485BPOS 1 nationwideselect.htm NATIONWIDE SELECT nationwideselect.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                                                                                                   File No.  033-82174

Pre-Effective Amendment No.
o


Post-Effective Amendment No. 18
þ

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940                                                                           File No.  811-8666

Amendment No. 55
þ

(Check appropriate box or boxes.)


NATIONWIDE VARIABLE ACCOUNT – 7
(Exact Name of Registrant)


NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)


One Nationwide Plaza, Columbus, Ohio 43215
(Address of Depositor's Principal Executive Offices)                                                                                                (Zip Code)


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



Thomas E. Barnes, SVP and Secretary, One Nationwide Plaza, Columbus, Ohio 43215
(Name and Address of Agent for Service)



Approximate Date of Proposed Public Offering
May 1, 2008


It is proposed that this filing will become effective (check appropriate box)
o      immediately upon filing pursuant to paragraph (b)
þ      on May 1, 2008 pursuant to paragraph (b)
o      60 days after filing pursuant to paragraph (a)(1)
o      on (date) pursuant to paragraph (a)(1)
If appropriate, check the following box:
o      this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered
Modified Single Premium Deferred Variable Annuity Contract





Nationwide Select SM
Nationwide Life Insurance Company
Individual Modified Single Premium Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its Nationwide Variable Account-7
The date of this prospectus is May 1, 2008.

This prospectus contains basic information you should understand about the contracts before investing. Please read this prospectus carefully and keep it for future reference.
 
Variable annuities are complex investment products with unique benefits and advantages that may be particularly useful in meeting long-term savings and retirement needs. There are costs and charges associated with these benefits and advantages - costs and charges that are different, or do not exist at all, within other investment products. With help from financial consultants and advisers, investors are encouraged to compare and contrast the costs and benefits of the variable annuity described in this prospectus against those of other investment products, especially other variable annuity and variable life insurance products offered by Nationwide and its affiliates. Nationwide offers a wide array of such products, many with different charges, benefit features and underlying investment options. This process of comparison and analysis should aid in determining whether the purchase of the contract described in this prospectus is consistent with your investment objectives, risk tolerance, investment time horizon, marital status, tax situation and other personal characteristics and needs.
 
The Statement of Additional Information (dated May 1, 2008) which contains additional information about the contracts and the variable account, has been filed with the Securities and Exchange Commission ("SEC") and is incorporated herein by reference.  The table of contents for the Statement of Additional Information is on page 29.  For general information or to obtain free copies of the Statement of Additional Information, call Nationwide's service center at 1-800-848-6331 (TDD 1-800-238-3035) or write:
 
Nationwide Life Insurance Company
5100 Rings Road, RR1-04-F4
Dublin, Ohio 43017-1522
 
Information about this and other Nationwide products can be found at: www.nationwide.com.
 
Information about us and the product (including the Statement of Additional Information) may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 100 F Street NE, Washington, D.C. 20549-0102.  Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090.  The SEC also maintains a web site (www.sec.gov) that contains the prospectus, the SAI, material incorporated by reference, and other information.
 
Before investing, understand that annuities and/or life insurance products are not insured by the FDIC or any other Federal government agency, and are not deposits or obligations of, guaranteed by, or insured by the depository institution where offered or any of its affiliates.  Annuities that involve investment risk may lose value.  These securities have not been approved or disapproved by the SEC, nor has the SEC passed upon the accuracy or adequacy of the prospectus.  Any representation to the contrary is a criminal offense.

 
The following is a list of the underlying mutual funds available under the contract.
 
Fidelity Variable Insurance Products Fund
·  
VIP Asset Manager Portfolio: Initial Class
·  
VIP Asset Manager: Growth Portfolio: Initial Class
·  
VIP Balanced Portfolio: Initial Class
·  
VIP Equity-Income Portfolio: Initial Class*
·  
VIP Growth & Income Portfolio: Initial Class
·  
VIP Growth Opportunities Portfolio: Initial Class
·  
VIP Growth Portfolio: Initial Class
·  
VIP High Income Portfolio: Initial Class R†
·  
VIP Index 500 Portfolio: Initial Class
·  
VIP Investment Grade Bond Portfolio: Initial Class*
·  
VIP Money Market Portfolio: Initial Class
·  
VIP Overseas Portfolio: Initial Class
 
The following underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2008:
 
Fidelity Variable Insurance Products Fund
·  
VIP Contrafund® Portfolio: Initial Class
 
Effective May 1, 2007, the following underlying mutual fund is no longer available to receive transfers or new purchase payments:
 
Fidelity Variable Insurance Products Fund
·  
VIP High Income Portfolio: Initial Class*
 
*These underlying mutual funds may invest in lower quality debt securities commonly referred to as junk bonds.
 
 
†These underlying mutual funds assess a short-term trading fee.
 
Purchase payments not invested in the underlying mutual fund options of the Nationwide Variable Account-7 ("variable account") may be allocated to the fixed account.

      
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Accumulation unit - An accounting unit of measure used to calculate the contract value allocated to the variable account before the annuitization date.
 
Annuitization date - The date on which annuity payments begin.
 
Annuity commencement date - The date on which annuity payments are scheduled to begin. This date may be changed by the contract owner with Nationwide’s consent.
 
Annuity unit - An accounting unit of measure used to calculate the variable annuity payments.
 
Contract value - The total value of all accumulation units in a contract plus any amount held in the fixed account and any amounts transferred as a loan to the collateral fixed account.
 
Contract year - Each year the contract is in force beginning with the date the contract is issued.
 
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
 
FDIC - Federal Deposit Insurance Corporation.
 
Fixed account- An investment option that is funded by the general account of Nationwide.
 
General account- All assets of Nationwide other than those of the variable account or in other separate accounts that have been or may be established by Nationwide.
 
Individual Retirement Account- An account that qualifies for favorable tax treatment under Section 408(a) of the Internal Revenue Code, but does not include Roth IRAs.
 
Individual Retirement Annuity - An annuity contract that qualifies for favorable tax treatment under Section 408(b) of the Internal Revenue Code, but does not include Roth IRAs.
 
Investment-only Contract- A contract purchased by a Qualified Pension, Profit-Sharing or Stock Bonus Plan as defined by Section 401(a) if the Internal Revenue Code.
 
Nationwide - Nationwide Life Insurance Company.
 
Net asset value- The value of one share of an underlying mutual fund at the close of the New York Stock Exchange.
 
Non-Qualified Contract - A contract which does not qualify for favorable tax treatment as an Individual Retirement Annuity, Roth IRA, or Tax Sheltered Annuity.
 
Qualified Plans - Retirement plans that receive favorable tax treatment under Section 401 of the Internal Revenue Code, including Investment-only Contracts.  In this prospectus, all provisions applicable to Qualified Plans also apply to Investment-only Contracts unless specifically stated otherwise.
 
Roth IRA - An annuity contract which qualifies for favorable tax treatment under Section 408A of the Internal Revenue Code.
 
SEC - Securities and Exchange Commission.
 
Sub-accounts - Divisions of the variable account to and for which accumulation units and annuity units are separately maintained - each sub-account corresponds to a single underlying mutual fund.
 
Tax Sheltered Annuity - An annuity that qualifies for favorable tax treatment under Section 403(b) of the Internal Revenue Code.
 
Valuation date - Each day the New York Stock Exchange is open for business, or any other day during which there is a sufficient degree of trading of underlying mutual fund shares such that the current Net asset value of accumulation units or annuity units might be materially affected.  Values of the variable account are determined as of the close of the New York Stock Exchange which generally closes at 4:00 p.m. Eastern Time, but may close earlier on certain days and as conditions warrant.
 
Valuation period - The period of time commencing at the close of a Valuation date and ending at the close of the New York Stock Exchange for the next succeeding Valuation date.
 
Variable account - Nationwide Variable Account-7, a separate account of Nationwide that contains variable account allocations.  The variable account is divided into sub-accounts, each of which invests in shares of a separate underlying mutual fund.


      
               
    
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Table of Contents
Page
Glossary of Special Terms                                                                                                                                                       
2
Contract Expenses                                                                                                                                                       
5
Underlying Mutual Fund Annual Expenses                                                                                                                                                       
6
Example                                                                                                                                                       
6
Synopsis of the Contracts                                                                                                                                                       
6
Minimum Initial and Subsequent Purchase Payments
 
Purpose of the Contract
 
Charges and Expenses
 
Annuity Payments
 
Taxation
 
Ten Day Free Look
 
Financial Statements                                                                                                                                                       
7
Condensed Financial Information                                                                                                                                                       
7
Nationwide Life Insurance Company                                                                                                                                                       
8
Nationwide Investment Services Corporation                                                                                                                                                       
8
Investing in the Contract                                                                                                                                                       
8
The Variable Account and Underlying Mutual Funds
 
The Fixed Account
 
The Contract in General                                                                                                                                                       
10
Distribution, Promotional and Sales Expenses
 
Underlying Mutual Fund Payments
 
Profitability
 
Contract Modification
 
Standard Charges and Deductions                                                                                                                                                       
11
Mortality and Expense Risk Charge
 
Administration Charge
 
Contingent Deferred Sales Charge
 
Premium Taxes
 
Short-Term Trading Fees
 
Optional Contract Benefits, Charges and Deductions                                                                                                                                                       
13
Optional Death Benefits
 
Contract Ownership                                                                                                                                                       
14
Joint Ownership
 
Contingent Ownership
 
Annuitant
 
Beneficiary and Contingent Beneficiary
 
Operation of the Contract                                                                                                                                                       
15
Minimum Initial and Subsequent Purchase Payments
 
Pricing
 
Allocation of Purchase Payments
 
Determining the Contract Value
 
Transfers Prior to Annuitization
 
Transfers After Annuitization
 
Transfer Requests
 
Transfer Restrictions
 
Right to Revoke                                                                                                                                                       
18
Surrender (Redemption) Prior to Annuitization                                                                                                                                                       
18
Partial Surrenders (Partial Redemptions)
 
Full Surrenders (Full Redemptions)
 
Surrenders Under a Tax Sheltered Annuity
 
Surrenders Under a Texas Optional Retirement Program or a Louisiana Optional Retirement Plan
 
Loan Privilege                                                                                                                                                       
19
Minimum and Maximum Loan Amounts
 
Maximum Loan Processing Fee
 

      
       
    
3



Table of Contents (continued)
Page
How Loan Requests are Processed                                                                                                                                                       
20
Loan Interest
 
Loan Repayment
 
Distributions and Annuity Payments
 
Transferring the Contract
 
Grace Period and Loan Default
 
Assignment                                                                                                                                                       
20
Contract Owner Services                                                                                                                                                       
21
Asset Rebalancing
 
Dollar Cost Averaging
 
Systematic Withdrawals
 
Annuity Commencement Date                                                                                                                                                       
22
Annuitizing the Contract                                                                                                                                                       
22
Annuitization Date
 
Annuitization
 
Fixed Payment Annuity
 
Variable Payment Annuity
 
Frequency and Amount of Annuity Payments
 
Annuity Payment Options
 
Death Benefits                                                                                                                                                       
23
Death of Contract Owner – Non-Qualified Contracts
 
Death of Annuitant – Non-Qualified Contracts
 
Death of Contract Owner/Annuitant
 
How the Death Benefit Value is Determined
 
Death Benefit Payments
 
Statements and Reports                                                                                                                                                       
25
Legal Proceedings                                                                                                                                                       
25
Table of Contents of Statement of Additional Information                                                                                                                                                       
29
Appendix A: Underlying Mutual Funds                                                                                                                                                       
30
Appendix B: Condensed Financial Information                                                                                                                                                       
32
Appendix C: Contract Types and Tax Information                                                                                                                                                       
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The following tables describe the fees and expenses that a contract owner will pay when buying, owning, or surrendering the contract.
 
The first table describes the fees and expenses a contract owner will pay at the time the contract is purchased, surrendered, or when cash value is transferred between investment options.
 
Contract Owner Transaction Expenses
Maximum Contingent Deferred Sales Charge ("CDSC") (as a percentage of purchase payments surrendered)
7%1
 
Number of Completed Years from Date of Purchase Payment
0
1
2
3
4
5
6
7
 
 
CDSC Percentage
7%
6%
5%
4%
3%
2%
1%
0%
 
Some state jurisdictions require a lower CDSC schedule. Please refer to your contract for state specific information.
 
Maximum Loan Processing Fee                                                                                                                                                  
$252
Maximum Premium Tax Charge (as a percentage of purchase payments)                                                                                                                                                  
5%3
 
The next table describes the fees and expenses that a contract owner will pay periodically during the life of the contract (not including underlying mutual fund fees and expenses).
 
Recurring Contract Expenses
Annual Loan Interest Charge                                                                                                                                                  
2.25%4
Variable Account Annual Expenses (annualized rate of total variable account charges as a percentage of the
daily net assets)5
 
Mortality and Expense Risk Charge                                                                                                                                             
1.25%
Administration Charge                                                                                                                                             
0.15%
Total Variable Account Annual Expenses                                                                                                                                       
1.40%
Death Benefit Options6 (an applicant may elect one)
 
Optional Long Term Care Facility and One-Year Step Up Death Benefit                                                                                                                                       
Total Variable Account Charges (including this option only)                                                                                                                                       
0.05%
1.45%
Optional Long Term Care Facility and 5% Enhanced Death Benefit                                                                                                                                       
Total Variable Account Charges (including this option only)                                                                                                                                       
0.10%
1.50%
 
The next table shows the fees and expenses that a contract owner would pay if he/she elected all of the optional benefits available under the contract.
 
Summary of Maximum Contract Expenses
Mortality and Expense Risk Charge (applicable to all contracts)                                                                                                                                                  
1.25%
Administrative Charge (applicable to all contracts)                                                                                                                                                  
0.15%
Optional Long Term Care Facility and 5% Enhanced Death Benefit                                                                                                                                                  
0.10%
Maximum Possible Total Variable Account Charges                                                                                                                                                  
1.50%
5


 
 
The next table shows the minimum and maximum total operating expenses as of December 31, 2007 charged by the underlying mutual funds periodically during the life of the contract.  The table does not reflect Short-Term Trading Fees.  More detail concerning each underlying mutual fund’s fees and expenses, including waivers and reimbursements, is contained in the prospectus for each underlying mutual fund.
 
Total Annual Underlying Mutual Fund Operating Expenses
Minimum
Maximum
     
(expenses that are deducted from underlying mutual fund assets, including management fees, distribution (12b-1) fees, and other expenses as a percentage of average underlying mutual fund assets)
0.10%
0.85%
The minimum and maximum underlying mutual fund operating expenses indicated above do not reflect voluntary or contractual reimbursements and/or waivers applied to some underlying mutual funds.  Therefore, actual expenses could be lower.  Refer to the underlying mutual fund prospectuses for specific expense information.
 
 


 
1 Each contract year, the contract owner may withdraw without a CDSC the greater of:
(1)  10% of all purchase payments made to the contract; or
(2)  any amount withdrawn to meet minimum distribution requirements under the Internal Revenue Code.
This free withdrawal privilege is non-cumulative.  Free amounts not taken during any given contract year cannot be taken as free amounts in a subsequent contract year.
The Internal Revenue Code may impose restrictions on surrenders from contracts issued as Tax Sheltered Annuities.
 
2 Nationwide may assess a loan processing fee at the time each new loan is processed.  Currently, Nationwide does not assess a loan processing fee.  Loans are only available for contracts issued as Tax Sheltered Annuities.  Loans are not available in all states.  In addition, some states may not permit Nationwide to assess a loan processing fee.
 
3 Nationwide will charge between 0% and 5% of purchase payments for premium taxes levied by state or other government entities.
 
4 The loan interest rate is determined, based on market conditions, at the time of loan application or issuance.  The loan balance in the collateral fixed account is credited with interest at 2.25% less than the loan interest rate.  Thus, the net loan interest charge is an annual rate of 2.25%, which is applied against the outstanding loan balance.
 
5 These charges apply only to sub-account allocations.  They do not apply to allocations made to the fixed account.  They are charged on a daily basis at the annualized rate noted above.
 
6 Unless otherwise indicated, optional benefits must be elected at the time of application and once elected, optional benefits may not be removed from the contract.
 
 
This Example is intended to help contract owners compare the cost of investing in the contract with the cost of investing in other variable annuity contracts.  These costs include contract owner transaction expenses, contract fees, variable account annual expenses, and underlying mutual fund fees and expenses.  The example does not reflect premium taxes or Short-Term Trading Fees which, if reflected, would result in higher expenses.
 
The Example assumes:
·  
a $10,000 investment in the contract for the time periods indicated;
·  
a 5% return each year;
·  
the maximum and the minimum fees and expenses of any of the underlying mutual funds;
·  
the CDSC schedule; and
·  
the total variable account charges associated with the most expensive combination of optional benefits (1.50%).
 
 
If you surrender your contract
at the end of the applicable
time period
If you do not
surrender
your contract
If you annuitize your contract
at the end of the applicable
time period
 
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
Maximum Total Underlying Mutual Fund Operating Expenses (0.85%)
787
1,119
1,478
2,769
247
759
1,298
2,769
*
759
1,298
2,769
Minimum Total Underlying Mutual Fund Operating Expenses (0.10%)
708
881
1,078
1,955
168
521
898
1,955
*
521
898
1,955
 
*The contracts sold under this prospectus do not permit annuitization during the first two contract years.

 
The contracts described in this prospectus are modified single purchase payment contracts.  The contracts may be issued as either individual or group contracts.  In those states where contracts are issued as group contracts, references throughout this prospectus to "contract(s)" will also mean "certificate(s)" and references to "contract owner" will mean "participant."
 
The contracts can be categorized as:

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·  
Individual Retirement Annuities ("IRAs"), with contributions rolled over or transferred from certain tax-qualified plans;
·  
Investment-only Contracts (Qualified Plans)
·  
Non-Qualified Contract;
·  
Roth IRAs; or
·  
Tax Sheltered Annuities, with contributions rolled over or transferred from other Tax Sheltered Annuity plans.
 
For more detailed information with regard to differences in contract types, please see "Types of Contracts" in Appendix C.
 
Minimum Initial and Subsequent Purchase Payments
 
Contract
Type
Minimum Initial Purchase Payment
Minimum Subsequent Payments
IRA
$15,000
$1,000
Non-Qualified Contract
$15,000
$1,000
Roth IRA
$15,000
$1,000
Tax Sheltered Annuity*
$15,000
$1,000
Investment-only Contract (Qualified Plan)
 
$15,000
 
$1,000
 
*  Only available for individual 403(b) Tax Sheltered Annuity contracts subject to ERISA and certain state Optional Retirement Plans and/or Programs that have purchased at least one individual annuity contract issued by Nationwide prior to September 25, 2007.
 
Purpose of the Contract
 
The annuity described in this prospectus is intended to provide benefits to a single individual and his/her beneficiaries.  It is not intended to be used:
 
·  
by institutional investors;
·  
in connection with other Nationwide contracts that have the same annuitant; or
·  
in connection with other Nationwide contracts that have different annuitants, but the same contract owner.
 
By providing these annuity benefits, Nationwide assumes certain risks.  If Nationwide determines that the risks it intended to assume in issuing the contract have been altered by misusing the contract as described above, Nationwide reserves the right to take any action it deems necessary to reduce or eliminate the altered risk, including, but not limited to, rescinding the contract and returning the contract value (less any applicable Contingent Deferred Sales Charge).  Nationwide also reserves the right to take any action it deems necessary to reduce or eliminate altered risk resulting from materially false, misleading, incomplete or otherwise deficient information provided by the contract owner.
 
Charges and Expenses
 
Nationwide deducts a mortality and expense risk charge equal to an annualized rate of 1.25% of the daily net assets of the variable account.  Nationwide assesses this charge in return for bearing certain mortality and expense risks.
 
Nationwide deducts an administration charge equal to an annualized rate of 0.15% of the daily net assets of the variable account.  Nationwide assesses this charge for reimbursement of administrative expenses relating to contract issuance and maintenance.
 
Nationwide does not deduct a sales charge from purchase payments upon deposit into the contract.  However, Nationwide may deduct a Contingent Deferred Sales Charge ("CDSC") if any amount is withdrawn from the contract.  This CDSC reimburses Nationwide for sales expenses.  The amount of the CDSC will not exceed 7% of purchase payments surrendered.
 
Two optional death benefits are available to contract owners at the time of application.  Nationwide will deduct a charge equal to an annualized rate of 0.05% of the daily net assets of the variable account if the One-Year Step Up Death Benefit is elected, or a charge equal to an annualized rate of 0.10% of the daily net assets of the variable account if the 5% Enhanced Death Benefit is elected.  For more information about the standard and optional death benefit(s), please see the "Death Benefit Payments" provision.
 
Annuity Payments
 
Annuity payments begin on the annuitization date and will be based on the annuity payment option chosen prior to annuitization.  Annuity payments will generally be received within 7 to 10 days after each annuity payment date.
 
Taxation
 
How the contracts are taxed depends on the type of contract issued and the purpose for which the contract is purchased.  Nationwide will charge against the contract any premium taxes levied by any governmental authority (see "Federal Tax Considerations" in Appendix C and "Premium Taxes").
 
Ten Day Free Look
 
Under state insurance laws, you have the right, during a limited period of time, to examine your contract and decide if you want to keep it or cancel it. This right is referred to as your “free look” right. The length of this time period depends on the law of your state, and may vary depending on whether your purchase is replacing another annuity contract you own. Check your contract for more details about the free look right in your state. See “Right to Revoke” later in this prospectus for more information.
 
 
Financial statements for the variable account and the consolidated financial statements for Nationwide are located in the Statement of Additional Information.  A current Statement of Additional Information may be obtained without charge by contacting Nationwide’s home office at the telephone number listed on page 1 of this prospectus.
 
 
The value of an accumulation unit is determined on the basis of changes in the per share value of the underlying mutual funds and variable account charges (for more information on the calculation of accumulation unit values, see "Determining Variable Account Value – Valuing an Accumulation Unit").

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Please refer to Appendix B for information regarding each class of accumulation units.
 
 
Nationwide is a stock life insurance company organized under Ohio law in March, 1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.  Nationwide is a provider of life insurance, annuities and retirement products.  It is admitted to do business in all states, the District of Columbia and Puerto Rico.
 
Nationwide is a member of the Nationwide group of companies.  Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (the "Companies") are the ultimate controlling persons of the Nationwide group of companies.  The Companies were organized under Ohio law in December 1925 and 1933 respectively.  The Companies engage in a general insurance and reinsurance business, except life insurance.
 
 
The contracts are distributed by the general distributor, Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza, Columbus, Ohio 43215.  NISC is a wholly owned subsidiary of Nationwide.
 
 
The Variable Account and Underlying Mutual Funds
 
Nationwide Variable Account-7 is a variable account that invests in the underlying mutual funds listed in Appendix A.  Nationwide established the variable account on July 22, 1994, pursuant to Ohio law.  Although the variable account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of Nationwide or the variable account.
 
Income, gains, and losses credited to, or charged against, the variable account reflect the variable account’s own investment experience and not the investment experience of Nationwide’s other assets.  The variable account’s assets are held separately from Nationwide’s assets and are not chargeable with liabilities incurred in any other business of Nationwide.  Nationwide is obligated to pay all amounts promised to contract owners under the contracts.
 
The variable account is divided into sub-accounts, each corresponding to a single underlying mutual fund.  Nationwide uses the assets of each sub-account to buy shares of the underlying mutual funds based on contract owner instructions.
 
Contract owners receive underlying mutual fund prospectuses when they make their initial sub-account allocations and any time they change those allocations. Contract owners can obtain prospectuses for underlying funds at any other time by contacting Nationwide’s home office at the telephone number listed on page 1 of this prospectus.Underlying mutual funds in the variable account are NOT publicly traded mutual funds.  They are only 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.
 
The investment advisers of the underlying mutual funds may manage publicly traded mutual funds with similar names and investment objectives.  However, the underlying mutual funds are NOT directly related to any publicly traded mutual fund.  Contract owners should not compare the performance of a publicly traded fund with the performance of underlying mutual funds participating in the variable account.  The performance of the underlying mutual funds could differ substantially from that of any publicly traded funds.
 
The particular underlying mutual funds available under the contract may change from time to time.  Specifically, underlying mutual funds or underlying mutual fund share classes that are currently available may be removed or closed off to future investment.  New underlying mutual funds or new share classes of currently available underlying mutual funds may be added.  Contract owners will receive notice of any such changes that affect their contract.  Additionally, not all of the underlying mutual funds are available in every state.
 
Voting Rights
 
Contract owners who have allocated assets to the underlying mutual funds are entitled to certain voting rights.  Nationwide will vote contract owner shares at special shareholder meetings based on contract owner instructions.  However, if the law changes and Nationwide is allowed to vote in its own right, it may elect to do so.
 
Contract owners with voting interests in an underlying mutual fund will be notified of issues requiring the shareholders’ vote as soon as possible before the shareholder meeting.  Notification will contain proxy materials and a form with which to give Nationwide voting instructions.  Nationwide will vote shares for which no instructions are received in the same proportion as those that are received.  What this means to you is that when only a small number of contract owners vote, each vote has a greater impact on, and may control the outcome.
 
The number of shares which a contract owner may vote is determined by dividing the cash value of the amount they have allocated to an underlying mutual fund by the Net asset value of that underlying mutual fund.  Nationwide will designate a date for this determination not more than 90 days before the shareholder meeting.
 
Material Conflicts
 
The underlying mutual funds may be offered through separate accounts of other insurance companies, as well as through other separate accounts of Nationwide.  Nationwide does not anticipate any disadvantages to this.  However, it is possible that a conflict may arise between the interests of the variable account and one or more of the other separate accounts in which these underlying mutual funds participate.
 
Material conflicts may occur due to a change in law affecting the operations of variable life insurance policies and variable

8


 
annuity contracts, or differences in the voting instructions of the contract owners and those of other companies.  If a material conflict occurs, Nationwide will take whatever steps are necessary to protect contract owners and variable annuity payees, including withdrawal of the variable account from participation in the underlying mutual fund(s) involved in the conflict.
 
Substitution of Securities
 
Nationwide may substitute, eliminate, or combine shares of another underlying mutual fund for shares already purchased or to be purchased in the future if either of the following occurs:
 
(1)  
shares of a current underlying mutual fund are no longer available for investment; or
 
(2)  
further investment in an underlying mutual fund is inappropriate.
 
No substitution, elimination, or combination of shares may take place without the prior approval of the SEC.  All affected contract owners will be notified in the event there is a substitution, elimination or combination of shares.
 
In February 2008, Nationwide filed an application with the SEC for an order permitting it to substitute assets allocated to certain underlying mutual funds into other underlying mutual funds available under the contract that have similar investment objectives and strategies.  If and when Nationwide receives SEC approval for these substitutions, affected contract owners will be notified in advance of the specific details relating to the substitutions and will be given an opportunity to make alternate investment allocations.
 
Deregistration of the Separate Account
 
Nationwide may deregister Nationwide Variable Account-7 under the 1940 Act in the event the separate account meets an exemption from registration under the 1940 Act, if there are no shareholders in the separate account or for any other purpose approved by the SEC.
 
No deregistration may take place without the prior approval of the SEC.  All contract owners will be notified in the event Nationwide deregisters Variable Account-7.
 
The Fixed Account
 
The fixed account is an investment option that is funded by assets of Nationwide’s general account.  The general account contains all of Nationwide’s assets other than those in this and other Nationwide separate accounts and is used to support Nationwide’s annuity and insurance obligations.  The general account is not subject to the same laws as the variable account and the SEC has not reviewed material in this prospectus relating to the fixed account.
 
Purchase payments will be allocated to the fixed account by election of the contract owner.  Nationwide reserves the right to limit or refuse purchase payments allocated to the fixed account at its sole discretion.  Nationwide reserves the right to refuse transfers into the fixed account if the fixed account value is (or would be after the transfer) equal to or greater than 30% of the contract value at the time the transfer is requested.  Generally, Nationwide will invoke this right when interest rates are low by historical standards.
 
The investment income earned by the fixed account will be allocated to the contracts at varying guaranteed interest rate(s) depending on the following categories of fixed account allocations:
 
·  
New Money Rate – The rate credited on the fixed account allocation when the contract is purchased or when subsequent purchase payments are made.  Subsequent purchase payments may receive different New Money Rates than the rate when the contract was issued, since the New Money Rate is subject to change based on market conditions.
 
·  
Variable Account to Fixed Rate – Allocations transferred from any of the underlying mutual funds in the variable account to the fixed account may receive a different rate.  The rate may be lower than the New Money Rate.  There may be limits on the amount and frequency of movements from the variable account to the fixed account.
 
·  
Renewal Rate – The rate available for maturing fixed account allocations that are entering a new guarantee period.  The contract owner will be notified of this rate in a letter issued with the quarterly statements when any of the money in the contract owner’s fixed account matures.  At that time, the contract owner will have an opportunity to leave the money in the fixed account and receive the Renewal Rate or the contract owner can move the money to any of the underlying mutual fund options.
 
·  
Dollar Cost Averaging – From time to time, Nationwide may offer a more favorable rate for an initial purchase payment into a new contract when used in conjunction with a Dollar Cost Averaging program.
 
All of these rates are subject to change on a daily basis; however, once applied to the fixed account, the interest rates are guaranteed until the end of the calendar quarter during which the 12 month anniversary of the fixed account allocation occurs.
 
Credited interest rates are annualized rates – the effective yield of interest over a one-year period.  Interest is credited to each contract on a daily basis.  As a result, the credited interest rate is compounded daily to achieve the stated effective yield.
 
The guaranteed rate for any purchase payment will be effective for not less than twelve months.  Nationwide guarantees that the rate will not be less than the minimum interest rate required by applicable state law.
 
Any interest in excess of the minimum interest rate required by applicable state law will be credited to fixed account allocations at Nationwide’s sole discretion.  The contract owner assumes the risk that interest credited to fixed account allocations may not exceed the minimum interest rate required by applicable state law.
 
Nationwide guarantees that the fixed account contract value will not be less than the amount of the purchase payments allocated to the fixed account, plus interest credited as described above, less any applicable charges including CDSC.

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Variable annuities are complex investment products with unique benefits and advantages that may be particularly useful in meeting long-term savings and retirement needs.  There are costs and charges associated with these benefits and advantages – costs and charges that are different, or do not exist at all, within other investment products.  With help from financial consultants and advisers, investors are encouraged to compare and contrast the costs and benefits of the variable annuity described in this prospectus against those of other investment products, especially other variable annuity and variable life insurance products offered by Nationwide and its affiliates.
 
Nationwide offers a wide array of such products, many with different charges, benefit features and underlying investment options.  This process of comparison and analysis should aid in determining whether the purchase of the contract described in this prospectus is consistent with your investment objectives, risk tolerance, investment time horizon, marital status, tax situation and other personal characteristics and needs.  Not all benefits, programs, features and investment options described in this prospectus are available or approved for use in every state.
 
In order to comply with the USA Patriot Act and rules promulgated thereunder, Nationwide has implemented procedures designed to prevent contracts described in this prospectus from being used to facilitate money laundering or the financing of terrorist activities.
 
In general, deferred variable annuities are long-term investments; they are not intended as short-term investments.  Accordingly, Nationwide has designed the contract to offer features, pricing, and investment options that encourage long-term ownership.  It is very important that contract owners and prospective contract owners understand all the costs associated with owning a contract, and if and how those costs change during the lifetime of the contract.  Contract and optional charges may not be the same in later contract years as they are in early contract years.  The various contract and optional benefit charges are assessed in order to compensate Nationwide for administrative services, distribution and operational expenses, and assumed actuarial risks associated with the contract.
 
Following is a discussion of some relevant factors that may be of particular interest to prospective investors.
 
Distribution, Promotional and Sales Expenses
 
Nationwide pays commissions to the firms that sell the contracts.  The maximum gross commission that Nationwide will pay on the sale of the contracts is 6.25% of purchase payments.  Note that the individual registered representatives typically receive only a portion of this amount; the remainder is retained by the firm.  Nationwide may also, instead of a premium-based commission, pay an asset-based commission (sometimes referred to as "trails" or "residuals"), or a combination of the two.
 
In addition to or partially in lieu of commission, Nationwide may also pay the selling firms a marketing allowance, which is based on the firm’s ability and demonstrated willingness to promote and market Nationwide's products.  How any marketing allowance is spent is determined by the firm, but generally will be used to finance firm activities that may contribute to the promotion and marketing of Nationwide's products.  For more information on the exact compensation arrangement associated with this contract, please consult your registered representative.
 
Underlying Mutual Fund Payments
 
Nationwide’s Relationship with the Underlying Mutual Funds
 
The underlying mutual funds incur expenses each time they sell, administer, or redeem their shares.  The variable account aggregates contract owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each underlying mutual fund daily.   The variable account (and not the contract owners) is the underlying mutual fund shareholder.  When the variable account aggregates transactions, the underlying mutual fund does not incur the expense of processing individual transactions it would normally incur if it sold its shares directly to the public.  Nationwide incurs these expenses instead.
 
Nationwide also incurs the distribution costs of selling the contract (as discussed above), which benefit the underlying mutual funds by providing contract owners with sub-account options that correspond to the underlying mutual funds.
 
An investment adviser or subadviser of an underlying mutual fund or its affiliates may provide Nationwide or its affiliates with wholesaling services that assist in the distribution of the contract and may pay Nationwide or its affiliates to participate in educational and/or marketing activities.  These activities may provide the adviser or subadviser (or their affiliates) with increased exposure to persons involved in the distribution of the contract.
 
Types of Payments Nationwide Receives
 
In light of the above, the underlying mutual funds and their affiliates make certain payments to Nationwide or its affiliates (the “payments”).  The amount of these payments is typically based on a percentage of assets invested in the underlying mutual funds attributable to the contracts and other variable contracts Nationwide and its affiliates issue, but in some cases may involve a flat fee.  These payments may be used by us for any corporate purpose, which include reducing the prices of the contracts, paying expenses that Nationwide or its affiliates incur in promoting, marketing, and administering the contracts and the underlying mutual funds, and achieving a profit.
 
Nationwide or its affiliates receive the following types of payments:
 
·  
Underlying mutual fund 12b-1 fees, which are deducted from underlying mutual fund assets;
 
·  
Sub-transfer agent fees or fees pursuant to administrative service plans adopted by the underlying mutual fund, which may be deducted from underlying mutual fund assets; and

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·  
Payments by an underlying mutual fund’s adviser or subadviser (or its affiliates).  Such payments may be derived, in whole or in part, from the advisory fee, which is deducted from underlying mutual fund assets and is reflected in mutual fund charges.
 
Furthermore, Nationwide benefits from assets invested in Nationwide’s affiliated underlying mutual funds (i.e., Nationwide Variable Insurance Trust) because its affiliates also receive compensation from the underlying mutual funds for investment advisory, administrative, transfer agency, distribution, and/or other services.  Thus, Nationwide may receive more revenue with respect to affiliated underlying mutual funds than unaffiliated underlying mutual funds.
 
Nationwide took into consideration the anticipated payments from the underlying mutual funds when we determined the charges imposed under the contracts (apart from fees and expenses imposed by the underlying mutual funds).  Without these payments, Nationwide would have imposed higher charges under the contract.
 
Amount of Payments Nationwide Receives
 
For the year ended December 31, 2007, the underlying mutual fund payments Nationwide and its affiliates received from the underlying mutual funds did not exceed 0.65% (as a percentage of the average daily net assets invested in the underlying mutual funds) offered through this contract or other variable contracts that Nationwide and its affiliates issue.  Payments from investment advisers or subadvisers to participate in educational and/or marketing activities have not been taken into account in this percentage.
 
Most underlying mutual funds or their affiliates have agreed to make payments to Nationwide or its affiliates, although the applicable percentages may vary from underlying mutual fund to underlying mutual fund and some may not make any payments at all.  Because the amount of the actual payments Nationwide and its affiliates receive depends on the assets of the underlying mutual funds attributable to the contract, Nationwide and its affiliates may receive higher payments from underlying mutual funds with lower percentages (but greater assets) than from underlying mutual funds that have higher percentages (but fewer assets).
 
For additional information related to amount of payments Nationwide receives, go to www.nationwide.com.
 
Identification of Underlying Mutual Funds
 
Nationwide may consider several criteria when identifying the underlying mutual funds, including some or all of the following:  investment objectives, investment process, investment performance, risk characteristics, investment capabilities, experience and resources, investment consistency, and fund expenses.  Another factor Nationwide considers during the identification process is whether the underlying mutual fund’s adviser or subadviser is one of our affiliates or whether the underlying mutual fund, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates.

 
There may be underlying mutual funds with lower fees, as well as other variable contracts that offer underlying mutual funds with lower fees.  You should consider all of the fees and charges of the contract in relation to its features and benefits when making your decision to invest.  Please note that higher contract and underlying mutual fund fees and charges have a direct effect on your investment performance.
 
Profitability
 
Nationwide does consider profitability when determining the charges in the contract.  In early contract years, Nationwide does not anticipate earning a profit, since that is a time when administrative and distribution expenses are typically higher.  Nationwide does, however, anticipate earning a profit in later contract years.  In general, Nationwide's profit will be greater the higher the investment return and the longer the contract is held.
 
Contract Modification
 
Nationwide may modify the annuity contracts, but no modification will affect the amount or term of any annuity contract unless a modification is required to conform the annuity contract to applicable federal or state law.  No modification will affect the method by which the Contract Values are determined.
 
 
Mortality and Expense Risk Charge
 
Nationwide deducts a mortality and expense risk charge from the variable account.  This amount is computed on a daily basis, and is equal to an annualized rate of 1.25% of the daily net assets of the variable account.
 
The Mortality Risk Charge compensates Nationwide for guaranteeing the annuity purchase rates of the contracts.  This guarantee ensures that the annuity purchase rates will not change regardless of the death rates of annuity payees or the general population.  The mortality risk charge also compensates Nationwide for risks assumed in connection with the standard death benefit, but only partially compensates Nationwide in connection with the two optional death benefits, for which there are separate charges.
 
The Expense Risk Charge compensates Nationwide for guaranteeing that charges will not increase regardless of actual expenses.
 
If the Mortality and Expense Risk charge is insufficient to cover actual expenses, the loss is borne by Nationwide.  Nationwide may realize a profit from this charge.
 
Administration Charge
 
Nationwide deducts an administration charge from the variable account.  This amount is computed on a daily basis and is equal to an annual rate of 0.15% of the daily net assets of the variable account.
 
The administration charge compensates Nationwide for expenses related to contract issuance and maintenance.
 
If this charge is insufficient to cover actual expenses, the loss is borne by Nationwide.

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Contingent Deferred Sales Charge
 
No sales charge deduction is made from the purchase payments when amounts are deposited into the contracts.  However, if any part of the contract is surrendered, Nationwide will deduct a CDSC.  The CDSC will not exceed 7% of purchase payments surrendered.
 
The CDSC is calculated by multiplying the applicable CDSC percentage (noted below) by the amount of purchase payments surrendered.
 
For purposes of calculating the CDSC, surrenders are considered to come first from the oldest purchase payment made to the contract, then the next oldest purchase payment, and so forth.  Earnings are not subject to the CDSC, but may not be distributed prior to the distribution of all purchase payments.  (For tax purposes, a surrender is usually treated as a withdrawal of earnings first.)
 
The CDSC applies as follows:
 
Number of Completed Years From Date of Purchase Payment
CDSC
Percentage
0
7%
1
6%
2
5%
3
4%
4
3%
5
2%
6
1%
7
0%
 
The CDSC is used to cover sales expenses, including commissions, production of sales material, and other promotional expenses.  If expenses are greater than the CDSC, the shortfall will be made up from Nationwide’s general account, which may indirectly include portions of the variable account charges, since Nationwide may generate a profit from these charges.
 
All or a portion of any withdrawal may be subject to federal income taxes.  Contract owners taking withdrawals prior to age 59½ may be subject to a 10% penalty tax.
 
Waiver of Contingent Deferred Sales Charge
 
Each contract year, the contract owner may withdraw without a CDSC the greater of:
 
(a)  
10% of all purchase payments; or
 
(b)  
any amount withdrawn to meet minimum distribution requirements under the Internal Revenue Code.
 
This CDSC-free privilege is non-cumulative.  Free amounts not taken during any given contract year cannot be taken as free amounts in a subsequent contract year.
 
In addition, no CDSC will be deducted:
 
(1)  
upon the annuitization of contracts which have been in force for at least two years;
 
(2)  
upon payment of a death benefit; or
 
(3)  
from any values which have been held under a contract for at least 7 years.
 
No CDSC applies to transfers among sub-accounts or between or among the fixed account and the variable account.
 
The CDSC will not be eliminated if to do so would be unfairly discriminatory or prohibited by state law.
 
This contract is not designed for and does not support active trading strategies.  In order to protect investors in this contract that do not utilize such strategies, Nationwide may initiate certain exchange offers intended to provide contract owners that meet certain criteria with an alternate variable annuity designed to accommodate active trading.  If this contract is exchanged as part of an exchange offer, the exchange will be made on the basis of the relative Net asset values of the exchanged contract.  Furthermore, no CDSC will be assessed on the exchanged assets and Nationwide will "tack" the contract’s CDSC schedule onto the new contract.  This means that the CDSC schedule will not start anew on the exchanged assets in the new contract; rather, the CDSC schedule from the exchanged contract will be applied to the exchanged assets both in terms of percentages and the number of completed contract years.  This enables the contract owner to exchange into the new contract without having to start a new CDSC schedule on exchanged assets.  However, if subsequent purchase payments are made to the new contract, they will be subject to any applicable CDSC schedule that is part of the new contract.
 
Premium Taxes
 
Nationwide will charge against the contract value any premium taxes levied by a state or other government entity.  Premium tax rates currently range from 0% to 5%.  This range is subject to change.  The method used to assess premium tax will be determined by Nationwide at its sole discretion in compliance with state law.
 
If applicable, Nationwide will deduct premium taxes from the contract either at:
 
(1)  
the time the contract is surrendered;
 
(2)  
annuitization; or
 
(3)  
such earlier date as Nationwide becomes subject to premium taxes.
 
Premium taxes may be deducted from death benefit proceeds.
 
Short-Term Trading Fees
 
Some underlying mutual funds may assess (or reserve the right to assess) a short-term trading fee in connection with transfers from a sub-account that occur within 60 days after the date of allocation to the sub-account.
 
Short-term trading fees are intended to compensate the underlying mutual fund (and contract owners with interests allocated in the underlying mutual fund) for the negative impact on fund performance that may result from frequent, short-term trading strategies.  Short-term trading fees are not intended to affect the large majority of contract owners not engaged in such strategies.
 
Any short-term trading fee assessed by any underlying mutual fund available in conjunction with the contracts described in this prospectus will equal 1% of the amount determined to be

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engaged in short-term trading.  Short-term trading fees will only apply to those sub-accounts corresponding to underlying mutual funds that charge such fees (see the underlying mutual fund prospectus).  Any short-term trading fees paid are retained by the underlying mutual fund, not by Nationwide, and are part of the underlying mutual fund’s assets.  Contract owners are responsible for monitoring the length of time allocations are held in any particular underlying mutual fund.  Nationwide will not provide advance notice of the assessment of any applicable short-term trading fee.
 
For a complete list of the underlying mutual funds offered under the contract that assess (or reserve the right to assess) a short-term trading fee, please see "Underlying Mutual Fund Annual Expenses" earlier in this prospectus.
 
If a short-term trading fee is assessed, the underlying mutual fund will charge the variable account 1% of the amount determined to be engaged in short-term trading.  The variable account will then pass the short-term trading fee on to the specific contract owner that engaged in short-term trading by deducting an amount equal to the short-term trading fee from that contract owner’s sub-account value.  All such fees will be remitted to the underlying mutual fund; none of the fee proceeds will be retained by Nationwide or the variable account.
 
When multiple purchase payments (or exchanges) are made to a sub-account that is subject to short-term trading fees, transfers will be considered to be made on a first in/first out (FIFO) basis for purposes of determining short-term trading fees.  In other words, units held the longest will be treated as being transferred first, and units held for the shortest time will be treated as being transferred last.
 
Some transactions are not subject to the short-term trading fees.  Transactions that are not subject to short-term trading fees include:
 
·  
scheduled and systematic transfers, such as Dollar Cost Averaging, Asset Rebalancing, and Systematic Withdrawals;
 
·  
contract loans or surrenders, including CDSC-free withdrawals;
 
·  
transfers made upon annuitization of the contract;
 
·  
surrenders of annuity units to make annuity payments; or
 
·  
surrenders of accumulation units to pay a death benefit.
 
New share classes of certain currently available underlying mutual funds may be added as investment options under the contracts.  These new share classes may require the assessment of short-term trading or redemption fees.  When these new share classes are added, new purchase payment allocations and exchange reallocations to the underlying mutual funds in question may be limited to the new share class.

 
Upon annuitization of the contract, any amounts assessed for any optional benefits elected will be waived and only those charges applicable to the base contract will be assessed.
 
Optional Death Benefits
 
For contracts issued on or after the later of November 3, 1997, or the date on which state insurance authorities approve applicable contract modifications, if the contract owner chooses an optional death benefit, Nationwide will deduct an additional charge equal to an annual rate of either 0.05% or 0.10% of the daily net assets of the variable account, depending upon the options chosen.  Nationwide may realize a profit from the charge assessed for these options.  Further information about these benefits can be found in the "Death Benefit Payment" provision.  All of the following death benefit options may not be available in every state.
 
One-Year Step Up Death Benefit
 
If the annuitant dies before the annuitization date, the death benefit will be the greatest of:
 
(1)  
the contract value;
 
(2)  
the total of all purchase payments, less an adjustment for amounts surrendered; or
 
(3)  
the highest contract value on any contract anniversary before the annuitant’s 86th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that contract anniversary.
 
The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the contract value was reduced on the date(s) of the partial surrender(s).
 
5% Enhanced Death Benefit
 
If the annuitant dies before the annuitization date, the death benefit will be the greater of:
 
(1)  
the contract value; or
 
(2)  
the total of all purchase payments, less any amounts surrendered, accumulated at 5% simple interest from the date of each purchase payment or surrender to the most recent contract anniversary prior to the annuitant’s 86th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received since that contract anniversary.
 
Long Term Care Facility Provisions
 
If the contract owner chooses an optional death benefit, no CDSC will be charged on withdrawals if:
 
·  
the third contract anniversary has passed; and
 
·  
the contract owner has been confined to a long-term care facility or hospital for a continuous 90-day period that began after the contract issue date.

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Additionally, if the contract owner chooses an optional death benefit, no CDSC will be charged if:
 
·  
the contract owner has been diagnosed by a physician at any time after contract issuance to have a terminal illness; and
 
·  
Nationwide receives and records a letter from that physician indicating such diagnosis.
 
For those contracts that have a non-natural person as contract owner (e.g. a trust or corporation) for the benefit of a natural person, the annuitant may exercise the rights of the contract owner for the purposes described in this provision.  If the non-natural contract owner has not been established for the benefit of a natural person (e.g. the contract owner is a corporation or a trust for the benefit of an entity), the annuitant may not exercise the rights described in this provision.
 
 
The contract owner has all rights under the contract.  Purchasers who name someone other than themselves as the contract owner will have no rights under the contract.
 
Contract owners of Non-Qualified Contracts may name a new contract owner at any time before the annuitization date.  Any change of contract owner automatically revokes any prior contract owner designation.  Changes in contract ownership may result in federal income taxation and may be subject to state and federal gift taxes.
 
A change in contract ownership must be submitted in writing and recorded at Nationwide’s home office.  Once recorded, the change will be effective as of the date signed.  However, the change will not affect any payments made or actions taken by Nationwide before the change was recorded.  No change will be effective unless and until it is received and recorded at Nationwide’s home office.
 
The contract owner may also request a change in the annuitant, contingent annuitant, contingent owner, beneficiary, or contingent beneficiary before the annuitization date.  These changes must be:
 
·  
on a Nationwide form;
 
·  
signed by the contract owner; and
 
·  
received at Nationwide’s home office before the annuitization date.
 
Nationwide must review and approve any change requests.  If the contract owner is not a natural person and there is a change of the annuitant, distributions will be made as if the contract owner died at the time of the change.
 
On the annuitization date, the annuitant will become the contract owner, unless the contract owner is a Charitable Remainder Trust.

Joint Ownership
 
Joint owners each own an undivided interest in the contract.
 
Contract owners can name a joint owner at any time before annuitization subject to the following conditions:
 
·  
joint owners can only be named for Non-Qualified Contracts;
 
·  
joint owners must be spouses at the time joint ownership is requested, unless state law requires Nationwide to allow non-spousal joint owners;
 
·  
the exercise of any ownership right in the contract will generally require a written request signed by both joint owners;
 
·  
Nationwide will not be liable for any loss, liability, cost, or expense for acting in accordance with the instructions of either joint owner; and
 
·  
an election in writing signed by both contract owners must be made to authorize Nationwide to allow the exercise of ownership rights independently by either joint owner.
 
Contingent Ownership
 
The contingent owner is entitled to certain benefits under the contract, if a contract owner who is not the annuitant dies before the annuitization date, and there is no surviving joint owner.
 
The contract owner may name or change a contingent owner at any time before the annuitization date.  To change the contingent owner, a written request must be submitted to Nationwide.  Once Nationwide has recorded the change, it will be effective as of the date it was signed, whether or not the contract owner was living at the time it was recorded.  The change will not affect any action taken by Nationwide before the change was recorded.
 
Annuitant
 
The annuitant is the person who will receive annuity payments and upon whose continuation of life any annuity payment involving life contingencies depends.  This person must be age 85 or younger at the time of contract issuance, unless Nationwide approves a request for an annuitant of greater age.  The annuitant may be changed before the annuitization date with Nationwide’s consent.
 
Beneficiary and Contingent Beneficiary
 
The beneficiary is the person who is entitled to the death benefit if the annuitant dies before the annuitization date and there is no joint owner or contingent annuitant.  The contract owner can name more than one beneficiary.  Multiple beneficiaries will share the death benefit equally, unless otherwise specified.
 
The contract owner may change the beneficiary(ies) or contingent beneficiary(ies) during the annuitant’s lifetime by submitting a written request to Nationwide.  Once recorded, the change will be effective as of the date it was signed, whether or not the annuitant was living at the time it was recorded.  The change will not affect any action taken by Nationwide before the change was recorded.

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Minimum Initial and Subsequent Purchase Payments
 
Contract
Type
Minimum Initial Purchase Payment
Minimum Subsequent Payments
IRA
$15,000
$1,000
Non-Qualified Contract
$15,000
$1,000
Roth IRA
$15,000
$1,000
Tax Sheltered Annuity*
$15,000
$1,000
Investment-only Contract (Qualified Plan)
$15,000
 
$1,000
 
 
*  Only available for individual 403(b) Tax Sheltered Annuity contracts subject to ERISA and certain state Optional Retirement Plans and/or Programs that have purchased at least one individual annuity contract issued by Nationwide prior to September 25, 2007.
 
Subsequent purchase payments are not permitted in the State of New York.
 
Pricing
 
Initial purchase payments allocated to sub-accounts will be priced at the accumulation unit value determined no later than 2 business days after receipt of an order to purchase if the application and all necessary information are complete.  If the application is not complete, Nationwide may retain a purchase payment for up to 5 business days while attempting to complete it.  If the application is not completed within 5 business days, the prospective purchaser will be informed of the reason for the delay.  The purchase payment will be returned unless the prospective purchaser specifically allows Nationwide to hold the purchase payment until the application is completed.
 
Subsequent purchase payments will be priced based on the next available accumulation unit value after the payment is received. The cumulative total of all purchase payments under contracts issued by Nationwide on the life of any one annuitant cannot exceed $1,000,000 without Nationwide’s prior consent.
 
Except on the days listed below and on weekends, purchase payments, transfers and surrenders are priced every day.  Purchase payments will not be priced when the New York Stock Exchange is closed or on the following nationally recognized holidays:
 
·  New Year’s Day
·  Independence Day
·  Martin Luther King, Jr. Day
·  Labor Day
·  Presidents’ Day
·  Thanksgiving
·  Good Friday
·  Christmas
·  Memorial Day
 
 
Nationwide also will not price purchase payments if:
 
(1)  
trading on the New York Stock Exchange is restricted;
 
(2)  
an emergency exists making disposal or valuation of securities held in the variable account impracticable; or
 
(3)  
the SEC, by order, permits a suspension or postponement for the protection of security holders.
 
Rules and regulations of the SEC will govern as to when the conditions described in (2) and (3) exist.  If Nationwide is closed on days when the New York Stock Exchange is open, Contract value may change and contract owners will not have access to their accounts.
 
Allocation of Purchase Payments
 
Nationwide allocates purchase payments to sub-accounts and/or the fixed account as instructed by the contract owner.  Shares of the underlying mutual funds allocated to the sub-accounts are purchased at Net asset value, then converted into accumulation units.  Nationwide reserves the right to limit or refuse purchase payments allocated to the fixed account at its sole discretion.
 
Contract owners can change allocations or make exchanges among the sub-accounts and the fixed account.  However, no change may be made that would result in an amount less than 1% of the purchase payments being allocated to any sub-account.  Certain transactions may be subject to conditions imposed by the underlying mutual funds, as well as those set forth in the contract.
 
Determining the Contract Value
 
The contract value is the sum of:
 
(1)  
the value of amounts allocated to the sub-accounts of the variable account; and
 
(2)  
amounts allocated to the fixed account.
 
If part or all of the contract value is surrendered, or charges are assessed against the whole contract value, Nationwide will deduct a proportionate amount from each sub-account and the fixed account based on current cash values.
 
Determining Variable Account Value – Valuing an Accumulation Unit
 
Purchase payments or transfers allocated to sub-accounts are accounted for in accumulation units.  Accumulation unit values (for each sub-account) are determined by calculating the net investment factor for the underlying mutual funds for the current valuation period and multiplying that result with the accumulation unit values determined on the previous valuation period.
 
Nationwide uses the net investment factor as a way to calculate the investment performance of a sub-account from valuation period to valuation period.  For each sub-account, the net investment factor shows the investment performance of the underlying mutual fund in which a particular sub-account invests, including the charges assessed against that sub-account for a valuation period.
 
The net investment factor for any particular sub-account is determined by dividing (a) by (b), and then subtracting (c) from the result, where:
 
(a)  
is the sum of:
 
(1)  
the Net asset value of the underlying mutual fund as of the end of the current valuation period; and

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(2)  
the per share amount of any dividend or income distributions made by the underlying mutual fund (if the date of the dividend or income distribution occurs during the current valuation period);
 
(b)  
is the Net asset value of the underlying mutual fund determined as of the end of the preceding valuation period; and
 
(c)  
is a factor representing the daily variable account charges, which may include charges for contract options chosen by the contract owner.  The factor is equal to an annualized rate ranging from 1.40% to 1.50% of the daily net assets of the variable account, depending on which contract features the contract owner chooses.
 
Based on the change in the net investment factor, the value of an accumulation unit may increase or decrease.  Changes in the net investment factor may not be directly proportional to changes in the Net asset value of the underlying mutual fund shares because of the deduction of variable account charges.
 
Though the number of accumulation units will not change as a result of investment experience, the value of an accumulation unit may increase or decrease from valuation period to valuation period.
 
Determining Fixed Account Value
 
Nationwide determines the value of the fixed account by:
 
(1)  
adding all amounts allocated to the fixed account, minus amounts previously transferred or withdrawn; and
 
(2)  
adding any interest earned on the amounts allocated.
 
Transfers Prior to Annuitization
 
Transfers from the Fixed Account to the Variable Account
 
Contract owners may request to have fixed account allocations transferred to the variable account only upon reaching the end of an interest rate guarantee period.  Normally, Nationwide will permit 100% of such fixed account allocations to be transferred to the variable account; however Nationwide may, under certain economic conditions and at its discretion, limit the maximum transferable amount.  Under no circumstances will the maximum transferable amount be less than 10% of the fixed account allocation reaching the end of an interest rate guarantee period.  Transfers of the fixed account allocations must be made within 45 days after reaching the end of an interest rate guarantee period.
 
Contract owners who use dollar cost averaging may transfer from the fixed account to the variable account under the terms of that program (see "Dollar Cost Averaging").
 
Transfers to the Fixed Account
 
Contract owners may request to have variable account allocations transferred to the fixed account at any time.  Normally, Nationwide will not restrict transfers from the variable account to the fixed account; however, Nationwide may establish a maximum transfer limit from the variable account to the fixed account.  Except as noted below, the transfer limit will not be less than 10% of the current value of the variable account at the time the transfer is requested.  Nationwide also reserves the right to refuse transfers to the fixed account if the fixed account value is equal to or greater than 30% of the contract value at the time the transfer is requested.
 
Transfers Among the Sub-Accounts
 
A contract owner may request to transfer allocations among the sub-accounts at any time, subject to the terms and conditions imposed by the contract and the underlying mutual funds.
 
Transfers After Annuitization
 
After annuitization, transfers may only be made on the anniversary of the annuitization date.
 
Transfer Requests
 
Contract owners may submit transfer requests in writing, over the telephone, or via the internet.  Nationwide will use reasonable procedures to confirm that instructions are genuine and will not be liable for following instructions that it reasonably determined to be genuine.  Nationwide may restrict or withdraw the telephone and/or internet transfer privilege at any time.
 
Generally, sub-account transfers will receive the accumulation unit value next computed after the transfer request is received.  However, if a contract that is limited to submitting transfer requests via U.S. mail submits a transfer request via the internet or telephone pursuant to Nationwide's one-day delay policy, the transfer will be executed on the next business day after the exchange request is received by Nationwide (see "Manager of Multiple Contracts").
 
Interest Rate Guarantee Period
 
The interest rate guarantee period is the period of time that the fixed account interest rate is guaranteed to remain the same.  Within 45 days of the end of an interest rate guarantee period, transfers may be made from the fixed account to the variable account.  Nationwide will determine the amount that may be transferred and will declare this amount at the end of the guarantee period.  This amount will not be less than 10% of the amount in the fixed account that is maturing.
 
For new purchase payments allocated to the fixed account, or transfers to the fixed account from the variable account, this period begins on the date of deposit or transfer and ends on the one year anniversary of the deposit or transfer.  The guaranteed interest rate period may last for up to 3 months beyond the 1-year anniversary because guaranteed terms end on the last day of a calendar quarter.
 
During an interest rate guarantee period, transfers cannot be made from the fixed account, and amounts transferred to the fixed account must remain on deposit.
 
Transfer Restrictions
 
Neither the contracts described in this prospectus nor the underlying mutual funds are designed to support active trading strategies that require frequent movement between or among sub-accounts (sometimes referred to as "market-timing" or "short-term trading").  A contract owner who intends to use an active trading strategy should consult his/her registered

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representative and request information on other Nationwide variable annuity contracts that offer underlying mutual funds that are designed specifically to support active trading strategies.
 
Nationwide discourages (and will take action to deter) short-term trading in this contract because the frequent movement between or among sub-accounts may negatively impact other investors in the contract.  Short-term trading can result in:
 
·  
the dilution of the value of the investors’ interests in the underlying mutual fund;
·  
underlying mutual fund managers taking actions that negatively impact performance (keeping a larger portion of the underlying mutual fund assets in cash or liquidating investments prematurely in order to support redemption requests); and/or
·  
increased administrative costs due to frequent purchases and redemptions.
 
To protect investors in this contract from the negative impact of these practices, Nationwide has implemented, or reserves the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies.
 
Nationwide makes no assurances that all risks associated with short-term trading will be completely eliminated by these processes and/or restrictions.
 
Nationwide cannot guarantee that its attempts to deter active trading strategies will be successful.  If we are unable to deter active trading strategies, the performance of the sub-accounts that are actively traded may be adversely impacted.
 
Redemption Fees
 
Some underlying mutual funds assess a short-term trading fee in connection with transfers from a sub-account that occur within 60 days after the date of the allocation to the sub-account.  The fee is assessed against the amount transferred and is paid to the underlying mutual fund.  Redemption fees compensate the underlying mutual fund for any negative impact on fund performance resulting from short-term trading.  For more information on short-term trading fees, please see the "Short-Term Trading Fees" provision.
 
U.S. Mail Restrictions
 
Nationwide monitors transfer activity in order to identify those who may be engaged in harmful trading practices.  Transaction reports are produced and examined.  Generally, a contract may appear on these reports if the contract owner (or a third party acting on their behalf) engages in a certain number of "transfer events" in a given period.  A "transfer event" is any transfer, or combination of transfers, occurring on a given trading day (valuation period).  For example, if a contract owner executes multiple transfers involving 10 underlying mutual funds in one day, this counts as one transfer event.  A single transfer occurring on a given trading day and involving only 2 underlying mutual funds (or one underlying mutual fund if the transfer is made to or from the fixed account) will also count as one transfer event.
 
As a result of this monitoring process, Nationwide may restrict the method of communication by which transfer orders will be accepted.  In general, Nationwide will adhere to the following guidelines:
 
Trading Behavior
Nationwide's Response
6 or more transfer events in one calendar quarter
Nationwide will mail a letter to the contract owner notifying them that:
 
(1)  they have been identified as engaging in harmful trading practices; and
 
(2)  if their transfer events exceed 11 in 2 consecutive calendar quarters or 20 in one calendar year, the contract owner will be limited to submitting transfer requests via U.S. mail.
More than 11 transfer events in 2 consecutive calendar quarters
OR
More than 20 transfer events in one calendar year
Nationwide will automatically limit the contract owner to submitting transfer requests via U.S. mail.
 
Each January 1st, Nationwide will start the monitoring anew, so that each contract starts with 0 transfer events each January 1.  See, however, the "Other Restrictions" provision below.
 
Managers of Multiple Contracts
 
Some investment advisers/representatives manage the assets of multiple Nationwide contracts pursuant to trading authority granted or conveyed by multiple contract owners.  These multi-contract advisers will generally be required by Nationwide to submit all transfer requests via U.S. mail.
 
Nationwide may, as an administrative practice, implement a "one-day delay" program for these multi-contract advisers, which they can use in addition to or in lieu of submitting transfer requests via U.S. mail.  The one-day delay option permits multi-contract advisers to continue to submit transfer requests via the internet or telephone.  However, transfer requests submitted by multi-contract advisers via the internet or telephone will not receive the next available accumulation unit value.  Rather, they will receive the accumulation unit value that is calculated on the following business day.  Transfer requests submitted under the one-day delay program are irrevocable.  Multi-contract advisers will receive advance notice of being subject to the one-day delay program.
 
Other Restrictions
 
Nationwide reserves the right to refuse or limit transfer requests, or take any other action it deems necessary, in order to protect contract owners, annuitants, and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some contract owners (or third parties acting on their behalf).  In particular, trading strategies designed to avoid or take advantage of Nationwide's monitoring procedures (and other measures aimed at curbing harmful trading practices) that are nevertheless determined by Nationwide to constitute harmful trading practices, may be restricted.
 
 
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Any restrictions that Nationwide implements will be applied consistently and uniformly.
 
Underlying Mutual Fund Restrictions and Prohibitions
 
Pursuant to regulations adopted by the SEC, Nationwide is required to enter into written agreements with the underlying mutual funds which allow the underlying mutual funds to:
 
(1)
request the taxpayer identification number, international taxpayer identification number, or other government issued identifier of any Nationwide contract owner;
(2)
request the amounts and dates of any purchase, redemption, transfer or exchange request (“transaction information”); and
(3)
instruct Nationwide to restrict or prohibit further purchases or exchanges by contract owners that violate policies established by the underlying mutual fund (whose policies may be more restrictive than Nationwide’s policies).
 
Nationwide is required to provide such transaction information to the underlying mutual funds upon their request.  In addition, Nationwide is required to restrict or prohibit further purchases or exchange requests upon instruction from the underlying mutual fund.  Nationwide and any affected contract owner may not have advance notice of such instructions from an underlying mutual fund to restrict or prohibit further purchases or exchange requests.  If an underlying mutual fund refuses to accept a purchase or exchange request submitted by Nationwide, Nationwide will keep any affected contract owner in their current underlying mutual fund allocation.
 
 
Contract owners have a ten day "free look" to examine the contract.  The contract may be returned to Nationwide’s home office for any reason within ten days of receipt and Nationwide will refund the contract value or another amount required by law.  All IRA and Roth IRA refunds will be a return of purchase payments.  The refunded contract value will reflect the deduction of any contract charges, unless otherwise required by law.  State and/or federal law may provide additional free look privileges.
 
Liability of the variable account under this provision is limited to the contract value in each sub-account on the date of revocation. Any additional amounts refunded to the contract owner will be paid by Nationwide.
 
 
Contract owners may surrender some or all of their contract value before the earlier of the annuitization date or the annuitant’s death.  Surrender requests must be in writing and Nationwide may require additional information.  When taking a full surrender, the contract must accompany the written request.  Nationwide may require a signature guarantee.
 
Nationwide will pay any amounts surrendered from the sub-accounts within 7 days.  However, Nationwide may suspend or postpone payment when it is unable to price a purchase payment or transfer (see "Pricing").
 
Nationwide is required by state law to reserve the right to postpone payment of assets in the fixed account for a period of up to six months from the date of the surrender request.
 
Surrenders from the contract may be subject to federal income tax and/or a penalty tax.  See "Federal Income Taxes" in Appendix C.
 
Partial Surrenders (Partial Redemptions)
 
Nationwide will surrender accumulation units from the sub-accounts and an amount from the fixed account.  The amount withdrawn from each investment option will be in proportion to the value in each option at the time of the surrender request.
 
A CDSC may apply.  The contract owner may direct Nationwide to deduct the CDSC from either:
 
(a)  
the amount requested; or
 
(b)  
the contract value remaining after the contract owner has received the amount requested.
 
If the contract owner does not make a specific election, any applicable CDSC will be taken from the contract value remaining after the contract owner has received the amount requested.
 
Partial Surrenders to Pay Investment Advisory Fees
Some contract owners utilize an investment advisor(s) to manage their assets, for which the investment advisor assesses a fee.  Investment advisors are not endorsed or affiliated with Nationwide and Nationwide makes no representation as to their qualifications.  The fees for these investment advisory services are specified in the respective account agreements and are separate from and in addition to the contract fees and expenses described in this prospectus.  Some contract owners authorize their investment advisor to take a partial surrender(s) from the contract in order to collect investment advisory fees.  Surrenders taken from this contract to pay advisory or investment management fees are subject to the CDSC provisions of the contract and may be subject to income tax and/or tax penalties.
 
Full Surrenders (Full Redemptions)
 
The contract value upon full surrender may be more or less than the total of all purchase payments made to the contract.  The contract value will reflect:
 
·  
variable account charges;
 
·  
underlying mutual fund charges;
 
·  
any outstanding loan balance plus accrued interest;
 
·  
the investment performance of the underlying mutual funds; and
 
·  
amounts allocated to the fixed account and any interest credited.
 
A CDSC may apply.

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Surrenders Under a Tax Sheltered Annuity
 
Contract owners of a Tax Sheltered Annuity may surrender part or all of their contract value before the earlier of the annuitization date or the annuitant’s death, except as provided below:
 
(A)
Contract value attributable to contributions made under a qualified cash or deferred arrangement (within the meaning of Internal Revenue Code Section 402(g)(3)(A)), a salary reduction agreement (within the meaning of Internal Revenue Code Section 402(g)(3)(C)), or transfers from a custodial account (described in Section 403(b)(7) of the Internal Revenue Code), may be surrendered only:
 
          (1)
when the contract owner reaches age 59½, separates from service, dies, or becomes disabled (within the meaning of Internal Revenue Code Section 72(m)(7)); or
 
          (2)
in the case of hardship (as defined for purposes of Internal Revenue Code Section 401(k)), provided that any such hardship surrender may not include any income earned on salary reduction contributions.
 
(B)
The surrender limitations described in Section A also apply to:
 
          (1)
salary reduction contributions to Tax Sheltered Annuities made for plan years beginning after December 31, 1988;
 
         (2)
earnings credited to such contracts after the last plan year beginning before January 1, 1989, on amounts attributable to salary reduction contributions; and
 
          (3)
all amounts transferred from 403(b)(7) custodial accounts (except that earnings and employer contributions as of December 31, 1988 in such custodial accounts may be withdrawn in the case of hardship).
 
(C)
Any distribution other than the above, including a ten day free look cancellation of the contract (when available) may result in taxes, penalties, and/or retroactive disqualification of a Qualified Contract or Tax Sheltered Annuity.
 
In order to prevent disqualification of a Tax Sheltered Annuity after a ten day free look cancellation, Nationwide will transfer the proceeds to another Tax Sheltered Annuity upon proper direction by the contract owner.
 
These provisions explain Nationwide's understanding of current withdrawal restrictions.  These restrictions may change.
 
Distributions pursuant to Qualified Domestic Relations Orders will not violate the restrictions stated above.

Surrenders Under a Texas Optional Retirement Program or a Louisiana Optional Retirement Plan
 
Redemption restrictions apply to contracts issued under the Texas Optional Retirement Program or the Louisiana Optional Retirement Plan.
 
The Texas Attorney General has ruled that participants in contracts issued under the Texas Optional Retirement Program may only take withdrawals if:
 
·  
the participant dies;
·  
the participant retires;
·  
the participant terminates employment due to total disability; or
·  
the participant that works in a Texas public institution of higher education terminates employment.
 
A participant under a contract issued under the Louisiana Optional Retirement Plan may only take distributions from the contract upon retirement or termination of employment.  All retirement benefits under this type of plan must be paid as lifetime income; lump sum cash payments are not permitted, except for death benefits.
 
Due to the restrictions described above, a participant under either of these plans will not be able to withdraw cash values from the contract unless one of the applicable conditions is met.  However, contract value may be transferred to other carriers, subject to any CDSC.
 
Nationwide issues this contract to participants in the Texas Optional Retirement Program in reliance upon and in compliance with Rule 6c-7 of the Investment Company Act of 1940.  Nationwide issues this contract to participants in the Louisiana Optional Retirement Plan in reliance upon and in compliance with an exemptive order that Nationwide received from the SEC on August 22, 1990.
 
 
The loan privilege is only available to owners of Tax Sheltered Annuities.  Contract owners of Tax Sheltered Annuities may take loans from the contract value beginning 30 days after the contract is issued up to the annuitization date.  Loans are subject to the terms of the contract, the plan, and the Internal Revenue Code.  Nationwide may modify the terms of a loan to comply with changes in applicable law.
 
Minimum and Maximum Loan Amounts
 
Contract owners may borrow a minimum of $1,000, unless Nationwide is required by law to allow a lesser minimum amount.  Each loan must individually satisfy the contract minimum amount.
 
Nationwide will calculate the maximum nontaxable loan amount based upon information provided by the participant or the employer.  Loans may be taxable if a participant has additional loans from other plans.  The total of all outstanding loans must not exceed the following limits:
 

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Contract Values
Maximum Outstanding Loan Balance Allowed
Non-ERISA Plans
up to $20,000
up to 80% of contract value (not more than $10,000)
 
$20,000 and over
up to 50% of contract value (not more than $50,000*)
     
ERISA Plans
All
up to 50% of contract value (not more than $50,000*)
 
 
*The $50,000 limits will be reduced by the highest outstanding balance owed during the previous 12 months.
 
For salary reduction Tax Sheltered Annuities, loans may be secured only by the contract value.
 
Maximum Loan Processing Fee
 
Nationwide may charge a loan processing fee at the time each new loan is processed.  The loan processing fee, if assessed, will not exceed $25 per loan transaction.  This fee compensates Nationwide for expenses related to administering and processing loans.
 
The fee is taken from the sub-accounts and the fixed account in proportion to the contract value at the time the loan is processed.
 
 
All loans are made from the collateral fixed account.  Nationwide transfers accumulation units in proportion to the assets in each sub-account to the collateral fixed account until the requested amount is reached.  If there are not enough accumulation units available in the contract to reach the requested loan amount, Nationwide then transfers contract value from the fixed account.  No CDSC will be deducted on transfers related to loan processing.
 
Loan Interest
 
The outstanding loan balance in the collateral fixed account is credited with interest until the loan is repaid in full.  The credited interest rate will be 2.25% less than the loan interest rate fixed by Nationwide.  The credited interest rate is guaranteed never to fall below the minimum interest rate required by applicable state law.
 
Specific loan terms are disclosed at the time of loan application or issuance.
 
Loan Repayment
 
Loans must be repaid in five years.  However, if the loan is used to purchase the contract owner’s principal residence, the contract owner has 15 years to repay the loan.
 
Contract owners must identify loan repayments as loan repayments or they will be treated as purchase payments and will not reduce the outstanding loan.  Payments must be substantially level and made at least quarterly.
 
Loan repayments will consist of principal and interest in amounts set forth in the loan agreement.  Repayments are allocated to the sub-accounts in accordance with the contract, unless Nationwide and the contract owner have agreed to amend the contract at a later date on a case by case basis.
 
Distributions and Annuity Payments
 
Distributions made from the contract while a loan is outstanding will be reduced by the amount of the outstanding loan plus accrued interest if:
 
·  
the contract is surrendered;
 
·  
the contract owner/annuitant dies;
 
·  
the contract owner who is not the annuitant dies prior to annuitization; or
 
·  
annuity payments begin.
 
Transferring the Contract
 
Nationwide reserves the right to restrict any transfer of the contract while the loan is outstanding.
 
Grace Period and Loan Default
 
If a loan payment is not made when due, interest will continue to accrue.  A grace period may be available (please refer to the terms of the loan agreement).  If a loan payment is not made by the end of the applicable grace period, the entire loan will be treated as a deemed distribution and will be taxable to the borrower.  This deemed distribution may also be subject to an early withdrawal tax penalty by the Internal Revenue Service.
 
After default, interest will continue to accrue on the loan.  Defaulted amounts, plus interest, are deducted from the contract value when the participant is eligible for a distribution of at least that amount.  Additional loans are not available while a previous loan is in default.
 
 
Contract rights are personal to the contract owner and may not be assigned without Nationwide’s written consent.
A Non-Qualified Contract owner may assign some or all rights under the contract.  An assignment must occur before annuitization while the annuitant is alive.  The contract owner must submit the request to Nationwide in writing and Nationwide must receive the request at its home office before the annuitization date.  Once Nationwide receives and records the change request, the change will be effective as of the date the written request was signed.
 
Investment-only Contracts, IRAs, Roth IRAs, and Tax Sheltered Annuities may not be assigned, pledged or otherwise transferred except where allowed by law.
 
Nationwide is not responsible for the validity or tax consequences of any assignment.  Nationwide is not liable for any payment or settlement made before the assignment is recorded.  Assignments will not be recorded until Nationwide receives sufficient direction from the contract owner and the assignee regarding the proper allocation of contract rights.
 
Amounts pledged or assigned will be treated as distributions and will be included in gross income to the extent that the cash value exceeds the investment in the contract for the taxable year in which it was pledged or assigned.  Amounts assigned

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may be subject to a tax penalty equal to 10% of the amount included in gross income.
 
Assignment of the entire contract value may cause the portion of the contract value exceeding the total investment in the contract and previously taxed amounts to be included in gross income for federal income tax purposes each year that the assignment is in effect.
 
 
Asset Rebalancing
 
Asset Rebalancing is the automatic reallocation of contract values to the sub-accounts on a predetermined percentage basis.  Asset Rebalancing is not available for assets held in the fixed account.  Each Asset Rebalancing reallocation is considered a transfer event.  Requests for Asset Rebalancing must be on a Nationwide form.  Once Asset Rebalancing is elected, it will only be terminated upon specific instructions from the contract owner; manual transfers will not automatically terminate the program.
 
Asset Rebalancing occurs every three months or on another frequency if permitted by Nationwide.  If the last day of the three-month period falls on a Saturday, Sunday, recognized holiday, or any other day when the New York Stock Exchange is closed, Asset Rebalancing will occur on the next business day.  Asset Rebalancing may be subject to employer limitations or restrictions for contracts issued to a Tax Sheltered Annuity plan.  Contract owners should consult a financial adviser to discuss the use of Asset Rebalancing.
 
Nationwide reserves the right to stop establishing new Asset Rebalancing programs.  Nationwide also reserves the right to assess a processing fee for this service.
 
Dollar Cost Averaging
 
Dollar Cost Averaging is a long-term transfer program that allows you to make regular, level investments over time.  It involves the automatic transfer of a specified amount from certain sub-accounts and/or the fixed account into other sub-accounts.  Nationwide does not guarantee that this program will result in profit or protect contract owners from loss.
 
Contract owners may direct Nationwide to automatically transfer specified amounts from the fixed account, and the:
 
Fidelity Variable Insurance Products Fund
·  
VIP High Income Portfolio: Initial Class R†
·  
VIP Money Market Portfolio: Initial Class
 
to any other underlying mutual fund.  Dollar Cost Averaging transfers may not be directed to the fixed account.
 
Transfers occur monthly or on another frequency if permitted by Nationwide.  Dollar Cost Averaging transfers are not considered transfer events.  Nationwide will process transfers until either the value in the originating investment option is exhausted, or the contract owner instructs Nationwide in writing to stop the transfers.
 
Nationwide reserves the right to stop establishing new Dollar Cost Averaging programs.  Nationwide also reserves the right to assess a processing fee for this service.
 
Dollar Cost Averaging from the Fixed Account
 
Transfers from the fixed account must be equal to or less than 1/30th of the fixed account value at the time the program is requested.  A dollar cost averaging program which transfers amounts from the fixed account to the variable account is not the same as an enhanced rate dollar cost averaging program.  Contract owners that wish to utilize dollar cost averaging from the fixed account should first inquire whether any enhanced rate dollar cost averaging programs are available. Nationwide is required by state law to reserve the right to postpone payment of assets in the fixed account for a period of up to six months from the date of the surrender request.
 
Enhanced Rate Dollar Cost Averaging
 
Nationwide may, from time to time, offer enhanced rate dollar cost averaging programs.  Only new purchase payments to the contract are eligible to participate in this program and the contract value must be $10,000 or more at the time the program is requested.  Dollar cost averaging transfers for this program may only be made from the fixed account.  Such enhanced rate dollar cost averaging programs allow the contract owner to earn a higher rate of interest on assets in the fixed account than would normally be credited when not participating in the program.  Each enhanced interest rate is guaranteed for as long as the corresponding program is in effect.  Nationwide will process transfers until either amounts in the enhanced rate fixed account are exhausted, or the contract owner instructs Nationwide in writing to stop the transfers.  For this program only, when a written request to discontinue transfers is received, Nationwide will automatically transfer the remaining amount in the enhanced rate fixed account to the VIP Money Market Portfolio.  Nationwide is required by state law to reserve the right to postpone payment of assets in the fixed account for a period of up to six months from the date of the surrender request.
 
Systematic Withdrawals
 
Systematic withdrawals allow contract owners to receive a specified amount (of at least $100) on a monthly, quarterly, semi-annual, or annual basis.  Requests for systematic withdrawals and requests to discontinue systematic withdrawals must be in writing.
 
The withdrawals will be taken from the sub-accounts and the fixed account proportionately unless Nationwide is instructed otherwise.
 
Nationwide will withhold federal income taxes from systematic withdrawals unless otherwise instructed by the contract owner.  The Internal Revenue Service may impose a 10% penalty tax if the contract owner is under age 59½ unless the contract owner has made an irrevocable election of distributions of substantially equal payments.
 
A CDSC may apply to amounts taken through systematic withdrawals.
 
If the contract owner takes systematic withdrawals, the maximum amount that can be withdrawn annually without a CDSC is the greatest of:
 
(1)  
10% of all purchase payments made to the contract as of the withdrawal date;

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(2)  
an amount withdrawn to meet minimum distribution requirements under the Internal Revenue Code; or
 
(3)  
a percentage of the contract value based on the contract owner’s age, as shown in the table that follows:
 
Contract Owner’s
Age
Percentage of
Contract Value
Under age 59½
5%
Age 59½ through age 61
7%
Age 62 through age 64
8%
Age 65 through age 74
10%
Age 75 and over
13%
 
Contract value and contract owner’s age are determined as of the date the request for the withdrawal program is recorded by Nationwide’s home office.  For joint owners, the older joint owner’s age will be used.
 
If total amounts withdrawn in any contract year exceed the CDSC-free amount described above, those amounts will only be eligible for the 10% of purchase payment CDSC-free withdrawal privilege described in the "Contingent Deferred Sales Charge" section.  The total amount of CDSC for that contract year will be determined in accordance with that provision.
 
For example, assume a scenario whereby the Premium equals $100,000 and the initial free withdrawal (“w/d”) equals $10,000.
 
Withdrawal in year 1                                                     $15,000
Less free w/d                                                          $10,000
Premium w/d subject to CDSC                                       $5,000
 
Withdrawal in year 2                                                      $15,000
Less free w/d                                $9,500 = 0.10* ($100,000 – $5,000)
Premium w/d subject to CDSC                                       $5,500
 
Since the withdrawal exceeded the free withdrawal amount, the free withdrawal amount available decreases.
 
The CDSC-free withdrawal privilege for systematic withdrawals is non-cumulative.  Free amounts not taken during any contract year cannot be taken as free amounts in a subsequent contract year.
 
Nationwide reserves the right to stop establishing new systematic withdrawal programs.  Systematic withdrawals are not available before the end of the ten-day free look period (see "Right to Revoke").
 
 
The annuity commencement date is the date on which annuity payments are scheduled to begin. The contract owner may change the annuity commencement date before annuitization.  This change must be in writing and approved by Nationwide.
 
 
Annuitization Date
 
The annuitization date is the date that annuity payments begin.  The annuitization date will be the first day of a calendar month unless otherwise agreed.  The annuitization date must be at least 2 years after the contract is issued, but may not be later than either:
 
·  
the age (or date) specified in your contract; or
 
·  
the age (or date) specified by state law, where applicable.
 
If the contract is issued to fund a Tax Sheltered Annuity, annuitization may occur during the first 2 years subject to Nationwide’s approval.
 
The Internal Revenue Code may require that distributions be made prior to the annuitization dates specified above (see "Required Distributions" in Appendix C).
 
Annuitization
 
Annuitization is the period during which annuity payments are received.  It is irrevocable once payments have begun.  Upon arrival of the annuitization date, the annuitant must choose:
 
(1)  
an annuity payment option; and
 
(2)  
either a fixed payment annuity, variable payment annuity, or an available combination.
 
Nationwide guarantees that each payment under a fixed payment annuity will be the same throughout annuitization.  Under a variable payment annuity, the amount of each payment will vary with the performance of the underlying mutual funds chosen by the contract owner.
 
Fixed Payment Annuity
 
A fixed payment annuity is an annuity where the amount of the annuity payment remains level.
 
The first payment under a fixed payment annuity is determined on the annuitization date based on the annuitant’s age (in accordance with the contract) by:
 
(1)  
deducting applicable premium taxes from the total contract value; then
 
(2)  
applying the contract value amount specified by the contract owner to the fixed payment annuity table for the annuity payment option elected.
 
Subsequent payments will remain level unless the annuity payment option elected provides otherwise. Nationwide does not credit discretionary interest during annuitization.
 
VariablePayment Annuity
 
A variable payment annuity is an annuity where the amount of the annuity payments will vary depending on the performance of the underlying mutual funds selected.
 
The first payment under a variable payment annuity is determined on the annuitization date based on the annuitant’s age (in accordance with the contract) by:
 
(1)  
deducting applicable premium taxes from the total contract value; then
 
(2)  
applying the contract value amount specified by the contract owner to the variable payment annuity table for the annuity payment option elected.
 
The dollar amount of the first payment is converted into a set number of annuity units that will represent each monthly

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payment.  This is done by dividing the dollar amount of the first payment by the value of an annuity unit as of the annuitization date.  This number of annuity units remains fixed during annuitization.  After annuitization, transfers among sub-accounts may only be made on the anniversary of the annuitization date.
 
The second and subsequent payments are determined by multiplying the fixed number of annuity units by the annuity unit value for the valuation period in which the payment is due.  The amount of the second and subsequent payments will vary with the performance of the selected underlying mutual funds.  Nationwide guarantees that variations in mortality experience from assumptions used to calculate the first payment will not affect the dollar amount of the second and subsequent payments.
 
Value of an Annuity Unit
 
Annuity unit values for sub-accounts are determined by:
 
(1)  
multiplying the annuity unit value for the immediately preceding valuation period by the net investment factor for the subsequent valuation period (see "Determining the Contract Value"); and then
 
(2)  
multiplying the result from (1) by an interest factor to neutralize the assumed investment rate of 3.5% per year built into the purchase rate basis for variable payment annuities.
 
Assumed Investment Rate
 
An assumed investment rate is the percentage rate of return assumed to determine the amount of the first payment under a variable payment annuity.  Nationwide uses the assumed investment rate of 3.5% to calculate the first annuity payment and to calculate the investment performance of an underlying mutual fund in order to determine subsequent payments under a variable payment annuity.  An assumed investment rate is the percentage rate of return required to maintain level variable annuity payments.  Subsequent variable annuity payments may be more or less than the first payment based on whether actual investment performance of the underlying mutual funds is higher or lower than the assumed investment rate of 3.5%.
 
Exchanges Among the Underlying Mutual Funds
 
Exchanges among underlying mutual funds during annuitization must be requested in writing.  Exchanges may only be made on each anniversary of the annuitization date.
 
Frequency and Amount of Annuity Payments
 
Payments are made based on the annuity payment option selected, unless:
 
·  
the amount to be distributed is less than $5,000, in which case Nationwide may make one lump sum payment of the contract value; or
 
·  
an annuity payment would be less than $50, in which case Nationwide can change the frequency of payments to intervals that will result in payments of at least $50.  Payments will be made at least annually.
 
Annuity payments will generally be received within 7 to 10 days after each annuity payment date.
 
Annuity Payment Options
 
Contract owners must elect an annuity payment option before the annuitization date.  If the annuitant does not elect an annuity payment option, a variable payment life annuity with a guarantee period of 240 months will be assumed as the automatic form of payment upon annuitization.  Once elected or assumed, the annuity payment option may not be changed.  The annuity payment options are:
 
(1)  
Life Annuity - An annuity payable periodically, but at least annually, for the lifetime of the annuitant.  Payments will end upon the annuitant’s death.  For example, if the annuitant dies before the second annuity payment date, the annuitant will receive only one annuity payment.  The annuitant will only receive two annuity payments if he or she dies before the third annuity payment date, and so on.
 
(2)  
Joint and Survivor Annuity - An annuity payable periodically, but at least annually, during the joint lifetimes of the annuitant and a designated second individual.  If one of these parties dies, payments will continue for the lifetime of the survivor.  As is the case under option 1, there is no guaranteed number of payments.  Therefore, it is possible that if the annuitant dies before the second annuity payment date, the annuitant will receive only one annuity payment.  No death benefit payment will be paid.
 
(3)  
Life Annuity with 120 or 240 Monthly Payments Guaranteed - An annuity payable monthly during the lifetime of the annuitant.  If the annuitant dies before all of the guaranteed payments have been made, payments will continue to the end of the guaranteed period and will be paid to a designee chosen by the annuitant at the time the annuity payment option was elected.
 
The designee may elect to receive the present value of the remaining guaranteed payments in a lump sum.  The present value will be computed as of the date Nationwide receives the notice of the annuitant’s death.
 
Not all of the annuity payment options may be available in all states.  Contract owners may request other options before the annuitization date.  These options are subject to Nationwide’s approval.
 
No distribution for Non-Qualified Contracts will be made until an annuity payment option has been elected.  IRAs and Tax Sheltered Annuities are subject to the "minimum distribution" requirements set forth in the plan, contract and the Internal Revenue Code.
 
 
Death of Contract Owner - Non-Qualified Contracts
 
If a contract owner (including a joint owner) who is not the annuitant dies before the annuitization date, no death benefit is payable and the surviving joint owner becomes the contract owner.  If no joint owner is named, the contingent owner becomes the contract owner.  If no contingent owner is named,

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the last surviving contract owner’s estate becomes the contract owner.
 
If the contract owner and annuitant are the same, and the contract owner/annuitant dies before the annuitization date, the contingent owner will not have any rights in the contract unless the contingent owner is also the beneficiary.
 
Distributions under Non-Qualified Contracts will be made pursuant to the "Required Distributions for Non-Qualified Contracts" provision in Appendix C.
 
Death of Annuitant - Non-Qualified Contracts
 
If the annuitant who is not the contract owner dies before the annuitization date, a death benefit is payable to the beneficiary unless a contingent annuitant is named.  If a contingent annuitant is named, the contingent annuitant becomes the annuitant and no death benefit is payable.
 
If no beneficiary(ies) survives the annuitant, the contingent beneficiary(ies) receives the death benefit.  Contingent beneficiary(ies) will share the death benefit equally, unless otherwise specified.
 
If no beneficiary(ies) or contingent beneficiary(ies) survives the annuitant, the contract owner or the last surviving contract owner’s estate will receive the death benefit.
 
If the contract owner is a Charitable Remainder Trust and the annuitant dies before the annuitization date, the death benefit will accrue to the Charitable Remainder Trust.  Any designation in conflict with the Charitable Remainder Trust’s right to the death benefit will be void.
 
If the annuitant dies after the annuitization date, any benefit that may be payable will be paid according to the selected annuity payment option.
 
Death of Contract Owner/Annuitant
 
If a contract owner who is also the annuitant dies before the annuitization date, a death benefit is payable according to the "Death of the Annuitant – Non-Qualified Contracts" provision.
 
If the contract owner/annuitant dies after the annuitization date, any benefit that may be payable will be paid according to the selected annuity payment option.
 
How the Death Benefit Value is Determined
 
The beneficiary may elect to receive the death benefit:
 
(1)  
in a lump sum;
 
(2)  
as an annuity; or
 
(3)  
in any other manner permitted by law and approved by Nationwide.
 
The beneficiary must notify Nationwide of this election within 60 days of the annuitant’s death.  If the recipient of the death benefit does not elect the form in which to receive the death benefit payment, Nationwide will pay the death benefit in a lump sum.  Contract value will continue to be allocated according to the most recent allocation instructions until the death benefit is paid.

 
The death benefit value is determined as of the date Nationwide receives:
 
(1)  
proper proof of the annuitant’s death;
 
(2)  
an election specifying the distribution method; and
 
(3)  
any state required form(s).
 
Death Benefit Payments
 
Nationwide will pay (or will begin to pay) the death benefit upon receiving proof of death and the instructions as to the payment of the death benefit.
 
For contracts issued before the later of November 3, 1997 or the date state insurance authorities approve contract modifications, if the annuitant dies before his or her 86th birthday, the death benefit will be the greatest of:
 
(1)  
the contract value;
 
(2)  
the total of all purchase payments, less any amounts surrendered; or
 
(3)  
the contract value as of the most recent five year contract anniversary, less any amounts surrendered since that five year anniversary.
 
If the annuitant dies on or after his or her 86th birthday, the death benefit will be the contract value.
 
For contracts issued on or after the later of November 3, 1997 or the date state insurance authorities approve contract modifications, contract owners may select one of three death benefits available under the contract at the time of application (not all death benefit options may be available in all states).  If no selection is made at the time of application, the death benefit will be the Five-Year Reset Death Benefit.
 
Five-Year Reset Death Benefit (Standard Contractual Death Benefit)
 
If the annuitant dies before the annuitization date, the death benefit will be the greatest of:
 
(a)  
the contract value;
 
(b)  
the total of all purchase payments, less an adjustment for amounts surrendered; or
 
(c)  
the contract value as of the most recent five year contract anniversary before the annuitant’s 86 th birthday, less an adjustment for amounts surrendered, plus purchase payments received after that five year contract anniversary.
 
One-Year Step Up Death Benefit
 
If the annuitant dies before the annuitization date, the death benefit will be the greatest of:
 
(1)  
the contract value;
 
(2)  
the total of all purchase payments, less an adjustment for amounts surrendered; or
 
(3)  
the highest contract value on any contract anniversary before the annuitant’s 86 th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that contract anniversary.

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The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the contract value was reduced on the date(s) of the partial surrender(s).
 
5% Enhanced Death Benefit
 
If the annuitant dies before the annuitization date, the death benefit will be the greater of:
 
(1)  
the contract value; or
 
(2)  
the total of all purchase payments, less any amounts surrendered, accumulated at 5% simple interest from the date of each purchase payment or surrender to the most recent contract anniversary prior to the annuitant’s 86th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received since that contract anniversary.
 
The adjustment for amounts surrendered will reduce item (2) above in the same proportion that the contract value was reduced on the date(s) of the partial surrender(s).
 
The total accumulated amount will not exceed 200% of the net of purchase payments and amounts surrendered.  The adjustment for amounts subsequently surrendered after the most recent contract anniversary will reduce the 5% interest anniversary value in the same proportion that the contract value was reduced on the date(s) of the partial surrender(s).
 
Death Benefit After Annuitization Date
 
For any death benefit option, if the annuitant dies after the annuitization date, payment will be determined based on the annuity payment option selected.
 
If the contract has multiple beneficiaries entitled to receive a portion of the death benefit, the contract value will continue to be allocated according to the most recent allocation instructions until the first beneficiary is paid.  After the first beneficiary is paid, the remaining contract value will be allocated to the available money market sub-account until instructions are received from the remaining beneficiary(ies).
 
 
Nationwide will mail contract owners statements and reports.  Therefore, contract owners should promptly notify Nationwide of any address change.
 
These mailings will contain:
 
·  
statements showing the contract’s quarterly activity;
 
·  
confirmation statements showing transactions that affect the contract's value.  Confirmation statements will not be sent for recurring transactions (i.e., Dollar Cost Averaging or salary reduction programs).  Instead, confirmation of recurring transactions will appear in the contract’s quarterly statements; and
 
·  
semi-annual and annual reports of allocated underlying mutual funds.
 
Contract owners can receive information from Nationwide faster and reduce the amount of mail they receive by signing up for Nationwide’s eDelivery program.  Nationwide will notify contract owners by email when important documents (statements, prospectuses and other documents) are ready for a contract owner to view, print, or download from Nationwide’s secure server. To choose this option, go to www.nationwide.com/login.
 
Contract owners should review statements and confirmations carefully.  All errors or corrections must be reported to Nationwide immediately to assure proper crediting to the contract.  Unless Nationwide is notified within 30 days of receipt of the statement, Nationwide will assume statements and confirmation statements are correct.
 
IMPORTANT NOTICE REGARDING DELIVERY OF
SECURITY HOLDER DOCUMENTS
 
When multiple copies of the same disclosure document(s), such as prospectuses, supplements, proxy statements and semi-annual and annual reports are required to be mailed to multiple contract owners in the same household, Nationwide will mail only one copy of each document, unless notified otherwise by the contract owner(s).  Household delivery will continue for the life of the contracts.  Please call 1-866-223-0303 to resume regular delivery.  Please allow 30 days for regular delivery to resume.
 
 
Nationwide is a party to litigation and arbitration proceedings in the ordinary course of its business.  It is often not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty.  Some matters, including certain of those referred to below, are in very preliminary stages, and Nationwide does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages.  In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period.  In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available.  Nationwide does not believe, based on information currently known by management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on Nationwide’s consolidated financial position.  However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on Nationwide’s consolidated financial results in a particular quarterly or annual period.
 
In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices.  A number of these lawsuits have resulted in substantial jury awards or settlements against life insurers other than Nationwide.
 
The financial services industry, including mutual fund, variable annuity, retirement plan, life insurance and

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distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past few years.  Numerous regulatory agencies, including the SEC, the Financial Industry Regulatory Authority and the New York State Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues.  Nationwide has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by Nationwide.  Nationwide has cooperated with these investigations.  Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by Nationwide and its affiliates in December 2003 and June 2005, respectively, and no further information requests have been received with respect to these matters.
 
In addition, state and federal regulators and other governmental bodies have commenced investigations, proceedings or inquiries relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer.  Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, funding agreements issued to back medium-term note (MTN) programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives.  Related investigations, proceedings or inquiries may be commenced in the future.  Nationwide and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, and funding agreements backing the Nationwide MTN program.  Nationwide is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.
 
These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including mutual fund, retirement plan, life insurance and annuity companies.  These proceedings also could affect the outcome of one or more of Nationwide’s litigation matters.  There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on Nationwide in the future.
 
On November 20, 2007, Nationwide and Nationwide Retirement Solutions, Inc. (NRS) were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v NLIC, NRS, Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z.  The plaintiffs purport to represent a class of all participants in the Alabama State Employees Association (ASEA) plan, excluding members of the Board of Control during the Class Period and excluding ASEA’s directors, officers and board members during the class period.  The class period is the date from which Nationwide and/or NRS first made a payment to ASEA or PEBCO arising out of the funding agreement dated March 24, 2004 to the date class notice is provided.  The plaintiffs allege that the defendants breached their fiduciary duties, converted plan participants’ properties, and breached their contract when payments were made and the plan was administered under the funding agreement.  The complaint seeks a declaratory judgment, an injunction, disgorgement of amounts paid, compensatory and punitive damages, interest, attorneys’ fees and costs, and such other equitable and legal relief to which the plaintiffs and class members may be entitled.  On January 9, 2008, Nationwide and NRS filed a Notice of Removal to the United States District Court Northern District of Alabama, Southern Division.  On January 16, 2008, Nationwide and NRS filed a motion to dismiss.  On January 24, 2008, the plaintiffs filed a motion to remand.  The motions have been fully briefed.  Nationwide and NRS intend to defend this case vigorously.
 
On July 11, 2007, Nationwide was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al.  The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries).  The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties.  The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees.  On October 12, 2007, Nationwide filed a motion to dismiss.  The motion has been fully briefed.  Nationwide intends to defend this lawsuit vigorously.
 
On November 15, 2006, Nationwide Financial Services, Inc. (NFS), Nationwide and NRS were named in a lawsuit filed in the United States District Court for the Southern District of

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Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc.  The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period.  The class period is from January 1, 1996 until the class notice is provided.  The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds.  The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest.  On January 25, 2007, NFS, Nationwide and NRS filed a motion to dismiss.  On September 17, 2007, the Court granted the motion to dismiss.  On October 1, 2007, the plaintiff filed a motion to vacate judgment and for leave to file an amended complaint.  On October 25, 2007, NFS, Nationwide and NRS filed their opposition to the plaintiff’s motion.  NFS, Nationwide and NRS continue to defend this lawsuit vigorously.
 
On February 11, 2005, Nationwide was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company.  The plaintiff claims that the total of modal payments that policyholders paid per year exceeded the guaranteed maximum premium provided for in the policy. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment.  The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees.  On February 2, 2006, the court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims.  The court certified a class consisting of all residents of the United States and the Virgin Islands who, during the class period, paid premiums on a modal basis to Nationwide for term life insurance policies issued by Nationwide during the class period that provide for guaranteed maximum premiums, excluding certain specified products.  Excluded from the class are Nationwide; any parent, subsidiary or affiliate of Nationwide; all employees, officers and directors of Nationwide; and any justice, judge or magistrate judge of the State of Ohio who may hear the case.  The class period is from February 10, 1990 through February 2, 2006, the date the class was certified.  On January 26, 2007, the plaintiff filed a motion for summary judgment.  On April 30, 2007, Nationwide filed a motion for summary judgment.  On February 4, 2008, the Court entered its ruling on the parties’ pending motions for summary judgment.  The Court granted Nationwide’s motion for summary judgment for some of the plaintiffs’ causes of action, including breach of contract claims on all decreasing term policies, plaintiff Carr’s individual claims for fraud by omission, violation of the Ohio Deceptive Trade Practices Act and all unjust enrichment claims.  However, several claims against Nationwide remain, including plaintiff Carr’s individual claim for breach of contract and the plaintiff Class’ claims for breach of contract for the term life policies in 43 of 51 jurisdictions.  The Court has requested additional briefing on Nationwide’s affirmative defense that the doctrine of voluntary payment acts as a defense to the breach of contract claims. Nationwide continues to defend this lawsuit vigorously.
 
On April 13, 2004, Nationwide was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company.  Nationwide removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004.  On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding entitled In Re Mutual Funds Investment Litigation.  In response, on May 13, 2005, the plaintiff filed the first amended complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity.  The first amended complaint purports to disclaim, with respect to market timing or stale price trading in Nationwide’s annuities sub-accounts, any allegation based on Nationwide’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of Nationwide annuities or units in annuities sub-accounts.  The plaintiff claims, in the alternative, that if Nationwide is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to Nationwide’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity.  The first amended complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs.  On June 1, 2006, the District Court granted Nationwide’s motion to dismiss the plaintiff’s complaint.  The plaintiff appealed the District Court’s decision, and the issues have been fully briefed.  Nationwide continues to defend this lawsuit vigorously.
 
n August 15, 2001, NFS and Nationwide were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company.  Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased

27


 
variable annuities from Nationwide.  The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that Nationwide and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds.
 
The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and Nationwide, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees.  To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class.  On September 25, 2007, NFS’ and Nationwide’s motion to dismiss the plaintiffs’ fifth amended complaint was denied.  On October 12, 2007, NFS and Nationwide filed their answer to the plaintiffs’ fifth amended complaint and amended counterclaims.  On November 1, 2007, the plaintiffs filed a motion to dismiss NFS’ and Nationwide’s amended counterclaims.  On November 15, 2007, the plaintiffs filed a motion for class certification.  On February 8, 2008, the Court denied the plaintiffs motion to dismiss the amended counterclaim, with the exception that it was tentatively granting the plaintiffs motion to dismiss with respect to the Companies’ claim that it could recover any disgorgement remedy from plan sponsors.  NFS and Nationwide continue to defend this lawsuit vigorously.
 
The general distributor, NISC, is not engaged in any litigation of any material nature.

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Page
General Information and History
1
Services
1
Purchase of Securities Being Offered
2
Underwriters
2
Advertising
2
Annuity Payments
2
Financial Statements
3
 
To learn more about this product, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus.  For a free copy of the SAI and to request other information about this product please call our Service Center at 1-800-848-6331 (TDD 1-800-238-3035) or write to us at Nationwide Life Insurance Company, 5100 Rings Road, RR1-04-F4, Dublin, Ohio 43017-1522.
 
The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SEC maintains an Internet website (http://www.sec.gov) that contains the SAI and other information about us and the product.  Information about us and the product (including the SAI) may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 100 F Street NE, Washington, D.C. 20549-0102. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090.
 
Investment Company Act of 1940 Registration File No. 811- 8666
 
Securities Act of 1933 Registration File No. 033-82174


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The underlying mutual funds listed below are designed primarily as investments for variable annuity contracts and variable life insurance policies issued by insurance companies.  There is no guarantee that the investment objectives will be met.
 
Please refer to the prospectus for each underlying mutual fund for more detailed information.
 
Fidelity Variable Insurance Products Fund - VIP Asset Manager Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
High total return.
 
Fidelity Variable Insurance Products Fund - VIP Asset Manager: Growth Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
Maximize total return.
 
Fidelity Variable Insurance Products Fund - VIP Balanced Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Investments Money Management, Inc.
Investment Objective:
Income and capital growth.
 
Fidelity Variable Insurance Products Fund - VIP Contrafund® Portfolio: Initial Class
This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2008
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
Long-term capital appreciation.
 
Fidelity Variable Insurance Products Fund - VIP Equity-Income Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
Reasonable income.
 
Fidelity Variable Insurance Products Fund - VIP Growth & Income Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
High total return.
 
Fidelity Variable Insurance Products Fund - VIP Growth Opportunities Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
Capital growth.
 
Fidelity Variable Insurance Products Fund - VIP Growth Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
FMR Co., Inc.
Investment Objective:
Capital appreciation.
 
Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Initial Class
This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 2007
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
FMR Co., Inc.
Investment Objective:
High level of current income.
 
Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Initial Class R
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
FMR Co., Inc.
Investment Objective:
High level of current income.
This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this
prospectus).

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Fidelity Variable Insurance Products Fund - VIP Index 500 Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Geode Capital Management, LLC
Investment Objective:
Total return.
 
Fidelity Variable Insurance Products Fund - VIP Investment Grade Bond Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Investments Money Management, Inc.
Investment Objective:
High level of current income.
 
Fidelity Variable Insurance Products Fund - VIP Money Market Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Investments Money Management, Inc.
Investment Objective:
As high a level of current income as is consistent with preservation of capital
 
and liquidity.
 
Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: Initial Class
Investment Adviser:
Fidelity Management & Research Company
Sub-adviser:
Fidelity Research & Analysis Company
Investment Objective:
Long-term capital growth.

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The following tables list the Condensed Financial Information (the Accumulation unit value information for accumulation units outstanding) for contracts with no optional benefits (the minimum variable account charge of 1.40%) and contracts with all optional benefits available on December 31, 2007 (the maximum variable account charge of 1.50%).  The term "Period" is defined as a complete calendar year, unless otherwise noted.  Those Periods with an asterisk (*) reflect accumulation unit information for a partial year only.  Should the Variable account charges applicable to your contract fall between the maximum and minimum charges, AND you wish to see a copy of the Condensed Financial Information applicable to your contract, such information can be obtained in the Statement of Additional Information FREE OF CHARGE by:
 
 
calling:                                 1-800-848-6331, TDD 1-800-238-3035
writing:                                 Nationwide Life Insurance Company
            5100 Rings Road, RR1-04-F4
            Dublin, Ohio 43017-1522
checking on-line at:           www.nationwide.com

No Optional Death Benefits Elected
(variable account charges of 1.40% of the daily net assets of the variable account)
Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Asset Manager: Growth Portfolio: Initial Class – Q/NQ
14.179562
16.631615
17.29%
138,259
2007
13.441212
14.179562
5.49%
190,741
2006
13.121142
13.441212
2.44%
264,806
2005
12.556217
13.121142
4.50%
395,708
2004
10.324912
12.556217
21.61%
475,279
2003
12.396395
10.324912
-16.71%
536,122
2002
13.577036
12.396395
-8.70%
716,843
2001
15.730503
13.577036
-13.69%
861,064
2000
13.841884
15.730503
13.64%
909,134
1999
11.940378
13.841884
15.93%
876,090
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Asset Manager Portfolio: Initial Class – Q/NQ
15.326940
17.454103
13.88%
211,423
2007
14.484159
15.326940
5.82%
247,820
2006
14.118235
14.484159
2.59%
343,659
2005
13.576190
14.118235
3.99%
532,862
2004
11.670962
13.576190
16.32%
667,790
2003
12.968654
11.670962
-10.01%
751,105
2002
13.714827
12.968654
-5.44%
905,729
2001
14.477303
13.714827
-5.27%
1,115,257
2000
13.216823
14.477303
9.54%
1,230,196
1999
11.650850
13.216823
13.44%
1,049,594
1998
 
 
 
 
 
 

32



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Balanced Portfolio: Initial Class – Q/NQ
20.054832
21.561070
7.51%
1,155,051
2007
18.207189
20.054832
10.15%
1,427,374
2006
17.458396
18.207189
4.29%
1,855,780
2005
16.787652
17.458396
4.00%
2,416,716
2004
14.462478
16.787652
16.08%
3,023,884
2003
16.068810
14.462478
-10.00%
3,764,687
2002
16.559606
16.068810
-2.96%
4,900,704
2001
17.547850
16.559606
-5.63%
5,872,179
2000
17.022798
17.547850
3.08%
7,788,648
1999
14.675543
17.022798
15.99%
8,755,609
1998
10.000000
11.234358
12.34%
3,416,997
1995*
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Contrafund® Portfolio: Initial Class –Q/NQ
24.029741
27.859468
15.94%
1,371,142
2007
21.814066
24.029741
10.16%
1,863,314
2006
18.918542
21.814066
15.31%
2,478,019
2005
16.615554
18.918542
13.86%
2,982,897
2004
13.117494
16.615554
26.67%
3,570,402
2003
14.675949
13.117494
-10.62%
4,075,474
2002
16.962632
14.675949
-13.48%
5,424,339
2001
18.422344
16.962632
-7.92%
6,707,116
2000
15.036722
18.422344
22.52%
6,071,379
1999
11.732706
15.036722
28.16%
5,106,999
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Equity-Income Portfolio: Initial Class – Q/NQ
20.267002
20.287559
0.10%
1,060,921
2007
17.100638
20.267002
18.52%
1,370,061
2006
16.381865
17.100638
4.39%
1,883,066
2005
14.896851
16.381865
9.97%
2,414,517
2004
11.592229
14.896851
28.51%
2,913,311
2003
14.156023
11.592229
-18.11%
3,387,196
2002
15.106920
14.156023
-6.29%
4,069,198
2001
14.130390
15.106920
6.91%
3,882,248
2000
13.477888
14.130390
4.84%
4,715,117
1999
12.245396
13.477888
10.06%
4,522,264
1998
 
 
 
 
 
 

33



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Growth & Income Portfolio: Initial Class – Q/NQ
18.007152
19.906344
10.55%
520,445
2007
16.135809
18.007152
11.60%
689,648
2006
15.203560
16.135809
6.13%
995,412
2005
14.574525
15.203560
4.32%
1,469,101
2004
11.942147
14.574525
22.04%
1,914,972
2003
14.524988
11.942147
-17.78%
2,220,568
2002
16.144665
14.524988
-10.03%
2,911,676
2001
16.987037
16.144665
-4.69%
3,385,093
2000
15.781386
16.987037
7.64%
3,863,839
1999
12.350709
15.781386
27.78%
3,344,233
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Growth Opportunities Portfolio: Initial Class – Q/NQ
19.818936
24.069922
21.45%
2,493,877
2007
19.059879
19.818936
3.98%
3,216,784
2006
17.751397
19.059879
7.37%
4,481,286
2005
16.795600
17.751397
5.69%
5,865,216
2004
13.115822
16.795600
28.06%
7,658,446
2003
17.020363
13.115822
-22.94%
9,511,083
2002
20.172772
17.020363
-15.63%
13,321,722
2001
24.667851
20.172772
-18.22%
17,833,598
2000
23.993138
24.667851
2.81%
25,447,799
1999
19.527096
23.993138
22.87%
28,414,698
1998
10.000000
13.069019
30.69%
11,095,627
1995*
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Growth Portfolio: Initial Class – Q/NQ
15.597468
19.524643
25.18%
929,203
2007
14.804258
15.597468
5.36%
1,246,164
2006
14.190931
14.804258
4.32%
1,809,848
2005
13.922094
14.190931
1.93%
2,616,132
2004
10.628317
13.922094
30.99%
3,519,563
2003
15.422487
10.628317
-31.09%
4,182,437
2002
18.995761
15.422487
-18.81%
5,960,258
2001
21.640361
18.995761
-12.21%
7,489,252
2000
15.969000
21.640361
35.51%
5,101,104
1999
11.610523
15.969000
37.54%
3,147,851
1998
 
 
 
 
 
 

34



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class – Q/NQ
12.192317
12.355618
1.34%
1,131,528
2007
11.115850
12.192317
9.68%
1,664,795
2006
10.976756
11.115850
1.27%
2,363,456
2005
10.158111
10.976756
8.06%
3,166,722
2004
8.095108
10.158111
25.48%
4,093,238
2003
7.936743
8.095108
2.00%
4,761,900
2002
9.120099
7.936743
-12.98%
5,787,078
2001
11.930180
9.120099
-23.55%
8,057,837
2000
11.187199
11.930180
6.64%
11,059,477
1999
11.859397
11.187199
-5.67%
12,800,840
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class R – Q/NQ
10.000000
9.797815
-2.02%
180,964
2007*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Index 500 Portfolio: Initial Class – Q/NQ
18.178915
18.897940
3.96%
840,229
2007
15.930573
18.178915
14.11%
1,099,976
2006
15.412633
15.930573
3.36%
1,514,254
2005
14.131388
15.412633
9.07%
2,094,825
2004
11.161105
14.131388
26.61%
2,597,784
2003
14.558975
11.161105
-23.34%
2,881,955
2002
16.800024
14.558975
-13.34%
4,016,315
2001
18.785022
16.800024
-10.57%
4,530,411
2000
15.809112
18.785022
18.82%
4,259,578
1999
12.494291
15.809112
26.53%
3,479,661
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Investment Grade Bond Portfolio: Initial Class – Q/NQ
16.008366
16.469170
2.88%
688,624
2007
15.558397
16.008366
2.89%
873,167
2006
15.440288
15.558397
0.76%
1,113,556
2005
14.991569
15.440288
2.99%
1,553,787
2004
14.452314
14.991569
3.73%
2,340,619
2003
13.283557
14.452314
8.80%
3,450,937
2002
12.421795
13.283557
6.94%
3,291,699
2001
11.326409
12.421795
9.67%
2,965,084
2000
11.609070
11.326409
-2.43%
3,487,348
1999
10.817010
11.609070
7.32%
3,388,904
1998
 
 
 
 
 
 

35



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund – VIP Money Market Portfolio: Initial Class – Q/NQ
12.723059
13.193781
3.70%
739,532
2007
12.301572
12.723059
3.43%
960,147
2006
12.107279
12.301572
1.60%
1,064,672
2005
12.132788
12.107279
-0.21%
1,403,203
2004
12.183380
12.132788
-0.42%
1,968,105
2003
12.150588
12.183380
0.27%
3,319,075
2002
11.833100
12.150588
2.68%
4,628,056
2001
11.285433
11.833100
4.85%
3,292,131
2000
10.883253
11.285433
3.70%
4,611,877
1999
10.065929
10.883253
8.12%
4,065,479
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Overseas Portfolio: Initial Class – Q/NQ
19.081173
22.069516
15.66%
988,884
2007
16.388350
19.081173
16.43%
1,257,710
2006
13.961227
16.388350
17.38%
1,573,841
2005
12.460357
13.961227
12.05%
1,920,889
2004
8.814379
12.460357
41.36%
2,350,188
2003
11.213840
8.814379
-21.40%
2,866,878
2002
14.428235
11.213840
-22.28%
3,912,704
2001
18.088630
14.428235
-20.24%
4,932,146
2000
12.862332
18.088630
40.63%
5,109,217
1999
11.569690
12.862332
11.17%
5,585,894
1998
 
 
 
 
 
 

36



Optional One-Year Step Up Death Benefit Elected
(variable account charges of 1.45% of the daily net assets of the variable account)
Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Asset Manager: Growth Portfolio: Initial Class – Q/NQ
12.104661
14.190670
17.23%
6,323
2007
11.480165
12.104661
5.44%
11,082
2006
11.212463
11.480165
2.39%
13,597
2005
10.735154
11.212463
4.45%
15,178
2004
8.831934
10.735154
21.55%
15,729
2003
10.609255
8.831934
-16.75%
17,695
2002
11.625620
10.609255
-8.74%
23,764
2001
13.476375
11.625620
-13.73%
25,683
2000
11.864403
13.476375
13.59%
23,461
1999
10.239737
11.864403
15.87%
27,444
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Asset Manager Portfolio: Initial Class – Q/NQ
13.369357
15.217067
13.82%
7,011
2007
12.640601
13.369357
5.77%
10,556
2006
12.327496
12.640601
2.54%
21,098
2005
11.860213
12.327496
3.94%
28,103
2004
10.200970
11.860213
16.27%
33,852
2003
11.340982
10.200970
-10.05%
44,739
2002
11.999629
11.340982
-5.49%
48,699
2001
12.673141
11.999629
-5.31%
54,932
2000
11.575607
12.673141
9.48%
57,444
1999
10.209261
11.575607
13.38%
32,492
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Balanced Portfolio: Initial Class – Q/NQ
13.974382
15.016294
7.46%
11,079
2007
12.693334
13.974382
10.09%
10,416
2006
12.177449
12.693334
4.24%
19,511
2005
11.715543
12.177449
3.94%
31,733
2004
10.097995
11.715543
16.02%
32,540
2003
11.225264
10.097995
-10.04%
37,961
2002
11.574021
11.225264
-3.01%
38,648
2001
12.270926
11.574021
-5.68%
61,102
2000
11.909803
12.270926
3.03%
102,797
1999
10.272783
11.909803
15.94%
70,479
1998
 
 
 
 
 
 

37



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Contrafund® Portfolio: Initial Class –Q/NQ
20.289665
23.511331
15.88%
43,277
2007
18.428168
20.289665
10.10%
66,566
2006
15.990164
18.428168
15.25%
106,761
2005
14.050776
15.990164
13.80%
117,489
2004
11.098298
14.050776
26.60%
124,115
2003
12.423170
11.098298
-10.66%
133,573
2002
14.366179
12.423170
-13.52%
170,532
2001
15.610339
14.366179
-7.97%
254,589
2000
12.747959
15.610339
22.45%
182,647
1999
9.951886
12.747959
28.10%
118,880
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Equity-Income Portfolio: Initial Class – Q/NQ
17.026328
17.034903
0.05%
28,174
2007
14.373528
17.026328
18.46%
38,936
2006
13.776345
14.373528
4.33%
85,022
2005
12.533878
13.776345
9.91%
123,810
2004
9.758378
12.533878
28.44%
123,006
2003
11.922646
9.758378
-18.15%
128,435
2002
12.730017
11.922646
-6.34%
154,894
2001
11.913142
12.730017
6.86%
187,086
2000
11.368793
11.913142
4.79%
207,264
1999
10.334399
11.368793
10.01%
143,214
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Growth & Income Portfolio: Initial Class – Q/NQ
15.100355
16.684461
10.49%
16,678
2007
13.537939
15.100355
11.54%
19,476
2006
12.762230
13.537939
6.08%
33,992
2005
12.240411
12.762230
4.26%
68,420
2004
10.034701
12.240411
21.98%
74,118
2003
12.211208
10.034701
-17.82%
78,929
2002
13.579820
12.211208
-10.08%
132,560
2001
14.295582
13.579820
-5.01%
154,167
2000
13.287693
14.295582
7.59%
153,521
1999
10.404380
13.287693
27.71%
117,575
1998
 
 
 
 
 
 

38



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Growth Opportunities Portfolio: Initial Class – Q/NQ
10.499396
12.744932
21.39%
36,320
2007
10.102384
10.499396
3.93%
64,563
2006
9.413600
10.102384
7.32%
139,840
2005
8.911262
9.413600
5.64%
175,022
2004
6.962409
8.911262
27.99%
187,805
2003
9.039693
6.962409
-22.98%
191,834
2002
10.719454
9.039693
-15.67%
250,183
2001
13.114680
10.719454
-18.26%
328,826
2000
12.762442
13.114680
2.76%
464,485
1999
10.392122
12.762442
22.81%
341,678
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Growth Portfolio: Initial Class – Q/NQ
13.406871
16.773931
25.11%
55,095
2007
12.731498
13.406871
5.30%
86,022
2006
12.210218
12.731498
4.27%
138,797
2005
11.984978
12.210218
1.88%
181,648
2004
9.154131
11.984978
30.92%
195,092
2003
13.290081
9.154131
-31.12%
198,800
2002
16.377655
13.290081
-18.85%
240,907
2001
18.667172
16.377655
-12.26%
447,316
2000
13.781993
18.667172
35.45%
297,413
1999
10.025497
13.781993
37.47%
133,287
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class – Q/NQ
10.362802
10.496256
1.29%
16,889
2007
9.452649
10.362802
9.63%
37,116
2006
9.339088
9.452649
1.22%
80,835
2005
8.646967
9.339088
8.00%
161,359
2004
6.894367
8.646967
25.42%
119,668
2003
6.762920
6.894367
1.94%
133,862
2002
7.775236
6.762920
-13.02%
150,130
2001
10.176069
7.775236
-23.59%
171,239
2000
9.547168
10.176069
6.59%
203,248
1999
10.125956
9.547168
-5.72%
154,310
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class R – Q/NQ
10.000000
9.794494
-2.06%
2,581
2007*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

39



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Index 500 Portfolio: Initial Class – Q/NQ
14.962815
15.546704
3.90%
46,186
2007
13.118871
14.962815
14.06%
67,112
2006
12.698760
13.118871
3.31%
100,088
2005
11.649028
12.698760
9.01%
114,023
2004
9.205181
11.649028
26.55%
122,337
2003
12.013694
9.205181
-23.38%
132,507
2002
13.870024
12.013694
-13.38%
159,178
2001
15.516650
13.870024
-10.61%
203,665
2000
13.065126
15.516650
18.76%
174,367
1999
10.330898
13.065126
26.47%
91,737
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Investment Grade Bond Portfolio: Initial Class – Q/NQ
14.947657
15.370088
2.83%
26,300
2007
14.534850
14.947657
2.84%
29,217
2006
14.431813
14.534850
0.71%
50,574
2005
14.019511
14.431813
2.94%
72,042
2004
13.522075
14.019511
3.68%
76,877
2003
12.434847
13.522075
8.74%
101,660
2002
11.634088
12.434847
6.88%
64,996
2001
10.613518
11.634088
9.62%
55,274
2000
10.883913
10.613518
-2.48%
66,413
1999
10.146469
10.883913
7.27%
10,876
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Money Market Portfolio: Initial Class – Q/NQ
12.182153
12.626422
3.65%
10,994
2007
11.784544
12.182153
3.37%
10,023
2006
11.604286
11.784544
1.55%
28,455
2005
11.634636
11.604286
-0.26%
25,773
2004
11.689079
11.634636
-0.47%
152,415
2003
11.663532
11.689079
0.22%
177,315
2002
11.364567
11.663532
2.63%
248,620
2001
10.844055
11.364567
4.80%
94,187
2000
10.462911
10.844055
3.64%
92,768
1999
10.066783
10.462911
3.94%
149,066
1998
 
 
 
 
 
 

40



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund – VIP Overseas Portfolio: Initial Class – Q/NQ
16.243925
18.778343
15.60%
16,429
2007
13.958571
16.243925
16.37%
19,745
2006
11.897310
13.958571
17.33%
50,925
2005
10.623695
11.897310
11.99%
54,008
2004
7.518950
10.623695
41.29%
40,523
2003
9.570633
7.518950
-21.44%
42,534
2002
12.320308
9.570633
-22.32%
62,839
2001
15.453729
12.320308
-20.28%
76,976
2000
10.994287
15.453729
40.56%
65,541
1999
9.894400
10.994287
11.12%
48,076
1998
 
 
 
 
 
 

41



(variable account charges of 1.50% of the daily net assets of the variable account)
Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Asset Manager: Growth Portfolio: Initial Class – Q/NQ
12.048539
14.117668
17.17%
2,078
2007
11.432724
12.048539
5.39%
7,322
2006
11.171781
11.432724
2.34%
7,616
2005
10.701637
11.171781
4.39%
7,762
2004
8.808823
10.701637
21.49%
7,994
2003
10.586882
8.808823
-16.79%
8,181
2002
11.607029
10.586882
-8.79%
9,841
2001
13.461613
11.607029
-13.78%
9,392
2000
11.857417
13.461613
13.53%
9,917
1999
10.238907
11.857417
15.81%
6,520
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Asset Manager Portfolio: Initial Class – Q/NQ
13.307404
15.138829
13.76%
1,299
2007
12.588399
13.307404
5.71%
1,815
2006
12.282785
12.588399
2.49%
2,015
2005
11.823194
12.282785
3.89%
8,019
2004
10.174290
11.823194
16.21%
13,948
2003
11.317060
10.174290
-10.10%
15,612
2002
11.980443
11.317060
-5.54%
14,892
2001
12.659254
11.980443
-5.36%
16,047
2000
11.568800
12.659254
9.43%
16,139
1999
10.208441
11.568800
13.33%
10,642
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Balanced Portfolio: Initial Class – Q/NQ
13.909584
14.939034
7.40%
8,251
2007
12.640884
13.909584
10.04%
7,883
2006
12.133277
12.640884
4.18%
9,612
2005
11.678968
12.133277
3.89%
11,052
2004
10.071577
11.678968
15.96%
12,729
2003
11.201595
10.071577
-10.09%
12,118
2002
11.555522
11.201595
-3.06%
24,064
2001
12.257491
11.555522
-5.73%
23,036
2000
11.902806
12.257491
2.98%
22,552
1999
10.271954
11.902806
15.88%
8,804
1998
 
 
 
 
 
 

42



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Contrafund® Portfolio: Initial Class –Q/NQ
20.195647
23.390456
15.82%
13,939
2007
18.352053
20.195647
10.05%
28,419
2006
15.932173
18.352053
15.19%
34,168
2005
14.006921
15.932173
13.75%
35,313
2004
11.069273
14.006921
26.54%
36,435
2003
12.396983
11.069273
-10.71%
36,953
2002
14.343222
12.396983
-13.57%
39,850
2001
15.593260
14.343222
-8.02%
42,232
2000
12.740463
15.593260
22.39%
35,989
1999
9.951081
12.740463
28.03%
21,842
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Equity-Income Portfolio: Initial Class – Q/NQ
16.947453
16.947333
0.00%
28,686
2007
14.314186
16.947453
18.40%
36,318
2006
13.726398
14.314186
4.28%
51,930
2005
12.494773
13.726398
9.86%
70,414
2004
9.732886
12.494773
28.38%
71,345
2003
11.897518
9.732886
-18.19%
73,278
2002
12.709684
11.897518
-6.39%
71,430
2001
11.900112
12.709684
6.80%
68,914
2000
11.362118
11.900112
4.73%
59,406
1999
10.333567
11.362118
9.95%
54,381
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Growth & Income Portfolio: Initial Class – Q/NQ
15.030422
16.598721
10.43%
9,929
2007
13.482057
15.030422
11.48%
12,966
2006
12.715976
13.482057
6.02%
18,124
2005
12.202238
12.715976
4.21%
24,620
2004
10.008474
12.202238
21.92%
28,822
2003
12.185475
10.008474
-17.87%
26,625
2002
13.558120
12.185475
-10.12%
40,331
2001
14.279936
13.558120
-5.05%
41,235
2000
13.279886
14.279936
7.53%
41,588
1999
10.403545
13.279886
27.65%
9,027
1998
 
 
 
 
 
 

43



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Growth Opportunities Portfolio: Initial Class – Q/NQ
10.450759
12.679414
21.33%
28,105
2007
10.060671
10.450759
3.88%
41,712
2006
9.379466
10.060671
7.26%
54,320
2005
8.883453
9.379466
5.58%
94,316
2004
6.944197
8.883453
27.93%
96,979
2003
9.020627
6.944197
-23.02%
100,295
2002
10.702308
9.020627
-15.71%
135,413
2001
13.100322
10.702308
-18.31%
147,881
2000
12.754941
13.100322
2.71%
161,121
1999
10.391285
12.754941
22.75%
118,332
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Growth Portfolio: Initial Class – Q/NQ
13.344763
16.687720
25.05%
38,423
2007
12.678940
13.344763
5.25%
44,123
2006
12.165962
12.678940
4.22%
54,879
2005
11.947602
12.165962
1.83%
62,950
2004
9.130201
11.947602
30.86%
63,375
2003
13.262071
9.130201
-31.16%
66,078
2002
16.351497
13.262071
-18.89%
74,355
2001
18.646776
16.351497
-12.31%
75,389
2000
13.773906
18.646776
35.38%
68,415
1999
10.024687
13.773906
37.40%
42,192
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class – Q/NQ
10.314801
10.442297
1.24%
35,507
2007
9.413616
10.314801
9.57%
38,215
2006
9.305233
9.413616
1.16%
43,217
2005
8.619983
9.305233
7.95%
49,229
2004
6.876332
8.619983
25.36%
52,202
2003
6.748658
6.876332
1.89%
54,717
2002
7.762794
6.748658
-13.06%
59,071
2001
10.164929
7.762794
-23.63%
64,359
2000
9.541553
10.164929
6.53%
67,174
1999
10.125138
9.541553
-5.76%
46,036
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class R – Q/NQ
10.000000
9.791167
-2.09%
0
2007*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

44



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund  – VIP Index 500 Portfolio: Initial Class – Q/NQ
14.893454
15.466742
3.85%
22,067
2007
13.064662
14.893454
14.00%
36,236
2006
12.652688
13.064662
3.26%
59,424
2005
11.612663
12.652688
8.96%
63,463
2004
9.181101
11.612663
26.48%
61,972
2003
11.988361
9.181101
-23.42%
62,561
2002
13.847864
11.988361
-13.43%
72,467
2001
15.499687
13.847864
-10.66%
73,250
2000
13.057468
15.499687
18.70%
59,044
1999
10.330070
13.057468
26.40%
27,002
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund  – VIP Investment Grade Bond Portfolio: Initial Class – Q/NQ
14.878408
15.291092
2.77%
11,013
2007
14.474832
14.878408
2.79%
16,969
2006
14.379491
14.474832
0.66%
20,355
2005
13.975777
14.379491
2.89%
22,529
2004
13.486744
13.975777
3.63%
25,063
2003
12.408647
13.486744
8.69%
25,085
2002
11.615489
12.408647
6.83%
28,454
2001
10.601902
11.615489
9.56%
29,771
2000
10.877515
10.601902
-2.53%
18,814
1999
10.145651
10.877515
7.21%
6,850
1998
 
 
 
 
 
 
Fidelity Variable Insurance Products Fund – VIP Money Market Portfolio: Initial Class – Q/NQ
12.125642
12.561438
3.59%
39,989
2007
11.735816
12.125642
3.32%
14,747
2006
11.562155
11.735816
1.50%
22,978
2005
11.598279
11.562155
-0.31%
24,928
2004
11.658464
11.598279
-0.52%
25,016
2003
11.638891
11.658464
0.17%
25,144
2002
11.346346
11.638891
2.58%
41,069
2001
10.832134
11.346346
4.75%
37,534
2000
10.456715
10.832134
3.59%
49,021
1999
10.065929
10.456715
3.88%
71,766
1998
 
 
 
 
 
 

45



Sub-Account
Accumulation Unit Value at Beginning of Period
Accumulation Unit Value at End of Period
Percentage Change in Accumulation Unit Value
Number of Accumulation Units at End of Period
Period
           
Fidelity Variable Insurance Products Fund – VIP Overseas Portfolio: Initial Class – Q/NQ
16.168711
18.681867
15.54%
6,481
2007
13.900964
16.168711
16.31%
16,737
2006
11.854202
13.900964
17.27%
18,273
2005
10.590569
11.854202
11.93%
20,167
2004
7.499286
10.590569
41.22%
21,152
2003
9.550445
7.499286
-21.48%
21,108
2002
12.300620
9.550445
-22.36%
23,111
2001
15.436822
12.300620
-20.32%
24,233
2000
10.987826
15.436822
40.49%
15,948
1999
9.893604
10.987826
11.06%
9,431
1998
 
 
 
 
 
 


46



Types of Contracts
 
The contracts described in this prospectus are classified according to the tax treatment to which they are subject under the Internal Revenue Code.  The following is a general description of the various types of contracts.  Eligibility requirements, tax benefits (if any), limitations, and other features of the contracts will differ depending on the type of contract.
 
Investment Only (Qualified Plans)
 
Contracts that are owned by Qualified Plans are not intended to confer tax benefits on the beneficiaries of the plan; they are used as investment vehicles for the plan.  The income tax consequences to the beneficiary of a Qualified Plan are controlled by the operation of the plan, not by operation of the assets in which the plan invests.
 
Beneficiaries of Qualified Plans should contact their employer and/or trustee of the plan to obtain and review the plan, trust, summary plan description and other documents for the tax and other consequences of being a participant in a Qualified Plan.
 
Individual Retirement Annuities (IRAs)
 
IRAs are contracts that satisfy the provisions of Section 408(b) of the Internal Revenue Code, including the following requirements:
 
·  
the contract is not transferable by the owner;
 
·  
the premiums are not fixed;
 
·  
if the contract owner is younger than age 50, the annual premium cannot exceed $5,000; if the contract owner is age 50 or older, the annual premium cannot exceed $6,000 (although rollovers of greater amounts from qualified plans, Tax Sheltered Annuities and other IRAs can be received);
 
·  
certain minimum distribution requirements must be satisfied after the owner attains the age of 70½;
 
·  
the entire interest of the owner in the contract is nonforfeitable; and
 
·  
after the death of the owner, additional distribution requirements may be imposed to ensure distribution of the entire balance in the contract within the statutory period of time.
 
Depending on the circumstance of the owner, all or a portion of the contributions made to the account may be deducted for federal income tax purposes.
 
IRAs may receive rollover contributions from other Individual Retirement Accounts, other Individual Retirement Annuities, Tax Sheltered Annuities, certain 457 governmental plans and qualified retirement plans (including 401(k) plans).
 
When the owner of an IRA attains the age of 70½, the Internal Revenue Code requires that certain minimum distributions be made.  In addition, upon the death of the owner of an IRA, mandatory distribution requirements are imposed by the Internal Revenue Code to ensure distribution of the entire contract value within the required statutory period.  Due to recent changes in Treasury Regulations, the amount used to compute the mandatory distributions may exceed the contract value.
 
Failure to make the mandatory distributions can result in an additional penalty tax of 50% of the excess of the amount required to be distributed over the amount that was actually distributed.
 
For further details regarding IRAs, please refer to the disclosure statement provided when the IRA was established and the annuity contract’s IRA endorsement.
 
Non-Qualified Contracts
 
A Non-Qualified Contract is a contract that does not qualify for certain tax benefits under the Internal Revenue Code, and which is not an IRA, a Roth IRA, a SEP IRA, a Simple IRA, or a Tax Sheltered Annuity.
 
Upon the death of the owner of a Non-Qualified Contract, mandatory distribution requirements are imposed to ensure distribution of the entire balance in the contract within a required period.
 
Non-Qualified contracts that are owned by natural persons allow the deferral of taxation on the income earned in the contract until it is distributed or deemed to be distributed.  Non-Qualified contracts that are owned by non-natural persons, such as trusts, corporations and partnerships are generally subject to current income tax on the income earned inside the contract, unless the nonnatural person owns the contract as an “agent” of a natural person.
 
Roth IRAs
 
Roth IRA contracts are contracts that satisfy the provisions of Section 408A of the Internal Revenue Code, including the following requirements:
 
·  
the contract is not transferable by the owner;
 
·  
the premiums are not fixed;
 
·  
if the contract owner is younger than age 50, the annual premium cannot exceed $5,000; if the contract owner is age 50 or older, the annual premium cannot exceed $6,000 (although rollovers of greater amounts from other Roth IRAs and IRAs can be received);
 
·  
the entire interest of the owner in the contract is nonforfeitable; and
 
·  
after the death of the owner, certain distribution requirements may be imposed to ensure distribution of the entire balance in the contract within the statutory period of time.
 
A Roth IRA can receive a rollover from an IRA; however, the amount rolled over from the IRA to the Roth IRA is required to be included in the owner's federal gross income at the time of the rollover, and will be subject to federal income tax.
 
There are income limitations on eligibility to participate in a Roth IRA and additional income limitations for eligibility to rollover amounts from an IRA to a Roth IRA.

47


 
For further details regarding Roth IRAs, please refer to the disclosure statement provided when the Roth IRA was established and the annuity contract’s IRA endorsement.
 
Tax Sheltered Annuities
 
Certain tax-exempt organizations (described in section 501(c)(3) of the Internal Revenue Code) and public school systems may establish a plan under which annuity contracts can be purchased for their employees.  These annuity contracts are often referred to as Tax Sheltered Annuities.
 
Purchase payments made to Tax Sheltered Annuities are excludable from the income of the employee, up to statutory maximum amounts.  These amounts should be set forth in the plan adopted by the employer.
 
Tax Sheltered Annuities may receive rollover contributions from Individual Retirement Accounts, Individual Retirement Annuities, other Tax Sheltered Annuities, certain 457 governmental plans, and qualified retirement plans (including 401(k) plans).
 
The owner's interest in the contract is nonforfeitable (except for failure to pay premiums) and cannot be transferred.
 
When the owner of a Tax Sheltered Annuity attains the age of 70½, the Internal Revenue Code requires that certain minimum distributions be made.  Due to recent changes in Treasury Regulations, the amount used to compute the minimum distributions may exceed the contract value.  In addition, upon the death of the owner of a Tax Sheltered Annuity, mandatory distribution requirements are imposed by the Internal Revenue Code to ensure distribution of the entire contract value within the required statutory period.
 
Final 403(b) Regulations were issued by the Internal Revenue Service that impose certain restrictions on non-taxable transfers or exchanges of one 403(b) Tax Sheltered Annuity contract for another. Nationwide will no longer issue or accept applications for new and/or in-service transfers to new or existing Nationwide individual 403(b) Tax Sheltered Annuity contracts used for salary reduction plans not subject to ERISA.  Nationwide will continue to accept applications and in-service transfers for individual 403(b) Tax Sheltered Annuity contracts used for 403(b) plans that are subject to ERISA and certain state Optional Retirement Plans and/or Programs that have purchased at least one individual annuity contract issued by Nationwide prior to September 25, 2007.
 
Commencing in 2009, Tax Sheltered Annuities must be issued pursuant to a written plan, and the plan must satisfy various administrative requirements.  You should check with your employer to ensure that these requirements will be satisfied in a timely manner.
 
Federal Tax Considerations
 
Federal Income Taxes
 
The tax consequences of purchasing a contract described in this prospectus will depend on:
 
·  
the type of contract purchased;
 
·  
the purposes for which the contract is purchased; and
 
·  
the personal circumstances of individual investors having interests in the contracts.
 
Existing tax rules are subject to change, and may affect individuals differently depending on their situation.  Nationwide does not guarantee the tax status of any contracts or any transactions involving the contracts.
 
Representatives of the Internal Revenue Service have informally suggested, from time to time, that the number of underlying mutual funds available or the number of transfer opportunities available under a variable product may be relevant in determining whether the product qualifies for the desired tax treatment.  In 2003, the Internal Revenue Service issued formal guidance, in Revenue Ruling 2003-91, that indicates that if the number of underlying mutual funds available in a variable insurance product does not exceed 20, the number of underlying mutual funds alone would not cause the contract to not qualify for the desired tax treatment.  The Internal Revenue Service has also indicated that exceeding 20 investment options may be considered a factor, along with other factors including the number of transfer opportunities available under the contract, when determining whether the contract qualifies for the desired tax treatment.  The revenue ruling did not indicate the actual number of underlying mutual funds that would cause the contract to not provide the desired tax treatment.  Should the U.S. Secretary of the Treasury issue additional rules or regulations limiting the number of underlying mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds such that the contract would no longer qualify for tax deferred treatment under Section 72 of the Internal Revenue Code, Nationwide will take whatever steps are available to remain in compliance.
 
If the contract is purchased as an investment of certain retirement plans (such as qualified retirement plans, Individual Retirement Accounts, and custodial accounts as described in Sections 401 and 408(a) of the Internal Revenue Code), tax advantages enjoyed by the contract owner and/or annuitant may relate to participation in the plan rather than ownership of the annuity contract.  Such plans are permitted to purchase investments other than annuities and retain tax-deferred status.
 
The following is a brief summary of some of the federal income tax considerations related to the contracts.  In addition to the federal income tax, distributions from annuity contracts may be subject to state and local income taxes.  The tax rules across all states and localities are not uniform and therefore will not be discussed in this prospectus.  Tax rules that may apply to contracts issued in U.S. territories such as Puerto Rico and Guam are also not discussed.  Nothing in this prospectus should be considered to be tax advice.  Contract owners and prospective contract owners should consult a financial consultant, tax adviser or legal counsel to discuss the taxation and use of the contracts.
 
IRAs
 
Distributions from IRAs are generally taxed as ordinary income when received.  If any of the amount contributed to the Individual Retirement Annuity was nondeductible for federal income tax purposes, then a portion of each distribution is excludable from income.

48


 
If distributions of income from an IRA are made prior to the date that the owner attains the age of 59½ years, the income is subject to the regular income tax, and an additional penalty tax of 10% is generally applicable.  The 10% penalty tax can be avoided if the distribution is:
 
·  
made to a beneficiary on or after the death of the owner;
 
·  
attributable to the owner becoming disabled (as defined in the Internal Revenue Code);
 
·  
part of a series of substantially equal periodic payments made not less frequently than annually made for the life (or life expectancy) of the owner, or the joint lives (or joint life expectancies) of the owner and his or her designated beneficiary;
 
·  
used for qualified higher education expenses; or
 
·  
used for expenses attributable to the purchase of a home for a qualified first-time buyer.
 
If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.
 
Roth IRAs
 
Distributions of earnings from Roth IRAs are taxable or nontaxable depending upon whether they are "qualified distributions" or "non-qualified distributions."  A "qualified distribution" is one that satisfies the five-year rule and meets one of the following requirements:
 
·  
it is made on or after the date on which the contract owner attains age 59½;
 
·  
it is made to a beneficiary (or the contract owner’s estate) on or after the death of the contract owner;
 
·  
it is attributable to the contract owner’s disability; or
 
·  
it is used for expenses attributable to the purchase of a home for a qualified first-time buyer.
 
The five-year rule generally is satisfied if the distribution is not made within the five year period beginning with the first taxable year in which a contribution is made to any Roth IRA established for the owner.
 
A qualified distribution is not included in gross income for federal income tax purposes.
 
A non-qualified distribution is not includable in gross income to the extent that the distribution, when added to all previous distributions, does not exceed the total amount of contributions made to the Roth IRA.  Any non-qualified distribution in excess of total contributions is includable in the contract owner’s gross income as ordinary income in the year that it is distributed to the contract owner.
 
Special rules apply for Roth IRAs that have proceeds received from an IRA prior to January 1, 1999 if the owner elected the special 4-year income averaging provisions that were in effect for 1998.
 
If non-qualified distributions of income from a Roth IRA are made prior to the date that the owner attains the age of 59½ years, the income is subject to both the regular income tax and an additional penalty tax of 10%.  The penalty tax can be avoided if the distribution is:
 
·  
made to a beneficiary on or after the death of the owner;
 
·  
attributable to the owner becoming disabled (as defined in the Internal Revenue Code);
 
·  
part of a series of substantially equal periodic payments made not less frequently than annually made for the life (or life expectancy) of the owner, or the joint lives (or joint life expectancies) of the owner and his or her designated beneficiary;
 
·  
for qualified higher education expenses; or
 
·  
used for expenses attributable to the purchase of a home for a qualified first-time buyer.
 
If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.
 
Tax Sheltered Annuities
 
Distributions from Tax Sheltered Annuities are generally taxed when received.  A portion of each distribution after the annuitization date is excludable from income based on a formula established pursuant to the Internal Revenue Code.  The formula excludes from income the amount invested in the contract divided by the number of anticipated payments until the full investment in the contract is recovered.  Thereafter all distributions are fully taxable.
 
If a distribution of income is made from a Tax Sheltered Annuity prior to the date that the owner attains the age of 59½ years, the income is subject to both the regular income tax and an additional penalty tax of 10%.  The penalty tax can be avoided if the distribution is:
 
·  
made to a beneficiary on or after the death of the owner;
 
·  
attributable to the owner becoming disabled (as defined in the Internal Revenue Code);
 
·  
part of a series of substantially equal periodic payments made not less frequently than annually made for the life (or life expectancy) of the owner, or the joint lives (or joint life expectancies) of the owner and his or her designated beneficiary; or
 
·  
made to the owner after separation from service with his or her employer after age 55.
 
A loan from a Tax Sheltered Annuity generally is not considered to be a distribution, and is therefore generally not taxable.  However, if the loan is not repaid in accordance with the repayment schedule, the entire balance of the loan would be treated as being in default, and the defaulted amount would be treated as being distributed to the participant as a taxable distribution.
 
If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.

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Non-Qualified Contracts - Natural Persons as Contract Owners
 
Generally, the income earned inside a Non-Qualified Annuity Contract that is owned by a natural person is not taxable until it is distributed from the contract.
 
Distributions before the annuitization date are taxable to the contract owner to the extent that the cash value of the contract exceeds the contract owner’s investment in the contract at the time of the distribution.  In general, the investment in the contract is equal to the purchase payment made with after-tax dollars.  Distributions, for this purpose, include full and partial surrenders, any portion of the contract that is assigned or pledged, amounts borrowed from the contract, or any portion of the contract that is transferred by gift.  For these purposes, a transfer by gift may occur upon annuitization if the contract owner and the annuitant are not the same individual.
With respect to annuity distributions on or after the annuitization date, a portion of each annuity payment is excludable from taxable income.  The amount excludable from each annuity payment is determined by multiplying the annuity payment by a ratio which is the contract owner’s investment in the contract, divided by the expected return on the contract.  Once the entire investment in the contract is recovered, all distributions are fully includable in income.  The maximum amount excludable from income is the investment in the contract.  If the annuitant dies before the entire investment in the contract has been excluded from income, and as a result of the annuitant's death no more payments are due under the contract, then the unrecovered investment in the contract may be deducted on his or her final tax return.
 
In determining the taxable amount of a distribution, all annuity contracts issued after October 21, 1988 by the same company to the same contract owner during the same calendar year will be treated as one annuity contract.
 
A special rule applies to distributions from contracts that have investments that were made prior to August 14, 1982.  For those contracts, distributions that are made prior to the annuitization date are treated first as a recovery of the investment in the contract as of that date.  A distribution in excess of the amount of the investment in the contract as of August 14, 1982, will be treated as taxable income.
 
The Internal Revenue Code imposes a penalty tax if a distribution is made before the contract owner reaches age 59½.  The amount of the penalty is 10% of the portion of any distribution that is includable in gross income.  The penalty tax does not apply if the distribution is:
 
·  
the result of a contract owner’s death;
 
·  
the result of a contract owner’s disability, (as defined in the Internal Revenue Code);
 
·  
one of a series of substantially equal periodic payments made over the life (or life expectancy) of the contract owner or the joint lives (or joint life expectancies) of the contract owner and the beneficiary selected by the contract owner to receive payment under the annuity payment option selected by the contract owner; or
 
·  
is allocable to an investment in the contract before August 14, 1982.
 
If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.
 
Non-Qualified Contracts - Non-Natural Persons as Contract Owners
 
The previous discussion related to the taxation of Non-Qualified Contracts owned by individuals.  Different rules (the so-called "non-natural persons" rules) apply if the contract owner is not a natural person.
 
Generally, contracts owned by corporations, partnerships, trusts, and similar entities are not treated as annuity contracts under the Internal Revenue Code.  Therefore, income earned under a Non-Qualified Contract that is owned by a non-natural person is taxed as ordinary income during the taxable year that it is earned.  Taxation is not deferred, even if the income is not distributed out of the contract.  The income is taxable as ordinary income, not capital gain.
 
The non-natural persons rules do not apply to all entity-owned contracts.  For purposes of the non-natural person’s rule, a contract that is owned by a non-natural person as an agent of an individual is treated as owned by the individual.  This would cause the contract to be treated as an annuity under the Internal Revenue Code, allowing tax deferral.  However, this exception does not apply when the non-natural person is an employer that holds the contract under a non-qualified deferred compensation arrangement for one or more employees.
 
The non-natural persons rules also do not apply to contracts that are:
 
·  
acquired by the estate of a decedent by reason of the death of the decedent;
 
·  
issued in connection with certain qualified retirement plans and individual retirement plans;
 
·  
purchased by an employer upon the termination of certain qualified retirement plans; or
 
·  
immediate annuities within the meaning of Section 72(u) of the Internal Revenue Code.
 
If the annuitant dies before the contract is completely distributed, the balance may be included in the annuitant’s gross estate for tax purposes, depending on the obligations that the non-natural owner may have owed to the annuitant.
 
Withholding
 
Pre-death distributions from the contracts are subject to federal income tax.  Nationwide will withhold the tax from the distributions unless the contract owner requests otherwise.  If the distribution is from a Tax Sheltered Annuity, it will be subject to mandatory 20% withholding that cannot be waived, unless:
 
·  
the distribution is made directly to another Tax Sheltered Annuity, qualified pension or profit-sharing plan described in section 401(a), an eligible deferred

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compensation plan described in section 457(b) which is maintained by an eligible employer described in section 457(e)(1)(A) or IRA; or
 
·  
the distribution satisfies the minimum distribution requirements imposed by the Internal Revenue Code.
 
In addition, under some circumstances, the Internal Revenue Code will not permit contract owners to waive withholding.  Such circumstances include:
 
·  
if the payee does not provide Nationwide with a taxpayer identification number; or
 
·  
if Nationwide receives notice from the Internal Revenue Service that the taxpayer identification number furnished by the payee is incorrect.
 
If a contract owner is prohibited from waiving withholding, as described above, the distribution will be subject to mandatory back-up withholding.  The mandatory back-up withholding rate is established by Section 3406 of the Internal Revenue Code and is applied against the amount of income that is distributed.
 
Non-Resident Aliens
 
Generally, a pre-death distribution from a contract to a non-resident alien is subject to federal income tax at a rate of 30% of the amount of income that is distributed.  Nationwide is required to withhold this amount and send it to the Internal Revenue Service.  Some distributions to non-resident aliens may be subject to a lower (or no) tax if a treaty applies.  In order to obtain the benefits of such a treaty, the non-resident alien must:
 
(1)  
provide Nationwide with a properly completed withholding certificate claiming the treaty benefit of a lower tax rate or exemption from tax; and
 
(2)  
provide Nationwide with an individual taxpayer identification number.
 
If the non-resident alien does not meet the above conditions, Nationwide will withhold 30% of income from the distribution.
 
Another exemption from the 30% withholding is for the non-resident alien to provide Nationwide with sufficient evidence that:
 
(1)  
the distribution is connected to the non-resident alien’s conduct of business in the United States;
 
(2)  
the distribution is  includable in the non-resident alien’s gross income for United States federal income tax purposes; and
 
(3)  
provide Nationwide with a properly completed withholding certificate claiming the exemption.
 
Note that for the preceding exemption, the distributions would be subject to the same withholding rules that are applicable to payments to United States persons, including back-up withholding, which is currently at a rate of 28%, if a correct taxpayer identification number is not provided.
 
Federal Estate, Gift and Generation Skipping Transfer Taxes
 
The following transfers may be considered a gift for federal gift tax purposes:
 
·  
a transfer of the contract from one contract owner to another; or
 
·  
a distribution to someone other than a contract owner.
 
Upon the contract owner’s death, the value of the contract may be subject to estate taxes, even if all or a portion of the value is also subject to federal income taxes.
 
Section 2612 of the Internal Revenue Code may require Nationwide to determine whether a death benefit or other distribution is a "direct skip" and the amount of the resulting generation skipping transfer tax, if any.  A direct skip is when property is transferred to, or a death benefit or other distribution is made to:
 
a)  
an individual who is two or more generations younger than the contract owner; or
 
b)  
certain trusts, as described in Section 2613 of the Internal Revenue Code (generally, trusts that have no beneficiaries who are not 2 or more generations younger than the contract owner).
 
If the contract owner is not an individual, then for this purpose only, "contract owner" refers to any person:
 
·  
who would be required to include the contract, death benefit, distribution, or other payment in his or her federal gross estate at his or her death; or
 
·  
who is required to report the transfer of the contract, death benefit, distribution, or other payment for federal gift tax purposes.
 
If a transfer is a direct skip, Nationwide will deduct the amount of the transfer tax from the death benefit, distribution or other payment, and remit it directly to the Internal Revenue Service.
 
Charge for Tax
 
Nationwide is not required to maintain a capital gain reserve liability on Non-Qualified Contracts.  If tax laws change requiring a reserve, Nationwide may implement and adjust a tax charge.
 
Diversification
 
Internal Revenue Code Section 817(h) contains rules on diversification requirements for variable annuity contracts.  A variable annuity contract that does not meet these diversification requirements will not be treated as an annuity, unless:
 
·  
the failure to diversify was accidental;
 
·  
the failure is corrected; and
 
·  
a fine is paid to the Internal Revenue Service.
 
The amount of the fine will be the amount of tax that would have been paid by the contract owner if the income, for the period the contract was not diversified, had been received by the contract owner.

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If the violation is not corrected, the contract owner will be considered the owner of the underlying securities and will be taxed on the earnings of his or her contract.  Nationwide believes that the investments underlying this contract meet these diversification requirements.
 
Tax Changes
 
The foregoing tax information is based on Nationwide’s understanding of federal tax laws.  It is NOT intended as tax advice.  All information is subject to change without notice.  You should consult with your personal tax and/or financial adviser for more information.
 
In 2001, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) was enacted.  EGTRRA made numerous changes to the Internal Revenue Code, including the following:
 
  · generally lowering federal income tax rates;
 
·  
increasing the amounts that may be contributed to various retirement plans, such as IRAs, Tax Sheltered Annuities and Qualified Plans;
 
·  
increasing the portability of various retirement plans by permitting IRAs, Tax Sheltered Annuities, Qualified Plans and certain governmental 457 plans to "roll" money from one plan to another;
 
·  
eliminating and/or reducing the highest federal estate tax rates;
 
·  
increasing the estate tax credit; and
 
·  
for persons dying after 2009, repealing the estate tax.
 
In 2006, the Pension Protection Act of 2006 made permanent the EGTRRA provisions noted above that increase the amounts that may be contributed to various retirement plans and that increase the portability of various retirement plans. However,  all of the other changes resulting from EGTRRA are scheduled to "sunset," or become ineffective, after December 31, 2010 unless they are extended by additional legislation.  If changes resulting from EGTRRA are not extended, beginning January 1, 2011, the Internal Revenue Code will be restored to its pre-EGTRRA form.
 
This creates uncertainty as to future tax requirements and implications.  Please consult a qualified tax or financial adviser for further information relating to EGTRRA and other tax issues.
 
Required Distributions
 
Any distribution paid that is NOT due to payment of the death benefit may be subject to a CDSC.
 
The Internal Revenue Code requires that certain distributions be made from the contracts issued in conjunction with this prospectus.  Following is an overview of the required distribution rules applicable to each type of contract.  Please consult a qualified tax or financial adviser for more specific required distribution information.
 
Required Distributions – General Information
 
In general, a beneficiary is an individual or other entity that the contract owner designates to receive death proceeds upon the contract owner’s death.  The distribution rules in the Internal Revenue Code make a distinction between "beneficiary" and "designated beneficiary" when determining the life expectancy that may be used for payments that are made from IRAs, Roth IRAs and Tax Sheltered Annuities after the death of the annuitant, or that are made from Non-Qualified Contracts after the death of the contract owner.  A designated beneficiary is a natural person who is designated by the contract owner as the beneficiary under the contract.  Non-natural beneficiaries (e.g. charities or certain trusts) are not designated beneficiaries for the purpose of required distributions and the life expectancy of such a beneficiary is zero.
 
Life expectancies and joint life expectancies will be determined in accordance with the relevant guidance provided by the Internal Revenue Service and the Treasury Department, including but not limited to Treasury Regulation 1.72-9 and Treasury Regulation 1.401(a)(9)-9.
 
Required distributions paid upon the death of the contract owner are paid to the beneficiary or beneficiaries stipulated by the contract owner.  How quickly the distributions must be made may be determined with respect to the life expectancies of the beneficiaries.  For Non-Qualified Contracts, the beneficiaries used in the determination of the distribution period are those in effect on the date of the contract owner’s death.  For contracts other than Non-Qualified Contracts, the beneficiaries used in the determination of the distribution period do not have to be determined until September 30 of the year following the contract owner’s death.  If there is more than one beneficiary, the life expectancy of the beneficiary with the shortest life expectancy is used to determine the distribution period.  Any beneficiary that is not a designated beneficiary has a life expectancy of zero.
 
Required Distributions for Non-Qualified Contracts
 
Internal Revenue Code Section 72(s) requires Nationwide to make certain distributions when a contract owner dies.  The following distributions will be made in accordance with the following requirements:
 
(1)  
If any contract owner dies on or after the annuitization date and before the entire interest in the contract has been distributed, then the remaining interest must be distributed at least as rapidly as the distribution method in effect on the contract owner's death.
 
(2)  
If any contract owner dies before the annuitization date, then the entire interest in the contract (consisting of either the death benefit or the contract value reduced by charges set forth elsewhere in the contract) will be distributed within 5 years of the contract owner’s death, provided however:
 
(a)  
any interest payable to or for the benefit of a designated beneficiary may be distributed over the life of the designated beneficiary or over a period not longer than the life expectancy of the designated beneficiary.  Payments must begin within one year of the contract owner's death unless otherwise permitted by federal income tax regulations; and

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(b)  
if the designated beneficiary is the surviving spouse of the deceased contract owner, the spouse can choose to become the contract owner instead of receiving a death benefit.  Any distributions required under these distribution rules will be made upon that spouse’s death.
 
In the event that the contract owner is not a natural person (e.g., a trust or corporation), for purposes of these distribution provisions:
 
(a)  
the death of the annuitant will be treated as the death of a contract owner;
 
(b)  
any change of annuitant will be treated as the death of a contract owner; and
 
(c)  
in either case, the appropriate distribution will be made upon the death or change, as the case may be.
 
These distribution provisions do not apply to any contract exempt from Section 72(s) of the Internal Revenue Code by reason of Section 72(s)(5) or any other law or rule.
 
Required Distributions for Tax Sheltered Annuities, IRAs and Roth IRAs
 
Distributions from a Tax Sheltered Annuity or IRA must begin no later than April 1 of the calendar year following the calendar year in which the contract owner reaches age 70½.  Distributions may be paid in a lump sum or in substantially equal payments over:
 
(a)  
the life of the contract owner or the joint lives of the contract owner and the contract owner’s designated beneficiary; or
 
(b)  
a period not longer than the period determined under the table in Treasury Regulation 1.401(a)(9)-9, which is the deemed joint life expectancy of the contract owner and a person 10 years younger than the contract owner.  If the designated beneficiary is the spouse of the contract owner, the period may not exceed the longer of the period determined under such table or the joint life expectancy of the contract owner and the contract owner’s spouse, determined in accordance with Treasury Regulation 1.72-9, or such additional guidance as may be provided pursuant to Treasury Regulation 1.401(a)(9)-9.
 
For Tax Sheltered Annuities, required distributions do not have to be withdrawn from this contract if they are being withdrawn from another Tax Sheltered Annuity of the contract owner.
 
For IRAs, required distributions do not have to be withdrawn from this contract if they are being withdrawn from another IRA of the contract owner.
 
If the contract owner’s entire interest in a Tax Sheltered Annuity or IRA will be distributed in equal or substantially equal payments over a period described in (a) or (b) above, the payments must begin on or before the required beginning date.  The required beginning date is April 1 of the calendar year following the calendar year in which the contract owner reaches age 70½.  The rules for Roth IRAs do not require distributions to begin during the contract owner’s lifetime, therefore, the required beginning date is not applicable to Roth IRAs.
 
Due to recent changes in Treasury Regulations, the amount used to compute the minimum distribution requirement may exceed the contract value.
 
If the contract owner dies before the required beginning date (in the case of a Tax Sheltered Annuity or IRA) or before the entire contract value is distributed (in the case of Roth IRAs), any remaining interest in the contract must be distributed over a period not exceeding the applicable distribution period, which is determined as follows:
 
(a)  
if the designated beneficiary is the contract owner’s spouse, the applicable distribution period is the surviving spouse’s remaining life expectancy using the surviving spouse’s birthday for each distribution calendar year after the calendar year of the contract owner’s death.  For calendar years after the death of the contract owner’s surviving spouse, the applicable distribution period is the spouse’s remaining life expectancy using the spouse’s age in the calendar year of the spouse’s death, reduced by one for each calendar year that elapsed since the calendar year immediately following the calendar year of the spouse’s death;
 
(b)  
if the designated beneficiary is not the contract owner’s surviving spouse, the applicable distribution period is the designated beneficiary’s remaining life expectancy using the designated beneficiary’s birthday in the calendar year immediately following the calendar year of the contract owner’s death, reduced by one for each calendar year that elapsed thereafter; and
 
(c)  
if there is no designated beneficiary, the entire balance of the contract must be distributed by December 31 of the fifth year following the contract owner’s death.
 
If the contract owner dies on or after the required beginning date, the interest in the Tax Sheltered Annuity or IRA must be distributed over a period not exceeding the applicable distribution period, which is determined as follows:
 
(a)  
if the designated beneficiary is the contract owner’s spouse, the applicable distribution period is the surviving spouse’s remaining life expectancy using the surviving spouse’s birthday for each distribution calendar year after the calendar year of the contract owner’s death.  For calendar years after the death of the contract owner’s surviving spouse, the applicable distribution period is the greater of (a) the contract owner’s remaining life expectancy using the contract owner’s birthday in the calendar year of the contract owner’s death, reduced by one for each year thereafter; or (b) spouse’s remaining life expectancy using the spouse’s age in the calendar year of the spouse’s death, reduced by one for each calendar year that elapsed since the calendar year immediately following the calendar year of the spouse’s death;

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(b)  
if the designated beneficiary is not the contract owner’s surviving spouse, the applicable distribution period is the greater of (a) the contract owner’s remaining life expectancy; or using the contract owner’s birthday in the calendar year of the contract owner’s death, reduced by one for each year thereafter; or (b) designated beneficiary’s remaining life expectancy using the designated beneficiary’s birthday in the calendar year immediately following the calendar year of the contract owner’s death, reduced by one for each calendar year that elapsed thereafter; and
 
(c)  
if there is no designated beneficiary, the applicable distribution period is the contract owner’s remaining life expectancy using the contract owner’s birthday in the calendar year of the contract owner’s death, reduced by one for each year thereafter.
 
If distribution requirements are not met, a penalty tax of 50% is levied on the difference between the amount that should have been distributed for that year and the amount that actually was distributed for that year.
 
For IRAs, all or a portion of each distribution will be included in the recipient’s gross income and taxed at ordinary income tax rates.  The portion of a distribution that is taxable is based on the ratio between the amount by which non-deductible purchase payments exceed prior non-taxable distributions and total account balances at the time of the distribution.  The owner of an IRA must annually report the amount of non-deductible purchase payments, the amount of any distribution, the amount by which non-deductible purchase payments for all years exceed non taxable distributions for all years, and the total balance of all IRAs.
 
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon whether they are "qualified distributions" or "non-qualified distributions."



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STATEMENT OF ADDITIONAL INFORMATION
 
May 1, 2008
 
Individual Modified Single Premium Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company
through its Nationwide Variable Account-7
 
This Statement of Additional Information is not a prospectus. It contains information in addition to and more detailed than set forth in the prospectus and should be read in conjunction with the prospectus dated May 1, 2008.  The prospectus may be obtained from Nationwide Life Insurance Company by writing 5100 Rings Road, RR1-04-F4 Dublin, Ohio 43017-1522, or calling 1-800-848-6331, Voice Response (available 24 hours) 1-800-573-2447, TDD 1-800-238-3035.

Table of Contents of Statement of Additional Information
Page
General Information and History
1
Services
1
Purchase of Securities Being Offered
2
Underwriters
2
Advertising
2
Annuity Payments
2
Financial Statements
3
 
 
The Nationwide Variable Account-7 is a separate investment account of Nationwide Life Insurance Company ("Nationwide").  Nationwide is a member of the Nationwide group of companies.  All of Nationwide's common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company.  NFS has two classes of common stock outstanding with different voting rights enabling Nationwide Corporation (the holder of all of the outstanding Class B Common Stock) to control NFS.  Nationwide Corporation is a holding company, as well.  All of its common stock is held by Nationwide Mutual Insurance Company (95.20%) and Nationwide Mutual Fire Insurance Company (4.80%), the ultimate controlling persons of the Nationwide group of companies.  On March 10, 2008, NFS announced that it received an offer from Nationwide Mutual, Nationwide Mutual Fire and Nationwide Corporation to acquire by merger all of NFS’ outstanding publicly held shares of Class A common stock for $47.20 per share in cash.  NFS’ board of directors has appointed a special committee of the board, comprised entirely of independent, non-affiliated directors, to consider the proposal. The Nationwide group of companies is one of America's largest insurance and financial services family of companies, with combined assets of over $160 billion as of December 31, 2007.
 
 
Nationwide, which has responsibility for administration of the contracts and the variable account, maintains records of the name, address, taxpayer identification number, and other pertinent information for each contract owner and the number and type of contract issued to each contract owner and records with respect to the contract value.
 
The custodian of the assets of the variable account is Nationwide.  Nationwide will maintain a record of all purchases and redemptions of shares of the underlying mutual funds.  Nationwide, or its affiliates may have entered into agreements with the underlying mutual funds and/or their affiliates.  The agreements relate to services furnished by Nationwide or an affiliate of Nationwide.  Some of the services provided include distribution of underlying fund prospectuses, semi-annual and annual fund reports, proxy materials and fund communications, as well as maintaining the websites and voice response systems necessary for contract owners to execute trades in the funds.  Nationwide also acts as a limited agent for the fund for purposes of accepting the trades.
 
See “Underlying Mutual Fund Payments” located in the prospectus.
 
Distribution, Promotional, and Sales Expenses
 
In addition to or partially in lieu of commission, Nationwide may pay the selling firms a marketing allowance, which is based on the firm’s ability and demonstrated willingness to promote and market Nationwide's products.  How any marketing allowance is spent is determined by the firm, but generally will be used to finance firm activities, such as training and education, that may contribute to the promotion and marketing of Nationwide's products.  Nationwide makes certain assumptions about the amount of marketing allowance it will pay and takes these assumptions into consideration when it determines the charges that will be assessed under the contracts.  For the contracts described in the prospectus, Nationwide assumed 0.60% (of the daily net assets of the variable account) for marketing allowance when determining the charges for the contracts.  The actual amount of the marketing allowance may be higher or lower than this assumption.  If the actual amount of marketing allowance paid is more than what was assumed, Nationwide will fund the difference.  Nationwide generally does not profit from any excess marketing allowance if the amount assumed was higher than what is actually paid.  Any excess would be spent on additional marketing for the contracts.  For more information about marketing allowance or how a particular selling firm uses marketing allowances, please consult with your registered representative.

1


 
Independent Registered Public Accounting Firm
 
The financial statements of Nationwide Variable Account-7 and the consolidated financial statements and schedules of Nationwide Life Insurance Company for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.  The audit report of KPMG LLP covering the December 31, 2007 consolidated financial statements and schedules of Nationwide Life Insurance Company contains an explanatory paragraph that states that Nationwide Life Insurance Company adopted the American Institute of Certified Public Accountants' Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts, in 2007.  KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.
 
 
The contracts will be sold by licensed insurance agents in the states where the contracts may be lawfully sold. Such agents will be registered representatives of broker-dealers registered under the Securities Exchange Act of 1934 who are members of the Financial Industry Regulatory Authority (“FINRA”).
 
 
The contracts, which are offered continuously, are distributed by Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza, Columbus, Ohio 43215.  For contracts issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation.  NISC is a wholly owned subsidiary of Nationwide.  During the fiscal years ended December 31, 2007, 2006, and 2005, no underwriting commissions were paid by Nationwide to NISC.
 
 
Money Market Yields
 
Nationwide may advertise the "yield" and "effective yield" for the money market sub-account.  Yield and effective yield are annualized, which means that it is assumed that the underlying mutual fund generates the same level of net income throughout a year.
 
Yield is a measure of the net dividend and interest income earned over a specific seven-day period (which period will be stated in the advertisement) expressed as a percentage of the offering price of the underlying mutual fund’s units.  The effective yield is calculated similarly, but reflects assumed compounding, calculated under rules prescribed by the SEC.  Thus, effective yield will be slightly higher than yield, due to the compounding.
 
Historical Performance of the Sub-Accounts
 
Nationwide will advertise historical performance of the sub-accounts in accordance with SEC prescribed calculations.  Performance information is annualized.  However, if a sub-account has been available in the variable account for less than one year, the performance information for that sub-account is not annualized.
 
Performance information is based on historical earnings and is not intended to predict or project future results.
 
 
Standardized performance will reflect the maximum variable account charges possible under the contract, the Contract Maintenance Charge, and the standard CDSC schedule.  Non-standardized performance, which will be accompanied by standardized performance, will reflect other expense structures contemplated under the contract.  The expense assumptions will be stated in the advertisement.
 
Additional Materials
 
Nationwide may provide information on various topics to contract owners and prospective contract owners in advertising, sales literature or other materials.
 
Performance Comparisons
 
Each sub-account may, from time to time, include in advertisements the ranking of its performance figures compared with performance figures of other annuity contracts’ sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services.
 
Annuity Payments
 
See "Frequency and Amount of Annuity Payments" located in the prospectus.

2


 
 
Report of Independent Registered Public Accounting Firm
 
The Board of Directors of Nationwide Life Insurance Company and
 
    Contract Owners of Nationwide Variable Account-7:
 
We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide Variable Account-7 (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2007, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Accounts as of December 31, 2007, and the results of their operations, changes in contract owners’ equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles.
 
 
 
 
 
/s/ KPMG LLP
Columbus, Ohio
March 17, 2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
84
 
 

 
 
NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY
 
December 31, 2007
 
 
 
Assets:   
Investments at fair value:
 
  
AIM VIF – Basic Value Fund – Series II (AIMBValue2)
976,654 shares (cost $10,578,917)
 
   $       12,325,368
AIM VIF – Capital Appreciation Fund – Series II (AIMCapAp2)
100,504 shares (cost $2,232,304)
 
     2,909,588
AIM VIF – Capital Development Fund – Series I (AIMCapDev)
11,883 shares (cost $177,637)
 
     223,995
AIM VIF – Capital Development Fund – Series II (AIMCapDev2)
39,737 shares (cost $785,458)
 
     736,318
AIM VIF – Core Equity Fund – Series I (AIMCoreEq)
21,460 shares (cost $545,357)
 
     624,712
AIM VIF – Core Equity Fund – Series II (AIMCoreEq2)
66,772 shares (cost $1,698,634)
 
     1,928,380
AIM VIF – International Growth Fund – Series II (AIMIntGr2)
43,187 shares (cost $676,540)
 
     1,435,539
AIM VIF – Mid Cap Core Equity Fund – Series I (AIMMidCpCor)
56,661 shares (cost $714,378)
 
     825,555
AllianceBernstein VPS – Growth and Income Portfolio – Class B (AlVGrIncB)
322,878 shares (cost $7,214,353)
 
     8,572,405
AllianceBernstein VPS – International Value Portfolio – Class B (AlVIntlValB)
217,957 shares (cost $3,119,072)
 
     5,422,778
AllianceBernstein VPS – Large Cap Growth Portfolio – Class B (AlVLrgCpGrB)
94,372 shares (cost $2,184,108)
 
     2,827,396
AllianceBernstein VPS – Small/Mid Cap Value Portfolio – Class B (AlVSmMdCpB)
631,519 shares (cost $9,652,966)
 
     10,754,777
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap)
57,498 shares (cost $848,068)
 
     1,014,269
Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx)
65,522 shares (cost $2,097,692)
 
     2,450,527
Dreyfus Stock Index Fund, Inc. – Service Shares (DryStklxS)
127,610 shares (cost $4,063,681)
 
     4,773,889
Federated IS – American Leaders Fund II – Service Shares (FedAmLeadS)
121,253 shares (cost $2,288,084)
 
     2,064,942
Federated IS – Capital Appreciation Fund II – Service Shares (FedCapApS)
341,709 shares (cost $1,839,651)
 
     2,518,395
Federated IS – High Income Bond II – Service Shares (FedHiIncS)
1,433,517 shares (cost $10,643,437)
 
     10,679,703
Federated IS – International Equity Fund II (FedIntEq)
12,521 shares (cost $142,679)
 
     234,273
Federated IS – Mid Cap Growth Strategies Fund II (FedMidCpGr2)
28,619 shares (cost $609,365)
 
     866,001
Federated IS – Quality Bond Fund II – Primary Shares (FedQualBd)
296,501 shares (cost $3,368,310)
 
     3,362,319
(Continued)
 
 
 
2
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued
 
 
 
Federated IS – Quality Bond Fund II – Service Shares (FedQualBdS)
1,073,164 shares (cost $12,135,816)
 
   $       12,116,024
Fidelity® VIP – Equity-Income Portfolio – Initial Class (FidVIPEI)
1,105,750 shares (cost $25,341,314)
 
     26,438,481
Fidelity® VIP – Equity-Income Portfolio – Service Class (FidVIPEIS)
909,612 shares (cost $20,855,277)
 
     21,666,946
Fidelity® VIP – Equity-Income Portfolio – Service Class 2 (FidVIPEIS2)
1,905,822 shares (cost $43,192,751)
 
     44,920,219
Fidelity® VIP – Growth Portfolio – Initial Class (FidVIPGr)
523,496 shares (cost $18,219,824)
 
     23,620,159
Fidelity® VIP – Growth Portfolio – Service Class (FidVIPGrS)
533,438 shares (cost $18,709,934)
 
     23,999,360
Fidelity® VIP – Growth Portfolio – Service Class 2 (FidVIPGrS2)
616,760 shares (cost $18,825,145)
 
     27,538,352
Fidelity® VIP – High Income Portfolio – Initial Class (FidVIPHI)
2,770,537 shares (cost $17,641,945)
 
     16,567,810
Fidelity® VIP – High Income Portfolio – Initial Class R (FidVIPHIR)
301,716 shares (cost $1,941,026)
 
     1,798,226
Fidelity® VIP – High Income Portfolio – Service Class (FidVIPHIS)
1,389,752 shares (cost $8,871,502)
 
     8,269,024
Fidelity® VIP – High Income Portfolio – Service Class 2 (FidVIPHIS2)
2,248,052 shares (cost $14,181,400)
 
     13,218,544
Fidelity® VIP – High Income Portfolio – Service Class 2R (FidVIPHIS2R)
383,978 shares (cost $2,440,751)
 
     2,253,954
Fidelity® VIP – High Income Portfolio – Service Class R (FidVIPHISR)
92,577 shares (cost $592,345)
 
     548,983
Fidelity® VIP – Money Market Portfolio – Initial Class (FidVIPMMkt)
22,377,079 shares (cost $22,377,079)
 
     22,377,079
Fidelity® VIP – Overseas Portfolio – Initial Class (FidVIPOv)
1,043,417 shares (cost $18,055,751)
 
     26,419,313
Fidelity® VIP – Overseas Portfolio – Service Class (FidVIPOvS)
331,028 shares (cost $4,812,733)
 
     8,348,515
Fidelity® VIP – Overseas Portfolio – Service Class 2 (FidVIPOvS2)
314,635 shares (cost $4,956,465)
 
     7,903,636
Fidelity® VIP – Overseas Portfolio – Service Class 2 R (FidVIPOvS2R)
373,396 shares (cost $8,277,413)
 
     9,316,223
Fidelity® VIP – Overseas Portfolio – Service Class R (FidVIPOvSR)
56,608 shares (cost $1,167,838)
 
     1,425,964
Fidelity® VIP – Value Portfolio – Service Class (FidVIPVal)
38,863 shares (cost $473,193)
 
     507,944
Fidelity® VIP – Value Portfolio – Service Class 2 (FidVIPVal2)
90,836 shares (cost $1,003,439)
 
     1,178,148
Fidelity® VIP II – Asset Manager Growth Portfolio – Initial Class (FidVIPAMGr)
182,711 shares (cost $2,160,474)
 
     2,833,855
Fidelity® VIP II – Asset Manager Growth Portfolio – Service Class (FidVIPAMGrS)
169,009 shares (cost $2,107,279)
 
     2,604,435
Fidelity® VIP II – Asset Manager Growth Portfolio – Service Class 2 (FidVIPAMGrS2)
109,870 shares (cost $1,278,043)
 
     1,684,300
(Continued)
 
 
 
3
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued
 
 
 
Fidelity® VIP II – Asset Manager Portfolio – Initial Class (FidVIPAM)
273,483 shares (cost $3,833,381)
 
   $       4,531,618
Fidelity® VIP II – Asset Manager Portfolio – Service Class (FidVIPAMS)
208,086 shares (cost $2,918,619)
 
     3,429,258
Fidelity® VIP II – Asset Manager Portfolio – Service Class 2 (FidVIPAMS2)
180,531 shares (cost $2,487,692)
 
     2,948,073
Fidelity® VIP II – Contrafund® Portfolio – Initial Class (FidVIPCon)
1,713,307 shares (cost $43,357,117)
 
     47,801,258
Fidelity® VIP II – Contrafund® Portfolio – Service Class (FidVIPConS)
1,233,722 shares (cost $30,928,069)
 
     34,297,472
Fidelity® VIP II – Contrafund® Portfolio – Service Class 2 (FidVIPConS2)
2,195,499 shares (cost $55,405,366)
 
     60,288,401
Fidelity® VIP II – Index 500 Portfolio – Initial Class (FidVIPIdx500)
302,186 shares (cost $38,184,310)
 
     49,564,486
Fidelity® VIP II – Investment Grade Bond Portfolio – Initial Class (FidVIPIGBd)
2,505,762 shares (cost $31,792,620)
 
     31,973,520
Fidelity® VIP III – Aggressive Growth Portfolio – Service Class (FidVIPAgGrS)
8,124 shares (cost $84,747)
 
     82,138
Fidelity® VIP III – Aggressive Growth Portfolio – Service Class 2 (FidVIPAgGrS2)
329,414 shares (cost $2,959,043)
 
     3,267,784
Fidelity® VIP III – Balanced Portfolio – Initial Class (FidVIPBal)
1,867,599 shares (cost $26,128,916)
 
     29,564,094
Fidelity® VIP III – Balanced Portfolio – Service Class (FidVIPBalS)
546,476 shares (cost $7,378,801)
 
     8,617,931
Fidelity® VIP III – Balanced Portfolio – Service Class 2 (FidVIPBalS2)
442,312 shares (cost $5,925,187)
 
     6,922,186
Fidelity® VIP III – Dynamic Capital Appreciation Portfolio – Service Class (FidVIPDyCapS)
46,287 shares (cost $441,600)
 
     419,822
Fidelity® VIP III – Dynamic Capital Appreciation Portfolio – Service Class 2 (FidVIPDyCapS2)
430,710 shares (cost $3,485,008)
 
     3,867,780
Fidelity® VIP III – Growth & Income Portfolio – Initial Class (FidVIPGrIn)
751,050 shares (cost $9,833,892)
 
     12,775,364
Fidelity® VIP III – Growth & Income Portfolio – Service Class (FidVIPGrInS)
919,003 shares (cost $12,798,073)
 
     15,531,143
Fidelity® VIP III – Growth & Income Portfolio – Service Class 2 (FidVIPGrInS2)
862,923 shares (cost $10,664,980)
 
     14,462,586
Fidelity® VIP III – Growth Opportunities Portfolio – Initial Class (FidVIPGrOp)
3,201,089 shares (cost $63,337,219)
 
     71,608,371
Fidelity® VIP III – Growth Opportunities Portfolio – Service Class (FidVIPGrOpS)
813,226 shares (cost $15,527,564)
 
     18,151,206
Fidelity® VIP III – Growth Opportunities Portfolio – Service Class 2 (FidVIPGrOpS2)
197,306 shares (cost $2,922,026)
 
     4,372,308
Fidelity® VIP III – Mid Cap Portfolio – Initial Class (FidVIPMCap)
126,126 shares (cost $3,694,356)
 
     4,560,729
Fidelity® VIP III – Mid Cap Portfolio – Service Class (FidVIPMCapS)
431,099 shares (cost $12,501,650)
 
     15,510,953
Fidelity® VIP III – Mid Cap Portfolio – Service Class 2 (FidVIPMCapS2)
1,624,468 shares (cost $41,755,501)
 
     57,879,781
(Continued)
 
 
 
4
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued
 
 
 
Fidelity® VIP III – Value Strategies Portfolio – Service Class (FidVIPVaIS)
36,487 shares (cost $460,514)
 
   $ 457,550
Fidelity® VIP III – Value Strategies Portfolio – Service Class 2 (FidVIPVaIS2)
489,911 shares (cost $6,286,706)
 
     6,182,682
Franklin Templeton VIP – Foreign Securities Fund – Class 1 (FrVIPForSec)
29,227 shares (cost $386,704)
 
     601,482
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1 (FrVIPRisDiv)
143,155 shares (cost $2,458,349)
 
     2,807,262
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JAspRMgCore)
33,217 shares (cost $432,830)
 
     441,451
MFS VIT – Investors Growth Stock Series – Service Class (MFSInvGrStS)
382,750 shares (cost $3,325,719)
 
     4,428,419
MFS VIT – Mid Cap Growth Series – Service Class (MFSMidCapGrS)
774,893 shares (cost $4,959,610)
 
     5,827,196
MFS VIT – New Discovery Series – Service Class (MFSNewDiscS)
189,772 shares (cost $2,966,868)
 
     3,095,177
MFS VIT – Value Series – Service Class (MFSValueS)
661,188 shares (cost $8,569,290)
 
     9,997,160
MTB Large-Cap Growth Fund II (MTBLgCapGr)
237,116 shares (cost $2,349,592)
 
     2,627,247
MTB Large-Cap Value Fund II (MTBLgCapV)
295,592 shares (cost $3,047,752)
 
     3,422,950
MTB Managed Allocation Fund – Moderate Growth II (MTBModGr)
2,782,754 shares (cost $28,893,204)
 
         30,081,576
Nationwide VIT – American Funds Asset Allocation Fund – Class II (NVITAstAll2)
348,789 shares (cost $6,711,557)
 
     6,749,077
Nationwide VIT – American Funds Bond Fund – Class II (NVITBnd2)
191,888 shares (cost $2,239,693)
 
     2,152,980
Nationwide VIT – American Funds Global Growth Fund – Class II (NVITGlobGr2)
140,048 shares (cost $3,440,107)
 
     3,652,462
Nationwide VIT – American Funds Growth – Income Fund – Class II (NVITGroInc2)
8,573 shares (cost $384,746)
 
     373,426
Nationwide VIT – American Funds Growth Fund – Class II (NVITGrowth2)
37,162 shares (cost $2,431,468)
 
     2,681,626
Nationwide VIT – Federated High Income Bond Fund – Class III (NVITFHiInc3)
12,454 shares (cost $99,827)
 
     95,022
Nationwide VIT – Gartmore Emerging Markets Fund – Class II (NVITEmMrkts2)
136,549 shares (cost $1,649,585)
 
     3,066,899
Nationwide VIT – Gartmore Emerging Markets Fund – Class VI (NVITEmMrkts6)
633,853 shares (cost $11,099,186)
 
     14,312,410
Nationwide VIT – Government Bond Fund – Class I (NVITGvtBd)
1,885,485 shares (cost $22,078,909)
 
     21,928,193
Nationwide VIT – International Value Fund – Class III (NVITIntVal3)
20,699 shares (cost $356,290)
 
     360,783
Nationwide VIT – International Value Fund – Class VI (NVITIntVal6)
358,826 shares (cost $6,371,009)
 
     6,236,387
Nationwide VIT – Investor Destinations Aggressive Fund – Class II (NVITIDAgg2)
1,572,268 shares (cost $17,858,458)
 
     21,382,844
(Continued)
 
 
 
5
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued
 
 
 
Nationwide VIT – Investor Destinations Conservative Fund – Class II (NVITIDCon2)
2,554,700 shares (cost $26,445,345)
 
   $ 26,568,880
Nationwide VIT – Investor Destinations Moderate Fund – Class II (NVITIDMod2)
11,828,341 shares (cost $125,556,931)
 
         147,144,564
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II (NVITIDModAg2) 4,910,383 shares (cost $54,008,030)
 
     65,504,503
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II (NVITIDModCon2) 4,168,781 shares (cost $45,157,424)
 
     47,315,667
Nationwide VIT – Mid Cap Growth Fund – Class II (NVITMdCpGr2)
6,503 shares (cost $206,555)
 
     209,781
Nationwide VIT – Mid Cap Index Fund – Class I (NVITMidCap)
67,238 shares (cost $1,113,187)
 
     1,289,634
Nationwide VIT – Mid Cap Index Fund – Class II (NVITMidCap2)
400,656 shares (cost $7,195,479)
 
     7,656,545
Nationwide VIT – Money Market Fund – Class I (NVITMyMkt)
38,742,008 shares (cost $38,742,008)
 
     38,742,008
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class II (NVITSmCapGr2)
168,682 shares (cost $2,562,825)
 
     2,994,112
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I (NVITSmCapVal)
59,570 shares (cost $706,938)
 
     588,556
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class II (NVITSmCapVal2)
593,702 shares (cost $7,149,725)
 
     5,794,536
Nationwide VIT – Multi-Manager Small Company Fund – Class I (NVITSmComp)
37,006 shares (cost $862,117)
 
     821,894
Nationwide VIT – Multi-Manager Small Company Fund – Class II (NVITSmComp2)
274,191 shares (cost $6,409,879)
 
     5,988,333
Nationwide VIT – Nationwide Fund – Class II (NVITNWFund2)
5,232 shares (cost $70,207)
 
     70,840
Neuberger Berman AMT – Regency Portfolio – Class S (NBTARegS)
12,781 shares (cost $232,122)
 
     222,001
Neuberger Berman AMT – Socially Responsive Portfolio Class I (NBTSocRes)
28,971 shares (cost $514,348)
 
     518,862
Oppenheimer VAF – Capital Appreciation Fund – Service Class (OppCapApS)
317,763 shares (cost $10,945,791)
 
     14,864,936
Oppenheimer VAF – Global Securities Fund – Class 3 (OppGlSec3)
21,174 shares (cost $695,448)
 
     779,623
Oppenheimer VAF – Global Securities Fund – Class 4 (OppGlSec4)
298,913 shares (cost $9,882,765)
 
     10,844,571
Oppenheimer VAF – Global Securities Fund – Non-Service Shares (OppGlSec)
21,877 shares (cost $579,748)
 
     800,688
Oppenheimer VAF – Global Securities Fund – Service Class (OppGlSecS)
212,587 shares (cost $5,387,439)
 
     7,710,544
Oppenheimer VAF – High Income Fund – Class 3 (OppHighInc3)
34,448 shares (cost $282,973)
 
     274,892
Oppenheimer VAF – High Income Fund – Non-Service Shares (OppHighInc)
193,519 shares (cost $1,606,485)
 
     1,538,477
Oppenheimer VAF – Main Street Small Cap Fund®– Non-Service Shares (OppMStSCap)
49,570 shares (cost $733,990)
 
     902,178
(Continued)
 
 
 
6
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY, Continued
 
 
 
Oppenheimer VAF – Main Street Small Cap Fund®– Service Class (OppMStSCapS)
33,955 shares (cost $669,348)
 
   $   612,207
Oppenheimer VAF – Main Street®– Service Class (OppMStS)
640,030 shares (cost $11,924,599)
 
     16,243,956
Oppenheimer VAF – Strategic Bond Fund – Service Class (OppStratBdS)
3,672,133 shares (cost $18,955,428)
 
     20,747,553
Putnam VT – Growth and Income Fund – IB Shares (PVTGroInc)
38,368 shares (cost $957,892)
 
     887,058
Putnam VT – International Equity Fund – IB Shares (PVTIntlEq)
35,819 shares (cost $575,834)
 
     679,137
Putnam VT – Small Cap Value Fund – IB Shares (PVTSmCapV)
23,566 shares (cost $507,614)
 
     441,854
Putnam VT – Voyager Fund – IB Shares (PVTVoygr)
26,568 shares (cost $701,334)
 
     843,009
STI Classic Variable Trust – Large Cap Core Equity Fund (STILgCapEq)
5,275 shares (cost $58,502)
 
     64,993
STI Classic Variable Trust – Large Cap Growth Stock Fund (STILgCapGr)
6,057 shares (cost $95,973)
 
     110,670
STI Classic Variable Trust – Large Cap Value Equity Fund (STILgCapVal)
7,744 shares (cost $115,542)
 
     139,318
STI Classic Variable Trust – Mid-Cap Core Equity Fund (STIMidCapEq)
7,023 shares (cost $78,318)
 
     85,472
STI Classic Variable Trust – Small Cap Value Equity Fund (STISmCapVal)
8,434 shares (cost $136,322)
 
     107,701
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares (DrySRGro)
12,690 shares (cost $310,392)
 
     387,040
Van Kampen LIT – Comstock Portfolio – Class II (VKLCom2)
1,271,515 shares (cost $16,622,924)
 
     17,546,900
Van Kampen LIT – Strategic Growth Portfolio – Class II (VKLStratGro2)
154,513 shares (cost $3,850,022)
 
     5,143,748
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class II (VKUCorPlus2)
169,439 shares (cost $1,916,351)
 
     1,945,162
Van Kampen UIF – U.S. Real Estate Portfolio – Class II (VKUUSRE2)
182,483 shares (cost $4,989,780)
 
     3,981,783
      
Total investments
 
     1,498,611,332
Accounts receivable
 
    
      
Total assets
 
     1,498,611,332
Accounts payable
 
     75,123
      
Contract owners’ equity (note 4)
 
   $   1,498,536,209
      
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to financial statements.
 
 
 
 
 
 
 
7
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS
 
Year Ended December 31, 2007
 
 
 
Investment activity:       Total     AIMBValue2     AIMCapAp2     AIMCapDev     AIMCapDev2     AIMCoreEq     AIMCoreEq2     AIMIntGr2  
Reinvested dividends
 
  $     34,237,996     43,178                 7,008     18,378     5,453  
Mortality and expense risk charges (note 2)
 
    (20,535,716 )   (184,708 )   (41,507 )   (2,896 )   (9,497 )   (6,726 )   (31,740 )   (19,397 )
                                                 
Net investment income (loss)
 
    13,702,280     (141,530 )   (41,507 )   (2,896 )   (9,497 )   282     (13,362 )   (13,944 )
                                                 
Proceeds from mutual fund shares sold
 
    476,785,564     3,324,728     735,797     60,049     467,345     90,757     1,272,863     573,495  
Cost of mutual fund shares sold
 
    (400,100,860 )   (2,201,118 )   (488,941 )   (33,784 )   (419,807 )   (80,085 )   (1,118,599 )   (265,929 )
                                                 
Realized gain (loss) on investments
 
    76,684,704     1,123,610     246,856     26,265     47,538     10,672     154,264     307,566  
Change in unrealized gain (loss) on investments
 
    (38,420,654 )   (1,604,275 )   106,874     (20,807 )   (60,222 )   30,426     26,628     (78,534 )
                                                 
Net gain (loss) on investments
 
    38,264,050     (480,665 )   353,730     5,458     (12,684 )   41,098     180,892     229,032  
                                                 
Reinvested capital gains
 
    78,954,252     725,911         20,258     61,503              
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     130,920,582     103,716     312,223     22,820     39,322     41,380     167,530     215,088  
                                                 
Investment activity:       AIMMidCpCor     AlVGrIncB     AlVIntlValB     AlVLrgCpGrB     AlVSmMdCpB     DryIPSmCap     DryStkIx     DryStklxS  
Reinvested dividends
 
  $     1,832     113,855     60,750         91,772     4,531     42,919     75,966  
Mortality and expense risk charges (note 2)
 
    (9,478 )   (127,134 )   (77,689 )   (36,638 )   (165,619 )   (13,081 )   (29,360 )   (69,130 )
                                                 
Net investment income (loss)
 
    (7,646 )   (13,279 )   (16,939 )   (36,638 )   (73,847 )   (8,550 )   13,559     6,836  
                                                 
Proceeds from mutual fund shares sold
 
    136,381     2,148,394     1,825,164     605,056     3,374,184     210,562     571,949     1,437,867  
Cost of mutual fund shares sold
 
    (94,723 )   (1,518,123 )   (876,254 )   (417,833 )   (1,968,916 )   (128,954 )   (393,317 )   (1,102,853 )
                                                 
Realized gain (loss) on investments
 
    41,658     630,271     948,910     187,223     1,405,268     81,608     178,632     335,014  
Change in unrealized gain (loss) on investments
 
    24,765     (745,848 )   (862,673 )   162,669     (2,002,880 )   (133,712 )   (90,211 )   (156,176 )
                                                 
Net gain (loss) on investments
 
    66,423     (115,577 )   86,237     349,892     (597,612 )   (52,104 )   88,421     178,838  
                                                 
Reinvested capital gains
 
    11,952     468,336     227,701         858,343     48,666          
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     70,729     339,480     296,999     313,254     186,884     (11,988 )   101,980     185,674  
                                                 
(Continued)
 
 
 
8
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       FedAmLeadS     FedCapApS     FedHiIncS     FedIntEq     FedMidCpGr2     FedQualBd     FedQualBdS     FidVIPEI  
Reinvested dividends
 
  $     31,149     14,434     914,082     411         151,955     629,140     505,308  
Mortality and expense risk charges (note 2)
 
    (31,275 )   (34,362 )   (158,068 )   (2,555 )   (9,933 )   (36,991 )   (172,029 )   (444,885 )
                                                 
Net investment income (loss)
 
    (126 )   (19,928 )   756,014     (2,144 )   (9,933 )   114,964     457,111     60,423  
                                                 
Proceeds from mutual fund shares sold
 
    574,348     461,233     4,493,480     14,552     251,815     483,131     4,721,439     9,085,507  
Cost of mutual fund shares sold
 
    (507,759 )   (307,391 )   (4,615,135 )   (8,566 )   (135,116 )   (511,621 )   (5,019,492 )   (7,197,048 )
                                                 
Realized gain (loss) on investments
 
    66,589     153,842     (121,655 )   5,986     116,699     (28,490 )   (298,053 )   1,888,459  
Change in unrealized gain (loss) on investments
 
    (606,003 )   76,599     (389,443 )   14,647     21,660     43,031     318,107     (3,811,017 )
                                                 
Net gain (loss) on investments
 
    (539,414 )   230,441     (511,098 )   20,633     138,359     14,541     20,054     (1,922,558 )
                                                 
Reinvested capital gains
 
    278,351                             2,227,382  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     (261,189 )   210,513     244,916     18,489     128,426     129,505     477,165     365,247  
                                                 
Investment activity:       FidVIPEIS     FidVIPEIS2     FidVIPGr     FidVIPGrS     FidVIPGrS2     FidVIPHI     FidVIPHIR     FidVIPHIS  
Reinvested dividends
 
  $     391,453     762,531     205,156     165,214     111,126     1,397,032     150,985     686,936  
Mortality and expense risk charges (note 2)
 
    (267,129 )   (658,598 )   (336,954 )   (247,753 )   (338,039 )   (280,369 )   (12,034 )   (99,425 )
                                                 
Net investment income (loss)
 
    124,324     103,933     (131,798 )   (82,539 )   (226,913 )   1,116,663     138,951     587,511  
                                                 
Proceeds from mutual fund shares sold
 
    8,964,076     9,505,904     7,571,800     9,339,620     8,865,434     8,559,918     1,311,005     3,963,934  
Cost of mutual fund shares sold
 
    (7,595,168 )   (6,355,106 )   (8,204,758 )   (11,917,906 )   (5,140,755 )   (8,834,454 )   (1,306,155 )   (3,589,896 )
                                                 
Realized gain (loss) on investments
 
    1,368,908     3,150,798     (632,958 )   (2,578,286 )   3,724,679     (274,536 )   4,850     374,038  
Change in unrealized gain (loss) on investments
 
    (2,950,580 )   (6,793,884 )   6,115,382     8,246,780     2,600,783     (487,666 )   (142,800 )   (753,681 )
                                                 
Net gain (loss) on investments
 
    (1,581,672 )   (3,643,086 )   5,482,424     5,668,494     6,325,462     (762,202 )   (137,950 )   (379,643 )
                                                 
Reinvested capital gains
 
    1,837,971     3,841,195     19,488     19,747     17,445              
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     380,623     302,042     5,370,114     5,605,702     6,115,994     354,461     1,001     207,868  
                                                 
(Continued)
 
 
 
9
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       FidVIPHIS2     FidVIPHIS2R     FidVIPHISR     FidVIPMMkt     FidVIPOv     FidVIPOvS     FidVIPOvS2     FidVIPOvS2R  
Reinvested dividends
 
  $     1,093,755     189,657     44,857     1,301,650     912,997     292,058     246,602     244,092  
Mortality and expense risk charges (note 2)
 
    (212,299 )   (14,205 )   (2,320 )   (323,644 )   (394,099 )   (94,087 )   (106,714 )   (97,382 )
                                                 
Net investment income (loss)
 
    881,456     175,452     42,537     978,006     518,898     197,971     139,888     146,710  
                                                 
Proceeds from mutual fund shares sold
 
    6,945,649     501,434     204,115     27,616,913     7,815,928     3,727,746     2,490,438     2,134,943  
Cost of mutual fund shares sold
 
    (6,917,334 )   (508,916 )   (207,807 )   (27,616,913 )   (5,518,032 )   (2,084,697 )   (1,347,376 )   (1,449,604 )
                                                 
Realized gain (loss) on investments
 
    28,315     (7,482 )   (3,692 )       2,297,896     1,643,049     1,143,062     685,339  
Change in unrealized gain (loss) on investments
 
    (628,819 )   (186,797 )   (43,362 )       (688,223 )   (1,115,079 )   (610,903 )   (277,699 )
                                                 
Net gain (loss) on investments
 
    (600,504 )   (194,279 )   (47,054 )       1,609,673     527,970     532,159     407,640  
                                                 
Reinvested capital gains
 
                    1,940,983     703,656     614,194     473,783  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     280,952     (18,827 )   (4,517 )   978,006     4,069,554     1,429,597     1,286,241     1,028,133  
                                                 
Investment activity:       FidVIPOvSR     FidVIPVal     FidVIPVal2     FidVIPAMGr     FidVIPAMGrS     FidVIPAMGrS2     FidVIPAM     FidVIPAMS  
Reinvested dividends
 
  $     43,836     2,886     5,084     129,346     108,476     70,732     274,077     209,487  
Mortality and expense risk charges (note 2)
 
    (14,326 )   (5,781 )   (18,654 )   (43,193 )   (25,883 )   (24,231 )   (62,762 )   (35,750 )
                                                 
Net investment income (loss)
 
    29,510     (2,895 )   (13,570 )   86,153     82,593     46,501     211,315     173,737  
                                                 
Proceeds from mutual fund shares sold
 
    392,348     102,674     629,397     1,070,260     660,432     699,248     852,578     1,236,211  
Cost of mutual fund shares sold
 
    (258,834 )   (77,870 )   (410,785 )   (936,955 )   (669,162 )   (612,722 )   (668,072 )   (1,161,071 )
                                                 
Realized gain (loss) on investments
 
    133,514     24,804     218,612     133,305     (8,730 )   86,526     184,506     75,140  
Change in unrealized gain (loss) on investments
 
    (56,027 )   (69,153 )   (316,669 )   273,189     350,592     171,098     58,968     124,011  
                                                 
Net gain (loss) on investments
 
    77,487     (44,349 )   (98,057 )   406,494     341,862     257,624     243,474     199,151  
                                                 
Reinvested capital gains
 
    92,273     55,360     130,508                 127,362     106,535  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     199,270     8,116     18,881     492,647     424,455     304,125     582,151     479,423  
                                                 
(Continued)
 
 
 
10
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       FidVIPAMS2     FidVIPCon     FidVIPConS     FidVIPConS2     FidVIPIdx500     FidVIPIGBd     FidVIPAgGrS     FidVIPAgGrS2  
Reinvested dividends
 
  $     175,304     433,877     280,519     432,034     2,034,605     1,704,657          
Mortality and expense risk charges (note 2)
 
    (38,716 )   (711,458 )   (377,349 )   (800,197 )   (698,290 )   (456,376 )   (693 )   (42,994 )
                                                 
Net investment income (loss)
 
    136,588     (277,581 )   (96,830 )   (368,163 )   1,336,315     1,248,281     (693 )   (42,994 )
                                                 
Proceeds from mutual fund shares sold
 
    1,099,379     15,658,639     13,675,298     11,563,401     21,758,060     17,638,400     61,642     734,656  
Cost of mutual fund shares sold
 
    (992,949 )   (12,031,669 )   (10,383,780 )   (6,304,060 )   (17,110,367 )   (18,778,164 )   (52,145 )   (570,445 )
                                                 
Realized gain (loss) on investments
 
    106,430     3,626,970     3,291,518     5,259,341     4,647,693     (1,139,764 )   9,497     164,211  
Change in unrealized gain (loss) on investments
 
    71,518     (7,489,891 )   (5,974,120 )   (10,780,714 )   (3,326,398 )   958,049     (6,904 )   13,607  
                                                 
Net gain (loss) on investments
 
    177,948     (3,862,921 )   (2,682,602 )   (5,521,373 )   1,321,295     (181,715 )   2,593     177,818  
                                                 
Reinvested capital gains
 
    92,914     11,622,607     8,411,302     14,781,163             7,104     298,482  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     407,450     7,482,105     5,631,870     8,891,627     2,657,610     1,066,566     9,004     433,306  
                                                 
Investment activity:       FidVIPBal     FidVIPBalS     FidVIPBalS2     FidVIPDyCapS     FidVIPDyCapS2     FidVIPGrIn     FidVIPGrInS     FidVIPGrInS2  
Reinvested dividends
 
  $     1,048,947     291,589     230,950     1,081     4,651     255,888     301,097     216,701  
Mortality and expense risk charges (note 2)
 
    (448,171 )   (94,473 )   (98,860 )   (5,872 )   (56,401 )   (196,776 )   (179,978 )   (202,592 )
                                                 
Net investment income (loss)
 
    600,776     197,116     132,090     (4,791 )   (51,750 )   59,112     121,119     14,109  
                                                 
Proceeds from mutual fund shares sold
 
    6,886,187     3,356,534     1,879,681     497,903     1,183,744     4,151,159     6,759,090     4,051,134  
Cost of mutual fund shares sold
 
    (6,652,796 )   (2,842,179 )   (1,609,694 )   (372,677 )   (712,519 )   (3,733,309 )   (6,216,334 )   (3,132,447 )
                                                 
Realized gain (loss) on investments
 
    233,391     514,355     269,987     125,226     471,225     417,850     542,756     918,687  
Change in unrealized gain (loss) on investments
 
    255,661     (356,688 )   (145,366 )   (132,081 )   (656,224 )   360,228     443,153     6,663  
                                                 
Net gain (loss) on investments
 
    489,052     157,667     124,621     (6,855 )   (184,999 )   778,078     985,909     925,350  
                                                 
Reinvested capital gains
 
    1,276,761     400,353     316,259     52,598     449,687     602,074     820,943     672,887  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     2,366,589     755,136     572,970     40,952     212,938     1,439,264     1,927,971     1,612,346  
                                                 
(Continued)
 
 
 
11
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       FidVIPGrOp     FidVIPGrOpS     FidVIPGrOpS2     FidVIPMCap     FidVIPMCapS     FidVIPMCapS2     FidVIPVaIS     FidVIPVaIS2  
Reinvested dividends
 
  $                 42,834     126,262     302,233     4,460     42,018  
Mortality and expense risk charges (note 2)
 
    (1,032,755 )   (197,399 )   (59,139 )   (62,857 )   (175,007 )   (816,300 )   (6,358 )   (96,734 )
                                                 
Net investment income (loss)
 
    (1,032,755 )   (197,399 )   (59,139 )   (20,023 )   (48,745 )   (514,067 )   (1,898 )   (54,716 )
                                                 
Proceeds from mutual fund shares sold
 
    19,274,831     7,824,753     1,979,371     1,168,844     6,732,606     14,776,486     135,042     4,125,247  
Cost of mutual fund shares sold
 
    (20,707,337 )   (8,442,513 )   (1,501,977 )   (588,819 )   (3,733,900 )   (7,980,437 )   (107,671 )   (4,026,468 )
                                                 
Realized gain (loss) on investments
 
    (1,432,506 )   (617,760 )   477,394     580,025     2,998,706     6,796,049     27,371     98,779  
Change in unrealized gain (loss) on investments
 
    16,735,823     4,761,749     572,067     (367,789 )   (2,281,935 )   (3,870,592 )   (59,821 )   (495,937 )
                                                 
Net gain (loss) on investments
 
    15,303,317     4,143,989     1,049,461     212,236     716,771     2,925,457     (32,450 )   (397,158 )
                                                 
Reinvested capital gains
 
                438,000     1,745,864     5,848,772     57,523     788,054  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     14,270,562     3,946,590     990,322     630,213     2,413,890     8,260,162     23,175     336,180  
                                                 
Investment activity:       FrVIPForSec     FrVIPRisDiv     JAspRMgCore     MFSInvGrStS     MFSMidCapGrS     MFSNewDiscS     MFSValueS     MTBLgCapGr  
Reinvested dividends
 
  $     12,743     78,029     2,205     4,013             90,770     9,666  
Mortality and expense risk charges (note 2)
 
    (6,510 )   (35,271 )   (9,561 )   (65,297 )   (88,205 )   (50,938 )   (144,942 )   (30,301 )
                                                 
Net investment income (loss)
 
    6,233     42,758     (7,356 )   (61,284 )   (88,205 )   (50,938 )   (54,172 )   (20,635 )
                                                 
Proceeds from mutual fund shares sold
 
    52,854     416,197     604,802     889,328     1,406,018     2,186,842     4,111,824     456,968  
Cost of mutual fund shares sold
 
    (30,196 )   (275,917 )   (584,815 )   (616,755 )   (1,079,241 )   (1,558,494 )   (2,714,287 )   (347,360 )
                                                 
Realized gain (loss) on investments
 
    22,658     140,280     19,987     272,573     326,777     628,348     1,397,537     109,608  
Change in unrealized gain (loss) on investments
 
    22,718     (329,289 )   29,076     225,275     45,719     (805,103 )   (894,316 )   (69,299 )
                                                 
Net gain (loss) on investments
 
    45,376     (189,009 )   49,063     497,848     372,496     (176,755 )   503,221     40,309  
                                                 
Reinvested capital gains
 
    26,387     44,218     4,776         245,678     309,699     182,071     182,166  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     77,996     (102,033 )   46,483     436,564     529,969     82,006     631,120     201,840  
                                                 
(Continued)
 
 
 
12
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       MTBLgCapV     MTBModGr     NVITAstAll2     NVITBnd2     NVITGlobGr2     NVITGroInc2     NVITGrowth2     NVITFHiInc3  
Reinvested dividends
 
  $     37,939     625,960     122,371     134,018     78,096     4,566     13,175     9,748  
Mortality and expense risk charges (note 2)
 
    (43,317 )   (355,227 )   (69,331 )   (21,113 )   (33,140 )   (1,485 )   (29,923 )   (1,717 )
                                                 
Net investment income (loss)
 
    (5,378 )   270,733     53,040     112,905     44,956     3,081     (16,748 )   8,031  
                                                 
Proceeds from mutual fund shares sold
 
    470,220     3,504,585     1,190,782     651,565     855,840     151,186     560,481     64,462  
Cost of mutual fund shares sold
 
    (291,272 )   (2,863,563 )   (1,046,038 )   (629,625 )   (710,930 )   (153,518 )   (483,458 )   (63,672 )
                                                 
Realized gain (loss) on investments
 
    178,948     641,022     144,744     21,940     144,910     (2,332 )   77,023     790  
Change in unrealized gain (loss) on investments
 
    (277,739 )   (113,136 )   (54,259 )   (111,266 )   99,428     (11,320 )   176,490     (6,019 )
                                                 
Net gain (loss) on investments
 
    (98,791 )   527,886     90,485     (89,326 )   244,338     (13,652 )   253,513     (5,229 )
                                                 
Reinvested capital gains
 
    122,937     933,072     3,042                 776      
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     18,768     1,731,691     146,567     23,579     289,294     (10,571 )   237,541     2,802  
                                                 
Investment activity:       NVITEmMrkts2     NVITEmMrkts6     NVITGvtBd     NVITIntVal3     NVITIntVal6     NVITIDAgg2     NVITIDCon2     NVITIDMod2  
Reinvested dividends
 
  $     12,417     75,627     948,989     8,130     134,137     438,200     1,004,962     4,084,772  
Mortality and expense risk charges (note 2)
 
    (35,310 )   (162,794 )   (272,946 )   (4,898 )   (86,017 )   (318,591 )   (377,428 )   (2,075,815 )
                                                 
Net investment income (loss)
 
    (22,893 )   (87,167 )   676,043     3,232     48,120     119,609     627,534     2,008,957  
                                                 
Proceeds from mutual fund shares sold
 
    800,610     5,950,025     5,935,831     165,098     2,010,180     3,766,616     10,762,985     26,148,352  
Cost of mutual fund shares sold
 
    (439,664 )   (4,234,634 )   (6,307,443 )   (138,633 )   (1,680,707 )   (2,596,019 )   (10,344,206 )   (18,157,283 )
                                                 
Realized gain (loss) on investments
 
    360,946     1,715,391     (371,612 )   26,465     329,473     1,170,597     418,779     7,991,069  
Change in unrealized gain (loss) on investments
 
    385,176     1,382,103     900,985     (48,206 )   (780,478 )   (1,020,982 )   (539,167 )   (5,766,525 )
                                                 
Net gain (loss) on investments
 
    746,122     3,097,494     529,373     (21,741 )   (451,005 )   149,615     (120,388 )   2,224,544  
                                                 
Reinvested capital gains
 
    311,453     1,307,143         26,635     485,051     736,982     673,591     2,441,097  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     1,034,682     4,317,470     1,205,416     8,126     82,166     1,006,206     1,180,737     6,674,598  
                                                 
(Continued)
 
 
 
13
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       NVITIDModAg2     NVITIDModCon2     NVITMdCpGr2     NVITMidCap     NVITMidCap2     NVITMyMkt     NVITSmCapGr2     NVITSmCapVal  
Reinvested dividends
 
  $     1,523,782     1,507,519         18,271     103,134     1,645,636         7,862  
Mortality and expense risk charges (note 2)
 
    (917,300 )   (656,475 )   (6,320 )   (15,663 )   (111,141 )   (448,928 )   (41,019 )   (7,965 )
                                                 
Net investment income (loss)
 
    606,482     851,044     (6,320 )   2,608     (8,007 )   1,196,708     (41,019 )   (103 )
                                                 
Proceeds from mutual fund shares sold
 
    9,704,414     10,319,301     716,241     204,231     2,483,439     22,119,137     1,128,372     123,193  
Cost of mutual fund shares sold
 
    (6,282,333 )   (8,955,605 )   (692,037 )   (142,404 )   (1,940,851 )   (22,119,137 )   (838,260 )   (114,262 )
                                                 
Realized gain (loss) on investments
 
    3,422,081     1,363,696     24,204     61,827     542,588         290,112     8,931  
Change in unrealized gain (loss) on investments
 
    (2,199,185 )   (1,254,249 )   6,739     (16,761 )   (223,105 )       (4,472 )   (146,717 )
                                                 
Net gain (loss) on investments
 
    1,222,896     109,447     30,943     45,066     319,483         285,640     (137,786 )
                                                 
Reinvested capital gains
 
    1,314,062     1,312,609         38,873     239,934             87,358  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     3,143,440     2,273,100     24,623     86,547     551,410     1,196,708     244,621     (50,531 )
                                                 
Investment activity:       NVITSmCapVal2     NVITSmComp     NVITSmComp2     NVITNWFund2     NBTARegS     NBTSocRes     OppCapApS     OppGlSec3  
Reinvested dividends
 
  $     67,856     799         483     912     522     1,495     9,882  
Mortality and expense risk charges (note 2)
 
    (106,037 )   (10,599 )   (86,115 )   (606 )   (6,160 )   (8,620 )   (201,650 )   (8,887 )
                                                 
Net investment income (loss)
 
    (38,181 )   (9,800 )   (86,115 )   (123 )   (5,248 )   (8,098 )   (200,155 )   995  
                                                 
Proceeds from mutual fund shares sold
 
    3,030,736     250,779     1,957,543     1,498     553,407     819,971     2,795,670     99,345  
Cost of mutual fund shares sold
 
    (3,026,166 )   (204,364 )   (1,881,614 )   (1,277 )   (545,761 )   (722,513 )   (1,901,978 )   (72,327 )
                                                 
Realized gain (loss) on investments
 
    4,570     46,415     75,929     221     7,646     97,458     893,692     27,018  
Change in unrealized gain (loss) on investments
 
    (1,436,259 )   (142,691 )   (833,635 )   (1,185 )   (11,351 )   (51,485 )   1,111,698     (28,094 )
                                                 
Net gain (loss) on investments
 
    (1,431,689 )   (96,276 )   (757,706 )   (964 )   (3,705 )   45,973     2,005,390     (1,076 )
                                                 
Reinvested capital gains
 
    892,763     119,377     908,974     2,708     5,914     1,962         35,976  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     (577,107 )   13,301     65,153     1,621     (3,039 )   39,837     1,805,235     35,895  
                                                 
(Continued)
 
 
 
14
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       OppGlSec4     OppGlSec     OppGlSecS     OppHighInc3     OppHighInc     OppMStSCap     OppMStSCapS     OppMStS  
Reinvested dividends
 
  $     121,826     11,225     105,987         152,608     3,493     563     149,006  
Mortality and expense risk charges (note 2)
 
    (144,781 )   (8,996 )   (109,820 )   (1,435 )   (21,120 )   (11,798 )   (7,593 )   (230,000 )
                                                 
Net investment income (loss)
 
    (22,955 )   2,229     (3,833 )   (1,435 )   131,488     (8,305 )   (7,030 )   (80,994 )
                                                 
Proceeds from mutual fund shares sold
 
    2,982,037     94,941     2,018,516     10,067     684,650     211,460     497,647     2,884,116  
Cost of mutual fund shares sold
 
    (2,288,905 )   (52,566 )   (1,127,314 )   (10,362 )   (668,466 )   (109,368 )   (473,565 )   (1,647,007 )
                                                 
Realized gain (loss) on investments
 
    693,132     42,375     891,202     (295 )   16,184     102,092     24,082     1,237,109  
Change in unrealized gain (loss) on investments
 
    (717,211 )   (42,462 )   (892,818 )   (8,081 )   (155,732 )   (152,246 )   (78,062 )   (607,993 )
                                                 
Net gain (loss) on investments
 
    (24,079 )   (87 )   (1,616 )   (8,376 )   (139,548 )   (50,154 )   (53,980 )   629,116  
                                                 
Reinvested capital gains
 
    529,971     40,802     443,241             37,246     12,186      
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     482,937     42,944     437,792     (9,811 )   (8,060 )   (21,213 )   (48,824 )   548,122  
                                                 
Investment activity:       OppStratBdS     PVTGroInc     PVTIntlEq     PVTSmCapV     PVTVoygr     STIIntlEq     STIInvGrBd     STILgCapEq  
Reinvested dividends
 
  $     670,546     12,867     19,450     3,236         14     154     823  
Mortality and expense risk charges (note 2)
 
    (261,550 )   (12,984 )   (8,068 )   (6,226 )   (11,416 )   (6 )   (31 )   (971 )
                                                 
Net investment income (loss)
 
    408,996     (117 )   11,382     (2,990 )   (11,416 )   8     123     (148 )
                                                 
Proceeds from mutual fund shares sold
 
    5,751,594     329,042     57,482     138,159     154,276     2,744     7,075     7,858  
Cost of mutual fund shares sold
 
    (5,210,728 )   (288,044 )   (40,104 )   (77,956 )   (122,461 )   (2,002 )   (7,171 )   (5,650 )
                                                 
Realized gain (loss) on investments
 
    540,866     40,998     17,378     60,203     31,815     742     (96 )   2,208  
Change in unrealized gain (loss) on investments.
 
    628,658     (255,293 )   (67,758 )   (192,695 )   14,970     (901 )   34     (6,170 )
                                                 
Net gain (loss) on investments
 
    1,169,524     (214,295 )   (50,380 )   (132,492 )   46,785     (159 )   (62 )   (3,962 )
                                                 
Reinvested capital gains
 
        147,855     84,199     64,711         281         4,116  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     1,578,520     (66,557 )   45,201     (70,771 )   35,369     130     61     6  
                                                 
(Continued)
 
 
 
15
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF OPERATIONS, Continued
 
Year Ended December 31, 2007
 
 
 
Investment activity:       STILgCapGr     STILgCapVal     STIMidCapEq     STISmCapVal     DrySRGro     VKLCom2     VKLStratGro2     VKUCorPlus2  
Reinvested dividends
 
  $     581     2,741     250     955     2,144     338,267         88,385  
Mortality and expense risk charges (note 2)
 
    (2,589 )   (2,825 )   (1,872 )   (1,148 )   (4,454 )   (268,928 )   (70,210 )   (29,021 )
                                                 
Net investment income (loss)
 
    (2,008 )   (84 )   (1,622 )   (193 )   (2,310 )   69,339     (70,210 )   59,364  
                                                 
Proceeds from mutual fund shares sold
 
    202,069     161,034     112,804     25,544     65,415     5,176,744     1,121,837     1,353,164  
Cost of mutual fund shares sold
 
    (177,936 )   (112,645 )   (78,548 )   (23,902 )   (49,846 )   (3,838,600 )   (766,193 )   (1,368,089 )
                                                 
Realized gain (loss) on investments
 
    24,133     48,389     34,256     1,642     15,569     1,338,144     355,644     (14,925 )
Change in unrealized gain (loss) on investments
 
    (8,834 )   (38,087 )   (35,458 )   (26,197 )   11,650     (2,457,488 )   421,832     41,886  
                                                 
Net gain (loss) on investments
 
    15,299     10,302     (1,202 )   (24,555 )   27,219     (1,119,344 )   777,476     26,961  
                                                 
Reinvested capital gains
 
    6,343         13,430     25,202         469,378          
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     19,634     10,218     10,606     454     24,909     (580,627 )   707,266     86,325  
                                                 
Investment activity:       VKUUSRE2                                            
Reinvested dividends
 
  $     52,336                
Mortality and expense risk charges (note 2)
 
    (78,238 )              
                     
Net investment income (loss)
 
    (25,902 )              
                     
Proceeds from mutual fund shares sold
 
    4,260,173                
Cost of mutual fund shares sold
 
    (3,378,445 )              
                     
Realized gain (loss) on investments
 
    881,728                
Change in unrealized gain (loss) on investments
 
    (2,322,436 )              
                     
Net gain (loss) on investments
 
    (1,440,708 )              
                     
Reinvested capital gains
 
    485,757                
                     
Net increase (decrease) in contract owners’ equity resulting from operations
 
  $     (980,853 )              
                     
See accompanying notes to financial statements.
 
 
 
 
 
 
 
16
 
 

 
 
NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY
 
Years Ended December 31, 2007 and 2006
 
 
 
         Total     AIMBValue2     AIMCapAp2     AIMCapDev  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     13,702,280     12,523,422     (141,530 )   (184,021 )   (41,507 )   (42,546 )   (2,896 )   (2,597 )
Realized gain (loss) on investments
 
     76,684,704     33,357,396     1,123,610     1,312,607     246,856     140,877     26,265     18,662  
Change in unrealized gain (loss) on investments
 
     (38,420,654 )   59,982,481     (1,604,275 )   (180,102 )   106,874     41,409     (20,807 )   10,967  
Reinvested capital gains
 
     78,954,252     57,493,885     725,911     637,346             20,258     4,191  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     130,920,582     163,357,184     103,716     1,585,830     312,223     139,740     22,820     31,223  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     41,477,773     52,106,118     284,833     354,722     77,785     34,972     6,078     12,972  
Transfers between funds
 
             (1,056,265 )   (1,200,600 )   (116,480 )   (25,679 )   (25,295 )   (1,856 )
Redemptions (note 3)
 
     (335,326,787 )   (341,659,011 )   (2,053,565 )   (2,082,911 )   (418,250 )   (259,729 )   (21,474 )   (9,512 )
Annuity benefits
 
     (167,097 )   (195,740 )                        
Annual contract maintenance charges (note 2)
 
     (68,722 )   (82,391 )                        
Contingent deferred sales charges (note 2)
 
     (1,958,056 )   (2,245,068 )   (18,233 )   (22,332 )   (5,566 )   (4,696 )   (500 )   (375 )
Adjustments to maintain reserves
 
     (61,077 )   152,824     (28 )   428     (167 )   9     (21 )   (2 )
                                                  
Net equity transactions
 
     (296,103,966 )   (291,923,268 )   (2,843,258 )   (2,950,693 )   (462,678 )   (255,123 )   (41,212 )   1,227  
                                                  
Net change in contract owners’ equity
 
     (165,183,384 )   (128,566,084 )   (2,739,542 )   (1,364,863 )   (150,455 )   (115,383 )   (18,392 )   32,450  
Contract owners’ equity beginning of period
 
     1,663,719,593     1,792,285,677     15,064,760     16,429,623     3,059,928     3,175,311     242,377     209,927  
                                                  
Contract owners’ equity end of period
 
   $     1,498,536,209     1,663,719,593     12,325,218     15,064,760     2,909,473     3,059,928     223,985     242,377  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     116,091,828     136,431,377     1,147,537     1,394,538     267,318     290,170     16,306     16,278  
                                                  
Units purchased
 
     20,457,178     20,346,147     60,189     62,804     21,268     17,959     1,102     3,006  
Units redeemed
 
     (38,861,404 )   (40,685,696 )   (268,917 )   (309,805 )   (58,147 )   (40,811 )   (3,661 )   (2,978 )
                                                  
Ending units
 
     97,687,602     116,091,828     938,809     1,147,537     230,439     267,318     13,747     16,306  
                                                  
(Continued)
 
 
 
17
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         AIMCapDev2     AIMCoreEq     AIMCoreEq2     AIMIntGr2  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (9,497 )   (5,371 )   282     (804 )   (13,362 )   (5,743 )   (13,944 )   (5,450 )
Realized gain (loss) on investments
 
     47,538     32,515     10,672     (404 )   154,264     (3,516 )   307,566     148,839  
Change in unrealized gain (loss) on investments
 
     (60,222 )   (109 )   30,426     48,930     26,628     203,118     (78,534 )   263,192  
Reinvested capital gains
 
     61,503     8,090                          
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     39,322     35,125     41,380     47,722     167,530     193,859     215,088     406,581  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     91,981     41,395     7,774     4,661     55,041     94,707     7      
Transfers between funds
 
     224,709     180,724     393     583,284     (719,964 )   2,780,438     (40,180 )   (159,860 )
Redemptions (note 3)
 
     (107,050 )   (22,029 )   (48,542 )   (11,361 )   (525,668 )   (125,704 )   (509,327 )   (161,756 )
Annuity benefits
 
                     (657 )   (447 )        
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (117 )   (13 )   (494 )   (103 )   (2,329 )   (338 )   (4,682 )   (2,913 )
Adjustments to maintain reserves
 
     (47 )   69     (46 )   15     729     11,668     26     203  
                                                  
Net equity transactions
 
     209,476     200,146     (40,915 )   576,496     (1,192,848 )   2,760,324     (554,156 )   (324,326 )
                                                  
Net change in contract owners’ equity
 
     248,798     235,271     465     624,218     (1,025,318 )   2,954,183     (339,068 )   82,255  
Contract owners’ equity beginning of period
 
     487,463     252,192     624,218         2,954,183         1,774,544     1,692,289  
                                                  
Contract owners’ equity end of period
 
   $     736,261     487,463     624,683     624,218     1,928,865     2,954,183     1,435,476     1,774,544  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     32,190     19,368     57,148         272,774         91,233     110,019  
                                                  
Units purchased
 
     46,581     42,859     3,817     60,058     9,868     294,001     675      
Units redeemed
 
     (34,393 )   (30,037 )   (7,524 )   (2,910 )   (115,470 )   (21,227 )   (26,515 )   (18,786 )
                                                  
Ending units
 
     44,378     32,190     53,441     57,148     167,172     272,774     65,393     91,233  
                                                  
(Continued)
 
 
 
18
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         AIMMidCpCor     AIMPreEq     AIMPreEq2     AlVGrIncB  
Investment activity:        2007     2006     2007    2006     2007    2006     2007     2006  
Net investment income (loss)
 
   $     (7,646 )   (1,048 )      3,988        5,907     (13,279 )   (15,980 )
Realized gain (loss) on investments
 
     41,658     27,109        103,590        496,855     630,271     626,982  
Change in unrealized gain (loss) on investments
 
     24,765     (31,440 )      (78,845 )      (399,237 )   (745,848 )   260,447  
Reinvested capital gains
 
     11,952     85,445                   468,336     514,354  
                                                
Net increase (decrease) in contract owners’ equity resulting from operations
 
     70,729     80,066        28,733        103,525     339,480     1,385,803  
                                                
Equity transactions:
 
                    
Purchase payments received from contract owners (note 3)
 
     9,104     14,598        55        13,398     84,332     258,248  
Transfers between funds
 
     (81,655 )   (22,282 )      (577,015 )      (2,156,611 )   (504,647 )   (369,243 )
Redemptions (note 3)
 
     (43,589 )   (23,462 )      (6,931 )      (21,387 )   (1,417,968 )   (1,206,788 )
Annuity benefits
 
                       (147 )   (667 )   (603 )
Annual contract maintenance charges (note 2)
 
                                
Contingent deferred sales charges (note 2)
 
     (517 )   (63 )      (180 )      (490 )   (9,569 )   (29,389 )
Adjustments to maintain reserves
 
     1     (30 )      (38 )      (1,191 )   494     1,029  
                                                
Net equity transactions
 
     (116,656 )   (31,239 )      (584,109 )      (2,166,428 )   (1,848,025 )   (1,346,746 )
                                                
Net change in contract owners’ equity
 
     (45,927 )   48,827        (555,376 )      (2,062,903 )   (1,508,545 )   39,057  
Contract owners’ equity beginning of period
 
     871,512     822,685        555,376        2,062,903     10,081,169     10,042,112  
                                                
Contract owners’ equity end of period
 
   $     825,585     871,512                   8,572,624     10,081,169  
                                                
CHANGES IN UNITS:
 
                    
Beginning units
 
     61,022     63,405        50,633        210,269     735,403     845,191  
                                                
Units purchased
 
     1,022     3,822        5        1,792     35,299     62,581  
Units redeemed
 
     (8,721 )   (6,205 )      (50,638 )      (212,061 )   (166,058 )   (172,369 )
                                                
Ending units
 
     53,323     61,022                   604,644     735,403  
                                                
(Continued)
 
 
 
19
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         AlVIntlValB     AlVLrgCpGrB     AlVSmMdCpB     DryIPSmCap  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (16,939 )   4,248     (36,638 )   (40,456 )   (73,847 )   (140,007 )   (8,550 )   (8,644 )
Realized gain (loss) on investments
 
     948,910     602,270     187,223     241,703     1,405,268     1,174,867     81,608     58,020  
Change in unrealized gain (loss) on investments
 
     (862,673 )   1,192,940     162,669     (277,391 )   (2,002,880 )   (341,991 )   (133,712 )   68,916  
Reinvested capital gains
 
     227,701     123,921             858,343     926,462     48,666     26,869  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     296,999     1,923,379     313,254     (76,144 )   186,884     1,619,331     (11,988 )   145,161  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     1,055     4,474     91,922     76,234     187,965     281,513     2,722     66,249  
Transfers between funds
 
     (343,430 )   (621,582 )   (69,449 )   (344,308 )   (920,342 )   (584,302 )   (135,183 )   (47,702 )
Redemptions (note 3)
 
     (1,392,268 )   (577,166 )   (307,067 )   (381,955 )   (1,873,339 )   (1,601,757 )   (50,624 )   (55,363 )
Annuity benefits
 
                     (739 )   (668 )        
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (13,060 )   (5,876 )   (4,418 )   (12,333 )   (17,010 )   (18,642 )   (1,295 )   (1,527 )
Adjustments to maintain reserves
 
     37     1,468     (46 )   132     (1,038 )   1,509     (59 )   31  
                                                  
Net equity transactions
 
     (1,747,666 )   (1,198,682 )   (289,058 )   (662,230 )   (2,624,503 )   (1,922,347 )   (184,439 )   (38,312 )
                                                  
Net change in contract owners’ equity
 
     (1,450,667 )   724,697     24,196     (738,374 )   (2,437,619 )   (303,016 )   (196,427 )   106,849  
Contract owners’ equity beginning of period
 
     6,873,247     6,148,550     2,803,216     3,541,590     13,190,958     13,493,974     1,210,663     1,103,814  
                                                  
Contract owners’ equity end of period
 
   $     5,422,580     6,873,247     2,827,412     2,803,216     10,753,339     13,190,958     1,014,236     1,210,663  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     271,312     323,653     261,485     324,021     750,612     865,217     75,679     78,129  
                                                  
Units purchased
 
     1,527     359     30,736     27,345     61,790     76,498     1,130     6,929  
Units redeemed
 
     (67,373 )   (52,700 )   (56,981 )   (89,881 )   (201,764 )   (191,103 )   (12,149 )   (9,379 )
                                                  
Ending units
 
     205,466     271,312     235,240     261,485     610,638     750,612     64,660     75,679  
                                                  
(Continued)
 
 
 
20
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         DryStkIx     DryStklxS     FedAmLeadS     FedCapApS  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     13,559     11,680     6,836     5,421     (126 )   1,062     (19,928 )   (18,670 )
Realized gain (loss) on investments
 
     178,632     212,557     335,014     139,006     66,589     97,909     153,842     104,543  
Change in unrealized gain (loss) on investments
 
     (90,211 )   91,744     (156,176 )   499,989     (606,003 )   (63,167 )   76,599     251,428  
Reinvested capital gains
 
                     278,351     331,996          
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     101,980     315,981     185,674     644,416     (261,189 )   367,800     210,513     337,301  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     66,179     143,390     101,847     256,716     65,722     77,201     78,039     56,285  
Transfers between funds
 
     (68,930 )   (196,748 )   (123,282 )   (10,846 )   (145,875 )   (122,188 )   (65,093 )   (79,956 )
Redemptions (note 3)
 
     (106,122 )   (82,183 )   (688,185 )   (493,845 )   (320,855 )   (279,990 )   (278,721 )   (232,095 )
Annuity benefits
 
                                  
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (1,167 )   (2,104 )   (5,229 )   (8,736 )   (4,481 )   (8,435 )   (3,583 )   (3,473 )
Adjustments to maintain reserves
 
     37     142     32     180     (112 )   19     (61 )   115  
                                                  
Net equity transactions
 
     (110,003 )   (137,503 )   (714,817 )   (256,531 )   (405,601 )   (333,393 )   (269,419 )   (259,124 )
                                                  
Net change in contract owners’ equity
 
     (8,023 )   178,478     (529,143 )   387,885     (666,790 )   34,407     (58,906 )   78,177  
Contract owners’ equity beginning of period
 
     2,458,545     2,280,067     5,302,944     4,915,059     2,731,670     2,697,263     2,577,261     2,499,084  
                                                  
Contract owners’ equity end of period
 
   $     2,450,522     2,458,545     4,773,801     5,302,944     2,064,880     2,731,670     2,518,355     2,577,261  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     185,956     196,318     341,893     360,175     209,203     237,603     213,327     236,385  
                                                  
Units purchased
 
     31,446     46,771     53,262     74,586     15,731     16,645     17,710     12,809  
Units redeemed
 
     (38,785 )   (57,133 )   (98,177 )   (92,868 )   (47,394 )   (45,045 )   (38,417 )   (35,867 )
                                                  
Ending units
 
     178,617     185,956     296,978     341,893     177,540     209,203     192,620     213,327  
                                                  
(Continued)
 
 
 
21
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FedHiIncS     FedIntEq     FedMidCpGr2     FedQualBd  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     756,014     848,472     (2,144 )   (1,862 )   (9,933 )   (9,528 )   114,964     93,231  
Realized gain (loss) on investments
 
     (121,655 )   (25,705 )   5,986     995     116,699     45,210     (28,490 )   (24,356 )
Change in unrealized gain (loss) on investments
 
     (389,443 )   259,186     14,647     35,028     21,660     15,700     43,031     26,644  
Reinvested capital gains
 
                                  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     244,916     1,081,953     18,489     34,161     128,426     51,382     129,505     95,519  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     691,789     305,493             22,137     21,437     112,290     128,916  
Transfers between funds
 
     (1,066,559 )   471,246     (9,988 )       (22,996 )   39,515     209,149     (85,178 )
Redemptions (note 3)
 
     (1,675,675 )   (1,686,625 )   (1,973 )   (533 )   (102,003 )   (54,761 )   (349,470 )   (213,324 )
Annuity benefits
 
                     (2,766 )            
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (24,604 )   (24,369 )   (25 )       (180 )   (1,218 )   (4,991 )   (6,365 )
Adjustments to maintain reserves
 
     24     825     (6 )   8     119     74     (55 )   (40 )
                                                  
Net equity transactions
 
     (2,075,025 )   (933,430 )   (11,992 )   (525 )   (105,689 )   5,047     (33,077 )   (175,991 )
                                                  
Net change in contract owners’ equity
 
     (1,830,109 )   148,523     6,497     33,636     22,737     56,429     96,428     (80,472 )
Contract owners’ equity beginning of period
 
     12,509,632     12,361,109     227,795     194,159     843,482     787,053     3,265,829     3,346,301  
                                                  
Contract owners’ equity end of period
 
   $     10,679,523     12,509,632     234,292     227,795     866,219     843,482     3,362,257     3,265,829  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     875,905     944,507     15,736     15,775     55,039     54,951     279,545     295,088  
                                                  
Units purchased
 
     217,013     297,058             7,127     6,713     41,683     27,452  
Units redeemed
 
     (359,011 )   (365,660 )   (801 )   (39 )   (14,521 )   (6,625 )   (44,706 )   (42,995 )
                                                  
Ending units
 
     733,907     875,905     14,935     15,736     47,645     55,039     276,522     279,545  
                                                  
(Continued)
 
 
 
22
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FedQualBdS     FidVIPEI     FidVIPEIS     FidVIPEIS2  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     457,111     366,703     60,423     682,883     124,324     663,015     103,933     835,023  
Realized gain (loss) on investments
 
     (298,053 )   (124,272 )   1,888,459     907,138     1,368,908     709,364     3,150,798     1,241,467  
Change in unrealized gain (loss) on investments
 
     318,107     124,114     (3,811,017 )   144,541     (2,950,580 )   278,326     (6,793,884 )   343,909  
Reinvested capital gains
 
             2,227,382     4,184,052     1,837,971     3,719,325     3,841,195     6,118,431  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     477,165     366,545     365,247     5,918,614     380,623     5,370,030     302,042     8,538,830  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     438,523     638,423     364,702     252,655     195,932     575,558     1,149,912     1,645,635  
Transfers between funds
 
     (1,457,906 )   546,655     (122,231 )   543,704     (1,646,925 )   (488,819 )   (1,817,107 )   (1,544,746 )
Redemptions (note 3)
 
     (1,871,947 )   (1,717,946 )   (7,917,074 )   (11,411,844 )   (7,122,622 )   (9,948,996 )   (7,474,301 )   (5,627,440 )
Annuity benefits
 
     (522 )   (520 )   (200 )   (9,927 )   (1,407 )   (1,260 )        
Annual contract maintenance charges (note 2)
 
             (5,101 )   (5,755 )                
Contingent deferred sales charges (note 2)
 
     (27,572 )   (31,910 )   (2,043 )   (5,311 )   (3,743 )   (10,375 )   (70,203 )   (82,097 )
Adjustments to maintain reserves
 
     195     (89 )   (65 )   209     745     1,272     2,115     10,313  
                                                  
Net equity transactions
 
     (2,919,229 )   (565,387 )   (7,682,012 )   (10,636,269 )   (8,578,020 )   (9,872,620 )   (8,209,584 )   (5,598,335 )
                                                  
Net change in contract owners’ equity
 
     (2,442,064 )   (198,842 )   (7,316,765 )   (4,717,655 )   (8,197,397 )   (4,502,590 )   (7,907,542 )   2,940,495  
Contract owners’ equity beginning of period
 
     14,558,220     14,757,062     33,755,176     38,472,831     29,864,999     34,367,589     52,827,666     49,887,171  
                                                  
Contract owners’ equity end of period
 
   $     12,116,156     14,558,220     26,438,411     33,755,176     21,667,602     29,864,999     44,920,124     52,827,666  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     1,265,396     1,316,031     1,675,332     2,268,978     1,848,034     2,510,246     3,777,054     4,235,309  
                                                  
Units purchased
 
     232,814     248,576     110,143     141,991     58,417     222,140     365,687     370,334  
Units redeemed
 
     (483,533 )   (299,211 )   (475,226 )   (735,637 )   (563,744 )   (884,352 )   (944,020 )   (828,589 )
                                                  
Ending units
 
     1,014,677     1,265,396     1,310,249     1,675,332     1,342,707     1,848,034     3,198,721     3,777,054  
                                                  
(Continued)
 
 
 
23
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPGr     FidVIPGrS     FidVIPGrS2     FidVIPHI  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (131,798 )   (276,333 )   (82,539 )   (220,446 )   (226,913 )   (317,839 )   1,116,663     1,396,944  
Realized gain (loss) on investments
 
     (632,958 )   (5,040,962 )   (2,578,286 )   (5,954,616 )   3,724,679     2,194,932     (274,536 )   (69,315 )
Change in unrealized gain (loss) on investments
 
     6,115,382     6,754,333     8,246,780     7,840,967     2,600,783     (431,288 )   (487,666 )   1,021,177  
Reinvested capital gains
 
     19,488         19,747         17,445              
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     5,370,114     1,437,038     5,605,702     1,665,905     6,115,994     1,445,805     354,461     2,348,806  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     186,711     277,696     173,088     362,899     292,273     598,644     46,299     131,429  
Transfers between funds
 
     (347,891 )   (1,621,135 )   (717,410 )   (2,066,264 )   (115,034 )   (2,586,593 )   (2,798,640 )   (873,581 )
Redemptions (note 3)
 
     (6,082,767 )   (8,827,479 )   (7,987,135 )   (10,310,818 )   (5,641,173 )   (4,496,360 )   (4,307,404 )   (8,017,429 )
Annuity benefits
 
         (16,373 )                   (1,821 )   (9,146 )
Annual contract maintenance charges (note 2)
 
     (5,216 )   (6,924 )                   (3,187 )   (3,920 )
Contingent deferred sales charges (note 2)
 
     (3,584 )   (7,693 )   (2,747 )   (19,703 )   (45,345 )   (58,314 )   (738 )   (2,737 )
Adjustments to maintain reserves
 
     (242 )   520     (119 )   (24 )   (16,339 )   3,239     418     880  
                                                  
Net equity transactions
 
     (6,252,989 )   (10,201,388 )   (8,534,323 )   (12,033,910 )   (5,525,618 )   (6,539,384 )   (7,065,073 )   (8,774,504 )
                                                  
Net change in contract owners’ equity
 
     (882,875 )   (8,764,350 )   (2,928,621 )   (10,368,005 )   590,376     (5,093,579 )   (6,710,612 )   (6,425,698 )
Contract owners’ equity beginning of period
 
     24,502,919     33,267,269     26,927,897     37,295,902     26,931,305     32,024,884     23,277,936     29,703,634  
                                                  
Contract owners’ equity end of period
 
   $     23,620,044     24,502,919     23,999,276     26,927,897     27,521,681     26,931,305     16,567,324     23,277,936  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     1,587,272     2,270,865     2,071,785     3,024,143     3,550,271     4,427,606     1,918,167     2,687,632  
                                                  
Units purchased
 
     100,354     51,440     115,110     33,928     1,086,011     217,916     133,156     321,066  
Units redeemed
 
     (466,737 )   (735,033 )   (735,256 )   (986,286 )   (1,655,669 )   (1,095,251 )   (704,819 )   (1,090,531 )
                                                  
Ending units
 
     1,220,889     1,587,272     1,451,639     2,071,785     2,980,613     3,550,271     1,346,504     1,918,167  
                                                  
(Continued)
 
 
 
24
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPHIR    FidVIPHIS     FidVIPHIS2     FidVIPHIS2R
Investment activity:        2007         2006        2007     2006     2007     2006     2007         2006    
Net investment income (loss)
 
   $     138,951        587,511     750,919     881,456     1,179,977     175,452    
Realized gain (loss) on investments
 
     4,850        374,038     95,038     28,315     377,780     (7,482 )  
Change in unrealized gain (loss) on investments
 
     (142,800 )      (753,681 )   483,927     (628,819 )   179,751     (186,797 )  
Reinvested capital gains
 
                               
                                               
Net increase (decrease) in contract owners’ equity resulting from operations
 
     1,001        207,868     1,329,884     280,952     1,737,508     (18,827 )  
                                               
Equity transactions:
 
                   
Purchase payments received from contract owners (note 3)
 
     22,033        46,432     134,226     280,947     423,706     142,867    
Transfers between funds
 
     2,006,121        (798,239 )   (815,828 )   (3,568,914 )   388,812     2,343,913    
Redemptions (note 3)
 
     (230,930 )      (3,104,154 )   (5,766,038 )   (2,939,571 )   (2,449,639 )   (212,718 )  
Annuity benefits
 
            (1,220 )   (1,169 )              
Annual contract maintenance charges (note 2)
 
                               
Contingent deferred sales charges (note 2)
 
            (1,130 )   (9,080 )   (33,545 )   (41,251 )   (1,281 )  
Adjustments to maintain reserves
 
     97        628     695     448     1,629     287    
                                               
Net equity transactions
 
     1,797,321        (3,857,683 )   (6,457,194 )   (6,260,635 )   (1,676,743 )   2,273,068    
                                               
Net change in contract owners’ equity
 
     1,798,322        (3,649,815 )   (5,127,310 )   (5,979,683 )   60,765     2,254,241    
Contract owners’ equity beginning of period
 
            11,919,428     17,046,738     19,198,055     19,137,290        
                                               
Contract owners’ equity end of period
 
   $     1,798,322        8,269,613     11,919,428     13,218,372     19,198,055     2,254,241    
                                               
CHANGES IN UNITS:
 
                   
Beginning units
 
            1,155,293     1,819,246     1,867,791     2,043,436        
                                               
Units purchased
 
     328,073        37,827     67,456     199,570     298,644     302,404    
Units redeemed
 
     (144,529 )      (404,360 )   (731,409 )   (807,829 )   (474,289 )   (72,616 )  
                                               
Ending units
 
     183,544        788,760     1,155,293     1,259,532     1,867,791     229,788    
                                               
(Continued)
 
 
 
25
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPHISR    FidVIPMMkt     FidVIPOv     FidVIPOvS  
Investment activity:        2007         2006        2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     42,537        978,006     1,139,741     518,898     (139,958 )   197,971     (20,218 )
Realized gain (loss) on investments
 
     (3,692 )              2,297,896     1,534,120     1,643,049     1,070,285  
Change in unrealized gain (loss) on investments
 
     (43,362 )              (688,223 )   2,841,948     (1,115,079 )   568,458  
Reinvested capital gains
 
                    1,940,983     187,866     703,656     72,924  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
     (4,517 )      978,006     1,139,741     4,069,554     4,423,976     1,429,597     1,691,449  
                                                 
Equity transactions:
 
                   
Purchase payments received from contract owners (note 3)
 
     11,414        873,682     683,564     288,131     267,768          
Transfers between funds
 
     576,700        10,483,436     11,721,630     (57,314 )   1,320,709     (303,273 )   (379,419 )
Redemptions (note 3)
 
     (34,615 )      (20,460,879 )   (15,180,482 )   (6,455,088 )   (7,575,798 )   (3,327,404 )   (2,418,463 )
Annuity benefits
 
            (109,278 )   (108,976 )   (1,283 )   (1,112 )        
Annual contract maintenance charges (note 2)
 
            (2,127 )   (2,027 )   (4,486 )   (4,787 )        
Contingent deferred sales charges (note 2)
 
            (15,834 )   (38,591 )   (1,393 )   (6,396 )   (2,430 )   (3,344 )
Adjustments to maintain reserves
 
     38        (4,559 )   5,247     56     63     (280 )   518  
                                                 
Net equity transactions
 
     553,537        (9,235,559 )   (2,919,635 )   (6,231,377 )   (5,999,553 )   (3,633,387 )   (2,800,708 )
                                                 
Net change in contract owners’ equity
 
     549,020        (8,257,553 )   (1,779,894 )   (2,161,823 )   (1,575,577 )   (2,203,790 )   (1,109,259 )
Contract owners’ equity beginning of period
 
            30,634,721     32,414,615     28,581,313     30,156,890     10,551,954     11,661,213  
                                                 
Contract owners’ equity end of period
 
   $     549,020        22,377,168     30,634,721     26,419,490     28,581,313     8,348,164     10,551,954  
                                                 
CHANGES IN UNITS:
 
                   
Beginning units
 
            2,404,784     2,635,345     1,500,483     1,847,746     661,770     852,469  
                                                 
Units purchased
 
     77,733        1,718,312     1,802,523     133,641     188,277     43,505      
Units redeemed
 
     (21,833 )      (2,430,288 )   (2,033,084 )   (436,390 )   (535,540 )   (257,046 )   (190,699 )
                                                 
Ending units
 
     55,900        1,692,808     2,404,784     1,197,734     1,500,483     448,229     661,770  
                                                 
(Continued)
 
 
 
26
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPOvS2     FidVIPOvS2R     FidVIPOvSR     FidVIPVal  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     139,888     (44,952 )   146,710     (32,797 )   29,510     (2,050 )   (2,895 )   (2,641 )
Realized gain (loss) on investments
 
     1,143,062     673,121     685,339     359,850     133,514     170,839     24,804     105,577  
Change in unrealized gain (loss) on investments
 
     (610,903 )   662,545     (277,699 )   469,229     (56,027 )   20,449     (69,153 )   (22,036 )
Reinvested capital gains
 
     614,194     57,648     473,783     30,201     92,273     8,403     55,360     3,658  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     1,286,241     1,348,362     1,028,133     826,483     199,270     197,641     8,116     84,558  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
             553,956     708,822     31,872     82,792          
Transfers between funds
 
     (515,022 )   (483,694 )   2,887,646     1,082,087     203,267     47,888     (217 )   (156,741 )
Redemptions (note 3)
 
     (1,854,402 )   (1,030,932 )   (1,533,644 )   (632,480 )   (325,031 )   (316,353 )   (75,932 )   (197,983 )
Annuity benefits
 
                     (667 )   (576 )        
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (9,908 )   (13,254 )   (13,161 )   (5,871 )   (147 )   (416 )       (824 )
Adjustments to maintain reserves
 
     (14,085 )   3,027     188     1,453     324     323     4     (80 )
                                                  
Net equity transactions
 
     (2,393,417 )   (1,524,853 )   1,894,985     1,154,011     (90,382 )   (186,342 )   (76,145 )   (355,628 )
                                                  
Net change in contract owners’ equity
 
     (1,107,176 )   (176,491 )   2,923,118     1,980,494     108,888     11,299     (68,029 )   (271,070 )
Contract owners’ equity beginning of period
 
     8,996,238     9,172,729     6,392,870     4,412,376     1,317,390     1,306,091     575,969     847,039  
                                                  
Contract owners’ equity end of period
 
   $     7,889,062     8,996,238     9,315,988     6,392,870     1,426,278     1,317,390     507,940     575,969  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     747,944     886,223     366,651     303,978     84,632     98,573     42,221     70,438  
                                                  
Units purchased
 
     154,978         307,823     188,330     22,317     29,249     1,632     2,505  
Units redeemed
 
     (315,717 )   (138,279 )   (200,491 )   (125,657 )   (27,496 )   (43,190 )   (6,988 )   (30,722 )
                                                  
Ending units
 
     587,205     747,944     473,983     366,651     79,453     84,632     36,865     42,221  
                                                  
(Continued)
 
 
 
27
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPVal2     FidVIPAMGr     FidVIPAMGrS     FidVIPAMGrS2  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (13,570 )   (8,686 )   86,153     29,598     82,593     36,355     46,501     12,200  
Realized gain (loss) on investments
 
     218,612     66,505     133,305     (126,147 )   (8,730 )   (220,343 )   86,526     (5,916 )
Change in unrealized gain (loss) on investments
 
     (316,669 )   110,509     273,189     280,192     350,592     346,126     171,098     98,821  
Reinvested capital gains
 
     130,508     8,313                          
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     18,881     176,641     492,647     183,643     424,455     162,138     304,125     105,105  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     9,429     4,193     25,913     29,275     11,935     41,455     7,904     5,667  
Transfers between funds
 
     6,117     (85,608 )   (105,945 )   (133,594 )   (56,959 )   (76,642 )   (255,893 )   (40,037 )
Redemptions (note 3)
 
     (280,978 )   (142,212 )   (861,879 )   (965,414 )   (576,339 )   (869,581 )   (418,241 )   (354,055 )
Annuity benefits
 
                                  
Annual contract maintenance charges (note 2)
 
             (665 )   (764 )                
Contingent deferred sales charges (note 2)
 
     (2,764 )   (2,280 )   (305 )   (411 )   (343 )   (1,753 )   (885 )   (5,077 )
Adjustments to maintain reserves
 
     46     257     (70 )   (54 )   (45 )   (83 )   (2,161 )   237  
                                                  
Net equity transactions
 
     (268,150 )   (225,650 )   (942,951 )   (1,070,962 )   (621,751 )   (906,604 )   (669,276 )   (393,265 )
                                                  
Net change in contract owners’ equity
 
     (249,269 )   (49,009 )   (450,304 )   (887,319 )   (197,296 )   (744,466 )   (365,151 )   (288,160 )
Contract owners’ equity beginning of period
 
     1,427,375     1,476,384     3,284,121     4,171,440     2,801,709     3,546,175     2,047,291     2,335,451  
                                                  
Contract owners’ equity end of period
 
   $     1,178,106     1,427,375     2,833,817     3,284,121     2,604,413     2,801,709     1,682,140     2,047,291  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     107,559     125,609     234,079     313,221     237,859     318,342     218,687     262,690  
                                                  
Units purchased
 
     53,017     1,396     6,792     13,007     3,698     3,756     74,149     991  
Units redeemed
 
     (72,774 )   (19,446 )   (69,517 )   (92,149 )   (53,995 )   (84,239 )   (137,220 )   (44,994 )
                                                  
Ending units
 
     87,802     107,559     171,354     234,079     187,562     237,859     155,616     218,687  
                                                  
(Continued)
 
 
 
28
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPAM     FidVIPAMS     FidVIPAMS2     FidVIPCon  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     211,315     76,560     173,737     95,216     136,588     54,893     (277,581 )   (87,069 )
Realized gain (loss) on investments
 
     184,506     164,794     75,140     (206,574 )   106,430     11,483     3,626,970     3,819,047  
Change in unrealized gain (loss) on investments
 
     58,968     37,481     124,011     381,091     71,518     143,679     (7,489,891 )   (2,458,828 )
Reinvested capital gains
 
     127,362         106,535         92,914         11,622,607     4,506,449  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     582,151     278,835     479,423     269,733     407,450     210,055     7,482,105     5,779,599  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     27,621     35,087     165     309,695     34,473     22,446     400,667     452,115  
Transfers between funds
 
     (1,883 )   46,591     (28,463 )   (134,377 )   (98,706 )   (117,662 )   (3,318,468 )   (318,510 )
Redemptions (note 3)
 
     (692,499 )   (1,619,480 )   (1,149,761 )   (1,987,610 )   (924,156 )   (790,557 )   (11,542,458 )   (16,365,549 )
Annuity benefits
 
                             (165 )   (125 )
Annual contract maintenance charges (note 2)
 
     (768 )   (929 )                   (9,392 )   (10,471 )
Contingent deferred sales charges (note 2)
 
     (123 )   (987 )   (521 )   (3,004 )   (2,564 )   (9,813 )   (5,616 )   (10,632 )
Adjustments to maintain reserves
 
     (63 )   (75 )   (73 )   (95 )   32     233     (182 )   (42 )
                                                  
Net equity transactions
 
     (667,715 )   (1,539,793 )   (1,178,653 )   (1,815,391 )   (990,921 )   (895,353 )   (14,475,614 )   (16,253,214 )
                                                  
Net change in contract owners’ equity
 
     (85,564 )   (1,260,958 )   (699,230 )   (1,545,658 )   (583,471 )   (685,298 )   (6,993,509 )   (10,473,615 )
Contract owners’ equity beginning of period
 
     4,617,104     5,878,062     4,128,448     5,674,106     3,531,528     4,216,826     54,794,644     65,268,259  
                                                  
Contract owners’ equity end of period
 
   $     4,531,540     4,617,104     3,429,218     4,128,448     2,948,057     3,531,528     47,801,135     54,794,644  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     302,401     408,397     313,691     457,159     328,594     415,041     2,291,778     3,010,456  
                                                  
Units purchased
 
     9,215     19,524     11,419     27,362     51,040     2,507     71,753     194,669  
Units redeemed
 
     (51,371 )   (125,520 )   (97,510 )   (170,830 )   (137,979 )   (88,954 )   (642,034 )   (913,347 )
                                                  
Ending units
 
     260,245     302,401     227,600     313,691     241,655     328,594     1,721,497     2,291,778  
                                                  
(Continued)
 
 
 
29
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPConS     FidVIPConS2     FidVIPIdx500     FidVIPIGBd  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (96,830 )   29,509     (368,163 )   (207,922 )   1,336,315     466,893     1,248,281     1,545,087  
Realized gain (loss) on investments
 
     3,291,518     2,988,134     5,259,341     3,736,844     4,647,693     (581,791 )   (1,139,764 )   (915,899 )
Change in unrealized gain (loss) on investments
 
     (5,974,120 )   (1,932,970 )   (10,780,714 )   (2,757,190 )   (3,326,398 )   9,258,827     958,049     567,845  
Reinvested capital gains
 
     8,411,302     3,425,575     14,781,163     4,855,135                 128,380  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     5,631,870     4,510,248     8,891,627     5,626,867     2,657,610     9,143,929     1,066,566     1,325,413  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     285,204     636,602     1,653,941     2,527,639     498,208     678,374     133,389     386,612  
Transfers between funds
 
     (503,368 )   (1,085,024 )   (1,215,263 )   143,675     (3,042,719 )   (3,515,348 )   8,901     (1,046,243 )
Redemptions (note 3)
 
     (12,333,933 )   (13,268,625 )   (8,890,802 )   (6,701,934 )   (14,560,338 )   (19,413,405 )   (11,416,528 )   (14,856,023 )
Annuity benefits
 
     (2,659 )               (2,003 )   (214 )       (6,971 )
Annual contract maintenance charges (note 2)
 
                     (4,320 )   (5,829 )   (1,933 )   (2,535 )
Contingent deferred sales charges (note 2)
 
     (10,809 )   (28,968 )   (106,224 )   (151,181 )   (29,890 )   (52,302 )   (30,985 )   (31,171 )
Adjustments to maintain reserves
 
     22     571     1,441     15,405     (125 )   2,366     (594 )   (524 )
                                                  
Net equity transactions
 
     (12,565,543 )   (13,745,444 )   (8,556,907 )   (4,166,396 )   (17,141,187 )   (22,306,358 )   (11,307,750 )   (15,556,855 )
                                                  
Net change in contract owners’ equity
 
     (6,933,673 )   (9,235,196 )   334,720     1,460,471     (14,483,577 )   (13,162,429 )   (10,241,184 )   (14,231,442 )
Contract owners’ equity beginning of period
 
     41,231,144     50,466,340     59,953,597     58,493,126     64,047,654     77,210,083     42,214,487     56,445,929  
                                                  
Contract owners’ equity end of period
 
   $     34,297,471     41,231,144     60,288,317     59,953,597     49,564,077     64,047,654     31,973,303     42,214,487  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     2,072,706     2,778,895     4,412,906     4,727,922     4,123,755     5,719,281     2,736,447     3,776,974  
                                                  
Units purchased
 
     134,635     178,541     732,851     767,223     350,744     209,267     304,405     220,040  
Units redeemed
 
     (722,763 )   (884,730 )   (1,285,060 )   (1,082,239 )   (1,411,557 )   (1,804,793 )   (1,038,423 )   (1,260,567 )
                                                  
Ending units
 
     1,484,578     2,072,706     3,860,697     4,412,906     3,062,942     4,123,755     2,002,429     2,736,447  
                                                  
(Continued)
 
 
 
30
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPAgGrS     FidVIPAgGrS2     FidVIPBal     FidVIPBalS  
Investment activity:            2007         2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $   (693 )   (965 )   (42,994 )   (40,693 )   600,776     275,133     197,116     153,007  
Realized gain (loss) on investments
 
     9,497     13,233     164,211     147,757     233,391     (253,338 )   514,355     103,700  
Change in unrealized gain (loss) on investments
 
     (6,904 )   (7,962 )   13,607     (70,466 )   255,661     2,146,549     (356,688 )   499,910  
Reinvested capital gains
 
     7,104     3,968     298,482     144,659     1,276,761     1,260,773     400,353     482,699  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     9,004     8,274     433,306     181,257     2,366,589     3,429,117     755,136     1,239,316  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
             43,814     44,631     279,184     173,020     54,593     169,160  
Transfers between funds
 
     35,900     (51,300 )   75,407     (99,667 )   (231,272 )   13,189     35,902     (149,460 )
Redemptions (note 3)
 
     (34,207 )   (66,846 )   (251,331 )   (227,258 )   (6,080,522 )   (8,953,757 )   (2,996,973 )   (5,179,441 )
Annuity benefits
 
                     (12,438 )   (11,562 )        
Annual contract maintenance charges (note 2)
 
                     (4,986 )   (6,049 )        
Contingent deferred sales charges (note 2)
 
             (3,088 )   (3,918 )   (553 )   (2,312 )   (507 )   (5,515 )
Adjustments to maintain reserves
 
         (24 )   (90 )   276     (359 )   975     (74 )   (125 )
                                                  
Net equity transactions
 
     1,693     (118,170 )   (135,288 )   (285,936 )   (6,050,946 )   (8,786,496 )   (2,907,059 )   (5,165,381 )
                                                  
Net change in contract owners’ equity
 
     10,697     (109,896 )   298,018     (104,679 )   (3,684,357 )   (5,357,379 )   (2,151,923 )   (3,926,065 )
Contract owners’ equity beginning of period
 
     71,435     181,331     2,969,741     3,074,420     33,247,350     38,604,729     10,769,761     14,695,826  
                                                  
Contract owners’ equity end of period
 
   $   82,132     71,435     3,267,759     2,969,741     29,562,993     33,247,350     8,617,838     10,769,761  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     6,594     17,951     285,349     315,380     1,656,632     2,121,755     790,203     1,191,624  
                                                  
Units purchased
 
     5,623     1,507     53,903     47,192     37,545     64,991     29,734     41,680  
Units redeemed
 
     (5,719 )   (12,864 )   (68,176 )   (77,223 )   (323,347 )   (530,114 )   (236,077 )   (443,101 )
                                                  
Ending units
 
     6,498     6,594     271,076     285,349     1,370,830     1,656,632     583,860     790,203  
                                                  
(Continued)
 
 
 
31
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPBalS2     FidVIPDyCapS     FidVIPDyCapS2     FidVIPGrIn  
Investment activity:        2007     2006         2007             2006         2007     2006     2007     2006  
Net investment income (loss)
 
   $   132,090     50,088     (4,791 )   (3,883 )   (51,750 )   (47,968 )   59,112     (66,151 )
Realized gain (loss) on investments
 
     269,987     98,256     125,226     93,143     471,225     408,626     417,850     (125,970 )
Change in unrealized gain (loss) on investments
 
     (145,366 )   350,405     (132,081 )   (28,456 )   (656,224 )   9,496     360,228     1,539,190  
Reinvested capital gains
 
     316,259     286,908     52,598     17,946     449,687     113,651     602,074     474,228  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     572,970     785,657     40,952     78,750     212,938     483,805     1,439,264     1,821,297  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     47,091     114,571         12,023     23,901     113,374     76,385     106,662  
Transfers between funds
 
     (41,893 )   70,067     (55,944 )   (23,947 )   (272,507 )   (54,194 )   (429,623 )   (568,763 )
Redemptions (note 3)
 
     (1,582,056 )   (1,581,897 )   (245,531 )   (62,708 )   (361,087 )   (541,690 )   (3,433,775 )   (5,399,509 )
Annuity benefits
 
                             (207 )   (162 )
Annual contract maintenance charges (note 2)
 
                             (2,696 )   (3,383 )
Contingent deferred sales charges (note 2)
 
     (11,044 )   (15,092 )   (67 )   (258 )   (3,890 )   (6,435 )   (2,305 )   (4,680 )
Adjustments to maintain reserves
 
     177     1,527     (41 )   (16 )   49     1,719     (184 )   (100 )
                                                  
Net equity transactions
 
     (1,587,725 )   (1,410,824 )   (301,583 )   (74,906 )   (613,534 )   (487,226 )   (3,792,405 )   (5,869,935 )
                                                  
Net change in contract owners’ equity
 
     (1,014,755 )   (625,167 )   (260,631 )   3,844     (400,596 )   (3,421 )   (2,353,141 )   (4,048,638 )
Contract owners’ equity beginning of period
 
     7,936,808     8,561,975     680,433     676,589     4,268,269     4,271,690     15,128,405     19,177,043  
                                                  
Contract owners’ equity end of period
 
   $   6,922,053     7,936,808     419,802     680,433     3,867,673     4,268,269     12,775,264     15,128,405  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     703,602     837,180     71,423     80,221     468,828     528,257     844,127     1,195,559  
                                                  
Units purchased
 
     115,486     33,540     21,022     24,472     125,902     84,405     17,355     28,136  
Units redeemed
 
     (252,706 )   (167,118 )   (50,899 )   (33,270 )   (195,144 )   (143,834 )   (216,504 )   (379,568 )
                                                  
Ending units
 
     566,382     703,602     41,546     71,423     399,586     468,828     644,978     844,127  
                                                  
(Continued)
 
 
 
32
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPGrInS     FidVIPGrInS2     FidVIPGrOp     FidVIPGrOpS  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $   121,119     (14,641 )   14,109     (92,193 )   (1,032,755 )   (523,431 )   (197,399 )   (77,598 )
Realized gain (loss) on investments
 
     542,756     (883,411 )   918,687     363,008     (1,432,506 )   (5,778,929 )   (617,760 )   (3,342,021 )
Change in unrealized gain (loss) on investments
 
     443,153     2,768,650     6,663     1,065,902     16,735,823     8,689,455     4,761,749     4,157,215  
Reinvested capital gains
 
     820,943     699,365     672,887     444,547                  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     1,927,971     2,569,963     1,612,346     1,781,264     14,270,562     2,387,095     3,946,590     737,596  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     155,812     175,132     340,057     427,844     516,108     673,950     72,840     271,612  
Transfers between funds
 
     (833,941 )   (1,063,343 )   (170,974 )   (651,835 )   (2,397,249 )   (4,275,396 )   (600,233 )   (1,454,721 )
Redemptions (note 3)
 
     (5,897,900 )   (9,465,273 )   (3,572,446 )   (2,586,089 )   (15,975,522 )   (23,551,542 )   (6,967,548 )   (9,203,965 )
Annuity benefits
 
                     (3,302 )   (13,383 )        
Annual contract maintenance charges (note 2)
 
                     (19,396 )   (24,187 )        
Contingent deferred sales charges (note 2)
 
     (1,849 )   (17,314 )   (23,408 )   (48,426 )   (4,856 )   (9,539 )   (2,293 )   (15,447 )
Adjustments to maintain reserves
 
     (147 )   66     873     3,472     (1,060 )   (291 )   (177 )   (272 )
                                                  
Net equity transactions
 
     (6,578,025 )   (10,370,732 )   (3,425,898 )   (2,855,034 )   (17,885,277 )   (27,200,388 )   (7,497,411 )   (10,402,793 )
                                                  
Net change in contract owners’ equity
 
     (4,650,054 )   (7,800,769 )   (1,813,552 )   (1,073,770 )   (3,614,715 )   (24,813,293 )   (3,550,821 )   (9,665,197 )
Contract owners’ equity beginning of period
 
     20,181,151     27,981,920     16,276,568     17,350,338     75,221,698     100,034,991     21,701,919     31,367,116  
                                                  
Contract owners’ equity end of period
 
   $   15,531,097     20,181,151     14,463,016     16,276,568     71,606,983     75,221,698     18,151,098     21,701,919  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     1,401,790     2,174,460     1,523,749     1,809,690     3,838,147     5,330,713     2,164,644     3,260,503  
                                                  
Units purchased
 
     29,920     33,931     279,212     109,292     58,976     61,368     52,106     64,349  
Units redeemed
 
     (463,121 )   (806,601 )   (585,496 )   (395,233 )   (898,509 )   (1,553,934 )   (739,036 )   (1,160,208 )
                                                  
Ending units
 
     968,589     1,401,790     1,217,465     1,523,749     2,998,614     3,838,147     1,477,714     2,164,644  
                                                  
(Continued)
 
 
 
33
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPGrOpS2     FidVIPMCap     FidVIPMCapS     FidVIPMCapS2  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $   (59,139 )   (40,038 )   (20,023 )   (48,442 )   (48,745 )   (165,730 )   (514,067 )   (738,619 )
Realized gain (loss) on investments
 
     477,394     (7,045 )   580,025     632,280     2,998,706     4,003,094     6,796,049     5,281,016  
Change in unrealized gain (loss) on investments
 
     572,067     202,702     (367,789 )   (662,299 )   (2,281,935 )   (4,314,908 )   (3,870,592 )   (5,889,550 )
Reinvested capital gains
 
             438,000     648,602     1,745,864     2,978,521     5,848,772     8,004,304  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     990,322     155,619     630,213     570,141     2,413,890     2,500,977     8,260,162     6,657,151  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     19,753     16,041     168,620     233,858     52,163     177,104     929,560     1,377,274  
Transfers between funds
 
     (163,577 )   (208,704 )   (370,344 )   (427,183 )   (746,766 )   (1,735,328 )   (2,415,217 )   (3,207,465 )
Redemptions (note 3)
 
     (1,601,848 )   (932,188 )   (666,541 )   (767,533 )   (5,441,163 )   (6,677,757 )   (10,812,119 )   (7,352,715 )
Annuity benefits
 
     (1,601 )               (865 )   (790 )   (2,140 )    
Annual contract maintenance charges (note 2)
 
             (4,449 )   (4,831 )                
Contingent deferred sales charges (note 2)
 
     (5,893 )   (14,000 )   (1,956 )   (4,215 )   (7,286 )   (10,164 )   (118,866 )   (130,234 )
Adjustments to maintain reserves
 
     1,560     438     (63 )   (31 )   (844 )   1,376     (29,547 )   22,241  
                                                  
Net equity transactions
 
     (1,751,606 )   (1,138,413 )   (874,733 )   (969,935 )   (6,144,761 )   (8,245,559 )   (12,448,329 )   (9,290,899 )
                                                  
Net change in contract owners’ equity
 
     (761,284 )   (982,794 )   (244,520 )   (399,794 )   (3,730,871 )   (5,744,582 )   (4,188,167 )   (2,633,748 )
Contract owners’ equity beginning of period
 
     5,135,032     6,117,826     4,805,186     5,204,980     19,240,984     24,985,566     62,036,810     64,670,558  
                                                  
Contract owners’ equity end of period
 
   $   4,373,748     5,135,032     4,560,666     4,805,186     15,510,113     19,240,984     57,848,643     62,036,810  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     633,127     783,699     133,809     161,231     528,205     764,088     2,499,223     2,895,497  
                                                  
Units purchased
 
     205,340     13,527     8,409     18,499     46,901     34,893     482,883     220,703  
Units redeemed
 
     (405,296 )   (164,099 )   (30,928 )   (45,921 )   (203,112 )   (270,776 )   (841,078 )   (616,977 )
                                                  
Ending units
 
     433,171     633,127     111,290     133,809     371,994     528,205     2,141,028     2,499,223  
                                                  
(Continued)
 
 
 
34
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         FidVIPVaIS     FidVIPVaIS2     FrVIPForSec     FrVIPRisDiv  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (1,898 )   (3,054 )   (54,716 )   (66,059 )   6,233     1,514     42,758     3,600  
Realized gain (loss) on investments
 
     27,371     14,533     98,779     (75,162 )   22,658     9,345     140,280     62,832  
Change in unrealized gain (loss) on investments
 
     (59,821 )   (27,415 )   (495,937 )   (84,337 )   22,718     87,161     (329,289 )   352,191  
Reinvested capital gains
 
     57,523     81,510     788,054     1,174,953     26,387         44,218     14,532  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     23,175     65,574     336,180     949,395     77,996     98,020     (102,033 )   433,155  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     21,304     8,520     264,855     169,912             55,348     175,009  
Transfers between funds
 
     (60,674 )   (19,441 )   (661,591 )   508,381     (35,290 )   (11,100 )   (181,380 )   98,403  
Redemptions (note 3)
 
     (30,147 )   (18,826 )   (1,427,203 )   (781,739 )   (10,805 )   (6,649 )   (165,839 )   (60,482 )
Annuity benefits
 
             (715 )   (626 )                
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (525 )   (465 )   (19,725 )   (11,095 )   (253 )   (16 )   (2,822 )   (800 )
Adjustments to maintain reserves
 
     (25 )   15     437     1,346         9     10     144  
                                                  
Net equity transactions
 
     (70,067 )   (30,197 )   (1,843,942 )   (113,821 )   (46,348 )   (17,756 )   (294,683 )   212,274  
                                                  
Net change in contract owners’ equity
 
     (46,892 )   35,377     (1,507,762 )   835,574     31,648     80,264     (396,716 )   645,429  
Contract owners’ equity beginning of period
 
     504,402     469,025     7,690,674     6,855,100     569,853     489,589     3,203,967     2,558,538  
                                                  
Contract owners’ equity end of period
 
   $     457,510     504,402     6,182,912     7,690,674     601,501     569,853     2,807,251     3,203,967  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     31,358     33,515     507,691     517,981     36,467     37,701     221,913     205,702  
                                                  
Units purchased
 
     3,624     582     168,816     78,839             8,562     30,501  
Units redeemed
 
     (7,735 )   (2,739 )   (284,202 )   (89,129 )   (2,832 )   (1,234 )   (28,908 )   (14,290 )
                                                  
Ending units
 
     27,247     31,358     392,305     507,691     33,635     36,467     201,567     221,913  
                                                  
(Continued)
 
 
 
35
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         JAspRMgCore     MFSInvGrStS     MFSMidCapGrS     MFSNewDiscS  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (7,356 )   (17,483 )   (61,284 )   (66,772 )   (88,205 )   (94,386 )   (50,938 )   (56,436 )
Realized gain (loss) on investments
 
     19,987     (44,893 )   272,573     242,400     326,777     260,261     628,348     302,854  
Change in unrealized gain (loss) on investments
 
     29,076     66,255     225,275     93,573     45,719     (359,221 )   (805,103 )   122,898  
Reinvested capital gains
 
     4,776     76,227             245,678     240,081     309,699     81,817  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     46,483     80,106     436,564     269,201     529,969     46,735     82,006     451,133  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     4,685     23,169     74,414     92,151     51,457     166,801     18,605     47,842  
Transfers between funds
 
     (66,682 )   (160,219 )   (123,279 )   (240,164 )   (464,412 )   (603,100 )   (444,832 )   (173,950 )
Redemptions (note 3)
 
     (502,613 )   (97,259 )   (641,658 )   (474,863 )   (819,609 )   (425,457 )   (924,745 )   (268,145 )
Annuity benefits
 
             (1,228 )   (1,148 )                
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (4,282 )   (1,354 )   (7,905 )   (8,642 )   (11,299 )   (4,864 )   (14,610 )   (5,306 )
Adjustments to maintain reserves
 
     (105 )   38     487     702     (337 )   (163 )   (96 )   117  
                                                  
Net equity transactions
 
     (568,997 )   (235,625 )   (699,169 )   (631,964 )   (1,244,200 )   (866,783 )   (1,365,678 )   (399,442 )
                                                  
Net change in contract owners’ equity
 
     (522,514 )   (155,519 )   (262,605 )   (362,763 )   (714,231 )   (820,048 )   (1,283,672 )   51,691  
Contract owners’ equity beginning of period
 
     963,929     1,119,448     4,691,565     5,054,328     6,541,165     7,361,213     4,378,742     4,327,051  
                                                  
Contract owners’ equity end of period
 
   $     441,415     963,929     4,428,960     4,691,565     5,826,934     6,541,165     3,095,070     4,378,742  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     57,222     72,507     442,921     505,183     663,155     752,964     380,452     418,960  
                                                  
Units purchased
 
     1,889     51,828     17,088     21,721     21,379     44,787     68,740     41,108  
Units redeemed
 
     (34,094 )   (67,113 )   (78,235 )   (83,983 )   (137,788 )   (134,596 )   (183,465 )   (79,616 )
                                                  
Ending units
 
     25,017     57,222     381,774     442,921     546,746     663,155     265,727     380,452  
                                                  
(Continued)
 
 
 
36
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         MFSValueS     MTBLgCapGr     MTBLgCapV     MTBModGr  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (54,172 )   (44,151 )   (20,635 )   (16,200 )   (5,378 )   (4,401 )   270,733     421,151  
Realized gain (loss) on investments
 
     1,397,537     498,027     109,608     41,181     178,948     67,569     641,022     425,049  
Change in unrealized gain (loss) on investments
 
     (894,316 )   902,912     (69,299 )   176,017     (277,739 )   200,583     (113,136 )   345,062  
Reinvested capital gains
 
     182,071     266,537     182,166     28,876     122,937     251,303     933,072     1,512,665  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     631,120     1,623,325     201,840     229,874     18,768     515,054     1,731,691     2,703,927  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     576,240     300,073     61,705     113,452     73,909     42,971     686,398     892,870  
Transfers between funds
 
     (1,020,635 )   2,272,668     (188,073 )   (125,165 )   (91,708 )   54,487     (839,075 )   (1,148,263 )
Redemptions (note 3)
 
     (1,608,148 )   (961,885 )   (195,991 )   (72,968 )   (268,239 )   (51,087 )   (2,661,318 )   (2,164,730 )
Annuity benefits
 
                     (2,426 )            
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (11,715 )   (11,321 )   (6,096 )   (1,381 )   (5,096 )   (604 )   (33,413 )   (43,598 )
Adjustments to maintain reserves
 
     164     1,088     2     62     241     406     (1,523 )   994  
                                                  
Net equity transactions
 
     (2,064,094 )   1,600,623     (328,453 )   (86,000 )   (293,319 )   46,173     (2,848,931 )   (2,462,727 )
                                                  
Net change in contract owners’ equity
 
     (1,432,974 )   3,223,948     (126,613 )   143,874     (274,551 )   561,227     (1,117,240 )   241,200  
Contract owners’ equity beginning of period
 
     11,429,940     8,205,992     2,753,846     2,609,972     3,697,613     3,136,386     31,197,082     30,955,882  
                                                  
Contract owners’ equity end of period
 
   $     9,996,966     11,429,940     2,627,233     2,753,846     3,423,062     3,697,613     30,079,842     31,197,082  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     767,688     655,457     250,037     258,535     256,800     253,241     2,471,444     2,677,871  
                                                  
Units purchased
 
     194,344     257,988     11,138     14,458     9,282     16,613     55,312     79,940  
Units redeemed
 
     (330,217 )   (145,757 )   (40,137 )   (22,956 )   (30,154 )   (13,054 )   (271,612 )   (286,367 )
                                                  
Ending units
 
     631,815     767,688     221,038     250,037     235,928     256,800     2,255,144     2,471,444  
                                                  
(Continued)
 
 
 
37
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
        NVITAstAll2     NVITBnd2     NVITGlobGr2     NVITGroInc2
Investment activity:       2007     2006     2007     2006     2007     2006     2007     2006
Net investment income (loss)
 
  $     53,040     37,785     112,905     1,774     44,956     (3,434 )   3,081    
Realized gain (loss) on investments
 
    144,744     (566 )   21,940     540     144,910     2,493     (2,332 )  
Change in unrealized gain (loss) on investments
 
    (54,259 )   91,779     (111,266 )   24,553     99,428     112,927     (11,320 )  
Reinvested capital gains
 
    3,042                            
                                               
Net increase (decrease) in contract owners’ equity resulting from operations
 
    146,567     128,998     23,579     26,867     289,294     111,986     (10,571 )  
                                               
Equity transactions:
 
                 
Purchase payments received from contract owners (note 3)
 
    1,925,786     1,345,278     370,394     112,822     335,034     56,086     57,684    
Transfers between funds
 
    2,708,839     1,783,647     1,388,368     696,906     2,037,322     1,467,866     397,791    
Redemptions (note 3)
 
    (898,257 )   (380,413 )   (456,871 )   (7,402 )   (621,909 )   (20,688 )   (71,479 )  
Annuity benefits
 
                               
Annual contract maintenance charges (note 2)
 
                               
Contingent deferred sales charges (note 2)
 
    (11,198 )   (217 )   (1,676 )       (2,519 )   (1 )      
Adjustments to maintain reserves
 
    (38 )   7     (45 )   (4 )   (12 )   (36 )   (27 )  
                                               
Net equity transactions
 
    3,725,132     2,748,302     1,300,170     802,322     1,747,916     1,503,227     383,969    
                                               
Net change in contract owners’ equity
 
    3,871,699     2,877,300     1,323,749     829,189     2,037,210     1,615,213     373,398    
Contract owners’ equity beginning of period
 
    2,877,300         829,189         1,615,213            
                                               
Contract owners’ equity end of period
 
  $     6,748,999     2,877,300     2,152,938     829,189     3,652,423     1,615,213     373,398    
                                               
CHANGES IN UNITS:
 
                 
Beginning units
 
    274,929         79,332         150,198            
                                               
Units purchased
 
    506,099     325,506     197,602     102,217     257,211     171,810     54,246    
Units redeemed
 
    (165,815 )   (50,577 )   (74,263 )   (22,885 )   (106,746 )   (21,612 )   (16,208 )  
                                               
Ending units
 
    615,213     274,929     202,671     79,332     300,663     150,198     38,038    
                                               
(Continued)
 
 
 
38
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         NVITGrowth2     NVITFHiInc3     NVITEmMrkts2     NVITEmMrkts6  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (16,748 )   2,364     8,031     1,702     (22,893 )   (17,719 )   (87,167 )   (65,092 )
Realized gain (loss) on investments
 
     77,023     (54 )   790     (2 )   360,946     70,686     1,715,391     591,907  
Change in unrealized gain (loss) on investments
 
     176,490     73,668     (6,019 )   1,214     385,176     661,767     1,382,103     1,774,058  
Reinvested capital gains
 
     776                 311,453     28,827     1,307,143     92,932  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     237,541     75,978     2,802     2,914     1,034,682     743,561     4,317,470     2,393,805  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     161,526     75,880     14,801     42,063             596,045     721,161  
Transfers between funds
 
     913,347     1,583,326     74,159     10,373     (251,680 )   (57,628 )   537,118     723,382  
Redemptions (note 3)
 
     (355,618 )   (7,932 )   (51,872 )   (222 )   (509,181 )   (148,152 )   (1,944,521 )   (927,155 )
Annuity benefits
 
                                  
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (2,422 )               (4,665 )   (1,619 )   (22,488 )   (12,166 )
Adjustments to maintain reserves
 
     (89 )   20     (16 )   8     89     1,302     1,261     5,976  
                                                  
Net equity transactions
 
     716,744     1,651,294     37,072     52,222     (765,437 )   (206,097 )   (832,585 )   511,198  
                                                  
Net change in contract owners’ equity
 
     954,285     1,727,272     39,874     55,136     269,245     537,464     3,484,885     2,905,003  
Contract owners’ equity beginning of period
 
     1,727,272         55,136         2,797,670     2,260,206     10,827,888     7,922,885  
                                                  
Contract owners’ equity end of period
 
   $     2,681,557     1,727,272     95,010     55,136     3,066,915     2,797,670     14,312,773     10,827,888  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     167,959         4,846         101,953     110,899     523,251     515,495  
                                                  
Units purchased
 
     128,650     173,079     8,675     4,885     6         286,824     375,836  
Units redeemed
 
     (60,640 )   (5,120 )   (5,333 )   (39 )   (24,075 )   (8,946 )   (328,743 )   (368,080 )
                                                  
Ending units
 
     235,969     167,959     8,188     4,846     77,884     101,953     481,332     523,251  
                                                  
(Continued)
 
 
 
39
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         NVITGvtBd     NVITIntVal3     NVITIntVal6     NVITIDAgg2  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     676,043     645,699     3,232     3,168     48,120     32,637     119,609     130,777  
Realized gain (loss) on investments
 
     (371,612 )   (495,419 )   26,465     7,315     329,473     195,982     1,170,597     468,170  
Change in unrealized gain (loss) on investments
 
     900,985     106,158     (48,206 )   34,496     (780,478 )   400,205     (1,020,982 )   2,077,410  
Reinvested capital gains
 
         177,850     26,635     24,506     485,051     310,513     736,982     302,576  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     1,205,416     434,288     8,126     69,485     82,166     939,337     1,006,206     2,978,933  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     422,675     588,803     39,974     52,940     414,162     495,948     706,808     441,140  
Transfers between funds
 
     2,124,025     (137,571 )   (41,160 )   80,318     625,022     1,169,191     (951,295 )   910,013  
Redemptions (note 3)
 
     (3,460,283 )   (4,146,670 )   (104,331 )   (11,953 )   (994,315 )   (503,854 )   (1,793,206 )   (1,088,607 )
Annuity benefits
 
     (1,279 )   (1,271 )                        
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (52,130 )   (117,730 )   (4,871 )   (143 )   (11,134 )   (3,202 )   (32,668 )   (26,147 )
Adjustments to maintain reserves
 
     413     332     14     86     99     1,340     (63 )   922  
                                                  
Net equity transactions
 
     (966,579 )   (3,814,107 )   (110,374 )   121,248     33,834     1,159,423     (2,070,424 )   237,321  
                                                  
Net change in contract owners’ equity
 
     238,837     (3,379,819 )   (102,248 )   190,733     116,000     2,098,760     (1,064,218 )   3,216,254  
Contract owners’ equity beginning of period
 
     21,689,832     25,069,651     463,042     272,309     6,120,278     4,021,518     22,446,931     19,230,677  
                                                  
Contract owners’ equity end of period
 
   $     21,928,669     21,689,832     360,794     463,042     6,236,278     6,120,278     21,382,713     22,446,931  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     1,841,755     2,172,204     26,633     19,055     399,195     316,954     1,511,432     1,492,478  
                                                  
Units purchased
 
     513,608     200,087     2,612     10,002     163,536     244,547     119,503     140,272  
Units redeemed
 
     (594,225 )   (530,536 )   (7,819 )   (2,424 )   (161,728 )   (162,306 )   (252,717 )   (121,318 )
                                                  
Ending units
 
     1,761,138     1,841,755     21,426     26,633     401,003     399,195     1,378,218     1,511,432  
                                                  
(Continued)
 
 
 
40
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         NVITIDCon2     NVITIDMod2     NVITIDModAg2     NVITIDModCon2  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     627,534     596,501     2,008,957     1,630,301     606,482     549,708     851,044     747,635  
Realized gain (loss) on investments
 
     418,779     236,791     7,991,069     3,736,213     3,422,081     2,780,339     1,363,696     2,197,349  
Change in unrealized gain (loss) on investments
 
     (539,167 )   341,496     (5,766,525 )   7,744,030     (2,199,185 )   3,814,036     (1,254,249 )   (120,845 )
Reinvested capital gains
 
     673,591     374,138     2,441,097     1,382,133     1,314,062     792,265     1,312,609     682,230  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     1,180,737     1,548,926     6,674,598     14,492,677     3,143,440     7,936,348     2,273,100     3,506,369  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     478,428     615,261     5,268,719     7,598,060     2,147,116     2,881,297     991,654     1,978,598  
Transfers between funds
 
     (598,162 )   (1,763,033 )   (549,847 )   (2,252,222 )   (762,563 )   762,591     15,886     8,699  
Redemptions (note 3)
 
     (5,743,509 )   (2,581,966 )   (21,372,819 )   (13,400,939 )   (7,052,618 )   (4,715,642 )   (7,679,610 )   (3,935,846 )
Annuity benefits
 
     (5,739 )   (5,620 )                        
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (92,122 )   (52,135 )   (251,639 )   (245,854 )   (130,680 )   (134,716 )   (133,455 )   (52,604 )
Adjustments to maintain reserves
 
     (4,607 )   12,320     812     7,703     692     3,903     375     1,453  
                                                  
Net equity transactions
 
     (5,965,711 )   (3,775,173 )   (16,904,774 )   (8,293,252 )   (5,798,053 )   (1,202,567 )   (6,805,150 )   (1,999,700 )
                                                  
Net change in contract owners’ equity
 
     (4,784,974 )   (2,226,247 )   (10,230,176 )   6,199,425     (2,654,613 )   6,733,781     (4,532,050 )   1,506,669  
Contract owners’ equity beginning of period
 
     31,349,205     33,575,452     157,373,718     151,174,293     68,159,021     61,425,240     51,847,780     50,341,111  
                                                  
Contract owners’ equity end of period
 
   $     26,564,231     31,349,205     147,143,542     157,373,718     65,504,408     68,159,021     47,315,730     51,847,780  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     2,682,972     3,011,800     11,881,233     12,538,745     4,792,606     4,881,060     4,147,288     4,309,293  
                                                  
Units purchased
 
     432,013     626,321     1,031,393     989,303     378,809     645,941     344,505     1,327,438  
Units redeemed
 
     (930,089 )   (955,149 )   (2,262,095 )   (1,646,815 )   (775,455 )   (734,395 )   (869,226 )   (1,489,443 )
                                                  
Ending units
 
     2,184,896     2,682,972     10,650,531     11,881,233     4,395,960     4,792,606     3,622,567     4,147,288  
                                                  
(Continued)
 
 
 
41
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         NVITMdCpGr2     NVITMidCap     NVITMidCap2     NVITMyMkt  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (6,320 )   (858 )   2,608     (173 )   (8,007 )   (30,854 )   1,196,708     1,013,834  
Realized gain (loss) on investments
 
     24,204     (94 )   61,827     44,621     542,588     1,057,361          
Change in unrealized gain (loss) on investments
 
     6,739     (3,513 )   (16,761 )   44,409     (223,105 )   (451,354 )        
Reinvested capital gains
 
             38,873     18,491     239,934     119,858          
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     24,623     (4,465 )   86,547     107,348     551,410     695,011     1,196,708     1,013,834  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     11,318     32,341     31,111     83,471     89,351     275,769     7,877,977     9,097,302  
Transfers between funds
 
     (539,792 )   706,214     (69,333 )   (11,913 )   (476,216 )   (491,496 )   18,705,744     13,563,906  
Redemptions (note 3)
 
     (17,046 )   (3,309 )   (113,823 )   (33,653 )   (1,222,584 )   (1,016,343 )   (19,449,153 )   (20,846,317 )
Annuity benefits
 
                             (413 )   (411 )
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (98 )       (4,488 )   (486 )   (15,694 )   (13,645 )   (89,535 )   (173,619 )
Adjustments to maintain reserves
 
     9     (20 )   (11 )   87     (101 )   733     1,086     1,804  
                                                  
Net equity transactions
 
     (545,609 )   735,226     (156,544 )   37,506     (1,625,244 )   (1,244,982 )   7,045,706     1,642,665  
                                                  
Net change in contract owners’ equity
 
     (520,986 )   730,761     (69,997 )   144,854     (1,073,834 )   (549,971 )   8,242,414     2,656,499  
Contract owners’ equity beginning of period
 
     730,761         1,359,632     1,214,778     8,730,294     9,280,265     30,500,360     27,843,861  
                                                  
Contract owners’ equity end of period
 
   $     209,775     730,761     1,289,635     1,359,632     7,656,460     8,730,294     38,742,774     30,500,360  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     69,651         89,807     87,273     611,240     703,966     2,927,510     2,761,373  
                                                  
Units purchased
 
     12,397     70,788     2,678     13,092     84,445     232,192     4,143,366     4,277,367  
Units redeemed
 
     (62,969 )   (1,137 )   (12,549 )   (10,558 )   (189,928 )   (324,918 )   (3,476,827 )   (4,111,230 )
                                                  
Ending units
 
     19,079     69,651     79,936     89,807     505,757     611,240     3,594,049     2,927,510  
                                                  
(Continued)
 
 
 
42
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         NVITSmCapGr2     NVITSmCapVal     NVITSmCapVal2     NVITSmComp  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (41,019 )   (46,753 )   (103 )   (4,614 )   (38,181 )   (89,763 )   (9,800 )   (10,178 )
Realized gain (loss) on investments
 
     290,112     343,025     8,931     15,024     4,570     307,723     46,415     22,963  
Change in unrealized gain (loss) on investments
 
     (4,472 )   (311,836 )   (146,717 )   37,710     (1,436,259 )   224,680     (142,691 )   61,817  
Reinvested capital gains
 
             87,358     55,564     892,763     658,531     119,377     17,842  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     244,621     (15,564 )   (50,531 )   103,684     (577,107 )   1,101,171     13,301     92,444  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     28,578     104,819     4,231     18,739     316,255     241,776     26,299     56,652  
Transfers between funds
 
     240,933     (313,021 )   (64,672 )   43,151     (1,410,417 )   646,791     (24,327 )   8,320  
Redemptions (note 3)
 
     (832,264 )   (504,460 )   (44,555 )   (38,760 )   (1,145,434 )   (942,670 )   (162,640 )   (22,579 )
Annuity benefits
 
                                  
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (12,887 )   (1,986 )   (759 )   (876 )   (10,609 )   (8,345 )   (7,229 )   (570 )
Adjustments to maintain reserves
 
     (238 )   47     (3 )   5     87     1,437     44     152  
                                                  
Net equity transactions
 
     (575,878 )   (714,601 )   (105,758 )   22,259     (2,250,118 )   (61,011 )   (167,853 )   41,975  
                                                  
Net change in contract owners’ equity
 
     (331,257 )   (730,165 )   (156,289 )   125,943     (2,827,225 )   1,040,160     (154,552 )   134,419  
Contract owners’ equity beginning of period
 
     3,325,221     4,055,386     744,833     618,890     8,621,588     7,581,428     976,486     842,067  
                                                  
Contract owners’ equity end of period
 
   $     2,993,964     3,325,221     588,544     744,833     5,794,363     8,621,588     821,934     976,486  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     290,582     359,454     46,188     44,709     581,526     589,896     60,219     57,587  
                                                  
Units purchased
 
     54,725     83,781     955     6,327     70,154     180,732     4,814     7,626  
Units redeemed
 
     (102,612 )   (152,653 )   (7,529 )   (4,848 )   (225,322 )   (189,102 )   (15,228 )   (4,994 )
                                                  
Ending units
 
     242,695     290,582     39,614     46,188     426,358     581,526     49,805     60,219  
                                                  
(Continued)
 
 
 
43
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         NVITSmComp2     NVITNWFund2     NBTARegS     NBTSocRes  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (86,115 )   (90,879 )   (123 )   (21 )   (5,248 )   (422 )   (8,098 )   (5,057 )
Realized gain (loss) on investments
 
     75,929     180,181     221     925     7,646     (847 )   97,458     23,866  
Change in unrealized gain (loss) on investments
 
     (833,635 )   516,655     (1,185 )   1,818     (11,351 )   1,230     (51,485 )   32,163  
Reinvested capital gains
 
     908,974     138,701     2,708         5,914     5,020     1,962     5,229  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     65,153     744,658     1,621     2,722     (3,039 )   4,981     39,837     56,201  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     128,407     424,261     14,763         2,824     25,000     38,903     22,716  
Transfers between funds
 
     (451,488 )   (600,113 )   28,759     23,891     (377,637 )   584,243     344,122     178,202  
Redemptions (note 3)
 
     (662,982 )   (1,053,966 )   (472 )   (445 )   (12,833 )   (1,479 )   (420,620 )   (163,849 )
Annuity benefits
 
                                  
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (9,983 )   (14,583 )           (54 )       (9,646 )   (1,171 )
Adjustments to maintain reserves
 
     83     654     (2 )   12     (46 )   31     (114 )   42  
                                                  
Net equity transactions
 
     (995,963 )   (1,243,747 )   43,048     23,458     (387,746 )   607,795     (47,355 )   35,940  
                                                  
Net change in contract owners’ equity
 
     (930,810 )   (499,089 )   44,669     26,180     (390,785 )   612,776     (7,518 )   92,141  
Contract owners’ equity beginning of period
 
     6,919,080     7,418,169     26,180         612,776         526,319     434,178  
                                                  
Contract owners’ equity end of period
 
   $     5,988,270     6,919,080     70,849     26,180     221,991     612,776     518,801     526,319  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     413,522     488,900     2,314         57,725         37,053     34,175  
                                                  
Units purchased
 
     79,345     158,936     3,713     3,089     13,915     58,759     51,996     16,718  
Units redeemed
 
     (137,263 )   (234,314 )   (79 )   (775 )   (51,178 )   (1,034 )   (54,910 )   (13,840 )
                                                  
Ending units
 
     355,604     413,522     5,948     2,314     20,462     57,725     34,139     37,053  
                                                  
(Continued)
 
 
 
44
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         OppCapApS     OppGlSec3     OppGlSec4     OppGlSec  
Investment activity:        2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
   $     (200,155 )   (179,266 )   995     (1,576 )   (22,955 )   (38,062 )   2,229     (333 )
Realized gain (loss) on investments
 
     893,692     891,161     27,018     27,548     693,132     1,054,432     42,375     23,925  
Change in unrealized gain (loss) on investments
 
     1,111,698     233,612     (28,094 )   43,009     (717,211 )   80,480     (42,462 )   51,743  
Reinvested capital gains
 
             35,976     26,360     529,971     646,437     40,802     41,711  
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     1,805,235     945,507     35,895     95,341     482,937     1,743,287     42,944     117,046  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     405,201     546,098     29,136     101,591     656,832     667,165     17,650      
Transfers between funds
 
     (588,379 )   (1,195,475 )   44,023     123,961     61,328     (733 )   (34,556 )   (25,501 )
Redemptions (note 3)
 
     (2,003,928 )   (1,956,769 )   (57,931 )   (13,761 )   (1,814,781 )   (2,343,669 )   (47,938 )   (22,918 )
Annuity benefits
 
                     (1,113 )   (1,002 )   (3,017 )    
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (31,050 )   (49,671 )   (635 )   (115 )   (17,956 )   (37,869 )   (481 )   (691 )
Adjustments to maintain reserves
 
     (200 )   617     (23 )   123     671     3,368     209     33  
                                                  
Net equity transactions
 
     (2,218,356 )   (2,655,200 )   14,570     211,799     (1,115,019 )   (1,712,740 )   (68,133 )   (49,077 )
                                                  
Net change in contract owners’ equity
 
     (413,121 )   (1,709,693 )   50,465     307,140     (632,082 )   30,547     (25,189 )   67,969  
Contract owners’ equity beginning of period
 
     15,277,880     16,987,573     729,149     422,009     11,476,911     11,446,364     826,057     758,088  
                                                  
Contract owners’ equity end of period
 
   $     14,864,759     15,277,880     779,614     729,149     10,844,829     11,476,911     800,868     826,057  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     1,327,283     1,568,318     44,501     29,188     761,024     879,877     47,987     51,252  
                                                  
Units purchased
 
     64,049     129,712     7,047     21,726     198,179     312,908          
Units redeemed
 
     (243,379 )   (370,747 )   (6,165 )   (6,413 )   (272,892 )   (431,761 )   (4,583 )   (3,265 )
                                                  
Ending units
 
     1,147,953     1,327,283     45,383     44,501     686,311     761,024     43,404     47,987  
                                                  
(Continued)
 
 
 
45
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         OppGlSecS     OppHighInc3    OppHighInc     OppMStSCap  
Investment activity:        2007     2006     2007         2006        2007     2006     2007     2006  
Net investment income (loss)
 
   $     (3,833 )   (32,801 )   (1,435 )      131,488     125,795     (8,305 )   (9,194 )
Realized gain (loss) on investments
 
     891,202     641,146     (295 )      16,184     9,047     102,092     26,769  
Change in unrealized gain (loss) on investments
 
     (892,818 )   181,383     (8,081 )      (155,732 )   28,437     (152,246 )   79,818  
Reinvested capital gains
 
     443,241     519,826                    37,246     28,604  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
     437,792     1,309,554     (9,811 )      (8,060 )   163,279     (21,213 )   125,997  
                                                 
Equity transactions:
 
                   
Purchase payments received from contract owners (note 3)
 
     612         11,587        39,036     30,003     44,626     44,053  
Transfers between funds
 
     (778,562 )   (372,909 )   283,577        (385,347 )   20,169     (115,275 )   23,274  
Redemptions (note 3)
 
     (1,121,357 )   (1,207,556 )   (10,258 )      (230,421 )   (77,787 )   (56,177 )   (32,742 )
Annuity benefits
 
                                 
Annual contract maintenance charges (note 2)
 
                                 
Contingent deferred sales charges (note 2)
 
     (10,138 )   (11,944 )   (201 )      (3,138 )   (1,032 )   (441 )   (640 )
Adjustments to maintain reserves
 
     53     1,485     12        (26 )   22     (38 )   55  
                                                 
Net equity transactions
 
     (1,909,392 )   (1,590,924 )   284,717        (579,896 )   (28,625 )   (127,305 )   34,000  
                                                 
Net change in contract owners’ equity
 
     (1,471,600 )   (281,370 )   274,906        (587,956 )   134,654     (148,518 )   159,997  
Contract owners’ equity beginning of period
 
     9,182,101     9,463,471            2,126,479     1,991,825     1,050,662     890,665  
                                                 
Contract owners’ equity end of period
 
   $     7,710,501     9,182,101     274,906        1,538,523     2,126,479     902,144     1,050,662  
                                                 
CHANGES IN UNITS:
 
                   
Beginning units
 
     538,871     643,114            152,574     154,663     60,225     58,089  
                                                 
Units purchased
 
     7,079         30,128        6,337     8,320     4,576     5,512  
Units redeemed
 
     (113,960 )   (104,243 )   (1,469 )      (47,194 )   (10,409 )   (11,831 )   (3,376 )
                                                 
Ending units
 
     431,990     538,871     28,659        111,717     152,574     52,970     60,225  
                                                 
(Continued)
 
 
 
46
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
                OppMStSCapS             OppMStS     OppStratBdS     PVTGroInc  
Investment activity:       2007     2006     2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
  $     (7,030 )   (982 )   (80,994 )   (55,470 )   408,996     578,415     (117 )   2,364  
Realized gain (loss) on investments
 
    24,082     (1,224 )   1,237,109     950,612     540,866     333,685     40,998     44,328  
Change in unrealized gain (loss) on investments
 
    (78,062 )   20,921     (607,993 )   1,275,547     628,658     200,842     (255,293 )   59,491  
Reinvested capital gains
 
    12,186                         147,855     22,621  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
    (48,824 )   18,715     548,122     2,170,689     1,578,520     1,112,942     (66,557 )   128,804  
                                                 
Equity transactions:
 
                 
Purchase payments received from contract owners (note 3)
 
    63,506     27,722     355,191     631,585     960,518     952,759     34,828     30,495  
Transfers between funds
 
    411,603     238,690     (395,774 )   (888,469 )   2,787,206     (798,500 )   (44,366 )   (18,515 )
Redemptions (note 3)
 
    (93,989 )   (4,762 )   (2,174,222 )   (1,565,641 )   (4,102,070 )   (2,264,103 )   (63,126 )   (88,942 )
Annuity benefits
 
                    (943 )   (903 )        
Annual contract maintenance charges (note 2)
 
                                 
Contingent deferred sales charges (note 2)
 
    (163 )   (289 )   (37,124 )   (23,581 )   (28,784 )   (33,944 )   (320 )   (1,370 )
Adjustments to maintain reserves
 
    (83 )   (1 )   48     1,748     441     974     4     (49 )
                                                 
Net equity transactions
 
    380,874     261,360     (2,251,881 )   (1,844,358 )   (383,632 )   (2,143,717 )   (72,980 )   (78,381 )
                                                 
Net change in contract owners’ equity
 
    332,050     280,075     (1,703,759 )   326,331     1,194,888     (1,030,775 )   (139,537 )   50,423  
Contract owners’ equity beginning of period
 
    280,075         17,947,530     17,621,199     19,552,962     20,583,737     1,026,524     976,101  
                                                 
Contract owners’ equity end of period
 
  $     612,125     280,075     16,243,771     17,947,530     20,747,850     19,552,962     886,987     1,026,524  
                                                 
CHANGES IN UNITS:
 
                 
Beginning units
 
    26,424         1,385,272     1,540,005     1,404,214     1,564,648     64,212     69,841  
                                                 
Units purchased
 
    77,814     31,132     67,739     131,889     474,685     216,376     17,535     8,278  
Units redeemed
 
    (45,934 )   (4,708 )   (233,698 )   (286,622 )   (502,107 )   (376,810 )   (21,884 )   (13,907 )
                                                 
Ending units
 
    58,304     26,424     1,219,313     1,385,272     1,376,792     1,404,214     59,863     64,212  
                                                 
(Continued)
 
 
 
47
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
         PVTIntlEq     PVTSmCapV     PVTVoygr     STIIntlEq  
Investment activity:        2007     2006     2007     2006     2007     2006       2007         2006    
Net investment income (loss)
 
   $     11,382     (2,525 )   (2,990 )   (4,501 )   (11,416 )   (10,547 )   8     (12 )
Realized gain (loss) on investments
 
     17,378     25,531     60,203     49,168     31,815     23,363     742     2,787  
Change in unrealized gain (loss) on investments
 
     (67,758 )   91,281     (192,695 )   (23,465 )   14,970     20,292     (901 )   (1,564 )
Reinvested capital gains
 
     84,199         64,711     59,186             281      
                                                  
Net increase (decrease) in contract owners’ equity resulting from operations
 
     45,201     114,287     (70,771 )   80,388     35,369     33,108     130     1,211  
                                                  
Equity transactions:
 
                  
Purchase payments received from contract owners (note 3)
 
     16,672     27,753     31,352     11,925     24,813     57,756          
Transfers between funds
 
     125,731     27,359     (82,487 )   3,342     (99,987 )   (80,475 )   (1,642 )   (129 )
Redemptions (note 3)
 
     (45,083 )   (81,561 )   (34,064 )   (20,096 )   (34,166 )   (55,991 )   (1,093 )   (8,714 )
Annuity benefits
 
             (2,937 )                    
Annual contract maintenance charges (note 2)
 
                                  
Contingent deferred sales charges (note 2)
 
     (513 )   (139 )   (90 )   (453 )   (165 )   (767 )       (422 )
Adjustments to maintain reserves
 
     (9 )   16     53     (32 )   (104 )   (71 )   (3 )   (11 )
                                                  
Net equity transactions
 
     96,798     (26,572 )   (88,173 )   (5,314 )   (109,609 )   (79,548 )   (2,738 )   (9,276 )
                                                  
Net change in contract owners’ equity
 
     141,999     87,715     (158,944 )   75,074     (74,240 )   (46,440 )   (2,608 )   (8,065 )
Contract owners’ equity beginning of period
 
     537,136     449,421     600,850     525,776     917,188     963,628     2,608     10,673  
                                                  
Contract owners’ equity end of period
 
   $     679,135     537,136     441,906     600,850     842,948     917,188         2,608  
                                                  
CHANGES IN UNITS:
 
                  
Beginning units
 
     32,370     34,163     34,169     34,690     80,396     87,931     112     566  
                                                  
Units purchased
 
     8,797     4,775     1,512     6,049     5,325     5,815         1  
Units redeemed
 
     (2,922 )   (6,568 )   (7,437 )   (6,570 )   (14,761 )   (13,350 )   (112 )   (455 )
                                                  
Ending units
 
     38,245     32,370     28,244     34,169     70,960     80,396         112  
                                                  
(Continued)
 
 
 
48
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
        STIInvGrBd     STILgCapEq     STILgCapGr     STILgCapVal  
Investment activity:           2007             2006             2007             2006             2007             2006             2007             2006      
Net investment income (loss)
 
  $     123     193     (148 )   (70 )   (2,008 )   (3,343 )   (84 )   6  
Realized gain (loss) on investments
 
    (96 )   (3 )   2,208     1,291     24,133     2,347     48,389     16,834  
Change in unrealized gain (loss) on investments
 
    34     (3 )   (6,170 )   3,248     (8,834 )   9,587     (38,087 )   33,642  
Reinvested capital gains
 
            4,116     4,581     6,343     16,265          
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
    61     187     6     9,050     19,634     24,856     10,218     50,482  
                                                 
Equity transactions:
 
                 
Purchase payments received from contract owners (note 3)
 
                2,116                 2,644  
Transfers between funds
 
    (7,040 )       (420 )   (631 )   (2,448 )   (9,283 )   (7,732 )   29,229  
Redemptions (note 3)
 
            (6,313 )   (3,262 )   (188,973 )   (7,668 )   (144,587 )   (62,696 )
Annuity benefits
 
                                 
Annual contract maintenance charges (note 2)
 
                                 
Contingent deferred sales charges (note 2)
 
                (26 )   (6,995 )   (306 )   (4,258 )   (1,239 )
Adjustments to maintain reserves
 
    3     (2 )   (12 )   20     (34 )   (27 )   (7 )   (14 )
                                                 
Net equity transactions
 
    (7,037 )   (2 )   (6,745 )   (1,783 )   (198,450 )   (17,284 )   (156,584 )   (32,076 )
                                                 
Net change in contract owners’ equity
 
    (6,976 )   185     (6,739 )   7,267     (178,816 )   7,572     (146,366 )   18,406  
Contract owners’ equity beginning of period
 
    6,976     6,791     71,740     64,473     289,474     281,902     285,683     267,277  
                                                 
Contract owners’ equity end of period
 
  $         6,976     65,001     71,740     110,658     289,474     139,317     285,683  
                                                 
CHANGES IN UNITS:
 
                 
Beginning units
 
    630     630     3,919     4,035     21,833     23,224     15,461     17,455  
                                                 
Units purchased
 
            8     120     80     276     92     2,262  
Units redeemed
 
    (630 )       (354 )   (236 )   (14,489 )   (1,667 )   (8,126 )   (4,256 )
                                                 
Ending units
 
        630     3,573     3,919     7,424     21,833     7,427     15,461  
                                                 
(Continued)
 
 
 
49
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
        STIMidCapEq     STISmCapVal     DrySRGro     VKLCom2  
Investment activity:           2007             2006             2007             2006             2007             2006             2007             2006      
Net investment income (loss)
 
  $     (1,622 )   (1,957 )   (193 )   (815 )   (2,310 )   (4,167 )   69,339     1,205  
Realized gain (loss) on investments
 
    34,256     3,809     1,642     1,393     15,569     5,657     1,338,144     1,567,647  
Change in unrealized gain (loss) on investments
 
    (35,458 )   331     (26,197 )   (12,191 )   11,650     28,825     (2,457,488 )   57,283  
Reinvested capital gains
 
    13,430     13,592     25,202     28,037             469,378     1,291,219  
                                                 
Net increase (decrease) in contract owners’ equity resulting from operations
 
    10,606     15,775     454     16,424     24,909     30,315     (580,627 )   2,917,354  
                                                 
Equity transactions:
 
                 
Purchase payments received from contract owners (note 3)
 
            13,737         5,940     359     351,535     804,844  
Transfers between funds
 
    476     (6,459 )   210     (10,577 )   (12,039 )   (10,887 )   (347,976 )   (312,654 )
Redemptions (note 3)
 
    (106,395 )   (3,780 )   (24,362 )       (45,398 )   (15,894 )   (3,377,562 )   (3,199,877 )
Annuity benefits
 
                            (680 )   (628 )
Annual contract maintenance charges (note 2)
 
                                 
Contingent deferred sales charges (note 2)
 
    (3,940 )   (150 )           (61 )   (46 )   (34,463 )   (40,421 )
Adjustments to maintain reserves
 
    (15 )   2     (6 )   23     3     12     617     1,675  
                                                 
Net equity transactions
 
    (109,874 )   (10,387 )   (10,421 )   (10,554 )   (51,555 )   (26,456 )   (3,408,529 )   (2,747,061 )
                                                 
Net change in contract owners’ equity
 
    (99,268 )   5,388     (9,967 )   5,870     (26,646 )   3,859     (3,989,156 )   170,293  
Contract owners’ equity beginning of period
 
    184,726     179,338     117,680     111,810     413,707     409,848     21,536,235     21,365,942  
                                                 
Contract owners’ equity end of period
 
  $     85,458     184,726     107,713     117,680     387,061     413,707     17,547,079     21,536,235  
                                                 
CHANGES IN UNITS:
 
                 
Beginning units
 
    9,935     10,525     5,093     5,562     38,573     41,096     1,520,299     1,726,728  
                                                 
Units purchased
 
    60     71     558     47     808     257     190,268     259,024  
Units redeemed
 
    (5,524 )   (661 )   (1,053 )   (516 )   (5,642 )   (2,780 )   (425,954 )   (465,453 )
                                                 
Ending units
 
    4,471     9,935     4,598     5,093     33,739     38,573     1,284,613     1,520,299  
                                                 
(Continued)
 
 
 
50
 
 

NATIONWIDE VARIABLE ACCOUNT-7
 
STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued
 
Years Ended December 31, 2007 and 2006
 
 
 
        VKLStratGro2     VKUCorPlus2     VKUUSRE2  
Investment activity:       2007     2006     2007     2006     2007     2006  
Net investment income (loss)
 
  $     (70,210 )   (73,788 )   59,364     61,919     (25,902 )   (22,220 )
Realized gain (loss) on investments
 
    355,644     310,234     (14,925 )   (17,390 )   881,728     507,794  
Change in unrealized gain (loss) on investments
 
    421,832     (196,895 )   41,886     (7,593 )   (2,322,436 )   848,888  
Reinvested capital gains
 
                12,348     485,757     342,186  
                                     
Net increase (decrease) in contract owners’ equity resulting from operations
 
    707,266     39,551     86,325     49,284     (980,853 )   1,676,648  
                                     
Equity transactions:
 
             
Purchase payments received from contract owners (note 3)
 
    82,956     106,519     440,190     48,459     496,006     344,450  
Transfers between funds
 
    (258,897 )   (114,899 )   213,964     91,258     (2,119,024 )   1,679,157  
Redemptions (note 3)
 
    (504,048 )   (387,607 )   (986,868 )   (312,272 )   (781,550 )   (629,322 )
Annuity benefits
 
                         
Annual contract maintenance charges (note 2)
 
                         
Contingent deferred sales charges (note 2)
 
    (5,005 )   (6,918 )   (223 )   (416 )   (3,778 )   (5,093 )
Adjustments to maintain reserves
 
    (202 )   (256 )   (37 )   (45 )   733     2,840  
                                     
Net equity transactions
 
    (685,196 )   (403,161 )   (332,974 )   (173,016 )   (2,407,613 )   1,392,032  
                                     
Net change in contract owners’ equity
 
    22,070     (363,610 )   (246,649 )   (123,732 )   (3,388,466 )   3,068,680  
Contract owners’ equity beginning of period
 
    5,121,527     5,485,137     2,191,757     2,315,489     7,370,089     4,301,409  
                                     
Contract owners’ equity end of period
 
  $     5,143,597     5,121,527     1,945,108     2,191,757     3,981,623     7,370,089  
                                     
CHANGES IN UNITS:
 
             
Beginning units
 
    517,589     560,959     200,767     216,760     266,611     211,373  
                                     
Units purchased
 
    40,547     77,585     93,337     40,231     90,131     151,570  
Units redeemed
 
    (106,542 )   (120,955 )   (122,728 )   (56,224 )   (179,661 )   (96,332 )
                                     
Ending units
 
    451,594     517,589     171,376     200,767     177,081     266,611  
                                     
See accompanying notes to financial statements.
 
 
 
 
 
 
 
51
 
 

 
 
NATIONWIDE VARIABLE ACCOUNT-7
 
NOTES TO FINANCIAL STATEMENTS
 
December 31, 2007 and 2006
 
 
 
(1) Background and Summary of Significant Accounting Policies
 
 
  (a) Organization and Nature of Operations
Nationwide Variable Account-7 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on July 22, 1994. 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, and Individual Modified Single Premium Deferred Variable Annuity Contracts through the Account. The primary distribution for the contracts is through the brokerage community and other financial institutions.
 
 
 
  (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 the payout phase may invest in any of the following:
 
Portfolios of the AIM Variable Insurance Funds (AIM VIF);
 
AIM VIF – Basic Value Fund – Series II (AIMBValue2)
 
AIM VIF – Capital Appreciation Fund – Series II (AIMCapAp2)
 
AIM VIF – Capital Development Fund – Series I (AIMCapDev)
 
AIM VIF – Capital Development Fund – Series II (AIMCapDev2)
 
AIM VIF – Core Equity Fund – Series I (AIMCoreEq)
 
AIM VIF – Core Equity Fund – Series II (AIMCoreEq2)
 
AIM VIF – International Growth Fund – Series II (AIMIntGr2)
 
AIM VIF – Mid Cap Core Equity Fund – Series I (AIMMidCpCor)
 
AIM VIF – Premier Equity Fund – Series I (AIMPreEq)*
 
AIM VIF – Premier Equity Fund – Series II (AIMPreEq2)*
 
Portfolios of the AllianceBernstein Variable Products Series Fund, Inc. (AllianceBernstein VPS);
 
AllianceBernstein VPS – Growth and Income Portfolio – Class B (AlVGrIncB)
 
AllianceBernstein VPS – International Value Portfolio – Class B (AlVIntlValB)
 
AllianceBernstein VPS – Large Cap Growth Portfolio – Class B (AlVLrgCpGrB)
 
AllianceBernstein VPS – Small Mid Cap Value Portfolio – Class B (AlVSmMdCpB)
 
Portfolios of the Dreyfus Investment Portfolios (Dreyfus IP);
 
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap)
 
Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx)
 
Dreyfus Stock Index Fund, Inc. – Service Shares (DryStklxS)
 
Portfolios of the Federated Insurance Series (Federated IS);
 
Federated IS – American Leaders Fund II – Service Shares (FedAmLeadS)
 
Federated IS – Capital Appreciation Fund II – Service Shares (FedCapApS)
 
Federated IS – High Income Bond II – Service Shares (FedHiIncS)
 
Federated IS – International Equity Fund II (FedIntEq)
 
Federated IS – Mid Cap Growth Strategies Fund II (FedMidCpGr2)
 
Federated IS – Quality Bond Fund II – Primary Shares (FedQualBd)
 
Federated IS – Quality Bond Fund II – Service Shares (FedQualBdS)
 
Portfolios of the Fidelity® Variable Insurance Products Fund (Fidelity® VIP);
 
Fidelity® VIP – Equity-Income Portfolio – Initial Class (FidVIPEI)
 
Fidelity® VIP – Equity-Income Portfolio – Service Class (FidVIPEIS)
 
Fidelity® VIP – Equity-Income Portfolio – Service Class 2 (FidVIPEIS2)
 
(Continued)
 
 
 
52
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
Fidelity® VIP – Growth Portfolio – Initial Class (FidVIPGr)
 
Fidelity® VIP – Growth Portfolio – Service Class (FidVIPGrS)
 
Fidelity® VIP – Growth Portfolio – Service Class 2 (FidVIPGrS2)
 
Fidelity® VIP – High Income Portfolio – Initial Class (FidVIPHI)
 
Fidelity® VIP – High Income Portfolio – Initial Class R (FidVIPHIR)
 
Fidelity® VIP – High Income Portfolio – Service Class (FidVIPHIS)
 
Fidelity® VIP – High Income Portfolio – Service Class 2 (FidVIPHIS2)
 
Fidelity® VIP – High Income Portfolio – Service Class 2R (FidVIPHIS2R)
 
Fidelity® VIP – High Income Portfolio – Service Class R (FidVIPHISR)
 
Fidelity® VIP – Money Market Portfolio – Initial Class (FidVIPMMkt)
 
Fidelity® VIP – Overseas Portfolio – Initial Class (FidVIPOv)
 
Fidelity® VIP – Overseas Portfolio – Service Class (FidVIPOvS)
 
Fidelity® VIP – Overseas Portfolio – Service Class 2 (FidVIPOvS2)
 
Fidelity® VIP – Overseas Portfolio – Service Class 2 R (FidVIPOvS2R)
 
Fidelity® VIP – Overseas Portfolio – Service Class R (FidVIPOvSR)
 
Fidelity® VIP – Value Portfolio – Service Class (FidVIPVal)
 
Fidelity® VIP – Value Portfolio – Service Class 2 (FidVIPVal2)
 
Portfolios of the Fidelity® Variable Insurance Products Fund II (Fidelity® VIP II);
 
Fidelity® VIP II – Asset Manager Growth Portfolio – Initial Class (FidVIPAMGr)
 
Fidelity® VIP II – Asset Manager Growth Portfolio – Service Class (FidVIPAMGrS)
 
Fidelity® VIP II – Asset Manager Growth Portfolio – Service Class 2 (FidVIPAMGrS2)
 
Fidelity® VIP II – Asset Manager Portfolio – Initial Class (FidVIPAM)
 
Fidelity® VIP II – Asset Manager Portfolio – Service Class (FidVIPAMS)
 
Fidelity® VIP II – Asset Manager Portfolio – Service Class 2 (FidVIPAMS2)
 
Fidelity® VIP II – Contrafund® Portfolio – Initial Class (FidVIPCon)
 
Fidelity® VIP II – Contrafund® Portfolio – Service Class (FidVIPConS)
 
Fidelity® VIP II – Contrafund® Portfolio – Service Class 2 (FidVIPConS2)
 
Fidelity® VIP II – Index 500 Portfolio – Initial Class (FidVIPIdx500)
 
Fidelity® VIP II – Investment Grade Bond Portfolio – Initial Class (FidVIPIGBd)
 
Portfolios of the Fidelity® Variable Insurance Products Fund III (Fidelity® VIP III);
 
Fidelity® VIP III – Aggressive Growth Portfolio – Service Class (FidVIPAgGrS)
 
Fidelity® VIP III – Aggressive Growth Portfolio – Service Class 2 (FidVIPAgGrS2)
 
Fidelity® VIP III – Balanced Portfolio – Initial Class (FidVIPBal)
 
Fidelity® VIP III – Balanced Portfolio – Service Class (FidVIPBalS)
 
Fidelity® VIP III – Balanced Portfolio – Service Class 2 (FidVIPBalS2)
 
Fidelity® VIP III – Dynamic Capital Appreciation Portfolio – Service Class (FidVIPDyCapS)
 
Fidelity® VIP III – Dynamic Capital Appreciation Portfolio – Service Class 2 (FidVIPDyCapS2)
 
Fidelity® VIP III – Growth & Income Portfolio – Initial Class (FidVIPGrIn)
 
Fidelity® VIP III – Growth & Income Portfolio – Service Class (FidVIPGrInS)
 
Fidelity® VIP III – Growth & Income Portfolio – Service Class 2 (FidVIPGrInS2)
 
Fidelity® VIP III – Growth Opportunities Portfolio – Initial Class (FidVIPGrOp)
 
Fidelity® VIP III – Growth Opportunities Portfolio – Service Class (FidVIPGrOpS)
 
Fidelity® VIP III – Growth Opportunities Portfolio – Service Class 2 (FidVIPGrOpS2)
 
Fidelity® VIP III – Mid Cap Portfolio – Initial Class (FidVIPMCap)
 
Fidelity® VIP III – Mid Cap Portfolio – Service Class (FidVIPMCapS)
 
Fidelity® VIP III – Mid Cap Portfolio – Service Class 2 (FidVIPMCapS2)
 
Fidelity® VIP III – Value Strategies Portfolio – Service Class (FidVIPVaIS)
 
Fidelity® VIP III – Value Strategies Portfolio – Service Class 2 (FidVIPVaIS2)
 
Portfolios of the Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIP);
 
Franklin Templeton VIP – Foreign Securities Fund – Class 1 (FrVIPForSec)
 
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1 (FrVIPRisDiv)
 
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JAspRMgCore)
 
(Continued)
 
 
 
53
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
Portfolios of the MFS Variable Insurance Trust (MFS VIT);
 
MFS VIT – Investors Growth Stock Series – Service Class (MFSInvGrStS)
 
MFS VIT – Mid Cap Growth Series – Service Class (MFSMidCapGrS)
 
MFS VIT – New Discovery Series – Service Class (MFSNewDiscS)
 
MFS VIT – Value Series – Service Class (MFSValueS)
 
MTB Large Cap Growth Fund II (MTBLgCapGr)
 
MTB Large Cap Value Fund II (MTBLgCapV)
 
MTB Managed Allocation Fund – Moderate Growth II (MTBModGr)
 
Portfolios of the Nationwide Variable Insurance Trust (Nationwide VIT) (formerly Gartmore GVIT);
 
Nationwide VIT – American Funds Asset Allocation Fund – Class II (NVITAstAll2)
 
Nationwide VIT – American Funds Bond Fund – Class II (NVITBnd2)
 
Nationwide VIT – American Funds Global Growth Fund – Class II (NVITGlobGr2)
 
Nationwide VIT – American Funds Growth – Income Fund – Class II (NVITGroInc2)
 
Nationwide VIT – American Funds Growth Fund – Class II (NVITGrowth2)
 
Nationwide VIT – Federated High Income Bond Fund – Class III (NVITFHiInc3)
 
Nationwide VIT – Gartmore Emerging Markets Fund – Class II (NVITEmMrkts2)
 
Nationwide VIT – Gartmore Emerging Markets Fund – Class VI (NVITEmMrkts6)
 
Nationwide VIT – Government Bond Fund – Class I (NVITGvtBd)
 
Nationwide VIT – International Value Fund – Class III (NVITIntVal3)
 
Nationwide VIT – International Value Fund – Class VI (NVITIntVal6)
 
Nationwide VIT – Investor Destinations Aggressive Fund – Class II (NVITIDAgg2)
 
Nationwide VIT – Investor Destinations Conservative Fund – Class II (NVITIDCon2)
 
Nationwide VIT – Investor Destinations Moderate Fund – Class II (NVITIDMod2)
 
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II (NVITIDModAg2)
 
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II (NVITIDModCon2)
 
Nationwide VIT – Mid Cap Growth Fund – Class II (NVITMdCpGr2)
 
Nationwide VIT – Mid Cap Index Fund – Class I (NVITMidCap)
 
Nationwide VIT – Mid Cap Index Fund – Class II (NVITMidCap2)
 
Nationwide VIT – Money Market Fund – Class I (NVITMyMkt)
 
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class II
 
    (formerly Gartmore GVIT – Small Cap Growth Fund – Class II) (NVITSmCapGr2)
 
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I
 
    (formerly Gartmore GVIT – Small Cap Value Fund – Class I) (NVITSmCapVal)
 
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class II
 
    (formerly Gartmore GVIT – Small Cap Value Fund – Class II) (NVITSmCapVal2)
 
Nationwide VIT – Multi-Manager Small Company Fund – Class I
 
    (formerly Gartmore GVIT – Small Company Fund – Class I) (NVITSmComp)
 
Nationwide VIT – Multi-Manager Small Company Fund – Class II
 
    (formerly Gartmore GVIT – Small Company Fund – Class II) (NVITSmComp2)
 
Nationwide VIT – Nationwide Fund – Class II (NVITNWFund2)
 
Portfolios of the Neuberger Berman Advisers Management Trust (Neuberger Berman AMT);
 
Neuberger Berman AMT – Regency Portfolio – Class S (NBTARegS)
 
Neuberger Berman AMT – Socially Responsive Portfolio Class I (NBTSocRes)
 
Portfolios of the Oppenheimer Variable Account Funds (Oppenheimer VAF);
 
Oppenheimer VAF – Capital Appreciation Fund – Service Class (OppCapApS)
 
Oppenheimer VAF – Global Securities Fund – Class 3 (OppGlSec3)
 
Oppenheimer VAF – Global Securities Fund – Class 4 (OppGlSec4)
 
Oppenheimer VAF – Global Securities Fund – Non-Service Shares (OppGlSec)
 
Oppenheimer VAF – Global Securities Fund – Service Class (OppGlSecS)
 
Oppenheimer VAF – High Income Fund – Class 3 (OppHighInc3)
 
Oppenheimer VAF – High Income Fund – Non-Service Shares (OppHighInc)
 
Oppenheimer VAF – Main Street Small Cap Fund® – Non-Service Shares (OppMStSCap)
 
(Continued)
 
 
 
54
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
Oppenheimer VAF – Main Street Small Cap Fund®– Service Class (OppMStSCapS)
 
Oppenheimer VAF – Main Street®– Service Class (OppMStS)
 
Oppenheimer VAF – Strategic Bond Fund – Service Class (OppStratBdS)
 
Portfolios of the Putnam Variable Trust (Putnam VT);
 
Putnam VT – Growth and Income Fund – IB Shares (PVTGroInc)
 
Putnam VT – International Equity Fund – IB Shares (PVTIntlEq)
 
Putnam VT – Small Cap Value Fund – IB Shares (PVTSmCapV)
 
Putnam VT – Voyager Fund – IB Shares (PVTVoygr)
 
Portfolios of the STI Classic Variable Trust;
 
STI Classic Variable Trust – International Equity Fund (STIIntlEq)*
 
STI Classic Variable Trust – Investment Grade Bond Fund (STIInvGrBd)*
 
STI Classic Variable Trust – Large Cap Core Equity Fund
 
    (formerly STI Classic Variable Trust – Large Cap Relative Value Fund) (STILgCapEq)
 
STI Classic Variable Trust – Large Cap Growth Stock Fund
 
    (formerly STI Classic Variable Trust – Capital Appreciation Fund) (STILgCapGr)
 
STI Classic Variable Trust – Large Cap Value Equity Fund (STILgCapVal)
 
STI Classic Variable Trust – Mid-Cap Core Equity Fund
 
    (formerly STI Classic Variable Trust – Mid Cap Equity Fund) (STIMidCapEq)
 
STI Classic Variable Trust – Small Cap Value Equity Fund (STISmCapVal)
 
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares (DrySRGro)
 
Portfolios of the Van Kampen Life Investment Trust (Van Kampen LIT);
 
Van Kampen LIT – Comstock Portfolio – Class II (VKLCom2)
 
Van Kampen LIT – Strategic Growth Portfolio – Class II (VKLStratGro2)
 
Portfolios of the Van Kampen – The Universal Institutional Funds, Inc. (Van Kampen UIF);
 
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class II (VKUCorPlus2)
 
Van Kampen UIF – U.S. Real Estate Portfolio – Class II (VKUUSRE2)
 
*At December 31, 2007, 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.
 
 
 
  (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, 2007 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.
 
(Continued)
 
 
 
55
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
  (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 FASB issued SFAS 157, Fair Value Measurements (SFAS 157). SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt SFAS 157 effective January 1, 2008. SFAS 157 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.
 
 
 
(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, not to exceed 7% of purchase payments surrendered. This charge declines a specified percentage each 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 Company may deduct an annual contract maintenance charge of up to $30, dependent on contract type and issue date, which is satisfied by surrendering units.
 
The Company deducts a mortality and expense risk charge assessed through the daily unit value calculation. The Option table below illustrates the annual rate for all contract level charges by product, as well as the maximum variable account charge per product. The table also summarizes the contract level options available to contract holders. The options and related charges are described in more detail in the applicable product prospectus.
 
(Continued)
 
 
 
56
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
Nationwide Variable Account-7 Options   
Nationwide    
 
Classic    
 
 
Nationwide    
 
Select    
 
 
All American    
 
Annutiy(5)    
 
Variable Account Charges – Recurring
 
   1.30%     1.40%     0.95%  
Reduced Purchase Payment Option
 
   –     –     0.25%  
Initial lowered to $1,000 and subsequent lowered to $25. Not available for investment only contracts.
 
            
Five Year CDSC Option
 
   –     –     0.15%  
CDSC Waiver Options:
 
            
Additional (5%) Withdrawal without Charge and Disability
 
   –     –     0.10%  
In addition to standard 10% CDSC-free withdrawal privilege.
 
            
10 Year and Disability Waiver for Tax Sheltered Annuities
 
   –     –     0.05%  
CDSC waived if (i) contract owner has owned contract for 10 years and (ii) has made regular payroll deferrals during entire contract year for at least 5 of those 10 years.
 
            
Hardship Waiver for Tax Sheltered Annuities
 
   –     –     0.15%  
CDSC waived if contract owner experiences hardship (defined under IRC Section 401(k)).
 
 
 
            
 
 
Death Benefit Options:
 
            
One-Year Enhanced
 
   –     –     0.15%(3)  
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrenders or (iii) highest contract value before 86th birthday less surrenders.
 
            
Greater of One-Year or 5% Enhanced
 
   –     –     0.20%(3)  
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrenders, (iii) highest contract value before 86th birthday less surrenders or (iv) the 5% interest anniversary value.
 
            
One-Year Step Up
 
   –     0.05%(2)     0.05%(4)  
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrenders or (iii) highest contract value before 86th birthday less surrenders.
 
            
5% Enhanced
 
   –     0.10%(2)     0.10%(4)  
If death before annuitization, benefit will be greater of (i) contract value or (ii) total of all purchase payments less surrenders with 5% simple interest from purchase to most recent contract anniversary prior to annuitants 86th birthday less surrenders.
 
 
 
            
 
 
Guaranteed Minimum Income Benefit Options:
 
            
Provide for minimum guaranteed value that may replace contract value for annuitization under certain circumstances (for contracts issued prior to May 1, 2003).
 
            
Option 1
 
   –     –     0.45%  
Option 2
 
 
 
   –     –     0.30%  
 
 
Extra Value Option (EV)
 
   –     –     0.45%  
Fee assessed to assets of the variable account and to allocations made to the fixed account or guaranteed term options for first seven contract years in exchange for application of 3% credit of purchase payments made during the first 12 months contract is in force.
 
 
 
            
 
 
Beneficiary Protector Option
 
   –     –     0.40%  
Upon annuitant death, in addition to any death benefit payable, the contract will be credited an additional amount.
 
 
 
            
 
 
Capital Preservation Plus Option
 
   –     –     0.50%  
Provides a return of principle over the elected program period.
 
 
 
            
      
Maximum Variable Account Charges(1):
 
   1.30%     1.50%     3.65%  
 
 
(1) 
 
When maximum options are elected. The contract charges indicated in bold, when summarized, represent the Maximum Variable Account Charges if all optional benefits available under the contract are elected including the most expensive of the mutually exclusive optional benefits.
 
(2) 
 
For contracts issued on or after the later of November 3, 1997 or date permitted by state insurance authorities.
 
(3) 
 
For contracts issued on or after the later of January 2, 2001 or date permitted by state insurance authorities.
 
(4) 
 
For contracts issued prior to January 2, 2001 or date prior to state insurance authority approval date.
 
(5) 
 
Includes Sun Trust, M&T and Compass products.
 
(Continued)
 
 
 
57
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
The following table provides mortality and expense risk charges by asset fee rates for the period ended December 31, 2007.
 
 
 
     Total    AIMBValue2    AIMCapAp2    AIMCapDev    AIMCapDev2    AIMCoreEq    AIMCoreEq2    AIMIntGr2
                                         
0.95%
 
   $ 2,955,437    28,646    3,726    252    1,547    2,701    3,956    4,108
1.00%
 
     1,229,164    5,607    237       395       376    546
1.05%
 
     306,556    1,473    59       444       133    82
1.10%
 
     1,869,900    13,144    6,828    2,417    376    2,985    4,454    2,903
1.15%
 
     720,339    6,729    3,081       434       423    1,798
1.20%
 
     237,972    2,829    664       149    318    188    233
1.25%
 
     277,963    3,543    1,816             113    240
1.30%
 
     1,082,987    5,941    1,053             505    1,122
1.35%
 
     82,903    593    74       297    72    45    95
1.40%
 
     6,410,872    45,726    6,118    227    2,492    21    8,833    3,069
1.45%
 
     746,504    3,123    937       45       1,299    573
1.50%
 
     196,381    2,139    10       230       217   
1.55%
 
     1,799,740    17,941    4,198       1,159    629    4,721    3,131
1.60%
 
     824,624    18,918    1,687       557       1,722    824
1.65%
 
     306,371    2,845    626       695       67    63
1.70%
 
     264,822    7,288    2,439             461    144
1.75%
 
     311,157    3,358    700       22       360    361
1.80%
 
     172,874    1,586    707       642       263    71
1.85%
 
     184,284    2,329    2,202             1,831    11
1.90%
 
     62,879    2,539                41   
1.95%
 
     26,207    248                  
2.00%
 
     154,659    239    1,530               
2.05%
 
     99,558    1,907    691       13       316   
2.10%
 
     22,604    100    90             319    14
2.15%
 
     59,954    1,309    135             676   
2.20%
 
     28,296    7    536               
2.25%
 
     51,888    758    356             285   
2.30%
 
     18,754    173                   9
2.35%
 
     23,905    2,874    883             136   
2.40%
 
     2,749    533                  
2.45%
 
     1,286    19                  
2.55%
 
     558                     
2.60%
 
     936    244    124               
2.70%
 
     633                     
                                         
Totals
 
   $ 20,535,716    184,708    41,507    2,896    9,497    6,726    31,740    19,397
                                         
     AIMMidCpCor    AlVGrIncB    AlVIntlValB    AlVLrgCpGrB    AlVSmMdCpB    DryIPSmCap    DryStkIx    DryStklxS
0.95%
 
   $ 2,952    14,263    15,818    6,433    23,371    2,830    6,807    13,295
1.00%
 
        2,225    3,150    763    5,939          1,754
1.05%
 
        2,067    285    101    1,732       21   
1.10%
 
     5,698    15,059    7,514    2,839    19,848    6,821    11,562    6,062
1.15%
 
     31    6,652    2,937    1,486    8,710    36    62    1,044
1.20%
 
     36    1,710    1,404    262    2,055    306    149    1,008
1.25%
 
        3,606    394    27    4,649    27    118    2,559
1.30%
 
        4,866    1,416    746    2,341          2,693
1.35%
 
     131    320    78    20    970    287    1,551    706
1.40%
 
     244    20,447    21,404    9,067    40,743    1,669    4,331    4,383
1.45%
 
        3,859    285    402    2,480          3,793
1.50%
 
        180    921    107    882    288    544    833
1.55%
 
     323    14,883    6,461    4,924    26,117    724    4,130    10,797
1.60%
 
        6,693    6,536    2,865    6,955       77    8,847
1.65%
 
     24    4,939    223    194    1,711    55    8    2,788
1.70%
 
        2,199    2,224    177    4,799          2,535
1.75%
 
     39    6,223    2,542    1,623    2,536    38       1,878
1.80%
 
        4,202    784    14    1,888          957
1.85%
 
        1,160    1,060    307    2,993          610
1.90%
 
        2,511       1,805    92          71
1.95%
 
        546       9    528         
2.00%
 
        89    396       2,335         
2.05%
 
        316    391    98    39          229
2.10%
 
        310       58    136          19
(Continued)
 
 
 
58
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
  Continued        AIMMidCpCor        AlVGrIncB        AlVIntlValB        AlVLrgCpGrB        AlVSmMdCpB        DryIPSmCap        DryStkIx        DryStklxS
                                         
2.15%
 
        3,221    1,316    505    1,347          143
2.20%
 
                 264         
2.25%
 
        2,321       1,135             2,006
2.30%
 
        385    10    670    31         
2.35%
 
        1,487                   120
2.40%
 
        395    140    1    128         
2.45%
 
                         
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 9,478    127,134    77,689    36,638    165,619    13,081    29,360    69,130
                                         
         FedAmLeadS        FedCapApS        FedHiIncS        FedIntEq        FedMidCpGr2        FedQualBd        FedQualBdS        FidVIPEI
                                         
0.95%
 
   $ 5,628    6,277    19,035    577    1,512    7,696    20,159   
1.00%
 
     1,682    594    2,071             7,098   
1.05%
 
     81    678    1,382    123          616   
1.10%
 
     4,434    2,633    20,061    1,373    5,986    17,537    23,709   
1.15%
 
     2,133    3,461    10,938    334       983    12,237   
1.20%
 
     200    368    1,348       70    253    2,741   
1.25%
 
     409    99    2,116       124    735    3,795   
1.30%
 
     2,541    339    2,103       39       7,062    58,721
1.35%
 
     582    103    308       212    391    1,163   
1.40%
 
     1,790    3,707    29,911    148    169    1,928    31,728    369,256
1.45%
 
     1,613    1,665    3,384             6,117    8,307
1.50%
 
        1    787       847    952    923    8,601
1.55%
 
     2,568    9,175    26,495       816    6,383    35,714   
1.60%
 
     2,167    1,538    10,207          93    6,895   
1.65%
 
     1,074    301    1,972       82    40    879   
1.70%
 
     553    95    2,142             3,203   
1.75%
 
     1,108    657    6,987       76       1,617   
1.80%
 
     618    35    549             2,001   
1.85%
 
     332    621    3,324             3,622   
1.90%
 
           78             116   
1.95%
 
                       50   
2.00%
 
     145    62    12,671             51   
2.05%
 
     865                   297   
2.10%
 
     5       199             48   
2.15%
 
     22                   108   
2.20%
 
                       80   
2.25%
 
     725    1,301                  
2.30%
 
        652                  
2.35%
 
                         
2.40%
 
                         
2.45%
 
                         
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 31,275    34,362    158,068    2,555    9,933    36,991    172,029    444,885
                                         
         FidVIPEIS        FidVIPEIS2        FidVIPGr        FidVIPGrS        FidVIPGrS2        FidVIPHI        FidVIPHIR        FidVIPHIS
                                         
0.95%
 
   $ 118,915    101,457       105,681    62,250          47,526
1.00%
 
     74,720    16,590       108,769    24,203          38,645
1.05%
 
     23,630    3,843       23,787    2,684          9,852
1.10%
 
     28,248    72,478       1,516    37,769          359
1.15%
 
     729    38,563       329    13,561          227
1.20%
 
     556    8,476       519    6,717          171
1.25%
 
     320    23,103       649    2,991          62
1.30%
 
     177    11,451    48,378    130    3,007    29,923      
1.35%
 
     1,797    3,513       77    2,326         
1.40%
 
     3,002    129,869    263,954    1,551    69,175    240,825    11,730    658
1.45%
 
     2,468    43,342    15,597    3,460    34,619    3,829    304    1,029
1.50%
 
     1,335    8,623    9,025    782    3,204    5,792       896
1.55%
 
     10,628    93,308       77    39,487         
1.60%
 
     81    27,854       110    12,046         
(Continued)
 
 
 
59
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
 Continued        FidVIPEIS        FidVIPEIS2        FidVIPGr        FidVIPGrS        FidVIPGrS2        FidVIPHI        FidVIPHIR        FidVIPHIS
                                         
1.65%
 
     154    10,090       263    3,316         
1.70%
 
        12,353       53    7,996         
1.75%
 
     79    13,967          768         
1.80%
 
     290    10,350          2,606         
1.85%
 
        7,391          2,914         
1.90%
 
        1,480          445         
1.95%
 
        1,395                  
2.00%
 
        8,790          825         
2.05%
 
        5,736          3,226         
2.10%
 
        60          33         
2.15%
 
        1,509          356         
2.20%
 
        234                  
2.25%
 
        1,060          1,230         
2.30%
 
        596          109         
2.35%
 
        963          159         
2.40%
 
                         
2.45%
 
                 17         
2.55%
 
        124                  
2.60%
 
        30                  
2.70%
 
                         
                                         
Totals
 
   $ 267,129    658,598    336,954    247,753    338,039    280,369    12,034    99,425
                                         
         FidVIPHIS2        FidVIPHIS2R        FidVIPHISR        FidVIPMMkt        FidVIPOv        FidVIPOvS        FidVIPOvS2        FidVIPOvS2R
                                         
0.95%
 
   $ 28,302    1,941    1,539    36,024       43,571    23,078    18,996
1.00%
 
     11,478    280    489    43,538       39,016    12,950    6,514
1.05%
 
     1,750    8    291    9,621       4,650    332    2,164
1.10%
 
     20,167    1,234       2,890       399    8,177    8,575
1.15%
 
     11,665    2,211       1,958       679    3,965    2,920
1.20%
 
     2,515    124    1    181       278    1,529    1,733
1.25%
 
     3,435    152       100       155    767    682
1.30%
 
     2,267    400       29,765    54,700    21    694    1,479
1.35%
 
     1,070    26                171    420
1.40%
 
     54,305    3,040       166,043    332,027    1,155    25,138    17,529
1.45%
 
     22,281    432       15,102    4,895    3,881    10,274    4,723
1.50%
 
     5,432          5,743    2,477    113    2,173    1,148
1.55%
 
     24,297    1,715       8,403       46    8,940    13,625
1.60%
 
     10,760    1,588       1,453       39    2,450    3,742
1.65%
 
     3,528    84       343          1,586    1,857
1.70%
 
     2,445    28       1,990       84    416    1,533
1.75%
 
     2,980          84          2,469    805
1.80%
 
     228    5       1          36    5,194
1.85%
 
     733    99       1             504
1.90%
 
     43                   20    25
1.95%
 
     526          404          550    118
2.00%
 
     1,974    834                214    596
2.05%
 
        4                   147
2.10%
 
     20                   19    23
2.15%
 
                       398   
2.20%
 
                         
2.25%
 
     98                   114    35
2.30%
 
                       254    2,034
2.35%
 
                         
2.40%
 
                         
2.45%
 
                         
2.55%
 
                          261
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 212,299    14,205    2,320    323,644    394,099    94,087    106,714    97,382
                                         
(Continued)
 
 
 
60
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
         FidVIPOvSR        FidVIPVal        FidVIPVal2        FidVIPAMGr        FidVIPAMGrS        FidVIPAMGrS2        FidVIPAM        FidVIPAMS
                                         
0.95%
 
   $ 6,719    3,400    2,317       11,920    5,008       17,127
1.00%
 
     1,959    2,037    408       11,750    1,223       12,835
1.05%
 
     1,017    230    524       1,428    126       5,446
1.10%
 
     2,343    114    1,803       231    1,726      
1.15%
 
           1,054          224      
1.20%
 
     88       174       47    161      
1.25%
 
     249       240       16    413       173
1.30%
 
              5,198          8,782   
1.35%
 
     24       170               
1.40%
 
     286       4,539    35,173    383    4,744    51,973    57
1.45%
 
     1,429       1,748    1,907       7,012    1,692    30
1.50%
 
           1,442    915    71    887    315    82
1.55%
 
     212       3,683          1,384      
1.60%
 
           329          1,011      
1.65%
 
           216       37    139      
1.70%
 
                    62      
1.75%
 
           7          33      
1.80%
 
                         
1.85%
 
                         
1.90%
 
                         
1.95%
 
                         
2.00%
 
                    78      
2.05%
 
                         
2.10%
 
                         
2.15%
 
                         
2.20%
 
                         
2.25%
 
                         
2.30%
 
                         
2.35%
 
                         
2.40%
 
                         
2.45%
 
                         
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 14,326    5,781    18,654    43,193    25,883    24,231    62,762    35,750
                                         
         FidVIPAMS2        FidVIPCon        FidVIPConS        FidVIPConS2        FidVIPIdx500        FidVIPIGBd        FidVIPAgGrS        FidVIPAgGrS2
                                         
0.95%
 
   $ 6,988       166,658    114,322    147,734    68,747    486    4,392
1.00%
 
     4,588       134,238    30,138    87,795    43,672    188    387
1.05%
 
     244       33,723    4,210    20,617    17,128       276
1.10%
 
     2,895       22,856    68,398    15,053    13,085       3,220
1.15%
 
     2,361       637    29,274    3,399    3,909       2,685
1.20%
 
     439       1,310    13,632    3,271    1,348       767
1.25%
 
     1,556       599    16,809    1,777    1,057       275
1.30%
 
        107,935    252    17,713    52,497    26,869       314
1.35%
 
           699    4,911    1,385    104       253
1.40%
 
     7,490    580,729    3,461    146,761    292,110    222,652    19    9,633
1.45%
 
     4,525    16,698    7,546    47,733    39,782    30,984       1,817
1.50%
 
     1,795    6,096    1,400    10,787    8,460    8,074       153
1.55%
 
     3,156       2,846    161,873    21,069    14,687       7,506
1.60%
 
     1,470       143    32,417    800    1,536       5,148
1.65%
 
     164       564    12,444    1,044    369       438
1.70%
 
     1,045       44    14,261    1,066    1,205       985
1.75%
 
           76    16,625    90    50       311
1.80%
 
           177    16,861    84    344       618
1.85%
 
           120    10,671       16       1,294
1.90%
 
              439       15      
1.95%
 
              2,796    70    84       513
2.00%
 
              9,575    187    441       66
2.05%
 
              3,818            
2.10%
 
              1,417            
2.15%
 
              2,945             620
2.20%
 
              1,731            
2.25%
 
              5,000             1,154
2.30%
 
              764            
(Continued)
 
 
 
61
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
 Continued       FidVIPAMS2       FidVIPCon       FidVIPConS       FidVIPConS2       FidVIPIdx500       FidVIPIGBd       FidVIPAgGrS       FidVIPAgGrS2
                                 
2.35%
 
          1,720         169
2.40%
 
          97        
2.45%
 
                 
2.55%
 
                 
2.60%
 
          55        
2.70%
 
                 
                                 
Totals
 
  $ 38,716   711,458   377,349   800,197   698,290   456,376   693   42,994
                                 
        FidVIPBal       FidVIPBalS       FidVIPBalS2       FidVIPDyCapS       FidVIPDyCapS2       FidVIPGrIn       FidVIPGrInS       FidVIPGrInS2
                                 
0.95%
 
  $   48,847   16,499   4,331   7,368     76,432   28,653
1.00%
 
      35,663   10,046   1,106   1,125     74,564   13,768
1.05%
 
      8,237   830   329   473     25,925   2,525
1.10%
 
      541   4,335     3,812     230   16,624
1.15%
 
      353   1,444     3,363     168   9,188
1.20%
 
      21   1,022   47   1,048     441   3,490
1.25%
 
      92   1,586     397     710   3,916
1.30%
 
    58,037   80   12     185   27,624   19   2,628
1.35%
 
        677     37       1,201
1.40%
 
    385,760   289   17,259   16   13,536   161,678   777   40,073
1.45%
 
    2,559   126   19,858   43   9,368   4,735   617   22,552
1.50%
 
    1,815   149   1,383     640   2,739   23   1,381
1.55%
 
        16,619     9,520       27,188
1.60%
 
        3,922     768       5,138
1.65%
 
        1,680     629       2,549
1.70%
 
      75   326     1,157     72   1,866
1.75%
 
        129     734       10,809
1.80%
 
        139     49       2,796
1.85%
 
            196       2,974
1.90%
 
            136       112
1.95%
 
        768           507
2.00%
 
        326          
2.05%
 
            34       1,217
2.10%
 
            52       32
2.15%
 
            242       423
2.20%
 
                 
2.25%
 
            877       545
2.30%
 
                 
2.35%
 
            655       386
2.40%
 
                 
2.45%
 
                  19
2.55%
 
                 
2.60%
 
                  32
2.70%
 
                 
                                 
Totals
 
  $ 448,171   94,473   98,860   5,872   56,401   196,776   179,978   202,592
                                 
        FidVIPGrOp       FidVIPGrOpS       FidVIPGrOpS2       FidVIPMCap       FidVIPMCapS       FidVIPMCapS2       FidVIPVaIS       FidVIPVaIS2
                                 
0.95%
 
  $   88,559   13,410     84,589   124,745   918   13,152
1.00%
 
      85,574   8,677     63,910   37,294     6,555
1.05%
 
      17,114   625     14,031   3,078     1,473
1.10%
 
      1,169   3,369     1,476   75,461   3,933   7,138
1.15%
 
      99   1,609     483   23,633   301   7,214
1.20%
 
      303   1,493     392   10,158     663
1.25%
 
      416   330     397   13,815   41   2,002
1.30%
 
    138,615   86   57   62,857   73   7,467     4,012
1.35%
 
        482       5,061     435
1.40%
 
    880,531   3,167   10,967     1,040   163,185   76   15,119
1.45%
 
    8,363   288   12,105     7,478   67,623     2,227
1.50%
 
    5,246   528   1,043     668   8,887     1,785
1.55%
 
      35   2,932     132   157,364   1,011   12,239
1.60%
 
        826     79   24,794     5,124
1.65%
 
      30   412     191   9,924     3,266
1.70%
 
      31   545       9,840     1,128
1.75%
 
              8,344   78   1,716
1.80%
 
        70       9,423     1,610
(Continued)
 
 
 
62
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
 Continued        FidVIPGrOp        FidVIPGrOpS        FidVIPGrOpS2        FidVIPMCap        FidVIPMCapS        FidVIPMCapS2        FidVIPVaIS        FidVIPVaIS2
                                         
1.85%
 
                 68    5,477       1,429
1.90%
 
                    4,331       553
1.95%
 
                    997      
2.00%
 
                    23,532       939
2.05%
 
                    7,793       3,422
2.10%
 
                    241       41
2.15%
 
                    2,930       541
2.20%
 
                    960       847
2.25%
 
           187          8,311       2,036
2.30%
 
                    1,525      
2.35%
 
                         
2.40%
 
                    70       68
2.45%
 
                    37      
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 1,032,755    197,399    59,139    62,857    175,007    816,300    6,358    96,734
                                         
         FrVIPForSec        FrVIPRisDiv        JAspRMgCore        MFSInvGrStS        MFSMidCapGrS        MFSNewDiscS        MFSValueS        MTBLgCapGr
0.95%
 
   $ 1,164    8,223    741    7,349    11,836    5,954    15,558    8,249
1.00%
 
           261    147    1,477    339    5,423   
1.05%
 
     66       241    620    82    246    1,725   
1.10%
 
     4,375    18,211    347    5,246    7,103    7,262    13,809    13,843
1.15%
 
        69    24    8,161    2,873    6,758    10,596   
1.20%
 
     31    508    611    708    1,178    291    1,391    145
1.25%
 
        232       2,079    1,386    651    2,097   
1.30%
 
        57    615    3,361    4,876    2,340    6,009   
1.35%
 
     110    861    2    222    696    231    499    282
1.40%
 
     329    2,166    866    6,042    15,867    12,746    23,093    3,815
1.45%
 
           65    1,064    1,705    415    4,006   
1.50%
 
        464    2,479    176    330    238    466   
1.55%
 
     435    4,365    188    2,919    9,797    3,355    18,681    3,961
1.60%
 
           177    2,935    9,555    4,217    12,989   
1.65%
 
        23    556    2,180    2,218    500    2,525    6
1.70%
 
           297    2,959    1,304    534    4,700   
1.75%
 
        92    207    1,902    2,506    605    7,311   
1.80%
 
           463    895    1,318    57    812   
1.85%
 
           23    2,784    2,611    736    6,703   
1.90%
 
              1,107    1,363       160   
1.95%
 
              267    896       781   
2.00%
 
              396    1,260    1,707    893   
2.05%
 
           170    1,256    992    1,747    1,622   
2.10%
 
           50    218    1,038       1,673   
2.15%
 
           895    1,994    895         
2.20%
 
              414    265       699   
2.25%
 
           283    347    1,588       721   
2.30%
 
              973    248         
2.35%
 
              5,646    935         
2.40%
 
              504            
2.45%
 
              19    7    9      
2.55%
 
                         
2.60%
 
              407            
2.70%
 
                         
                                         
Totals
 
   $ 6,510    35,271    9,561    65,297    88,205    50,938    144,942    30,301
                                         
         MTBLgCapV        MTBModGr        NVITAstAll2        NVITBnd2        NVITGlobGr2        NVITGroInc2        NVITGrowth2        NVITFHiInc3
                                         
0.95%
 
   $ 7,686    78,699    8,686    3,285    8,881    395    8,642   
1.00%
 
           4,634    844    3,056    8    440   
1.05%
 
        456    90    518    32       683   
1.10%
 
     21,295    167,043    10,880    1,815    2,457    192    5,109    367
1.15%
 
     296    17,009    238    521    183    198    77    69
1.20%
 
     573    7,744    438    663    396       355   
1.25%
 
     52    1,372    351    954    157       73    466
1.30%
 
        3,038    339    240    95       255   
(Continued)
 
 
 
63
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
 Continued        MTBLgCapV        MTBModGr        NVITAstAll2        NVITBnd2        NVITGlobGr2        NVITGroInc2        NVITGrowth2        NVITFHiInc3
                                         
1.35%
 
     435    5,415    124    16    8    6    10    46
1.40%
 
     4,076    16,798    14,359    5,123    5,107    267    3,006   
1.45%
 
           1,905    559    974    60    1,016   
1.50%
 
     305    4,501    79       38         
1.55%
 
     8,455    46,149    18,384    2,420    6,452    303    4,355    769
1.60%
 
        4,708    535    492    799       1,071   
1.65%
 
     144    1,235    81    701    552    27    306   
1.70%
 
        82    1,623    155    498       365   
1.75%
 
        277    1,217    573    567    29    149   
1.80%
 
        581    1,504    1,507    430       3,770   
1.85%
 
        120    3,262    727    2,289       68   
1.90%
 
           22             11   
1.95%
 
           200               
2.00%
 
           38       145       138   
2.05%
 
           342               
2.10%
 
                 24       24   
2.15%
 
                         
2.20%
 
                         
2.25%
 
                         
2.30%
 
                         
2.35%
 
                         
2.40%
 
                         
2.45%
 
                         
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 43,317    355,227    69,331    21,113    33,140    1,485    29,923    1,717
                                         
         NVITEmMrkts2        NVITEmMrkts6        NVITGvtBd        NVITIntVal3        NVITIntVal6        NVITIDAgg2        NVITIDCon2        NVITIDMod2
                                         
0.95%
 
   $ 6,841    18,991    45,384    549    13,457    24,345    43,324    208,992
1.00%
 
     1,960    11,943    7,348       5,732    412    4,272    13,024
1.05%
 
     675    4,882    2,087       2,023    2,693    1,073    12,306
1.10%
 
     4,835    6,738    38,051    2,509    6,835    48,240    65,132    285,544
1.15%
 
     980    4,704    13,059       6,323    10,676    32,782    157,895
1.20%
 
     163    1,306    4,291       387    1,930    15,508    66,262
1.25%
 
     307    477    3,926       613    2,249    7,737    51,733
1.30%
 
     754    2,928    5,564       2,248    15,329    19,884    98,244
1.35%
 
     1    499    1,186       553    3,482    5,960    6,719
1.40%
 
     8,912    30,846    58,799    769    19,773    47,980    48,086    350,740
1.45%
 
     177    3,148    6,650       592    26,714    6,033    53,738
1.50%
 
     869    429    3,129       196    1,749    2,596    10,309
1.55%
 
     6,799    25,363    28,752    886    14,736    16,481    36,811    259,594
1.60%
 
     412    7,066    19,566       1,360    34,605    23,576    213,111
1.65%
 
     29    4,833    11,132       2,188    15,158    20,505    66,179
1.70%
 
     37    1,852    2,179       1,843    14,813    6,958    45,046
1.75%
 
        3,058    5,548    185    1,774    5,710    17,537    65,512
1.80%
 
        6,687    1,755       2,202    8,723    5,924    29,836
1.85%
 
     120    3,789    3,455       383    2,499    9,580    23,547
1.90%
 
        76    4,871       301    6,403       14,848
1.95%
 
        187    53       278    115    720    3,445
2.00%
 
     944    22,128    5,265       603    3,272    41    13,129
2.05%
 
     495    484    502          17,416    391    8,539
2.10%
 
        31    49       33    53    26    2,328
2.15%
 
                    638    2,415    6,789
2.20%
 
                    464       1,720
2.25%
 
        34          83    5,513    557    3,259
2.30%
 
        315    216       1,501    484       273
2.35%
 
           129          420       2,032
2.40%
 
                    25       227
2.45%
 
                          722
2.55%
 
                          173
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 35,310    162,794    272,946    4,898    86,017    318,591    377,428    2,075,815
                                         
(Continued)
 
 
 
64
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     NVITIDModAg2    NVITIDModCon2    NVITMdCpGr2    NVITMidCap    NVITMidCap2    NVITMyMkt    NVITSmCapGr2    NVITSmCapVal
                                         
0.95%
 
   $ 133,296    65,851    833    3,218    17,089    83,426    7,151    1,013
1.00%
 
     5,741    3,602    230       2,041    30,262    1,506   
1.05%
 
     1,308    734          1,030    3,844    137   
1.10%
 
     89,460    116,224    373    7,803    12,341    49,781    4,349    5,807
1.15%
 
     46,710    59,946    531    479    6,047    12,286    1,420   
1.20%
 
     14,788    6,679    94    126    1,293    7,014    826    89
1.25%
 
     36,140    17,301    16    27    524    4,207    1,947   
1.30%
 
     21,580    45,020          7,742    2,002    749   
1.35%
 
     5,781    3,797       268    1,016    1,359    362   
1.40%
 
     192,579    95,243    13    1,659    27,083    103,989    7,529    416
1.45%
 
     41,021    15,199    95       2,611    11,502    315   
1.50%
 
     5,112    7,058       472    116    1,988      
1.55%
 
     68,440    84,938    405    1,473    9,925    69,208    4,927    610
1.60%
 
     82,640    66,118    2,413    83    7,270    10,807    2,062   
1.65%
 
     37,101    22,360    8       1,073    5,522    365   
1.70%
 
     31,044    10,409          2,116    13,149    522   
1.75%
 
     23,486    17,769    32    55    4,412    6,098    588    30
1.80%
 
     7,445    2,670          1,073    4,022    791   
1.85%
 
     11,766    3,313    552       886    2,622    2,234   
1.90%
 
     7,289    259          570    415      
1.95%
 
     1,076    1,464             1,575    239   
2.00%
 
     3,759    1,620          365    7,275    211   
2.05%
 
     7,534    4,868    725       1,737    5,314    654   
2.10%
 
     7,593             87    1,747    21   
2.15%
 
     19,044    1,594          337    605    725   
2.20%
 
     12,299    2,142             3,007      
2.25%
 
     1,165    231          1,541    2,764      
2.30%
 
     255             749    1,862    1,378   
2.35%
 
     967    51          61    1,028      
2.40%
 
     218                     
2.45%
 
     30    15          6    248    11   
2.55%
 
                         
2.60%
 
                         
2.70%
 
     633                     
                                         
Totals
 
   $ 917,300    656,475    6,320    15,663    111,141    448,928    41,019    7,965
                                         
     NVITSmCapVal2    NVITSmComp    NVITSmComp2    NVITNWFund2    NBTARegS    NBTSocRes    OppCapApS    OppGlSec3
                                         
0.95%
 
   $ 15,884    2,396    14,345    79    124    979    29,762    1,960
1.00%
 
     2,652       3,503          161    1,409   
1.05%
 
     2,895       593       19    143    244   
1.10%
 
     7,213    4,682    10,937    325    1,347    87    30,541    3,772
1.15%
 
     3,085       4,701       396    260    11,622    105
1.20%
 
     1,360    41    1,331             3,827    27
1.25%
 
     1,482       808       14    229    4,450   
1.30%
 
     990       523          7    7,653   
1.35%
 
     584    116    328          4    1,769    171
1.40%
 
     17,627    440    14,887    29    531    2,197    34,959    2,110
1.45%
 
     1,557       3,083       112    513    5,871   
1.50%
 
     1,552    132    188          215    1,379    397
1.55%
 
     10,905    2,745    12,496       679    735    20,141    271
1.60%
 
     7,480       4,055    173    2,129    995    14,477   
1.65%
 
     1,345    26    1,475          159    4,748   
1.70%
 
     744       3,244          315    2,984   
1.75%
 
     5,553    21    1,794       31    308    3,624    74
1.80%
 
     816       1,467       4    238    1,776   
1.85%
 
     4,749       1,926       196    133    3,454   
1.90%
 
     10       50             2,781   
1.95%
 
           553             1,134   
2.00%
 
     14,743       2,656             2,903   
2.05%
 
     582       1,105       578    371    3,116   
2.10%
 
     37       67             811   
2.15%
 
     1,400                   807   
2.20%
 
     573                426    623   
2.25%
 
     82                   917   
2.30%
 
     137                   642   
(Continued)
 
 
 
65
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
Continued    NVITSmCapVal2      NVITSmComp      NVITSmComp2      NVITNWFund2      NBTARegS      NBTSocRes      OppCapApS        OppGlSec3
                                         
2.35%
 
                    145    2,839   
2.40%
 
                       343   
2.45%
 
                         
2.55%
 
                         
2.60%
 
                       44   
2.70%
 
                         
                                         
Totals
 
   $ 106,037    10,599    86,115    606    6,160    8,620    201,650    8,887
                                         
     OppGlSec4    OppGlSec    OppGlSecS    OppHighInc3    OppHighInc    OppMStSCap    OppMStSCapS    OppMStS
                                         
0.95%
 
   $ 22,931    4,236    15,105    501    3,858    4,332    1,215    33,044
1.00%
 
     8,522       3,936             269    2,676
1.05%
 
     4,626       192          122    109    231
1.10%
 
     11,185    3,345    14,589    772    14,366    5,436    1,773    31,905
1.15%
 
     4,660       11,715       771    61    140    11,876
1.20%
 
     1,414       861       32    184    199    5,354
1.25%
 
     3,688       3,479       634       14    4,300
1.30%
 
     3,702       1,983             317    5,585
1.35%
 
     1,139    26    371       220    45       1,584
1.40%
 
     26,624    65    25,746    153    763    699    675    43,902
1.45%
 
     4,056       1,024             270    4,113
1.50%
 
     66       1,243    5    147       1    1,521
1.55%
 
     19,211    1,324    13,033       267    873    1,143    33,549
1.60%
 
     7,238       5,364             978    16,534
1.65%
 
     2,679       708       41    46       4,698
1.70%
 
     3,265       2,303                7,092
1.75%
 
     3,234       1,935    4    21       111    3,855
1.80%
 
     5,928       7             38    1,627
1.85%
 
     4,879       3,172             338    5,559
1.90%
 
     4                      5,186
1.95%
 
     233       1,847                367
2.00%
 
     3,463       86                312
2.05%
 
     258                   3    2,997
2.10%
 
     1,233       1,091                412
2.15%
 
     244                      283
2.20%
 
     246       30               
2.25%
 
                          829
2.30%
 
                          590
2.35%
 
                         
2.40%
 
                         
2.45%
 
     53                      19
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 144,781    8,996    109,820    1,435    21,120    11,798    7,593    230,000
                                         
     OppStratBdS    PVTGroInc    PVTIntlEq    PVTSmCapV    PVTVoygr    STIIntlEq    STIInvGrBd    STILgCapEq
                                         
0.95%
 
   $ 41,403    1,475    427    947    1,607    5       29
1.00%
 
     7,843    407    189       135         
1.05%
 
     2,595                     
1.10%
 
     31,933    706    4,921    4,280    3,247    1      
1.15%
 
     12,974    554                   412
1.20%
 
     3,053    677       23    69         
1.25%
 
     5,902                     
1.30%
 
     5,142    3,714          738         
1.35%
 
     1,822       263    258    75         
1.40%
 
     52,911    3,411    1,722    160    1,229         
1.45%
 
     6,442    121          1,082          166
1.50%
 
     4,096          500    537         
1.55%
 
     31,611    720    263       1,322       31   
1.60%
 
     14,576    40          26         
1.65%
 
     4,024          58            
1.70%
 
     3,171    12    283       99         
1.75%
 
     14,022    352          390         
1.80%
 
     5,534    30          7          364
(Continued)
 
 
 
66
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
Continued    OppStratBdS    PVTGroInc    PVTIntlEq    PVTSmCapV    PVTVoygr    STIIntlEq    STIInvGrBd    STILgCapEq
                                         
1.85%
 
     9,690    478          15         
1.90%
 
     705             59         
1.95%
 
     6                     
2.00%
 
     970                     
2.05%
 
     381             522         
2.10%
 
     173    34                  
2.15%
 
     207    36                  
2.20%
 
     6                     
2.25%
 
                 257         
2.30%
 
     358    217                  
2.35%
 
                         
2.40%
 
                         
2.45%
 
                         
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 261,550    12,984    8,068    6,226    11,416    6    31    971
                                         
     STILgCapGr    STILgCapVal    STIMidCapEq    STISmCapVal    DrySRGro    VKLCom2    VKLStratGro2    VKUCorPlus2
                                         
0.95%
 
   $ 223    186    147    683    1,138    38,394    5,328    7,619
1.00%
 
                    8,443    915    1,616
1.05%
 
                    3,684    32   
1.10%
 
        1       47    2,104    28,314    6,142    1,245
1.15%
 
        521       21       12,417    5,412    1,924
1.20%
 
                    2,426    1,135    1
1.25%
 
                 26    6,994    3,936   
1.30%
 
                    8,536    2,841    288
1.35%
 
                    516    440   
1.40%
 
              397    312    56,735    16,151    1,488
1.45%
 
     633    271    712          7,410    1,410    562
1.50%
 
     86    111          14    5,616    2,254    74
1.55%
 
                 860    33,442    3,159    10,156
1.60%
 
     943    634    478          12,492    3,135    787
1.65%
 
     102    79    67          9,212    3,575    539
1.70%
 
                    7,535    1,566    22
1.75%
 
                    12,356    4,043    526
1.80%
 
     442    354    378          4,081    630    39
1.85%
 
     160    117    90          3,646    3,253    1,525
1.90%
 
        551             391    465   
1.95%
 
                    662      
2.00%
 
                    92    55   
2.05%
 
                    2,181    1,447    496
2.10%
 
                    245    161    8
2.15%
 
                    2,194       106
2.20%
 
                    364    359   
2.25%
 
                       2,183   
2.30%
 
                    416    162   
2.35%
 
                    100      
2.40%
 
                         
2.45%
 
                    34    21   
2.55%
 
                         
2.60%
 
                         
2.70%
 
                         
                                         
Totals
 
   $ 2,589    2,825    1,872    1,148    4,454    268,928    70,210    29,021
                                         
(Continued)
 
 
 
67
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
           VKUUSRE2
      
0.95%
 
   $ 11,777
1.00%
 
     2,657
1.05%
 
     2,022
1.10%
 
     5,441
1.15%
 
     4,088
1.20%
 
     764
1.25%
 
     1,281
1.30%
 
     2,507
1.35%
 
     389
1.40%
 
     15,978
1.45%
 
     2,569
1.50%
 
     1,179
1.55%
 
     15,197
1.60%
 
     3,314
1.65%
 
     1,380
1.70%
 
     837
1.75%
 
     1,395
1.80%
 
     1,451
1.85%
 
     2,546
1.90%
 
     130
1.95%
 
    
2.00%
 
     295
2.05%
 
     174
2.10%
 
     101
2.15%
 
    
2.20%
 
    
2.25%
 
    
2.30%
 
     766
2.35%
 
    
2.40%
 
    
2.45%
 
    
2.55%
 
    
2.60%
 
    
2.70%
 
    
      
Totals
 
   $ 78,238
      
 
 
 
 
(Continued)
 
 
 
68
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
(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, 2007 and 2006, total transfers to the Account from the fixed account were $27,710,944 and $31,628,852, respectively, and total transfers from the Account to the fixed account were $11,954,587 and $8,963,765, respectively. Transfers from the Account to the fixed account are included in redemptions, and transfers to the Account from the fixed account are included in purchase payments received from contract owners, as applicable, on the accompanying Statements of Changes in Contract Owners’ Equity.
 
For contracts with the Extra Value option, the Company contributed $318 and $0 to the Account in the form of bonus credits to the contract owner accounts for the years ended December 31, 2007 and 2006, respectively. These amounts are included in purchase payments received from contract owners and are credited at the time the related purchase payment from the contract owner is received.
 
For guaranteed minimum death benefits, the Company contributed $147,640 and $535,340 to the Account in the form of additional premium to contract owner accounts for the years ended December 31, 2007 and 2006, respectively. These amounts are included in purchase payments received from contract owners and are credited at time of annuitant death.
 
 
 
 
 
(Continued)
 
 
 
69
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
(4) Financial Highlights
The Company offers several variable annuity products through the Account that have unique combinations of features and fees that are assessed to the contract owner. Differences in fee structures result in a variety of contract expense rates, unit fair values and total returns. The following tabular presentation 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 contract expense rate, investment income ratio and total return for each period in the five-year period ended December 31, 2007. The information is presented as a range of minimum to maximum values based upon product grouping. The range is determined by identifying the lowest and the highest contract expense rate. The unit fair values and total returns related to these identified contract expense rates are also disclosed as a range below. Accordingly, some individual contract amounts may not be within the ranges presented.
 
 
 
     Contract
Expense Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total Return***  
AIM VIF – Basic Value Fund – Series II
 
 
 
2007
 
   0.95% to 2.60%    938,809     $    13.42 to 12.18      $     12,325,218    0.32%      0.40% to  -1.24%  
2006
 
   0.95% to 2.60%    1,147,537       13.37 to 12.33        15,064,760    0.12%    11.87% to 10.06%  
2005
 
   0.95% to 2.60%    1,394,538       11.95 to 11.20        16,429,623    0.00%    4.43% to   2.73%  
2004
 
   0.95% to 2.60%    1,498,502       11.44 to 10.90        16,966,976    0.00%    9.79% to   8.05%  
2003
 
   0.95% to 2.70%    1,352,155       10.42 to 10.07        13,999,545    0.00%    32.03% to 29.67%  
AIM VIF – Capital Appreciation Fund – Series II
 
 
 
2007
 
   0.95% to 2.60%    230,439       12.93 to 11.73      2,909,473    0.00%    10.67% to   8.86%  
2006
 
   0.95% to 2.60%    267,318       11.68 to 10.77      3,059,928    0.00%    5.05% to   3.35%  
2005
 
   0.95% to 2.60%    290,170       11.12 to 10.42      3,175,311    0.00%    7.55% to   5.80%  
2004
 
   0.95% to 2.60%    330,900       10.34 to 9.85      3,375,836    0.00%    5.32% to   3.63%  
2003
 
   0.95% to 2.35%    316,154       9.82 to 9.55      3,077,512    0.00%    27.96% to 26.12%  
AIM VIF – Capital Development Fund – Series I
 
 
 
2007
 
   0.95% to 1.40%    13,747       16.43 to 16.05      223,985    0.00%    9.79% to   9.36%  
2006
 
   0.95% to 1.40%    16,306       14.97 to 14.68      242,377    0.00%    15.42% to 14.97%  
2005
 
   0.95% to 1.40%    16,278       12.97 to 12.77      209,927    0.00%    8.57% to   8.13%  
2004
 
   0.95% to 1.40%    16,085       11.95 to 11.81      191,366    0.00%    14.40% to 13.98%  
2003
 
   0.95% to 1.40%    10,904       10.44 to 10.36      113,560    0.00%    34.07% to 33.45%  
AIM VIF – Capital Development Fund – Series II
 
 
 
2007
 
   0.95% to 2.05%    44,378       15.12 to 19.11      736,261    0.00%    9.49% to   8.34%  
2006
 
   0.95% to 1.80%    32,190       13.81 to 17.80      487,463    0.00%    15.15% to 14.25%  
2005
 
   0.95% to 1.80%    19,368       11.99 to 15.58      252,192    0.00%    8.23% to   7.36%  
2004
 
   0.95% to 1.80%    7,100       11.08 to 14.52      83,456    0.00%    10.78% to 10.19%  (a) (b)
AIM VIF – Core Equity Fund – Series I
 
 
 
2007
 
   0.95% to 1.55%    53,441       11.61 to 13.06      624,683    1.12%    7.08% to   6.50%  
2006
 
   0.95% to 1.55%    57,148       10.85 to 12.26      624,218    1.07%    8.46% to   8.06%  (a) (b)
AIM VIF – Core Equity Fund – Series II
 
 
 
2007
 
   0.95% to 2.35%    167,172       11.57 to 11.31      1,920,889    0.75%    6.85% to   5.39%  
2006
 
   0.95% to 2.35%    272,774       10.83 to 10.73      2,946,445    1.04%    8.29% to   7.27%  (a) (b)
AIM VIF – International Growth Fund – Series II
 
 
 
2007
 
   0.95% to 2.10%    65,393       22.30 to 20.89      1,435,476    0.34%    13.35% to 12.14%  
2006
 
   0.95% to 2.30%    91,233       19.67 to 18.45      1,774,544    0.90%    26.67% to 25.07%  
2005
 
   0.95% to 2.30%    110,019       15.53 to 14.75      1,692,289    0.55%    16.59% to 15.10%  
2004
 
   0.95% to 2.30%    128,816       13.32 to 12.81      1,704,214    0.47%    22.53% to 20.98%  
2003
 
   0.95% to 2.30%    148,422       10.87 to 10.59      1,605,977    0.40%    27.38% to 25.62%  
AIM VIF – Mid Cap Core Equity Fund – Series I
 
 
 
2007
 
   0.95% to 1.55%    53,323       15.58 to 15.09      825,585    0.22%    8.50% to   7.90%  
2006
 
   0.95% to 1.65%    61,022       14.36 to 13.92      871,512    0.95%    10.19% to   9.45%  
2005
 
   0.95% to 1.75%    63,405       13.03 to 12.67      822,685    0.54%    6.60% to   5.79%  
2004
 
   0.95% to 1.75%    59,558       12.23 to 11.98      725,829    0.17%    12.74% to 11.92%  
2003
 
   0.95% to 1.75%    46,999       10.85 to 10.70      508,621    0.00%    26.11% to 25.09%  
AIM VIF – Premier Equity Fund – Series I
 
 
 
2005
 
   0.95% to 1.55%    50,633       11.15 to 9.24      555,376    0.86%    4.65% to   4.05%  
2004
 
   0.95% to 1.55%    49,381       10.65 to 8.88      517,581    0.54%    4.77% to   4.19%  
2003
 
   0.95% to 1.75%    35,260       10.17 to 8.48      349,853    0.39%    23.89% to 22.85%  
AIM VIF – Premier Equity Fund – Series II
 
 
 
2005
 
   0.95% to 2.35%    210,269       9.93 to 9.39      2,055,863    0.61%    4.36% to   2.92%  
2004
 
   0.95% to 2.35%    227,049       9.51 to 9.13      2,135,771    0.33%    4.49% to   3.07%  
2003
 
   0.95% to 2.35%    204,961       9.11 to 8.86      1,852,060    0.30%    23.64% to 21.85%  
(Continued)
 
 
 
70
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
 
AllianceBernstein VPS – Growth and Income Portfolio – Class B
 
 
 
2007
 
   0.95% to 2.40%    604,644     $    14.50 to 13.32      $     8,564,579    1.22%    3.86% to    2.39%  
2006
 
   0.95% to 2.40%    735,403       13.96 to 13.01        10,073,140    1.14%    15.88% to  14.23%  
2005
 
   0.95% to 2.40%    845,191       12.05 to 11.39        10,034,933    1.27%    3.61% to    2.13%  
2004
 
   0.95% to 2.40%    878,709       11.63 to 11.15        10,112,127    0.76%    10.17% to    8.64%  
2003
 
   0.95% to 2.70%    742,495       10.56 to 10.21        7,788,932    0.82%    30.93% to  28.61%  
AllianceBernstein VPS – International Value Portfolio – Class B
 
 
 
2007
 
   0.95% to 2.40%    205,466       26.88 to 24.75        5,422,580    0.99%    4.57% to    3.12%  
2006
 
   0.95% to 2.40%    271,312       25.70 to 24.00        6,873,247    1.34%    33.84% to  32.03%  
2005
 
   0.95% to 2.40%    323,653       19.20 to 18.18        6,148,550    0.48%    15.42% to  13.83%  
2004
 
   0.95% to 2.40%    380,692       16.64 to 15.97        6,281,818    0.46%    23.70% to  22.03%  
2003
 
   0.95% to 2.45%    465,461       13.45 to 13.07        6,221,573    0.34%    42.58% to  40.47%  
AllianceBernstein VPS – Large Cap Growth Portfolio – Class B
 
 
 
2007
 
   0.95% to 2.40%    235,240       12.29 to 11.28        2,827,412    0.00%    12.53% to  10.92%  
2006
 
   0.95% to 2.40%    261,485       10.93 to 10.17        2,803,216    0.00%    -1.58% to   -2.98%  
2005
 
   0.95% to 2.40%    324,021       11.10 to 10.48        3,541,590    0.00%    13.75% to  12.14%  
2004
 
   0.95% to 2.40%    318,337       9.76 to 9.35        3,071,305    0.00%    7.32% to    5.80%  
2003
 
   0.95% to 2.30%    309,330       9.09 to 8.85        2,794,786    0.00%    22.20% to  20.49%  
AllianceBernstein VPS – Small/Mid Cap Value Portfolio – Class B
 
 
 
2007
 
   0.95% to 2.40%    610,638       17.94 to 16.50        10,745,008    0.77%    0.56% to   -0.86%  
2006
 
   0.95% to 2.40%    750,612       17.84 to 16.65        13,182,370    0.24%    13.12% to  11.52%  
2005
 
   0.95% to 2.40%    865,217       15.77 to 14.93        13,486,108    0.56%    5.62% to    4.14%  
2004
 
   0.95% to 2.40%    898,836       14.94 to 14.33        13,302,384    0.08%    17.94% to  16.34%  
2003
 
   0.95% to 2.40%    859,724       12.66 to 12.32        10,816,970    0.49%    39.55% to  37.54%  
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares
 
 
 
2007
 
   0.95% to 1.65%    64,660       16.02 to 14.32        1,014,236    0.41%    -1.60% to   -2.26%  
2006
 
   0.95% to 1.65%    75,679       16.28 to 14.65        1,210,663    0.41%    13.33% to  12.59%  
2005
 
   0.95% to 1.75%    78,129       14.37 to 12.97        1,103,814    0.00%    6.22% to    5.43%  
2004
 
   0.95% to 1.75%    70,029       13.53 to 12.30        938,233    0.46%    20.73% to  19.88%  
2003
 
   0.95% to 1.75%    45,605       11.21 to 10.26        507,629    0.26%    36.47% to  35.35%  
Dreyfus Stock Index Fund, Inc. – Initial Shares
 
 
 
2007
 
   0.95% to 1.65%    178,617       14.61 to 11.57        2,450,522    1.75%    4.25% to    3.57%  
2006
 
   0.95% to 1.60%    185,956       14.02 to 11.20        2,458,545    1.65%    14.40% to  13.70%  
2005
 
   0.95% to 1.60%    196,318       12.25 to   9.85        2,280,067    1.64%    3.70% to    3.06%  
2004
 
   0.95% to 1.60%    174,082       11.81 to   9.56        1,983,446    1.98%    9.59% to    8.95%  
2003
 
   0.95% to 1.55%    129,158       10.78 to   8.79        1,343,041    1.59%    27.15% to  26.36%  
Dreyfus Stock Index Fund, Inc. – Service Shares
 
 
 
2007
 
   0.95% to 2.35%    296,978       16.32 to 15.34        4,773,801    1.51%    3.99% to    2.57%  
2006
 
   0.95% to 2.35%    341,893       15.69 to 14.96        5,302,944    1.37%    14.11% to  12.55%  
2005
 
   0.95% to 2.35%    360,175       13.75 to 13.29        4,915,059    1.41%    3.44% to    2.02%  
2004
 
   0.95% to 2.35%    363,953       13.29 to 13.02        4,817,048    1.78%    9.30% to    7.84%  
2003
 
   0.95% to 2.35%    159,827       12.16 to 12.08        1,941,207    0.84%    21.60% to 20.50%  (a) (b)
Federated IS – American Leaders Fund II – Service Shares
 
 
 
2007
 
   0.95% to 2.25%    177,540       11.83 to 10.99        2,064,880    1.30%    -10.72% to -11.87%  
2006
 
   0.95% to 2.25%    209,203       13.25 to 12.47        2,731,670    1.25%    15.38% to  13.91%  
2005
 
   0.95% to 2.25%    237,603       11.48 to 10.95        2,697,263    1.25%    3.78% to    2.46%  
2004
 
   0.95% to 2.25%    242,829       11.07 to 10.68        2,663,199    1.28%    8.46% to    7.12%  
2003
 
   0.95% to 2.70%    203,311       10.20 to   9.90        2,062,876    0.47%    26.11% to  23.86%  
Federated IS – Capital Appreciation Fund II – Service Shares
 
 
 
2007
 
   0.95% to 2.30%    192,620       13.34 to 12.35        2,518,355    0.57%    8.59% to    7.18%  
2006
 
   0.95% to 2.30%    213,327       12.28 to 11.53        2,577,261    0.54%    14.68% to  13.16%  
2005
 
   0.95% to 2.30%    236,385       10.71 to 10.19        2,499,084    0.80%    0.73% to   -0.61%  
2004
 
   0.95% to 2.30%    266,015       10.63 to 10.25        2,800,440    0.46%    6.09% to    4.71%  
2003
 
   0.95% to 2.25%    231,866       10.02 to   9.80        2,309,010    0.19%    22.70% to  21.07%  
Federated IS – High Income Bond II – Service Shares
 
 
 
2007
 
   0.95% to 2.10%    733,907       14.87 to 13.91        10,679,523    7.88%    2.20% to    1.05%  
2006
 
   0.95% to 2.10%    875,905       14.55 to 13.77        12,509,632    8.16%    9.52% to    8.28%  
2005
 
   0.95% to 2.10%    944,507       13.28 to 12.71        12,361,109    7.61%    1.30% to    0.16%  
2004
 
   0.95% to 2.10%    1,065,920       13.11 to 12.69        13,837,890    6.77%    9.11% to    7.91%  
2003
 
   0.95% to 2.10%    989,694       12.02 to 11.76        11,817,284    5.07%    20.64% to  19.30%  
(Continued)
 
 
 
71
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense

Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
Federated IS – International Equity Fund II
 
2007
 
   0.95% to 1.40%    14,935     $    15.80 to 15.43      $     234,292    0.18%    8.50% to   8.07%
2006
 
   0.95% to 1.40%    15,736       14.56 to 14.28        227,795    0.19%    17.76% to 17.32%
2005
 
   0.95% to 1.40%    15,775       12.37 to 12.17        194,159    0.00%    8.04% to   7.60%
2004
 
   0.95% to 1.40%    18,034       11.45 to 11.31        205,713    0.00%    12.98% to 12.57%
2003
 
   0.95% to 1.40%    14,585       10.13 to 10.05        147,361    0.00%    30.60% to 29.96%
Federated IS – Mid Cap Growth Strategies Fund II
 
2007
 
   0.95% to 1.65%    47,645       18.07 to 17.41        851,505    0.00%    16.89% to 16.14%
2006
 
   0.95% to 1.65%    55,039       15.46 to 14.99        843,482    0.00%    7.21% to   6.51%
2005
 
   0.95% to 1.65%    54,951       14.42 to 14.07        787,053    0.00%    11.64% to 10.92%
2004
 
   0.95% to 1.65%    56,524       12.92 to 12.69        726,618    0.00%    14.33% to 13.63%
2003
 
   0.95% to 1.65%    34,404       11.30 to 11.17        387,498    0.00%    38.75% to 37.78%
Federated IS – Quality Bond Fund II – Primary Shares
 
2007
 
   0.95% to 1.65%    276,522       12.19 to 12.38        3,362,257    4.59%    4.38% to   3.66%
2006
 
   0.95% to 1.65%    279,545       11.68 to 11.94        3,265,829    3.95%    3.17% to   2.45%
2005
 
   0.95% to 1.65%    295,088       11.32 to 11.65        3,346,301    3.71%    0.34% to  -0.36%
2004
 
   0.95% to 1.65%    301,028       11.28 to 11.70        3,406,732    3.89%    2.64% to   1.93%
2003
 
   0.95% to 1.65%    229,888       10.99 to 11.47        2,540,248    2.81%    3.65% to   2.96%
Federated IS – Quality Bond Fund II – Service Shares
 
2007
 
   0.95% to 2.20%    1,014,677       12.16 to 11.33        12,109,722    4.72%    4.14% to   2.84%
2006
 
   0.95% to 2.20%    1,265,396       11.68 to 11.02        14,551,816    3.76%    2.94% to   1.65%
2005
 
   0.95% to 2.20%    1,316,031       11.35 to 10.84        14,750,616    3.61%    0.03% to  -1.22%
2004
 
   0.95% to 2.20%    1,438,086       11.34 to 10.97        16,160,311    4.05%    2.34% to   1.06%
2003
 
   0.95% to 2.15%    1,371,824       11.08 to 10.87        15,115,571    2.60%    3.45% to   2.23%
Fidelity® VIP – Equity-Income Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    1,310,249       20.51 to 16.95        26,437,845    1.68%    0.20% to   0.00%
2006
 
   1.30% to 1.50%    1,675,332       20.47 to 16.95        33,754,419    3.25%    18.64% to 18.40%
2005
 
   1.30% to 1.50%    2,268,978       17.26 to 14.31        38,463,175    1.72%    4.49% to   4.28%
2004
 
   1.30% to 1.50%    2,896,630       16.51 to 13.73        46,980,762    1.62%    10.08% to   9.86%
2003
 
   1.30% to 1.50%    3,424,309       15.00 to 12.49        50,582,699    1.77%    28.64% to 28.38%
Fidelity® VIP – Equity-Income Portfolio – Service Class
 
2007
 
   0.95% to 1.80%    1,342,707       16.72 to 14.44        21,651,322    1.52%    0.45% to  -0.35%
2006
 
   0.95% to 1.80%    1,848,034       16.65 to 14.49        29,848,200    3.06%    18.94% to 17.99%
2005
 
   0.95% to 1.80%    2,510,246       13.99 to 12.28        34,352,955    1.60%    4.76% to   3.90%
2004
 
   0.95% to 1.75%    2,974,661       13.36 to 11.85        39,071,642    1.43%    10.32% to   9.53%
2003
 
   0.95% to 1.75%    3,113,981       12.11 to 10.82        37,200,996    1.62%    28.98% to 27.93%
Fidelity® VIP – Equity-Income Portfolio – Service Class 2
 
2007
 
   0.95% to 2.60%    3,198,721       14.81 to 11.94        44,920,124    1.56%    0.31% to  -1.31%
2006
 
   0.95% to 2.60%    3,777,054       14.77 to 12.10        52,827,666    2.90%    18.79% to 16.88%
2005
 
   0.95% to 2.60%    4,235,309       12.43 to 10.35        49,887,171    1.44%    4.57% to   2.87%
2004
 
   0.95% to 2.60%    4,658,436       11.89 to 10.06        52,594,896    1.33%    10.18% to   8.43%
2003
 
   0.95% to 2.55%    4,300,709       10.79 to   9.30        44,282,602    1.31%    28.79% to 26.70%
Fidelity® VIP – Growth Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    1,220,889       19.74 to 16.69        23,620,044    0.85%    25.31% to 25.05%
2006
 
   1.30% to 1.50%    1,587,272       15.76 to 13.34        24,502,919    0.43%    5.46% to   5.25%
2005
 
   1.30% to 1.50%    2,270,865       14.94 to 12.68        33,250,199    0.53%    4.43% to   4.22%
2004
 
   1.30% to 1.50%    3,223,167       14.31 to 12.17        45,294,082    0.29%    2.03% to   1.83%
2003
 
   1.30% to 1.50%    4,218,568       14.02 to 11.95        58,271,608    0.27%    31.12% to 30.86%
Fidelity® VIP – Growth Portfolio – Service Class
 
2007
 
   0.95% to 1.70%    1,451,639       16.75 to 11.35        23,999,276    0.65%    25.66% to 24.79%
2006
 
   0.95% to 1.70%    2,071,785       13.33 to   9.10        26,927,897    0.31%    5.72% to   4.96%
2005
 
   0.95% to 1.70%    3,024,143       12.61 to   8.67        37,295,902    0.40%    4.67% to   3.90%
2004
 
   0.95% to 1.70%    3,820,516       12.04 to   8.34        45,077,084    0.17%    2.28% to   1.57%
2003
 
   0.95% to 1.70%    4,386,812       11.77 to   8.21        50,646,486    0.19%    31.52% to 30.48%
Fidelity® VIP – Growth Portfolio – Service Class 2
 
2007
 
   0.95% to 2.45%    2,980,613       8.84 to   9.95        27,521,681    0.41%    25.45% to 23.62%
2006
 
   0.95% to 2.45%    3,550,271       7.04 to   8.05        26,931,305    0.17%    5.56% to   4.01%
2005
 
   0.95% to 2.45%    4,427,606       6.67 to   7.74        32,024,884    0.27%    4.50% to   2.94%
2004
 
   0.95% to 2.45%    5,106,094       6.39 to   7.52        35,419,888    0.13%    2.14% to   0.66%
2003
 
   0.95% to 2.45%    5,503,924       6.25 to   7.47        37,423,355    0.11%    31.28% to 29.25%
(Continued)
 
 
 
72
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense Rate*
   Units    Unit Fair Value   Contract
Owners’ Equity
   Investment
Income
Ratio**
  Total
Return***
 
Fidelity® VIP – High Income Portfolio – Initial Class
 
 
 
2007
 
   1.30% to 1.50%    1,346,504     $   12.50 to 10.44     $ 16,560,408      7.01%   1.44% to   1.24%  
2006
 
   1.30% to 1.50%    1,918,167     12.32 to 10.31       23,269,712      6.62%   9.79% to   9.57%  
2005
 
   1.30% to 1.50%    2,687,632     11.22 to   9.41       29,688,053    14.55%   1.37% to   1.16%  
2004
 
   1.30% to 1.50%    3,630,254     11.07 to   9.31       39,524,939      8.08%   8.17% to   7.95%  
2003
 
   1.30% to 1.50%    4,594,500    10.23 to   8.62       46,434,695      6.96%   25.61% to 25.36%  
Fidelity® VIP – High Income Portfolio – Initial Class R
 
 
 
2007
 
   1.40% to 1.45%    183,544     9.80 to   9.79       1,798,322    16.79%   -2.02% to -2.06%  (a) (b)
Fidelity® VIP – High Income Portfolio – Service Class
 
 
 
2007
 
   0.95% to 1.50%    788,760     10.50 to   9.86       8,254,967      6.81%   1.68% to   1.11%  
2006
 
   0.95% to 1.50%    1,155,293     10.33 to   9.75       11,904,498      6.18%   10.12% to   9.51%  
2005
 
   0.95% to 1.50%    1,819,246     9.38 to   8.91       17,032,691    14.40%   1.55% to   0.99%  
2004
 
   0.95% to 1.50%    2,423,282     9.24 to   9.57       22,349,842      8.19%   8.43% to   7.89%  
2003
 
   0.95% to 1.50%    2,810,258     8.52 to   8.18       23,909,014      7.08%   25.76% to 25.07%  
Fidelity® VIP – High Income Portfolio – Service Class 2
 
 
 
2007
 
   0.95% to 2.25%    1,259,532     11.06 to   9.15       13,218,372      6.75%   1.56% to   0.26%  
2006
 
   0.95% to 2.25%    1,867,791     10.89 to   9.13       19,198,055      7.42%   9.97% to   8.57%  
2005
 
   0.95% to 2.25%    2,043,436     9.90 to   8.41       19,137,290    14.45%   1.34% to   0.04%  
2004
 
   0.95% to 2.30%    2,341,459     9.77 to   8.38       21,685,188      7.89%   8.34% to   6.93%  
2003
 
   0.95% to 2.25%    2,404,278     9.02 to   7.85       20,602,230      5.22%   25.55% to 23.99%  
Fidelity® VIP – High Income Portfolio – Service Class 2R
 
 
 
2007
 
   0.95% to 2.05%    229,788     9.83 to   9.76       2,254,241    16.83%   -1.68% to  -2.41%  (a) (b)
Fidelity® VIP – High Income Portfolio – Service Class R
 
 
 
2007
 
   0.95% to 1.20%    55,900     9.82 to   9.81       549,020    16.34%   -1.77% to   1.94%  (a) (b)
Fidelity® VIP – Money Market Portfolio – Initial Class
 
 
 
2007
 
   0.95% to 1.95%    1,692,808     13.14 to 11.57       22,140,604      4.91%   4.18% to   3.14%  
2006
 
   0.95% to 1.95%    2,404,784     12.62 to 11.22       30,299,680      4.92%   3.90% to   2.87%  
2005
 
   0.95% to 1.95%    2,635,345     12.14 to 10.91       31,983,967      3.08%   2.07% to   1.05%  
2004
 
   0.95% to 1.95%    3,218,350     11.90 to 10.80       38,382,444      1.14%   0.25% to -0.76%  
2003
 
   0.95% to 1.95%    4,532,670     11.87 to 10.88       54,093,344      1.01%   0.04% to -0.96%  
Fidelity® VIP – Overseas Portfolio – Initial Class
 
 
 
2007
 
   1.30% to 1.50%    1,197,734     22.32 to 18.68       26,404,069      3.32%   15.78% to 15.54%  
2006
 
   1.30% to 1.50%    1,500,483     19.28 to 16.17       28,566,943      0.92%   16.55% to 16.31%  
2005
 
   1.30% to 1.50%    1,847,746     16.54 to 13.90       30,143,611      0.65%   17.50% to 17.27%  
2004
 
   1.30% to 1.50%    2,254,225     14.08 to 11.85       31,347,848      1.21%   12.16% to 11.93%  
2003
 
   1.30% to 1.50%    2,717,889     12.55 to 10.59       33,779,679      0.81%   41.51% to 41.22%  
Fidelity® VIP – Overseas Portfolio – Service Class
 
 
 
2007
 
   0.95% to 1.70%    448,229     18.76 to 16.53       8,348,164      3.09%   16.09% to 15.30%  
2006
 
   0.95% to 1.70%    661,770     16.16 to 14.34       10,551,954      0.84%   16.83% to 16.05%  
2005
 
   0.95% to 1.70%    852,469     13.83 to 12.35       11,661,213      0.57%   17.84% to 17.02%  
2004
 
   0.95% to 1.70%    1,061,644     11.74 to 10.56       12,340,609      1.13%   12.41% to 11.68%  
2003
 
   0.95% to 1.70%    1,338,806     10.44 to   9.45       13,852,488      0.71%   41.85% to 40.74%  
Fidelity®VIP – Overseas Portfolio – Service Class 2
 
 
 
2007
 
   0.95% to 2.30%    587,205     16.35 to 14.52       7,889,062      2.92%   16.03% to 14.44%  
2006
 
   0.95% to 2.30%    747,944     11.28 to 12.68       8,996,238      0.73%   16.66% to 15.17%  
2005
 
   0.95% to 2.30%    886,223     9.67 to 11.01       9,172,729      0.51%   17.66% to 16.12%  
2004
 
   0.95% to 2.30%    1,049,600     8.22 to   9.48       9,328,152      1.08%   12.24% to 10.83%  
2003
 
   0.95% to 2.30%    1,264,290     7.32 to   8.56       10,016,450      0.44%   41.68% to 39.72%  
Fidelity®VIP – Overseas Portfolio – Service Class 2 R
 
 
 
2007
 
   0.95% to 2.55%    473,983     17.60 to 24.25       9,315,988      3.11%   15.94% to 14.15%  
2006
 
   0.95% to 2.55%    366,651     15.18 to 21.24       6,392,870      0.67%   16.70% to 14.92%  
2005
 
   0.95% to 2.30%    303,978     13.01 to 18.61       4,412,376      0.42%   17.62% to 16.08%  
2004
 
   0.95% to 2.30%    197,038     11.06 to 16.03       2,424,902      0.00%   10.63% to   9.68%  (a) (b)
Fidelity® VIP – Overseas Portfolio – Service Class R
 
 
 
2007
 
   0.95% to 1.55%    79,453     17.71 to 25.60       1,417,786      3.20%   16.11% to 15.49%  
2006
 
   0.95% to 1.55%    84,632     15.25 to 22.16       1,309,809      0.85%   16.83% to 16.23%  
2005
 
   0.95% to 1.55%    98,573     13.05 to 19.07       1,299,368      0.59%   17.80% to 17.15%  
2004
 
   0.95% to 1.45%    100,201     11.08 to 11.04       1,114,963      0.00%   10.81% to 10.44%  (a) (b)
(Continued)
 
 
 
73
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense Rate*
   Units    Unit Fair Value    Contract
Owners’ Equity
   Investment
Income
Ratio**
  Total Return***
Fidelity® VIP – Value Portfolio – Service Class
 
2007
 
   0.95% to 1.10%    36,865     $  13.80 to 13.66      $ 507,940    0.53%   1.02% to   0.87%
2006
 
   0.95% to 1.10%    42,221       13.66 to 13.55        575,969    0.62%   13.47% to 13.30%
2005
 
   0.95% to 1.10%    70,438       12.04 to 11.96        847,039    0.44%   5.08% to   4.92%
2004
 
   0.95% to 1.05%    75,284       11.46 to 11.42        861,783    1.05%   10.02% to   9.91%
2003
 
   0.95% to 1.05%    61,973       10.41 to 10.39        644,929    0.33%   32.80% to 32.67%
Fidelity® VIP – Value Portfolio – Service Class 2
 
2007
 
   0.95% to 1.85%    87,802       13.66 to 12.89        1,178,106    0.39%   0.89% to   0.03%
2006
 
   0.95% to 1.85%    107,559       13.54 to 12.88        1,427,375    0.69%   13.32% to 12.35%
2005
 
   0.95% to 1.85%    125,609       11.95 to 11.47        1,476,384    0.33%   4.83% to   3.93%
2004
 
   0.95% to 1.95%    144,568       11.40 to 10.99        1,626,826    0.93%   9.87% to   8.77%
2003
 
   0.95% to 1.95%    153,119       10.38 to 10.11        1,573,358    0.33%   32.48% to 31.14%
Fidelity® VIP II – Asset Manager Growth Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    171,354       16.82 to 14.12        2,833,817    4.23%   17.41% to 17.17%
2006
 
   1.30% to 1.50%    234,079       14.32 to 12.05        3,284,121    2.18%   5.60% to   5.39%
2005
 
   1.30% to 1.50%    313,221       13.56 to 11.43        4,171,440    2.64%   2.54% to   2.34%
2004
 
   1.30% to 1.50%    450,386       13.23 to 11.17        5,868,849    2.36%   4.61% to   4.39%
2003
 
   1.30% to 1.50%    533,547       12.64 to 10.70        6,658,925    2.92%   21.73% to 21.49%
Fidelity® VIP II – Asset Manager Growth Portfolio – Service Class
 
2007
 
   0.95% to 1.50%    187,562       13.98 to 11.25        2,604,413    4.01%   17.74% to 17.08%
2006
 
   0.95% to 1.65%    237,859       11.88 to   9.89        2,801,709    2.13%   5.84% to   5.12%
2005
 
   0.95% to 1.65%    318,342       11.22 to   9.41        3,546,175    2.39%   2.81% to   2.10%
2004
 
   0.95% to 1.65%    396,705       10.91 to   9.22        4,297,283    2.30%   4.85% to   4.16%
2003
 
   0.95% to 1.65%    461,854       10.41 to   8.85        4,778,009    2.84%   21.98% to 21.13%
Fidelity® VIP II – Asset Manager Growth Portfolio – Service Class 2
 
2007
 
   0.95% to 2.00%    155,616       11.66 to 10.63        1,682,140    3.79%   17.53% to 16.28%
2006
 
   0.95% to 2.00%    218,687       9.20 to   9.14        2,047,291    1.88%   5.71% to   4.62%
2005
 
   0.95% to 2.00%    262,690       8.70 to   8.74        2,335,451    2.21%   2.58% to   1.52%
2004
 
   0.95% to 2.00%    358,223       8.48 to   8.60        3,122,330    2.30%   4.63% to   3.57%
2003
 
   0.95% to 2.00%    411,988       8.11 to   8.31        3,444,963    2.70%   21.86% to 20.58%
Fidelity® VIP II – Asset Manager Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    260,245       17.65 to 15.14        4,531,540    5.99%   13.99% to 13.76%
2006
 
   1.30% to 1.50%    302,401       15.48 to 13.31        4,617,104    2.84%   5.93% to   5.71%
2005
 
   1.30% to 1.50%    408,397       14.62 to 12.59        5,878,062    3.04%   2.70% to   2.49%
2004
 
   1.30% to 1.50%    615,773       14.23 to 12.28        8,633,926    2.91%   4.10% to   3.89%
2003
 
   1.30% to 1.50%    770,719       13.67 to 11.82        10,386,174    3.65%   16.44% to 16.21%
Fidelity® VIP II – Asset Manager Portfolio – Service Class
 
2007
 
   0.95% to 1.50%    227,600       15.12 to 12.53        3,429,218    5.54%   14.26% to 13.62%
2006
 
   0.95% to 1.50%    313,691       13.23 to 11.03        4,128,448    2.89%   6.22% to   5.63%
2005
 
   0.95% to 1.50%    457,159       12.46 to 10.44        5,674,106    2.70%   2.94% to   2.37%
2004
 
   0.95% to 1.50%    595,788       12.10 to 10.20        7,157,568    2.78%   4.36% to   3.78%
2003
 
   0.95% to 1.50%    685,066       11.60 to   9.82        7,895,483    3.53%   16.79% to 16.14%
Fidelity® VIP II – Asset Manager Portfolio – Service Class 2
 
2007
 
   0.95% to 1.70%    241,655       12.23 to 12.18        2,948,057    5.41%   14.07% to 13.26%
2006
 
   0.95% to 1.70%    328,594       10.72 to 10.75        3,531,528    2.70%   6.12% to   5.35%
2005
 
   0.95% to 1.75%    415,041       10.10 to   9.65        4,216,826    2.66%   2.80% to   1.97%
2004
 
   0.95% to 2.05%    499,428       9.83 to   9.33        4,955,687    2.58%   4.18% to   3.02%
2003
 
   0.95% to 2.05%    546,660       9.43 to   9.05        5,227,561    3.38%   16.55% to 15.25%
Fidelity® VIP II – Contrafund® Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    1,721,497       28.17 to 23.39        47,800,612    0.85%   16.06% to 15.82%
2006
 
   1.30% to 1.50%    2,291,778       24.27 to 20.20        54,794,040    1.26%   10.27% to 10.05%
2005
 
   1.30% to 1.50%    3,010,456       22.01 to 18.35        65,268,259    0.30%   15.42% to 15.19%
2004
 
   1.30% to 1.50%    3,579,619       19.07 to 15.93        67,339,563    0.35%   13.98% to 13.75%
2003
 
   1.30% to 1.50%    4,203,351       16.73 to 14.01        69,483,080    0.46%   26.80% to 26.54%
Fidelity® VIP II – Contrafund® Portfolio – Service Class
 
2007
 
   0.95% to 1.85%    1,484,578       23.99 to 16.30        34,282,899    0.74%   16.39% to 15.32%
2006
 
   0.95% to 1.85%    2,072,706       20.62 to 14.13        41,231,144    1.08%   10.53% to   9.53%
2005
 
   0.95% to 1.85%    2,778,895       18.65 to 12.90        50,466,340    0.20%   15.74% to 14.69%
2004
 
   0.95% to 1.85%    3,159,087       16.12 to 11.25        49,704,454    0.25%   14.24% to 13.21%
2003
 
   0.95% to 1.85%    3,374,699       14.11 to   9.94        46,777,335    0.35%   27.13% to 25.98%
(Continued)
 
 
 
74
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
Fidelity® VIP II – Contrafund® Portfolio – Service Class 2
 
2007
 
   0.95% to 2.60%    3,860,697     $    15.41 to 15.08      $            60,288,317    0.72%      16.18% to  14.31%
2006
 
   0.95% to 2.60%    4,412,906     13.27 to 13.19      59,953,597    0.99%      10.38% to    8.61%
2005
 
   0.95% to 2.60%    4,727,922     12.02 to 12.14      58,493,126    0.12%      15.54% to  13.70%
2004
 
   0.95% to 2.60%    4,843,433     10.40 to 10.68      52,031,404    0.20%      14.07% to  12.26%
2003
 
   0.95% to 2.70%    4,294,206     9.12 to   9.47      40,584,160    0.23%      26.98% to  24.75%
Fidelity® VIP II – Index 500 Portfolio – Initial Class
 
2007
 
   0.95% to 2.00%    3,062,942     15.20 to 11.22      49,555,131    3.58%      4.43% to    3.38%
2006
 
   0.95% to 2.00%    4,123,755     14.55 to 10.85      64,044,703    1.85%      14.63% to  13.47%
2005
 
   0.95% to 2.00%    5,719,281     12.70 to   9.56      77,208,276    1.86%      3.83% to    2.77%
2004
 
   0.95% to 2.00%    7,217,333     12.23 to   9.30      94,669,988    1.33%      9.56% to    8.48%
2003
 
   0.95% to 2.05%    8,294,373     11.16 to   7.89      100,019,978    1.46%      27.19% to  25.78%
Fidelity® VIP II – Investment Grade Bond Portfolio – Initial Class
 
2007
 
   0.95% to 2.00%    2,002,429     15.80 to 13.44      31,971,786    4.60%      3.35% to    2.27%
2006
 
   0.95% to 2.00%    2,736,447     15.29 to 13.14      42,212,416    4.35%      3.36% to    2.28%
2005
 
   0.95% to 2.00%    3,776,974     14.79 to 12.84      56,436,283    3.90%      1.22% to    0.17%
2004
 
   0.95% to 1.95%    4,666,693     14.61 to 12.86      69,232,888    4.44%      3.46% to    2.44%
2003
 
   0.95% to 1.95%    6,033,702     14.12 to 12.56      87,046,104    4.37%      4.20% to    3.19%
Fidelity® VIP III – Aggressive Growth Portfolio – Service Class
 
2007
 
   0.95% to 1.20%    6,498     12.65 to 12.43      82,132    0.00%      16.39% to  16.09%
2006
 
   0.95% to 1.40%    6,594     10.87 to 10.57      71,435    0.00%      7.40% to    6.95%
2005
 
   0.95% to 1.40%    17,951     10.12 to   9.89      181,331    0.00%      6.96% to    6.50%
2004
 
   0.95% to 1.40%    18,556     9.46 to   9.28      175,311    0.00%      9.18% to    8.77%
2003
 
   0.95% to 1.40%    25,870     8.67 to   8.54      223,991    0.00%      29.24% to  28.62%
Fidelity® VIP III – Aggressive Growth Portfolio – Service Class 2
 
2007
 
   0.95% to 2.35%    271,076     12.41 to 11.24      3,267,759    0.00%      16.20% to  14.63%
2006
 
   0.95% to 2.35%    285,349     10.68 to   9.81      2,969,741    0.00%      7.27% to    5.80%
2005
 
   0.95% to 2.35%    315,380     9.96 to   9.27      3,074,420    0.00%      6.72% to    5.25%
2004
 
   0.95% to 2.35%    349,870     9.33 to   8.81      3,209,635    0.00%      8.92% to    7.46%
2003
 
   0.95% to 2.25%    319,322     8.57 to   8.22      2,702,200    0.00%      29.05% to  27.32%
Fidelity® VIP III – Balanced Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    1,370,830     21.85 to 14.94      29,485,545    3.34%      7.62% to    7.40%
2006
 
   1.30% to 1.50%    1,656,632     20.30 to 13.91      33,163,410    2.15%      10.26% to  10.04%
2005
 
   1.30% to 1.50%    2,121,755     18.41 to 12.64      38,518,391    2.75%      4.39% to    4.18%
2004
 
   1.30% to 1.50%    2,753,646     17.64 to 12.13      47,900,055    2.14%      4.10% to    3.89%
2003
 
   1.30% to 1.50%    3,444,593     16.94 to 11.68      57,654,257    2.98%      16.19% to  15.96%
Fidelity® VIP III – Balanced Portfolio – Service Class
 
2007
 
   0.95% to 1.70%    583,860     14.82 to 12.27      8,617,838    3.01%      7.86% to    7.10%
2006
 
   0.95% to 1.70%    790,203     13.74 to 11.46      10,769,761    2.19%      10.58% to    9.80%
2005
 
   0.95% to 1.70%    1,191,624     12.43 to 10.44      14,695,826    2.58%      4.61% to    3.84%
2004
 
   0.95% to 1.70%    1,481,618     11.88 to 10.05      17,485,819    2.01%      4.42% to    3.67%
2003
 
   0.95% to 1.70%    1,671,579     11.38 to   9.69      18,897,936    2.76%      16.41% to  15.55%
Fidelity® VIP III – Balanced Portfolio – Service Class 2
 
2007
 
   0.95% to 2.00%    566,382     12.68 to 11.18      6,922,053    3.11%      7.68% to    6.59%
2006
 
   0.95% to 2.00%    703,602     11.78 to 10.49      7,936,808    1.89%      10.44% to    9.32%
2005
 
   0.95% to 2.00%    837,180     10.67 to   9.59      8,561,975    2.43%      4.53% to    3.44%
2004
 
   0.95% to 2.00%    986,170     10.20 to   9.28      9,687,488    1.87%      4.15% to    3.09%
2003
 
   0.95% to 2.00%    1,107,853     9.80 to   9.00      10,480,979    2.55%      16.30% to  15.09%
Fidelity® VIP III – Dynamic Capital Appreciation Portfolio – Service Class
 
2007
 
   0.95% to 1.20%    41,546     10.11 to   9.93      419,802    0.20%      5.90% to    5.64%
2006
 
   0.95% to 1.45%    71,423     9.55 to   9.01      680,433    0.38%      12.91% to  12.44%
2005
 
   0.95% to 1.45%    80,221     8.45 to   8.02      676,589    0.00%      19.83% to  19.28%
2004
 
   0.95% to 1.45%    67,631     7.06 to   6.72      476,398    0.00%      0.31% to   -0.16%
2003
 
   0.95% to 1.45%    97,835     7.03 to   6.73      687,328    0.00%      23.99% to  23.39%
Fidelity® VIP III – Dynamic Capital Appreciation Portfolio – Service Class 2
 
2007
 
   0.95% to 2.35%    399,586     9.99 to   8.79      3,867,673    0.11%      5.71% to    4.27%
2006
 
   0.95% to 2.35%    468,828     9.45 to   8.43      4,268,269    0.23%      12.74% to  11.24%
2005
 
   0.95% to 2.35%    528,257     8.39 to   7.58      4,271,690    0.00%      19.53% to  17.90%
2004
 
   0.95% to 2.35%    538,971     7.02 to   6.43      3,665,367    0.00%      0.32% to   -1.06%
2003
 
   0.95% to 2.25%    571,779     6.99 to   6.52      3,888,328    0.00%      23.73% to  22.13%
(Continued)
 
 
 
75
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense

Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
Fidelity® VIP III – Growth & Income Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    644,978     $  20.13 to 16.60      $ 12,774,324    1.83%    10.66% to 10.43%
2006
 
   1.30% to 1.50%    844,127       18.19 to 15.03        15,127,365    0.99%    11.71% to 11.48%
2005
 
   1.30% to 1.50%    1,195,559       16.28 to 13.48        19,176,656    1.64%    6.24% to   6.02%
2004
 
   1.30% to 1.50%    1,747,812       15.33 to 12.72        26,367,510    0.93%    4.42% to   4.21%
2003
 
   1.30% to 1.50%    2,241,345       14.68 to 12.20        32,448,173    1.23%    22.17% to 21.92%
Fidelity® VIP III – Growth & Income Portfolio – Service Class
 
2007
 
   0.95% to 1.70%    968,589       16.14 to 12.27        15,531,097    1.69%    10.93% to 10.15%
2006
 
   0.95% to 1.70%    1,401,790       14.55 to 11.14        20,181,151    0.93%    11.94% to 11.15%
2005
 
   0.95% to 1.70%    2,174,460       12.99 to 10.02        27,981,920    1.50%    6.51% to   5.73%
2004
 
   0.95% to 1.70%    2,762,401       12.20 to   9.48        33,386,094    0.82%    4.75% to   4.01%
2003
 
   0.95% to 1.70%    3,186,392       11.65 to   9.11        36,708,432    1.13%    22.43% to 21.51%
Fidelity® VIP III – Growth & Income Portfolio – Service Class 2
 
2007
 
   0.95% to 2.60%    1,217,465       12.02 to 10.39        14,463,016    1.41%    10.86% to   9.00%
2006
 
   0.95% to 2.60%    1,523,749       11.09 to   9.53        16,276,568    0.73%    11.79% to   9.99%
2005
 
   0.95% to 2.60%    1,809,690       9.92 to   8.67        17,350,338    1.33%    6.38% to   4.64%
2004
 
   0.95% to 2.60%    2,109,708       9.32 to   8.28        19,069,976    0.77%    4.52% to   2.83%
2003
 
   0.95% to 2.45%    2,256,250       8.92 to   8.11        19,586,061    0.95%    22.27% to 20.43%
Fidelity® VIP III – Growth Opportunities Portfolio – Initial Class
 
2007
 
   1.30% to 1.50%    2,998,614       24.39 to 12.68        71,585,431    0.00%    21.57% to 21.33%
2006
 
   1.30% to 1.50%    3,838,147       20.06 to 10.45        75,200,329    0.75%    4.09% to   3.88%
2005
 
   1.30% to 1.50%    5,330,713       19.27 to 10.06        100,001,156    0.96%    7.48% to   7.26%
2004
 
   1.30% to 1.50%    6,993,903       17.93 to   9.38        122,057,923    0.57%    5.80% to   5.58%
2003
 
   1.30% to 1.50%    9,018,711       16.95 to   8.88        149,392,032    0.82%    28.19% to 27.93%
Fidelity® VIP III – Growth Opportunities Portfolio – Service Class
 
2007
 
   0.95% to 1.70%    1,477,714       12.36 to   9.67        18,151,098    0.00%    21.87% to 21.03%
2006
 
   0.95% to 1.70%    2,164,644       10.14 to   7.99        21,701,919    0.67%    4.30% to   3.54%
2005
 
   0.95% to 1.70%    3,260,503       9.73 to   7.71        31,367,116    0.85%    7.83% to   7.05%
2004
 
   0.95% to 1.70%    4,052,469       9.02 to   7.21        36,206,313    0.48%    6.04% to   5.31%
2003
 
   0.95% to 1.70%    4,718,108       8.51 to   6.84        39,725,388    0.63%    28.43% to 27.45%
Fidelity® VIP III – Growth Opportunities Portfolio – Service Class 2
 
2007
 
   0.95% to 2.25%    433,171       10.29 to   8.81        4,367,308    0.00%    21.73% to 20.22%
2006
 
   0.95% to 2.25%    633,127       8.45 to   7.33        5,135,032    0.48%    4.12% to   2.79%
2005
 
   0.95% to 2.25%    783,699       8.12 to   7.13        6,117,826    0.70%    7.65% to   6.27%
2004
 
   0.95% to 2.25%    1,008,606       7.54 to   6.71        7,337,439    0.34%    5.88% to   4.55%
2003
 
   0.95% to 2.25%    1,135,191       7.12 to   6.42        7,823,843    0.49%    28.18% to 26.48%
Fidelity® VIP III – Mid Cap Portfolio – Initial Class
 
2007
 
   1.30%    111,290       40.98      4,560,666    0.91%    14.12%
2006
 
   1.30%    133,809       35.91      4,805,186    0.38%    11.24%
2005
 
   1.30%    161,231       32.28      5,204,980    0.00%    16.77%
2004
 
   1.30%    163,205       27.65      4,511,984    0.00%    23.29%
2003
 
   1.30%    147,072       22.42      3,297,769    0.41%    36.84%
Fidelity® VIP III – Mid Cap Portfolio – Service Class
 
2007
 
   0.95% to 1.85%    371,994       41.91 to 35.74        15,499,235    0.73%    14.38% to 13.34%
2006
 
   0.95% to 1.85%    528,205       36.64 to 31.53        19,231,126    0.30%    11.52% to 10.51%
2005
 
   0.95% to 1.85%    764,088       32.85 to 28.53        24,976,408    0.00%    17.08% to 16.02%
2004
 
   0.95% to 1.85%    872,164       28.06 to 24.59        24,362,311    0.00%    23.59% to 22.47%
2003
 
   0.95% to 1.85%    950,947       22.70 to 20.08        21,494,305    0.30%    37.21% to 35.96%
Fidelity® VIP III – Mid Cap Portfolio – Service Class 2
 
2007
 
   0.95% to 2.45%    2,141,028       23.93 to 33.87        57,840,422    0.50%    14.24% to 12.57%
2006
 
   0.95% to 2.45%    2,499,223       20.95 to 30.09        62,036,810    0.19%    11.34% to   9.74%
2005
 
   0.95% to 2.45%    2,895,497       18.82 to 27.42        64,670,558    0.00%    16.90% to 15.24%
2004
 
   0.95% to 2.45%    3,023,221       16.10 to 23.79        58,193,494    0.00%    23.47% to 21.74%
2003
 
   0.95% to 2.45%    2,836,613       13.04 to 19.54        44,434,522    0.21%    36.94% to 34.88%
Fidelity® VIP III – Value Strategies Portfolio – Service Class
 
2007
 
   0.95% to 1.55%    27,247       17.12 to 15.59        457,510    0.93%    4.59% to   4.03%
2006
 
   0.95% to 1.55%    31,358       16.37 to 14.98        504,402    0.50%    15.10% to 14.46%
2005
 
   0.95% to 1.55%    33,515       14.23 to 13.09        469,025    0.00%    1.58% to   1.00%
2004
 
   0.95% to 1.40%    30,201       14.00 to 13.01        421,211    0.00%    12.90% to 12.51%
2003
 
   0.95% to 1.40%    22,081       12.40 to 11.57        272,822    0.00%    56.29% to 55.59%
(Continued)
 
 
 
76
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense
Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
 
                 
                 
Fidelity® VIP III – Value Strategies Portfolio – Service Class 2
 
 
 
2007
 
   0.95% to 2.40%    392,305     $   16.07 to 14.81      $     6,174,688    0.61%        4.43% to    2.97%  
2006
 
   0.95% to 2.40%    507,691       15.39 to 14.38        7,682,512    0.34%        14.91% to  13.29%  
2005
 
   0.95% to 2.40%    517,981       13.39 to 12.69        6,847,740    0.00%        1.46% to    0.01%  
2004
 
   0.95% to 2.40%    660,380       13.20 to 12.69        8,639,584    0.00%        12.76% to  11.23%  
2003
 
   0.95% to 2.40%    558,223       11.70 to 11.41        6,494,435    0.00%        55.87% to  53.60%  
Franklin Templeton VIP – Foreign Securities Fund – Class 1
 
 
 
2007
 
   0.95% to 1.55%    33,635       18.18 to 16.29      601,501    2.18%        14.68% to  14.07%  
2006
 
   0.95% to 1.55%    36,467       15.85 to 14.28      569,853    1.37%        20.54% to  19.90%  
2005
 
   0.95% to 1.55%    37,701       13.15 to 11.91      489,589    1.23%        9.43% to    8.84%  
2004
 
   0.95% to 1.55%    40,951       12.02 to 10.94      486,910    1.55%        17.74% to  17.15%  
2003
 
   0.95% to 1.55%    23,502       10.21 to   9.34      239,297    1.52%        31.29% to  30.46%  
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1
 
 
 
2007
 
   0.95% to 1.65%    201,567       14.07 to 13.55      2,807,251    2.60%        -3.35% to   -3.99%  
2006
 
   0.95% to 1.75%    221,913       14.55 to 14.04      3,203,967    1.25%        16.32% to  15.44%  
2005
 
   0.95% to 1.75%    205,702       12.51 to 12.16      2,558,538    0.99%        2.70% to    1.90%  
2004
 
   0.95% to 1.75%    192,350       12.18 to 11.94      2,332,814    0.83%        10.19% to    9.39%  
2003
 
   0.95% to 1.75%    103,449       11.06 to 10.91      1,140,788    0.91%        23.69% to  22.70%  
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
 
 
 
2007
 
   0.95% to 2.25%    25,017       18.02 to 16.99      441,415    0.31%        5.12% to    3.78%  
2006
 
   0.95% to 2.25%    57,222       17.14 to 16.37      963,929    0.13%        9.72% to    8.33%  
2005
 
   0.95% to 2.25%    72,507       15.63 to 15.11      1,119,448    1.63%        9.86% to    8.49%  
2004
 
   0.95% to 2.30%    37,195       14.22 to 13.92      524,905    1.87%        16.35% to  14.86%  
2003
 
   0.95% to 2.25%    12,354       12.22 to 12.12      150,570    0.15%        22.24% to  21.21%  (a) (b)
MFS VIT – Investors Growth Stock Series – Service Class
 
 
 
2007
 
   0.95% to 2.60%    381,774       11.88 to 10.77      4,413,592    0.09%        9.96% to    8.18%  
2006
 
   0.95% to 2.60%    442,921       10.80 to   9.96      4,677,080    0.00%        6.29% to    4.55%  
2005
 
   0.95% to 2.60%    505,183       10.16 to   9.52      5,040,207    0.14%        3.24% to    1.56%  
2004
 
   0.95% to 2.60%    581,820       9.85 to   9.38      5,650,930    0.00%        7.95% to    6.20%  
2003
 
   0.95% to 2.45%    483,758       9.12 to   8.85      4,379,571    0.00%        21.44% to  19.57%  
MFS VIT – Mid Cap Growth Series – Service Class
 
 
 
2007
 
   0.95% to 2.45%    546,746       10.93 to   9.99      5,826,934    0.00%        8.46% to    6.86%  
2006
 
   0.95% to 2.45%    663,155       10.07 to   9.35      6,541,165    0.00%        1.33% to   -0.18%  
2005
 
   0.95% to 2.45%    752,964       9.94 to   9.36      7,361,213    0.00%        1.88% to    0.37%  
2004
 
   0.95% to 2.45%    890,831       9.76 to   9.33      8,579,778    0.00%        13.29% to  11.67%  
2003
 
   0.95% to 2.45%    782,319       8.61 to   8.35      6,682,965    0.00%        35.31% to  33.20%  
MFS VIT – New Discovery Series – Service Class
 
 
 
2007
 
   0.95% to 2.45%    265,727       11.86 to 10.85      3,095,070    0.00%        1.27% to   -0.21%  
2006
 
   0.95% to 2.45%    380,452       11.71 to 10.88      4,378,742    0.00%        11.86% to  10.23%  
2005
 
   0.95% to 2.45%    418,960       10.47 to   9.87      4,327,051    0.00%        4.04% to    2.49%  
2004
 
   0.95% to 2.45%    467,317       10.06 to   9.63      4,654,247    0.00%        5.20% to    3.67%  
2003
 
   0.95% to 2.70%    516,432       9.57 to   9.24      4,906,118    0.00%        32.16% to  29.79%  
MFS VIT – Value Series – Service Class
 
 
 
2007
 
   0.95% to 2.25%    631,815       16.17 to 15.00      9,996,966    0.85%        6.57% to    5.23%  
2006
 
   0.95% to 2.25%    767,688       15.18 to 14.25      11,429,940    0.81%        19.36% to  17.86%  
2005
 
   0.95% to 2.25%    655,457       12.72 to 12.09      8,205,992    0.71%        5.46% to    4.13%  
2004
 
   0.95% to 2.25%    638,853       12.06 to 11.61      7,612,804    0.40%        13.73% to  12.33%  
2003
 
   0.95% to 2.15%    567,227       10.60 to 10.36      5,972,049    0.13%        23.52% to  22.01%  
MTB Large-Cap Growth Fund II
 
 
 
2007
 
   0.95% to 1.55%    221,038       12.00 to 11.60      2,627,233    0.36%        8.11% to    7.46%  
2006
 
   0.95% to 1.65%    250,037       11.10 to 10.75      2,753,846    0.52%        9.30% to    8.56%  
2005
 
   0.95% to 1.65%    258,535       10.16 to   9.90      2,609,972    0.39%        1.05% to    0.35%  
2004
 
   0.95% to 1.65%    255,689       10.05 to   9.87      2,559,023    0.69%        4.16% to    3.47%  
2003
 
   0.95% to 1.65%    171,147       9.65 to   9.54      1,647,299    0.11%        16.23% to  15.39%  
MTB Large-Cap Value Fund II
 
 
 
2007
 
   0.95% to 1.65%    235,928       14.63 to 14.09      3,410,924    1.07%        0.60% to   -0.06%  
2006
 
   0.95% to 1.65%    256,800       14.54 to 14.10      3,697,613    1.03%        16.49% to  15.74%  
2005
 
   0.95% to 1.65%    253,241       12.48 to 12.18      3,136,386    0.86%        9.24% to    8.52%  
2004
 
   0.95% to 1.65%    254,337       11.43 to 11.22      2,889,581    1.30%        8.54% to    7.86%  
2003
 
   0.95% to 1.65%    164,487       10.53 to 10.40      1,724,915    0.94%        32.18% to  31.24%  
(Continued)
 
 
 
77
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total Return***  
MTB Managed Allocation Fund – Moderate Growth II
 
 
 
2007
 
   0.95% to 1.85%    2,255,144     $    13.48 to 12.83    $     30,079,842    2.04%        5.87% to    4.95%  
2006
 
   0.95% to 1.85%    2,471,444       12.73 to 12.22      31,197,082    2.49%        9.37% to    8.42%  
2005
 
   0.95% to 1.85%    2,677,871       11.64 to 11.27      30,955,882    1.45%        3.01% to    2.10%  
2004
 
   0.95% to 1.85%    2,900,167       11.30 to 11.04      32,607,560    1.40%        4.93% to    4.03%  
2003
 
   0.95% to 1.85%    2,168,937       10.77 to 10.61      23,287,184    0.97%        16.17% to  15.13%  
Nationwide VIT – American Funds Asset Allocation Fund – Class II
 
 
 
2007
 
   0.95% to 2.05%    615,213       11.03 to 10.83      6,748,999    2.54%        5.13% to    4.00%  
2006
 
   0.95% to 2.05%    274,929       10.49 to 10.41      2,877,300    3.37%        4.90% to    4.13%  (a) (b)
Nationwide VIT – American Funds Bond Fund – Class II
 
 
 
2007
 
   0.95% to 1.85%    202,671       10.68 to 10.52      2,152,938    8.99%        2.00% to    1.09%  
2006
 
   0.95% to 1.80%    79,332       10.47 to 10.41      829,189    1.40%        4.72% to    4.14%  (a) (b)
Nationwide VIT – American Funds Global Growth Fund – Class II
 
 
 
2007
 
   0.95% to 2.10%    300,663       12.20 to 11.98      3,652,423    2.97%        13.27% to  12.03%  
2006
 
   0.95% to 2.00%    150,198       10.77 to 10.70      1,615,213    0.36%        7.74% to    6.98%  (a) (b)
Nationwide VIT – American Funds Growth – Income Fund – Class II
 
 
 
2007
 
   0.95% to 1.75%    38,038       9.83 to   9.78      373,398    2.45%        -1.71% to   -2.23%  (a) (b)
Nationwide VIT – American Funds Growth Fund – Class II
 
 
 
2007
 
   0.95% to 2.10%    235,969       11.41 to 11.20      2,681,557    0.60%        10.83% to    9.60%  
2006
 
   0.95% to 2.00%    167,959       10.30 to 10.23      1,727,272    1.19%        2.99% to    2.26%  (a) (b)
Nationwide VIT – Federated High Income Bond Fund – Class III
 
 
 
2007
 
   1.10% to 1.55%    8,188       11.68 to 11.55      95,010    12.98%        2.03% to    1.60%  
2006
 
   1.10% to 1.55%    4,846       11.45 to 11.36      55,136    7.33%        9.39% to    8.92%  
Nationwide VIT – Gartmore Emerging Markets Fund – Class II
 
 
 
2007
 
   0.95% to 2.05%    77,884       40.01 to 37.64      3,066,915    0.42%        43.80% to  42.39%  
2006
 
   0.95% to 2.05%    101,953       27.82 to 26.43      2,797,670    0.52%        35.02% to  33.69%  
2005
 
   0.95% to 2.05%    110,899       20.60 to 19.77      2,260,206    0.40%        31.08% to  29.75%  
2004
 
   0.95% to 2.30%    134,352       15.72 to 15.13      2,092,732    0.93%        19.29% to  17.83%  
2003
 
   0.95% to 2.25%    119,362       13.18 to 12.85      1,563,181    0.38%        63.10% to  60.97%  
Nationwide VIT – Gartmore Emerging Markets Fund – Class VI
 
 
 
2007
 
   0.95% to 2.30%    481,332       30.13 to 28.76      14,312,773    0.60%        44.06% to  42.28%  
2006
 
   0.95% to 2.30%    523,251       20.92 to 20.22      10,827,888    0.54%        35.26% to  33.59%  
2005
 
   0.95% to 2.10%    515,495       15.46 to 15.18      7,922,885    0.43%        31.23% to  29.85%  
2004
 
   0.95% to 2.10%    64,091       11.78 to 11.69      752,656    1.45%        17.83% to  16.93%  (a) (b)
Nationwide VIT – Government Bond Fund – Class I
 
 
 
2007
 
   0.95% to 2.35%    1,761,138       12.49 to 12.03      21,912,674    4.35%        6.13% to    4.65%  
2006
 
   0.95% to 2.35%    1,841,755       11.77 to 11.50      21,674,212    4.01%        2.36% to    0.93%  
2005
 
   0.95% to 2.35%    2,172,204       11.49 to 11.39      25,053,840    3.65%        2.29% to    0.86%  
2004
 
   0.95% to 2.35%    2,542,383       11.24 to 11.29      28,769,779    5.39%        2.28% to    0.85%  
2003
 
   0.95% to 2.30%    2,897,500       10.99 to 11.21      32,173,064    3.85%        1.03% to   -0.32%  
Nationwide VIT – International Value Fund – Class III
 
 
 
2007
 
   0.95% to 1.55%    21,426       15.88 to 22.10      360,794    1.97%        1.95% to    1.39%  
2006
 
   0.95% to 1.75%    26,633       15.58 to 21.64      463,042    2.12%        21.58% to  20.70%  
2005
 
   0.95% to 1.55%    19,055       12.81 to 12.69      272,309    1.67%        10.99% to  10.32%  
2004
 
   1.10% to 1.55%    6,001       11.53 to 16.33      90,057    2.03%        15.34% to  15.06%  (a) (b)
Nationwide VIT – International Value Fund – Class VI
 
 
 
2007
 
   0.95% to 2.30%    401,003       15.73 to 14.99      6,236,278    2.17%        1.72% to    0.38%  
2006
 
   0.95% to 2.30%    399,195       15.46 to 14.93      6,120,278    1.93%        21.25% to  19.69%  
2005
 
   0.95% to 2.00%    316,954       12.75 to 12.54      4,021,518    1.54%        10.74% to    9.64%  
2004
 
   0.95% to 1.90%    119,239       11.51 to 11.44      1,370,721    0.62%        15.15% to  14.43%  (a) (b)
Nationwide VIT – Investor Destinations Aggressive Fund – Class II
 
 
 
2007
 
   0.95% to 2.35%    1,378,218       15.94 to 14.57      21,382,713    2.00%        4.95% to    3.52%  
2006
 
   0.95% to 2.45%    1,511,432       15.19 to 14.10      22,446,931    2.02%        15.76% to  14.01%  
2005
 
   0.95% to 2.45%    1,492,478       13.12 to 12.37      19,230,677    1.82%        6.91% to    5.30%  
2004
 
   0.95% to 2.45%    1,598,752       12.28 to 11.75      19,358,099    1.69%        12.94% to  11.23%  
2003
 
   0.95% to 2.40%    1,174,265       10.87 to 10.48      12,659,702    1.33%        30.62% to  28.70%  
(Continued)
 
 
 
78
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense
Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
 
Nationwide VIT – Investor Destinations Conservative Fund – Class II
 
 
 
2007
 
   0.95% to 2.25%    2,184,896    $    12.39 to 11.47      $ 26,543,595    3.47%      4.37% to   3.03%  
2006
 
   0.95% to 2.25%    2,682,972      11.87 to 11.14        31,319,557    3.15%      5.16% to   3.80%  
2005
 
   0.95% to 2.30%    3,011,800      11.29 to 10.71        33,553,690    2.71%      2.33% to   0.96%  
2004
 
   0.95% to 2.25%    3,386,624      11.03 to 10.62        36,988,477    2.33%      3.66% to   2.33%  
2003
 
   0.95% to 2.25%    3,348,427      10.64 to 10.38        35,404,679    2.78%      6.88% to   5.50%  
Nationwide VIT – Investor Destinations Moderate Fund – Class II
 
 
 
2007
 
   0.95% to 2.55%    10,650,531      14.13 to 12.80        147,143,542    2.68%      4.65% to   3.00%  
2006
 
   0.95% to 2.55%    11,881,233      13.50 to 12.43        157,373,718    2.37%      10.30% to   8.56%  
2005
 
   0.95% to 2.55%    12,538,745      12.24 to 11.45        151,174,293    2.28%      4.35% to   2.70%  
2004
 
   0.95% to 2.55%    12,564,944      11.73 to 11.15        145,739,412    2.05%      8.50% to   6.81%  
2003
 
   0.95% to 2.55%    10,125,266      10.81 to 10.44        108,655,956    1.99%      18.91% to 17.00%  
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II
 
 
 
2007
 
   0.95% to 2.70%    4,395,960      15.26 to 13.68        65,504,408    2.28%      5.14% to   3.33%  
2006
 
   0.95% to 2.45%    4,792,606      14.51 to 13.40        68,159,021    2.18%      13.46% to 11.80%  
2005
 
   0.95% to 2.45%    4,881,060      12.79 to 11.99        61,425,240    2.01%      6.06% to   4.50%  
2004
 
   0.95% to 2.45%    5,001,910      12.06 to 11.47        59,575,549    1.83%      11.03% to   9.43%  
2003
 
   0.95% to 2.40%    3,925,388      10.86 to 11.49        42,285,245    1.50%      25.44% to 23.61%  
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II
 
 
 
2007
 
   0.95% to 2.40%    3,622,567      13.33 to 12.22        47,315,730    3.04%      4.85% to   3.34%  
2006
 
   0.95% to 2.45%    4,147,288      12.72 to 11.79        51,847,780    2.79%      7.40% to   5.80%  
2005
 
   0.95% to 2.45%    4,309,293      11.84 to 11.14        50,341,111    2.54%      3.50% to   1.96%  
2004
 
   0.95% to 2.45%    4,640,924      11.44 to 10.93        52,545,545    2.28%      6.14% to   4.58%  
2003
 
   0.95% to 2.45%    4,126,406      10.78 to 10.45        44,183,731    2.47%      12.62% to 10.93%  
Nationwide VIT – Mid Cap Growth Fund – Class II
 
 
 
2007
 
   0.95% to 1.75%    19,079      10.68 to 10.54        209,775    0.00%      7.69% to   6.82%  
2006
 
   0.95% to 2.05%    69,651      9.92 to 12.57        730,761    0.00%      -0.83% to  -1.54%  (a) (b)
Nationwide VIT – Mid Cap Index Fund – Class I
 
 
 
2007
 
   0.95% to 1.60%    79,936      16.36 to 15.38        1,289,635    1.38%      6.53% to   5.89%  
2006
 
   0.95% to 1.60%    89,807      15.35 to 14.52        1,359,632    1.18%      8.85% to   8.19%  
2005
 
   0.95% to 1.75%    87,273      14.11 to 13.33        1,214,778    1.02%      11.04% to 10.21%  
2004
 
   0.95% to 1.75%    76,130      12.70 to 12.10        957,220    0.66%      14.63% to 13.81%  
2003
 
   0.95% to 1.75%    35,096      11.08 to 10.63        385,335    0.46%      33.37% to 32.29%  
Nationwide VIT – Mid Cap Index Fund – Class II
 
 
 
2007
 
   0.95% to 2.45%    505,757      15.43 to 14.18        7,656,460    1.26%      6.35% to   4.78%  
2006
 
   0.95% to 2.45%    611,240      14.51 to 13.53        8,730,294    0.94%      8.70% to   7.12%  
2005
 
   0.95% to 2.45%    703,966      13.35 to 12.63        9,280,265      0.86%      10.84% to   9.23%  
2004
 
   0.95% to 2.45%    703,255      12.04 to 11.56        8,389,511    0.37%      14.41% to 12.78%  
2003
 
   0.95% to 2.45%    562,754      10.53 to 10.25        5,887,850    0.29%      33.02% to 31.00%  
Nationwide VIT – Money Market Fund – Class I
 
 
 
2007
 
   0.95% to 2.45%    3,594,049      10.90 to 10.06        38,737,718    4.75%      3.79% to   2.23%  
2006
 
   0.95% to 2.45%    2,927,510      10.50 to   9.84        30,495,311    4.87%      3.54% to   1.99%  
2005
 
   0.95% to 2.45%    2,761,373      10.14 to   9.65        27,838,808    2.94%      1.70% to   0.17%  
2004
 
   0.95% to 2.45%    2,157,270      9.97 to   9.63        21,464,980    0.91%      -0.15% to  -1.66%  
2003
 
   0.95% to 2.10%    2,346,235      9.99 to   9.90        23,492,068    0.55%      -0.33% to  -1.48%  
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class II
 
 
 
2007
 
   0.95% to 2.45%    242,695      12.61 to 11.54        2,993,964    0.00%      8.45% to   6.85%  
2006
 
   0.95% to 2.45%    290,582      11.63 to 10.80        3,325,221    0.00%      2.01% to   0.50%  
2005
 
   0.95% to 2.45%    359,454      11.40 to 10.74        4,055,386    0.00%      6.71% to   5.16%  
2004
 
   0.95% to 2.45%    388,541      10.68 to 10.22        4,117,381    0.00%      12.09% to 10.46%  
2003
 
   0.95% to 2.45%    366,267      9.53 to   9.25        3,471,151    0.00%      32.79% to 30.74%  
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I
 
 
 
2007
 
   0.95% to 1.55%    39,614      15.17 to 13.16        588,544    1.18%      -7.78% to  -8.31%  
2006
 
   0.95% to 1.55%    46,188      16.45 to 14.35        744,833    0.46%      16.18% to 15.54%  
2005
 
   0.95% to 1.75%    44,709      14.16 to 12.31        618,890    0.07%      2.10% to   1.32%  
2004
 
   0.95% to 1.75%    43,060      13.87 to 12.14        586,761    0.00%      16.18% to 15.39%  
2003
 
   0.95% to 1.65%    23,228      11.93 to 10.55        266,670    0.00%      55.37% to 54.26%  
(Continued)
 
 
 
79
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense
Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
 
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class II
 
 
 
2007
 
   0.95% to 2.20%    426,358     $  13.90 to 12.95      $ 5,794,363    0.94%      -8.12% to   -9.25%  
2006
 
   0.95% to 2.30%    581,526       15.13 to 14.20        8,621,588    0.22%      15.99% to  14.47%  
2005
 
   0.95% to 2.30%    589,896       13.04 to 12.41        7,581,428    0.00%      1.81% to    0.47%  
2004
 
   0.95% to 2.30%    647,848       12.81 to 12.35        8,216,175    0.00%      15.89% to  14.44%  
2003
 
   0.95% to 2.30%    559,038       11.05 to 10.79        6,135,019    0.00%      54.96% to  52.83%  
Nationwide VIT – Multi-Manager Small Company Fund – Class I
 
 
 
2007
 
   0.95% to 1.65%    49,805       16.94 to 15.29        821,934    0.09%      1.16% to    0.49%  
2006
 
   0.95% to 1.65%    60,219       16.74 to 15.22        976,486    0.12%      10.98% to  10.26%  
2005
 
   0.95% to 1.75%    57,587       15.09 to 13.74        842,067    0.00%      11.25% to  10.43%  
2004
 
   0.95% to 1.75%    60,409       13.56 to 12.44        797,491    0.00%      17.89% to  17.06%  
2003
 
   0.95% to 1.65%    39,888       11.50 to 10.66        451,750    0.00%      39.68% to  38.70%  
Nationwide VIT – Multi-Manager Small Company Fund – Class II
 
 
 
2007
 
   0.95% to 2.10%    355,604       17.16 to 16.06        5,988,270    0.00%      0.92% to    -0.21%  
2006
 
   0.95% to 2.10%    413,522       17.01 to 16.10        6,919,080    0.05%      10.69% to    9.47%  
2005
 
   0.95% to 2.10%    488,900       15.36 to 14.71        7,418,169    0.00%      10.94% to    9.74%  
2004
 
   0.95% to 2.05%    481,110       13.85 to 13.42        6,610,549    0.00%      17.66% to  16.47%  
2003
 
   0.95% to 2.05%    371,625       11.77 to 11.52        4,351,383    0.00%      39.28% to  37.74%  
Nationwide VIT – Nationwide Fund – Class II
 
 
 
2007
 
   0.95% to 1.60%    5,948       11.43 to 13.19        70,849    1.00%      6.86% to    6.22%  
2006
 
   1.10% to 1.60%    2,314       10.68 to 12.42        26,180    0.94%      6.84% to    6.51%  (a) (b)
Neuberger Berman AMT – Regency Portfolio – Class S
 
 
 
2007
 
   0.95% to 1.80%    20,462       10.42 to 12.72        221,991    0.22%      2.07% to    1.24%  
2006
 
   0.95% to 2.05%    57,725       10.20 to 12.51        612,776    0.12%      2.04% to    1.31%  (a) (b)
Neuberger Berman AMT – Socially Responsive Portfolio Class I
 
 
 
2007
 
   0.95% to 2.35%    34,139       14.37 to 16.45        518,801    0.10%      6.59% to    5.14%  
2006
 
   0.95% to 2.35%    37,053       13.48 to 15.64        526,319    0.15%      12.63% to  11.09%  
2005
 
   0.95% to 1.80%    34,175       11.97 to 14.29        434,178    0.00%      5.84% to    4.99%  
2004
 
   0.95% to 2.05%    10,971       11.31 to 13.56        132,457    0.00%      13.12% to  12.33%  (a) (b)
Oppenheimer VAF – Capital Appreciation Fund – Service Class
 
 
 
2007
 
   0.95% to 2.60%    1,147,953       13.22 to 11.99        14,864,759    0.01%      12.77% to  10.95%  
2006
 
   0.95% to 2.60%    1,327,283       11.72 to 10.80        15,277,880    0.19%      6.66% to    4.92%  
2005
 
   0.95% to 2.60%    1,568,318       10.99 to 10.30        16,987,573    0.75%      3.87% to    2.17%  
2004
 
   0.95% to 2.60%    1,746,466       10.58 to 10.08        18,254,140    0.23%      5.60% to    3.92%  
2003
 
   0.95% to 2.70%    1,504,622       10.02 to 9.68        14,953,724    0.21%      29.45% to  27.14%  
Oppenheimer VAF – Global Securities Fund – Class 3
 
 
 
2007
 
   0.95% to 1.55%    45,383       16.11 to 22.84        779,614    1.31%      5.32% to    4.75%  
2006
 
   0.95% to 1.55%    44,501       15.30 to 21.81        729,149    0.87%      16.57% to  15.96%  
2005
 
   0.95% to 1.75%    29,188       13.12 to 18.71        422,009    0.60%      13.25% to  12.42%  
2004
 
   0.95% to 1.75%    14,284       11.59 to 16.64        171,919    0.00%      15.86% to  15.31%  (a) (b)
Oppenheimer VAF – Global Securities Fund – Class 4
 
 
 
2007
 
   0.95% to 2.45%    686,311       15.96 to 15.13        10,831,474    1.09%      5.05% to    3.51%  
2006
 
   0.95% to 2.45%    761,024       15.20 to 14.62        11,463,733    0.91%      16.29% to  14.62%  
2005
 
   0.95% to 2.45%    879,877       13.07 to 12.75        11,434,623    0.68%      12.97% to  11.34%  
2004
 
   0.95% to 2.45%    436,362       11.57 to 11.45        5,036,591    0.00%      15.69% to  14.54%  (a) (b)
Oppenheimer VAF – Global Securities Fund – Non-Service Shares
 
 
 
2007
 
   0.95% to 1.55%    43,404       18.41 to 16.26        785,425    1.38%      5.30% to    4.73%  
2006
 
   0.95% to 1.55%    47,987       17.48 to 15.52        826,057    1.01%      16.58% to  15.96%  
2005
 
   0.95% to 1.55%    51,252       15.00 to 13.39        758,088    1.00%      13.22% to  12.62%  
2004
 
   0.95% to 1.55%    55,720       13.25 to 11.89        729,261    1.35%      18.03% to  17.45%  
2003
 
   0.95% to 1.75%    38,245       11.22 to 10.07        423,082    0.25%      41.66% to  40.49%  
Oppenheimer VAF – Global Securities Fund – Service Class
 
 
 
2007
 
   0.95% to 2.10%    431,990       18.18 to 17.02        7,710,501    1.25%      5.07% to    3.91%  
2006
 
   0.95% to 2.20%    538,871       17.30 to 16.30        9,182,101    0.90%      16.25% to  14.87%  
2005
 
   0.95% to 2.20%    643,114       14.88 to 14.19        9,463,471    0.85%      12.98% to  11.63%  
2004
 
   0.95% to 2.20%    764,881       13.17 to 12.71        9,987,023    1.31%      17.75% to  16.39%  
2003
 
   0.95% to 2.45%    1,001,034       11.19 to 10.87        11,125,344    0.77%      41.50% to  39.33%  
(Continued)
 
 
 
80
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
    Contract
Expense Rate*
  Units   Unit
Fair Value
  Contract
Owners’ Equity
  Investment
Income
Ratio**
  Total
Return***
 
Oppenheimer VAF – High Income Fund – Class 3
 
 
 
2007
 
  0.95% to 1.55%   28,659    $  9.60 to   9.56     $ 274,906   0.00%   -4.00% to   -4.40%  (a) (b)
Oppenheimer VAF – High Income Fund – Non-Service Shares
 
 
 
2007
 
  0.95% to 1.65%   111,717      13.88 to 13.37       1,538,523   8.33%   -1.06% to   -1.73%  
2006
 
  0.95% to 1.65%   152,574      14.03 to 13.60       2,126,479   7.19%   8.39% to    7.65%  
2005
 
  0.95% to 1.65%   154,663      12.94 to 12.63       1,991,825   6.26%   1.34% to    0.66%  
2004
 
  0.95% to 1.75%   153,260      12.77 to 12.52       1,949,978   5.81%   7.93% to    7.12%  
2003
 
  0.95% to 1.65%   112,870      11.83 to 11.70       1,332,616   3.41%   22.78% to  21.97%  
Oppenheimer VAF – Main Street Small Cap Fund® – Non-Service Shares
 
 
 
2007
 
  0.95% to 1.55%   52,970      17.17 to 16.64       902,144   0.36%   -2.15% to   -2.71%  
2006
 
  0.95% to 1.65%   60,225      17.54 to 17.02       1,050,662   0.15%   13.91% to  13.18%  
2005
 
  0.95% to 1.65%   58,089      15.40 to 15.04       890,665   0.00%   8.88% to    8.18%  
2004
 
  0.95% to 1.65%   59,126      14.15 to 13.90       833,668   0.00%   18.29% to  17.57%  
2003
 
  0.95% to 1.65%   39,780      11.96 to 11.82       474,752   0.00%   42.99% to  42.00%  
Oppenheimer VAF – Main Street Small Cap Fund® – Service Class
 
 
 
2007
 
  0.95% to 2.05%   58,304      9.78 to 12.91       612,125   0.13%   -2.33% to   -3.38%  
2006
 
  0.95% to 1.80%   26,424      10.01 to 13.42       280,075   0.00%   0.11% to   -0.43%  (a) (b)
Oppenheimer VAF – Main Street® – Service Class
 
           
2007
 
  0.95% to 2.45%   1,219,313      13.60 to 12.45       16,243,771   0.87%   3.16% to    1.64%  
2006
 
  0.95% to 2.45%   1,385,272      13.19 to 12.25       17,947,530   0.98%   13.67% to  12.01%  
2005
 
  0.95% to 2.45%   1,540,005      11.60 to 10.94       17,621,199   1.17%   4.74% to    3.19%  
2004
 
  0.95% to 2.45%   1,636,694      11.08 to 10.60       17,941,496   0.68%   8.11% to    6.55%  
2003
 
  0.95% to 2.45%   1,412,782      10.24 to   9.95       14,373,700   0.56%   25.24% to  23.32%  
Oppenheimer VAF – Strategic Bond Fund – Service Class
 
 
 
2007
 
  0.95% to 2.30%   1,376,792      15.35 to 14.19       20,735,994   3.33%   8.51% to    7.06%  
2006
 
  0.95% to 2.30%   1,404,214      14.14 to 13.25       19,541,636   4.14%   6.22% to    4.79%  
2005
 
  0.95% to 2.30%   1,564,648      13.32 to 12.64       20,572,689   4.14%   1.51% to    0.16%  
2004
 
  0.95% to 2.20%   1,419,627      13.12 to 12.66       18,439,937   4.76%   7.40% to    6.10%  
2003
 
  0.95% to 2.10%   1,241,682      12.21 to 11.96       15,070,705   3.80%   16.05% to  14.76%  
Putnam VT – Growth and Income Fund – IB Shares
 
 
 
2007
 
  0.95% to 2.30%   59,863      15.13 to 13.85       886,987   1.34%   -6.94% to   -8.17%  
2006
 
  0.95% to 2.30%   64,212      16.26 to 15.08       1,026,524   1.45%   14.81% to  13.30%  
2005
 
  0.95% to 2.30%   69,841      14.16 to 13.31       976,101   1.53%   4.23% to    2.85%  
2004
 
  0.95% to 2.15%   61,063      13.59 to 12.99       821,625   1.34%   10.06% to    8.81%  
2003
 
  0.95% to 2.10%   43,738      12.35 to 11.95       537,504   0.00%   23.46% to  22.55%  (a) (b)
Putnam VT – International Equity Fund – IB Shares
 
 
 
2007
 
  0.95% to 1.70%   38,245      17.98 to 17.28       679,135   3.20%   7.33% to    6.60%  
2006
 
  0.95% to 1.70%   32,370      16.75 to 16.21       537,136   0.61%   26.51% to  25.66%  
2005
 
  0.95% to 1.70%   34,163      13.24 to 12.90       449,421   1.28%   11.13% to  10.37%  
2004
 
  0.95% to 1.70%   44,398      11.92 to 11.69       526,429   1.99%   15.09% to  14.32%  
2003
 
  0.95% to 1.70%   32,137      10.35 to 10.22       331,951   0.64%   27.31% to  26.31%  
Putnam VT – Small Cap Value Fund – IB Shares
 
 
 
2007
 
  0.95% to 1.50%   28,244      15.32 to 14.85       428,659   0.62%   -13.55% to -14.04%  
2006
 
  0.95% to 1.65%   34,169      17.72 to 17.18       600,850   0.34%   16.18% to  15.43%  
2005
 
  0.95% to 1.50%   34,690      15.25 to 14.95       525,776   0.17%   6.02% to    5.43%  
2004
 
  0.95% to 1.50%   33,428      14.38 to 14.18       478,686   0.31%   25.02% to  24.32%  
2003
 
  0.95% to 1.40%   28,092      11.51 to 11.42       322,508   0.30%   48.23% to  47.54%  
Putnam VT – Voyager Fund – IB Shares
 
 
 
2007
 
  0.95% to 2.25%   70,960      12.09 to 11.25       842,948   0.00%   4.51% to    3.17%  
2006
 
  0.95% to 2.25%   80,396      11.57 to 10.90       917,188   0.11%   4.44% to    3.09%  
2005
 
  0.95% to 2.25%   87,931      11.08 to 10.57       963,628   0.68%   4.69% to    3.34%  
2004
 
  0.95% to 2.25%   94,158      10.58 to 10.23       989,007   0.23%   4.03% to    2.72%  
2003
 
  0.95% to 2.05%   72,604      10.17 to   9.99       735,625   0.14%   23.72% to  22.34%  
STI Classic Variable Trust – International Equity Fund
 
 
 
2006
 
  0.95% to 1.10%   112      23.35 to 23.20       2,608   0.66%   23.30% to  23.12%  
2005
 
  0.95% to 1.10%   566      18.94 to 18.84       10,673   1.57%   11.89% to  11.72%  
2004
 
  0.95% to 1.10%   1,409      16.92 to 16.87       23,770   2.96%   18.21% to  18.03%  
2003
 
  0.95%   78      14.32     1,117   0.00%   36.01%  
(Continued)
 
 
 
81
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense
Rate*
   Units    Unit
Fair Value
   Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total
Return***
 
STI Classic Variable Trust – Investment Grade Bond Fund
 
 
 
2006
 
   1.55%    630      $          11.07                $ 6,976    4.33%    2.72%      
2005
 
   1.55%    630      10.78      6,791    3.91%    0.63%      
2004
 
   1.55%    630      10.71      6,749    4.50%    2.56%      
STI Classic Variable Trust – Large Cap Core Equity Fund
 
 
 
2007
 
   0.95% to 1.80%    3,573      18.61 to 17.79      65,001    1.20%    -0.18% to  -1.04%  
2006
 
   0.95% to 1.80%    3,919      18.64 to 17.97      71,740    1.21%    15.09% to 14.11%  
2005
 
   0.95% to 1.80%    4,035      16.20 to 15.75      64,473    0.91%    7.99% to   7.07%  
2004
 
   0.95% to 1.80%    4,514      15.00 to 14.71      67,120    1.00%    13.22% to 12.24%  
2003
 
   0.95% to 1.80%    5,829      13.25 to 13.11      77,021    0.64%    25.29% to 24.21%  
STI Classic Variable Trust – Large Cap Growth Stock Fund
 
 
 
2007
 
   1.45% to 1.85%    7,424      15.07 to 14.75      110,658    0.29%    13.60% to 13.13%  
2006
 
   0.95% to 1.85%    21,833      13.55 to 13.04      289,474    0.28%    9.78% to   8.78%  
2005
 
   0.95% to 1.85%    23,224      12.34 to 11.98      281,902    0.14%    -1.84% to  -2.73%  
2004
 
   0.95% to 1.85%    23,732      12.57 to 12.32      294,980    0.25%    5.74% to   4.78%  
2003
 
   1.45% to 1.80%    12,594      11.82 to 11.77      148,676    0.00%    16.73% to 16.32%  
STI Classic Variable Trust – Large Cap Value Equity Fund
 
 
 
2007
 
   1.10% to 1.90%    7,427      19.20 to 18.46      139,317    1.29%    2.41% to   1.64%  
2006
 
   0.95% to 1.90%    15,461      18.87 to 18.17      285,683    1.40%    21.30% to 20.21%  
2005
 
   0.95% to 1.90%    17,455      15.56 to 15.11      267,277    1.56%    2.77% to   1.83%  
2004
 
   0.95% to 1.90%    19,347      15.14 to 14.84      289,809    1.75%    14.20% to 13.20%  
2003
 
   1.15% to 1.80%    10,956      13.22 to 13.12      144,387    1.03%    21.70% to 20.91%  
STI Classic Variable Trust – Mid-Cap Core Equity Fund
 
 
 
2007
 
   0.95% to 1.85%    4,471      19.79 to 18.87      85,458    0.19%    4.18% to   3.23%  
2006
 
   0.95% to 1.85%    9,935      19.00 to 18.28      184,726    0.38%    9.67% to   8.68%  
2005
 
   0.95% to 1.85%    10,525      17.32 to 16.82      179,338    0.45%    13.24% to 12.21%  
2004
 
   0.95% to 1.85%    11,875      15.30 to 14.99      179,646    0.79%    15.71% to 14.66%  
2003
 
   0.95% to 1.80%    7,474      13.22 to 13.08      98,167    0.74%    28.49% to 27.39%  
STI Classic Variable Trust – Small Cap Value Equity Fund
 
 
 
2007
 
   0.95% to 1.40%    4,598      23.59 to 23.13      107,713    0.85%    1.58% to   1.17%  
2006
 
   0.95% to 1.40%    5,093      23.22 to 22.86      117,680    0.44%    15.00% to 14.57%  
2005
 
   0.95% to 1.40%    5,562      20.19 to 19.95      111,810    0.44%    10.84% to 10.42%  
2004
 
   0.95% to 1.40%    5,605      18.22 to 18.07      101,799    0.22%    23.01% to 22.59%  
2003
 
   0.95% to 1.40%    1,520      14.81 to 14.74      22,410    0.01%    37.12% to 36.60%  
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares
 
 
 
2007
 
   0.95% to 1.55%    33,739      12.39 to   9.04      387,061    0.54%    6.76% to   6.16%  
2006
 
   0.95% to 1.55%    38,573      11.61 to   8.51      413,707    0.11%    8.17% to   7.54%  
2005
 
   0.95% to 1.55%    41,096      10.73 to   7.92      409,848    0.00%    2.63% to   2.04%  
2004
 
   0.95% to 1.55%    43,895      10.46 to   7.76      424,838    0.48%    5.20% to   4.63%  
2003
 
   0.95% to 1.55%    29,343        9.94 to   7.41      260,457    0.17%    24.81% to 24.00%  
Van Kampen LIT – Comstock Portfolio – Class II
 
 
 
2007
 
   0.95% to 2.45%    1,284,613      13.94 to 12.76      17,539,374    1.73%    -3.26% to  -4.68%  
2006
 
   0.95% to 2.45%    1,520,299      14.41 to 13.39      21,527,980    1.29%    14.95% to 13.26%  
2005
 
   0.95% to 2.45%    1,726,728      12.53 to 11.82      21,358,501    0.95%    3.12% to   1.61%  
2004
 
   0.95% to 2.45%    1,737,181      12.15 to 11.64      20,902,268    0.72%    16.31% to 14.66%  
2003
 
   0.95% to 2.45%    1,350,669      10.45 to 10.15      14,017,694    0.55%    29.53% to 27.56%  
Van Kampen LIT – Strategic Growth Portfolio – Class II
 
 
 
2007
 
   0.95% to 2.45%    451,594      11.67 to 10.68      5,143,597    0.00%    15.53% to 13.82%  
2006
 
   0.95% to 2.45%    517,589      10.10 to   9.38      5,121,527    0.00%    1.65% to   0.15%  
2005
 
   0.95% to 2.45%    560,959        9.94 to   9.37      5,485,137    0.01%    6.62% to   5.04%  
2004
 
   0.95% to 2.45%    672,641        9.32 to   8.92      6,189,617    0.00%    5.76% to   4.21%  
2003
 
   0.95% to 2.45%    688,105        8.81 to   8.55      6,015,661    0.00%    25.83% to 23.87%  
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class II
 
 
 
2007
 
   0.95% to 2.15%    171,376      11.52 to 10.89      1,945,108    4.27%    4.21% to   2.97%  
2006
 
   0.95% to 2.15%    200,767      11.05 to 10.57      2,191,757    4.03%    2.58% to   1.35%  
2005
 
   0.95% to 2.15%    216,760      10.77 to 10.43      2,315,489    3.70%    2.95% to   1.72%  
2004
 
   0.95% to 2.15%    110,871      10.46 to 10.26      1,155,479    5.10%    3.08% to   1.85%  
2003
 
   0.95% to 2.10%    19,930      10.15 to 10.07      201,875    0.00%    1.51% to   0.73%  (a) (b)
(Continued)
 
 
 
82
 
 

NATIONWIDE VARIABLE ACCOUNT-7 (NOTES TO FINANCIAL STATEMENTS, Continued)
 
 
 
     Contract
Expense Rate*
   Units    Unit Fair Value        Contract
Owners’ Equity
   Investment
Income
Ratio**
   Total Return***  
Van Kampen UIF – U.S. Real Estate Portfolio – Class II
 
 
 
2007
 
   0.95% to 2.30%    177,081     $ 22.32 to 22.19     $    3,981,623    0.92%      -18.06% to -19.14%  
2006
 
   0.95% to 2.30%    266,611     27.24 to 27.44        7,370,089    0.85%      36.36% to  34.66%  
2005
 
   0.95% to 2.30%    211,373     19.97 to 20.38        4,301,409    1.24%      15.65% to  14.19%  
2004
 
   0.95% to 2.30%    219,601     17.27 to 17.85        3,871,141    1.38%      34.78% to  33.09%  
2003
 
   0.95% to 2.25%    64,808     12.81 to 13.42        846,144    0.00%      28.14% to  27.09%  (a) (b)
                     
2007 Reserves for annuity contracts in payout phase:
 
     634,445      
                     
2007 Contract owners’ equity
 
  $    1,498,536,209      
                     
2006 Reserves for annuity contracts in payout phase:
 
     656,017      
                     
2006 Contract owners’ equity
 
  $    1,663,719,593      
                     
2005 Reserves for annuity contracts in payout phase:
 
     785,677      
                     
2005 Contract owners’ equity
 
  $    1,792,285,677      
                     
2004 Reserves for annuity contracts in payout phase:
 
     388,543      
                     
2004 Contract owners’ equity
 
  $    1,918,111,618      
                     
2003 Reserves for annuity contracts in payout phase:
 
     342,070      
                     
2003 Contract owners’ equity
 
  $    1,862,484,350      
                     
 
 
 
 
*  
This represents the range of annual contract expense rates 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 or annual contract maintenance charges, that result in direct reductions to the contractholder accounts 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 range of minimum and maximum total returns for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit value for expenses assessed. It does not include any expenses assessed through the redemption of units, the inclusion of which would result in a reduction of the total return presented.
 
(a) & (b)  
Denote the minimum and maximum of the total return ranges, respectively, for underlying mutual fund options that were added during the reporting period. These returns were not annualized. Minimum and maximum ranges are not shown for underlying mutual fund options for which a single contract expense rate (product option) is representative of all units issued and outstanding at period end. Such options that were added during the reporting period are designated using both symbols.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83



 
The management of Nationwide Life Insurance Company and subsidiaries (the Company) is responsible for the preparation and integrity of the consolidated financial statements and other financial information contained in this Annual Report on Form 10-K. The consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, and where necessary, include amounts that are based on the best estimates and judgment of management. Management believes the consolidated financial statements present fairly the Company’s financial position and results of operations and that other financial data contained in the Annual Report on Form 10-K has been compiled in a manner consistent with the consolidated financial statements.
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control system was designed to provide reasonable assurance to management and our Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the preparation and presentation of financial statements.
 
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. In making this assessment, our management used the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on those criteria, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2007.
 
Our independent registered public accounting firm, KPMG LLP, performed audits of the Company’s consolidated financial statements. Management has made available to KPMG LLP all of the Company’s financial records and related data.
 
Management also recognizes its responsibility for fostering a strong ethical business environment that ensures the Company’s affairs are conducted according to the highest standards of professional conduct, honesty and integrity. The Company’s Code of Conduct and Business Practices (Code), which is posted on the Company’s web site, reflects this responsibility. The Code addresses the necessity of ensuring open communication within the Company; potential conflicts of interest; marketing practices; compliance with all laws, including those relating to financial disclosure; and the confidentiality of proprietary information. The Company’s Office of Ethics and Business Practices is responsible for raising employee awareness of the Company’s Code and serves as a confidential resource for inquiries and reporting.
 
The Audit Committee of the Board of Directors of the Company, composed of independent directors pursuant to the New York Stock Exchange listing standards and rules of the Securities and Exchange Commission, meets periodically with the external and internal auditors, jointly and separately, to evaluate the effectiveness of work performed by them in discharging their respective responsibilities and to assure their independence and free access to the Audit Committee.
 
 
 
/s/ Mark R. Thresher
 
Name: Mark R. Thresher
 
Title: President and Chief Operating Officer
 
February 29, 2008
 
 
 
F-1
 
 

 
The Board of Directors and Shareholder
 
Nationwide Life Insurance Company:
 
We have audited the accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholder’s equity and cash flows for each of the years in the three-year period ended December 31, 2007. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
 
As discussed in Note 3 to the consolidated financial statements, the Company adopted the American Institute of Certified Public Accountants’ Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts, in 2007.
 
 
 
/s/ KPMG LLP
 
Columbus, Ohio
 
February 29, 2008
 
 
 
F-2
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Consolidated Statements of Income
 
(in millions)
 
 
 
     Years ended December 31,
     2007     2006    2005
Revenues:
 
       
Policy charges
 
   $ 1,208.3     $ 1,132.6    $ 1,055.1
Premiums
 
     291.7       308.3      260.0
Net investment income
 
     1,975.8       2,058.5      2,105.2
Net realized investment (losses) gains
 
     (166.2 )     7.1      10.6
Other income
 
     7.5       0.2      2.2
                     
Total revenues
 
     3,317.1       3,506.7      3,433.1
                     
Benefits and expenses:
 
       
Interest credited to policyholder accounts
 
     1,262.6       1,330.1      1,331.0
Benefits and claims
 
     479.3       450.3      377.5
Policyholder dividends
 
     24.5       25.6      33.1
Amortization of deferred policy acquisition costs
 
     368.5       450.3      466.3
Interest expense, primarily with Nationwide Financial Services, Inc. (NFS)
 
     70.0       65.5      66.3
Other operating expenses
 
     529.5       536.8      538.3
                     
Total benefits and expenses
 
     2,734.4       2,858.6      2,812.5
                     
Income from continuing operations before federal income tax expense
 
     582.7       648.1      620.6
Federal income tax expense
 
     128.5       28.7      95.8
                     
Income from continuing operations
 
     454.2       619.4      524.8
Cumulative effect of adoption of accounting principle, net of taxes
 
     (6.0 )     —        —  
                     
Net income
 
   $ 448.2     $ 619.4    $ 524.8
                     
See accompanying notes to consolidated financial statements.
 
 
 
F-3
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Consolidated Balance Sheets
 
(in millions, except per share amounts)
 
 
 
     December 31,
     2007     2006
Assets
 
    
Investments:
 
    
Securities available-for-sale, at fair value:
 
    
Fixed maturity securities (cost $24,021.2 and $25,197.2)
 
   $ 23,933.4     $ 25,275.4
Equity securities (cost $69.6 and $28.5)
 
     72.9       34.4
Mortgage loans on real estate, net
 
     7,615.4       8,202.2
Short-term investments, including amounts managed by a related party
 
     959.1       1,722.0
Other investments
 
     1,330.8       1,292.9
              
Total investments
 
     33,911.6       36,526.9
Cash
 
     1.3       0.5
Accrued investment income
 
     314.3       323.6
Deferred policy acquisition costs
 
     3,997.4       3,758.0
Other assets
 
     1,638.9       2,001.5
Separate account assets
 
     69,676.5       67,351.9
              
Total assets
 
   $ 109,540.0     $ 109,962.4
              
Liabilities and Shareholder’s Equity
 
    
Liabilities:
 
    
Future policy benefits and claims
 
   $ 31,998.4     $ 34,409.4
Short-term debt
 
     285.3       75.2
Long-term debt, payable to NFS
 
     700.0       700.0
Other liabilities
 
     2,642.6       2,980.2
Separate account liabilities
 
     69,676.5       67,351.9
              
Total liabilities
 
     105,302.8       105,516.7
              
Shareholder’s equity:
 
    
Common stock ($1 par value; authorized - 5.0 shares; issued and outstanding - 3.8 shares)
 
     3.8       3.8
Additional paid-in capital
 
     274.4       274.4
Retained earnings
 
     4,049.5       4,138.8
Accumulated other comprehensive (loss) income
 
     (90.5 )     28.7
              
Total shareholder’s equity
 
     4,237.2       4,445.7
              
Total liabilities and shareholder’s equity
 
   $ 109,540.0     $ 109,962.4
              
See accompanying notes to consolidated financial statements.
 
 
 
F-4
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Consolidated Statements of Changes in Shareholder’s Equity
 
(in millions)
 
 
 
     Capital
shares
   Additional
paid-in
capital
   Retained
earnings
    Accumlated
other
comprehensive
income (loss)
    Total
shareholder’s
equity
 
Balance as of December 31, 2004
 
   $ 3.8    $ 274.4    $ 3,554.6     $ 393.8     $ 4,226.6  
Dividends to NFS
 
     —        —        (185.0 )     —         (185.0 )
Comprehensive income:
 
            
Net income
 
     —        —        524.8       —         524.8  
Other comprehensive loss, net of taxes
 
     —        —        —         (300.2 )     (300.2 )
                  
Total comprehensive income
 
               224.6  
                                      
Balance as of December 31, 2005
 
     3.8      274.4      3,894.4       93.6       4,266.2  
Dividends to NFS
 
     —        —        (375.0 )     —         (375.0 )
Comprehensive income:
 
            
Net income
 
     —        —        619.4       —         619.4  
Other comprehensive loss, net of taxes
 
     —        —        —         (64.9 )     (64.9 )
                  
Total comprehensive income
 
               554.5  
                                      
Balance as of December 31, 2006
 
     3.8      274.4      4,138.8       28.7       4,445.7  
Dividends to NFS
 
     —        —        (537.5 )     —         (537.5 )
Comprehensive income:
 
            
Net income
 
     —        —        448.2       —         448.2  
Other comprehensive loss, net of taxes
 
     —        —        —         (119.2 )     (119.2 )
                  
Total comprehensive income
 
               329.0  
                                      
Balance as of December 31, 2007
 
   $ 3.8    $ 274.4    $ 4,049.5     $ (90.5 )   $ 4,237.2  
                                      
See accompanying notes to consolidated financial statements.
 
 
 
F-5
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Consolidated Statements of Cash Flows
 
(in millions)
 
 
 
     Years ended December 31,  
     2007     2006     2005  
Cash flows from operating activities:
 
      
Net income
 
   $ 448.2     $ 619.4     $ 524.8  
Adjustments to reconcile net income to net cash provided by operating activities:
 
      
Net realized investment losses (gains)
 
     166.2       (7.1 )     (10.6 )
Interest credited to policyholder accounts
 
     1,262.6       1,330.1       1,331.0  
Capitalization of deferred policy acquisition costs
 
     (612.6 )     (569.6 )     (460.5 )
Amortization of deferred policy acquisition costs
 
     368.5       450.3       466.3  
Amortization and depreciation
 
     22.3       46.6       65.6  
Decrease (increase) in other assets
 
     410.5       (298.0 )     591.0  
(Decrease) increase in policy and other liabilities
 
     (230.3 )     228.8       (511.4 )
Other, net
 
     8.5       0.1       (114.9 )
                        
Net cash provided by operating activities
 
     1,843.9       1,800.6       1,881.3  
                        
Cash flows from investing activities:
 
      
Proceeds from maturity of securities available-for-sale
 
     4,379.8       5,128.6       4,198.5  
Proceeds from sale of securities available-for-sale
 
     4,657.5       2,267.3       2,619.7  
Proceeds from repayments or sales of mortgage loans on real estate
 
     2,467.7       2,430.8       2,854.6  
Cost of securities available-for-sale acquired
 
     (8,008.3 )     (5,658.9 )     (6,924.1 )
Cost of mortgage loans on real estate originated or acquired
 
     (1,887.0 )     (2,180.4 )     (2,524.9 )
Net decrease (increase) in short-term investments
 
     762.9       (125.4 )     56.9  
Collateral (paid) received - securities lending, net
 
     (175.6 )     (332.6 )     36.6  
Other, net
 
     (68.6 )     52.1       121.6  
                        
Net cash provided by investing activities
 
     2,128.4       1,581.5       438.9  
                        
Cash flows from financing activities:
 
      
Net increase (decrease) in short-term debt
 
     210.1       (167.1 )     27.3  
Cash dividends paid to NFS
 
     (537.5 )     (375.0 )     (185.0 )
Investment and universal life insurance product deposits
 
     3,586.1       3,400.8       2,845.4  
Investment and universal life insurance product withdrawals
 
     (7,230.2 )     (6,241.2 )     (5,022.5 )
                        
Net cash used in financing activities
 
     (3,971.5 )     (3,382.5 )     (2,334.8 )
                        
Net increase (decrease) in cash
 
     0.8       (0.4 )     (14.6 )
Cash, beginning of period
 
     0.5       0.9       15.5  
                        
Cash, end of period
 
   $ 1.3     $ 0.5     $ 0.9  
                        
See accompanying notes to consolidated financial statements.
 
 
 
F-6
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements
 
December 31, 2007, 2006 and 2005
 
 
 
(1)
Nature of Operations
 
Nationwide Life Insurance Company (NLIC, or collectively with its subsidiaries, the Company) was incorporated in 1929 and is an Ohio stock legal reserve life insurance company. The Company is a member of the Nationwide group of companies (Nationwide), which is comprised of Nationwide Mutual Insurance Company (NMIC) and all of its subsidiaries and affiliates.
 
All of the outstanding shares of NLIC’s common stock are owned by NFS, a holding company formed by Nationwide Corporation (Nationwide Corp.), a majority-owned subsidiary of NMIC.
 
Wholly-owned subsidiaries of NLIC as of December 31, 2007 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker/dealer.
 
The Company is a leading provider of long-term savings and retirement products in the United States of America (U.S.). The Company develops and sells a diverse range of products including individual annuities, private and public sector group retirement plans, other investment products sold to institutions, life insurance and advisory services.
 
The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker/dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), Nationwide Financial Network (NFN) producers; and Mullin TBG Insurance Agency Services, LLC, a joint venture between NFS’ majority-owned subsidiary, TBG Insurance Services Corporation d/b/a TBG Financial, and MC Insurance Agency Services, LLC d/b/a Mullin Consulting. The Company also distributes products through the agency distribution force of its ultimate majority parent company, NMIC.
 
As of December 31, 2007 and 2006, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.
 
 
 
(2)
Summary of Significant Accounting Policies
 
The Company’s significant accounting policies that materially affect financial reporting are summarized below. The accompanying consolidated financial statements were prepared in accordance with United States generally accepted accounting principles (GAAP).
 
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ significantly from those estimates.
 
The Company’s most significant estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition costs (DAC) for investment and universal life insurance products; impairment losses on investments; valuation allowances for mortgage loans on real estate; the liability for future policy benefits and claims; and federal income tax provision. Although some variability is inherent in these estimates, recorded amounts reflect management’s best estimates based on facts and circumstances as of the balance sheet date. Management believes the amounts provided are appropriate.
 
Certain items in the 2006 and 2005 consolidated financial statements and related notes have been reclassified to conform to the current presentation.
 
 
 
F-7
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(a) Consolidation Policy
 
The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. Minority interest expense is included in other operating expenses in the consolidated statements of income, and minority interest is included in other liabilities on the consolidated balance sheets. All significant intercompany balances and transactions were eliminated.
 
(b) Valuation of Investments, Investment Income and Related Gains and Losses
 
The Company is required to classify its fixed maturity securities and marketable equity securities as held-to-maturity, available-for-sale or trading. All fixed maturity and marketable equity securities are classified as available-for-sale. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of adjustments to DAC, future policy benefits and claims, and deferred federal income taxes reported as a separate component of accumulated other comprehensive income (AOCI) in shareholder’s equity. The adjustment to DAC represents the changes in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.
 
The fair value of fixed maturity and marketable equity securities is generally obtained from independent pricing services based on market quotations. For fixed maturity securities not priced by independent services (generally private placement securities), an internally developed pricing model or “corporate pricing matrix” is most often used. The corporate pricing matrix is developed by obtaining private spreads versus the U.S. Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the U.S. Treasury yield to create an estimated market yield for that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. Additionally, a “structured product model” is used to value certain fixed maturity securities with complex cash flows, such as certain mortgage-backed and asset-backed securities,. The structured product model uses third party pricing tools. For securities for which quoted market prices are not available and for which the Company’s structured product model is not suitable for estimating fair values, fair values are determined using other modeling techniques, primarily a commercial software application utilized in valuing complex securitized investments with variable cash flows. The company also utilized broker quotes in pricing securities or to validate modeled prices. As of December 31, 2007, 70% of the fair values of fixed maturity securities were obtained from independent pricing services, 17% from the Company’s pricing matrices and 13% from other sources compared to 71%, 20% and 9%, respectively, in 2006.
 
Management regularly reviews each investment in its fixed maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments.
 
For debt and equity securities not subject to Emerging Issues Task Force Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets (EITF 99-20), an other-than-temporary impairment charge is taken when the Company does not have the ability and intent to hold the security until the forecasted recovery or if it is no longer probable that the Company will recover all amounts due under the contractual terms of the security. Many criteria are considered during this process including, but not limited to, the current fair value as compared to cost or amortized cost, as appropriate, of the security; the amount and length of time a security’s fair value has been below cost or amortized cost; specific credit issues and financial prospects related to the issuer; management’s intent to hold or dispose of the security; and current economic conditions. Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment.
 
 
 
F-8
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In addition to the above, for certain securitized financial assets with contractual cash flows, including asset-backed securities, EITF 99-20 also requires the Company to periodically update its best estimate of cash flows over the life of the security. If the fair value of a securitized financial asset is not greater than or equal to its carrying value based on current information and events, and if there has been an adverse change in estimated cash flows since the last revised estimate (considering both timing and amount), then the Company recognizes an other-than-temporary impairment and writes down the investment to fair value.
 
For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income. All other investment income is recorded using the interest method without anticipating the impact of prepayments.
 
The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan is impaired, a provision for loss is established equal to either the difference between the carrying value and the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. In addition to the valuation allowance on specific loans, the Company maintains an allowance not yet specifically identified by loan for probable losses inherent in the loan portfolio as of the balance sheet date. The valuation allowance account for mortgage loans on real estate reflects management’s best estimate of probable credit losses, including losses incurred at the balance sheet date but not yet identified by specific loan. Management’s periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Changes in the valuation allowance are recorded in net realized investment gains and losses. Loans in foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received.
 
The Company grants mainly commercial mortgage loans on real estate to customers throughout the U.S. As of December 31, 2007, the Company’s largest exposure to any single borrower, region and property type was 2%, 24% and 33%, respectively, of the Company’s general account mortgage loan portfolio, compared to 3%, 26% and 33%, respectively, as of December 31, 2006.
 
Real estate to be held and used is carried at cost less accumulated depreciation. Real estate designated as held for disposal is not depreciated and is carried at the lower of the carrying value at the time of such designation or fair value less cost to sell. Other long-term investments are carried on the equity method of accounting.
 
Impairment losses are recorded on investments in long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.
 
Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in the Company’s mortgage loan valuation allowance and recognition of impairment losses for other-than-temporary declines in the fair values of applicable investments are included in net realized investment gains and losses.
 
 
 
F-9
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(c) Derivative Instruments
 
Derivatives are carried at fair value. On the date the derivative contract is entered into, the Company designates the derivative as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge); a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); a foreign currency fair value or cash flow hedge (foreign currency hedge); or a non-hedge transaction. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for entering into various hedge transactions. This process includes linking all derivatives that are designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used for hedging transactions are expected to be and, for ongoing hedging relationships, have been highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not, or is not expected to be, highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.
 
The Company enters into interest rate swaps, cross-currency swaps or Euro futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short U.S. Treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in net realized investment gains and losses. Changes in the fair value of the hedged item that are attributable to the risk being hedged are also recorded in net realized investment gains and losses.
 
Accrued interest receivable or payable under interest rate and foreign currency swaps are recognized as an adjustment to net investment income or interest credited to policyholder accounts consistent with the nature of the hedged item, except for interest rate swaps hedging the anticipated sale of investments where amounts receivable or payable under the swaps are recorded as net realized investment gains and losses, and except for interest rate swaps hedging the anticipated purchase of investments where amounts receivable or payable under the swaps are initially recorded in AOCI to the extent the hedging relationship is effective.
 
The Company periodically may enter into a derivative transaction that will not qualify for hedge accounting. The Company does not enter into speculative positions. Although these transactions do not qualify for hedge accounting, or have not been designated in hedging relationships by the Company, they are part of its overall risk management strategy. For example, the Company may sell credit default protection through a credit default swap. Although the credit default swap is not effective in hedging specific investments, the income stream allows the Company to manage overall investment yields while exposing the Company to acceptable credit risk. The Company may enter into a cross-currency basis swap (pay a variable U.S. rate and receive a variable foreign-denominated rate) to eliminate the foreign currency exposure of a variable rate foreign-denominated liability. Although basis swaps may qualify for hedge accounting, the Company has chosen not to designate these derivatives as hedging instruments due to the difficulty in assessing and monitoring effectiveness for both sides of the basis swap. Derivative instruments that do not qualify for hedge accounting or are not designated as hedging instruments are carried at fair value, with changes in fair value recorded in net realized investment gains and losses.
 
 
 
F-10
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(d) Revenues and Benefits
 
Investment and Universal Life Insurance Products: Investment products consist primarily of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, bank-owned life insurance (BOLI) and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, asset fees, cost of insurance charges, administrative fees and surrender charges that have been earned and assessed against policy account balances during the period. The timing of revenue recognition as it relates to fees assessed on investment contracts and universal life contracts is determined based on the nature of such fees. Asset fees, cost of insurance charges and administrative fees are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. Policy benefits and claims that are charged to expense include interest credited to policyholder accounts and benefits and claims incurred in the period in excess of related policyholder accounts.
 
Traditional Life Insurance Products: Traditional life insurance products include those products with fixed and guaranteed premiums and benefits and primarily consist of whole life insurance, limited-payment life insurance, term life insurance and certain annuities with life contingencies. Premiums for traditional life insurance products are recognized as revenue when due. Benefits and expenses are associated with earned premiums so that profits are recognized over the life of the contract. This association is accomplished through the provision for future policy benefits and the deferral and amortization of policy acquisition costs.
 
(e) Deferred Policy Acquisition Costs for Investment and Universal Life Insurance Products
 
The Company has deferred certain costs of acquiring investment and universal life insurance products business, principally commissions, certain expenses of the policy issue and underwriting department, and certain variable sales expenses that relate to and vary with the production of new and renewal business. In addition, the Company defers sales inducements, such as interest credit bonuses and jumbo deposit bonuses. Investment products primarily consist of individual and group variable and fixed deferred annuities in the Individual Investments and Retirement Plans segments. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, BOLI and other interest-sensitive life insurance policies in the Individual Protection segment. DAC are subject to recoverability testing in the year of policy issuance and loss recognition testing at the end of each reporting period.
 
For investment and universal life insurance products, DAC is being amortized with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administration fees, surrender charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses. The DAC asset related to investment and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(b) to the audited consolidated financial statements included in the F pages of this report.
 
 
 
F-11
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The assumptions used in the estimation of future gross profits are based on the Company’s current best estimates of future events and are reviewed as part of an annual process during the second quarter. During the annual process, the Company performs a comprehensive study of assumptions, including mortality and persistency studies, maintenance expense studies, and an evaluation of projected general and separate account investment returns. The most significant assumptions that are involved in the estimation of future gross profits include future net separate account investment performance, surrender/lapse rates, interest margins and mortality. Currently, the Company’s long-term assumption for net separate account investment performance is approximately 7% growth per year and varies by product. This assumption, like others, is reviewed as part of the annual process. If this assumption were unlocked, the date of the unlocking could become the anchor date used in the reversion to the mean process (defined below). Variances from the long-term assumption are expected since the majority of the investments in the underlying separate accounts are in equity securities, which strongly correlate with the Standard & Poor’s (S&P) 500 Index in the aggregate. The reversion to the mean process is based on actual net separate account investment performance from the anchor date to the valuation date. The Company then assumes different performance levels over the next three years such that the separate account mean return measured from the anchor date to the end of the life of the product equals the long-term assumption. The assumed net separate account investment performance used in the DAC models is intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, and as part of its pre-set parameters, the Company’s reversion to the mean process generally limits net separate account investment performance to 0-15% during the three-year reversion period. See below for a discussion of current year assumption changes.
 
Changes in assumptions can have a significant impact on the amount of DAC reported for investment and universal life insurance products and their related amortization patterns. In the event actual experience differs from assumptions or future assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense, which could be significant. In general, increases in the estimated long-term general and separate account returns result in increased expected future profitability and may lower the rate of DAC amortization, while increases in long-term lapse/surrender and mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization.
 
In addition to the comprehensive annual study of assumptions, management evaluates the appropriateness of the individual variable annuity DAC balance quarterly within pre-set parameters. These parameters are designed to appropriately reflect the Company’s long-term expectations with respect to individual variable annuity contracts while also evaluating the potential impact of short-term experience on the Company’s recorded individual variable annuity DAC balance. If the recorded balance of individual variable annuity DAC falls outside of these parameters for a prescribed time period, or if the recorded balance falls outside of these parameters and management determines it is not reasonably possible to get back within the parameters during this time period, assumptions are required to be unlocked, and DAC is recalculated using revised best estimate assumptions. When DAC assumptions are unlocked and revised, the Company continues to use the reversion to the mean process. See below for a discussion of current year assumption changes.
 
At the end of the second quarter of 2007, the Company determined as part of its analysis of DAC that the overall profitability of separate account products is expected to exceed previous estimates due to favorable financial market trends. Accordingly, the Company unlocked its DAC assumptions after completing a comprehensive review of assumptions used to project DAC and other related balances, including sales inducement assets, unearned revenue reserves, and guaranteed minimum death and income benefit reserves. This review covered all assumptions including expected separate account investment returns, lapse rates, mortality and expenses. Additionally, while the Company estimates that the overall profitability of its variable products has improved, it also expects the long-term net growth in separate account investment performance to moderate. As a result of its current analysis, including its evaluation of ongoing trends and expectations regarding financial market performance, the Company reduced its long-term net separate account growth rate assumption from approximately 8% to approximately 7%. The Company unlocked assumptions, as appropriate, for all investment products and variable universal life insurance products in order to remain consistent across product lines using revised assumptions which reflect the Company’s current best estimate of future events. Therefore, in the second quarter of 2007, the Company recorded a net increase in DAC and a benefit to DAC amortization and other related balances totaling $221.6 million pre-tax, which was reported in the following segments in the pre-tax amounts indicated: Individual Investments - $196.4 million; Retirement Plans - $10.5 million; and Individual Protection - $14.7 million.
 
 
 
F-12
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The most significant assumption changes that resulted from the Company’s unlocking decisions were resetting the anchor date for reversion to the mean calculations to June 30, 2007, resulting in resetting the assumption for net separate account growth to approximately 7% during the three-year reversion period; resetting the long-term assumption for net separate account growth and the discount rate used to calculate the present value of estimated gross profits to approximately 7% (formerly approximately 8%); and increasing estimated lapse rates for fixed annuity and bank-owned life insurance products.
 
During the second quarter of 2007, the Company added a new feature to its existing guaranteed minimum withdrawal benefit rider, Lifetime Income (L.inc). This new feature results in a substantial change in the existing contracts and, therefore, an extinguishment of the DAC associated with those contracts pursuant to Statement of Position (SOP) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). As a result, existing DAC and other related balances were eliminated resulting in a $135.0 million pre-tax charge.
 
(f) Separate Accounts
 
Separate account assets and liabilities represent contractholders’ funds that have been legally segregated into accounts with specific investment objectives. Separate account assets are recorded at fair value based primarily on market quotations of the underlying securities. Investment income and realized investment gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income except for (1) the fees the Company receives, which are assessed on a daily or monthly basis and recognized as revenue when assessed and earned, and (2) the activity related to contract guarantees, which are riders to existing variable annuity contracts.
 
(g) Future Policy Benefits and Claims
 
The process of calculating reserve amounts for a life insurance organization involves the use of a number of assumptions, including those related to persistency (how long a contract stays with a company), mortality (the relative incidence of death in a given time), morbidity (the relative incidence of disability resulting from disease or physical impairment) and interest rates (the rates expected to be paid or received on financial instruments, including insurance or investment contracts).
 
The Company calculates its liability for future policy benefits and claims for investment products in the accumulation phase and universal life and variable universal life insurance policies as the policy account balance, which represents participants’ net premiums and deposits plus investment performance and interest credited less applicable contract charges.
 
The Company’s liability for funding agreements to an unrelated third party trust related to the Company’s medium-term note (MTN) program equals the balance that accrues to the benefit of the contractholder, including interest credited. The funding agreements constitute insurance obligations and are considered annuity contracts under Ohio insurance laws.
 
The liability for future policy benefits and claims for traditional life insurance policies was determined using the net level premium method using interest rates varying from 2.0% to 10.5% and estimates of mortality, morbidity, investment yields and withdrawals that were used or being experienced at the time the policies were issued.
 
The liability for future policy benefits for payout annuities was calculated using the present value of future benefits and maintenance costs discounted using interest rates varying generally from 3.0% to 13.0%.
 
(h) Participating Business
 
Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 6% in 2007 (8% in 2006 and 10% in 2005) of the Company’s life insurance in force, 48% of the number of life insurance policies in force in 2007 (50% in 2006 and 52% in 2005) and 7% of life insurance statutory premiums in 2007 (5% in 2006 and 5% in 2005). The provision for policyholder dividends was based on the current dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.
 
 
 
F-13
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(i) Federal Income Taxes
 
The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. Any such change could significantly affect the amounts reported in the consolidated statements of income. Management has established reserves in accordance with FIN 48 based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Management evaluates the appropriateness of such reserves quarterly based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums and other rulings issued by the Internal Revenue Service (IRS) or the tax courts.
 
The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully realized.
 
(j) Reinsurance Ceded
 
Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company.
 
(k) Change in Accounting Principle
 
Historically, the Company accrued for legal costs associated with litigation defense and regulatory investigations by estimating the ultimate costs of such activity. Beginning April 1, 2007, the Company’s accrual for such legal expenses includes only the amount for services that have been provided but not yet paid. The Company believes the newly adopted accounting principle is preferable because it more accurately reflects expenses in the periods in which they are incurred. The Company continues to estimate and accrue the ultimate amounts expected to be paid for litigation and regulatory investigation loss contingencies. The Company has presented its condensed consolidated financial statements and accompanying notes as applicable for all periods presented to retroactively apply the adoption of this change in accounting principle.
 
The following table summarizes the impact of the change in accounting principle described above for the years ended December 31:
 
 
 
(in millions)
 
   2007     2006     2005  
Other operating expenses
 
   $ 2.8     $ 5.0     $ (0.5 )
Net income
 
     (1.9 )     (3.1 )     0.3  
The cumulative effect of the change on retained earnings as of January 1, 2006 was an $11.0 million increase.
 
 
 
F-14
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(3)
Recently Issued Accounting Standards
 
In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations (SFAS 141R), which replaces SFAS No. 141, Business Combinations (SFAS 141). The objective of SFAS 141R is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. Accordingly, SFAS 141R establishes principles and requirements for how the acquirer: 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; 2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and 3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R applies to all transactions or other events in which an entity obtains control of one or more businesses and retains the fundamental requirements in SFAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R is applicable prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier application is prohibited. The Company currently is evaluating the impact of adopting SFAS 141R.
 
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51 (SFAS 160). The objective of SFAS 160 is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 also amends certain consolidation procedures prescribed by Accounting Research Bulletin No. 51, Consolidated Financial Statements, for consistency with the requirements of SFAS 141R. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company currently is evaluating the impact of adopting SFAS 160.
 
In June 2007, the Accounting Standards Executive Committee (AcSEC) of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies (SOP 07-1). SOP 07-1 provides guidance for determining whether an entity is within the scope of the AICPA Audit and Accounting Guide Investment Companies (the Guide). For those entities that are investment companies under SOP 07-1, this SOP also addresses whether the specialized industry accounting principles of the Guide (i.e., fair value accounting) should be retained by a parent company in consolidation or by an investor that has the ability to exercise significant influence over the investment company and applies the equity method of accounting to its investment in the entity (referred to as an equity method investor). In addition, SOP 07-1 includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain investment company accounting in the parent company’s consolidated financial statements or the financial statements of an equity method investor. The provisions of SOP 07-1 were to be effective for fiscal years beginning on or after December 15, 2007. On February 14, 2008, the FASB issued FASB Staff Position (FSP) SOP 07-1-1, which delays indefinitely the effective date of SOP 07-1. The Company will monitor the FASB and AICPA deliberations regarding this standard.
 
In April 2007, the FASB issued FSP FIN 39-1, An Amendment of FASB Interpretation No. 39 (FSP FIN 39-1). FSP FIN 39-1 addresses whether a reporting entity that is party to a master netting arrangement can offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments that have been offset under the same master netting arrangement in accordance with paragraph 10 of Interpretation 39. FSP FIN 39-1 is effective for fiscal years beginning after November 15, 2007, with early application permitted. FSP FIN 39-1 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.
 
 
 
F-15
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. In addition, SFAS 159 does not establish requirements for recognizing and measuring dividend income, interest income or interest expense, nor does it eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS No. 157, Fair Value Measurements (SFAS 157), and SFAS No. 107, Disclosures about Fair Value of Financial Instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company will elect adoption of SFAS 159 for certain financial instruments effective January 1, 2008, which is not expected to have a material impact on the Company’s financial position or results of operations. The Company will assess election for new financial assets or liabilities on a prospective basis.
 
In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end balance sheet, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end balance sheet is effective for fiscal years ending after December 15, 2008. The Company adopted SFAS 158 effective December 31, 2006. The adoption of SFAS 158 did not have a material impact on the Company’s financial position or results of operations.
 
In September 2006, the FASB issued SFAS 157. SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. For recurring fair value measurements using significant unobservable inputs, the reporting entity shall disclose the effect of the measurements on earnings for the period. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt SFAS 157 effective January 1, 2008. SFAS 157 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.
 
In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108 (SAB 108). SAB 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB 108 requires registrants to quantify misstatements using both the balance sheet and income-statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB 108 does not change the SEC’s previous guidance in SAB No. 99 on evaluating the materiality of misstatements. The Company adopted SAB 108 effective December 31, 2006. SAB 108 did not have a material impact on the Company’s financial position or results of operations upon adoption.
 
 
 
F-16
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In June 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 effective January 1, 2007. FIN 48 did not have a material impact on the Company’s financial position or results of operations upon adoption.
 
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets (SFAS 156).SFAS 156 amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140). SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. SFAS 156 permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. An entity that uses derivative instruments to mitigate the risks inherent in servicing assets and servicing liabilities is required to account for those derivative instruments at fair value. Under SFAS 156, an entity can elect subsequent fair value measurement to account for its separately recognized servicing assets and servicing liabilities. By electing that option, an entity may simplify its accounting because SFAS 156 permits income statement recognition of the potential offsetting changes in fair value of those servicing assets and servicing liabilities and derivative instruments in the same accounting period. SFAS 156 is effective for fiscal years beginning after September 15, 2006. The Company adopted SFAS 156 effective January 1, 2007. SFAS 156 did not have a material impact on the Company’s financial position or results of operations upon adoption.
 
In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments (SFAS 155). SFAS 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), and SFAS 140. SFAS 155 also resolves issues addressed in SFAS 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. In summary, SFAS 155: (1) permits an entity to make an irrevocable election to measure any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation at fair value in its entirety, with changes in fair value recognized in earnings; (2) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (3) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (4) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (5) amends SFAS 140 to eliminate the prohibition on a qualifying special purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Provisions of SFAS 155 may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis. The Company adopted SFAS 155 effective January 1, 2006. On the date of adoption, there was no impact to the Company’s financial position or results of operations.
 
In September 2005, AcSEC issued SOP 05-1. SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, issued by the FASB. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights or coverages that occurs as a result of the exchange of a contract for a new contract, or by amendment, endorsement or rider to a contract, or by the election of a new feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Retrospective application of SOP 05-1 to previously issued financial statements is not permitted. Initial application of SOP 05-1 is required as of the beginning of an entity’s fiscal year. The Company adopted SOP 05-1 effective January 1, 2007, which resulted in a $6.0 million charge, net of taxes, as the cumulative effect of adoption of this accounting principle.
 
 
 
F-17
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS 154), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, with earlier adoption permitted. The Company adopted SFAS 154 effective January 1, 2006. SFAS 154 did not have any impact on the Company’s financial position or results of operations upon adoption.
 
 
 
(4)
Fair Value of Financial Instruments
 
Assets and liabilities that are presented at fair value in the consolidated balance sheets are not included in the disclosures below, including investment securities, cash, separate accounts, securities lending collateral and derivative financial instruments. Those financial assets and liabilities not presented at fair value are discussed below.
 
The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought or sold, or in the case of liabilities incurred or settled, in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is based on the best information available in the circumstances. Such estimates of fair value consider prices for similar assets or similar liabilities and the results of valuation techniques to the extent available in the circumstances. Examples of valuation techniques include the present value of estimated expected future cash flows using discount rates commensurate with the risks involved, option-pricing models, matrix pricing, option-adjusted spread models and fundamental analysis. Valuation techniques for measuring assets and liabilities must be consistent with the objective of measuring fair value and should incorporate assumptions that market participants would use in their estimates of values, future revenues and future expenses, including assumptions about interest rates, default, prepayment and volatility.
 
Many of the Company’s assets and liabilities subject to these disclosure requirements are not actively traded, requiring fair values to be estimated by management using matrix pricing, present value or other suitable valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments.
 
The tax ramifications of the related unrealized gains and losses can have a significant effect on the estimates of fair value and have not been considered in arriving at such estimates.
 
In estimating its fair value disclosures, the Company used the following methods and assumptions:
 
Mortgage loans on real estate, net: The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Estimated fair value is based on the present value of expected future cash flows discounted at the loan’s effective interest rate.
 
Policy loans: The carrying amount reported in the consolidated balance sheets approximates fair value.
 
Investment contracts: The fair values of the Company’s liabilities under investment type contracts are based on one of two methods. For investment contracts without defined maturities, fair value is the amount payable on demand, net of certain surrender charges. For investment contracts with known or determined maturities, fair value is estimated using discounted cash flow analysis. Interest rates used in this analysis are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued.
 
Short-term debt: The carrying amount reported in the consolidated balance sheets approximates fair value.
 
 
 
F-18
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
Long-term debt, payable to NFS: The fair values for long-term debt are based on estimated market prices.
 
The following table summarizes the carrying values and estimated fair values of financial instruments subject to disclosure requirements as of December 31:
 
 
 
     2007     2006  
(in millions)
 
   Carrying
value
    Estimated
fair value
    Carrying
value
    Estimated
fair value
 
Assets
 
        
Investments:
 
        
Mortgage loans on real estate, net
 
   $ 7,615.4     $ 7,659.9     $ 8,202.2     $ 8,060.7  
Policy loans
 
     687.9       687.9       639.2       639.2  
Liabilities
 
        
Investment contracts
 
     (24,671.0 )     (23,084.7 )     (27,124.7 )     (25,455.2 )
Short-term debt
 
     (285.3 )     (285.3 )     (75.2 )     (75.2 )
Long-term debt, payable to NFS
 
     (700.0 )     (751.3 )     (700.0 )     (809.3 )
 
 
(5)
Derivative Financial Instruments
 
Qualitative Disclosure
 
Interest Rate Risk Management
 
The Company periodically purchases fixed rate investments to back variable rate liabilities. As a result, the Company can be exposed to interest rate risk due to the mismatch between variable rate liabilities and fixed rate assets. In an effort to mitigate the risk from this mismatch, the Company enters into various types of derivative instruments, with fluctuations in the fair values of the derivatives offsetting changes in the fair values of the investments resulting from changes in interest rates. The Company principally uses pay fixed/receive variable interest rate swaps to manage this risk.
 
Under these interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments. The fixed interest paid on the swap offsets the fixed interest received on the investment, resulting in the Company receiving the variable interest payments on the swap, generally 3-month U.S. London Interbank Offered Rate (LIBOR), and the credit spread on the investment. The net receipt of a variable rate will then more closely match the variable rate paid on the liability.
 
As a result of entering into fixed rate commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to funding of the loans. In an effort to manage this risk, the Company enters into short U.S. Treasury futures and/or pay fixed interest rate swaps during the commitment period. With short U.S. Treasury futures or pay fixed interest rate swaps, if interest rates rise/fall, the gains/losses on the futures will offset the change in fair value of the commitment attributable to the change in interest rates.
 
The Company periodically purchases variable rate investments such as commercial mortgage loans and corporate bonds. As a result, the Company can be exposed to variability in cash flows and investment income due to changes in interest rates. Such variability poses risks to the Company when the assets are funded with fixed rate liabilities. In an effort to manage this risk, the Company may enter into receive fixed/pay variable interest rate swaps.
 
In using these interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap offsets the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap and the credit spread on the investment. The net receipt of a fixed rate will then more closely match the fixed rate paid on the liability.
 
 
 
F-19
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The Company manages interest rate risk at the segment level. Different segments may simultaneously hedge interest rate risks associated with owning fixed and variable rate investments considering the risk relevant to a particular segment.
 
Foreign Currency Risk Management
 
In conjunction with the Company’s MTN program, the Company periodically issues both fixed and variable rate liabilities denominated in foreign currencies. As a result, the Company is exposed to changes in the fair value of liabilities due to changes in foreign currency exchange rates and related interest rates. In an effort to manage these risks, the Company enters into cross-currency interest rate swaps.
 
The Company is exposed to changes in the fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and related interest rates. In an effort to manage this risk, the Company uses cross-currency interest rate hedges to swap these asset characteristics to variable U.S. dollar rate instruments. Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in a foreign currency, and receive a variable U.S. dollar rate, generally 3-month U.S. LIBOR. These derivative instruments are designated as a fair value hedge of a fixed rate foreign denominated asset.
 
Cross-currency interest rate swaps on variable rate investments are structured to pay a variable rate, in a foreign currency, and receive a fixed U.S. dollar rate. The terms of the foreign currency paid on the swap will exactly match the terms of the foreign currency received on the asset, thus eliminating currency risk. These derivative instruments are designated as a cash flow hedge.
 
Equity Market Risk Management
 
Asset fees calculated as a percentage of separate account assets are a significant source of revenue to the Company. As of December 31, 2007 and 2006, approximately 82% of separate account assets were invested in equity mutual funds. Gains and losses in the equity markets result in corresponding increases and decreases in the Company’s separate account assets and asset fee revenue. In addition, a decrease in separate account assets may decrease the Company’s expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in guaranteed contract claims, which also may require the Company to accelerate amortization of DAC.
 
The Company’s long-term assumption for net separate account returns is 7% annual growth. If equity markets were unchanged throughout a given year, the Company estimates that its net earnings per diluted share, calculated using current weighted average diluted shares outstanding, would be approximately $0.05 to $0.10 less than if the Company’s long-term assumption for net separate account returns were realized. This analysis assumes no other factors change and that an unlocking of DAC assumptions would not be required. However, as it does each quarter, the Company would evaluate its DAC balance and underlying assumptions to determine the need for unlocking. The Company can provide no assurance that the experience of flat equity market returns would not result in changes to other factors affecting profitability, including the possibility of unlocking of DAC assumptions.
 
Many of the Company’s individual variable annuity contracts offer GMDB features. A GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on premiums paid less amounts withdrawn or contract value on a specified anniversary date. A decline in the stock market causing the contract value to fall below this specified amount, which varies from contract to contract based on the date the contract was entered into as well as the GMDB feature elected, will increase the net amount at risk, which is the GMDB in excess of the contract value. This could result in additional GMDB claims.
 
 
 
F-20
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In an effort to mitigate this risk, the Company implemented a GMDB economic hedging program for certain new and existing business. Prior to implementation of the GMDB hedging program in 2000, the Company managed this risk primarily by entering into reinsurance arrangements. The GMDB economic hedging program is designed to offset changes in the economic value of the designated GMDB obligation. Currently the program shorts S&P 500 Index futures, which provides an offset to changes in the value of the designated obligation. The futures are not designated as hedges and, therefore, hedge accounting is not applied. The Company’s economic and accounting hedges are not perfectly offset. Therefore, the economic hedging activity is likely to lead to earnings volatility. This volatility was negligible in 2007. As of December 31, 2007 and 2006, the Company’s net amount at risk was $519.9 million and $562.4 million before reinsurance, respectively, and $317.2 million and $193.0 million net of reinsurance, respectively. As of December 31, 2007 and 2006, the Company’s reserve for GMDB claims was $47.4 million and $29.3 million, respectively.
 
The Company also offers certain variable annuity products with guaranteed minimum accumulation benefit (GMAB), guaranteed lifetime withdrawal benefit (GLWB) and hybrid GMAB/GLWB riders (collectively referred to as living benefits). A GMAB provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the time of issuance of a variable annuity contract. In some cases, the contractholder also has the option, after a specified time, to drop the rider and continue the variable annuity contract without the GMAB. The design of the GMAB rider limits the risk to the Company in a variety of ways including asset allocation requirements, which serve to reduce the Company’s potential exposure to underlying fund performance risks. Specifically, the terms in the GMAB rider limit policyholder asset allocation by either (1) requiring partial allocation of assets to a guaranteed term option (a fixed rate investment option) and excluding certain funds that are highly volatile or difficult to hedge or (2) requiring all assets be allocated to one of the approved asset allocation funds or models defined by the Company.
 
Beginning in March 2005, the Company began offering a hybrid GMAB/GLWB through its Capital Preservation Plus Lifetime Income (CPPLI) contract rider. This living benefit combines a GMAB feature in its first 5-10 years with a lifetime withdrawal benefit election at the end of the GMAB feature. Upon maturity of the GMAB, the contractholder can elect the lifetime withdrawal benefit, which would continue for the duration of the insured’s life; elect a new CPPLI rider; or drop the rider completely and continue the variable annuity contract without any rider. If the lifetime withdrawal benefit is elected and the insured’s contract value is exhausted through such withdrawals and market conditions, the Company will continue to fund future withdrawals at a pre-defined level until the insured’s death. In some cases, the contractholder has the right to drop the GLWB portion of this rider or periodically reset the guaranteed withdrawal basis to a higher level. This benefit requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy as previously described above.
 
In March 2006, the Company added Lifetime Income (L.inc), a stand-alone GLWB, to complement CPPLI in its product offerings. This rider is very similar to the hybrid benefit discussed above in that L.inc and CPPLI both have guaranteed withdrawal rates that increase based on the age at which the contractholder begins taking income. The withdrawal rates are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder. The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a ratchet feature that is driven by account performance and a roll-up feature that is driven by policy duration. Generally, the longer the contractholder waits before commencing withdrawals, the greater the guaranteed lifetime income. One key difference between L.inc and CPPLI is that the charge associated with L.inc is assessed against the benefit base. This is a risk mitigation feature as it alleviates much of the uncertainty around account performance and customer withdrawal patterns, both of which can lead to lower than expected revenue streams if the charge were assessed on account value. In June 2007, the Company added a feature to L.inc to allow for a lump settlement in lieu of lifetime withdrawals in certain situations.
 
 
 
F-21
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The Company’s living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contractholder persistency, contractholder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility. As of December 31, 2007 and 2006, the net balance of the embedded derivatives for living benefits was a liability of $91.9 million and an asset of $23.7 million, respectively.
 
Similar to the Company’s economic hedging for GMDBs, the living benefits features are also being economically hedged. The primary risks being hedged are the exposures associated with declining equity market returns and downward interest rate movements. The Company employs a variety of instruments to mitigate this exposure including S&P 500 Index futures, U.S. Treasury futures, interest rate swaps and long-dated over-the-counter put options. The positions used in the economic hedging program are not designated as hedges and, therefore, hedge accounting is not applied. The living benefits hedging program is designed to offset changes in the economic value of the living benefits obligation to contractholders. Changes in the fair value of the embedded derivatives are likely to create volatility in earnings. The hedging activity associated with changes in the economic value of the living benefits obligations will likely mitigate a portion of this earnings volatility.
 
Other Non-Hedging Derivatives
 
The Company periodically enters into basis swaps (receive one variable rate, pay another variable rate) to better match the cash flows received from the specific variable-rate investments with the variable rate paid on a group of liabilities. While the pay-side terms of the basis swap will be consistent with the terms of the asset, the Company is not able to match the receive-side terms of the derivative to a specific liability. Therefore, basis swaps do not receive hedge accounting treatment.
 
The Company sells credit default protection on selected debt instruments and combines the credit default swap with selected assets the Company owns to replicate a higher yielding bond. These selected assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. The combined credit default swap and investments provide cash flows with the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment.
 
The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company. The purchased credit default protection is not designated for hedge accounting treatment.
 
Quantitative Disclosure
 
Fair Value Hedges
 
During the years ended December 31, 2007, 2006 and 2005, a net loss of $2.4 million, a net gain of $2.9 million and a net gain of $4.1 million, respectively, were recognized in net realized investment gains and losses. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness. There were also no gains or losses recognized in earnings as a result of hedged firm commitments no longer qualifying as fair value hedges.
 
Cash Flow Hedges
 
For the years ended December 31, 2007, 2006 and 2005, the ineffective portion of cash flow hedges was a net loss of $1.4 million, a net loss of $1.5 million and a net gain of $3.1 million, respectively. There were no net gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness.
 
 
 
F-22
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In general, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows associated with forecasted transactions, other than those relating to variable interest on existing financial instruments, is twelve months or less. However, in 2003 the Company entered into a hedge of a forecasted purchase of shares of a mutual fund tied to the S&P 500 Index where delivery of the shares will occur in 2033.
 
During 2007, the Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Additionally, no amounts were reclassified from AOCI into earnings due to the probability that a forecasted transaction would not occur.
 
Other Derivative Instruments, Including Embedded Derivatives
 
Net realized investment gains and losses for the years ended December 31, 2007, 2006 and 2005 included net losses of $12.4 million, $0.5 million and $9.1 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. In addition, the Individual Investments segment included net losses of $51.8 million (recorded as a $41.7 million net realized loss, net investment income of $2.6 million and annuity expense of $12.7 million) and $11.4 million (recorded as net investment income of $10.7 million and annuity expense of $22.1 million) for the years ended December 31, 2007 and 2006, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2007, 2006 and 2005, net losses of $0.5 million, $10.6 million and $80.7 million, respectively, were recorded in net realized investment gains and losses reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate MTNs denominated in foreign currencies. No additional net gains were recorded in net realized investment gains and losses to reflect the change in spot rates of these foreign currency denominated obligations during the year ended December 31, 2007 compared to $14.1 million and $78.3 million during the years ended December 31, 2006 and 2005, respectively.
 
The following table summarizes the notional amount of derivative financial instruments outstanding as of December 31:
 
 
 
(in millions)
 
   2007    2006
Interest rate swaps:
 
     
Pay fixed/receive variable rate swaps hedging investments
 
   $ 1,692.9    $ 1,930.5
Pay variable/receive fixed rate swaps hedging investments
 
     21.0      60.4
Pay fixed/receive variable rate swaps hedging liabilities
 
     1,120.7      1,048.8
Pay variable/receive fixed rate swaps hedging liabilities
 
     343.1      —  
Cross-currency interest rate swaps:
 
     
Hedging foreign currency denominated investments
 
     375.5      452.9
Hedging foreign currency denominated liabilities
 
     1,144.1      1,137.1
Credit default swaps
 
     300.3      376.8
Other non-hedging instruments
 
     518.1      101.8
Equity option contracts
 
     2,361.8      1,640.7
Interest rate futures contracts
 
     371.3      214.2
             
Total
 
   $ 8,248.8    $ 6,963.2
             
The notional value is the amount upon which exchanges of interest are based. Exposure to a counterparty arises if the net expected cash flows are positive, as calculated based on forward interest rate curves and notional contract values.
 
 
 
F-23
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(6)
Investments
 
The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale as of the dates indicated:
 
 
 
(in millions)
 
   Amortized
cost
   Gross
unrealized
gains
   Gross
unrealized
losses
   Estimated
fair value
December 31, 2007:
 
           
Fixed maturity securities:
 
           
U.S. Treasury securities and obligations of U.S. Government corporations
 
   $ 110.8    $ 14.3    $ 0.4    $ 124.7
Agencies not backed by the full faith and credit of the U. S. Government
 
     406.1      61.2      —        467.3
Obligations of states and political subdivisions
 
     245.3      1.6      2.7      244.2
Debt securities issued by foreign governments
 
     40.0      2.5      0.1      42.4
Corporate securities
 
           
Public
 
     8,253.8      133.4      161.6      8,225.6
Private
 
     5,474.2      131.7      57.6      5,548.3
Mortgage-backed securities
 
     5,855.9      31.3      98.4      5,788.8
Asset-backed securities
 
     3,635.1      31.2      174.2      3,492.1
                           
Total fixed maturity securities
 
     24,021.2      407.2      495.0      23,933.4
Equity securities
 
     69.6      4.8      1.5      72.9
                           
Total securities available-for-sale
 
   $ 24,090.8    $ 412.0    $ 496.5    $ 24,006.3
                           
December 31, 2006:
 
           
Fixed maturity securities:
 
           
U.S. Treasury securities and obligations of U.S. Government corporations
 
   $ 123.7    $ 11.4    $ 1.4    $ 133.7
Agencies not backed by the full faith and credit of the U. S. Government
 
     559.4      46.2      2.2      603.4
Obligations of states and political subdivisions
 
     266.0      0.7      7.2      259.5
Debt securities issued by foreign governments
 
     34.9      1.7      0.1      36.5
Corporate securities
 
           
Public
 
     8,602.0      168.8      109.9      8,660.9
Private
 
     6,015.4      128.8      71.4      6,072.8
Mortgage-backed securities
 
     6,089.1      21.3      112.8      5,997.6
Asset-backed securities
 
     3,506.7      43.3      39.0      3,511.0
                           
Total fixed maturity securities
 
     25,197.2      422.2      344.0      25,275.4
Equity securities
 
     28.5      6.2      0.3      34.4
                           
Total securities available-for-sale
 
   $ 25,225.7    $ 428.4    $ 344.3    $ 25,309.8
                           
The market value of the Company’s general account investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads. In addition, the Company may be likely to experience realized investment losses to the extent its liquidity needs require the disposition of general account fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments.
 
 
 
F-24
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The table below summarizes the amortized cost and estimated fair value of fixed maturity securities available-for-sale, by maturity, as of December 31, 2007. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
 
(in millions)
 
   Amortized
cost
   Estimated
fair value
Fixed maturity securities available-for-sale:
 
     
Due in one year or less
 
   $ 1,389.8    $ 1,392.5
Due after one year through five years
 
     6,267.3      6,375.0
Due after five years through ten years
 
     3,732.8      3,758.7
Due after ten years
 
     3,140.3      3,126.3
             
Subtotal
 
     14,530.2      14,652.5
Mortgage-backed securities
 
     5,855.9      5,788.8
Asset-backed securities
 
     3,635.1      3,492.1
             
Total
 
   $ 24,021.2    $ 23,933.4
             
The following table presents the components of net unrealized (losses) gains on securities available-for-sale as of December 31:
 
 
 
(in millions)
 
   2007      2006  
Net unrealized (losses) gains, before adjustments and taxes
 
   $ (84.5 )    $ 84.1  
Adjustment to DAC
 
     87.1        83.3  
Adjustment to future policy benefits and claims
 
     (77.7 )      (83.1 )
Deferred federal income tax benefit (expense)
 
     26.1        (29.5 )
                 
Net unrealized (losses) gains
 
   $ (49.0 )    $ 54.8  
                 
The following table presents an analysis of the net decrease in net unrealized gains on securities available-for-sale before adjustments and taxes for the years ended December 31:
 
 
 
(in millions)
 
     2007      2006      2005  
Fixed maturity securities
 
     $ (166.0 )    $ (161.0 )    $ (704.1 )
Equity securities
 
       (2.6 )      (1.1 )      (3.4 )
                            
Net decrease
 
     $ (168.6 )    $ (162.1 )    $ (707.5 )
                            
 
 
F-25
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
For securities available-for-sale as of the dates indicated, the following table summarizes the Company’s gross unrealized losses based on the amount of time each type of security has been in an unrealized loss position:
 
 
 
     Less than or equal
to one year
   More
than one year
   Total
(in millions)
 
   Estimated
fair value
   Gross
unrealized
losses
   Estimated
fair value
   Gross
unrealized
losses
   Estimated
fair value
   Gross
unrealized
losses
December 31, 2007:
 
                 
Fixed maturity securities:
 
                 
U.S. Treasury securities and obligations of U.S. Government corporations
 
   $ 16.4    $ 0.4    $ 2.6    $ —      $ 19.0    $ 0.4
Agencies not backed by the full faith and credit of the U.S. Government
 
     —        —        13.9      —        13.9      —  
Obligations of states and political subdivisions
 
     15.4      0.1      149.6      2.6      165.0      2.7
Debt securities issued by foreign governments
 
     11.5      0.1      —        —        11.5      0.1
Corporate securities
 
                 
Public
 
     2,354.0      95.2      1,966.8      66.4      4,320.8      161.6
Private
 
     680.6      17.1      1,814.7      40.5      2,495.3      57.6
Mortgage-backed securities
 
     1,227.8      23.7      2,466.4      74.7      3,694.2      98.4
Asset-backed securities
 
     1,453.8      127.1      1,078.1      47.1      2,531.9      174.2
                                         
Total fixed maturity securities
 
     5,759.5      263.7      7,492.1      231.3      13,251.6      495.0
Equity securities
 
     17.1      1.5      0.1      —        17.2      1.5
                                         
Total
 
   $ 5,776.6    $ 265.2    $ 7,492.2    $ 231.3    $ 13,268.8    $ 496.5
                                         
% of gross unrealized losses
 
        53%         47%      
December 31, 2006:
 
                 
Fixed maturity securities:
 
                 
U.S. Treasury securities and obligations of U.S. Government corporations
 
   $ 49.8    $ 0.8    $ 17.7    $ 0.6    $ 67.5    $ 1.4
Agencies not backed by the full faith and credit of the U.S. Government
 
     31.7      0.1      120.3      2.1      152.0      2.2
Obligations of states and political subdivisions
 
     82.4      1.0      156.3      6.2      238.7      7.2
Debt securities issued by foreign governments
 
     12.8      0.1      —        —        12.8      0.1
Corporate securities
 
                 
Public
 
     2,445.0      24.3      2,964.6      85.6      5,409.6      109.9
Private
 
     1,162.7      13.5      1,872.3      57.9      3,035.0      71.4
Mortgage-backed securities
 
     767.8      6.4      3,809.5      106.4      4,577.3      112.8
Asset-backed securities
 
     539.2      4.2      1,336.6      34.8      1,875.8      39.0
                                         
Total fixed maturity securities
 
     5,091.4      50.4      10,277.3      293.6      15,368.7      344.0
Equity securities
 
     0.1      —        3.4      0.3      3.5      0.3
                                         
Total
 
   $ 5,091.5    $ 50.4    $ 10,280.7    $ 293.9    $ 15,372.2    $ 344.3
                                         
% of gross unrealized losses
 
        15%         85%      
 
 
F-26
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The Company has assets that have been in an unrealized loss position for more than one year that are not other-than-temporarily impaired. The Company reviews each asset in an unrealized loss position and evaluates whether or not the loss is other-than-temporary. This evaluation considers several factors, including the extent of the unrealized loss, the rating of the affected security, the Company’s ability and intent to hold the security until recovery, and economic conditions that could affect the creditworthiness of the issuer. As of December 31, 2007, assets that have been in an unrealized loss position for more than one year totaled $231.3 million, or 47% of the Company’s total unrealized losses. Of this total, $209.3 million, or 90%, were classified as investment grade securities, as defined by the National Association of Insurance Commissioners (NAIC).
 
As noted in the table above, the majority of the increases in the Company’s unrealized losses from December 31, 2006 to December 31, 2007 were attributable to corporate securities and asset-backed securities (ABSs). These increased loss positions primarily were driven by the combined impacts of interest rate movements, volatility in investment quality ratings and credit spreads, and illiquid markets.
 
As of December 31, 2007, 69% of the Company’s corporate securities in unrealized loss positions, or $150.2 million, were classified as investment grade, as defined by the NAIC. Of these investment grade corporate securities, 57%, or $84.9 million, have been in an unrealized loss position for more than one year, but 87% of those investments have ratios of estimated fair value to amortized cost of at least 90%. Of the Company’s corporate securities in unrealized loss positions classified as non-investment grade, 68% have been in an unrealized loss position for less than one year.
 
As of December 31, 2007, 100% of the Company’s ABSs in unrealized loss positions, or $174.2 million, were classified as investment grade, as defined by the NAIC. Of these investment grade ABSs, 72%, or $126.9 million, have been in an unrealized loss position for less than one year, but 33% of those investments have ratios of estimated fair value to amortized cost of at least 90%. Of the Company’s ABSs in unrealized loss positions that have been in loss positions for more than one year, 57% have ratios of estimated fair value to amortized cost of at least 90%.
 
For fixed maturity securities that are available-for-sale as of December 31, 2007, the following table summarizes the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, as defined by the NAIC, in an unrealized loss position for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):
 
 
 
     Period of time for which unrealized loss has existed
   Investment Grade    Non-Investment Grade    Total          
Ratio of estimated fair value to amortized cost
 
   Less
than or
equal to
one
year
   More
than
one
year
   Total    Less
than or
equal to
one year
   More
than
one
year
   Total    Less
than or
equal to
one year
   More
than
one
year
   Total
                          
                          
                          
99.9% - 95.0%
 
   $ 55.2    $ 93.5    $ 148.7    $ 13.1    $ 5.2    $ 18.3    $ 68.3    $ 98.7    $ 167.0
94.9% - 90.0%
 
     49.9      84.6      134.5      13.2      4.4      17.6      63.1      89.0      152.1
89.9% - 85.0%
 
     34.6      19.2      53.8      3.1      6.3      9.4      37.7      25.5      63.2
84.9% - 80.0%
 
     16.3      6.2      22.5      3.0      0.2      3.2      19.3      6.4      25.7
Below 80.0%
 
     60.5      5.8      66.3      14.9      5.8      20.7      75.4      11.6      87.0
                                                              
Total
 
   $ 216.5    $ 209.3    $ 425.8    $ 47.3    $ 21.9    $ 69.2    $ 263.8    $ 231.2    $ 495.0
                                                              
As noted in the table above, as of December 31, 2007, 64% of the Company’s investments in an unrealized loss position had ratios of estimated fair value to amortized cost of at least 90%. In addition, 86% of the Company’s investments in an unrealized loss position were classified as investment grade, as defined by the NAIC. Of the Company’s investments in unrealized loss positions classified as non-investment grade, 68% have been in an unrealized loss position for less than one year.
 
The NAIC assigns securities quality ratings and uniform valuations (called NAIC Designations), which are used by insurers when preparing their annual statements. The NAIC assigns designations to publicly traded and privately placed securities. The designations assigned by the NAIC range from class 1 (highest quality) to class 6 (lowest quality). Of the Company’s general account fixed maturity securities, 94% were in the two highest NAIC Designations as of December 31, 2007 and 2006.
 
 
 
F-27
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The following table summarizes the credit quality, as determined by NAIC Designation, of the Company’s general account fixed maturity securities portfolio as of December 31:
 
 
 
 
 
(in millions)    2007    2006
NAIC
 
designation1
 
  
Rating agency equivalent designation2
 
   Amortized
cost
   Estimated
fair value
   Amortized
cost
   Estimated
fair value
              
1    Aaa/Aa/A    $ 16,765.5    $ 16,662.7    $ 17,433.9    $ 17,426.3
2    Baa      5,730.3      5,784.3      6,117.2      6,175.8
3    Ba      1,101.6      1,078.3      1,024.8      1,033.6
4    B      325.0      316.8      590.4      596.6
5    Caa and lower      60.2      52.7      12.6      20.3
6    In or near default      38.6      38.6      18.3      22.8
                              
       Total    $ 24,021.2    $ 23,933.4    $ 25,197.2    $ 25,275.4
                              
 
1    NAIC Designations are assigned at least annually. Some designations for securities shown have been assigned to securities not yet assigned an NAIC Designation in a manner approximating equivalent public rating categories.
2    Comparisons between NAIC and Moody’s designations are published by the NAIC. If no Moody’s rating is available, the Company assigns internal ratings corresponding to public ratings.
Recent conditions in the securities markets, including changes in interest rates, investment quality ratings, liquidity and credit spreads, have resulted in declines in the values of investment securities, including mortgage-backed securities (MBSs) and ABSs. When evaluating whether these securities are other-than-temporarily impaired, the Company considers characteristics of the underlying collateral, such as delinquency and default rates, the quality of the underlying borrower, the type of collateral in the pool, the vintage year of the collateral, subordination levels within the structure of the collateral pool, expected future cash flows, and the Company’s ability and intent to hold the security to recovery. These same factors also affect the estimated fair value of these securities.
 
The Company’s investments in MBSs and ABSs include securities that are supported by Alt-A and Sub-prime collateral. The Company considers Alt-A collateral to be mortgages whose underwriting standards do not qualify the mortgage for regular conforming or jumbo loan programs. Typical underwriting characteristics that cause a mortgage to fall into the Alt-A classification may include, but are not limited to, inadequate loan documentation of a borrower’s financial information, debt-to-income ratios above normal lending limits, loan-to-value ratios above normal lending limits that do not have primary mortgage insurance, a borrower who is a temporary resident, and loans securing non-conforming types of real estate. Alt-A mortgages are generally issued to borrowers having higher Fair Isaac Credit Organization (FICO) scores, and the lender typically issues a slightly higher interest rate for such mortgages. The Company considers Sub-prime collateral to be mortgages that are first-lien mortgage loans issued to Sub-prime borrowers, as demonstrated by recent delinquent rent or housing payments or substandard FICO scores. Second-lien mortgage loans are also considered Sub-prime. The amortized cost and estimated fair value of the Company’s investments in securities containing Alt-A collateral totaled $1,199.5 and $1,953.6, respectively, and the amortized cost and estimated fair value of the Company’s investments in securities containing Sub-prime collateral totaled $755.7 and $707.1, respectively. As of December 31, 2007, 100.0% and 91.7% of securities containing Alt-A and Sub-prime collateral, respectively, were rated AA or better. In addition, 56.5% and 70.9% of Alt-A and Sub-prime collateral, respectively, was originated in 2005 or earlier.
 
Proceeds from the sale of securities available-for-sale during 2007, 2006 and 2005 were $4.65 billion, $2.27 billion and $2.62 billion, respectively. During 2007, gross gains of $70.0 million ($61.6 million and $71.9 million in 2006 and 2005, respectively) and gross losses of $70.2 million ($64.1 million and $22.6 million in 2006 and 2005, respectively) were realized on those sales.
 
Real estate held for use was $17.8 million and $38.8 million as of December 31, 2007 and 2006, respectively. These assets are carried at cost less accumulated depreciation, which was $3.6 million and $15.1 million as of December 31, 2007 and 2006, respectively. There was no real estate held for sale as of December 31, 2007 compared to real estate held for sale with a carrying value of $16.0 million as of December 31, 2006.
 
The carrying value of commercial mortgage loans on real estate considered to be impaired was $7.4 million as of December 31, 2007 ($17.5 million as of December 31, 2006), for which the related valuation allowance was $3.0 million ($12.3 million as of December 31, 2006). No valuation allowance exists for collateral dependent commercial mortgage loans for which the fair value of the collateral is estimated to be greater than the carrying value. During 2007, the average carrying value of impaired mortgage loans on real estate was $3.7 million ($3.5 million in 2006). Interest income on those loans, which is recognized on a cash basis, was $0.4 million in 2007 ($1.9 million in 2006).
 
 
 
F-28
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The following table summarizes activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31:
 
 
 
(in millions)
 
   2007     2006    2005  
Allowance, beginning of period
 
   $ 34.3     $ 31.1    $ 33.3  
Net (reductions) additions to allowance
 
     (11.2 )     3.2      (2.2 )
                       
Allowance, end of period
 
   $ 23.1     $ 34.3    $ 31.1  
                       
The following table summarizes net realized investment (losses) gains from continuing operations by source for the years ended December 31:
 
 
 
(in millions)
 
   2007     2006     2005  
Total realized gains on sales, net of hedging losses
 
   $ 65.4     $ 88.8     $ 75.6  
Total realized losses on sales, net of hedging gains
 
     (79.9 )     (64.8 )     (22.9 )
Total other-than-temporary and other investment impairments
 
     (116.4 )     (17.1 )     (36.8 )
Credit default swaps
 
     (7.5 )     (1.1 )     (7.5 )
Periodic net coupon settlements on non-qualifying derivatives
 
     1.7       1.9       1.1  
Other derivatives
 
     (29.5 )     (0.6 )     1.1  
                        
Net realized investment (losses) gains
 
   $ (166.2 )   $ 7.1     $ 10.6  
                        
The following table summarizes net investment income from continuing operations by investment type for the years ended December 31:
 
 
 
(in millions)
 
   2007    2006    2005
Securities available-for-sale:
 
        
Fixed maturity securities
 
   $ 1,370.5    $ 1,419.2    $ 1,466.2
Equity securities
 
     4.0      2.6      2.4
Mortgage loans on real estate
 
     512.6      535.4      577.3
Short-term investments
 
     28.7      47.3      18.8
Other
 
     124.3      120.9      97.8
                    
Gross investment income
 
     2,040.1      2,125.4      2,162.5
Less investment expenses
 
     64.3      66.9      57.3
                    
Net investment income
 
   $ 1,975.8    $ 2,058.5    $ 2,105.2
                    
Fixed maturity securities with an amortized cost of $8.3 million and $8.1 million as of December 31, 2007 and 2006, respectively, were on deposit with various regulatory agencies as required by law.
 
As of December 31, 2007 and 2006, the Company had received $551.9 million and $802.3 million, respectively, of cash collateral on securities lending. The Company had not received any non-cash collateral on securities lending as of December 31, 2007 and 2006. As of December 31, 2007 and 2006, the Company had loaned securities with a fair value of $541.2 million and $778.6 million, respectively.
 
As of December 31, 2007 and 2006, the Company had received $245.4 million and $171.0 million, respectively, of cash for derivative collateral. The Company also held $18.5 million and $12.8 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2007 and 2006, respectively. As of December 31, 2007, the Company had pledged fixed maturity securities with a fair value of $18.8 million as collateral to various derivative counterparties compared to none as of December 31, 2006.
 
 
 
(7)
Variable Annuity Contracts
 
The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contractholders. The Company provides five primary guarantee types under non-traditional variable annuity contracts: (1) GMDB; (2) GMAB; (3) guaranteed minimum income benefits (GMIB); (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.
 
 
 
F-29
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:
 
 
 
   
Return of premium– provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.
 
 
 
   
Reset– provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.
 
 
 
   
Ratchet– provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.
 
 
 
   
Rollup– provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit. For certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.
 
 
 
   
Combo– provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.
 
 
 
   
Earnings enhancement– provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.
 
The GMAB, offered in the Company’s Capital Preservation Plus (CPP) contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified time period, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.
 
The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:
 
 
 
   
Ratchet– provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.
 
 
 
   
Rollup– provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.
 
 
 
   
Combo– provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.
 
See Note 5 for a complete description of the Company’s hybrid GMAB/GLWB offered through its CPPLI contract rider. All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables.
 
 
 
F-30
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of December 31:
 
 
 
     2007    2006
(in millions)
 
   Account
value
   Net amount
at risk1
   Wtd. avg.
attained age
   Account
value
   Net amount
at risk1
   Wtd. avg.
attained age
GMDB:
 
                 
Return of premium
 
   $ 9,082.6    $ 18.7    62    $ 9,231.4    $ 33.9    60
Reset
 
     17,915.0      61.1    64      17,587.0      47.5    63
Ratchet
 
     15,789.2      132.2    66      13,481.0      30.3    66
Rollup
 
     467.0      8.4    71      538.4      11.3    70
Combo
 
     2,555.5      47.0    68      2,588.7      28.9    68
                                     
Subtotal
 
     45,809.3      267.4    66      43,426.5      151.9    65
Earnings enhancement
 
     519.2      49.8    62      477.8      41.1    61
                                     
Total - GMDB
 
   $ 46,328.5    $ 317.2    65    $ 43,904.3    $ 193.0    64
                                     
GMAB2:
 
                 
5 Year
 
   $ 2,985.6    $ 4.6    N/A    $ 2,131.1    $ 0.1    N/A
7 Year
 
     2,644.1      6.2    N/A      1,865.7      0.1    N/A
10 Year
 
     927.3      1.3    N/A      784.0      —      N/A
                                     
Total - GMAB
 
   $ 6,557.0    $ 12.1    N/A    $ 4,780.8    $ 0.2    N/A
                                     
GMIB3:
 
                 
Ratchet
 
   $ 425.2    $ —      N/A    $ 450.6    $ —      N/A
Rollup
 
     1,119.9      —      N/A      1,187.1      —      N/A
Combo
 
     0.3      —      N/A      0.5      —      N/A
                                     
Total - GMIB
 
   $ 1,545.4    $ —      N/A      1,638.2    $ —      N/A
                                     
GLWB:
 
                 
L.inc
 
   $ 2,865.8    $ —      N/A    $ 993.8    $ —      N/A
                                     
 
 
1
 
Net amount at risk is calculated on a seriatum basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance, with the earliest annuitizations beginning in 2007.
 
 
 
 
2
 
GMAB contracts with the hybrid GMAB/GLWB rider had account values of $4.77 billion and $2.95 billion as of December 31, 2007 and 2006, respectively.
 
 
 
 
3
 
The weighted average period remaining until expected annuitization is not meaningful and has not been presented because there is currently no material GMIB exposure.
 
 
 
F-31
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The following table summarizes account balances of variable annuity contracts that were invested in separate accounts as of December 31:
 
 
 
(in millions)
 
   2007    2006
Mutual funds:
 
     
Bond
 
   $ 5,143.6    $ 4,467.3
Domestic equity
 
     31,217.7      29,808.4
International equity
 
     3,987.3      3,420.5
             
Total mutual funds
 
     40,348.6      37,696.2
Money market funds
 
     1,728.2      1,414.4
             
Total
 
   $ 42,076.8    $ 39,110.6
             
The Company’s GMDB claim reserves are determined by estimating the expected value of death benefits on contracts that trigger a policy benefit and recognizing the excess ratably over the accumulation period based on total expected assessments. GMIB claim reserves are determined each period by estimating the expected value of annuitization benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total assessments. The Company regularly evaluates its GMDB and GMIB claim reserve estimates and adjusts the additional liability balances as appropriate, with a related charge or credit to other benefits and claims in the period of evaluation if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in calculating GMIB claim reserves are consistent with those used for calculating GMDB claim reserves. In addition, the calculation of GMIB claim reserves assumes benefit utilization ranges from a low of 3% when the contractholder’s annuitization value is at least 10% in the money to 100% utilization when the contractholder is 90% or more in the money.
 
The Company’s living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions.
 
The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2007 and 2006:
 
 
 
   
Data used was based on a combination of historical numbers and future projections generally involving 50 probabilistically generated economic scenarios
 
 
 
   
Mean gross equity performance – 8.1%
 
 
 
   
Equity volatility – 18.7%
 
 
 
   
Mortality – 100% of Annuity 2000 table
 
 
 
   
Asset fees – equivalent to mutual fund and product loads
 
 
 
   
Discount rate – 7.0% and 8.0% as of December 31, 2007 and 2006, respectively
 
Lapse rate assumptions vary by duration as shown below:
 
 
 
Duration (years)
 
   1    2    3    4    5    6    7    8    9    10+
Minimum
 
   4.00%    5.00%    6.00%    7.00%    8.00%    9.50%    10.00%    11.00%    14.00%    14.00%
Maximum
 
   4.00%    5.00%    6.00%    7.00%    35.00%    35.00%    23.00%    35.00%    35.00%    23.00%
 
 
F-32
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(8)
Short-Term Debt
 
The following table summarizes short-term debt as of December 31:
 
 
 
(in millions)
 
     2007      2006
$800.0 million commercial paper program
 
     $ 199.7      $ —  
$350.0 million securities lending program facility
 
       85.6        75.2
                 
Total short-term debt
 
     $ 285.3      $ 75.2
                 
The Company has available as a source of funds a $1.00 billion revolving variable rate credit facility entered into by NFS, NLIC and NMIC with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company’s debt not exceed 40% of tangible net worth, as defined, and that NLIC maintain statutory surplus, as defined, in excess of $1.67 billion. As of December 31, 2007, the Company and NLIC were in compliance with all covenants. The Company had no amounts outstanding under this agreement as of December 31, 2007 and 2006. NLIC also has an $800.0 million commercial paper program and is required to maintain an available credit facility equal to 50% of any amounts outstanding under the commercial paper program. Therefore, borrowing capacity under the aggregate $1.00 billion revolving credit facility is reduced by 50% of any amounts outstanding under the commercial paper program. NLIC had $199.7 million of commercial paper outstanding at December 31, 2007 at a weighted average interest rate of 4.39% and no commercial paper outstanding at December 31, 2006.
 
NLIC has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR (4.60% and 5.32% as of December 31, 2007 and 2006, respectively). NLIC had $85.6 million and $75.2 million outstanding under this agreement as of December 31, 2007 and 2006, respectively. As of December 31, 2007, the Company had not provided any guarantees on such borrowings, either directly or indirectly.
 
The Company paid interest on short-term debt totaling $15.0 million, $11.7 million and $11.5 million in 2007, 2006 and 2005, respectively.
 
 
 
(9)
Long-Term Debt
 
The following table summarizes surplus notes payable to NFS as of December 31:
 
 
 
(in millions)
 
     2007      2006
8.15% surplus note, due June 27, 2032
 
     $ 300.0      $ 300.0
7.50% surplus note, due December 17, 2031
 
       300.0        300.0
6.75% surplus note, due December 23, 2033
 
       100.0        100.0
                 
Total long-term debt
 
     $ 700.0      $ 700.0
                 
The Company made interest payments to NFS on surplus notes totaling $53.7 million in 2007, 2006 and 2005. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).
 
 
 
F-33
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(10)
Federal Income Taxes
 
Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, the ultimate majority shareholder of NFS. Effective October 1, 2002, Nationwide Corporation’s ownership in NFS decreased from 79.8% to 63.0%. Therefore, NFS and its subsidiaries, including the Company, no longer qualify to be included in the NMIC consolidated federal income tax return. The members of the NMIC consolidated federal income tax return group participated in a tax sharing arrangement, which uses a consolidated approach in allocating the amount of current and deferred expense to the separate financial statements of subsidiaries.
 
Under Internal Revenue Code (IRC) regulations, NFS and its subsidiaries cannot file a life/non-life consolidated federal income tax return until five full years following NFS’ departure from the NMIC consolidated federal income tax return group. Therefore, NFS and its direct non-life insurance company subsidiaries will file a consolidated federal income tax return; NLIC and NLAIC will file a consolidated federal income tax return; and the direct non-life insurance companies under NLIC will file separate federal income tax returns, until 2008, when NFS will become eligible to file a single life/non-life consolidated federal income tax return with all of its eligible subsidiaries.
 
The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31:
 
 
 
(in millions)
 
   2007     2006  
Deferred tax assets:
 
    
Future policy benefits
 
   $ 622.0     $ 607.8  
Other
 
     213.2       138.6  
                
Gross deferred tax assets
 
     835.2       746.4  
Less valuation allowance
 
     (7.0 )     (7.0 )
                
Deferred tax assets, net of valuation allowance
 
     828.2       739.4  
                
Deferred tax liabilities:
 
    
Deferred policy acquisition costs
 
     1,112.6       1,022.2  
Other
 
     130.8       173.9  
                
Gross deferred tax liabilities
 
     1,243.4       1,196.1  
                
Net deferred tax liability
 
   $ 415.2     $ 456.7  
                
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income taxes paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged during 2007, 2006 and 2005.
 
The Company’s current federal income tax asset was $12.7 million and $12.6 million as of December 31, 2007 and 2006, respectively.
 
Total federal income taxes paid (refunded) were $99.1 million, $(4.3) million and $182.2 million during the years ended December 31, 2007, 2006 and 2005, respectively.
 
During the second quarter of 2007, the Company recorded $6.8 million of net federal income tax expense adjustments primarily related to differences between the 2006 estimated tax liability and the amounts the Company reported on its 2006 tax returns. The Company recorded an additional $1.5 million and $0.2 million of such adjustments during the third and fourth quarters of 2007, respectively.
 
 
 
F-34
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
Through June 2006, the Company’s federal income tax returns for tax years 2000-2002 were under IRS examination pursuant to a routine audit. In accordance with its regular practice, management established tax reserves based on the current facts and circumstances regarding each tax exposure item for which the ultimate deductibility is open to interpretation. These reserves are reviewed regularly and are adjusted as events occur that management believes impacts the Company’s liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/non-deductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. A significant component of the Company’s tax reserve as of December 31, 2005 was related to the separate account dividends received deduction (DRD). See “Tax Matters” in Note 14 for more information regarding DRD.
 
In July 2006, the Company reached substantial agreement with the IRS on all open issues for tax years 2000-2002, including issues related to the DRD. Accordingly, the Company revised its estimate of amounts that may be due in connection with certain tax positions, including the DRD, for all open tax years. As a result of the revised estimate, $110.9 million of tax reserves were released into earnings during the second quarter of 2006.
 
During the third quarter of 2006, the Company recorded $7.8 million of net federal income tax expense adjustments primarily related to differences between the 2005 estimated tax liability and the amounts reported on the Company’s 2005 tax returns.
 
During the third quarter of 2005, the Company refined its separate account DRD estimation process. As a result, the Company identified and recorded additional federal income tax benefits and recoverables of $42.6 million related to all tax years (2000 – 2005) that were open at that time. In addition, the Company recorded $5.6 million of net benefit adjustments primarily related to differences between the 2004 estimated tax liability and the amounts reported on the Company’s 2004 tax returns.
 
The following table summarizes federal income tax expense attributable to income from continuing operations for the years ended December 31:
 
 
 
(in millions)
 
   2007    2006     2005
Current
 
   $ 106.5    $ (61.8 )   $ 90.6
Deferred
 
     22.0      90.5       5.2
                     
Federal income tax expense
 
   $ 128.5    $ 28.7     $ 95.8
                     
Total federal income tax expense differs from the amount computed by applying the U.S. federal income tax rate to income from continuing operations before federal income taxes as follows for the years ended December 31:
 
 
 
      2007     2006     2005  
(dollars in millions)
 
   Amount     %     Amount     %     Amount     %  
Computed (expected) tax expense
 
   $ 204.0     35.0     $ 226.8     35.0     $ 217.2     35.0  
DRD
 
     (61.0 )   (10.5 )     (67.5 )   (10.4 )     (107.5 )   (17.3 )
Reserve release
 
     —       —         (110.9 )   (17.1 )     —       —    
Other, net
 
     (14.5 )   (2.4 )     (19.7 )   (3.1 )     (13.9 )   (2.3 )
                                          
Total
 
   $ 128.5     22.1     $ 28.7     4.4     $ 95.8     15.4  
                                          
 
 
F-35
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(11)
Shareholders’ Equity, Regulatory Risk-Based Capital and Dividend Restrictions
 
Regulatory Risk-Based Capital
 
The State of Ohio, where NLIC and NLAIC are domiciled, imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level risk-based capital, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. NLIC and NLAIC each exceeded the minimum risk-based capital requirements for all periods presented herein.
 
Dividend Restrictions
 
The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state. The State of Ohio insurance laws require Ohio-domiciled life insurance companies to seek prior regulatory approval to pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer for the prior year. During the year ended December 31, 2007, NLIC paid dividends of $537.5 million to NFS, including a $242.5 million extraordinary dividend paid after obtaining approval from the ODI. NLIC’s statutory capital and surplus as of December 31, 2007 was $2.50 billion, and statutory net income for 2007 was $309.0 million. As of January 1, 2008, NLIC could not pay dividends to NFS without obtaining prior approval. As of April 2008, NLIC will be able to pay dividends to NFS totaling $246.5 million upon providing prior notice to the ODI. On February 20, 2008, NLIC declared a dividend of $246.5 million payable to NFS in April 2008. NLIC will provide notice to the ODI before paying this dividend to NFS.
 
The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the State of Ohio insurance laws as the amount equal to the Company’s unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurer’s policyholder surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on NLIC’s participating policies (measured before dividends to policyholders) available for the benefit of the Company and its shareholder.
 
The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends.
 
 
 
F-36
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
Comprehensive Income
 
The Company’s comprehensive income includes net income and certain items that are reported directly within separate components of shareholder’s equity that are not recorded in net income (other comprehensive income or loss).
 
The following table summarizes the Company’s other comprehensive loss, before and after federal income tax benefit, for the years ended December 31:
 
 
 
(in millions)
 
   2007     2006     2005  
Net unrealized losses on securities available-for-sale arising during the period:
 
      
Net unrealized losses before adjustments
 
   $ (276.3 )   $ (171.3 )   $ (687.2 )
Net adjustment to deferred policy acquisition costs
 
     3.8       40.9       187.0  
Net adjustment to future policy benefits and claims
 
     5.4       21.5       17.0  
Related federal income tax benefit
 
     93.3       38.1       169.1  
                        
Net unrealized losses
 
     (173.8 )     (70.8 )     (314.1 )
                        
Reclassification adjustment for net realized losses (gains) on securities available-for-sale realized during the period:
 
      
Net unrealized losses (gains)
 
     107.7       9.2       (20.3 )
Related federal income tax (benefit) expense
 
     (37.7 )     (3.2 )     7.1  
                        
Net reclassification adjustment
 
     70.0       6.0       (13.2 )
                        
Other comprehensive loss on securities available-for-sale
 
     (103.8 )     (64.8 )     (327.3 )
                        
Accumulated net holding (losses) gains on cash flow hedges:
 
      
Unrealized holding (losses) gains
 
     (17.2 )     (0.2 )     41.7  
Related federal income tax benefit (expense)
 
     6.0       0.1       (14.6 )
                        
Other comprehensive (loss) income on cash flow hedges
 
     (11.2 )     (0.1 )     27.1  
                        
Other net unrealized losses
 
     (4.2 )     —         —    
                        
Total other comprehensive loss
 
   $ (119.2 )   $ (64.9 )   $ (300.2 )
                        
Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2007, 2006 and 2005.
 
 
 
F-37
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(12)
Employee Benefit Plans
 
Defined Benefit Plans
 
The Company and certain affiliated companies participate in a qualified defined benefit pension plan sponsored by NMIC. This plan covers all employees of participating companies who have completed at least one year of service. Plan contributions are invested in a group annuity contract issued by NLIC. All participants are eligible for benefits based on an account balance feature. Participants last hired before 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature. The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. A separate non-qualified defined benefit pension plan sponsored by NMIC covers certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $13.5 million, $19.9 million and $16.6 million for the years ended December 31, 2007, 2006 and 2005, respectively.
 
In addition to the NMIC pension plan, the Company and certain affiliated companies participate in life and health care defined benefit plans sponsored by NMIC for qualifying retirees. Postretirement life and health care benefits are contributory. The level of contribution required by a qualified retiree depends on the retiree’s years of service and date of hire. In general, postretirement benefits are available to full-time employees who are credited with 120 months of retiree life and health service. Postretirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and coinsurance. In addition, there are caps on the Company’s portion of the per-participant cost of the postretirement health care benefits. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested primarily in group annuity contracts issued by NLIC. The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2007, 2006 and 2005.
 
Defined Contribution Plans
 
NMIC sponsors a defined contribution retirement savings plan covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company’s expense for contributions to these plans was $7.3 million, $6.6 million and $6.2 million for the years ended December 31, 2007, 2006 and 2005, respectively.
 
 
 
(13)
Related Party Transactions
 
The Company has entered into significant, recurring transactions and agreements with NMIC, other affiliates and subsidiaries as a part of its ongoing operations. These include annuity and life insurance contracts, office space leases, and agreements related to reinsurance, cost sharing, administrative services, marketing, intercompany loans, intercompany repurchases, cash management services and software licensing. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, the number of full-time employees, commission expense and other methods agreed to by the participating companies.
 
In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides computer, telephone, mail, employee benefits administration and other services to NMIC and certain of its direct and indirect subsidiaries, including the Company, based on specified rates for units of service consumed. For the years ended December 31, 2007, 2006 and 2005, the Company made payments to NMIC and NSC totaling $285.6 million, $261.7 million and $274.1 million, respectively.
 
 
 
F-38
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $2.90 billion and $5.48 billion as of December 31, 2007 and 2006, respectively. Total revenues from these contracts were $130.8 million, $133.4 million and $136.2 million for the years ended December 31, 2007, 2006 and 2005, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $109.7 million, $110.7 million and $107.3 million for the years ended December 31, 2007, 2006 and 2005, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated.
 
The Company leases office space from NMIC. For the years ended December 31, 2007, 2006 and 2005, the Company made lease payments to NMIC of $23.0 million, $19.3 million and $18.7 million, respectively.
 
NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC for the years ended December 31, 2007, 2006 and 2005 were $317.6 million, $430.8 million and $429.5 million, respectively, while benefits, claims and expenses ceded during these years were $348.1 million, $470.4 million and $398.8 million, respectively.
 
Funds of Nationwide Funds Group (NFG), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2007 and 2006, customer allocations to NFG funds totaled $21.41 billion and $18.26 billion, respectively. For the years ended December 31, 2007, 2006 and 2005, NFG paid the Company $76.9 million, $64.4 million and $51.6 million, respectively, for the distribution and servicing of these funds.
 
Under a marketing agreement with NMIC, NLIC makes payments to cover a portion of the agent marketing allowance that is paid to Nationwide agents. These costs cover product development and promotion, sales literature, rent and similar items. Payments under this agreement totaled $20.1 million, $28.3 million and $26.5 million for the years ended December 31, 2007, 2006 and 2005, respectively.
 
The Company also participates in intercompany repurchase agreements with affiliates whereby the seller transfers securities to the buyer at a stated value. Upon demand or after a stated period, the seller repurchases the securities at the original sales price plus interest. As of December 31, 2007 and 2006, the Company had no outstanding borrowings from affiliated entities under such agreements. During 2007, 2006 and 2005, the most the Company had outstanding at any given time was $178.2 million, $191.5 million and $55.3 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements during these years were immaterial.
 
The Company and various affiliates have agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC for the benefit of the Company were $368.2 million and $601.3 million as of December 31, 2007 and 2006, respectively, and are included in short-term investments on the consolidated balance sheets.
 
Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2007, 2006 and 2005 were $59.5 million, $58.1 million and $59.0 million, respectively.
 
 
 
F-39
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
An affiliate of the Company is currently developing a browser-based policy administration and online brokerage software application for defined benefit plans. In connection with the development of this application, the Company made net payments, which were expensed, to that affiliate related to development totaling $9.4 million, $6.9 million and $2.9 million for the years ended December 31, 2007, 2006 and 2005, respectively.
 
Historically, the Company has retained funds for certain claim and benefit payments to customers in the form of interest-bearing accounts. During the year ended December 31, 2006, this practice was discontinued. Eligible participant balances totaling $224.7 million were transferred from the Company to interest-bearing deposit accounts of Nationwide Bank, a wholly-owned subsidiary of NFS, in exchange for cash plus a premium of $0.7 million payable to NFS for the value of the relationships acquired by Nationwide Bank.
 
Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 10. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. There were no payments (from) to NMIC for the year ended December 31, 2007 compared to $(15.3) million and $45.0 million for the years ended December 31, 2006 and 2005, respectively. These payments related to tax years prior to deconsolidation.
 
In 2007, 2006 and 2005, NLIC paid dividends to NFS totaling $537.5 million, $375.0 million and $185.0 million, respectively.
 
 
 
(14)
Contingencies
 
Legal Matters
 
The Company is a party to litigation and arbitration proceedings in the ordinary course of its business. It is often not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. The Company does not believe, based on information currently known by management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on the Company’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on the Company’s consolidated financial results in a particular quarterly or annual period.
 
In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements against life insurers other than the Company.
 
The financial services industry, including mutual fund, variable annuity, retirement plan, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past few years. Numerous regulatory agencies, including the SEC, the Financial Industry Regulatory Authority and the New York State Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues. The Company has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by the Company. The Company has cooperated with these investigations. Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by the Company and its affiliates in December 2003 and June 2005, respectively, and no further information requests have been received with respect to these matters.
 
 
 
F-40
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
In addition, state and federal regulators and other governmental bodies have commenced investigations, proceedings or inquiries relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives. Related investigations, proceedings or inquiries may be commenced in the future. The Company and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, and funding agreements backing the NLIC MTN program. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.
 
These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including mutual fund, retirement plan, life insurance and annuity companies. These proceedings also could affect the outcome of one or more of the Company’s litigation matters. There can be no assurance that any litigation or regulatory actions will not have a material adverse effect on the Company in the future.
 
On November 20, 2007, NLIC and NRS were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v NLIC, NRS, Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. The plaintiffs purport to represent a class of all participants in the Alabama State Employees Association (ASEA) plan, excluding members of the Board of Control during the Class Period and excluding ASEA’s directors, officers and board members during the class period. The class period is the date from which NLIC and/or NRS first made a payment to ASEA or PEBCO arising out of the funding agreement dated March 24, 2004 to the date class notice is provided. The plaintiffs allege that the defendants breached their fiduciary duties, converted plan participants’ properties, and breached their contract when payments were made and the plan was administered under the funding agreement. The complaint seeks a declaratory judgment, an injunction, disgorgement of amounts paid, compensatory and punitive damages, interest, attorneys’ fees and costs, and such other equitable and legal relief to which the plaintiffs and class members may be entitled. On January 9, 2008, NLIC and NRS filed a Notice of Removal to the United States District Court Northern District of Alabama, Southern Division. On January 16, 2008, NLIC and NRS filed a motion to dismiss. On January 24, 2008, the plaintiffs filed a motion to remand. The motions have been fully briefed. NLIC and NRS intend to defend this case vigorously.
 
On July 11, 2007, NLIC was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al. The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries). The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties. The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On October 12, 2007, NLIC filed a motion to dismiss. The motion has been fully briefed. NLIC intends to defend this lawsuit vigorously.
 
 
 
F-41
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
On November 15, 2006, NFS, NLIC and NRS were named in a lawsuit filed in the United States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The class period is from January 1, 1996 until the class notice is provided. The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, NFS, NLIC and NRS filed a motion to dismiss. On September 17, 2007, the Court granted the motion to dismiss. On October 1, 2007, the plaintiff filed a motion to vacate judgment and for leave to file an amended complaint. On October 25, 2007, NFS, NLIC and NRS filed their opposition to the plaintiff’s motion. NFS, NLIC and NRS continue to defend this lawsuit vigorously.
 
On February 11, 2005, NLIC was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The plaintiff claims that the total of modal payments that policyholders paid per year exceeded the guaranteed maximum premium provided for in the policy. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees. On February 2, 2006, the court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The court certified a class consisting of all residents of the United States and the Virgin Islands who, during the class period, paid premiums on a modal basis to NLIC for term life insurance policies issued by NLIC during the class period that provide for guaranteed maximum premiums, excluding certain specified products. Excluded from the class are NLIC; any parent, subsidiary or affiliate of NLIC; all employees, officers and directors of NLIC; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The class period is from February 10, 1990 through February 2, 2006, the date the class was certified. On January 26, 2007, the plaintiff filed a motion for summary judgment. On April 30, 2007, NLIC filed a motion for summary judgment. On February 4, 2008, the Court entered its ruling on the parties’ pending motions for summary judgment. The court granted NLIC’s motion for summary judgment for some of the plaintiffs’ causes of action, including breach of contract claims on all decreasing term policies, plaintiff Carr’s individual claims for fraud by omission, violation of the Ohio Deceptive Trade Practices Act and all unjust enrichment claims. However, several claims against NLIC remain, including plaintiff Carr’s individual claim for breach of contract and the plaintiff Class’ claims for breach of contract for the term life policies in 43 of 51 jurisdictions. The Court has requested additional briefing on NLIC’s affirmative defense that the doctrine of voluntary payment acts as a defense to the breach of contract claims. NLIC continues to defend this lawsuit vigorously.
 
On April 13, 2004, NLIC was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. NLIC removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed the first amended complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of an NLIC annuity or insurance product) units of any NLIC sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The first amended complaint purports to disclaim, with respect to market timing or stale price trading in NLIC’s annuities sub-accounts, any allegation based on NLIC’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of NLIC annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if NLIC is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to NLIC’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an NLIC annuity or insurance product) units of any NLIC sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The first amended complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 1, 2006, the District Court granted NLIC’s motion to dismiss the plaintiff’s complaint. The plaintiff appealed the District Court’s decision, and the issues have been fully briefed. NLIC continues to defend this lawsuit vigorously.
 
 
 
F-42
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class. On September 25, 2007, NFS’ and NLIC’s motion to dismiss the plaintiffs’ fifth amended complaint was denied. On October 12, 2007, NFS and NLIC filed their answer to the plaintiffs’ fifth amended complaint and amended counterclaims. On November 1, 2007, the plaintiffs filed a motion to dismiss NFS’ and NLIC’s amended counterclaims. On November 15, 2007, the plaintiffs filed a motion for class certification. On February 8, 2008, the Court denied the plaintiffs’ motion to dismiss the amended counterclaim, with the exception that it was tentatively granting the plaintiffs’ motion to dismiss with respect to NFS’ and NLIC’s claim that it could recover any “disgorgement remedy” from plan sponsors. NFS and NLIC continue to defend this lawsuit vigorously.
 
Tax Matters
 
Management has established tax reserves in accordance with the requirements of FIN 48. See Note 3 for a summary of the provisions of FIN 48. These reserves are reviewed regularly and are adjusted as events occur that management believes impact its liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/nondeductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. Management believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years.
 
The separate account DRD is a significant component of the Company’s federal income tax provision. On August 16, 2007, the IRS issued Revenue Ruling 2007-54. This ruling took a position with respect to the DRD that could have significantly reduced the Company’s DRD. The Company believes that the position taken by the IRS in the ruling was contrary to existing law and the relevant legislative history.
 
In Revenue Ruling 2007-61, released September 25, 2007, the IRS and the U.S. Department of the Treasury suspended Revenue Ruling 2007-54 and informed taxpayers of their intention to address certain issues in connection with the DRD in future tax regulations. Final tax regulations could impact the Company’s DRD in periods subsequent to their effective date.
 
 
 
(15)
Guarantees
 
Since 2001, the Company has sold $677.2 million of credit enhanced equity interests in Low-Income-Housing Tax Credit Funds (Tax Credit Funds) to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 5.25% over periods ending between 2002 and 2022. As of December 31, 2007, the Company held guarantee reserves totaling $6.0 million on these transactions. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $1.28 billion. The Company does not anticipate making any payments related to these guarantees.
 
As of December 31, 2007, the Company held stabilization reserves of $1.6 million as collateral for certain properties owned by the Tax Credit Funds that had not met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized.
 
 
 
F-43
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
To the extent there are cash deficits in any specific property owned by the Tax Credit Funds, property reserves, property operating guarantees and reserves held by the Tax Credit Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the Tax Credit Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.
 
 
 
(16)
Variable Interest Entities
 
As of December 31, 2007 and 2006, the Company had relationships with 19 and 18 variable interest entities (VIEs), respectively, each of which the Company was the primary beneficiary. Each VIE is a conduit that assists the Company in structured products transactions involving the sale of Tax Credit Funds to third party investors for which the Company provides guaranteed returns (see Note 15). The results of operations and financial position of these VIEs are included along with corresponding minority interest liabilities in the accompanying consolidated financial statements.
 
VIE net assets were $465.7 million and $445.5 million as of December 31, 2007 and 2006, respectively. The following table summarizes the components of net assets as of December 31:
 
 
 
(in millions)
 
   2007     2006  
Other long-term investments
 
   $ 434.1     $ 432.5  
Short-term investments
 
     31.9       33.7  
Other assets
 
     38.1       37.8  
Other liabilities
 
     (38.4 )     (58.5 )
The Company’s total loss exposure from VIEs of which the Company is the primary beneficiary was immaterial as of December 31, 2007 and 2006 (except for the impact of guarantees disclosed in Note 15).
 
In addition to the VIEs described above, the Company holds variable interests, in the form of limited partnerships or similar investments, in Tax Credit Funds of which the Company is not the primary beneficiary. These investments have been held by the Company for periods of 1 to 10 years and allow the Company to utilize certain tax credits and realize other tax benefits from affordable housing projects. The Company also has certain investments in other securitization transactions that qualify as VIEs, but of which the Company is not the primary beneficiary. The total exposure to loss on these VIEs was $201.3 million and $68.9 million as of December 31, 2007 and 2006, respectively.
 
 
 
F-44
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(17)
Segment Information
 
Management views the Company’s business primarily based on its underlying products and uses this basis to define its four reportable segments: Individual Investments, Retirement Plans, Individual Protection, and Corporate and Other.
 
The primary segment profitability measure that management uses is pre-tax operating earnings, which is calculated by adjusting income from continuing operations before federal income taxes to exclude (1) net realized investment gains and losses, except for periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations and (2) the adjustment to amortization of DAC related to net realized investment gains and losses.
 
Individual Investments
 
The Individual Investments segment consists of individual The BEST of AMERICA® and private label deferred variable annuity products, deferred fixed annuity products, income products and advisory services. Individual deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, individual variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while individual fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods.
 
Retirement Plans
 
The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans business. The private sector primarily includes IRC Section 401 business, and the public sector primarily includes IRC Section 457 and Section 401(a) business, both in the form of full-service arrangements that provide plan administration and fixed and variable group annuities as well as administration-only business.
 
Individual Protection
 
The Individual Protection segment consists of investment life insurance products, including individual variable, COLI and BOLI products; traditional life insurance products; and universal life insurance products. Life insurance products provide a death benefit and generally allow the customer to build cash value on a tax-advantaged basis.
 
Corporate and Other
 
The Corporate and Other segment includes the MTN program; structured products business; and other revenues and expenses not allocated to other segments.
 
 
 
F-45
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
The following tables summarize the Company’s business segment operating results for the years ended December 31:
 
 
 
(in millions)
 
   Individual
Investments
   Retirement
Plans
   Individual
Protection
   Corporate
and Other
    Total  
2007
 
             
Revenues:
 
             
Policy charges
 
   $ 656.9    $ 139.5    $ 411.9    $ —       $ 1,208.3  
Premiums
 
     133.1      —        158.6      —         291.7  
Net investment income
 
     609.1      639.4      330.2      397.1       1,975.8  
Non-operating net realized investment losses1
 
     —        —        —        (156.0 )     (156.0 )
Other income
 
     3.1      —        —        (5.8 )     (2.7 )
                                     
Total revenues
 
     1,402.2      778.9      900.7      235.3       3,317.1  
                                     
Benefits and expenses:
 
             
Interest credited to policyholder accounts
 
     419.7      433.7      178.0      231.2       1,262.6  
Benefits and claims
 
     234.2      —        245.1      —         479.3  
Policyholder dividends
 
     —        —        24.5      —         24.5  
Amortization of DAC
 
     287.1      26.7      80.2      (25.5 )     368.5  
Interest expense
 
     —        —        —        70.0       70.0  
Other operating expenses
 
     191.6      173.6      147.1      17.2       529.5  
                                     
Total benefits and expenses
 
     1,132.6      634.0      674.9      292.9       2,734.4  
                                     
Income (loss) from continuing operations before federal income tax expense
 
     269.6      144.9      225.8      (57.6 )   $ 582.7  
                   
Less: non-operating net realized investment losses1
 
     —        —        —        156.0    
Less: adjustment to amortization related to net realized investment gains and losses
 
     —        —        —        (25.5 )  
                               
Pre-tax operating earnings
 
   $ 269.6    $ 144.9    $ 225.8    $ 72.9    
                               
Assets as of year end
 
   $ 55,692.9    $ 26,912.6    $ 18,251.1    $ 8,683.4     $ 109,540.0  
                                     
 
 
1
 
Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations.
 
 
 
F-46
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(in millions)
 
   Individual
Investments
   Retirement
Plans
   Individual
Protection
   Corporate
and Other
    Total
2006
 
             
Revenues:
 
             
Policy charges
 
   $ 581.7    $ 160.2    $ 390.7    $ —       $ 1,132.6
Premiums
 
     142.5      —        165.8      —         308.3
Net investment income
 
     739.5      636.0      328.2      354.8       2,058.5
Non-operating net realized investment gains1
 
     —        —        —        1.0       1.0
Other income
 
     2.6      —        0.3      3.4       6.3
                                   
Total revenues
 
     1,466.3      796.2      885.0      359.2       3,506.7
                                   
Benefits and expenses:
 
             
Interest credited to policyholder accounts
 
     501.7      440.5      179.2      208.7       1,330.1
Benefits and claims
 
     202.8      —        247.5      —         450.3
Policyholder dividends
 
     —        —        25.6      —         25.6
Amortization of DAC
 
     352.7      37.9      69.6      (9.9 )     450.3
Interest expense
 
     —        —        —        65.5       65.5
Other operating expenses
 
     206.3      179.1      142.4      9.0       536.8
                                   
Total benefits and expenses
 
     1,263.5      657.5      664.3      273.3       2,858.6
                                   
Income from continuing operations before federal income tax expense
 
     202.8      138.7      220.7      85.9     $ 648.1
                 
Less: non-operating net realized investment gains1
 
     —        —        —        (1.0 )  
Less: adjustment to amortization related to net realized investment gains and losses
 
     —        —        —        (9.9 )  
                               
Pre-tax operating earnings
 
   $ 202.8    $ 138.7    $ 220.7    $ 75.0    
                               
Assets as of year end
 
   $ 55,404.6    $ 28,817.2    $ 16,948.8    $ 8,791.8     $ 109,962.4
                                   
 
1
 
Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations.
 
 
 
F-47
 
 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Notes to Consolidated Financial Statements, Continued
 
December 31, 2007, 2006 and 2005
 
 
 
(in millions)
 
   Individual
Investments
   Retirement
Plans
   Individual
Protection
   Corporate
and Other
    Total
2005
 
             
Revenues:
 
             
Policy charges
 
   $ 532.4    $ 145.0    $ 377.7    $ —       $ 1,055.1
Premiums
 
     96.7      —        163.3      —         260.0
Net investment income
 
     822.4      642.9      332.8      307.1       2,105.2
Non-operating net realized investment gains1
 
     —        —        —        9.5       9.5
Other income
 
     1.3      0.2      —        1.8       3.3
                                   
Total revenues
 
     1,452.8      788.1      873.8      318.4       3,433.1
                                   
Benefits and expenses:
 
             
Interest credited to policyholder accounts
 
     557.7      444.8      182.4      146.1       1,331.0
Benefits and claims
 
     149.1      —        228.4      —         377.5
Policyholder dividends
 
     —        —        33.1      —         33.1
Amortization of DAC
 
     329.1      47.2      89.0      1.0       466.3
Interest expense
 
     —        —        —        66.3       66.3
Other operating expenses
 
     193.1      181.8      148.1      15.3       538.3
                                   
Total benefits and expenses
 
     1,229.0      673.8      681.0      228.7       2,812.5
                                   
Income from continuing operations before federal income tax expense
 
     223.8      114.3      192.8      89.7     $ 620.6
                 
Less: non-operating net realized investment gains1
 
     —        —        —        (9.5 )  
Less: adjustment to amortization related to net realized investment gains and losses
 
     —        —        —        1.0    
                               
Pre-tax operating earnings
 
   $ 223.8    $ 114.3    $ 192.8    $ 81.2    
                               
Assets as of year end
 
   $ 52,929.2    $ 29,987.2    $ 14,728.7    $ 9,313.4     $ 106,958.5
                                   
 
1
 
Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations.
 
 
 
F-48
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Schedule I          Consolidated Summary of Investments – Other Than Investments in Related Parties
 
As of December 31, 2007 (in millions)
 
 
 
Column A
 
   Column B    Column C    Column D  
Type of investment
 
   Cost    Market
value
   Amount at
which shown
in the
consolidated
balance sheet
 
Fixed maturity securities available-for-sale:
 
        
Bonds:
 
        
U.S. Treasury securities and obligations of U.S. Government corporations
 
   $ 110.8    $ 124.7    $ 124.7  
Agencies not backed by the full faith and credit of the U.S. Government
 
     406.1      467.3      467.3  
Obligations of states and political subdivisions
 
     245.3      244.2      244.2  
Foreign governments
 
     40.0      42.4      42.4  
Public utilities
 
     1,345.3      1,358.8      1,358.8  
All other corporate
 
     21,873.7      21,696.0      21,696.0  
                      
Total fixed maturity securities available-for-sale
 
     24,021.2      23,933.4      23,933.4  
                      
Equity securities available-for-sale:
 
        
Common stocks:
 
        
Banks, trusts and insurance companies
 
     15.5      18.5      18.5  
Industrial, miscellaneous and all other
 
     2.3      1.6      1.6  
Nonredeemable preferred stocks
 
     51.8      52.8      52.8  
                      
Total equity securities available-for-sale
 
     69.6      72.9      72.9  
                      
Mortgage loans on real estate, net
 
     7,619.2         7,615.4 1
Real estate, net:
 
        
Investment properties
 
     11.1         8.6 2
Acquired in satisfaction of debt
 
     10.4         9.2 2
                  
Total real estate, net
 
     21.5         17.8  
                  
Policy loans
 
     687.9         687.9  
Other long-term investments
 
     625.1         625.1  
Short-term investments, including amounts managed by a related party
 
     965.4         959.1 3
                  
Total investments
 
   $ 34,009.9       $ 33,911.6  
                  
 
1
 
Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans on real estate (see Note 6 to the audited consolidated financial statements), hedges and commitment hedges on mortgage loans on real estate.
 
 
 
2
 
Difference from Column B primarily results from adjustments for accumulated depreciation.
 
 
 
3
 
Difference from Column B primarily is due to unrealized gains and/or losses from securities lending.
 
See accompanying report of independent registered public accounting firm.
 
 
 
F-49
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Schedule III        Supplementary Insurance Information
 
As of December 31, 2007, 2006 and 2005 and for each of the years then ended (in millions)
 
 
 
Column A
 
   Column B    Column C    Column D     Column E    Column F
Year: Segment
 
   Deferred
policy
acquisition
costs
   Future policy
benefits, losses,
claims and

loss expenses
   Unearned
premiums1
    Other policy
claims and
benefits payable1
   Premium
revenue
2007
 
             
Individual Investments
 
   $ 2,078.1    $ 10,748.6         $ 133.1
Retirement Plans
 
     289.7      10,693.7           —  
Individual Protection
 
     1,542.5      5,635.9           158.6
Corporate and Other
 
     87.1      4,920.2           —  
                         
Total
 
   $ 3,997.4    $ 31,998.4         $ 291.7
                         
2006
 
             
Individual Investments
 
   $ 1,945.0    $ 13,004.4         $ 142.5
Retirement Plans
 
     288.6      10,839.0           —  
Individual Protection
 
     1,441.0      5,574.1           165.8
Corporate and Other
 
     83.4      4,991.9           —  
                         
Total
 
   $ 3,758.0    $ 34,409.4         $ 308.3
                         
2005
 
             
Individual Investments
 
   $ 1,936.4    $ 14,970.9         $ 96.7
Retirement Plans
 
     290.3      10,847.3           —  
Individual Protection
 
     1,328.7      5,531.9           163.3
Corporate and Other
 
     42.5      4,591.0           —  
                         
Total
 
   $ 3,597.9    $ 35,941.1         $ 260.0
                         
Column A
 
   Column G    Column H    Column I     Column J    Column K
Year: Segment
 
   Net
investment
income2
   Benefits, claims,
losses and

settlement expenses
   Amortization
of deferred policy
acquisition costs
    Other
operating
expenses2
   Premiums
written
2007
 
             
Individual Investments
 
   $ 609.1    $ 653.9    $ 287.1       191.6   
Retirement Plans
 
     639.4      433.7      26.7       173.6   
Individual Protection
 
     330.2      447.6      80.2       147.1   
Corporate and Other
 
     397.1      231.2      (25.5 )     87.1   
                               
Total
 
   $ 1,975.8    $ 1,766.4    $ 368.5     $ 599.4   
                               
2006
 
             
Individual Investments
 
   $ 739.5    $ 704.5    $ 352.7     $ 206.3   
Retirement Plans
 
     636.0      440.5      37.9       179.1   
Individual Protection
 
     328.2      452.3      69.6       142.4   
Corporate and Other
 
     354.8      208.7      (9.9 )     74.5   
                               
Total
 
   $ 2,058.5    $ 1,806.0    $ 450.3     $ 602.3   
                               
2005
 
             
Individual Investments
 
   $ 822.4    $ 706.8    $ 329.1     $ 193.1   
Retirement Plans
 
     642.9      444.8      47.2       181.8   
Individual Protection
 
     332.8      443.9      89.0       148.1   
Corporate and Other
 
     307.1      146.1      1.0       81.6   
                               
Total
 
   $ 2,105.2    $ 1,741.6    $ 466.3     $ 604.6   
                               
 
1
 
Unearned premiums and other policy claims and benefits payable are included in Column C amounts.
 
 
 
2
 
Allocations of net investment income and certain operating expenses are based on numerous assumptions and estimates, and reported segment operating results would change if different methods were applied.
 
 
 
F-50
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Schedule IV         Reinsurance
 
As of December 31, 2007, 2006 and 2005 and for each of the years then ended (dollars in millions)
 
 
 
Column A
 
   Column B    Column C    Column D    Column E    Column F
     Gross
amount
   Ceded to
other
companies
   Assumed
from
other
companies
   Net
amount
   Percentage
of amount
assumed
to net
2007
 
              
Life insurance in force
 
   $ 156,899.3    $ 58,529.0    $ 4.4    $ 98,374.7    0.0%
                                
Premiums:
 
              
Life insurance 1
 
   $ 364.2    $ 72.7    $ 0.2    $ 291.7    0.0%
Accident and health insurance
 
     289.2      316.8      27.6      —      NM
                                
Total
 
   $ 653.4    $ 389.5    $ 27.8    $ 291.7    9.5%
                                
2006
 
              
Life insurance in force
 
   $ 151,109.9    $ 58,189.8    $ 7.9    $ 92,928.0    0.0%
                                
Premiums:
 
              
Life insurance 1
 
   $ 336.4    $ 28.4    $ 0.3    $ 308.3    0.1%
Accident and health insurance
 
     388.9      417.4      28.5      —      N/A
                                
Total
 
   $ 725.3    $ 445.8    $ 28.8    $ 308.3    9.3%
                                
2005
 
              
Life insurance in force
 
   $ 142,308.1    $ 52,339.1    $ 10.6    $ 89,979.6    0.0%
                                
Premiums:
 
              
Life insurance 1
 
   $ 311.5    $ 51.8    $ 0.3    $ 260.0    0.1%
Accident and health insurance
 
     415.2      445.1      29.9      —      N/A
                                
Total
 
   $ 726.7    $ 496.9    $ 30.2    $ 260.0    11.6%
                                
 
1
 
Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment and universal life insurance products.
 
 
 
F-51
 
 

 
(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)
 
Schedule V        Valuation and Qualifying Accounts
 
Years ended December 31, 2007, 2006 and 2005 (in millions)
 
 
 
Column A
 
   Column B    Column C    Column D    Column E
Description
 
   Balance at
beginning
of period
   Charged
(credited) to
costs and
expenses
   Charged to
other
accounts
   Deductions1    Balance at
end of
period
2007
 
              
Valuation allowances - mortgage loans on real estate
 
   $ 34.3    $ 1.1    $ —      $ 12.3    $ 23.1
2006
 
              
Valuation allowances - mortgage loans on real estate
 
   $ 31.1    $ 6.0    $ —      $ 2.8    $ 34.3
2005
 
              
Valuation allowances - mortgage loans on real estate
 
   $ 33.3    $ 1.6    $ —      $ 3.8    $ 31.1
 
1
 
Amounts represent transfers to real estate owned and recoveries.
 
 
 
F-52
 
 

 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
NATIONWIDE LIFE INSURANCE COMPANY
 
(Registrant)
 
Date: February 29, 2008
 
 
By
 
 
/s/ W.G. Jurgensen
 
   
W.G. Jurgensen,
 
Chief Executive Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
 
/s/ Arden L. Shisler     February 20, 2008     /s/ W.G. Jurgensen     February 29, 2008
Arden L. Shisler,
 
Chairman of the Board
 
    Date    
W.G. Jurgensen,
 
Chief Executive Officer and Director
 
    Date
/s/ Joseph A. Alutto     February 20, 2008     /s/ James G. Brocksmith, Jr.     February 20, 2008
Joseph A. Alutto,
 
Director
 
    Date    
James G. Brocksmith, Jr.,
 
Director
 
    Date
/s/ Keith W. Eckel     February 20, 2008     /s/ Lydia M. Marshall     February 20, 2008
Keith W. Eckel,
 
Director
 
    Date    
Lydia M. Marshall,
 
Director
 
    Date
/s/ Donald L. McWhorter     February 20, 2008     /s/ David O. Miller     February 20, 2008
Donald L. McWhorter, Director     Date    
David O. Miller,
 
Director
 
    Date
/s/ Martha Miller de Lombera     February 20, 2008     /s/ James F. Patterson     February 20, 2008
Martha Miller de Lombera,
 
Director
 
    Date    
James F. Patterson,
 
Director
 
    Date
/s/ Gerald D. Prothro     February 20, 2008     /s/ Alex Shumate     February 20, 2008
Gerald D. Prothro,
 
Director
 
    Date    
Alex Shumate,
 
Director
 
    Date
/s/ Mark R. Thresher     February 29, 2008     /s/ Timothy G. Frommeyer     February 29, 2008
Mark R. Thresher,
 
President and Chief Operating Officer
 
    Date    
Timothy G. Frommeyer,
 
Senior Vice President – Chief Financial Officer
 
    Date
 
 
F-53
 
 

 
 
 
Exhibit
 
   
  3.1    
Amended Articles of Incorporation of Nationwide Life Insurance Company, dated February 3, 2000 (previously filed as Exhibit 3.1 to Form 10-K, Commission File Number 2-64559, filed March 24, 2003, and incorporated herein by reference)
 
  3.2    
Amended and Restated Code of Regulations of Nationwide Life Insurance Company (previously filed as Exhibit 3.2 to Form 10-K, Commission File Number 2-64559, filed March 1, 2007, and incorporated herein by reference)
 
10.1    
Tax Sharing Agreement effective as of January 1, 2008 among Nationwide Financial Services, Inc. and any company that in the future becomes a subsidiary of Nationwide Financial Services, Inc. if eligible under the Internal Revenue Code (previously filed as Exhibit 99.1 to Form 8-K, Commission File Number 1-12785, filed January 29, 2008, and incorporated herein by reference)
 
10.2    
Form of Tax Sharing Agreement dated as of October 1, 2002 among Nationwide Life Insurance Company and any corporation that may hereafter be a subsidiary of Nationwide Life Insurance Company (previously filed as Exhibit 10.4 to Form 10-K, Commission File Number 1-12785, filed March 11, 2004, and incorporated herein by reference)
 
10.3    
Form of Amended and Restated Cost Sharing Agreement among parties named therein (previously filed as Exhibit 10.3 to Form 10-K, Commission File Number 1-12785, filed March 14, 2003, and incorporated herein by reference)
 
10.4    
Amended and Restated Five-Year Credit Agreement, dated December 31, 2007, among Nationwide Financial Services, Inc., Nationwide Life Insurance Company, Nationwide Mutual Insurance Company, the banks party thereto and Wachovia Bank, National Association, as syndication agent, and Citicorp USA, Inc. as agent (previously filed as Exhibit 10.7 to Form 10-K, Commission File Number 1-12785, filed February 29, 2007, and incorporated herein by reference)
 
10.5    
Form of Lease Agreement between Nationwide Mutual Insurance Company, Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance Company and Nationwide Financial Services, Inc. (previously filed as Exhibit 10.7 to Form S-1/A, Registration Number 333-18531, filed February 25, 1997, and incorporated herein by reference)
 
10.6*  
General Description of Nationwide Performance Incentive Plan (previously filed as Exhibit 10.9 to Form 10-K, Commission File Number 333-18527, filed March 29, 2001, and incorporated herein by reference)
 
10.7*  
Form of Amended and Restated Nationwide Office of Investments Incentive Plan dated as of October 7, 2003 (previously filed as Exhibit 10.13 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
10.8*  
Nationwide Excess Benefit Plan effective as of January 1, 2000 (previously filed as Exhibit 10.14 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
10.9*  
Nationwide Supplemental Retirement Plan As Amended and Restated effective January 1, 2000 (previously filed as Exhibit 10.1 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
10.10*  
Nationwide Severance Pay Plan effective as of March 1, 2003 (previously filed as Exhibit 10.16 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
 
 
F-54
 
 

10.11*     
Nationwide Supplemental Defined Contribution Plan effective as of January 1, 2005 (previously filed as Exhibit 10.17 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
10.12*     
Nationwide Individual Deferred Compensation Plan, as Amended and Restated, effective as of January 1, 2005 (previously filed as Exhibit 10.18 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
10.13*     
Nationwide Board of Directors Deferred Compensation Plan, as Amended and Restated, effective as of January 1, 2005 (previously filed as Exhibit 10.19 to Form 10-K, Commission File Number 1-12785, filed March 1, 2005, and incorporated herein by reference)
 
10.14       
Investment Agency Cost Allocation Agreement dated October 30, 2002 between Nationwide Life Insurance Company and Nationwide Cash Management Company (previously filed as Exhibit 10.22 to Form 10-K, Commission File Number 1-12785, filed March 11, 2004, and incorporated herein by reference)
 
10.15       
Master Repurchase Agreement between Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance Company, and Nationwide Mutual Insurance Company and certain of its Subsidiaries and affiliates (previously filed as Exhibit 10.20 to Form 10-K, Commission File Number 333-18527, filed March 29, 2000, and incorporated herein by reference)
 
 
 
F-55
 
 

10.16*  
Employment letter agreement between Nationwide Financial Services, Inc. and John Carter dated October 27, 2005 (previously filed as Exhibit 10.1 Form 10-Q, Commission File Number 1-12785, filed November 3, 2005, and incorporated herein by reference)
 
10.17*  
Summary of terms of employment of Timothy G. Frommeyer (previously filed as Exhibit 10.2 to Form 10-Q, Commission File Number 1-12785, filed November 3, 2005, and incorporated herein by reference)
 
10.18  
Form of Employee Leasing Agreement, dated July 1, 2000, between Nationwide Mutual Insurance Company and Nationwide Financial Services, Inc. (previously filed as Exhibit 10.35 to Form 10-Q, Commission File Number 1-12785, filed May 11, 2001, and incorporated herein by reference)
 
10.19  
Form of Surplus Note, dated December 17, 2001, between Nationwide Financial Services, Inc. and Nationwide Life Insurance Company (previously filed as Exhibit 10.32 to Form 10-K, Commission File Number 2-64559, filed March 23, 2003, and incorporated herein by reference)
 
10.20  
Form of Surplus Note, dated June 26, 2002, between Nationwide Financial Services, Inc. and Nationwide Life Insurance Company (previously filed as Exhibit 10.33 to Form 10-K, Commission File Number 2-64559, filed March 23, 2003, and incorporated herein by reference)
 
10.21  
Form of Surplus Note, dated December 23, 2003, between Nationwide Financial Services, Inc. and Nationwide Life Insurance Company (previously filed as Exhibit 10.34 to Form 10-K, Commission File Number 2-64559, filed March 11, 2004, and incorporated herein by reference)
 
10.22*  
Employment Offer Letter Agreement between Nationwide Financial Services, Inc. and Gail Snyder dated November 28, 2005 (previously filed as Exhibit 10.49 to Form 10-K, Commission File Number 1-12785, filed March 1, 2006, and incorporated herein by reference)
 
10.23*  
Offer Letter for Anne L. Arvia, dated June 30, 2006 (previously filed as Exhibit 10.2 to Form 10-Q, Commission File Number 1-12785, filed August 3, 2006, and incorporated herein by reference)
 
10.24*  
Offer Letter for William Jackson, dated August 21, 2006 (previously filed as Exhibit 10.1 to Form 10-Q, Commission File Number 1-12785, filed November 3, 2006, and incorporated herein by reference)
 
10.25*  
Offer Letter for James Lyski, dated August 30, 2006 (previously filed as Exhibit 10.2 to Form 10-Q, Commission File Number 1-12785, filed November 3, 2006, and incorporated herein by reference)
 
10.26*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and Larry Hilsheimer (previously filed as Exhibit 10.49 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.27*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and Terri L. Hill (previously filed as Exhibit 10.50 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.28*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and James Lyski (previously filed as Exhibit 10.51 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.29*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and Michael C. Keller (previously filed as Exhibit 10.52 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.30*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and Patricia R. Hatler (previously filed as Exhibit 10.53 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.31*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Financial Services, Inc. and Mark R. Thresher (previously filed as Exhibit 99.1 to Form 8-K, Commission File Number 1-12785, filed February 19, 2008, and incorporated herein by reference)
 
10.32*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and Stephen S. Rasmussen (previously filed as Exhibit 10.55 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
 
 
F-56
 
 

10.33*  
Executive Severance Agreement, dated January 1, 2008, between Nationwide Mutual Insurance Company and W.G. Jurgensen (previously filed as Exhibit 99.2 to Form 8-K, Commission File Number 1-12785, filed February 19, 2008, and incorporated herein by reference)
 
10.34*  
First Amendment to the Nationwide Individual Deferred Compensation Plan, as amended and restated, effective as of January 1, 2005 (previously filed as Exhibit 10.58 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.35*  
Second Amendment to the Nationwide Individual Deferred Compensation Plan, as amended and restated, effective as of January 1, 2005 (previously filed as Exhibit 10.59 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
10.36*  
Third Amendment to the Nationwide Individual Deferred Compensation Plan, as amended and restated (now known as the Nationwide Officer Deferred Compensation Plan), effective as of January 1, 2005 (previously filed as Exhibit 10.60 to Form 10-K, Commission File Number 1-12785, filed February 29, 2008, and incorporated herein by reference)
 
18.1  
Letter regarding change in accounting principle from KPMG LLP related to annual goodwill impairment testing (previously filed as Exhibit 18 to Form 10-Q, Commission File Number 1-12785, filed November 12, 2003, and incorporated herein by reference)
 
18.2  
Letter regarding change in accounting principle from KPMG LLP related to accrued legal expenses (previously filed as Exhibit 18.1 to Form 10-Q, Commission File Number 1-12785, filed August 2, 2007, and incorporated herein by reference)
 
31.1  
Certification of W.G. Jurgensen pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
 
31.2  
Certification of Timothy G. Frommeyer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
 
32.1  
Certification of W.G. Jurgensen pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit is intended to be furnished in accordance with Regulation S-K, Item 601(b)(32)(ii) and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any document filed under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing)
 
32.2  
Certification of Timothy G. Frommeyer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit is intended to be furnished in accordance with Regulation S-K, Item 601(b)(32)(ii) and shall note be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any document filed under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing)
 
 
*
Management Compensatory Plan
 
All other exhibits referenced by Item 601 of Regulation S-K are not required under the related instructions or are inapplicable and therefore have been omitted.
 
 
 
F-57
 
 

 
PART C.     OTHER INFORMATION
 
Item 24.
Financial Statements and Exhibits
 
 
(a)
Financial Statements:
 
Nationwide Variable Account-7:
 
Report of Independent Registered Public Accounting Firm.
 
Statement of Assets, Liabilities and Contract
Owners’ Equity as of December 31, 2007.
 
Statements of Operations for year ended
December 31, 2007.
 
Statements of Changes in Contract Owners' Equity for Years
ended December 31, 2007 and 2006.
 
Notes to Financial Statements.
 
Nationwide Life Insurance Company and Subsidiaries:
 
Report of Independent Registered Public Accounting Firm.
 
Consolidated Balance Sheets as of December 31, 2007 and
2006.
 
Consolidated Statements of Income for the
years ended December 31, 2007, 2006 and
2005.
 
Consolidated Statements of Shareholder's
Equity for the years ended December 31,
2007, 2006 and 2005.
 
Consolidated Statements of Cash Flows for
the years ended December 31, 2007, 2006 and 2005.
 
Notes to Consolidated Financial Statements.
 
Financial Statement Schedules



(b)           Exhibits
 
(1) Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant.
Filed previously with Post-Effective Amendment No. 11 on February 5, 2002 (File No. 033-82174) and hereby incorporated by reference.
(2) Not Applicable
 
(3) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter.
Filed previously with Post-Effective Amendment  No. 14 on February 5, 2002 (File No. 033-89560) and hereby incorporated by reference.
(4) The form of the variable annuity contract
Filed previously with Post-Effective Amendment  No. 17 on April 26, 2007 (File No. 033-82174) and hereby incorporated by reference.
(5) Variable Annuity Application
Filed previously with Post-Effective Amendment  No. 17 on April 26, 2007 (File No. 033-82174) and hereby incorporated by reference.
(6) Articles of Incorporation of Depositor
Filed previously with Post-Effective Amendment  No. 17 on April 26, 2007 (File No. 033-82174) and hereby incorporated by reference.
(7) Not Applicable
 
(8) Fund Participation Agreements
Fund Participation Agreement with Fidelity filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.
(9) Opinion of Counsel
Filed previously with Post-Effective Amendment  No. 17 on April 26, 2007 (File No. 033-82174) and hereby incorporated by reference.
(10) Consent of Independent Registered Public Accounting Firm
Attached hereto.
(11) Not Applicable
 
(12) Not Applicable
 
(99) Power of Attorney
Attached hereto.



Item 25.
Directors and Officers of the Depositor

Chairman of the Board and Director
Arden L. Shisler
Chief Executive Officer and Director
W. G. Jurgensen
President and Chief Operating Officer
Mark R. Thresher
Executive Vice President and Chief Legal and Governance Officer
Patricia R. Hatler
Executive Vice President-Chief Administrative Officer
Terri L. Hill
Executive Vice President-Chief Information Officer
Michael C. Keller
Executive Vice President-Chief Marketing Officer
James R. Lyski
Executive Vice President-Finance
Lawrence A. Hilsheimer
Senior Vice President-and Secretary
Thomas E. Barnes
Senior Vice President and Treasurer
Harry H. Hallowell
Senior Vice President-Associate Services
Robert J. Puccio
Senior Vice President-Chief Compliance Officer
Carol Baldwin Moody
Senior Vice President-Chief Financial Officer
Timothy G. Frommeyer
Senior Vice President-Chief Investment Officer
Gail G. Snyder
Senior Vice President-Chief Litigation Counsel
Randolph C. Wiseman
Senior Vice President-CIO NSC
Robert J. Dickson
Senior Vice President-CIO Strategic Investments
Gary I. Siroko
Senior Vice President-Corporate Strategy
J. Stephen Baine
Senior Vice President-Customer Insight/Analytic
Paul D. Ballew
Senior Vice President-Customer Relationships
David R. Jahn
Senior Vice President-Division General Counsel
Roger A. Craig
Senior Vice President-Division General Counsel
Thomas W. Dietrich
Senior Vice President-Division General Counsel
Sandra L. Neely
Senior Vice President-Government Relations
Jeffrey D. Rouch
Senior Vice President-Head of Taxation
Pamela A. Biesecker
Senior Vice President-Health and Productivity
Holly R. Snyder
Senior Vice President-Human Resources
Kim R. Geyer
Senior Vice President-Individual Investments Business Head
Eric S. Henderson
Senior Vice President-Individual Protection Business Head
Peter A. Golato
Senior Vice President-Information Technology
Srinivas Koushik
Senior Vice President-Internal Audits
Kelly A. Hamilton
Senior Vice President-NF Marketing
Gordon E. Hecker
Senior Vice President-NF Systems
Susan Gueli
Senior Vice President-NFN Retail Distribution
Michael A. Hamilton
Senior Vice President-Non-Affiliated Sales
John L. Carter
Senior Vice President-NW Retirement Plans
William S. Jackson
Senior Vice President-President – Nationwide Bank
Anne L. Arvia
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing
W. Kim Austen
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing
James R. Burke
Senior Vice President-Property and Casualty Human Resources
Gale V. King
Senior Vice President-Property and Casualty Personal Lines Product Pricing
J. Lynn Greenstein
Director
Joseph A. Alutto
Director
James G. Brocksmith, Jr.
Director
Keith W. Eckel
Director
Lydia M. Marshall
Director
Donald L. McWhorter
Director
David O. Miller
Director
Martha Miller de Lombera
Director
James F. Patterson
Director
Gerald D. Prothro
Director
Alex Shumate

 
The business address of the Directors and Officers of the Depositor is:
 
One Nationwide Plaza, Columbus, Ohio 43215




Item 26.                  Persons Controlled by or Under Common Control with the Depositor or Registrant.

*
Subsidiaries for which separate financial statements are filed
**
Subsidiaries included in the respective consolidated financial statements
***
Subsidiaries included in the respective group financial statements filed for unconsolidated subsidiaries
****
Other subsidiaries

COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
1717 Advisory Services, Inc.
Pennsylvania
 
The company was formerly registered as an investment advisor and is currently inactive.
1717 Brokerage Services, Inc.
Pennsylvania
 
The company is a multi-state licensed insurance agency.
1717 Capital Management Company*
Pennsylvania
 
The company is registered as a broker-dealer and investment advisor.
AGMC Reinsurance, Ltd.
Turks & Caicos Islands
 
The company is in the business of reinsurance of mortgage guaranty risks.
ALLIED General Agency Company
Iowa
 
The company acts as a general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.
Iowa
 
The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company
Iowa
 
The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.
Texas
 
The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
AMCO Insurance Company
Iowa
 
The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.
Florida
 
The company is an underwriting manager for ocean cargo and hull insurance.
Atlantic Floridian Insurance Company (f.k.a. Nationwide Atlantic Insurance Company)
Ohio
 
The company writes personal lines residential property insurance in the State of Florida.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Audenstar Limited
England
 
The company is an investment holding company.
Cal-Ag Insurance Services, Inc.
California
 
The company is an insurance agency.
CalFarm Insurance Agency
California
 
The company is an insurance agency.
Champions of the Community, Inc.
Ohio
 
The company raises money for gifts and grants to charitable organizations
Colonial County Mutual Insurance Company*
Texas
 
The company underwrites non-standard automobile and motorcycle insurance and other various commercial liability coverage in Texas.
Corviant Corporation
Delaware
 
The purpose of the company is to create a captive distribution network through which affiliates can sell multi-manager investment products, insurance products and sophisticated estate planning services.
Crestbrook Insurance Company* (f.k.a. CalFarm Insurance Company)
California
 
The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Depositors Insurance Company
Iowa
 
The company underwrites general property and casualty insurance.
DVM Insurance Agency, Inc.
California
 
This company places the pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
F&B, Inc.
Iowa
 
The company is an insurance agency that places business with carriers other than Farmland Mutual Insurance Company and its affiliates.
Farmland Mutual Insurance Company
Iowa
 
The company provides property and casualty insurance primarily to agricultural businesses.
FutureHealth Corporation
 Maryland
 
The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
FutureHealth Holding Company
Maryland
 
The company provides population health management.
FutureHealth Technologies Corporation
Maryland
 
The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.
Gates, McDonald & Company*
Ohio
 
The company provides services to employers for managing workers' compensation matters and employee benefits costs.
Gates, McDonald & Company of New York, Inc.
New York
 
The company provides workers' compensation and self-insured claims administration services to employers with exposure in New York.
GatesMcDonald Health Plus Inc.
Ohio
 
The company provides medical management and cost containment services to employers.
GVH Participacoes e Empreedimientos Ltda.
Brazil
 
The company acts as a holding company.
Insurance Intermediaries, Inc.
Ohio
 
The company is an insurance agency and provides commercial property and casualty brokerage services.
Intervent USA, Inc.
Georgia
 
Lifestyle Management and Chronic Disease Risk Reduction Programs Consultants.
Life REO Holdings, LLC
Ohio
 
The company serves as a holding company for foreclosure entities.
Lone Star General Agency, Inc.
Texas
 
The company acts as general agent to market non-standard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
Mullen TBG Insurance Agency Services, LLC
Delaware
 
The company is a joint venture between TBG Insurance Services Corporation and MC Insurance Agency Services LLC. The Company provides financial products and services to executive plan participants.
National Casualty Company
Wisconsin
 
The company underwrites various property and casualty coverage, as well as individual and group accident and health insurance.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
National Casualty Company of America, Ltd.
England
 
This company is currently inactive.
Nationwide Advantage Mortgage Company*
Iowa
 
The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*
Ohio
 
The company provides property and casualty insurance products.
Nationwide Agribusiness Insurance Company
Iowa
 
The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*
Ohio
 
The purpose of the company is to develop Nationwide Arena and to engage in related development activity.
Nationwide Asset Management, LLC
Ohio
 
Provides investment advisory services as a registered investment advisor to affiliated and unaffiliated clients
Nationwide Asset Management Holdings Limited
England and Wales
 
The Company is an investment holding company
Nationwide Assurance Company
Wisconsin
 
The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Bank*
 United States
 
This is a federal savings bank chartered by the Office of Thrift Supervision in the United States Department of Treasury to exercise deposit, lending agency custody and fiduciary powers and to engage in activities permissible for federal savings banks under the Home Owners’ Loan act of 1933.
Nationwide Better Health, Inc. (f.k.a. Nationwide Health and Productivity Company)
Ohio
 
The company is a holding company for the health and productivity operations of Nationwide.
Nationwide Cash Management Company
Ohio
 
The company buys and sells investment securities of a short-term nature as the agent for other Nationwide corporations, foundations, and insurance company separate accounts.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Nationwide Community Development Corporation, LLC
Ohio
 
The company holds investments in low-income housing funds.
Nationwide Corporation
Ohio
 
The company acts primarily as a holding company for entities affiliated with Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company.
Nationwide Document Solutions, Inc. (f.k.a. ALLIED Document Solutions, Inc.)
Iowa
 
The company provides general printing services to its affiliated companies as well as to certain unaffiliated companies.
Nationwide Emerging Managers, LLC (f.k.a. Gartmore Emerging Managers, LLC)
Delaware
 
The company acquires and holds interests in registered investment advisors and provides investment management services.
Nationwide Exclusive Agent Risk Purchasing Group, LLC
Ohio
 
The company's purpose is to provide a mechanism for the purchase of group liability insurance for insurance agents operating nationwide.
Nationwide Financial Assignment Company
Ohio
 
The company is an administrator of structured settlements.
Nationwide Financial Institution Distributors Agency, Inc.
Delaware
 
The company is an insurance agency.
Nationwide Financial Services Capital Trust
Delaware
 
The trust's sole purpose is to issue and sell certain securities representing individual beneficial interests in the assets of the trust.
Nationwide Financial Services, Inc.*
Delaware
 
The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute long-term savings and retirement products.
Nationwide Financial Sp. Zo.o
Poland
 
The company provides services to Nationwide Global Holdings, Inc. in Poland.
Nationwide Financial Structured Products, LLC
Ohio
 
The company captures and reports the results of the structured products business unit.
Nationwide Foundation*
Ohio
 
The company contributes to non-profit activities and projects.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Nationwide Fund Advisors
Delaware
 
The company is a business trust. The trust is designed to act as a registered investment advisor.
Nationwide Fund Distributors LLC (f.k.a. Gartmore Distribution Services, Inc.)
Delaware
 
The company is a distributor and administrator for Nationwide mutual funds.
Nationwide Fund Management LLC (f.k.a Gartmore Investors Services, Inc.)
Delaware
 
The corporation provides transfer and dividend disbursing services to various mutual fund entities.
Nationwide General Insurance Company
Ohio
 
The company transacts a general insurance business, except life insurance, and primarily provides automobile and fire insurance to select customers.
Nationwide Global Funds
Luxembourg
 
This company issues shares of mutual funds.
Nationwide Global Holdings, Inc.
Ohio
 
The company is a holding company for the international operations of Nationwide.
Nationwide Global Ventures (f.k.a. Gartmore Global Ventures, Inc.)
Delaware
 
The company acts as a holding company.
Nationwide Indemnity Company*
Ohio
 
The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide Insurance organization.
Nationwide Insurance Company of America
Wisconsin
 
The corporation is an independent agency personal lines underwriter of property/casualty insurance.
Nationwide Insurance Company of Florida*
Ohio
 
The company transacts general insurance business except life insurance.
Nationwide International Underwriters
California
 
The company is a special risk, excess and surplus lines underwriting manager.
Nationwide Investment Advisors, LLC
Ohio
 
The company provides investment advisory services.
Nationwide Investment Services Corporation**
Oklahoma
 
This is a limited purpose broker-dealer and acts as an investment advisor.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Nationwide Life and Annuity Company of America**
Delaware
 
The company provides variable and traditional life insurance and other investment products. The company also maintains blocks of individual variable and fixed annuities products.
Nationwide Life and Annuity Insurance Company**
Ohio
 
The company engages in underwriting life insurance and granting, purchasing, and disposing of annuities.
Nationwide Life Insurance Company*
Ohio
 
The company provides individual life insurance, group life and health insurance, fixed and variable annuity products, and other life insurance products.
Nationwide Life Insurance Company of America*
Pennsylvania
 
The company provides individual life insurance and group annuity products.
Nationwide Life Insurance Company of Delaware*
Delaware
 
The company insures against personal injury, disability or death resulting from traveling, sickness or other general accidents, and every type of insurance appertaining thereto.
Nationwide Lloyds
Texas
 
The company markets commercial property insurance in Texas.
Nationwide Management Systems, Inc.
Ohio
 
The company offers a preferred provider organization and other related products and services.
Nationwide Mutual Capital, LLC (f.k.a. Nationwide Strategic Investment Fund, LLC)
Ohio
 
The company acts as a private equity fund investing in companies for investment purposes and to create strategic opportunities for Nationwide.
Nationwide Mutual Capital I, LLC*
Delaware
 
The business of the company is to achieve long-term capital appreciation through a portfolio of primarily domestic equity investments in financial service and related companies.
Nationwide Mutual Fire Insurance Company
Ohio
 
The company engages in a general insurance and reinsurance business, except life insurance.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Nationwide Mutual Funds
Delaware
 
The corporation operates as a business trust for the purposes of issuing investment shares to the public and to segregated asset accounts of life insurance companies.
Nationwide Mutual Insurance Company*
Ohio
 
The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Private Equity Fund, LLC
Ohio
 
The company invests in private equity funds.
Nationwide Property and Casualty Insurance Company
Ohio
 
The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC
Ohio
 
The company provides alarm systems and security guard services.
Nationwide Provident Holding Company* (f.k.a. Provident Mutual Holding Company)
Pennsylvania
 
The company is a holding company for non-insurance subsidiaries.
Nationwide Realty Investors, Ltd.*
Ohio
 
The company is engaged in the business of developing, owning and operating real estate and real estate investments.
Nationwide Retirement Solutions, Inc.*
Delaware
 
The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Arizona
Arizona
 
The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio
Ohio
 
The company provides retirement products, marketing and education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas
Texas
 
The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Insurance Agency, Inc.
Massachusetts
 
The company markets and administers deferred compensation plans for public employees.
Nationwide S.A. Capital Trust (f.k.a. Gartmore S.A. Capital Trust)
Delaware
 
The company is a business trust. The trust is designed to act as a registered investment advisor.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Nationwide Sales Solutions, Inc. (f.k.a. Allied Group Insurance Marketing Company)
Iowa
 
The company engages in direct marketing of property and casualty insurance products.
Nationwide Securities, Inc.*
Ohio
 
The company is a registered broker-dealer and provides investment management and administrative services.
Nationwide Separate Accounts, LLC (f.k.a. Gartmore Separate Accounts, LLC)
Delaware
 
The company acts as a registered investment advisor.
Nationwide Services Company, LLC
Ohio
 
The company performs shared services’ functions for the Nationwide organization.
Nationwide Services For You, LLC
Ohio
 
The company provides consumer services that are related to the business of insurance, including services that help consumers prevent losses and mitigate risks.
Nationwide Services Sp. Zo.o.
Poland
 
The corporation provides services to Nationwide Global Holdings, Inc. in Poland.
Newhouse Capital Partners, LLC
Delaware
 
The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Capital Partners II, LLC
Delaware
 
The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Special Situations Fund I, LLC
Delaware
 
The company owns and manages contributed securities in order to achieve long-term capital appreciation from the contributed securities and through investments in a portfolio of other equity investments in financial service and other related companies.
NF Reinsurance Ltd.*
Bermuda
 
The company serves as a captive reinsurer for Nationwide Life Insurance Company’s universal life, term life and annuity business.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
NFS Distributors, Inc.
Delaware
 
The company acts primarily as a holding company for Nationwide Financial Services, Inc.'s distribution companies.
NWD Investment Management, Inc. (f.k.a. Gartmore Global Investments, Inc.)
Delaware
 
The company acts as a holding company and provides other business services for the NWD Investments group of companies.
NWD Management & Research Trust (f.k.a. Gartmore Global Asset Management Trust)
Delaware
 
The company acts as a holding company for the NWD Investments group of companies and as a registered investment advisor.
NWD MGT, LLC (f.k.a. GGI MGT LLC)
Delaware
 
The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to the NWD Investments management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC.
Olentangy Reinsurance Company
Vermont
 
The company is a reinsurance company.
Pension Associates, Inc.
Wisconsin
 
The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.
Iowa
 
This company is an insurance agency.
Provestco, Inc.
Delaware
 
The company serves as a general partner in certain real estate limited partnerships invested in by Nationwide Life Insurance Company of America.
RCMD Financial Services, Inc.
Delaware
 
The company is a holding company.
Registered Investment Advisors Services, Inc.
Texas
 
The company facilitates third-party money management services for plan providers.
Retention Alternatives, Ltd.*
Bermuda
 
The company is a captive insurer and writes first dollar insurance policies in workers’ compensation, general liability and automobile liability for its affiliates in the United States.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Riverview Alternative Investment Advisors, LLC (f.k.a. Gartmore Riverview, LLC)
Delaware
 
The company provides investment management services to a limited number of institutional investors.
Riverview Alternative Investment Advisors II LLC (f.k.a. Gartmore Riverview II, LLC)
Delaware
 
The company is a holding company.
Riverview International Group, Inc.
Delaware
 
The company is a holding company.
RP&C International, Inc.
Ohio
 
The company is an investment-banking firm that provides specialist advisory services and innovative financial solutions to public and private companies internationally.
Scottsdale Indemnity Company
Ohio
 
The company is engaged in a general insurance business, except life insurance.
Scottsdale Insurance Company
Ohio
 
The company primarily provides excess and surplus lines of property and casualty insurance.
Scottsdale Surplus Lines Insurance Company
Arizona
 
The company provides excess and surplus lines coverage on a non-admitted basis.
TBG Aviation, LLC
California
 
The company holds an investment in a leased airplane and maintains an operating agreement with Flight Options.
TBG Danco Insurance Services Corporation
California
 
The corporation provides life insurance and individual executive estate planning.
TBG Financial & Insurance Services Corporation*
California
 
The company consults with corporate clients and financial institutions on the development and implementation of proprietary and/or private placement insurance products for the financing of executive benefit programs and individual executive's estate planning requirements.  As a broker dealer, TBG Financial & Insurance Services Corporation provides access to institutional insurance investment products.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
TBG Insurance Services Corporation*
Delaware
 
The company markets and administers executive benefit plans.
THI Holdings (Delaware), Inc.*
Delaware
 
The company acts as a holding company for subsidiaries of the Nationwide group of companies.
Titan Auto Insurance of New Mexico, Inc.
New Mexico
 
The Company is an insurance agency and operates as an employee agent "storefront" for Titan Indemnity Company in New Mexico.
Titan Indemnity Company
Texas
 
 The company is a multi-line licensed insurance company and is operating primarily as a property and casualty insurance company.
Titan Insurance Company
Michigan
 
This is a property and casualty insurance company.
Titan Insurance Services, Inc.
Texas
 
The company is a Texas grandfathered managing general agency.
Veterinary Pet Insurance Company*
California
 
The company provides pet insurance.
Victoria Automobile Insurance Company
Indiana
 
The company is a property and casualty insurance company.
Victoria Fire & Casualty Company
Ohio
 
The company is a property and casualty insurance company.
Victoria National Insurance Company
Ohio
 
The company is a property and casualty insurance company.
Victoria Select Insurance Company
Ohio
 
The company is a property and casualty insurance company.
Victoria Specialty Insurance Company
Ohio
 
The company is a property and casualty insurance company.
Vida Seguradora SA
Brazil
 
The company operates as a licensed insurance company in the categories of life and unrestricted private pension plan in Brazil.
VPI Services, Inc.
California
 
The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance Company policies, including pet indemnification and a lost pet recovery program.
Washington Square Administrative Services, Inc.
Pennsylvania
 
The company provides administrative services to Nationwide Life and Annuity Company of America.
Western Heritage Insurance Company
Arizona
 
The company underwrites excess and surplus lines of property and casualty insurance.




COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES (see attached chart unless otherwise indicated)
PRINCIPAL BUSINESS
Whitehall Holdings, Inc.
Texas
 
The company acts as a holding company for the Titan group of agencies.
W.I. of Florida (d.b.a. Titan Auto Insurance)
Florida
 
The company is an insurance agency and operates as an employee agent storefront for Titan Indemnity Company in Florida.




 
COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES
(see attached chart
 unless otherwise indicated)
PRINCIPAL BUSINESS
*
MFS Variable Account
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Multi-Flex Variable Account
Ohio
 
Issuer of Annuity Contracts
*
Nationwide VA Separate Account-A
Ohio
 
Issuer of Annuity Contracts
*
Nationwide VA Separate Account-B
Ohio
 
Issuer of Annuity Contracts
*
Nationwide VA Separate Account-C
Ohio
 
Issuer of Annuity Contracts
*
Nationwide VA Separate Account-D
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-II
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-3
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-4
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-5
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-6
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-7
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-8
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-9
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-10
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-11
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-12
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-13
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Variable Account-14
Ohio
 
Issuer of Annuity Contracts
 
Nationwide Variable Account-15
Ohio
 
Issuer of Annuity Contracts




 
COMPANY
STATE/COUNTRY OF ORGANIZATION
NO. VOTING SECURITIES
(see attached chart
 unless otherwise indicated)
PRINCIPAL BUSINESS
 
Nationwide Variable Account-16
Ohio
 
Issuer of Annuity Contracts
 
Nationwide Variable Account-17
Ohio
 
Issuer of Annuity Contracts
*
Nationwide Provident VA Separate Account 1
Pennsylvania
 
Issuer of Annuity Contracts
*
Nationwide Provident VA Separate Account A
Delaware
 
Issuer of Annuity Contracts
 
Nationwide VL Separate Account-A
Ohio
 
Issuer of Life Insurance Policies
 
Nationwide VL Separate Account-B
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VL Separate Account-C
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VL Separate Account-D
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VL Separate Account-G
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account-2
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account-3
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account-4
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account-5
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account-6
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide VLI Separate Account-7
Ohio
 
Issuer of Life Insurance Policies
*
Nationwide Provident VLI Separate Account 1
Pennsylvania
 
Issuer of Life Insurance Policies
*
Nationwide Provident VLI Separate Account A
Delaware
 
Issuer of Life Insurance Policies





 

 
 

 



Item 27.                 Number of Contract Owners
 
The number of contract owners of Qualified and Non-Qualified Contracts as of February 1, 2008 was 9,220 and 3,251, respectively.
 
Item 28.                 Indemnification
 
Provision is made in Nationwide’s Amended and Restated Code of Regulations and expressly authorized by the General Corporation Law of the State of Ohio, for indemnification by Nationwide of any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person is or was a director, officer or employee of Nationwide, against expenses, including attorneys fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the General Corporation Law of the State of Ohio.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers or persons controlling Nationwide pursuant to the foregoing provisions, Nationwide has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
 
Item 29.                 Principal Underwriter

 
(a)
Nationwide Investment Services Corporation ("NISC") serves as principal underwriter and general distributor for the following separate investment accounts of Nationwide or its affiliates:
 
Multi-Flex Variable Account
Nationwide VLI Separate Account-2
Nationwide Variable Account
Nationwide VLI Separate Account-3
Nationwide Variable Account-II
Nationwide VLI Separate Account-4
Nationwide Variable Account-4
Nationwide VLI Separate Account-6
Nationwide Variable Account-5
Nationwide VLI Separate Account-7
Nationwide Variable Account-6
Nationwide VL Separate Account-C
Nationwide Variable Account-7
Nationwide VL Separate Account-D
Nationwide Variable Account-8
Nationwide VL Separate Account-G
Nationwide Variable Account-9
 
Nationwide Variable Account-10
 
Nationwide Variable Account-11
 
Nationwide Variable Account-13
 
Nationwide Variable Account-14
 
Nationwide VA Separate Account-A
 
Nationwide VA Separate Account-B
 
Nationwide VA Separate Account-C
 

(b)
Directors and Officers of NISC:

President
Robert O. Cline
Senior Vice President and Secretary
Thomas E. Barnes
Senior Vice President, Treasurer and Director
James D. Benson
Vice President
Karen R. Colvin
Vice President
Charles E. Riley
Vice President
Trey Rouse
Vice President-Chief Compliance Officer
James J. Rabenstine
Secretary
Kathy R. Richards
Assistant Treasurer
Terry C. Smetzer
Director
John L. Carter
Director
Eric S. Henderson

The business address of the Directors and Officers of Nationwide Investment Services Corporation is:
One Nationwide Plaza, Columbus, Ohio 43215
 
 

 

(c)
Name of Principal Underwriter
Net Underwriting Discounts and Commissions
Compensation on Redemption or Annuitization
Brokerage Commissions
Compensation
Nationwide Investment Services Corporation
N/A
N/A
N/A
N/A

 
Item 30.          Location of Accounts and Records
 
Timothy G. Frommeyer
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH  43215
 
Item 31.          Management Services
 
Not Applicable
 
Item 32.          Undertakings
 
The Registrant hereby undertakes to:
 
 
(a)
File a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted;
 
 
(b)
Include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and
 
 
(c)
Deliver any Statement of Additional Information and any financial statements required to be made available under this form promptly upon written or oral request.
 
The Registrant represents that any of the contracts which are issued pursuant to Section 403(b) of the Internal Revenue Code are issued by Nationwide through the Registrant in reliance upon, and in compliance with a no-action letter issued by the staff of the Securities and Exchange Commission to the American Council of Life Insurance (publicly available November 28, 1988) permitting withdrawal restrictions to the extent necessary to comply with Section 403(b)(11) of the Internal Revenue Code.
 
Nationwide represents that the fees and charges deducted under the contract in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Nationwide.
 




SIGNATURES
 
As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT-7, certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of Columbus, and State of Ohio, on this 24th day of April, 2008.
 
NATIONWIDE VARIABLE ACCOUNT-7
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Depositor)
 
By/s/ W. MICHAEL STOBART
                      W. Michael Stobart

As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 24th day of April, 2008.


 
   
W. G. JURGENSEN
 
W. G. Jurgensen, Director and Chief Executive Officer
 
ARDEN L. SHISLER
 
Arden L. Shisler, Chairman of the Board
 
JOSEPH A. ALUTTO
 
Joseph A. Alutto, Director
 
JAMES G. BROCKSMITH, JR.
 
James G. Brocksmith, Jr., Director
 
KEITH W. ECKEL
 
Keith W. Eckel, Director
 
LYDIA M. MARSHALL
 
Lydia M. Marshall, Director
 
DONALD L. MCWHORTER
 
Donald L. McWhorter, Director
 
MARTHA MILLER DE LOMBERA
 
Martha Miller de Lombera, Director
 
DAVID O. MILLER
 
David O. Miller, Director
 
JAMES F. PATTERSON
 
James F. Patterson, Director
 
GERALD D. PROTHRO
 
Gerald D. Prothro, Director
 
ALEX SHUMATE
 
Alex Shumate, Director
 
 
By /s/   W. MICHAEL STOBART
 
   W. Michael Stobart
 
Attorney-in-Fact