'33 Act File No. 333-31725

'40 Act File No. 811-08301

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-6

REGISTRATION UNDER THE SECURITIES ACT OF 1933
Pre-effective Amendment No. ___	o
Post-effective Amendment No. 30	þ
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	o
Amendment No. 174	þ

(Check appropriate box or boxes.)

NATIONWIDE VLI SEPARATE ACCOUNT-4

(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

Robert W. Horner, III

Vice President and Secretary

One Nationwide Plaza

Columbus, Ohio 43215-2220

(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:  May 1, 2011

It is proposed that this filing will become effective (check appropriate box)

o Immediately upon filing pursuant to paragraph (b)

þ On May 1, 2011 pursuant to paragraph (b)

o 60 days after filing pursuant to paragraph (a)(1)

o On (date) pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

o This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

The Best of America Next Generation® FPVUL

The Best of America® Choice LifeSM FPVUL

Individual Flexible Premium Variable Universal Life Insurance Policies

Issued By

Nationwide Life Insurance Company

Through

Nationwide VLI Separate Account-4

The Date Of This Prospectus Is May 1, 2011

PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.

Variable life insurance is complex.  This prospectus is designed to provide you with information about the policy that will assist you when  making your decision whether or not to purchase the policy .  We encourage you to take time you need to understand the policy and its potential benefits and risks.  In consultation with your financial advisor , you should use this prospectus to compare the benefits and risks of the policy against those of other life insurance policies.

Please read this entire prospectus, and the policy , and consult with a trusted financial advisor .   Please contact us if you have policy specific questions, need additional information,  or would like to receive free copies of prospectuses for the mutual funds available under the policy.

Telephone:	1-800-547-7548
TDD:	1-800-238-3035
Internet:	www.nationwide.com
U.S. Mail:	Nationwide Life Insurance Company
	5100 Rings Road, RR1-04-D4
	Dublin, OH 43017-1522

These securities have not been approved or disapproved by the Securities and Exchange Commission (SEC) nor has the SEC passed upon the accuracy or adequacy of the prospectus.  Any representation to the contrary is a criminal offense.  This prospectus is not an offering in any jurisdiction where such offering may not lawfully be made.  Not all terms, conditions, benefits, programs, features and investment options are available or approved for use in every state .

The purpose of the policy is to provide life insurance protection for the beneficiary you name.  If your primary need is not life insurance protection, then purchasing the policy may not be in your best interest.  We make no claim that the policy is in any way similar or comparable to a systematic investment plan of a mutual fund.

In thinking about buying the policy to replace existing life insurance, please carefully consider its advantages versus those of the policy you intend to replace, as well as any replacement costs.  As always, consult your financial advisor .

We offer a variety of variable universal life policies.  Despite offering substantially similar features and investment options, certain policies may have lower overall charges than others, including the policy this prospectus describes.  These differences in charges may be attributable to differences in sales and related expenses incurred in one distribution channel versus another.

Table of Contents	Page
In Summary: Policy Benefits	1
In Summary: Policy Risks	3
In Summary: Variable Universal Life Insurance and the Policy	4
In Summary: Fee Tables	5
Policy Investment Options	11
The Fixed Investment Option
Variable Investment Options
Allocation of Net Premium and Cash Value
Valuation of Accumulation Units
How Sub-Account Investment Experience is Determined
Cash Value
Transfers Among and Between Policy Investment Options	14
Sub-Account Portfolio Transfers
Fixed Account Transfers
Modes to Make a Transfer
The Policy	17
Policy Owner
The Beneficiaries
To Purchase
Coverage
Coverage Effective Date
Temporary Insurance Coverage
To Cancel (Examination Right)
To Change Coverage
To Exchange
To Terminate or Surrender
To Assign
Proceeds Upon Maturity
Reminders, Reports and Illustrations
Errors or Misstatements
Incontestability
If We Modify the Policy
Riders	21
Adjusted Sales Load Life Insurance Rider
Children's Insurance Rider
Long-Term Care Rider
Spouse Life Insurance Rider
Accidental Death Benefit Rider
Premium Waiver Rider
Change of Insured Rider
Additional (Insurance) Protection Rider
Deduction (of Fees and Expenses) Waiver Rider
Policy Guard Rider
Premium	25
Initial Premium
Subsequent Premiums

Table of Contents (continued)	Page
Charges	26
Sales Load
Premium Taxes
Surrender Charge
Partial Surrender Fee
Short-Term Trading Fees
Cost of Insurance Charge
Mortality and Expense Risk Charge
Administrative Charge
Policy Loan Interest Charge
Adjusted Sales Load Life Insurance Rider Charge
Children's Insurance Rider Charge
Long-Term Care Rider Charge
Spouse Life Insurance Rider Charge
Accidental Death Benefit Rider Charge
Premium Waiver Rider Charge
Additional (Insurance) Protection Rider Charge
Deduction (of Fees and Expenses) Waiver Rider Charge
Policy Guard Rider Charge
Reduction of Charges
A Note on Charges Information of Underlying Mutual Fund Payments
The Death Benefit	33
Calculation of the Death Benefit Proceeds
Death Benefit Options
The Minimum Required Death Benefit
Changes in the Death Benefit Option
Suicide
Surrenders	34
Full Surrender
Partial Surrender
Reduction of Specified Amount on a Partial Surrender
The Payout Options	35
Interest Income
Income for a Fixed Period
Life Income With Payments Guaranteed
Fixed Income for Varying Periods
Joint and Survivor Life
Alternate Life Income
Policy Owner Services	36
Dollar Cost Averaging
Asset Rebalancing
Automated Income Monitor
Policy Loans	39
Loan Amount and Interest
Collateral and Interest
Repayment
Net Effect of Policy Loans
Lapse	40
Guaranteed Policy Continuation Provision
Grace Period
Reinstatement

Table of Contents (continued)	Page
Taxes	41
Types of Taxes
Buying the Policy
Investment Gain in the Policy
Periodic Withdrawals, Non-Periodic Withdrawals and Loans
Surrendering the Policy; Maturity
Sale of a Life Insurance Policy Withholding and Tax Reporting
Exchanging the Policy for Another Life Insurance Policy
Taxation of Death Benefits
Terminal Illness
Special Considerations for Corporations
Taxes and the Value of Your Policy
Business Uses of the Policy
Non-Resident Aliens and Other Persons who are not Citizens of the United States
Tax Changes
Nationwide Life Insurance Company	47
Nationwide VLI Separate Account-4	47
Organization, Registration and Operation
Addition, Deletion, or Substitution of Mutual Funds
Voting Rights
Legal Proceedings	49
Nationwide Life Insurance Company
Nationwide Investment Services Corporation
Financial Statements	52
Appendix A: Sub-Account Information	53
Appendix B: Definitions	66

In Summary: Policy Benefits

Appendix B defines certain words and phrases we use in this prospectus.

Death Benefit

The primary benefit of your policy is life insurance coverage.  We will pay the death benefit Proceeds upon the Insured's death if the Insured dies while your policy is In Force.  The policy is In Force when:

·    the policy has been issued;

·    the Insured is living;

·    the policy has not been surrendered for its Cash Surrender Value; and

·   the policy has not Lapsed.

Your Choice of Death Benefit Options

·   Option One: The Death Benefit is the greater of the Specified Amount or the minimum required Death Benefit under federal tax law.

·   Option Two: The Death Benefit is the greater of the Specified Amount plus the Cash Value or the minimum required Death Benefit under federal tax law.

·   Option Three: The Death Benefit is the greater of the Specified Amount plus accumulated Premium payments (less any partial surrenders) or the minimum required Death Benefit under federal tax law.

You or Your Beneficiary's Choice of Policy Proceeds

You or your beneficiary may choose to receive the Policy Proceeds in a lump sum, or there are a variety of options that will pay out over time.

Coverage Flexibility

Subject to conditions, you may choose to:

·   change the Death Benefit option;

·   increase or decrease the Specified Amount;

·   change your beneficiaries; and/or

·   change who owns the policy.

Continuation of Coverage is Guaranteed

Your policy will remain In Force during the policy continuation period as long as you pay sufficient Premium to meet the requirements set forth in the "Guaranteed Policy Continuation Provision" section of the "Lapse" provision.

Access to Cash Value

Subject to conditions, you may choose to borrow against, or withdraw, the Cash Value of your policy . You may:

·    take a policy loan of an amount no greater than 90% of the Sub-Account portfolios and 100% of the fixed account, less any surrender charges.  The minimum amount is $200 ( see "Policy Loans" ).

·    take a partial surrender of no less than $200 ( see "Partial Surrender" ).

Surrender the policy at any time while the Insured is alive.  The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans and surrender charges.  You may choose to receive the Cash Surrender Value in a lump sum, or you will have available the same payout options as if it constituted a Death Benefit ( see "Full Surrender" and "The Payout Options" ).

Premium Flexibility

While we would like you to select a Premium payment plan, you will not be required to make your Premium payments accordingly.  Within limits, you may vary the frequency and amount, and you might even be able to skip making a Premium payment ( see the "Premium" ).

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Investment Options

You may choose to allocate your Premiums after charges to a fixed or variable investment options in any proportion.

·    the fixed investment option will earn interest daily at an annual effective rate of at least 3%.

·    the variable investment options constitute the available mutual funds, and we have divided Nationwide VLI Separate Account-4 into an equal number of Sub-Account portfolios, identified in the "Appendix A-Sub-Account Information" section, to account for your allocations.  Your Investment Experience will depend on the market performance of the Sub-Account portfolios you have chosen.

Transfers Between and Among Investment Options

You may transfer between the fixed and variable investment options, subject to conditions.  You may transfer among the Sub-Account portfolios of the variable investment option within limits.   We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-Account Investment Experience ( see "Sub-Account Portfolio Transfers" and "Modes to Make a Transfer" ). We also offer dollar cost averaging, an automated investment strategy that spreads out transfers over time to try to reduce the investment risks of market fluctuations ( see "Dollar Cost Averaging" ).

Taxes

Unless you make a withdrawal, generally, you will not be taxed on any earnings.  This is known as tax deferral ( see "The Minimum Required Death Benefit" ).   Also, your beneficiary generally will not have to include the Proceeds as taxable income ( see "Taxes" ). Unlike other variable insurance products Nationwide offers, these Individual Flexible Premium Variable Universal Life Insurance Policies do not require distributions to be made before the death of the Insured.

Assignment

You may assign the policy as collateral for a loan or another obligation while the Insured is alive ( see "To Assign" ).

Examination Right

For a limited time, you may cancel the policy, and you will receive a refund ( see "To Cancel [ Examination Right ]").

Riders

You may purchase any of the following Riders (except for both the Premium Waiver and Deduction Waiver Riders, simultaneously) to suit your needs (see "Riders") .  Availability will vary by state, and there may be an additional charge.

·   Adjusted Sales Load Life Insurance Rider

·   Children's Insurance Rider

·   Long-term Care Rider

·   Spouse Life Insurance Rider

·   Accidental Death Benefit Rider

·   Premium Waiver Rider

·   Change of Insured Rider (There is no charge for this Rider.)

·   Additional (Insurance) Protection Rider

·   Deduction (of Fees and Expenses) Waiver Rider

·   Policy Guard Rider

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In Summary: Policy Risks

Improper Use

Variable universal life insurance is not suitable as an investment vehicle for short-term savings.  It is designed for long-term financial planning.  You should not purchase the policy if you expect that you will need to access its Cash Value in the near future because substantial surrender charges will apply in the first several years from the Policy Date.

Unfavorable Investment Experience

The variable investment options to which you have chosen to allocate Net Premium may not generate a sufficient, let alone a positive, return, especially after the deductions for policy and Sub-Account portfolio charges.  Besides Premium payments, Investment Experience will impact the Cash Value, and poor Investment Experience, in conjunction with your flexibility to make changes to the policy and deviate from your chosen premium payment plan could cause the Cash Value of your policy to decrease, resulting in a Lapse of insurance coverage, sooner than might have been foreseen, and, potentially, even without value.

Effect of Partial Surrenders and Policy Loans on Investment Returns

Partial surrenders or policy loans may accelerate a Lapse because the amount of either or both will no longer be available to generate any investment return.  A partial surrender will proportionately reduce the amount of Cash Value allocated among the Sub-Account portfolios you have chosen, and to the fixed account, too, if there is not enough Cash Value in the Sub-Account portfolios.  As collateral for a policy loan, we will transfer an equal amount of Cash Value to the policy loan account, which will also reduce the Cash Value allocated between and among your chosen investment options.  Thus, the remainder of your policy's Cash Value is all that would be available to generate enough of an investment return to cover policy and Sub-Account portfolio charges and keep the policy In Force, at least until you repay the policy loan or make another Premium payment.  There will always be a Grace Period, and the opportunity to reinstate insurance coverage.

Under certain circumstances, however, the policy could terminate without value, and insurance coverage would cease.

Reduction of the Death Benefit

A partial surrender could, and a policy loan would, decrease the policy's Death Benefit, depending on how the Death Benefit option relates to the policy's Cash Value.

Adverse Tax Consequences

Existing federal tax laws that benefit this policy may change at any time.  These changes could alter the favorable federal income tax treatment the policy enjoys, such as the deferral of taxation on the gains in the policy's Cash Value and the exclusion from taxable income of the Proceeds we pay to the policy's beneficiary.  Partial and full surrenders from the policy may be subject to taxes.  The income tax treatment of the surrender of Cash Value is different in the event the policy is treated as a modified endowment contract under the Code.  Generally, tax treatment of modified endowment contracts will be less favorable when compared to having the policy treated as a life insurance contract that is not a modified endowment contract.  For example, distributions and loans from modified endowment contracts may currently be taxed as ordinary income not a return of investment ( see " Taxes ").   For detailed information regarding tax treatment of modified endowment contracts, please see the Periodic Withdrawals, Non-Periodic Withdrawals and Loans section of the Taxes provision. Consult a qualified tax advisor on all tax matters involving your policy.

The proceeds of a life insurance contract are includible in the insured's gross estate for federal income tax purposes if either (a) the proceeds are payable to the executor of the estate of the insured, or (b) the insured, at any time within three years prior to his or her death, possessed any incident of ownership in the policy.  For this purpose, the Treasury Regulations provide that the term "incident of ownership" is to be construed very broadly, and includes any right that the insured may have with respect to the economic benefits in the policy, such as the power to change the beneficiary, surrender or cancel the policy, assign (or revoke the assignment of) the policy, pledge the policy for a loan, obtain a loan against the surrender value of the contract, etc.  Consult a qualified tax advisor on all tax matters involving your policy.

Fixed Account Transfer Restrictions and Limitations

We will not honor a request to transfer Cash Value to or from the fixed account until after the first year.  Then, we will only honor a transfer request from the fixed account that is made within thirty days of the end of a calendar quarter, but not within twelve months of a previous request.  We may also limit what percentage of Cash Value you will be permitted to transfer to or from the fixed account.

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Sub-Account Portfolio Limitations

Frequent trading among the Sub-Accounts may dilute the value of your Sub-Account units, cause the Sub-Account to incur higher transaction costs, and interfere with the Sub-Accounts' ability to pursue its stated investment objective.  This disruption to the Sub-Account may result in lower Investment Experience and Cash Value.  We have instituted procedures to minimize disruptive transfers, including, but not limited to, transfer restrictions and short-term trading fees.    ( see "Sub-Account Portfolio Transfers" and "Modes to Make a Transfer" ).   While we expect these procedures to reduce the adverse effect of disruptive transfers, we cannot assure you that we have eliminated these risks.

Sub-Account Portfolio Investment Risk

A comprehensive discussion of the risks of the mutual funds held by each Sub-Account portfolio may be found in that mutual fund's prospectus. You should read the mutual fund's prospectus carefully before investing.  Free copies of each mutual fund's prospectus may be obtained by contacting us at the address or phone number stated on the front of this prospectus.

In Summary: Variable Universal Life Insurance and the Policy

Variable Universal Life Insurance may be important to you in two ways :

1.  it will provide economic protection to a beneficiary; and

2.  it may build Cash Value.

Why would you want to purchase this type of life insurance?  How will you allocate the Net Premium among the variable and the fixed investment options?  Your reasons and decisions will affect the insurance and Cash Value aspects.

While variable universal life insurance is designed primarily to provide life insurance protection, the Cash Value of a policy will be important to you in that it may impair (with poor investment results) or enhance (with favorable investment results) your ability to pay the costs of keeping the insurance In Force.

Apart from the life insurance protection features, you will have an interest in maximizing the value of the policy as a financial asset.

It is similar to, but also different from, universal life insurance.

It is similar in that:

·    you will pay Premiums for life insurance coverage on the Insured ;

·    the policy will provide for the accumulation of a Cash Surrender Value if you were to surrender it at any time while the Insured is alive ; and

·    the Cash Surrender Value could be substantially lower than the Premiums you have paid.

What makes the policy different than universal life insurance is your opportunity to allocate Premiums after charges to the Sub-Account portfolios you have chosen (and the fixed account).  Also, that its Cash Value will vary depending on the market performance of the Sub-Account portfolios, and you will bear this risk.

From the time we issue the policy through the Insured's death, here is a basic overview.   However, please read the remainder of this prospectus for the details.

·    at issue, the policy will require a minimum initial Premium payment.

Among other considerations, this amount will be based on: the Insured's age and sex; the underwriting class; any Substandard Ratings; the Specified Amount; the Death Benefit option; and the choice of any Riders.

·    at the time of a Premium payment, we will deduct some charges.  We call these charges transaction fees.

·    you will then be able to allocate the Premium net of transaction fees, or Net Premium, between and among a fixed and the variable investment options.

·    from the policy's Cash Value, on a periodic basis, we will deduct other charges to help cover the mortality risks we assumed, and the sales and administrative costs.

·    you may be able to vary the timing and amount of Premium payments.

·    so long as there is enough Cash Surrender Value to cover the policy's periodic charges as they come due, the policy will remain In Force.

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·   after the first year from the Policy Date, you may request to increase or decrease the policy's Specified Amount.

·    this flexibility will allow you to adjust the policy to meet your changing needs and circumstances, subject to: additional underwriting (for us to evaluate an increase of risk); confirmation that the policy's tax status is not jeopardized; and confirmation that the minimum and maximum insurance amounts remain met.

·    the policy will pay a Death Benefit to the beneficiary.  You have a choice of one of three Death Benefit options.

·    as your insurance needs change, you may be able to change Death Benefit options rather than buying a new policy or terminating the policy.

·    prior to the Insured's death, you may withdraw all, or a portion (after the first year from the Policy Date), of the policy's Cash Surrender Value.  Or you may borrow against the Cash Surrender Value.

·    withdrawals and policy loans are subject to restrictions, may reduce the Death Benefit and increase the likelihood of the policy Lapsing.  There also could be adverse tax consequences.

In Summary: Fee Tables

The following tables describe the fees and expenses that you will pay when buying, owning and surrendering the policy (see "Charges").   Fees in this table may be rounded to the hundredth decimal.  The first table describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy or transfer Cash Value between investment options.

Transaction Fees
Charge	When Charge Is Deducted	Amount Deducted
Sales Load Charge(1)	Upon Making A Premium Payment	Maximum Guaranteed	Currently
		$25	$5
		Per $1,000 Of Premium Payment
Premium Taxes Charge(1)	Upon Making A Premium Payment	$35 Per $1,000 Of Premium Payment
Surrender Charge(2), (3), (4) Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $500,000 And Death Benefit Option One	Upon Full Surrender; Upon policy Lapse; Upon a decrease to the Specified Amount	Maximum (5)		Minimum (6)
		$25,590		$2,337
		Representative (7)
		$3,408
		Proportionately From The Policy's Cash Value
Illustration Charge (8)	Upon Requesting An Illustration	Maximum Guaranteed			Currently
		$25			$0
Partial Surrender Fee (9)	Upon A Partial Surrender	Maximum Guaranteed(10)			Currently
		$25			$0
		From The Policy's Available Cash Value(11)
Short-Term Trading Fee(12)	Upon transfer of sub-account value out of a sub-account within 60 days after allocation to that sub-account	1% of the amount transferred from the sub-account within 60 days of allocation to that sub-account

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The next table describes the fees and expenses that you will pay periodically during the time that you own the policy, not including Sub-Account portfolio operating expenses.

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses
Charge	When Charge Is Deducted	Amount Deducted From Cash Values
Cost Of Insurance Charge (13), (14)  Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $500,000 And Death Benefit Option One	Monthly	Minimum	Maximum		Representative (15)
		$0.04	$83.33		$0.14
		Per $1,000 Of Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options
Flat Extra(16)	Monthly	Maximum
		$2.08 per $1,000 of Net Amount At Risk for each Flat Extra assessed
Mortality And Expense Risk Charge	Monthly	Maximum Guaranteed
		A monthly rate of $0.50 Per $1,000 Of Cash Value taken proportionally from the Sub-Accounts.(17)
		Proportionately From Your Chosen Variable Investment Options
Administrative Charge	Monthly	Maximum Guaranteed		Currently
		$10		$10 (18)
		Proportionately From Your Chosen Variable And Fixed Investment Options
Policy Loan Interest Charge (19), (20), (21)	Annually	Maximum Guaranteed		Currently
		$39		$39
		Per $1,000 Of An Outstanding Policy Loan

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Periodic Charges For Riders
Optional Charge (22)	When Optional Charge Is Deducted	Amount Deducted From Cash Value
Adjusted Sales Load Life Insurance Rider Charge	Monthly	$0.14
		Per $1,000 Of Aggregate Monthly Premiums And 1% Of Premium Load replaced – Waived Proportionately From Your Chosen Variable And Fixed Investment Options
Children's Insurance Rider Charge	Monthly	$0.43 Per $1,000 Of Rider Specified Amount - Proportionately From Your Chosen Variable And Fixed Investment Options
Long-term Care Rider Charge (23) Representative - For An Age 35 Male Non-tobacco Preferred With A Long-term Care Specified Amount Of $500,000 And Death Benefit Option One	Monthly	Minimum	Maximum	Representative
		$0.02	$28.65	$0.02
		Per $1,000 Of Rider Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options
Spouse Life Insurance RiderCharge(24) Representative Spouse - For An Age 35 Female Non-tobacco With A Spouse Life Specified Amount Of $100,000	Monthly	Minimum	Maximum	Representative
		$0.10	$10.23	$0.11
		Per $1,000 Of Spouse Death Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Accidental Death Benefit Rider Charge (25) Representative - For An Age 35 Male Non-tobacco Preferred With An Accidental Death Benefit Of $100,000	Monthly	Minimum	Maximum	Representative
		$0.05	$0.75	$0.06
		Per $1,000 Of Accidental Death Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Premium Waiver Rider Charge (26), (27) Representative - For An Age 35 Male Non-tobacco Preferred	Monthly	Minimum	Maximum	Representative
		$42	$315 (28)	$42
		Per $1,000 Of Premium Waiver Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Additional (Insurance) Protection Rider Charge (29) Representative - For An Age 35 Male Non-tobacco Preferred With Additional Death Benefit Of $250,000	Monthly	Minimum	Maximum	Representative
		$0.01	$83.33	$0.04
		Per $1,000 of Rider Net Amount at Risk – Proportionately From Your Chosen Variable And Fixed Investment Options

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Periodic Charges For Riders
Optional Charge (22)	When Optional Charge Is Deducted	Amount Deducted From Cash Value
Deduction (of Fees and Expenses) Waiver Rider Charge (30) Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $500,000 And Death Benefit Option One	Monthly	Minimum	Maximum	Representative
		$90	$860	$90
		Per $1,000 Of Deduction Waiver Benefit - Proportionately From Your Chosen Variable and Fixed Investment Options
Policy Guard Rider Charge (31) Representative – The Insured Is Attained Age 85 With a Cash Value of $500,000 and Indebtedness of $480,000	Upon Invoking The Rider	Minimum	Maximum	Representative
		$6.50	$46.00	$37.00
		Deducted From Each $1,000 Of The Policy's Cash Value

The next item shows the minimum and maximum total operating expenses, as of December 31, 2010 , charged by the Sub-Account portfolios that you may pay periodically during the time that you own the policy.  The table does not reflect Short-Term Trading Fees.  More detail concerning each Sub-Account portfolio's fees and expenses is contained in the prospectus for the mutual fund that corresponds to the Sub-Account portfolio.  Please contact us, at the telephone numbers or address on the front page of this prospectus, for free copies of the prospectuses for the mutual funds available under the policy.

Total Annual Sub-Account Portfolio Operating Expenses
Total Annual Sub-Account Portfolio Operating Expenses	Maximum	Minimum
(expenses that are deducted from the Sub-Account portfolio assets, including management fees, distribution (12b-1) fees, and other expenses)	2.43%	0.27%

(1) We deduct one charge composed of the sales load and premium taxes.  On the Policy Data Page, we call the combined charge a "Premium Load."

(2) This charge is comprised of two components.  There is an underwriting component, which is based on the Insured's age (when the policy was issued).  There is also a sales expense component, which is based on and varies by the Insured's sex, age (when the policy was issued) and underwriting class.  The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date.  For example, by the ninth year, the amount is 30% of the surrender charge, and, thereafter, there is no charge for a full surrender.  A surrender charge will apply if you surrender or lapse the policy, or if you request to decrease the Specified Amount.  We will calculate a separate surrender charge based on the Specified Amount, and each increase in the Specified Amount, which, when added together, will amount to your surrender charge (see "Surrender Charge").

(3) For purposes of this table, for a full surrender occurring in the first year from the Policy Date, we assume an aggregate first year Premium in excess of the surrender target premium.  The surrender target premium is an assumed Premium payment amount we use in calculating the surrender charge.  We base the surrender charge on the lesser of the surrender target premium and the Premiums you pay in the first year from the Policy Date.  The surrender target premium varies by: the Insured's sex; age (when the policy was issued); underwriting class; and the Specified Amount (including any increases).  The surrender charge for decreases in the Specified Amount will be a fraction of the charge for a full surrender.

(4) Ask for an illustration, or see the Policy Data Page for more information on your cost.

(5) We base this amount on a male who is age 85 or older and uses tobacco (representing our greatest underwriting risk).  We assume a policy with a Specified Amount of $500,000 and Death Benefit Option One.  The stated surrender charge is for a surrender occurring in the first year from the Policy Date.

(6) We base this amount on a female who is age 0.  We assume a policy with a Specified Amount of $500,000 and Death Benefit Option One.  The stated surrender charge is for a surrender occurring in the first year from the Policy Date.

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(7) This amount may not be representative of your cost.

(8) If we begin to charge for illustrations, we will expect you to pay the charge in cash directly to us at the time of your request.  This charge will not be deducted from the policy's Cash Value.

(9) You may request a partial surrender at any time after the first year from the Policy Date so long as the policy is In Force.

(10) The maximum charge is the lesser of $25 or 2% of the dollar amount of the partial surrender.

(11) The Cash Value available for a partial surrender is subject to any outstanding policy loans.

(12) Short-term trading fees are only assessed in connection with Sub-Accounts that correspond to underlying mutual funds that assess a short-term trading fee to the variable account (see "Short-Term Trading Fees") .  Sub-Accounts that may assess a short-term trading fee are identified in the "Appendix A: Sub-Account Information" section of this prospectus.

(13) This charge varies by: the Insured's sex; age; underwriting class; any Substandard Ratings; the year from the Policy Date and the Specified Amount.  Cost of Insurance charges are taken from the policy's Cash Value at the beginning of the month starting with the Policy Date and we will not pro rate the monthly fee should the Policy terminate before the beginning of the next month.

(14) Ask for an illustration, or see the Policy Data Page for more information on your cost.

(15) This amount may not be representative of your cost.

(16) The Flat Extra is a component in the calculation of the base policy Cost of Insurance Charge and any Rider Cost of Insurance Charge.  It is only applicable if certain factors result in an Insured having a Substandard Rating.  For additional information, refer to the "Cost of Insurance" sub-section of the "Policy Charges" section of this prospectus.

(17) On a current basis,during policy years one through fifteen, the charge is $0.50 per $1,000 on the first $25,000 of CashValue, and $0.25 per $1,000 on Cash Values of $25,001 up to $250,000.  For Cash Values above $250,000, the charge is $0.08 per $1,000.  Beginning in the policy year sixteen, the charge is $0.50 per $1,000 on the first $25,000 of Cash Value allocated to variable investment options, and $0.08 per $1,000 of Cash Value over $25,000 allocated to variable investment options.

(18) During the first year from the Policy Date, the monthly maximum guaranteed amount is $10, and the monthly current amount is $10.  Thereafter, the monthly maximum guaranteed amount is $7.50, and the monthly current amount is $5.

(19) On the amount of an outstanding loan, we not only charge, but also credit, interest, so there is a net cost to you.  Also, there are ordinary and preferred loans on which interest rates vary ( see "Policy Loans" ).

(20) We charge a 3.9% interest per annum on the outstanding balance, which accrues daily and becomes due and payable at the end of the year from the Policy Date, or we add it to your loan.  Meanwhile, we credit interest daily, too, on the portion of your policy's Cash Value corresponding to, and serving as collateral or security to ensure repayment of, the loan.  During years one through ten, the current credited rate is 3.0% (guaranteed 3.0% minimally), and, thereafter, 3.9% per annum currently (guaranteed 3.65% minimally).

(21) Your net cost for a loan through years one through ten from the Policy Date is 0.9% per annum currently.  Thereafter, there is no cost (a net zero cost) for a loan currently ( see "Collateral and Interest" ).

(22)  You may elect any of these Riders (except for both the Premium Waiver and Deduction Waiver Riders, simultaneously).  Rider charges are taken from the policy's Cash Value at the beginning of the month starting with the Policy Date and we will not pro rate the monthly fee should the Rider terminate before the beginning on the next month.  There is also a Change of Insured Rider you may elect for no charge.  The continuation of a Rider is contingent on the policy being In Force.  The amounts presented here may not be representative of your cost.  Ask for an illustration, or see the Policy Data Page, for more information on your cost.

(23) This charge varies by the Insured's sex, age, underwriting class, any Substandard Ratings, and the Specified Amount of the Rider.

(24) This charge varies by the spouse's sex, age, underwriting class, any Substandard Ratings, and the Specified Amount of the Rider.

(25) This charge varies by the Insured's Attained Age, any Substandard Ratings, and the Specified Amount of the Rider.

(26) To be able to present dollar amounts of this charge here, we assume monthly Premium payments of $1,000, the waiver of which would occur in the event of the Insured's total disability for six consecutive months.

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(27) This charge varies by the Insured's sex, Attained Age, underwriting class, any Substandard Ratings and the Specified Amount of the Rider.

(28) For policies issued before July 13, 2006, the maximum charge for this Rider is $105.

(29) This charge varies by the Insured's sex, Attained Age, and any Substandard Ratings.  The monthly charge is a product of the Rider's monthly cost of insurance charge and the Rider Death Benefit.

(30) To be able to present dollar amounts of this charge here, we assume total monthly periodic charges of $1,000 (not including this Rider's cost, and any loan amount interest [ which are meant to be excluded ] ).  These charges would be waived in the event of the Insured's total disability for six consecutive months.

(31) You may invoke this Rider only when certain conditions are met, including: (a) the Insured attains age 75; (b) the policy has been In Force for 15 years from the Policy Date; (c) the policy's Cash Value is at least $100,000; (d) the policy qualifies as life insurance using the guideline premium/cash value corridor tax test; and (e) the entire cost basis for tax purposes has been withdrawn from the policy.  For more information, see the "Policy Guard Rider" section of this prospectus.  The level of Indebtedness as a percentage of Cash Value that will allow you to invoke the Rider will vary with the attained age of the Insured.  Generally, the higher the Insured's attained age, the higher the level of Indebtedness must be to invoke the Rider.

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Policy Investment Options

When you apply for the policy, you choose how your Net Premium will be allocated among the available Sub-Accounts once the free look period expires.  When this actually happens depends on the right to examine law of the state in which you live.  You may also choose to allocate all or a portion of your Net Premium to the fixed investment option, and we will allocate it when we receive it.

Based on the right to examine law, some states require that we refund the initial Premium if you exercise your right to cancel the policy.  Others require that we return the Cash Value.  If yours is a state that requires us to refund the initial Premium, we will hold the initial Net Premium in the available money market Sub-Account until the free-look period expires.  Once your examination right ends, we will transfer the variable account Cash Value to your Sub-Account allocations in effect at the time of the transfer.  If your state requires us to refund the Cash Value, we will allocate all of the initial Net Premium to available money market Sub-Account.  On the next Valuation Period, we will allocate all of the Cash Value to the designated Sub-Accounts based on the allocation instructions in effect at the time.  Any initial Net Premium allocated to fixed investment options will be so allocated immediately upon receipt.

The Fixed Investment Option

The Net Premium you allocate to the fixed investment option is held in the fixed account, which is part of our general account.  The general account contains all of our assets other than those in the separate accounts and funds the fixed investment option.  These assets are subject to our general liabilities from business operations.  We use the general account to support our insurance and annuity obligations.  Any amounts in excess of the separate account liabilities are deposited into our general account.  We bear the full investment risk for all amounts allocated to the fixed account.

We guarantee that the amounts you allocate to the fixed investment option will be credited interest daily at a net effective annual interest rate of no less than the stated interest crediting rate in the Policy Data Page s .  We will credit any interest in excess of the guaranteed interest crediting rate at our sole discretion.  You assume the risk that the actual rate may not exceed the guaranteed interest crediting rate.

The amounts you allocate to the fixed investment option will not share in the investment performance of our general account.  Rather, the investment income you earn on your allocations will be based on varying rates we set.

The general account is not subject to the same laws as the separate account, and the SEC has not reviewed the disclosures in this prospectus relating to the fixed account.

Interest rates are set at the beginning of each calendar quarter.  You may receive a different interest rate depending on the rates in effect when you purchase the policy.  The rate may also vary for Net Premiums versus a transfer of Units from a Sub-Account portfolio.  In honoring your request to transfer an amount out of the fixed account, we will do so on a last-in, first out basis (LIFO).  Interest we credit to the fixed investment option may not increase the Cash Surrender Value enough to cover the policy's charges.  If not, the policy may Lapse ( see "Lapse" ).   It is important to remember any guaranteed benefits or interest crediting associated with the Fixed Account is subject to our claims paying ability.

Variable Investment Options

The variable investment options constitute the available mutual funds, and we have divided the separate account into an equal number of Sub-Account portfolios to account for your allocations.  Each Sub-Account portfolio invests in a mutual fund that is registered with the SEC.  This registration does not involve the SEC's supervision of the management or investment practices or policies of these mutual funds.  The "Appendix A: Sub-Account Information" section identifies the available mutual funds by name, investment type and advisor .  Your choices and any changes will appear in the Policy Data Page s .

Underlying mutual funds in the separate 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 advisors 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.  Policy owners should not compare the performance of a publicly traded fund with the performance of underlying mutual funds participating in the separate account.  The performance of the underlying mutual funds could differ substantially from that of any publicly traded funds.

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The particular underlying mutual funds available under the policy 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.  Policy 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.

In the future, additional underlying mutual funds managed by certain financial institutions, brokerage firms or their affiliates may be added to the separate account.  These additional underlying mutual funds may be offered exclusively to purchasing customers of the particular financial institution or brokerage firm, or through other exclusive distribution arrangements.

Each Sub-Account portfolio's assets are held separately from the assets of the other Sub-Account portfolios, and each Sub-Account portfolio has investment objectives and policies that are different from those of the other Sub-Account portfolios.  Thus, each Sub-Account portfolio operates as a separate investment fund, and the income or losses of one Sub-Account portfolio generally have no effect on the Investment Experience of any other Sub-Account portfolio.

The Sub-Accounts available through this policy invest in the underlying mutual funds of the companies listed below ( see "Appendix A: Sub-Account Information" ).   Appendix A also contains information about the underlying mutual fund a Sub-Account invests in, including its investment objective, advisor , and sub- advisor , if applicable.  For more information on the underlying mutual funds, please refer to the prospectus for the mutual fund.

·   AllianceBernstein Variable Products Series Fund, Inc.

·   American Century Variable Portfolios II, Inc.

·   American Century Variable Portfolios, Inc.

·   BlackRock Variable Series Funds, Inc.

·   Credit Suisse Trust

·   Dreyfus

·   Dreyfus Investment Portfolios

·   Dreyfus Variable Investment Fund

·   Federated Insurance Series

·   Fidelity Variable Insurance Products Fund

·   Franklin Templeton Variable Insurance Products Trust

·   Invesco

·   Ivy Funds Variable Insurance Portfolios, Inc.

·   Janus Aspen Series

·   MFS® Variable Insurance Trust

·   Nationwide Variable Insurance Trust

·   Neuberger Berman Advisers Management Trust

·   Oppenheimer Variable Account Funds

·   PIMCO Variable Insurance Trust

·   Putnam Variable Trust

·   T. Rowe Price Equity Series, Inc.

·   The Universal Institutional Funds, Inc.

·   Van Eck VIP Trust

·   Wells Fargo Variable Trust

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Allocation of Net Premium and Cash Value

We allocate your Net Premium payments to Sub-Accounts or the fixed account per your instructions.  You must specify your Net Premium payments in whole percentages.  The sum of allocations must equal 100%.

Valuation of Accumulation Units

We account for the value of a policy owner's interest in the Sub-Accounts by using Accumulation Units.  The value of each Accumulation Unit varies daily based on the Investment Experience of the underlying mutual fund in which the Sub-Account invests.  We use each underlying mutual fund's Net Asset Value ("NAV") per share to calculate the daily Accumulation Unit value for the corresponding Sub-Account.  Note, however, that the Accumulation Unit value will not equal the underlying mutual fund's NAV.  This daily Accumulation Unit valuation process is referred to as "pricing" the Accumulation Units (see "How Sub-Account Investment Experience is Determined" ).

Accumulation Units are priced as of the New York Stock Exchange's ("NYSE") close of business, normally 4:00 pm EST , on each day that it is open.  We will price Accumulation Units on any day that the NYSE is open for business.  Any transaction submitted on a day when the NYSE is closed or after it has closed for the day, will not be priced until the close of business on the next day that the NYSE is open for business.  Accordingly, we will not price Accumulation Units on these recognized holidays:

·   New Year's Day

·   Martin Luther King, Jr. Day

·   Presidents' Day

·   Good Friday

·   Memorial Day

·   Independence Day

·   Labor Day

·   Thanksgiving

·   Christmas

In addition, we will not price Accumulation Units if:

·   trading on the New York Stock Exchange is restricted;

·   an emergency exists making disposal or valuation of securities held in the separate account impracticable; or

·   the SEC, by order, permits a suspension or postponement for the protection of security holders.

SEC rules and regulations govern when the conditions described above exist.  Any transaction you try to effect when we are closed will not happen until the next day the NYSE and we are both open for business.

We will process transactions we receive after the close of the NYSE on the next Valuation Period that we are open.

How Sub-Account Investment Experience is Determined

A policy owner's variable account value is based on their allocations to the Sub-Accounts. Sub-Account allocations are accounted for in Accumulation Units.  A policy owner's interest in the Sub-Accounts is represented by the number of Accumulation Units they own.  The number of Accumulation Units associated with a given Sub-Account allocation is determined by dividing the dollar amount allocated to the Sub-Account by the Accumulation Unit value for the Sub-Account.   The number of Accumulation Units you own in a Sub-Account will not change except when Accumulation Units are redeemed to process a requested surrender, transfer, loan, or to take policy charges, or when additional Accumulation Units are purchased with new Premium and loan repayments.

Initially, we set the Accumulation Unit value at $10 for each Sub-Account.  Thereafter, the daily value of Accumulation Units in a Sub-Account will vary depending on the Investment Experience of the underlying mutual fund in which the Sub-Account invests.  We account for these performance fluctuations by using a "net investment factor," as described below, in our daily Sub-Account valuation calculations.  Changes in the net investment factor may not be directly proportional to changes in the NAV of the mutual fund shares.

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We determine the net investment factor for any Valuation Period by dividing (a) by (b) where:

(a) is the sum of:

1.   the NAV per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period; and

2.   the per share amount of any dividend or income distributions made by the mutual fund (if the date of the dividend or income distribution occurs during the current Valuation Period); plus or minus

3.   a per share charge or credit for any taxes reserved for as a result of the Sub-Account's investment operations if changes to the law result in a modification to the tax treatment of the separate account; and

(b) is the NAV per share of the mutual fund determined as of the end of the immediately preceding Valuation Period.

Cash Value

The policy has a Cash Value.  We do not guarantee the Cash Value of the Policy.  Rather, it will be based on the values, and will vary with the Investment Experience of the Sub-Account portfolios to which you have allocated Net Premium, as well as the values of, and any daily crediting of interest to, the policy loan (if you have taken a policy loan) and fixed accounts.  It will also vary because we deduct the policy's periodic charges from the Cash Value.  As such, if the policy's Cash Value is part of the Death Benefit option you have chosen, then your Death Benefit will fluctuate.

We will determine the value of the assets in the separate account at the end of each Valuation Period.  We will determine the Cash Value at least monthly. To determine the number of Accumulation Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Accumulation Unit value for the Sub-Account using the next Valuation Period following when we receive the Premium.

If you surrender part or all of the policy, we will deduct a number of Accumulation Units from the separate account and an amount from the fixed account that corresponds to the surrendered amount.  Thus, your policy's Cash Value will be reduced by the surrendered amount.  Similarly, when we assess charges or deductions, a number of Accumulation Units from the separate account and an amount from the fixed account that corresponds with the charge or deduction will be deducted from the policy's Cash Value.  We make these deductions in the same proportion that your interests in the separate account and the fixed account bear to the policy's total Cash Value.

We will credit interest to the Cash Value in the policy loan and fixed accounts daily at the guaranteed minimum annual effective rate stated in the Policy Data Page s .

For there to be Cash Value in the policy loan account, you must have taken a policy loan.  We may decide to credit interest in excess of the guaranteed minimum annual effective rate.  For the fixed account, we will guarantee the current rate in effect through the end of the calendar quarter.  Upon request, we will inform you of the current applicable rates for each account   ( see "The Fixed Investment Option" and "Policy Loan Interest" ).

On any date during the policy year, the Cash Value equals the Cash Value on the preceding Valuation Period, plus any Net Premium applied since the previous Valuation Period, minus any policy charges, plus or minus any investment results and minus any partial surrenders.

Transfers Among and Between Policy Investment Options

Sub-Account Portfolio Transfers

We will determine the amount you have available for transfers among the Sub-Account portfolios in Accumulation Units based on the NAV per share of the mutual fund in which a Sub-Account portfolio invests.  The mutual fund will determine its NAV once daily as of the close of the regular business session of the New York Stock Exchange, usually 4:00 pm EST .  An Accumulation Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests, however, because the Accumulation Unit value will reflect the deduction for any transaction fees and periodic charges ( see "In Summary: Fee Tables" and "How Sub-Account Investment Experience is Determined" ).   Transfers will be implemented by redeeming Accumulation Units from the Sub-Account(s) indicated by the policy owner and using the redemption proceeds to purchase Accumulation Units in another Sub-Account(s) as directed by the policy owner.  The net result is that the policy owner's Cash Value will not change (except due to standard market fluctuations), but the number and allocation of Accumulation Units within the policy will change.

Policy owners may request transfers to or from the Sub-Accounts once per valuation day, subject to the terms and conditions of the policy and the mutual funds.

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Neither the policies nor the 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."  If you intend to use an active trading strategy, you should consult your registered representative and request information on other Nationwide policies that offer mutual funds that are designed specifically to support active trading strategies.

We discourage, and will take action to deter, short-term trading in the policy because the frequent movement between or among Sub-Accounts may negatively impact other investors in the policy.  Short-term trading can result in:

·   the dilution of the value of the investors' interests in the mutual fund;

·   mutual fund managers taking actions that negatively impact performance, such as keeping a larger portion of the 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 Policy Owners from the negative impact of these practices, we have implemented, or reserve the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies.  We cannot guarantee that our attempts to deter active trading strategies will be successful.  If our actions do not successfully deter active trading strategies, the performance of Sub-Accounts that are actively traded will be adversely impacted. Policy owners remaining in the affected Sub-Account will bear any resulting increased costs.

Redemption Fees.  Some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within sixty days after the date of the allocation to the Sub-Account.  We assess the fee against the amount transferred and pay the fee to the mutual fund.  Redemption fees compensate the mutual fund for any negative impact on fund performance resulting from short-term trading.

U.S. Mail Restrictions.  We monitor transfer activity in order to identify those who may be engaged in harmful trading practices.  We produce and examine transaction reports.  Generally, a policy may appear on these reports if the policy 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 in a given Valuation Period.  For example, if a policy owner executes multiple transfers involving ten Sub-Accounts in one day, this counts as one transfer event.  A single transfer occurring in a given Valuation Period that involves only two Sub-Accounts, or one Sub-Account if the transfer is made to or from a fixed investment option, will also count as one transfer event.

As a result of this monitoring process, we may restrict the form in which transfer requests will be accepted.  In general, we will adhere to the following guidelines:

Trading Behavior	Nationwide's Response
Six or more transfer events in one calendar quarter	Nationwide will mail a letter to the policy owner notifying them that: 1.they have been identified as engaging in harmful trading practices; and 2.if their transfer events exceed eleven in two consecutive calendar quarters or twenty in one calendar year, the policy      owner will be limited to submitting transfer requests via U.S. mail.
More than eleven transfer events in two consecutive calendar quarters OR More than twenty transfer events in one calendar year	Nationwide will automatically limit the policy owner to submitting transfer requests via U.S. mail.

For purposes of Nationwide's transfer policy, U.S. mail includes standard U.S. mail, expedited U.S. mail, and expedited delivery via private carrier.

Each January 1, we will start the monitoring anew so that each policy starts with 0 transfer events each January 1 (see "Other Restrictions" ).

Managers of Multiple Contracts.  Some investment advisors /representatives manage the assets of multiple Nationwide contracts pursuant to trading authority granted or conveyed by multiple policy owners.  These multi-contract advisors will be required by Nationwide to submit all transfer requests via U.S. mail.

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Other Restrictions.  We reserve the right to refuse or limit transfer requests, or take any other action we deem necessary, in order to protect policy owners and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some policy 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 us to constitute harmful trading practices, may be restricted.

Any restrictions that we implement will be applied consistently and uniformly. In the event a restriction we impose results in a transfer request being rejected, we will notify you that your transfer request has been rejected.  If a short-term trading fee is assessed on your transfer, we will provide you a confirmation of the amount of the fee assessed.

Underlying Mutual Fund Restrictions and Prohibitions.  Pursuant to regulations adopted by the SEC, we are required to enter into written agreements with the underlying mutual funds which allow the underlying mutual funds to:

·    request the taxpayer identification number, international taxpayer identification number, or other government issued identifier of any of our policy owners;

·    request the amounts and dates of any purchase, redemption, transfer or exchange request, which we also refer to as "transaction information"; and

·    instruct us to restrict or prohibit further purchases or exchanges by policy owners that violate policies established by the underlying mutual fund whose policies may be more restrictive than our policies.

We are required to provide such transaction information to the underlying mutual funds upon their request.  In addition, we are required to restrict or prohibit further purchases or exchange requests upon instruction from the underlying mutual fund.  We and any affected policy 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 us, we will keep any affected policy owner in their current underlying mutual fund allocation.

We may add new underlying mutual funds, or new share classes of currently available underlying mutual funds, that assess short-term trading fees.  In the case of new share class additions, your subsequent allocations may be limited to that new share class.  Short-term trading fees are a charge assessed by an underlying mutual fund when you transfer out of a Sub-Account within 60 days of the date of allocation to the Sub-Account.  The separate account will collect the short-term trading fees at the time of the transfer by reducing the amount transferred.  We will remit all such fees to the underlying mutual fund.

Fixed Account Transfers

Prior to the policy's Maturity Date, you may also make transfers involving the fixed account.  These transfers will be in dollars, and we reserve the right to limit their timing and amount, including that you may not request a transfer involving the fixed account before the end of the first year from the Policy Date.  Also, you may not make more than one transfer every twelve months.

On transfers to the fixed account, we may not permit you to transfer over 20% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period.  We reserve the right to refuse any transfer to the fixed account if the fixed account's Cash Value comprises more than 30% of the policy's Cash Value.

On transfers from the fixed account, we may not permit you to transfer over 20% of the Cash Value of the fixed account as of the end of the previous policy year (subject to state restrictions).

Modes to Make a Transfer

You can submit transfer requests in writing to our Home Office via first class U.S. mail .  We may also allow you to use other methods of communication, such as fax, telephone, or through our website.  Our contact information is on the front page of this prospectus.  We will use reasonable procedures to confirm that transfer instructions are genuine and will not be liable for following instructions that we reasonably determine to be genuine.  Forms of communication other than via first class U.S. mail are subject to the short-term trading limitations described in the "Sub-Account Transfers" section of this prospectus.

In addition, any computer system or telephone can experience slowdowns or outages that could delay or prevent our ability to process your request.  Although we have taken precautions to help our systems handle heavy usage, we cannot promise complete reliability under all circumstances.  If you are experiencing problems, please make your transfer request in writing.

When we have received your transfer request we will process it at the end of the current Valuation Period.  This is when the Accumulation Unit value will be next determined ( see "Valuation of Accumulation Units" ).

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The Policy

The policy is a legal contract between you and us.  Any change to the policy we would make must be in writing, signed by our president and corporate secretary and attached to or endorsed on the policy.  You may exercise all policy rights and options while the Insured is alive.  You may also change the policy, but only in accordance with its terms.

Generally, the policy is available for an insured between the ages of 0 and 85 although these ages may vary in your state.  It is nonparticipating, meaning we will not be contributing any operating profits or surplus earnings toward the Proceeds from the policy.  The policy will comprise and be evidenced by: a written contract; any Riders; any endorsements; Policy Data Pages; and the application, including any supplemental application.  This prospectus discloses all material provisions of the Policy.  In addition to the terms and conditions of the policy, policy owner rights are governed by this prospectus and protected by federal securities laws and regulations.  The benefits described in the policy and this prospectus, including any optional riders or modifications in coverage, may be subject to our underwriting and approval. We will consider the statements you make in the application as representations.

We will rely on them as being true and complete.  However, we will not void the policy or deny a claim unless a statement is a material misrepresentation. In order to comply with the USA Patriot Act and rules promulgated thereunder, Nationwide has implemented procedures designed to prevent policies described in this prospectus from being used to facilitate money laundering or the financing of terrorist activities.

To the extent permitted by law, policy benefits are not subject to any legal process on the part of a third-party for the payment of any claim, and no right or benefit will be subject to the claims of creditors (except as may be provided by assignment).

It is important to remember the portion of any amounts allocated to our general account and any guaranteed benefits we may provide under the policy exceeding the value of amounts held in the separate account are subject to our claims paying ability.

Policy Owner

The policy belongs to the owner named in the application.  You may also name a contingent owner.  A contingent owner will become the owner if the owner dies before any Proceeds become payable.  Otherwise, ownership will pass to the owner's estate, if the owner is not the Insured.  To the extent permitted by law, policy benefits are not subject to any legal process for the payment of any claim, and no right or benefit will be subject to claims of creditors, except as may be provided by assignment.  You may name different owners or contingent owners, so long as the Insured is alive, by submitting your written request to our Home Office, which will become effective when signed rather than the date on which we received it.  There may be adverse tax consequences ( see "Taxes" ).

Policy Owner Rights.  Subject to our approval, the policy owner may exercise all policy rights in accordance with policy terms while the policy is In Force.  These rights include, but are not limited to, the following:

·   changing the policy owner, contingent owner, and beneficiary;

·   assigning, exchanging and/or converting the policy;

·   requesting transfers, policy loans, and partial surrenders or a complete surrender; and

·   changing insurance coverage such as death benefit option changes, adding or removing riders, and/or increasing or decreasing the Specified Amount.

These rights are explained in greater detail throughout this prospectus.

The Beneficiaries

The principal right of a beneficiary is to receive Proceeds constituting the Death Benefit upon the Insured's death.  So long as the Insured is alive, you may:

·    name more than one beneficiary;

·    designate primary and contingent beneficiaries;

·    change or add beneficiaries; and

·   direct us to distribute Proceeds other than described below.

If a primary beneficiary dies before the Insured, we will pay the Death Benefit to the remaining primary beneficiaries.  We will pay multiple primary beneficiaries in equal shares.  A contingent beneficiary will become the primary beneficiary if all primary beneficiaries die before the Insured and before any Proceeds become payable.  You may name more than one contingent beneficiary.  We will also pay multiple contingent beneficiaries in equal shares.  To change or add beneficiaries, you must submit your written request to us at our Home Office, which will become effective when signed, rather than the date on which we receive it.  The change will not affect any payment we make, or action we take, before we record the change.

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To Purchase

To purchase the policy, you must submit to us a completed application and an initial Premium payment.

We must receive evidence of insurability that satisfies our underwriting standards, which may require a medical examination, before we will issue a policy.  We can provide you with the details of our underwriting standards.  We reserve the right to reject any application for any reason permitted by law. Additionally, we reserve the right to modify our underwriting standards on a prospective basis to newly issued policies at any time.

The minimum initial Specified Amount in most states is $50,000 for non-preferred policies.  For preferred policies, the minimum initial Specified Amount is $100,000.  The basic distinction between the non-preferred and preferred underwriting classifications is that we expect the Insured under a preferred policy to live longer.   We reserve the right to modify the minimum Specified Amount on a prospective basis to newly issued policies at any time.

Coverage

We will issue the policy only if the underwriting process has been completed, we have approved the application and the proposed Insured is alive and in the same condition of health as described in the application.  However, full insurance coverage will take effect only after you have paid the minimum initial Premium.  We begin to deduct monthly charges from your policy Cash Value on the Policy Date.

Coverage Effective Date

Insurance coverage will begin and be In Force on the Policy Date shown on the Policy Data Page.  For a change in the Specified Amount, the effective date will be on the next monthly anniversary from the Policy Date after we have approved your request.  It will end upon the Insured's death, once we begin to pay the Proceeds, or when the policy matures.  It will also end if the policy were to Lapse.

Temporary Insurance Coverage

Temporary insurance coverage, equal to the Specified Amount up to $1,000,000, may be available for no charge before full insurance coverage takes effect.  You must submit a temporary insurance agreement and make an initial Premium payment.  The amount of the initial Premium will depend on the initial Specified Amount, and your choice of Death Benefit option and any Riders, for purposes of the policy.  During this time, we will deposit your initial Premium payment into an interest bearing checking account.  Temporary insurance coverage will remain In Force for no more than 60 days from the date of the temporary insurance agreement.  Before then, temporary insurance coverage will terminate on the date full insurance coverage takes effect, or 5 days from the date we mail a termination notice accompanied by a refund equal to the Premium payment you submitted.  If we issue the policy, when we allocate the Net Premium depends on the right to examine law of the state in which we issued the Policy.

To Cancel (Examination Right)

For a limited time, commonly referred to as the "free look" period, you may cancel the policy and receive a refund.    The free look period expires ten days after you receive the policy ( or longer if required by state law ) .

If you decide to cancel the policy during the free look period, return the policy to the sales representative who sold it, or to us at our Home Office, along with your written cancellation request. Your written request must be received, if returned by means other than U.S. mail, or post-marked, if returned by U.S. mail, by the last day of the free look period.  If we do not receive your policy at our Home Office by the close of business on the date the free look period expires, you will not be allowed to cancel your policy free of charge.  If the policy is canceled, we will treat the policy as if it was never issued.

Within seven days of a cancellation request, we will refund the amount prescribed by law.  Depending upon the law in the state you live in, the amount we refund will be Cash Value or, in certain states, the greater of the initial Premium payment or the policy's Cash Value.

If the policy was issued in a state or territory that requires us to refund the initial Premium payment, we will allocate initial Net Premium to the fixed accounts as instructed, but hold all of the initial Net Premium designated to be allocated to the Sub-Accounts in the available money market Sub-Account until the free look period expires.  At the expiration of the free look period, we will transfer the variable account Cash Value to the Sub-Accounts based on the allocation instructions in effect at the time of the transfer.

If the policy was issued in a state or territory that requires us to refund the Cash Value, we will allocate all of the initial Net Premium to the designated Sub-Accounts and fixed accounts based upon the allocation instructions in effect at that time, at the price next determined.

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To Change Coverage

After the first year from the Policy Date, you may request to change the Specified Amount; however, no change will take effect unless the new Cash Surrender Value would be sufficient to keep the policy In Force for at least 3 months.  Changes to the Specified Amount will alter the Death Benefit ( see "Changes in the Death Benefit Option" ).

You may request to increase the Specified Amount, by at least $10,000, which will increase the Net Amount At Risk.  Because the cost of insurance charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will also cause the policy's cost of insurance charge to increase.  As a result, there will be a corresponding increase in the periodic charges we deduct from the policy's Cash Value.  A separate additional Surrender

Charge schedule will also apply whenever you increase the base Policy Specified Amount.  Also, an increase in the Specified Amount may cause an increase to the amount of your subsequent Premium payments and the likelihood that the entire policy is at risk of lapsing sooner ( see "Lapse" ). You may request to decrease the Specified Amount.  We first apply decreases to the amount of insurance coverage as a result of any prior Specified Amount increases, starting with the most recent.  Then we will decrease the initial Specified Amount.  We will deny a request, however, to reduce the amount of your coverage below the minimum initial Specified Amount   ( see "To Purchase" ).  Also, we will deny a request that would disqualify the policy as a contract for life insurance ( see "The Minimum Required Death Benefit" ).

To change the Specified Amount, you must submit your written request to us at our Home Office.  You must provide us with evidence of insurability that satisfies our underwriting standards. The Insured must be 85 or younger.  Changes will become effective on the next monthly anniversary from the Policy Date after we approve the request.  We reserve the right to limit the number of changes to 1 each year from the Policy Date.

To Exchange

You have an exchange right under the policy.  At any time within the first twenty-four months of coverage from the Policy Date, you may surrender the policy and use the Cash Surrender Value to purchase a new policy on the Insured's life without evidence of insurability.  Afterwards, you may also surrender the policy and use the Cash Surrender Value to purchase a new policy on the same Insured's life .   Policy exchanges are subject to our approval, you paying all costs associated with the exchange, and the Insured satisfying all underwriting standards of insurability.  You may transfer Indebtedness to the new policy, subject to the minimum and maximum loan amounts of the new policy.

The new policy may be one of our available flexible premium adjustable life insurance policies.  It may not have a greater Death Benefit than that of the policy immediately prior to the exchange date.  It will have the same Specified Amount, Policy Date, and issue age.  We will base Premiums on our rates in effect for the same sex, Attained Age and Premium class of the Insured on the exchange date.

You must make your request on our official forms to the Home Office.  The policy must be In Force and not in a Grace Period.  You must pay a surrender charge ( see "In Summary: Fee Tables" ).   The exchange may have tax consequences ( see "Exchanging the Policy for Another Life Insurance Policy" ).   The new policy will take effect on the exchange date only if the Insured is alive.  The policy will terminate when the new policy takes effect.

To Terminate or Surrender

You have the right to terminate (surrender) the policy.  Or you may surrender the policy for its Cash Surrender Value.  The policy will automatically terminate when the Insured dies, the policy matures, or the Grace Period ends ( see "Surrenders" ).

Generally, if the policy has a Cash Surrender Value in excess of the Premiums you have paid, upon surrender the excess will be included in your income for federal tax purposes ( see "Surrender of the Policy" ).   The Cash Surrender Value will be reduced by the outstanding amount of a policy loan ( see "Policy Loans" ).

To Assign

You may assign any rights under the policy while the Insured is alive , subject to our approval.     If you do, your beneficiary's interest will be subject to the person(s) to whom you have assigned rights.  Your assignment must be in writing and will become effective on the date we record it at our Home Office.  Your assignment will be subject to any outstanding policy loans, policy liens, garnishments, court orders, or any previous assignments.

Proceeds Upon Maturity

If the policy is In Force on the Maturity Date, we will pay you the Proceeds.

Normally, we will pay the Proceeds within 7 days after we receive your written request at our Home Office.  The payment will be postponed, however, when: the New York Stock Exchange is closed; the SEC restricts trading or declares an emergency; the SEC permits us to defer it for the protection of our policy owners; or the Proceeds are to be paid from the fixed account.  The Proceeds will equal the policy's Cash Value minus any Indebtedness.  After we pay the Proceeds, the policy is terminated.

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We may offer to extend the Maturity Date to coincide with the Insured's death, after which we will pay the Proceeds to your beneficiary.  During this time, you will still be able to request partial surrenders, and you will still have in effect the Long-term Care Rider, though you will not be charged for it, the termination of benefits under which will coincide with the policy's extended Maturity Date, unless you decide otherwise.  The Maturity Date extension will either be for the policy value, as defined below, or for the Specified Amount subject to the law of the state in which you lived at the time you purchased the policy.  It is your choice, and, in any event, your policy will be endorsed so that:

·   no changes to the Specified Amount will be allowed;

·   no additional Premium payments will be allowed;

·   no additional periodic charges will be deducted;

·   100% of the policy value will be transferred to the fixed account;

·   to extend for the Cash Value, your policy's Death Benefit will become the Cash Value, irrespective of your previous Death Benefit option choice; or

·   to extend for the Specified Amount, the Specified Amount will be adjusted to what it was when the Insured reached Attained Age 70, but excluding any coverage provided by the Additional Protection Rider and subject to any partial surrenders, which will affect the Specified Amount of a policy with Death Benefit Option One, based on the Insured's Attained Age at the time the request for a partial surrender is made in the case that you extend for the Specified Amount.  While the Insured is between the Attained Ages of 71 and 90, a partial surrender will decrease the Specified Amount proportionately.  If the Insured is Attained Age 91, a partial surrender will reduce the Proceeds by an amount proportionate to the ratio of the partial surrender to the Cash Value prior to the partial surrender.  Notwithstanding, the Proceeds will be the greater of the policy's Specified Amount or Cash Value, unless you have invoked the Policy Guard Rider, in which case the Proceeds may be reduced.

The Maturity Date will not be extended, however, beyond when the policy would fail the definition of life insurance under the Code ( see "The Payout Options" and "The Death Benefit" ).

The primary purpose of Maturity Date extension is to continue the life insurance coverage, and avoid current income taxes on any earnings in excess of your cost basis if the maturity Proceeds are taken.   (see "Surrendering the Policy; Maturity" ).

Assuming you have no outstanding loans on the Maturity Date and that no partial surrenders or loans are taken after the Maturity Date, the Proceeds after the Maturity Date will equal or exceed the Proceeds at maturity.  However, because the loan interest rate charged may be greater than loan interest credited, if you have an outstanding loan on or after the Maturity Date, Proceeds after the Maturity Date may be less than the Proceeds at maturity.

Reminders, Reports and Illustrations

On request, we will send you scheduled Premium payment reminders.  We generate and mail confirmations of individual financial transactions, such as transfers, partial surrenders and loans, automatically.  We will also send you semi-annual and annual reports that show:

·   the Specified Amount;

·   the current Cash Value;

·   minimum monthly Premiums;

·   the Cash Surrender Value;

·   Premiums paid;

·   outstanding Indebtedness; and

·   all charges since the last report.

You may obtain copies of confirmation statements and reports by calling our service center or submitting a written request.  You may receive information faster from us and reduce the amount of mail you receive by signing up for our eDelivery program.  We will notify you by email when important documents, like statements and prospectuses, are ready for you to view, print, or download from our secure server.  If you would like to choose this option, go to www.nationwide.com/login.

We will send reminders, transaction confirmations and reports to the address you provide on the application, or to another you may specify. At any time after the first policy year, you may ask for an illustration of future benefits and values under the policy.

While we do not at present, we may assess a charge if you ask for more than one illustration per year from the Policy Date.

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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  policy owners in the same household, Nationwide will mail only one copy of each document, unless notified otherwise by the policy owner(s).  Household delivery will continue for the life of the policies. A policy owner can revoke their consent to household delivery and reinstitute individual delivery by calling 1-866-223-0303 or by writing to the address on the front page of this prospectus.  We will reinstitute individual delivery within 30 days after receiving such notification.

Errors or Misstatements

If you make an error or misstatement in completing the application, we will adjust the Death Benefit and Cash Value accordingly.

To determine the adjusted Death Benefit, we will multiply the Net Amount At Risk at the time of the Insured's death by the ratio of the monthly cost of insurance applied at the true age and sex in the policy month of death and the monthly cost of insurance that should have been applied at the true age and sex in the policy month of death.  We will then add this adjusted amount that reflects the true age and sex of the Insured to the Cash Value of the policy at the Insured's death.  The Cash Value will also be adjusted to reflect the cost of insurance charges based on the Insured's correct age and sex from the Policy Date.

Incontestability

We will not contest payment of the Death Benefit based on the initial Specified Amount after the policy has been In Force during the Insured's lifetime for two years from the Policy Date.  For any change in Specified Amount requiring evidence of insurability, we will not contest payment of the Death Benefit based on such an increase after it has been In Force during the Insured's lifetime for 2 years from its effective date.

If We Modify the Policy

Any modification or waiver of our rights or requirements under the policy must be in writing and signed by our president or corporate secretary.  No agent may bind us by making promise not contained in the policy.

We may modify the policy, our operations or the separate account's operations to meet the requirements of any law or regulation issued by a government agency to which the policy, our company, or the separate account is subject.  We may modify the policy to assure that it continues to qualify as a life insurance contract under the federal tax laws.  We will notify you of all modifications, and we will make appropriate endorsements to the policy.

Riders

Riders are available for you to purchase to design the policy to meet your specific needs.  You may purchase any of them (except for both the Premium Waiver and Deduction Waiver Riders, simultaneously).  Once the policy is In Force, to add a Rider, we may require further evidence of insurability.  You may only elect the Adjusted Sales Load Life Insurance Rider when purchasing the policy.

Availability of the Riders will vary by state.  You will be charged for a Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; or you decide you no longer need the benefit and let us know in writing at our Home Office ( see "In Summary: Fee Tables" and "Charges" ).

Adjusted Sales Load Life Insurance Rider

This Rider is only available to purchase when you purchase the policy.  The benefit is replacing the Premium Load we would otherwise deduct before allocating your Net Premiums with the Rider's monthly charge, which depends on whether you want to replace all or a portion of the Premium Load.  We will deduct the Rider's charge from the policy's Cash Value over a period of up to 15 years, depending on the number of years over which the Premium payments you plan to make will be covered by this Rider, up to seven years from the Policy Date.  This deduction will continue to be deducted for 9 years after the lesser of:

·   the number of years you choose to have the Rider apply to your Premium payments; or

·   the number of years in this period during which you actually make Premium payments.

For example, if you want to replace all of the Premium Load on each of your Premium payments for 5 years, but the last Premium payment you make while the Rider is in effect is within the 3rd year from the Policy Date, instead of deducting the Riders charge for 14 years, we will deduct the Rider's charge through the 12 th   year.  Also, if you terminate your policy during the first 10 years from the Policy Date, we will reduce your Cash Surrender Value.  The more Premium Load you elect to replace, the higher the Rider's charge will be.  If you purchase this Rider, you should expect that its charge, in the aggregate,

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would amount to more than if we had deducted the Premium Load from each of your Premium payments covered by it.  To better understand how this Rider might benefit you, ask for an illustration of future benefits and rights under the policy with and without the purchase of this Rider.

Children's Insurance Rider

Subject to our underwriting approval, you may purchase term life insurance on any of the Insured's children at any time.  Before an expiration date, the policy pays a benefit to the named beneficiary upon the insured child's death.  As long as the policy is In Force, the insurance coverage for each child will continue until the earlier of: 1) the anniversary of the policy on or after the date that the child turns age 22 ; or 2) the anniversary of the policy on or after the date that the Insured turns age 65 .

Subject to certain conditions specified in the Rider, the Rider may be converted into a policy on the life of the insured child without evidence of insurability.  You will be charged for this Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; or you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Otherwise, the benefit of this Rider and the Death Benefit are independent of one another.

Long Term Care Rider

You may purchase this Rider at any time, but if you purchase it after issue, we will require evidence of insurability.  Upon meeting the eligibility requirements, the Insured is paid a monthly benefit after ninety days of being confined to a care facility (other than a hospital) or provided personal assistance at home while under a physician's care.  The requirements include confinement to a care facility (other than a hospital) or provision of personal assistance at home while under a physician's care.  The care must be necessary.  The Insured must either be unable to do two of the following activities: dress, eat, bathe, be continent, use toilet facilities, move to/from beds and chairs; or be cognitively impaired.  The benefit may not cover all your prospective long-term care costs.  The benefit will not cover your retrospective long-term care costs.  The benefits paid under the Rider are intended to be "qualified long-term care insurance" under federal tax law, and, generally, the benefits may not be taxable to the policyholder.  See your tax advisor about the use of this Rider in your situation.  The benefit will end if you invoke the Policy Guard Rider.  You will be charged for this Rider: so long as the policy remains In Force through maturity; until we have paid the benefit; until you invoke the Policy Guard Rider; or until you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Also, the benefits paid under this Rider will reduce the Cash Surrender Value if you were to surrender the policy while the Insured is alive.  More importantly, though, the benefits paid under this Rider will impact your policy's Death Benefit.  The Proceeds payable upon the Insured's death will be adjusted to account for the benefits paid under this Rider.  There is a free look period for this Rider.  Within 30 days of receipt, you may return this Rider to the sales representative who sold it to you, or to us at our Home Office, and we will void this Rider and refund the related charges.

Spouse Life InsuranceRider

Subject to our underwriting approval, you may purchase this Rider at any time.  The benefit is a death benefit payable to the beneficiary you designate upon the Insured's spouse's death; otherwise, the benefit is payable to the Insured.  The benefit continues until the anniversary of the Rider on or next following the year in which the Insured's spouse turns age 70 , you invoke the Policy Guard Rider, or the policy matures, whichever is earlier.  You will be charged for this Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; until you invoke the Policy Guard Rider; or until you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Otherwise, the benefit of this Rider and the Death Benefit are independent of one another.  This Rider has a conversion right.  The Insured's spouse may exchange this Rider's benefit for a level premium, level benefit plan of whole life insurance, subject to limitations.

Accidental Death Benefit Rider

Subject to our underwriting approval, you may purchase this Rider at any time.  The Rider pays a benefit, in addition to the Death Benefit, to the named beneficiary upon the Insured's accidental death.  The benefit continues until the Insured reaches Attained Age 70 .  You will be charged for this Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit or you decide you no longer need the benefit and let us know in writing at our Home Office.  Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  Otherwise, the benefit of this Rider and the Death Benefit are independent of one another.

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Premium Waiver Rider

Subject to our underwriting approval, you may purchase this Rider at any time.  The benefit is a monthly credit to the policy upon the Insured's total disability for 6 consecutive months.  The amount is the lesser of:

·   the Premium you specified, or

·   the average actual Premiums you paid over the 36 months before the total disability.

However, the monthly credit may not be enough to allow you to rely on this Rider alone.  While the benefit is payable, you may also need to pay additional Premium to keep your policy from Lapsing.  Notwithstanding, purchasing this Rider could help to preserve the Death Benefit.

The benefit continues until the Insured turn's age 65 , or for 2 years for an Insured who is age 63 or older, at the time of the total disability.  You will be charged for this Rider so long as the policy remains In Force and the Rider's term has not expired unless we are paying a benefit under the Rider or you decide you no longer need the benefit and let us know in writing at our Home Office.

Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  The benefit payable under this Rider appears to be the same as the benefit payable under the Deduction (of Fees and Expenses) Waiver Rider during the first 3 years from the Policy Date.  However, there are 2 distinctions.  If the benefit under the Deduction (of Fees and Expenses) Waiver Rider becomes payable during the first 3 years from the Policy Date, the monthly credit will be sufficient to keep the policy from Lapsing.  Thereafter, or if the benefit becomes payable after 3 years from the Policy Date, the benefit will be the waiver of your policy's charges on a monthly basis.  If you choose this Rider, you may not also choose the Deduction (of Fees and Expenses) Rider.

Change of Insured Rider

You may elect this Rider for no charge at any time.  You may change the Insured for a new Insured, subject to insurability and other conditions.  The costs and benefits under the policy after the change will be based on, and could change with, the underwriting classification and characteristics of the new Insured, but this Rider's benefit will have no impact on the policy's Specified Amount.

Additional (Insurance) Protection Rider

The benefit associated with the Additional (Insurance) Protection Rider is term life insurance on the Insured, in addition to the Death Benefit, payable to the beneficiary upon the Insured's death.

Subject to our underwriting approval, you may purchase this Rider at any time while the policy is In Force until the Insured reaches age 85 .  If you purchase this rider after the Policy Date, we will require evidence of insurability.  The Rider benefit amount may vary monthly and is based on the chosen Death Benefit.  You may renew coverage annually until the Insured reaches Attained Age one hundred, when this Rider's term expires.

Before deciding whether to purchase the Additional (Insurance) Protection Rider it is important for you to know that when you purchase this Rider, the compensation received by your registered representative and his or her firm is less than when compared to purchasing insurance coverage under the base policy.  As a result of this compensation reduction, the charges assessed for the cost of insurance under this Rider will be lower for a significant period of time.  There are instances where the Additional (Insurance) Protection Rider may require lower Premium to maintain the total death benefit over the life of the policy or may require increased Premium when compared to not purchasing the Rider at all.

There are also some distinct disadvantages to purchasing the Rider, such as not being able to extend the Maturity Date for coverage under the Rider (resulting in a loss of coverage at maturity).   Another disadvantage is the Rider only allows coverage under the Guaranteed Policy Continuation Provision for the first 5 policy years.  In comparison, the base policy allows longer coverage for issue ages under seventy (see "Lapse" ).

If you have questions about whether the Rider is appropriate for you, please consult your registered representative for more specific information on this Rider and its potential benefits.  Your registered representative can answer your questions and provide you with illustrations demonstrating the impact of purchasing coverage under the Rider.

Because we deduct the Rider charge from the Cash Value, purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on the Cash Value.

Deduction (of Fees and Expenses) Waiver Rider

Subject to our underwriting approval, you may purchase this Rider at any time so long as the policy is In Force and it is before the Policy Date on or following when the Insured reaches age 65 .  If an Insured becomes disabled, as defined in this Rider, for 6 consecutive months within the first 3 years from the Policy Date, the benefit is a credit to your policy in an

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amount necessary to keep the policy In Force.  The benefit for subsequent years, however, is a waiver of your policy's monthly charges.  So, say you become totally disabled for 6 consecutive months 2 years and 8 months from the Policy Date.  For the first 4 months, the benefit would be a credit equal to the amount necessary to keep the policy In Force.  After that, the Rider's benefit is a waiver of your policy's monthly charges.

Note: This Rider's benefit alone may not be sufficient to keep your policy from Lapsing.  Therefore, you may need to make additional premium payments to prevent Lapse even while the Rider's benefit is being paid.  However, while the Rider's benefit is being paid, it will cost you less on a monthly basis to keep the policy In Force.

For how long the benefit lasts depends on the Insured's age when total disability begins.  Before age 60 , the benefit continues for as long as the Insured is totally disabled (even if that disability extends past when the Insured reaches age 65 ).  Between ages 60 and 63 , the benefit continues until the Insured turns age 65 .  From age 63 , the benefit lasts only for 2 years.  The benefit will end if you invoke the Policy Guard Rider.

Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value.  For the first 3 years from the Policy Date, the benefit payable under this Rider appears to be the same as the benefit payable under the Premium Waiver Rider; however, the monthly credit will be sufficient to keep the policy from Lapsing.  Thereafter, or if the benefit becomes payable after the 3 years from the Policy Date, it will cost you less, on a monthly basis, to keep the policy In Force.  Meanwhile, the benefit payable under the Premium Waiver Rider will remain a monthly credit of Premium.  If you choose this Rider, you may not also choose the Premium Waiver Rider.

Policy Guard Rider

The Policy Guard Rider prevents the policy from Lapsing due to Indebtedness by providing a guaranteed paid-up insurance benefit.  The Rider is dormant until specifically invoked by the policy owner, at which time the policy is assessed a one-time charge.  Invocation of the Rider enables the policy owner of a substantially depleted policy (due to outstanding loans) to avoid the negative tax consequences associated with lapsing a life insurance policy.  Consult a qualified tax advisor for more details.  All policies for which the guideline premium/cash value corridor life insurance qualification test is elected will automatically receive the Policy Guard Rider (state law permitting).  This Rider is not available for policies for which the cash value accumulation life insurance qualification test is elected.   (see "Minimum Required Death Benefit" ).

The policy owner is eligible to invoke the Policy Guard Rider when outstanding Indebtedness reaches a certain percentage of the policy's Cash Value.  This percentage varies based on the Insured's Attained Age.  The first time the policy's outstanding Indebtedness reaches the percentage that makes the policy eligible for invocation of the Rider, Nationwide will send a letter to the policy owner notifying them of the policy's eligibility to invoke the Rider.  The letter will also describe the Rider, its cost, and its guaranteed benefits.

In addition, the following conditions must be met in order to invoke the Rider:

·   the Insured is Attained Age 75 or older ;

·   the policy has been In Force for at least 15 years ;

·   the policy's Cash Value is at least $100,000 ;

·   at the time of policy issuance, you selected the guideline premium/cash value corridor tax test to qualify the policy for life insurance ; and

·   based on our records of your Premium payments, the entire cost basis of the policy for tax purposes has been withdrawn.

The policy owner need not invoke the Rider immediately upon notification of eligibility.  The Rider may be invoked at any time, provided that the above conditions are met and the policy remains In Force.

After Nationwide receives the policy owner's request to invoke the Rider, Nationwide will adjust the policy, as follows:

·    if not already in effect, the Death Benefit option will be changed to Death Benefit Option One.

·    the Specified Amount will be adjusted to equal the lesser of: (1) the Specified Amount immediately before you invoked the Rider, or (2) the Specified Amount that will cause the Death Benefit to equal the minimum required death benefit.

·    any non-loaned Cash Value after deduction of the Policy Guard Rider charge will be transferred to the fixed account, where it will earn the guaranteed fixed interest rate of the base policy as shown on the Policy Data Page.

After the above adjustments are made, the loan balance will continue to grow at the policy's loan charge rate, and the amount in the collateral loan account will continue to earn interest at the policy's loan crediting rate.  No policy charges will be assessed.  No further loans may be taken from the policy and no withdrawals may be taken from the policy except for a full

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policy surrender.  Cash Value may not be transferred out of the Fixed Account.  Both the charges and benefits of the Long-Term Care Rider, Spouse Life Insurance Rider, and Deduction (of fees and expenses) Waiver Rider will terminate.  The Death Benefit will be the lesser of the Specified Amount or the minimum required death benefit.  The policy will remain as described above for the duration of the policy.

Invocation of the Policy Guard Rider is irrevocable.

Premium

The policy does not require a scheduled payment of Premium to keep it In Force.  The policy will remain in effect as long as the conditions that cause the policy to Lapse do not exist.  Upon request, we will furnish Premium receipts.

Initial Premium

The amount of your initial Premium will depend on the initial Specified Amount of insurance, the Death Benefit option and any Riders you select.  Generally, the higher the required initial Specified Amount, the higher the initial Premium will be.  Similarly, because Death Benefit Options Two and Three provide for a potentially greater Death Benefit than Death Benefit Option One, Death Benefit Options Two and Three may require a higher amount of initial Premium.  Also, the age, health and activities of the Insured will affect our determination of the risk of issuing the policy.  In general, the greater this risk, the higher the initial Premium will be.

Whether we will issue full insurance coverage depends on the Insured meeting all underwriting requirements, you paying the initial Premium and our delivery of the policy while the Insured is alive.  We will not delay delivery of the policy to increase the likelihood that the Insured is not still living.  Depending on the outcome of our underwriting process, more or less Premium may be necessary for us to issue the policy.  We also retain the right to not issue the policy, after which, if we exercise this right, we will return your payment within two business days.

You may pay the initial Premium to our Home Office or to our authorized representative.  The initial Premium payment must be at least $50. The initial Premium payment will not be applied to the policy until the underwriting process is complete.

Subsequent Premiums

You may make additional Premium payments at any time while the policy is In Force, subject to the following:

·   we may require satisfactory evidence of insurability before accepting any additional Premium payment that results in an increase in the policy's Net Amount At Risk;

·   we will refund Premium payments that exceed the applicable Premium limit established by the Internal Revenue Code (IRS) to qualify the policy as a contract for life insurance.   Additional Premium payments or other changes to the policy may jeopardize the policy's non-modified endowment status (see "Taxes").   We will monitor Premiums paid and other policy transactions and will notify you when the policy's non-modified endowment contract status is in jeopardy; and

·   we may require that policy Indebtedness be repaid prior to accepting any additional Premium payments.  Some, but not all, of the situations where we might exercise this right include when interest rates are low, when your policy loans exceed 90% of the Cash Value of your Sub-Account portfolio allocations or when a Premium payment may alter the character of the policy for tax purposes ( see "Lapse" ).

We will send scheduled Premium payment reminder notices to you according to the Premium payment method shown on the Policy Data Page.  If you decide to make a subsequent Premium payment, you must send it to our Home Office.  Each Premium payment must be at least $50.

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Charges

Please read and consider the following, which we intend to be an amplification, but it may also be duplicative, in conjunction with the fee tables, and the accompanying footnotes, appearing earlier in the prospectus (see "In Summary: Fee Tables" ).   Also, see the policy, including the Policy Data Page s , and the Riders for more information.  These charges are assessed by redeeming Accumulation Units.  The number of Accumulation Units redeemed is determined by dividing the dollar amount of the charge by the Accumulation Unit value for the Sub-Account.

We will make deductions under the policy to compensate us for: the services and benefits we provide; the costs and expenses we incur and the risks we assume.  Every time you make a Premium payment, we will charge against that Premium payment a Premium Load, which is composed of the sales load and premium taxes.  If we begin to charge for illustrations, you will be expected to pay the charge in cash at the time of your request.  We will not deduct this charge from your policy's Cash Value.  However, we will deduct all other charges from the policy's Cash Value, rather than a Premium payment, except for morality and expense risk and loan amount interest, in proportion to the balances of your Sub-Account portfolio, and the fixed account, allocations.  We will only deduct the mortality and expense risk charge from the Cash Value of the Sub-Account portfolios.  We will transfer the loan interest charge from your investment options to the loan account.  We take the monthly periodic charges in advance and we will not prorate any monthly Rider charge should the Rider terminate before the beginning of the next month.

There are also operating charges associated with the Sub-Account portfolios.  While you will not pay them directly, they will affect the value of the assets in the Sub-Account portfolios.  On a daily basis, the manager of each mutual fund that comprises the policy's available variable investment options deducts operating charges from that mutual fund's assets before calculating the NAV.  We use NAV to calculate the value of your corresponding Sub-Account portfolio allocation in Accumulation Units.  In addition, some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within sixty days after the date of the allocation to that Sub-Account.  The fee is assessed against the amount transferred and is paid to the mutual fund.  For more information on the operating charges and short-term trading fees assessed by the mutual funds held by the Sub-Account portfolios ( see "Short-Term Trading Fees" ).   More detail about these charges is contained in the prospectus for the mutual fund.

Sales Load

Currently, the sales load portion of the Premium Load charge is $5 per $1,000 of Premium and covers our sales expenses.  The guaranteed maximum sales load is $25 per $1,000 of Premium.

Premium Taxes

The current (and guaranteed) Premium taxes portion of the Premium Load charge is $35 per $1,000 of Premium and reimburses us for state and local Premium taxes at the estimated rate of 2.25%, and for federal premium taxes at the estimated rate of 1.25%.  If the actual tax liability is more or less, we will not adjust the charge retroactively, so we may profit from it.

Surrender Charge

A surrender charge will apply if you surrender or lapse the policy.  A surrender charge may apply if you request to decrease the Specified Amount.  There are 2 components of the surrender charge meant to cover our policy underwriting, or the underwriting component, and sales expenses, or the sales component, including for processing the application, conducting any medical exams, determining insurability and the Insured's underwriting class and establishing policy records.  The surrender charge equals the underwriting component and 26.5% of the sales component.  We will deduct the surrender charge based on the following schedule:

Policy year calculated from the Policy Date or effective date of Specified Amount increase:	Percentage Of Initial Surrender Charge
1	100%
2	100%
3	90%
4	80%
5	70%
6	60%
7	50%
8	40%
9	30%
After 9	0

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The underwriting component is the product of the Specified Amount, divided by 1,000, and the administrative target premium.  The administrative target premium is actuarially derived, and we use it to determine how much to charge per Premium payment for underwriting expenses.  The administrative target premium varies by the Insured's age when the policy was issued.

The sales expense component is the lesser of the following two amounts:  The first amount is the product of the Specified Amount, divided by 1,000, and the surrender target premium.  The surrender target premium is actuarially derived, and we use it to figure out how much to charge per Premium payment for sales expenses.  The surrender target premium varies by: the Insured's sex; age (when the policy was issued); and the underwriting class.  The second amount is the sum of all Premium payments you made during the first year from the Policy Date.

We will calculate a separate surrender charge based on the initial Specified Amount and each increase in the Specified Amount, which are, respectively, Specified Amount segments.  The surrender charge for each segment, when added together, will amount to your total surrender charge.  A surrender charge will also apply when the aggregate surrenders exceed 25% of a segment's Specified Amount.  We defer and accrue the charge on partial surrenders that do not exceed 25% of the segment's Specified Amount.  Once partial surrenders exceed 25%, we assess the current and accrued charge against your Cash Value.  In determining the 25% level, we use a last in-first out method, so that the latest segment reaches the 25% level first.  We reserve the right to change this practice and assess the surrender charge against all partial surrenders.  We will calculate the surrender charge for a decrease in the Specified Amount as if you surrendered the policy, though we will only deduct a portion of it from your policy's Cash Value.  The amount of surrender charge we deduct will be a product of the surrender charge and the decrease in Specified Amount divided by the Specified Amount before the decrease.

The surrender charge will typically be greater for a policy with: an older Insured; a male insured; a higher Specified Amount; more first year Premium; or a higher-risk Insured.  If you change the Death Benefit option, and it does not change our Net Amount At Risk, we will not deduct a surrender charge.  If you change the Death Benefit option, and the change does not result in a different Net Amount At Risk, we will not deduct a surrender charge.

We will waive the surrender charge of your policy if you elect to surrender it in exchange for a plan of permanent fixed life insurance offered by us subject to the following:

·   the exchange and waiver may be subject to your providing us new evidence of insurability and our underwriting approval; and

·   you have not invoked any of these Riders:

1.Premium Waiver Rider;

2.Deduction (of Fees and Expenses Waiver Rider); or

3.Long-Term Care Rider.

We may impose a new surrender charge on the policy received in the exchange.

Partial Surrender Fee

You may request a partial surrender after the first year from the Policy Date while the policy is In Force, and we may charge a $25 partial surrender fee to compensate us for the administrative costs in calculating and generating the surrender amount.  However, there is currently no charge for a partial surrender.

Short-Term Trading Fees

Some 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 sixty days after the date of allocation to the Sub-Account.

Short-term trading fees are intended to compensate the mutual fund, and policy owners with interests allocated in the 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 policy owners not engaged in such strategies.

Any short-term trading fee assessed by any mutual fund available in conjunction with the Policy will equal 1% of the amount determined to be engaged in short-term trading.  Short-term trading fees will only apply to those Sub-Accounts corresponding to mutual funds charging such fees.  Please refer to the prospectus for each Sub-Account portfolio for more detailed information.  Policy owners are responsible for monitoring the length of time allocations are held in any particular Sub-Account.  We will not provide advance notice of the assessment of any applicable short-term trading fee.

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For a complete list of the Sub-Accounts that assess (or reserve the right to assess) a Short-Term Trading Fee, please see "Appendix A: Sub-Account Information" later in this prospectus. If a short-term trading fee is assessed, the mutual fund will charge the separate account 1% of the amount determined to be engaged in short-term trading.  The separate account will then pass the short-term trading fee on to the specific policy owner that engaged in short-term trading by deducting an amount equal to the fee from that policy owner's sub-account value.  All such fees will be remitted to the mutual fund. None of the fee proceeds will be retained by us or the separate account.

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 time 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 short-term trading fees.  Transactions that are not subject to short-term trading fees include:

·   scheduled and systematic transfers, such as Dollar Cost Averaging and Asset Rebalancing;

·   policy loans or surrenders; or

·   payment of the Death Benefit proceeds upon the Insured's death.

New share classes of currently available mutual funds may be added as investment options under the policy.  These new share classes may require the assessment of short-term trading fees.  When these new share classes are added, new Premium payments and exchange reallocations to the mutual funds in question may be limited to the new share class.

Cost of Insurance Charge

The cost of insurance charge compensates us for underwriting insurance protection.  The cost of insurance charge is the product of the Net Amount At Risk and the cost of insurance rate.

We base the cost of insurance rate on our expectations as to future mortality and expense experience.  The cost of insurance rate will vary by: the Insured's sex; age; underwriting class; any Substandard Ratings; how long the policy has been In Force and the Specified Amount.  There will be a separate cost of insurance rate for the initial Specified Amount and any increases.  The cost of insurance rates will never be greater than those shown in the Policy Data Pages.

Flat Extras and Substandard Ratings.As part of our underwriting process, we may inquire about the occupation and activities of the Insured.  If the activities or occupation of an Insured cause an increased health or accident risk, it may result in the Insured receiving a Substandard Rating.  If this is the case, we may add an additional component to the Cost of Insurance Charge called a "Flat Extra."  The Flat Extra accounts for the increased risk of providing life insurance when one or more of these factors apply to the Insured.  The Flat Extra is a component of the total Cost of Insurance Charge, so if applied it will be deducted from the Policy's Cash Value on the Policy Date and the monthly anniversary of the Policy Date.  The monthly Flat Extra is between $0.00 and $2.08 per $1,000 of the Net Amount At Risk.  If a Flat Extra is applied, it is shown in the Policy Data Pages.  In no event will the Flat Extra result in the Cost of Insurance Charge exceeding the maximum charge listed in the Fee Table of this prospectus.

We will uniformly apply a change in any cost of insurance rate for Insureds of the same age, sex, underwriting classes and any Substandard Ratings, on whom policies with the same Specified Amount have been In Force for the same length of time.  The change could increase your cost of insurance charge, which, accordingly, would decrease your policy's Cash Value.  The converse is true, too.  In contrast, you could cause your cost of insurance charge to decrease with a request to reduce the Specified Amount that also reduces the Net Amount At Risk.

Mortality and Expense Risk Charge

Though the maximum guaranteed mortality and expense risk charge is higher, currently, we deduct this monthly charge according to the following schedule. During the first through 15 years from the Policy Date, the charge is $0.50 per $1,000 on the first $25,000 of Cash Value, and $0.25 per $1,000 on $25,001 up to $250,000 of Cash Value.  This charge is $0.08 per $1,000 of Cash Value over $250,000.  Beginning in Policy year sixteen, this charge is: $0.50 per $1000 on the first $25,000 of the Cash Value in the variable investment options, and $0.08 per $1,000 of the Cash Value in the variable investment options over $25,000.  This charge compensates us for assuming risks associated with mortality and expense costs, and we may profit from it.  The mortality risk is that the Insured does not live as long as expected.  The expense risk is that the costs of issuing and administering the policy are more than expected.

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Administrative Charge

Currently, we deduct $10 per month through the first year from the Policy Date, which is also the maximum guaranteed administrative charge.  Thereafter, we currently deduct $5 per month, and the maximum guaranteed administrative charge is $7.50 per month.  This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping.

Policy Loan Interest Charge

We will charge interest on the amount of an outstanding policy loan, at the rate of 3.9% per annum, which will have accrued daily and become due and payable at the end of the year from the Policy Date.  If left unpaid, we will add it to the loan amount.  As collateral or security for repayment, we will transfer an equal amount of Cash Value to the policy loan account, on which interest will accrue and be credited daily.  During years 1 through 10 from the Policy Date, current interest crediting rate is 3.0% (guaranteed minimum of 3.0%).  Thereafter, the current interest crediting rate is 3.9% per annum for all loans (guaranteed minimum of 3.65%).  Accordingly, your net cost for an ordinary loan during years 1 through 10 from the Policy Date is 0.9% per annum currently.  Thereafter, there is no cost (a net cost of 0 ) for a loan currently ( see "Collateral and Interest" ).

Adjusted Sales Load Life Insurance Rider Charge

The charge for this Rider replaces the Premium Load to cover our sales expenses and premium taxes.  You should expect the aggregate monthly Rider charges to be greater than the amount we would have deducted as Premium Load.

You will pay a Premium Load on any amount you do not elect to be covered by the Rider.  As this premium taxes portion is an estimated amount and not subject to adjustment based on actual tax liability, we may profit from it.  The charge is the product of your aggregate monthly Premiums since the Policy Date, the portion of Premium Load you choose to replace (expressed as a whole percentage of Premium paid) and the factor of 0.0001345.

The Rider's charge may vary.  Each Premium payment you make during the selected waiver period will cause the Rider's charge to increase.  The length of time of the charge will also vary up to 15 years.  The length of time will be 9 years after the lesser of:

·   the number of years (from 1 to 7 ) you choose to have the Rider apply to your Premium payments; or

·   the number of years during this period which you actually made Premium payments.

For example, if you had chosen to have this Rider apply to your Premium payments for five years, but you only made Premium payments for three years while the Rider was in effect, we would adjust the number of years over which we would deduct this charge from 14 to 12 years.

If the policy terminates within the first 10 years from the Policy Date, we will recover a portion of the Premium Load replaced by the Rider, based on the following schedule:

Years Policy Has Been In Force	Percentage
1	100%
2	90%
3	80%
4	70%
5	60%
6	50%
7	40%
8	30%
9	20%
10	10%
11+	0

This deduction is equal to the amount of Premium Load actually replaced by the Rider multiplied by the percentage from the table above that corresponds to the number of years the policy has been In Force.  For example, assume you terminate your policy during the fifth year from the Policy Date, on which Policy you had chosen to replace the entire Premium for seven years.  Assume as well that you paid $10,000 of Premium during this time.  The Premium Load the Rider has replaced is $400, and 60% of this amount is $240, which we will deduct from your Cash Surrender Value.

This deduction allows us to cover a portion of our sales expenses and premium taxes for which the Rider's charge would have compensated us had the policy remained In Force.

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Children's Insurance Rider Charge

The charge for this Rider is $0.43 per $1,000 of Specified Amount of the Rider.  This charge compensates us for providing term insurance on the life of each child of the Insured.  We will charge for the Rider so long as the policy is In Force and the Rider is in effect.  The cost will remain the same, even if you request to change the number of children covered under the Rider.  However, we may decline your request to add another child based on our underwriting standards.

Long-Term Care Rider Charge

This charge for this Rider compensates us for providing long-term care coverage once the Insured meets the eligibility requirements.  The charge is the product of the Net Amount At Risk of the Rider and a long-term care cost of insurance rate.  Because this Rider has no Cash Value, we define its Net Amount At Risk as the lesser of the Specified Amount of the Rider and the Net Amount At Risk of the policy.  We base the long-term care cost of insurance rate on our expectations as to your need for long-term care over time.  The long-term care cost of insurance rate will vary by the Insured's sex, Attained Age, underwriting class and any Substandard Ratings.

Spouse Life Insurance Rider Charge

This charge for this Rider compensates us for providing term insurance on the life of the Insured's spouse.  The charge is the product of the Specified Amount of this Rider and the spouse life insurance cost of insurance rate.  We base the spouse life insurance cost of insurance rate on our expectations as to the mortality of the Insured's spouse.  The spouse life insurance cost of insurance rate will vary by the spouse's sex, Attained Age, underwriting class, any Substandard Ratings, and Specified Amount of the Rider.

Accidental Death Benefit Rider Charge

This charge for this Rider compensates us for providing coverage in the event of the Insured's accidental death, meaning the Insured's death as a result of bodily injury caused by external, violent and accidental means from a cause other than a risk not assumed.  The charge is the product of the Specified Amount of this Rider and the accidental death benefit cost of insurance rate.  We base the accidental death benefit cost of insurance rate on our expectations as to the likelihood of the Insured's accidental death.  The accidental death benefit cost of insurance rate will vary by the Insured's sex, Attained Age, underwriting class and any Substandard Ratings.

Premium Waiver Rider Charge

This charge for this Rider compensates us for crediting your policy the amount of scheduled due and payable Premium payments upon the Insured's total disability for six consecutive months.  The benefit will amount to the lesser of the Premium you specified and the average actual Premiums you paid over the 36 months before the total disability.  The charge is the product of the benefit of this Rider and the premium waiver cost rate.  We base the premium waiver cost rate on our expectations as to likelihood of the Insured's total disability for 6 consecutive months.  The premium waiver cost rate will vary by the Insured's sex, Attained Age, underwriting class and any Substandard Ratings.  If you choose this Rider, you may not also choose the Deduction Waiver Rider.

Additional (Insurance) Protection Rider Charge

This charge for this Rider compensates us for providing term life insurance on the Insured.  The monthly cost of insurance charge for this Rider is determined by multiplying the Rider monthly cost of insurance rate by the Rider Death Benefit.  The Rider Death Benefit is the death benefit option elected by you.  We base the additional protection cost of insurance rate on our expectation as to the Insured's mortality.  The additional protection cost of insurance rate will vary by the Insured's sex, Attained Age, underwriting class, any Substandard Ratings and the total Specified Amount of the base policy plus the Additional Protection Rider Specified Amount.

Deduction (of Fees and Expenses) Waiver Rider Charge

This charge for this Rider compensates us for waiving monthly charges (excluding this Rider's charge) upon the Insured's total disability, as defined in this Rider, for 6 consecutive months.  However, during the first 3 years from the Policy Date, we will instead credit your policy with the minimum monthly Premium payment due during the Insured's total disability.  The charge is the product of the amount of periodic charges deducted from the policy on a monthly basis (excluding the cost for this Rider) and the deduction waiver cost rate.  We base the deduction waiver cost rate on our expectations as to the likelihood of the Insured's total disability for 6 consecutive months.  The deduction waiver cost rate varies by the Insured's sex, Attained Age, underwriting class, and any Substandard Ratings.  If you choose this Rider, you may not also choose the Premium Waiver Rider.

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Policy Guard Rider Charge

We take a one-time charge at the time you invoke this Rider.  The charge is the product of the policy's Cash Value and an age-based factor shown in the Rider which is based on the age of the Insured.  If the policy's non-loaned Cash Value is insufficient to pay the Rider's charge, you must make loan repayments sufficient to cover the Rider's charge.  The Rider's charge covers the administrative costs associated with the rider and compensates us for the risk of the Rider's guaranteed paid-up death benefit.  We may profit from the charge.

Reduction of Charges

In addition to sales to individuals, the policy may be purchased by corporations and other entities.  Nationwide may reduce or eliminate certain charges, such as sales load, surrender charge, monthly administrative charge, monthly cost of insurance charge or other charges, where the size or nature of the group allows us to realize savings with respect to sales, underwriting, administrative or other costs.

We determine the eligibility and the amount of any reduction by examining a number of factors, including: the number of policies owned with different insureds; the total premium we expect to receive; total Cash Value of commonly owned policies; the nature of the relationship among individual insureds; the purpose for which the policies are being purchased; the length of time we expect the individual policies to be In Force; and any other circumstances that are rationally related to the expected reduction in expenses.

We may lower commissions to the selling broker-dealer and/or increase charge back of commissions paid for policies sold with reduced or eliminated charges.  If you have questions about whether your policy is eligible for reduction of any charges, please consult with your registered representative for more specific information.  Your registered representative can answer your questions and, where appropriate, provide you with illustrations demonstrating the impact of any reduced charges for which you may be eligible.

We may change both the extent and the nature of the reductions.  We make the reductions in charges in a way that is not unfairly discriminatory to policy owners and reflective of the differences in costs of services we provide.

Entities considering purchasing the policy should note that in 1983, the U.S. Supreme Court held in Arizona Governing Committee v. Norris that certain annuity benefits provided by employers' retirement and fringe benefit programs may not vary between men and women on the basis of sex.  The policies are based upon actuarial tables which distinguish between men and women unless the purchaser is an entity and requests that we use sex non-distinct tables.  Thus the policies generally provide different benefits to men and women of the same age.  Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of Norris on any employment - related insurance or benefit program before purchasing the policy.

A Note on Charges

During a policy's early years, the expenses we incur in distributing and establishing the policy exceed the deductions we take.  Nevertheless, we expect to make a profit over time because variable life insurance is intended to be a long-term financial investment.  Accordingly, we have designed the policy with features and investment options that we believe support and encourage long-term ownership.

We make many assumptions and account for many economic and financial factors when we establish the policy's fees and charges.  The following is a discussion of some of the factors that are relevant to the policy's pricing structure.

Distribution, Promotional and Sales Expenses.  Distribution, promotional and sales expenses include amounts we pay to broker-dealer firms as commissions, expense allowances and marketing allowances.  We refer to these expenses collectively as "total compensation." The maximum total compensation we pay to any broker-dealer firm in conjunction with policy sales is 99% of first year premiums and 3% of renewal premium after the first year.

We have the ability to customize the total compensation package of our broker-dealer firms.  We may vary the form of compensation paid or the amounts paid as commission, expense allowance or marketing allowance; however, the total compensation will not exceed the maximum, which is 99% of first year premiums and 3% of renewal premium after the first year.  Commission may also be paid as an asset-based amount instead of a premium based amount.  If an asset-based commission is paid, it will not exceed 0.25% of the non-loaned cash value per year.

The actual amount and/or forms of total compensation we pay depend on factors such as the level of premiums we receive from respective broker-dealer firms and the scope of services they provide.  Some broker-dealer firms may not receive maximum total compensation.

Individual registered representatives typically receive a portion of the commissions/total compensation we pay, depending on their arrangement with their broker-dealer firm.  If you would like to know the exact compensation arrangement associated with this product, you should consult your registered representative.

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Information on Underlying Mutual Fund Payments

Our Relationship with the Underlying Mutual Funds.  The underlying mutual funds incur expenses each time they sell, administer, or redeem their shares.  The separate account aggregates policy owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each underlying mutual fund daily.  The separate account (and not the policy owners) is the underlying mutual fund shareholder.  When the separate 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.  We incur these expenses instead.

We also incur the distribution costs of selling the policy (as discussed above), which benefit the underlying mutual funds by providing policy owners with Sub-Account options that correspond to the underlying mutual funds.

An investment advisor or subadvisor of an underlying mutual fund or its affiliates may provide us or our affiliates with wholesaling services that assist in the distribution of the policy and may pay us or our affiliates to participate in educational and/or marketing activities.  These activities may provide the advisor or subadvisor (or their affiliates) with increased exposure to persons involved in the distribution of the policy.

Types of Payments We Receive.  In light of the above, the underlying mutual funds or their affiliates make certain payments to us or our affiliates.  The amount of these payments is typically based on a percentage of assets invested in the underlying mutual funds attributable to the policies and other variable policies we and our 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 policies, paying expenses that we or our affiliates incur in promoting, marketing, and administering the policies and the underlying mutual funds, and achieving a profit.

We or our 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

·    payments by an underlying mutual fund's advisor or subadvisor (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 underlying mutual fund charges.

Furthermore, we benefit from assets invested in our affiliated underlying mutual funds (i.e., Nationwide Variable Insurance Trust) because our affiliates also receive compensation from the underlying mutual funds for investment advisory, administrative, transfer agency, distribution, and/or other services.  Thus, we may receive more revenue with respect to affiliated underlying mutual funds than unaffiliated underlying mutual funds.

We took into consideration the anticipated payments from the underlying mutual funds when we determined the charges imposed under the policies (apart from fees and expenses imposed by the underlying mutual funds).  Without these payments, we would have imposed higher charges under the policy.

Amount of Payments We Receive.  For the year ended December 31, 2010 , the underlying mutual fund payments we and our affiliates received from the underlying mutual funds did not exceed 0. 61 % (as a percentage of the average daily net assets invested in the underlying mutual funds) offered through the policy or other variable policies that we and our affiliates issue.  Payments from investment advisors or subadvisors 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 us or our 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 we or our affiliates receive depends on the assets of the underlying mutual funds attributable to the policy, we and our 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 the amount of payments Nationwide receives, go to www.nationwide.com.

Identification of Underlying Mutual Funds.  We 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 we consider during the identification process is whether the underlying mutual fund's advisor or subadvisor is one of our affiliates or whether the underlying mutual fund, its advisor , its subadvisor (s), or an affiliate will make payments to us or our affiliates.

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There may be underlying mutual funds with lower fees, as well as other variable policies that offer underlying mutual funds with lower fees.  You should consider all of the fees and charges of the policy in relation to its features and benefits when making your decision to invest.  Please note that higher policy and underlying mutual fund fees and charges have a direct effect on your investment performance.

The Death Benefit

Calculation of the Death Benefit Proceeds

We will calculate the Death Benefit and pay it to the beneficiary when we receive at our Home Office proof that the Insured has died, as well as other customary information.  We will not dispute the payment of the Death Benefit after the policy has been In Force for 2 years from the Policy Date.  The Death Benefit may be subject to an adjustment if you make an error or misstatement upon application, or if the Insured dies by suicide.

While the policy is In Force, the Death Benefit (exclusive of any outstanding indebtedness) will never be less than the Specified Amount. The Death Benefit will depend on which option you have chosen and the tax test you have elected, as discussed in greater detail below.  Also, the Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and take into account any insurance provided by Riders, as well as outstanding Indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period.

Death Benefit Options

There are three Death Benefit options under the policy.  You may choose one.

If you do not choose one of the following Death Benefit options, we will assume that you intended to choose Death Benefit Option One.

Death Benefit Option One

The Death Benefit will be the greater of the Specified Amount or the minimum required Death Benefit.

Death Benefit Option Two

The Death Benefit will be the greater of the Specified Amount plus the Cash Value as of the date of death, or the minimum required Death Benefit.

Death Benefit Option Three

The Death Benefit will be the greater of the Specified Amount plus the accumulated premium account, which consists of all Premium payments minus all partial surrenders to the date of death, or the minimum required Death Benefit.  The amount of the accumulated premium account will be based on the Option Three Interest Rate stated on the Policy Data Page, which will be no less than 0 or more than the Option Three Maximum Increase also stated in the Policy Data Page s .

For any Death Benefit option, the calculation of the minimum required Death Benefit is shown on the Policy's Data Page.  Not all Death Benefit options are available in all states.

The Minimum Required Death Benefit

The policy has a minimum required Death Benefit.  The minimum required Death Benefit is the lowest Death Benefit that will qualify the policy as life insurance under Section 7702 of the Code.

The tax tests for life insurance generally require that the policy has a significant element of life insurance and not be primarily an investment vehicle.  At the time we issue the policy, you irrevocably elect one of the following tests to qualify the policy as life insurance under Section 7702 of the Code:

·   the cash value accumulation test; or

·   the guideline premium/cash value corridor test.

The cash value accumulation test determines the minimum required Death Benefit by multiplying the account value by a percentage determined by methodology set out in the federal tax regulations. The percentages depend upon the Insured's age, sex and underwriting classification.  Under the cash value accumulation test, there is no limit to the amount that may be paid in premiums as long as there is sufficient Death Benefit in relation to the account value at all times.

The guideline premium/cash value corridor test determines the minimum required Death Benefit by comparing the Death Benefit to an applicable percentage of the Cash Value.  These percentages are set out in the Code, but the percentage varies only by the Attained Age of the Insured.

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Regardless of which test you elect, we will monitor compliance to assure that the policy meets the statutory definition of life insurance for federal tax purposes.  As a result, the Proceeds payable under a policy should be excludable from gross income of the beneficiary for federal income tax purposes.  Conversely, in the unlikely event that the policy did not qualify as life insurance because your Death Benefit failed to amount to the minimum required Death Benefit, the Proceeds payable under the policy would be includible in the gross income of the beneficiary for federal income tax purposes.  Because of this adverse consequence, we may refuse additional Premium payments or return the gross Premium payments to you so that the policy continues to meet the Code's definition of life insurance ( see "Periodic Withdrawals, Non-Periodic Withdrawals and Loans" ).

If you do not elect a test, we will assume that you intended to elect the guideline premium/cash value corridor test.  If the cash value accumulation test is elected, the Policy Guard Rider is not available.

Changes in the Death Benefit Option

After the first year from the Policy Date, you may elect to change the Death Benefit option under the policy from either Option One to Option Two, or from Option Two to Option One.  You may not change from or to Option Three.  We will permit only one change of Death Benefit option per policy year.  The effective date of a change will be the monthly anniversary date following the date we approve the change.

For any change in the Death Benefit option to become effective, the Cash Surrender Value after the change must be sufficient to keep the policy In Force for at least three months.

We will adjust the Specified Amount so that the Net Amount At Risk remains constant before and after the Death Benefit option change.  Because your Net Amount At Risk remains the same, changing the Death Benefit option by itself does not alter the policy's cost of insurance. The policy's charges going forward, however, will be based on a new Specified Amount that will change the calculation of those charges.  Depending on changes in factors such as fluctuations in the policy's Cash Value, these charges may increase or decrease after the reduction.  Notwithstanding, we will refuse a Death Benefit option change that would reduce the Specified Amount to a level where the Premium you have already paid would exceed any premium limit under the tax tests for life insurance.

Where the policy owner has selected the guideline premium/cash value corridor test, a change in Death Benefit option will not be permitted if it results in the total Premiums paid exceeding the maximum premium limitations under Section 7702 of the Code.

Suicide

If the Insured dies by suicide, while sane or insane, within two years from the Policy Date, we will pay no more than the sum of the Premiums paid, less any Indebtedness, and less any partial surrenders.  Similarly, if the Insured dies by suicide, while sane or insane, within two years from the date we accept an application for an increase in the Specified Amount, we will pay no more than the Death Benefit associated with the initial Specified Amount, plus the cost of insurance charges associated with the increase in Specified Amount.

Surrenders

Full Surrender

You may surrender the policy for the Cash Surrender Value at any time while the Insured is alive.  We calculate the Cash Surrender Value based on the policy's Cash Value ( see the "Cash Value" ). To derive the Cash Surrender Value, we will deduct from the Cash Value Indebtedness and the surrender charge.  The effective date of a surrender will coincide with the date on which we receive the policy and your written request at our Home Office.  We reserve the right to postpone payment of that portion of the Cash Surrender Value attributable to the fixed account for up to six months.

                Policy Restoration after a Full Surrender.  Prior to the Insured's death, we will permit restoration of a surrendered policy pursuant to the established procedures to meet the requirements of state insurance law regarding the replacement of life insurance

                (i.e. use of the Proceeds from a surrendered policy to purchase a new policy).  Restored policies will be treated as if they were never surrendered for all purposes, including Investment Experience, interest, and deduction of charges.

For additional information and a description of our current policy restoration requirements and procedures see the "Policy Restoration Procedure" section of the Statement of Additional Information to this prospectus or contact us.  The Statement of Additional Information is available free of charge and can be obtained using the contact information on the front of this prospectus.

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Partial Surrender

After the policy has been In Force for one year, you may request, in writing to our Home Office, a partial surrender of the policy's Cash Surrender Value.  We may charge a $25 partial surrender fee.  Currently, however, there is no charge.  During the first ten policy years, the amount of a partial surrender cannot exceed 10% of the Cash Surrender Value as of the beginning of the policy year.  When a partial surrender is taken, we will reduce the Cash Value by the partial surrender amount.  We will also reduce the Specified Amount by the amount necessary to prevent an increase in the Net Amount at Risk.  However, the reduction to the Specified Amount will not be greater than the excess of the partial surrender amount over the preferred partial surrender amount ( a preferred partial surrender is a partial surrender that occurs before the 15th policy anniversary and does not exceed 10% of the Cash Surrender Value as of the beginning of the policy year) .   In any event, a partial surrender will reduce the Cash Value in each Sub-Account the same proportion as your current allocations, unless you instruct otherwise.

We reserve the right to limit partial surrenders to one per year from the Policy Date.  The minimum amount of any partial surrender request is $200.  A partial surrender cannot cause the total Specified Amount to be reduced below the minimum Specified Amount indicated on the Policy Data Page, and after any partial surrender, the policy must continue to qualify as life insurance under Section 7702 of the Code.  Partial surrenders may be subject to income tax penalties.  They could also cause your policy to become a "modified endowment contract" under the Code, which could change the income tax treatment of any distribution from the policy ( see "Periodic Withdrawals, Non-Periodic Withdrawals and Loans" ).

Reduction of Specified Amount on a Partial Surrender

We will reduce the Cash Value of the policy by the amount of any partial surrender in the same proportion as how you have allocated Cash Value among the Sub-Accounts.  We will only reduce the Cash Value attributable to the fixed account when that of the Sub-Accounts is insufficient to cover the amount of the partial surrender.

When you take a partial surrender, we may reduce the Specified Amount to ensure that the Net Amount At Risk does not increase.  Because your Net Amount At Risk is the same before and after the reduction, a partial surrender by itself does not alter the policy's cost of insurance.  The policy's charges going forward will be based on a new Specified Amount that will change the calculation of those charges.  Depending on changes in variables such as the Cash Value, these charges may increase or decrease after the reduction in Specified Amount.  However, we will not reduce the Specified Amount when you take a preferred partial surrender.  We consider a partial surrender as preferred that you request before the fifteenth year from the Policy Date, the maximum aggregate annual amount of which is no more than 10% of the policy's Cash Surrender Value as of the beginning of that year.

Any reduction we make to the Specified Amount will be made in the following order:

·   against the most recent increase in the Specified Amount;

·   against the next most recent increases in the Specified Amount in succession; and

·   against the Specified Amount under the original application.

While we reserve the right to deduct a partial surrender fee of up to $25, we currently deduct none.  We deduct a surrender charge on certain partial surrenders ( see "Surrender Charge" ).   Partial surrenders may be subject to income tax penalties.  They could also cause your policy to become a "modified endowment contract" under the Code, which would change the income tax treatment of any distributions from the policy   ( see "Periodic Withdrawals, Non-Periodic Withdrawals, and Loans" ).

The Payout Options

You have a number of options of receiving Proceeds, besides in a lump sum, that you may elect upon application.  You may elect one or a combination of options.  We will pay the Proceeds from our general account.  If you do not make an election, when the Insured dies, the beneficiary may do so.  If the beneficiary does not make an election, we will pay the Proceeds in a lump sum.  Normally, we will make the lump sum payment within 7 days after we receive your written request at our Home Office.  We will postpone any payment of Proceeds, however, on the days we are unable to price Accumulation Units ( see "Allocation of Net Premium and Cash Value" ).   To elect more than one payout option, you must apportion at least $2,000 per option, which would amount to a payment, at specified intervals, of at least $20.  At any time before Proceeds become payable, you may request to change your payout option in writing to our Home Office.  Changing the beneficiary of the policy will revoke the payout options in effect at that time.  Proceeds are neither assignable nor subject to claims of creditors or legal process.

Please note that for the remainder of The Payout Options section, "you" means the person we are obligated to pay.

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Interest Income

You keep the Proceeds with us to earn interest at a specified rate.  The interest can be paid at the end of twelve-, six-, three- or one-month intervals or left to accumulate.  You may withdraw any outstanding balance by making a written request of us at our Home Office.  We will pay interest on the outstanding balance at a rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  Upon your death, we will pay any outstanding balance to your estate.

Income for a Fixed Period

You keep the Proceeds with us, but are paid at specified intervals over a number of years, not to exceed thirty years.  Each payment will consist of a portion of the Proceeds plus interest at a stated rate.  The Proceeds can be paid at the beginning of 12- , 6- , 3- or 1 -month intervals.  You may withdraw any outstanding balance by making a written request of us at our Home Office.  We will pay interest at an annually determined rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  Upon your death, we will pay any outstanding balance to your estate.

Life Income with Payments Guaranteed

We pay you the Proceeds at specified intervals for a guaranteed period ( 10 , 15 or 20 years), and, then, for the rest of your life, if you outlive the guaranteed period.  The Proceeds can be paid at the beginning of 12 -, 6 -, 3 - or 1 -month intervals.  During the guaranteed period, we will pay interest on the outstanding balance at a rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin.  If you die before the guaranteed period has elapsed, we will make the remaining payments to your estate.  If you die after the guaranteed period has elapsed, we will make no payments to your estate.

Fixed Income for Varying Periods

You keep the Proceeds with us, but are paid a fixed amount at specified intervals until principal and interest have been exhausted.  The total amount payable each year may not be less than 5% of the original Proceeds.  The Proceeds can be paid at the beginning of 12 -, 6 -, 3 - or 1 -month intervals.  You may withdraw any outstanding balance by making a written request of us at our Home Office.  We will pay interest on the outstanding balance at a rate of at least 2.5% per annum, compounded annually.  We will determine annually if we will pay any interest in excess of 2.5%.  Upon your death, we will pay any outstanding balance to your estate.

Joint and Survivor Life

We pay you the Proceeds in equal payments at specified intervals for the life of the last surviving payee.  The Proceeds can be paid at the beginning of 12 -, 6 -, 3 - or 1 -month intervals.  As the payments are based on the lifetimes of the payees, you cannot withdraw any amount you designate to this option after payments begin.  Also, payments will cease upon the death of the last surviving payee.  We will make no payments to the last surviving payee's estate.

Alternate Life Income

We use the Proceeds to purchase an annuity with the payee as annuitant.  The amount payable will be 102% of our current individual immediate annuity purchase rate on the date of the Insured's death, the Maturity Date, or the date the policy is surrendered, as applicable.  The Proceeds can be paid at the end of 12 -, 6 -, 3 - or 1 -month intervals.  As the payments are based on your lifetime, you may not withdraw any amount you designate to this option after payments begin.  Also, payments will cease upon your death.  We will make no payments to your estate.

Policy Owner Services

Dollar Cost Averaging

You may elect to participate in the dollar cost averaging program at the time of application or at a later date by submitting an election form.  An election to participate in the program that is submitted after application will be effective at the end of the Valuation Period coinciding with the date you request or, if that date has passed or no date is specified, then at the end of the Valuation Period during which we receive your request.   Dollar cost averaging is an investment strategy designed to spread the allocation of your Premium among the Sub-Account portfolios and the fixed investment option over a period of time to allow you to potentially reduce the risk of investing most of your Premium into the Sub-Accounts at a time when prices are

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high.  There is no charge for dollar cost averaging, and it does not count as a transfer event ( see "Modes to Make a Transfer" ).   On a monthly basis, or such other frequency as we may permit, a specified dollar amount of your Premium is systematically and automatically transferred from the fixed account to a Sub-Account portfolio.  You may also have Premium transferred from the:

Federated Insurance Series

·   Federated Quality Bond Fund II: Primary Shares

Nationwide Variable Insurance Trust ("NVIT")

·   NVIT Government Bond Fund: Class I

·   NVIT Money Market Fund: Class I

These funds may or may not be available depending on when you purchased this policy. Please refer to "Appendix A: Sub-Account Information" for Sub-Account for details on fund availability.

We will continue to process transfers until there is no more value left in the fixed account or the originating mutual fund(s).  You may also instruct us in writing to stop the transfers.  If you have Premium transferred from the fixed account, the amount must be no more than 1/30th of the fixed account value at the time you elect to participate in the program.  An election to participate in the program that is submitted after application will be effective on the date provided on the election form or, if the date provided has passed upon our receipt of your submitted election form participation will be effective at the beginning of the next policy month.

Periodically, we may offer enhanced dollar cost averaging programs on initial Premiums, participation in which will earn you interest on the Cash Value of the fixed account that is covered under the enhanced dollar cost averaging program.  The interest we credit daily may be different than the net effective annual interest rate we credit on the Cash Value of the fixed account that is outside of the enhanced dollar cost averaging program.  These programs will last for 1 year, and your Premium will be systematically and automatically transferred based on the following schedule:

Beginning of Month	Fraction Of Remaining Cash Value Transferred
2	1/11
3	1/10
4	1/9
5	1/8
6	1/7
7	1/6
8	1/5
9	1/4
10	1/3
11	1/2
12	Remaining Amount

We do not assure the success of these strategies; success depends on market trends.  We cannot guarantee that dollar cost averaging will result in a profit or protect against loss.  You should carefully consider your financial ability to continue these programs over a long enough period of time to purchase Accumulation Units when their value is low, as well as when their value is high.  We may modify, suspend or discontinue these programs at any time.  We will notify you in writing 30 days before we do so.

Asset Rebalancing

You may elect to set up asset rebalancing.  To do so, you must complete the Asset Rebalancing Program Form and submit it to our Home Office.  You will use the same form to change your investment allocation choices, or terminate asset rebalancing, too.  Thereafter, automatically, on a periodic basis, the Cash Value of your chosen Sub-Account portfolios (up to 20), having fluctuated with Investment Experience, will be rebalanced in proportion to your investment allocation choices.  There is no charge for asset rebalancing and it does not count as a transfer event.  For more information, see the "Modes to Make a Transfer" section of this prospectus.  You can schedule asset rebalancing to occur every 3 , 6 , or 12 months on days when we price Accumulation Units ( see "Valuation of Accumulation Units" ).

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Unless you elect otherwise, asset rebalancing will not affect the allocation of Net Premiums you pay after beginning the program.  Manual transfers will not automatically terminate the program.  Termination of Asset Rebalancing program will only occur as a result of your specific instruction to do so. Asset Rebalancing is not available for the Long Term Fixed Account.  We reserve the right to modify, suspend or discontinue asset rebalancing at any time.

Automated Income Monitor

Automated Income Monitor is an optional systematic partial surrender and/or policy loan program that may be elected at any time, at no additional cost.  This program is only available to policies that are not Modified Endowment Contracts.

Automated Income Monitor programs are intended for policy owners who wish to take an income stream of scheduled payments from the Cash Value of their policy.  The income stream is generated via partial surrenders until the policy cost basis is depleted, then through policy loans.  Taking partial surrenders and/or policy loans may result in adverse tax consequences, will reduce policy values and therefore limit the ability to accumulate Cash Value, and may increase the likelihood your policy will lapse.  Before requesting the Automated Income Monitor program, please consult with your financial and tax advisors .

You can obtain an Automated Income Monitor election form by contacting your registered representative or our service center.  At the time of application for a program, we will provide you with an illustration of the proposed income stream and impacts to the Cash Value, Cash Surrender Value and Death Benefit.  You must submit this illustration along with your application.  Programs will commence at the beginning of the next monthly anniversary after we receive your election form and illustration. On each Policy Anniversary thereafter we will provide an updated In Force illustration to assist you in determining whether to continue, modify, or discontinue an elected program based on your goals.  You may request modification or termination of a program at any time by written request.

Your program will be based on your policy's Cash Surrender Value at the time of election, and each succeeding Policy Anniversary, and the following elections:

1.      Payment type:

a. fixed amount :  If you elect payments of a fixed amount, the amount you receive will not vary with policy Investment Experience; however, the length of time the elected payment amount can be sustained will vary based on the illustration assumptions below and your policy's Investment Experience; or

b. fixed duration :  If you elect payments for a fixed duration, the amount you receive during the first year will be based on the illustration assumptions below.  After the first year, the amount will vary based on the illustration assumptions below and policy Investment Experience to maintain the elected duration.

2.      Illustration assumptions:

a.   an assumed variable rate of return you specify from the available options stated in the election form;

b.   minimum Cash Surrender Value you target to have remaining on your policy's Maturity Date, or other date you specify.  This dollar amount is used to calculate available income.  It is not guaranteed to be the Cash Surrender Value on the specified date;

c.   you may also request a change of death benefit option from Death Benefit Option 2 to Death Benefit Option 1, or a decrease in Specified Amount to be effective in conjunction with commencing a program or to occur at a future date; and

d.   payment frequency: monthly; quarterly; semi-annually; or annually.  Payments on a monthly basis are made by direct deposit (electronic funds transfer) only.

Generally, higher variable rate of return assumptions, a lower target Cash Surrender Value, and Death Benefit Option 1, will result in larger projected payments or longer projected durations.  However, larger payments or longer duration may increase the likelihood your policy will lapse.

You are responsible for monitoring your policy to prevent lapse.  We will provide annual In Force illustrations based on your then current Cash Surrender Value and your elected illustration assumptions to assist you in planning and preventing lapse.  You may request modification or termination of a program at any time by written request.

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Automated Income Monitor programs are subject to the following additional conditions:

1.       to prevent adverse tax consequences, you authorize us to make scheduled payments via policy loan when:

a.your policy's cost basis is reduced to zero;

b.a partial surrender within the first 15 policy years would be a taxable event; or

c.   to prevent your policy from becoming a MEC (see , "When the Policy is Life Insurance that is a Modified Endowment Contract" ) .

Note: Partial surrenders and policy loans taken under the Automated Income Monitor program are subject to the same terms and conditions as other partial surrenders and policy loans (see "Partial Surrenders" and "Policy Loans" ).

2.    while a program is in effect, no Premium payment reminder notices will be sent; however, Premium payments will be accepted.

3.    programs will terminate on the earliest of the following:

a.our receipt of your written request to terminate participation;

b.at the time your policy enters a grace period or terminates for any reason;

c.at the time of a requested partial surrender or policy loan outside the program;

d.upon a change of policy owner;

e.one of the following riders is invoked or begins providing benefits:

 i.   Policy Guard Rider; or

 ii.  Long-Term Care Rider ;

             f.for income based on a fixed duration, the end of the period you specify at the time of election;

g.   on any Policy Anniversary when your then current Cash Surrender Value is less than or equal to the target Cash Surrender Value assumption you specify;

h.   at any time the scheduled partial surrender or policy loan would cause your policy to fail to qualify as life insurance under Section 7702 of the Code, as amended; or

i.   your Policy's Maturity Date.

We will notify you upon termination of your Automated Income Monitor program due to one of the above events.  In addition, we may modify, suspend or discontinue Automated Income Monitor programs at any time.  We will notify you in writing 30 days before we do so.

Policy Loans

After the expiration of the free-look period and while the policy is In Force, you may take an advance of money from the Cash Value otherwise only available upon surrender or maturity, or upon payment of the Death Benefit.  We call this advance a policy loan.  You must make your request in writing at our Home Office.  You may increase your risk of Lapse if you take a policy loan.  There also may be adverse tax consequences.  You should obtain competent tax advice before you decide to take a policy loan.

Loan Amount and Interest

The minimum policy loan you may take is $200.  You may take no more than the maximum loan value.  The maximum loan value is based on your Cash Surrender Value less 10% of your Cash Value allocated to the Sub-Accounts   ( see the "Full Surrender" ).   We charge interest, at the maximum guaranteed rate of 3.9% per annum, on the amount of an outstanding loan, which will accrue daily and be payable at the end of each year from the Policy Date.  If left unpaid, we will add the interest to the loan amount.

Collateral and Interest

As collateral or security, we will transfer a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations, unless you instruct otherwise.  You may request that we transfer this amount from specific Sub-Account portfolios. We will only make a transfer from the fixed investment option if the loan amount exceeds 90% of the Cash Value you have allocated to Sub-Account portfolios.  On this amount, we will credit interest daily based on the current rate in effect, which will not be less than the guaranteed interest crediting rates shown on the Policy Data Page.  We may credit interest in excess of the guaranteed interest crediting rate.  Currently, the interest crediting rate is 3.0% per annum during years one through ten from the Policy Date, and 3.9% per annum thereafter.

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Repayment

You may repay all or part of a policy loan at any time while your policy is In Force during the Insured's lifetime.  The minimum repayment is $50.  Interest on the loan amount will be due and payable at the end of each year or at the time of a new loan, a loan repayment, the Insured's Death, a policy lapse, or a full surrender. If left unpaid, we will add it to the loan amount by transferring a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations.  While your policy loan is outstanding, we will continue to treat any payments that you make as a Premium payment, unless you instruct otherwise.  We will apply all loan repayments to the Sub-Accounts according to the allocation instructions in effect at the time the payment is received, unless you indicate otherwise.

Net Effect of Policy Loans

We will charge interest on the loan amount at the same time as the collateral amount will be credited interest.  In effect, we will net the loan amount interest rate against the interest crediting rate, so that your actual cost of a policy loan will be less than the loan amount interest rate ( see "In Summary: Fee Tables" ).   The amount transferred to the loan account is part of our General Account and will not be affected by the investment experience of the Sub-Accounts. The loan account is credited interest at a different rate than the fixed investment options.

Whether repaid, a policy loan will affect the policy, the net Cash Surrender Value and the Death Benefit.  If your total Indebtedness ever exceeds the policy's Cash Value, your policy may Lapse.  Repaying a policy loan will cause the Death Benefit and net Cash Surrender Value to increase accordingly.

Lapse

The policy is at risk of Lapsing when the Cash Surrender Value is insufficient to cover the monthly deduction of periodic charges.  However, it will not Lapse under the guaranteed policy continuation provision so long as you have at least paid the Policy Continuation Premium Amount, irrespective of poor investment results from your Net Premium allocation choices, or that the Cash Surrender Value is less than the amount of the policy's periodic charges deduction.  Subject to its conditions, you may also invoke the Policy Guard Rider to prevent the policy from Lapsing due to Indebtedness ( see "Policy Guard Rider" ).   In any event, there is a Grace Period before your policy will Lapse.  Also, you may reinstate a policy that has Lapsed, subject to conditions.

Guaranteed Policy Continuation Provision

The policy will not Lapse if you have at least paid the Policy Continuation Premium Amount during the guaranteed policy continuation period, as stated on the Policy Data Page.  The Policy Continuation Premium Amount will vary by: the Insured's age; sex; underwriting class; any Substandard Ratings; the Specified Amount, including increases; and the Riders purchased.  The Policy Continuation Premium Amount will not account, however, for any subsequent increases in the Specified Amount, policy loans or partial surrenders.  For no charge, you may request that we determine whether your Premium payments, less policy loans and partial surrenders, are sufficient to keep the guaranteed policy continuation provision in effect at any time, and you should do so especially after you have: requested an increase in the Specified Amount; taken a policy loan; or requested a partial surrender.

The guaranteed policy continuation period will begin when we issue the policy and continue for the lesser of thirty years, or the number of years until the Insured reaches Attained Age 65 , from the Policy Date.  For policies issued to ages greater than 55 , the guaranteed policy continuation period is 10 years.  When the guaranteed policy continuation period ends, if the Cash Surrender Value remains insufficient to cover the monthly deductions of periodic charges, the policy is at risk of Lapsing, and a Grace Period will begin.    There is no charge for the guaranteed policy continuation provision.  For free assistance in determining if your policy meets the requirements of this provision, contact us using the phone number or address listed on the front of this prospectus.

Grace Period

We will send you a notice when the Grace Period begins.  The notice will state an amount of Premium required to avoid Lapse that is equal to four times the current monthly deductions or, if it is less, the Premium that will bring the guaranteed policy continuation provision back into effect.  If you do not pay this Premium within 61 days, the policy and all Riders will Lapse.  The Grace Period will not alter the operation of the policy or the payment of Proceeds.

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Reinstatement

You may reinstate a Lapsed policy by:

·   submitting a written request at any time within 3 years after the end of the Grace Period and prior to the Maturity Date;

·   providing further evidence of insurability we may require that is satisfactory to us;

·   paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period;

·   paying sufficient Premium to keep the policy In Force for 3 months from the date of reinstatement, or, if the policy is in the guaranteed policy continuation period, paying the lesser of (a) and (b) where:

(a)   is Premium sufficient to keep the policy In Force for 3 months from the date of reinstatement; and

(b)   is Premium sufficient to bring the guaranteed policy continuation provision into effect; and

·   paying or reinstating any Indebtedness against the policy which existed at the end of the Grace Period.

At the same time, you may also reinstate any Riders, but subject to evidence of insurability satisfactory to us.

The effective date of a reinstated policy, including any Riders, will be the monthly anniversary date on or next following the date we approve the application for reinstatement.  If the policy is reinstated, the Cash Value on the date of reinstatement, will be set equal to the lesser of:

·   the Cash Value at the end of the Grace Period; or

·   the surrender charge for the year from the Policy Date in which the policy was reinstated.

We will then add any Premiums or loan repayments that you made to reinstate the policy.

The allocations to the Sub-Accounts in effect at the start of the Grace Period will be reinstated, unless you provide otherwise.

Taxes

The tax treatment of life insurance policies under the Internal Revenue Code (" Code ") is complex and the tax treatment of your policy will depend on your particular circumstances.   Seek competent tax advice regarding the tax treatment of the policy given your situation.  The following discussion provides a general overview of the Code's provisions relating to certain common life insurance policy transactions.  It is not and cannot be comprehensive, and it cannot replace personalized advice provided by a competent tax professional.

Types of Taxes

Federal Income Tax.  Generally, the United States assesses a tax on income, which is broadly defined to include all items of income from whatever source, unless specifically excluded.  Certain expenditures can reduce income for tax purposes and correspondingly the amount of tax payable.  These expenditures are called deductions.  While there are many more income tax concepts under the Code, the concepts of "income" and "deduction" are the most fundamental to the federal income tax treatment that pertains to this policy.

Federal Transfer Tax.  In addition to the income tax, the United States also assesses a tax on some or all of the value of certain transfers of wealth made by gift while a person is living (the federal gift tax), and by bequest or otherwise at the time of a person's death (the federal estate tax).

The federal gift tax is imposed on the value of the property (including cash) transferred by gift.  Each donor is allowed to exclude an amount from the value of present interest gifts.  In addition, each donor is allowed a credit against the tax on the first million dollars in lifetime gifts (calculated after taking into account the applicable exclusion amount).  An unlimited marital deduction may be available for certain lifetime gifts made by the donor to the donor's spouse.  Unlike the estate tax, the gift tax is not scheduled to be repealed.  In general, in 2011 and 2012 , an estate of less than $5 ,0 00,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability.     After 2012, the size of estates that will not incur an estate tax is set to revert to $1 million.  However, it is possible that new tax legislation will be introduced and passed that may make further changes to the estate tax for 2013 and beyond.  Those changes could include changing the threshold at which an estate would pay a federal estate tax and changing the tax rates applicable to such estates.

Under prior law, which is expected to continue if an estate tax is reimposed, an unlimited marital deduction may be available for federal estate tax purposes for certain amounts that pass to the surviving spouse.

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If the transfer is made to someone two or more generations younger than the transferor, the transfer may be subject to the federal generation-skipping transfer tax ("GSTT").  The GSTT provisions generally apply to the same transfers that are subject to estate or gift taxes.  The GSTT tax is imposed at a flat rate equal to the maximum estate tax rate subject to any applicable exemptions .  As with the estate tax, the GSTT tax has been repealed for 2010; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011 , at a rate of 55%.

State and Local Taxes.  State and local estate, inheritance, income and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary.  While these taxes may or may not be substantial in your case, state by state differences of these taxes preclude a useful description of them in this prospectus.

Buying the Policy

Federal Income Tax.  Generally, the Code treats life insurance premiums as a nondeductible expense for income tax purposes.

Federal Transfer Tax.  Generally, the Code treats the payment of premiums on a life insurance policy as a gift when the premium payment benefits someone else (such as when premium payments are paid by someone other than the policy owner).  Gifts are not generally included in the recipient's taxable income.  If you (whether or not you are the Insured) transfer ownership of the policy to another person, the transfer may be subject to a federal gift tax.

Investment Gain in the Policy

The income tax treatment of changes in the policy's cash value depends on whether the policy is "life insurance" under the Code.  If the policy meets the definition of life insurance, then the increase in the policy's cash value is not included in your taxable income for federal income tax purposes unless it is distributed to you before the death of the insured .

To qualify as life insurance, the policy must meet certain tests set out in Section 7702 of the Code.  We will monitor the policy's compliance with Code Section 7702, and take whatever steps are necessary to stay in compliance.

Diversification.  In addition to meeting the tests required under Section 7702, Section 817(h) of the Code requires that the investments of the separate account be adequately diversified.  Regulations under Code Section 817(h) provide that a variable life policy that fails to satisfy the diversification standards will not be treated as life insurance unless such failure was inadvertent, is corrected, and the policy owner or the issuer pays an amount to the IRS.  If the failure to diversify is not corrected, the income and gain in the policy would be treated as taxable ordinary income for federal income tax purposes.

We will also monitor compliance with Code Section 817(h) and the regulations applicable to Section 817(h) and, to the extent necessary, take appropriate action to remain in compliance.

Representatives of the IRS have informally suggested, from time to time, that the number of underlying investment options available or the number of transfer opportunities available under a variable insurance product may be relevant in determining whether the product qualifies for the desired tax treatment.  In 2003, the IRS issued formal guidance, in Revenue Ruling 2003-91, that indicates that if the number of underlying investment options available in a variable insurance product does not exceed 20, the number of underlying investment options alone would not cause the policy to not qualify for the desired tax treatment.  The IRS has also indicated that exceeding 20 underlying investment options may be considered a factor, along with other factors including the number of transfer opportunities available under the policy, when determining whether the policy qualifies for the desired tax treatment.  The revenue ruling did not indicate the number of underlying investment options, if any, that would cause the policy 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 investment options, transfers between underlying investment options, exchanges of underlying investment options or changes in the investment objectives of underlying investment options such that the policy would no longer qualify as life insurance under Section 7702 of the Code, we will take whatever steps are available to remain in compliance.

Based on the above, the policy should be treated as life insurance for federal income tax purposes.

Periodic Withdrawals, Non-Periodic Withdrawals and Loans

The tax treatment described in this section applies to withdrawals and loans , p remiums we accept but then return to meet the Code's definition of life insurance, and amounts used to pay the premium on any rider to the policy.

The income tax treatment of distributions of cash from the policy depends on whether the policy is also a "modified endowment contract" under the Code. Generally, the income tax consequences of owning a life insurance policy that is not a modified endowment contract are more advantageous than the tax consequences of owning a life insurance policy that is a modified endowment contract.

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The policies offered by this prospectus may or may not be issued as modified endowment contracts.  If a policy is issued as a modified endowment contract, it will always be a modified endowment contract; a policy that is not issued as a modified endowment contract can become a modified endowment contract due to subsequent transactions with respect to the policy, such as payment of additional premiums .  If the policy is not issued as a modified endowment contract, we will monitor it and advise you if the payment of a premium , or other transaction, may cause the policy to become a modified endowment contract.   It is only with your written authorization that we will permit your policy to become a modified endowment policy.  Otherwise, we will reject the requested action or refund any Premium paid in excess of the modified endowment limits.

Depending on your circumstances, the use of the cash value of the policy to pay for the cost of any rider added to the base policy, could be treated as a distribution, and would be subject to the rules described below.  You should seek competent tax advice regarding the tax treatment of the addition of any rider to your policy, based on your individual facts and circumstances.

When the Policy is Life Insurance that is a Modified Endowment Contract.  Section 7702A of the Code defines modified endowment contracts as those life insurance policies issued or materially changed on or after June 21, 1988 , on which the total premiums paid during the first 7 years exceed the amount that would have been paid if the policy provided for paid up benefits after 7 level annual premiums .  Under certain conditions, a policy may become a modified endowment contract, or may become subject to a new 7 year testing period as a result of a "material change" or a "reduction in benefits" as defined by Section 7702A(c) of the Code.

All modified endowment contracts issued to the same owner by the same company during a single calendar year are required to be aggregated and treated as a single policy for purposes of determining the amount that is includible in income when a distribution occurs.

The Code provides special rules for the taxation of surrenders, partial surrenders, loans, collateral assignments , and other pre-death distributions from modified endowment contracts.  Under these special rules, such transactions are taxable to the extent that at the time of the transaction the cash value of the policy exceeds “ the investment in the contract” (generally, the net p remiumspaid for the policy).  In addition, a 10% tax penalty generally applies to the taxable portion of such distributions unless the policy owner is over age 59½ or disabled, or the distribution is part of a series of substantially equal periodic payments as defined in the Code.

When the Policy is Life Insurance that is NOT a Modified Endowment Contract.  If the policy is not issued as a modified endowment contract, we will monitor premiums paid and will notify the policy owner when the policy is in jeopardy of becoming a modified endowment contract.

Distributions from life insurance policies that are not modified endowment contracts generally are treated as being first from the investment in the contract , and then from the income in the policy.  Because premium payments are generally nondeductible, distributions not in excess of investment in the contract are generally not includible in income; instead, they reduce the owner's investment in the contract .

However, if a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued that causes a reduction in death benefits may still be fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Code.  You should carefully consider this potential tax ramification and seek further information before requesting any changes in the terms of the policy.

In addition, a loan from a life insurance policy that is not a modified endowment contract is not taxable when made, although it can be treated as a distribution if it is forgiven during the owner's lifetime.  Distributions from policies that are not modified endowment contracts are not subject to the 10% early distribution penalty tax.

Surrendering the Policy; Maturity

A full surrender, cancellation of the policy by lapse , or the maturity of the policy on its maturity date may have adverse income tax consequences.  If the amount receive d (or deemed receive d upon maturity) plus total policy indebtedness exceeds the investment in the contract then the excess generally will be treated as taxable ordinary income, regardless of whether or not the policy is a modified endowment contract.  In certain circumstances, for example when the policy indebtedness is very large, the amount of tax could exceed the amount distributed to you at surrender.

The purpose of the maturity date extension feature is to permit the policy to continue to be treated as life insurance for tax purposes.  Although we believe that the extension provision will cause the policy to continue to be treated as life insurance after the initially scheduled maturity date, that result is not certain due to a lack of specificity in the guidance on the issue.  You should consult with your qualified tax advisor regarding the possible adverse tax consequences that could result from an extension of the scheduled maturity date .

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Sale of a Life Insurance Policy

If a life insurance policy is sold for a gain, all or a portion of the gain will be treated as ordinary income.  In Revenue Ruling 2009-13, the IRS concluded that the amount of gain realized from the sale of a life insurance policy is equal to the amount received (which can include relief from, or assumption of, debt) over the owner’s basis in the policy.  The portion of the gain that is equal to the excess of the cash surrender value over the investment in the contract would be treated as ordinary income; any additional gain would be short or long-term capital gain, depending on the holding period.  The ruling also concluded that the amount of gain resulting from the sale of a life insurance policy is equal to the excess of the amount received over the owner’s basis in the policy (the investment in the contract reduced by the cost of insurance previously paid out of the cash value).  Consequently, a sale may result in more gain than a surrender for the same amount.

Withholding and Tax Reporting

Distributions of taxable income from a life insurance policy, including a life insurance policy that is a modified endowment contract, are subject to federal income tax withholding.  Generally, the recipient may elect not to have the withholding taken from the distribution.  We will withhold income tax unless you advise us, in writing, of your request not to withhold.  If you request that taxes not be withheld, or if the taxes withheld are insufficient, you may be liable for payment of an estimated tax.

A distribution of income from a life insurance policy may be subject to mandatory back-up withholding.  Mandatory backup withholding means that we are required to withhold taxes on a distribution, at the rate established by Section 3406 of the Code, and the recipient cannot elect to receive the entire distribution at once.  Mandatory backup withholding may arise if we have not been provided a taxpayer identification number, or if the IRS notifies us that back-up withholding is required.

In certain employer-sponsored life insurance arrangements, participants may be required to report for income tax purposes, one or more of the following:

·    the value each year of the life insurance protection provided;

·    an amount equal to any employer-paid Premiums;

·    some or all of the amount by which the current value exceeds the employer’s interest in the policy; and/or

·    interest that is deemed to have been forgiven on a loan that we deemed to have been made by the employer.

Participants in an employer-sponsored plan relating to this policy should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal adviser, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements.

Exchanging the Policy for Another Life Insurance Policy

Generally, policy owners will be taxed on amounts receive d in excess of premium payments when the policy is surrendered in full .  If, however, the policy is exchange d for another life insurance policy, modified endowment contract, or annuity contract, the transaction will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035.  To meet Section 1035 requirements, the insured named in the policy must be the insured for the new policy.  Generally, the new policy or contract will be treated as having the same issue date and tax basis as the old policy or contract.

If the policy or contract is subject to a policy indebtedness that is discharged as part of the exchange transaction, the discharge of the indebtedness may be taxable.   Policy owners should consult with their personal tax or legal advisors in structuring any policy exchange transaction.

Taxation of Death Benefits

Federal Income Tax.  The death benefit is generally excludable from the beneficiary's gross income under Section 101 of the Code.  However, if the policy had been transferred to a new policy owner for valuable consideration (e.g., through a sale of the policy ), a portion of the death benefit may be includable in the beneficiary's gross income when it is paid.

The payout option selected by your beneficiary may affect how the payments received by the beneficiary are taxed.  Under the various payout options, the amount payable to the beneficiary may include earnings on the death benefit , which will be taxable as ordinary income.  For example, if the beneficiary elects to receive interest only, then the entire amount of the interest payment will be taxable to the beneficiary; if a periodic payment (whether for a fixed period or for life) is selected, then a portion of each payment will be taxable interest income, and a portion will be treated as the nontaxable payment of the death benefit .  Your beneficiaries should consult with their tax advisors to determine the tax consequences of electing a payout option, based on their individual circumstances.

Federal Estate Tax.   The death benefit is generally includible in the estate of the insured if either (a) it is paid to, or for the benefit of, the insured’s estate, or (b) at any time during the 3 year period ending with the insured’s death, the insured had an incident of ownership in the policy.  The regulations define an incident of ownership as any right of the insured or the estate of the insured to the economic benefits of the policy. Examples include the power to change the beneficiary, to surrender or cancel the policy, to assign the policy, to revoke an assignment, to pledge the policy for a loan, or to obtain from the insurer a

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 loan against the surrender value of the policy.  Special federal income tax considerations for life insurance policies owned by employers.   In 2006, President Bush signed the Pension Protection Act of 2006, which added Sections 101(j) and 6039I to the Internal Revenue Code, which affect the tax treatment of life insurance policies owned by the employer of the insured .  These provisions are generally effective for life insurance policies issued after August 17, 2006. If a life insurance policy was issued on or before August 17, 2006, but materially modified after that date, it will be treated as having been issued after that date for purposes of section 101(j).  Policies issued August 17, 2006 , pursuant to a Section 1035 exchange generally are excluded from the operation of these new provisions, provided that the policy received in the exchange does not have a material increase in death benefit or other material change with respect to the old policy.

Section 101(j) provides the general rule that, with respect to an employer-owned life insurance policy, the amount of death benefit payable directly or indirectly to the employer that may be excluded from income cannot exceed the sum of premiums and other payments paid by the policy owner for the policy.  Consequently, under this general rule, the entire death benefit, less the cost to the policy owner , will be taxable.  Although Section 101(j) is not clear, if lifetime distributions from the policy are made as a nontaxable return of premium, it appears that the reduction would apply for Section 101(j) purposes and reduce the amount of premiums for this purpose.

There are two exceptions to this general rule of taxability, provided that statutory notice, consent, and information requirements are satisfied.    First, if proper notice and consent are given and received, and if the insured was an employee at any time during the 12-month period before the insured's death, then new Section 101(j) would not apply.

Second, if proper notice and consent are given and received and, at the time that the policy is issued, and the insured is either a director, a "highly compensated employee" (within the meaning of Section 414(q) of the Code without regard to paragraph (1)(B)(ii) thereof), or a "highly compensated individual" (within the meaning of Section 105(h)(5), except "35%" is substituted for "25%" in paragraph (C) thereof), then the new Section 101(j) would not apply.

Code Section 6039I requires any policyholder of an employer-owned policy to file an annual return showing (a) the number of employees of the policyholder, (b) the number of such employees insured under employee-owned policies at the end of the year, (c) the total amount of insurance in force with respect to those policies at the end of the year, (d) the name, address, taxpayer identification number and type of business of the policyholder, and (e) that the policyholder has a valid consent for each insured (or, if all consents are not obtained, the number of insured employees for whom such consent was not obtained).  Proper recordkeeping is also required by this section.

It is the employer's responsibility to (a) provide the proper notice to each insured , (b) obtain the proper consent from each insured , (c) inform each insured in writing that the employer-owner will be the beneficiary of any proceeds payable upon the death of the insured , and (d) file the annual return required by Section 6039I.  If the employer-owner fail s to provide the necessary notice and information, or fail s to obtain the necessary consent, the death benefit will be taxable when received.  If the employer-owner fail s to file a properly completed return under Section 6039I, a penalty may apply .

Federal Transfer Taxes.  When the insured dies, the death benefit will generally be included in the insured's federal gross estate if: (1) the proceeds were payable to or for the benefit of the insured's estate; or (2) the insured held any "incident of ownership" in the policy at death or at any time within 3 years of death.  An incident of ownership, in general, is any right in the policy that may be exercised by the policy owner, such as the right to borrow on the policy or the right to name a new beneficiary.

If the beneficiary is two or more generations younger than the insured , the death benefit may be subject to the GSTT.  Pursuant to regulations issued by the U.S. Secretary of the Treasury, we may be required to withhold a portion of the proceeds and pay them directly to the IRS as the GSTT payment.

If the policy owner is not the Insured or a beneficiary, payment of the death benefit to the beneficiary will be treated as a gift to the beneficiary from the policy owner.

Terminal Illness

Certain distributions made under a policy on the life of a "terminally ill individual" or a "chronically ill individual," as those terms are defined in the Code, are treated as death proceeds   (see "Taxation of Death Benefits" ).

Special Considerations for Corporations

Section 264 of the Code imposes a number of limitations on the interest and other business deductions that may otherwise be available to businesses that own life insurance policies.  In addition, the premium paid by a business for a life insurance policy is not deductible as a business expense or otherwise if the business is directly or indirectly a beneficiary of the policy.

For purposes of the alternative minimum tax ("AMT") that may be imposed on corporations, the death benefit from a life insurance policy, even though excluded from gross income for normal tax purposes, is included in "adjusted current earnings" for AMT purposes.  In addition, although increases to the cash surrender value of a life insurance policy are generally excluded from gross income for normal income tax purposes, such increases are included in adjusted current earnings for income tax purposes.

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Due to the complexity of these rules, and because they are affected by your facts and circumstances, you should consult with legal and tax counsel and other competent advisors regarding these matters.

Federal appellate and trial courts have examined the economic substance of transactions involving life insurance policies owned by corporations.  These cases involved relatively large loans against the policy's cash value as well as tax deductions for the interest paid on the policy loans by the corporate policy owner to the insurance company.  Under the particular factual circumstances in these cases, the courts determined that the corporate policy owners should not have taken tax deductions for the interest paid.  Accordingly, the court determined that the corporations should have paid taxes on the amounts deducted.  Corporations should consider, in consultation with tax advisors familiar with these matters, the impact of these decisions on the corporation's intended use of the policy .

Taxes and the Value of Your Policy

For federal income tax purposes, a separate account is not a separate entity from the company.  Thus, the tax status of the separate account is not distinct from our status as a life insurance company.  Investment income and realized capital gains on the assets of the separate account are reinvested and taken into account in determining the value of Accumulation Units.  As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies.

At present, we do not expect to incur any federal income tax liability that would be chargeable to the Accumulation Units.  Based upon these expectations, no charge is being made against your Accumulation Units for federal income taxes.  If, however, we determine that taxes may be incurred, we reserve the right to assess a charge for these taxes.

We may also incur state and local taxes (in addition to those described in the discussion of the Premium Taxes) in several states.  At present, these taxes are not significant.  If they increase, however, charges for such taxes may be made that would decrease the value of your Accumulation Units.

Business Uses of the Policy

The life insurance policy may be used in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans, and others.  The tax consequences of these plans may vary depending on the particular facts and circumstances of each individual arrangement.  Therefore, if you are contemplating using the policy in any arrangement the value of which depends in part on its tax consequences, you should be sure to consult a tax advisor as to tax attributes of the arrangement.

Non-Resident Aliens and Other Persons who are not Citizens of the United States

Special income tax laws and rules apply to non-resident aliens of the United States including certain withholding requirements with respect to pre-death distributions from the policy.  In addition, foreign law may impose additional taxes on the policy, the death benefit , or other distributions and/or ownership of the policy.

In addition, special gift, estate and GSTT laws and rules may apply to non-resident aliens, and to transfers to persons who are not citizens of the United States, including limitations on the marital deduction if the surviving or donee spouse is not a citizen of the United States.

If you are a non-resident alien, or a resident alien, or if any of your beneficiaries (including your spouse) are not citizens of the United States, you should confer with a competent tax advisor with respect to the tax treatment if this policy.

If you, the Insured, the beneficiary, or other person receiving any benefit or interest in or from the policy, are not both a resident and citizen of the United States, there may be a tax imposed by a foreign country that is in addition to any tax imposed by the United States.  The foreign law (including regulations, rulings, treaties with the United States, and case law) may change and impose additional or increased taxes on the policy, payment of the death benefit , or other distributions and/or ownership of the policy.

Tax Changes

The foregoing is a general discussion of various tax matters pertaining to life insurance policies.  It is based on our understanding of federal tax laws as currently interpreted by the IRS, is general and is not intended as tax advice.   You should consult your independent legal, tax and/or financial advisor.

The Code has been subjected to numerous amendments and changes, and it is reasonable to believe that it will continue to be revised.  The United States Congress has, in the past, considered numerous legislative proposals that, if enacted, could change the tax treatment of life insurance policies.   For example t he “FY 2012, Budget of the United States Government” includes a proposal which, if enacted, would affect the treatment of corporate owned life insurance policies by limiting the availability of certain interest deductions for companies that purchase those policies.  No proposed statutory language has been released yet, so the specifics of the proposal cannot be addressed herein.  Such a proposal, if enacted, could have an adverse tax impact on the ownership of life insurance by or for the benefit of business entities.   It is reasonable to believe that

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such proposals, and future proposals, may be enacted into law.  The U.S. Treasury Department may amend existing regulations, issue new regulations, or adopt new interpretations of existing law that may differ from its current positions on these matters.  In addition, current state law (which is not discussed herein) and future amendments to state law may affect the tax consequences of the policy.

Any or all of the foregoing may change from time to time without any notice, and the tax consequences arising out of a policy may be changed retroactively.  There is no way of predicting if, when, or to what extent any such change may take place.  We make no representation as to the likelihood of the continuation of these current laws, interpretations, and policies.

Nationwide Life Insurance Company

We are a stock life insurance company organized under Ohio law.  We were founded in March 1929 and our Home Office is One Nationwide Plaza, Columbus, Ohio 43215.  We provide long-term savings products by issuing life insurance, annuities and other retirement products.

Nationwide VLI Separate Account–4

Organization, Registration and Operation

Nationwide VLI Separate Account-4 is a separate account established under Ohio law.  We own the assets in this account, and we are obligated to pay all benefits under the policies.  We may use the account to support other variable life insurance policies we issue. It is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 ( " 1940 Act " ) and qualifies as a "separate account" within the meaning of the federal securities laws.  For purposes of federal securities laws, the separate account is, and will remain, fully funded at all times. This registration, however, does not involve the SEC's supervision of this account's management or investment practice or policies.

It is divided into Sub-Accounts that may invest in shares of the available Sub-Account portfolios.  We buy and sell the Sub-Account portfolio shares at NAV.  Any dividends and distributions from a Sub-Account portfolio are reinvested at NAV in shares of that Sub-Account portfolio.

Income, gains and losses, whether or not realized, from the assets in the account will be credited to, or charged against, the account without regard to our other income, gains or losses.  Income, gains and losses credited to, or charged against, a Sub-Account reflect the Sub-Account's own Investment Experience and not the Investment Experience of our other assets.  Its assets are held separately from our other assets and are not part of our general account.  We may not use the separate account's assets to pay any of our liabilities other than those arising from the policies.  We hold assets in the separate account equal to its liabilities.

If the separate account's assets exceed the required reserves and its other liabilities, we may transfer the excess to our general account.  The separate account may include other Sub-Accounts that are not available under the policies, and are not discussed in this prospectus.

We do not guarantee any money you place in this separate account.  The value of each Sub-Account will increase or decrease, depending on the investment performance of the corresponding portfolio.  You could lose some or all of your money.

Addition, Deletion or Substitution of Mutual Funds

Where permitted by applicable law, we reserve the right to:

·   remove, combine or add Sub-Accounts and make new Sub-Accounts available;

·   substitute shares of another mutual fund, which may have different fees and expenses, for shares of an existing mutual fund;

·   transfer assets supporting the policies from one Sub-Account to another or from one separate account to another;

·   combine the separate account with other separate accounts, and/or create new separate accounts;

·   deregister the separate account under the 1940 Act, or operate the separate account as a management investment company under the 1940 Act, or as any other form permitted by the law; and

·   modify the policy provisions to reflect changes in the Sub-Accounts and the separate account to comply with applicable law.

We reserve the right to make other structural and operational changes affecting this separate account.

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We will notify you if we make any of the changes above.  Also, to the extent required by law, we will obtain the required orders, approvals and/or regulatory clearance from the appropriate government agencies (such as the various insurance regulators or the SEC).

Substitution of Securities. We 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 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.

The substitute mutual fund may have different fees and expenses.  Substitution may be made with respect to existing investments or the investment of future Premium, or both.  We may close Sub-Accounts to allocations of Premiums or policy value, or both, at any time in our sole discretion.  The mutual funds, which sell their shares to the Sub-Accounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Sub-Accounts.

Deregistration of the Separate Account. We may deregister Nationwide VLI Separate Account - 4 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 we deregister Nationwide VLI Separate Account-4.

Voting Rights

Unless there is a change in existing law, we will vote our shares only as you instruct on all matters submitted to shareholders of the portfolios.

Before a vote of a portfolio's shareholders occurs, you will have the right to instruct us based on the number of portfolio shares that corresponds to the amount of policy account value you have in the portfolio (as of a date set by the mutual fund ).  We 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 policy owners vote, each vote has a greater impact on, and may control the outcome of the vote.

The number of shares which a policy owner may vote is determined by dividing the Cash Value of the amount they have allocated to an underlying mutual fund by the NAV of that underlying mutual fund. We will designate a date for this determination not more than 90 days before the shareholder meeting. What this means to you is that when only a small number of policy owners vote, each vote has a greater impact on, and may control the outcome of the vote.

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Legal Proceedings

Nationwide Life Insurance Company

Nationwide Financial Services, Inc. (NFS, or collectively with its subsidiaries, "the Company") was formed in November 1996.  NFS is the holding company for Nationwide Life Insurance Company (NLIC), Nationwide Life and Annuity Insurance Company (NLAIC) and other companies that comprise the life insurance and retirement savings operations of the Nationwide group of companies (Nationwide). This group includes Nationwide Financial Network (NFN), an affiliated distribution network that markets directly to its customer base.  NFS is incorporated in Delaware and maintains its principal executive offices in Columbus, Ohio.

The Company is a subject to legal and regulatory proceedings in the ordinary course of its business. The Company's legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates. The Company's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted. Regulatory proceedings also could affect the outcome of one or more of the Company's litigations matters. Furthermore, it is often not possible to determine the ultimate outcomes of the pending regulatory 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. Management believes, however, that based on their currently known information, the ultimate outcome of all pending legal and regulatory matters is not likely to have a material adverse effect on the Company's consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that such outcomes could materially affect the Company's consolidated financial position or results of operations in a particular quarter or annual period.

The financial services industry has been the subject of increasing scrutiny on a broad range of issues by regulators and legislators. The Company and/or its affiliates have been contacted by, self reported or received subpoenas from state and federal regulatory agencies, including the Securities and Exchange Commission, and other governmental bodies, state securities law regulators and state attorneys general for information relating to, among other things, compensation, the allocation of compensation, revenue sharing and bidding arrangements, market-timing, anticompetitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, and the use of side agreements and finite reinsurance agreements. The Company 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.

A promotional and marketing arrangement associated with the Company's offering of a retirement plan product and related services in Alabama was investigated by the Alabama Attorney General, which assumed the investigation from the Alabama Securities Commission. On October 27, 2010, the State Attorney General announced a settlement agreement, subject to court approval, between the Company and the State of Alabama, the Alabama Department of Insurance, the Alabama Securities Commission, and the Alabama State Personnel Board. If the court approves the settlement agreement, the Company currently expects that the settlement will not have a material adverse impact on its consolidated financial position. It is not possible to predict what effect, if any, the settlement may have on the Company's retirement plan operations with respect to promotional and marketing arrangements in general in the future.

On September 10, 2009, Nationwide Retirement Solutions, Inc. (NRS) was named in a lawsuit filed in the Circuit Court for Montgomery County, Alabama entitled Twanna Brown, Individually and on behalf of all other persons in Alabama who are similarly situated, v Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc., Edwin "Mac" McArthur, Steve Walkley, Glenn Parker, Ulysses Lavender, Diana McLain, Randy Hebson, and Robert Wagstaff; and Unknown Defendants A-Z. On February 17, 2010, Brown filed an Amended Complaint alleging in Count One, that all the defendants were involved in a civil conspiracy and seeks to recover actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Two, although NRS is not named, it is alleged that the remaining defendants breached their fiduciary duties and seeks actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Three, although NRS is not named, the plaintiff seeks declaratory relief that the individual defendants breached their fiduciary duties, seeks injunctive relief permanently removing said defendants from their respective offices in the Alabama State Employees Association (ASEA) and PEBCO and costs and attorneys fees. In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants. Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On March 10, 2011, the plaintiff filed a Notice of Dismissal. The Company continues to defend this case vigorously.

On November 20, 2007, NRS and NLIC 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 Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. On March 12, 2010, NRS and NLIC were named in a Second Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama

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entitled Steven E. Coker, Sandra H. Turner, David N. Lichtenstein and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the ASEA Plan, excluding members of the Deferred Compensation Committee, ASEA's directors, officers and board members, and PEBCO's directors, officers and board members. The class period is from November 20, 2001 to the date of trial. In the second amended class action complaint, the plaintiffs allege breach of fiduciary duty, wantonness and breach of contract. The second amended class action complaint seeks a disgorgement of amounts paid, compensatory damages and punitive damages, plus interest, attorneys' fees and costs and such other equitable and legal relief to which plaintiffs and class members may be entitled. On April 2, 2010, NRS and NLIC filed an answer. On June 4, 2010, the plaintiffs filed a motion for class certification. On July 8, 2010, the defendants filed their briefs in opposition to plaintiffs' motion for class certification. On October 17, 2010, Twanna Brown filed a motion to intervene in this case. On October 22, 2010, the parties to this action executed a stipulation of settlement that agrees to certify a class for settlement purposes only, that provides for payments to the settlement class, and that provides for releases, certain bar orders, and dismissal of the case, subject to the Circuit Courts' approval. After a hearing on November 5, 2010, on November 9, 2010, the Court denied Brown's motion to intervene. On November 13, 2010, the Court issued a Preliminary Approval Order and held a Settlement Fairness Hearing on January 26, 2011. On November 22, 2010, Brown filed a Notice of Appeal with the Supreme Court of Alabama, appealing the Preliminary Approval Order. On January 25, 2011, the Alabama Supreme Court dismissed the appeal. Class notices were sent out on November 24, 2010. On December 3, 2010, Brown filed a motion with the trial court to stay this case. On December 22, 2010, Brown filed with the Alabama Supreme Court, a motion to stay all further Gwin trial court proceedings until Ms. Brown's appeal of the certification order is decided. On January 25, 2011, the Alabama Supreme Court denied Brown's motion to stay. On February 28, 2011, the Court entered its Order permitting ASEA/PEBCO to assert indemnification claims for attorneys' fees and costs, but barring them from asserting any other claims for indemnification. On March 3, 2011, ASEA and PEBCO filed a cross claim against NLIC and NRS seeking indemnification. On March 9, 2011, the Court severed the cross claim. NRS and NLIC continue 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 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 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 May 23, 2008, the Court granted the defendants' motion to dismiss. On June 19, 2008, the plaintiffs filed a notice of appeal. On December 20, 2010, the 9th Circuit Court of Appeals affirmed the dismissal of this case and entered judgment. The plaintiffs did not file a writ of certiorari with the US Supreme Court. NLIC intends to continue to defend this case vigorously.

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. In the plaintiffs' sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees 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. On November 6, 2009, the Court granted the plaintiff's motion for class certification and certified a class of "All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participants had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009". On October 20, 2010, the Second Circuit Court of Appeals granted NLIC's 23(f) petition agreeing to hear an appeal of the District Court's order granting class certification. On October 21, 2010, the District Court dismissed NFS from the lawsuit. On October 27, 2010, the District Court stayed the underlying action pending a decision from the Second Circuit Court of Appeals. On March 2, 2011, the Company filed its brief in the 2nd Circuit Court of Appeals. NLIC continues to defend this lawsuit vigorously.

On May 14, 2010, NLIC was named in a lawsuit filed in the Western District of New York entitled Sandra L. Meidenbauer, on behalf of herself and all others similarly situated v. Nationwide Life Insurance Company . The plaintiff claims to represent a class of all individuals who purchased a variable life insurance policy from NLIC during an unspecified period. The complaint claims breach of contract, alleging that NLIC charged excessive monthly deductions and costs of insurance resulting in reduced policy values and, in some cases, premature lapsing of policies. The complaint seeks reimbursement of excessive charges, costs, interest, attorney's fees, and other relief. NLIC filed a motion to dismiss the complaint on July 23, 2010. NLIC filed a motion to disqualify the proposed class representative on August 27, 2010. Plaintiff filed a motion to amend the complaint on September 17, 2010, and NLIC filed an

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opposition to the motion to amend on November 2, 2010. Those motions have been fully briefed. NLIC continues to vigorously defend this case.

On October 22, 2010, NRS was named in a lawsuit filed in the United States District Court, Middle District of Florida, Orlando Division entitled Camille McCullough, and Melanie Monroe, Individually and on behalf of all others similarly situated v. National Association of Counties, NACo Research Foundation, NACo Financial Services Corp., NACo Financial Center, and Nationwide Retirement Solutions, Inc. The Plaintiffs' First Amended Class Action Complaint and Demand for Jury Trial was filed on February 18, 2011. If the Court determines that the Plan is governed by ERISA, then Plaintiffs seek to represent a class of "All natural persons in the United States who are currently employed or previously were employed at any point during the six years preceding the date Plaintiffs filed their Original Class Action Complaint, by a government entity that is or was a member of the National Association of Counties, and who participate or participated in the Section 457 Deferred Compensation Plan for Public Employees endorsed by the National Association of Counties and administered by Nationwide Retirement Solutions, Inc." If the Court determines that the Plan is not governed by ERISA, then the Plaintiffs seek to represent a class of " All natural persons in the United States who are currently employed or previously were employed at any point during the four years preceding the date Plaintiffs filed their Original Class Action Complaint, by a government entity that is or was a member of the National Association of Counties, and who participate or participated in a Section 457 Deferred Compensation Plan for Public Employees endorsed by the National Association of Counties and administered by Nationwide Retirement Solutions, Inc." The First Amended Complaint alleges ERISA Violation, Breach of Fiduciary Duty - NACo, Aiding and Abetting Breach of Fiduciary Duty - Nationwide, Breach of Fiduciary Duty - Nationwide, and Aiding and Abetting Breach of Fiduciary Duty - NACo. The First Amended Complaint asks for actual damages, lost profits, lost opportunity costs, restitution, and/or other injunctive or other relief, including without limitation (a) ordering Nationwide and NACo to restore all plan losses, (b) ordering Nationwide to refund all fees associated with Nationwide's Plan to Plaintiffs and Class members, (c) ordering NACo and Nationwide to pay the expenses and losses incurred by Plaintiffs and/or any Class member as a proximate result of Defendants' breaches of fiduciary duty, (d) forcing NACo to forfeit the fees that NACo received from Nationwide for promoting and endorsing its Plan and disgorging all profits, benefits, and other compensation obtained by NACo from its wrongful conduct, and (e) awarding Plaintiff and Class members their reasonable and necessary attorney's fees and cost incurred in connection with this suit, punitive damages, and pre-judgment and post judgment interest, at the highest rates allowed by law, on the damages awarded. On March 21, 2011, the Company filed a motion to dismiss the plaintiffs' first amended complaint. The Company intends to defend this case vigorously.

On December 27, 2006, NLIC and NRS were named as defendants in a lawsuit filed in Circuit Court, Cole County Missouri entitled State of Missouri, Office of Administration, and Missouri State Employees Deferred Comp Plan v NLIC and NRS. The complaint seeks recovery for breach of contract and breach of the implied covenant of good faith and fair dealing against NLIC and NRS as well as a breach of fiduciary duty against NRS. The complaint seeks to recover the amount of the market value adjustment withheld by NLIC ($18,586, 380 ), prejudgment interest, loss of investment income from ING due to Nationwide's assessment of the market value adjustment, and an accounting. On March 8, 2007 the Company filed a motion to remove this case from state court to federal court in Missouri. On March 20, 2007 the State filed a motion to remand to state court and to stay court order. On April 3, 2007 the case was remanded to state court. On June 25, 2007 the Companies filed an Answer. On October 16, 2009, the plaintiff filed a partial motion for summary judgment. On November 20, 2009, the Companies filed a response to the plaintiff's motion for summary judgment and also filed a motion for summary judgment on behalf of the Companies. On February 26, 2010, the court denied Missouri's partial motion for summary judgment and granted Nationwide's motion for summary judgment and dismissed the case. On March 8, 2011, the Missouri Court of Appeals reversed the granting of Nationwide's motion for summary judgment and directed the trial court to enter judgment in favor of the State and against Nationwide in the amount of $18,586, 380 , plus statutory interest at the rate of 9% per annum from June 2, 2006. On March 22, 2011, the Companies filed with the Missouri Court of Appeals, a motion for rehearing and an application for transfer to the Supreme Court of Missouri. The Companies intend to defend this case vigorously.

Nationwide Investment Services Corporation

The general distributor, NISC, is not engaged in any litigation of any material nature.

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Financial Statements

The Statement of Additional Information (SAI) contains consolidated financial statements of Nationwide Life Insurance Company and subsidiaries and financial statements of Nationwide VLI Separate Account-4.  You may obtain a copy of the SAI FREE OF CHARGE by contacting us at the address or telephone number on the front page of this prospectus.  You should distinguish the consolidated financial statements of the company and subsidiaries from the financial statements of the separate account.  Please consider the consolidated financial statements of the company only as bearing on our ability to meet the obligations under the policy.  You should not consider the consolidated financial statements of the company and subsidiaries as affecting the investment performance of the assets of the separate account.

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Appendix A: Sub-Account Information

Below is a list of the available Sub-Accounts and information about the corresponding underlying mutual funds in which they invest.  The underlying mutual funds in which the Sub-Accounts invest   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.

Designations Key:

STTF:           The underlying mutual fund corresponding to this Sub-Account assesses (or reserves the right to assess) a short-term trading fee (see "Short-Term Trading Fees" earlier in the prospectus).

FF:           The underlying mutual fund corresponding to this Sub-Account primarily invests in other mutual funds.  Therefore, a proportionate share of the fees and expenses of any acquired funds are indirectly borne by investors.  As a result, investors in this Sub-Account may incur higher charges than if the assets were invested in an underlying mutual fund that does not invest in other mutual funds.  Please refer to the prospectus for this underlying mutual fund for more information.

AllianceBernstein Variable Products Series Fund, Inc. - AllianceBernstein Growth and Income Portfolio: Class A

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	AllianceBernstein L.P.
Investment Objective:	Long-term growth of capital.

AllianceBernstein Variable Products Series Fund, Inc. - AllianceBernstein Small/Mid Cap Value Portfolio: Class A

Investment Advisor:	AllianceBernstein L.P.
Investment Objective:	Long-term growth of capital.

American Century Variable Portfolios II, Inc. - American Century VP Inflation Protection Fund: Class II

Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	Long-term total return using a strategy that seeks to protect against U.S. inflation.

American Century Variable Portfolios, Inc. - American Century VP Income & Growth Fund: Class I

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	Capital growth by investing in common stocks.  Income is a secondary objective.

American Century Variable Portfolios, Inc. - American Century VP Mid Cap Value Fund: Class I

Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	Long-term capital growth with income as a secondary objective.

BlackRock Variable Series Funds, Inc. - BlackRock Global Allocation V.I. Fund: Class II

Investment Advisor:	BlackRock Advisors, LLC
Sub-advisor:	BlackRock Investment Management, LLC; BlackRock International Limited
Investment Objective:	Seek high total investment return.

Credit Suisse Trust - International Equity Flex III Portfolio

This sub-account is only available in policies issued before September 27, 1999

Investment Advisor:	Credit Suisse Asset Management, LLC
Investment Objective:	Capital appreciation.

Credit Suisse Trust - U.S. Equity Flex I Portfolio

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	Credit Suisse Asset Management, LLC
Investment Objective:	The fund seeks capital growth.

Dreyfus Investment Portfolios - Small Cap Stock Index Portfolio: Service Shares

Investment Advisor:	The Dreyfus Corporation
Sub-advisor:	Mellon Capital Management
Investment Objective:	To match performance of the S&P SmallCap 600 Index®.

Dreyfus Socially Responsible Growth Fund, Inc. (The): Initial Shares

This sub-account is only available in policies issued before May 1, 2003

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	Capital growth with current income as a secondary goal.

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Dreyfus Stock Index Fund, Inc.: Initial Shares

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	To match performance of the S&P 500.

Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

Investment Advisor:	The Dreyfus Corporation
Sub-advisor:	Fayez Sarofim & Co.
Investment Objective:	Long-term capital growth consistent with the preservation of capital.

Dreyfus Variable Investment Fund - Opportunistic Small Cap Portfolio: Initial Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	The Dreyfus Corporation
Sub-advisor:	Franklin Portfolio Associates
Investment Objective:	Capital growth.

Federated Insurance Series - Federated Capital Appreciation Fund II: Primary Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	Federated Equity Management Company of Pennsylvania
Investment Objective:	Capital appreciation.

Federated Insurance Series - Federated Quality Bond Fund II: Primary Shares

This sub-account is only available in policies issued before May 1, 2008

Investment Advisor:	Federated Investment Management Company
Investment Objective:	Current income.

Fidelity Variable Insurance Products Fund - Fidelity VIP Freedom Fund 2010 Portfolio: Service Class

Investment Advisor:	Strategic Advisers Inc. Boston MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	High total return with a secondary objective of principal preservation as the fund
	approaches its target date and beyond.

Designation: FF

Fidelity Variable Insurance Products Fund - Fidelity VIP Freedom Fund 2020 Portfolio: Service Class

Investment Advisor:	Strategic Advisers Inc. Boston MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	High total return with a secondary objective of principal preservation as the fund
	approaches its target date and beyond.

Designation: FF

Fidelity Variable Insurance Products Fund - Fidelity VIP Freedom Fund 2030 Portfolio: Service Class

Investment Advisor:	Strategic Advisers Inc. Boston MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	High total return with a secondary objective of principal preservation as the fund
	approaches its target date and beyond.

Designation: FF

Fidelity Variable Insurance Products Fund - VIP Energy Portfolio: Service Class 2

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	Capital appreciation.

Designation: STTF

Fidelity Variable Insurance Products Fund - VIP Equity-Income Portfolio: Service Class

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research
	& Analysis Company, Fidelity Investments Japan Limited, Fidelity
	International Investment Advisors, Fidelity International Investment Advisors
	(U.K.) Limited
Investment Objective:	Reasonable income.

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Fidelity Variable Insurance Products Fund - VIP Growth Portfolio: Service Class

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research
	& Analysis Company, Fidelity International Investment Advisors, Fidelity
	International Investment Advisors (U.K.) Limited, Fidelity Investments Japan
	Limited
Investment Objective:	Capital appreciation.

Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Service Class

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2007

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company, Fidelity Investments
	Japan Limited, Fidelity International Investment Advisors, Fidelity International
	Investment Advisors (U.K.) Limited
Investment Objective:	High level of current income while also considering growth of capital.

Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Service Class R

This Portfolio is only available in Policies issued before May 1, 2003

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company, Fidelity Investments
	Japan Limited, Fidelity International Investment Advisors, Fidelity International
	Investment Advisors (U.K.) Limited
Investment Objective:	High level of current income while also considering growth of capital.

Designation: STTF

Fidelity Variable Insurance Products Fund - VIP Investment Grade Bond Portfolio: Service Class

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	Fidelity Investments Money Management, Inc., Fidelity Research & Analysis
	Company, Fidelity International Investment Advisors, Fidelity International
	Investment Advisors (U.K.) Limited
Investment Objective:	High level of current income.

Fidelity Variable Insurance Products Fund - VIP Mid Cap Portfolio: Service Class

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research
	& Analysis Company, Fidelity Investments Japan Limited, Fidelity
	International Investment Advisors, Fidelity International Investment Advisors
	(U.K.) Limited
Investment Objective:	Long-term growth of capital.

Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: Service Class

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research
	& Analysis Company, Fidelity International Investment Advisors, Fidelity
	International Investment Advisors (U.K.) Limited, Fidelity Investments Japan
	Limited
Investment Objective:	Long-term capital growth.

Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: Service Class R

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research
	& Analysis Company, Fidelity International Investment Advisors, Fidelity
	International Investment Advisors (U.K.) Limited, Fidelity Investments Japan
	Limited
Investment Objective:	Long-term capital growth.

Designation: STTF

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Fidelity Variable Insurance Products Fund - VIP Value Strategies Portfolio: Service Class

This sub-account is only available in policies issued before May 1, 2006

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research
	& Analysis Company, Fidelity Investments Japan Limited, Fidelity
	International Investment Advisors, Fidelity International Investment Advisors
	(U.K.) Limited
Investment Objective:	Capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Income Securities Fund: Class 2

Investment Advisor:	Franklin Advisers, Inc.
Investment Objective:	Maximum income while maintaining prospects for capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Rising Dividends Securities Fund: Class 1

This sub-account is only available in policies issued before May 1, 2006

Investment Advisor:	Franklin Advisory Services, LLC
Investment Objective:	Long-term capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Small Cap Value Securities Fund: Class 1

Investment Advisor:	Franklin Advisory Services, LLC
Investment Objective:	Long-term total return.

Franklin Templeton Variable Insurance Products Trust - Franklin Templeton VIP Founding Funds Allocation Fund: Class 2

Investment Advisor:	Franklin Templeton Services, LLC
Investment Objective:	Capital appreciation with income as a secondary goal.

Designation: FF

Franklin Templeton Variable Insurance Products Trust - Templeton Developing Markets Securities Fund: Class 3

This sub-account is only available in policies issued before May 1, 2008

Investment Advisor:	Templeton Asset Management, Ltd.
Investment Objective:	Long-term capital appreciation.

Designation: STTF

Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 1

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Advisor:	Templeton Investment Counsel, LLC
Investment Objective:	Long-term capital growth.

Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 3

This sub-account is only available in policies issued before May 1, 2009

Investment Advisor:	Templeton Investment Counsel, LLC
Investment Objective:	Long-term capital growth.

Designation: STTF

Franklin Templeton Variable Insurance Products Trust - Templeton Global Bond Securities Fund: Class 3

Investment Advisor:	Franklin Advisers, Inc.
Investment Objective:	High current income, consistent with preservation of capital, with capital
	appreciation as a secondary consideration.

Designation: STTF

Invesco - Invesco V.I. Capital Appreciation Fund: Series I

This sub-account is only available in policies issued before May 1, 2008

Investment Advisor:	Invesco Advisers, Inc.
Investment Objective:	Long-term growth of capital.

Invesco - Invesco V.I. Capital Development Fund: Series I

Investment Advisor:	Invesco Advisers, Inc.
Investment Objective:	Long-term growth of capital.

Ivy Funds Variable Insurance Portfolios, Inc. - Asset Strategy

Investment Advisor:	Waddell & Reed Investment Management Company
Investment Objective:	High total return over the long run.

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Janus Aspen Series - Balanced Portfolio: Service Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term capital growth, consistent with preservation of capital and balanced
	by current income.

Janus Aspen Series - Forty Portfolio: Service Shares

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term growth of capital.

Janus Aspen Series - Global Technology Portfolio: Service II Shares

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term growth of capital.

Designation: STTF

Janus Aspen Series - Global Technology Portfolio: Service Shares

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2010

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term growth of capital.

Janus Aspen Series - Overseas Portfolio: Service II Shares

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term growth of capital.

Designation: STTF

Janus Aspen Series - Overseas Portfolio: Service Shares

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term growth of capital.

MFS® Variable Insurance Trust - MFS Investors Growth Stock Series: Initial Class

This sub-account is only available in policies issued before May 1, 2006

Investment Advisor:	Massachusetts Financial Services Company
Investment Objective:	To seek capital appreciation.

MFS® Variable Insurance Trust - MFS Value Series: Initial Class

Investment Advisor:	Massachusetts Financial Services Company
Investment Objective:	To seek capital appreciation.

Nationwide Variable Insurance Trust - American Century NVIT Growth Fund: Class I (formerly, Nationwide Variable Insurance Trust - NVIT Growth Fund: Class I)

This sub-account is only available in policies issued before May 1, 2003

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	American Century Investment Management, Inc.
Investment Objective:	The Fund seeks long-term capital appreciation.

Nationwide Variable Insurance Trust - American Century NVIT Multi Cap Value Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	American Century Investment Management, Inc.
Investment Objective:	The Fund seeks capital appreciation, and secondarily current income.

Nationwide Variable Insurance Trust - American Funds NVIT Asset Allocation Fund: Class II

Investment Advisor:	Capital Research and Management Company
Investment Objective:	The fund seeks to provide high total return (including income and capital gains)
	consistent with the preservation of capital over the long term.

Nationwide Variable Insurance Trust - American Funds NVIT Bond Fund: Class II

Investment Advisor:	Capital Research and Management Company
Investment Objective:	The Fund seeks to maximize an investors level of current income and preserve
	the investor's capital.

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Nationwide Variable Insurance Trust - American Funds NVIT Global Growth Fund: Class II

Investment Advisor:	Capital Research and Management Company
Investment Objective:	The Fund is designed for investors seeking capital appreciation through stocks.

Nationwide Variable Insurance Trust - American Funds NVIT Growth Fund: Class II

Investment Advisor:	Capital Research and Management Company
Investment Objective:	The Fund is designed for investors seeking capital appreciation principally
	through investment in stocks.

Nationwide Variable Insurance Trust - American Funds NVIT Growth-Income Fund: Class II

Investment Advisor:	Capital Research and Management Company
Investment Objective:	The fund seeks returns from both capital gains as well as income generated by
	dividends paid by stock issuers.

Nationwide Variable Insurance Trust - Federated NVIT High Income Bond Fund: Class I

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Federated Investment Management Company
Investment Objective:	The Fund seeks to provide high current income.

Nationwide Variable Insurance Trust - Federated NVIT High Income Bond Fund: Class III

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Federated Investment Management Company
Investment Objective:	The Fund seeks to provide high current income.

Designation: STTF

Nationwide Variable Insurance Trust - Neuberger Berman NVIT Multi Cap Opportunities Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Neuberger Berman Management LLC
Investment Objective:	The fund seeks long-term capital growth.

Nationwide Variable Insurance Trust - Neuberger Berman NVIT Socially Responsible Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Neuberger Berman Management LLC
Investment Objective:	The Fund seeks long-term growth of capital by investing primarily in securities
	of companies that meet the fund's financial criteria and social policy.

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Aggressive Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The Aggressive Fund seeks maximum growth of capital consistent with a more
	aggressive level of risk as compared to other Cardinal Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Balanced Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The Fund seeks a high level of total return through investment in both equity and
	fixed income securities.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Capital Appreciation Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The Fund seeks growth of capital, but also seeks income consistent with a less
	aggressive level of risk as compared to other Cardinal Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Conservative Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The Fund seeks a high level of total return consistent with a conservative level of
	risk as compared to other Cardinal Funds.

Designation: FF

58

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Moderate Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The Fund seeks a high level of total return consistent with a moderate level of
	risk as compared to other Cardinal Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Moderately Aggressive Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The Fund seeks growth of capital, but also seeks income consistent with a
	moderately aggressive level of risk as compared to other Cardinal Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Cardinal(SM) Moderately Conservative Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The fund seeks a high level of total return consistent with a moderately
	conservative level of risk.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Core Bond Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Nationwide Asset Management, LLC
Investment Objective:	The Fund seeks a high level of current income consistent with preserving capital.

Nationwide Variable Insurance Trust - NVIT Core Plus Bond Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Neuberger Berman Fixed Income LLC
Investment Objective:	The fund seeks long-term total return consistent with reasonable risk.

Nationwide Variable Insurance Trust - NVIT Emerging Markets Fund: Class I

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Baring International Investment Limited
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity
	securities of companies located in emerging market countries.

Nationwide Variable Insurance Trust - NVIT Emerging Markets Fund: Class III

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Baring International Investment Limited
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity
	securities of companies located in emerging market countries.

Designation: STTF

Nationwide Variable Insurance Trust - NVIT Government Bond Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Nationwide Asset Management, LLC
Investment Objective:	The fund seeks as high level of income as is consistent with the preserving of
	capital.

Nationwide Variable Insurance Trust - NVIT International Equity Fund: Class I (formerly, Nationwide Variable Insurance Trust - Gartmore NVIT International Equity Fund: Class I)

This sub-account is only available in policies issued before May 1, 2003

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity
	securities of companies in Europe, Australasia, the Far East and other regions,
	including developing countries.

59

Nationwide Variable Insurance Trust - NVIT International Equity Fund: Class III (formerly, Nationwide Variable Insurance Trust - Gartmore NVIT International Equity Fund: Class III)

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity
	securities of companies in Europe, Australasia, the Far East and other regions,
	including developing countries.

Designation: STTF

Nationwide Variable Insurance Trust - NVIT International Index Fund: Class VI

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	BlackRock Investment Management, LLC
Investment Objective:	The Fund seeks to match the performance of the Morgan Stanley Capital
	International Europe, Australasia and Far East Index ("MSCI EAFE® Index") as
	closely as possible before the deduction of Fund expenses.

Designation: STTF

Nationwide Variable Insurance Trust - NVIT Investor Destinations Aggressive Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Aggressive Fund seeks maximum growth of
	capital consistent with a more aggressive level of risk as compared to other
	Investor Destinations Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Investor Destinations Balanced Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Balanced Fund seeks a high level of total return
	through investment in both equity and fixed-income securities.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Investor Destinations Capital Appreciation Fund: Class II

This sub-account is only available in policies issued before

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Capital Appreciation Fund seeks growth of
	capital, but also seeks income consistent with a less aggressive level of risk as
	compared to other NVIT Investor Destinations Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Investor Destinations Conservative Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Conservative Fund seeks a high level of total
	return consistent with a conservative level of risk as compared to other Investor
	Destinations Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Investor Destinations Moderate Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Moderate Fund seeks a high level of total
	return consistent with a moderate level of risk as compared to other Investor
	Destinations Funds.

Designation: FF

60

Nationwide Variable Insurance Trust - NVIT Investor Destinations Moderately Aggressive Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Moderately Aggressive Fund seeks growth of
	capital, but also seeks income consistent with a moderately aggressive level of
	risk as compared to other Investor Destinations Funds.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Investor Destinations Moderately Conservative Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Moderately Conservative Fund seeks a high
	level of total return consistent with a moderately conservative level of risk.

Designation: FF

Nationwide Variable Insurance Trust - NVIT Mid Cap Index Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	BlackRock Investment Management, LLC
Investment Objective:	The Fund seeks capital appreciation.

Nationwide Variable Insurance Trust - NVIT Money Market Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Federated Investment Management Company
Investment Objective:	The Fund seeks as high a level of current income as is consistent with preserving
	capital and maintaining liquidity.

Nationwide Variable Insurance Trust - NVIT Multi Sector Bond Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Logan Circle Partners, L.P.
Investment Objective:	The Fund seeks to provide above average total return over a market cycle of
	three to five years.

Nationwide Variable Insurance Trust - NVIT Multi-Manager International Growth Fund: Class III

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc. and American Century Investment Management, Inc.
Investment Objective:	The fund seeks long-term capital growth.

Designation: STTF

Nationwide Variable Insurance Trust - NVIT Multi-Manager International Value Fund: Class I

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	AllianceBernstein L.P.; JPMorgan Investment Management, Inc.
Investment Objective:	The Fund seeks long-term capital appreciation.

Nationwide Variable Insurance Trust - NVIT Multi-Manager International Value Fund: Class III

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	AllianceBernstein L.P.; JPMorgan Investment Management, Inc.
Investment Objective:	The Fund seeks long-term capital appreciation.

Designation: STTF

Nationwide Variable Insurance Trust - NVIT Multi-Manager Large Cap Growth Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Winslow Capital Management, Inc.; Neuberger Berman Management Inc. and
	Wells Capital Management, Inc.;
Investment Objective:	The fund seeks long-term capital growth.

Nationwide Variable Insurance Trust - NVIT Multi-Manager Large Cap Value Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Goldman Sachs Asset Management, L.P.; Wellington Management Company,
	LLP; The Boston Company Asset Management, LLC
Investment Objective:	The fund seeks long-term capital growth.

61

Nationwide Variable Insurance Trust - NVIT Multi-Manager Mid Cap Growth Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	American Century Investment Management, Inc.; Neuberger Berman
	Management LLC; Wells Capital Management, Inc.
Investment Objective:	The fund seeks long-term capital growth.

Nationwide Variable Insurance Trust - NVIT Multi-Manager Mid Cap Value Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	American Century Investment Management, Inc.; Columbia Management
	Investment Advisers, LLC; Thompson, Siegel & Walmsley LLC
Investment Objective:	The fund seeks long-term capital appreciation.

Nationwide Variable Insurance Trust - NVIT Multi-Manager Small Cap Growth Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Waddell & Reed Investment Management Company; OppenheimerFunds, Inc.
Investment Objective:	The Fund seeks capital growth.

Nationwide Variable Insurance Trust - NVIT Multi-Manager Small Cap Value Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Aberdeen Asset Management, Inc.; Epoch Investment Partners, Inc.; J.P.
	Morgan Investment Management Inc.
Investment Objective:	The Fund seeks capital appreciation.

Nationwide Variable Insurance Trust - NVIT Multi-Manager Small Company Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Aberdeen Asset Management, Inc.; Morgan Stanley Investment Management;
	Neuberger Berman Management, Inc.; Putnam Investment Management, LLC;
	and Waddell & Reed Investment Management Company
Investment Objective:	The Fund seeks capital appreciation.

Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Aberdeen Asset Management, Inc. and Diamond Hill Capital Management, Inc.
Investment Objective:	The Fund seeks total return through a flexible combination of capital
	appreciation and current income.

Nationwide Variable Insurance Trust - NVIT Real Estate Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Morgan Stanley Investment Management, Inc.
Investment Objective:	The Fund seeks current income and long-term capital appreciation.

Nationwide Variable Insurance Trust - NVIT Short Term Bond Fund: Class II

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Nationwide Asset Management, LLC
Investment Objective:	The Fund seeks to provide a high level of current income while preserving capital
	and minimizing fluctuations in share value.

Nationwide Variable Insurance Trust - NVIT Worldwide Leaders Fund: Class I (formerly, Nationwide Variable Insurance Trust - Gartmore NVIT Worldwide Leaders Fund: Class I)

This sub-account is only available in policies issued before May 1, 2003

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The fund seeks long-term capital growth.

Nationwide Variable Insurance Trust - NVIT Worldwide Leaders Fund: Class III (formerly, Nationwide Variable Insurance Trust - Gartmore NVIT Worldwide Leaders Fund: Class III)

This sub-account is only available in policies issued before May 1, 2011

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The fund seeks long-term capital growth.

Designation: STTF

62

Nationwide Variable Insurance Trust - Oppenheimer NVIT Large Cap Growth Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	OppenheimerFunds, Inc.
Investment Objective:	The Fund seeks long-term capital growth.

Nationwide Variable Insurance Trust - Templeton NVIT International Value Fund: Class III

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Templeton Investment Counsel, LLC
Investment Objective:	The Fund seeks to maximize total return consisting of capital appreciation and/or
	current income.

Designation: STTF

Nationwide Variable Insurance Trust - Van Kampen NVIT Comstock Value Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The Fund’s investment objective is to seek capital growth and income through
	investments in equity securities, including common stocks, preferred stocks, and
	convertible securities.

Neuberger Berman Advisers Management Trust - AMT Short Duration Bond Portfolio: I Class

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman Fixed Income LLC
Investment Objective:	Highest available current income consistent with liquidity and low risk to
	principal; total return is a secondary goal.

Neuberger Berman Advisers Management Trust - AMT Small Cap Growth Portfolio: S Class

This sub-account is only available in policies issued before May 1, 2008

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman, LLC
Investment Objective:	Long-term capital growth.

Neuberger Berman Advisers Management Trust - AMT Socially Responsive Portfolio: I Class

This sub-account is only available in policies issued before May 1, 2008

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman, LLC
Investment Objective:	Long-term growth by investing primarily in securities of companies that meet
	financial criteria and social policy.

Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA: Class 3

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	Long-term capital appreciation by investing a substantial portion of its assets in
	securities of foreign issuers, "growth-type" companies, cyclical industries and
	special situations that are considered to have appreciation  possibilities.

Designation: STTF

Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA: Non-Service Shares

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	Long-term capital appreciation by investing a substantial portion of its assets in
	securities of foreign issuers, "growth-type" companies, cyclical industries and
	special situations that are considered to have appreciation possibilities.

Oppenheimer Variable Account Funds - Oppenheimer High Income Fund/VA: Class 3

This sub-account is only available in policies issued before May 1, 2009

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	High level of current income.
Designation: STTF

Oppenheimer Variable Account Funds - Oppenheimer High Income Fund/VA: Non-Service Shares

This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2007

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	High level of current income.

63

Oppenheimer Variable Account Funds - Oppenheimer Main Street Fund®/VA: Non-Service Shares

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	High total return which includes growth in the value of its shares as well as
	current income from equity and debt securities.

Oppenheimer Variable Account Funds - Oppenheimer Main Street Small- & Mid-Cap Fund®/VA: Non-Service Shares (formerly, Oppenheimer Variable Account Funds - Oppenheimer Main Street Small Cap Fund®/VA: Non-Service Shares)

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	Capital appreciation.

Oppenheimer Variable Account Funds - Oppenheimer Small- & Mid-Cap Growth Fund/VA: Non-Service Shares

This sub-account is only available in policies issued before May 1, 2003

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	Capital appreciation.

PIMCO Variable Insurance Trust - Foreign Bond Portfolio (Unhedged): Administrative Class

Investment Advisor:	Pacific Investment Management Company LLC
Investment Objective:	Seeks maximum total return consistent with preservation of capital and prudent
	investment management. The Portfolio seeks to achieve its investment objective
	by investing under normal circumstances at least 80% of its assets in Fixed
	Income Instruments that are economically tied to foreign (non-U.S.) countries,
	representing at least three foreign countries, which may be represented by
	forwards or derivatives such as options, futures contracts or swap agreements.

PIMCO Variable Insurance Trust - Low Duration Portfolio: Administrative Class

Investment Advisor:	Pacific Investment Management Company LLC
Investment Objective:	Seeks maximum total return, consistent with preservation of capital and prudent
	investment management. The Portfolio seeks to achieve its investment objective
	by investing under normal circumstances at least 65% of its assets in a diversified
	portfolio of Fixed Income Instruments of varying maturities, which may be
	represented by forwards or derivatives such as options, futures contracts or
	swap agreements.

PIMCO Variable Insurance Trust - Total Return Portfolio: Administrative Class

Investment Advisor:	Pacific Investment Management Company LLC
Investment Objective:	Seeks maximum total return consistent with preservation of capital and prudent
	investment management. The Portfolio seeks to achieve its investment objectives
	by investing under normal circumstances at least 65% of its total assets in a
	diversified portfolio of Fixed Income Instruments of varying maturities, which
	may be represented by forwards or derivatives such as option, futures contracts
	or swap agreements.

Putnam Variable Trust - Putnam VT Growth & Income Fund: Class IB

This sub-account is only available in policies issued before May 1, 2005

Investment Advisor:	Putnam Investment Management, LLC
Investment Objective:	Capital growth and current income.

Putnam Variable Trust - Putnam VT International Equity Fund: Class IB

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	Putnam Investment Management, LLC
Sub-advisor:	Putnam Investments Limited and Putnam Advisory Company, LLC
Investment Objective:	Capital appreciation.

Putnam Variable Trust - Putnam VT Voyager Fund: Class IB

This sub-account is only available in policies issued before May 1, 2005

Investment Advisor:	Putnam Investment Management, LLC
Investment Objective:	Capital appreciation.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Health Sciences Portfolio: II

Investment Advisor:	T. Rowe Price Investment Services
Investment Objective:	Long-term capital appreciation.

64

The Universal Institutional Funds, Inc. - Core Plus Fixed Income Portfolio: Class I

This sub-account is only available in policies issued before May 1, 2009

Investment Advisor:	Morgan Stanley Investment Management Inc.
Investment Objective:	Above-average total return over a market cycle of three to five years by investing
	primarily in a diversified portfolio of fixed income securities.

The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio: Class I

This sub-account is only available in policies issued before May 1, 2004

Investment Advisor:	Morgan Stanley Investment Management Inc.
Investment Objective:	High total return by investing primarily in fixed income securities of government
	and government-related issuers and, to a lesser extent, of corporate issuers in
	emerging market countries.

Van Eck VIP Trust - Van Eck VIP Emerging Markets Fund: Initial Class

This sub-account is only available in policies issued before May 1, 2002

Investment Advisor:	Van Eck Associates Corporation
Investment Objective:	Long-term capital appreciation by investing primarily in equity securities in
	emerging markets around the world.

Van Eck VIP Trust - Van Eck VIP Global Hard Assets Fund: Initial Class

This sub-account is only available in policies issued before May 1, 2002

Investment Advisor:	Van Eck Associates Corporation
Investment Objective:	Long-term capital appreciation by investing primarily in hard asset securities.
	Income is a secondary consideration.

Wells Fargo Variable Trust - Wells Fargo Advantage VT Small Cap Growth Fund

Investment Advisor:	Wells Fargo Funds Management, LLC
Sub-advisor:	Wells Capital Management Inc.
Investment Objective:	Long-term capital appreciation.

65

Appendix B: Definitions

Accumulation Unit- The measure of your investment in, or share of, a Sub-Account after we deduct for transaction fees and periodic charges.  Initially, we set the Accumulation Unit value at $10 for each Sub-Account.

Attained Age- The Insured's age upon the issue of full insurance coverage plus the number of full years since the Policy Date.

Cash Surrender Value- The Cash Value, minus Indebtedness and any surrender charge.

Cash Value- The total of the Sub-Accounts you have chosen, which will vary with Investment Experience, and the policy loan and fixed accounts, to which interest will be credited daily.  We will deduct partial surrenders and the policy's periodic charges from the Cash Value.

Code- The Internal Revenue Code of 1986, as amended.

Death Benefit- The amount we pay upon the Insured's death, before payment of any outstanding Indebtedness .

FDIC- Federal Deposit Insurance Corporation.

Grace Period- A 61-day period after which the Policy will Lapse if you do not make a sufficient payment.

Home Office- Our Home Office is located at One Nationwide Plaza, Columbus, Ohio 43215.

In Force- Any time during which benefits are payable under the policy and any elected Rider(s).

Indebtedness- The total amount of all outstanding policy loans, including principal and interest due.

Insured- The person whose life we insure under the policy, and whose death triggers payment of the Death Benefit.

Investment Experience- The performance of a mutual fund in which a Sub-Account portfolio invests.

Lapse- The policy terminates without value.

Maturity Date- The policy anniversary on or next following the Insured's 100th birthday.

Net Amount At Risk- The policy's base Death Benefit minus the policy's Cash Value.

Net Asset Value (NAV)- The price each share of a mutual fund in which a Sub-Account portfolio invests.  It is calculated by subtracting the mutual fund's liabilities from its total assets, and dividing that figure by the number of shares outstanding.  We use NAV to calculate the value of Accumulation Units.  NAV does not reflect deductions we make for charges we take from Sub-Accounts.  Accumulation Unit values do reflect these deductions.

Net Premium- Premium after transaction charges, but before any allocation to an investment option.

Policy Data Page(s)- The Policy Data Page s contain more detailed information about the policy, some of which is unique and particular to the owner, the beneficiary and the Insured.

Policy Date- The date the policy takes effect as shown on the Policy Data Page.  Policy years and months are measured from this date.

Policy Proceeds or Proceeds- Policy Proceeds may constitute the Death Benefit, or the amount payable if the policy matures or you choose to surrender the policy adjusted to account for any unpaid charges or policy loans and Rider benefits.

66

Premium- The amount of money you pay to begin and continue the policy.

Premium Load- The aggregate of the sales load and premium tax charges.

Rider- An optional benefit you may purchase under the policy.

SEC- The Securities and Exchange Commission.

Specified Amount- The dollar or face amount of insurance coverage the owner selects.

Sub-Accounts- The mechanism we use to account for your allocations of Net Premium and cash value among the policy's variable investment options.

Substandard Rating- An underwriting classification based on medical and/or non-medical factors used to determine what to charge for life insurance based on characteristics of the Insured beyond traditional factors for standard risks, which include age, sex, and smoking habits of the Insured.  Substandard Ratings are shown in the Policy Data Pages as rate class multiples (medical factors) and/or monthly flat extras (medical and/or non-medical factors).  The higher the rate class multiple or monthly flat extra, the greater the risk assessed and the higher the cost of coverage.

Us, we, our, Nationwide, or the company- Nationwide Life Insurance Company.

Valuation Period- The period during which we determine the change in the value of the Sub-Accounts.  One Valuation Period ends and another begins with the close of trading on the New York Stock Exchange.

You, your or the policy owner or Owner- The person or entity named as the owner in the application, or the person or entity assigned ownership rights.

67

Outside back cover page

To learn more about the policy, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus.  For a free copy of the SAI, to receive personalized illustrations of Death Benefits, net Cash Surrender Values, and Cash Values, and to request other information about the policy please call our Service Center at 1-800-547-7548 (TDD: 1-800-238-3035) or write to us at our Service Center at Nationwide Life Insurance Company, 5100 Rings Road, RR1-04-D4, Dublin, OH 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 policy.  Information about us and the policy (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.  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. 811-08301.

Securities Act of 1933 Registration File No. 333-31725

'33 Act File No. 333-31725

'40 Act File No. 811-08301

Nationwide VLI Separate Account-4

(Registrant)

Nationwide Life Insurance Company

(Depositor)

5100 Rings Road, RR1-04-D4

Dublin, OH 43017-1522

1-800-547-7548

TDD: 1-800-238-3035

STATEMENT OF ADDITIONAL INFORMATION

Individual Flexible Premium Variable Universal Life Insurance Policies

This Statement of Additional Information ("SAI'') contains additional information regarding the individual flexible premium variable universal life insurance policy offered by us, Nationwide Life Insurance Company. This SAI is not a prospectus and should be read together with the policy prospectus dated May 1, 2011 and the prospectuses for the variable investment options. The prospectus is incorporated by reference in this SAI. You may obtain a copy of these prospectuses FREE OF CHARGE by writing or calling us at our address or phone number shown above.

The date of this Statement of Additional Information is May 1, 2011 .

Table of Contents

Nationwide Life Insurance Company	1	Maximum Surrender Charge Calculation	3
Nationwide VLI Separate Account-4	1	Illustrations	5
Nationwide Investment Services Corporation (NISC)	1	Advertising	5
Services	2	Tax Definition of Life Insurance	6
Underwriting Procedure	2	Financial Statements	10
Policy Restoration Procedure	3

Nationwide Life Insurance Company

We are a stock life insurance company organized under the laws of the State of Ohio in March 1929 with our Home Office at One Nationwide Plaza, Columbus, Ohio 43215.  We provide life insurance, annuities and retirement products.  We are admitted to do business in all states, the District of Columbia and Puerto Rico.  Nationwide is a member of the Nationwide group of companies and all of our common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company.  Nationwide Corporation owns all of NFS's common stock and is a holding company, as well.  All of Nationwide Corporation's common stock is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), the ultimate controlling persons of the Nationwide group of companies.  The Nationwide group of companies is one of America’s largest insurance and financial services family of companies, with combined assets of over $ 148.7 billion as of December 31, 2010 .

Nationwide VLI Separate Account-4

Nationwide VLI Separate Account-4 is a separate account that invests in mutual funds offered and sold to insurance companies and certain retirement plans.  We established the separate account on May 21, 1998 , pursuant to Ohio law.  Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 the SEC does not supervise our management or the management of the variable account. We serve as the custodian of the assets of the variable account.

Nationwide Investment Services Corporation (NISC)

The policies are distributed by NISC, located at One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide.  For contract issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation.

1

The policies will be sold on a continuous basis by licensed insurance agents in those states where the policies may lawfully be sold.  Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 that are member firms of the Financial Industry Regulatory Authority (FINRA).

Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 99% of the target premium plus 3% of any excess premium payments.  We pay gross renewal commissions in years two through ten on the sale of the policies provided by NISC that will not exceed 3% of actual premium payment, and that will not exceed 2% in policy years eleven and thereafter.

We paid no underwriting commissions to NISC for this separate account in 2010 , 2009 and 2008 .

Services

We have responsibility for administration of the policies and the variable account.  We also maintain the records of the name, address, taxpayer identification number and other pertinent information for each policy owner and the number and type of policy issued to each policy owner and records with respect to the policy value of each policy.

We are the custodian of the assets of the variable account.  We will maintain a record of all purchases and redemption of shares of the mutual funds.

Independent Registered Public Accounting Firm

The financial statements of Nationwide VLI Separate Account-4 and the consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries 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 consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.   KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Underwriting Procedure

We underwrite the policies issued through Nationwide VLI Separate Account-4.  The policy's cost of insurance depends upon the Insured's sex, issue age, risk class and length of time the policy has been In Force.  The rates will vary depending upon tobacco use and other risk factors.  Monthly cost of insurance rates will not exceed those guaranteed in the policy.  Guaranteed cost of insurance rates for policies issued on Specified Amounts less than $100,000 are based on the 1980 Commissioners’ Extended Term Mortality Table, Age Last Birthday ("1980 CET").  Guaranteed cost of insurance rates for policies issued on Specified Amounts $100,000 or more are based on the 1980 Commissioners’ Standard Ordinary Mortality Table, Age Last Birthday ("1980 CSO").  Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the standard guaranteed cost of insurance rate on a standard basis.  That is, standard guaranteed cost of insurance rates for substandard risks are guaranteed cost of insurance rates for standard risks times a percentage greater than 100%.  These mortality tables are sex distinct.  In addition, separate mortality tables will be used for tobacco and non-tobacco.

Mortality tables are unisex for:

· policies issued in the State of Montana; and

· group or sponsored arrangements (including our employees and their family members).

The rate class of an insured may affect the cost of insurance rate.  We currently place insureds into both standard rate classes and substandard rate classes that involve a higher mortality risk.  In an otherwise identical policy, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks.  Any change in the cost of insurance rates will apply to all insureds of the same age, gender, risk class and whose policies have been in effect for the same length of time.  The cost of insurance rates, policy charges, and payment options for policies issued in some states or in connection with certain employee benefit arrangements may be issued on a gender-neutral (unisex) basis.  The unisex rates will be higher than those applicable to females and lower than those applicable to males.  If the rating class for any increase in the Specified Amount of insurance coverage is not the same as the rating class at issue, the cost of insurance rate used after such increase will be a composite rate based upon a weighted average of the rates of the different rating classes.  The actual charges made during the policy year will be shown in the annual report delivered to policy owners.

2

Policy Restoration Procedure

Requests to restore a surrendered policy must meet the following requirements:

·   the request must be in writing and signed by the policy owner (if the surrender was a Code Section 1035 exchange to a new policy with a different insurer, the signature of an officer of the replacing insurer is also required);

·   the written request must be received by us within thirty days of the date the policy was surrendered (periods up to sixty days will be permitted based on the right to examine period applicable to replaced life insurance policies in the state where the policy was issued);

·   the surrender Proceeds must be returned in their entirety; and

·   the Insured must be alive on the date the restoration request is received.

No proof of insurability or additional underwriting will be required for requests to restore a surrendered policy that meet the above requirements.

A restored policy will be treated as if it had never been surrendered for all purposes, including Investment Experience, accrual of interest, and deduction of charges, resulting in the following:

·   the returned surrender proceeds and any amount taken as a surrender charge will be used to purchase Accumulation Units according to your allocations in effect on, and priced as of, the surrender date;

·   any charges that would otherwise have been assessed during the period of surrender will be assessed as of the date(s) they were due resulting in the cancellation of Accumulation Units priced as of the applicable date(s);

·   interest will be credited on any allocation to a fixed investment option at the rate(s) in effect during the period of surrender;

·   interest charged and credited on any Indebtedness will accrue at the rates in effect for the period of surrender; and

·   any transfer of loan interest charged or credited that would have occurred during the period of surrender will been transferred as of the date(s) such transfers would have otherwise occurred.

Policy restoration is not a contract right of the policy, it is an administrative procedure based on requirements of state insurance law and the terms are subject to change without notice at any time.

Maximum Surrender Charge Calculation

The maximum surrender charge under the policy is based on the following calculation.

Maximum Surrender Charge                                                      26.50% multiplied by the lesser of (a) or (b), where:

(a) = the Specified Amount multiplied by the rate indicated on the chart "Surrender Target Factor" below divided by 1,000; and

(b) = Premiums paid by the policy owner during the first two policy years

Plus (c) multiplied by (d) where:

(c) = the Specified Amount divided by 1,000; and

(d) = the applicable rate from the "Administrative Target Factor" chart below.

The Surrender Target Factor allows the company to account for the probability that our costs incurred in the sales process will not be recouped.  The Administrative Target Factor allows the company to account for the probability (at various ages) that death will occur and no CDSC will be recouped.

Surrender Target Factor

Age	Male Non-Tobacco	Female Non-Tobacco	Male Tobacco	Female Tobacco
0	0.00	3.35	0.00	2.54
1	0.00	3.38	0.00	2.57
2	0.00	3.50	0.00	2.66
3	0.00	3.64	0.00	2.75
4	0.00	3.78	0.00	2.86
5	0.00	3.93	0.00	2.96
6	0.00	4.09	0.00	3.08
7	0.00	4.27	0.00	3.20

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Age	Male Non-Tobacco	Female Non-Tobacco	Male Tobacco	Female Tobacco
8	0.00	4.45	0.00	3.34
9	0.00	4.65	0.00	3.47
10	0.00	4.87	0.00	3.62
11	0.00	5.09	0.00	3.78
12	0.00	5.33	0.00	3.94
13	0.00	5.57	0.00	4.12
14	0.00	5.82	0.00	4.30
15	0.00	6.07	0.00	4.48
16	0.00	6.31	0.00	4.67
17	0.00	6.55	0.00	4.87
18	5.11	6.80	4.27	5.08
19	5.30	7.05	4.45	5.29
20	5.50	7.32	4.64	5.52
21	5.71	7.60	4.83	5.76
22	5.93	7.90	5.04	6.01
23	6.17	8.22	5.26	6.28
24	6.42	8.57	5.49	6.56
25	6.69	8.94	5.73	6.86
26	6.99	9.34	5.99	7.17
27	7.30	9.77	6.25	7.50
28	7.63	10.22	6.54	7.85
29	7.98	10.71	6.84	8.22
30	8.36	11.23	7.16	8.61
31	8.76	11.79	7.49	9.02
32	9.19	12.38	7.85	9.45
33	9.64	13.01	8.22	9.91
34	10.12	13.67	8.62	10.39
35	10.63	14.38	9.04	10.90
36	11.16	15.12	9.48	11.44
37	11.73	15.92	9.95	12.01
38	12.34	16.75	10.44	12.60
39	12.97	17.64	10.96	13.22
40	13.65	18.58	11.50	13.87
41	14.36	19.56	12.07	14.55
42	15.12	20.60	12.67	15.26
43	15.93	21.70	13.30	16.01
44	16.78	22.87	13.97	16.79
45	17.68	24.09	14.68	17.60
46	18.65	25.39	15.42	18.47
47	19.67	26.76	16.21	19.37
48	20.76	28.21	17.05	20.33
49	21.92	29.76	17.93	21.34
50	23.15	31.40	18.87	22.40
51	24.47	33.13	19.87	23.53
52	25.87	34.98	20.93	24.72
53	27.37	36.93	22.05	25.97
54	28.97	38.99	23.25	27.30
55	30.67	41.17	24.51	28.70
56	32.49	43.48	25.86	30.18
57	34.42	45.92	27.31	31.76
58	36.49	48.52	28.86	33.46
59	38.71	51.28	30.52	35.28
60	41.09	54.23	32.32	37.25
61	43.63	57.36	34.26	39.37
62	46.36	60.70	36.35	41.65
63	49.28	64.24	38.59	44.09
64	52.40	67.98	40.99	46.69
65	55.75	71.92	43.56	49.46

4

Age		Male Non-Tobacco		Female Non-Tobacco		Male Tobacco		Female Tobacco
	66		59.32		76.10		46.32		52.41
	67		63.16		80.52		49.30		55.57
	68		67.28		85.23		52.52		58.99
	69		71.73		90.27		56.04		62.72
	70		76.52		95.66		59.88		66.80
	71		81.69		101.41		64.08		71.26
	72		87.24		107.54		68.67		76.11
	73		93.18		114.01		73.64		81.35
	74		99.50		120.81		79.03		86.97
	75		106.21		127.90		84.84		92.97
	76		113.33		135.27		91.10		99.39
	77		120.92		142.94		97.88		106.27
	78		129.04		150.99		105.24		113.68
	79		137.79		159.53		113.28		121.73
	80		147.23		168.60		122.07		130.49
	81		147.23		168.60		122.07		130.49
	82		147.23		168.60		122.07		130.49
	83		147.23		168.60		122.07		130.49
	84		147.23		168.60		122.07		130.49
	85		147.23		168.60		122.07		130.49

Administrative Target Factor

Issue Age	Administrative Target Component With Specified Amount Less Than $100,000	Administrative Target Component With Specified Amount Of $100,000 And More
0 through 35	6.00	4.00
36 through 55	7.50	5.00
56 through 85	7.50	6.50

Illustrations

Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insured's age and premium class, the Death Benefits option, face amount, planned periodic Premiums, and Riders requested.  We reserve the right to charge a reasonable fee of no more than $25 for this service to persons who request more than one policy illustration during a policy year.

Advertising

Rating Agencies

Independent financial rating services, including Moody's, Standard & Poor's and A.M. Best Company rank and rate us.  The purpose of these ratings is to reflect the financial strength or claims-paying ability of Nationwide.  The ratings are not intended to reflect the Investment Experience or financial strength of the variable account.  We may advertise these ratings from time to time.  In addition, we may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend us or the policies.  Furthermore, we may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions.

Money Market Yields

We 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.

5

Historical Performance of the Sub-Accounts

We will advertise historical performance of the sub-accounts in accordance with SEC prescribed calculations.  Please note that 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.

Additional Materials.  We may provide information on various topics to you and prospective policy owners in advertising, sales literature or other materials.

Tax Definition of Life Insurance

Section 7702(b)(1) of the Internal Revenue Code provides that if one of two alternate tests is met, a policy will be treated as life insurance for federal tax purposes.  The two tests are referred to as the Cash Value Accumulation Test and the Guideline Premium/Cash Value Corridor Test.  Both tests are available to flexible premium policies such as this one.

The tables below show, numerically, the requirements for each test.

Guideline Premium/Cash Value Corridor Test

Table of Applicable Percentages of Cash Value

Attained Age of Insured	Percentage of Cash Value
0-40	250%
41	243%
42	236%
43	229%
44	222%
45	215%
46	209%
47	203%
48	197%
49	191%
50	185%
51	178%
52	171%
53	164%
54	157%
55	150%
56	146%
57	142%
58	138%
59	134%
60	130%
61	128%
62	126%
63	124%
64	122%
65	120%
66	119%
67	118%
68	117%
69	116%
70	115%
71	113%
72	111%
73	109%
74	107%
75	105%

6

Attained Age of Insured	Percentage of Cash Value
76	105%
77	105%
78	105%
79	105%
80	105%
81	105%
82	105%
83	105%
84	105%
85	105%
86	105%
87	105%
88	105%
89	105%
90	105%
91	104%
92	103%
93	102%
94	101%
95	101%
96	101%
97	101%
98	101%
99	101%
100	100%

7

The table below provides an example of applicable percentages for the Cash Value Accumulation Test.  This example is for a male non-tobacco preferred issue age 55.

Cash value Accumulation Test

Table of Applicable Percentages of Cash Value Policy Year	Percentage of Cash Value
1	302%
2	290%
3	279%
4	269%
5	259%
6	249%
7	240%
8	231%
9	223%
10	215%
11	207%
12	200%
13	193%
14	186%
15	180%
16	174%
17	169%
18	164%
19	159%
20	154%
21	150%
22	146%
23	142%
24	139%
25	136%
26	133%
27	130%
28	127%
29	125%
30	123%
31	121%
32	119%
33	118%
34	116%
35	115%
36	113%
37	112%
38	111%
39	110%
40	108%
41	107%
42	106%
43	104%
44	103%
45	102%

8

The Cash Value Accumulation Test also requires the Death Benefit to exceed an applicable percentage of the cash value.  These applicable percentages are calculated by determining net single premiums, as defined in Code Section 7702(b), for each policy year given a set of actuarial assumptions.  The relevant material assumptions include an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Revenue Code Section 7702 for the Cash Value Accumulation Test.  The resulting net single premiums are then inverted (i.e., multiplied by 1/net single premium) to give the applicable cash value  percentages.  These premiums vary with the ages, sexes, and risk classifications of the Insureds.

9

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

Contract Owners of Nationwide VLI Separate Account-4:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide VLI Separate Account-4 (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2010, and the related statements of operations for the year then ended, the statements of changes in contract owners’ equity for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. 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, 2010, 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, 2010, the results of their operations for the year then ended, the changes in contract owners’ equity for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/    KPMG LLP

Columbus, Ohio

March 9, 2011

2

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

Assets:
Investments at fair value:
Asset Allocation Fund - Class 2 (AMVAA2)
86,194 shares (cost $1,151,092)	$	1,393,759
Bond Fund - Class 2 (AMVBD2)
109,315 shares (cost $1,124,577)		1,154,365
Global Small Capitalization Fund - Class 2 (AMVGS2)
57,297 shares (cost $911,888)		1,223,284
Growth Fund - Class 2 (AMVGR2)
39,088 shares (cost $1,565,210)		2,124,024
Large Cap Core V.I. Fund - Class II (MLVLC2)
84,377 shares (cost $1,607,762)		1,918,725
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)
382,974 shares (cost $5,785,652)		6,177,372
Variable Series, Inc. - Social Equity Portfolio (CVSSE)
13,513 shares (cost $217,722)		261,473
Credit Suisse Trust- International Equity Flex III Portfolio (CSIEF3)
153,998 shares (cost $874,328)		1,011,766
U.S. Equity Flex I Portfolio (WSCP)
137,682 shares (cost $1,621,313)		1,961,963
Variable Account Fund, Inc. - Value Portfolio (DAVVL)
204,401 shares (cost $2,037,082)		2,446,675
Insurance Trust - Insurance Trust Diversified Mid Cap Growth Portfolio 1 (OGGO)
233,668 shares (cost $2,580,833)		3,951,334
Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)
17,846 shares (cost $75,995)		121,356
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
440,511 shares (cost $11,914,871)		12,959,846
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
1,706,699 shares (cost $56,252,813)		60,144,064
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)
297,229 shares (cost $1,544,269)		1,720,955
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
2,189,246 shares (cost $9,095,113)		12,391,135
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
538,197 shares (cost $26,373,425)		30,332,776
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
1,179,581 shares (cost $49,828,186)		66,103,706
Janus Aspen Series - Perkins Mid Cap Value Portfolio - Service Shares (JAMVS)
30,954 shares (cost $435,655)		487,216
Retirement Emerging Markets Equity Portfolio - Service Shares (LZREMS)
343,670 shares (cost $7,456,842)		8,017,829
Series Fund - Mid Cap Value Portfolio - Class VC (LOVMCV)
79,306 shares (cost $1,061,063)		1,313,308
Investors Growth Stock Series - Initial Class (MIGIC)
308,681 shares (cost $3,024,881)		3,398,582
Research International Series - Service Class (MVRISC)
62,801 shares (cost $632,229)		775,591
Value Series - Initial Class (MVFIC)
621,122 shares (cost $7,712,873)		8,062,170
Value Series - Service Class (MVFSC)
534,854 shares (cost $5,893,180)		6,862,183
Variable Insurance Trust II - International Value Portfolio - Service Class (MVIVSC)
1,306,359 shares (cost $18,607,839)		20,157,121
Core Plus Fixed Income Portfolio - Class I (MSVFI)
243,884 shares (cost $2,578,387)		2,441,280

(Continued)

3

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

Emerging Markets Debt Portfolio - Class I (MSEM)
4,089,703 shares (cost $32,665,629)	33,290,184
Mid Cap Growth Portfolio - Class I (MSVMG)
942,133 shares (cost $7,722,077)	11,418,653
The Universal Institutional Funds, Inc. - Capital Growth Portfolio - Class I (MSVEG)
6,754 shares (cost $120,196)	139,809
U.S. Real Estate Portfolio - Class I (MSVRE)
1,962,579 shares (cost $16,612,088)	25,336,897
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)
35,849 shares (cost $404,426)	393,267
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
2,653,409 shares (cost $37,044,686)	37,651,879
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
303,847 shares (cost $5,114,685)	5,259,600
American Funds NVIT Bond Fund - Class II (GVABD2)
240,990 shares (cost $2,469,944)	2,665,353
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
260,138 shares (cost $5,600,542)	5,678,806
American Funds NVIT Growth Fund - Class II (GVAGR2)
151,148 shares (cost $8,052,691)	8,205,845
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
70,720 shares (cost $2,279,791)	2,607,449
Federated NVIT High Income Bond Fund - Class I (HIBF)
3,318,696 shares (cost $21,002,169)	22,733,070
Federated NVIT High Income Bond Fund - Class III (HIBF3)
1,752,651 shares (cost $11,359,150)	11,988,136
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
2,103,254 shares (cost $20,050,991)	27,741,926
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
1,282,132 shares (cost $16,949,864)	16,885,677
Gartmore NVIT International Equity Fund - Class I (GIG)
624,837 shares (cost $4,516,600)	5,617,288
Gartmore NVIT International Equity Fund - Class III (GIG3)
436,273 shares (cost $3,188,458)	3,926,458
Gartmore NVIT International Equity Fund - Class VI (NVIE6)
71,638 shares (cost $529,525)	642,589
Gartmore NVIT Worldwide Leaders Fund - Class I (GEF)
371,749 shares (cost $4,673,537)	4,193,334
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)
350 shares (cost $3,688)	3,943
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
1,745,920 shares (cost $13,575,838)	15,625,985
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
24,661 shares (cost $214,231)	254,997
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)
91,660 shares (cost $789,018)	820,358
NVIT Cardinal Balanced Fund - Class I (NVCRB1)
12,851,168 shares (cost $129,581,986)	134,166,197
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)
366,565 shares (cost $3,396,220)	3,716,970
NVIT Cardinal Conservative Fund - Class I (NVCCN1)
140,864 shares (cost $1,376,341)	1,472,024
NVIT Cardinal Moderate Fund - Class I (NVCMD1)
349,240 shares (cost $3,155,176)	3,597,168
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)
485,143 shares (cost $4,001,308)	4,832,020
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)
105,841 shares (cost $974,463)	1,113,451

(Continued)

4

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

NVIT Core Bond Fund - Class I (NVCBD1)
64,963 shares (cost $696,016)	684,056
NVIT Core Plus Bond Fund - Class I (NVLCP1)
20,933 shares (cost $234,501)	232,354
NVIT Fund - Class I (TRF)
9,436,847 shares (cost $90,239,047)	85,969,679
NVIT Government Bond Fund - Class I (GBF)
10,170,752 shares (cost $119,880,224)	116,861,937
NVIT Growth Fund - Class I (CAF)
987,833 shares (cost $10,380,853)	13,770,399
NVIT International Index Fund - Class II (GVIX2)
770,225 shares (cost $6,047,612)	6,577,722
NVIT International Index Fund - Class VI (GVIX6)
79,248 shares (cost $623,707)	675,985
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
3,011,697 shares (cost $30,535,277)	27,948,547
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
7,154 shares (cost $90,480)	93,007
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
8,872 shares (cost $118,090)	126,422
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
1,343,760 shares (cost $12,831,701)	13,692,915
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
8,156,402 shares (cost $84,052,900)	86,131,609
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
7,624,294 shares (cost $85,517,606)	79,292,660
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
1,761,115 shares (cost $17,825,984)	18,350,822
NVIT Mid Cap Index Fund - Class I (MCIF)
3,131,328 shares (cost $50,861,350)	57,804,311
NVIT Money Market Fund - Class I (SAM)
94,974,453 shares (cost $94,974,453)	94,974,453
NVIT Money Market Fund - Class V (SAM5)
247,808,504 shares (cost $247,808,504)	247,808,504
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
1,881,914 shares (cost $14,380,223)	18,405,119
NVIT Multi-Manager International Value Fund - Class I (GVDIVI)
87,529 shares (cost $1,254,377)	893,674
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
539,233 shares (cost $7,309,319)	5,478,612
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
1,316,677 shares (cost $11,857,676)	12,653,265
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)
792,749 shares (cost $6,815,936)	7,118,886
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
3,320,288 shares (cost $24,628,109)	35,327,867
NVIT Multi-Manager Mid Cap Value Fund - Class I (NVMMV1)
6,894 shares (cost $66,353)	70,938
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
1,158,229 shares (cost $9,681,418)	11,929,754
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
873,953 shares (cost $12,575,938)	13,485,088
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)
3,852,123 shares (cost $42,173,305)	40,254,689
NVIT Multi-Manager Small Company Fund - Class I (SCF)
3,556,702 shares (cost $58,652,971)	64,234,040
NVIT Multi-Sector Bond Fund - Class I (MSBF)
2,263,123 shares (cost $18,412,713)	19,417,593

(Continued)

5

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

NVIT Short Term Bond Fund - Class I (NVSTB1)
535,267 shares (cost $5,540,387)	5,556,076
NVIT Short Term Bond Fund - Class II (NVSTB2)
385,426 shares (cost $3,985,282)	3,985,302
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
8,090,454 shares (cost $122,489,646)	122,893,999
Templeton NVIT International Value Fund - Class III (NVTIV3)
13,228 shares (cost $180,113)	165,743
Van Kampen NVIT Comstock Value Fund - Class I (EIF)
973,266 shares (cost $10,704,905)	9,859,184
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
3,282,244 shares (cost $22,083,709)	28,292,945
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)
362,510 shares (cost $4,117,546)	4,060,114
Long-Term U.S. Government Portfolio - Administrative Class (PMVLGA)
3,560 shares (cost $39,610)	39,128
V.I. Basic Value Fund - Series I (AVBVI)
102,986 shares (cost $582,425)	657,051
V.I. Capital Appreciation Fund - Series I (AVCA)
41,017 shares (cost $870,580)	955,700
V.I. Capital Development Fund - Series I (AVCDI)
700,841 shares (cost $6,538,237)	9,398,272
V.I. High Yield Fund - Series I (AVHY1)
127,535 shares (cost $697,967)	682,313
V.I. International Growth Fund - Series I (AVIE)
1,376,176 shares (cost $34,326,902)	39,482,488
V.I. Mid Cap Core Equity Fund - Series I (AVMCCI)
8,502 shares (cost $92,326)	105,337
VPS Growth and Income Portfolio - Class A (ALVGIA)
651,816 shares (cost $12,374,994)	11,204,715
VPS International Value Portfolio - Class A (ALVIVA)
1,128,178 shares (cost $14,437,930)	16,809,859
VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)
675,640 shares (cost $8,358,774)	11,452,096
VP Income & Growth Fund - Class I (ACVIG)
2,812,905 shares (cost $19,048,017)	17,018,076
VP Inflation Protection Fund - Class II (ACVIP2)
2,817,858 shares (cost $29,743,671)	31,250,048
VP International Fund - Class I (ACVI)
1,145,539 shares (cost $8,329,033)	9,805,817
VP Mid Cap Value Fund - Class I (ACVMV1)
312,168 shares (cost $3,513,398)	4,414,061
VP Ultra(R) Fund - Class I (ACVU1)
110,000 shares (cost $779,246)	1,031,796
VP Value Fund - Class I (ACVV)
3,097,864 shares (cost $14,459,123)	18,153,484
VP Vista(SM) Fund - Class I (ACVVS1)
113,783 shares (cost $1,293,053)	1,859,212
MidCap Stock Portfolio - Initial Shares (DVMCS)
127,814 shares (cost $1,342,575)	1,683,311
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
2,908,660 shares (cost $28,029,899)	35,485,656
Stock Index Fund, Inc. - Initial Shares (DSIF)
9,125,767 shares (cost $264,625,273)	270,761,516
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)
346,578 shares (cost $7,975,786)	10,362,685
Appreciation Portfolio - Initial Shares (DCAP)
712,756 shares (cost $24,607,238)	25,260,065

(Continued)

6

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

Developing Leaders Portfolio - Initial Shares (DSC)
34,293 shares (cost $817,565)	1,049,017
International Value Portfolio - Initial Shares (DVIV)
2,077,203 shares (cost $22,702,998)	23,285,451
Variable Series II - Dreman Small Mid Cap Value VIP - Class B (SVSSVB)
152,622 shares (cost $1,288,255)	1,861,988
Variable Series II - Strategic Value VIP - Class B (SVSHEB)
24,581 shares (cost $180,180)	200,335
Capital Appreciation Fund II - Primary Shares (FVCA2P)
131,398 shares (cost $777,908)	840,949
Quality Bond Fund II - Primary Shares (FQB)
3,202,636 shares (cost $34,851,653)	36,990,447
VIP Fund - Contrafund Portfolio - Service Class (FCS)
2,848,122 shares (cost $51,163,514)	67,813,791
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
500,858 shares (cost $6,949,196)	9,987,112
VIP Fund - Equity-Income Portfolio - Service Class (FEIS)
3,469,201 shares (cost $77,103,344)	65,776,048
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
180,762 shares (cost $1,676,170)	1,916,076
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
718,199 shares (cost $6,288,964)	7,598,546
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
391,400 shares (cost $3,656,675)	3,992,281
VIP Fund - Growth & Income Portfolio - Service Class (FGIS)
6,145 shares (cost $62,746)	77,062
VIP Fund - Growth Opportunities Portfolio - Service Class (FGOS)
85,846 shares (cost $1,104,087)	1,535,792
VIP Fund - Growth Portfolio - Service Class (FGS)
1,897,519 shares (cost $63,927,927)	70,189,218
VIP Fund - High Income Portfolio - Service Class (FHIS)
2,697,678 shares (cost $13,695,724)	14,945,134
VIP Fund - High Income Portfolio - Service Class R (FHISR)
746,537 shares (cost $3,856,994)	4,120,886
VIP Fund - Index 500 Portfolio - Initial Class (FIP)
189,983 shares (cost $23,954,619)	25,151,896
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
3,159,152 shares (cost $40,080,084)	40,216,004
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
1,521,075 shares (cost $39,721,245)	49,465,361
VIP Fund - Overseas Portfolio - Service Class (FOS)
1,570,107 shares (cost $29,298,182)	26,220,784
VIP Fund - Overseas Portfolio - Service Class R (FOSR)
748,997 shares (cost $14,294,209)	12,493,268
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
421,145 shares (cost $3,175,715)	4,089,320
VIP Fund - VIP Freedom Fund 2015 Portfolio - Service Class (FF15S)
200,275 shares (cost $1,958,931)	2,140,943
VIP Fund - VIP Freedom Fund 2025 Portfolio - Service Class (FF25S)
118,840 shares (cost $1,105,922)	1,246,628
Franklin Income Securities Fund - Class 2 (FTVIS2)
286,467 shares (cost $4,158,731)	4,245,441
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)
634,759 shares (cost $11,615,548)	12,155,632
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)
714,259 shares (cost $11,328,464)	11,820,985
Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)
376,515 shares (cost $4,325,776)	6,118,370

(Continued)

7

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

Mutual Discovery Global Securities Fund - Class 2 (FTVMD2)
9,812 shares (cost $168,555)	203,982
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
502,462 shares (cost $4,759,288)	5,642,649
Templeton Foreign Securities Fund - Class 1 (TIF)
110,660 shares (cost $1,635,730)	1,608,989
Templeton Foreign Securities Fund - Class 2 (TIF2)
817,133 shares (cost $9,420,157)	11,676,833
Templeton Foreign Securities Fund - Class 3 (TIF3)
384,331 shares (cost $5,752,842)	5,472,875
Templeton Global Bond Securities Fund - Class 2 (FTVGI2)
1,977,535 shares (cost $37,691,320)	38,542,161
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
491,006 shares (cost $8,571,902)	9,564,790
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
47,063 shares (cost $319,751)	362,856
Goldman Sachs VIT - Goldman Sachs Mid Cap Value Fund - Institutional Shares (GVMCE)
3,607,487 shares (cost $42,231,735)	50,865,564
ClearBridge Variable Small Cap Growth Portfolio - Class I (SBVSG)
14,185 shares (cost $156,239)	219,297
Lincoln VIP Trust - Baron Growth Opportunities Funds - Service Class (BNCAI)
426,208 shares (cost $9,834,114)	12,901,322
Guardian Portfolio - I Class Shares (AMGP)
98,504 shares (cost $1,316,837)	1,865,660
Mid-Cap Growth Portfolio - I Class Shares (AMCG)
222,872 shares (cost $5,233,224)	6,111,158
Partners Portfolio - I Class Shares (AMTP)
357,880 shares (cost $3,593,455)	4,033,306
Regency Portfolio - I Class Shares (AMRI)
284,108 shares (cost $3,038,816)	4,363,905
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
155,459 shares (cost $1,395,346)	1,905,933
Socially Responsive Portfolio - I Class Shares (AMSRS)
176,623 shares (cost $2,449,202)	2,624,624
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
851,182 shares (cost $26,696,398)	34,345,206
Global Securities Fund/VA - Class 3 (OVGS3)
571,130 shares (cost $17,132,816)	17,419,468
Global Securities Fund/VA - Non-Service Shares (OVGS)
1,706,423 shares (cost $48,587,865)	51,704,608
High Income Fund/VA - Class 3 (OVHI3)
634,986 shares (cost $1,106,215)	1,358,870
High Income Fund/VA - Non-Service Shares (OVHI)
177,668 shares (cost $1,329,001)	378,433
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
1,334,751 shares (cost $27,307,977)	27,869,596
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
267,217 shares (cost $4,009,393)	4,719,049
MidCap Fund/VA - Non-Service Shares (OVAG)
566,703 shares (cost $24,373,926)	26,380,044
Strategic Bond Fund/VA - Non-Service Shares (OVSB)
370,239 shares (cost $1,766,434)	2,065,934
All Asset Portfolio - Administrative Class (PMVAAA)
192,097 shares (cost $2,045,867)	2,109,229
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)
169,148 shares (cost $1,818,353)	1,928,282
Low Duration Portfolio - Administrative Class (PMVLDA)
6,836,523 shares (cost $69,699,291)	71,373,305

(Continued)

8

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

Real Return Portfolio - Administrative Class (PMVRRA)
6,865,067 shares (cost $85,309,357)	90,206,981
Total Return Portfolio - Administrative Class (PMVTRA)
32,362,011 shares (cost $357,445,630)	358,571,082
Variable Contracts Trust - Emerging Markets VCT Portfolio - Class I Shares (PIVEMI)
63,568 shares (cost $1,791,720)	2,003,673
Variable Contracts Trust - High Yield VCT Portfolio - Class I Shares (PIHYB1)
1,191,154 shares (cost $10,560,845)	12,673,882
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
48,128 shares (cost $799,467)	781,112
Putnam VT International Equity Fund - IB Shares (PVTIGB)
97,877 shares (cost $1,318,520)	1,152,991
Putnam VT Small Cap Value Fund - IB Shares (PVTSCB)
561 shares (cost $7,060)	7,734
Putnam VT Voyager Fund - IB Shares (PVTVB)
39,658 shares (cost $1,185,796)	1,533,180
Global Real Estate Portfolio - Class II (VKVGR2)
148,708 shares (cost $1,130,781)	1,249,148
Micro-Cap Portfolio - Investment Class (ROCMC)
3,861,568 shares (cost $31,934,270)	47,033,893
Small-Cap Portfolio - Investment Class (ROCSC)
31,549 shares (cost $235,328)	329,683
Blue Chip Growth Portfolio - II (TRBCG2)
41,078 shares (cost $426,131)	452,682
Equity Income Portfolio - II (TREI2)
3,058,108 shares (cost $48,170,208)	60,795,190
Health Sciences Portfolio - II (TRHS2)
169,509 shares (cost $2,003,911)	2,464,658
Mid-Cap Growth Portfolio - II (TRMCG2)
926,800 shares (cost $16,638,022)	22,335,888
New America Growth Portfolio (TRNAG1)
910,680 shares (cost $15,784,924)	20,362,807
Personal Strategy Balanced Portfolio (TRPSB1)
81,812 shares (cost $1,388,310)	1,492,246
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
1,485,240 shares (cost $13,870,622)	21,001,289
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)
1,554,550 shares (cost $45,342,770)	58,559,887
Vanguard(R) Variable Insurance Funds - Balanced Portfolio (VVB)
102,530 shares (cost $1,580,468)	1,917,303
Vanguard(R) Variable Insurance Funds - Diversified Value Portfolio (VVDV)
138,172 shares (cost $1,444,412)	1,703,660
Vanguard(R) Variable Insurance Funds - International Portfolio (VVI)
240,141 shares (cost $3,377,277)	4,392,177
Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)
603,903 shares (cost $7,611,811)	9,016,278
Vanguard(R) Variable Insurance Funds - REIT Index Portfolio (VVREI)
202,522 shares (cost $2,051,550)	2,096,105
Vanguard(R) Variable Insurance Funds - Short-Term Investment-Grade Portfolio (VVSTC)
323,491 shares (cost $3,335,905)	3,548,697
Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)
679,605 shares (cost $8,230,015)	8,196,034
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
833,443 shares (cost $7,699,762)	8,260,753
Ivy Fund Variable Insurance Portfolios, Inc. - Growth (WRGP)
141,530 shares (cost $1,198,185)	1,468,739
Ivy Fund Variable Insurance Portfolios, Inc. - Real Estate Securities (WRRESP)
235,606 shares (cost $1,274,869)	1,526,351

(Continued)

9

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010

Ivy Fund Variable Insurance Portfolios, Inc. - Science and Technology (WRSTP)
80,833 shares (cost $1,248,058)		1,352,285
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
199,529 shares (cost $3,061,458)		4,245,977
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
482,860 shares (cost $6,721,117)		8,894,279
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
846,434 shares (cost $5,785,230)		6,813,793
Total Investments	$	4,097,447,277
Accounts Receivable		727,074
Accounts Payable - U.S. Equity Flex I Portfolio (WSCP)		(828,567	)
	$	4,097,345,784
Contract Owners’ Equity:
Accumulation units		4,097,345,784
Total Contract Owners’ Equity (note 8)	$	4,097,345,784

See accompanying notes to financial statements.

10

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	Total			AMVAA2			AMVBD2			AMVGS2			AMVGR2			MLVLC2			MLVGA2			CVSSE
Reinvested dividends	$	52,849,148			24,611			33,702			18,674			13,851			16,490			63,465			138
Asset charges (note 3)		(4,797,611	)		(2,065	)		(2,183	)		(2,237	)		(3,718	)		(3,659	)		-			(342	)
Net investment income (loss)		48,051,537			22,546			31,519			16,437			10,133			12,831			63,465			(204	)
Realized gain (loss) on investments		(169,061,674	)		(66,157	)		34,343			120,547			34,614			50,459			90,734			(6,435	)
Change in unrealized gain (loss) on investments		564,262,211			196,109			(12,968	)		77,067			243,725			87,026			330,292			43,284
Net gain (loss) on investments		395,200,537			129,952			21,375			197,614			278,339			137,485			421,026			36,849
Reinvested capital gains		23,983,582			-			-			-			-			-			31,733			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	467,235,656			152,498			52,894			214,051			288,472			150,316			516,224			36,645
Investment Activity:	CSIEF3			WSCP			DAVVL			OGGO			JPMMV1			JABS			JACAS			JAGTS2
Reinvested dividends	$	963			2,722			30,694			-			2,123			310,004			130,512			-
Asset charges (note 3)		(693	)		-			(3,845	)		(6,723	)		(279	)		(19,465	)		(66,497	)		-
Net investment income (loss)		270			2,722			26,849			(6,723	)		1,844			290,539			64,015			-
Realized gain (loss) on investments		2,478			33,671			354,968			280,247			26,764			439,703			1,885,956			20,465
Change in unrealized gain (loss) on investments		138,462			215,891			(133,085	)		463,624			4,223			173,573			1,660,766			176,686
Net gain (loss) on investments		140,940			249,562			221,883			743,871			30,987			613,276			3,546,722			197,151
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	141,210			252,284			248,732			737,148			32,831			903,815			3,610,737			197,151

(Continued)

11

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	JAGTS			JAIGS2			JAIGS			JAMVS			LZREMS			LOVMCV			MIGIC			MVRISC
Reinvested dividends	$	-			139,019			326,181			1,656			80,180			4,670			14,365			8,836
Asset charges (note 3)		(6,694	)		-			(84,704	)		(451	)		(4,710	)		(2,029	)		-			(1,586	)
Net investment income (loss)		(6,694	)		139,019			241,477			1,205			75,470			2,641			14,365			7,250
Realized gain (loss) on investments		516,960			(208,457	)		741,576			4,709			67,842			287,966			7,810			(10,221	)
Change in unrealized gain (loss) on investments		2,018,995			5,882,163			12,993,882			51,561			560,987			(15,216	)		357,498			70,928
Net gain (loss) on investments		2,535,955			5,673,706			13,735,458			56,270			628,829			272,750			365,308			60,707
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,529,261			5,812,725			13,976,935			57,475			704,299			275,391			379,673			67,957
Investment Activity:	MVFIC			MVFSC			MVIVSC			MSVFI			MSEM			MSVMG			MSVEG			MSVRE
Reinvested dividends	$	105,911			60,493			220,731			152,267			411,868			-			568			540,643
Asset charges (note 3)		-			(10,861	)		(38,210	)		-			(12,713	)		(23,540	)		(885	)		(51,103	)
Net investment income (loss)		105,911			49,632			182,521			152,267			399,155			(23,540	)		(317	)		489,540
Realized gain (loss) on investments		(242,905	)		173,246			(93,156	)		(70,775	)		271,162			318,696			72,477			(750,645	)
Change in unrealized gain (loss) on investments		958,030			365,978			1,578,836			90,701			(167,202	)		2,519,164			(10,654	)		6,194,105
Net gain (loss) on investments		715,125			539,224			1,485,680			19,926			103,960			2,837,860			61,823			5,443,460
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	821,036			588,856			1,668,201			172,193			503,115			2,814,320			61,506			5,933,000

(Continued)

12

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	NVAGF3			NVAMV1			GVAAA2			GVABD2			GVAGG2			GVAGR2			GVAGI2			HIBF
Reinvested dividends	$	22,047			58,025			69,483			58,669			43,712			12,128			22,997			1,901,151
Asset charges (note 3)		-			-			-			-			-			-			-			(41,053	)
Net investment income (loss)		22,047			58,025			69,483			58,669			43,712			12,128			22,997			1,860,098
Realized gain (loss) on investments		7,759			10,365			(143,324	)		(26,339	)		(339,175	)		(669,336	)		(84,523	)		(1,002,551	)
Change in unrealized gain (loss) on investments		(2,684	)		607,953			670,464			135,883			857,732			1,909,972			307,631			1,854,148
Net gain (loss) on investments		5,075			618,318			527,140			109,544			518,557			1,240,636			223,108			851,597
Reinvested capital gains		9,387			79,381			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	36,509			755,724			596,623			168,213			562,269			1,252,764			246,105			2,711,695
Investment Activity:	HIBF3			GEM			GEM3			GVGU1			GIG			GIG3			NVIE6			GEF
Reinvested dividends	$	924,537			15,298			10,804			22,974			51,695			35,622			4,923			39,944
Asset charges (note 3)		-			(49,515	)		-			(691	)		(3,852	)		-			-			(1,133	)
Net investment income (loss)		924,537			(34,217	)		10,804			22,283			47,843			35,622			4,923			38,811
Realized gain (loss) on investments		1,542,620			(4,893,423	)		(1,813,522	)		(879,814	)		133,598			71,922			16,572			(206,407	)
Change in unrealized gain (loss) on investments		(1,162,778	)		8,698,405			4,018,759			759,565			473,917			343,925			60,048			583,671
Net gain (loss) on investments		379,842			3,804,982			2,205,237			(120,249	)		607,515			415,847			76,620			377,264
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,304,379			3,770,765			2,216,041			(97,966	)		655,358			451,469			81,543			416,075

(Continued)

13

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	GEF3			NVNMO1			NVNSR1			NVCRA1			NVCRB1			NVCCA1			NVCCN1			NVCMD1
Reinvested dividends	$	78			30,365			1,767			2,354			8,651			13,324			15,774			26,090
Asset charges (note 3)		-			-			-			(8	)		(15,574	)		-			(1	)		-
Net investment income (loss)		78			30,365			1,767			2,346			(6,923	)		13,324			15,773			26,090
Realized gain (loss) on investments		(180	)		253,245			20,922			73,149			66,611			60,613			40,000			124,735
Change in unrealized gain (loss) on investments		(169	)		549,952			21,821			(41,470	)		4,468,297			200,530			8,688			176,046
Net gain (loss) on investments		(349	)		803,197			42,743			31,679			4,534,908			261,143			48,688			300,781
Reinvested capital gains		-			1,269,994			-			57,146			-			84			19,495			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	(271	)		2,103,556			44,510			91,171			4,527,985			274,551			83,956			326,871
Investment Activity:	NVCMA1			NVCMC1			NVCBD1			NVLCP1			TRF			GVGF1			GBF			CAF
Reinvested dividends	$	27,106			9,913			20,139			5,098			2,167,636			8,081			3,408,470			79,540
Asset charges (note 3)		(6	)		(5	)		-			-			(259,322	)		(545	)		(176,036	)		(1,627	)
Net investment income (loss)		27,100			9,908			20,139			5,098			1,908,314			7,536			3,232,434			77,913
Realized gain (loss) on investments		127,196			18,357			37,064			19,902			(58,516,108	)		630,658			1,219,784			1,389,135
Change in unrealized gain (loss) on investments		385,280			59,821			(18,373	)		(15,400	)		80,596,372			(589,487	)		(3,696,043	)		870,743
Net gain (loss) on investments		512,476			78,178			18,691			4,502			22,080,264			41,171			(2,476,259	)		2,259,878
Reinvested capital gains		-			1,756			6,641			5,146			-			-			4,377,401			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	539,576			89,842			45,471			14,746			23,988,578			48,707			5,133,576			2,337,791

(Continued)

14

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	GVGH1			GVGHS			GVIX2			GVIX6			GVIDA			NVDBL2			NVDCA2			GVIDC
Reinvested dividends	$	7,865			8,326			128,732			11,823			463,483			408			534			302,909
Asset charges (note 3)		(959	)		-			(13,635	)		-			(18,347	)		-			-			(9,562	)
Net investment income (loss)		6,906			8,326			115,097			11,823			445,136			408			534			293,347
Realized gain (loss) on investments		(25,626	)		24,927			261,254			(58,804	)		(3,494,307	)		462			5,490			(28,611	)
Change in unrealized gain (loss) on investments		61,559			11,752			249,614			82,237			6,696,983			2,413			5,932			475,816
Net gain (loss) on investments		35,933			36,679			510,868			23,433			3,202,676			2,875			11,422			447,205
Reinvested capital gains		-			-			-			-			-			142			175			37,188
Net increase (decrease) in contract owners’ equity resulting from operations	$	42,839			45,005			625,965			35,256			3,647,812			3,425			12,131			777,740
Investment Activity:	GVIDM			GVDMA			GVDMC			GVUS1			MCIF			SAM			SAM5			NVMIG3
Reinvested dividends	$	1,624,464			1,390,161			398,278			1,595			655,719			134			371			131,546
Asset charges (note 3)		(44,303	)		(21,005	)		(8,663	)		(203	)		(59,580	)		(18,261	)		(551,442	)		-
Net investment income (loss)		1,580,161			1,369,156			389,615			1,392			596,139			(18,127	)		(551,071	)		131,546
Realized gain (loss) on investments		(1,492,261	)		(1,477,072	)		(501,352	)		43,826			(1,427,533	)		-			-			260,184
Change in unrealized gain (loss) on investments		8,549,098			9,116,754			1,626,837			8,542			13,058,095			-			-			1,891,077
Net gain (loss) on investments		7,056,837			7,639,682			1,125,485			52,368			11,630,562			-			-			2,151,261
Reinvested capital gains		-			-			-			-			58,668			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	8,636,998			9,008,838			1,515,100			53,760			12,285,369			(18,127	)		(551,071	)		2,282,807

(Continued)

15

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	GVDIVI			GVDIV3			NVMLG1			NVMLV1			NVMMG1			NVMMV1			NVMMV2			SCGF
Reinvested dividends	$	19,299			119,439			5,878			41,751			-			594			147,777			-
Asset charges (note 3)		-			-			(2,871	)		(1,193	)		(726	)		(55	)		-			(7,578	)
Net investment income (loss)		19,299			119,439			3,007			40,558			(726	)		539			147,777			(7,578	)
Realized gain (loss) on investments		(137,238	)		(802,577	)		12,681			243,585			1,318,796			16			276,152			(190,504	)
Change in unrealized gain (loss) on investments		170,412			1,032,832			542,323			(35,905	)		6,506,187			4,585			1,070,875			3,000,202
Net gain (loss) on investments		33,174			230,255			555,004			207,680			7,824,983			4,601			1,347,027			2,809,698
Reinvested capital gains		-			-			460,542			273,687			-			3,159			530,955			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	52,473			349,694			1,018,553			521,925			7,824,257			8,299			2,025,759			2,802,120
Investment Activity:	SCVF			SCF			MSBF			NVSTB1			NVSTB2			GGTC			GGTC3			GVUG1
Reinvested dividends	$	218,264			175,996			1,251,394			65,828			43,530			-			-			-
Asset charges (note 3)		(23,192	)		(83,584	)		(17,367	)		(9,819	)		-			(2,461	)		-			(290	)
Net investment income (loss)		195,072			92,412			1,234,027			56,009			43,530			(2,461	)		-			(290	)
Realized gain (loss) on investments		(2,077,629	)		(11,969,302	)		(594,018	)		7,142			8,220			(9,198	)		241,631			(526,543	)
Change in unrealized gain (loss) on investments		10,773,319			26,741,507			1,268,594			8,211			14,658			144,464			(196,316	)		662,486
Net gain (loss) on investments		8,695,690			14,772,205			674,576			15,353			22,878			135,266			45,315			135,943
Reinvested capital gains		-			-			-			10,269			7,416			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	8,890,762			14,864,617			1,908,603			81,631			73,824			132,805			45,315			135,653

(Continued)

16

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	NVOLG1			NVTIV3			EIF			NVRE1			AMTB			PMVLGA			AVBVI			AVCA
Reinvested dividends	$	5,813			2,735			140,424			488,777			236,887			128			3,916			6,540
Asset charges (note 3)		-			-			(663	)		(2,665	)		-			(2	)		(1,262	)		-
Net investment income (loss)		5,813			2,735			139,761			486,112			236,887			126			2,654			6,540
Realized gain (loss) on investments		52,851			(661	)		(307,357	)		1,040,735			(216,459	)		44			124,938			(82,744	)
Change in unrealized gain (loss) on investments		394,273			(13,933	)		1,545,904			3,056,673			207,199			(482	)		(66,904	)		203,946
Net gain (loss) on investments		447,124			(14,594	)		1,238,547			4,097,408			(9,260	)		(438	)		58,034			121,202
Reinvested capital gains		33,871			21,213			-			2,139,672			-			162			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	486,808			9,354			1,378,308			6,723,192			227,627			(150	)		60,688			127,742
Investment Activity:	AVCDI			AVHY1			AVIE			AVMCCI			ALVGIA			ALVIVA			ALVSVA			ACVIG
Reinvested dividends	$	-			39,472			673,202			550			-			536,546			40,783			245,165
Asset charges (note 3)		(14,089	)		(484	)		(68,052	)		(87	)		(17,748	)		(41,835	)		(8,590	)		(6,512	)
Net investment income (loss)		(14,089	)		38,988			605,150			463			(17,748	)		494,711			32,193			238,653
Realized gain (loss) on investments		(1,416,091	)		3,980			(2,802,187	)		598			(1,294,162	)		593,155			(226,218	)		(375,341	)
Change in unrealized gain (loss) on investments		2,940,474			(15,654	)		5,889,133			13,011			2,586,997			(715,148	)		2,297,123			2,264,346
Net gain (loss) on investments		1,524,383			(11,674	)		3,086,946			13,609			1,292,835			(121,993	)		2,070,905			1,889,005
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,510,294			27,314			3,692,096			14,072			1,275,087			372,718			2,103,098			2,127,658

(Continued)

17

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	ACVIP2			ACVI			ACVMV1			ACVU1			ACVV			ACVVS1			DVMCS			DVSCS
Reinvested dividends	$	519,194			373,444			83,170			4,815			896,573			-			9,795			159,803
Asset charges (note 3)		-			(32,720	)		(1,782	)		(1,222	)		(40,112	)		(3,462	)		(2,082	)		(42,196	)
Net investment income (loss)		519,194			340,724			81,388			3,593			856,461			(3,462	)		7,713			117,607
Realized gain (loss) on investments		54,863			(114,692	)		(10,766	)		(29,018	)		(12,637,551	)		198,888			(50,141	)		(4,941,906	)
Change in unrealized gain (loss) on investments		968,994			1,625,362			565,974			153,537			17,323,542			195,418			357,857			11,513,004
Net gain (loss) on investments		1,023,857			1,510,670			555,208			124,519			4,685,991			394,306			307,716			6,571,098
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,543,051			1,851,394			636,596			128,112			5,542,452			390,844			315,429			6,688,705
Investment Activity:	DSIF			DSRG			DCAP			DSC			DVIV			SVSSVB			SVSHEB			FVCA2P
Reinvested dividends	$	4,708,861			90,237			511,997			4,743			421,863			15,522			5,197			6,453
Asset charges (note 3)		(372,942	)		(1,401	)		(20,346	)		-			(50,355	)		(3,532	)		(693	)		-
Net investment income (loss)		4,335,919			88,836			491,651			4,743			371,508			11,990			4,504			6,453
Realized gain (loss) on investments		(5,752,564	)		321,718			(691,095	)		(88,907	)		(3,086,519	)		7,531			66,688			(4,068	)
Change in unrealized gain (loss) on investments		36,844,292			988,748			3,577,649			261,421			3,650,644			339,495			(56,528	)		88,407
Net gain (loss) on investments		31,091,728			1,310,466			2,886,554			172,514			564,125			347,026			10,160			84,339
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	35,427,647			1,399,302			3,378,205			177,257			935,633			359,016			14,664			90,792

(Continued)

18

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	FALF			FVMOS			FQB			FCS			FNRS2			FEIS			FF10S			FF20S
Reinvested dividends	$	3,510			26,523			1,791,732			718,266			31,690			1,065,555			37,462			149,468
Asset charges (note 3)		-			-			(40,991	)		(141,117	)		-			(49,446	)		(151	)		(6,283	)
Net investment income (loss)		3,510			26,523			1,750,741			577,149			31,690			1,016,109			37,311			143,185
Realized gain (loss) on investments		(68,794	)		(33,427	)		(10,753	)		(28,369,710	)		(2,058,408	)		(4,211,956	)		(107,049	)		(286,515	)
Change in unrealized gain (loss) on investments		72,384			14,290			1,247,838			48,385,295			3,538,726			11,998,977			248,709			1,059,262
Net gain (loss) on investments		3,590			(19,137	)		1,237,085			20,015,585			1,480,318			7,787,021			141,660			772,747
Reinvested capital gains		-			-			-			28,176			-			-			34,632			52,594
Net increase (decrease) in contract owners’ equity resulting from operations	$	7,100			7,386			2,987,826			20,620,910			1,512,008			8,803,130			213,603			968,526
Investment Activity:	FF30S			FGIS			FGOS			FGS			FHIS			FHISR			FIP			FIGBS
Reinvested dividends	$	71,096			442			1,287			109,207			1,106,839			304,869			456,597			1,379,019
Asset charges (note 3)		(1,476	)		(131	)		(1,822	)		(49,087	)		(14,554	)		-			(13,780	)		(30,407	)
Net investment income (loss)		69,620			311			(535	)		60,120			1,092,285			304,869			442,817			1,348,612
Realized gain (loss) on investments		(240,063	)		6,179			220,059			(83,728	)		(401,720	)		408,502			(202,734	)		266,091
Change in unrealized gain (loss) on investments		647,309			315			1,589,853			13,386,883			1,181,040			(221,319	)		992,191			(343,681	)
Net gain (loss) on investments		407,246			6,494			1,809,912			13,303,155			779,320			187,183			789,457			(77,590	)
Reinvested capital gains		26,398			-			-			213,529			-			-			80,011			437,020
Net increase (decrease) in contract owners’ equity resulting from operations	$	503,264			6,805			1,809,377			13,576,804			1,871,605			492,052			1,312,285			1,708,042

(Continued)

19

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	FMCS			FOS			FOSR			FVSS			FF15S			FF25S			FTVIS2			FTVRDI
Reinvested dividends	$	116,533			317,177			151,475			16,417			42,699			23,895			261,705			186,190
Asset charges (note 3)		(36,226	)		(40,187	)		-			(950	)		(3,880	)		(2,334	)		-			-
Net investment income (loss)		80,307			276,990			151,475			15,467			38,819			21,561			261,705			186,190
Realized gain (loss) on investments		(1,086,575	)		(3,589,756	)		(962,768	)		(380,239	)		103,389			28,660			(278,994	)		1,127
Change in unrealized gain (loss) on investments		11,623,565			6,151,870			2,260,405			1,277,589			50,776			105,698			502,274			1,859,503
Net gain (loss) on investments		10,536,990			2,562,114			1,297,637			897,350			154,165			134,358			223,280			1,860,630
Reinvested capital gains		135,969			46,644			22,276			-			22,330			6,479			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	10,753,266			2,885,748			1,471,388			912,817			215,314			162,398			484,985			2,046,820
Investment Activity:	FTVSVI			FTVSV2			FTVMD2			FTVDM3			TIF			TIF2			TIF3			FTVGI2
Reinvested dividends	$	93,383			36,870			2,424			85,554			31,666			212,986			83,653			48,187
Asset charges (note 3)		-			(11,213	)		(398	)		-			-			(25,124	)		-			(11,855	)
Net investment income (loss)		93,383			25,657			2,026			85,554			31,666			187,862			83,653			36,332
Realized gain (loss) on investments		(561,766	)		(68,097	)		11,626			(861,147	)		(23,051	)		(2,047,726	)		(301,713	)		65,901
Change in unrealized gain (loss) on investments		3,017,088			1,414,910			8,457			1,582,406			116,020			2,720,805			665,144			802,304
Net gain (loss) on investments		2,455,322			1,346,813			20,083			721,259			92,969			673,079			363,431			868,205
Reinvested capital gains		-			-			-			-			-			-			-			8,717
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,548,705			1,372,470			22,109			806,813			124,635			860,941			447,084			913,254

(Continued)

20

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	FTVGI3			FTVFA2			GVMCE			SBVSG			BNCAI			AMGP			AMCG			AMTP
Reinvested dividends	$	119,496			7,656			314,456			-			-			7,708			-			25,173
Asset charges (note 3)		-			-			(110,955	)		(471	)		(23,730	)		(2,761	)		(12,744	)		(5,056	)
Net investment income (loss)		119,496			7,656			203,501			(471	)		(23,730	)		4,947			(12,744	)		20,117
Realized gain (loss) on investments		245,111			20,260			(4,619,559	)		42,700			(486,045	)		(52,136	)		(324,725	)		398,708
Change in unrealized gain (loss) on investments		708,982			1,483			15,374,155			3,268			3,126,422			357,862			1,793,966			90,998
Net gain (loss) on investments		954,093			21,743			10,754,596			45,968			2,640,377			305,726			1,469,241			489,706
Reinvested capital gains		21,763			29			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,095,352			29,428			10,958,097			45,497			2,616,647			310,673			1,456,497			509,823
Investment Activity:	AMRI			AMFAS			AMSRS			OVGR			OVGS3			OVGS			OVHI3			OVHI
Reinvested dividends	$	27,171			-			903			145,948			223,304			694,871			69,445			24,995
Asset charges (note 3)		(8,308	)		(1,869	)		-			(106,290	)		-			(84,250	)		-			-
Net investment income (loss)		18,863			(1,869	)		903			39,658			223,304			610,621			69,445			24,995
Realized gain (loss) on investments		(35,559	)		(143,543	)		(219,013	)		1,013,283			(506,394	)		(1,974,775	)		(200,323	)		(280,275	)
Change in unrealized gain (loss) on investments		872,086			454,102			720,728			5,254,291			2,706,776			8,507,156			296,349			307,950
Net gain (loss) on investments		836,527			310,559			501,715			6,267,574			2,200,382			6,532,381			96,026			27,675
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	855,390			308,690			502,618			6,307,232			2,423,686			7,143,002			165,471			52,670

(Continued)

21

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	OVGI			OVSC			OVAG			OVSB			PMVAAA			PMVFBA			PMVLDA			PMVRRA
Reinvested dividends	$	295,457			28,669			-			157,067			114,728			31,460			1,136,377			1,162,948
Asset charges (note 3)		(9,816	)		-			(14,654	)		(4,078	)		(2,334	)		(764	)		(146,039	)		(187,269	)
Net investment income (loss)		285,641			28,669			(14,654	)		152,989			112,394			30,696			990,338			975,679
Realized gain (loss) on investments		(116,047	)		(209,465	)		11,310			(3,787	)		52,148			75,657			241,229			317,077
Change in unrealized gain (loss) on investments		3,808,825			1,112,371			5,664,838			118,807			1,419			129,492			1,881,278			3,930,175
Net gain (loss) on investments		3,692,778			902,906			5,676,148			115,020			53,567			205,149			2,122,507			4,247,252
Reinvested capital gains		-			-			-			-			-			14,971			230,508			780,456
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,978,419			931,575			5,661,494			268,009			165,961			250,816			3,343,353			6,003,387
Investment Activity:	PMVTRA			PIVEMI			PIHYB1			PVGIB			PVTIGB			PVTSCB			PVVIB			PVTVB
Reinvested dividends	$	6,202,680			8,241			991,467			11,812			39,408			10			19			17,709
Asset charges (note 3)		(558,648	)		(2,797	)		(37,131	)		-			-			(8	)		(129	)		-
Net investment income (loss)		5,644,032			5,444			954,336			11,812			39,408			2			(110	)		17,709
Realized gain (loss) on investments		6,713,624			405,607			2,035,090			(125,402	)		(266,079	)		877			34,847			204,446
Change in unrealized gain (loss) on investments		(6,400,019	)		(151,076	)		(222,972	)		211,614			330,023			104			(30,219	)		23,834
Net gain (loss) on investments		313,605			254,531			1,812,118			86,212			63,944			981			4,628			228,280
Reinvested capital gains		10,775,489			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	16,733,126			259,975			2,766,454			98,024			103,352			983			4,518			245,989

(Continued)

22

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	VKVGR2			ROCMC			ROCSC			TRBCG2			TREI2			TRHS2			TRMCG2			TRNAG1
Reinvested dividends	$	75,922			764,600			362			-			1,137,906			-			-			37,396
Asset charges (note 3)		(1,993	)		(89,902	)		(580	)		(844	)		(152,976	)		(3,470	)		(49,191	)		(39,929	)
Net investment income (loss)		73,929			674,698			(218	)		(844	)		984,930			(3,470	)		(49,191	)		(2,533	)
Realized gain (loss) on investments		218,884			(4,167,787	)		31,737			644,331			(8,864,178	)		14,364			(878,331	)		1,769,354
Change in unrealized gain (loss) on investments		(91,262	)		14,605,283			19,394			(103,159	)		17,190,432			291,793			5,235,037			1,239,828
Net gain (loss) on investments		127,622			10,437,496			51,131			541,172			8,326,254			306,157			4,356,706			3,009,182
Reinvested capital gains		-			-			-			-			-			-			1,137,324			430,055
Net increase (decrease) in contract owners’ equity resulting from operations	$	201,551			11,112,194			50,913			540,328			9,311,184			302,687			5,444,839			3,436,704
Investment Activity:	TRPSB1			VWEM			VWHA			VVB			VVDV			VVI			VVMCI			VVREI
Reinvested dividends	$	36,497			119,002			112,351			47,377			42,604			61,224			32,243			-
Asset charges (note 3)		(3,050	)		(14,901	)		(41,644	)		(3,398	)		(3,302	)		(7,638	)		(7,769	)		(235	)
Net investment income (loss)		33,447			104,101			70,707			43,979			39,302			53,586			24,474			(235	)
Realized gain (loss) on investments		111,884			(1,763,348	)		(2,508,620	)		27,507			(69,409	)		(234,731	)		(90,542	)		680
Change in unrealized gain (loss) on investments		31,772			6,164,743			12,459,821			99,161			167,125			735,299			967,111			44,555
Net gain (loss) on investments		143,656			4,401,395			9,951,201			126,668			97,716			500,568			876,569			45,235
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	177,103			4,505,496			10,021,908			170,647			137,018			554,154			901,043			45,000

(Continued)

23

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENT OF OPERATIONS

Year Ended December 31, 2010

Investment Activity:	VVSTC			VVHGB			WRASP			WRGP			WRRESP			WRSTP			SVDF			SVOF
Reinvested dividends	$	100,191			-			77,144			6,838			24,392			-			-			67,110
Asset charges (note 3)		(7,188	)		(1,056	)		(3,746	)		(1,744	)		(1,949	)		(2,973	)		(2,609	)		(16,793	)
Net investment income (loss)		93,003			(1,056	)		73,398			5,094			22,443			(2,973	)		(2,609	)		50,317
Realized gain (loss) on investments		36,207			(1,942	)		352,254			36,816			190,398			105,218			44,430			(87,189	)
Change in unrealized gain (loss) on investments		40,466			(33,980	)		320,015			120,236			82,275			(10,642	)		892,940			1,859,409
Net gain (loss) on investments		76,673			(35,922	)		672,269			157,052			272,673			94,576			937,370			1,772,220
Reinvested capital gains		-			-			-			-			-			42,929			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$	169,676			(36,978	)		745,667			162,146			295,116			134,532			934,761			1,822,537
Investment Activity:	WFVSCG
Reinvested dividends	$	-
Asset charges (note 3)		(8,728	)
Net investment income (loss)		(8,728	)
Realized gain (loss) on investments		989,167
Change in unrealized gain (loss) on investments		255,038
Net gain (loss) on investments		1,244,205
Reinvested capital gains		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,235,477

See accompanying notes to financial statements.

24

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	Total						AMVAA2						AMVBD2						AMVGS2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	48,051,537			61,056,529			22,546			24,779			31,519			23,552			16,437			966
Realized gain (loss) on investments		(169,061,674	)		(358,177,114	)		(66,157	)		(65,240	)		34,343			(15,359	)		120,547			(186,340	)
Change in unrealized gain (loss) on investments		564,262,211			1,008,719,318			196,109			289,232			(12,968	)		72,580			77,067			452,147
Reinvested capital gains		23,983,582			50,615,249			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		467,235,656			762,213,982			152,498			248,771			52,894			80,773			214,051			266,773
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		249,444,820			272,284,700			132,641			121,519			14,019			60,167			10,148			63,208
Transfers between funds		-			-			(38,102	)		233,650			250,685			172,236			103,700			348,701
Surrenders (note 6)		(247,893,625	)		(355,058,443	)		(112,008	)		(9,371	)		-			(3,527	)		-			-
Death Benefits (note 4)		(12,114,304	)		(11,445,523	)		(7,934	)		(1,226	)		(996	)		(3,035	)		(1,102	)		(1,736	)
Net policy repayments (loans) (note 5)		(1,195,759	)		(3,094,048	)		(7,927	)		(20,918	)		(16,183	)		-			(16,514	)		-
Deductions for surrender charges (note 2d)		(3,091,806	)		(4,834,935	)		-			-			-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(113,435,370	)		(123,944,193	)		(46,888	)		(44,645	)		(9,836	)		(9,281	)		(7,842	)		(4,710	)
Asset charges (note 3):
FPVUL & VEL contracts		(5,244,610	)		(4,763,557	)		(781	)		(2,191	)		(49	)		(75	)		(1	)		(925	)
MSP contracts		(284,267	)		(257,792	)		-			(132	)		-			(1	)		-			(25	)
SL contracts or LSFP contracts		(802,521	)		(865,995	)		-			(736	)		-			-			-			(171	)
Adjustments to maintain reserves		906,192			(316,113	)		5			2,490			(18	)		63			27			1,124
Net equity transactions		(133,711,250	)		(232,295,899	)		(80,994	)		278,440			237,622			216,547			88,416			405,466
Net change in contract owners’ equity		333,524,406			529,918,083			71,504			527,211			290,516			297,320			302,467			672,239
Contract owners’ equity beginning of period		3,763,821,378			3,233,903,295			1,322,260			795,049			863,837			566,517			920,818			248,579
Contract owners’ equity end of period	$	4,097,345,784			3,763,821,378			1,393,764			1,322,260			1,154,353			863,837			1,223,285			920,818
CHANGES IN UNITS:
Beginning units		293,757,661			307,038,686			156,977			116,841			84,585			62,336			113,530			49,331
Units purchased		74,642,038			64,050,669			21,571			51,072			25,471			23,944			15,137			68,718
Units redeemed		(89,430,018	)		(77,331,694	)		(31,268	)		(10,936	)		(3,638	)		(1,695	)		(5,201	)		(4,519	)
Ending units		278,969,681			293,757,661			147,280			156,977			106,418			84,585			123,466			113,530

(Continued)

25

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	AMVGR2						MLVLC2						MLVGA2						CVSSE
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	10,133			6,819			12,831			13,799			63,465			33,614			(204	)		528
Realized gain (loss) on investments		34,614			(308,612	)		50,459			(325,237	)		90,734			9,083			(6,435	)		(22,950	)
Change in unrealized gain (loss) on investments		243,725			783,659			87,026			604,305			330,292			61,427			43,284			49,279
Reinvested capital gains		-			-			-			-			31,733			-			-			9,784
Net increase (decrease) in contract owners’ equity resulting from operations		288,472			481,866			150,316			292,867			516,224			104,124			36,645			36,641
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		102			66,140			116,342			144,241			327,401			206,933			2,685			1,239
Transfers between funds		109,186			393,875			297,757			204,761			2,773,995			2,696,159			19,173			56,921
Surrenders (note 6)		-			-			(91,783	)		(39,389	)		(186,160	)		(3,828	)		(83	)		(2	)
Death Benefits (note 4)		(2,333	)		(5,180	)		(885	)		(1,174	)		-			-			(1,059	)		(873	)
Net policy repayments (loans) (note 5)		(31,460	)		-			(1,852	)		(2,560	)		(33,527	)		(991	)		-			-
Deductions for surrender charges (note 2d)		-			-			-			-			(3,736	)		-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(12,552	)		(11,775	)		(25,435	)		(30,948	)		(176,055	)		(23,364	)		(2,063	)		(1,464	)
Asset charges (note 3):
FPVUL & VEL contracts		-			(6,921	)		(123	)		(93,144	)		(12,542	)		(32,194	)		-			(748	)
MSP contracts		-			(46	)		-			(2,003	)		(267	)		(518	)		-			(112	)
SL contracts or LSFP contracts		-			(2,326	)		-			(15,179	)		(4,288	)		(3,465	)		-			(58	)
Adjustments to maintain reserves		33			9,307			149			110,301			(233	)		33,704			9			934
Net equity transactions		62,976			443,073			294,170			274,906			2,684,588			2,872,437			18,662			55,837
Net change in contract owners’ equity		351,448			924,939			444,486			567,773			3,200,812			2,976,561			55,307			92,478
Contract owners’ equity beginning of period		1,772,579			847,640			1,474,245			906,472			2,976,561			-			206,165			113,687
Contract owners’ equity end of period	$	2,124,027			1,772,579			1,918,731			1,474,245			6,177,373			2,976,561			261,472			206,165
CHANGES IN UNITS:
Beginning units		226,599			150,751			138,588			103,948			244,329			-			14,173			10,503
Units purchased		11,392			78,538			44,933			67,765			249,092			247,162			1,650			5,351
Units redeemed		(8,730	)		(2,690	)		(17,715	)		(33,125	)		(31,957	)		(2,833	)		(458	)		(1,681	)
Ending units		229,261			226,599			165,806			138,588			461,464			244,329			15,365			14,173

(Continued)

26

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	CSIEF3						WSCP						DAVVL						OGGO
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	270			(15	)		2,722			(30	)		26,849			13,085			(6,723	)		(5,642	)
Realized gain (loss) on investments		2,478			2,566			33,671			10,414			354,968			(143,939	)		280,247			(102,721	)
Change in unrealized gain (loss) on investments		138,462			(1,024	)		215,891			124,758			(133,085	)		715,824			463,624			1,006,472
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		141,210			1,527			252,284			135,142			248,732			584,970			737,148			898,109
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		19,136			4,816			79,178			36,205			292,907			148,479			1,623			24,312
Transfers between funds		449,201			462,115			63,942			998,589			(123,019	)		991,950			438,245			(358,578	)
Surrenders (note 6)		(15,200	)		-			(207,977	)		(13,685	)		(5,752	)		(18,571	)		(110,832	)		(384,949	)
Death Benefits (note 4)		-			-			-			-			(10,084	)		(12,457	)		(4,607	)		-
Net policy repayments (loans) (note 5)		(3,585	)		-			14,983			828			(12,105	)		(18,200	)		(981	)		66,622
Deductions for surrender charges (note 2d)		-			-			-			-			-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(42,196	)		(668	)		(52,530	)		(13,927	)		(36,959	)		(30,638	)		(47,213	)		(53,929	)
Asset charges (note 3):
FPVUL & VEL contracts		(1,276	)		(61,176	)		(3,360	)		(64,855	)		(1,686	)		(12,506	)		-			(18,826	)
MSP contracts		(10	)		(1,596	)		(106	)		(2,355	)		-			(147	)		-			(476	)
SL contracts or LSFP contracts		(12	)		(12,063	)		(579	)		(11,255	)		-			(792	)		-			(5,204	)
Adjustments to maintain reserves		1,032			71,614			(102,126	)		25,001			2,095			12,611			102			24,521
Net equity transactions		407,090			463,041			(208,575	)		954,546			105,397			1,059,730			276,337			(706,507	)
Net change in contract owners’ equity		548,300			464,568			43,709			1,089,688			354,129			1,644,700			1,013,485			191,602
Contract owners’ equity beginning of period		464,568			-			1,089,688			-			2,092,544			447,844			2,937,855			2,746,253
Contract owners’ equity end of period	$	1,012,868			464,568			1,133,397			1,089,688			2,446,673			2,092,544			3,951,340			2,937,855
CHANGES IN UNITS:
Beginning units		45,958			-			100,191			-			273,828			76,781			177,271			237,302
Units purchased		52,435			46,164			12,817			103,318			46,348			211,685			21,582			17,698
Units redeemed		(9,046	)		(206	)		(21,962	)		(3,127	)		(35,945	)		(14,638	)		(8,741	)		(77,729	)
Ending units		89,347			45,958			91,046			100,191			284,231			273,828			190,112			177,271

(Continued)

27

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	JPMMV1						JABS						JACAS						JAGTS2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	1,844			(163	)		290,539			246,771			64,015			(45,297	)		-			-
Realized gain (loss) on investments		26,764			180			439,703			(795,610	)		1,885,956			1,745,282			20,465			-
Change in unrealized gain (loss) on investments		4,223			41,137			173,573			2,248,632			1,660,766			16,558,142			176,686			-
Reinvested capital gains		-			-			-			320,012			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		32,831			41,154			903,815			2,019,805			3,610,737			18,258,127			197,151			-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		(11	)		-			501,957			301,338			3,768,440			4,174,879			509,656			-
Transfers between funds		(78,656	)		129,774			637,059			3,968,776			2,057,685			(308,597	)		1,048,774			-
Surrenders (note 6)		-			-			(525,946	)		(508,732	)		(3,133,700	)		(2,929,548	)		(83,333	)		-
Death Benefits (note 4)		(123	)		-			(17,291	)		(2,997	)		(135,292	)		(39,874	)		(1,045	)		-
Net policy repayments (loans) (note 5)		-			-			(3,518	)		(28,182	)		(762,945	)		(372,161	)		92,481			-
Deductions for surrender charges (note 2d)		-			-			(1,613	)		(9,173	)		(38,022	)		(77,596	)		(384	)		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(2,401	)		(1,212	)		(272,081	)		(228,396	)		(1,833,997	)		(1,994,792	)		(40,140	)		-
Asset charges (note 3):
FPVUL & VEL contracts		-			(9,691	)		(9,139	)		(18,187	)		(100,018	)		(4,075	)		(1,858	)		-
MSP contracts		-			(474	)		(38	)		(371	)		(2,325	)		(54	)		-			-
SL contracts or LSFP contracts		-			(2,637	)		(1,820	)		(2,646	)		(13,044	)		(509	)		(106	)		-
Adjustments to maintain reserves		(2	)		12,808			(10	)		12,876			(4,142	)		(106,141	)		(237	)		-
Net equity transactions		(81,193	)		128,568			307,560			3,484,306			(197,360	)		(1,658,469	)		1,523,808			-
Net change in contract owners’ equity		(48,362	)		169,722			1,211,375			5,504,111			3,413,377			16,599,658			1,720,959			-
Contract owners’ equity beginning of period		169,722			-			11,748,349			6,244,238			56,731,236			40,131,578			-			-
Contract owners’ equity end of period	$	121,360			169,722			12,959,724			11,748,349			60,144,613			56,731,236			1,720,959			-
CHANGES IN UNITS:
Beginning units		13,479			-			695,173			463,743			5,472,899			5,646,789			-			-
Units purchased		-			13,589			110,363			296,842			736,565			654,414			162,312			-
Units redeemed		(5,638	)		(110	)		(95,828	)		(65,412	)		(745,554	)		(828,304	)		(10,725	)		-
Ending units		7,841			13,479			709,708			695,173			5,463,910			5,472,899			151,587			-

(Continued)

28

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	JAGTS						JAIGS2						JAIGS						JAMVS
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(6,694	)		(4,489	)		139,019			75,197			241,477			140,819			1,205			-
Realized gain (loss) on investments		516,960			236,968			(208,457	)		(1,003,544	)		741,576			2,092,288			4,709			-
Change in unrealized gain (loss) on investments		2,018,995			4,251,296			5,882,163			10,228,555			12,993,882			26,292,193			51,561			-
Reinvested capital gains		-			-			-			507,630			-			1,524,193			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		2,529,261			4,483,775			5,812,725			9,807,838			13,976,935			30,049,493			57,475			-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		265,864			852,053			3,078,690			2,863,554			946,066			1,683,512			36,863			-
Transfers between funds		(485,648	)		9,727			1,558,932			1,596,794			(3,697,255	)		(8,108,119	)		395,220			-
Surrenders (note 6)		(832,271	)		(927,179	)		(2,212,694	)		(1,171,640	)		(4,411,633	)		(1,902,180	)		-			-
Death Benefits (note 4)		(30,098	)		(8,625	)		(77,739	)		(9,652	)		(142,987	)		(566,649	)		-			-
Net policy repayments (loans) (note 5)		(302,799	)		5,616			(289,490	)		(113,704	)		(405,123	)		(463,301	)		-			-
Deductions for surrender charges (note 2d)		(5,975	)		(36,357	)		(34,759	)		(65,642	)		(10,879	)		(39,431	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(555,410	)		(613,362	)		(1,221,542	)		(1,062,455	)		(1,350,641	)		(1,444,266	)		(2,341	)		-
Asset charges (note 3):
FPVUL & VEL contracts		(33,674	)		(38,036	)		(87,302	)		(683	)		(71,430	)		(11,786	)		-			-
MSP contracts		(619	)		(1,255	)		(2,312	)		-			(3,032	)		(3,575	)		-			-
SL contracts or LSFP contracts		(2,228	)		(5,875	)		(12,779	)		-			(10,254	)		(2,443	)		-			-
Adjustments to maintain reserves		678			10,179			1,991			(74,252	)		(11,339	)		(56,781	)		5			-
Net equity transactions		(1,982,180	)		(753,115	)		700,996			1,962,320			(9,168,507	)		(10,915,019	)		429,747			-
Net change in contract owners’ equity		547,081			3,730,660			6,513,721			11,770,158			4,808,428			19,134,474			487,222			-
Contract owners’ equity beginning of period		11,844,065			8,113,405			23,819,114			12,048,956			61,294,985			42,160,511			-			-
Contract owners’ equity end of period	$	12,391,146			11,844,065			30,332,835			23,819,114			66,103,413			61,294,985			487,222			-
CHANGES IN UNITS:
Beginning units		2,576,599			2,764,915			1,868,731			1,692,770			3,903,753			4,806,329			-			-
Units purchased		159,422			392,025			369,316			440,345			197,872			273,003			46,745			-
Units redeemed		(564,869	)		(580,341	)		(334,675	)		(264,384	)		(727,121	)		(1,175,579	)		(245	)		-
Ending units		2,171,152			2,576,599			1,903,372			1,868,731			3,374,504			3,903,753			46,500			-

(Continued)

29

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	LZREMS					LOVMCV						MIGIC						MVRISC
	2010			2009		2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	75,470			-		2,641			3,583			14,365			20,378			7,250			3,758
Realized gain (loss) on investments		67,842			-		287,966			(470,487	)		7,810			(119,540	)		(10,221	)		(9,041	)
Change in unrealized gain (loss) on investments		560,987			-		(15,216	)		733,471			357,498			1,031,933			70,928			106,342
Reinvested capital gains		-			-		-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		704,299			-		275,391			266,567			379,673			932,771			67,957			101,059
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		332,627			-		89,543			52,322			242,908			308,957			63,618			84,935
Transfers between funds		7,077,998			-		(212,360	)		93,047			(163,657	)		(177,095	)		23,371			243,655
Surrenders (note 6)		-			-		(113,258	)		(81,151	)		(108,377	)		(144,174	)		(28,917	)		-
Death Benefits (note 4)		(8,484	)		-		(4,482	)		(246	)		(4,464	)		(6,809	)		-			-
Net policy repayments (loans) (note 5)		(72,904	)		-		(803	)		(35,760	)		(63,844	)		(4,778	)		-			-
Deductions for surrender charges (note 2d)		-			-		-			-			(8,135	)		(18,020	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(15,317	)		-		(24,185	)		(23,317	)		(180,912	)		(195,706	)		(14,090	)		(9,423	)
Asset charges (note 3):
FPVUL & VEL contracts		(138	)		-		(165	)		(8,867	)		(13,894	)		(14,802	)		(49	)		(20,050	)
MSP contracts		-			-		-			(915	)		(176	)		(1,100	)		-			(1,260	)
SL contracts or LSFP contracts		-			-		-			(2,247	)		(697	)		(3,145	)		-			(5,533	)
Adjustments to maintain reserves		(185	)		-		133			12,046			42			5,683			36			26,846
Net equity transactions		7,313,597			-		(265,577	)		4,912			(301,206	)		(250,989	)		43,969			319,170
Net change in contract owners’ equity		8,017,896			-		9,814			271,479			78,467			681,782			111,926			420,229
Contract owners’ equity beginning of period		-			-		1,303,483			1,032,004			3,320,118			2,638,336			663,668			243,439
Contract owners’ equity end of period	$	8,017,896			-		1,313,297			1,303,483			3,398,585			3,320,118			775,594			663,668
CHANGES IN UNITS:
Beginning units		-			-		134,346			134,578			237,765			263,673			84,128			40,234
Units purchased		712,911			-		16,557			21,529			17,940			28,331			11,683			45,527
Units redeemed		(8,784	)		-		(42,935	)		(21,761	)		(39,314	)		(54,239	)		(6,632	)		(1,633	)
Ending units		704,127			-		107,968			134,346			216,391			237,765			89,179			84,128

(Continued)

30

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	MVFIC						MVFSC						MVIVSC						MSVFI
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	105,911			77,213			49,632			29,301			182,521			(677	)		152,267			240,723
Realized gain (loss) on investments		(242,905	)		(563,326	)		173,246			(105,731	)		(93,156	)		28,429			(70,775	)		(123,741	)
Change in unrealized gain (loss) on investments		958,030			1,787,278			365,978			839,404			1,578,836			(29,554	)		90,701			136,733
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		821,036			1,301,165			588,856			762,974			1,668,201			(1,802	)		172,193			253,715
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		537,510			696,007			397,640			181,598			(217,964	)		3,065			159,141			206,165
Transfers between funds		398,804			449,084			2,388,705			877,781			16,022,249			3,039,919			(135,198	)		(460,391	)
Surrenders (note 6)		(504,623	)		(246,925	)		(152,659	)		(9,776	)		(76,258	)		-			(81,672	)		(84,373	)
Death Benefits (note 4)		(36,760	)		(14,795	)		-			(2,279	)		(16,546	)		-			(211	)		-
Net policy repayments (loans) (note 5)		(7,690	)		(50,255	)		(9,352	)		-			-			-			(23,432	)		(109,745	)
Deductions for surrender charges (note 2d)		(6,687	)		(9,796	)		-			-			-			-			(4,714	)		(4,794	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(304,177	)		(334,244	)		(114,977	)		(84,084	)		(227,272	)		(3,374	)		(135,090	)		(178,900	)
Asset charges (note 3):
FPVUL & VEL contracts		(20,863	)		(5,463	)		(1,359	)		(14,501	)		(29	)		(32,390	)		(9,160	)		(10,343	)
MSP contracts		(593	)		(723	)		-			(836	)		-			(490	)		(486	)		(569	)
SL contracts or LSFP contracts		(5,619	)		(989	)		-			(1,770	)		-			(4,373	)		(1,763	)		(631	)
Adjustments to maintain reserves		(20	)		(16,326	)		73			16,247			393,235			37,253			225			(1,368	)
Net equity transactions		49,282			465,575			2,508,071			962,380			15,877,415			3,039,611			(232,360	)		(644,950	)
Net change in contract owners’ equity		870,318			1,766,740			3,096,927			1,725,354			17,545,616			3,037,809			(60,167	)		(391,235	)
Contract owners’ equity beginning of period		7,191,846			5,425,106			3,765,237			2,039,883			3,037,809			-			2,501,454			2,892,689
Contract owners’ equity end of period	$	8,062,164			7,191,846			6,862,164			3,765,237			20,583,425			3,037,809			2,441,287			2,501,454
CHANGES IN UNITS:
Beginning units		438,770			406,164			467,409			309,365			230,861			-			208,669			264,578
Units purchased		61,462			82,247			334,550			173,178			1,263,642			231,182			15,435			18,987
Units redeemed		(59,228	)		(49,641	)		(34,322	)		(15,134	)		(53,347	)		(321	)		(34,034	)		(74,896	)
Ending units		441,004			438,770			767,637			467,409			1,441,156			230,861			190,070			208,669

(Continued)

31

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	MSEM						MSVMG						MSVEG						MSVRE
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	399,155			737,398			(23,540	)		(16,993	)		(317	)		(694	)		489,540			1,068,395
Realized gain (loss) on investments		271,162			(1,492,240	)		318,696			(3,580,005	)		72,477			(2,036	)		(750,645	)		(39,285,801	)
Change in unrealized gain (loss) on investments		(167,202	)		3,233,667			2,519,164			7,296,271			(10,654	)		139,072			6,194,105			43,914,953
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		503,115			2,478,825			2,814,320			3,699,273			61,506			136,342			5,933,000			5,697,547
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		419,139			445,174			102,006			315,242			1,132			25,782			541,390			2,103,699
Transfers between funds		24,553,237			(2,259,258	)		(94,798	)		(906,840	)		(309,141	)		34,423			(430,858	)		(21,008,864	)
Surrenders (note 6)		(1,280,237	)		(949,108	)		(735,822	)		(510,236	)		(4,410	)		(11,500	)		(1,055,295	)		(1,869,963	)
Death Benefits (note 4)		(11,771	)		(16,177	)		(4,467	)		(2,888	)		-			-			(44,647	)		(162,578	)
Net policy repayments (loans) (note 5)		(21,556	)		42,354			17,980			(15,991	)		17,981			(1,811	)		(129,433	)		445,953
Deductions for surrender charges (note 2d)		(4,732	)		(21,584	)		-			(8,360	)		-			-			184			(61,632	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(338,250	)		(361,633	)		(157,990	)		(207,596	)		(6,440	)		(4,750	)		(356,015	)		(1,032,429	)
Asset charges (note 3):
FPVUL & VEL contracts		(20,144	)		(44,490	)		(69	)		(6,034	)		(18	)		(9,486	)		93			(5,355	)
MSP contracts		(292	)		(3,601	)		-			(398	)		-			(309	)		-			(288	)
SL contracts or LSFP contracts		(2,491	)		(8,157	)		-			(370	)		-			(1,770	)		-			(502	)
Adjustments to maintain reserves		(206	)		35,414			655			2,436			150			11,572			5,382			(36,850	)
Net equity transactions		23,292,697			(3,141,066	)		(872,505	)		(1,341,035	)		(300,746	)		42,152			(1,469,199	)		(21,628,809	)
Net change in contract owners’ equity		23,795,812			(662,241	)		1,941,815			2,358,238			(239,240	)		178,494			4,463,801			(15,931,262	)
Contract owners’ equity beginning of period		9,494,372			10,156,613			9,477,152			7,118,914			379,109			200,615			20,873,165			36,804,427
Contract owners’ equity end of period	$	33,290,184			9,494,372			11,418,967			9,477,152			139,869			379,109			25,336,966			20,873,165
CHANGES IN UNITS:
Beginning units		366,568			515,980			1,005,476			1,183,540			45,095			39,408			895,319			1,994,137
Units purchased		698,489			30,123			72,497			168,550			4,892			9,844			48,972			155,566
Units redeemed		(65,724	)		(179,535	)		(160,104	)		(346,614	)		(36,437	)		(4,157	)		(105,618	)		(1,254,384	)
Ending units		999,333			366,568			917,869			1,005,476			13,550			45,095			838,673			895,319

(Continued)

32

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	NVAGF3						NVAMV1						GVAAA2						GVABD2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	22,047			8,672			58,025			457			69,483			2,621			58,669			8,601
Realized gain (loss) on investments		7,759			1,344			10,365			3,912			(143,324	)		(177,856	)		(26,339	)		(184,344	)
Change in unrealized gain (loss) on investments		(2,684	)		(8,475	)		607,953			(760	)		670,464			826,043			135,883			472,238
Reinvested capital gains		9,387			1,173			79,381			2,439			-			83,925			-			822
Net increase (decrease) in contract owners’ equity resulting from operations		36,509			2,714			755,724			6,048			596,623			734,733			168,213			297,317
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		47,439			859			142,179			73			385,165			417,287			193,074			223,586
Transfers between funds		85,315			261,374			37,090,765			22,416			858,183			174,388			102,002			237,659
Surrenders (note 6)		(26,915	)		(3	)		(225,001	)		-			(207,424	)		(211,363	)		(292,514	)		(287,364	)
Death Benefits (note 4)		-			-			-			-			-			-			(43,957	)		(45,571	)
Net policy repayments (loans) (note 5)		(4,973	)		-			(26,427	)		-			(11,110	)		(15,389	)		(28,940	)		(7,708	)
Deductions for surrender charges (note 2d)		(2,007	)		-			(1,023	)		-			(19,589	)		(3,158	)		(4,876	)		(10,873	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(5,732	)		(591	)		(102,555	)		(709	)		(250,934	)		(254,828	)		(139,500	)		(151,037	)
Asset charges (note 3):
FPVUL & VEL contracts		(520	)		(1,055	)		(8,125	)		(10,765	)		(15,075	)		(1,653	)		(9,235	)		(23,426	)
MSP contracts		-			-			(326	)		(338	)		(4,137	)		-			(1,010	)		(574	)
SL contracts or LSFP contracts		(128	)		(561	)		(1,102	)		(1,175	)		(6,052	)		-			(1,958	)		(2,301	)
Adjustments to maintain reserves		9			1,534			(124	)		12,218			740			(15,740	)		(12	)		14,608
Net equity transactions		92,488			261,558			36,868,261			21,719			729,767			89,544			(226,926	)		(53,000	)
Net change in contract owners’ equity		128,997			264,272			37,623,985			27,767			1,326,390			824,277			(58,713	)		244,317
Contract owners’ equity beginning of period		264,272			-			27,767			-			3,933,215			3,108,938			2,724,059			2,479,742
Contract owners’ equity end of period	$	393,269			264,272			37,651,752			27,767			5,259,605			3,933,215			2,665,346			2,724,059
CHANGES IN UNITS:
Beginning units		23,143			-			2,210			-			405,011			395,090			248,317			253,508
Units purchased		12,386			23,202			2,664,041			2,275			133,707			64,077			50,560			55,238
Units redeemed		(3,711	)		(59	)		(25,148	)		(65	)		(55,227	)		(54,156	)		(69,643	)		(60,429	)
Ending units		31,818			23,143			2,641,103			2,210			483,491			405,011			229,234			248,317

(Continued)

33

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GVAGG2						GVAGR2						GVAGI2						HIBF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	43,712			-			12,128			-			22,997			-			1,860,098			1,774,184
Realized gain (loss) on investments		(339,175	)		(356,606	)		(669,336	)		(992,070	)		(84,523	)		(294,455	)		(1,002,551	)		(2,015,466	)
Change in unrealized gain (loss) on investments		857,732			1,635,045			1,909,972			2,098,032			307,631			744,397			1,854,148			7,106,133
Reinvested capital gains		-			339,649			-			642,236			-			47,807			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		562,269			1,618,088			1,252,764			1,748,198			246,105			497,749			2,711,695			6,864,851
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		332,115			504,914			665,936			658,595			157,105			286,427			1,066,197			1,211,131
Transfers between funds		(250,877	)		373,988			206,945			172,806			133,173			339,677			(664,043	)		(619,286	)
Surrenders (note 6)		(386,777	)		(392,917	)		(579,287	)		(329,491	)		(90,631	)		(103,274	)		(1,046,482	)		(958,302	)
Death Benefits (note 4)		(31,906	)		(296	)		(36,661	)		(5,016	)		(40,844	)		(28,910	)		(78,750	)		(16,042	)
Net policy repayments (loans) (note 5)		(70,922	)		(402	)		(54,549	)		(14,180	)		(10,564	)		(3,760	)		(77,435	)		(44,517	)
Deductions for surrender charges (note 2d)		(16,348	)		(11,024	)		(12,661	)		(11,601	)		(6,277	)		(2,545	)		(3,427	)		(17,868	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(220,572	)		(238,358	)		(293,451	)		(292,525	)		(95,446	)		(81,550	)		(335,635	)		(466,772	)
Asset charges (note 3):
FPVUL & VEL contracts		(17,231	)		(85	)		(22,181	)		(1,953	)		(7,627	)		(2,329	)		(15,008	)		(3,367	)
MSP contracts		(1,308	)		-			(1,736	)		(10	)		(782	)		(622	)		(958	)		(173	)
SL contracts or LSFP contracts		(2,970	)		(182	)		(6,365	)		(236	)		(1,011	)		(546	)		(1,417	)		(526	)
Adjustments to maintain reserves		453			(18,687	)		306			(22,535	)		49			(3,594	)		(80	)		(12,952	)
Net equity transactions		(666,343	)		216,951			(133,704	)		153,854			37,145			398,974			(1,157,038	)		(928,674	)
Net change in contract owners’ equity		(104,074	)		1,835,039			1,119,060			1,902,052			283,250			896,723			1,554,657			5,936,177
Contract owners’ equity beginning of period		5,782,885			3,947,846			7,086,792			5,184,740			2,324,195			1,427,472			21,178,416			15,242,239
Contract owners’ equity end of period	$	5,678,811			5,782,885			8,205,852			7,086,792			2,607,445			2,324,195			22,733,073			21,178,416
CHANGES IN UNITS:
Beginning units		536,732			518,855			789,242			801,346			290,258			232,982			1,191,262			1,266,632
Units purchased		38,545			105,029			93,446			99,059			49,627			95,171			96,720			127,682
Units redeemed		(101,716	)		(87,152	)		(109,485	)		(111,163	)		(46,456	)		(37,895	)		(153,140	)		(203,052	)
Ending units		473,561			536,732			773,203			789,242			293,429			290,258			1,134,842			1,191,262

(Continued)

34

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	HIBF3						GEM						GEM3						GVGU1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	924,537			981,264			(34,217	)		261,334			10,804			148,491			22,283			106,408
Realized gain (loss) on investments		1,542,620			(1,275,133	)		(4,893,423	)		(10,300,909	)		(1,813,522	)		(1,938,071	)		(879,814	)		(932,336	)
Change in unrealized gain (loss) on investments		(1,162,778	)		3,979,738			8,698,405			21,638,633			4,018,759			7,575,496			759,565			1,013,356
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		1,304,379			3,685,869			3,770,765			11,599,058			2,216,041			5,785,916			(97,966	)		187,428
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		863,490			1,100,053			597,380			1,016,503			1,271,174			1,295,101			27,362			126,300
Transfers between funds		(456,586	)		2,117,915			(2,467,648	)		(1,066,354	)		273,745			122,614			(2,647,311	)		(237,147	)
Surrenders (note 6)		(949,364	)		(373,588	)		(1,859,974	)		(1,299,231	)		(1,132,074	)		(544,992	)		(39,987	)		(192,221	)
Death Benefits (note 4)		(51,218	)		(11,357	)		(54,066	)		(74,865	)		(12,552	)		(3,736	)		(15	)		(26,184	)
Net policy repayments (loans) (note 5)		(94,591	)		(39,857	)		(248,487	)		359,012			4,184			(87,448	)		3,736			(62,636	)
Deductions for surrender charges (note 2d)		(28,504	)		(14,439	)		(4,412	)		(9,022	)		(32,316	)		(49,407	)		(306	)		(4,338	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(545,419	)		(559,369	)		(489,985	)		(502,866	)		(596,941	)		(588,338	)		(32,880	)		(115,873	)
Asset charges (note 3):
FPVUL & VEL contracts		(38,622	)		(4,441	)		(10,969	)		(5,093	)		(41,923	)		(8,000	)		(1,755	)		(1,102	)
MSP contracts		(664	)		(891	)		(703	)		(414	)		(6,946	)		(2,175	)		(99	)		(1,279	)
SL contracts or LSFP contracts		(5,155	)		(43	)		(676	)		(2,047	)		(9,579	)		(1,267	)		(180	)		(169	)
Adjustments to maintain reserves		33			(31,771	)		638			(3,956	)		(6,524	)		(36,239	)		(14	)		(4,061	)
Net equity transactions		(1,306,600	)		2,182,212			(4,538,902	)		(1,588,333	)		(289,752	)		96,113			(2,691,449	)		(518,710	)
Net change in contract owners’ equity		(2,221	)		5,868,081			(768,137	)		10,010,725			1,926,289			5,882,029			(2,789,415	)		(331,282	)
Contract owners’ equity beginning of period		11,990,373			6,122,292			28,510,202			18,499,477			14,959,380			9,077,351			2,789,415			3,120,697
Contract owners’ equity end of period	$	11,988,152			11,990,373			27,742,065			28,510,202			16,885,669			14,959,380			-			2,789,415
CHANGES IN UNITS:
Beginning units		949,161			707,956			1,139,730			1,209,140			818,029			811,502			156,967			189,353
Units purchased		106,225			344,819			36,991			220,942			87,377			110,151			6,506			17,300
Units redeemed		(216,765	)		(103,614	)		(220,714	)		(290,352	)		(110,862	)		(103,624	)		(163,473	)		(49,686	)
Ending units		838,621			949,161			956,007			1,139,730			794,544			818,029			-			156,967

(Continued)

35

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GIG						GIG3						NVIE6						GEF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	47,843			55,220			35,622			3,333			4,923			498			38,811			36,162
Realized gain (loss) on investments		133,598			(4,204,394	)		71,922			(8,426	)		16,572			(24,066	)		(206,407	)		(329,610	)
Change in unrealized gain (loss) on investments		473,917			5,470,605			343,925			469,935			60,048			83,896			583,671			1,154,975
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		655,358			1,321,431			451,469			464,842			81,543			60,328			416,075			861,527
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		471,664			329,073			225,766			84,849			90,166			38,549			333,822			269,031
Transfers between funds		(543,049	)		(1,575,185	)		(21,378	)		3,291,333			521			381,123			(65,366	)		(125,089	)
Surrenders (note 6)		(232,284	)		(353,341	)		(202,893	)		(161,849	)		(14,340	)		(631	)		(190,608	)		(206,567	)
Death Benefits (note 4)		(12,200	)		(337	)		(2,197	)		(2,468	)		-			-			(27,137	)		(11,151	)
Net policy repayments (loans) (note 5)		(32,852	)		(101,201	)		(38,826	)		(37,112	)		(631	)		(380	)		(5,175	)		8,254
Deductions for surrender charges (note 2d)		(2,328	)		(4,438	)		(4,197	)		(8,466	)		(691	)		(753	)		(1,319	)		(4,117	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(146,216	)		(159,684	)		(161,176	)		(68,246	)		(16,045	)		(10,371	)		(172,750	)		(193,558	)
Asset charges (note 3):
FPVUL & VEL contracts		(9,654	)		(2,753	)		(12,172	)		(816	)		(578	)		(120,030	)		(12,141	)		(3,451	)
MSP contracts		(388	)		(92	)		(736	)		-			-			(7,094	)		(345	)		-
SL contracts or LSFP contracts		(1,220	)		(523	)		(878	)		(44	)		(1,269	)		(10,207	)		(961	)		(775	)
Adjustments to maintain reserves		2,278			(8,572	)		582			(5,763	)		8			136,362			175			(8,448	)
Net equity transactions		(506,249	)		(1,877,053	)		(218,105	)		3,091,418			57,141			406,568			(141,805	)		(275,871	)
Net change in contract owners’ equity		149,109			(555,622	)		233,364			3,556,260			138,684			466,896			274,270			585,656
Contract owners’ equity beginning of period		5,468,173			6,023,795			3,693,095			136,835			503,904			37,008			3,919,072			3,333,416
Contract owners’ equity end of period	$	5,617,282			5,468,173			3,926,459			3,693,095			642,588			503,904			4,193,342			3,919,072
CHANGES IN UNITS:
Beginning units		460,651			656,884			516,240			24,803			70,672			6,719			267,639			285,138
Units purchased		42,369			62,657			50,779			533,829			22,121			65,951			25,612			44,545
Units redeemed		(85,430	)		(258,890	)		(82,455	)		(42,392	)		(13,040	)		(1,998	)		(35,470	)		(62,044	)
Ending units		417,590			460,651			484,564			516,240			79,753			70,672			257,781			267,639

(Continued)

36

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GEF3						NVNMO1						NVNSR1						NVCRA1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	78			64			30,365			10,318			1,767			300			2,346			3,137
Realized gain (loss) on investments		(180	)		63			253,245			104,269			20,922			(9,127	)		73,149			(89,222	)
Change in unrealized gain (loss) on investments		(169	)		424			549,952			1,500,363			21,821			31,839			(41,470	)		177,395
Reinvested capital gains		-			-			1,269,994			32,649			-			-			57,146			79
Net increase (decrease) in contract owners’ equity resulting from operations		(271	)		551			2,103,556			1,647,599			44,510			23,012			91,171			91,389
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		4,507			-			994,487			433,356			10,115			77,711			160,881			70,724
Transfers between funds		(13,331	)		14,487			(330,968	)		13,880,272			102,035			52,118			315,756			(58,588	)
Surrenders (note 6)		(20	)		-			(1,267,530	)		(442,410	)		(73,609	)		-			(48,032	)		(5,318	)
Death Benefits (note 4)		-			-			(86,967	)		(2,899	)		-			-			-			-
Net policy repayments (loans) (note 5)		-			-			(42,071	)		(58,007	)		(356	)		(2,642	)		(23,264	)		(1,351	)
Deductions for surrender charges (note 2d)		-			-			(15,679	)		(6,069	)		-			-			(2,186	)		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,508	)		(449	)		(778,592	)		(314,834	)		(5,508	)		(2,766	)		(27,425	)		(21,276	)
Asset charges (note 3):
FPVUL & VEL contracts		(54	)		(132,612	)		(55,544	)		(51,016	)		(244	)		(3,724	)		(2,334	)		(8,326	)
MSP contracts		-			(10,008	)		(1,510	)		(1,462	)		-			(150	)		(12	)		(99	)
SL contracts or LSFP contracts		-			(44,660	)		(4,854	)		(4,184	)		(271	)		(666	)		-			(1,401	)
Adjustments to maintain reserves		42			187,269			(1,477	)		31,849			(4	)		4,314			(8	)		8,378
Net equity transactions		(10,364	)		14,027			(1,590,705	)		13,464,597			32,158			124,194			373,376			(17,257	)
Net change in contract owners’ equity		(10,635	)		14,578			512,851			15,112,196			76,668			147,206			464,547			74,132
Contract owners’ equity beginning of period		14,578			-			15,113,129			933			178,327			31,121			355,821			281,689
Contract owners’ equity end of period	$	3,943			14,578			15,625,980			15,113,129			254,995			178,327			820,368			355,821
CHANGES IN UNITS:
Beginning units		1,087			-			1,906,534			180			21,943			5,037			42,818			43,904
Units purchased		156			1,124			154,869			2,012,080			12,814			21,928			55,442			18,966
Units redeemed		(979	)		(37	)		(356,284	)		(105,726	)		(9,367	)		(5,022	)		(12,514	)		(20,052	)
Ending units		264			1,087			1,705,119			1,906,534			25,390			21,943			85,746			42,818

(Continued)

37

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	NVCRB1						NVCCA1						NVCCN1						NVCMD1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(6,923	)		14,685			13,324			18,627			15,773			23,286			26,090			32,429
Realized gain (loss) on investments		66,611			(15,424	)		60,613			(14,153	)		40,000			11,717			124,735			(17,203	)
Change in unrealized gain (loss) on investments		4,468,297			138,862			200,530			246,582			8,688			102,299			176,046			350,508
Reinvested capital gains		-			-			84			-			19,495			1,717			-			118
Net increase (decrease) in contract owners’ equity resulting from operations		4,527,985			138,123			274,551			251,056			83,956			139,019			326,871			365,852
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		595,661			54,743			934,851			216,138			269,122			37,034			212,996			213,261
Transfers between funds		128,391,397			206,940			1,549,868			639,089			410,239			559,841			1,026,644			1,142,296
Surrenders (note 6)		(26,258	)		(12,629	)		(490,082	)		(10,056	)		(37,990	)		(634	)		(37,375	)		(45,459	)
Death Benefits (note 4)		(25,624	)		-			-			-			-			-			(27,959	)		-
Net policy repayments (loans) (note 5)		578			144			2,855			(79	)		(91,681	)		(54,901	)		(27,936	)		770
Deductions for surrender charges (note 2d)		(3,241	)		(1,564	)		-			-			(1,637	)		-			(707	)		(1,317	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(157,287	)		(35,947	)		(103,545	)		(51,183	)		(77,387	)		(53,581	)		(110,717	)		(55,287	)
Asset charges (note 3):
FPVUL & VEL contracts		(3,038	)		(1,129	)		(7,214	)		(63,773	)		(4,743	)		(239	)		(7,704	)		(139	)
MSP contracts		(697	)		(123	)		(323	)		(6,332	)		(632	)		-			(602	)		-
SL contracts or LSFP contracts		(740	)		(586	)		(1,137	)		(5,513	)		(37	)		-			(4,323	)		-
Adjustments to maintain reserves		23			(1,466	)		(84	)		72,068			(8	)		(3,952	)		(11	)		(6,429	)
Net equity transactions		128,770,774			208,383			1,885,189			790,358			465,246			483,568			1,022,306			1,247,696
Net change in contract owners’ equity		133,298,759			346,506			2,159,740			1,041,414			549,202			622,587			1,349,177			1,613,548
Contract owners’ equity beginning of period		867,451			520,945			1,557,229			515,815			922,821			300,234			2,247,987			634,439
Contract owners’ equity end of period	$	134,166,210			867,451			3,716,969			1,557,229			1,472,023			922,821			3,597,164			2,247,987
CHANGES IN UNITS:
Beginning units		90,423			65,101			172,546			71,014			89,148			32,838			241,583			83,184
Units purchased		10,275,750			31,784			206,656			108,865			65,461			68,059			128,328			171,060
Units redeemed		(21,758	)		(6,462	)		(12,971	)		(7,333	)		(21,550	)		(11,749	)		(22,974	)		(12,661	)
Ending units		10,344,415			90,423			366,231			172,546			133,059			89,148			346,937			241,583

(Continued)

38

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	NVCMA1						NVCMC1						NVCBD1						NVLCP1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	27,100			36,889			9,908			12,101			20,139			16,101			5,098			10,487
Realized gain (loss) on investments		127,196			(228,372	)		18,357			(454	)		37,064			24,773			19,902			21,401
Change in unrealized gain (loss) on investments		385,280			786,425			59,821			75,372			(18,373	)		3,669			(15,400	)		9,164
Reinvested capital gains		-			1,157			1,756			387			6,641			3,009			5,146			4,977
Net increase (decrease) in contract owners’ equity resulting from operations		539,576			596,099			89,842			87,406			45,471			47,552			14,746			46,029
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		573,439			473,349			154,536			36,982			64,314			88,571			6,422			126
Transfers between funds		1,005,668			811,650			299,274			287,927			246,639			377,679			(16,793	)		99,386
Surrenders (note 6)		(105,261	)		(70,716	)		(14,078	)		(3,829	)		(236,196	)		(58,737	)		(7,577	)		(27,433	)
Death Benefits (note 4)		-			-			-			-			-			-			-			-
Net policy repayments (loans) (note 5)		(25,168	)		(205,572	)		(2,738	)		3,018			(2,684	)		(23,576	)		(6,132	)		11,084
Deductions for surrender charges (note 2d)		(6,804	)		(2,110	)		-			(1,315	)		(1,807	)		(1,858	)		-			(495	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(152,370	)		(113,766	)		(62,579	)		(37,482	)		(35,823	)		(30,317	)		(10,947	)		(9,267	)
Asset charges (note 3):
FPVUL & VEL contracts		(11,747	)		(25,864	)		(2,223	)		(177,468	)		(2,144	)		(218,074	)		(654	)		(39,623	)
MSP contracts		(2,786	)		(6,503	)		(1,686	)		(32,958	)		(83	)		(17,170	)		-			(16,950	)
SL contracts or LSFP contracts		(2,985	)		(5,269	)		(331	)		(28,834	)		(1,351	)		(29,869	)		(50	)		(9,733	)
Adjustments to maintain reserves		(59	)		26,339			(93	)		236,770			169			262,749			3			65,479
Net equity transactions		1,271,927			881,539			370,082			282,811			31,034			349,398			(35,728	)		72,574
Net change in contract owners’ equity		1,811,503			1,477,638			459,924			370,217			76,505			396,950			(20,982	)		118,603
Contract owners’ equity beginning of period		3,020,513			1,542,875			653,525			283,308			607,549			210,599			253,336			134,733
Contract owners’ equity end of period	$	4,832,016			3,020,513			1,113,449			653,525			684,054			607,549			232,354			253,336
CHANGES IN UNITS:
Beginning units		345,687			223,705			66,327			33,824			56,157			21,176			21,838			13,545
Units purchased		176,788			178,283			46,209			37,144			35,257			48,659			4,168			13,349
Units redeemed		(35,328	)		(56,301	)		(9,237	)		(4,641	)		(32,353	)		(13,678	)		(7,521	)		(5,056	)
Ending units		487,147			345,687			103,299			66,327			59,061			56,157			18,485			21,838

(Continued)

39

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	TRF						GVGF1						GBF						CAF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	1,908,314			3,345,442			7,536			21,040			3,232,434			3,978,157			77,913			67,503
Realized gain (loss) on investments		(58,516,108	)		(1,042,850	)		630,658			(1,389,231	)		1,219,784			947,871			1,389,135			258,366
Change in unrealized gain (loss) on investments		80,596,372			61,992,768			(589,487	)		1,963,916			(3,696,043	)		(3,501,589	)		870,743			3,518,953
Reinvested capital gains		-			-			-			-			4,377,401			1,702,702			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		23,988,578			64,295,360			48,707			595,725			5,133,576			3,127,141			2,337,791			3,844,822
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		3,203,927			3,727,417			54,089			92,356			4,959,490			5,672,055			1,335,059			1,487,344
Transfers between funds		(244,183,855	)		523,446			(2,212,806	)		(137,563	)		639,340			(9,936,785	)		(2,508,177	)		631,555
Surrenders (note 6)		(2,090,555	)		(2,189,741	)		(43,012	)		(50,148	)		(4,965,009	)		(7,206,573	)		(1,343,479	)		(829,196	)
Death Benefits (note 4)		(725,197	)		(420,554	)		(19	)		(20,078	)		(252,641	)		(278,522	)		(61,432	)		(44,790	)
Net policy repayments (loans) (note 5)		(214,108	)		(117,156	)		(2,181	)		(16,452	)		(143,863	)		(1,340,648	)		(61,828	)		(53,927	)
Deductions for surrender charges (note 2d)		(34,940	)		(48,979	)		(815	)		(2,234	)		(60,528	)		(102,837	)		(15,256	)		(6,668	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(4,759,043	)		(5,027,515	)		(25,728	)		(77,810	)		(3,509,655	)		(3,962,145	)		(1,012,020	)		(1,126,311	)
Asset charges (note 3):
FPVUL & VEL contracts		(133,534	)		(2,105	)		(1,222	)		(74,366	)		(125,289	)		(399,204	)		(55,566	)		(27,116	)
MSP contracts		(7,718	)		-			-			(1,784	)		(9,614	)		(28,447	)		(1,471	)		(833	)
SL contracts or LSFP contracts		(7,771	)		(422	)		(272	)		(13,234	)		(28,374	)		(90,812	)		(3,079	)		(3,533	)
Adjustments to maintain reserves		5,157			(134,787	)		14			85,258			(5,252	)		331,445			60			(24,743	)
Net equity transactions		(248,947,637	)		(3,690,396	)		(2,231,952	)		(216,055	)		(3,501,395	)		(17,342,473	)		(3,727,189	)		1,782
Net change in contract owners’ equity		(224,959,059	)		60,604,964			(2,183,245	)		379,670			1,632,181			(14,215,332	)		(1,389,398	)		3,846,604
Contract owners’ equity beginning of period		310,928,783			250,323,819			2,183,245			1,803,575			115,229,652			129,444,984			15,159,793			11,313,189
Contract owners’ equity end of period	$	85,969,724			310,928,783			-			2,183,245			116,861,833			115,229,652			13,770,395			15,159,793
CHANGES IN UNITS:
Beginning units		30,335,668			30,738,481			158,071			171,955			6,834,892			7,781,878			1,971,201			1,919,769
Units purchased		353,898			503,102			9,344			20,168			707,441			518,251			171,129			426,516
Units redeemed		(23,644,440	)		(905,915	)		(167,415	)		(34,052	)		(893,035	)		(1,465,237	)		(686,793	)		(375,084	)
Ending units		7,045,126			30,335,668			-			158,071			6,649,298			6,834,892			1,455,537			1,971,201

(Continued)

40

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GVGH1						GVGHS						GVIX2						GVIX6
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	6,906			4,802			8,326			6,852			115,097			28,220			11,823			11,544
Realized gain (loss) on investments		(25,626	)		(266,588	)		24,927			(339,358	)		261,254			(315,049	)		(58,804	)		(260,909	)
Change in unrealized gain (loss) on investments		61,559			738,864			11,752			735,726			249,614			632,696			82,237			311,663
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		42,839			477,078			45,005			403,220			625,965			345,867			35,256			62,298
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		808			30,016			199,265			252,753			336,669			646,085			160,035			54,056
Transfers between funds		(2,759,275	)		19,335			(2,545,300	)		(110,789	)		2,045,710			2,062,529			(30,228	)		53,829
Surrenders (note 6)		(127,271	)		(93,144	)		(129,776	)		(230,113	)		(44,414	)		(15,763	)		(28,578	)		(47,359	)
Death Benefits (note 4)		(562	)		(2,710	)		(62	)		(29,050	)		(1,370	)		(384	)		-			-
Net policy repayments (loans) (note 5)		(19,605	)		(34,844	)		(6,976	)		(101,611	)		(26	)		-			(4,475	)		(7,093	)
Deductions for surrender charges (note 2d)		(629	)		(2,027	)		(4,510	)		(7,864	)		-			-			(477	)		(222	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(24,065	)		(91,239	)		(34,676	)		(124,256	)		(57,032	)		(20,798	)		(28,472	)		(30,805	)
Asset charges (note 3):
FPVUL & VEL contracts		(932	)		(3,306	)		(2,729	)		(22,451	)		(520	)		(3,687	)		(1,305	)		(6,037	)
MSP contracts		(54	)		(134	)		(25	)		(186	)		-			(91	)		(41	)		(105	)
SL contracts or LSFP contracts		(139	)		(508	)		(395	)		(2,985	)		-			(513	)		(926	)		(663	)
Adjustments to maintain reserves		427			(141	)		(80	)		16,062			(248	)		4,044			1,055			5,027
Net equity transactions		(2,931,297	)		(178,701	)		(2,525,264	)		(360,490	)		2,278,769			2,671,422			66,588			20,629
Net change in contract owners’ equity		(2,888,458	)		298,377			(2,480,259	)		42,730			2,904,734			3,017,289			101,844			82,927
Contract owners’ equity beginning of period		2,888,458			2,590,081			2,480,259			2,437,529			3,672,985			655,696			574,140			491,213
Contract owners’ equity end of period	$	-			2,888,458			-			2,480,259			6,577,719			3,672,985			675,984			574,140
CHANGES IN UNITS:
Beginning units		210,934			225,000			222,948			260,983			498,549			114,389			65,290			71,845
Units purchased		4,723			17,451			17,650			30,079			355,316			405,170			28,670			8,895
Units redeemed		(215,657	)		(31,517	)		(240,598	)		(68,114	)		(21,567	)		(21,010	)		(22,480	)		(15,450	)
Ending units		-			210,934			-			222,948			832,298			498,549			71,480			65,290

(Continued)

41

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GVIDA						NVDBL2						NVDCA2						GVIDC
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	445,136			236,550			408			135			534			814			293,347			286,883
Realized gain (loss) on investments		(3,494,307	)		(2,064,061	)		462			19			5,490			(97	)		(28,611	)		(1,906,856	)
Change in unrealized gain (loss) on investments		6,696,983			6,579,751			2,413			113			5,932			2,401			475,816			2,658,897
Reinvested capital gains		-			1,352,345			142			155			175			650			37,188			94,127
Net increase (decrease) in contract owners’ equity resulting from operations		3,647,812			6,104,585			3,425			422			12,131			3,768			777,740			1,133,051
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,504,750			3,421,525			899			15,052			30,985			6,132			847,965			1,200,182
Transfers between funds		(447,622	)		(813,824	)		74,869			6,878			(35,266	)		116,102			(1,121,396	)		(11,116,062	)
Surrenders (note 6)		(3,442,951	)		(1,229,667	)		(5,458	)		-			-			-			(730,202	)		(604,928	)
Death Benefits (note 4)		(276,089	)		(30,110	)		-			-			-			-			(349,145	)		(89,265	)
Net policy repayments (loans) (note 5)		(161,597	)		(171,112	)		-			-			(3,101	)		-			(65,817	)		(15,355	)
Deductions for surrender charges (note 2d)		(125,623	)		(130,322	)		(867	)		-			-			-			(11,614	)		(17,463	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,219,949	)		(1,376,485	)		(1,582	)		(403	)		(2,804	)		(1,073	)		(557,454	)		(745,672	)
Asset charges (note 3):
FPVUL & VEL contracts		(69,948	)		(52,214	)		(198	)		(15,980	)		(280	)		(29,109	)		(26,065	)		(88,369	)
MSP contracts		(6,340	)		(1,028	)		-			(375	)		-			(632	)		(6,853	)		(2,405	)
SL contracts or LSFP contracts		(5,647	)		(7,128	)		-			(2,583	)		-			(2,601	)		(4,130	)		(9,818	)
Adjustments to maintain reserves		306			(14,530	)		(1	)		18,908			(39	)		32,203			(118	)		61,378
Net equity transactions		(3,250,710	)		(404,895	)		67,662			21,497			(10,505	)		121,023			(2,024,829	)		(11,427,777	)
Net change in contract owners’ equity		397,102			5,699,690			71,087			21,919			1,626			124,791			(1,247,089	)		(10,294,726	)
Contract owners’ equity beginning of period		27,551,462			21,851,772			21,919			-			124,791			-			14,939,995			25,234,721
Contract owners’ equity end of period	$	27,948,564			27,551,462			93,006			21,919			126,417			124,791			13,692,906			14,939,995
CHANGES IN UNITS:
Beginning units		2,059,117			2,076,728			1,883			-			10,225			-			1,116,660			2,076,535
Units purchased		247,836			364,953			6,055			1,921			6,539			10,328			143,851			253,841
Units redeemed		(484,445	)		(382,564	)		(662	)		(38	)		(7,518	)		(103	)		(292,458	)		(1,213,716	)
Ending units		1,822,508			2,059,117			7,276			1,883			9,246			10,225			968,053			1,116,660

(Continued)

42

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GVIDM						GVDMA						GVDMC						GVUS1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	1,580,161			1,014,977			1,369,156			805,174			389,615			295,619			1,392			7,607
Realized gain (loss) on investments		(1,492,261	)		(2,373,635	)		(1,477,072	)		(2,858,759	)		(501,352	)		(1,269,197	)		43,826			(754,822	)
Change in unrealized gain (loss) on investments		8,549,098			12,852,063			9,116,754			13,647,980			1,626,837			3,097,306			8,542			1,037,888
Reinvested capital gains		-			1,648,516			-			2,700,488			-			274,021			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		8,636,998			13,141,921			9,008,838			14,294,883			1,515,100			2,397,749			53,760			290,673
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		5,692,079			7,127,276			7,140,804			9,615,571			1,034,544			1,548,291			9,668			40,422
Transfers between funds		2,640,107			12,787,935			596,235			(1,802,843	)		(239,073	)		(472,912	)		(1,072,774	)		(180,682	)
Surrenders (note 6)		(6,896,654	)		(4,408,689	)		(5,187,616	)		(4,307,477	)		(1,970,389	)		(1,164,612	)		(21,384	)		(54,298	)
Death Benefits (note 4)		(308,956	)		(689,935	)		(316,951	)		(58,020	)		(71,319	)		(73,371	)		(151	)		(72	)
Net policy repayments (loans) (note 5)		(334,356	)		(179,572	)		(620,426	)		(743,018	)		662,459			(38,536	)		(1,422	)		1,563
Deductions for surrender charges (note 2d)		(122,605	)		(18,289	)		(331,772	)		(382,509	)		(62,392	)		(24,310	)		-			(5,830	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,664,908	)		(3,752,452	)		(3,688,440	)		(3,967,017	)		(847,945	)		(864,754	)		(10,953	)		(35,932	)
Asset charges (note 3):
FPVUL & VEL contracts		(196,675	)		(95,157	)		(242,931	)		(31,264	)		(41,061	)		(5,536	)		(629	)		(2,914	)
MSP contracts		(36,952	)		(2,713	)		(17,709	)		(1,551	)		(18,222	)		(250	)		-			(34	)
SL contracts or LSFP contracts		(33,156	)		(14,206	)		(33,400	)		(6,792	)		(8,427	)		(1,075	)		(51	)		(151	)
Adjustments to maintain reserves		13,832			(126,921	)		(585	)		(222,379	)		128			(59,309	)		24			864
Net equity transactions		(3,248,244	)		10,627,277			(2,702,791	)		(1,907,299	)		(1,561,697	)		(1,156,373	)		(1,097,672	)		(237,064	)
Net change in contract owners’ equity		5,388,754			23,769,198			6,306,047			12,387,584			(46,597	)		1,241,376			(1,043,912	)		53,609
Contract owners’ equity beginning of period		80,742,826			56,973,628			72,986,606			60,599,022			18,397,421			17,156,045			1,043,912			990,303
Contract owners’ equity end of period	$	86,131,580			80,742,826			79,292,653			72,986,606			18,350,824			18,397,421			-			1,043,912
CHANGES IN UNITS:
Beginning units		5,949,215			4,997,828			5,338,316			5,511,580			1,346,685			1,437,268			86,944			110,239
Units purchased		684,022			1,791,447			621,697			889,744			151,446			225,095			12,778			5,672
Units redeemed		(909,904	)		(840,060	)		(818,796	)		(1,063,008	)		(259,788	)		(315,678	)		(99,722	)		(28,967	)
Ending units		5,723,333			5,949,215			5,141,217			5,338,316			1,238,343			1,346,685			-			86,944

(Continued)

43

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	MCIF						SAM						SAM5						NVMIG3
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	596,139			362,816			(18,127	)		35,553			(551,071	)		(543,038	)		131,546			54,487
Realized gain (loss) on investments		(1,427,533	)		(5,522,677	)		-			-			-			-			260,184			69,102
Change in unrealized gain (loss) on investments		13,058,095			17,238,205			-			-			-			-			1,891,077			2,136,753
Reinvested capital gains		58,668			1,328,431			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		12,285,369			13,406,775			(18,127	)		35,553			(551,071	)		(543,038	)		2,282,807			2,260,342
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,449,012			3,385,036			9,965,789			13,320,686			61,057,339			60,789,909			1,150,872			507,330
Transfers between funds		(2,119,670	)		(3,024,145	)		3,510,415			15,786,585			(88,510,786	)		(10,495,762	)		(465,256	)		16,234,491
Surrenders (note 6)		(3,213,551	)		(3,404,487	)		(22,372,289	)		(41,246,434	)		(27,365,873	)		(110,603,433	)		(1,181,422	)		(509,590	)
Death Benefits (note 4)		(189,413	)		(91,735	)		(583,265	)		(684,404	)		(2,129,122	)		(982,442	)		(114,915	)		(3,733	)
Net policy repayments (loans) (note 5)		(189,128	)		1,362,415			552,041			(37,415	)		12,746,229			(5,626,865	)		(183,082	)		(86,166	)
Deductions for surrender charges (note 2d)		(46,380	)		(49,758	)		(562,710	)		(983,194	)		-			-			(20,626	)		(6,962	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,558,955	)		(1,592,471	)		(6,563,524	)		(8,035,920	)		(5,641,586	)		(6,939,336	)		(960,409	)		(399,291	)
Asset charges (note 3):
FPVUL & VEL contracts		(85,324	)		(6,999	)		(349,950	)		(8,484	)		(10,824	)		(1,840	)		(65,784	)		(240	)
MSP contracts		(1,791	)		(220	)		(24,791	)		(363	)		-			-			(2,244	)		-
SL contracts or LSFP contracts		(13,333	)		(1,256	)		(67,448	)		(841	)		-			(119	)		(7,402	)		-
Adjustments to maintain reserves		(1,192	)		(78,517	)		(24	)		(506,434	)		(9,350	)		(7,525	)		(98	)		(30,298	)
Net equity transactions		(4,969,725	)		(3,502,136	)		(16,495,756	)		(22,396,218	)		(49,863,973	)		(73,867,413	)		(1,850,366	)		15,705,541
Net change in contract owners’ equity		7,315,644			9,904,639			(16,513,883	)		(22,360,665	)		(50,415,044	)		(74,410,451	)		432,441			17,965,883
Contract owners’ equity beginning of period		50,488,823			40,584,184			111,488,326			133,848,991			298,223,155			372,633,606			17,972,680			6,797
Contract owners’ equity end of period	$	57,804,467			50,488,823			94,974,443			111,488,326			247,808,111			298,223,155			18,405,121			17,972,680
CHANGES IN UNITS:
Beginning units		2,627,179			2,837,215			7,901,022			9,487,421			25,782,567			32,217,849			2,144,940			1,107
Units purchased		164,627			349,791			929,152			2,036,219			5,700,778			9,639,717			150,033			2,274,283
Units redeemed		(382,084	)		(559,827	)		(2,089,651	)		(3,622,618	)		(9,989,669	)		(16,074,999	)		(368,779	)		(130,450	)
Ending units		2,409,722			2,627,179			6,740,523			7,901,022			21,493,676			25,782,567			1,926,194			2,144,940

(Continued)

44

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	GVDIVI						GVDIV3						NVMLG1						NVMLV1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	19,299			20,448			119,439			107,135			3,007			7,951			40,558			20,167
Realized gain (loss) on investments		(137,238	)		(168,939	)		(802,577	)		(1,214,689	)		12,681			31,265			243,585			(6,313	)
Change in unrealized gain (loss) on investments		170,412			402,617			1,032,832			2,465,427			542,323			260,488			(35,905	)		348,841
Reinvested capital gains		-			-			-			-			460,542			-			273,687			-
Net increase (decrease) in contract owners’ equity resulting from operations		52,473			254,126			349,694			1,357,873			1,018,553			299,704			521,925			362,695
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		(36	)		75			499,639			548,080			688,877			130,936			228,105			146,552
Transfers between funds		(150,355	)		(38,052	)		(224,406	)		(440,786	)		9,867,173			2,042,576			3,326,586			3,293,501
Surrenders (note 6)		(40,471	)		(41,249	)		(462,849	)		(392,314	)		(635,328	)		(47,225	)		(300,100	)		(235,851	)
Death Benefits (note 4)		(1,635	)		(698	)		(5,466	)		(37,159	)		(11,633	)		-			(3,929	)		(10,425	)
Net policy repayments (loans) (note 5)		(6,761	)		(29,156	)		(694	)		(30,929	)		(131,136	)		(11,125	)		(33,242	)		31,830
Deductions for surrender charges (note 2d)		(742	)		(4,206	)		(23,382	)		(19,706	)		(13,189	)		(3,342	)		(14,767	)		(23,322	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(34,737	)		(45,322	)		(244,394	)		(284,564	)		(459,086	)		(61,197	)		(294,980	)		(86,407	)
Asset charges (note 3):
FPVUL & VEL contracts		(2,862	)		(28,174	)		(18,847	)		(30,510	)		(28,860	)		(15,168	)		(20,322	)		(7,543	)
MSP contracts		(151	)		(865	)		(201	)		(1,021	)		(806	)		(625	)		(458	)		(131	)
SL contracts or LSFP contracts		(326	)		(4,589	)		(2,935	)		(4,250	)		(3,206	)		(2,031	)		(2,119	)		(730	)
Adjustments to maintain reserves		14			29,887			266			13,718			317			13,737			231,836			1,749
Net equity transactions		(238,062	)		(162,350	)		(483,269	)		(679,441	)		9,273,123			2,046,536			3,116,610			3,109,223
Net change in contract owners’ equity		(185,589	)		91,776			(133,575	)		678,432			10,291,676			2,346,240			3,638,535			3,471,918
Contract owners’ equity beginning of period		1,079,253			987,477			5,612,185			4,933,753			2,361,623			15,383			3,712,063			240,145
Contract owners’ equity end of period	$	893,664			1,079,253			5,478,610			5,612,185			12,653,299			2,361,623			7,350,598			3,712,063
CHANGES IN UNITS:
Beginning units		65,225			77,496			556,645			635,373			285,919			2,417			457,649			37,776
Units purchased		-			7			49,191			70,443			1,682,255			300,423			517,153			472,587
Units redeemed		(14,364	)		(12,278	)		(93,738	)		(149,171	)		(640,928	)		(16,921	)		(186,734	)		(52,714	)
Ending units		50,861			65,225			512,098			556,645			1,327,246			285,919			788,068			457,649

(Continued)

45

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	NVMMG1						NVMMV1						NVMMV2						SCGF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(726	)		(491	)		539			(3	)		147,777			51,381			(7,578	)		(7,445	)
Realized gain (loss) on investments		1,318,796			302,640			16			(1,298	)		276,152			79,482			(190,504	)		(1,258,724	)
Change in unrealized gain (loss) on investments		6,506,187			4,194,989			4,585			(81	)		1,070,875			1,177,622			3,000,202			3,866,242
Reinvested capital gains		-			-			3,159			-			530,955			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		7,824,257			4,497,138			8,299			(1,382	)		2,025,759			1,308,485			2,802,120			2,600,073
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,287,835			1,305,582			1,679			8,306			696,496			289,239			806,803			1,212,314
Transfers between funds		(1,706,319	)		28,236,353			61,191			(9,194	)		(618,682	)		10,449,995			(436,432	)		(1,054,901	)
Surrenders (note 6)		(2,433,960	)		(1,192,048	)		-			-			(908,932	)		(187,446	)		(637,200	)		(927,758	)
Death Benefits (note 4)		(151,328	)		(9,723	)		-			-			(44,547	)		(4,506	)		(36,662	)		(16,523	)
Net policy repayments (loans) (note 5)		(360,784	)		(60,331	)		(1	)		-			(92,054	)		(117,765	)		(135,631	)		44,836
Deductions for surrender charges (note 2d)		(40,146	)		(54,604	)		-			-			(16,199	)		(4,479	)		(14,060	)		(26,320	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,754,803	)		(869,041	)		(230	)		(156	)		(559,504	)		(224,981	)		(513,369	)		(545,165	)
Asset charges (note 3):
FPVUL & VEL contracts		(116,642	)		(3,463	)		-			(8,588	)		(41,325	)		(8,847	)		(32,201	)		(9,924	)
MSP contracts		(2,410	)		(130	)		-			(236	)		(1,062	)		(66	)		(765	)		(236	)
SL contracts or LSFP contracts		(13,656	)		(251	)		-			(910	)		(5,814	)		(1,023	)		(2,348	)		(1,522	)
Adjustments to maintain reserves		915			(57,552	)		5			9,739			222			(8,711	)		(1,192	)		(19,070	)
Net equity transactions		(4,291,298	)		27,294,792			62,644			(1,039	)		(1,591,401	)		10,181,410			(1,003,057	)		(1,344,268	)
Net change in contract owners’ equity		3,532,959			31,791,930			70,943			(2,421	)		434,358			11,489,895			1,799,063			1,255,805
Contract owners’ equity beginning of period		31,794,932			3,002			-			2,421			11,495,403			5,508			11,685,487			10,429,682
Contract owners’ equity end of period	$	35,327,891			31,794,932			70,943			-			11,929,761			11,495,403			13,484,550			11,685,487
CHANGES IN UNITS:
Beginning units		3,983,062			478			-			358			1,303,777			815			903,788			1,029,066
Units purchased		307,231			4,320,422			6,764			1,366			95,013			1,372,216			69,676			120,387
Units redeemed		(800,604	)		(337,838	)		(25	)		(1,724	)		(267,784	)		(69,254	)		(141,460	)		(245,665	)
Ending units		3,489,689			3,983,062			6,739			-			1,131,006			1,303,777			832,004			903,788

(Continued)

46

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	SCVF						SCF						MSBF						NVSTB1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	195,072			161,893			92,412			81,840			1,234,027			1,203,420			56,009			11,059
Realized gain (loss) on investments		(2,077,629	)		(4,761,068	)		(11,969,302	)		(13,079,026	)		(594,018	)		(1,276,189	)		7,142			17,656
Change in unrealized gain (loss) on investments		10,773,319			12,393,594			26,741,507			30,488,109			1,268,594			2,935,874			8,211			7,478
Reinvested capital gains		-			-			-			-			-			-			10,269			2,224
Net increase (decrease) in contract owners’ equity resulting from operations		8,890,762			7,794,419			14,864,617			17,490,923			1,908,603			2,863,105			81,631			38,417
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		1,926,942			2,584,925			3,762,418			3,863,358			1,547,503			693,574			7,948			7,932
Transfers between funds		(2,807,124	)		(2,566,414	)		(14,675,633	)		(4,407,046	)		4,161,041			186,213			4,989,710			571,571
Surrenders (note 6)		(2,247,641	)		(2,633,904	)		(4,262,724	)		(2,465,530	)		(824,406	)		(853,573	)		-			-
Death Benefits (note 4)		(137,895	)		(31,905	)		(142,351	)		(107,042	)		(88,369	)		(15,100	)		-			-
Net policy repayments (loans) (note 5)		(160,838	)		(52,053	)		(396,329	)		(410,010	)		70,738			(68,065	)		(22,300	)		(31,205	)
Deductions for surrender charges (note 2d)		(35,582	)		(73,495	)		(46,695	)		(64,032	)		(8,126	)		(18,095	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,521,895	)		(1,610,014	)		(2,010,382	)		(2,147,096	)		(560,287	)		(588,350	)		(63,797	)		(23,790	)
Asset charges (note 3):
FPVUL & VEL contracts		(100,069	)		(45,062	)		(106,719	)		(27,490	)		(33,837	)		(18,693	)		(28	)		(17,029	)
MSP contracts		(2,653	)		(1,625	)		(3,073	)		(767	)		(1,764	)		(882	)		-			(204	)
SL contracts or LSFP contracts		(8,572	)		(6,495	)		(13,556	)		(43,327	)		(6,072	)		(3,341	)		-			(1,885	)
Adjustments to maintain reserves		(145	)		(46,864	)		2,045			(39,833	)		(7	)		(16,217	)		(19	)		19,117
Net equity transactions		(5,095,472	)		(4,482,905	)		(17,892,999	)		(5,848,815	)		4,256,414			(702,529	)		4,911,514			524,507
Net change in contract owners’ equity		3,795,290			3,311,514			(3,028,382	)		11,642,108			6,165,017			2,160,576			4,993,145			562,924
Contract owners’ equity beginning of period		36,459,396			33,147,882			67,262,500			55,620,392			13,252,569			11,091,993			562,924			-
Contract owners’ equity end of period	$	40,254,686			36,459,396			64,234,118			67,262,500			19,417,586			13,252,569			5,556,069			562,924
CHANGES IN UNITS:
Beginning units		1,705,456			1,967,130			3,835,413			4,212,566			793,540			829,979			52,762			-
Units purchased		95,109			157,655			218,583			327,867			359,192			122,530			463,588			58,017
Units redeemed		(308,520	)		(419,329	)		(1,179,531	)		(705,020	)		(81,974	)		(158,969	)		(7,944	)		(5,255	)
Ending units		1,492,045			1,705,456			2,874,465			3,835,413			1,070,758			793,540			508,406			52,762

(Continued)

47

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	NVSTB2						GGTC						GGTC3						GVUG1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	43,530			38,007			(2,461	)		(5,207	)		-			-			(290	)		(919	)
Realized gain (loss) on investments		8,220			30,565			(9,198	)		(949,836	)		241,631			(638,693	)		(526,543	)		(1,653,326	)
Change in unrealized gain (loss) on investments		14,658			(13,643	)		144,464			2,357,643			(196,316	)		1,482,600			662,486			2,371,469
Reinvested capital gains		7,416			10,128			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		73,824			65,057			132,805			1,402,600			45,315			843,907			135,653			717,224
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		100,356			54,528			(1,322	)		59,465			153,297			293,443			57,492			210,814
Transfers between funds		1,127,799			2,954,483			(4,378,401	)		208,568			(2,650,394	)		231,817			(2,787,573	)		(1,134,855	)
Surrenders (note 6)		(110,671	)		(1,122,812	)		(28,369	)		(88,980	)		(58,545	)		(171,080	)		(52,137	)		(815,352	)
Death Benefits (note 4)		(462	)		-			(4,518	)		(4,694	)		-			(2,608	)		(523	)		(19,119	)
Net policy repayments (loans) (note 5)		41,273			38,512			1,095			(1,179	)		(20,455	)		32,383			(20,138	)		29,135
Deductions for surrender charges (note 2d)		(2,139	)		(5,629	)		(204	)		(1,955	)		(2,653	)		(14,538	)		(2,163	)		(20,151	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(110,051	)		(63,004	)		(30,256	)		(88,089	)		(44,977	)		(126,032	)		(40,102	)		(154,679	)
Asset charges (note 3):
FPVUL & VEL contracts		(10,373	)		(6,909	)		(995	)		(4,676	)		(2,906	)		(112,611	)		(2,595	)		(4,028	)
MSP contracts		(496	)		(437	)		(15	)		(114	)		(82	)		(3,331	)		(138	)		(88	)
SL contracts or LSFP contracts		(2,197	)		(1,137	)		(49	)		(558	)		(412	)		(17,838	)		(240	)		(425	)
Adjustments to maintain reserves		(10	)		2,111			2,298			2,399			(1	)		125,448			(124	)		(4,958	)
Net equity transactions		1,033,029			1,849,706			(4,440,736	)		80,187			(2,627,128	)		235,053			(2,848,241	)		(1,913,706	)
Net change in contract owners’ equity		1,106,853			1,914,763			(4,307,931	)		1,482,787			(2,581,813	)		1,078,960			(2,712,588	)		(1,196,482	)
Contract owners’ equity beginning of period		2,878,449			963,686			4,307,931			2,825,144			2,581,813			1,502,853			2,712,588			3,909,070
Contract owners’ equity end of period	$	3,985,302			2,878,449			-			4,307,931			-			2,581,813			-			2,712,588
CHANGES IN UNITS:
Beginning units		270,272			96,918			1,315,161			1,311,533			200,315			177,753			191,297			347,750
Units purchased		112,902			291,724			77,162			104,270			8,584			58,779			9,468			19,096
Units redeemed		(17,815	)		(118,370	)		(1,392,323	)		(100,642	)		(208,899	)		(36,217	)		(200,765	)		(175,549	)
Ending units		365,359			270,272			-			1,315,161			-			200,315			-			191,297

(Continued)

48

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	NVOLG1						NVTIV3						EIF						NVRE1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	5,813			457			2,735			368			139,761			87,614			486,112			179,377
Realized gain (loss) on investments		52,851			1,424			(661	)		4,120			(307,357	)		(906,434	)		1,040,735			137,380
Change in unrealized gain (loss) on investments		394,273			10,079			(13,933	)		(436	)		1,545,904			2,824,759			3,056,673			3,191,020
Reinvested capital gains		33,871			7,009			21,213			195			-			-			2,139,672			71,568
Net increase (decrease) in contract owners’ equity resulting from operations		486,808			18,969			9,354			4,247			1,378,308			2,005,939			6,723,192			3,579,345
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		522,949			1,701			7,856			1,738			606,344			672,491			1,830,396			826,975
Transfers between funds		122,386,050			405,120			55,509			110,336			79,600			(688,791	)		645,647			19,807,032
Surrenders (note 6)		(443,122	)		-			(3	)		(1	)		(521,997	)		(480,476	)		(2,168,475	)		(587,474	)
Death Benefits (note 4)		-			-			-			-			(37,287	)		(7,146	)		(138,113	)		(375	)
Net policy repayments (loans) (note 5)		(82,587	)		-			(10,888	)		(4,268	)		(40,839	)		(104,177	)		(146,576	)		(174,499	)
Deductions for surrender charges (note 2d)		(5,058	)		-			-			-			(17,259	)		(24,760	)		(72,999	)		(20,423	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(362,198	)		(2,296	)		(5,845	)		(1,621	)		(442,963	)		(471,664	)		(1,302,017	)		(480,637	)
Asset charges (note 3):
FPVUL & VEL contracts		(27,412	)		(22,628	)		(492	)		(326,294	)		(32,305	)		(40,921	)		(91,068	)		(50,828	)
MSP contracts		(1,006	)		(692	)		-			(11,033	)		(981	)		(1,196	)		(3,037	)		(1,105	)
SL contracts or LSFP contracts		(3,716	)		(4,057	)		(45	)		(83,213	)		(4,617	)		(2,503	)		(10,292	)		(6,737	)
Adjustments to maintain reserves		(33	)		27,180			(15	)		420,419			362			11,126			(758	)		22,931
Net equity transactions		121,983,867			404,328			46,077			106,063			(411,942	)		(1,138,017	)		(1,457,292	)		19,334,859
Net change in contract owners’ equity		122,470,675			423,297			55,431			110,310			966,366			867,922			5,265,900			22,914,204
Contract owners’ equity beginning of period		423,297			-			110,310			-			8,892,816			8,024,894			23,027,067			112,863
Contract owners’ equity end of period	$	122,893,972			423,297			165,741			110,310			9,859,182			8,892,816			28,292,967			23,027,067
CHANGES IN UNITS:
Beginning units		32,412			-			8,463			-			759,809			886,702			3,109,395			19,987
Units purchased		8,684,119			32,613			5,528			8,948			75,300			73,045			323,493			3,283,529
Units redeemed		(67,557	)		(201	)		(2,034	)		(485	)		(106,300	)		(199,938	)		(590,977	)		(194,121	)
Ending units		8,648,974			32,412			11,957			8,463			728,809			759,809			2,841,911			3,109,395

(Continued)

49

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	AMTB						PMVLGA					AVBVI						AVCA
	2010			2009			2010			2009		2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	236,887			290,441			126			-		2,654			7,646			6,540			4,684
Realized gain (loss) on investments		(216,459	)		(300,148	)		44			-		124,938			(3,531,453	)		(82,744	)		(74,322	)
Change in unrealized gain (loss) on investments		207,199			492,764			(482	)		-		(66,904	)		4,600,082			203,946			213,629
Reinvested capital gains		-			-			162			-		-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		227,627			483,057			(150	)		-		60,688			1,076,275			127,742			143,991
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		368,189			309,832			(31	)		-		10,969			261,637			109,427			143,524
Transfers between funds		(22,481	)		538,842			39,919			-		(131,286	)		(3,528,959	)		(9,253	)		14,288
Surrenders (note 6)		(553,757	)		(757,328	)		-			-		(17,590	)		(286,219	)		(67,294	)		(34,964	)
Death Benefits (note 4)		(69,114	)		(3,196	)		-			-		(1,869	)		(3,881	)		(1	)		-
Net policy repayments (loans) (note 5)		9,278			19,344			-			-		(3,968	)		(130,587	)		(60,595	)		9,181
Deductions for surrender charges (note 2d)		(11,017	)		(18,581	)		-			-		-			(12,997	)		(6,627	)		(3,151	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(247,567	)		(248,978	)		(603	)		-		(16,369	)		(150,764	)		(59,069	)		(64,911	)
Asset charges (note 3):
FPVUL & VEL contracts		(15,099	)		(1,785	)		(7	)		-		1			(1,556	)		(3,860	)		(734	)
MSP contracts		(605	)		-			-			-		-			(31	)		(152	)		-
SL contracts or LSFP contracts		(2,911	)		(264	)		-			-		-			(399	)		(334	)		(120	)
Adjustments to maintain reserves		162			(15,850	)		12			-		69			(6,033	)		(43	)		(2,921	)
Net equity transactions		(544,922	)		(177,964	)		39,290			-		(160,043	)		(3,859,789	)		(97,801	)		60,192
Net change in contract owners’ equity		(317,295	)		305,093			39,140			-		(99,355	)		(2,783,514	)		29,941			204,183
Contract owners’ equity beginning of period		4,377,409			4,072,316			-			-		756,376			3,539,890			925,765			721,582
Contract owners’ equity end of period	$	4,060,114			4,377,409			39,140			-		657,021			756,376			955,706			925,765
CHANGES IN UNITS:
Beginning units		395,794			417,277			-			-		60,501			414,366			77,637			73,269
Units purchased		68,485			105,650			3,751			-		6,882			43,794			11,155			15,211
Units redeemed		(115,601	)		(127,133	)		(54	)		-		(18,464	)		(397,659	)		(19,393	)		(10,843	)
Ending units		348,678			395,794			3,697			-		48,919			60,501			69,399			77,637

(Continued)

50

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	AVCDI						AVHY1					AVIE						AVMCCI
	2010			2009			2010			2009		2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(14,089	)		(12,329	)		38,988			-		605,150			377,449			463			-
Realized gain (loss) on investments		(1,416,091	)		(3,608,941	)		3,980			-		(2,802,187	)		(3,733,536	)		598			-
Change in unrealized gain (loss) on investments		2,940,474			6,335,247			(15,654	)		-		5,889,133			11,299,759			13,011			-
Reinvested capital gains		-			-			-			-		-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		1,510,294			2,713,977			27,314			-		3,692,096			7,943,672			14,072			-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		696,700			523,418			36,582			-		1,518,061			1,911,585			517			-
Transfers between funds		(1,041,240	)		(551,590	)		620,238			-		3,324,886			1,882,564			92,374			-
Surrenders (note 6)		(252,034	)		(126,744	)		-			-		(1,430,280	)		(1,077,166	)		-			-
Death Benefits (note 4)		(15,005	)		(11,878	)		-			-		(35,539	)		(50,998	)		-			-
Net policy repayments (loans) (note 5)		(84,853	)		(37,566	)		-			-		(215,504	)		495,580			-			-
Deductions for surrender charges (note 2d)		(4,901	)		(10,104	)		-			-		-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(203,048	)		(240,838	)		(1,817	)		-		(478,033	)		(520,217	)		(1,612	)		-
Asset charges (note 3):
FPVUL & VEL contracts		(9,417	)		(2,628	)		(4	)		-		(1,201	)		(71,710	)		(17	)		-
MSP contracts		(292	)		(133	)		-			-		-			(3,138	)		-			-
SL contracts or LSFP contracts		(1,017	)		(48	)		-			-		-			(11,782	)		-			-
Adjustments to maintain reserves		439			(6,849	)		(4	)		-		2,535			85,751			1			-
Net equity transactions		(914,668	)		(464,960	)		654,995			-		2,684,925			2,640,470			91,263			-
Net change in contract owners’ equity		595,626			2,249,017			682,309			-		6,377,021			10,584,142			105,335			-
Contract owners’ equity beginning of period		8,802,674			6,553,657			-			-		33,106,019			22,521,877			-			-
Contract owners’ equity end of period	$	9,398,300			8,802,674			682,309			-		39,483,040			33,106,019			105,335			-
CHANGES IN UNITS:
Beginning units		543,425			575,421			-			-		2,007,609			1,844,850			-			-
Units purchased		43,281			45,237			64,501			-		395,922			372,280			7,501			-
Units redeemed		(97,353	)		(77,233	)		(176	)		-		(277,236	)		(209,521	)		(124	)		-
Ending units		489,353			543,425			64,325			-		2,126,295			2,007,609			7,377			-

(Continued)

51

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	ALVGIA						ALVIVA						ALVSVA						ACVIG
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(17,748	)		390,671			494,711			309,247			32,193			56,853			238,653			676,849
Realized gain (loss) on investments		(1,294,162	)		(2,433,244	)		593,155			(14,852,340	)		(226,218	)		(1,362,274	)		(375,341	)		(916,664	)
Change in unrealized gain (loss) on investments		2,586,997			3,892,452			(715,148	)		23,712,549			2,297,123			3,299,033			2,264,346			2,634,136
Reinvested capital gains		-			-			-			-			-			242,912			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		1,275,087			1,849,879			372,718			9,169,456			2,103,098			2,236,524			2,127,658			2,394,321
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		410,510			494,754			883,542			1,580,472			987,032			802,782			986,212			1,153,511
Transfers between funds		(27,278	)		(1,630,709	)		(13,634,178	)		(4,169,695	)		1,660,304			840,526			318,015			(786,783	)
Surrenders (note 6)		(829,894	)		(461,687	)		(1,989,151	)		(517,122	)		(630,998	)		(218,390	)		(1,047,877	)		(1,010,586	)
Death Benefits (note 4)		(52,347	)		(70,052	)		(3,240	)		(56,372	)		(21,050	)		(4,386	)		(54,146	)		(16,535	)
Net policy repayments (loans) (note 5)		(46,109	)		757,452			(42,084	)		(14,340	)		(74,559	)		(9,557	)		(104,897	)		(23,681	)
Deductions for surrender charges (note 2d)		(4,994	)		(4,936	)		-			-			(12,489	)		(15,875	)		(12,197	)		(33,102	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(211,989	)		(249,295	)		(325,769	)		(573,202	)		(257,726	)		(210,880	)		(818,717	)		(878,340	)
Asset charges (note 3):
FPVUL & VEL contracts		(9,500	)		(253,523	)		(2,714	)		(28,455	)		(17,997	)		(138,691	)		(47,550	)		(5,184	)
MSP contracts		(76	)		(8,338	)		-			(2,561	)		(324	)		(5,248	)		(1,830	)		(2,518	)
SL contracts or LSFP contracts		(919	)		(37,941	)		-			(5,285	)		(1,664	)		(23,702	)		(5,333	)		(183	)
Adjustments to maintain reserves		69			289,883			826			34,757			(358	)		154,270			(871	)		(45,154	)
Net equity transactions		(772,527	)		(1,174,392	)		(15,112,768	)		(3,751,802	)		1,630,171			1,170,849			(789,191	)		(1,648,555	)
Net change in contract owners’ equity		502,560			675,487			(14,740,050	)		5,417,654			3,733,269			3,407,373			1,338,467			745,766
Contract owners’ equity beginning of period		10,702,162			10,026,675			31,549,759			26,132,105			7,718,893			4,311,520			15,678,376			14,932,610
Contract owners’ equity end of period	$	11,204,722			10,702,162			16,809,709			31,549,759			11,452,162			7,718,893			17,016,843			15,678,376
CHANGES IN UNITS:
Beginning units		788,774			891,856			4,203,456			4,683,123			412,183			328,168			1,215,565			1,377,996
Units purchased		42,792			110,336			127,408			534,493			135,902			156,315			139,222			118,060
Units redeemed		(100,267	)		(213,418	)		(2,185,490	)		(1,014,160	)		(65,416	)		(72,300	)		(182,607	)		(280,491	)
Ending units		731,299			788,774			2,145,374			4,203,456			482,669			412,183			1,172,180			1,215,565

(Continued)

52

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	ACVIP2						ACVI						ACVI3						ACVMV1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	519,194			408,663			340,724			499,991			-			149,185			81,388			79,153
Realized gain (loss) on investments		54,863			(17,598	)		(114,692	)		(1,817,728	)		-			(2,457,774	)		(10,766	)		(337,105	)
Change in unrealized gain (loss) on investments		968,994			1,696,211			1,625,362			7,646,953			-			3,577,208			565,974			837,183
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		1,543,051			2,087,276			1,851,394			6,329,216			-			1,268,619			636,596			579,231
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		1,858,646			1,797,228			1,970,994			256,325			(9	)		875,837			295,741			376,909
Transfers between funds		1,801,498			8,694,431			(10,150,465	)		(7,162,032	)		17			(7,901,795	)		1,137,328			344,013
Surrenders (note 6)		(940,629	)		(1,193,898	)		(216,963	)		(5,747,050	)		-			(610,700	)		(276,102	)		(113,286	)
Death Benefits (note 4)		(9,172	)		(4,883	)		(17,815	)		(109,866	)		-			(8,423	)		(1,959	)		(169	)
Net policy repayments (loans) (note 5)		(637,358	)		(330,435	)		(28,157	)		(37,869	)		-			242,748			(26,054	)		(38,948	)
Deductions for surrender charges (note 2d)		(21,568	)		(21,774	)		47			(13,460	)		-			(17,064	)		(4,342	)		(5,642	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(534,150	)		(541,350	)		(252,562	)		(909,646	)		(14	)		(346,939	)		(131,580	)		(124,627	)
Asset charges (note 3):
FPVUL & VEL contracts		(30,300	)		(7,576	)		54			(8,955	)		5			(23,675	)		(9,216	)		(153,873	)
MSP contracts		(1,006	)		(4,106	)		-			(1,192	)		-			(901	)		(531	)		(4,267	)
SL contracts or LSFP contracts		(60,673	)		(3,983	)		-			(760	)		-			(4,164	)		(955	)		(18,176	)
Adjustments to maintain reserves		5,581			(61,490	)		737			(11,872	)		1			15,083			(270	)		167,924
Net equity transactions		1,430,869			8,322,164			(8,694,130	)		(13,746,377	)		-			(7,779,994	)		982,060			429,858
Net change in contract owners’ equity		2,973,920			10,409,440			(6,842,736	)		(7,417,161	)		-			(6,511,375	)		1,618,656			1,009,089
Contract owners’ equity beginning of period		28,276,116			17,866,676			16,648,577			24,065,738			-			6,511,375			2,795,410			1,786,321
Contract owners’ equity end of period	$	31,250,036			28,276,116			9,805,841			16,648,577			-			-			4,414,066			2,795,410
CHANGES IN UNITS:
Beginning units		2,112,440			1,471,121			1,578,437			2,563,444			-			684,882			213,925			177,588
Units purchased		281,981			842,838			205,140			413,697			242			102,209			110,685			60,679
Units redeemed		(173,496	)		(201,519	)		(959,916	)		(1,398,704	)		(242	)		(787,091	)		(40,582	)		(24,342	)
Ending units		2,220,925			2,112,440			823,661			1,578,437			-			-			284,028			213,925

(Continued)

53

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	ACVU1						ACVV						ACVVS1						DVMCS
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	3,593			6,758			856,461			2,567,542			(3,462	)		(3,136	)		7,713			7,754
Realized gain (loss) on investments		(29,018	)		(1,249,197	)		(12,637,551	)		(5,673,840	)		198,888			(2,157,073	)		(50,141	)		(194,997	)
Change in unrealized gain (loss) on investments		153,537			1,752,880			17,323,542			11,996,736			195,418			2,667,921			357,857			397,732
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		128,112			510,441			5,542,452			8,890,438			390,844			507,712			315,429			210,489
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		53,976			203,832			3,071,871			3,462,119			127,801			350,419			493			18,235
Transfers between funds		57,776			(2,176,059	)		(37,519,391	)		939,781			(533,112	)		(1,970,914	)		522,931			131,562
Surrenders (note 6)		(15,025	)		(93,738	)		(3,132,709	)		(2,992,993	)		(3,489	)		(46,524	)		(15,231	)		(42,213	)
Death Benefits (note 4)		(4,204	)		(2,797	)		(192,678	)		(101,903	)		(1,853	)		(901	)		(4,290	)		(14	)
Net policy repayments (loans) (note 5)		(309	)		(3,536	)		(292,514	)		(7,525	)		(4,610	)		1,586			(276	)		7,444
Deductions for surrender charges (note 2d)		-			(4,410	)		(51,900	)		(95,117	)		-			(3,962	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(10,890	)		(113,956	)		(1,830,981	)		(2,164,400	)		(58,498	)		(125,689	)		(18,644	)		(13,153	)
Asset charges (note 3):
FPVUL & VEL contracts		1			(23,491	)		(112,300	)		(9,941	)		(242	)		(40,347	)		-			(66,862	)
MSP contracts		-			(1,408	)		(3,328	)		(102	)		(43	)		(2,934	)		-			(2,463	)
SL contracts or LSFP contracts		-			(2,630	)		(14,269	)		(2,552	)		-			(17,601	)		-			(13,513	)
Adjustments to maintain reserves		6			22,625			3,710			(122,079	)		316			56,283			53			82,850
Net equity transactions		81,331			(2,195,569	)		(40,074,489	)		(1,094,713	)		(473,730	)		(1,800,584	)		485,036			101,873
Net change in contract owners’ equity		209,443			(1,685,128	)		(34,532,037	)		7,795,725			(82,886	)		(1,292,872	)		800,465			312,362
Contract owners’ equity beginning of period		822,316			2,507,444			52,829,815			45,034,090			1,942,104			3,234,976			882,854			570,492
Contract owners’ equity end of period	$	1,031,759			822,316			18,297,778			52,829,815			1,859,218			1,942,104			1,683,319			882,854
CHANGES IN UNITS:
Beginning units		79,433			323,265			3,016,448			3,065,576			178,279			361,695			61,624			53,835
Units purchased		9,523			34,869			178,104			414,934			17,518			40,041			33,362			11,544
Units redeemed		(2,958	)		(278,701	)		(2,185,747	)		(464,062	)		(57,883	)		(223,457	)		(2,362	)		(3,755	)
Ending units		85,998			79,433			1,008,805			3,016,448			137,914			178,279			92,624			61,624

(Continued)

54

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	DVSCS						DSIF						DSRG						DCAP
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	117,607			513,409			4,335,919			4,611,419			88,836			89,517			491,651			529,882
Realized gain (loss) on investments		(4,941,906	)		(5,382,740	)		(5,752,564	)		(15,363,916	)		321,718			(339,716	)		(691,095	)		(1,158,330	)
Change in unrealized gain (loss) on investments		11,513,004			6,521,628			36,844,292			53,256,000			988,748			3,016,835			3,577,649			3,343,161
Reinvested capital gains		-			3,690,903			-			15,610,923			-			-			-			1,595,366
Net increase (decrease) in contract owners’ equity resulting from operations		6,688,705			5,343,200			35,427,647			58,114,426			1,399,302			2,766,636			3,378,205			4,310,079
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		1,306,213			1,549,773			13,888,136			14,993,791			1,044,123			1,253,433			1,505,457			1,600,282
Transfers between funds		1,571,736			3,331,538			(12,247,307	)		(20,202,465	)		(640,445	)		(485,857	)		(658,440	)		165,445
Surrenders (note 6)		(1,527,938	)		(1,105,804	)		(21,168,029	)		(19,024,632	)		(1,056,913	)		(822,907	)		(1,570,238	)		(1,518,374	)
Death Benefits (note 4)		(23,510	)		(16,453	)		(535,722	)		(957,808	)		(102,410	)		(30,191	)		(103,187	)		(20,573	)
Net policy repayments (loans) (note 5)		(60,903	)		(280,899	)		(141,730	)		1,723,359			(77,927	)		(34,091	)		(109,748	)		16,087
Deductions for surrender charges (note 2d)		(22,951	)		(36,027	)		(133,150	)		(327,301	)		(3,476	)		(18,147	)		(11,407	)		(41,880	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(669,050	)		(670,203	)		(8,764,718	)		(9,939,235	)		(794,886	)		(873,104	)		(899,581	)		(995,180	)
Asset charges (note 3):
FPVUL & VEL contracts		(27,400	)		(25,245	)		(354,390	)		(40,697	)		(44,387	)		(9,693	)		(54,466	)		(8,686	)
MSP contracts		(695	)		(594	)		(12,213	)		(525	)		(1,331	)		(140	)		(1,335	)		(1,639	)
SL contracts or LSFP contracts		(4,833	)		(6,290	)		(67,989	)		(6,753	)		(2,077	)		(607	)		(5,034	)		(5,174	)
Adjustments to maintain reserves		184			4,452			16,500			(373,354	)		116			(34,105	)		343			(43,970	)
Net equity transactions		540,853			2,744,248			(29,520,612	)		(34,155,620	)		(1,679,613	)		(1,055,409	)		(1,907,636	)		(853,661	)
Net change in contract owners’ equity		7,229,558			8,087,448			5,907,035			23,958,806			(280,311	)		1,711,227			1,470,569			3,456,418
Contract owners’ equity beginning of period		28,256,567			20,169,119			264,854,808			240,896,002			10,643,011			8,931,784			23,789,510			20,333,092
Contract owners’ equity end of period	$	35,486,125			28,256,567			270,761,843			264,854,808			10,362,700			10,643,011			25,260,079			23,789,510
CHANGES IN UNITS:
Beginning units		2,107,045			1,877,655			24,244,638			27,480,971			938,021			1,059,639			1,788,469			1,847,383
Units purchased		355,112			440,945			1,451,225			2,190,468			94,519			142,236			139,746			189,168
Units redeemed		(355,202	)		(211,555	)		(4,086,455	)		(5,426,801	)		(244,155	)		(263,854	)		(263,305	)		(248,082	)
Ending units		2,106,955			2,107,045			21,609,408			24,244,638			788,385			938,021			1,664,910			1,788,469

(Continued)

55

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	DSC						DVIV						SVSSVB						SVSHEB
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	4,743			8,771			371,508			802,080			11,990			66,248			4,504			20,726
Realized gain (loss) on investments		(88,907	)		(237,303	)		(3,086,519	)		(5,642,350	)		7,531			(991,504	)		66,688			(365,065	)
Change in unrealized gain (loss) on investments		261,421			339,478			3,650,644			10,533,052			339,495			1,926,210			(56,528	)		449,631
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		177,257			110,946			935,633			5,692,782			359,016			1,000,954			14,664			105,292
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		51,491			52,230			473,515			969,516			135,748			56,728			25			42,298
Transfers between funds		226,819			16,007			174,748			(2,201,698	)		(104,781	)		(100,655	)		(309,658	)		(157,787	)
Surrenders (note 6)		(17,264	)		(26,557	)		(1,478,316	)		(338,852	)		(5,387	)		(3,360,663	)		-			(26,594	)
Death Benefits (note 4)		-			-			(45,900	)		(36,099	)		(1,852	)		(38,126	)		(3,293	)		-
Net policy repayments (loans) (note 5)		(3,765	)		(3,692	)		(171,354	)		143			(20,767	)		(10,085	)		(226	)		-
Deductions for surrender charges (note 2d)		(366	)		(3,254	)		-			-			-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(28,137	)		(26,762	)		(284,199	)		(321,217	)		(27,939	)		(257,513	)		(7,035	)		(13,802	)
Asset charges (note 3):
FPVUL & VEL contracts		(2,253	)		(35,569	)		(320	)		(27,852	)		(187	)		(12,685	)		-			(5,002	)
MSP contracts		-			(1,022	)		-			(963	)		-			(626	)		-			(382	)
SL contracts or LSFP contracts		(310	)		(4,487	)		-			(3,961	)		-			(3,100	)		-			(1,084	)
Adjustments to maintain reserves		(12	)		39,092			431			32,697			138			16,383			14			6,471
Net equity transactions		226,203			5,986			(1,331,395	)		(1,928,286	)		(25,027	)		(3,710,342	)		(320,173	)		(155,881	)
Net change in contract owners’ equity		403,460			116,932			(395,762	)		3,764,496			333,989			(2,709,388	)		(305,509	)		(50,589	)
Contract owners’ equity beginning of period		645,550			528,618			23,681,231			19,916,735			1,528,003			4,237,391			505,843			556,432
Contract owners’ equity end of period	$	1,049,010			645,550			23,285,469			23,681,231			1,861,992			1,528,003			200,334			505,843
CHANGES IN UNITS:
Beginning units		58,513			60,390			1,328,460			1,460,923			188,237			672,760			68,810			94,357
Units purchased		18,515			14,002			103,971			82,908			25,430			45,475			5			6,594
Units redeemed		(4,528	)		(15,879	)		(178,968	)		(215,371	)		(26,327	)		(529,998	)		(44,472	)		(32,141	)
Ending units		72,500			58,513			1,253,463			1,328,460			187,340			188,237			24,343			68,810

(Continued)

56

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FVCA2P						FALF						FVMOS						FQB
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	6,453			5,549			3,510			4,980			26,523			11,339			1,750,741			2,031,892
Realized gain (loss) on investments		(4,068	)		(15,641	)		(68,794	)		(90,243	)		(33,427	)		(17,471	)		(10,753	)		(284,840	)
Change in unrealized gain (loss) on investments		88,407			85,511			72,384			112,514			14,290			2,498			1,247,838			4,238,316
Reinvested capital gains		-			-			-			-			-			11,510			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		90,792			75,419			7,100			27,251			7,386			7,876			2,987,826			5,985,368
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		49,717			53,556			747			7,318			4,275			56,736			1,607,780			1,841,214
Transfers between funds		167,188			131,145			(181,829	)		16,561			(723,580	)		51,298			1,548,117			1,722,487
Surrenders (note 6)		(19,953	)		(48,967	)		(11,627	)		(29,556	)		(12,063	)		(93,659	)		(2,819,228	)		(1,305,814	)
Death Benefits (note 4)		(7,459	)		-			-			-			-			-			(466,065	)		(73,632	)
Net policy repayments (loans) (note 5)		(37,453	)		1,694			1,828			(7,062	)		(4,498	)		(22,495	)		(193,401	)		(212,033	)
Deductions for surrender charges (note 2d)		(493	)		(656	)		(92	)		(1,594	)		-			(2,103	)		(78,330	)		(49,747	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(26,714	)		(20,933	)		(1,627	)		(9,054	)		(5,665	)		(37,061	)		(1,214,399	)		(1,336,261	)
Asset charges (note 3):
FPVUL & VEL contracts		(2,311	)		(14,566	)		(151	)		(21,288	)		(484	)		(851	)		(73,922	)		(12,303	)
MSP contracts		(28	)		(262	)		-			(685	)		(23	)		(29	)		(3,689	)		(233	)
SL contracts or LSFP contracts		(516	)		(6,844	)		(16	)		(4,316	)		(2	)		(109	)		(9,990	)		(1,082	)
Adjustments to maintain reserves		(7	)		19,728			-			25,400			4			(1,787	)		33			(72,672	)
Net equity transactions		121,971			113,895			(192,767	)		(24,276	)		(742,036	)		(50,060	)		(1,703,094	)		499,924
Net change in contract owners’ equity		212,763			189,314			(185,667	)		2,975			(734,650	)		(42,184	)		1,284,732			6,485,292
Contract owners’ equity beginning of period		628,196			438,882			185,667			182,692			734,650			776,834			35,705,735			29,220,443
Contract owners’ equity end of period	$	840,959			628,196			-			185,667			-			734,650			36,990,467			35,705,735
CHANGES IN UNITS:
Beginning units		46,524			36,885			15,949			18,003			71,443			76,516			2,083,382			2,049,199
Units purchased		17,062			14,544			64			3,434			415			11,355			275,474			259,877
Units redeemed		(8,506	)		(4,905	)		(16,013	)		(5,488	)		(71,858	)		(16,428	)		(365,691	)		(225,694	)
Ending units		55,080			46,524			-			15,949			-			71,443			1,993,165			2,083,382

(Continued)

57

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FCS						FNRS2						FEIS						FF10S
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	577,149			1,550,632			31,690			19,097			1,016,109			1,180,270			37,311			66,791
Realized gain (loss) on investments		(28,369,710	)		(38,137,604	)		(2,058,408	)		(3,503,742	)		(4,211,956	)		(8,802,232	)		(107,049	)		(158,183	)
Change in unrealized gain (loss) on investments		48,385,295			74,183,384			3,538,726			7,057,894			11,998,977			22,562,984			248,709			488,742
Reinvested capital gains		28,176			36,005			-			-			-			-			34,632			14,154
Net increase (decrease) in contract owners’ equity resulting from operations		20,620,910			37,632,417			1,512,008			3,573,249			8,803,130			14,941,022			213,603			411,504
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		8,774,020			9,007,187			955,268			921,259			4,299,809			4,899,671			60,238			60,646
Transfers between funds		(92,723,278	)		(24,042,556	)		(1,066,245	)		(1,393,880	)		(2,802,562	)		(6,014,274	)		45,735			265,977
Surrenders (note 6)		(9,523,477	)		(9,034,785	)		(606,557	)		(682,814	)		(4,457,726	)		(4,389,242	)		(43,767	)		(28,995	)
Death Benefits (note 4)		(448,316	)		(336,831	)		(1,624	)		(9,801	)		(280,846	)		(163,982	)		(167,290	)		(37,311	)
Net policy repayments (loans) (note 5)		(603,545	)		1,183,619			(97,353	)		26,475			(130,036	)		(251,250	)		(4,807	)		(616	)
Deductions for surrender charges (note 2d)		(91,525	)		(192,255	)		(22,192	)		(23,203	)		(59,809	)		(98,170	)		(4,571	)		(347	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(4,460,519	)		(5,367,108	)		(390,775	)		(462,382	)		(2,675,288	)		(2,927,280	)		(64,439	)		(79,301	)
Asset charges (note 3):
FPVUL & VEL contracts		(261,180	)		(3,768	)		(28,701	)		(38,528	)		(151,878	)		(17,150	)		(4,538	)		(1,633	)
MSP contracts		(8,415	)		(171	)		(2,937	)		(701	)		(5,898	)		(454	)		(2,944	)		(34	)
SL contracts or LSFP contracts		(32,520	)		(801	)		(4,651	)		(5,686	)		(21,696	)		(2,441	)		(257	)		(210	)
Adjustments to maintain reserves		8,576			(295,565	)		9,306			8,741			221			(147,356	)		(1	)		(5,973	)
Net equity transactions		(99,370,179	)		(29,083,035	)		(1,256,461	)		(1,660,519	)		(6,285,709	)		(9,111,927	)		(186,641	)		172,203
Net change in contract owners’ equity		(78,749,269	)		8,549,382			255,547			1,912,730			2,517,421			5,829,095			26,962			583,707
Contract owners’ equity beginning of period		146,562,711			138,013,329			9,731,567			7,818,837			63,257,462			57,428,367			1,889,103			1,305,396
Contract owners’ equity end of period	$	67,813,442			146,562,711			9,987,114			9,731,567			65,774,883			63,257,462			1,916,065			1,889,103
CHANGES IN UNITS:
Beginning units		8,508,181			11,013,774			630,089			747,087			4,882,719			5,797,882			157,623			135,192
Units purchased		606,440			840,475			54,208			96,254			389,511			520,004			8,246			36,923
Units redeemed		(5,067,200	)		(3,346,068	)		(141,620	)		(213,252	)		(853,561	)		(1,435,167	)		(24,042	)		(14,492	)
Ending units		4,047,421			8,508,181			542,677			630,089			4,418,669			4,882,719			141,827			157,623

(Continued)

58

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FF20S						FF30S						FGIS						FGOS
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	143,185			168,966			69,620			56,247			311			524			(535	)		24,301
Realized gain (loss) on investments		(286,515	)		(690,784	)		(240,063	)		(258,601	)		6,179			(3,209	)		220,059			(205,046	)
Change in unrealized gain (loss) on investments		1,059,262			1,954,092			647,309			870,053			315			14,001			1,589,853			2,704,979
Reinvested capital gains		52,594			63,886			26,398			31,524			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		968,526			1,496,160			503,264			699,223			6,805			11,316			1,809,377			2,524,234
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		688,008			732,783			492,821			366,393			4			3			517,383			673,114
Transfers between funds		456,997			899,650			502,344			411,897			3,890			58,366			(7,493,911	)		(201,169	)
Surrenders (note 6)		(293,746	)		(613,436	)		(359,043	)		(135,211	)		-			-			(585,999	)		(373,231	)
Death Benefits (note 4)		(65	)		(48,314	)		(2,691	)		(1,507	)		(98	)		(108	)		(36,067	)		(11,187	)
Net policy repayments (loans) (note 5)		225			(1,977	)		(18,819	)		(15,113	)		(2,153	)		-			(55,296	)		51,325
Deductions for surrender charges (note 2d)		(7,023	)		(7,949	)		(7,075	)		(22,995	)		-			-			(1,494	)		(12,957	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(192,131	)		(201,066	)		(152,119	)		(154,222	)		(449	)		(515	)		(455,435	)		(496,575	)
Asset charges (note 3):
FPVUL & VEL contracts		(9,139	)		(2,829	)		(11,638	)		(7,779	)		-			(125,692	)		(25,361	)		(48,340	)
MSP contracts		(4,734	)		-			(1,438	)		(739	)		-			(3,289	)		(1,036	)		(1,051	)
SL contracts or LSFP contracts		(4,566	)		(194	)		(779	)		(1,681	)		-			(15,394	)		(2,951	)		(8,804	)
Adjustments to maintain reserves		110			(12,660	)		(654	)		(408	)		6			144,374			95			29,494
Net equity transactions		633,936			744,008			440,909			438,634			1,200			57,745			(8,140,072	)		(399,381	)
Net change in contract owners’ equity		1,602,462			2,240,168			944,173			1,137,857			8,005			69,061			(6,330,695	)		2,124,853
Contract owners’ equity beginning of period		5,996,090			3,755,922			3,048,093			1,910,236			69,061			-			7,866,489			5,741,636
Contract owners’ equity end of period	$	7,598,552			5,996,090			3,992,266			3,048,093			77,066			69,061			1,535,794			7,866,489
CHANGES IN UNITS:
Beginning units		507,284			408,386			263,191			216,667			9,244			-			872,275			928,680
Units purchased		124,725			183,284			74,723			79,628			109			9,348			109,865			99,337
Units redeemed		(69,680	)		(84,386	)		(40,406	)		(33,104	)		(338	)		(104	)		(820,081	)		(155,742	)
Ending units		562,329			507,284			297,508			263,191			9,015			9,244			162,059			872,275

(Continued)

59

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FGS						FHIS						FHISR						FIP
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	60,120			140,356			1,092,285			1,014,107			304,869			265,552			442,817			89,440
Realized gain (loss) on investments		(83,728	)		(170,254	)		(401,720	)		(2,346,308	)		408,502			(368,107	)		(202,734	)		(905,611	)
Change in unrealized gain (loss) on investments		13,386,883			15,472,365			1,181,040			7,293,431			(221,319	)		1,117,802			992,191			1,620,518
Reinvested capital gains		213,529			51,075			-			-			-			-			80,011			79,994
Net increase (decrease) in contract owners’ equity resulting from operations		13,576,804			15,493,542			1,871,605			5,961,230			492,052			1,015,247			1,312,285			884,341
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		5,220,384			6,031,817			100,298			528,515			503,909			582,129			292			112,714
Transfers between funds		(4,368,539	)		(2,738,938	)		725,244			800,914			(8,874	)		860,493			19,778,746			118,874
Surrenders (note 6)		(4,953,147	)		(10,901,774	)		(773,201	)		(6,607,266	)		(480,422	)		(514,675	)		-			-
Death Benefits (note 4)		(194,355	)		(167,800	)		(27,334	)		(76,510	)		(3,267	)		(5,348	)		(6,219	)		(15,004	)
Net policy repayments (loans) (note 5)		(407,672	)		411,525			(99,238	)		(175,701	)		104,343			315,065			(477,881	)		-
Deductions for surrender charges (note 2d)		(50,782	)		(122,063	)		(2,121	)		(26,124	)		(3,169	)		(8,883	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,184,233	)		(3,922,229	)		(446,146	)		(871,020	)		(214,550	)		(195,153	)		(36,471	)		(36,158	)
Asset charges (note 3):
FPVUL & VEL contracts		(172,480	)		(33,921	)		(23,164	)		(3,090	)		(13,135	)		(1,513	)		-			(82,622	)
MSP contracts		(5,080	)		(1,169	)		(1,631	)		(61	)		(211	)		(68	)		-			(2,675	)
SL contracts or LSFP contracts		(15,241	)		(5,913	)		(2,094	)		(628	)		(2,151	)		(218	)		-			(10,206	)
Adjustments to maintain reserves		1,252			(135,123	)		(1,948	)		(23,315	)		78			(10,773	)		79			95,508
Net equity transactions		(8,129,893	)		(11,585,588	)		(551,335	)		(6,454,286	)		(117,449	)		1,021,056			19,258,546			180,432
Net change in contract owners’ equity		5,446,911			3,907,954			1,320,270			(493,056	)		374,603			2,036,303			20,570,831			1,064,773
Contract owners’ equity beginning of period		64,741,573			60,833,619			13,624,900			14,117,956			3,746,287			1,709,984			4,581,070			3,516,297
Contract owners’ equity end of period	$	70,188,484			64,741,573			14,945,170			13,624,900			4,120,890			3,746,287			25,151,901			4,581,070
CHANGES IN UNITS:
Beginning units		6,332,118			7,700,401			997,738			1,538,011			350,965			230,571			568,495			551,311
Units purchased		561,095			787,812			80,659			131,771			68,101			196,276			2,211,677			25,026
Units redeemed		(1,419,425	)		(2,156,095	)		(130,244	)		(672,044	)		(79,410	)		(75,882	)		(60,954	)		(7,842	)
Ending units		5,473,788			6,332,118			948,153			997,738			339,656			350,965			2,719,218			568,495

(Continued)

60

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FIGBS						FMCS						FOS						FOSR
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	1,348,612			1,451,310			80,307			157,840			276,990			498,907			151,475			221,481
Realized gain (loss) on investments		266,091			(218,707	)		(1,086,575	)		(4,816,852	)		(3,589,756	)		(2,964,630	)		(962,768	)		(1,450,487	)
Change in unrealized gain (loss) on investments		(343,681	)		1,108,825			11,623,565			15,544,782			6,151,870			8,680,677			2,260,405			3,796,623
Reinvested capital gains		437,020			66,026			135,969			167,621			46,644			86,971			22,276			34,875
Net increase (decrease) in contract owners’ equity resulting from operations		1,708,042			2,407,454			10,753,266			11,053,391			2,885,748			6,301,925			1,471,388			2,602,492
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		3,912,460			1,112,309			2,869,954			2,796,586			1,015,465			1,118,093			1,362,516			1,667,323
Transfers between funds		20,377,649			1,469,190			3,591,468			(197,748	)		(4,095,085	)		(2,522,542	)		(710,542	)		(667,393	)
Surrenders (note 6)		(1,620,244	)		(1,800,765	)		(3,043,348	)		(2,271,179	)		(1,315,790	)		(2,520,492	)		(1,155,915	)		(1,393,473	)
Death Benefits (note 4)		(26,947	)		(10,094	)		(51,728	)		(522,334	)		(24,089	)		(8,121	)		(6,634	)		(9,594	)
Net policy repayments (loans) (note 5)		(16,216	)		(91,945	)		(240,501	)		(96,386	)		(72,154	)		(280,378	)		11,869			95,249
Deductions for surrender charges (note 2d)		(33,493	)		(39,692	)		(60,472	)		(67,437	)		(5,401	)		(52,416	)		(22,089	)		(36,249	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(672,033	)		(701,838	)		(1,472,201	)		(1,422,500	)		(707,845	)		(870,779	)		(585,964	)		(670,427	)
Asset charges (note 3):
FPVUL & VEL contracts		(40,909	)		(13,134	)		(84,427	)		(62,798	)		(23,533	)		(1,671	)		(43,941	)		(3,090	)
MSP contracts		(3,424	)		(240	)		(3,065	)		(1,009	)		(618	)		(6	)		(620	)		(168	)
SL contracts or LSFP contracts		(10,784	)		(2,664	)		(14,156	)		(5,411	)		(4,529	)		(138	)		(5,236	)		(771	)
Adjustments to maintain reserves		2,309			(45,207	)		2,787			(15,391	)		792			(30,231	)		(163	)		(43,844	)
Net equity transactions		21,868,368			(124,080	)		1,494,311			(1,865,606	)		(5,232,787	)		(5,168,680	)		(1,156,719	)		(1,062,437	)
Net change in contract owners’ equity		23,576,410			2,283,374			12,247,577			9,187,785			(2,347,039	)		1,133,245			314,669			1,540,055
Contract owners’ equity beginning of period		16,639,606			14,356,232			37,217,839			28,030,054			28,567,208			27,433,963			12,178,591			10,638,536
Contract owners’ equity end of period	$	40,216,016			16,639,606			49,465,416			37,217,839			26,220,169			28,567,208			12,493,260			12,178,591
CHANGES IN UNITS:
Beginning units		1,260,866			1,257,854			1,635,926			1,725,728			2,245,756			2,724,548			992,596			1,096,774
Units purchased		1,807,763			209,579			262,739			256,639			87,971			152,172			109,472			173,704
Units redeemed		(210,721	)		(206,567	)		(207,630	)		(346,441	)		(500,547	)		(630,964	)		(201,038	)		(277,882	)
Ending units		2,857,908			1,260,866			1,691,035			1,635,926			1,833,180			2,245,756			901,030			992,596

(Continued)

61

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FVSS						FF15S						FF25S						FTVIS2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	15,467			14,646			38,819			35,845			21,561			16,647			261,705			313,612
Realized gain (loss) on investments		(380,239	)		(1,474,268	)		103,389			(236,332	)		28,660			(28,032	)		(278,994	)		(499,666	)
Change in unrealized gain (loss) on investments		1,277,589			2,868,659			50,776			406,105			105,698			139,482			502,274			1,348,478
Reinvested capital gains		-			-			22,330			13,329			6,479			5,650			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		912,817			1,409,037			215,314			218,947			162,398			133,747			484,985			1,162,424
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		282,825			320,330			145,537			111,700			283,246			38,096			371,627			367,692
Transfers between funds		(179,033	)		(175,406	)		713,034			(305	)		204,319			228,073			216,330			(173,558	)
Surrenders (note 6)		(295,647	)		(295,655	)		(86,754	)		(2,216	)		(16,194	)		(3,332	)		(849,481	)		(327,889	)
Death Benefits (note 4)		(39,889	)		(20,978	)		-			(10,042	)		-			(4,436	)		(15,220	)		(331	)
Net policy repayments (loans) (note 5)		(63,720	)		(55,097	)		-			-			-			-			3,823			(2,213	)
Deductions for surrender charges (note 2d)		(12,558	)		(9,979	)		-			-			-			-			(5,689	)		(4,378	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(175,015	)		(170,429	)		(25,463	)		(19,622	)		(13,568	)		(7,584	)		(193,697	)		(207,936	)
Asset charges (note 3):
FPVUL & VEL contracts		(12,310	)		(2,773	)		(114	)		(4,147	)		(33	)		(2,343	)		(9,401	)		(6,579	)
MSP contracts		(157	)		(23	)		-			(134	)		-			(65	)		(2,021	)		(368	)
SL contracts or LSFP contracts		(553	)		(244	)		-			(423	)		-			(1,924	)		(5,573	)		(2,911	)
Adjustments to maintain reserves		219			(7,307	)		(26	)		4,547			494			4,349			147			(5,627	)
Net equity transactions		(495,838	)		(417,560	)		746,214			79,358			458,264			250,833			(489,155	)		(364,098	)
Net change in contract owners’ equity		416,979			991,477			961,528			298,305			620,662			384,580			(4,170	)		798,326
Contract owners’ equity beginning of period		3,672,347			2,680,870			1,179,422			881,117			625,968			241,388			4,249,609			3,451,283
Contract owners’ equity end of period	$	4,089,326			3,672,347			2,140,950			1,179,422			1,246,630			625,968			4,245,439			4,249,609
CHANGES IN UNITS:
Beginning units		281,584			323,896			127,313			118,752			71,379			35,716			382,836			421,586
Units purchased		35,326			38,702			92,486			34,618			60,090			37,806			48,260			50,921
Units redeemed		(68,758	)		(81,014	)		(14,814	)		(26,057	)		(8,329	)		(2,143	)		(91,651	)		(89,671	)
Ending units		248,152			281,584			204,985			127,313			123,140			71,379			339,445			382,836

(Continued)

62

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FTVRDI						FTVSVI						FTVSV2						FTVMD2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	186,190			163,842			93,383			150,962			25,657			51,803			2,026			1,950
Realized gain (loss) on investments		1,127			(577,159	)		(561,766	)		(917,805	)		(68,097	)		(1,390,336	)		11,626			(10,390	)
Change in unrealized gain (loss) on investments		1,859,503			1,903,727			3,017,088			2,461,641			1,414,910			2,181,594			8,457			44,892
Reinvested capital gains		-			-			-			350,550			-			165,739			-			5,595
Net increase (decrease) in contract owners’ equity resulting from operations		2,046,820			1,490,410			2,548,705			2,045,348			1,372,470			1,008,800			22,109			42,047
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		728,531			1,022,781			739,486			863,669			371,418			248,450			15			19
Transfers between funds		589,311			62,494			559,833			(224,665	)		75,774			518,265			(17,627	)		99,663
Surrenders (note 6)		(752,729	)		(1,000,863	)		(868,083	)		(389,024	)		(214,576	)		(352,465	)		-			-
Death Benefits (note 4)		(17,366	)		(33,527	)		(3,679	)		(1,166	)		(6,493	)		(2,924	)		(324	)		(636	)
Net policy repayments (loans) (note 5)		(13,809	)		(154,524	)		(170,652	)		(112,640	)		(9,445	)		(11,580	)		(6,007	)		-
Deductions for surrender charges (note 2d)		(29,288	)		(54,334	)		(31,927	)		(39,693	)		-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(476,575	)		(527,726	)		(407,314	)		(412,959	)		(85,969	)		(78,972	)		(1,370	)		(2,034	)
Asset charges (note 3):
FPVUL & VEL contracts		(40,072	)		(12,314	)		(33,765	)		(4,778	)		(418	)		(28,613	)		-			(27,399	)
MSP contracts		(1,280	)		(771	)		(1,216	)		(480	)		-			(498	)		-			(759	)
SL contracts or LSFP contracts		(3,974	)		(2,135	)		(3,778	)		(1,306	)		-			(3,977	)		-			(4,360	)
Adjustments to maintain reserves		(41	)		(25,747	)		1,805			(27,630	)		(311	)		32,758			8			32,524
Net equity transactions		(17,292	)		(726,667	)		(219,290	)		(350,671	)		129,980			320,443			(25,305	)		97,017
Net change in contract owners’ equity		2,029,528			763,743			2,329,415			1,694,677			1,502,450			1,329,243			(3,196	)		139,064
Contract owners’ equity beginning of period		10,126,099			9,362,356			9,491,565			7,796,888			4,615,957			3,286,714			207,181			68,117
Contract owners’ equity end of period	$	12,155,627			10,126,099			11,820,980			9,491,565			6,118,407			4,615,957			203,985			207,181
CHANGES IN UNITS:
Beginning units		724,097			787,806			526,295			560,057			415,075			381,137			23,500			9,508
Units purchased		84,826			77,928			65,455			69,493			51,759			86,958			-			14,344
Units redeemed		(90,195	)		(141,637	)		(81,623	)		(103,255	)		(36,797	)		(53,020	)		(2,791	)		(352	)
Ending units		718,728			724,097			510,127			526,295			430,037			415,075			20,709			23,500

(Continued)

63

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FTVDM3						TIF						TIF2						TIF3
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	85,554			145,606			31,666			55,755			187,862			341,266			83,653			175,850
Realized gain (loss) on investments		(861,147	)		(805,887	)		(23,051	)		(81,845	)		(2,047,726	)		(3,399,112	)		(301,713	)		(726,575	)
Change in unrealized gain (loss) on investments		1,582,406			2,635,761			116,020			438,313			2,720,805			6,489,010			665,144			1,930,983
Reinvested capital gains		-			13,648			-			62,378			-			451,291			-			212,562
Net increase (decrease) in contract owners’ equity resulting from operations		806,813			1,989,128			124,635			474,601			860,941			3,882,455			447,084			1,592,820
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		468,588			543,048			-			41			626,704			806,566			387,500			522,616
Transfers between funds		(472,657	)		909,392			(51,111	)		(87,521	)		(1,829,701	)		(1,161,518	)		(127,204	)		(570,054	)
Surrenders (note 6)		(587,507	)		(215,313	)		(83,141	)		(60,255	)		(622,352	)		(1,201,312	)		(524,225	)		(439,480	)
Death Benefits (note 4)		-			(5,865	)		(86	)		-			(55,395	)		(58,838	)		(10,410	)		(584	)
Net policy repayments (loans) (note 5)		(8,281	)		(68,935	)		(21,446	)		(16,520	)		(1,272	)		731,642			(10,848	)		(19,199	)
Deductions for surrender charges (note 2d)		(6,937	)		(5,637	)		(1,538	)		(3,956	)		-			-			(9,958	)		(21,871	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(218,801	)		(208,344	)		(50,419	)		(58,983	)		(136,962	)		(166,754	)		(204,142	)		(239,699	)
Asset charges (note 3):
FPVUL & VEL contracts		(16,535	)		(2,278	)		(5,058	)		(20,486	)		-			(984	)		(14,940	)		1
MSP contracts		(874	)		(94	)		(442	)		(466	)		-			(60	)		(231	)		-
SL contracts or LSFP contracts		(3,208	)		(441	)		(822	)		(3,725	)		-			(243	)		(4,523	)		-
Adjustments to maintain reserves		2,005			(13,494	)		22			18,343			286			1,301			264			(21,981	)
Net equity transactions		(844,207	)		932,040			(214,041	)		(233,529	)		(2,018,692	)		(1,050,199	)		(518,717	)		(790,251	)
Net change in contract owners’ equity		(37,394	)		2,921,168			(89,406	)		241,072			(1,157,751	)		2,832,256			(71,633	)		802,569
Contract owners’ equity beginning of period		5,680,036			2,758,868			1,698,403			1,457,331			12,834,613			10,002,357			5,544,505			4,741,936
Contract owners’ equity end of period	$	5,642,642			5,680,036			1,608,997			1,698,403			11,676,862			12,834,613			5,472,872			5,544,505
CHANGES IN UNITS:
Beginning units		329,156			275,997			84,266			99,305			694,601			740,460			428,311			502,570
Units purchased		24,354			94,539			-			9			98,184			106,764			38,242			49,905
Units redeemed		(75,250	)		(41,380	)		(10,808	)		(15,048	)		(208,052	)		(152,623	)		(76,559	)		(124,164	)
Ending units		278,260			329,156			73,458			84,266			584,733			694,601			389,994			428,311

(Continued)

64

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	FTVGI2						FTVGI3						FTVFA2						GVMCE
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	36,332			289,491			119,496			1,010,310			7,656			6,436			203,501			648,737
Realized gain (loss) on investments		65,901			(32,038	)		245,111			(194,950	)		20,260			(33,732	)		(4,619,559	)		(7,867,883	)
Change in unrealized gain (loss) on investments		802,304			52,782			708,982			312,003			1,483			83,885			15,374,155			18,839,243
Reinvested capital gains		8,717			-			21,763			-			29			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		913,254			310,235			1,095,352			1,127,363			29,428			56,589			10,958,097			11,620,097
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		186,675			164,993			604,542			590,036			16,889			36,283			1,389,835			1,476,811
Transfers between funds		35,245,316			1,083,600			2,961,122			(678,613	)		60,335			118,482			(5,663,166	)		(1,551,525	)
Surrenders (note 6)		(131,222	)		(2,269	)		(1,011,818	)		(703,025	)		(23,686	)		(18,028	)		(1,467,673	)		(2,223,541	)
Death Benefits (note 4)		-			(2,761	)		(3,122	)		(226	)		-			-			(105,300	)		(76,838	)
Net policy repayments (loans) (note 5)		(121,073	)		126			(100,034	)		1,895			(4	)		(783	)		(129,893	)		(5,807	)
Deductions for surrender charges (note 2d)		-			-			(10,616	)		(8,038	)		(987	)		(140	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(87,020	)		(40,404	)		(343,604	)		(347,645	)		(14,457	)		(10,828	)		(656,780	)		(664,105	)
Asset charges (note 3):
FPVUL & VEL contracts		(464	)		(0	)		(24,177	)		(2,429	)		(1,372	)		(1,171	)		-			(8,864	)
MSP contracts		-			-			(1,020	)		(218	)		(140	)		(8	)		-			(312	)
SL contracts or LSFP contracts		-			-			(3,965	)		(232	)		(106	)		(10	)		-			(1,832	)
Adjustments to maintain reserves		23,900			(182	)		27			(23,271	)		277			207			7,561			11,220
Net equity transactions		35,116,112			1,203,103			2,067,335			(1,171,766	)		36,749			124,005			(6,625,416	)		(3,044,794	)
Net change in contract owners’ equity		36,029,366			1,513,338			3,162,687			(44,403	)		66,177			180,594			4,332,681			8,575,303
Contract owners’ equity beginning of period		2,537,371			1,024,033			6,402,103			6,446,506			296,677			116,083			46,532,951			37,957,648
Contract owners’ equity end of period	$	38,566,737			2,537,371			9,564,790			6,402,103			362,854			296,677			50,865,632			46,532,951
CHANGES IN UNITS:
Beginning units		198,636			94,925			410,243			490,278			34,220			17,440			2,611,229			2,832,966
Units purchased		2,461,875			108,351			183,369			60,991			11,100			19,878			115,735			150,600
Units redeemed		(25,138	)		(4,640	)		(57,755	)		(141,026	)		(7,359	)		(3,098	)		(438,178	)		(372,337	)
Ending units		2,635,373			198,636			535,857			410,243			37,961			34,220			2,288,786			2,611,229

(Continued)

65

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	SBVSG						BNCAI						AMGP						AMINS
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(471	)		(506	)		(23,730	)		(21,202	)		4,947			13,816			-			-
Realized gain (loss) on investments		42,700			(18,609	)		(486,045	)		(1,758,205	)		(52,136	)		(1,542,769	)		-			(1,466,302	)
Change in unrealized gain (loss) on investments		3,268			104,712			3,126,422			4,837,859			357,862			2,680,187			-			1,820,124
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		45,497			85,597			2,616,647			3,058,452			310,673			1,151,234			-			353,822
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		9,985			1,939			590,057			656,234			4,604			244,183			144			65,299
Transfers between funds		(66,998	)		100,339			(196,692	)		347,031			26,758			(5,838,657	)		323			(2,205,412	)
Surrenders (note 6)		(27,721	)		(7,889	)		(493,834	)		(662,978	)		(5,143	)		(819,973	)		-			(116,343	)
Death Benefits (note 4)		-			-			(13,159	)		(14,320	)		(6,218	)		(4,578	)		-			-
Net policy repayments (loans) (note 5)		(5,341	)		(6,076	)		(58,119	)		(148,984	)		-			77,234			-			(7,532	)
Deductions for surrender charges (note 2d)		-			-			-			-			-			(13,343	)		-			(3,413	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(8,418	)		(8,102	)		(181,852	)		(194,251	)		(32,847	)		(245,140	)		(475	)		(70,693	)
Asset charges (note 3):
FPVUL & VEL contracts		(12	)		(8,583	)		(657	)		(2,382	)		1			-			8			-
MSP contracts		-			(216	)		-			(64	)		-			-			-			-
SL contracts or LSFP contracts		-			(1,184	)		-			(740	)		-			-			-			-
Adjustments to maintain reserves		25			9,985			221			2,921			77			(13,505	)		-			(4,675	)
Net equity transactions		(98,480	)		80,213			(354,035	)		(17,533	)		(12,768	)		(6,613,779	)		-			(2,342,769	)
Net change in contract owners’ equity		(52,983	)		165,810			2,262,612			3,040,919			297,905			(5,462,545	)		-			(1,988,947	)
Contract owners’ equity beginning of period		272,274			106,464			10,638,685			7,597,766			1,567,749			7,030,294			-			1,988,947
Contract owners’ equity end of period	$	219,291			272,274			12,901,297			10,638,685			1,865,654			1,567,749			-			-
CHANGES IN UNITS:
Beginning units		32,677			18,197			655,905			647,462			124,914			551,770			-			248,009
Units purchased		6,093			18,130			62,746			117,245			6,371			21,595			38			9,142
Units redeemed		(17,723	)		(3,650	)		(88,204	)		(108,802	)		(6,566	)		(448,451	)		(38	)		(257,151	)
Ending units		21,047			32,677			630,447			655,905			124,719			124,914			-			-

(Continued)

66

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	AMCG						AMTP						AMRI						AMRS
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(12,744	)		(14,212	)		20,117			39,264			18,863			38,852			-			-
Realized gain (loss) on investments		(324,725	)		3,341,833			398,708			(8,477,055	)		(35,559	)		(406,048	)		-			(397,742	)
Change in unrealized gain (loss) on investments		1,793,966			1,225,579			90,998			11,536,812			872,086			1,298,460			-			561,579
Reinvested capital gains		-			-			-			182,659			-			37,516			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		1,456,497			4,553,200			509,823			3,281,680			855,390			968,780			-			163,837
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		173,591			1,056,999			66,949			480,946			68,312			48,189			18			38,424
Transfers between funds		(939,798	)		(19,239,794	)		605,957			(8,041,260	)		538,409			23,956			97			(867,123	)
Surrenders (note 6)		(36,093	)		(5,616,544	)		(186,477	)		(398,408	)		(17,523	)		(43,936	)		-			(3,652	)
Death Benefits (note 4)		(3,478	)		(84,081	)		(9,305	)		(21,709	)		-			-			-			(2,977	)
Net policy repayments (loans) (note 5)		(1,243	)		(50,813	)		(1,297	)		42,842			-			-			-			(5,884	)
Deductions for surrender charges (note 2d)		-			(51,831	)		48			(32,388	)		-			-			-			(474	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(120,026	)		(1,177,096	)		(97,370	)		(352,221	)		(50,012	)		(45,605	)		(117	)		(21,295	)
Asset charges (note 3):
FPVUL & VEL contracts		19			-			(1,010	)		-			(477	)		-			2			-
MSP contracts		-			-			-			-			-			-			-			-
SL contracts or LSFP contracts		-			-			-			-			-			-			-			-
Adjustments to maintain reserves		484			(44,740	)		1,857			(20,089	)		544			(286	)		-			(1,830	)
Net equity transactions		(926,544	)		(25,207,900	)		379,352			(8,342,287	)		539,253			(17,682	)		-			(864,811	)
Net change in contract owners’ equity		529,953			(20,654,700	)		889,175			(5,060,607	)		1,394,643			951,098			-			(700,974	)
Contract owners’ equity beginning of period		5,581,236			26,235,936			3,144,149			8,204,756			2,969,274			2,018,176			-			700,974
Contract owners’ equity end of period	$	6,111,189			5,581,236			4,033,324			3,144,149			4,363,917			2,969,274			-			-
CHANGES IN UNITS:
Beginning units		537,257			2,207,124			235,941			900,619			355,419			353,171			-			97,268
Units purchased		25,729			82,822			49,525			167,718			66,990			28,237			11			5,889
Units redeemed		(93,929	)		(1,752,689	)		(25,884	)		(832,396	)		(7,606	)		(25,989	)		(11	)		(103,157	)
Ending units		469,057			537,257			259,582			235,941			414,803			355,419			-			-

(Continued)

67

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	AMFAS						AMSRS						OVGR						OVGS3
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(1,869	)		(1,318	)		903			49,340			39,658			146,045			223,304			288,133
Realized gain (loss) on investments		(143,543	)		(528,882	)		(219,013	)		(593,019	)		1,013,283			(2,935,835	)		(506,394	)		(1,112,664	)
Change in unrealized gain (loss) on investments		454,102			842,176			720,728			1,138,345			5,254,291			31,182,105			2,706,776			5,057,893
Reinvested capital gains		-			-			-			-			-			-			-			275,295
Net increase (decrease) in contract owners’ equity resulting from operations		308,690			311,976			502,618			594,666			6,307,232			28,392,315			2,423,686			4,508,657
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		111,978			128,971			196,098			207,791			3,727,416			5,012,399			1,780,086			2,218,664
Transfers between funds		12,681			169,724			116,871			(267,869	)		(54,151,519	)		(6,327,099	)		264,803			(902,235	)
Surrenders (note 6)		(53,286	)		(113,078	)		(371,627	)		(493,708	)		(5,328,817	)		(6,494,378	)		(1,621,881	)		(1,036,224	)
Death Benefits (note 4)		(9,516	)		(663	)		(2,342	)		-			(256,873	)		(233,092	)		(16,147	)		(47,241	)
Net policy repayments (loans) (note 5)		(5,965	)		(7,919	)		46,291			(92,047	)		(355,071	)		958,751			(76,450	)		81,516
Deductions for surrender charges (note 2d)		(1,707	)		(11,367	)		(9,053	)		(19,244	)		(45,396	)		(99,081	)		(43,803	)		(56,919	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(42,602	)		(47,203	)		(133,253	)		(144,198	)		(2,572,763	)		(3,201,673	)		(776,956	)		(801,297	)
Asset charges (note 3):
FPVUL & VEL contracts		(3,143	)		-			(8,290	)		-			(126,808	)		-			(57,402	)		-
MSP contracts		-			-			(729	)		-			(3,221	)		-			(1,701	)		-
SL contracts or LSFP contracts		(97	)		-			(1,766	)		-			(12,970	)		-			(8,918	)		-
Adjustments to maintain reserves		131			(2,942	)		693			(10,831	)		361			(144,866	)		(2,188	)		(58,081	)
Net equity transactions		8,474			115,523			(167,107	)		(820,106	)		(59,125,661	)		(10,529,039	)		(560,557	)		(601,817	)
Net change in contract owners’ equity		317,164			427,499			335,511			(225,440	)		(52,818,429	)		17,863,276			1,863,129			3,906,840
Contract owners’ equity beginning of period		1,588,784			1,161,285			2,289,073			2,514,513			87,241,809			69,378,533			15,556,341			11,649,501
Contract owners’ equity end of period	$	1,905,948			1,588,784			2,624,584			2,289,073			34,423,380			87,241,809			17,419,470			15,556,341
CHANGES IN UNITS:
Beginning units		140,469			125,689			156,920			226,546			7,777,387			8,886,911			1,233,718			1,290,636
Units purchased		16,745			39,463			20,800			18,302			307,731			655,964			173,041			229,006
Units redeemed		(16,090	)		(24,683	)		(31,270	)		(87,928	)		(4,743,236	)		(1,765,488	)		(215,563	)		(285,924	)
Ending units		141,124			140,469			146,450			156,920			3,341,882			7,777,387			1,191,196			1,233,718

(Continued)

68

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	OVGS						OVHI3						OVHI						OVGI
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	610,621			813,761			69,445			-			24,995			-			285,641			459,271
Realized gain (loss) on investments		(1,974,775	)		(5,381,641	)		(200,323	)		(754,547	)		(280,275	)		(470,256	)		(116,047	)		(799,855	)
Change in unrealized gain (loss) on investments		8,507,156			17,448,044			296,349			976,180			307,950			557,363			3,808,825			6,382,896
Reinvested capital gains		-			842,392			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		7,143,002			13,722,556			165,471			221,633			52,670			87,107			3,978,419			6,042,312
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		696,356			1,219,956			271,059			303,261			-			72			1,975,097			2,179,467
Transfers between funds		(1,399,207	)		(1,788,353	)		123,164			100,991			(24,763	)		(43,550	)		(1,000,492	)		(1,262,166	)
Surrenders (note 6)		(1,943,876	)		(1,726,010	)		(136,052	)		(69,967	)		(30,192	)		(17,592	)		(2,039,437	)		(1,636,677	)
Death Benefits (note 4)		(73,171	)		(35,757	)		(2,574	)		(3,770	)		(50	)		(409	)		(166,401	)		(63,001	)
Net policy repayments (loans) (note 5)		(263,981	)		(273,864	)		49,394			22,959			(4,788	)		(16,487	)		(12,664	)		(91,065	)
Deductions for surrender charges (note 2d)		(11,486	)		(19,207	)		(6,799	)		(4,267	)		(1,464	)		(2,244	)		(33,491	)		(85,697	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,025,803	)		(1,100,453	)		(83,028	)		(67,632	)		(18,774	)		(27,177	)		(1,398,517	)		(1,571,971	)
Asset charges (note 3):
FPVUL & VEL contracts		(35,531	)		-			(4,843	)		-			(1,389	)		-			(88,180	)		-
MSP contracts		(1,269	)		-			(61	)		-			(82	)		-			(2,877	)		-
SL contracts or LSFP contracts		(5,643	)		-			(540	)		-			(186	)		-			(9,689	)		-
Adjustments to maintain reserves		(2,678	)		(40,490	)		(1	)		(3,751	)		1			(1,780	)		310			(95,351	)
Net equity transactions		(4,066,289	)		(3,764,178	)		209,719			277,824			(81,687	)		(109,167	)		(2,776,341	)		(2,626,461	)
Net change in contract owners’ equity		3,076,713			9,958,378			375,190			499,457			(29,017	)		(22,060	)		1,202,078			3,415,851
Contract owners’ equity beginning of period		48,628,512			38,670,134			983,678			484,221			407,449			429,509			26,667,566			23,251,715
Contract owners’ equity end of period	$	51,705,225			48,628,512			1,358,868			983,678			378,432			407,449			27,869,644			26,667,566
CHANGES IN UNITS:
Beginning units		3,690,714			4,095,071			380,539			237,435			111,867			147,777			2,312,253			2,576,774
Units purchased		58,272			269,410			169,370			226,067			-			8			192,947			292,365
Units redeemed		(358,063	)		(673,767	)		(91,536	)		(82,963	)		(21,372	)		(35,918	)		(420,275	)		(556,886	)
Ending units		3,390,923			3,690,714			458,373			380,539			90,495			111,867			2,084,925			2,312,253

(Continued)

69

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	OVSC						OVAG						OVSB						PMVAAA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	28,669			30,280			(14,654	)		(12,026	)		152,989			1,565			112,394			53,354
Realized gain (loss) on investments		(209,465	)		(494,419	)		11,310			(1,129,222	)		(3,787	)		(81,767	)		52,148			47,363
Change in unrealized gain (loss) on investments		1,112,371			1,681,672			5,664,838			6,737,017			118,807			313,267			1,419			73,226
Reinvested capital gains		-			-			-			-			-			622			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		931,575			1,217,533			5,661,494			5,595,769			268,009			233,687			165,961			173,943
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		323,428			454,245			2,554,988			2,281,640			56			60,260			195,465			54,772
Transfers between funds		(99,276	)		142,242			(1,821,376	)		(998,486	)		104,967			498,766			943,289			86,878
Surrenders (note 6)		(492,091	)		(209,982	)		(1,428,507	)		(1,698,953	)		-			-			(29,503	)		(30,321	)
Death Benefits (note 4)		(356	)		(311	)		(67,823	)		(27,597	)		(2,285	)		(4,655	)		(4,306	)		(1,831	)
Net policy repayments (loans) (note 5)		(73,566	)		(83,858	)		(224,590	)		89,593			(40,477	)		-			4,839			2,567
Deductions for surrender charges (note 2d)		(13,035	)		(8,407	)		(10,108	)		(44,870	)		-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(199,303	)		(209,269	)		(1,243,526	)		(1,343,048	)		(13,922	)		(11,502	)		(29,804	)		(18,658	)
Asset charges (note 3):
FPVUL & VEL contracts		(15,306	)		-			(71,824	)		-			-			-			(276	)		-
MSP contracts		(341	)		-			(1,248	)		-			-			-			-			-
SL contracts or LSFP contracts		(2,702	)		-			(4,656	)		-			-			-			-			-
Adjustments to maintain reserves		50			(16,096	)		(831	)		(69,046	)		4			13			(19	)		4
Net equity transactions		(572,498	)		68,564			(2,319,501	)		(1,810,767	)		48,343			542,882			1,079,685			93,411
Net change in contract owners’ equity		359,077			1,286,097			3,341,993			3,785,002			316,352			776,569			1,245,646			267,354
Contract owners’ equity beginning of period		4,359,964			3,073,867			23,038,111			19,253,109			1,749,558			972,989			863,589			596,235
Contract owners’ equity end of period	$	4,719,041			4,359,964			26,380,104			23,038,111			2,065,910			1,749,558			2,109,235			863,589
CHANGES IN UNITS:
Beginning units		247,124			239,034			2,460,389			2,739,147			173,563			114,461			63,072			52,891
Units purchased		19,961			44,998			300,156			298,331			12,063			60,896			77,818			16,170
Units redeemed		(50,339	)		(36,908	)		(542,720	)		(577,089	)		(6,992	)		(1,794	)		(4,448	)		(5,989	)
Ending units		216,746			247,124			2,217,825			2,460,389			178,634			173,563			136,442			63,072

(Continued)

70

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	PMVFBA						PMVLDA						PMVRRA						PMVTRA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	30,696			9,699			990,338			1,401,981			975,679			1,939,994			5,644,032			10,160,514
Realized gain (loss) on investments		75,657			81,133			241,229			(157,572	)		317,077			(68,919	)		6,713,624			2,719,493
Change in unrealized gain (loss) on investments		129,492			(19,563	)		1,881,278			1,291,678			3,930,175			6,383,343			(6,400,019	)		6,413,613
Reinvested capital gains		14,971			9,479			230,508			2,576,351			780,456			2,826,272			10,775,489			6,877,332
Net increase (decrease) in contract owners’ equity resulting from operations		250,816			80,748			3,343,353			5,112,438			6,003,387			11,080,690			16,733,126			26,170,952
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		76,282			30,965			3,083,419			2,234,772			3,140,682			3,726,517			8,068,376			10,285,511
Transfers between funds		1,123,956			569,719			12,963,321			16,938,777			13,853,605			4,070,896			120,035,007			42,752,222
Surrenders (note 6)		(47,777	)		(1,511	)		(4,509,403	)		(2,689,673	)		(6,767,937	)		(2,559,305	)		(9,918,676	)		(16,959,592	)
Death Benefits (note 4)		-			(6,469	)		(64,790	)		(95,366	)		(92,282	)		(91,743	)		(238,786	)		(1,576,032	)
Net policy repayments (loans) (note 5)		(18,532	)		(11,451	)		328,279			(145,433	)		(269,332	)		467,799			(392,591	)		1,083,860
Deductions for surrender charges (note 2d)		(175	)		-			(8,272	)		-			-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(85,446	)		(22,331	)		(1,130,468	)		(744,922	)		(1,111,302	)		(1,116,672	)		(3,713,233	)		(3,915,290	)
Asset charges (note 3):
FPVUL & VEL contracts		(5,663	)		-			(16,962	)		-			(1,228	)		-			(9,747	)		-
MSP contracts		(14	)		-			(592	)		-			-			-			-			-
SL contracts or LSFP contracts		(1,006	)		-			(1,908	)		-			-			-			-			-
Adjustments to maintain reserves		(2,052	)		(1,949	)		(475	)		(9,181	)		3,746			(8,604	)		(3,155	)		(35,005	)
Net equity transactions		1,039,573			556,973			10,642,149			15,488,974			8,755,952			4,488,888			113,827,195			31,635,674
Net change in contract owners’ equity		1,290,389			637,721			13,985,502			20,601,412			14,759,339			15,569,578			130,560,321			57,806,626
Contract owners’ equity beginning of period		637,721			-			57,380,322			36,778,910			75,443,783			59,874,205			227,959,829			170,153,203
Contract owners’ equity end of period	$	1,928,110			637,721			71,365,824			57,380,322			90,203,122			75,443,783			358,520,150			227,959,829
CHANGES IN UNITS:
Beginning units		57,795			-			4,311,499			3,127,979			4,986,254			4,682,086			14,722,981			12,508,618
Units purchased		118,214			61,891			1,414,403			1,606,797			1,019,127			1,216,812			8,162,697			3,688,960
Units redeemed		(16,415	)		(4,096	)		(625,764	)		(423,277	)		(481,171	)		(912,644	)		(1,497,530	)		(1,474,597	)
Ending units		159,594			57,795			5,100,138			4,311,499			5,524,210			4,986,254			21,388,148			14,722,981

(Continued)

71

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	PIVEMI						PIHYB1						PVGIB						PVTIGB
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	5,444			7,824			954,336			1,158,417			11,812			17,919			39,408			-
Realized gain (loss) on investments		405,607			85,798			2,035,090			(2,909,377	)		(125,402	)		(138,463	)		(266,079	)		(426,118	)
Change in unrealized gain (loss) on investments		(151,076	)		380,336			(222,972	)		8,661,414			211,614			299,375			330,023			715,663
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		259,975			473,958			2,766,454			6,910,454			98,024			178,831			103,352			289,545
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		246,818			114,246			188,948			440,744			69,685			93,820			48,409			101,596
Transfers between funds		243,622			618,567			(7,381,992	)		(360,962	)		20,315			(38,269	)		(114,096	)		(109,102	)
Surrenders (note 6)		(13,465	)		(6,359	)		(939,267	)		(598,060	)		(96,935	)		(74,009	)		(66,414	)		(194,029	)
Death Benefits (note 4)		-			-			(27,890	)		(58,486	)		(1,682	)		-			-			(1,238	)
Net policy repayments (loans) (note 5)		8,973			(906	)		(138,220	)		19,307			59			23,772			(13,604	)		(21,438	)
Deductions for surrender charges (note 2d)		-			-			-			-			(7,325	)		(4,235	)		(3,115	)		(8,810	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(57,365	)		(29,556	)		(258,535	)		(244,445	)		(44,566	)		(49,122	)		(53,961	)		(68,256	)
Asset charges (note 3):
FPVUL & VEL contracts		(1,227	)		-			(289	)		-			(3,026	)		-			(3,664	)		-
MSP contracts		-			-			-			-			(28	)		-			(141	)		-
SL contracts or LSFP contracts		-			-			-			-			(292	)		-			(231	)		-
Adjustments to maintain reserves		262			(200	)		(3,164	)		834			6			(2,998	)		(26	)		(4,642	)
Net equity transactions		427,618			695,792			(8,560,409	)		(801,068	)		(63,789	)		(51,041	)		(206,843	)		(305,919	)
Net change in contract owners’ equity		687,593			1,169,750			(5,793,955	)		6,109,386			34,235			127,790			(103,491	)		(16,374	)
Contract owners’ equity beginning of period		1,316,071			146,321			18,463,987			12,354,601			746,878			619,088			1,256,441			1,272,815
Contract owners’ equity end of period	$	2,003,664			1,316,071			12,670,032			18,463,987			781,113			746,878			1,152,950			1,256,441
CHANGES IN UNITS:
Beginning units		173,004			33,546			1,038,134			1,112,104			59,317			63,826			77,883			98,334
Units purchased		68,260			146,604			61,389			221,563			7,599			9,538			3,781			6,093
Units redeemed		(13,888	)		(7,146	)		(495,087	)		(295,533	)		(12,678	)		(14,047	)		(16,708	)		(26,544	)
Ending units		227,376			173,004			604,436			1,038,134			54,238			59,317			64,956			77,883

(Continued)

72

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	PVTSCB						PVVIB						PVTVB						VKVGR2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	2			39			(110	)		(142	)		17,709			5,777			73,929			(1,279	)
Realized gain (loss) on investments		877			452			34,847			3,470			204,446			7,386			218,884			(61,518	)
Change in unrealized gain (loss) on investments		104			756			(30,219	)		30,219			23,834			398,764			(91,262	)		306,866
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		983			1,247			4,518			33,547			245,989			411,927			201,551			244,069
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		414			120			9			(2,876	)		113,302			78,972			76,710			116,161
Transfers between funds		2,798			2,180			(95,749	)		63,395			22,230			438,777			325,744			(29,428	)
Surrenders (note 6)		(56	)		-			-			-			(92,674	)		(39,574	)		(64,540	)		(34,126	)
Death Benefits (note 4)		-			-			(138	)		(226	)		-			-			-			(3,820	)
Net policy repayments (loans) (note 5)		-			-			(207	)		-			(32,716	)		7,212			(11,458	)		(7,402	)
Deductions for surrender charges (note 2d)		-			-			-			-			(1,855	)		(3,660	)		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(168	)		(137	)		(391	)		(646	)		(64,020	)		(45,182	)		(26,969	)		(22,515	)
Asset charges (note 3):
FPVUL & VEL contracts		-			-			-			-			(4,148	)		-			(258	)		-
MSP contracts		-			-			-			-			(260	)		-			-			-
SL contracts or LSFP contracts		-			-			-			-			(1,991	)		-			-			-
Adjustments to maintain reserves		(1	)		2			(134	)		(1,102	)		(33	)		(4,279	)		(47	)		(138	)
Net equity transactions		2,987			2,165			(96,610	)		58,545			(62,165	)		432,266			299,182			18,732
Net change in contract owners’ equity		3,970			3,412			(92,092	)		92,092			183,824			844,193			500,733			262,801
Contract owners’ equity beginning of period		3,762			350			92,092			-			1,349,351			505,158			748,123			485,322
Contract owners’ equity end of period	$	7,732			3,762			-			92,092			1,533,175			1,349,351			1,248,856			748,123
CHANGES IN UNITS:
Beginning units		532			65			6,667			-			89,306			54,796			108,490			99,311
Units purchased		416			495			-			7,139			22,974			42,015			53,771			35,801
Units redeemed		(78	)		(28	)		(6,667	)		(472	)		(28,278	)		(7,505	)		(13,911	)		(26,622	)
Ending units		870			532			-			6,667			84,002			89,306			148,350			108,490

(Continued)

73

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	ROCMC						ROCSC						TRBCG2						TREI2
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	674,698			(73,599	)		(218	)		(456	)		(844	)		(752	)		984,930			940,663
Realized gain (loss) on investments		(4,167,787	)		(8,656,246	)		31,737			(26,692	)		644,331			(358,102	)		(8,864,178	)		(12,130,552	)
Change in unrealized gain (loss) on investments		14,605,283			24,040,908			19,394			102,125			(103,159	)		1,319,164			17,190,432			25,683,362
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		11,112,194			15,311,063			50,913			74,977			540,328			960,310			9,311,184			14,493,473
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		1,503,512			1,561,059			21			67			277,618			198,132			2,513,055			2,952,172
Transfers between funds		(2,801,037	)		(1,815,279	)		14,117			115,780			(3,300,205	)		(7,519	)		(17,597,195	)		242,104
Surrenders (note 6)		(1,351,903	)		(1,752,898	)		-			-			(138,307	)		(144,897	)		(3,273,990	)		(3,799,863	)
Death Benefits (note 4)		(90,690	)		(544,550	)		(404	)		(758	)		(638	)		(16,169	)		(102,615	)		(118,457	)
Net policy repayments (loans) (note 5)		(138,177	)		759,368			(9,261	)		-			(26,610	)		(23,045	)		(172,691	)		50,167
Deductions for surrender charges (note 2d)		-			-			-			-			(5,379	)		(4,703	)		(4,932	)		(7,785	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(540,504	)		(539,587	)		(1,955	)		(2,018	)		(99,986	)		(120,428	)		(1,253,625	)		(1,287,230	)
Asset charges (note 3):
FPVUL & VEL contracts		(1,176	)		-			-			-			(7,102	)		-			(14,952	)		-
MSP contracts		-			-			-			-			(364	)		-			(899	)		-
SL contracts or LSFP contracts		-			-			-			-			(3,030	)		-			(1,936	)		-
Adjustments to maintain reserves		1,724			(601	)		16			3			227			(9,961	)		15,711			(19,724	)
Net equity transactions		(3,418,251	)		(2,332,488	)		2,534			113,074			(3,303,776	)		(128,590	)		(19,894,069	)		(1,988,616	)
Net change in contract owners’ equity		7,693,943			12,978,575			53,447			188,051			(2,763,448	)		831,720			(10,582,885	)		12,504,857
Contract owners’ equity beginning of period		39,340,030			26,361,455			276,243			88,192			3,216,125			2,384,405			71,264,522			58,759,665
Contract owners’ equity end of period	$	47,033,973			39,340,030			329,690			276,243			452,677			3,216,125			60,681,637			71,264,522
CHANGES IN UNITS:
Beginning units		1,847,860			1,954,973			27,947			12,038			284,572			298,969			4,921,613			5,076,907
Units purchased		130,601			181,540			835			16,265			23,756			35,680			282,173			515,424
Units redeemed		(274,874	)		(288,653	)		(1,050	)		(356	)		(273,436	)		(50,077	)		(1,539,463	)		(670,718	)
Ending units		1,703,587			1,847,860			27,732			27,947			34,892			284,572			3,664,323			4,921,613

(Continued)

74

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	TRHS2						TRMCG2						TRNAG1						TRPSB1
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(3,470	)		(2,633	)		(49,191	)		(39,987	)		(2,533	)		(26,319	)		33,447			7,974
Realized gain (loss) on investments		14,364			(185,395	)		(878,331	)		(4,004,691	)		1,769,354			(1,964,836	)		111,884			(95,706	)
Change in unrealized gain (loss) on investments		291,793			545,834			5,235,037			10,715,898			1,239,828			6,203,128			31,772			185,158
Reinvested capital gains		-			-			1,137,324			20,964			430,055			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		302,687			357,806			5,444,839			6,692,184			3,436,704			4,211,973			177,103			97,426
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		5,691			101,670			546,017			677,001			803,205			829,411			75,384			81,170
Transfers between funds		651,711			(146,376	)		(2,839,584	)		(969,185	)		3,368,266			1,877,527			818,265			(67,394	)
Surrenders (note 6)		-			-			(1,208,114	)		(583,311	)		(337,857	)		(982,155	)		(1,708	)		(61,621	)
Death Benefits (note 4)		(2,298	)		(5,293	)		(84,081	)		(32,255	)		(23,094	)		(9,030	)		-			(1,971	)
Net policy repayments (loans) (note 5)		(40,131	)		-			(72,336	)		15,601			(50,185	)		30,857			(4,062	)		-
Deductions for surrender charges (note 2d)		-			-			-			-			-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(17,882	)		(12,381	)		(273,504	)		(260,321	)		(334,082	)		(233,956	)		(26,062	)		(14,220	)
Asset charges (note 3):
FPVUL & VEL contracts		(413	)		-			-			-			(993	)		-			(349	)		-
MSP contracts		-			-			-			-			-			-			-			-
SL contracts or LSFP contracts		(121	)		-			-			-			-			-			-			-
Adjustments to maintain reserves		5			13			1,170			64			988			(274	)		18			(331	)
Net equity transactions		596,562			(62,367	)		(3,930,432	)		(1,152,406	)		3,426,248			1,512,380			861,486			(64,367	)
Net change in contract owners’ equity		899,249			295,439			1,514,407			5,539,778			6,862,952			5,724,353			1,038,589			33,059
Contract owners’ equity beginning of period		1,565,396			1,269,957			20,821,506			15,281,728			13,499,897			7,775,544			453,677			420,618
Contract owners’ equity end of period	$	2,464,645			1,565,396			22,335,913			20,821,506			20,362,849			13,499,897			1,492,266			453,677
CHANGES IN UNITS:
Beginning units		167,972			178,625			1,015,894			1,081,279			1,070,932			925,249			45,275			55,304
Units purchased		69,087			14,108			74,771			51,631			347,642			302,701			88,949			20,259
Units redeemed		(7,594	)		(24,761	)		(236,057	)		(117,016	)		(65,614	)		(157,018	)		(3,106	)		(30,288	)
Ending units		229,465			167,972			854,608			1,015,894			1,352,960			1,070,932			131,118			45,275

(Continued)

75

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	VWEM						VWHA						VVB						VVDV
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	104,101			10,849			70,707			27,884			43,979			54,460			39,302			44,866
Realized gain (loss) on investments		(1,763,348	)		(8,929,462	)		(2,508,620	)		(5,731,591	)		27,507			(179,323	)		(69,409	)		(201,304	)
Change in unrealized gain (loss) on investments		6,164,743			17,730,793			12,459,821			15,745,952			99,161			373,050			167,125			479,742
Reinvested capital gains		-			831,487			-			109,163			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		4,505,496			9,643,667			10,021,908			10,151,408			170,647			248,187			137,018			323,304
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		492,390			1,448,691			1,034,056			1,953,824			61			133,418			133			73,249
Transfers between funds		(1,077,529	)		791,663			19,911,036			3,007,379			398,764			91,677			(27,963	)		241,922
Surrenders (note 6)		(1,009,934	)		(1,024,271	)		(1,591,505	)		(1,391,062	)		-			-			-			-
Death Benefits (note 4)		(87,070	)		(19,839	)		(35,523	)		(92,143	)		(1,942	)		(4,406	)		(2,181	)		(4,664	)
Net policy repayments (loans) (note 5)		(172,075	)		(2,966	)		(420,110	)		(265,454	)		(19,968	)		-			(26,546	)		-
Deductions for surrender charges (note 2d)		(6,430	)		(12,153	)		(2,522	)		(12,404	)		-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(576,725	)		(519,527	)		(688,701	)		(639,955	)		(11,501	)		(11,497	)		(11,278	)		(11,431	)
Asset charges (note 3):
FPVUL & VEL contracts		(35,308	)		-			(30,409	)		-			-			-			-			-
MSP contracts		(568	)		-			(833	)		-			-			-			-			-
SL contracts or LSFP contracts		(3,745	)		-			(3,912	)		-			-			-			-			-
Adjustments to maintain reserves		(14,000	)		(40,396	)		(3,700	)		(30,620	)		14			17			22			14
Net equity transactions		(2,490,994	)		621,202			18,167,877			2,529,565			365,428			209,209			(67,813	)		299,090
Net change in contract owners’ equity		2,014,502			10,264,869			28,189,785			12,680,973			536,075			457,396			69,205			622,394
Contract owners’ equity beginning of period		18,989,279			8,724,410			30,370,806			17,689,833			1,381,229			923,833			1,634,455			1,012,061
Contract owners’ equity end of period	$	21,003,781			18,989,279			58,560,591			30,370,806			1,917,304			1,381,229			1,703,660			1,634,455
CHANGES IN UNITS:
Beginning units		624,859			618,949			789,317			741,155			145,114			119,040			199,517			156,479
Units purchased		32,748			152,569			419,592			181,584			43,299			38,459			2,735			45,488
Units redeemed		(114,753	)		(146,659	)		(100,088	)		(133,422	)		(6,592	)		(12,385	)		(11,647	)		(2,450	)
Ending units		542,854			624,859			1,108,821			789,317			181,821			145,114			190,605			199,517

(Continued)

76

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	VVI						VVMCI						VVREI					VVSTC
	2010			2009			2010			2009			2010			2009		2010			2009
Investment activity:
Net investment income (loss)	$	53,586			91,329			24,474			35,587			(235	)		-		93,003			100,837
Realized gain (loss) on investments		(234,731	)		(570,258	)		(90,542	)		(588,270	)		680			-		36,207			(4,977	)
Change in unrealized gain (loss) on investments		735,299			1,513,119			967,111			1,336,235			44,555			-		40,466			246,123
Reinvested capital gains		-			-			-			101,879			-			-		-			12,942
Net increase (decrease) in contract owners’ equity resulting from operations		554,154			1,034,190			901,043			885,431			45,000			-		169,676			354,925
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		(9	)		158,175			369			84,263			-			-		107			50,280
Transfers between funds		263,299			375,772			5,100,638			342,626			2,088,008			-		39,302			751,457
Surrenders (note 6)		-			-			-			-			-			-		-			-
Death Benefits (note 4)		(5,028	)		(10,563	)		(4,539	)		(9,499	)		-			-		(4,857	)		(10,339	)
Net policy repayments (loans) (note 5)		(77,625	)		-			(180,527	)		-			(36,902	)		-		(83,874	)		-
Deductions for surrender charges (note 2d)		-			-			-			-			-			-		-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(25,970	)		(25,633	)		(23,638	)		(23,326	)		-			-		(24,718	)		(27,225	)
Asset charges (note 3):
FPVUL & VEL contracts		-			-			-			-			-			-		-			-
MSP contracts		-			-			-			-			-			-		-			-
SL contracts or LSFP contracts		-			-			-			-			-			-		-			-
Adjustments to maintain reserves		79			23			74			4			(98	)		-		7			(7	)
Net equity transactions		154,746			497,774			4,892,377			394,068			2,051,008			-		(74,033	)		764,166
Net change in contract owners’ equity		708,900			1,531,964			5,793,420			1,279,499			2,096,008			-		95,643			1,119,091
Contract owners’ equity beginning of period		3,683,278			2,151,314			3,222,860			1,943,361			-			-		3,453,057			2,333,966
Contract owners’ equity end of period	$	4,392,178			3,683,278			9,016,280			3,222,860			2,096,008			-		3,548,700			3,453,057
CHANGES IN UNITS:
Beginning units		467,282			388,890			390,462			329,815			-			-		316,885			243,364
Units purchased		33,434			91,459			506,259			65,829			202,142			-		5,243			77,198
Units redeemed		(18,210	)		(13,067	)		(23,605	)		(5,182	)		-			-		(11,980	)		(3,677	)
Ending units		482,506			467,282			873,116			390,462			202,142			-		310,148			316,885

(Continued)

77

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	VVHGB					WRASP						WRGP						WRRESP
	2010			2009		2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(1,056	)		-		73,398			121			5,094			1,688			22,443			13,826
Realized gain (loss) on investments		(1,942	)		-		352,254			(24,263	)		36,816			(133,903	)		190,398			(16,435	)
Change in unrealized gain (loss) on investments		(33,980	)		-		320,015			330,887			120,236			323,926			82,275			261,570
Reinvested capital gains		-			-		-			62,302			-			22,732			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		(36,978	)		-		745,667			369,047			162,146			214,443			295,116			258,961
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		-			-		724,455			339,871			52,128			56,691			196,213			25,094
Transfers between funds		8,377,471			-		3,141,923			3,589,076			371,272			77,182			238,339			373,198
Surrenders (note 6)		-			-		(441,214	)		(31,207	)		(48,437	)		(14,299	)		(27,764	)		(10,285	)
Death Benefits (note 4)		-			-		(16	)		(4,323	)		(4,437	)		(4,802	)		(1,837	)		(440	)
Net policy repayments (loans) (note 5)		(144,458	)		-		(142,900	)		(15,738	)		8,993			(879	)		(14,602	)		(7,017	)
Deductions for surrender charges (note 2d)		-			-		(3,718	)		-			-			-			-			-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		-			-		(297,425	)		(81,751	)		(21,633	)		(13,598	)		(36,718	)		(17,149	)
Asset charges (note 3):
FPVUL & VEL contracts		-			-		(19,305	)		-			(297	)		-			(531	)		-
MSP contracts		-			-		(342	)		-			-			-			-			-
SL contracts or LSFP contracts		-			-		(2,646	)		-			-			-			-			-
Adjustments to maintain reserves		(248	)		-		4,440			(3,102	)		175			(80	)		449			(31	)
Net equity transactions		8,232,765			-		2,963,252			3,792,826			357,764			100,215			353,549			363,370
Net change in contract owners’ equity		8,195,787			-		3,708,919			4,161,873			519,910			314,658			648,665			622,331
Contract owners’ equity beginning of period		-			-		4,551,826			389,953			948,829			634,171			877,707			255,376
Contract owners’ equity end of period	$	8,195,787			-		8,260,745			4,551,826			1,468,739			948,829			1,526,372			877,707
CHANGES IN UNITS:
Beginning units		-			-		433,930			46,516			76,067			64,648			89,045			31,929
Units purchased		823,116			-		378,358			400,426			34,930			29,205			41,399			70,388
Units redeemed		-			-		(87,227	)		(13,012	)		(6,191	)		(17,786	)		(9,808	)		(13,272	)
Ending units		823,116			-		725,061			433,930			104,806			76,067			120,636			89,045

(Continued)

78

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	WRSTP						SVDF						SVOF						WFVSCG
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(2,973	)		(1,918	)		(2,609	)		(807	)		50,317			(13,388	)		(8,728	)		(4,336	)
Realized gain (loss) on investments		105,218			(56,620	)		44,430			(104,336	)		(87,189	)		(8,660,730	)		989,167			(191,163	)
Change in unrealized gain (loss) on investments		(10,642	)		302,917			892,940			487,368			1,859,409			13,914,162			255,038			1,103,171
Reinvested capital gains		42,929			45,120			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		134,532			289,499			934,761			382,225			1,822,537			5,240,044			1,235,477			907,672
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		110,989			39,226			703,977			616,594			29,202			564,750			487,777			146,510
Transfers between funds		269,426			81,080			795,313			(48,986	)		(933,976	)		(10,519,279	)		1,837,532			2,020,761
Surrenders (note 6)		(194,244	)		(10,983	)		(3	)		-			(213,427	)		(285,874	)		(258,095	)		(35,852	)
Death Benefits (note 4)		(17	)		(1,273	)		-			-			(12,144	)		(11,958	)		-			(1,254	)
Net policy repayments (loans) (note 5)		17,968			(2,344	)		-			-			(6,026	)		(11,707	)		(37,146	)		48
Deductions for surrender charges (note 2d)		-			-			-			-			(101	)		(19,294	)		(1,801	)		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(28,235	)		(18,408	)		(52,843	)		(38,767	)		(109,975	)		(473,961	)		(153,611	)		(56,397	)
Asset charges (note 3):
FPVUL & VEL contracts		(134	)		-			(3,650	)		-			23			-			(6,360	)		-
MSP contracts		-			-			-			-			-			-			(116	)		-
SL contracts or LSFP contracts		-			-			-			-			(1	)		-			(778	)		-
Adjustments to maintain reserves		514			(43	)		53			(1,738	)		88			(24,586	)		(3,103	)		(1,391	)
Net equity transactions		176,267			87,255			1,442,847			527,103			(1,246,337	)		(10,781,909	)		1,864,299			2,072,425
Net change in contract owners’ equity		310,799			376,754			2,377,608			909,328			576,200			(5,541,865	)		3,099,776			2,980,097
Contract owners’ equity beginning of period		1,041,485			664,731			1,868,368			959,040			8,318,108			13,859,973			3,713,916			733,819
Contract owners’ equity end of period	$	1,352,284			1,041,485			4,245,976			1,868,368			8,894,308			8,318,108			6,813,692			3,713,916
CHANGES IN UNITS:
Beginning units		108,014			98,930			243,559			175,360			658,199			1,600,488			433,325			130,587
Units purchased		40,053			14,731			172,175			83,123			4,531			113,035			241,600			313,709
Units redeemed		(23,401	)		(5,647	)		(6,590	)		(14,924	)		(92,771	)		(1,055,324	)		(46,851	)		(10,971	)
Ending units		124,666			108,014			409,144			243,559			569,959			658,199			628,074			433,325

(Continued)

79

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	TGF					WIEP						WVCP						BF
	2010			2009		2010			2009			2010			2009			2010		2009
Investment activity:
Net investment income (loss)	$	-			-		-			4,120			-			6,746			-		94,608
Realized gain (loss) on investments		-			-		-			93,379			-			(125,903	)		-		(4,616,970	)
Change in unrealized gain (loss) on investments		-			-		-			52,379			-			196,067			-		4,327,370
Reinvested capital gains		-			-		-			-			-			-			-		-
Net increase (decrease) in contract owners’ equity resulting from operations		-			-		-			149,878			-			76,910			-		(194,992	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		(9	)		-		176			60,794			(4,256	)		27,857			-		336,393
Transfers between funds		9			-		(984	)		(1,259,905	)		46			(353,737	)		-		(10,323,170	)
Surrenders (note 6)		-			-		185			(48,578	)		-			(36,911	)		-		(207,622	)
Death Benefits (note 4)		-			-		-			(3,223	)		-			-			-		(19,918	)
Net policy repayments (loans) (note 5)		-			-		(161	)		9,172			-			16,372			-		87,760
Deductions for surrender charges (note 2d)		-			-		-			-			-			-			-		(6,951	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		-			-		765			(38,406	)		63			(17,632	)		-		(233,203	)
Asset charges (note 3):
FPVUL & VEL contracts		-			-		19			-			6			-			-		-
MSP contracts		-			-		-			-			-			-			-		-
SL contracts or LSFP contracts		-			-		-			-			-			-			-		-
Adjustments to maintain reserves		-			-		(1,240	)		(2,843	)		3,938			(5,125	)		-		34,473
Net equity transactions		-			-		(1,240	)		(1,282,989	)		(203	)		(369,176	)		-		(10,332,238	)
Net change in contract owners’ equity		-			-		(1,240	)		(1,133,111	)		(203	)		(292,266	)		-		(10,527,230	)
Contract owners’ equity beginning of period		-			-		1,240			1,134,351			203			292,469			-		10,527,230
Contract owners’ equity end of period	$	-			-		-			1,240			-			203			-		-
CHANGES IN UNITS:
Beginning units		-			-		93			105,435			20			39,119			-		1,018,519
Units purchased		-			-		-			4,315			6			3,509			-		293,304
Units redeemed		-			-		(93	)		(109,657	)		(26	)		(42,608	)		-		(1,311,823	)
Ending units		-			-		-			93			-			20			-		-

(Continued)

80

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	SGRF						WGIP						JARLCS					TRLT2
	2010			2009			2010			2009			2010		2009			2010		2009
Investment activity:
Net investment income (loss)	$	-			(406	)		-			67,002			-		2,199			-		55,596
Realized gain (loss) on investments		-			(3,918,506	)		-			(525,886	)		-		(193,632	)		-		67,765
Change in unrealized gain (loss) on investments		-			4,212,112			-			664,850			-		231,479			-		35,191
Reinvested capital gains		-			-			-			-			-		(67	)		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		-			293,200			-			205,966			-		39,979			-		158,552
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		(3,528	)		331,413			(282,739	)		326,528			-		13,396			-		148,224
Transfers between funds		1,361			(8,103,398	)		(10,890	)		(1,151,660	)		-		(431,701	)		-		(2,106,612	)
Surrenders (note 6)		160			(265,724	)		3,461			(11,879	)		-		(12,461	)		-		(107,960	)
Death Benefits (note 4)		-			(21,835	)		-			(657	)		-		-			-		-
Net policy repayments (loans) (note 5)		(396	)		39,812			-			(8,264	)		-		(2,767	)		-		(16,473	)
Deductions for surrender charges (note 2d)		(19	)		(12,947	)		-			(1,052	)		-		(59	)		-		(793	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		2,340			(203,602	)		2			(46,279	)		-		(9,469	)		-		(66,353	)
Asset charges (note 3):
FPVUL & VEL contracts		83			-			2			-			-		(587	)		-		-
MSP contracts		-			-			-			-			-		-			-		-
SL contracts or LSFP contracts		-			-			-			-			-		(17	)		-		-
Adjustments to maintain reserves		(1	)		(2,731	)		290,164			(280,782	)		-		(238	)		-		(6,293	)
Net equity transactions		-			(8,239,012	)		-			(1,174,045	)		-		(443,902	)		-		(2,156,260	)
Net change in contract owners’ equity		-			(7,945,812	)		-			(968,079	)		-		(403,923	)		-		(1,997,708	)
Contract owners’ equity beginning of period		-			7,945,812			-			968,079			-		403,923			-		1,997,708
Contract owners’ equity end of period	$	-			-			-			-			-		-			-		-
CHANGES IN UNITS:
Beginning units		-			930,055			-			83,554			-		33,622			-		177,875
Units purchased		11			36,753			36			5,160			-		1,187			-		8,132
Units redeemed		(11	)		(966,808	)		(36	)		(88,714	)		-		(34,809	)		-		(186,007	)
Ending units		-			-			-			-			-		-			-		-

(Continued)

81

NATIONWIDE VLI SEPARATE ACCOUNT-4

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009

	OGMVP					PVOEGB
	2010		2009			2010		2009
Investment activity:
Net investment income (loss)	$	-		3,283			-		(16	)
Realized gain (loss) on investments		-		(193,176	)		-		(6,492	)
Change in unrealized gain (loss) on investments		-		185,593			-		7,288
Reinvested capital gains		-		-			-		-
Net increase (decrease) in contract owners’ equity resulting from operations		-		(4,300	)		-		780
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		-		4			-		158
Transfers between funds		-		(129,708	)		-		(35,513	)
Surrenders (note 6)		-		-			-		-
Death Benefits (note 4)		-		(70	)		-		(48	)
Net policy repayments (loans) (note 5)		-		-			-		-
Deductions for surrender charges (note 2d)		-		-			-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		-		(637	)		-		(293	)
Asset charges (note 3):
FPVUL & VEL contracts		-		-			-		-
MSP contracts		-		-			-		-
SL contracts or LSFP contracts		-		-			-		-
Adjustments to maintain reserves		-		14			-		16
Net equity transactions		-		(130,397	)		-		(35,680	)
Net change in contract owners’ equity		-		(134,697	)		-		(34,900	)
Contract owners’ equity beginning of period		-		134,697			-		34,900
Contract owners’ equity end of period	$	-		-			-		-
CHANGES IN UNITS:
Beginning units		-		10,719			-		6,380
Units purchased		-		6			-		6,302
Units redeemed		-		(10,725	)		-		(12,682	)
Ending units		-		-			-		-

See accompanying notes to financial statements.

82

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide VLI Separate Account-4 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on December 3, 1997. The Account is registered as a unit investment trust under the Investment Company Act of 1940. The Company offers Flexible Premium, Modified Single Premium, Variable Executive Life and Survivorship Life Variable Life Insurance Policies through the Account. The primary distribution for contracts is through wholesalers and brokers.

(b) The Contracts

Only contracts with a front-end sales charge and certain other fees are offered for purchase. See note 2 for a discussion of policy charges and note 3 for asset charges.

With certain exceptions, contract owners may invest in the following:

AMERICAN FUNDS GROUP (THE)

Asset Allocation Fund - Class 2 (AMVAA2)

Bond Fund - Class 2 (AMVBD2)

Global Small Capitalization Fund - Class 2 (AMVGS2)

Growth Fund - Class 2 (AMVGR2)

BLACKROCK FUNDS

Large Cap Core V.I. Fund - Class II (MLVLC2)

Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)

CALVERT FUNDS

Variable Series, Inc. - Social Equity Portfolio (CVSSE)

CREDIT SUISSE ASSET MANAGEMENT

Credit Suisse Trust- International Equity Flex III Portfolio (CSIEF3)

U.S. Equity Flex I Portfolio (WSCP)

DAVIS FUNDS

Variable Account Fund, Inc. - Value Portfolio (DAVVL)

FIDELITY INVESTMENTS

VIP Fund - VIP Freedom Fund 2015 Portfolio - Service Class 2 (FF15S2)*

VIP Fund - VIP Freedom Fund 2025 Portfolio - Service Class 2 (FF25S2)*

VIP Fund - VIP Freedom Fund 2040 Portfolio - Service Class (FF40S)*

VIP Fund - VIP Freedom Fund 2040 Portfolio - Service Class 2 (FF40S2)*

J.P. MORGAN INVESTMENT MANAGEMENT INC.

Insurance Trust - Insurance Trust Diversified Mid Cap Growth Portfolio 1 (OGGO)

Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)

JPMorgan Insurance Trust Core Bond Portfolio 1 (OGBDP)*

JPMorgan Insurance Trust Equity Index Portfolio 1 (OGEI)*

JPMorgan Insurance Trust Intrepid Growth Portfolio - Class 1 (OGLG)*

JPMorgan Insurance Trust Intrepid Mid Cap Portfolio 1 (OGDMP)*

JPMorgan Insurance Trust U.S. Equity Portfolio 1 (OGDEP)*

JANUS FUNDS

Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)

Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)

Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)

Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)

Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)

Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)

Janus Aspen Series - Perkins Mid Cap Value Portfolio - Service Shares (JAMVS)

LAZARD FUNDS

Retirement Emerging Markets Equity Portfolio - Service Shares (LZREMS)

LORD ABBETT FUNDS

Series Fund - Mid Cap Value Portfolio - Class VC (LOVMCV)

MASSACHUSETTS FINANCIAL SERVICES CO.

Investors Growth Stock Series - Initial Class (MIGIC)

Research International Series - Service Class (MVRISC)

Value Series - Initial Class (MVFIC)

Value Series - Service Class (MVFSC)

Variable Insurance Trust II - International Value Portfolio - Service Class (MVIVSC)

MORGAN STANLEY

Core Plus Fixed Income Portfolio - Class I (MSVFI)

Emerging Markets Debt Portfolio - Class I (MSEM)

Emerging Markets Debt Portfolio - Class II (MSEMB)*

Mid Cap Growth Portfolio - Class II (MSVMG2)*

Mid Cap Growth Portfolio - Class I (MSVMG)

The Universal Institutional Funds, Inc. - Capital Growth Portfolio - Class I (MSVEG)

U.S. Mid Cap Value Portfolio - Class I (MSVMV)*

U.S. Real Estate Portfolio - Class I (MSVRE)

NATIONWIDE FUNDS GROUP

AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)

American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)

American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)

American Funds NVIT Bond Fund - Class II (GVABD2)

American Funds NVIT Global Growth Fund - Class II (GVAGG2)

American Funds NVIT Growth Fund - Class II (GVAGR2)

American Funds NVIT Growth-Income Fund - Class II (GVAGI2)

Federated NVIT High Income Bond Fund - Class I (HIBF)

Federated NVIT High Income Bond Fund - Class III (HIBF3)

Gartmore NVIT Emerging Markets Fund - Class I (GEM)

Gartmore NVIT Emerging Markets Fund - Class III (GEM3)

Gartmore NVIT International Equity Fund - Class I (GIG)

(Continued)

83

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

Gartmore NVIT International Equity Fund - Class III (GIG3)

Gartmore NVIT International Equity Fund - Class VI (NVIE6)

Gartmore NVIT Worldwide Leaders Fund - Class I (GEF)

Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)

Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)

Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)

Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)*

NVIT Cardinal Aggressive Fund - Class I (NVCRA1)

NVIT Cardinal Balanced Fund - Class I (NVCRB1)

NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)

NVIT Cardinal Conservative Fund - Class I (NVCCN1)

NVIT Cardinal Moderate Fund - Class I (NVCMD1)

NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)

NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)

NVIT Core Bond Fund - Class I (NVCBD1)

NVIT Core Plus Bond Fund - Class I (NVLCP1)

NVIT Fund - Class I (TRF)

NVIT Government Bond Fund - Class I (GBF)

NVIT Growth Fund - Class I (CAF)

NVIT International Index Fund - Class II (GVIX2)

NVIT International Index Fund - Class VI (GVIX6)

NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)

NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)

NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)

NVIT Investor Destinations Conservative Fund - Class II (GVIDC)

NVIT Investor Destinations Moderate Fund - Class II (GVIDM)

NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)

NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)

NVIT Mid Cap Index Fund - Class I (MCIF)

NVIT Mid Cap Index Fund - Class II (MCIF2)*

NVIT Money Market Fund - Class I (SAM)

NVIT Money Market Fund - Class V (SAM5)

NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)

NVIT Multi-Manager International Value Fund - Class I (GVDIVI)

NVIT Multi-Manager International Value Fund - Class III (GVDIV3)

NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)

NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)

NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)

NVIT Multi-Manager Mid Cap Value Fund - Class I (NVMMV1)

NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)

NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)

NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)

NVIT Multi-Manager Small Company Fund - Class I (SCF)

NVIT Multi-Sector Bond Fund - Class I (MSBF)

NVIT Short Term Bond Fund - Class I (NVSTB1)

NVIT Short Term Bond Fund - Class II (NVSTB2)

Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)

Templeton NVIT International Value Fund - Class III (NVTIV3)

Van Kampen NVIT Comstock Value Fund - Class I (EIF)

Van Kampen NVIT Real Estate Fund - Class I (NVRE1)

NEUBERGER & BERMAN MANAGEMENT, INC.

Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)

PIMCO FUNDS

Long-Term U.S. Government Portfolio - Administrative Class (PMVLGA)

PIONEER INVESTMENTS

Variable Contracts Trust - High Yield VCT Portfolio - Class II Shares (PIHYB2)*

PORTFOLIOS OF THE AIM VARIABLE INSURANCE FUNDS

V.I. Basic Value Fund - Series I (AVBVI)

V.I. Capital Appreciation Fund - Series I (AVCA)

V.I. Capital Development Fund - Series I (AVCDI)

V.I. High Yield Fund - Series I (AVHY1)

V.I. International Growth Fund - Series I (AVIE)

V.I. Mid Cap Core Equity Fund - Series I (AVMCCI)

PORTFOLIOS OF THE ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.

VPS Growth and Income Portfolio - Class A (ALVGIA)

VPS Growth and Income Portfolio - Class B (ALVGIB)*

VPS International Value Portfolio - Class A (ALVIVA)

VPS International Value Portfolio - Class B (ALVIVB)*

VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)

VPS Small/Mid Cap Value Portfolio - Class B (ALVSVB)*

PORTFOLIOS OF THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

VP Income & Growth Fund - Class I (ACVIG)

VP Inflation Protection Fund - Class II (ACVIP2)

VP International Fund - Class I (ACVI)

VP International Fund - Class III (ACVI3)

VP Mid Cap Value Fund - Class I (ACVMV1)

VP Mid Cap Value Fund - Class II (ACVMV2)*

VP Ultra(R) Fund - Class I (ACVU1)

VP Value Fund - Class I (ACVV)

VP Value Fund - Class II (ACVV2)*

(Continued)

84

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

VP Vista(SM) Fund - Class I (ACVVS1)

VP Vista(SM) Fund - Class II (ACVVS2)*

PORTFOLIOS OF THE DREYFUS INVESTMENT PORTFOLIOS

MidCap Stock Portfolio - Initial Shares (DVMCS)

Small Cap Stock Index Portfolio - Service Shares (DVSCS)

Stock Index Fund, Inc. - Initial Shares (DSIF)

Stock Index Fund, Inc. - Service Shares (DSIFS)*

The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)

PORTFOLIOS OF THE DREYFUS VARIABLE INVESTMENT FUND

Appreciation Portfolio - Initial Shares (DCAP)

Appreciation Portfolio - Service Shares (DCAPS)*

Developing Leaders Portfolio - Initial Shares (DSC)

International Value Portfolio - Initial Shares (DVIV)

PORTFOLIOS OF THE DWS INVESTMENTS VARIABLE INSURANCE TRUST

Small Cap Index VIP - Class A (BISCI)*

Variable Series II - Dreman Small Mid Cap Value VIP - Class B (SVSSVB)

Variable Series II - Strategic Value VIP - Class B (SVSHEB)

PORTFOLIOS OF THE FEDERATED INSURANCE SERIES

Capital Appreciation Fund II - Primary Shares (FVCA2P)

Quality Bond Fund II - Primary Shares (FQB)

Quality Bond Fund II - Service Shares (FQBS)*

PORTFOLIOS OF THE FIDELITY(R) VARIABLE INSURANCE PRODUCTS

VIP Fund - Contrafund Portfolio - Service Class (FCS)

VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)

VIP Fund - Equity-Income Portfolio - Service Class (FEIS)

VIP Fund - Equity-Income Portfolio - Service Class 2 (FEI2)*

VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)

VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)

VIP Fund - Freedom Fund 2020 Portfolio - Service Class 2 (FF20S2)*

VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)

VIP Fund - Freedom Fund 2030 Portfolio - Service Class 2 (FF30S2)*

VIP Fund - Freedom Income Fund Portfolio - Service Class (FFINS)*

VIP Fund - Growth & Income Portfolio - Service Class (FGIS)

VIP Fund - Growth Opportunities Portfolio - Service Class (FGOS)

VIP Fund - Growth Portfolio - Service Class (FGS)

VIP Fund - Growth Portfolio - Service Class 2 (FG2)*

VIP Fund - High Income Portfolio - Service Class (FHIS)

VIP Fund - High Income Portfolio - Service Class R (FHISR)

VIP Fund - Index 500 Portfolio - Initial Class (FIP)

VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)

VIP Fund - Investment Grade Bond Portfolio - Service Class 2 (FIGBP2)*

VIP Fund - Mid Cap Portfolio - Service Class (FMCS)

VIP Fund - Mid Cap Portfolio - Service Class 2 (FMC2)*

VIP Fund - Overseas Portfolio - Service Class (FOS)

VIP Fund - Overseas Portfolio - Service Class R (FOSR)

VIP Fund - Value Strategies Portfolio - Service Class (FVSS)

VIP Fund - VIP Freedom Fund 2005 Portfolio - Service Class (FF05S)*

VIP Fund - VIP Freedom Fund 2015 Portfolio - Service Class (FF15S)

VIP Fund - VIP Freedom Fund 2025 Portfolio - Service Class (FF25S)

PORTFOLIOS OF THE FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Franklin Income Securities Fund - Class 2 (FTVIS2)

Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)

Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)

Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)

Mutual Discovery Global Securities Fund - Class 2 (FTVMD2)

Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)

Templeton Foreign Securities Fund - Class 1 (TIF)

Templeton Foreign Securities Fund - Class 2 (TIF2)

Templeton Foreign Securities Fund - Class 3 (TIF3)

Templeton Global Bond Securities Fund - Class 2 (FTVGI2)

Templeton Global Bond Securities Fund - Class 3 (FTVGI3)

VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)

PORTFOLIOS OF THE GOLDMAN SACHS VARIABLE INSURANCE TRUST

Goldman Sachs VIT - Goldman Sachs Mid Cap Value Fund - Institutional Shares (GVMCE)

PORTFOLIOS OF THE LEGG MASON PARTNERS VARIABLE EQUITY TRUST

ClearBridge Variable Small Cap Growth Portfolio - Class I (SBVSG)

PORTFOLIOS OF THE LINCOLN VARIABLE INSURANCE PRODUCTS TRUST

Brandes International Equity Fund (MFBIE)*

Business Opportunity Value Fund (MFBOV)*

Frontier Capital Appreciation Fund (MFFCA)*

Lincoln VIP Trust - Baron Growth Opportunities Funds - Service Class (BNCAI)

M Large Cap Growth Fund (MFTCG)*

PORTFOLIOS OF THE NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST

Guardian Portfolio - I Class Shares (AMGP)

International Portfolio - S Class Shares (AMINS)*

Mid-Cap Growth Portfolio - I Class Shares (AMCG)

Partners Portfolio - I Class Shares (AMTP)

Regency Portfolio - I Class Shares (AMRI)

Regency Portfolio - S Class Shares (AMRS)*

Small-Cap Growth Portfolio - S Class Shares (AMFAS)

Socially Responsive Portfolio - I Class Shares (AMSRS)

(Continued)

85

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

PORTFOLIOS OF THE OPPENHEIMER VARIABLE ACCOUNT FUNDS

Capital Appreciation Fund/VA - Service Class (OVCAFS)*

Capital Appreciation Fund/VA - Non-Service Shares (OVGR)

Global Securities Fund/VA - Class 3 (OVGS3)

Global Securities Fund/VA - Non-Service Shares (OVGS)

Global Securities Fund/VA - Service Class (OVGSS)*

High Income Fund/VA - Class 3 (OVHI3)

High Income Fund/VA - Non-Service Shares (OVHI)

Main Street Fund(R)/VA - Non-Service Shares (OVGI)

Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)

MidCap Fund/VA - Non-Service Shares (OVAG)

Strategic Bond Fund/VA - Non-Service Shares (OVSB)

PORTFOLIOS OF THE PIMCO VARIABLE INSURANCE TRUST

All Asset Portfolio - Administrative Class (PMVAAA)

Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)

Low Duration Portfolio - Administrative Class (PMVLDA)

Real Return Portfolio - Administrative Class (PMVRRA)

Total Return Portfolio - Administrative Class (PMVTRA)

PORTFOLIOS OF THE PIONEER VARIABLE CONTRACTS TRUST

Variable Contracts Trust - Emerging Markets VCT Portfolio - Class I Shares (PIVEMI)

Variable Contracts Trust - High Yield VCT Portfolio - Class I Shares (PIHYB1)

PORTFOLIOS OF THE PUTNAM VARIABLE TRUST

Putnam VT Growth and Income Fund - IB Shares (PVGIB)

Putnam VT International Equity Fund - IB Shares (PVTIGB)

Putnam VT Small Cap Value Fund - IB Shares (PVTSCB)

Putnam VT Voyager Fund - IB Shares (PVTVB)

PORTFOLIOS OF THE VAN KAMPEN - THE UNIVERSAL INSTITUTIONAL FUNDS, INC.

Global Real Estate Portfolio - Class II (VKVGR2)

PORTFOLIOS OF THE VAN KAMPEN LIFE INVESTMENT TRUST

Capital Growth Portfolio - Class II (ACEG2)*

Growth and Income Portfolio - Class I (ACGI)*

ROYCE CAPITAL FUNDS

Micro-Cap Portfolio - Investment Class (ROCMC)

Small-Cap Portfolio - Investment Class (ROCSC)

T. ROWE PRICE

Blue Chip Growth Portfolio - II (TRBCG2)

Equity Income Portfolio - II (TREI2)

Health Sciences Portfolio - II (TRHS2)

Limited-Term Bond Portfolio (TRLT1)*

Limited-Term Bond Portfolio - II (TRLT2)*

Mid-Cap Growth Portfolio - II (TRMCG2)

New America Growth Portfolio (TRNAG1)

Personal Strategy Balanced Portfolio (TRPSB1)

VAN ECK ASSOCIATES CORPORATION

Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)

Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)

VAN KAMPEN

Life Investment Trust - Growth and Income Portfolio - Class II (VKLGI2)*

VANGUARD GROUP OF INVESTMENT COMPANIES

Vanguard(R) Variable Insurance Funds - Balanced Portfolio (VVB)

Vanguard(R) Variable Insurance Funds - Diversified Value Portfolio (VVDV)

Vanguard(R) Variable Insurance Funds - International Portfolio (VVI)

Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)

Vanguard(R) Variable Insurance Funds - REIT Index Portfolio (VVREI)

Vanguard(R) Variable Insurance Funds - Short-Term Investment-Grade Portfolio (VVSTC)

Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)

WADDELL & REED, INC.

Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)

Ivy Fund Variable Insurance Portfolios, Inc. - Growth (WRGP)

Ivy Fund Variable Insurance Portfolios, Inc. - Real Estate Securities (WRRESP)

Ivy Fund Variable Insurance Portfolios, Inc. - Science and Technology (WRSTP)

WELLS FARGO FUNDS

Advantage Funds Variable Trust - VT Discovery Fund (SVDF)

Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)

Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)

* At December 31, 2010, 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 policy and asset charges (see notes 2 and 3). The accompanying financial statements include only contract owners’ purchase payments pertaining to the variable portions of their contracts and exclude any purchase payments for fixed dollar benefits, the latter being included in the accounts of the Company.

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

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

(Continued)

86

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

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

The Company allocates purchase payments to sub-accounts and/or the fixed account as instructed by the contract owner. Shares of the sub-accounts are purchased at Net Asset Value, then converted into accumulation units. Certain transactions may be subject to conditions imposed by the underlying mutual funds, as well as those set forth in the contract.

(c) Security Valuation, Transactions and Related Investment Income

Investments in underlying mutual funds are valued at the closing net asset value per share at December 31, 2010 of such funds, which represents 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 and capital gain distributions are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

Operations of the Account form a part of, and are taxed with, operations of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code. The Company does not provide for income taxes within the Account. Taxes are generally 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) Recently Issued Accounting Standards

In September 2006, the FASB issued FASB ASC 820, Fair Value Measurements and Disclosures (SFAS No. 157, Fair Value Measurements). FASB ASC 820 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements and 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. FASB ASC 820 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.

FASB ASC 820 was effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Account adopted FASB ASC 820 effective January 1, 2008. The adoption of FASB ASC 820 did not have a material impact on the Account’s financial position or results of operations.

In September 2009 the FASB issued ASU 2009-12, which amends FASB ASC 820, Fair Value Measurements and Disclosures. This guidance applies to reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or nonrecurring basis if the investment does not have a readily determinable fair value and the investee has attributes of an investment company. For these investments, this update allows, as a practical expedient, the use of net asset value (NAV) as the basis to estimate fair value as long as it is not probable, as of the measurement date that the investment will be sold and NAV is not the value that will be used in the sale. The NAVs must be calculated consistent with the American Institute of Certified Public Accountants Audit and Accounting Guide, Investment Companies, which generally requires these investments to be measured at fair value. Additionally, the guidance provided updated disclosures for investments within its scope and noted that if the investor can redeem the investment with the investee on the measurement date at NAV, the investment should likely be classified as Level 2 in the fair value hierarchy. Investments that cannot be redeemed with the investee at NAV would generally be classified as Level 3 in the fair value hierarchy. If the investment is not redeemable with the investee on the measurement date, but will be at a future date, the length of time until the investment is redeemable should be considered in determining classification as Level 2 or 3. This guidance is effective for interim and annual periods ending after December 15, 2009 with early adoption permitted. The Account adopted this guidance effective the period ending December 31, 2009. The adoption of this guidance did not have a material impact on the financial statements of the Account.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures. This guidance requires new disclosures and provides amendments to clarify existing disclosures. The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements, the reasons for the transfers, and further disaggregating activity in level 3 fair value measurements. The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2010, except for the new disclosure regarding the activity in Level 3 measurements, which the Company will adopt for the fiscal period beginning January 1, 2011.

(g) Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued with the SEC.

(2) Policy Charges

(a) Deductions from Premium

For individual flexible premium and survivorship contracts, the Company deducts a minimum of 0.5% to a maximum of 7.5% of all premiums received to cover premium tax and sales expense. The Company may, at its sole discretion, reduce the sales loading portion of the premium load.

There are no deductions from premium on modified single premium contracts.

For the Corporate Series, the Company deducts a front-end sales load from each premium payment received to compensate us for our sales expenses and premium taxes, and certain actual expenses, including acquisition costs. The Company may reduce this charge where the size or nature of the group results in savings in sales, underwriting, or administrative costs. Variations due to differences in costs are determined in a manner not unfairly discriminatory to policy owners.

For Future Corporate Flexible Premium Variable Universal Life this charge is guaranteed not to exceed 12% (5.5% starting in the sixth policy year) from each premium payment received.

For Next Generation and Nationwide MarathonSM Corporate Owned Flexible Premium Variable Universal Life this charge is guaranteed not to exceed 10% from each premium payment received.

(Continued)

87

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

For the periods ended December 31, 2010 and 2009, total front-end sales charge deductions were $11,717,798 and $12,945,103, respectively and were recognized as a reduction of purchase payments on the Statement of Changes in Contract Owners’ Equity.

(b) Cost of Insurance

A cost of insurance charge is assessed monthly against each contract by liquidating units. The amount of the charge varies widely and is based upon age, sex, rate class and net amount at risk (death benefit less total contract value).

(c) Administrative Charges

For The Best of America® Next Generation, Choice LifeSM and all flexible premium survivorship contracts, the Company currently deducts a minimum monthly administration charge of $5 per policy month to a maximum of $10 per policy month to recover policy maintenance, accounting, record keeping and other administrative expenses. These charges are assessed monthly against each contract by liquidating units. For The Best of America® Last Survivorship II and The Best of America® ChoiceLife Survivorship Life contracts, an administrative (per Specified Amount) charge is assessed to reimburse us for sales, underwriting, distribution and issuance costs. This charge is deducted from the policy’s Cash Value. During the first ten years from the Policy Date, the current monthly charge is $0.04 per $1,000 of Specified Amount, subject to a minimum charge of $20 and a maximum charge of $80 per month. These rates represent the maximum guaranteed charge for all years. After the tenth year from the Policy Date, the current monthly charge is $0.02 per $1,000 of Specified Amount with a $10 minimum and $40 maximum charge.

For The Best of America® ChoiceLifeSM Survivorship II and Next GenerationSM Survivorship Life contracts, the Company deducts a per $1,000 of Specified Amount charge for the first 3 policy years. This charge varies with the age of the insured and will not exceed $0.40 per $1,000 of Specified Amount. These charges are assessed monthly against each contract by liquidating units.

For modified single preimum contracts, for all states other than New York, the Company currently deducts a minimum monthly administration charge of $10 per policy per month. The actual charge is determined by multiplying 0.30% on an annualized basis by the policy’s cash value. This charge may be reduced to 0.15%on an annualized basis for policy years 11 and later. In New York, this charge is assessed in all policy years, with a maximum charge of $7.50 per month. These charges are assessed monthly against each contract by liquidating units.

For ProtectionSM flexible premium contracts, the Company deducts a policy expense per $1,000 of Specified Amount charge for the first two policy years. This charge varies with the age of the insured and will not exceed $0.30 per $1,000 of Specified Amount. For last survivor contracts, the Company deducts a per $1,000 of Specified Amount charge for the first 3 policy years. This charge varies with the age of the insured and will not exceed $0.40 per $1,000 of Specified Amount. These charges are assessed monthly against each contract by liquidating units.

For the Corporate Series, the Company deducts a monthly administrative expense charge to recover policy maintenance, accounting, record keeping and other administrative expenses. These charges are assessed against each contract by liquidating units. Currently, this charge is $5 per month in all policy years (guaranteed not to exceed $10 per month). We also deduct a per $1,000 of Specified Amount charge to compensate us for sales, underwriting, distribution and issuance of the policy. This charge is assessed monthly against each contract by liquidating units. This charge varies depending on the total Specified Amount. For Future Corporate Flexible Premium Variable Universal Life, the Company deducts a per $1,000 of Specified Amount that will not exceed $0.40 per $1,000 of Specified Amount, unless the policy is issued in the state of New York with an application signed on or after January 2, 2010, where the maximum guaranteed charge is $0.085 of Specified Amount. For Next Generation and Nationwide MarathonSM Corporate Owned Flexible Premium Variable Universal Life, the Company deducts a per $1,000 of Specified Amount charge that will not exceed $0.40 per $1,000 of Specified Amount.

(d) Surrender Charges

Policy surrenders result in a redemption of the contract value from the Account and payment of the surrender proceeds to the contract owner or designee. The surrender proceeds consist of the contract value, less any outstanding policy loans, and less a surrender charge, if applicable. The amount of the charge is based upon a specified percentage of the initial surrender charge which varies by issue age, sex and rate class. For individual flexible premium, flexible premium survivorship and modified single premium and corporate contracts (such as Variable Executive Life), the charge is 100% of the initial surrender charge in the first year, and declines a Specified Amount each year to 0% of the initial surrender charge in the ninth year or later. The Company may waive the surrender charge for certain contracts in which the sales expenses normally associated with the distribution of a contract are not incurred. The charges are assessed against each contract by liquidating units.

For the Corporate Series, contracts do not currently assess surrender charges.

(3) Asset Charges

The Company deducts a charge related to the assumption of mortality and expense risk.

(a) Modified Single Premium Contracts (MSP)

For modified single premium contracts, the Company deducts a charge equal to an annualized rate of 0.70% of the cash surrender value of the sub-accounts. In policy years 1- 10, the Company also deducts a charge equal to the annualized rate of 0.50% of the cash surrender value of the sub-accounts to remiburse us for taxes imposed by federal, state and local governments. These charges are assessed monthly against each contract by liquidating units.

(b) Flexible Premium and Variable Executive Life Contracts (FPVUL and VEL)

For Best of America® The Next Generation and Choice LifeSM contracts, the Company deducts a charge of $0.50 per $1,000 on the first $25,000 of cash surrender value attributable to the variable account, $0.25 per $1,000 on $25,001 up to $250,000 of cash surrender value attributable to the variable account and $0.08 per $1,000 over $250,000 of cash surrender value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units. For Choice Life ProtectionSM contracts and Best of America® ProtectionSM contracts, the Company deducts $0.66 per $1,000 of cash surrender value attributable to the variable account during the first through fifteenth years from the Policy Date. Thereafter, this charge is $0.25 per $1,000 of cash surrender value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

(c) Survivorship Life Contracts (SL)

For The Best of America® Last Survivorship II and The Best of America® ChoiceLife Survivorship contracts, during the first ten policy years, the Company deducts a charge of $0.46 per $1,000 on the cash surrender value attributable to the variable account. After ten years from the Policy Date, the Company deducts $0.46 per $1,000 on the first $25,000 of cash surrender value attributable to the variable account; $0.29 per $1,000 on $25,001 up to $99,999 of cash surrender value attributable to the variable account; and $0.17 per $1,000 on $100,000 or more of cash surrender value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

For The Best of America® ChoiceLifeSM Survivorship II and Next GenerationSM Survivorship Life contracts, during the first fifteen policy years, the Company deducts a charge of $0.50 per $1,000 on the first $25,000 of cash surrender value attributable to the variable account; $0.25 per $1,000 on $25,001 up to $250,000 of cash surrender value attributable to the variable account; and $0.08 per $1,000 over $250,000 of cash surrender value attributable to the variable account. After fifteen years from the Policy Date, the Company deducts $0.50 per $1,000 on the first $25,000 of cash surrender value attributable to the variable account and $0.08 per $1,000 over $25,000 of cash surrender value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

(Continued)

88

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

For The Best of America® ProtectionSM Survivorship and ChoiceLife ProtectionSM Survivorship Life contracts, during the first fifteen policy years, the Company deducts a charge of $0.66 per $1,000 of cash surrender value attributable to the variable account. After fifteen years from the Policy Date, the Company deducts $0.25 per $1,000 of cash surrender value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units.

(d) Corporate Contracts

For Future Corporate Flexible Premium variable Universal Life, the Company deducts a charge guaranteed not to exceed an annualized rate of 0.90% of the daily net assets of the Account for policies issued on or after January 1, 2009. This charge is guaranteed not to exceed an annualized rate of 0.75% of the daily net assets of the Account for policies issued prior to January 1, 2009. Currently, this rate is 0.25% during the first through fourth policy years, 0.20% during the fifth through fifteenth policy years, and 0.10% thereafter. This charge is assessed monthly against each contract by liquidating units.

For Next Generation Corporate Owned Flexible Premium Variable Universal Life, the Company deducts a charge guaranteed not to exceed an annualized rate of 1.25% of the daily net assets of the Account. Currently, this rate will not exceed 0.60%. This charge is assessed monthly against each contract by liquidating units. For Nationwide MarathonSM Corporate Owned Flexbile Premium Variable Universal Life, the Company deducts a charge guaranteed not to exceed an annualized rate of 0.90% of the daily net asset value of the Account. Currently, this rate will not exceed 0.50%. This charge is assessed monthly against each contract by liquidating units.

The Company may reduce or eliminate certain charges where the size or nature of the group results in savings in sales, underwriting, administrative or other costs to the Company. These charges may be reduced in certain group sponsored arrangements or special exchange programs made available by the Company.

(4) Death Benefits

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

(5) Policy Loans (Net of Repayments)

Contract provisions allow contract owners to borrow 90% of a policy’s variable cash surrender value plus 100% of a policy’s fixed cash surrender value less applicable value of surrender charge. Interest is charged on the outstanding loan and is due and payable in advance on the policy anniversary. At the time the loan is granted, the amount of the loan is transferred from the Account to the Company’s general account as collateral for the outstanding loan. Collateral amounts in the general account are credited with the stated rate of interest in effect at the time the loan is made, subject to a guaranteed minimum rate. Interest credited is paid by the Company’s general account to the Account. Loan repayments result in a transfer of collateral including interest credited back to the Account.

(6) Related Party Transactions

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

Contract owners may, with certain restrictions, transfer their assets between the Account and a fixed dollar contract (fixed account) maintained in the accounts of the Company. These transfers are the result of the contract owner executing fund exchanges. Fund exchanges from the Account to the fixed account are included in surrenders, and fund exchanges from the fixed account tothe Account are included in purchase payments received from contract owners, as applicable, on the accompanying Statements of Change in Contract Owner’s Equity. Policy loan transactions (note 5), executed at the direction of the contract owner, also result in transfers between the Account and the fixed account of the Company, but are included in Net Policy (Loans) Repayments. The fixed account assets are not reflected in the accompanying financial statements. For the periods ended December 31, 2010 and 2009, total transfers into the Account from the fixed account were $50,643,902 and $57,576,680, respectively, and total transfers from the Account to the fixed account were $71,185,930 and $123,242,143, respectively.

(7) Fair Value Measurement

FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Account generally uses the market approach as the valuation technique due to the nature of the mutual fund investments offered in the Account. This technique maximizes the use of observable inputs and minimizes the use of unobservable inputs.

In accordance with FASB ASC 820, the Account categorized its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Account categorizes financial assets recorded at fair value as follows:

• Level 1 – Unadjusted quoted prices accessible in active markets for identical assets at the measurement date. The assets utilizing Level 1 valuations represent investments in publicly-traded registered mutual funds with quoted market prices.  

• Level 2 – Unadjusted quoted prices for similar assets in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means. The assets utilizing Level 2 valuations represent investments in privately-traded registered mutual funds only offered through insurance products. These funds have no unfunded commitments or restrictions and the Account always has the ability to redeem its interest in the funds with the investee at NAV daily. The investment objectives of these mutual funds are described by the fund name in note 1(b) and in more detail in the applicable product prospectus.  

• Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Account invests only in funds with fair value measurements in the first two levels of the fair value hierarchy.  

The Account recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Level 1 and 2 as of December 31, 2010.

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2010:

	Level 1		Level 2		Level 3		Total
Separate Account Investments		0	$	4,097,447,277		0	$	4,097,447,277

The Account did not have any assets or liabilities reported at fair value on a nonrecurring basis required to be disclosed under FASB ASC 820.

(Continued)

89

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

The cost of purchases and proceeds from sales of investments for the year ended December 31, 2010 are as follows:

	Purchases of Investments		Sales of Investments
Asset Allocation Fund - Class 2 (AMVAA2)	$	462,926	$	396,769
Bond Fund - Class 2 (AMVBD2)		306,384		340,727
Global Small Capitalization Fund - Class 2 (AMVGS2)		153,986		274,533
Growth Fund - Class 2 (AMVGR2)		478,098		512,712
Large Cap Core V.I. Fund - Class II (MLVLC2)		446,721		497,180
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)		1,262,879		1,353,613
Variable Series, Inc. - Social Equity Portfolio (CVSSE)		45,347		38,912
Credit Suisse Trust- International Equity Flex III Portfolio (CSIEF3)		99,843		102,321
U.S. Equity Flex I Portfolio (WSCP)		235,719		269,390
Variable Account Fund, Inc. - Value Portfolio (DAVVL)		723,133		1,078,101
Insurance Trust - Insurance Trust Diversified Mid Cap Growth Portfolio 1 (OGGO)		354,939		635,186
Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)		54,704		81,468
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)		5,396,466		5,836,169
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)		8,166,485		10,052,441
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)		142,259		162,724
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)		2,430,460		2,947,420
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)		3,773,330		3,564,873
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)		14,776,698		15,518,274
Janus Aspen Series - Perkins Mid Cap Value Portfolio - Service Shares (JAMVS)		43,806		48,515
Retirement Emerging Markets Equity Portfolio - Service Shares (LZREMS)		387,761		455,603
Series Fund - Mid Cap Value Portfolio - Class VC (LOVMCV)		683,236		971,202
Investors Growth Stock Series - Initial Class (MIGIC)		536,382		544,192
Research International Series - Service Class (MVRISC)		95,824		85,603
Value Series - Initial Class (MVFIC)		1,167,806		924,901
Value Series - Service Class (MVFSC)		552,761		726,007
Variable Insurance Trust II - International Value Portfolio - Service Class (MVIVSC)		3,209,826		3,116,670
Core Plus Fixed Income Portfolio - Class I (MSVFI)		558,402		487,627
Emerging Markets Debt Portfolio - Class I (MSEM)		3,246,398		3,517,560
Mid Cap Growth Portfolio - Class I (MSVMG)		3,597,066		3,915,762
The Universal Institutional Funds, Inc. - Capital Growth Portfolio - Class I (MSVEG)		367,806		440,283
U.S. Real Estate Portfolio - Class I (MSVRE)		7,846,571		7,095,926
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)		152,439		160,198
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)		349,634		359,999
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)		710,349		567,025
American Funds NVIT Bond Fund - Class II (GVABD2)		1,110,881		1,084,542
American Funds NVIT Global Growth Fund - Class II (GVAGG2)		1,515,920		1,176,745
American Funds NVIT Growth Fund - Class II (GVAGR2)		1,971,744		1,302,408
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)		445,283		360,760
Federated NVIT High Income Bond Fund - Class I (HIBF)		7,283,547		6,280,996
Federated NVIT High Income Bond Fund - Class III (HIBF3)		4,699,426		6,242,046
Gartmore NVIT Emerging Markets Fund - Class I (GEM)		13,943,516		9,050,093
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)		4,500,580		2,687,058
Gartmore NVIT Global Utilities Fund - Class I (GVGU1)		3,771,130		2,891,316
Gartmore NVIT International Equity Fund - Class I (GIG)		1,767,036		1,900,634
Gartmore NVIT International Equity Fund - Class III (GIG3)		528,487		600,409
Gartmore NVIT International Equity Fund - Class VI (NVIE6)		92,240		108,812
Gartmore NVIT Worldwide Leaders Fund - Class I (GEF)		834,096		627,689
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)		17,609		17,429
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)		2,034,456		2,287,701
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)		97,647		118,569
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)		222,732		295,881
NVIT Cardinal Balanced Fund - Class I (NVCRB1)		311,385		377,996
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)		732,085		792,698
NVIT Cardinal Conservative Fund - Class I (NVCCN1)		256,517		296,517
NVIT Cardinal Moderate Fund - Class I (NVCMD1)		429,541		554,276
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)		548,092		675,288
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)		82,896		101,253
NVIT Core Bond Fund - Class I (NVCBD1)		571,730		608,794
NVIT Core Plus Bond Fund - Class I (NVLCP1)		173,786		193,688
NVIT Fund - Class I (TRF)		309,878,101		251,361,993
NVIT Global Financial Services Fund - Class I (GVGF1)		1,813,075		2,443,733
NVIT Government Bond Fund - Class I (GBF)		24,425,684		25,645,468
NVIT Growth Fund - Class I (CAF)		2,578,173		3,967,308
NVIT Health Sciences Fund - Class I (GVGH1)		3,058,833		3,033,207
NVIT Health Sciences Fund - Class III (GVGHS)		2,827,097		2,852,024
NVIT International Index Fund - Class II (GVIX2)		1,370,498		1,631,752
NVIT International Index Fund - Class VI (GVIX6)		372,571		313,767
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)		9,729,131		6,234,824
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)		10,464		10,926
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)		135,986		141,476
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)		4,953,460		4,924,849
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)		13,327,067		11,834,806
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)		8,678,393		7,201,321
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)		4,135,976		3,634,624
NVIT Leaders Fund - Class I (GVUS1)		1,200,456		1,244,282
NVIT Mid Cap Index Fund - Class I (MCIF)		11,439,925		10,012,392
NVIT Money Market Fund - Class I (SAM)		41,162,222		41,162,222
NVIT Money Market Fund - Class V (SAM5)		152,165,951		152,165,951
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)		1,783,952		2,044,136

(Continued)

90

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

NVIT Multi-Manager International Value Fund - Class I (GVDIVI)	375,284	238,046
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)	1,855,207	1,052,630
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)	6,636,450	6,649,131
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)	2,369,748	2,613,333
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)	3,726,755	5,045,551
NVIT Multi-Manager Mid Cap Value Fund - Class I (NVMMV1)	269	285
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)	1,644,019	1,920,171
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)	2,085,591	1,895,087
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)	8,533,049	6,455,420
NVIT Multi-Manager Small Company Fund - Class I (SCF)	35,129,521	23,160,219
NVIT Multi-Sector Bond Fund - Class I (MSBF)	6,351,046	5,757,028
NVIT Short Term Bond Fund - Class I (NVSTB1)	194,260	201,402
NVIT Short Term Bond Fund - Class II (NVSTB2)	1,076,860	1,085,080
NVIT Technology & Communications Fund - Class I (GGTC)	5,238,848	5,229,650
NVIT Technology & Communications Fund - Class III (GGTC3)	2,633,948	2,875,579
NVIT U.S. Growth Leaders Fund - Class I (GVUG1)	3,573,855	3,047,312
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)	1,354,647	1,407,498
Templeton NVIT International Value Fund - Class III (NVTIV3)	41,451	40,790
Van Kampen NVIT Comstock Value Fund - Class I (EIF)	1,566,417	1,259,060
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)	3,536,606	4,577,341
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)	1,835,949	1,619,490
Long-Term U.S. Government Portfolio - Administrative Class (PMVLGA)	21,079	21,123
V.I. Basic Value Fund - Series I (AVBVI)	210,888	335,826
V.I. Capital Appreciation Fund - Series I (AVCA)	370,050	287,306
V.I. Capital Development Fund - Series I (AVCDI)	4,173,794	2,757,703
V.I. High Yield Fund - Series I (AVHY1)	287,740	291,720
V.I. International Growth Fund - Series I (AVIE)	12,914,743	10,112,556
V.I. Mid Cap Core Equity Fund - Series I (AVMCCI)	17,823	18,421
VPS Growth and Income Portfolio - Class A (ALVGIA)	3,080,786	1,786,624
VPS International Value Portfolio - Class A (ALVIVA)	18,971,777	19,564,932
VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)	2,706,391	2,480,173
VP Income & Growth Fund - Class I (ACVIG)	2,418,659	2,043,318
VP Inflation Protection Fund - Class II (ACVIP2)	2,832,531	2,887,394
VP International Fund - Class I (ACVI)	13,113,904	12,999,212
VP International Fund - Class III (ACVI3)	2	2
VP Mid Cap Value Fund - Class I (ACVMV1)	739,855	729,089
VP Ultra(R) Fund - Class I (ACVU1)	212,287	183,269
VP Value Fund - Class I (ACVV)	55,361,467	42,723,916
VP Vista(SM) Fund - Class I (ACVVS1)	547,878	746,766
MidCap Stock Portfolio - Initial Shares (DVMCS)	307,955	257,814
Small Cap Stock Index Portfolio - Service Shares (DVSCS)	13,162,992	8,221,086
Stock Index Fund, Inc. - Initial Shares (DSIF)	51,180,654	45,428,090
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)	1,632,638	1,954,356
Appreciation Portfolio - Initial Shares (DCAP)	5,258,893	4,567,798
Developing Leaders Portfolio - Initial Shares (DSC)	336,620	247,713
International Value Portfolio - Initial Shares (DVIV)	7,954,612	4,868,093
Variable Series II - Dreman Small Mid Cap Value VIP - Class B (SVSSVB)	464,352	471,883
Variable Series II - Strategic Value VIP - Class B (SVSHEB)	358,473	425,161
Capital Appreciation Fund II - Primary Shares (FVCA2P)	138,112	134,044
Clover Value Fund II - Primary Shares (FALF)	261,879	193,085
Market Opportunity Fund II - Service Shares (FVMOS)	811,432	778,005
Quality Bond Fund II - Primary Shares (FQB)	8,782,571	8,771,818
VIP Fund - Contrafund Portfolio - Service Class (FCS)	140,667,525	112,297,815
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)	5,927,108	3,868,700
VIP Fund - Equity-Income Portfolio - Service Class (FEIS)	14,790,072	10,578,116
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)	676,213	569,164
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)	2,209,186	1,922,671
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)	767,231	527,168
VIP Fund - Growth & Income Portfolio - Service Class (FGIS)	19,632	25,811
VIP Fund - Growth Opportunities Portfolio - Service Class (FGOS)	8,488,679	8,708,738
VIP Fund - Growth Portfolio - Service Class (FGS)	13,621,222	13,537,494
VIP Fund - High Income Portfolio - Service Class (FHIS)	3,228,949	2,827,229
VIP Fund - High Income Portfolio - Service Class R (FHISR)	1,103,148	1,511,650
VIP Fund - Index 500 Portfolio - Initial Class (FIP)	1,176,217	973,483
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)	4,559,044	4,825,135
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)	7,602,073	6,515,498
VIP Fund - Overseas Portfolio - Service Class (FOS)	11,075,413	7,485,657
VIP Fund - Overseas Portfolio - Service Class R (FOSR)	3,112,852	2,150,084
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)	1,881,540	1,501,301
VIP Fund - VIP Freedom Fund 2015 Portfolio - Service Class (FF15S)	349,966	453,355
VIP Fund - VIP Freedom Fund 2025 Portfolio - Service Class (FF25S)	276,660	305,320
Franklin Income Securities Fund - Class 2 (FTVIS2)	1,607,800	1,328,806
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)	1,466,935	1,468,062
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)	2,341,739	1,779,973
Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)	1,600,281	1,532,184
Mutual Discovery Global Securities Fund - Class 2 (FTVMD2)	46,786	58,412
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)	2,296,336	1,435,189
Templeton Foreign Securities Fund - Class 1 (TIF)	237,093	214,042
Templeton Foreign Securities Fund - Class 2 (TIF2)	7,521,981	5,474,255
Templeton Foreign Securities Fund - Class 3 (TIF3)	1,256,490	954,777
Templeton Global Bond Securities Fund - Class 2 (FTVGI2)	1,147,721	1,213,622
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)	1,808,487	2,053,598
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)	75,244	95,504

(Continued)

91

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

Goldman Sachs VIT - Goldman Sachs Mid Cap Value Fund - Institutional Shares (GVMCE)		18,216,014		13,596,455
ClearBridge Variable Small Cap Growth Portfolio - Class I (SBVSG)		137,335		180,035
Lincoln VIP Trust - Baron Growth Opportunities Funds - Service Class (BNCAI)		3,178,185		2,692,140
Guardian Portfolio - I Class Shares (AMGP)		383,979		331,843
Mid-Cap Growth Portfolio - I Class Shares (AMCG)		1,959,486		1,634,761
Partners Portfolio - I Class Shares (AMTP)		1,588,472		1,987,180
Regency Portfolio - I Class Shares (AMRI)		764,525		728,966
Regency Portfolio - S Class Shares (AMRS)		-		-
Small-Cap Growth Portfolio - S Class Shares (AMFAS)		543,067		399,524
Socially Responsive Portfolio - I Class Shares (AMSRS)		827,216		608,203
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)		63,678,859		64,692,142
Global Securities Fund/VA - Class 3 (OVGS3)		2,693,266		2,186,872
Global Securities Fund/VA - Non-Service Shares (OVGS)		10,232,680		8,257,905
High Income Fund/VA - Class 3 (OVHI3)		382,064		181,741
High Income Fund/VA - Non-Service Shares (OVHI)		361,973		81,698
Main Street Fund(R)/VA - Non-Service Shares (OVGI)		4,001,239		3,885,192
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)		1,265,361		1,055,896
MidCap Fund/VA - Non-Service Shares (OVAG)		5,431,284		5,442,594
Strategic Bond Fund/VA - Non-Service Shares (OVSB)		278,739		274,952
All Asset Portfolio - Administrative Class (PMVAAA)		275,577		327,725
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)		2,767,494		2,843,151
Low Duration Portfolio - Administrative Class (PMVLDA)		16,486,590		16,727,819
Real Return Portfolio - Administrative Class (PMVRRA)		19,793,432		20,110,509
Total Return Portfolio - Administrative Class (PMVTRA)		70,580,924		77,294,548
Variable Contracts Trust - Emerging Markets VCT Portfolio - Class I Shares (PIVEMI)		894,182		1,299,789
Variable Contracts Trust - High Yield VCT Portfolio - Class I Shares (PIHYB1)		10,667,371		12,702,461
Putnam VT Growth and Income Fund - IB Shares (PVGIB)		281,026		155,624
Putnam VT International Equity Fund - IB Shares (PVTIGB)		583,031		316,952
Putnam VT Small Cap Value Fund - IB Shares (PVTSCB)		4,024		4,901
Putnam VT Vista Fund - IB Shares (PVVIB)		100,994		135,841
Putnam VT Voyager Fund - IB Shares (PVTVB)		403,672		608,118
Global Real Estate Portfolio - Class II (VKVGR2)		558,256		777,140
Micro-Cap Portfolio - Investment Class (ROCMC)		16,607,789		12,440,002
Small-Cap Portfolio - Investment Class (ROCSC)		62,177		93,914
Blue Chip Growth Portfolio - II (TRBCG2)		3,610,057		4,254,388
Equity Income Portfolio - II (TREI2)		41,804,138		32,939,960
Health Sciences Portfolio - II (TRHS2)		294,833		309,197
Mid-Cap Growth Portfolio - II (TRMCG2)		10,001,509		9,123,178
New America Growth Portfolio (TRNAG1)		4,117,884		5,887,238
Personal Strategy Balanced Portfolio (TRPSB1)		734,840		846,724
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)		8,339,435		6,576,087
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)		11,339,270		8,830,650
Vanguard(R) Variable Insurance Funds - Balanced Portfolio (VVB)		149,654		177,161
Vanguard(R) Variable Insurance Funds - Diversified Value Portfolio (VVDV)		373,632		304,223
Vanguard(R) Variable Insurance Funds - International Portfolio (VVI)		936,873		702,142
Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)		613,718		523,176
Vanguard(R) Variable Insurance Funds - REIT Index Portfolio (VVREI)		36,457		37,137
Vanguard(R) Variable Insurance Funds - Short-Term Investment-Grade Portfolio (VVSTC)		775,129		811,336
Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)		147,456		145,514
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)		3,644,788		3,997,042
Ivy Fund Variable Insurance Portfolios, Inc. - Growth (WRGP)		272,301		309,117
Ivy Fund Variable Insurance Portfolios, Inc. - Real Estate Securities (WRRESP)		324,059		514,457
Ivy Fund Variable Insurance Portfolios, Inc. - Science and Technology (WRSTP)		1,098,647		1,203,865
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)		166,416		210,846
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)		2,048,015		1,960,826
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)		2,152,411		3,141,578
Total	$	1,596,109,866	$	1,427,048,192

(8) Financial Highlights

The following tabular presentation is a summary of units, unit fair values and contract owners’ equity outstanding for variable life contracts as of the end of the periods indicated, and the contract expense rate, investment income ratio and total return for each of the periods in the five year period ended December 31, 2010.

(Continued)

92

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Asset Allocation Fund - Class 2 (AMVAA2)
2010		0.00%		42,950	$	9.515611	$	408,695		2.01%		12.51%
2010		0.20%		23,921		9.453733		226,143		2.01%		12.28%
2010		0.25%		80,409		9.438323		758,926		2.01%		12.22%
2009		0.00%		42,984		8.457915		363,555		2.53%		23.98%
2009		0.25%		113,993		8.410207		958,705		2.53%		23.67%
2008		0.00%		25,201		6.821773		171,916		4.65%		-29.51%
2008		0.25%		88,189		6.800279		599,710		4.65%		-29.69%
2008		0.40%		3,451		6.787413		23,423		4.65%		-29.79%
Bond Fund - Class 2 (AMVBD2)
2010		0.00%		3,571		10.921671		39,001		3.24%		6.44%
2010		0.20%		68,366		10.850693		741,818		3.24%		6.23%
2010		0.25%		34,481		10.833025		373,534		3.24%		6.18%
2009		0.00%		1,580		10.260471		16,212		3.45%		12.61%
2009		0.20%		65,270		10.214198		666,681		3.45%		12.38%
2009		0.25%		17,735		10.202662		180,944		3.45%		12.32%
2008		0.00%		702		9.111914		6,397		5.81%		-9.35%
2008		0.20%		49,461		9.088973		449,550		5.81%		-9.53%
2008		0.25%		12,173		9.083242		110,570		5.81%		-9.57%
Global Small Capitalization Fund - Class 2 (AMVGS2)
2010		0.00%		278		9.968859		2,771		1.76%		22.41%
2010		0.20%		103,759		9.910046		1,028,256		1.76%		22.17%
2010		0.25%		19,429		9.895414		192,258		1.76%		22.11%
2009		0.20%		99,620		8.111767		808,094		0.37%		60.97%
2009		0.25%		13,910		8.103815		112,724		0.37%		60.89%
2008		0.20%		45,204		5.039200		227,792		0.00%		-49.61%	1/16/2008
2008		0.25%		4,127		5.036777		20,787		0.00%		-49.63%	1/16/2008
Growth Fund - Class 2 (AMVGR2)
2010		0.20%		200,497		9.266406		1,857,887		0.78%		18.44%
2010		0.25%		28,764		9.252533		266,140		0.78%		18.38%
2009		0.20%		198,835		7.823490		1,555,584		0.73%		39.13%
2009		0.25%		27,764		7.815684		216,995		0.73%		39.06%
2008		0.20%		138,139		5.623019		776,758		0.96%		-43.77%	1/2/2008
2008		0.25%		12,612		5.620215		70,882		0.96%		-43.80%	1/2/2008
Large Cap Core V.I. Fund - Class II (MLVLC2)
2010		0.00%		5,769		11.722431		67,627		1.03%		8.98%
2010		0.10%		12,100		11.656201		141,040		1.03%		8.87%
2010		0.20%		8,336		11.590313		96,617		1.03%		8.77%
2010		0.25%		139,601		11.557561		1,613,447		1.03%		8.71%
2009		0.00%		3,193		10.756180		34,344		1.38%		22.35%
2009		0.10%		6,164		10.706109		65,992		1.38%		22.23%
2009		0.25%		129,231		10.631422		1,373,909		1.38%		22.05%
2008		0.00%		2,673		8.791079		23,499		0.50%		-38.83%
2008		0.10%		27,826		8.758902		243,725		0.50%		-38.89%
2008		0.25%		61,843		8.710851		538,705		0.50%		-38.99%
2008		0.40%		11,606		8.663056		100,543		0.50%		-39.08%
2007		0.10%		16,026		14.333835		229,714		1.23%		8.02%
2007		0.25%		230,248		14.276667		3,287,174		1.23%		7.86%
2007		0.40%		15,428		14.219711		219,382		1.23%		7.69%
2006		0.25%		131,296		13.236885		1,737,950		0.79%		14.33%
2006		0.40%		17,728		13.203975		234,080		0.79%		14.16%
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II  (MLVGA2)
2010		0.00%		461,464		13.386468		6,177,373		1.39%		9.88%
2009		0.00%		244,329		12.182592		2,976,561		3.16%		21.83%	5/1/2009

(Continued)

93

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Variable Series, Inc. - Social Equity Portfolio (CVSSE)
2010		0.10%		9,539	$	17.097854	$	163,096		0.06%		17.15%
2010		0.25%		5,826		16.885673		98,376		0.06%		16.97%
2009		0.10%		9,826		14.595276		143,413		0.57%		34.13%
2009		0.25%		4,347		14.435757		62,752		0.57%		33.92%
2008		0.10%		4,626		10.881799		50,339		0.00%		-35.86%
2008		0.25%		5,877		10.779017		63,348		0.00%		-35.95%
2007		0.10%		3,460		16.964928		58,699		0.00%		9.88%
2007		0.25%		4,512		16.829986		75,937		0.00%		9.71%
2006		0.10%		1,026		15.439612		15,841		0.00%		9.95%
2006		0.25%		7,002		15.339931		107,410		0.00%		9.78%
2006		0.40%		512		15.240875		7,803		0.00%		9.62%
Credit Suisse Trust-International Equity Flex III Portfolio (CSIEF3)
2010		0.00%		27,195		11.345188		308,532		0.11%		12.23%
2010		0.10%		59,479		11.333247		674,090		0.11%		12.12%
2010		0.25%		2,673		11.315359		30,246		0.11%		11.95%
2009		0.00%		28,749		10.108851		290,619		0.00%		1.09%	12/11/2009
2009		0.10%		11,666		10.108299		117,923		0.00%		1.08%	12/11/2009
2009		0.25%		5,543		10.107469		56,026		0.00%		1.07%	12/11/2009
U.S. Equity Flex I Portfolio (WSCP)
2010		0.00%		91,046		12.448619		1,133,397		0.26%		14.46%
2009		0.00%		100,191		10.876108		1,089,688		0.00%		8.76%	10/2/2009
Variable Account Fund, Inc. - Value Portfolio (DAVVL)
2010		0.00%		99,340		8.653758		859,664		1.39%		12.76%
2010		0.20%		560		8.597487		4,815		1.39%		12.54%
2010		0.25%		184,331		8.583442		1,582,194		1.39%		12.48%
2009		0.00%		69,243		7.674178		531,383		1.04%		31.16%
2009		0.25%		204,585		7.630866		1,561,161		1.04%		30.83%
2008		0.25%		76,781		5.832746		447,844		1.92%		-40.47%
Insurance Trust - Insurance Trust Diversified Mid Cap Growth Portfolio 1  (OGGO)
2010		0.10%		44,475		20.982776		933,209		0.00%		25.51%
2010		0.25%		145,637		20.723653		3,018,131		0.00%		25.32%
2009		0.10%		34,974		16.718525		584,714		0.00%		42.90%
2009		0.25%		142,297		16.536826		2,353,141		0.00%		42.68%
2008		0.10%		24,370		11.699757		285,123		0.00%		-43.84%
2008		0.25%		150,923		11.589969		1,749,193		0.00%		-43.93%
2008		0.40%		62,009		11.481181		711,937		0.00%		-44.01%
2007		0.10%		50,026		20.833315		1,042,207		0.00%		17.12%
2007		0.20%		71,184		20.723509		1,475,182		0.00%		17.00%
2007		0.25%		100,032		20.668909		2,067,552		0.00%		16.94%
2007		0.40%		106,088		20.505746		2,175,414		0.00%		16.77%
2006		0.10%		35,396		17.787877		629,620		0.00%		11.28%
2006		0.20%		43,296		17.711914		766,855		0.00%		11.17%
2006		0.25%		62,906		17.674125		1,111,809		0.00%		11.11%
2006		0.40%		83,526		17.561058		1,466,805		0.00%		10.95%
Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)
2010		0.20%		7,841		15.477647		121,360		1.26%		23.21%
2009		0.10%		5,523		12.633626		69,776		0.00%		26.57%
2009		0.20%		7,956		12.562325		99,946		0.00%		26.44%

(Continued)

94

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
2010		0.00%		199,120	$	18.488077	$	3,681,346		2.48%		8.12%
2010		0.10%		120,166		18.334845		2,203,225		2.48%		8.01%
2010		0.20%		74,749		18.182894		1,359,153		2.48%		7.90%
2010		0.25%		315,673		18.107344		5,716,000		2.48%		7.85%
2009		0.00%		150,726		17.099722		2,577,373		3.12%		25.58%
2009		0.10%		148,713		16.974945		2,524,395		3.12%		25.46%
2009		0.20%		39,203		16.851105		660,614		3.12%		25.33%
2009		0.25%		356,531		16.789471		5,985,967		3.12%		25.27%
2008		0.00%		103,832		13.616425		1,413,821		2.30%		-16.06%
2008		0.10%		82,014		13.530581		1,109,697		2.30%		-16.14%
2008		0.20%		24,988		13.445294		335,971		2.30%		-16.23%
2008		0.25%		213,858		13.402810		2,866,298		2.30%		-16.27%
2008		0.40%		39,051		13.276251		518,451		2.30%		-16.39%
2007		0.00%		103,442		16.221536		1,677,988		2.47%		10.29%
2007		0.10%		71,356		16.135395		1,151,357		2.47%		10.18%
2007		0.20%		69,250		16.049753		1,111,445		2.47%		10.07%
2007		0.25%		193,582		16.007046		3,098,676		2.47%		10.01%
2007		0.40%		133,728		15.879713		2,123,562		2.47%		9.84%
2006		0.00%		116,884		14.708447		1,719,182		1.99%		10.41%
2006		0.10%		8,030		14.645065		117,600		1.99%		10.30%
2006		0.20%		63,792		14.581974		930,213		1.99%		10.19%
2006		0.25%		83,320		14.550491		1,212,347		1.99%		10.14%
2006		0.40%		165,700		14.456527		2,395,447		1.99%		9.98%
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
2010		0.00%		2,484,331		11.155290		27,713,433		0.23%		6.48%
2010		0.10%		361,943		11.034023		3,993,687		0.23%		6.37%
2010		0.20%		405,847		10.914078		4,429,446		0.23%		6.27%
2010		0.25%		2,211,789		10.854583		24,008,047		0.23%		6.21%
2009		0.00%		2,848,502		10.476528		29,842,411		0.01%		46.01%
2009		0.10%		332,343		10.372987		3,447,390		0.01%		45.87%
2009		0.20%		384,661		10.270489		3,950,657		0.01%		45.72%
2009		0.25%		1,893,904		10.219612		19,354,964		0.01%		45.65%
2009		0.40%		13,489		10.068481		135,814		0.01%		45.43%
2008		0.00%		2,977,283		7.174977		21,361,937		0.01%		-44.31%
2008		0.10%		364,911		7.111160		2,594,941		0.01%		-44.36%
2008		0.20%		358,465		7.047942		2,526,441		0.01%		-44.42%
2008		0.25%		1,873,016		7.016534		13,142,080		0.01%		-44.45%
2008		0.40%		73,114		6.923153		506,179		0.01%		-44.53%
2007		0.00%		2,924,576		12.883520		37,678,833		0.19%		36.63%
2007		0.10%		400,482		12.781740		5,118,857		0.19%		36.50%
2007		0.20%		250,814		12.680828		3,180,529		0.19%		36.36%
2007		0.25%		1,592,000		12.630653		20,108,000		0.19%		36.29%
2007		0.40%		59,336		12.481327		740,592		0.19%		36.09%
2006		0.00%		2,885,418		9.429195		27,207,169		0.14%		9.12%
2006		0.10%		124,964		9.364110		1,170,177		0.14%		9.01%
2006		0.20%		291,224		9.299521		2,708,244		0.14%		8.90%
2006		0.25%		1,255,440		9.267372		11,634,630		0.14%		8.84%
2006		0.40%		228,352		9.171618		2,094,357		0.14%		8.68%
Janus Aspen Series - Global Technology Portfolio - Service II Shares  (JAGTS2)
2010		0.00%		151,587		11.352948		1,720,959		0.00%		13.53%	5/3/2010

(Continued)

95

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Janus Aspen Series - Global Technology Portfolio - Service Shares  (JAGTS)
2010		0.00%		1,414,446	$	5.746904	$	8,128,685		0.00%		24.40%
2010		0.10%		331,841		5.684397		1,886,316		0.00%		24.27%
2010		0.20%		11,445		5.622552		64,350		0.00%		24.15%
2010		0.25%		413,420		5.591880		2,311,795		0.00%		24.09%
2009		0.00%		1,850,637		4.619855		8,549,675		0.00%		56.90%
2009		0.10%		337,606		4.574181		1,544,271		0.00%		56.74%
2009		0.25%		388,356		4.506481		1,750,119		0.00%		56.51%
2008		0.00%		2,144,996		2.944514		6,315,971		0.09%		-43.97%
2008		0.10%		319,290		2.918324		931,792		0.09%		-44.03%
2008		0.25%		300,519		2.879447		865,329		0.09%		-44.11%
2008		0.40%		110		2.841109		313		0.09%		-44.20%
2007		0.00%		2,554,744		5.255324		13,426,007		0.34%		21.70%
2007		0.10%		297,474		5.213806		1,550,972		0.34%		21.58%
2007		0.25%		291,228		5.152101		1,500,436		0.34%		21.39%
2007		0.40%		2,106		5.091162		10,722		0.34%		21.21%
2006		0.00%		2,894,560		4.318333		12,499,674		0.00%		7.83%
2006		0.10%		179,882		4.288525		771,428		0.00%		7.72%
2006		0.25%		770,748		4.244167		3,271,183		0.00%		7.56%
2006		0.40%		52		4.200294		218		0.00%		7.40%
Janus Aspen Series - INTECH Risk-Managed Core Portfolio - Service Shares  (JARLCS)
2008		0.00%		33,622		12.013653		403,923		0.75%		-36.24%
2007		0.00%		26,988		18.842190		508,513		0.49%		6.13%
2006		0.00%		30,204		17.753498		536,227		0.11%		10.77%
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
2010		0.00%		1,903,372		15.936367		30,332,835		0.54%		25.03%
2009		0.00%		1,868,731		12.746144		23,819,114		0.43%		79.07%
2008		0.00%		1,692,770		7.117893		12,048,956		2.73%		-52.21%
2007		0.00%		1,653,148		14.893765		24,621,598		0.49%		28.07%
2006		0.00%		754,850		11.629148		8,778,262		1.78%		16.29%	5/1/2006
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
2010		0.00%		1,084,854		19.891294		21,579,150		0.53%		25.02%
2010		0.10%		326,192		19.675174		6,417,884		0.53%		24.89%
2010		0.20%		973,187		19.461274		18,939,459		0.53%		24.77%
2010		0.25%		990,271		19.355227		19,166,920		0.53%		24.70%
2009		0.00%		1,339,119		15.910990		21,306,709		0.41%		79.07%
2009		0.10%		374,105		15.753839		5,893,590		0.41%		78.89%
2009		0.20%		1,239,451		15.598133		19,333,122		0.41%		78.71%
2009		0.25%		951,078		15.520876		14,761,564		0.41%		78.62%
2008		0.00%		1,658,237		8.885289		14,733,915		1.05%		-52.23%
2008		0.10%		391,460		8.806322		3,447,323		1.05%		-52.28%
2008		0.20%		1,506,012		8.728004		13,144,479		1.05%		-52.32%
2008		0.25%		973,967		8.689119		8,462,915		1.05%		-52.35%
2008		0.40%		276,653		8.573479		2,371,879		1.05%		-52.42%
2007		0.00%		2,005,464		18.599320		37,300,267		0.44%		28.02%
2007		0.10%		392,780		18.452535		7,247,787		0.44%		27.89%
2007		0.20%		409,154		18.306795		7,490,298		0.44%		27.76%
2007		0.25%		1,103,674		18.234395		20,124,828		0.44%		27.70%
2007		0.40%		4,662		18.018848		84,004		0.44%		27.50%
2006		0.00%		2,503,690		14.528655		36,375,248		1.89%		46.63%
2006		0.10%		206,152		14.428484		2,974,461		1.89%		46.48%
2006		0.20%		351,364		14.328921		5,034,667		1.89%		46.34%
2006		0.25%		1,109,576		14.279422		15,844,104		1.89%		46.26%
2006		0.40%		43,784		14.131910		618,752		1.89%		46.05%
Janus Aspen Series - Perkins Mid Cap Value Portfolio - Service Shares  (JAMVS)
2010		0.20%		183		10.481347		1,918		0.42%		4.81%	5/3/2010
2010		0.25%		46,317		10.477878		485,304		0.42%		4.78%	5/3/2010

(Continued)

96

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Retirement Emerging Markets Equity Portfolio - Service Shares (LZREMS)
2010		0.00%		18,770	$	11.403634	$	214,046		2.49%		14.04%	5/3/2010
2010		0.20%		322,122		11.388546		3,668,501		2.49%		13.89%	5/3/2010
2010		0.25%		363,235		11.384777		4,135,349		2.49%		13.85%	5/3/2010
Series Fund - Mid Cap Value Portfolio - Class VC (LOVMCV)
2010		0.00%		984		12.273411		12,077		0.37%		25.43%
2010		0.10%		63,727		12.204067		777,729		0.37%		25.30%
2010		0.20%		1,367		12.135118		16,589		0.37%		25.18%
2010		0.25%		41,890		12.100786		506,902		0.37%		25.12%
2009		0.00%		2,510		9.785090		24,561		0.52%		26.62%
2009		0.10%		56,829		9.739518		553,487		0.52%		26.49%
2009		0.25%		75,007		9.671569		725,435		0.52%		26.30%
2008		0.10%		43,763		7.699923		336,972		1.22%		-39.42%
2008		0.25%		81,281		7.657684		622,424		1.22%		-39.51%
2008		0.40%		9,534		7.615671		72,608		1.22%		-39.60%
2007		0.10%		46,312		12.709507		588,603		0.59%		0.48%
2007		0.25%		87,970		12.658811		1,113,596		0.59%		0.33%
2007		0.40%		14,806		12.608296		186,678		0.59%		0.18%
2006		0.25%		45,876		12.617407		578,836		0.89%		11.95%
2006		0.40%		7,064		12.586028		88,908		0.89%		11.78%
Investors Growth Stock Series - Initial Class (MIGIC)
2010		0.00%		216,391		15.705759		3,398,585		0.45%		12.47%
2009		0.00%		237,765		13.963862		3,320,118		0.73%		39.55%
2008		0.00%		263,673		10.006089		2,638,336		0.61%		-36.87%
2007		0.00%		289,412		15.850552		4,587,340		0.33%		11.36%
2006		0.00%		314,824		14.233850		4,481,158		0.00%		7.58%
Research International Series - Service Class (MVRISC)
2010		0.00%		4,927		8.772736		43,223		1.35%		10.47%
2010		0.25%		84,252		8.692628		732,371		1.35%		10.20%
2009		0.00%		1,144		7.940931		9,084		1.26%		30.57%
2009		0.25%		82,984		7.888076		654,584		1.26%		30.24%
2008		0.00%		213		6.081781		1,295		0.06%		-42.52%
2008		0.25%		24,151		6.056428		146,269		0.06%		-42.67%
2008		0.40%		15,870		6.041270		95,875		0.06%		-42.75%
2007		0.25%		128		10.563577		1,352		0.00%		5.64%	5/1/2007
2007		0.40%		772		10.552986		8,147		0.00%		5.53%	5/1/2007
Value Series - Initial Class (MVFIC)
2010		0.00%		441,004		18.281385		8,062,164		1.47%		11.53%
2009		0.00%		438,770		16.390924		7,191,846		1.29%		22.71%
2008		0.00%		406,164		13.356934		5,425,106		1.20%		-32.58%
2007		0.00%		348,380		19.812092		6,902,137		0.87%		7.91%
2006		0.00%		200,260		18.360218		3,676,817		0.97%		20.84%
Value Series - Service Class (MVFSC)
2010		0.00%		78,860		9.004753		710,115		1.25%		11.22%
2010		0.20%		10,967		8.946185		98,113		1.25%		10.99%
2010		0.25%		677,810		8.931612		6,053,936		1.25%		10.94%
2009		0.00%		46,902		8.096650		379,749		1.17%		22.45%
2009		0.25%		420,507		8.050967		3,385,488		1.17%		22.15%
2008		0.00%		37,486		6.612135		247,862		1.35%		-32.74%
2008		0.25%		270,891		6.591290		1,785,521		1.35%		-32.91%
2008		0.40%		988		6.578814		6,500		1.35%		-33.01%
Variable Insurance Trust II - International Value Portfolio - Service Class  (MVIVSC)
2010		0.00%		3,508		14.337712		50,297		1.41%		8.78%
2010		0.20%		520,695		14.290030		7,440,747		1.41%		8.56%
2010		0.25%		916,953		14.278137		13,092,381		1.41%		8.51%
2009		0.25%		230,861		13.158607		3,037,809		0.00%		31.59%	5/1/2009

(Continued)

97

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Core Plus Fixed Income Portfolio - Class I (MSVFI)
2010		0.00%		190,070	$	12.844145	$	2,441,287		6.09%		7.14%
2009		0.00%		208,669		11.987667		2,501,454		8.83%		9.64%
2008		0.00%		264,578		10.933218		2,892,689		4.73%		-10.20%
2007		0.00%		281,694		12.175696		3,429,821		3.71%		5.45%
2006		0.00%		190,806		11.546094		2,203,064		4.06%		3.73%
Emerging Markets Debt Portfolio - Class I (MSEM)
2010		0.00%		212,950		28.119543		5,988,057		3.00%		9.74%
2010		0.10%		644,413		36.303218		23,394,266		3.00%		9.63%
2010		0.20%		81,138		27.585403		2,238,224		3.00%		9.53%
2010		0.25%		60,832		27.446686		1,669,637		3.00%		9.47%
2009		0.00%		190,919		25.622719		4,891,864		7.90%		30.21%
2009		0.10%		23,721		33.112830		785,469		7.90%		30.08%
2009		0.20%		68,982		25.186305		1,737,402		7.90%		29.95%
2009		0.25%		82,946		25.072181		2,079,637		7.90%		29.88%
2008		0.00%		235,478		19.678201		4,633,783		7.06%		-14.98%
2008		0.10%		32,806		25.456014		835,110		7.06%		-15.06%
2008		0.20%		94,088		19.381729		1,823,588		7.06%		-15.15%
2008		0.25%		83,661		19.303549		1,614,954		7.06%		-15.19%
2008		0.40%		69,947		17.858916		1,249,178		7.06%		-15.32%
2007		0.00%		244,604		23.144388		5,661,210		7.13%		6.53%
2007		0.10%		53,870		29.969902		1,614,479		7.13%		6.42%
2007		0.20%		79,524		22.841354		1,816,436		7.13%		6.32%
2007		0.25%		74,644		22.760599		1,698,942		7.13%		6.26%
2007		0.40%		68,018		21.088867		1,434,423		7.13%		6.10%
2006		0.00%		296,826		21.725302		6,448,634		10.28%		10.81%
2006		0.10%		11,152		28.160613		314,047		10.28%		10.70%
2006		0.20%		74,878		21.483999		1,608,679		10.28%		10.59%
2006		0.25%		49,984		21.418803		1,070,597		10.28%		10.53%
2006		0.40%		81,282		19.875581		1,615,527		10.28%		10.37%
Mid Cap Growth Portfolio - Class I (MSVMG)
2010		0.00%		4,677		12.756351		59,661		0.00%		32.31%
2010		0.10%		64,134		12.620906		809,429		0.00%		32.18%
2010		0.20%		61,988		12.486960		774,042		0.00%		32.05%
2010		0.25%		787,070		12.420541		9,775,835		0.00%		31.98%
2009		0.00%		2,129		9.640943		20,526		0.00%		57.66%
2009		0.10%		76,530		9.548100		730,716		0.00%		57.50%
2009		0.20%		87,692		9.456210		829,234		0.00%		57.34%
2009		0.25%		839,125		9.410608		7,896,676		0.00%		57.27%
2008		0.00%		240,987		6.115056		1,473,649		0.80%		-46.77%
2008		0.10%		79,376		6.062222		481,195		0.80%		-46.82%
2008		0.20%		24,533		6.009877		147,440		0.80%		-46.87%
2008		0.25%		816,330		5.983894		4,884,832		0.80%		-46.90%
2008		0.40%		22,314		5.906531		131,798		0.80%		-46.98%
2007		0.00%		283,210		11.486951		3,253,219		0.00%		22.67%
2007		0.10%		59,566		11.399129		679,001		0.00%		22.54%
2007		0.20%		20,784		11.312053		235,110		0.00%		22.42%
2007		0.25%		401,714		11.268795		4,526,833		0.00%		22.36%
2007		0.40%		44,500		11.139857		495,724		0.00%		22.17%
2006		0.00%		282,660		9.364438		2,646,952		0.00%		9.27%
2006		0.10%		21,636		9.302196		201,262		0.00%		9.17%
2006		0.20%		26,838		9.240416		247,994		0.00%		9.06%
2006		0.25%		265,862		9.209696		2,448,508		0.00%		9.00%
2006		0.40%		44,880		9.118070		409,219		0.00%		8.84%

(Continued)

98

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
The Universal Institutional Funds, Inc. - Capital Growth Portfolio - Class I  (MSVEG)
2010		0.00%		2,539	$	10.387395	$	26,374		0.16%		22.86%
2010		0.20%		2,940		10.319840		30,340		0.16%		22.62%
2010		0.25%		8,071		10.302995		83,155		0.16%		22.55%
2009		0.25%		45,095		8.406886		379,109		0.00%		65.14%
2008		0.25%		39,408		5.090726		200,615		0.00%		-49.31%
U.S. Real Estate Portfolio - Class I (MSVRE)
2010		0.10%		100,621		36.412421		3,663,854		2.31%		29.83%
2010		0.20%		182,394		29.476966		5,376,422		2.31%		29.70%
2010		0.25%		555,658		29.328633		16,296,690		2.31%		29.64%
2009		0.10%		111,151		28.046079		3,117,350		4.14%		28.23%
2009		0.20%		142,875		22.726829		3,247,096		4.14%		28.10%
2009		0.25%		640,708		22.623746		14,495,215		4.14%		28.03%
2009		0.40%		585		23.083528		13,504		4.14%		27.84%
2008		0.00%		1,007,215		18.602467		18,736,684		3.40%		-37.89%
2008		0.10%		141,708		21.872227		3,099,470		3.40%		-37.96%
2008		0.20%		136,212		17.741677		2,416,629		3.40%		-38.02%
2008		0.25%		648,045		17.670052		11,450,989		3.40%		-38.05%
2008		0.40%		60,957		18.056248		1,100,655		3.40%		-38.14%
2007		0.00%		1,115,184		29.952335		33,402,365		1.11%		-17.07%
2007		0.10%		183,278		35.252498		6,461,007		1.11%		-17.15%
2007		0.20%		249,376		28.623844		7,138,100		1.11%		-17.24%
2007		0.25%		617,432		28.522644		17,610,793		1.11%		-17.28%
2007		0.40%		172,122		29.190018		5,024,244		1.11%		-17.40%
2006		0.00%		1,384,756		36.117848		50,014,407		1.07%		38.04%
2006		0.10%		109,384		42.551820		4,654,488		1.07%		37.91%
2006		0.20%		324,820		34.585436		11,234,041		1.07%		37.77%
2006		0.25%		709,670		34.480507		24,469,781		1.07%		37.70%
2006		0.40%		290,660		35.340571		10,272,090		1.07%		37.50%
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)
2010		0.00%		31,818		12.359941		393,269		5.84%		8.24%
2009		0.00%		23,143		11.419071		264,272		5.26%		14.19%	5/1/2009
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
2010		0.00%		2,641,103		14.256071		37,651,752		1.97%		13.46%
2009		0.00%		2,210		12.564442		27,767		1.25%		25.64%	5/1/2009
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
2010		0.00%		483,491		10.878393		5,259,605		1.49%		12.02%
2009		0.00%		405,011		9.711378		3,933,215		0.08%		23.41%
2008		0.00%		395,090		7.868935		3,108,938		2.59%		-29.78%
2007		0.00%		340,142		11.205324		3,811,401		2.43%		6.14%
2006		0.00%		166,024		10.556998		1,752,715		3.37%		5.57%	5/1/2006
American Funds NVIT Bond Fund - Class II (GVABD2)
2010		0.00%		229,234		11.627184		2,665,346		2.06%		5.99%
2009		0.00%		248,317		10.970085		2,724,059		0.32%		12.15%
2008		0.00%		253,508		9.781713		2,479,742		5.43%		-9.87%
2007		0.00%		223,108		10.853118		2,421,417		8.46%		2.98%
2006		0.00%		70,612		10.538858		744,170		0.90%		5.39%	5/1/2006
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
2010		0.00%		473,561		11.991721		5,678,811		0.81%		11.30%
2009		0.00%		536,732		10.774250		5,782,885		0.00%		41.60%
2008		0.00%		518,855		7.608765		3,947,846		2.78%		-38.64%
2007		0.00%		451,322		12.399481		5,596,159		2.98%		14.36%
2006		0.00%		150,826		10.842096		1,635,270		0.23%		8.42%	5/1/2006

(Continued)

99

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
American Funds NVIT Growth Fund - Class II (GVAGR2)
2010		0.00%		773,203	$	10.612804	$	8,205,852		0.17%		18.19%
2009		0.00%		789,242		8.979238		7,086,792		0.00%		38.78%
2008		0.00%		801,346		6.470039		5,184,740		2.15%		-44.21%
2007		0.00%		610,966		11.597638		7,085,762		0.75%		11.90%
2006		0.00%		168,526		10.364424		1,746,675		1.12%		3.64%	5/1/2006
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
2010		0.00%		293,429		8.886120		2,607,445		0.96%		10.97%
2009		0.00%		290,258		8.007342		2,324,195		0.00%		30.69%
2008		0.00%		232,982		6.126963		1,427,472		2.61%		-38.06%
2007		0.00%		94,768		9.892316		937,475		2.46%		-1.08%	5/1/2007
Federated NVIT High Income Bond Fund - Class I (HIBF)
2010		0.00%		217,797		20.146924		4,387,940		8.65%		13.15%
2010		0.10%		96,568		18.165863		1,754,241		8.65%		13.04%
2010		0.20%		97,797		20.310994		1,986,354		8.65%		12.93%
2010		0.25%		722,680		20.208859		14,604,538		8.65%		12.87%
2009		0.00%		248,681		17.804842		4,427,726		9.89%		46.00%
2009		0.10%		62,774		16.070122		1,008,786		9.89%		45.85%
2009		0.20%		79,750		17.985742		1,434,363		9.89%		45.71%
2009		0.25%		790,244		17.904242		14,148,720		9.89%		45.63%
2009		0.40%		9,813		16.184733		158,821		9.89%		45.41%
2008		0.00%		312,224		12.195368		3,807,687		9.24%		-27.99%
2008		0.10%		56,513		11.018160		622,669		9.24%		-28.06%
2008		0.20%		70,677		12.343884		872,429		9.24%		-28.13%
2008		0.25%		629,259		12.294086		7,736,164		9.24%		-28.17%
2008		0.40%		197,959		11.130031		2,203,290		9.24%		-28.28%
2007		0.00%		650,262		16.935434		11,012,469		7.29%		3.13%
2007		0.10%		47,480		15.315998		727,204		7.29%		3.03%
2007		0.20%		69,190		17.176023		1,188,409		7.29%		2.93%
2007		0.25%		419,204		17.115297		7,174,801		7.29%		2.88%
2007		0.40%		205,334		15.518038		3,186,381		7.29%		2.72%
2006		0.00%		882,542		16.420739		14,491,992		7.41%		10.60%
2006		0.10%		9,510		14.865456		141,370		7.41%		10.49%
2006		0.20%		61,806		16.687538		1,031,390		7.41%		10.38%
2006		0.25%		370,802		16.636894		6,168,994		7.41%		10.33%
2006		0.40%		230,582		15.107048		3,483,413		7.41%		10.16%
Federated NVIT High Income Bond Fund - Class III (HIBF3)
2010		0.00%		838,621		14.295077		11,988,152		8.54%		13.16%
2009		0.00%		949,161		12.632602		11,990,373		10.36%		46.08%
2008		0.00%		707,956		8.647843		6,122,292		8.18%		-28.10%
2007		0.00%		1,316,814		12.027193		15,837,576		7.98%		3.17%
2006		0.00%		701,700		11.657910		8,180,355		7.85%		10.60%

(Continued)

100

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
2010		0.00%		108,618	$	29.562687	$	3,211,040		0.06%		16.17%
2010		0.10%		142,172		29.261305		4,160,138		0.06%		16.06%
2010		0.20%		338,600		28.962911		9,806,842		0.06%		15.94%
2010		0.25%		366,617		28.814934		10,564,045		0.06%		15.88%
2009		0.00%		129,828		25.446836		3,303,712		1.36%		63.31%
2009		0.10%		153,669		25.212581		3,874,392		1.36%		63.15%
2009		0.20%		362,310		24.980405		9,050,651		1.36%		62.99%
2009		0.25%		493,823		24.865174		12,278,995		1.36%		62.91%
2009		0.40%		100		24.522567		2,452		1.36%		62.66%
2008		0.00%		149,822		15.581599		2,334,466		1.16%		-57.76%
2008		0.10%		140,572		15.453591		2,172,342		1.16%		-57.80%
2008		0.20%		249,942		15.326599		3,830,761		1.16%		-57.85%
2008		0.25%		421,621		15.263531		6,435,425		1.16%		-57.87%
2008		0.40%		247,183		15.075807		3,726,483		1.16%		-57.93%
2007		0.00%		204,784		36.889137		7,554,305		0.71%		45.58%
2007		0.10%		146,372		36.622841		5,360,558		0.71%		45.43%
2007		0.20%		410,876		36.358404		14,938,796		0.71%		45.29%
2007		0.25%		406,344		36.226972		14,720,613		0.71%		45.21%
2007		0.40%		273,120		35.835395		9,787,363		0.71%		44.99%
2006		0.00%		270,924		25.339713		6,865,136		0.71%		36.72%
2006		0.10%		48,516		25.182064		1,221,733		0.71%		36.58%
2006		0.20%		258,760		25.025345		6,475,558		0.71%		36.45%
2006		0.25%		300,448		24.947405		7,495,398		0.71%		36.38%
2006		0.40%		316,790		24.714946		7,829,448		0.71%		36.17%
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
2010		0.00%		794,544		21.252025		16,885,669		0.07%		16.21%
2009		0.00%		818,029		18.287102		14,959,380		1.28%		63.48%
2008		0.00%		811,502		11.185864		9,077,351		1.15%		-57.83%
2007		0.00%		938,196		26.524857		24,885,515		0.72%		45.55%
2006		0.00%		714,108		18.224168		13,014,024		0.72%		36.64%
Gartmore NVIT Global Utilities Fund - Class I (GVGU1)
2009		0.00%		91,226		17.873386		1,630,518		3.96%		8.01%
2009		0.10%		30,519		17.736871		541,312		3.96%		7.90%
2009		0.25%		35,222		17.534069		617,585		3.96%		7.74%
2008		0.00%		121,284		16.548066		2,007,016		3.05%		-32.94%
2008		0.10%		36,003		16.438112		591,821		3.05%		-33.01%
2008		0.25%		32,066		16.274553		521,860		3.05%		-33.11%
2007		0.00%		177,796		24.676248		4,387,338		2.57%		20.43%
2007		0.10%		44,916		24.536865		1,102,098		2.57%		20.31%
2007		0.25%		27,478		24.329252		668,519		2.57%		20.13%
2006		0.00%		178,132		20.489395		3,649,817		2.84%		37.56%
2006		0.10%		11,378		20.394132		232,044		2.84%		37.42%
2006		0.25%		20,796		20.252066		421,162		2.84%		37.22%
2006		0.40%		2,542		20.110980		51,122		2.84%		37.01%

(Continued)

101

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Gartmore NVIT International Equity Fund - Class I (GIG)
2010		0.00%		263,475	$	13.537857	$	3,566,887		0.95%		13.29%
2010		0.10%		80,397		13.399813		1,077,305		0.95%		13.18%
2010		0.20%		5,187		13.263217		68,796		0.95%		13.06%
2010		0.25%		68,531		13.195400		904,294		0.95%		13.01%
2009		0.00%		275,076		11.949736		3,287,086		1.09%		29.72%
2009		0.10%		87,077		11.839714		1,030,967		1.09%		29.59%
2009		0.25%		98,498		11.676578		1,150,120		1.09%		29.40%
2008		0.00%		457,734		9.211762		4,216,537		1.36%		-46.06%
2008		0.10%		91,345		9.136079		834,535		1.36%		-46.11%
2008		0.25%		107,083		9.023725		966,288		1.36%		-46.19%
2008		0.40%		722		8.912712		6,435		1.36%		-46.27%
2007		0.00%		522,056		17.076402		8,914,838		0.38%		27.15%
2007		0.10%		180,062		16.953079		3,052,605		0.38%		27.02%
2007		0.25%		36,532		16.769826		612,635		0.38%		26.83%
2006		0.00%		554,752		13.430598		7,450,651		0.84%		32.96%
2006		0.10%		109,564		13.347009		1,462,352		0.84%		32.83%
2006		0.25%		55,980		13.222655		740,204		0.84%		32.63%
2006		0.40%		416		13.099372		5,449		0.84%		32.44%
Gartmore NVIT International Equity Fund - Class III (GIG3)
2010		0.00%		484,564		8.103077		3,926,459		1.02%		13.27%
2009		0.00%		516,240		7.153834		3,693,095		0.22%		29.67%
2008		0.00%		24,803		5.516874		136,835		1.55%		-44.83%	5/1/2008
Gartmore NVIT International Equity Fund - Class VI (NVIE6)
2010		0.00%		79,753		8.057227		642,588		0.98%		13.00%
2009		0.00%		70,672		7.130177		503,904		0.24%		29.45%
2008		0.00%		6,719		5.508000		37,008		1.45%		-44.92%	5/1/2008
Gartmore NVIT Worldwide Leaders Fund - Class I (GEF)
2010		0.00%		195,615		17.098317		3,344,687		1.02%		11.46%
2010		0.10%		45,228		13.742313		621,537		1.02%		11.35%
2010		0.20%		2,064		13.468298		27,799		1.02%		11.24%
2010		0.25%		14,874		13.400531		199,319		1.02%		11.18%
2009		0.00%		206,712		15.340444		3,171,054		1.06%		25.00%
2009		0.10%		47,322		12.341792		584,038		1.06%		24.88%
2009		0.25%		13,605		12.052893		163,980		1.06%		24.69%
2008		0.00%		216,990		12.271930		2,662,886		0.73%		-44.34%
2008		0.10%		54,435		9.882968		537,979		0.73%		-44.40%
2008		0.25%		13,713		9.666117		132,551		0.73%		-44.48%
2007		0.00%		250,388		22.048358		5,520,644		0.41%		19.90%
2007		0.10%		109,004		17.774048		1,937,442		0.41%		19.78%
2007		0.25%		14,992		17.410223		261,014		0.41%		19.60%
2006		0.00%		249,376		18.389109		4,585,802		0.85%		25.88%
2006		0.10%		64,922		14.839096		963,384		0.85%		25.76%
2006		0.25%		13,250		14.557271		192,884		0.85%		25.57%
2006		0.40%		24		15.509710		372		0.85%		25.38%
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)
2010		0.00%		264		14.935320		3,943		0.79%		11.36%
2009		0.00%		1,087		13.411529		14,578		1.12%		34.12%	5/1/2009
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
2010		0.00%		1,705,119		9.164158		15,625,980		0.21%		15.61%
2009		0.00%		1,906,534		7.927018		15,113,129		0.18%		52.96%
2008		0.00%		180		5.182412		933		0.00%		-48.18%	5/1/2008
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
2010		0.00%		25,390		10.043115		254,995		0.89%		23.58%
2009		0.00%		21,943		8.126831		178,327		0.37%		31.53%
2008		0.00%		5,037		6.178465		31,121		0.45%		-38.22%	5/1/2008

(Continued)

102

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Cardinal Aggressive Fund -Class I (NVCRA1)
2010		0.00%		85,305	$	9.540229	$	813,829		0.40%		15.00%
2010		0.20%		3		14.837971		45		0.40%		14.77%
2010		0.25%		438		14.825611		6,494		0.40%		14.71%
2009		0.00%		42,686		8.295819		354,115		1.03%		29.30%
2009		0.25%		132		12.924011		1,706		1.03%		29.24%	5/1/2009
2008		0.00%		43,904		6.416027		281,689		2.01%		-35.84%	5/1/2008
NVIT Cardinal Balanced Fund - Class I (NVCRB1)
2010		0.00%		171,673		10.596561		1,819,143		0.04%		10.46%
2010		0.10%		10,172,685		13.009970		132,346,327		0.04%		10.35%
2010		0.20%		7		12.988326		91		0.04%		10.24%
2010		0.25%		50		12.977497		649		0.04%		10.18%
2009		0.00%		90,417		9.593104		867,380		2.22%		19.88%
2009		0.25%		6		11.777952		71		2.22%		17.78%	5/1/2009
2008		0.00%		65,101		8.002099		520,945		2.15%		-19.98%	5/1/2008
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)
2010		0.00%		366,215		10.149086		3,716,748		0.64%		12.46%
2010		0.20%		2		13.801379		28		0.64%		12.23%
2010		0.25%		14		13.789878		193		0.64%		12.17%
2009		0.00%		172,546		9.025006		1,557,229		1.99%		24.25%
2008		0.00%		71,014		7.263571		515,815		1.50%		-27.36%	5/1/2008
NVIT Cardinal Conservative Fund - Class I (NVCCN1)
2010		0.00%		132,942		11.062310		1,470,646		1.26%		6.87%
2010		0.20%		107		11.766279		1,259		1.26%		6.65%
2010		0.25%		10		11.756479		118		1.26%		6.60%
2009		0.00%		89,148		10.351566		922,821		2.79%		13.22%
2008		0.00%		32,838		9.142885		300,234		1.40%		-8.57%	5/1/2008
NVIT Cardinal Moderate Fund - Class I (NVCMD1)
2010		0.00%		346,937		10.368348		3,597,164		0.93%		11.42%
2009		0.00%		241,583		9.305236		2,247,987		2.29%		22.00%
2008		0.00%		83,184		7.626933		634,439		2.04%		-23.73%	5/1/2008
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)
2010		0.00%		486,915		9.916957		4,828,715		0.73%		13.50%
2010		0.20%		8		14.238938		114		0.73%		13.27%
2010		0.25%		224		14.227081		3,187		0.73%		13.21%
2009		0.00%		345,676		8.737590		3,020,375		1.60%		26.69%
2009		0.25%		11		12.566486		138		1.60%		25.66%	5/1/2009
2008		0.00%		223,705		6.896919		1,542,875		1.52%		-31.03%	5/1/2008
NVIT Cardinal Moderately Conservative Fund -Class I (NVCMC1)
2010		0.00%		102,837		10.770841		1,107,641		1.12%		9.31%
2010		0.20%		424		12.574113		5,331		1.12%		9.10%
2010		0.25%		38		12.563636		477		1.12%		9.04%
2009		0.00%		66,327		9.853071		653,525		2.50%		17.64%
2008		0.00%		33,824		8.375935		283,308		2.14%		-16.24%	5/1/2008
NVIT Core Bond Fund - Class I (NVCBD1)
2010		0.00%		59,061		11.582155		684,054		2.81%		7.06%
2009		0.00%		56,157		10.818752		607,549		2.99%		8.78%
2008		0.00%		21,176		9.945181		210,599		4.53%		-0.55%	5/1/2008
NVIT Core Plus Bond Fund - Class I (NVLCP1)
2010		0.00%		18,485		12.569892		232,354		2.49%		8.35%
2009		0.00%		21,838		11.600708		253,336		4.05%		16.62%
2008		0.00%		13,545		9.947099		134,733		3.73%		-0.53%	5/1/2008

(Continued)

103

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Fund - Class I (TRF)
2010		0.00%		2,208,854	$	13.919537	$	30,746,225		0.79%		13.45%
2010		0.10%		4,747,522		11.424837		54,239,665		0.79%		13.34%
2010		0.20%		58,071		11.104765		644,865		0.79%		13.22%
2010		0.25%		30,679		11.048893		338,969		0.79%		13.17%
2009		0.00%		2,358,784		12.269388		28,940,836		1.35%		26.10%
2009		0.10%		27,862,777		10.080498		280,870,668		1.35%		25.97%
2009		0.20%		72,093		9.807872		707,079		1.35%		25.84%
2009		0.25%		42,014		9.763407		410,200		1.35%		25.78%
2008		0.00%		2,528,801		9.730137		24,605,580		1.41%		-41.55%
2008		0.10%		28,106,065		8.002258		224,911,983		1.41%		-41.61%
2008		0.20%		56,085		7.793622		437,105		1.41%		-41.67%
2008		0.25%		46,732		7.762178		362,742		1.41%		-41.70%
2008		0.40%		798		8.031680		6,409		1.41%		-41.79%
2007		0.00%		2,766,768		16.648158		46,061,591		1.03%		8.18%
2007		0.10%		28,344,872		13.705507		388,480,842		1.03%		8.07%
2007		0.20%		50,032		13.361574		668,506		1.03%		7.96%
2007		0.25%		52,394		13.314351		697,592		1.03%		7.91%
2007		0.40%		1,370		13.797367		18,902		1.03%		7.75%
2006		0.00%		2,948,242		15.389126		45,370,868		1.09%		13.63%
2006		0.10%		37,804,244		12.681766		479,424,576		1.09%		13.51%
2006		0.20%		49,380		12.375964		611,125		1.09%		13.40%
2006		0.25%		236,736		12.338411		2,920,946		1.09%		13.34%
2006		0.40%		31,470		12.805324		402,984		1.09%		13.18%
NVIT Global Financial Services Fund - Class I (GVGF1)
2009		0.00%		81,891		13.889643		1,137,437		1.15%		31.75%
2009		0.10%		49,431		13.783502		681,332		1.15%		31.62%
2009		0.25%		26,749		13.625762		364,476		1.15%		31.42%
2008		0.00%		94,761		10.542078		998,978		1.83%		-46.27%
2008		0.10%		40,964		10.471992		428,975		1.83%		-46.33%
2008		0.25%		36,230		10.367711		375,622		1.83%		-46.41%
2007		0.00%		93,918		19.621675		1,842,828		3.45%		-1.05%
2007		0.10%		104,978		19.510815		2,048,206		3.45%		-1.15%
2007		0.25%		38,992		19.345657		754,326		3.45%		-1.30%
2006		0.00%		113,986		19.830405		2,260,389		1.89%		20.32%
2006		0.10%		98,040		19.738206		1,935,134		1.89%		20.20%
2006		0.25%		30,252		19.600661		592,959		1.89%		20.02%
2006		0.40%		5,096		19.464132		99,189		1.89%		19.84%

(Continued)

104

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Government Bond Fund - Class I (GBF)
2010		0.00%		1,970,073	$	19.888530	$	39,181,856		2.91%		4.78%
2010		0.10%		179,088		18.294455		3,276,317		2.91%		4.68%
2010		0.20%		1,247,423		16.593936		20,699,657		2.91%		4.57%
2010		0.25%		3,252,714		16.510521		53,704,003		2.91%		4.52%
2009		0.00%		2,155,474		18.980932		40,912,905		3.40%		2.69%
2009		0.10%		172,188		17.477068		3,009,341		3.40%		2.59%
2009		0.20%		1,080,876		15.868375		17,151,746		3.40%		2.48%
2009		0.25%		3,410,676		15.796520		53,876,812		3.40%		2.43%
2009		0.40%		15,678		17.785926		278,848		3.40%		2.28%
2008		0.00%		2,666,781		18.484063		49,292,948		4.28%		7.72%
2008		0.10%		149,239		17.036588		2,542,523		4.28%		7.61%
2008		0.20%		1,179,027		15.483913		18,255,951		4.28%		7.50%
2008		0.25%		3,301,654		15.421502		50,916,464		4.28%		7.45%
2008		0.40%		485,177		17.389732		8,437,098		4.28%		7.29%
2007		0.00%		2,247,294		17.159530		38,562,509		4.48%		7.16%
2007		0.10%		160,904		15.831585		2,547,365		4.48%		7.05%
2007		0.20%		717,380		14.403124		10,332,513		4.48%		6.94%
2007		0.25%		3,004,026		14.352245		43,114,517		4.48%		6.89%
2007		0.40%		440,784		16.208282		7,144,351		4.48%		6.73%
2006		0.00%		2,428,156		16.013288		38,882,761		3.95%		3.34%
2006		0.10%		78,218		14.788907		1,156,759		3.95%		3.24%
2006		0.20%		826,566		13.468059		11,132,240		3.95%		3.14%
2006		0.25%		3,008,954		13.427221		40,401,890		3.95%		3.08%
2006		0.40%		445,662		15.186518		6,768,054		3.95%		2.93%
NVIT Growth Fund - Class I (CAF)
2010		0.00%		1,313,922		9.655570		12,686,666		0.62%		19.25%
2010		0.10%		114,797		7.272204		834,827		0.62%		19.13%
2010		0.20%		21,579		9.290303		200,475		0.62%		19.01%
2010		0.25%		5,239		9.243540		48,427		0.62%		18.95%
2009		0.00%		1,493,205		8.097149		12,090,703		0.55%		33.47%
2009		0.10%		389,073		6.104552		2,375,116		0.55%		33.34%
2009		0.20%		83,427		7.806410		651,265		0.55%		33.20%
2009		0.25%		5,496		7.771001		42,709		0.55%		33.14%
2008		0.00%		1,603,390		6.066573		9,727,082		0.28%		-38.71%
2008		0.10%		208,878		4.578246		956,295		0.28%		-38.77%
2008		0.20%		99,363		5.860450		582,312		0.28%		-38.83%
2008		0.25%		8,138		5.836782		47,500		0.28%		-38.86%
2007		0.00%		1,726,074		9.897441		17,083,716		0.18%		19.54%
2007		0.10%		226,134		7.476755		1,690,749		0.18%		19.42%
2007		0.20%		76,332		9.580341		731,287		0.18%		19.30%
2007		0.25%		8,184		9.546438		78,128		0.18%		19.24%
2006		0.00%		1,876,832		8.279324		15,538,900		0.05%		6.17%
2006		0.10%		51,726		6.260681		323,840		0.05%		6.06%
2006		0.20%		67,782		8.030198		544,303		0.05%		5.96%
2006		0.25%		45,366		8.005797		363,191		0.05%		5.90%
2006		0.40%		4		6.904680		28		0.05%		5.75%

(Continued)

105

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Health Sciences Fund - Class I (GVGH1)
2009		0.00%		62,420	$	13.810897	$	862,076		0.29%		19.16%
2009		0.10%		90,762		13.705345		1,243,925		0.29%		19.04%
2009		0.25%		57,752		13.548576		782,457		0.29%		18.87%
2008		0.00%		84,235		11.589966		976,281		0.26%		-25.21%
2008		0.10%		81,523		11.512893		938,566		0.26%		-25.29%
2008		0.25%		59,035		11.398285		672,898		0.26%		-25.40%
2008		0.40%		207		11.284830		2,336		0.26%		-25.51%
2007		0.00%		101,446		15.497697		1,572,179		0.07%		13.16%
2007		0.10%		52,696		15.410067		812,049		0.07%		13.05%
2007		0.20%		90,084		15.322977		1,380,355		0.07%		12.93%
2007		0.25%		57,456		15.279611		877,905		0.07%		12.88%
2007		0.40%		2,882		15.150267		43,663		0.07%		12.71%
2006		0.00%		124,614		13.695316		1,706,628		0.00%		2.71%
2006		0.10%		13,596		13.631572		185,335		0.00%		2.61%
2006		0.20%		72,832		13.568156		988,196		0.00%		2.50%
2006		0.25%		29,942		13.536569		405,312		0.00%		2.45%
2006		0.40%		18,258		13.442227		245,428		0.00%		2.30%
NVIT Health Sciences Fund - Class III (GVGHS)
2009		0.00%		222,948		11.124833		2,480,259		0.28%		19.11%
2008		0.00%		260,983		9.339799		2,437,529		0.29%		-25.23%
2007		0.00%		210,752		12.491648		2,632,640		0.07%		13.23%
2006		0.00%		212,658		11.032385		2,346,125		0.00%		2.70%
NVIT International Index Fund - Class II (GVIX2)
2010		0.00%		52,697		7.971131		420,055		2.29%		7.52%
2010		0.20%		7,211		7.912838		57,059		2.29%		7.30%
2010		0.25%		772,390		7.898348		6,100,605		2.29%		7.25%
2009		0.00%		30,419		7.413670		225,516		2.43%		28.58%
2009		0.25%		468,130		7.364341		3,447,469		2.43%		28.26%
2008		0.00%		592		5.765640		3,413		1.66%		-43.11%
2008		0.25%		37,630		5.741605		216,057		1.66%		-43.25%
2008		0.40%		76,167		5.727230		436,226		1.66%		-43.34%
2007		0.25%		164,488		10.117465		1,664,202		3.21%		1.17%	5/1/2007
2007		0.40%		55,246		10.107323		558,389		3.21%		1.07%	5/1/2007
2006		0.00%		134,862		23.062454		3,110,249		2.07%		22.67%
NVIT International Index Fund - Class VI (GVIX6)
2010		0.00%		71,480		9.456969		675,984		2.11%		7.54%
2009		0.00%		65,290		8.793694		574,140		2.61%		28.62%
2008		0.00%		71,845		6.837123		491,213		2.06%		-43.11%
2007		0.00%		53,368		12.017667		641,359		1.67%		9.50%
2006		0.00%		20,334		10.975279		223,171		1.50%		9.75%	5/1/2006

(Continued)

106

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
2010		0.00%		1,251,096	$	15.419576	$	19,291,370		1.71%		14.63%
2010		0.10%		160,260		15.282480		2,449,170		1.71%		14.51%
2010		0.20%		121,836		15.146603		1,845,402		1.71%		14.40%
2010		0.25%		289,316		15.079089		4,362,622		1.71%		14.34%
2009		0.00%		1,378,139		13.451838		18,538,503		1.09%		27.21%
2009		0.10%		141,202		13.345564		1,884,420		1.09%		27.08%
2009		0.20%		196,053		13.240124		2,595,766		1.09%		26.95%
2009		0.25%		342,826		13.187693		4,521,084		1.09%		26.89%
2009		0.40%		897		13.031705		11,689		1.09%		26.70%
2008		0.00%		1,362,477		10.574854		14,407,995		2.07%		-36.84%
2008		0.10%		206,669		10.501810		2,170,399		2.07%		-36.91%
2008		0.20%		190,819		10.429261		1,990,101		2.07%		-36.97%
2008		0.25%		234,097		10.393146		2,433,004		2.07%		-37.00%
2008		0.40%		82,666		10.285643		850,273		2.07%		-37.10%
2007		0.00%		1,376,510		16.743624		23,047,766		2.03%		5.96%
2007		0.10%		211,970		16.644647		3,528,166		2.03%		5.85%
2007		0.20%		198,282		16.546241		3,280,822		2.03%		5.75%
2007		0.25%		160,792		16.497208		2,652,619		2.03%		5.69%
2007		0.40%		157,686		16.351146		2,578,347		2.03%		5.53%
2006		0.00%		1,105,550		15.802084		17,469,994		2.11%		16.87%
2006		0.10%		23,050		15.724474		362,449		2.11%		16.75%
2006		0.20%		211,872		15.647232		3,315,210		2.11%		16.64%
2006		0.25%		77,654		15.608708		1,212,079		2.11%		16.58%
2006		0.40%		171,634		15.493861		2,659,273		2.11%		16.40%
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
2010		0.00%		7,276		12.782641		93,006		1.26%		9.81%
2009		0.00%		1,883		11.640280		21,919		0.87%		16.40%	5/1/2009
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
2010		0.00%		9,246		13.672666		126,417		0.96%		12.03%
2009		0.00%		10,225		12.204484		124,791		0.71%		22.04%	5/1/2009
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
2010		0.00%		634,498		14.239553		9,034,968		2.23%		5.89%
2010		0.10%		25,085		14.112974		354,024		2.23%		5.79%
2010		0.20%		135,026		13.987465		1,888,671		2.23%		5.68%
2010		0.25%		173,444		13.925202		2,415,243		2.23%		5.63%
2009		0.00%		787,357		13.447193		10,587,742		1.73%		9.08%
2009		0.10%		35,939		13.340983		479,462		1.73%		8.98%
2009		0.20%		103,310		13.235577		1,367,367		1.73%		8.87%
2009		0.25%		189,396		13.183237		2,496,852		1.73%		8.81%
2009		0.40%		658		13.027295		8,572		1.73%		8.65%
2008		0.00%		746,175		12.327359		9,198,367		3.88%		-6.02%
2008		0.10%		36,290		12.242222		444,270		3.88%		-6.12%
2008		0.20%		72,139		12.157648		877,041		3.88%		-6.21%
2008		0.25%		508,679		12.115615		6,162,959		3.88%		-6.26%
2008		0.40%		713,252		11.990270		8,552,084		3.88%		-6.40%
2007		0.00%		621,536		13.117367		8,152,916		3.54%		5.38%
2007		0.10%		35,914		13.039806		468,312		3.54%		5.28%
2007		0.20%		28,608		12.962685		370,836		3.54%		5.17%
2007		0.25%		332,180		12.924331		4,293,204		3.54%		5.12%
2007		0.40%		106,108		12.809833		1,359,226		3.54%		4.96%
2006		0.00%		628,508		12.447546		7,823,382		3.23%		6.16%
2006		0.10%		26,518		12.386397		328,462		3.23%		6.06%
2006		0.20%		22,320		12.325531		275,106		3.23%		5.95%
2006		0.25%		287,996		12.295233		3,540,978		3.23%		5.90%
2006		0.40%		92,396		12.204705		1,127,666		3.23%		5.74%

(Continued)

107

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
2010		0.00%		4,345,889	$	15.118520	$	65,703,410		1.99%		10.91%
2010		0.10%		189,430		14.984107		2,838,439		1.99%		10.80%
2010		0.20%		382,830		14.850857		5,685,354		1.99%		10.69%
2010		0.25%		805,184		14.784666		11,904,377		1.99%		10.64%
2009		0.00%		4,458,884		13.630962		60,778,878		1.56%		19.14%
2009		0.10%		144,450		13.523280		1,953,438		1.56%		19.02%
2009		0.20%		480,252		13.416419		6,443,262		1.56%		18.90%
2009		0.25%		863,030		13.363298		11,532,927		1.56%		18.84%
2009		0.40%		2,599		13.205276		34,321		1.56%		18.66%
2008		0.00%		3,933,503		11.441586		45,005,513		2.82%		-23.20%
2008		0.10%		117,688		11.362546		1,337,235		2.82%		-23.27%
2008		0.20%		205,224		11.284040		2,315,756		2.82%		-23.35%
2008		0.25%		551,789		11.244982		6,204,857		2.82%		-23.39%
2008		0.40%		189,624		11.128694		2,110,267		2.82%		-23.50%
2007		0.00%		3,877,166		14.896957		57,757,975		2.71%		5.66%
2007		0.10%		117,560		14.808865		1,740,930		2.71%		5.55%
2007		0.20%		221,366		14.721295		3,258,794		2.71%		5.45%
2007		0.25%		341,144		14.677673		5,007,200		2.71%		5.39%
2007		0.40%		384,024		14.547724		5,586,675		2.71%		5.24%
2006		0.00%		3,554,252		14.099052		50,111,584		2.47%		11.35%
2006		0.10%		1,864		14.029768		26,151		2.47%		11.24%
2006		0.20%		206,458		13.960840		2,882,327		2.47%		11.13%
2006		0.25%		161,088		13.926464		2,243,386		2.47%		11.08%
2006		0.40%		490,632		13.823999		6,782,496		2.47%		10.91%
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
2010		0.00%		4,382,022		15.460895		67,749,982		1.89%		12.83%
2010		0.10%		291,696		15.323384		4,469,770		1.89%		12.72%
2010		0.20%		67,465		15.187117		1,024,599		1.89%		12.61%
2010		0.25%		400,034		15.119471		6,048,302		1.89%		12.55%
2009		0.00%		4,600,411		13.702388		63,036,616		1.31%		24.39%
2009		0.10%		218,272		13.594088		2,967,209		1.31%		24.27%
2009		0.20%		44,938		13.486671		606,064		1.31%		24.14%
2009		0.25%		474,675		13.433301		6,376,452		1.31%		24.08%
2009		0.40%		20		13.274448		265		1.31%		23.90%
2008		0.00%		4,832,634		11.015454		53,233,658		2.49%		-31.39%
2008		0.10%		157,940		10.939329		1,727,758		2.49%		-31.46%
2008		0.20%		45,387		10.863747		493,073		2.49%		-31.53%
2008		0.25%		434,590		10.826159		4,704,940		2.49%		-31.56%
2008		0.40%		41,029		10.714194		439,593		2.49%		-31.66%
2007		0.00%		4,655,618		16.055259		74,747,153		2.31%		6.15%
2007		0.10%		168,006		15.960296		2,681,425		2.31%		6.04%
2007		0.20%		53,480		15.865910		848,509		2.31%		5.94%
2007		0.25%		236,756		15.818947		3,745,231		2.31%		5.88%
2007		0.40%		202,098		15.678888		3,168,672		2.31%		5.72%
2006		0.00%		4,071,170		15.125018		61,576,520		2.25%		14.54%
2006		0.10%		18,108		15.050687		272,538		2.25%		14.43%
2006		0.20%		38,278		14.976735		573,279		2.25%		14.31%
2006		0.25%		84,106		14.939913		1,256,536		2.25%		14.26%
2006		0.40%		268,984		14.829966		3,989,024		2.25%		14.08%

(Continued)

108

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
2010		0.00%		953,397	$	14.879939	$	14,186,489		2.16%		8.52%
2010		0.10%		81,279		14.747641		1,198,674		2.16%		8.41%
2010		0.20%		30,996		14.616529		453,054		2.16%		8.30%
2010		0.25%		172,671		14.551412		2,512,607		2.16%		8.25%
2009		0.00%		1,042,745		13.712188		14,298,315		1.77%		14.56%
2009		0.10%		67,425		13.603867		917,241		1.77%		14.45%
2009		0.20%		44,906		13.496401		606,069		1.77%		14.33%
2009		0.25%		191,581		13.443003		2,575,424		1.77%		14.28%
2009		0.40%		28		13.284003		372		1.77%		14.10%
2008		0.00%		1,167,584		11.969310		13,975,175		2.74%		-15.04%
2008		0.10%		70,328		11.886643		835,964		2.74%		-15.13%
2008		0.20%		21,399		11.804545		252,605		2.74%		-15.21%
2008		0.25%		168,630		11.763719		1,983,716		2.74%		-15.26%
2008		0.40%		9,327		11.642029		108,585		2.74%		-15.38%
2007		0.00%		1,091,298		14.088774		15,375,051		3.18%		5.86%
2007		0.10%		76,886		14.005474		1,076,825		3.18%		5.75%
2007		0.20%		21,560		13.922670		300,173		3.18%		5.65%
2007		0.25%		260,644		13.881453		3,618,117		3.18%		5.59%
2007		0.40%		1,104,372		13.758509		15,194,512		3.18%		5.43%
2006		0.00%		1,022,586		13.308971		13,609,567		2.84%		8.42%
2006		0.10%		8,862		13.243591		117,365		2.84%		8.31%
2006		0.20%		19,512		13.178536		257,140		2.84%		8.21%
2006		0.25%		105,542		13.146115		1,387,467		2.84%		8.15%
2006		0.40%		820,496		13.049356		10,706,944		2.84%		7.99%
NVIT Leaders Fund - Class I (GVUS1)
2009		0.00%		46,260		12.049802		557,424		0.84%		33.79%
2009		0.10%		40,684		11.957718		486,488		0.84%		33.65%
2008		0.00%		67,331		9.006647		606,427		0.76%		-49.91%
2008		0.10%		42,776		8.946759		382,707		0.76%		-49.96%
2008		0.25%		132		8.857680		1,169		0.76%		-50.03%
2007		0.00%		89,306		17.979434		1,605,671		1.24%		11.56%
2007		0.10%		44,572		17.877821		796,850		1.24%		11.45%
2007		0.25%		3,872		17.726502		68,637		1.24%		11.28%
2006		0.00%		85,138		16.116355		1,372,114		0.70%		16.05%
2006		0.10%		8,386		16.041401		134,523		0.70%		15.93%
2006		0.25%		2,392		15.929628		38,104		0.70%		15.76%
2006		0.40%		54		15.818643		854		0.70%		15.58%

(Continued)

109

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Mid Cap Index Fund - Class I (MCIF)
2010		0.00%		972,303	$	29.216232	$	28,407,030		1.25%		26.20%
2010		0.10%		134,857		26.461933		3,568,577		1.25%		26.07%
2010		0.20%		201,344		19.913978		4,009,560		1.25%		25.95%
2010		0.25%		1,101,218		19.813788		21,819,300		1.25%		25.89%
2009		0.00%		1,091,787		23.150606		25,275,531		0.98%		36.76%
2009		0.10%		194,480		20.989089		4,081,958		0.98%		36.62%
2009		0.20%		174,671		15.811153		2,761,750		0.98%		36.48%
2009		0.25%		1,162,757		15.739465		18,301,173		0.98%		36.41%
2009		0.40%		3,484		19.635632		68,411		0.98%		36.21%
2008		0.00%		1,183,654		16.928443		20,037,419		1.25%		-36.46%
2008		0.10%		204,375		15.363236		3,139,861		1.25%		-36.53%
2008		0.20%		243,882		11.584754		2,825,313		1.25%		-36.59%
2008		0.25%		970,816		11.537999		11,201,274		1.25%		-36.62%
2008		0.40%		234,488		14.415737		3,380,317		1.25%		-36.72%
2007		0.00%		1,320,468		26.643107		35,181,370		1.35%		7.56%
2007		0.10%		234,870		24.203943		5,684,780		1.35%		7.45%
2007		0.20%		433,092		18.269470		7,912,361		1.35%		7.34%
2007		0.25%		1,035,184		18.204864		18,845,384		1.35%		7.29%
2007		0.40%		374,168		22.779636		8,523,411		1.35%		7.13%
2006		0.00%		1,451,458		24.770554		35,953,419		1.14%		9.89%
2006		0.10%		154,944		22.525451		3,490,183		1.14%		9.78%
2006		0.20%		639,140		17.019619		10,877,919		1.14%		9.67%
2006		0.25%		993,900		16.967969		16,864,464		1.14%		9.62%
2006		0.40%		660,842		21.263963		14,052,120		1.14%		9.45%
NVIT Money Market Fund - Class I (SAM)
2010		0.00%		6,150,810		14.293225		87,914,911		0.00%		0.00%
2010		0.20%		1,348		12.031632		16,219		0.00%		-0.20%
2010		0.25%		588,365		11.970993		7,043,313		0.00%		-0.25%
2009		0.00%		7,271,586		14.293206		103,934,277		0.05%		0.04%
2009		0.20%		3,780		12.055725		45,571		0.05%		-0.16%
2009		0.25%		625,656		12.000968		7,508,478		0.05%		-0.21%
2008		0.00%		8,735,601		14.287212		124,807,383		2.03%		2.05%
2008		0.20%		4,546		12.074817		54,892		2.03%		1.85%
2008		0.25%		747,274		12.025998		8,986,716		2.03%		1.80%
2007		0.00%		8,018,358		13.999702		112,254,623		4.65%		4.79%
2007		0.20%		5,226		11.855541		61,957		4.65%		4.58%
2007		0.25%		839,752		11.813525		9,920,431		4.65%		4.53%
2006		0.00%		7,870,664		13.359424		105,147,538		4.43%		4.53%
2006		0.20%		5,784		11.336122		65,568		4.43%		4.32%
2006		0.25%		906,990		11.301640		10,250,474		4.43%		4.27%

(Continued)

110

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Money Market Fund - Class V (SAM5)
2010		0.00%		528,187	$	11.731129	$	6,196,230		0.00%		0.00%
2010		0.10%		1,869,173		11.635333		21,748,450		0.00%		-0.10%
2010		0.20%		8,254,159		11.540261		95,255,149		0.00%		-0.20%
2010		0.25%		10,842,157		11.492942		124,608,282		0.00%		-0.25%
2009		0.00%		454,540		11.731114		5,332,261		0.06%		0.06%
2009		0.10%		6,087,351		11.646971		70,899,201		0.06%		-0.04%
2009		0.20%		7,395,065		11.563359		85,511,791		0.06%		-0.14%
2009		0.25%		11,828,679		11.521736		136,286,917		0.06%		-0.19%
2009		0.40%		16,932		11.397666		192,985		0.06%		-0.34%
2008		0.00%		208,319		11.724390		2,442,413		2.10%		2.14%
2008		0.10%		6,427,722		11.651947		74,895,476		2.10%		2.04%
2008		0.20%		7,319,234		11.579888		84,755,910		2.10%		1.94%
2008		0.25%		15,618,922		11.543990		180,304,679		2.10%		1.89%
2008		0.40%		2,643,652		11.436879		30,235,128		2.10%		1.73%
2007		0.10%		5,521,946		11.419178		63,056,084		4.74%		4.76%
2007		0.20%		9,193,300		11.359928		104,435,226		4.74%		4.66%
2007		0.25%		12,378,852		11.330392		140,257,246		4.74%		4.60%
2007		0.40%		3,398,038		11.242166		38,201,307		4.74%		4.44%
2006		0.10%		6,733,802		10.900267		73,400,240		4.63%		4.51%
2006		0.20%		8,530,114		10.854633		92,591,257		4.63%		4.40%
2006		0.25%		11,262,860		10.831867		121,997,802		4.63%		4.35%
2006		0.40%		4,048,114		10.763797		43,573,077		4.63%		4.20%
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
2010		0.00%		1,926,194		9.555175		18,405,121		0.78%		14.04%
2009		0.00%		2,144,940		8.379106		17,972,680		0.81%		36.46%
2008		0.00%		1,107		6.140389		6,797		0.06%		-38.60%	5/1/2008
NVIT Multi-Manager International Value Fund - Class I (GVDIVI)
2010		0.00%		50,861		17.570720		893,664		2.15%		6.19%
2009		0.00%		65,225		16.546611		1,079,253		2.12%		29.86%
2008		0.00%		77,496		12.742294		987,477		1.73%		-46.31%
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
2010		0.00%		512,098		10.698362		5,478,610		2.30%		6.11%
2009		0.00%		556,645		10.082162		5,612,185		2.13%		29.84%
2008		0.00%		635,373		7.765128		4,933,753		1.74%		-46.33%
2007		0.00%		665,320		14.468946		9,626,479		2.15%		2.93%
2006		0.00%		575,980		14.056822		8,096,448		2.01%		22.75%
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
2010		0.00%		1,140,603		9.540808		10,882,274		0.06%		15.51%
2010		0.10%		50,494		9.515403		480,471		0.06%		15.39%
2010		0.20%		17,386		9.490013		164,993		0.06%		15.28%
2010		0.25%		118,763		9.477375		1,125,561		0.06%		15.22%
2009		0.00%		285,919		8.259762		2,361,623		0.86%		29.78%
2008		0.00%		2,417		6.364575		15,383		0.26%		-36.35%	5/1/2008
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)
2010		0.00%		694,617		9.169345		6,369,183		0.70%		13.05%
2010		0.10%		31,135		10.508835		327,193		0.70%		5.09%	4/30/2010
2010		0.20%		3,506		10.501786		36,819		0.70%		5.02%	4/30/2010
2010		0.25%		58,810		10.498264		617,403		0.70%		4.98%	4/30/2010
2009		0.00%		457,649		8.111157		3,712,063		1.39%		27.59%
2008		0.00%		37,776		6.357067		240,145		0.95%		-36.43%	5/1/2008

(Continued)

111

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
2010		0.00%		3,476,447	$	10.123676	$	35,194,423		0.00%		26.82%
2010		0.10%		7,478		10.096737		75,503		0.00%		26.69%
2010		0.25%		5,764		10.056395		57,965		0.00%		26.50%
2009		0.00%		3,889,090		7.982859		31,046,057		0.00%		27.12%
2009		0.10%		91,898		7.969566		732,387		0.00%		26.99%
2009		0.25%		2,074		7.949631		16,488		0.00%		26.80%
2008		0.00%		478		6.279727		3,002		0.00%		-37.20%	5/1/2008
NVIT Multi-Manager Mid Cap Value Fund - Class I (NVMMV1)
2010		0.25%		6,739		10.527298		70,943		1.08%		19.37%
2008		0.25%		358		6.761352		2,421		0.46%		-32.39%	5/1/2008
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
2010		0.00%		1,131,006		10.547920		11,929,761		1.33%		19.63%
2009		0.00%		1,303,777		8.817001		11,495,403		1.19%		30.47%
2008		0.00%		815		6.757903		5,508		1.51%		-32.42%	5/1/2008
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
2010		0.00%		583,188		16.329069		9,522,917		0.00%		25.45%
2010		0.10%		46,291		16.139729		747,124		0.00%		25.32%
2010		0.20%		27,210		15.952454		434,066		0.00%		25.20%
2010		0.25%		175,315		15.859701		2,780,443		0.00%		25.13%
2009		0.00%		627,172		13.016693		8,163,705		0.00%		27.46%
2009		0.10%		70,402		12.878613		906,680		0.00%		27.33%
2009		0.20%		22,417		12.741894		285,635		0.00%		27.21%
2009		0.25%		183,789		12.674135		2,329,367		0.00%		27.14%
2009		0.40%		8		12.472919		100		0.00%		26.95%
2008		0.00%		659,708		10.212287		6,737,127		0.00%		-46.42%
2008		0.10%		72,753		10.114063		735,828		0.00%		-46.47%
2008		0.20%		18,977		10.016703		190,087		0.00%		-46.53%
2008		0.25%		271,535		9.968426		2,706,777		0.00%		-46.55%
2008		0.40%		6,093		9.824891		59,863		0.00%		-46.63%
2007		0.00%		711,702		19.059414		13,564,623		0.00%		9.75%
2007		0.10%		104,246		18.895046		1,969,733		0.00%		9.64%
2007		0.20%		101,242		18.731944		1,896,459		0.00%		9.53%
2007		0.25%		271,302		18.651020		5,060,059		0.00%		9.47%
2007		0.40%		28,166		18.410147		518,540		0.00%		9.31%

(Continued)

112

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)
2010		0.00%		994,468	$	28.908970	$	28,749,046		0.59%		26.60%
2010		0.10%		61,312		30.950627		1,897,645		0.59%		26.48%
2010		0.20%		102,771		22.108296		2,272,092		0.59%		26.35%
2010		0.25%		333,494		21.997105		7,335,903		0.59%		26.29%
2009		0.00%		1,113,781		22.834198		25,432,296		0.57%		26.22%
2009		0.10%		99,716		24.471259		2,440,176		0.57%		26.09%
2009		0.20%		125,186		17.497487		2,190,440		0.57%		25.96%
2009		0.25%		362,635		17.418185		6,316,444		0.57%		25.90%
2009		0.40%		4,138		19.342658		80,040		0.57%		25.71%
2008		0.00%		1,246,918		18.091428		22,558,527		1.07%		-32.15%
2008		0.10%		107,445		19.407862		2,085,278		1.07%		-32.22%
2008		0.20%		117,819		13.890932		1,636,616		1.07%		-32.29%
2008		0.25%		482,118		13.834895		6,670,052		1.07%		-32.32%
2008		0.40%		12,830		15.386534		197,409		1.07%		-32.42%
2007		0.00%		1,454,620		26.664377		38,786,536		1.13%		-6.89%
2007		0.10%		262,148		28.633322		7,506,168		1.13%		-6.99%
2007		0.20%		289,534		20.514502		5,939,646		1.13%		-7.08%
2007		0.25%		575,424		20.441984		11,762,808		1.13%		-7.13%
2007		0.40%		25,628		22.768858		583,520		1.13%		-7.27%
2006		0.00%		1,678,046		28.638579		48,056,853		0.43%		17.29%
2006		0.10%		237,134		30.784276		7,299,999		0.43%		17.18%
2006		0.20%		348,296		22.077762		7,689,596		0.43%		17.06%
2006		0.25%		667,586		22.010798		14,694,101		0.43%		17.00%
2006		0.40%		104,786		24.553275		2,572,839		0.43%		16.83%
NVIT Multi-Manager Small Company Fund - Class I (SCF)
2010		0.00%		1,145,604		27.500722		31,504,937		0.27%		25.32%
2010		0.10%		82,358		27.703734		2,281,624		0.27%		25.19%
2010		0.20%		354,127		18.565556		6,574,565		0.27%		25.07%
2010		0.25%		1,292,376		18.472172		23,872,992		0.27%		25.01%
2009		0.00%		1,279,276		21.944622		28,073,228		0.27%		34.70%
2009		0.10%		181,456		22.128719		4,015,389		0.27%		34.57%
2009		0.20%		858,139		14.844285		12,738,460		0.27%		34.43%
2009		0.25%		1,510,254		14.777001		22,317,025		0.27%		34.37%
2009		0.40%		6,288		18.829123		118,398		0.27%		34.16%
2008		0.00%		1,461,719		16.291230		23,813,200		0.83%		-38.19%
2008		0.10%		200,454		16.444339		3,296,334		0.83%		-38.25%
2008		0.20%		968,556		11.042145		10,694,936		0.83%		-38.31%
2008		0.25%		1,443,694		10.997602		15,877,172		0.83%		-38.34%
2008		0.40%		138,143		14.034369		1,938,750		0.83%		-38.44%
2007		0.00%		1,568,836		26.356127		41,348,441		0.09%		2.13%
2007		0.10%		214,492		26.630532		5,712,036		0.09%		2.03%
2007		0.20%		773,666		17.899968		13,848,597		0.09%		1.93%
2007		0.25%		1,805,786		17.836712		32,209,285		0.09%		1.88%
2007		0.40%		227,380		22.796223		5,183,405		0.09%		1.72%
2006		0.00%		1,691,018		25.805828		43,638,120		0.10%		12.04%
2006		0.10%		109,004		26.100738		2,845,085		0.10%		11.93%
2006		0.20%		730,292		17.561515		12,825,034		0.10%		11.82%
2006		0.25%		1,848,548		17.508253		32,364,846		0.10%		11.76%
2006		0.40%		428,830		22.410227		9,610,178		0.10%		11.59%

(Continued)

113

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Sector Bond Fund - Class I (MSBF)
2010		0.00%		628,182	$	18.726591	$	11,763,707		6.64%		10.59%
2010		0.10%		65,852		18.075827		1,190,329		6.64%		10.48%
2010		0.20%		18,613		17.239635		320,881		6.64%		10.37%
2010		0.25%		358,111		17.152974		6,142,669		6.64%		10.31%
2009		0.00%		620,658		16.933793		10,510,094		9.43%		24.38%
2009		0.10%		65,180		16.361665		1,066,453		9.43%		24.25%
2009		0.20%		18,311		15.620376		286,025		9.43%		24.13%
2009		0.25%		89,391		15.549631		1,389,997		9.43%		24.07%
2008		0.00%		603,494		13.614701		8,216,390		6.15%		-17.29%
2008		0.10%		55,384		13.167860		729,289		6.15%		-17.37%
2008		0.20%		27,508		12.583839		346,156		6.15%		-17.46%
2008		0.25%		141,197		12.533105		1,769,637		6.15%		-17.50%
2008		0.40%		2,396		12.738274		30,521		6.15%		-17.62%
2007		0.00%		697,366		16.461000		11,479,342		4.18%		4.62%
2007		0.10%		81,530		15.936672		1,299,317		4.18%		4.52%
2007		0.20%		70,520		15.245098		1,075,084		4.18%		4.41%
2007		0.25%		657,186		15.191219		9,983,456		4.18%		4.36%
2007		0.40%		44,644		15.463091		690,334		4.18%		4.20%
2006		0.00%		657,636		15.733416		10,346,861		4.07%		4.84%
2006		0.10%		18,772		15.247568		286,227		4.07%		4.73%
2006		0.20%		57,084		14.600569		833,459		4.07%		4.63%
2006		0.25%		450,402		14.556279		6,556,177		4.07%		4.58%
2006		0.40%		34,566		14.839152		512,930		4.07%		4.42%
NVIT Short Term Bond Fund - Class I (NVSTB1)
2010		0.00%		1,405		11.001081		15,457		1.63%		2.68%
2010		0.20%		7,406		10.942569		81,041		1.63%		2.48%
2010		0.25%		499,595		10.927993		5,459,571		1.63%		2.43%
2009		0.25%		52,762		10.669125		562,924		2.15%		7.12%
NVIT Short Term Bond Fund - Class II (NVSTB2)
2010		0.00%		365,359		10.907906		3,985,302		1.37%		2.42%
2009		0.00%		270,272		10.650192		2,878,449		2.32%		7.11%
2008		0.00%		96,918		9.943310		963,686		3.46%		-0.57%	5/1/2008
NVIT Technology & Communications Fund - Class I (GGTC)
2009		0.00%		235,876		3.325931		784,507		0.00%		52.47%
2009		0.10%		226,699		3.295310		747,043		0.00%		52.31%
2009		0.20%		371,260		3.264934		1,212,139		0.00%		52.16%
2009		0.25%		481,326		3.249860		1,564,242		0.00%		52.09%
2008		0.00%		286,434		2.181418		624,832		0.00%		-48.57%
2008		0.10%		259,568		2.163493		561,574		0.00%		-48.62%
2008		0.20%		338,127		2.145696		725,518		0.00%		-48.67%
2008		0.25%		424,273		2.136859		906,612		0.00%		-48.70%
2008		0.40%		3,131		2.110566		6,608		0.00%		-48.78%
2007		0.00%		400,856		4.241547		1,700,250		0.00%		20.09%
2007		0.10%		257,506		4.210915		1,084,336		0.00%		19.97%
2007		0.20%		380,790		4.180465		1,591,879		0.00%		19.85%
2007		0.25%		519,226		4.165338		2,162,752		0.00%		19.79%
2007		0.40%		80,076		4.120279		329,935		0.00%		19.61%
2006		0.00%		515,480		3.531877		1,820,612		0.00%		11.17%
2006		0.10%		101,564		3.509892		356,479		0.00%		11.06%
2006		0.20%		311,356		3.488016		1,086,015		0.00%		10.95%
2006		0.25%		446,826		3.477132		1,553,673		0.00%		10.89%
2006		0.40%		238,650		3.444715		822,081		0.00%		10.73%
NVIT Technology & Communications Fund - Class III (GGTC3)
2009		0.00%		200,315		12.888766		2,581,813		0.00%		52.44%
2008		0.00%		177,753		8.454726		1,502,853		0.00%		-48.59%
2007		0.00%		249,550		16.444438		4,103,710		0.00%		20.19%
2006		0.00%		136,014		13.682536		1,861,016		0.00%		11.08%

(Continued)

114

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT U.S. Growth Leaders Fund - Class I (GVUG1)
2009		0.00%		134,485	$	14.212216	$	1,911,330		0.00%		25.84%
2009		0.10%		56,812		14.103668		801,258		0.00%		25.71%
2008		0.00%		204,284		11.293974		2,307,178		0.00%		-41.29%
2008		0.10%		75,068		11.218926		842,182		0.00%		-41.35%
2008		0.25%		68,398		11.107192		759,710		0.00%		-41.44%
2007		0.00%		231,876		19.237188		4,460,642		0.00%		22.49%
2007		0.10%		147,470		19.128541		2,820,886		0.00%		22.36%
2007		0.25%		71,458		18.966559		1,355,312		0.00%		22.18%
2006		0.00%		250,268		15.705651		3,930,622		0.27%		-0.29%
2006		0.10%		74,050		15.632647		1,157,598		0.27%		-0.39%
2006		0.25%		93,502		15.523663		1,451,494		0.27%		-0.54%
2006		0.40%		118		15.415524		1,819		0.27%		-0.69%
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
2010		0.00%		8,648,974		14.209081		122,893,972		0.06%		8.80%
2009		0.00%		32,412		13.059893		423,297		0.24%		30.60%	5/1/2009
Templeton NVIT International Value Fund - Class III (NVTIV3)
2010		0.00%		11,957		13.861453		165,741		2.33%		6.35%
2009		0.00%		8,463		13.034354		110,310		0.64%		30.34%	5/1/2009
Van Kampen NVIT Comstock Value Fund - Class I (EIF)
2010		0.00%		667,292		13.719138		9,154,671		1.53%		15.77%
2010		0.10%		61,360		11.452871		702,748		1.53%		15.66%
2010		0.25%		157		11.232402		1,763		1.53%		15.48%
2009		0.00%		702,809		11.850163		8,328,401		1.12%		28.55%
2009		0.10%		56,839		9.902521		562,849		1.12%		28.42%
2009		0.25%		161		9.726461		1,566		1.12%		28.23%
2008		0.00%		790,298		9.218422		7,285,300		2.00%		-36.99%
2008		0.10%		66,339		7.711029		511,542		2.00%		-37.05%
2008		0.25%		30,065		7.585299		228,052		2.00%		-37.15%
2007		0.00%		883,520		14.630092		12,925,979		1.74%		-2.22%
2007		0.10%		50,950		12.250079		624,142		1.74%		-2.31%
2007		0.25%		48,922		12.068473		590,414		1.74%		-2.46%
2006		0.00%		875,334		14.961750		13,096,528		1.73%		15.91%
2006		0.10%		5,264		12.540372		66,013		1.73%		15.79%
2006		0.25%		36,988		12.373114		457,657		1.73%		15.62%
2006		0.40%		2		13.317925		27		1.73%		15.44%
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
2010		0.00%		2,741,940		9.617905		26,371,718		1.94%		30.18%
2010		0.20%		99		19.234046		1,904		1.94%		29.92%
2010		0.25%		99,872		19.218051		1,919,345		1.94%		29.86%
2009		0.00%		3,102,055		7.388147		22,918,438		2.16%		30.84%
2009		0.25%		7,340		14.799525		108,629		2.16%		48.00%	5/1/2009
2008		0.00%		19,987		5.646840		112,863		4.37%		-43.53%	5/1/2008
Advisers Management Trust -Short Duration Bond Portfolio - I Class Shares  (AMTB)
2010		0.00%		348,678		11.644307		4,060,114		5.25%		5.28%
2009		0.00%		395,794		11.059816		4,377,409		7.00%		13.33%
2008		0.00%		417,277		9.759262		4,072,316		3.91%		-13.43%
2007		0.00%		757,962		11.273070		8,544,559		2.69%		4.77%
2006		0.00%		903,048		10.759706		9,716,531		3.07%		4.20%
Long-Term U.S. Government Portfolio - Administrative Class (PMVLGA)
2010		0.00%		707		10.601417		7,495		0.84%		6.01%	4/30/2010
2010		0.25%		2,990		10.583624		31,645		0.84%		5.84%	4/30/2010

(Continued)

115

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
V.I. Basic Value Fund - Series I (AVBVI)
2010		0.10%		24,967	$	13.506772	$	337,224		0.57%		7.24%
2010		0.20%		5,367		13.394748		71,890		0.57%		7.14%
2010		0.25%		18,585		13.339087		247,907		0.57%		7.08%
2009		0.10%		19,823		12.594459		249,660		0.41%		47.85%
2009		0.25%		40,678		12.456759		506,716		0.41%		47.63%
2008		0.00%		322,494		8.572219		2,764,489		0.87%		-51.77%
2008		0.10%		14,438		8.518126		122,985		0.87%		-51.82%
2008		0.25%		65,576		8.437654		553,308		0.87%		-51.89%
2008		0.40%		11,858		8.357923		99,108		0.87%		-51.96%
2007		0.00%		315,430		17.772480		5,605,973		0.59%		1.54%
2007		0.10%		14,780		17.678080		261,282		0.59%		1.44%
2007		0.20%		34,052		17.584241		598,779		0.59%		1.34%
2007		0.25%		74,740		17.537474		1,310,751		0.59%		1.29%
2007		0.40%		16,380		17.397964		284,979		0.59%		1.14%
2006		0.00%		334,122		17.502242		5,847,884		0.42%		13.20%
2006		0.10%		1,258		17.426798		21,923		0.42%		13.09%
2006		0.20%		55,730		17.351728		967,012		0.42%		12.98%
2006		0.25%		70,154		17.314284		1,214,666		0.42%		12.92%
2006		0.40%		30,412		17.202471		523,162		0.42%		12.75%
V.I. Capital Appreciation Fund - Series I (AVCA)
2010		0.00%		69,399		13.771185		955,706		0.73%		15.49%
2009		0.00%		77,637		11.924271		925,765		0.59%		21.08%
2008		0.00%		73,269		9.848393		721,582		0.00%		-42.49%
2007		0.00%		101,352		17.125365		1,735,690		0.00%		12.01%
2006		0.00%		102,104		15.288632		1,561,030		0.06%		6.30%
V.I. Capital Development Fund - Series I (AVCDI)
2010		0.00%		137,618		19.473180		2,679,860		0.00%		18.78%
2010		0.10%		17,428		19.311717		336,565		0.00%		18.66%
2010		0.20%		74,958		19.151595		1,435,565		0.00%		18.54%
2010		0.25%		259,349		19.072022		4,946,310		0.00%		18.48%
2009		0.00%		164,731		16.394648		2,700,707		0.00%		42.37%
2009		0.10%		15,032		16.274948		244,645		0.00%		42.23%
2009		0.20%		59,711		16.156149		964,700		0.00%		42.09%
2009		0.25%		303,416		16.097055		4,884,104		0.00%		42.02%
2009		0.40%		535		15.921111		8,518		0.00%		41.80%
2008		0.00%		186,381		11.515462		2,146,263		0.00%		-47.03%
2008		0.10%		18,486		11.442826		211,532		0.00%		-47.08%
2008		0.20%		60,947		11.370648		693,007		0.00%		-47.13%
2008		0.25%		249,314		11.334726		2,825,906		0.00%		-47.16%
2008		0.40%		60,293		11.227657		676,949		0.00%		-47.24%
2007		0.00%		192,610		21.737696		4,186,898		0.00%		10.84%
2007		0.10%		113,300		21.622263		2,449,802		0.00%		10.73%
2007		0.20%		105,866		21.507445		2,276,907		0.00%		10.62%
2007		0.25%		191,752		21.450254		4,113,129		0.00%		10.57%
2007		0.40%		129,860		21.279639		2,763,374		0.00%		10.40%
2006		0.00%		180,668		19.610981		3,543,077		0.00%		16.52%
2006		0.10%		100,288		19.526450		1,958,269		0.00%		16.40%
2006		0.20%		73,000		19.442307		1,419,288		0.00%		16.29%
2006		0.25%		158,748		19.400361		3,079,769		0.00%		16.23%
2006		0.40%		137,464		19.275099		2,649,632		0.00%		16.06%
V.I. High Yield Fund - Series I (AVHY1)
2010		0.00%		885		10.624548		9,403		8.17%		6.25%	5/3/2010
2010		0.25%		63,440		10.606962		672,906		8.17%		6.07%	5/3/2010

(Continued)

116

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
V.I. International Growth Fund - Series I (AVIE)
2010		0.00%		39,185	$	18.848465	$	738,577		2.26%		12.86%
2010		0.10%		95,102		18.723325		1,780,626		2.26%		12.75%
2010		0.20%		606,955		18.599074		11,288,801		2.26%		12.64%
2010		0.25%		1,385,053		18.537223		25,675,036		2.26%		12.58%
2009		0.00%		34,545		16.700382		576,915		1.69%		35.24%
2009		0.10%		219,927		16.606084		3,652,126		1.69%		35.11%
2009		0.20%		229,555		16.512357		3,790,494		1.69%		34.97%
2009		0.25%		1,521,302		16.465672		25,049,260		1.69%		34.90%
2009		0.40%		2,280		16.326447		37,224		1.69%		34.70%
2008		0.00%		5,516		12.348500		68,114		0.54%		-40.38%
2008		0.10%		207,823		12.291069		2,554,367		0.54%		-40.44%
2008		0.20%		118,867		12.233919		1,454,209		0.54%		-40.50%
2008		0.25%		1,309,467		12.205427		15,982,604		0.54%		-40.53%
2008		0.40%		203,177		12.120383		2,462,583		0.54%		-40.62%
2007		0.10%		183,632		20.636261		3,789,478		0.53%		14.60%
2007		0.20%		187,080		20.560904		3,846,534		0.53%		14.49%
2007		0.25%		903,590		20.523294		18,544,643		0.53%		14.43%
2007		0.40%		475,710		20.410961		9,709,698		0.53%		14.26%
2006		0.20%		189,366		17.958795		3,400,785		0.97%		27.98%
2006		0.25%		447,740		17.934952		8,030,195		0.97%		27.91%
2006		0.40%		461,146		17.863705		8,237,776		0.97%		27.72%
V.I. Mid Cap Core Equity Fund - Series I (AVMCCI)
2010		0.00%		547		14.438615		7,898		1.28%		14.11%
2010		0.20%		222		14.277548		3,170		1.28%		13.88%
2010		0.25%		6,608		14.265646		94,267		1.28%		13.83%
VPS Growth and Income Portfolio - Class A (ALVGIA)
2010		0.00%		200,244		15.534777		3,110,746		0.00%		13.09%
2010		0.10%		70,827		15.405969		1,091,159		0.00%		12.98%
2010		0.20%		8,723		15.278240		133,272		0.00%		12.87%
2010		0.25%		451,505		15.214771		6,869,545		0.00%		12.81%
2009		0.00%		220,764		13.736397		3,032,502		4.18%		20.82%
2009		0.10%		62,989		13.636111		858,925		4.18%		20.70%
2009		0.25%		501,456		13.487083		6,763,179		4.18%		20.52%
2009		0.40%		3,565		13.339666		47,556		4.18%		20.34%
2008		0.00%		227,556		11.368917		2,587,065		2.03%		-40.60%
2008		0.10%		84,717		11.297207		957,065		2.03%		-40.66%
2008		0.25%		548,481		11.190516		6,137,785		2.03%		-40.75%
2008		0.40%		31,102		11.084829		344,760		2.03%		-40.84%
2007		0.00%		232,948		19.140759		4,458,802		1.44%		5.12%
2007		0.10%		63,136		19.039121		1,202,054		1.44%		5.01%
2007		0.20%		47,418		18.938067		898,005		1.44%		4.91%
2007		0.25%		720,052		18.887703		13,600,128		1.44%		4.85%
2007		0.40%		63,592		18.737498		1,191,555		1.44%		4.70%
2006		0.00%		241,896		18.208779		4,404,631		1.37%		17.29%
2006		0.10%		3,554		18.130310		64,435		1.37%		17.17%
2006		0.20%		44,760		18.052215		808,017		1.37%		17.05%
2006		0.25%		422,112		18.013258		7,603,612		1.37%		16.99%
2006		0.40%		395,572		17.896979		7,079,544		1.37%		16.82%

(Continued)

117

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VPS International Value Portfolio - Class A (ALVIVA)
2010		0.00%		200,883	$	7.916459	$	1,590,282		2.85%		4.59%
2010		0.20%		257,323		7.842837		2,018,142		2.85%		4.38%
2010		0.25%		1,687,168		7.824523		13,201,285		2.85%		4.33%
2009		0.00%		154,940		7.568873		1,172,721		1.32%		34.68%
2009		0.20%		1,046,990		7.513480		7,866,538		1.32%		34.41%
2009		0.25%		3,001,526		7.499685		22,510,500		1.32%		34.34%
2008		0.00%		84,052		5.619859		472,360		1.09%		-53.18%
2008		0.20%		981,200		5.589904		5,484,814		1.09%		-53.28%
2008		0.25%		2,650,624		5.582435		14,796,936		1.09%		-53.30%
2008		0.40%		967,247		5.560105		5,377,995		1.09%		-53.37%
2007		0.20%		656,858		11.964050		7,858,682		1.13%		5.63%
2007		0.25%		1,304,024		11.954073		15,588,398		1.13%		5.57%
2007		0.40%		764,464		11.924192		9,115,616		1.13%		5.42%
2006		0.20%		287,868		11.326575		3,260,558		0.57%		13.27%	5/1/2006
2006		0.25%		343,264		11.322832		3,886,721		0.57%		13.23%	5/1/2006
2006		0.40%		453,968		11.311574		5,135,093		0.57%		13.12%	5/1/2006
VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)
2010		0.00%		276,981		23.918151		6,624,873		0.45%		26.91%
2010		0.20%		11,224		23.554154		264,372		0.45%		26.65%
2010		0.25%		194,464		23.464072		4,562,917		0.45%		26.59%
2009		0.00%		253,341		18.846934		4,774,701		1.10%		42.86%
2009		0.25%		158,842		18.535349		2,944,192		1.10%		42.50%
2008		0.00%		231,734		13.192861		3,057,234		0.72%		-35.58%
2008		0.25%		95,945		13.007237		1,247,979		0.72%		-35.74%
2008		0.40%		489		12.897108		6,307		0.72%		-35.83%
2007		0.00%		214,120		20.478040		4,384,758		0.89%		1.70%
2007		0.25%		62,706		20.240586		1,269,206		0.89%		1.45%
2006		0.00%		168,136		20.134859		3,385,395		0.45%		14.42%
VP Income & Growth Fund - Class I (ACVIG)
2010		0.00%		850,874		15.604299		13,277,292		1.54%		14.15%
2010		0.10%		88,094		11.873399		1,045,975		1.54%		14.03%
2010		0.20%		139,375		11.573339		1,613,034		1.54%		13.92%
2010		0.25%		93,837		11.515093		1,080,542		1.54%		13.86%
2009		0.00%		943,045		13.670467		12,891,866		4.69%		18.10%
2009		0.10%		88,247		10.412325		918,856		4.69%		17.98%
2009		0.20%		87,958		10.159333		893,595		4.69%		17.86%
2009		0.25%		96,315		10.113262		974,059		4.69%		17.80%
2008		0.00%		1,027,223		11.575621		11,890,744		2.04%		-34.59%
2008		0.10%		110,562		8.825580		975,774		2.04%		-34.65%
2008		0.20%		111,787		8.619752		963,576		2.04%		-34.72%
2008		0.25%		128,424		8.584965		1,102,516		2.04%		-34.75%
2007		0.00%		1,143,260		17.695903		20,231,018		1.91%		-0.07%
2007		0.10%		113,024		13.505398		1,526,434		1.91%		-0.17%
2007		0.20%		101,346		13.203656		1,338,138		1.91%		-0.27%
2007		0.25%		200,072		13.156950		2,632,337		1.91%		-0.32%
2006		0.00%		1,305,236		17.707797		23,112,854		1.85%		17.09%
2006		0.10%		23,772		13.528072		321,589		1.85%		16.97%
2006		0.20%		163,996		13.239121		2,171,163		1.85%		16.85%
2006		0.25%		284,862		13.198939		3,759,876		1.85%		16.80%
2006		0.40%		280		14.724248		4,123		1.85%		16.62%
VP Inflation Protection Fund - Class II (ACVIP2)
2010		0.00%		2,220,925		14.070730		31,250,036		1.67%		5.12%
2009		0.00%		2,112,440		13.385524		28,276,116		1.87%		10.21%
2008		0.00%		1,471,121		12.144940		17,866,676		4.70%		-1.59%
2007		0.00%		555,690		12.340997		6,857,769		4.55%		9.49%
2006		0.00%		555,240		11.270913		6,258,062		3.48%		1.59%

(Continued)

118

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VP International Fund - Class I (ACVI)
2010		0.00%		478	$	18.277925	$	8,737		2.46%		13.29%
2010		0.10%		83,179		14.840952		1,234,456		2.46%		13.18%
2010		0.20%		82,185		11.623003		955,237		2.46%		13.07%
2010		0.25%		657,819		11.564596		7,607,411		2.46%		13.01%
2009		0.00%		478		16.133486		7,712		2.11%		33.76%
2009		0.10%		162,692		13.112836		2,133,354		2.11%		33.63%
2009		0.20%		529,597		10.279855		5,444,180		2.11%		33.50%
2009		0.25%		885,670		10.233305		9,063,331		2.11%		33.43%
2008		0.00%		712,789		12.061113		8,597,029		0.81%		-44.82%
2008		0.10%		585,318		9.812726		5,743,565		0.81%		-44.88%
2008		0.20%		669,811		7.700423		5,157,828		0.81%		-44.93%
2008		0.25%		595,526		7.669381		4,567,316		0.81%		-44.96%
2007		0.00%		846,898		21.858923		18,512,278		0.70%		18.06%
2007		0.10%		655,660		17.801907		11,671,998		0.70%		17.94%
2007		0.20%		563,546		13.983846		7,880,540		0.70%		17.82%
2007		0.25%		760,806		13.934456		10,601,418		0.70%		17.76%
2007		0.40%		3,154		17.343787		54,702		0.70%		17.58%
2006		0.00%		1,069,366		18.515660		19,800,017		1.58%		25.03%
2006		0.10%		620,316		15.094317		9,363,246		1.58%		24.90%
2006		0.20%		530,226		11.868885		6,293,191		1.58%		24.78%
2006		0.25%		987,980		11.832909		11,690,677		1.58%		24.71%
2006		0.40%		146,198		14.750278		2,156,461		1.58%		24.53%
VP International Fund - Class III (ACVI3)
2008		0.00%		684,882		9.507294		6,511,375		0.80%		-44.82%
2007		0.00%		702,238		17.230511		12,099,920		0.60%		18.06%
2006		0.00%		548,782		14.595156		8,009,559		1.38%		25.03%
VP Mid Cap Value Fund - Class I (ACVMV1)
2010		0.00%		207,868		15.599747		3,242,688		2.38%		19.25%
2010		0.20%		267		15.424007		4,118		2.38%		19.02%
2010		0.25%		75,893		15.380339		1,167,260		2.38%		18.96%
2009		0.00%		194,218		13.081223		2,540,609		3.88%		29.94%
2009		0.25%		19,707		12.929491		254,801		3.88%		29.62%
2008		0.00%		162,562		10.066767		1,636,474		0.10%		-24.35%
2008		0.25%		14,371		9.974909		143,349		0.10%		-24.54%
2008		0.40%		655		9.920204		6,498		0.10%		-24.65%
2007		0.00%		172,152		13.306496		2,290,740		0.74%		-2.31%
2007		0.25%		48		13.218157		634		0.74%		-2.55%
2006		0.00%		88,992		13.620466		1,212,113		0.96%		20.30%

(Continued)

119

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VP Ultra(R) Fund - Class I (ACVU1)
2010		0.10%		65,269	$	12.034525	$	785,481		0.53%		15.97%
2010		0.20%		720		11.930621		8,590		0.53%		15.85%
2010		0.25%		20,009		11.879037		237,688		0.53%		15.79%
2009		0.10%		62,621		10.377444		649,846		0.42%		34.34%
2009		0.25%		16,812		10.258719		172,470		0.42%		34.14%
2008		0.00%		241,214		7.776182		1,875,724		0.00%		-41.48%
2008		0.10%		55,133		7.724476		425,874		0.00%		-41.54%
2008		0.25%		26,763		7.647567		204,672		0.00%		-41.63%
2008		0.40%		155		7.571430		1,174		0.00%		-41.71%
2007		0.00%		263,464		13.288079		3,500,930		0.00%		21.02%
2007		0.10%		72,634		13.212973		959,711		0.00%		20.89%
2007		0.20%		61,870		13.138291		812,866		0.00%		20.77%
2007		0.25%		27,300		13.101110		357,660		0.00%		20.71%
2007		0.40%		9,950		12.990210		129,253		0.00%		20.53%
2006		0.00%		257,010		10.980437		2,822,082		0.00%		-3.28%
2006		0.10%		28,308		10.929351		309,388		0.00%		-3.37%
2006		0.20%		38,106		10.878509		414,536		0.00%		-3.47%
2006		0.25%		24,306		10.853176		263,797		0.00%		-3.52%
2006		0.40%		15,632		10.777532		168,474		0.00%		-3.66%
VP Value Fund - Class I (ACVV)
2010		0.00%		36,231		21.002542		760,943		1.87%		13.42%
2010		0.10%		128,712		20.561475		2,646,509		1.87%		13.31%
2010		0.20%		123,078		17.721598		2,181,139		1.87%		13.20%
2010		0.25%		720,784		17.632449		12,709,187		1.87%		13.14%
2009		0.00%		1,823,545		18.517102		33,766,769		4.43%		19.86%
2009		0.10%		181,074		18.146348		3,285,832		4.43%		19.74%
2009		0.20%		109,685		15.655677		1,717,193		4.43%		19.62%
2009		0.25%		900,703		15.584697		14,037,183		4.43%		19.56%
2009		0.40%		1,441		15.848647		22,838		4.43%		19.39%
2008		0.00%		1,960,285		15.448478		30,283,420		2.41%		-26.78%
2008		0.10%		148,861		15.154320		2,255,887		2.41%		-26.85%
2008		0.20%		126,637		13.087397		1,657,349		2.41%		-26.92%
2008		0.25%		740,756		13.034585		9,655,447		2.41%		-26.96%
2008		0.40%		89,037		13.275233		1,181,987		2.41%		-27.07%
2007		0.00%		2,211,696		21.097489		46,661,232		1.58%		-5.14%
2007		0.10%		146,596		20.716530		3,036,960		1.58%		-5.23%
2007		0.20%		200,240		17.908888		3,586,076		1.58%		-5.33%
2007		0.25%		644,276		17.845573		11,497,474		1.58%		-5.38%
2007		0.40%		199,154		18.202380		3,625,077		1.58%		-5.52%
2006		0.00%		2,442,604		22.240206		54,324,016		1.41%		18.65%
2006		0.10%		62,962		21.860590		1,376,386		1.41%		18.53%
2006		0.20%		228,952		18.916906		4,331,063		1.41%		18.42%
2006		0.25%		552,364		18.859509		10,417,314		1.41%		18.36%
2006		0.40%		250,854		19.265641		4,832,863		1.41%		18.18%

(Continued)

120

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VP Vista(SM) Fund - Class I (ACVVS1)
2010		0.00%		4,745	$	13.614679	$	64,602		0.00%		23.88%
2010		0.10%		58,821		13.537768		796,305		0.00%		23.76%
2010		0.20%		8,529		13.461279		114,811		0.00%		23.63%
2010		0.25%		65,819		13.423172		883,500		0.00%		23.57%
2009		0.00%		10,424		10.990064		114,560		0.00%		22.47%
2009		0.10%		55,152		10.938887		603,301		0.00%		22.35%
2009		0.25%		112,703		10.862560		1,224,243		0.00%		22.16%
2008		0.00%		193,947		8.973691		1,740,420		0.00%		-48.62%
2008		0.10%		71,127		8.940846		635,936		0.00%		-48.67%
2008		0.25%		86,096		8.891784		765,547		0.00%		-48.75%
2008		0.40%		10,525		8.843015		93,073		0.00%		-48.83%
2007		0.00%		227,012		17.466180		3,965,032		0.00%		39.77%
2007		0.10%		29,042		17.419741		505,904		0.00%		39.63%
2007		0.25%		48,218		17.350253		836,594		0.00%		39.42%
2007		0.40%		9,298		17.281076		160,679		0.00%		39.21%
2006		0.00%		13,662		12.496264		170,724		0.00%		9.01%
2006		0.25%		4,932		12.444525		61,376		0.00%		8.74%
2006		0.40%		9,374		12.413582		116,365		0.00%		8.57%
MidCap Stock Portfolio - Initial Shares (DVMCS)
2010		0.10%		47,760		18.283588		873,224		0.78%		26.97%
2010		0.25%		44,864		18.056676		810,095		0.78%		26.78%
2009		0.10%		32,827		14.400019		472,709		1.40%		35.37%
2009		0.25%		28,797		14.242624		410,145		1.40%		35.17%
2008		0.10%		33,401		10.637241		355,294		0.85%		-40.48%
2008		0.25%		19,324		10.536775		203,613		0.85%		-40.57%
2008		0.40%		1,110		10.437244		11,585		0.85%		-40.66%
2007		0.10%		27,786		17.871247		496,570		0.45%		1.40%
2007		0.20%		14,222		17.776343		252,815		0.45%		1.29%
2007		0.25%		30,302		17.729117		537,228		0.45%		1.24%
2007		0.40%		2,880		17.588091		50,654		0.45%		1.09%
2006		0.10%		2,040		17.625316		35,956		0.37%		7.64%
2006		0.20%		15,656		17.549344		274,753		0.37%		7.53%
2006		0.25%		38,318		17.511529		671,007		0.37%		7.48%
2006		0.40%		6,714		17.398454		116,813		0.37%		7.32%

(Continued)

121

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
2010		0.00%		595,639	$	17.074091	$	10,169,994		0.58%		25.83%
2010		0.10%		136,498		16.926721		2,310,464		0.58%		25.70%
2010		0.20%		484,419		16.780615		8,128,849		0.58%		25.58%
2010		0.25%		890,399		16.708035		14,876,818		0.58%		25.51%
2009		0.00%		622,763		13.569574		8,450,629		2.54%		25.03%
2009		0.10%		232,174		13.465899		3,126,432		2.54%		24.90%
2009		0.20%		230,031		13.363002		3,073,905		2.54%		24.78%
2009		0.25%		1,021,175		13.311853		13,593,731		2.54%		24.71%
2009		0.40%		902		13.159552		11,870		2.54%		24.53%
2008		0.00%		615,900		10.853308		6,684,552		0.81%		-30.91%
2008		0.10%		244,811		10.781160		2,639,347		0.81%		-30.98%
2008		0.20%		202,504		10.709488		2,168,714		0.81%		-31.05%
2008		0.25%		657,368		10.673834		7,016,637		0.81%		-31.09%
2008		0.40%		157,072		10.567565		1,659,869		0.81%		-31.19%
2007		0.00%		618,466		15.709599		9,715,853		0.38%		-0.65%
2007		0.10%		227,178		15.620822		3,548,707		0.38%		-0.75%
2007		0.20%		151,814		15.532546		2,358,058		0.38%		-0.85%
2007		0.25%		418,268		15.488598		6,478,385		0.38%		-0.90%
2007		0.40%		207,618		15.357469		3,188,487		0.38%		-1.05%
2006		0.00%		707,480		15.813075		11,187,434		0.38%		14.41%
2006		0.10%		28,070		15.739536		441,809		0.38%		14.30%
2006		0.20%		155,436		15.666332		2,435,112		0.38%		14.18%
2006		0.25%		247,338		15.629868		3,865,860		0.38%		14.13%
2006		0.40%		418,714		15.520951		6,498,839		0.38%		13.96%
Stock Index Fund, Inc. - Initial Shares (DSIF)
2010		0.00%		6,808,183		15.765432		107,333,946		1.82%		14.84%
2010		0.10%		594,473		11.524660		6,851,099		1.82%		14.72%
2010		0.20%		2,162,487		11.068506		23,935,500		1.82%		14.61%
2010		0.25%		12,044,265		11.012818		132,641,298		1.82%		14.55%
2009		0.00%		7,609,790		13.728464		104,470,728		2.09%		26.33%
2009		0.10%		697,601		10.045645		7,007,852		2.09%		26.21%
2009		0.20%		3,048,450		9.657668		29,440,918		2.09%		26.08%
2009		0.25%		12,874,664		9.613888		123,775,578		2.09%		26.02%
2009		0.40%		14,133		11.302075		159,732		2.09%		25.83%
2008		0.00%		8,607,774		10.866779		93,538,778		2.11%		-37.14%
2008		0.10%		798,401		7.959597		6,354,950		2.11%		-37.20%
2008		0.20%		3,600,239		7.659842		27,577,262		2.11%		-37.27%
2008		0.25%		12,257,626		7.628923		93,512,485		2.11%		-37.30%
2008		0.40%		2,216,931		8.982024		19,912,527		2.11%		-37.39%
2007		0.00%		9,395,826		17.287487		162,430,220		1.72%		5.26%
2007		0.10%		715,466		12.675284		9,068,735		1.72%		5.15%
2007		0.20%		3,344,206		12.210172		40,833,330		1.72%		5.04%
2007		0.25%		10,532,952		12.166992		128,154,343		1.72%		4.99%
2007		0.40%		3,158,044		14.346541		45,307,008		1.72%		4.83%
2006		0.00%		10,489,244		16.424348		172,278,994		1.64%		15.50%
2006		0.10%		363,900		12.054530		4,386,643		1.64%		15.38%
2006		0.20%		3,580,384		11.623891		41,617,993		1.64%		15.27%
2006		0.25%		8,834,012		11.588607		102,373,893		1.64%		15.21%
2006		0.40%		4,780,522		13.685152		65,422,170		1.64%		15.04%

(Continued)

122

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares  (DSRG)
2010		0.00%		715,374	$	13.539393	$	9,685,730		0.89%		14.82%
2010		0.10%		34,941		9.755504		340,867		0.89%		14.70%
2010		0.25%		38,070		8.828556		336,103		0.89%		14.53%
2009		0.00%		819,703		11.792335		9,666,212		0.98%		33.76%
2009		0.10%		81,262		8.505196		691,149		0.98%		33.62%
2009		0.25%		37,056		7.708595		285,650		0.98%		33.42%
2008		0.00%		903,627		8.816356		7,966,697		0.76%		-34.42%
2008		0.10%		108,438		6.365134		690,222		0.76%		-34.49%
2008		0.25%		47,574		5.777639		274,865		0.76%		-34.59%
2007		0.00%		990,572		13.444500		13,317,745		0.54%		7.79%
2007		0.10%		116,744		9.716245		1,134,313		0.54%		7.68%
2007		0.25%		50,616		8.832711		447,076		0.54%		7.51%
2006		0.00%		1,115,238		12.473391		13,910,800		0.11%		9.20%
2006		0.10%		84,702		9.023502		764,309		0.11%		9.09%
2006		0.25%		91,596		8.215346		752,493		0.11%		8.93%
2006		0.40%		90		10.406467		937		0.11%		8.77%
Appreciation Portfolio - Initial Shares (DCAP)
2010		0.00%		843,704		17.976967		15,167,239		2.23%		15.32%
2010		0.10%		103,883		13.141262		1,365,154		2.23%		15.20%
2010		0.20%		119,634		12.218237		1,461,717		2.23%		15.09%
2010		0.25%		597,689		12.156773		7,265,969		2.23%		15.03%
2009		0.00%		954,621		15.589221		14,881,798		2.64%		22.56%
2009		0.10%		86,738		11.407200		989,438		2.64%		22.44%
2009		0.20%		111,948		10.616570		1,188,504		2.64%		22.31%
2009		0.25%		626,873		10.568440		6,625,070		2.64%		22.25%
2009		0.40%		8,289		12.631233		104,700		2.64%		22.07%
2008		0.00%		1,041,473		12.719805		13,247,333		2.12%		-29.55%
2008		0.10%		92,545		9.316859		862,229		2.12%		-29.62%
2008		0.20%		101,573		8.679771		881,630		2.12%		-29.69%
2008		0.25%		580,600		8.644744		5,019,138		2.12%		-29.73%
2008		0.40%		31,192		10.347582		322,762		2.12%		-29.83%
2007		0.00%		1,088,634		18.055279		19,655,591		1.56%		7.13%
2007		0.10%		108,528		13.238181		1,436,713		1.56%		7.02%
2007		0.20%		141,606		12.345312		1,748,170		1.56%		6.92%
2007		0.25%		947,616		12.301651		11,657,241		1.56%		6.86%
2007		0.40%		65,988		14.746966		973,123		1.56%		6.70%
2006		0.00%		1,210,752		16.853206		20,405,053		1.53%		16.48%
2006		0.10%		41,554		12.369250		513,992		1.53%		16.36%
2006		0.20%		139,136		11.546593		1,606,547		1.53%		16.24%
2006		0.25%		752,594		11.511538		8,663,514		1.53%		16.19%
2006		0.40%		265,322		13.820624		3,666,916		1.53%		16.01%
Developing Leaders Portfolio - Initial Shares (DSC)
2010		0.00%		72,500		14.469098		1,049,010		0.70%		31.15%
2009		0.00%		58,513		11.032594		645,550		1.70%		26.04%
2008		0.00%		60,390		8.753397		528,618		0.83%		-37.59%
2007		0.00%		46,856		14.026060		657,205		0.76%		-11.06%
2006		0.00%		52,662		15.770049		830,482		0.40%		3.77%

(Continued)

123

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
International Value Portfolio - Initial Shares (DVIV)
2010		0.00%		10,726	$	18.926715	$	203,008		1.87%		4.45%
2010		0.10%		56,264		18.769778		1,056,063		1.87%		4.35%
2010		0.20%		425,859		18.614188		7,927,019		1.87%		4.25%
2010		0.25%		760,614		18.536839		14,099,379		1.87%		4.19%
2009		0.00%		6,852		18.119573		124,155		4.09%		30.97%
2009		0.10%		99,191		17.987291		1,784,177		4.09%		30.84%
2009		0.20%		412,421		17.856007		7,364,192		4.09%		30.71%
2009		0.25%		801,300		17.790702		14,255,690		4.09%		30.65%
2009		0.40%		8,696		17.596305		153,017		4.09%		30.45%
2008		0.10%		93,781		13.747265		1,289,232		2.45%		-37.38%
2008		0.20%		485,843		13.660576		6,636,895		2.45%		-37.45%
2008		0.25%		800,273		13.617429		10,897,661		2.45%		-37.48%
2008		0.40%		81,026		13.488849		1,092,947		2.45%		-37.57%
2007		0.10%		105,712		21.954680		2,320,873		1.57%		4.05%
2007		0.20%		553,448		21.838102		12,086,254		1.57%		3.94%
2007		0.25%		809,738		21.780049		17,636,133		1.57%		3.89%
2007		0.40%		180,206		21.606848		3,893,684		1.57%		3.74%
2006		0.10%		70,076		21.100318		1,478,626		1.25%		22.47%
2006		0.20%		644,284		21.009394		13,536,016		1.25%		22.35%
2006		0.25%		931,538		20.964071		19,528,829		1.25%		22.29%
2006		0.40%		293,760		20.828757		6,118,656		1.25%		22.11%
Variable Series II - Dreman Small Mid Cap Value VIP -Class B (SVSSVB)
2010		0.00%		14,853		10.004800		148,601		0.91%		22.66%
2010		0.20%		105,748		9.939712		1,051,105		0.91%		22.42%
2010		0.25%		66,739		9.923523		662,286		0.91%		22.36%
2009		0.00%		3,735		8.156371		30,464		1.81%		29.28%
2009		0.20%		126,894		8.119519		1,030,318		1.81%		29.02%
2009		0.25%		57,608		8.110345		467,221		1.81%		28.96%
2008		0.00%		1,165		6.308994		7,350		0.57%		-33.67%
2008		0.10%		469,621		6.301021		2,959,092		0.57%		-33.74%
2008		0.20%		180,104		6.293064		1,133,406		0.57%		-33.81%
2008		0.25%		21,870		6.289098		137,543		0.57%		-33.84%
Variable Series II -Strategic Value VIP - Class B (SVSHEB)
2010		0.20%		8,894		8.241888		73,303		1.79%		11.91%
2010		0.25%		15,449		8.222631		127,031		1.79%		11.85%
2009		0.25%		68,810		7.351304		505,843		4.46%		24.63%
2008		0.25%		88,068		5.898673		519,484		2.32%		-46.29%
2008		0.40%		6,289		5.875072		36,948		2.32%		-46.38%
2007		0.25%		66,654		10.983369		732,085		0.92%		-2.43%
2007		0.40%		1,088		10.955918		11,920		0.92%		-2.58%
2006		0.25%		15,180		11.257266		170,885		0.00%		12.57%	5/1/2006
Capital Appreciation Fund II - Primary Shares (FVCA2P)
2010		0.00%		55,080		15.267952		840,959		0.87%		13.07%
2009		0.00%		46,524		13.502613		628,196		1.05%		13.48%
2008		0.00%		36,885		11.898648		438,882		0.34%		-29.37%
2007		0.00%		30,528		16.845591		514,262		0.72%		9.88%
2006		0.00%		27,898		15.330912		427,702		0.75%		16.21%
Clover Value Fund II - Primary Shares (FALF)
2009		0.00%		15,949		11.641309		185,667		2.79%		14.72%
2008		0.00%		18,003		10.147874		182,692		1.86%		-33.79%
2007		0.00%		18,632		15.327257		285,577		1.51%		-9.66%
2006		0.00%		21,354		16.967010		362,314		1.46%		16.81%
Market Opportunity Fund II - Service Shares (FVMOS)
2009		0.00%		71,443		10.283025		734,650		1.47%		1.28%
2008		0.00%		76,516		10.152569		776,834		1.01%		-0.86%
2007		0.00%		4,512		10.240958		46,207		1.07%		-1.48%
2006		0.00%		3,964		10.395256		41,207		0.00%		3.95%	5/1/2006

(Continued)

124

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Quality Bond Fund II - Primary Shares (FQB)
2010		0.00%		1,065,571	$	18.798086	$	20,030,695		4.78%		8.50%
2010		0.10%		73,085		18.580145		1,357,930		4.78%		8.40%
2010		0.20%		2,408		18.364732		44,222		4.78%		8.29%
2010		0.25%		852,101		18.257953		15,557,620		4.78%		8.23%
2009		0.00%		1,207,203		17.324766		20,914,509		6.41%		20.43%
2009		0.10%		43,709		17.141028		749,217		6.41%		20.31%
2009		0.25%		828,781		16.869071		13,980,766		6.41%		20.13%
2009		0.40%		3,689		16.601438		61,243		6.41%		19.95%
2008		0.00%		1,273,310		14.385247		18,316,879		5.71%		-7.29%
2008		0.10%		48,074		14.246920		684,906		5.71%		-7.38%
2008		0.25%		721,614		14.041907		10,132,837		5.71%		-7.52%
2008		0.40%		6,201		13.839860		85,821		5.71%		-7.66%
2007		0.00%		1,451,108		15.516026		22,515,429		5.83%		5.38%
2007		0.10%		412,398		15.382206		6,343,591		5.83%		5.28%
2007		0.20%		110,682		15.249527		1,687,848		5.83%		5.17%
2007		0.25%		776,642		15.183610		11,792,229		5.83%		5.12%
2007		0.40%		18,180		14.987597		272,475		5.83%		4.96%
2006		0.00%		1,685,612		14.723396		24,817,933		5.17%		4.15%
2006		0.10%		380,302		14.611096		5,556,629		5.17%		4.05%
2006		0.20%		197,756		14.499637		2,867,390		5.17%		3.95%
2006		0.25%		1,173,262		14.444216		16,946,850		5.17%		3.89%
2006		0.40%		68,922		14.279265		984,156		5.17%		3.74%
VIP Fund - Contrafund Portfolio - Service Class (FCS)
2010		0.00%		21,505		24.702642		531,230		0.54%		17.11%
2010		0.10%		508,353		17.737330		9,016,825		0.54%		16.99%
2010		0.20%		788,579		16.629006		13,113,285		0.54%		16.87%
2010		0.25%		2,728,984		16.545389		45,152,102		0.54%		16.82%
2009		0.00%		3,669,623		21.093947		77,406,833		1.29%		35.66%
2009		0.10%		488,468		15.161297		7,405,808		1.29%		35.53%
2009		0.20%		1,321,851		14.228141		18,807,482		1.29%		35.39%
2009		0.25%		3,013,281		14.163669		42,679,115		1.29%		35.33%
2009		0.40%		14,958		17.614183		263,473		1.29%		35.12%
2008		0.00%		4,190,707		15.548565		65,159,480		0.93%		-42.61%
2008		0.10%		522,978		11.186730		5,850,414		0.93%		-42.67%
2008		0.20%		2,850,610		10.508698		29,956,200		0.93%		-42.73%
2008		0.25%		3,082,104		10.466315		32,258,271		0.93%		-42.76%
2008		0.40%		367,375		13.035628		4,788,964		0.93%		-42.84%
2007		0.00%		4,524,124		27.094222		122,577,620		0.89%		17.51%
2007		0.10%		503,350		19.513053		9,821,895		0.89%		17.39%
2007		0.20%		1,674,382		18.348754		30,722,823		0.89%		17.27%
2007		0.25%		3,212,196		18.283913		58,731,512		0.89%		17.21%
2007		0.40%		694,122		22.806621		15,830,577		0.89%		17.04%
2006		0.00%		4,668,602		23.057410		107,645,870		1.12%		11.59%
2006		0.10%		155,940		16.622464		2,592,107		1.12%		11.48%
2006		0.20%		1,713,066		15.646354		26,803,237		1.12%		11.37%
2006		0.25%		2,614,782		15.598891		40,787,699		1.12%		11.31%
2006		0.40%		967,474		19.486792		18,852,965		1.12%		11.15%
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
2010		0.00%		542,677		18.403422		9,987,114		0.35%		19.16%
2009		0.00%		630,089		15.444750		9,731,567		0.22%		47.57%
2008		0.00%		747,087		10.465765		7,818,837		0.00%		-54.40%
2007		0.00%		621,068		22.953063		14,255,413		0.12%		45.64%
2006		0.00%		488,940		15.759845		7,705,619		0.75%		16.62%

(Continued)

125

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Equity-Income Portfolio - Service Class (FEIS)
2010		0.00%		2,608,980	$	16.196839	$	42,257,229		1.70%		15.09%
2010		0.10%		221,619		14.042784		3,112,148		1.70%		14.97%
2010		0.20%		512,456		12.893153		6,607,174		1.70%		14.86%
2010		0.25%		1,075,614		12.828331		13,798,332		1.70%		14.80%
2009		0.00%		2,900,543		14.073509		40,820,818		2.16%		30.03%
2009		0.10%		249,158		12.214029		3,043,223		2.16%		29.90%
2009		0.20%		420,614		11.225322		4,721,528		2.16%		29.77%
2009		0.25%		1,304,182		11.174471		14,573,544		2.16%		29.71%
2009		0.40%		8,222		11.961703		98,349		2.16%		29.51%
2008		0.00%		3,254,696		10.823135		35,226,014		2.35%		-42.70%
2008		0.10%		294,647		9.402510		2,770,421		2.35%		-42.76%
2008		0.20%		412,573		8.650050		3,568,777		2.35%		-42.82%
2008		0.25%		1,761,859		8.615165		15,178,706		2.35%		-42.85%
2008		0.40%		74,107		9.235955		684,449		2.35%		-42.93%
2007		0.00%		3,474,112		18.889723		65,625,013		1.67%		1.42%
2007		0.10%		291,212		16.426769		4,783,672		1.67%		1.32%
2007		0.20%		488,726		15.127358		7,393,133		1.67%		1.21%
2007		0.25%		1,729,636		15.073906		26,072,370		1.67%		1.16%
2007		0.40%		275,862		16.184435		4,464,671		1.67%		1.01%
2006		0.00%		3,666,100		18.625658		68,283,525		3.15%		20.08%
2006		0.10%		114,862		16.213431		1,862,307		3.15%		19.96%
2006		0.20%		524,062		14.945916		7,832,587		3.15%		19.84%
2006		0.25%		1,907,206		14.900594		28,418,502		3.15%		19.78%
2006		0.40%		520,282		16.022504		8,336,220		3.15%		19.60%
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
2010		0.00%		136,140		13.516167		1,840,091		2.19%		12.74%
2010		0.20%		4,973		13.363919		66,459		2.19%		12.51%
2010		0.25%		714		13.326120		9,515		2.19%		12.46%
2009		0.00%		151,807		11.989176		1,820,041		3.90%		24.15%
2009		0.20%		5,103		11.877840		60,613		3.90%		23.90%
2009		0.25%		713		11.850165		8,449		3.90%		23.84%
2008		0.00%		133,384		9.656832		1,288,067		2.70%		-25.08%
2008		0.20%		1,657		9.586290		15,884		2.70%		-25.23%
2008		0.25%		151		9.568737		1,445		2.70%		-25.26%
2007		0.00%		121,944		12.888793		1,571,711		3.28%		8.65%
2006		0.00%		56,804		11.863160		673,875		2.70%		9.78%
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
2010		0.00%		329,369		13.590648		4,476,338		2.28%		14.52%
2010		0.20%		17,386		13.437543		233,625		2.28%		14.29%
2010		0.25%		215,574		13.399524		2,888,589		2.28%		14.23%
2009		0.00%		331,447		11.867504		3,933,449		3.37%		28.78%
2009		0.20%		3,437		11.757279		40,410		3.37%		28.52%
2009		0.25%		172,400		11.729876		2,022,231		3.37%		28.45%
2008		0.00%		331,111		9.215628		3,051,396		3.25%		-32.71%
2008		0.25%		55,034		9.131542		502,545		3.25%		-32.88%
2008		0.40%		22,241		9.081452		201,981		3.25%		-32.98%
2007		0.00%		222,540		13.695591		3,047,817		2.67%		10.17%
2006		0.00%		109,012		12.431698		1,355,204		2.11%		11.81%

(Continued)

126

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
2010		0.00%		236,147	$	13.457007	$	3,177,832		2.16%		16.00%
2010		0.20%		8,368		13.305353		111,339		2.16%		15.77%
2010		0.25%		52,993		13.267698		703,095		2.16%		15.71%
2009		0.00%		223,653		11.600974		2,594,593		2.39%		31.40%
2009		0.20%		5,273		11.493181		60,604		2.39%		31.14%
2009		0.25%		34,265		11.466383		392,896		2.39%		31.08%
2008		0.00%		189,269		8.828445		1,670,951		2.64%		-38.08%
2008		0.20%		3,626		8.763926		31,778		2.64%		-38.20%
2008		0.25%		14,454		8.747863		126,442		2.64%		-38.23%
2008		0.40%		9,318		8.699870		81,065		2.64%		-38.32%
2007		0.00%		136,304		14.256765		1,943,254		2.62%		11.21%
2006		0.00%		54,734		12.819894		701,684		2.16%		13.15%
VIP Fund - Growth & Income Portfolio - Service Class (FGIS)
2010		0.20%		7,884		8.550246		67,410		0.70%		14.43%
2010		0.25%		1,131		8.537429		9,656		0.70%		14.38%
2009		0.20%		8,111		7.471827		60,604		0.11%		26.91%
2009		0.25%		1,133		7.464354		8,457		0.11%		26.84%
VIP Fund - Growth Opportunities Portfolio - Service Class (FGOS)
2010		0.00%		2		11.379822		23		0.02%		23.65%
2010		0.10%		120,418		9.153616		1,102,260		0.02%		23.53%
2010		0.25%		41,639		10.411166		433,511		0.02%		23.34%
2009		0.00%		756,757		9.203011		6,964,443		0.38%		45.72%
2009		0.10%		70,834		7.410032		524,882		0.38%		45.57%
2009		0.25%		44,684		8.440703		377,164		0.38%		45.36%
2008		0.00%		797,395		6.315602		5,036,029		0.34%		-55.06%
2008		0.10%		79,193		5.090243		403,112		0.34%		-55.10%
2008		0.25%		52,092		5.806945		302,495		0.34%		-55.17%
2007		0.00%		876,024		14.053200		12,310,940		0.00%		23.04%
2007		0.10%		87,966		11.337986		997,357		0.00%		22.92%
2007		0.25%		62,164		12.953846		805,263		0.00%		22.73%
2006		0.00%		1,014,378		11.421365		11,585,581		0.69%		5.30%
2006		0.10%		18,424		9.223917		169,941		0.69%		5.20%
2006		0.25%		127,338		10.554406		1,343,977		0.69%		5.04%

(Continued)

127

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Growth Portfolio - Service Class (FGS)
2010		0.00%		2,828,191	$	16.084224	$	45,489,258		0.17%		24.06%
2010		0.10%		195,448		10.434553		2,039,413		0.17%		23.93%
2010		0.20%		556,067		9.284476		5,162,791		0.17%		23.81%
2010		0.25%		1,894,082		9.237732		17,497,022		0.17%		23.75%
2009		0.00%		3,107,304		12.965334		40,287,234		0.32%		28.15%
2009		0.10%		292,689		8.419589		2,464,321		0.32%		28.02%
2009		0.20%		596,741		7.499084		4,475,011		0.32%		27.89%
2009		0.25%		2,310,471		7.465060		17,247,805		0.32%		27.83%
2009		0.40%		24,913		10.725399		267,202		0.32%		27.64%
2008		0.00%		3,467,374		10.117480		35,081,087		0.74%		-47.23%
2008		0.10%		986,037		6.576790		6,484,958		0.74%		-47.29%
2008		0.20%		580,783		5.863617		3,405,489		0.74%		-47.34%
2008		0.25%		2,552,430		5.839928		14,906,007		0.74%		-47.37%
2008		0.40%		113,777		8.403086		956,078		0.74%		-47.44%
2007		0.00%		3,775,216		19.173877		72,385,527		0.62%		26.87%
2007		0.10%		1,087,228		12.476360		13,564,648		0.62%		26.74%
2007		0.20%		882,468		11.134607		9,825,934		0.62%		26.62%
2007		0.25%		1,845,202		11.095199		20,472,883		0.62%		26.55%
2007		0.40%		190,114		15.988944		3,039,722		0.62%		26.36%
2006		0.00%		3,992,818		15.113032		60,343,586		0.28%		6.73%
2006		0.10%		963,760		9.843867		9,487,125		0.28%		6.63%
2006		0.20%		1,027,390		8.794051		9,034,920		0.28%		6.52%
2006		0.25%		2,159,692		8.767341		18,934,756		0.28%		6.47%
2006		0.40%		245,682		12.653389		3,108,710		0.28%		6.31%
VIP Fund - High Income Portfolio - Service Class (FHIS)
2010		0.00%		456,051		14.549690		6,635,401		7.61%		13.79%
2010		0.10%		164,151		14.327814		2,351,925		7.61%		13.67%
2010		0.20%		143,953		18.218308		2,622,580		7.61%		13.56%
2010		0.25%		183,998		18.126634		3,335,264		7.61%		13.50%
2009		0.00%		522,350		12.786757		6,679,163		6.43%		43.77%
2009		0.10%		194,653		12.604336		2,453,472		6.43%		43.63%
2009		0.20%		122,251		16.042868		1,961,257		6.43%		43.49%
2009		0.25%		158,484		15.970114		2,531,008		6.43%		43.41%
2008		0.00%		671,992		8.893725		5,976,512		8.01%		-25.06%
2008		0.10%		637,990		8.775597		5,598,743		8.01%		-25.14%
2008		0.20%		76,481		11.180781		855,117		8.01%		-25.21%
2008		0.25%		151,548		11.135640		1,687,584		8.01%		-25.25%
2007		0.00%		877,636		11.868272		10,416,023		8.58%		2.66%
2007		0.10%		759,028		11.722369		8,897,606		8.58%		2.55%
2007		0.20%		208,598		14.950148		3,118,571		8.58%		2.45%
2007		0.25%		178,522		14.897237		2,659,485		8.58%		2.40%
2006		0.00%		1,194,886		11.561165		13,814,274		7.58%		11.18%
2006		0.10%		628,630		11.430519		7,185,567		7.58%		11.07%
2006		0.20%		10,750		14.592608		156,871		7.58%		10.96%
2006		0.25%		195,198		14.548271		2,839,793		7.58%		10.90%
2006		0.40%		244		10.547905		2,574		7.58%		10.73%
VIP Fund - High Income Portfolio - Service Class R (FHISR)
2010		0.00%		339,656		12.132539		4,120,890		7.97%		13.66%
2009		0.00%		350,965		10.674246		3,746,287		8.96%		43.93%
2008		0.00%		230,571		7.416301		1,709,984		7.80%		-24.98%
2007		0.00%		231,578		9.885500		2,289,264		10.69%		-1.15%	5/1/2007

(Continued)

128

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Index 500 Portfolio - Initial Class (FIP)
2010		0.20%		2,378,076	$	9.251418	$	22,000,575		6.89%		14.79%
2010		0.25%		341,142		9.237578		3,151,326		6.89%		14.74%
2009		0.20%		498,840		8.059227		4,020,265		2.45%		26.35%
2009		0.25%		69,655		8.051179		560,805		2.45%		26.29%
2008		0.20%		505,186		6.378330		3,222,243		2.29%		-36.22%	1/2/2008
2008		0.25%		46,125		6.375146		294,054		2.29%		-36.25%	1/2/2008
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
2010		0.00%		1,042,979		14.237787		14,849,713		5.00%		7.68%
2010		0.10%		89,213		14.129064		1,260,496		5.00%		7.57%
2010		0.20%		34,875		14.021133		488,987		5.00%		7.46%
2010		0.25%		1,690,841		13.967499		23,616,820		5.00%		7.41%
2009		0.00%		1,066,040		13.222437		14,095,647		8.80%		15.67%
2009		0.10%		75,947		13.134577		997,532		8.80%		15.56%
2009		0.20%		12,441		13.047289		162,321		8.80%		15.44%
2009		0.25%		106,438		13.003875		1,384,106		8.80%		15.38%
2008		0.00%		1,078,108		11.430864		12,323,706		3.94%		-3.35%
2008		0.10%		75,054		11.366264		853,084		3.94%		-3.44%
2008		0.25%		100,055		11.270047		1,127,625		3.94%		-3.59%
2008		0.40%		4,637		11.174634		51,817		3.94%		-3.73%
2007		0.00%		969,956		11.826500		11,471,185		3.80%		4.21%
2007		0.10%		72,344		11.771423		851,592		3.80%		4.11%
2007		0.20%		81,300		11.716596		952,559		3.80%		4.00%
2007		0.25%		102,048		11.689304		1,192,870		3.80%		3.95%
2007		0.40%		5,038		11.607727		58,480		3.80%		3.79%
2006		0.00%		855,338		11.348586		9,706,877		3.34%		4.30%
2006		0.20%		64,972		11.265752		731,958		3.34%		4.09%
2006		0.25%		49,006		11.245144		551,080		3.34%		4.04%
2006		0.40%		880		11.183530		9,842		3.34%		3.88%
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
2010		0.00%		1,034,040		29.444519		30,446,810		0.28%		28.70%
2010		0.10%		81,078		29.219667		2,369,072		0.28%		28.57%
2010		0.20%		124,610		28.996539		3,613,259		0.28%		28.45%
2010		0.25%		451,307		28.885604		13,036,275		0.28%		28.38%
2009		0.00%		1,033,209		22.878053		23,637,810		0.58%		40.01%
2009		0.10%		66,502		22.726025		1,511,326		0.58%		39.87%
2009		0.20%		52,799		22.575019		1,191,938		0.58%		39.73%
2009		0.25%		483,255		22.499878		10,873,179		0.58%		39.66%
2009		0.40%		161		22.275993		3,586		0.58%		39.46%
2008		0.00%		1,053,808		16.339788		17,218,999		0.38%		-39.51%
2008		0.10%		60,956		16.247436		990,379		0.38%		-39.57%
2008		0.20%		40,911		16.155616		660,942		0.38%		-39.63%
2008		0.25%		395,836		16.109892		6,376,875		0.38%		-39.66%
2008		0.40%		174,217		15.973520		2,782,859		0.38%		-39.75%
2007		0.00%		1,090,690		27.011367		29,461,028		0.72%		15.49%
2007		0.10%		41,774		26.885640		1,123,121		0.72%		15.37%
2007		0.25%		354,360		26.698163		9,460,761		0.72%		15.20%
2007		0.40%		51,988		26.511996		1,378,306		0.72%		15.02%
2006		0.00%		1,042,192		23.389128		24,375,962		0.23%		12.59%
2006		0.25%		172,826		23.176101		4,005,433		0.23%		12.31%
2006		0.40%		35,172		23.049221		810,687		0.23%		12.14%

(Continued)

129

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Overseas Portfolio - Service Class (FOS)
2010		0.00%		444,043	$	17.440640	$	7,744,394		1.27%		12.99%
2010		0.10%		127,406		14.809197		1,886,781		1.27%		12.88%
2010		0.20%		120,641		13.207916		1,593,416		1.27%		12.77%
2010		0.25%		1,141,090		13.141451		14,995,578		1.27%		12.71%
2009		0.00%		520,924		15.435366		8,040,653		2.05%		26.44%
2009		0.10%		280,028		13.119571		3,673,847		2.05%		26.31%
2009		0.20%		97,757		11.712682		1,144,997		2.05%		26.19%
2009		0.25%		1,344,902		11.659560		15,680,966		2.05%		26.12%
2009		0.40%		2,145		12.468464		26,745		2.05%		25.93%
2008		0.00%		628,957		12.207782		7,678,170		2.43%		-43.86%
2008		0.10%		283,593		10.386619		2,945,572		2.43%		-43.92%
2008		0.20%		98,672		9.282079		915,881		2.43%		-43.98%
2008		0.25%		1,629,016		9.244601		15,059,603		2.43%		-44.00%
2008		0.40%		84,310		9.900810		834,737		2.43%		-44.09%
2007		0.00%		761,402		21.746938		16,558,162		3.19%		17.21%
2007		0.10%		223,530		18.521287		4,140,063		3.19%		17.09%
2007		0.20%		308,712		16.568287		5,114,829		3.19%		16.97%
2007		0.25%		1,540,530		16.509660		25,433,627		3.19%		16.91%
2007		0.40%		205,152		17.708202		3,632,873		3.19%		16.74%
2006		0.00%		963,186		18.554369		17,871,308		0.84%		17.95%
2006		0.10%		106,768		15.818147		1,688,872		0.84%		17.83%
2006		0.20%		271,410		14.164421		3,844,366		0.84%		17.71%
2006		0.25%		1,070,198		14.121395		15,112,689		0.84%		17.65%
2006		0.40%		581,496		15.169405		8,820,948		0.84%		17.48%
VIP Fund - Overseas Portfolio - Service Class R (FOSR)
2010		0.00%		901,030		13.865532		12,493,260		1.32%		13.01%
2009		0.00%		992,596		12.269434		12,178,591		2.07%		26.49%
2008		0.00%		1,096,774		9.699843		10,638,536		2.55%		-43.88%
2007		0.00%		1,080,792		17.283296		18,679,648		3.16%		17.23%
2006		0.00%		985,990		14.743687		14,537,128		0.62%		17.95%
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
2010		0.00%		183,598		16.516915		3,032,473		0.41%		26.45%
2010		0.10%		63,715		16.374356		1,043,292		0.41%		26.33%
2010		0.25%		839		16.162748		13,561		0.41%		26.14%
2009		0.00%		226,619		13.061648		2,960,018		0.51%		57.40%
2009		0.10%		54,167		12.961834		702,104		0.51%		57.24%
2009		0.25%		798		12.813506		10,225		0.51%		57.00%
2008		0.00%		242,212		8.298533		2,010,004		0.56%		-51.17%
2008		0.10%		51,422		8.243364		423,890		0.56%		-51.22%
2008		0.25%		30,262		8.161269		246,976		0.56%		-51.30%
2007		0.00%		495,906		16.996302		8,428,568		0.83%		5.60%
2007		0.10%		45,242		16.900270		764,602		0.83%		5.49%
2007		0.25%		3,262		16.757189		54,662		0.83%		5.33%
2006		0.00%		494,372		16.095011		7,956,923		0.49%		16.20%
2006		0.10%		4,096		16.020178		65,619		0.49%		16.08%
2006		0.25%		2,506		15.908520		39,867		0.49%		15.91%
2006		0.40%		14		15.797724		221		0.49%		15.73%
VIP Fund - VIP Freedom Fund 2015 Portfolio - Service Class (FF15S)
2010		0.00%		7,055		10.510490		74,152		2.63%		13.00%
2010		0.20%		20,002		10.454598		209,113		2.63%		12.78%
2010		0.25%		177,928		10.440658		1,857,685		2.63%		12.72%
2009		0.00%		5,406		9.301002		50,281		4.01%		25.06%
2009		0.25%		121,907		9.262314		1,129,141		4.01%		24.75%
2008		0.25%		37,047		7.424925		275,071		3.44%		-25.75%	5/1/2008
2008		0.40%		81,705		7.417486		606,046		3.44%		-25.83%	5/1/2008

(Continued)

130

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - VIP Freedom Fund 2025 Portfolio - Service Class (FF25S)
2010		0.00%		2,126	$	10.188758	$	21,661		2.55%		15.70%
2010		0.20%		13,233		10.134563		134,111		2.55%		15.47%
2010		0.25%		107,781		10.121060		1,090,858		2.55%		15.41%
2009		0.00%		94		8.806233		828		4.01%		29.96%
2009		0.25%		71,285		8.769590		625,140		4.01%		29.63%
2008		0.25%		1,777		6.764989		12,021		3.09%		-32.35%	5/1/2008
2008		0.40%		33,939		6.758199		229,367		3.09%		-32.42%	5/1/2008
Franklin Income Securities Fund - Class 2 (FTVIS2)
2010		0.00%		339,445		12.507001		4,245,439		6.43%		12.67%
2009		0.00%		382,836		11.100337		4,249,609		8.31%		35.59%
2008		0.00%		421,586		8.186428		3,451,283		5.51%		-29.66%
2007		0.00%		416,188		11.637657		4,843,453		3.54%		3.76%
2006		0.00%		117,590		11.216304		1,318,925		0.07%		12.16%	5/1/2006
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)
2010		0.00%		718,728		16.912694		12,155,627		1.78%		20.94%
2009		0.00%		724,097		13.984451		10,126,099		1.80%		17.67%
2008		0.00%		787,806		11.884088		9,362,356		2.02%		-26.94%
2007		0.00%		910,630		16.266644		14,812,894		2.49%		-2.41%
2006		0.00%		943,340		16.669002		15,724,536		1.23%		17.43%
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)
2010		0.00%		510,127		23.172621		11,820,980		0.94%		28.49%
2009		0.00%		526,295		18.034685		9,491,565		1.92%		29.54%
2008		0.00%		560,057		13.921598		7,796,888		1.42%		-32.87%
2007		0.00%		545,164		20.738061		11,305,644		0.89%		-2.14%
2006		0.00%		484,062		21.190555		10,257,542		0.82%		17.30%
Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)
2010		0.00%		15,995		14.404363		230,398		0.72%		28.22%
2010		0.10%		54,144		14.322976		775,503		0.72%		28.09%
2010		0.20%		33,435		14.242025		476,182		0.72%		27.97%
2010		0.25%		326,463		14.201682		4,636,324		0.72%		27.90%
2009		0.00%		24,186		11.233980		271,705		1.61%		29.16%
2009		0.10%		45,532		11.181660		509,123		1.61%		29.03%
2009		0.20%		16,337		11.129584		181,824		1.61%		28.90%
2009		0.25%		329,020		11.103596		3,653,305		1.61%		28.83%
2008		0.00%		13,222		8.697893		115,004		1.16%		-33.02%
2008		0.10%		42,469		8.666053		368,039		1.16%		-33.08%
2008		0.20%		2,572		8.634328		22,207		1.16%		-33.15%
2008		0.25%		297,041		8.618488		2,560,044		1.16%		-33.18%
2008		0.40%		25,833		8.571211		221,420		1.16%		-33.28%
2007		0.10%		14,194		12.950462		183,819		0.63%		-2.48%
2007		0.25%		317,232		12.898779		4,091,905		0.63%		-2.62%
2007		0.40%		62,522		12.847323		803,240		0.63%		-2.77%
2006		0.25%		208,584		13.246445		2,762,996		0.76%		16.69%
2006		0.40%		62,174		13.213518		821,537		0.76%		16.52%
Mutual Discovery Global Securities Fund - Class 2 (FTVMD2)
2010		0.20%		18,111		9.851892		178,428		1.26%		11.73%
2010		0.25%		2,598		9.837163		25,557		1.26%		11.68%
2009		0.20%		20,621		8.817252		181,821		1.18%		23.07%
2009		0.25%		2,879		8.808466		25,360		1.18%		23.01%
2008		0.20%		8,713		7.164503		62,424		1.90%		-28.35%	1/2/2008
2008		0.25%		795		7.160940		5,693		1.90%		-28.39%	1/2/2008
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
2010		0.00%		278,260		20.278309		5,642,642		1.64%		17.51%
2009		0.00%		329,156		17.256364		5,680,036		3.87%		72.63%
2008		0.00%		275,997		9.996007		2,758,868		2.81%		-52.67%
2007		0.00%		364,400		21.120230		7,696,212		2.19%		28.70%
2006		0.00%		310,222		16.410826		5,090,999		1.29%		28.17%

(Continued)

131

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Templeton Foreign Securities Fund - Class 1 (TIF)
2010		0.00%		73,458	$	21.903633	$	1,608,997		2.06%		8.67%
2009		0.00%		84,266		20.155256		1,698,403		3.77%		37.34%
2008		0.00%		99,305		14.675305		1,457,331		2.66%		-40.23%
2007		0.00%		131,776		24.554735		3,235,725		2.08%		15.79%
2006		0.00%		174,552		21.206570		3,701,649		1.39%		21.70%
Templeton Foreign Securities Fund - Class 2 (TIF2)
2010		0.10%		76,012		20.172194		1,533,329		1.89%		8.30%
2010		0.20%		106,558		20.004971		2,131,690		1.89%		8.19%
2010		0.25%		402,163		19.921879		8,011,843		1.89%		8.14%
2009		0.10%		184,222		18.626590		3,431,428		3.25%		36.91%
2009		0.20%		36,928		18.490649		682,823		3.25%		36.77%
2009		0.25%		463,306		18.423035		8,535,503		3.25%		36.70%
2009		0.40%		10,145		18.221708		184,859		3.25%		36.50%
2008		0.10%		199,971		13.605462		2,720,698		2.30%		-40.44%
2008		0.20%		41,270		13.519674		557,957		2.30%		-40.50%
2008		0.25%		465,751		13.476974		6,276,914		2.30%		-40.53%
2008		0.40%		33,468		13.349706		446,788		2.30%		-40.62%
2007		0.10%		205,828		22.842250		4,701,575		1.86%		15.34%
2007		0.20%		130,208		22.720977		2,958,453		1.86%		15.23%
2007		0.25%		590,458		22.660573		13,380,117		1.86%		15.17%
2007		0.40%		64,892		22.480343		1,458,794		1.86%		14.99%
2006		0.10%		8,186		19.804108		162,116		1.24%		21.32%
2006		0.20%		109,726		19.718779		2,163,663		1.24%		21.20%
2006		0.25%		359,658		19.676237		7,076,716		1.24%		21.14%
2006		0.40%		494,684		19.549201		9,670,677		1.24%		20.96%
Templeton Foreign Securities Fund - Class 3 (TIF3)
2010		0.00%		389,994		14.033220		5,472,872		1.62%		8.41%
2009		0.00%		428,311		12.945045		5,544,505		3.55%		37.20%
2008		0.00%		502,570		9.435374		4,741,936		2.55%		-40.39%
2007		0.00%		462,356		15.828965		7,318,617		2.11%		15.45%
2006		0.00%		424,646		13.711150		5,822,385		1.34%		21.46%
Templeton Global Bond Securities Fund - Class 2 (FTVGI2)
2010		0.00%		25,445		14.698405		374,001		0.61%		14.45%
2010		0.10%		1,839,432		14.650582		26,948,749		0.61%		14.33%
2010		0.20%		455,180		14.602909		6,646,952		0.61%		14.22%
2010		0.25%		315,316		14.579135		4,597,035		0.61%		14.16%
2009		0.00%		9,362		12.842917		120,235		16.61%		18.68%
2009		0.25%		189,274		12.770565		2,417,136		16.61%		18.39%
2008		0.00%		1,646		10.821275		17,812		2.99%		6.21%
2008		0.25%		93,179		10.787239		1,005,144		2.99%		5.94%
2008		0.40%		100		10.766879		1,077		2.99%		5.78%
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
2010		0.00%		535,857		17.849519		9,564,790		1.48%		14.38%
2009		0.00%		410,243		15.605635		6,402,103		15.12%		18.69%
2008		0.00%		490,278		13.148675		6,446,506		4.25%		6.21%
2007		0.00%		280,836		12.380292		3,476,832		2.62%		11.03%
2006		0.00%		138,640		11.150160		1,545,858		2.84%		12.84%
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
2010		0.00%		37,961		9.558606		362,854		2.37%		10.25%
2009		0.00%		34,220		8.669683		296,677		3.31%		30.25%
2008		0.00%		17,440		6.656135		116,083		3.75%		-33.44%	5/1/2008

(Continued)

132

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Goldman Sachs VIT - Goldman Sachs Mid Cap Value Fund - Institutional Shares  (GVMCE)
2010		0.10%		146,239	$	22.464900	$	3,285,245		0.65%		24.88%
2010		0.20%		491,175		22.278722		10,942,751		0.65%		24.75%
2010		0.25%		1,651,372		22.186180		36,637,636		0.65%		24.69%
2009		0.10%		117,092		17.989872		2,106,470		1.90%		33.02%
2009		0.20%		732,755		17.858604		13,085,981		1.90%		32.89%
2009		0.25%		1,759,781		17.793307		31,312,324		1.90%		32.82%
2009		0.40%		1,601		17.598827		28,176		1.90%		32.62%
2008		0.10%		128,526		13.524296		1,738,224		0.95%		-37.11%
2008		0.20%		831,665		13.439050		11,176,788		0.95%		-37.18%
2008		0.25%		1,507,852		13.396598		20,200,087		0.95%		-37.21%
2008		0.40%		364,923		13.270057		4,842,549		0.95%		-37.30%
2007		0.10%		160,214		21.505877		3,445,543		0.81%		3.10%
2007		0.20%		1,061,686		21.391758		22,711,330		0.81%		3.00%
2007		0.25%		1,727,904		21.334874		36,864,614		0.81%		2.94%
2007		0.40%		707,562		21.165166		14,975,667		0.81%		2.79%
2006		0.10%		29,454		20.859259		614,389		0.98%		16.05%
2006		0.20%		1,042,500		20.769434		21,652,135		0.98%		15.93%
2006		0.25%		1,231,810		20.724643		25,528,822		0.98%		15.87%
2006		0.40%		1,066,122		20.590810		21,952,316		0.98%		15.70%
ClearBridge Variable Small Cap Growth Portfolio - Class I (SBVSG)
2010		0.00%		3,623		10.489595		38,004		0.00%		25.18%
2010		0.20%		129		10.421361		1,344		0.00%		24.93%
2010		0.25%		17,295		10.404348		179,943		0.00%		24.87%
2009		0.00%		92		8.379457		771		0.00%		42.77%
2009		0.25%		32,585		8.332144		271,503		0.00%		42.42%
2008		0.00%		166		5.869001		974		0.00%		-40.71%
2008		0.25%		18,031		5.850489		105,490		0.00%		-40.86%
Lincoln VIP Trust - Baron Growth Opportunities Funds - Service Class (BNCAI)
2010		0.00%		17,793		20.834594		370,710		0.00%		26.38%
2010		0.10%		57,988		20.661902		1,198,142		0.00%		26.26%
2010		0.20%		167,060		20.490617		3,423,162		0.00%		26.13%
2010		0.25%		387,606		20.405470		7,909,283		0.00%		26.07%
2009		0.00%		19,056		16.485275		314,143		0.00%		38.32%
2009		0.10%		46,598		16.364975		762,575		0.00%		38.19%
2009		0.20%		138,033		16.245528		2,242,419		0.00%		38.05%
2009		0.25%		451,652		16.186105		7,310,487		0.00%		37.98%
2009		0.40%		566		16.009192		9,061		0.00%		37.77%
2008		0.00%		8,641		11.917785		102,982		0.00%		-39.14%
2008		0.10%		62,479		11.842641		739,916		0.00%		-39.20%
2008		0.20%		120,684		11.767949		1,420,203		0.00%		-39.26%
2008		0.25%		360,408		11.730770		4,227,863		0.00%		-39.29%
2008		0.40%		95,250		11.619973		1,106,802		0.00%		-39.38%
2007		0.10%		129,912		19.476896		2,530,283		0.00%		3.32%
2007		0.20%		222,816		19.373459		4,316,717		0.00%		3.21%
2007		0.25%		312,238		19.321952		6,033,048		0.00%		3.16%
2007		0.40%		154,928		19.168269		2,969,702		0.00%		3.01%
2006		0.10%		80,920		18.851618		1,525,473		0.00%		15.41%
2006		0.20%		216,684		18.770366		4,067,238		0.00%		15.29%
2006		0.25%		186,980		18.729880		3,502,113		0.00%		15.23%
2006		0.40%		206,184		18.608964		3,836,871		0.00%		15.06%

(Continued)

133

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Guardian Portfolio - I Class Shares (AMGP)
2010		0.00%		2	$	21.625604	$	43		0.44%		19.01%
2010		0.10%		72,597		15.491894		1,124,665		0.44%		18.89%
2010		0.25%		52,120		14.216158		740,946		0.44%		18.72%
2009		0.00%		2		18.170858		36		0.35%		29.69%
2009		0.10%		68,145		13.030029		887,931		0.35%		29.56%
2009		0.25%		56,767		11.974954		679,782		0.35%		29.36%
2008		0.00%		392,065		14.011166		5,493,288		0.54%		-37.24%
2008		0.10%		73,276		10.057230		736,954		0.54%		-37.31%
2008		0.25%		86,429		9.256750		800,052		0.54%		-37.40%
2007		0.00%		434,652		22.326685		9,704,338		0.26%		7.39%
2007		0.10%		100,594		16.042197		1,613,749		0.26%		7.28%
2007		0.25%		98,428		14.787583		1,455,512		0.26%		7.12%
2006		0.00%		477,638		20.790721		9,930,438		0.70%		13.38%
2006		0.10%		88,754		14.953594		1,327,191		0.70%		13.26%
2006		0.25%		194,222		13.804932		2,681,222		0.70%		13.09%
2006		0.40%		74		14.282531		1,057		0.70%		12.93%
International Portfolio - S Class Shares (AMINS)
2008		0.00%		248,009		8.019658		1,988,947		0.00%		-46.44%
2007		0.00%		280,340		14.972222		4,197,313		1.87%		3.21%
2006		0.00%		140,884		14.506093		2,043,676		0.29%		23.45%
Mid-Cap Growth Portfolio - I Class Shares (AMCG)
2010		0.10%		31,209		17.557221		547,943		0.00%		28.97%
2010		0.20%		28,698		12.765923		366,356		0.00%		28.84%
2010		0.25%		409,150		12.701675		5,196,890		0.00%		28.77%
2009		0.10%		74,748		13.613710		1,017,598		0.00%		31.47%
2009		0.20%		37,091		9.908467		367,515		0.00%		31.34%
2009		0.25%		425,418		9.863529		4,196,123		0.00%		31.27%
2008		0.00%		1,241,103		14.241194		17,674,789		0.00%		-43.37%
2008		0.10%		457,960		10.355229		4,742,281		0.00%		-43.43%
2008		0.20%		43,749		7.544382		330,059		0.00%		-43.48%
2008		0.25%		464,312		7.513928		3,488,807		0.00%		-43.51%
2007		0.00%		1,375,816		25.147074		34,597,747		0.00%		22.53%
2007		0.10%		412,472		18.303613		7,549,728		0.00%		22.40%
2007		0.20%		38,324		13.348628		511,573		0.00%		22.28%
2007		0.25%		489,154		13.301400		6,506,433		0.00%		22.22%
2007		0.40%		3,494		19.674042		68,741		0.00%		22.04%
2006		0.00%		1,474,382		20.523539		30,259,536		0.00%		14.69%
2006		0.10%		366,596		14.953339		5,481,834		0.00%		14.58%
2006		0.20%		41,698		10.916267		455,187		0.00%		14.47%
2006		0.25%		391,016		10.883119		4,255,474		0.00%		14.41%
2006		0.40%		97,186		16.121456		1,566,780		0.00%		14.24%

(Continued)

134

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Partners Portfolio - I Class Shares (AMTP)
2010		0.00%		41,486	$	16.619507	$	689,477		0.72%		15.67%
2010		0.10%		120,297		15.409693		1,853,740		0.72%		15.55%
2010		0.20%		7,571		15.307500		115,893		0.72%		15.43%
2010		0.25%		90,228		15.230457		1,374,214		0.72%		15.38%
2009		0.00%		13,263		14.368560		190,570		0.68%		56.07%
2009		0.10%		109,951		13.335919		1,466,298		0.68%		55.92%
2009		0.25%		111,841		13.200579		1,476,366		0.68%		55.68%
2009		0.40%		886		12.319713		10,915		0.68%		55.45%
2008		0.00%		772,159		9.206209		7,108,657		0.48%		-52.39%
2008		0.10%		101,292		8.553125		866,363		0.48%		-52.44%
2008		0.25%		26,043		8.479038		220,820		0.48%		-52.51%
2008		0.40%		1,125		7.925107		8,916		0.48%		-52.58%
2007		0.00%		902,352		19.337705		17,449,417		0.62%		9.34%
2007		0.10%		194,378		17.983949		3,495,684		0.62%		9.23%
2007		0.25%		25,412		17.855044		453,732		0.62%		9.06%
2007		0.40%		596		16.713743		9,961		0.62%		8.90%
2006		0.00%		967,144		17.686426		17,105,321		0.68%		12.24%
2006		0.10%		148,132		16.464820		2,438,967		0.68%		12.13%
2006		0.25%		70,676		16.371496		1,157,072		0.68%		11.96%
2006		0.40%		414		15.348160		6,354		0.68%		11.79%
Regency Portfolio - I Class Shares (AMRI)
2010		0.00%		26,123		10.635314		277,826		0.77%		26.18%
2010		0.20%		14,683		10.536414		154,706		0.77%		25.93%
2010		0.25%		373,997		10.511809		3,931,385		0.77%		25.87%
2009		0.00%		13,249		8.428473		111,669		1.90%		46.56%
2009		0.25%		342,170		8.351420		2,857,605		1.90%		46.19%
2008		0.00%		23,511		5.750861		135,208		2.92%		-45.82%
2008		0.25%		319,496		5.712555		1,825,138		2.92%		-45.95%
2008		0.40%		10,164		5.689701		57,830		2.92%		-46.04%
2007		0.25%		32,224		10.569832		340,602		0.46%		3.04%
2007		0.40%		48,338		10.543396		509,647		0.46%		2.89%
2006		0.25%		6,524		10.257708		66,921		0.44%		2.58%	5/1/2006
2006		0.40%		34,570		10.247505		354,256		0.44%		2.48%	5/1/2006
Regency Portfolio - S Class Shares (AMRS)
2008		0.00%		97,268		7.206627		700,974		0.95%		-45.95%
2007		0.00%		94,148		13.332382		1,255,217		0.47%		3.05%
2006		0.00%		62,360		12.937253		806,767		0.48%		10.94%

(Continued)

135

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
2010		0.00%		64,200	$	13.632145	$	875,184		0.00%		19.61%
2010		0.10%		22,218		13.519070		300,367		0.00%		19.49%
2010		0.25%		54,706		13.351308		730,397		0.00%		19.31%
2009		0.00%		70,054		11.397179		798,418		0.00%		22.75%
2009		0.10%		19,428		11.313940		219,807		0.00%		22.63%
2009		0.25%		50,987		11.190284		570,559		0.00%		22.45%
2008		0.00%		74,557		9.284535		692,227		0.00%		-39.47%
2008		0.10%		20,820		9.225949		192,084		0.00%		-39.53%
2008		0.25%		29,832		9.138805		272,629		0.00%		-39.62%
2008		0.40%		480		9.052482		4,345		0.00%		-39.72%
2007		0.00%		70,284		15.339463		1,078,119		0.00%		0.52%
2007		0.10%		24,496		15.257956		373,759		0.00%		0.41%
2007		0.20%		13,934		15.176941		211,475		0.00%		0.31%
2007		0.25%		20,928		15.136586		316,778		0.00%		0.26%
2007		0.40%		1,998		15.016171		30,002		0.00%		0.11%
2006		0.00%		54,558		15.260818		832,600		0.00%		5.25%
2006		0.10%		9,420		15.195016		143,137		0.00%		5.15%
2006		0.20%		11,666		15.129543		176,501		0.00%		5.04%
2006		0.25%		18,450		15.096902		278,538		0.00%		4.99%
2006		0.40%		7,818		14.999423		117,265		0.00%		4.83%
Socially Responsive Portfolio - I Class Shares (AMSRS)
2010		0.00%		146,450		17.921368		2,624,584		0.04%		22.85%
2009		0.00%		156,920		14.587514		2,289,073		2.13%		31.43%
2008		0.00%		226,546		11.099348		2,514,513		2.16%		-39.44%
2007		0.00%		254,068		18.328379		4,656,655		0.09%		7.61%
2006		0.00%		160,134		17.031699		2,727,354		0.16%		13.70%
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
2010		0.00%		5,497		17.506620		96,234		0.19%		9.42%
2010		0.10%		251,170		13.042797		3,275,959		0.19%		9.31%
2010		0.20%		400,167		10.108773		4,045,197		0.19%		9.20%
2010		0.25%		2,685,048		10.057917		27,005,990		0.19%		9.14%
2009		0.00%		2,150,050		15.999951		34,400,695		0.33%		44.52%
2009		0.10%		315,282		11.932216		3,762,013		0.33%		44.37%
2009		0.20%		1,910,067		9.257266		17,681,998		0.33%		44.23%
2009		0.25%		3,390,134		9.215295		31,241,085		0.33%		44.16%
2009		0.40%		11,854		13.161667		156,018		0.33%		43.94%
2008		0.00%		2,357,625		11.071272		26,101,908		0.14%		-45.52%
2008		0.10%		586,696		8.264836		4,848,946		0.14%		-45.57%
2008		0.20%		2,400,370		6.418454		15,406,664		0.14%		-45.63%
2008		0.25%		3,405,107		6.392540		21,767,283		0.14%		-45.65%
2008		0.40%		137,113		9.143789		1,253,732		0.14%		-45.74%
2007		0.00%		2,560,294		20.320760		52,027,120		0.22%		14.15%
2007		0.10%		671,050		15.184919		10,189,840		0.22%		14.03%
2007		0.20%		1,732,160		11.804408		20,447,123		0.22%		13.92%
2007		0.25%		3,734,518		11.762653		43,927,839		0.22%		13.86%
2007		0.40%		364,698		16.850466		6,145,331		0.22%		13.69%
2006		0.00%		2,846,436		17.801944		50,672,094		0.38%		7.95%
2006		0.10%		530,754		13.316078		7,067,562		0.38%		7.84%
2006		0.20%		1,641,104		10.362024		17,005,159		0.38%		7.73%
2006		0.25%		3,188,414		10.330569		32,938,131		0.38%		7.68%
2006		0.40%		1,040,592		14.821276		15,422,901		0.38%		7.52%
Global Securities Fund/VA - Class 3 (OVGS3)
2010		0.00%		1,191,196		14.623513		17,419,470		1.42%		15.97%
2009		0.00%		1,233,718		12.609317		15,556,341		2.21%		39.70%
2008		0.00%		1,290,636		9.026171		11,649,501		1.57%		-40.19%
2007		0.00%		1,378,496		15.092302		20,804,678		1.24%		6.34%
2006		0.00%		1,194,348		14.192798		16,951,140		0.84%		17.69%

(Continued)

136

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Global Securities Fund/VA - Non-Service Shares (OVGS)
2010		0.00%		722,666	$	15.535921	$	11,227,282		1.44%		15.96%
2010		0.10%		261,739		15.371084		4,023,212		1.44%		15.85%
2010		0.20%		632,553		15.207955		9,619,838		1.44%		15.73%
2010		0.25%		1,773,965		15.127070		26,834,893		1.44%		15.68%
2009		0.00%		848,172		13.397168		11,363,103		2.21%		39.77%
2009		0.10%		263,715		13.268257		3,499,038		2.21%		39.63%
2009		0.20%		671,992		13.140568		8,830,357		2.21%		39.49%
2009		0.25%		1,906,475		13.077210		24,931,374		2.21%		39.42%
2009		0.40%		360		12.888902		4,640		2.21%		39.21%
2008		0.00%		1,018,581		9.585005		9,763,104		1.55%		-40.19%
2008		0.10%		292,991		9.502282		2,784,083		1.55%		-40.25%
2008		0.20%		771,294		9.420249		7,265,782		1.55%		-40.31%
2008		0.25%		1,877,301		9.379518		17,608,179		1.55%		-40.34%
2008		0.40%		134,904		9.258335		1,248,986		1.55%		-40.43%
2007		0.00%		1,244,300		16.025167		19,940,115		1.33%		6.32%
2007		0.10%		319,328		15.902782		5,078,204		1.33%		6.21%
2007		0.20%		664,384		15.781314		10,484,853		1.33%		6.11%
2007		0.25%		1,785,708		15.720950		28,073,026		1.33%		6.05%
2007		0.40%		792,482		15.541185		12,316,109		1.33%		5.89%
2006		0.00%		1,579,632		15.072696		23,809,313		1.07%		17.69%
2006		0.10%		150,202		14.972632		2,248,919		1.07%		17.57%
2006		0.20%		578,604		14.873215		8,605,702		1.07%		17.46%
2006		0.25%		1,608,848		14.823774		23,849,199		1.07%		17.40%
2006		0.40%		898,758		14.676391		13,190,524		1.07%		17.22%
High Income Fund/VA - Class 3 (OVHI3)
2010		0.00%		458,373		2.964546		1,358,868		5.86%		14.68%
2009		0.00%		380,539		2.584961		983,678		0.00%		26.75%
2008		0.00%		237,435		2.039384		484,221		5.39%		-78.89%
2007		0.00%		97,144		9.661022		938,510		0.00%		-3.39%	5/1/2007
High Income Fund/VA - Non-Service Shares (OVHI)
2010		0.00%		90,495		4.181802		378,432		6.48%		14.81%
2009		0.00%		111,867		3.642267		407,449		0.00%		25.32%
2008		0.00%		147,777		2.906468		429,509		8.17%		-78.67%
2007		0.00%		197,334		13.627157		2,689,101		7.57%		-0.10%
2006		0.00%		324,172		13.641009		4,422,033		6.62%		9.42%
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
2010		0.00%		1,678,208		13.722935		23,029,939		1.13%		16.11%
2010		0.10%		66,086		12.494835		825,734		1.13%		15.99%
2010		0.20%		137,581		11.819394		1,626,124		1.13%		15.88%
2010		0.25%		203,050		11.759898		2,387,847		1.13%		15.82%
2009		0.00%		1,878,416		11.819203		22,201,380		1.96%		28.29%
2009		0.10%		84,972		10.772223		915,337		1.96%		28.16%
2009		0.20%		184,538		10.200084		1,882,303		1.96%		28.03%
2009		0.25%		164,327		10.153815		1,668,546		1.96%		27.97%
2008		0.00%		2,155,808		9.213175		19,861,836		1.52%		-38.47%
2008		0.10%		96,686		8.405452		812,690		1.52%		-38.53%
2008		0.20%		127,115		7.966974		1,012,722		1.52%		-38.59%
2008		0.25%		197,165		7.934811		1,564,467		1.52%		-38.62%
2007		0.00%		2,359,688		14.973285		35,332,281		1.00%		4.42%
2007		0.10%		92,924		13.674278		1,270,669		1.00%		4.32%
2007		0.20%		333,966		12.973942		4,332,856		1.00%		4.21%
2007		0.25%		225,200		12.928044		2,911,396		1.00%		4.16%
2006		0.00%		2,564,464		14.338943		36,771,703		1.10%		15.02%
2006		0.10%		43,364		13.108136		568,421		1.10%		14.91%
2006		0.20%		184,798		12.449315		2,300,609		1.10%		14.80%
2006		0.25%		370,160		12.411511		4,594,245		1.10%		14.74%
2006		0.40%		3,524		11.856561		41,783		1.10%		14.57%

(Continued)

137

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
2010		0.00%		216,746	$	21.772215	$	4,719,041		0.66%		23.41%
2009		0.00%		247,124		17.642817		4,359,964		0.83%		37.20%
2008		0.00%		239,034		12.859537		3,073,867		0.51%		-37.83%
2007		0.00%		264,706		20.683895		5,475,151		0.29%		-1.21%
2006		0.00%		215,614		20.937110		4,514,334		0.13%		15.00%
MidCap Fund/VA - Non-Service Shares (OVAG)
2010		0.00%		1,279,230		14.473451		18,514,873		0.00%		27.46%
2010		0.10%		120,175		11.522698		1,384,740		0.00%		27.34%
2010		0.20%		109,183		7.952967		868,329		0.00%		27.21%
2010		0.25%		709,237		7.912957		5,612,162		0.00%		27.15%
2009		0.00%		1,391,901		11.354891		15,804,884		0.00%		32.61%
2009		0.10%		205,460		9.048967		1,859,201		0.00%		32.47%
2009		0.20%		105,065		6.251839		656,849		0.00%		32.34%
2009		0.25%		757,963		6.223493		4,717,177		0.00%		32.28%
2008		0.00%		1,511,513		8.562806		12,942,793		0.00%		-49.07%
2008		0.10%		250,167		6.830721		1,708,821		0.00%		-49.12%
2008		0.20%		135,869		4.723995		641,844		0.00%		-49.17%
2008		0.25%		841,598		4.704920		3,959,651		0.00%		-49.19%
2007		0.00%		1,618,182		16.811588		27,204,209		0.00%		6.33%
2007		0.10%		528,414		13.424400		7,093,641		0.00%		6.23%
2007		0.20%		121,920		9.293377		1,133,049		0.00%		6.12%
2007		0.25%		1,094,732		9.260496		10,137,761		0.00%		6.07%
2006		0.00%		1,834,314		15.810416		29,001,267		0.00%		2.96%
2006		0.10%		445,344		12.637642		5,628,098		0.00%		2.85%
2006		0.20%		106,664		8.757520		934,112		0.00%		2.75%
2006		0.25%		1,386,376		8.730923		12,104,342		0.00%		2.70%
2006		0.40%		986		13.200215		13,015		0.00%		2.55%
Strategic Bond Fund/VA - Non-Service Shares (OVSB)
2010		0.20%		156,222		11.567209		1,807,053		7.99%		14.74%
2010		0.25%		22,412		11.549930		258,857		7.99%		14.68%
2009		0.20%		152,297		10.081478		1,535,379		0.32%		18.59%
2009		0.25%		21,266		10.071445		214,179		0.32%		18.53%
2008		0.20%		104,885		8.500963		891,624		3.48%		-14.99%	1/2/2008
2008		0.25%		9,576		8.496736		81,365		3.48%		-15.03%	1/2/2008
All Asset Portfolio - Administrative Class (PMVAAA)
2010		0.00%		11,713		15.645399		183,255		8.29%		13.09%
2010		0.10%		41,515		15.541558		645,208		8.29%		12.98%
2010		0.20%		6,904		15.438355		106,586		8.29%		12.87%
2010		0.25%		76,310		15.387057		1,174,186		8.29%		12.81%
2009		0.00%		1,575		13.834339		21,789		6.32%		21.57%
2009		0.10%		25,654		13.756266		352,903		6.32%		21.45%
2009		0.25%		35,843		13.639951		488,897		6.32%		21.27%
2008		0.00%		1,313		11.379397		14,941		4.28%		-15.84%
2008		0.10%		15,498		11.326491		175,538		4.28%		-15.93%
2008		0.25%		35,350		11.247576		397,602		4.28%		-16.05%
2008		0.40%		730		11.169222		8,154		4.28%		-16.18%
2007		0.10%		15,834		13.472183		213,319		8.25%		8.22%
2007		0.25%		133,088		13.398414		1,783,168		8.25%		8.06%
2007		0.40%		2,462		13.325057		32,806		8.25%		7.89%
2006		0.25%		121,412		12.399544		1,505,453		4.03%		4.40%
2006		0.40%		2,542		12.350260		31,394		4.03%		4.24%
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)
2010		0.00%		131,526		12.094751		1,590,774		1.34%		9.48%
2010		0.20%		7,458		12.030347		89,722		1.34%		9.26%
2010		0.25%		20,610		12.014282		247,614		1.34%		9.21%
2009		0.00%		41,010		11.047544		453,060		1.82%		4.07%
2009		0.25%		16,785		11.001548		184,661		1.82%		3.81%

(Continued)

138

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Low Duration Portfolio - Administrative Class (PMVLDA)
2010		0.00%		593,471	$	14.231338	$	8,445,886		1.64%		5.29%
2010		0.10%		137,386		14.113277		1,938,967		1.64%		5.19%
2010		0.20%		1,420,531		13.996078		19,881,863		1.64%		5.08%
2010		0.25%		2,948,750		13.937807		41,099,108		1.64%		5.03%
2009		0.00%		298,516		13.516257		4,034,819		3.53%		13.32%
2009		0.10%		109,511		13.417547		1,469,369		3.53%		13.20%
2009		0.20%		1,554,752		13.319459		20,708,456		3.53%		13.09%
2009		0.25%		2,339,252		13.270656		31,043,409		3.53%		13.03%
2009		0.40%		9,468		13.125160		124,269		3.53%		12.86%
2008		0.00%		15,497		11.927738		184,844		4.10%		-0.45%
2008		0.10%		85,251		11.852482		1,010,436		4.10%		-0.55%
2008		0.20%		1,648,644		11.777625		19,417,111		4.10%		-0.65%
2008		0.25%		1,211,549		11.740354		14,224,014		4.10%		-0.70%
2008		0.40%		167,038		11.629122		1,942,505		4.10%		-0.85%
2007		0.10%		115,344		11.918100		1,374,681		4.75%		7.27%
2007		0.20%		1,869,506		11.854696		22,162,425		4.75%		7.16%
2007		0.25%		1,853,686		11.823104		21,916,322		4.75%		7.10%
2007		0.40%		189,584		11.728722		2,223,578		4.75%		6.94%
2006		0.10%		24,296		11.110721		269,946		4.19%		3.86%
2006		0.20%		1,775,448		11.062747		19,641,332		4.19%		3.75%
2006		0.25%		875,682		11.038824		9,666,499		4.19%		3.70%
2006		0.40%		995,170		10.967285		10,914,313		4.19%		3.55%
Real Return Portfolio - Administrative Class (PMVRRA)
2010		0.00%		46,129		16.641007		767,633		1.44%		8.11%
2010		0.10%		229,063		16.502776		3,780,175		1.44%		8.00%
2010		0.20%		1,617,090		16.365561		26,464,585		1.44%		7.90%
2010		0.25%		3,631,928		16.297330		59,190,729		1.44%		7.84%
2009		0.00%		17,619		15.392452		271,200		3.17%		18.35%
2009		0.10%		171,544		15.279874		2,621,171		3.17%		18.23%
2009		0.20%		1,055,715		15.168007		16,013,093		3.17%		18.11%
2009		0.25%		3,725,567		15.112339		56,302,031		3.17%		18.05%
2009		0.40%		15,809		14.946401		236,288		3.17%		17.87%
2008		0.00%		1,297		13.006263		16,869		3.55%		-7.02%
2008		0.10%		150,898		12.924061		1,950,215		3.55%		-7.12%
2008		0.20%		817,317		12.842295		10,496,226		3.55%		-7.21%
2008		0.25%		2,758,640		12.801575		35,314,937		3.55%		-7.26%
2008		0.40%		953,934		12.680079		12,095,958		3.55%		-7.40%
2007		0.10%		93,920		13.914414		1,306,842		4.64%		10.53%
2007		0.20%		777,912		13.840237		10,766,486		4.64%		10.42%
2007		0.25%		1,535,174		13.803269		21,190,420		4.64%		10.37%
2007		0.40%		1,489,604		13.692856		20,396,933		4.64%		10.20%
2006		0.10%		50,474		12.588282		635,381		4.26%		0.64%
2006		0.20%		672,656		12.533792		8,430,930		4.26%		0.54%
2006		0.25%		1,287,852		12.506613		16,106,667		4.26%		0.49%
2006		0.40%		1,442,470		12.425357		17,923,205		4.26%		0.34%

(Continued)

139

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Total Return Portfolio - Administrative Class (PMVTRA)
2010		0.00%		335,164	$	17.016112	$	5,703,188		2.37%		8.11%
2010		0.10%		7,893,918		16.874773		133,208,074		2.37%		8.01%
2010		0.20%		4,544,093		16.734465		76,042,965		2.37%		7.90%
2010		0.25%		8,614,973		16.664698		143,565,923		2.37%		7.84%
2009		0.00%		176,178		15.739138		2,772,890		5.33%		14.03%
2009		0.10%		1,021,669		15.624030		15,962,587		5.33%		13.91%
2009		0.20%		4,005,633		15.509642		62,125,934		5.33%		13.80%
2009		0.25%		9,496,915		15.452727		146,753,235		5.33%		13.74%
2009		0.40%		22,586		15.283042		345,183		5.33%		13.57%
2008		0.00%		72,078		13.802824		994,880		4.47%		4.75%
2008		0.10%		1,250,843		13.715592		17,156,052		4.47%		4.64%
2008		0.20%		2,728,440		13.628820		37,185,418		4.47%		4.54%
2008		0.25%		7,835,547		13.585613		106,450,709		4.47%		4.49%
2008		0.40%		621,710		13.456667		8,366,144		4.47%		4.33%
2007		0.10%		832,700		13.106902		10,914,117		4.81%		8.63%
2007		0.20%		3,931,096		13.037033		51,249,828		4.81%		8.52%
2007		0.25%		5,454,364		13.002214		70,918,808		4.81%		8.47%
2007		0.40%		1,905,050		12.898203		24,571,722		4.81%		8.31%
2006		0.10%		8,770		12.065231		105,812		4.42%		3.74%
2006		0.20%		3,889,630		12.013005		46,726,145		4.42%		3.64%
2006		0.25%		3,326,500		11.986960		39,874,622		4.42%		3.59%
2006		0.40%		3,150,134		11.909077		37,515,188		4.42%		3.43%
Variable Contracts Trust - Emerging Markets VCT Portfolio - Class I Shares (PIVEMI)
2010		0.00%		89,814		8.855229		795,324		0.49%		15.89%
2010		0.20%		6,533		8.797643		57,475		0.49%		15.66%
2010		0.25%		131,029		8.783283		1,150,865		0.49%		15.61%
2009		0.00%		38,365		7.640745		293,137		1.20%		74.64%
2009		0.25%		134,639		7.597606		1,022,934		1.20%		74.21%
2008		0.00%		1,435		4.375030		6,278		0.36%		-58.20%
2008		0.25%		32,111		4.361213		140,043		0.36%		-58.31%
Variable Contracts Trust - High Yield VCT Portfolio - Class I Shares (PIHYB1)
2010		0.00%		8,029		21.329223		171,252		5.62%		18.04%
2010		0.10%		65,118		21.152286		1,377,395		5.62%		17.92%
2010		0.20%		264,897		20.976629		5,556,646		5.62%		17.81%
2010		0.25%		266,392		20.889289		5,564,739		5.62%		17.75%
2009		0.00%		6,000		18.069028		108,414		8.34%		60.49%
2009		0.10%		56,238		17.937073		1,008,745		8.34%		60.33%
2009		0.20%		517,292		17.805947		9,210,874		8.34%		60.17%
2009		0.25%		458,604		17.740695		8,135,954		8.34%		60.09%
2008		0.00%		433		11.258511		4,875		8.46%		-35.43%
2008		0.10%		110,077		11.187479		1,231,484		8.46%		-35.49%
2008		0.20%		694,575		11.116824		7,721,468		8.46%		-35.55%
2008		0.25%		254,649		11.081635		2,821,927		8.46%		-35.59%
2008		0.40%		52,370		10.976641		574,847		8.46%		-35.68%
2007		0.10%		100,470		17.342224		1,742,373		5.36%		5.81%
2007		0.20%		507,564		17.249965		8,755,461		5.36%		5.71%
2007		0.25%		195,182		17.203983		3,357,908		5.36%		5.65%
2007		0.40%		179,670		17.066645		3,066,364		5.36%		5.50%
2006		0.10%		10,514		16.389248		172,317		5.53%		8.39%
2006		0.20%		467,554		16.318486		7,629,773		5.53%		8.29%
2006		0.25%		82,444		16.283186		1,342,451		5.53%		8.23%
2006		0.40%		280,054		16.177661		4,530,619		5.53%		8.07%

(Continued)

140

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
2010		0.00%		54,238	$	14.401578	$	781,113		1.61%		14.38%
2009		0.00%		59,317		12.591298		746,878		2.76%		29.81%
2008		0.00%		63,826		9.699626		619,088		2.04%		-38.70%
2007		0.00%		65,188		15.822165		1,031,415		1.43%		-6.04%
2006		0.00%		79,204		16.838971		1,333,714		1.47%		15.91%
Putnam VT International Equity Fund - IB Shares (PVTIGB)
2010		0.00%		64,956		17.749703		1,152,950		3.58%		10.03%
2009		0.00%		77,883		16.132414		1,256,441		0.00%		24.63%
2008		0.00%		98,334		12.943794		1,272,815		2.18%		-43.95%
2007		0.00%		132,680		23.093467		3,064,041		2.23%		8.37%
2006		0.00%		227,790		21.310423		4,854,301		0.36%		27.72%
Putnam VT Small Cap Value Fund - IB Shares (PVTSCB)
2010		0.20%		23		8.900840		205		0.25%		25.73%
2010		0.25%		847		8.886315		7,527		0.25%		25.67%
2009		0.25%		532		7.071223		3,762		1.78%		31.20%
2008		0.25%		65		5.389467		350		0.00%		-39.51%
Putnam VT Vista Fund - IB Shares (PVVIB)
2009		0.20%		5,870		13.767109		80,813		0.00%		37.67%	2/6/2009
2009		0.25%		797		14.151257		11,279		0.00%		41.51%	2/13/2009
Putnam VT Voyager Fund - IB Shares (PVTVB)
2010		0.00%		84,002		18.251644		1,533,175		1.31%		20.80%
2009		0.00%		89,306		15.109296		1,349,351		0.69%		63.90%
2008		0.00%		54,796		9.218880		505,158		0.00%		-37.03%
2007		0.00%		29,740		14.640393		435,405		0.00%		5.52%
2006		0.00%		28,784		13.874456		399,362		0.11%		5.44%
Global Real Estate Portfolio - Class II (VKVGR2)
2010		0.00%		17,979		8.477927		152,425		8.26%		22.32%
2010		0.20%		9,827		8.422781		82,771		8.26%		22.07%
2010		0.25%		120,544		8.409049		1,013,660		8.26%		22.01%
2009		0.00%		10,415		6.931156		72,188		0.02%		41.42%
2009		0.25%		98,075		6.892024		675,935		0.02%		41.06%
2008		0.00%		9,686		4.901259		47,474		4.11%		-44.34%
2008		0.25%		85,328		4.885787		416,894		4.11%		-44.48%
2008		0.40%		4,297		4.876534		20,954		4.11%		-44.57%

(Continued)

141

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Micro-Cap Portfolio - Investment Class (ROCMC)
2010		0.00%		31,852	$	28.128399	$	895,946		1.92%		29.96%
2010		0.10%		126,687		27.895201		3,533,959		1.92%		29.83%
2010		0.20%		343,994		27.663928		9,516,225		1.92%		29.70%
2010		0.25%		1,201,054		27.549005		33,087,843		1.92%		29.64%
2009		0.00%		16,000		21.643845		346,302		0.00%		58.04%
2009		0.10%		126,584		21.485855		2,719,765		0.00%		57.89%
2009		0.20%		478,012		21.329008		10,195,522		0.00%		57.73%
2009		0.25%		1,217,957		21.251012		25,882,819		0.00%		57.65%
2009		0.40%		9,307		21.018795		195,622		0.00%		57.41%
2008		0.00%		3,305		13.694894		45,262		2.44%		-43.27%
2008		0.10%		126,086		13.608530		1,715,845		2.44%		-43.33%
2008		0.20%		526,233		13.522698		7,116,090		2.44%		-43.38%
2008		0.25%		1,056,241		13.479984		14,238,112		2.44%		-43.41%
2008		0.40%		243,108		13.352691		3,246,146		2.44%		-43.50%
2007		0.10%		192,752		24.012175		4,628,395		1.50%		3.87%
2007		0.20%		516,162		23.884685		12,328,367		1.50%		3.77%
2007		0.25%		1,213,818		23.821182		28,914,579		1.50%		3.72%
2007		0.40%		383,860		23.631757		9,071,286		1.50%		3.56%
2006		0.10%		102,390		23.116715		2,366,920		0.17%		20.95%
2006		0.20%		487,556		23.017122		11,222,136		0.17%		20.83%
2006		0.25%		779,248		22.967474		17,897,358		0.17%		20.77%
2006		0.40%		767,354		22.819241		17,510,436		0.17%		20.59%
Small-Cap Portfolio - Investment Class (ROCSC)
2010		0.20%		24,253		11.890655		288,384		0.13%		20.28%
2010		0.25%		3,479		11.872859		41,306		0.13%		20.22%
2009		0.20%		24,523		9.885736		242,428		0.00%		34.93%
2009		0.25%		3,424		9.875865		33,815		0.00%		34.86%
2008		0.20%		11,031		7.326443		80,818		0.43%		-26.74%	1/2/2008
2008		0.25%		1,007		7.322794		7,374		0.43%		-26.77%	1/2/2008
Blue Chip Growth Portfolio - II (TRBCG2)
2010		0.20%		30,509		12.978284		395,954		0.00%		15.77%
2010		0.25%		4,383		12.941568		56,723		0.00%		15.71%
2009		0.00%		247,600		11.315697		2,801,767		0.00%		41.79%
2009		0.20%		32,437		11.210550		363,637		0.00%		41.51%
2009		0.25%		4,535		11.184427		50,721		0.00%		41.44%
2008		0.00%		273,286		7.980543		2,180,971		0.11%		-42.65%
2008		0.20%		23,532		7.922205		186,425		0.11%		-42.76%
2008		0.25%		2,151		7.907699		17,009		0.11%		-42.79%
2007		0.00%		212,892		13.915435		2,962,485		0.11%		12.49%
2006		0.00%		117,044		12.370493		1,447,892		0.34%		9.33%

(Continued)

142

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Equity Income Portfolio - II (TREI2)
2010		0.00%		78,807	$	16.874180	$	1,329,804		1.59%		14.74%
2010		0.10%		186,234		16.734289		3,116,494		1.59%		14.63%
2010		0.20%		822,711		16.595545		13,653,337		1.59%		14.51%
2010		0.25%		2,576,571		16.526617		42,582,002		1.59%		14.46%
2009		0.00%		348,107		14.706264		5,119,353		1.81%		25.25%
2009		0.10%		153,172		14.598914		2,236,145		1.81%		25.13%
2009		0.20%		1,596,462		14.492354		23,136,492		1.81%		25.00%
2009		0.25%		2,808,807		14.439362		40,557,381		1.81%		24.94%
2009		0.40%		15,065		14.281536		215,151		1.81%		24.75%
2008		0.00%		345,566		11.741384		4,057,423		2.12%		-36.26%
2008		0.10%		166,121		11.667331		1,938,189		2.12%		-36.33%
2008		0.20%		1,762,229		11.593772		20,430,881		2.12%		-36.39%
2008		0.25%		2,240,330		11.557153		25,891,837		2.12%		-36.42%
2008		0.40%		562,661		11.447985		6,441,335		2.12%		-36.52%
2007		0.00%		342,686		18.422059		6,312,982		1.51%		3.03%
2007		0.10%		160,922		18.324230		2,948,772		1.51%		2.93%
2007		0.20%		1,884,266		18.226974		34,344,467		1.51%		2.82%
2007		0.25%		2,229,008		18.178518		40,520,062		1.51%		2.77%
2007		0.40%		834,360		18.033915		15,046,777		1.51%		2.62%
2006		0.00%		232,318		17.880327		4,153,922		1.35%		18.65%
2006		0.10%		17,014		17.803262		302,905		1.35%		18.53%
2006		0.20%		1,955,804		17.726578		34,669,712		1.35%		18.41%
2006		0.25%		1,540,034		17.688346		27,240,654		1.35%		18.35%
2006		0.40%		1,391,756		17.574134		24,458,906		1.35%		18.18%
Health Sciences Portfolio - II (TRHS2)
2010		0.00%		59,497		10.790053		641,976		0.00%		15.31%
2010		0.20%		148,647		10.725614		1,594,330		0.00%		15.08%
2010		0.25%		21,321		10.709560		228,339		0.00%		15.02%
2009		0.20%		147,391		9.320531		1,373,762		0.00%		31.09%
2009		0.25%		20,581		9.311233		191,634		0.00%		31.03%
2008		0.20%		163,681		7.109924		1,163,759		0.00%		-28.90%	1/2/2008
2008		0.25%		14,944		7.106377		106,198		0.00%		-28.94%	1/2/2008
Limited-Term Bond Portfolio - II (TRLT2)
2008		0.00%		177,875		11.230967		1,997,708		3.75%		1.31%
2007		0.00%		97,460		11.086232		1,080,464		4.06%		5.23%
2006		0.00%		51,598		10.535464		543,609		3.73%		4.03%
Mid-Cap Growth Portfolio - II (TRMCG2)
2010		0.10%		106,889		26.402453		2,822,132		0.00%		27.65%
2010		0.20%		157,925		26.183527		4,135,034		0.00%		27.52%
2010		0.25%		589,794		26.074777		15,378,747		0.00%		27.46%
2009		0.10%		83,827		20.683485		1,733,834		0.00%		45.22%
2009		0.20%		266,361		20.532481		5,469,052		0.00%		45.07%
2009		0.25%		665,706		20.457409		13,618,620		0.00%		45.00%
2008		0.10%		97,962		14.242855		1,395,259		0.00%		-40.00%
2008		0.20%		302,266		14.153026		4,277,979		0.00%		-40.06%
2008		0.25%		681,051		14.108326		9,608,490		0.00%		-40.09%
2007		0.10%		118,598		23.736199		2,815,066		0.00%		17.11%
2007		0.20%		283,588		23.610164		6,695,559		0.00%		16.99%
2007		0.25%		726,466		23.547392		17,106,380		0.00%		16.93%
2007		0.40%		34,870		23.360091		814,566		0.00%		16.75%
2006		0.10%		23,520		20.268825		476,723		0.00%		6.28%
2006		0.20%		288,630		20.181467		5,824,977		0.00%		6.17%
2006		0.25%		560,134		20.137940		11,279,945		0.00%		6.12%
2006		0.40%		256,586		20.007898		5,133,747		0.00%		5.96%

(Continued)

143

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
New America Growth Portfolio (TRNAG1)
2010		0.00%		39,759	$	15.281652	$	607,583		0.22%		19.65%
2010		0.10%		74,949		15.180193		1,137,740		0.22%		19.53%
2010		0.20%		150,190		15.079403		2,264,776		0.22%		19.41%
2010		0.25%		1,088,062		15.029245		16,352,750		0.22%		19.35%
2009		0.00%		19,557		12.771923		249,780		0.00%		49.76%
2009		0.10%		67,015		12.699803		851,077		0.00%		49.62%
2009		0.20%		107,004		12.628086		1,351,256		0.00%		49.47%
2009		0.25%		875,288		12.592384		11,021,963		0.00%		49.39%
2009		0.40%		2,068		12.485874		25,821		0.00%		49.17%
2008		0.10%		52,850		8.488305		448,607		0.00%		-38.30%
2008		0.20%		83,615		8.448808		706,447		0.00%		-38.37%
2008		0.25%		307,465		8.429140		2,591,666		0.00%		-38.40%
2008		0.40%		481,319		8.370383		4,028,824		0.00%		-38.49%
2007		0.10%		25,334		13.758234		348,551		0.00%		13.67%
2007		0.20%		299,098		13.707959		4,100,023		0.00%		13.55%
2007		0.25%		194,180		13.682900		2,656,946		0.00%		13.49%
2007		0.40%		536,034		13.607980		7,294,340		0.00%		13.32%
2006		0.20%		301,726		12.072027		3,642,444		0.04%		7.12%
2006		0.25%		86,392		12.056017		1,041,543		0.04%		7.06%
2006		0.40%		551,676		12.008095		6,624,578		0.04%		6.90%
Personal Strategy Balanced Portfolio (TRPSB1)
2010		0.00%		22,601		11.478195		259,419		2.69%		13.71%
2010		0.20%		275		11.384193		3,131		2.69%		13.48%
2010		0.25%		108,242		11.360802		1,229,716		2.69%		13.43%
2009		0.00%		2,569		10.094281		25,932		2.19%		32.12%
2009		0.25%		42,706		10.016034		427,745		2.19%		31.79%
2008		0.00%		7,764		7.640233		59,319		2.80%		-29.88%
2008		0.25%		47,397		7.599968		360,216		2.80%		-30.06%
2008		0.40%		143		7.575907		1,083		2.80%		-30.16%
2007		0.25%		5,720		10.865761		62,152		1.34%		7.34%
2007		0.40%		340		10.847653		3,688		1.34%		7.18%
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
2010		0.00%		307,064		34.249232		10,516,706		0.62%		26.84%
2010		0.10%		119,267		46.313968		5,523,728		0.62%		26.71%
2010		0.20%		68,475		42.683992		2,922,786		0.62%		26.59%
2010		0.25%		48,048		42.469224		2,040,561		0.62%		26.52%
2009		0.00%		363,631		27.002169		9,818,826		0.16%		113.17%
2009		0.10%		130,675		36.550513		4,776,238		0.16%		112.96%
2009		0.20%		78,529		33.719407		2,647,951		0.16%		112.75%
2009		0.25%		52,024		33.566508		1,746,264		0.16%		112.64%
2008		0.00%		379,342		12.666688		4,805,007		0.00%		-64.78%
2008		0.10%		96,284		17.162939		1,652,516		0.00%		-64.81%
2008		0.20%		70,043		15.849346		1,110,136		0.00%		-64.85%
2008		0.25%		73,280		15.785351		1,156,751		0.00%		-64.87%
2007		0.00%		517,190		35.963363		18,599,892		0.40%		37.61%
2007		0.10%		94,388		48.778177		4,604,075		0.40%		37.48%
2007		0.20%		66,494		45.090153		2,998,225		0.40%		37.34%
2007		0.25%		105,400		44.930650		4,735,691		0.40%		37.27%
2006		0.00%		565,466		26.133423		14,777,562		0.56%		39.49%
2006		0.10%		43,526		35.481161		1,544,353		0.56%		39.35%
2006		0.20%		46,954		32.831467		1,541,569		0.56%		39.21%
2006		0.25%		66,446		32.731758		2,174,894		0.56%		39.14%

(Continued)

144

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class  (VWHA)
2010		0.00%		273,628	$	43.844278	$	11,997,022		0.34%		29.23%
2010		0.10%		373,992		60.873685		22,766,271		0.34%		29.11%
2010		0.20%		277,177		51.702291		14,330,686		0.34%		28.98%
2010		0.25%		184,024		51.442267		9,466,612		0.34%		28.91%
2009		0.00%		317,923		33.926069		10,785,878		0.25%		57.54%
2009		0.10%		104,417		47.150241		4,923,287		0.25%		57.38%
2009		0.20%		189,232		40.086483		7,585,645		0.25%		57.22%
2009		0.25%		175,560		39.904798		7,005,686		0.25%		57.14%
2009		0.40%		2,185		32.178659		70,310		0.25%		56.91%
2008		0.00%		387,879		21.535500		8,353,168		0.27%		-46.12%
2008		0.10%		84,350		29.959857		2,527,114		0.27%		-46.18%
2008		0.20%		129,114		25.496953		3,292,014		0.27%		-46.23%
2008		0.25%		133,086		25.394095		3,379,599		0.27%		-46.26%
2008		0.40%		6,726		20.508184		137,938		0.27%		-46.34%
2007		0.00%		416,768		39.972562		16,659,285		0.11%		45.36%
2007		0.10%		99,614		55.665036		5,545,017		0.11%		45.21%
2007		0.20%		81,432		47.420563		3,861,551		0.11%		45.06%
2007		0.25%		170,146		47.252962		8,039,902		0.11%		44.99%
2007		0.40%		6,820		38.218809		260,652		0.11%		44.77%
2006		0.00%		487,264		27.499610		13,399,570		0.06%		24.49%
2006		0.10%		20,452		38.333948		784,006		0.06%		24.37%
2006		0.20%		59,788		32.689202		1,954,422		0.06%		24.24%
2006		0.25%		153,486		32.590053		5,002,117		0.06%		24.18%
Vanguard(R) Variable Insurance Funds - Balanced Portfolio (VVB)
2010		0.20%		159,013		10.546985		1,677,108		2.90%		10.79%
2010		0.25%		22,808		10.531205		240,196		2.90%		10.74%
2009		0.20%		127,334		9.519394		1,212,143		4.83%		22.66%
2009		0.25%		17,780		9.509907		169,086		4.83%		22.60%
2008		0.20%		109,081		7.761012		846,579		0.00%		-22.39%	1/2/2008
2008		0.25%		9,959		7.757156		77,254		0.00%		-22.43%	1/2/2008
Vanguard(R) Variable Insurance Funds - Diversified Value Portfolio (VVDV)
2010		0.20%		166,695		8.939847		1,490,228		2.69%		9.11%
2010		0.25%		23,910		8.926459		213,432		2.69%		9.06%
2009		0.20%		175,071		8.193060		1,434,367		3.85%		26.67%
2009		0.25%		24,446		8.184883		200,088		3.85%		26.61%
2008		0.20%		143,388		6.467982		927,431		0.00%		-35.32%	1/2/2008
2008		0.25%		13,091		6.464759		84,630		0.00%		-35.35%	1/2/2008
Vanguard(R) Variable Insurance Funds - International Portfolio (VVI)
2010		0.20%		421,970		9.104558		3,841,850		1.67%		15.49%
2010		0.25%		60,536		9.090922		550,328		1.67%		15.43%
2009		0.20%		410,028		7.883310		3,232,378		3.47%		42.50%
2009		0.25%		57,254		7.875437		450,900		3.47%		42.43%
2008		0.20%		356,354		5.532166		1,971,409		0.00%		-44.68%	1/2/2008
2008		0.25%		32,536		5.529407		179,905		0.00%		-44.71%	1/2/2008
Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)
2010		0.20%		763,575		10.328493		7,886,579		0.86%		25.12%
2010		0.25%		109,541		10.313041		1,129,701		0.86%		25.06%
2009		0.20%		342,621		8.254974		2,828,327		1.64%		40.09%
2009		0.25%		47,841		8.246745		394,533		1.64%		40.02%
2008		0.20%		301,906		5.892524		1,778,988		0.00%		-41.07%	1/2/2008
2008		0.25%		27,909		5.889589		164,373		0.00%		-41.10%	1/2/2008
Vanguard(R) Variable Insurance Funds - REIT Index Portfolio (VVREI)
2010		0.20%		176,817		10.369043		1,833,423		0.00%		3.69%	12/1/2010
2010		0.25%		25,325		10.368617		262,585		0.00%		3.69%	12/1/2010

(Continued)

145

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Vanguard(R) Variable Insurance Funds - Short-Term Investment-Grade Portfolio  (VVSTC)
2010		0.20%		271,236	$	11.444105	$	3,104,053		2.88%		5.01%
2010		0.25%		38,912		11.426982		444,647		2.88%		4.96%
2009		0.20%		278,059		10.898210		3,030,345		3.71%		13.63%
2009		0.25%		38,826		10.887347		422,712		3.71%		13.57%
2008		0.20%		223,003		9.590829		2,138,784		0.00%		-4.09%	1/2/2008
2008		0.25%		20,361		9.586056		195,182		0.00%		-4.14%	1/2/2008
Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)
2010		0.20%		719,981		9.957077		7,168,906		0.00%		-0.43%	12/1/2010
2010		0.25%		103,135		9.956666		1,026,881		0.00%		-0.43%	12/1/2010
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
2010		0.00%		503,668		11.421435		5,752,611		1.09%		8.67%
2010		0.20%		1,589		11.347238		18,031		1.09%		8.46%
2010		0.25%		219,804		11.328745		2,490,103		1.09%		8.40%
2009		0.00%		287,483		10.509760		3,021,377		0.13%		25.05%
2009		0.25%		146,447		10.450534		1,530,449		0.13%		24.73%
2008		0.00%		9,046		8.404777		76,030		1.01%		-25.79%
2008		0.25%		36,675		8.378314		307,275		1.01%		-25.98%
2008		0.40%		795		8.362478		6,648		1.01%		-26.09%
Ivy Fund Variable Insurance Portfolios, Inc. - Growth (WRGP)
2010		0.00%		10,396		14.137204		146,970		0.58%		12.58%
2010		0.10%		48,419		14.057322		680,641		0.58%		12.47%
2010		0.20%		2,258		13.977904		31,562		0.58%		12.36%
2010		0.25%		43,733		13.938364		609,566		0.58%		12.30%
2009		0.00%		9,754		12.557495		122,486		0.37%		27.07%
2009		0.10%		37,585		12.499017		469,776		0.37%		26.95%
2009		0.25%		28,728		12.411842		356,567		0.37%		26.76%
2008		0.10%		21,448		9.845881		211,174		0.00%		-36.34%
2008		0.25%		42,971		9.791882		420,767		0.00%		-36.43%
2008		0.40%		229		9.738174		2,230		0.00%		-36.53%
2007		0.10%		12,832		15.110144		193,893		0.00%		22.80%
2007		0.25%		2,806		15.049872		43,230		0.00%		22.61%
2007		0.40%		24		14.989837		360		0.00%		22.43%
2006		0.40%		1,882		12.243877		23,043		0.00%		4.62%
Ivy Fund Variable Insurance Portfolios, Inc. - Real Estate Securities (WRRESP)
2010		0.00%		26,415		12.767438		337,252		2.03%		28.51%
2010		0.10%		27,301		12.695262		346,593		2.03%		28.38%
2010		0.20%		4,295		12.623516		54,218		2.03%		28.25%
2010		0.25%		62,625		12.587772		788,309		2.03%		28.19%
2009		0.00%		10,737		9.935185		106,674		2.78%		23.62%
2009		0.10%		29,857		9.888874		295,252		2.78%		23.50%
2009		0.25%		48,451		9.819846		475,781		2.78%		23.31%
2008		0.00%		193		8.036688		1,551		0.94%		-36.03%
2008		0.10%		25,624		8.007242		205,178		0.94%		-36.10%
2008		0.25%		5,538		7.963301		44,101		0.94%		-36.20%
2008		0.40%		574		7.919581		4,546		0.94%		-36.29%
2007		0.10%		5,798		12.530753		72,653		1.28%		-16.15%
2007		0.25%		3,926		12.480780		49,000		1.28%		-16.28%
2007		0.40%		2,396		12.430983		29,785		1.28%		-16.40%
2006		0.25%		594		14.907103		8,855		1.58%		29.76%
2006		0.40%		2,546		14.870055		37,859		1.58%		29.57%

(Continued)

146

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Ivy Fund Variable Insurance Portfolios, Inc. - Science and Technology  (WRSTP)
2010		0.00%		7,021	$	10.930985	$	76,746		0.00%		12.75%
2010		0.20%		132		10.859919		1,434		0.00%		12.53%
2010		0.25%		117,513		10.842237		1,274,104		0.00%		12.47%
2009		0.00%		4,290		9.694632		41,590		0.00%		43.84%
2009		0.25%		103,724		9.639961		999,895		0.00%		43.48%
2008		0.00%		3,163		6.739848		21,318		0.00%		-33.89%
2008		0.25%		95,158		6.718607		639,329		0.00%		-34.05%
2008		0.40%		609		6.705890		4,084		0.00%		-34.15%
2007		0.25%		448		10.188127		4,564		0.00%		1.88%	9/27/2007
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
2010		0.00%		229,478		10.410941		2,389,082		0.00%		35.54%
2010		0.10%		31,322		10.377053		325,030		0.00%		35.41%
2010		0.20%		346		10.343273		3,579		0.00%		35.27%
2010		0.25%		147,998		10.326390		1,528,285		0.00%		35.20%
2009		0.00%		169,734		7.681010		1,303,729		0.00%		40.30%
2009		0.10%		30,327		7.663653		232,416		0.00%		40.16%
2009		0.25%		43,498		7.637661		332,223		0.00%		39.95%
2008		0.00%		97,543		5.474555		534,005		0.00%		-44.36%
2008		0.10%		35,560		5.467646		194,429		0.00%		-44.41%
2008		0.25%		42,095		5.457284		229,724		0.00%		-44.50%
2008		0.40%		162		5.446950		882		0.00%		-44.58%
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
2010		0.00%		4		15.939710		64		0.78%		23.76%
2010		0.10%		145,576		15.770532		2,295,811		0.78%		23.63%
2010		0.20%		144,720		15.603173		2,258,091		0.78%		23.51%
2010		0.25%		279,659		15.520123		4,340,342		0.78%		23.45%
2009		0.00%		4		12.880035		52		0.00%		47.74%
2009		0.10%		180,073		12.756058		2,297,022		0.00%		47.59%
2009		0.20%		162,688		12.633308		2,055,288		0.00%		47.44%
2009		0.25%		315,434		12.572347		3,965,746		0.00%		47.37%
2008		0.00%		966,983		8.718261		8,430,410		1.86%		-40.10%
2008		0.10%		184,457		8.642979		1,594,258		1.86%		-40.16%
2008		0.20%		117,180		8.568374		1,004,042		1.86%		-40.22%
2008		0.25%		331,868		8.531293		2,831,263		1.86%		-40.25%
2007		0.00%		1,129,684		14.553953		16,441,368		0.61%		6.63%
2007		0.10%		224,604		14.442760		3,243,902		0.61%		6.53%
2007		0.20%		154,478		14.332457		2,214,049		0.61%		6.42%
2007		0.25%		358,194		14.277593		5,114,148		0.61%		6.37%
2006		0.00%		1,303,766		13.648563		17,794,532		0.00%		12.22%
2006		0.10%		143,310		13.557898		1,942,982		0.00%		12.11%
2006		0.20%		199,708		13.467901		2,689,648		0.00%		12.00%
2006		0.25%		454,354		13.423088		6,098,834		0.00%		11.94%
2006		0.40%		126		13.289662		1,674		0.00%		11.77%
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
2010		0.00%		207,689		10.907631		2,265,395		0.00%		26.77%
2010		0.20%		8,178		10.836693		88,622		0.00%		26.52%
2010		0.25%		412,207		10.819018		4,459,675		0.00%		26.46%
2009		0.00%		135,128		8.604153		1,162,662		0.00%		52.64%
2009		0.25%		298,197		8.555599		2,551,254		0.00%		52.26%
2008		0.00%		3,856		5.636741		21,735		0.00%		-41.42%
2008		0.25%		125,618		5.618956		705,842		0.00%		-41.57%
2008		0.40%		1,113		5.608316		6,242		0.00%		-41.66%

(Continued)

147

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’  equity		Investment Income Ratio**		Total Return***		Inception Date****
Insurance Trust - Insurance Trust Diversified Mid Cap Value Portfolio 1 (obsolete)  (OGMVP)
2008		0.10%		4,372	$	12.612983	$	55,144		1.51%		-35.55%
2008		0.20%		6,347		12.533943		79,553		1.51%		-35.61%
2007		0.10%		4,412		19.569601		86,341		1.87%		0.82%
2007		0.20%		6,420		19.466479		124,975		1.87%		0.71%
2006		0.10%		5,886		19.411280		114,255		1.18%		16.60%
2006		0.20%		6,476		19.328434		125,171		1.18%		16.49%
2006		0.25%		730		19.287150		14,080		1.18%		16.43%
2006		0.40%		2,838		19.163821		54,387		1.18%		16.26%
International Equity Flex I Portfolio (obsolete) (WIEP)
2009		0.00%		93		13.330928		1,240		0.66%		22.20%
2008		0.00%		96,326		10.909328		1,050,852		1.75%		-41.03%
2008		0.25%		9,109		9.166659		83,499		1.75%		-41.18%
2007		0.00%		116,860		18.501094		2,162,038		1.09%		16.60%
2007		0.25%		10,580		15.584704		164,886		1.09%		16.30%
2006		0.00%		121,824		15.867715		1,933,069		1.01%		18.65%
2006		0.25%		7,190		13.400060		96,346		1.01%		18.36%
International Equity Flex II Portfolio (obsolete) (WVCP)
2009		0.00%		20		10.138334		203		2.62%		30.47%
2008		0.00%		33,935		7.770427		263,689		1.69%		-46.75%
2008		0.25%		5,184		5.551756		28,780		1.69%		-46.89%
2007		0.00%		38,516		14.592824		562,057		0.00%		-3.96%
2007		0.25%		6,308		10.452361		65,933		0.00%		-4.20%
2006		0.00%		46,476		15.193949		706,154		0.00%		13.20%
2006		0.25%		9,586		10.910325		104,586		0.00%		12.92%
International Index Portfolio - Class II (obsolete) (MLVIX2)
2006		0.40%		17,946		14.547195		261,064		5.83%		25.18%
J.P. Morgan NVIT Balanced Fund - Class I (obsolete) (BF)
2008		0.00%		757,878		10.568294		8,009,478		2.70%		-25.55%
2008		0.10%		48,246		9.589808		462,670		2.70%		-25.62%
2008		0.20%		104,098		9.695696		1,009,303		2.70%		-25.70%
2008		0.25%		108,297		9.656587		1,045,779		2.70%		-25.73%
2007		0.00%		856,726		14.194595		12,160,879		2.16%		4.63%
2007		0.10%		83,510		12.893261		1,076,716		2.16%		4.52%
2007		0.20%		140,532		13.048688		1,833,758		2.16%		4.41%
2007		0.25%		182,240		13.002564		2,369,587		2.16%		4.36%
2006		0.00%		919,452		13.567085		12,474,283		2.25%		12.25%
2006		0.10%		64,592		12.335682		796,786		2.25%		12.14%
2006		0.20%		73,958		12.496956		924,250		2.25%		12.02%
2006		0.25%		257,054		12.459031		3,202,644		2.25%		11.97%
2006		0.40%		608		12.170646		7,400		2.25%		11.80%
NVIT Mid Cap Growth Fund - Class I (obsolete) (SGRF)
2008		0.00%		749,875		9.006596		6,753,821		0.00%		-46.11%
2008		0.10%		137,374		6.935563		952,766		0.00%		-46.17%
2008		0.25%		42,806		5.588576		239,225		0.00%		-46.25%
2007		0.00%		898,950		16.713321		15,024,440		0.00%		9.01%
2007		0.10%		104,616		12.883089		1,347,777		0.00%		8.91%
2007		0.25%		111,508		10.396626		1,159,307		0.00%		8.74%
2006		0.00%		961,292		15.331247		14,737,805		0.00%		9.91%
2006		0.10%		101,742		11.829636		1,203,571		0.00%		9.80%
2006		0.25%		154,712		9.560904		1,479,187		0.00%		9.63%
2006		0.40%		94		13.633719		1,282		0.00%		9.47%

(Continued)

148

NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2010

	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**		Total Return***		Inception Date****
Putnam VT OTC & Emerging Growth Fund - IB Shares (obsolete) (PVOEGB)
2008		0.20%		5,847	$	5.470558	$	31,986		0.00%		-45.29%	1/2/2008
2008		0.25%		533		5.467827		2,914		0.00%		-45.32%	1/2/2008
U.S. Equity Flex II Portfolio (obsolete) (WGIP)
2008		0.00%		72,061		11.767861		848,004		3.07%		-36.19%
2008		0.10%		11,493		10.447694		120,075		3.07%		-36.25%
2007		0.00%		87,284		18.440646		1,609,573		1.30%		1.79%
2007		0.25%		3,478		14.931536		51,932		1.30%		1.53%
2006		0.00%		96,894		18.117019		1,755,430		0.89%		19.35%
2006		0.25%		5,326		14.706419		78,326		0.89%		19.05%
2010		Contract owners equity:							$	4,097,345,784
2009		Contract owners equity:							$	3,763,821,378
2008		Contract owners equity:							$	3,233,903,295
2007		Contract owners equity:							$	4,818,129,455
2006		Contract owners equity:							$	4,464,442,368

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

** This represents the ratio of 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 policy and asset charges, that result in direct reductions to the contract holder accounts through redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.

*** This represents the total return for the period. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Total return is not annualized if the underlying mutual fund option is initially offered, funded, or both, during the period presented.

**** This represents the date the underlying mutual fund option was initially added and funded.

149

Report of Independent Registered Public Accounting Firm

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, 2010 and 2009, and the related consolidated statements of operations, changes in equity and cash flows for each of the years in the three-year period ended December 31, 2010. 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. 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 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, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2010, 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 2 to the consolidated financial statements, the Company changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.

/s/ KPMG LLP

Columbus, Ohio

March 1, 2011

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

 Consolidated Statements of Operations

(in millions)

	Years ended December 31,
	2010	2009	2008
Revenues:
Policy charges	$        1,399	$          1,245	$          1,341
Premiums	484	470	394
Net investment income	1,825	1,879	1,865
Net realized investment gains (losses)	(236)	454	(348)
Other-than-temporary impairment losses (consisting of $394 and
$992 of total other-than-temporary impairment losses, net of $174
and $417 non-credit related recognized in other comprehensive income
for the years ended December 31, 2010 and 2009, respectively)	(220)	(575)	(1,131)
Other income	2	(4)	(4)
Total revenues	$        3,254	3,469	2,117
Benefits and expenses:
Interest credited to policyholder accounts	$        1,056	$          1,100	$          1,173
Benefits and claims	873	812	856
Policyholder dividends	78	87	93
Amortization of deferred policy acquisition costs	396	466	692
Amortization of value of business acquired and other intangible assets	18	63	31
Interest expense, primarily with Nationwide Financial Services, Inc. (NFS)	55	55	62
Other operating expenses	574	579	631
Total benefits and expenses	$        3,050	3,162	3,538
Income (loss) from continuing operations before federal income
tax expense (benefit)	$            204	$             307	$        (1,421)
Federal income tax expense (benefit)	24	48	(534)
Net income (loss)	$            180	$             259	$           (887)
Less:  Net loss attributable to noncontrolling interest	60	52	72
Net income (loss) attributable to Nationwide Life Insurance Company	$            240	$             311	$           (815)

  See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Balance Sheets

(in millions, except for share and per share amounts)

	December 31,
	2010	2009
Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (amortized cost $25,613 and $25,103)	$         26,434	$           24,750
Equity securities (cost $39 and $49)	42	53
Mortgage loans, net	6,125	6,829
Short-term investments	1,062	1,003
Other investments	1,646	1,517
Total investments	$         35,309	$           34,152
Cash and cash equivalents	337	49
Accrued investment income	459	402
Deferred policy acquisition costs	3,973	3,983
Value of business acquired	259	277
Goodwill	200	200
Other assets	1,985	2,080
Separate account assets	64,875	57,846
Total assets	$      107,397	$           98,989
Liabilities and Shareholder's Equity
Liabilities:
Future policy benefits and claims	$         32,676	$           33,150
Short-term debt	300	150
Long-term debt	978	706
Other liabilities	2,429	1,820
Separate account liabilities	64,875	57,846
Total liabilities	$      101,258	$           93,672
Shareholder's equity:
Common stock  ($1 par value; authorized - 5,000,000 shares, issued
and outstanding - 3,814,779 shares)	$                   4	$                    4
Additional paid-in capital	1,718	1,718
Retained earnings	3,741	3,510
Accumulated other comprehensive income (loss)	321	(266)
Total shareholder's equity	$           5,784	$             4,966
Noncontrolling interest	355	351
Total equity	$           6,139	$             5,317
Total liabilities and equity	$      107,397	$           98,989

  See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Changes in Equity

(in millions)

	Class A&B common stock	Additional paid-in  capital	Retained earnings	Accumulated other comprehensive income (loss)	Total shareholder's equity	Non-controlling interest	Total  equity
Balance as of December 31, 2007	$         4	$       1,359	$    4,228	$                 (87)	$           5,504	$          466	$ 5,970
Dividends to NFS	-	-	(461)	-	(461)	-	(461)
Capital contributed by NFS	-	339	-	-	339	-	339
Other, net	-	-	-	-	-	22	22
Comprehensive loss:
Net loss	-	-	(815)	-	(815)	(72)	(887)
Other comprehensive loss,    net of taxes	-	-	-	(1,274)	(1,274)	-	(1,274)
Total comprehensive loss					(2,089)	(72)	(2,161)
Balance as of December 31, 2008	$         4	$       1,698	$    2,952	$            (1,361)	$           3,293	$          416	$ 3,709
Cumulative effect of change in accounting principle, net of taxes	-	-	250	(250)	-	-	-
Capital contributed by NFS	-	20	-	-	20	-	20
Other, net	-	-	(3)	-	(3)	(13)	(16)
Comprehensive income (loss):
Net income (loss)	-	-	311	-	311	(52)	259
Other comprehensive income,    net of taxes	-	-		1,345	1,345	-	1,345
Total comprehensive income (loss)					1,656	(52)	1,604
Balance as of December 31, 2009	$         4	$       1,718	$    3,510	$               (266)	$           4,966	$          351	$ 5,317
Cumulative effect of change in accounting principle, net of taxes	-	-	(9)	9	-	46	46
Other, net	-	-	-	-	-	18	18
Comprehensive income (loss):
Net income (loss)	-	-	240	-	240	(60)	180
Other comprehensive income,    net of taxes	-	-	-	578	578	-	578
Total comprehensive income (loss)					818	(60)	758
Balance as of December 31, 2010	$         4	$       1,718	$    3,741	$                321	$           5,784	$          355	$ 6,139

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2010	2009	2008
Cash flows from operating activities:
Net income (loss)	$          180	$           259	$         (887)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment losses (gains)	236	(454)	348
Other-than-temporary impairment losses	220	575	1,131
Interest credited to policyholder accounts	1,056	1,100	1,173
Capitalization of deferred policy acquisition costs	(634)	(513)	(588)
Amortization of deferred policy acquisition costs	396	466	692
Amortization and depreciation	(2)	51	48
Changes in:
Policy liabilities	(579)	(725)	(173)
Other, net	(187)	(147)	(798)
Net cash provided by operating activities	$          686	$           612	$           946
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale	$      3,251	$        3,889	$        4,272
Proceeds from sale of securities available-for-sale	2,168	4,211	4,309
Proceeds from sales/repayments of mortgage loans	996	773	869
Cost of securities available-for-sale acquired	(5,910)	(9,206)	(7,255)
Cost of mortgage loans originated or acquired	(373)	(36)	(372)
Net (increase) decrease in short-term investments	(44)	1,910	(1,857)
Collateral received (paid), net	(23)	(869)	592
Other, net	(29)	208	15
Net cash provided by investing activities	$            36	$           880	$           573
Cash flows from financing activities:
Net increase (decrease) in short-term debt	$          150	$         (100)	$           (35)
Net proceeds from issuance of long-term debt	272	-	-
Capital contributed by NFS	-	20	-
Cash dividends paid to NFS	-	-	(281)
Investment and universal life insurance product deposits and other additions	4,540	3,877	3,862
Investment and universal life insurance product withdrawals and other deductions	(5,405)	(5,301)	(5,306)
Other, net	9	19	282
Net cash used in financing activities	$        (434)	$      (1,485)	$      (1,478)
Net increase in cash and cash equivalents	$          288	$               7	$             41
Cash and cash equivalents, beginning of period	49	42	1
Cash and cash equivalents, end of period	$          337	$             49	$             42

  See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements

December 31, 2010, 2009 and 2008

(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, 2010 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), and Nationwide Financial Network (NFN) producers.  The Company also distributes products through the agency distribution force of its ultimate parent company, NMIC.

On December 31, 2009, NLIC merged with its affiliate, Nationwide Life Insurance Company of America and subsidiaries (NLICA), with NLIC as the surviving entity.  In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, Nationwide Life and Annuity Company of America (NLACA), effective as of December 31, 2009, with NLAIC as the surviving entity.  The mergers were completed to streamline the enterprise's capital structure and create operational efficiencies.  See Note 2 for further information.

In 2010, the Company elected to rely on the exemption pursuant to Rule 12h-7 of the Securities Exchange Act of 1934 (Exchange Act) from its duty under Section 15(d) of the Exchange Act to file reports required by Section 13(a) of the Exchange Act for products that are registered as securities but also are regulated as insurance under state law.  Consequently, absent a further change in circumstances, the Company no longer files periodic reports with the United States Securities and Exchange Commission (SEC).

As of December 31, 2010 and 2009, 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).

Use of Estimates

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The Company’s most critical estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition costs (DAC); whether an available-for-sale security is other-than-temporarily impaired; valuation allowances for mortgage loans; valuation of derivatives; the liability for future policy benefits and claims, including the valuation of embedded derivatives resulting from living benefit contracts; and the 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.

Basis of Presentation

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest.  All significant intercompany balances and transactions were eliminated in consolidation.

Certain items in the consolidated financial statements and related notes have been reclassified to conform to the current presentation.

Investments

The Company classifies fixed maturity and equity securities as either available-for-sale or trading. Purchases and sales of securities are recorded on the trade date. Receivables are recorded for sales of securities and liabilities for purchases not yet settled at the balance sheet date. Realized gains and losses on sales of fixed maturity and equity securities are recognized in income based on the specific identification method. Interest and dividend income are recognized when earned.

Available-for-sale securities.  Available-for-sale securities are reported at fair value, with unrealized holdings gains and losses reported as a separate component of other comprehensive income, net of adjustments for DAC, value of business acquired (VOBA), future policy benefits and claims, policyholder dividend obligations, noncontrolling interests and deferred federal income taxes.

For fixed maturity and marketable equity securities for which market quotations are available, the Company generally uses independent pricing services to assist in determining the fair value measurement.

The Company’s investments in corporate debt securities, mortgage-backed securities and other asset-backed securities are valued with the assistance of independent pricing services and non-binding broker quotes. The Company’s policy is to give priority to pricing obtained from our primary independent pricing service. In the event that pricing information is not available from an independent pricing service, non-binding broker quotes are used to assist in the valuation of the investments. In many cases, only one broker quote is available. The Company’s policy is generally not to adjust the values obtained from brokers.

Broker quotes are considered unobservable inputs as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and/or the transaction volume in the same or similar investments has decreased such that generally only one quotation is available. As the brokers often do not provide the necessary transparency into their quotes and methodologies, the Company periodically performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value.

For investments valued with the assistance of independent pricing services, the Company obtains the pricing services’ methodologies, inputs and assumptions and classifies these investments accordingly in the fair value hierarchy. The Company periodically reviews and tests the pricing and related methodologies obtained from these independent pricing services against secondary sources to ensure that management can validate the investment’s fair value and related fair value hierarchy categorization. If large variances are observed between the price obtained from the independent pricing services and secondary sources, the Company analyzes the causes driving the variance.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

For certain fixed maturity securities not priced by independent pricing services (e.g., private placement securities without quoted market prices), a corporate pricing matrix or internally developed pricing model is generally used. The corporate pricing matrix is developed using private spreads for corporate securities with varying weighted average lives and credit quality ratings. The weighted average life and credit quality rating of a fixed maturity security to be priced using the corporate pricing matrix are important inputs into the model and are used to determine a corresponding spread that is added to the appropriate U.S. Treasury yield to create an estimated market yield for that security. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security.

In 2009, certain residential mortgage-backed securities backed by sub-prime and Alt-A collateral experienced low levels of market activity, leading the Company to utilize internal pricing models to assist in determining the estimated fair values of these securities.

As such, the Company used a weighting of internal pricing models and independent pricing services to better estimate the investments’ fair value. Management determined the use of multiple valuation techniques, considering both an income approach that maximized the use of relevant observable inputs and minimized the use of unobservable inputs and a market approach based on that observed quotes provided by independent pricing services produced a result more representative of the securities’ fair value.

The income approach incorporated cash flows for each investment adjusted for expected losses in different interest rate and housing scenarios. The adjusted cash flows were then discounted using a risk premium that market participants would demand because of the risk in the cash flows. The risk premium was reflective of an orderly transaction between market participants at the measurement date under the then current market conditions and included items such as liquidity and structure risk. The income approach also included a weighting of external third-party values. As sufficient information is often not available to conclude whether such prices are based on orderly transactions, this weighting methodology was designed to incorporate external prices into the Company’s internal valuation process.

In addition to weighting external prices when developing the internal values, the Company further calibrated those values to market indications through pricing determined from two independent pricing services (the market approach). The Company calibrated the prices obtained from the independent pricing services and the price developed internally by utilizing the median value to determine the estimated fair value.

In 2010, the markets for these securities began to experience more normal levels of activity and the prices obtained from independent pricing services were more representative of orderly transactions between market participants. As such, these securities were priced solely with the assistance of independent pricing services as of December 31, 2010.

When the collectability of contractual interest payments on fixed maturity securities is considered doubtful, such securities are placed in non-accrual status and any accrued interest is excluded from investment income.  These securities are not restored to accrual status until all delinquent interest and principal are paid and the Company determines that payment of future principal and interest is probable.

For investments in beneficial interests of securitized assets, the Company recognizes income and amortizes discounts and premiums using the effective-yield method based on prepayment assumptions and the estimated economic life of the securities. When actual prepayments differ significantly from estimated 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 effective-yield method without anticipating the impact of prepayments.

Mortgage loans, net of allowance.  The Company holds commercial mortgage loans that are collateralized by properties throughout the United States.  Mortgage loans held for investment are carried at amortized cost less a valuation allowance.

The Company maintains a valuation allowance comprised of specific reserves for impaired loans and non-specific reserves for losses inherent in the balance of the portfolio.  Specific reserve changes are included in other-than-temporary impairment losses, while changes in non-specific reserves are recorded in net realized investment gains and losses.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

 

Interest income on performing mortgage loans is recognized over the life of the loan using the effective-yield method.  Loans in default or in the process of foreclosure are placed on non-accrual status.  Interest received on non-accrual status mortgage loans is included in net investment income in the period received.

Policy loans.  Policy loans, which are collateralized by the related insurance policy, are carried at the outstanding principal balance and do not exceed the net cash surrender value of the policy. As such, no valuation allowance for policy loans is required.

Short-term investments.  Short-term investments consist of highly liquid debt instruments with maturities of greater than three months and less than twelve months when purchased.  The Company carries short-term investments at estimated fair value.

Securities lending.  The Company has entered into securities lending agreements with an agent bank whereby eligible securities are loaned to third parties, primarily major brokerage firms. These transactions are used to generate additional income on the securities portfolio. The Company is entitled to receive from the borrower any payments of interest and dividends received on loaned securities during the loan term. The agreements require a minimum of 102% of the fair value of loaned securities to be held as collateral. Cash collateral is invested by the agent bank in investment-grade securities, which are included in the total investments of the Company. Non-cash collateral is recorded off-balance sheet. The Company continues to recognize loaned securities in either available-for-sale investments or short-term investments, and a securities lending payable is recorded in other liabilities for the amount of collateral received. Net income received from securities lending activities is included in net investment income.

Other-than-temporary impairments evaluations.  The Company periodically reviews its available-for-sale fixed maturities and equities on a case-by-case basis to determine if any decline in fair value to below cost or amortized cost is other-than-temporary. Factors considered in determining whether a decline is other-than-temporary include the length of time a security has been in an unrealized loss position, the severity of the unrealized loss, reasons for the decline in value and expectations for the amount and timing of a recovery in fair value.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt, the Company’s intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before the recovery of its amortized cost basis. The Company also evaluates U.S. Treasury securities and obligations of U.S. Government corporations, U.S. Government agencies, obligations of states and political subdivisions, and debt securities issued by foreign governments for other-than-temporary impairment by examining similar characteristics referenced above for corporate debt securities.

When evaluating whether residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities are other-than-temporarily impaired, the Company examines 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, the quality of any credit guarantors, the Company’s intent to sell the security and whether it is more likely than not will be required to sell the security before the recovery of its amortized cost basis.

For all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and amount of the cash flows. The Company evaluates its intent to sell on an individual security basis.

To the extent that the present value of cash flows generated by a debt security is less than the amortized cost, or the reference amount if the security is accounted for under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 325, Investments - Other, an other-than-temporary impairment is recognized through earnings.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Other-than-temporary impairment losses on securities (where the Company does not intend to sell the security and it is not more likely than not it will be required to sell the security prior to recovery of the security’s amortized cost) are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment being recognized in other comprehensive income, net of applicable taxes and other offsets.

Prior to 2009, an other-than-temporary impairment charge was taken when the Company did not have the ability and intent to hold the security until the forecasted recovery or if it was probable that the Company would not recover all contractual amounts when due. Many criteria were considered during this process including, but not limited to, specific credit issues and financial prospects related to the issuer, the quality of the underlying collateral, management’s intent and ability to hold the security until recovery, current economic conditions that could affect the creditworthiness of the issuer in the future, the current fair value as compared to the amortized cost of the security, the extent and duration of the unrealized loss, and the rating of the affected security. Other-than-temporary impairment losses resulted in a permanent reduction to the cost basis of the underlying investment equal to the difference between the estimated fair value of the security and its amortized cost.

It is reasonably possible that further declines in estimated fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments in the near term, which could be significant.

The Company considers both the non-credit portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income and any subsequent changes in the fair value of those debt securities as accumulated other comprehensive losses recognized on debt securities which have credit losses in earnings.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery.

Derivative Instruments

The Company uses derivative instruments in efforts to manage exposures and mitigate risks associated with interest rates, equity markets, foreign currency and credit.  These derivative instruments primarily include interest rate swaps, futures contracts, credit default swaps, cross-currency swaps and other traditional swap agreements.  Certain features embedded in the Company’s investments, equity-indexed annuity contracts and variable annuity contracts are derivatives requiring separate accounting under the provisions of FASB ASC 815-15 Embedded Derivatives.  All derivative instruments are carried at fair value and are reflected as an asset or liability.  See Note 6 for a discussion on the Company’s use of derivative instruments.

The Company’s derivative transaction counterparties are generally financial institutions and corporations. To reduce the credit risk associated with open contracts, the Company enters into master netting agreements which permit the closeout and netting of transactions with the same counterparty upon the occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. Generally, the Company accepts collateral in the form of cash and marketable securities.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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, corporate-owned 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.

Cash and Cash Equivalents

Cash and cash equivalents, which include highly liquid investments with original maturities of less than three months, are carried at cost, which approximates fair value.

Deferred Policy Acquisition Costs

Investment and universal life insurance products.  The Company has deferred certain costs of acquiring investment and universal life insurance products, 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 is 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, the Company amortizes DAC 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, administrative fees, surrender charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses.

The Company adjusts the DAC asset related to investment and universal life insurance products to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale. The adjustment to DAC represents the change 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 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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

performance is approximately 7% growth per year.  The Company reviews this assumption, like others, as part of its 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 in the aggregate with the Standard & Poor’s (S&P) 500 Index.  The Company bases its reversion to the mean process 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.

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 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 a given 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 Note 7 for a discussion of assumption changes that impacted DAC amortization and related balances for 2010, 2009 and 2008.

Traditional life insurance products. Generally, DAC related to traditional life insurance productsis amortized with interest over the premium-paying period of the related policies in proportion to the ratio of actual annual premium revenue to the anticipated total premium revenue.  Such anticipated premium revenue is estimated using the same assumptions as those used for computing liabilities for future policy benefits at issuance.  Under existing accounting guidance, the concept of DAC unlocking does not apply to traditional life insurance products, although evaluations of DAC for recoverability at the time of policy issuance and loss recognition testing at each reporting period are required.

Value of Business Acquired

As a result of the acquisition of Provident Mutual Life Insurance Company (Provident) in 2002 and the application of purchase accounting, the Company reports an intangible asset representing the estimated fair value of the business in force and the portion of the purchase price that was allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts existing as of the closing date of the Provident acquisition.  The value assigned to VOBA was supported by an independent valuation study commissioned by the Company and executed by a team of qualified valuation experts, including actuarial consultants.

VOBA represents the actuarially-determined value of future cash flows for acquired insurance contracts. Expected future cash flows are determined based on projected future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, changes in reserves, operating expenses, investment income and other factors. VOBA is adjusted for unrealized gains and losses on available-for-sale securities for changes in amortization that would have been

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

required had such unrealized amounts been realized. In the event actual experience differs or assumptions are revised, an increase or decrease in VOBA amortization expense is recorded, which could be significant.

See Note 8 for a discussion of VOBA amortization and related balances for 2010, 2009 and 2008.

Goodwill

In connection with acquisitions of operating entities, the Company recognizes the excess of the purchase price over the fair value of net assets acquired as goodwill.  Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually.  Goodwill of a reporting unit also is tested for impairment on an interim basis in addition to the annual evaluation if an event occurs or circumstances change which would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The process of evaluating goodwill for impairment requires several judgments and assumptions to be made to determine the fair value of the reporting units, including the method used to determine fair value; discount rates; expected levels of cash flows, revenues and earnings; and the selection of comparable companies used to develop market-based assumptions.  The Company performed its annual impairment test during the third quarter.

Closed Block

In connection with the sponsored demutualization of Provident prior to its acquisition, Provident established a closed block for the benefit of certain classes of individual participating policies that had a dividend scale payable in 2001.  Assets were allocated to the closed block in an amount that produces cash flows which, together with anticipated revenues from closed block business, is reasonably expected to be sufficient to provide for (1) payment of policy benefits, specified expenses and taxes, and (2) the continuation of dividends throughout the life of the Provident policies included in the closed block based upon the dividend scales payable for 2001, if the experience underlying such dividend scales continues.

Assets allocated to the closed block benefit only the holders of the policies included in the closed block and will not revert to the benefit of the Company.  No reallocation, transfer, borrowing or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without the approval of the Pennsylvania Insurance Department and Ohio Department of Insurance (ODI).  The closed block will remain in effect as long as any policy in the closed block is in force.

If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will increase.  If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced.  If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from the Company’s assets outside of the closed block, which are general account assets.

The assets and liabilities allocated to the closed block are recorded in the Company’s consolidated financial statements on the same basis as other similar assets and liabilities.  The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date Provident was acquired by the Company represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income, for the benefit of stockholders, over the period the policies in the closed block remain in force.

If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income.  This is because the excess cumulative earnings over expected cumulative earnings, which represents undistributed accumulated earnings attributable to policyholders, is recorded as a policyholder dividend obligation.  Therefore, the excess will be paid to closed block policyholders as an additional policyholder dividend expense in the future unless it is otherwise offset by future performance of the closed block that is less favorable than originally expected.  If actual cumulative performance is less favorable than expected, actual earnings will be recognized in income.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholder benefits, policyholder dividends, premium taxes and income taxes.  The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions and net investment income and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies for the purpose of the amortization of VOBA.  See Note 10 for further disclosure.

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 and the Company primarily uses net asset value (NAV) to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values.  The Company also uses market quotations to determine the underlying fair value of mutual funds when available.  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 operations 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.

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 adjusts future policy benefits and claims related to investments to reflect the impact of unrealized gains and losses on fixed maturity available-for-sale securities. The adjustment to future policy benefits and claims represents the change 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 vary from the then current effective portfolio rate.

The Company’s liability for funding agreements to an unrelated third party trust related to the 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 at issue varying generally from 3.0% to 13.0%

Liabilities for Variable Contract Guarantees

The Company offers various guarantees to variable annuity contractholders including a return of no less than total deposits made on the contract less any customer withdrawals, total deposits made on the contract less any customer withdrawals plus a minimum return, or the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees include benefits payable in the event of death, upon annuitization, upon periodic withdrawal or at specified dates during the accumulation period. See Note 11 for accounting policy discussion.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 8% of the Company’s life insurance in force in 2010 (9% in 2009 and 12% in 2008), 44% of the number of life insurance policies in force in 2010 (49% in 2009 and 50% in 2008).  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.

Federal Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires deferred tax assets and liabilities to be 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 or loss 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 management determines it is more likely than not that all or some portion of the deferred tax assets will not be realized.

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 change the provision for federal income taxes recorded in the consolidated financial statements, which could be significant.

The Company has established tax reserves in accordance with the requirements of FASB ASC 740, Income Taxes.These reserves 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 with taxing authorities on the deductibility/nondeductibility of uncertain items, additional exposure based on current calculations, identification of new issues or release of administrative guidance or rendering of a court decision affecting a particular tax issue.

NLIC filed separate consolidated federal income tax returns, with their subsidiaries, and are eligible to join the Mutual consolidated tax return group in 2014.

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 generally are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company.  The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder.

NLICA and Subsidiaries Merger

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity.  In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity.  The merger was accounted for at historical cost in a manner similar to a pooling of interests because the involved entities were under common control.  NLICA and subsidiaries are reflected in the Company’s prior year consolidated financial statements at the historical cost of the transferred net assets to provide comparative information as though the companies were combined for all periods presented.  This presentation is consistent for both GAAP and Statutory reporting.  Since NLICA and NLACA were wholly-owned subsidiaries, there was no noncontrolling interest impact.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The Company has presented its consolidated financial statements and accompanying notes as applicable for all years presented to reflect the NLICA merger.

The following tables summarize the impact of the items described above on the income statement for the years ended December 31:

(in millions)	2009	2008
Total revenues	$                  375	$                  411
Total benefits and expenses	$                  357	$                  395
Federal income tax (benefit) expense	$                    (5)	$                      1
Net income	$                    23	$                    15

The following tables summarize the impact of the items described above on the balance sheet for the years ended December 31:

(in millions)	2009
Total assets	$               5,926
Total liabilities	$               4,895
Total shareholder's equity	$               1,031

The impact of the merger on shareholder’s equity was $1.0 billion and $1.3 billion as of December 31, 2008 and 2007, respectively.

Subsequent events

The Company evaluated subsequent events through the date the consolidated financial statements were issued.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(3) Recently Issued Accounting Standards

In January 2011, the FASB issued Accounting Standards Update (ASU) 2011-01, which temporarily defers the effective date for disclosures related to troubled debt restructurings contained within ASU 2010-20.  This deferral enables public companies to delay the effective date of these disclosures indefinitely until the FASB adopts clarification to the guidance for determining what constitutes a troubled debt restructuring.  The effective date for all other disclosures required under ASU 2010-20 are not subject to this deferral.  This guidance is effective for the Company immediately.  This guidance was adopted by the Company in January 2011 with no impact to the Company's financial statements.

In December 2010, the FASB adopted ASU 2010-29, which amends FASB ASC 805, Business Combinations for public entities that present comparative financial statements.  This guidance specifies that an entity should disclose revenue and earnings of the combined entity as though the business combinations that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period.  The revised guidance also expands the pro forma revenue and earnings disclosures to include a description of the nature and amount of any material, nonrecurring pro forma adjustments attributable to the business combinations.  This ASU is effective for business combinations that have an acquisition date on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.  The Company adopted this guidance prospectively beginning January 1, 2011.  On the date of adoption, there was no impact to the Company’s financial statements.

In December 2010, the FASB adopted ASU 2010-28, which amends FASB ASC 350, Intangibles – Goodwill and Other related to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts.  As a result of this ASU, an entity will be required to perform Step 2 on reporting units that have zero or negative carrying amounts if adverse qualitative factors exist that would indicate that the reporting unit is more likely than not impaired.  This will eliminate the ability for entities to pass Step 1 of the impairment test just because the fair value of the reporting unit is generally greater than zero.  This guidance is effective for fiscal and interim reporting periods beginning after December 15, 2010.  The Company adopted this guidance effective January 1, 2011 with no impact to the Company’s financial statements.  The Company will apply this guidance prospectively as is required.

In October 2010, the FASB issued ASU 2010-26, which amends FASB ASC 944, Financial Services - Insurance. This guidance amends Topic 944 by modifying the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal contracts. Under this ASU incremental direct costs of contract acquisition can be capitalized. Additionally, certain costs related directly to underwriting, policy issuance and processing, medical and inspection, and sales force contract selling activities can be capitalized. The costs are limited to the portion of an employee’s total compensation, excluding any compensation that is capitalized as incremental direct costs of contract acquisition, and payroll-related fringe benefits related directly to time spent performing these activities for actual acquired contracts and other costs related directly to these activities that would not have been incurred if the contract had not been acquired. The guidance also specifies that only certain direct-response advertising costs are able to be included in DAC. This guidance is effective for fiscal and interim periods beginning after December 15, 2011, with early adoption permitted, but only at the beginning of an entity’s annual reporting period. The amendments are required to be applied prospectively upon adoption. Retrospective application to all prior periods presented upon the date of adoption also is permitted, but not required. The Company will adopt this guidance effective January 1, 2012. The Company is currently evaluating the impact of adoption and whether prospective application or retrospective application is desired. The adoption of this guidance could have a significant impact on the Company’s financial statements.

In July 2010, the FASB issued ASU 2010-20, which amends FASB ASC 310, Receivables.  This guidance amends Topic 310 to improve the disclosures that an entity provides about the credit quality of its financing receivables and the related allowance for credit losses.  As a result of this guidance, an entity is required to disaggregate certain existing disclosures by portfolio segment or class.  The guidance also provides certain new disclosures about its financing receivables and related allowance for credit losses.  For disclosures as of the end of a reporting period, the guidance is effective for the Company for interim and annual reporting periods ending on or after December 15, 2010.  For disclosures about activity during a reporting period, the guidance is effective for the Company for interim and annual reporting periods beginning on or after December 15, 2010.  The Company adopted the guidance following this incremental approach as of December 31, 2010, with no impact to the consolidated financial statements of the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In April 2010, the FASB issued ASU 2010-18, which amends FASB ASC 310, Receivables.  This guidance clarifies that modifications of loans that are accounted for within a pool under FASB ASC Subtopic 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring.  An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change.  The guidance does not affect the accounting for loans under the scope of FASB ASC Subtopic 310-30 that are not accounted for within pools.  This guidance is effective for modifications occurring in the interim or annual period ending on or after July 15, 2010, with early adoption permitted.  The guidance was adopted on September 30, 2010 and will be applied to prospective transactions as is required. The adoption of this guidance had no impact on the consolidated financial statements of the Company.

In April 2010, the FASB issued ASU 2010-15 which clarifies that an insurance entity should not consider any separate account interests held for the benefit of policy holders in an investment to be the insurer’s interest and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for the benefit of a related party holder and the variable interest entity guidance requires the consideration of related parties.  The update also clarifies that for the purpose of evaluating whether the retention of specialized accounting for investments in consolidation is appropriate, a separate account arrangement should be considered a subsidiary.  Additionally, the amendments do not require an insurer to consolidate an investment in which a separate account holds a controlling financial interest if the investment is not or would not be consolidated in the standalone financial statements of the separate account.  When consolidation is required, the update provides guidance on how an insurer should consolidate an investment fund.  The amendments should be applied retrospectively in fiscal years beginning after December 15, 2010, and interim periods within those years with earlier application permitted.  The Company early adopted this guidance effective April 1, 2010 resulting in an immaterial impact of adoption.

In March 2010, the FASB issued ASU 2010-11 which clarifies the scope exception for embedded credit derivatives.  This scope exception allows for embedded credit-derivative features related only to the transfer of credit risk in the form of subordination of one financial instrument to another to not be subject to potential bifurcation and separate accounting under Subtopic 815-15, Embedded Derivatives.  The ASU clarifies how to apply this scope exception including how to determine which embedded credit derivative features, including those in collateralized debt obligations and synthetic collateralized debt obligations, are considered to be embedded derivatives that should not be analyzed for potential bifurcation and separate accounting under Subtopic 815-15.  To ease transition, the guidance allows companies to irrevocably elect to apply the fair-value option to any investment in a beneficial interest in securitized financial assets.  The amendments are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010 with early adoption permitted at the beginning of the first fiscal quarter beginning after issuance of the ASU.  The Company adopted this guidance effective July 1, 2010 and elected fair value treatment for synthetic collateralized debt obligations. The adoption of this guidance resulted in a cumulative effect adjustment of $9 million, net of taxes, to retained earnings with a corresponding adjustment to accumulated other comprehensive income (AOCI).  See Note 6 for further discussion on synthetic collateralized debt obligations.

In February 2010, the FASB issued ASU 2010-08 which contained technical corrections to various codification topics.  While none of the provisions in the ASU fundamentally change GAAP, certain clarifications made to the guidance on embedded derivatives and hedging (Subtopic 815-15) may cause a change in the application of that Subtopic and, thus, special transition provisions were provided for accounting changes related to that Subtopic.  The amendments of this ASU are effective for the first reporting period, including interim periods, beginning after issuance, except for certain amendments related to embedded derivatives and certain changes that affect the calculation of tax benefits attributable to reorganizations.  The amendments related to the reorganization guidance in Paragraph 852-740-45-2 should be applied to reorganizations for which the date of the reorganization is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  The Company adopted these provisions as of January 1, 2009 with no impact of adoption.  The amendments to the embedded derivative guidance are effective for fiscal years beginning after December 15, 2009.  The Company adopted the embedded derivative provisions as of January 1, 2010 with an immaterial impact of adoption.  The Company adopted all other ASU 2010-08 provisions as of April 1, 2010 with no impact of adoption.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In February 2010, the FASB issued ASU 2010-10, which defers the application of guidance under FASB ASC 810 for certain interests in an entity that has all of the attributes of an investment company, or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those investment companies apply, or the entity is a registered money market fund.  An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of variable interest entities before the guidance amendments.  This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009.  The Company adopted this guidance effective January 1, 2010.  As a result of the application of this ASU, the Company deferred application for the applicable entities within the scope of the standard.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures.  This guidance requires new disclosures and provides amendments to clarify existing disclosures.  The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements and the reasons for the transfers and further disaggregating activity in Level 3 fair value measurements.  The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements.  The guidance also includes conforming amendments to the guidance on employers’ disclosures about the postretirement benefit plan assets.  This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  The Company adopted this guidance effective January 1, 2010, except for the new disclosure regarding the activity in level 3 measurements, which the Company will adopt for the fiscal period beginning January 1, 2011.  See Note 4 for required disclosures.

In June 2009, the FASB issued guidance under FASB ASC 860, Transfers and Servicing.  This guidance eliminates the concept of a qualifying special-purpose entity (QSPE) and clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale and the unit of account eligible for sale accounting.  Additionally, this guidance requires a transferor to initially measure and recognize all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale at fair value.  Additionally, on and after the effective date, existing QSPEs (as defined under previous accounting standards) must be evaluated for consolidation in accordance with the applicable consolidation guidance.  This guidance also establishes new requirements for reporting a transfer of a portion of a financial asset as a sale.  This guidance requires enhanced disclosures about, among other things, a transferor’s continuing involvement with transfers of financial assets accounted for as sales, the risks inherent in the transferred financial assets that have been retained, and the nature and financial effect of restrictions on the transferor’s assets that continue to be reported in the consolidated balance sheets.  This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009.  The Company adopted this guidance effective January 1, 2010. The guidance will be applied to prospective transactions, as is required. There was no impact on the consolidated financial statements of the Company in the adoption of the guidance.

In June 2009, the FASB issued guidance under FASB ASC 810, Consolidation.  This guidance changes the consolidation guidance applicable to a variable interest entity (VIE).  It also amends the guidance governing the determination of whether an entity is the VIE’s primary beneficiary (the reporting entity that must consolidate the VIE) by requiring a qualitative analysis rather than a quantitative analysis.  The qualitative analysis will include consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.  FASB ASC 810 also requires continuous reassessment of whether an enterprise is the primary beneficiary of a VIE.  Prior guidance required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred.  FASB ASC 810 also requires enhanced disclosures about an enterprise’s variable interest with a VIE.  See Note 21 for required disclosures.  This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009.  The Company adopted this guidance effective January 1, 2010 resulting in an increase to noncontrolling interest of $46 million.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities.  This guidance is designed to create greater clarity and consistency in accounting for and presentation of impairment losses on debt securities.  This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted.  As of the beginning of the interim period of adoption, this guidance requires a cumulative-effect adjustment to reclassify the non-credit component of previously recognized other-than-temporary impairment losses on debt securities from retained earnings to the beginning balance of AOCI.  The Company adopted this guidance as of January 1, 2009.  The adoption of this guidance resulted in a cumulative-effect adjustment of $250 million, net of taxes, as an adjustment to the opening balance of retained earnings with a corresponding adjustment to the opening balance of AOCI.

(4) Fair Value Measurements

Fair Value Option

The Company assesses the fair value option election for newly acquired financial assets or liabilities on a prospective basis. Except for synthetic collateralized debt obligations, there are no material assets or liabilities for which the Company elected the fair value option.

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable inputs.  The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  In determining fair value, the Company uses various methods including market, income and cost approaches.

The Company categorizes its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Company categorizes financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

·   Level 1 – Unadjusted quoted prices accessible in active markets for identical assets or liabilities at the measurement date.

·   Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means.

·   Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.  Inputs reflect management’s best estimate about the assumptions market participants would use at the measurement date in pricing the asset or liability.  Consideration is given to the risk inherent in both the method of valuation and the valuation inputs.

The Company periodically reviews its fair value hierarchy classifications for financial assets and liabilities. Changes in observability of significant valuation inputs identified during these reviews may trigger reclassifications. Reclassifications into/out of Level 3 are reported as transfers at the beginning of the period in which the change occurs.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the sources used in determining the fair values of fixed maturity securities as of the dates indicated:

	December 31,	December 31,
	2010	2009
Independent pricing services	81%	68%
Pricing matrices	10%	11%
Broker quotes	5%	6%
Internal pricing models	2%	13%
Other sources	2%	2%
Total	100%	100%

Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

The Company uses NAV to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values, which are included in separate account assets.

All but one of these mutual funds are included in Level 2 and had fair values totaling $50.0 billion and $44.0 billion as of December 31, 2010 and 2009, respectively.  These funds have no unfunded commitments or restrictions and the Company always has the ability to redeem the separate account investment in these funds with the investee at NAV daily.  These mutual funds are primarily invested in domestic and international equity funds.

The Company’s separate account assets include an investment in a mutual fund that may not be redeemed until a seven year guarantee period expires in 2016; however, NAV has been used to estimate the fair value of this investment as a practical expedient.  This fund has no unfunded commitments or other restrictions.  The investment strategy of this fund is to build a portfolio where the assets shall be sufficient to achieve a target portfolio value by the end of the seven year guarantee period.  The Company’s portion of the net asset value of this fund reported in separate account assets was $1.3 billion and $976 million as of December 31, 2010 and 2009, respectively, and is included in Level 3.

Since separate account assets include mutual fund investments not directed by the Company, the contractholders have the ability to select and change investment categories, which may result in the underlying mutual funds being purchased and sold in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:

(in millions)	Level 1	Level 2	Level 3	Total
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$        572	$          10	$             2	$        584
Obligations of states and political subdivisions	-	1,377	-	1,377
Debt securities issued by foreign governments	123	-	-	123
Corporate public securities	2	12,600	114	12,716
Corporate private securities	-	3,087	1,161	4,248
Residential mortgage-backed securities	540	5,090	9	5,639
Commercial mortgage-backed securities	-	1,184	2	1,186
Collateralized debt obligations	-	61	191	252
Other asset-backed securities	-	293	16	309
Total fixed maturity securities	$     1,237	$  23,702	$     1,495	$  26,434
Equity securities	10	32	-	42
Total securities available-for-sale	$     1,247	$  23,734	$     1,495	$  26,476
Trading securities	-	-	45	45
Short-term investments	25	1,037	-	1,062
Total investments	$     1,272	$  24,771	$     1,540	$  27,583
Cash and cash equivalents	337	-	-	337
Derivative assets	-	627	211	838
Separate account assets1,3	12,325	50,745	1,805	64,875
Total assets	$  13,934	$  76,143	$     3,556	$  93,633
Liabilities
Future policy benefits and claims2	$              -	$              -	$      (226)	$      (226)
Derivative liabilities	(18)	(524)	(4)	(546)
Total liabilities	$         (18)	$      (524)	$      (230)	$      (772)

__________

1 Comprised of public, privately registered and non-registered mutual funds and investments in securities.

2 Related to embedded derivatives associated with living benefit contracts.  The Company’s guaranteed minimum accumulation benefits (GMABs), guaranteed lifetime withdrawal benefits (GLWBs) and hybrid GMABs/GLWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings.  This balance also includes embedded derivatives associated with fixed equity-indexed annuities (EIA) that provide for interest earnings that are linked to the performance of specified equity market indices.

3 The value of separate account liabilities is set to equal the fair value of separate account assets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2010:

		Net investment						Change in
		gains (losses)						unrealized
		In earnings		Purchases,				gains (losses)
	Balance as of	(realized		issuances,	Transfers	Transfers	Balance as of	in earnings
	December 31,	and	In OCI	sales and	into	out of	December 31,	due to assets
(in millions)	2009	unrealized)1	(unrealized)2	settlements	Level 3	Level 3	2010	still held
Assets
Investments:
Securities available-for-sale3:
Fixed maturity securities
U.S. Treasury securities and
obligations of U.S.
Government corporations
and agencies	$                   2	$                 -	$                   -	$               -	$            -	$            -	$                  2	$                    -
Corporate public securities	215	1	4	(15)	1	(92)	114	-
Corporate private securities	1,187	3	31	(268)	311	(103)	1,161	-
Residential mortgage-backed
securities	2,034	(1)	4	(12)	2	(2,018)	9	-
Commercial mortgage-backed
securities	405	-	1	-	-	(404)	2	-
Collateralized debt obligations	240	(27)	29	(67)	16	-	191	-
Other asset-backed securities	167	(9)	8	(11)	-	(139)	16	-
Total fixed maturity securities	$            4,250	$            (33)	$                77	$         (373)	$       330	$   (2,756)	$           1,495	$                    -
Equity securities	8	-	-	(7)	-	(1)	-	-
Total securities available for sale	$            4,258	$            (33)	$                77	$         (380)	$       330	$   (2,757)	$           1,495	$                    -
Trading securities	-	(4)	-	49	-	-	45	(4)
Mortgage loans held for sale	48	14	-	(62)	-	-	-	2
Total investments	$            4,306	$            (23)	$                77	$         (393)	$       330	$   (2,757)	$           1,540	$                  (2)
Derivative assets	331	(91)	-	(29)	-	-	211	(69)
Separate account assets4,6	1,628	188	-	(4)	1	(8)	1,805	-
Total assets	$            6,265	$              74	$                77	$         (426)	$       331	$   (2,765)	$           3,556	$                (71)
Liabilities
Future policy benefits and claims5	$             (311)	$              93	$                   -	$             (8)	$            -	$            -	$            (226)	$                  93
Derivative liabilities	(2)	(2)	-	-	-	-	(4)	(2)
Total liabilities	$             (313)	$              91	$                   -	$             (8)	$            -	$            -	$            (230)	$                  91

1 Includes gains and losses on sales of financial instruments, changes in fair value of certain instruments and other-than-temporary impairments.  The net unrealized gain/loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.

2 Includes changes in fair value of certain instruments and non-credit related other-than-temporary impairments.

3 Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the National Association of Insurance Commissioners (NAIC) (see Note 5 for a discussion of NAIC designations.  Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.

4 Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

5 Relates to GMAB, GLWB and hybrid GMAB/GLWB embedded derivatives associated with contracts with living benefit riders.  This balance also includes embedded derivatives associated with EIAs.  Related derivatives are internally valued.  The valuation of guaranteed minimum benefit embedded derivatives is based on capital market and actuarial assumptions, including risk margin considerations reflecting policyholder behavior.  The Company uses both observable and unobservable inputs, such as published swap rates and historical volatilities as well as implied volatilities, in its capital market assumptions.  Actuarial assumptions, including lapse behavior and mortality rates, are either based on annuity experience or pricing assumptions if experience has not yet developed.

6 The value of separate account liabilities is set to equal the fair value of separate account assets.

Transfers during the year ended December 31, 2010

At December 31, 2009, most of the Company’s investments in residential mortgage-backed securities backed by Alt-A and sub-prime collateral were categorized as Level 3 financial assets because there was little market activity in these securities.   During 2010, market activity increased in these securities such that they are no longer considered inactive.  As such, these securities were transferred out of Level 3 and into Level 2. Additionally, many of the Company’s investments in below investment-grade commercial mortgage-backed securities which were categorized as Level 3 financial assets as of December 31, 2009 were transferred to Level 2 in 2010. This was primarily due to an increase in the observable valuation inputs of market activity and availability of higher quality independent pricing data. There were no significant transfers into or out of Level 1 during the year ended December 31, 2010.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following tables summarize transfers of financial instruments into and out of Level 1 and Level 2 for the year ended December 31, 2010:

(in millions)	Transfers into Level 1	Transfers out of Level 1	Transfers into Level 2	Transfers out of Level 2
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$                   -	$                   (6)	$                  6	$                      -
Debt securities issued by foreign governments	120	-	-	(120)
Corporate public securities	-	(22)	114	(1)
Corporate private securities	-	-	103	(311)
Residential mortgage-backed securities	-	(41)	2,059	(2)
Commercial mortgage-backed securities	-	-	404	-
Collateralized debt obligations	-	-	-	(16)
Other asset-backed securities	-	-	139	-
Total fixed maturity securities	$             120	$                 (69)	$          2,825	$               (450)
Equity securities	-	-	1	-
Total securities available-for-sale	$             120	$                 (69)	$          2,826	$               (450)
Total investments	$             120	$                 (69)	$          2,826	$               (450)
Separate account assets	-	(1)	8	-
Total assets	$             120	$                 (70)	$          2,834	$               (450)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2009:

(in millions)	Level 1	Level 2	Level 3	Total
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$         748	$             4	$             2	$         754
Obligations of states and political subdivisions	-	549	-	549
Debt securities issued by foreign governments	-	75	-	75
Corporate public securities	2	11,134	215	11,351
Corporate private securities	-	3,423	1,187	4,610
Residential mortgage-backed securities	229	3,246	2,034	5,509
Commercial mortgage-backed securities	-	679	405	1,084
Collateralized debt obligations	-	132	240	372
Other asset-backed securities	-	279	167	446
Total fixed maturity securities	$         979	$    19,521	$      4,250	$    24,750
Equity securities	13	32	8	53
Total securities available-for-sale	$         992	$    19,553	$      4,258	$    24,803
Mortgage loans held for sale1	-	-	48	48
Short-term investments	56	947	-	1,003
Total investments	$      1,048	$    20,500	$      4,306	$    25,854
Cash and cash equivalents	49	-	-	49
Derivative assets	-	498	331	829
Separate account assets2,4	11,607	44,611	1,628	57,846
Total assets	$    12,704	$    65,609	$      6,265	$    84,578
Liabilities
Future policy benefits and claims3	$             -	$             -	$        (311)	$        (311)
Derivative liabilities	(10)	(404)	(2)	(416)
Total liabilities	$          (10)	$        (404)	$        (313)	$        (727)

__________

1 Elected to be carried at fair value.

2 Comprised of public, privately registered and non-registered mutual funds and investments in securities.

3 Related to embedded derivatives associated with living benefit contracts.  The Company’s GMABs, GLWBs and hybrid GMABs/GLWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings.  This balance also includes embedded derivatives associated with fixed EIAs that provide for interest earnings that are linked to the performance of specified equity market indices.

4 The value of separate account liabilities is set to equal the fair value of separate account assets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2009:

	December 31,	and	In OCI	sales and	in to	out of	December 31,	due to assets
(in millions)	2008	unrealized)1	(unrealized)2	settlements	Level 3	Level 3	2009	still held
Assets
Investments:
Securities available-for-sale3:
Fixed maturity securities
U.S. Treasury securities and
obligations of U.S.
Government corporations
and agencies	$                    2	$              -	$         -	$              -	$              -	$            -	$                  2	$                      -
Corporate public securities	253	(31)	40	(121)	92	(18)	215	-
Corporate private securities	1,074	(49)	220	(280)	395	(173)	1,187	-
Residential mortgage-backed
securities	3,036	(111)	389	(431)	1	(850)	2,034	-
Commercial mortgage-backed
securities	263	(20)	139	(7)	94	(64)	405	-
Collateralized debt obligations	251	(53)	77	(18)	-	(17)	240	-
Other asset-backed securities	112	(17)	43	(12)	49	(8)	167	-
Total fixed maturity securities	$             4,991	$        (281)	$    908	$        (869)	$         631	$   (1,130)	$           4,250	$                      -
Equity securities	18	1	-	5	-	(16)	8	-
Total securities available for sale	$             5,009	$        (280)	$    908	$        (864)	$         631	$   (1,146)	$           4,258	$                      -
Mortgage loans held for sale	125	(8)	-	(69)	-	-	48	(3)
Total investments	$             5,134	$        (288)	$    908	$        (933)	$         631	$   (1,146)	$           4,306	$                    (3)
Derivative assets	598	(312)	(12)	57	-	-	331	(310)
Separate account assets4,6	2,142	(647)	-	400	15	(282)	1,628	218
Total assets	$             7,874	$     (1,247)	$    896	$        (476)	$         646	$   (1,428)	$           6,265	$                  (95)
Liabilities
Future policy benefits and claims5	$            (1,740)	$      1,438	$         -	$            (9)	$              -	$            -	$             (311)	$               1,438
Derivative liabilities	(4)	2	-	-	-	-	(2)	2
Total liabilities	$            (1,744)	$      1,440	$         -	$            (9)	$              -	$            -	$             (313)	$               1,440

__________

1 Includes gains and losses on sales of financial instruments, changes in fair value of certain instruments and other-than-temporary impairments.  The net unrealized gain/loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.

2 Includes changes in fair value of certain instruments and non-credit related other-than-temporary impairments.

3 Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the NAIC (see Note 5 for a discussion of NAIC designations).  Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.

4 Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

5 Relates to GMAB, GLWB and hybrid GMAB/GLWB embedded derivatives associated with contracts with living benefit riders.  This balance also includes embedded derivatives associated with EIAs.  Related derivatives are internally valued.  The valuation of guaranteed minimum benefit embedded derivatives is based on capital market and actuarial assumptions, including risk margin considerations reflecting policyholder behavior.  The Company uses both observable and unobservable inputs, such as published swap rates and historical volatilities as well as implied volatilities, in its capital market assumptions.  Actuarial assumptions, including lapse behavior and mortality rates, are either based on annuity experience or pricing assumptions if experience has not yet developed.

6 The value of separate account liabilities is set to equal the fair value of separate account assets.

Transfers during the year ended December 31, 2009

The Company periodically reviews its fair value hierarchy classifications.  Changes in observability of significant valuation inputs identified during these reviews may trigger reclassification of fair value hierarchy levels of financial assets and liabilities.  During 2008, the Company’s investments in residential mortgage-backed securities backed by prime collateral were classified as Level 3 financial assets because of their inactive markets and resulting illiquidity.  As of December 31, 2009, these securities were no longer considered inactive due to increased trading volume and market activity and as a result were transferred out of Level 3.  In addition, the Company was able to gain additional observable valuation inputs in the pricing of certain corporate securities, residential mortgage-backed securities and commercial mortgage-backed securities, which led to transferring these securities out of Level 3.

Additionally, certain corporate securities and commercial mortgage-backed securities had significant changes in key valuation inputs, which led to transfers into Level 3, primarily related to ratings downgrades and changes in pricing sources.

Fair Value on a Nonrecurring Basis

The Company measured certain mortgage loans at fair value, or fair value of the collateral, for collateral dependent loans, on a non-recurring basis subsequent to their initial recognition, due to impairments recorded during the year. In determining the estimated fair value for these impaired mortgage loans, the Company primarily uses the direct capitalization method based on management’s view of current market capitalization rates.  Alternatively, when deemed more appropriate, the Company may use a discounted cash flow methodology or an independently provided appraisal of value.  Each of these methodologies is considered to represent a Level 3 fair value estimate.  Refer to Note 5 for further discussion of the carrying value of mortgage loans.

Financial Instruments Not Carried at Fair Value

In estimating fair value for its disclosures for financial instruments not carried at fair value (and not included in the fair value disclosures above), the Company used the following methods and assumptions:

Mortgage loans, net:  The fair values of mortgage loans held for investment 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.

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.

Long-term debt:  The fair values for long-term debt are based on estimated market prices.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the carrying values and estimated fair values of financial instruments as of December 31:

	2010		2009
	Carrying	Estimated	Carrying	Estimated
(in millions)	value	fair value	value	fair value
Assets
Investments:
Mortgage loans, net	$                6,125	$            5,863	$        6,781	$         5,946
Policy loans	$                1,088	$            1,088	$        1,050	$         1,050
Liabilities
Investment contracts	$            (17,962)	$        (18,973)	$     (18,724)	$     (18,316)
Short-term debt	$                  (300)	$             (300)	$          (150)	$          (150)
Long-term debt	$                  (978)	$          (1,039)	$          (706)	$          (723)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(5) Investments

Fixed Maturity Securities and Equity Securities Available-for-Sale

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:

		Gross	Gross
	Amortized	unrealized	unrealized	Estimated
(in millions)	cost	gains	losses	fair value
December 31, 2010
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$          497	$            87	$               -	$         584
Obligations of states and political subdivisions	1,410	15	48	1,377
Debt securities issued by foreign governments	110	13	-	123
Corporate public securities	11,921	879	84	12,716
Corporate private securities	4,038	257	47	4,248
Residential mortgage-backed securities	5,811	183	355	5,639
Commercial mortgage-backed securities	1,167	51	32	1,186
Collateralized debt obligations	365	13	126	252
Other asset-backed securities	294	19	4	309
Total fixed maturity securities	$     25,613	$      1,517	$         696	$    26,434
Equity securities	39	3	-	42
Total securities available-for-sale	$     25,652	$      1,520	$         696	$    26,476
December 31, 2009
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations	$            688	$             73	$               7	$           754
Obligations of states and political subdivisions	568	4	23	549
Debt securities issued by foreign governments	70	5	-	75
Corporate public securities	10,929	597	175	11,351
Corporate private securities	4,500	193	83	4,610
Residential mortgage-backed securities	6,079	95	665	5,509
Commercial mortgage-backed securities	1,284	7	207	1,084
Collateralized debt obligations	531	12	171	372
Other asset-backed securities	454	20	28	446
Total fixed maturity securities	$       25,103	$        1,006	$        1,359	$      24,750
Equity securities	49	5	1	53
Total securities available-for-sale	$       25,152	$        1,011	$        1,360	$      24,803

The fair value of the Company’s investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads.  The Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell debt securities in unrealized loss positions.  The Company may realize investment losses to the extent its liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes, for securities available-for-sale, the gross unrealized losses based on the amount of time each type of security has been in an unrealized loss position, as of the dates indicated:

	Less than or equal  to one year			More than one year			Total
		Gross	Number		Gross	Number		Gross	Number
	Estimated	unrealized	of	Estimated	unrealized	of	Estimated	unrealized	of
(in millions, except number of securities)	fair value	losses	securities	fair value	losses	securities	fair value	losses	securities
December 31, 2010
Fixed maturity securities:
Obligations of states and
political subdivisions	$       814	$          48	77	$            -	$             -	-	$        814	$           48	77
Debt securities issued by foreign
governments	20	-	1	-	-	-	20	-	1
Corporate public securities	1,009	28	109	528	56	107	1,537	84	216
Corporate private securities	371	26	41	221	21	22	592	47	63
Residential mortgage-backed securities	562	13	41	1,765	342	281	2,327	355	322
Commercial mortgage-backed securities	40	1	7	182	31	35	222	32	42
Collateralized debt obligations	1	-	2	180	126	46	181	126	48
Other asset-backed securities	27	1	2	62	3	17	89	4	19
Total fixed maturity securities	$   2,844	$        117	$       280	$   2,938	$        579	$       508	$     5,782	$        696	$      788
Equity securities	3	-	3	2	-	40	5	-	43
Total	$   2,847	$        117	$       283	$   2,940	$        579	$       548	$     5,787	$        696	$      831
December 31, 2009
Fixed maturity securities:
U.S. Treasury securities and
obligations of U.S. Government corporations and agencies
corporations and agencies	$        206	$             7	10	$             -	$              -	-	$         206	$              7	10
Obligations of states and
political subdivisions	318	12	35	79	11	13	397	23	48
Debt securities issued by foreign
governments	1	-	2	-	-	-	1	-	2
Corporate public securities	1,198	32	160	1,117	143	201	2,315	175	361
Corporate private securities	279	19	47	973	64	73	1,252	83	120
Residential mortgage-backed securities	937	103	117	2,375	562	341	3,312	665	458
Commercial mortgage-backed securities	43	5	11	699	202	101	742	207	112
Collateralized debt obligations	30	29	13	277	142	45	307	171	58
Other asset-backed securities	5	-	12	248	28	33	253	28	45
Total fixed maturity securities	$     3,017	$         207	$        407	$     5,768	$      1,152	$        807	$      8,785	$       1,359	$    1,214
Equity securities	17	-	13	3	1	75	20	1	88
Total	$     3,034	$         207	420	$     5,771	$      1,153	882	$      8,805	$       1,360	1,302

The weighted estimated fair value to amortized cost for non-investment grade fixed maturity securities that have an estimated fair value to amortized cost ratio of less than 80% and have been in an unrealized loss position for more than one year was 54% and 65% as of December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The table below summarizes the amortized cost and estimated fair values of fixed maturity securities available-for-sale, by maturity, as of December 31, 2010.  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.

	Amortized	Estimated
(in millions)	cost	fair value
Fixed maturity securities available-for-sale:
Due in one year or less	$                   961	$                   980
Due after one year through five years	6,784	7,195
Due after five years through ten years	6,087	6,588
Due after ten years	4,144	4,285
Subtotal	$             17,976	$             19,048
Residential mortgage-backed securities	5,811	5,639
Commercial mortgage-backed securities	1,167	1,186
Collateralized debt obligations	365	252
Other asset-backed securities	294	309
Total	$             25,613	$             26,434

The NAIC assigns credit quality ratings (NAIC designations) to securities for the purpose of statutory reporting.  These NAIC designations are generally based on the credit ratings assigned by nationally recognized statistical rating agencies organizations (NRSRO) unless a security is not rated by an NRSRO, in which case the NAIC rates it using an alternative approach.  Beginning with year-end 2009 statutory reporting, the NAIC modified its ratings approach for residential mortgage-backed securities, which are not backed by U.S. government agencies.  Additionally, beginning with year-end 2010 statutory reporting, the NAIC similarly modified its ratings approach for commercial mortgage-backed securities.  Under the modified approach, the NAIC designations for these types of securities are based on an insurer’s reported carrying value for the security relative to a NAIC-prescribed ratings matrix for the security, with a higher NAIC designation afforded securities with lower carrying values.  In effect, this process rates the credit quality of a security based on an independent market view of the expected discounted future cash flows from the security versus its statutory carrying value.  Under this process, NAIC designations for these types of mortgage-backed securities could be higher or lower than the related NRSRO ratings.  NAIC designations range from class 1 (highest quality) to class 6 (lowest quality).  Of the Company’s fixed maturity securities, 93% and 91% were in the two highest NAIC designations categories as of December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table shows the equivalent designation between the NAIC and NRSRO and summarizes the credit quality, as determined by NAIC designations, of the Company’s fixed maturity securities portfolio as of the dates indicated:

(in millions)		December 31, 2010		December 31, 2009
NAIC Designations1, 2	NRSRO equivalent designation	Amortized  cost	Estimated fair value	Amortized  cost	Estimated fair value
1	AAA/AA/A	$      14,879	$      15,595	$      15,323	$         15,196
2	BBB	8,495	8,893	7,140	7,275
3	BB	1,389	1,280	1,551	1,404
4	B	492	437	724	617
5	CCC and lower	260	191	253	188
6	In or near default	98	38	112	70
	Total	$      25,613	$      26,434	$      25,103	$         24,750

__________

1 NAIC designations are assigned at least annually.  Some ratings for securities shown have been assigned to securities not yet assigned an NAIC designation in a manner approximating equivalent NRSRO categories.

2 Class 1 and class 2 NAIC designations are generally considered to represent investment grade ratings and are considered as such by the Company in reporting its credit quality information.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Corporate Securities

Corporate securities include conventional bonds, private placement fixed maturity securities, syndicated corporate bank loans and hybrid securities with both debt and equity-like features.  For these corporate securities, the following table summarizes, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, 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	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total
December 31, 2010
99.9% - 80.0%	$         37	$      35	$   72	$           4	$         20	$    24	$         41	$       55	$       96
79.9% - 50.0%	-	17	17	12	5	17	12	22	34
Below 50.0%	-	-	-	1	-	1	1	-	1
Total	$         37	$      52	$   89	$         17	$         25	$    42	$         54	$       77	$     131
December 31, 2009
99.9% - 80.0%	$          27	$     104	$  131	$          13	$          45	$     58	$          40	$      149	$      189
79.9% - 50.0%	9	46	55	2	12	14	11	58	69
Below 50.0%	-	-	-	-	-	-	-	-	-
Total	$          36	$     150	$  186	$          15	$          57	$     72	$          51	$      207	$      258

Judgments regarding whether a corporate debt security is other-than-temporarily impaired include analyzing the issuer’s financial condition.  An analysis of the issuer’s financial condition includes whether there has been a decline in the overall value of the issuer or its ability to service the specific security.  The total enterprise value of the company issuing the security is determined through asset coverage, cash flow multiples, or other industry standards.  Several factors assessed when determining the enterprise value include, but are not limited to, credit quality ratings, cash flow sustainability, liquidity, strength, industry, and market position.  Sources of information include, but are not limited to, management projections, independent consultants, street research, peer analysis, and internal analysis.

If the Company has concerns regarding the viability of the issuer or its ability to service the specific security after this analysis, a recovery value analysis is prepared to determine if the recovery value has declined below the amortized cost of the security.  The recovery value is combined with the estimated timing to recovery, any other applicable cash flows that are expected and discounted at the security’s effective yield to arrive at the expected present value of cash flows.  If a recovery estimate is not feasible, then the market view of cash flows implied by the current fair value is the primary factor used to estimate recovery and the present value of cash flows.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The Company held hybrid securities issued by institutions in the financial sector with both debt and equity-like features, classified as corporate fixed maturity securities, with estimated fair values of $403 million and $609 million, and gross unrealized losses of $39 million and $101 million, as of December 31, 2010 and 2009, respectively.  Of these unrealized losses as of December 31, 2010, $36 million, or 92%, were in an unrealized loss position for more than one year, evaluated under the debt model, compared to $99 million, or 98%, as of December 31, 2009.  The Company evaluates such securities for other-than-temporary impairment using the criteria of either a debt or an equity security depending on the facts and circumstances of the individual issuer and security.

The Company invests in private placement fixed maturity securities because of the generally higher nominal yield available compared to comparably rated public fixed maturity securities, more restrictive financial and business covenants available in private fixed maturity security loan agreements, and stronger prepayment protection.  Although private placement fixed maturity securities are not registered with the SEC and generally are less liquid than public fixed maturity securities, restrictive financial and business covenants included in private placement fixed maturity security loan agreements generally are designed to compensate for the impact of increased liquidity risk.  A significant portion of the private placement fixed maturity securities that the Company holds are participations in large issuances that are also owned by other investors.

Residential Mortgage-Backed Securities

Residential mortgage-backed securities are a type of fixed income security backed by residential mortgage loans, which have been are sold into a trust or special purpose entity, formed for the purpose of securitizing and tranching the cash flows of the mortgage loans. The following tables summarize the distribution by collateral classification of the Company’s residential mortgage-backed securities as of dates indicated:

	December 31, 2010			December 31, 2009
			% of			% of
			estimated			estimated
	Amortized	Estimated	fair value	Amortized	Estimated	fair value
in millions	cost	fair value	total	cost	fair value	total
Government agency	$        2,795	$        2,929	52%	$         2,547	$         2,621	48%
Prime	973	944	17%	1,120	960	17%
Alt-A	1,545	1,333	23%	1,831	1,452	26%
Sub-prime	498	433	8%	577	474	9%
Other residential mortgage collateral	-	-	-	4	2	-
Total	$        5,811	$        5,639	100%	$         6,079	$         5,509	100%

The Company considers prime collateral to be mortgages whose underwriting standards qualify the mortgage for regular conforming or jumbo loan programs.  In addition, government agency collateral is considered to be mortgages securitized by government agencies both implicitly and explicitly backed by the full faith and credit of the U.S. Government.

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 charges a slightly higher interest rate for such mortgages.

The Company considers sub-prime collateral to be mortgages that are first or second 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

For residential mortgage-backed securities, the following table summarizes as of the dates indicated the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, 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	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total
December 31, 2010
99.9% - 80.0%	$       13	$     97	$  110	$          -	$     72	$    72	$       13	$  169	$    182
79.9% - 50.0%	-	51	51	-	97	97	-	148	148
Below 50.0%	-	11	11	-	14	14	-	25	25
Total	$       13	$  159	$  172	$          -	$  183	$  183	$       13	$  342	$    355
December 31, 2009
99.9% - 80.0%	$        29	$    134	$   163	$        11	$      42	$     53	$        40	$    176	$     216
79.9% - 50.0%	17	198	215	20	140	160	37	338	375
Below 50.0%	10	34	44	16	14	30	26	48	74
Total	$        56	$    366	$   422	$        47	$    196	$   243	$      103	$    562	$     665

The Company evaluates its residential mortgage-backed securities for other-than-temporary impairment using multiple inputs.  Loan level defaults are estimated using an option pricing approach in which the probability of borrower default increases as home equity declines.  Home price appreciation statistics are provided by a third-party.  Other factors which influence the probability of default are debt-servicing, missed refinancing opportunities and geography.  Loan level characteristics such as issuer, FICO score, payment terms, level of documentation, residency type, dwelling type and loan purpose are also utilized in the model along with historical performance, to estimate or measure the loan’s propensity to default.  Additionally, the model takes into account loan age, seasonality, payment changes and exposure to refinancing as additional drivers of default.  For transactions where loan level data is not available, the model uses a proxy based on the collateral characteristics.  Loss severity in the model is a function of multiple factors, including but not limited to, the unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property valuation and loan-to-value ratio at origination.  Prepayment speeds, both actual and estimated, are also considered.  The cash flows generated by the collateral securing these securities are then determined based on these default, loss severity and prepayment assumptions.  These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to determine the cash flows associated with the residential mortgage-backed security held by the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Commercial Mortgage-Backed Securities

The Company owns and manages commercial mortgage-backed securities, which are trust certificates or bonds offered to investors that are collateralized by a pool of commercial mortgage loans from which the principal and interest paid on those mortgages flows to investors.  These investments in commercial mortgage-backed securities are generally characterized by securities that are collateralized by static, heterogeneous pools of mortgages on commercial real estate properties.  Deals are generally diversified across property types, geography, borrowers, tenants, loan size, coupon and vintages.  For commercial mortgage-backed securities, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, 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	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total
December 31, 2010
99.9% - 80.0%	$         1	$       7	$       8	$          -	$       4	$    4	$         1	$     11	$      12
79.9% - 50.0%	-	5	5	-	10	10	-	15	15
Below 50.0%	-	-	-	-	5	5	-	5	5
Total	$         1	$     12	$    13	$          -	$     19	$  19	$         1	$     31	$      32
December 31, 2009
99.9% - 80.0%	$          4	$      54	$     58	$          -	$        -	$      -	$          4	$      54	$       58
79.9% - 50.0%	-	85	85	-	-	-	-	85	85
Below 50.0%	1	63	64	-	-	-	1	63	64
Total	$          5	$    202	$   207	$          -	$        -	$      -	$          5	$    202	$     207

Commercial mortgage-backed securities’ cash flows are generated by an industry standard fixed income analytics system designed for asset backed securities.  In addition, a third party default model is generally utilized within this service to apply loan specific probability of default, refinance risk and loss severity ratios to generate estimated cash flows.  Default and prepayment assumptions are deal specific and include, but are not limited to, delinquency, property type, loan size, debt service coverage ratio, loan to value ratios and loan age.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Collateralized Debt Obligations

Collateralized debt obligations are asset-backed securities whose value is derived from the credit quality of the underlying corporate obligations.  For collateralized debt obligations, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade versus non-investment grade, 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	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total
December 31, 2010
99.9% - 80.0%	$          -	$       9	$       9	$          -	$       3	$       3	$          -	$     12	$      12
79.9% - 50.0%	-	8	8	-	8	8	-	16	16
Below 50.0%	-	-	-	-	98	98	-	98	98
Total	$          -	$     17	$    17	$          -	$  109	$  109	$          -	$  126	$    126
December 31, 2009
99.9% - 80.0%	$          1	$        4	$       5	$          -	$      15	$     15	$          1	$      19	$       20
79.9% - 50.0%	-	29	29	4	31	35	4	60	64
Below 50.0%	-	10	10	24	53	77	24	63	87
Total	$          1	$      43	$     44	$        28	$      99	$   127	$        29	$    142	$     171

To generate the expected cash flows, NRSRO ratings of the underlying corporate securities were used to develop default probabilities.  Historical and forecasted loss severities were then applied to develop the expected losses within the security’s collateral pool.  An independent data provider is then used to model each security’s structure and waterfall to determine cash flows at the security level.  If a recovery estimate is not feasible, then the market’s view of cash flows implied by the current fair value, market discount rates, and effective yield are the primary factors used to estimate recovery.

Within the collateralized debt obligations security type are Pooled Trust Preferreds.  Pooled Trust Preferreds are collateralized debt obligations where the collateral is regional bank and insurance company trust preferred securities.  All banks in the pools were screened using data provided by U.S. Bank Rating service.  The rating service score is a combination of the bank’s liquidity, asset quality, capital adequacy and profitability.  The results of the analysis, as well as management’s evaluation of the results and broker research, are used to generate default rates which are modeled to create cash flows from the entire collateral pool underlying each pooled trust preferred security.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Unrealized Gains and Losses

The following table presents the components of net unrealized gains (losses) on securities available-for-sale, as of December 31:

(in millions)	2010 1	2009 2
Net unrealized gains (losses), before adjustments and taxes	$                 824	$                 (350)
Change in fair value attributable to fixed maturity securities designated in fair value
hedging relationships	(20)	(35)
Net unrealized gains (losses), before adjustments and taxes	804	(385)
Adjustment to deferred policy acquisition costs	(217)	31
Adjustment to value of business acquired	1	-
Adjustment to future policy benefits and claims	27	20
Adjustment to policyholder dividend obligation	(90)	(17)
Deferred federal income tax (benefit) expense	(184)	123
Net unrealized gains (losses)	$                 341	$                 (228)

__________

1 Includes the $9 million, net of taxes, cumulative effect of adoption of accounting principle as of July 1, 2010 for the adoption of FASB ASU 2010-11.

2 Includes the $250 million, net of taxes, cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.

The following table presents an analysis of the net change in net unrealized gains (losses) on securities available-for-sale before adjustments and taxes for the years ended December 31:

(in millions)	2010 1	2009	2	2008
Fixed maturity securities	$        1,174	$          2,382		$        (2,682)
Equity securities	(1)	12		(14)
Net increase (decrease)	$        1,173	$          2,394		$        (2,696)

__________

1 Includes the $14 million cumulative effect of adoption of accounting principle as of July 1, 2010 for the adoption of FASB ASU 2010-11.

2 Includes the $384 million cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The non-credit portion of other-than-temporary impairments and any subsequent changes in the fair value of those debt securities are recognized in other comprehensive income. Cumulative non-credit gains and losses recognized on debt securities which have credit losses in earnings, before federal income tax benefit, for the years ended December 31:

(in millions)	2010	2009
Unrealized losses as of January 1,	$      (346)	$              -
Cumulative adoption of accounting principle as of January 1, 2009	-	(384)
Non-credit losses in the period	(174)	(417)
Net unrealized gains in the period	305	455
Total	$      (215)	$        (346)

Mortgage Loans, Net of Allowance

The Company’s investments in mortgage loans consist primarily of first lien, collateral dependent, non-mezzanine commercial mortgage loans.  These loans are further segregated into the following classes based on the unique risk profiles of the underlying property types: office, warehouse, retail, apartment, hotel and other.

The collectability of a mortgage loan is based on the ability of the borrower to repay and/or the value of the underlying collateral.  The quality of a loan is generally defined by the specific financial position and condition of a borrower and the underlying collateral. Many of the Company’s commercial mortgage loans are structured with balloon payment maturities, exposing the Company to risks associated with the borrowers’ ability to make the balloon payment or refinance the property.

As part of the underwriting process, specific guidelines are followed to ensure the initial quality of a new mortgage loan.  Third-party appraisals are generally obtained to support loaned amounts.

The Company actively monitors the credit quality of its mortgage loans to support the development of the valuation allowance.  This monitoring process includes quantitative analyses which facilitate the identification of deteriorating loans, and qualitative analyses which consider other factors relevant to the borrowers’ ability to repay.  Loans with deteriorating credit fundamentals are identified for special surveillance procedures and are categorized based on the severity of their deterioration and management’s judgment as to the likelihood of loss.

Mortgage loans 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 loan-specific reserves, the Company maintains a non-specific reserve for losses developed based on loan surveillance categories and property type classes and reflects management’s best estimate of probable credit losses as of the balance sheet date but not yet attributable to specific loans.  Management’s periodic evaluation of the adequacy of the non-specific reserve is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The unpaid principal balance, amortized cost and valuation allowance for commercial mortgage loans by class as of December 31, 2010:

(in millions)	Office	Warehouse	Retail	Apartment	Hotel	Other	Total
Commercial mortgage loans subject to non-specific reserves:
Unpaid principal balance	$                    775	$           1,360	$              2,276	$           1,220	$                    223	$                 88	$           5,942
Amortized cost	$                    774	$           1,365	$              2,276	$           1,222	$                    227	$                 88	$           5,952
Non-specific reserve	$                    (14)	$                 (7)	$                  (10)	$                 (9)	$                      (7)	$                    -	$              (47)
Commercial mortgage loans subject to specific reserves:
Unpaid principal balance	$                        8	$                52	$                   49	$                23	$                    137	$                    -	$              269
Amortized cost	$                        8	$                52	$                   49	$                23	$                    137	$                    -	$              269
Specific reserves	$                      (1)	$                 (8)	$                  (14)	$                 (4)	$                    (22)	$                    -	$              (49)

The following table summarizes activity in the valuation allowance for mortgage loans for the years ended December 31:

(in millions)	2010	2009
Valuation allowance, beginning of period	$                     77	$                   42
Additions	66	85
Deductions	(47)	(50)
Valuation allowance, end of period	$                     96	$                   77

In 2010, management developed an internal credit quality rating process to reflect an internal view of the credit risk associated with individual loans, as well as the portfolio as a whole.  This process considers a number of relevant loan quality measurements and factors, including loan-to-value ratio (LTV), debt service coverage ratio (DSC), current market rent expectations, economic vacancy, property characteristics, market area, and borrower strength.  LTV is calculated as a ratio of the amortized cost of a loan to the estimated value of the underlying collateral.  DSC is the amount of cash flow generated by the underlying collateral of the mortgage loan available to meet periodic interest and principal payments of the loan.  This process yields an individual internal credit quality rating score for substantially all of the Company’s commercial mortgage loans which is then translated to a credit quality rating ranging from 1 to 5, with 1 representing the lowest risk profile and lowest potential for loss and 5 representing the highest risk profile and highest potential for loss.  These internal ratings by property will be updated at least annually.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the amortized cost of commercial mortgage loans by internal credit quality rating and by class as of December 31, 2010:

(in millions)	Office	Warehouse	Retail	Apartment	Hotel	Other	Total
Rated 1	$                        4	$                   -	$                     1	$                   -	$                         -	$                    -	$                  5
Rated 2	173	173	571	108	24	-	1,049
Rated 3	523	1,065	1,643	935	128	16	4,310
Rated 4	66	173	105	202	209	72	827
Rated 5	16	6	5	-	3	-	30
Total commercial mortgage loans	$                    782	$           1,417	$              2,325	$           1,245	$                    364	$                 88	$           6,221

Internal credit quality ratings are not used to establish the valuation allowance; however, there is a strong correlation between the two processes.  For example, loans in the category receiving the highest loss factors for determination of the valuation allowance are generally rated with an internal credit quality rating of 4 or 5, while loans in the category receiving the lowest loss factors for determination of the valuation allowance are generally rated 1, 2 or 3.

While the internal credit ratings above display management’s assessment of relative credit risk in the mortgage loan portfolio for the date indicated based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible.

As of December 31, 2010, the Company’s mortgage loans classified as delinquent and/or in non-accrual status were immaterial in relation to the total mortgage loan portfolio.  The Company had no mortgage loans 90 days or more past due and still accruing interest.

The estimated fair value of mortgage loans was $5.9 billion and $6.0 billion at December 31, 2010 and 2009 respectively.

Securities Lending

The estimated fair value of loaned securities was $269 million and $40 million as of December 31, 2010 and 2009, respectively.  The Company had received $276 million and $41 million of cash collateral on securities lending as of December 31, 2010 and 2009, respectively. The Company had not received any non-cash collateral on securities lending as of the balance sheet dates.

Assets on Deposit, Held in Trust and Pledged as Collateral

Fixed maturity securities with an amortized cost of $8 million and $19 million were on deposit with various regulatory agencies as required by law as of December 31, 2010 and 2009, respectively.  These securities continue to be included in fixed maturity securities on the consolidated balance sheets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Net Investment Income

The following table summarizes net investment income from continuing operations by source for the years ended December 31:

(in millions)	2010	2009	2008
Securities available-for-sale:
Fixed maturity securities	$               1,474	$                 1,465	$                 1,477
Equity securities	2	2	5
Trading assets	1	-	-
Mortgage loans	396	445	497
Short-term investments	2	6	17
Other	9	17	(75)
Gross investment income	$               1,884	$                 1,935	$                 1,921
Less  investment expenses	59	56	56
Net investment income	$               1,825	$                 1,879	$                 1,865

Net Realized Investment Gains and Losses

The following table summarizes net realized investment gains (losses) from continuing operations by source for the years ended December 31:

(in millions)	2010	2009	2008
Net derivatives (losses) gains  1,2	$              (385)	$                  400	$                (330)
Realized gains on sales	176	192	40
Realized losses on sales	(43)	(113)	(41)
Valuation gains (losses)  3	17	(21)	(56)
Other	(1)	(4)	39
Net realized investment (losses) gains	$              (236)	$                  454	$                (348)

__________

1 Includes net losses of $155 million, net gains of $414 million, and net losses $501 million on derivatives and embedded derivatives associated with living benefit contracts for the years ended December 31, 2010, 2009, and 2008, respectively.

2 Includes net losses of $88 million, net losses of $172 million and net gains of $109 million on derivatives associated with death benefit contracts for the years ended December 31, 2010, 2009 and 2008, respectively.

3 Includes valuation of trading securities, mark-to-market valuation of mortgage loans held for sale, and changes in the non-specific loss reserves component of the valuation allowance on mortgage loans.

Proceeds from the sale of securities available-for-sale during 2010, 2009 and 2008 were $2.2 billion, $4.2 billion and $4.3 billion, respectively.  During 2010, 2009 and 2008, gross gains of $172 million, $189 million and $36 million, respectively, and gross losses of $17 million, $70 million and $25 million, respectively, were realized on those sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Other-Than-Temporary Impairment Losses

The following table summarizes other-than-temporary impairments for the years ended December 31:

		Included in OCI
(in millions)	Gross		Net
2010
Fixed maturity securities1	$            330	$           (174)	$            156
Equity securities	5	-	5
Mortgage loans	59	-	59
Total other-than-temporary impairment losses	$            394	$           (174)	$            220
2009
Fixed maturity securities1	$              907	$            (417)	$              490
Equity securities	7	-	7
Mortgage loans	72	-	72
Other	6	-	6
Total other-than-temporary impairment losses	$              992	$            (417)	$              575
2008
Fixed maturity securities1			$           1,052
Equity securities			60
Mortgage loans			15
Other			4
Total other-than-temporary impairment losses			$           1,131

__________

1 Declines in the creditworthiness of the issuer of hybrid securities with both debt and equity-like features requires the use of the equity model in analyzing the security for other-than-temporary impairment.  For the year ended December 31, 2010, the Company recognized $6 million in other-than-temporary impairments related to these securities compared to $168 million and $90 million for the years ended December 31, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the cumulative amounts related to the Company's credit loss portion of the other-than-temporary-impairment losses on debt securities that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security prior to recovery of the amortized cost basis as of December 31:

(in millions)	2010	2009
Cumulative credit loss as of January 1, 1	$            417	$             507
New credit losses	31	168
Incremental credit losses2	116	72
Subtotal	$            564	$             747
Less:
Losses related to securities included in the beginning balance sold or paid down during the period	(202)	(267)
Losses related to securities included in the beginning balance for which there was a change in intent3	(22)	(63)
Cumulative credit loss as of December 31,1	$            340	$             417

__________

1 The cumulative credit loss amount excludes other-than-temporary-impairment losses on securities held as of the periods indicated that the Company intends to sell or it is more likely than not that the Company will be required to sell the security before the recovery of the amortized cost basis.

2 Includes losses on securities for which the Company can no longer assert that it does not intend to sell the securities.

3 Securities for which a credit-related other-than-temporary impairment loss was previously recorded that the Company now intends to sell or is more likely than not it will be required to sell before recovery of the amortized cost basis and has transferred the non-credit portion of loss previously recorded in other comprehensive income to earnings during the period.  Also includes hybrid securities that had previously been evaluated for other-than-temporary impairment based on the criteria as a debt security, but in the current period are evaluated as an equity security due to declines in the creditworthiness of the issuer.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(6) Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations which are managed by using derivative instruments and include interest rate, foreign exchange, equity market and credit risk. To manage these risks and exposures, the Company uses interest rate contracts, primarily interest rate swaps; currency derivatives, primarily cross-currency swaps and futures; equity derivatives, primarily options and futures; credit default swaps and total return swaps.  The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship.  The Company recognizes all of its derivative instruments as either assets or liabilities at fair value.

Interest Rate Risk Management:  The Company uses interest rate contracts, primarily interest rate swaps, to reduce or alter interest rate exposure arising from mismatches between assets and liabilities.  In the case of interest rate swaps, the Company enters into a contractual agreement with a counterparty to exchange, at specified intervals, the difference between fixed and variable rates of interest, calculated on a reference notional amount.

Interest rate swaps are used by the Company in association with fixed and variable rate investments to achieve cash flow streams that support certain financial obligations of the Company and to produce desired investment returns.  As such, interest rate swaps are generally used to convert fixed rate cash flow streams to variable rate cash flow streams or vice versa.

In connection with the MTN program, the Company issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust.  The proceeds from these funding agreements are generally used to purchase fixed rate investments, generally available-for-sale public or private corporate bonds or commercial mortgage loans. In a rising interest rate environment, the Company is exposed to narrowing margins.  To mitigate this risk, the Company enters into interest rate swap contracts to hedge the volatility associated with changes in interest rates.

The Company also enters into interest rate swap transactions which are structured to provide a hedge against the negative impact of higher interest rates on the Company’s capital position.

Foreign Currency Risk Management:As part of its regular investing activities, the Company may purchase foreign currency denominated investments, generally fixed maturity securities.  These investments and the associated income expose the Company to volatility associated with movements in foreign exchange rates.  In an effort to mitigate this risk, the Company uses cross-currency swaps.  As foreign exchange rates change, the increase or decrease in the cash flows of the derivative instrument generally offsets the changes in the functional-currency equivalent cash flows of the hedged asset.

In addition, foreign exchange risks associated with foreign currency-denominated MTNs are managed using cross-currency swaps.

Credit Risk Management:  The Company enters into credit derivative contracts, primarily credit default swaps, under which the Company buys and sells credit default protection on standardized credit indices, which are established baskets of creditors, or on specific corporate creditors.  These derivatives allow the Company to manage or modify its credit risk profile in general or its credit exposure to specific creditors.

Equity Market Risk Management:  The Company offers a variety of variable annuity products available with living benefit features such as GMABs or GLWBs.  These living benefit features represent embedded derivatives in variable annuity contracts that are required to be separated from, and valued apart from, the host variable annuity contracts.  The embedded derivatives are carried at fair value. Subsequent changes in the fair value of these embedded derivatives are recognized in earnings as a component of net realized investment gains and losses.  The fair value of these 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 contract holder persistency, contract holder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility.  The Company believes the impact of claims is expected to be mitigated by its economic hedging program.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

These products and related obligations expose the Company to various market risks, predominately interest rate and equity risk.  Adverse changes in the equity markets or interest rate movements expose the Company to significant volatility.  To mitigate these risks and hedge the living benefit obligations, the Company enters into a variety of derivatives including interest rate swaps, equity index futures, options and total return swaps.

Derivatives Qualifying for Hedge Accounting

Fair Value Hedge Relationship:For derivative instruments that are designated and qualify as a fair value hedge (e.g., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the hedged item, to the extent of the risk being hedged, are recognized in net realized investment gains and losses.

The Company uses derivative instruments that are designated and qualify as fair value hedges in various financial transactions as follows:

·   Interest rate swaps are used to hedge certain fixed rate investments such as commercial mortgage loans and  certain fixed maturity securities, and

·   Cross-currency swaps are used to hedge foreign currency-denominated fixed maturity securities.

Cash Flow Hedge Relationship: For derivative instruments that are designated and qualify as a cash flow hedge (e.g., hedging the exposure to the variability in expected future cash flows that is attributable to interest rate risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction impacts earnings in the same line item associated with the forecasted transaction.  The ineffective portion of the derivative’s change in value, if any, along with any of the derivative’s change in value that is excluded from the assessment of hedge effectiveness, are recorded in net realized investment gains and losses.

The Company uses derivative instruments that are designated and qualify as a cash flow hedges in various financial transactions as follows:

·   Interest rate swaps are used to hedge cash flows from variable rate investments such as commercial mortgage loans and certain fixed maturity securities,

·   Interest rate swaps are used to hedge payments of funding agreement liabilities associated with the MTN program,

·   Cross-currency swaps are used to hedge interest payments and principal payments on foreign currency-denominated fixed maturity securities, and

·   Cross-currency swaps are used to hedge payments of foreign currency-denominated funding agreement liabilities associated with the MTN program.

Termination:  The Company is required to discontinue hedge accounting when it is determined that a derivative instrument no longer qualifies as an effective hedge.  Upon such determination, the derivative continues to be carried in the consolidated balance sheet at its fair value with changes in fair value recognized in net realized investment gains and losses.  In a discontinued fair value hedge on available-for-sale securities, changes in the fair value of the previously hedged asset or liability are no longer included in net realized gains and losses, rather are included in accumulated other comprehensive income and reclassified to net realized investment gains and losses through maturity of the hedged item.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Derivatives Not Qualifying for Hedge Accounting

For derivatives that are not designated as a hedging instrument, the gain or loss on the derivative is recognized in net realized investment gains and losses. The Company uses these derivatives in various financial transactions as follows:

·   Futures, options, interest rate swaps and total return swaps are used to hedge certain benefit rider obligations included in variable annuity products, as described above,

·   Interest rate swaps, futures and options are used to hedge portfolio duration and other interest rate risks to which the Company is exposed,

·   Cross-currency swaps and futures are used to hedge foreign currency-denominated assets and liabilities, and

·   Credit default swaps are used to either buy or sell credit protection on a credit index or specific creditor.

Credit Risk Associated with Derivatives Transactions

The Company periodically evaluates the risks within the derivative portfolios due to credit exposure.  When evaluating this risk, the Company considers several factors which include, but are not limited to, the counterparty risk associated with derivative receivables, the Company’s own credit as it relates to derivative payables, the collateral thresholds associated with each counterparty, and changes in relevant market data in order to gain insight into the probability of default by the counterparty. In addition, the effect the Company’s exposure to credit risk could have on the effectiveness of the Company’s hedging relationships is considered.  As of December 31, 2010 and 2009, the impact of the exposure to credit risk on both the fair value measurement of derivative assets and liabilities and the effectiveness of the Company’s hedging relationships was immaterial.

As of December 31, 2010 and 2009, the Company had received $351 million and $532 million, respectively, of cash for derivative collateral, which is included in short-term investments.  The Company held no material securities as off-balance sheet collateral on derivative transactions as of December 31, 2010.  The Company held $32 million as off-balance sheet collateral on derivative transactions as of December 31, 2009.  As of December 31, 2010 and 2009, the Company had pledged fixed maturity securities with a fair value of $28 million and $56 million, respectively, as collateral to derivative counterparties.  There are no contingent features associated with the Company’s derivative instruments which would require additional collateral to be pledged to counterparties.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table presents the fair value of derivative instruments, location of the related instruments in the consolidated balance sheets and the related notional amounts of the derivative instruments as of the dates indicated:

	Derivative assets			Derivative liabilities
(in millions)	Balance sheet location	Fair value	Notional amount	Balance sheet location	Fair value	Notional amount
December 31, 2010
Derivatives designated as
hedging instruments:
Interest rate contracts	Other assets	$             1	$           78	Other liabilities	$       37	$        830
Cross-currency swaps	Other assets	26	132	Other liabilities	18	101
Total derivatives designated as
hedging instruments		$           27	$        210		$       55	$        931
Derivatives not designated as
hedging instruments:
Interest rate contracts	Other assets	556	10,944	Other liabilities	418	10,225
Cross-currency swaps	Other assets	30	210	Other liabilities	30	210
Credit default swaps	Other assets	1	20	Other liabilities	-	17
Total return swaps	Other assets	12	1,119	Other liabilities	23	1,053
Equity contracts	Other assets	212	2,484	Other liabilities	20	1,124
Embedded derivatives on      guaranteed benefit      annuity programs	N/A	-	N/A	Future policy benefits and claims	226	N/A
Total derivatives not designated
as hedging instruments		$        811	$   14,777		$    717	$   12,629
Total derivatives		$        838	$   14,987		$    772	$   13,560

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

	Derivative assets			Derivative liabilities
(in millions)	Balance sheet location	Fair value	Notional amount	Balance sheet location	Fair value	Notional amount
December 31, 2009
Derivatives designated as
hedging instruments:
Interest rate contracts	Other assets	$           4	$             86	Other liabilities	$         69	$   1,216
Cross-currency swaps	Other assets	34	93	Other liabilities	36	216
Total derivatives designated as
hedging instruments		$         38	$           179		$       105	$   1,432
Derivatives not designated as
hedging instruments:
Interest rate contracts	Other assets	409	7,457	Other liabilities	239	5,162
Cross-currency swaps	Other assets	49	211	Other liabilities	49	210
Credit default swaps	Other assets	1	29	Other liabilities	3	82
Total return swaps	Other assets	1	85	Other liabilities	8	556
Equity contracts	Other assets	331	2,505	Other liabilities	10	996
Embedded derivatives on      guaranteed benefit      annuity programs	N/A	-	-	Future policy benefits and claims	311	N/A
Other embedded derivatives	N/A	-	-	Other liabilities	2	N/A
Total derivatives not designated
as hedging instruments		$       791	$      10,287		$       622	$   7,006
Total derivatives		$       829	$      10,466		$       727	$   8,438

The following table presents the gains (losses) for derivative instruments designated and qualifying as hedging instruments in fair value hedges and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010 1	2009 1
Derivatives in fair value hedging relationships:
Interest rate contracts2	Net realized investment gains (losses)	$             7	$           25
Cross-currency swaps2	Net realized investment gains (losses)	1	(2)
Total		$             8	$           23
Underlying fair value hedge relationships:
Interest rate contracts	Net realized investment gains (losses)	$         (12)	$          (35)
Cross-currency swaps	Net realized investment gains (losses)	(3)	2
Total		$         (15)	$          (33)

__________

1 Includes $6 million and $8 million of cash paid in the termination of fair value hedging instruments for the years ended December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

2 Excludes $30 million and $37 million of periodic settlements on interest rate contracts which are recorded in net investment income for the years ended December 31, 2010 and 2009, respectively.

The following table present the gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges recognized in AOCI in the consolidated financial statements for the years ended December 31,:

(in millions)	2010	2009
Derivatives in cash flow hedging relationships:
Interest rate contracts	$             5	$           12
Cross-currency swaps	(2)	(4)
Currency contracts	22	(19)
Other embedded derivatives	-	(12)
Total	$          25	$          (23)

The following table presents the gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges reclassified from AOCI into income and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010	2009
Derivatives in cash flow hedging relationships:
Interest rate contracts	Interest credited to policyholder accounts	$              -	$            (4)
Cross-currency swaps	Net realized investment gains (losses)	-	(11)
Currency contracts	Net realized investment gains (losses)	(2)	(4)
Total		$           (2)	$          (19)

The following table presents the realized gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges recognized in income and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010	2009
Derivatives in cash flow hedging relationships:
Cross-currency swaps	Net realized investment gains (losses)	$                -	$              (1)
Credit default swaps	Net realized investment gains (losses)	-	(3)
Total 1,2,3		$                -	$              (4)

__________

1 Ineffective portion and amounts excluded from the measurement of ineffectiveness.

2 Excludes $2 million of periodic settlements in interest rate contracts which are recorded in net investment income for the year ended December 31, 2010.  Periodic settlements in interest rate contracts for the year ended December 31, 2009 were immaterial.

3 No cash was paid in the termination of cash flow hedging instruments for the year ended December 31, 2010. Includes $17 million of cash received in the termination of cash flow hedging instruments for the year ended December 31, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table presents the gains (losses) for derivative instruments not designated and qualifying as hedging instruments recognized in income and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010	2009
Derivatives not designated as hedging instruments:
Interest rate contracts	Net realized investment gains (losses)	$         (39)	$        (197)
Cross-currency swaps	Net realized investment gains (losses)	-	3
Credit default swaps	Net realized investment gains (losses)	(5)	8
Equity total return swaps	Net realized investment gains (losses)	(136)	7
Equity contracts	Net realized investment gains (losses)	(389)	(739)
Embedded derivatives on guaranteed
benefit annuity programs	Net realized investment gains (losses)	98	1,432
Other embedded derivatives	Net realized investment gains (losses)	(2)	3
Total		$      (473)	$         517

The previous tables exclude $16 million and $(151) million of net interest settlements on all derivative instruments and $94 million and $63 million of other revenue related to guaranteed benefits on annuities that are also recorded in net realized investment gains (losses) for the year ended December 31, 2010 and 2009, respectively. The previous tables exclude $13 million in losses relating to foreign denominated cash balances for the year ended December 31, 2010, compared to an immaterial balance for the year ended December 31, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Credit Derivatives

The Company had exposure to credit protection contracts as of the years ended December 31, 2010, 2009 and 2008 and experienced credit event losses of $8 million in 2010, no credit losses in  2009 and credit event losses of $19 million in 2008 on such contracts.  The following table presents the Company’s outstanding exposure to credit protection contracts, all of which are related to corporate debt instruments, as of the dates indicated, by contract maturity and industry exposure:

	Less than or equal  to one year		One to three years		Three to five years		Total
	Maximum	Estimated	Maximum	Estimated	Maximum	Estimated	Maximum	Estimated
	potential	fair	potential	fair	potential	fair	potential	fair
(in millions)	risk	value	risk	value	risk	value	risk	value
December 31, 2010
Single sector exposure:
Financial	$            6	$         -	$            3	$         -	$             -	$         -	$            9	$         -
Services	-	-	10	1	-	-	10	1
Total	$            6	$         -	$          13	$         1	$             -	$         -	$          19	$         1
December 31, 2009
Single sector exposure:
Financial	$          35	$       (3)	$            9	$         -	$             -	$         -	$          44	$       (3)
Oil & gas pipelines	15	-	-	-	-	-	15	-
Services	-	-	-	-	10	-	10	-
Total	$          50	$       (3)	$            9	$         -	$          10	$         -	$          69	$       (3)

In addition, the Company invests in certain structured securities that contain embedded credit derivatives.  These securities are referred to as synthetic collateralized debt obligations and have maturity dates ranging from one to ten years.  The credit derivatives embedded in these securities have not been separated from their host contracts for separate fair value reporting, rather, the Company elected to carry the entire security at fair value with any changes in fair value included in earnings.  Effective July 1, 2010, these securities had a fair value of $35 million and were transferred from available-for-sale securities to trading securities.  At December 31, 2010, the fair value of synthetic collateralized debt obligations, including the embedded credit derivatives, was $45 million.  The fair value represents the maximum future potential loss that could be incurred by the Company as there is no future payment obligation associated with these investments.  Additionally, there are no recourse provisions related to these investments that would enable the Company to recover any losses on these securities from third parties.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(7)   Deferred Policy Acquisition Costs

During the second quarter of 2010, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA and unearned revenue reserves.  The review covered all assumptions including mortality, lapses, expenses and general and separate account returns.  As a result of this review, certain assumptions were unlocked (DAC unlock).  The unlocked assumptions primarily related to lapse assumptions in the Individual Investment segment, market performance assumptions in the Retirement Plans segment, and mortality, lapse and market performance assumptions in the Individual Protection segment.

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during the year ended December 31, 2010 was as follows:

(in millions)	DAC	VOBA	Unearned Revenue Reserves	Sales Inducement Assets	Total
Segment:
Individual Investments	$             4	$              -	$              -	$                -	$             4
Retirement Plans	7	-	-	-	7
Individual Protection	(22)	13	1	-	(8)
Total	$         (11)	$          13	$             1	$                -	$             3

During the fourth quarter of 2009, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by the continued market recovery and favorable market performance compared to assumed net separate account returns.  Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in an increase in DAC and other related balances, including sales inducement assets, and a decrease in DAC amortization and other related balances of $219 million pre-tax in the Individual Investments segment.  The Company used the reversion to the mean process with the anchor date that was reset during 2007.  The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable.  The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

During the second quarter of 2009, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA and unearned revenue reserves.  The unlocked assumptions primarily related to lower expected investment spreads and separate account returns across all segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

 

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during the year ended December 31, 2009 was as follows:

(in millions)	DAC	VOBA	Unearned Revenue Reserves	Sales Inducement Assets	Total
Segment:
Individual Investments	$         192	$              -	$              -	$              11	$         203
Retirement Plans	(8)	-	-	-	(8)
Individual Protection	(44)	(13)	10	-	(47)
Total	$         140	$          (13)	$           10	$              11	$         148

During the fourth quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters, which primarily was driven by continued unfavorable market performance compared to assumed net separate account returns.  Management made a determination that it was not reasonably possible to get back within the preset parameters during the remaining prescribed period.  Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances of $243 million pre-tax in the Individual Investments segment.  The Company used the reversion to the mean process with the anchor date that was reset during 2007.  The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable.  The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

During the third quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by unfavorable market performance compared to the assumed net separate account returns.  Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances totaling $177 million pre-tax in the Individual Investments segment.

At the end of the second quarter of 2008, the Company determined as part of its comprehensive annual study of assumptions that certain assumptions should be unlocked.  The unlocked assumptions primarily related to lapse and spread assumptions in the Individual Investments segment, the assumed growth rate on deposits per contract in the Retirement Plans segment, and mortality and lapse assumptions in the Individual Protection segment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

 

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of these assumptions during the year ended December 31, 2008 was as follows:

(in millions)	DAC	VOBA	Unearned Revenue Reserves	Sales Inducement Assets	Total
Segment:
Individual Investments	$        (429)	$            (3)	$              -	$              (1)	(433)
Retirement Plans	(2)	-	-	-	(2)
Individual Protection	(3)	8	3	-	8
Total	$        (434)	$             5	$             3	$              (1)	$        (427)

The following table presents a reconciliation of DAC for the years ended December 31:

	December 31,	December 31,
(in millions)	2010	2009
Balance at beginning of period	$                3,983	$                4,524
Capitalization of DAC	634	513
Amortization of DAC, excluding unlocks	(385)	(606)
Amortization of DAC related to unlocks	(11)	140
Adjustments to DAC related to unrealized gains and losses on securities   available-for-sale and other
	(248)	(588)
Balance at end of period	$                3,973	$                3,983

(8) Value of Business Acquired and Other Intangible Assets

The following table presents a reconciliation of VOBA for the years ended December 31:

(in millions)	2010	2009
Balance at beginning of period	$             277	$             334
Amortization of VOBA	(20)	(49)
Net realized losses on investments	1	1
Subtotal	$             258	$             286
Change in unrealized gain (loss) on available-for-sale securities	1	(9)
Balance at end of period	$             259	$             277

Interest on the unamortized VOBA balance (at interest rates ranging from 4.50% to 7.56%) is included in amortization and was $18 million, $20 million and $22 million during the years ended December 31, 2010, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes intangible assets as of December 31:

		2010		2009
	Initial	Gross		Gross
	useful	carrying	Accumulated	carrying	Accumulated
(in millions)	life1	amount	amortization	amount	amortization
Amortizing:
VOBA	28 years	$       595	$           336	$     595	$          318
Total intangible assets		$       595	$           336	$     595	$          318

__________

1 The initial useful life was based on applicable assumptions.  Actual periods are subject to revision based on variances from assumptions and other relevant factors.

During 2009, the Company recorded a $5 million pre-tax impairment charge on intangible assets associated with the NFN retirement services distribution channel.

During 2009, the Company fully amortized intangible assets related to NLICA and NLACA state insurance licenses, which resulted in an $8 million pre-tax charge.  The state insurance licenses had indefinite useful lives and were not previously amortized.  Due to the merger with NLIC and NLAIC, respectively, on December 31, 2009, the NLICA and NLACA state insurance licenses were no longer required as the surviving entities had the required state insurance licenses to conduct business on existing NLICA and NLACA products.  The Company surrendered the state insurance licenses back to each state.  See Note 1 for a description of the merger transaction between these entities.

During 2008, the Company recorded a $20 million pre-tax impairment charge on career agency force and independent agency force intangible assets associated with its plan to exit the NFN professional consulting group sales channel and selling arrangement changes for the independent agency force.

The Company’s annual impairment testing performed did not result in material impairment losses on intangible assets during 2010, 2009 and 2008.

Based on current assumptions, which are subject to change, the following table summarizes estimated amortization for the next five years ended December 31:

(in millions)	VOBA
2011	$              23
2012	$              21
2013	$              19
2014	$              15
2015	$              13

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(9) Goodwill

The following table summarizes changes in the carrying value of goodwill by segment for the years indicated:

	Retirement	Individual
(in millions)	Plans	Protection	Total
Balance as of December 31, 2008	$               25	$             175	$             200
Adjustments	-	-	-
Balance as of December 31, 2009	$               25	$             175	$             200
Adjustments	-	-	-
Balance as of December 31, 2010	$              25	$            175	$            200

The Company’s annual impairment testing did not result in any impairment on existing goodwill during 2010 and 2009, respectively.  As of the 2010 and 2009 annual impairment testing, the fair value of the reporting units with goodwill was in excess of the carrying value.  The goodwill balances as of December 31, 2010 and 2009 have not been previously impaired.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(10) Closed Block

The amounts shown in the following tables for assets, liabilities, revenues and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following table summarizes financial information for the closed block as of December 31:

(in millions)	2010	2009
Liabilities:
Future policyholder benefits	$           1,794	$            1,818
Policyholder funds and accumulated dividends	143	143
Policyholder dividends payable	28	29
Policyholder dividend obligation	121	49
Other policy obligations and liabilities	13	13
Total liabilities	$           2,099	$            2,052
Assets:
Fixed maturity securities available-for-sale, at estimated fair value	$           1,312	$            1,236
Mortgage loans	224	263
Policy loans	186	191
Other assets	162	135
Total assets	$           1,884	$            1,825
Excess of reported liabilities over assets	215	227
Portion of above representing other comprehensive income:
Increase in unrealized gain on fixed maturity securities available-for-sale	$                73	$                 91
Adjustment to policyholder dividend obligation	(73)	(91)
Total	$                    -	$                    -
Maximum future earnings to be recognized from assets and liabilities	$              215	$               227
Other comprehensive income:
Fixed maturity securities available-for-sale:
Fair value	$           1,312	$            1,236
Amortized cost	1,222	1,253
Shadow policyholder dividend obligation	(90)	(17)
Net unrealized appreciation	$                   -	$                    -

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes closed block operations for the years ended December 31:

(in millions)	2010	2009	2008
Revenues:
Premiums	$           83	$            90	$            93
Net investment income	101	106	109
Realized investment (losses) gains	(3)	2	(41)
Realized (losses) gains credited to to policyholder benefit obligation	(1)	(7)	37
Total revenues	$         180	$          191	$          198
Benefits and expenses:
Policy and contract benefits	$         131	$          133	$          131
Change in future policyholder benefits and interest credited to
policyholder accounts	(23)	(24)	(17)
Policyholder dividends	56	59	63
Change in policyholder dividend obligation	(3)	4	3
Other expenses	1	1	1
Total benefits and expenses	$         162	$          173	$          181
Total revenues, net of benefits and expenses, before federal income
tax expense	$           18	$            18	$            17
Federal income tax expense	6	6	6
Revenues, net of benefits and expenses and federal income tax
expense	$           12	$            12	$            11
Maximum future earnings from assets and liabilities:
Beginning of period	$         227	$          239	$          250
Change during period	(12)	(12)	(11)
End of period	$         215	$          227	$          239

Cumulative closed block earnings from inception through December 31, 2010 and 2009 were higher than expected as determined in the actuarial calculation.  Therefore, policyholder dividend obligations (excluding the adjustment for unrealized gains on available-for-sale securities) were $31 million and $32 million as of December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(11) Variable Contracts

The Company issues 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 provides various forms of guarantees to benefit the related contractholders.  The Company provides five primary guarantee types of variable annuity contracts: (1) guaranteed minimum death benefits (GMDB); (2) GMAB; (3) guaranteed minimum income benefits (GMIB); (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.

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 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 GLWB, offered in the Company’s L.inc, is a living benefit that provides for enhanced retirement income security without the liquidity loss associated with annuitization.  The withdrawal rates vary based on the age when withdrawals begin and 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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.

In January 2009, the Company simplified its living benefit guarantees and only offer L.inc on new GLWB sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables.  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 (a contract may contain multiple guarantees):

	2010					2009
	General	Separate	Total	Net	Wtd. avg.	General	Separate	Total	Net	Wtd. avg.
	account	account	account	amount	attained	account	account	account	amount	attained
(in millions)	value	value	value	at risk1	age	value	value	value	at risk1	age
GMDB:
Return of premium	$    832	$    8,039	$    8,871	$       39	62	$     729	$        5,860	$   6,589	$    100	61
Reset	1,366	13,242	14,608	305	65	1,622	12,406	14,028	900	64
Ratchet	1,018	15,733	16,751	761	68	1,181	13,836	15,017	1,772	67
Rollup	35	264	299	13	73	42	259	301	18	73
Combo	185	1,731	1,916	192	69	229	1,577	1,806	325	69
Subtotal	$ 3,436	$ 39,009	$ 42,445	$ 1,310	66	$  3,803	$      33,938	$ 37,741	$ 3,115	65
Earnings enhancement	25	403	428	29	64	17	373	390	19	64
Total - GMDB	$ 3,461	$ 39,412	$ 42,873	$ 1,339	66	$  3,820	$      34,311	$ 38,131	$ 3,134	65
GMAB2:
5 Year	$    167	$    2,507	$    2,674	$       43	N/A	$     383	$        2,640	$   3,023	$    172	N/A
7 Year	323	2,192	2,515	52	N/A	394	2,152	2,546	180	N/A
10 Year	68	695	763	13	N/A	70	684	754	39	N/A
Total - GMAB	$    558	$    5,394	$    5,952	$     108	N/A	$     847	$        5,476	$   6,323	$    391	N/A
GMIB3:
Ratchet	$       14	$       220	$       234	$          -	N/A	$       16	$           242	$      258	$         -	N/A
Rollup	41	514	555	1	N/A	47	626	673	-	N/A
Total - GMIB	$       55	$       734	$       789	$         1	N/A	$       63	$           868	$      931	$         -	N/A
GLWB:
L.inc	$    287	$ 12,030	$ 12,317	$     430	N/A	$     230	$        7,057	$   7,287	$      67	N/A
Porfolio income insurance	-	42	42	-	N/A	-	20	20	-	N/A
Total - GLWB	$    287	$ 12,072	$ 12,359	$     430	N/A	$     230	$        7,077	$   7,307	$      67	N/A

__________

1 Net amount at risk is calculated on a seriatim 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.

2 GMAB contracts with the hybrid GMAB/GLWB rider had account values of $5.2 billion and $5.3 billion as of December 31, 2010 and 2009, 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.

Net amount at risk is highly sensitive to changes in financial market movements.  See Note 6 for a discussion of the Company’s risk management practices with respect to financial market exposure.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes account balances of deferred variable annuity and variable single premium immediate annuity contracts that were invested in separate accounts as of December 31:

(in millions)	2010	2009
Mutual funds:
Bond	$               4,889	$                 4,920
Domestic equity	29,987	24,599
International equity	2,985	3,047
Total mutual funds	$             37,861	$               32,566
Money market funds	1,254	1,473
Total	$             39,115	$               34,039

The following table summarizes the reserve balances, net of reinsurance, for variable annuity contracts with guarantees as of December 31:

(in millions)	2010	2009
Living benefit riders	$                   168	$                    266
GMDB	$                     46	$                      67
GMIB	$                       2	$                        3

The Company’s GMAB and GLWB 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, 2010 and December 31, 2009, the net balance of the embedded derivatives for living benefits was a liability of $168 million and a liability of $266 million, respectively. The GLWB component of living benefit riders was immaterial in 2010 and 2009, respectively.

The Company’s incurred and paid amounts for living benefit features were immaterial for the years ended December 31, 2010 and 2009.  The Company does not expect any meaningful level of claims under the living benefit features for several years and believes the impact of claims is expected to be mitigated by its economic hedging program.

During the year ended December 31, 2010, the Company recorded net realized investment losses on living benefits embedded derivatives and related economic hedging activity of $155 million compared to net realized investments gains of $414 million as of December 31, 2009.

The losses recorded during the year ended December 31, 2010 were comprised of $192 million of net realized investment gains on living benefit embedded derivative liabilities and $347 million of related economic hedging losses.  The net realized investment losses were primarily driven by market volatility in the second quarter and mortality and withdrawal assumption updates.  Net realized investment losses on living benefit embedded derivatives resulted in lower amortization of DAC of $63 million during the year ended December 31, 2010.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The gains recorded in 2009 were comprised of $1.5 billion of net realized investment gains on living benefit embedded derivative liabilities and $1.1 billion of related economic hedging losses.  The net realized investment gains on living benefit embedded derivatives primarily resulted from higher interest rates on living benefit embedded derivatives, lower volatility assumptions and an increase to the nonperformance component of the discount rate.  The net realized gains resulted in higher amortization of DAC of $284 million during the year ended December 31, 2009.

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 incurred and paid amounts for GMDBs were $62 million for the year ended December 31, 2010 compared to $132 million for the year ended December 31, 2009.

The following assumptions and methodologies were used to determine the GMDB claim reserves as of December 31, 2010 and 2009:

·   Data used was based on a combination of historical numbers and future projections generally involving 250 probabilistically generated economic scenarios

·   Mean gross equity performance –10.4%

·   Equity volatility –18.0%

·   Mortality – 84% of Annuity 2000 Basic table for males, 93% for females as of December 31, 2010; and 91% of Annuity 2000 Basic table for males, 101% for females as of December 31, 2009

·   Asset fees – equivalent to mutual fund and product loads

·   Discount rate – approximately 7.0%

Lapse rate assumptions vary by duration as shown below:

Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	1.0%	2.0%	2.5%	3.0%	5.0%	6.0%	7.0%	7.0%	10.0%	10.0%
Maximum	3.5%	2.0%	4.0%	4.5%	35.0%	40.0%	18.5%	32.5%	32.5%	18.5%

The Company’s incurred and paid amounts for GMIBs were $3 million and $7 million for the years ended December 31, 2010 and 2009.

The Company did not transfer assets from the general account to the separate account to cover guarantees for any of its variable annuity contracts during the years ended December 31, 2010 and 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

 

The following table summarizes account balances of variable universal life insurance contracts that were invested in separate accounts as of December 31:

(in millions)	2010	2009
Mutual funds:
Bond	$                   475	$                    453
Domestic equity	3,267	2,996
International equity	452	417
Total mutual funds	$               4,194	$                 3,866
Money market funds	203	257
Total	$               4,397	$                 4,123

(12) Short-Term Debt

The following table summarizes outstanding short-term debt as of December 31:

[Missing Graphic Reference]

In May 2010, NMIC, NFS, and NLIC entered into a $600 million revolving credit facility.  The new facility matures in May 2011, with an option to convert the outstanding balances into a one-year term loan.  NMIC will guarantee all borrowings under the agreement.  The credit may be used for general corporate purposes.  The borrower has the ability to draw funds at a variable rate based on the Eurodollar rate.  The facility contains financial covenants that require NMIC to maintain a statutory surplus in excess of $7.1 billion and the debt is not to exceed 30% of statutory surplus, both figures determined as of the end of each fiscal quarter.  A breach of these and other named covenants will impact the availability of the line for the other borrowers and may accelerate payment. NLIC had no amounts outstanding under this agreement as of December 31, 2010.

In June 2010, NLIC entered into an agreement reducing the commercial paper program from $800 million to $600 million. The rating agency guidelines recommend that NLIC maintain minimum liquidity backup, which includes cash and liquid assets as well as committed bank lines, equal to 50% of any amounts outstanding under the commercial paper program.  Therefore, availability under the aggregate $600 million credit facility is reduced by the amount outstanding in excess of available cash and liquid assets.  NLIC had $300 million of commercial paper outstanding at December 31, 2010 at a weighted average interest rate of 0.35% and $150 million outstanding at December 31, 2009 at a weighted average interest rate of 0.29%.

The Company 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 million.  The borrowing rate on this program is equal to one-month U.S. London Interbank Offered Rate (LIBOR).  The Company had no amounts outstanding under this agreement as of December 31, 2010 and 2009.

The Company paid immaterial interest on short-term debt in 2010, compared to $1 million and $8 million in 2009 and 2008, respectively.

.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(13) Long-Term Debt

The following table summarizes surplus notes payable to affiliates as of December 31:

(in millions)	2010	2009
8.15% surplus note, due June 27, 2032	$                   300	$                    300
7.50% surplus note, due December 17, 2031	300	300
6.75% surplus note, due December 23, 2033	100	100
Variable funding surplus note, due December 31, 2040	272	-
Other	6	6
Total long-term debt	$                   978	$                   706

On December 31, 2010, Olentangy Reinsurance, LLC, a special purpose financial captive insurance subsidiary of NLAIC, issued a variable funding surplus note to Nationwide Corporation, a majority-owned subsidiary of NMIC.  The note is redeemable in full or partial amount at any time subject to proper notice and approval.  A redemption premium shall be payable if the note is redeemed on or prior to the third anniversary date of the note’s issuance.  The note will mature in full on December 31, 2040.  The note bears interest at the rate of three-month U.S. LIBOR plus 2.80% payable quarterly.  Olentangy Reinsurance, LLC agrees to draw down or reduce principal amounts in accordance with the terms outlined in the purchase agreement.  The maximum amount outstanding under the agreement is $313 million in 2015.  As of December 31, 2010, the principal amount outstanding was $272 million.

The Company made interest payments to NFS on surplus notes totaling $54 million in 2010, 2009 and 2008.  Payments of interest and principal under the notes require the prior approval of the ODI.

(14) Federal Income Taxes

The following table summarizes the federal income tax expense (benefit) attributable to income (loss) from continuing operations for the years ended December 31:

(in millions)	2010	2009	2008
Current	$                 (91)	$                  165	$                (131)
Deferred	115	(117)	(403)
Federal income tax expense (benefit)	$                   24	$                    48	$                (534)

Total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to income (loss) from continuing operations before federal income tax expense (benefit) as follows for the years ended December 31:

	2010		2009		2008
(in millions)	Amount	%	Amount	%	Amount	%
Computed tax expense (benefit)	$             71	35	$            107	35	$          (497)	35
DRD	(50)	(25)	(56)	(18)	(42)	3
Impact of noncontrolling interest	21	10	18	6	25	(2)
Tax credits	(27)	(13)	(21)	(7)	(26)	2
Other, net	9	5	-	-	6	-
Total	$             24	12	$              48	16	$          (534)	38

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Total federal income taxes refunded were $35 million, $59 million, and $41 million during the years ended December 31, 2010, 2009 and 2008, respectively.

During 2010, there were no material federal income tax expense adjustments.

During 2009, the Company recorded $9 million of net federal income tax expense adjustments primarily related to differences between the 2008 estimated tax liability and the amounts reported on the Company’s 2008 tax returns.  These changes in estimates primarily were driven by the Company’s separate account dividends received deduction (DRD) and foreign tax credit.

During 2008, the Company refined its separate account DRD calculation and estimation process.  As a result, the Company reduced its third quarter separate account DRD projection from a federal income tax benefit of $14 million to a $4 million benefit.  This reduction in estimate primarily was driven by the assumptions used in the estimation process regarding future dividend income within the separate accounts.  The assumptions used in the separate account DRD calculation are based on the Company’s best estimate of future events.

In addition, during 2008, the Company recorded $12 million of net federal income tax expense adjustments primarily related to differences between the 2007 estimated tax liability and the amounts expected to be reported on the Company’s 2007 tax returns when filed.  These changes in estimates primarily were driven by the Company’s separate account DRD.

As of December 31, 2010, the Company has capital loss carryforwards of $507 million, which expire between 2011 and 2015. In addition, the Company has $67 million in low income housing credit carryforwards, which expire between 2025 and 2030, $5 million in foreign tax credit carryforwards, which will expire in 2020 and $73 million in Alternative Minimum Tax credit carryforwards, which have an unlimited carryforward. The Company expects to fully utilize all carryforwards.

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax (liability) asset as of December 31:

(in millions)	2010	2009
Deferred tax assets:
Future policy benefits and claims	$               1,030	$                 1,109
Derivatives	27	63
Capital loss carryforward	178	103
Tax credit carryforwards	145	23
Other	236	195
Gross deferred tax assets	$               1,616	$                 1,493
Less valuation allowance	(24)	(24)
Deferred tax assets, net of valuation allowance	$               1,592	$                 1,469
Deferred tax liabilities:
Deferred policy acquisition costs	$              (1,071)	$               (1,084)
Securities available-for-sale	(670)	(168)
Value of business acquired	(89)	(96)
Other	(150)	(96)
Gross deferred tax liabilities	$              (1,980)	$               (1,444)
Net deferred tax (liability) asset	$                 (388)	$                      25

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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.  Valuation allowances are established when necessary to reduce the deferred tax assets to amounts expected to be realized.  Because it is more likely than not that certain deferred tax assets will not be realized, the Company established a valuation allowance of $24 million, $24 million and $24 million as of December 31, 2010, 2009 and 2008, respectively.  Based on management’s analysis, it is more likely than not that the results of future operations and the implementation of tax planning strategies will generate sufficient taxable income to enable the Company to realize the deferred tax assets for which the Company has not established valuation allowances.

The Company’s current federal income tax liability was $50 million and $109 million as of December 31, 2010 and 2009, respectively.

A rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties, is as follows:

(in millions)	2010	2009
Balance at beginning of period	$                95	$                 44
Additions for current year tax positions	18	37
Additions for prior years tax positions	19	15
Reductions for prior years tax positions	(13)	(1)
Balance at end of period	$              119	$                 95

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate on December 31, 2010, is $47 million.

Interest expense and any associated penalties are shown as income tax expense. The Company incurred interest and penalties of $2 million during the year ended December 31, 2010 and an immaterial balance during the year ended December 31, 2009.  The Company had accrued $6 million and $4 million for the payment of interest and penalties at December 31, 2010 and 2009, respectively.

During 2010, the Company had an appeals conference with the Internal Revenue Service (IRS) with respect to our appeal of IRS audit adjustments for the years 2003 to 2005. Though the Company has not yet reached a final settlement with the IRS for these years, it is reasonably possible that this appeal will be resolved in whole or in part within 12 months. As a result, it is reasonably possible that our liability for unrecognized tax benefits could decrease within 12 months by approximately $15 million.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years through 2002. The IRS recently completed an audit of the Company’s tax years 2003 through 2005.  The statute remains open for these years as the Company completes the appeals process. See “Tax Matters” in Note 19 for more information on the Company’s tax years 2003 through 2005 audit and the related appeals process.

(15) Statutory Financial Information

Statutory Results

The Company and its life subsidiary are required to prepare statutory financial statements in conformity with the NAIC’s Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable state department of insurance.  Statutory accounting practices focus on insurer solvency and differ from GAAP materially.  The principal differences include charging policy acquisition and certain sales inducement costs to expense as incurred, establishing future policy benefits and claims reserves using different actuarial assumptions, excluding certain assets from statutory admitted assets; and valuing investments and establishing deferred taxes on a different basis.  The following tables summarize the statutory net income (loss) and statutory capital and surplus for the Company and its primary insurance subsidiary for the years ended December 31:

(in millions)	2010	2009	2008
	(unaudited)
Statutory net income (loss)
NLIC	$          560	$               397	$              (871)
NLAIC	$          (50)	$                (61)	$                (90)
Statutory capital and surplus
NLIC	$      3,686	$            3,130	$            2,750
NLAIC	$          287	$               214	$               123

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity.  In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity.  See Note 2 for details on the accounting treatment of this transaction.

Dividend Restrictions (unaudited)

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.  NLIC’s statutory capital and surplus as of December 31, 2010 was $3.7 billion, and statutory net income for the year ended December 31, 2010 was $560 million.  During the year ended December 31, 2010, NLIC did not pay any dividends to NFS.  As of January 1, 2011, NLIC has the ability to pay dividends to NFS totaling $560 million upon providing prior notice to the ODI.

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 the Company 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 the Company’s participating policies (measured before dividends to policyholders) that can inure to the benefit of the Company and its stockholders.

The Company currently does not expect such regulatory requirements to impair its ability to pay operating expenses and dividends in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(16) Other Comprehensive Income

The Company’s other comprehensive income and loss includes net income (loss) and certain items that are reported directly within separate components of shareholder’s equity that are not recorded in net income.

The following table summarizes the Company’s other comprehensive gain (loss), before and after federal income tax expense (benefit), for the years ended December 31:

(in millions)	2010	2009	2008
Net unrealized gains (losses) on securities available-for-sale
arising during the period:
Net unrealized gains (losses) before adjustments	$               1,039	$                 2,374	$               (3,828)
Net non-credit gains	131	38	-
Net adjustment to DAC	(248)	(585)	529
Net adjustment to VOBA	1	(9)	8
Net adjustment to future policy benefits and claims	7	(27)	128
Net adjustment to policyholder dividend obligation	(73)	(91)	89
Related federal income tax (expense) benefit	(300)	(595)	1,076
Net unrealized gains (losses)	$                   557	$                 1,105	$               (1,998)
Reclassification adjustment for net realized losses on securities
available-for-sale realized during the period:
Net unrealized losses	5	388	1,102
Related federal income tax benefit	(2)	(136)	(386)
Net losses realized on available-for-sale securities	$                       3	$                    252	$                    716
Other comprehensive gain (loss) on securities available-for-sale	$                   560	$                 1,357	$               (1,282)
Accumulated net holding gains (losses) on cash flow hedges:
Unrealized holding gains (losses)	27	(4)	17
Related federal income tax (expense) benefit	(9)	1	(6)
Other comprehensive income (loss) on cash flow hedges	$                     18	$                      (3)	$                      11
Other unrealized (losses) gains:
Net unrealized (losses) gains	-	(14)	8
Related federal income tax benefit (expense)	-	5	(3)
Other net unrealized (losses) gains	$                        -	$                      (9)	$                        5
Unrecognized amounts on pension plans:
Net unrecognized amounts	-	-	(12)
Related federal income tax benefit	-	-	4
Other comprehensive loss on unrecognized pension amounts	$                        -	$                         -	$                      (8)
Total other comprehensive income (loss)	$                   578	$                 1,345	$               (1,274)

The adjustments to DAC and VOBA represent the changes in amortization of DAC and VOBA 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.

As of July 1, 2010, the adoption of FASB ASU 2010-11 resulted in a cumulative effect adjustment of $9 million, net of taxes, to retained earnings with a corresponding adjustment to AOCI, which is excluded from the table above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

 

The adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities during 2009 resulted in a cumulative-effect adjustment of $250 million, net of taxes, to reclassify the non-credit component of previously recognized other-than-temporary impairment losses from the beginning balance of retained earnings to AOCI, which is excluded from the table above.

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2010, 2009 and 2008.

(17) Employee Benefit Plans

The Company and certain affiliated companies participate in a qualified defined benefit pension plan (the Nationwide Retirement Plan or the NRP), several non-qualified defined benefit supplemental executive retirement plans, postretirement benefit plans (life and health care), and the Nationwide Savings Plan 401(k), allsponsored by NMIC.  Effective January 30, 2008, NMIC merged the NLICA Retirement Plan into the NRP.

The NRP covers all employees of participating employers who have completed at least one year of service and who are at least 21 years of age. Plan assets are invested in a third-party trust and group annuity contracts issued by NLIC.  All participants are eligible for benefits based on an account balance formula.  However, participants hired prior to 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.

Effective January 1, 2010, NMIC amended the NRP to eliminate the company-paid early retirement enhancement (an additional benefit for associates retiring between ages 55 and 65), which is part of the final average pay formula and to stop pay credits under the account balance formula for participants eligible for the account balance formula.  An affected associate’s benefits, however, will not be less than the NRP benefit he or she accrued as of December 31, 2009, under the greater of the final average pay formula or the account balance formula.

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.  In addition, separate non-qualified defined benefit pension plans sponsored by NMIC cover certain executives with at least one year of service.  The Company’s portion of expense relating to these plans was $4 million, $11 million, and $5 million for the years ended December 31, 2010, 2009 and 2008, respectively.  The 2008 expense includes a gain of $5 million due to the merger of the NLICA Retirement Plan into the NRP.

See Note 18 for more information on group annuity contracts issued by the Company for various employee benefit plans sponsored by NMIC or its affiliates.

In addition to the NRP, the Company and certain affiliated companies participate in life and health care benefit plans sponsored by NMIC for qualifying retirees.  Contributory post-retirement life and health care benefits are generally available to associates, hired prior to and continuously employed since June 1, 2000, for health care benefits, and prior to December 31, 1994, for life benefits, who have attained age 55, and have accumulated 15 years of service with the Company.  The associate subsidy for the post-retirement death benefit was capped beginning in 2007. Employer subsidies for retiree life insurance ended as of December 31, 2008. No future employer contributions are anticipated for retiree life insurance and settlement accounting was applied during 2008. Post-retirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and co-insurance. In addition, there are caps on the Company’s contribution to the cost of the post-retirement health care benefits. The Company does not receive a Medicare Part D subsidy from the government. 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 in a group annuity contract issued by NLIC and a third-party trust.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

On September 3, 2009, NMIC announced changes to the post-retirement health care benefits available under the health care defined benefit plans. On December 31, 2009, each eligible associate’s current cost-sharing percentage was fixed and, following this date, Company contributions towards the cost of post-retirement health care coverage for eligible associates will be based only on service through December 31, 2009. This modification does not impact former associates receiving Nationwide-sponsored retiree health care benefits prior to January 1, 2010. Additionally, effective January 1, 2010, all associates not considered to be highly compensated employees, as defined by IRC 414, became eligible to receive an annual retiree health care credit up to a maximum of $1,000 per year, not to exceed a maximum lifetime benefit amount of $25,000, which includes any years of cost-sharing service earned by December 31, 2009. The credit is equal to one-third of otherwise unmatched Health Savings Account contributions and/or Nationwide Savings Plan (NSP) 401(a) contributions. No contributions will be made by NMIC if the associate does not make eligible contributions.

The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2010, 2009 and 2008.

Defined Contribution Plans

NMIC sponsors the NSP, a defined contribution retirement savings plan (a 401(k) plan) covering substantially all of the Company’s associates.  Associates may make salary deferral contributions of up to 80%.  Salary deferrals of up to 6% are subject to a 50% Company match.  In addition, NMIC sponsors the NLICA Producer’s Pension Plan, a defined contribution money purchase plan, covering statutory employees of NLICA.  However, this plan has no active participants, and is in the process of being terminated.  The Company’s expense for contributions to these plans was $7 million, $9 million, and $6 million for the years ended December 31, 2010, 2009 and 2008, respectively.

(18) 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 data processing, systems development, hardware and software support, telephone, mail and other services to the Company, based on specified rates for units of service consumed.  For the years ended December 31, 2010, 2009 and 2008, the Company made payments to NMIC and NSC totaling $250 million, $241 million, and $285 million, respectively.

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 $3.0 billion and $3.1 billion as of December 31, 2010 and 2009, respectively.  Total revenues from these contracts were $139 million, $143 million and $138 million for the years ended December 31, 2010, 2009 and 2008, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees.  Total interest credited to the account balances was $115 million, $116 million, and $116 million for the years ended December 31, 2010, 2009 and 2008, respectively.  The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties.

The Company leases office space from NMIC.  For the years ended December 31, 2010, 2009 and 2008, the Company made lease payments to NMIC of $20 million, $21 million, and $22 million, respectively.  In addition, the Company leases office space to an affiliate of NMIC.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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, 2010, 2009 and 2008 were $209 million, $177 million, and $202 million, respectively, while benefits, claims and expenses ceded during these years were $241 million, $196 million, and $219 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, 2010, 2009 and 2008, customer allocations to NFG funds totaled $30.5 billion, $23.7 billion and $18.1 billion, respectively.  For the years ended December 31, 2010, 2009, and 2008, NFG paid the Company $103 million, $79 million, and $77 million, respectively, for the distribution and servicing of these funds.

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 $762 million and $919 million as of December 31, 2010 and 2009, 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, 2010, 2009 and 2008 were $61 million, $48 million, and $53 million, respectively.

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 $13 million, $11 million, and $11 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Refer to Note 13 for discussion of variable funding surplus note between Olentangy Reinsurance, LLC and Nationwide Corporation.

The Company entered into a note purchase agreement with an affiliate on November 17, 2006 to purchase $25 million of the affiliate’s 5.6% senior notes due November 16, 2016.  The notes are secured by certain pledged mortgage servicing rights.  The note is payable in seven equal principal installments of $4 million, which began November 6, 2010.  Interest is payable semi-annually on each May 16 and November 16.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 14.  Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC.  No payments to (from) NMIC were made for the year ended December 31, 2010. Total payments to (from) NMIC were $4 million and ($23) million during the years ended December 31, 2009 and 2008, respectively.  These payments related to tax years prior to deconsolidation.

During 2009, NLIC received a $20 million capital contribution from NFS.

During 2010 and 2009, NLIC did not pay dividends to NFS.  In 2008 NLIC paid dividends to NFS totaling $461 million.

During 2010 and 2009, the Company sold, at fair value, commercial mortgage loans with a carrying value of $117 million and $273 million, respectively, to NMIC.  The sale resulted in a net realized loss of $21 million and $34 million in 2010 and 2009, respectively to the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

During 2009, the Company sold private equity investments to NMIC for $61 million.  The private equity investments were carried and sold at fair value.  No gain or loss was recognized on the sale.

(19) Contingencies

Legal and Regulatory Matters

The Company is a subject to legal and regulatory proceedings in the ordinary course of its business. The Company’s legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates.  The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted.  Regulatory proceedings also could affect the outcome of one or more of the Company’s litigations matters.  Furthermore, it is often not possible to determine the ultimate outcomes of the pending regulatory 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.  Management believes, however, that based on their currently known information, the ultimate outcome of all pending legal and regulatory matters is not likely to have a material adverse effect on the Company’s consolidated financial position.  Nonetheless, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that such outcomes could materially affect the Company’s consolidated financial position or results of operations in a particular quarter or annual period.

The financial services industry has been the subject of increasing scrutiny on a broad range of issues by regulators and legislators. The Company and/or its affiliates have been contacted by, self reported 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, among other things, compensation, revenue sharing and bidding arrangements, market-timing, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, and the use of side agreements and finite reinsurance agreements.  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.

A promotional and marketing arrangement associated with the Company’s offering of a retirement plan product and related services in Alabama was investigated by the Alabama Attorney General, which assumed the investigation from the Alabama Securities Commission.  On October 27, 2010, the State Attorney General announced a settlement agreement, subject to court approval, between the Company and the State of Alabama, the Alabama Department of Insurance, the Alabama Securities Commission, and the Alabama State Personnel Board.  If the court approves the settlement agreement, the Company currently expects that the settlement will not have a material adverse impact on its consolidated financial position.  It is not possible to predict what effect, if any, the settlement may have on the Company's retirement plan operations with respect to promotional and marketing arrangements in general in the future.

On September 10, 2009, Nationwide Retirement Solutions, Inc. (NRS) was named in a lawsuit filed in the Circuit Court for Montgomery County, Alabama entitled Twanna Brown, Individually and on behalf of all other persons in Alabama who are similarly situated, v Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc., Edwin “Mac” McArthur, Steve Walkley, Glenn Parker, Ulysses Lavender, Diana McLain, Randy Hebson, and Robert Wagstaff; and Unknown Defendants A-Z.  On February 17, 2010, Brown filed an Amended Complaint alleging in Count One, that all the defendants were involved in a civil conspiracy and seeks to recover actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Two, although NRS is not named, it is alleged that the remaining defendants breached their fiduciary duties and seeks actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Three, although NRS is not named, the plaintiff seeks declaratory relief that the individual defendants breached their

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

fiduciary duties, seeks injunctive relief permanently removing said defendants from their respective offices in the Alabama State Employees Association (ASEA) and PEBCO and costs and attorneys fees. In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants. Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On March 3, 2010, the Company filed a motion to dismiss the amendment to the complaint.  On October 17, 2010, the plaintiff filed motions to intervene in Nationwide Retirement Solutions, Inc. v. Alabama State Personnel Board, PEBCO, Inc. and Alabama State Employees Association and also in Coker, et. al. v. NLIC, et. al.  The Company continues to defend this case vigorously.

On November 20, 2007, NRS and NLIC 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 Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z.  On March 12, 2010, NRS and NLIC were named in a Second Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Steven E. Coker, Sandra H. Turner, David N. Lichtenstein and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the ASEA Plan, excluding members of the Deferred Compensation Committee, ASEA's directors, officers and board members, and PEBCO’s directors, officers and board members. The class period is from November 20, 2001 to the date of trial.  In the second amended class action complaint, the plaintiffs allege breach of fiduciary duty, wantonness and breach of contract. The second amended class action complaint seeks a disgorgement of amounts paid, compensatory damages and punitive damages, plus interest, attorneys' fees and costs and such other equitable and legal relief to which plaintiffs and class members may be entitled.  On April 2, 2010, NRS and NLIC filed an answer.  On June 4, 2010, the plaintiffs filed a motion for class certification.  On July 8, 2010, the defendants filed their briefs in opposition to plaintiffs' motion for class certification.  On October 17, 2010, Twanna Brown filed a motion to intervene in this case.  On October 22, 2010, the parties to this action have executed a stipulation of settlement that agrees to certify a class for settlement purposes only, that provides for payments to the settlement class, and that provides for releases, certain bar orders, and dismissal of the case, subject to the Circuit Courts' approval. After a hearing on November 5, 2010, on November 9, 2010, the Court denied Brown’s motion to intervene. On November 13, 2010, the Court issued a Preliminary Approval Order and held a Settlement Fairness Hearing on January 26, 2011. On November 22, 2010, Brown filed a Notice of Appeal with the Supreme Court of Alabama, appealing the Preliminary Approval Order. On January 25, 2011, the Alabama Supreme Court dismissed the appeal. Class notices were sent out on November 24, 2010. On December 3, 2010, Brown filed a motion with the trial court to stay this case. On December 22, 2010, Brown filed with the Alabama Supreme Court, a motion to stay all further Gwin trial court proceedings until Ms. Brown's appeal of the certification order is decided. On January 25, 2011, the Alabama Supreme Court denied Brown’s motion to stay.  NRS and NLIC continue 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 May 23, 2008, the Court granted the defendants’ motion to dismiss.  On June 19, 2008, the plaintiffs filed a notice of appeal.  On December 20, 2010, the 9th Circuit Court of Appeals affirmed the dismissal of this case.  NLIC continues to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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.  In the plaintiffs' sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees 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.  On November 6, 2009, the Court granted the plaintiffs’ motion for class certification and certified a class of “All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participants had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009”.  On November 23, 2009, NFS and NLIC filed a rule 23(f) petition asking the Second Circuit Court of Appeals to hear an appeal of the District Court's order granting class certification. On December 2, 2009, NFS and NLIC filed an answer to the sixth amended complaint and a third amended counterclaim.  On January 29, 2010, the Companies filed a motion for class certification against the four named plaintiffs, as trustees of their respective retirement plans and against the trustees of other ERISA retirement plans who become members of the class certified in this lawsuit, for breach of fiduciary duty to the plans because the trustees approved and accepted the advantages of the allegedly unlawful “revenue sharing” payments.  On July 23, 2010, the District Court denied the Companies’ motion for class certification and dismissed the counterclaim.  On August 6, 2010, the Companies filed a motion for reconsideration of the ruling on the motion for certification of counterclaim defendants’ class certification order and also filed a motion for leave to amend the answer to the plaintiffs’ sixth amended complaint and third amended counterclaim.  These motions were denied on November 8, 2010. On October 20, 2010, the Second Circuit Court of Appeals granted NLIC’s 23(f) petition agreeing to hear an appeal of the District Court’s order granting class certification.  On October 21, 2010, the Court dismissed NFS from the lawsuit.  On October 27, 2010, the District Court stayed the underlying action pending a decision from the Second Circuit Court of Appeals.  NFS and NLIC continue to defend this lawsuit vigorously.

On May 14, 2010, NLIC was named in a lawsuit filed in the Western District of New York entitled Sandra L. Meidenbauer, on behalf of herself and all others similarly situated v. Nationwide Life Insurance Company.  The plaintiff claims to represent a class of all individuals who purchased a variable life insurance policy from NLIC during an unspecified period. The complaint claims breach of contract, alleging that NLIC charged excessive monthly deductions and costs of insurance resulting in reduced policy values and, in some cases, premature lapsing of policies. The complaint seeks reimbursement of excessive charges, costs, interest, attorney's fees, and other relief. NLIC filed a motion to dismiss the complaint on July 23, 2010. NLIC filed a motion to disqualify the proposed class representative on August 27, 2010. Plaintiff filed a motion to amend the complaint on September 17, 2010, and NLIC filed an opposition to the motion to amend on November 2, 2010. Those motions have been fully briefed. NLIC continues to vigorously defend this case.

On October 22, 2010, NRS was named in a lawsuit filed in the United States District Court, Middle District of Florida, Orlando Division entitled Camille McCullough, and Melanie Monroe, Individually and on behalf of all others similarly situated v. National Association of Counties, NACo Research Foundation, NACo Financial Services Corp., NACo Financial Center, and Nationwide Retirement Solutions, Inc.  The Plaintiffs’ First Amended Class Action Complaint and Demand for Jury Trial was filed on February 18, 2011.  If the Court determines that the Plan is governed by ERISA, then Plaintiffs seek to represent a class of “All natural persons in the United States who are currently employed or previously were employed at any point during the six years preceding the date Plaintiffs filed their Original Class Action Complaint, by a government entity that is or was a member of the National Association of Counties, and who participate or participated in the Section 457 Deferred Compensation Plan for Public Employees endorsed by the National Association of Counties and administered by Nationwide Retirement Solutions, Inc.”  If the Court determines that the Plan is not governed by ERISA, then the Plaintiffs seek to represent a class of “All natural persons in the United States who are currently employed or previously were employed at any point during the four years preceding the date Plaintiffs filed their Original Class Action Complaint, by a government entity that is or was a member of the National Association of Counties, and who participate or participated in a Section 457 Deferred Compensation Plan for Public Employees endorsed by the National Association of Counties and administered by Nationwide Retirement Solutions, Inc.”  The First Amended Complaint alleges ERISA Violation, Breach of Fiduciary Duty -

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

NACo, Aiding and Abetting Breach of Fiduciary Duty - Nationwide, Breach of Fiduciary Duty - Nationwide, and Aiding and Abetting Breach of Fiduciary Duty - NACo. The First Amended Complaint asks for actual damages, lost profits, lost opportunity costs, restitution, and/or other injunctive or other relief, including without limitation (a) ordering Nationwide and NACo to restore all plan losses, (b) ordering Nationwide to refund all fees associated with Nationwide’s Plan to Plaintiffs and Class members, (c) ordering NACo and Nationwide to pay the expenses and losses incurred by Plaintiffs and/or any Class member as a proximate result of Defendants’ breaches of fiduciary duty, (d) forcing NACo to forfeit the fees that NACo received from Nationwide for promoting and endorsing its Plan and disgorging all profits, benefits, and other compensation obtained by NACo from its wrongful conduct, and (e) awarding Plaintiff and Class members their reasonable and necessary attorney’s fees and cost incurred in connection with this suit, punitive damages, and pre-judgment and post judgment interest, at the highest rates allowed by law, on the damages awarded.The Company intends to defend this case vigorously.

Tax Matters

The separate account dividends received deduction (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.

The IRS recently completed an audit of the Company’s tax years 2003 through 2005. As a result of this audit, the Company received a Revenue Agent’s Report (RAR) and 30-Day Letter (requiring payment of additional tax due or the preparation of protest to start the appeals process) from the IRS in July 2009.  The RAR includes an adjustment to reduce the Company’s DRD for the above tax years resulting in additional tax due of $151 million. The Company is still at appeals on this issue  and believes that it will ultimately prevail based on technical merits.

(20) Guarantees

Since 2002, the Company has sold $747 million of credit enhanced equity interests in LIHTC Funds to unrelated third parties.  The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 7.75% over periods ending between 2002 and 2025.  As of December 31, 2010 and 2009, the Company held guarantee reserves totaling $6 million and $6 million, respectively, on these transactions.  These guarantees are in effect for periods of approximately 15 years each.  The LIHTC 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 $908 million.  The Company does not anticipate making any material payments related to these guarantees.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

As of December 31, 2010, the Company did not hold any material stabilization reserves as collateral for certain properties owned by the LIHTC Funds, as the LIHTC Funds have 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.  During 2010, the stabilization reserve was not increased materially and no portion was released into income.  In 2009, $1 million of the stabilization reserve was released into income.

To the extent there are cash deficits in any specific property owned by the LIHTC Funds, property reserves, property operating guarantees and reserves held by the LIHTC 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 LIHTC Funds.  This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

(21) Variable Interest Entities

In the normal course of business, the Company has relationships with VIEs.  The Company considers many factors when determining whether it is (or is not) the primary beneficiary of a VIE.  There is a review of the entity’s contract and other deal related information, such as 1) the entity's equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity, 2) whether the contractual or ownership interest in the entity changes with the change in fair value of the entity, and 3) the extent to which, through the variable interest, the Company has the power to direct the activities that most significantly impacts the entity’s performance and the obligation to absorb losses of the entity that could potentially be significant to the entity or the right to receive benefits from the entity that could potentially be significant to the entity.

The Company was not required and does not intend to provide financial or other support outside previous contractual requirements to any VIE.

Low-Income-Housing Tax Credit Funds

The Company provides guarantees to limited partners related to the amount of tax credits that will be generated LIHTC Funds.  The results of operations and financial position of each VIE of which the Company is the primary beneficiary are consolidated along with corresponding noncontrolling interest in the accompanying consolidated financial statements.

The Company had relationships with 22 and 19 LIHTC Funds that are considered VIEs as of December 31, 2010 and December 31, 2009, respectively, where the Company was the primary beneficiary. Net assets of these consolidated VIEs were $355 million and $351 million as of December 31, 2010 and December 31, 2009, respectively, composed primarily of other long-term investments of $315 million and $314 million as of the same respective dates.

Two LIHTC Funds were consolidated as a result of the adoption of guidance under FASB ASC 810, Consolidation.  Previously, the Company was not deemed the primary beneficiary.  As the managing member of the LITHC funds, the Company has the power to direct the activities that most significantly impact the economic power of the entities and consolidated the funds.  The impact of consolidation was an increase to noncontrolling interest of $46 million.

The Company’s total loss exposure from consolidated VIEs was immaterial as of December 31, 2010 and December 31, 2009 (except for the impact of guarantees disclosed in Note 20 to the 2009 audited consolidated financial statements).  Creditors (or beneficial interest holders) of the consolidated VIEs have no recourse to the general credit of the Company.

These LIHTC Funds are financed through the sale of these funds into the secondary market.  The proceeds from these sales are used to participate in low-income housing projects that provide tax benefits to the investors.

In addition to the consolidated VIEs described above, the Company holds variable interests in other LIHTC Funds that qualify as VIEs where the Company is not the primary beneficiary.  The carrying amount of these unconsolidated VIEs was $157

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

million and $110 million as of December 31, 2010 and December 31, 2009, respectively.  The total exposure to loss on these unconsolidated VIEs was $218 million and $123 million as of December 31, 2010 and December 31, 2009, respectively.  The total exposure to loss is determined by adding any unfunded commitments to the carrying amount of the VIEs.

Fixed Maturity Securities

The Company invests in fixed maturity securities that could qualify as VIEs, including corporate securities, mortgage-backed securities, and asset-backed securities.  The Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impacts the entities’ performances.  The Company’s maximum exposure to loss is limited to the carrying values of these securities.  There are no liquidity arrangements, guarantees or other commitments by third parties that affect the fair value of the Company’s interest in these assets.  Refer to Note 5 for additional disclosures related to these investments.

(22) 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 (loss), which is calculated by adjusting income from continuing operations before federal income taxes and discontinued operations to exclude: (1) net realized investment gains and losses, except for operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment, trading portfolio realized gains and losses, trading portfolio valuation changes, net realized gains and losses related to hedges on GMDB contracts and securitizations); (2) other-than-temporary impairment losses; (3) the adjustment to amortization of DAC and VOBA related to net realized investment gains and losses; and (4) net loss attributable to noncontrolling interest.

Individual Investments

The Individual Investments segment consists of individual annuity products marketed under the Nationwide DestinationSM and other Nationwide-specific or private label brands.  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, deferred variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while deferred fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. Immediate annuities differ from deferred annuities in that the initial premium is exchanged for a stream of income for a certain period or for the owner’s lifetime without future access to the original investment.  Portfolio income insurance is a form of deferred annuity that provides the income protection features common to today’s variable annuities to owners of specific managed account investments whose assets are outside of the annuity product.  The majority of assets and recent sales for the Individual Investments segment consist of deferred variable annuities.

Retirement Plans

The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans business.  The private sector primarily includes Internal Revenue Code (IRC) Section 401 fixed and variable group annuity business, and the public sector primarily includes IRC Section 457 and Section 401(a) business 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 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; non-operating realized gains and losses and related amortization, including mark-to-market adjustments on embedded derivatives, net of economic hedges, related to products with living benefits; other-than-temporary impairment losses, and other revenues and expenses not allocated to other segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following tables summarize the Company’s business segment operating results for the years ended December 31:

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2010
Revenues:
Policy charges	$           646	$             98	$           652	$               3	$         1,399
Premiums	209	-	275	-	484
Net investment income	569	691	510	55	1,825
Non-operating net realized investment losses1	-	-	-	(177)	(177)
Other-than-temporary impairment losses	-	-	-	(220)	(220)
Other income2	(82)	-	-	25	(57)
Total revenues	$       1,342	$           789	$       1,437	$         (314)	$         3,254
Benefits and expenses:
Interest credited to policyholder accounts	$           391	$           424	$           199	$             42	$         1,056
Benefits and claims	354	-	524	(5)	873
Policyholder dividends	-	-	78	-	78
Amortization of DAC	231	30	184	(49)	396
Amortization of VOBA and other intangible assets	1	-	19	(2)	18
Interest expense	-	-	-	55	55
Other operating expenses	180	143	172	79	574
Total benefits and expenses	$       1,157	$           597	$       1,176	$           120	$         3,050
Income (loss) from continuing operations before
federal income tax expense (benefit)	$           185	$           192	$           261	$         (434)	$            204
Less:  non-operating net realized investment losses1	-	-	-	177
Less:  non-operating net other-than-temporary            impairment losses	-	-	-	220
Less:  adjustment to amortization related to net            realized investment gains and losses
	-	-	-	(59)
Less:  net loss attributable to noncontrolling interest	-	-	-	60
Pre-tax operating earnings (loss)	$           185	$           192	$           261	$           (36)
Assets as of year end	$     53,113	$     25,599	$     22,874	$       5,811	$    107,397

_________

1 Excluding operating items (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 hedges on GMDB contracts and securitizations).

2 Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2009
Revenues:
Policy charges	$            522	$              93	$            634	$              (4)	$         1,245
Premiums	191	-	279	-	470
Net investment income	562	679	492	146	1,879
Non-operating net realized investment gains1	-	-	-	619	619
Other-than-temporary impairment losses	-	-	-	(575)	(575)
Other income2	(168)	-	-	(1)	(169)
Total revenues	$         1,107	$            772	$         1,405	$            185	$         3,469
Benefits and expenses:
Interest credited to policyholder accounts	$            394	$            433	$            201	$              72	$         1,100
Benefits and claims	247	-	538	27	812
Policyholder dividends	-	-	87	-	87
Amortization of DAC	(1)	45	158	264	466
Amortization of VOBA and other intangible assets	1	9	45	8	63
Interest expense	-	-	-	55	55
Other operating expenses	178	149	184	68	579
Total benefits and expenses	$            819	$            636	$         1,213	$            494	$         3,162
Income (loss) from continuing operations before
federal income tax expense (benefit)	$            288	$            136	$            192	$          (309)	$            307
Less:  non-operating net realized investment gains1	-	-	-	(619)
Less:  non-operating net other-than-temporary            impairment losses	-	-	-	575
Less:  adjustment to amortization related to net            realized investment gains and losses
	-	-	-	297
Less:  net loss attributable to noncontrolling interest	-	-	-	52
Pre-tax operating earnings (loss)	$            288	$            136	$            192	$              (4)
Assets as of year end	$       48,891	$       25,035	$       22,115	$         2,948	$       98,989

__________

1 Excluding operating items (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 hedges on GMDB contracts and securitizations).

2 Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2008
Revenues:
Policy charges	$            603	$            120	$            618	$                 -	$         1,341
Premiums	120	-	274	-	394
Net investment income	530	651	486	198	1,865
Non-operating net realized investment losses1	-	-	-	(387)	(387)
Other-than-temporary impairment losses	-	-	-	(1,131)	(1,131)
Other income2	110	1	-	(76)	35
Total revenues	$         1,363	$            772	$         1,378	$       (1,396)	$         2,117
Benefits and expenses:
Interest credited to policyholder accounts	$            379	$            436	$            196	$            162	$         1,173
Benefits and claims	379	-	489	(12)	856
Policyholder dividends	-	-	93	-	93
Amortization of DAC	648	41	130	(127)	692
Amortization of VOBA and other intangible assets	8	1	22	-	31
Interest expense	-	-	-	62	62
Other operating expenses	189	152	193	97	631
Total benefits and expenses	$         1,603	$            630	$         1,123	$            182	$         3,538
Income (loss) from continuing operations before
federal income tax expense (benefit)	$          (240)	$            142	$            255	$       (1,578)	$       (1,421)
Less:  non-operating net realized investment losses1	-	-	-	387
Less:  non-operating net other-than-temporary            impairment losses	-	-	-	1,131
Less:  adjustment to amortization related to net            realized investment gains and losses
	-	-	-	(139)
Less:  net loss attributable to noncontrolling interest	-	-	-	72
Pre-tax operating earnings (loss)	$          (240)	$            142	$            255	$          (127)
Assets as of year end	$       42,508	$       22,498	$       20,360	$         6,438	$       91,804

__________

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 hedges on GMDB contracts and securitizations.

2 Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(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, 2010 (in millions)

Column A	Column B	Column C	Column D
			Amount at
			which shown
			in the
		Fair	consolidated
Type of investment	Cost	value	balance sheet
Fixed maturity securities available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies	$             497	$             584	$                 584
Obligations of states and political subdivisions	1,410	1,377	1,377
Debt securities issued by foreign governments	110	123	123
Public utilities	2,492	2,655	2,655
All other corporate	21,104	21,695	21,695
Total fixed maturity securities available-for-sale	$        25,613	$       26,434	$           26,434
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies	$                23	$               24	$                   24
Industrial, miscellaneous and all other	3	4	4
Nonredeemable preferred stocks	13	14	14
Total equity securities available-for-sale	$                39	$               42	$                   42
Trading assets	49	45	45
Mortgage loans, net	6,211		6,125
Policy loans	1,088		1,088
Other long-term investments	513		513
Short-term investments, including amounts managed by a related party	1,062		1,062
Total investments	$        34,575		$           35,309

__________

1 Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans (see Note 5 to the audited consolidated financial statements), hedges and commitment hedges on mortgage loans.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule III                           Supplementary Insurance Information

As of December 31, 2010, 2009 and 2008 and for each of the years then ended (in millions)

Column A	Column B	Column C	Column D	Column E	Column F
	Deferred	Future policy
	policy	benefits, losses,		Other  policy
	acquisition	claims and	Unearned	claims and	Premium
Year:  Segment	costs	loss expenses	premiums1	benefits payable1	revenue
2010
Individual Investments	$          2,126	$                    10,541			$            209
Retirement Plans	269	11,874			-
Individual Protection	1,795	9,163			275
Corporate and Other	(217)	1,098			-
Total	$          3,973	$                    32,676			$            484
2009
Individual Investments	$           1,911	$                      10,871			$              191
Retirement Plans	271	11,703			-
Individual Protection	1,770	8,745			279
Corporate and Other	31	1,831
Total	$           3,983	$                      33,150			$              470
2008
Individual Investments	$           1,883	$                      12,477			$              120
Retirement Plans	290	11,498			-
Individual Protection	1,735	8,351			274
Corporate and Other	616	3,389			-
Total	$           4,524	$                      35,715			$              394

Column A	Column G	Column H	Column I	Column J	Column K
	Net	Benefits, claims,	Amortization	Other
	investment	losses and	of deferred policy	operating	Premiums
Year:  Segment	income2	settlement expenses	acquisition costs	expenses2	written
2010
Individual Investments	$             569	$                         745	$                    231	$                    181
Retirement Plans	691	424	30	143
Individual Protection	510	801	184	191
Corporate and Other	55	37	(49)	132
Total	$          1,825	$                      2,007	$                    396	$                    647
2009
Individual Investments	$              562	$                           641	$                        (1)	$                     179
Retirement Plans	679	433	45	158
Individual Protection	492	826	158	229
Corporate and Other	146	99	264	131
Total	$           1,879	$                        1,999	$                     466	$                     697
2008
Individual Investments	$              530	$                           758	$                     648	$                     197
Retirement Plans	651	436	41	153
Individual Protection	486	778	130	215
Corporate and Other	198	150	(127)	159
Total	$           1,865	$                        2,122	$                     692	$                     724

________

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule IV                           Reinsurance

As of December 31, 2010, 2009 and 2008 and for each of the years then ended (dollars in millions)

Column A	Column B	Column C	Column D	Column E	Column F
					Percentage
		Ceded to	Assumed		of amount
	Gross	other	from other	Net	assumed
	amount	companies	companies	amount	to net
2010
Life insurance in force	$     208,920	$        64,755	$                10	$     144,175	-
Premiums:
Life insurance 1	$             570	$                88	$                  1	$             483	0.2%
Accident and health insurance	238	241	4	1	NM
Total	$             808	$             329	$                  5	$             484	1.0%
2009
Life insurance in force	$        208,485	$          76,136	$                   8	$        132,357	-
Premiums:
Life insurance 1	$               549	$                 80	$                   -	$               469	-
Accident and health insurance	212	223	12	1	NM
Total	$               761	$               303	$                 12	$               470	2.6%
2008
Life insurance in force	$        208,071	$          75,092	$                 12	$        132,991	-
Premiums:
Life insurance 1	$               477	$                 84	$                   1	$               394	0.3%
Accident and health insurance	183	209	26	-	NM
Total	$               660	$               293	$                 27	$               394	6.9%

__________

1 Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment and universal life insurance products.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule V                           Valuation and Qualifying Accounts

Years ended December 31, 2010, 2009 and 2008 (in millions)

Column A	Column B	Column C		Column D	Column E
		Charged
	Balance at	(credited) to	Charged to		Balance at
	beginning	costs and	other		end of
Description	of period	expenses	accounts	Deductions1	period
2010
Valuation allowances - mortgage loans   on real estate	$                77	$                66	$                   -	$                47	$                 96
2009
Valuation allowances - mortgage loans   on real estate	$                 42	$                 85	$                    -	$                 50	$                 77
2008
Valuation allowances - mortgage loans   on real estate	$                 25	$                 20	$                    -	$                   3	$                 42

__________

1 Amounts represent transfers to real estate owned and recoveries.

'33 Act File No. 333-31725

'40 Act File No. 811-8301

PART C. OTHER INFORMATION

Item 26.                   Exhibits

(a) Resolution of the Depositor’s Board of Directors authorizing the establishment of the Registrant – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(b) Not Applicable

(c) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter – Filed previously with the registration statement (333-27133) and hereby incorporated by reference.

(d) The form of the contract – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(e) The form of the contract application – Filed previously with initial registration statement (333-31725) and hereby incorporated by reference.

(f)         Depositor’s Certificate of Incorporation and By-Laws.

(1)   Amended Articles of Incorporation for Nationwide Life Insurance Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitf1.htm" and hereby incorporated by reference.

(2)   Amended and Restated Code of Regulations of Nationwide Life Insurance Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitf2.htm" and hereby incorporated by reference.

(3) Articles of Merger of Nationwide Life Insurance Company of America with and into Nationwide Life Insurance Company, effective December 31, 2009. Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitf3.htm" and hereby incorporated by reference.

(g) Reinsurance Contracts -Filed previously with registration statement (333-31725) and hereby incorporated by reference.

(h) Form of Participation Agreements –

The following Fund Participation Agreements were previously filed on July 17, 2007 with pre-effective amendment number 1 of registration statement (333-140608) under Exhibit 26(h), and are hereby incorporated by reference.

(1) Fund Participation Agreement with AIM Variable Insurance Funds, AIM Advisors, Inc., and AIM Distributors dated January 6, 2003, under document “aimfpa99h1.htm”

(2) Amended and Restated Fund Participation and Shareholder Services Agreement with American Century Investment Services, Inc. dated September 15, 2004, as amended, under document “amcentfpa99h2”

(3) Restated and Amended Fund Participation Agreement with The Dreyfus Corporation dated January 27, 2000, as amended, under document “dreyfusfpa99h3.htm”

(4) Fund Participation Agreement with Federated Insurance Series and Federated Securities Corp. dated April 1, 2006, as amended, under document “fedfpa99h4.htm”

(5) Fund Participation Agreement with Fidelity Variable Insurance Products Fund dated May 1, 1988, as amended, including Fidelity Variable Insurance Products Fund IV and Fidelity Variable Insurance Products Fund V, under document “fidifpa99h5.htm”

(6) Amended and Restated Fund Participation Agreement with Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc. dated May 1, 2003 , as amended, under document “frankfpa99h8.htm”

(7) Fund Participation Agreement, Service and Institutional Shares, with Janus Aspen Series, dated December 31, 1999, under document “janusfpa99h9a.htm”

( 8 ) Amended and Restated Fund Participation Agreement with MFS Variable Insurance Trust and Massachusetts Financial Services Company dated February 1, 2003, as amended, under document “mfsfpa99h11.htm”

( 9 ) Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust) dated May 2, 2005 , as amended, under document “nwfpa99h12a.htm”

( 10 ) Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust), American Funds Insurance Series, and Capital Research and Management Company dated May 1, 2007 , as amended, under document “nwfpa99h12b.htm”

( 11 ) Fund Participation Agreement with Neuberger Berman Advisers Management Trust / Lehman Brothers Advisers Management Trust (formerly, Neuberger Berman Advisers Management Trust) dated January 1, 2006, under document “neuberfpa99h13.htm”

(12) Fund Participation Agreement with Oppenheimer Variable Account Funds and Oppenheimer Funds, Inc. dated April 13, 2007, under document “oppenfpa99h14.htm”

( 13 ) Fund Participation Agreement with T. Rowe Price Equity Series, Inc., T. Rowe Price International Series, Inc., T. Rowe Price Fixed Income Series, Inc., and T. Rowe Price Investment Services, Inc. dated October 1, 2002, as amended, under document “trowefpa99h15.htm”

(14) Fund Participation Agreement with The Universal Institutional Funds, Inc., Morgan Stanley Distribution, Inc., and Morgan Stanley Investment Management, Inc. dated February 1, 2002, as amended, under document “univfpa99h16.htm”

The following Fund Participation Agreements were previously filed on September 27, 2007 with pre-effective amendment number 3 of registration statement (333-137202) under Exhibit 26(h), and are hereby incorporated by reference.

( 15 ) Fund Participation Agreement (Amended and Restated) with Alliance Capital Management L.P. and Alliance-Bernstein Investment Research and Management, Inc. dated June 1, 2003, as document “alliancebernsteinfpa.htm”

(16) Fund Participation Agreement with BlackRock (formerly FAM Distributors, Inc, and FAM Variable Series Funds, Inc.) dated April 13, 2004, as amended, under document "blackrockfpa.htm"

(17) Fund Participation Agreement with PIMCO Variable Insurance Trust and PIMCO Funds Distributors, LLC, dated March 28, 2002, as amended, under document "pimcofpa.htm"

(18 ) Fund Participation Agreement with Putnam Variable Trust and Putnam Retail Management, L.P., dated February 1, 2002, as document “putnamfpa.htm”

( 19 ) Fund Participation Agreement Van Eck Investment Trust, Van Eck Associates Corporation, Van Eck Securities Corporation dated September 1, 1989, as amended, as document “vaneckfpa.htm”

(20) Fund Participation Agreement with Waddell & Reed Services Company and Waddell & Reed Inc. dated December 1, 2000, as document "waddellreedfpa.htm"

( 21 ) Fund Participation Agreement with Wells Fargo Management, LLC, Stephens, Inc. dated November 15, 2004, as amended, as document “wellsfargofpa.htm”

The following Fund Participation Agreement was previously filed on April 22, 2008 with post-effective amendment number 21 of registration statement (033-60063) under Exhibit 24(b), and is hereby incorporated by reference.  For information regarding payments Nationwide receives from underlying mutual funds, please see the "Information on Underlying Mutual Fund Payments" section of the prospectus and/or the underlying mutual fund prospectuses.

( 22 ) Fund Participation Agreement with Credit Suisse Asset Management, LLC, and Provident Distributors, Inc. dated January 3, 2000, as document “creditsuissefpa.htm”

(i) Not Applicable

(j) Not Applicable

(k) Opinion of Counsel – Filed previously with Pre-Effective Amendment No. 1 to the registration statement (333-31725) and hereby incorporated by reference.

(l) Not Applicable

(m) Not Applicable

(n) Consent of Independent Registered Public Accounting Firm – Attached hereto.

(o) Not Applicable

(p) Not Applicable

(q) Redeemability Exemption – Filed previously with registration statement (333-31725) on December 21, 2009 under document "exhibit_26q.htm" and is hereby incorporated by reference.

(99) Power of Attorney – Attached hereto.

Item 27. Directors and Officers of the Depositor

President and Chief Operating Officer and Director	Kirt A. Walker
Executive Vice President and Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President-Administration	Terri L. Hill
Executive Vice President-Chief Human Resources Officer	Gale V. King
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing and Strategy Officer	Matthew Jauchius
Executive Vice President-Finance	Lawrence A. Hilsheimer
Executive Vice President	Mark A. Pizzi
Executive Vice President and Director	Mark R. Thresher
Senior Vice President	Harry H. Hallowell
Senior Vice President-Associate Services	Robert J. Puccio
Senior Vice President-Business Transformation Office	Gregory S. Moran
Senior Vice President-Chief Financial Officer and Director	Timothy G. Frommeyer
Senior Vice President-Chief Risk Officer	Michael W. Mahaffey
Senior Vice President-CIO IT Infrastructure	Robert J. Dickson
Senior Vice President-Customer Insight/Analytic	Paul D. Ballew
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-Corporate Relations	Jeffrey D. Rouch
Senior Vice President-Head of Taxation	Pamela A. Biesecker
Senior Vice President-Individual Investments Business Head	Eric S. Henderson
Senior Vice President-Individual Protection Business Head and Director	Peter A. Golato
Senior Vice President-P&C Marketing	Gordon E. Hecker
Senior Vice President-CIO NF Systems	Susan Gueli
Senior Vice President, Chief Financial Officer – Property and Casualty	Michael P. Leach
Senior Vice President-Distribution and Sales	John L. Carter
Senior Vice President-President-NW Retirement Plans	Anne L. Arvia
Senior Vice President-President-Investment Management Group	Michael S. Spangler
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Marketing Services	Jennifer M. Hanley
Senior Vice President-President-NW Bank	J. Lynn Greenstein
Senior Vice President-Internal Audit	Kai V. Monahan
Senior Vice President-CIO Corp Apps/NBH/NW Bank	Mark A. Gaetano
Senior Vice President-CIO Corp Apps/NBH/NW Bank	Guruprasad C. Vasudeva
Senior Vice President-Nationwide Financial	Steven C. Power
Senior Vice President and Treasurer	David LePaul
Senior Vice President-Controller	James D. Benson
Senior Vice President-Field Operations IC	Jeff M. Rommel
Senior Vice President-NF Marketing	William J. Burke
Senior Vice President-PCIO Sales Support	Melissa D. Gutierrez
Senior Vice President-Chief Compliance Officer	Sandra L. Rich
Vice President – Corporate Governance and Secretary	Robert W. Horner, III
Director	Stephen S. Rasmussen

The business address of the Directors and Officers of the Depositor is:

One Nationwide Plaza, Columbus, Ohio 43215

Item 28.                 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
1492 Capital, LLC	Ohio		The company acts as an investment holding company.
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 managing 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	Ohio		The company writes personal lines residential property insurance in the State of Florida.
Freedom Specialty Insurance Company	Ohio		The company operates as a multi-line insurance company.
Audenstar Limited	England		The company is an investment holding company.
Champions of the Community, Inc.	Ohio		The company raises money to enable it to make gifts and grants to charitable organizations.
Colonial County Mutual Insurance Company*	Texas		The company underwrites non-standard automobile and motorcycle insurance and various other commercial liability coverages in Texas.
Crestbrook Insurance Company*	Ohio		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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
DVM Insurance Agency, Inc.	California		The company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
Farmland Mutual Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Freedom Specialty Insurance Company	Ohio		The company operates as a multi-line insurance company.
Gates, McDonald of Ohio, LLC *	Ohio		The company provides services to employers for managing workers’ and unemployment compensation matters and employee leave administration.
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 LLC .	Ohio		The company provides medical management and cost containment services to employers.
Insurance Intermediaries, Inc.	Ohio		The company is an insurance agency and provides commercial property and casualty brokerage services.
Life REO Holdings, LLC	Ohio		The company is an investment company.
Lone Star General Agency, Inc.	Texas		The company acts as general agent to market nonstandard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as some individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England		This is a limited liability company organized for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds.  The company is currently inactive.
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Ohio		The company is a property and casualty insurer that writes personal lines business.
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 Holdings	England and Wales		The company operates as an investment holding company.
Nationwide Asset Management, LLC	Ohio		The company provides investment advisory services as a registered investment advisor to affiliated and non-affiliated clients.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
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 Holding Company , LLC (fka Nationwide Better Health Holding Company , Inc.)	Ohio		The company provides health management services.
Nationwide Better Health (Ohio), LLC (fka Nationwide Better Health, Inc.)	Ohio		The company provides population health management.
Nationwide Cash Management Company	Ohio		The company buys and sells investment securities of a short-term nature as the agent for other corporations, foundations and insurance company separate accounts.
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.
Nationwide 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 General Agency, Inc. (fka 1717 Brokerage Services, Inc.)	Pennsylvania		The company is a multi-state licensed insurance agency.
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 Structured Products, LLC	Ohio		The company captures and reports the results of the structured products business unit.
Nationwide Fund Advisors (fka Gartmore Mutual Fund Capital Trust)	Delaware		The trust acts as a registered investment advisor.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Fund Distributors LLC (successor to Gartmore Distribution Services, Inc.)	Delaware		The company is a limited purpose broker-dealer.
Nationwide Fund Management LLC (successor to Gartmore Investors Services, Inc.)	Delaware		The company provides administration, transfer and dividend disbursing agent 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 Holdings, Inc.	Ohio		The company is a holding company for the international operations of Nationwide.
Nationwide 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 company is an independent agency personal lines underwriter of property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio		The company transacts general insurance business, except life insurance.
Nationwide Insurance Foundation	Ohio		The company contributes to non-profit activities and projects.
Nationwide Investment Advisors, LLC	Ohio		The company provides investment advisory services.
Nationwide Investment Services Corporation**	Oklahoma		This is a limited purpose broker-dealer and distributor of variable annuities and variable life products for Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. The company also provides educational services to retirement plan sponsors and its participants.
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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Lloyds	Texas		The company markets commercial and property insurance in Texas.
Nationwide Mutual Capital, 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.
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 Realty Services, Ltd.	Ohio		The company provides relocation services for associates.
Nationwide Realty Investors, Ltd.*	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investment.
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, 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 SA Capital Trust	Delaware		The trust acts as a holding company .
Nationwide Sales Solutions, Inc.	Iowa		The company engages in the direct marketing of property and casualty insurance products.
Nationwide Securities, LLC	Delaware		The company is a registered broker-dealer and provides investment management and administrative services.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Services Company, LLC	Ohio		The company performs shared services functions for the Nationwide organization.
Newhouse Capital Partners, LLC	Delaware		The company is an investment holding company.
Newhouse Capital Partners II, LLC	Delaware		The company is an investment holding company.
NF Reinsurance Ltd.*	Bermuda		The company serves as a captive reinsurer for Nationwide Life Insurance Company’s universal life, term life and annuity business.
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc.’s distribution companies.
NMC CPC WT Investment, LLC	Delaware		The business of the company is to hold and exercise rights in a specific private equity investment.
NWD Asset Management Holdings, Inc.	Delaware		The company is an investment holding company.
NWD Investment Management, 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	Delaware		The company acts as a holding company for the NWD Investments group of companies and as a registered investment advisor.
Pension Associates, Inc.	Wisconsin		The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa		The company is an insurance agency.
Privilege Underwriters, Inc.	Florida		The company acts as a holding company for the PURE Group of insurance companies.
Privilege Underwriters, Reciprocal Exchange	Florida		The company acts as a reciprocal insurance company.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Pure Insurance Company	Florida		The company acts as a captive reinsurance company.
Pure Risk Management, LLC	Florida		The company acts as an attorney-in-fact for Privilege Underwriters Reciprocal Exchange.
Registered Investment Advisors Services, Inc.	Texas		The company is a technology company that facilitates third-party money management services for registered investment advisors.
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.
Riverview International Group, Inc.	Delaware		The company is an insurance 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.
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 that operates employee agent storefronts.
Titan Indemnity Company	Texas		The company is a multi-line insurance company and is operating primarily as a property and casualty insurance company.
Titan Insurance Company	Michigan		The company 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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
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.
Western Heritage Insurance Company	Arizona		The company underwrites excess and surplus lines of property and casualty insurance.
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.

Item 29. Indemnification

Ohio's General Corporation Law expressly authorizes and Nationwide’s Amended and Restated Code of Regulations provides for indemnification by Nationwide of any person who, because such person is or was a director, officer or employee of Nationwide was or is a party, or is threatened to be made a party to:

o any threatened, pending or completed civil action, suit or proceeding;

o any threatened, pending or completed criminal action, suit or proceeding;

o any threatened, pending or completed administrative action or proceeding;

o any threatened, pending or completed investigative action or proceeding;

The indemnification will be for actual and reasonable expenses, including attorney's fees, judgments, fines and amounts paid in settlement by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the Ohio's General Corporation Law.

Although Nationwide is of the opinion that 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 permitted, Nationwide has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide for liabilities arising under the Securities Act of 1933 ( the 1933 "Act") is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act.

Nationwide and the directors, officers and/or controlling persons will be governed by the final adjudication of such issue.  Nationwide will not be required to seek the court’s determination if, in the opinion of Nationwide’s counsel, the matter has been settled by controlling precedent.

Item 30. 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:

MFS Variable Account	Nationwide VA Separate Account-D
Multi-Flex Variable Account	Nationwide VLI Separate Account
Nationwide Variable Account	Nationwide VLI Separate Account-2
Nationwide Variable Account-II	Nationwide VLI Separate Account-3
Nationwide Variable Account-3	Nationwide VLI Separate Account-4
Nationwide Variable Account-4	Nationwide VLI Separate Account-5
Nationwide Variable Account-5	Nationwide VLI Separate Account-6
Nationwide Variable Account-6	Nationwide VLI Separate Account-7
Nationwide Variable Account-7	Nationwide VL Separate Account-C
Nationwide Variable Account-8	Nationwide VL Separate Account-D
Nationwide Variable Account-9	Nationwide VL Separate Account-G
Nationwide Variable Account-10	Nationwide Provident VA Separate Account 1
Nationwide Variable Account-11	Nationwide Provident VA Separate Account A
Nationwide Variable Account-12	Nationwide Provident VLI Separate Account 1
Nationwide Variable Account-13	Nationwide Provident VLI Separate Account A
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, Treasurer and Director	James D. Benson
Vice President-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Kathy R. Richards
Associate Vice President-Financial Systems & Treasury Services and Assistant Treasurer	Terry C. Smetzer
Associate Vice President	John J. Humphries, Jr.
Assistant Secretary	Mark E. Hartman
Assistant Treasurer	Morgan J. Elliott
Assistant Treasurer	Jerry L. Greene
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 31. Location of Accounts and Records

Timothy G. Frommeyer

Nationwide Life Insurance Company

One Nationwide Plaza

Columbus, OH  43215

Item 32. Management Services

Not Applicable

Item 33. Fee Representation

Nationwide Life Insurance Company 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 risks assumed by Nationwide Life Insurance Company.

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VLI SEPARATE ACCOUNT-4, certifies that it meets the requirements of the 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 21 st day of April, 2011 .

NATIONWIDE VLI SEPARATE ACCOUNT-4

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

By: /s/ PAIGE L. RYAN

Paige L. Ryan

As required by the Securities Act of 1933, the Registration Statement has been signed by the following persons in the capacities indicated on this  21st day of April, 2011 .

KIRT A. WALKER
Kirt A. Walker, President and Chief Operating Officer, and Director
MARK R. THRESHER
Mark R. Thresher, Executive Vice President and Director
TIMOTHY G. FROMMEYER
Timothy G. Frommeyer, Senior Vice President-Chief Financial Officer and Director
PETER A. GOLATO
Peter A. Golato, Senior Vice President-Individual Protection Business Head and Director
STEPHEN S. RASMUSSEN
Stephen S. Rasmussen, Director
	By /s/ PAIGE L. RYAN
	Paige L. Ryan
	Attorney-in-Fact