'33 Act File No. 33- 62795

'40 Act File No. 811-5311

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-6

REGISTRATION UNDER THE SECURITIES ACT OF 1933	o
Pre-effective Amendment No. ___	o
Post-effective Amendment No. 19	þ

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	o
Amendment No. 19	þ

(Check appropriate box or boxes.)

NATIONWIDE VLI SEPARATE ACCOUNT-2

(Exact Name of Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Name of Depositor)

One Nationwide Plaza

Columbus, Ohio 43215-2220

(Address of Depositor's Principal Executive Offices) (Zip Code)

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

Thomas E. Barnes, Esq.

VP and Secretary

One Nationwide Plaza

Columbus, Ohio 43215-2220

(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: June 1, 2006

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

oImmediately upon filing pursuant to paragraph (b)

þOn June 1, 2006 pursuant to paragraph (b)

o60 days after filing pursuant to paragraph (a)(1)

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

If appropriate, check the following box:

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

Nationwide Life Insurance Company:

·Nationwide VLI Separate Account - 2

·Nationwide VLI Separate Account - 4

Prospectus supplement dated June 1, 2006 to

Prospectus dated May 1, 2006

 This supplement updates certain information contained in your prospectus. Please read it and keep it with your prospectus for future reference.

Policy Owners with Policies issued prior to May 1, 2004:

Effective June 1, 2006, the following underlying mutual fund will no longer be available to accept new transfers or premium payments:

Janus Aspen Series - International Growth Portfolio: Service Shares

Therefore, effective June 1, 2006, unless you instruct us otherwise, allocation requests made to the Janus Aspen Series - International Growth Portfolio: Service Shares will be allocated to the Janus Aspen Series - International Growth Portfolio: Service II Shares.

Modified Single Premium Variable Universal Life Insurance Policies

Issued By

Nationwide Life Insurance Company

Through

Nationwide VLI Separate Account-2

The Date Of This Prospectus Is May 1, 2006

PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.

Variable life insurance is complex, and this prospectus is designed to help you become as fully informed as possible in making your decision to purchase or not to purchase the variable life insurance policy it describes. Prior to your purchase, we encourage you to take the time you need to understand the policy, its potential benefits and risks, and how it might or might not benefit you. In consultation with your financial advisor, you should use this prospectus to compare the benefits and risks of this policy versus those of other life insurance policies and alternative investment instruments.

Please read this entire prospectus and consult with a trusted financial adviser. If you have policy specific questions or need additional information, contact us. Also, contact us for free copies of the prospectuses for the mutual funds available under the policy.

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

Please understand that the POLICY TERMS will govern the way the policy works and all rights and obligations.

These securities have not been approved or disapproved by the SEC nor has the SEC passed upon the accuracy or adequacy of the prospectus. Any representation to the contrary is a criminal offense.

This policy is NOT: FDIC or NCUSIF insured; a bank deposit; available in every state; or insured or endorsed by a bank or any federal government agency.

This policy MAY decrease in value to the point of being valueless.

THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY NOT LAWFULLY BE MADE.

The purpose of this policy is to provide life insurance protection for the beneficiary you name. If your primary need is not life insurance protection, then purchasing this policy may not be in your best interests. 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 this 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. Consult your financial adviser.

Not all terms, conditions, benefits, programs, features and investment options are available or approved for use in every state.

Table Of Contents

	Page
In Summary: Policy Benefits	4
In Summary: Policy Risks	5
In Summary: Variable Universal Life Insurance And The Policy	6
In Summary: Fee Tables	8
Policy Investment Options	11
The Fixed Investment Option
Variable Investment Options
Allocation of Premium and Cash Value
Valuation of Accumulation Units
How Sub-Account Investment Experience is
Determined
Cash Value
Transfers Among and Between Policy Investment Options	16
Sub-Account Portfolio Transfers
Fixed Account Transfers
Modes to Make a Transfer
The Policy	18
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
Rider	21
Long-term Care Rider
Premium	22
Initial Premium
Subsequent Premiums
Charges	23
Surrender Charges
Short-Term Trading Fees
Cost Of Insurance
Mortality And Expense Risk
Tax Expense
Administrative Expense
Policy Loan Interest
Long-term Care Rider
A Note On Charges
The Death Benefit	26
Calculation Of The Death Benefit Proceeds
Death Benefit
Suicide

Table Of Contents (continued)

	Page
Surrenders	27
Full Surrender
Partial Surrender
The Payout Options	27
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	28
Dollar Cost Averaging
Asset Rebalancing
Policy Loans	29
Loan Amount And Interest
Collateral and Interest
Repayment
Net Effect Of Policy Loans
Lapse	30
Grace Period
Reinstatement
Taxes	31
Types Of Taxes Of Which To Be Aware
Buying The Policy
Investment Gain In The Policy
Periodic Withdrawals, Non-Periodic Withdrawals
And Loans
Surrender Of The Policy
Withholding
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
Non-Resident Aliens and Other Persons Who are not
Citizens of the United States
Tax Changes
Nationwide Life Insurance Company	35
Nationwide VLI Separate Account-2	36
Organization, Registration And Operation
Addition, Deletion, Or Substitution Of Mutual Funds
Voting Rights
Legal Proceedings	37
Nationwide Life Insurance Company
Nationwide Investment Services Corporation
Financial Statements	39
Appendix A: Sub-Account Information	40
Appendix B: Definitions	53

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. While the policy is In Force, we will pay the Proceeds to your beneficiary when the Insured dies. The Death Benefit is the greater of the Specified Amount or the applicable percentage of cash value under federal tax law.

For more information, see "The Death Benefit" beginning on page26.

Your 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. For more information, see "The Payout Options" beginning on page 27.

Coverage Flexibility

Subject to conditions, you may choose to:

üChange your beneficiaries; and

üChange who owns the policy.

For more information, see "The Beneficiaries" beginning on page 19; and "To Assign" beginning on page 20.

Access To Cash Value

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

üTake a policy loan of an amount no greater in the first year than 50% of the policy's Cash Value, less surrender charge, and no greater than 90% of the policy's Cash Value, less surrender charge, in the following years . The minimum amount is $1,000. For more information, see "Policy Loans" beginning on page 29.

üAfter the fifth year, take a partial surrender of no less than $500, but no more than 10% of total Premium payments or 100% of Cash Value less total Premium payments less any loan amount at the time of the partial surrender, so long as it does not reduce the policy's Cash Surrender Value below $10,000. For more information, see "Partial Surrender" beginning on page 27.

üSurrender 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. For more information, see "Full Surrender" beginning on page 27; and "The Payout Options" beginning on page 27.

Additional Premium

Though the policy is designed to be a single Premium policy, you may make additional Premium payments, subject to conditions. The minimum initial Premium is $10,000 for policies where the Insured is less than 71 years of age and $50,000 where the Insured is between the ages of 71 and 80. For more information, see "Premium" beginning on page 22.

Investment Options

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

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

üThe variable investment options constitute the limitedly available mutual funds, and we have divided Nationwide VLI Separate Account-2 into an equal number of Sub-Account portfolios, identified in the "Appendix A: Sub-Account Information" section, to account for your allocations. Your investment return will depend on Investment Experience of the Sub-Account portfolios you have chosen.

For more information, see " Appendix A: Sub-Account Information," beginning on page 40 and "Policy Investment Options" beginning on page11.

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 within limits. For more information, see "Sub-Account Portfolio Transfers" beginning on page16. We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-

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Account Investment Experience. For more information, see "Sub-Account Portfolio Transfers," beginning on page 16and "Modes To Make A Transfer," beginning on page18. 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. For more information, see "Dollar Cost Averaging" beginning on page 28.

Taxes

Unless you make a withdrawal, you will generally not be taxed on any earnings while your policy remains In Force. This is known as tax deferral. Also, your beneficiary will generally not have to include the Proceeds as taxable income. For more information, see "Taxes" beginning on page 31. Unlike other variable insurance products offered by Nationwide, this policy does 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. For more information, see "To Assign" beginning on page 20.

Examination Right

For a limited time, you may cancel the policy, and you will receive a refund. For more information, see "To Cancel (Examination Right)" beginning on page 19.

Rider

You may purchase a Long-term CareRider. Availability will vary by state. For more information, see "Rider" beginning on page 21.

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) 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 terminate 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 reduce the amount of Cash Value allocated among the Sub-Account portfolios you have chosen. If the partial surrender amount exceeds the Cash Value in the Sub-Account portfolios, the fixed account will be reduced as well. 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 relates to the policy's Cash Value. For more information, see "Surrenders" beginning on page 27 and "Net Effect Of Policy Loans" beginning on page 30.

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 beneficiaries. Also, not all policies are afforded the same tax treatment. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans" beginning on page 32. For example, distributions from the policy may be taxed differently. Special rules will apply for a policy that is considered a "modified endowment contract," including that a 10% penalty tax may be imposed on distributions, including

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any policy loan. In addition, there are federal estate and gift taxes, and state and local taxes, with which you should be aware. You should 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 30 days of the end of a calendar quarter, but not within 12 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. For more information, see "The Fixed Investment Option" beginning on page 11.

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. For more information, see "Sub-Account Portfolio Transfers," beginning on page16, "Modes To Make A Transfer," beginning on page 18, and "Short-Term Trading Fees," beginning on page 24. 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.

In Summary: Variable Universal Life Insurance And The Policy

Variable Universal Life Insurance, in general, may be important to you in two ways.

üIt will provide economic protection to a beneficiary.

üIt 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 investment options and the fixed investment option? 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.

üYou will pay a Premium for life insurance coverage on the Insured.

üThe 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.

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

What makes the policy different from 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 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. (But please read the remainder of this prospectus for the details.)

üAt 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; and the choice of the Rider.

üYou will then be able to allocate the Premium between and among a fixed and the variable investment options.

üFrom the policy's Cash Value each month, we will deduct other charges to help cover the mortality risks we assumed, and the sales and administrative costs. We call these charges periodic charges.

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üSo 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.

üThe policy will pay a Death Benefit to the beneficiary.

üPrior to the Insured's death, you may withdraw all, or a portion (after the fifth policy year), of the policy's Cash Surrender Value. Or you may borrow against the Cash Surrender Value.

Withdrawals and 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.

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In Summary: Fee Tables

The following tables describe the fee and expenses that you will pay when buying, owning and surrendering the policy. The first table describes the fee that you will pay at the time that you surrender the policy.

For more information, see "Charges" beginning on page 23.

Transaction Fees
Charge	When Charge Is Deducted	Amount Deducted
Surrender Charges(1)	Upon Full Surrender or Lapse	Maximum Guaranteed Charge
		10% of Initial Premium Payments
		From The Policy's Cash Value
Illustration Charge(2)	Upon Requesting an Illustration	Maximum Guaranteed Charge	Currently
		$25	$0
		Proportionately From Policy's Cash Value
Short-Term Trading Fee(3)	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

^{_______________________________________}

⁽¹⁾The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date. For the third year from the Policy Date the charge is 9% of initial Premium, for the fourth year it is 8%, for the fifth year it is 7%, for the sixth year it is 6%, for the seventh year it is 5%, for the eighth year it is 4%, for the ninth year it is 3%, and, thereafter, there is no charge. Initial Premium may vary by: the Insured's sex; age (when the policy was issued); underwriting class and the Specified Amount (and any increases).

⁽²⁾If we begin to charge for illustrations, you will be expected 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.

⁽³⁾Short-term trading fees are only assessed in connection with Sub-Accounts that correspond to an underlying mutual fund that assesses a short-term trading fee. See "Total Annual Sub-Account Portfolio Operating Expenses" for a list of mutual funds that assess a short-term trading fee. For more information about transactions subject to short-term trading fees, see "Short-Term Trading Fees" beginning on page 24.

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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(4), (5), (6) Representative - For An Age 50 Male With A Single Premium Of $50,000 and A Specified Amount Of $167,395	Monthly	Minimum	Maximum		Representative(7)
		$0.06		$83.33	$0.54
		Per $1,000 of Net Amount at Risk (Death Benefit less Cash Value)
		Proportionately From Your Chosen Variable And Fixed Investment Options

Mortality And Expense Risk	Monthly	Maximum And Current Charge
		$0.75 Per $1,000 Of Cash Value
		Proportionately From Your Chosen Variable Investment Options
Tax Expense(8)	Monthly	Maximum And Current Charges
		$0.42 Per $1,000 Of Cash Value
		Proportionately From Your Chosen Variable And Fixed Investment Options
Administrative Expense(9)	Monthly	Maximum
		The Greater Of: $10 Or $0.25 Per $1,000 Of Cash Value
		Proportionately From Your Chosen Variable And Fixed Investment Options
Policy Loan Interest (10), (11), (12)	Annually (Accrues Daily)	Maximum Guaranteed		Currently
		$60		$60
		Per $1,000 Of An Outstanding Policy Loan
Long-term Care Rider(13) Representative - For An Age 50 Male With A Long-term Care Specified Amount Of $100,000	Monthly	Minimum	Maximum		Representative
		$0.02	$5.73		$0.09

^{_______________________________________}

⁽⁴⁾This charge varies by: the Insured's sex; age; underwriting class; any substandard ratings; the year from the Policy Date and the Specified Amount.

⁽⁵⁾Ask for a policy illustration, or see your Policy Data Page for information on your cost.

⁽⁶⁾The current cost of insurance charge is calculated based on your policy's Cash Value and is equal to $0.54 per $1,000 of Cash Value for each month for the first ten years from the Policy Date and for all policies with Cash Value less than $100,000. For polices with at least $100,000 of Cash Value, for years after the tenth from the Policy Date, the charge is equal to $0.25 per $1,000 of Cash Value for each month. In New York, the current cost of insurance charge is $0.54 per $1,000 of Cash Value for each month in all years.

⁽⁷⁾The representative charge may not be representative of the charge that a particular policy owner pays.

⁽⁸⁾This charge applies for the first ten years from the Policy Date.

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⁽⁹⁾The current monthly administrative charge is $0.25 per $1,000 of Cash Value for the first ten years from the Policy Date on all policies with Cash Value less than $100,000. For policies with $100,000 or more of Cash Value, for years after the tenth from the Policy Date, the current charge is equal to $0.13 per $1,000 of Cash Value. The charge, however, is not less than $10 per month. In New York, the administrative charge is $0.25 per $1,000 of Cash Value each month in all years, subject to a maximum of $7.50 per month.

⁽¹⁰⁾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. For more information, see "Policy Loans" beginning on page 29.

The effect is a net cost of no more than 2% per annum for regular loans, based on the minimum guaranteed interest crediting rates. Preferred loans may be available that have a net cost of $0 (i.e., 6% loan interest rate less a 6% loan crediting rate). For more information, see "Policy Loans" beginning on page 29.

⁽¹¹⁾We charge 6% 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. It is 4% and 6% per annum currently for ordinary and preferred loans, respectively (guaranteed 4% minimally).

⁽¹²⁾Your net cost for an ordinary loan is 2% per annum currently. There is no cost (a net cost of zero) for a preferred loan currently. For more information, see "Collateral And Interest" beginning on page 29.

⁽¹³⁾This charge varies by any substandard ratings. The continuation of a Rider is contingent on the policy being In Force.

The next item shows the minimum and maximum total operating expenses, as of December 31, 2005, 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 cover 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)	2.68%	0.27%

The following mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of allocation to that Sub-Account (see "Short-Term Trading Fees"):

·American Century Variable Portfolios, Inc. - American Century VP International Fund: Class III

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

·Fidelity Variable Insurance Products Fund IV - VIP Natural Resources Portfolio: Service Class 2

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

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

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

·Gartmore Variable Insurance Trust - Federated GVIT High Income Bond Fund: Class III

·Gartmore Variable Insurance Trust - Gartmore GVIT Emerging Markets Fund: Class III

·Gartmore Variable Insurance Trust - Gartmore GVIT Global Health Sciences Fund: Class III

·Gartmore Variable Insurance Trust - Gartmore GVIT Global Technology and Communications Fund: Class III

·Gartmore Variable Insurance Trust - GVIT International Index Fund: Class VI

·Gartmore Variable Insurance Trust - GVIT International Value Fund: Class III

·Janus Aspen Series - International Growth Portfolio: Service II Shares

·Neuberger Berman Advisers Management Trust - AMT International Portfolio: S Class

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

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Policy Investment Options

You may allocate all or a portion of your Premium to any Sub-Account. The separate account is divided into Sub-Accounts that invest in shares of one or more portfolios of the different mutual funds available under the policy. Or you may allocate all or a portion of your Premium to the fixed investment option that is funded by the assets of our general account.

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 ends. 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 yours is a state that requires us to refund the Cash Value, we will allocate all of the initial Net Premium to the available money market Sub-Accounts based on the allocation instructions in effect at the time. Any initial Net Premium designated to be allocated to fixed investment options will be so allocated immediately upon receipt.

The Fixed Investment Option

The 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. The general account is used 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 on the policy data page. 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 in any given year.

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. However, information about the fixed account is subject to federal securities laws relating to the accuracy and completeness of statements made by prospectus disclosure.

Interest rates are set at the beginning of each calendar quarter and will be effective for at least three months. You may receive a different interest rate on Premium 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).

Variable Investment Options

The variable investment options constitute the limitedly 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 supervision of the management or investment practices or policies of the portfolios or mutual funds by the SEC. The "Appendix A: Sub-Account Information" section identifies the available mutual funds, by name, investment type and adviser. Your choices and any changes will appear on the Policy Data Page.

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 performance of any other Sub-Account portfolio.

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The Sub-Accounts available through this policy are listed below. For more information about the mutual funds, please refer to “Appendix A: Sub-Account Information” and/or the applicable mutual fund’s prospectus.

AIM Variable Insurance Funds

· AIM V.I. Basic Value Fund: Series I Shares

· AIM V.I. Capital Appreciation Fund: Series I Shares

· AIM V.I. Capital Development Fund: Series I Shares

American Century Variable Portfolios, Inc.

· American Century VP Mid Cap Value Fund: Class I

· American Century VP Ultra Fund: Class I

· American Century VP Value Fund: Class I*

· American Century VP Vista Fund: Class I

American Century Variable Portfolios II, Inc.

· American Century VP Inflation Protection Fund: Class II

Dreyfus

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

·   Dreyfus Stock Index Fund, Inc.: Initial Shares

·   Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

Federated Insurance Series

· Federated Market Opportunity Fund II: Service Shares

· Federated Quality Bond Fund II: Primary Shares

Fidelity Variable Insurance Products Fund

· VIP Equity-Income Portfolio: Initial Class*

· VIP Growth Portfolio: Initial Class

· VIP Overseas Portfolio: Service Class R†

Fidelity Variable Insurance Products Fund II

· VIP Contrafund® Portfolio: Initial Class

· VIP Investment Grade Bond Portfolio: Service Class*

Fidelity Variable Insurance Products Fund III

· VIP Mid Cap Portfolio: Service Class

Fidelity Variable Insurance Products Fund IV

· Fidelity VIP Freedom Fund 2010 Portfolio: Service Class

· Fidelity VIP Freedom Fund 2020 Portfolio: Service Class

· Fidelity VIP Freedom Fund 2030 Portfolio: Service Class

· VIP Natural Resources Portfolio: Service Class 2†

Franklin Templeton Variable Insurance Products Trust

· Franklin Income Securities Fund: Class 2

· Franklin Small Cap Value Securities Fund: Class 1

· Templeton Developing Markets Securities Fund: Class 3†

· Templeton Foreign Securities Fund: Class 3†

· Templeton Global Income Securities Fund: Class 3†

Gartmore Variable Insurance Trust ("GVIT")

· American Funds GVIT Asset Allocation Fund: Class II

· American Funds GVIT Bond Fund: Class II

· American Funds GVIT Global Growth Fund: Class II

· American Funds GVIT Growth Fund: Class II

· Federated GVIT High Income Bond Fund: Class III†*

· Gartmore GVIT Emerging Markets Fund: Class III†

· Gartmore GVIT Global Health Sciences Fund: Class III†

· Gartmore GVIT Global Technology and Communications Fund: Class III†

· Gartmore GVIT Government Bond Fund: Class I

· Gartmore GVIT Investor Destinations Funds: Class II

ØGartmore GVIT Investor Destinations Conservative Fund: Class II

ØGartmore GVIT Investor Destinations Moderately Conservative Fund: Class II

ØGartmore GVIT Investor Destinations Moderate Fund: Class II

ØGartmore GVIT Investor Destinations Moderately Aggressive Fund: Class II

ØGartmore GVIT Investor Destinations Aggressive Fund: Class II

· Gartmore GVIT Mid Cap Growth Fund: Class I

· Gartmore GVIT Money Market Fund: Class I

· Gartmore GVIT Nationwide® Fund: Class I

· Gartmore GVIT U.S. Growth Leaders Fund: Class I

· GVIT International Index Fund: Class VI†

· GVIT International Value Fund: Class III† (formerly, Dreyfus GVIT International Value Fund: Class III)

· GVIT Mid Cap Index Fund: Class I (formerly, Dreyfus GVIT Mid Cap Index Fund: Class I)

· GVIT Small Cap Growth Fund: Class I

· GVIT Small Cap Value Fund: Class I

· GVIT Small Company Fund: Class I

· Van Kampen GVIT Comstock Value Fund: Class I*

· Van Kampen GVIT Multi Sector Bond Fund: Class I

Janus Aspen Series

· Forty Portfolio: Service Shares

· International Growth Portfolio: Service II Shares†

MFS® Variable Insurance Trust

· MFS Value Series: Initial Class

Neuberger Berman Advisers Management Trust

· AMT Fasciano Portfolio: S Class

· AMT International Portfolio: S Class†

· AMT Limited Maturity Bond Portfolio: I Class

· AMT Regency Portfolio: S Class

· AMT Socially Responsive Portfolio: I Class

Oppenheimer Variable Account Funds

· Oppenheimer Capital Appreciation Fund/VA: Non-Service Shares

· Oppenheimer Global Securities Fund/VA: Class 3†

· Oppenheimer High Income Fund/VA: Non-Service Shares*

· Oppenheimer Main Street Fund®/VA: Non-Service Shares

· Oppenheimer Main Street Small Cap Fund®/VA: Non-Service Shares

T. Rowe Price Equity Series, Inc.

· T. Rowe Price Blue Chip Growth Portfolio: Class II

· T. Rowe Price Equity Income Portfolio: Class II

· T. Rowe Price Limited Term Bond Portfolio: Class II

Van Kampen

The Universal Institutional Funds, Inc.

· Core Plus Fixed Income Portfolio: Class I

· U.S. Real Estate Portfolio: Class I

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The following Sub-Accounts are only available in policies issued before May 1, 2006:

Fidelity Variable Insurance Products Fund III

· VIP Value Strategies Portfolio: Service Class

Franklin Templeton Variable Insurance Products Trust

· Franklin Rising Dividends Securities Fund: Class 1

MFS® Variable Insurance Trust

· MFS Investors Growth Stock Series: Initial Class

The following Sub-Accounts are only available in policies issued before May 1, 2005:

American Century Variable Portfolios, Inc.

· American Century VP International Fund: Class III†

Putnam Variable Trust

· Putnam VT Growth and Income Fund: Class IB

· Putnam VT Voyager Fund: Class IB

The following Sub-Accounts are only available in policies issued before May 1, 2004:

AllianceBernstein Variable Products Series Fund, Inc.

· AllianceBernstein Growth and Income Portfolio: Class A

· AllianceBernstein Small/Mid Cap Value Portfolio: Class A

American Century Variable Portfolios, Inc.

· American Century VP Income & Growth Fund: Class I

Dreyfus

· Dreyfus Variable Investment Fund - Developing Leaders Portfolio: Initial Shares

Federated Insurance Series

· Federated American Leaders Fund II: Primary Shares

· Federated Capital Appreciation Fund II: Primary Shares

Gartmore Variable Insurance Trust

· Gartmore GVIT Global Financial Services Fund: Class I

· Gartmore GVIT Global Utilities Fund: Class I 

Janus Aspen Series

· Balanced Portfolio: Service Shares

· International Growth Portfolio: Service Shares

· Risk-Managed Core Portfolio: Service Shares

Neuberger Berman Advisers Management Trust

· AMT Mid-Cap Growth Portfolio: S Class

Putnam Variable Trust

· Putnam VT International Equity Fund: Class IB

Van Kampen

The Universal Institutional Funds, Inc.

· Emerging Markets Debt Portfolio: Class I

The following Sub-Accounts are only available in policies issued before May 1, 2003:

American Century Variable Portfolios, Inc.

· American Century VP Balanced Fund: Class I

Credit Suisse Trust

· Small Cap Growth Portfolio

Dreyfus

· Dreyfus Socially Responsible Growth Fund, Inc.: Initial Shares

· Dreyfus Variable Investment Fund - Growth and Income Portfolio: Initial Shares

Fidelity Variable Insurance Products Fund

· VIP High Income Portfolio: Initial Class*

Fidelity Variable Insurance Products Fund II

· VIP Asset Manager Portfolio: Initial Class

Gartmore Variable Insurance Trust

· Gartmore GVIT Growth Fund: Class I

· Gartmore GVIT International Growth Fund: Class I

· Gartmore GVIT Nationwide® Leaders Fund: Class I

Janus Aspen Series

· Global Technology Portfolio: Service Shares

Neuberger Berman Advisers Management Trust

· AMT Growth Portfolio: I Class

· AMT Guardian Portfolio: I Class

· AMT Partners Portfolio: I Class

Oppenheimer Variable Account Funds

· Oppenheimer Balanced Fund/VA: Non-Service Shares

· Oppenheimer Core Bond Fund/VA: Non-Service Shares

· Oppenheimer MidCap Fund/VA: Non-Service Shares (formerly, Oppenheimer Aggressive Growth Fund/VA: Non-Service Shares)

Wells Fargo Variable Trust

· Wells Fargo Advantage VT Opportunity Fund

The following Sub-Accounts are only available in policies issued before May 1, 2002:

Fidelity Variable Insurance Products Fund III

· VIP Growth Opportunities Portfolio: Service Class

Van Eck Worldwide Insurance Trust

· Worldwide Bond Fund: Initial Class

· Worldwide Emerging Markets Fund: Initial Class

· Worldwide Hard Assets Fund: Initial Class

The following Sub-Accounts are only available in policies issued before September 27, 1999:

American Century Variable Portfolios, Inc.

· American Century VP Capital Appreciation Fund: Class I

Wells Fargo Variable Trust

· Wells Fargo Advantage VT Discovery Fund

The following Sub-Accounts are no longer available to receive transfers or new premium payments effective May 1, 2005:

American Century Variable Portfolios, Inc.

· American Century VP International Fund: Class I

Fidelity Variable Insurance Products Fund

· VIP Overseas Portfolio: Initial Class

Franklin Templeton Variable Insurance Products Trust

· Templeton Foreign Securities Fund: Class 1

Gartmore Variable Insurance Trust

· Federated GVIT High Income Bond Fund: Class I*

· Gartmore GVIT Emerging Markets Fund: Class I

· Gartmore GVIT Global Health Sciences Fund: Class I

· Gartmore GVIT Global Technology and Communications Fund: Class I

· GVIT International Value Fund: Class I (formerly, Dreyfus GVIT International Value Fund: Class I)

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Oppenheimer Variable Account Funds

· Oppenheimer Global Securities Fund/VA: Non-Service Shares

The following Sub-Accounts are no longer available to receive transfers or new premium payments effective May 1, 2002:

Credit Suisse Trust

· Global Small Cap Portfolio

· International Focus Portfolio

†These underlying mutual funds assess a short-term trading fee.

*These underlying mutual funds may invest in lower quality debt securities commonly referred to as junk bonds.

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Allocation Of Premium And Cash Value

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

Valuation of Accumulation Units

We will price Sub-Account Units on any day the New York Stock Exchange (NYSE) is open for business, unless we are closed.

We will not price Sub-Account 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 Sub-Account 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. If we are closed on days when the New York Stock Exchange is open, you may not effect transactions. If you try, we will neither price the Sub-Account Units, nor effect the transaction, until the next day we, and the New York Stock Exchange, are open for business. 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

Though the number of Sub-Account Units will not change as a result of Investment Experience, changes in the net investment factor, as described below, may cause the value of a Sub-Account Unit to increase or decrease from Valuation Period to Valuation Period. Changes in the net investment factor may not be directly proportional to changes in the NAV of the mutual fund shares, because of the deduction for mortality and expense risk charge, and any charge or credit for tax reserves.

We determine the change in Sub-Account values at the end of a Valuation Period. The Sub-Account Unit value for a Valuation Period is determined by multiplying the Sub-Account Unit value as of the prior Valuation Period by the net investment factor for the Sub-Account for the current Valuation Period.

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

(a) is the sum of:

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

·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).

·a per share charge or credit for any taxes reserved for as a result of the Sub-Account’s investment operations.

(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. There is no guaranteed Cash Value. Rather, it will be based on the values, and 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 and fixed accounts. It will also vary because we deduct the policy’s periodic charges from the Cash Value. So, if the policy’s Cash Value is part of the Death Benefit option you have chosen, then your Death Benefit will fluctuate.

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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 Sub-Account Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Sub-Account 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 Sub-Account 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 Sub-Account 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.

The Cash Value in the policy loan and fixed accounts will be credited interest daily at the guaranteed minimum annual effective rate stated on the policy data page. 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. For more information, see "The Fixed Investment Option" on page 11 and "Loan Amount And Interest" on page 29.

On any date during the policy year, the Cash Value equals the Cash Value on the preceding Valuation Period, plus any 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 Units based on the Net Asset Value (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 p.m. Eastern time). A Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests because the Unit value will reflect the deduction for any periodic charges. For more information, see "In Summary: Fee Tables" beginning on page 8, and "How Investment Experience Is Determined" beginning on page 15.

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.

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 this 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 (i.e., 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 investors in this policy 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.

Redemption Fees. Some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to the Sub-Account. The fee is assessed against the amount transferred and is paid to the mutual fund. Redemption fees compensate the mutual fund for any negative impact on fund performance resulting from short-term trading.

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U.S. Mail Restrictions. We monitor transfer activity in order to identify those who may be engaged in harmful trading practices. Transaction reports are produced and examined. 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 10 Sub-Accounts in 1 day, this counts as 1 transfer event. A single transfer occurring in a given Valuation Period that involves only 2 Sub-Accounts (or one Sub-Account if the transfer is made to or from a fixed investment option) will also count as 1 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
6 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 11 in 2 consecutive calendar quarters or 20 in one calendar year, the policy owner will be limited to submitting transfer requests via U.S. mail.
More than 11 transfer events in 2 consecutive calendar quarters OR More than 20 transfer events in one calendar year	Nationwide will automatically limit the policy owner to submitting transfer requests via U.S. mail.

Each January 1^st, we will start the monitoring anew, so that each policy starts with 0 transfer events each January 1. See, however, the "Other Restrictions" provision below.

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

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.

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.

14

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 12 months. However, during the first 24 months following the initial Policy Date you may irrevocably elect to transfer all of the Cash Value to the fixed account.

On transfers to the fixed account, you may request a transfer of up to 100% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period, but we may limit the transfer to 25%.

On transfers from the fixed account, we reserve the right to limit the amount of the policy's Cash Value that you may transfer from the fixed account in a given policy year. We will declare the limit that may be transferred at the end of each interest rate guarantee period. An interest rate guaranteed period is the time that a stated interest rate is guaranteed to remain in effect. The period begins at the time of the transfer and ends on the last day of the calendar quarter. Each successive period is three months. Any transfers you make from the fixed account must be within 30 days of the end of a period.

Modes To Make A Transfer

To make a transfer, send your written request to us at our Home Office via first class U.S. mail. Upon receipt, we will process a transfer request at the end of the current Valuation Period. We may also permit you to use other modes of communication, subject to limitations.

Our contact information is on the cover page of this prospectus.

We will employ reasonable procedures to confirm that instructions are genuine, including:

·requiring forms of personal identification before acting upon instructions;

·providing you with written confirmation of completed transactions; and/or

·tape recording telephone instructions.

If we follow these procedures, we will not be liable for any loss, damage, cost or expense from complying with what we reasonably believe to be genuine instructions. Rather, you will bear the risk of loss.

The Policy

The policy is a legal contract between you and us. Any change we make must be in writing, signed by our president and 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 age 80 or younger (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: Policy Data Pages; a written contract; any Riders; any endorsements; and the application, including any supplemental application. 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 will implement procedures designed to prevent policies described in this prospectus from being used to facilitate money laundering or the financing of terrorist activities.

Policy Owner

The policy belongs to the owner named in the application. You may also name a contingent policy 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 us at our Home Office, which will become effective when signed, rather than the date on which we received it. There may be adverse tax consequences. For more information, see "Taxes" beginning on page 31.

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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 provide for another distribution than the following.

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 received it. The change will not affect any payment we made, or action we took, before we recorded the change.

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 (this 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 an application for any reason permitted by law. Also, we reserve the right to modify our underwriting standards 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 could 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 options and any Riders, for purposes of the policy. During this time, we 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 five 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, what we do with the Net Premium depends on the right to examine law of the state in which you live.

To Cancel (Examination Right)

You may cancel your policy during the free look period. The free look period expires ten days after you receive the policy or longer if required by state law. If you decide to cancel 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. Within seven days, we will refund the amount prescribed by the law of the state in which we issued the policy. We will treat the policy as if we never issued it. Depending on the right to examine law in the state in which you live, this amount will be your initial premium or the policy's Cash Value. For more information, see "Policy Investment Options" beginning on page 11.

Any premium payments we receive after your right to cancel the policy expires will be allocated to the Sub-Accounts choices in effect when we receive that premium payment.

To Change Coverage

If you choose to make additional premium payments, then we may need to increase the Specified Amount to maintain the policy as life insurance under the Code. In this case, we will not accept the Premium and make the corresponding increase the Specified Amount, unless: 1) you provide us with evidence of the Insured's

16

insurability; and 2) the Insured is in same underwriting rate class and in the same underwriting rate class multiple as when the policy was purchased.

If you take a partial surrender, we reduce the Specified Amount, as well as the Cash Value, by the amount of the partial surrender.

To Exchange

You have an exchange right under the policy. At any time within the first 24 months of coverage from the Policy Date, you may surrender this 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, but subject to evidence of insurability that satisfies our underwriting standards.

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 this 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 may transfer any Indebtedness to the new policy.

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. For more information, see "In Summary: Fee Tables" beginning on page 8. The new policy will take effect on the exchange date only if the Insured is alive. This policy will terminate when the new policy takes effect.

To Terminate Or Surrender

You have the right to terminate the policy. At any time, 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. For more information, see "Surrenders" beginning on page 27.

Generally, if the policy has a Cash Surrender Value in excess of the Premiums you have paid, the excess upon surrender will be included in your income for federal tax purposes. For more information, see "Surrender Of The Policy" beginning on page 33. The Cash Surrender Value will be reduced by the amount of a policy loan, if any. For more information see, "Policy Loans" beginning on page 29.

To Assign

You may assign any rights under the policy while the Insured is alive. 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 it must be recorded at our Home Office before it will become effective. Your assignment will be subject to any outstanding policy loans. Please see the "Policy Loans" section of this prospectus. For more information see, "Policy Loans" beginning on page 29.

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 seven 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.

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, the policy will be endorsed so that:

·no additional Premium payments will be allowed;

·no changes to the amount of the Specified Amount will be allowed;

·no additional periodic charges will be deducted;

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·the Death Benefit will equal the Cash Value; and

·100% of the Cash Value will be transferred to the policy's fixed account.

Notwithstanding your choice, the Proceeds will be the greater of the policy's Specified Amount or Cash Value. The Maturity Date will not be extended; however, where the policy will fail the definition of life insurance. For more information, see "The Payout Options" beginning on page 27, and "The Death Benefit" beginning on page 26.

Reminders, Reports And Illustrations

We will send you scheduled Premium payment reminders and transaction confirmations. We will also send you semi-annual and annual reports that show:

·the Specified Amount

·the current Cash Value

·Premiums paid

·the Cash Surrender Value

·all charges since the last report

·outstanding policy indebtedness

We will send these reminders and reports to the address you provide on the application, or to another you may specify.

At any time, you may ask for an illustration of future benefits and values under the policy. While we do not at present, we may charge if you ask for more than one illustration per year from the Policy Date.

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 your household, we will mail only one copy of each document, unless notified otherwise by you. Household delivery will continue for the life of the contracts. Please call 1-866-223-0303 to resume regular delivery. Please allow 30 days for regular delivery to resume.

Errors Or Misstatements

If you make an error or misstatement in completing the application, we will adjust the Death Benefit accordingly. To determine the adjusted Death Benefit, we will recalculate the Specified Amount as of the date of issue using the Insured's true age and sex.

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 for two years from the 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 any 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.

Rider

A Rider is available for you to purchase to design the policy to meet your specific needs. Once the policy is In Force, we may require further evidence of insurability before you may add a Rider. Availability will vary by state. You will incur an additional charge so long as the policy remains in effect and the Rider’s term has not expired, until we paid the benefit, or you decide you no longer need the benefit and let us know in writing at our Home Office. For more

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information on the costs of the Rider, see "In Summary: Fee Tables" beginning on page 8, and "Charges" beginning on page 23.

Long-term CareRider

This Rider is available to purchase at any time only within six months from the Policy Date. The Insured is paid a monthly benefit upon meeting the eligibility requirements, the Insured is paid a monthly benefit after 90 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 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 payee. See your tax adviser about the use of this Rider in your situation.

You will be charged for this Rider: so long as the policy remains In Force through maturity; 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. 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.

Premium

This policy is designed to be a single premium policy and it 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 initial premium must be at least $10,000 for issue ages 0-70 and $50,000 for issue ages 71-80. The amount of your initial Premium will depend on the initial Specified Amount of insurance and any Riders you select. Generally, the higher the required initial Specified Amount, the higher the initial Premium will be. 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, or the lower the Specified Amount 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, thereafter.

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

Subsequent Premiums

While the policy is not designed for multiple Premium payments, 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. Payments of additional Premium may require an in increase in the Specified Amount. For more information see, "To Change Coverage" beginning on page 19. The Insured must be in the same underwriting rate class and in the same underwriting rate class multiple as when the policy was purchased;

·We will refund any portion of Premium payments that exceed the applicable premium limit established by the IRS to qualify the policy as a contract for life insurance. As discussed in the "Taxes" section of this prospectus, additional Premium payments or other changes to the policy may jeopardize the policy’s non-modified endowment contract status. 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

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·We may require that policy indebtedness be repaid prior to accepting any additional Premium payments. Some, but not all, of the situations when we might exercise this right include when interest rates are low, when your policy loans exceed 90% of value of the Sub-Account portfolio allocations, or when a Premium payment may alter the character of the policy for tax purposes. For more information, see "Lapse" beginning on page 30. We will let you know ahead of time.

If you decide to make a subsequent Premium payment, you must send it to our Home Office. Generally, each Premium payment must be at least $1,000, but we will accept a Premium payment of any amount required to keep the policy In Force.

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" beginning on page 8. Also, see the policy, including the Policy Data Page, and the Riders, for more information.

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 directly to us 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 mortality 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. 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 Units.) In addition, some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to 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, please see the prospectus for the mutual fund and "Short-Term Trading Fees"in this prospectus.

Surrender Charges

The surrender charge is a percentage of initial Premium you pay at the time we issue the policy, rather than any subsequent Premiums you pay. This charge covers our policy underwriting and sales expenses, including for: processing the application; conducting any medical exams; determining insurability (and the Insured’s underwriting class); and establishing policy records. The charge will apply if you surrender or lapse the policy.

We will assess the surrender charge based on the following schedule:

Number of Completed Policy Year	Surrender Charge As A Percentage Of Initial Premium Payment
0	10%
1	10%
2	9%
3	8%
4	7%
5	6%
6	5%
7	4%
8	3%
9 or more	0

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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 60 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 policies described in this prospectus 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 that charge 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.

For a list of available sub-accounts that assess short-term trading fees, see "Total Annual Sub-Account Portfolio Operating Expenses" earlier 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

The cost of insurance charge compensates us for providing insurance protection under the policy. The monthly charge is computed by multiplying 0.65% on an annualized basis by the policy’s Cash Value. In New York, we will assess this charge for all years. In other states, we may reduce the charge to 0.30% on an annualized basis (and expect to do so for policy years 11 and later for policies with at least $100,000 of Cash Surrender Value. This charge will never exceed the policy’s Net Amount at Risk times the guaranteed cost of insurance rate based on the 1980 Commissioner’s Standard Ordinary Table.

We base the cost of insurance rates 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; for how long the policy has been In Force and the Specified Amount.

Mortality And Expense Risk

This charge compensates us for assuming risks associated with mortality and expense costs. 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. We will deduct this charge proportionately from the Cash Values of each Sub-Account portfolio. The monthly charge is computed by multiplying 0.90% on an annualized basis by the policy’s Sub-Account Cash Value. We may realize a profit from these charges.

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Tax Expense

To reimburse us for taxes imposed by federal, state and local governments. The monthly charge is computed by multiplying 0.5% on an annualized basis by the policy’s Cash Value. This charge is incurred in policy years 1-10.

Administrative Expense

This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping. We will determine this monthly charge by multiplying 0.30% on an annualized basis by the policy’s Cash Value. In New York, we will assess this charge for all years, but the charge will not exceed $7.50 per month. In other states, we may reduce the charge to 0.15% on an annualized basis and expect to do so for policy years 11 and later. This charge is subject to a minimum of $10.00 per month in states other than New York.

Policy Loan Interest

We charge interest on the amount of an outstanding policy loan, at the rate of 6% per annum, which will accrue daily and become due and payable at the end of each year from the Policy Date. If left unpaid, we will add it to the policy’s outstanding indebtedness. As collateral or security for repayment, we will transfer an equal amount of Cash Value to the loan account on which will interest will accrue and be credited daily. The minimum guaranteed interest crediting rate is 4% per annum. The effect of the 6% interest on the loan balance and the 4% crediting on the policy loan account is a net cost of no more than 2% per annum.

Long-term Care Rider

The 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 rate 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.

A Note On Charges

We make many assumptions and account for many economic and financial factors in establishing fees and charges. As we noted at the beginning of this "Charges" section, the deductions we make under the policy are designed to compensate us for the services and benefits we provide, the distribution and operational expenses we incur, and the risks we assume. Our initial expenses in distributing and establishing the contract exceed the deductions we make during the early stages of policy ownership. Nevertheless, we expect to make a profit over time because variable life insurance is intended to be a long term financial product. Accordingly, we have designed the policy with features and underlying investment options that we believe support and encourage long-term ownership. The "In Summary: Fee Tables," beginning on page 8 sets out the costs you incur when you purchase this policy. The following two sections describe how we use some of those charges to distribute the policy and how some of the underlying investment options pay us for services we provide to them. Neither of these transactions alters the charges you pay for the policy. Rather, these two sections provide you with information about how we set those charges. You should consider how these transactions may affect any advice you may receive with respect to the policy.

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 target 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 (99% of first year target 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 depends 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.

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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.

Revenue from Underlying Mutual Funds

The underlying mutual funds incur expense each time they sell, administer, or redeem their shares. Since the Variable Account purchases fund shares on behalf of all policy holders, it serves as a single shareholder of the fund. By processing aggregated policy owner transactions, we relieve the fund of the expenses of processing individual policy owner transactions. We also pay the costs of selling the policy as outlined in the preceding section. Sales of the policy benefits the funds by allowing policy owners to purchase interests in the Sub-Accounts, which then results in the Variable Account’s purchase of fund shares. We perform all of the accounting and recordkeeping for the Sub-Accounts, and pay any processing cost associated with the redemption of interests in the Sub-Accounts. The underlying mutual funds understand and acknowledge the value of these services we provide. Accordingly, the underlying mutual funds pay us (or our affiliates) a fee for some of the distribution and operational services that we provide (and related costs incurred). These payments may be made pursuant to an underlying mutual fund's 12b-1 plan, in which case they are deducted from underlying mutual fund assets. Alternatively, such payments may be made pursuant to service/administration or other similar agreements between the underlying mutual fund's adviser (or its affiliates) and us (or our affiliates), in which case payments are typically made from assets outside of the underlying mutual fund assets. In some cases, however, payments received may derive from sub-transfer agent fees or fees taken pursuant to administrative service plans adopted by the underlying mutual fund. In some cases, however, payments received may derive from sub-transfer agent fees or fees taken pursuant to administrative service plans adopted by the underlying mutual fund. In setting the charges for this policy, we considered the amount of these payments expected to be received from the underlying mutual funds. Without these payments, our charges would be expected to be higher. We include only funds in the Variable Account that make these payments for the services we provide.

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 two 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 will never be less than the Specified Amount. The Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and may take into account any insurance provided by any Riders, as well as outstanding indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period.

Death Benefit

The Death Benefit under the policy is the greater of the Specified Amount and the "applicable percentage of cash value." The applicable percentage of Cash Value is the lowest Death Benefit that will qualify the policy as life insurance under the guideline premium/cash value corridor test of Section 7702 of the Code. For this policy, this is the tax test for life insurance that we will use.

This tax test for life insurance generally requires that the policy have a significant element of life insurance and not be primarily an investment vehicle. The test reaches this result by comparing the Death Benefit to an applicable percentage of the Cash Value. These percentages are set out in the Code, and vary only by the Attained Age of the Insured.

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.

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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. For more information, see "Cash Value" beginning on page 15. To derive the Cash Surrender Value, we will deduct from the Cash Value Indebtedness and the surrender charge. The effective date of 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.

Partial Surrender

You may request a partial surrender at any time after the policy has been In Force for five years from the Policy Date.

We permit partial surrenders if the partial surrender satisfies the following requirements:

·the minimum partial surrender is $500;

·the maximum partial surrender in any policy year is the maximum of:

1. 10% of the total Premium payments, and

2. 100% of cumulative earnings (Cash Value less total Premium payments less any loan amount at the time of the partial surrender).

·after the partial surrender, the policy’s Cash Surrender Value is at least $10,000; and

·after the partial surrender, the policy continues to qualify as life insurance.

We will reduce the Cash Value and the Specified Amount 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-Account is insufficient to cover the amount of the partial surrender.

Certain partial surrenders may result in currently taxable income and tax penalties. For more information see, "Surrender Of The Policy" beginning on page 33.

The Payout Options

You have a number of options of receiving Proceeds, besides in a lump sum, which you may elect upon application. You may elect one or a combination of payout 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 seven 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 Sub-Account Units. For more information, see "Valuation of Accumulation Units" beginning on page 15.

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

Interest Income

You keep the Proceeds with us to earn interest at a specified rate. The interest can be paid at the end of 12-, 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 year. 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 (no more than 30). 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-, six-, three- or one-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 year, 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.

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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-, six-, three- or one-month intervals. During the guaranteed period, we will pay interest on the outstanding balance at a rate of at least 2.5% per year, 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. Also, payments will cease upon your death. 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-, six-, three- or one-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 year, 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 payee who lives longer. The Proceeds can be paid at the beginning of 12-, six-, three- or one-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-, six-, three- or one-month intervals. As the payments are based on your lifetime, you cannot 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 a dollar cost averaging program. Dollar cost averaging is an investment strategy designed to reduce the investment risks associated with market fluctuations, which will promote a more stable Cash Value and Death Benefit over time. The strategy spreads 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 high. There is no charge for dollar cost averaging, but it does count as a transfer event. For more information regarding transfer events, see "Modes To Make A Transfer" beginning on page 18.

On a monthly basis (or another frequency 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, Fidelity Variable Insurance Products - VIP High Income Portfolio: Service Class (available only for policies issued prior to May 1, 2003), GVIT Federated GVIT High Income Bond Fund: Class III and the GVIT Gartmore GVIT Money Market Fund: Class I.

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 1/30^th of the fixed account value at the time you elect to participate in the program. Either you elect to participate in the dollar cost averaging program upon application or by submitting an election form before the beginning of the month.

A dollar cost averaging program may not be available in all states. 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

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over a long enough period of time to purchase Units when their value is low, as well as when it 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, but it does count as a transfer event. For more information, see "Modes To Make A Transfer" beginning on page 18. You can schedule asset rebalancing to occur every three, six, or twelve months on days when we price Sub-Account Units. For more information, see "Valuation of Accumulation Units" beginning on page 15.

Unless you elect otherwise, asset rebalancing will not affect the allocation of 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. We reserve the right to modify, suspend or discontinue asset rebalancing at any time.

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 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 $1,000. You may take no more than the maximum loan value. To determine your maximum loan amount for the first policy year, multiply 50% by the difference between the Cash Value and any surrender charges. After the first year from the Policy Date, multiply 90% by the difference between the Cash Value and any surrender charges. On the loan amount, we will charge interest, which will accrue daily and be payable at the end of each policy year. If you do not pay the interest, we will add it to the loan amount. The guaranteed policy loan amount interest rate in all policy years is 6%.

Collateral And Interest

As collateral or security, we will transfer to the loan account an amount equal to the amount of the policy loan. 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.

Total policy indebtedness is composed of two components:

i.preferred loans; and

ii.regular loans.

The amount in the policy loan account will be treated as a preferred loan to the extent such amount is less than or equal to the cash value minus the result of:

·the premiums excluding any 1035 Exchange amount; less

·any withdrawals not taxed as distributions; plus

·any loans previously taxed as distributions; plus

·any amounts reported to Nationwide as cost basis attributable to exchanges under Section 1035 of the Internal Revenue Code.

Any additional loan amounts will be treated as regular loans.

Preferred and regular loan amounts will be determined once a year and at any time a new loan is requested. On a current basis, preferred loans will be credited interest daily at an annualized effective rate of 6%, and regular loans will be credited interest daily at an annualized effective rate of 4%. The credited rate for all policy loan accounts is guaranteed never to be lower than that stated on the Policy Data Page.

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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 $1,000. Interest on the loan amount will be due and payable at the end of each policy year from the Policy Date. 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 allocation. While your policy loan is outstanding, we will continue to treat any payments that you make as a Premium payment, unless you instruct otherwise. Similarly, we will apply a loan repayment in the same proportion as your current Sub-Account allocations, unless you instruct otherwise. Outstanding ordinary policy loan balances will be satisfied by your loan repayments before outstanding preferred policy loans.

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. For more information, see "In Summary: Fee Tables" in particular, the footnotes, beginning on page 8. Nevertheless, keep in mind that the Cash Value we transfer to our loan account as collateral for a policy loan will neither be affected by the investment performance of the Sub-Account portfolios, nor credited with the interest rates accruing on the fixed account. 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 less outstanding policy loans and net Cash Surrender Value to increase by the repayment amount.

Lapse

So long as your policy’s Cash Surrender Value is enough to cover the deduction of charges on each monthly anniversary from the Policy Date, the policy will remain In Force. The Cash Surrender Value could be below the amount of a monthly deduction, for example, because you have not paid enough Premium, or because Investment Experience has decreased the Cash Surrender Value, or both. We do not guarantee that paying the initial or subsequent Premiums will offset adverse Investment Experience so that the policy will remain In Force.

Stated another way, this policy will Lapse when the Grace Period ends before you make a required Premium payment as stated in a notice.

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 three 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.

Reinstatement

You may reinstate a Lapsed policy by:

·submitting a written request at any time within three 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 additional Premiums at least equal to 3 times the maximum guaranteed cost of insurance charges; For more information, see "In Summary: Fee Tables" beginning on page 8.

·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 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 a surrender charge calculated for the period between the initial Policy Date and the date of reinstatement.

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

The allocations to Sub-Account portfolios 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 Code is a multifaceted subject. The tax treatment of your policy will depend on your particular circumstances. We urge you to seek competent tax advice regarding the tax treatment of the policy given your situation. The following discussion provides an overview of the Code’s provisions relating to certain common transactions involving a life insurance policy. It is not and cannot be comprehensive. It cannot replace consulting with a competent tax professional.

Types Of Taxes Of Which To Be Aware

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 the item is 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 gift tax is imposed on the value of the property (including cash) transferred by gift. Each donor is allowed to exclude an amount (in 2006, up to $12,000 per recipient) from the value of the gift. In addition, each donor is allowed a credit against the first $1 million in lifetime gifts (calculated after taking into account the $12,000 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 2006, an estate of less than $2,000,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability. The $2 million amount increases to $3.5 million in 2009. The federal estate tax (but not the federal gift tax) is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the estate tax is scheduled to be reinstated with respect to decedents who die after December 31, 2010. If the estate tax is reinstated and Congress has not acted further, the size of estates that will not incur an estate tax will revert to $1 million. .

An unlimited marital deduction may be available for federal estate tax purposes for certain amounts that pass to the surviving spouse.

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 tax is imposed at a flat rate equal to the maximum estate tax rate (for 2006, 46%, which will decrease again in 2007, when it will be 45%), and there is a provision for an aggregate $1 million exemption. The GSTT tax is scheduled to be repealed effective after 2009; 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, the specific nature 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 personal expense. This means that under the general rule you cannot deduct from your taxable income the Premiums paid to purchase the policy.

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 where the premium is 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.

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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. 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 contract would be treated as taxable ordinary income for federal income tax purposes.

Representatives of the IRS have informally suggested, from time to time, that the number of underlying mutual funds available or the number of transfer opportunities available under a variable product may be relevant in determining whether the product qualifies for the desired tax treatment. In 2003, the IRS issued formal guidance, in Revenue Ruling 2003-91, that indicates that if the number of underlying mutual funds available in a variable insurance product does not exceed twenty, the number of funds alone would not cause the policy to not qualify for the desired tax treatment. The IRS has also indicated that exceeding 20 investment options may be considered a factor, along with other factors including the number of transfer opportunities available under the policy, when determining whether the policy qualifies for the desired tax treatment. The revenue ruling did not indicate the number of fund 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 mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds 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.

We will monitor compliance with the Code Section 817(h) and the regulations applicable to Section 817(h) and, to the extent necessary, will change the objectives or assets of the Sub-Account investments to remain in compliance. We will also monitor the Policy’s compliance with Code Section 7702. Thus, the policy should receive federal income tax treatment as life insurance.

Periodic Withdrawals, Non-Periodic Withdrawals And Loans

The tax treatment described in this section applies to withdrawals and loans you choose to take from the policy. It also applies to Premiums we accept but then return to meet the Code’s definition of life insurance. 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 contract that is not a modified endowment contract are more advantageous than the tax consequences of owning a life insurance contract that is a modified endowment contract.

The policies offered by this prospectus may or may not be issued as modified endowment contracts. If a contract is issued as a modified endowment contract, it will always be a modified endowment contract; a contract that is not issued as a modified endowment contract can become a modified endowment contract due to subsequent transactions with respect to the contract, such as payment of additional Premiums.

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 seven years exceed the amount that would have been paid if the policy provided for paid up benefits after seven 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.

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 transaction the Cash Value of the policy exceeds, the Premiums previously paid into 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, Nationwide will monitor Premiums paid and will notify the policy owner when the policy is in jeopardy of becoming a modified endowment contract. If a policy is not a modified endowment

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contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in Death Benefits may still become 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 initiating any changes in the terms of the policy.

Distributions from life insurance contracts that are not modified endowment contracts are treated as being (a) from the Premiums paid into the contract, and then (b) from the income in the contract. Because Premium payments are generally nondeductible, distributions not in excess of aggregate Premium payments are generally not includible in income; instead, they reduce the owner’s "cost basis" in the contract. In addition, a loan from life insurance contracts that are not modified endowment contracts are not taxable when made, although it can be treated as a distribution if it is forgiven during the owner’s lifetime. Contracts that are not modified endowment contracts are not subject to the 10% early distribution penalty tax.

Surrender Of The Policy

A total surrender or cancellation of the policy by Lapse or the maturity of the policy on its Maturity Date may have adverse tax consequences. If the amount you receive plus total policy indebtedness exceeds the Premiums paid into the policy, then the excess generally will be treated as taxable 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.

Withholding

Distributions of 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 contract may be subject to mandatory back-up withholding. Mandatory back-up withholding means 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. 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; or

·interest that is deemed to have been forgiven on a loan that was 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, you will pay taxes on amounts that you receive in excess of your Premium payments when you completely surrender the policy. If, however, you exchange the policy for another life insurance policy, a modified endowment contract or an annuity contract, you 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 or contract. and the new policy or contract cannot extend the Maturity Date of the policy or otherwise delay a distribution that would extend when tax would be payable under the policy.Generally, the new policy or contract will be treated as having the same date of issue and tax basis as the old contract.

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

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Taxation Of Death Benefits

Federal Income Tax. The amount of the Death Benefit payable under a policy generally is excludable from gross income of the beneficiary under Section 101 of the Code. However, if the policy is transferred to a new owner for valuable consideration, then a portion of the Death Benefit may be includable in the beneficiary’s gross income when it is paid.

Federal Transfer Taxes. When the Insured dies, the Death Benefit will generally be included in such 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 three years of death. An incident of ownership is, in general, any right 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 payment of the Proceeds at the death of the Insured 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 liability.

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

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. These distributions from the policy are subject to the death benefit rules of Section 101 of the Code.

Special Considerations for Corporations

Section 264 of the Code imposes numerous 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.

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 advisers 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 professionals 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

As discussed in "Charges," the Units you hold in the separate account are adjusted to reflect a Premium Tax charge for certain taxes assessed by federal and state taxingauthorities. This charge relates to taxes associated with the payment of Premium or certain other policy acquisition costs. This charge decreases your Unit values.

For federal income tax purposes, the separate account is not a separate entity from Nationwide Life Insurance 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 Sub-Account 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 initially expect to incur any federal income tax liability that would be chargeable to the Units you hold in the separate account. Based upon these expectations, no charge is currently being made against your Units in the separate account for federal income taxes. If, however, we determine that taxes may be incurred, we reserve the right to assess a charge for taxes.

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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 Units in the separate account.

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 professional with respect to the tax treatment of this policy.

Tax Changes

The foregoing discussion, which is based on our understanding of federal tax laws as currently interpreted by the IRS, is general and is not intended as tax advice.

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 the policies. It is reasonable to believe that 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 be at variance with 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.

If you, the Insured, the beneficiary or other person receiving any benefit or interest in or from the policy is not both a resident and citizen of the United States, there may be a tax imposed by a foreign country, in addition to any tax imposed by the United States. The foreign law (including regulations, rulings, and case law) may change and impose additional taxes on the policy, payment of the Death Benefit, or other distributions and/or ownership of the policy, or a treaty may be amended and all or part of the favorable treatment may be eliminated.

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.

In 2001, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) was enacted into law. EGTRRA contained numerous changes to the federal income, gift, estate and generation skipping transfer taxes, many of which are not scheduled to become effective until a future date. Among other matters, EGTRRA provides for the repeal of the federal estate and generation skipping transfer taxes after 2009; however, unless Congress and the President enact additional legislation, EGTRRA also provides that all of those changes will "sunset" after 2010, and the estate and generation skipping transfer taxes will be reinstated as if EGTRRA had never been enacted.

The foregoing is a general explanation as to certain tax matters pertaining to insurance policies. It is not intended to be legal or tax advice. You should consult your independent legal, tax and/or financial adviser.

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.

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Nationwide VLI Separate Account-2

Organization, Registration And Operation

Nationwide VLI Separate Account-2 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. 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. 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.

If investment in the mutual funds or a particular portfolio is no longer possible, in our judgment becomes inappropriate for the purposes of the policy, or for any other reason in our sole discretion, we may substitute another mutual fund or portfolio without your consent. The substituted mutual fund or portfolio may have different fees and expenses. Substitution may be made with respect to existing investments or the investments of future Premium, or both. We will comply with federal securities laws to effect a substitution. Furthermore, 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.

In addition, we reserve the right to make other structural and operational changes affecting this separate account.

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 to you;

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

·substitute or close Sub-Accounts to allocations;

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

·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.

Voting Rights

Unless there is a change in existing law, on all matters submitted to shareholders, we will vote our portfolio shares attributable to your allocations in a Sub-Account only as you instruct.

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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 portfolio). We will vote shares for which no instructions are received in the same proportion as those that are received.

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 Net Asset Value of that underlying mutual fund. We will designate a date for this determination not more than 90 days before the shareholder meeting.

Legal Proceedings

Nationwide Life Insurance Company

Nationwide is a party to litigation and arbitration proceedings in the ordinary course of its business. It is not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses. Some of the matters, including certain of those referred to below, are in very preliminary stages, and Nationwide does not have sufficient information to make an assessment of 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, plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, that are difficult to quantify and cannot be defined based on the information currently available. Nationwide does not believe, based on information currently known by Nationwide’s management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on Nationwide’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on Nationwide’s consolidated financial results in a particular quarterly or annual period.

In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements against life insurers other than Nationwide.

The financial services industry, including mutual fund, variable annuity, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past few years. Numerous regulatory agencies, including the SEC, the NASD and the New York State Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues. Nationwide has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by Nationwide. Nationwide has cooperated with these investigations. Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by Nationwide and its affiliates in December 2003 and April 2005, respectively, and no further information requests have been received with respect to these matters.

In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, the use of side agreements and finite reinsurance agreements, and funding agreements issued to back Nationwide’s MTN programs. Related investigations and proceedings may be commenced in the future. Nationwide and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies, state securities law regulators and state attorneys general for information relating to these investigations into compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, the use of side agreements and finite reinsurance agreements, and funding agreements backing Nationwide’s MTN program. Nationwide is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC), Nationwide’s ultimate parent, in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including

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life insurance and annuity companies. These proceedings also could affect the outcome of one or more of Nationwide’s litigation matters. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on Nationwide in the future.

On February 11, 2005, Nationwide was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum annual premium and attorneys’ fees. On February 2, 2006, the court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The court certified a class consisting of: all residents of the United States and the Virgin Islands who, during the Class Period paid premiums on a modal basis to Nationwide for term life insurance policies issued by Nationwide during the Class Period which provide for guaranteed maximum premiums, excluding products NWLA-224 (and all state variations thereof), Life 4608 (and all state variations thereof), and policy forms Life 4219, Life 4290, and Life 3617. Excluded from the class are: Nationwide; any parent, subsidiary or affiliate of Nationwide; all employees, officers and directors of Nationwide; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The Class Period is from February 10, 1990, through the date the Class is certified. Nationwide intends to defend this lawsuit vigorously.

On April 13, 2004, Nationwide was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. Nationwide removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding there entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed a First Amended Complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The First Amended Complaint purports to disclaim, with respect to market timing or stale price trading in Nationwide’s annuities sub-accounts, any allegation based on Nationwide’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of Nationwide annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if Nationwide is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to Nationwide’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The First Amended Complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 24, 2005, Nationwide filed a motion to dismiss the First Amended Complaint. The plaintiff has opposed that motion. Nationwide intends to defend this lawsuit vigorously.

On January 21, 2004, Nationwide was named in a lawsuit filed in the United States District Court for the Northern District of Mississippi entitled United Investors Life Insurance Company v. Nationwide Life Insurance Company and/or Nationwide Life Insurance Company of America and/or Nationwide Life and Annuity Insurance Company and/or Nationwide Life and Annuity Company of America and/or Nationwide Financial Services, Inc. and/or Nationwide Financial Corporation, and John Does A-Z. In its complaint, plaintiff United Investors alleges that Nationwide and/or its affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Nationwide defendants. The plaintiff raises claims for: (1) violations of the Federal Lanham Act, and common law unfair competition and defamation; (2) tortious interference with the plaintiff’s contractual relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W&R Insurance Agency, Inc., or with the plaintiff’s contractual relationships with its variable policyholders; (3) civil conspiracy; and (4) breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, a constructive trust, and costs and disbursements, including attorneys’ fees. Nationwide filed a motion to dismiss the complaint on June 1, 2004. On February 8, 2005 the court denied the motion to dismiss. On March 23, 2005, Nationwide filed its

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answer, and on December 30, 2005, Nationwide filed a motion for summary judgment. Nationwide intends to defend this lawsuit vigorously.

On October 31, 2003, Nationwide and Nationwide Life and Annuity Insurance Company (NLAIC) were named in a lawsuit seeking class action status filed in the United States District Court for the District of Arizona entitled Robert Helman et al v. Nationwide Life Insurance Company et al. The suit challenges the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans. On April 8, 2004, the plaintiff filed an amended class action complaint on behalf of all persons who purchased an individual variable deferred annuity contract or a certificate to a group variable annuity contract issued by Nationwide or NLAIC which were allegedly used to fund certain tax-deferred retirement plans. The amended class action complaint seeks unspecified compensatory damages. Nationwide and NLAIC filed a motion to dismiss the complaint on May 24, 2004. On July 27, 2004, the court granted the motion to dismiss. The plaintiff has appealed that dismissal to the United States Court of Appeals for the Ninth Circuit. Nationwide and NLAIC intend to defend this lawsuit vigorously.

On August 15, 2001, Nationwide was 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. The plaintiffs first amended their complaint on September 5, 2001 to include class action allegations and have subsequently amended their complaint four times. As amended, in the current complaint, filed March 21, 2006, the plaintiffs seek to represent a class of ERISA qualified retirement plans that purchased variable annuities from Nationwide. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that Nationwide 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 Nationwide, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On December 13, 2001, the plaintiffs filed a motion for class certification. The plaintiffs filed a supplement to that motion on September 19, 2003. Nationwide opposed that motion on December 24, 2003. On July 6, 2004, Nationwide filed a Revised Memorandum in Support of Summary Judgment. On February 24, 2006, Nationwide’s motion for summary judgment was denied. On March 7, 2006, the plaintiff’s motion for class certification was denied without prejudice. Nationwide intends to defend this lawsuit vigorously.

Nationwide Investment Services Corporation

The general distributor, Nationwide Investment Services Corporation, is not engaged in litigation of a material nature.

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 - 2. You may obtain a copy of the SAI FREE OF CHARGE by contacting us at the address or telephone number on the first 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

The Sub-Accounts listed below invest in corresponding mutual funds that 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. You have voting rights with respect to the Sub-Accounts. For more information, see "Voting Rights," beginning on page 36.

Please refer to the prospectus for each underlying mutual fund for more detailed information.

AIM Variable Insurance Funds - AIM V.I. Basic Value Fund: Series I Shares

Investment Adviser:	AIM Advisors, Inc.
Investment Objective:	Long-term growth of capital.

AIM Variable Insurance Funds - AIM V.I. Capital Appreciation Fund: Series I Shares

Investment Adviser:	AIM Advisors, Inc.
Investment Objective:	Growth of capital.

AIM Variable Insurance Funds - AIM V.I. Capital Development Fund: Series I Shares

Investment Adviser:	AIM Advisors, Inc.
Investment Objective:	Long-term capital growth.

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 Adviser:	Alliance Capital Management, L.P.
Investment Objective:	Long-term growth of capital.

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

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	Alliance Capital Management, L.P.
Investment Objective:	Long-term growth of capital.

American Century Variable Portfolios, Inc. - American Century VP Balanced Fund: Class I

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Long-term capital growth and income.

American Century Variable Portfolios, Inc. - American Century VP Capital Appreciation Fund: Class I

This Sub-Account is only available in policies issued before September 27, 1999.

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Capital growth.

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 Adviser:	American Century Investment Management, Inc.
Investment Objective:	Capital growth by investing in common stocks.

American Century Variable Portfolios, Inc. - American Century VP International Fund: Class I

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2005.

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Capital growth.

American Century Variable Portfolios, Inc. - American Century VP International Fund: Class III

This Sub-Account is only available in policies issued before May 1, 2005.

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Capital growth.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

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

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Long-term capital growth.

American Century Variable Portfolios, Inc. - American Century VP Ultra Fund: Class I

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Long-term capital growth.

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

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

American Century Variable Portfolios, Inc. - American Century VP Vista Fund: Class I

Investment Adviser:	American Century Investment Management, Inc.
Investment Objective:	Long-term capital growth.

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

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

Credit Suisse Trust - Global Small Cap Portfolio

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2002.

Investment Adviser:	Credit Suisse Asset Management, LLC
Sub-Adviser:	Credit Suisse Asset Management L.L.C.
Investment Objective:	Capital appreciation.

Credit Suisse Trust - International Focus Portfolio

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2002.

Investment Adviser:	Credit Suisse Asset Management, LLC
Sub-Adviser:	Credit Suisse Asset Management (Australia ) Limited
Investment Objective:	Long-term capital appreciation.

Credit Suisse Trust - Small Cap Growth Portfolio

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Credit Suisse Asset Management, LLC
Investment Objective:	Capital growth.

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

Investment Adviser:	The Dreyfus Corporation
Investment Objective:	To match performance of the S&P SmallCap 600 Index®.

Dreyfus Socially Responsible Growth Fund, Inc.: Initial Shares

This Sub-Account is only available in policies issued before May 1, 2003.

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

Dreyfus Stock Index Fund, Inc.: Initial Shares

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

Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

Investment Adviser:	The Dreyfus Corporation
Investment Objective:	Long-term capital growth.

Dreyfus Variable Investment Fund - Developing Leaders Portfolio: Initial Shares

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	The Dreyfus Corporation
Investment Objective:	Capital growth.

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Dreyfus Variable Investment Fund - Growth and Income Portfolio: Initial Shares

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	The Dreyfus Corporation
Investment Objective:	Long-term capital growth, current income and growth of income.

Federated Insurance Series - Federated American Leaders Fund II: Primary Shares

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	Federated Equity Management Company of Pennsylvania.
Investment Objective:	Long-term 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 Adviser:	Federated Equity Management Company of Pennsylvania
Investment Objective:	Capital appreciation.

Federated Insurance Series - Federated Market Opportunity Fund II: Service Shares

Investment Adviser:	Federated Equity Management Company of Pennsylvania
Sub-adviser:	Federated Investment Management Company
Investment Objective:	To provide moderate capital appreciation and high current income.

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

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

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Reasonable income.

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Capital appreciation.

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

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	High level of current income.

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

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2005.

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Long-term capital growth.

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Long-term capital growth.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Fidelity Variable Insurance Products Fund II - VIP Asset Manager Portfolio: Initial Class

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	High total return.

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Fidelity Variable Insurance Products Fund II - VIP Contrafund® Portfolio: Initial Class

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Long-term capital appreciation.

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	High level of current income.

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

This Sub-Account is only available in policies issued before May 1, 2002.

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Capital growth.

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Long-term growth of capital.

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

This Sub-Account is only available in policies issued before May 1, 2006.

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Capital appreciation.

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

Investment Adviser:	Fidelity Management & Research Company
Investment Objective:	High total return with a secondary objective of principal preservation as the fund approaches its target date and beyond.

The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds (underlying Fidelity funds). Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund. Please refer to the prospectus for the Fidelity VIP Freedom Funds for more information.

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

Investment Adviser:	Fidelity Management & Research Company
Investment Objective:	High total return with a secondary objective of principal preservation as the fund approaches its target date and beyond.

The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds (underlying Fidelity funds). Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund. Please refer to the prospectus for the Fidelity VIP Freedom Funds for more information.

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

Investment Adviser:	Fidelity Management & Research Company
Investment Objective:	High total return with a secondary objective of principal preservation as the fund approaches its target date and beyond.

The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds (underlying Fidelity funds). Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund. Please refer to the prospectus for the Fidelity VIP Freedom Funds for more information.

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Fidelity Variable Insurance Products Fund IV - VIP Natural Resources Portfolio: Service Class 2

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	FMR Co., Inc.
Investment Objective:	Capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

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

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

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

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

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

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

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

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

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

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

Investment Adviser:	Franklin Advisors, Inc.
Investment Objective:	High current income, with preservation of capital.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Gartmore Variable Insurance Trust - American Funds GVIT Asset Allocation Fund: Class II

Investment Adviser:	Capital Research and Management Company
Investment Objective:	Seeks to provide high total return (including income and capital gains) consistent with the preservation of capital.

Gartmore Variable Insurance Trust - American Funds GVIT Bond Fund: Class II

Investment Adviser:	Capital Research and Management Company
Investment Objective:	Income and more price stability than stocks, and capital preservation over the long term. Seeks to maximize an investor’s level of current income and preserve the investor’s capital.

Gartmore Variable Insurance Trust - American Funds GVIT Global Growth Fund: Class II

Investment Adviser:	Capital Research and Management Company
Investment Objective:	Capital appreciation through stocks.

Gartmore Variable Insurance Trust - American Funds GVIT Growth Fund: Class II

Investment Adviser:	Capital Research and Management Company
Investment Objective:	Capital appreciation principally through investment in stocks.

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Gartmore Variable Insurance Trust - Federated GVIT 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 Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Federated Investment Management Company
Investment Objective:	High current income.

Gartmore Variable Insurance Trust - Federated GVIT High Income Bond Fund: Class III

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Federated Investment Management Company
Investment Objective:	High current income.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Gartmore Variable Insurance Trust - Gartmore GVIT Emerging Markets Fund: Class I

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2005.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company
Investment Objective:	Long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.

Gartmore Variable Insurance Trust - Gartmore GVIT Emerging Markets Fund: Class III

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company
Investment Objective:	Long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.

This underlying mutual fund assesses a short-term trading fee (please see “Short-Term Trading Fees” earlier in this prospectus).

Gartmore Variable Insurance Trust - Gartmore GVIT Global Financial Services Fund: Class I

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company
Investment Objective:	Long-term capital growth.

Gartmore Variable Insurance Trust - Gartmore GVIT Global Health Sciences Fund: Class I

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2005.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term capital appreciation.

Gartmore Variable Insurance Trust - Gartmore GVIT Global Health Sciences Fund: Class III

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Gartmore Variable Insurance Trust - Gartmore GVIT Global Technology and Communications Fund: Class I

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2005.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term capital appreciation.

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Gartmore Variable Insurance Trust - Gartmore GVIT Global Technology and Communications Fund: Class III

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Gartmore Variable Insurance Trust - Gartmore GVIT Global Utilities Fund: Class I

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company
Investment Objective:	Long-term capital growth.

Gartmore Variable Insurance Trust - Gartmore GVIT Government Bond Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	To provide as high level of income as is consistent with the preservation of capital.

Gartmore Variable Insurance Trust - Gartmore GVIT Growth Fund: Class I

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term capital appreciation.

Gartmore Variable Insurance Trust - Gartmore GVIT International Growth Fund: Class I

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company
Investment Objective:	Long-term capital growth by investing primarily in equity securities of companies in Europe, Australasia, the Far East and other regions, including developing countries.

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Gartmore Variable Insurance Trust - Gartmore GVIT Investor Destinations Funds: Class II

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Gartmore GVIT Investor Destinations Conservative Fund: Class II	Investment Objective:	High level of return consistent with a conservative level of risk compared to the other Investor Destination Funds.
Gartmore GVIT Investor Destinations Moderately Conservative Fund: Class II	Investment Objective:	High level of total return consistent with a moderately conservative level of risk.
Gartmore GVIT Investor Destinations Moderate Fund: Class II	Investment Objective:	High level of total return consistent with a moderate level of risk as compared to other Investor Destination Funds.
Gartmore GVIT Investor Destinations Moderately Aggressive Fund: Class II	Investment Objective:	Growth of capital, but also seeks income consistent with a moderately aggressive level of risk as compared to the other Investor Destination Funds.
Gartmore GVIT Investor Destinations Aggressive Fund: Class II	Investment Objective:	To maximize growth of capital consistent with a more aggressive level of risk as compared to the other Investor Destination Funds.

The Gartmore GVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. Therefore, a proportionate share of the fees and expenses of the underlying funds are indirectly borne by investors. Please refer to the prospectus for the Gartmore GVIT Investor Destinations Funds for more information.

Gartmore Variable Insurance Trust - Gartmore GVIT Mid Cap Growth Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term capital appreciation.

Gartmore Variable Insurance Trust - Gartmore GVIT Money Market Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	High level of current income as is consistent with the preservation of capital and maintenance of liquidity.

Gartmore Variable Insurance Trust - Gartmore GVIT Nationwideâ Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Total return through a flexible combination of capital appreciation and current income.

Gartmore Variable Insurance Trust - Gartmore GVIT Nationwideâ Leaders Fund: Class I

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	High total return from a concentrated portfolio of U.S. securities.

Gartmore Variable Insurance Trust - Gartmore GVIT U.S. Growth Leaders Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Investment Objective:	Long-term growth of capital.

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Gartmore Variable Insurance Trust - GVIT International Index Fund: Class VI

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Fund Asset Management, L.P.
Investment Objective:	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.

This underlying mutual fund assesses a short-term trading fee (please see “Short-Term Trading Fees” earlier in this prospectus).

Gartmore Variable Insurance Trust - GVIT International Value Fund: Class I

This Sub-Account is no longer available to receive transfers or new premium payments effective May 1, 2005.

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	The Boston Company Asset Management LLC
Investment Objective:	Long-term capital appreciation.

Gartmore Variable Insurance Trust - GVIT International Value Fund: Class III

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	The Boston Company Asset Management LLC
Investment Objective:	Long-term capital appreciation.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Gartmore Variable Insurance Trust - GVIT Mid Cap Index Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Fund Asset Management LP
Investment Objective:	Capital appreciation.

Gartmore Variable Insurance Trust - GVIT Small Cap Growth Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-advisers:	Oberweis Asset Management, Inc.; Waddell & Reed Investment Management Company
Investment Objective:	Capital growth.

Gartmore Variable Insurance Trust - GVIT Small Cap Value Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-advisers:	Epoch Investment Partners, Inc.; J.P. Morgan Investment Management Inc.
Investment Objective:	Capital appreciation.

Gartmore Variable Insurance Trust - GVIT Small Company Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-advisers:	American Century Investment Management Inc.; Franklin Portfolio Associates LLC; Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company; Morgan Stanley Investment Management Inc.; Neuberger Berman, LLC; Waddell & Reed Investment Management Company
Investment Objective:	Long-term growth of capital.

Gartmore Variable Insurance Trust - Van Kampen GVIT Comstock Value Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Van Kampen Asset Management
Investment Objective:	Seeks capital growth and income through investments in equity securities, including common stocks and securities convertibles into common stocks.

45

Gartmore Variable Insurance Trust - Van Kampen GVIT Multi Sector Bond Fund: Class I

Investment Adviser:	Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Mutual Insurance Company.
Sub-adviser:	Van Kampen Asset Management
Investment Objective:	Above average total return over a market cycle of three to five years.

Janus Aspen Series - Balanced Portfolio: Service Shares

This Sub-Account is only available in policies issued before May 1, 2004.

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

Janus Aspen Series - Forty Portfolio: Service Shares

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

Janus Aspen Series - Global Technology Portfolio: Service Shares

This Sub-Account is only available in policies issued before May 1, 2003.

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

Janus Aspen Series - International Growth Portfolio: Service Shares

This Sub-Account is only available in policies issued before May 1, 2004.

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

Janus Aspen Series - International Growth Portfolio: Service II Shares

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

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

Janus Aspen Series - Risk-Managed Core Portfolio: Service Shares

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	Janus Capital Management LLC
Sub-adviser:	Enhanced Investment Technologies, LLC
Investment Objective:	Long-term growth of capital.

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

This Sub-Account is only available in policies issued before May 1, 2006.

Investment Adviser:	Massachusetts Financial Services Company
Investment Objective:	Long-term capital growth and future income.

MFSÒ Variable Insurance Trust - MFS Value Series: Initial Class

Investment Adviser:	Massachusetts Financial Services Company
Investment Objective:	Capital appreciation and reasonable income.

Neuberger Berman Advisers Management Trust - AMT Fasciano Portfolio: S Class

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Long-term capital growth.

Neuberger Berman Advisers Management Trust - AMT Growth Portfolio: I Class

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Capital growth.

46

Neuberger Berman Advisers Management Trust - AMT Guardian Portfolio: I Class

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Long-term capital growth and, secondarily, current income.

Neuberger Berman Advisers Management Trust - AMT International Portfolio: S Class

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Long-term growth of capital by investing primarily in common stocks of foreign companies.

This underlying mutual fund assesses a short-term trading fee (please see “Short-Term Trading Fees” earlier in this prospectus).

Neuberger Berman Advisers Management Trust - AMT Limited Maturity Bond Portfolio: I Class

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Highest available current income consistent with liquidity and low risk to principal and, secondarily, total return.

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

This Sub-Account is only available in policies issued before May 1, 2004.

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Capital growth.

Neuberger Berman Advisers Management Trust - AMT Partners Portfolio: I Class

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Capital growth.

Neuberger Berman Advisers Management Trust - AMT Regency Portfolio: S Class

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Growth of capital.

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

Investment Adviser:	Neuberger Berman Management Inc.
Investment Objective:	Long-term capital growth by investing primarily in securities of companies that meet certain financial criteria and social policy.

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

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	OppenheimerFunds, Inc.
Investment Objective:	High total investment return which includes current income and capital appreciation in the value of its shares.

Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation Fund/VA: Non-Service Shares

Investment Adviser:	OppenheimerFunds, Inc.
Investment Objective:	Capital appreciation by investing in securities of well-known, established companies.

Oppenheimer Variable Account Funds - Oppenheimer Core Bond Fund/VA: Non-Service Shares

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	OppenheimerFunds, Inc.
Investment Objective:	High level of current income and, secondarily, capital appreciation when consistent with goal of high current income.

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

Investment Adviser:	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.

This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" earlier in this prospectus).

47

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 Adviser:	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: Non-Service Shares

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

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

Investment Adviser:	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 Cap Fund®/VA: Non-Service Shares

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

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

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	OppenheimerFunds, Inc.
Investment Objective:	Capital appreciation by investing in “growth type” companies.

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

This Sub-Account is only available in policies issued before May 1, 2005.

Investment Adviser:	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 Adviser:	Putnam Investment Management, 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 Adviser:	Putnam Investment Management, LLC
Investment Objective:	Capital appreciation.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Blue Chip Growth Portfolio: Class II

Investment Adviser:	T. Rowe Price Investment Services
Investment Objective:	Long-term capital growth, and, secondarily, income.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Equity Income Portfolio: Class II

Investment Adviser:	T. Rowe Price Investment Services
Investment Objective:	Substantial dividend income as well as long-term growth of capital through investments in the common stocks of established companies.

T. Rowe Price Equity Series, Inc. - T. Rowe Price Limited Term Bond Portfolio: Class II

Investment Adviser:	T. Rowe Price Investment Services
Investment Objective:	High level of income.

The Universal Institutional Funds, Inc. - Core Plus Fixed Income Portfolio: Class I

Investment Adviser:	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.

48

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 Adviser:	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.

The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio: Class I

Investment Adviser:	Morgan Stanley Investment Management Inc.
Investment Objective:	Above average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts.

Van Eck Worldwide Insurance Trust - Worldwide Bond Fund: Initial Class

This Sub-Account is only available in policies issued before May 1, 2002.

Investment Adviser:	Van Eck Associates Corporation
Investment Objective:	High total return - income plus capital appreciation - by investing globally, primarily in a variety of debt securities.

Van Eck Worldwide Insurance Trust - Worldwide Emerging Markets Fund: Initial Class

This Sub-Account is only available in policies issued before May 1, 2002.

Investment Adviser:	Van Eck Associates Corporation
Investment Objective:	Long-term capital appreciation by investing primarily in equity securities in emerging markets around the world.

Van Eck Worldwide Insurance Trust - Worldwide Hard Assets Fund: Initial Class

This Sub-Account is only available in policies issued before May 1, 2002.

Investment Adviser:	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 Discovery Fund

This Sub-Account is only available in policies issued before September 27, 1999.

Investment Adviser:	Wells Fargo Funds Management, LLC
Sub-adviser:	Wells Capital Management, Inc.
Investment Objective:	Long-term capital appreciation.

Wells Fargo Variable Trust - Wells Fargo Advantage VT Opportunity Fund

This Sub-Account is only available in policies issued before May 1, 2003.

Investment Adviser:	Wells Fargo Funds Management, LLC
Sub-adviser:	Wells Capital Management, Inc.
Investment Objective:	Long-term capital appreciation.

The Sub-Account portfolios listed above 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. We have entered into agency agreements with certain broker-dealer firms to distribute the policy. Some of those firms have an affiliate that acts as an investment adviser or a subadviser to one or more of the underlying funds that are offered under the policy. You have voting rights with respect to the Sub-Accounts. For more information, see "Voting Rights" beginning on page .

Please refer to the prospectus for each Sub-Account portfolio for more detailed information.

49

Appendix B: Definitions

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, subject to Indebtedness and the 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 to the beneficiary upon the Insured's death, before payment of any unpaid outstanding loan balances or charges.

FDIC - Federal Deposit Insurance Corporation.

Grace Period - A 61-day period after which the Policy will Lapse if you do not make sufficient payment.

Home Office - Our Home Offices are located at One Nationwide Plaza, Columbus, Ohio 43215.

In Force - The insurance coverage is in effect.

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 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 100^th birthday.

NCUSIF - Nationwide Credit Union Share Insurance Fund.

Net Amount At Risk - The policy's base Death Benefit minus the policy's Cash Value.

Net Asset Value (NAV) - The price of 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 Units. NAV does not reflect deductions we make for charges we take from Sub-Accounts. Unit values do reflect these deductions.

Policy Data Page(s) - The Policy Data Page contains 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.

Premium - The amount of money you pay to begin and continue the policy.

Rider - An optional benefit you may purchase under the policy.

SEC -Securities and Exchange Commission.

50

Specified Amount - The dollar or face amount of insurance the owner selects.

Sub-Accounts - The mechanism we use to account for your allocations of Premium and Cash Value among the policy's variable investment options.

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 Unit value at $10 for each Sub-Account.

Us, we, our 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 normal trading on the New York Stock Exchange.

You, your or the policy owner or Owner- The person named as the owner in the application, or the person assigned ownership rights.

51

Outside back cover page

To learn more about this 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 this 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, Ohio 43017-1522.

The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SEC maintains an Internet website (http://www.sec.gov) that contains the SAI and other information about us and the 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, DC 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. 811-5311.

Securities Act of 1933 Registration File No. 033-62795.

Nationwide VLI Separate Account-2

(Registrant)

Nationwide Life Insurance Company

(Depositor)

5100 Rings Road, RR1-04-D4

Dublin, Ohio 43017-1522

1-800-547-7548

TDD: 1-800-238-3035

STATEMENT OF ADDITIONAL INFORMATION

Modified Single Premium Variable Universal Life Insurance Policies

This Statement of Additional Information ("SAI'') contains additional information regarding the individual modified single 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, 2006 and the prospectuses for the policy's variable investment options . You may obtain a copy of these prospectuses by writing or calling us at our address or phone number shown above.

The date of this Statement of Additional Information is May 1, 2006.

1

Table of Contents

Nationwide Life Insurance Company	3	Illustrations	4
Nationwide VLI Separate Account-2	3	Advertising	4
Nationwide Investment Services Corporation (NISC)	3	Tax Definition of Life Insurance	4
Services	3	Financial Statements	7
Underwriting Procedure	4

2

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. NFS has two classes of common stock outstanding with different voting rights enabling Nationwide Corporation (the holder of all of the outstanding Class B Common Stock) to control NFS. Nationwide Corporation is a holding company, as well. All of the 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 $158 billion as of December 31, 2005.

Nationwide VLI Separate Account-2

Nationwide VLI Separate Account-2 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 7, 1987 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 Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide. For contracts issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation. NISC was organized as an Oklahoma corporation in 1981.

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 who are member firms of the National Association of Securities Dealers, Inc. ("NASD").

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 4% of any excess premium payments. We pay gross renewal commissions in years 2 through 10 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 11 and thereafter.

We have paid no underwriting commissions to NISC for each of the separate account's last three fiscal years.

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. We or our affiliates may have entered into agreements with either the investment adviser or distributor for the mutual funds. The agreements relate to administrative services we or our affiliate furnish. Some of the services provided include distribution of underlying fund prospectuses, semi-annual and annual fund reports, proxy materials and fund communications, as well as maintaining the websites and voice response systems necessary for contract owners to execute trades in the funds. We also act as a limited agent for the fund for purposes of accepting the trades. For these services the funds agree to pay us an annual fee based on the average aggregate net assets of the variable account (and other separate accounts of Nationwide or life insurance company subsidiaries of Nationwide) invested in the particular fund.

We take these anticipated fee payments into consideration when determining the expenses necessary to support the policies. Without these payments, policy charges would be higher. Only those funds that agree to pay us a fee will be offered in the policy. Generally, we expect to receive somewhere between 0.10% to 0.45% (an annualized rate of the daily net assets of the variable account) from the funds offered in the policies. What is actually received depends upon many factors, including but not limited to the type of fund (i.e., money market funds generally pay less revenue than other fund types) and the actual services rendered to the fund company.

The financial statements of Nationwide VLI Separate Account-2 and the consolidated financial statements of Nationwide Life Insurance Company and subsidiaries and Nationwide VLI Separate Account-2 for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report of KPMG LLP covering the December 31, 2005 consolidated financial statements of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries adopted the

3

American Institute of Certified Public Accountants' Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, in 2004. KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Underwriting Procedure

We underwrite the policies issued through Nationwide VLI Separate Account-2. The policy's Specified Amount depends upon the Insured's sex, issue age, risk class, and length of time the policy has been In Force. The Specified Amount will vary depending upon other risk factors. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates 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 guaranteed cost of insurance rate on a standard basis. That is, 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.

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.

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.

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.

The tables below show the numeric requirements for Guideline Premium/Cash Value Corridor 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%

4

  Attained Age of Insured     Percentage of Cash Value  

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%

5

70	115%
71	113%
72	111%
73	109%
74	107%
75	105%
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%

6

  Attained Age of Insured     Percentage of Cash Value  

97	101%
98	101%
99	101%
100	100%

7

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

    Contract Owners of Nationwide VLI Separate Account-2:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide VLI Separate Account-2 (comprised of the sub-accounts listed in note 1(b)) (collectively, “the Account”) as of December 31, 2005, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

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

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

KPMG LLP

Columbus, Ohio

March 8, 2006

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2005

Assets:
Investments at fair value:
AIM VIF – Basic Value Fund – Series I Shares (AIMBValue) 64,780 shares (cost $723,242)	$	801,324
AIM VIF – Capital Appreciation Fund – Series I Shares (AIMCapAp) 3,427 shares (cost $80,818)		84,581
AIM VIF – Capital Development Fund – Series I Shares (AIMCapDev) 15,136 shares (cost $209,244)		243,534
Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A (AlVPGrIncA) 37,421 shares (cost $866,399)		931,034
Alliance VPSF – AllianceBernstein Small/Mid Cap Value Portfolio – Class A (AlVPSmCapVA) 59,900 shares (cost $947,285)		1,021,892
American Century VP – Balanced Fund – Class I (ACVPBal) 719,280 shares (cost $4,641,106)		5,394,600
American Century VP – Capital Appreciation Fund – Class I (ACVPCapAp) 1,491,734 shares (cost $11,650,607)		13,947,712
American Century VP – Income & Growth Fund – Class I (ACVPIncGr) 484,431 shares (cost $2,849,359)		3,638,078
American Century VP – International Fund – Class I (ACVPInt) 1,213,150 shares (cost $7,008,660)		9,984,223
American Century VP – Mid Cap Value Fund – Class I (ACVPMidCpVal) 8,838 shares (cost $103,836)		103,400
American Century VP – Ultra® Fund – Class I (ACVPUltra) 74,268 shares (cost $741,915)		770,906
American Century VP – Value Fund – Class I (ACVPVal) 1,645,193 shares (cost $11,873,175)		13,490,584
American Century VP – VistaSM Fund – Class I (ACVPVista) 2,004 shares (cost $29,003)		29,040
American Century VP II – Inflation Protection Fund – Class II (ACVPInflaPro) 114,478 shares (cost $1,192,541)		1,174,540
American Century VP III – International Fund – Class III (ACVPInt3) 188,801 shares (cost $1,406,712)		1,553,835
Credit Suisse Trust – Global Small Cap Portfolio (CSGPVen) 73,987 shares (cost $791,291)		958,135
Credit Suisse Trust – International Focus Portfolio (CSIntFoc) 611,185 shares (cost $5,288,366)		7,150,861
Credit Suisse Trust – Small Cap Growth Portfolio (CSSmCapGr) 857,429 shares (cost $9,737,404)		12,767,112
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class (DrySmCapIxS) 122,082 shares (cost $1,796,541)		2,035,114
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx) 2,386,642 shares (cost $73,887,888)		75,942,933
Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro) 337,160 shares (cost $11,093,233)		8,793,128
Dreyfus VIF – Appreciation Portfolio – Initial Shares (DryVIFApp) 155,890 shares (cost $4,858,060)		5,785,092
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares (DryVIFDevLd) 9,954 shares (cost $394,926)		437,574
Dreyfus VIF – Growth and Income Portfolio – Initial Shares (DryVIFGrInc) 105,875 shares (cost $2,071,060)		2,310,188

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Federated IS – American Leaders Fund II – Primary Shares (FedAmLead) 8,347 shares (cost $162,754)	$	178,458
Federated IS – Capital Appreciation Fund II – Primary Shares (FedCapAp) 4,322 shares (cost $23,353)		25,412
Federated IS – Quality Bond Fund II – Primary Shares (FedQualBd) 103,458 shares (cost $1,203,176)		1,169,079
Fidelity® VIP – Equity-Income Portfolio: Initial Class (FidVIPEI) 2,881,991 shares (cost $66,908,189)		73,461,953
Fidelity® VIP – Growth Portfolio: Initial Class (FidVIPGr) 2,519,260 shares (cost $109,799,429)		84,899,049
Fidelity® VIP – High Income Portfolio: Initial Class (FidVIPHI) 3,099,775 shares (cost $20,374,134)		19,125,615
Fidelity® VIP – Overseas Portfolio: Initial Class (FidVIPOv) 836,536 shares (cost $10,232,743)		17,241,008
Fidelity® VIP – Overseas Portfolio: Service Class R (FidVIPOvSR) 129,912 shares (cost $2,286,428)		2,663,190
Fidelity® VIP II – Asset Manager Portfolio: Initial Class (FidVIPAM) 1,421,619 shares (cost $21,980,638)		21,381,144
Fidelity® VIP II – Contrafund® Portfolio: Initial Class (FidVIPCon) 2,204,886 shares (cost $53,057,883)		68,417,612
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class (FidVIPIGBdS) 215,560 shares (cost $2,723,515)		2,733,304
Fidelity® VIP III – Growth Opportunities Portfolio: Initial Class (FidVIPGrOp) 240,276 shares (cost $3,457,577)		4,166,391
Fidelity® VIP III – Mid Cap Portfolio: Service Class (FidVIPMCapS) 228,007 shares (cost $6,557,395)		7,968,840
Fidelity® VIP III – Value Strategies Portfolio: Service Class (FidVIPVaIS) 84,102 shares (cost $1,134,209)		1,174,908
Fidelity® VIP IV – Natural Resources Portfolio: Service Class 2 (FidVIPCon2) 97,762 shares (cost $1,796,520)		1,846,715
Fidelity® VIP FF – Freedom Fund 2010 Portfolio: Service Class (FidFF2010) 5,921 shares (cost $62,453)		63,773
Fidelity® VIP FF – Freedom Fund 2020 Portfolio: Service Class (FidFF2020) 23,922 shares (cost $251,378)		264,821
Fidelity® VIP FF – Freedom Fund 2030 Portfolio: Service Class (FidFF2030) 3,815 shares (cost $42,433)		42,995
Franklin Templeton VIP – Franklin Rising Dividends Securities Fund – Class I (FrVIPRisDiv) 180,589 shares (cost $3,071,357)		3,270,461
Franklin Templeton VIP – Franklin Small Cap Value Securities Fund – Class I (FTVIPSmCpVal) 177,247 shares (cost $2,742,037)		3,016,736
Franklin Templeton VIP – Templeton Foreign Securities Fund – Class I (FrVIPForSec) 87,702 shares (cost $1,189,905)		1,389,201
Franklin Templeton VIP III – Franklin Global Income Securities Fund – Class 3 (FrVIPGISec3) 4,366 shares (cost $61,780)		61,912
Franklin Templeton VIP III – Templeton Developing Markets Securities Fund – Class 3 (TmDevMktS3) 58,860 shares (cost $572,337)		641,574
Franklin Templeton VIP III – Templeton Foreign Securities Fund – Class 3 (FrVIPForSec3) 44,615 shares (cost $658,531)		695,994
Gartmore GVIT – Dreyfus International Value Fund – Class I (GVITDryIntVal) 62,962 shares (cost $941,004)		1,045,791
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I (GVITDMidCapI) 415,797 shares (cost $6,046,506)		7,218,238
Gartmore GVIT – Emerging Markets Fund: Class I (GVITEmMrkts) 178,186 shares (cost $1,997,012)		2,330,678
		(Continued	)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Gartmore GVIT – Federated High Income Bond Fund: Class I (GVITFHiInc) 44,563 shares (cost $352,402)	$	346,257
Gartmore GVIT – Global Financial Services Fund: Class I (GVITGlFin1) 58,335 shares (cost $732,965)		738,521
Gartmore GVIT – Global Health Sciences Fund: Class I (GVITGlHlth) 73,662 shares (cost $771,071)		761,667
Gartmore GVIT – Global Technology and Communications Fund: Class I (GVITGlTech) 152,000 shares (cost $529,779)		585,200
Gartmore GVIT – Global Utilities Fund: Class I (GVITGlUtl1) 138,435 shares (cost $1,561,399)		1,403,732
Gartmore GVIT – Government Bond Fund: Class I (GVITGvtBd) 990,741 shares (cost $11,969,683)		11,433,156
Gartmore GVIT – Growth Fund – Class I (GVITGrowth) 1,480,294 shares (cost $22,609,033)		16,949,366
Gartmore GVIT – International Growth Fund: Class I (GVITIntGro) 77,377 shares (cost $627,036)		712,646
Gartmore GVIT – Mid Cap Growth Fund: Class I (GVITSMdCpGr) 47,079 shares (cost $1,072,023)		1,278,194
Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt) 26,582,826 shares (cost $26,582,826)		26,582,826
Gartmore GVIT – Nationwide® Fund: Class I (GVITNWFund) 6,326,889 shares (cost $88,844,681)		74,973,633
Gartmore GVIT – Nationwide® Leaders Fund: Class I (GVITLead) 31,896 shares (cost $441,124)		411,145
Gartmore GVIT – Small Cap Growth Fund: Class I (GVITSmCapGr) 79,304 shares (cost $1,127,118)		1,260,932
Gartmore GVIT – Small Cap Value Fund: Class I (GVITSmCapVal) 1,182,187 shares (cost $13,840,857)		13,630,613
Gartmore GVIT – Small Company Fund: Class I (GVITSmComp) 1,324,659 shares (cost $26,879,628)		30,175,732
Gartmore GVIT – U.S. Growth Leaders Fund: Class I (GVITUSGro) 93,316 shares (cost $1,034,227)		1,006,877
Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I (GVITVKMultiSec) 105,169 shares (cost $1,043,387)		1,027,502
Gartmore GVIT – Van Kampen Value Fund – Class I (GVITCVal) 70,574 shares (cost $784,554)		813,720
Gartmore GVIT III – Dreyfus International Value Fund – Class III (GVITDryIntVal3) 60,154 shares (cost $925,435)		996,147
Gartmore GVIT III – Emerging Markets Fund: Class III (GVITEmMrkts3) 110,773 shares (cost $1,414,075)		1,448,909
Gartmore GVIT III – Federated High Income Bond Fund: Class III (GVITFHiInc3) 21,139 shares (cost $168,065)		164,035
Gartmore GVIT III – Global Health Sciences Fund: Class III (GVITGlHlth3) 41,813 shares (cost $464,919)		433,188
Gartmore GVIT III – Global Technology and Communications Fund: Class III (GVITGlTech3) 100,191 shares (cost $372,392)		388,740
Gartmore GVIT ID II – Aggressive Fund – Class II (GVITIDAgg) 160,696 shares (cost $1,818,678)		1,923,528
Gartmore GVIT ID II – Conservative Fund – Class II (GVITIDCon) 58,056 shares (cost $599,197)		596,239
Gartmore GVIT ID II – Moderate Fund – Class II (GVITIDMod) 524,670 shares (cost $5,561,361)		5,981,237
Gartmore GVIT ID II – Moderately Aggressive Fund – Class II (GVITIDModAgg) 446,028 shares (cost $4,821,900)		5,280,966
		(Continued	)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Gartmore GVIT ID II – Moderately Conservative Fund – Class II (GVITIDModCon) 215,229 shares (cost $2,288,766)	$	2,348,149
Janus AS – Balanced Portfolio – Service Shares (JanBal) 8,348 shares (cost $206,085)		222,225
Janus AS – Forty Portfolio – Service Shares (JanCapAp) 97,041 shares (cost $2,148,960)		2,663,778
Janus AS – Global Technology Portfolio – Service Shares (JanGlTech) 298,871 shares (cost $929,726)		1,183,529
Janus AS – International Growth Portfolio – Service Shares (JanIntGro) 82,354 shares (cost $2,105,831)		2,896,383
Janus AS – Risk-Managed Large Cap Core Portfolio – Service Shares (JanRMgLgCap) 20,214 shares (cost $271,276)		251,870
MFS® VITSM– MFS Investors Growth Stock Series – Initial Class (MFSVITInvGrwI) 31,492 shares (cost $284,928)		311,770
MFS® VITSM– MFS Value Series – Initial Class (MFSVITValIn) 27,943 shares (cost $327,985)		349,845
Neuberger Berman AMT – International Portfolio – Class S (NBAMTInt) 61,130 shares (cost $673,480)		714,004
Neuberger Berman AMT – Regency Portfolio – Class S (NBAMTReg) 5,267 shares (cost $84,011)		87,223
Neuberger Berman AMT – Balanced Portfolio®– I Class Shares (NBAMTBal) 4,179 shares (cost $38,307)		43,543
Neuberger Berman AMT – Growth Portfolio®– I Class Shares (NBAMTGro) 1,208,912 shares (cost $11,366,979)		16,670,901
Neuberger Berman AMT – Guardian Portfolio – I Class Shares (NBAMTGuard) 112,011 shares (cost $1,532,318)		1,960,201
Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares (NBAMTLMat) 315,558 shares (cost $4,186,644)		3,988,655
Neuberger Berman AMT – Partners Portfolio®– I Class Shares (NBAMTPart) 1,276,563 shares (cost $19,686,355)		27,331,204
Neuberger Berman AMT – Socially Responsive Portfolio®– I Class Shares (NBAMTSocRes) 12,316 shares (cost $172,708)		183,629
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares (NBAMTFasc) 8,374 shares (cost $110,898)		118,573
Neuberger Berman AMT – Mid Cap Growth Portfolio®– S Class Shares (NBAMTMCGrS) 13,218 shares (cost $233,404)		265,815
Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class (OppAggGro) 39,176 shares (cost $1,703,674)		1,934,917
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class (OppCapAp) 335,680 shares (cost $10,154,637)		12,930,378
Oppenheimer Funds – Global Securities Fund/VA – Initial Class (OppGlSec) 1,081,195 shares (cost $23,958,041)		36,090,277
Oppenheimer Funds – High Income Fund/VA – Initial Class (OppHighInc) 68,257 shares (cost $569,342)		576,091
Oppenheimer Funds – Main Street Fund®/VA – Initial Class (OppMSFund) 88,523 shares (cost $1,773,161)		1,928,922
Oppenheimer Funds – Main Street Small Cap Fund®/VA – Initial Class (OppMSSmCap) 36,799 shares (cost $544,242)		632,214
Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class (OppMultStr) 826,502 shares (cost $12,825,167)		14,108,383
Oppenheimer Funds III – Global Securities Fund/VA – Class 3 (OppGlSec3) 88,661 shares (cost $2,688,054)		2,974,560
Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class (OppBdFd) 1,005,698 shares (cost $11,082,319)		11,253,761
		(Continued	)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Putnam VT IB – Growth & Income Fund – IB Shares (PVTGroInc) 4,247 shares (cost $105,338)	$	111,917
Putnam VT IB – International Equity Fund – IB Shares (PVTIntEq) 19,715 shares (cost $297,121)		320,570
Putnam VT IB – Voyager II Fund – IB Shares (PVTVoyII) 3,749 shares (cost $100,872)		107,046
T. Rowe Price II – Blue Chip Growth Portfolio – II (TRPBluChpGrII) 25,372 shares (cost $241,039)		242,048
T. Rowe Price II – Equity Income Portfolio – II (TRowEqInc2) 14,939 shares (cost $334,508)		325,073
T. Rowe Price II – Equity Series, Inc. – T. Rowe Price Limited Term Bond Portfolio – Class II (TRLimTrmBnd2) 7,058 shares (cost $34,579)		34,516
Van Eck WIT – Worldwide Bond Fund – Initial Class (VEWrldBd) 258,165 shares (cost $3,193,455)		3,105,723
Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class (VEWrldEMkt) 449,557 shares (cost $5,792,886)		8,950,689
Van Eck WIT – Worldwide Hard Assets Fund – Initial Class (VEWrldHAs) 376,832 shares (cost $6,780,336)		10,453,326
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I (VKoreFI) 31,559 shares (cost $363,326)		363,874
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I (VKEmMkt) 294,413 shares (cost $2,551,286)		2,661,494
Van Kampen UIF – U.S. Real Estate Portfolio – Class I (VKUSRealEst) 872,121 shares (cost $14,110,951)		20,128,564
Wells Fargo VTF SM– Wells Fargo Advantage Discovery Fund VT (StDisc2) 543,235 shares (cost $6,052,202)		7,789,985
Wells Fargo VTF SM– Wells Fargo Advantage Opportunity Fund VT (StOpp2) 1,386,020 shares (cost $27,498,244)		33,569,415
Total Investments		929,334,020
Accounts Receivable		81,391
Total Assets		929,415,411
Accounts Payable		15,651
Contract Owners Equity (note 7)	$	929,399,760

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS

Year Ended December 31, 2005

Investment activity:	Total			AIMBValue		AIMCapAp		AIMCapDev		AlVPGrIncA		AlVPSmCapVA		ACVPBal		ACVPCapAp
Reinvested dividends	$	12,961,447		698		52		–		17,016		6,654		100,614		–
Mortality and expense risk charges (note 3)		(6,204,997	)	(5,089	)	(1,017	)	(1,518	)	(5,456	)	(6,129	)	(37,761	)	(91,300	)
Net investment income (loss)		6,756,450		(4,391	)	(965	)	(1,518	)	11,560		525		62,853		(91,300	)
Proceeds from mutual fund shares sold		218,636,378		87,221		258,315		104,906		451,884		320,096		998,746		1,930,642
Cost of mutual fund shares sold		(212,833,981	)	(76,310	)	(252,445	)	(90,244	)	(402,020	)	(288,562	)	(1,012,491	)	(2,064,441	)
Realized gain (loss) on investments		5,802,397		10,911		5,870		14,662		49,864		31,534		(13,745	)	(133,799	)
Change in unrealized gain (loss) on investments		44,234,328		23,967		787		9,434		(18,971	)	(14,639	)	175,002		2,711,854
Net gain (loss) on investments		50,036,725		34,878		6,657		24,096		30,893		16,895		161,257		2,578,055
Reinvested capital gains		13,179,108		8,914		–		–		–		40,190		2,138		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	69,972,283		39,401		5,692		22,578		42,453		57,610		226,248		2,486,755
Investment activity:	ACVPIncGr			ACVPInt		ACVPMidCpVal		ACVPUltra		ACVPVal		ACVPVista		ACVPInflaPro		ACVPInt3
Reinvested dividends	$	75,116		129,128		860		–		117,600		–		46,958		–
Mortality and expense risk charges (note 3)		(25,855	)	(71,955	)	(228	)	(4,830	)	(93,153	)	(24	)	(7,201	)	(5,345	)
Net investment income (loss)		49,261		57,173		632		(4,830	)	24,447		(24	)	39,757		(5,345	)
Proceeds from mutual fund shares sold		949,930		3,190,423		6,660		869,001		2,596,963		1,979		207,084		1,444,777
Cost of mutual fund shares sold		(702,357	)	(2,759,749	)	(6,660	)	(843,519	)	(2,156,750	)	(1,933	)	(209,614	)	(1,406,029	)
Realized gain (loss) on investments		247,573		430,674		–		25,482		440,213		46		(2,530	)	38,748
Change in unrealized gain (loss) on investments		(159,572	)	631,256		(435	)	(39,774	)	(1,258,011	)	37		(28,790	)	147,123
Net gain (loss) on investments		88,001		1,061,930		(435	)	(14,292	)	(817,798	)	83		(31,320	)	185,871
Reinvested capital gains		–		–		2,402		–		1,360,674		–		568		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	137,262		1,119,103		2,599		(19,122	)	567,323		59		9,005		180,526

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	CSGPVen			CSIntFoc		CSSmCapGr		DrySmCapIxS		DryStkIx		DrySRGro		DryVIFApp		DryVIFDevLd
Reinvested dividends	$	–		61,630		–		–		1,233,986		–		1,034		–
Mortality and expense risk charges (note 3)		(5,963	)	(45,437	)	(89,573	)	(11,733	)	(501,301	)	(62,999	)	(41,232	)	(2,552	)
Net investment income (loss)		(5,963	)	16,193		(89,573	)	(11,733	)	732,685		(62,999	)	(40,198	)	(2,552	)
Proceeds from mutual fund shares sold		603,350		1,268,509		2,924,042		961,109		11,686,897		1,038,037		1,140,919		138,086
Cost of mutual fund shares sold		(423,882	)	(1,013,529	)	(1,894,617	)	(796,869	)	(13,230,613	)	(1,599,838	)	(932,253	)	(132,615	)
Realized gain (loss) on investments		179,468		254,980		1,029,425		164,240		(1,543,716	)	(561,801	)	208,666		5,471
Change in unrealized gain (loss) on investments		(46,376	)	790,968		(1,440,310	)	(35,007	)	3,730,757		868,402		43,167		16,850
Net gain (loss) on investments		133,092		1,045,948		(410,885	)	129,233		2,187,041		306,601		251,833		22,321
Reinvested capital gains		–		–		–		5,886		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	127,129		1,062,141		(500,458	)	123,386		2,919,726		243,602		211,635		19,769
Investment activity:	DryVIFGrInc			FedAmLead		FedCapAp		FedQualBd		FidVIPEI		FidVIPGr		FidVIPHI		FidVIPOv
Reinvested dividends	$	31,154		2,172		268		40,890		1,197,330		429,060		3,233,590		121,422
Mortality and expense risk charges (note 3)		(15,110	)	(1,035	)	(150	)	(7,255	)	(508,729	)	(599,889	)	(134,740	)	(113,771	)
Net investment income (loss)		16,044		1,137		118		33,635		688,601		(170,829	)	3,098,850		7,651
Proceeds from mutual fund shares sold		369,857		34,788		4,392		261,122		7,136,967		10,078,859		20,034,442		4,566,871
Cost of mutual fund shares sold		(401,930	)	(33,468	)	(3,964	)	(266,371	)	(7,575,313	)	(14,087,593	)	(19,960,505	)	(3,355,837	)
Realized gain (loss) on investments		(32,073	)	1,320		428		(5,249	)	(438,346	)	(4,008,734	)	73,937		1,211,034
Change in unrealized gain (loss) on investments		73,967		4,839		(356	)	(28,170	)	691,808		8,161,191		(2,837,088	)	1,417,693
Net gain (loss) on investments		41,894		6,159		72		(33,419	)	253,462		4,152,457		(2,763,151	)	2,628,727
Reinvested capital gains		–		–		–		7,014		2,631,172		–		–		95,026
Net increase (decrease) in contract owners’ equity resulting from operations	$	57,938		7,296		190		7,230		3,573,235		3,981,628		335,699		2,731,404

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	FidVIPOvSR			FidVIPAM		FidVIPCon		FidVIPIGBdS		FidVIPGrOp		FidVIPMCapS		FidVIPVaIS		FidVIPCon2
Reinvested dividends	$	–		601,128		179,636		34,232		39,526		–		–		6,512
Mortality and expense risk charges (note 3)		(5,997	)	(150,713	)	(434,576	)	(13,495	)	(27,242	)	(41,647	)	(9,405	)	(3,740	)
Net investment income (loss)		(5,997	)	450,415		(254,940	)	20,737		12,284		(41,647	)	(9,405	)	2,772
Proceeds from mutual fund shares sold		103,924		2,945,551		5,570,845		362,578		1,763,807		1,229,791		1,399,317		457,142
Cost of mutual fund shares sold		(92,778	)	(3,295,192	)	(4,878,356	)	(366,603	)	(2,005,790	)	(955,473	)	(1,417,220	)	(407,734	)
Realized gain (loss) on investments		11,146		(349,641	)	692,489		(4,025	)	(241,983	)	274,318		(17,903	)	49,408
Change in unrealized gain (loss) on investments		376,763		564,829		9,019,770		(13,301	)	525,041		801,405		(45,834	)	50,196
Net gain (loss) on investments		387,909		215,188		9,712,259		(17,326	)	283,058		1,075,723		(63,737	)	99,604
Reinvested capital gains		–		7,706		11,226		20,900		–		79,678		59,032		85,592
Net increase (decrease) in contract owners’ equity resulting from operations	$	381,912		673,309		9,468,545		24,311		295,342		1,113,754		(14,110	)	187,968
Investment activity:	FidFF2010			FidFF2020		FidFF2030		FrVIPRisDiv		FTVIPSmCpVal		FrVIPForSec		FrVIPGISec3		TmDevMktS3
Reinvested dividends	$	276		1,428		228		33,490		25,566		21,818		3,258		1,860
Mortality and expense risk charges (note 3)		(63	)	(468	)	(60	)	(18,844	)	(19,111	)	(9,455	)	(150	)	(937	)
Net investment income (loss)		213		960		168		14,646		6,455		12,363		3,108		923
Proceeds from mutual fund shares sold		12,245		2,661		283		812,134		822,303		689,681		47,925		84,557
Cost of mutual fund shares sold		(12,203	)	(2,485	)	(268	)	(740,075	)	(674,572	)	(585,987	)	(51,702	)	(76,148	)
Realized gain (loss) on investments		42		176		15		72,059		147,731		103,694		(3,777	)	8,409
Change in unrealized gain (loss) on investments		1,320		13,443		563		(2,803	)	40,513		20,664		132		69,238
Net gain (loss) on investments		1,362		13,619		578		69,256		188,244		124,358		(3,645	)	77,647
Reinvested capital gains		–		–		–		19,938		17,618		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,575		14,579		746		103,840		212,317		136,721		(537	)	78,570

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	FrVIPForSec3			GVITDryIntVal		GVITDMidCapI		GVITEmMrkts		GVITFHiInc		GVITGlFin1		GVITGlHlth		GVITGlTech
Reinvested dividends	$	1,502		18,256		70,358		12,794		34,760		12,098		–		–
Mortality and expense risk charges (note 3)		(1,013	)	(8,822	)	(45,682	)	(14,247	)	(2,846	)	(4,564	)	(7,197	)	(5,066	)
Net investment income (loss)		489		9,434		24,676		(1,453	)	31,914		7,534		(7,197	)	(5,066	)
Proceeds from mutual fund shares sold		63,815		991,125		2,004,569		902,408		1,297,315		314,478		733,040		485,802
Cost of mutual fund shares sold		(61,042	)	(867,719	)	(1,368,109	)	(808,962	)	(1,314,966	)	(305,727	)	(709,962	)	(567,367	)
Realized gain (loss) on investments		2,773		123,406		636,460		93,446		(17,651	)	8,751		23,078		(81,565	)
Change in unrealized gain (loss) on investments		37,464		(63,445	)	(355,770	)	292,891		(11,541	)	(21,076	)	(32,124	)	42,968
Net gain (loss) on investments		40,237		59,961		280,690		386,337		(29,192	)	(12,325	)	(9,046	)	(38,597	)
Reinvested capital gains		–		53,106		415,044		193,400		–		67,106		88,424		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	40,726		122,501		720,410		578,284		2,722		62,315		72,181		(43,663	)
Investment activity:	GVITGlUtl1			GVITGvtBd		GVITGrowth		GVITIntGro		GVITSMdCpGr		GVITMyMkt		GVITNWFund		GVITLead
Reinvested dividends	$	29,408		449,734		13,648		4,000		–		785,059		671,606		4,396
Mortality and expense risk charges (note 3)		(9,660	)	(86,305	)	(117,659	)	(3,294	)	(8,160	)	(211,061	)	(523,221	)	(2,022	)
Net investment income (loss)		19,748		363,429		(104,011	)	706		(8,160	)	573,998		148,385		2,374
Proceeds from mutual fund shares sold		1,284,978		3,387,514		1,729,831		321,645		381,582		42,855,390		5,505,017		328,770
Cost of mutual fund shares sold		(1,195,274	)	(3,564,138	)	(4,464,855	)	(282,790	)	(323,397	)	(42,855,390	)	(8,036,919	)	(317,166	)
Realized gain (loss) on investments		89,704		(176,624	)	(2,735,024	)	38,855		58,185		–		(2,531,902	)	11,604
Change in unrealized gain (loss) on investments		(229,966	)	99,562		3,772,943		69,474		61,864		–		7,142,405		(39,955	)
Net gain (loss) on investments		(140,262	)	(77,062	)	1,037,919		108,329		120,049		–		4,610,503		(28,351	)
Reinvested capital gains		195,266		22,538		–		1,588		–		–		–		56,438
Net increase (decrease) in contract owners’ equity resulting from operations	$	74,752		308,905		933,908		110,623		111,889		573,998		4,758,888		30,461

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	GVITSmCapGr			GVITSmCapVal		GVITSmComp		GVITUSGro		GVITVKMultiSec		GVITCVal		GVITDryIntVal3		GVITEmMrkts3
Reinvested dividends	$	–		9,082		–		–		42,222		11,888		6,104		1,124
Mortality and expense risk charges (note 3)		(9,083	)	(93,901	)	(187,960	)	(6,036	)	(6,846	)	(4,727	)	(2,216	)	(1,816	)
Net investment income (loss)		(9,083	)	(84,819	)	(187,960	)	(6,036	)	35,376		7,161		3,888		(692	)
Proceeds from mutual fund shares sold		1,209,302		5,085,957		3,821,896		528,475		543,792		226,707		166,198		174,584
Cost of mutual fund shares sold		(1,076,496	)	(3,748,191	)	(3,093,968	)	(503,537	)	(536,327	)	(192,787	)	(165,584	)	(165,190	)
Realized gain (loss) on investments		132,806		1,337,766		727,928		24,938		7,465		33,920		614		9,394
Change in unrealized gain (loss) on investments		(49,894	)	(2,634,618	)	(995,207	)	(91,765	)	(34,567	)	(30,719	)	70,712		34,834
Net gain (loss) on investments		82,912		(1,296,852	)	(267,279	)	(66,827	)	(27,102	)	3,201		71,326		44,228
Reinvested capital gains		–		1,564,872		3,550,094		161,958		5,570		20,414		11,850		104,312
Net increase (decrease) in contract owners’ equity resulting from operations	$	73,829		183,201		3,094,855		89,095		13,844		30,776		87,064		147,848
Investment activity:	GVITFHiInc3			GVITGlHlth3		GVITGlTech3		GVITIDAgg		GVITIDCon		GVITIDMod		GVITIDModAgg		GVITIDModCon
Reinvested dividends	$	8,010		–		–		33,224		17,016		124,356		101,682		57,648
Mortality and expense risk charges (note 3)		(463	)	(882	)	(558	)	(11,594	)	(4,498	)	(34,705	)	(34,789	)	(19,921	)
Net investment income (loss)		7,547		(882	)	(558	)	21,630		12,518		89,651		66,893		37,727
Proceeds from mutual fund shares sold		73,080		158,474		66,900		680,705		154,773		520,369		692,478		424,511
Cost of mutual fund shares sold		(72,586	)	(157,616	)	(65,263	)	(589,052	)	(149,367	)	(405,370	)	(513,504	)	(380,306	)
Realized gain (loss) on investments		494		858		1,637		91,653		5,406		114,999		178,974		44,205
Change in unrealized gain (loss) on investments		(4,029	)	(31,731	)	16,348		(4,619	)	(15,757	)	(43,991	)	(41,664	)	(45,321	)
Net gain (loss) on investments		(3,535	)	(30,873	)	17,985		87,034		(10,351	)	71,008		137,310		(1,116	)
Reinvested capital gains		–		41,196		–		35,342		13,526		93,246		102,524		40,334
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,012		9,441		17,427		144,006		15,693		253,905		306,727		76,945

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	JanBal			JanCapAp		JanGlTech		JanIntGro		JanRMgLgCap		MFSVITInvGrwI		MFSVITValIn		NBAMTInt
Reinvested dividends	$	4,266		216		–		22,346		3,090		1,156		1,758		784
Mortality and expense risk charges (note 3)		(976	)	(16,678	)	(7,187	)	(13,181	)	(1,517	)	(2,045	)	(1,737	)	(898	)
Net investment income (loss)		3,290		(16,462	)	(7,187	)	9,165		1,573		(889	)	21		(114	)
Proceeds from mutual fund shares sold		13,545		827,187		310,190		651,530		109,024		105,577		77,902		95,972
Cost of mutual fund shares sold		(12,676	)	(623,242	)	(213,999	)	(383,063	)	(104,776	)	(97,658	)	(68,240	)	(96,028	)
Realized gain (loss) on investments		869		203,945		96,191		268,467		4,248		7,919		9,662		(56	)
Change in unrealized gain (loss) on investments		11,177		86,853		20,130		291,505		(20,802	)	9,290		4,912		40,524
Net gain (loss) on investments		12,046		290,798		116,321		559,972		(16,554	)	17,209		14,574		40,468
Reinvested capital gains		–		–		–		–		41,532		–		5,236		3,464
Net increase (decrease) in contract owners’ equity resulting from operations	$	15,336		274,336		109,134		569,137		26,551		16,320		19,831		43,818
Investment activity:	NBAMTReg			NBAMTBal		NBAMTGro		NBAMTGuard		NBAMTLMat		NBAMTPart		NBAMTSocRes		NBAMTFasc
Reinvested dividends	$	–		364		–		2,954		119,612		254,928		–		–
Mortality and expense risk charges (note 3)		(171	)	(255	)	(114,795	)	(12,567	)	(29,813	)	(159,203	)	(1,548	)	(632	)
Net investment income (loss)		(171	)	109		(114,795	)	(9,613	)	89,799		95,725		(1,548	)	(632	)
Proceeds from mutual fund shares sold		79,229		19,489		3,741,983		667,891		2,103,670		4,270,735		187,497		14,654
Cost of mutual fund shares sold		(79,120	)	(17,751	)	(2,912,257	)	(425,970	)	(2,182,073	)	(3,335,356	)	(165,441	)	(12,893	)
Realized gain (loss) on investments		109		1,738		829,726		241,921		(78,403	)	935,379		22,056		1,761
Change in unrealized gain (loss) on investments		3,213		637		1,131,493		(74,766	)	21,009		2,841,210		(11,609	)	1,137
Net gain (loss) on investments		3,322		2,375		1,961,219		167,155		(57,394	)	3,776,589		10,447		2,898
Reinvested capital gains		–		–		–		–		–		5,916		344		572
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,151		2,484		1,846,424		157,542		32,405		3,878,230		9,243		2,838

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	NBAMTMCGrS			OppAggGro		OppCapAp		OppGlSec		OppHighInc		OppMSFund		OppMSSmCap		OppMultStr
Reinvested dividends	$	–		–		120,544		378,434		44,126		20,230		–		257,242
Mortality and expense risk charges (note 3)		(1,542	)	(14,677	)	(90,846	)	(242,707	)	(3,694	)	(10,511	)	(4,033	)	(103,246	)
Net investment income (loss)		(1,542	)	(14,677	)	29,698		135,727		40,432		9,719		(4,033	)	153,996
Proceeds from mutual fund shares sold		454,551		1,790,456		3,264,292		6,134,610		567,172		567,550		180,970		2,619,476
Cost of mutual fund shares sold		(407,509	)	(1,524,674	)	(2,440,072	)	(4,677,749	)	(560,976	)	(493,646	)	(153,773	)	(2,561,465	)
Realized gain (loss) on investments		47,042		265,782		824,220		1,456,861		6,196		73,904		27,197		58,011
Change in unrealized gain (loss) on investments		2,625		(73,853	)	(343,491	)	2,816,700		(35,276	)	(4,654	)	16,728		(289,228	)
Net gain (loss) on investments		49,667		191,929		480,729		4,273,561		(29,080	)	69,250		43,925		(231,217	)
Reinvested capital gains		–		–		–		–		–		–		13,920		525,540
Net increase (decrease) in contract owners’ equity resulting from operations	$	48,125		177,252		510,427		4,409,288		11,352		78,969		53,812		448,319
Investment activity:	OppGlSec3			OppBdFd		PVTGroInc		PVTIntEq		PVTVoyII		TRPBluChpGrII		TRowEqInc2		TRLimTrmBnd2
Reinvested dividends	$	–		633,812		1,504		2,226		424		238		2,016		200
Mortality and expense risk charges (note 3)		(7,511	)	(78,129	)	(630	)	(1,454	)	(242	)	(244	)	(602	)	(36	)
Net investment income (loss)		(7,511	)	555,683		874		772		182		(6	)	1,414		164
Proceeds from mutual fund shares sold		150,016		2,709,596		52,801		128,803		6,342		3,250		143,979		163
Cost of mutual fund shares sold		(137,745	)	(2,703,806	)	(48,567	)	(110,377	)	(5,547	)	(3,082	)	(141,559	)	(164	)
Realized gain (loss) on investments		12,271		5,790		4,234		18,426		795		168		2,420		(1	)
Change in unrealized gain (loss) on investments		286,506		(330,503	)	(87	)	9,869		3,168		1,009		(9,434	)	(62	)
Net gain (loss) on investments		298,777		(324,713	)	4,147		28,295		3,963		1,177		(7,014	)	(63	)
Reinvested capital gains		–		–		–		–		–		–		12,064		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	291,266		230,970		5,021		29,067		4,145		1,171		6,464		101

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2005

Investment activity:	VEWrldBd			VEWrldEMkt		VEWrldHAs		VKoreFI		VKEmMkt		VKUSRealEst		StDisc2		StOpp2
Reinvested dividends	$	260,362		53,150		24,490		9,322		190,476		235,012		–		–
Mortality and expense risk charges (note 3)		(25,892	)	(47,430	)	(57,761	)	(1,780	)	(14,289	)	(135,089	)	(54,490	)	(239,912	)
Net investment income (loss)		234,470		5,720		(33,271	)	7,542		176,187		99,923		(54,490	)	(239,912	)
Proceeds from mutual fund shares sold		934,950		1,545,784		2,911,887		39,892		1,248,734		4,440,629		1,245,123		5,132,179
Cost of mutual fund shares sold		(962,237	)	(849,369	)	(1,553,305	)	(40,334	)	(1,214,500	)	(2,531,450	)	(955,470	)	(5,622,228	)
Realized gain (loss) on investments		(27,287	)	696,415		1,358,582		(442	)	34,234		1,909,179		289,653		(490,049	)
Change in unrealized gain (loss) on investments		(346,641	)	1,334,255		1,986,081		246		24,829		366,974		(437,422	)	3,022,828
Net gain (loss) on investments		(373,928	)	2,030,670		3,344,663		(196	)	59,063		2,276,153		(147,769	)	2,532,779
Reinvested capital gains		–		–		–		1,912		40,480		519,092		715,214		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	(139,458	)	2,036,390		3,311,392		9,258		275,730		2,895,168		512,955		2,292,867

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2005 and 2004

	Total					AIMBValue				AIMCapAp				AIMCapDev
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	6,756,450		4,909,183		(4,391	)	(3,551	)	(965	)	(653	)	(1,518	)	(855	)
Realized gain (loss) on investments		5,802,397		(2,276,513	)	10,911		11,559		5,870		7,449		14,662		4,921
Change in unrealized gain (loss) on investments		44,234,328		79,434,320		23,967		40,599		787		(5,301	)	9,434		20,230
Reinvested capital gains		13,179,108		5,894,860		8,914		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		69,972,283		87,961,850		39,401		48,607		5,692		1,495		22,578		24,296
Equity transactions:
Purchase payments received from contract owners (note 6)		63,121,158		69,481,040		88,640		35,522		6,876		29,196		20,052		13,168
Transfers between funds		–		–		62,224		493,566		17,342		(26,360	)	(14,078	)	148,686
Surrenders (note 6)		(69,500,794	)	(73,138,728	)	(29,194	)	(101,278	)	(994	)	(10,006	)	(10,546	)	(582	)
Death benefits (note 4)		(3,794,134	)	(4,542,616	)	(106	)	–		–		–		–		–
Net policy repayments (loans) (note 5)		898,160		3,031,442		(3,764	)	7,288		10		–		(306	)	(684	)
Deductions for surrender charges (note 2d)		(1,252,942	)	(1,863,380	)	(88	)	(472	)	(118	)	(164	)	(62	)	(8	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(45,231,780	)	(45,778,018	)	(26,368	)	(15,900	)	(2,562	)	(2,518	)	(12,998	)	(7,884	)
Asset charges (note 3):
MSP contracts		(402,742	)	(401,693	)	(21	)	(37	)	(17	)	–		(59	)	(16	)
LSFP contracts		(424,918	)	(408,347	)	(72	)	(81	)	(5	)	(8	)	(200	)	(191	)
Adjustments to maintain reserves		387,993		(276,260	)	43		84		6		54		(28	)	88
Net equity transactions		(56,199,999	)	(53,896,560	)	91,294		418,692		20,538		(9,806	)	(18,225	)	152,577
Net change in contract owners’ equity		13,772,284		34,065,290		130,695		467,299		26,230		(8,311	)	4,353		176,873
Contract owners’ equity beginning of period		915,627,476		881,562,186		670,737		203,438		58,400		66,711		239,247		62,374
Contract owners’ equity end of period	$	929,399,760		915,627,476		801,432		670,737		84,630		58,400		243,600		239,247
CHANGES IN UNITS:
Beginning units		39,381,106		42,122,919		46,810		15,645		4,476		5,411		16,082		4,816
Units purchased		15,006,946		8,772,462		30,105		39,833		1,956		2,721		2,056		11,990
Units redeemed		(13,683,428	)	(11,514,275	)	(23,809	)	(8,668	)	(440	)	(3,656	)	(3,102	)	(724	)
Ending units		40,704,624		39,381,106		53,106		46,810		5,992		4,476		15,036		16,082

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	AlVPGrIncA					AlVPSmCapVA				ACVPBal				ACVPCapAp
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	11,560		2,918		525		(2,417	)	62,853		51,554		(91,300	)	(93,439	)
Realized gain (loss) on investments		49,864		24,986		31,534		41,561		(13,745	)	(32,159	)	(133,799	)	(620,237	)
Change in unrealized gain (loss) on investments		(18,971	)	50,846		(14,639	)	68,703		175,002		457,056		2,711,854		1,468,614
Reinvested capital gains		–		–		40,190		8,078		2,138		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		42,453		78,750		57,610		115,925		226,248		476,451		2,486,755		754,938
Equity transactions:
Purchase payments received from contract owners (note 6)		128,310		127,076		88,588		49,214		327,960		391,466		991,958		1,058,944
Transfers between funds		100,470		398,776		116,956		631,852		(112,376	)	23,106		188,038		(952,342	)
Surrenders (note 6)		(210,372	)	(64,460	)	(39,544	)	(86,583	)	(405,472	)	(473,397	)	(822,808	)	(1,043,813	)
Death benefits (note 4)		–		–		(90	)	–		(38,842	)	(57,230	)	(76,010	)	(30,998	)
Net policy repayments (loans) (note 5)		(178	)	(5,074	)	(17,086	)	(52,904	)	(52,262	)	42,342		(39,198	)	(171,170	)
Deductions for surrender charges (note 2d)		(1,162	)	(1,890	)	(486	)	(147	)	(7,328	)	(9,903	)	(15,062	)	(13,664	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(39,592	)	(34,606	)	(35,760	)	(15,714	)	(262,706	)	(273,398	)	(726,550	)	(713,770	)
Asset charges (note 3):
MSP contracts		(1,148	)	(855	)	(421	)	(504	)	(5,102	)	(4,296	)	(4,938	)	(4,329	)
LSFP contracts		(1,076	)	(788	)	(184	)	(194	)	(1,530	)	(1,547	)	(2,442	)	(2,365	)
Adjustments to maintain reserves		8		127		(93	)	201		(356	)	(16,752	)	(21,392	)	13,111
Net equity transactions		(24,740	)	418,306		111,880		525,221		(558,014	)	(379,609	)	(528,404	)	(1,860,396	)
Net change in contract owners’ equity		17,713		497,056		169,490		641,146		(331,766	)	96,842		1,958,351		(1,105,458	)
Contract owners’ equity beginning of period		913,433		416,377		852,487		211,341		5,726,483		5,629,641		11,993,491		13,098,949
Contract owners’ equity end of period	$	931,146		913,433		1,021,977		852,487		5,394,717		5,726,483		13,951,842		11,993,491
CHANGES IN UNITS:
Beginning units		66,458		33,587		52,384		15,381		263,900		281,953		658,094		787,974
Units purchased		21,716		40,603		29,959		46,840		107,087		46,826		348,294		104,451
Units redeemed		(23,216	)	(7,732	)	(23,299	)	(9,837	)	(106,047	)	(64,879	)	(285,602	)	(234,331	)
Ending units		64,958		66,458		59,044		52,384		264,940		263,900		720,786		658,094

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	ACVPIncGr					ACVPInt				ACVPMidCpVal			ACVPUltra
Investment activity:	2005			2004		2005		2004		2005		2004	2005		2004
Net investment income (loss)	$	49,261		27,130		57,173		(15,493	)	632		–	(4,830	)	(5,362	)
Realized gain (loss) on investments		247,573		168,601		430,674		(128,993	)	–		–	25,482		(7,423	)
Change in unrealized gain (loss) on investments		(159,572	)	221,739		631,256		1,534,838		(435	)	–	(39,774	)	40,489
Reinvested capital gains		–		–		–		–		2,402		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		137,262		417,470		1,119,103		1,390,352		2,599		–	(19,122	)	27,704
Equity transactions:
Purchase payments received from contract owners (note 6)		189,444		226,060		243,198		772,956		2,690		–	30,928		69,390
Transfers between funds		(113,836	)	(75,266	)	(1,303,244	)	(1,004,794	)	100,510		–	(69,202	)	446,860
Surrenders (note 6)		(233,010	)	(296,076	)	(636,772	)	(865,282	)	–		–	(77,334	)	(19,123	)
Death benefits (note 4)		–		–		(11,794	)	(17,724	)	–		–	(5,908	)	(10,646	)
Net policy repayments (loans) (note 5)		3,426		(5,576	)	(155,324	)	(12,270	)	(1,290	)	–	(9,016	)	(6,214	)
Deductions for surrender charges (note 2d)		(4,528	)	(15,820	)	(14,894	)	(31,075	)	–		–	(202	)	(226	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(157,308	)	(168,154	)	(433,704	)	(494,264	)	(1,092	)	–	(23,720	)	(26,972	)
Asset charges (note 3):
MSP contracts		(2,386	)	(2,732	)	(2,996	)	(3,576	)	(5	)	–	(291	)	(876	)
LSFP contracts		(1,278	)	(1,729	)	(5,407	)	(6,467	)	(14	)	–	(513	)	(642	)
Adjustments to maintain reserves		(3	)	242		502		(16,185	)	59		–	(5	)	122
Net equity transactions		(319,479	)	(339,051	)	(2,320,435	)	(1,678,681	)	100,858		–	(155,263	)	451,673
Net change in contract owners’ equity		(182,217	)	78,419		(1,201,332	)	(288,329	)	103,457		–	(174,385	)	479,377
Contract owners’ equity beginning of period		3,820,422		3,742,003		11,186,069		11,474,398		–		–	945,377		466,000
Contract owners’ equity end of period	$	3,638,205		3,820,422		9,984,737		11,186,069		103,457		–	770,992		945,377
CHANGES IN UNITS:
Beginning units		322,014		353,293		650,574		762,045		–		–	86,518		46,927
Units purchased		99,246		49,103		149,191		92,138		9,395		–	13,155		49,139
Units redeemed		(123,688	)	(80,382	)	(250,697	)	(203,609	)	(219	)	–	(30,213	)	(9,548	)
Ending units		297,572		322,014		549,068		650,574		9,176		–	69,460		86,518

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	ACVPVal					ACVPVista			ACVPInflaPro				ACVPInt3
Investment activity:	2005			2004		2005		2004	2005		2004		2005		2004
Net investment income (loss)	$	24,447		37,288		(24	)	–	39,757		16,055		(5,345	)	–
Realized gain (loss) on investments		440,213		481,111		46		–	(2,530	)	655		38,748		–
Change in unrealized gain (loss) on investments		(1,258,011	)	1,012,962		37		–	(28,790	)	9,790		147,123		–
Reinvested capital gains		1,360,674		100,800		–		–	568		172		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		567,323		1,632,161		59		–	9,005		26,672		180,526		–
Equity transactions:
Purchase payments received from contract owners (note 6)		750,758		901,250		28		–	66,570		87,896		444,582		–
Transfers between funds		158,172		(334,816	)	29,076		–	241,474		819,828		907,628		–
Surrenders (note 6)		(719,062	)	(1,231,770	)	–		–	(51,112	)	(18,824	)	(172,776	)	–
Death benefits (note 4)		(808	)	(68,752	)	–		–	–		–		(236	)	–
Net policy repayments (loans) (note 5)		(89,452	)	258,974		–		–	(11,166	)	(2,120	)	228,558		–
Deductions for surrender charges (note 2d)		(17,348	)	(21,878	)	–		–	(138	)	(64	)	(344	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(513,258	)	(501,372	)	(120	)	–	(42,692	)	(24,724	)	(33,328	)	–
Asset charges (note 3):
MSP contracts		(7,115	)	(7,193	)	(5	)	–	(814	)	(158	)	(469	)	–
LSFP contracts		(7,741	)	(8,766	)	–		–	(80	)	(47	)	(328	)	–
Adjustments to maintain reserves		(228	)	745		23		–	(27	)	(36	)	72		–
Net equity transactions		(446,082	)	(1,013,578	)	29,002		–	202,015		861,751		1,373,359		–
Net change in contract owners’ equity		121,241		618,583		29,061		–	211,020		888,423		1,553,885		–
Contract owners’ equity beginning of period		13,369,560		12,750,977		–		–	963,559		75,136		–		–
Contract owners’ equity end of period	$	13,490,801		13,369,560		29,061		–	1,174,579		963,559		1,553,885		–
CHANGES IN UNITS:
Beginning units		621,194		672,518		–		–	89,246		7,313		–		–
Units purchased		172,292		133,333		2,559		–	32,808		85,609		141,605		–
Units redeemed		(177,106	)	(184,657	)	(11	)	–	(14,332	)	(3,676	)	(7,983	)	–
Ending units		616,380		621,194		2,548		–	107,722		89,246		133,622		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	CSGPVen					CSIntFoc				CSSmCapGr				DrySmCapIxS
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(5,963	)	(5,968	)	16,193		19,083		(89,573	)	(103,596	)	(11,733	)	(1,174	)
Realized gain (loss) on investments		179,468		59,105		254,980		86,421		1,029,425		799,688		164,240		131,484
Change in unrealized gain (loss) on investments		(46,376	)	73,406		790,968		694,824		(1,440,310	)	682,170		(35,007	)	172,260
Reinvested capital gains		–		–		–		–		–		–		5,886		41,304
Net increase (decrease) in contract owners’ equity resulting from operations		127,129		126,543		1,062,141		800,328		(500,458	)	1,378,262		123,386		343,874
Equity transactions:
Purchase payments received from contract owners (note 6)		63,986		52,592		413,648		482,274		974,358		1,143,502		94,092		161,358
Transfers between funds		54,316		(128,082	)	(255,978	)	(155,782	)	(767,204	)	(962,634	)	(67,224	)	630,836
Surrenders (note 6)		(36,774	)	(41,977	)	(264,698	)	(367,092	)	(793,446	)	(1,237,023	)	(121,940	)	(64,217	)
Death benefits (note 4)		–		(4,548	)	(77,954	)	(18,522	)	(54,252	)	(28,560	)	–		–
Net policy repayments (loans) (note 5)		(27,512	)	(7,418	)	9,452		(5,770	)	58,184		77,356		(9,566	)	(40,932	)
Deductions for surrender charges (note 2d)		(76	)	(1,426	)	(11,918	)	(14,049	)	(21,220	)	(43,380	)	(2,670	)	(3,743	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(51,638	)	(39,452	)	(317,826	)	(305,216	)	(692,044	)	(769,020	)	(69,272	)	(47,766	)
Asset charges (note 3):
MSP contracts		(645	)	(483	)	(3,637	)	(3,639	)	(4,434	)	(4,704	)	(2,841	)	(2,217	)
LSFP contracts		(838	)	(641	)	(5,839	)	(5,035	)	(9,795	)	(9,701	)	(1,433	)	(1,297	)
Adjustments to maintain reserves		26		83		3,746		501		147,315		1,336		39		157
Net equity transactions		845		(171,352	)	(511,004	)	(392,330	)	(1,162,538	)	(1,832,828	)	(180,815	)	632,179
Net change in contract owners’ equity		127,974		(44,809	)	551,137		407,998		(1,662,996	)	(454,566	)	(57,429	)	976,053
Contract owners’ equity beginning of period		830,257		875,066		6,603,576		6,195,578		14,430,221		14,884,787		2,092,687		1,116,634
Contract owners’ equity end of period	$	958,231		830,257		7,154,713		6,603,576		12,767,225		14,430,221		2,035,258		2,092,687
CHANGES IN UNITS:
Beginning units		65,698		81,649		553,182		591,551		801,312		906,285		165,014		106,585
Units purchased		17,988		9,118		78,912		85,208		164,876		134,426		44,866		76,878
Units redeemed		(16,140	)	(25,069	)	(114,378	)	(123,577	)	(208,892	)	(239,399	)	(59,590	)	(18,449	)
Ending units		67,546		65,698		517,716		553,182		757,296		801,312		150,290		165,014

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	DryStkIx					DrySRGro				DryVIFApp				DryVIFDevLd
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	732,685		873,076		(62,999	)	(33,728	)	(40,198	)	56,471		(2,552	)	(1,662	)
Realized gain (loss) on investments		(1,543,716	)	(1,532,885	)	(561,801	)	(806,699	)	208,666		155,012		5,471		15,990
Change in unrealized gain (loss) on investments		3,730,757		8,040,385		868,402		1,328,566		43,167		46,494		16,850		12,674
Reinvested capital gains		–		–		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		2,919,726		7,380,576		243,602		488,139		211,635		257,977		19,769		27,002
Equity transactions:
Purchase payments received from contract owners (note 6)		6,390,148		5,819,012		976,402		1,128,736		365,466		473,540		34,892		35,436
Transfers between funds		(6,220,270	)	(761,242	)	(565,722	)	(666,026	)	(339,064	)	(289,280	)	(22,200	)	297,292
Surrenders (note 6)		(4,670,510	)	(5,274,180	)	(447,314	)	(831,998	)	(364,278	)	(612,235	)	(4,278	)	(63,513	)
Death benefits (note 4)		(132,604	)	(76,370	)	(26,172	)	(37,622	)	–		(3,640	)	–		–
Net policy repayments (loans) (note 5)		160,438		(19,290	)	(58,546	)	15,494		38,078		127,596		(3,002	)	(14,384	)
Deductions for surrender charges (note 2d)		(145,956	)	(169,358	)	(20,686	)	(23,562	)	(13,214	)	(17,243	)	(136	)	(2,314	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,639,900	)	(3,849,024	)	(639,946	)	(714,430	)	(253,240	)	(276,726	)	(23,160	)	(19,066	)
Asset charges (note 3):
MSP contracts		(31,664	)	(33,721	)	(2,569	)	(2,730	)	(1,103	)	(1,480	)	(269	)	(84	)
LSFP contracts		(62,339	)	(64,318	)	(3,311	)	(3,474	)	(6,611	)	(6,503	)	(352	)	(332	)
Adjustments to maintain reserves		143,866		(17,510	)	(197	)	(4,322	)	(733	)	917		39		71
Net equity transactions		(8,208,791	)	(4,446,001	)	(788,061	)	(1,139,934	)	(574,699	)	(605,054	)	(18,466	)	233,106
Net change in contract owners’ equity		(5,289,065	)	2,934,575		(544,459	)	(651,795	)	(363,064	)	(347,077	)	1,303		260,108
Contract owners’ equity beginning of period		81,237,544		78,302,969		9,337,664		9,989,459		6,148,259		6,495,336		436,374		176,266
Contract owners’ equity end of period	$	75,948,479		81,237,544		8,793,205		9,337,664		5,785,195		6,148,259		437,677		436,374
CHANGES IN UNITS:
Beginning units		3,024,638		3,212,360		420,438		474,191		456,698		503,372		30,716		13,709
Units purchased		797,667		503,402		93,584		89,754		90,951		64,225		7,425		24,841
Units redeemed		(873,851	)	(691,124	)	(115,562	)	(143,507	)	(127,401	)	(110,899	)	(8,885	)	(7,834	)
Ending units		2,948,454		3,024,638		398,460		420,438		420,248		456,698		29,256		30,716

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	DryVIFGrInc					FedAmLead				FedCapAp				FedQualBd
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	16,044		13,339		1,137		(182	)	118		(69	)	33,635		58,606
Realized gain (loss) on investments		(32,073	)	(116,587	)	1,320		579		428		109		(5,249	)	(27,697	)
Change in unrealized gain (loss) on investments		73,967		272,360		4,839		10,052		(356	)	1,916		(28,170	)	(13,787	)
Reinvested capital gains		—		—		—		—		—		—		7,014		15,062
Net increase (decrease) in contract owners’ equity resulting from operations		57,938		169,112		7,296		10,449		190		1,956		7,230		32,184
Equity transactions:
Purchase payments received from contract owners (note 6)		162,380		190,266		6,864		18,822		2,390		2,036		84,588		109,548
Transfers between funds		(38,456	)	(177,546	)	49,256		77,360		(1,056	)	16,614		104,356		(263,806	)
Surrenders (note 6)		(153,462	)	(81,752	)	(4,598	)	–		(936	)	–		(124,800	)	(280,016	)
Death benefits (note 4)		(40,578	)	(634	)	–		–		–		–		(14	)	–
Net policy repayments (loans) (note 5)		(9,498	)	(28,366	)	4,550		–		(6	)	–		23,852		5,516
Deductions for surrender charges (note 2d)		(3,774	)	(2,029	)	–		–		(28	)	–		(2,826	)	(1,758	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(118,650	)	(121,480	)	(4,042	)	(1,294	)	(1,308	)	(1,082	)	(67,980	)	(79,436	)
Asset charges (note 3):
MSP contracts		(1,920	)	(2,069	)	–		–		–		–		(1,484	)	(1,037	)
LSFP contracts		(2,378	)	(2,022	)	(34	)	(8	)	–		–		(255	)	(241	)
Adjustments to maintain reserves		23		177		26		26		(9	)	61		28		1,802
Net equity transactions		(206,313	)	(225,455	)	52,022		94,906		(953	)	17,629		15,465		(509,428	)
Net change in contract owners’ equity		(148,375	)	(56,343	)	59,318		105,355		(763	)	19,585		22,695		(477,244	)
Contract owners’ equity beginning of period		2,458,715		2,515,058		119,190		13,835		26,215		6,630		1,146,508		1,623,752
Contract owners’ equity end of period	$	2,310,340		2,458,715		178,508		119,190		25,452		26,215		1,169,203		1,146,508
CHANGES IN UNITS:
Beginning units		185,888		203,263		8,716		1,104		2,046		553		99,904		145,750
Units purchased		40,682		23,926		5,010		7,714		261		1,582		34,895		25,226
Units redeemed		(49,404	)	(41,301	)	(1,236	)	(102	)	(347	)	(89	)	(33,877	)	(71,072	)
Ending units		177,166		185,888		12,490		8,716		1,960		2,046		100,922		99,904

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FidVIPEI					FidVIPGr				FidVIPHI				FidVIPOv
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	688,601		592,619		(170,829	)	(443,590	)	3,098,850		1,864,799		7,651		69,567
Realized gain (loss) on investments		(438,346	)	(134,459	)	(4,008,734	)	(3,912,874	)	73,937		2,220,844		1,211,034		236,087
Change in unrealized gain (loss) on investments		691,808		6,772,765		8,161,191		6,531,064		(2,837,088	)	(1,972,719	)	1,417,693		1,839,902
Reinvested capital gains		2,631,172		273,300		–		–		–		–		95,026		–
Net increase (decrease) in contract owners’ equity resulting from operations		3,573,235		7,504,225		3,981,628		2,174,600		335,699		2,112,924		2,731,404		2,145,556
Equity transactions:
Purchase payments received from contract owners (note 6)		4,276,432		4,682,522		6,634,272		7,682,530		1,125,916		1,274,410		339,404		1,200,290
Transfers between funds		(1,568,012	)	(609,102	)	(5,237,722	)	(3,502,668	)	(4,769,268	)	(850,270	)	(2,267,056	)	242,818
Surrenders (note 6)		(4,242,404	)	(5,559,758	)	(5,321,108	)	(6,015,624	)	(1,430,746	)	(1,847,641	)	(1,241,402	)	(1,183,433	)
Death benefits (note 4)		(386,046	)	(453,804	)	(385,328	)	(203,234	)	(55,498	)	(235,720	)	(102,992	)	(69,402	)
Net policy repayments (loans) (note 5)		(324,136	)	(281,628	)	171,620		(163,886	)	147,382		(269,810	)	(196,920	)	28,242
Deductions for surrender charges (note 2d)		(68,256	)	(138,476	)	(92,286	)	(122,330	)	(18,716	)	(63,387	)	(9,828	)	(19,778	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,460,728	)	(3,619,962	)	(4,618,442	)	(5,031,380	)	(981,708	)	(1,112,912	)	(715,194	)	(785,808	)
Asset charges (note 3):
MSP contracts		(35,185	)	(35,698	)	(21,245	)	(23,346	)	(13,335	)	(15,003	)	(5,342	)	(5,129	)
LSFP contracts		(27,017	)	(26,478	)	(29,556	)	(29,338	)	(9,345	)	(10,950	)	(9,197	)	(7,924	)
Adjustments to maintain reserves		(22,180	)	6,794		(67,826	)	43,880		(4,671	)	31,312		(12,213	)	(4,815	)
Net equity transactions		(5,857,532	)	(6,035,590	)	(8,967,621	)	(7,365,396	)	(6,009,989	)	(3,099,971	)	(4,220,740	)	(604,939	)
Net change in contract owners’ equity		(2,284,297	)	1,468,635		(4,985,993	)	(5,190,796	)	(5,674,290	)	(987,047	)	(1,489,336	)	1,540,617
Contract owners’ equity beginning of period		75,753,426		74,284,791		89,885,403		95,076,199		24,799,760		25,786,807		18,733,377		17,192,760
Contract owners’ equity end of period	$	73,469,129		75,753,426		84,899,410		89,885,403		19,125,470		24,799,760		17,244,041		18,733,377
CHANGES IN UNITS:
Beginning units		1,873,796		2,059,854		2,468,188		2,758,125		1,035,038		1,189,559		867,542		929,231
Units purchased		884,610		252,033		1,237,181		419,056		265,940		161,920		283,227		189,869
Units redeemed		(675,696	)	(438,091	)	(941,053	)	(708,993	)	(435,478	)	(316,441	)	(404,951	)	(251,558	)
Ending units		2,082,710		1,873,796		2,764,316		2,468,188		865,500		1,035,038		745,818		867,542

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FidVIPOvSR				FidVIPAM				FidVIPCon				FidVIPIGBdS
Investment activity:	2005			2004	2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(5,997	)	–	450,415		461,392		(254,940	)	(219,252	)	20,737		10,773
Realized gain (loss) on investments		11,146		–	(349,641	)	(529,148	)	692,489		(72,116	)	(4,025	)	(10,390	)
Change in unrealized gain (loss) on investments		376,763		–	564,829		1,123,796		9,019,770		7,993,551		(13,301	)	18,606
Reinvested capital gains		–		–	7,706		–		11,226		–		20,900		10,740
Net increase (decrease) in contract owners’ equity resulting from operations		381,912		–	673,309		1,056,040		9,468,545		7,702,183		24,311		29,729
Equity transactions:
Purchase payments received from contract owners (note 6)		680,560		–	1,143,732		1,362,064		3,426,214		3,768,052		121,204		120,520
Transfers between funds		1,623,842		–	(512,764	)	(575,488	)	2,390,668		930,944		1,813,088		822,392
Surrenders (note 6)		(119,598	)	–	(1,877,914	)	(1,751,498	)	(3,532,336	)	(3,850,752	)	(61,552	)	(242,179	)
Death benefits (note 4)		(1,624	)	–	(272,552	)	(100,692	)	(203,908	)	(136,828	)	–		–
Net policy repayments (loans) (note 5)		175,084		–	148,348		(60,134	)	(273,738	)	(343,396	)	(2,788	)	(10,414	)
Deductions for surrender charges (note 2d)		(466	)	–	(14,732	)	(25,977	)	(101,032	)	(183,454	)	(1,578	)	(5,992	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(75,868	)	–	(980,678	)	(1,042,868	)	(2,656,078	)	(2,563,618	)	(76,578	)	(33,280	)
Asset charges (note 3):
MSP contracts		(41	)	–	(6,788	)	(8,291	)	(23,286	)	(20,179	)	(1,017	)	(594	)
LSFP contracts		(661	)	–	(4,954	)	(4,465	)	(31,998	)	(28,070	)	(1,105	)	(1,132	)
Adjustments to maintain reserves		118		–	(13,081	)	(5,288	)	7,607		7,627		(34	)	110
Net equity transactions		2,281,346		–	(2,391,383	)	(2,212,637	)	(997,887	)	(2,419,674	)	1,789,640		649,431
Net change in contract owners’ equity		2,663,258		–	(1,718,074	)	(1,156,597	)	8,470,658		5,282,509		1,813,951		679,160
Contract owners’ equity beginning of period		–		–	23,099,307		24,255,904		59,955,159		54,672,650		919,417		240,257
Contract owners’ equity end of period	$	2,663,258		–	21,381,233		23,099,307		68,425,817		59,955,159		2,733,368		919,417
CHANGES IN UNITS:
Beginning units		–		–	829,310		929,268		2,196,532		2,298,709		87,010		23,615
Units purchased		227,292		–	512,422		200,959		595,164		298,867		183,122		89,463
Units redeemed		(13,428	)	–	(425,776	)	(300,917	)	(509,762	)	(401,044	)	(14,408	)	(26,068	)
Ending units		213,864		–	915,956		829,310		2,281,934		2,196,532		255,724		87,010

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FidVIPGrOp					FidVIPMCapS				FidVIPVaIS				FidVIPCon2
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	12,284		(6,185	)	(41,647	)	(13,935	)	(9,405	)	(16,146	)	2,772		–
Realized gain (loss) on investments		(241,983	)	(277,935	)	274,318		71,720		(17,903	)	210,002		49,408		–
Change in unrealized gain (loss) on investments		525,041		555,712		801,405		551,905		(45,834	)	(95,148	)	50,196		–
Reinvested capital gains		–		–		79,678		–		59,032		5,608		85,592		–
Net increase (decrease) in contract owners’ equity resulting from operations		295,342		271,592		1,113,754		609,690		(14,110	)	104,316		187,968		–
Equity transactions:
Purchase payments received from contract owners (note 6)		344,226		404,720		533,880		336,798		76,358		205,304		58,540		–
Transfers between funds		(421,544	)	107,890		2,962,566		3,000,958		(613,290	)	(180,056	)	1,649,170		–
Surrenders (note 6)		(238,812	)	(301,588	)	(620,812	)	(232,890	)	(211,158	)	(101,474	)	(3,970	)	–
Death benefits (note 4)		(5,844	)	(16,426	)	–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(36,264	)	30,642		(33,242	)	(59,662	)	(12,436	)	(44,428	)	(15,300	)	–
Deductions for surrender charges (note 2d)		(6,722	)	(16,966	)	(8,674	)	(5,869	)	(2,170	)	(1,994	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(195,190	)	(210,638	)	(267,044	)	(93,814	)	(68,474	)	(94,152	)	(29,276	)	–
Asset charges (note 3):
MSP contracts		(1,755	)	(1,797	)	(3,034	)	(2,020	)	(868	)	(1,669	)	(379	)	–
LSFP contracts		(3,432	)	(3,255	)	(1,614	)	(878	)	(707	)	(780	)	(41	)	–
Adjustments to maintain reserves		24		185		32		238		(35	)	53		85		–
Net equity transactions		(565,313	)	(7,233	)	2,562,058		2,942,861		(832,780	)	(219,196	)	1,658,829		–
Net change in contract owners’ equity		(269,971	)	264,359		3,675,812		3,552,551		(846,890	)	(114,880	)	1,846,797		–
Contract owners’ equity beginning of period		4,436,477		4,172,118		4,293,243		740,692		2,021,897		2,136,777		–		–
Contract owners’ equity end of period	$	4,166,506		4,436,477		7,969,055		4,293,243		1,175,007		2,021,897		1,846,797		–
CHANGES IN UNITS:
Beginning units		422,878		423,769		247,050		52,810		152,482		182,656		–		–
Units purchased		50,100		66,328		193,614		219,882		29,683		34,952		140,962		–
Units redeemed		(103,634	)	(67,219	)	(50,444	)	(25,642	)	(95,169	)	(65,126	)	(3,730	)	–
Ending units		369,344		422,878		390,220		247,050		86,996		152,482		137,232		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FidFF2010				FidFF2020			FidFF2030			FrVIPRisDiv
Investment activity:	2005			2004	2005		2004	2005		2004	2005		2004
Net investment income (loss)	$	213		–	960		–	168		–	14,646		1,025
Realized gain (loss) on investments		42		–	176		–	15		–	72,059		45,375
Change in unrealized gain (loss) on investments		1,320		–	13,443		–	563		–	(2,803	)	136,846
Reinvested capital gains		–		–	–		–	–		–	19,938		20,468
Net increase (decrease) in contract owners’ equity resulting from operations		1,575		–	14,579		–	746		–	103,840		203,714
Equity transactions:
Purchase payments received from contract owners (note 6)		2,332		–	1,000		–	1,226		–	321,422		300,688
Transfers between funds		72,488		–	252,104		–	41,294		–	923,274		1,348,144
Surrenders (note 6)		–		–	–		–	–		–	(441,810	)	(145,801	)
Death benefits (note 4)		–		–	–		–	–		–	–		–
Net policy repayments (loans) (note 5)		(11,606	)	–	(44	)	–	–		–	(10,662	)	(18,846	)
Deductions for surrender charges (note 2d)		–		–	–		–	–		–	(3,596	)	(2,978	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(938	)	–	(2,492	)	–	(272	)	–	(135,758	)	(78,610	)
Asset charges (note 3):
MSP contracts		(80	)	–	(331	)	–	–		–	(1,993	)	(1,802	)
LSFP contracts		–		–	–		–	–		–	(1,476	)	(775	)
Adjustments to maintain reserves		56		–	49		–	35		–	(88	)	211
Net equity transactions		62,252		–	250,286		–	42,283		–	649,313		1,400,231
Net change in contract owners’ equity		63,827		–	264,865		–	43,029		–	753,153		1,603,945
Contract owners’ equity beginning of period		–		–	–		–	–		–	2,517,386		913,441
Contract owners’ equity end of period	$	63,827		–	264,865		–	43,029		–	3,270,539		2,517,386
CHANGES IN UNITS:
Beginning units		–		–	–		–	–		–	185,710		74,514
Units purchased		7,128		–	24,209		–	3,842		–	85,734		126,703
Units redeemed		(1,204	)	–	(295	)	–	(24	)	–	(37,148	)	(15,507	)
Ending units		5,924		–	23,914		–	3,818		–	234,296		185,710

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FTVIPSmCpVal					FrVIPForSec				FrVIPGISec3			TmDevMktS3
Investment activity:	2005			2004		2005		2004		2005		2004	2005		2004
Net investment income (loss)	$	6,455		(3,551	)	12,363		4,288		3,108		–	923		–
Realized gain (loss) on investments		147,731		21,260		103,694		25,804		(3,777	)	–	8,409		–
Change in unrealized gain (loss) on investments		40,513		219,705		20,664		147,057		132		–	69,238		–
Reinvested capital gains		17,618		–		–		–		–		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		212,317		237,414		136,721		177,149		(537	)	–	78,570		–
Equity transactions:
Purchase payments received from contract owners (note 6)		268,370		106,506		46,438		95,482		16,760		–	16,080		–
Transfers between funds		1,024,200		1,438,660		(246,220	)	1,007,026		47,002		–	563,464		–
Surrenders (note 6)		(223,060	)	(16,060	)	(42,594	)	(51,766	)	–		–	(8,354	)	–
Death benefits (note 4)		–		–		(50	)	(16,632	)	–		–	–		–
Net policy repayments (loans) (note 5)		(40,146	)	(9,666	)	(12,664	)	3,054		–		–	(400	)	–
Deductions for surrender charges (note 2d)		(3,312	)	(267	)	(166	)	(673	)	–		–	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(107,762	)	(37,460	)	(49,820	)	(27,632	)	(1,264	)	–	(7,172	)	–
Asset charges (note 3):
MSP contracts		(734	)	(440	)	(1,866	)	(429	)	(39	)	–	(611	)	–
LSFP contracts		(689	)	(233	)	(827	)	(827	)	(10	)	–	(4	)	–
Adjustments to maintain reserves		(76	)	199		6		96		33		–	71		–
Net equity transactions		916,791		1,481,239		(307,763	)	1,007,699		62,482		–	563,074		–
Net change in contract owners’ equity		1,129,108		1,718,653		(171,042	)	1,184,848		61,945		–	641,644		–
Contract owners’ equity beginning of period		1,887,740		169,087		1,560,326		375,478		–		–	–		–
Contract owners’ equity end of period	$	3,016,848		1,887,740		1,389,284		1,560,326		61,945		–	641,644		–
CHANGES IN UNITS:
Beginning units		115,218		12,709		99,854		28,423		–		–	–		–
Units purchased		75,591		106,989		19,547		77,809		6,425		–	52,129		–
Units redeemed		(20,777	)	(4,480	)	(38,347	)	(6,378	)	(133	)	–	(1,861	)	–
Ending units		170,032		115,218		81,054		99,854		6,292		–	50,268		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	FrVIPForSec3				GVITDryIntVal				GVITDMidCapI				GVITEmMrkts
Investment activity:	2005			2004	2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	489		–	9,434		10,166		24,676		(11,866	)	(1,453	)	3,973
Realized gain (loss) on investments		2,773		–	123,406		23,527		636,460		478,712		93,446		238,509
Change in unrealized gain (loss) on investments		37,464		–	(63,445	)	150,304		(355,770	)	286,574		292,891		(187,562	)
Reinvested capital gains		–		–	53,106		–		415,044		166,818		193,400		154,636
Net increase (decrease) in contract owners’ equity resulting from operations		40,726		–	122,501		183,997		720,410		920,238		578,284		209,556
Equity transactions:
Purchase payments received from contract owners (note 6)		82,782		–	40,142		83,122		439,202		379,206		43,378		106,916
Transfers between funds		598,340		–	(382,668	)	1,119,622		151,132		(208,152	)	14,646		334,962
Surrenders (note 6)		(17,022	)	–	(174,560	)	(29,572	)	(950,394	)	(370,743	)	(99,968	)	(249,676	)
Death benefits (note 4)		–		–	–		–		(876	)	(24,324	)	–		–
Net policy repayments (loans) (note 5)		(918	)	–	(20,866	)	(23,014	)	82,918		(87,850	)	(39,768	)	3,154
Deductions for surrender charges (note 2d)		(28	)	–	(3,928	)	(489	)	(8,884	)	(11,516	)	(2,288	)	(4,721	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(7,438	)	–	(51,900	)	(27,700	)	(278,424	)	(268,398	)	(90,432	)	(81,474	)
Asset charges (note 3):
MSP contracts		(198	)	–	(679	)	(372	)	(4,804	)	(5,049	)	(938	)	(1,189	)
LSFP contracts		(261	)	–	(237	)	(431	)	(3,397	)	(3,951	)	(986	)	(1,029	)
Adjustments to maintain reserves		90		–	(3,019	)	2,557		(2	)	356		(80	)	281
Net equity transactions		655,347		–	(597,715	)	1,123,723		(573,529	)	(600,421	)	(176,436	)	107,224
Net change in contract owners’ equity		696,073		–	(475,214	)	1,307,720		146,881		319,817		401,848		316,780
Contract owners’ equity beginning of period		–		–	1,518,140		210,420		7,071,536		6,751,719		1,928,987		1,612,207
Contract owners’ equity end of period	$	696,073		–	1,042,926		1,518,140		7,218,417		7,071,536		2,330,835		1,928,987
CHANGES IN UNITS:
Beginning units		–		–	91,502		15,258		533,950		585,904		142,194		142,811
Units purchased		64,552		–	18,401		81,949		171,696		84,218		37,963		55,251
Units redeemed		(2,718	)	–	(53,517	)	(5,705	)	(214,458	)	(136,172	)	(49,567	)	(55,868	)
Ending units		61,834		–	56,386		91,502		491,188		533,950		130,590		142,194

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITFHiInc					GVITGlFin1				GVITGlHlth				GVITGlTech
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	31,914		30,998		7,534		3,053		(7,197	)	(7,884	)	(5,066	)	(9,013	)
Realized gain (loss) on investments		(17,651	)	3,104		8,751		20,841		23,078		(39,556	)	(81,565	)	45,664
Change in unrealized gain (loss) on investments		(11,541	)	1,341		(21,076	)	22,641		(32,124	)	55,376		42,968		(46,031	)
Reinvested capital gains		–		–		67,106		31,262		88,424		4,166		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		2,722		35,443		62,315		77,797		72,181		12,102		(43,663	)	(9,380	)
Equity transactions:
Purchase payments received from contract owners (note 6)		10,724		93,324		39,184		32,914		54,890		59,664		47,736		186,008
Transfers between funds		(287,434	)	514,170		150,044		99,268		(202,846	)	469,650		(267,874	)	(338,000	)
Surrenders (note 6)		(100,240	)	(63,910	)	(36,400	)	(6,767	)	(124,996	)	(16,305	)	(24,454	)	(152,345	)
Death benefits (note 4)		–		–		–		–		–		(19,378	)	–		(32	)
Net policy repayments (loans) (note 5)		(3,496	)	(10,348	)	7,182		1,396		(52,312	)	(34,896	)	(20,444	)	42,390
Deductions for surrender charges (note 2d)		(1,270	)	(641	)	(466	)	(124	)	(2,604	)	(285	)	(532	)	(2,819	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(25,634	)	(24,318	)	(24,736	)	(18,622	)	(36,958	)	(43,152	)	(42,052	)	(62,196	)
Asset charges (note 3):
MSP contracts		(799	)	(652	)	(99	)	(202	)	(624	)	(818	)	(115	)	(430	)
LSFP contracts		(172	)	(119	)	(144	)	(147	)	(475	)	(512	)	(376	)	(242	)
Adjustments to maintain reserves		(6	)	82		(10	)	123		5		126		(13	)	71
Net equity transactions		(408,327	)	507,588		134,555		107,839		(365,920	)	414,094		(308,124	)	(327,595	)
Net change in contract owners’ equity		(405,605	)	543,031		196,870		185,636		(293,739	)	426,196		(351,787	)	(336,975	)
Contract owners’ equity beginning of period		751,931		208,900		541,752		356,116		1,055,508		629,312		937,006		1,273,981
Contract owners’ equity end of period	$	346,326		751,931		738,622		541,752		761,769		1,055,508		585,219		937,006
CHANGES IN UNITS:
Beginning units		62,024		18,857		37,388		29,492		87,634		56,010		302,962		426,738
Units purchased		3,549		50,816		24,968		10,634		30,026		42,107		34,385		93,708
Units redeemed		(37,563	)	(7,649	)	(16,276	)	(2,738	)	(58,982	)	(10,483	)	(145,821	)	(217,484	)
Ending units		28,010		62,024		46,080		37,388		58,678		87,634		191,526		302,962

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITGlUtl1					GVITGvtBd				GVITGrowth				GVITIntGro
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	19,748		4,489		363,429		682,063		(104,011	)	(66,326	)	706		886
Realized gain (loss) on investments		89,704		37,735		(176,624	)	(209,367	)	(2,735,024	)	(3,116,950	)	38,855		5,100
Change in unrealized gain (loss) on investments		(229,966	)	54,265		99,562		(428,372	)	3,772,943		4,364,984		69,474		11,025
Reinvested capital gains		195,266		46,716		22,538		298,626		–		–		1,588		–
Net increase (decrease) in contract owners’ equity resulting from operations		74,752		143,205		308,905		342,950		933,908		1,181,708		110,623		17,011
Equity transactions:
Purchase payments received from contract owners (note 6)		109,630		36,290		703,036		1,006,916		2,125,034		2,420,292		15,074		5,288
Transfers between funds		307,898		807,656		(365,628	)	(2,260,102	)	(552,550	)	(849,524	)	453,534		163,264
Surrenders (note 6)		(142,162	)	(12,101	)	(1,291,822	)	(1,685,271	)	(1,200,768	)	(1,371,347	)	(81,924	)	(145	)
Death benefits (note 4)		–		–		(100,232	)	(330,542	)	(76,034	)	(61,054	)	–		–
Net policy repayments (loans) (note 5)		(6,664	)	(458	)	(114,420	)	223,756		19,472		149,202		(23,764	)	(3,314	)
Deductions for surrender charges (note 2d)		(3,028	)	(145	)	(15,586	)	(31,821	)	(45,926	)	(45,401	)	(1,424	)	(2	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(63,040	)	(12,034	)	(630,986	)	(717,200	)	(1,386,344	)	(1,422,256	)	(14,910	)	(7,554	)
Asset charges (note 3):
MSP contracts		(637	)	(196	)	(12,578	)	(14,028	)	(4,544	)	(4,709	)	(229	)	(89	)
LSFP contracts		(951	)	(233	)	(4,419	)	(4,861	)	(9,044	)	(8,832	)	(28	)	(22	)
Adjustments to maintain reserves		50		119		(6,920	)	9,852		1,480		(393	)	88		37
Net equity transactions		201,096		818,898		(1,839,555	)	(3,803,301	)	(1,129,224	)	(1,194,022	)	346,417		157,463
Net change in contract owners’ equity		275,848		962,103		(1,530,650	)	(3,460,351	)	(195,316	)	(12,314	)	457,040		174,474
Contract owners’ equity beginning of period		1,128,032		165,929		12,963,907		16,424,258		17,146,941		17,159,255		255,723		81,249
Contract owners’ equity end of period	$	1,403,880		1,128,032		11,433,257		12,963,907		16,951,625		17,146,941		712,763		255,723
CHANGES IN UNITS:
Beginning units		82,240		15,619		559,802		735,699		1,056,188		1,137,890		34,358		12,282
Units purchased		51,024		69,288		211,849		72,739		244,346		236,511		64,382		25,002
Units redeemed		(36,656	)	(2,667	)	(239,719	)	(248,636	)	(288,234	)	(318,213	)	(25,174	)	(2,926	)
Ending units		96,608		82,240		531,932		559,802		1,012,300		1,056,188		73,566		34,358

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITSMdCpGr					GVITMyMkt				GVITNWFund				GVITLead
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(8,160	)	(9,995	)	573,998		14,826		148,385		385,234		2,374		(287	)
Realized gain (loss) on investments		58,185		177,103		–		–		(2,531,902	)	(3,508,491	)	11,604		18,968
Change in unrealized gain (loss) on investments		61,864		(5,663	)	–		–		7,142,405		9,344,235		(39,955	)	(7,534	)
Reinvested capital gains		–		–		–		–		–		–		56,438		2,094
Net increase (decrease) in contract owners’ equity resulting from operations		111,889		161,445		573,998		14,826		4,758,888		6,220,978		30,461		13,241
Equity transactions:
Purchase payments received from contract owners (note 6)		54,032		68,408		3,098,610		3,980,268		6,837,524		7,503,374		8,860		32,596
Transfers between funds		19,446		(1,040,164	)	7,508,134		(834,436	)	(1,605,702	)	(2,144,250	)	292,428		14,952
Surrenders (note 6)		(93,482	)	(81,738	)	(11,194,006	)	(9,992,566	)	(4,096,384	)	(4,356,117	)	(74,082	)	–
Death benefits (note 4)		–		–		(356,008	)	(525,790	)	(356,444	)	(462,056	)	–		–
Net policy repayments (loans) (note 5)		(10,446	)	(33,732	)	2,290,152		4,435,022		43,084		(89,138	)	(4,668	)	(5,088	)
Deductions for surrender charges (note 2d)		(1,892	)	(2,255	)	(105,694	)	(223,037	)	(98,438	)	(94,140	)	(172	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(69,030	)	(76,480	)	(1,879,132	)	(1,886,032	)	(5,265,766	)	(5,370,136	)	(10,544	)	(5,630	)
Asset charges (note 3):
MSP contracts		(430	)	(640	)	(24,149	)	(30,803	)	(24,634	)	(26,151	)	(336	)	(45	)
LSFP contracts		(651	)	(700	)	(18,073	)	(20,710	)	(20,184	)	(19,154	)	(12	)	(4	)
Adjustments to maintain reserves		1		(721,648	)	15,000		(22,191	)	(40,828	)	38,325		24		80
Net equity transactions		(102,452	)	(1,888,949	)	(665,166	)	(5,120,275	)	(4,627,772	)	(5,019,443	)	211,498		36,861
Net change in contract owners’ equity		9,437		(1,727,504	)	(91,168	)	(5,105,449	)	131,116		1,201,535		241,959		50,102
Contract owners’ equity beginning of period		1,268,797		2,996,301		26,674,454		31,779,903		74,845,888		73,644,353		169,291		119,189
Contract owners’ equity end of period	$	1,278,234		1,268,797		26,583,286		26,674,454		74,977,004		74,845,888		411,250		169,291
CHANGES IN UNITS:
Beginning units		226,164		613,017		1,778,058		2,142,989		2,310,270		2,521,462		13,742		11,414
Units purchased		74,321		45,410		1,071,035		483,724		576,159		429,659		27,437		7,054
Units redeemed		(90,247	)	(432,263	)	(1,028,001	)	(848,655	)	(636,659	)	(640,851	)	(10,821	)	(4,726	)
Ending units		210,238		226,164		1,821,092		1,778,058		2,249,770		2,310,270		30,358		13,742

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITSmCapGr					GVITSmCapVal				GVITSmComp				GVITTGroFoc
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(9,083	)	(10,577	)	(84,819	)	(103,939	)	(187,960	)	(185,854	)	–		(1,480	)
Realized gain (loss) on investments		132,806		106,456		1,337,766		2,227,969		727,928		741,643		–		97,783
Change in unrealized gain (loss) on investments		(49,894	)	82,462		(2,634,618	)	(1,098,406	)	(995,207	)	733,177		–		(76,678	)
Reinvested capital gains		–		–		1,564,872		1,045,306		3,550,094		3,163,878		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		73,829		178,341		183,201		2,070,930		3,094,855		4,452,844		–		19,625
Equity transactions:
Purchase payments received from contract owners (note 6)		64,152		97,852		642,074		983,040		1,457,404		1,501,060		148		30,074
Transfers between funds		(534,830	)	158,032		(647,828	)	(974,418	)	270,824		(1,666,148	)	(18	)	(662,670	)
Surrenders (note 6)		(96,302	)	(96,487	)	(838,592	)	(1,561,609	)	(1,681,274	)	(1,926,595	)	–		(12,623	)
Death benefits (note 4)		(30	)	(2,000	)	(17,284	)	(8,604	)	(79,856	)	(67,214	)	–		–
Net policy repayments (loans) (note 5)		(57,338	)	(1,510	)	(131,392	)	92,882		(51,224	)	(100,620	)	(124	)	(11,088	)
Deductions for surrender charges (note 2d)		(1,110	)	(3,446	)	(10,918	)	(29,758	)	(38,284	)	(48,364	)	–		(164	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(76,020	)	(79,462	)	(512,442	)	(576,466	)	(1,257,290	)	(1,257,388	)	(8	)	(11,168	)
Asset charges (note 3):
MSP contracts		(985	)	(551	)	(8,307	)	(9,432	)	(15,783	)	(14,551	)	–		(83	)
LSFP contracts		(1,086	)	(1,199	)	(11,286	)	(11,986	)	(14,861	)	(13,521	)	–		(188	)
Adjustments to maintain reserves		(6	)	160		2,355		755		272,757		(1,241	)	2		2
Net equity transactions		(703,555	)	71,389		(1,533,620	)	(2,095,596	)	(1,137,587	)	(3,594,582	)	–		(667,908	)
Net change in contract owners’ equity		(629,726	)	249,730		(1,350,419	)	(24,666	)	1,957,268		858,262		–		(648,283	)
Contract owners’ equity beginning of period		1,890,749		1,641,019		14,983,774		15,008,440		28,221,725		27,363,463		–		648,283
Contract owners’ equity end of period	$	1,261,023		1,890,749		13,633,355		14,983,774		30,178,993		28,221,725		–		–
CHANGES IN UNITS:
Beginning units		265,602		260,132		746,406		872,565		925,912		1,062,343		–		198,969
Units purchased		49,153		49,869		224,334		144,889		190,821		124,727		853		8,546
Units redeemed		(150,055	)	(44,399	)	(290,730	)	(271,048	)	(207,721	)	(261,158	)	(853	)	(207,515	)
Ending units		164,700		265,602		680,010		746,406		909,012		925,912		–		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITUSGro					GVITVKMultiSec				GVITCVal				GVITDryIntVal3
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(6,036	)	(6,707	)	35,376		47,933		7,161		2,734		3,888		–
Realized gain (loss) on investments		24,938		(36,682	)	7,465		11,062		33,920		8,948		614		–
Change in unrealized gain (loss) on investments		(91,765	)	78,876		(34,567	)	(2,839	)	(30,719	)	47,320		70,712		–
Reinvested capital gains		161,958		43,050		5,570		–		20,414		–		11,850		–
Net increase (decrease) in contract owners’ equity resulting from operations		89,095		78,537		13,844		56,156		30,776		59,002		87,064		–
Equity transactions:
Purchase payments received from contract owners (note 6)		20,500		93,866		54,556		66,512		68,698		31,332		88,134		–
Transfers between funds		151,248		(223,028	)	(55,206	)	55,642		234,646		382,380		845,398		–
Surrenders (note 6)		(124,464	)	(46,028	)	(164,012	)	(177,833	)	(57,654	)	(13,645	)	(1,262	)	–
Death benefits (note 4)		–		(30,522	)	–		–		–		–		–		–
Net policy repayments (loans) (note 5)		25,118		7,548		20,336		(4,728	)	864		1,954		(11,818	)	–
Deductions for surrender charges (note 2d)		(1,082	)	(531	)	(3,366	)	(3,103	)	(270	)	(116	)	(8	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(31,880	)	(35,240	)	(47,972	)	(48,846	)	(36,178	)	(17,250	)	(11,126	)	–
Asset charges (note 3):
MSP contracts		(173	)	(149	)	(1,034	)	(895	)	(17	)	(14	)	(152	)	–
LSFP contracts		(231	)	(267	)	(634	)	(511	)	(330	)	(113	)	(86	)	–
Adjustments to maintain reserves		(236	)	(10,401	)	21		147		44		97		114		–
Net equity transactions		38,800		(244,752	)	(197,311	)	(113,615	)	209,803		384,625		909,194		–
Net change in contract owners’ equity		127,895		(166,215	)	(183,467	)	(57,459	)	240,579		443,627		996,258		–
Contract owners’ equity beginning of period		878,882		1,045,097		1,211,110		1,268,569		573,261		129,634		–		–
Contract owners’ equity end of period	$	1,006,777		878,882		1,027,643		1,211,110		813,840		573,261		996,258		–
CHANGES IN UNITS:
Beginning units		63,712		84,662		89,396		99,033		38,956		10,283		–		–
Units purchased		26,621		16,545		14,376		18,043		21,993		30,754		91,263		–
Units redeemed		(24,719	)	(37,495	)	(29,322	)	(27,680	)	(7,631	)	(2,081	)	(3,931	)	–
Ending units		65,614		63,712		74,450		89,396		53,318		38,956		87,332		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITEmMrkts3				GVITFHiInc3			GVITGlHlth3			GVITGlTech3
Investment activity:	2005			2004	2005		2004	2005		2004	2005		2004
Net investment income (loss)	$	(692	)	–	7,547		–	(882	)	–	(558	)	–
Realized gain (loss) on investments		9,394		–	494		–	858		–	1,637		–
Change in unrealized gain (loss) on investments		34,834		–	(4,029	)	–	(31,731	)	–	16,348		–
Reinvested capital gains		104,312		–	–		–	41,196		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		147,848		–	4,012		–	9,441		–	17,427		–
Equity transactions:
Purchase payments received from contract owners (note 6)		74,318		–	93,216		–	32,238		–	44,160		–
Transfers between funds		1,253,186		–	72,750		–	396,302		–	318,266		–
Surrenders (note 6)		(28,716	)	–	(734	)	–	(12,484	)	–	(182	)	–
Death benefits (note 4)		–		–	–		–	–		–	–		–
Net policy repayments (loans) (note 5)		17,840		–	1,294		–	13,346		–	14,038		–
Deductions for surrender charges (note 2d)		(238	)	–	(2	)	–	(24	)	–	(10	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(14,816	)	–	(6,442	)	–	(5,622	)	–	(4,928	)	–
Asset charges (note 3):
MSP contracts		(189	)	–	(53	)	–	(17	)	–	–		–
LSFP contracts		(330	)	–	(23	)	–	–		–	(38	)	–
Adjustments to maintain reserves		95		–	72		–	48		–	160		–
Net equity transactions		1,301,150		–	160,078		–	423,787		–	371,466		–
Net change in contract owners’ equity		1,448,998		–	164,090		–	433,228		–	388,893		–
Contract owners’ equity beginning of period		–		–	–		–	–		–	–		–
Contract owners’ equity end of period	$	1,448,998		–	164,090		–	433,228		–	388,893		–
CHANGES IN UNITS:
Beginning units		–		–	–		–	–		–	–		–
Units purchased		111,672		–	19,348		–	41,388		–	32,305		–
Units redeemed		(2,626	)	–	(3,718	)	–	(886	)	–	(615	)	–
Ending units		109,046		–	15,630		–	40,502		–	31,690		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITIDAgg					GVITIDCon				GVITIDMod				GVITIDModAgg
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	21,630		11,082		12,518		9,015		89,651		54,319		66,893		36,384
Realized gain (loss) on investments		91,653		33,335		5,406		12,643		114,999		67,380		178,974		63,452
Change in unrealized gain (loss) on investments		(4,619	)	71,983		(15,757	)	(2,310	)	(43,991	)	189,320		(41,664	)	223,424
Reinvested capital gains		35,342		27,300		13,526		5,140		93,246		19,510		102,524		48,204
Net increase (decrease) in contract owners’ equity resulting from operations		144,006		143,700		15,693		24,488		253,905		330,529		306,727		371,464
Equity transactions:
Purchase payments received from contract owners (note 6)		157,642		116,778		48,316		24,908		418,850		355,834		392,234		411,256
Transfers between funds		636,636		816,808		(36,184	)	243,122		1,074,126		2,034,482		1,142,442		1,517,198
Surrenders (note 6)		(399,694	)	(198,704	)	(19,258	)	(39,863	)	(351,472	)	(171,362	)	(206,032	)	(68,638	)
Death benefits (note 4)		–		–		–		–		(1,148	)	–		(80,942	)	–
Net policy repayments (loans) (note 5)		145,236		(12,542	)	7,482		(418	)	64,184		11,084		(78,268	)	21,058
Deductions for surrender charges (note 2d)		(2,106	)	(732	)	(408	)	(20	)	(9,268	)	(621	)	(3,466	)	(924	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(69,670	)	(50,690	)	(28,918	)	(23,128	)	(284,726	)	(202,360	)	(296,694	)	(217,050	)
Asset charges (note 3):
MSP contracts		(14	)	(9	)	(265	)	(447	)	(5,493	)	(4,064	)	(1,615	)	(933	)
LSFP contracts		–		–		(109	)	(39	)	(724	)	(617	)	(900	)	(642	)
Adjustments to maintain reserves		21		87		25		61		20		183		(102	)	179
Net equity transactions		468,051		670,996		(29,319	)	204,176		904,349		2,022,559		866,657		1,661,504
Net change in contract owners’ equity		612,057		814,696		(13,626	)	228,664		1,158,254		2,353,088		1,173,384		2,032,968
Contract owners’ equity beginning of period		1,311,551		496,855		609,937		381,273		4,823,102		2,470,014		4,107,584		2,074,616
Contract owners’ equity end of period	$	1,923,608		1,311,551		596,311		609,937		5,981,356		4,823,102		5,280,968		4,107,584
CHANGES IN UNITS:
Beginning units		106,736		45,926		54,920		35,654		409,194		228,410		340,366		191,327
Units purchased		82,019		84,874		17,854		26,633		170,263		217,965		143,297		178,077
Units redeemed		(42,677	)	(24,064	)	(20,396	)	(7,367	)	(95,317	)	(37,181	)	(72,291	)	(29,038	)
Ending units		146,078		106,736		52,378		54,920		484,140		409,194		411,372		340,366

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	GVITIDModCon					JanBal				JanCapAp				JanGlTech
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	37,727		22,719		3,290		1,422		(16,462	)	(16,818	)	(7,187	)	(8,182	)
Realized gain (loss) on investments		44,205		20,445		869		637		203,945		181,446		96,191		73,598
Change in unrealized gain (loss) on investments		(45,321	)	55,620		11,177		4,089		86,853		200,822		20,130		(70,981	)
Reinvested capital gains		40,334		7,790		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		76,945		106,574		15,336		6,148		274,336		365,450		109,134		(5,565	)
Equity transactions:
Purchase payments received from contract owners (note 6)		208,524		76,060		6,342		10,398		183,122		219,742		101,390		114,866
Transfers between funds		565,274		1,019,982		115,096		55,766		72,786		(201,086	)	(69,038	)	(57,688	)
Surrenders (note 6)		(28,196	)	(9,847	)	(2,538	)	(4,206	)	(199,394	)	(228,302	)	(25,024	)	(124,635	)
Death benefits (note 4)		(211,024	)	–		–		–		(4,622	)	(1,046	)	(3,500	)	(3,682	)
Net policy repayments (loans) (note 5)		1,878		(16,580	)	(360	)	–		(54,628	)	7,202		(15,226	)	(43,396	)
Deductions for surrender charges (note 2d)		(736	)	(108	)	–		(55	)	(2,784	)	(12,387	)	(342	)	(2,916	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(81,718	)	(59,032	)	(5,420	)	(1,798	)	(119,602	)	(129,148	)	(53,312	)	(64,060	)
Asset charges (note 3):
MSP contracts		(1,044	)	(2,435	)	(401	)	(40	)	(1,888	)	(1,595	)	(616	)	(700	)
LSFP contracts		(17	)	(90	)	–		–		(1,478	)	(1,379	)	(889	)	(1,047	)
Adjustments to maintain reserves		20		120		(2	)	42		(42	)	141		18		58
Net equity transactions		452,961		1,008,070		112,717		60,107		(128,530	)	(347,858	)	(66,539	)	(183,200	)
Net change in contract owners’ equity		529,906		1,114,644		128,053		66,255		145,806		17,592		42,595		(188,765	)
Contract owners’ equity beginning of period		1,818,334		703,690		94,211		27,956		2,518,000		2,500,408		1,140,979		1,329,744
Contract owners’ equity end of period	$	2,348,240		1,818,334		222,264		94,211		2,663,806		2,518,000		1,183,574		1,140,979
CHANGES IN UNITS:
Beginning units		158,844		64,892		7,980		2,548		351,590		409,213		318,846		371,145
Units purchased		71,917		108,440		10,287		5,983		76,865		54,006		77,013		50,531
Units redeemed		(32,349	)	(14,488	)	(731	)	(551	)	(96,963	)	(111,629	)	(99,057	)	(102,830	)
Ending units		198,412		158,844		17,536		7,980		331,492		351,590		296,802		318,846

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	JanIntGro					JanRMgLgCap				MFSVITInvGrwI				MFSVITValIn
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	9,165		1,396		1,573		555		(889	)	(1,241	)	21		(239	)
Realized gain (loss) on investments		268,467		205,854		4,248		341		7,919		986		9,662		3,050
Change in unrealized gain (loss) on investments		291,505		46,089		(20,802	)	894		9,290		16,004		4,912		13,100
Reinvested capital gains		–		–		41,532		5,250		–		–		5,236		842
Net increase (decrease) in contract owners’ equity resulting from operations		569,137		253,339		26,551		7,040		16,320		15,749		19,831		16,753
Equity transactions:
Purchase payments received from contract owners (note 6)		128,112		140,402		19,358		5,478		27,122		15,306		24,214		9,032
Transfers between funds		738,664		(80,274	)	145,336		73,042		54,014		189,424		145,716		134,988
Surrenders (note 6)		(100,680	)	(133,375	)	(14,380	)	(599	)	(23,910	)	(4,306	)	(7,942	)	(19,256	)
Death benefits (note 4)		(3,574	)	(1,112	)	–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(122,300	)	(28,212	)	(930	)	(1,902	)	(2,476	)	(928	)	(3,332	)	1,942
Deductions for surrender charges (note 2d)		(1,488	)	(3,119	)	(242	)	(8	)	(142	)	(127	)	(462	)	(333	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(91,098	)	(85,374	)	(12,036	)	(2,700	)	(17,532	)	(12,200	)	(10,682	)	(3,932	)
Asset charges (note 3):
MSP contracts		(744	)	(810	)	(90	)	–		–		–		(56	)	(29	)
LSFP contracts		(1,797	)	(1,230	)	–		–		(42	)	(95	)	(205	)	(110	)
Adjustments to maintain reserves		32		99		38		59		(2	)	86		53		56
Net equity transactions		545,127		(193,005	)	137,054		73,370		37,032		187,160		147,304		122,358
Net change in contract owners’ equity		1,114,264		60,334		163,605		80,410		53,352		202,909		167,135		139,111
Contract owners’ equity beginning of period		1,782,207		1,721,873		88,352		7,942		258,492		55,583		182,812		43,701
Contract owners’ equity end of period	$	2,896,471		1,782,207		251,957		88,352		311,844		258,492		349,947		182,812
CHANGES IN UNITS:
Beginning units		255,024		291,169		6,186		649		20,652		4,816		12,970		3,551
Units purchased		141,436		41,327		12,211		5,915		9,922		17,442		12,042		11,128
Units redeemed		(84,014	)	(77,472	)	(2,395	)	(378	)	(6,590	)	(1,606	)	(1,604	)	(1,709	)
Ending units		312,446		255,024		16,002		6,186		23,984		20,652		23,408		12,970

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	NBAMTInt				NBAMTReg			NBAMTBal				NBAMTGro
Investment activity:	2005			2004	2005		2004	2005		2004		2005		2004
Net investment income (loss)	$	(114	)	–	(171	)	–	109		350		(114,795	)	(122,271	)
Realized gain (loss) on investments		(56	)	–	109		–	1,738		904		829,726		(65,787	)
Change in unrealized gain (loss) on investments		40,524		–	3,213		–	637		4,443		1,131,493		2,575,966
Reinvested capital gains		3,464		–	–		–	–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		43,818		–	3,151		–	2,484		5,697		1,846,424		2,387,908
Equity transactions:
Purchase payments received from contract owners (note 6)		2,266		–	4,370		–	2,420		2,606		1,271,972		1,422,100
Transfers between funds		670,592		–	80,522		–	9,052		4,666		(1,072,358	)	(437,744	)
Surrenders (note 6)		(938	)	–	(46	)	–	(15,950	)	(29,767	)	(1,526,768	)	(1,321,082	)
Death benefits (note 4)		–		–	–		–	–		–		(121,564	)	(84,216	)
Net policy repayments (loans) (note 5)		–		–	(62	)	–	76		278		55,140		66,888
Deductions for surrender charges (note 2d)		–		–	–		–	(350	)	(460	)	(27,324	)	(30,080	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,652	)	–	(696	)	–	(2,260	)	(3,114	)	(969,830	)	(972,086	)
Asset charges (note 3):
MSP contracts		(64	)	–	–		–	–		–		(2,851	)	(2,886	)
LSFP contracts		(19	)	–	(17	)	–	–		–		(6,410	)	(5,895	)
Adjustments to maintain reserves		33		–	29		–	45		19		(20,500	)	20,840
Net equity transactions		670,218		–	84,100		–	(6,967	)	(25,772	)	(2,420,493	)	(1,344,161	)
Net change in contract owners’ equity		714,036		–	87,251		–	(4,483	)	(20,075	)	(574,069	)	1,043,747
Contract owners’ equity beginning of period		–		–	–		–	48,092		68,167		17,245,059		16,201,312
Contract owners’ equity end of period	$	714,036		–	87,251		–	43,609		48,092		16,670,990		17,245,059
CHANGES IN UNITS:
Beginning units		–		–	–		–	2,306		3,415		730,188		821,615
Units purchased		61,230		–	7,574		–	848		383		361,914		134,685
Units redeemed		(154	)	–	(72	)	–	(848	)	(1,492	)	(337,996	)	(226,112	)
Ending units		61,076		–	7,502		–	2,306		2,306		754,106		730,188

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	NBAMTGuard					NBAMTLMat				NBAMTPart				NBAMTSocRes
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(9,613	)	(10,008	)	89,799		173,093		95,725		(134,882	)	(1,548	)	(810	)
Realized gain (loss) on investments		241,921		141,283		(78,403	)	2,068		935,379		211,699		22,056		1,132
Change in unrealized gain (loss) on investments		(74,766	)	151,481		21,009		(172,376	)	2,841,210		3,414,183		(11,609	)	18,249
Reinvested capital gains		–		–		–		–		5,916		–		344		–
Net increase (decrease) in contract owners’ equity resulting from operations		157,542		282,756		32,405		2,785		3,878,230		3,491,000		9,243		18,571
Equity transactions:
Purchase payments received from contract owners (note 6)		107,446		148,296		225,792		297,222		1,593,968		1,811,132		13,606		108,636
Transfers between funds		(338,946	)	53,930		(836,846	)	(36,250	)	2,194,314		(318,362	)	8,030		100,258
Surrenders (note 6)		(46,544	)	(92,306	)	(798,462	)	(719,031	)	(1,285,982	)	(1,489,288	)	(93,274	)	–
Death benefits (note 4)		(850	)	–		(40	)	(279,808	)	(90,206	)	(163,254	)	–		–
Net policy repayments (loans) (note 5)		(55,134	)	(27,708	)	60,978		212,060		(134,670	)	(174,578	)	(10,538	)	(12	)
Deductions for surrender charges (note 2d)		(1,098	)	(2,357	)	(27,730	)	(8,138	)	(28,382	)	(71,638	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(90,028	)	(88,002	)	(173,380	)	(210,888	)	(1,203,698	)	(1,120,926	)	(7,764	)	(3,546	)
Asset charges (note 3):
MSP contracts		(1,502	)	(1,260	)	(5,400	)	(4,235	)	(14,116	)	(12,080	)	(64	)	(34	)
LSFP contracts		(1,668	)	(1,576	)	(1,717	)	(1,935	)	(22,397	)	(18,835	)	(18	)	–
Adjustments to maintain reserves		2		117		(406	)	4,711		11,046		150,638		22		55
Net equity transactions		(428,322	)	(10,866	)	(1,557,211	)	(746,292	)	1,019,877		(1,407,191	)	(90,000	)	205,357
Net change in contract owners’ equity		(270,780	)	271,890		(1,524,806	)	(743,507	)	4,898,107		2,083,809		(80,757	)	223,928
Contract owners’ equity beginning of period		2,231,057		1,959,167		5,513,675		6,257,182		22,444,856		20,361,047		264,464		40,536
Contract owners’ equity end of period	$	1,960,277		2,231,057		3,988,869		5,513,675		27,342,963		22,444,856		183,707		264,464
CHANGES IN UNITS:
Beginning units		193,216		195,762		304,988		352,066		842,520		903,543		19,112		3,293
Units purchased		27,210		39,197		86,624		49,406		253,312		148,097		6,113		16,107
Units redeemed		(62,788	)	(41,743	)	(156,354	)	(96,484	)	(177,248	)	(209,120	)	(12,761	)	(288	)
Ending units		157,638		193,216		235,258		304,988		918,584		842,520		12,464		19,112

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	NBAMTFasc					NBAMTMCGrS				OppAggGro				OppCapAp
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	(632	)	(241	)	(1,542	)	(1,734	)	(14,677	)	(15,105	)	29,698		(58,392	)
Realized gain (loss) on investments		1,761		466		47,042		15,460		265,782		76,047		824,220		322,087
Change in unrealized gain (loss) on investments		1,137		5,792		2,625		20,124		(73,853	)	268,323		(343,491	)	548,435
Reinvested capital gains		572		152		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		2,838		6,169		48,125		33,850		177,252		329,265		510,427		812,130
Equity transactions:
Purchase payments received from contract owners (note 6)		8,162		6,350		23,360		26,634		147,500		221,836		873,822		1,223,634
Transfers between funds		968		95,586		(31,402	)	39,838		(274,800	)	44,672		(1,112,944	)	(1,165,538	)
Surrenders (note 6)		(364	)	(14,167	)	(12,588	)	(90,743	)	(174,922	)	(45,473	)	(911,922	)	(740,992	)
Death benefits (note 4)		–		–		–		–		(8,766	)	(34,534	)	(7,502	)	(50,554	)
Net policy repayments (loans) (note 5)		114		13,390		252		(19,292	)	(10,654	)	(17,348	)	(8,372	)	(63,270	)
Deductions for surrender charges (note 2d)		(12	)	(184	)	–		(43	)	(3,076	)	(2,370	)	(24,374	)	(30,565	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(8,144	)	(2,746	)	(12,258	)	(11,196	)	(120,362	)	(120,132	)	(653,916	)	(735,336	)
Asset charges (note 3):
MSP contracts		(60	)	(29	)	(55	)	(37	)	(721	)	(1,039	)	(4,960	)	(5,222	)
LSFP contracts		(18	)	–		(392	)	(319	)	(576	)	(545	)	(6,231	)	(6,153	)
Adjustments to maintain reserves		55		43		(5	)	113		(158	)	201		(338	)	729
Net equity transactions		701		98,243		(33,088	)	(55,045	)	(446,535	)	45,268		(1,856,737	)	(1,573,267	)
Net change in contract owners’ equity		3,539		104,412		15,037		(21,195	)	(269,283	)	374,533		(1,346,310	)	(761,137	)
Contract owners’ equity beginning of period		115,122		10,710		250,861		272,056		2,204,229		1,829,696		14,276,835		15,037,972
Contract owners’ equity end of period	$	118,661		115,122		265,898		250,861		1,934,946		2,204,229		12,930,525		14,276,835
CHANGES IN UNITS:
Beginning units		8,244		854		17,720		22,177		390,550		385,863		916,154		1,025,550
Units purchased		3,059		7,673		5,934		13,917		62,529		109,911		248,511		149,997
Units redeemed		(3,017	)	(283	)	(6,998	)	(18,374	)	(144,245	)	(105,224	)	(318,381	)	(259,393	)
Ending units		8,286		8,244		16,656		17,720		308,834		390,550		846,284		916,154

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	OppGlSec					OppHighInc				OppMSFund				OppMSSmCap
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	135,727		170,282		40,432		20,029		9,719		2,590		(4,033	)	(2,876	)
Realized gain (loss) on investments		1,456,861		(146,798	)	6,196		6,132		73,904		71,154		27,197		34,052
Change in unrealized gain (loss) on investments		2,816,700		5,762,698		(35,276	)	26,739		(4,654	)	46,372		16,728		41,925
Reinvested capital gains		–		–		–		–		–		–		13,920		–
Net increase (decrease) in contract owners’ equity resulting from operations		4,409,288		5,786,182		11,352		52,900		78,969		120,116		53,812		73,101
Equity transactions:
Purchase payments received from contract owners (note 6)		655,236		2,032,224		45,286		44,568		104,358		121,866		47,892		43,982
Transfers between funds		(1,906,256	)	534,826		(30,540	)	346,876		439,782		187,100		112,184		33,862
Surrenders (note 6)		(2,043,212	)	(2,425,284	)	(91,762	)	(18,234	)	(219,672	)	(143,536	)	(21,312	)	(41,329	)
Death benefits (note 4)		(12,008	)	(90,694	)	–		–		–		–		–		(24,258	)
Net policy repayments (loans) (note 5)		(596,226	)	(133,226	)	(22,672	)	(23,832	)	(44,696	)	(276	)	(6,416	)	1,010
Deductions for surrender charges (note 2d)		(33,896	)	(60,616	)	(2,040	)	(322	)	(2,496	)	(3,173	)	(216	)	(430	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,407,740	)	(1,453,212	)	(23,802	)	(21,854	)	(69,568	)	(65,446	)	(24,324	)	(18,740	)
Asset charges (note 3):
MSP contracts		(13,732	)	(12,749	)	(732	)	(754	)	(1,063	)	(1,585	)	(142	)	(178	)
LSFP contracts		(11,136	)	(9,658	)	(308	)	(237	)	(1,048	)	(1,008	)	(53	)	(21	)
Adjustments to maintain reserves		1,779		3,026		44		88		(71	)	183		57		106
Net equity transactions		(5,367,191	)	(1,615,363	)	(126,526	)	326,299		205,526		94,125		107,670		(5,996	)
Net change in contract owners’ equity		(957,903	)	4,170,819		(115,174	)	379,199		284,495		214,241		161,482		67,105
Contract owners’ equity beginning of period		37,051,443		32,880,624		691,369		312,170		1,644,500		1,430,259		470,868		403,763
Contract owners’ equity end of period	$	36,093,540		37,051,443		576,195		691,369		1,928,995		1,644,500		632,350		470,868
CHANGES IN UNITS:
Beginning units		1,094,866		1,150,008		57,270		28,013		185,346		175,119		28,790		29,251
Units purchased		280,077		254,793		12,996		34,681		85,392		57,917		9,829		6,754
Units redeemed		(345,931	)	(309,935	)	(23,378	)	(5,424	)	(65,472	)	(47,690	)	(3,215	)	(7,215	)
Ending units		1,029,012		1,094,866		46,888		57,270		205,266		185,346		35,404		28,790

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	OppMultStr					OppGlSec3			OppBdFd				PVTGroInc
Investment activity:	2005			2004		2005		2004	2005		2004		2005		2004
Net investment income (loss)	$	153,996		37,791		(7,511	)	–	555,683		530,582		874		766
Realized gain (loss) on investments		58,011		5,026		12,271		–	5,790		9,317		4,234		2,429
Change in unrealized gain (loss) on investments		(289,228	)	1,342,038		286,506		–	(330,503	)	46,534		(87	)	5,108
Reinvested capital gains		525,540		–		–		–	–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		448,319		1,384,855		291,266		–	230,970		586,433		5,021		8,303
Equity transactions:
Purchase payments received from contract owners (note 6)		814,120		1,078,916		1,150,944		–	765,224		901,146		4,690		3,164
Transfers between funds		(1,510,072	)	197,728		1,553,416		–	(349,990	)	(379,158	)	51,834		57,970
Surrenders (note 6)		(708,646	)	(1,310,498	)	(199,424	)	–	(1,329,182	)	(859,561	)	(22,422	)	(786	)
Death benefits (note 4)		(61,648	)	(50,442	)	(6,350	)	–	(8,662	)	(206,078	)	–		–
Net policy repayments (loans) (note 5)		(24,094	)	(99,578	)	255,630		–	116,484		(196,780	)	(2	)	–
Deductions for surrender charges (note 2d)		(18,606	)	(19,981	)	(906	)	–	(14,108	)	(26,725	)	(778	)	(10	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(669,256	)	(720,680	)	(68,940	)	–	(540,300	)	(612,690	)	(5,558	)	(4,220	)
Asset charges (note 3):
MSP contracts		(9,239	)	(9,268	)	(860	)	–	(8,128	)	(8,648	)	–		–
LSFP contracts		(3,920	)	(3,641	)	(396	)	–	(6,051	)	(6,365	)	(111	)	(143	)
Adjustments to maintain reserves		(7,348	)	6,181		275		–	(1,476	)	5,975		34		42
Net equity transactions		(2,198,709	)	(931,263	)	2,683,389		–	(1,376,189	)	(1,388,884	)	27,687		56,017
Net change in contract owners’ equity		(1,750,390	)	453,592		2,974,655		–	(1,145,219	)	(802,451	)	32,708		64,320
Contract owners’ equity beginning of period		15,858,615		15,405,023		–		–	12,399,148		13,201,599		79,274		14,954
Contract owners’ equity end of period	$	14,108,225		15,858,615		2,974,655		–	11,253,929		12,399,148		111,982		79,274
CHANGES IN UNITS:
Beginning units		515,596		549,203		–		–	538,742		607,217		5,796		1,210
Units purchased		235,916		81,077		264,357		–	123,487		91,514		4,153		4,994
Units redeemed		(228,310	)	(114,684	)	(16,661	)	–	(168,031	)	(159,989	)	(2,105	)	(408	)
Ending units		523,202		515,596		247,696		–	494,198		538,742		7,844		5,796

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	PVTIntEq					PVTVoyII				TRPBluChpGrII			TRowEqInc2
Investment activity:	2005			2004		2005		2004		2005		2004	2005		2004
Net investment income (loss)	$	772		878		182		(78	)	(6	)	–	1,414		–
Realized gain (loss) on investments		18,426		5,777		795		100		168		–	2,420		–
Change in unrealized gain (loss) on investments		9,869		8,163		3,168		1,982		1,009		–	(9,434	)	–
Reinvested capital gains		–		–		–		–		–		–	12,064		–
Net increase (decrease) in contract owners’ equity resulting from operations		29,067		14,818		4,145		2,004		1,171		–	6,464		–
Equity transactions:
Purchase payments received from contract owners (note 6)		7,090		22,980		3,564		14,440		1,292		–	12,674		–
Transfers between funds		171,922		62,948		52,596		23,716		242,994		–	311,286		–
Surrenders (note 6)		(11,238	)	(9,097	)	(2,990	)	–		–		–	–		–
Death benefits (note 4)		–		(16,252	)	–		–		–		–	–		–
Net policy repayments (loans) (note 5)		(1,574	)	20		(34	)	–		–		–	46		–
Deductions for surrender charges (note 2d)		(26	)	(124	)	–		–		–		–	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(7,460	)	(5,228	)	(3,374	)	(1,682	)	(3,320	)	–	(5,266	)	–
Asset charges (note 3):
MSP contracts		(63	)	–		(190	)	(84	)	(42	)	–	–		–
LSFP contracts		(4	)	–		(108	)	(62	)	(50	)	–	(133	)	–
Adjustments to maintain reserves		(8	)	67		–		82		44		–	54		–
Net equity transactions		158,639		55,314		49,464		36,410		240,918		–	318,661		–
Net change in contract owners’ equity		187,706		70,132		53,609		38,414		242,089		–	325,125		–
Contract owners’ equity beginning of period		132,907		62,775		53,509		15,095		–		–	–		–
Contract owners’ equity end of period	$	320,613		132,907		107,118		53,509		242,089		–	325,125		–
CHANGES IN UNITS:
Beginning units		9,052		4,931		4,322		1,280		–		–	–		–
Units purchased		11,550		6,455		4,455		3,319		21,801		–	31,225		–
Units redeemed		(988	)	(2,334	)	(543	)	(277	)	(309	)	–	(527	)	–
Ending units		19,614		9,052		8,234		4,322		21,492		–	30,698		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	TRLimTrmBnd2				VEWrldBd				VEWrldEMkt				VEWrldHAs
Investment activity:	2005			2004	2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	164		–	234,470		318,281		5,720		(5,121	)	(33,271	)	(21,702	)
Realized gain (loss) on investments		(1	)	–	(27,287	)	9,612		696,415		708,751		1,358,582		535,736
Change in unrealized gain (loss) on investments		(62	)	–	(346,641	)	(13,258	)	1,334,255		452,466		1,986,081		666,602
Reinvested capital gains		–		–	–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		101		–	(139,458	)	314,635		2,036,390		1,156,096		3,311,392		1,180,636
Equity transactions:
Purchase payments received from contract owners (note 6)		98		–	149,562		187,640		353,284		358,934		621,334		378,056
Transfers between funds		34,504		–	(374,642	)	(752,214	)	1,107,540		147,794		1,387,764		559,764
Surrenders (note 6)		–		–	(215,630	)	(440,910	)	(376,808	)	(757,540	)	(991,560	)	(457,841	)
Death benefits (note 4)		–		–	(11,218	)	(126,398	)	(7,398	)	(12,234	)	(39,474	)	(22,680	)
Net policy repayments (loans) (note 5)		(10	)	–	(9,374	)	243,984		(48,756	)	(4,256	)	(33,512	)	(11,024	)
Deductions for surrender charges (note 2d)		–		–	(2,308	)	(7,794	)	(11,754	)	(12,080	)	(10,622	)	(5,285	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(178	)	–	(153,478	)	(179,718	)	(282,468	)	(247,600	)	(345,372	)	(264,062	)
Asset charges (note 3):
MSP contracts		–		–	(1,329	)	(1,408	)	(3,275	)	(2,494	)	(5,608	)	(3,385	)
LSFP contracts		–		–	(596	)	(729	)	(6,149	)	(4,567	)	(1,890	)	(1,484	)
Adjustments to maintain reserves		32		–	(745	)	(38,437	)	(653	)	(5,705	)	7,525		(7,896	)
Net equity transactions		34,446		–	(619,758	)	(1,115,984	)	723,563		(539,748	)	588,585		164,163
Net change in contract owners’ equity		34,547		–	(759,216	)	(801,349	)	2,759,953		616,348		3,899,977		1,344,799
Contract owners’ equity beginning of period		–		–	3,865,200		4,666,549		6,190,315		5,573,967		6,555,127		5,210,328
Contract owners’ equity end of period	$	34,547		–	3,105,984		3,865,200		8,950,268		6,190,315		10,455,104		6,555,127
CHANGES IN UNITS:
Beginning units		–		–	186,970		248,334		517,510		582,778		302,712		288,700
Units purchased		3,446		–	77,210		43,903		173,072		74,842		153,010		82,927
Units redeemed		(18	)	–	(97,076	)	(105,267	)	(128,228	)	(140,110	)	(108,504	)	(68,915	)
Ending units		3,428		–	167,104		186,970		562,354		517,510		347,218		302,712

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	VKoreFI					VKEmMkt				VKUSRealEst				StDisc2
Investment activity:	2005			2004		2005		2004		2005		2004		2005		2004
Net investment income (loss)	$	7,542		4,746		176,187		146,343		99,923		125,187		(54,490	)	(57,587	)
Realized gain (loss) on investments		(442	)	430		34,234		72,756		1,909,179		1,117,091		289,653		296,424
Change in unrealized gain (loss) on investments		246		(110	)	24,829		(96,117	)	366,974		3,194,741		(437,422	)	813,089
Reinvested capital gains		1,912		334		40,480		75,894		519,092		272,360		715,214		–
Net increase (decrease) in contract owners’ equity resulting from operations		9,258		5,400		275,730		198,876		2,895,168		4,709,379		512,955		1,051,926
Equity transactions:
Purchase payments received from contract owners (note 6)		5,030		8,264		345,778		140,568		950,232		918,742		396,298		460,124
Transfers between funds		168,874		163,312		(22,574	)	(424,230	)	(651,482	)	2,210,362		(689,072	)	180,546
Surrenders (note 6)		(8,026	)	–		(139,664	)	(371,959	)	(1,252,896	)	(1,260,930	)	(425,832	)	(472,825	)
Death benefits (note 4)		–		–		–		–		(32,252	)	(52,372	)	(30,356	)	(137,894	)
Net policy repayments (loans) (note 5)		(1,000	)	–		(9,176	)	29,362		26,554		(120,630	)	61,912		(40,052	)
Deductions for surrender charges (note 2d)		(44	)	–		(1,984	)	(4,708	)	(21,224	)	(35,729	)	(6,028	)	(8,681	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(12,346	)	(5,370	)	(101,168	)	(104,182	)	(779,820	)	(661,004	)	(335,386	)	(346,490	)
Asset charges (note 3):
MSP contracts		(64	)	(34	)	(1,143	)	(1,131	)	(8,279	)	(7,358	)	(1,928	)	(1,865	)
LSFP contracts		–		–		(4,366	)	(3,951	)	(8,725	)	(6,992	)	(840	)	(693	)
Adjustments to maintain reserves		(28	)	61		11		199		(9,658	)	284,480		5,691		(6,447	)
Net equity transactions		152,396		166,233		65,714		(740,032	)	(1,787,550	)	1,268,569		(1,025,541	)	(374,277	)
Net change in contract owners’ equity		161,654		171,633		341,444		(541,156	)	1,107,618		5,977,948		(512,586	)	677,649
Contract owners’ equity beginning of period		202,244		30,611		2,320,205		2,861,361		19,011,928		13,033,980		8,308,716		7,631,067
Contract owners’ equity end of period	$	363,898		202,244		2,661,649		2,320,205		20,119,546		19,011,928		7,796,130		8,308,716
CHANGES IN UNITS:
Beginning units		19,166		3,007		140,706		190,911		498,620		463,861		284,110		300,059
Units purchased		16,131		16,678		35,963		22,530		146,492		113,729		87,076		56,220
Units redeemed		(2,005	)	(519	)	(32,829	)	(72,735	)	(162,996	)	(78,970	)	(107,590	)	(72,169	)
Ending units		33,292		19,166		143,840		140,706		482,116		498,620		263,596		284,110

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2005 and 2004

	StOpp2
Investment activity:	2005			2004
Net investment income (loss)	$	(239,912	)	(262,942	)
Realized gain (loss) on investments		(490,049	)	(315,827	)
Change in unrealized gain (loss) on investments		3,022,828		6,108,252
Reinvested capital gains		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		2,292,867		5,529,483
Equity transactions:
Purchase payments received from contract owners (note 6)		1,963,664		2,279,452
Transfers between funds		(2,083,948	)	(1,564,776	)
Surrenders (note 6)		(2,472,238	)	(2,433,372	)
Death benefits (note 4)		(185,056	)	(65,608	)
Net policy repayments (loans) (note 5)		(300,760	)	(54,978	)
Deductions for surrender charges (note 2d)		(28,846	)	(45,345	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,573,710	)	(1,661,992	)
Asset charges (note 3):
MSP contracts		(8,121	)	(8,687	)
LSFP contracts		(8,407	)	(8,055	)
Adjustments to maintain reserves		582		(39,900	)
Net equity transactions		(4,696,840	)	(3,603,261	)
Net change in contract owners’ equity		(2,403,973	)	1,926,222
Contract owners’ equity beginning of period		35,975,510		34,049,288
Contract owners’ equity end of period	$	33,571,537		35,975,510
CHANGES IN UNITS:
Beginning units		802,158		891,693
Units purchased		332,641		173,276
Units redeemed		(303,601	)	(262,811	)
Ending units		831,198		802,158

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

NOTES TO FINANCIAL STATEMENTS

December 31, 2005 and 2004

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide VLI Separate Account-2 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on May 7, 1987. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers Single Premium, Modified Single Premium, Flexible Premium and Last Survivor Flexible Premium Variable Life Insurance Policies through the Account. The primary distribution for the contracts is through the brokerage community; however, other distributors may be utilized.

(b) The Contracts

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

Contract owners may invest in the following:

Funds of the AIM Variable Insurance Fund (AIM VIF);

    AIM VIF – Basic Value Fund – Series I Shares (AIMBValue)

    AIM VIF – Capital Appreciation Fund – Series I Shares (AIMCapAp)

    AIM VIF – Capital Development Fund – Series I Shares (AIMCapDev)

Portfolios of the Alliance Variable Product Series Funds, Inc (Alliance VPSF);

    Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A (AlVPGrIncA)

    Alliance VPSF – AllianceBernstein Small/Mid Cap Value Portfolio – Class A (AlVPSmCapVA)

        (formerly AllianceBernstein VPSF, Inc. – AllianceBernstein Small Cap Value Portfolio – Class A)

Portfolios of the American Century Variable Portfolios, Inc. (American Century VP);

    American Century VP – Balanced Fund – Class I (ACVPBal)

    American Century VP – Capital Appreciation Fund – Class I (ACVPCapAp)

    American Century VP – Income & Growth Fund – Class I (ACVPIncGr)

    American Century VP – International Fund – Class I (ACVPInt)

    American Century VP – Mid Cap Value Fund – Class I (ACVPMidCpVal)

    American Century VP – Ultra^® Fund – Class I (ACVPUltra)

    American Century VP – Value Fund – Class I (ACVPVal)

    American Century VP – Vista^SM Fund – Class I (ACVPVista)

Portfolios of the American Century Variable Portfolios, Inc. (American Century VP II);

    American Century VP II – Inflation Protection Fund – Class II (ACVPInflaPro)

Portfolios of the American Century Variable Portfolios, Inc. (American Century VP III);

    American Century VP III – International Fund – Class III (ACVPInt3)

Portfolios of the Credit Suisse Trust (Credit Suisse Trust);

    Credit Suisse Trust – Global Small Cap Portfolio (CSGPVen)

        (formerly Credit Suisse Trust – Global Post-Venture Capital Portfolio)

    Credit Suisse Trust – International Focus Portfolio (CSIntFoc)

    Credit Suisse Trust – Small Cap Growth Portfolio (CSSmCapGr)

Funds of the Dreyfus Investment Portfolios (Dreyfus IP);

    Dreyfus IP – Small Cap Stock Index Portfolio – Service Class (DrySmCapIxS)

Portfolios of Dreyfus Investor Inc. (Dreyfus Investor, Inc.);

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

    Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);

    Dreyfus VIF – Appreciation Portfolio – Initial Shares (DryVIFApp)

    Dreyfus VIF – Developing Leaders Portfolio – Initial Shares (DryVIFDevLd)

    Dreyfus VIF – Growth and Income Portfolio – Initial Shares (DryVIFGrInc)

Portfolios of Federated Insurance Series (Federated IS);

    Federated IS – American Leaders Fund II – Primary Shares (FedAmLead)

    Federated IS – Capital Appreciation Fund II – Primary Shares (FedCapAp)

    Federated IS – Quality Bond Fund II – Primary Shares (FedQualBd)

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP);

    Fidelity^® VIP – Equity-Income Portfolio: Initial Class (FidVIPEI)

    Fidelity^® VIP – Growth Portfolio: Initial Class (FidVIPGr)

    Fidelity^® VIP – High Income Portfolio: Initial Class (FidVIPHI)

    Fidelity^® VIP – Overseas Portfolio: Initial Class (FidVIPOv)

    Fidelity^® VIP Overseas Portfolio: Service Class R (FidVIPOvSR)

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP II);

    Fidelity^® VIP II – Asset Manager Portfolio: Initial Class (FidVIPAM)

    Fidelity^® VIP II – Contrafund^® Portfolio: Initial Class (FidVIPCon)

    Fidelity^® VIP II – Investment Grade Bond Portfolio: Service Class (FidVIPIGBdS)

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP III);

    Fidelity^® VIP III – Growth Opportunities Portfolio: Initial Class (FidVIPGrOp)

    Fidelity^® VIP III – Mid Cap Portfolio: Service Class (FidVIPMCapS)

    Fidelity^® VIP III – Value Strategies Portfolio: Service Class (FidVIPVaIS)

Portfolios of the Fidelity^® Variable Insurance Products (Fidelity^® VIP IV);

    Fidelity^® VIP IV – Natural Resources Portfolio: Service Class 2 (FidVIPCon2)

Portfolios of the Fidelity^® Variable Insurance Products Freedom Funds (Fidelity^® VIP FF);

    Fidelity^® VIP FF – Freedom Fund 2010 Portfolio: Service Class (FidFF2010)

    Fidelity^® VIP FF – Freedom Fund 2020 Portfolio: Service Class (FidFF2020)

    Fidelity^® VIP FF – Freedom Fund 2030 Portfolio: Service Class (FidFF2030)

Funds of the Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIP);

    Franklin Templeton VIP – Franklin Rising Dividends Securities Fund – Class I (FrVIPRisDiv)

    Franklin Templeton VIP – Franklin Small Cap Value Securities Fund – Class I (FTVIPSmCpVal)

    Franklin Templeton VIP – Templeton Foreign Securities Fund – Class I (FrVIPForSec)

Funds of the Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIP III);

    Franklin Templeton VIP III – Franklin Global Income Securities Fund – Class 3 (FrVIPGISec3)

    Franklin Templeton VIP III – Templeton Developing Markets Securities Fund –

        Class 3 (TmDevMktS3)

    Franklin Templeton VIP III – Templeton Foreign Securities Fund – Class 3 (FrVIPForSec3)

Funds of the Gartmore Variable Insurance Trust (Gartmore GVIT)

(Gartmore is an affiliate of the Company);

    Gartmore GVIT – Dreyfus International Value Fund – Class I (GVITDryIntVal)

    Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I (GVITDMidCapI)

    Gartmore GVIT – Emerging Markets Fund: Class I (GVITEmMrkts)

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

    Gartmore GVIT – Global Financial Services Fund: Class I (GVITGlFin1)

    Gartmore GVIT – Global Health Sciences Fund: Class I (GVITGlHlth)

    Gartmore GVIT – Global Technology and Communications Fund: Class I (GVITGlTech)

    Gartmore GVIT – Global Utilities Fund: Class I (GVITGlUtl1)

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

    Gartmore GVIT – Growth Fund – Class I (GVITGrowth)

    Gartmore GVIT – International Growth Fund: Class I (GVITIntGro)

    Gartmore GVIT – Mid Cap Growth Fund: Class I (GVITSMdCpGr)

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

    Gartmore GVIT – Nationwide^® Fund: Class I (GVITNWFund)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

    Gartmore GVIT – Nationwide® Leaders Fund: Class I (GVITLead)

    Gartmore GVIT – Small Cap Growth Fund: Class I (GVITSmCapGr)

    Gartmore GVIT – Small Cap Value Fund: Class I (GVITSmCapVal)

    Gartmore GVIT – Small Company Fund: Class I (GVITSmComp)

    Gartmore GVIT – U.S. Growth Leaders Fund: Class I (GVITUSGro)

    Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I (GVITVKMultiSec)

    Gartmore GVIT – Van Kampen Value Fund – Class I (GVITCVal)

Funds of the Gartmore Variable Insurance Trust (Gartmore GVIT III)

(Gartmore is an affiliate of the Company);

    Gartmore GVIT III – Dreyfus International Value Fund – Class III (GVITDryIntVal3)

    Gartmore GVIT III – Emerging Markets Fund: Class III (GVITEmMrkts3)

    Gartmore GVIT III – Federated High Income Bond Fund: Class III (GVITFHiInc3)

    Gartmore GVIT III – Global Health Sciences Fund: Class III (GVITGlHlth3)

    Gartmore GVIT III – Global Technology and Communications Fund: Class III (GVITGlTech3)

Funds of the Gartmore Variable Insurance Trust – Investor Destinations (Gartmore GVIT ID II)

(Gartmore is an affiliate of the Company);

    Gartmore GVIT ID II – Aggressive Fund – Class II (GVITIDAgg)

    Gartmore GVIT ID II – Conservative Fund – Class II (GVITIDCon)

    Gartmore GVIT ID II – Moderate Fund – Class II (GVITIDMod)

    Gartmore GVIT ID II – Moderately Aggressive Fund – Class II (GVITIDModAgg)

    Gartmore GVIT ID II – Moderately Conservative Fund – Class II (GVITIDModCon)

Portfolios of the Janus Aspen Series (Janus AS);

    Janus AS – Balanced Portfolio – Service Shares (JanBal)

    Janus AS – Forty Portfolio – Service Shares (JanCapAp)

        (formerly Janus Aspen Series – Capital Appreciation Portfolio – Service Shares)

    Janus AS – Global Technology Portfolio – Service Shares (JanGlTech)

    Janus AS – International Growth Portfolio – Service Shares (JanIntGro)

    Janus AS – Risk–Managed Large Cap Core Portfolio – Service Shares (JanRMgLgCap)

Funds of the Massachusetts Financial Services Variable Insurance Trust (MFS VIT^SM);

    MFS^® VIT^SM– MFS Investors Growth Stock Series – Initial Class (MFSVITInvGrwI)

    MFS^® VIT^SM– MFS Value Series – Initial Class (MFSVITValIn)

Portfolios of the Neuberger Berman Advisers Management Trust (Neuberger Berman AMT);

    Neuberger Berman AMT – International Portfolio – Class S (NBAMTInt)

    Neuberger Berman AMT – Regency Portfolio – Class S (NBAMTReg)

    Neuberger Berman AMT – Balanced Portfolio^®– I Class Shares (NBAMTBal)

    Neuberger Berman AMT – Growth Portfolio^®– I Class Shares (NBAMTGro)

    Neuberger Berman AMT – Guardian Portfolio – I Class Shares (NBAMTGuard)

    Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares (NBAMTLMat)

    Neuberger Berman AMT – Partners Portfolio^®– I Class Shares (NBAMTPart)

    Neuberger Berman AMT – Socially Responsive Portfolio^®– I Class Shares (NBAMTSocRes)

    Neuberger Berman AMT – Fasciano Portfolio – S Class Shares (NBAMTFasc)

    Neuberger Berman AMT – Mid Cap Growth Portfolio^®– S Class Shares (NBAMTMCGrS)

Portfolios of the Oppenheimer Funds (Oppenheimer Funds);

    Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class (OppAggGro)

    Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class (OppCapAp)

    Oppenheimer Funds – Global Securities Fund/VA – Initial Class (OppGlSec)

    Oppenheimer Funds – High Income Fund/VA – Initial Class (OppHighInc)

    Oppenheimer Funds – Main Street Fund^®/VA – Initial Class (OppMSFund)

    Oppenheimer Funds – Main Street Small Cap Fund^®/VA – Initial Class (OppMSSmCap)

    Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class (OppMultStr)

Portfolios of the Oppenheimer Funds (Oppenheimer Funds III);

    Oppenheimer Funds III – Global Securities Fund/VA – Class 3 (OppGlSec3)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

Portfolios of the Oppenheimer Variable Account Funds (Oppenheimer VAF);

    Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class (OppBdFd)

        (formerly Oppenheimer Bond Fund/VA – Initial Class)

Funds of the Putnam Variable Trust (Putnam VT IB);

    Putnam VT IB – Growth & Income Fund – IB Shares (PVTGroInc)

    Putnam VT IB – International Equity Fund – IB Shares (PVTIntEq)

    Putnam VT IB – Voyager II Fund – IB Shares (PVTVoyII)

Portfolios of T. Rowe Price Funds, Inc. II (T. Rowe Price II);

    T. Rowe Price II – Blue Chip Growth Portfolio – II (TRPBluChpGrII)

    T. Rowe Price II – Equity Income Portfolio – II (TRowEqInc2)

    T. Rowe Price II – Equity Series, Inc. – T. Rowe Price Limited Term Bond Portfolio –

        Class II (TRLimTrmBnd2)

Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT);

    Van Eck WIT – Worldwide Bond Fund – Initial Class (VEWrldBd)

    Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class (VEWrldEMkt)

    Van Eck WIT – Worldwide Hard Assets Fund – Initial Class (VEWrldHAs)

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

    Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I (VKoreFI)

    Van Kampen UIF – Emerging Markets Debt Portfolio – Class I (VKEmMkt)

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

Portfolios of the Wells Fargo Advantage Variable Trust Funds^SM (Wells Fargo Advantage VTF^SM);

    Wells Fargo VTF^SM– Wells Fargo Advantage Discovery Fund VT (StDisc2)

        (formerly Strong Variable Insurance Funds, Inc. – Strong Discovery Fund II)

    Wells Fargo VTF^SM– Wells Fargo Advantage Opportunity Fund VT (StOpp2)

        (formerly Strong Variable Insurance Funds, Inc. – Strong Opportunity Fund II, Inc.)

At December 31, 2005, contract owners were invested in all of the above funds. The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners nd certain contract expenses (see notes 2 and 3). The accompanying financial statements include only contract owners’ purchase payments pertaining to the variable portions of their contracts and exclude any purchase payments for fixed dollar benefits, the latter being included in the accounts of the Company.

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

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

(c) Security Valuation, Transactions and Related Investment Income

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

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

(d) Federal Income Taxes

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

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

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

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

(2) Policy Charges

(a) Deductions from Premiums

For single premium and modified single premium contracts, no deduction is made from any premium at the time of payment. On multiple payment contracts the Company deducts a charge for state premium taxes equal to 2.5% of all premiums received to cover the payment of these premium taxes. The Company also deducts a sales load from each premium payment received not to exceed 3.5% of each premium payment. For flexible premium contracts, the sales load is reduced to 1.5% on any portion of the annual premium paid in excess of the annual break point premium.

On last survivor flexible premium contracts, the Company deducts a charge for state premium taxes equal to 3.5% of all premiums received to cover the payment of these premium taxes. The Company also deducts a sales load from each premium payment received not to exceed 5% of each premium payment during the first ten years and 1.5% of each premium payment thereafter.

The Company may at its sole discretion reduce this sales loading.

For the periods ended December 31, 2005 and 2004, total front-end sales charge deductions were $3,591,203 and $4,033,320, respectively.

(b) Cost of Insurance

A cost of insurance charge is assessed monthly against each contract by liquidating units. The amount of the charge varies widely and is based upon age, sex, rate class and net amount at risk (death benefit less total contract value).

For last survivor flexible premium contracts, the monthly cost of insurance is determined in a manner that reflects the anticipated mortality of the two insureds and the fact that the death benefit is not payable until the death of the second insured policyholder.

(c) Administrative Charges

An administrative charge is assessed against each contract to recover policy maintenance, accounting, record keeping and other administrative expenses and is assessed against each contract by liquidating units.

For single premium contracts, the Company deducts an annual administrative charge which is determined as follows:

Contracts issued prior to April 16, 1990:

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

    Purchase payments totalling $25,000 or more – none

Contracts issued on or after April 16, 1990:

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

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

For multiple payment contracts, the Company currently deducts a monthly administrative charge of $5 (not to exceed $7.50 per month).

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

For flexible premium contracts, the Company currently deducts a monthly administrative charge of $12.50 during the first policy year. For all subsequent years, a monthly administrative charge is deducted (currently $5 per month not to exceed $7.50). Additionally, the Company deducts an increase charge when the policy’s specified amount is increased. The charge is equal $2.04 per year per $1,000 of the specified amount increase.

For modified single premium contracts, the monthly charge is equal to an annualized rate of 0.30% multiplied by the policy’s cash value to cover administrative, premium tax and deferred acquisition costs. For policy years 11 and later, this monthly charge is reduced to an annualized rate of 0.15% of the policy’s cash value. The monthly charge is subject to a $10 minimum.

For last survivor flexible premium contracts, the Company deducts a monthly administrative charge equal to the sum of the per policy charge and the per $1,000 basic coverage charge. For policy years one through ten the per policy charge is $10. Additionally, there is a $0.04 per $1,000 basic coverage charge (not less than $20 or more than $80 per policy per year). For policy years eleven and after, the per policy charge is $5. Additionally, there is a $0.02 per $1,000 basic coverage charge (not less than $10 or more than $40 per policy per year).

(d) Surrender Charges

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

For single premium contracts, the charge is a percentage of the original purchase payment. For single premium contracts issued prior to April 16, 1990, the charge is 8% in the first year and declines a specified amount each year. After the ninth year, the charge is 0%. For single premium contracts issued on or after April 16, 1990, the charge is 8.5% in the first year, and declines a specified amount each year. After the ninth year, the charge is 0%. However, if a policy’s specified amount increases, the amount of the increase will have a nine-year surrender charge period.

For multiple payment contracts, last survivor flexible premium contract and flexible premium contracts, the amount charged is based upon a specified percentage of the initial specified amount and varies by issue age, sex and rate class. The charge is reduced at certain time intervals, and declines a specified amount each year. After the ninth year for flexible premium contracts and after the tenth year for multiple payment and last survivor contracts, the charge is 0%. However, if a policy’s specified amount increases, the amount of the increase will have the same nine-year surrender charge period.

For modified single premium contracts, the amount charged is based on a percentage of the original premium payment. The charge is 10% of the initial premium payment and declines a specified amount each year to 0% after the end of the ninth year.

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.

(3) Asset Charges

For single premium contracts, the Company deducts a mortality and expense risk charge from the contract to cover mortality and expense risk charges related to operations, and to recover policy maintenance and premium tax charges. For contracts issued prior to April 16, 1990, the charge is equal to an annualized rate of 0.95% during the first ten policy years, and 0.50% thereafter. For single premium contracts issued on or after April 16, 1990, the charge is equal to an annualized rate of 1.30% during the first ten policy years, and 1.00% thereafter. The charge is assessed through the daily unit value calculation and is reflected in the table below.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

For multiple payment contracts, the Company deducts a mortality and expense risk charge equal to an annualized rate of 0.80%. The charge is assessed through the daily unit value calculation and is reflected in the table below.

For modified single premium contracts (MSP), the Company deducts an annualized rate of 0.90% charged against the cash value in the Variable Account. This charge is assessed monthly against each contract by liquidating units.

For flexible premium contracts and last survivor flexible premium contracts (LSFP), the Company deducts an annualized rate of 0.80% in policy years one through ten. This charge is assessed monthly by liquidating units. In policy years eleven and after, the charge will continue to be deducted, but may be reduced for policies at specified asset levels.

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

	Total		AIMBValue	AIMCapAp	AIMCapDev	AlVPGrIncA
Single Premium contracts issued prior to April 16, 1990	$	876,721	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		6,706	–	–	–	–
Multiple Payment and Flexible Premium contracts		5,321,570	5,089	1,017	1,518	5,456
Total	$	6,204,997	5,089	1,017	1,518	5,456
	AlVPSmCapVA		ACVPBal	ACVPCapAp	ACVPIncGr	ACVPInt
Single Premium contracts issued prior to April 16, 1990	$	–	7,799	15,665	4,197	9,800
Single Premium contracts issued on or after April 16, 1990		–	–	413	–	13
Multiple Payment and Flexible Premium contracts		6,129	29,962	75,222	21,658	62,142
Total	$	6,129	37,761	91,300	25,855	71,955
	ACVPMidCpVal		ACVPUltra	ACVPVal	ACVPVista	ACVPInflaPro
Single Premium contracts issued prior to April 16, 1990	$	–	738	19,799	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	1	–	–
Multiple Payment and Flexible Premium contracts		228	4,092	73,353	24	7,201
Total	$	228	4,830	93,153	24	7,201
	ACVPInt3		CSGPVen	CSIntFoc	CSSmCapGr	DryEuroEq
Single Premium contracts issued prior to April 16, 1990	$	192	827	6,394	8,325	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		5,153	5,136	39,043	81,248	–
Total	$	5,345	5,963	45,437	89,573	–
	DrySmCapIxS		DryStkIx	DrySRGro	DryVIFApp	DryVIFDevLd
Single Premium contracts issued prior to April 16, 1990	$	3,165	50,942	1,924	11,776	–
Single Premium contracts issued on or after April 16, 1990		520	177	–	–	–
Multiple Payment and Flexible Premium contracts		8,048	450,182	61,075	29,456	2,552
Total	$	11,733	501,301	62,999	41,232	2,552

(Continued)

    NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	DryVIFGrInc		FedAmLead	FedCapAp	FedQualBd	FidVIPEI
Single Premium contracts issued prior to April 16, 1990	$	3,446	–	–	637	91,480
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	691
Multiple Payment and Flexible Premium contracts		11,664	1,035	150	6,618	416,558
Total	$	15,110	1,035	150	7,255	508,729
	FidVIPGr		FidVIPHI	FidVIPOv	FidVIPOvSR	FidVIPAM
Single Premium contracts issued prior to April 16, 1990	$	78,415	24,344	20,638	10	37,994
Single Premium contracts issued on or after April 16, 1990		647	257	287	–	177
Multiple Payment and Flexible Premium contracts		520,827	110,139	92,846	5,987	112,542
Total	$	599,889	134,740	113,771	5,997	150,713
	FidVIPCon		FidVIPIGBdS	FidVIPGrOp	FidVIPMCapS	FidVIPVaIS
Single Premium contracts issued prior to April 16, 1990	$	56,025	–	1,409	–	2,640
Single Premium contracts issued on or after April 16, 1990		–	–	60	–	–
Multiple Payment and Flexible Premium contracts		378,551	13,495	25,773	41,647	6,765
Total	$	434,576	13,495	27,242	41,647	9,405
	FidVIPCon2		FidFF2010	FidFF2020	FidFF2030	FrVIPRisDiv
Single Premium contracts issued prior to April 16, 1990	$	17	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		3,723	63	468	60	18,844
Total	$	3,740	63	468	60	18,844
	FTVIPSmCpVal		FrVIPForSec	FrVIPGISec3	TmDevMktS3	FrVIPForSec3
Single Premium contracts issued prior to April 16, 1990	$	–	–	57	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		19,111	9,455	93	937	1,013
Total	$	19,111	9,455	150	937	1,013
	GVITDryIntVal		GVITDMidCapI	GVITEmMrkts	GVITFHiInc	GVITGlFin1
Single Premium contracts issued prior to April 16, 1990	$	–	10,029	2,792	–	925
Single Premium contracts issued on or after April 16, 1990		–	10	1	–	2
Multiple Payment and Flexible Premium contracts		8,822	35,643	11,454	2,846	3,637
Total	$	8,822	45,682	14,247	2,846	4,564
	GVITGlHlth		GVITGlTech	GVITGlUtl1	GVITGvtBd	GVITGrowth
Single Premium contracts issued prior to April 16, 1990	$	3,172	760	2,767	24,432	3,896
Single Premium contracts issued on or after April 16, 1990		1	1	209	176	–
Multiple Payment and Flexible Premium contracts		4,024	4,305	6,684	61,697	113,763
Total	$	7,197	5,066	9,660	86,305	117,659

(Continued)

    NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	GVITIntGro		GVITSMdCpGr	GVITMyMkt	GVITNWFund	GVITLead
Single Premium contracts issued prior to April 16, 1990	$	1,736	1,652	73,712	19,874	646
Single Premium contracts issued on or after April 16, 1990		–	–	743	117	–
Multiple Payment and Flexible Premium contracts		1,558	6,508	136,606	503,230	1,376
Total	$	3,294	8,160	211,061	523,221	2,022
	GVITSmCapGr		GVITSmCapVal	GVITSmComp	GVITUSGro	GVITVKMultiSec
Single Premium contracts issued prior to April 16, 1990	$	1,348	23,654	9,787	1,808	788
Single Premium contracts issued on or after April 16, 1990		19	171	115	–	–
Multiple Payment and Flexible Premium contracts		7,716	70,076	178,058	4,228	6,058
Total	$	9,083	93,901	187,960	6,036	6,846
	GVITCVal		GVITDryIntVal3	GVITEmMrkts3	GVITFHiInc3	GVITGlHlth3
Single Premium contracts issued prior to April 16, 1990	$	–	–	57	–	32
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		4,727	2,216	1,759	463	850
Total	$	4,727	2,216	1,816	463	882
	GVITGlTech3		GVITIDAgg	GVITIDCon	GVITIDMod	GVITIDModAgg
Single Premium contracts issued prior to April 16, 1990	$	10	–	371	5,972	3,696
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		548	11,594	4,127	28,733	31,093
Total	$	558	11,594	4,498	34,705	34,789
	GVITIDModCon		JanBal	JanCapAp	JanGlTech	JanIntGro
Single Premium contracts issued prior to April 16, 1990	$	11,870	–	1,125	806	2,951
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	68
Multiple Payment and Flexible Premium contracts		8,051	976	15,553	6,381	10,162
Total	$	19,921	976	16,678	7,187	13,181
	JanRMgLgCap		MFSVITInvGrwI	MFSVITValIn	NBAMTInt	NBAMTReg
Single Premium contracts issued prior to April 16, 1990	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		1,517	2,045	1,737	898	171
Total	$	1,517	2,045	1,737	898	171
	NBAMTBal		NBAMTGro	NBAMTGuard	NBAMTLMat	NBAMTPart
Single Premium contracts issued prior to April 16, 1990	$	–	15,188	527	8,446	16,386
Single Premium contracts issued on or after April 16, 1990		–	417	–	97	–
Multiple Payment and Flexible Premium contracts		255	99,190	12,040	21,270	142,817
Total	$	255	114,795	12,567	29,813	159,203

(Continued)

    NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	NBAMTSocRes		NBAMTFasc	NBAMTMCGrS	OppAggGro	OppCapAp
Single Premium contracts issued prior to April 16, 1990	$	–	–	–	2,217	12,659
Single Premium contracts issued on or after April 16, 1990		–	–	–	1	–
Multiple Payment and Flexible Premium contracts		1,548	632	1,542	12,459	78,187
Total	$	1,548	632	1,542	14,677	90,846
	OppGlSec		OppHighInc	OppMSFund	OppMSSmCap	OppMultStr
Single Premium contracts issued prior to April 16, 1990	$	28,135	–	2,047	–	22,170
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		214,572	3,694	8,464	4,033	81,076
Total	$	242,707	3,694	10,511	4,033	103,246
	OppGlSec3		OppBdFd	PVTGroInc	PVTIntEq	PVTVoyII
Single Premium contracts issued prior to April 16, 1990	$	59	8,195	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		7,452	69,934	630	1,454	242
Total	$	7,511	78,129	630	1,454	242
	StIntStk2		TRPBluChpGrII	TRowEqInc2	TRLimTrmBnd2	VEWrldBd
Single Premium contracts issued prior to April 16, 1990	$	–	–	–	–	8,793
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	112
Multiple Payment and Flexible Premium contracts		–	244	602	36	16,987
Total	$	–	244	602	36	25,892
	VEWrldEMkt		VEWrldHAs	VKoreFI	VKEmMkt	VKUSRealEst
Single Premium contracts issued prior to April 16, 1990	$	8,577	16,855	–	1,860	20,392
Single Premium contracts issued on or after April 16, 1990		409	346	–	100	202
Multiple Payment and Flexible Premium contracts		38,444	40,560	1,780	12,329	114,495
Total	$	47,430	57,761	1,780	14,289	135,089
	StDisc2		StOpp2
Single Premium contracts issued prior to April 16, 1990	$	6,054	28,838
Single Premium contracts issued on or after April 16, 1990		42	104
Multiple Payment and Flexible Premium contracts		48,394	210,970
Total	$	54,490	239,912

(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.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

(5) Policy Loans (Net of Repayments)

Contract provisions allow contract owners to borrow up to 90% (50% during first year of single and modified single premium contracts) of a policy’s cash surrender value. For single premium contracts issued prior to April 16, 1990, 6.5% interest is due and payable annually in advance of the policy anniversary date. For single premium contracts issued on or after April 16, 1990, multiple payment, flexible premium, modified single and last survivor flexible premium contracts, 6% interest is due and payable in advance on the policy anniversary when there is a loan outstanding on the policy.

At the time the loan is granted, the amount of the loan is transferred from the Account to the Company’s general account as collateral for the outstanding loan. Collateral amounts in the general account are credited with the stated rate of interest in effect at the time the loan is made, subject to a guaranteed minimum rate. Loan repayments result in a transfer of collateral, including interest, back to the Account.

(6) Related Party Transactions

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

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

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

For the periods ended December 31, 2005 and 2004, total transfers into the Account from the fixed account were $24,517,955 and $25,279,930, respectively, and total transfers from the Account to the fixed account were $27,229,398 and $26,791,089, respectively.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

(7) Financial Highlights

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Modified Single Premium contracts and Last Survivor Flexible Premium contracts
AIM VIF – Basic Value Fund – Series I Shares
2005	0.00%	1,026	$	15.346928	$	15,746	0.09%	5.74%
2004	0.00%	738		14.514365		10,712	0.00%	11.07%
2003	0.00%	1,146		13.067831		14,976	0.11%	30.68%	05/01/03
AIM VIF – Capital Appreciation Fund – Series I Shares
2005	0.00%	780		14.382523		11,218	0.04%	8.84%
2004	0.00%	76		13.214909		1,004	0.00%	6.63%
2003	0.00%	78		12.393708		967	0.00%	23.94%	05/01/03
AIM VIF – Capital Development Fund – Series I Shares
2005	0.00%	2,094		16.468791		34,486	0.00%	9.60%
2004	0.00%	2,534		15.025595		38,075	0.00%	15.50%
2003	0.00%	286		13.009212		3,721	0.00%	30.09%	05/01/03
Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A
2005	0.00%	17,122		14.542693		249,000	1.68%	4.87%
2004	0.00%	18,484		13.867818		256,333	0.96%	11.46%
2003	0.00%	10,465		12.441750		130,203	0.00%	24.42%	05/01/03
Alliance VPSF – AllianceBernstein Small/Mid Cap Value Portfolio – Class A
2005	0.00%	3,250		17.597332		57,191	0.72%	6.91%
2004	0.00%	6,962		16.459431		114,591	0.13%	19.30%
2003	0.00%	3,645		13.796395		50,288	0.02%	37.96%	05/01/03
American Century VP – Balanced Fund – Class I
2005	0.00%	40,316		18.850696		759,985	1.83%	4.93%
2004	0.00%	40,968		17.964228		735,958	1.68%	9.78%
2003	0.00%	39,618		16.364159		648,315	2.53%	19.46%
2002	0.00%	41,666		13.698528		570,763	2.63%	-9.56%
2001	0.00%	46,974		15.146118		711,474	2.81%	-3.54%
American Century VP – Capital Appreciation Fund – Class I
2005	0.00%	73,308		13.885054		1,017,886	0.00%	22.06%
2004	0.00%	71,068		11.375351		808,423	0.00%	7.58%
2003	0.00%	78,088		10.573426		825,658	0.00%	20.47%
2002	0.00%	84,319		8.776539		740,029	0.00%	-21.20%
2001	0.00%	113,954		11.137742		1,269,190	0.00%	-28.07%
American Century VP – Income & Growth Fund – Class I
2005	0.00%	27,378		13.018850		356,430	2.03%	4.63%
2004	0.00%	42,110		12.442664		523,961	1.44%	12.99%
2003	0.00%	57,191		11.011963		629,785	1.30%	29.35%
2002	0.00%	52,727		8.513147		448,873	1.10%	-19.37%
2001	0.00%	53,217		10.558315		561,882	0.81%	-8.35%
American Century VP – International Fund – Class I
2005	0.00%	52,474		18.928348		993,246	1.27%	13.25%
2004	0.00%	63,654		16.713189		1,063,861	0.58%	14.92%
2003	0.00%	93,653		14.542846		1,361,981	0.75%	24.51%
2002	0.00%	108,743		11.680067		1,270,126	0.79%	-20.37%
2001	0.00%	111,542		14.668200		1,636,120	0.09%	-29.17%
American Century VP – Mid Cap Value Fund – Class I
2005	0.00%	956		11.322176		10,824	1.06%	13.22%	05/02/05
American Century VP – Ultra® Fund – Class I
2005	0.00%	9,754		11.352287		110,730	0.00%	2.17%
2004	0.00%	12,672		11.111676		140,807	0.00%	10.68%
2003	0.00%	8,464		10.039885		84,978	0.00%	24.90%
2002	0.00%	2,062		8.038471		16,575	0.46%	-19.62%	05/01/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
American Century VP – Value Fund – Class I
2005	0.00%	73,392	$	23.976512	$	1,759,684	0.88%	5.03%
2004	0.00%	80,992		22.827520		1,848,846	1.01%	14.33%
2003	0.00%	94,777		19.965823		1,892,301	1.09%	28.96%
2002	0.00%	105,282		15.482416		1,630,020	0.90%	-12.62%
2001	0.00%	98,909		17.718442		1,752,513	0.95%	12.82%
American Century VP II – Inflation Protection Fund – Class II
2005	0.00%	10,992		11.094803		121,954	4.38%	1.56%
2004	0.00%	7,602		10.924094		83,045	3.57%	5.81%
2003	0.00%	739		10.324182		7,630	1.88%	3.24%	04/30/03
American Century VP III – International Fund – Class III
2005	0.00%	20,404		11.673757		238,191	0.00%	16.74%	05/02/05
Credit Suisse Trust – Global Small Cap Portfolio
2005	0.00%	12,466		15.465259		192,790	0.00%	16.14%
2004	0.00%	11,532		13.315648		153,556	0.00%	17.99%
2003	0.00%	11,132		11.285456		125,630	0.00%	47.66%
2002	0.00%	11,260		7.643060		86,061	0.00%	-34.16%
2001	0.00%	12,080		11.607891		140,223	0.00%	-28.63%
Credit Suisse Trust – International Focus Portfolio
2005	0.00%	94,820		12.986442		1,231,374	0.91%	17.44%
2004	0.00%	103,404		11.058069		1,143,449	0.99%	14.74%
2003	0.00%	111,879		9.637324		1,078,214	0.49%	33.09%
2002	0.00%	115,124		7.241185		833,634	0.00%	-19.90%
2001	0.00%	120,573		9.040640		1,090,057	0.00%	-22.27%
Credit Suisse Trust – Small Cap Growth Portfolio
2005	0.00%	127,936		13.646704		1,745,905	0.00%	-2.68%
2004	0.00%	136,576		14.022473		1,915,133	0.00%	10.87%
2003	0.00%	136,928		12.647723		1,731,827	0.00%	48.55%
2002	0.00%	132,124		8.514305		1,124,944	0.00%	-33.69%
2001	0.00%	185,522		12.840185		2,382,137	0.00%	-16.01%
Dreyfus IP – European Equity Portfolio
2001	0.00%	133		6.722485		894	0.84%	-28.13%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class
2005	0.00%	38,236		13.821296		528,471	0.00%	7.23%
2004	0.00%	40,584		12.889095		523,091	0.50%	21.88%
2003	0.00%	38,496		10.574853		407,090	0.33%	37.78%
2002	0.00%	4,411		7.675242		33,855	0.27%	-23.25%	05/01/02
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares
2005	0.00%	514,448		21.667325		11,146,712	1.60%	4.69%
2004	0.00%	578,778		20.696422		11,978,634	1.80%	10.64%
2003	0.00%	632,333		18.706070		11,828,465	1.51%	28.36%
2002	0.00%	584,757		14.572787		8,521,539	1.31%	-22.36%
2001	0.00%	599,693		18.770165		11,256,337	1.06%	-12.18%
Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc.
2005	0.00%	40,512		16.401660		664,464	0.00%	3.62%
2004	0.00%	46,244		15.829359		732,013	0.38%	6.21%
2003	0.00%	50,706		14.903772		755,711	0.11%	26.00%
2002	0.00%	57,964		11.828136		685,606	0.21%	-28.94%
2001	0.00%	72,096		16.646416		1,200,140	0.06%	-22.57%
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2005	0.00%	63,038		14.837109		935,302	0.02%	4.38%
2004	0.00%	68,432		14.214838		972,750	1.63%	5.05%
2003	0.00%	77,680		13.532029		1,051,168	1.40%	21.17%
2002	0.00%	76,442		11.167894		853,696	1.14%	-16.71%
2001	0.00%	81,387		13.409044		1,091,322	0.84%	-9.31%
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares
2005	0.00%	5,054		15.197076		76,806	0.00%	5.80%
2004	0.00%	3,802		14.363942		54,612	0.22%	11.34%
2003	0.00%	4,756		12.900917		61,357	0.08%	29.01%	05/01/03

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Dreyfus VIF – Growth and Income Portfolio – Initial Shares
2005	0.00%	35,564	$	14.429123	$	513,157	1.34%	3.35%
2004	0.00%	37,814		13.961156		527,927	1.23%	7.47%
2003	0.00%	36,562		12.991038		474,978	0.84%	26.57%
2002	0.00%	42,290		10.263905		434,061	0.60%	-25.33%
2001	0.00%	42,969		13.745232		590,619	0.50%	-5.85%
Federated IS – American Leaders Fund II – Primary Shares
2005	0.00%	362		14.525597		5,258	1.33%	5.02%
2004	0.00%	306		13.830995		4,232	0.41%	9.78%
Federated IS – Quality Bond Fund II – Primary Shares
2005	0.00%	19,802		11.843786		234,531	3.65%	1.30%
2004	0.00%	12,318		11.692084		144,023	4.98%	3.62%
2003	0.00%	11,878		11.283621		134,027	3.93%	4.65%
2002	0.00%	11,620		10.782678		125,295	0.00%	7.83%	05/01/02
Fidelity® VIP – Equity-Income Portfolio: Initial Class
2005	0.00%	348,510		21.607366		7,530,383	1.64%	5.87%
2004	0.00%	375,788		20.410267		7,669,933	1.56%	11.53%
2003	0.00%	409,083		18.300351		7,486,362	1.80%	30.33%
2002	0.00%	407,426		14.041601		5,720,913	1.77%	-16.95%
2001	0.00%	431,008		16.906669		7,286,910	1.70%	-4.96%
Fidelity® VIP – Growth Portfolio: Initial Class
2005	0.00%	341,122		18.410455		6,280,211	0.51%	5.80%
2004	0.00%	365,242		17.401445		6,355,739	0.27%	3.38%
2003	0.00%	393,063		16.832769		6,616,339	0.27%	32.85%
2002	0.00%	408,322		12.670716		5,173,732	0.25%	-30.10%
2001	0.00%	464,650		18.128151		8,423,245	0.08%	-17.65%
Fidelity® VIP – High Income Portfolio: Initial Class
2005	0.00%	185,840		13.370516		2,484,777	16.14%	2.70%
2004	0.00%	222,416		13.018901		2,895,612	8.82%	9.59%
2003	0.00%	277,638		11.879372		3,298,165	5.94%	27.26%
2002	0.00%	277,242		9.334381		2,587,882	9.29%	3.44%
2001	0.00%	268,872		9.023656		2,426,208	13.67%	-11.73%
Fidelity® VIP – Overseas Portfolio: Initial Class
2005	0.00%	101,850		18.869419		1,921,850	0.71%	19.05%
2004	0.00%	112,550		15.850578		1,783,983	1.14%	13.64%
2003	0.00%	104,335		13.948630		1,455,330	0.83%	43.37%
2002	0.00%	100,989		9.729244		982,547	0.83%	-20.28%
2001	0.00%	100,976		12.204145		1,232,326	5.37%	-21.17%
Fidelity® VIP – Overseas Portfolio: Service Class R
2005	0.00%	21,148		12.499996		264,350	0.00%	25.00%	05/02/05
Fidelity® VIP II – Asset Manager Portfolio: Initial Class
2005	0.00%	71,156		18.505123		1,316,751	2.76%	4.04%
2004	0.00%	80,426		17.785832		1,430,443	2.76%	5.47%
2003	0.00%	78,858		16.863587		1,329,829	3.62%	17.97%
2002	0.00%	87,642		14.294216		1,252,774	3.98%	-8.73%
2001	0.00%	97,209		15.661062		1,522,396	4.21%	-4.09%
Fidelity® VIP II – Contrafund® Portfolio: Initial Class
2005	0.00%	264,040		29.064668		7,674,235	0.29%	16.94%
2004	0.00%	258,620		24.855086		6,428,022	0.34%	15.48%
2003	0.00%	271,532		21.523942		5,844,439	0.46%	28.46%
2002	0.00%	278,231		16.754926		4,661,740	0.85%	-9.35%
2001	0.00%	310,919		18.482808		5,746,656	0.78%	-12.24%
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class
2005	0.00%	24,210		10.880732		263,423	1.67%	2.08%
2004	0.00%	24,840		10.659014		264,770	1.88%	4.32%
2003	0.00%	998		10.217718		10,197	0.00%	2.18%	05/01/03
Fidelity® VIP III – Growth Opportunities Portfolio: Initial Class
2005	0.00%	52,346		12.017274		629,056	0.95%	8.89%
2004	0.00%	61,482		11.036087		678,521	0.53%	7.19%
2003	0.00%	60,543		10.295709		623,333	0.74%	29.87%
2002	0.00%	51,868		7.927585		411,188	1.07%	-21.84%
2001	0.00%	59,212		10.143319		600,606	0.38%	-14.42%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Fidelity® VIP III – Mid Cap Portfolio: Service Class
2005	0.00%	37,294	$	20.773676	$	774,733	0.00%	18.20%
2004	0.00%	27,716		17.574515		487,095	0.00%	24.77%
2003	0.00%	9,873		14.085331		139,064	0.00%	40.85%	05/01/03
Fidelity® VIP III – Value Strategies Portfolio: Service Class
2005	0.00%	9,800		13.851491		135,745	0.00%	2.55%
2004	0.00%	27,044		13.506506		365,270	0.00%	13.99%
2003	0.00%	26,162		11.849148		309,997	0.00%	57.79%
2002	0.00%	843		7.509507		6,331	0.00%	-24.90%	05/01/02
Fidelity® VIP IV – Natural Resources Portfolio: Service Class 2
2005	0.00%	11,834		13.514321		159,928	0.65%	35.14%	05/02/05
Fidelity® VIP FF – Freedom Fund 2010 Portfolio: Service Class
2005	0.00%	2,002		10.806063		21,634	0.56%	8.06%	05/02/05
Fidelity® VIP FF – Freedom Fund 2020 Portfolio: Service Class
2005	0.00%	5,140		11.118664		57,150	0.86%	11.19%	05/02/05
Franklin Templeton VIP – Franklin Rising Dividends Securities Fund – Class I
2005	0.00%	20,818		14.195085		295,513	1.09%	3.68%
2004	0.00%	30,080		13.690957		411,824	0.66%	11.25%
2003	0.00%	15,727		12.306508		193,544	0.20%	23.07%	05/01/03
Franklin Templeton VIP – Franklin Small Cap Value Securities Fund – Class I
2005	0.00%	8,690		18.064784		156,983	0.91%	8.99%
2004	0.00%	7,248		16.575156		120,137	0.19%	24.09%
2003	0.00%	2,401		13.357313		32,071	0.12%	33.57%	05/01/03
Franklin Templeton VIP – Templeton Foreign Securities Fund – Class I
2005	0.00%	8,296		17.425708		144,564	1.37%	10.48%
2004	0.00%	25,722		15.773327		405,722	1.10%	18.87%
2003	0.00%	4,015		13.269107		53,275	0.79%	32.69%	05/01/03
Franklin Templeton VIP III – Franklin Global Income Securities Fund – Class 3
2005	0.00%	1,034		9.881172		10,217	7.95%	-1.19%	05/02/05
Franklin Templeton VIP III – Templeton Developing Markets Securities Fund – Class 3
2005	0.00%	14,152		12.804274		181,206	0.53%	28.04%	05/02/05
Franklin Templeton VIP III – Templeton Foreign Securities Fund – Class 3
2005	0.00%	21,384		11.288544		241,394	0.39%	12.89%	05/02/05
Gartmore GVIT – Dreyfus International Value Fund – Class I
2005	0.00%	3,908		18.800450		73,472	1.34%	12.09%
2004	0.00%	11,032		16.772215		185,031	2.03%	20.29%
2003	0.00%	3,602		13.838062		49,845	0.00%	38.38%	05/01/03
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	0.00%	65,296		15.357475		1,002,782	1.03%	12.10%
2004	0.00%	74,186		13.700026		1,016,350	0.54%	15.73%
2003	0.00%	87,632		11.837744		1,037,365	0.49%	34.65%
2002	0.00%	57,522		8.791459		505,702	0.42%	-15.30%
2001	0.00%	37,983		10.379883		394,259	0.54%	-1.30%
Gartmore GVIT – Emerging Markets Fund: Class I
2005	0.00%	11,646		18.534273		215,850	0.61%	32.64%
2004	0.00%	16,620		13.973799		232,245	0.93%	20.74%
2003	0.00%	19,194		11.573140		222,135	0.66%	65.26%
2002	0.00%	7,501		7.002885		52,529	0.17%	-15.23%
2001	0.00%	27,272		8.260926		225,292	0.52%	-5.18%
Gartmore GVIT – Federated High Income Bond Fund: Class I
2005	0.00%	8,510		12.532998		106,656	6.81%	2.38%
2004	0.00%	7,390		12.241616		90,466	8.50%	10.10%
2003	0.00%	5,828		11.119017		64,802	9.25%	11.19%	05/01/03
Gartmore GVIT – Global Financial Services Fund: Class I
2005	0.00%	952		16.481268		15,690	2.00%	11.15%
2004	0.00%	1,534		14.827817		22,746	1.45%	20.99%
2003	0.00%	1,548		12.255125		18,971	0.88%	41.45%
2002	0.00%	289		8.663891		2,504	0.08%	-13.36%	05/01/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Global Health Sciences Fund: Class I
2005	0.00%	7,210	$	13.334230	$	96,140	0.00%	8.44%
2004	0.00%	11,908		12.296466		146,426	0.00%	7.86%
2003	0.00%	7,254		11.400451		82,699	0.00%	36.69%
2002	0.00%	1,753		8.340128		14,620	0.00%	-16.60%	05/01/02
Gartmore GVIT – Global Technology and Communications Fund:Class I
2005	0.00%	15,970		3.177040		50,737	0.00%	-0.52%
2004	0.00%	24,430		3.193545		78,018	0.00%	4.31%
2003	0.00%	27,880		3.061527		85,355	0.00%	55.23%
2002	0.00%	11,606		1.972253		22,890	0.59%	-42.78%
2001	0.00%	2,536		3.446837		8,741	0.00%	-42.72%
Gartmore GVIT – Global Utilities Fund: Class I
2005	0.00%	12,822		14.894755		190,981	2.16%	6.39%
2004	0.00%	12,104		14.000446		169,461	1.92%	29.97%
2003	0.00%	3,190		10.772327		34,364	0.70%	24.05%
2002	0.00%	250		8.683837		2,171	0.54%	-13.16%	05/01/02
Gartmore GVIT – Government Bond Fund: Class I
2005	0.00%	105,202		18.147625		1,909,166	3.64%	3.26%
2004	0.00%	114,686		17.574111		2,015,504	5.48%	3.26%
2003	0.00%	141,781		17.018937		2,412,962	3.14%	2.00%
2002	0.00%	215,754		16.685161		3,599,890	4.42%	10.98%
2001	0.00%	192,314		15.033937		2,891,237	5.12%	7.25%
Gartmore GVIT – Growth Fund – Class I
2005	0.00%	135,380		12.177042		1,648,528	0.08%	6.50%
2004	0.00%	145,006		11.433814		1,657,972	0.33%	8.16%
2003	0.00%	161,969		10.571536		1,712,261	0.02%	32.74%
2002	0.00%	160,573		7.964177		1,278,832	0.00%	-28.72%
2001	0.00%	169,484		11.173143		1,893,669	0.00%	-28.13%
Gartmore GVIT – International Growth Fund: Class I
2005	0.00%	3,756		10.100861		37,939	1.03%	30.21%
2004	0.00%	1,590		7.757434		12,334	1.40%	14.19%
2003	0.00%	2,327		6.793220		15,808	0.00%	35.62%
Gartmore GVIT – Mid Cap Growth Fund: Class I
2005	0.00%	24,418		6.346461		154,968	0.00%	9.74%
2004	0.00%	21,204		5.783113		122,625	0.00%	15.34%
2003	0.00%	85,532		5.014057		428,862	0.00%	40.13%
2002	0.00%	49,103		3.578034		175,692	0.00%	-37.01%
2001	0.00%	15,083		5.680754		85,683	0.00%	-30.31%
Gartmore GVIT – Money Market Fund – Class I
2005	0.00%	309,850		13.908651		4,309,596	2.64%	2.67%
2004	0.00%	336,040		13.547206		4,552,403	0.78%	0.81%
2003	0.00%	426,388		13.438171		5,729,875	0.63%	0.63%
2002	0.00%	611,041		13.354620		8,160,220	1.26%	1.21%
2001	0.00%	752,971		13.194770		9,935,279	3.57%	3.60%
Gartmore GVIT – Nationwide® Fund: Class I
2005	0.00%	271,134		20.062025		5,439,497	0.91%	7.44%
2004	0.00%	283,884		18.672551		5,300,838	1.28%	9.75%
2003	0.00%	320,276		17.013568		5,449,038	0.56%	27.51%
2002	0.00%	343,472		13.342709		4,582,847	0.85%	-17.35%
2001	0.00%	370,050		16.144226		5,974,171	0.74%	-11.82%
Gartmore GVIT – Nationwide® Leaders Fund: Class I
2005	0.00%	2,942		13.887943		40,858	1.54%	10.31%
2004	0.00%	2,072		12.589767		26,086	0.52%	18.79%
2003	0.00%	680		10.598061		7,207	0.19%	25.38%
2002	0.00%	837		8.452459		7,075	1.18%	-15.48%	05/01/02
Gartmore GVIT – Small Cap Growth Fund: Class I
2005	0.00%	18,340		7.949160		145,788	0.00%	8.09%
2004	0.00%	38,172		7.354229		280,726	0.00%	13.42%
2003	0.00%	29,802		6.484322		193,246	0.00%	34.27%
2002	0.00%	39,937		4.829491		192,875	0.00%	-33.29%
2001	0.00%	28,981		7.239237		209,800	0.00%	-10.84%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Small Cap Value Fund: Class I
2005	0.00%	107,082	$	21.671283	$	2,320,604	0.06%	3.07%
2004	0.00%	125,486		21.025284		2,638,379	0.00%	17.30%
2003	0.00%	144,123		17.924637		2,583,352	0.00%	56.85%
2002	0.00%	156,777		11.427654		1,791,593	0.01%	-27.16%
2001	0.00%	145,093		15.689204		2,276,394	0.03%	28.28%
Gartmore GVIT – Small Company Fund: Class I
2005	0.00%	133,578		28.446533		3,799,831	0.00%	12.32%
2004	0.00%	143,764		25.327151		3,641,133	0.00%	19.02%
2003	0.00%	163,826		21.279390		3,486,117	0.00%	41.01%
2002	0.00%	161,607		15.090443		2,438,721	0.00%	-17.33%
2001	0.00%	171,105		18.253468		3,123,260	0.10%	-6.70%
Gartmore GVIT – Turner Growth Focus Fund – Class I
2003	0.00%	35,452		3.336873		118,299	0.00%	50.96%
2002	0.00%	5,450		2.210411		12,047	0.00%	-42.86%
Gartmore GVIT – U.S. Growth Leaders Fund: Class I
2005	0.00%	5,658		15.751023		89,119	0.00%	11.96%
2004	0.00%	4,040		14.068165		56,835	0.00%	12.41%
2003	0.00%	4,436		12.515174		55,517	0.00%	52.14%
2002	0.00%	1,992		8.226323		16,387	0.00%	-17.74%	05/01/02
Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I
2005	0.00%	14,212		14.303985		203,288	3.89%	2.18%
2004	0.00%	12,326		13.998807		172,549	4.85%	6.53%
2003	0.00%	18,184		13.140266		238,943	5.47%	12.12%
2002	0.00%	12,174		11.720231		142,682	4.53%	7.21%
2001	0.00%	2,363		10.932334		25,833	8.29%	4.19%
Gartmore GVIT – Van Kampen Value Fund – Class I
2005	0.00%	5,522		15.522071		85,713	1.69%	4.25%
2004	0.00%	1,768		14.889740		26,325	1.56%	17.50%
2003	0.00%	75		12.672281		950	1.52%	26.72%	05/01/03
Gartmore GVIT III – Dreyfus International Value Fund – Class III
2005	0.00%	6,630		11.451970		75,927	0.95%	14.52%	05/02/05
Gartmore GVIT III – Emerging Markets Fund: Class III
2005	0.00%	17,390		13.336908		231,929	0.19%	33.37%	05/02/05
Gartmore GVIT III – Federated High Income Bond Fund: Class III
2005	0.00%	1,936		10.540776		20,407	6.33%	5.41%	05/02/05
Gartmore GVIT III – Global Health Sciences Fund: Class III
2005	0.00%	230		10.742057		2,471	0.00%	7.42%	05/02/05
Gartmore GVIT III – Global Technology and Communications Fund: Class III
2005	0.00%	2,428		12.317458		29,907	0.00%	23.17%	05/02/05
Gartmore GVIT ID II – Aggressive Fund – Class II
2005	0.00%	530		13.521320		7,166	1.95%	7.93%
2004	0.00%	84		12.527746		1,052	1.75%	14.03%
2003	0.00%	86		10.986753		945	1.41%	31.87%
Gartmore GVIT ID II – Conservative Fund – Class II
2005	0.00%	966		11.724859		11,326	2.78%	3.31%
2004	0.00%	5,030		11.349571		57,088	2.46%	4.65%
2003	0.00%	4,630		10.845040		50,213	2.37%	7.91%
2002	0.00%	10,505		10.050418		105,580	2.80%	0.50%	01/25/02
Gartmore GVIT ID II – Moderate Fund – Class II
2005	0.00%	72,624		12.661618		919,537	2.36%	5.34%
2004	0.00%	57,958		12.019313		696,615	2.27%	9.54%
2003	0.00%	26,164		10.972970		287,097	2.06%	20.05%
2002	0.00%	14,854		9.140249		135,769	1.72%	-8.60%	01/25/02
Gartmore GVIT ID II – Moderately Aggressive Fund – Class II
2005	0.00%	25,104		13.204972		331,498	2.14%	7.07%
2004	0.00%	24,722		12.332826		304,892	1.97%	12.09%
2003	0.00%	10,934		11.002361		120,300	1.54%	26.64%
2002	0.00%	14,728		8.687687		127,952	1.55%	-13.12%	01/25/02

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT ID II – Moderately Conservative Fund – Class II
2005	0.00%	9,208	$	12.275099	$	113,029	2.75%	4.49%
2004	0.00%	27,902		11.748118		327,796	2.48%	7.16%
2003	0.00%	21,041		10.963279		230,678	2.34%	13.70%
2002	0.00%	9,155		9.642427		88,276	2.35%	-3.58%	01/25/02
Janus AS – Balanced Portfolio – Service Shares
2005	0.00%	5,050		12.860543		64,946	2.56%	7.66%
2004	0.00%	668		11.945467		7,980	3.27%	8.29%
Janus AS – Forty Portfolio – Service Shares
2005	0.00%	51,138		8.323593		425,652	0.01%	12.56%
2004	0.00%	46,432		7.395085		343,369	0.02%	17.97%
2003	0.00%	57,199		6.268750		358,566	0.25%	20.23%
2002	0.00%	58,881		5.213836		306,996	0.30%	-15.93%
2001	0.00%	62,604		6.201616		388,246	0.91%	-21.83%
Janus AS – Global Technology Portfolio – Service Shares
2005	0.00%	48,024		4.124323		198,066	0.00%	11.55%
2004	0.00%	46,310		3.697308		171,222	0.00%	0.57%
2003	0.00%	63,964		3.676479		235,162	0.00%	46.47%
2002	0.00%	54,722		2.510001		137,352	0.00%	-40.93%
2001	0.00%	58,616		4.249300		249,077	0.56%	-37.31%
Janus AS – International Growth Portfolio – Service Shares
2005	0.00%	38,214		9.523236		363,921	1.14%	31.94%
2004	0.00%	47,840		7.217918		345,305	0.83%	18.69%
2003	0.00%	43,445		6.081514		264,211	0.99%	34.53%
2002	0.00%	43,393		4.520472		196,157	0.67%	-25.76%
2001	0.00%	37,721		6.088787		229,675	0.70%	-23.43%
Janus AS – Risk-Managed Large Cap Core Portfolio – Service Shares
2005	0.00%	1,406		16.027544		22,535	1.43%	10.91%
MFS® VITSM– MFS Investors Growth Stock Series – Initial Class
2005	0.00%	704		13.231476		9,315	0.38%	4.49%
2004	0.00%	1,058		12.663111		13,398	0.00%	9.18%
MFS® VITSM– MFS Value Series – Initial Class
2005	0.00%	2,450		15.193770		37,225	0.65%	6.66%
2004	0.00%	2,060		14.245099		29,345	0.34%	15.18%
2003	0.00%	255		12.367820		3,154	0.00%	23.68%	05/01/03
Neuberger Berman AMT – International Portfolio – Class S
2005	0.00%	2,516		11.750261		29,564	0.22%	17.50%	05/02/05
Neuberger Berman AMT – Regency Portfolio – Class S
2005	0.00%	2,786		11.661977		32,490	0.00%	16.62%	05/02/05
Neuberger Berman AMT – Growth Portfolio®– I Class Shares
2005	0.00%	74,162		16.292408		1,208,278	0.00%	13.50%
2004	0.00%	79,436		14.354807		1,140,288	0.00%	16.60%
2003	0.00%	92,061		12.310867		1,133,351	0.00%	31.40%
2002	0.00%	91,607		9.369018		858,268	0.00%	-31.16%
2001	0.00%	194,831		13.610476		2,651,743	0.00%	-30.36%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2005	0.00%	23,910		13.041591		311,824	0.14%	8.39%
2004	0.00%	34,354		12.031993		413,347	0.12%	15.81%
2003	0.00%	33,326		10.389042		346,225	0.84%	31.76%
2002	0.00%	40,952		7.884759		322,897	0.80%	-26.45%
2001	0.00%	42,795		10.719948		458,760	0.47%	-1.51%
Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares
2005	0.00%	52,164		15.179497		791,823	2.61%	1.44%
2004	0.00%	57,882		14.963540		866,120	3.64%	0.78%
2003	0.00%	68,260		14.847857		1,013,515	4.41%	2.42%
2002	0.00%	78,261		14.496454		1,134,507	4.91%	5.34%
2001	0.00%	53,267		13.761786		733,049	5.78%	8.78%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Neuberger Berman AMT – Partners Portfolio®– I Class Shares
2005	0.00%	203,136	$	23.735143	$	4,821,462	1.02%	18.04%
2004	0.00%	200,296		20.106864		4,027,324	0.01%	18.98%
2003	0.00%	212,651		16.900050		3,593,813	0.00%	35.09%
2002	0.00%	211,641		12.510433		2,647,721	0.53%	-24.14%
2001	0.00%	214,234		16.491924		3,533,131	0.38%	-2.83%
Neuberger Berman AMT – Socially Responsive Portfolio®– I Class Shares
2005	0.00%	2,042		14.979202		30,588	0.00%	6.86%
2004	0.00%	510		14.018027		7,149	0.00%	13.28%
2003	0.00%	42		12.374746		520	0.00%	23.75%	05/01/03
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares
2005	0.00%	854		14.513954		12,395	0.00%	2.90%
2004	0.00%	486		14.105334		6,855	0.00%	11.88%
Neuberger Berman AMT – Mid Cap Growth Portfolio®– S Class Shares
2005	0.00%	2,328		16.217741		37,755	0.00%	13.42%
2004	0.00%	3,532		14.298387		50,502	0.00%	16.03%
2003	0.00%	2,927		12.322580		36,068	0.00%	23.23%	05/01/03
Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class
2005	0.00%	17,266		6.561616		113,293	0.00%	12.33%
2004	0.00%	34,910		5.841557		203,929	0.00%	19.78%
2003	0.00%	27,076		4.877042		132,051	0.00%	25.59%
2002	0.00%	11,406		3.883303		44,293	0.65%	-27.79%
2001	0.00%	27,049		5.377832		145,465	0.87%	-31.27%
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class
2005	0.00%	81,160		17.301818		1,404,216	0.93%	5.10%
2004	0.00%	83,842		16.462506		1,380,249	0.33%	6.94%
2003	0.00%	98,014		15.394717		1,508,898	0.38%	30.94%
2002	0.00%	90,095		11.756809		1,059,230	0.64%	-26.86%
2001	0.00%	116,791		16.074008		1,877,299	0.64%	-12.58%
Oppenheimer Funds – Global Securities Fund/VA – Initial Class
2005	0.00%	90,550		33.631650		3,045,346	1.07%	14.31%
2004	0.00%	105,104		29.422164		3,092,387	1.25%	19.16%
2003	0.00%	103,002		24.690704		2,543,192	0.76%	43.02%
2002	0.00%	106,692		17.263833		1,841,913	0.56%	-22.13%
2001	0.00%	111,537		22.171331		2,472,924	0.69%	-12.04%
Oppenheimer Funds – High Income Fund/VA – Initial Class
2005	0.00%	8,710		12.466334		108,582	6.75%	2.31%
2004	0.00%	12,018		12.184423		146,432	4.23%	8.97%
2003	0.00%	6,913		11.181817		77,300	0.00%	11.82%	05/01/03
Oppenheimer Funds – Main Street Fund®/VA – Initial Class
2005	0.00%	44,198		9.709756		429,152	1.25%	5.98%
2004	0.00%	28,322		9.162245		259,493	0.84%	9.46%
2003	0.00%	34,417		8.370485		288,087	0.90%	26.72%
2002	0.00%	30,456		6.605587		201,180	0.65%	-18.80%
2001	0.00%	21,240		8.134641		172,780	0.41%	-10.16%
Oppenheimer Funds – Main Street Small Cap Fund®/VA – Initial Class
2005	0.00%	1,242		18.206560		22,613	0.00%	9.92%
2004	0.00%	1,252		16.563464		20,737	0.00%	19.42%
2003	0.00%	2,855		13.869971		39,599	0.00%	38.70%	05/01/03
Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class
2005	0.00%	72,064		21.300283		1,534,984	1.76%	3.89%
2004	0.00%	76,060		20.502973		1,559,456	1.01%	10.10%
2003	0.00%	80,959		18.621945		1,507,614	2.82%	24.96%
2002	0.00%	82,462		14.902681		1,228,905	3.60%	-10.40%
2001	0.00%	84,920		16.632670		1,412,446	3.96%	2.22%
Oppenheimer Funds III – Global Securities Fund/VA – Class 3
2005	0.00%	28,160		12.059670		339,600	0.00%	20.60%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class
2005	0.00%	91,754	$	17.632382	$	1,617,842	5.34%	2.59%
2004	0.00%	96,616		17.187703		1,660,607	4.80%	5.49%
2003	0.00%	113,252		16.292834		1,845,196	5.67%	6.78%
2002	0.00%	126,813		15.258399		1,934,963	7.25%	9.08%
2001	0.00%	120,742		13.988352		1,688,982	7.04%	7.79%
Putnam VT IB – Growth & Income Fund – IB Shares
2005	0.00%	1,222		14.527575		17,753	1.56%	5.23%
2004	0.00%	1,634		13.805820		22,559	1.66%	11.11%
Putnam VT IB – International Equity Fund – IB Shares
2005	0.00%	178		16.685441		2,970	1.11%	12.20%
Putnam VT IB – Voyager II Fund – IB Shares
2005	0.00%	2,746		13.159164		36,135	0.60%	5.69%
2004	0.00%	2,224		12.450430		27,690	0.19%	5.03%
2003	0.00%	42		11.853879		498	0.00%	18.54%	05/01/03
Strong VIF – Strong International Stock Fund II
2002	0.00%	57,275		5.361165		307,061	4.04%	-26.54%
2001	0.00%	55,640		7.298468		406,087	0.00%	-22.14%
T. Rowe Price II – Blue Chip Growth Portfolio – II
2005	0.00%	2,948		11.314946		33,356	0.29%	13.15%	05/02/05
T. Rowe Price II – Equity Income Portfolio – II
2005	0.00%	3,790		10.636871		40,314	1.20%	6.37%	05/02/05
Van Eck WIT – Worldwide Bond Fund – Initial Class
2005	0.00%	12,460		16.461869		205,115	7.55%	-3.03%
2004	0.00%	14,838		16.976579		251,898	8.78%	9.15%
2003	0.00%	23,556		15.553340		366,374	1.75%	18.16%
2002	0.00%	39,706		13.162611		522,635	0.00%	21.66%
2001	0.00%	15,977		10.819530		172,864	4.39%	-5.10%
Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class
2005	0.00%	83,034		16.694466		1,386,208	0.73%	32.00%
2004	0.00%	83,090		12.647730		1,050,900	0.59%	25.89%
2003	0.00%	79,411		10.046593		797,810	0.11%	54.19%
2002	0.00%	99,351		6.515847		647,356	0.20%	-2.90%
2001	0.00%	79,757		6.710492		535,209	0.00%	-1.81%
Van Eck WIT – Worldwide Hard Assets Fund – Initial Class
2005	0.00%	54,640		21.840496		1,193,365	0.30%	51.67%
2004	0.00%	41,778		14.400064		601,606	0.37%	24.23%
2003	0.00%	43,115		11.615034		500,782	0.48%	45.08%
2002	0.00%	40,828		8.006062		326,871	0.68%	-2.83%
2001	0.00%	32,526		8.239575		268,000	1.21%	-10.44%
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I
2005	0.00%	1,144		11.130805		12,734	3.62%	4.21%
2004	0.00%	622		10.680729		6,643	4.78%	4.37%
2003	0.00%	49		10.233765		501	0.00%	2.34%	05/01/03
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I
2005	0.00%	37,616		19.352478		727,963	7.52%	12.25%
2004	0.00%	37,346		17.240440		643,861	6.41%	10.06%
2003	0.00%	41,844		15.664315		655,458	0.00%	27.86%
2002	0.00%	36,681		12.250737		449,369	6.91%	9.22%
2001	0.00%	33,534		11.216363		376,130	9.40%	10.10%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	0.00%	49,280		43.458397		2,141,630	1.22%	17.05%
2004	0.00%	57,878		37.127644		2,148,874	1.55%	36.39%
2003	0.00%	54,506		27.220749		1,483,694	0.00%	37.51%
2002	0.00%	52,407		19.795314		1,037,413	3.29%	-0.79%
2001	0.00%	58,299		19.952330		1,163,201	3.98%	9.84%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Wells Fargo VTFSM– Wells Fargo Advantage Discovery Fund VT
2005	0.00%	16,270	$	20.726714	$	337,224	0.00%	8.27%
2004	0.00%	17,898		19.143146		342,624	0.00%	15.72%
2003	0.00%	18,929		16.542813		313,139	0.00%	39.43%
2002	0.00%	20,094		11.864827		238,412	0.00%	-12.02%
2001	0.00%	22,035		13.485135		297,145	0.72%	4.08%
Wells Fargo VTFSM– Wells Fargo Advantage Opportunity Fund VT
2005	0.00%	70,754		27.158853		1,921,597	0.00%	7.88%
2004	0.00%	85,426		25.174087		2,150,522	0.00%	18.22%
2003	0.00%	93,627		21.294252		1,993,717	0.07%	37.01%
2002	0.00%	98,264		15.542573		1,527,275	0.38%	-26.82%
2001	0.00%	103,859		21.238327		2,205,791	0.59%	-3.70%
Single Premium contracts issued prior to April 16, 1990 (policy years 11 and thereafter)
AIM VIF – Basic Value Fund – Series I Shares
2005	0.50%	27,146		15.143837		411,095	0.09%	5.21%
2004	0.50%	2,482		14.393873		35,726	0.00%	10.52%
AIM VIF – Capital Appreciation Fund – Series I Shares
2005	0.50%	288		14.192232		4,087	0.04%	8.29%
2004	0.50%	310		13.105225		4,063	0.00%	6.09%
2003	0.50%	1,364		12.965885		17,685	0.00%	29.66%	05/01/03
AIM VIF – Capital Development Fund – Series I Shares
2005	0.50%	3,614		16.250893		58,731	0.00%	9.06%
2004	0.50%	4,050		14.900870		60,349	0.00%	14.92%
Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A
2005	0.50%	10,070		14.350279		144,507	1.68%	4.35%
2004	0.50%	9,008		13.752717		123,884	0.96%	10.91%
2003	0.50%	1,081		12.400313		13,405	0.00%	24.00%	05/01/03
Alliance VPSF – AllianceBernstein Small/Mid Cap Value Portfolio – Class A
2005	0.50%	26,464		17.364568		459,536	0.72%	6.38%
2004	0.50%	2,172		16.322856		35,453	0.13%	18.71%
American Century VP – Balanced Fund – Class I
2005	0.50%	50,386		23.844923		1,201,450	1.83%	4.41%
2004	0.50%	28,138		22.837145		642,592	1.68%	9.23%
2003	0.50%	10,265		20.907285		214,613	2.53%	18.86%
2002	0.50%	2,665		17.589248		46,875	2.63%	-10.01%
American Century VP – Capital Appreciation Fund – Class I
2005	0.50%	104,698		34.827698		3,646,390	0.00%	21.46%
2004	0.50%	59,666		28.675107		1,710,929	0.00%	7.05%
2003	0.50%	31,820		26.787231		852,370	0.00%	19.87%
2002	0.50%	13,972		22.346236		312,222	0.00%	-21.59%
2001	0.50%	2,922		28.500613		83,279	0.00%	-28.43%
American Century VP – Income & Growth Fund – Class I
2005	0.50%	83,992		12.529281		1,052,359	2.03%	4.11%
2004	0.50%	28,284		12.034610		340,387	1.44%	12.43%
2003	0.50%	14,230		10.704192		152,321	1.30%	28.71%
2002	0.50%	7,837		8.316655		65,178	1.10%	-19.77%
American Century VP – International Fund – Class I
2005	0.50%	109,946		19.793391		2,176,204	1.27%	12.69%
2004	0.50%	59,792		17.564316		1,050,206	0.58%	14.35%
2003	0.50%	27,774		15.360020		426,609	0.75%	23.89%
2002	0.50%	5,091		12.398163		63,119	0.79%	-20.77%
American Century VP – Mid Cap Value Fund – Class I
2005	0.50%	2,498		11.284751		28,189	1.06%	12.85%	05/02/05
American Century VP – Ultra® Fund – Class I
2005	0.50%	20,298		11.146133		226,244	0.00%	1.66%
2004	0.50%	28,728		10.964413		314,986	0.00%	10.12%
2003	0.50%	2,408		9.956460		23,975	0.00%	24.28%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
American Century VP – Value Fund – Class I
2005	0.50%	121,762	$	22.794288	$	2,775,478	0.88%	4.51%
2004	0.50%	83,868		21.810391		1,829,194	1.01%	13.76%
2003	0.50%	31,176		19.171791		597,700	1.09%	28.32%
2002	0.50%	13,026		14.941112		194,623	0.90%	-13.06%
American Century VP – VistaSM Fund – Class I
2005	0.50%	242		11.425723		2,765	0.00%	14.26%	05/02/05
American Century VP II – Inflation Protection Fund – Class II
2005	0.50%	24,828		10.947391		271,802	4.38%	1.06%
2004	0.50%	9,540		10.832965		103,346	3.57%	5.28%
American Century VP III – International Fund – Class III
2005	0.50%	43,276		11.635157		503,523	0.00%	16.35%	05/02/05
Credit Suisse Trust – Global Small Cap Portfolio
2005	0.50%	12,544		14.702300		184,426	0.00%	15.57%
2004	0.50%	9,874		12.721972		125,617	0.00%	17.40%
2003	0.50%	6,096		10.836336		66,058	0.00%	46.92%
2002	0.50%	1,728		7.375606		12,745	0.00%	-34.49%
Credit Suisse Trust – International Focus Portfolio
2005	0.50%	62,308		14.460784		901,023	0.91%	16.85%
2004	0.50%	39,228		12.375012		485,447	0.99%	14.17%
2003	0.50%	14,533		10.839093		157,525	0.49%	32.43%
2002	0.50%	2,769		8.184926		22,664	0.00%	-20.30%
Credit Suisse Trust – Small Cap Growth Portfolio
2005	0.50%	125,444		18.549847		2,326,967	0.00%	-3.16%
2004	0.50%	82,304		19.155888		1,576,606	0.00%	10.32%
2003	0.50%	27,210		17.364452		472,487	0.00%	47.81%
2002	0.50%	6,039		11.748025		70,946	0.00%	-34.02%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class
2005	0.50%	38,160		13.570376		517,846	0.00%	6.70%
2004	0.50%	32,364		12.718312		411,615	0.50%	21.28%
2003	0.50%	6,160		10.487006		64,600	0.33%	37.09%
2002	0.50%	4,866		7.649570		37,223	0.27%	-23.50%	05/01/02
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares
2005	0.50%	544,048		29.958454		16,298,837	1.60%	4.17%
2004	0.50%	347,660		28.759010		9,998,357	1.80%	10.09%
2003	0.50%	108,026		26.123506		2,822,018	1.51%	27.72%
2002	0.50%	26,741		20.453144		546,938	1.31%	-22.75%
2001	0.50%	1,122		26.476528		29,707	1.06%	-12.62%
Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc.
2005	0.50%	50,962		24.043585		1,225,309	0.00%	3.10%
2004	0.50%	31,910		23.320608		744,161	0.38%	5.68%
2003	0.50%	7,832		22.067029		172,829	0.11%	25.38%
2002	0.50%	876		17.600806		15,418	0.21%	-29.30%
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2005	0.50%	71,712		14.180252		1,016,894	0.02%	3.86%
2004	0.50%	39,366		13.653414		537,480	1.63%	4.52%
2003	0.50%	15,431		13.062720		201,571	1.40%	20.57%
2002	0.50%	7,627		10.834553		82,635	1.14%	-17.13%
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares
2005	0.50%	6,920		14.996047		103,773	0.00%	5.27%
2004	0.50%	4,108		14.244729		58,517	0.22%	10.79%
2003	0.50%	840		12.857964		10,801	0.08%	28.58%	05/01/03
Dreyfus VIF – Growth and Income Portfolio – Initial Shares
2005	0.50%	11,612		13.717541		159,288	1.34%	2.84%
2004	0.50%	10,312		13.338990		137,552	1.23%	6.93%
2003	0.50%	6,368		12.474297		79,436	0.84%	25.94%
Federated IS – American Leaders Fund II – Primary Shares
2005	0.50%	6,978		14.333441		100,019	1.33%	4.50%
2004	0.50%	2,628		13.716228		36,046	0.41%	9.23%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Federated IS – Capital Appreciation Fund II – Primary Shares
2005	0.50%	1,354	$	13.017510	$	17,626	1.07%	1.41%
2004	0.50%	1,276		12.836844		16,380	0.28%	6.86%
Federated IS – Quality Bond Fund II – Primary Shares
2005	0.50%	16,246		11.628696		188,920	3.65%	0.79%
2004	0.50%	9,180		11.537144		105,911	4.98%	3.10%
2003	0.50%	4,444		11.189906		49,728	3.93%	4.12%
Fidelity® VIP – Equity-Income Portfolio: Initial Class
2005	0.50%	344,836		56.848284		19,603,335	1.64%	5.34%
2004	0.50%	187,988		53.967094		10,145,166	1.56%	10.97%
2003	0.50%	86,371		48.630667		4,200,279	1.80%	29.68%
2002	0.50%	25,078		37.500399		940,435	1.77%	-17.36%
2001	0.50%	3,200		45.378727		145,212	1.70%	-5.43%
Fidelity® VIP – Growth Portfolio: Initial Class
2005	0.50%	390,486		57.613946		22,497,439	0.51%	5.27%
2004	0.50%	263,644		54.728412		14,428,817	0.27%	2.86%
2003	0.50%	105,480		53.205281		5,612,093	0.27%	32.19%
2002	0.50%	39,628		40.250246		1,595,037	0.25%	-30.45%
2001	0.50%	3,370		57.875878		195,042	0.08%	-18.06%
Fidelity® VIP – High Income Portfolio: Initial Class
2005	0.50%	175,964		28.752380		5,059,384	16.14%	2.19%
2004	0.50%	140,176		28.136168		3,944,015	8.82%	9.05%
2003	0.50%	55,652		25.802029		1,435,935	5.94%	26.63%
2002	0.50%	2,722		20.375870		55,463	9.29%	2.93%
2001	0.50%	1,784		19.796324		35,317	13.67%	-12.17%
Fidelity® VIP – Overseas Portfolio: Initial Class
2005	0.50%	187,952		33.055758		6,212,896	0.71%	18.45%
2004	0.50%	160,928		27.905999		4,490,857	1.14%	13.07%
2003	0.50%	58,985		24.680530		1,455,781	0.83%	42.65%
2002	0.50%	16,114		17.300971		278,788	0.83%	-20.68%
2001	0.50%	2,274		21.810922		49,598	5.37%	-21.56%
Fidelity® VIP – Overseas Portfolio: Service Class R
2005	0.50%	108,508		12.458682		1,351,867	0.00%	24.59%	05/02/05
Fidelity® VIP II – Asset Manager Portfolio: Initial Class
2005	0.50%	288,746		32.768260		9,461,704	2.76%	3.53%
2004	0.50%	209,976		31.651957		6,646,151	2.76%	4.94%
2003	0.50%	84,282		30.161112		2,542,039	3.62%	17.39%
2002	0.50%	7,255		25.693764		186,408	3.98%	-9.18%
2001	0.50%	1,169		28.291882		33,073	4.21%	-4.57%
Fidelity® VIP II – Contrafund® Portfolio: Initial Class
2005	0.50%	418,680		32.738236		13,706,845	0.29%	16.36%
2004	0.50%	222,346		28.136431		6,256,023	0.34%	14.90%
2003	0.50%	101,752		24.487594		2,491,662	0.46%	27.82%
2002	0.50%	11,284		19.157346		216,171	0.85%	-9.80%
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class
2005	0.50%	47,416		10.736671		509,090	1.67%	1.57%
2004	0.50%	14,444		10.570462		152,680	1.88%	3.80%
2003	0.50%	9,748		10.183621		99,270	0.00%	1.84%	05/01/03
Fidelity® VIP III – Growth Opportunities Portfolio: Initial Class
2005	0.50%	36,764		11.485107		422,238	0.95%	8.35%
2004	0.50%	38,174		10.600065		404,647	0.53%	6.66%
2003	0.50%	20,500		9.938499		203,739	0.74%	29.23%
2002	0.50%	3,061		7.690844		23,542	1.07%	-22.23%
2001	0.50%	1,210		9.889817		11,967	0.38%	-14.85%
Fidelity® VIP III – Mid Cap Portfolio: Service Class
2005	0.50%	105,862		20.498936		2,170,058	0.00%	17.62%
2004	0.50%	28,738		17.428707		500,866	0.00%	24.15%
2003	0.50%	2,295		14.038431		32,218	0.00%	40.38%	05/01/03

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Fidelity® VIP III – Value Strategies Portfolio: Service Class
2005	0.50%	16,310	$	13.600017	$	221,816	0.00%	2.04%
2004	0.50%	22,246		13.327560		296,485	0.00%	13.42%
2003	0.50%	15,781		11.750739		185,438	0.00%	57.00%
Fidelity® VIP IV – Natural Resources Portfolio: Service Class 2
2005	0.50%	42,914		13.469693		578,038	0.65%	34.70%	05/02/05
Fidelity® VIP FF – Freedom Fund 2010 Portfolio: Service Class
2005	0.50%	1,590		10.770315		17,125	0.56%	7.70%	05/02/05
Fidelity® VIP FF – Freedom Fund 2020 Portfolio: Service Class
2005	0.50%	3,540		11.081899		39,230	0.86%	10.82%	05/02/05
Franklin Templeton VIP – Franklin Rising Dividends Securities Fund – Class I
2005	0.50%	76,976		14.007257		1,078,223	1.09%	3.17%
2004	0.50%	45,226		13.577316		614,048	0.66%	10.70%
2003	0.50%	11,618		12.265513		142,501	0.20%	22.66%	05/01/03
Franklin Templeton VIP – Franklin Small Cap Value Securities Fund – Class I
2005	0.50%	47,146		17.825857		840,418	0.91%	8.45%
2004	0.50%	20,500		16.437638		336,972	0.19%	23.47%
2003	0.50%	2,305		13.312843		30,686	0.12%	33.13%	05/01/03
Franklin Templeton VIP – Templeton Foreign Securities Fund – Class I
2005	0.50%	26,236		17.195159		451,132	1.37%	9.93%
2004	0.50%	10,062		15.642411		157,394	1.10%	18.28%
2003	0.50%	2,090		13.224912		27,640	0.79%	32.25%	05/01/03
Franklin Templeton VIP III – Franklin Global Income Securities Fund – Class 3
2005	0.50%	2,394		9.848458		23,577	7.95%	-1.52%	05/02/05
Franklin Templeton VIP III – Templeton Developing Markets Securities Fund – Class 3
2005	0.50%	17,310		12.761961		220,910	0.53%	27.62%	05/02/05
Franklin Templeton VIP III – Templeton Foreign Securities Fund – Class 3
2005	0.50%	21,078		11.251218		237,153	0.39%	12.51%	05/02/05
Gartmore GVIT – Dreyfus International Value Fund – Class I
2005	0.50%	24,690		18.551760		458,043	1.34%	11.54%
2004	0.50%	15,934		16.633064		265,031	2.03%	19.69%
2003	0.50%	4,952		13.791985		68,298	0.00%	37.92%	05/01/03
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	0.50%	137,224		14.928625		2,048,566	1.03%	11.54%
2004	0.50%	57,928		13.383987		775,308	0.54%	15.15%
2003	0.50%	19,389		11.622612		225,351	0.49%	33.98%
2002	0.50%	7,249		8.674888		62,884	0.42%	-15.73%
Gartmore GVIT – Emerging Markets Fund: Class I
2005	0.50%	39,142		18.054599		706,693	0.61%	31.98%
2004	0.50%	26,586		13.680089		363,699	0.93%	20.14%
2003	0.50%	17,288		11.386650		196,852	0.66%	64.44%
Gartmore GVIT – Federated High Income Bond Fund: Class I
2005	0.50%	4,370		12.367140		54,044	6.81%	1.87%
2004	0.50%	25,084		12.139983		304,519	8.50%	9.55%
Gartmore GVIT – Global Financial Services Fund: Class I
2005	0.50%	7,780		16.182094		125,897	2.00%	10.60%
2004	0.50%	3,124		14.631389		45,708	1.45%	20.39%
2003	0.50%	629		12.153349		7,644	0.88%	40.75%
Gartmore GVIT – Global Health Sciences Fund: Class I
2005	0.50%	7,318		13.092046		95,808	0.00%	7.90%
2004	0.50%	10,306		12.133480		125,048	0.00%	7.32%
2003	0.50%	3,699		11.305727		41,820	0.00%	36.01%
Gartmore GVIT – Global Technology and Communications Fund: Class I
2005	0.50%	33,760		3.094710		104,477	0.00%	-1.01%
2004	0.50%	29,620		3.126331		92,602	0.00%	3.79%
2003	0.50%	44,144		3.012098		132,966	0.00%	54.46%
2002	0.50%	2,129		1.950112		4,152	0.59%	-43.07%
Gartmore GVIT – Global Utilities Fund: Class I
2005	0.50%	18,728		14.624338		273,885	2.16%	5.86%
2004	0.50%	10,822		13.814954		149,505	1.92%	29.32%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Government Bond Fund: Class I
2005	0.50%	64,816	$	32.062663	$	2,078,174	3.64%	2.75%
2004	0.50%	43,088		31.204592		1,344,543	5.48%	2.75%
2003	0.50%	20,794		30.370279		631,520	3.14%	1.49%
2002	0.50%	10,251		29.923916		306,750	4.42%	10.43%
2001	0.50%	1,291		27.097613		34,983	5.12%	6.72%
Gartmore GVIT – Growth Fund – Class I
2005	0.50%	111,080		18.233340		2,025,359	0.08%	5.97%
2004	0.50%	72,558		17.206018		1,248,434	0.33%	7.62%
2003	0.50%	13,689		15.988156		218,862	0.02%	32.08%
2002	0.50%	10,305		12.105122		124,743	0.00%	-29.08%
Gartmore GVIT – International Growth Fund: Class I
2005	0.50%	4,962		9.839331		48,823	1.03%	29.56%
2004	0.50%	1,290		7.594318		9,797	1.40%	13.62%
Gartmore GVIT – Mid Cap Growth Fund: Class I
2005	0.50%	72,740		6.169108		448,741	0.00%	9.20%
2004	0.50%	87,438		5.649583		493,988	0.00%	14.76%
2003	0.50%	74,157		4.922829		365,062	0.00%	39.44%
Gartmore GVIT – Money Market Fund – Class I
2005	0.50%	305,794		19.028333		5,818,750	2.64%	2.16%
2004	0.50%	162,122		18.626719		3,019,801	0.78%	0.31%
2003	0.50%	103,301		18.569650		1,918,271	0.63%	0.12%
2002	0.50%	12,207		18.546928		226,402	1.26%	0.71%
2001	0.50%	7,295		18.417013		134,352	3.57%	3.08%
Gartmore GVIT – Nationwide® Fund: Class I
2005	0.50%	297,534		44.533940		13,250,361	0.91%	6.91%
2004	0.50%	167,838		41.656679		6,991,574	1.28%	9.20%
2003	0.50%	19,074		38.145818		727,593	0.56%	26.88%
2002	0.50%	3,981		30.065207		119,690	0.85%	-17.77%
2001	0.50%	1,162		36.560512		42,483	0.74%	-12.26%
Gartmore GVIT – Nationwide® Leaders Fund: Class I
2005	0.50%	9,478		13.635788		129,240	1.54%	9.76%
2004	0.50%	2,600		12.422944		32,300	0.52%	18.20%
2003	0.50%	588		10.510022		6,180	0.19%	24.76%
Gartmore GVIT – Small Cap Growth Fund: Class I
2005	0.50%	36,714		7.727049		283,691	0.00%	7.55%
2004	0.50%	32,220		7.184440		231,483	0.00%	12.85%
2003	0.50%	10,334		6.366359		65,790	0.00%	33.60%
Gartmore GVIT – Small Cap Value Fund: Class I
2005	0.50%	164,618		20.856322		3,433,326	0.06%	2.56%
2004	0.50%	100,222		20.335711		2,038,086	0.00%	16.71%
2003	0.50%	31,504		17.423619		548,914	0.00%	56.07%
2002	0.50%	4,939		11.163801		55,138	0.01%	-27.53%
2001	0.50%	16,203		15.403979		249,591	0.03%	27.63%
Gartmore GVIT – Small Company Fund: Class I
2005	0.50%	159,914		35.701630		5,709,190	0.00%	11.76%
2004	0.50%	94,992		31.945431		3,034,560	0.00%	18.43%
2003	0.50%	45,264		26.974404		1,220,969	0.00%	40.31%
2002	0.50%	13,072		19.224829		251,307	0.00%	-17.74%
2001	0.50%	749		23.371178		17,505	0.10%	-7.17%
Gartmore GVIT – Turner Growth Focus Fund – Class I
2003	0.50%	17,823		3.283013		58,513	0.00%	50.21%
Gartmore GVIT – U.S. Growth Leaders Fund: Class I
2005	0.50%	14,474		15.465102		223,842	0.00%	11.41%
2004	0.50%	21,016		13.881788		291,740	0.00%	11.85%
2003	0.50%	8,655		12.411260		107,419	0.00%	51.38%
Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I
2005	0.50%	11,354		13.904678		157,874	3.89%	1.67%
2004	0.50%	9,006		13.676033		123,166	4.85%	6.00%
2003	0.50%	2,912		12.901625		37,570	5.47%	11.56%
2002	0.50%	360		11.565028		4,163	4.53%	6.67%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Van Kampen Value Fund – Class I
2005	0.50%	15,396	$	15.316704	$	235,816	1.69%	3.73%
2004	0.50%	7,480		14.766163		110,451	1.56%	16.91%
2003	0.50%	570		12.630064		7,199	1.52%	26.30%	05/01/03
Gartmore GVIT III – Dreyfus International Value Fund – Class III
2005	0.50%	44,904		11.414099		512,539	0.95%	14.14%	05/02/05
Gartmore GVIT III – Emerging Markets Fund: Class III
2005	0.50%	42,298		13.292850		562,261	0.19%	32.93%	05/02/05
Gartmore GVIT III – Federated High Income Bond Fund: Class III
2005	0.50%	4,790		10.505908		50,323	6.33%	5.06%	05/02/05
Gartmore GVIT III – Global Health Sciences Fund: Class III
2005	0.50%	20,616		10.706525		220,726	0.00%	7.07%	05/02/05
Gartmore GVIT III – Global Technology and Communications Fund: Class III
2005	0.50%	18,758		12.276743		230,287	0.00%	22.77%	05/02/05
Gartmore GVIT ID II – Aggressive Fund – Class II
2005	0.50%	59,996		13.258370		795,449	1.95%	7.39%
2004	0.50%	49,550		12.345496		611,719	1.75%	13.46%
Gartmore GVIT ID II – Conservative Fund – Class II
2005	0.50%	8,068		11.496816		92,756	2.78%	2.79%
2004	0.50%	2,158		11.184449		24,136	2.46%	4.13%
2003	0.50%	1,037		10.740821		11,138	2.37%	7.37%
Gartmore GVIT ID II – Moderate Fund – Class II
2005	0.50%	129,056		12.415323		1,602,272	2.36%	4.82%
2004	0.50%	85,112		11.844428		1,008,103	2.27%	8.99%
2003	0.50%	16,518		10.867503		179,509	2.06%	19.45%
Gartmore GVIT ID II – Moderately Aggressive Fund – Class II
2005	0.50%	81,078		12.948162		1,049,811	2.14%	6.54%
2004	0.50%	41,042		12.153407		498,800	1.97%	11.53%
Gartmore GVIT ID II – Moderately Conservative Fund – Class II
2005	0.50%	18,510		12.036367		222,793	2.75%	3.97%
2004	0.50%	9,360		11.577210		108,363	2.48%	6.62%
Janus AS – Balanced Portfolio – Service Shares
2005	0.50%	1,282		12.690331		16,269	2.56%	7.13%
2004	0.50%	730		11.846263		8,648	3.27%	7.75%
Janus AS – Forty Portfolio – Service Shares
2005	0.50%	44,888		8.091082		363,192	0.01%	12.00%
2004	0.50%	23,622		7.224414		170,655	0.02%	17.38%
2003	0.50%	7,149		6.154757		44,000	0.25%	19.63%
2002	0.50%	12,685		5.144661		65,260	0.30%	-16.35%
Janus AS – Global Technology Portfolio – Service Shares
2005	0.50%	36,250		4.009018		145,327	0.00%	10.99%
2004	0.50%	16,918		3.611898		61,106	0.00%	0.06%
2003	0.50%	8,256		3.609555		29,800	0.00%	45.74%
2002	0.50%	3,149		2.476639		7,799	0.00%	-41.23%
Janus AS – International Growth Portfolio – Service Shares
2005	0.50%	62,034		9.257232		574,263	1.14%	31.28%
2004	0.50%	11,248		7.051335		79,313	0.83%	18.09%
2003	0.50%	7,242		5.970919		43,241	0.99%	33.86%
2002	0.50%	12,584		4.460490		56,131	0.67%	-26.13%
Janus AS – Risk-Managed Large Cap Core Portfolio – Service Shares
2005	0.50%	3,292		15.815517		52,065	1.43%	10.36%
2004	0.50%	2,006		14.330811		28,748	2.29%	16.88%
MFS® VITSM – MFS Investors Growth Stock Series – Initial Class
2005	0.50%	9,568		13.056404		124,924	0.38%	3.97%
2004	0.50%	4,150		12.557998		52,116	0.00%	8.64%
2003	0.50%	1,131		11.559230		13,073	0.00%	15.59%	05/01/03
MFS® VITSM – MFS Value Series – Initial Class
2005	0.50%	8,422		14.992740		126,269	0.65%	6.13%
2004	0.50%	1,594		14.126859		22,518	0.34%	14.60%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Neuberger Berman AMT – International Portfolio – Class S
2005	0.50%	490	$	11.711411	$	5,739	0.22%	17.11%	05/02/05
Neuberger Berman AMT – Regency Portfolio – Class S
2005	0.50%	2,318		11.623425		26,943	0.00%	16.23%	05/02/05
Neuberger Berman AMT – Balanced Portfolio®– I Class Shares
2005	0.50%	1,038		11.494958		11,932	1.03%	8.64%
2004	0.50%	408		10.580939		4,317	1.30%	8.76%
2003	0.50%	387		9.728263		3,765	1.91%	15.70%
Neuberger Berman AMT – Growth Portfolio®– I Class Shares
2005	0.50%	111,124		38.986368		4,332,321	0.00%	12.93%
2004	0.50%	72,940		34.521424		2,517,993	0.00%	16.02%
2003	0.50%	24,292		29.754395		722,794	0.00%	30.75%
2002	0.50%	5,671		22.757505		129,058	0.00%	-31.51%
2001	0.50%	3,126		33.226236		103,865	0.00%	-30.71%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2005	0.50%	42,392		12.551167		532,069	0.14%	7.85%
2004	0.50%	32,314		11.637402		376,051	0.12%	15.24%
2003	0.50%	12,247		10.098680		123,679	0.84%	31.10%
2002	0.50%	870		7.702769		6,701	0.80%	-26.82%
Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares
2005	0.50%	38,328		22.640077		867,749	2.61%	0.94%
2004	0.50%	37,986		22.429536		852,008	3.64%	0.28%
2003	0.50%	20,267		22.367675		453,326	4.41%	1.91%
2002	0.50%	4,156		21.947749		91,215	4.91%	4.81%
2001	0.50%	2,817		20.939856		58,988	5.78%	8.24%
Neuberger Berman AMT – Partners Portfolio®– I Class Shares
2005	0.50%	163,828		34.231207		5,608,030	1.02%	17.46%
2004	0.50%	72,448		29.143256		2,111,371	0.01%	18.38%
2003	0.50%	15,209		24.617984		374,415	0.00%	34.41%
2002	0.50%	7,065		18.314930		129,395	0.53%	-24.52%
Neuberger Berman AMT – Socially Responsive Portfolio®– I Class Shares
2005	0.50%	2,512		14.781029		37,130	0.00%	6.33%
2004	0.50%	98		13.901675		1,362	0.00%	12.71%
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares
2005	0.50%	5,906		14.321953		84,585	0.00%	2.39%
2004	0.50%	4,114		13.988281		57,548	0.00%	11.32%
Neuberger Berman AMT – Mid Cap Growth Portfolio®– S Class Shares
2005	0.50%	5,284		16.003177		84,561	0.00%	12.86%
2004	0.50%	2,568		14.179701		36,413	0.00%	15.46%
2003	0.50%	1,669		12.281545		20,498	0.00%	22.82%	05/01/03
Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class
2005	0.50%	62,332		6.378300		397,572	0.00%	11.77%
2004	0.50%	50,906		5.706718		290,506	0.00%	19.18%
2003	0.50%	15,822		4.788336		75,761	0.00%	24.96%
2002	0.50%	2,385		3.831748		9,139	0.65%	-28.15%
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class
2005	0.50%	154,400		16.535627		2,553,101	0.93%	4.58%
2004	0.50%	104,114		15.812092		1,646,260	0.33%	6.40%
2003	0.50%	43,463		14.860580		645,885	0.38%	30.29%
2002	0.50%	9,164		11.405697		104,522	0.64%	-27.22%
2001	0.50%	8,487		15.672302		133,011	0.64%	-13.02%
Oppenheimer Funds – Global Securities Fund/VA – Initial Class
2005	0.50%	262,628		39.620511		10,405,456	1.07%	13.74%
2004	0.50%	191,944		34.834576		6,686,288	1.25%	18.57%
2003	0.50%	33,503		29.379176		984,291	0.76%	42.31%
2002	0.50%	4,420		20.644823		91,250	0.56%	-22.52%
Oppenheimer Funds – High Income Fund/VA – Initial Class
2005	0.50%	17,466		12.301306		214,855	6.75%	1.80%
2004	0.50%	14,518		12.083237		175,424	4.23%	8.42%
2003	0.50%	8,543		11.144531		95,208	0.00%	11.45%	05/01/03

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Oppenheimer Funds – Main Street Fund® /VA – Initial Class
2005	0.50%	48,678	$	9.438598	$	459,452	1.25%	5.45%
2004	0.50%	33,884		8.950876		303,291	0.84%	8.91%
2003	0.50%	10,060		8.218350		82,677	0.90%	26.09%
2002	0.50%	3,493		6.518000		22,767	0.65%	-19.20%
Oppenheimer Funds – Main Street Small Cap Fund® /VA – Initial Class
2005	0.50%	6,094		17.965801		109,484	0.00%	9.37%
2004	0.50%	554		16.426073		9,100	0.00%	18.82%
Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class
2005	0.50%	102,966		35.300804		3,634,783	1.76%	3.37%
2004	0.50%	54,126		34.149236		1,848,362	1.01%	9.55%
2003	0.50%	23,053		31.171669		718,600	2.82%	24.33%
2002	0.50%	9,549		25.070852		239,402	3.60%	-10.85%
Oppenheimer Funds III – Global Securities Fund/VA – Class 3
2005	0.50%	63,366		12.019802		761,647	0.00%	20.20%	05/02/05
Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class
2005	0.50%	85,328		26.785454		2,285,549	5.34%	2.08%
2004	0.50%	73,062		26.240474		1,917,182	4.80%	4.97%
2003	0.50%	32,391		24.998938		809,741	5.67%	6.25%
2002	0.50%	379		23.529109		8,918	7.25%	8.54%
2001	0.50%	47		21.678723		1,019	7.04%	7.25%
Putnam VT IB – Growth & Income Fund – IB Shares
2005	0.50%	486		14.335363		6,967	1.56%	4.70%
2004	0.50%	236		13.691228		3,231	1.66%	10.56%
Putnam VT IB – International Equity Fund – IB Shares
2005	0.50%	1,404		16.464692		23,116	1.11%	11.64%
2004	0.50%	1,000		14.748085		14,748	1.61%	15.62%
Putnam VT IB – Voyager II Fund – IB Shares
2005	0.50%	2,788		12.985042		36,202	0.60%	5.17%
2004	0.50%	720		12.347084		8,890	0.19%	4.51%
Strong VIF – Strong International Stock Fund II
2002	0.50%	392		5.758212		2,257	4.04%	-26.91%
T. Rowe Price II – Blue Chip Growth Portfolio – II
2005	0.50%	818		11.277528		9,225	0.29%	12.78%	05/02/05
T. Rowe Price II – Equity Income Portfolio – II
2005	0.50%	5,032		10.601687		53,348	1.20%	6.02%	05/02/05
T. Rowe Price II – Equity Series, Inc. – T. Rowe Price Limited Term Bond Portfolio – Class II
2005	0.50%	540		10.094160		5,451	1.39%	0.94%	05/02/05
Van Eck WIT – Worldwide Bond Fund – Initial Class
2005	0.50%	43,868		21.853802		958,683	7.55%	-3.51%
2004	0.50%	36,364		22.649785		823,637	8.78%	8.61%
2003	0.50%	19,995		20.854897		416,994	1.75%	17.57%
2002	0.50%	4,159		17.737696		73,771	0.00%	21.05%
2001	0.50%	1,086		14.653212		15,913	4.39%	-5.57%
Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class
2005	0.50%	142,848		15.870762		2,267,107	0.73%	31.34%
2004	0.50%	56,568		12.083728		683,552	0.59%	25.26%
2003	0.50%	60,208		9.646671		580,807	0.11%	53.42%
2002	0.50%	32,774		6.287778		206,076	0.20%	-3.39%
Van Eck WIT – Worldwide Hard Assets Fund – Initial Class
2005	0.50%	94,726		31.007818		2,937,247	0.30%	50.92%
2004	0.50%	65,614		20.546330		1,348,127	0.37%	23.61%
2003	0.50%	19,105		16.655601		318,205	0.48%	44.36%
2002	0.50%	7,750		11.537923		89,419	0.68%	-3.32%
2001	0.50%	4		11.933986		48	1.21%	-10.89%
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I
2005	0.50%	10,072		10.983426		110,625	3.62%	3.70%
2004	0.50%	3,084		10.591991		32,666	4.78%	3.85%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I
2005	0.50%	28,944	$	18.495488	$	535,333	7.52%	11.69%
2004	0.50%	16,150		16.559313		267,433	6.41%	9.51%
2003	0.50%	7,714		15.120856		116,642	0.00%	27.23%
2002	0.50%	2,372		11.884934		28,191	6.91%	8.68%
2001	0.50%	1,244		10.935992		13,604	9.40%	9.55%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	0.50%	94,426		45.366664		4,283,793	1.22%	16.47%
2004	0.50%	69,458		38.951553		2,705,497	1.55%	35.71%
2003	0.50%	28,086		28.701013		806,097	0.00%	36.83%
2002	0.50%	10,521		20.976263		220,691	3.29%	-1.28%
Wells Fargo VTFSM – Wells Fargo Advantage Discovery Fund VT
2005	0.50%	83,820		32.700726		2,740,975	0.00%	7.73%
2004	0.50%	50,972		30.353233		1,547,165	0.00%	15.14%
2003	0.50%	18,256		26.361651		481,258	0.00%	38.73%
2002	0.50%	2,071		19.001713		39,353	0.00%	-12.45%
Wells Fargo VTFSM – Wells Fargo Advantage Opportunity Fund VT
2005	0.50%	200,868		51.392952		10,323,199	0.00%	7.35%
2004	0.50%	143,178		47.875122		6,854,664	0.00%	17.63%
2003	0.50%	38,309		40.699472		1,559,156	0.07%	36.32%
2002	0.50%	10,474		29.855056		312,702	0.38%	-27.18%
2001	0.50%	3,831		41.000669		157,074	0.59%	-4.19%
Multiple Payment contracts and Flexible Premium contracts
AIM VIF – Basic Value Fund – Series I Shares
2005	0.80%	24,934		15.023289		374,591	0.09%	4.90%
2004	0.80%	43,590		14.322072		624,299	0.00%	10.18%
2003	0.80%	14,499		12.998258		188,462	0.11%	29.98%	05/01/03
AIM VIF – Capital Appreciation Fund – Series I Shares
2005	0.80%	4,924		14.079275		69,326	0.04%	7.97%
2004	0.80%	4,090		13.039850		53,333	0.00%	5.78%
2003	0.80%	5,333		12.327742		65,744	0.00%	23.28%	05/01/03
AIM VIF – Capital Development Fund – Series I Shares
2005	0.80%	9,328		16.121553		150,382	0.00%	8.73%
2004	0.80%	9,498		14.826548		140,823	0.00%	14.58%
2003	0.80%	3,166		12.939952		40,968	0.00%	29.40%	05/01/03
Alliance VPSF – AllianceBernstein Growth & Income Portfolio – Class A
2005	0.80%	37,766		14.236062		537,639	1.68%	4.03%
2004	0.80%	38,966		13.684124		533,216	0.96%	10.57%
2003	0.80%	22,041		12.375515		272,769	0.00%	23.76%	05/01/03
Alliance VPSF – AllianceBernstein Small/Mid Cap Value Portfolio – Class A
2005	0.80%	29,330		17.226379		505,250	0.72%	6.06%
2004	0.80%	43,250		16.241455		702,443	0.13%	18.35%
2003	0.80%	11,736		13.722986		161,053	0.02%	37.23%	05/01/03
American Century VP – Balanced Fund – Class I
2005	0.80%	119,320		23.498278		2,803,815	1.83%	4.10%
2004	0.80%	159,436		22.572554		3,598,878	1.68%	8.90%
2003	0.80%	195,164		20.727117		4,045,187	2.53%	18.51%
2002	0.80%	196,895		17.490037		3,443,701	2.63%	-10.28%
2001	0.80%	201,384		19.493759		3,925,731	2.81%	-4.31%
American Century VP – Capital Appreciation Fund – Class I
2005	0.80%	365,618		21.718376		7,940,629	0.00%	21.09%
2004	0.80%	460,364		17.935168		8,256,706	0.00%	6.73%
2003	0.80%	592,724		16.804738		9,960,572	0.00%	19.51%
2002	0.80%	657,612		14.060797		9,246,549	0.00%	-21.83%
2001	0.80%	735,263		17.987270		13,225,374	0.00%	-28.64%
American Century VP – Income & Growth Fund – Class I
2005	0.80%	157,452		12.244450		1,927,913	2.03%	3.80%
2004	0.80%	220,344		11.796249		2,599,233	1.44%	12.09%
2003	0.80%	259,996		10.523680		2,736,115	1.30%	28.32%
2002	0.80%	289,017		8.200926		2,370,207	1.10%	-20.01%
2001	0.80%	322,604		10.252927		3,307,635	0.81%	-9.09%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
American Century VP – International Fund – Class I
2005	0.80%	311,096	$	19.440637	$	6,047,904	1.27%	12.35%
2004	0.80%	471,466		17.302961		8,157,758	0.58%	14.01%
2003	0.80%	587,899		15.176915		8,922,493	0.75%	23.52%
2002	0.80%	679,193		12.287143		8,345,342	0.79%	-21.01%
2001	0.80%	733,730		15.554724		11,412,968	0.09%	-29.74%
American Century VP – Mid Cap Value Fund – Class I
2005	0.80%	5,722		11.262347		64,443	1.06%	12.62%	05/02/05
American Century VP – Ultra® Fund – Class I
2005	0.80%	34,120		11.024259		376,148	0.00%	1.35%
2004	0.80%	37,042		10.877007		402,906	0.00%	9.79%
2003	0.80%	34,345		9.906750		340,247	0.00%	23.90%
2002	0.80%	7,959		7.995504		63,636	0.46%	-20.04%	05/01/02
American Century VP – Value Fund – Class I
2005	0.80%	333,368		22.307840		7,436,720	0.88%	4.20%
2004	0.80%	363,556		21.408869		7,783,323	1.01%	13.42%
2003	0.80%	461,113		18.875362		8,703,675	1.09%	27.93%
2002	0.80%	522,332		14.754246		7,706,615	0.90%	-13.32%
2001	0.80%	499,070		17.020923		8,494,632	0.95%	11.92%
American Century VP – VistaSM Fund – Class I
2005	0.80%	2,306		11.403054		26,295	0.00%	14.03%	05/02/05
American Century VP II – Inflation Protection Fund – Class II
2005	0.80%	71,902		10.859530		780,822	4.38%	0.75%
2004	0.80%	72,104		10.778433		777,168	3.57%	4.96%
2003	0.80%	6,574		10.268669		67,506	1.88%	2.69%	04/30/03
American Century VP III – International Fund – Class III
2005	0.80%	69,942		11.612061		812,171	0.00%	16.12%	05/02/05
Credit Suisse Trust – Global Small Cap Portfolio
2005	0.80%	36,140		14.388419		519,997	0.00%	15.22%
2004	0.80%	40,182		12.487641		501,778	0.00%	17.05%
2003	0.80%	53,805		10.668685		574,029	0.00%	46.48%
2002	0.80%	156,158		7.283277		1,137,342	0.00%	-34.68%
2001	0.80%	135,156		11.150533		1,507,061	0.00%	-29.21%
Credit Suisse Trust – International Focus Portfolio
2005	0.80%	320,444		14.183450		4,545,001	0.91%	16.51%
2004	0.80%	369,172		12.174019		4,494,307	0.99%	13.83%
2003	0.80%	431,745		10.695076		4,617,546	0.49%	32.03%
2002	0.80%	469,749		8.100409		3,805,159	0.00%	-20.54%
2001	0.80%	503,048		10.194751		5,128,449	0.00%	-22.90%
Credit Suisse Trust – Small Cap Growth Portfolio
2005	0.80%	443,896		18.193863		8,076,183	0.00%	-3.45%
2004	0.80%	539,886		18.844567		10,173,918	0.00%	9.99%
2003	0.80%	692,838		17.133573		11,870,790	0.00%	47.37%
2002	0.80%	739,837		11.626571		8,601,767	0.00%	-34.22%
2001	0.80%	816,970		17.675000		14,439,945	0.00%	-16.68%
Dreyfus IP – European Equity Portfolio
2001	0.80%	9,248		6.633319		61,345	0.84%	-28.71%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class
2005	0.80%	52,974		13.422021		711,018	0.00%	6.38%
2004	0.80%	70,472		12.616946		889,141	0.50%	20.91%
2003	0.80%	47,348		10.434661		494,060	0.33%	36.68%
2002	0.80%	5,194		7.634206		39,652	0.27%	-23.66%	05/01/02
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares
2005	0.80%	1,502,104		29.461184		44,253,762	1.60%	3.86%
2004	0.80%	1,932,026		28.366357		54,804,539	1.80%	9.76%
2003	0.80%	2,290,356		25.844217		59,192,457	1.51%	27.34%
2002	0.80%	2,526,349		20.295193		51,272,741	1.31%	-22.98%
2001	0.80%	2,735,378		26.351146		72,080,345	1.06%	-12.88%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc.
2005	0.80%	285,024	$	23.643910	$	6,739,082	0.00%	2.79%
2004	0.80%	333,044		23.001657		7,660,564	0.38%	5.36%
2003	0.80%	403,682		21.830604		8,812,622	0.11%	25.00%
2002	0.80%	432,657		17.464486		7,556,132	0.21%	-29.51%
2001	0.80%	479,262		24.776659		11,874,511	0.06%	-23.20%
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2005	0.80%	211,690		13.866041		2,935,302	0.02%	3.55%
2004	0.80%	279,490		13.390880		3,742,617	1.63%	4.21%
2003	0.80%	338,655		12.850022		4,351,724	1.40%	20.20%
2002	0.80%	376,103		10.690124		4,020,588	1.14%	-17.38%
2001	0.80%	358,763		12.938645		4,641,907	0.84%	-10.04%
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares
2005	0.80%	17,282		14.876684		257,099	0.00%	4.96%
2004	0.80%	22,806		14.173675		323,245	0.22%	10.45%
2003	0.80%	8,113		12.832258		104,108	0.08%	28.32%	05/01/03
Dreyfus VIF – Growth and Income Portfolio – Initial Shares
2005	0.80%	98,630		13.424762		1,324,084	1.34%	2.53%
2004	0.80%	117,298		13.093387		1,535,828	1.23%	6.61%
2003	0.80%	140,345		12.281397		1,723,633	0.84%	25.56%
2002	0.80%	152,335		9.781078		1,490,001	0.60%	-25.92%
2001	0.80%	162,195		13.204070		2,141,634	0.50%	-6.60%
Federated IS – American Leaders Fund II – Primary Shares
2005	0.80%	5,150		14.219360		73,230	1.33%	4.19%
2004	0.80%	5,782		13.647806		78,912	0.41%	8.90%
2003	0.80%	1,104		12.531875		13,835	0.00%	25.32%	05/01/03
Federated IS – Capital Appreciation Fund II – Primary Shares
2005	0.80%	606		12.913893		7,826	1.07%	1.10%
2004	0.80%	770		12.772814		9,835	0.28%	6.54%
2003	0.80%	553		11.988805		6,630	0.00%	19.89%	05/01/03
Federated IS – Quality Bond Fund II – Primary Shares
2005	0.80%	60,574		11.501519		696,693	3.65%	0.49%
2004	0.80%	73,162		11.445157		837,351	4.98%	2.79%
2003	0.80%	117,985		11.134037		1,313,649	3.93%	3.81%
2002	0.80%	101,228		10.725195		1,085,690	0.00%	7.25%	05/01/02
Fidelity® VIP – Equity-Income Portfolio: Initial Class
2005	0.80%	824,566		46.932598		38,699,025	1.64%	5.02%
2004	0.80%	1,112,750		44.687399		49,725,903	1.56%	10.64%
2003	0.80%	1,336,308		40.389521		53,972,840	1.80%	29.29%
2002	0.80%	1,471,599		31.238892		45,971,122	1.77%	-17.61%
2001	0.80%	1,558,719		37.915521		59,099,643	1.70%	-5.72%
Fidelity® VIP – Growth Portfolio: Initial Class
2005	0.80%	1,251,056		39.666280		49,624,738	0.51%	4.96%
2004	0.80%	1,643,610		37.792486		62,116,108	0.27%	2.55%
2003	0.80%	2,035,206		36.851094		74,999,568	0.27%	31.79%
2002	0.80%	2,235,794		27.961807		62,516,840	0.25%	-30.66%
2001	0.80%	2,474,278		40.327380		99,781,149	0.08%	-18.31%
Fidelity® VIP – High Income Portfolio: Initial Class
2005	0.80%	356,194		27.098684		9,652,389	16.14%	1.88%
2004	0.80%	565,686		26.597360		15,045,754	8.82%	8.72%
2003	0.80%	720,241		24.464133		17,620,072	5.94%	26.25%
2002	0.80%	765,595		19.377316		14,835,176	9.29%	2.62%
2001	0.80%	653,854		18.882734		12,346,551	13.67%	-12.44%
Fidelity® VIP – Overseas Portfolio: Initial Class
2005	0.80%	287,574		25.223510		7,253,626	0.71%	18.10%
2004	0.80%	498,640		21.357697		10,649,802	1.14%	12.73%
2003	0.80%	653,974		18.945840		12,390,087	0.83%	42.23%
2002	0.80%	722,432		13.320811		9,623,380	0.83%	-20.92%
2001	0.80%	814,381		16.843777		13,717,252	5.37%	-21.80%
Fidelity® VIP – Overseas Portfolio: Service Class R
2005	0.80%	84,208		12.433969		1,047,040	0.00%	24.34%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Fidelity® VIP II – Asset Manager Portfolio: Initial Class
2005	0.80%	261,190	$	28.387536	$	7,414,541	2.76%	3.22%
2004	0.80%	416,912		27.502617		11,466,171	2.76%	4.63%
2003	0.80%	623,055		26.285930		16,377,580	3.62%	17.04%
2002	0.80%	753,208		22.459775		16,916,882	3.98%	-9.46%
2001	0.80%	808,651		24.805237		20,058,780	4.21%	-4.86%
Fidelity® VIP II – Contrafund® Portfolio: Initial Class
2005	0.80%	1,315,976		32.110552		42,256,716	0.29%	16.01%
2004	0.80%	1,547,972		27.679601		42,847,247	0.34%	14.56%
2003	0.80%	1,740,028		24.162368		42,043,197	0.46%	27.44%
2002	0.80%	1,875,068		18.959642		35,550,618	0.85%	-10.07%
2001	0.80%	2,013,717		21.083066		42,455,328	0.78%	-12.95%
Fidelity® VIP II – Investment Grade Bond Portfolio: Service Class
2005	0.80%	184,098		10.651144		1,960,854	1.67%	1.27%
2004	0.80%	47,726		10.517675		501,967	1.88%	3.49%
2003	0.80%	12,869		10.163210		130,790	0.00%	1.63%	05/01/03
Fidelity® VIP III – Growth Opportunities Portfolio: Initial Class
2005	0.80%	267,592		11.230531		3,005,200	0.95%	8.03%
2004	0.80%	304,964		10.396153		3,170,452	0.53%	6.34%
2003	0.80%	324,568		9.776597		3,173,171	0.74%	28.84%
2002	0.80%	328,074		7.588268		2,489,513	1.07%	-22.47%
2001	0.80%	341,765		9.787292		3,344,954	0.38%	-15.11%
Fidelity® VIP III – Mid Cap Portfolio: Service Class
2005	0.80%	247,064		20.335877		5,024,263	0.00%	17.26%
2004	0.80%	190,596		17.341823		3,305,282	0.00%	23.78%
2003	0.80%	40,642		14.010381		569,410	0.00%	40.10%	05/01/03
Fidelity® VIP III – Value Strategies Portfolio: Service Class
2005	0.80%	47,774		13.451310		642,623	0.00%	1.74%
2004	0.80%	79,260		13.221316		1,047,922	0.00%	13.08%
2003	0.80%	100,700		11.692079		1,177,392	0.00%	56.53%
2002	0.80%	10,466		7.469351		78,174	0.00%	-25.31%	05/01/02
Fidelity® VIP IV – Natural Resources Portfolio: Service Class 2
2005	0.80%	82,484		13.442988		1,108,831	0.65%	34.43%	05/02/05
Fidelity® VIP FF – Freedom Fund 2010 Portfolio: Service Class
2005	0.80%	2,332		10.748937		25,067	0.56%	7.49%	05/02/05
Fidelity® VIP FF – Freedom Fund 2020 Portfolio: Service Class
2005	0.80%	15,234		11.059893		168,486	0.86%	10.60%	05/02/05
Fidelity® VIP FF – Freedom Fund 2030 Portfolio: Service Class
2005	0.80%	3,818		11.269912		43,029	1.32%	12.70%	05/02/05
Franklin Templeton VIP – Franklin Rising Dividends Securities Fund – Class I
2005	0.80%	136,502		13.895780		1,896,802	1.09%	2.86%
2004	0.80%	110,404		13.509605		1,491,514	0.66%	10.36%
2003	0.80%	47,169		12.240997		577,396	0.20%	22.41%	05/01/03
Franklin Templeton VIP – Franklin Small Cap Value Securities Fund – Class I
2005	0.80%	114,196		17.684023		2,019,445	0.91%	8.12%
2004	0.80%	87,470		16.355679		1,430,631	0.19%	23.10%
2003	0.80%	8,003		13.286230		106,330	0.12%	32.86%	05/01/03
Franklin Templeton VIP – Templeton Foreign Securities Fund – Class I
2005	0.80%	46,522		17.058302		793,586	1.37%	9.60%
2004	0.80%	64,070		15.564386		997,210	1.10%	17.93%
2003	0.80%	22,318		13.198462		294,563	0.79%	31.98%	05/01/03
Franklin Templeton VIP III – Franklin Global Income Securities Fund – Class 3
2005	0.80%	2,864		9.828879		28,150	7.95%	-1.71%	05/02/05
Franklin Templeton VIP III – Templeton Developing Markets Securities Fund – Class 3
2005	0.80%	18,806		12.736654		239,526	0.53%	27.37%	05/02/05
Franklin Templeton VIP III – Templeton Foreign Securities Fund – Class 3
2005	0.80%	19,372		11.228867		217,526	0.39%	12.29%	05/02/05
Gartmore GVIT – Dreyfus International Value Fund – Class I
2005	0.80%	27,788		18.404112		511,413	1.34%	11.20%
2004	0.80%	64,536		16.550116		1,068,078	2.03%	19.33%
2003	0.80%	6,704		13.764414		92,277	0.00%	37.64%	05/01/03

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	0.80%	229,268	$	14.677115	$	3,364,993	1.03%	11.21%
2004	0.80%	324,610		13.197899		4,284,170	0.54%	14.81%
2003	0.80%	402,465		11.495433		4,626,509	0.49%	33.58%
2002	0.80%	332,165		8.605706		2,858,514	0.42%	-15.98%
2001	0.80%	246,977		10.242303		2,529,613	0.54%	-2.10%
Gartmore GVIT – Emerging Markets Fund: Class I
2005	0.80%	57,534		17.772777		1,022,539	0.61%	31.58%
2004	0.80%	84,992		13.506849		1,147,974	0.93%	19.78%
2003	0.80%	74,580		11.276219		840,980	0.66%	63.95%
2002	0.80%	29,904		6.877883		205,676	0.17%	-15.91%
2001	0.80%	23,612		8.178748		193,117	0.52%	-5.94%
Gartmore GVIT – Federated High Income Bond Fund: Class I
2005	0.80%	15,130		12.268656		185,625	6.81%	1.57%
2004	0.80%	29,550		12.079399		356,946	8.50%	9.22%
2003	0.80%	13,029		11.059766		144,098	9.25%	10.60%	05/01/03
Gartmore GVIT – Global Financial Services Fund: Class I
2005	0.80%	31,498		16.005171		504,131	2.00%	10.27%
2004	0.80%	23,526		14.514755		341,474	1.45%	20.03%
2003	0.80%	19,256		12.092670		232,856	0.88%	40.33%
2002	0.80%	3,345		8.617613		28,826	0.08%	-13.82%	05/01/02
Gartmore GVIT – Global Health Sciences Fund: Class I
2005	0.80%	24,756		12.948895		320,563	0.00%	7.58%
2004	0.80%	44,046		12.036757		530,171	0.00%	7.00%
2003	0.80%	22,955		11.249287		258,227	0.00%	35.61%
2002	0.80%	3,831		8.295539		31,780	0.00%	-17.04%	05/01/02
Gartmore GVIT – Global Technology and Communications Fund: Class I
2005	0.80%	124,346		3.046342		378,800	0.00%	-1.31%
2004	0.80%	219,234		3.086695		676,708	0.00%	3.48%
2003	0.80%	304,934		2.982846		909,571	0.00%	54.00%
2002	0.80%	113,725		1.936951		220,280	0.59%	-43.24%
2001	0.80%	86,686		3.412440		295,811	0.00%	-43.18%
Gartmore GVIT – Global Utilities Fund: Class I
2005	0.80%	52,446		14.464451		758,603	2.16%	5.54%
2004	0.80%	38,258		13.704848		524,320	1.92%	28.93%
2003	0.80%	6,211		10.629478		66,020	0.70%	23.06%
2002	0.80%	1,341		8.637451		11,583	0.54%	-13.63%	05/01/02
Gartmore GVIT – Government Bond Fund: Class I
2005	0.80%	225,488		24.326268		5,485,282	3.64%	2.44%
2004	0.80%	314,094		23.746180		7,458,533	5.48%	2.44%
2003	0.80%	448,119		23.180734		10,387,727	3.14%	1.19%
2002	0.80%	575,815		22.908666		13,191,154	4.42%	10.10%
2001	0.80%	492,674		20.807253		10,251,193	5.12%	6.40%
Gartmore GVIT – Growth Fund – Class I
2005	0.80%	720,822		17.967853		12,951,624	0.08%	5.65%
2004	0.80%	818,234		17.006258		13,915,099	0.33%	7.30%
2003	0.80%	936,407		15.849998		14,842,049	0.02%	31.68%
2002	0.80%	969,929		12.036520		11,674,570	0.00%	-29.29%
2001	0.80%	950,129		17.022307		16,173,388	0.00%	-28.71%
Gartmore GVIT – International Growth Fund: Class I
2005	0.80%	37,028		9.685731		358,643	1.03%	29.17%
2004	0.80%	16,036		7.498148		120,240	1.40%	13.28%
2003	0.80%	5,733		6.618892		37,946	0.00%	34.54%
2002	0.80%	7,532		4.919535		37,054	0.00%	-24.71%
2001	0.80%	8,456		6.534130		55,253	0.09%	-29.22%
Gartmore GVIT – Mid Cap Growth Fund: Class I
2005	0.80%	88,246		6.065031		535,215	0.00%	8.87%
2004	0.80%	97,936		5.570908		545,592	0.00%	14.42%
2003	0.80%	398,980		4.868865		1,942,580	0.00%	39.02%
2002	0.80%	250,537		3.502288		877,453	0.00%	-37.52%
2001	0.80%	146,210		5.605279		819,548	0.00%	-30.87%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Money Market Fund – Class I
2005	0.80%	727,730	$	15.286397	$	11,124,370	2.64%	1.85%
2004	0.80%	899,340		15.008890		13,498,095	0.78%	0.00%
2003	0.80%	1,224,466		15.008153		18,376,973	0.63%	-0.18%
2002	0.80%	1,963,625		15.035122		29,523,341	1.26%	0.40%
2001	0.80%	1,991,692		14.974957		29,825,502	3.57%	2.77%
Gartmore GVIT – Nationwide® Fund: Class I
2005	0.80%	1,522,010		35.868129		54,591,651	0.91%	6.59%
2004	0.80%	1,808,392		33.651239		60,854,631	1.28%	8.88%
2003	0.80%	2,115,628		30.907637		65,389,062	0.56%	26.50%
2002	0.80%	2,203,258		24.433418		53,833,124	0.85%	-18.01%
2001	0.80%	2,295,929		29.801440		68,421,990	0.74%	-12.53%
Gartmore GVIT – Nationwide® Leaders Fund: Class I
2005	0.80%	12,432		13.486728		167,667	1.54%	9.44%
2004	0.80%	3,724		12.323917		45,894	0.52%	17.85%
2003	0.80%	6,691		10.457551		69,971	0.19%	24.39%
2002	0.80%	12,664		8.407288		106,470	1.18%	-15.93%	05/01/02
Gartmore GVIT – Small Cap Growth Fund: Class I
2005	0.80%	96,746		7.596795		734,960	0.00%	7.23%
2004	0.80%	168,182		7.084474		1,191,481	0.00%	12.51%
2003	0.80%	191,617		6.296628		1,206,541	0.00%	33.20%
2002	0.80%	202,182		4.727311		955,777	0.00%	-33.82%
2001	0.80%	146,635		7.143137		1,047,434	0.00%	-11.55%
Gartmore GVIT – Small Cap Value Fund: Class I
2005	0.80%	287,838		20.382189		5,866,769	0.06%	2.25%
2004	0.80%	410,958		19.932939		8,191,601	0.00%	16.36%
2003	0.80%	566,915		17.129814		9,711,149	0.00%	55.61%
2002	0.80%	581,061		11.008455		6,396,584	0.01%	-27.74%
2001	0.80%	679,631		15.235359		10,354,422	0.03%	27.25%
Gartmore GVIT – Small Company Fund: Class I
2005	0.80%	568,428		35.000912		19,895,498	0.00%	11.42%
2004	0.80%	659,468		31.412204		20,715,343	0.00%	18.07%
2003	0.80%	812,594		26.603797		21,618,086	0.00%	39.89%
2002	0.80%	877,427		19.017572		16,686,531	0.00%	-17.99%
2001	0.80%	928,089		23.188796		21,521,266	0.10%	-7.45%
Gartmore GVIT – Turner Growth Focus Fund – Class I
2003	0.80%	103,819		3.251119		337,528	0.00%	49.76%
2002	0.80%	80,828		2.170866		175,467	0.00%	-43.31%
2001	0.80%	50,607		3.829622		193,806	0.00%	-39.52%
Gartmore GVIT – U.S. Growth Leaders Fund: Class I
2005	0.80%	30,714		15.296041		469,803	0.00%	11.07%
2004	0.80%	27,528		13.771155		379,092	0.00%	11.51%
2003	0.80%	55,080		12.349314		680,200	0.00%	50.93%
2002	0.80%	3,205		8.182356		26,224	0.00%	-18.18%	05/01/02
Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I
2005	0.80%	44,454		13.670462		607,707	3.89%	1.37%
2004	0.80%	59,986		13.485955		808,968	4.85%	5.68%
2003	0.80%	67,316		12.760526		858,988	5.47%	11.22%
2002	0.80%	94,053		11.472904		1,079,061	4.53%	6.35%
2001	0.80%	55,247		10.787560		595,980	8.29%	3.35%
Gartmore GVIT – Van Kampen Value Fund – Class I
2005	0.80%	32,400		15.194781		492,311	1.69%	3.42%
2004	0.80%	29,708		14.692503		436,485	1.56%	16.56%
2003	0.80%	9,638		12.604789		121,485	1.52%	26.05%	05/01/03
Gartmore GVIT III – Dreyfus International Value Fund – Class III
2005	0.80%	35,798		11.391430		407,790	0.95%	13.91%	05/02/05
Gartmore GVIT III – Emerging Markets Fund: Class III
2005	0.80%	49,358		13.266490		654,807	0.19%	32.66%	05/02/05
Gartmore GVIT III – Federated High Income Bond Fund: Class III
2005	0.80%	8,904		10.485051		93,359	6.33%	4.85%	05/02/05

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT III – Global Health Sciences Fund: Class III
2005	0.80%	19,656	$	10.685265	$	210,030	0.00%	6.85%	05/02/05
Gartmore GVIT III – Global Technology and Communications Fund: Class III
2005	0.80%	10,504		12.252375		128,699	0.00%	22.52%	05/02/05
Gartmore GVIT ID II – Aggressive Fund – Class II
2005	0.80%	85,552		13.103041		1,120,991	1.95%	7.07%
2004	0.80%	57,102		12.237400		698,780	1.75%	13.12%
2003	0.80%	45,840		10.818285		495,910	1.41%	30.82%
2002	0.80%	17,710		8.269753		146,457	1.83%	-17.30%	01/25/02
Gartmore GVIT ID II – Conservative Fund – Class II
2005	0.80%	40,486		11.362140		460,008	2.78%	2.49%
2004	0.80%	44,818		11.086539		496,877	2.46%	3.82%
2003	0.80%	27,042		10.678769		288,775	2.37%	7.05%
2002	0.80%	21,249		9.975795		211,976	2.80%	-0.24%	01/25/02
Gartmore GVIT ID II – Moderate Fund – Class II
2005	0.80%	234,442		12.269879		2,876,575	2.36%	4.51%
2004	0.80%	230,378		11.740731		2,704,806	2.27%	8.66%
2003	0.80%	153,659		10.804715		1,660,242	2.06%	19.10%
2002	0.80%	44,700		9.072331		405,533	1.72%	-9.28%	01/25/02
Gartmore GVIT ID II – Moderately Aggressive Fund – Class II
2005	0.80%	281,378		12.796464		3,600,643	2.14%	6.22%
2004	0.80%	250,424		12.046998		3,016,857	1.97%	11.20%
2003	0.80%	180,393		10.833658		1,954,316	1.54%	25.64%
2002	0.80%	94,483		8.623105		814,737	1.55%	-13.77%	01/25/02
Gartmore GVIT ID II – Moderately Conservative Fund – Class II
2005	0.80%	88,944		11.895366		1,058,021	2.75%	3.66%
2004	0.80%	43,224		11.475860		496,033	2.48%	6.31%
2003	0.80%	40,296		10.795210		435,004	2.34%	12.79%
2002	0.80%	18,773		9.570814		179,673	2.35%	-4.29%	01/25/02
Janus AS – Balanced Portfolio – Service Shares
2005	0.80%	11,204		12.589281		141,050	2.56%	6.81%
2004	0.80%	6,582		11.787133		77,583	3.27%	7.43%
2003	0.80%	2,548		10.971897		27,956	4.49%	9.72%	05/01/03
Janus AS – Forty Portfolio – Service Shares
2005	0.80%	225,546		7.954734		1,794,158	0.01%	11.66%
2004	0.80%	271,392		7.123936		1,933,379	0.02%	17.03%
2003	0.80%	331,505		6.087370		2,017,994	0.25%	19.28%
2002	0.80%	358,288		5.103609		1,828,562	0.30%	-16.60%
2001	0.80%	350,620		6.119334		2,145,561	0.91%	-22.46%
Janus AS – Global Technology Portfolio – Service Shares
2005	0.80%	195,006		3.941403		768,597	0.00%	10.66%
2004	0.80%	234,210		3.561614		834,166	0.00%	-0.23%
2003	0.80%	262,295		3.569999		936,393	0.00%	45.31%
2002	0.80%	276,903		2.456849		680,309	0.00%	-41.40%
2001	0.80%	346,031		4.192814		1,450,844	0.56%	-37.82%
Janus AS – International Growth Portfolio – Service Shares
2005	0.80%	171,522		9.101228		1,561,061	1.14%	30.89%
2004	0.80%	166,012		6.953243		1,154,322	0.83%	17.74%
2003	0.80%	186,894		5.905539		1,103,710	0.99%	33.46%
2002	0.80%	219,129		4.424879		969,619	0.67%	-26.35%
2001	0.80%	227,552		6.008001		1,367,133	0.70%	-24.04%
Janus AS – Risk-Managed Large Cap Core Portfolio – Service Shares
2005	0.80%	11,304		15.689665		177,356	1.43%	10.03%
2004	0.80%	4,180		14.259340		59,604	2.29%	16.53%
2003	0.80%	649		12.236775		7,942	0.30%	22.37%	05/01/03
MFS® VITSM – MFS Investors Growth Stock Series – Initial Class
2005	0.80%	13,712		12.952455		177,604	0.38%	3.66%
2004	0.80%	15,444		12.495325		192,978	0.00%	8.32%
2003	0.80%	3,685		11.536092		42,510	0.00%	15.36%	05/01/03

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
MFS® VIT SM – MFS Value Series – Initial Class
2005	0.80%	12,536	$	14.873414	$	186,453	0.65%	5.81	%
2004	0.80%	9,316		14.056392		130,949	0.34%	14.26	%
2003	0.80%	3,296		12.301954		40,547	0.00%	23.02	%	05/01/03
Neuberger Berman AMT – International Portfolio – Class S
2005	0.80%	58,070		11.688169		678,732	0.22%	16.88	%	05/02/05
Neuberger Berman AMT – Regency Portfolio – Class S
2005	0.80%	2,398		11.600355		27,818	0.00%	16.00	%	05/02/05
Neuberger Berman AMT – Balanced Portfolio®– I Class Shares
2005	0.80%	1,268		24.981076		31,676	1.03%	8.31	%
2004	0.80%	1,898		23.063588		43,775	1.30%	8.44	%
2003	0.80%	3,028		21.268673		64,402	1.91%	15.35	%
2002	0.80%	2,497		18.438130		46,040	4.01%	-17.81	%
2001	0.80%	636		22.433930		14,268	0.00%	-3.34	%	06/15/01
Neuberger Berman AMT – Growth Portfolio®– I Class Shares
2005	0.80%	370,758		26.545874		9,842,095	0.00%	12.60	%
2004	0.80%	519,352		23.576070		12,244,279	0.00%	15.67	%
2003	0.80%	637,363		20.381526		12,990,431	0.00%	30.35	%
2002	0.80%	698,803		15.635481		10,926,121	0.00%	-31.71	%
2001	0.80%	800,152		22.896752		18,320,882	0.00%	-30.92	%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2005	0.80%	88,548		12.265806		1,086,113	0.14%	7.53	%
2004	0.80%	121,580		11.406874		1,386,848	0.12%	14.89	%
2003	0.80%	143,460		9.928356		1,424,322	0.84%	30.71	%
2002	0.80%	161,292		7.595581		1,225,106	0.80%	-27.04	%
2001	0.80%	196,852		10.409898		2,049,209	0.47%	-2.30	%
Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares
2005	0.80%	93,430		18.269985		1,706,965	2.61%	0.64	%
2004	0.80%	165,170		18.154314		2,998,548	3.64%	-0.02	%
2003	0.80%	195,325		18.158640		3,546,836	4.41%	1.61	%
2002	0.80%	225,668		17.871272		4,032,974	4.91%	4.50	%
2001	0.80%	178,198		17.101800		3,047,507	5.78%	7.91	%
Neuberger Berman AMT – Partners Portfolio®– I Class Shares
2005	0.80%	450,896		33.621038		15,159,592	1.02%	17.11	%
2004	0.80%	534,216		28.709463		15,337,054	0.01%	18.03	%
2003	0.80%	637,464		24.324378		15,505,915	0.00%	34.01	%
2002	0.80%	728,943		18.150798		13,230,897	0.53%	-24.75	%
2001	0.80%	777,174		24.119941		18,745,391	0.38%	-3.61	%
Neuberger Berman AMT – Socially Responsive Portfolio®– I Class Shares
2005	0.80%	7,910		14.663357		115,987	0.00%	6.01	%
2004	0.80%	18,504		13.832310		255,953	0.00%	12.38	%
2003	0.80%	3,251		12.308850		40,016	0.00%	23.09	%	05/01/03
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares
2005	0.80%	1,526		14.207958		21,681	0.00%	2.08	%
2004	0.80%	3,644		13.918505		50,719	0.00%	10.99	%
2003	0.80%	854		12.540843		10,710	0.00%	25.41	%	05/01/03
Neuberger Berman AMT – Mid Cap Growth Portfolio®– S Class Shares
2005	0.80%	9,044		15.875842		143,581	0.00%	12.52	%
2004	0.80%	11,620		14.108984		163,946	0.00%	15.11	%
2003	0.80%	17,581		12.256991		215,490	0.00%	22.57	%	05/01/03
Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class
2005	0.80%	203,896		6.270767		1,278,584	0.00%	11.43	%
2004	0.80%	265,960		5.627305		1,496,638	0.00%	18.82	%
2003	0.80%	315,600		4.735882		1,494,644	0.00%	24.59	%
2002	0.80%	279,004		3.801151		1,060,536	0.65%	-28.37	%
2001	0.80%	298,688		5.306432		1,584,968	0.87%	-31.82	%
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class
2005	0.80%	488,450		16.169181		7,897,836	0.93%	4.26	%
2004	0.80%	653,294		15.508004		10,131,286	0.33%	6.08	%
2003	0.80%	796,583		14.618573		11,644,907	0.38%	29.90	%
2002	0.80%	847,094		11.253616		9,532,871	0.64%	-27.44	%
2001	0.80%	859,711		15.509895		13,334,027	0.64%	-13.28	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Oppenheimer Funds – Global Securities Fund/VA – Initial Class
2005	0.80%	519,226	$	38.963173	$	20,230,692	1.07%	13.40%
2004	0.80%	723,504		34.359210		24,859,026	1.25%	18.21%
2003	0.80%	941,453		29.065271		27,363,587	0.76%	41.88%
2002	0.80%	1,001,953		20.485514		20,525,522	0.56%	-22.76%
2001	0.80%	1,078,042		26.520512		28,590,226	0.69%	-12.74%
Oppenheimer Funds – High Income Fund/VA – Initial Class
2005	0.80%	20,712		12.203356		252,756	6.75%	1.50%
2004	0.80%	30,734		12.022940		369,513	4.23%	8.10%
2003	0.80%	12,557		11.122220		139,662	0.00%	11.22%	05/01/03
Oppenheimer Funds – Main Street Fund®/VA – Initial Class
2005	0.80%	92,862		9.279543		861,717	1.25%	5.13%
2004	0.80%	97,760		8.826404		862,869	0.84%	8.59%
2003	0.80%	114,284		8.128407		928,947	0.90%	25.71%
2002	0.80%	111,681		6.466008		722,130	0.65%	-19.44%
2001	0.80%	73,856		8.026816		592,829	0.41%	-10.88%
Oppenheimer Funds – Main Street Small Cap Fund®/VA – Initial Class
2005	0.80%	28,068		17.822891		500,253	0.00%	9.05%
2004	0.80%	26,984		16.344185		441,031	0.00%	18.47%
2003	0.80%	26,396		13.796198		364,164	0.00%	37.96%	05/01/03
Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class
2005	0.80%	211,716		33.428671		7,077,385	1.76%	3.06%
2004	0.80%	325,990		32.435047		10,573,501	1.01%	9.22%
2003	0.80%	378,776		29.695890		11,248,090	2.82%	23.96%
2002	0.80%	393,230		23.955594		9,420,058	3.60%	-11.12%
2001	0.80%	394,571		26.951432		10,634,253	3.96%	1.40%
Oppenheimer Funds III – Global Securities Fund/VA – Class 3
2005	0.80%	156,170		11.995949		1,873,407	0.00%	19.96%	05/02/05
Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class
2005	0.80%	276,654		24.300441		6,722,814	5.34%	1.77%
2004	0.80%	337,846		23.877339		8,066,863	4.80%	4.65%
2003	0.80%	422,466		22.815950		9,638,963	5.67%	5.93%
2002	0.80%	492,395		21.538984		10,605,688	7.25%	8.21%
2001	0.80%	499,632		19.904727		9,945,039	7.04%	6.92%
Putnam VT IB – Growth & Income Fund – IB Shares
2005	0.80%	6,136		14.221232		87,261	1.56%	4.39%
2004	0.80%	3,926		13.622923		53,484	1.66%	10.23%
2003	0.80%	1,210		12.359054		14,954	0.00%	23.59%	05/01/03
Putnam VT IB – International Equity Fund – IB Shares
2005	0.80%	18,032		16.333628		294,528	1.11%	11.31%
2004	0.80%	8,052		14.674512		118,159	1.61%	15.27%
2003	0.80%	4,931		12.730633		62,775	0.00%	27.31%	05/01/03
Putnam VT IB – Voyager II Fund – IB Shares
2005	0.80%	2,700		12.881691		34,781	0.60%	4.85%
2004	0.80%	1,378		12.285483		16,929	0.19%	4.20%
2003	0.80%	1,238		11.790763		14,597	0.00%	17.91%	05/01/03
Strong VIF – Strong International Stock Fund II
2002	0.80%	199,430		5.696130		1,135,979	4.04%	-27.13%
2001	0.80%	213,256		7.816872		1,666,995	0.00%	-22.76%
T. Rowe Price II – Blue Chip Growth Portfolio – II
2005	0.80%	17,726		11.255124		199,508	0.29%	12.55%	05/02/05
T. Rowe Price II – Equity Income Portfolio – II
2005	0.80%	21,876		10.580627		231,462	1.20%	5.81%	05/02/05
T. Rowe Price II – Equity Series, Inc. – T. Rowe Price Limited Term Bond Portfolio – Class II
2005	0.80%	2,888		10.073971		29,094	1.39%	0.74%	05/02/05
Van Eck WIT – Worldwide Bond Fund – Initial Class
2005	0.80%	64,726		19.633767		1,270,815	7.55%	-3.80%
2004	0.80%	94,458		20.409871		1,927,876	8.78%	8.28%
2003	0.80%	159,535		18.848928		3,007,064	1.75%	17.22%
2002	0.80%	198,934		16.079714		3,198,802	0.00%	20.69%
2001	0.80%	120,008		13.323421		1,598,917	4.39%	-5.86%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class
2005	0.80%	293,746	$	15.531958	$	4,562,451	0.73%	30.95%
2004	0.80%	322,338		11.861162		3,823,303	0.59%	24.89%
2003	0.80%	401,918		9.497431		3,817,188	0.11%	52.96%
2002	0.80%	444,801		6.209058		2,761,795	0.20%	-3.68%
2001	0.80%	444,368		6.445985		2,864,389	0.00%	-2.60%
Van Eck WIT – Worldwide Hard Assets Fund – Initial Class
2005	0.80%	119,090		36.954214		4,400,877	0.30%	50.47%
2004	0.80%	134,666		24.559747		3,307,363	0.37%	23.24%
2003	0.80%	173,612		19.968789		3,466,821	0.48%	43.92%
2002	0.80%	254,426		13.874598		3,530,058	0.68%	-3.61%
2001	0.80%	176,699		14.394010		2,543,407	1.21%	-11.16%
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I
2005	0.80%	22,076		10.895944		240,539	3.62%	3.39%
2004	0.80%	15,460		10.539104		162,935	4.78%	3.54%
2003	0.80%	2,958		10.179170		30,110	0.00%	1.79%	05/01/03
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I
2005	0.80%	68,904		18.085748		1,246,180	7.52%	11.36%
2004	0.80%	74,670		16.240956		1,212,712	6.41%	9.19%
2003	0.80%	113,201		14.874690		1,683,830	0.00%	26.85%
2002	0.80%	79,485		11.726545		932,084	6.91%	8.35%
2001	0.80%	74,719		10.822665		808,659	9.40%	9.22%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	0.80%	267,504		44.496942		11,903,110	1.22%	16.12%
2004	0.80%	332,014		38.319214		12,722,516	1.55%	35.31%
2003	0.80%	336,013		28.319843		9,515,835	0.00%	36.42%
2002	0.80%	355,742		20.759770		7,385,122	3.29%	-1.58%
2001	0.80%	313,717		21.092541		6,617,089	3.98%	8.96%
Wells Fargo VTFSM – Wells Fargo Advantage Discovery Fund VT
2005	0.80%	130,268		32.224282		4,197,793	0.00%	7.41%
2004	0.80%	194,396		30.000581		5,831,993	0.00%	14.80%
2003	0.80%	240,474		26.133664		6,284,467	0.00%	38.32%
2002	0.80%	264,753		18.893884		5,002,212	0.00%	-12.72%
2001	0.80%	269,121		21.646818		5,825,613	0.72%	3.25%
Wells Fargo VTFSM – Wells Fargo Advantage Opportunity Fund VT
2005	0.80%	373,488		50.644296		18,915,037	0.00%	7.03%
2004	0.80%	515,136		47.318990		24,375,715	0.00%	17.28%
2003	0.80%	690,716		40.347502		27,868,665	0.07%	35.92%
2002	0.80%	826,619		29.685674		24,538,742	0.38%	-27.40%
2001	0.80%	901,762		40.890795		36,873,765	0.59%	-4.48%
American Century VP – Balanced Fund – Class I
2005	1.00%	52,040		10.882231		566,311	1.83%	3.89%
American Century VP – Capital Appreciation Fund – Class I
2005	1.00%	171,146		7.100441		1,215,212	0.00%	20.85%
American Century VP – Income & Growth Fund – Class I
2005	1.00%	20,504		9.965424		204,331	2.03%	3.59%
American Century VP – International Fund – Class I
2005	1.00%	61,088		8.214210		501,790	1.27%	12.13%
American Century VP – Ultra® Fund – Class I
2005	1.00%	5,288		10.943695		57,870	0.00%	1.15%
American Century VP – Value Fund – Class I
2005	1.00%	71,670		16.376728		1,173,720	0.88%	3.99%
Credit Suisse Trust – Global Small Cap Portfolio
2005	1.00%	3,714		6.496475		24,128	0.00%	14.99%
Credit Suisse Trust – International Focus Portfolio
2005	1.00%	15,960		9.513742		151,839	0.91%	16.27%
Credit Suisse Trust – Small Cap Growth Portfolio
2005	1.00%	41,474		7.185242		298,001	0.00%	-3.65%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class
2005	1.00%	15,334		13.324009		204,310	0.00%	6.17%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares
2005	1.00%	344,792	$	8.862854	$	3,055,841	1.60%	3.65%
Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc.
2005	1.00%	20,360		6.322127		128,719	0.00%	2.59%
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2005	1.00%	21,248		9.369677		199,087	0.02%	3.34%
Dreyfus VIF – Growth and Income Portfolio – Initial Shares
2005	1.00%	23,964		9.134532		218,900	1.34%	2.33%
Federated IS – Quality Bond Fund II – Primary Shares
2005	1.00%	4,004		11.417503		45,716	3.65%	0.29%
Fidelity® VIP – Equity-Income Portfolio: Initial Class
2005	1.00%	537,298		11.985917		6,440,009	1.64%	4.81%
Fidelity® VIP – Growth Portfolio: Initial Class
2005	1.00%	746,748		6.958097		5,195,945	0.51%	4.75%
Fidelity® VIP – High Income Portfolio: Initial Class
2005	1.00%	126,486		10.651851		1,347,310	16.14%	1.68%
Fidelity® VIP – Overseas Portfolio: Initial Class
2005	1.00%	162,770		10.624371		1,729,329	0.71%	17.87%
Fidelity® VIP II – Asset Manager Portfolio: Initial Class
2005	1.00%	287,746		10.339381		2,975,116	2.76%	3.01%
Fidelity® VIP II – Contrafund® Portfolio: Initial Class
2005	1.00%	210,686		12.233291		2,577,383	0.29%	15.78%
Fidelity® VIP III – Growth Opportunities Portfolio: Initial Class
2005	1.00%	11,798		8.554456		100,925	0.95%	7.81%
Fidelity® VIP III – Value Strategies Portfolio: Service Class
2005	1.00%	11,298		13.353090		150,863	0.00%	1.54%
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	1.00%	43,640		13.226964		577,225	1.03%	10.99%
Gartmore GVIT – Emerging Markets Fund: Class I
2005	1.00%	19,494		17.324605		337,726	0.61%	31.32%
Gartmore GVIT – Global Financial Services Fund: Class I
2005	1.00%	5,612		15.888310		89,165	2.00%	10.05%
Gartmore GVIT – Global Health Sciences Fund: Class I
2005	1.00%	19,108		12.854278		245,620	0.00%	7.36%
Gartmore GVIT – Global Technology and Communications Fund: Class I
2005	1.00%	15,226		2.929673		44,607	0.00%	-1.50%
Gartmore GVIT – Global Utilities Fund: Class I
2005	1.00%	8,262		14.358831		118,633	2.16%	5.33%
Gartmore GVIT – Government Bond Fund: Class I
2005	1.00%	119,678		12.902408		1,544,134	3.64%	2.24%
Gartmore GVIT – Growth Fund – Class I
2005	1.00%	38,158		5.529847		211,008	0.08%	5.44%
Gartmore GVIT – International Growth Fund: Class I
2005	1.00%	24,308		9.635544		234,221	1.03%	28.92%
Gartmore GVIT – Mid Cap Growth Fund: Class I
2005	1.00%	24,834		5.609609		139,309	0.00%	8.65%
Gartmore GVIT – Money Market Fund – Class I
2005	1.00%	408,430		10.519895		4,296,641	2.64%	1.64%
Gartmore GVIT – Nationwide® Fund: Class I
2005	1.00%	153,820		9.791361		1,506,107	0.91%	6.38%
Gartmore GVIT – Nationwide® Leaders Fund: Class I
2005	1.00%	3,916		13.388228		52,428	1.54%	9.22%
Gartmore GVIT – Small Cap Growth Fund: Class I
2005	1.00%	9,740		7.520431		73,249	0.00%	7.02%
Gartmore GVIT – Small Cap Value Fund: Class I
2005	1.00%	105,618		16.297231		1,721,281	0.06%	2.05%
Gartmore GVIT – Small Company Fund: Class I
2005	1.00%	40,176		13.551021		544,426	0.00%	11.20%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – U.S. Growth Leaders Fund: Class I
2005	1.00%	13,390	$	15.184319	$	203,318	0.00%	10.85%
Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I
2005	1.00%	2,210		13.245485		29,273	3.89%	1.17%
Gartmore GVIT ID II – Conservative Fund – Class II
2005	1.00%	2,858		11.273191		32,219	2.78%	2.28%
Gartmore GVIT ID II – Moderate Fund – Class II
2005	1.00%	36,840		12.173861		448,485	2.36%	4.30%
Gartmore GVIT ID II – Moderately Aggressive Fund – Class II
2005	1.00%	1,550		12.696312		19,679	2.14%	6.01%
Gartmore GVIT ID II – Moderately Conservative Fund – Class II
2005	1.00%	6,244		11.802269		73,693	2.75%	3.45%
Janus AS – Forty Portfolio – Service Shares
2005	1.00%	8,522		8.213276		69,994	0.01%	11.44%
Janus AS – Global Technology Portfolio – Service Shares
2005	1.00%	17,522		4.085406		71,584	0.00%	10.44%
Janus AS – International Growth Portfolio – Service Shares
2005	1.00%	35,600		9.896611		352,319	1.14%	30.63%
Neuberger Berman AMT – Growth Portfolio®– I Class Shares
2005	1.00%	189,716		5.658791		1,073,563	0.00%	12.37%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2005	1.00%	2,788		10.858076		30,272	0.14%	7.32%
Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares
2005	1.00%	47,674		11.659063		555,834	2.61%	0.44%
Neuberger Berman AMT – Partners Portfolio®– I Class Shares
2005	1.00%	78,466		13.343910		1,047,043	1.02%	16.87%
Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class
2005	1.00%	14,778		5.488955		81,116	0.00%	11.21%
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class
2005	1.00%	112,070		8.184351		917,220	0.93%	4.06%
Oppenheimer Funds – Global Securities Fund/VA – Initial Class
2005	1.00%	136,196		12.217371		1,663,957	1.07%	13.17%
Oppenheimer Funds – Main Street Fund®/VA – Initial Class
2005	1.00%	16,864		9.169966		154,642	1.25%	4.92%
Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class
2005	1.00%	127,708		12.353496		1,577,640	1.76%	2.86%
Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class
2005	1.00%	32,080		13.172613		422,577	5.34%	1.57%
Van Eck WIT – Worldwide Bond Fund – Initial Class
2005	1.00%	44,648		14.409920		643,374	7.55%	-3.99%
Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class
2005	1.00%	33,638		17.824242		599,572	0.73%	30.69%
Van Eck WIT – Worldwide Hard Assets Fund – Initial Class
2005	1.00%	66,950		23.079126		1,545,147	0.30%	50.17%
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I
2005	1.00%	8,002		18.206549		145,689	7.52%	11.14%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	1.00%	63,520		23.286362		1,479,150	1.22%	15.89%
Wells Fargo VTFSM– Wells Fargo Advantage Discovery Fund VT
2005	1.00%	30,292		14.243955		431,478	0.00%	7.20%
Wells Fargo VTFSM– Wells Fargo Advantage Opportunity Fund VT
2005	1.00%	179,860		11.770963		2,117,125	0.00%	6.81%
Single Premium contracts issued on or after April 16, 1990
American Century VP – Balanced Fund – Class I
2005	1.30%	2,878		21.944037		63,155	1.83%	3.58%
2004	1.30%	35,358		21.184881		749,055	1.68%	8.36%
2003	1.30%	36,906		19.550372		721,526	2.53%	17.92%
2002	1.30%	36,064		16.579698		597,930	2.63%	-10.73%
2001	1.30%	27,610		18.571841		512,769	2.81%	-4.79%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
American Century VP – Capital Appreciation Fund – Class I
2005	1.30%	6,016	$	21.895512	$	131,723	0.00%	20.49%
2004	1.30%	66,996		18.171733		1,217,433	0.00%	6.19%
2003	1.30%	85,342		17.111726		1,460,349	0.00%	18.92%
2002	1.30%	83,334		14.389339		1,199,121	0.00%	-22.22%
2001	1.30%	93,041		18.500029		1,721,261	0.00%	-29.00%
American Century VP – Income & Growth Fund – Class I
2005	1.30%	8,246		11.784027		97,171	2.03%	3.28%
2004	1.30%	31,276		11.409408		356,841	1.44%	11.53%
2003	1.30%	21,876		10.229575		223,782	1.30%	27.68%
2002	1.30%	18,481		8.011655		148,063	1.10%	-20.41%
2001	1.30%	40,468		10.066594		407,375	0.81%	-9.54%
American Century VP – International Fund – Class I
2005	1.30%	14,464		18.362361		265,593	1.27%	11.80%
2004	1.30%	55,662		16.424915		914,244	0.58%	13.44%
2003	1.30%	52,719		14.478934		763,315	0.75%	22.90%
2002	1.30%	67,411		11.780758		794,153	0.79%	-21.40%
2001	1.30%	105,515		14.988556		1,581,517	0.09%	-30.10%
American Century VP – Ultra® Fund – Class I
2004	1.30%	8,076		10.732849		86,678	0.00%	9.25%
2003	1.30%	1,710		9.824442		16,800	0.00%	23.29%
2002	1.30%	739		7.968770		5,889	0.46%	-20.31%	05/01/02
American Century VP – Value Fund – Class I
2005	1.30%	16,188		21.324425		345,200	0.88%	3.68%
2004	1.30%	92,778		20.567340		1,908,197	1.01%	12.86%
2003	1.30%	85,452		18.224277		1,557,301	1.09%	27.29%
2002	1.30%	94,957		14.316630		1,359,464	0.90%	-13.75%
2001	1.30%	123,905		16.598988		2,056,698	0.95%	11.36%
Credit Suisse Trust – Global Small Cap Portfolio
2005	1.30%	2,682		13.753775		36,888	0.00%	14.65%
2004	1.30%	4,110		11.996474		49,306	0.00%	16.47%
2003	1.30%	10,616		10.300420		109,349	0.00%	45.75%
2002	1.30%	5,188		7.067052		36,664	0.00%	-35.01%
2001	1.30%	7,002		10.873870		76,139	0.00%	-29.56%
Credit Suisse Trust – International Focus Portfolio
2005	1.30%	24,184		13.458367		325,477	0.91%	15.93%
2004	1.30%	41,378		11.609376		480,373	0.99%	13.26%
2003	1.30%	33,394		10.250133		342,293	0.49%	31.37%
2002	1.30%	49,680		7.802280		387,617	0.00%	-20.94%
2001	1.30%	55,979		9.868857		552,449	0.00%	-23.29%
Credit Suisse Trust – Small Cap Growth Portfolio
2005	1.30%	18,546		17.263500		320,169	0.00%	-3.93%
2004	1.30%	42,546		17.970297		764,564	0.00%	9.44%
2003	1.30%	49,309		16.420586		809,683	0.00%	46.63%
2002	1.30%	54,671		11.198504		612,233	0.00%	-34.55%
2001	1.30%	82,230		17.109846		1,406,943	0.00%	-17.10%
Dreyfus IP – European Equity Portfolio
2001	1.30%	2,993		6.578172		19,688	0.84%	-29.06%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Class
2005	1.30%	5,586		13.178346		73,614	0.00%	5.85%
2004	1.30%	21,594		12.449758		268,840	0.50%	20.31%
2003	1.30%	14,581		10.347973		150,884	0.33%	36.00%
Dreyfus Investor, Inc. – Dreyfus Stock Index Fund, Inc. – Initial Shares
2005	1.30%	43,062		27.711836		1,193,327	1.60%	3.34%
2004	1.30%	166,174		26.815353		4,456,014	1.80%	9.21%
2003	1.30%	181,645		24.553549		4,460,029	1.51%	26.71%
2002	1.30%	179,477		19.378177		3,477,937	1.31%	-23.37%
2001	1.30%	215,776		25.286872		5,456,300	1.06%	-13.32%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Dreyfus Investor, Inc. – The Dreyfus Socially Responsible Growth Fund, Inc.
2005	1.30%	1,602	$	22.241255	$	35,630	0.00%	2.28%
2004	1.30%	9,240		21.745234		200,926	0.38%	4.84%
2003	1.30%	11,971		20.741572		248,297	0.11%	24.38%
2002	1.30%	13,724		16.676328		228,866	0.21%	-29.86%
2001	1.30%	22,613		23.777410		537,679	0.06%	-23.58%
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2005	1.30%	52,560		13.291662		698,610	0.02%	3.03%
2004	1.30%	69,410		12.900329		895,412	1.63%	3.69%
2003	1.30%	71,606		12.441321		890,873	1.40%	19.61%
2002	1.30%	74,627		10.401947		776,266	1.14%	-17.79%
2001	1.30%	80,268		12.653068		1,015,636	0.84%	-10.49%
Dreyfus VIF – Growth and Income Portfolio – Initial Shares
2005	1.30%	7,396		12.832801		94,911	1.34%	2.02%
2004	1.30%	20,464		12.578597		257,408	1.23%	6.08%
2003	1.30%	19,988		11.857652		237,011	0.84%	24.94%
2002	1.30%	13,957		9.490878		132,464	0.60%	-26.29%
2001	1.30%	12,109		12.876695		155,924	0.50%	-7.07%
Federated IS – Quality Bond Fund II – Primary Shares
2005	1.30%	296		11.292632		3,343	3.65%	-0.01%
2004	1.30%	5,244		11.293463		59,223	4.98%	2.28%
2003	1.30%	11,443		11.041537		126,348	3.93%	3.29%
2002	1.30%	4,830		10.689420		51,630	0.00%	6.89%	05/01/02
Fidelity® VIP – Equity-Income Portfolio: Initial Class
2005	1.30%	27,500		43.504590		1,196,376	1.64%	4.50%
2004	1.30%	197,270		41.630375		8,212,424	1.56%	10.09%
2003	1.30%	228,092		37.815050		8,625,310	1.80%	28.65%
2002	1.30%	242,191		29.394119		7,118,991	1.77%	-18.02%
2001	1.30%	292,636		35.855591		10,492,637	1.70%	-6.19%
Fidelity® VIP – Growth Portfolio: Initial Class
2005	1.30%	34,904		37.275932		1,301,079	0.51%	4.44%
2004	1.30%	195,692		35.692511		6,984,739	0.27%	2.04%
2003	1.30%	224,376		34.977889		7,848,199	0.27%	31.13%
2002	1.30%	239,109		26.673304		6,377,827	0.25%	-31.01%
2001	1.30%	283,815		38.662344		10,972,953	0.08%	-18.72%
Fidelity® VIP – High Income Portfolio: Initial Class
2005	1.30%	21,016		27.674631		581,610	16.14%	1.38%
2004	1.30%	106,760		27.298414		2,914,379	8.82%	8.18%
2003	1.30%	136,028		25.234771		3,432,635	5.94%	25.62%
2002	1.30%	160,671		20.087809		3,227,528	9.29%	2.11%
2001	1.30%	93,229		19.673202		1,834,113	13.67%	-12.88%
Fidelity® VIP – Overseas Portfolio: Initial Class
2005	1.30%	5,672		22.274316		126,340	0.71%	17.51%
2004	1.30%	95,424		18.954713		1,808,735	1.14%	12.17%
2003	1.30%	111,937		16.898456		1,891,562	0.83%	41.52%
2002	1.30%	129,046		11.940760		1,540,907	0.83%	-21.31%
2001	1.30%	150,144		15.174561		2,278,369	5.37%	-22.19%
Fidelity® VIP II – Asset Manager Portfolio: Initial Class
2005	1.30%	7,118		29.941319		213,122	2.76%	2.70%
2004	1.30%	121,996		29.152937		3,556,542	2.76%	4.11%
2003	1.30%	143,073		28.002882		4,006,456	3.62%	16.45%
2002	1.30%	165,830		24.046655		3,987,657	3.98%	-9.91%
2001	1.30%	187,390		26.691052		5,001,636	4.21%	-5.34%
Fidelity® VIP II – Contrafund® Portfolio: Initial Class
2005	1.30%	72,552		30.469674		2,210,636	0.29%	15.43%
2004	1.30%	167,594		26.396331		4,423,867	0.34%	13.99%
2003	1.30%	185,397		23.157613		4,293,352	0.46%	26.81%
2002	1.30%	199,804		18.262213		3,648,863	0.85%	-10.52%
2001	1.30%	215,185		20.409441		4,391,806	0.78%	-13.39%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Fidelity® VIP III – Growth Opportunities Portfolio: Initial Class
2005	1.30%	844	$	10.765183	$	9,086	0.95%	7.49%
2004	1.30%	18,258		10.015165		182,857	0.53%	5.81%
2003	1.30%	18,158		9.465516		171,875	0.74%	28.20%
2002	1.30%	15,005		7.383595		110,791	1.07%	-22.86%
2001	1.30%	17,924		9.571123		171,553	0.38%	-15.53%
Fidelity® VIP III – Value Strategies Portfolio: Service Class
2005	1.30%	1,814		13.207092		23,958	0.00%	1.23%
2004	1.30%	23,932		13.046144		312,220	0.00%	12.52%
2003	1.30%	40,013		11.594984		463,950	0.00%	55.76%
2002	1.30%	1,517		7.444367		11,293	0.00%	-25.56%	05/01/02
Gartmore GVIT – Dreyfus Mid Cap Index Fund – Class I
2005	1.30%	15,760		14.267251		224,852	1.03%	10.66%
2004	1.30%	77,226		12.893433		995,708	0.54%	14.24%
2003	1.30%	76,418		11.286523		862,494	0.49%	32.91%
2002	1.30%	48,885		8.491590		415,111	0.42%	-16.40%
2001	1.30%	41,031		10.157238		416,762	0.54%	-2.59%
Gartmore GVIT – Emerging Markets Fund: Class I
2005	1.30%	2,774		17.312824		48,026	0.61%	30.93%
2004	1.30%	13,996		13.222981		185,069	0.93%	19.18%
2003	1.30%	31,749		11.094534		352,240	0.66%	63.13%
2002	1.30%	2,303		6.800904		15,662	0.17%	-16.33%
2001	1.30%	1,128		8.127810		9,168	0.52%	-6.42%
Gartmore GVIT – Global Financial Services Fund: Class I
2005	1.30%	238		15.714600		3,740	2.00%	9.72%
2004	1.30%	9,204		14.322458		131,824	1.45%	19.43%
2003	1.30%	8,059		11.992233		96,645	0.88%	39.63%
2002	1.30%	3,861		8.588804		33,161	0.08%	-14.11%	05/01/02
Gartmore GVIT – Global Health Sciences Fund: Class I
2005	1.30%	286		12.713706		3,636	0.00%	7.04%
2004	1.30%	21,374		11.877203		253,863	0.00%	6.47%
2003	1.30%	22,102		11.155813		246,566	0.00%	34.93%
2002	1.30%	13,221		8.267793		109,308	0.00%	-17.32%	05/01/02
Gartmore GVIT – Global Technology and Communications Fund: Class I
2005	1.30%	2,224		2.967380		6,599	0.00%	-1.80%
2004	1.30%	29,678		3.021716		89,678	0.00%	2.97%
2003	1.30%	49,780		2.934687		146,089	0.00%	53.23%
2002	1.30%	7,189		1.915215		13,768	0.59%	-43.52%
2001	1.30%	13,394		3.391119		45,421	0.00%	-43.47%
Gartmore GVIT – Global Utilities Fund: Class I
2005	1.30%	4,350		14.201823		61,778	2.16%	5.02%
2004	1.30%	21,056		13.523265		284,746	1.92%	28.29%
2003	1.30%	6,218		10.541163		65,545	0.70%	22.45%
2002	1.30%	2,573		8.608580		22,150	0.54%	-13.91%	05/01/02
Gartmore GVIT – Government Bond Fund: Class I
2005	1.30%	16,748		24.868713		416,501	3.64%	1.93%
2004	1.30%	87,934		24.397010		2,145,327	5.48%	1.93%
2003	1.30%	125,005		23.935432		2,992,049	3.14%	0.68%
2002	1.30%	222,251		23.773114		5,283,598	4.42%	9.55%
2001	1.30%	253,883		21.700608		5,509,415	5.12%	5.86%
Gartmore GVIT – Growth Fund – Class I
2005	1.30%	6,860		16.779162		115,105	0.08%	5.13%
2004	1.30%	20,390		15.960562		325,436	0.33%	6.76%
2003	1.30%	25,825		14.949958		386,083	0.02%	31.03%
2002	1.30%	29,222		11.409842		333,418	0.00%	-29.64%
2001	1.30%	37,694		16.217110		611,288	0.00%	-29.07%
Gartmore GVIT – International Growth Fund: Class I
2005	1.30%	3,512		9.434995		33,136	1.03%	28.53%
2004	1.30%	15,442		7.340515		113,352	1.40%	12.72%
2003	1.30%	4,222		6.512199		27,495	0.00%	33.87%
2002	1.30%	3,701		4.864470		18,003	0.00%	-25.09%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT – Mid Cap Growth Fund: Class I
2004	1.30%	19,586	$	5.442251	$	106,592	0.00%	13.85%
2003	1.30%	54,348		4.780255		259,797	0.00%	38.33%
2002	1.30%	36,181		3.455755		125,033	0.00%	-37.83%
2001	1.30%	3,579		5.558609		19,894	0.00%	-31.22%
Gartmore GVIT – Money Market Fund – Class I
2005	1.30%	69,288		14.923119		1,033,993	2.64%	1.34%
2004	1.30%	380,556		14.726229		5,604,155	0.78%	-0.50%
2003	1.30%	388,834		14.800105		5,754,784	0.63%	-0.68%
2002	1.30%	594,197		14.901808		8,854,610	1.26%	-0.10%
2001	1.30%	788,057		14.917365		11,755,734	3.57%	2.25%
Gartmore GVIT – Nationwide® Fund: Class I
2005	1.30%	5,272		35.923101		189,387	0.91%	6.06%
2004	1.30%	50,156		33.871221		1,698,845	1.28%	8.33%
2003	1.30%	66,484		31.265566		2,078,660	0.56%	25.87%
2002	1.30%	72,057		24.840096		1,789,903	0.85%	-18.42%
2001	1.30%	91,363		30.449581		2,781,965	0.74%	-12.97%
Gartmore GVIT – Nationwide® Leaders Fund: Class I
2005	1.30%	1,590		13.241863		21,055	1.54%	8.89%
2004	1.30%	5,346		12.160621		65,011	0.52%	17.26%
2003	1.30%	3,455		10.370684		35,831	0.19%	23.77%
2002	1.30%	178		8.379188		1,491	1.18%	-16.21%	05/01/02
Gartmore GVIT – Small Cap Growth Fund: Class I
2005	1.30%	3,160		7.384553		23,335	0.00%	6.70%
2004	1.30%	27,028		6.920939		187,059	0.00%	11.95%
2003	1.30%	28,379		6.182099		175,442	0.00%	32.53%
2002	1.30%	23,644		4.664552		110,289	0.00%	-34.15%
2001	1.30%	10,664		7.083730		75,541	0.00%	-12.00%
Gartmore GVIT – Small Cap Value Fund: Class I
2005	1.30%	14,854		19.615792		291,373	0.06%	1.75%
2004	1.30%	109,740		19.279280		2,115,708	0.00%	15.78%
2003	1.30%	130,023		16.651092		2,165,025	0.00%	54.83%
2002	1.30%	95,522		10.754320		1,027,274	0.01%	-28.11%
2001	1.30%	193,975		14.958425		2,901,560	0.03%	26.61%
Gartmore GVIT – Small Company Fund: Class I
2005	1.30%	6,916		33.263194		230,048	0.00%	10.87%
2004	1.30%	27,688		30.001771		830,689	0.00%	17.49%
2003	1.30%	40,659		25.536562		1,038,291	0.00%	39.19%
2002	1.30%	38,599		18.345997		708,137	0.00%	-18.40%
2001	1.30%	42,033		22.482240		944,996	0.10%	-7.92%
Gartmore GVIT – Turner Growth Focus Fund – Class I
2003	1.30%	41,875		3.198637		133,943	0.00%	49.02%
2002	1.30%	9,832		2.146502		21,104	0.00%	-43.60%
2001	1.30%	2,633		3.805692		10,020	0.00%	-39.82%
Gartmore GVIT – U.S. Growth Leaders Fund: Class I
2005	1.30%	1,378		15.018298		20,695	0.00%	10.52%
2004	1.30%	11,128		13.588665		151,215	0.00%	10.96%
2003	1.30%	16,491		12.246750		201,961	0.00%	50.17%
2002	1.30%	4,697		8.154993		38,304	0.00%	-18.45%	05/01/02
Gartmore GVIT – Van Kampen Multi Sector Bond Fund – Class I
2005	1.30%	2,220		13.288789		29,501	3.89%	0.86%
2004	1.30%	8,078		13.174974		106,427	4.85%	5.16%
2003	1.30%	10,621		12.528743		133,068	5.47%	10.67%
2002	1.30%	10,843		11.320967		122,753	4.53%	5.82%
2001	1.30%	269		10.698042		2,878	8.29%	2.84%
Gartmore GVIT ID II – Conservative Fund – Class II
2004	1.30%	2,914		10.925221		31,836	2.46%	3.30%
2003	1.30%	2,945		10.576130		31,147	2.37%	6.51%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Gartmore GVIT ID II – Moderate Fund – Class II
2005	1.30%	11,178	$	12.031239	$	134,485	2.36%	3.99%
2004	1.30%	35,746		11.569914		413,578	2.27%	8.12%
2003	1.30%	32,069		10.700865		343,166	2.06%	18.50%
2002	1.30%	265		9.030143		2,393	1.72%	-9.70%	01/25/02
Gartmore GVIT ID II – Moderately Aggressive Fund – Class II
2005	1.30%	22,262		12.547596		279,335	2.14%	5.69%
2004	1.30%	24,178		11.871734		287,035	1.97%	10.65%
Gartmore GVIT ID II – Moderately Conservative Fund – Class II
2005	1.30%	75,506		11.663995		880,702	2.75%	3.14%
2004	1.30%	78,358		11.308888		886,142	2.48%	5.78%
2003	1.30%	3,555		10.691448		38,008	2.34%	12.23%
2002	1.30%	99		9.526311		943	2.35%	-4.74%	01/25/02
Janus AS – Forty Portfolio – Service Shares
2005	1.30%	1,398		7.732522		10,810	0.01%	11.11%
2004	1.30%	10,144		6.959531		70,597	0.02%	16.44%
2003	1.30%	13,360		5.976684		79,848	0.25%	18.68%
2002	1.30%	10,536		5.035896		53,058	0.30%	-17.02%
2001	1.30%	15,561		6.068452		94,431	0.91%	-22.85%
Janus AS – Global Technology Portfolio – Service Shares
2004	1.30%	21,408		3.479325		74,485	0.00%	-0.73%
2003	1.30%	36,630		3.505015		128,389	0.00%	44.58%
2002	1.30%	22,402		2.424192		54,307	0.00%	-41.70%
2001	1.30%	44,468		4.157888		184,893	0.56%	-38.13%
Janus AS – International Growth Portfolio – Service Shares
2005	1.30%	5,076		8.846998		44,907	1.14%	30.24%
2004	1.30%	29,924		6.792762		203,267	0.83%	17.15%
2003	1.30%	53,588		5.798153		310,711	0.99%	32.80%
2002	1.30%	59,542		4.366167		259,970	0.67%	-26.72%
2001	1.30%	59,476		5.958051		354,361	0.70%	-24.43%
Neuberger Berman AMT – Growth Portfolio®– I Class Shares
2005	1.30%	8,346		25.728636		214,731	0.00%	12.04%
2004	1.30%	58,460		22.964403		1,342,499	0.00%	15.10%
2003	1.30%	67,899		19.952228		1,354,736	0.00%	29.71%
2002	1.30%	70,474		15.382754		1,084,084	0.00%	-32.05%
2001	1.30%	116,532		22.639891		2,638,272	0.00%	-31.27%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2004	1.30%	4,968		11.032769		54,811	0.12%	14.32%
2003	1.30%	6,729		9.650858		64,941	0.84%	30.06%
2002	1.30%	6,891		7.420249		51,133	0.80%	-27.40%
2001	1.30%	7,490		10.220670		76,553	0.47%	-2.79%
Neuberger Berman AMT – Limited Maturity Bond Portfolio – I Class Shares
2005	1.30%	3,662		18.158987		66,498	2.61%	0.14%
2004	1.30%	43,950		18.134220		796,999	3.64%	-0.52%
2003	1.30%	68,214		18.229469		1,243,505	4.41%	1.10%
2002	1.30%	82,238		18.030897		1,482,825	4.91%	3.98%
2001	1.30%	64,208		17.341018		1,113,432	5.78%	7.37%
Neuberger Berman AMT – Partners Portfolio®– I Class Shares
2005	1.30%	22,258		31.756491		706,836	1.02%	16.53%
2004	1.30%	35,560		27.252721		969,107	0.01%	17.44%
2003	1.30%	38,219		23.205843		886,904	0.00%	33.35%
2002	1.30%	42,685		17.402827		742,840	0.53%	-25.12%
2001	1.30%	58,929		23.242157		1,369,637	0.38%	-4.09%
Oppenheimer Funds – Aggressive Growth Fund/VA – Initial Class
2005	1.30%	10,562		6.095550		64,381	0.00%	10.88%
2004	1.30%	38,774		5.497394		213,156	0.00%	18.23%
2003	1.30%	27,365		4.649735		127,240	0.00%	23.97%
2002	1.30%	11,830		3.750690		44,371	0.65%	-28.72%
2001	1.30%	12,032		5.262277		63,316	0.87%	-32.16%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Oppenheimer Funds – Capital Appreciation Fund/VA – Initial Class
2005	1.30%	10,204	$	15.499156	$	158,153	0.93%	3.75%
2004	1.30%	74,904		14.939657		1,119,040	0.33%	5.56%
2003	1.30%	87,490		14.153408		1,238,282	0.38%	29.25%
2002	1.30%	84,080		10.950071		920,682	0.64%	-27.81%
2001	1.30%	89,005		15.167382		1,349,973	0.64%	-13.71%
Oppenheimer Funds – Global Securities Fund/VA – Initial Class
2005	1.30%	20,412		36.649419		748,088	1.07%	12.84%
2004	1.30%	74,314		32.480314		2,413,742	1.25%	17.62%
2003	1.30%	72,050		27.613518		1,989,554	0.76%	41.18%
2002	1.30%	77,714		19.559687		1,520,062	0.56%	-23.14%
2001	1.30%	89,126		25.449092		2,268,176	0.69%	-13.18%
Oppenheimer Funds – Main Street Fund®/VA – Initial Class
2005	1.30%	2,664		9.020429		24,030	1.25%	4.61%
2004	1.30%	25,380		8.622799		218,847	0.84%	8.05%
2003	1.30%	16,358		7.980692		130,548	0.90%	25.08%
2002	1.30%	8,466		6.380282		54,015	0.65%	-19.85%
2001	1.30%	11,244		7.960162		89,504	0.41%	-11.33%
Oppenheimer Funds – Multiple Strategies Fund/VA – Initial Class
2005	1.30%	8,748		32.399586		283,432	1.76%	2.55%
2004	1.30%	59,420		31.593672		1,877,296	1.01%	8.68%
2003	1.30%	66,415		29.070523		1,930,719	2.82%	23.34%
2002	1.30%	58,166		23.568558		1,370,889	3.60%	-11.56%
2001	1.30%	95,325		26.649037		2,540,319	3.96%	0.89%
Oppenheimer VAF – Oppenheimer Bond Fund/VA – Initial Class
2005	1.30%	8,382		24.474528		205,145	5.34%	1.27%
2004	1.30%	31,218		24.168614		754,496	4.80%	4.13%
2003	1.30%	39,108		23.210049		907,699	5.67%	5.40%
2002	1.30%	66,289		22.020858		1,459,741	7.25%	7.67%
2001	1.30%	71,479		20.452013		1,461,889	7.04%	6.39%
Strong VIF – Strong International Stock Fund II
2002	1.30%	28,207		5.494908		154,995	4.04%	-27.49%
2001	1.30%	28,858		7.578594		218,703	0.00%	-23.15%
Van Eck WIT – Worldwide Bond Fund – Initial Class
2005	1.30%	1,402		19.968392		27,996	7.55%	-4.28%
2004	1.30%	41,310		20.861514		861,789	8.78%	7.74%
2003	1.30%	45,248		19.362563		876,117	1.75%	16.64%
2002	1.30%	48,544		16.600653		805,862	0.00%	20.09%
2001	1.30%	33,122		13.823940		457,877	4.39%	-6.33%
Van Eck WIT – Worldwide Emerging Markets Fund – Initial Class
2005	1.30%	9,088		14.846881		134,928	0.73%	30.30%
2004	1.30%	55,514		11.394604		632,560	0.59%	24.27%
2003	1.30%	41,241		9.169570		378,162	0.11%	52.20%
2002	1.30%	32,199		6.024691		193,989	0.20%	-4.16%
2001	1.30%	34,168		6.285993		214,780	0.00%	-3.09%
Van Eck WIT – Worldwide Hard Assets Fund – Initial Class
2005	1.30%	11,812		32.040853		378,467	0.30%	49.72%
2004	1.30%	60,654		21.400584		1,298,031	0.37%	22.63%
2003	1.30%	52,868		17.487326		924,520	0.48%	43.21%
2002	1.30%	42,486		12.211274		518,808	0.68%	-4.09%
2001	1.30%	38,241		12.731937		486,882	1.21%	-11.61%
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I
2005	1.30%	374		17.336446		6,484	7.52%	10.81%
2004	1.30%	12,540		15.645892		196,199	6.41%	8.64%
2003	1.30%	28,152		14.401515		405,431	0.00%	26.21%
2002	1.30%	5,151		11.410385		58,775	6.91%	7.81%
2001	1.30%	7,324		10.583651		77,515	9.40%	8.67%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 (NOTES TO FINANCIAL STATEMENTS, Continued)

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income **Ratio**	Total ***Return***
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	1.30%	7,386	$	42.223333	$	311,862	1.22%	15.54%
2004	1.30%	39,270		36.542922		1,435,041	1.55%	34.63%
2003	1.30%	45,256		27.142344		1,228,354	0.00%	35.74%
2002	1.30%	51,170		19.996209		1,023,206	3.29%	-2.07%
2001	1.30%	53,253		20.418602		1,087,352	3.98%	8.41%
Wells Fargo VTFSM– Wells Fargo Advantage Discovery Fund VT
2005	1.30%	2,946		30.095203		88,660	0.00%	6.88%
2004	1.30%	20,844		28.158423		586,934	0.00%	14.22%
2003	1.30%	22,400		24.651908		552,203	0.00%	37.63%
2002	1.30%	26,664		17.911803		477,600	0.00%	-13.15%
2001	1.30%	35,961		20.624646		741,683	0.72%	2.73%
Wells Fargo VTFSM– Wells Fargo Advantage Opportunity Fund VT
2005	1.30%	6,228		47.299447		294,581	0.00%	6.50%
2004	1.30%	58,418		44.414552		2,594,609	0.00%	16.69%
2003	1.30%	69,041		38.060714		2,627,750	0.07%	35.24%
2002	1.30%	78,959		28.143339		2,222,170	0.38%	-27.77%
2001	1.30%	99,955		38.960989		3,894,346	0.59%	-4.95%
2005					$	929,399,760
2004					$	915,627,476
2003					$	881,562,186
2002					$	727,023,336
2001					$	933,404,977

*	This represents the annual contract expense rate of the variable account for the period indicated and includes only those expenses that are assessed through a reduction in the unit values. Excluded are expenses of the underlying mutual funds and charges made directly to contract owner accounts through the redemption of units.
**	This represents the dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by average net assets. The ratios exclude those expenses, if any, that result in direct reductions to the contractholder accounts either through reductions in unit values or redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.
***	This represents the total return for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit value for expenses assessed. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Account. The total return is calculated for the period indicated or from the effective date through the end of the period.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

Nationwide Life Insurance Company:

We have audited the consolidated financial statements of Nationwide Life Insurance Company and subsidiaries (the Company) as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in note 3 to the consolidated financial statements, the Company adopted the American Institute of Certified Public Accountants’ Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, in 2004.

/s/ KPMG LLP

Columbus, Ohio

March 1, 2006

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Income

(in millions)

	Years ended December 31,
	2005		2004			2003
Revenues:
Policy charges	$	1,055.1	$	1,025.2		$	924.1
Life insurance premiums		260.0		270.4			279.8
Net investment income		2,105.2		2,000.5			1,973.1
Net realized gains (losses) on investments, hedging instruments and hedged items		10.6		(36.4	)		(85.2	)
Other		2.2		9.8			12.8
Total revenues		3,433.1		3,269.5			3,104.6
Benefits and expenses:
Interest credited to policyholder account values		1,331.0		1,277.2			1,309.2
Other benefits and claims		377.5		369.2			380.0
Policyholder dividends on participating policies		33.1		36.2			41.2
Amortization of deferred policy acquisition costs		466.3		410.1			375.9
Interest expense on debt, primarily with Nationwide Financial Services, Inc. (NFS)		66.3		59.8			48.4
Other operating expenses		538.8		582.0			515.5
Total benefits and expenses		2,813.0		2,734.5			2,670.2
Income from continuing operations before federal income tax expense		620.1		535.0			434.4
Federal income tax expense		95.6		120.0			96.2
Income from continuing operations		524.5		415.0			338.2
Cumulative effect of adoption of accounting principles, net of taxes		—		(3.3	)		(0.6	)
Net income	$	524.5	$	411.7		$	337.6

See accompanying notes to consolidated financial statements,

including Note 15 which describes related party transactions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Balance Sheets

(in millions, except per share amounts)

	December 31,
	2005		2004
Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (cost $26,958.9 in 2005; $26,708.7 in 2004)	$	27,198.1	$	27,652.0
Equity securities (cost $35.1 in 2005; $37.7 in 2004)		42.1		48.1
Mortgage loans on real estate, net		8,458.9		8,649.2
Real estate, net		84.9		83.9
Policy loans		604.7		644.5
Other long-term investments		641.5		539.6
Short-term investments, including amounts managed by a related party		1,596.6		1,645.8
Total investments		38,626.8		39,263.1
Cash		0.9		15.5
Accrued investment income		344.0		364.2
Deferred policy acquisition costs		3,597.9		3,416.6
Other assets		1,699.1		2,099.8
Assets held in separate accounts		62,689.8		60,798.7
Total assets	$	106,958.5	$	105,957.9
Liabilities and Shareholder’s Equity
Liabilities:
Future policy benefits and claims	$	35,941.1	$	36,383.1
Short-term debt		242.3		215.0
Long-term debt, payable to NFS		700.0		700.0
Other liabilities		3,130.1		3,645.2
Liabilities related to separate accounts		62,689.8		60,798.7
Total liabilities		102,703.3		101,742.0
Shareholder’s equity:
Common stock, $1 par value; authorized - 5.0 shares; issued and outstanding - 3.8 shares		3.8		3.8
Additional paid-in capital		274.4		274.4
Retained earnings		3,883.4		3,543.9
Accumulated other comprehensive income		93.6		393.8
Total shareholder’s equity		4,255.2		4,215.9
Total liabilities and shareholder’s equity	$	106,958.5	$	105,957.9

See accompanying notes to consolidated financial statements,

including Note 15 which describes related party transactions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Shareholder’s Equity

(in millions)

	Capital shares		Additional paid-in capital			Retained earnings			Accumlated other comprehensive income			Total shareholder’s equity
Balance as of December 31, 2002	$	3.8	$	171.1		$	2,979.6		$	394.3		$	3,548.8
Comprehensive income:
Net income		—		—			337.6			—			337.6
Net unrealized gains on securities available-for-sale arising during the period, net of taxes		—		—			—			99.6			99.6
Accumulated net losses on cash flow hedges, net of taxes		—		—			—			(26.6	)		(26.6	)
Total comprehensive income													410.6
Capital contributed by NFS		—		200.2			—			—			200.2
Capital returned to NFS		—		(100.0	)		—			—			(100.0	)
Dividends to NFS		—		—			(60.0	)		—			(60.0	)
Balance as of December 31, 2003		3.8		271.3			3,257.2			467.3			3,999.6
Comprehensive income:
Net income		—		—			411.7			—			411.7
Net unrealized losses on securities available-for-sale arising during the period, net of taxes		—		—			—			(42.7	)		(42.7	)
Accumulated net losses on cash flow hedges, net of taxes		—		—			—			(30.8	)		(30.8	)
Total comprehensive income													338.2
Capital contributed by NFS		—		3.1			—			—			3.1
Dividends to NFS		—		—			(125.0	)		—			(125.0	)
Balance as of December 31, 2004		3.8		274.4			3,543.9			393.8			4,215.9
Comprehensive income:
Net income		—		—			524.5			—			524.5
Net unrealized losses on securities available-for-sale arising during the period, net of taxes		—		—			—			(327.3	)		(327.3	)
Accumulated net gains on cash flow hedges, net of taxes		—		—			—			27.1			27.1
Total comprehensive income													224.3
Dividends to NFS		—		—			(185.0	)		—			(185.0	)
Balance as of December 31, 2005	$	3.8	$	274.4		$	3,883.4		$	93.6		$	4,255.2

See accompanying notes to consolidated financial statements,

including Note 15 which describes related party transactions.

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,
	2005			2004			2003
Cash flows from operating activities:
Net income	$	524.5		$	411.7		$	337.6
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized (gains) losses on investments, hedging instruments and hedged items		(10.6	)		36.4			85.2
Interest credited to policyholder account values		1,331.0			1,277.2			1,309.2
Capitalization of deferred policy acquisition costs		(460.5	)		(496.4	)		(567.2	)
Amortization of deferred policy acquisition costs		466.3			410.1			375.9
Amortization and depreciation		65.6			73.0			69.3
Decrease (increase) in other assets		591.0			(303.5	)		(735.9	)
(Decrease) increase in policy and other liabilities		(511.1	)		324.4			342.3
Other, net		(114.9	)		1.5			45.4
Net cash provided by operating activities		1,881.3			1,734.4			1,261.8
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale		4,198.5			3,099.4			4,101.6
Proceeds from sale of securities available-for-sale		2,619.7			2,485.5			2,220.5
Proceeds from repayments of mortgage loans on real estate		2,854.6			1,920.9			1,478.3
Cost of securities available-for-sale acquired		(6,924.1	)		(6,291.4	)		(9,366.7	)
Cost of mortgage loans on real estate originated or acquired		(2,524.9	)		(2,169.9	)		(1,914.4	)
Net decrease (increase) in short-term investments		56.9			205.9			(639.9	)
Collateral received (paid) - securities lending, net		36.6			89.4			(26.1	)
Other, net		121.6			(357.2	)		280.3
Net cash provided by (used in) investing activities		438.9			(1,017.4	)		(3,866.4	)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt to NFS		—			—			100.0
Net increase in short-term debt		27.3			15.2			199.8
Capital contributed by NFS		—			3.1			200.2
Capital returned to NFS		—			—			(100.0	)
Cash dividends paid to NFS		(185.0	)		(125.0	)		(60.0	)
Investment and universal life insurance product deposits		2,845.4			3,561.6			5,116.1
Investment and universal life insurance product withdrawals		(5,022.5	)		(4,156.5	)		(2,852.3	)
Net cash (used in) provided by financing activities		(2,334.8	)		(701.6	)		2,603.8
Net (decrease) increase in cash		(14.6	)		15.4			(0.8	)
Cash, beginning of period		15.5			0.1			0.9
Cash, end of period	$	0.9		$	15.5		$	0.1

See accompanying notes to consolidated financial statements,

including Note 15 which describes related party transactions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements

December 31, 2005, 2004 and 2003

(1) Organization and Description of Business

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 Nationwide Financial Services, Inc. (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, 2005 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 group retirement plans, other investment products sold to institutions, life insurance and advisory services. The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker/dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), Nationwide Financial Network (NFN) producers and TBG Insurance Services Corporation (TBG Financial). The Company also distributes products through the agency distribution force of its ultimate majority parent company, NMIC.

(2) Summary of Significant Accounting Policies

The significant accounting policies followed by the Company that materially affect financial reporting are summarized below. The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP).

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ significantly from those estimates.

The most significant estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition (DAC) for investment products and universal life insurance products; impairment losses on investments; valuation allowances for mortgage loans on real estate; federal income tax provisions; the liability for future policy benefits; and pension and other postretirement employee benefits. Although some variability is inherent in these estimates, the 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.

(a) Consolidation Policy

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. Effective December 31, 2003, the Company applied the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities - an interpretation of ARB No. 51 (FIN 46R), to those variable interest entities (VIEs) with which it is associated. As a result, the Company deconsolidated certain VIEs which previously were consolidated, as of that date. Minority interest expense is included in other operating expenses in the consolidated statements of income, and minority interest is included in other liabilities on the consolidated balance sheets. All significant intercompany balances and transactions have been eliminated.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(b) Valuation of Investments, Investment Income and Related Gains and Losses

The Company is required to classify its fixed maturity securities and marketable equity securities as held-to-maturity, available-for-sale or trading. All fixed maturity and marketable equity securities are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of adjustments to DAC, future policy benefits and claims, and deferred federal income taxes reported as a separate component of accumulated other comprehensive income (AOCI) in shareholder’s equity. The adjustment to DAC represents the changes in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.

The fair value of fixed maturity and marketable equity securities is generally obtained from independent pricing services based on market quotations. For fixed maturity securities not priced by independent services (generally private placement securities and securities that do not trade regularly), an internally developed pricing model or “corporate pricing matrix” is most often used. The corporate pricing matrix is developed by obtaining spreads versus the U.S. Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the U.S. Treasury yield to create an estimated market yield for that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. Additionally, for valuing certain fixed maturity securities with complex cash flows such as certain mortgage-backed and asset-backed securities, a “structured product model” is used. The structured product model uses third party pricing tools. For securities for which quoted market prices are not available and for which the Company’s structured product model is not suitable for estimating fair values, fair values are determined using other modeling techniques, primarily a commercial software application utilized in valuing complex securitized investments with variable cash flows. As of December 31, 2005, 72% of the fair values of fixed maturity securities were obtained from independent pricing services, 20% from the Company’s pricing matrices and 8% from other sources compared to 70%, 21% and 9%, respectively, in 2004.

Management regularly reviews each investment in its fixed maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments.

Under the Company’s accounting policy for equity securities and debt securities that can be contractually prepaid or otherwise settled in a way that may limit the Company’s ability to fully recover cost, an impairment is deemed to be other-than-temporary unless the Company has both the ability and intent to hold the investment until the security’s forecasted recovery and evidence exists indicating that recovery will occur in a reasonable period of time. Also, for such debt securities management estimates cash flows over the life of purchased beneficial interests in securitized financial assets. If management estimates that the fair value of its beneficial interest is not greater than or equal to its carrying value based on current information and events, and if there has been an adverse change in estimated cash flows since the last revised estimate (considering both timing and amount), then the Company recognizes an other-than-temporary impairment and writes down the purchased beneficial interest to fair value.

For other debt securities, an other-than-temporary impairment charge is taken when the Company does not have the ability and intent to hold the security until the forecasted recovery or if it is no longer probable that the Company will recover all amounts due under the contractual terms of the security. Many criteria are considered during this process including, but not limited to, the current fair value as compared to cost or amortized cost, as appropriate, of the security; the amount and length of time a security’s fair value has been below cost or amortized cost; specific credit issues and financial prospects related to the issuer; management’s intent to hold or dispose of the security; and current economic conditions.

Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment.

Impairment losses are recorded on investments in long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income. All other investment income is recorded using the interest-method without anticipating the impact of prepayments.

The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan is impaired, a provision for loss is established equal to the difference between the carrying value and the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. In addition to the valuation allowance on specific loans, the Company maintains an unallocated allowance for probable losses inherent in the loan portfolio as of the balance sheet date, but not yet specifically identified by loan. Changes in the valuation allowance are recorded in net realized gains and losses on investments, hedging instruments and hedged items. Loans in foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received.

The valuation allowance account for mortgage loans on real estate is maintained at a level believed adequate by management and reflects management’s best estimate of probable credit losses, including losses incurred at the balance sheet date but not yet identified by specific loan. Management’s periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.

Real estate is carried at cost less accumulated depreciation. Real estate designated as held for disposal is carried at the lower of the carrying value at the time of such designation or fair value less cost to sell. Other long-term investments are carried on the equity method of accounting.

Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in the Company’s mortgage loan valuation allowance and recognition of impairment losses for other-than-temporary declines in the fair values of applicable investments are included in realized gains and losses on investments, hedging instruments and hedged items.

(c) Derivative Instruments

Derivatives are carried at fair value. On the date the derivative contract is entered into, the Company designates the derivative as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge); a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); a foreign currency fair value or cash flow hedge (foreign currency hedge); or a non-hedge transaction. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for entering into various hedge transactions. This process includes linking all derivatives that are designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used for hedging transactions are expected to be and, for ongoing hedging relationships, have been highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not, or is not expected to be, highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The Company enters into interest rate swaps, cross-currency swaps or Euro futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short U.S. Treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items. Changes in the fair value of the hedged item that are attributable to the risk being hedged are also recorded in realized gains and losses on investments, hedging instruments and hedged items.

The Company may enter into “receive fixed/pay variable” interest rate swaps to hedge existing variable rate assets or to hedge cash flows from the anticipated purchase of investments. These derivative instruments are identified as cash flow hedges and are carried at fair value with the offset recorded in AOCI to the extent the hedging relationship is effective. The ineffective portion of the hedging relationship is recorded in realized gains and losses on investments, hedging instruments and hedged items. Gains and losses on derivative instruments that are initially recorded in AOCI are reclassified out of AOCI and recognized in earnings over the same period(s) that the hedged item affects earnings.

Accrued interest receivable or payable under interest rate and foreign currency swaps are recognized as an adjustment to net investment income or interest credited to policyholder account values consistent with the nature of the hedged item, except for interest rate swaps hedging the anticipated sale of investments where amounts receivable or payable under the swaps are recorded as realized gains and losses on investments, hedging instruments and hedged items, and except for interest rate swaps hedging the anticipated purchase of investments where amounts receivable or payable under the swaps are initially recorded in AOCI to the extent the hedging relationship is effective.

The Company periodically may enter into a derivative transaction that will not qualify for hedge accounting. The Company does not enter into speculative positions. Although these transactions do not qualify for hedge accounting, or have not been designated in hedging relationships by the Company, they provide the Company with an economic hedge, which is used as part of its overall risk management strategy. For example, the Company may sell credit default protection through a credit default swap. Although the credit default swap may not be effective in hedging specific investments, the income stream allows the Company to manage overall investment yields while exposing the Company to acceptable credit risk. The Company may enter into a cross-currency basis swap (pay a variable U.S. rate and receive a variable foreign-denominated rate) to eliminate the foreign currency exposure of a variable rate foreign-denominated liability. Although basis swaps may qualify for hedge accounting, the Company has chosen not to designate these derivatives as hedging instruments due to the difficulty in assessing and monitoring effectiveness for both sides of the basis swap. Derivative instruments that do not qualify for hedge accounting or are not designated as hedging instruments are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items.

(d) Revenues and Benefits

Investment Products 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 policy account values and benefits and claims incurred in the period in excess of related policy account values.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

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 by the provision for future policy benefits and the deferral and amortization of policy acquisition costs.

(e) Deferred Policy Acquisition Costs for Investment Products and Universal Life Insurance Products

The Company has deferred the costs of acquiring investment products and universal life insurance products business, principally commissions, certain expenses of the policy issue and underwriting department, and certain variable sales expenses that relate to and vary with the production of new and renewal business. Investment products primarily consist of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, COLI and other interest-sensitive life insurance policies. DAC is subject to recoverability testing at the time of policy issuance and loss recognition testing at the end of each reporting period.

For investment products (principally individual and group annuities) and universal life insurance products, DAC is being amortized with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administration fees, surrender charges, and net realized gains and losses less policy benefits and policy maintenance expenses. The DAC asset related to investment products and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(b).

The most significant assumptions that are involved in the estimation of future gross profits include future net separate account performance, surrender/lapse rates, interest margins and mortality. The Company’s long-term assumption for net separate account performance is currently 8% growth per year. If actual net separate account performance varies from the 8% assumption, the Company assumes different performance levels over the next three years such that the mean return equals the long-term assumption. This process is referred to as a reversion to the mean. The assumed net separate account return assumptions used in the DAC models are 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 returns 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 products and universal life insurance products and their related amortization patterns. In the event actual experience differs from assumptions or assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense (referred to as DAC unlocking), which could be significant. In general, increases in the estimated general and separate account returns result in increased expected future profitability and may lower the rate of DAC amortization, while increases in lapse/surrender and mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization.

Management evaluates the appropriateness of the individual variable annuity DAC balance 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 of time, or if the recorded balance falls outside of these parameters and management determines it is not reasonably possible to get back within the parameters during this period of time, assumptions are required to be unlocked and DAC is recalculated using revised best estimate assumptions. Otherwise, DAC is not unlocked to reflect updated assumptions. If DAC assumptions were unlocked and revised, the Company would continue to use the reversion to the mean process.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

For other investment products and universal life insurance products, DAC is adjusted each quarter to reflect revised best estimate assumptions, including the use of a reversion to the mean methodology over the next three years as it relates to net separate account performance. Any resulting DAC unlocking adjustments are reflected currently in the consolidated statements of income.

(f) Separate Accounts

Separate account assets and liabilities represent contractholders’ funds, which have been segregated into accounts with specific investment objectives. Separate account assets are recorded at fair value based primarily on market quotations of the underlying securities. The investment income and gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income except for: (1) the fees the Company receives, which are assessed on a daily or monthly basis and recognized as revenue when assessed and earned; and (2) the activity related to guaranteed minimum death benefit (GMDB) and guaranteed minimum income benefit (GMIB) contracts, which are riders to existing variable annuity contracts.

(g) Future Policy Benefits

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 for investment products in the accumulation phase and universal life and variable universal life insurance policies as the policy account balance, which represents participants’ net premiums and deposits plus investment performance and interest credited less applicable contract charges.

The Company’s liability for funding agreements to an unrelated third party trust equals the balance that accrues to the benefit of the contractholder, including interest credited. The funding agreements constitute insurance obligations considered annuity contracts under Ohio insurance laws.

The liability for future policy benefits for traditional life insurance policies has been calculated by the net level premium method using interest rates varying from 5.4% to 6.0% 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 has been calculated using the present value of future benefits and maintenance costs discounted using interest rates varying from 3.0% to 13.0%. Also, as of December 31, 2005 and 2004, the calculated reserve was adjusted to reflect the incremental reserve that would be required if unrealized gains and losses had been realized and the proceeds reinvested at lower rates, which would have resulted in the use of a lower discount rate, as discussed in Note 2(b).

(h) Participating Business

Participating business represented approximately 10% in 2005 (11% in 2004 and 13% in 2003) of the Company’s life insurance in force, 52% of the number of life insurance policies in force in 2005 (55% in 2004 and 56% in 2003) and 5% of life insurance statutory premiums in 2005 (7% in 2004 and 11% in 2003). The provision for policyholder dividends was based on then current dividend scales and has been included in future policy benefits and claims in 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, 2005, 2004 and 2003

(i) Federal Income Taxes

The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. Any such change could significantly affect the amounts reported in the consolidated statements of income. Management has used best estimates to establish reserves based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Quarterly, management evaluates the appropriateness of such reserves based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums and other rulings issued by the Internal Revenue Service or the tax courts.

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully realized.

(j) Reinsurance Ceded

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related balances of the Company.

(k) Reclassification

Certain items in the 2004 and 2003 consolidated financial statements and related notes have been reclassified to conform to the current presentation.

(3) Recently Issued Accounting Standards

On February 16, 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments (SFAS 155). SFAS 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140). SFAS 155 also resolves issues addressed in SFAS 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. The following is a summary of SFAS No. 155: (1) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; (2) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (3) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (4) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; (5) amends SFAS 140 to eliminate the prohibition on a qualifying special purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of SFAS 155 may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis. Although the Company is currently unable to quantify the impact of adoption, SFAS 155 could have a material impact on the Company’s financial position and/or results of operations once adopted.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, issued by the FASB. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement or rider to a contract, or by the election of a feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006, with earlier adoption encouraged. Retrospective application of SOP 05-1 to previously issued financial statements is not permitted. Initial application of SOP 05-1 should be as of the beginning of an entity’s fiscal year. The Company will adopt SOP 05-1 effective January 1, 2007. Although the Company is currently unable to quantify the impact of adoption, SOP 05-1 could have a material impact on the Company’s financial position and/or results of operations once adopted.

In May 2005, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 154, Accounting Changes and Error Corrections (SFAS 154), which replaces Accounting Principles Board (APB) Opinion No. 20, Accounting Changes (APB 20), and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application of changes in accounting principle to prior period financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, SFAS 154 requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported on the income statement. When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, SFAS 154 requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable. SFAS 154 carries forward without change the guidance contained in APB 20 for reporting the correction of an error in previously issued financial statements and a change in accounting estimate and justifying a change in accounting principle on the basis of preferability. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, with earlier adoption permitted. The Company will adopt SFAS 154 effective January 1, 2006. SFAS 154 is not expected to have any impact on the Company’s financial position or results of operations upon adoption.

In March 2004, the Emerging Issues Task Force (EITF) reached consensus on further guidance concerning the identification of and accounting for other-than-temporary impairments and disclosures for cost method investments, as required by EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (EITF 03-1), which was issued on October 23, 2003. The Company began applying this additional guidance beginning July 1, 2004. Also, effective June 30, 2004, the Company revised its method of evaluating securities to be sold based on additional interpretation of the intent to hold criteria in EITF 03-1. This revision had no impact on the Company’s financial position or results of operations.

On September 8, 2004, the FASB issued for comment FASB Staff Position (FSP) EITF Issue 03-1-a, which was intended to provide guidance related to the application of paragraph 16 of EITF 03-1, and proposed FSP EITF Issue 03-1-b, which proposed a delay in the effective date of EITF 03-1 for debt securities that are impaired because of interest rate and/or sector spread increases. Based on comments received on these proposals, on September 30, 2004 the FASB issued FSP EITF 03-1-1, Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1, which delayed the effectiveness of the guidance in EITF 03-1 in its entirety, with the exception of certain disclosure requirements. The delay had no impact on the Company’s financial position or results of operations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

At its June 29, 2005 meeting, the FASB decided not to provide additional guidance on the meaning of other-than-temporary impairment. Instead, the FASB decided to issue proposed FSP EITF 03-1-a, Implementation Guidance for the Application of Paragraph 16 of EITF Issue No. 03-1, as final. The final FSP supersedes EITF 03-1 and EITF Topic No. D-44, Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value (EITF Topic D-44). The final FSP, retitled FSP FAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (FSP FAS 115-1), was issued on November 3, 2005 and replaces the guidance set forth in paragraphs 10-18 of EITF 03-1 with references to existing other-than-temporary impairment guidance. FSP FAS 115-1 codifies the guidance set forth in EITF Topic D-44 and clarifies that an investor should recognize an impairment loss no later than when the impairment is deemed other-than-temporary, even if a decision to sell has not been made. At its September 14, 2005 meeting, the FASB decided that FSP FAS 115-1 would be applied prospectively effective for periods beginning after December 15, 2005. FSP FAS 115-1 does not address when a debt security should be designated as nonaccrual or how to subsequently report income on a nonaccrual debt security. The Company continues to actively monitor its portfolio for any securities deemed to be other-than-temporarily impaired based on the guidance in SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, and United States Securities and Exchange Commission Staff Accounting Bulletin No. 59, Accounting for Noncurrent Marketable Equity Securities, which is expected to be the guidance referenced in FSP FAS 115-1. Because the Company’s existing policies are consistent with the guidance in FSP FAS 115-1, the adoption of FSP FAS 115-1 had no impact on the Company’s financial position or results of operations.

In July 2003, the AICPA issued Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1) to address many topics. The most significant topic affecting the Company was the accounting for contracts with GMDB. SOP 03-1 requires companies to evaluate the significance of a GMDB to determine whether a contract should be accounted for as an investment or insurance contract. For contracts determined to be insurance contracts, companies are required to establish a reserve to recognize a portion of the assessment (revenue) that compensates the insurance company for benefits to be provided in future periods. The Company adopted SOP 03-1 effective January 1, 2004, which resulted in a $3.3 million charge, net of taxes, as the cumulative effect of adoption of this accounting principle.

The following table summarizes the components of cumulative effect adjustments recorded in the Company’s 2004 consolidated statements of income:

(in millions)	January 1, 2004
Increase in future policy benefits:
Ratchet interest crediting	$	(12.3	)
Secondary guarantees - life insurance		(2.4	)
GMDB claim reserves		(1.8	)
GMIB claim reserves		(1.0	)
Subtotal		(17.5	)
Adjustment to amortization of deferred policy acquisition costs related to above		12.4
Deferred federal income taxes		1.8
Cumulative effect of adoption of accounting principle, net of taxes	$	(3.3	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(4) Risk Disclosures

The following is a description of the most significant risks facing the Company and how it attempts to mitigate those risks:

Credit Risk: This is the risk that issuers of securities, mortgagees on real estate mortgage loans or other parties, including reinsurers and derivatives counterparties, default on their contractual obligations. The Company attempts to mitigate this risk by adhering to investment policies that provide portfolio diversification on an asset class, creditor and industry basis, and by complying with investment limitations governed by state insurance laws and regulations, as applicable. The Company actively monitors and manages exposures, including restructuring, reducing or liquidating investments; determines whether any securities are impaired or loans are deemed uncollectible; and takes charges in the period such assessments are made. The ratings of reinsurers who owe the Company money are regularly monitored along with outstanding balances as part of the Company’s reinsurance collection process, with timely follow-up on delayed payments. The aggregate credit risk taken in the investment portfolio is influenced by management’s risk/return preferences, the economic and credit environment, the relationship of credit risk in the asset portfolio to other business risks that the Company is exposed to, and the Company’s current and expected future capital position.

Interest Rate Risk: This is the risk that interest rates will change and cause a decrease in the value of an insurer’s investments relative to the value of its liabilities, and/or an unfavorable change in prepayment activity, resulting in compressed interest margins. For example, if liabilities come due more quickly than assets mature, an insurer could potentially have to borrow funds or sell assets prior to maturity and potentially recognize a gain or loss. In some investments that contain borrower options, this risk may be realized through unfavorable cash flow patterns, such as increased principal repayment when interest rates have declined. When unfavorable interest rate movements occur, interest margins may compress, reducing profitability. The Company attempts to mitigate this risk by offering products that transfer this risk to the purchaser and/or by attempting to approximately match the maturity schedule of its assets with the expected payouts of its liabilities, both at inception and on an ongoing basis. In some investments that permit prepayment at the borrower option, make-whole provisions are required such that if the borrower prepays in a lower-rate environment, the Company may be compensated for the loss of future income. In other situations, the Company accepts some interest rate risk in exchange for a higher yield on the investment.

Legal/Regulatory Risk: This is the risk that changes in the legal or regulatory environment in which an insurer operates will result in increased competition, reduced demand for a company’s products, or additional expenses not anticipated by the insurer in pricing its products. The Company attempts to mitigate this risk by offering a wide range of products and by operating throughout the U.S., thus reducing its exposure to any single product or jurisdiction, and also by employing practices that identify and minimize the adverse impact of this risk.

Ratings Risk: This is the risk that rating agencies change their outlook or rating of the Company or a subsidiary of the Company. The rating agencies generally utilize proprietary capital adequacy models in the process of establishing ratings for the Company and certain subsidiaries. The Company is at risk to changes in these models and the impact that changes in the underlying business in which it is engaged in can have on such models. To help mitigate this risk, the Company maintains regular communications with the rating agencies evaluates the impact of significant transactions on such capital adequacy models and considers the same in the design of transactions to minimize the adverse impact of this risk.

Financial Instruments with Off-Balance Sheet Risk: The Company is a party to financial instruments with off-balance sheet risk in the normal course of business through management of its investment portfolio. These financial instruments include commitments to extend credit in the form of loans. These instruments involve, to varying degrees, elements of credit risk in excess of amounts recognized in 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, 2005, 2004 and 2003

Commitments to fund fixed rate mortgage loans on real estate are agreements to lend to a borrower and are subject to conditions established in the underlying contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a deposit. Commitments extended by the Company are based on management’s case-by-case credit evaluation of the borrower and the borrower’s loan collateral. The underlying mortgaged property represents the collateral if the commitment is funded. The Company’s policy for new mortgage loans on real estate is generally to lend no more than 80% of collateral value. Should the commitment be funded, the Company’s exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amounts of these commitments less the net realizable value of the collateral. The contractual amounts also represent the cash requirements for all unfunded commitments. Commitments on mortgage loans on real estate of $267.5 million extending into 2006 were outstanding as of December 31, 2005 compared to $243.7 million extending into 2005 as of December 31, 2004. The Company also had $47.4 million and $68.1 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2005 and 2004, respectively

Notional amounts of derivative financial instruments, primarily interest rate swaps, interest rate futures contracts and foreign currency swaps, significantly exceed the credit risk associated with these instruments and represent contractual balances on which calculations of amounts to be exchanged are based. Credit exposure is limited to the sum of the aggregate fair value of positions that have become favorable to the Company, including accrued interest receivable due from counterparties. The Company attempts to minimize potential credit losses through careful evaluation of counterparty credit standing, selection of counterparties from a limited group of high quality institutions, collateral agreements and other contract provisions. Any exposures related to derivative activity are aggregated with other credit exposures between the Company and the derivative counterparty to assess adherence to established credit limits. As of December 31, 2005, the Company’s credit risk from these derivative financial instruments was $63.5 million, net of $203.3 million of cash collateral and $53.2 million in securities pledged as collateral compared to $46.3 million, $415.7 million and $222.5 million, respectively, as of December 31, 2004.

Equity Market Risk:Asset fees calculated as a percentage of the separate account assets are a significant source of revenue to the Company. As of December 31, 2005, approximately 83% of separate account assets were invested in equity mutual funds (approximately 82% as of December 31, 2004). Gains and losses in the equity markets result in corresponding increases and decreases in the Company’s separate account assets and asset fee revenue. In addition, a decrease in separate account assets may decrease the Company’s expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in guaranteed contract claims, which may require the Company to accelerate the amortization of DAC.

Many of the Company’s individual variable annuity contracts offer GMDB features. A GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on the premiums paid less amounts withdrawn or contract value on a specified anniversary date. A decline in the stock market causing the contract value to fall below this specified amount, which varies from contract to contract based on the date the contract was entered into as well as the GMDB feature elected, will increase the net amount at risk, which is the GMDB in excess of the contract value. This could result in additional GMDB claims.

In an effort to mitigate this risk, the Company has implemented a GMDB economic hedging program for certain new and existing business. Prior to implementation of the GMDB hedging program in 2003, the Company managed this risk primarily by entering into reinsurance arrangements. The GMDB economic hedging program is designed to offset changes in the economic value of the GMDB obligation up to a return of the contractholder’s premium payments. However, the first 10% of GMDB claims are not hedged. Currently the program shorts S&P 500 Index futures, which provides an offset to changes in the value of the designated obligation. The Company’s economic evaluation of the GMDB obligation is not consistent with current accounting treatment of the GMDB obligation. Therefore, the hedging activity will lead to earnings volatility. This volatility was negligible in 2005. As of December 31, 2005 and 2004, the net amount at risk was $1.08 billion and $1.71 billion before reinsurance, respectively, and $178.4 million and $296.5 million net of reinsurance, respectively. As of December 31, 2005 and 2004, the Company’s reserve for GMDB claims was $26.9 million and $23.6 million, respectively. See Note 3 for discussion of the impact of adopting a new accounting principle regarding GMDB reserves in 2004.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The Company also offers certain variable annuity products with a guaranteed minimum accumulation benefit (GMAB) rider. A GMAB provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time (5, 7 or 10 years) selected by the contractholder at the time of issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified period of time, to drop the rider and continue the variable annuity contract without the GMAB. The design of the GMAB rider limits the risk to the Company in a variety of ways including asset allocation requirements, which serve to reduce the Company’s potential exposure to underlying fund performance risks. Specifically, the GMAB terms limit asset allocation by: (1) requiring partial allocation of assets to a guaranteed term option (a fixed rate investment option) and excluding certain funds that are highly volatile or difficult to hedge; or (2) requiring all assets be allocated to one of the approved asset allocation funds or models defined by the Company. A GMAB represents an embedded derivative in the variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivative is carried at fair value and reported in other future policy benefits and claims. The Company initially records an offset to the fair value of the embedded derivative on the balance sheet, which is amortized through the income statement over the term of the GMAB period of the contract. The fair value of the GMAB embedded derivative is calculated based on actuarial assumptions related to the projected benefit cash flows incorporating numerous assumptions including, but not limited to, expectations of contractholder persistency, market returns, correlations of market returns and market return volatility.

The Company began selling contracts with the GMAB feature on May 1, 2003. Beginning October 1, 2003, the Company launched an enhanced version of the rider that offered increased equity exposure to the contractholder in return for a higher charge. The Company simultaneously began economically hedging the GMAB exposure for those risks that exceed a level it considered acceptable. The GMAB economic hedge consists of shorting interest rate futures and S&P 500 Index futures contracts and does not qualify for hedge accounting under current guidance. Upon reaching scale, the Company anticipates the purchase of S&P 500 Index put options and over-the-counter basket put options, which are constructed in order to minimize the tracking error of the hedge and the GMAB liability. See Note 2(c) for discussion of economic hedges. The objective of the GMAB economic hedge strategy is to manage the exposures with risk beyond a level considered acceptable to the Company. The Company is exposed to equity market risk related to the GMAB feature should the growth in the underlying investments, including any GTO investment, fail to reach the guaranteed return level. The GMAB embedded derivative will create volatility in earnings; however, the hedging program provides substantial mitigation of this exposure. This volatility was negligible in 2005 and 2004. As of December 31, 2005 and 2004, the fair value of the GMAB embedded derivative was $67.9 million and $20.6 million, respectively. The increase in the fair value of the GMAB embedded derivative primarily was due to the value of new business sold during 2005.

Beginning in March 2005, the Company began offering a hybrid GMAB/guaranteed minimum withdrawal benefit (GMWB) through its Capital Preservation Plus Lifetime Income (CPPLI) contract rider. This living benefit combines a GMAB feature in its first 5-10 years with a lifetime withdrawal benefit which begins upon the maturity of the GMAB and extends for the duration of the insured’s life. In the event that the insured’s contract value is exhausted through such withdrawals, the Company shall continue to fund future withdrawals at a pre-defined level until the insured’s death. In some cases, the contract owner has the right to drop the GMWB portion of this rider or periodically reset the guaranteed withdrawal basis to a higher level. This benefit requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy as previously described above.

Significant Concentrations of Credit Risk: The Company grants mainly commercial mortgage loans on real estate to customers throughout the U.S. As of December 31, 2005, the Company had a diversified portfolio with no more than 23.8% in any geographic region of the U.S. and no more than 1.6% with any one borrower, compared to 25.1% and 1.6%, respectively, as of December 31, 2004. As of December 31, 2005 and 2004, 32.0% and 30.0% of the carrying value of the Company’s commercial mortgage loan portfolio financed retail properties, respectively.

Significant Business Concentrations:As of December 31, 2005 and 2004, 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

Guarantee Risk:In connection with the selling of securitized interests in Low-Income-Housing Tax Credit Funds (Tax Credit Funds), the Company guarantees a specified minimum return to the investor. The guaranteed return varies by transaction and follows general market trends. The Company’s risk related to securitized interests in Tax Credit Funds is that the tax benefits provided to the investor are not sufficient to provide the guaranteed cumulative after-tax yields. The Company attempts to mitigate these risks by having qualified individuals with extensive industry experience perform due diligence on each of the underlying properties to ensure they will be capable of delivering the amount of credits anticipated and by requiring cash reserves to be held at various levels within these structures to provide for possible shortfalls in the amount of credits generated. See Note 17 for further discussion of Tax Credit Funds.

Reinsurance: The Company follows the industry practice of reinsuring a portion of its life insurance and annuity risks with other companies in order to reduce net liability on individual risks, to provide protection against large losses and to obtain greater diversification of risks. The maximum amount of individual ordinary life insurance retained by the Company on any one life is $5.0 million. The Company cedes insurance primarily on an automatic basis, under which risks are ceded to a reinsurer on specific blocks of business where the underlying risks meet certain predetermined criteria, and on a facultative basis, under which the reinsurer’s prior approval is required for each risk reinsured. The Company also cedes insurance on a case-by-case basis particularly where the Company may be writing new risks or is unwilling to retain the full costs associated with new lines of business. The Company maintains catastrophic reinsurance coverage to protect against large losses related to a single event. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder.

The Company has entered into reinsurance contracts with certain unaffiliated reinsurers to cede a portion of its general account life, annuity and health business. Total amounts recoverable under these reinsurance contracts include ceded reserves, paid and unpaid claims, and certain other amounts and totaled $909.6 million and $894.3 million as of December 31, 2005 and 2004, respectively. The impact of these contracts on the Company’s results of operations is immaterial. The ceding of risk does not discharge the original insurer from its primary obligation to the contractholder. Under the terms of the contracts, specified assets have been placed in trusts as collateral for the recoveries. The trust assets are invested in investment grade securities, the fair value of which must at all times be greater than or equal to 100% or 102% of the reinsured reserves, as outlined in each of the underlying contracts. The Company has no other material reinsurance arrangements with unaffiliated reinsurers. The Company’s only material reinsurance agreements with affiliates are the modified coinsurance agreements pursuant to which NLIC ceded to other members of Nationwide all of its accident and health insurance business not ceded to unaffiliated reinsurers, as described in Note 15.

Collateral – Derivatives:The Company enters into agreements with various counterparties to execute over-the-counter derivative transactions. The Company’s policy is to include a Credit Support Annex with each agreement in an effort to protect the Company for any exposure above the approved credit threshold. This also protects the counterparty against exposure to the Company. The Company generally posts securities as collateral and receives cash as collateral from counterparties. The Company maintains ownership of the pledged securities at all times and is entitled to receive from the borrower any payments for interest or dividends received on such securities during the period it is pledged as collateral.

Collateral – Securities Lending:The Company, through its agent, lends certain portfolio holdings and in turn receives cash collateral. The cash collateral is invested in high-quality short-term investments. The Company’s policy requires a minimum of 102% of the fair value of the securities loaned to be maintained as collateral. Net returns on the investments, after payment of a rebate to the borrower, are shared between the Company and its agent. Both the borrower and the Company can request or return the loaned securities at any time. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest or dividends received on such securities during the loan term.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(5) Fair Value of Financial Instruments

The following disclosures summarize the carrying amount and estimated fair value of the Company’s financial instruments. Certain assets and liabilities are specifically excluded from the disclosure requirements for financial instruments. For this reason, among others, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought or sold, or in the case of liabilities incurred or settled, in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is to be based on the best information available in the circumstances. Such estimates of fair value should consider prices for similar assets or similar liabilities and the results of valuation techniques to the extent available in the circumstances. Examples of valuation techniques include the present value of estimated expected future cash flows using discount rates commensurate with the risks involved, option-pricing models, matrix pricing, option-adjusted spread models and fundamental analysis. Valuation techniques for measuring assets and liabilities must be consistent with the objective of measuring fair value and should incorporate assumptions that market participants would use in their estimates of values, future revenues and future expenses, including assumptions about interest rates, default, prepayment and volatility.

Many of the Company’s assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management using matrix pricing, present value or other suitable valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments.

Although insurance contracts are specifically exempted from the disclosure requirements (other than those that are classified as investment contracts), the Company’s estimate of the fair values of policy reserves on life insurance contracts is provided to make the fair value disclosures more meaningful.

The tax ramifications of the related unrealized gains and losses can have a significant effect on the estimates of fair value and have not been considered in arriving at such estimates.

In estimating its fair value disclosures, the Company used the following methods and assumptions:

Fixed maturity and equity securities available-for-sale: See Note 2(b).

Mortgage loans on real estate, net: The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Estimated fair value is based on the present value of expected future cash flows discounted at the loan’s effective interest rate.

Policy loans, short-term investments and cash: The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair values.

Separate account assets and liabilities: The fair values of assets held in separate accounts are based on quoted market prices of the underlying securities. The fair value of liabilities related to separate accounts are the amounts payable on demand, which are net of certain surrender charges.

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. 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

Policy reserves on life insurance contracts: Included are disclosures for individual life insurance, COLI, BOLI, universal life insurance and supplementary contracts with life contingencies for which the estimated fair value is the amount payable on demand. Also included are disclosures for the Company’s limited payment policies for which the Company has used discounted cash flow analyses to estimate fair value, similar to those used for investment contracts with known maturities.

Short-term debt, collateral received – securities lending and collateral received – derivatives: The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair values.

Long-term debt, payable to NFS: The fair values for long-term debt are based on estimated market prices.

Commitments to extend credit: Commitments to extend credit have nominal fair values because of the short-term nature of such commitments. See Note 4.

Interest rate and cross-currency interest rate swaps:The fair values for interest rate and cross-currency interest rate swaps are calculated with pricing models using current rate assumptions.

Interest rate futures contracts: The fair values for futures contracts are based on quoted market prices.

The following table summarizes the carrying values and estimated fair values of financial instruments subject to disclosure requirements and policy reserves on life insurance contracts as of December 31:

	2005						2004
(in millions)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities	$	27,198.1		$	27,198.1		$	27,652.0		$	27,652.0
Equity securities		42.1			42.1			48.1			48.1
Mortgage loans on real estate, net		8,458.9			8,503.0			8,649.2			8,942.7
Policy loans		604.7			604.7			644.5			644.5
Short-term investments		1,596.6			1,596.6			1,645.8			1,645.8
Cash		0.9			0.9			15.5			15.5
Assets held in separate accounts		62,689.8			62,689.8			60,798.7			60,798.7
Liabilities
Investment contracts		(28,698.1	)		(26,607.2	)		(29,196.6	)		(26,870.6	)
Policy reserves on life insurance contracts		(7,243.0	)		(7,173.1	)		(7,186.5	)		(7,153.9	)
Short-term debt		(242.3	)		(242.3	)		(215.0	)		(215.0	)
Long-term debt, payable to NFS		(700.0	)		(822.8	)		(700.0	)		(743.9	)
Collateral received – securities lending and derivatives		(1,359.1	)		(1,359.1	)		(1,289.9	)		(1,289.9	)
Liabilities related to separate accounts		(62,689.8	)		(61,483.5	)		(60,798.7	)		(59,651.2	)
Derivative financial instruments
Interest rate swaps hedging assets		3.3			3.3			(72.1	)		(72.1	)
Cross-currency interest rate swaps		178.5			178.5			495.0			495.0
Interest rate futures contracts		1.6			1.6			(6.5	)		(6.5	)
Other derivatives		41.1			41.1			36.1			36.1

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(6) Derivative Financial Instruments

Qualitative Disclosure

Interest Rate Risk Management

The Company periodically purchases fixed rate investments to back variable rate liabilities. As a result, the Company can be exposed to interest rate risk due to the mismatch between variable rate liabilities and fixed rate assets. To mitigate this risk, the Company enters into various types of derivative instruments to minimize this mismatch, with fluctuations in the fair values of the derivatives offsetting changes in the fair values of the investments resulting from changes in interest rates. The Company principally uses pay fixed/receive variable interest rate swaps to manage this risk.

Under these interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments. The fixed interest paid on the swap offsets the fixed interest received on the investment, resulting in the Company receiving the variable interest payments on the swap, generally 3-month U.S. London Interbank Offered Rate (LIBOR), and the credit spread on the investment. The net receipt of a variable rate will then match the variable rate paid on the liability.

As a result of entering into commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to the loans being funded. To manage this risk, the Company enters into short U.S. Treasury futures during the commitment period. With short U.S. Treasury futures, if interest rates rise/fall, the gains/losses on the futures will offset the change in fair value of the commitment attributable to the change in interest rates.

The Company periodically purchases variable rate investments (i.e., commercial mortgage loans and corporate bonds). As a result, the Company can be exposed to variability in cash flows and investment income due to changes in interest rates. Such variability poses risks to the Company when the assets are funded with fixed rate liabilities. To manage this risk, the Company may enter into receive fixed/pay variable interest rate swaps.

In using these interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap offsets the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap and the credit spread on the investment. The net receipt of a fixed rate will then match the fixed rate paid on the liability.

The Company manages interest rate risk at the segment level. Different segments may simultaneously hedge interest rate risks associated with owning fixed and variable rate investments considering the risk relevant to a particular segment.

Foreign Currency Risk Management

In conjunction with the Company’s medium-term note (MTN) program, the Company periodically issues both fixed and variable rate liabilities denominated in foreign currencies. As a result, the Company is exposed to changes in fair value of the liabilities due to changes in foreign currency exchange rates and related interest rates. To manage these risks, the Company enters into cross-currency interest rate swaps to convert these liabilities to a U.S. dollar rate.

The Company is exposed to changes in fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and related interest rates. To manage this risk, the Company uses cross-currency interest rate hedges to swap these asset characteristics to variable U.S. dollar rate instruments. Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in the foreign currency, and receive a variable U.S. dollar rate, generally 3-month U.S. LIBOR. These derivative instruments are designated as a fair value hedge of the fixed rate foreign denominated asset.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

For a variable rate foreign liability, the cross-currency interest rate swap is structured to receive a variable rate, in the foreign currency, and pay a variable U.S. dollar rate, generally 3-month U.S. LIBOR. As both sides of the cross-currency interest rate swap are variable, the derivative instrument is a basis swap. While the receive-side terms of the cross-currency interest rate swap will line up with the terms of the liability, the Company is not able to match the pay-side terms of the derivative to a specific asset. Therefore, these derivative instruments do not receive hedge accounting treatment.

Cross-currency interest rate swaps on variable rate investments are structured to pay a variable rate, in the foreign currency, and receive a fixed U.S. dollar rate. The terms of the foreign currency paid on the swap will exactly match the terms of the foreign currency received on the asset, thus eliminating currency risk. These derivative instruments are designated as a cash flow hedge.

Equity Market Risk Management

See Note 4 for a complete discussion of the Company’s equity market risk management.

Other Non-Hedging Derivatives

The Company periodically enters into basis swaps (receive one variable rate, pay another variable rate) to better match the cash flows received from the specific variable-rate investments with the variable rate paid on a group of liabilities. While the pay-side terms of the basis swap will line up with the terms of the asset, the Company is not able to match the receive-side terms of the derivative to a specific liability. Therefore, basis swaps do not receive hedge accounting treatment.

The Company sells credit default protection on selected debt instruments and combines the credit default swap with selected assets the Company owns to replicate a higher yielding bond. These selected assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. The combined credit default swap and investments provide the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment.

The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company. The purchased credit default protection does not qualify for hedge accounting treatment.

Quantitative Disclosure

Fair Value Hedges

During the years ended December 31, 2005, 2004 and 2003, a net gain of $4.1 million, a net loss of $11.3 million and a net gain of $4.2 million, respectively, were recognized in net realized gains and losses on investments, hedging instruments and hedged items. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness. There were also no gains or losses recognized in earnings as a result of hedged firm commitments no longer qualifying as fair value hedges.

Cash Flow Hedges

For the years ended December 31, 2005, 2004 and 2003, the ineffective portion of cash flow hedges was a net gain of $3.1 million, a net gain of $1.0 million and a net loss of $5.4 million, respectively. There were no net gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness.

The Company anticipates reclassifying less than $0.5 million in net losses out of AOCI over the next 12-month period.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

In general, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows associated with forecasted transactions, other than those relating to variable interest on existing financial instruments, is twelve months or less. However, in 2003 the Company did enter into a hedge of a forecasted purchase of shares of a mutual fund tied to the S&P 500 Index, where delivery of the shares will occur 30 years in the future. During 2005, 2004 and 2003, the Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Additionally, no amounts were reclassified from AOCI into earnings due to the probability that a forecasted transaction would not occur.

Other Derivative Instruments, Including Embedded Derivatives

Net realized gains and losses on investments, hedging instruments and hedged items for the years ended December 31, 2005, 2004 and 2003 included a net loss of $9.1 million, a net gain of $8.1 million and a net gain of $11.8 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. In addition, Annuity Benefits included a gain of $5.1 million for the year ended December 31, 2005 related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2005, 2004 and 2003, a net loss of $80.7 million, a net loss of $5.9 million and a net gain of $4.2 million, respectively, were recorded in net realized gains and losses on investments, hedging instruments and hedged items reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate MTNs denominated in foreign currencies. Additional net gains of $78.3 million, $5.9 million and $0.9 million were recorded in net realized gains and losses on investments, hedging instruments and hedged items to reflect the change in spot rates of these foreign currency denominated obligations during the years ended December 31, 2005, 2004 and 2003, respectively.

The following table summarizes the notional amount of derivative financial instruments outstanding as of December 31:

(in millions)	2005		2004
Interest rate swaps:
Pay fixed/receive variable rate swaps hedging investments	$	2,040.1	$	1,891.5
Pay variable/receive fixed rate swaps hedging investments		79.2		152.8
Pay variable/receive variable rate swaps hedging investments		—		145.0
Pay variable/receive fixed rate swaps hedging liabilities		550.0		275.0
Pay variable/receive variable rate swaps hedging liabilities		30.0		280.0
Pay fixed/receive variable rate swaps hedging liabilities		170.0		275.0
Other contracts hedging investments		10.0		43.9
Cross-currency interest rate swaps:
Hedging foreign currency denominated investments		439.8		400.9
Hedging foreign currency denominated liabilities		1,312.4		2,028.8
Credit default swaps and other non-hedging instruments		555.3		836.0
Equity option contracts		774.4		190.9
Interest rate futures contracts		120.5		387.0
Total	$	6,081.7	$	6,906.8

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(7) Investments

The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale as of the dates indicated:

(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
December 31, 2005:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	163.8	$	14.3	$	0.6	$	177.5
Agencies not backed by the full faith and credit of the U.S. Government		849.7		61.2		6.2		904.7
Obligations of states and political subdivisions		300.3		2.4		3.8		298.9
Debt securities issued by foreign governments		41.4		2.7		0.1		44.0
Corporate securities
Public		9,520.0		233.7		106.2		9,647.5
Private		6,572.2		195.3		65.3		6,702.2
Mortgage-backed securities – U.S. Government-backed		6,048.3		18.1		107.6		5,958.8
Asset-backed securities		3,463.2		42.6		41.3		3,464.5
Total fixed maturity securities		26,958.9		570.3		331.1		27,198.1
Equity securities		35.1		7.0		—		42.1
Total securities available-for-sale	$	26,994.0	$	577.3	$	331.1	$	27,240.2
December 31, 2004:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	81.1	$	13.9	$	0.1	$	94.9
Agencies not backed by the full faith and credit of the U.S. Government		1,101.0		81.6		1.0		1,181.6
Obligations of states and political subdivisions		246.8		3.1		2.7		247.2
Debt securities issued by foreign governments		41.6		2.7		0.1		44.2
Corporate securities
Public		10,192.0		448.9		26.4		10,614.5
Private		6,633.6		342.9		24.1		6,952.4
Mortgage-backed securities – U.S. Government-backed		4,628.8		59.5		16.3		4,672.0
Asset-backed securities		3,783.8		87.7		26.3		3,845.2
Total fixed maturity securities		26,708.7		1,040.3		97.0		27,652.0
Equity securities		37.7		10.5		0.1		48.1
Total securities available-for-sale	$	26,746.4	$	1,050.8	$	97.1	$	27,700.1

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The table below summarizes the amortized cost and estimated fair value of fixed maturity securities available-for-sale, by maturity, as of December 31, 2005. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(in millions)	Amortized cost		Estimated fair value
Fixed maturity securities available-for-sale:
Due in one year or less	$	1,902.1	$	1,909.1
Due after one year through five years		6,212.8		6,285.3
Due after five years through ten years		6,160.3		6,246.3
Due after ten years		3,172.2		3,334.1
Subtotal		17,447.4		17,774.8
Mortgage-backed securities – U.S. Government-backed		6,048.3		5,958.8
Asset-backed securities		3,463.2		3,464.5
Total	$	26,958.9	$	27,198.1

The following table presents the components of net unrealized gains on securities available-for-sale as of December 31:

(in millions)	2005			2004
Net unrealized gains, before adjustments and taxes	$	246.2		$	953.7
Adjustment to DAC		42.4			(144.6	)
Adjustment to future policy benefits and claims		(104.6	)		(121.6	)
Deferred federal income taxes		(64.4	)		(240.6	)
Net unrealized gains	$	119.6		$	446.9

The following table presents an analysis of the net (decrease) increase in net unrealized gains on securities available-for-sale before adjustments and taxes for the years ended December 31:

(in millions)	2005			2004			2003
Fixed maturity securities	$	(704.1	)	$	(153.3	)	$	61.9
Equity securities		(3.4	)		(1.2	)		12.4
Net change	$	(707.5	)	$	(154.5	)	$	74.3

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes by time the gross unrealized losses on securities available-for-sale in an unrealized loss position as of the dates indicated:

	Less than or equal to one year				More than one year				Total
(in millions)	Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses
December 31, 2005:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	25.1	$	0.5	$	3.7	$	0.1	$	28.8	$	0.6
Agencies not backed by the full faith and credit of the U.S. Government		297.0		4.9		42.2		1.3		339.2		6.2
Obligations of states and political subdivisions		150.7		3.0		29.7		0.8		180.4		3.8
Debt securities issued by foreign governments		7.4		0.1		—		—		7.4		0.1
Corporate securities
Public		3,210.4		63.2		1,088.2		43.0		4,298.6		106.2
Private		1,690.3		39.1		672.6		26.2		2,362.9		65.3
Mortgage-backed securities – U.S. Government-backed		4,062.8		88.6		632.6		19.0		4,695.4		107.6
Asset-backed securities		1,420.7		26.1		432.5		15.2		1,853.2		41.3
Total fixed maturity securities		10,864.4		225.5		2,901.5		105.6		13,765.9		331.1
Equity securities		3.9		—		—		—		3.9		—
Total	$	10,868.3	$	225.5	$	2,901.5	$	105.6	$	13,769.8	$	331.1
% of gross unrealized losses				68%				32%
December 31, 2004:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	5.7	$	0.1	$	0.2	$	—	$	5.9	$	0.1
Agencies not backed by the full faith and credit of the U.S. Government		179.9		1.0		—		—		179.9		1.0
Obligations of states and political subdivisions		68.6		0.5		52.7		2.2		121.3		2.7
Debt securities issued by foreign governments		—		—		7.5		0.1		7.5		0.1
Corporate securities
Public		1,522.3		17.9		291.5		8.5		1,813.8		26.4
Private		994.2		16.3		184.2		7.8		1,178.4		24.1
Mortgage-backed securities – U.S.
Government-backed		1,271.5		10.5		225.1		5.8		1,496.6		16.3
Asset-backed securities		728.0		15.4		229.3		10.9		957.3		26.3
Total fixed maturity securities		4,770.2		61.7		990.5		35.3		5,760.7		97.0
Equity securities		0.7		0.1		—		—		0.7		0.1
Total	$	4,770.9	$	61.8	$	990.5	$	35.3	$	5,761.4	$	97.1
% of gross unrealized losses				64.0%				36.0%

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

Proceeds from the sale of securities available-for-sale during 2005, 2004 and 2003 were $2.62 billion, $2.49 billion and $2.22 billion, respectively. During 2005, gross gains of $71.9 million ($61.5 million and $104.0 million in 2004 and 2003, respectively) and gross losses of $22.6 million ($8.7 million and $27.6 million in 2004 and 2003, respectively) were realized on those sales.

The Company had $22.2 million and $18.0 million of real estate investments as of December 31, 2005 and 2004, respectively, that were non-income producing during the preceding twelve months.

Real estate is presented at cost less accumulated depreciation of $21.5 million as of December 31, 2005 ($20.9 million as of December 31, 2004). The carrying value of real estate held for disposal totaled $2.5 million and $2.8 million as of December 31, 2005 and 2004, respectively.

The recorded investment of mortgage loans on real estate considered to be impaired was $29.7 million as of December 31, 2005 ($30.0 million as of December 31, 2004), for which the related valuation allowance was $7.1 million ($7.6 million as of December 31, 2004). Impaired mortgage loans with no valuation allowance are a result of collateral dependent loans where the fair value of the collateral is estimated to be greater than the recorded investment of the loan. During 2005, the average recorded investment in impaired mortgage loans on real estate was $7.4 million ($10.0 million in 2004). Interest income recognized on those loans, which is recognized on a cash basis, totaled $2.1 million in 2005 ($1.6 million in 2004).

The following table summarizes activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31:

(in millions)	2005			2004		2003
Allowance, beginning of period	$	33.3		$	29.1	$	43.4
Net additions (reductions) charged (credited) to allowance		(2.2	)		4.2		(14.3	)
Allowance, end of period	$	31.1		$	33.3	$	29.1

During the third quarter of 2003, the Company refined its analysis of the overall performance of the mortgage loan portfolio and related allowance for mortgage loan losses. This analysis included an evaluation of the current composition of the portfolio, historical losses by property type, current economic conditions and probable losses inherent in the loan portfolio as of the balance sheet date, but not yet identified by specific loan. As a result of the analysis, the total valuation allowance was reduced by $12.1 million.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes net realized gains (losses) on investments, hedging instruments and hedged items from continuing operations by source for the years ended December 31:

(in millions)	2005			2004			2003
Realized gains on sales, net of hedging losses:
Fixed maturity securities available-for-sale	$	65.3		$	57.5		$	98.5
Hedging losses on fixed maturity sales		(6.8	)		(15.2	)		(42.4	)
Equity securities available-for-sale		6.6			4.0			5.5
Mortgage loans on real estate		10.7			10.7			3.0
Mortgage loan hedging losses		(3.3	)		(4.0	)		(2.4	)
Real estate		2.1			3.7			4.2
Other		1.0			8.3			—
Total realized gains on sales, net of hedging losses		75.6			65.0			66.4
Realized losses on sales, net of hedging gains:
Fixed maturity securities available-for-sale		(22.5	)		(7.8	)		(27.2	)
Hedging gains on fixed maturity sales		3.9			3.7			9.2
Equity securities available-for-sale		(0.1	)		(0.9	)		(0.4	)
Mortgage loans on real estate		(10.4	)		(6.8	)		(5.0	)
Mortgage loan hedging gains		7.8			2.2			0.5
Real estate		—			(1.2	)		(0.3	)
Other		(1.6	)		(1.9	)		(2.0	)
Total realized losses on sales, net of hedging gains		(22.9	)		(12.7	)		(25.2	)
Other-than-temporary and other investment impairments:
Fixed maturity securities available-for-sale		(28.1	)		(79.7	)		(159.4	)
Equity securities available-for-sale		(0.9	)		(0.6	)		(8.0	)
Mortgage loans on real estate, including valuation allowance adjustment		(4.5	)		(7.1	)		11.7
Real estate		(0.1	)		(3.2	)		(0.8	)
Other		(3.2	)		—			—
Total other-than-temporary and other investment impairments		(36.8	)		(90.6	)		(156.5	)
Credit default swaps		(7.5	)		0.3			13.3
Periodic net coupon settlements on non-qualifying derivatives		1.1			6.6			15.6
Other derivatives		1.1			(5.0	)		1.2
Net realized gains (losses) on investments, hedging instruments and hedged items	$	10.6		$	(36.4	)	$	(85.2	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes net investment income from continuing operations by investment type for the years ended December 31:

(in millions)	2005			2004			2003
Securities available-for-sale:
Fixed maturity securities	$	1,466.2		$	1,461.9		$	1,453.1
Equity securities		2.4			1.2			1.4
Mortgage loans on real estate		577.3			577.4			579.7
Real estate		16.6			17.9			21.7
Short-term investments		18.8			8.9			9.3
Derivatives		(31.0	)		(94.3	)		(107.2	)
Other		112.2			78.4			64.8
Gross investment income		2,162.5			2,051.4			2,022.8
Less investment expenses		57.3			50.9			49.7
Net investment income	$	2,105.2		$	2,000.5		$	1,973.1

Fixed maturity securities with an amortized cost of $16.4 million and $52.3 million as of December 31, 2005 and 2004, respectively, were on deposit with various regulatory agencies as required by law.

As of December 31, 2005 and 2004, the Company had pledged fixed maturity securities with a fair value of $8.6 million and $51.4 million, respectively, as collateral to various derivative counterparties.

As of December 31, 2005 and 2004, the Company had received $1.10 billion and $874.2 million, respectively, of cash collateral on securities lending and $203.3 million and $415.7 million, respectively, of cash for derivative collateral. As of December 31, 2005, the Company had not received any non-cash collateral on securities lending compared to $191.8 million received at December 31, 2004. Both the cash and non-cash collateral amounts are included in short-term investments with a corresponding liability recorded in other liabilities. As of December 31, 2005 and 2004, the Company had loaned securities with a fair value of $1.07 billion and $1.04 billion, respectively. The Company also held $53.2 million and $222.5 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2005 and 2004, respectively.

(8) Variable Annuity Contracts

The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contractholders. The Company provides four primary guarantee types under non-traditional variable annuity contracts: (1) GMDB; (2) GMAB; (3) GMIB; and (4) a hybrid guarantee with GMAB and GMWB.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:

• Return of premium– provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.

• Reset– provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.

• Ratchet– provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.

• Rollup– provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit. For certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.

• Combo– provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.

• Earnings enhancement– provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.

The GMAB, offered in the Company’s Capital Preservation Plus (CPP) contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time (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 period of time, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:

• Ratchet– provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.

• Rollup– provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.

• Combo– provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.

See Note 4 for a complete description of the Company’s hybrid GMAB/GMWB offered through its CPPLI contract rider. All GMAB contracts with the hybrid GMAB/GMWB rider are included with GMAB contracts in the following tables.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

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:

	2005					2004
(in millions)	Account value		Net amount at risk1		Wtd. avg. attained age	Account  value		Net amount at risk1		Wtd. avg. attained age
GMDB:
Return of premium	$	9,260.6	$	32.5	60	$	9,675.4	$	54.1	59
Reset		16,932.1		58.7	63		17,315.9		153.2	62
Ratchet		11,020.6		28.9	65		9,621.0		42.3	64
Rollup		592.1		8.4	69		638.6		9.7	68
Combo		2,530.6		22.3	68		2,519.9		19.2	67
Subtotal		40,336.0		150.8	64		39,770.8		278.5	62
Earnings enhancement		418.5		27.6	61		310.1		18.0	60
Total - GMDB	$	40,754.5	$	178.4	63	$	40,080.9	$	296.5	62
GMAB2:
5 Year	$	1,041.8	$	0.5	N/A	$	460.6	$	0.1	N/A
7 Year		1,103.5		0.2	N/A		568.4		—	N/A
10 Year		595.5		0.1	N/A		304.0		—	N/A
Total - GMAB	$	2,740.8	$	0.8	N/A	$	1,333.0	$	0.1	N/A
GMIB3:
Ratchet	$	444.7	$	—	N/A	$	437.7	$	—	N/A
Rollup		1,189.3		—	N/A		1,188.2		—	N/A
Combo		0.5		—	N/A		1.0		—	N/A
Total - GMIB	$	1,634.5	$	—	N/A	$	1,626.9	$	—	N/A

¹ Net amount at risk is calculated on a seriatum basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance, with the earliest annuitizations beginning in 2006.

² GMAB contracts with the hybrid GMAB/GMWB rider had account values of $939.1 million as of December 31, 2005.

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table is a rollforward of the liabilities for guarantees on variable annuity contracts reflected in the Company’s general account for the years indicated:

(in millions)	GMDB			GMAB			GMIB		Total
Balance as of December 31, 2003	$	21.8		$	4.3		$	—	$	26.1
Expense provision		25.0			—			0.8		25.8
Net claims paid		(23.2	)		—			—		(23.2	)
Value of new business sold		—			24.7			—		24.7
Change in fair value		—			(8.4	)		—		(8.4	)
Balance as of December 31, 2004		23.6			20.6			0.8		45.0
Expense provision		32.8			—			0.4		33.2
Net claims paid		(29.5	)		—			—		(29.5	)
Value of new business sold		—			53.4			—		53.4
Change in fair value					(6.1	)		—		(6.1	)
Balance as of December 31, 2005	$	26.9		$	67.9		$	1.2	$	96.0

The following table summarizes account balances of contracts with guarantees that were invested in separate accounts as of December 31:

(in millions)	2005		2004
Mutual funds:
Bond	$	3,857.3	$	4,136.8
Domestic equity		28,011.3		27,402.4
International equity		2,161.4		1,831.3
Total mutual funds		34,030.0		33,370.5
Money market funds		1,350.4		1,313.6
Total	$	35,380.4	$	34,684.1

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 GMDB and GMIB claim reserve estimates used 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 10% in the money to 100% utilization when the contractholder is 90% in the money.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2005 and December 31, 2004 (except where noted otherwise):

• Data used was based on a combination of historical numbers and future projections involving 50 probabilistically generated economic scenarios

• Mean gross equity performance – 8.1%

• Equity volatility – 18.7%

• Mortality – 100% of Annuity 2000 table

• Asset fees – equivalent to mutual fund and product loads

• Discount rate – 8.0%

Lapse rate assumptions vary by duration as shown below:

Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	4.50%	5.50%	6.50%	8.50%	10.50%	10.50%	10.50%	17.50%	17.50%	17.50%
Maximum	4.50%	8.50%	11.50%	17.50%	22.50%	22.50%	22.50%	22.50%	22.50%	19.50%

GMABs and hybrid GMABs/GMWBs are considered embedded derivatives under current accounting guidance, resulting in the related liabilities being separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings, and therefore, excluded from the SOP 03-1 policy benefits.

(9) Short-Term Debt

The following table summarizes short-term debt as of December 31:

(in millions)	2005		2004
$800.0 million commercial paper program	$	134.7	$	134.7
$350.0 million securities lending program facility		75.0		47.7
$250.0 million securities lending program facility		32.6		32.6
Total short-term debt	$	242.3	$	215.0

The Company has available as a source of funds a $1.00 billion revolving credit facility entered into by NFS, NLIC and NMIC with a group of national financial institutions. Previously, the facility consisted of a 364-day agreement and a five-year agreement. In May 2005, the 364-day agreement was terminated, and the five-year agreement was amended and restated for a new five-year term. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company maintain consolidated tangible net worth, as defined, in excess of $2.60 billion and that NLIC maintain statutory surplus, as defined, in excess of $1.67 billion. As of December 31, 2005 and 2004, the Company and NLIC were in compliance with all covenants. The Company had no amounts outstanding under this agreement as of December 31, 2005 and 2004. NLIC also has an $800.0 million commercial paper program and is required to maintain an available credit facility equal to 50% of any amounts outstanding under the commercial paper program. Therefore, borrowing capacity under the aggregate $1.00 billion revolving credit facility is reduced by 50% of any amounts outstanding under the commercial paper program. NLIC had $134.7 million in commercial paper outstanding as of December 31, 2005 and 2004 at a weighted average effective interest rate of 4.22% in 2005 and 2.14% in 2004.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

NLIC has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility, which is contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. NLIC had $75.0 million and $47.7 million outstanding under this agreement as of December 31, 2005 and 2004, respectively. As of December 31, 2005, the Company has not provided any guarantees on such borrowings, either directly or indirectly.

In addition to the agreement described above, NMIC 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, which is 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. Because NLIC has a variable interest in the profits from the securitization of these loans and is the primary beneficiary of this arrangement, NLIC consolidates the assets and liabilities associated with these loans and the corresponding borrowings in accordance with current accounting guidance. The maximum amount available under the agreement is $250.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. NMIC had $32.6 million outstanding under this agreement as of December 31, 2005 and 2004. As of December 31, 2005, the Company has not provided any guarantees on such borrowings, either directly or indirectly.

The Company paid interest on short-term debt totaling $11.5 million, $3.6 million and $1.3 million in 2005, 2004 and 2003, respectively, including less than $0.1 million to NFS during each year.

(10) Long-Term Debt

The following table summarizes surplus notes payable to NFS as of December 31:

(in millions)	2005		2004
8.15% surplus note, due June 27, 2032	$	300.0	$	300.0
7.50% surplus note, due December 17, 2031		300.0		300.0
6.75% surplus note, due December 23, 2033		100.0		100.0
Total long-term debt	$	700.0	$	700.0

The Company made interest payments to NFS on surplus notes totaling $53.7 million in 2005, $50.7 million in 2004 and $47.1 million in 2003. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).

(11) Federal Income Taxes

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, the ultimate majority shareholder of NFS. Effective October 1, 2002, Nationwide Corporation’s ownership in NFS decreased from 79.8% to 63.0%. Therefore, NFS and its subsidiaries, including the Company, no longer qualify to be included in the NMIC consolidated federal income tax return. The members of the NMIC consolidated federal income tax return group participated in a tax sharing arrangement, which provided, in effect, for each member to bear essentially the same federal income tax liability as if separate tax returns were filed.

Under Internal Revenue Code (IRC) regulations, NFS and its subsidiaries cannot file a life/non-life consolidated federal income tax return until five full years following NFS’ departure from the NMIC consolidated federal income tax return group. Therefore, NFS and its direct non-life insurance company subsidiaries will file a consolidated federal income tax return; NLIC and NLAIC will file a consolidated federal income tax return; and the direct non-life insurance companies under NLIC will file separate federal income tax returns, until 2008, when NFS will become eligible to file a single life/non-life consolidated federal income tax return with all of its subsidiaries.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31:

(in millions)	2005			2004
Deferred tax assets:
Future policy benefits	$	630.5		$	715.5
Other		185.9			117.0
Gross deferred tax assets		816.4			832.5
Less valuation allowance		(7.0	)		(7.0	)
Deferred tax assets, net of valuation allowance		809.4			825.5
Deferred tax liabilities:
Fixed maturity securities		65.1			318.2
Equity securities and other investments		23.8			20.9
Derivatives		31.8			31.2
Deferred policy acquisition costs		970.5			908.1
Other		116.4			101.9
Gross deferred tax liabilities		1,207.6			1,380.3
Net deferred tax liability	$	398.2		$	554.8

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income tax paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged during 2005, 2004 and 2003.

The Company’s current federal income tax liability was $53.8 million and $145.3 million as of December 31, 2005 and 2004, respectively.

During the third quarter of 2005, the Company refined its separate account dividends received deduction (DRD) estimation process. As a result, the Company identified and recorded additional federal income tax benefits and recoverables in the amount of $42.6 million related to all open tax years (2000 – 2005). In addition, the Company recorded $5.6 million of net benefit adjustments in the third quarter of 2005, primarily related to differences between the estimated tax liability and the amounts reported on the Company’s tax returns and revised estimates of permanent income tax deductions expected to be generated in 2005. During the fourth quarter of 2005, the Company revised the estimate for the separate account DRD and recorded an additional federal income tax benefit of $8.0 million based on additional information available at year end.

The following table summarizes federal income tax expense attributable to income from continuing operations for the years ended December 31:

(in millions)	2005		2004			2003
Current	$	90.6	$	181.5		$	106.7
Deferred		5.0		(61.5	)		(10.5	)
Federal income tax expense	$	95.6	$	120.0		$	96.2

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

Total federal income tax expense differs from the amount computed by applying the U.S. federal income tax rate to income from continuing operations before federal income taxes as follows for the years ended December 31:

	2005					2004					2003
(dollars in millions)	Amount			%		Amount			%		Amount			%
Computed (expected) tax expense	$	217.0		35.0		$	187.2		35.0		$	152.0		35.0
Tax exempt interest and dividends received deduction		(107.5	)	(17.3	)		(47.2	)	(8.8	)		(45.7	)	(10.5	)
Income tax credits		(16.3	)	(2.6	)		(9.7	)	(1.8	)		(10.8	)	(2.5	)
Release of Phase III tax liability		—		—			(5.1	)	(1.0	)		—		—
Other, net		2.4		0.3			(5.2	)	(1.0	)		0.7		0.1
Total	$	95.6		15.4		$	120.0		22.4		$	96.2		22.1

The Jobs Creation Act of 2004 suspends policyholder surplus accounts (PSA) during 2005 and 2006 and provides that direct and indirect distributions from the PSA during any taxable year beginning after 2004 and before 2007 be treated as zero. Because NLIC had the ability and intent to distribute this PSA balance to its shareholder during the noted period, the potential tax liability was eliminated as of December 31, 2004 (see “Release of Phase III tax liability” above). The Jobs Creation Act of 2004 had no other significant impact on the Company’s tax position.

Total federal income tax paid was $182.2 million, $142.3 million and $176.2 million during the years ended December 31, 2005, 2004 and 2003, respectively.

(12) Shareholders’ Equity, Regulatory Risk-Based Capital, Retained Earnings and Dividend Restrictions

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.

State insurance laws generally restrict the ability of insurance companies to pay cash dividends and make other payments in excess of certain prescribed limitations without prior approval. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the ODI. The statutory capital and surplus of NLIC as of December 31, 2005 and 2004 was $2.60 billion and $2.39 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2005, 2004 and 2003 was $462.5 million, $317.7 million and $444.4 million, respectively. As of January 1, 2006, based on statutory financial results as of and for the year ended December 31, 2005, NLIC could pay dividends totaling $277.5 million without obtaining prior approval. On February 22, 2006, NLIC declared a $70.0 million dividend to NFS. In addition, the payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on NLIC’s participating policies (measured before dividends to policyholders) that can inure to the benefit of the Company and its shareholder.

The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(13) Comprehensive Income

Comprehensive income includes net income and certain items that are reported directly within separate components of shareholder’s equity that are not recorded in net income (other comprehensive income or loss). The following table summarizes the Company’s other comprehensive (loss) income, before and after federal income tax benefit (expense), for the years ended December 31:

(in millions)	2005			2004			2003
Net unrealized (losses) gains on securities available-for-sale arising during the period:
Net unrealized (losses) gains before adjustments	$	(687.2	)	$	(182.0	)	$	(16.7	)
Net adjustment to deferred policy acquisition costs		187.0			99.1			56.9
Net adjustment to future policy benefits and claims		17.0			(11.0	)		22.6
Related federal income tax benefit (expense)		169.1			33.3			(22.4	)
Net unrealized (losses) gains		(314.1	)		(60.6	)		40.4
Reclassification adjustment for net realized (gains) losses on securities available-for-sale realized during the period:
Net unrealized (gains) losses		(20.3	)		27.5			91.0
Related federal income tax expense (benefit)		7.1			(9.6	)		(31.8	)
Net reclassification adjustment		(13.2	)		17.9			59.2
Other comprehensive (loss) income on securities available-for-sale		(327.3	)		(42.7	)		99.6
Accumulated net holding gains (losses) on cash flow hedges:
Unrealized holding gains (losses)		41.7			(47.4	)		(40.9	)
Related federal income tax (expense) benefit		(14.6	)		16.6			14.3
Other comprehensive income (loss) on cash flow hedges		27.1			(30.8	)		(26.6	)
Total other comprehensive (loss) income	$	(300.2	)	$	(73.5	)	$	73.0

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2005, 2004 and 2003.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(14) Employee Benefit Plans

Defined Benefit Plans

The Company and certain affiliated companies participate in a defined benefit pension plan sponsored by NMIC. This plan covers all employees of participating companies who have completed at least one year of service. Plan contributions are invested in a group annuity contract issued by NLIC. All participants are eligible for benefits based on an account balance feature. Participants last hired before 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature. The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company.

The Company’s portion of pension expense for this plan for the years ended December 31, 2005, 2004 and 2003 was $16.6 million, $13.7 million and $13.2 million, respectively. The Company recorded prepaid pension assets of $38.1 million and $14.6 million as of December 31, 2005 and 2004, respectively.

In addition to the NMIC pension plan, the Company and certain affiliated companies participate in life and health care defined benefit plans sponsored by NMIC for qualifying retirees. Postretirement life and health care benefits are contributory and generally are available to full-time employees, hired prior to June 1, 2000, who have attained age 55 and have accumulated 15 years of service with the Company after reaching age 40. Postretirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and coinsurance. In addition, there are caps on the Company’s portion of the per-participant cost of the postretirement health care benefits. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested primarily in group annuity contracts issued by NLIC.

Two significant plan changes were enacted to the postretirement benefit plans at December 31, 2002. The first involved the postretirement medical plan, which was revised to reflect the current expectation that there will be no further increases in the benefit cap after 2006. Prior to 2007, it is assumed that the pre-65 benefit caps will increase by 3% per year, at which time the cap will be frozen. The second involved the postretirement death benefit plan, which was revised to reflect that all employer subsidies will be phased out beginning in 2007. The 2007 subsidy is assumed to be 2/3 of the current subsidy, and the 2008 subsidy is assumed to be 1/3 of the current amount. There is no employer subsidized benefit assumed after 2008.

The Company’s accrued postretirement benefit expense as of December 31, 2005 and 2004 was $47.6 million and $49.3 million, respectively. The net periodic benefit (income) cost for the postretirement benefit plans as a whole was $(0.1) million, $0.3 million and $1.1 million for 2005, 2004 and 2003, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes information regarding the funded status of the NMIC pension plan as a whole and the NMIC postretirement benefit plans as a whole (all of which are U.S. plans), including amounts not related to the Company, as of the years ended December 31:

	Pension benefits						Postretirement benefits
(in millions)	2005			2004			2005			2004
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,733.1		$	2,457.0		$	291.9		$	306.8
Service cost		133.5			121.8			9.7			9.2
Interest cost		134.9			134.0			16.0			17.5
Participant contributions		—			—			6.5			4.1
Plan amendment		—			—			—			(13.3	)
Actuarial loss (gain)		261.6			125.7			3.0			(10.1	)
Benefits paid		(117.3	)		(105.4	)		(25.9	)		(22.3	)
Benefit obligation at end of year		3,145.8			2,733.1			301.2			291.9
Change in plan assets:
Fair value of plan assets at beginning of year		2,454.3			2,242.4			135.6			127.5
Actual return on plan assets		184.1			187.3			6.3			6.2
Employer contributions1		249.8			130.0			19.1			20.1
Participant contributions		—			—			6.5			4.1
Benefits paid1		(117.3	)		(105.4	)		(25.9	)		(22.3	)
Fair value of plan assets at end of year		2,770.9			2,454.3			141.6			135.6
Funded status		(374.9	)		(278.8	)		(159.6	)		(156.3	)
Unrecognized prior service cost		21.4			25.8			(88.3	)		(103.0	)
Unrecognized net loss		544.6			298.2			52.1			48.0
Unrecognized net asset at transition		—			(1.2	)		—			—
Prepaid (accrued) benefit cost, net	$	191.1		$	44.0		$	(195.8	)	$	(211.3	)
Accumulated benefit obligation	$	2,510.3		$	2,271.6

¹ Employer contributions and benefits paid include only those amounts contributed directly to or paid directly from plan assets.

In 2004, the postretirement medical plan was amended to reflect the provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Act), which was signed into law on December 8, 2003. The amendment integrates prescription drug benefits with the coverage provisions provided in the Medicare Act. The impact of the amendment is reflected in the accumulated postretirement benefit obligations beginning December 31, 2004. The expense impact of the amendment was a $2.0 million decrease for 2005 for the plan as a whole.

The effect of a 1% increase or decrease in the assumed health care cost trend rate on the accumulated postretirement benefit obligation was $0.1 million and $1.7 million at December 31, 2005 and 2004, respectively, for the plan as a whole.

NMIC and all participating employers, including the Company, expect to contribute $120.0 million to the pension plan and $20.0 million to the postretirement benefit plan in 2006.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:

(in millions)	Pension      benefits		Postretirement benefits
2006	$	115.7	$	20.7
2007		117.8		20.5
2008		120.2		19.8
2009		127.0		19.3
2010		133.8		19.9
2011-2015		817.1		111.6

The following table summarizes the weighted average assumptions used to calculate the benefit obligation and funded status of the NMIC pension plan as a whole and the NMIC postretirement benefit plans as a whole as of the December 31 measurement date for all plans:

	Pension benefits		Postretirement benefits
	2005	2004	2005	2004
Discount rate	4.75%	5.00%	5.45%	5.70%
Rate of increase in future compensation levels	4.25%	3.50%	—	—
Assumed health care cost trend rate:
Initial rate	—	—	9.00%	10.00%	1
Ultimate rate	—	—	5.50%	5.20%	1
Declining period	—	—	7 Years	10 Years

¹ The 2005 initial rate was 9.00% for participants over age 65, with an ultimate rate of 5.5%, and the 2004 initial rate was 11.00% for participants over age 65, with an ultimate rate of 5.70%.

The NMIC pension plan employs a total return investment approach using a mix of equities and fixed income investments to maximize the long-term return on plan assets in exchange for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial condition. The plan requires investment in a group annuity contract backed by fixed investments with an interest rate guarantee to match liabilities for specific classes of retirees. On a periodic basis, the portfolio is analyzed to establish the optimal mix of assets based on current market conditions given the risk tolerance. In the most recent study, asset sub-classes were considered in debt securities (diversified U.S. investment grade bonds, diversified high-yield U.S. securities, international fixed income, emerging markets and commercial mortgage loans) and equity investments (domestic equities, private equities, international equities, emerging market equities and real estate investments). Each asset sub-class chosen contains a diversified blend of securities from that sub-class. Investment mix is measured and monitored continually through regular investment reviews, annual liability measurements and periodic asset/liability studies.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes the asset allocation for the NMIC pension plan as a whole at the end of 2005 and 2004 and the target allocation for 2006, by asset category:

	Percentage of plan assets		Target allocation percentage
Asset Category	2005	2004	2006
Equity securities	50%	48%	40 - 65%
Debt securities	50%	52%	25 - 50%
Real estate	—	—	0 - 10%
Total	100%	100%

The NMIC postretirement benefit plans employ a total return investment approach using a mix of equities and fixed income investments to maximize the long-term return on plan assets in exchange for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial condition. Plan investments for retiree life insurance benefits generally include a retiree life insurance contract issued by NLIC. For retiree medical liabilities, plan investments include both a group annuity contract issued by NLIC backed by fixed investments with an interest rate guarantee and a separate account invested in diversified U.S. equities. Investment mix is measured and monitored continually through regular investment reviews, annual liability measurements and periodic asset/liability studies.

The following table summarizes the asset allocation for the NMIC postretirement benefit plans as a whole at the end of 2005 and 2004 and the target allocation for 2006, by asset category:

	Percentage of plan assets		Target allocation percentage
Asset Category	2005	2004	2006
Equity securities	60%	60%	50 - 80%
Debt securities	37%	35%	20 - 50%
Other	3%	5%	0 - 10%
Total	100%	100%

The following table summarizes the components of net periodic benefit cost for the NMIC pension plan as a whole, including amounts not related to the Company, for the years ended December 31:

(in millions)	2005			2004			2003
Service cost	$	133.5		$	121.8		$	104.0
Interest cost		134.9			134.0			131.7
Expected return on plan assets		(172.6	)		(167.7	)		(156.7	)
Recognized net actuarial loss		—			—			0.1
Amortization of prior service cost		4.5			4.5			4.5
Amortization of unrecognized net losses		3.6			—			—
Amortization of unrecognized transition cost		(1.2	)		(1.3	)		(1.3	)
Net periodic benefit cost	$	102.7		$	91.3		$	82.3

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes the weighted average assumptions used to calculate net periodic benefit cost, set at the beginning of each year, for the NMIC pension plan as a whole:

	2005	2004	2003
Discount rate	5.00%	5.50%	6.00%
Rate of increase in future compensation levels	3.50%	4.00%	4.50%
Expected long-term rate of return on plan assets	6.75%	7.25%	7.75%

The NMIC pension plan employs a prospective building block approach in determining the expected long-term rate of return on plan assets. This process is integrated with the determination of other economic assumptions such as discount rate and salary scale. Historical markets are studied, and long-term historical relationships between equities and fixed income investments are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run (called a risk premium). Historical risk premiums are used to develop expected real rates of return for each asset sub-class. The expected real rates of return, reduced for investment expenses, are applied to the target allocation of each asset sub-class to produce an expected real rate of return for the target portfolio. This expected real rate of return will vary by plan and will change when the plan’s target investment portfolio changes. Current market factors such as inflation and interest rates are incorporated into the process. For a given measurement date, the discount rate is set by reference to the yield on high-quality corporate bonds to approximate the rate at which plan benefits could effectively be settled. The historical real rate of return is subtracted from these bonds to generate an assumed inflation rate. The expected long-term rate of return on plan assets is the assumed inflation rate plus the expected real rate of return. This process effectively sets the expected return for the plan’s portfolio at the yield for the reference bond portfolio, adjusted for expected risk premiums of the target asset portfolio. Given the prospective nature of this calculation, short-term fluctuations in the market do not impact the expected risk premiums. However, as the yield for the reference bond fluctuates, the assumed inflation rate and the expected long-term rate are adjusted in tandem.

Effective December 31, 2005, the historical risk premiums and expected real rates of return were re-evaluated affecting December 31, 2005 benefit obligations and 2006 costs. For benefits obligations, a lower real rate of return on corporate bonds led to a higher implied inflation rate and a higher rate of future compensation increase, which was 4.25% at December 31, 2005.

The following table summarizes the components of net periodic benefit cost for the NMIC postretirement benefit plans as a whole, including amounts not related to the Company, for the years ended December 31:

(in millions)	2005			2004			2003
Service cost	$	9.7		$	9.2		$	9.9
Interest cost		16.0			17.5			19.5
Expected return on plan assets		(8.7	)		(8.9	)		(8.0	)
Amortization of unrecognized net losses		1.4			—			—
Net amortization and deferral		(14.8	)		(12.1	)		(9.9	)
Net periodic benefit cost	$	3.6		$	5.7		$	11.5

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes the weighted average assumptions used to calculate the Company’s net periodic benefit cost, set at the beginning of each year, for the postretirement benefit plan as a whole:

	2005	2004	2003
Discount rate	5.70%	6.10%	6.60%
Expected long-term rate of return on plan assets	6.50%	7.00%	7.50%
Assumed health care cost trend rate:
Initial rate	10.00%1	11.00%1	11.30%1
Ultimate rate	5.20%1	5.20%1	5.70%1
Declining period	10 Years	11 Years	11 Years

¹ The initial rate was 11.00% for participants over 65, with an ultimate rate of 5.70%, the 2004 initial rate was 11.00% for participants over age 65, with an ultimate rate of 5.70%, and the 2003 initial rate was 12.00% for participants over age 65, with an ultimate rate of 5.60%.

Defined Contribution Plans

The Company and certain affiliated companies sponsor defined contribution retirement savings plans covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company’s expense for contributions to these plans was $6.2 million, $5.8 million and $5.5 million for 2005, 2004 and 2003, respectively.

(15) 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 and that are within industry guidelines and practices. In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides computer, telephone, mail, employee benefits administration and other services to NMIC and certain of its direct and indirect subsidiaries, including the Company, based on specified rates for units of service consumed. For the years ended December 31, 2005, 2004 and 2003, the Company made payments to NMIC and NSC totaling $274.1 million, $194.6 million and $170.4 million, respectively. The Company does not believe that expenses recognized under these agreements are materially different than expenses that would have been recognized had the Company operated on a stand-alone basis.

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 $6.39 billion and $5.75 billion as of December 31, 2005 and 2004, respectively. Total revenues from these contracts were $136.2 million, $136.5 million and $138.9 million for the years ended December 31, 2005, 2004 and 2003, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $107.3 million, $107.9 million and $111.8 million for the years ended December 31, 2005, 2004 and 2003, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated.

The Company leases office space from NMIC and certain of its subsidiaries. For the years ended December 31, 2005, 2004 and 2003, the Company made lease payments to NMIC and its subsidiaries of $18.7 million, $18.4 million and $17.5 million, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

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, 2005, 2004 and 2003 were $429.5 million, $335.6 million and $286.7 million, respectively, while benefits, claims and expenses ceded during these years were $398.8 million, $336.0 million and $247.5 million, respectively.

Funds of Gartmore Global Investments, Inc. (GGI), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2005 and 2004, customer allocations to GGI funds totaled $15.70 billion and $14.06 billion, respectively. For the years ended December 31, 2005, 2004 and 2003, GGI paid the Company $51.6 million, $44.5 million and $38.6 million, respectively, for the distribution and servicing of these funds.

Under a marketing agreement with NMIC, NLIC makes payments to cover a portion of the agent marketing allowance that is paid to Nationwide agents. These costs cover product development and promotion, sales literature, rent and similar items. Payments under this agreement totaled $26.5 million, $23.2 million and $24.8 million for the years ended December 31, 2005, 2004 and 2003, respectively.

The Company also participates in intercompany repurchase agreements with affiliates whereby the seller transfers securities to the buyer at a stated value. Upon demand or after a stated period, the seller repurchases the securities at the original sales price plus interest. As of December 31, 2005 and 2004, the Company had no borrowings from affiliated entities under such agreements. During 2005, 2004 and 2003, the most the Company had outstanding at any given time was $55.3 million, $227.7 million and $126.0 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements during these years were immaterial. The Company believes that the terms of the repurchase agreements are materially consistent with what the Company could have obtained from unaffiliated parties.

The Company and various affiliates entered into 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 $390.6 million and $498.4 million as of December 31, 2005 and 2004, respectively, and are included in short-term investments on the consolidated balance sheets. For the years ended December 31, 2005, 2004 and 2003, the Company paid NCMC fees totaling less than $0.1 million under this agreement.

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, 2005, 2004 and 2003 were $59.0 million, $63.1 million and $62.0 million, respectively.

During the year ended December 31, 2005, the Company did not purchase any fixed maturity securities available-for-sale from NFN compared to $829.9 million purchased during 2004. NFN recorded gross realized gains of $23.4 million on such transactions during 2004.

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 $2.9 million, $2.6 million and $0.7 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 11. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. Total payments to NMIC were $45.0 million, $37.4 million and $2.4 million in the years ended December 31, 2005, 2004 and 2003, respectively. These payments related to tax years prior to deconsolidation.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

In the first quarter of 2003, NLIC received a $200.0 million capital contribution from NFS for general corporate purposes.

On February 22, 2006, NLIC declared a $70.0 million dividend to NFS. In 2005, 2004 and 2003, NLIC paid dividends to NFS totaling $185.0 million, $125.0 million and $60.0 million, respectively. During 2003, NLIC returned capital totaling $100.0 million to NFS.

See Note 10 for information on surplus notes payable from NLIC to NFS. In addition, the Company made interest payments on unsecured notes to NFS totaling less than $0.1 million in 2005, 2004 and 2003. As of December 31, 2005, there were no outstanding balances on unsecured notes to NFS.

(16) Contingencies

Legal Matters

The Company is a party to litigation and arbitration proceedings in the ordinary course of its business. It is not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses. Some of the 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 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, plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, that are difficult to quantify and cannot be defined based on the information currently available. The Company does not believe, based on information currently known by the Company’s management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on the Company’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on the Company’s consolidated financial results in a particular quarterly or annual period.

In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements against life insurers other than the Company.

The financial services industry, including mutual fund, variable annuity, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past few years. Numerous regulatory agencies, including the SEC, the National Association of Securities Dealers and the New York State Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues. The Company has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by the Company. The Company has cooperated with these investigations. Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by the Company and its affiliates in December 2003 and April 2005, respectively, and no further information requests have been received with respect to these matters.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, the use of side agreements and finite reinsurance agreements, and funding agreements issued to back MTN programs. Related investigations and proceedings may be commenced in the future. The Company and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies, state securities law regulators and state attorneys general for information relating to these investigations into compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, the use of side agreements and finite reinsurance agreements, and funding agreements backing the MTN program. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. These proceedings also could affect the outcome of one or more of the Company’s litigation matters. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on the Company in the future.

On February 11, 2005, NLIC was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum annual premium and attorneys’ fees. On February 2, 2006, the court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The court certified a class consisting of all residents of the United States who, during the class period from February 10, 1995 through February 2, 2006, purchased life insurance policies from NLIC that provided for guaranteed maximum premiums and who paid premiums on a modal basis to NLIC. Excluded from the class are NLIC; any parent, subsidiary or affiliate of NLIC; all employees, officers and directors of NLIC; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The case is currently set for trial on April 10, 2006. NLIC intends to defend this lawsuit vigorously.

On April 13, 2004, NLIC was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. NLIC removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding there entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed a First Amended Complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of an NLIC annuity or insurance product) units of any NLIC sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The First Amended Complaint purports to disclaim, with respect to market timing or stale price trading in NLIC’s annuities sub-accounts, any allegation based on NLIC’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of NLIC annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if NLIC is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to NLIC’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an NLIC annuity or insurance product) units of any NLIC sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The First Amended Complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 24, 2005, NLIC filed a motion to dismiss the First Amended Complaint. The plaintiff has opposed that motion. NLIC intends 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, 2005, 2004 and 2003

On January 21, 2004, the Company was named in a lawsuit filed in the United States District Court for the Northern District of Mississippi entitled United Investors Life Insurance Company v. Nationwide Life Insurance Company and/or Nationwide Life Insurance Company of America and/or Nationwide Life and Annuity Insurance Company and/or Nationwide Life and Annuity Company of America and/or Nationwide Financial Services, Inc. and/or Nationwide Financial Corporation, and John Does A-Z. In its complaint, plaintiff United Investors alleges that the Company and/or its affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Nationwide defendants. The plaintiff raises claims for: (1) violations of the Federal Lanham Act, and common law unfair competition and defamation; (2) tortious interference with the plaintiff’s contractual relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W&R Insurance Agency, Inc., or with the plaintiff’s contractual relationships with its variable policyholders; (3) civil conspiracy; and (4) breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, a constructive trust, and costs and disbursements, including attorneys’ fees. The Company filed a motion to dismiss the complaint on June 1, 2004. On February 8, 2005 the court denied the motion to dismiss. On March 23, 2005, the Company filed its answer, and on December 30, 2005, the Company filed a motion for summary judgment. The Company intends to defend this lawsuit vigorously.

On October 31, 2003, NLIC and NLAIC were named in a lawsuit seeking class action status filed in the United States District Court for the District of Arizona entitled Robert Helman et al v. Nationwide Life Insurance Company et al. The suit challenges the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans. On April 8, 2004, the plaintiff filed an amended class action complaint on behalf of all persons who purchased an individual variable deferred annuity contract or a certificate to a group variable annuity contract issued by NLIC or NLAIC which were allegedly used to fund certain tax-deferred retirement plans. The amended class action complaint seeks unspecified compensatory damages. NLIC and NLAIC filed a motion to dismiss the complaint on May 24, 2004. On July 27, 2004, the court granted the motion to dismiss. The plaintiff has appealed that dismissal to the United States Court of Appeals for the Ninth Circuit. NLIC and NLAIC intend to defend this lawsuit vigorously.

On August 15, 2001, the Company was 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. The plaintiffs first amended their complaint on September 5, 2001 to include class action allegations and have subsequently amended their complaint three times. As amended, in the current complaint the plaintiffs seek to represent a class of ERISA qualified retirement plans that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that the Company 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 the Company, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On December 13, 2001, the plaintiffs filed a motion for class certification. The plaintiffs filed a supplement to that motion on September 19, 2003. The Company opposed that motion on December 24, 2003. On July 6, 2004, the Company filed a Revised Memorandum in Support of Summary Judgment. The Company’s motion for summary judgment was denied with respect to all claims on February 24, 2006. The Company intends to defend this lawsuit vigorously.

Tax Matters

The Company’s federal income tax returns are routinely audited by the IRS, and the Company is currently under examination for the 2000-2002 tax years. Management has established tax reserves representing its best estimate of additional amounts it may be required to pay if certain tax positions it has taken are challenged and ultimately denied by the IRS. These reserves are reviewed regularly and are adjusted as events occur that management believes impact its liability for additional taxes, such as lapsing of applicable statutes of limitations, conclusion of tax audits or substantial agreement on the deductibility/non-deductibility of uncertain items, additional exposure based on current calculations, identification of new issues, release of administrative guidance or rendering of a court decision affecting a particular tax issue. Management believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

A significant component of the tax reserve is related to the separate account DRD. The Company has not reached any final agreements with the IRS with respect to the DRD, and there can be no assurance that any such agreements will be reached. However, resolution of the separate account DRD and/or other identified issues could result in a potentially significant adjustment to the Company’s future results of operations.

(17) Securitization Transactions

Since 2001, the Company has sold $626.1 million of credit enhanced equity interests in Tax Credit Funds to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 5.25% over periods ending between 2002 and 2022. As of December 31, 2005, the Company held guarantee reserves totaling $6.3 million on these transactions. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $1.54 billion. The Company does not anticipate making any payments related to the guarantees.

At the time of the sales, $5.9 million of net sale proceeds were set aside as collateral for certain properties owned by the Tax Credit Funds that had not met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized. During 2005, no stabilization collateral amounts were released into income, compared to $0.1 million released in 2004. As of December 31, 2005 and 2004, $2.2 million and $1.4 million of stabilization collateral was unrecognized and recorded as a reserve, respectively.

To the extent there are cash deficits in any specific property owned by the Tax Credit Funds, property reserves, property operating guarantees and reserves held by the Tax Credit Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the Tax Credit Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

(18) Variable Interest Entities

As of December 31, 2005 and 2004, the Company had relationships with 19 and 14 VIEs, respectively, where the Company was the primary beneficiary. Each of these VIEs is a conduit that assists the Company in structured products transactions. One of the VIEs is used in the securitization of mortgage loans, while the others are involved in the sale of Tax Credit Funds to third party investors where the Company provides guaranteed returns (see Note 17). The results of operations and financial position of these VIEs are included along with corresponding minority interest liabilities in the accompanying consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The net assets of these VIEs totaled $440.6 million and $366.4 million as of December 31, 2005 and December 31, 2004, respectively. The following table summarizes the components of net assets as of the dates indicated:

(in millions)	December 31, 2005		December 31, 2004
Mortgage loans on real estate	$	31.5	$	32.1
Other long-term investments		478.6		401.2
Short-term investments		42.3		31.7
Other assets		41.3		50.3
Short-term debt		32.6		32.6
Other liabilities		120.5		116.3

The total exposure to loss on these VIEs where the Company is the primary beneficiary was immaterial as of December 31, 2005 and December 31, 2004. For the mortgage loan VIE, to which the short-term debt relates, the creditors have no recourse against the Company in the event of default by the VIE.

In addition to the VIEs described above, the Company holds variable interests, in the form of limited partnerships or similar investments, in a number of Tax Credit Funds where the Company is not the primary beneficiary. These investments have been held by the Company for periods of 1 to 10 years and allow the Company to experience certain tax credits and other tax benefits from affordable housing projects. The Company also has certain investments in other securitization transactions that qualify as VIEs, but for which the Company is not the primary beneficiary. The total exposure to loss on these VIEs was $53.9 million and $36.3 million as of December 31, 2005 and 2004, respectively.

(19) Segment Information

Management of the Company views its business primarily based on the underlying products, and this is the basis used for defining its reportable segments. The Company reports four segments: Individual Investments, Retirement Plans, Individual Protection, and Corporate and Other.

The primary segment profitability measure that management uses is pre-tax operating earnings, which is calculated by adjusting income from continuing operations before federal income taxes and the cumulative effect of adoption of accounting principles to exclude: (1) net realized gains and losses on investments, hedging instruments and hedged items, except for periodic net coupon settlements on non-qualifying derivatives; (2) net realized gains and losses related to securitizations; and (3) the adjustment to amortization of DAC related to net realized gains and losses.

Individual Investments

The Individual Investments segment consists of individual The BEST of AMERICA® and private label deferred variable annuity products, deferred fixed annuity products, income products and advisory services. Individual deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, individual variable annuity contracts provide the customer with access to a wide range of investment options and asset protection in the event of an untimely death, while individual fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods.

Retirement Plans

The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans business. The private sector includes IRC Section 401(k) business, and the public sector includes IRC Section 457 and Section 401(a) business, both in the form of fixed and variable group annuities.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

Individual Protection

The Individual Protection segment consists of investment life insurance products, including individual variable, COLI and BOLI products; traditional life insurance products; and universal life insurance products. Life insurance products provide a death benefit and generally allow the customer to build cash value on a tax-advantaged basis.

Corporate and Other

The Corporate and Other segment includes certain structured products business; the MTN program; net investment income not allocated to product segments; periodic net coupon settlements on non-qualifying derivatives; unallocated expenses; interest expense on debt; revenue and expenses of the Company’s non-insurance subsidiaries not reported in other segments; and net realized gains and losses related to securitizations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

The following table summarizes the Company’s business segment operating results for the years ended December 31:

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2005
Revenues:
Policy charges	$	532.4	$	145.0	$	377.7	$	—		$	1,055.1
Life insurance premiums		96.7		—		163.3		—			260.0
Net investment income		822.4		642.9		332.8		307.1			2,105.2
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		9.5			9.5
Other		1.3		0.2		—		1.8			3.3
Total revenues		1,452.8		788.1		873.8		318.4			3,433.1
Benefits and expenses:
Interest credited to policyholder account values		557.7		444.8		182.4		146.1			1,331.0
Other benefits and claims		149.1		—		228.4		—			377.5
Policyholder dividends on participating policies		—		—		33.1		—			33.1
Amortization of DAC		329.1		47.2		89.0		1.0			466.3
Interest expense on debt		—		—		—		66.3			66.3
Other operating expenses		193.1		181.8		148.1		15.8			538.8
Total benefits and expenses		1,229.0		673.8		681.0		229.2			2,813.0
Income from continuing operations before federal income tax expense		223.8		114.3		192.8		89.2		$	620.1
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		(9.5	)
Adjustment to amortization of DAC related to net realized gains		—		—		—		1.0
Pre-tax operating earnings	$	223.8	$	114.3	$	192.8	$	80.7
Assets as of period end	$	52,929.2	$	29,987.2	$	14,728.7	$	9,313.4		$	106,958.5

¹ Excluding periodic net coupon settlements on non-qualifying derivatives.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2004
Revenues:
Policy charges	$	503.6	$	157.0	$	364.6	$	—		$	1,025.2
Life insurance premiums		87.5		—		182.9		—			270.4
Net investment income		824.8		627.9		327.2		220.6			2,000.5
Net realized losses on investments, hedging instruments and hedged items1		—		—		—		(43.0	)		(43.0	)
Other		0.6		—		—		15.8			16.4
Total revenues		1,416.5		784.9		874.7		193.4			3,269.5
Benefits and expenses:
Interest credited to policyholder account values		573.5		435.5		181.5		86.7			1,277.2
Other benefits and claims		136.9		—		232.3		—			369.2
Policyholder dividends on participating policies		—		—		36.2		—			36.2
Amortization of DAC		276.1		39.6		94.4		—			410.1
Interest expense on debt		—		—		—		59.8			59.8
Other operating expenses		210.0		184.5		159.7		27.8			582.0
Total benefits and expenses		1,196.5		659.6		704.1		174.3			2,734.5
Income from continuing operations before federal income tax expense		220.0		125.3		170.6		19.1		$	535.0
Net realized losses on investments, hedging instruments and hedged items1		—		—		—		43.0
Pre-tax operating earnings	$	220.0	$	125.3	$	170.6	$	62.1
Assets as of period end	$	52,642.5	$	29,668.7	$	12,932.4	$	10,714.3		$	105,957.9

¹ Excluding periodic net coupon settlements on non-qualifying derivatives.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2005, 2004 and 2003

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2003
Revenues:
Policy charges	$	427.9	$	150.0	$	346.2	$	—		$	924.1
Life insurance premiums		89.8		—		190.0		—			279.8
Net investment income		807.9		640.2		324.3		200.7			1,973.1
Net realized losses on investments, hedging instruments and hedged items1		—		—		—		(100.8	)		(100.8	)
Other		—		—		—		28.4			28.4
Total revenues		1,325.6		790.2		860.5		128.3			3,104.6
Benefits and expenses:
Interest credited to policyholder account values		602.5		443.2		185.6		77.9			1,309.2
Other benefits and claims		155.5		—		224.5		—			380.0
Policyholder dividends on participating policies		—		—		41.2		—			41.2
Amortization of DAC		228.4		45.6		101.9		—			375.9
Interest expense on debt		—		—		—		48.4			48.4
Other operating expenses		172.9		178.9		157.3		6.4			515.5
Total benefits and expenses		1,159.3		667.7		710.5		132.7			2,670.2
Income (loss) from continuing operations before federal income tax expense		166.3		122.5		150.0		(4.4	)	$	434.4
Net realized losses on investments, hedging instruments and hedged items1		—		—		—		100.8
Pre-tax operating earnings	$	166.3	$	122.5	$	150.0	$	96.4
Assets as of period end	$	49,419.2	$	29,226.9	$	11,286.6	$	10,695.0		$	100,627.7

¹ Excluding periodic net coupon settlements on non-qualifying derivatives.

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 (33-62795) 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 (33-62795) and hereby incorporated by reference.

(e) The form of the contract application - Filed previously with initial registration statement (33-62795) and hereby incorporated by reference.

(f) Articles of Incorporation of Depositor - Filed previously with initial registration statement (33-62795) and hereby incorporated by reference.

(g) Reinsurance Contracts -Filed previously with registration statement (333-46338) and hereby incorporated by reference.

(h) Participation Agreements - Filed previously with registration statement (333-46338) and hereby incorporated by reference.

(i) Not Applicable

(j) Not Applicable

(k) Opinion of Counsel - Filed previously with Pre-Effective Amendment No. 1 to the registration statement (33-62795) and hereby incorporated by reference.

(l) Not Applicable

(m) Not Applicable

(n) Consent of Independent Registered Public Accounting Firm - Filed previously with registration statement (333-46338) and hereby incorporated by reference.

(o) Not Applicable

(p) Not Applicable

(q) Redeemability Exemption Procedures - Filed previously with registration statement (333-46338) and hereby incorporated by reference.

Item 27.Directors and Officers of the Depositor

Chairman of the Board	Arden L. Shisler
Chief Executive Officer and Director	W. G. Jurgensen
President and Chief Operating Officer	Mark R. Thresher
Executive Vice President and Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President-Chief Administrative Officer	Terri L. Hill
Executive Vice President-Chief Financial and Investment Officer	Robert A. Rosholt
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing Officer	Kathleen D. Ricord
Senior Vice President and Treasurer	Harry H. Hallowell
Senior Vice President-Chief Compliance Officer	Carol Baldwin Moody
Senior Vice President-Chief Financial Officer	Timothy G. Frommeyer
Senior Vice President-Chief Investment Officer	Gail G. Snyder
Senior Vice President-Chief Technology Officer	Srinivas Koushik
Senior Vice President-CIO Strategic Investments	Gary I. Siroko
Senior Vice President-Consumer Finance	John S. Skubik
Senior Vice President-Corporate Relations	Gregory S. Lashutka
Senior Vice President-Corporate Strategy	J. Stephen Baine
Senior Vice President-Division General Counsel	Thomas W. Dietrich
Senior Vice President-Enterprise Chief Risk Officer	Brian W. Nocco
Senior Vice President-Group Business Head	Duane C. Meek
Senior Vice President-In Retirement Business Head	Keith I. Millner
Senior Vice President-Individual Investments Business Head	Mark D. Phelan
Senior Vice President-Individual Protection Business Head	Peter A. Golato
Senior Vice President-Information Technology	Mark D. Torkos
Senior Vice President-Internal Audits	Kelly A. Hamilton
Senior Vice President-Marketing, Strategy and Urban Operations	Katherine A. Mabe
Senior Vice President-NF Systems	R. Dennis Noice
Senior Vice President-Non-Affiliated Sales	John Laughlin Carter
Senior Vice President-P/C Strategic Planning and Operations	James R. Burke
Senior Vice President-PCIO Brokerage Operations & Sponsor Relations	David K. Hollingsworth
Senior Vice President-Property and Casualty Claims	David R. Jahn
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Property and Casualty Human Resources	Gale V. King
Senior Vice President-Property and Casualty Personal Lines Product Pricing	J. Lynn Greenstein
Director	Joseph A. Alutto
Director	James G. Brocksmith, Jr.
Director	Keith W. Eckel
Director	Lydia M. Marshall
Director	Donald L. McWhorter
Director	David O. Miller
Director	Martha James Miller de Lombera
Director	James F. Patterson
Director	Gerald D. Prothro
Director	Alex (nmn) Shumate

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

1717 Advisory Services, Inc.	Pennsylvania	The company was formerly registered as an investment advisor and is currently inactive.
1717 Brokerage Services, Inc.	Pennsylvania	The company is registered as a broker-dealer.
1717 Capital Management Company*	Pennsylvania	The company is registered as a broker-dealer and investment advisor.
1717 Insurance Agency of Massachusetts, Inc.	Massachusetts	The company is established to grant proper licensing to the Nationwide Life Insurance Company of America affiliates in Massachusetts.
1717 Insurance Agency of Texas, Inc.	Texas	The company is established to grant proper licensing to the Nationwide Life Insurance Company of America affiliates in Texas.
401(k) Investment Advisors, Inc.	Texas	The company is an investment advisor registered with the State of Texas.
401(k) Investment Services, Inc.*	Texas	The company is a broker-dealer registered with the National Association of Securities Dealers, Inc.
AGMC Reinsurance, Ltd.	Turks & Caicos Islands	The company is in the business of reinsurance of mortgage guaranty risks.
AID Finance Services, Inc.	Iowa	The company operates as a holding company.
ALLIED Document Solutions, Inc.	Iowa	The company provides general printing services to its affiliated companies as well as to unaffiliated companies.
ALLIED General Agency Company	Iowa	The company acts as a general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.	Iowa	The company is a property and casualty insurance holding company.
ALLIED Group Insurance Marketing Company	Iowa	The company engages in the direct marketing of property and casualty insurance products.
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.
Allnations, Inc.	Ohio	The company engages in promoting, extending, and strengthening cooperative insurance organizations throughout the world.
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.
Asset Management Holdings plc*	England and Wales	The company is a holding company of a group engaged in the management of pension fund assets, unit trusts and other collective investment schemes, investment trusts and portfolios for corporate clients.
Audenstar Limited	England and Wales	The company is an investment holding company.
BlueSpark, LLC	Ohio	The company is currently inactive.
Cal-Ag Insurance Services, Inc.	California	The company is an insurance agency.

7

  COMPANY STATE/COUNTRY OF ORGANIZATION NO. VOTING SECURITIES (see attached chart unless otherwise indicated) PRINCIPAL BUSINESS

CalFarm Insurance Agency	California	The company is an insurance agency.
Capital Pro Holding, Inc.	Delaware	The company operates as a holding company and is currently inactive.
Capital Professional Advisors, Inc.	Delaware	The company is currently inactive.
Cap Pro Advisory Services, Inc.	Delaware	The company is currently inactive.
Cap Pro Brokerage Services, Inc.	Delaware	The company is currently inactive.
Cap Pro Insurance Agency Services, Inc.	Delaware	The company is currently inactive.
Colonial County Mutual Insurance Company*	Texas	The company underwrites non-standard automobile and motorcycle insurance and other various commercial liability coverages in Texas.
Corviant Corporation	Delaware	The purpose of the company is to create a captive distribution network through which affiliates can sell multi-manager investment products, insurance products and sophisticated estate planning services.
Crestbrook Insurance Company* (f.k.a. CalFarm Insurance Company)	Ohio	The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Damian Securities Limited*	England and Wales	The company is engaged in investment holding.
Depositors Insurance Company	Iowa	The company underwrites general property and casualty insurance.
Discover Insurance Agency, LLC	California	The company is currently inactive.
Discover Insurance Agency of Texas, LLC	Texas	The company is currently inactive.
DVM Insurance Agency, Inc.	California	This company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
Europewide Life SA (f.k.a. CLARIENT Life Insurance SA)*	Luxembourg	The company writes life insurance including coinsurance and reinsurance.
F&B, Inc.	Iowa	The company is an insurance agency that places business not written by Farmland Mutual Insurance Company and its affiliates with other carriers.
Farmland Mutual Insurance Company	Iowa	The company provides property and casualty insurance primarily to agricultural businesses.
Fenplace Limited	England and Wales	The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 of England and Wales.
Financial Horizons Distributors Agency of Alabama, Inc.	Alabama	The company is an insurance agency marketing life insurance and annuity products through financial institutions.
Financial Horizons Distributors Agency of Ohio, Inc.	Ohio	The company is an insurance agency marketing life insurance and annuity products through financial institutions.
Financial Horizons Distributors Agency of Texas, Inc.	Texas	The company is an insurance agency marketing life insurance and annuity products through financial institutions.
Financial Settlement Services Agency, Inc.	Ohio	The company is an insurance agency in the business of selling structured settlement products.
FutureHealth Corporation	Maryland	The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.
FutureHealth Holding Company	Maryland	The company provides population health management.

7

  COMPANY STATE/COUNTRY OF ORGANIZATION NO. VOTING SECURITIES (see attached chart unless otherwise indicated) PRINCIPAL BUSINESS

FutureHealth Technologies Corporation	Maryland	The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.
Gardiner Point Hospitality LLC	Ohio	The company holds the assets of a hotel in foreclosure.
Gartmore 1990 Limited	England and Wales	This company is currently in Members' Voluntary Liquidation.
Gartmore 1990 Trustee Limited	England and Wales	This company is currently in Members' Voluntary Liquidation.
Gartmore Capital Management Limited*	England and Wales	The company acts as a holding company for Gartmore US Limited and has applied to cancel its registration with the United Kingdom Financial Services Authority.
Gartmore Distribution Services, Inc.*	Delaware	The company is a limited purpose broker-dealer.
Gartmore Emerging Managers, LLC	Delaware	The company acquires and holds interests in registered investment advisors and provides investment management services.
Gartmore Fund Managers International Limited	Jersey, Channel Islands	The company is currently in Liquidation.
Gartmore Fund Managers Limited*	England and Wales	The company is engaged in authorized unit trust management and OEIC management. It is also the authorized Corporate Director of the Gartmore OEIC Funds. The company is authorized and regulated by the United Kingdom Financial Services Authority.
Gartmore Global Asset Management, Inc.	Delaware	The company operates as a holding company.
Gartmore Global Asset Management Trust*	Delaware	The company acts as a holding company for the Gartmore group of companies and as a registered investment advisor for registered investment companies.
Gartmore Global Investments, Inc.*	Delaware	The company acts as a holding company and provides other business services for the Gartmore group of companies.
Gartmore Global Partners*	Delaware	The partnership is engaged in investment management. The company is authorized and regulated by the Securities and Exchange Commission and the United Kingdom Financial Services Authority.
Gartmore Global Ventures, Inc.	Delaware	The company acts as a holding company for subsidiaries in the Nationwide group of companies.
Gartmore Group Limited*	England and Wales	The company is a holding company for a group engaged in the management of pension fund assets, unit trusts and other collective investment schemes, hedge funds, investment trusts, and portfolios for corporate clients.
Gartmore Indosuez UK Recovery Fund (G.P.) Limited	England and Wales	The company is currently in Members' Voluntary Dissolution.
Gartmore Investment Limited*	England and Wales	The company is engaged in investment management and advisory services to pension funds, unit trusts and other collective investment schemes, hedge funds, investment trusts and portfolios for corporate or other institutional clients. The company is authorized and regulated by the Securities and Exchange Commission and the United Kingdom Financial Services Authority.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Gartmore Investment Management plc*	England and Wales		The company is an investment holding company and provides services to other companies within the Gartmore group of companies in the United Kingdom.
Gartmore Investment Services GmbH	Germany		The company is engaged in marketing support for subsidiaries of the Gartmore group of companies.
Gartmore Investment Services Limited*	England and Wales		The company is engaged in investment holding for subsidiaries of the Gartmore group of companies.
Gartmore Investor Services, Inc.	Ohio		The company provides transfer and dividend disbursing agent services to various mutual fund entities.
Gartmore Japan Limited* (n.k.a. Gartmore Investment Japan Limited)	Japan		The company is the renamed survivor entity of the merger of Gartmore Investment Management Japan Limited and Gartmore NC Investment Trust Management Company Ltd. The company is engaged in the business of investment management. The company is authorized and regulated by the Japan Financial Services Authority.
Gartmore Managers (Jersey) Limited	Jersey, Channel Islands		The company is currently in Liquidation.
Gartmore Morley & Associates, Inc.	Oregon		The company brokers or places book-value maintenance agreements (wrap contracts) and guaranteed investment contracts for collective investment trusts and accounts.
Gartmore Morley Capital Management, Inc.	Oregon		The company is an investment advisor and stable value money manager.
Gartmore Morley Financial Services, Inc.	Oregon		The company is a holding company.
Gartmore Mutual Fund Capital Trust	Delaware		The trust acts as a registered investment advisor.
Gartmore No. 1 General Partner, Limited	Scotland		The company is a general partner in a number of Scottish Limited Partnerships that act as a general partner in private equity investment vehicles.
Gartmore No. 2 General Partner, Limited*	Scotland		The company is a general partner in a number of Scottish Limited Partnerships that act as a general partner in private equity investment vehicles.
Gartmore No. 3 General Partner GP Limited	Scotland		The company is a general partner in a Scottish Limited Partnership acting as a general partner in a private equity investment vehicle.
Gartmore No. 3 General Partner ILP Limited	Scotland		The company is a general partner in a Scottish Limited Partnership acting as a general partner in a private equity investment vehicle.
Gartmore Nominees Limited	England and Wales		The company acts as a nominee. The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 of England and Wales.
Gartmore Pension Trustees, Limited	England and Wales		The company acts as the corporate trustee of the Gartmore pension scheme and is dormant within the meaning of Section 249AA of the Companies Act of 1985 of England and Wales.
Gartmore Riverview, LLC*	Delaware		The company provides customized solutions in the form of expert advice and investment management services to a limited number of institutional investors through construction of hedge fund and alternative asset portfolios and their integration into the entire asset allocation framework.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Gartmore Riverview II, LLC	Delaware		The company is a holding company for Gartmore Riverview, LLC.
Gartmore Riverview Polyphony LLC*	Delaware		The company invests in limited partnerships and other entities and retains managers to invest, reinvest and trade in securities and other financial instruments.
Gartmore S.A. Capital Trust	Delaware		The trust acts as a registered investment advisor.
Gartmore Securities Limited*	England and Wales		The company is engaged in investment holding and is a partner in Gartmore Global Partners.
Gartmore Separate Accounts, LLC	Delaware		The company acts as an investment advisor registered with the Securities and Exchange Commission.
Gartmore Services Limited	Jersey, Channel Islands		The company provides services to the Gartmore group of companies.
Gartmore Trust Company	Oregon		The company is an Oregon state bank with trust power.
Gartmore U.S. Limited*	England and Wales		The company is a joint partner in Gartmore Global Partners.
Gates, McDonald & Company*	Ohio		The company provides services to employers for managing workers' compensation matters and employee benefits costs.
Gates, McDonald & Company of New York, Inc.	New York		The company provides workers' compensation and self-insured claims administration services to employers with exposure in New York.
GatesMcDonald DTAO, LLC	Ohio		The company provides disability tax reporting services.
GatesMcDonald DTC, LLC	Ohio		The company provides disability tax reporting services.
GatesMcDonald Health Plus Inc.	Ohio		The company provides medical management and cost containment services to employers.
GGI MGT LLC	Delaware		The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to Gartmore management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC.
G.I.L. Nominees Limited	England and Wales		The company acts as a nominee. The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 of England and Wales.
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 serves as a holding company for foreclosure entities.
Lone Star General Agency, Inc.	Texas		The company acts as general agent to market non-standard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
MedProSolutions, Inc.	Massachusetts		The company provides third-party administration services for workers' compensation, automobile injury and disability claims.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England		This is a limited liability company organized for profit under the Companies Act of 1948 of England for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds. This company is currently inactive.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Kansas		The company is a shell insurer with no active policies or liabilities.
Nationwide Affordable Housing, LLC	Ohio		The company invests in multi-family housing projects throughout the U.S.
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, Limited*	England and Wales		The company is a holding company for a group engaged in the management of pension fund assets, unit trusts and other collective investment schemes, hedge funds, investment trusts and portfolios for corporate clients.
Nationwide Assurance Company	Wisconsin		The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Atlantic Insurance Company	Ohio		The company writes personal lines residential property insurance in the State of Florida.
Nationwide Capital Mortgage, LLC	Ohio		This company is a holding company that funds/owns commercial mortgage loans on an interim basis, hedges the loans during the ownership period, and then sells the loans as part of a securitization to generate profit.
Nationwide Cash Management Company*	Ohio		The company buys and sells investment securities of a short-term nature as 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 Company and Nationwide Mutual Fire Insurance Company.
Nationwide Credit Enhancement Insurance Company	Ohio		The company is currently inactive.
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 acts as an administrator of structured settlements.
Nationwide Financial Institution Distributors Agency, Inc.	Delaware		The company is an insurance agency.
Nationwide Financial Institution Distributors Agency, Inc. of New Mexico	New Mexico		The company is an insurance agency.
Nationwide Financial Institution Distributors Insurance Agency, Inc. of Massachusetts	Massachusetts		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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Financial Services, Inc.*	Delaware		The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute long-term savings and retirement products.
Nationwide Financial Sp. Zo.o	Poland		The company provides distribution services for its affiliate Nationwide Towarzystwo Ubezpieczen na Zycie S.A. in Poland.
Nationwide Financial Structured Products, LLC	Ohio		The company captures and reports the results of the structured products business unit.
Nationwide Foundation*	Ohio		The company contributes to non-profit activities and projects.
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 Finance, LLC	Ohio		The company acts as a support company for Nationwide Global Holdings, Inc. in its international capitalization efforts.
Nationwide Global Funds	Luxembourg		This company issues shares of mutual funds.
Nationwide Global Holdings, Inc.*	Ohio		The company is a holding company for the international operations of Nationwide.
Nationwide Global Holdings-NGH Brasil Participacoes, Ltda.	Brazil		The company acts as a holding company for subsidiaries of the Nationwide group of companies.
Nationwide Global Services EIG*	Luxembourg		The company provides shared services to PanEuroLife, Europewide Life SA, Europewide Financial S.A. (f.k.a. Dancia Life S.A.) and Nationwide Global Holdings, Inc.
Nationwide Health and Productivity Company	Ohio		The company is a holding company for the health and productivity operations of Nationwide.
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 Management Services, Inc.	Ohio		The company is currently inactive.
Nationwide International Underwriters	California		The company is a special risk, excess and surplus lines underwriting manager.
Nationwide Investment Services Corporation**	Oklahoma		This is a limited broker-dealer company doing business in the deferred compensation market and acts as an investment advisor.
Nationwide Life and Annuity Company of America**	Delaware		The company provides individual life insurance products.
Nationwide Life and Annuity Insurance Company**	Ohio		The company engages in underwriting life insurance and granting, purchasing, and disposing of annuities.
Nationwide Life Insurance Company*	Ohio		The company provides individual life insurance, group life and health insurance, fixed and variable annuity products, and other life insurance products.
Nationwide Life Insurance Company of America*	Pennsylvania		The company provides individual life insurance and group annuity products.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Life Insurance Company of Delaware*	Delaware		The company insures against personal injury, disability or death resulting from traveling, sickness or other general accidents, and every type of insurance appertaining thereto.
Nationwide Lloyds	Texas		The company markets commercial property insurance in Texas.
Nationwide Management Systems, Inc.	Ohio		The company offers a preferred provider organization and other related products and services.
Nationwide Marítima Vida E Previdência SA* (n.k.a. Vida Seguradora SA)	Brazil		The company operates as a licensed insurance company in the categories of life and unrestricted private pension plans in Brazil.
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 Properties, Ltd.	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investments.
Nationwide Property and Casualty Insurance Company	Ohio		The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC	Ohio		The company provides alarm systems and security guard services.
Nationwide Provident Holding Company*	Pennsylvania		The company is a holding company for non-insurance subsidiaries.
Nationwide Realty Investors, Ltd.*	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate 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 and education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas	Texas		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Insurance Agency, Inc.	Massachusetts		The company markets and administers deferred compensation plans for public employees.
Nationwide Securities, Inc.*	Ohio		The company is a registered broker-dealer and provides investment management and administrative services.
Nationwide Services Company, LLC	Ohio		The company performs shared services functions for the Nationwide organization.
Nationwide Services Sp. Zo.o.	Poland		The company provides services to Nationwide Global Holdings, Inc. in Poland.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Trust Company, FSB	United States		This is a federal savings bank chartered by the Office of Thrift Supervision in the United States Department of the Treasury to exercise custody and fiduciary powers.
Nationwide UK Holding Company, Limited*	England and Wales		The company is a holding company for a group engaged in the management of pension fund assets, unit trusts and other collective investment schemes, hedge funds, investment trusts and portfolios for corporate clients.
Newhouse Capital Partners, LLC	Delaware		The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Special Situations Fund I, LLC	Delaware		The company owns and manages contributed securities in order to achieve long-term capital appreciation from the contributed securities and through investments in a portfolio of other equity investments in financial service and other related companies.
NF Reinsurance Ltd.*	Bermuda		The company serves as a captive reinsurer for Nationwide Life Insurance Company’s universal life, term life and annuity business.
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc.'s distribution companies.
NGH Luxembourg S.a.r.L.*	Luxembourg		The company acts primarily as a holding company for the European operations of Nationwide Global Holdings, Inc.
NGH Netherlands B.V.	Netherlands		The company acts as a holding company for other Nationwide overseas companies.
NGH UK, Ltd.*	United Kingdom		The company functions as a support company for other Nationwide overseas companies.
North Front Pass-Through Trust	Delaware		The trust issued and sold $4,000,000 aggregate face amount of CSN Pass-Through Securities to certain unrelated Initial Purchasers.
NorthPointe Capital LLC	Delaware		The company acts as a registered investment advisor.
PanEuroLife*	Luxembourg		The company provides individual life insurance, primarily in the United Kingdom, Belgium and France.
Pension Associates, Inc.	Wisconsin		The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa		This company is an insurance agency.
Provestco, Inc.	Delaware		The company serves as a general partner in certain real estate limited partnerships invested in by Nationwide Life Insurance Company of America.
Quick Sure Auto Agency, Inc.	Texas		The company is an insurance agency and operates as an employee agent "storefront" for Titan Insurance Services.
RCMD Financial Services, Inc.	Delaware		The company is a holding company.
Registered Investment Advisors Services, Inc.	Texas		The company facilitates third-party money management services for plan providers.
Retention Alternatives, Ltd. *	Bermuda		The company is a captive insurer and writes first dollar insurance policies in workers’ compensation, general liability and automobile liability for its affiliates in the United States.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Riverview International Group, Inc.	Delaware		The company is a holding company for Gartmore Riverview I, LLC.
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.
Siam Ar-Na-Khet Company Limited	Thailand		The company is a holding company.
TBG Advisory Services Corporation (d.b.a. TBG Advisors)	California		The company is an investment advisor.
TBG Aviation, LLC	California		The company holds an investment in a leased airplane and maintains an operating agreement with Flight Options.
TBG Danco Insurance Company	California		The corporation provides life insurance and individual executive estate planning.
TBG Financial & Insurance Services Corporation*	California		The company consults with corporate clients and financial institutions on the development and implementation of proprietary and/or private placement insurance products for the financing of executive benefit programs and individual executive's estate planning requirements. As a broker dealer, TBG Financial & Insurance Services Corporation provides access to institutional insurance investment products.
TBG Financial & Insurance Services Corporation of Hawaii	Hawaii		The corporation consults with corporate clients and financial institutions on the development and implementation of proprietary, private placement and institutional insurance products.
TBG Insurance Services Corporation*	Delaware		The company markets and administers executive benefit plans.
THI Holdings (Delaware), Inc.*	Delaware		The company acts as a holding company for certain subsidiaries of the Nationwide group of companies.
The 401(k) Companies, Inc.	Texas		The company acts as a holding company for certain subsidiaries of the Nationwide group of companies.
The 401(k) Company	Texas		The company is a third-party administrator providing record-keeping services for 401(k) plans.
Titan Auto Agency, Inc. (d.b.a. Arlans Agency)	Michigan		The company is an insurance agency that primarily sells non-standard automobile insurance for Titan Insurance Company in Michigan.
Titan Auto Insurance of Pennsylvania, Inc.	Pennsylvania		The company is an insurance agency that operates as an employee agent "storefront" for Titan Indemnity Company in Pennsylvania. The company is currently inactive.
Titan Auto Insurance of New Mexico, Inc.	New Mexico		The company is an insurance agency that operates as an employee agent "storefront" for Titan Indemnity Company in New Mexico.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Titan Holdings Service Corporation	Texas		The company acts as a holding company specifically for Titan corporate employees.
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		This is a property and casualty insurance company.
Titan Insurance Services, Inc.	Texas		The company is a Texas grandfathered managing general agency.
Titan National Auto Call Center, Inc.	Texas		The company is licensed as an insurance agency that operates as an employee agent "call center" for Titan Indemnity Company.
VertBois, SA*	Luxembourg		The company acts as a real property holding company.
Veterinary Pet Insurance Company*	California		The company provides pet insurance.
Victoria Automobile Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Financial Corporation	Delaware		The company acts as a holding company specifically for corporate employees of the Victoria group of companies.
Victoria Fire & Casualty Company	Ohio		The company is a property and casualty insurance company.
Victoria Insurance Agency, Inc.	Ohio		The company is an insurance agency that acts as a broker for independent agents appointed with the Victoria companies in the State of Ohio.
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.
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 lost pet recovery program.
Washington Square Administrative Services, Inc.	Pennsylvania		The company provides administrative services to Nationwide Life and Annuity Company of America.
Western Heritage Insurance Company	Arizona		The company underwrites excess and surplus lines of property and casualty insurance.
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.
William J. Lynch and Associates, Inc.	California		The company specializes in the analysis and funding of corporate benefit liabilities.

	COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
*	MFS Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide Multi-Flex Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-A	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-B	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-C	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-D	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-II	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-3	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-4	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-5	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-6	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-7	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-8	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-9	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-10	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-11	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-12	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-13	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-14	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-15	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-16	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-17	Ohio		Issuer of Annuity Contracts
*	Nationwide Provident VA Separate Account 1	Pennsylvania		Issuer of Annuity Contracts
*	Nationwide Provident VA Separate Account A	Delaware		Issuer of Annuity Contracts
	Nationwide VL Separate Account-A	Ohio		Issuer of Life Insurance Policies
	Nationwide VL Separate Account-B	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-C	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-D	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-G	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-2	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-3	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-4	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-5	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-6	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-7	Ohio		Issuer of Life Insurance Policies
*	Nationwide Provident VLI Separate Account 1	Pennsylvania		Issuer of Life Insurance Policies
*	Nationwide Provident VLI Separate Account A	Delaware		Issuer of Life Insurance Policies

Item 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:

oany threatened, pending or completed civil action, suit or proceeding;

oany threatened, pending or completed criminal action, suit or proceeding;

oany threatened, pending or completed administrative action, suit or proceeding;

oany threatened, pending or completed investigative action, suit 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.

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 ("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 cousel, the mater has been settled by controlling precedent.

However, 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.

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:

Multi-Flex Variable Account	Nationwide VLI Separate Account-2
Nationwide Variable Account	Nationwide VLI Separate Account-3
Nationwide Variable Account-II	Nationwide VLI Separate Account-4
Nationwide Variable Account-4	Nationwide VLI Separate Account-6
Nationwide Variable Account-5	Nationwide VLI Separate Account-7
Nationwide Variable Account-6	Nationwide VL Separate Account-C
Nationwide Variable Account-7	Nationwide VL Separate Account-D
Nationwide Variable Account-8	Nationwide VL Separate Account-G
Nationwide Variable Account-9
Nationwide Variable Account-10
Nationwide Variable Account-11
Nationwide Variable Account-13
Nationwide Variable Account-14
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C

(b)Directors and Officers of NISC:

Chairman of the Board and Director	Mark D. Phelan
President	Rhodes B. Baker
Senior Vice President	William G. Goslee, Jr.
Vice President	Karen R. Colvin
Vice President	Scott A. Englehart
Vice President	Charles E. Riley
Vice President	Trey Rouse
Vice President and Assistant Secretary	Thomas E. Barnes
Vice President-Compliance Officer	Barbara J. Shane
Associate Vice President and Secretary	Glenn W. Soden
Assistant Treasurer	E. Gary Berndt
Director	James D. Benson
Director	Keith I. Millner

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 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.

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VLI SEPARATE ACCOUNT-2, certifies that it meets the requirements of the Securities Act Rule 485(a) 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 16^th day of May, 2006.

NATIONWIDE VLI SEPARATE ACCOUNT - 2

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

By /s/ STEVEN R. SAVINI

Steven R. Savini

Attorney-in-Fact

As required by the Securities Act of 1933, the Registration Statement has been signed by the following persons in the capacities indicated on this 16^thday of May, 2006.

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