Annual Report

December 31, 2006

Nationwide^® Multi-Flex Variable Account   Nationwide is on your side Columbus, Ohio

APO–724–12/06

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2006

Assets:
Investments at fair value:
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I (AIMCapAp) 127,405 shares (cost $2,593,961)	$	3,340,549
AIM Variable Insurance Funds – AIM V.I. Global Health Care Fund – Series I (AIMGlobHlth) 4,532 shares (cost $92,043)		97,490
AIM Variable Insurance Funds – AIM V.I. Global Real Estate Fund – Series I (AIMGlobReal) 19,418 shares (cost $514,168)		558,086
AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I (AIMIntGr) 71,873 shares (cost $1,661,496)		2,115,222
American Century Variable Portfolios, Inc. – Balanced Fund – Class I (ACVPBal) 821,069 shares (cost $5,735,713)		6,182,645
American Century Variable Portfolios, Inc. – Capital Appreciation Fund – Class I (ACVPCapAp) 1,316,775 shares (cost $10,788,647)		14,431,853
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I (ACVPIncGr) 801,884 shares (cost $5,073,100)		6,920,253
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The (DrySRGro) 837,608 shares (cost $22,003,250)		23,829,958
Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx) 1,912,240 shares (cost $54,962,491)		69,127,454
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares (DryVIFApp) 215,095 shares (cost $7,313,168)		9,152,260
Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares (DryVIFDevLd) 1,609,737 shares (cost $59,605,657)		67,657,258
Dreyfus Variable Investment Fund – Quality Bond Portfolio – Initial Shares (DryVIFQualBd) 888,215 shares (cost $10,151,693)		9,974,657
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class (FidVIPEI) 3,442,326 shares (cost $79,037,084)		90,188,942
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class (FidVIPHI) 2,617,567 shares (cost $16,634,855)		16,621,547
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class 2 (FidVIPConS2) 77,187 shares (cost $2,417,621)		2,401,297
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1 (FrVIPForSec) 1,716,235 shares (cost $21,104,165)		32,591,297
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I (GVITFHiInc) 155,650 shares (cost $1,242,816)		1,242,083
Gartmore GVIT – Government Bond Fund – Class I (GVITGvtBd) 3,145,556 shares (cost $37,001,061)		35,702,067
Gartmore GVIT – Growth Fund – Class I (GVITGrowth) 594,925 shares (cost $5,867,741)		7,228,341
Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt) 13,043,152 shares (cost $13,043,152)		13,043,152
Gartmore GVIT – Nationwide Fund – Class I (GVITNWFund) 10,491,484 shares (cost $112,687,169)		139,746,572
Janus Aspen Series – International Growth Portfolio – Institutional Shares (JanIntGrI) 458,950 shares (cost $11,826,984)		23,502,824

(Continued)

2

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

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

Neuberger Berman Advisers Management Trust – Balanced Portfolio® – I Class Shares (NBAMTBal) 1,547,483 shares (cost $14,636,804)	$	17,703,208
Neuberger Berman Advisers Management Trust – Partners Portfolio – Class I (NBAMTPart) 5,408 shares (cost $112,683)		114,428
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares (PVITRealRet) 41,718 shares (cost $514,062)		497,691
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares (PVITTotRet) 34,096 shares (cost $343,999)		345,053
Royce Capital Fund – Micro Cap (RCFMicroCap) 31,106 shares (cost $437,812)		447,923
SBL Fund – Series D (Global Series) (SBLGlob) 54,679 shares (cost $555,258)		603,110
SBL Fund – Series J (Mid Cap Growth Series) (SBLMidCapGr) 5,344 shares (cost $160,114)		167,052
SBL Fund – Series N (Managed Asset Allocation Series) (SBLAsAlloc) 15,191 shares (cost $261,499)		281,789
SBL Fund – Series O (Equity Income Series) (SBLEqInc) 43,849 shares (cost $935,579)		996,676
SBL Fund – Series P (High Yield Series) (SBLHighYld) 35,151 shares (cost $628,180)		660,479
SBL Fund – Series Q (Small Cap Value Series) (SBLSmCapVal) 13,836 shares (cost $342,792)		361,669
SBL Fund – Series V (Mid Cap Value Series) (SBLMidCapVal) 40,133 shares (cost $1,782,778)		1,877,033
SBL Fund – Series X (Small Cap Growth Series) (SBLSmCapGr) 5,265 shares (cost $95,106)		101,461
SBL Fund – Series Y (Select 25 Series) (SBLSel25) 1,934 shares (cost $19,736)		20,960
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM (WFOpp) 1,464,630 shares (cost $29,658,367)		35,180,405
Total investments		635,014,744
Accounts receivable		–
Total assets		635,014,744
Accounts payable		20,624
Contract owners’ equity (note 4)	$	634,994,120

See accompanying notes to financial statements.

3

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF OPERATIONS

Year Ended December 31, 2006

Investment activity:	Total			AIMCapAp		AIMGlobHlth		AIMGlobReal		AIMIntGr		ACVPBal		ACVPCapAp		ACVPIncGr
Reinvested dividends	$	11,224,875		1,918		–		5,086		19,034		141,373		–		129,476
Mortality and expense risk charges (note 2)		(8,020,302	)	(45,756	)	(525	)	(1,905	)	(23,966	)	(89,548	)	(189,649	)	(85,219	)
Net investment income (loss)		3,204,573		(43,838	)	(525	)	3,181		(4,932	)	51,825		(189,649	)	44,257
Proceeds from mutual fund shares sold		116,410,499		980,112		13,778		95,765		874,548		3,360,807		3,259,833		1,544,845
Cost of mutual fund shares sold		(104,933,602	)	(867,149	)	(12,842	)	(84,531	)	(610,664	)	(3,011,724	)	(2,696,719	)	(1,255,650	)
Realized gain (loss) on investments		11,476,897		112,963		936		11,234		263,884		349,083		563,114		289,195
Change in unrealized gain (loss) on investments		35,190,421		93,810		5,448		43,918		165,318		(333,612	)	1,665,681		659,855
Net gain (loss) on investments		46,667,318		206,773		6,384		55,152		429,202		15,471		2,228,795		949,050
Reinvested capital gains		21,458,133		–		–		17,562		–		473,863		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	71,330,024		162,935		5,859		75,895		424,270		541,159		2,039,146		993,307
Investment activity:	DrySRGro			DryStkIx		DryVIFApp		DryVIFDevLd		DryVIFQualBd		FidVIPEI		FidVIPHI		FidVIPConS2
Reinvested dividends	$	26,614		1,128,311		144,884		293,220		439,472		2,899,864		1,247,425		13,903
Mortality and expense risk charges (note 2)		(303,517	)	(865,366	)	(115,315	)	(899,003	)	(120,465	)	(1,103,070	)	(210,112	)	(10,651	)
Net investment income (loss)		(276,903	)	262,945		29,569		(605,783	)	319,007		1,796,794		1,037,313		3,252
Proceeds from mutual fund shares sold		4,076,498		10,716,261		2,273,019		10,637,216		1,453,089		13,601,474		2,393,365		67,683
Cost of mutual fund shares sold		(4,135,690	)	(9,516,968	)	(1,998,922	)	(9,520,941	)	(1,548,011	)	(12,094,195	)	(2,535,176	)	(63,494	)
Realized gain (loss) on investments		(59,192	)	1,199,293		274,097		1,116,275		(94,922	)	1,507,279		(141,811	)	4,189
Change in unrealized gain (loss) on investments		2,093,482		7,510,045		979,696		(5,015,020	)	62,106		1,243,723		670,401		(16,323	)
Net gain (loss) on investments		2,034,290		8,709,338		1,253,793		(3,898,745	)	(32,816	)	2,751,002		528,590		(12,134	)
Reinvested capital gains		–		–		–		6,063,791		–		10,462,439		–		168,222
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,757,387		8,972,283		1,283,362		1,559,263		286,191		15,010,235		1,565,903		159,340

(Continued)

4

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	FrVIPForSec			GVITFHiInc		GVITGvtBd		GVITGrowth		GVITMyMkt		GVITNWFund		JanIntGrI		NBAMTBal
Reinvested dividends	$	449,439		97,907		1,545,692		3,730		568,633		1,511,626		398,259		140,003
Mortality and expense risk charges (note 2)		(396,804	)	(17,490	)	(492,735	)	(100,546	)	(164,605	)	(1,823,238	)	(251,722	)	(228,868	)
Net investment income (loss)		52,635		80,417		1,052,957		(96,816	)	404,028		(311,612	)	146,537		(88,865	)
Proceeds from mutual fund shares sold		4,816,432		578,464		8,845,180		1,911,306		5,449,082		25,650,274		3,056,173		2,712,262
Cost of mutual fund shares sold		(3,479,650	)	(580,069	)	(8,860,109	)	(2,023,658	)	(5,449,082	)	(23,000,121	)	(1,659,081	)	(2,365,965	)
Realized gain (loss) on investments		1,336,782		(1,605	)	(14,929	)	(112,352	)	–		2,650,153		1,397,092		346,297
Change in unrealized gain (loss) on investments		4,405,607		37,274		(651,150	)	539,871		–		13,812,126		5,839,759		1,334,325
Net gain (loss) on investments		5,742,389		35,669		(666,079	)	427,519		–		16,462,279		7,236,851		1,680,622
Reinvested capital gains		–		–		297,325		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	5,795,024		116,086		684,203		330,703		404,028		16,150,667		7,383,388		1,591,757
Investment activity:	NBAMTPart			PVITRealRet		PVITTotRet		RCFMicroCap		SBLGlob		SBLMidCapGr		SBLAsAlloc		SBLEqInc
Reinvested dividends	$	597		12,719		5,003		687		–		–		–		–
Mortality and expense risk charges (note 2)		(433	)	(3,473	)	(1,334	)	(1,283	)	(2,084	)	(671	)	(3,563	)	(2,972	)
Net investment income (loss)		164		9,246		3,669		(596	)	(2,084	)	(671	)	(3,563	)	(2,972	)
Proceeds from mutual fund shares sold		2,573		204,155		43,592		26,305		62,635		14,438		773,420		77,528
Cost of mutual fund shares sold		(2,661	)	(202,689	)	(42,991	)	(24,830	)	(56,843	)	(14,015	)	(732,606	)	(72,970	)
Realized gain (loss) on investments		(88	)	1,466		601		1,475		5,792		423		40,814		4,558
Change in unrealized gain (loss) on investments		1,744		(16,371	)	1,054		10,111		47,852		6,937		20,289		61,096
Net gain (loss) on investments		1,656		(14,905	)	1,655		11,586		53,644		7,360		61,103		65,654
Reinvested capital gains		9,197		14,795		1,514		20,930		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	11,017		9,136		6,838		31,920		51,560		6,689		57,540		62,682

(Continued)

5

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	SBLHighYld			SBLSmCapVal		SBLMidCapVal		SBLSmCapGr		SBLSel25		WFOpp
Reinvested dividends	$	–		–		–		–		–		–
Mortality and expense risk charges (note 2)		(3,280	)	(1,351	)	(6,529	)	(377	)	(127	)	(452,750	)
Net investment income (loss)		(3,280	)	(1,351	)	(6,529	)	(377	)	(127	)	(452,750	)
Proceeds from mutual fund shares sold		91,646		27,839		121,374		22,597		9,007		6,565,924
Cost of mutual fund shares sold		(88,459	)	(26,343	)	(115,812	)	(21,803	)	(8,513	)	(6,152,656	)
Realized gain (loss) on investments		3,187		1,496		5,562		794		494		413,268
Change in unrealized gain (loss) on investments		32,299		18,877		94,256		6,355		1,223		(241,641	)
Net gain (loss) on investments		35,486		20,373		99,818		7,149		1,717		171,627
Reinvested capital gains		–		–		–		–		–		3,928,495
Net increase (decrease) in contract owners’ equity resulting from operations	$	32,206		19,022		93,289		6,772		1,590		3,647,372

See accompanying notes to financial statements.

6

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2006 and 2005

	Total					AIMCapAp				AIMGlobHlth			AIMGlobReal
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	3,204,573		1,779,913		(43,838	)	(44,857	)	(525	)	–	3,181		–
Realized gain (loss) on investments		11,476,897		3,766,613		112,963		660		936		–	11,234		–
Change in unrealized gain (loss) on investments		35,190,421		25,664,291		93,810		306,728		5,448		–	43,918		–
Reinvested capital gains		21,458,133		3,310,456		–		–		–		–	17,562		–
Net increase (decrease) in contract owners’ equity resulting from operations		71,330,024		34,521,273		162,935		262,531		5,859		–	75,895		–
Equity transactions:
Purchase payments received from contract owners		25,051,538		28,237,970		199,551		250,993		3,926		–	14,768		–
Transfers between funds (including fixed account), net (note 3)		(3,954,938	)	(4,873,012	)	(160,153	)	(145,804	)	88,096		–	518,720		–
Redemptions		(98,680,801	)	(101,105,932	)	(650,223	)	(594,872	)	(357	)	–	(51,067	)	–
Annuity benefits		(78,827	)	(62,650	)	–		–		–		–	–		–
Annual contract maintenance charges (note 2)		(1,026,916	)	(1,127,464	)	(5,805	)	(6,708	)	(33	)	–	(228	)	–
Contingent deferred sales charges (note 2)		(297,205	)	(437,950	)	(3,104	)	(3,112	)	–		–	–		–
Adjustments to maintain reserves		(1,135	)	8,519		(1,255	)	165		(3	)	–	33		–
Net equity transactions		(78,988,284	)	(79,360,519	)	(620,989	)	(499,338	)	91,629		–	482,226		–
Net change in contract owners’ equity		(7,658,260	)	(44,839,246	)	(458,054	)	(236,807	)	97,488		–	558,121		–
Contract owners’ equity beginning of period		642,652,380		687,491,626		3,797,520		4,034,327		–		–	–		–
Contract owners’ equity end of period	$	634,994,120		642,652,380		3,339,466		3,797,520		97,488		–	558,121		–
CHANGES IN UNITS:
Beginning units		22,430,768		25,148,126		331,083		377,865		–		–	–		–
Units purchased		3,352,780		2,406,995		47,355		49,546		10,515		–	53,606		–
Units redeemed		(5,299,944	)	(5,124,353	)	(100,845	)	(96,328	)	(1,344	)	–	(10,138	)	–
Ending units		20,483,604		22,430,768		277,593		331,083		9,171		–	43,468		–

(Continued)

7

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	AIMIntGr					ACVPBal				ACVPCapAp				ACVPIncGr
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(4,932	)	(7,020	)	51,825		33,687		(189,649	)	(172,019	)	44,257		59,084
Realized gain (loss) on investments		263,884		115,600		349,083		66,082		563,114		7,251		289,195		182,228
Change in unrealized gain (loss) on investments		165,318		114,821		(333,612	)	145,893		1,665,681		2,715,493		659,855		(8,187	)
Reinvested capital gains		–		–		473,863		2,598		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		424,270		223,401		541,159		248,260		2,039,146		2,550,725		993,307		233,125
Equity transactions:
Purchase payments received from contract owners		142,746		101,776		272,403		314,517		537,215		464,826		322,019		382,293
Transfers between funds (including fixed account), net (note 3)		94,605		625,153		(862,058	)	1,289,769		29,856		157,616		(136,372	)	(170,024	)
Redemptions		(247,520	)	(202,688	)	(1,173,585	)	(1,294,826	)	(2,242,333	)	(2,485,551	)	(1,233,237	)	(1,246,888	)
Annuity benefits		–		–		(140	)	(47	)	(2,662	)	(2,301	)	–		–
Annual contract maintenance charges (note 2)		(2,478	)	(1,996	)	(10,015	)	(10,217	)	(25,207	)	(25,260	)	(10,385	)	(11,795	)
Contingent deferred sales charges (note 2)		(1,034	)	(1,391	)	(2,991	)	(2,932	)	(6,589	)	(5,793	)	(4,945	)	(5,375	)
Adjustments to maintain reserves		513		21		1,220		(432	)	583		(663	)	1,729		(382	)
Net equity transactions		(13,168	)	520,875		(1,775,166	)	295,832		(1,709,137	)	(1,897,126	)	(1,061,191	)	(1,052,171	)
Net change in contract owners’ equity		411,102		744,276		(1,234,007	)	544,092		330,009		653,599		(67,884	)	(819,046	)
Contract owners’ equity beginning of period		1,704,667		960,391		7,417,399		6,873,307		14,100,963		13,447,364		6,989,487		7,808,533
Contract owners’ equity end of period	$	2,115,769		1,704,667		6,183,392		7,417,399		14,430,972		14,100,963		6,921,603		6,989,487
CHANGES IN UNITS:
Beginning units		119,041		78,064		648,931		622,792		670,184		769,955		493,259		569,073
Units purchased		65,666		77,885		175,263		182,126		100,664		108,512		51,927		62,828
Units redeemed		(68,007	)	(36,908	)	(324,301	)	(155,987	)	(178,025	)	(208,283	)	(122,621	)	(138,642	)
Ending units		116,700		119,041		499,893		648,931		592,823		670,184		422,565		493,259

(Continued)

8

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	DrySRGro					DryStkIx				DryVIFApp				DryVIFDevLd
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(276,903	)	(332,695	)	262,945		241,810		29,569		(123,666	)	(605,783	)	(969,458	)
Realized gain (loss) on investments		(59,192	)	(322,025	)	1,199,293		244,142		274,097		107,758		1,116,275		1,329,511
Change in unrealized gain (loss) on investments		2,093,482		1,187,699		7,510,045		1,794,933		979,696		326,376		(5,015,020	)	2,857,396
Reinvested capital gains		–		–		–		–		–		–		6,063,791		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,757,387		532,979		8,972,283		2,280,885		1,283,362		310,468		1,559,263		3,217,449
Equity transactions:
Purchase payments received from contract owners		1,362,033		1,720,882		3,382,474		3,960,342		628,849		749,670		3,298,923		4,045,159
Transfers between funds (including fixed account), net (note 3)		(1,331,127	)	(1,188,316	)	(3,214,484	)	(1,155,348	)	(461,301	)	(271,402	)	(3,065,896	)	(2,038,189	)
Redemptions		(3,300,539	)	(4,300,385	)	(9,395,490	)	(11,111,047	)	(1,703,257	)	(1,782,804	)	(9,639,381	)	(11,719,541	)
Annuity benefits		–		–		–		–		–		–		–		–
Annual contract maintenance charges (note 2)		(49,827	)	(58,015	)	(113,938	)	(125,945	)	(14,739	)	(17,092	)	(139,455	)	(158,981	)
Contingent deferred sales charges (note 2)		(15,149	)	(27,149	)	(33,693	)	(57,603	)	(7,106	)	(10,503	)	(39,027	)	(78,466	)
Adjustments to maintain reserves		(118	)	(5,938	)	(91	)	8,914		904		149		2,871		299
Net equity transactions		(3,334,727	)	(3,858,921	)	(9,375,222	)	(8,480,687	)	(1,556,650	)	(1,331,982	)	(9,581,965	)	(9,949,719	)
Net change in contract owners’ equity		(1,577,340	)	(3,325,942	)	(402,939	)	(6,199,802	)	(273,288	)	(1,021,514	)	(8,022,702	)	(6,732,270	)
Contract owners’ equity beginning of period		25,386,952		28,712,894		69,539,109		75,738,911		9,426,596		10,448,110		75,683,142		82,415,412
Contract owners’ equity end of period	$	23,809,612		25,386,952		69,136,170		69,539,109		9,153,308		9,426,596		67,660,440		75,683,142
CHANGES IN UNITS:
Beginning units		1,220,524		1,411,482		2,477,379		2,788,580		706,112		806,310		3,014,064		3,427,575
Units purchased		105,587		108,495		166,733		216,170		94,537		89,567		180,675		233,345
Units redeemed		(264,132	)	(299,453	)	(483,579	)	(527,371	)	(204,342	)	(189,765	)	(564,083	)	(646,856	)
Ending units		1,061,979		1,220,524		2,160,533		2,477,379		596,307		706,112		2,630,656		3,014,064

(Continued)

9

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	DryVIFQualBd					FidVIPEI				FidVIPHI				FidVIPConS2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	319,007		226,672		1,796,794		356,059		1,037,313		2,416,309		3,252		–
Realized gain (loss) on investments		(94,922	)	(58,221	)	1,507,279		822,645		(141,811	)	(106,538	)	4,189		–
Change in unrealized gain (loss) on investments		62,106		(54,710	)	1,243,723		(613,430	)	670,401		(2,080,852	)	(16,323	)	–
Reinvested capital gains		–		–		10,462,439		3,228,226		–		–		168,222		–
Net increase (decrease) in contract owners’ equity resulting from operations		286,191		113,741		15,010,235		3,793,500		1,565,903		228,919		159,340		–
Equity transactions:
Purchase payments received from contract owners		596,602		589,672		3,608,201		3,862,029		824,597		994,139		73,872		–
Transfers between funds (including fixed account), net (note 3)		1,051,688		247,184		(1,806,374	)	(491,011	)	(462,613	)	(511,401	)	2,304,950		–
Redemptions		(1,477,436	)	(1,347,659	)	(13,274,939	)	(12,870,018	)	(2,358,631	)	(2,446,713	)	(135,519	)	–
Annuity benefits		–		–		(3,079	)	(2,838	)	–		–		–		–
Annual contract maintenance charges (note 2)		(14,369	)	(15,677	)	(134,201	)	(144,221	)	(32,365	)	(36,383	)	(1,181	)	–
Contingent deferred sales charges (note 2)		(5,019	)	(5,354	)	(36,047	)	(60,970	)	(10,958	)	(11,920	)	(164	)	–
Adjustments to maintain reserves		218		(788	)	(6,849	)	7,804		(5,466	)	1,773		300		–
Net equity transactions		151,684		(532,622	)	(11,653,288	)	(9,699,225	)	(2,045,436	)	(2,010,505	)	2,242,258		–
Net change in contract owners’ equity		437,875		(418,881	)	3,356,947		(5,905,725	)	(479,533	)	(1,781,586	)	2,401,598		–
Contract owners’ equity beginning of period		9,536,209		9,955,090		86,832,874		92,738,599		17,097,395		18,878,981		–		–
Contract owners’ equity end of period	$	9,974,084		9,536,209		90,189,821		86,832,874		16,617,862		17,097,395		2,401,598		–
CHANGES IN UNITS:
Beginning units		611,295		645,435		3,000,073		3,348,323		1,175,080		1,315,434		–		–
Units purchased		160,843		93,845		194,562		238,916		75,282		98,623		248,478		–
Units redeemed		(150,700	)	(127,985	)	(567,804	)	(587,166	)	(209,797	)	(238,977	)	(30,151	)	–
Ending units		621,438		611,295		2,626,831		3,000,073		1,040,565		1,175,080		218,327		–

(Continued)

10

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FrVIPForSec					GVITFHiInc				GVITGvtBd				GVITGrowth
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	52,635		14,331		80,417		90,804		1,052,957		1,050,408		(96,816	)	(105,710	)
Realized gain (loss) on investments		1,336,782		700,160		(1,605	)	12,910		(14,929	)	(41,123	)	(112,352	)	(488,472	)
Change in unrealized gain (loss) on investments		4,405,607		1,949,247		37,274		(88,260	)	(651,150	)	(234,917	)	539,871		1,023,293
Reinvested capital gains		–		–		–		–		297,325		79,632		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		5,795,024		2,663,738		116,086		15,454		684,203		854,000		330,703		429,111
Equity transactions:
Purchase payments received from contract owners		1,317,088		1,591,835		79,508		96,534		1,003,828		1,250,229		158,238		144,712
Transfers between funds (including fixed account), net (note 3)		(685,646	)	(223,343	)	(204,279	)	245,786		(1,071,611	)	140,888		(231,398	)	(223,485	)
Redemptions		(4,756,622	)	(4,874,133	)	(223,248	)	(149,892	)	(7,132,007	)	(6,007,506	)	(1,444,655	)	(1,013,152	)
Annuity benefits		–		–		–		–		(1,524	)	(3,624	)	(2,703	)	(2,640	)
Annual contract maintenance charges (note 2)		(49,796	)	(51,855	)	(1,839	)	(2,013	)	(58,535	)	(67,409	)	(14,380	)	(16,495	)
Contingent deferred sales charges (note 2)		(17,460	)	(29,252	)	(1,610	)	(1,098	)	(18,312	)	(16,353	)	(4,788	)	(2,451	)
Adjustments to maintain reserves		10,943		(6,922	)	(246	)	223		181		1,541		8		(33	)
Net equity transactions		(4,181,493	)	(3,593,670	)	(351,714	)	189,540		(7,277,980	)	(4,702,234	)	(1,539,678	)	(1,113,544	)
Net change in contract owners’ equity		1,613,531		(929,932	)	(235,628	)	204,994		(6,593,777	)	(3,848,234	)	(1,208,975	)	(684,433	)
Contract owners’ equity beginning of period		30,981,821		31,911,753		1,477,692		1,272,698		42,296,565		46,144,799		8,437,305		9,121,738
Contract owners’ equity end of period	$	32,595,352		30,981,821		1,242,064		1,477,692		35,702,788		42,296,565		7,228,330		8,437,305
CHANGES IN UNITS:
Beginning units		1,394,319		1,565,711		108,256		94,233		930,129		1,034,263		502,626		571,151
Units purchased		93,273		117,604		23,982		39,085		56,098		60,311		25,844		33,493
Units redeemed		(266,791	)	(288,996	)	(48,878	)	(25,062	)	(216,517	)	(164,445	)	(117,526	)	(102,018	)
Ending units		1,220,801		1,394,319		83,360		108,256		769,710		930,129		410,944		502,626

(Continued)

11

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITMyMkt					GVITNWFund				JanIntGrI				NBAMTBal
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	404,028		179,576		(311,612	)	(588,540	)	146,537		(5,540	)	(88,865	)	(62,105	)
Realized gain (loss) on investments		–		–		2,650,153		511,266		1,397,092		465,175		346,297		69,747
Change in unrealized gain (loss) on investments		–		–		13,812,126		8,840,121		5,839,759		3,454,016		1,334,325		1,354,992
Reinvested capital gains		–		–		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		404,028		179,576		16,150,667		8,762,847		7,383,388		3,913,651		1,591,757		1,362,634
Equity transactions:
Purchase payments received from contract owners		508,680		520,694		3,299,677		3,683,165		885,645		789,873		502,940		647,362
Transfers between funds (including fixed account), net (note 3)		2,068,053		1,435,965		(2,038,295	)	(1,593,030	)	1,144,922		559,332		80,830		(350,900	)
Redemptions		(2,820,239	)	(3,533,795	)	(24,334,156	)	(22,520,654	)	(2,427,884	)	(2,309,585	)	(2,531,157	)	(3,225,784	)
Annuity benefits		(10,431	)	(3,920	)	(58,083	)	(47,030	)	–		–		(205	)	(250	)
Annual contract maintenance charges (note 2)		(18,605	)	(21,786	)	(210,809	)	(235,497	)	(27,095	)	(21,972	)	(30,549	)	(33,256	)
Contingent deferred sales charges (note 2)		(2,677	)	(13,886	)	(50,463	)	(53,228	)	(11,153	)	(12,857	)	(5,256	)	(7,807	)
Adjustments to maintain reserves		1,038		(6,042	)	(7,501	)	9,949		(386	)	2,192		3,323		(1,164	)
Net equity transactions		(274,181	)	(1,622,770	)	(23,399,630	)	(20,756,325	)	(435,951	)	(993,017	)	(1,980,074	)	(2,971,799	)
Net change in contract owners’ equity		129,847		(1,443,194	)	(7,248,963	)	(11,993,478	)	6,947,437		2,920,634		(388,317	)	(1,609,165	)
Contract owners’ equity beginning of period		12,907,434		14,350,628		146,987,236		158,980,714		16,557,188		13,636,554		18,093,515		19,702,680
Contract owners’ equity end of period	$	13,037,281		12,907,434		139,738,273		146,987,236		23,504,625		16,557,188		17,705,198		18,093,515
CHANGES IN UNITS:
Beginning units		521,956		589,228		1,522,109		1,747,130		847,784		911,869		768,558		901,843
Units purchased		244,745		215,774		48,799		62,408		194,324		139,735		51,674		47,877
Units redeemed		(254,607	)	(283,046	)	(280,434	)	(287,429	)	(212,727	)	(203,820	)	(131,862	)	(181,162	)
Ending units		512,094		521,956		1,290,474		1,522,109		829,381		847,784		688,370		768,558

(Continued)

12

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTPart				PVITRealRet			PVITTotRet			RCFMicroCap
Investment activity:	2006			2005	2006		2005	2006		2005	2006		2005
Net investment income (loss)	$	164		–	9,246		–	3,669		–	(596	)	–
Realized gain (loss) on investments		(88	)	–	1,466		–	601		–	1,475		–
Change in unrealized gain (loss) on investments		1,744		–	(16,371	)	–	1,054		–	10,111		–
Reinvested capital gains		9,197		–	14,795		–	1,514		–	20,930		–
Net increase (decrease) in contract owners’ equity resulting from operations		11,017		–	9,136		–	6,838		–	31,920		–
Equity transactions:
Purchase payments received from contract owners		7,523		–	22,944		–	10,770		–	19,465		–
Transfers between funds (including fixed account), net (note 3)		98,340		–	535,568		–	337,758		–	418,210		–
Redemptions		(2,410	)	–	(69,625	)	–	(10,222	)	–	(21,544	)	–
Annuity benefits		–		–	–		–	–		–	–		–
Annual contract maintenance charges (note 2)		(43	)	–	(319	)	–	(89	)	–	(129	)	–
Contingent deferred sales charges (note 2)		–		–	(12	)	–	(1	)	–	–		–
Adjustments to maintain reserves		33		–	(46	)	–	(73	)	–	99		–
Net equity transactions		103,443		–	488,510		–	338,143		–	416,101		–
Net change in contract owners’ equity		114,460		–	497,646		–	344,981		–	448,021		–
Contract owners’ equity beginning of period		–		–	–		–	–		–	–		–
Contract owners’ equity end of period	$	114,460		–	497,646		–	344,981		–	448,021		–
CHANGES IN UNITS:
Beginning units		–		–	–		–	–		–	–		–
Units purchased		10,284		–	85,011		–	39,513		–	43,597		–
Units redeemed		(226	)	–	(35,885	)	–	(6,117	)	–	(2,831	)	–
Ending units		10,058		–	49,126		–	33,396		–	40,766		–

(Continued)

13

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	SBLGlob				SBLMidCapGr			SBLAsAlloc			SBLEqInc
Investment activity:	2006			2005	2006		2005	2006		2005	2006		2005
Net investment income (loss)	$	(2,084	)	–	(671	)	–	(3,563	)	–	(2,972	)	–
Realized gain (loss) on investments		5,792		–	423		–	40,814		–	4,558		–
Change in unrealized gain (loss) on investments		47,852		–	6,937		–	20,289		–	61,096		–
Reinvested capital gains		–		–	–		–	–		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		51,560		–	6,689		–	57,540		–	62,682		–
Equity transactions:
Purchase payments received from contract owners		22,851		–	4,497		–	19,471		–	14,546		–
Transfers between funds (including fixed account), net (note 3)		563,485		–	165,184		–	254,529		–	949,541		–
Redemptions		(34,589	)	–	(9,245	)	–	(49,480	)	–	(29,770	)	–
Annuity benefits		–		–	–		–	–		–	–		–
Annual contract maintenance charges (note 2)		(196	)	–	(74	)	–	(266	)	–	(314	)	–
Contingent deferred sales charges (note 2)		(1	)	–	–		–	(5	)	–	(10	)	–
Adjustments to maintain reserves		78		–	81		–	115		–	(134	)	–
Net equity transactions		551,628		–	160,443		–	224,364		–	933,859		–
Net change in contract owners’ equity		603,188		–	167,132		–	281,904		–	996,541		–
Contract owners’ equity beginning of period		–		–	–		–	–		–	–		–
Contract owners’ equity end of period	$	603,188		–	167,132		–	281,904		–	996,541		–
CHANGES IN UNITS:
Beginning units		–		–	–		–	–		–	–		–
Units purchased		58,873		–	17,956		–	100,076		–	97,599		–
Units redeemed		(6,874	)	–	(1,698	)	–	(74,425	)	–	(9,800	)	–
Ending units		51,999		–	16,258		–	25,651		–	87,799		–

(Continued)

14

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	SBLHighYld				SBLSmCapVal			SBLMidCapVal			SBLSmCapGr
Investment activity:	2006			2005	2006		2005	2006		2005	2006		2005
Net investment income (loss)	$	(3,280	)	–	(1,351	)	–	(6,529	)	–	(377	)	–
Realized gain (loss) on investments		3,187		–	1,496		–	5,562		–	794		–
Change in unrealized gain (loss) on investments		32,299		–	18,877		–	94,256		–	6,355		–
Reinvested capital gains		–		–	–		–	–		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		32,206		–	19,022		–	93,289		–	6,772		–
Equity transactions:
Purchase payments received from contract owners		16,651		–	28,294		–	90,004		–	1,871		–
Transfers between funds (including fixed account), net (note 3)		657,059		–	334,186		–	1,830,675		–	95,636		–
Redemptions		(45,103	)	–	(19,709	)	–	(136,070	)	–	(2,789	)	–
Annuity benefits		–		–	–		–	–		–	–		–
Annual contract maintenance charges (note 2)		(321	)	–	(122	)	–	(729	)	–	(27	)	–
Contingent deferred sales charges (note 2)		(13	)	–	(2	)	–	(134	)	–	(2	)	–
Adjustments to maintain reserves		104		–	39		–	(205	)	–	41		–
Net equity transactions		628,377		–	342,686		–	1,783,541		–	94,730		–
Net change in contract owners’ equity		660,583		–	361,708		–	1,876,830		–	101,502		–
Contract owners’ equity beginning of period		–		–	–		–	–		–	–		–
Contract owners’ equity end of period	$	660,583		–	361,708		–	1,876,830		–	101,502		–
CHANGES IN UNITS:
Beginning units		–		–	–		–	–		–	–		–
Units purchased		77,979		–	38,988		–	200,474		–	12,198		–
Units redeemed		(15,542	)	–	(5,372	)	–	(25,397	)	–	(2,353	)	–
Ending units		62,437		–	33,616		–	175,077		–	9,845		–

(Continued)

15

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	SBLSel25				WFOpp
Investment activity:	2006			2005	2006		2005
Net investment income (loss)	$	(127	)	–	(452,750	)	(477,217	)
Realized gain (loss) on investments		494		–	413,268		147,857
Change in unrealized gain (loss) on investments		1,223		–	(241,641	)	2,673,639
Reinvested capital gains		–		–	3,928,495		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,590		–	3,647,372		2,344,279
Equity transactions:
Purchase payments received from contract owners		1,440		–	1,767,428		2,077,268
Transfers between funds (including fixed account), net (note 3)		26,830		–	(1,872,052	)	(1,212,452	)
Redemptions		(8,890	)	–	(5,687,873	)	(6,068,439	)
Annuity benefits		–		–	–		–
Annual contract maintenance charges (note 2)		(11	)	–	(58,442	)	(64,891	)
Contingent deferred sales charges (note 2)		–		–	(19,480	)	(30,450	)
Adjustments to maintain reserves		8		–	(3,224	)	(2,147	)
Net equity transactions		19,377		–	(5,873,643	)	(5,301,111	)
Net change in contract owners’ equity		20,967		–	(2,226,271	)	(2,956,832	)
Contract owners’ equity beginning of period		–		–	37,401,311		40,358,143
Contract owners’ equity end of period	$	20,967		–	35,175,040		37,401,311
CHANGES IN UNITS:
Beginning units		–		–	1,368,006		1,571,810
Units purchased		3,630		–	96,170		130,850
Units redeemed		(1,694	)	–	(302,519	)	(334,654	)
Ending units		1,936		–	1,161,657		1,368,006

See accompanying notes to financial statements.

16

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

NOTES TO FINANCIAL STATEMENTS

December 31, 2006 and 2005

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide Multi-Flex Variable Account (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on October 7, 1981. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers tax qualified and non-tax qualified Individual Deferred Variable annuity Contracts through the Account. The primary distributions for the contracts is through Company agents and an affiliated sales organization; however, other distributors may be utilized.

Effective July 1, 2000, the Company entered into a reinsurance agreement with Security Benefit Life Insurance Company (SBL) to sell, transfer and cede on an indemnity basis all of its obligations in connection with annuity contracts issued pursuant to the NEA Valuebuilder Annuity program (Program). Under the agreement, the Company continued to provide administrative and support services for contracts issued under the Program until September 2001. Thereafter, SBL assumed full responsibility for servicing the contracts and receives all fees and charges of the contracts. The Company is paid a Supplemental Capital Charge by SBL to meet the capital needs of the reinsured contracts. The ceding of risk does not discharge the Company from its primary obligation, including regulatory record keeping and reporting, to the contract owners of the Account.

(b) The Contracts

Only contracts without a front-end sales charge, but with a contingent deferred sales charge and certain other fees, are offered for purchase. See note 2 for a discussion of contract expenses. With certain exceptions, contract owners in either the accumulation or payout phase may invest in any of the following:

Portfolios of the AIM Variable Insurance Funds;

    AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I (AIMCapAp)

    AIM Variable Insurance Funds – AIM V.I. Global Health Care Fund – Series I (AIMGlobHlth)

    AIM Variable Insurance Funds – AIM V.I. Global Real Estate Fund – Series I (AIMGlobReal)

        (formerly AIM Variable Insurance Funds – AIM V.I. Real Estate Fund – Series I Shares)

AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I

Portfolios of the American Century Variable Portfolios Inc.;

    American Century Variable Portfolios Inc. – Advantage (ACVPAdv)*

    American Century Variable Portfolios Inc. – Balanced Fund – Class I (ACVPBal)

    American Century Variable Portfolios Inc. – Capital Appreciation Fund – Class I (ACVPCapAp)

    American Century Variable Portfolios Inc. – Income & Growth Fund – Class I (ACVPIncGr)

Dreyfus Socially Responsible Growth Fund Inc. – Initial Shares The (DrySRGro)

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

Portfolios of the Dreyfus Variable Investment Fund;

    Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares (DryVIFApp)

    Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares (DryVIFDevLd)

    Dreyfus Variable Investment Fund – Quality Bond Portfolio – Initial Shares (DryVIFQualBd)

Portfolios of the Fidelity^® Variable Insurance Products Fund;

    Fidelity^® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class (FidVIPEI)

    Fidelity^® Variable Insurance Products Fund – High Income Portfolio – Initial Class (FidVIPHI)

Portfolio of the Fidelity^® Variable Insurance Products Fund II;

    Fidelity^® Variable Insurance Products Fund II - Contrafund^® Portfolio - Service Class 2 (FidVIPConS2)

(Continued)

17

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolio of the Franklin Templeton Variable Insurance Products Trust;

    Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund –

    Class 1(FrVIPForSec)

Portfolios of the Gartmore Variable Insurance Trust (GVIT);

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

    Gartmore GVIT – Government Bond Fund – Class I (GVITGvtBd)

    Gartmore GVIT – Growth Fund – Class I (GVITGrowth)

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

    Gartmore GVIT – Nationwide Fund – Class I (GVITNWFund)

Portfolio of the Janus Aspen Series;

    Janus Aspen Series – International Growth Portfolio – Institutional Shares (JanIntGrI)

Portfolios of the Neuberger Berman Advisers Management Trust;

    Neuberger Berman Advisers Management Trust – Balanced Portfolio^® – I Class Shares (NBAMTBal)

    Neuberger Berman Advisers Management Trust – Partners Portfolio – Class I (NBAMTPart)

Portfolios of the PIMCO Variable Insurance Trust;

    PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative

    Shares(PVITRealRet)

    PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative

    Shares (PVITTotRet)

Royce Capital Fund – Micro Cap (RCFMicroCap)

SBL Fund – Series D (Global Series) (SBLGlob)

SBL Fund – Series J (Mid Cap Growth Series) (SBLMidCapGr)

SBL Fund – Series N (Managed Asset Allocation Series) (SBLAsAlloc)

SBL Fund – Series O (Equity Income Series) (SBLEqInc)

SBL Fund – Series P (High Yield Series) (SBLHighYld)

SBL Fund – Series Q (Small Cap Value Series) (SBLSmCapVal)

SBL Fund – Series V (Mid Cap Value Series) (SBLMidCapVal)

SBL Fund – Series X (Small Cap Growth Series) (SBLSmCapGr)

SBL Fund – Series Y (Select 25 Series) (SBLSel25)

Portfolio of the Wells Fargo Advantage Variable Trust Funds^SM;

    Wells Fargo Advantage Variable Trust Funds^SM – Wells Fargo Advantage VT Opportunity

    Fund^SM (WFOpp)

*At December 31, 2006, contract owners were not invested in this fund.

The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners and certain contract expenses (see note 2). 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.

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)

18

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

(c) Security Valuation, Transactions and Related Investment Income

Investments in underlying mutual funds are valued based on the closing net asset value per share at December 31, 2006 of such funds, which value their investment securities at fair value. The cost of investments sold is determined on a First in – First out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed) 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 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) Calculation of Annuity Reserves

Annuity reserves are computed for contracts in the variable payout stage according to industry standard mortality tables. The assumed investment return is 3.5% unless the annuitant elects otherwise, in which case the rate may vary from 3.5% to 7%, as regulated by the laws of the respective states. The mortality risk is fully borne by the Company and may result in additional amounts being transferred into the Account by the Company to cover greater longevity of annuitants than expected. Conversely, if reserves exceed amounts required, transfers may be made to the Company.

(g) New Accounting Pronouncement

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) 157. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted. SFAS 157 is not expected to have a material impact on the Accounts’ financial position or results of their operations upon adoption.

(Continued)

19

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

(2) Expenses

The Company does not deduct a sales charge from purchase payments received from the contract owners. However, if any part of the contract value of such contracts is surrendered, the Company will, with certain exceptions, deduct from a contract owners’ contract value a contingent deferred sales charge. For contracts issued prior to February 1, 1989, the contingent deferred sales charge will be equal to 5% of the lesser of the total of all purchase payments or the amount surrendered. For contracts issued on or after February 1, 1989, the Company will deduct a contingent deferred sales charge not to exceed 7% of purchase payments surrendered. This charge declines 1% per year. After the purchase payment has been held in the contract for 7 years, the charge is 0%. No sales charges are deducted on redemptions used to purchase units in the fixed investment options of the Company.

The following contract charges are deducted by the Company: (a) an annual contract maintenance charge of up to $30, dependent upon contract type and issue date, which is satisfied by surrendering units; and (b) a mortality and expense risk charge and an administration charge assessed through the daily unit value calculation equal to an annualized rate of 1.25% and 0.05%, respectively; for NEA Valuebuilder Annuity contracts issued before November 3, 1997, or in states which have not approved the applicable contract modifications, a mortality and expense risk charge and an administrative charge assessed through the daily unit value calculation equal to an annualized rate of 1.25% and .05%, respectively; for NEA Valuebuilder Annuity contracts issued on or after the later of November 3, 1997, or the date on which state insurance authorities approve corresponding contract modifications, an actuarial risk charge assessed through the daily unit value calculation equal to an annualized rate of 1.30%.

(3) 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. The fixed account assets are not reflected in the accompanying financial statements. In addition, the Account portion of contract owner loans is transferred to the accounts of the Company for administration and collection. Loan repayments are transferred to the Account at the direction of the contract owner. For the years ended December 31, 2006 and 2005, total transfers to the Account from the fixed account were $495,817 and $372,119, respectively, and total transfers from the Account to the fixed account were $1,336,844 and $958,945, respectively. Transfers from the Account to the fixed account, and transfers to the Account from the fixed account are included in transfers between funds (including fixed account), net, on the accompanying Statements of Changes in Contract Owners’ Equity.

For guaranteed minimum death benefits, the Company contributed $736 to the Account in the form of additional premium to contract owner accounts for the year ended December 31, 2006. These amounts are included in purchase payments received from contract owners and are credited at time of annuitant death, when applicable.

(Continued)

20

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

(4) Financial Highlights

The following is a summary of units, unit fair values and contract owners’ equity outstanding for variable annuity contracts as of the end of the periods indicated, and the contract expense rate, investment income ratio and total return for each of the periods in the five-year period ended December 31, 2006. The Account includes contracts administered by Security Benefit Life Insurance Company under a reinsurance agreement discussed in note 1. The mutual fund and product options of the contracts so administered are identified by those unit fair values presented below using two decimal places.

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2006	1.30%	5,425	$	12.034161	$	65,285	0.05%	4.92%
	1.30%	272,168		12.03		3,274,181	0.05%	4.92%
2005	1.30%	6,623		11.469653		75,964	0.06%	7.43%
	1.30%	324,460		11.47		3,721,556	0.06%	7.43%
2004	1.30%	4,575		10.676868		48,847	0.00%	5.24%
	1.30%	373,290		10.68		3,985,480	0.00%	5.24%
2003	1.30%	8,472		10.145261		85,951	0.00%	27.84%
	1.30%	440,589		10.15		4,471,978	0.00%	27.84%
2002	1.30%	5,920		7.936045		46,980	0.00%	-25.34%
	1.30%	434,117		7.94		3,446,886	0.00%	-25.34%
AIM Variable Insurance Funds – AIM V.I. Global Health Care Fund – Series I
2006	1.30%	9,171		10.63		97,488	0.00%	6.30%	06/08/06
AIM Variable Insurance Funds – AIM V.I. Global Real Estate Fund – Series I
2006	1.30%	97		12.751928		1,237	1.82%	27.52%	06/09/06
	1.30%	43,371		12.84		556,884	1.82%	28.40%	06/08/06
AIM Variable Insurance Funds – AIM V.I. International Growth Fund – Series I
2006	1.30%	588		18.125204		10,658	1.00%	26.57%
	1.30%	116,112		18.13		2,105,111	1.00%	26.57%
2005	1.30%	475		14.320119		6,802	0.75%	16.40%
	1.30%	118,566		14.32		1,697,865	0.75%	16.40%
2004	1.30%	420		12.302542		5,167	0.73%	22.39%
	1.30%	77,644		12.30		955,224	0.73%	22.39%
2003	1.30%	589		10.051603		5,920	0.53%	27.39%
	1.30%	57,869		10.05		581,583	0.53%	27.39%
2002	1.30%	137		7.890688		1,083	0.54%	-16.77%
	1.30%	57,534		7.89		453,947	0.54%	-16.77%
American Century Variable Portfolios, Inc. – Balanced Fund – Class I
2006	1.30%	140,798		12.367801		1,741,361	2.08%	8.20%
	1.30%	359,095		12.37		4,442,005	2.08%	8.20%
2005	1.30%	172,160		11.430683		1,967,906	1.71%	3.57%
	1.30%	476,771		11.43		5,449,493	1.71%	3.57%
2004	1.30%	212,190		11.036175		2,341,766	1.60%	8.35%
	1.30%	410,602		11.04		4,531,541	1.60%	8.35%
2003	1.30%	207,081		10.185550		2,109,234	2.44%	17.91%
	1.30%	397,687		10.19		4,052,431	2.44%	17.91%
2002	1.30%	218,265		8.638585		1,885,499	2.74%	-10.73%
	1.30%	330,980		8.64		2,859,671	2.74%	-10.73%
American Century Variable Portfolios, Inc. – Capital Appreciation Fund – Class I
2006	1.30%	233,127		24.323239		5,670,404	0.00%	15.70%
	1.30%	359,696		24.32		8,747,807	0.00%	15.70%
2005	1.30%	262,293		21.022816		5,514,137	0.00%	20.48%
	1.30%	407,891		21.02		8,573,869	0.00%	20.48%
2004	1.30%	333,321		17.448933		5,816,096	0.00%	6.19%
	1.30%	436,634		17.45		7,618,830	0.00%	6.19%
2003	1.30%	364,951		16.432489		5,997,053	0.00%	18.91%
	1.30%	482,328		16.43		7,924,649	0.00%	18.91%
2002	1.30%	400,478		13.819339		5,534,342	0.00%	-22.23%
	1.30%	516,646		13.82		7,140,048	0.00%	-22.23%

(Continued)

21

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	1.30%	5,352	$	16.377810	$	87,654	1.86%	15.57%
	1.30%	417,213		16.38		6,833,949	1.86%	15.57%
2005	1.30%	5,345		14.171369		75,746	2.05%	3.27%
	1.30%	487,914		14.17		6,913,741	2.05%	3.27%
2004	1.30%	5,602		13.722025		76,871	1.41%	11.52%
	1.30%	563,471		13.72		7,731,662	1.41%	11.52%
2003	1.30%	5,818		12.304086		71,585	1.24%	27.67%
	1.30%	573,968		12.30		7,059,806	1.24%	27.67%
2002	1.30%	5,859		9.637195		56,465	1.08%	-20.42%
	1.30%	574,406		9.64		5,537,277	1.08%	-20.42%
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	1.30%	10,128		22.424260		227,113	0.11%	7.78%
	1.30%	1,051,851		22.42		23,582,499	0.11%	7.78%
2005	1.30%	11,469		20.804638		238,608	0.00%	2.27%
	1.30%	1,209,055		20.80		25,148,344	0.00%	2.27%
2004	1.30%	11,970		20.342381		243,498	0.38%	4.83%
	1.30%	1,399,512		20.34		28,469,396	0.38%	4.83%
2003	1.30%	13,643		19.405114		264,744	0.11%	24.37%
	1.30%	1,539,953		19.41		29,890,488	0.11%	24.37%
2002	1.30%	15,461		15.603132		241,234	0.21%	-29.87%
	1.30%	1,615,649		15.60		25,204,126	0.21%	-29.87%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	1.30%	190,451		31.995347		6,093,546	1.63%	14.00%
	1.30%	1,970,082		32.00		63,042,624	1.63%	14.00%
2005	1.30%	225,414		28.065915		6,326,451	1.57%	3.33%
	1.30%	2,251,965		28.07		63,212,658	1.57%	3.33%
2004	1.30%	284,122		27.160283		7,716,834	1.76%	9.20%
	1.30%	2,504,458		27.16		68,022,077	1.76%	9.20%
2003	1.30%	358,961		24.871495		8,927,897	1.45%	26.70%
	1.30%	2,643,224		24.87		65,736,981	1.45%	26.70%
2002	1.30%	400,765		19.630772		7,867,327	1.31%	-23.37%
	1.30%	2,657,073		19.63		52,158,352	1.31%	-23.37%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	1.30%	2,155		15.348290		33,075	1.56%	14.97%
	1.30%	594,152		15.35		9,120,233	1.56%	14.97%
2005	1.30%	4,469		13.350131		59,662	0.02%	3.02%
	1.30%	701,643		13.35		9,366,934	0.02%	3.02%
2004	1.30%	6,659		12.958165		86,288	1.65%	3.68%
	1.30%	799,651		12.96		10,361,822	1.65%	3.68%
2003	1.30%	5,296		12.498159		66,190	1.41%	19.60%
	1.30%	833,474		12.50		10,418,425	1.41%	19.60%
2002	1.30%	4,940		10.450363		51,629	1.13%	-17.80%
	1.30%	798,272		10.45		8,341,946	1.13%	-17.80%
Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares
2006	1.30%	23,604		25.718654		607,063	0.41%	2.42%
	1.30%	2,607,052		25.72		67,053,377	0.41%	2.42%
2005	1.30%	27,397		25.109832		687,934	0.00%	4.43%
	1.30%	2,986,667		25.11		74,995,208	0.00%	4.43%
2004	1.30%	28,484		24.044779		684,891	0.19%	9.89%
	1.30%	3,399,091		24.04		81,730,521	0.19%	9.89%
2003	1.30%	31,860		21.880107		697,100	0.03%	29.98%
	1.30%	3,653,746		21.88		79,943,962	0.03%	29.98%
2002	1.30%	32,398		16.833459		545,367	0.05%	-20.18%
	1.30%	3,795,742		16.83		63,882,345	0.05%	-20.18%

(Continued)

22

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Dreyfus Variable Investment Fund – Quality Bond Portfolio – Initial Shares
2006	1.30%	4,082	$	16.050943	$	65,520	4.51%	2.88%
	1.30%	617,356		16.05		9,908,564	4.51%	2.88%
2005	1.30%	4,534		15.601357		70,737	3.58%	1.15%
	1.30%	606,761		15.60		9,465,472	3.58%	1.15%
2004	1.30%	5,783		15.423994		89,197	4.01%	2.02%
	1.30%	639,652		15.42		9,865,893	4.01%	2.02%
2003	1.30%	5,065		15.117949		76,572	4.04%	3.58%
	1.30%	711,940		15.12		10,764,533	4.04%	3.58%
2002	1.30%	4,728		14.595705		69,013	5.06%	6.36%
	1.30%	726,030		14.60		10,600,042	5.06%	6.36%
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class
2006	1.30%	357,186		34.329754		12,262,108	3.28%	18.64%
	1.30%	2,269,645		34.33		77,916,913	3.28%	18.64%
2005	1.30%	417,174		28.937089		12,071,801	1.64%	4.49%
	1.30%	2,582,899		28.94		74,749,097	1.64%	4.49%
2004	1.30%	467,815		27.692797		12,955,106	1.52%	10.08%
	1.30%	2,880,508		27.69		79,769,188	1.52%	10.08%
2003	1.30%	537,853		25.156955		13,530,744	1.72%	28.64%
	1.30%	3,054,169		25.16		76,842,892	1.72%	28.64%
2002	1.30%	596,921		19.556483		11,673,680	1.80%	-18.03%
	1.30%	3,196,064		19.56		62,515,003	1.80%	-18.03%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class
2006	1.30%	11,556		15.973333		184,588	7.40%	9.79%
	1.30%	1,029,009		15.97		16,433,274	7.40%	9.79%
2005	1.30%	11,336		14.548340		164,920	14.68%	1.37%
	1.30%	1,163,744		14.55		16,932,475	14.68%	1.37%
2004	1.30%	11,638		14.351788		167,026	8.16%	8.17%
	1.30%	1,303,796		14.35		18,711,955	8.16%	8.17%
2003	1.30%	11,371		13.267980		150,870	7.07%	25.61%
	1.30%	1,398,657		13.27		18,560,178	7.07%	25.61%
2002	1.30%	11,484		10.562700		121,304	10.63%	2.10%
	1.30%	1,373,068		10.56		14,499,602	10.63%	2.10%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Service Class 2
2006	1.30%	28		11.035607		309	1.16%	10.36%	06/09/06
	1.30%	218,299		11.00		2,401,289	1.16%	10.00%	06/08/06
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1
2006	1.30%	10,216		26.696591		272,732	1.41%	20.12%
	1.30%	1,210,585		26.70		32,322,620	1.41%	20.12%
2005	1.30%	10,685		22.224937		237,474	1.28%	9.04%
	1.30%	1,383,634		22.22		30,744,347	1.28%	9.04%
2004	1.30%	12,755		20.381609		259,967	1.13%	17.33%
	1.30%	1,552,956		20.38		31,651,786	1.13%	17.33%
2003	1.30%	11,884		17.371469		206,443	1.79%	30.83%
	1.30%	1,647,097		17.37		28,610,075	1.79%	30.83%
2002	1.30%	10,350		13.277855		137,429	1.82%	-19.47%
	1.30%	1,683,288		13.28		22,354,071	1.82%	-19.47%
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	1.30%	1,231		14.899690		18,342	7.20%	9.17%
	1.30%	82,129		14.90		1,223,722	7.20%	9.17%
2005	1.30%	1,259		13.648215		17,183	7.87%	1.05%
	1.30%	106,997		13.65		1,460,509	7.87%	1.05%
2004	1.30%	1,273		13.505990		17,193	7.21%	8.67%
	1.30%	92,960		13.51		1,255,505	7.21%	8.67%
2003	1.30%	185		12.428955		2,299	7.81%	20.68%
	1.30%	81,206		12.43		1,009,391	7.81%	20.68%
2002	1.30%	164		10.298837		1,692	8.42%	1.88%
	1.30%	62,976		10.30		648,652	8.42%	1.88%

(Continued)

23

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Government Bond Fund – Class I
Tax qualified
2006	1.30%	304,367	$	46.37	$	14,113,498	3.96%	2.00%
	1.30%	316,072		46.368773		14,655,871	3.96%	2.00%
2005	1.30%	355,478		45.46		16,160,030	3.66%	1.92%
	1.30%	389,643		45.458911		17,712,746	3.66%	1.92%
2004	1.30%	390,334		44.60		17,409,051	5.45%	1.92%
	1.30%	440,719		44.600457		19,656,269	5.45%	1.92%
2003	1.30%	455,751		43.76		19,943,664	3.16%	0.67%
	1.30%	507,035		43.760351		22,188,030	3.16%	0.67%
2002	1.30%	495,829		43.47		21,553,668	4.33%	9.54%
	1.30%	578,186		43.467280		25,132,177	4.33%	9.54%
Non-tax qualified
2006	1.30%	11,152		46.39		517,341	3.96%	2.00%
	1.30%	138,119		46.385889		6,406,773	3.96%	2.00%
2005	1.30%	14,440		45.48		656,731	3.66%	1.92%
	1.30%	170,568		45.475702		7,756,700	3.66%	1.92%
2004	1.30%	16,561		44.62		738,948	5.45%	1.92%
	1.30%	186,649		44.616924		8,327,704	5.45%	1.92%
2003	1.30%	18,386		43.78		804,939	3.16%	0.67%
	1.30%	223,560		43.776516		9,786,678	3.16%	0.67%
2002	1.30%	20,315		43.48		883,280	4.33%	9.54%
	1.30%	275,972		43.483340		12,000,203	4.33%	9.54%
Gartmore GVIT – Growth Fund – Class I
2006	1.30%	5,762		17.57		101,238	0.05%	4.79%
	1.30%	405,182		17.565687		7,117,301	0.05%	4.79%
2005	1.30%	8,925		16.76		149,583	0.08%	5.12%
	1.30%	493,701		16.762531		8,275,678	0.08%	5.12%
2004	1.30%	10,388		15.95		165,642	0.31%	6.75%
	1.30%	560,763		15.946096		8,941,980	0.31%	6.75%
2003	1.30%	8,993		14.94		134,355	0.02%	31.02%
	1.30%	623,995		14.937671		9,321,032	0.02%	31.02%
2002	1.30%	2,251		11.40		25,666	0.00%	-29.65%
	1.30%	667,397		11.401436		7,609,279	0.00%	-29.65%
Gartmore GVIT – Money Market Fund – Class I
Tax qualified
2006	1.30%	177,042		25.09		4,441,984	4.38%	3.18%
	1.30%	266,444		25.082875		6,683,182	4.38%	3.18%
2005	1.30%	185,497		24.31		4,509,432	2.60%	1.34%
	1.30%	256,685		24.310982		6,240,264	2.60%	1.34%
2004	1.30%	199,857		24.02		4,801,048	0.78%	-0.50%
	1.30%	295,209		23.990230		7,082,132	0.78%	-0.50%
2003	1.30%	260,352		24.11		6,277,087	0.64%	-0.68%
	1.30%	324,361		24.110582		7,820,532	0.64%	-0.68%
2002	1.30%	323,611		24.28		7,857,281	0.78%	-0.10%
	1.30%	398,579		24.276265		9,676,012	0.78%	-0.10%
Non-tax qualified
2006	1.30%	2,617		27.26		71,339	4.38%	3.18%
	1.30%	65,991		27.252995		1,798,452	4.38%	3.18%
2005	1.30%	2,464		26.41		65,074	2.60%	1.34%
	1.30%	77,310		26.414319		2,042,091	2.60%	1.34%
2004	1.30%	2,425		26.07		63,210	0.78%	-0.50%
	1.30%	91,737		26.065818		2,391,200	0.78%	-0.50%
2003	1.30%	2,990		26.20		78,338	0.64%	-0.68%
	1.30%	131,274		26.196581		3,438,930	0.64%	-0.68%
2002	1.30%	6,971		26.38		183,884	0.78%	-0.10%
	1.30%	164,236		26.376600		4,331,979	0.78%	-0.10%

(Continued)

24

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Gartmore GVIT – Nationwide Fund – Class I
Tax qualified
2006	1.30%	447,327	$	108.65	$	48,602,079	1.05%	12.15%
	1.30%	590,790		108.653662		64,191,497	1.05%	12.15%
2005	1.30%	513,899		96.88		49,786,535	0.89%	6.05%
	1.30%	716,402		96.878249		69,403,771	0.89%	6.05%
2004	1.30%	581,247		91.35		53,098,368	1.24%	8.32%
	1.30%	824,356		91.352418		75,306,914	1.24%	8.32%
2003	1.30%	633,322		84.33		53,408,044	0.54%	25.86%
	1.30%	938,062		84.332018		79,108,661	0.54%	25.86%
2002	1.30%	666,959		67.01		44,692,919	0.84%	-18.43%
	1.30%	1,057,678		67.006421		70,871,195	0.84%	-18.43%
Non-tax qualified
2006	1.30%	9,133		105.53		963,805	1.05%	12.15%
	1.30%	243,224		105.528470		25,667,057	1.05%	12.15%
2005	1.30%	11,726		94.09		1,103,299	0.89%	6.05%
	1.30%	280,082		94.091731		26,353,400	0.89%	6.05%
2004	1.30%	13,863		88.72		1,229,912	1.24%	8.32%
	1.30%	327,664		88.724843		29,071,937	1.24%	8.32%
2003	1.30%	15,915		81.91		1,303,598	0.54%	25.86%
	1.30%	373,533		81.906372		30,594,733	0.54%	25.86%
2002	1.30%	20,204		65.08		1,314,904	0.84%	-18.43%
	1.30%	437,770		65.079111		28,489,707	0.84%	-18.43%
Janus Aspen Series – International Growth Portfolio – Institutional Shares
2006	1.30%	10,496		28.336913		297,424	1.99%	45.12%
	1.30%	818,885		28.34		23,207,201	1.99%	45.12%
2005	1.30%	10,659		19.526904		208,137	1.13%	30.58%
	1.30%	837,125		19.53		16,349,051	1.13%	30.58%
2004	1.30%	7,558		14.954107		113,023	0.88%	17.40%
	1.30%	904,311		14.95		13,523,531	0.88%	17.40%
2003	1.30%	9,453		12.737304		120,406	1.16%	33.16%
	1.30%	996,322		12.74		12,693,142	1.16%	33.16%
2002	1.30%	8,192		9.565195		78,360	0.85%	-26.55%
	1.30%	1,104,918		9.57		10,574,068	0.85%	-26.55%
Neuberger Berman Advisers Management Trust – Balanced Portfolio® – I Class Shares
2006	1.30%	195,611		25.716074		5,030,347	0.78%	9.23%
	1.30%	492,759		25.72		12,673,761	0.78%	9.23%
2005	1.30%	216,420		23.542486		5,095,065	0.92%	7.77%
	1.30%	552,138		23.54		12,997,329	0.92%	7.77%
2004	1.30%	268,004		21.845873		5,854,781	1.19%	7.89%
	1.30%	633,839		21.85		13,846,737	1.19%	7.89%
2003	1.30%	319,097		20.248421		6,461,210	1.72%	14.77%
	1.30%	702,000		20.25		14,215,500	1.72%	14.77%
2002	1.30%	357,115		17.643073		6,300,606	2.60%	-18.23%
	1.30%	747,434		17.64		13,184,733	2.60%	-18.23%
Neuberger Berman Advisers Management Trust – Partners Portfolio – Class I
2006	1.30%	10,058		11.38		114,460	1.04%	13.80%	06/08/06
PIMCO Variable Insurance Trust – PIMCO VIT Real Return Portfolio – Administrative Shares
2006	1.30%	49,126		10.13		497,646	5.11%	1.30%	06/08/06
PIMCO Variable Insurance Trust – PIMCO VIT Total Return Portfolio – Administrative Shares
2006	1.30%	33,396		10.33		344,981	2.90%	3.30%	06/08/06
Royce Capital Fund – Micro Cap
2006	1.30%	168		11.003808		1,849	0.31%	10.04%	06/09/06
	1.30%	40,598		10.99		446,172	0.31%	9.90%	06/08/06
SBL Fund – Series D (Global Series)
2006	1.30%	51,999		11.60		603,188	0.00%	16.00%	06/08/06
SBL Fund – Series J (Mid Cap Growth Series)
2006	1.30%	16,258		10.28		167,132	0.00%	2.80%	06/08/06

(Continued)

25

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
SBL Fund – Series N (Managed Asset Allocation Series)
2006	1.30%	25,651	$	10.99	$	281,904	0.00%	9.90%	06/08/06
SBL Fund – Series O (Equity Income Series)
2006	1.30%	476		11.396634		5,425	0.00%	13.97%	06/09/06
	1.30%	87,323		11.350000		991,116	0.00%	13.50%	06/08/06
SBL Fund – Series P (High Yield Series)
2006	1.30%	62,437		10.58		660,583	0.00%	5.80%	06/08/06
SBL Fund – Series Q (Small Cap Value Series)
2006	1.30%	33,616		10.76		361,708	0.00%	7.60%	06/08/06
SBL Fund – Series V (Mid Cap Value Series)
2006	1.30%	134		10.755372		1,441	0.00%	7.55%	06/09/06
	1.30%	174,943		10.72		1,875,389	0.00%	7.20%	06/08/06
SBL Fund – Series X (Small Cap Growth Series)
2006	1.30%	9,845		10.31		101,502	0.00%	3.10%	06/08/06
SBL Fund – Series Y (Select 25 Series)
2006	1.30%	1,936		10.83		20,967	0.00%	8.30%	06/08/06
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM
2006	1.30%	14,003		30.284724		424,077	0.00%	10.76%
	1.30%	1,147,654		30.28		34,750,963	0.00%	10.76%
2005	1.30%	15,971		27.341650		436,674	0.00%	6.49%
	1.30%	1,352,035		27.34		36,964,637	0.00%	6.49%
2004	1.30%	17,147		25.676197		440,270	0.00%	16.68%
	1.30%	1,554,663		25.68		39,917,873	0.00%	16.68%
2003	1.30%	19,661		22.004891		432,638	0.08%	35.23%
	1.30%	1,629,468		22.00		35,848,296	0.08%	35.23%
2002	1.30%	16,855		16.272524		274,275	0.39%	-27.77%
	1.30%	1,652,043		16.27		26,878,742	0.39%	-27.77%
2006 Reserves for annuity contracts in payout phase:						399,932
2006 Contract owners’ equity				.	$	634,994,120
2005 Reserves for annuity contracts in payout phase:						439,260
2005 Contract owners’ equity				.	$	642,652,380
2004 Reserves for annuity contracts in payout phase:						341,469
2004 Contract owners’ equity					$	687,491,626
2003 Reserves for annuity contracts in payout phase:						371,700
2003 Contract owners’ equity				.	$	692,411,487
2002 Reserves for annuity contracts in payout phase:						394,504
2002 Contract owners’ equity				.	$	600,182,454

*  This represents the annual contract expense rate of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying mutual funds and charges made directly to contract owner accounts through the redemption of units.

**  This represents the dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by average net assets. The ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions to the contractholder accounts either through reductions in unit values or redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.

***  This represents the total return for the period indicated and includes a deduction only for expenses assessed through the daily unit value calculation. 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.

26

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

    Contract Owners of Nationwide Multi-Flex Variable Account:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide Multi-Flex Variable Account (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2006, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2006, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Accounts as of December 31, 2006, and the results of their operations, changes in contract owners’ equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Columbus, Ohio

March 9, 2007

27

NATIONWIDE LIFE 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