Nationwide^® VL

  Separate Account-D

  December 31, 2005

2005    

Annual Report    

Nationwide Life and Annuity Insurance Company

Home Office: Columbus, Ohio

VLOB–0233–12/05

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2005

Assets:
Investments at fair value:
AIM VIF – AIM V.I. Core Stock Fund – Series I Shares (AIMVEqIncF) 60,922 shares (cost $1,141,283)	$	1,160,559
AIM VIF – AIM V.I. Global Health Care Fund – Series I Shares (AIMVHealthF) 113 shares (cost $2,284)		2,304
AIM VIF – AIM V.I. Small Company Growth Fund – Series I Shares (AIMVSmCoGro) 5,766 shares (cost $90,789)		93,461
AIM VIF – Growth Fund – Series I Shares (AIMGrwth) 82 shares (cost $1,318)		1,415
Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A (AlVPGrIncA) 109,646 shares (cost $2,528,813)		2,727,985
American Century VP – International Fund – Class I (ACVPInt) 28,592 shares (cost $197,681)		235,310
Calvert VS – Social Equity Portfolio (CVSSoEq) 2,422 shares (cost $30,835)		42,867
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class (DrySmCapIxS) 2,054 shares (cost $32,268)		34,232
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx) 120,585 shares (cost $3,463,617)		3,837,015
Dreyfus VIF – International Value Portfolio – Initial Shares (DryVIFIntVal) 108,491 shares (cost $1,631,128)		1,897,507
Fidelity® VIP – Equity-Income Portfolio: Service Class (FidVIPEIS) 215,491 shares (cost $4,815,355)		5,471,323
Fidelity® VIP – Growth Portfolio: Service Class (FidVIPGrS) 19,966 shares (cost $583,752)		670,049
Fidelity® VIP – Overseas Portfolio: Service Class (FidVIPOvS) 81,760 shares (cost $1,453,559)		1,677,711
Fidelity® VIP II – Contrafund® Portfolio: Service Class (FidVIPConS) 195,434 shares (cost $4,208,655)		6,044,774
Fidelity® VIP II – Index 500 Portfolio: Initial Class (FidVIPI500) 30,133 shares (cost $4,064,195)		4,275,329
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class (FidVIPIGBdS) 96,424 shares (cost $1,210,089)		1,222,655
Fidelity® VIP III – Balanced Portfolio: Service Class (FidVIPBalS) 184,261 shares (cost $2,454,052)		2,708,643
Franklin Templeton VIP II – Templeton Foreign Securities Fund – Class 2 (FrVIPForSec2) 64,445 shares (cost $838,795)		1,006,629
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I (GVITDMidCapI) 225,074 shares (cost $3,466,143)		3,907,287
Gartmore GVIT – Government Bond Fund: Class I (GVITGvtBd) 6,127 shares (cost $71,478)		70,702
Gartmore GVIT – J.P. Morgan Balanced Fund – Class I (GVITJPBal) 134,214 shares (cost $1,314,480)		1,346,163
Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt) 2,493,075 shares (cost $2,493,075)		2,493,075

(Continued)

2

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued

Gartmore GVIT – Nationwide® Fund: Class I (GVITNWFund) 46,001 shares (cost $492,653)	$	545,113
Gartmore GVIT – Small Company Fund: Class I (GVITSmComp) 9,151 shares (cost $210,969)		208,450
Goldman Sachs VIT – Mid Cap Value Fund (GSVITMidCap) 18,840 shares (cost $290,084)		292,580
JPMorgan IT – Bond Portfolio (OGBond) 2,274 shares (cost $25,340)		25,602
JPMorgan IT – Equity Index Portfolio (OGEqIndx) 3,045 shares (cost $31,683)		33,254
JPMorgan IT – JPMorgan Investment Trust Balanced Portfolio (OGBal) 770 shares (cost $11,274)		11,506
JPMorgan IT – Mid Cap Growth Portfolio (OGMidCapGr) 1,055 shares (cost $18,879)		20,712
JPMorgan IT – Mid Cap Value Portfolio (OGMidCapV) 1,585 shares (cost $24,271)		25,199
MFS® VITSM – MFS Investors Growth Stock Series – Initial Class (MFSVITInvGrwI) 59,304 shares (cost $524,317)		587,109
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class (OppCapAp) 24,164 shares (cost $885,929)		930,791
Oppenheimer Funds – Global Securities Fund/VA – Initial Class (OppGlSec) 49,324 shares (cost $1,325,479)		1,646,448
PIMCO VIT – Real Return Portfolio – Administrative Shares (PIMRealRet) 145,807 shares (cost $1,870,974)		1,850,289
PIMCO VIT – Total Return Portfolio – Administrative Shares (PIMTotRet) 196,020 shares (cost $2,054,661)		2,007,243
Royce Capital Fund – Small Cap Portfolio (RoySmCp) 178,457 shares (cost $1,514,921)		1,725,678
Salomon Brothers VSF – Investors Fund (SalBrInv) 1,073 shares (cost $15,343)		15,607
T. Rowe Price II – Equity Income Portfolio – II (TRowEqInc2) 11,895 shares (cost $261,994)		258,846
W & R Target Funds, Inc. – Small Cap Portfolio (WRSmCap) 66,684 shares (cost $617,828)		699,300
Total Investments		51,810,722
Accounts Receivable		680
Total Assets		51,811,402
Accounts Payable		2,371
Contract Owners Equity (note 7)	$	51,809,031

See accompanying notes to financial statements.

3

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF OPERATIONS

Year Ended December 31, 2005

Investment activity:	Total			AIMVEqIncF		AIMVDyn		AIMVHealthF		AIMVSmCoGro		AIMVTechF		AIMVTotRetF		AIMBValue
Reinvested dividends	$	688,818		4,924		–		–		–		–		5,958		–
Mortality and expense risk charges (note 3)		(191,092	)	(5,610	)	(22	)	(24	)	(8,766	)	(4	)	(2,560	)	(7,608	)
Net investment income (loss)		497,726		(686	)	(22	)	(24	)	(8,766	)	(4	)	3,398		(7,608	)
Proceeds from mutual fund shares sold		53,159,261		3,582,645		132,194		120,962		7,497,388		21,266		2,046,631		5,448,093
Cost of mutual fund shares sold		(47,295,671	)	(3,318,574	)	(121,186	)	(109,357	)	(6,579,886	)	(21,427	)	(1,996,147	)	(4,918,258	)
Realized gain (loss) on investments		5,863,590		264,071		11,008		11,605		917,502		(161	)	50,484		529,835
Change in unrealized gain (loss) on investments		(2,671,499	)	(254,785	)	(16,014	)	(17,590	)	(806,193	)	(1,772	)	(90,957	)	(471,017	)
Net gain (loss) on investments		3,192,091		9,286		(5,006	)	(5,985	)	111,309		(1,933	)	(40,473	)	58,818
Reinvested capital gains		687,060		–		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,376,877		8,600		(5,028	)	(6,009	)	102,543		(1,937	)	(37,075	)	51,210
Investment activity:	AIMGrwth			AIMMidCore		AlVPGrIncA		ACVPInt		CVSSoEq		DrySmCapIxS		DryStkIx		DryVIFIntVal
Reinvested dividends	$	–		–		35,446		2,286		22		–		61,770		–
Mortality and expense risk charges (note 3)		(6,998	)	(8,346	)	(9,788	)	(776	)	(168	)	(124	)	(14,972	)	(6,140	)
Net investment income (loss)		(6,998	)	(8,346	)	25,658		1,510		(146	)	(124	)	46,798		(6,140	)
Proceeds from mutual fund shares sold		5,241,333		4,754,488		516,346		19,135		1,039		30,534		808,075		429,560
Cost of mutual fund shares sold		(4,771,479	)	(4,237,885	)	(401,895	)	(16,786	)	(728	)	(30,116	)	(566,523	)	(339,129	)
Realized gain (loss) on investments		469,854		516,603		114,451		2,349		311		418		241,552		90,431
Change in unrealized gain (loss) on investments		(268,718	)	(393,049	)	(29,332	)	21,714		1,537		1,938		(114,133	)	92,822
Net gain (loss) on investments		201,136		123,554		85,119		24,063		1,848		2,356		127,419		183,253
Reinvested capital gains		–		–		–		–		–		74		–		18,424
Net increase (decrease) in contract owners’ equity resulting from operations	$	194,138		115,208		110,777		25,573		1,702		2,306		174,217		195,537

(Continued)

4

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	FidVIPEIS			FidVIPGrS		FidVIPOvS		FidVIPConS		FidVIPI500		FidVIPIGBdS		FidVIPBalS		FrVIPForSec2
Reinvested dividends	$	104,270		2,658		34,378		10,824		73,504		17,030		69,360		10,954
Mortality and expense risk charges (note 3)		(11,518	)	(1,550	)	(14,978	)	(11,642	)	(8,754	)	(1,120	)	(5,570	)	(4,072	)
Net investment income (loss)		92,752		1,108		19,400		(818	)	64,750		15,910		63,790		6,882
Proceeds from mutual fund shares sold		1,716,979		186,806		7,858,708		257,998		605,194		671,268		406,281		337,946
Cost of mutual fund shares sold		(1,666,428	)	(132,979	)	(5,852,158	)	(246,200	)	(634,107	)	(674,802	)	(425,227	)	(273,900	)
Realized gain (loss) on investments		50,551		53,827		2,006,550		11,798		(28,913	)	(3,534	)	(18,946	)	64,046
Change in unrealized gain (loss) on investments		(109,756	)	(18,576	)	(1,298,654	)	854,245		148,513		(7,169	)	88,223		12,200
Net gain (loss) on investments		(59,205	)	35,251		707,896		866,043		119,600		(10,703	)	69,277		76,246
Reinvested capital gains		241,042		–		30,940		984		–		10,398		1,982		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	274,589		36,359		758,236		866,209		184,350		15,605		135,049		83,128
Investment activity:	GVITDMidCapI			GVITGvtBd		GVITJPBal		GVITMyMkt		GVITNWFund		GVITSmComp		GVITCVal		GSVITMidCap
Reinvested dividends	$	35,604		1,582		24,680		56,290		4,554		–		–		1,614
Mortality and expense risk charges (note 3)		(12,640	)	(126	)	(2,780	)	(8,168	)	(1,164	)	(360	)	(16	)	(1,030	)
Net investment income (loss)		22,964		1,456		21,900		48,122		3,390		(360	)	(16	)	584
Proceeds from mutual fund shares sold		487,754		347,201		24,897		6,679,467		72,534		39,809		99,228		47,194
Cost of mutual fund shares sold		(299,039	)	(352,640	)	(24,515	)	(6,679,467	)	(61,735	)	(42,110	)	(90,934	)	(40,824	)
Realized gain (loss) on investments		188,715		(5,439	)	382		–		10,799		(2,301	)	8,294		6,370
Change in unrealized gain (loss) on investments		(39,595	)	6,695		31,684		–		26,579		(372	)	(12,117	)	(3,552	)
Net gain (loss) on investments		149,120		1,256		32,066		–		37,378		(2,673	)	(3,823	)	2,818
Reinvested capital gains		221,694		62		–		–		–		23,342		–		27,088
Net increase (decrease) in contract owners’ equity resulting from operations	$	393,778		2,774		53,966		48,122		40,768		20,309		(3,839	)	30,490

(Continued)

5

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	OGBond			OGEqIndx		OGBal		OGMidCapGr		OGMidCapV		MFSVITInvGrwI		MFSVITValIn		OppCapAp
Reinvested dividends	$	810		304		278		–		70		1,978		–		7,620
Mortality and expense risk charges (note 3)		(102	)	(114	)	(46	)	(76	)	(60	)	(2,258	)	(18	)	(3,274	)
Net investment income (loss)		708		190		232		(76	)	10		(280	)	(18	)	4,346
Proceeds from mutual fund shares sold		24,907		22,492		5,856		13,471		6,382		568,825		325,845		329,806
Cost of mutual fund shares sold		(25,222	)	(22,155	)	(5,866	)	(12,693	)	(6,573	)	(515,333	)	(300,645	)	(320,582	)
Realized gain (loss) on investments		(315	)	337		(10	)	778		(191	)	53,492		25,200		9,224
Change in unrealized gain (loss) on investments		111		807		9		1,251		913		(37,411	)	(32,899	)	31,255
Net gain (loss) on investments		(204	)	1,144		(1	)	2,029		722		16,081		(7,699	)	40,479
Reinvested capital gains		–		–		–		–		820		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	504		1,334		231		1,953		1,552		15,801		(7,717	)	44,825
Investment activity:	OppGlSec			PIMRealRet		PIMTotRet		RoySmCp		SalBrInv		TRowEqInc2		WRSmCap
Reinvested dividends	$	11,088		45,572		59,884		–		182		3,324		–
Mortality and expense risk charges (note 3)		(5,096	)	(6,386	)	(6,710	)	(6,150	)	(92	)	(932	)	(2,384	)
Net investment income (loss)		5,992		39,186		53,174		(6,150	)	90		2,392		(2,384	)
Proceeds from mutual fund shares sold		164,187		309,771		264,717		249,351		204,577		54,188		125,933
Cost of mutual fund shares sold		(114,113	)	(298,190	)	(263,750	)	(153,236	)	(188,540	)	(50,668	)	(91,664	)
Realized gain (loss) on investments		50,074		11,581		967		96,115		16,037		3,520		34,269
Change in unrealized gain (loss) on investments		145,657		(43,004	)	(49,947	)	7,159		(22,359	)	(11,215	)	5,375
Net gain (loss) on investments		195,731		(31,423	)	(48,980	)	103,274		(6,322	)	(7,695	)	39,644
Reinvested capital gains		–		20,214		32,028		17,656		–		12,072		28,240
Net increase (decrease) in contract owners’ equity resulting from operations	$	201,723		27,977		36,222		114,780		(6,232	)	6,769		65,500

See accompanying notes to financial statements.

6

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2005 and 2004

	Total					AIMVEqIncF				AIMVDyn				AIMVHealthF
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	497,726		346,107		(686	)	12,952		(22	)	(180	)	(24	)	(270	)
Realized gain (loss) on investments		5,863,590		(568,710	)	264,071		(190,564	)	11,008		5,858		11,605		5,487
Change in unrealized gain (loss) on investments		(2,671,499	)	5,958,102		(254,785	)	218,505		(16,014	)	11,646		(17,590	)	3,624
Reinvested capital gains		687,060		443,254		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		4,376,877		6,178,753		8,600		40,893		(5,028	)	17,324		(6,009	)	8,841
Equity transactions:
Purchase payments received from contract owners (note 6)		7,504,514		9,005,448		322,188		514,916		952		18,332		4,198		21,888
Transfers between funds		–		–		(1,480,118	)	(1,761,750	)	(131,874	)	63,836		(120,624	)	(9,944	)
Surrenders (note 6)		(24,083,026	)	–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,923,010	)	(1,782,152	)	(68,982	)	(99,308	)	(300	)	(2,136	)	(318	)	(3,466	)
Adjustments to maintain reserves		(2,369	)	46,865		(10	)	38		(19	)	27		1		4
Net equity transactions		(18,503,891	)	7,270,161		(1,226,922	)	(1,346,104	)	(131,241	)	80,059		(116,743	)	8,482
Net change in contract owners’ equity		(14,127,014	)	13,448,914		(1,218,322	)	(1,305,211	)	(136,269	)	97,383		(122,752	)	17,323
Contract owners’ equity beginning of period		65,936,045		52,487,131		2,378,892		3,684,103		136,269		38,886		125,063		107,740
Contract owners’ equity end of period	$	51,809,031		65,936,045		1,160,570		2,378,892		–		136,269		2,311		125,063
CHANGES IN UNITS:
Beginning units		5,553,628		5,385,830		214,696		346,519		12,758		4,116		10,156		9,388
Units purchased		1,976,915		4,922,022		55,995		159,123		92		8,863		334		1,922
Units redeemed		(3,447,181	)	(4,754,224	)	(169,209	)	(290,946	)	(12,850	)	(221	)	(10,316	)	(1,154	)
Ending units		4,083,362		5,553,628		101,482		214,696		–		12,758		174		10,156

(Continued)

7

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	AIMVSmCoGro					AIMVTechF				AIMVTotRetF				AIMVUtilF
Investment activity:	2005			2004		2005		2004		2005		2004		2005	2004
Net investment income (loss)	$	(8,766	)	(11,698	)	(4	)	(266	)	3,398		24,960		–	1,378
Realized gain (loss) on investments		917,502		(221,561	)	(161	)	34,956		50,484		(8,916	)	–	6,788
Change in unrealized gain (loss) on investments		(806,193	)	745,637		(1,772	)	(40,372	)	(90,957	)	26,847		–	(6,306	)
Reinvested capital gains		–		–		–		–		–		–		–	–
Net increase (decrease) in contract owners’ equity resulting from operations		102,543		512,378		(1,937	)	(5,682	)	(37,075	)	42,891		–	1,860
Equity transactions:
Purchase payments received from contract owners (note 6)		213,110		527,842		160		14,938		92,474		241,338		–	3,116
Transfers between funds		(157,642	)	(574,420	)	(21,212	)	(150,458	)	(1,774,204	)	88,146		–	(48,140	)
Surrenders (note 6)		(4,426,484	)	–		–		–		–		–		–	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(137,974	)	(155,890	)	(52	)	(3,712	)	(35,364	)	(60,300	)	–	(1,112	)
Adjustments to maintain reserves		(13	)	64		(11	)	14		(29	)	51		–	1
Net equity transactions		(4,509,003	)	(202,404	)	(21,115	)	(139,218	)	(1,717,123	)	269,235		–	(46,135	)
Net change in contract owners’ equity		(4,406,460	)	309,974		(23,052	)	(144,900	)	(1,754,198	)	312,126		–	(44,275	)
Contract owners’ equity beginning of period		4,499,928		4,189,954		23,052		167,952		1,754,198		1,442,072		–	44,275
Contract owners’ equity end of period	$	93,468		4,499,928		–		23,052		–		1,754,198		–	–
CHANGES IN UNITS:
Beginning units		326,208		345,962		2,718		20,669		177,014		150,934		–	5,717
Units purchased		68,014		171,529		20		1,945		31,292		84,394		–	387
Units redeemed		(387,774	)	(191,283	)	(2,738	)	(19,896	)	(208,306	)	(58,314	)	–	(6,104	)
Ending units		6,448		326,208		–		2,718		–		177,014		–	–

(Continued)

8

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	AIMVREO				AIMBValue				AIMGrwth				AIMMidCore
Investment activity:	2005		2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	–	(66	)	(7,608	)	(6,388	)	(6,998	)	(5,858	)	(8,346	)	(2,522	)
Realized gain (loss) on investments		–	3,574		529,835		23,164		469,854		(12,599	)	516,603		33,534
Change in unrealized gain (loss) on investments		–	(2,305	)	(471,017	)	284,250		(268,718	)	268,816		(393,049	)	204,341
Reinvested capital gains		–	–		–		–		–		–		–		153,454
Net increase (decrease) in contract owners’ equity resulting from operations		–	1,203		51,210		301,026		194,138		250,359		115,208		388,807
Equity transactions:
Purchase payments received from contract owners (note 6)		–	2,660		146,904		119,350		149,648		58,004		167,890		143,220
Transfers between funds		–	(37,220	)	1,488,816		1,907,494		588,850		3,298,612		895,294		2,014,924
Surrenders (note 6)		–	–		(4,765,870	)	–		(4,398,800	)	–		(4,616,304	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		–	(958	)	(120,294	)	(81,244	)	(110,114	)	(77,300	)	(130,026	)	(97,682	)
Adjustments to maintain reserves		–	9		(25	)	58		(1,440	)	48,043		(18	)	60
Net equity transactions		–	(35,509	)	(3,250,469	)	1,945,658		(3,771,856	)	3,327,359		(3,683,164	)	2,060,522
Net change in contract owners’ equity		–	(34,306	)	(3,199,259	)	2,246,684		(3,577,718	)	3,577,718		(3,567,956	)	2,449,329
Contract owners’ equity beginning of period		–	34,306		3,199,259		952,575		3,577,718		–		3,567,956		1,118,627
Contract owners’ equity end of period	$	–	–		–		3,199,259		–		3,577,718		–		3,567,956
CHANGES IN UNITS:
Beginning units		–	1,861		233,338		77,019		326,490		–		251,542		89,589
Units purchased		–	134		159,203		192,569		113,060		346,601		113,807		204,068
Units redeemed		–	(1,995	)	(392,541	)	(36,250	)	(439,550	)	(20,111	)	(365,349	)	(42,115	)
Ending units		–	–		–		233,338		–		326,490		–		251,542

(Continued)

9

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	AlVPGrIncA					ACVPInt				CVSSoEq				DrySmCapIxS
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	25,658		6,708		1,510		(298	)	(146	)	(128	)	(124	)	130
Realized gain (loss) on investments		114,451		118,091		2,349		295		311		342		418		4,061
Change in unrealized gain (loss) on investments		(29,332	)	52,627		21,714		15,916		1,537		2,396		1,938		12
Reinvested capital gains		–		–		–		–		–		–		74		1,110
Net increase (decrease) in contract owners’ equity resulting from operations		110,777		177,426		25,573		15,913		1,702		2,610		2,306		5,313
Equity transactions:
Purchase payments received from contract owners (note 6)		(26	)	836		–		(2	)	–		–		(4	)	2
Transfers between funds		727,738		822,050		67,696		135,848		–		2,716		5,940		22,378
Surrenders (note 6)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(40,458	)	(27,180	)	(6,002	)	(3,722	)	(872	)	(760	)	(1,486	)	(664	)
Adjustments to maintain reserves		10		38		4		5		(11	)	25		(9	)	24
Net equity transactions		687,264		795,744		61,698		132,129		(883	)	1,981		4,441		21,740
Net change in contract owners’ equity		798,041		973,170		87,271		148,042		819		4,591		6,747		27,053
Contract owners’ equity beginning of period		1,929,974		956,804		148,042		–		42,060		37,469		27,494		441
Contract owners’ equity end of period	$	2,728,015		1,929,974		235,313		148,042		42,879		42,060		34,241		27,494
CHANGES IN UNITS:
Beginning units		172,414		94,893		18,162		–		3,150		2,995		2,156		42
Units purchased		64,504		80,145		8,156		18,673		–		215		473		2,171
Units redeemed		(3,592	)	(2,624	)	(726	)	(511	)	(66	)	(60	)	(115	)	(57	)
Ending units		233,326		172,414		25,592		18,162		3,084		3,150		2,514		2,156

(Continued)

10

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	DryStkIx					DryVIFIntVal				FidVIPEIS				FidVIPGrS
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	46,798		42,138		(6,140	)	7,776		92,752		89,794		1,108		(714	)
Realized gain (loss) on investments		241,552		110,221		90,431		32,381		50,551		9,120		53,827		54,796
Change in unrealized gain (loss) on investments		(114,133	)	138,182		92,822		130,314		(109,756	)	592,281		(18,576	)	(34,123	)
Reinvested capital gains		–		–		18,424		17,410		241,042		27,054		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		174,217		290,541		195,537		187,881		274,589		718,249		36,359		19,959
Equity transactions:
Purchase payments received from contract owners (note 6)		–		140,514		–		21,326		–		–		(4	)	2
Transfers between funds		397,904		944,444		484,552		415,270		(1,523,062	)	(926,326	)	(52,306	)	17,532
Surrenders (note 6)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(69,636	)	(57,512	)	(23,042	)	(18,900	)	(182,400	)	(202,232	)	(23,842	)	(21,222	)
Adjustments to maintain reserves		15		45		5		40		12		58		6		29
Net equity transactions		328,283		1,027,491		461,515		417,736		(1,705,450	)	(1,128,500	)	(76,146	)	(3,659	)
Net change in contract owners’ equity		502,500		1,318,032		657,052		605,617		(1,430,861	)	(410,251	)	(39,787	)	16,300
Contract owners’ equity beginning of period		3,334,537		2,016,505		1,240,475		634,858		6,902,201		7,312,452		709,861		693,561
Contract owners’ equity end of period	$	3,837,037		3,334,537		1,897,527		1,240,475		5,471,340		6,902,201		670,074		709,861
CHANGES IN UNITS:
Beginning units		326,338		217,474		84,172		51,497		610,162		636,125		84,774		77,099
Units purchased		40,595		114,939		32,897		34,129		–		658,055		1,035		95,499
Units redeemed		(6,811	)	(6,075	)	(1,535	)	(1,454	)	(151,908	)	(684,018	)	(10,057	)	(87,824	)
Ending units		360,122		326,338		115,534		84,172		458,254		610,162		75,752		84,774

(Continued)

11

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FidVIPOvS					FidVIPConS				FidVIPI500				FidVIPIGBdS
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	19,400		46,280		(818	)	(96	)	64,750		38,900		15,910		15,932
Realized gain (loss) on investments		2,006,550		(230,268	)	11,798		(25,575	)	(28,913	)	(12,460	)	(3,534	)	2,109
Change in unrealized gain (loss) on investments		(1,298,654	)	868,260		854,245		710,578		148,513		355,837		(7,169	)	10,384
Reinvested capital gains		30,940		–		984		–		–		–		10,398		12,908
Net increase (decrease) in contract owners’ equity resulting from operations		758,236		684,272		866,209		684,907		184,350		382,277		15,605		41,333
Equity transactions:
Purchase payments received from contract owners (note 6)		332,138		669,492		–		–		–		–		–		–
Transfers between funds		802,858		(905,290	)	23,582		112,700		(148,078	)	722,738		748,648		(692,658	)
Surrenders (note 6)		(5,875,568	)	–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(226,646	)	(200,786	)	(170,278	)	(139,892	)	(138,386	)	(115,006	)	(16,578	)	(28,720	)
Adjustments to maintain reserves		25		81		44		39		5		34		(3	)	15
Net equity transactions		(4,967,193	)	(436,503	)	(146,652	)	(27,153	)	(286,459	)	607,766		732,067		(721,363	)
Net change in contract owners’ equity		(4,208,957	)	247,769		719,557		657,754		(102,109	)	990,043		747,672		(680,030	)
Contract owners’ equity beginning of period		5,886,715		5,638,946		5,325,265		4,667,511		4,377,447		3,387,404		474,983		1,155,013
Contract owners’ equity end of period	$	1,677,758		5,886,715		6,044,822		5,325,265		4,275,338		4,377,447		1,222,655		474,983
CHANGES IN UNITS:
Beginning units		529,604		575,758		417,912		405,029		436,930		432,638		38,490		97,914
Units purchased		228,717		280,006		1,630		406,301		–		504,039		60,097		83,020
Units redeemed		(624,099	)	(326,160	)	(12,708	)	(393,418	)	(29,016	)	(499,747	)	(1,335	)	(142,444	)
Ending units		134,222		529,604		406,834		417,912		407,914		436,930		97,252		38,490

(Continued)

12

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FidVIPBalS					FrVIPForSec2				GVITDMidCapI				GVITGvtBd
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	63,790		38,526		6,882		5,070		22,964		4,144		1,456		14,002
Realized gain (loss) on investments		(18,946	)	(7,690	)	64,046		7,438		188,715		122,044		(5,439	)	(802	)
Change in unrealized gain (loss) on investments		88,223		100,285		12,200		116,900		(39,595	)	140,400		6,695		(11,105	)
Reinvested capital gains		1,982		–		–		–		221,694		63,924		62		5,482
Net increase (decrease) in contract owners’ equity resulting from operations		135,049		131,121		83,128		129,408		393,778		330,512		2,774		7,577
Equity transactions:
Purchase payments received from contract owners (note 6)		–		–		–		–		126,686		59,364		91,206		53,376
Transfers between funds		(182,472	)	812,110		(209,790	)	433,610		738,580		816,288		(320,458	)	(122,550	)
Surrenders (note 6)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(88,256	)	(71,092	)	(25,094	)	(16,782	)	(60,994	)	(42,854	)	(1,332	)	(9,174	)
Adjustments to maintain reserves		(1	)	27		1		13		(5	)	71		(12	)	20
Net equity transactions		(270,729	)	741,045		(234,883	)	416,841		804,267		832,869		(230,596	)	(78,328	)
Net change in contract owners’ equity		(135,680	)	872,166		(151,755	)	546,249		1,198,045		1,163,381		(227,822	)	(70,751	)
Contract owners’ equity beginning of period		2,844,332		1,972,166		1,158,390		612,141		2,709,273		1,545,892		298,532		369,283
Contract owners’ equity end of period	$	2,708,652		2,844,332		1,006,635		1,158,390		3,907,318		2,709,273		70,710		298,532
CHANGES IN UNITS:
Beginning units		258,454		191,781		78,650		49,066		152,070		100,111		21,918		27,927
Units purchased		–		291,649		–		30,873		47,593		54,629		6,555		3,957
Units redeemed		(24,936	)	(224,976	)	(16,364	)	(1,289	)	(3,309	)	(2,670	)	(23,433	)	(9,966	)
Ending units		233,518		258,454		62,286		78,650		196,354		152,070		5,040		21,918

(Continued)

13

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITGrowth				GVITJPBal			GVITSMdCpGr			GVITMyMkt
Investment activity:	2005		2004		2005		2004	2005	2004		2005		2004
Net investment income (loss)	$	–	(92	)	21,900		–	–	(2	)	48,122		6,234
Realized gain (loss) on investments		–	16,980		382		–	–	562		–		–
Change in unrealized gain (loss) on investments		–	(14,430	)	31,684		–	–	(265	)	–		–
Reinvested capital gains		–	–		–		–	–	–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		–	2,458		53,966		–	–	295		48,122		6,234
Equity transactions:
Purchase payments received from contract owners (note 6)		–	4,976		166,504		–	–	322		5,526,270		5,752,898
Transfers between funds		–	(152,402	)	1,153,166		–	–	(8,448	)	(4,736,786	)	(5,252,890	)
Surrenders (note 6)		–	–		–		–	–	–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		–	(2,584	)	(27,474	)	–	–	(22	)	(40,732	)	(44,472	)
Adjustments to maintain reserves		–	–		15		–	–	(2	)	(36	)	18
Net equity transactions		–	(150,010	)	1,292,211		–	–	(8,150	)	748,716		455,554
Net change in contract owners’ equity		–	(147,552	)	1,346,177		–	–	(7,855	)	796,838		461,788
Contract owners’ equity beginning of period		–	147,552		–		–	–	7,855		1,696,264		1,234,476
Contract owners’ equity end of period	$	–	–		1,346,177		–	–	–		2,493,102		1,696,264
CHANGES IN UNITS:
Beginning units		–	28,670		–		–	–	820		146,948		107,374
Units purchased		–	942		125,512		–	–	34		491,659		500,044
Units redeemed		–	(29,612	)	(2,566	)	–	–	(854	)	(427,571	)	(460,470	)
Ending units		–	–		122,946		–	–	–		211,036		146,948

(Continued)

14

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITNWFund					GVITSmComp				GVITCVal				GVITWLead
Investment activity:	2005			2004		2005		2004		2005		2004		2005	2004
Net investment income (loss)	$	3,390		2,140		(360	)	(188	)	(16	)	862		–	(32	)
Realized gain (loss) on investments		10,799		2,312		(2,301	)	26,604		8,294		13,057		–	4,240
Change in unrealized gain (loss) on investments		26,579		11,765		(372	)	(22,751	)	(12,117	)	1,527		–	(5,252	)
Reinvested capital gains		–		–		23,342		3,626		–		–		–	–
Net increase (decrease) in contract owners’ equity resulting from operations		40,768		16,217		20,309		7,291		(3,839	)	15,446		–	(1,044	)
Equity transactions:
Purchase payments received from contract owners (note 6)		110,512		37,876		31,474		4,320		718		16,972		–	1,194
Transfers between funds		196,338		(45,662	)	127,774		(94,490	)	(98,986	)	(31,860	)	–	(40,188	)
Surrenders (note 6)		–		–		–		–		–		–		–	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(11,624	)	(6,610	)	(3,678	)	(2,506	)	(228	)	(3,210	)	–	(454	)
Adjustments to maintain reserves		37		8		(11	)	49		(17	)	21		–	3
Net equity transactions		295,263		(14,388	)	155,559		(92,627	)	(98,513	)	(18,077	)	–	(39,445	)
Net change in contract owners’ equity		336,031		1,829		175,868		(85,336	)	(102,352	)	(2,631	)	–	(40,489	)
Contract owners’ equity beginning of period		209,121		207,292		32,614		117,950		102,352		104,983		–	40,489
Contract owners’ equity end of period	$	545,152		209,121		208,482		32,614		–		102,352		–	–
CHANGES IN UNITS:
Beginning units		20,024		21,730		1,616		6,919		9,778		11,755		–	4,733
Units purchased		29,778		3,964		7,777		710		71		1,792		–	137
Units redeemed		(1,094	)	(5,670	)	(175	)	(6,013	)	(9,849	)	(3,769	)	–	(4,870	)
Ending units		48,708		20,024		9,218		1,616		–		9,778		–	–

(Continued)

15

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GSVITMidCap					INVGrF			OGBond				OGEqIndx
Investment activity:	2005			2004		2005	2004		2005		2004		2005		2004
Net investment income (loss)	$	584		664		–	(3,178	)	708		240		190		(16	)
Realized gain (loss) on investments		6,370		4,126		–	(837,153	)	(315	)	245		337		2,954
Change in unrealized gain (loss) on investments		(3,552	)	5,982		–	813,439		111		124		807		729
Reinvested capital gains		27,088		18,008		–	–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		30,490		28,780		–	(26,892	)	504		609		1,334		3,667
Equity transactions:
Purchase payments received from contract owners (note 6)		–		12		–	429,660		–		–		(2	)	2
Transfers between funds		79,090		164,390		–	(3,672,316	)	900		22,684		2,648		26,694
Surrenders (note 6)		–		–		–	–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(8,816	)	(5,632	)	–	(42,190	)	(1,234	)	(682	)	(1,382	)	(706	)
Adjustments to maintain reserves		17		16		–	8		5		1		4		8
Net equity transactions		70,291		158,786		–	(3,284,838	)	(329	)	22,003		1,268		25,998
Net change in contract owners’ equity		100,781		187,566		–	(3,311,730	)	175		22,612		2,602		29,665
Contract owners’ equity beginning of period		191,826		4,260		–	3,311,730		25,438		2,826		30,661		996
Contract owners’ equity end of period	$	292,607		191,826		–	–		25,613		25,438		33,263		30,661
CHANGES IN UNITS:
Beginning units		8,870		247		–	774,829		1,892		218		3,698		132
Units purchased		3,557		8,920		–	396,043		67		1,726		324		3,656
Units redeemed		(387	)	(297	)	–	(1,170,872	)	(91	)	(52	)	(166	)	(90	)
Ending units		12,040		8,870		–	–		1,868		1,892		3,856		3,698

(Continued)

16

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	OGBal					OGMidCapGr				OGMidCapV				MFSVITInvGrwI
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	232		68		(76	)	(54	)	10		(2	)	(280	)	(4,074	)
Realized gain (loss) on investments		(10	)	691		778		1,985		(191	)	82		53,492		27,272
Change in unrealized gain (loss) on investments		9		146		1,251		517		913		17		(37,411	)	58,720
Reinvested capital gains		–		–		–		–		820		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		231		905		1,953		2,448		1,552		97		15,801		81,918
Equity transactions:
Purchase payments received from contract owners (note 6)		–		–		(2	)	2		–		–		–		17,382
Transfers between funds		72		9,556		2,392		13,642		23,614		662		(502,714	)	243,298
Surrenders (note 6)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(548	)	(372	)	(892	)	(494	)	(706	)	(24	)	(13,234	)	(21,370	)
Adjustments to maintain reserves		8		16		10		10		(22	)	27		10		27
Net equity transactions		(468	)	9,200		1,508		13,160		22,886		665		(515,938	)	239,337
Net change in contract owners’ equity		(237	)	10,105		3,461		15,608		24,438		762		(500,137	)	321,255
Contract owners’ equity beginning of period		11,764		1,659		17,268		1,660		762		–		1,087,265		766,010
Contract owners’ equity end of period	$	11,527		11,764		20,729		17,268		25,200		762		587,128		1,087,265
CHANGES IN UNITS:
Beginning units		1,192		177		2,050		221		50		–		110,050		84,317
Units purchased		7		1,054		276		1,892		1,508		51		–		28,069
Units redeemed		(55	)	(39	)	(102	)	(63	)	(46	)	(1	)	(52,948	)	(2,336	)
Ending units		1,144		1,192		2,224		2,050		1,512		50		57,102		110,050

(Continued)

17

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	MFSVITValIn					OppCapAp				OppGlSec				PIMRealRet
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(18	)	1,840		4,346		(170	)	5,992		5,936		39,186		6,228
Realized gain (loss) on investments		25,200		30,595		9,224		29		50,074		50,550		11,581		20,948
Change in unrealized gain (loss) on investments		(32,899	)	7,745		31,255		13,608		145,657		90,220		(43,004	)	20,465
Reinvested capital gains		–		11,442		–		–		–		–		20,214		39,108
Net increase (decrease) in contract owners’ equity resulting from operations		(7,717	)	51,622		44,825		13,467		201,723		146,706		27,977		86,749
Equity transactions:
Purchase payments received from contract owners (note 6)		–		25,218		–		(2	)	–		15,004		–		21,496
Transfers between funds		(325,826	)	53,548		688,284		196,594		485,444		196,974		594,744		115,530
Surrenders (note 6)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		–		(10,482	)	(11,714	)	(666	)	(21,100	)	(15,954	)	(28,026	)	(24,020	)
Adjustments to maintain reserves		(21	)	33		5		11		(10	)	35		(375	)	229
Net equity transactions		(325,847	)	68,317		676,575		195,937		464,334		196,059		566,343		113,235
Net change in contract owners’ equity		(333,564	)	119,939		721,400		209,404		666,057		342,765		594,320		199,984
Contract owners’ equity beginning of period		333,564		213,625		209,404		–		980,395		637,630		1,255,596		1,055,612
Contract owners’ equity end of period	$	–		333,564		930,804		209,404		1,646,452		980,395		1,849,916		1,255,596
CHANGES IN UNITS:
Beginning units		28,266		20,767		20,074		–		76,140		58,774		92,138		84,012
Units purchased		–		8,490		66,296		20,141		37,780		18,789		43,427		11,462
Units redeemed		(28,266	)	(991	)	(1,130	)	(67	)	(1,610	)	(1,423	)	(2,039	)	(3,336	)
Ending units		–		28,266		85,240		20,074		112,310		76,140		133,526		92,138

(Continued)

18

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	PIMTotRet					PVTIntEq			RoySmCp				SalBrInv
Investment activity:	2005			2004		2005	2004		2005		2004		2005		2004
Net investment income (loss)	$	53,174		12,102		–	–		(6,150	)	(4,269	)	90		2,440
Realized gain (loss) on investments		967		4,919		–	(73	)	96,115		128,507		16,037		2,639
Change in unrealized gain (loss) on investments		(49,947	)	2,606		–	–		7,159		45,216		(22,359	)	10,239
Reinvested capital gains		32,028		15,440		–	–		17,656		70,486		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		36,222		35,067		–	(73	)	114,780		239,940		(6,232	)	15,318
Equity transactions:
Purchase payments received from contract owners (note 6)		–		25,604		–	2,662		–		8,660		21,524		26,884
Transfers between funds		1,172,590		191,540		–	(2,612	)	278,322		353,186		(194,118	)	69,976
Surrenders (note 6)		–		–		–	–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(27,986	)	(20,418	)	–	–		(25,936	)	(22,530	)	(1,042	)	(3,844	)
Adjustments to maintain reserves		(569	)	(49	)	–	23		27		(1,670	)	17		12
Net equity transactions		1,144,035		196,677		–	73		252,413		337,646		(173,619	)	93,028
Net change in contract owners’ equity		1,180,257		231,744		–	–		367,193		577,586		(179,851	)	108,346
Contract owners’ equity beginning of period		826,419		594,675		–	–		1,358,531		780,945		195,481		87,135
Contract owners’ equity end of period	$	2,006,676		826,419		–	–		1,725,724		1,358,531		15,630		195,481
CHANGES IN UNITS:
Beginning units		70,122		52,710		–	–		101,118		72,341		14,406		7,070
Units purchased		99,124		25,540		–	203		19,559		30,702		1,562		7,639
Units redeemed		(2,346	)	(8,128	)	–	(203	)	(1,883	)	(1,925	)	(14,884	)	(303	)
Ending units		166,900		70,122		–	–		118,794		101,118		1,084		14,406

(Continued)

19

NATIONWIDE VL SEPARATE ACCOUNT–D

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	TRowEqInc2					WRSmCap
Investment activity:	2005			2004		2005		2004
Net investment income (loss)	$	2,392		1,222		(2,384	)	(1,998	)
Realized gain (loss) on investments		3,520		5,377		34,269		60,018
Change in unrealized gain (loss) on investments		(11,215	)	7,867		5,375		6,041
Reinvested capital gains		12,072		3,802		28,240		–
Net increase (decrease) in contract owners’ equity resulting from operations		6,769		18,268		65,500		64,061
Equity transactions:
Purchase payments received from contract owners (note 6)		(4	)	932		–		2,860
Transfers between funds		83,890		158,690		120,544		81,964
Surrenders (note 6)		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(8,230	)	(3,186	)	(9,702	)	(10,118	)
Adjustments to maintain reserves		13		(912	)	2		10
Net equity transactions		75,669		155,524		110,844		74,716
Net change in contract owners’ equity		82,438		173,792		176,344		138,777
Contract owners’ equity beginning of period		176,441		2,649		522,963		384,186
Contract owners’ equity end of period	$	258,879		176,441		699,307		522,963
CHANGES IN UNITS:
Beginning units		12,254		210		42,666		35,681
Units purchased		5,724		12,282		8,838		7,905
Units redeemed		(570	)	(238	)	(760	)	(920	)
Ending units		17,408		12,254		50,744		42,666

See accompanying notes to financial statements.

20

NATIONWIDE VL SEPARATE ACCOUNT–D

NOTES TO FINANCIAL STATEMENTS

December 31, 2005 and 2004

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide VL Separate Account-D (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life and Annuity Insurance Company (the Company) on May 22, 1998. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers Corporate Flexible Premium Variable Life Insurance Policies through the Account.

(b) The Contracts

Only contracts with a front-end 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 AIM Variable Insurance Fund (AIM VIF);

    AIM VIF – AIM V.I. Core Stock Fund – Series I Shares (AIMVEqIncF)

    AIM VIF – AIM V.I. Dynamics Fund – Series I Shares (AIMVDyn)*

    AIM VIF – AIM V.I. Global Health Care Fund – Series I Shares (AIMVHealthF)

        (formerly AIM Variable Insurance Funds – AIM V.I. Health Sciences Fund – Series I)

    AIM VIF – AIM V.I. Small Company Growth Fund – Series I Shares (AIMVSmCoGro)

    AIM VIF – AIM V.I. Technology Fund – Series I Shares (AIMVTechF)*

    AIM VIF – AIM V.I. Total Return Fund – Series I Shares (AIMVTotRetF)*

    AIM VIF – AIM V.I. Utilities Fund – Series I Shares (AIMVUtilF)*

    AIM VIF – AIM V.I. Real Estate Fund – Series I Shares (AIMVREO)*

    AIM VIF – Basic Value Fund – Series I Shares (AIMBValue)*

    AIM VIF – Capital Development Fund – Series I Shares (AIMCapDev)*

    AIM VIF – Growth Fund – Series I Shares (AIMGrwth)

    AIM VIF – High Yield Fund – Series I Shares (AIMHighYld)*

    AIM VIF – International Growth Fund – Series I Shares (AIMIntGr)*

    AIM VIF – Mid Cap Core Equity Fund – Series I Shares (AIMMidCore)*

Portfolios of the Alliance Variable Product Series Funds, Inc (Alliance VPSF);

    Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A (AlVPGrIncA)

    Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class B (AlVPSmCapVB)*

Portfolios of the American Century Variable Portfolios, Inc. (American Century VP);

    American Century VP – Balanced Fund – Class I (ACVPBal)*

    American Century VP – Capital Appreciation Fund – Class I (ACVPCapAp)*

    American Century VP – Income & Growth Fund – Class I (ACVPIncGr)*

    American Century VP – International Fund – Class I (ACVPInt)

    American Century VP – Ultra^® Fund – Class I (ACVPUltra)*

    American Century VP – Value Fund – Class I (ACVPVal)*

    American Century VP – Vista^SM Fund – Class I (ACVPVista)*

Portfolios of Baron Capital Asset Trust Insurance Series (Baron Capital Funds Trust IS);

    Baron Capital Funds Trust IS – Baron Capital Asset Fund: Insurance Shares (BCFTCpAsset)*

Portfolio of the Calvert Variable Series (Calvert VS);

    Calvert VS – Social Equity Portfolio (CVSSoEq)

Funds of the Dreyfus Investment Portfolios (Dreyfus IP);

    Dreyfus IP – Mid Cap Stock Portfolio – Initial Shares (DryMidCapStS)*

        (formerly Dreyfus Investment Portfolios – MidCap Stock Portfolio – Service Shares)

    Dreyfus IP – Small Cap Stock Index Portfolio – Service Class (DrySmCapIxS)

(Continued)

21

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of Dreyfus Investor Inc. (Dreyfus Investor, Inc.);

    Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)*

    Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx)

Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);

    Dreyfus VIF – Appreciation Portfolio – Initial Shares (DryVIFApp)*

    Dreyfus VIF – Disciplined Stock Portfolio – Initial Shares (DryVIFDSP)*

    Dreyfus VIF – International Value Portfolio – Initial Shares (DryVIFIntVal)

    Dreyfus VIF – Limited Term High Yield Portfolio – Initial Shares (DryVIFLTHYP)*

    Dreyfus VIF – Quality Bond Portfolio – Initial Shares (DryVIFQualBd)*

    Dreyfus VIF – Small Company Stock Portfolio – Initial Shares (DryVIFSCSP)*

Portfolios of the Federated Insurance Series (Federated IS);

    Federated IS – Quality Bond Fund II – Primary Shares (FedQualBd)*

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP);

    Fidelity^® VIP – Equity-Income Portfolio: Service Class (FidVIPEIS)

    Fidelity^® VIP – Growth Portfolio: Service Class (FidVIPGrS)

    Fidelity^® VIP – High Income Portfolio: Service Class (FidVIPHIS)*

    Fidelity^® VIP – Overseas Portfolio: Service Class (FidVIPOvS)

    Fidelity^® VIP – Value Portfolio: Service Class (FidVIPVal)*

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP II);

    Fidelity^® VIP II – Asset Manager Growth Portfolio: Service Class (FidVIPAMGrS)*

    Fidelity^® VIP II – Asset Manager Portfolio: Service Class (FidVIPAMS)*

    Fidelity^® VIP II – Contrafund^® Portfolio: Service Class (FidVIPConS)

    Fidelity^® VIP II – Index 500 Portfolio: Initial Class (FidVIPI500)

    Fidelity^® VIP II – Investment Grade Bond Portfolio: Service Class (FidVIPIGBdS)

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP III);

    Fidelity^® VIP III – Aggressive Growth Portfolio – Service Class (FidVIPAgGrS)*

    Fidelity^® VIP III – Balanced Portfolio: Service Class (FidVIPBalS)

    Fidelity^® VIP III – Dynamic Capital Appreciation Fund: Service Class (FidVIPDyCapS)*

    Fidelity^® VIP III – Growth & Income Portfolio – Service Class (FidVIPGrInS)*

    Fidelity^® VIP III – Growth Opportunities Portfolio: Service Class (FidVIPGrOpS)*

    Fidelity^® VIP III – Mid Cap Portfolio: Service Class (FidVIPMCapS)*

    Fidelity^® VIP III – Value Strategies Portfolio: Service Class (FidVIPVaIS)*

Funds of the Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIP II);

    Franklin Templeton VIP II – Templeton Foreign Securities Fund – Class 2 (FrVIPForSec2)

Funds of the Gartmore Variable Insurance Trust (Gartmore GVIT)

(Gartmore is an affiliate of the Company);

    Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I (GVITDMidCapI)

    Gartmore GVIT – Emerging Markets Fund: Class I (GVITEmMrkts)*

    Gartmore GVIT – Federated High Income Bond Fund: Class I (GVITFHiInc)*

    Gartmore GVIT – Global Financial Services Fund: Class I (GVITGlFin1)*

    Gartmore GVIT – Global Health Sciences Fund: Class I (GVITGlHlth)*

    Gartmore GVIT – Global Technology and Communications Fund: Class I (GVITGlTech)*

    Gartmore GVIT – Global Utilities Fund: Class I (GVITGlUtl1)*

    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 – J.P. Morgan Balanced Fund – Class I (GVITJPBal)

    Gartmore GVIT – Mid Cap Growth Fund: Class I (GVITSMdCpGr)*

    Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt)

    Gartmore GVIT – Nationwide^® Fund: Class I (GVITNWFund)

    Gartmore GVIT – Nationwide^® Leaders Fund: Class I (GVITLead)*

    Gartmore GVIT – Small Cap Growth Fund: Class I (GVITSmCapGr)*

(Continued)

22

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

    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 Multi Sector Bond Fund – Class I (GVITVKMultiSec)*

    Gartmore GVIT – Van Kampen Value Fund – Class I (GVITCVal)*

    Gartmore GVIT – Worldwide Leaders Fund: Class I (GVITWLead)*

Funds of the Gartmore Variable Insurance Trust (Gartmore GVIT V)

(Gartmore is an affiliate of the Company);

    Gartmore GVIT V – Money Market Fund: Class V (GVITMyMkt5)*

Funds of the Gartmore Variable Insurance Trust – Investor Destinations (Gartmore GVIT ID II)

(Gartmore is an affiliate of the Company);

    Gartmore GVIT ID II – Aggressive Fund – Class II (GVITIDAgg)*

    Gartmore GVIT ID II – Conservative Fund – Class II (GVITIDCon)*

    Gartmore GVIT ID II – Moderate Fund – Class II (GVITIDMod)*

    Gartmore GVIT ID II – Moderately Aggressive Fund – Class II (GVITIDModAgg)*

    Gartmore GVIT ID II – Moderately Conservative Fund – Class II (GVITIDModCon)*

Portfolios of Goldman Sachs Asset Management Funds (Goldman Sachs VIT);

    Goldman Sachs VIT – Capital Growth Fund (GSVITCGF)*

    Goldman Sachs VIT – CORE^SM Small Cap Equity Fund (GSVITCoreSMCap)*

    Goldman Sachs VIT – CORE^SM U.S. Equity Fund (GSVITCoreSMUSEq)*

    Goldman Sachs VIT – Growth and Income Fund (GVITGrthInc)*

    Goldman Sachs VIT – International Equity Fund (GVITIntEq)*

    Goldman Sachs VIT – Mid Cap Value Fund (GSVITMidCap)

Funds of the Huntington Trust Company;

    Huntington VA – Huntington VA Divident Capture Fund – Trust Shares (HVADivCpTr)*

    Huntington VA – Huntington VA Growth Fund – Trust Shares (HVAGrwth)*

    Huntington VA – Huntington VA Income Equity Fund – Trust Shares (HVAIncEq)*

    Huntington VA – Huntington VA Mid Corp America Fund – Trust Shares (HVAMdCrAm)*

    Huntington VA – Huntington VA New Economy Fund – Trust Shares (HVANwEc)*

Portfolios of the Janus Advisor Series (Janus Advisor);

    Janus Advisor – International Growth Portfolio – Institutional Shares (JanAdIntGr)*

Portfolios of the Janus Aspen Series (Janus AS);

    Janus AS – Balanced Portfolio – Service Shares (JanBal)*

    Janus AS – Forty Portfolio – Service Shares (JanCapAp)*

        (formerly Janus Aspen Series – Capital Appreciation Portfolio – Service Shares)

    Janus AS – Global Technology Portfolio – Service Shares (JanGlTech)*

    Janus AS – International Growth Portfolio – Service Shares (JanIntGro)*

    Janus AS – Mid Cap Value Portfolio – Service Shares (JanMidCpVal)*

Portfolios of the JPMorgan Investment Trust (JPMorgan IT);

    JPMorgan IT – Bond Portfolio (OGBond) (formerly One Group^® Investment Trust Bond Portfolio)

    JPMorgan IT – Diversified Equity Portfolio (OGDivEq)*

        (formerly One Group^® Investment Trust Diversified Equity Portfolio)

    JPMorgan IT – Diversified Mid Cap Portfolio (OGDivMidCap)*

        (formerly One Group^® Investment Trust Diversified Mid Cap Portfolio)

    JPMorgan IT – Equity Index Portfolio (OGEqIndx)

        (formerly One Group^® Investment Trust Equity Index Portfolio)

    JPMorgan IT – Government Bond Portfolio (OGGvtBd)*

        (formerly One Group^® Investment Trust Government Bond Portfolio)

    JPMorgan IT – JPMorgan Investment Trust Balanced Portfolio (OGBal)

        (formerly One Group^® Investment Trust Balanced Portfolio)

    JPMorgan IT – Large Cap Growth Portfolio (OGLgCapGr)*

        (formerly One Group^® Investment Trust Large Cap Growth Portfolio)

(Continued)

23

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

    JPMorgan IT – Mid Cap Growth Portfolio (OGMidCapGr)

        (formerly One Group^® Investment Trust Mid Cap Growth Portfolio)

    JPMorgan IT – Mid Cap Value Portfolio (OGMidCapV)

        (formerly One Group^® Investment Trust Mid Cap Value Portfolio)

Portfolios of the JPMorgan Series Trust II (JPMorgan Series Trust II);

    JPMorgan Series Trust II – Bond Portfolio (JPMST2BP)*

    JPMorgan Series Trust II – International Equity Portfolio (JPMST2IEP)*

    JPMorgan Series Trust II – Small Company Portfolio (JPMST2SCP)*

    JPMorgan Series Trust II – U.S. Large Cap Core Equity Portfolio (JPMST2USLCC)*

    JPMorgan Series Trust II – U.S. Mid Cap Value Portfolio (JPMST2MdcpV)*

Funds of the Massachusetts Financial Services Variable Insurance Trust (MFS VIT^SM);

    MFS^® VIT^SM – MFS Investors Growth Stock Series – Initial Class (MFSVITInvGrwI)

    MFS^® VIT^SM – MFS Utilities Series Initial Class (MFSVITUS)*

    MFS^® VIT^SM – MFS Value Series – Initial Class (MFSVITValIn)*

    MFS^® VIT^SM – MFS Investors Growth Stock Series – Service Class (MFSInvGrS)*

    MFS^® VIT^SM – MFS Utilities Series – Service Class (MFSUtilS)*

    MFS^® VIT^SM – Mid Cap Growth Series – Service Class (MFSMidCapGrS)*

    MFS^® VIT^SM – Value Series – Service Class (MFSValS)*

Funds of Merrill Lynch (Mercury II);

    Mercury II – American Balanced VIF – Class II (MLVIFAB2)*

        (formerly Merrill Lynch Variable Insurance Funds – American Balanced – Class II)

    Mercury II – Basic Value VIF – Class II (MLVIFBV2)*

        (formerly Merrill Lynch Variable Insurance Funds – Basic Value – Class II)

    Mercury II – Core Bond VIF – Class II (MLVIFCB2)*

        (formerly Merrill Lynch Variable Insurance Funds – Core Bond – Class II)

    Mercury II – Domestic Money Market VIF – Class II (MLVIFDMM2)*

        (formerly Merrill Lynch Variable Insurance Funds – Domestic Money Market – Class II)

    Mercury II – Fundamental Growth VIF – Class II (MLVIFFG2)*

        (formerly Merrill Lynch Variable Insurance Funds – Fundamental Growth – Class II)

    Mercury II – Global Allocation VIF – Class II (MLVIFGA2)*

        (formerly Merrill Lynch Variable Insurance Funds – Global Allocation – Class II)

    Mercury II – Global Growth VIF – Class II (MLVIFGlGr)*

        (formerly Merrill Lynch Variable Insurance Funds – Global Growth – Class II)

    Mercury II – Government Bond VIF – Class II (MLVIFGB2)*

        (formerly Merrill Lynch Variable Insurance Funds – Government Bond – Class II)

    Mercury II – High Current Income VIF – Class II (MLVIFHCI2)*

        (formerly Merrill Lynch Variable Insurance Funds – High Current Income – Class II)

    Mercury II – Index 500 VIF – Class II (MLVIFInd5002)*

        (formerly Merrill Lynch Variable Insurance Funds – Index 500 – Class II)

    Mercury II – Large Cap Core VIF – Class II (MLVIFLCCore2)*

        (formerly Merrill Lynch Variable Insurance Funds – Large Cap Core – Class II)

    Mercury II – Large Cap Growth VIF – Class II (MLVIVLCGr2)*

        (formerly Merrill Lynch Variable Insurance Funds – Large Cap Growth – Class II)

    Mercury II – Large Cap Value VIF – Class II (MLVIFLCVal2)*

        (formerly Merrill Lynch Variable Insurance Funds – Large Cap Value – Class II)

    Mercury II – Utilities and Telecom VIF – Class II (MLVIFU&T2)*

        (formerly Merrill Lynch Variable Insurance Funds – Utilities and Telecom – Class II)

    Mercury II – Value Opportunities VIF – Class II (MLVIFSmCapVal2)*

        (formerly Merrill Lynch Variable Insurance Funds – Value Opportunities – Class II)

Portfolio of Nations Marsico (Nations Marsico);

    Nations Marsico Growth Portfolio (MATMAR)*

(Continued)

24

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of the Neuberger Berman Advisers Management Trust (Neuberger Berman AMT);

    Neuberger Berman AMT – Partners Portfolio^® – I Class Shares (NBAMTPart)*

    Neuberger Berman AMT – Guardian Portfolio – I Class Shares (NBAMTGuard)*

    Neuberger Berman AMT – Mid Cap Growth Portfolio – I Class Shares (NBAMTMCGr)*

    Neuberger Berman AMT – Fasciano Portfolio – S Class Shares (NBAMTFasc)*

Portfolios of the Oppenheimer Funds (Oppenheimer Funds);

    Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class (OppAggGro)*

    Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class (OppCapAp)

    Oppenheimer Funds – Global Securities Fund/VA – Initial Class (OppGlSec)

    Oppenheimer Funds – Main Street Fund^®/VA – Initial Class (OppMSFund)*

Portfolios of PIMCO Variable Insurance Trust (PIMCO VIT);

    PIMCO VIT – All Asset Portfolio – Administrative Shares (PVITAllAsset)*

    PIMCO VIT – High Yield Portfolio – Administrative Shares (PIMHighY)*

    PIMCO VIT – Low Duration Portfolio – Administrative Shares (PIMLowDur)*

    PIMCO VIT – Real Return Portfolio – Administrative Shares (PIMRealRet)

    PIMCO VIT – Total Return Portfolio – Administrative Shares (PIMTotRet)

Portfolio of Pioneer Variable Contracts Trust Funds (Pioneer VCT);

    Pioneer VCT – Pioneer High Yield VCT Portfolio – Class I Shares (PVCTHiYield)*

Funds of the Putnam Variable Trust (Putnam VT IA);

    Putnam VT IA – International Equity Fund – IA Shares (PVTGroEqIA)*

Funds of the Putnam Variable Trust (Putnam VT IB);

    Putnam VT IB – International Equity Fund – IB Shares (PVTIntEq)*

Portfolios of Royce Capital Funds (Royce Capital Funds);

    Royce Capital Fund – Royce Micro-Cap Portfolio (RCFMicroCap)*

    Royce Capital Fund – Small Cap Portfolio (RoySmCp)

Portfolios of Salomon Smith Barney Funds, Inc. (Salomon Brothers VSF);

    Salomon Brothers VSF – All Cap Fund (SalBrCap)*

    Salomon Brothers VSF – High Yield Bond Fund (SalBrHYBd)*

    Salomon Brothers VSF – Investors Fund (SalBrInv)

    Salomon Brothers VSF – Total Return Fund (SalBrTotRet)*

Portfolios of Salomon Smith Barney Funds, Inc. (Salomon Brothers VSF I);

    Salomon Brothers VSF I – Emerging Growth Fund – Class I (SalBrEmGr)*

    Salomon Brothers VSF I – Strategic Bond Fund – Class I (SalBrStratBd)*

Portfolios of Scudder Variable Insurance Trust (Scudder VIT A);

    Scudder VIT A – Equity 500 Index Fund – Class A Shares (SVITIF)*

    Scudder VIT A – Small Cap Index Fund – Class A Shares (SVITSCI)*

Portfolios of Scudder Variable Series 1 (Scudder VS1 B);

    Scudder VS1 B – Capital Growth Portfolio – Class B (ScVS1CpGrB)*

    Scudder VS1 B – Health Sciences Portfolio – Class B (ScVS1HSciGrB)*

Portfolios of Scudder Variable Series 2 (Scudder VS2 B);

    Scudder VS2 B – Dreman Financial Services Portfolio – Class B (ScVS2DrFSrvB)*

    Scudder VS2 B – Dreman High Return Equity Portfolio – Class B (ScVS2DrHiRtEqB)*

    Scudder VS2 B – Dreman Small Cap Value Portfolio – Class B (ScVS2DrSmCpVB)*

    Scudder VS2 B – Fixed Income Portfolio – Class B (ScVS2FxIncB)*

    Scudder VS2 B – Global Blue Chip Portfolio – Class B (ScVS2GlBluChB)*

    Scudder VS2 B – High Income Portfolio – Class B (ScVS2HiIncB)*

    Scudder VS2 B – Large Cap Value Portfolio – Class B (ScVS2ConVB)*

        (formerly Scudder Variable Series II – Contrarian Value Portfolio – Class B)

    Scudder VS2 B – Small Cap Growth Portfolio – Class B (ScVS2SmCpGrB)*

    Scudder VS2 B – Technology Growth Portfolio – Class B (ScVS2TechGrwB)*

    Scudder VS2 B – Total Return Portfolio – Class B (ScVS2TotRtnB)*

(Continued)

25

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of T. Rowe Price Funds, Inc. (T. Rowe Price);

    T. Rowe Price – New America Growth Portfolio (TRowNewAmG)*

Portfolios of T. Rowe Price Funds, Inc. II (T. Rowe Price II);

    T. Rowe Price II – Equity Income Portfolio – II (TRowEqInc2)

    T. Rowe Price II – Mid Cap Growth Fund – II (TRowMidCap2)*

Portfolios of Van Kampen Life Investment Trust (Van Kampen LIT II);

    Van Kampen LIT II – Comstock Portfolio – Class II (VKCom2)*

    Van Kampen LIT II – Emerging Growth Portfolio-Class II (VKEmGr2)*

    Van Kampen LIT II – Enterprise Portfolio – Class II (VKEnt2)*

Funds of Van Kampen Universal Institutional Funds, Inc. (Van Kampen UIF);

    Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I (VKoreFI)*

    Van Kampen UIF – Emerging Markets Debt Portfolio – Class I (VKEmMkt)*

    Van Kampen UIF – Emerging Markets Equity Portfolio – Class I (VKEmMk1)*

    Van Kampen UIF – Equity Growth Portfolio – Class I (VKEQGrP)*

    Van Kampen UIF – Global Value Equity Portfolio – Class I (VKGlValEq1)*

    Van Kampen UIF – High Yield Portfolio – Class I (VKHiYld1)*

    Van Kampen UIF – International Magnum Portfolio – Class I (VKIntMag)*

    Van Kampen UIF – Mid Cap Growth Portfolio – Class I (VKMidCapG)*

    Van Kampen UIF – Mid Cap Value Portfolio – Class I (VKMidCapVal1)*

    Van Kampen UIF – Technology Portfolio – Class I (VKTech1)*

    Van Kampen UIF – U.S. Real Estate Portfolio – Class I (VKUSRealEst)*

    Van Kampen UIF – Value Portfolio – Class I (VKVal)*

Portfolios of the Waddell and Reed (W & R Target Funds, Inc.);

    W & R Target Funds, Inc. – Small Cap Portfolio (WRSmCap)

Portfolios of the Wells Fargo Advantage Variable Trust Funds^SM (Wells Fargo Advantage VTF^SM);

    Wells Fargo VTF^SM – Wells Fargo Advantage Opportunity Fund VT (StOpp2)*

        (formerly Strong Variable Insurance Funds, Inc. – Strong Opportunity Fund II, Inc.)

At December 31, 2005, 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 transaction 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.

(Continued)

26

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

(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, 2005 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 specific identification 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.

(2) Policy Charges

(a) Deductions from Premium

The Company deducts a charge for state premium taxes and sales expenses not to exceed 9.0% (reduced to 5.5% starting in the seventh policy year) of each premium received to cover the payment of these premium taxes. 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 cost are determined in a manner not unfairly discriminatory to policy owners.

For the periods ended December 31, 2005 and 2004, total front-end sales charge deductions were $562,177 and $724,529, respectively.

(b) Cost of Insurance

A cost of insurance charge is assessed monthly against each contract by liquidating units. 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).

(c) Administrative Charges

The Company currently deducts a monthly administrative charge of $5 in all policy years to recover policy maintenance, accounting, record keeping and other administrative expenses. This charge is subject to change but will not exceed $10 per month. These charges are assessed against each contract by liquidating units.

(3) Asset Charges

For corporate flexible premium contracts, the Company deducts a charge from the contract to cover mortality and expense risk charges. This charge is guaranteed not to exceed an annualized rate of 0.75% of the policy’s cash value. 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 rate exists for corporate flexible premium contracts and is 0.20% for all policy years. These charges are assessed through the daily unit value calculation.

For contracts issued prior to September 9, 2002, the Company reduced the asset charges where the size or nature of the group resulted in savings in sales, underwriting, or administrative costs. Variations due to differences in costs were determined in a manner not unfairly discriminatory to policy owners.

(Continued)

27

NATIONWIDE VL SEPARATE ACCOUNT–D (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. 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 non-loaned cash value. Interest is charged on the outstanding loan and is due and payable on the each policy anniversary, or when the loan is repaid or a new loan is effective.

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 was made. 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.

The interest rate charged on the policy loan is the stated rate of interest in effect at the time the loan is made, subject to a guaranteed maximum rate of 3.75%. No loans were outstanding for the periods ended December 31, 2005 and 2004.

(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, 2005 and 2004, there were no transfers between the Account and the fixed account of the Company.

(Continued)

28

NATIONWIDE VL SEPARATE ACCOUNT–D (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 life and annuity contracts as of the end of the periods indicated, and the contract expense rate, investment income ratio and total return for each period in the five year period ended December 31, 2005.

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
The BEST of AMERICA® America’s FUTURE Life SeriesSM   Reduced Fee Tier – (0.20%)
Fidelity® VIP – Equity-Income Portfolio: Service Class
2005	0.20%	458,254	$	11.939536	$	5,471,340	1.80%	5.55%
2004	0.20%	610,162		11.312080		6,902,201	1.58%	11.16%
Fidelity® VIP – Growth Portfolio: Service Class
2005	0.20%	71,030		8.786288		624,090	0.36%	5.46%
2004	0.20%	80,876		8.331220		673,796	0.16%	3.06%
Fidelity® VIP – Overseas Portfolio: Service Class
2005	0.20%	112,464		12.362488		1,390,335	0.56%	18.73%
Fidelity® VIP II – Index 500 Portfolio: Initial Class
2005	0.20%	407,914		10.480980		4,275,338	1.68%	4.61%
2004	0.20%	436,930		10.018647		4,377,447	1.25%	10.39%
Fidelity® VIP II – Contrafund® Portfolio: Service Class
2005	0.20%	385,314		14.827535		5,713,257	0.20%	16.61%
2004	0.20%	395,940		12.715028		5,034,388	0.26%	15.11%
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class
2005	0.20%	97,252		12.572029		1,222,655	2.93%	1.88%
2004	0.20%	38,490		12.340435		474,983	2.00%	4.11%
Fidelity® VIP III – Balanced Portfolio: Service Class
2005	0.20%	233,518		11.599328		2,708,652	2.49%	5.40%
2004	0.20%	258,454		11.005178		2,844,332	1.85%	5.21%
Gartmore GVIT – Money Market Fund – Class I
2005	0.20%	76		10.641320		809	2.73%	2.46%
2004	0.20%	76		10.385497		789	0.83%	0.61%
The BEST of AMERICA® America’s FUTURE Life SeriesSM   Reduced Fee Tier – (0.25%)
AIM VIF – AIM V.I. Core Stock Fund – Series I Shares
2005	0.25%	101,482		11.436219		1,160,570	0.23%	3.10%
2004	0.25%	187,696		11.092753		2,082,065	0.74%	3.98%
2003	0.25%	187,983		10.668115		2,005,424	1.26%	22.29%
AIM VIF – AIM V.I. Dynamics Fund – Series I Shares
2004	0.25%	12,758		10.681061		136,269	0.00%	13.06%
2003	0.25%	4,116		9.447591		38,886	0.00%	37.48%
AIM VIF – AIM V.I. Global Health Care Fund – Series I Shares
2005	0.25%	174		13.284465		2,311	0.00%	7.88%
2004	0.25%	10,156		12.314241		125,063	0.00%	7.30%
2003	0.25%	9,388		11.476339		107,740	0.00%	27.46%
AIM VIF – AIM V.I. Real Estate Fund – Series I Shares
2003	0.25%	1,861		18.434416		34,306	5.75%	38.47%
AIM VIF – AIM V.I. Small Company Growth Fund – Series I Shares
2005	0.25%	6,448		14.495652		93,468	0.00%	4.93%
2004	0.25%	273,458		13.814641		3,777,724	0.00%	13.61%
2003	0.25%	160,568		12.159621		1,952,446	0.00%	33.10%
AIM VIF – AIM V.I. Technology Fund – Series I Shares
2004	0.25%	2,718		8.481089		23,052	0.00%	4.37%
2003	0.25%	20,669		8.125808		167,952	0.00%	44.93%
AIM VIF – AIM V.I. Total Return Fund – Series I Shares
2004	0.25%	154,896		9.921020		1,536,726	1.74%	3.47%
2003	0.25%	79,699		9.588040		764,157	2.74%	16.69%
AIM VIF – AIM V.I. Utilities Fund – Series I Shares
2003	0.25%	5,717		7.744429		44,275	1.05%	17.18%

(Continued)

29

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
AIM VIF – Basic Value Fund – Series I Shares
2004	0.25%	194,202	$	13.719318	$	2,664,319	0.00%	10.79%
2003	0.25%	34,744		12.382943		430,233	0.04%	33.29%
AIM VIF – Growth Fund – Series I Shares
2004	0.25%	277,828		10.959763		3,044,929	0.00%	9.60%	04/30/04
AIM VIF – Mid Cap Core Equity Fund – Series I Shares
2004	0.25%	209,352		14.193109		2,971,356	0.19%	13.53%
2003	0.25%	40,414		12.501247		505,225	0.00%	27.00%
Fidelity® VIP – Overseas Portfolio: Service Class
2005	0.25%	21,758		13.209999		287,423	0.56%	18.67%
2004	0.25%	444,828		11.131246		4,951,490	1.11%	13.20%
2003	0.25%	269,951		9.832886		2,654,397	0.81%	42.85%
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	0.25%	24,440		20.082588		490,818	1.07%	11.82%
2004	0.25%	15,780		17.959872		283,407	0.59%	15.44%
2003	0.25%	324		15.557368		5,041	0.58%	34.31%
Gartmore GVIT – Government Bond Fund: Class I
2005	0.25%	5,040		14.029861		70,710	2.97%	3.01%
2004	0.25%	21,918		13.620393		298,532	5.18%	3.00%
2003	0.25%	27,927		13.223142		369,283	2.73%	1.75%
Gartmore GVIT – Growth Fund – Class I
2003	0.25%	28,670		5.146555		147,552	0.02%	32.41%
Gartmore GVIT – J.P. Morgan Balanced Fund – Class I
2005	0.25%	122,946		10.949336		1,346,177	2.06%	2.29%
Gartmore GVIT – Mid Cap Growth Fund: Class I
2003	0.25%	820		9.579740		7,855	0.00%	39.79%
Gartmore GVIT – Money Market Fund – Class I
2005	0.25%	15,932		11.929582		190,062	2.73%	2.41%
Gartmore GVIT – Nationwide® Fund: Class I
2005	0.25%	48,504		11.192728		542,892	0.99%	7.17%
2004	0.25%	20,024		10.443524		209,121	1.31%	9.48%
2003	0.25%	21,730		9.539460		207,292	0.52%	27.19%
Gartmore GVIT – Small Company Fund: Class I
2005	0.25%	6,854		22.677354		155,431	0.00%	12.04%
2004	0.25%	1,086		20.240968		21,982	0.00%	18.72%
2003	0.25%	6,841		17.048620		116,630	0.00%	40.66%
Gartmore GVIT – Van Kampen Value Fund – Class I
2004	0.25%	9,778		10.467533		102,352	1.12%	17.21%
2003	0.25%	11,755		8.930936		104,983	1.80%	31.11%
Gartmore GVIT – Worldwide Leaders Fund: Class I
2003	0.25%	4,733		8.554639		40,489	0.00%	35.72%
Invesco VIF – Growth Fund
2003	0.25%	348,515		4.291770		1,495,746	0.00%	29.55%
Salomon Brothers VSF – Investors Fund
2005	0.25%	1,084		14.419098		15,630	0.49%	6.26%
2004	0.25%	14,406		13.569403		195,481	2.21%	10.10%
2003	0.25%	7,070		12.324552		87,135	1.32%	32.00%
The BEST of AMERICA® America’s FUTURE Life SeriesSM   Reduced Fee Tier – (0.40%)
AIM VIF – AIM V.I. Core Stock Fund – Series I Shares
2004	0.40%	27,000		10.993594		296,827	0.74%	3.82%
2003	0.40%	158,536		10.588631		1,678,679	1.26%	22.11%
2002	0.40%	286,948		8.671582		2,488,293	1.67%	-19.43%
2001	0.40%	246,524		10.763365		2,653,428	1.48%	-9.34%
AIM VIF – AIM V.I. Dynamics Fund – Series I Shares
2001	0.40%	30,111		10.070858		303,244	0.00%	-31.41%
AIM VIF – AIM V.I. Global Health Care Fund – Series I Shares
2002	0.40%	5,342		8.949952		47,811	0.00%	-24.75%

(Continued)

30

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
AIM VIF – AIM V.I. Small Company Growth Fund – Series I Shares
2004	0.40%	52,750	$	13.691063	$	722,204	0.00%	13.44%
2003	0.40%	185,394		12.068934		2,237,508	0.00%	32.90%
2002	0.40%	318,301		9.081210		2,890,558	0.00%	-31.39%
2001	0.40%	171,788		13.235944		2,273,776	0.00%	-18.87%
AIM VIF – AIM V.I. Technology Fund – Series I Shares
2002	0.40%	27,179		5.573377		151,479	0.00%	-47.06%
AIM VIF – AIM V.I. Total Return Fund – Series I Shares
2004	0.40%	22,118		9.832340		217,472	1.74%	3.32%
2003	0.40%	71,235		9.516603		677,915	2.74%	16.51%
2002	0.40%	111,191		8.167813		908,187	3.39%	-10.58%
2001	0.40%	68,822		9.134304		628,641	1.93%	-1.87%
AIM VIF – AIM V.I. Utilities Fund – Series I Shares
2002	0.40%	6,844		6.569711		44,963	1.04%	-20.64%
AIM VIF – Basic Value Fund – Series I Shares
2004	0.40%	39,136		13.668757		534,940	0.00%	10.63%
2003	0.40%	42,275		12.355819		522,342	0.04%	33.09%
2002	0.40%	41,838		9.283590		388,407	0.00%	-7.16%	07/15/02
AIM VIF – Growth Fund – Series I Shares
2004	0.40%	48,662		10.948763		532,789	0.00%	9.49%	04/30/04
AIM VIF – Mid Cap Core Equity Fund – Series I Shares
2004	0.40%	42,190		14.140795		596,600	0.19%	13.36%
2003	0.40%	49,175		12.473849		613,402	0.00%	26.81%
2002	0.40%	52,865		9.836962		520,031	0.00%	-1.63%	07/15/04
Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A
2005	0.40%	233,326		11.691859		2,728,015	1.46%	4.45%
2004	0.40%	172,414		11.193833		1,929,974	0.86%	11.02%
2003	0.40%	94,893		10.082977		956,804	1.15%	31.97%
American Century VP – International Fund – Class I
2005	0.40%	25,592		9.194806		235,313	1.17%	12.80%
2004	0.40%	18,162		8.151177		148,042	0.00%	14.47%
Calvert VS – Social Equity Portfolio
2005	0.40%	3,084		13.903575		42,879	0.06%	4.13%
2004	0.40%	3,150		13.352495		42,060	0.08%	6.73%
2003	0.40%	2,995		12.510533		37,469	0.02%	21.69%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class
2005	0.40%	2,514		13.620186		34,241	0.00%	6.81%
2004	0.40%	2,156		12.752292		27,494	1.20%	21.40%
2003	0.40%	42		10.504526		441	0.63%	37.23%
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares
2005	0.40%	360,122		10.654824		3,837,037	1.66%	4.27%
2004	0.40%	326,338		10.218046		3,334,537	1.97%	10.20%
2003	0.40%	217,474		9.272395		2,016,505	1.82%	27.85%
Dreyfus VIF – International Value Portfolio – Initial Shares
2005	0.40%	115,534		16.423973		1,897,527	0.00%	11.44%
2004	0.40%	84,172		14.737382		1,240,475	1.24%	19.54%
2003	0.40%	51,497		12.328061		634,858	6.21%	35.81%
Dreyfus VIF – Quality Bond Portfolio – Initial Shares
2001	0.40%	7,599		11.774415		89,474	2.16%	6.26%
Fidelity® VIP – Equity-Income Portfolio: Service Class
2003	0.40%	636,125		11.495307		7,312,452	1.68%	29.70%
2002	0.40%	559,168		8.862985		4,955,898	1.68%	-17.33%
2001	0.40%	592,870		10.720798		6,356,040	1.52%	-5.47%
Fidelity® VIP – Growth Portfolio: Service Class
2005	0.40%	4,722		9.738159		45,984	0.36%	5.25%
2004	0.40%	3,898		9.252214		36,065	0.16%	2.85%
2003	0.40%	77,099		8.995716		693,561	0.03%	32.25%
2002	0.40%	9,523		6.801978		64,775	0.00%	-30.48%

(Continued)

31

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Fidelity® VIP – Overseas Portfolio: Service Class
2004	0.40%	84,776	$	11.031720	$	935,225	1.11%	13.03%
2003	0.40%	305,807		9.759585		2,984,549	0.81%	42.63%
2002	0.40%	574,848		6.842437		3,933,361	0.82%	-20.66%
2001	0.40%	334,783		8.624328		2,887,278	7.46%	-21.59%
Fidelity® VIP II – Index 500 Portfolio: Initial Class
2003	0.40%	432,638		7.829650		3,387,404	1.53%	27.90%
2002	0.40%	457,424		6.121876		2,800,293	1.29%	-22.56%
2001	0.40%	457,849		7.905210		3,619,392	0.00%	-12.45%
Fidelity® VIP II – Contrafund® Portfolio: Service Class
2005	0.40%	21,520		15.407287		331,565	0.20%	16.38%
2004	0.40%	21,972		13.238537		290,877	0.26%	14.88%
2003	0.40%	405,029		11.523894		4,667,511	0.36%	27.84%
2002	0.40%	384,953		9.014275		3,470,072	0.73%	-9.79%
2001	0.40%	388,621		9.992116		3,883,146	0.40%	-12.71%
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class
2003	0.40%	97,914		11.796195		1,155,013	2.74%	4.64%
2002	0.40%	75,241		11.272735		848,172	0.00%	9.76%
Fidelity® VIP III – Balanced Portfolio: Service Class
2003	0.40%	191,781		10.283429		1,972,166	2.48%	17.06%
2002	0.40%	154,828		8.784896		1,360,148	2.83%	-9.12%
2001	0.40%	147,063		9.666294		1,421,554	3.39%	-2.12%
Franklin Templeton VIP II – Templeton Foreign Securities Fund – Class 2
2005	0.40%	62,286		16.161499		1,006,635	1.07%	9.73%
2004	0.40%	78,650		14.728417		1,158,390	1.06%	18.06%
2003	0.40%	49,066		12.475864		612,141	1.59%	31.68%
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	0.40%	171,914		19.873309		3,416,500	1.07%	11.65%
2004	0.40%	136,290		17.799298		2,425,866	0.59%	15.27%
2003	0.40%	99,787		15.441403		1,540,851	0.58%	34.11%
Gartmore GVIT – Government Bond Fund: Class I
2002	0.40%	19,615		12.918846		253,403	9.52%	10.54%
2001	0.40%	31,421		11.686979		367,217	9.72%	6.82%
Gartmore GVIT – Growth Fund – Class I
2002	0.40%	20,775		3.863679		80,268	0.00%	-29.01%
Gartmore GVIT – Mid Cap Growth Fund: Class I
2002	0.40%	6,186		6.812256		42,141	0.00%	-37.27%
Gartmore GVIT – Money Market Fund – Class I
2005	0.40%	195,028		11.804619		2,302,231	2.73%	2.26%
2004	0.40%	146,872		11.543898		1,695,475	0.83%	0.41%
2003	0.40%	107,374		11.496973		1,234,476	0.55%	0.22%
2002	0.40%	41		11.471376		470	3.26%	0.81%
2001	0.40%	132,087		11.379587		1,503,096	5.57%	3.19%
Gartmore GVIT – Nationwide® Fund: Class I
2005	0.40%	204		11.076090		2,260	0.99%	7.01%
2002	0.40%	17,310		7.455189		129,049	1.94%	-17.68%
Gartmore GVIT – Small Company Fund: Class I
2005	0.40%	2,364		22.441067		53,051	0.00%	11.87%
2004	0.40%	530		20.060030		10,632	0.00%	18.55%
2003	0.40%	78		16.921572		1,320	0.00%	40.45%
2002	0.40%	717		12.048077		8,638	0.00%	-17.66%
Gartmore GVIT – Worldwide Leaders Fund: Class I
2002	0.40%	15,496		6.265578		97,091	0.00%	-25.69%
Goldman Sachs VIT – Mid Cap Value Fund
2005	0.40%	12,040		24.302910		292,607	0.63%	12.38%
2004	0.40%	8,870		21.626334		191,826	0.99%	25.38%
2003	0.40%	247		17.248288		4,260	4.06%	27.88%
Invesco VIF – Growth Fund
2003	0.40%	426,314		4.259733		1,815,984	0.00%	29.36%
2002	0.40%	703,188		3.293048		2,315,632	0.00%	-39.18%
2001	0.40%	496,604		5.414750		2,688,987	0.00%	-44.49%

(Continued)

32

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Invesco VIF – High Yield Fund – Series I Shares
2001	0.40%	68,560	$	8.085321	$	554,330	21.64%	-15.27%
JPMorgan IT – Bond Portfolio
2005	0.40%	1,868		13.711626		25,613	3.15%	1.98%
2004	0.40%	1,892		13.445176		25,438	1.81%	3.72%
2003	0.40%	218		12.963219		2,826	0.00%	3.46%
JPMorgan IT – Equity Index Portfolio
2005	0.40%	3,856		8.626320		33,263	1.05%	4.04%
2004	0.40%	3,698		8.291329		30,661	0.34%	9.90%
2003	0.40%	132		7.544510		996	0.00%	27.47%
JPMorgan IT – JPMorgan Investment Trust Balanced Portfolio
2005	0.40%	1,144		10.075754		11,527	2.43%	2.09%
2004	0.40%	1,192		9.869290		11,764	1.17%	5.31%
2003	0.40%	177		9.371697		1,659	0.00%	16.73%
JPMorgan IT – Mid Cap Growth Portfolio
2005	0.40%	2,224		9.320747		20,729	0.00%	10.65%
2004	0.40%	2,050		8.423606		17,268	0.00%	12.17%
2003	0.40%	221		7.509677		1,660	0.00%	26.64%
JPMorgan IT – Mid Cap Value Portfolio
2005	0.40%	1,512		16.666561		25,200	0.47%	9.32%
2004	0.40%	50		15.246029		762	0.29%	14.94%
MFS® VIT SM – MFS Investors Growth Stock Series – Initial Class
2005	0.40%	57,102		10.282095		587,128	0.33%	4.07%
2004	0.40%	110,050		9.879737		1,087,265	0.00%	8.75%
2003	0.40%	84,317		9.084887		766,010	0.00%	22.53%
MFS® VIT SM – MFS Value Series – Initial Class
2004	0.40%	28,266		11.800888		333,564	0.83%	14.72%
2003	0.40%	20,767		10.286766		213,625	0.00%	24.46%
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class
2005	0.40%	85,240		10.919800		930,804	0.97%	4.68%
2004	0.40%	20,074		10.431598		209,404	0.00%	6.51%
Oppenheimer Funds – Global Securities Fund/VA – Initial Class
2005	0.40%	112,310		14.659892		1,646,452	0.87%	13.85%
2004	0.40%	76,140		12.876219		980,395	1.14%	18.69%
2003	0.40%	58,774		10.848847		637,630	0.16%	42.45%
PIMCO VIT – Real Return Portfolio – Administrative Shares
2005	0.40%	133,526		13.854354		1,849,916	2.86%	1.67%
2004	0.40%	92,138		13.627337		1,255,596	0.99%	8.45%
2003	0.40%	84,012		12.565018		1,055,612	2.61%	8.42%
PIMCO VIT – Total Return Portfolio – Administrative Shares
2005	0.40%	166,900		12.023223		2,006,676	3.64%	2.02%
2004	0.40%	70,122		11.785439		826,419	1.94%	4.46%
2003	0.40%	52,710		11.282022		594,675	2.95%	4.62%
Royce Capital Fund – Small Cap Portfolio
2005	0.40%	118,794		14.527033		1,725,724	0.00%	8.13%
2004	0.40%	101,118		13.435110		1,358,531	0.00%	24.45%
2003	0.40%	72,341		10.795330		780,945	0.00%	40.54%
Salomon Brothers VSF – Investors Fund
2002	0.40%	17,337		9.281074		160,906	2.66%	-23.36%
T. Rowe Price II – Equity Income Portfolio – II
2005	0.40%	17,408		14.871262		258,879	1.42%	3.28%
2004	0.40%	12,254		14.398668		176,441	1.99%	14.16%
2003	0.40%	210		12.612824		2,649	2.54%	24.67%
W & R Target Funds, Inc. – Small Cap Portfolio
2005	0.40%	50,744		13.781072		699,307	0.00%	12.43%
2004	0.40%	42,666		12.257131		522,963	0.00%	13.84%
2003	0.40%	35,681		10.767230		384,186	0.00%	35.23%

(Continued)

33

NATIONWIDE VL SEPARATE ACCOUNT–D (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Owners’ Equity
2005	$	51,809,031
2004	$	65,936,045
2003	$	52,487,131
2002	$	27,960,046
2001	$	29,229,603

*	This represents the annual contract expense rate of the variable account for the period indicated and includes only those expenses that are assessed 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, if any, 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.

34

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life and Annuity Insurance Company and

    Contract Owners of Nationwide VL Separate Account-D:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide VL Separate Account-D (comprised of the sub-accounts listed in note 1(b)) (collectively, “the Account”) as of December 31, 2005, 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 Account’s 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 audit 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, 2005, 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 Account as of December 31, 2005, and the results of its 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.

KPMG LLP

Columbus, Ohio

March 8, 2006

35

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY	PRSRT STD
HOME OFFICE: ONE NATIONWIDE PLAZA • COLUMBUS, OHIO 43215-2220	U.S. POSTAGE
	PAID
	NATIONWIDE

Nationwide^® is a registered federal service mark of Nationwide Mutual Insurance Company