167	)	(5,020	)	(4,247	)	–		–		(442	)	(327	)
SL contracts		(28,628	)	(31,488	)	(24,669	)	(23,268	)	–		–		(2,313	)	(1,229	)
Adjustments to maintain reserves		95		(4,800	)	(62,516	)	189		–		2		55		(12	)
Net equity transactions		(19,371,448	)	(8,883,999	)	(17,970,793	)	6,739,369		–		–		(114,901	)	2,187,213
Net change in contract owners’ equity		(5,931,021	)	(6,645,056	)	(6,646,608	)	18,278,434		–		–		(238,926	)	2,696,898
Contract owners’ equity beginning of period		86,244,409		92,889,465		107,929,871		89,651,437		–		–		6,780,459		4,083,561
Contract owners’ equity end of period	$	80,313,388		86,244,409		101,283,263		107,929,871		–		–		6,541,533		6,780,459
CHANGES IN UNITS:
Beginning units		3,867,500		4,231,442		5,767,374		4,948,194		–		–		431,480		290,806
Units purchased		361,356		1,603,362		715,029		3,368,175		49		1,416		84,716		228,574
Units redeemed		(1,193,008	)	(1,967,304	)	(1,674,711	)	(2,548,995	)	(49	)	(1,416	)	(98,258	)	(87,900	)
Ending units		3,035,848		3,867,500		4,807,692		5,767,374		–		–		417,938		431,480

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITVKVal					GVITMltSec				GVITWLead				GSVMdCpV
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	215,731		156,510		702,956		704,651		44,960		49,630		447,368		154,348
Realized gain (loss) on investments		611,592		1,305,284		14,731		55,235		397,546		1,186,830		1,527,282		3,824,811
Change in unrealized gain (loss) on investments		499,983		(1,324,762	)	51,097		(490,913	)	800,472		(451,565	)	565,343		(2,832,569	)
Reinvested capital gains		577,219		280,896		38,017		105,992		–		–		6,847,239		4,779,360
Net increase (decrease) in contract owners’ equity resulting from operations		1,904,525		417,928		806,801		374,965		1,242,978		784,895		9,387,232		5,925,950
Equity transactions:
Purchase payments received from contract owners (note 6)		1,717,353		1,658,134		1,807,496		2,328,590		415,550		470,616		9,151,404		8,697,054
Transfers between funds		347,555		(1,053,884	)	(1,130,497	)	6,286,074		(215,873	)	(353,660	)	1,717,030		19,116,412
Surrenders (note 6)		(563,976	)	(971,204	)	(1,536,865	)	(2,489,696	)	(292,759	)	(658,382	)	(4,345,371	)	(16,028,218	)
Death benefits (note 4)		(130,765	)	(20,678	)	(285,442	)	(86,920	)	(5,633	)	(5,270	)	(44,468	)	(36,842	)
Net policy repayments (loans) (note 5)		(128,466	)	(51,712	)	(5,560	)	(127,030	)	(34,245	)	(23,198	)	(253	)	(1,252	)
Deductions for surrender charges (note 2d)		(34,111	)	(34,204	)	(25,056	)	(51,082	)	(8,990	)	(29,412	)	–		–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(611,392	)	(575,530	)	(605,722	)	(737,666	)	(258,860	)	(266,276	)	(860,787	)	(824,296	)
Asset charges (note 3):
FPVUL & VEL contracts		(43,708	)	(29,150	)	(32,124	)	(28,630	)	(17,581	)	(14,568	)	–		–
MSP contracts		(1,297	)	(1,230	)	(3,307	)	(3,643	)	(379	)	(313	)	–		–
SL contracts		(5,807	)	(3,818	)	(5,862	)	(4,972	)	(1,912	)	(1,523	)	–		–
Adjustments to maintain reserves		99		(65	)	(8	)	61		26		(15	)	1,371		150
Net equity transactions		545,485		(1,083,341	)	(1,822,947	)	5,085,086		(420,656	)	(882,001	)	5,618,926		10,923,008
Net change in contract owners’ equity		2,450,010		(665,413	)	(1,016,146	)	5,460,051		822,322		(97,106	)	15,006,158		16,848,958
Contract owners’ equity beginning of period		11,170,215		11,835,628		19,551,800		14,091,749		4,920,120		5,017,226		54,741,504		37,892,546
Contract owners’ equity end of period	$	13,620,225		11,170,215		18,535,654		19,551,800		5,742,442		4,920,120		69,747,662		54,741,504
CHANGES IN UNITS:
Beginning units		873,378		1,010,062		1,351,476		980,208		354,722		440,648		3,064,044		2,386,580
Units purchased		175,325		292,506		158,491		824,057		25,803		189,720		659,984		2,517,363
Units redeemed		(131,115	)	(429,190	)	(291,507	)	(452,789	)	(52,953	)	(275,646	)	(354,142	)	(1,839,899	)
Ending units		917,588		873,378		1,218,460		1,351,476		327,572		354,722		3,369,886		3,064,044

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	JanBal					JanForty				JanGlTech				JanRMgCore
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	140,956		152,654		19,557		(34,927	)	(4,761	)	(3,541	)	677		5,763
Realized gain (loss) on investments		718,982		459,986		4,052,326		3,013,007		727,508		(476,937	)	(6,169	)	6,996
Change in unrealized gain (loss) on investments		(247,691	)	26,626		(196,228	)	1,708,676		489,592		1,867,653		21,541		(49,154	)
Reinvested capital gains		–		–		–		–		–		–		42,380		83,508
Net increase (decrease) in contract owners’ equity resulting from operations		612,247		639,266		3,875,655		4,686,756		1,212,339		1,387,175		58,429		47,113
Equity transactions:
Purchase payments received from contract owners (note 6)		814,693		1,225,974		4,436,262		5,269,780		1,726,100		2,281,730		45,743		49,474
Transfers between funds		(2,998,740	)	(771,402	)	1,640,984		(2,287,536	)	1,204,456		(1,413,638	)	(41,864	)	147,744
Surrenders (note 6)		(139,904	)	(807,376	)	(5,569,498	)	(4,583,720	)	(746,802	)	(1,334,454	)	(4,910	)	(44,184	)
Death benefits (note 4)		(9,517	)	(6,256	)	(155,868	)	(17,062	)	(15,700	)	(4,292	)	–		–
Net policy repayments (loans) (note 5)		(60,524	)	(27,354	)	(327,900	)	(330,624	)	(148,833	)	(99,806	)	(5,751	)	(3,394	)
Deductions for surrender charges (note 2d)		(3,986	)	(3,852	)	(150,791	)	(169,738	)	(68,718	)	(71,836	)	(640	)	(3,450	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(157,298	)	(184,630	)	(1,723,893	)	(1,994,710	)	(692,384	)	(795,868	)	(22,573	)	(21,760	)
Asset charges (note 3):
FPVUL & VEL contracts		(4,752	)	(3,367	)	(99,861	)	(100,236	)	(43,998	)	(42,571	)	(1,774	)	(1,339	)
MSP contracts		–		–		(2,411	)	(2,390	)	(834	)	(783	)	(362	)	(275	)
SL contracts		(915	)	(549	)	(13,846	)	(13,231	)	(8,830	)	(8,667	)	(127	)	(93	)
Adjustments to maintain reserves		12,505		44		165		(1,624	)	234		1,037		(37	)	58
Net equity transactions		(2,548,438	)	(578,768	)	(1,966,657	)	(4,231,091	)	1,204,691		(1,489,148	)	(32,295	)	122,781
Net change in contract owners’ equity		(1,936,191	)	60,498		1,908,998		455,665		2,417,030		(101,973	)	26,134		169,894
Contract owners’ equity beginning of period		8,310,980		8,250,482		42,905,579		42,449,914		14,125,473		14,227,446		510,093		340,199
Contract owners’ equity end of period	$	6,374,789		8,310,980		44,814,577		42,905,579		16,542,503		14,125,473		536,227		510,093
CHANGES IN UNITS:
Beginning units		628,864		670,846		4,991,020		5,560,894		3,531,632		3,971,414		31,826		23,542
Units purchased		115,952		241,647		1,115,457		1,685,267		972,673		871,305		2,850		13,493
Units redeemed		(307,090	)	(283,629	)	(1,321,079	)	(2,255,141	)	(659,063	)	(1,311,087	)	(4,472	)	(5,209	)
Ending units		437,726		628,864		4,785,398		4,991,020		3,845,242		3,531,632		30,204		31,826

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	JanIntGroS2				JanIntGroS				JPMMidCapGr				JPMMidCapV
Investment activity:	2006			2005	2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	75,317		–	987,830		371,496		(10,359	)	(8,296	)	6,164		3,396
Realized gain (loss) on investments		168		–	8,545,861		5,363,604		231,144		343,944		4,335		89,704
Change in unrealized gain (loss) on investments		1,243,011		–	10,808,316		5,238,898		(10,397	)	(31,068	)	(30,208	)	(70,259	)
Reinvested capital gains		–		–	–		–		109,584		–		98,910		66,486
Net increase (decrease) in contract owners’ equity resulting from operations		1,318,496		–	20,342,007		10,973,998		319,972		304,580		79,201		89,327
Equity transactions:
Purchase payments received from contract owners (note 6)		1,819,270		–	3,361,029		4,705,514		503,494		494,648		30,062		120,354
Transfers between funds		5,793,495		–	444,747		(5,758,140	)	(90,427	)	782,682		(587,553	)	(297,044	)
Surrenders (note 6)		(77,073	)	–	(3,818,358	)	(5,494,906	)	(84,882	)	(870,990	)	(82,845	)	(201,206	)
Death benefits (note 4)		(464	)	–	(264,675	)	(17,372	)	(151	)	(2,886	)	(805	)	(528	)
Net policy repayments (loans) (note 5)		71,621		–	(454,585	)	(217,512	)	–		–		–		–
Deductions for surrender charges (note 2d)		(3,100	)	–	(131,288	)	(188,528	)	–		–		–		–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(134,013	)	–	(1,849,857	)	(1,685,664	)	(76,330	)	(66,548	)	(8,083	)	(14,646	)
Asset charges (note 3):
FPVUL & VEL contracts		(8,505	)	–	(119,340	)	(87,703	)	–		–		–		–
MSP contracts		(78	)	–	(2,820	)	(1,797	)	–		–		–		–
SL contracts		(1,428	)	–	(17,542	)	(12,028	)	–		–		–		–
Adjustments to maintain reserves		41		–	735		(6	)	8		10		8		35
Net equity transactions		7,459,766		–	(2,851,954	)	(8,758,142	)	251,712		336,916		(649,216	)	(393,035	)
Net change in contract owners’ equity		8,778,262		–	17,490,053		2,215,856		571,684		641,496		(570,015	)	(303,708	)
Contract owners’ equity beginning of period		–		–	43,357,179		41,141,323		3,403,405		2,761,909		877,908		1,181,616
Contract owners’ equity end of period	$	8,778,262		–	60,847,232		43,357,179		3,975,089		3,403,405		307,893		877,908
CHANGES IN UNITS:
Beginning units		–		–	4,397,578		5,514,336		214,242		192,734		53,000		78,176
Units purchased		777,292		–	487,995		1,598,196		63,298		261,089		1,741		48,870
Units redeemed		(22,442	)	–	(671,007	)	(2,714,954	)	(52,416	)	(239,581	)	(38,811	)	(74,046	)
Ending units		754,850		–	4,214,566		4,397,578		225,124		214,242		15,930		53,000

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	LAMidCapV					MFSInvGrStl				MFSValueI				GVITNStrVal
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	2,252		724		–		9,985		24,098		9,978		–		–
Realized gain (loss) on investments		3,568		731		59,908		48,694		104,789		39,281		–		–
Change in unrealized gain (loss) on investments		1,310		(4,233	)	247,242		121,870		286,163		21,116		–		–
Reinvested capital gains		49,476		13,692		–		–		68,117		32,118		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		56,606		10,914		307,150		180,549		483,167		102,493		–		–
Equity transactions:
Purchase payments received from contract owners (note 6)		2,994		(2	)	865,208		722,216		410,693		363,110		3		–
Transfers between funds		387,073		225,126		(58,134	)	649,508		1,224,719		460,144		(30	)	–
Surrenders (note 6)		(7,874	)	–		(118,612	)	(65,716	)	(62,697	)	(25,282	)	–		–
Death benefits (note 4)		–		–		(17,006	)	(43,208	)	–		(828	)	–		–
Net policy repayments (loans) (note 5)		–		–		(39,305	)	(10,682	)	(12,805	)	(13,326	)	–		–
Deductions for surrender charges (note 2d)		–		–		(14,157	)	(7,572	)	(11,532	)	(1,996	)	–		–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(4,758	)	(1,542	)	(280,830	)	(269,260	)	(139,305	)	(111,492	)	3		–
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(17,699	)	(13,029	)	(9,363	)	(5,202	)	(1	)	–
MSP contracts		–		–		(237	)	(173	)	(380	)	(201	)	–		–
SL contracts		–		–		(824	)	(623	)	(1,208	)	(727	)	–		–
Adjustments to maintain reserves		(838	)	45		5		11		50		32		25		–
Net equity transactions		376,597		223,627		318,409		961,472		1,398,172		664,232		–		–
Net change in contract owners’ equity		433,203		234,541		625,559		1,142,021		1,881,339		766,725		–		–
Contract owners’ equity beginning of period		234,541		–		3,855,599		2,713,578		1,795,478		1,028,753		–		–
Contract owners’ equity end of period	$	667,744		234,541		4,481,158		3,855,599		3,676,817		1,795,478		–		–
CHANGES IN UNITS:
Beginning units		20,812		–		291,396		214,290		118,172		72,218		–		–
Units purchased		33,292		22,477		62,263		112,910		96,110		56,230		3		–
Units redeemed		(1,164	)	(1,665	)	(38,835	)	(35,804	)	(14,022	)	(10,276	)	(3	)	–
Ending units		52,940		20,812		314,824		291,396		200,260		118,172		–		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTFasc					NBAMTGuard				NBAMTInt				NBAMTLMat
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(1,815	)	(3,239	)	95,651		8,896		3,750		664		272,797		214,521
Realized gain (loss) on investments		78,642		135,918		2,245,862		1,071,673		64,388		2,547		(17,147	)	(63,991	)
Change in unrealized gain (loss) on investments		(36,527	)	(93,155	)	(418,853	)	29,510		183,156		32,993		113,979		(61,052	)
Reinvested capital gains		45,103		7,692		–		–		13,829		3,050		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		85,403		47,216		1,922,660		1,110,079		265,123		39,254		369,629		89,478
Equity transactions:
Purchase payments received from contract owners (note 6)		181,213		471,948		887,138		1,738,684		216,888		21,870		785,674		1,286,146
Transfers between funds		(282,594	)	(958,828	)	(964,203	)	(1,115,540	)	1,146,282		591,616		1,348,992		3,474,880
Surrenders (note 6)		(47,239	)	(309,050	)	(1,705,503	)	(1,002,208	)	(108,990	)	(1,650	)	(138,889	)	(187,828	)
Death benefits (note 4)		(1,821	)	(1,130	)	(29,599	)	(52,436	)	–		–		–		(68,168	)
Net policy repayments (loans) (note 5)		(22,508	)	(14,204	)	(189,086	)	(88,276	)	(46,365	)	(4,560	)	(5,571	)	(6,508	)
Deductions for surrender charges (note 2d)		(974	)	(1,752	)	(22,589	)	(30,876	)	(2,291	)	(476	)	(14,623	)	(8,856	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(42,693	)	(64,846	)	(530,149	)	(581,516	)	(56,459	)	(11,664	)	(334,442	)	(246,608	)
Asset charges (note 3):
FPVUL & VEL contracts		(2,505	)	(1,788	)	(32,924	)	(32,955	)	(4,456	)	(534	)	(24,807	)	(12,987	)
MSP contracts		(85	)	–		(939	)	(962	)	(233	)	(1	)	(753	)	(472	)
SL contracts		(498	)	(329	)	(4,041	)	(4,015	)	(498	)	(1	)	(2,448	)	(2,044	)
Adjustments to maintain reserves		74		(28	)	36		100		748		73		(10	)	200
Net equity transactions		(219,630	)	(880,007	)	(2,591,859	)	(1,170,000	)	1,144,626		594,673		1,613,123		4,227,755
Net change in contract owners’ equity		(134,227	)	(832,791	)	(669,199	)	(59,921	)	1,409,749		633,927		1,982,752		4,317,233
Contract owners’ equity beginning of period		1,682,268		2,515,059		14,609,107		14,669,028		633,927		–		7,733,779		3,416,546
Contract owners’ equity end of period	$	1,548,041		1,682,268		13,939,908		14,609,107		2,043,676		633,927		9,716,531		7,733,779
CHANGES IN UNITS:
Beginning units		116,494		179,164		934,782		1,000,824		53,950		–		748,972		335,648
Units purchased		27,221		57,082		154,898		389,304		99,337		55,621		204,964		467,743
Units redeemed		(41,803	)	(119,752	)	(328,992	)	(455,346	)	(12,403	)	(1,671	)	(50,888	)	(54,419	)
Ending units		101,912		116,494		760,688		934,782		140,884		53,950		903,048		748,972

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT- 4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTMCGr					NBAMTPart				NBAMTRegI			NBAMTRegS
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	(22,024	)	(24,851	)	136,790		181,744		730		–	3,419		(162	)
Realized gain (loss) on investments		1,903,659		3,965,024		2,935,967		3,223,639		(14,805	)	–	7,578		2,701
Change in unrealized gain (loss) on investments		3,585,864		549,775		(2,822,988	)	(223,832	)	12,278		–	8,407		7,430
Reinvested capital gains		–		–		2,237,618		4,592		22,223		–	47,400		–
Net increase (decrease) in contract owners’ equity resulting from operations		5,467,499		4,489,948		2,487,387		3,186,143		20,426		–	66,804		9,969
Equity transactions:
Purchase payments received from contract owners (note 6)		4,023,169		5,156,916		1,561,021		2,016,266		12,694		–	77,630		7,400
Transfers between funds		(1,734,701	)	(5,894,314	)	815,963		1,247,214		399,771		–	477,234		274,800
Surrenders (note 6)		(1,585,818	)	(6,484,224	)	(5,958,775	)	(3,881,124	)	(1,466	)	–	(51,066	)	(19,240	)
Death benefits (note 4)		(88,663	)	(104,540	)	(34,546	)	(8,784	)	–		–	–		–
Net policy repayments (loans) (note 5)		(157,366	)	(277,610	)	(680,813	)	(279,760	)	–		–	(4,356	)	–
Deductions for surrender charges (note 2d)		(122,940	)	(147,180	)	(63,405	)	(88,342	)	–		–	(726	)	(1,328	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(1,799,054	)	(1,924,068	)	(815,350	)	(840,918	)	(9,310	)	–	(25,199	)	(2,124	)
Asset charges (note 3):
FPVUL & VEL contracts		(102,689	)	(92,477	)	(54,760	)	(47,738	)	–		–	(2,680	)	(142	)
MSP contracts		(2,090	)	(1,966	)	(1,489	)	(1,654	)	–		–	(57	)	(7	)
SL contracts		(15,066	)	(13,348	)	(12,080	)	(10,122	)	–		–	(234	)	(3	)
Adjustments to maintain reserves		107		(4,370	)	2,087		830		(938	)	–	25		67
Net equity transactions		(1,585,111	)	(9,787,181	)	(5,242,147	)	(1,894,132	)	400,751		–	470,571		259,423
Net change in contract owners’ equity		3,882,388		(5,297,233	)	(2,754,760	)	1,292,011		421,177		–	537,375		269,392
Contract owners’ equity beginning of period		38,136,423		43,433,656		23,462,474		22,170,463		–		–	269,392		–
Contract owners’ equity end of period	$	42,018,811		38,136,423		20,707,714		23,462,474		421,177		–	806,767		269,392
CHANGES IN UNITS:
Beginning units		2,443,662		3,470,750		1,534,846		1,731,354		–		–	23,100		–
Units purchased		261,641		679,255		193,885		513,241		42,315		–	42,368		25,079
Units redeemed		(334,425	)	(1,706,343	)	(542,365	)	(709,749	)	(1,221	)	–	(3,108	)	(1,979	)
Ending units		2,370,878		2,443,662		1,186,366		1,534,846		41,094		–	62,360		23,100

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT- 4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTSocRes					OppGlSec3				OppCapAp				OppGlSec
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	3,512		(271	)	109,643		(1,266	)	290,028		958,062		653,896		510,971
Realized gain (loss) on investments		84,079		34,585		216,685		65,081		6,558,021		578,276		8,813,547		5,322,204
Change in unrealized gain (loss) on investments		177,186		59,578		1,264,016		764,233		2,466,146		4,398,023		(1,859,919	)	2,527,482
Reinvested capital gains		24,933		3,326		573,997		–		–		–		4,090,534		–
Net increase (decrease) in contract owners’ equity resulting from operations		289,710		97,218		2,164,341		828,048		9,314,195		5,934,361		11,698,058		8,360,657
Equity transactions:
Purchase payments received from contract owners (note 6)		469,710		313,774		3,887,872		2,779,566		13,571,860		21,711,790		2,915,675		7,081,714
Transfers between funds		707,196		727,176		3,708,909		5,535,992		(20,777,203	)	(16,457,702	)	1,041,332		907,058
Surrenders (note 6)		(152,125	)	(85,330	)	(657,688	)	(244,838	)	(4,677,523	)	(19,271,526	)	(8,605,245	)	(7,039,230	)
Death benefits (note 4)		–		–		(28,039	)	(25,442	)	(120,277	)	(158,872	)	(122,420	)	(44,770	)
Net policy repayments (loans) (note 5)		(9,253	)	242		(78,170	)	99,806		(321,628	)	(624,116	)	(218,423	)	(394,164	)
Deductions for surrender charges (note 2d)		(11,943	)	(1,526	)	(41,812	)	(20,618	)	(216,478	)	(319,496	)	(86,123	)	(101,854	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(118,796	)	(77,622	)	(672,243	)	(218,144	)	(4,147,291	)	(4,695,310	)	(1,744,211	)	(2,108,658	)
Asset charges (note 3):
FPVUL & VEL contracts		(7,089	)	(3,337	)	(42,792	)	(10,565	)	(199,499	)	(190,375	)	(81,862	)	(87,539	)
MSP contracts		(307	)	(91	)	(923	)	(257	)	(6,029	)	(5,610	)	(2,061	)	(1,846	)
SL contracts		(2,022	)	(893	)	(9,127	)	(3,052	)	(26,270	)	(24,477	)	(14,148	)	(14,320	)
Adjustments to maintain reserves		62		2		30		286		4,713		1		1,897		(735	)
Net equity transactions		875,433		872,395		6,066,017		7,892,734		(16,915,625	)	(20,035,693	)	(6,915,589	)	(1,804,344	)
Net change in contract owners’ equity		1,165,143		969,613		8,230,358		8,720,782		(7,601,430	)	(14,101,332	)	4,782,469		6,556,313
Contract owners’ equity beginning of period		1,562,211		592,598		8,720,782		–		130,707,277		144,808,609		66,921,188		60,364,875
Contract owners’ equity end of period	$	2,727,354		1,562,211		16,951,140		8,720,782		123,105,847		130,707,277		71,703,657		66,921,188
CHANGES IN UNITS:
Beginning units		104,292		42,274		723,136		–		10,683,274		11,425,008		5,273,314		5,430,766
Units purchased		71,098		69,573		594,916		766,045		1,281,089		7,056,358		991,724		2,878,688
Units redeemed		(15,256	)	(7,555	)	(123,704	)	(42,909	)	(2,717,063	)	(7,798,092	)	(1,448,994	)	(3,036,140	)
Ending units		160,134		104,292		1,194,348		723,136		9,247,300		10,683,274		4,816,044		5,273,314

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	OppHighInc					OppMSt				OppMStSCap				OppMidCap
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	258,840		188,043		438,967		529,350		4,810		(1,163	)	(45,719	)	(58,472	)
Realized gain (loss) on investments		(18,628	)	(50,931	)	1,963,250		1,705,806		156,168		71,417		3,970,282		8,348,656
Change in unrealized gain (loss) on investments		119,146		(47,298	)	3,463,093		9,374		210,349		117,558		(2,446,101	)	(2,182,218	)
Reinvested capital gains		–		–		–		–		94,934		53,070		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		359,358		89,814		5,865,310		2,244,530		466,261		240,882		1,478,462		6,107,966
Equity transactions:
Purchase payments received from contract owners (note 6)		532,106		538,178		4,120,791		5,707,864		680,348		394,638		4,625,076		8,090,218
Transfers between funds		227,330		431,688		(244,548	)	(2,801,076	)	1,271,772		495,442		(7,824,283	)	(10,107,086	)
Surrenders (note 6)		(106,681	)	(136,760	)	(2,633,893	)	(3,983,586	)	(284,848	)	(71,788	)	(3,278,861	)	(9,951,726	)
Death benefits (note 4)		(802	)	(2,084	)	(306,762	)	(211,410	)	(35,812	)	(2,630	)	(114,492	)	(106,858	)
Net policy repayments (loans) (note 5)		(47,547	)	(30,886	)	(432,302	)	(402,058	)	(2,810	)	(59,140	)	(129,426	)	(661,682	)
Deductions for surrender charges (note 2d)		(12,825	)	(12,660	)	(127,429	)	(185,490	)	(23,293	)	(8,466	)	(162,360	)	(243,372	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(308,843	)	(249,062	)	(2,107,721	)	(2,344,784	)	(205,569	)	(169,816	)	(2,339,153	)	(2,747,066	)
Asset charges (note 3):
FPVUL & VEL contracts		(14,128	)	(9,638	)	(132,654	)	(123,336	)	(14,409	)	(8,403	)	(128,675	)	(129,137	)
MSP contracts		(302	)	(102	)	(5,596	)	(5,206	)	(207	)	(96	)	(2,733	)	(2,946	)
SL contracts		(1,596	)	(1,089	)	(16,675	)	(17,120	)	(1,701	)	(672	)	(13,529	)	(13,009	)
Adjustments to maintain reserves		14		48		40		(22,898	)	145		(6	)	(255	)	(3,681	)
Net equity transactions		266,726		527,633		(1,886,749	)	(4,389,100	)	1,383,616		569,063		(9,368,691	)	(15,876,345	)
Net change in contract owners’ equity		626,084		617,447		3,978,561		(2,144,570	)	1,849,877		809,945		(7,890,229	)	(9,768,379	)
Contract owners’ equity beginning of period		3,795,949		3,178,502		40,298,200		42,442,770		2,664,457		1,854,512		55,571,063		65,339,442
Contract owners’ equity end of period	$	4,422,033		3,795,949		44,276,761		40,298,200		4,514,334		2,664,457		47,680,834		55,571,063
CHANGES IN UNITS:
Beginning units		304,496		260,866		3,313,744		3,750,564		146,346		111,964		4,702,756		5,915,758
Units purchased		57,743		74,854		419,706		1,087,846		99,399		56,039		376,202		2,290,601
Units redeemed		(38,067	)	(31,224	)	(567,140	)	(1,524,666	)	(30,131	)	(21,657	)	(1,305,274	)	(3,503,603	)
Ending units		324,172		304,496		3,166,310		3,313,744		215,614		146,346		3,773,684		4,702,756

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	PVITAllAst					PVITLowDur				PVITRealRet				PVITTotRet
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	128,582		149,414		1,576,571		990,266		1,586,946		682,032		4,249,566		2,469,162
Realized gain (loss) on investments		62,978		4,077		(319,633	)	(186,935	)	(330,063	)	150,024		(749,358	)	(2,913	)
Change in unrealized gain (loss) on investments		(54,520	)	50,480		210,497		(595,391	)	(2,320,724	)	(739,307	)	(291,320	)	(2,205,252	)
Reinvested capital gains		3,877		12,230		–		104,450		1,140,949		345,124		654,903		1,411,494
Net increase (decrease) in contract owners’ equity resulting from operations		140,917		216,201		1,467,435		312,390		77,108		437,873		3,863,791		1,672,491
Equity transactions:
Purchase payments received from contract owners (note 6)		417,108		240,212		3,274,924		4,651,648		3,855,829		5,417,370		11,445,348		12,384,494
Transfers between funds		(2,728,357	)	3,418,706		(130,978	)	15,350,362		10,103,605		10,901,204		33,883,799		13,111,258
Surrenders (note 6)		(371,662	)	–		(2,584,179	)	(28,029,434	)	(2,190,978	)	(3,182,524	)	(13,016,934	)	(4,948,132	)
Death benefits (note 4)		–		–		(12,566	)	(43,444	)	(10,531	)	(41,306	)	(33,557	)	(82,760	)
Net policy repayments (loans) (note 5)		–		–		840		(20	)	107		10		(26,634	)	(59,414	)
Deductions for surrender charges (note 2d)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(34,790	)	(37,340	)	(879,519	)	(827,922	)	(535,709	)	(521,088	)	(1,589,933	)	(1,316,828	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		–		–		–		–		–		–
MSP contracts		–		–		–		–		–		–		–		–
SL contracts		–		–		–		–		–		–		–		–
Adjustments to maintain reserves		110		5		(1,166	)	(2,218	)	11,835		(6,521	)	30,288		(21,486	)
Net equity transactions		(2,717,591	)	3,621,583		(332,644	)	(8,901,028	)	11,234,158		12,567,145		30,692,377		19,067,132
Net change in contract owners’ equity		(2,576,674	)	3,837,784		1,134,791		(8,588,638	)	11,311,266		13,005,018		34,556,168		20,739,623
Contract owners’ equity beginning of period		4,113,521		275,737		39,357,299		47,945,937		31,784,917		18,779,899		89,665,599		68,925,976
Contract owners’ equity end of period	$	1,536,847		4,113,521		40,492,090		39,357,299		43,096,183		31,784,917		124,221,767		89,665,599
CHANGES IN UNITS:
Beginning units		346,486		24,614		3,699,808		4,539,622		2,555,674		1,538,994		7,755,960		6,094,914
Units purchased		45,134		365,450		434,776		3,460,367		1,220,721		2,077,818		3,928,794		4,650,228
Units redeemed		(267,666	)	(43,578	)	(463,988	)	(4,300,181	)	(322,943	)	(1,061,138	)	(1,309,720	)	(2,989,182	)
Ending units		123,954		346,486		3,670,596		3,699,808		3,453,452		2,555,674		10,375,034		7,755,960

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	PioHiYield					PVTGroIncIB				PVTIntEqIB				PVTVoyIB
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	645,917		499,686		18,028		15,494		12,530		23,274		389		1,751
Realized gain (loss) on investments		(140,344	)	(66,334	)	35,631		21,915		375,808		106,954		6,926		7,602
Change in unrealized gain (loss) on investments		323,000		(555,063	)	102,959		20,998		520,130		97,263		12,151		10,546
Reinvested capital gains		171,999		327,788		28,081		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,000,572		206,077		184,699		58,407		908,468		227,491		19,466		19,899
Equity transactions:
Purchase payments received from contract owners (note 6)		1,272,832		1,262,376		192,407		229,886		220,234		190,056		108,648		105,898
Transfers between funds		711,631		2,312,216		(44,426	)	68,440		2,167,875		453,196		(28,660	)	9,278
Surrenders (note 6)		(263,529	)	(1,118,194	)	(30,875	)	(61,800	)	(409,962	)	(75,660	)	(6,539	)	(32,990	)
Death benefits (note 4)		(2,578	)	(16,674	)	–		–		(863	)	–		(9,679	)	(29,824	)
Net policy repayments (loans) (note 5)		175		10		(21,032	)	(7,834	)	(212,480	)	(2,638	)	(1,653	)	(1,908	)
Deductions for surrender charges (note 2d)		–		–		(8,618	)	(6,558	)	(10,394	)	(5,496	)	(2,997	)	(2,940	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(161,357	)	(155,358	)	(83,572	)	(90,674	)	(105,882	)	(72,620	)	(36,622	)	(41,046	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(4,578	)	(3,647	)	(7,388	)	(3,903	)	(1,773	)	(1,390	)
MSP contracts		–		–		(36	)	(34	)	(220	)	(177	)	(7	)	(6	)
SL contracts		–		–		(307	)	(185	)	(2,321	)	(2,388	)	(154	)	(113	)
Adjustments to maintain reserves		137		(73	)	20		26		38		25		(18	)	24
Net equity transactions		1,557,311		2,284,303		(1,017	)	127,620		1,638,637		480,395		20,546		4,983
Net change in contract owners’ equity		2,557,883		2,490,380		183,682		186,027		2,547,105		707,886		40,012		24,882
Contract owners’ equity beginning of period		11,117,277		8,626,897		1,150,032		964,005		2,307,196		1,599,310		359,350		334,468
Contract owners’ equity end of period	$	13,675,160		11,117,277		1,333,714		1,150,032		4,854,301		2,307,196		399,362		359,350
CHANGES IN UNITS:
Beginning units		739,418		584,660		79,162		69,826		138,276		107,542		27,308		26,864
Units purchased		133,955		689,878		11,200		22,192		154,928		42,649		8,335		9,766
Units redeemed		(32,807	)	(535,120	)	(11,158	)	(12,856	)	(65,414	)	(11,915	)	(6,859	)	(9,322	)
Ending units		840,566		739,418		79,204		79,162		227,790		138,276		28,784		27,308

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	RCFMicroCap					TRoeBlChip2				TRowEqInc2				TRowLtdTBd2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(55,521	)	96,192		2,764		318		864,340		665,219		13,800		2,024
Realized gain (loss) on investments		4,280,337		667,307		20,130		3,925		3,458,350		2,694,532		(1,565	)	(13	)
Change in unrealized gain (loss) on investments		1,284,180		2,639,776		75,614		9,234		7,085,486		(4,229,484	)	5,730		(1,192	)
Reinvested capital gains		2,562,710		593,782		–		–		2,346,470		3,101,640		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		8,071,706		3,997,057		98,508		13,477		13,754,646		2,231,907		17,965		819
Equity transactions:
Purchase payments received from contract owners (note 6)		5,413,595		4,740,150		211,549		41,398		8,015,837		8,267,440		49,427		3,104
Transfers between funds		2,521,755		6,725,044		814,033		333,894		12,414,642		21,558,452		307,240		199,838
Surrenders (note 6)		(5,177,630	)	(2,695,940	)	(5,819	)	–		(11,104,790	)	(11,550,652	)	(19,071	)	–
Death benefits (note 4)		(19,609	)	(17,684	)	–		–		(78,939	)	(68,344	)	–		–
Net policy repayments (loans) (note 5)		(14,185	)	(15,066	)	(3,902	)	(8,488	)	(20,030	)	(25,616	)	374		–
Deductions for surrender charges (note 2d)		–		–		(992	)	–		(1,671	)	–		(1,701	)	–
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(712,198	)	(575,576	)	(36,353	)	(5,912	)	(1,270,895	)	(978,192	)	(11,120	)	(2,056	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		(2,476	)	(465	)	(5,571	)	(892	)	(872	)	(180	)
MSP contracts		–		–		(251	)	(8	)	(189	)	(14	)	(25	)	–
SL contracts		–		–		(357	)	(25	)	(1,426	)	(129	)	(101	)	(40	)
Adjustments to maintain reserves		15,515		233		(7	)	88		23,259		(723	)	(9	)	17
Net equity transactions		2,027,243		8,161,161		975,425		360,482		7,970,227		17,201,330		324,142		200,683
Net change in contract owners’ equity		10,098,949		12,158,218		1,073,933		373,959		21,724,873		19,433,237		342,107		201,502
Contract owners’ equity beginning of period		38,897,901		26,739,683		373,959		–		69,101,226		49,667,989		201,502		–
Contract owners’ equity end of period	$	48,996,850		38,897,901		1,447,892		373,959		90,826,099		69,101,226		543,609		201,502
CHANGES IN UNITS:
Beginning units		2,048,560		1,568,630		33,050		–		4,627,720		3,441,590		19,896		–
Units purchased		515,021		1,454,511		88,498		34,381		1,306,509		3,455,577		34,852		20,121
Units redeemed		(427,033	)	(974,581	)	(4,504	)	(1,331	)	(797,303	)	(2,269,447	)	(3,150	)	(225	)
Ending units		2,136,548		2,048,560		117,044		33,050		5,136,926		4,627,720		51,598		19,896

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	TRowMidCap2					TRowNewAmGr				VEWrldEMkt				VEWrldHAs
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(70,941	)	(69,266	)	(36,053	)	(22,046	)	84,938		77,634		(4,133	)	26,413
Realized gain (loss) on investments		2,418,664		3,166,572		168,410		11,876		1,284,003		3,049,750		4,562,925		2,105,837
Change in unrealized gain (loss) on investments		(4,201,040	)	(1,508,118	)	86,063		642,042		2,758,263		(29,014	)	(1,696,211	)	3,024,831
Reinvested capital gains		2,767,140		1,546,394		140,937		–		1,453,634		–		1,034,045		–
Net increase (decrease) in contract owners’ equity resulting from operations		913,823		3,135,582		359,357		631,872		5,580,838		3,098,370		3,896,626		5,157,081
Equity transactions:
Purchase payments received from contract owners (note 6)		2,301,920		3,502,378		1,663,612		1,125,026		1,351,579		1,145,516		1,455,729		1,342,472
Transfers between funds		(2,433,681	)	2,669,954		(1,364,094	)	10,104,458		1,591,024		(2,645,068	)	1,215,205		4,481,862
Surrenders (note 6)		(5,825,971	)	(13,090,592	)	(3,522,388	)	(1,324	)	(1,042,203	)	(1,705,926	)	(1,683,571	)	(3,026,088	)
Death benefits (note 4)		(38,052	)	(9,362	)	(21,928	)	–		(8,419	)	(11,994	)	(36,968	)	(17,978	)
Net policy repayments (loans) (note 5)		–		–		–		–		(487,331	)	(385,634	)	55,554		(469,262	)
Deductions for surrender charges (note 2d)		–		–		–		–		(43,711	)	(56,880	)	(51,830	)	(7,698	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(309,455	)	(369,676	)	(188,860	)	(104,032	)	(611,984	)	(530,786	)	(531,025	)	(385,080	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–		–		–		(44,978	)	(34,020	)	(36,114	)	(23,737	)
MSP contracts		–		–		–		–		(647	)	(480	)	(947	)	(564	)
SL contracts		–		–		–		–		(6,099	)	(4,100	)	(5,760	)	(4,586	)
Adjustments to maintain reserves		3,236		(2,989	)	1,091		(6	)	(345	)	(2,490	)	(2,992	)	(1,623	)
Net equity transactions		(6,302,003	)	(7,300,287	)	(3,432,567	)	11,124,122		696,886		(4,231,862	)	377,281		1,887,718
Net change in contract owners’ equity		(5,388,180	)	(4,164,705	)	(3,073,210	)	11,755,994		6,277,724		(1,133,492	)	4,273,907		7,044,799
Contract owners’ equity beginning of period		28,103,572		32,268,277		14,381,775		2,625,781		13,760,654		14,894,146		16,866,208		9,821,409
Contract owners’ equity end of period	$	22,715,392		28,103,572		11,308,565		14,381,775		20,038,378		13,760,654		21,140,115		16,866,208
CHANGES IN UNITS:
Beginning units		1,481,904		1,942,056		1,278,060		242,954		698,520		954,538		718,664		656,558
Units purchased		153,093		813,669		235,785		1,169,650		136,935		280,840		88,502		553,270
Units redeemed		(506,127	)	(1,273,821	)	(574,051	)	(134,544	)	(113,063	)	(536,858	)	(86,176	)	(491,164	)
Ending units		1,128,870		1,481,904		939,794		1,278,060		722,392		698,520		720,990		718,664

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	VKCorPlus					VKEmMkt				VKMidCapG				VKUSRealEst
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	77,741		34,365		1,330,659		768,924		(9,401	)	(2,536	)	788,090		665,982
Realized gain (loss) on investments		(8,603	)	760		(46,443	)	103,612		779,703		612,444		6,245,079		6,251,798
Change in unrealized gain (loss) on investments		542		(4,172	)	(428,311	)	211,347		(658,265	)	(107,928	)	14,169,666		1,277,163
Reinvested capital gains		10,330		7,318		293,124		166,324		414,443		–		5,346,275		1,656,042
Net increase (decrease) in contract owners’ equity resulting from operations		80,010		38,271		1,149,029		1,250,207		526,480		501,980		26,549,110		9,850,985
Equity transactions:
Purchase payments received from contract owners (note 6)		282,476		163,676		1,126,294		1,500,046		625,729		798,064		9,310,060		9,546,940
Transfers between funds		676,418		733,546		(3,393,738	)	1,973,702		689,264		488,932		1,549,147		3,311,152
Surrenders (note 6)		(100,849	)	(5,126	)	(564,400	)	(738,728	)	(225,258	)	(1,480,310	)	(3,486,873	)	(8,585,088	)
Death benefits (note 4)		–		(1,048	)	(21,145	)	(7,230	)	(5,059	)	(6	)	(111,497	)	(38,984	)
Net policy repayments (loans) (note 5)		(17,816	)	3,826		(103,345	)	(237,600	)	(26,087	)	(4,384	)	(516,555	)	(770,598	)
Deductions for surrender charges (note 2d)		(4,133	)	(1,576	)	(29,118	)	(25,750	)	(14,362	)	(29,920	)	(151,721	)	(162,314	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(107,363	)	(69,530	)	(371,946	)	(411,882	)	(173,251	)	(165,004	)	(2,753,121	)	(2,612,016	)
Asset charges (note 3):
FPVUL & VEL contracts		(7,082	)	(3,010	)	(22,200	)	(19,780	)	(10,068	)	(9,426	)	(151,490	)	(118,020	)
MSP contracts		(316	)	(9	)	(831	)	(892	)	(130	)	(156	)	(8,360	)	(9,138	)
SL contracts		(911	)	(266	)	(3,626	)	(3,096	)	(1,151	)	(934	)	(19,001	)	(14,556	)
Adjustments to maintain reserves		15		20		101		65		(135	)	28		9,186		1,172
Net equity transactions		720,439		820,503		(3,383,954	)	2,028,855		859,492		(403,116	)	3,669,775		548,550
Net change in contract owners’ equity		800,449		858,774		(2,234,925	)	3,279,062		1,385,972		98,864		30,218,885		10,399,535
Contract owners’ equity beginning of period		1,402,615		543,841		13,292,409		10,013,347		4,567,963		4,469,099		70,425,922		60,026,387
Contract owners’ equity end of period	$	2,203,064		1,402,615		11,057,484		13,292,409		5,953,935		4,567,963		100,644,807		70,425,922
CHANGES IN UNITS:
Beginning units		126,012		50,918		682,272		582,104		536,530		616,296		2,709,484		2,693,498
Units purchased		84,880		82,630		88,656		302,206		178,601		359,927		412,839		1,231,087
Units redeemed		(20,086	)	(7,536	)	(256,806	)	(202,038	)	(73,255	)	(439,693	)	(303,033	)	(1,215,101	)
Ending units		190,806		126,012		514,122		682,272		641,876		536,530		2,819,290		2,709,484

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	WRGrowth				WRRealEstS			WFAVTOpp
Investment activity:	2006			2005	2006		2005	2006		2005
Net investment income (loss)	$	(1,761	)	–	246		–	(26,293	)	(39,171	)
Realized gain (loss) on investments		(74,296	)	–	480		–	3,018,661		5,230,150
Change in unrealized gain (loss) on investments		829		–	4,210		–	(2,833,629	)	(3,039,693	)
Reinvested capital gains		–		–	1,120		–	3,200,397		–
Net increase (decrease) in contract owners’ equity resulting from operations		(75,228	)	–	6,056		–	3,359,136		2,151,286
Equity transactions:
Purchase payments received from contract owners (note 6)		–		–	629		–	3,443,916		5,081,812
Transfers between funds		104,397		–	40,773		–	(5,466,911	)	(8,191,432	)
Surrenders (note 6)		–		–	(319	)	–	(1,514,361	)	(4,838,992	)
Death benefits (note 4)		–		–	–		–	(131,177	)	(19,018	)
Net policy repayments (loans) (note 5)		–		–	–		–	(173,669	)	(60,236	)
Deductions for surrender charges (note 2d)		–		–	–		–	(52,172	)	(83,646	)
Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)		(6,134	)	–	(479	)	–	(928,700	)	(1,149,974	)
Asset charges (note 3):
FPVUL & VEL contracts		–		–	–		–	(54,429	)	(53,858	)
MSP contracts		–		–	–		–	(1,283	)	(1,436	)
SL contracts		–		–	–		–	(12,740	)	(12,209	)
Adjustments to maintain reserves		8		–	54		–	62		(123	)
Net equity transactions		98,271		–	40,658		–	(4,891,464	)	(9,329,112	)
Net change in contract owners’ equity		23,043		–	46,714		–	(1,532,328	)	(7,177,826	)
Contract owners’ equity beginning of period		–		–	–		–	30,059,998		37,237,824
Contract owners’ equity end of period	$	23,043		–	46,714		–	28,527,670		30,059,998
CHANGES IN UNITS:
Beginning units		–		–	–		–	2,485,342		3,328,492
Units purchased		90,417		–	3,198		–	319,153		1,435,568
Units redeemed		(88,535	)	–	(58	)	–	(703,231	)	(2,278,718	)
Ending units		1,882		–	3,140		–	2,101,264		2,485,342

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT–4

NOTES TO FINANCIAL STATEMENTS

December 31, 2006 and 2005

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide VLI Separate Account-4 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on December 3, 1997. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers Flexible Premium, Modified Single Premium, Variable Executive Life and Survivorship Life Variable Life Insurance Policies through the Account. The primary distribution for contracts is through wholesalers and brokers.

(b) The Contracts

Only contracts with a front-end sales charge, a contingent deferred sales charge and certain other fees are 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:

Portfolios of the AIM Variable Insurance Funds;

    AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I (AIMBValue)

    AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I (AIMCapAp)

    AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I (AIMCapDev)

    AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I (AIMIntGr)

AllianceBernstein Growth and Income Fund – Class A (AlGrIncA)*

Portfolios of the AllianceBernstein Variable Products Series Fund Inc.;

    AllianceBernstein Variable Products Series Fund Inc. – Growth and Income Portfolio – Class A

        (AlVPGrIncA)

    AllianceBernstein Variable Products Series Fund Inc. – International Value Portfolio – Class A

        (AlVPIntlValA)

    AllianceBernstein Variable Products Series Fund Inc. – Small-Mid Cap Value Portfolio – Class A

        (AlVPSmMdCpA)

Portfolios of the American Century Variable Portfolios Inc.;

    American Century Variable Portfolios Inc. – Income & Growth Fund – Class I (ACVPIncGr)

    American Century Variable Portfolios Inc. – Inflation Protection Fund – Class II (ACVPInflPro2)

    American Century Variable Portfolios Inc. – International Fund – Class I (ACVPInt)

    American Century Variable Portfolios Inc. – International Fund – Class III (ACVPInt3)

    American Century Variable Portfolios Inc. – Mid Cap Value Fund – Class I (ACVPMdCpV)

    American Century Variable Portfolios Inc. – Ultra^®Fund – Class I (ACVPUltra)

    American Century Variable Portfolios Inc. – Value Fund – Class I (ACVPVal)

    American Century Variable Portfolios Inc. – Vista^SM Fund – Class I (ACVPVista)

Portfolio of the Baron Capital Funds Trust;

    Baron Capital Funds Trust – Baron Capital Asset Fund – Insurance Shares (BCFTCpAsset)

BlackRock International Index Portfolio – Class II (BRIntIndex)

    (formerly FAM Variable Series Funds Inc. – Mercury International Index Portfolio – Class II)

BlackRock Large Cap Core V.I. Fund – Class II (BRLrgCp)

    (formerly Mercury Large Cap Core Variable Insurance Fund – Class II)

Portfolio of the Calvert Variable Series Inc.;

    Calvert Variable Series Inc. – Social Equity Portfolio (CalVSSocEq)

Portfolios of the Credit Suisse Trust;

    Credit Suisse Trust – Global Small Cap Portfolio (CSTGlSmCp)

    Credit Suisse Trust – International Focus Portfolio (CSTIntFoc)

    Credit Suisse Trust – Large Cap Value Portfolio (CSTLCapV)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of the Dreyfus Investment Portfolios;

    Dreyfus Investment Portfolios – Mid Cap Stock Index Portfolio – Initial Shares (DryIPMidCap)

    Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap)

Dreyfus Mid Cap Index Fund Inc. (DryMidCap)*

Dreyfus Socially Responsible Growth Fund Inc. – Initial Shares The (DrySRGro)

Dreyfus Stock Index Fund Inc. – Initial Shares (DryStkIx)

Portfolios of the Dreyfus Variable Investment Fund;

    Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares (DryVIApp)

    Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares (DryVIDevLd)

    Dreyfus Variable Investment Fund – International Value Portfolio – Initial Shares (DryVIIntVal)

Portfolio of the DWS Variable Series II;

    DWS Variable Series II – DWS Dreman High Return Equity VIP – Class B (DWSVHghRtrn)

        (formerly Scudder Variable Series II – Dreman High Return Equity Portfolio – Class B)

Portfolios of the Federated Insurance Series;

    Federated Insurance Series – Federated American Leaders Fund II – Primary Shares (FedAmLead)

    Federated Insurance Series – Federated Capital Appreciation Fund II – Primary Shares (FedCapAp)

    Federated Insurance Series – Federated Market Opportunity Fund II – Service Shares (FedMrkOp)

    Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares (FedQualBd)

Portfolios of the Fidelity^® Variable Insurance Products Fund;

    Fidelity^® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class (FidVIPEIS)

    Fidelity^® Variable Insurance Products Fund – Growth Portfolio – Service Class (FidVIPGrS)

    Fidelity^® Variable Insurance Products Fund – High Income Portfolio – Service Class (FidVIPHIS)

    Fidelity^® Variable Insurance Products Fund – Overseas Portfolio – Service Class (FidVIPOvS)

    Fidelity^® Variable Insurance Products Fund – Overseas Portfolio – Service Class R (FidVIPOvSR)

Portfolios of the Fidelity^® Variable Insurance Products Fund II;

    Fidelity^® Variable Insurance Products Fund II – Contrafund^® Portfolio – Service Class (FidVIPConS)

    Fidelity^® Variable Insurance Products Fund II – Investment Grade Bond Portfolio –

        Service Class (FidVIPIGBdS)

Portfolios of the Fidelity^® Variable Insurance Products Fund III;

    Fidelity^® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class (FidVIPGrOpS)

    Fidelity^® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class (FidVIPMCapS)

    Fidelity^® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class (FidVIPVaIS)

Portfolios of the Fidelity^® Variable Insurance Products Fund IV;

    Fidelity^® Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2 (FidVIPEnergyS2)

        (formerly Fidelity^® Variable Insurance Products Fund IV – Natural Resources Portfolio – Service

        Class 2)

    Fidelity^® Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio –

        Service Class (FidVIPFree10S)

    Fidelity^® Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio –

        Service Class (FidVIPFree20S)

    Fidelity^® Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio –

        Service Class (FidVIPFree30S)

Portfolios of the Franklin Templeton Variable Insurance Products Trust;

    Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund –

        Class 2 (FrVIPIncSec2)

    Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund –

        Class 1 (FrVIPRisDiv)

    Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund –

        Class 1 (FrVIPSmCapV1)

    Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund –

        Class 2 (FrVIPSmCapV2)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

    Franklin Templeton Variable Insurance Products Trust – Templeton Developing Markets Securities Fund –

        Class 3 (FrVIPDevMrk3)

    Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund –

        Class 1 (FrVIPForSec)

    Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund –

        Class 2 (FrVIPForSec2)

    Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund –

        Class 3 (FrVIPForSec3)

    Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund –

        Class 3 (FrVIPGlInc3)

Portfolios of the Gartmore Variable Insurance Trust (GVIT);

    Gartmore GVIT – American Funds GGVIT Asset Allocation Fund – Class II (GVITAstAll2)

    Gartmore GVIT – American Funds GGVIT Bond Fund – Class II (GVITBnd2)

    Gartmore GVIT – American Funds GGVIT Global Growth Fund – Class II (GVITGlobGr2)

    Gartmore GVIT – American Funds GGVIT Growth Fund – Class II (GVITGrowth2)

    Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I (GVITIntValI)

    Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class III (GVITIntVal3)

    Gartmore GVIT – Emerging Markets Fund – Class I (GVITEmMrkts)

    Gartmore GVIT – Emerging Markets Fund – Class III (GVITEmMrkts3)

    Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I (GVITFHiInc)

    Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class III (GVITFHiInc3)

    Gartmore GVIT – Global Financial Services Fund – Class I (GVITGlFin)

    Gartmore GVIT – Global Health Sciences Fund – Class I (GVITGlHlth)

    Gartmore GVIT – Global Health Sciences Fund – Class III (GVITGlHlth3)

    Gartmore GVIT – Global Technology and Communications Fund – Class I (GVITGlTech)

    Gartmore GVIT – Global Technology and Communications Fund – Class III (GVITGlTech3)

    Gartmore GVIT – Global Utilities Fund – Class I (GVITGlUtl)

    Gartmore GVIT – Government Bond Fund – Class I (GVITGvtBd)

    Gartmore GVIT – Growth Fund – Class I (GVITGrowth)

    Gartmore GVIT – International Growth Fund – Class I (GVITIntGro)

    Gartmore GVIT – International Index Fund – Class VI (GVITIntIdx6)

    Gartmore GVIT – Investor Destinations Aggressive Fund – Class II (GVITIDAgg2)

    Gartmore GVIT – Investor Destinations Conservative Fund – Class II (GVITIDCon2)

    Gartmore GVIT – Investor Destinations Moderate Fund – Class II (GVITIDMod2)

    Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II (GVITIDModAg2)

    Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II (GVITIDModCon2)

    Gartmore GVIT – J.P. Morgan GVIT Balanced Fund – Class I (GVITJPBal)

    Gartmore GVIT – Mid Cap Growth Fund – Class I (GVITMdCpGr)

    Gartmore GVIT – Mid Cap Index Fund – Class I (GVITMdCpIdx)

    Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt)

    Gartmore GVIT – Money Market Fund – Class V (GVITMyMkt5)

    Gartmore GVIT – Nationwide Fund – Class I (GVITNWFund)

    Gartmore GVIT – Nationwide Leaders Fund – Class I (GVITNWLead)

    Gartmore GVIT – Small Cap Growth Fund – Class I (GVITSmCapGr)

    Gartmore GVIT – Small Cap Value Fund – Class I (GVITSmCapVal)

    Gartmore GVIT – Small Company Fund – Class I (GVITSmComp)

    Gartmore GVIT – U.S. Growth Leaders Fund – Class I (GVITUSGro)

    Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund – Class I (GVITVKVal)

    Gartmore GVIT – Van Kampen GVIT Multi Sector Bond Fund – Class I (GVITMltSec)

    Gartmore GVIT – Worldwide Leaders Fund – Class I (GVITWLead)

Goldman Sachs Mid Cap Value Fund – Class A (GSMidCpV)*

Portfolio of the Goldman Sachs Variable Insurance Trust (VIT);

    Goldman Sachs VIT Mid Cap Value Fund (GSVMdCpV)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of the Janus Aspen Series;

    Janus Aspen Series – Balanced Portfolio – Service Shares (JanBal)

    Janus Aspen Series – Forty Portfolio – Service Shares (JanForty)

    Janus Aspen Series – Global Technology Portfolio – Service Shares (JanGlTech)

    Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JanRMgCore)

        (formerly Janus Aspen Series – Risk-Managed Core Portfolio – Service Shares)

    Janus Aspen Series – International Growth Portfolio – Service II Shares (JanIntGroS2)

    Janus Aspen Series – International Growth Portfolio – Service Shares (JanIntGroS)

Portfolios of the JPMorgan Insurance Trust;

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Balanced Portfolio 1 (JPMBal)*

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Core Bond Portfolio 1 (JPMCBond)*

        (formerly JPMorgan Investment Trust – JPMorgan Investment Trust Bond Portfolio 1)

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Equity Portfolio 1 (JPMDivEq)*

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio 1

        (JPMMidCapGr)

        (formerly JPMorgan Investment Trust – JPMorgan Investment Trust Mid Cap Growth Portfolio 1)

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio 1

        (JPMMidCapV)

        (formerly JPMorgan Investment Trust – JPMorgan Investment Trust Mid Cap Value Portfolio 1)

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Equity Index Portfolio 1 (JPMEqIndx)*

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Government Bond Portfolio 1 (JPMGvtBd)*

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Intrepid Mid Cap Portfolio 1 (JPMMidCap)*

        (formerly JPMorgan Investment Trust – JPMorgan Investment Trust Diversified Mid Cap Portfolio 1)

    JPMorgan Insurance Trust – JPMorgan Insurance Trust Large Cap Growth Portfolio 1 (JPMLgCapGr)*

Lord Abbett Series Mid Cap Value Fund – Class VC (LAMidCapV)

Portfolios of the MFS Variable Insurance Trust;

    MFS Variable Insurance Trust – Investors Growth Stock Series – Initial Class (MFSInvGrStI)

    MFS Variable Insurance Trust – Value Series – Initial Class (MFSValueI)

Portfolios of the Neuberger Berman Advisers Management Trust;

    Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S (NBAMTFasc)

    Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares (NBAMTGuard)

    Neuberger Berman Advisers Management Trust – International Portfolio – Class S (NBAMTInt)

    Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I (NBAMTLMat)

    Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares

        (NBAMTMCGr)

    Neuberger Berman Advisers Management Trust – Partners Portfolio – Class I (NBAMTPart)

    Neuberger Berman Advisers Management Trust – Regency Portfolio – Class I (NBAMTRegI)

    Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S (NBAMTRegS)

    Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio Class I (NBAMSocRes)

Oppenheimer Global Securities Fund/VA – Class 3 (OppGlSec3)

Portfolios of the Oppenheimer Variable Account Funds;

    Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA –

        Non-Service Shares (OppCapAp) (formerly Oppenheimer Variable Account Funds –

            Oppenheimer Capital Appreciation Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA –

        Non-Service Shares (OppGlSec) (formerly Oppenheimer Variable Account Funds –

            Oppenheimer Global Securities Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA –

        Non-Service Shares (OppHighInc) (formerly Oppenheimer Variable Account Funds –

            Oppenheimer High Income Fund/VA – Initial Class)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

Oppenheimer Variable Account Funds – Oppenheimer Main Street^®Fund/VA –

    Non-Service Shares (OppMSt) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Main Street Fund^®/VA – Initial Class)

Oppenheimer Variable Account Funds – Oppenheimer Main Street^®Small Cap Fund/VA –

    Non-Service Shares (OppMStSCap) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Main Street Small Cap Fund^®/VA – Initial Class)

Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA –

    Non-Service Shares (OppMidCap) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Aggressive Growth Fund/VA – Initial Class)

Portfolios of the PIMCO Variable Insurance Trust;

PIMCO Variable Insurance Trust – PIMCO VIT All Asset Portfolio – Administrative Shares (PVITAllAst)

PIMCO Variable Insurance Trust – PIMCO VIT Low Duration Portfolio – Administrative Shares

    (PVITLowDur)

PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares

    (PVITRealRet)

PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares

    (PVITTotRet)

Pioneer High Yield VCT Portfolio – Class I Shares (PioHiYield)

Portfolios of the Putnam Variable Trust;

Putnam Variable Trust – Putnam VT Growth & Income Fund – IB Shares (PVTGroIncIB)

Putnam Variable Trust – Putnam VT International Equity Fund – IB Shares (PVTIntEqIB)

Putnam Variable Trust – Putnam VT Voyager Fund – IB Shares (PVTVoyIB)

Royce Capital Fund – Micro Cap (RCFMicroCap)

T. Rowe Price Blue Chip Growth Portfolio – II (TRoeBlChip2)

T. Rowe Price Equity Income Fund (TRowEqInc)*

T. Rowe Price Equity Income Portfolio – II (TRowEqInc2)

T. Rowe Price Limited Term Bond Portfolio – Class II (TRowLtdTBd2)

T. Rowe Price Mid Cap Growth Fund Inc. (TRowMidCap)*

T. Rowe Price Mid Cap Growth Portfolio – II (TRowMidCap2)

T. Rowe Price New America Growth Portfolio (TRowNewAmGr)

T. Rowe Price Personal Strategy Balanced Portfolio (TRowPerStrBal)*

Portfolios of the Van Eck Worldwide Insurance Trust;

Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class (VEWrldEMkt)

Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class (VEWrldHAs)

Portfolios of the Van Kampen – The Universal Institutional Funds Inc.;

Van Kampen – The Universal Institutional Funds Inc. – Core Plus Fixed Income Portfolio – Class I

    (VKCorPlus)

Van Kampen – The Universal Institutional Funds Inc. – Emerging Markets Debt Portfolio – Class I

    (VKEmMkt)

Van Kampen – The Universal Institutional Funds Inc. – Mid Cap Growth Portfolio – Class I (VKMidCapG)

Van Kampen – The Universal Institutional Funds Inc. – U.S. Real Estate Portfolio – Class I

    (VKUSRealEst)

Portfolios of the W&R Target Funds Inc.;

W&R Target Funds Inc. – Global Natural Resources Portfolio (WRGlNatRes)*

W&R Target Funds Inc. – Growth Portfolio (WRGrowth)

W&R Target Funds Inc. – Mid Cap Growth Portfolio (WRMidCpGr)*

W&R Target Funds Inc. – Real Estate Securities Portfolio (WRRealEstS)

Portfolios of the Wells Fargo Advantage Funds^SM;

Wells Fargo Advantage Funds^SM – Opportunity Fund – Investor Class (WFAFOpp)*

Wells Fargo Advantage Variable Trust Funds^SM –

Wells Fargo Advantage VT Opportunity Fund^SM (WFAVTOpp)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

At December 31, 2006, contract owners were invested in all of the above funds, except those noted with an asterisk (*). The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners and certain contract expenses (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.

A purchase payment could be presented as a negative equity transaction in the Statements of Changes in Contract Owners’ Equity if a prior period purchase payment is refunded to a contract owner due to a contract cancellation during the free look period, and/or if a gain is realized by the contract owner during the free look period.

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

Investments in underlying mutual funds are valued on the closing net asset value per share at December 31, 2006 of such funds, which value their investment securities at fair value. Fund purchases and sales are accounted for on the trade date (date the order to buy or sell is executed). The cost of investments sold is determined on a First in – First out basis, and dividends (which include capital gain distributions) are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(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 U.S 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) New Accounting Pronouncement

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) 157. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted. SFAS 157 is not expected to have a material impact on the Accounts’ financial position or results of their operations upon adoption.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

(2) Policy Charges

(a) Deductions from Premium

For individual flexible premium and survivorship contracts, the Company deducts a minimum of 0.5% to a maximum of 7.5% of all premiums received to cover premium tax and sales expense. The Company may, at its sole discretion, reduce the sales loading portion of the premium load.

There are no deductions from premium on modified single premium contracts.

For the Corporate Series, the Company deducts a front-end sales load of 9.0% (5.5% starting in the seventh policy year) from each premium payment received. The Company may reduce this charge where the size or nature of the group results in savings in sales, underwriting, or administrative costs. Variations due to differences in costs are determined in a manner not unfairly discriminatory to policy owners.

For the periods ended December 31, 2006 and 2005, total front-end sales charge deductions were $30,403,541 and $38,078,931, respectively.

(b) Cost of Insurance

A cost of insurance charge is assessed monthly against each contract. The amount of the charge varies widely and is based upon age, sex, rate class and net amount at risk (death benefit less total contract value). This charge is assessed against each contract by liquidating units.

(c) Administrative Charges

For individual flexible premium survivorship and modified single premium contracts, the Company currently deducts a minimum monthly administration charge of $5 per policy month to a maximum of $10 per policy month to recover policy maintenance, accounting, record keeping and other administrative expenses. These charges are assessed monthly against each contract by liquidating units.

For Protection^SM flexible premium contracts, the Company deducts a policy expense per $1,000 of specified amount charge for the first two policy years. This charge varies with the age of the insured and will not exceed $0.30 per $1,000 of specified amount. For last survivor contracts, the Company deducts a per $1,000 of specified amount charge for the first 3 policy years. This charge varies with the age of the insured and will not exceed $0.40 per $1,000 of specified amount. These charges are assessed monthly against each contract by liquidating units.

For the Corporate Series, the Company deducts a monthly administrative expense charge to recover policy maintenance, accounting, record keeping and other administrative expenses. These charges are assessed against each contract by liquidating units. Currently, this charge is $5 per month in all policy years (guaranteed not to exceed $10 per month).

(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 survivorship, modified single premium and corporate contracts, the charge is 100% of the initial surrender charge in the first year, and declines a specified amount each year to 0% of the initial surrender charge in the ninth year or later.

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 by the Depositor, or from earnings thereon.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

(3) Asset Charges

(a) Modified Single Premium Contracts (MSP)

For modified single premium contracts, the Company deducts a mortality and expense risk charge equal to an annualized rate of 0.70% of the cash value of the sub-accounts. This charge is assessed monthly against each contract by liquidating units.

(b) Flexible Premium and Variable Executive Life Contracts (SPVUL and VEL)

For Choice Life^SM contracts, the Company deducts a mortality and expense risk charge of $0.50 per $1,000 on the first $25,000 of cash value attributable to the variable account, $0.25 per $1,000 on $25,001 up to $250,000 of cash value attributable to the variable account and $0.08 per $1,000 over $250,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

For Choice Life Protection^SM contracts and Best of America^® Protection^SM contracts, the Company deducts $0.66 per $1,000 of cash value attributable to the variable account during the first through fifteenth years from the Policy Date. Thereafter, this charge is $0.25 per $1,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

(c) Survivorship Life Contracts (SL)

For Choice Survivorship and Last Survivor contracts, during the first ten policy years, the Company deducts a mortality and expense risk charge of $0.55 per $1,000 on the first $25,000 of cash value attributable to the variable account; $0.55 per $1,000 on $25,001 up to $99,999 of cash value attributable to the variable account; and $0.55 per $1,000 on $100,000 or more of cash value attributable to the variable account. After ten years from the Policy Date, the Company deducts $0.55 per $1,000 on the first $25,000 of cash value attributable to the variable account; $0.35 per $1,000 on $25,001 up to $99,999 of cash value attributable to the variable account; and $0.20 per $1,000 on $100,000 or more of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

For ChoiceLife^SM Survivorship II and Next Generation^SM Survivorship Life contracts, during the first fifteen policy years, the Company deducts a mortality and expense risk charge of $0.60 per $1,000 on the first $25,000 of cash value attributable to the variable account; $0.30 per $1,000 on $25,001 up to $250,000 of cash value attributable to the variable account; and $0.10 per $1,000 over $250,000 of cash value attributable to the variable account. After fifteen years from the Policy Date, the Company deducts $0.60 per $1,000 on the first $25,000 of cash value attributable to the variable account and $0.10 per $1,000 over $25,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

For Protection^SM Survivorship and ChoiceLife Protection^SM Survivorship Life contracts, during the first fifteen policy years, the Company deducts a mortality and expense risk charge of $0.80 per $1,000 of cash value attributable to the variable account. After fifteen years from the Policy Date, the Company deducts $0.30 per $1,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

(d) Corporate Contracts

For the Corporate Series, the Company deducts from the assets of the Account, a charge to provide for mortality and expense risks. This charge is guaranteed not to exceed an annualized rate of 0.75% of the daily net assets of the Account. Currently, this rate is 0.40% during the first through fourth policy years, 0.25% during the fifth through twentieth policy years, and 0.10% thereafter. A reduced fee tier for Corporate Series contracts applies as 0.20% for all policy years. This charge is assessed through the daily unit value calculation.

The Company may reduce or eliminate certain charges where the size or nature of the group results in savings in sales, underwriting, administrative or other costs to the Company. These charges may be reduced in certain group sponsored arrangements or special exchange programs made available by the Company.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

(4) Death Benefits

Death benefit proceeds result in a redemption of the contract value from the Account and payment of those proceeds, less any outstanding policy loans (and policy charges), to the legal beneficiary. For last survivor flexible premium contracts, the proceeds are payable on the death of the last surviving insured. In the event that the guaranteed death benefit exceeds the contract value on the date of death, the excess 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 variable cash surrender value plus 100% of a policy’s fixed cash surrender value less applicable value of surrender charge. Interest is charged 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.

Contract owners may, with certain restrictions, transfer their assets between the Account and a fixed dollar contract (fixed account) maintained in the accounts of the Company. These transfers are the result of the contract owner executing fund exchanges. Fund exchanges from the Account to the fixed account are included in surrenders, and fund exchanges from the fixed account to the Account are included in purchase payments received from contact owners, as applicable, on the accompanying Statements of Change in Contract Owners’ Equity.

Policy loan transactions (note 5), executed at the direction of the contract owner, also result in transfers between the Account and the fixed account of the Company. The fixed account assets are not reflected in the accompanying financial statements.

For the periods ended December 31, 2006 and 2005, total transfers into the Account from the fixed account were $33,285,412 and $33,113,861, respectively, and total transfers from the Account to the fixed account were $48,694,028 and $55,474,580, respectively.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

(7) Financial Highlights

The following is a summary of units, unit fair values and contract owners’ equity outstanding for variable universal life contracts as of the end of the periods indicated, and the contract expense rates, investment income ratio and total return for each period in the five year period ended December 31, 2006.

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
The BEST of AMERICA® America’s FUTURE Life SeriesSM
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.00%	334,122	$	17.502242	$	5,847,884	0.42%	13.20%
2005	0.00%	300,432		15.460790		4,644,916	0.09%	5.74%
2004	0.00%	218,854		14.622048		3,200,094	0.00%	11.07%
2003	0.00%	62,247		13.164786		819,468	0.06%	33.63%
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2006	0.00%	102,104		15.288632		1,561,030	0.06%	6.30%
2005	0.00%	85,976		14.382523		1,236,552	0.08%	8.84%
2004	0.00%	57,596		13.214909		761,126	0.00%	6.63%
2003	0.00%	26,916		12.393708		333,589	0.00%	23.94%	05/01/03
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.00%	180,668		19.610981		3,543,077	0.00%	16.52%
2005	0.00%	164,886		16.830569		2,775,125	0.00%	9.60%
2004	0.00%	122,266		15.355666		1,877,476	0.00%	15.50%
2003	0.00%	33,912		13.294993		450,860	0.00%	35.36%
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.00%	241,896		18.208779		4,404,631	1.37%	17.29%
2005	0.00%	247,326		15.525074		3,839,754	1.48%	4.87%
2004	0.00%	243,956		14.804614		3,611,674	0.92%	11.46%
2003	0.00%	145,925		13.282209		1,938,206	0.51%	32.50%
AllianceBernstein Variable Products Series Fund, Inc. – Small-Mid Cap Value Portfolio – Class A
2006	0.00%	168,136		20.134859		3,385,395	0.45%	14.42%
2005	0.00%	198,030		17.597332		3,484,800	0.74%	6.91%
2004	0.00%	181,154		16.459431		2,981,692	0.13%	19.30%
2003	0.00%	28,635		13.796395		395,060	0.13%	37.96%	05/01/03
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.00%	1,305,236		17.707797		23,112,854	1.85%	17.09%
2005	0.00%	1,496,010		15.123633		22,625,106	1.94%	4.63%
2004	0.00%	1,546,166		14.454301		22,348,749	1.37%	12.99%
2003	0.00%	1,520,999		12.792293		19,457,065	1.28%	29.35%
2002	0.00%	1,357,662		9.889493		13,426,589	1.00%	-19.37%
American Century Variable Portfolios, Inc. – Inflation Protection Fund – Class II
2006	0.00%	555,240		11.270913		6,258,062	3.48%	1.59%
2005	0.00%	535,932		11.094803		5,946,060	4.48%	1.56%
2004	0.00%	457,932		10.924094		5,002,492	3.35%	5.81%
2003	0.00%	108,990		10.324182		1,125,233	1.85%	3.24%	04/30/03
American Century Variable Portfolios, Inc. – International Fund – Class I
2006	0.00%	1,069,366		18.515660		19,800,017	1.58%	25.03%
2005	0.00%	1,314,688		14.809535		19,469,918	1.25%	13.25%
2004	0.00%	1,713,168		13.076396		22,402,063	0.56%	14.92%
2003	0.00%	1,660,633		11.378318		18,895,210	0.73%	24.51%
2002	0.00%	1,633,924		9.138486		14,931,592	0.78%	-20.37%
American Century Variable Portfolios, Inc. – International Fund – Class III
2006	0.00%	548,782		14.595156		8,009,559	1.38%	25.03%
2005	0.00%	366,150		11.673757		4,274,346	0.00%	16.74%	05/02/05
American Century Variable Portfolios, Inc. – Mid Cap Value Fund – Class I
2006	0.00%	88,992		13.620466		1,212,113	0.96%	20.30%
2005	0.00%	57,178		11.322176		647,379	1.24%	13.22%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.00%	257,010	$	10.980437	$	2,822,082	0.00%	-3.28%
2005	0.00%	263,874		11.352287		2,995,573	0.00%	2.17%
2004	0.00%	229,742		11.111676		2,552,819	0.00%	10.68%
2003	0.00%	208,689		10.039885		2,095,214	0.00%	24.90%
2002	0.00%	75,002		8.038471		602,901	0.66%	-19.62%	05/01/02
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.00%	2,442,604		22.240206		54,324,016	1.41%	18.65%
2005	0.00%	2,800,196		18.743947		52,486,725	0.83%	5.03%
2004	0.00%	2,668,438		17.845717		47,620,189	0.97%	14.33%
2003	0.00%	2,467,117		15.608555		38,508,131	1.04%	28.96%
2002	0.00%	2,232,546		12.103586		27,021,813	0.75%	-12.62%
American Century Variable Portfolios, Inc. – VistaSM Fund – Class I
2006	0.00%	13,662		12.496264		170,724	0.00%	9.01%
2005	0.00%	7,434		11.463606		85,220	0.00%	14.64%	05/02/05
Credit Suisse Trust – Global Small Cap Portfolio
2006	0.00%	46,476		15.193949		706,154	0.00%	13.20%
2005	0.00%	48,980		13.421675		657,394	0.00%	16.14%
2004	0.00%	54,638		11.556117		631,403	0.00%	17.99%
2003	0.00%	58,125		9.794203		569,288	0.00%	47.66%
2002	0.00%	56,373		6.633112		373,928	0.00%	-34.16%
Credit Suisse Trust – International Focus Portfolio
2006	0.00%	121,824		15.867715		1,933,069	1.01%	18.65%
2005	0.00%	132,046		13.373190		1,765,876	0.88%	17.44%
2004	0.00%	141,708		11.387391		1,613,684	0.99%	14.74%
2003	0.00%	152,971		9.924331		1,518,135	0.49%	33.09%
2002	0.00%	158,237		7.456827		1,179,946	0.00%	-19.90%
Credit Suisse Trust – Large Cap Value Portfolio
2006	0.00%	96,894		18.117019		1,755,430	0.89%	19.35%
2005	0.00%	117,378		15.179777		1,781,772	0.73%	8.14%
2004	0.00%	114,260		14.036771		1,603,841	0.58%	11.34%
2003	0.00%	114,258		12.606777		1,440,425	0.76%	25.16%
2002	0.00%	109,088		10.072243		1,098,761	0.76%	-23.09%
Dreyfus Investment Portfolios – European Equity Portfolio
2002	0.00%	282		7.045961		1,987	0.00%	-22.64%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.00%	707,480		15.813075		11,187,434	0.38%	14.41%
2005	0.00%	581,680		13.821296		8,039,571	0.00%	7.23%
2004	0.00%	589,810		12.889095		7,602,117	0.57%	21.88%
2003	0.00%	440,723		10.574853		4,660,581	0.27%	37.78%
2002	0.00%	142,420		7.675242		1,093,108	0.29%	-23.25%	05/01/02
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.00%	1,115,238		12.473391		13,910,800	0.11%	9.20%
2005	0.00%	1,203,742		11.422458		13,749,692	0.00%	3.62%
2004	0.00%	1,320,272		11.023895		14,554,540	0.40%	6.21%
2003	0.00%	1,330,170		10.379305		13,806,240	0.11%	26.00%
2002	0.00%	1,313,324		8.237365		10,818,329	0.22%	-28.94%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.00%	10,489,244		16.424348		172,278,994	1.64%	15.50%
2005	0.00%	12,914,370		14.220511		183,648,941	1.63%	4.69%
2004	0.00%	13,432,296		13.583304		182,454,960	1.82%	10.64%
2003	0.00%	12,939,837		12.277012		158,862,534	1.54%	28.36%
2002	0.00%	11,929,984		9.564281		114,101,719	1.45%	-22.36%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.00%	1,210,752		16.853206		20,405,053	1.53%	16.48%
2005	0.00%	1,326,026		14.469157		19,186,478	0.02%	4.38%
2004	0.00%	1,281,098		13.862320		17,758,990	1.67%	5.05%
2003	0.00%	1,185,642		13.196450		15,646,265	1.18%	21.17%
2002	0.00%	1,148,080		10.890932		12,503,661	1.22%	-16.71%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares
2006	0.00%	52,662	$	15.770049	$	830,482	0.40%	3.77%
2005	0.00%	58,416		15.197076		887,752	0.00%	5.80%
2004	0.00%	63,226		14.363942		908,175	0.28%	11.34%
2003	0.00%	15,972		12.900917		206,053	0.11%	29.01%	05/01/03
Federated Insurance Series – Federated American Leaders Fund II – Primary Shares
2006	0.00%	21,354		16.967010		362,314	1.46%	16.81%
2005	0.00%	21,684		14.525597		314,973	1.48%	5.02%
2004	0.00%	22,444		13.830995		310,423	1.17%	9.78%
2003	0.00%	12,199		12.598945		153,695	0.00%	25.99%	05/01/03
Federated Insurance Series – Federated Capital Appreciation Fund II – Primary Shares
2006	0.00%	27,898		15.330912		427,702	0.75%	16.21%
2005	0.00%	26,192		13.192087		345,527	1.04%	1.91%
2004	0.00%	28,136		12.944293		364,201	0.42%	7.39%
2003	0.00%	8,379		12.052976		100,992	0.00%	20.53%	05/01/03
Federated Insurance Series – Federated Market Opportunity Fund II – Service Shares
2006	0.00%	3,964		10.395256		41,207	0.00%	3.95%	05/01/06
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.00%	1,685,612		14.723396		24,817,933	5.17%	4.15%
2005	0.00%	2,483,218		14.136175		35,103,204	3.55%	1.30%
2004	0.00%	2,361,192		13.955112		32,950,699	3.92%	3.62%
2003	0.00%	2,262,363		13.467590		30,468,577	3.30%	4.65%
2002	0.00%	2,274,059		12.869670		29,266,389	3.20%	9.31%
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class
2006	0.00%	3,666,100		18.625658		68,283,525	3.15%	20.08%
2005	0.00%	3,799,536		15.511120		58,935,059	1.56%	5.76%
2004	0.00%	3,986,154		14.666699		58,463,721	1.39%	11.38%
2003	0.00%	3,691,492		13.167905		48,609,216	1.66%	30.22%
2002	0.00%	3,282,138		10.112108		33,189,334	1.50%	-17.00%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Service Class
2006	0.00%	3,992,818		15.113032		60,343,586	0.28%	6.73%
2005	0.00%	4,330,880		14.159785		61,324,330	0.41%	5.67%
2004	0.00%	4,602,660		13.399667		61,674,111	0.16%	3.26%
2003	0.00%	4,622,588		12.976175		59,983,511	0.18%	32.78%
2002	0.00%	4,393,697		9.772625		42,937,953	0.14%	-30.20%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Service Class
2006	0.00%	1,194,886		11.561165		13,814,274	7.58%	11.18%
2005	0.00%	1,308,856		10.398866		13,610,618	14.70%	2.52%
2004	0.00%	1,366,190		10.142968		13,857,221	8.03%	9.47%
2003	0.00%	1,549,745		9.265750		14,359,550	6.36%	26.97%
2002	0.00%	1,244,727		7.297581		9,083,496	9.18%	3.62%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class
2006	0.00%	963,186		18.554369		17,871,308	0.84%	17.95%
2005	0.00%	1,411,140		15.731142		22,198,844	0.56%	18.97%
2004	0.00%	1,749,970		13.222678		23,139,290	0.98%	13.49%
2003	0.00%	1,414,346		11.651219		16,478,855	0.63%	43.20%
2002	0.00%	1,180,783		8.136116		9,606,987	0.64%	-20.34%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class R
2006	0.00%	985,990		14.743687		14,537,128	0.62%	17.95%
2005	0.00%	579,174		12.499996		7,239,673	0.00%	25.00%	05/02/05
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class
2006	0.00%	4,668,602		23.057410		107,645,870	1.12%	11.59%
2005	0.00%	4,501,900		20.662750		93,021,634	0.19%	16.85%
2004	0.00%	4,151,040		17.683622		73,405,422	0.24%	15.34%
2003	0.00%	3,745,714		15.331836		57,428,673	0.30%	28.35%
2002	0.00%	3,355,920		11.945132		40,086,907	0.69%	-9.42%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.00%	855,338	$	11.348586	$	9,706,877	3.34%	4.30%
2005	0.00%	649,570		10.880732		7,067,797	2.69%	2.08%
2004	0.00%	352,046		10.659014		3,752,463	1.68%	4.32%
2003	0.00%	67,767		10.217718		692,424	0.00%	2.18%	05/01/03
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class
2006	0.00%	1,014,378		11.421365		11,585,581	0.69%	5.30%
2005	0.00%	1,129,706		10.846338		12,253,173	0.84%	8.86%
2004	0.00%	1,211,402		9.963454		12,069,748	0.48%	7.06%
2003	0.00%	1,245,460		9.306474		11,590,841	0.59%	29.66%
2002	0.00%	1,183,841		7.177547		8,497,074	0.93%	-21.92%
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class
2006	0.00%	1,042,192		23.389128		24,375,962	0.23%	12.59%
2005	0.00%	868,756		20.773676		18,047,256	0.00%	18.20%
2004	0.00%	431,128		17.574515		7,576,866	0.00%	24.77%
2003	0.00%	99,682		14.085331		1,404,054	0.00%	40.85%	05/01/03
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.00%	494,372		16.095011		7,956,923	0.49%	16.20%
2005	0.00%	510,536		13.851491		7,071,685	0.00%	2.55%
2004	0.00%	337,180		13.506506		4,554,124	0.00%	13.99%
2003	0.00%	284,603		11.849148		3,372,303	0.00%	57.79%
2002	0.00%	19,541		7.509507		146,743	0.00%	-24.90%	05/01/02
Fidelity® Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2
2006	0.00%	488,940		15.759845		7,705,619	0.75%	16.62%
2005	0.00%	243,526		13.514321		3,291,089	0.64%	35.14%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio – Service Class
2006	0.00%	56,804		11.863160		673,875	2.70%	9.78%
2005	0.00%	15,242		10.806063		164,706	0.47%	8.06%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio – Service Class
2006	0.00%	109,012		12.431698		1,355,204	2.11%	11.81%
2005	0.00%	52,700		11.118664		585,954	1.32%	11.19%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio – Service Class
2006	0.00%	54,734		12.819894		701,684	2.16%	13.15%
2005	0.00%	23,432		11.329788		265,480	1.38%	13.30%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund – Class 2
2006	0.00%	117,590		11.216304		1,318,925	0.07%	12.16%	05/01/06
Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund – Class 1
2006	0.00%	943,340		16.669002		15,724,536	1.23%	17.43%
2005	0.00%	840,480		14.195085		11,930,685	1.01%	3.68%
2004	0.00%	635,954		13.690957		8,706,819	0.70%	11.25%
2003	0.00%	220,019		12.306508		2,707,666	0.48%	23.07%	05/01/03
Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 1
2006	0.00%	484,062		21.190555		10,257,542	0.82%	17.30%
2005	0.00%	398,540		18.064784		7,199,539	0.92%	8.99%
2004	0.00%	237,384		16.575156		3,934,677	0.23%	24.09%
2003	0.00%	47,449		13.357313		633,791	0.00%	33.57%	05/01/03
Franklin Templeton Variable Insurance Products Trust – Templeton Developing Markets Securities Fund – Class 3
2006	0.00%	310,222		16.410826		5,090,999	1.29%	28.17%
2005	0.00%	159,292		12.804274		2,039,618	0.06%	28.04%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1
2006	0.00%	174,552		21.206570		3,701,649	1.39%	21.70%
2005	0.00%	228,680		17.425708		3,984,911	1.53%	10.48%
2004	0.00%	261,568		15.773327		4,125,798	1.08%	18.87%
2003	0.00%	92,411		13.269107		1,226,211	0.42%	32.69%
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 3
2006	0.00%	424,646		13.711150		5,822,385	1.34%	21.46%
2005	0.00%	237,992		11.288544		2,686,583	0.34%	12.89%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund – Class 3
2006	0.00%	138,640	$	11.150160	$	1,545,858	2.84%	12.84%
2005	0.00%	53,324		9.881172		526,904	1.81%	-1.19%	05/02/05
Gartmore GVIT – American Funds GVIT Asset Allocation Fund – Class II
2006	0.00%	166,024		10.556998		1,752,715	3.37%	5.57%	05/01/06
Gartmore GVIT – American Funds GVIT Bond Fund – Class II
2006	0.00%	70,612		10.538858		744,170	0.90%	5.39%	05/01/06
Gartmore GVIT – American Funds GVIT Global Growth Fund – Class II
2006	0.00%	150,826		10.842096		1,635,270	0.23%	8.42%	05/01/06
Gartmore GVIT – American Funds GVIT Growth Fund – Class II
2006	0.00%	168,526		10.364424		1,746,675	1.12%	3.64%	05/01/06
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I
2006	0.00%	134,862		23.062454		3,110,249	2.07%	22.67%
2005	0.00%	175,520		18.800450		3,299,855	1.31%	12.09%
2004	0.00%	281,276		16.772215		4,717,622	1.91%	20.29%
2003	0.00%	23,901		13.838062		330,744	0.00%	38.38%	05/01/03
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class III
2006	0.00%	575,980		14.056822		8,096,448	2.01%	22.75%
2005	0.00%	402,348		11.451970		4,607,677	0.95%	14.52%	05/02/05
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.00%	270,924		25.339713		6,865,136	0.71%	36.72%
2005	0.00%	369,062		18.534273		6,840,296	0.60%	32.64%
2004	0.00%	466,980		13.973799		6,525,485	1.04%	20.74%
2003	0.00%	343,512		11.573140		3,975,512	0.61%	65.26%
2002	0.00%	146,740		7.002885		1,027,603	0.23%	-15.23%
Gartmore GVIT – Emerging Markets Fund – Class III
2006	0.00%	714,108		18.224168		13,014,024	0.72%	36.64%
2005	0.00%	462,520		13.336908		6,168,587	0.20%	33.37%	05/02/05
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.00%	882,542		16.420739		14,491,992	7.41%	10.60%
2005	0.00%	1,047,212		14.846585		15,547,522	6.92%	2.38%
2004	0.00%	1,351,330		14.501407		19,596,186	7.58%	10.10%
2003	0.00%	1,164,352		13.171585		15,336,361	7.99%	22.27%
2002	0.00%	660,476		10.772444		7,114,941	10.09%	3.23%
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class III
2006	0.00%	701,700		11.657910		8,180,355	7.85%	10.60%
2005	0.00%	429,384		10.540776		4,526,041	6.02%	5.41%	05/02/05
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.00%	113,986		19.830405		2,260,389	1.89%	20.32%
2005	0.00%	105,354		16.481268		1,736,368	2.00%	11.15%
2004	0.00%	121,742		14.827817		1,805,168	1.37%	20.99%
2003	0.00%	137,222		12.255125		1,681,673	1.08%	41.45%
2002	0.00%	14,069		8.663891		121,892	0.02%	-13.36%	05/01/02
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	0.00%	124,614		13.695316		1,706,628	0.00%	2.71%
2005	0.00%	194,488		13.334230		2,593,348	0.00%	8.44%
2004	0.00%	256,666		12.296466		3,156,085	0.00%	7.86%
2003	0.00%	170,154		11.400451		1,939,832	0.00%	36.69%
2002	0.00%	24,643		8.340128		205,526	0.00%	-16.60%	05/01/02
Gartmore GVIT – Global Health Sciences Fund – Class III
2006	0.00%	212,658		11.032385		2,346,125	0.00%	2.70%
2005	0.00%	128,282		10.742057		1,378,013	0.00%	7.42%	05/02/05
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.00%	515,480		3.531877		1,820,612	0.00%	11.17%
2005	0.00%	740,614		3.177040		2,352,960	0.00%	-0.52%
2004	0.00%	1,025,772		3.193545		3,275,849	0.00%	4.31%
2003	0.00%	1,041,511		3.061527		3,188,614	0.00%	55.23%
2002	0.00%	469,967		1.972253		926,894	0.67%	-42.78%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Global Technology and Communications Fund – Class III
2006	0.00%	136,014	$	13.682536	$	1,861,016	0.00%	11.08%
2005	0.00%	89,142		12.317458		1,098,003	0.00%	23.17%	05/02/05
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.00%	178,132		20.489395		3,649,817	2.84%	37.56%
2005	0.00%	118,088		14.894755		1,758,892	2.09%	6.39%
2004	0.00%	134,138		14.000446		1,877,992	1.64%	29.97%
2003	0.00%	50,633		10.772327		545,435	1.02%	24.05%
2002	0.00%	8,397		8.683837		72,918	0.61%	-13.16%	05/01/02
Gartmore GVIT – Government Bond Fund – Class I
2006	0.00%	2,428,156		16.013288		38,882,761	3.95%	3.34%
2005	0.00%	3,195,842		15.495567		49,521,384	3.71%	3.26%
2004	0.00%	3,187,198		15.005858		47,826,641	5.38%	3.26%
2003	0.00%	3,340,824		14.531815		48,548,236	3.25%	2.00%
2002	0.00%	3,339,535		14.246814		47,577,734	4.66%	10.98%
Gartmore GVIT – Growth Fund: Class I
2006	0.00%	1,876,832		8.279324		15,538,900	0.05%	6.17%
2005	0.00%	1,986,938		7.798327		15,494,792	0.08%	6.50%
2004	0.00%	2,009,968		7.322345		14,717,679	0.34%	8.16%
2003	0.00%	2,002,653		6.770126		13,558,213	0.02%	32.74%
2002	0.00%	1,934,729		5.100354		9,867,803	0.00%	-28.72%
Gartmore GVIT – International Growth Fund – Class I
2006	0.00%	554,752		13.430598		7,450,651	0.84%	32.96%
2005	0.00%	203,318		10.100861		2,053,687	1.10%	30.21%
2004	0.00%	125,904		7.757434		976,692	0.85%	14.19%
2003	0.00%	195,693		6.793220		1,329,386	0.00%	35.62%
2002	0.00%	72,938		5.008923		365,341	0.00%	-24.10%
Gartmore GVIT – International Index Fund – Class VI
2006	0.00%	20,334		10.975279		223,171	1.50%	9.75%	05/01/06
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.00%	1,105,550		15.802084		17,469,994	2.11%	16.87%
2005	0.00%	1,044,556		13.521320		14,123,776	2.02%	7.93%
2004	0.00%	937,068		12.527746		11,739,350	1.85%	14.03%
2003	0.00%	539,178		10.986753		5,923,816	1.57%	31.87%
2002	0.00%	154,196		8.331709		1,284,716	0.86%	-16.68%	01/25/02
Gartmore GVIT – Investor Destinations Conservative Fund – Class II
2006	0.00%	628,508		12.447546		7,823,382	3.23%	6.16%
2005	0.00%	706,430		11.724859		8,282,792	2.49%	3.31%
2004	0.00%	593,680		11.349571		6,738,013	2.49%	4.65%
2003	0.00%	430,237		10.845040		4,665,937	2.59%	7.91%
2002	0.00%	202,573		10.050418		2,035,943	2.18%	0.50%	01/25/02
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	0.00%	3,554,252		14.099052		50,111,584	2.47%	11.35%
2005	0.00%	3,150,642		12.661618		39,892,225	2.39%	5.34%
2004	0.00%	2,369,740		12.019313		28,482,647	2.21%	9.54%
2003	0.00%	1,419,724		10.972970		15,578,589	2.05%	20.05%
2002	0.00%	398,104		9.140249		3,638,770	1.66%	-8.60%	01/25/02
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.00%	4,071,170		15.125018		61,576,520	2.25%	14.54%
2005	0.00%	3,665,284		13.204972		48,399,973	2.19%	7.07%
2004	0.00%	2,664,904		12.332826		32,865,797	2.01%	12.09%
2003	0.00%	1,386,608		11.002361		15,255,962	1.61%	26.64%
2002	0.00%	375,973		8.687687		3,266,336	1.05%	-13.12%	01/25/02
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	0.00%	1,022,586		13.308971		13,609,567	2.84%	8.42%
2005	0.00%	996,854		12.275099		12,236,482	2.78%	4.49%
2004	0.00%	934,806		11.748118		10,982,211	2.38%	7.16%
2003	0.00%	794,151		10.963279		8,706,499	2.33%	13.70%
2002	0.00%	418,980		9.642427		4,039,984	1.99%	-3.58%	01/25/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – J.P. Morgan GVIT Balanced Fund: Class I
2006	0.00%	919,452	$	13.567085	$	12,474,283	2.25%	12.25%
2005	0.00%	1,170,652		12.086643		14,149,253	1.98%	2.54%
2004	0.00%	1,256,734		11.786975		14,813,092	1.94%	8.49%
2003	0.00%	1,222,571		10.864458		13,282,571	1.76%	18.41%
2002	0.00%	1,025,461		9.174983		9,408,587	2.28%	-12.31%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.00%	961,292		15.331247		14,737,805	0.00%	9.91%
2005	0.00%	989,192		13.949172		13,798,409	0.00%	9.74%
2004	0.00%	1,022,504		12.710961		12,997,008	0.00%	15.34%
2003	0.00%	1,048,110		11.020618		11,550,820	0.00%	40.13%
2002	0.00%	863,328		7.864311		6,789,480	0.00%	-37.01%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.00%	1,451,458		24.770554		35,953,419	1.14%	9.89%
2005	0.00%	1,705,870		22.541352		38,452,616	1.04%	12.10%
2004	0.00%	1,662,184		20.108596		33,424,187	0.56%	15.73%
2003	0.00%	1,562,296		17.375180		27,145,174	0.50%	34.65%
2002	0.00%	1,255,638		12.903917		16,202,649	0.45%	-15.30%
Gartmore GVIT – Money Market Fund – Class I
2006	0.00%	7,870,664		13.359424		105,147,538	4.43%	4.53%
2005	0.00%	8,487,334		12.780436		108,471,829	2.61%	2.67%
2004	0.00%	9,274,680		12.448310		115,454,092	0.80%	0.81%
2003	0.00%	10,900,245		12.348118		134,597,511	0.63%	0.63%
2002	0.00%	13,460,393		12.271344		165,177,113	1.51%	1.21%
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.00%	2,948,242		15.389126		45,370,868	1.09%	13.63%
2005	0.00%	3,161,412		13.543467		42,816,479	1.00%	7.44%
2004	0.00%	3,312,776		12.605461		41,759,069	1.30%	9.75%
2003	0.00%	3,352,137		11.485510		38,501,003	0.59%	27.51%
2002	0.00%	3,234,937		9.007395		29,138,355	0.95%	-17.35%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	0.00%	85,138		16.116355		1,372,114	0.70%	16.05%
2005	0.00%	40,072		13.887943		556,518	1.29%	10.31%
2004	0.00%	24,720		12.589767		311,219	0.48%	18.79%
2003	0.00%	21,594		10.598061		228,855	0.15%	25.38%
2002	0.00%	15,191		8.452459		128,401	1.19%	-15.48%	05/01/02
Gartmore GVIT – Small Cap Growth Fund – Class I
2006	0.00%	807,056		17.366191		14,015,489	0.00%	3.21%
2005	0.00%	925,228		16.826475		15,568,326	0.00%	8.09%
2004	0.00%	936,378		15.567128		14,576,716	0.00%	13.42%
2003	0.00%	890,100		13.725736		12,217,278	0.00%	34.26%
2002	0.00%	741,006		10.222874		7,575,211	0.00%	-33.29%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.00%	1,678,046		28.638579		48,056,853	0.43%	17.29%
2005	0.00%	1,914,388		24.416176		46,742,034	0.07%	3.07%
2004	0.00%	2,111,792		23.688343		50,024,853	0.00%	17.30%
2003	0.00%	2,161,994		20.194975		43,661,415	0.00%	56.85%
2002	0.00%	1,878,685		12.875081		24,188,222	0.01%	-27.16%
Gartmore GVIT – Small Company Fund – Class I
2006	0.00%	1,691,018		25.805828		43,638,120	0.10%	12.04%
2005	0.00%	1,752,846		23.033016		40,373,330	0.00%	12.32%
2004	0.00%	1,765,320		20.507271		36,201,896	0.00%	19.02%
2003	0.00%	1,696,669		17.229813		29,233,290	0.00%	41.01%
2002	0.00%	1,515,751		12.218656		18,520,440	0.00%	-17.33%
Gartmore GVIT – Turner GVIT Growth Focus Fund – Class I
2003	0.00%	215,089		3.336873		717,725	0.00%	50.96%
2002	0.00%	156,451		2.210411		345,821	0.00%	-42.86%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2006	0.00%	250,268	$	15.705651	$	3,930,622	0.27%	-0.29%
2005	0.00%	279,900		15.751023		4,408,711	0.00%	11.96%
2004	0.00%	184,294		14.068165		2,592,678	0.00%	12.41%
2003	0.00%	242,970		12.515174		3,040,812	0.00%	52.14%
2002	0.00%	48,858		8.226323		401,922	0.00%	-17.74%	05/01/02
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I
2006	0.00%	875,334		14.961750		13,096,528	1.73%	15.91%
2005	0.00%	825,902		12.908610		10,661,247	1.61%	4.25%
2004	0.00%	665,190		12.382749		8,236,881	1.39%	17.50%
2003	0.00%	432,461		10.538646		4,557,553	1.34%	31.43%
2002	0.00%	277,592		8.018258		2,225,804	1.34%	-25.14%
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.00%	657,636		15.733416		10,346,861	4.07%	4.84%
2005	0.00%	636,228		15.007380		9,548,115	3.99%	2.18%
2004	0.00%	588,866		14.687199		8,648,792	4.55%	6.53%
2003	0.00%	589,360		13.786437		8,125,175	5.42%	12.12%
2002	0.00%	574,913		12.296568		7,069,457	4.49%	7.21%
Gartmore GVIT – Worldwide Leaders Fund – Class I
2006	0.00%	249,376		18.389109		4,585,802	0.85%	25.88%
2005	0.00%	262,448		14.608344		3,833,931	1.11%	19.34%
2004	0.00%	281,954		12.241206		3,451,457	0.00%	15.67%
2003	0.00%	280,311		10.583316		2,966,620	0.00%	36.06%
2002	0.00%	279,292		7.778516		2,172,477	2.00%	-25.39%
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.00%	116,884		14.708447		1,719,182	1.99%	10.41%
2005	0.00%	93,760		13.321108		1,248,987	2.04%	7.66%
2004	0.00%	90,538		12.373264		1,120,251	2.45%	8.29%
2003	0.00%	60,397		11.425728		690,080	2.34%	13.72%
Janus Aspen Series – Forty Portfolio – Service Shares
2006	0.00%	2,885,418		9.429195		27,207,169	0.14%	9.12%
2005	0.00%	3,170,060		8.641403		27,393,766	0.01%	12.56%
2004	0.00%	3,379,686		7.677436		25,947,323	0.02%	17.97%
2003	0.00%	3,484,342		6.508092		22,676,418	0.25%	20.23%
2002	0.00%	3,279,169		5.412895		17,749,797	0.32%	-15.93%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	0.00%	2,894,560		4.318333		12,499,674	0.00%	7.83%
2005	0.00%	3,135,014		4.004823		12,555,176	0.00%	11.55%
2004	0.00%	3,258,384		3.590186		11,698,205	0.00%	0.57%
2003	0.00%	3,237,773		3.569969		11,558,749	0.00%	46.47%
2002	0.00%	3,153,932		2.437287		7,687,037	0.00%	-40.93%
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2006	0.00%	30,204		17.753498		536,227	0.11%	10.77%
2005	0.00%	31,826		16.027544		510,093	1.33%	10.91%
2004	0.00%	23,542		14.450740		340,199	2.52%	17.46%
2003	0.00%	3,278		12.302260		40,327	0.30%	23.02%	05/01/03
Janus Aspen Series – International Growth Portfolio – Service II Shares
2006	0.00%	754,850		11.629148		8,778,262	1.78%	16.29%	05/01/06
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.00%	2,503,690		14.528655		36,375,248	1.89%	46.63%
2005	0.00%	2,831,486		9.908475		28,055,708	1.05%	31.94%
2004	0.00%	3,009,298		7.509901		22,599,530	0.85%	18.69%
2003	0.00%	3,013,609		6.327527		19,068,692	1.02%	34.53%
2002	0.00%	2,935,440		4.703343		13,806,381	0.70%	-25.76%
MFS® Variable Insurance Trust – Investors Growth Stock Series – Initial Class
2006	0.00%	314,824		14.233850		4,481,158	0.00%	7.58%
2005	0.00%	291,396		13.231476		3,855,599	0.34%	4.49%
2004	0.00%	214,290		12.663111		2,713,578	0.00%	9.18%
2003	0.00%	38,925		11.597867		451,447	0.00%	15.98%	05/01/03

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
MFS® Variable Insurance Trust – Value Series – Initial Class
2006	0.00%	200,260	$	18.360218	$	3,676,817	0.97%	20.84%
2005	0.00%	118,172		15.193770		1,795,478	0.73%	6.66%
2004	0.00%	72,218		14.245099		1,028,753	0.45%	15.18%
2003	0.00%	21,683		12.367820		268,171	0.00%	23.68%	05/01/03
Nationwide® GVIT Strategic Value Fund – Class I
2003	0.00%	99,848		10.495857		1,047,990	0.04%	38.81%
2002	0.00%	103,027		7.561458		779,034	0.03%	-25.36%
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.00%	54,558		15.260818		832,600	0.00%	5.25%
2005	0.00%	69,514		14.499238		1,007,900	0.00%	2.90%
2004	0.00%	57,292		14.091031		807,303	0.00%	11.88%
2003	0.00%	26,989		12.595173		339,931	0.00%	25.06%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.00%	477,638		20.790721		9,930,438	0.70%	13.38%
2005	0.00%	509,104		18.337744		9,335,819	0.15%	8.39%
2004	0.00%	572,382		16.918157		9,683,649	0.12%	15.81%
2003	0.00%	601,395		14.608014		8,785,187	0.89%	31.76%
2002	0.00%	568,694		11.086748		6,304,967	0.75%	-26.45%
Neuberger Berman Advisers Management Trust – International Portfolio – Class S
2006	0.00%	140,884		14.506093		2,043,676	0.29%	23.45%
2005	0.00%	53,950		11.750261		633,927	0.26%	17.50%	05/02/05
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I
2006	0.00%	903,048		10.759706		9,716,531	3.07%	4.20%
2005	0.00%	748,972		10.325859		7,733,779	3.97%	1.44%
2004	0.00%	335,648		10.178954		3,416,546	4.28%	0.78%
2003	0.00%	116,918		10.100257		1,180,902	12.48%	1.00%	05/01/03
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares
2006	0.00%	1,474,382		20.523539		30,259,536	0.00%	14.69%
2005	0.00%	1,544,990		17.894121		27,646,238	0.00%	13.74%
2004	0.00%	1,604,468		15.732356		25,242,062	0.00%	16.31%
2003	0.00%	1,575,959		13.526477		21,317,173	0.00%	28.07%
2002	0.00%	1,415,445		10.561769		14,949,603	0.00%	-29.34%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	0.00%	967,144		17.686426		17,105,321	0.68%	12.24%
2005	0.00%	1,054,060		15.757590		16,609,445	0.98%	18.04%
2004	0.00%	902,952		13.348803		12,053,328	0.01%	18.98%
2003	0.00%	883,657		11.219837		9,914,488	0.00%	35.09%
2002	0.00%	887,402		8.305600		7,370,406	0.54%	-24.14%
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S
2006	0.00%	62,360		12.937253		806,767	0.48%	10.94%
2005	0.00%	23,100		11.661977		269,392	0.00%	16.62%	05/02/05
Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio®– Class I
2006	0.00%	160,134		17.031699		2,727,354	0.16%	13.70%
2005	0.00%	104,292		14.979202		1,562,211	0.00%	6.86%
2004	0.00%	42,274		14.018027		592,598	0.00%	13.28%
2003	0.00%	10,340		12.374746		127,955	0.00%	23.75%	05/01/03
Oppenheimer Global Securities Fund/VA – Class 3
2006	0.00%	1,194,348		14.192798		16,951,140	0.84%	17.69%
2005	0.00%	723,136		12.059670		8,720,782	0.00%	20.60%	05/02/05
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.00%	2,846,436		17.801944		50,672,094	0.38%	7.95%
2005	0.00%	2,994,184		16.491164		49,377,579	0.91%	5.10%
2004	0.00%	3,086,788		15.691176		48,435,334	0.31%	6.94%
2003	0.00%	2,916,468		14.673413		42,794,539	0.38%	30.94%
2002	0.00%	2,688,225		11.205948		30,124,110	0.57%	-26.86%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.00%	1,579,632	$	15.072696	$	23,809,313	1.07%	17.69%
2005	0.00%	2,017,894		12.806945		25,843,057	1.00%	14.31%
2004	0.00%	2,460,964		11.203969		27,572,564	1.15%	19.16%
2003	0.00%	1,978,401		9.402230		18,601,381	0.73%	43.02%
2002	0.00%	1,533,749		6.574074		10,082,979	0.55%	-22.13%
Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA – Non-Service Shares
2006	0.00%	324,172		13.641009		4,422,033	6.62%	9.42%
2005	0.00%	304,496		12.466334		3,795,949	6.30%	2.31%
2004	0.00%	260,866		12.184423		3,178,502	4.03%	8.97%
2003	0.00%	137,738		11.181817		1,540,161	0.00%	11.82%	05/01/03
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.00%	2,564,464		14.338943		36,771,703	1.10%	15.02%
2005	0.00%	2,675,742		12.465965		33,355,706	1.37%	5.98%
2004	0.00%	2,802,124		11.763032		32,961,474	0.83%	9.46%
2003	0.00%	2,733,213		10.746526		29,372,545	0.90%	26.72%
2002	0.00%	2,347,711		8.480652		19,910,120	0.75%	-18.80%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Small Cap Fund®/VA – Non-Service Shares
2006	0.00%	215,614		20.937110		4,514,334	0.13%	15.00%
2005	0.00%	146,346		18.206560		2,664,457	0.00%	9.92%
2004	0.00%	111,964		16.563464		1,854,512	0.00%	19.42%
2003	0.00%	81,527		13.869971		1,130,777	0.00%	38.70%	05/01/03
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.00%	1,834,314		15.810416		29,001,267	0.00%	2.96%
2005	0.00%	2,021,976		15.356470		31,050,414	0.00%	12.33%
2004	0.00%	2,473,214		13.671269		33,811,974	0.00%	19.78%
2003	0.00%	2,289,693		11.413972		26,134,492	0.00%	25.59%
2002	0.00%	2,165,861		9.088271		19,683,932	0.63%	-27.79%
Putnam Variable Trust – Putnam VT Growth and Income Fund – IB Shares
2006	0.00%	79,204		16.838971		1,333,714	1.47%	15.91%
2005	0.00%	79,162		14.527575		1,150,032	1.49%	5.23%
2004	0.00%	69,826		13.805820		964,005	1.11%	11.11%
2003	0.00%	21,892		12.425216		272,013	0.00%	24.25%	05/01/03
Putnam Variable Trust – Putnam VT International Equity Fund – IB Shares
2006	0.00%	227,790		21.310423		4,854,301	0.36%	27.72%
2005	0.00%	138,276		16.685441		2,307,196	1.32%	12.20%
2004	0.00%	107,542		14.871493		1,599,310	1.30%	16.19%
2003	0.00%	58,343		12.798803		746,721	0.00%	27.99%	05/01/03
Putnam Variable Trust – Putnam VT Voyager Fund – IB Shares
2006	0.00%	28,784		13.874456		399,362	0.11%	5.44%
2005	0.00%	27,308		13.159164		359,350	0.59%	5.69%
2004	0.00%	26,864		12.450430		334,468	0.20%	5.03%
2003	0.00%	11,366		11.853879		134,731	0.00%	18.54%	05/01/03
T. Rowe Price Blue Chip Growth Portfolio – II
2006	0.00%	117,044		12.370493		1,447,892	0.34%	9.33%
2005	0.00%	33,050		11.314946		373,959	0.16%	13.15%	05/02/05
T. Rowe Price Equity Income Portfolio – II
2006	0.00%	232,318		17.880327		4,153,922	1.35%	18.65%
2005	0.00%	69,938		15.070153		1,053,976	1.39%	3.69%
T. Rowe Price Limited Term Bond Portfolio – Class II
2006	0.00%	51,598		10.535464		543,609	3.73%	4.03%
2005	0.00%	19,896		10.127763		201,502	2.09%	1.28%	05/02/05
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.00%	565,466		26.133423		14,777,562	0.56%	39.49%
2005	0.00%	573,050		18.734825		10,735,991	0.71%	32.00%
2004	0.00%	535,204		14.193509		7,596,423	0.53%	25.89%
2003	0.00%	596,383		11.274461		6,723,897	0.11%	54.19%
2002	0.00%	596,497		7.312205		4,361,708	0.21%	-2.90%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.00%	487,264	$	27.499610	$	13,399,570	0.06%	24.49%
2005	0.00%	509,766		22.089482		11,260,467	0.31%	51.67%
2004	0.00%	392,894		14.564221		5,722,195	0.31%	24.23%
2003	0.00%	345,678		11.747435		4,060,830	0.41%	45.08%
2002	0.00%	244,054		8.097327		1,976,185	0.75%	-2.83%
Van Kampen – The Universal Institutional Funds, Inc. – Core Plus Fixed Income Portfolio – Class I
2006	0.00%	190,806		11.546094		2,203,064	4.06%	3.73%
2005	0.00%	126,012		11.130805		1,402,615	3.73%	4.21%
2004	0.00%	50,918		10.680729		543,841	3.92%	4.37%
2003	0.00%	12,470		10.233765		127,615	0.05%	2.34%	05/01/03
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.00%	296,826		21.725302		6,448,634	10.28%	10.81%
2005	0.00%	306,254		19.606425		6,004,546	7.14%	12.25%
2004	0.00%	310,368		17.466655		5,421,091	7.52%	10.06%
2003	0.00%	310,596		15.869838		4,929,108	0.00%	27.86%
2002	0.00%	229,797		12.411489		2,852,123	8.74%	9.22%
Van Kampen – The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio – Class I
2006	0.00%	282,660		9.364438		2,646,952	0.00%	9.27%
2005	0.00%	300,668		8.569610		2,576,607	0.00%	17.57%
2004	0.00%	328,124		7.289089		2,391,725	0.00%	21.60%
2003	0.00%	308,361		5.994500		1,848,470	0.00%	41.76%
2002	0.00%	282,160		4.228519		1,193,119	0.00%	-31.16%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.00%	1,384,756		36.117848		50,014,407	1.07%	38.04%
2005	0.00%	1,409,392		26.163932		36,875,236	1.19%	17.05%
2004	0.00%	1,415,482		22.352530		31,639,604	1.61%	36.39%
2003	0.00%	1,225,582		16.388129		20,084,996	0.00%	37.51%
2002	0.00%	1,098,781		11.917684		13,094,925	4.01%	-0.79%
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM
2006	0.00%	1,303,766		13.648563		17,794,532	0.00%	12.22%
2005	0.00%	1,428,994		12.162469		17,380,095	0.00%	7.88%
2004	0.00%	1,509,654		11.273634		17,019,287	0.00%	18.22%
2003	0.00%	1,535,336		9.536128		14,641,161	0.08%	37.01%
2002	0.00%	1,334,891		6.960374		9,291,341	0.50%	-26.82%
The BEST of AMERICA® America’s FUTURE Life SeriesSM Reduced Fee Tier (0.10%)
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.10%	1,258		17.426798		21,923	0.42%	13.09%
2005	0.10%	174		15.409499		2,681	0.09%	5.63%
2004	0.10%	27,138		14.588087		395,892	0.00%	10.96%
2003	0.10%	173		13.147350		2,274	0.06%	33.49%
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2003	0.10%	1,045		13.277382		13,875	0.00%	35.22%
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.10%	100,288		19.526450		1,958,269	0.00%	16.40%
2005	0.10%	29,388		16.774744		492,976	0.00%	9.50%
2004	0.10%	12,220		15.320003		187,210	0.00%	15.38%
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.10%	3,554		18.130310		64,435	1.37%	17.17%
2005	0.10%	84,426		15.473584		1,306,373	1.48%	4.76%
2004	0.10%	13,180		14.770235		194,672	0.92%	11.35%
2003	0.10%	8,268		13.264628		109,672	0.51%	32.37%
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.10%	23,772		13.528072		321,589	1.85%	16.97%
2005	0.10%	27,068		11.565387		313,052	1.94%	4.53%
2004	0.10%	39,010		11.064552		431,628	1.37%	12.88%
2003	0.10%	44,282		9.802103		434,057	1.28%	29.22%
2002	0.10%	483,390		7.585400		3,666,707	1.00%	-19.45%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century Variable Portfolios, Inc. – International Fund – Class I
2006	0.10%	620,316	$	15.094317	$	9,363,246	1.58%	24.90%
2005	0.10%	645,460		12.085047		7,800,414	1.25%	13.14%
2004	0.10%	881,348		10.681395		9,414,026	0.56%	14.81%
2003	0.10%	860,133		9.303615		8,002,346	0.73%	24.39%
2002	0.10%	1,065,487		7.479659		7,969,479	0.78%	-20.45%
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.10%	28,308		10.929351		309,388	0.00%	-3.37%
2005	0.10%	28,300		11.310747		320,094	0.00%	2.06%
2004	0.10%	9,976		11.082064		110,555	0.00%	10.56%
2003	0.10%	865		10.023142		8,670	0.00%	24.77%
2002	0.10%	3,004		8.033091		24,131	0.66%	-19.67%	05/01/02
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.10%	62,962		21.860590		1,376,386	1.41%	18.53%
2005	0.10%	71,456		18.442377		1,317,818	0.83%	4.93%
2004	0.10%	59,642		17.576102		1,048,274	0.97%	14.22%
2003	0.10%	68,891		15.388111		1,060,102	1.04%	28.83%
2002	0.10%	455,713		11.944573		5,443,297	0.75%	-12.71%
Baron Capital Funds Trust – Baron Capital Asset Fund – Insurance Shares
2006	0.10%	80,920		18.851618		1,525,473	0.00%	15.41%
2005	0.10%	97,836		16.334885		1,598,140	0.00%	3.26%
2004	0.10%	128,444		15.819001		2,031,856	0.00%	25.51%
2003	0.10%	13,790		12.603456		173,802	0.00%	29.88%
Calvert Variable Series, Inc. – Social Equity Portfolio
2006	0.10%	1,026		15.439612		15,841	0.00%	9.95%
2005	0.10%	1,026		14.042800		14,408	0.06%	4.44%
2004	0.10%	1,026		13.445930		13,796	0.08%	7.05%
2003	0.10%	1,026		12.560357		12,887	0.01%	22.05%
Credit Suisse Trust – Large Cap Value Portfolio
2003	0.10%	9,715		11.248621		109,280	0.76%	25.04%
2002	0.10%	15,615		8.996113		140,474	0.76%	-23.17%
Dreyfus Investment Portfolios – Mid Cap Stock Index Portfolio – Initial Shares
2006	0.10%	2,040		17.625316		35,956	0.37%	7.64%
2005	0.10%	2,806		16.374088		45,946	0.02%	9.06%
2004	0.10%	2,784		15.013547		41,798	0.43%	14.36%
2003	0.10%	98,265		13.128294		1,290,052	1.02%	31.59%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.10%	28,070		15.739536		441,809	0.38%	14.30%
2005	0.10%	37,378		13.770744		514,723	0.00%	7.13%
2004	0.10%	219,642		12.854754		2,823,444	0.57%	21.76%
2003	0.10%	220,855		10.557229		2,331,617	0.27%	37.64%
2002	0.10%	173,580		7.670098		1,331,376	0.29%	-23.30%	05/01/02
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.10%	84,702		9.023502		764,309	0.11%	9.09%
2005	0.10%	90,610		8.271484		749,479	0.00%	3.51%
2004	0.10%	88,956		7.990838		710,833	0.40%	6.10%
2003	0.10%	85,500		7.531118		643,911	0.11%	25.88%
2002	0.10%	103,586		5.982920		619,747	0.22%	-29.02%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.10%	363,900		12.054530		4,386,643	1.64%	15.38%
2005	0.10%	426,152		10.447448		4,452,201	1.63%	4.59%
2004	0.10%	1,151,618		9.989249		11,503,799	1.82%	10.53%
2003	0.10%	1,165,447		9.037627		10,532,875	1.54%	28.23%
2002	0.10%	3,024,447		7.047709		21,315,422	1.45%	-22.44%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.10%	41,554		12.369250		513,992	1.53%	16.36%
2005	0.10%	49,014		10.630084		521,023	0.02%	4.27%
2004	0.10%	44,950		10.194416		458,239	1.67%	4.94%
2003	0.10%	55,181		9.714448		536,053	1.18%	21.05%
2002	0.10%	471,098		8.025278		3,780,692	1.22%	-16.80%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Dreyfus Variable Investment Fund – International Value Portfolio – Initial Shares
2006	0.10%	70,076	$	21.100318	$	1,478,626	1.25%	22.47%
2005	0.10%	71,656		17.228282		1,234,510	0.00%	11.78%
2004	0.10%	69,786		15.412931		1,075,607	1.23%	19.90%
2003	0.10%	64,009		12.854570		822,808	2.67%	36.22%
2002	0.10%	23,131		9.436677		218,280	0.37%	-5.63%	09/03/02
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.10%	380,302		14.611096		5,556,629	5.17%	4.05%
2005	0.10%	394,406		14.042347		5,538,386	3.55%	1.20%
2004	0.10%	720,724		13.876320		10,000,997	3.92%	3.52%
2003	0.10%	711,865		13.404948		9,542,513	3.30%	4.54%
2002	0.10%	1,174,189		12.822629		15,056,190	3.20%	9.20%
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class
2006	0.10%	114,862		16.213431		1,862,307	3.15%	19.96%
2005	0.10%	129,586		13.515730		1,751,449	1.56%	5.65%
2004	0.10%	300,426		12.792683		3,843,255	1.39%	11.27%
2003	0.10%	318,394		11.496883		3,660,539	1.66%	30.09%
2002	0.10%	1,076,277		8.837687		9,511,799	1.50%	-17.08%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Service Class
2006	0.10%	963,760		9.843867		9,487,125	0.28%	6.63%
2005	0.10%	1,048,788		9.232178		9,682,598	0.41%	5.57%
2004	0.10%	1,103,628		8.745297		9,651,555	0.16%	3.16%
2003	0.10%	1,108,591		8.477377		9,397,944	0.18%	32.65%
2002	0.10%	1,133,702		6.390869		7,245,341	0.14%	-30.27%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Service Class
2006	0.10%	628,630		11.430519		7,185,567	7.58%	11.07%
2005	0.10%	653,958		10.291612		6,730,282	14.70%	2.42%
2004	0.10%	668,456		10.048366		6,716,891	8.03%	9.36%
2003	0.10%	674,902		9.188481		6,201,324	6.36%	26.84%
2002	0.10%	844,975		7.243970		6,120,974	9.18%	3.51%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class
2006	0.10%	106,768		15.818147		1,688,872	0.84%	17.83%
2005	0.10%	116,010		13.424644		1,557,393	0.56%	18.85%
2004	0.10%	127,656		11.295209		1,441,901	0.98%	13.37%
2003	0.10%	100,484		9.962776		1,001,100	0.63%	43.06%
2002	0.10%	191,072		6.964010		1,330,627	0.64%	-20.42%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class
2006	0.10%	155,940		16.622464		2,592,107	1.12%	11.48%
2005	0.10%	216,460		14.910969		3,227,628	0.19%	16.73%
2004	0.10%	194,978		12.773836		2,490,617	0.24%	15.22%
2003	0.10%	200,777		11.086093		2,225,832	0.30%	28.22%
2002	0.10%	166,146		8.645878		1,436,478	0.69%	-9.51%
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class
2006	0.10%	18,424		9.223917		169,941	0.69%	5.20%
2005	0.10%	18,822		8.768269		165,036	0.84%	8.75%
2004	0.10%	19,294		8.062568		155,559	0.48%	6.95%
2003	0.10%	17,795		7.538466		134,147	0.59%	29.53%
2002	0.10%	37,306		5.819798		217,113	0.93%	-21.99%
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.10%	4,096		16.020178		65,619	0.49%	16.08%
2005	0.10%	6,844		13.800839		94,453	0.00%	2.45%
2004	0.10%	9,532		13.470536		128,401	0.00%	13.87%
2003	0.10%	9,280		11.829409		109,777	0.00%	57.63%
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 2
2006	0.10%	8,186		19.804108		162,116	1.24%	21.32%
2005	0.10%	25,200		16.323349		411,348	1.12%	10.06%
2004	0.10%	202,324		14.831493		3,000,767	1.11%	18.41%
2003	0.10%	172,783		12.525565		2,164,205	1.96%	32.08%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.10%	48,516	$	25.182064	$	1,221,733	0.71%	36.58%
2005	0.10%	51,076		18.437333		941,705	0.60%	32.50%
2004	0.10%	70,226		13.914559		977,164	1.04%	20.62%
2003	0.10%	47,949		11.535602		553,121	0.61%	65.10%
2002	0.10%	32,769		6.987132		228,961	0.23%	-15.31%
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.10%	9,510		14.865456		141,370	7.41%	10.49%
2005	0.10%	25,760		13.453811		346,570	6.92%	2.28%
2004	0.10%	95,632		13.154128		1,257,956	7.58%	9.99%
2003	0.10%	22,729		11.959792		271,834	7.99%	22.15%
2002	0.10%	383,942		9.791148		3,759,233	10.09%	3.12%
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.10%	98,040		19.738206		1,935,134	1.89%	20.20%
2005	0.10%	69,072		16.420998		1,134,231	2.00%	11.04%
2004	0.10%	5,676		14.788326		83,939	1.37%	20.87%
2003	0.10%	4,317		12.234704		52,817	1.08%	41.31%
2002	0.10%	1,597		8.658094		13,827	0.02%	-13.42%	05/01/02
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	0.10%	13,596		13.631572		185,335	0.00%	2.61%
2005	0.10%	20,710		13.285419		275,141	0.00%	8.33%
2004	0.10%	49,544		12.263680		607,592	0.00%	7.75%
2003	0.10%	8,967		11.381435		102,057	0.00%	36.56%
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.10%	101,564		3.509892		356,479	0.00%	11.06%
2005	0.10%	125,958		3.160408		398,079	0.00%	-0.62%
2004	0.10%	675,570		3.180008		2,148,318	0.00%	4.21%
2003	0.10%	111,866		3.051579		341,368	0.00%	55.08%
2002	0.10%	109,706		1.967806		215,880	0.67%	-42.84%
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.10%	11,378		20.394132		232,044	2.84%	37.42%
2005	0.10%	16,528		14.840284		245,280	2.09%	6.28%
2004	0.10%	13,192		13.963148		184,202	1.64%	29.84%
2003	0.10%	1,184		10.754365		12,733	1.02%	23.93%
2002	0.10%	200		8.678027		1,736	0.61%	-13.22%	05/01/02
Gartmore GVIT – Government Bond Fund – Class I
2006	0.10%	78,218		14.788907		1,156,759	3.95%	3.24%
2005	0.10%	100,704		14.325057		1,442,591	3.71%	3.16%
2004	0.10%	68,418		13.886189		950,065	5.38%	3.16%
2003	0.10%	112,900		13.460973		1,519,744	3.25%	1.90%
2002	0.10%	1,835,772		13.210181		24,250,880	4.66%	10.87%
Gartmore GVIT – Growth Fund: Class I
2006	0.10%	51,726		6.260681		323,840	0.05%	6.06%
2005	0.10%	59,854		5.902844		353,309	0.08%	6.39%
2004	0.10%	47,844		5.548096		265,443	0.34%	8.05%
2003	0.10%	27,011		5.134813		138,696	0.02%	32.61%
2002	0.10%	278,378		3.872224		1,077,942	0.00%	-28.79%
Gartmore GVIT – International Growth Fund – Class I
2006	0.10%	109,564		13.347009		1,462,352	0.84%	32.83%
2005	0.10%	96,242		10.048006		967,040	1.10%	30.08%
2004	0.10%	50,722		7.724537		391,804	0.85%	14.08%
2003	0.10%	40,966		6.771174		277,388	0.00%	35.49%
2002	0.10%	15,806		4.997657		78,993	0.00%	-24.18%
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.10%	23,050		15.724474		362,449	2.11%	16.75%
2005	0.10%	24,154		13.468331		325,314	2.02%	7.82%
2004	0.10%	24,186		12.491088		302,109	1.85%	13.91%
2003	0.10%	23,514		10.965564		257,844	1.57%	31.74%
2002	0.10%	4,815		8.323942		40,080	0.86%	-16.76%	01/25/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Investor Destinations Conservative Fund – Class II
2006	0.10%	26,518	$	12.386397	$	328,462	3.23%	6.06%
2005	0.10%	29,088		11.678890		339,716	2.49%	3.20%
2004	0.10%	21,194		11.316349		239,839	2.49%	4.55%
2003	0.10%	13,104		10.824110		141,839	2.59%	7.80%
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	0.10%	1,864		14.029768		26,151	2.47%	11.24%
2005	0.10%	1,874		12.611956		23,635	2.39%	5.24%
2004	0.10%	39,950		11.984122		478,766	2.21%	9.43%
2003	0.10%	1,913		10.951794		20,951	2.05%	19.93%
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.10%	18,108		15.050687		272,538	2.25%	14.43%
2005	0.10%	20,444		13.153196		268,904	2.19%	6.97%
2004	0.10%	14,182		12.296725		174,392	2.01%	11.98%
2003	0.10%	6,422		10.981133		70,521	1.61%	26.52%
2002	0.10%	6,436		8.679579		55,862	1.05%	-13.20%	01/25/02
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	0.10%	8,862		13.243591		117,365	2.84%	8.31%
2005	0.10%	8,950		12.226987		109,432	2.78%	4.38%
2004	0.10%	9,038		11.713743		105,869	2.38%	7.05%
2003	0.10%	2,011		10.942135		22,005	2.33%	13.58%
Gartmore GVIT – J.P. Morgan GVIT Balanced Fund: Class I
2006	0.10%	64,592		12.335682		796,786	2.25%	12.14%
2005	0.10%	81,682		11.000579		898,549	1.98%	2.44%
2004	0.10%	59,166		10.738528		635,356	1.94%	8.38%
2003	0.10%	19,620		9.907971		194,394	1.76%	18.30%
2002	0.10%	192,540		8.375591		1,612,636	2.28%	-12.40%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.10%	101,742		11.829636		1,203,571	0.00%	9.80%
2005	0.10%	102,290		10.773967		1,102,069	0.00%	9.63%
2004	0.10%	102,944		9.827397		1,011,672	0.00%	15.22%
2003	0.10%	121,377		8.529042		1,035,230	0.00%	39.99%
2002	0.10%	509,655		6.092407		3,105,026	0.00%	-37.08%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.10%	154,944		22.525451		3,490,183	1.14%	9.78%
2005	0.10%	169,140		20.518746		3,470,541	1.04%	11.99%
2004	0.10%	193,708		18.322527		3,549,220	0.56%	15.62%
2003	0.10%	216,768		15.847726		3,435,280	0.50%	34.52%
2002	0.10%	185,632		11.781293		2,186,985	0.45%	-15.39%
Gartmore GVIT – Money Market Fund – Class I
2002	0.10%	1,193,207		11.481201		13,699,449	1.51%	1.11%
Gartmore GVIT – Money Market Fund – Class V
2006	0.10%	6,733,802		10.900267		73,400,240	4.63%	4.51%
2005	0.10%	537,434		10.429961		5,605,416	2.74%	2.65%
2004	0.10%	13,954,380		10.160839		141,788,209	0.91%	0.79%
2003	0.10%	8,030,895		10.081195		80,961,019	0.70%	0.61%
2002	0.10%	11,193,504		10.020530		112,164,843	0.28%	0.21%
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.10%	37,804,244		12.681766		479,424,576	1.09%	13.51%
2005	0.10%	38,013,326		11.171952		424,683,053	1.00%	7.33%
2004	0.10%	19,034,918		10.408568		198,126,238	1.30%	9.64%
2003	0.10%	19,180,432		9.493288		182,085,365	0.59%	27.38%
2002	0.10%	16,109,248		7.452447		120,053,317	0.95%	-17.44%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	0.10%	8,386		16.041401		134,523	0.70%	15.93%
2005	0.10%	13,776		13.837136		190,620	1.29%	10.20%
2004	0.10%	12,564		12.556222		157,756	0.48%	18.67%
2003	0.10%	8,556		10.580391		90,526	0.15%	25.26%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Small Cap Growth Fund – Class I
2006	0.10%	82,090	$	17.233732	$	1,414,717	0.00%	3.10%
2005	0.10%	123,464		16.714800		2,063,676	0.00%	7.98%
2004	0.10%	70,962		15.479228		1,098,437	0.00%	13.30%
2003	0.10%	81,334		13.661888		1,111,176	0.00%	34.13%
2002	0.10%	65,945		10.185475		671,681	0.00%	-33.35%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.10%	237,134		30.784276		7,299,999	0.43%	17.18%
2005	0.10%	250,094		26.271693		6,570,393	0.07%	2.97%
2004	0.10%	250,742		25.513967		6,397,423	0.00%	17.18%
2003	0.10%	270,768		21.773115		5,895,463	0.00%	56.70%
2002	0.10%	280,707		13.895068		3,900,443	0.01%	-27.24%
Gartmore GVIT – Small Company Fund – Class I
2006	0.10%	109,004		26.100738		2,845,085	0.10%	11.93%
2005	0.10%	123,158		23.319481		2,871,981	0.00%	12.20%
2004	0.10%	254,060		20.783025		5,280,135	0.00%	18.90%
2003	0.10%	334,150		17.478961		5,840,595	0.00%	40.87%
2002	0.10%	388,032		12.407717		4,814,591	0.00%	-17.41%
Gartmore GVIT – Turner GVIT Growth Focus Fund – Class I
2003	0.10%	32,705		3.326027		108,778	0.00%	50.81%
2002	0.10%	45,497		2.205430		100,340	0.00%	-42.91%
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2006	0.10%	74,050		15.632647		1,157,598	0.27%	-0.39%
2005	0.10%	70,284		15.693455		1,102,999	0.00%	11.85%
2004	0.10%	44,170		14.030717		619,737	0.00%	12.30%
2003	0.10%	36,540		12.494332		456,543	0.00%	51.98%
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I
2006	0.10%	5,264		12.540372		66,013	1.73%	15.79%
2005	0.10%	5,204		10.830304		56,361	1.61%	4.14%
2004	0.10%	230,518		10.399470		2,397,265	1.39%	17.38%
2003	0.10%	233,799		8.859580		2,071,361	1.34%	31.30%
2002	0.10%	211,612		6.747487		1,427,849	1.34%	-25.22%
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.10%	18,772		15.247568		286,227	4.07%	4.73%
2005	0.10%	28,056		14.558458		408,452	3.99%	2.08%
2004	0.10%	6,318		14.262059		90,108	4.55%	6.43%
2003	0.10%	3,251		13.400762		43,566	5.42%	12.00%
2002	0.10%	479,688		11.964522		5,739,238	4.49%	7.10%
Gartmore GVIT – Worldwide Leaders Fund – Class I
2006	0.10%	64,922		14.839096		963,384	0.85%	25.76%
2005	0.10%	79,212		11.799959		934,698	1.11%	19.22%
2004	0.10%	120,048		9.897753		1,188,205	0.00%	15.55%
2003	0.10%	11,041		8.565807		94,575	0.00%	35.92%
2002	0.10%	44,257		6.301972		278,906	2.00%	-25.46%
Goldman Sachs Variable Insurance Trust – Goldman Sachs VIT Mid Cap Value Fund
2006	0.10%	29,454		20.859259		614,389	0.98%	16.05%
2005	0.10%	75,394		17.974716		1,355,186	0.60%	12.71%
2004	0.10%	117,114		15.947340		1,867,657	0.74%	25.76%
2003	0.10%	855		12.680880		10,842	1.72%	28.26%
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.10%	8,030		14.645065		117,600	1.99%	10.30%
2005	0.10%	10,914		13.276935		144,904	2.04%	7.55%
2004	0.10%	11,560		12.344530		142,703	2.45%	8.18%
2003	0.10%	8,186		11.410593		93,407	2.34%	13.61%
Janus Aspen Series – Forty Portfolio – Service Shares
2006	0.10%	124,964		9.364110		1,170,177	0.14%	9.01%
2005	0.10%	217,972		8.590325		1,872,450	0.01%	12.44%
2004	0.10%	112,522		7.639669		859,631	0.02%	17.85%
2003	0.10%	178,232		6.482555		1,155,399	0.25%	20.11%
2002	0.10%	182,330		5.397045		984,043	0.32%	-16.01%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	0.10%	179,882	$	4.288525	$	771,428	0.00%	7.72%
2005	0.10%	158,528		3.981148		631,123	0.00%	11.44%
2004	0.10%	151,606		3.572518		541,615	0.00%	0.47%
2003	0.10%	272,134		3.555943		967,693	0.00%	46.33%
2002	0.10%	293,034		2.430136		712,112	0.00%	-40.99%
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.10%	206,152		14.428484		2,974,461	1.89%	46.48%
2005	0.10%	177,088		9.849961		1,744,310	1.05%	31.81%
2004	0.10%	150,980		7.472984		1,128,271	0.85%	18.57%
2003	0.10%	176,234		6.302712		1,110,752	1.02%	34.40%
2002	0.10%	520,482		4.689573		2,440,838	0.70%	-25.83%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio 1
2006	0.10%	35,396		17.787877		629,620	0.00%	11.28%
2005	0.10%	24,994		15.985073		399,531	0.00%	10.98%
2004	0.10%	2,456		14.403351		35,375	0.00%	12.51%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio 1
2006	0.10%	5,886		19.411280		114,255	1.18%	16.60%
2005	0.10%	5,916		16.647145		98,485	0.60%	9.64%
2004	0.10%	5,950		15.182812		90,338	0.58%	15.28%
2003	0.10%	5,997		13.170159		78,981	0.57%	32.62%
Nationwide® GVIT Strategic Value Fund – Class I
2003	0.10%	6,148		10.638965		65,408	0.04%	38.67%
2002	0.10%	68,838		7.672215		528,140	0.03%	-25.43%
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.10%	9,420		15.195016		143,137	0.00%	5.15%
2005	0.10%	1,074		14.451137		15,521	0.00%	2.79%
2004	0.10%	51,200		14.058294		719,785	0.00%	11.76%
2003	0.10%	1,074		12.578474		13,509	0.00%	24.94%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.10%	88,754		14.953594		1,327,191	0.70%	13.26%
2005	0.10%	34,424		13.202464		454,482	0.15%	8.28%
2004	0.10%	26,978		12.192566		328,931	0.12%	15.70%
2003	0.10%	21,062		10.538218		221,956	0.89%	31.63%
2002	0.10%	67,810		8.005967		542,885	0.75%	-26.52%
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares
2006	0.10%	366,596		14.953339		5,481,834	0.00%	14.58%
2005	0.10%	383,494		13.050574		5,004,817	0.00%	13.63%
2004	0.10%	394,394		11.485392		4,529,770	0.00%	16.19%
2003	0.10%	392,036		9.884865		3,875,223	0.00%	27.94%
2002	0.10%	687,560		7.726029		5,312,108	0.00%	-29.41%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	0.10%	148,132		16.464820		2,438,967	0.68%	12.13%
2005	0.10%	185,490		14.683836		2,723,705	0.98%	17.93%
2004	0.10%	162,162		12.451586		2,019,174	0.01%	18.86%
2003	0.10%	6,882		10.476169		72,097	0.00%	34.95%
2002	0.10%	29,344		7.762839		227,793	0.54%	-24.22%
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.10%	530,754		13.316078		7,067,562	0.38%	7.84%
2005	0.10%	558,612		12.347907		6,897,689	0.91%	4.99%
2004	0.10%	876,150		11.760631		10,304,077	0.31%	6.83%
2003	0.10%	882,196		11.008811		9,711,929	0.38%	30.81%
2002	0.10%	969,758		8.415727		8,161,219	0.57%	-26.93%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.10%	150,202		14.972632		2,248,919	1.07%	17.57%
2005	0.10%	183,864		12.734604		2,341,435	1.00%	14.19%
2004	0.10%	419,770		11.151785		4,681,185	1.15%	19.04%
2003	0.10%	441,202		9.367798		4,133,091	0.73%	42.88%
2002	0.10%	769,291		6.556537		5,043,885	0.55%	-22.21%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.10%	43,364	$	13.108136	$	568,421	1.10%	14.91%
2005	0.10%	65,504		11.407291		747,223	1.37%	5.87%
2004	0.10%	62,892		10.774785		677,648	0.83%	9.35%
2003	0.10%	236,533		9.853529		2,330,685	0.90%	26.59%
2002	0.10%	322,290		7.783700		2,508,609	0.75%	-18.88%
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.10%	445,344		12.637642		5,628,098	0.00%	2.85%
2005	0.10%	448,332		12.287042		5,508,674	0.00%	12.21%
2004	0.10%	538,726		10.949589		5,898,828	0.00%	19.66%
2003	0.10%	588,192		9.150815		5,382,436	0.00%	25.46%
2002	0.10%	1,125,894		7.293537		8,211,750	0.63%	-27.86%
PIMCO Variable Insurance Trust – PIMCO VIT Low Duration Portfolio – Administrative Shares
2006	0.10%	24,296		11.110721		269,946	4.19%	3.86%
2004	0.10%	435,394		10.602263		4,616,162	1.29%	1.74%
2003	0.10%	456,933		10.421178		4,761,780	1.22%	2.24%
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares
2006	0.10%	50,474		12.588282		635,381	4.26%	0.64%
2005	0.10%	80,408		12.508033		1,005,746	2.85%	1.97%
2004	0.10%	96,300		12.266232		1,181,238	1.03%	8.78%
2003	0.10%	24,527		11.276054		276,568	2.35%	8.75%
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares
2006	0.10%	8,770		12.065231		105,812	4.42%	3.74%
2005	0.10%	30,398		11.629906		353,526	3.47%	2.32%
2004	0.10%	50,172		11.365760		570,243	1.92%	4.78%
2003	0.10%	4,202		10.847595		45,582	2.71%	4.94%
Pioneer Variable Contracts Trust – Pioneer High Yield VCT Portfolio – Class I
2006	0.10%	10,514		16.389248		172,317	5.53%	8.39%
2005	0.10%	11,722		15.120107		177,238	5.49%	1.84%
2004	0.10%	16,298		14.846381		241,966	5.59%	7.95%
2003	0.10%	82,218		13.752414		1,130,696	5.84%	32.65%
Royce Capital Fund – Micro Cap Portfolio
2006	0.10%	102,390		23.116715		2,366,920	0.17%	20.95%
2005	0.10%	11,746		19.112697		224,498	0.60%	11.50%
2004	0.10%	11,820		17.141696		202,615	0.00%	13.73%
2003	0.10%	76,384		15.072020		1,151,261	0.00%	49.01%
T. Rowe Price Equity Income Portfolio – II
2006	0.10%	17,014		17.803262		302,905	1.35%	18.53%
2005	0.10%	22,826		15.020167		342,850	1.39%	3.59%
2004	0.10%	11,962		14.499419		173,442	1.46%	14.50%
2003	0.10%	19,960		12.663048		252,754	1.80%	25.05%
2002	0.10%	512		10.126777		5,185	0.77%	1.27%	09/03/02
T. Rowe Price Mid Cap Growth Fund – II
2006	0.10%	23,520		20.268825		476,723	0.00%	6.28%
2005	0.10%	44,810		19.071958		854,614	0.00%	14.32%
2004	0.10%	172,276		16.682608		2,874,013	0.00%	17.94%
2003	0.10%	168,799		14.145535		2,387,752	0.00%	37.95%
2002	0.10%	844		10.253796		8,654	0.00%	2.54%	09/03/02
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.10%	43,526		35.481161		1,544,353	0.56%	39.35%
2005	0.10%	38,212		25.461491		972,934	0.71%	31.86%
2004	0.10%	32,436		19.308855		626,302	0.53%	25.76%
2003	0.10%	26,838		15.353127		412,047	0.11%	54.03%
2002	0.10%	63,522		9.967428		633,151	0.21%	-3.00%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.10%	20,452		38.333948		784,006	0.06%	24.37%
2005	0.10%	26,250		30.823042		809,105	0.31%	51.52%
2004	0.10%	7,980		20.342743		162,335	0.31%	24.10%
2003	0.10%	7,570		16.424776		124,336	0.41%	44.93%
2002	0.10%	10,722		11.332655		121,509	0.75%	-2.93%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.10%	11,152	$	28.160613	$	314,047	10.28%	10.70%
2005	0.10%	17,164		25.439451		436,643	7.14%	12.14%
2004	0.10%	6,174		22.685707		140,062	7.52%	9.95%
2003	0.10%	11,686		20.632384		241,110	0.00%	27.74%
2002	0.10%	2,680		16.152298		43,288	8.74%	9.11%
Van Kampen – The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio – Class I
2006	0.10%	21,636		9.302196		201,262	0.00%	9.17%
2005	0.10%	21,748		8.521148		185,318	0.00%	17.45%
2004	0.10%	21,882		7.255105		158,756	0.00%	21.47%
2003	0.10%	22,063		5.972526		131,772	0.00%	41.62%
2002	0.10%	63,481		4.217224		267,714	0.00%	-31.23%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.10%	109,384		42.551820		4,654,488	1.07%	37.91%
2005	0.10%	125,524		30.855447		3,873,099	1.19%	16.93%
2004	0.10%	110,058		26.386900		2,904,089	1.61%	36.26%
2003	0.10%	189,968		19.365338		3,678,795	0.00%	37.37%
2002	0.10%	346,576		14.096819		4,885,619	4.01%	-0.89%
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM
2006	0.10%	143,310		13.557898		1,942,982	0.00%	12.11%
2005	0.10%	114,460		12.093732		1,384,249	0.00%	7.78%
2004	0.10%	184,596		11.221097		2,071,370	0.00%	18.10%
2003	0.10%	223,707		9.501191		2,125,483	0.08%	36.87%
2002	0.10%	226,501		6.941814		1,572,328	0.50%	-26.89%
The BEST of AMERICA® America’s FUTURE Life SeriesSM Reduced Fee Tier (0.20%)
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.20%	55,730		17.351728		967,012	0.42%	12.98%
2005	0.20%	46,214		15.358428		709,774	0.09%	5.53%
2004	0.20%	23,358		14.554224		339,958	0.00%	10.85%
2003	0.20%	4,973		13.129953		65,295	0.06%	33.36%
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2003	0.20%	288		13.259800		3,819	0.00%	35.09%
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.20%	73,000		19.442307		1,419,288	0.00%	16.29%
2005	0.20%	21,682		16.719125		362,504	0.00%	9.39%
2004	0.20%	996		15.284432		15,223	0.00%	15.27%
AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I
2006	0.20%	189,366		17.958795		3,400,785	0.97%	27.98%
2005	0.20%	451,992		14.032735		6,342,684	1.14%	17.69%
2004	0.20%	126,346		11.923183		1,506,446	1.36%	19.23%	05/03/04
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.20%	44,760		18.052215		808,017	1.37%	17.05%
2005	0.20%	37,842		15.422290		583,610	1.48%	4.66%
2004	0.20%	28,554		14.735953		420,770	0.92%	11.24%
2003	0.20%	5,515		13.247066		73,058	0.51%	32.24%
AllianceBernstein Variable Products Series Fund, Inc. – International Value Portfolio – Class A
2006	0.20%	287,868		11.326575		3,260,558	0.57%	13.27%	05/01/06
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.20%	163,996		13.239121		2,171,163	1.85%	16.85%
2005	0.20%	123,222		11.329648		1,396,062	1.94%	4.42%
2004	0.20%	141,218		10.849845		1,532,193	1.37%	12.77%
2003	0.20%	166,512		9.621502		1,602,096	1.28%	29.09%
American Century Variable Portfolios, Inc. – International Fund – Class I
2006	0.20%	530,226		11.868885		6,293,191	1.58%	24.78%
2005	0.20%	640,818		9.512128		6,095,543	1.25%	13.03%
2004	0.20%	434,052		8.415693		3,652,848	0.56%	14.69%
2003	0.20%	384,244		7.337502		2,819,391	0.73%	24.26%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.20%	38,106	$	10.878509	$	414,536	0.00%	-3.47%
2005	0.20%	34,792		11.269368		392,084	0.00%	1.96%
2004	0.20%	7,212		11.052535		79,711	0.00%	10.45%
2003	0.20%	1,924		10.006426		19,252	0.00%	24.65%
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.20%	228,952		18.916906		4,331,063	1.41%	18.42%
2005	0.20%	421,892		15.974895		6,739,680	0.83%	4.82%
2004	0.20%	321,958		15.239704		4,906,545	0.97%	14.10%
2003	0.20%	190,981		13.355894		2,550,722	1.04%	28.70%
Baron Capital Funds Trust – Baron Capital Asset Fund – Insurance Shares
2006	0.20%	216,684		18.770366		4,067,238	0.00%	15.29%
2005	0.20%	219,114		16.280709		3,567,331	0.00%	3.16%
2004	0.20%	401,660		15.782247		6,339,097	0.00%	25.39%
2003	0.20%	276,028		12.586755		3,474,297	0.00%	29.75%
Credit Suisse Trust – Global Small Cap Portfolio
2004	0.20%	7,744		8.356633		64,714	0.00%	17.75%
2003	0.20%	7,043		7.096703		49,982	0.00%	47.36%
Credit Suisse Trust – International Focus Portfolio
2004	0.20%	10,148		9.684322		98,276	0.99%	14.51%
2003	0.20%	9,647		8.456964		81,584	0.49%	32.82%
Credit Suisse Trust – Large Cap Value Portfolio
2004	0.20%	35,398		11.474634		406,179	0.58%	11.12%
2003	0.20%	20,469		10.326271		211,368	0.76%	24.91%
Dreyfus Investment Portfolios – Mid Cap Stock Index Portfolio – Initial Shares
2006	0.20%	15,656		17.549344		274,753	0.37%	7.53%
2005	0.20%	13,484		16.319776		220,056	0.02%	8.95%
2004	0.20%	20,268		14.978665		303,588	0.43%	14.25%
2003	0.20%	8,456		13.110902		110,866	1.02%	31.46%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.20%	155,436		15.666332		2,435,112	0.38%	14.18%
2005	0.20%	219,726		13.720362		3,014,720	0.00%	7.02%
2004	0.20%	330,608		12.820499		4,238,560	0.57%	21.64%
2003	0.20%	13,371		10.539624		140,925	0.27%	37.50%
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2004	0.20%	29,340		7.311886		214,531	0.40%	6.00%
2003	0.20%	15,093		6.898125		104,113	0.11%	25.75%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.20%	3,580,384		11.623891		41,617,993	1.64%	15.27%
2005	0.20%	6,634,008		10.084272		66,899,141	1.63%	4.48%
2004	0.20%	4,920,402		9.651621		47,489,855	1.82%	10.42%
2003	0.20%	3,957,858		8.740894		34,595,217	1.54%	28.11%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.20%	139,136		11.546593		1,606,547	1.53%	16.24%
2005	0.20%	66,566		9.932997		661,200	0.02%	4.17%
2004	0.20%	290,942		9.535398		2,774,248	1.67%	4.84%
2003	0.20%	265,908		9.095533		2,418,575	1.18%	20.93%
Dreyfus Variable Investment Fund – International Value Portfolio – Initial Shares
2006	0.20%	644,284		21.009394		13,536,016	1.25%	22.35%
2005	0.20%	679,392		17.171154		11,665,945	0.00%	11.67%
2004	0.20%	1,014,594		15.377151		15,601,565	1.23%	19.78%
2003	0.20%	611,687		12.837546		7,852,560	2.67%	36.08%
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.20%	197,756		14.499637		2,867,390	5.17%	3.95%
2005	0.20%	1,334,518		13.949122		18,615,354	3.55%	1.10%
2004	0.20%	1,045,524		13.797947		14,426,085	3.92%	3.41%
2003	0.20%	705,554		13.342573		9,413,906	3.30%	4.44%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class
2006	0.20%	524,062	$	14.945916	$	7,832,587	3.15%	19.84%
2005	0.20%	600,930		12.471541		7,494,523	1.56%	5.55%
2004	0.20%	253,254		11.816128		2,992,482	1.39%	11.16%
2003	0.20%	141,957		10.629864		1,508,984	1.66%	29.96%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Service Class
2006	0.20%	1,027,390		8.794051		9,034,920	0.28%	6.52%
2005	0.20%	525,004		8.255819		4,334,338	0.41%	5.46%
2004	0.20%	1,398,590		7.828218		10,948,467	0.16%	3.06%
2003	0.20%	595,465		7.595988		4,523,145	0.18%	32.52%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Service Class
2006	0.20%	10,750		14.592608		156,871	7.58%	10.96%
2005	0.20%	53,750		13.151735		706,906	14.70%	2.32%
2004	0.20%	373,660		12.853699		4,802,913	8.03%	9.25%
2003	0.20%	87,435		11.765514		1,028,718	6.36%	26.72%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class
2006	0.20%	271,410		14.164421		3,844,366	0.84%	17.71%
2005	0.20%	473,692		12.033136		5,700,000	0.56%	18.73%
2004	0.20%	373,770		10.134523		3,787,981	0.98%	13.26%
2003	0.20%	315,760		8.947944		2,825,403	0.63%	42.92%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class
2006	0.20%	1,713,066		15.646354		26,803,237	1.12%	11.37%
2005	0.20%	1,838,026		14.049369		25,823,106	0.19%	16.61%
2004	0.20%	708,896		12.047726		8,540,585	0.24%	15.11%
2003	0.20%	143,092		10.466376		1,497,655	0.30%	28.10%
Fidelity® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.20%	64,972		11.265752		731,958	3.34%	4.09%
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class
2004	0.20%	24,564		9.272138		227,761	0.48%	6.85%
2003	0.20%	13,277		8.678086		115,219	0.59%	29.40%
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2004	0.20%	7,530		13.434633		101,163	0.00%	13.76%
2003	0.20%	973		11.809676		11,491	0.00%	57.47%
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 2
2006	0.20%	109,726		19.718779		2,163,663	1.24%	21.20%
2005	0.20%	69,050		16.269222		1,123,390	1.12%	9.95%
2004	0.20%	41,174		14.797053		609,254	1.11%	18.29%
2003	0.20%	155,351		12.508977		1,943,282	1.96%	31.95%
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.20%	258,760		25.025345		6,475,558	0.71%	36.45%
2005	0.20%	169,786		18.340864		3,114,022	0.60%	32.37%
2004	0.20%	16,822		13.855548		233,078	1.04%	20.50%
2003	0.20%	21,189		11.498175		243,635	0.61%	64.93%
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.20%	61,806		16.687538		1,031,390	7.41%	10.38%
2005	0.20%	75,410		15.117925		1,140,043	6.92%	2.18%
2004	0.20%	810,264		14.795923		11,988,604	7.58%	9.88%
2003	0.20%	777,021		13.465993		10,463,359	7.99%	22.03%
Gartmore GVIT – Global Financial Services Fund – Class I
2004	0.20%	7,074		14.748909		104,334	1.37%	20.75%
2003	0.20%	8,215		12.214302		100,340	1.08%	41.17%
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	0.20%	72,832		13.568156		988,196	0.00%	2.50%
2005	0.20%	62,816		13.236814		831,484	0.00%	8.22%
2004	0.20%	16,466		12.231005		201,396	0.00%	7.64%
2003	0.20%	4,437		11.362461		50,415	0.00%	36.42%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.20%	311,356	$	3.488016	$	1,086,015	0.00%	10.95%
2005	0.20%	273,712		3.143852		860,510	0.00%	-0.71%
2004	0.20%	448,724		3.166487		1,420,879	0.00%	4.10%
2003	0.20%	78,739		3.041648		239,496	0.00%	54.92%
Gartmore GVIT – Global Utilities Fund – Class I
2004	0.20%	21,186		13.925951		295,035	1.64%	29.71%
2003	0.20%	12,612		10.736432		135,408	1.02%	23.80%
Gartmore GVIT – Government Bond Fund – Class I
2006	0.20%	826,566		13.468059		11,132,240	3.95%	3.14%
2005	0.20%	1,941,614		13.058642		25,354,842	3.71%	3.06%
2004	0.20%	1,951,516		12.671201		24,728,051	5.38%	3.06%
2003	0.20%	1,095,538		12.295487		13,470,173	3.25%	1.80%
Gartmore GVIT – Growth Fund: Class I
2006	0.20%	67,782		8.030198		544,303	0.05%	5.96%
2005	0.20%	60,144		7.578777		455,818	0.08%	6.29%
2004	0.20%	47,838		7.130400		341,104	0.34%	7.94%
2003	0.20%	40,423		6.605859		267,029	0.02%	32.47%
Gartmore GVIT – International Growth Fund – Class I
2004	0.20%	12,706		7.691798		97,732	0.85%	13.97%
2003	0.20%	8,703		6.749218		58,738	0.00%	35.35%
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.20%	211,872		15.647232		3,315,210	2.11%	16.64%
2005	0.20%	170,910		13.415540		2,292,850	2.02%	7.72%
2004	0.20%	7,054		12.454537		87,854	1.85%	13.80%
2003	0.20%	2,814		10.944415		30,798	1.57%	31.60%
Gartmore GVIT – Investor Destinations Conservative Fund – Class II
2006	0.20%	22,320		12.325531		275,106	3.23%	5.95%
2005	0.20%	34,084		11.633095		396,502	2.49%	3.10%
2004	0.20%	2,950		11.283226		33,286	2.49%	4.44%
2003	0.20%	1,756		10.803228		18,970	2.59%	7.69%
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	0.20%	206,458		13.960840		2,882,327	2.47%	11.13%
2005	0.20%	114,016		12.562517		1,432,328	2.39%	5.13%
2004	0.20%	28,510		11.949051		340,667	2.21%	9.32%
2003	0.20%	4,545		10.930659		49,680	2.05%	19.81%
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.20%	38,278		14.976735		573,279	2.25%	14.31%
2005	0.20%	22,860		13.101623		299,503	2.19%	6.86%
2004	0.20%	19,906		12.260724		244,062	2.01%	11.87%
2003	0.20%	5,607		10.959933		61,452	1.61%	26.39%
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	0.20%	19,512		13.178536		257,140	2.84%	8.21%
2005	0.20%	18,166		12.179054		221,245	2.78%	4.28%
2004	0.20%	11,104		11.679461		129,689	2.38%	6.94%
2003	0.20%	3,486		10.921034		38,071	2.33%	13.47%
Gartmore GVIT – J.P. Morgan GVIT Balanced Fund: Class I
2006	0.20%	73,958		12.496956		924,250	2.25%	12.02%
2005	0.20%	119,512		11.155509		1,333,217	1.98%	2.34%
2004	0.20%	132,248		10.900634		1,441,587	1.94%	8.27%
2003	0.20%	104,019		10.067605		1,047,222	1.76%	18.18%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2004	0.20%	763,680		7.982767		6,096,280	0.00%	15.11%
2003	0.20%	155,794		6.935054		1,080,440	0.00%	39.85%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.20%	639,140		17.019619		10,877,919	1.14%	9.67%
2005	0.20%	704,782		15.518876		10,937,424	1.04%	11.87%
2004	0.20%	458,242		13.871631		6,356,564	0.56%	15.50%
2003	0.20%	280,100		12.010005		3,364,002	0.50%	34.38%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Money Market Fund – Class I
2006	0.20%	5,784	$	11.336122	$	65,568	4.43%	4.32%
2005	0.20%	12,740		10.866496		138,439	2.61%	2.46%
2004	0.20%	30,788		10.605257		326,515	0.80%	0.61%
2003	0.20%	221,572		10.540982		2,335,586	0.63%	0.42%
Gartmore GVIT – Money Market Fund – Class V
2006	0.20%	8,530,114		10.854633		92,591,257	4.63%	4.40%
2005	0.20%	7,660,560		10.396676		79,644,360	2.74%	2.55%
2004	0.20%	8,296,360		10.138533		84,112,920	0.91%	0.69%
2003	0.20%	6,564,517		10.069143		66,099,060	0.70%	0.50%
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.20%	49,380		12.375964		611,125	1.09%	13.40%
2005	0.20%	56,248		10.913424		613,858	1.00%	7.23%
2004	0.20%	32,724		10.177848		333,060	1.30%	9.53%
2003	0.20%	20,659		9.291410		191,951	0.59%	27.26%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2004	0.20%	3,700		12.522767		46,334	0.48%	18.56%
2003	0.20%	1,086		10.562758		11,471	0.15%	25.13%
Gartmore GVIT – Small Cap Growth Fund – Class I
2006	0.20%	159,120		17.102157		2,721,295	0.00%	3.00%
2005	0.20%	196,494		16.603744		3,262,536	0.00%	7.87%
2004	0.20%	269,788		15.391720		4,152,501	0.00%	13.19%
2003	0.20%	108,065		13.598245		1,469,494	0.00%	34.00%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.20%	348,296		22.077762		7,689,596	0.43%	17.06%
2005	0.20%	458,988		18.860242		8,656,625	0.07%	2.87%
2004	0.20%	271,422		18.334546		4,976,399	0.00%	17.06%
2003	0.20%	234,794		15.661984		3,677,340	0.00%	56.54%
Gartmore GVIT – Small Company Fund – Class I
2006	0.20%	730,292		17.561515		12,825,034	0.10%	11.82%
2005	0.20%	1,146,078		15.705843		18,000,121	0.00%	12.09%
2004	0.20%	346,438		14.011465		4,854,104	0.00%	18.78%
2003	0.20%	126,604		11.795728		1,493,386	0.00%	40.73%
Gartmore GVIT – Turner GVIT Growth Focus Fund – Class I
2003	0.20%	17,434		3.315211		57,797	0.00%	50.66%
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2004	0.20%	8,230		13.993330		115,165	0.00%	12.18%
2003	0.20%	5,224		12.473517		65,162	0.00%	51.83%
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I
2004	0.20%	49,480		10.312567		510,266	1.39%	17.26%
2003	0.20%	7,421		8.794319		65,263	1.34%	31.17%
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.20%	57,084		14.600569		833,459	4.07%	4.63%
2005	0.20%	114,922		13.954609		1,603,692	3.99%	1.98%
2004	0.20%	13,584		13.684149		185,885	4.55%	6.32%
2003	0.20%	9,884		12.870615		127,213	5.42%	11.89%
Gartmore GVIT – Worldwide Leaders Fund – Class I
2004	0.20%	2,874		9.758795		28,047	0.00%	15.43%
2003	0.20%	3,219		8.453981		27,213	0.00%	35.79%
Goldman Sachs Variable Insurance Trust – Goldman Sachs VIT Mid Cap Value Fund
2006	0.20%	1,042,500		20.769434		21,652,135	0.98%	15.93%
2005	0.20%	1,081,334		17.915150		19,372,261	0.60%	12.60%
2004	0.20%	907,474		15.910334		14,438,214	0.74%	25.63%
2003	0.20%	528,186		12.664093		6,688,997	1.72%	28.13%
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.20%	63,792		14.581974		930,213	1.99%	10.19%
2005	0.20%	261,918		13.232912		3,465,938	2.04%	7.45%
2004	0.20%	229,366		12.315866		2,824,841	2.45%	8.08%
2003	0.20%	5,017		11.395477		57,171	2.34%	13.49%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Janus Aspen Series – Forty Portfolio – Service Shares
2006	0.20%	291,224	$	9.299521	$	2,708,244	0.14%	8.90%
2005	0.20%	294,576		8.539588		2,515,558	0.01%	12.33%
2004	0.20%	233,906		7.602120		1,778,181	0.02%	17.73%
2003	0.20%	262,941		6.457142		1,697,847	0.25%	19.99%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2004	0.20%	173,558		3.554928		616,986	0.00%	0.37%
2003	0.20%	102,131		3.541982		361,746	0.00%	46.18%
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.20%	351,364		14.328921		5,034,667	1.89%	46.34%
2005	0.20%	349,754		9.791747		3,424,703	1.05%	31.68%
2004	0.20%	586,420		7.436235		4,360,757	0.85%	18.45%
2003	0.20%	245,144		6.277993		1,539,012	1.02%	34.26%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio 1
2006	0.20%	43,296		17.711914		766,855	0.00%	11.17%
2005	0.20%	23,694		15.932691		377,509	0.00%	10.87%
2004	0.20%	8,286		14.370472		119,074	0.00%	12.39%
2003	0.20%	4,483		12.785745		57,318	0.00%	26.89%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio 1
2006	0.20%	6,476		19.328434		125,171	1.18%	16.49%
2005	0.20%	22,284		16.592629		369,750	0.60%	9.54%
2004	0.20%	14,900		15.148180		225,708	0.58%	15.17%
2003	0.20%	7,236		13.153260		95,177	0.57%	32.49%
Nationwide® GVIT Strategic Value Fund – Class I
2003	0.20%	9,101		10.583982		96,325	0.04%	38.53%
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.20%	11,666		15.129543		176,501	0.00%	5.04%
2005	0.20%	9,828		14.403227		141,555	0.00%	2.69%
2004	0.20%	4,062		14.025658		56,972	0.00%	11.65%
2003	0.20%	1,829		12.561832		22,976	0.00%	24.81%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2005	0.20%	234,680		12.237616		2,871,924	0.15%	8.18%
2004	0.20%	19,660		11.312789		222,409	0.12%	15.58%
2003	0.20%	30,298		9.787595		296,545	0.89%	31.50%
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares
2006	0.20%	41,698		10.916267		455,187	0.00%	14.47%
2005	0.20%	23,118		9.536717		220,470	0.00%	13.51%
2004	0.20%	470,456		8.401327		3,952,455	0.00%	16.08%
2003	0.20%	274,225		7.237810		1,984,788	0.00%	27.81%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2004	0.20%	229,766		12.443485		2,859,090	0.01%	18.74%
2003	0.20%	14,991		10.479833		157,103	0.00%	34.82%
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.20%	1,641,104		10.362024		17,005,159	0.38%	7.73%
2005	0.20%	1,970,560		9.618219		18,953,278	0.91%	4.89%
2004	0.20%	1,451,308		9.169906		13,308,358	0.31%	6.72%
2003	0.20%	710,846		8.592296		6,107,799	0.38%	30.68%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.20%	578,604		14.873215		8,605,702	1.07%	17.46%
2005	0.20%	1,091,788		12.662678		13,824,960	1.00%	14.08%
2004	0.20%	342,972		11.099865		3,806,943	1.15%	18.92%
2003	0.20%	78,177		9.333505		729,665	0.73%	42.73%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.20%	184,798		12.449315		2,300,609	1.10%	14.80%
2005	0.20%	185,032		10.844763		2,006,628	1.37%	5.76%
2004	0.20%	86,940		10.253671		891,454	0.83%	9.24%
2003	0.20%	50,314		9.386344		472,265	0.90%	26.47%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.20%	106,664	$	8.757520	$	934,112	0.00%	2.75%
2005	0.20%	454,650		8.523068		3,875,013	0.00%	12.10%
2004	0.20%	260,230		7.602891		1,978,500	0.00%	19.54%
2003	0.20%	163,694		6.360255		1,041,136	0.00%	25.34%
PIMCO Variable Insurance Trust – PIMCO VIT Low Duration Portfolio – Administrative Shares
2006	0.20%	1,775,448		11.062747		19,641,332	4.19%	3.75%
2005	0.20%	1,845,738		10.662435		19,680,061	2.71%	0.80%
2004	0.20%	2,001,144		10.577591		21,167,283	1.29%	1.64%
2003	0.20%	1,032,781		10.407346		10,748,509	1.22%	2.14%
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares
2006	0.20%	672,656		12.533792		8,430,930	4.26%	0.54%
2005	0.20%	628,146		12.466336		7,830,679	2.85%	1.87%
2004	0.20%	225,144		12.237557		2,755,213	1.03%	8.67%
2003	0.20%	41,728		11.260965		469,898	2.35%	8.64%
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares
2006	0.20%	3,889,630		12.013005		46,726,145	4.42%	3.64%
2005	0.20%	3,110,384		11.591132		36,052,872	3.47%	2.22%
2004	0.20%	1,390,690		11.339186		15,769,293	1.92%	4.67%
2003	0.20%	805,938		10.833078		8,730,789	2.71%	4.83%
Pioneer Variable Contracts Trust – Pioneer High Yield VCT Portfolio – Class I
2006	0.20%	467,554		16.318486		7,629,773	5.53%	8.29%
2005	0.20%	438,236		15.069867		6,604,158	5.49%	1.74%
2004	0.20%	41,538		14.811836		615,254	5.59%	7.85%
2003	0.20%	38,729		13.734162		531,910	5.84%	32.52%
Royce Capital Fund – Micro Cap
2006	0.20%	487,556		23.017122		11,222,136	0.17%	20.83%
2005	0.20%	516,002		19.049333		9,829,494	0.60%	11.39%
2004	0.20%	251,888		17.101898		4,307,763	0.00%	13.62%
2003	0.20%	58,726		15.052067		883,948	0.00%	48.87%
T. Rowe Price Equity Income Portfolio – II
2006	0.20%	1,955,804		17.726578		34,669,712	1.35%	18.41%
2005	0.20%	1,993,558		14.970390		29,844,341	1.39%	3.49%
2004	0.20%	1,400,944		14.465784		20,265,753	1.46%	14.39%
2003	0.20%	546,267		12.646299		6,908,256	1.80%	24.92%
T. Rowe Price Mid Cap Growth Fund – II
2006	0.20%	288,630		20.181467		5,824,977	0.00%	6.17%
2005	0.20%	626,894		19.008705		11,916,443	0.00%	14.21%
2004	0.20%	835,584		16.643864		13,907,346	0.00%	17.82%
2003	0.20%	473,916		14.126799		6,694,916	0.00%	37.82%
T. Rowe Price New America Growth Portfolio
2006	0.20%	301,726		12.072027		3,642,444	0.04%	7.12%
2005	0.20%	690,950		11.269904		7,786,940	0.00%	4.26%
2004	0.20%	222,430		10.808909		2,404,226	0.00%	8.09%	05/03/04
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.20%	46,954		32.831467		1,541,569	0.56%	39.21%
2005	0.20%	45,066		23.583541		1,062,816	0.71%	31.73%
2004	0.20%	120,164		17.902527		2,151,239	0.53%	25.64%
2003	0.20%	6,811		14.249147		97,051	0.11%	53.88%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.20%	59,788		32.689202		1,954,422	0.06%	24.24%
2005	0.20%	52,740		26.310503		1,387,616	0.31%	51.37%
2004	0.20%	70,582		17.381825		1,226,844	0.31%	23.98%
2003	0.20%	17,418		14.048159		244,691	0.41%	44.79%
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.20%	74,878		21.483999		1,608,679	10.28%	10.59%
2005	0.20%	227,212		19.427363		4,414,130	7.14%	12.03%
2004	0.20%	105,242		17.341685		1,825,074	7.52%	9.84%
2003	0.20%	3,595		15.787831		56,757	0.00%	27.61%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 ( NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Van Kampen – The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio – Class I
2006	0.20%	26,838	$	9.240416	$	247,994	0.00%	9.06%
2005	0.20%	20,382		8.473005		172,697	0.00%	17.33%
2004	0.20%	98,272		7.221303		709,652	0.00%	21.35%
2003	0.20%	70,714		5.950642		420,794	0.00%	41.48%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.20%	324,820		34.585436		11,234,041	1.07%	37.77%
2005	0.20%	250,510		25.103798		6,288,752	1.19%	16.82%
2004	0.20%	98,428		21.489618		2,115,180	1.61%	36.12%
2003	0.20%	40,136		15.786980		633,626	0.00%	37.24%
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM
2006	0.20%	199,708		13.467901		2,689,648	0.00%	12.00%
2005	0.20%	360,812		12.025433		4,338,921	0.00%	7.67%
2004	0.20%	266,180		11.168856		2,972,926	0.00%	17.98%
2003	0.20%	202,631		9.466409		1,918,188	0.08%	36.73%
The BEST of AMERICA® America’s FUTURE Life SeriesSM Reduced Fee Tier (0.25%)
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.25%	70,154		17.314284		1,214,666	0.42%	12.92%
2005	0.25%	54,050		15.332927		828,745	0.09%	5.47%
2004	0.25%	98,126		14.537319		1,426,489	0.00%	10.79%
2003	0.25%	1,947		13.121262		25,547	0.06%	33.29%
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2003	0.25%	2,553		13.251011		33,830	0.00%	35.02%
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.25%	158,748		19.400361		3,079,769	0.00%	16.23%
2005	0.25%	93,372		16.691371		1,558,507	0.00%	9.33%
2004	0.25%	27,246		15.266666		415,956	0.00%	15.21%
AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I
2006	0.25%	447,740		17.934952		8,030,195	0.97%	27.91%
2005	0.25%	202,258		14.021093		2,835,878	1.14%	17.63%
2004	0.25%	26,402		11.919243		314,692	1.36%	19.19%	05/03/04
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.25%	422,112		18.013258		7,603,612	1.37%	16.99%
2005	0.25%	369,126		15.396687		5,683,317	1.48%	4.61%
2004	0.25%	426,728		14.718823		6,280,934	0.92%	11.18%
2003	0.25%	278,219		13.238290		3,683,144	0.51%	32.17%
AllianceBernstein Variable Products Series Fund, Inc. – International Value Portfolio – Class A
2006	0.25%	343,264		11.322832		3,886,721	0.57%	13.23%	05/01/06
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.25%	284,862		13.198939		3,759,876	1.85%	16.80%
2005	0.25%	284,088		11.300886		3,210,446	1.94%	4.37%
2004	0.25%	368,640		10.827688		3,991,519	1.37%	12.71%
2003	0.25%	225,657		9.606659		2,167,810	1.28%	29.03%
2002	0.25%	1,435		7.445299		10,684	1.00%	-19.57%
American Century Variable Portfolios, Inc. – International Fund – Class I
2006	0.25%	987,980		11.832909		11,690,677	1.58%	24.71%
2005	0.25%	882,458		9.488028		8,372,786	1.25%	12.97%
2004	0.25%	923,768		8.398563		7,758,324	0.56%	14.64%
2003	0.25%	674,427		7.326221		4,941,001	0.73%	24.20%
2002	0.25%	49,356		5.898746		291,139	0.78%	-20.57%
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.25%	24,306		10.853176		263,797	0.00%	-3.52%
2005	0.25%	252,658		11.248731		2,842,082	0.00%	1.91%
2004	0.25%	212,496		11.037791		2,345,486	0.00%	10.40%
2003	0.25%	138,103		9.998079		1,380,765	0.00%	24.59%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 ( NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.25%	552,364	$	18.859509	$	10,417,314	1.41%	18.36%
2005	0.25%	496,994		15.934364		7,919,283	0.83%	4.77%
2004	0.25%	351,012		15.208626		5,338,410	0.97%	14.05%
2003	0.25%	248,298		13.335325		3,311,135	1.04%	28.64%
2002	0.25%	90,011		10.366670		933,114	0.75%	-12.84%
American Century Variable Portfolios, Inc. – VistaSM Fund – Class I
2006	0.25%	4,932		12.444525		61,376	0.00%	8.74%
2005	0.25%	248		11.444645		2,838	0.00%	14.45%	05/02/05
Baron Capital Funds Trust – Baron Capital Asset Fund – Insurance Shares
2006	0.25%	186,980		18.729880		3,502,113	0.00%	15.23%
2005	0.25%	304,012		16.253697		4,941,319	0.00%	3.11%
2004	0.25%	84,614		15.763932		1,333,849	0.00%	25.33%
2003	0.25%	17,272		12.578424		217,255	0.00%	29.69%
BlackRock International Index Portfolio – Class II
2006	0.25%	82,570		14.583459		1,204,156	5.83%	25.37%
2005	0.25%	732		11.632654		8,515	1.76%	16.33%	05/02/05
BlackRock Large Cap Core V.I. Fund – Class II
2006	0.25%	131,296		13.236885		1,737,950	0.79%	14.33%
2005	0.25%	101,208		11.577932		1,171,779	0.74%	15.78%	05/02/05
Calvert Variable Series, Inc. – Social Equity Portfolio
2006	0.25%	7,002		15.339931		107,410	0.00%	9.78%
2005	0.25%	1,152		13.973029		16,097	0.06%	4.28%
2004	0.25%	826		13.399142		11,068	0.08%	6.89%
Credit Suisse Trust – Global Small Cap Portfolio
2006	0.25%	9,586		10.910325		104,586	0.00%	12.92%
2005	0.25%	15,838		9.661761		153,023	0.00%	15.85%
2004	0.25%	25,520		8.339563		212,826	0.00%	17.69%
2003	0.25%	30,888		7.085747		218,865	0.00%	47.29%
2002	0.25%	1,104		4.810802		5,311	0.00%	-34.32%
Credit Suisse Trust – International Focus Portfolio
2006	0.25%	7,190		13.400060		96,346	1.01%	18.36%
2005	0.25%	7,410		11.321642		83,893	0.88%	17.15%
2004	0.25%	13,758		9.664537		132,965	0.99%	14.46%
2003	0.25%	17,161		8.443905		144,906	0.49%	32.76%
Credit Suisse Trust – Large Cap Value Portfolio
2006	0.25%	5,326		14.706419		78,326	0.89%	19.05%
2005	0.25%	2,276		12.352874		28,115	0.73%	7.87%
2004	0.25%	16,952		11.451229		194,121	0.58%	11.07%
2003	0.25%	15,477		10.310367		159,574	0.76%	24.85%
2002	0.25%	5,253		8.258105		43,380	0.76%	-23.29%
Dreyfus Investment Portfolios – Mid Cap Stock Index Portfolio – Initial Shares
2006	0.25%	38,318		17.511529		671,007	0.37%	7.48%
2005	0.25%	20,998		16.292721		342,115	0.02%	8.90%
2004	0.25%	41,246		14.961281		617,093	0.43%	14.19%
2003	0.25%	647		13.102225		8,477	1.02%	31.39%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.25%	247,338		15.629868		3,865,860	0.38%	14.13%
2005	0.25%	162,720		13.695264		2,228,493	0.00%	6.97%
2004	0.25%	376,014		12.803427		4,814,268	0.57%	21.58%
2003	0.25%	145,429		10.530847		1,531,491	0.27%	37.44%
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.25%	91,596		8.215346		752,493	0.11%	8.93%
2005	0.25%	101,932		7.541951		768,766	0.00%	3.36%
2004	0.25%	154,666		7.296964		1,128,592	0.40%	5.95%
2003	0.25%	71,544		6.887482		492,758	0.11%	25.69%
2002	0.25%	425		5.479795		2,329	0.22%	-29.12%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 ( NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.25%	8,834,012	$	11.588607	$	102,373,893	1.64%	15.21%
2005	0.25%	8,079,650		10.058674		81,270,565	1.63%	4.43%
2004	0.25%	5,809,448		9.631920		55,956,138	1.82%	10.36%
2003	0.25%	4,843,218		8.727408		42,268,740	1.54%	28.04%
2002	0.25%	529,695		6.815999		3,610,401	1.45%	-22.56%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.25%	752,594		11.511538		8,663,514	1.53%	16.19%
2005	0.25%	561,480		9.907772		5,563,016	0.02%	4.12%
2004	0.25%	555,430		9.515935		5,285,436	1.67%	4.78%
2003	0.25%	487,461		9.081512		4,426,883	1.18%	20.87%
2002	0.25%	48,950		7.513649		367,793	1.22%	-16.92%
Dreyfus Variable Investment Fund – International Value Portfolio – Initial Shares
2006	0.25%	931,538		20.964071		19,528,829	1.25%	22.29%
2005	0.25%	640,638		17.142660		10,982,239	0.00%	11.61%
2004	0.25%	481,030		15.359280		7,388,274	1.23%	19.72%
2003	0.25%	561,722		12.829044		7,206,356	2.67%	36.02%
DWS Variable Series II – DWS Dreman High Return Equity VIP – Class B
2006	0.25%	15,180		11.257266		170,885	0.00%	12.57%	05/01/06
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.25%	1,173,262		14.444216		16,946,850	5.17%	3.89%
2005	0.25%	1,963,430		13.902748		27,297,073	3.55%	1.05%
2004	0.25%	1,438,890		13.758938		19,797,598	3.92%	3.36%
2003	0.25%	204,710		13.311504		2,724,998	3.30%	4.38%
2002	0.25%	55,859		12.752372		712,335	3.20%	9.03%
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class
2006	0.25%	1,907,206		14.900594		28,418,502	3.15%	19.78%
2005	0.25%	1,459,748		12.439919		18,159,147	1.56%	5.49%
2004	0.25%	1,061,120		11.792032		12,512,761	1.39%	11.10%
2003	0.25%	374,570		10.613484		3,975,493	1.66%	29.89%
2002	0.25%	244,789		8.170844		2,000,133	1.50%	-17.20%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Service Class
2006	0.25%	2,159,692		8.767341		18,934,756	0.28%	6.47%
2005	0.25%	2,214,058		8.234853		18,232,442	0.41%	5.41%
2004	0.25%	1,835,224		7.812236		14,337,203	0.16%	3.01%
2003	0.25%	585,819		7.584268		4,443,008	0.18%	32.45%
2002	0.25%	78,608		5.726150		450,121	0.14%	-30.37%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Service Class
2006	0.25%	195,198		14.548271		2,839,793	7.58%	10.90%
2005	0.25%	195,986		13.118317		2,571,006	14.70%	2.27%
2004	0.25%	593,920		12.827432		7,618,468	8.03%	9.19%
2003	0.25%	93,070		11.747355		1,093,326	6.36%	26.65%
2002	0.25%	606		9.275222		5,621	9.18%	3.36%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class
2006	0.25%	1,070,198		14.121395		15,112,689	0.84%	17.65%
2005	0.25%	742,572		12.002567		8,912,770	0.56%	18.67%
2004	0.25%	460,116		10.113816		4,653,529	0.98%	13.20%
2003	0.25%	301,169		8.934131		2,690,683	0.63%	42.85%
2002	0.25%	1,213		6.254343		7,587	0.64%	-20.54%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class
2006	0.25%	2,614,782		15.598891		40,787,699	1.12%	11.31%
2005	0.25%	1,766,496		14.013727		24,755,193	0.19%	16.56%
2004	0.25%	970,084		12.023156		11,663,471	0.24%	15.05%
2003	0.25%	964,994		10.450250		10,084,429	0.30%	28.03%
2002	0.25%	7,198		8.162207		58,752	0.69%	-9.65%
Fidelity® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.25%	49,006		11.245144		551,080	3.34%	4.04%
2005	0.25%	33,064		10.808463		357,371	2.69%	1.83%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 ( NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class
2006	0.25%	127,338	$	10.554406	$	1,343,977	0.69%	5.04%
2005	0.25%	326,516		10.048055		3,280,851	0.84%	8.59%
2004	0.25%	451,498		9.253175		4,177,790	0.48%	6.79%
2003	0.25%	197,613		8.664666		1,712,251	0.59%	29.34%
2002	0.25%	794		6.699267		5,319	0.93%	-22.11%
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class
2006	0.25%	172,826		23.176101		4,005,433	0.23%	12.31%
2005	0.25%	159,618		20.635857		3,293,854	0.00%	17.91%
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.25%	2,506		15.908520		39,867	0.49%	15.91%
2005	0.25%	884		13.725157		12,133	0.00%	2.30%
2004	0.25%	29,960		13.416717		401,965	0.00%	13.70%
2003	0.25%	15,729		11.799819		185,599	0.00%	57.40%
Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 2
2006	0.25%	208,584		13.246445		2,762,996	0.76%	16.69%
2005	0.25%	11,480		11.351855		130,319	0.00%	13.52%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 2
2006	0.25%	359,658		19.676237		7,076,716	1.24%	21.14%
2005	0.25%	241,412		16.242222		3,921,067	1.12%	9.89%
2004	0.25%	173,760		14.779865		2,568,149	1.11%	18.23%
2003	0.25%	9,405		12.500683		117,569	1.96%	31.88%
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.25%	300,448		24.947405		7,495,398	0.71%	36.38%
2005	0.25%	198,760		18.292860		3,635,889	0.60%	32.31%
2004	0.25%	68,036		13.826171		940,677	1.04%	20.44%
2003	0.25%	14,303		11.479519		164,192	0.61%	64.85%
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.25%	370,802		16.636894		6,168,994	7.41%	10.33%
2005	0.25%	204,814		15.079557		3,088,504	6.92%	2.13%
2004	0.25%	157,482		14.765731		2,325,337	7.58%	9.82%
2003	0.25%	33,606		13.445225		451,840	7.99%	21.97%
2002	0.25%	47,160		11.023733		519,879	10.09%	2.97%
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.25%	30,252		19.600661		592,959	1.89%	20.02%
2005	0.25%	24,048		16.330978		392,727	2.00%	10.87%
2004	0.25%	8,572		14.729262		126,259	1.37%	20.69%
2003	0.25%	958		12.207124		11,694	1.08%	41.10%
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	0.25%	29,942		13.536569		405,312	0.00%	2.45%
2005	0.25%	27,596		13.212593		364,615	0.00%	8.17%
2004	0.25%	24,814		12.214711		303,096	0.00%	7.59%
2003	0.25%	9,013		11.352997		102,325	0.00%	36.35%
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.25%	446,826		3.477132		1,553,673	0.00%	10.89%
2005	0.25%	262,362		3.135604		822,663	0.00%	-0.76%
2004	0.25%	674,980		3.159750		2,132,768	0.00%	4.05%
2003	0.25%	118,132		3.036698		358,731	0.00%	54.84%
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.25%	20,796		20.252066		421,162	2.84%	37.22%
2005	0.25%	15,934		14.758947		235,169	2.09%	6.12%
2004	0.25%	17,668		13.907406		245,716	1.64%	29.64%
2003	0.25%	1,187		10.727488		12,734	1.02%	23.74%
Gartmore GVIT – Government Bond Fund – Class I
2006	0.25%	3,008,954		13.427221		40,401,890	3.95%	3.08%
2005	0.25%	3,496,292		13.025536		45,541,077	3.71%	3.01%
2004	0.25%	2,572,680		12.645377		32,532,509	5.38%	3.00%
2003	0.25%	1,556,780		12.276554		19,111,894	3.25%	1.75%
2002	0.25%	1,141,119		12.065916		13,768,646	4.66%	10.71%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 ( NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Growth Fund: Class I
2006	0.25%	45,366	$	8.005797	$	363,191	0.05%	5.90%
2005	0.25%	40,952		7.559516		309,577	0.08%	6.24%
2004	0.25%	73,454		7.115834		522,686	0.34%	7.89%
2003	0.25%	76,188		6.595662		502,510	0.02%	32.41%
2002	0.25%	49,665		4.981328		247,398	0.00%	-28.90%
Gartmore GVIT – International Growth Fund – Class I
2006	0.25%	55,980		13.222655		740,204	0.84%	32.63%
2005	0.25%	54,480		9.969281		543,126	1.10%	29.89%
2004	0.25%	28,960		7.675467		222,282	0.85%	13.91%
2003	0.25%	4,806		6.738255		32,384	0.00%	35.28%
2002	0.25%	65		4.980814		324	0.00%	-24.29%
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.25%	77,654		15.608708		1,212,079	2.11%	16.58%
2005	0.25%	24,354		13.389188		326,080	2.02%	7.66%
2004	0.25%	14,712		12.436282		182,963	1.85%	13.74%
2003	0.25%	4,309		10.933839		47,114	1.57%	31.54%
Gartmore GVIT – Investor Destinations Conservative Fund – Class II
2006	0.25%	287,996		12.295233		3,540,978	3.23%	5.90%
2005	0.25%	4,440		11.610294		51,550	2.49%	3.05%
2004	0.25%	6,398		11.266714		72,084	2.49%	4.39%
2003	0.25%	929		10.792806		10,027	2.59%	7.64%
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	0.25%	161,088		13.926464		2,243,386	2.47%	11.08%
2005	0.25%	31,934		12.537840		400,383	2.39%	5.08%
2004	0.25%	18,974		11.931529		226,389	2.21%	9.26%
2003	0.25%	7,829		10.920096		85,493	2.05%	19.75%
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.25%	84,106		14.939913		1,256,536	2.25%	14.26%
2005	0.25%	80,236		13.075926		1,049,160	2.19%	6.81%
2004	0.25%	90,230		12.242773		1,104,665	2.01%	11.81%
2003	0.25%	3,797		10.949354		41,575	1.61%	26.33%
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	0.25%	105,542		13.146115		1,387,467	2.84%	8.15%
2005	0.25%	151,626		12.155154		1,843,037	2.78%	4.23%
2004	0.25%	21,136		11.662359		246,496	2.38%	6.89%
2003	0.25%	2,613		10.910488		28,509	2.33%	13.41%
Gartmore GVIT – J.P. Morgan GVIT Balanced Fund: Class I
2006	0.25%	257,054		12.459031		3,202,644	2.25%	11.97%
2005	0.25%	234,374		11.127198		2,607,926	1.98%	2.29%
2004	0.25%	138,252		10.878396		1,503,960	1.94%	8.22%
2003	0.25%	86,171		10.052086		866,198	1.76%	18.12%
2002	0.25%	1,233		8.510165		10,493	2.28%	-12.53%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.25%	154,712		9.560904		1,479,187	0.00%	9.63%
2005	0.25%	161,102		8.720733		1,404,928	0.00%	9.47%
2004	0.25%	989,792		7.966452		7,885,130	0.00%	15.05%
2003	0.25%	74,105		6.924341		513,128	0.00%	39.79%
2002	0.25%	5,143		4.953560		25,476	0.00%	-37.17%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.25%	993,900		16.967969		16,864,464	1.14%	9.62%
2005	0.25%	613,462		15.479497		9,496,083	1.04%	11.82%
2004	0.25%	317,498		13.843332		4,395,230	0.56%	15.44%
2003	0.25%	70,843		11.991494		849,513	0.50%	34.31%
2002	0.25%	1,993		8.927901		17,793	0.45%	-15.51%
Gartmore GVIT – Money Market Fund – Class I
2006	0.25%	906,990		11.301640		10,250,474	4.43%	4.27%
2005	0.25%	997,352		10.838856		10,810,155	2.61%	2.41%
2004	0.25%	877,048		10.583572		9,282,301	0.80%	0.56%
2003	0.25%	2,168,315		10.524702		22,820,869	0.63%	0.37%
2002	0.25%	1,395,229		10.485477		14,629,642	1.51%	0.96%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Money Market Fund – Class V
2006	0.25%	11,262,860	$	10.831867	$	121,997,802	4.63%	4.35%
2005	0.25%	5,577,142		10.380057		57,891,052	2.74%	2.49%
2004	0.25%	9,126,608		10.127388		92,428,700	0.91%	0.64%
2003	0.25%	1,814,317		10.063117		18,257,684	0.70%	0.45%
2002	0.25%	656		10.017601		6,572	0.28%	0.18%	10/21/02
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.25%	236,736		12.338411		2,920,946	1.09%	13.34%
2005	0.25%	230,206		10.885739		2,505,962	1.00%	7.17%
2004	0.25%	200,466		10.157086		2,036,150	1.30%	9.48%
2003	0.25%	49,376		9.277816		458,101	0.59%	27.19%
2002	0.25%	588		7.294217		4,289	0.95%	-17.56%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	0.25%	2,392		15.929628		38,104	0.70%	15.76%
2005	0.25%	8,298		13.761286		114,191	1.29%	10.04%
2004	0.25%	13,762		12.506076		172,109	0.48%	18.50%
2003	0.25%	1,148		10.553942		12,116	0.15%	25.07%
Gartmore GVIT – Small Cap Growth Fund – Class I
2006	0.25%	174,802		17.036832		2,978,072	0.00%	2.95%
2005	0.25%	186,986		16.548582		3,094,353	0.00%	7.82%
2004	0.25%	283,520		15.348222		4,351,528	0.00%	13.13%
2003	0.25%	59,176		13.566592		802,817	0.00%	33.93%
2002	0.25%	209		10.129586		2,117	0.00%	-33.45%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.25%	667,586		22.010798		14,694,101	0.43%	17.00%
2005	0.25%	848,398		18.812416		15,960,416	0.07%	2.82%
2004	0.25%	557,634		18.297168		10,203,123	0.00%	17.01%
2003	0.25%	258,610		15.637860		4,044,107	0.00%	56.46%
2002	0.25%	89,722		9.994656		896,741	0.01%	-27.34%
Gartmore GVIT – Small Company Fund – Class I
2006	0.25%	1,848,548		17.508253		32,364,846	0.10%	11.76%
2005	0.25%	1,912,752		15.666008		29,965,188	0.00%	12.04%
2004	0.25%	766,554		13.982897		10,718,646	0.00%	18.72%
2003	0.25%	492,798		11.777552		5,803,954	0.00%	40.66%
2002	0.25%	98,835		8.373012		827,547	0.00%	-17.54%
Gartmore GVIT – Turner GVIT Growth Focus Fund – Class I
2003	0.25%	23,948		3.309832		79,264	0.00%	50.59%
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2006	0.25%	93,502		15.523663		1,451,494	0.27%	-0.54%
2005	0.25%	80,480		15.607398		1,256,083	0.00%	11.68%
2004	0.25%	50,246		13.974657		702,171	0.00%	12.13%
2003	0.25%	33,465		12.463103		417,078	0.00%	51.76%
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I
2006	0.25%	36,988		12.373114		457,657	1.73%	15.62%
2005	0.25%	42,010		10.701838		449,584	1.61%	3.99%
2004	0.25%	36,102		10.291496		371,544	1.39%	17.21%
2003	0.25%	3,887		8.780739		34,131	1.34%	31.11%
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.25%	450,402		14.556279		6,556,177	4.07%	4.58%
2005	0.25%	483,160		13.919206		6,725,204	3.99%	1.93%
2004	0.25%	63,742		13.656231		870,475	4.55%	6.27%
2003	0.25%	515,327		12.850783		6,622,355	5.42%	11.84%
2002	0.25%	42,803		11.490701		491,836	4.49%	6.94%
Gartmore GVIT – Worldwide Leaders Fund – Class I
2006	0.25%	13,250		14.557271		192,884	0.85%	25.57%
2005	0.25%	12,984		11.593174		150,526	1.11%	19.04%
2004	0.25%	34,068		9.738860		331,783	0.00%	15.38%
2003	0.25%	34,022		8.440937		287,178	0.00%	35.72%
2002	0.25%	85		6.219415		529	2.00%	-25.58%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Goldman Sachs Variable Insurance Trust – Goldman Sachs VIT Mid Cap Value Fund
2006	0.25%	1,231,810	$	20.724643	$	25,528,822	0.98%	15.87%
2005	0.25%	792,502		17.885426		14,174,236	0.60%	12.54%
2004	0.25%	315,450		15.891856		5,013,086	0.74%	25.57%
2003	0.25%	259,089		12.655709		3,278,955	1.72%	28.07%
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.25%	83,320		14.550491		1,212,347	1.99%	10.14%
2005	0.25%	53,532		13.210934		707,208	2.04%	7.39%
2004	0.25%	53,754		12.301545		661,257	2.45%	8.02%
2003	0.25%	14,950		11.387925		170,249	2.34%	13.44%
Janus Aspen Series – Forty Portfolio – Service Shares
2006	0.25%	1,255,440		9.267372		11,634,630	0.14%	8.84%
2005	0.25%	1,090,640		8.514303		9,286,039	0.01%	12.28%
2004	0.25%	956,584		7.583386		7,254,146	0.02%	17.67%
2003	0.25%	677,613		6.444456		4,366,847	0.25%	19.93%
2002	0.25%	318		5.373376		1,709	0.32%	-16.14%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	0.25%	770,748		4.244167		3,271,183	0.00%	7.56%
2005	0.25%	229,560		3.945872		905,814	0.00%	11.27%
2004	0.25%	204,340		3.546168		724,624	0.00%	0.32%
2003	0.25%	97,833		3.535026		345,842	0.00%	46.11%
2002	0.25%	708		2.419456		1,713	0.00%	-41.08%
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.25%	1,109,576		14.279422		15,844,104	1.89%	46.26%
2005	0.25%	882,786		9.762789		8,618,453	1.05%	31.61%
2004	0.25%	680,002		7.417926		5,044,205	0.85%	18.39%
2003	0.25%	92,562		6.265664		579,962	1.02%	34.20%
2002	0.25%	905		4.668998		4,225	0.70%	-25.94%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio 1
2006	0.25%	62,906		17.674125		1,111,809	0.00%	11.11%
2005	0.25%	75,420		15.906622		1,199,677	0.00%	10.82%
2004	0.25%	82,778		14.354104		1,188,204	0.00%	12.34%
2003	0.25%	6,068		12.777560		77,534	0.00%	26.83%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio 1
2006	0.25%	730		19.287150		14,080	1.18%	16.43%
2005	0.25%	10,644		16.565444		176,323	0.60%	9.48%
2004	0.25%	22,074		15.130897		333,999	0.58%	15.11%
2003	0.25%	1,068		13.144807		14,039	0.57%	32.42%
Lord Abbett Series Mid Cap Value Fund – Class VC
2006	0.25%	45,876		12.617407		578,836	0.89%	11.95%
2005	0.25%	19,122		11.270434		215,513	0.52%	12.70%	05/02/05
Nationwide® GVIT Strategic Value Fund – Class I
2003	0.25%	22,022		10.567653		232,721	0.04%	38.46%
2002	0.25%	42		7.632212		321	0.03%	-25.55%
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.25%	18,450		15.096902		278,538	0.00%	4.99%
2005	0.25%	15,290		14.379334		219,860	0.00%	2.64%
2004	0.25%	22,204		14.009370		311,064	0.00%	11.60%
2003	0.25%	3,926		12.553503		49,285	0.00%	24.75%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.25%	194,222		13.804932		2,681,222	0.70%	13.09%
2005	0.25%	75,766		12.206553		924,842	0.15%	8.12%
2004	0.25%	91,408		11.289714		1,031,970	0.12%	15.53%
2003	0.25%	52,239		9.772505		510,506	0.89%	31.43%
2002	0.25%	535		7.435383		3,978	0.75%	-26.63%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares
2006	0.25%	391,016	$	10.883119	$	4,255,474	0.00%	14.41%
2005	0.25%	365,056		9.512489		3,472,591	0.00%	13.46%
2004	0.25%	678,994		8.384158		5,692,793	0.00%	16.02%
2003	0.25%	284,185		7.226636		2,053,702	0.00%	27.75%
2002	0.25%	217,507		5.656826		1,230,399	0.00%	-29.52%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	0.25%	70,676		16.371496		1,157,072	0.68%	11.96%
2005	0.25%	84,180		14.622460		1,230,919	0.98%	17.75%
2004	0.25%	191,928		12.418080		2,383,377	0.01%	18.68%
2003	0.25%	44,110		10.463664		461,552	0.00%	34.75%
2002	0.25%	53,464		7.765195		415,158	0.54%	-24.33%
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class I
2006	0.25%	6,524		10.257708		66,921	0.44%	2.58%	05/01/06
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.25%	3,188,414		10.330569		32,938,131	0.38%	7.68%
2005	0.25%	3,734,142		9.593805		35,824,630	0.91%	4.84%
2004	0.25%	1,591,142		9.151191		14,560,844	0.31%	6.67%
2003	0.25%	503,219		8.579039		4,317,135	0.38%	30.62%
2002	0.25%	345,299		6.568116		2,267,964	0.57%	-27.04%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.25%	1,608,848		14.823774		23,849,199	1.07%	17.40%
2005	0.25%	1,169,740		12.626867		14,770,151	1.00%	14.02%
2004	0.25%	436,776		11.073978		4,836,848	1.15%	18.87%
2003	0.25%	162,279		9.316393		1,511,855	0.73%	42.66%
2002	0.25%	228,358		6.530337		1,491,255	0.55%	-22.33%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.25%	370,160		12.411511		4,594,245	1.10%	14.74%
2005	0.25%	381,782		10.817217		4,129,819	1.37%	5.71%
2004	0.25%	192,090		10.232719		1,965,603	0.83%	9.19%
2003	0.25%	264,755		9.371848		2,481,244	0.90%	26.40%
2002	0.25%	1,058		7.414306		7,844	0.75%	-19.00%
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.25%	1,386,376		8.730923		12,104,342	0.00%	2.70%
2005	0.25%	1,772,498		8.501413		15,068,738	0.00%	12.05%
2004	0.25%	1,726,784		7.587355		13,101,723	0.00%	19.48%
2003	0.25%	809,116		6.350438		5,138,241	0.00%	25.28%
2002	0.25%	11,391		5.069121		57,742	0.63%	-27.97%
PIMCO Variable Insurance Trust – PIMCO VIT All Asset Portfolio – Administrative Shares
2006	0.25%	121,412		12.399544		1,505,453	4.03%	4.40%
2005	0.25%	287,514		11.877133		3,414,842	4.94%	5.96%
2004	0.25%	10,938		11.208609		122,600	6.86%	12.09%	05/03/04
PIMCO Variable Insurance Trust – PIMCO VIT Low Duration Portfolio – Administrative Shares
2006	0.25%	875,682		11.038824		9,666,499	4.19%	3.70%
2005	0.25%	747,294		10.644694		7,954,716	2.71%	0.75%
2004	0.25%	554,690		10.565271		5,860,450	1.29%	1.58%
2003	0.25%	1,496,037		10.400435		15,559,436	1.22%	2.09%
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares
2006	0.25%	1,287,852		12.506613		16,106,667	4.26%	0.49%
2005	0.25%	1,206,896		12.445521		15,020,450	2.85%	1.82%
2004	0.25%	309,916		12.223233		3,788,175	1.03%	8.62%
2003	0.25%	73,396		11.253423		825,956	2.35%	8.58%
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares
2006	0.25%	3,326,500		11.986960		39,874,622	4.42%	3.59%
2005	0.25%	2,083,246		11.571785		24,106,875	3.47%	2.17%
2004	0.25%	1,511,060		11.325918		17,114,142	1.92%	4.62%
2003	0.25%	1,182,357		10.825824		12,799,989	2.71%	4.78%
2002	0.25%	165		10.331952		1,705	0.98%	3.32%	08/30/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Pioneer Variable Contracts Trust – Pioneer High Yield VCT Portfolio – Class I
2006	0.25%	82,444	$	16.283186	$	1,342,451	5.53%	8.23%
2005	0.25%	36,528		15.044787		549,556	5.49%	1.69%
2004	0.25%	53,634		14.794578		793,492	5.59%	7.79%
2003	0.25%	379,007		13.725038		5,201,885	5.84%	32.45%
2002	0.25%	162		10.362072		1,679	1.76%	3.62%	09/30/02
Royce Capital Fund – Micro Cap
2006	0.25%	779,248		22.967474		17,897,358	0.17%	20.77%
2005	0.25%	690,136		19.017724		13,124,816	0.60%	11.33%
2004	0.25%	271,392		17.082044		4,635,930	0.00%	13.56%
2003	0.25%	85,061		15.042113		1,279,497	0.00%	48.79%
T. Rowe Price Equity Income Portfolio – II
2006	0.25%	1,540,034		17.688346		27,240,654	1.35%	18.35%
2005	0.25%	892,058		14.945544		13,332,292	1.39%	3.44%
2004	0.25%	366,698		14.448971		5,298,409	1.46%	14.33%
2003	0.25%	167,637		12.637920		2,118,583	1.80%	24.86%
T. Rowe Price Mid Cap Growth Fund – II
2006	0.25%	560,134		20.137940		11,279,945	0.00%	6.12%
2005	0.25%	356,418		18.977178		6,763,808	0.00%	14.15%
2004	0.25%	179,746		16.624542		2,988,195	0.00%	17.76%
2003	0.25%	279,141		14.117448		3,940,759	0.00%	37.75%
T. Rowe Price New America Growth Portfolio
2006	0.25%	86,392		12.056017		1,041,543	0.04%	7.06%
2005	0.25%	2,404		11.260565		27,070	0.00%	4.21%
2004	0.25%	560		10.805340		6,051	0.00%	8.05%	05/03/04
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.25%	66,446		32.731758		2,174,894	0.56%	39.14%
2005	0.25%	41,596		23.523647		978,490	0.71%	31.67%
2004	0.25%	212,994		17.865954		3,805,341	0.53%	25.58%
2003	0.25%	38,302		14.227140		544,928	0.11%	53.80%
2002	0.25%	399		9.250254		3,691	0.21%	-3.14%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.25%	153,486		32.590053		5,002,117	0.06%	24.18%
2005	0.25%	129,856		26.243783		3,407,913	0.31%	51.29%
2004	0.25%	31,156		17.346378		540,444	0.31%	23.92%
2003	0.25%	12,374		14.026509		173,564	0.41%	44.72%
2002	0.25%	497		9.692423		4,817	0.75%	-3.08%
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.25%	49,984		21.418803		1,070,597	10.28%	10.53%
2005	0.25%	48,476		19.378063		939,371	7.14%	11.97%
2004	0.25%	37,344		17.306300		646,286	7.52%	9.79%
2003	0.25%	68,138		15.763497		1,074,093	0.00%	27.55%
2002	0.25%	83		12.359143		1,026	8.74%	8.95%
Van Kampen – The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio – Class I
2006	0.25%	265,862		9.209696		2,448,508	0.00%	9.00%
2005	0.25%	144,664		8.449046		1,222,273	0.00%	17.28%
2004	0.25%	137,920		7.204463		993,640	0.00%	21.29%
2003	0.25%	74,914		5.939719		444,968	0.00%	41.41%
2002	0.25%	354		4.200344		1,487	0.00%	-31.33%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.25%	709,670		34.480507		24,469,781	1.07%	37.70%
2005	0.25%	546,448		25.040093		13,683,109	1.19%	16.76%
2004	0.25%	352,704		21.445777		7,564,011	1.61%	36.05%
2003	0.25%	151,526		15.762653		2,388,452	0.00%	37.17%
2002	0.25%	770		11.491482		8,848	4.01%	-1.03%
W&R Target Funds, Inc. – Real Estate Securities Portfolio
2006	0.25%	594		14.907103		8,855	1.58%	29.76%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM
2006	0.25%	454,354	$	13.423088	$	6,098,834	0.00%	11.94%
2005	0.25%	470,806		11.991404		5,645,625	0.00%	7.62%
2004	0.25%	469,872		11.142802		5,235,691	0.00%	17.93%
2003	0.25%	169,629		9.449055		1,602,834	0.08%	36.66%
2002	0.25%	182,111		6.914071		1,259,128	0.50%	-27.00%
The BEST of AMERICA® America’s FUTURE Life SeriesSM Reduced Fee Tier (0.40%)
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.40%	30,412		17.202471		523,162	0.42%	12.75%
2005	0.40%	44,502		15.256716		678,954	0.09%	5.32%
2004	0.40%	73,606		14.486704		1,066,308	0.00%	10.63%
2003	0.40%	82,900		13.095200		1,085,592	0.06%	33.09%
2002	0.40%	39,881		9.839124		392,394	0.00%	-1.61%	09/03/02
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2003	0.40%	13,547		13.224712		179,155	0.00%	34.82%
2002	0.40%	24		9.809368		235	0.00%	-1.91%	09/03/02
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.40%	137,464		19.275099		2,649,632	0.00%	16.06%
2005	0.40%	247,510		16.608430		4,110,753	0.00%	9.17%
2004	0.40%	59,864		15.213529		910,743	0.00%	15.04%
AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I
2006	0.40%	461,146		17.863705		8,237,776	0.97%	27.72%
2005	0.40%	457,728		13.986284		6,401,914	1.14%	17.46%
2004	0.40%	152,296		11.907437		1,813,455	1.36%	19.07%	05/03/04
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.40%	395,572		17.896979		7,079,544	1.37%	16.82%
2005	0.40%	386,306		15.320186		5,918,280	1.48%	4.45%
2004	0.40%	309,918		14.667608		4,545,756	0.92%	11.02%
2003	0.40%	246,983		13.212012		3,263,142	0.51%	31.97%
2002	0.40%	5,432		10.011053		54,380	0.00%	0.11%	09/03/02
AllianceBernstein Variable Products Series Fund, Inc. – International Value Portfolio – Class A
2006	0.40%	453,968		11.311574		5,135,093	0.57%	13.12%	05/01/06
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.40%	280		14.724248		4,123	1.85%	16.62%
2005	0.40%	1,326		12.625722		16,742	1.94%	4.21%
2004	0.40%	177,026		12.115153		2,144,697	1.37%	12.54%
2003	0.40%	350,297		10.765053		3,770,966	1.28%	28.84%
2002	0.40%	2,529,796		8.355578		21,137,908	1.00%	-19.69%
American Century Variable Portfolios, Inc. – International Fund – Class I
2006	0.40%	146,198		14.750278		2,156,461	1.58%	24.53%
2005	0.40%	243,536		11.844974		2,884,678	1.25%	12.80%
2004	0.40%	1,074,540		10.500552		11,283,263	0.56%	14.47%
2003	0.40%	2,984,336		9.173579		27,377,042	0.73%	24.01%
2002	0.40%	2,893,353		7.397247		21,402,847	0.78%	-20.69%
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.40%	15,632		10.777532		168,474	0.00%	-3.66%
2005	0.40%	28,284		11.187064		316,415	0.00%	1.76%
2004	0.40%	102,910		10.993709		1,131,363	0.00%	10.23%
2003	0.40%	79,186		9.973091		789,729	0.00%	24.40%
2002	0.40%	4,655		8.016962		37,319	0.66%	-19.83%	05/01/02
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.40%	250,854		19.265641		4,832,863	1.41%	18.18%
2005	0.40%	371,836		16.301854		6,061,616	0.83%	4.62%
2004	0.40%	572,678		15.582659		8,923,846	0.97%	13.88%
2003	0.40%	835,035		13.683795		11,426,448	1.04%	28.44%
2002	0.40%	872,044		10.653510		9,290,329	0.75%	-12.97%
American Century Variable Portfolios, Inc. – VistaSM Fund – Class I
2006	0.40%	9,374		12.413582		116,365	0.00%	8.57%
2005	0.40%	596		11.433293		6,814	0.00%	14.33%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Baron Capital Funds Trust – Baron Capital Asset Fund – Insurance Shares
2006	0.40%	206,184	$	18.608964	$	3,836,871	0.00%	15.06%
2005	0.40%	191,636		16.172933		3,099,316	0.00%	2.95%
2004	0.40%	171,058		15.709055		2,687,160	0.00%	25.14%
2003	0.40%	107,132		12.553439		1,344,875	0.00%	29.49%
2002	0.40%	7,134		9.694252		69,159	0.00%	-3.06%	09/03/02
BlackRock International Index Portfolio – Class II
2006	0.40%	17,946		14.547195		261,064	5.83%	25.18%
2005	0.40%	220		11.621096		2,557	1.76%	16.21%	05/02/05
BlackRock Large Cap Core V.I. Fund – Class II
2006	0.40%	17,728		13.203975		234,080	0.79%	14.16%
2005	0.40%	73,626		11.566434		851,590	0.74%	15.66%	05/02/05
Calvert Variable Series, Inc. – Social Equity Portfolio
2006	0.40%	512		15.240875		7,803	0.00%	9.62%
2005	0.40%	428		13.903575		5,951	0.06%	4.13%
2004	0.40%	6,064		13.352495		80,970	0.08%	6.73%
2003	0.40%	1,076		12.510533		13,461	0.01%	21.69%
Credit Suisse Trust – Global Small Cap Portfolio
2002	0.40%	27,170		5.555805		150,951	0.00%	-34.42%
Credit Suisse Trust – International Focus Portfolio
2002	0.40%	32,357		6.196425		200,498	0.00%	-20.22%
Credit Suisse Trust – Large Cap Value Portfolio
2003	0.40%	17,547		10.955988		192,245	0.76%	24.66%
2002	0.40%	45,124		8.788383		396,567	0.76%	-23.40%
Dreyfus Investment Portfolios – Mid Cap Stock Index Portfolio – Initial Shares
2006	0.40%	6,714		17.398454		116,813	0.37%	7.32%
2005	0.40%	9,248		16.211755		149,926	0.02%	8.74%
2004	0.40%	25,166		14.909204		375,205	0.43%	14.02%
2003	0.40%	58,097		13.076217		759,689	1.02%	31.20%
2002	0.40%	2,842		9.966854		28,326	0.60%	-0.33%	09/03/02
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.40%	418,714		15.520951		6,498,839	0.38%	13.96%
2005	0.40%	434,388		13.620186		5,916,445	0.00%	6.81%
2004	0.40%	164,998		12.752292		2,104,103	0.57%	21.40%
2003	0.40%	61,690		10.504526		648,024	0.27%	37.23%
2002	0.40%	5,221		7.654697		39,965	0.29%	-23.45%	05/01/02
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.40%	90		10.406467		937	0.11%	8.77%
2005	0.40%	734		9.567773		7,023	0.00%	3.20%
2004	0.40%	21,434		9.270823		198,711	0.40%	5.79%
2003	0.40%	114,903		8.763701		1,006,976	0.11%	25.50%
2002	0.40%	368,609		6.983004		2,573,998	0.22%	-29.23%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.40%	4,780,522		13.685152		65,422,170	1.64%	15.04%
2005	0.40%	3,928,314		11.896207		46,732,037	1.63%	4.27%
2004	0.40%	6,072,526		11.408542		69,278,668	1.82%	10.20%
2003	0.40%	9,284,780		10.352696		96,122,505	1.54%	27.85%
2002	0.40%	14,027,919		8.097446		113,590,317	1.45%	-22.67%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.40%	265,322		13.820624		3,666,916	1.53%	16.01%
2005	0.40%	471,228		11.912967		5,613,724	0.02%	3.96%
2004	0.40%	504,718		11.458946		5,783,536	1.67%	4.63%
2003	0.40%	830,526		10.952239		9,096,119	1.18%	20.69%
2002	0.40%	1,866,807		9.074997		16,941,268	1.22%	-17.05%
Dreyfus Variable Investment Fund – International Value Portfolio – Initial Shares
2006	0.40%	293,760		20.828757		6,118,656	1.25%	22.11%
2005	0.40%	369,294		17.057481		6,299,225	0.00%	11.44%
2004	0.40%	507,212		15.305834		7,763,303	1.23%	19.54%
2003	0.40%	146,661		12.803571		1,877,785	2.67%	35.81%
2002	0.40%	7,620		9.427437		71,837	0.37%	-5.73%	09/03/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.40%	68,922	$	14.279265	$	984,156	5.17%	3.74%
2005	0.40%	592,368		13.764550		8,153,679	3.55%	0.89%
2004	0.40%	1,333,708		13.642560		18,195,191	3.92%	3.21%
2003	0.40%	2,418,929		13.218733		31,975,177	3.30%	4.23%
2002	0.40%	2,571,167		12.682507		32,608,843	3.20%	8.87%
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Service Class
2006	0.40%	520,282		16.022504		8,336,220	3.15%	19.60%
2005	0.40%	722,038		13.396579		9,672,839	1.56%	5.34%
2004	0.40%	1,784,684		12.717880		22,697,397	1.39%	10.94%
2003	0.40%	2,509,045		11.463982		28,763,647	1.66%	29.70%
2002	0.40%	2,559,502		8.838834		22,623,013	1.50%	-17.33%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Service Class
2006	0.40%	245,682		12.653389		3,108,710	0.28%	6.31%
2005	0.40%	510,730		11.902677		6,079,054	0.41%	5.25%
2004	0.40%	1,600,358		11.308717		18,097,996	0.16%	2.85%
2003	0.40%	2,979,457		10.995198		32,759,720	0.18%	32.25%
2002	0.40%	3,005,019		8.313850		24,983,277	0.14%	-30.48%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Service Class
2006	0.40%	244		10.547905		2,574	7.58%	10.73%
2005	0.40%	2,824		9.525383		26,900	14.70%	2.11%
2004	0.40%	217,058		9.328110		2,024,741	8.03%	9.03%
2003	0.40%	504,057		8.555502		4,312,461	6.36%	26.46%
2002	0.40%	774,551		6.765203		5,239,995	9.18%	3.20%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class
2006	0.40%	581,496		15.169405		8,820,948	0.84%	17.48%
2005	0.40%	700,420		12.912620		9,044,257	0.56%	18.50%
2004	0.40%	912,684		10.896942		9,945,465	0.98%	13.03%
2003	0.40%	746,827		9.640353		7,199,676	0.63%	42.63%
2002	0.40%	1,627,578		6.758846		11,000,549	0.64%	-20.66%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class
2006	0.40%	967,474		19.486792		18,852,965	1.12%	11.15%
2005	0.40%	1,090,144		17.532748		19,113,220	0.19%	16.38%
2004	0.40%	1,506,264		15.064815		22,691,589	0.24%	14.88%
2003	0.40%	1,901,875		13.113640		24,940,504	0.30%	27.84%
2002	0.40%	1,492,216		10.257824		15,306,889	0.69%	-9.79%
Fidelity® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.40%	880		11.183530		9,842	3.34%	3.88%
2005	0.40%	372		10.765329		4,005	2.69%	1.67%
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Service Class
2005	0.40%	608		9.527944		5,793	0.84%	8.43%
2004	0.40%	20,800		8.787333		182,777	0.48%	6.63%
2003	0.40%	259,028		8.240791		2,134,596	0.59%	29.14%
2002	0.40%	402,649		6.381088		2,569,339	0.93%	-22.23%
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class
2006	0.40%	35,172		23.049221		810,687	0.23%	12.14%
2005	0.40%	3,976		20.553596		81,721	0.00%	17.73%
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.40%	14		15.797724		221	0.49%	15.73%
2005	0.40%	2,310		13.649958		31,531	0.00%	2.15%
2004	0.40%	64,044		13.363171		855,831	0.00%	13.53%
2003	0.40%	59,064		11.770364		695,205	0.00%	57.16%
2002	0.40%	953		7.489405		7,137	0.00%	-25.11%	05/01/02
Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 2
2006	0.40%	62,174		13.213518		821,537	0.76%	16.52%
2005	0.40%	199,332		11.340582		2,260,541	0.00%	13.41%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 2
2006	0.40%	494,684	$	19.549201	$	9,670,677	1.24%	20.96%
2005	0.40%	485,970		16.161499		7,854,004	1.12%	9.73%
2004	0.40%	397,492		14.728417		5,854,428	1.11%	18.06%
2003	0.40%	300,494		12.475864		3,748,922	1.96%	31.68%
2002	0.40%	14,717		9.474024		139,429	0.00%	-5.26%	09/03/02
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.40%	316,790		24.714946		7,829,448	0.71%	36.17%
2005	0.40%	150,756		18.149525		2,736,150	0.60%	32.11%
2004	0.40%	182,748		13.738334		2,510,653	1.04%	20.26%
2003	0.40%	183,203		11.423706		2,092,857	0.61%	64.60%
2002	0.40%	10,388		6.940105		72,094	0.23%	-15.57%
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.40%	230,582		15.107048		3,483,413	7.41%	10.16%
2005	0.40%	224,370		13.713412		3,076,878	6.92%	1.97%
2004	0.40%	329,516		13.448117		4,431,370	7.58%	9.66%
2003	0.40%	767,382		12.263819		9,411,034	7.99%	21.78%
2002	0.40%	555,227		10.070195		5,591,244	10.09%	2.81%
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.40%	5,096		19.464132		99,189	1.89%	19.84%
2005	0.40%	3,938		16.241486		63,959	2.00%	10.71%
2004	0.40%	59,974		14.670465		879,846	1.37%	20.51%
2003	0.40%	44,687		12.173639		544,003	1.08%	40.89%
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	0.40%	18,258		13.442227		245,428	0.00%	2.30%
2005	0.40%	13,866		13.140144		182,201	0.00%	8.01%
2004	0.40%	57,244		12.165918		696,426	0.00%	7.43%
2003	0.40%	52,928		11.324625		599,390	0.00%	36.15%
2002	0.40%	292		8.317804		2,429	0.00%	-16.82%	05/01/02
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.40%	238,650		3.444715		822,081	0.00%	10.73%
2005	0.40%	232,710		3.111019		723,965	0.00%	-0.91%
2004	0.40%	481,400		3.139672		1,511,438	0.00%	3.90%
2003	0.40%	573,189		3.021924		1,732,134	0.00%	54.61%
2002	0.40%	46,574		1.954523		91,030	0.67%	-43.01%
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.40%	2,542		20.110980		51,122	2.84%	37.01%
2005	0.40%	2,742		14.678049		40,247	2.09%	5.96%
2004	0.40%	15,120		13.851870		209,440	1.64%	29.45%
2003	0.40%	13,251		10.700667		141,795	1.02%	23.56%
2002	0.40%	2,326		8.660608		20,145	0.61%	-13.39%	05/01/02
Gartmore GVIT – Government Bond Fund – Class I
2006	0.40%	445,662		15.186518		6,768,054	3.95%	2.93%
2005	0.40%	800,072		14.754249		11,804,462	3.71%	2.85%
2004	0.40%	2,350,974		14.345081		33,724,912	5.38%	2.85%
2003	0.40%	5,633,215		13.947593		78,569,790	3.25%	1.59%
2002	0.40%	9,515,935		13.728864		130,642,977	4.66%	10.54%
Gartmore GVIT – Growth Fund: Class I
2006	0.40%	4		6.904680		28	0.05%	5.75%
2005	0.40%	3,778		6.529541		24,669	0.08%	6.08%
2004	0.40%	16,686		6.155504		102,711	0.34%	7.72%
2003	0.40%	76,097		5.714099		434,826	0.02%	32.21%
2002	0.40%	174,753		4.322008		755,284	0.00%	-29.01%
Gartmore GVIT – International Growth Fund – Class I
2006	0.40%	416		13.099372		5,449	0.84%	32.44%
2005	0.40%	4		9.891115		40	1.10%	29.69%
2004	0.40%	25,428		7.626680		193,931	0.85%	13.74%
2003	0.40%	52,743		6.705480		353,667	0.00%	35.08%
2002	0.40%	40,096		4.964024		199,038	0.00%	-24.41%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.40%	171,634	$	15.493861	$	2,659,273	2.11%	16.40%
2005	0.40%	104,554		13.310555		1,391,672	2.02%	7.50%
2004	0.40%	63,674		12.381734		788,395	1.85%	13.57%
2003	0.40%	19,629		10.902206		213,999	1.57%	31.34%
2002	0.40%	4,346		8.300685		36,075	0.86%	-16.99%	01/25/02
Gartmore GVIT – Investor Destinations Conservative Fund – Class II
2006	0.40%	92,396		12.204705		1,127,666	3.23%	5.74%
2005	0.40%	49,050		11.542054		566,138	2.49%	2.90%
2004	0.40%	95,536		11.217265		1,071,653	2.49%	4.23%
2003	0.40%	12,703		10.761565		136,704	2.59%	7.48%
2002	0.40%	6,694		10.013037		67,027	2.18%	0.13%	01/25/02
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	0.40%	490,632		13.823999		6,782,496	2.47%	10.91%
2005	0.40%	390,100		12.464210		4,862,288	2.39%	4.92%
2004	0.40%	264,480		11.879208		3,141,813	2.21%	9.10%
2003	0.40%	37,624		10.888513		409,669	2.05%	19.57%
2002	0.40%	9,222		9.106228		83,978	1.66%	-8.94%	01/25/02
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.40%	268,984		14.829966		3,989,024	2.25%	14.08%
2005	0.40%	181,156		12.999118		2,354,868	2.19%	6.65%
2004	0.40%	142,944		12.189084		1,742,356	2.01%	11.65%
2003	0.40%	56,878		10.917690		620,976	1.61%	26.14%
2002	0.40%	14,555		8.655338		125,978	1.05%	-13.45%	01/25/02
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	0.40%	820,496		13.049356		10,706,944	2.84%	7.99%
2005	0.40%	521,412		12.083751		6,300,613	2.78%	4.07%
2004	0.40%	210,474		11.611205		2,443,857	2.38%	6.73%
2003	0.40%	13,568		10.878938		147,605	2.33%	13.24%
2002	0.40%	4,849		9.606563		46,582	1.99%	-3.93%	01/25/02
Gartmore GVIT – J.P. Morgan GVIT Balanced Fund: Class I
2006	0.40%	608		12.170646		7,400	2.25%	11.80%
2005	0.40%	39,454		10.885904		429,492	1.98%	2.13%
2004	0.40%	241,606		10.658428		2,575,140	1.94%	8.06%
2003	0.40%	533,567		9.863609		5,262,896	1.76%	17.94%
2002	0.40%	943,228		8.363123		7,888,332	2.28%	-12.66%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.40%	94		13.633719		1,282	0.00%	9.47%
2005	0.40%	468		12.454266		5,829	0.00%	9.30%
2004	0.40%	114,718		11.394076		1,307,106	0.00%	14.88%
2003	0.40%	335,334		9.918443		3,325,991	0.00%	39.58%
2002	0.40%	1,062,592		7.106122		7,550,908	0.00%	-37.27%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.40%	660,842		21.263963		14,052,120	1.14%	9.45%
2005	0.40%	746,512		19.427688		14,503,002	1.04%	11.65%
2004	0.40%	1,048,696		17.400194		18,247,514	0.56%	15.27%
2003	0.40%	1,017,996		15.095175		15,366,828	0.50%	34.11%
2002	0.40%	922,042		11.255500		10,378,044	0.45%	-15.64%
Gartmore GVIT – Money Market Fund – Class I
2005	0.40%	1,872		12.182168		22,805	2.61%	2.26%
2004	0.40%	165,086		11.913109		1,966,688	0.80%	0.41%
2003	0.40%	541,898		11.864684		6,429,449	0.63%	0.22%
2002	0.40%	4,829,326		11.838269		57,170,860	1.51%	0.81%
Gartmore GVIT – Money Market Fund – Class V
2006	0.40%	4,048,114		10.763797		43,573,077	4.63%	4.20%
2005	0.40%	5,136,552		10.330316		53,062,205	2.74%	2.34%
2004	0.40%	7,815,054		10.093995		78,885,116	0.91%	0.49%
2003	0.40%	11,999,723		10.045042		120,537,722	0.70%	0.30%
2002	0.40%	15,116,078		10.014669		151,382,518	0.28%	0.15%	10/21/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.40%	31,470	$	12.805324	$	402,984	1.09%	13.18%
2005	0.40%	28,310		11.314587		320,316	1.00%	7.01%
2004	0.40%	119,314		10.573030		1,261,511	1.30%	9.31%
2003	0.40%	331,958		9.672247		3,210,780	0.59%	27.00%
2002	0.40%	368,763		7.615719		2,808,395	0.95%	-17.68%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	0.40%	54		15.818643		854	0.70%	15.58%
2005	0.40%	212		13.685866		2,901	1.29%	9.87%
2004	0.40%	996		12.456136		12,406	0.48%	18.32%
2003	0.40%	2,091		10.527571		22,013	0.15%	24.88%
Gartmore GVIT – Small Cap Growth Fund – Class I
2006	0.40%	106,988		16.842189		1,801,912	0.00%	2.80%
2005	0.40%	123,110		16.384018		2,017,036	0.00%	7.66%
2004	0.40%	302,750		15.218321		4,607,347	0.00%	12.96%
2003	0.40%	315,046		13.471955		4,244,286	0.00%	33.73%
2002	0.40%	312,346		10.074004		3,146,575	0.00%	-33.55%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.40%	104,786		24.553275		2,572,839	0.43%	16.83%
2005	0.40%	395,632		21.016857		8,314,941	0.07%	2.66%
2004	0.40%	1,039,852		20.471824		21,287,667	0.00%	16.83%
2003	0.40%	1,315,269		17.522719		23,047,089	0.00%	56.23%
2002	0.40%	1,401,972		11.216089		15,724,643	0.01%	-27.45%
Gartmore GVIT – Small Company Fund – Class I
2006	0.40%	428,830		22.410227		9,610,178	0.10%	11.59%
2005	0.40%	832,540		20.082219		16,719,251	0.00%	11.87%
2004	0.40%	1,815,822		17.951460		32,596,656	0.00%	18.55%
2003	0.40%	2,515,752		15.142892		38,095,761	0.00%	40.45%
2002	0.40%	2,331,936		10.781666		25,142,155	0.00%	-17.66%
Gartmore GVIT – Turner GVIT Growth Focus Fund – Class I
2003	0.40%	48,390		3.293722		159,383	0.00%	50.36%
2002	0.40%	6,098		2.190553		13,358	0.00%	-43.09%
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2006	0.40%	118		15.415524		1,819	0.27%	-0.69%
2005	0.40%	816		15.521877		12,666	0.00%	11.52%
2004	0.40%	3,866		13.918876		53,810	0.00%	11.96%
2003	0.40%	28,684		12.431976		356,599	0.00%	51.53%
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I
2006	0.40%	2		13.317925		27	1.73%	15.44%
2005	0.40%	262		11.536276		3,023	1.61%	3.83%
2004	0.40%	28,772		11.110531		319,672	1.39%	17.03%
2003	0.40%	50,453		9.493770		478,989	1.34%	30.91%
2002	0.40%	254,670		7.252185		1,846,914	1.34%	-25.44%
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.40%	34,566		14.839152		512,930	4.07%	4.42%
2005	0.40%	89,110		14.210938		1,266,337	3.99%	1.77%
2004	0.40%	307,698		13.963330		4,296,489	4.55%	6.11%
2003	0.40%	469,752		13.159481		6,181,693	5.42%	11.67%
2002	0.40%	775,887		11.784392		9,143,357	4.49%	6.78%
Gartmore GVIT – Worldwide Leaders Fund – Class I
2006	0.40%	24		15.509710		372	0.85%	25.38%
2005	0.40%	78		12.370181		965	1.11%	18.86%
2004	0.40%	1,704		10.407118		17,734	0.00%	15.20%
2003	0.40%	30,673		9.033664		277,090	0.00%	35.52%
2002	0.40%	82,915		6.666122		552,722	2.00%	-25.69%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Goldman Sachs Variable Insurance Trust – Goldman Sachs VIT Mid Cap Value Fund
2006	0.40%	1,066,122	$	20.590810	$	21,952,316	0.98%	15.70%
2005	0.40%	1,114,814		17.796530		19,839,821	0.60%	12.38%
2004	0.40%	1,046,542		15.836525		16,573,589	0.74%	25.38%
2003	0.40%	599,528		12.630569		7,572,380	1.72%	27.88%
2002	0.40%	7,368		9.877029		72,774	0.27%	-1.23%	09/03/02
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.40%	165,700		14.456527		2,395,447	1.99%	9.98%
2005	0.40%	208,740		13.145265		2,743,943	2.04%	7.23%
2004	0.40%	285,628		12.258707		3,501,430	2.45%	7.86%
2003	0.40%	360,530		11.365300		4,097,532	2.34%	13.27%
2002	0.40%	977		10.033996		9,803	2.14%	0.34%	09/03/02
Janus Aspen Series – Forty Portfolio – Service Shares
2006	0.40%	228,352		9.171618		2,094,357	0.14%	8.68%
2005	0.40%	217,772		8.438947		1,837,766	0.01%	12.11%
2004	0.40%	878,196		7.527514		6,610,633	0.02%	17.50%
2003	0.40%	1,755,706		6.406568		11,248,050	0.25%	19.75%
2002	0.40%	1,902,427		5.349794		10,177,593	0.32%	-16.26%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	0.40%	52		4.200294		218	0.00%	7.40%
2005	0.40%	8,530		3.910937		33,360	0.00%	11.11%
2004	0.40%	183,526		3.520024		646,016	0.00%	0.16%
2003	0.40%	524,317		3.514240		1,842,576	0.00%	45.89%
2002	0.40%	783,206		2.408830		1,886,610	0.00%	-41.17%
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.40%	43,784		14.131910		618,752	1.89%	46.05%
2005	0.40%	156,464		9.676381		1,514,005	1.05%	31.41%
2004	0.40%	1,087,636		7.363272		8,008,560	0.85%	18.21%
2003	0.40%	2,277,464		6.228826		14,185,927	1.02%	34.00%
2002	0.40%	3,375,569		4.648509		15,691,363	0.70%	-26.05%
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio 1
2006	0.40%	83,526		17.561058		1,466,805	0.00%	10.95%
2005	0.40%	90,134		15.828526		1,426,688	0.00%	10.65%
2004	0.40%	99,214		14.304998		1,419,256	0.00%	12.17%
2003	0.40%	208,667		12.752960		2,661,122	0.00%	26.64%
2002	0.40%	19,940		10.070202		200,800	0.00%	0.70%	09/18/02
JPMorgan Insurance Trust – JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio 1
2006	0.40%	2,838		19.163821		54,387	1.18%	16.26%
2005	0.40%	14,156		16.484146		233,350	0.60%	9.32%
2004	0.40%	35,252		15.079159		531,571	0.58%	14.94%
2003	0.40%	30,988		13.119525		406,548	0.57%	32.22%
2002	0.40%	39,000		9.922131		386,963	0.00%	-0.78%	09/18/02
Lord Abbett Series Mid Cap Value Fund – Class VC
2006	0.40%	7,064		12.586028		88,908	0.89%	11.78%
2005	0.40%	1,690		11.259238		19,028	0.52%	12.59%	05/02/05
Nationwide® GVIT Strategic Value Fund – Class I
2003	0.40%	19,292		9.311693		179,641	0.04%	38.25%
2002	0.40%	30,787		6.735208		207,357	0.03%	-25.66%
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.40%	7,818		14.999423		117,265	0.00%	4.83%
2005	0.40%	20,788		14.307871		297,432	0.00%	2.49%
2004	0.40%	44,406		13.960609		619,935	0.00%	11.43%
2003	0.40%	35,320		12.528578		442,509	0.00%	24.56%
2002	0.40%	3,552		10.057930		35,726	0.00%	0.58%	09/03/02
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.40%	74		14.282531		1,057	0.70%	12.93%
2005	0.40%	80,808		12.647762		1,022,040	0.15%	7.96%
2004	0.40%	290,396		11.715274		3,402,069	0.12%	15.35%
2003	0.40%	406,038		10.156098		4,123,762	0.89%	31.24%
2002	0.40%	1,042,854		7.738827		8,070,467	0.75%	-26.74%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio – I Class Shares
2006	0.40%	97,186	$	16.121456	$	1,566,780	0.00%	14.24%
2005	0.40%	127,004		14.112212		1,792,307	0.00%	13.29%
2004	0.40%	322,438		12.456893		4,016,576	0.00%	15.84%
2003	0.40%	895,379		10.753194		9,628,184	0.00%	27.56%
2002	0.40%	1,801,971		8.429938		15,190,504	0.00%	-29.62%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	0.40%	414		15.348160		6,354	0.68%	11.79%
2005	0.40%	211,116		13.728969		2,898,405	0.98%	17.58%
2004	0.40%	244,546		11.676716		2,855,494	0.01%	18.50%
2003	0.40%	271,980		9.853739		2,680,020	0.00%	34.55%
2002	0.40%	341,601		7.323519		2,501,721	0.54%	-24.45%
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class I
2006	0.40%	34,570		10.247505		354,256	0.44%	2.48%	05/01/06
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.40%	1,040,592		14.821276		15,422,901	0.38%	7.52%
2005	0.40%	1,425,776		13.784845		19,654,101	0.91%	4.68%
2004	0.40%	4,419,620		13.168552		58,199,996	0.31%	6.51%
2003	0.40%	4,490,131		12.363752		55,514,866	0.38%	30.42%
2002	0.40%	3,582,220		9.479881		33,959,019	0.57%	-27.15%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.40%	898,758		14.676391		13,190,524	1.07%	17.22%
2005	0.40%	810,028		12.520042		10,141,585	1.00%	13.85%
2004	0.40%	1,770,284		10.996730		19,467,335	1.15%	18.69%
2003	0.40%	1,588,406		9.265284		14,717,033	0.73%	42.45%
2002	0.40%	1,442,545		6.504237		9,382,655	0.55%	-22.45%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.40%	3,524		11.856561		41,783	1.10%	14.57%
2005	0.40%	5,684		10.349023		58,824	1.37%	5.55%
2004	0.40%	606,518		9.804476		5,946,591	0.83%	9.02%
2003	0.40%	805,623		8.993106		7,245,053	0.90%	26.21%
2002	0.40%	704,851		7.125335		5,022,300	0.75%	-19.12%
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.40%	986		13.200215		13,015	0.00%	2.55%
2005	0.40%	5,300		12.872483		68,224	0.00%	11.88%
2004	0.40%	916,804		11.505640		10,548,417	0.00%	19.30%
2003	0.40%	1,747,033		9.644393		16,849,073	0.00%	25.09%
2002	0.40%	2,442,509		7.709999		18,831,742	0.63%	-28.08%
PIMCO Variable Insurance Trust – PIMCO VIT All Asset Portfolio – Administrative Shares
2006	0.40%	2,542		12.350260		31,394	4.03%	4.24%
2005	0.40%	58,972		11.847635		698,679	4.94%	5.81%
2004	0.40%	13,676		11.197507		153,137	6.86%	11.98%	05/03/04
PIMCO Variable Insurance Trust – PIMCO VIT Low Duration Portfolio – Administrative Shares
2006	0.40%	995,170		10.967285		10,914,313	4.19%	3.55%
2005	0.40%	1,106,776		10.591594		11,722,522	2.71%	0.60%
2004	0.40%	1,548,394		10.528355		16,302,042	1.29%	1.43%
2003	0.40%	427,929		10.379703		4,441,776	1.22%	1.94%
2002	0.40%	45,027		10.182621		458,493	0.26%	1.83%	09/03/02
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares
2006	0.40%	1,442,470		12.425357		17,923,205	4.26%	0.34%
2005	0.40%	640,224		12.383232		7,928,042	2.85%	1.67%
2004	0.40%	907,634		12.180321		11,055,273	1.03%	8.45%
2003	0.40%	604,652		11.230805		6,790,729	2.35%	8.42%
2002	0.40%	48,671		10.358691		504,168	0.39%	3.59%	08/30/02
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares
2006	0.40%	3,150,134		11.909077		37,515,188	4.42%	3.43%
2005	0.40%	2,531,932		11.513866		29,152,326	3.47%	2.02%
2004	0.40%	3,142,992		11.286156		35,472,298	1.92%	4.46%
2003	0.40%	2,117,582		10.804064		22,878,491	2.71%	4.62%
2002	0.40%	185,190		10.326715		1,912,404	0.98%	3.27%	08/30/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Pioneer Variable Contracts Trust – Pioneer High Yield VCT Portfolio – Class I
2006	0.40%	280,054	$	16.177661	$	4,530,619	5.53%	8.07%
2005	0.40%	252,932		14.969736		3,786,325	5.49%	1.54%
2004	0.40%	473,190		14.742883		6,976,185	5.59%	7.63%
2003	0.40%	105,483		13.697677		1,444,872	5.84%	32.26%
2002	0.40%	211		10.356990		2,185	1.76%	3.57%	09/03/02
Royce Capital Fund – Micro Cap
2006	0.40%	767,354		22.819241		17,510,436	0.17%	20.59%
2005	0.40%	830,676		18.923254		15,719,093	0.60%	11.17%
2004	0.40%	1,033,530		17.022607		17,593,375	0.00%	13.39%
2003	0.40%	548,859		15.012271		8,239,620	0.00%	48.57%
2002	0.40%	43,606		10.104573		440,620	0.00%	1.05%	09/03/02
T. Rowe Price Equity Income Portfolio – II
2006	0.40%	1,391,756		17.574134		24,458,906	1.35%	18.18%
2005	0.40%	1,649,340		14.871262		24,527,767	1.39%	3.28%
2004	0.40%	1,661,986		14.398668		23,930,385	1.46%	14.16%
2003	0.40%	1,166,336		12.612824		14,710,791	1.80%	24.67%
2002	0.40%	16,487		10.116880		166,797	0.77%	1.17%	09/03/02
T. Rowe Price Mid Cap Growth Fund – II
2006	0.40%	256,586		20.007898		5,133,747	0.00%	5.96%
2005	0.40%	453,782		18.882872		8,568,707	0.00%	13.98%
2004	0.40%	754,450		16.566668		12,498,723	0.00%	17.58%
2003	0.40%	513,748		14.089414		7,238,408	0.00%	37.54%
2002	0.40%	11,398		10.243767		116,758	0.00%	2.44%	09/03/02
T. Rowe Price New America Growth Portfolio
2006	0.40%	551,676		12.008095		6,624,578	0.04%	6.90%
2005	0.40%	584,706		11.232593		6,567,765	0.00%	4.06%
2004	0.40%	19,964		10.794628		215,504	0.00%	7.95%	05/03/04
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2005	0.40%	596		17.488050		10,423	0.71%	31.47%
2004	0.40%	53,740		13.301843		714,841	0.53%	25.39%
2003	0.40%	69,877		10.608507		741,291	0.11%	53.57%
2002	0.40%	170,526		6.907806		1,177,961	0.21%	-3.29%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2005	0.40%	52		21.290146		1,107	0.31%	51.07%
2004	0.40%	153,946		14.093195		2,169,591	0.31%	23.73%
2003	0.40%	111,979		11.413041		1,278,021	0.41%	44.50%
2002	0.40%	38,434		7.898317		303,564	0.75%	-3.22%
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.40%	81,282		19.875581		1,615,527	10.28%	10.37%
2005	0.40%	83,166		18.008789		1,497,719	7.14%	11.80%
2004	0.40%	122,976		16.107486		1,980,834	7.52%	9.62%
2003	0.40%	200,179		14.693571		2,941,344	0.00%	27.35%
2002	0.40%	159,659		11.537562		1,842,076	8.74%	8.79%
Van Kampen – The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio – Class I
2006	0.40%	44,880		9.118070		409,219	0.00%	8.84%
2005	0.40%	49,068		8.377513		411,068	0.00%	17.10%
2004	0.40%	30,098		7.154160		215,326	0.00%	21.11%
2003	0.40%	142,586		5.907110		842,271	0.00%	41.20%
2002	0.40%	265,456		4.183540		1,110,546	0.00%	-31.43%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.40%	290,660		35.340571		10,272,090	1.07%	37.50%
2005	0.40%	377,610		25.703042		9,705,726	1.19%	16.59%
2004	0.40%	716,826		22.046498		15,803,503	1.61%	35.85%
2003	0.40%	698,195		16.228488		11,330,649	0.00%	36.96%
2002	0.40%	636,267		11.848822		7,539,014	4.01%	-1.18%
W&R Target Funds, Inc. – Growth Portfolio
2006	0.40%	1,882		12.243877		23,043	0.00%	4.62%
W&R Target Funds, Inc. – Real Estate Securities Portfolio
2006	0.40%	2,546		14.870055		37,859	1.58%	29.57%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT– 4 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM
2006	0.40%	126	$	13.289662	$	1,674	0.00%	11.77%
2005	0.40%	110,270		11.889981		1,311,108	0.00%	7.45%
2004	0.40%	898,190		11.065086		9,938,550	0.00%	17.75%
2003	0.40%	1,423,338		9.397220		13,375,420	0.08%	36.46%
2002	0.40%	1,740,569		6.886442		11,986,327	0.50%	-27.11%
Contract Owners’ Equity Total By Year
2006					$	4,464,442,368
2005					$	3,947,899,004
2004					$	3,677,896,359
2003					$	3,032,894,218
2002					$	2,276,440,710

*	This represents the annual contract expense rate of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying mutual funds and charges made directly to contract owner accounts through the redemption of units.
**	This represents the dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by average net assets. The ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions to the contractholder accounts either through reductions in unit values or redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.
***	This represents the total return for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit value for expenses assessed. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Account. The total return is calculated for the period indicated or from the effective date through the end of the period.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

Nationwide Life Insurance Company:

We have audited the consolidated financial statements of Nationwide Life Insurance Company and subsidiaries (the Company) as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, the Company adopted the American Institute of Certified Public Accountants’ Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, in 2004.

/s/ KPMG LLP

Columbus, Ohio

March 1, 2007

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Income

(in millions)

	Years ended December 31,
	2006		2005		2004
Revenues:
Policy charges	$	1,132.6	$	1,055.1	$	1,025.2
Traditional life insurance and immediate annuity premiums		308.3		260.0		270.4
Net investment income		2,058.5		2,105.2		2,000.5
Net realized gains (losses) on investments, hedging instruments and hedged items		7.1		10.6		(36.4	)
Other income		0.2		2.2		9.8
Total revenues		3,506.7		3,433.1		3,269.5
Benefits and expenses:
Interest credited to policyholder account values		1,330.1		1,331.0		1,277.2
Life insurance and annuity benefits		450.3		377.5		369.2
Policyholder dividends on participating policies		25.6		33.1		36.2
Amortization of deferred policy acquisition costs		450.3		466.3		410.1
Interest expense on debt, primarily with Nationwide Financial Services, Inc. (NFS)		65.5		66.3		59.8
Other operating expenses		531.8		538.8		582.0
Total benefits and expenses		2,853.6		2,813.0		2,734.5
Income from continuing operations before federal income tax expense		653.1		620.1		535.0
Federal income tax expense		30.6		95.6		120.0
Income from continuing operations		622.5		524.5		415.0
Cumulative effect of adoption of accounting principle, net of taxes		—		—		(3.3	)
Net income	$	622.5	$	524.5	$	411.7

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Balance Sheets

(in millions, except per share amounts)

	December 31,
	2006		2005
Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (cost $25,197.2 in 2006; $26,658.9 in 2005)	$	25,275.4	$	27,198.1
Equity securities (cost $28.5 in 2006; $35.1 in 2005)		34.4		42.1
Mortgage loans on real estate, net		8,202.2		8,458.9
Real estate, net		54.8		84.9
Policy loans		639.2		604.7
Other long-term investments		598.9		641.5
Short-term investments, including amounts managed by a related party		1,722.0		1,596.6
Total investments		36,526.9		38,626.8
Cash		0.5		0.9
Accrued investment income		323.6		344.0
Deferred policy acquisition costs		3,758.0		3,597.9
Other assets		2,001.5		1,699.1
Assets held in separate accounts		67,351.9		62,689.8
Total assets	$	109,962.4	$	106,958.5
Liabilities and Shareholder’s Equity
Liabilities:
Future policy benefits and claims	$	34,409.4	$	35,941.1
Short-term debt		75.2		242.3
Long-term debt, payable to NFS		700.0		700.0
Other liabilities		2,988.1		3,130.1
Liabilities related to separate accounts		67,351.9		62,689.8
Total liabilities		105,524.6		102,703.3
Shareholder’s equity:
Common stock, $1 par value; authorized - 5.0 shares; issued and outstanding - 3.8 shares		3.8		3.8
Additional paid-in capital		274.4		274.4
Retained earnings		4,130.9		3,883.4
Accumulated other comprehensive income		28.7		93.6
Total shareholder’s equity		4,437.8		4,255.2
Total liabilities and shareholder’s equity	$	109,962.4	$	106,958.5

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Shareholder’s Equity

(in millions)

	Capital shares		Additional paid-in capital		Retained earnings			Accumlated other comprehensive income			Total shareholder’s equity
Balance as of December 31, 2003	$	3.8	$	271.3	$	3,257.2		$	467.3		$	3,999.6
Comprehensive income:
Net income		—		—		411.7			—			411.7
Other comprehensive loss, net of taxes		—		—		—			(73.5	)		(73.5	)
Total comprehensive income												338.2
Capital contributed by NFS		—		3.1		—			—			3.1
Dividends to NFS		—		—		(125.0	)		—			(125.0	)
Balance as of December 31, 2004		3.8		274.4		3,543.9			393.8			4,215.9
Comprehensive income:
Net income		—		—		524.5			—			524.5
Other comprehensive loss, net of taxes		—		—		—			(300.2	)		(300.2	)
Total comprehensive income												224.3
Dividends to NFS		—		—		(185.0	)		—			(185.0	)
Balance as of December 31, 2005		3.8		274.4		3,883.4			93.6			4,255.2
Comprehensive income:
Net income		—		—		622.5			—			622.5
Other comprehensive loss, net of taxes		—		—		—			(64.9	)		(64.9	)
Total comprehensive income												557.6
Dividends to NFS		—		—		(375.0	)		—			(375.0	)
Balance as of December 31, 2006	$	3.8	$	274.4	$	4,130.9		$	28.7		$	4,437.8

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2006			2005			2004
Cash flows from operating activities:
Net income	$	622.5		$	524.5		$	411.7
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized (gains) losses on investments, hedging instruments and hedged items		(7.1	)		(10.6	)		36.4
Interest credited to policyholder account values		1,330.1			1,331.0			1,277.2
Capitalization of deferred policy acquisition costs		(569.6	)		(460.5	)		(496.4	)
Amortization of deferred policy acquisition costs		450.3			466.3			410.1
Amortization and depreciation		46.6			65.6			73.0
(Increase) decrease in other assets		(298.0	)		591.0			(303.5	)
Increase (decrease) in policy and other liabilities		225.7			(511.1	)		324.4
Other, net		0.1			(114.9	)		1.5
Net cash provided by operating activities		1,800.6			1,881.3			1,734.4
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale		5,128.6			4,198.5			3,099.4
Proceeds from sale of securities available-for-sale		2,267.3			2,619.7			2,485.5
Proceeds from repayments or sales of mortgage loans on real estate		2,430.8			2,854.6			1,920.9
Cost of securities available-for-sale acquired		(5,658.9	)		(6,924.1	)		(6,291.4	)
Cost of mortgage loans on real estate originated or acquired		(2,180.4	)		(2,524.9	)		(2,169.9	)
Net (increase) decrease in short-term investments		(125.4	)		56.9			205.9
Collateral (paid) received - securities lending, net		(332.6	)		36.6			89.4
Other, net		52.1			121.6			(357.2	)
Net cash provided by (used in) investing activities		1,581.5			438.9			(1,017.4	)
Cash flows from financing activities:
Net (decrease) increase in short-term debt		(167.1	)		27.3			15.2
Capital contributed by NFS		—			—			3.1
Cash dividends paid to NFS		(375.0	)		(185.0	)		(125.0	)
Investment and universal life insurance product deposits		3,400.8			2,845.4			3,561.6
Investment and universal life insurance product withdrawals		(6,241.2	)		(5,022.5	)		(4,156.5	)
Net cash used in financing activities		(3,382.5	)		(2,334.8	)		(701.6	)
Net (decrease) increase in cash		(0.4	)		(14.6	)		15.4
Cash, beginning of period		0.9			15.5			0.1
Cash, end of period	$	0.5		$	0.9		$	15.5

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

(1) Nature of Operations  

Nationwide Life Insurance Company (NLIC, or collectively with its subsidiaries, the Company) was incorporated in 1929 and is an Ohio stock legal reserve life insurance company. The Company is a member of the Nationwide group of companies (Nationwide), which is comprised of Nationwide Mutual Insurance Company (NMIC) and all of its subsidiaries and affiliates.

All of the outstanding shares of NLIC’s common stock are owned by Nationwide Financial Services, Inc. (NFS), a holding company formed by Nationwide Corporation (Nationwide Corp.), a majority-owned subsidiary of NMIC.

Wholly-owned subsidiaries of NLIC as of December 31, 2006 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker/dealer.

The Company is a leading provider of long-term savings and retirement products in the United States of America (U.S.). The Company develops and sells a diverse range of products including individual annuities, private and public sector group retirement plans, other investment products sold to institutions, life insurance and advisory services. The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker/dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), Nationwide Financial Network (NFN) producers and TBG Insurance Services Corporation d/b/a TBG Financial (TBG Financial) through its joint venture with MC Insurance Agency Services, LLC d/b/a Mullin Consulting. The Company also distributes products through the NMIC agency distribution force.

As of December 31, 2006 and 2005, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

(2) Summary of Significant Accounting Policies  

The significant accounting policies followed by the Company that materially affect financial reporting are summarized below. The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP).

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ significantly from those estimates.

The Company’s most significant estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition (DAC) for investment and universal life insurance products; impairment losses on investments; valuation allowances for mortgage loans on real estate; the liability for future policy benefits and claims; and federal income tax provision. Although some variability is inherent in these estimates, the recorded amounts reflect management’s best estimates based on facts and circumstances as of the balance sheet date. Management believes the amounts provided are appropriate.

(a) Consolidation Policy

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. Minority interest expense is included in other operating expenses in the consolidated statements of income, and minority interest is included in other liabilities on the consolidated balance sheets. All significant intercompany balances and transactions have been eliminated.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(b) Valuation of Investments, Investment Income and Related Gains and Losses

The Company is required to classify its fixed maturity securities and marketable equity securities as held-to-maturity, available-for-sale or trading. All fixed maturity and marketable equity securities are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of adjustments to DAC, future policy benefits and claims, and deferred federal income taxes reported as a separate component of accumulated other comprehensive income (AOCI) in shareholder’s equity. The adjustment to DAC represents the changes in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.

The fair value of fixed maturity and marketable equity securities is generally obtained from independent pricing services based on market quotations. For fixed maturity securities not priced by independent services (generally private placement securities and securities that do not trade regularly), an internally developed pricing model or “corporate pricing matrix” is most often used. The corporate pricing matrix is developed by obtaining spreads versus the U.S. Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the U.S. Treasury yield to create an estimated market yield for that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. Additionally, for valuing certain fixed maturity securities with complex cash flows such as certain mortgage-backed and asset-backed securities, a “structured product model” is used. The structured product model uses third party pricing tools. For securities for which quoted market prices are not available and for which the Company’s structured product model is not suitable for estimating fair values, fair values are determined using other modeling techniques, primarily a commercial software application utilized in valuing complex securitized investments with variable cash flows. As of December 31, 2006, 71% of the fair values of fixed maturity securities were obtained from independent pricing services, 20% from the Company’s pricing matrices and 9% from other sources compared to 72%, 20% and 8%, respectively, in 2005.

Management regularly reviews each investment in its fixed maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments.

Under the Company’s accounting policy for equity securities and debt securities that can be contractually prepaid or otherwise settled in a way that may limit the Company’s ability to fully recover cost, an impairment is deemed to be other-than-temporary unless the Company has both the ability and intent to hold the investment until the security’s forecasted recovery and evidence exists indicating that recovery will occur in a reasonable period of time. Also, for such debt securities management estimates cash flows over the life of purchased beneficial interests in securitized financial assets. If management estimates that the fair value of its beneficial interest is not greater than or equal to its carrying value based on current information and events, and if there has been an adverse change in estimated cash flows since the last revised estimate (considering both timing and amount), then the Company recognizes an other-than-temporary impairment and writes down the purchased beneficial interest to fair value.

For other debt securities, an other-than-temporary impairment charge is taken when the Company does not have the ability and intent to hold the security until the forecasted recovery or if it is no longer probable that the Company will recover all amounts due under the contractual terms of the security. Many criteria are considered during this process including, but not limited to, the current fair value as compared to cost or amortized cost, as appropriate, of the security; the amount and length of time a security’s fair value has been below cost or amortized cost; specific credit issues and financial prospects related to the issuer; management’s intent to hold or dispose of the security; and current economic conditions.

Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income. All other investment income is recorded using the interest-method without anticipating the impact of prepayments.

The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan is impaired, a provision for loss is established equal to the difference between the carrying value and the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. In addition to the valuation allowance on specific loans, the Company maintains an unallocated allowance for probable losses inherent in the loan portfolio as of the balance sheet date, but not yet specifically identified by loan. Changes in the valuation allowance are recorded in net realized gains and losses on investments, hedging instruments and hedged items. Loans in foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received.

The valuation allowance account for mortgage loans on real estate is maintained at a level believed adequate by management and reflects management’s best estimate of probable credit losses, including losses incurred at the balance sheet date but not yet identified by specific loan. Management’s periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.

The Company grants mainly commercial mortgage loans on real estate to customers throughout the U.S. As of December 31, 2006, the Company had a diversified portfolio with no more than 25.5% of the mortgage loan portfolio in any geographic region of the U.S. and no more than 2.6% with any one borrower, compared to 23.8% and 1.6%, respectively, as of December 31, 2005. As of December 31, 2006 and 2005, 33.4% and 32.0% of the carrying value of the Company’s commercial mortgage loan portfolio financed retail properties, respectively.

Real estate to be held and used is carried at cost less accumulated depreciation. Real estate designated as held for disposal is not depreciated and is carried at the lower of the carrying value at the time of such designation or fair value less cost to sell. Other long-term investments are carried on the equity method of accounting.

Impairment losses are recorded on investments in long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in the Company’s mortgage loan valuation allowance and recognition of impairment losses for other-than-temporary declines in the fair values of applicable investments are included in realized gains and losses on investments, hedging instruments and hedged items.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(c) Derivative Instruments

Derivatives are carried at fair value. On the date the derivative contract is entered into, the Company designates the derivative as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge); a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); a foreign currency fair value or cash flow hedge (foreign currency hedge); or a non-hedge transaction. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for entering into various hedge transactions. This process includes linking all derivatives that are designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used for hedging transactions are expected to be and, for ongoing hedging relationships, have been highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not, or is not expected to be, highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

The Company enters into interest rate swaps, cross-currency swaps or Euro futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short U.S. Treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items. Changes in the fair value of the hedged item that are attributable to the risk being hedged are also recorded in realized gains and losses on investments, hedging instruments and hedged items.

The Company may enter into “receive fixed/pay variable” interest rate swaps to hedge existing variable rate assets or to hedge cash flows from the anticipated purchase of investments. These derivative instruments are identified as cash flow hedges and are carried at fair value with the offset recorded in AOCI to the extent the hedging relationship is effective. The ineffective portion of the hedging relationship is recorded in realized gains and losses on investments, hedging instruments and hedged items. Gains and losses on derivative instruments that are initially recorded in AOCI are reclassified out of AOCI and recognized in earnings over the same period(s) that the hedged item affects earnings.

Accrued interest receivable or payable under interest rate and foreign currency swaps are recognized as an adjustment to net investment income or interest credited to policyholder account values consistent with the nature of the hedged item, except for interest rate swaps hedging the anticipated sale of investments where amounts receivable or payable under the swaps are recorded as realized gains and losses on investments, hedging instruments and hedged items, and except for interest rate swaps hedging the anticipated purchase of investments where amounts receivable or payable under the swaps are initially recorded in AOCI to the extent the hedging relationship is effective.

The Company periodically may enter into a derivative transaction that will not qualify for hedge accounting. The Company does not enter into speculative positions. Although these transactions do not qualify for hedge accounting, or have not been designated in hedging relationships by the Company, they are part of its overall risk management strategy. For example, the Company may sell credit default protection through a credit default swap. Although the credit default swap may not be effective in hedging specific investments, the income stream allows the Company to manage overall investment yields while exposing the Company to acceptable credit risk. The Company may enter into a cross-currency basis swap (pay a variable U.S. rate and receive a variable foreign-denominated rate) to eliminate the foreign currency exposure of a variable rate foreign-denominated liability. Although basis swaps may qualify for hedge accounting, the Company has chosen not to designate these derivatives as hedging instruments due to the difficulty in assessing and monitoring effectiveness for both sides of the basis swap. Derivative instruments that do not qualify for hedge accounting or are not designated as hedging instruments are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(d) Revenues and Benefits

Investment and Universal Life Insurance Products: Investment products consist primarily of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, bank-owned life insurance (BOLI) and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, asset fees, cost of insurance charges, administrative fees and surrender charges that have been earned and assessed against policy account balances during the period. The timing of revenue recognition as it relates to fees assessed on investment contracts and universal life contracts is determined based on the nature of such fees. Asset fees, cost of insurance charges and administrative fees are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. Policy benefits and claims that are charged to expense include interest credited to policy account values and benefits and claims incurred in the period in excess of related policy account values.

Traditional Life Insurance Products: Traditional life insurance products include those products with fixed and guaranteed premiums and benefits and primarily consist of whole life insurance, limited-payment life insurance, term life insurance and certain annuities with life contingencies. Premiums for traditional life insurance products are recognized as revenue when due. Benefits and expenses are associated with earned premiums so that profits are recognized over the life of the contract. This association is accomplished through the provision for future policy benefits and the deferral and amortization of policy acquisition costs.

(e) Deferred Policy Acquisition Costs for Investment and Universal Life Insurance Products

The Company has deferred certain costs of acquiring investment and universal life insurance products business, principally commissions, certain expenses of the policy issue and underwriting department, and certain variable sales expenses that relate to and vary with the production of new and renewal business. Investment products primarily consist of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, COLI and other interest-sensitive life insurance policies. DAC is subject to recoverability testing in the year of policy issuance and loss recognition testing at the end of each reporting period.

For investment and universal life insurance products, DAC is being amortized with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administration fees, surrender charges, and net realized gains and losses less policy benefits and policy maintenance expenses. The DAC asset related to investment products and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(b).

The most significant assumptions that are involved in the estimation of future gross profits include future net separate account performance, surrender/lapse rates, interest margins and mortality. The Company’s long-term assumption for net separate account performance is currently 8% growth per year. If actual net separate account performance varies from the 8% assumption, the Company assumes different performance levels over the next three years such that the mean return equals the long-term assumption. This process is referred to as a reversion to the mean. The assumed net separate account return assumptions used in the DAC models are intended to reflect what is anticipated. However, based on historical returns of the Standard & Poor’s (S&P) 500 Index, and as part of its pre-set parameters, the Company’s reversion to the mean process generally limits returns to 0-15% during the three-year reversion period.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Changes in assumptions can have a significant impact on the amount of DAC reported for investment products and universal life insurance products and their related amortization patterns. In the event actual experience differs from assumptions or future assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense, which could be significant. In general, increases in the estimated general and separate account returns result in increased expected future profitability and may lower the rate of DAC amortization, while increases in lapse/surrender and mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization.

Management evaluates the appropriateness of the individual variable annuity DAC balance within pre-set parameters. These parameters are designed to appropriately reflect the Company’s long-term expectations with respect to individual variable annuity contracts while also evaluating the potential impact of short-term experience on the Company’s recorded individual variable annuity DAC balance. If the recorded balance of individual variable annuity DAC falls outside of these parameters for a prescribed period of time, or if the recorded balance falls outside of these parameters and management determines it is not reasonably possible to get back within the parameters during this period of time, assumptions are required to be unlocked and DAC is recalculated using revised best estimate assumptions. If DAC assumptions were unlocked and revised, the Company would continue to use the reversion to the mean process.

For other investment and universal life insurance products, DAC is adjusted each quarter to reflect revised best estimate assumptions, including the use of a reversion to the mean methodology over the next three years as it relates to net separate account performance. Any resulting DAC true-up and unlocking adjustments are reflected currently in the consolidated statements of income.

(f) Separate Accounts

Separate account assets and liabilities represent contractholders’ funds, which have been segregated into accounts with specific investment objectives. Separate account assets are recorded at fair value based primarily on market quotations of the underlying securities. The investment income and gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income except for (1) the fees the Company receives, which are assessed on a daily or monthly basis and recognized as revenue when assessed and earned, and (2) the activity related to guaranteed contracts, which are riders to existing variable annuity contracts.

(g) Future Policy Benefits and Claims

The process of calculating reserve amounts for a life insurance organization involves the use of a number of assumptions, including those related to persistency (how long a contract stays with a company), mortality (the relative incidence of death in a given time), morbidity (the relative incidence of disability resulting from disease or physical impairment) and interest rates (the rates expected to be paid or received on financial instruments, including insurance or investment contracts).

The Company calculates its liability for future policy benefits and claims for investment products in the accumulation phase and universal life and variable universal life insurance policies as the policy account balance, which represents participants’ net premiums and deposits plus investment performance and interest credited less applicable contract charges.

The Company’s liability for funding agreements to an unrelated third party trust equals the balance that accrues to the benefit of the contractholder, including interest credited. The funding agreements constitute insurance obligations and are considered annuity contracts under Ohio insurance laws.

The liability for future policy benefits and claims for traditional life insurance policies was calculated by the net level premium method using interest rates varying from 2.0% to 10.5% and estimates of mortality, morbidity, investment yields and withdrawals that were used or being experienced at the time the policies were issued.

The liability for future policy benefits for payout annuities was calculated using the present value of future benefits and maintenance costs discounted using interest rates varying generally from 3.0% to 13.0%.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(h) Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 8% in 2006 (10% in 2005 and 11% in 2004) of the Company’s life insurance in force, 50% of the number of life insurance policies in force in 2006 (52% in 2005 and 55% in 2004) and 5% of life insurance statutory premiums in 2006 (5% in 2005 and 7% in 2004). The provision for policyholder dividends was based on then current dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.

(i) Federal Income Taxes

The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. Any such change could significantly affect the amounts reported in the consolidated statements of income. Management has used best estimates to establish reserves based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Management evaluates the appropriateness of such reserves quarterly based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums and other rulings issued by the Internal Revenue Service (IRS) or the tax courts.

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully realized.

(j) Reinsurance Ceded

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related balances of the Company.

(k) Reclassification

Certain items in the 2005 and 2004 consolidated financial statements and related notes have been reclassified to conform to the current presentation.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(3) Recently Issued Accounting Standards  

In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statements No. 115 (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. In addition, SFAS 159 does not establish requirements for recognizing and measuring dividend income, interest income or interest expense, nor does it eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS No. 157, Fair Value Measurements (SFAS 157), and SFAS No. 107, Disclosures about Fair Value of Financial Instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company currently is evaluating the impact of adopting SFAS 159.

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end balance sheet, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end balance sheet is effective for fiscal years ending after December 15, 2008. If in the last quarter of the preceding fiscal year an employer enters into a transaction that results in a settlement or experiences an event that causes a curtailment of the plan, the related gain or loss pursuant to Statement 88 or 106 is required to be recognized in earnings that quarter. The adoption of SFAS 158 did not have a material impact on the Company’s financial position or results of operations.

In September 2006, the FASB issued SFAS 157. SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. SFAS 157 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108 (SAB 108). SAB 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB 108 requires registrants to quantify misstatements using both the balance sheet and income-statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB 108 does not change the SEC’s previous guidance in SAB No. 99 on evaluating the materiality of misstatements. A registrant applying the new guidance for the first time that identifies material errors in existence at the beginning of the first fiscal year ending after November 15, 2006, may correct those errors through a one-time cumulative effect adjustment to beginning-of-year retained earnings. The cumulative effect alternative is available only if the application of the new guidance results in a conclusion that a material error exists as of the beginning of the first fiscal year ending after November 15, 2006, and those misstatements were determined to be immaterial based on a proper application of the registrant’s previous method for quantifying misstatements. Because of the beginning-of-year recognition of the cumulative effect adjustment, misstatements occurring in the year of adoption cannot be included in that adjustment. SAB 108 requires the following disclosures if a cumulative effect adjustment is recorded: the nature and amount of each individual error included in the cumulative effect adjustment; when and how each error arose; and the fact that the errors had previously been considered immaterial. The cumulative effect adjustment is available only for prior-year uncorrected misstatements. The adjustment should not include amounts related to changes in accounting estimates. SAB 108 did not have a material impact on the Company’s financial position or results of operations upon adoption.

In June 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company plans to adopt FIN 48 effective January 1, 2007. FIN 48 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets (SFAS 156).SFAS 156 amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140). SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. SFAS 156 permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. An entity that uses derivative instruments to mitigate the risks inherent in servicing assets and servicing liabilities is required to account for those derivative instruments at fair value. Under SFAS 156, an entity can elect subsequent fair value measurement to account for its separately recognized servicing assets and servicing liabilities. By electing that option, an entity may simplify its accounting because SFAS 156 permits income statement recognition of the potential offsetting changes in fair value of those servicing assets and servicing liabilities and derivative instruments in the same accounting period. SFAS 156 is effective for fiscal years beginning after September 15, 2006, with early adoption permitted. The Company plans to adopt SFAS 156 effective January 1, 2007. SFAS 156 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments (SFAS 155). SFAS 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), and SFAS 140. SFAS 155 also resolves issues addressed in SFAS 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. In summary, SFAS 155: (1) permits an entity to make an irrevocable election to measure any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation at fair value in its entirety, with changes in fair value recognized in earnings; (2) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (3) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (4) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (5) amends SFAS 140 to eliminate the prohibition on a qualifying special purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of SFAS 155 may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis. The Company elected to early adopt SFAS 155 as of January 1, 2006. On the date of adoption, there was no impact to the Company’s financial position or results of operations.

In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, issued by the FASB. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights or coverages that occurs as a result of the exchange of a contract for a new contract, or by amendment, endorsement or rider to a contract, or by the election of a new feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006, with earlier adoption encouraged. Retrospective application of SOP 05-1 to previously issued financial statements is not permitted. Initial application of SOP 05-1 is required as of the beginning of an entity’s fiscal year. The Company will adopt SOP 05-1 effective January 1, 2007. Although the Company is currently unable to quantify the impact of adoption, SOP 05-1 is not expected to have a material impact on the Company’s financial position and/or results of operations.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS 154), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, with earlier adoption permitted. The Company adopted SFAS 154 effective January 1, 2006. SFAS 154 has not had any impact on the Company’s financial position or results of operations since adoption.

In July 2003, the AICPA issued Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1) to address many topics. The most significant topic affecting the Company was the accounting for contracts with guaranteed minimum death benefits (GMDB). SOP 03-1 requires companies to evaluate the significance of a GMDB to determine whether a contract should be accounted for as an investment or insurance contract. For contracts determined to be insurance contracts, companies are required to establish a reserve to recognize a portion of the assessment (revenue) that compensates the insurance company for benefits to be provided in future periods. The Company adopted SOP 03-1 effective January 1, 2004, which resulted in a $3.3 million charge, net of taxes, as the cumulative effect of adoption of this accounting principle.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes the components of cumulative effect adjustments recorded in the Company’s 2004 consolidated statements of income:

(in millions)	January 1, 2004
Increase in future policy benefits:
Ratchet interest crediting	$	(12.3	)
Secondary guarantees - life insurance		(2.4	)
GMDB claim reserves		(1.8	)
GMIB claim reserves		(1.0	)
Subtotal		(17.5	)
Adjustment to amortization of deferred policy acquisition costs related to above		12.4
Deferred federal income taxes		1.8
Cumulative effect of adoption of accounting principle, net of taxes	$	(3.3	)

(4) Fair Value of Financial Instruments  

The following disclosures summarize the carrying amount and estimated fair value of the Company’s financial instruments. Certain assets and liabilities are specifically excluded from the disclosure requirements for financial instruments.

The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought or sold, or in the case of liabilities incurred or settled, in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is based on the best information available in the circumstances. Such estimates of fair value should consider prices for similar assets or similar liabilities and the results of valuation techniques to the extent available in the circumstances. Examples of valuation techniques include the present value of estimated expected future cash flows using discount rates commensurate with the risks involved, option-pricing models, matrix pricing, option-adjusted spread models and fundamental analysis. Valuation techniques for measuring assets and liabilities must be consistent with the objective of measuring fair value and should incorporate assumptions that market participants would use in their estimates of values, future revenues and future expenses, including assumptions about interest rates, default, prepayment and volatility.

Many of the Company’s assets and liabilities subject to these disclosure requirements are not actively traded, requiring fair values to be estimated by management using matrix pricing, present value or other suitable valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments.

Although insurance contracts are specifically exempted from the disclosure requirements (other than those that are classified as investment contracts), the Company’s estimate of the fair values of policy reserves on life insurance contracts is provided to make the fair value disclosures more meaningful.

The tax ramifications of the related unrealized gains and losses can have a significant effect on the estimates of fair value and have not been considered in arriving at such estimates.

In estimating its fair value disclosures, the Company used the following methods and assumptions:

Fixed maturity and equity securities available-for-sale: See Note 2(b).

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Mortgage loans on real estate, net: The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Estimated fair value is based on the present value of expected future cash flows discounted at the loan’s effective interest rate.

Policy loans, short-term investments and cash: The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair values.

Separate account assets and liabilities: The fair values of assets held in separate accounts are based on quoted market prices of the underlying securities. The fair values of liabilities related to separate accounts are the amounts payable on demand, net of certain surrender charges.

Investment contracts: The fair values of the Company’s liabilities under investment type contracts are based on one of two methods. For investment contracts without defined maturities, fair value is the amount payable on demand, net of certain surrender charges. For investment contracts with known or determined maturities, fair value is estimated using discounted cash flow analysis. Interest rates used in this analysis are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued.

Policy reserves on life insurance contracts: Included are disclosures for individual life insurance, COLI, BOLI, universal life insurance and supplementary contracts with life contingencies for which the estimated fair value is the amount payable on demand. Also included are disclosures for the Company’s limited payment policies for which the Company has used discounted cash flow analyses to estimate fair value, similar to those used for investment contracts with known maturities.

Short-term debt, collateral received – securities lending and collateral received – derivatives: The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair values.

Long-term debt, payable to NFS: The fair values for long-term debt are based on estimated market prices.

Commitments to extend credit: Commitments to extend credit have nominal fair values because of the short-term nature of such commitments.

Interest rate and cross-currency interest rate swaps:The fair values for interest rate and cross-currency interest rate swaps are calculated with pricing models using current rate assumptions.

Interest rate futures contracts: The fair values for futures contracts are based on quoted market prices.

Other derivatives: The fair values for other derivatives are based on credit event probabilities, equity option index levels and broker valuations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes the carrying values and estimated fair values of financial instruments subject to disclosure requirements and policy reserves on life insurance contracts as of December 31:

	2006						2005
(in millions)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities	$	25,275.4		$	25,275.4		$	27,198.1		$	27,198.1
Equity securities		34.4			34.4			42.1			42.1
Mortgage loans on real estate, net		8,202.2			8,060.7			8,458.9			8,503.0
Policy loans		639.2			639.2			604.7			604.7
Short-term investments		1,722.0			1,722.0			1,596.6			1,596.6
Cash		0.5			0.5			0.9			0.9
Assets held in separate accounts		67,351.9			67,351.9			62,689.8			62,689.8
Liabilities
Investment contracts		(27,124.7	)		(25,455.2	)		(28,698.1	)		(26,607.2	)
Policy reserves on life insurance contracts		(7,284.7	)		(7,120.4	)		(7,243.0	)		(7,173.1	)
Short-term debt		(75.2	)		(75.2	)		(242.3	)		(242.3	)
Long-term debt, payable to NFS		(700.0	)		(809.3	)		(700.0	)		(822.8	)
Collateral received – securities lending and derivatives		(986.1	)		(986.1	)		(1,359.1	)		(1,359.1	)
Liabilities related to separate accounts		(67,351.9	)		(66,149.8	)		(62,689.8	)		(61,483.5	)
Derivative financial instruments
Interest rate swaps hedging assets		4.2			4.2			3.3			3.3
Cross-currency interest rate swaps		66.1			66.1			178.5			178.5
Interest rate futures contracts		(2.4	)		(2.4	)		1.6			1.6
Other derivatives		128.2			128.2			41.1			41.1

(5) Derivative Financial Instruments  

Qualitative Disclosure

Interest Rate Risk Management

The Company periodically purchases fixed rate investments to back variable rate liabilities. As a result, the Company can be exposed to interest rate risk due to the mismatch between variable rate liabilities and fixed rate assets. In an effort to mitigate this risk, the Company enters into various types of derivative instruments to minimize this mismatch, with fluctuations in the fair values of the derivatives offsetting changes in the fair values of the investments resulting from changes in interest rates. The Company principally uses pay fixed/receive variable interest rate swaps to manage this risk.

Under these interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments. The fixed interest paid on the swap offsets the fixed interest received on the investment, resulting in the Company receiving the variable interest payments on the swap, generally 3-month U.S. London Interbank Offered Rate (LIBOR), and the credit spread on the investment. The net receipt of a variable rate will then match the variable rate paid on the liability.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

As a result of entering into commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to the loans being funded. In an effort to manage this risk, the Company enters into short U.S. Treasury futures during the commitment period. With short U.S. Treasury futures, if interest rates rise/fall, the gains/losses on the futures will offset the change in fair value of the commitment attributable to the change in interest rates.

The Company periodically purchases variable rate investments (i.e., commercial mortgage loans and corporate bonds). As a result, the Company can be exposed to variability in cash flows and investment income due to changes in interest rates. Such variability poses risks to the Company when the assets are funded with fixed rate liabilities. In an effort to manage this risk, the Company may enter into receive fixed/pay variable interest rate swaps.

In using these interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap offsets the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap and the credit spread on the investment. The net receipt of a fixed rate will then match the fixed rate paid on the liability.

The Company manages interest rate risk at the segment level. Different segments may simultaneously hedge interest rate risks associated with owning fixed and variable rate investments considering the risk relevant to a particular segment.

Foreign Currency Risk Management

In conjunction with the Company’s medium-term note (MTN) program, the Company periodically issues both fixed and variable rate liabilities denominated in foreign currencies. As a result, the Company is exposed to changes in fair value of the liabilities due to changes in foreign currency exchange rates and related interest rates. In an effort to manage these risks, the Company enters into cross-currency interest rate swaps to convert these liabilities to a U.S. dollar rate.

The Company is exposed to changes in fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and related interest rates. In an effort to manage this risk, the Company uses cross-currency interest rate hedges to swap these asset characteristics to variable U.S. dollar rate instruments. Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in the foreign currency, and receive a variable U.S. dollar rate, generally 3-month U.S. LIBOR. These derivative instruments are designated as a fair value hedge of the fixed rate foreign denominated asset.

For a variable rate foreign liability, the cross-currency interest rate swap is structured to receive a variable rate, in the foreign currency, and pay a variable U.S. dollar rate, generally 3-month U.S. LIBOR. As both sides of the cross-currency interest rate swap are variable, the derivative instrument is a basis swap. While the receive-side terms of the cross-currency interest rate swap will line up with the terms of the liability, the Company is not able to match the pay-side terms of the derivative to a specific asset. Therefore, these derivative instruments do not receive hedge accounting treatment.

Cross-currency interest rate swaps on variable rate investments are structured to pay a variable rate, in the foreign currency, and receive a fixed U.S. dollar rate. The terms of the foreign currency paid on the swap will exactly match the terms of the foreign currency received on the asset, thus eliminating currency risk. These derivative instruments are designated as a cash flow hedge.

Equity Market Risk Management

Asset fees calculated as a percentage of the separate account assets are a significant source of revenue to the Company. As of December 31, 2006, approximately 82% of separate account assets were invested in equity mutual funds (approximately 83% as of December 31, 2005). Gains and losses in the equity markets result in corresponding increases and decreases in the Company’s separate account assets and asset fee revenue. In addition, a decrease in separate account assets may decrease the Company’s expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in guaranteed contract claims, which also may require the Company to accelerate the amortization of DAC.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The Company’s long-term assumption for net separate account returns is 8% annual growth. If equity markets were unchanged throughout a given year, the Company estimates that its net earnings per diluted share, calculated using current weighted average diluted shares outstanding, would be approximately $0.05 to $0.10 less than had the Company’s long-term assumption for net separate account returns been realized. This analysis assumes no other factors change and that an unlocking of DAC assumptions would not be required. However, as it does each quarter, the Company would evaluate its DAC balance and underlying assumptions to determine whether unlocking is appropriate. The Company can provide no assurance that the experience of flat equity market returns would not result in changes to other factors affecting profitability, including the possibility of unlocking of DAC assumptions.

Many of the Company’s individual variable annuity contracts offer GMDB features. A GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on the premiums paid less amounts withdrawn or contract value on a specified anniversary date. A decline in the stock market causing the contract value to fall below this specified amount, which varies from contract to contract based on the date the contract was entered into as well as the GMDB feature elected, will increase the net amount at risk, which is the GMDB in excess of the contract value. This could result in additional GMDB claims.

In an effort to mitigate this risk, the Company has implemented a GMDB economic hedging program for certain new and existing business. Prior to implementation of the GMDB hedging program in 2000, the Company managed this risk primarily by entering into reinsurance arrangements. The GMDB economic hedging program is designed to offset changes in the economic value of the GMDB obligation up to a return of the contractholder’s premium payments. However, the first 10% of GMDB claims are not hedged. Currently the program shorts S&P 500 Index futures, which provides an offset to changes in the value of the designated obligation. The futures are not designated as hedges and, therefore, hedge accounting is not applied. The Company’s economic evaluation of the GMDB obligation is not consistent with current accounting treatment of the GMDB obligation. Therefore, the hedging activity is likely to lead to earnings volatility. This volatility was negligible in 2006. As of December 31, 2006 and 2005, the net amount at risk was $562.4 million and $1.08 billion before reinsurance, respectively, and $119.0 million and $178.4 million net of reinsurance, respectively. As of December 31, 2006 and 2005, the Company’s reserve for GMDB claims was $29.3 million and $26.9 million, respectively. See Note 3 to the audited consolidated financial statements included in the F pages of this report for discussion of the impact of adopting a new accounting principle regarding GMDB reserves in 2004.

The Company also offers certain variable annuity products with a guaranteed minimum accumulation benefit (GMAB) rider. A GMAB provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time (5, 7 or 10 years) selected by the contractholder at the time of issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified period of time, to drop the rider and continue the variable annuity contract without the GMAB. The design of the GMAB rider limits the risk to the Company in a variety of ways including asset allocation requirements, which serve to reduce the Company’s potential exposure to underlying fund performance risks. Specifically, the GMAB terms limit asset allocation by (1) requiring partial allocation of assets to a guaranteed term option (a fixed rate investment option) and excluding certain funds that are highly volatile or difficult to hedge or (2) requiring all assets be allocated to one of the approved asset allocation funds or models defined by the Company. A GMAB represents an embedded derivative in the variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivative is carried at fair value and reported in other future policy benefits and claims. The Company initially records an offset to the fair value of the embedded derivative on the balance sheet, which is amortized through the income statement over the term of the GMAB period of the contract. Subsequent changes in the fair value of the embedded derivative are recognized in earnings. The fair value of the GMAB embedded derivative is calculated based on actuarial assumptions related to the projected benefit cash flows incorporating numerous assumptions including, but not limited to, expectations of contractholder persistency, market returns, correlations of market returns and market return volatility.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The Company began selling contracts with the GMAB feature on May 1, 2003. Beginning October 1, 2003, the Company launched an enhanced version of the rider that offered increased equity exposure to the contractholder in return for a higher charge. The Company simultaneously began economically hedging the GMAB exposure for those risks that exceed a level it considered acceptable. The GMAB economic hedge consists of shorting interest rate futures and S&P 500 Index futures contracts and does not qualify for hedge accounting under current guidance. Quarterly, the Company purchases S&P 500 Index put options and over-the-counter basket put options, which are constructed in order to minimize the tracking error of the hedge and the GMAB liability. See Note 2(c) to the audited consolidated financial statements included in the F pages of this report for discussion of economic hedges. The objective of the GMAB economic hedge strategy is to manage the exposures with risk beyond a level considered acceptable to the Company. The Company is exposed to equity market risk related to the GMAB feature should the growth in the underlying investments, including any GTO investment, fail to reach the guaranteed return level. The GMAB embedded derivative is likely to create volatility in earnings; however, the economic hedging program provides substantial mitigation of this exposure. This volatility was negligible in 2006 and 2005. As of December 31, 2006 and 2005, the balance of the GMAB embedded derivative was $116.3 million and $67.9 million, respectively. The increase in the balance of the GMAB embedded derivative was driven by the value of new business sold during 2006.

Beginning in March 2005, the Company began offering a hybrid GMAB/guaranteed lifetime withdrawal benefit (GLWB) through its Capital Preservation Plus Lifetime Income (CPPLI) contract rider. This living benefit combines a GMAB feature in its first 5-10 years with a lifetime withdrawal benefit which begins upon the maturity of the GMAB and extends for the duration of the insured’s life. In the event that the insured’s contract value is exhausted through such withdrawals, the Company will continue to fund future withdrawals at a pre-defined level until the insured’s death. In some cases, the contract owner has the right to drop the GLWB portion of this rider or periodically reset the guaranteed withdrawal basis to a higher level. This benefit requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy as previously described above.

In March 2006, the Company added Lifetime Income (L.INC), a stand-alone GLWB, to compliment CPPLI in its product offerings. This rider is very similar to the hybrid benefit discussed above. L.INC provides for enhanced retirement income security via guaranteed accumulation rates and withdrawal rates that increase with age without the liquidity loss associated with annuitization. The lifetime withdrawal feature also is being economically hedged. Currently, the Company is using S&P 500 Index and U.S. Treasury futures to hedge exposure to declining equity and interest rate markets, respectively. Similar to GMDBs, the Company’s economic valuation of the lifetime income obligation is not consistent with the accounting treatment of the obligation. Therefore, hedging activity is likely to create volatility in earnings; however, the economic hedging program provides substantial mitigation of this exposure. This volatility was negligible in 2006.

Other Non-Hedging Derivatives

The Company periodically enters into basis swaps (receive one variable rate, pay another variable rate) to better match the cash flows received from the specific variable-rate investments with the variable rate paid on a group of liabilities. While the pay-side terms of the basis swap will line up with the terms of the asset, the Company is not able to match the receive-side terms of the derivative to a specific liability. Therefore, basis swaps do not receive hedge accounting treatment.

The Company sells credit default protection on selected debt instruments and combines the credit default swap with selected assets the Company owns to replicate a higher yielding bond. These selected assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. The combined credit default swap and investments provide cash flows with the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment.

The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company. The purchased credit default protection does not qualify for hedge accounting treatment.

Quantitative Disclosure

Fair Value Hedges

During the years ended December 31, 2006, 2005 and 2004, a net gain of $2.9 million, a net gain of $4.1 million and a net loss of $11.3 million, respectively, were recognized in net realized gains and losses on investments, hedging instruments and hedged items. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness. There were also no gains or losses recognized in earnings as a result of hedged firm commitments no longer qualifying as fair value hedges.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Cash Flow Hedges

For the years ended December 31, 2006, 2005 and 2004, the ineffective portion of cash flow hedges was a net loss of $1.5 million, a net gain of $3.1 million and a net gain of $1.0 million, respectively. There were no net gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness.

The Company anticipates reclassifying less than $0.8 million in net losses out of AOCI over the next 12-month period.

In general, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows associated with forecasted transactions, other than those relating to variable interest on existing financial instruments, is twelve months or less.

During 2006, the Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Additionally, no amounts were reclassified from AOCI into earnings due to the probability that a forecasted transaction would not occur.

Other Derivative Instruments, Including Embedded Derivatives

Net realized gains and losses on investments, hedging instruments and hedged items for the years ended December 31, 2006, 2005 and 2004 included a net loss of $0.5 million, a net loss of $9.1 million and a net gain of $8.1 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. In addition, the Individual Investments segment included a loss of $11.4 million and a gain of $5.1 million for the years ended December 31, 2006 and 2005, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2006, 2005 and 2004, net losses of $10.6 million, $80.7 million and $5.9 million, respectively, were recorded in net realized gains and losses on investments, hedging instruments and hedged items reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate MTNs denominated in foreign currencies. Additional net gains of $14.1 million, $78.3 million and $5.9 million were recorded in net realized gains and losses on investments, hedging instruments and hedged items to reflect the change in spot rates of these foreign currency denominated obligations during the years ended December 31, 2006, 2005 and 2004, respectively.

The following table summarizes the notional amount of derivative financial instruments outstanding as of December 31:

(in millions)	2006		2005
Interest rate swaps:
Pay fixed/receive variable rate swaps hedging investments	$	1,930.5	$	2,040.1
Pay variable/receive fixed rate swaps hedging investments		60.4		79.2
Pay variable/receive fixed rate swaps hedging liabilities		—		550.0
Pay variable/receive variable rate swaps hedging liabilities		—		30.0
Pay fixed/receive variable rate swaps hedging liabilities		1,048.8		170.0
Other contracts hedging investments		—		10.0
Cross-currency interest rate swaps:
Hedging foreign currency denominated investments		452.9		439.8
Hedging foreign currency denominated liabilities		1,137.1		1,312.4
Credit default swaps and other non-hedging instruments		478.6		555.3
Equity option contracts		1,640.7		774.4
Interest rate futures contracts		214.2		120.5
Total	$	6,963.2	$	6,081.7

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(6) Investments  

The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale as of the dates indicated:

(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
December 31, 2006:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	123.7	$	11.4	$	1.4	$	133.7
Agencies not backed by the full faith and credit of the U. S. Government		559.4		46.2		2.2		603.4
Obligations of states and political subdivisions		266.0		0.7		7.2		259.5
Debt securities issued by foreign governments		34.9		1.7		0.1		36.5
Corporate securities
Public		8,602.0		168.8		109.9		8,660.9
Private		6,015.4		128.8		71.4		6,072.8
Mortgage-backed securities – U.S. Government-backed		6,089.1		21.3		112.8		5,997.6
Asset-backed securities		3,506.7		43.3		39.0		3,511.0
Total fixed maturity securities		25,197.2		422.2		344.0		25,275.4
Equity securities		28.5		6.2		0.3		34.4
Total securities available-for-sale	$	25,225.7	$	428.4	$	344.3	$	25,309.8
December 31, 2005:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	163.8	$	14.3	$	0.6	$	177.5
Agencies not backed by the full faith and credit of the U. S. Government		849.7		61.2		6.2		904.7
Obligations of states and political subdivisions		300.3		2.4		3.8		298.9
Debt securities issued by foreign governments		41.4		2.7		0.1		44.0
Corporate securities
Public		9,520.0		233.7		106.2		9,647.5
Private		6,572.2		195.3		65.3		6,702.2
Mortgage-backed securities – U.S. Government-backed		6,048.3		18.1		107.6		5,958.8
Asset-backed securities		3,463.2		42.6		41.3		3,464.5
Total fixed maturity securities		26,958.9		570.3		331.1		27,198.1
Equity securities		35.1		7.0		—		42.1
Total securities available-for-sale	$	26,994.0	$	577.3	$	331.1	$	27,240.2

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The table below summarizes the amortized cost and estimated fair value of fixed maturity securities available-for-sale, by maturity, as of December 31, 2006. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(in millions)	Amortized cost		Estimated fair value
Fixed maturity securities available-for-sale:
Due in one year or less	$	1,476.3	$	1,488.2
Due after one year through five years		6,350.0		6,406.7
Due after five years through ten years		4,697.0		4,722.5
Due after ten years		3,078.1		3,149.4
Subtotal		15,601.4		15,766.8
Mortgage-backed securities – U.S. Government-backed		6,089.1		5,997.6
Asset-backed securities		3,506.7		3,511.0
Total	$	25,197.2	$	25,275.4

The following table presents the components of net unrealized gains on securities available-for-sale as of December 31:

(in millions)	2006			2005
Net unrealized gains, before adjustments and taxes	$	84.1		$	246.2
Adjustment to DAC		83.3			42.4
Adjustment to future policy benefits and claims		(83.1	)		(104.6	)
Deferred federal income taxes		(29.5	)		(64.4	)
Net unrealized gains	$	54.8		$	119.6

The following table presents an analysis of the net decrease in net unrealized gains on securities available-for-sale before adjustments and taxes for the years ended December 31:

(in millions)	2006			2005			2004
Fixed maturity securities	$	(161.0	)	$	(704.1	)	$	(153.3	)
Equity securities		(1.1	)		(3.4	)		(1.2	)
Net change	$	(162.1	)	$	(707.5	)	$	(154.5	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes by time the gross unrealized losses on securities available-for-sale in an unrealized loss position as of the dates indicated:

	Less than or equal to one year				More than one year				Total
(in millions)	Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses
December 31, 2006:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	49.8	$	0.8	$	17.7	$	0.6	$	67.5	$	1.4
Agencies not backed by the full faith and credit of the U.S. Government		31.7		0.1		120.3		2.1		152.0		2.2
Obligations of states and political subdivisions		82.4		1.0		156.3		6.2		238.7		7.2
Debt securities issued by foreign governments		12.8		0.1		—		—		12.8		0.1
Corporate securities
Public		2,445.0		24.3		2,964.6		85.6		5,409.6		109.9
Private		1,162.7		13.5		1,872.3		57.9		3,035.0		71.4
Mortgage-backed securities – U.S. Government-backed		767.8		6.4		3,809.5		106.4		4,577.3		112.8
Asset-backed securities		539.2		4.2		1,336.6		34.8		1,875.8		39.0
Total fixed maturity securities		5,091.4		50.4		10,277.3		293.6		15,368.7		344.0
Equity securities		0.1		—		3.4		0.3		3.5		0.3
Total	$	5,091.5	$	50.4	$	10,280.7	$	293.9	$	15,372.2	$	344.3
% of gross unrealized losses				15%				85%
December 31, 2005:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	25.1	$	0.5	$	3.7	$	0.1	$	28.8	$	0.6
Agencies not backed by the full faith and credit of the U.S. Government		297.0		4.9		42.2		1.3		339.2		6.2
Obligations of states and political subdivisions		150.7		3.0		29.7		0.8		180.4		3.8
Debt securities issued by foreign governments		7.4		0.1		—		—		7.4		0.1
Corporate securities
Public		3,210.4		63.2		1,088.2		43.0		4,298.6		106.2
Private		1,690.3		39.1		672.6		26.2		2,362.9		65.3
Mortgage-backed securities – U.S. Government-backed		4,062.8		88.6		632.6		19.0		4,695.4		107.6
Asset-backed securities		1,420.7		26.1		432.5		15.2		1,853.2		41.3
Total fixed maturity securities		10,864.4		225.5		2,901.5		105.6		13,765.9		331.1
Equity securities		3.9		—		—		—		3.9		—
Total	$	10,868.3	$	225.5	$	2,901.5	$	105.6	$	13,769.8	$	331.1
% of gross unrealized losses				68%				32%

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Increases in unrealized losses more than one year are primarily due to changes in the interest rate environment. Those securities are not considered other-than-temporarily impaired because the decline in market value is attributed to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold those investments until recovery.

Proceeds from the sale of securities available-for-sale during 2006, 2005 and 2004 were $2.27 billion, $2.62 billion and $2.49 billion, respectively. During 2006, gross gains of $61.6 million ($71.9 million and $61.5 million in 2005 and 2004, respectively) and gross losses of $64.1 million ($22.6 million and $8.7 million in 2005 and 2004, respectively) were realized on those sales.

The Company had $5.1 million and $22.2 million of real estate investments as of December 31, 2006 and 2005, respectively, that were non-income producing during the preceding twelve months.

Real estate held for use is presented at cost less accumulated depreciation of $16.7 million as of December 31, 2006 ($21.5 million as of December 31, 2005). The carrying value of real estate held for sale totaled $42.1 million and $2.5 million as of December 31, 2006 and 2005, respectively.

The recorded investment of mortgage loans on real estate considered to be impaired was $17.5 million as of December 31, 2006 ($29.7 million as of December 31, 2005), for which the related valuation allowance was $12.3 million ($7.1 million as of December 31, 2005). Impaired mortgage loans with no valuation allowance are a result of collateral dependent loans where the fair value of the collateral is estimated to be greater than the recorded investment of the loan. During 2006, the average recorded investment in impaired mortgage loans on real estate was $3.5 million ($7.4 million in 2005). Interest income on those loans, which is recognized on a cash basis, totaled $1.9 million in 2006 ($2.1 million in 2005).

The following table summarizes activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31:

(in millions)	2006		2005			2004
Allowance, beginning of period	$	31.1	$	33.3		$	29.1
Net additions (reductions) to allowance		3.2		(2.2	)		4.2
Allowance, end of period	$	34.3	$	31.1		$	33.3

The following table summarizes net realized gains (losses) on investments, hedging instruments and hedged items from continuing operations by source for the years ended December 31:

(in millions)	2006			2005			2004
Total realized gains on sales, net of hedging losses	$	88.8		$	75.6		$	65.0
Total realized losses on sales, net of hedging gains		(64.8	)		(22.9	)		(12.7	)
Total other-than-temporary and other investment impairments		(17.1	)		(36.8	)		(90.6	)
Credit default swaps		(1.1	)		(7.5	)		0.3
Periodic net coupon settlements on non-qualifying derivatives		1.9			1.1			6.6
Other derivatives		(0.6	)		1.1			(5.0	)
Net realized gains (losses) on investments, hedging instruments and hedged items	$	7.1		$	10.6		$	(36.4	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes net investment income from continuing operations by investment type for the years ended December 31:

(in millions)	2006			2005			2004
Securities available-for-sale:
Fixed maturity securities	$	1,419.2		$	1,466.2		$	1,461.9
Equity securities		2.6			2.4			1.2
Mortgage loans on real estate		535.4			577.3			577.4
Real estate		17.0			16.6			17.9
Short-term investments		47.3			18.8			8.9
Derivatives		(1.9	)		(31.0	)		(94.3	)
Other		105.8			112.2			78.4
Gross investment income		2,125.4			2,162.5			2,051.4
Less investment expenses		66.9			57.3			50.9
Net investment income	$	2,058.5		$	2,105.2		$	2,000.5

Fixed maturity securities with an amortized cost of $8.1 million and $16.4 million as of December 31, 2006 and 2005, respectively, were on deposit with various regulatory agencies as required by law.

As of December 31, 2006, the Company had not pledged any fixed maturity securities as collateral to various derivative counterparties compared to $8.5 million as of December 31, 2005.

As of December 31, 2006 and 2005, the Company had received $802.3 million and $1.10 billion, respectively, of cash collateral on securities lending and $171.0 million and $203.3 million, respectively, of cash for derivative collateral. As of December 31, 2006 and 2005, the Company had not received any non-cash collateral on securities. Both the cash and non-cash collateral amounts are included in short-term investments with a corresponding liability recorded in other liabilities. As of December 31, 2006 and 2005, the Company had loaned securities with a fair value of $778.6 million and $1.07 billion, respectively. The Company also held $12.8 million and $53.2 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2006 and 2005, respectively.

(7) Variable Annuity Contracts  

The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contractholders. The Company provides four primary guarantee types under non-traditional variable annuity contracts: (1) GMDB; (2) GMAB; (3) guaranteed minimum income benefits (GMIB); and (4) a hybrid guarantee with GMAB and GLWB.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:

• Return of premium– provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.  

• Reset– provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.  

• Ratchet– provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.  

• Rollup– provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit. For certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.  

• Combo– provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.  

• Earnings enhancement– provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.  

The GMAB, offered in the Company’s Capital Preservation Plus (CPP) contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified period of time, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:

• Ratchet– provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.  

• Rollup– provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.  

• Combo– provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.  

See Note 5 for a complete description of the Company’s hybrid GMAB/GLWB offered through its CPPLI contract rider. All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of December 31:

	2006					2005
(in millions)	Account value		Net amount at risk1		Wtd. avg. attained age	Account value		Net amount at risk1		Wtd. avg. attained age
GMDB:
Return of premium	$	9,231.4	$	17.1	60	$	9,260.6	$	32.5	60
Reset		17,587.0		24.2	63		16,932.1		58.7	63
Ratchet		13,481.0		16.0	66		11,020.6		28.9	65
Rollup		538.4		5.7	70		592.1		8.4	69
Combo		2,588.7		14.9	68		2,530.6		22.3	68
Subtotal		43,426.5		77.9	65		40,336.0		150.8	64
Earnings enhancement		477.8		41.1	61		418.5		27.6	61
Total - GMDB	$	43,904.3	$	119.0	65	$	40,754.5	$	178.4	63
GMAB2:
5 Year	$	2,131.1	$	0.1	N/A	$	1,041.8	$	0.5	N/A
7 Year		1,865.7		0.1	N/A		1,103.5		0.2	N/A
10 Year		784.0		—	N/A		595.5		0.1	N/A
Total - GMAB	$	4,780.8	$	0.2	N/A	$	2,740.8	$	0.8	N/A
GMIB3:
Ratchet	$	450.6	$	—	N/A	$	444.7	$	—	N/A
Rollup		1,187.1		—	N/A		1,189.3		—	N/A
Combo		0.5		—	N/A		0.5		—	N/A
Total - GMIB	$	1,638.2	$	—	N/A	$	1,634.5	$	—	N/A
GLWB:
Lifetime Income (L.INC)	$	993.8	$	—	N/A	$	—	$	—	N/A
Total - GLWB	$	993.8	$	—	N/A	$	—	$	—	N/A

¹   Net amount at risk is calculated on a seriatum basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance, with the earliest annuitizations beginning in 2006.  

²   GMAB contracts with the hybrid GMAB/GLWB rider had account values of $2.95 billion and $939.1 million as of December 31, 2006 and 2005, respectively.  

³   The weighted average period remaining until expected annuitization is not meaningful and has not been presented because there is currently no material GMIB exposure.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table is a rollforward of the liabilities for guarantees on variable annuity contracts reflected in the Company’s general account for the years indicated:

(in millions)	GMDB			GMAB			GMIB		GLWB		Total
Balance as of December 31, 2004	$	23.6		$	20.6		$	0.8	$	—	$	45.0
Expense provision		32.8			—			0.4		—		33.2
Net claims paid		(29.5	)		—			—		—		(29.5	)
Value of new business sold		—			53.4			—		—		53.4
Change in fair value		—			(6.1	)		—		—		(6.1	)
Balance as of December 31, 2005		26.9			67.9			1.2		—		96.0
Expense provision		32.5			—			—		0.3		32.8
Net claims paid		(30.1	)		—			—		—		(30.1	)
Value of new business sold		—			95.2			—		—		95.2
Change in fair value		—			(46.8	)		—		—		(46.8	)
Balance as of December 31, 2006	$	29.3		$	116.3		$	1.2	$	0.3	$	147.1

The following table summarizes account balances of contracts with guarantees that were invested in separate accounts as of December 31:

(in millions)	2006		2005
Mutual funds:
Bond	$	4,467.3	$	3,857.3
Domestic equity		29,808.4		28,011.3
International equity		3,420.5		2,161.4
Total mutual funds		37,696.2		34,030.0
Money market funds		1,414.4		1,350.4
Total	$	39,110.6	$	35,380.4

The Company’s GMDB claim reserves are determined by estimating the expected value of death benefits on contracts that trigger a policy benefit and recognizing the excess ratably over the accumulation period based on total expected assessments. GMIB claim reserves are determined each period by estimating the expected value of annuitization benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total assessments. The Company regularly evaluates its GMDB and GMIB claim reserve estimates and adjusts the additional liability balances as appropriate, with a related charge or credit to other benefits and claims in the period of evaluation if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in calculating GMIB claim reserves are consistent with those used for calculating GMDB claim reserves. In addition, the calculation of GMIB claim reserves assumes benefit utilization ranges from a low of 3% when the contractholder’s annuitization value is at least 10% in the money to 100% utilization when the contractholder is 90% or more in the money.

In accordance with SOP 03-01, GLWB claim reserves for the L.INC rider are determined each period by estimating the expected value of withdrawal benefits in excess of the projected account balance and recognizing such potential additional liabilities of the Company as a benefit reserve expense ratably over the accumulation period. The Company periodically evaluates estimates used and adjusts the additional liability balance as appropriate, with a related charge or credit to life insurance and annuity benefits in the period of evaluation if actual experience or other evidence suggests that earlier assumptions should be revised.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2006 and 2005:

• Data used was based on a combination of historical numbers and future projections involving 50 probabilistically generated economic scenarios  

• Mean gross equity performance – 8.1%  

• Equity volatility – 18.7%  

• Mortality – 100% of Annuity 2000 table  

• Asset fees – equivalent to mutual fund and product loads  

• Discount rate – 8.0%  

Lapse rate assumptions vary by duration as shown below:

Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	4.00%	5.00%	6.00%	7.00%	8.00%	9.50%	10.00%	11.00%	14.00%	14.00%
Maximum	4.00%	5.00%	6.00%	7.00%	35.00%	35.00%	23.00%	35.00%	35.00%	23.00%

GMABs and hybrid GMABs/GLWBs are considered embedded derivatives under current accounting guidance, resulting in the related liabilities being separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings, and therefore, excluded from the SOP 03-1 policy benefits.

(8) Short-Term Debt  

The following table summarizes short-term debt as of December 31:

(in millions)	2006		2005
$800.0 million commercial paper program	$	—	$	134.7
$350.0 million securities lending program facility		75.2		75.0
$250.0 million securities lending program facility		—		32.6
Total short-term debt	$	75.2	$	242.3

The Company has available as a source of funds a $1.00 billion revolving variable rate credit facility entered into by NFS, NLIC and NMIC with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company maintain consolidated tangible net worth, as defined, in excess of $2.60 billion and that NLIC maintain statutory surplus, as defined, in excess of $1.67 billion. As of December 31, 2006, the Company and NLIC were in compliance with all covenants. The Company had no amounts outstanding under this agreement as of December 31, 2006 and 2005. NLIC also has an $800.0 million commercial paper program and is required to maintain an available credit facility equal to 50% of any amounts outstanding under the commercial paper program. Therefore, borrowing capacity under the aggregate $1.00 billion revolving credit facility is reduced by 50% of any amounts outstanding under the commercial paper program. NLIC had no commercial paper outstanding at December 31, 2006 and $134.7 million outstanding at December 31, 2005 at a weighted average effective interest rate of 4.22%.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

NLIC has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. NLIC had $75.2 million and $75.0 million outstanding under this agreement as of December 31, 2006 and 2005, respectively. As of December 31, 2006, the Company had not provided any guarantees on such borrowings, either directly or indirectly.

The Company paid interest on short-term debt totaling $11.7 million, $11.5 million and $3.6 million in 2006, 2005 and 2004, respectively.

(9) Long-Term Debt  

The following table summarizes surplus notes payable to NFS as of December 31:

(in millions)	2006		2005
8.15% surplus note, due June 27, 2032	$	300.0	$	300.0
7.50% surplus note, due December 17, 2031		300.0		300.0
6.75% surplus note, due December 23, 2033		100.0		100.0
Total long-term debt	$	700.0	$	700.0

The Company made interest payments to NFS on surplus notes totaling $53.7 million, $53.7 million and $50.7 million in 2006, 2005 and 2004, respectively. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).

(10) Federal Income Taxes  

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, the ultimate majority shareholder of NFS. Effective October 1, 2002, Nationwide Corporation’s ownership in NFS decreased from 79.8% to 63.0%. Therefore, NFS and its subsidiaries, including the Company, no longer qualify to be included in the NMIC consolidated federal income tax return. The members of the NMIC consolidated federal income tax return group participated in a tax sharing arrangement, which provided, in effect, for each member to bear essentially the same federal income tax liability as if separate tax returns were filed.

Under Internal Revenue Code (IRC) regulations, NFS and its subsidiaries cannot file a life/non-life consolidated federal income tax return until five full years following NFS’ departure from the NMIC consolidated federal income tax return group. Therefore, NFS and its direct non-life insurance company subsidiaries will file a consolidated federal income tax return; NLIC and NLAIC will file a consolidated federal income tax return; and the direct non-life insurance companies under NLIC will file separate federal income tax returns, until 2008, when NFS will become eligible to file a single life/non-life consolidated federal income tax return with all of its subsidiaries.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31:

(in millions)	2006			2005
Deferred tax assets:
Future policy benefits	$	607.8		$	630.5
Other		138.6			185.9
Gross deferred tax assets		746.4			816.4
Less valuation allowance		(7.0	)		(7.0	)
Deferred tax assets, net of valuation allowance		739.4			809.4
Deferred tax liabilities:
Deferred policy acquisition costs		1,022.2			970.5
Other		173.9			237.1
Gross deferred tax liabilities		1,196.1			1,207.6
Net deferred tax liability	$	456.7		$	398.2

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income taxes paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged during 2006, 2005 and 2004.

The Company’s current federal income tax (asset) liability was $(12.6) million and $53.8 million as of December 31, 2006 and 2005, respectively.

Through June 2006, the Company’s federal income tax returns for tax years 2000-2002 were under IRS examination pursuant to a routine audit. In accordance with its regular practice, management established tax reserves representing its best estimate of additional amounts the Company could be required to pay if certain positions it had taken were challenged and ultimately denied by the IRS with respect to these tax years. These reserves are reviewed regularly and are adjusted as events occur that management believes impacts the Company’s liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/non-deductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. A significant component of the Company’s tax reserve as of December 31, 2005 was related to the separate account dividends received deduction (DRD).

In July 2006, the Company reached substantial agreement with the IRS on all open issues for tax years 2000-2002, including issues related to the DRD. Accordingly, the Company revised its estimate of amounts that may be due in connection with certain tax positions, including the DRD, for all open tax years. As a result of the revised estimate, $110.9 million of tax reserves were released into earnings during the quarter ended June 30, 2006.

During the third quarter of 2006, the Company recorded $7.8 million of net federal income tax expense adjustments primarily related to differences between the 2005 estimated tax liability and the amounts reported on the Company’s 2005 tax returns.

During the third quarter of 2005, the Company refined its separate account DRD estimation process. As a result, the Company identified and recorded additional federal income tax benefits and recoverables in the amount of $42.6 million related to all tax years (2000 – 2005) that were open at that time. In addition, the Company recorded $5.6 million of net benefit adjustments primarily related to differences between the 2004 estimated tax liability and the amounts reported on the Company’s 2004 tax returns.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes federal income tax expense attributable to income from continuing operations for the years ended December 31:

(in millions)	2006			2005		2004
Current	$	(61.8	)	$	90.6	$	181.5
Deferred		92.4			5.0		(61.5	)
Federal income tax expense	$	30.6		$	95.6	$	120.0

Total federal income tax expense differs from the amount computed by applying the U.S. federal income tax rate to income from continuing operations before federal income taxes as follows for the years ended December 31:

	2006					2005					2004
(dollars in millions)	Amount			%		Amount			%		Amount			%
Computed (expected) tax expense	$	228.6		35.0		$	217.0		35.0		$	187.2		35.0
Tax exempt interest and DRD		(67.5	)	(10.3	)		(107.5	)	(17.3	)		(47.2	)	(8.8	)
Reserve release		(110.9	)	(17.0	)		—		—			—		—
Other, net		(19.6	)	(3.0	)		(13.9	)	(2.3	)		(20.0	)	(3.8	)
Total	$	30.6		4.7		$	95.6		15.4		$	120.0		22.4

The Jobs Creation Act of 2004 suspends policyholder surplus accounts (PSA) during 2005 and 2006 and provides that direct and indirect distributions from the PSA during any taxable year beginning after 2004 and before 2007 be treated as zero. Because NLIC had the ability and intent to distribute this PSA balance to its shareholder during the noted period, the potential tax liability was eliminated as of December 31, 2004. The Jobs Creation Act of 2004 had no other significant impact on the Company’s tax position.

Total federal income taxes (refunded) paid were $(4.3) million, $182.2 million and $142.3 million during the years ended December 31, 2006, 2005 and 2004, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(11) Shareholders’ Equity, Regulatory Risk-Based Capital and Dividend Restrictions  

Regulatory Risk-Based Capital

The State of Ohio, where NLIC and NLAIC are domiciled, imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level risk-based capital, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. NLIC and NLAIC each exceeded the minimum risk-based capital requirements for all periods presented herein.

Dividend Restrictions

State insurance laws generally restrict the ability of insurance companies to pay cash dividends and make other payments in excess of certain prescribed limitations without prior approval. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the ODI. The statutory capital and surplus of NLIC as of December 31, 2006 and 2005 was $2.68 billion and $2.60 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2006, 2005 and 2004 was $537.5 million, $462.5 million and $317.7 million, respectively. As of January 1, 2007, based on statutory financial results as of and for the year ended December 31, 2006, NLIC could pay dividends totaling $162.5 million without obtaining prior approval. As of March 1, 2007, NLIC will be able to pay dividends to NFS totaling $232.5 million upon providing prior notice to the ODI. On February 21, 2007, NLIC declared an ordinary dividend of $232.5 million and an extraordinary dividend of $242.5 million, both payable to NFS in March 2007. NLIC will provide notice to the ODI of the ordinary dividend and seek prior approval from the ODI of the extraordinary dividend before paying these dividends to NFS.

In addition, the payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on NLIC’s participating policies (measured before dividends to policyholders) that can inure to the benefit of the Company and its shareholder.

The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Comprehensive Income

The Company’s comprehensive income includes net income and certain items that are reported directly within separate components of shareholder’s equity that are not recorded in net income (other comprehensive income or loss).

The following table summarizes the Company’s other comprehensive loss, before and after federal income tax benefit (expense), for the years ended December 31:

(in millions)	2006			2005			2004
Net unrealized losses on securities available-for-sale arising during the period:
Net unrealized losses before adjustments	$	(171.3	)	$	(687.2	)	$	(182.0	)
Net adjustment to deferred policy acquisition costs		40.9			187.0			99.1
Net adjustment to future policy benefits and claims		21.5			17.0			(11.0	)
Related federal income tax benefit		38.1			169.1			33.3
Net unrealized losses		(70.8	)		(314.1	)		(60.6	)
Reclassification adjustment for net realized losses (gains) on securities available-for-sale realized during the period:
Net unrealized losses (gains)		9.2			(20.3	)		27.5
Related federal income tax (benefit) expense		(3.2	)		7.1			(9.6	)
Net reclassification adjustment		6.0			(13.2	)		17.9
Other comprehensive loss on securities available-for-sale		(64.8	)		(327.3	)		(42.7	)
Accumulated net holding (losses) gains on cash flow hedges:
Unrealized holding (losses) gains		(0.2	)		41.7			(47.4	)
Related federal income tax benefit (expense)		0.1			(14.6	)		16.6
Other comprehensive (loss) income on cash flow hedges		(0.1	)		27.1			(30.8	)
Total other comprehensive loss	$	(64.9	)	$	(300.2	)	$	(73.5	)

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2006, 2005 and 2004.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(12) Employee Benefit Plans  

Defined Benefit Plans

The Company and certain affiliated companies participate in a qualified defined benefit pension plan sponsored by NMIC. This plan covers all employees of participating companies who have completed at least one year of service. Plan contributions are invested in a group annuity contract issued by NLIC. All participants are eligible for benefits based on an account balance feature. Participants last hired before 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature. The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. A separate non-qualified defined benefit pension plan sponsored by NMIC covers certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $19.9 million, $16.6 million and $13.7 million for the years ended December 31, 2006, 2005 and 2004, respectively.

In addition to the NMIC pension plan, the Company and certain affiliated companies participate in life and health care defined benefit plans sponsored by NMIC for qualifying retirees. Postretirement life and health care benefits are contributory. The level of contribution required by a qualified retiree depends on the retiree’s years of service and date of hire. In general, postretirement benefits are available to full-time employees who are credited with 120 months of retiree life and health service. Postretirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and coinsurance. In addition, there are caps on the Company’s portion of the per-participant cost of the postretirement health care benefits. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested primarily in group annuity contracts issued by NLIC. The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2006, 2005 and 2004.

Defined Contribution Plans

NMIC sponsors a defined contribution retirement savings plan covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company’s expense for contributions to these plans was $6.6 million, $6.2 million and $5.8 million for the years ended December 31, 2006, 2005 and 2004, respectively.

(13) Related Party Transactions  

The Company has entered into significant, recurring transactions and agreements with NMIC, other affiliates and subsidiaries as a part of its ongoing operations. These include annuity and life insurance contracts, office space leases, and agreements related to reinsurance, cost sharing, administrative services, marketing, intercompany loans, intercompany repurchases, cash management services and software licensing. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, the number of full-time employees, commission expense and other methods agreed to by the participating companies and that are within industry guidelines and practices.

In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides computer, telephone, mail, employee benefits administration and other services to NMIC and certain of its direct and indirect subsidiaries, including the Company, based on specified rates for units of service consumed. For the years ended December 31, 2006, 2005 and 2004, the Company made payments to NMIC and NSC totaling $261.7 million, $274.1 million and $194.6 million, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $5.48 billion and $6.39 billion as of December 31, 2006 and 2005, respectively. Total revenues from these contracts were $133.4 million, $136.2 million and $136.5 million for the years ended December 31, 2006, 2005 and 2004, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $110.7 million, $107.3 million and $107.9 million for the years ended December 31, 2006, 2005 and 2004, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated.

The Company leases office space from NMIC. For the years ended December 31, 2006, 2005 and 2004, the Company made lease payments to NMIC of $19.3 million, $18.7 million and $18.4 million, respectively.

NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC for the years ended December 31, 2006, 2005 and 2004 were $430.8 million, $429.5 million and $335.6 million, respectively, while benefits, claims and expenses ceded during these years were $470.4 million, $398.8 million and $336.0 million, respectively.

Funds of NWD Investment Management, Inc. (NWD), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2006 and 2005, customer allocations to NWD funds totaled $18.26 billion and $15.70 billion, respectively. For the years ended December 31, 2006, 2005 and 2004, NWD paid the Company $64.4 million, $51.6 million and $44.5 million, respectively, for the distribution and servicing of these funds.

Under a marketing agreement with NMIC, NLIC makes payments to cover a portion of the agent marketing allowance that is paid to Nationwide agents. These costs cover product development and promotion, sales literature, rent and similar items. Payments under this agreement totaled $28.3 million, $26.5 million and $23.2 million for the years ended December 31, 2006, 2005 and 2004, respectively.

The Company also participates in intercompany repurchase agreements with affiliates whereby the seller transfers securities to the buyer at a stated value. Upon demand or after a stated period, the seller repurchases the securities at the original sales price plus interest. As of December 31, 2006 and 2005, the Company had no outstanding borrowings from affiliated entities under such agreements. During 2006, 2005 and 2004, the most the Company had outstanding at any given time was $191.5 million, $55.3 million and $227.7 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements during these years were immaterial.

The Company and various affiliates entered into agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC for the benefit of the Company were $601.3 million and $390.9 million as of December 31, 2006 and 2005, respectively, and are included in short-term investments on the consolidated balance sheets.

Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2006, 2005 and 2004 were $58.1 million, $59.0 million and $63.1 million, respectively.

During the years ended December 31, 2006 and 2005, the Company did not purchase any fixed maturity securities available-for-sale from NFN compared to $829.9 million during 2004. NFN recorded gross realized gains of $23.4 million on such transactions during 2004.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

An affiliate of the Company is currently developing a browser-based policy administration and online brokerage software application for defined benefit plans. In connection with the development of this application, the Company made net payments, which were expensed, to that affiliate related to development totaling $6.9 million, $2.9 million and $2.6 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Historically, the Company has retained funds for certain claim and benefit payments to customers in the form of interest-bearing accounts. During the year ended December 31, 2006, this practice was discontinued. Eligible participant balances totaling $224.7 million were transferred from the Company to interest-bearing deposit accounts of Nationwide Bank, a wholly-owned subsidiary of NFS, in exchange for cash plus a premium of $0.7 million payable to NFS for the value of the relationships acquired by Nationwide Bank.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 10. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. Total payments (from) to NMIC were $(15.3) million, $45.0 million and $37.4 million in the years ended December 31, 2006, 2005 and 2004, respectively. These payments related to tax years prior to deconsolidation.

In 2006, 2005 and 2004, NLIC paid dividends to NFS totaling $375.0 million, $185.0 million and $125.0 million, respectively.

(14) Contingencies  

Legal Matters

The Company is a party to litigation and arbitration proceedings in the ordinary course of its business. It is often not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. The Company does not believe, based on information currently known by management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on the Company’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on the Company’s consolidated financial results in a particular quarterly or annual period.

In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements against life insurers other than the Company.

The financial services industry, including mutual fund, variable annuity, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past few years. Numerous regulatory agencies, including the SEC, the National Association of Securities Dealers and the New York State Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues. The Company has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by the Company. The Company has cooperated with these investigations. Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by the Company and its affiliates in December 2003 and June 2005, respectively, and no further information requests have been received with respect to these matters.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, the use of side agreements and finite reinsurance agreements, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives. Related investigations and proceedings may be commenced in the future. The Company and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, the use of side agreements and finite reinsurance agreements, and funding agreements backing the NLIC MTN program. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. These proceedings also could affect the outcome of one or more of the Company’s litigation matters. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on the Company in the future.

On November 15, 2006, NFS, NLIC and NRS were named in a lawsuit filed in the Untied States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The Class Period is from January 1, 1996 until the Class Notice is provided. The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, NFS, NLIC and NRS filed a motion to dismiss. NFS, NLIC and NRS intend to defend this lawsuit vigorously.

On February 11, 2005, NLIC was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees. On February 2, 2006, the Court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The Court certified a class consisting of all residents of the United States and the Virgin Islands who, during the Class Period, paid premiums on a modal basis to NLIC for term life insurance policies issued by NLIC during the Class Period that provide for guaranteed maximum premiums, excluding certain specified products. Excluded from the class are NLIC; any parent, subsidiary or affiliate of NLIC; all employees, officers and directors of NLIC; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The Class Period is from February 10, 1990 through February 2, 2006, the date the class was certified. On January 26, 2007, the plaintiff filed a motion for summary judgment. NLIC continues to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

On April 13, 2004, NLIC was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. NLIC removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed a First Amended Complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of an NLIC annuity or insurance product) units of any NLIC sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The First Amended Complaint purports to disclaim, with respect to market timing or stale price trading in NLIC’s annuities sub-accounts, any allegation based on NLIC’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of NLIC annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if NLIC is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to NLIC’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an NLIC annuity or insurance product) units of any NLIC sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The First Amended Complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 1, 2006, the District Court granted NLIC’s motion to dismiss the plaintiff’s complaint. On November 29, 2006, the plaintiff filed its appellate brief with the Fourth Circuit Court of Appeals contesting the District Court’s dismissal. NLIC continues to defend this lawsuit vigorously.

On January 21, 2004, NLIC, Nationwide Life Insurance Company of America, NLAIC, NFS and Nationwide Financial Corporation (collectively referred to as the Companies) were named in a lawsuit filed in the United States District Court for the Northern District of Mississippi entitled United Investors Life Insurance Company v. Nationwide Life Insurance Company and/or Nationwide Life Insurance Company of America and/or Nationwide Life and Annuity Insurance Company and/or Nationwide Life and Annuity Company of America and/or Nationwide Financial Services, Inc. and/or Nationwide Financial Corporation, and John Does A-Z. In its complaint, the plaintiff alleges that the Companies and/or their affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Companies. The plaintiff raises claims for (1) violations of the Federal Lanham Act, and common law unfair competition and defamation; (2) tortious interference with the plaintiff’s contractual relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W&R Insurance Agency, Inc., or with the plaintiff’s contractual relationships with its variable policyholders; (3) civil conspiracy; and (4) breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, a constructive trust and costs and disbursements, including attorneys’ fees. On December 30, 2005, the Companies filed a motion for summary judgment. On June 15, 2006, the District Court granted the Companies’ motion for summary judgment on all grounds and dismissed the plaintiff’s entire case with prejudice. The plaintiff appealed the District Court’s decision to the Fifth Circuit Court of Appeals. The appeal has been fully briefed, and the Companies are awaiting a decision. The Companies continue to defend this lawsuit vigorously.

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NLIC and NFS, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class. NFS’ and NLIC’s motion to dismiss the plaintiffs’ fifth amended complaint is currently pending before the court. NFS and NLIC continue to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Tax Matters

The Company’s federal income tax returns are routinely audited by the IRS. Management has established tax reserves representing its best estimate of additional amounts it may be required to pay if certain tax positions it has taken are challenged and ultimately denied by the IRS. These reserves are reviewed regularly and are adjusted as events occur that management believes impact its liability for additional taxes, such as lapsing of applicable statutes of limitations, conclusion of tax audits or substantial agreement on the deductibility/non-deductibility of uncertain items, additional exposure based on current calculations, identification of new issues, release of administrative guidance or rendering of a court decision affecting a particular tax issue. Management believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years.

(15) Guarantees  

Since 2001, the Company has sold $626.1 million of credit enhanced equity interests in Low-Income-Housing Tax Credit Funds (Tax Credit Funds) to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 5.25% over periods ending between 2002 and 2022. As of December 31, 2006, the Company held guarantee reserves totaling $6.3 million on these transactions. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $1.36 billion. The Company does not anticipate making any payments related to these guarantees.

At the time of the sales, $5.9 million of net sale proceeds were set aside as collateral for certain properties owned by the Tax Credit Funds that had not met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized. During 2006 and 2005, no stabilization collateral amounts were released into income. As of December 31, 2006 and 2005, $2.2 million of stabilization collateral was unrecognized and recorded as a reserve, respectively.

To the extent there are cash deficits in any specific property owned by the Tax Credit Funds, property reserves, property operating guarantees and reserves held by the Tax Credit Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the Tax Credit Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(16) Variable Interest Entities  

As of December 31, 2006 and 2005, the Company had relationships with 18 and 19 variable interest entities (VIEs), respectively, each of which the Company was the primary beneficiary. As of December 31, 2006, each VIE was a conduit that assists the Company in structured products transactions involving the sale of Tax Credit Funds to third party investors for which the Company provides guaranteed returns (see Note 15). The results of operations and financial position of these VIEs are included along with corresponding minority interest liabilities in the accompanying consolidated financial statements.

VIE net assets were $445.5 million and $440.6 million as of December 31, 2006 and December 31, 2005, respectively. The following table summarizes the components of net assets as of December 31:

(in millions)	2006			2005
Mortgage loans on real estate	$	—		$	31.5
Other long-term investments		432.5			478.6
Short-term investments		33.7			42.3
Other assets		37.8			41.3
Short-term debt		—			(32.6	)
Other liabilities		(58.5	)		(120.5	)

The Company’s total loss exposure from VIEs of which the Company is the primary beneficiary was immaterial as of December 31, 2006 and 2005 (except for the impact of guarantees disclosed in Note 15).

In addition to the VIEs described above, the Company holds variable interests, in the form of limited partnerships or similar investments, in Tax Credit Funds of which the Company is not the primary beneficiary. These investments have been held by the Company for periods of 1 to 10 years and allow the Company to utilize certain tax credits and realize other tax benefits from affordable housing projects. The Company also has certain investments in other securitization transactions that qualify as VIEs, but of which the Company is not the primary beneficiary. The total exposure to loss on these VIEs was $68.9 million and $53.9 million as of December 31, 2006 and 2005, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(17) Segment Information  

Management views the Company’s business primarily based on its underlying products and uses this basis to define its four reportable segments: Individual Investments, Retirement Plans, Individual Protection, and Corporate and Other.

The primary segment profitability measure that management uses is pre-tax operating earnings, which is calculated by adjusting income from continuing operations before federal income taxes to exclude (1) net realized gains and losses on investments, hedging instruments and hedged items, except for periodic net coupon settlements on non-qualifying derivatives and net realized gains and losses related to securitizations and (2) the adjustment to amortization of DAC related to net realized gains and losses.

Individual Investments

The Individual Investments segment consists of individual The BEST of AMERICA^® and private label deferred variable annuity products, deferred fixed annuity products, income products and advisory services. Individual deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, individual variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while individual fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods.

Retirement Plans

The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans business. The private sector primarily includes IRC Section 401(k) business, and the public sector primarily includes IRC Section 457 and Section 401(a) business, both in the form of full-service arrangements that provide plan administration and fixed and variable group annuities as well as administration-only business.

Individual Protection

The Individual Protection segment consists of investment life insurance products, including individual variable, COLI and BOLI products; traditional life insurance products; and universal life insurance products. Life insurance products provide a death benefit and generally allow the customer to build cash value on a tax-advantaged basis.

Corporate and Other

The Corporate and Other segment includes certain structured products business; the MTN program; net investment income and certain expenses not allocated to other segments; periodic net coupon settlements on non-qualifying derivatives; interest expense on debt; revenue and expenses of the Company’s non-insurance subsidiaries not reported in other segments; and net realized gains and losses related to securitizations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes the Company’s business segment operating results for the years ended December 31:

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2006
Revenues:
Policy charges	$	581.7	$	160.2	$	390.7	$	—		$	1,132.6
Traditional life insurance and immediate annuity premiums		142.5		—		165.8		—			308.3
Net investment income		739.5		636.0		328.2		354.8			2,058.5
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		1.0			1.0
Other income		2.6		—		0.3		3.4			6.3
Total revenues		1,466.3		796.2		885.0		359.2			3,506.7
Benefits and expenses:
Interest credited to policyholder account values		501.7		440.5		179.2		208.7			1,330.1
Life insurance and annuity benefits		202.8		—		247.5		—			450.3
Policyholder dividends on participating policies		—		—		25.6		—			25.6
Amortization of DAC		352.7		37.9		69.6		(9.9	)		450.3
Interest expense on debt		—		—		—		65.5			65.5
Other operating expenses		206.3		179.1		142.4		4.0			531.8
Total benefits and expenses		1,263.5		657.5		664.3		268.3			2,853.6
Income from continuing operations before federal income tax expense		202.8		138.7		220.7		90.9		$	653.1
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		(1.0	)
Adjustment to amortization related to net realized gains and losses		—		—		—		(9.9	)
Pre-tax operating earnings	$	202.8	$	138.7	$	220.7	$	80.0
Assets as of period end	$	55,404.6	$	28,817.2	$	16,948.8	$	8,791.8		$	109,962.4

¹   Excluding periodic net coupon settlements on non-qualifying derivatives and net realized gains and losses related to securitizations.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2005
Revenues:
Policy charges	$	532.4	$	145.0	$	377.7	$	—		$	1,055.1
Traditional life insurance and immediate annuity premiums		96.7		—		163.3		—			260.0
Net investment income		822.4		642.9		332.8		307.1			2,105.2
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		9.5			9.5
Other income		1.3		0.2		—		1.8			3.3
Total revenues		1,452.8		788.1		873.8		318.4			3,433.1
Benefits and expenses:
Interest credited to policyholder account values		557.7		444.8		182.4		146.1			1,331.0
Life insurance and annuity benefits		149.1		—		228.4		—			377.5
Policyholder dividends on participating policies		—		—		33.1		—			33.1
Amortization of DAC		329.1		47.2		89.0		1.0			466.3
Interest expense on debt		—		—		—		66.3			66.3
Other operating expenses		193.1		181.8		148.1		15.8			538.8
Total benefits and expenses		1,229.0		673.8		681.0		229.2			2,813.0
Income from continuing operations before federal income tax expense		223.8		114.3		192.8		89.2		$	620.1
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		(9.5	)
Adjustment to amortization of DAC related to net realized gains and losses		—		—		—		1.0
Pre-tax operating earnings	$	223.8	$	114.3	$	192.8	$	80.7
Assets as of period end	$	52,929.2	$	29,987.2	$	14,728.7	$	9,313.4		$	106,958.5

¹   Excluding periodic net coupon settlements on non-qualifying derivatives and net realized gains and losses related to securitizations.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2004
Revenues:
Policy charges	$	503.6	$	157.0	$	364.6	$	—		$	1,025.2
Traditional life insurance and immediate annuity premiums		87.5		—		182.9		—			270.4
Net investment income		824.8		627.9		327.2		220.6			2,000.5
Net realized losses on investments, hedging instruments and hedged items1		—		—		—		(43.0	)		(43.0	)
Other income		0.6		—		—		15.8			16.4
Total revenues		1,416.5		784.9		874.7		193.4			3,269.5
Benefits and expenses:
Interest credited to policyholder account values		573.5		435.5		181.5		86.7			1,277.2
Life insurance and annuity benefits		136.9		—		232.3		—			369.2
Policyholder dividends on participating policies		—		—		36.2		—			36.2
Amortization of DAC		276.1		39.6		94.4		—			410.1
Interest expense on debt		—		—		—		59.8			59.8
Other operating expenses		210.0		184.5		159.7		27.8			582.0
Total benefits and expenses		1,196.5		659.6		704.1		174.3			2,734.5
Income from continuing operations before federal income tax expense		220.0		125.3		170.6		19.1		$	535.0
Net realized losses on investments, hedging instruments and hedged items1		—		—		—		43.0
Pre-tax operating earnings	$	220.0	$	125.3	$	170.6	$	62.1
Assets as of period end	$	52,642.5	$	29,668.7	$	12,932.4	$	10,714.3		$	105,957.9

¹   Excluding periodic net coupon settlements on non-qualifying derivatives and net realized gains and losses related to securitizations.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule I          Consolidated Summary of Investments – Other Than Investments in Related Parties

As of December 31, 2006 (in millions)

Column A	Column B		Column C		Column D
Type of investment	Cost		Market value		Amount at which shown in the consolidated balance sheet
Fixed maturity securities available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government corporations	$	123.7	$	133.7	$	133.7
Agencies not backed by the full faith and credit of the U.S. Government		559.4		603.4		603.4
Obligations of states and political subdivisions		266.0		259.5		259.5
Foreign governments		34.9		36.5		36.5
Public utilities		1,541.9		1,543.5		1,543.5
All other corporate		22,671.3		22,698.8		22,698.8
Total fixed maturity securities available-for-sale		25,197.2		25,275.4		25,275.4
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies		13.3		17.8		17.8
Industrial, miscellaneous and all other		7.8		9.1		9.1
Nonredeemable preferred stocks		7.4		7.5		7.5
Total equity securities available-for-sale		28.5		34.4		34.4
Mortgage loans on real estate, net		8,222.9				8,202.2	1
Real estate, net:
Investment properties		66.3				49.7	2
Acquired in satisfaction of debt		5.2				5.1	2
Total real estate, net		71.5				54.8
Policy loans		639.2				639.2
Other long-term investments		677.4				574.9	3, 4
Short-term investments, including amounts managed by a related party		1,722.0				1,722.0
Total investments	$	36,558.7			$	36,502.9

¹   Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans on real estate (see Note 6 to the audited consolidated financial statements), hedges and commitment hedges on mortgage loans on real estate.  

²   Difference from Column B primarily results from adjustments for accumulated depreciation.  

³   Difference from Column B primarily is due to operating gains and/or losses of investments in limited partnerships.  

⁴   Amount shown does not agree to the audited consolidated balance sheet due to $24.1 million in unconsolidated related party investments.  

See accompanying report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule III        Supplementary Insurance Information

As of December 31, 2006, 2005 and 2004 and for each of the years then ended (in millions)

Column A	Column B			Column C		Column D			Column E		Column F
Year: Segment	Deferred policy acquisition costs			Future policy benefits, losses, claims and loss expenses		Unearned premiums1			Other policy claims and benefits payable1		Premium revenue
2006
Individual Investments	$	1,945.0		$	13,004.4						$	142.5
Retirement Plans		288.6			10,839.0							—
Individual Protection		1,441.0			5,574.1							165.8
Corporate and Other		83.4			4,991.9							—
Total	$	3,758.0		$	34,409.4						$	308.3
2005
Individual Investments	$	1,936.4		$	14,970.9						$	96.7
Retirement Plans		290.3			10,847.3							—
Individual Protection		1,328.7			5,531.9							163.3
Corporate and Other		42.5			4,591.0							—
Total	$	3,597.9		$	35,941.1						$	260.0
2004
Individual Investments	$	2,015.5		$	15,500.6						$	87.5
Retirement Plans		301.7			10,139.8							—
Individual Protection		1,244.1			5,430.5							182.9
Corporate and Other		(144.7	)		5,312.2							—
Total	$	3,416.6		$	36,383.1						$	270.4
Column A	Column G			Column H		Column I			Column J		Column K
Year: Segment	Net investment income2			Benefits, claims, losses and settlement expenses		Amortization of deferred policy acquisition costs			Other operating expenses2		Premiums written
2006
Individual Investments	$	739.5		$	704.5	$	352.7			206.3
Retirement Plans		636.0			440.5		37.9			179.1
Individual Protection		328.2			452.3		69.6			142.4
Corporate and Other		354.8			208.7		(9.9	)		4.0
Total	$	2,058.5		$	1,806.0	$	450.3		$	531.8
2005
Individual Investments	$	822.4		$	706.8	$	329.1		$	193.1
Retirement Plans		642.9			444.8		47.2			181.8
Individual Protection		332.8			443.9		89.0			148.1
Corporate and Other		307.1			146.1		1.0			15.8
Total	$	2,105.2		$	1,741.6	$	466.3		$	538.8
2004
Individual Investments	$	824.8		$	710.4	$	276.1		$	210.0
Retirement Plans		627.9			435.5		39.6			184.5
Individual Protection		327.2			450.0		94.4			159.7
Corporate and Other		220.6			86.7		—			27.8
Total	$	2,000.5		$	1,682.6	$	410.1		$	582.0

¹   Unearned premiums and other policy claims and benefits payable are included in Column C amounts.  

²   Allocations of net investment income and certain operating expenses are based on numerous assumptions and estimates, and reported segment operating results would change if different methods were applied.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule IV          Reinsurance

As of December 31, 2006, 2005 and 2004 and for each of the years then ended (dollars in millions)

Column A	Column B		Column C		Column D		Column E		Column F
	Gross amount		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
2006
Life insurance in force	$	151,109.9	$	58,189.8	$	7.9	$	92,928.0	0.0%
Premiums:
Life insurance 1	$	336.4	$	28.4	$	0.3	$	308.3	0.1%
Accident and health insurance		388.9		417.4		28.5		—	N/A
Total	$	725.3	$	445.8	$	28.8	$	308.3	9.3%
2005
Life insurance in force	$	142,308.1	$	52,339.1	$	10.6	$	89,979.6	0.0%
Premiums:
Life insurance 1	$	311.5	$	51.8	$	0.3	$	260.0	0.1%
Accident and health insurance		415.2		445.1		29.9		—	N/A
Total	$	726.7	$	496.9	$	30.2	$	260.0	11.6%
2004
Life insurance in force	$	123,756.6	$	46,866.2	$	10.2	$	76,900.6	0.0%
Premiums:
Life insurance 1	$	300.7	$	30.6	$	0.3	$	270.4	0.1%
Accident and health insurance		312.7		345.1		32.4		—	N/A
Total	$	613.4	$	375.7	$	32.7	$	270.4	12.1%

¹   Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment products and universal life insurance products.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule V        Valuation and Qualifying Accounts

Years ended December 31, 2006, 2005 and 2004 (in millions)

Column A	Column B		Column C				Column D		Column E
Description	Balance at beginning of period		Charged (credited) to costs and expenses		Charged to other accounts		Deductions1		Balance at end of period
2006
Valuation allowances - mortgage loans on real estate	$	31.1	$	6.0	$	—	$	2.8	$	34.3
2005
Valuation allowances - mortgage loans on real estate	$	33.3	$	1.6	$	—	$	3.8	$	31.1
2004
Valuation allowances - mortgage loans on real estate	$	29.1	$	7.5	$	—	$	3.3	$	33.3

¹   Amounts represent transfers to real estate owned and recoveries.  

PART C. OTHER INFORMATION

Item 26.                   Exhibits

(a) Resolution of the Depositor’s Board of Directors authorizing the establishment of the Registrant – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(b) Not Applicable

(c) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter – Filed previously with the registration statement (333-31725) and hereby incorporated by reference.

(d) The form of the contract – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(e) The form of the contract application – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(f) Articles of Incorporation of Depositor – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(g) Reinsurance Contracts -Filed previously with registration statement (333-31725) and hereby incorporated by reference.

(h) Participation Agreements - Filed previously with registration statement (333-31725) and hereby incorporated by reference.

(i) Not Applicable

(j) Not Applicable

(k) Opinion of Counsel – Filed previously with Pre-Effective Amendment No. 1 to the registration statement (333-31725) and hereby incorporated by reference.

(l) Not Applicable

(m) Not Applicable

(n) Consent of Independent Registered Public Accounting Firm – Attached hereto.

(o) Not Applicable

(p) Not Applicable

(q) Redeemability Exemption Procedures - Filed previously with registration statement (333-46338) and hereby incorporated by reference.

(99)      Power of Attorney – Attached hereto.        

Item 27. Directors and Officers of the Depositor

Chairman of the Board and Director	Arden L. Shisler
Chief Executive Officer and Director	W. G. Jurgensen
President and Chief Operating Officer	Mark R. Thresher
Executive Vice President and Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President-Chief Administrative Officer	Terri L. Hill
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing Officer	James R. Lyski
Executive Vice President-Financial, Investments and Strategy	Robert A. Rosholt
Senior Vice President and Treasurer	Harry H. Hallowell
Senior Vice President-Chief Compliance Officer	Carol Baldwin Moody
Senior Vice President-Chief Financial Officer	Timothy G. Frommeyer
Senior Vice President-Chief Investment Officer	Gail G. Snyder
Senior Vice President-CIO Strategic Investments	Gary I. Siroko
Senior Vice President-Corporate Relations	Gregory S. Lashutka
Senior Vice President-Corporate Strategy	J. Stephen Baine
Senior Vice President-Division General Counsel	Thomas W. Dietrich
Senior Vice President-Enterprise Chief Risk Officer	Brian W. Nocco
Senior Vice President-Health and Productivity	Holly R. Snyder
Senior Vice President-In Retirement Business Head	Keith I. Millner
Senior Vice President-Individual Protection Business Head	Peter A. Golato
Senior Vice President-Information Technology	Srinivas Koushik
Senior Vice President-Internal Audits	Kelly A. Hamilton
Senior Vice President-NF Marketing	Gordon E. Hecker
Senior Vice President-NF Systems	R. Dennis Noice
Senior Vice President-Non-Affiliated Sales	John Laughlin Carter
Senior Vice President-NW Retirement Plans	William S. Jackson
Senior Vice President-President - Nationwide Bank	Anne L. Arvia
Senior Vice President-Property and Casualty Claims	David R. Jahn
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	James R. Burke
Senior Vice President-Property and Casualty Human Resources	Gale V. King
Senior Vice President-Property and Casualty Personal Lines Product Pricing	J. Lynn Greenstein
Vice President-Assistant to the CEO and Secretary	Thomas E. Barnes
Director	Joseph A. Alutto
Director	James G. Brocksmith, Jr.
Director	Keith W. Eckel
Director	Lydia M. Marshall
Director	Donald L. McWhorter
Director	David O. Miller
Director	Martha Miller de Lombera
Director	James F. Patterson
Director	Gerald D. Prothro
Director	Alex Shumate

The business address of the Directors and Officers of the Depositor is:

One Nationwide Plaza, Columbus, Ohio 43215

Item 28.                 Persons Controlled by or Under Common Control with the Depositor or Registrant.

	*	Subsidiaries for which separate financial statements are filed
	**	Subsidiaries included in the respective consolidated financial statements
	***	Subsidiaries included in the respective group financial statements filed for unconsolidated subsidiaries
	****	Other subsidiaries
COMPANY			STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
1717 Advisory Services, Inc.			Pennsylvania		The company was formerly registered as an investment advisor and is currently inactive.
1717 Brokerage Services, Inc.			Pennsylvania		The company is a multi-state licensed insurance agency.
1717 Capital Management Company*			Pennsylvania		The company is registered as a broker-dealer and investment advisor.
1717 Insurance Agency of Massachusetts, Inc.			Massachusetts		The company is established to grant proper licensing to the Nationwide Life Insurance Company of America affiliates in Massachusetts.
1717 Insurance Agency of Texas, Inc.			Texas		The company is established to grant proper licensing to the Nationwide Life Insurance Company of America affiliates in Texas.
AGMC Reinsurance, Ltd.			Turks & Caicos Islands		The company is in the business of reinsurance of mortgage guaranty risks.
AID Finance Services, Inc.			Iowa		The company operates as a holding company.
ALLIED General Agency Company			Iowa		The company acts as a general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.			Iowa		The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company			Iowa		The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.			Texas		The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
Allnations, Inc.			Ohio		The company engages in promoting, extending, and strengthening cooperative insurance organizations throughout the world.
AMCO Insurance Company			Iowa		The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.			Florida		The company is an underwriting manager for ocean cargo and hull insurance.
Atlantic Floridian Insurance Company (f.k.a Nationwide Atlantic Insurance Company)			Ohio		The company writes personal lines residential property insurance in the State of Florida.
Audenstar Limited			England and Wales		The company is an investment holding company.
BlueSpark, LLC			Ohio		The company is currently inactive.
Cal-Ag Insurance Services, Inc.			California		The company is an insurance agency.
CalFarm Insurance Agency			California		The company is an insurance agency.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Colonial County Mutual Insurance Company*	Texas		The company underwrites non-standard automobile and motorcycle insurance and other various commercial liability coverages in Texas.
Corviant Corporation	Delaware		The purpose of the company is to create a captive distribution network through which affiliates can sell multi-manager investment products, insurance products and sophisticated estate planning services.
Crestbrook Insurance Company* (f.k.a. CalFarm Insurance Company)	Ohio		The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Depositors Insurance Company	Iowa		The company underwrites general property and casualty insurance.
DVM Insurance Agency, Inc.	California		This company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
F&B, Inc.	Iowa		The company is an insurance agency that places business with carriers other than Farmland Mutual Insurance Company and its affiliates.
Farmland Mutual Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Financial Settlement Services Agency, Inc.	Ohio		The company is an insurance agency in the business of selling structured settlement products.
FutureHealth Corporation	Maryland		The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.
FutureHealth Holding Company	Maryland		The company provides population health management.
FutureHealth Technologies Corporation	Maryland		The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.
Gartmore Distribution Services, Inc.*	Delaware		The company is a limited purpose broker-dealer.
Gartmore Investor Services, Inc.	Ohio		The company provides transfer and dividend disbursing agent services to various mutual fund entities.
Gartmore Morley Capital Management, Inc.	Oregon		The company is an investment advisor and stable value money manager.
Gartmore Mutual Fund Capital Trust	Delaware		The trust acts as a registered investment advisor.
Gartmore S.A. Capital Trust	Delaware		The trust acts as a registered investment advisor.
Gates, McDonald & Company	Ohio		The company provides services to employers for managing workers' compensation matters and employee benefits costs.
Gates, McDonald & Company of New York, Inc.	New York		The company provides workers' compensation and self-insured claims administration services to employers with exposure in New York.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
GatesMcDonald DTAO, LLC	Ohio		The company provides disability tax reporting services.
GatesMcDonald DTNHP, LLC	Ohio		The company provides disability tax reporting services.
GatesMcDonald DTC, LLC	Ohio		The company provides disability tax reporting services.
GatesMcDonald Health Plus Inc.*	Ohio		The company provides medical management and cost containment services to employers.
GVH Participacoes e Empreedimientos Ltda.	Brazil		The company acts as a holding company.
Insurance Intermediaries, Inc.	Ohio		The company is an insurance agency and provides commercial property and casualty brokerage services.
Life REO Holdings, LLC	Ohio		The company serves as a holding company for foreclosure entities.
Lone Star General Agency, Inc.	Texas		The company acts as general agent to market automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
Morely & Associates, Inc. (f.k.a. Gartmore Morley & Associates, Inc.)	Oregon		The company brokers or places book-value maintenance agreements (wrap contracts) and guarantee investment contracts for collective investment trusts and accounts.
Morley Financial Services, Inc. (f.k.a. Gartmore Morley Financial Services, Inc.)	Oregon		The company is a holding company.
Mullen TBG Insurance Agency Services, LLC	Delaware		The company is a joint venture between TBG Insurance Services Corporation and MC Insurance Agency Services LLC. The Company provides financial products and services to executive plan participants.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England		This is a limited liability company organized for profit under the Companies Act of 1948 of England for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds.  This company is currently inactive.
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Ohio		The company provides property and casualty insurance products.
Nationwide Agribusiness Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*	Ohio		The purpose of the company is to develop Nationwide Arena and to engage in related development activity.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Asset Management Holdings	England and Wales		The company operates as a holding company.
Nationwide Global Asset Management, Inc. (f.k.a. Gartmore Global Asset Management , Inc.)	Delaware		The company operates as a holding company.
Nationwide Assurance Company	Wisconsin		The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Bank			This is a federal savings bank charted by the Office of Thrift Supervision in the United States Department of Treasury to exercise deposit, lending agency custody and fiduciary powers and to engage in activities permissible for federal savings banks under the Home Owners’ Loan act of 1933.
Nationwide Better Health, Inc.	Ohio		The company is a holding company for the health and productivity operations of Nationwide.
Nationwide Cash Management Company*	Ohio		The company buys and sells investment securities of a short-term nature as the agent for other Nationwide corporations, foundations, and insurance company separate accounts.
Nationwide Community Development Corporation, LLC	Ohio		The company holds investments in low-income housing funds.
Nationwide Corporation	Ohio		The company acts primarily as a holding company for entities affiliated with Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company.
Nationwide Document Solutions, Inc. (f.k.a. ALLIED Document Solutions, Inc.)	Iowa		The company provides general printing services to its affiliated companies as well as to certain unaffiliated companies.
Nationwide Emerging Managers, LLC (f.k.a. Gartmore Emerging Managers, LLC)	Delaware		The company acquires and holds interests in registered investment advisors and provides investment management services.
Nationwide Exclusive Agent Risk Purchasing Group, LLC	Ohio		The company's purpose is to provide a mechanism for the purchase of group liability insurance for insurance agents operating nationwide.
Nationwide Financial Assignment Company	Ohio		The company is an administrator of structured settlements.
Nationwide Financial Institution Distributors Agency, Inc.	Delaware		The company is an insurance agency.
Nationwide Financial Institution Distributors Insurance Agency, Inc. of Massachusetts	Massachusetts		The company is an insurance agency.
Nationwide Financial Institution Distributors Insurance Agency, Inc. of New Mexico	New Mexico		The company is an insurance agency.
Nationwide Financial Services Capital Trust	Delaware		The trust's sole purpose is to issue and sell certain securities representing individual beneficial interests in the assets of the trust.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Financial Services, Inc.*	Delaware		The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute long-term savings and retirement products.
Nationwide Financial Sp. Zo.o	Poland		The company is currently inactive.
Nationwide Financial Structured Products, LLC	Ohio		The company captures and reports the results of the structured products business unit.
Nationwide Foundation*	Ohio		The company contributes to non-profit activities and projects.
Nationwide General Insurance Company	Ohio		The company transacts a general insurance business, except life insurance, and primarily provides automobile and fire insurance to select customers.
Nationwide Global Finance, LLC	Ohio		The company acts as a support company for Nationwide Global Holdings, Inc. in its international capitalization efforts.
Nationwide Global Funds	Luxembourg		This company issues shares of mutual funds.
Nationwide Global Holdings, Inc.	Ohio		The company is a holding company for the international operations of Nationwide.
Nationwide Global Ventures, Inc. (f.k.a. Gartmore Global Ventures, Inc.)	Delaware		The company acts as a holding company.
Nationwide Indemnity Company*	Ohio		The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide Insurance organization.
Nationwide Insurance Company of America	Wisconsin		The company underwrites general property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio		The company transacts general insurance business except life insurance.
Nationwide International Underwriters	California		The company is a special risk, excess and surplus lines underwriting manager.
Nationwide Investment Advisors, LLC	Ohio		The company provides investment advisory services.
Nationwide Investment Services Corporation**	Oklahoma		This is a limited purpose broker-dealer and acts as an investment advisor.
Nationwide Life and Annuity Company of America**	Delaware		The company provides individual life insurance products.
Nationwide Life and Annuity Insurance Company**	Ohio		The company engages in underwriting life insurance and granting, purchasing, and disposing of annuities.
Nationwide Life Insurance Company*	Ohio		The company provides individual life insurance, group life and health insurance, fixed and variable annuity products, and other life insurance products.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Life Insurance Company of America*	Pennsylvania		The company provides individual life insurance and group annuity products.
Nationwide Life Insurance Company of Delaware*	Delaware		The company insures against personal injury, disability or death resulting from traveling, sickness or other general accidents, and every type of insurance appertaining thereto.
Nationwide Lloyds	Texas		The company markets commercial and residential property insurance in Texas.
Nationwide Management Systems, Inc.	Ohio		The company offers a preferred provider organization and other related products and services.
Nationwide Mutual Capital, LLC	Ohio		The company acts as a private equity fund investing in companies for investment purposes and to create strategic opportunities for Nationwide.
Nationwide Mutual Capital I, LLC*	Delaware		The business of the company is to achieve long term capital appreciation through a portfolio of primarily domestic equity investments in financial service and related companies.
Nationwide Mutual Fire Insurance Company	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Mutual Insurance Company*	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Private Equity Fund, LLC	Ohio		The company invests in private equity funds.
Nationwide Properties, Ltd.	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investments.
Nationwide Property and Casualty Insurance Company	Ohio		The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC	Ohio		The company provides alarm systems and security guard services.
Nationwide Provident Holding Company*	Pennsylvania		The company is a holding company for non-insurance subsidiaries.
Nationwide Realty Investors, Ltd.*	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investment.
Nationwide Retirement Solutions, Inc.*	Delaware		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Arizona	Arizona		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio	Ohio		The company provides retirement products, marketing and education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas	Texas		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Insurance Agency, Inc.	Massachusetts		The company markets and administers deferred compensation plans for public employees.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Sales Solutions, Inc.	Iowa		The company engages in direct marketing of property and casualty insurance products.
Nationwide Securities, Inc.*	Ohio		The company is a registered broker-dealer and provides investment management and administrative services.
Nationwide Separate Accounts, LLC (f.k.a. Gartmore Separate Accounts, LLC)	Delaware		The company acts as a registered investment advisor.
Nationwide Services Company, LLC	Ohio		The company performs shared services functions for the Nationwide organization.
Nationwide Services For You, LLC	Ohio		The company provides consumer services that are related to the business of insurance, including services that help consumers prevent losses and mitigate risks.
Nationwide Services Sp. Zo.o.	Poland		The company is currently inactive.
Newhouse Capital Partners, LLC	Delaware		The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Capital Partners II, LLC	Delaware		The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Special Situations Fund I, LLC	Delaware		The company owns and manages contributed securities in order to achieve long-term capital appreciation from the contributed securities and through investments in a portfolio of other equity investments in financial service and other related companies.
NF Reinsurance Ltd.*	Bermuda		The company serves as a captive reinsurer for Nationwide Life Insurance Company’s universal life, term life and annuity business.
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc.'s distribution companies.
NGH UK, Ltd.*	United Kingdom		The company is currently inactive.
NMC CPC WT Investment, LLC	Delaware		The business of the company is to hold and exercise rights in a specific private equity investment.
NorthPointe Capital LLC	Delaware		The company acts as a registered investment advisor.
NWD Investment Management, Inc. (f.k.a. Gartmore Global Investments, Inc.)	Delaware		The company acts as a holding company and provides other business services for the NWD Investments group of companies.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
NWD Management & Research Trust (f.k.a. Gartmore Global Asset Management Trust)	Delaware		The company acts as a holding company for the NWD Investments group of companies and as a registered investment advisor.
NWD MGT, LLC (f.k.a. GGI MGT LLC)	Delaware		The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to the NWD Investments management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC.
Pension Associates, Inc.	Wisconsin		The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa		This company is an insurance agency.
Provestco, Inc.	Delaware		The company serves as a general partner in certain real estate limited partnerships invested in by Nationwide Life Insurance Company of America.
Quick Sure Auto Agency, Inc.	Texas		The company is an insurance agency and operates as an employee agent "storefront" for Titan Insurance Services.
RCMD Financial Services, Inc.	Delaware		The company is a holding company.
Registered Investment Advisors Services, Inc.	Texas		The company facilitates third-party money management services for plan providers.
Retention Alternatives, Ltd.*	Bermuda		The company is a captive insurer and writes first dollar insurance policies in workers’ compensation, general liability and automobile liability for its affiliates in the United States.
Riverview Alternative Investment Advisors, LLC (f.k.a. Gartmore Riverview, LLC)	Delaware		The company provides investment management services to a limited number of institutional investors.
Riverview Alternative Investment Advisors II LLC (f.k.a. Gartmore riverview II, LLC)	Delaware		The company is a holding company.
Riverview International Group, Inc.	Delaware		The company is a holding company.
RP&C International, Inc.	Ohio		The company is an investment-banking firm that provides specialist advisory services and innovative financial solutions to public and private companies internationally.
Scottsdale Indemnity Company	Ohio		The company is engaged in a general insurance business, except life insurance.
Scottsdale Insurance Company	Ohio		The company primarily provides excess and surplus lines of property and casualty insurance.
Scottsdale Surplus Lines Insurance Company	Arizona		The company provides excess and surplus lines coverage on a non-admitted basis.
TBG Advisory Services Corporation (d.b.a. TBG Advisors)	California		The company is an investment advisor.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
TBG Aviation, LLC	California		The company holds an investment in a leased airplane and maintains an operating agreement with Flight Options.
TBG Danco Insurance Services Corporation	California		The corporation provides life insurance and individual executive estate planning.
TBG Financial & Insurance Services Corporation*	California		The company consults with corporate clients and financial institutions on the development and implementation of proprietary and/or private placement insurance products for the financing of executive benefit programs and individual executive's estate planning requirements.  As a broker dealer, TBG Financial & Insurance Services Corporation provides access to institutional insurance investment products.
TBG Financial & Insurance Services Corporation of Hawaii	Hawaii		The corporation consults with corporate clients and financial institutions on the development and implementation of proprietary, private placement and institutional insurance products.
TBG Insurance Services Corporation*	Delaware		The company markets and administers executive benefit plans.
THI Holdings (Delaware), Inc.*	Delaware		The company acts as a holding company for subsidiaries of the Nationwide group of companies.
Titan Auto Agency, Inc. (d.b.a. Arlans Agency)	Michigan		The company is an insurance agency that primarily sells non-standard automobile insurance for Titan Insurance Company in Michigan.
Titan Auto Insurance of New Mexico, Inc.	New Mexico		The company is an insurance agency that operates employee agent storefronts.
Titan Holdings Service Corporation	Texas		The company is currently inactive.
Titan Indemnity Company	Texas		The company is a multi-line insurance company and is operating primarily as a property and casualty insurance company.
Titan Insurance Company	Michigan		This is a property and casualty insurance company.
Titan Insurance Services, Inc.	Texas		The company is a Texas grandfathered managing general agency.
Titan National Auto Call Center, Inc.	Texas		The company is licensed as an insurance agency that operates as an employee agent "call center" for Titan Indemnity Company.
Union Bond & Trust Company (f.k.a. Gartmore Trust Company)	Oregon		The company is an Oregon state bank with trust powers.
Veterinary Pet Insurance Company*	California		The company provides pet insurance.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Victoria Automobile Insurance Company	Indiana		The company is a property and casualty insurance company.
Victoria Financial Corporation	Delaware		The company acts as a holding company specifically for holding insurance companies of Victoria group of companies.
Victoria Fire & Casualty Company	Ohio		The company is a property and casualty insurance company.
Victoria Insurance Agency, Inc.	Ohio		The company is an insurance agency that acts as a broker for independent agents appointed with the Victoria companies in the State of Ohio.
Victoria National Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Select Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Specialty Insurance Company	Ohio		The company is a property and casualty insurance company.
Vida Seguradora SA	Brazil		The company operates as a licensed insurance company in the categories of life and unrestricted private pension plan in Brazil.
VPI Services, Inc.	California		The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance Company policies, including pet indemnification and a lost pet recovery program.
Washington Square Administrative Services, Inc.	Pennsylvania		The company provides administrative services to Nationwide Life and Annuity Company of America.
Western Heritage Insurance Company	Arizona		The company underwrites excess and surplus lines of property and casualty insurance.
Whitehall Holdings, Inc.	Texas		The company acts as a holding company for the Titan group of agencies.
W.I. of Florida (d.b.a. Titan Auto Insurance)	Florida		The company is an insurance agency and operates as an employee agent storefront for Titan Indemnity Company in Florida.

	COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart  unless otherwise indicated)	PRINCIPAL BUSINESS
*	MFS Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide Multi-Flex Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-A	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-B	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-C	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-D	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-II	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-3	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-4	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-5	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-6	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-7	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-8	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-9	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-10	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-11	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-12	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-13	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-14	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-15	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-16	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-17	Ohio		Issuer of Annuity Contracts
*	Nationwide Provident VA Separate Account 1	Pennsylvania		Issuer of Annuity Contracts
*	Nationwide Provident VA Separate Account A	Delaware		Issuer of Annuity Contracts
	Nationwide VL Separate Account-A	Ohio		Issuer of Life Insurance Policies
	Nationwide VL Separate Account-B	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-C	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-D	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-G	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-2	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-3	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-4	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-5	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-6	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-7	Ohio		Issuer of Life Insurance Policies
*	Nationwide Provident VLI Separate Account 1	Pennsylvania		Issuer of Life Insurance Policies
*	Nationwide Provident VLI Separate Account A	Delaware		Issuer of Life Insurance Policies

Item 29. Indemnification

Ohio's General Corporation Law expressly authorizes and Nationwide’s Amended and Restated Code of Regulations provides for indemnification by Nationwide of any person who, because such person is or was a director, officer or employee of Nationwide was or is a party; or is threatened to be made a party to:

o any threatened, pending or completed civil action, suit or proceeding;

o any threatened, pending or completed criminal action, suit or proceeding;

o any threatened, pending or completed administrative action or proceeding;

o any threatened, pending or completed investigative action or proceeding; ,

The indemnification will be for actual and reasonable expenses, including attorney's fees, judgments, fines and amounts paid in settlement by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the Ohio's General Corporation Law.

Nationwide has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide for liabilities arising under the Securities Act of 1933 ("Act") is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities is asserted by a  director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act. Nationwide and the directors, officers and/or controlling persons will be governed by the final adjudication of such issue.  Nationwide will not be required to seek the court’s determination if, in the opinion of Nationwide’s counsel, the matter has been settled by controlling precedent.

However, the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding is permitted

Item 30.                 Principal Underwriter

(a) Nationwide Investment Services Corporation ("NISC") serves as principal underwriter and general distributor for the following separate investment accounts of Nationwide or its affiliates:

Multi-Flex Variable Account	Nationwide VL Separate Account-C
Nationwide Variable Account	Nationwide VL Separate Account-D
Nationwide Variable Account-II	Nationwide VL Separate Account-G
Nationwide Variable Account-4	Nationwide VLI Separate Account-2
Nationwide Variable Account-5	Nationwide VLI Separate Account-3
Nationwide Variable Account-6	Nationwide VLI Separate Account-4
Nationwide Variable Account-7	Nationwide VLI Separate Account-6
Nationwide Variable Account-8	Nationwide VLI Separate Account-7
Nationwide Variable Account-9
Nationwide Variable Account-10
Nationwide Variable Account-11
Nationwide Variable Account-13
Nationwide Variable Account-14
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C

(b) Directors and Officers of NISC:

President	Keith J. Kelly
Senior Vice President, Treasurer and Director	James D. Benson.
Vice President	Karen R. Colvin
Vice President	Scott A. Englehart
Vice President	Charles E. Riley
Vice President	Trey Rouse
Vice President and Assistant Secretary	Thomas E. Barnes
Vice President-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Glenn W. Soden
Assistant Treasurer	Terry C. Smetzer
Director	John Laughlin Carter
Director	Keith I. Millner

The business address of the Directors and Officers of Nationwide Investment Services Corporation is:

One Nationwide Plaza, Columbus, Ohio 43215

(c)

Name of Principal Underwriter	Net Underwriting Discounts and Commissions	Compensation on Redemption or Annuitization	Brokerage Commissions	Compensation
Nationwide Investment Services Corporation	N/A	N/A	N/A	N/A

(d)

Item 31.           Location of Accounts and Records

Timothy G. Frommeyer

Nationwide Life Insurance Company

One Nationwide Plaza

Columbus, OH  43215

Item 32.           Management Services

Not Applicable

Item 33. Fee Representation

Nationwide represents that the fees and charges deducted under the contract in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred and risks assumed by Nationwide.

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VLI SEPARATE ACCOUNT-4, certifies that it meets the requirements of the Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of Columbus, and State of Ohio, on this 20th day of April, 2007.

NATIONWIDE VLI SEPARATE ACCOUNT-4

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

By: /s/ TIMOTHY D. CRAWFORD.

Timothy D. Crawford

As required by the Securities Act of 1933, the Registration Statement has been signed by the following persons in the capacities indicated on this 20th day of April, 2007.

W. G. JURGENSEN
W. G. Jurgensen, Director and Chief Executive Officer
ARDEN L. SHISLER
Arden L. Shisler, Chairman of the Board
JOSEPH A. ALUTTO
Joseph A. Alutto, Director
JAMES G. BROCKSMITH, JR.
James G. Brocksmith, Jr., Director
KEITH W. ECKEL
Keith W. Eckel, Director
LYDIA M. MARSHALL
Lydia M. Marshall, Director
DONALD L. MCWHORTER
Donald L. McWhorter, Director
MARTHA MILLER DE LOMBERA
Martha Miller de Lombera, Director
DAVID O. MILLER
David O. Miller, Director
JAMES F. PATTERSON
James F. Patterson, Director
GERALD D. PROTHRO
Gerald D. Prothro, Director
ALEX SHUMATE
Alex Shumate, Director
	By /s/ TIMOTHY D. CRAWFORD
	Timothy D. Crawford
	Attorney-in-Fact

EX-99

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY and NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY, both Ohio corporations, which have filed or will file with the U.S. Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended; the Investment Company Act of 1940, as amended; and, if applicable, the Securities Exchange Act of 1934, various registration statements and amendments thereto for the registration of current, as well as any future, separate accounts established by said corporations for the purpose of registering under said Act(s) immediate or deferred variable annuity contracts, fixed interest rate options subject to a market value adjustment, group flexible fund retirement annuity contracts and variable life insurance policies in connection with the separate accounts and contracts listed below:

Separate Accounts:	’40 Act Number	’33 Act Number
MFS Variable Account,	811-2662	002-73432
Multi-Flex Variable Account;	811-3338	033-23905, 002-75174
Nationwide Variable Account;	811-2716	002-58043, 333-80481, 033-60239
Nationwide Variable Account-II;	811-3330	002-75059, 033-67636, 033-60063, 333-103093, 333-103094, 333-103095, 333-104513, 333-104511, 333-104512, 333-104510, 333-105992
Nationwide Variable Account-3;	811-5405	033-18422, 033-24434
Nationwide Variable Account-4;	811-5701	033-25734, 033-26454, 333-62692, 333-135650
Nationwide Variable Account-5;	811-8142	033-71440
Nationwide Variable Account-6;	811-8684	033-82370, 333-21909
Nationwide Variable Account-7;	811-8666	033-82190, 033-82174, 033-89560
Nationwide Variable Account-8;	811-7357	033-62637, 033-62659
Nationwide Variable Account-9;	811-08241	333-28995, 333-52579, 333-56073, 333-53023, 333-79327, 333-69014, 333-75360
Nationwide Variable Account-10;	811-09407	333-81701
Nationwide Variable Account-11;	811-10591	333-74904, 333-74908
Nationwide Variable Account-12;	811-21099	333-88612, 333-108894
Nationwide Variable Account-13;	811-21139	333-91890
Nationwide Variable Account-14;	811-21205	333-104339

Separate Accounts:	’40 Act Number	’33 Act Number
Nationwide VA Separate Account-A;	811-5606	033-85164, 333-22940
Nationwide VA Separate Account-B;	811-06399	033-86408, 033-93482, 333-11415
Nationwide VA Separate Account-C;	811-7908	033-66496, 333-44485
Nationwide VA Separate Account-D;	811-10139	333-45976
Nationwide Multiple Maturity Separate Account;	N/A	333-133163
Nationwide Multiple Maturity Separate Account-2;	N/A	333-49112
Nationwide Multiple Maturity Separate Account-A;	N/A	333-47640
Nationwide VLI Separate Account;	811-4399	033-00145, 033-44290, 033-35698
Nationwide VLI Separate Account-2;	811-5311	033-16999, 033-62795, 033-42180, 033-35783, 033-63179, 333-27133
Nationwide VLI Separate Account-3;	811-6140	033-44789, 033-44296
Nationwide VLI Separate Account-4;	811-8301	333-31725, 333-43671, 333-52617, 333-94037, 333-52615, 333-53728, 333-69160, 333-83010
Nationwide VLI Separate Account-5;	811-10143	333-46338, 333-46412, 333-66572, 333-121881, 333-125481, 333-125482
Nationwide VLI Separate Account-6;	811-21398	333-106908
Nationwide VLI Separate Account-7;	811-21610	333-117998, 333-121879
Nationwide VL Separate Account-A;	811-6137	033-44792, 033-44300, 033-35775, 333-27123, 333-22677
Nationwide VL Separate Account-B;	811-07819	333-12333

Separate Accounts:	’40 Act Number	’33 Act Number
Nationwide VL Separate Account-C;	811-8351	333-43639, 333-36869
Nationwide VL Separate Account-D; and	811-08891	333-59517
Nationwide VL Separate Account-G	811-21697	333-121878

As such, the undersigned hereby constitute and appoint W.G. Jurgensen, Mark R. Thresher, Peter A. Golato, Mark D. Phelan, Timothy D. Crawford, Stephen M. Jackson, Jeanny V. Simaitis and W. Michael Stobart, and each of them with power to act without the others, his/her attorney, with full power of substitution for and in his/her name, place and stead, in any and all capacities, to approve, and sign such Applications and Registration Statements, and any and all amendments thereto, with power to affix the corporate seal of said corporation thereto and to attest said seal and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, hereby granting unto said attorneys, and each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof.  This instrument may be executed in one or more counterparts.

IN WITNESS WHEREOF, the undersigned have herewith set their names as of this 29th day of August, 2006.

W. G. JURGENSEN, Director and Chief Executive Officer	ARDEN L. SHISLER, Chairman of the Board
JOSEPH A. ALUTTO, Director	JAMES G. BROCKSMITH, JR., Director
KEITH W. ECKEL, Director	LYDIA M. MARSHALL, Director
DONALD L. MCWHORTER, Director	MARTHA JAMES MILLER DE LOMBERA, Director
DAVID O. MILLER, Director	JAMES F. PATTERSON, Director
GERALD D. PROTHRO, Director	ALEX SHUMATE, Director

EX-99.N OTH OPINIONS

  
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