Nationwide^®

VLI Separate Account-5

Annual Report

to

Contract Owners

December 31, 2007

NATIONWIDE LIFE INSURANCE COMPANY

HOME OFFICE: COLUMBUS, OHIO

WR– 0113 –12/07

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2007

Assets:
Investments at fair value:
W&R Target Funds, Inc. – Asset Strategy Portfolio (WRAsStrat) 2,394,886 shares (cost $20,417,712)	$	29,518,648
W&R Target Funds, Inc. – Balanced Portfolio (WRBal) 696,514 shares (cost $5,086,576)		6,799,644
W&R Target Funds, Inc. – Bond Portfolio (WRBond) 1,480,700 shares (cost $8,078,422)		7,885,466
W&R Target Funds, Inc. – Core Equity Portfolio (WRCoreEq) 1,442,603 shares (cost $14,368,866)		18,693,681
W&R Target Funds, Inc. – Dividend Income Portfolio (WRDivInc) 453,862 shares (cost $3,030,906)		3,631,577
W&R Target Funds, Inc. – Energy Portfolio (WREnergy) 122,938 shares (cost $669,562)		857,270
W&R Target Funds, Inc. – Global Natural Resources Portfolio (WRGlNatRes) 541,772 shares (cost $4,360,793)		5,463,121
W&R Target Funds, Inc. – Growth Portfolio (WRGrowth) 2,040,580 shares (cost $15,833,869)		24,535,320
W&R Target Funds, Inc. – High Income Portfolio (WRHiInc) 2,109,753 shares (cost $7,104,135)		6,757,749
W&R Target Funds, Inc. – International Growth Portfolio (WRIntGro) 636,820 shares (cost $4,465,264)		6,844,920
W&R Target Funds, Inc. – International Value Portfolio (WRIntVal) 176,530 shares (cost $3,880,038)		3,953,127
W&R Target Funds, Inc. – Micro Cap Growth Portfolio (WRMicCpGr) 54,263 shares (cost $1,006,466)		1,160,355
W&R Target Funds, Inc. – Mid Cap Growth Portfolio (WRMidCpGr) 286,652 shares (cost $1,915,819)		2,066,505
W&R Target Funds, Inc. – Money Market Portfolio (WRMMkt) 1,643,816 shares (cost $1,643,816)		1,643,816
W&R Target Funds, Inc. – Mortgage Securities Portfolio (WRMortSec) 145,942 shares (cost $742,443)		726,980
W&R Target Funds, Inc. – Real Estate Securities Portfolio (WRRealEstS) 271,921 shares (cost $2,190,374)		1,899,827
W&R Target Funds, Inc. – Science and Technology Portfolio (WRSciTech) 859,193 shares (cost $12,202,774)		15,446,316
W&R Target Funds, Inc. – Small Cap Growth Portfolio (WRSmCpGr) 1,229,435 shares (cost $10,657,845)		12,592,115
W&R Target Funds, Inc. – Small Cap Value Portfolio (WRSmCpVal) 135,310 shares (cost $2,142,045)		1,937,895
W&R Target Funds, Inc. – Value Portfolio (WRValue) 1,404,509 shares (cost $8,154,054)		8,938,297
Total Investments		161,352,629
Accounts Receivable		993
Total Assets		161,353,622
Accounts Payable		–
Contract Owners Equity (note 7)	$	161,353,622

See accompanying notes to financial statements.

2

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF OPERATIONS

Year Ended December 31, 2007

Investment activity:		Total		WRAsStrat		WRBal		WRBond		WRCoreEq		WRDivInc		WREnergy		WRGlNatRes
Reinvested dividends	$	1,551,201		161,586		91,119		291,279		112,617		30,056		2,549		1,112
Net investment income (loss)		1,551,201		161,586		91,119		291,279		112,617		30,056		2,549		1,112
Proceeds from mutual fund shares sold		17,572,906		477,689		492,901		461,051		869,595		74,366		27,295		190,515
Cost of mutual fund shares sold		(15,283,552	)	(284,846	)	(347,124	)	(494,342	)	(639,815	)	(47,347	)	(22,358	)	(123,766	)
Realized gain (loss) on investments		2,289,354		192,843		145,777		(33,291	)	229,780		27,019		4,937		66,749
Change in unrealized gain (loss) on investments		12,188,282		6,954,072		578,918		114,693		287,167		342,342		183,794		929,189
Net gain (loss) on investments		14,477,636		7,146,915		724,695		81,402		516,947		369,361		188,731		995,938
Reinvested capital gains		9,262,827		1,260,296		124		–		1,651,754		27,049		2,288		392,197
Net increase (decrease) in contract owners’ equity resulting from operations	$	25,291,664		8,568,797		815,938		372,681		2,281,318		426,466		193,568		1,389,247
Investment activity:		WRGrowth		WRHiInc		WRIntGro		WRIntVal		WRLTBond		WRMicCpGr		WRMidCpGr		WRMMkt
Reinvested dividends	$	259		514,016		36,221		62,112		43,812		–		360		79,764
Net investment income (loss)		259		514,016		36,221		62,112		43,812		–		360		79,764
Proceeds from mutual fund shares sold		1,584,204		289,073		250,337		280,116		1,772,999		168,737		53,619		7,174,436
Cost of mutual fund shares sold		(1,200,041	)	(261,907	)	(132,756	)	(200,356	)	(1,814,222	)	(113,866	)	(42,782	)	(7,174,436	)
Realized gain (loss) on investments		384,163		27,166		117,581		79,760		(41,223	)	54,871		10,837		–
Change in unrealized gain (loss) on investments		4,118,021		(329,125	)	778,887		(182,060	)	40,058		12,703		103,621		–
Net gain (loss) on investments		4,502,184		(301,959	)	896,468		(102,300	)	(1,165	)	67,574		114,458		–
Reinvested capital gains		563,564		–		169,017		354,041		–		–		49,505		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	5,066,007		212,057		1,101,706		313,853		42,647		67,574		164,323		79,764

(Continued)

3

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		WRMortSec		WRRealEstS		WRSciTech		WRSmCpGr		WRSmCpVal		WRValue
Reinvested dividends	$	23,837		12,137		–		–		104		88,261
Net investment income (loss)		23,837		12,137		–		–		104		88,261
Proceeds from mutual fund shares sold		91,611		363,393		742,603		892,787		234,011		1,081,568
Cost of mutual fund shares sold		(92,057	)	(284,356	)	(432,347	)	(619,257	)	(243,751	)	(711,820	)
Realized gain (loss) on investments		(446	)	79,037		310,256		273,530		(9,740	)	369,748
Change in unrealized gain (loss) on investments		(1,235	)	(560,484	)	(173,111	)	34,092		(174,214	)	(869,046	)
Net gain (loss) on investments		(1,681	)	(481,447	)	137,145		307,622		(183,954	)	(499,298	)
Reinvested capital gains		–		85,578		2,843,305		1,201,740		92,381		569,988
Net increase (decrease) in contract owners’ equity resulting from operations	$	22,156		(383,732	)	2,980,450		1,509,362		(91,469	)	158,951

See accompanying notes to financial statements.

4

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2007 and 2006

		Total				WRAsStrat				WRBal				WRBond
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	1,551,201		1,237,886		161,586		57,539		91,119		80,994		291,279		222,733
Realized gain (loss) on investments		2,289,354		1,379,940		192,843		166,972		145,777		120,024		(33,291	)	(13,765	)
Change in unrealized gain (loss) on investments		12,188,282		4,423,037		6,954,072		(290,704	)	578,918		380,258		114,693		(10,857	)
Reinvested capital gains		9,262,827		5,266,513		1,260,296		2,641,323		124		19,863		–		1,524
Net increase (decrease) in contract owners’ equity resulting from operations		25,291,664		12,307,376		8,568,797		2,575,130		815,938		601,139		372,681		199,635
Equity transactions:
Purchase payments received from contract owners (note 6)		31,943,766		26,084,588		3,510,499		2,683,807		927,216		963,507		1,065,065		861,595
Transfers between funds		–		–		2,744,190		1,833,928		(45,532	)	(391,278	)	2,244,389		94,048
Surrenders (note 6)		(6,354,846	)	(3,118,602	)	(738,850	)	(369,889	)	(255,802	)	(105,708	)	(366,185	)	(126,358	)
Death benefits (note 4)		(59,479	)	(13,155	)	(13,486	)	(2,013	)	(4,486	)	(1,011	)	(2,759	)	(795	)
Net policy repayments (loans) (note 5)		(1,642,526	)	(1,338,052	)	(151,905	)	(148,510	)	(67,151	)	(78,528	)	(25,908	)	(29,013	)
Deductions for surrender charges (note 2d)		(783,512	)	(715,519	)	(101,255	)	(61,193	)	(28,736	)	(37,721	)	(37,512	)	(23,804	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(9,508,859	)	(8,560,864	)	(1,509,368	)	(1,153,228	)	(454,864	)	(478,370	)	(435,405	)	(383,532	)
Asset charges (note 3)		(661,227	)	(522,074	)	(99,397	)	(68,236	)	(30,063	)	(26,899	)	(27,757	)	(21,638	)
Adjustments to maintain reserves		533		(73	)	30		9		25		(12	)	(14	)	8
Net equity transactions		12,933,850		11,816,249		3,640,458		2,714,675		40,607		(156,020	)	2,413,914		370,511
Net change in contract owners’ equity		38,225,514		24,123,625		12,209,255		5,289,805		856,545		445,119		2,786,595		570,146
Contract owners’ equity beginning of period		123,128,108		99,004,483		17,309,476		12,019,671		5,943,142		5,498,023		5,098,882		4,528,736
Contract owners’ equity end of period	$	161,353,622		123,128,108		29,518,731		17,309,476		6,799,687		5,943,142		7,885,477		5,098,882
CHANGES IN UNITS:
Beginning units		9,304,108		8,473,066		949,996		792,586		444,334		457,136		371,000		343,498
Units purchased		3,247,623		2,706,571		300,065		263,336		75,542		79,385		236,283		76,011
Units redeemed		(2,491,915	)	(1,875,529	)	(125,885	)	(105,926	)	(72,624	)	(92,187	)	(64,307	)	(48,509	)
Ending units		10,059,816		9,304,108		1,124,176		949,996		447,252		444,334		542,976		371,000

(Continued)

5

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		WRCoreEq				WRDivInc				WREnergy				WRGlNatRes
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	112,617		134,139		30,056		23,963		2,549		999		1,112		7,457
Realized gain (loss) on investments		229,780		147,685		27,019		10,960		4,937		(1,732	)	66,749		27,711
Change in unrealized gain (loss) on investments		287,167		1,584,604		342,342		162,531		183,794		3,915		929,189		137,572
Reinvested capital gains		1,651,754		433,444		27,049		9,741		2,288		–		392,197		87,441
Net increase (decrease) in contract owners’ equity resulting from operations		2,281,318		2,299,872		426,466		207,195		193,568		3,182		1,389,247		260,181
Equity transactions:
Purchase payments received from contract owners (note 6)		2,259,482		2,325,612		688,092		371,215		100,618		37,412		945,893		556,623
Transfers between funds		217,134		(248,850	)	834,587		654,216		418,003		156,901		1,131,911		1,325,612
Surrenders (note 6)		(618,388	)	(413,994	)	(57,682	)	(21,866	)	(966	)	–		(102,134	)	(32,135	)
Death benefits (note 4)		(5,670	)	(3,119	)	(5,433	)	–		–		–		–		–
Net policy repayments (loans) (note 5)		(209,229	)	(213,845	)	(14,513	)	(1,211	)	(2,273	)	(460	)	(22,864	)	(24,841	)
Deductions for surrender charges (note 2d)		(76,574	)	(117,607	)	(12,094	)	(4,239	)	(3,208	)	–		(29,445	)	(2,575	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,047,178	)	(1,040,753	)	(218,643	)	(126,437	)	(38,104	)	(4,932	)	(327,530	)	(145,661	)
Asset charges (note 3)		(80,588	)	(69,290	)	(12,657	)	(6,337	)	(2,129	)	(341	)	(17,776	)	(7,215	)
Adjustments to maintain reserves		(12	)	19		–		(7	)	(7	)	20		(2	)	40
Net equity transactions		438,977		218,173		1,201,657		865,334		471,934		188,600		1,578,053		1,669,848
Net change in contract owners’ equity		2,720,295		2,518,045		1,628,123		1,072,529		665,502		191,782		2,967,300		1,930,029
Contract owners’ equity beginning of period		15,973,411		13,455,366		2,003,496		930,967		191,782		–		2,495,902		565,873
Contract owners’ equity end of period	$	18,693,706		15,973,411		3,631,619		2,003,496		857,284		191,782		5,463,202		2,495,902
CHANGES IN UNITS:
Beginning units		1,429,256		1,408,452		139,064		74,902		20,580		–		160,974		45,800
Units purchased		241,181		247,891		97,385		76,026		44,293		21,207		111,559		129,991
Units redeemed		(203,545	)	(227,087	)	(20,477	)	(11,864	)	(4,069	)	(627	)	(26,997	)	(14,817	)
Ending units		1,466,892		1,429,256		215,972		139,064		60,804		20,580		245,536		160,974

(Continued)

6

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		WRGrowth				WRHiInc				WRIntGro				WRIntVal
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	259		–		514,016		380,620		36,221		27,254		62,112		42,828
Realized gain (loss) on investments		384,163		176,466		27,166		18,008		117,581		121,850		79,760		21,990
Change in unrealized gain (loss) on investments		4,118,021		757,333		(329,125	)	93,339		778,887		665,391		(182,060	)	251,692
Reinvested capital gains		563,564		–		–		–		169,017		–		354,041		173,403
Net increase (decrease) in contract owners’ equity resulting from operations		5,066,007		933,799		212,057		491,967		1,101,706		814,495		313,853		489,913
Equity transactions:
Purchase payments received from contract owners (note 6)		3,206,417		3,588,136		1,082,157		963,645		893,533		739,792		772,970		532,356
Transfers between funds		(496,101	)	(706,919	)	691,660		122,592		750,461		42,990		633,060		492,380
Surrenders (note 6)		(1,086,251	)	(627,592	)	(224,254	)	(158,471	)	(168,141	)	(158,042	)	(56,528	)	(22,732	)
Death benefits (note 4)		(7,984	)	(861	)	(2,280	)	(147	)	(1,869	)	–		(4,468	)	–
Net policy repayments (loans) (note 5)		(319,135	)	(245,838	)	(87,470	)	(41,982	)	(87,556	)	(70,044	)	(41,182	)	(20,161	)
Deductions for surrender charges (note 2d)		(118,004	)	(140,077	)	(24,658	)	(30,051	)	(29,625	)	(24,883	)	(14,131	)	(7,741	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,377,152	)	(1,436,838	)	(391,170	)	(370,281	)	(363,721	)	(296,131	)	(231,481	)	(149,545	)
Asset charges (note 3)		(105,433	)	(93,100	)	(28,675	)	(23,420	)	(26,041	)	(19,090	)	(15,156	)	(8,206	)
Adjustments to maintain reserves		340		(11	)	8		(21	)	(25	)	(3	)	3		(5	)
Net equity transactions		(303,303	)	336,900		1,015,318		461,864		967,016		214,589		1,043,087		816,346
Net change in contract owners’ equity		4,762,704		1,270,699		1,227,375		953,831		2,068,722		1,029,084		1,356,940		1,306,259
Contract owners’ equity beginning of period		19,772,957		18,502,258		5,530,409		4,576,578		4,776,219		3,747,135		2,596,206		1,289,947
Contract owners’ equity end of period	$	24,535,661		19,772,957		6,757,784		5,530,409		6,844,941		4,776,219		3,953,146		2,596,206
CHANGES IN UNITS:
Beginning units		1,949,096		1,915,708		344,698		314,526		368,214		349,502		135,698		87,390
Units purchased		329,608		393,335		106,868		73,038		115,180		78,020		77,349		61,069
Units redeemed		(356,332	)	(359,947	)	(46,026	)	(42,866	)	(48,338	)	(59,308	)	(25,001	)	(12,761	)
Ending units		1,922,372		1,949,096		405,540		344,698		435,056		368,214		188,046		135,698

(Continued)

7

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		WRLTBond				WRMicCpGr				WRMidCpGr				WRMMkt
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	43,812		57,131		–		–		360		3,472		79,764		63,924
Realized gain (loss) on investments		(41,223	)	(3,913	)	54,871		33,523		10,837		11,283		–		–
Change in unrealized gain (loss) on investments		40,058		6,172		12,703		55,674		103,621		36,209		–		–
Reinvested capital gains		–		–		–		–		49,505		283		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		42,647		59,390		67,574		89,197		164,323		51,247		79,764		63,924
Equity transactions:
Purchase payments received from contract owners (note 6)		153,013		308,183		215,551		220,749		464,243		211,933		9,300,388		5,377,189
Transfers between funds		(1,652,870	)	29,204		49,031		266,418		552,262		552,222		(8,425,205	)	(4,896,743	)
Surrenders (note 6)		(53,321	)	(35,650	)	(75,883	)	(13,810	)	(6,985	)	(12,091	)	(679,451	)	(27,715	)
Death benefits (note 4)		–		(141	)	–		–		–		–		–		(251	)
Net policy repayments (loans) (note 5)		(5,707	)	(20,675	)	7,113		(23,629	)	(2,238	)	(1,916	)	(61,021	)	(15,379	)
Deductions for surrender charges (note 2d)		(6,511	)	(7,440	)	(12,433	)	(2,951	)	(6,049	)	(2,258	)	(28,565	)	(9,272	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(66,905	)	(118,346	)	(85,586	)	(72,505	)	(121,274	)	(63,488	)	(315,211	)	(283,518	)
Asset charges (note 3)		(4,241	)	(6,589	)	(5,131	)	(3,797	)	(6,718	)	(2,757	)	(12,194	)	(8,456	)
Adjustments to maintain reserves		(30	)	11		6		4		8		(6	)	142		(114	)
Net equity transactions		(1,636,572	)	148,557		92,668		370,479		873,249		681,639		(221,117	)	135,741
Net change in contract owners’ equity		(1,593,925	)	207,947		160,242		459,676		1,037,572		732,886		(141,353	)	199,665
Contract owners’ equity beginning of period		1,593,925		1,385,978		1,000,169		540,493		1,028,970		296,084		1,785,123		1,585,458
Contract owners’ equity end of period	$	–		1,593,925		1,160,411		1,000,169		2,066,542		1,028,970		1,643,770		1,785,123
CHANGES IN UNITS:
Beginning units		123,102		111,282		62,844		38,126		82,972		25,918		156,676		145,160
Units purchased		14,671		30,510		18,798		32,667		75,700		64,025		852,348		479,559
Units redeemed		(137,773	)	(18,690	)	(13,172	)	(7,949	)	(10,702	)	(6,971	)	(871,120	)	(468,043	)
Ending units		–		123,102		68,470		62,844		147,970		82,972		137,904		156,676

(Continued)

8

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		WRMortSec				WRRealEstS				WRSciTech				WRSmCpGr
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	23,837		26,939		12,137		11,617		–		–		–		–
Realized gain (loss) on investments		(446	)	(310	)	79,037		16,317		310,256		156,190		273,530		251,414
Change in unrealized gain (loss) on investments		(1,235	)	(2,470	)	(560,484	)	239,665		(173,111	)	358,149		34,092		(779,737	)
Reinvested capital gains		–		–		85,578		41,552		2,843,305		324,277		1,201,740		1,045,161
Net increase (decrease) in contract owners’ equity resulting from operations		22,156		24,159		(383,732	)	309,151		2,980,450		838,616		1,509,362		516,838
Equity transactions:
Purchase payments received from contract owners (note 6)		164,133		118,299		577,079		382,666		2,175,149		2,227,273		1,741,423		1,897,781
Transfers between funds		60,549		102,211		364,802		468,233		228,539		247,494		(64,289	)	(310,444	)
Surrenders (note 6)		(48,918	)	(11,690	)	(177,274	)	(15,316	)	(543,010	)	(378,779	)	(627,992	)	(396,239	)
Death benefits (note 4)		(3,959	)	–		–		(854	)	(1,381	)	(2,307	)	(5,704	)	(960	)
Net policy repayments (loans) (note 5)		2,504		(275	)	(2,420	)	(31,266	)	(233,916	)	(150,795	)	(163,310	)	(161,231	)
Deductions for surrender charges (note 2d)		(9,899	)	(1,342	)	(26,817	)	(5,591	)	(83,279	)	(87,532	)	(71,297	)	(72,238	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(51,255	)	(35,947	)	(175,004	)	(117,079	)	(909,423	)	(850,454	)	(724,915	)	(769,382	)
Asset charges (note 3)		(2,680	)	(1,834	)	(9,405	)	(5,395	)	(67,565	)	(54,880	)	(57,321	)	(52,430	)
Adjustments to maintain reserves		17		(10	)	(5	)	6		22		(27	)	15		(3	)
Net equity transactions		110,492		169,412		550,956		675,404		565,136		949,993		26,610		134,854
Net change in contract owners’ equity		132,648		193,571		167,224		984,555		3,545,586		1,788,609		1,535,972		651,692
Contract owners’ equity beginning of period		594,363		400,792		1,732,634		748,079		11,900,782		10,112,173		11,056,184		10,404,492
Contract owners’ equity end of period	$	727,011		594,363		1,899,858		1,732,634		15,446,368		11,900,782		12,592,156		11,056,184
CHANGES IN UNITS:
Beginning units		52,984		37,434		90,590		50,880		954,284		874,698		776,382		767,544
Units purchased		19,712		20,297		50,603		50,193		196,427		224,577		144,538		157,277
Units redeemed		(10,020	)	(4,747	)	(22,847	)	(10,483	)	(154,793	)	(144,991	)	(141,966	)	(148,439	)
Ending units		62,676		52,984		118,346		90,590		995,918		954,284		778,954		776,382

(Continued)

9

NATIONWIDE VLI SEPARATE ACCOUNT-5

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		WRSmCpVal				WRValue
Investment activity:		2007		2006		2007		2006
Net investment income (loss)	$	104		2,369		88,261		93,908
Realized gain (loss) on investments		(9,740	)	1,291		369,748		117,976
Change in unrealized gain (loss) on investments		(174,214	)	80,991		(869,046	)	693,310
Reinvested capital gains		92,381		135,645		569,988		352,856
Net increase (decrease) in contract owners’ equity resulting from operations		(91,469	)	220,296		158,951		1,258,050
Equity transactions:
Purchase payments received from contract owners (note 6)		419,986		386,711		1,280,859		1,330,104
Transfers between funds		81,853		180,430		(318,434	)	(14,645	)
Surrenders (note 6)		(40,817	)	(18,344	)	(426,014	)	(172,181	)
Death benefits (note 4)		–		(315	)	–		(381	)
Net policy repayments (loans) (note 5)		(14,340	)	(2,709	)	(140,005	)	(55,744	)
Deductions for surrender charges (note 2d)		(15,356	)	(11,341	)	(48,064	)	(65,663	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(134,854	)	(120,027	)	(529,816	)	(544,410	)
Asset charges (note 3)		(8,807	)	(6,525	)	(41,493	)	(35,639	)
Adjustments to maintain reserves		8		10		4		19
Net equity transactions		287,673		407,890		(222,963	)	441,460
Net change in contract owners’ equity		196,204		628,186		(64,012	)	1,699,510
Contract owners’ equity beginning of period		1,741,724		1,113,538		9,002,352		7,302,842
Contract owners’ equity end of period	$	1,937,928		1,741,724		8,938,340		9,002,352
CHANGES IN UNITS:
Beginning units		114,326		85,404		577,038		547,120
Units purchased		40,619		40,460		98,894		107,697
Units redeemed		(22,261	)	(11,538	)	(113,660	)	(77,779	)
Ending units		132,684		114,326		562,272		577,038

See accompanying notes to financial statements.

10

NATIONWIDE VLI SEPARATE ACCOUNT-5

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

Nationwide VLI Separate Account-5 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on May 21, 1998. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers Select Life and Survivorship Life Variable Life Insurance Policies through the Account. The primary distribution for the contracts is through banks and other financial institutions; however, other distributors may be utilized.

(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 contract expenses and note 3 for asset charges.

Contract owners may invest in the following funds:

Portfolios of the W&R Target Funds, Inc.;

W&R Target Funds, Inc.– Asset Strategy Portfolio (WRAsStrat)

W&R Target Funds, Inc.– Balanced Portfolio (WRBal)

W&R Target Funds, Inc.– Bond Portfolio (WRBond)

W&R Target Funds, Inc.– Core Equity Portfolio (WRCoreEq)

W&R Target Funds, Inc.– Dividend Income Portfolio (WRDivInc)

W&R Target Funds, Inc.– Energy Portfolio (WREnergy)

W&R Target Funds, Inc.– Global Natural Resources Portfolio (WRGlNatRes)

W&R Target Funds, Inc.– Growth Portfolio (WRGrowth)

W&R Target Funds, Inc.– High Income Portfolio (WRHiInc)

W&R Target Funds, Inc.– International Growth Portfolio (WRIntGro)

W&R Target Funds, Inc.– International Value Portfolio (WRIntVal)

W&R Target Funds, Inc.– Limited-Term Bond Portfolio (WRLTBond)*

W&R Target Funds, Inc.– Micro Cap Growth Portfolio (WRMicCpGr)

W&R Target Funds, Inc.– Mid Cap Growth Portfolio (WRMidCpGr)

W&R Target Funds, Inc.– Money Market Portfolio (WRMMkt)

W&R Target Funds, Inc.– Mortgage Securities Portfolio (WRMortSec)

W&R Target Funds, Inc.– Real Estate Securities Portfolio (WRRealEstS)

W&R Target Funds, Inc.– Science and Technology Portfolio (WRSciTech)

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

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

W&R Target Funds, Inc.– Value Portfolio (WRValue)

At December 31, 2007, contract owners were invested in all of the above funds except for those indicated 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.

(Continued)

11

NATIONWIDE VLI SEPARATE ACCOUNT-5 (NOTES TO FINANCIAL STATEMENTS, Continued)

A contract owner may choose from among a number of different underlying mutual fund options. The underlying mutual fund options are not available to the general public directly. The underlying mutual funds are available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans.

Some of the underlying mutual funds have been established by investment advisers which manage publicly traded mutual funds having similar names and investment objectives. While some of the underlying mutual funds may be similar to, and may in fact be modeled after, publicly traded mutual funds, the underlying mutual funds are not otherwise directly related to any publicly traded mutual fund. Consequently, the investment performance of publicly traded mutual funds and any corresponding underlying mutual funds may differ substantially.

(c) Security Valuation, Transactions and Related Investment Income

Investments in underlying mutual funds are valued on the closing net asset value per share at December 31, 2007 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 FASB issued SFAS 157, Fair Value Measurements (SFAS 157). SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements. 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. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. 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. The Company will adopt SFAS 157 effective January 1, 2008. SFAS 157 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

(Continued)

12

NATIONWIDE VLI SEPARATE ACCOUNT-5 (NOTES TO FINANCIAL STATEMENTS, Continued)

(2) Policy Charges

(a) Deductions from Premium

On Select Life and Survivorship Life insurance contracts, the Company deducts a charge for state premium taxes equal to 3.5% of all premiums received to cover the payment of these premium taxes. Additionally, the Company deducts a front-end sales load of up to 0.5% from each premium payment received for Select Life contracts. For Survivorship Life contracts, the sales load is 1.5% of each premium payment received in policy years one through ten and 0.5% thereafter. The Company may at its sole discretion reduce this sales loading.

For the periods ended December 31, 2007 and 2006, total front-end sales charge deductions were $1,339,948 and $1,105,117, 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

For Select Life contracts, the Company currently deducts a monthly administrative charge of $10 during the first policy year to recover policy maintenance, accounting, record keeping and other administrative expenses. For all subsequent years, a monthly administrative charge is deducted (currently $5 per month not to exceed $7.50 per month). The charges are assessed against each contract by liquidating units.

For Survivorship Life contracts, the Company currently deducts a monthly administrative charge of $10 during the first policy year; $5 during policy years 2 through 20 if the specified amount is equal to or greater than $150,000; $3 during policy years 2 through 20 if the specified amount is less than $150,000; $0 during policy years 21 and on. The Company assesses a monthly per $1,000 of specified amount charge on basic coverage for the first three policy years. The charge varies, but will not exceed $7.50 per month. If there is an increase in the specified amount, the per $1,000 charge will be assessed to the increase based on the age of the younger insured at the time of the increase. The per $1,000 charge assessed as a result of the specified amount increase will be assessed for three policy years. The charges are assessed against each contract by liquidating units.

(d) Surrender Charges

Policy surrenders result in a redemption of the contract value from the Account and payment of the surrender proceeds to the contract owner or designee. The surrender proceeds consist of the contract value, less any outstanding policy loans, and less a surrender charge, if applicable. The amount of the charge is based upon a specified percentage of the initial surrender charge which varies by issue age, sex and rate class. For Select Life and Survivorship Life contracts, the charge is 100% of the initial surrender charge in the first year, declining a specified amount each year of the initial surrender charge. After the purchase payment has been held in the contract for nine years, the charge is 0%.

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.

(Continued)

13

NATIONWIDE VLI SEPARATE ACCOUNT-5 (NOTES TO FINANCIAL STATEMENTS, Continued)

(3) Asset Charges

For Select Life contracts, the Company deducts a monthly charge of 0.50% on the first $25,000 of cash value attributable to the variable account, 0.25% of $25,001 up to $250,000 of cash value attributable to the variable account, and 0.08% of cash value attributable to the variable account in excess of $250,000.

For Survivorship Life contracts, during the first through fifteenth policy year, the Company deducts a monthly charge of 0.60% on the first $25,000 of cash value attributable to the variable account, 0.30% on $25,001 up to $250,000 of cash value attributable to the variable account, and 0.10% of cash value attributable to the variable account in excess of $250,000. Thereafter, the charge is 0.60% of the first $25,000 of cash value attributable to the variable account and 0.10% of cash value attributable to the variable account in excess of $25,000.

The above charges are assessed against each contract by liquidating units.

(4) Death Benefits

For Select Life contracts, 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 Survivorship Life 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 cash surrender value (90% of the variable account value less the applicable deferred sales charge value). Select Life and Survivorship Life contracts are charged interest equal to 3.9% of the outstanding loan balance which 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, 2007 and 2006, total transfers into the Account from the fixed account were $1,282,178 and $455,913, respectively, and total transfers from the Account to the fixed account were $2,746,136 and $1,687,417, respectively.

(Continued)

14

NATIONWIDE VLI SEPARATE ACCOUNT-5 (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 rate, investment income ratio and total return for the five year period ended December 31, 2007.

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
W&R Target Funds, Inc. – Asset Strategy Portfolio
2007	0.00%	1,124,176	$	26.258105	$	29,518,731	0.72%	44.11%
2006	0.00%	949,996		18.220578		17,309,476	0.38%	20.15%
2005	0.00%	792,586		15.165132		12,019,671	0.98%	24.27%
2004	0.00%	687,372		12.203056		8,388,039	1.56%	13.30%
2003	0.00%	533,948		10.770735		5,751,012	1.39%	11.47%
W&R Target Funds, Inc. – Balanced Portfolio
2007	0.00%	447,252		15.203256		6,799,687	1.43%	13.67%
2006	0.00%	444,334		13.375394		5,943,142	1.43%	11.21%
2005	0.00%	457,136		12.027106		5,498,023	1.30%	5.01%
2004	0.00%	447,320		11.452888		5,123,106	1.65%	8.93%
2003	0.00%	362,437		10.513531		3,810,493	0.86%	19.09%
W&R Target Funds, Inc. – Bond Portfolio
2007	0.00%	542,976		14.522699		7,885,477	4.70%	5.67%
2006	0.00%	371,000		13.743617		5,098,882	4.70%	4.24%
2005	0.00%	343,498		13.184169		4,528,736	4.69%	1.61%
2004	0.00%	304,690		12.974723		3,953,268	4.45%	3.88%
2003	0.00%	291,704		12.490076		3,643,405	5.06%	4.18%
W&R Target Funds, Inc. – Core Equity Portfolio
2007	0.00%	1,466,892		12.743751		18,693,706	0.65%	14.03%
2006	0.00%	1,429,256		11.176032		15,973,411	0.91%	16.99%
2005	0.00%	1,408,452		9.553301		13,455,366	0.35%	9.01%
2004	0.00%	1,352,874		8.764021		11,856,616	0.68%	9.57%
2003	0.00%	1,223,264		7.998637		9,784,445	0.90%	17.27%
W&R Target Funds, Inc. – Dividend Income Portfolio
2007	0.00%	215,972		16.815229		3,631,619	1.06%	16.72%
2006	0.00%	139,064		14.407005		2,003,496	1.68%	15.91%
2005	0.00%	74,902		12.429138		930,967	1.57%	13.03%
2004	0.00%	29,352		10.996320		322,764	1.86%	9.96%
2003	0.00%	4		10.000000		40	0.00%	0.00% 1	1/21/03
W&R Target Funds, Inc. – Energy Portfolio
2007	0.00%	60,804		14.099137		857,284	0.56%	51.30%
2006	0.00%	20,580		9.318860		191,782	0.81%	-6.81% 0	5/01/06
W&R Target Funds, Inc. – Global Natural Resources Portfolio
2007	0.00%	245,536		22.250106		5,463,202	0.03%	43.50%
2006	0.00%	160,974		15.505001		2,495,902	0.48%	25.49%
2005	0.00%	45,800		12.355299		565,873	0.00%	23.55% 0	6/01/05
W&R Target Funds, Inc. – Growth Portfolio
2007	0.00%	1,922,372		12.763222		24,535,661	0.00%	25.81%
2006	0.00%	1,949,096		10.144681		19,772,957	0.00%	5.04%
2005	0.00%	1,915,708		9.658183		18,502,258	0.00%	11.23%
2004	0.00%	1,765,286		8.683167		15,328,273	0.31%	3.31%
2003	0.00%	1,437,097		8.405176		12,079,053	0.00%	23.06%
W&R Target Funds, Inc. – High Income Portfolio
2007	0.00%	405,540		16.663667		6,757,784	8.22%	3.86%
2006	0.00%	344,698		16.044215		5,530,409	7.63%	10.26%
2005	0.00%	314,526		14.550714		4,576,578	8.07%	2.54%
2004	0.00%	281,156		14.189601		3,989,491	7.82%	9.86%
2003	0.00%	218,833		12.915738		2,826,390	9.62%	19.74%

(Continued)

15

NATIONWIDE VLI SEPARATE ACCOUNT-5 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
W&R Target Funds, Inc. – International Growth Portfolio
2007	0.00%	435,056	$	15.733472	$	6,844,941	0.63%	21.29%
2006	0.00%	368,214		12.971313		4,776,219	0.64%	20.99%
2005	0.00%	349,502		10.721355		3,747,135	2.42%	16.47%
2004	0.00%	305,342		9.204986		2,810,669	0.72%	14.00%
2003	0.00%	262,213		8.074653		2,117,279	1.98%	24.90%
W&R Target Funds, Inc. – International Value Portfolio
2007	0.00%	188,046		21.022230		3,953,146	1.79%	9.88%
2006	0.00%	135,698		19.132236		2,596,206	2.37%	29.62%
2005	0.00%	87,390		14.760810		1,289,947	2.95%	11.16%
2004	0.00%	33,454		13.278601		444,222	2.94%	22.68%
2003	0.00%	124		10.824073		1,342	10.65%	8.24% 1	1/21/03
W&R Target Funds, Inc. – Limited-Term Bond Portfolio
2006	0.00%	123,102		12.947999		1,593,925	3.83%	3.96%
2005	0.00%	111,282		12.454645		1,385,978	3.84%	1.68%
2004	0.00%	78,084		12.248689		956,427	2.87%	1.61%
2003	0.00%	63,722		12.054200		768,118	3.05%	3.16%
W&R Target Funds, Inc. – Micro Cap Growth Portfolio
2007	0.00%	68,470		16.947723		1,160,411	0.00%	6.49%
2006	0.00%	62,844		15.915113		1,000,169	0.00%	12.26%
2005	0.00%	38,126		14.176497		540,493	0.00%	20.87%
2004	0.00%	17,316		11.729102		203,101	0.00%	10.05%
2003	0.00%	101		10.657894		1,076	0.00%	6.58% 1	1/21/03
W&R Target Funds, Inc. – Mid Cap Growth Portfolio
2007	0.00%	147,970		13.965952		2,066,542	0.02%	12.62%
2006	0.00%	82,972		12.401416		1,028,970	0.56%	8.56%
2005	0.00%	25,918		11.423889		296,084	0.00%	14.24% 0	6/01/05
W&R Target Funds, Inc. – Money Market Portfolio
2007	0.00%	137,904		11.919671		1,643,770	4.47%	4.62%
2006	0.00%	156,676		11.393726		1,785,123	4.17%	4.32%
2005	0.00%	145,160		10.922141		1,585,458	2.53%	2.49%
2004	0.00%	104,152		10.656792		1,109,926	0.72%	0.69%
2003	0.00%	78,441		10.583415		830,174	0.57%	0.52%
W&R Target Funds, Inc. – Mortgage Securities Portfolio
2007	0.00%	62,676		11.599517		727,011	3.59%	3.40%
2006	0.00%	52,984		11.217790		594,363	5.55%	4.77%
2005	0.00%	37,434		10.706622		400,792	7.09%	2.00%
2004	0.00%	4,840		10.497120		50,806	7.30%	4.97% 0	5/03/04
W&R Target Funds, Inc. – Real Estate Securities Portfolio
2007	0.00%	118,346		16.053419		1,899,858	0.60%	-16.07%
2006	0.00%	90,590		19.126109		1,732,634	0.97%	30.08%
2005	0.00%	50,880		14.702801		748,079	2.31%	10.83%
2004	0.00%	12,120		13.266020		160,784	3.03%	32.66% 0	5/03/04
W&R Target Funds, Inc. – Science and Technology Portfolio
2007	0.00%	995,918		15.509679		15,446,368	0.00%	24.37%
2006	0.00%	954,284		12.470902		11,900,782	0.00%	7.87%
2005	0.00%	874,698		11.560759		10,112,173	0.00%	17.24%
2004	0.00%	782,100		9.860415		7,711,831	0.00%	16.25%
2003	0.00%	622,777		8.482074		5,282,441	0.00%	30.46%
W&R Target Funds, Inc. – Small Cap Growth Portfolio
2007	0.00%	778,954		16.165468		12,592,156	0.00%	13.52%
2006	0.00%	776,382		14.240650		11,056,184	0.00%	5.05%
2005	0.00%	767,544		13.555564		10,404,492	0.00%	12.88%
2004	0.00%	751,440		12.008612		9,023,751	0.00%	14.29%
2003	0.00%	643,039		10.506816		6,756,292	0.00%	35.77%

(Continued)

16

NATIONWIDE VLI SEPARATE ACCOUNT-5 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total  Return***
W&R Target Funds, Inc. – Small Cap Value Portfolio
2007	0.00%	132,684	$	14.605591	$	1,937,928	0.01%	-4.13%
2006	0.00%	114,326		15.234712	1,741,724		0.17%	16.84%
2005	0.00%	85,404		13.038481	1,113,538		0.00%	4.15%
2004	0.00%	42,020		12.519028	526,050		0.00%	15.02%
2003	0.00%	10		10.884196	109		0.00%	8.84% 1	1/21/03
W&R Target Funds, Inc – Value Portfolio
2007	0.00%	562,272		15.896826	8,938,340		0.94%	1.90%
2006	0.00%	577,038		15.600969	9,002,352		1.19%	16.88%
2005	0.00%	547,120		13.347788	7,302,842		1.51%	4.42%
2004	0.00%	486,556		12.782454	6,219,380		1.21%	14.70%
2003	0.00%	388,841		11.144045	4,333,262		0.68%	25.11%
Contract Owners’ Equity Total By Year
2007					$	161,353,622
2006					$	123,128,108
2005					$	99,004,483
2004					$	78,178,504
2003					$	57,984,931

*	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, such as mortality and expense charges or cost of insurance 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.

17

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

    Contract Owners of Nationwide VLI Separate Account-5:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide VLI Separate Account-5 (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2007, 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, 2007, 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, 2007, 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 18, 2008

18

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

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