Investment/Life® VAN KA3MPEN/ NATIONWIDE LIFE INSURANCE COMPANY
VLO–185–12/05

NATIONWIDE® VLI

Separate Account

Annual Report

December 31, 2005

NATIONWIDE VLI SEPARATE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2005

Assets:
Investments in Van Kampen Life Investment Trust, at fair value:
Van Kampen LIT I – Emerging Growth Portfolio – Class I (VKEmGr) 127,816 shares (cost $2,955,032)	$	3,580,137
Van Kampen LIT I – Enterprise Portfolio – Class I (VKEnt) 2,081,234 shares (cost $30,048,911)		30,386,016
Van Kampen LIT I – Government Portfolio – Class I (VKGov) 3,955,079 shares (cost $35,297,396)		37,256,848
Van Kampen LIT I – Money Market Portfolio – Class I (VKMMkt) 4,139,044 shares (cost $4,139,044)		4,139,044
Van Kampen UIF – U.S. Real Estate Portfolio – Class I (VKUSRealEst) 116,715 shares (cost $1,999,143)		2,693,774
Total Investments		78,055,819
Accounts Receivable		29,593
Total Assets		78,085,412
Accounts Payable		31,878
Contract Owners Equity (note 7)	$	78,053,534

See accompanying notes to financial statements.

2

NATIONWIDE VLI SEPARATE ACCOUNT

STATEMENTS OF OPERATIONS

Year Ended December 31, 2005

Investment activity:	Total			VKEmGr		VKEnt		VKGov		VKMMkt		VKUSRealEst
Reinvested dividends	$	1,932,862		8,522		220,846		1,549,214		123,238		31,042
Mortality and expense risk charges (note 3)		(392,416	)	(16,795	)	(150,361	)	(189,960	)	(23,336	)	(11,964	)
Net investment income (loss)		1,540,446		(8,273	)	70,485		1,359,254		99,902		19,078
Proceeds from mutual fund shares sold		11,292,226		687,118		3,677,522		3,704,672		2,429,590		793,324
Cost of mutual fund shares sold		(13,115,349	)	(709,473	)	(6,081,551	)	(3,388,972	)	(2,429,590	)	(505,763	)
Realized gain (loss) on investments		(1,823,123	)	(22,355	)	(2,404,029	)	315,700		–		287,561
Change in unrealized gain (loss) on investments		4,223,933		258,797		4,520,915		(540,079	)	–		(15,700	)
Net gain (loss) on investments		2,400,810		236,442		2,116,886		(224,379	)	–		271,861
Reinvested capital gains		68,566		–		–		–		–		68,566
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,009,822		228,169		2,187,371		1,134,875		99,902		359,505

See accompanying notes to financial statements.

3

NATIONWIDE VLI SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2005 and 2004

	Total					VKEmGr				VKEnt				VKGov
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	1,540,446		1,701,545		(8,273	)	(17,172	)	70,485		(33,340	)	1,359,254		1,711,412
Realized gain (loss) on investments		(1,823,123	)	(2,255,020	)	(22,355	)	(588,438	)	(2,404,029	)	(1,860,928	)	315,700		29,877
Change in unrealized gain (loss) on investments		4,223,933		3,795,090		258,797		814,397		4,520,915		2,908,913		(540,079	)	(327,740	)
Reinvested capital gains		68,566		42,666		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		4,009,822		3,284,281		228,169		208,787		2,187,371		1,014,645		1,134,875		1,413,549
Equity transactions:
Purchase payments received from contract owners (note 6)		1,426		98,534		168		(17,106	)	760		82,334		238		32,380
Transfers between funds		–		–		8,970		(16,404	)	168,468		(177,284	)	(103,874	)	(135,654	)
Surrenders (note 6)		(7,575,250	)	(6,580,564	)	(157,966	)	(401,338	)	(3,477,232	)	(3,033,542	)	(3,224,680	)	(2,310,662	)
Death benefits (note 4)		(1,422,692	)	(2,530,526	)	–		(148,302	)	(292,400	)	(726,576	)	(999,064	)	(1,366,970	)
Net policy repayments (loans) (note 5)		3,369,128		3,041,338		59,814		302,816		1,359,470		1,306,734		1,719,280		1,015,474
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(839,328	)	(896,670	)	(44,770	)	(50,954	)	(308,906	)	(331,120	)	(347,536	)	(369,904	)
Adjustments to maintain reserves		(174,322	)	(464,191	)	(3,015	)	(23,542	)	(111,206	)	(74,591	)	(56,396	)	14,782
Net equity transactions		(6,641,038	)	(7,332,079	)	(136,799	)	(354,830	)	(2,661,046	)	(2,954,045	)	(3,012,032	)	(3,120,554	)
Net change in contract owners’ equity		(2,631,216	)	(4,047,798	)	91,370		(146,043	)	(473,675	)	(1,939,400	)	(1,877,157	)	(1,707,005	)
Contract owners’ equity beginning of period		80,684,750		84,732,548		3,488,866		3,634,909		30,859,826		32,799,226		39,132,874		40,839,879
Contract owners’ equity end of period	$	78,053,534		80,684,750		3,580,236		3,488,866		30,386,151		30,859,826		37,255,717		39,132,874
CHANGES IN UNITS:
Beginning units		2,646,454		2,906,215		140,300		155,600		891,892		980,935		1,318,916		1,425,979
Units purchased		95,446		106,830		9,434		8,610		42,349		36,888		36,010		31,142
Units redeemed		(303,390	)	(366,591	)	(12,052	)	(23,910	)	(109,991	)	(125,931	)	(135,192	)	(138,205	)
Ending units		2,438,510		2,646,454		137,682		140,300		824,250		891,892		1,219,734		1,318,916

(Continued)

4

NATIONWIDE VLI SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	VKMMkt					VKUSRealEst
Investment activity:	2005			2004		2005		2004
Net investment income (loss)	$	99,902		14,427		19,078		26,218
Realized gain (loss) on investments		–		–		287,561		164,469
Change in unrealized gain (loss) on investments		–		–		(15,700	)	399,520
Reinvested capital gains		–		–		68,566		42,666
Net increase (decrease) in contract owners’ equity resulting from operations		99,902		14,427		359,505		632,873
Equity transactions:
Purchase payments received from contract owners (note 6)		260		102		–		824
Transfers between funds		(71,048	)	80,232		(2,516	)	249,110
Surrenders (note 6)		(671,396	)	(632,268	)	(43,976	)	(202,754	)
Death benefits (note 4)		(131,228	)	(94,124	)	–		(194,554	)
Net policy repayments (loans) (note 5)		248,476		340,444		(17,912	)	75,870
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(122,086	)	(119,910	)	(16,030	)	(24,782	)
Adjustments to maintain reserves		(3,111	)	(389,655	)	(594	)	8,815
Net equity transactions		(750,133	)	(815,179	)	(81,028	)	(87,471	)
Net change in contract owners’ equity		(650,231	)	(800,752	)	278,477		545,402
Contract owners’ equity beginning of period		4,787,870		5,588,622		2,415,314		1,869,912
Contract owners’ equity end of period	$	4,137,639		4,787,870		2,693,791		2,415,314
CHANGES IN UNITS:
Beginning units		233,856		279,094		61,490		64,607
Units purchased		7,334		21,525		319		8,665
Units redeemed		(43,228	)	(66,763	)	(2,927	)	(11,782	)
Ending units		197,962		233,856		58,882		61,490

See accompanying notes to financial statements.

5

NATIONWIDE VLI SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS

December 31, 2005 and 2004

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide VLI Separate Account (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on August 8, 1984. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers single premium, multiple payment and flexible premium variable life insurance contracts through the Account. The primary distribution for the contracts is through the brokerage community; however, other distributors may be utilized.

(b) The Contracts

Prior to December 31, 1990, only contracts without a front-end sales charge, but with a contingent deferred sales charge and certain other fees, were offered for purchase. Beginning December 31, 1990, contracts with a front-end sales charge, a contingent deferred sales charge and certain other fees, are offered for purchase. See note 2 for a discussion of policy charges and note 3 for asset charges.

Contract owners may invest in the following funds as of December 31, 2005:

Funds of the Van Kampen Life Investment Trust (Van Kampen LIT I)

(formerly Van Kampen American Capital Life Investment Trust);

    Van Kampen LIT I – Emerging Growth Portfolio – Class I (VKEmGr)

    Van Kampen LIT I – Enterprise Portfolio – Class I (VKEnt)

    Van Kampen LIT I – Government Portfolio – Class I (VKGov)

    Van Kampen LIT I – Money Market Portfolio – Class I (VKMMkt)

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

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

At December 31, 2005, contract owners were invested in all of the above funds.

Effective in April, 2002, due to the liquidating of underlying mutual fund assets at Van Kampen Life Investment Trust, the following underlying sub account options were made unavailable in the Account:

Van Kampen LIT – Asset Allocation Fund (VKAAlloc);

Van Kampen LIT – Domestic Income Fund (VKDomInc);

Van Kampen LIT – Global Equity Fund (VKGlobEq).

Contract owners were given 90 days to exchange their units from the above underlying sub account options to any other available sub account options in the Account. If instructions were not received from individual contractholders by the end of the 90-day notice period, the remaining units were transferred as follows:

Van Kampen LIT – Asset Allocation Fund to Van Kampen LIT – Enterprise Fund (VKEnt);

Van Kampen LIT – Domestic Income Fund to Van Kampen LIT – Government Fund (VKGov);

Van Kampen LIT – Global Equity Fund to Van Kampen LIT – Money Market Fund (VKMMkt).

(Continued)

6

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

The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners and certain policy charges (see notes 2 and 3). The accompanying financial statements include only contract owners’ purchase payments pertaining to the variable portions of their contracts and exclude any purchase payments for fixed dollar benefits, the latter being included in the accounts of the Company.

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

A purchase payment could be presented as a negative equity transaction in the Statements of Changes in Contract Owners’ Equity if a prior period purchase payment is refunded to a contract owner due to a contract cancellation during the free look period, and/or if a gain is realized by the contract owner during the free look period.

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

(c) Security Valuation, Transactions and Related Investment Income

Investments in underlying mutual funds are valued on the closing net asset value per share at December 31, 2005 of such funds, which value their investment securities at fair value. Fund purchases and sales are accounted for on the trade date (date the order to buy or sell is executed). The cost of investments sold is determined on a specific identification basis, and dividends (which include capital gain distributions) are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

Operations of the Account form a part of, and are taxed with, operations of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code.

The Company does not provide for income taxes within the Account. Taxes are the responsibility of the contract owner upon termination or withdrawal.

(e) Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(Continued)

7

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

(2) Policy Charges

(a) Deductions from Premiums

For single premium contracts, no deduction is made from any premium at the time of payment. On multiple payment contracts and flexible premium contracts, the Company deducts a charge for state premium taxes equal to 2.5% of all premiums received to cover the payment of these premium taxes. For multiple and flexible premium contracts, the Company also deducts a sales load from each premium payment received not to exceed 3.5% of each premium payment. The Company may at its sole discretion reduce this sales loading.

For the periods ended December 31, 2005 and 2004, total front-end sales charge deductions were $0 and $13, 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 single premium contracts, the Company deducts an annual administrative charge which is determined as follows:

Contracts issued prior to April 16, 1990:

Purchase payments totalling less than $25,000 – $10/month

Purchase payments totalling $25,000 or more – none

Contracts issued on or after April 16, 1990:

Purchase payments totalling less than $25,000 – $90/year ($65/year in New York)

Purchase payments totalling $25,000 or more – $50/year

For multiple payment contracts the Company currently deducts a monthly administrative charge of $5 (may deduct up to $7.50, maximum) to recover policy maintenance, accounting, record keeping and other administrative expenses.

For flexible premium contracts, the Company currently deducts a monthly administrative charge of $12.50 (not to exceed $25 per month) 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). Additionally, the Company deducts an increase charge of $1.50 per year per $1,000 to cover underwriting and administration costs and $0.54 per year per $1,000 to cover sales costs.

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

(d) Surrender Charges

Policy surrenders result in a redemption of the contract value from the Account and payment of the surrender proceeds to the contract owner or designee. The surrender proceeds consist of the contract value, less any outstanding policy loans, and less a surrender charge, if applicable. The charge is determined according to contract type.

For single premium contracts, the charge is determined based upon a specified percentage of each purchase payment. For single premium contracts issued prior to April 16, 1990, the charge is 8% in the first year and declines a specified amount each year. After the ninth year, the charge is 0%. For single premium contracts issued on or after April 16, 1990, the charge is 8.5% in the first year and declines a specified amount each year. After the ninth year, the charge is 0%.

For multiple payment contracts and flexible premium contracts, the amount is calculated based upon the initial specified amount and varies by issue age, sex and rate class. The charge is 100% of the initial surrender charge in the first year and declines a specified amount each year. After the ninth year, the charge is 0%. However, if a policy’s specified amount increases, the amount of the increase will have a nine-year surrender charge period.

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)

8

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

(3) Asset Charges

For single premium contracts, the Company deducts a charge from the contract to cover mortality and expense risk charges related to operations, and to recover policy maintenance and premium tax charges. For contracts issued prior to April 16, 1990, the charge is equal to an annual rate of 0.95% during the first ten policy years, and 0.50% thereafter (Reduced Fee). A reduction of charges on these contracts is possible in policy years six through ten for those contracts achieving certain investment performance criteria. For single premium contracts issued on or after April 16, 1990, the charge is equal to an annual rate of 1.30% during the first ten policy years, and 1.00% thereafter (Reduced Fee).

For multiple payment contracts and flexible premium contracts, the Company deducts a charge equal to an annual rate of 0.80%, with certain exceptions, to cover mortality and expense risk charges related to operations.

The above charges are assessed through the daily unit value calculation.

The following table provides mortality, expense and administration charges by contract type for the period ended December 31, 2005.

	Total		VKEmGr	VKEnt	VKGov	VKMMkt
Single Premium contracts issued on or after April 16, 1990	$	389,770	16,239	149,071	189,203	23,293
Multiple Payment and Flexible Premium contracts		1,446	233	671	499	43
Reduced Fee		1,200	323	619	258	–
Total	$	392,416	16,795	150,361	189,960	23,336
	VKUSRealEst
Single Premium contracts issued on or after April 16, 1990	$	11,964
Multiple Payment and Flexible Premium contracts		–
Reduced Fee		–
Total	$	11,964

(4) Death Benefits

Death benefit proceeds result in a redemption of the contract value from the Account and payment of those proceeds, less any outstanding policy loans (and policy charges), to the legal beneficiary. For last survivor flexible premium contracts, the proceeds are payable on the death of the last surviving insured. In the event that the guaranteed death benefit exceeds the contract value on the date of death, the excess is paid by the Company’s general account.

(5) Policy Loans (Net of Repayments)

Contract provisions allow contract owners to borrow up to 90% (50% during the first year of single premium contracts) of a policy’s cash surrender value. For single premium contracts issued prior to April 16, 1990, 5.0% interest is due and payable annually in advance. For single premium contracts issued on or after April 16, 1990, multiple payment contracts and flexible premium contracts, 5.1% interest is due and payable in advance on the policy anniversary when there is a loan outstanding on the policy.

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. Loan repayments result in a transfer of collateral, including interest, back to the Account.

(Continued)

9

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

(6) Related Party Transactions

The Company performs various services on behalf of the Mutual Fund Companies in which the Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, preparation, postage, fund transfer agency and various other record keeping and customer service functions. These fees are paid to an affiliate of the Company.

Contract owners may, with certain restrictions, transfer their assets between the Account and a fixed dollar contract (fixed account) maintained in the accounts of the Company. These transfers are the result of the contract owner executing fund exchanges. Fund exchanges from the Account to the fixed account are included in surrenders, and fund exchanges from the fixed account to the Account are included in purchase payments received from contact owners, as applicable, on the accompanying Statements of Change in Contract Owners’ Equity.

Policy loan transactions (note 5), executed at the direction of the contract owner, also result in transfers between the Account and the fixed account of the Company. The fixed account assets are not reflected in the accompanying financial statements.

For the periods ended December 31, 2005 and 2004, total transfers into the Account from the fixed account were $5,297,355 and $5,037,565, respectively, and total transfers from the Account to the fixed account were $1,898,560 and $1,996,514, respectively.

(Continued)

10

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

(7) Financial Highlights

The following is a summary of units, unit fair values and contract owners’ equity outstanding for variable life and annuity contracts as of the end of the periods indicated, and the contract expense rate, investment income ratio and total return for each period in the five year period ended December 31, 2005.

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Single Premium contracts issued prior to April 16, 1990 (policy years 11 and thereafter)
Van Kampen LIT – Asset Allocation Fund
2001	0.50%	574,263	$	34.355825	$	19,729,279	4.05%	-2.09%
Van Kampen LIT – Domestic Income Fund
2001	0.50%	51,720		24.359872		1,259,893	6.82%	9.42%
Van Kampen LIT – Global Equity Fund
2001	0.50%	73,350		15.404703		1,129,935	0.00%	-15.39%
Van Kampen LIT I – Emerging Growth Portfolio – Class I
2005	0.50%	133,060		26.728516		3,556,496	0.26%	7.40%
2004	0.50%	137,222		24.888027		3,415,185	0.00%	6.50%
2003	0.50%	154,582		23.368945		3,612,418	0.00%	26.71%
2002	0.50%	130,494		18.442857		2,406,682	0.30%	-32.82%
2001	0.50%	121,395		27.453840		3,332,759	0.10%	-31.84%
Van Kampen LIT I – Enterprise Portfolio – Class I
2005	0.50%	812,408		37.273548		30,281,329	0.73%	7.61%
2004	0.50%	886,622		34.636713		30,709,672	0.39%	3.53%
2003	0.50%	977,608		33.454750		32,705,631	0.51%	25.25%
2002	0.50%	1,043,372		26.710140		27,868,612	0.35%	-29.68%
2001	0.50%	609,563		37.985117		23,154,322	0.19%	-20.82%
Van Kampen LIT I – Government Portfolio – Class I
2005	0.50%	1,216,044		30.593826		37,203,439	4.07%	3.02%
2004	0.50%	1,314,678		29.696262		39,041,022	4.82%	3.65%
2003	0.50%	1,421,996		28.650758		40,741,263	4.58%	1.24%
2002	0.50%	1,581,163		28.300411		44,747,563	4.30%	9.07%
2001	0.50%	1,595,659		25.947594		41,403,512	5.65%	6.38%
Van Kampen LIT I – Money Market Portfolio – Class I
2005	0.50%	197,554		20.922581		4,133,340	2.64%	2.16%
2004	0.50%	233,588		20.480823		4,784,074	0.80%	0.30%
2003	0.50%	261,220		20.420120		5,334,144	0.58%	0.07%
2002	0.50%	318,016		20.405966		6,489,424	1.29%	0.72%
2001	0.50%	322,892		20.261037		6,542,127	3.55%	3.17%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	0.50%	58,882		45.748974		2,693,791	1.29%	16.47%
2004	0.50%	61,490		39.279791		2,415,314	1.75%	35.71%
2003	0.50%	64,607		28.942872		1,869,912	0.00%	36.83%
2002	0.50%	54,884		21.153029		1,160,963	4.55%	-1.28%
2001	0.50%	22,883		21.427704		490,330	4.01%	9.29%
Multiple Payment contracts and Flexible Premium contracts
Van Kampen LIT – Asset Allocation Fund
2001	0.80%	5,005		26.122489		130,743	4.05%	-2.38%
Van Kampen LIT I – Emerging Growth Portfolio – Class I
2004	0.80%	2,102		24.279081		51,035	0.00%	6.18%
2003	0.80%	149		22.865645		3,407	0.00%	26.33%
2002	0.80%	2,226		18.099781		40,290	0.30%	-33.02%
Van Kampen LIT I – Enterprise Portfolio – Class I
2005	0.80%	1,338		29.203243		39,074	0.73%	7.29%
2004	0.80%	3,222		27.218605		87,698	0.39%	3.22%
2003	0.80%	1,562		26.368770		41,188	0.51%	24.88%
2002	0.80%	5,022		21.115891		106,044	0.35%	-29.89%
2001	0.80%	4,260		30.119826		128,310	0.19%	-21.06%

(Continued)

11

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Van Kampen LIT I – Government Portfolio – Class I
2004	0.80%	1,882	$	21.289315	$	40,066	4.82%	3.34%
2003	0.80%	156		20.601507		3,214	4.58%	0.93%
2002	0.80%	3,005		20.410749		61,334	4.30%	8.74%
Single Premium contracts issued prior to April 16, 1990 (policy years 1 through 10)
Van Kampen LIT I – Emerging Growth Portfolio – Class I
2005	0.95%	62		25.590678		1,587	0.26%	6.91%
2004	0.95%	62		23.935663		1,484	0.00%	6.02%
2003	0.95%	61		22.576045		1,377	0.00%	26.14%
2002	0.95%	61		17.897336		1,092	0.30%	-33.12%
2001	0.95%	61		26.762212		1,632	0.10%	-32.14%
Van Kampen LIT I – Government Portfolio – Class I
2005	0.95%	310		29.289798		9,080	4.07%	2.56%
2004	0.95%	310		28.558351		8,853	4.82%	3.18%
2003	0.95%	2,380		27.677182		65,872	4.58%	0.78%
2002	0.95%	2,380		27.462076		65,360	4.30%	8.58%
2001	0.95%	1,938		25.292479		49,017	5.65%	5.90%
Van Kampen LIT I – Money Market Portfolio – Class I
2001	0.95%	830		19.750753		16,393	3.55%	2.71%
Van Kampen LIT I – Emerging Growth Portfolio – Class I
2005	1.00%	4,560		4.858180		22,153	0.26%	6.86%
Van Kampen LIT I – Enterprise Portfolio – Class I
2005	1.00%	10,504		6.259359		65,748	0.73%	7.08%
Van Kampen LIT I – Government Portfolio – Class I
2005	1.00%	3,380		12.780417		43,198	4.07%	2.51%
Van Kampen LIT I – Money Market Portfolio – Class I
2005	1.00%	408		10.537364		4,299	2.64%	1.64%
Single Premium contracts issued on or after April 16, 1990
Van Kampen LIT – Asset Allocation Fund
2001	1.30%	1,452		28.280541		41,063	4.05%	-2.87%
Van Kampen LIT – Domestic Income Fund
2001	1.30%	408		23.069404		9,412	6.82%	8.55%
Van Kampen LIT – Global Equity Fund
2001	1.30%	255		14.679267		3,743	0.00%	-16.07%
Van Kampen LIT I – Emerging Growth Portfolio – Class I
2004	1.30%	914		23.153190		21,162	0.00%	5.65%
2003	1.30%	808		21.914572		17,707	0.00%	25.70%
2002	1.30%	279		17.433772		4,864	0.30%	-33.36%
2001	1.30%	301		26.160663		7,874	0.10%	-32.38%
Van Kampen LIT I – Enterprise Portfolio – Class I
2004	1.30%	2,048		30.496180		62,456	0.39%	2.71%
2003	1.30%	1,765		29.692096		52,407	0.51%	24.25%
2002	1.30%	1,397		23.896221		33,383	0.35%	-30.24%
2001	1.30%	548		34.256946		18,773	0.19%	-21.46%
Van Kampen LIT I – Government Portfolio – Class I
2004	1.30%	2,046		20.983996		42,933	4.82%	2.82%
2003	1.30%	1,447		20.407835		29,530	4.58%	0.43%
2002	1.30%	2,740		20.320238		55,677	4.30%	8.20%
2001	1.30%	2,789		18.780467		52,379	5.65%	5.53%
Van Kampen LIT I – Money Market Portfolio – Class I
2004	1.30%	268		14.165845		3,796	0.80%	-0.50%
2003	1.30%	17,874		14.237315		254,478	0.58%	-0.73%
2002	1.30%	17,772		14.341737		254,881	1.29%	-0.09%
2001	1.30%	15,742		14.354254		225,965	3.55%	2.35%

(Continued)

12

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

	Contract Owners’ Equity
Contract Owners’ Equity Total By Year
2005	$	78,053,534
2004	$	80,684,750
2003	$	84,732,548
2002	$	83,296,169
2001	$	97,727,461

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

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

***  This represents the total return for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit value for expenses assessed. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.

13

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

    Contract Owners of Nationwide VLI Separate Account:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide VLI Separate Account (comprised of the sub-accounts listed in note 1(b)) (collectively, “the Account”) as of December 31, 2005, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Account as of December 31, 2005, and the results of its operations, changes in contract owners’ equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

Columbus, Ohio

March 8, 2006

14

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

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