485BPOS

'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. 20	þ

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	o
Amendment No. 50	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:  May 1, 2007

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

o           Immediately upon filing pursuant to paragraph (b)

þ           On May 1, 2007 pursuant to paragraph (b)

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

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

If appropriate, check the following box:

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

The Best of AmericaÒ MSPVL

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, 2007

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.nationwide.com
U.S. Mail:	Nationwide Life Insurance Company
	5100 Rings Road, RR1-04-D4
	Dublin, Ohio 43017-1522

You should read your policy along with this prospectus.

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.

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

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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	22
Long-term Care Rider
Premium                                                                                                                                         0;	22
Initial Premium
Subsequent Premiums
Charges                                                                                                                                         0;	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
Information On Underlying Mutual Fund Payments
The Death Benefit	27
Calculation Of The Death Benefit Proceeds
Death Benefit
Suicide

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Table Of Contents (continued)

	Page
Surrenders                                                                                                                                        & #160;	28
Full Surrender
Partial Surrender
The Payout Options	28
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	29
Dollar Cost Averaging
Asset Rebalancing
Policy Loans	30
Loan Amount And Interest
Collateral and Interest
Repayment
Net Effect Of Policy Loans
Lapse	31
Grace Period
Reinstatement
Taxes	32
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
Business Uses of the Policy
Non-Resident Aliens and Other Persons Who are not Citizens of the United States
Tax Changes
Nationwide Life Insurance Company	38
Nationwide VLI Separate Account-2	39
Organization, Registration And Operation
Addition, Deletion, Or Substitution Of Mutual Funds
Voting Rights
Legal Proceedings	40
Nationwide Life Insurance Company
Nationwide Investment Services Corporation
Financial Statements	42
Appendix A: Sub-Account Information	43
Appendix B: Definitions	57

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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 page 27.

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 28.

Coverage Flexibility

Subject to conditions, you may choose to:

ü Change your beneficiaries; and

ü Change 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:

ü Take 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 30.

ü After 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 28.

ü Surrender the policy at any time while the Insured is alive.  The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans and surrender charges.  You may choose to receive the Cash Surrender Value in a lump sum, or you will have available the same payout options as if it constituted a Death Benefit.  For more information, see "Full Surrender" beginning on page 28; and "The Payout Options" beginning on page 28.

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:

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

ü The 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 43 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 page 16.  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 16 and "Modes To Make A Transfer," beginning on page 18.  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 29.

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 32.  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 20.

Rider

You may purchase a Long-term Care Rider.  Availability will vary by state.  For more information, see "Rider" beginning on page 22.

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 28 and "Net Effect Of Policy Loans" beginning on page 31.

Adverse Tax Consequences

Existing federal tax laws that benefit this policy may change at any time.  These changes could alter the favorable federal income tax treatment the policy enjoys, such as the deferral of taxation on the gains in the policy's Cash Value and the exclusion from taxable income of the Proceeds we pay to the policy's Beneficiary.  Partial and full surrenders from the policy may be subject to taxes.  The income tax treatment of the surrender of Cash Value is different in the event the policy is treated as a modified endowment contract under the Code.  Generally, tax treatment on modified endowment contracts will

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be less favorable when compared to having the policy treated as a life insurance contract.  Consult a qualified tax adviser 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 page 16, "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.

ü It will provide economic protection to a beneficiary.

ü It may build Cash Value.

Why would you want to purchase this type of life insurance?  How will you allocate the Net Premium among the variable 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.

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

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

ü The 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.)

ü At issue, the policy will require a minimum initial Premium payment.

Among other considerations, this amount will be based on: the Insured's age and sex; the underwriting class; any substandard ratings; the Specified Amount; and the choice of the Rider.

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

ü From 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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ü So long as there is enough Cash Surrender Value to cover the policy’s periodic charges as they come due, the policy will remain In Force.

ü The policy will pay a Death Benefit to the beneficiary.

ü Prior 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.  Fees in this table may be rounded to the hundredth decimal.  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 policy 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
		Per $1,000 Of Rider Net Amount At Risk – Proportionately From Your Chosen Variable And Fixed Investment Options

^{_______________________________________}

⁽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 30.

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 30.

⁽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 30.

⁽¹³⁾ The Long-term Care Rider charge varies by policy based on individual characteristics of the Insured, including sex, age and 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, 2006, 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)	11.49%	0.10%

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 IV – VIP Energy Portfolio: Service Class 2

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

· 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

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

· Nationwide Variable Insurance Trust – Gartmore NVIT Emerging Markets Fund: Class III

· Nationwide Variable Insurance Trust – Gartmore NVIT Global Health Sciences Fund: Class III

· Nationwide Variable Insurance Trust – Gartmore NVIT Global Technology and Communications Fund: Class III

· Nationwide Variable Insurance Trust – NVIT International Index Fund: Class VI

· Nationwide Variable Insurance Trust – NVIT 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

· Oppenheimer Variable Account Funds – Oppenheimer High Income 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 International Fund: Class III†

· 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 Energy Portfolio: Service Class 2†

· Fidelity VIP Freedom Fund 2010 Portfolio: Service Class

· Fidelity VIP Freedom Fund 2020 Portfolio: Service Class

· Fidelity VIP Freedom Fund 2030 Portfolio: Service Class

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†

Janus Aspen Series

· Forty Portfolio: Service Shares

· INTECH Risk-Managed Core Portfolio: Service Shares

· International Growth Portfolio: Service II Shares†

Lehman Brothers Advisers Management Trust (formerly Neuberger Berman Advisers Management Trust)

· AMT Short Duration Bond Portfolio: I Class* (formerly AMT Limited Maturity Bond Portfolio)

MFS® Variable Insurance Trust

· MFS Value Series: Initial Class

Nationwide Variable Insurance Trust ("NVIT") (formerly Gartmore Variable Insurance Trust (“GVIT”))

· American Funds NVIT Asset Allocation Fund: Class II

· American Funds NVIT Bond Fund: Class II

· American Funds NVIT Global Growth Fund: Class II

· American Funds NVIT Growth-Income Fund: Class II

· American Funds NVIT Growth Fund: Class II

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

· Gartmore NVIT Emerging Markets Fund: Class III†

· Nationwide Multi-Manager NVIT Small Cap Growth Fund: Class I (formerly, GVIT Small Cap Growth Fund)

· Nationwide Multi-Manager NVIT Small Cap Value Fund: Class I (formerly, GVIT Small Cap Value Fund)

· Nationwide Multi-Manager NVIT Small Company Fund: Class I (formerly, GVIT Small Company Fund)

· Nationwide NVIT Global Health Sciences Fund: Class III†

·    Nationwide NVIT Global Technology and Communications Fund: Class III†

· Nationwide NVIT Government Bond Fund: Class I

· Nationwide NVIT Investor Destinations Funds: Class II

Ø Nationwide NVIT Investor Destinations Aggressive Fund: Class II

Ø Nationwide NVIT Investor Destinations Conservative Fund: Class II

Ø Nationwide NVIT Investor Destinations Moderate Fund: Class II

Ø Nationwide NVIT Investor Destinations Moderately Aggressive Fund: Class II

Ø Nationwide NVIT Investor Destinations Moderately Conservative Fund: Class II

· Nationwide NVIT Mid Cap Growth Fund: Class I

· Nationwide NVIT Money Market Fund: Class I

· Nationwide NVIT U.S. Growth Leaders Fund: Class I

· NVIT International Index Fund: Class VI†

· NVIT International Value Fund: Class III†

· NVIT Mid Cap Index Fund: Class I

· NVIT Nationwide® Fund: Class I

· Van Kampen NVIT Comstock Value Fund: Class I*

· Van Kampen NVIT Multi Sector Bond Fund: Class I*

Neuberger Berman Advisers Management Trust

· AMT Fasciano Portfolio: S Class

· AMT International Portfolio: S 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: Class 3†

· 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

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Van Kampen

The Universal Institutional Funds, Inc.

· Core Plus Fixed Income Portfolio: Class I*

· U.S. Real Estate Portfolio: Class I

The following Sub-Accounts are only available in policies issued before May 1, 2007:

American Century Variable Portfolios, Inc.

· American Century VP Ultra Fund: Class I

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:

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

Janus Aspen Series

· Balanced Portfolio: Service Shares

· International Growth Portfolio: Service Shares

Nationwide Variable Insurance Trust

· Gartmore NVIT Global Utilities Fund: Class I

· Nationwide NVIT Global Financial Services Fund: Class I

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 Core I Portfolio (formerly 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 R*

Fidelity Variable Insurance Products Fund II

· VIP Asset Manager Portfolio: Initial Class

Janus Aspen Series

· Global Technology Portfolio: Service Shares

Nationwide Variable Insurance Trust

· Gartmore NVIT International Growth Fund: Class I

· Nationwide NVIT Growth Fund: Class I

· NVIT Nationwide® Leaders Fund: Class I

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

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, 2007:

Fidelity Variable Insurance Products Fund

· VIP High Income Portfolio: Initial Class

Oppenheimer Variable Account Funds

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

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

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American Century Variable Portfolios, Inc.

· American Century VP International Fund: Class I

Fidelity Variable Insurance Products Fund

· VIP Overseas Portfolio: Initial Class

· VIP Overseas Portfolio: Service Class

Franklin Templeton Variable Insurance Products Trust

· Templeton Foreign Securities Fund: Class 1

Nationwide Variable Insurance Trust

· Federated NVIT High Income Bond Fund: Class I*

· Gartmore NVIT Emerging Markets Fund: Class I

· Nationwide NVIT Global Health Sciences Fund: Class I

· Nationwide NVIT Global Technology and Communications Fund: Class I

· NVIT International Value Fund: Class I

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;

· 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 if changes to the law result in a modification to the tax treatment of the separate account; and

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

Cash Value

The policy has a Cash Value.  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 30.

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 Sub-Account 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.  We cannot guarantee that our attempts to deter active trading strategies will be successful.  If active trading strategies are not successfully deterred by our actions, the performance of Sub-Accounts that are actively traded will be adversely impacted.

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

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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.

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.

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

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

(2) request the amounts and dates of any purchase, redemption, transfer or exchange request (“transaction information”); and

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

We are required to provide such transaction information to the underlying mutual funds upon their request.  In addition, we are required to restrict or prohibit further purchases or exchange requests upon instruction from the underlying mutual fund.  We and any affected policy owner may not have advance notice of such instructions from an underlying mutual fund to restrict or prohibit further purchases or exchange requests.  If an underlying mutual fund refuses to accept a purchase or exchange request submitted by us, we will keep any affected policy owner in their current underlying mutual fund allocation.

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

18

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 32.

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

19

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 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 28.

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 "Surrendering The Policy" beginning on page 34.  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 30.

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 30.

Proceeds Upon Maturity

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

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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;

· 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 28, and "The Death Benefit" beginning on page 27.

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

You may receive information faster from us and reduce the amount of mail you receive by signing up for our eDelivery program.  We will notify you by e-mail when important documents, like statements and prospectuses, are ready for you to view, print, or download from our secure server.  If you would like to choose this option, go to www.nationwide.com/login.

We will send 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.

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

Long-term Care Rider

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

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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 20.  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

· 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 31.  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:

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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

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

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

· you have not elected the Long-term Care Rider.

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

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.

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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.

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.

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A Note On Charges

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

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

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

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

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

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

Information on Underlying Mutual Fund Payments

Our Relationship with the Underlying Mutual Funds.  The underlying mutual funds incur expenses each time they sell, administer, or redeem their shares.  The separate account aggregates policy owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each underlying mutual fund daily.  The separate account (not the policy owners) is the underlying mutual fund shareholder.  When the separate account aggregates transactions, the underlying mutual fund does not incur the expense of processing individual transactions it would normally incur if it sold its shares directly to the public.  We incur these expenses instead.

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

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

Types of Payments We Receive.  In light of the above, the underlying mutual funds or their affiliates make certain payments to us or our affiliates (the “payments”).  The amount of these payments is typically based on a percentage of assets invested in the underlying mutual funds attributable to the policies and other variable policies we and our affiliates issue, but in some cases may involve a flat fee.  These payments may be used by us for any corporate purpose, which include reducing the prices of the policies, paying expenses that we or our affiliates incur in promoting, marketing, and administering the policies and the underlying mutual funds, and achieving a profit.

We or our affiliates receive the following types of payments:

·Underlying mutual fund 12b-1 fees, which are deducted from underlying mutual fund assets;

· Sub-transfer agent fees or fees pursuant to administrative service plans adopted by the underlying mutual fund, which may be deducted from underlying mutual fund assets; and

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· Payments by an underlying mutual fund’s adviser or subadviser (or its affiliates).  Such payments may be derived, in whole or in part, from the advisory fee, which is deducted from underlying mutual fund assets and is reflected in mutual fund charges.

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

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

Amount of Payments We Receive.  For the year ended December 31, 2006, the underlying mutual fund payments we and our affiliates received from the underlying mutual funds did not exceed 0.50% (as a percentage of the average daily net assets invested in the underlying mutual funds) offered through this policy or other variable policies that we and our affiliates issue.  Payments from investment advisers or subadvisers to participate in educational and/or marketing activities have not been taken into account in this percentage.

Most underlying mutual funds or their affiliates have agreed to make payments to us or our affiliates, although the applicable percentages may vary from underlying mutual fund to underlying mutual fund and some may not make any payments at all.  Because the amount of the actual payments we or our affiliates receive depends on the assets of the underlying mutual funds attributable to the policy, we and our affiliates may receive higher payments from underlying mutual funds with lower percentages (but greater assets) than from underlying mutual funds that have higher percentages (but fewer assets).

For additional information related to the amount of payments Nationwide receives, go to www.nationwide.com.

Identification of Underlying Mutual Funds.   We may consider several criteria when identifying the underlying mutual funds, including some or all of the following:  investment objectives, investment process, investment performance, risk characteristics, investment capabilities, experience and resources, investment consistency, and fund expenses.  Another factor we consider during the identification process is whether the underlying mutual fund’s adviser or subadviser is one of our affiliates or whether the underlying mutual fund, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates.

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

The Death Benefit

Calculation Of The Death Benefit Proceeds

We will calculate the Death Benefit and pay it to the beneficiary when we receive at our Home Office proof that the Insured has died, as well as other customary information.  We will not dispute the payment of the Death Benefit after the policy has been In Force for 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

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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.

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, "Surrendering The Policy" beginning on page 34.

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

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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.

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: Initial Class R (available only for

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policies issued prior to May 1, 2003), NVIT Federated NVIT High Income Bond Fund: Class III and the NVIT Nationwide NVIT 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 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

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· 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.

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;

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· 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.) or

· 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.

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

Types of Taxes

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

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

The federal gift tax is imposed on the value of the property (including cash) transferred by gift.  Each donor is allowed to exclude an amount (in 2007, up to $12,000 per recipient) from the value of present interest gifts.  In addition, each donor is allowed a credit against the tax on the first million dollars in lifetime gifts (calculated after taking into account the $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 2007, 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 2007, 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, state by state differences of these taxes preclude a useful description of them in this prospectus.

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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 when premium payments are paid by someone other than the policy owner).  Gifts are not generally included in the recipient’s taxable income.  If you (whether or not you are the Insured) transfer ownership of the policy to another person, the transfer may be subject to a federal gift tax.

Investment Gain in the Policy

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

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

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

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

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 20, 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 the 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.

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.  If the contract is not issued as a modified endowment contract, we will monitor it and advise you if  the payment of a Premium, or other transaction, may cause the contract to become a modified endowment contract.

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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.

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

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

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

Distributions from life insurance contracts that are not modified endowment contracts generally are treated as being from the investment in the contract (generally, the Premiums paid for the contract), and then from the income in the contract.  Because Premium payments are generally nondeductible, distributions not in excess of investment in the contract are generally not includible in income; instead, they reduce the owner’s investment in the contract.

However, if a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued that causes a reduction in Death Benefits may still 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 requesting any changes in the terms of the policy.

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

Surrendering the Policy

A full surrender, 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 investment in the contract (generally, the Premiums paid into the policy), then the excess generally will be treated as taxable ordinary income, regardless of whether or not the policy is a modified endowment contract.  In certain circumstances, for example when the policy Indebtedness is very large, the amount of tax could exceed the amount distributed to you at surrender.

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

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

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

· an amount equal to any employer-paid Premiums; or

· 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 we deemed to have been made by the employer.

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

Exchanging the Policy for Another Life Insurance Policy

Generally, 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, modified endowment contract, or 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 or otherwise delay a distribution that would extend the time that tax would be payable.  Generally, the new policy or contract will be treated as having the same issue date and tax basis as the old policy or contract.

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

Taxation of Death Benefits

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

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

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

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

There are 2 exceptions to this general rule of taxability, provided that statutory notice, consent, and information requirements are satisfied.  These requirements are as follows:  Prior to the issuance of the company, (a) the employee is notified in writing that the employer intends to insure the employee's life, and the maximum face amount for which the employee could be Insured at the time that the contract is issued; (b) the employee provides written consent to being insured under the contract and that such coverage may continue after the Insured terminates employment; and (c) the employee is informed in writing that the employer will be a

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beneficiary of any proceeds payable upon the death of the employee.  If the employer fails to meet all of those requirements, then neither exception can apply.

The 2 exceptions are as follows.  First, if proper notice and consent are given and received, and if the Insured was an employee at any time during the 12-month period before the Insured’s death, then new Section 101(j) would not apply.

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

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

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

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

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

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

Terminal Illness

Certain distributions made under a policy on the life of a “terminally ill individual” or a “chronically ill individual,” as those terms are defined in the Code, are treated as death proceeds.  See, “Taxation of Death Benefits,” above.

Special Considerations for Corporations

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

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

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

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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.

See, also, Business Uses of the Policy, below.

Taxes and the Value of Your Policy

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

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

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

Business Uses of the Policy.

The life insurance policy may be used in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans, and others.  The tax consequences of these plans may vary depending on the particular facts and circumstances of each individual arrangement.  The IRS has also recently issued new guidance on split dollar insurance plans.  In addition, Internal Revenue Code Section 409A, which sets forth new rules for taxation of nonqualified deferred compensation, was added to the Code for deferrals after December 31, 2004.  Therefore, if you are contemplating using the Policy in any arrangement the value of which depends in part on its tax consequences, you should be sure to consult a tax adviser as to tax attributes of the arrangement.

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

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

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

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

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

Tax Changes

The foregoing 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 life insurance 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 differ from its

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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.

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.

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

Nationwide Life Insurance Company

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

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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.  What this means to you is that when only a small number of policy owners vote, each vote has a greater impact on, and may control the outcome of the vote.

The number of shares which a policy owner may vote is determined by dividing the Cash Value of the amount they have allocated to an underlying mutual fund by the 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 often not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and Nationwide does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. Nationwide does not believe, based on information currently known by management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on Nationwide’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on Nationwide’s consolidated financial results in a particular quarterly or annual period.

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

The financial services industry, including mutual fund, variable annuity, 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. Nationwide has been contacted by or received subpoenas from the SEC and the New York State Attorney General, who are investigating market

 timing in certain mutual funds offered in insurance products sponsored by Nationwide. Nationwide has cooperated with these investigations. Information requests from the New York State Attorney General and the SEC with respect to investigations into late trading and market timing were last responded to by Nationwide and its affiliates in December 2003 and June 2005, respectively, and no further information requests have been received with respect to these matters.

In addition, state and federal regulators 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, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives. 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 certain of these investigations, including those relating to 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 Nationwide’s MTN program. Nationwide is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

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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 Nationwide’s litigation matters. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on Nationwide in the future.

On November 15, 2006, Nationwide was named in a lawsuit filed in the United States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The Class Period is from January 1, 1996 until the Class Notice is provided. The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, Nationwide filed a motion to dismiss.  Nationwide intends to defend this lawsuit vigorously.

On February 11, 2005, Nationwide was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees. On February 2, 2006, the Court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The Court certified a class consisting of all residents of the United States and the Virgin Islands who, during the Class Period, paid premiums on a modal basis to Nationwide for term life insurance policies issued by Nationwide during the Class Period that provide for guaranteed maximum premiums, excluding certain specified products. Excluded from the class are Nationwide; any parent, subsidiary or affiliate of Nationwide; all employees, officers and directors of Nationwide; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The Class Period is from February 10, 1990 through February 2, 2006, the date the class was certified. On January 26, 2007, the plaintiff filed a motion for summary judgment. Nationwide continues to defend this lawsuit vigorously.

On April 13, 2004, Nationwide was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. Nationwide removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed a First Amended Complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of a Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The First Amended Complaint purports to disclaim, with respect to market timing or stale price trading in Nationwide’s annuities sub-accounts, any allegation based on Nationwide’s untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member’s purchases or sales of Nationwide annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if Nationwide is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to Nationwide’s untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The First Amended Complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 1, 2006, the District Court granted Nationwide’s motion to dismiss the plaintiff’s complaint. On November 29, 2006, the plaintiff filed its appellate brief with the Fourth Circuit Court of Appeals contesting the District Court’s dismissal. Nationwide continues 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

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 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, the plaintiff 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 Companies. 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. On December 30, 2005, Nationwide filed a motion for summary judgment. On June 15, 2006, the District Court granted Nationwide’s motion for summary judgment on all grounds and dismissed the plaintiff’s entire case with prejudice. The plaintiff appealed the District Court’s decision to the Fifth Circuit Court of Appeals. The appeal has been fully briefed, and Nationwide is awaiting a decision. Nationwide continues 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. Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from 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. To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class. Nationwide’s motion to dismiss the plaintiffs’ fifth amended complaint is currently pending before the court. Nationwide continues 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 39.

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:                                                         AllianceBernstein 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:                                                         AllianceBernstein L.P.

Investment Objective:                                                         Long-term growth of capital.

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

Investment Objective:                                                        

Long-term total return using a strategy that seeks to protect against U.S. inflation.

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 Global Investment Management, Inc.

Investment Objective:                                                         Capital growth.

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

Investment Adviser:                                                         American Century Global 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).

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.

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

This sub-account is only available in policies issued before May 1, 2007

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.

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 Limited

Investment Objective:                                                         Long-term growth of capital.

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 Limited

Investment Objective:                                                         Long-term capital appreciation.

Credit Suisse Trust - Small Cap Core I 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 consistent with the preservation of capital.

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.

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, and secondarily income.

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.

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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:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

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 no longer available to receive transfers or new premium payments effective May 1, 2007

Investment Adviser:                                                         Fidelity Management & Research Company

Sub-adviser:                                                         FMR Co., Inc.

Investment Objective:                                                         High level of current income.

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

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.

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 - 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:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Long-term capital growth.

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

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

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

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:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         High total return.

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

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Long-term capital appreciation.

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

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Investments Money Management, 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:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Capital growth.

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

Investment Adviser:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

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:                                                         FMR

Sub-adviser:                                                         Fidelity Research & Analysis Company

Investment Objective:                                                         Capital appreciation.

Fidelity Variable Insurance Products Fund IV - VIP Energy 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).

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

Investment Adviser:                                                         FMR

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 - 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.

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Fidelity Variable Insurance Products Fund IV - 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.

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

Investment Adviser:                                                         Franklin Advisors, 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.  Capital appreciation is a secondary consideration.

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

prospectus).

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.

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

Investment Adviser:                                                         Janus Capital Management LLC

Sub-adviser:                                                         Enhanced Investment Technologies, LLC

Investment Objective:                                                         Long-term growth of capital.

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 - 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.

Lehman Brothers Advisers Management Trust - AMT Short Duration Bond Portfolio: I Class

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

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

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

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

Investment Adviser:                                                         Massachusetts Financial Services Company

Investment Objective:                                                         Long-term capital growth and future income.

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

Investment Adviser:                                                         Massachusetts Financial Services Company

Investment Objective:                                                         Capital appreciation and reasonable income.

Nationwide Variable Insurance Trust - American Funds NVIT 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.

Nationwide Variable Insurance Trust - American Funds NVIT 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.

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

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         Capital appreciation through stocks.

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

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         Capital appreciation principally through investment in stocks.

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

Investment Adviser:                                                         Capital Research and Management Company

Investment Objective:                                                         The fund seeks to make shareholders' investments grow and provide income over time by investing primarily in common stock of companies or other

securities that demonstrate the potential for appreciation and/or dividends.

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

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Federated Investment Management Company

Investment Objective:                                                         High current income.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

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).

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

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Gartmore Global Partners

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).

Nationwide Variable Insurance Trust - Gartmore NVIT 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

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth.

Nationwide Variable Insurance Trust - Gartmore NVIT 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

Sub-adviser:                                                         Gartmore Global Partners

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.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Oberweis Asset Management, Inc.; Waddell & Reed Investment Management Company

Investment Objective:                                                        

Capital growth.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Epoch Investment Partners, Inc.; J.P. Morgan Investment Management Inc.

Investment Objective:                                                         Capital appreciation.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         American Century Investment Management Inc.; Franklin Portfolio Associates LLC; Gartmore Global Partners; Morgan Stanley Investment Management Inc.; Neuberger Berman, LLC; Waddell & Reed Investment Management Company

Investment Objective:                                                        

Long-term growth of capital.

Nationwide Variable Insurance Trust - Nationwide NVIT 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

Sub-adviser:                                                         Gartmore Global Partners

Investment Objective:                                                         Long-term capital growth.

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Nationwide Variable Insurance Trust - Nationwide NVIT 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

Investment Objective:                                                         Long-term capital appreciation.

Nationwide Variable Insurance Trust - Nationwide NVIT Global Health Sciences Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

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).

Nationwide Variable Insurance Trust - Nationwide NVIT 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

Investment Objective:                                                         Long-term capital appreciation.

Nationwide Variable Insurance Trust - Nationwide NVIT Global Technology and Communications Fund: Class III

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

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).

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         To provide a high level of income as is consistent with the preservation of capital.

Nationwide Variable Insurance Trust - Nationwide NVIT Growth Fund: Class I

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         To maximize growth of capital consistent with a more aggressive level of risk as compared to the other Investor Destinations Funds.

The Gartmore GVIT Nationwide NVIT 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 Nationwide NVIT Gartmore

GVIT Investor Destinations Funds for more information.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of return consistent with a conservative level of risk compared to the other Investor Destinations Funds.

The Nationwide NVIT 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 Nationwide NVIT Investor Destinations Funds for more information.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of total return consistent with a moderate level of risk as compared to other Investor Destinations Funds.

The Nationwide NVIT 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 Nationwide NVIT Investor Destinations Funds for more information.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Growth of capital, but also seeks income consistent with a moderately aggressive level of risk as compared to the other Investor Destinations Funds.

The Nationwide NVIT 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 Nationwide NVIT Investor Destinations Funds for more information.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of total return consistent with a moderately conservative level of risk.

The Nationwide NVIT 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 Nationwide NVIT Investor Destinations Funds for more information.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term capital appreciation.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High level of current income as is consistent with the preservation of capital and maintenance of liquidity.

Nationwide Variable Insurance Trust - Nationwide NVIT U.S. Growth Leaders Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Long-term growth of capital.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Fund Asset Management, LP

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).

Nationwide Variable Insurance Trust - NVIT 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

Sub-adviser:                                                         The Boston Company Asset Management LLC

Investment Objective:                                                         Long-term capital appreciation.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

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).

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Fund Asset Management, LP

Investment Objective:                                                         Capital appreciation.

Nationwide Variable Insurance Trust - NVIT Nationwide® Fund: Class I

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         Total return through a flexible combination of capital appreciation and current income.

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Nationwide Variable Insurance Trust - NVIT Nationwide® Leaders Fund: Class I

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Investment Objective:                                                         High total return from a concentrated portfolio of U.S. securities.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

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.

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

Investment Adviser:                                                         Gartmore Mutual Fund Capital Trust

Sub-adviser:                                                         Van Kampen Asset Management

Investment Objective:                                                         Above average total return over a market cycle of three to five years.

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

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

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.

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.

Sub-adviser:                                                         Neuberger Berman, LLC

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 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.

Sub-adviser:                                                         Neuberger Berman, LLC

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.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Capital growth.

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

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

Investment Objective:                                                         Growth of capital.

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

Investment Adviser:                                                         Neuberger Berman Management Inc.

Sub-adviser:                                                         Neuberger Berman, LLC

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

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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 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).

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, cyclicalindustries and special situations that are considered to have appreciation.

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

Investment Adviser:                                                         OppenheimerFunds, Inc.

Investment Objective:                                                         High level of current income.

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

prospectus).

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

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

Investment 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.

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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 consistent with moderate price fluctuation.

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.

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 Advantage 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 Incorporated

Investment Objective:                                                         Long-term capital appreciation.

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Wells Fargo Advantage 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 Incorporated

Investment Objective:                                                         Long-term capital appreciation.

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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 39.

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

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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 – National 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.

57

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 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.

58

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, 2007 and the prospectuses for the policy's variable investment options . The prospectus is incorporated by reference in this SAI.  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, 2007.

Table of Contents

Nationwide Life Insurance Company	1	Illustrations	2
Nationwide VLI Separate Account-2	1	Advertising	2
Nationwide Investment Services Corporation  (NISC)	1	Tax Definition of Life Insurance	3
Services	2	Financial Statements	5
Underwriting Procedure	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 $160 billion as of December 31, 2006.

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").

SAI - 1

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.  

Independent Registered Public Accounting Firm

The financial statements of Nationwide VLI Separate Account-2 and the consolidated financial statements and schedules 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, 2006 consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries 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.  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

SAI - 2

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.

Additional Materials

We may provide information on various topics to you and prospective policy owners in advertising, sales literature or other materials.

Tax Definition of Life Insurance

Section 7702(b)(1) of the Internal Revenue Code provides that if one of two alternate tests is met, a policy will be treated as life insurance for federal tax purposes.  The two tests are referred to as the Cash Value Accumulation Test and the Guideline Premium/Cash Value Corridor Test.

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

Attained Age of Insured	Percentage of Cash Value
0-40	250%
41	243%
42	236%
43	229%
44	222%
45	215%
46	209%
47	203%
48	197%
49	191%
50	185%
51	178%
52	171%
53	164%
54	157%
55	150%
56	146%
57	142%
58	138%
59	134%
60	130%
61	128%
62	126%
63	124%
64	122%
65	120%
66	119%
67	118%
68	117%
69	116%
70	115%
71	113%
72	111%
73	109%

SAI - 3

Attained Age of Insured	Percentage of Cash Value
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%
97	101%
98	101%
99	101%
100	100%

SAI - 4

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 Accounts”)) as of December 31, 2006, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

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

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

/s/ KPMG LLP

Columbus, Ohio

March 9, 2007

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2006

Assets:
Investments at fair value:
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I (AIMBValue) 99,108 shares (cost $1,219,268)	$	1,324,084
AIM Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I (AIMCapAp) 2,599 shares (cost $66,911)		68,147
AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares (AIMCapDev) 21,523 shares (cost $365,095)		396,663
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A (AlVPGrIncA) 39,088 shares (cost $945,039)		1,062,792
AllianceBernstein Variable Products Series Fund, Inc. – Small-Mid Cap Value Portfolio – Class A (AlVPSmMdCpA) 67,661 shares (cost $1,101,802)		1,223,308
American Century Variable Portfolios, Inc. – Balanced Fund – Class I (ACVPBal) 666,538 shares (cost $4,258,083)		5,019,033
American Century Variable Portfolios, Inc. – Capital Appreciation Fund – Class I (ACVPCapAp) 1,316,687 shares (cost $10,205,076)		14,430,891
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I (ACVPIncGr) 431,476 shares (cost $2,691,752)		3,723,641
American Century Variable Portfolios, Inc. – Inflation Protection Fund – Class II (ACVPInfPro2) 85,676 shares (cost $889,641)		863,616
American Century Variable Portfolios, Inc. – International Fund – Class I (ACVPInt) 1,008,588 shares (cost $6,005,764)		10,206,914
American Century Variable Portfolios, Inc. – International Fund – Class III (ACVPInt3) 218,008 shares (cost $1,910,469)		2,206,244
American Century Variable Portfolios, Inc. – Mid Cap Value Fund – Class I (ACVPMdCpV) 49,938 shares (cost $663,299)		673,667
American Century Variable Portfolios, Inc. – Ultra®Fund – Class I (ACVPUltra) 53,665 shares (cost $542,117)		538,799
American Century Variable Portfolios, Inc. – Value Fund – Class I (ACVPVal) 1,678,985 shares (cost $12,814,521)		14,674,330
American Century Variable Portfolios, Inc. – VistaSM Fund – Class I (ACVPVista) 2,602 shares (cost $39,863)		40,960
Credit Suisse Trust – Global Small Cap Portfolio (CSTGlSmCp) 63,972 shares (cost $791,226)		937,831
Credit Suisse Trust – International Focus Portfolio (CSTIntFoc) 555,598 shares (cost $5,120,406)		7,633,917
Credit Suisse Trust – Small Cap Growth Portfolio (CSTSmCapGr) 728,392 shares (cost $8,700,087)		11,362,920
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap) 115,534 shares (cost $1,864,006)		2,147,771
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The (DrySRGro) 304,269 shares (cost $9,774,597)		8,656,446
Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx) 2,112,146 shares (cost $63,900,585)		76,354,090
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares (DryVIApp) 144,152 shares (cost $4,808,595)		6,133,683

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares (DryVIFDevLd) 8,873 shares (cost $364,235)	$	372,946
Dreyfus Variable Investment Fund – Growth and Income Portfolio – Initial Shares (DryVIFGrInc) 93,352 shares (cost $1,789,634)		2,314,188
Federated Insurance Series – Federated American Leaders Fund II – Primary Shares (FedAmLead) 9,409 shares (cost $183,178)		202,765
Federated Insurance Series – Federated Capital Appreciation Fund II – Primary Shares (FedCapAp) 1,396 shares (cost $8,375)		9,462
Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares (FedQualBd) 120,509 shares (cost $1,356,053)		1,360,552
Fidelity®Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class (FidVIPEI) 3,029,296 shares (cost $69,983,059)		79,367,560
Fidelity®Variable Insurance Products Fund – Growth Portfolio – Initial Class (FidVIPGr) 2,196,186 shares (cost $95,192,474)		78,777,184
Fidelity®Variable Insurance Products Fund – High Income Portfolio – Initial Class (FidVIPHI) 3,142,892 shares (cost $20,336,216)		19,957,367
Fidelity®Variable Insurance Products Fund – Overseas Portfolio – Initial Class (FidVIPOv) 721,060 shares (cost $9,200,409)		17,283,816
Fidelity®Variable Insurance Products Fund – Overseas Portfolio – Service Class R (FidVIPOvSR) 216,467 shares (cost $4,428,554)		5,158,415
Fidelity®Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class (FidVIPAM) 1,291,367 shares (cost $19,627,784)		20,287,377
Fidelity®Variable Insurance Products Fund II – Contrafund®Portfolio – Initial Class (FidVIPCon) 2,252,980 shares (cost $56,211,316)		70,901,272
Fidelity®Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class (FidVIPIGBdS) 266,583 shares (cost $3,316,867)		3,380,269
Fidelity®Variable Insurance Products Fund III – Growth Opportunities Portfolio – Initial Class (FidVIPGrOp) 218,126 shares (cost $3,184,661)		3,961,161
Fidelity®Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class (FidVIPMCapS) 274,034 shares (cost $8,671,117)		9,478,821
Fidelity®Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class (FidVIPVaIS) 124,032 shares (cost $1,521,159)		1,664,511
Fidelity®Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2 (FidVIPEnergyS2) 209,627 shares (cost $4,275,001)		3,978,714
Fidelity®Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio – Service Class (FidVIPFree10S) 20,103 shares (cost $227,510)		232,791
Fidelity®Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio – Service Class (FidVIPFree20S) 29,840 shares (cost $323,526)		360,766
Fidelity®Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio – Service Class (FidVIPFree30S) 29,379 shares (cost $361,876)		365,473
Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund – Class 2 (FrVIPIncSec2) 18,885 shares (cost $312,460)		327,848
Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund – Class 1 (FrVIPRisDiv) 214,186 shares (cost $3,820,625)		4,472,194
Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 1 (FrVIPSmCapV1) 182,003 shares (cost $3,079,449)		3,470,797

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Franklin Templeton Variable Insurance Products Trust – Templeton Developing Markets Securities Fund – Class 3 (FrVIPDevMrk3) 120,657 shares (cost $1,432,961)	$	1,662,655
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1 (FrVIPForSec) 59,150 shares (cost $833,264)		1,123,267
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 3 (FrVIPForSec3) 86,107 shares (cost $1,417,009)		1,608,483
Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund – Class 3 (FrVIPGlInc3) 24,857 shares (cost $373,789)		385,034
Gartmore GVIT – American Funds GVIT Asset Allocation Fund – Class II (GVITAstAll2) 20,169 shares (cost $367,271)		374,744
Gartmore GVIT – American Funds GVIT Bond Fund – Class II (GVITBnd2) 30,594 shares (cost $348,295)		358,558
Gartmore GVIT – American Funds GVIT Global Growth Fund – Class II (GVITGlobGr2) 38,134 shares (cost $859,303)		890,434
Gartmore GVIT – American Funds GVIT Growth Fund – Class II (GVITGrowth2) 9,974 shares (cost $622,171)		646,542
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I (GVITIntValI) 47,128 shares (cost $728,557)		875,634
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class III (GVITIntVal3) 115,685 shares (cost $1,953,752)		2,143,644
Gartmore GVIT – Emerging Markets Fund – Class I (GVITEmMrkts) 132,246 shares (cost $1,651,291)		2,316,941
Gartmore GVIT – Emerging Markets Fund – Class III (GVITEmMrkts3) 161,904 shares (cost $2,378,653)		2,834,944
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I (GVITFHiInc) 32,202 shares (cost $254,153)		256,973
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class III (GVITFHiInc3) 38,437 shares (cost $302,775)		306,344
Gartmore GVIT – Global Financial Services Fund – Class I (GVITGlFin) 68,262 shares (cost $893,140)		904,475
Gartmore GVIT – Global Health Sciences Fund – Class I (GVITGlHlth) 41,464 shares (cost $442,577)		440,345
Gartmore GVIT – Global Health Sciences Fund – Class III (GVITGlHlth3) 38,428 shares (cost $408,070)		408,875
Gartmore GVIT – Global Technology and Communications Fund – Class I (GVITGlTech) 115,421 shares (cost $409,544)		494,001
Gartmore GVIT – Global Technology and Communications Fund – Class III (GVITGlTech3) 64,834 shares (cost $257,290)		279,436
Gartmore GVIT – Global Utilities Fund – Class I (GVITGlUtl) 193,166 shares (cost $2,245,855)		2,478,320
Gartmore GVIT – Government Bond Fund – Class I (GVITGvtBd) 977,237 shares (cost $11,659,729)		11,091,645
Gartmore GVIT – Growth Fund: Class I (GVITGrowth) 1,347,382 shares (cost $18,710,707)		16,370,687
Gartmore GVIT – International Growth Fund – Class I (GVITIntGro) 180,044 shares (cost $1,859,653)		2,173,125

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Gartmore GVIT – International Index Fund – Class VI (GVITIntIdx6) 1,596 shares (cost $14,954)	$	17,252
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II (GVITIDAgg2) 214,095 shares (cost $2,601,515)		2,892,419
Gartmore GVIT – Investor Destinations Conservative Fund – Class II (GVITIDCon2) 42,425 shares (cost $439,367)		444,189
Gartmore GVIT – Investor Destinations Moderate Fund – Class II (GVITIDMod2) 642,072 shares (cost $7,192,815)		7,884,646
Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II (GVITIDModAg2) 526,585 shares (cost $6,032,536)		6,898,268
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II (GVITIDModCon2) 235,699 shares (cost $2,528,591)		2,675,183
Gartmore GVIT – Mid Cap Growth Fund – Class I (GVITMdCpGr) 48,836 shares (cost $1,197,359)		1,457,265
Gartmore GVIT – Mid Cap Index Fund – Class I (GVITMdCpIdx) 387,869 shares (cost $6,075,273)		7,210,476
Gartmore GVIT – Money Market Fund – Class I (GVITMyMkt) 28,462,809 shares (cost $28,462,809)		28,462,809
Gartmore GVIT – Nationwide® Fund – Class I (GVITNWFund) 5,838,352 shares (cost $79,401,527)		77,766,847
Gartmore GVIT – Nationwide® Leaders Fund – Class I (GVITNWLead) 37,941 shares (cost $507,340)		521,314
Gartmore GVIT – Small Cap Growth Fund – Class I (GVITSmCapGr) 86,083 shares (cost $1,430,922)		1,412,625
Gartmore GVIT – Small Cap Value Fund – Class I (GVITSmCapVal) 966,319 shares (cost $11,854,028)		12,030,666
Gartmore GVIT – Small Company Fund – Class I (GVITSmComp) 1,208,785 shares (cost $24,849,856)		30,207,540
Gartmore GVIT – U.S. Growth Leaders Fund – Class I (GVITUSGro) 73,425 shares (cost $825,968)		773,904
Gartmore GVIT – Van Kampen GGVIT Comstock Value Fund: Class I (GVITVKVal) 81,740 shares (cost $948,781)		1,025,020
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I (GVITMltSec) 149,650 shares (cost $1,481,493)		1,468,070
Janus Aspen Series – Balanced Portfolio – Service Shares (JanBal) 9,434 shares (cost $239,043)		271,969
Janus Aspen Series – Forty Portfolio – Service Shares (JanForty) 83,159 shares (cost $1,979,510)		2,487,290
Janus Aspen Series – Global Technology Portfolio – Service Shares (JanGlTech) 251,210 shares (cost $897,864)		1,072,667
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JanRMgCore) 15,565 shares (cost $197,588)		197,670
Janus Aspen Series – International Growth Portfolio – Service II Shares (JanIntGroS2) 57,043 shares (cost $2,555,287)		2,897,765
Janus Aspen Series – International Growth Portfolio – Service Shares (JanIntGroS) 103,313 shares (cost $3,902,092)		5,228,674
MFS®Variable Insurance Trust – Investors Growth Stock Series – Initial Class (MFSInvGrStl) 26,711 shares (cost $247,496)		284,468
MFS®Variable Insurance Trust – Value Series – Initial Class (MFSValueI) 64,836 shares (cost $836,955)		941,412

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Neuberger Berman Advisers Management Trust – Balanced Portfolio®– I Class Shares (NBAMTBal) 3,566 shares (cost $34,991)	$	40,791
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S (NBAMTFasc) 6,314 shares (cost $89,474)		91,747
Neuberger Berman Advisers Management Trust – Growth Portfolio®– Class I (NBAMTGro) 1,121,615 shares (cost $11,008,995)		17,643,010
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares (NBAMTGuard) 103,199 shares (cost $1,475,525)		2,034,060
Neuberger Berman Advisers Management Trust – International Portfolio – Class S (NBAMTInt) 22,711 shares (cost $289,361)		324,541
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I (NBAMTLMat) 295,850 shares (cost $3,881,596)		3,775,045
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio®– S Class Shares (NBAMTMCGrS) 22,965 shares (cost $503,839)		528,661
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I (NBAMTPart) 1,298,011 shares (cost $21,051,798)		27,465,907
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S (NBAMTRegS) 9,841 shares (cost $168,813)		170,739
Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio®– Class I (NBAMTSocRes) 25,744 shares (cost $384,358)		430,182
Oppenheimer Global Securities Fund/VA – Class 3 (OppGlSec3) 182,282 shares (cost $5,927,823)		6,742,613
Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA – Non-Service Shares (OppBal) 776,399 shares (cost $11,964,760)		13,734,501
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares (OppCapAp) 269,346 shares (cost $8,402,260)		11,159,011
Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA – Non-Service Shares (OppBdFd) 1,026,060 shares (cost $11,220,181)		11,450,827
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares (OppGlSec) 974,519 shares (cost $22,325,848)		35,852,551
Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA – Non-Service Shares (OppHighInc) 77,683 shares (cost $639,448)		664,190
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares (OppMSt) 97,089 shares (cost $2,064,792)		2,405,864
Oppenheimer Variable Account Funds – Oppenheimer Main Street Small Cap Fund®/VA – Non-Service Shares (OppMStSCap) 59,159 shares (cost $1,074,750)		1,132,892
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares (OppMidCap) 31,048 shares (cost $1,419,137)		1,578,775
Putnam Variable Trust – Putnam VT Growth and Income Fund – IB Shares (PVTGroIncIB) 3,944 shares (cost $102,728)		115,802
Putnam Variable Trust – Putnam VT International Equity Fund – IB Shares (PVTIntEqIB) 17,953 shares (cost $310,029)		370,556
Putnam Variable Trust – Putnam VT Voyager II Fund – IB Shares (PVTVoyIB) 2,690 shares (cost $73,566)		80,880
T. Rowe Price Blue Chip Growth Portfolio – II (TRoeBlChip2) 34,221 shares (cost $331,539)		356,236

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

T. Rowe Price Equity Income Portfolio – II (TRowEqInc2) 51,984 shares (cost $1,215,698)	$	1,289,206
T. Rowe Price Limited Term Bond Portfolio – Class II (TRowLtdTBd2) 12,653 shares (cost $61,749)		61,998
Van Eck Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class (VEWrldBd) 241,448 shares (cost $2,936,060)		2,844,253
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class (VEWrldEMkt) 451,765 shares (cost $7,487,742)		11,285,079
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class (VEWrldHAs) 339,584 shares (cost $8,320,452)		11,107,779
Van Kampen – The Universal Institutional Funds, Inc. – Core Plus Fixed Income Portfolio – Class I (VKCorPlus) 29,974 shares (cost $340,874)		341,699
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I (VKEmMkt) 278,214 shares (cost $2,417,665)		2,481,666
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I (VKUSRealEst) 915,134 shares (cost $17,157,882)		26,868,339
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Discovery FundSM (WFAVTDisc) 497,374 shares (cost $5,724,963)		8,176,821
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM (WFAVTOpp) 1,406,424 shares (cost $27,447,485)		33,782,310
Total Investments		980,710,041
Accounts Receivable		117,079
Total Assets		980,827,120
Accounts Payable		–
Contract Owners Equity (note 7)	$	980,827,120

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS

Year Ended December 31, 2006

Investment activity:	Total			AIMBValue		AIMCapAp		AIMCapDev		AlVPGrIncA		AlVPSmMdCpA		ACVPBal		ACVPCapAp
Reinvested dividends	$	14,468,362		4,993		38		–		14,544		4,267		102,495		–
Mortality and expense risk charges (note 3)		(6,009,785	)	(5,333	)	(556	)	(2,227	)	(4,996	)	(6,492	)	(33,913	)	(96,111	)
Net investment income (loss)		8,458,577		(340	)	(518	)	(2,227	)	9,548		(2,225	)	68,582		(96,111	)
Proceeds from mutual fund shares sold		199,375,412		220,337		118,454		194,886		365,349		210,615		1,041,011		2,706,296
Cost of mutual fund shares sold		(183,704,607	)	(185,359	)	(109,130	)	(150,334	)	(329,773	)	(179,810	)	(1,006,846	)	(2,375,405	)
Realized gain (loss) on investments		15,670,805		34,978		9,324		44,552		35,576		30,805		34,165		330,891
Change in unrealized gain (loss) on investments		59,883,124		26,733		(2,526	)	(2,722	)	53,118		46,899		7,456		1,928,710
Net gain (loss) on investments		75,553,929		61,711		6,798		41,830		88,694		77,704		41,621		2,259,601
Reinvested capital gains		33,553,421		55,210		–		6,748		52,880		70,543		343,547		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	117,565,927		116,581		6,280		46,351		151,122		146,022		453,750		2,163,490
Investment activity:	ACVPIncGr			ACVPInfPro2		ACVPInt		ACVPInt3		ACVPMdCpV		ACVPUltra		ACVPVal		ACVPVista
Reinvested dividends	$	65,864		30,524		166,349		22,598		4,085		–		186,669		–
Mortality and expense risk charges (note 3)		(21,633	)	(5,337	)	(64,871	)	(11,439	)	(1,547	)	(3,185	)	(82,201	)	(260	)
Net investment income (loss)		44,231		25,187		101,478		11,159		2,538		(3,185	)	104,468		(260	)
Proceeds from mutual fund shares sold		771,736		573,803		2,128,641		2,037,877		650,831		360,003		2,986,585		12,741
Cost of mutual fund shares sold		(516,723	)	(582,501	)	(1,274,215	)	(1,770,759	)	(630,458	)	(346,066	)	(2,297,986	)	(12,022	)
Realized gain (loss) on investments		255,013		(8,698	)	854,426		267,118		20,373		13,937		688,599		719
Change in unrealized gain (loss) on investments		243,170		(8,024	)	1,225,587		148,652		10,804		(32,309	)	242,399		1,061
Net gain (loss) on investments		498,183		(16,722	)	2,080,013		415,770		31,177		(18,372	)	930,998		1,780
Reinvested capital gains		–		–		–		–		18,160		–		1,177,539		117
Net increase (decrease) in contract owners’ equity resulting from operations	$	542,414		8,465		2,181,491		426,929		51,875		(21,557	)	2,213,005		1,637

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	CSTGlSmCp			CSTIntFoc		CSTSmCapGr		DryIPSmCap		DrySRGro		DryStkIx		DryVIApp		DryVIFDevLd
Reinvested dividends	$	–		77,469		–		7,705		9,164		1,253,956		87,814		1,804
Mortality and expense risk charges (note 3)		(6,024	)	(46,088	)	(78,172	)	(12,088	)	(58,468	)	(464,424	)	(38,996	)	(2,515	)
Net investment income (loss)		(6,024	)	31,381		(78,172	)	(4,383	)	(49,304	)	789,532		48,818		(711	)
Proceeds from mutual fund shares sold		518,708		1,634,121		2,547,846		724,052		1,016,183		12,081,733		1,518,836		158,814
Cost of mutual fund shares sold		(379,982	)	(1,121,061	)	(1,551,599	)	(554,996	)	(1,452,024	)	(12,711,464	)	(1,083,489	)	(154,438	)
Realized gain (loss) on investments		138,726		513,060		996,247		169,056		(435,841	)	(629,731	)	435,347		4,376
Change in unrealized gain (loss) on investments		(20,240	)	651,016		(366,875	)	45,191		1,181,954		10,398,460		398,055		(33,937	)
Net gain (loss) on investments		118,486		1,164,076		629,372		214,247		746,113		9,768,729		833,402		(29,561	)
Reinvested capital gains		–		–		–		43,700		–		–		–		37,304
Net increase (decrease) in contract owners’ equity resulting from operations	$	112,462		1,195,457		551,200		253,564		696,809		10,558,261		882,220		7,032
Investment activity:	DryVIFGrInc			FedAmLead		FedCapAp		FedQualBd		FidVIPEI		FidVIPGr		FidVIPHI		FidVIPOv
Reinvested dividends	$	16,984		2,717		207		45,766		2,498,427		325,352		1,498,959		153,501
Mortality and expense risk charges (note 3)		(13,398	)	(1,066	)	(161	)	(8,691	)	(479,753	)	(536,301	)	(118,144	)	(102,092	)
Net investment income (loss)		3,586		1,651		46		37,075		2,018,674		(210,949	)	1,380,815		51,409
Proceeds from mutual fund shares sold		446,591		21,746		25,904		406,894		9,490,482		12,797,635		5,351,241		3,215,579
Cost of mutual fund shares sold		(445,482	)	(21,820	)	(20,527	)	(431,839	)	(9,866,748	)	(16,183,043	)	(5,653,906	)	(1,727,485	)
Realized gain (loss) on investments		1,109		(74	)	5,377		(24,945	)	(376,266	)	(3,385,408	)	(302,665	)	1,488,094
Change in unrealized gain (loss) on investments		285,427		3,883		(973	)	38,596		2,830,737		8,485,090		869,670		1,075,141
Net gain (loss) on investments		286,536		3,809		4,404		13,651		2,454,471		5,099,682		567,005		2,563,235
Reinvested capital gains		–		22,481		–		–		9,044,526		–		–		106,712
Net increase (decrease) in contract owners’ equity resulting from operations	$	290,122		27,941		4,450		50,726		13,517,671		4,888,733		1,947,820		2,721,356

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	FidVIPOvSR			FidVIPAM		FidVIPCon		FidVIPIGBdS		FidVIPGrOp		FidVIPMCapS		FidVIPVaIS		FidVIPEnergyS2
Reinvested dividends	$	32,669		568,944		897,367		99,587		27,244		22,593		5,476		23,719
Mortality and expense risk charges (note 3)		(23,968	)	(134,010	)	(448,686	)	(17,556	)	(25,301	)	(55,242	)	(7,613	)	(19,848	)
Net investment income (loss)		8,701		434,934		448,681		82,031		1,943		(32,649	)	(2,137	)	3,871
Proceeds from mutual fund shares sold		1,364,352		2,959,831		8,594,447		611,857		667,469		2,291,321		909,351		1,042,686
Cost of mutual fund shares sold		(1,037,803	)	(3,302,155	)	(6,696,627	)	(629,060	)	(552,879	)	(1,746,067	)	(978,924	)	(924,104	)
Realized gain (loss) on investments		326,549		(342,324	)	1,897,820		(17,203	)	114,590		545,254		(69,573	)	118,582
Change in unrealized gain (loss) on investments		353,098		1,259,086		(669,773	)	53,613		67,686		(603,741	)	102,652		(346,483	)
Net gain (loss) on investments		679,647		916,762		1,228,047		36,410		182,276		(58,487	)	33,079		(227,901	)
Reinvested capital gains		24,549		–		5,670,529		6,072		–		1,019,980		183,028		520,211
Net increase (decrease) in contract owners’ equity resulting from operations	$	712,897		1,351,696		7,347,257		124,513		184,219		928,844		213,970		296,181
Investment activity:	FidVIPFree10S			FidVIPFree20S		FidVIPFree30S		FrVIPIncSec2		FrVIPRisDiv		FrVIPSmCapV1		FrVIPDevMrk3		FrVIPForSec
Reinvested dividends	$	3,820		5,190		5,245		–		45,855		27,628		13,797		17,222
Mortality and expense risk charges (note 3)		(509	)	(1,764	)	(563	)	(389	)	(22,630	)	(21,096	)	(6,747	)	(6,968	)
Net investment income (loss)		3,311		3,426		4,682		(389	)	23,225		6,532		7,050		10,254
Proceeds from mutual fund shares sold		44,140		18,141		2,639		13,324		536,950		1,132,592		467,238		503,936
Cost of mutual fund shares sold		(41,260	)	(15,934	)	(2,283	)	(12,314	)	(457,505	)	(880,352	)	(372,427	)	(373,863	)
Realized gain (loss) on investments		2,880		2,207		356		1,010		79,445		252,240		94,811		130,073
Change in unrealized gain (loss) on investments		3,962		23,797		3,034		15,388		452,466		116,649		160,456		90,707
Net gain (loss) on investments		6,842		26,004		3,390		16,398		531,911		368,889		255,267		220,780
Reinvested capital gains		984		3,207		3,726		–		18,463		116,222		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	11,137		32,637		11,798		16,009		573,599		491,643		262,317		231,034

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	FrVIPForSec3			FrVIPGlInc3		GVITAstAll2		GVITBnd2		GVITGlobGr2		GVITGrowth2		GVITIntValI		GVITIntVal3
Reinvested dividends	$	15,388		4,561		6,188		89		165		3,781		20,157		27,303
Mortality and expense risk charges (note 3)		(5,032	)	(1,164	)	(464	)	(711	)	(705	)	(983	)	(5,798	)	(7,425	)
Net investment income (loss)		10,356		3,397		5,724		(622	)	(540	)	2,798		14,359		19,878
Proceeds from mutual fund shares sold		267,893		133,267		11,842		1,228		36,462		55,324		368,707		390,719
Cost of mutual fund shares sold		(222,830	)	(126,314	)	(11,257	)	(1,216	)	(36,242	)	(57,750	)	(295,944	)	(341,751	)
Realized gain (loss) on investments		45,063		6,953		585		12		220		(2,426	)	72,763		48,968
Change in unrealized gain (loss) on investments		154,011		11,113		7,473		10,263		31,132		24,372		42,289		119,180
Net gain (loss) on investments		199,074		18,066		8,058		10,275		31,352		21,946		115,052		168,148
Reinvested capital gains		–		–		–		–		–		–		63,340		87,625
Net increase (decrease) in contract owners’ equity resulting from operations	$	209,430		21,463		13,782		9,653		30,812		24,744		192,751		275,651
Investment activity:	GVITEmMrkts			GVITEmMrkts3		GVITFHiInc		GVITFHiInc3		GVITGlFin		GVITGlHlth		GVITGlHlth3		GVITGlTech
Reinvested dividends	$	16,981		19,231		21,650		20,415		15,004		–		–		–
Mortality and expense risk charges (note 3)		(16,577	)	(13,757	)	(1,444	)	(1,486	)	(5,641	)	(4,417	)	(3,035	)	(3,449	)
Net investment income (loss)		404		5,474		20,206		18,929		9,363		(4,417	)	(3,035	)	(3,449	)
Proceeds from mutual fund shares sold		1,241,357		1,464,717		119,901		670,551		309,409		427,216		325,832		207,959
Cost of mutual fund shares sold		(893,917	)	(1,252,811	)	(119,899	)	(677,199	)	(285,651	)	(420,810	)	(344,860	)	(184,217	)
Realized gain (loss) on investments		347,440		211,906		2		(6,648	)	23,758		6,406		(19,028	)	23,742
Change in unrealized gain (loss) on investments		331,985		421,457		8,965		7,599		5,779		7,171		32,536		29,036
Net gain (loss) on investments		679,425		633,363		8,967		951		29,537		13,577		13,508		52,778
Reinvested capital gains		25,537		30,546		–		–		102,103		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	705,366		669,383		29,173		19,880		141,003		9,160		10,473		49,329

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	GVITGlTech3			GVITGlUtl		GVITGvtBd		GVITGrowth		GVITIntGro		GVITIntIdx6		GVITIDAgg2		GVITIDCon2
Reinvested dividends	$	–		45,372		467,138		8,454		10,336		167		50,493		14,033
Mortality and expense risk charges (note 3)		(2,004	)	(10,731	)	(72,144	)	(110,406	)	(9,296	)	(52	)	(15,289	)	(3,603	)
Net investment income (loss)		(2,004	)	34,641		394,994		(101,952	)	1,040		115		35,204		10,430
Proceeds from mutual fund shares sold		355,538		600,876		1,969,467		1,755,369		949,974		227		560,367		315,638
Cost of mutual fund shares sold		(334,262	)	(615,093	)	(2,120,549	)	(4,115,448	)	(780,531	)	(235	)	(467,030	)	(314,250	)
Realized gain (loss) on investments		21,276		(14,217	)	(151,082	)	(2,360,079	)	169,443		(8	)	93,337		1,388
Change in unrealized gain (loss) on investments		5,799		390,133		(31,557	)	3,319,647		227,862		2,298		186,054		7,780
Net gain (loss) on investments		27,075		375,916		(182,639	)	959,568		397,305		2,290		279,391		9,168
Reinvested capital gains		–		132,217		89,332		–		1,912		–		33,920		4,883
Net increase (decrease) in contract owners’ equity resulting from operations	$	25,071		542,774		301,687		857,616		400,257		2,405		348,515		24,481
Investment activity:	GVITIDMod2			GVITIDModAg2		GVITIDModCon2		GVITMdCpGr		GVITMdCpIdx		GVITMyMkt		GVITNWFund		GVITNWLead
Reinvested dividends	$	163,834		133,545		70,891		–		82,720		1,246,049		810,177		4,583
Mortality and expense risk charges (note 3)		(38,980	)	(39,016	)	(22,802	)	(8,447	)	(42,952	)	(173,760	)	(506,252	)	(2,710	)
Net investment income (loss)		124,854		94,529		48,089		(8,447	)	39,768		1,072,289		303,925		1,873
Proceeds from mutual fund shares sold		1,025,229		844,638		302,953		363,390		1,567,096		27,301,953		7,311,226		506,095
Cost of mutual fund shares sold		(809,667	)	(639,642	)	(287,588	)	(284,833	)	(1,044,781	)	(27,301,953	)	(10,719,293	)	(529,654	)
Realized gain (loss) on investments		215,562		204,996		15,365		78,557		522,315		–		(3,408,067	)	(23,559	)
Change in unrealized gain (loss) on investments		271,956		406,666		87,209		53,734		(36,528	)	–		12,236,368		43,954
Net gain (loss) on investments		487,518		611,662		102,574		132,291		485,787		–		8,828,301		20,395
Reinvested capital gains		57,432		71,094		34,355		–		103,301		–		–		39,071
Net increase (decrease) in contract owners’ equity resulting from operations	$	669,804		777,285		185,018		123,844		628,856		1,072,289		9,132,226		61,339

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	GVITSmCapGr			GVITSmCapVal		GVITSmComp		GVITUSGro		GVITVKVal		GVITMltSec		JanBal		JanForty
Reinvested dividends	$	–		53,610		32,717		2,140		15,642		53,926		4,869		3,536
Mortality and expense risk charges (note 3)		(8,928	)	(72,468	)	(188,644	)	(5,205	)	(5,176	)	(7,366	)	(1,265	)	(15,610	)
Net investment income (loss)		(8,928	)	(18,858	)	(155,927	)	(3,065	)	10,466		46,560		3,604		(12,074	)
Proceeds from mutual fund shares sold		1,164,442		5,649,639		4,119,832		536,405		229,758		259,251		26,787		771,619
Cost of mutual fund shares sold		(987,742	)	(4,969,087	)	(3,345,262	)	(529,487	)	(201,132	)	(261,671	)	(22,873	)	(555,436	)
Realized gain (loss) on investments		176,700		680,552		774,570		6,918		28,626		(2,420	)	3,914		216,183
Change in unrealized gain (loss) on investments		(152,111	)	386,882		2,061,580		(24,714	)	47,073		2,462		16,786		(7,039	)
Net gain (loss) on investments		24,589		1,067,434		2,836,150		(17,796	)	75,699		42		20,700		209,144
Reinvested capital gains		–		911,820		580,447		13,100		42,502		2,816		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	15,661		1,960,396		3,260,670		(7,761	)	128,667		49,418		24,304		197,070
Investment activity:	JanGlTech			JanRMgCore		JanIntGroS2		JanIntGroS		MFSInvGrStl		MFSValueI		NBAMTBal		NBAMTFasc
Reinvested dividends	$	–		217		24,818		89,622		–		4,334		314		–
Mortality and expense risk charges (note 3)		(6,855	)	(1,172	)	(4,404	)	(31,238	)	(1,862	)	(3,097	)	(293	)	(548	)
Net investment income (loss)		(6,855	)	(955	)	20,414		58,384		(1,862	)	1,237		21		(548	)
Proceeds from mutual fund shares sold		432,926		243,782		62,734		2,040,527		82,432		66,414		15,604		81,430
Cost of mutual fund shares sold		(266,266	)	(254,324	)	(63,813	)	(1,053,150	)	(69,831	)	(55,350	)	(12,171	)	(72,767	)
Realized gain (loss) on investments		166,660		(10,542	)	(1,079	)	987,377		12,601		11,064		3,433		8,663
Change in unrealized gain (loss) on investments		(79,000	)	19,487		342,478		536,030		10,130		82,597		565		(5,402	)
Net gain (loss) on investments		87,660		8,945		341,399		1,523,407		22,731		93,661		3,998		3,261
Reinvested capital gains		–		14,511		–		–		–		12,250		–		2,187
Net increase (decrease) in contract owners’ equity resulting from operations	$	80,805		22,501		361,813		1,581,791		20,869		107,148		4,019		4,900

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	NBAMTGro			NBAMTGuard		NBAMTInt		NBAMTLMat		NBAMTMCGrS		NBAMTPart		NBAMTRegS		NBAMTSocRes
Reinvested dividends	$	–		12,887		607		120,928		–		193,909		715		516
Mortality and expense risk charges (note 3)		(113,010	)	(11,375	)	(1,594	)	(23,359	)	(3,800	)	(158,219	)	(635	)	(1,852	)
Net investment income (loss)		(113,010	)	1,512		(987	)	97,569		(3,800	)	35,690		80		(1,336	)
Proceeds from mutual fund shares sold		1,922,094		321,663		1,362,485		859,022		858,740		4,493,426		93,992		61,108
Cost of mutual fund shares sold		(977,133	)	(220,137	)	(1,292,281	)	(909,823	)	(787,140	)	(3,324,783	)	(90,072	)	(54,499	)
Realized gain (loss) on investments		944,961		101,526		70,204		(50,801	)	71,600		1,168,643		3,920		6,609
Change in unrealized gain (loss) on investments		1,330,092		130,653		(8,136	)	91,438		(7,589	)	(1,230,740	)	(1,287	)	34,903
Net gain (loss) on investments		2,275,053		232,179		62,068		40,637		64,011		(62,097	)	2,633		41,512
Reinvested capital gains		–		–		2,236		–		–		2,986,619		9,918		3,663
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,162,043		233,691		63,317		138,206		60,211		2,960,212		12,631		43,839
Investment activity:	OppGlSec3			OppBal		OppCapAp		OppBdFd		OppGlSec		OppHighInc		OppMSt		OppMStSCap
Reinvested dividends	$	40,764		295,771		44,700		586,110		367,710		43,461		22,275		1,294
Mortality and expense risk charges (note 3)		(31,267	)	(89,995	)	(75,493	)	(68,130	)	(225,108	)	(3,152	)	(10,495	)	(6,149	)
Net investment income (loss)		9,497		205,776		(30,793	)	517,980		142,602		40,309		11,780		(4,855	)
Proceeds from mutual fund shares sold		445,501		2,020,900		2,969,097		1,374,960		6,024,280		223,540		441,393		758,524
Cost of mutual fund shares sold		(353,682	)	(1,979,222	)	(2,074,454	)	(1,436,388	)	(3,930,068	)	(228,616	)	(368,960	)	(656,248	)
Realized gain (loss) on investments		91,819		41,678		894,643		(61,428	)	2,094,212		(5,076	)	72,433		102,276
Change in unrealized gain (loss) on investments		528,285		486,525		(18,989	)	59,204		1,394,466		17,994		185,311		(29,831	)
Net gain (loss) on investments		620,104		528,203		875,654		(2,224	)	3,488,678		12,918		257,744		72,445
Reinvested capital gains		213,406		650,195		–		–		1,920,739		–		–		25,550
Net increase (decrease) in contract owners’ equity resulting from operations	$	843,007		1,384,174		844,861		515,756		5,552,019		53,227		269,524		93,140

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2006

Investment activity:	OppMidCap			PVTGroIncIB		PVTIntEqIB		PVTVoyIB		TRoeBlChip2		TRowEqInc2		TRowLtdTBd2		VEWrldBd
Reinvested dividends	$	–		1,461		1,227		115		657		10,330		1,900		250,734
Mortality and expense risk charges (note 3)		(12,067	)	(754	)	(1,911	)	(366	)	(1,427	)	(3,731	)	(372	)	(20,030	)
Net investment income (loss)		(12,067	)	707		(684	)	(251	)	(770	)	6,599		1,528		230,704
Proceeds from mutual fund shares sold		599,398		136,581		215,518		34,097		470,226		143,632		3,516		771,049
Cost of mutual fund shares sold		(474,190	)	(127,184	)	(185,674	)	(30,773	)	(462,614	)	(142,530	)	(3,570	)	(835,464	)
Realized gain (loss) on investments		125,208		9,397		29,844		3,324		7,612		1,102		(54	)	(64,415	)
Change in unrealized gain (loss) on investments		(71,606	)	6,494		37,078		1,141		23,688		82,943		312		(4,075	)
Net gain (loss) on investments		53,602		15,891		66,922		4,465		31,300		84,045		258		(68,490	)
Reinvested capital gains		–		2,275		–		–		–		30,539		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	41,535		18,873		66,238		4,214		30,530		121,183		1,786		162,214
Investment activity:	VEWrldEMkt			VEWrldHAs		VKCorPlus		VKEmMkt		VKUSRealEst		WFAVTDisc		WFAVTOpp
Reinvested dividends	$	59,674		7,549		14,379		196,395		249,237		–		–
Mortality and expense risk charges (note 3)		(58,390	)	(72,840	)	(2,445	)	(13,154	)	(148,471	)	(50,456	)	(215,703	)
Net investment income (loss)		1,284		(65,291	)	11,934		183,241		100,766		(50,456	)	(215,703	)
Proceeds from mutual fund shares sold		2,986,468		4,677,310		248,056		1,109,051		3,709,401		1,127,290		3,871,288
Cost of mutual fund shares sold		(1,349,006	)	(2,228,416	)	(252,940	)	(1,061,010	)	(1,730,291	)	(757,520	)	(3,871,233	)
Realized gain (loss) on investments		1,637,462		2,448,894		(4,884	)	48,041		1,979,110		369,770		55
Change in unrealized gain (loss) on investments		639,534		(885,664	)	277		(46,208	)	3,692,843		714,074		263,654
Net gain (loss) on investments		2,276,996		1,563,230		(4,607	)	1,833		5,671,953		1,083,844		263,709
Reinvested capital gains		939,523		642,387		1,911		42,664		1,496,337		–		3,582,720
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,217,803		2,140,326		9,238		227,738		7,269,056		1,033,388		3,630,726

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2006 and 2005

	Total					AIMBValue				AIMCapAp				AIMCapDev
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	8,458,577		6,756,450		(340	)	(4,391	)	(518	)	(965	)	(2,227	)	(1,518	)
Realized gain (loss) on investments		15,670,805		5,802,397		34,978		10,911		9,324		5,870		44,552		14,662
Change in unrealized gain (loss) on investments		59,883,124		44,234,328		26,733		23,967		(2,526	)	787		(2,722	)	9,434
Reinvested capital gains		33,553,421		13,179,108		55,210		8,914		–		–		6,748		–
Net increase (decrease) in contract owners’ equity resulting from operations		117,565,927		69,972,283		116,581		39,401		6,280		5,692		46,351		22,578
Equity transactions:
Purchase payments received from contract owners (note 6)		57,002,649		63,121,158		53,182		88,640		1,925		6,876		20,007		20,052
Transfers between funds		–		–		423,535		62,224		(18,532	)	17,342		113,190		(14,078	)
Surrenders (note 6)		(69,702,501	)	(69,500,794	)	(14,004	)	(29,194	)	(1,854	)	(994	)	(3,655	)	(10,546	)
Death benefits (note 4)		(5,384,769	)	(3,794,134	)	(1,660	)	(106	)	–		–		(821	)	–
Net policy repayments (loans) (note 5)		(3,089,028	)	898,160		(24,667	)	(3,764	)	31		10		(4,123	)	(306	)
Deductions for surrender charges (note 2d)		(622,220	)	(1,252,942	)	(22	)	(88	)	–		(118	)	(808	)	(62	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(44,413,062	)	(45,231,780	)	(30,050	)	(26,368	)	(4,257	)	(2,562	)	(16,711	)	(12,998	)
Asset charges (note 3):
MSP contracts		(424,218	)	(402,742	)	(19	)	(21	)	(35	)	(17	)	(72	)	(59	)
LSFP contracts		(461,922	)	(424,918	)	(118	)	(72	)	–		(5	)	(231	)	(200	)
Adjustments to maintain reserves		956,504		387,993		(26	)	43		18		6		22		(28	)
Net equity transactions		(66,138,567	)	(56,199,999	)	406,151		91,294		(22,704	)	20,538		106,798		(18,225	)
Net change in contract owners’ equity		51,427,360		13,772,284		522,732		130,695		(16,424	)	26,230		153,149		4,353
Contract owners’ equity beginning of period		929,399,760		915,627,476		801,432		670,737		84,630		58,400		243,600		239,247
Contract owners’ equity end of period	$	980,827,120		929,399,760		1,324,164		801,432		68,206		84,630		396,749		243,600
CHANGES IN UNITS:
Beginning units		40,704,624		39,381,106		53,106		46,810		5,992		4,476		15,036		16,082
Units purchased		10,587,187		15,006,946		32,232		30,105		2,692		1,956		10,145		2,056
Units redeemed		(12,097,075	)	(13,683,428	)	(7,508	)	(23,809	)	(4,122	)	(440	)	(4,079	)	(3,102	)
Ending units		39,194,736		40,704,624		77,830		53,106		4,562		5,992		21,102		15,036

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	AlVPGrIncA					AlVPSmMdCpA				ACVPBal				ACVPCapAp
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	9,548		11,560		(2,225	)	525		68,582		62,853		(96,111	)	(91,300	)
Realized gain (loss) on investments		35,576		49,864		30,805		31,534		34,165		(13,745	)	330,891		(133,799	)
Change in unrealized gain (loss) on investments		53,118		(18,971	)	46,899		(14,639	)	7,456		175,002		1,928,710		2,711,854
Reinvested capital gains		52,880		–		70,543		40,190		343,547		2,138		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		151,122		42,453		146,022		57,610		453,750		226,248		2,163,490		2,486,755
Equity transactions:
Purchase payments received from contract owners (note 6)		115,628		128,310		90,901		88,588		327,424		327,960		765,972		991,958
Transfers between funds		22,114		100,470		63,950		116,956		(442,403	)	(112,376	)	(211,697	)	188,038
Surrenders (note 6)		(103,010	)	(210,372	)	(31,726	)	(39,544	)	(394,033	)	(405,472	)	(1,198,454	)	(822,808	)
Death benefits (note 4)		–		–		–		(90	)	(12,437	)	(38,842	)	(165,926	)	(76,010	)
Net policy repayments (loans) (note 5)		(13,854	)	(178	)	(27,219	)	(17,086	)	(52,335	)	(52,262	)	(94,347	)	(39,198	)
Deductions for surrender charges (note 2d)		(1,956	)	(1,162	)	(1,877	)	(486	)	(3,701	)	(7,328	)	(3,610	)	(15,062	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(35,794	)	(39,592	)	(38,224	)	(35,760	)	(246,231	)	(262,706	)	(767,284	)	(726,550	)
Asset charges (note 3):
MSP contracts		(1,147	)	(1,148	)	(334	)	(421	)	(4,975	)	(5,102	)	(5,771	)	(4,938	)
LSFP contracts		(1,365	)	(1,076	)	(129	)	(184	)	(1,147	)	(1,530	)	(2,500	)	(2,442	)
Adjustments to maintain reserves		34		8		106		(93	)	822		(356	)	126,244		(21,392	)
Net equity transactions		(19,350	)	(24,740	)	55,448		111,880		(829,016	)	(558,014	)	(1,557,373	)	(528,404	)
Net change in contract owners’ equity		131,772		17,713		201,470		169,490		(375,266	)	(331,766	)	606,117		1,958,351
Contract owners’ equity beginning of period		931,146		913,433		1,021,977		852,487		5,394,717		5,726,483		13,951,842		11,993,491
Contract owners’ equity end of period	$	1,062,918		931,146		1,223,447		1,021,977		5,019,451		5,394,717		14,557,959		13,951,842
CHANGES IN UNITS:
Beginning units		64,958		66,458		59,044		52,384		264,940		263,900		720,786		658,094
Units purchased		13,974		21,716		14,297		29,959		27,737		107,087		104,513		348,294
Units redeemed		(15,516	)	(23,216	)	(11,257	)	(23,299	)	(67,379	)	(106,047	)	(217,569	)	(285,602	)
Ending units		63,416		64,958		62,084		59,044		225,298		264,940		607,730		720,786

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	ACVPIncGr					ACVPInfPro2				ACVPInt				ACVPInt3
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	44,231		49,261		25,187		39,757		101,478		57,173		11,159		(5,345	)
Realized gain (loss) on investments		255,013		247,573		(8,698	)	(2,530	)	854,426		430,674		267,118		38,748
Change in unrealized gain (loss) on investments		243,170		(159,572	)	(8,024	)	(28,790	)	1,225,587		631,256		148,652		147,123
Reinvested capital gains		–		–		–		568		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		542,414		137,262		8,465		9,005		2,181,491		1,119,103		426,929		180,526
Equity transactions:
Purchase payments received from contract owners (note 6)		137,970		189,444		35,285		66,570		10,447		243,198		565,664		444,582
Transfers between funds		(164,490	)	(113,836	)	(107,852	)	241,474		(861,287	)	(1,303,244	)	(106,353	)	907,628
Surrenders (note 6)		(308,975	)	(233,010	)	(180,674	)	(51,112	)	(581,619	)	(636,772	)	(220,922	)	(172,776	)
Death benefits (note 4)		(10,551	)	–		(316	)	–		(12,907	)	(11,794	)	(872	)	(236	)
Net policy repayments (loans) (note 5)		46,341		3,426		(24,236	)	(11,166	)	(124,163	)	(155,324	)	83,718		228,558
Deductions for surrender charges (note 2d)		(5,700	)	(4,528	)	(2,081	)	(138	)	(7,053	)	(14,894	)	(1,813	)	(344	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(148,138	)	(157,308	)	(38,167	)	(42,692	)	(374,063	)	(433,704	)	(91,911	)	(33,328	)
Asset charges (note 3):
MSP contracts		(2,367	)	(2,386	)	(873	)	(814	)	(2,785	)	(2,996	)	(731	)	(469	)
LSFP contracts		(977	)	(1,278	)	(474	)	(80	)	(5,694	)	(5,407	)	(1,311	)	(328	)
Adjustments to maintain reserves		42		(3	)	160		(27	)	85		502		64		72
Net equity transactions		(456,845	)	(319,479	)	(319,228	)	202,015		(1,959,039	)	(2,320,435	)	225,533		1,373,359
Net change in contract owners’ equity		85,569		(182,217	)	(310,763	)	211,020		222,452		(1,201,332	)	652,462		1,553,885
Contract owners’ equity beginning of period		3,638,205		3,820,422		1,174,579		963,559		9,984,737		11,186,069		1,553,885		–
Contract owners’ equity end of period	$	3,723,774		3,638,205		863,816		1,174,579		10,207,189		9,984,737		2,206,347		1,553,885
CHANGES IN UNITS:
Beginning units		297,572		322,014		107,722		89,246		549,068		650,574		133,622		–
Units purchased		54,380		99,246		11,699		32,808		88,332		149,191		56,124		141,605
Units redeemed		(90,482	)	(123,688	)	(41,203	)	(14,332	)	(181,504	)	(250,697	)	(37,088	)	(7,983	)
Ending units		261,470		297,572		78,218		107,722		455,896		549,068		152,658		133,622

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	ACVPMdCpV					ACVPUltra				ACVPVal				ACVPVista
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	2,538		632		(3,185	)	(4,830	)	104,468		24,447		(260	)	(24	)
Realized gain (loss) on investments		20,373		–		13,937		25,482		688,599		440,213		719		46
Change in unrealized gain (loss) on investments		10,804		(435	)	(32,309	)	(39,774	)	242,399		(1,258,011	)	1,061		37
Reinvested capital gains		18,160		2,402		–		–		1,177,539		1,360,674		117		–
Net increase (decrease) in contract owners’ equity resulting from operations		51,875		2,599		(21,557	)	(19,122	)	2,213,005		567,323		1,637		59
Equity transactions:
Purchase payments received from contract owners (note 6)		31,883		2,690		30,683		30,928		608,706		750,758		2,572		28
Transfers between funds		496,403		100,510		(188,618	)	(69,202	)	(140,596	)	158,172		10,306		29,076
Surrenders (note 6)		(1,559	)	–		(14,930	)	(77,334	)	(902,976	)	(719,062	)	–		–
Death benefits (note 4)		–		–		–		(5,908	)	(8,081	)	(808	)	–		–
Net policy repayments (loans) (note 5)		1,333		(1,290	)	(14,299	)	(9,016	)	(66,301	)	(89,452	)	(29	)	–
Deductions for surrender charges (note 2d)		–		–		(61	)	(202	)	(6,367	)	(17,348	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(9,282	)	(1,092	)	(22,383	)	(23,720	)	(499,627	)	(513,258	)	(2,566	)	(120	)
Asset charges (note 3):
MSP contracts		(227	)	(5	)	(345	)	(291	)	(7,479	)	(7,115	)	–		(5	)
LSFP contracts		(158	)	(14	)	(602	)	(513	)	(8,181	)	(7,741	)	–		–
Adjustments to maintain reserves		(4	)	59		16		(5	)	1,797		(228	)	31		23
Net equity transactions		518,389		100,858		(210,539	)	(155,263	)	(1,029,105	)	(446,082	)	10,314		29,002
Net change in contract owners’ equity		570,264		103,457		(232,096	)	(174,385	)	1,183,900		121,241		11,951		29,061
Contract owners’ equity beginning of period		103,457		–		770,992		945,377		13,490,801		13,369,560		29,061		–
Contract owners’ equity end of period	$	673,721		103,457		538,896		770,992		14,674,701		13,490,801		41,012		29,061
CHANGES IN UNITS:
Beginning units		9,176		–		69,460		86,518		616,380		621,194		2,548		–
Units purchased		41,564		9,395		7,963		13,155		145,948		172,292		2,998		2,559
Units redeemed		(836	)	(219	)	(27,129	)	(30,213	)	(192,658	)	(177,106	)	(2,230	)	(11	)
Ending units		49,904		9,176		50,294		69,460		569,670		616,380		3,316		2,548

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	CSTGlSmCp					CSTIntFoc				CSTSmCapGr				DryIPSmCap
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(6,024	)	(5,963	)	31,381		16,193		(78,172	)	(89,573	)	(4,383	)	(11,733	)
Realized gain (loss) on investments		138,726		179,468		513,060		254,980		996,247		1,029,425		169,056		164,240
Change in unrealized gain (loss) on investments		(20,240	)	(46,376	)	651,016		790,968		(366,875	)	(1,440,310	)	45,191		(35,007	)
Reinvested capital gains		–		–		–		–		–		–		43,700		5,886
Net increase (decrease) in contract owners’ equity resulting from operations		112,462		127,129		1,195,457		1,062,141		551,200		(500,458	)	253,564		123,386
Equity transactions:
Purchase payments received from contract owners (note 6)		47,889		63,986		377,303		413,648		775,675		974,358		117,090		94,092
Transfers between funds		(48,464	)	54,316		(150,794	)	(255,978	)	(1,026,283	)	(767,204	)	21,029		(67,224	)
Surrenders (note 6)		(64,785	)	(36,774	)	(482,407	)	(264,698	)	(1,029,079	)	(793,446	)	(189,949	)	(121,940	)
Death benefits (note 4)		(28,137	)	–		(57,139	)	(77,954	)	(25,938	)	(54,252	)	–		–
Net policy repayments (loans) (note 5)		8,868		(27,512	)	(56,763	)	9,452		(5,522	)	58,184		(5,330	)	(9,566	)
Deductions for surrender charges (note 2d)		(1,512	)	(76	)	(7,246	)	(11,918	)	(18,438	)	(21,220	)	(26	)	(2,670	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(44,982	)	(51,638	)	(328,515	)	(317,826	)	(613,043	)	(692,044	)	(79,874	)	(69,272	)
Asset charges (note 3):
MSP contracts		(719	)	(645	)	(4,257	)	(3,637	)	(3,915	)	(4,434	)	(2,052	)	(2,841	)
LSFP contracts		(976	)	(838	)	(6,344	)	(5,839	)	(9,076	)	(9,795	)	(1,800	)	(1,433	)
Adjustments to maintain reserves		22		26		172		3,746		262		147,315		(58	)	39
Net equity transactions		(132,796	)	845		(715,990	)	(511,004	)	(1,955,357	)	(1,162,538	)	(140,970	)	(180,815	)
Net change in contract owners’ equity		(20,334	)	127,974		479,467		551,137		(1,404,157	)	(1,662,996	)	112,594		(57,429	)
Contract owners’ equity beginning of period		958,231		830,257		7,154,713		6,603,576		12,767,225		14,430,221		2,035,258		2,092,687
Contract owners’ equity end of period	$	937,897		958,231		7,634,180		7,154,713		11,363,068		12,767,225		2,147,852		2,035,258
CHANGES IN UNITS:
Beginning units		67,546		65,698		517,716		553,182		757,296		801,312		150,290		165,014
Units purchased		13,854		17,988		166,651		78,912		172,749		164,876		36,205		44,866
Units redeemed		(20,328	)	(16,140	)	(215,027	)	(114,378	)	(276,817	)	(208,892	)	(47,097	)	(59,590	)
Ending units		61,072		67,546		469,340		517,716		653,228		757,296		139,398		150,290

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	DrySRGro					DryStkIx				DryVIApp				DryVIFDevLd
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(49,304	)	(62,999	)	789,532		732,685		48,818		(40,198	)	(711	)	(2,552	)
Realized gain (loss) on investments		(435,841	)	(561,801	)	(629,731	)	(1,543,716	)	435,347		208,666		4,376		5,471
Change in unrealized gain (loss) on investments		1,181,954		868,402		10,398,460		3,730,757		398,055		43,167		(33,937	)	16,850
Reinvested capital gains		–		–		–		–		–		–		37,304		–
Net increase (decrease) in contract owners’ equity resulting from operations		696,809		243,602		10,558,261		2,919,726		882,220		211,635		7,032		19,769
Equity transactions:
Purchase payments received from contract owners (note 6)		833,043		976,402		4,144,765		6,390,148		312,847		365,466		31,506		34,892
Transfers between funds		(428,466	)	(565,722	)	(3,413,229	)	(6,220,270	)	(325,424	)	(339,064	)	9,961		(22,200	)
Surrenders (note 6)		(736,233	)	(447,314	)	(6,390,077	)	(4,670,510	)	(208,368	)	(364,278	)	(83,602	)	(4,278	)
Death benefits (note 4)		(64,260	)	(26,172	)	(337,394	)	(132,604	)	(3,569	)	–		(122	)	–
Net policy repayments (loans) (note 5)		145,274		(58,546	)	(609,188	)	160,438		(60,634	)	38,078		(5,510	)	(3,002	)
Deductions for surrender charges (note 2d)		(7,417	)	(20,686	)	(52,509	)	(145,956	)	(6,416	)	(13,214	)	(165	)	(136	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(570,614	)	(639,946	)	(3,403,423	)	(3,639,900	)	(234,430	)	(253,240	)	(23,256	)	(23,160	)
Asset charges (note 3):
MSP contracts		(2,468	)	(2,569	)	(29,388	)	(31,664	)	(1,107	)	(1,103	)	(118	)	(269	)
LSFP contracts		(2,992	)	(3,311	)	(65,134	)	(62,339	)	(6,453	)	(6,611	)	(366	)	(352	)
Adjustments to maintain reserves		1,201		(197	)	4,280		143,866		221		(733	)	3		39
Net equity transactions		(832,932	)	(788,061	)	(10,151,297	)	(8,208,791	)	(533,333	)	(574,699	)	(71,669	)	(18,466	)
Net change in contract owners’ equity		(136,123	)	(544,459	)	406,964		(5,289,065	)	348,887		(363,064	)	(64,637	)	1,303
Contract owners’ equity beginning of period		8,793,205		9,337,664		75,948,479		81,237,544		5,785,195		6,148,259		437,677		436,374
Contract owners’ equity end of period	$	8,657,082		8,793,205		76,355,443		75,948,479		6,134,082		5,785,195		373,040		437,677
CHANGES IN UNITS:
Beginning units		398,460		420,438		2,948,454		3,024,638		420,248		456,698		29,256		30,716
Units purchased		86,163		93,584		533,365		797,667		117,685		90,951		6,692		7,425
Units redeemed		(121,715	)	(115,562	)	(844,481	)	(873,851	)	(136,551	)	(127,401	)	(11,792	)	(8,885	)
Ending units		362,908		398,460		2,637,338		2,948,454		401,382		420,248		24,156		29,256

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	DryVIFGrInc					FedAmLead				FedCapAp				FedQualBd
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	3,586		16,044		1,651		1,137		46		118		37,075		33,635
Realized gain (loss) on investments		1,109		(32,073	)	(74	)	1,320		5,377		428		(24,945	)	(5,249	)
Change in unrealized gain (loss) on investments		285,427		73,967		3,883		4,839		(973	)	(356	)	38,596		(28,170	)
Reinvested capital gains		–		–		22,481		–		–		–		–		7,014
Net increase (decrease) in contract owners’ equity resulting from operations		290,122		57,938		27,941		7,296		4,450		190		50,726		7,230
Equity transactions:
Purchase payments received from contract owners (note 6)		128,783		162,380		4,941		6,864		2,133		2,390		78,133		84,588
Transfers between funds		5,480		(38,456	)	13,529		49,256		(17,732	)	(1,056	)	205,525		104,356
Surrenders (note 6)		(208,235	)	(153,462	)	(17,795	)	(4,598	)	(1,014	)	(936	)	(57,324	)	(124,800	)
Death benefits (note 4)		(88,276	)	(40,578	)	–		–		–		–		(863	)	(14	)
Net policy repayments (loans) (note 5)		3,442		(9,498	)	–		4,550		(2,459	)	(6	)	(13,410	)	23,852
Deductions for surrender charges (note 2d)		(3,525	)	(3,774	)	–		–		–		(28	)	(261	)	(2,826	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(119,441	)	(118,650	)	(4,261	)	(4,042	)	(1,329	)	(1,308	)	(69,013	)	(67,980	)
Asset charges (note 3):
MSP contracts		(1,590	)	(1,920	)	–		–		–		–		(1,682	)	(1,484	)
LSFP contracts		(2,824	)	(2,378	)	(47	)	(34	)	–		–		(379	)	(255	)
Adjustments to maintain reserves		95		23		29		26		(2	)	(9	)	3		28
Net equity transactions		(286,091	)	(206,313	)	(3,604	)	52,022		(20,403	)	(953	)	140,729		15,465
Net change in contract owners’ equity		4,031		(148,375	)	24,337		59,318		(15,953	)	(763	)	191,455		22,695
Contract owners’ equity beginning of period		2,310,340		2,458,715		178,508		119,190		25,452		26,215		1,169,203		1,146,508
Contract owners’ equity end of period	$	2,314,371		2,310,340		202,845		178,508		9,499		25,452		1,360,658		1,169,203
CHANGES IN UNITS:
Beginning units		177,166		185,888		12,490		8,716		1,960		2,046		100,922		99,904
Units purchased		24,311		40,682		3,461		5,010		458		261		47,356		34,895
Units redeemed		(45,883	)	(49,404	)	(3,763	)	(1,236	)	(1,780	)	(347	)	(34,594	)	(33,877	)
Ending units		155,594		177,166		12,188		12,490		638		1,960		113,684		100,922

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPEI					FidVIPGr				FidVIPHI				FidVIPOv
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	2,018,674		688,601		(210,949	)	(170,829	)	1,380,815		3,098,850		51,409		7,651
Realized gain (loss) on investments		(376,266	)	(438,346	)	(3,385,408	)	(4,008,734	)	(302,665	)	73,937		1,488,094		1,211,034
Change in unrealized gain (loss) on investments		2,830,737		691,808		8,485,090		8,161,191		869,670		(2,837,088	)	1,075,141		1,417,693
Reinvested capital gains		9,044,526		2,631,172		–		–		–		–		106,712		95,026
Net increase (decrease) in contract owners’ equity resulting from operations		13,517,671		3,573,235		4,888,733		3,981,628		1,947,820		335,699		2,721,356		2,731,404
Equity transactions:
Purchase payments received from contract owners (note 6)		3,692,252		4,276,432		5,488,181		6,634,272		1,001,448		1,125,916		98,138		339,404
Transfers between funds		(1,100,538	)	(1,568,012	)	(5,811,691	)	(5,237,722	)	780,432		(4,769,268	)	(560,429	)	(2,267,056	)
Surrenders (note 6)		(6,003,272	)	(4,242,404	)	(5,709,362	)	(5,321,108	)	(1,783,680	)	(1,430,746	)	(1,268,080	)	(1,241,402	)
Death benefits (note 4)		(613,030	)	(386,046	)	(286,030	)	(385,328	)	(190,989	)	(55,498	)	(58,159	)	(102,992	)
Net policy repayments (loans) (note 5)		(202,336	)	(324,136	)	(585,121	)	171,620		15,180		147,382		(316,052	)	(196,920	)
Deductions for surrender charges (note 2d)		(37,613	)	(68,256	)	(41,734	)	(92,286	)	(15,389	)	(18,716	)	(12,157	)	(9,828	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,388,475	)	(3,460,728	)	(4,323,254	)	(4,618,442	)	(914,286	)	(981,708	)	(578,144	)	(715,194	)
Asset charges (note 3):
MSP contracts		(36,652	)	(35,185	)	(21,734	)	(21,245	)	(12,781	)	(13,335	)	(5,967	)	(5,342	)
LSFP contracts		(29,239	)	(27,017	)	(28,131	)	(29,556	)	(9,012	)	(9,345	)	(9,916	)	(9,197	)
Adjustments to maintain reserves		98,232		(22,180	)	294,974		(67,826	)	14,015		(4,671	)	21,747		(12,213	)
Net equity transactions		(7,620,671	)	(5,857,532	)	(11,023,902	)	(8,967,621	)	(1,115,062	)	(6,009,989	)	(2,689,019	)	(4,220,740	)
Net change in contract owners’ equity		5,897,000		(2,284,297	)	(6,135,169	)	(4,985,993	)	832,758		(5,674,290	)	32,337		(1,489,336	)
Contract owners’ equity beginning 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
Contract owners’ equity end of period	$	79,366,129		73,469,129		78,764,241		84,899,410		19,958,228		19,125,470		17,276,378		17,244,041
CHANGES IN UNITS:
Beginning units		2,082,710		1,873,796		2,764,316		2,468,188		865,500		1,035,038		745,818		867,542
Units purchased		340,139		884,610		423,537		1,237,181		186,842		265,940		87,006		283,227
Units redeemed		(570,529	)	(675,696	)	(782,499	)	(941,053	)	(232,478	)	(435,478	)	(189,746	)	(404,951	)
Ending units		1,852,320		2,082,710		2,405,354		2,764,316		819,864		865,500		643,078		745,818

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPOvSR					FidVIPAM				FidVIPCon				FidVIPIGBdS
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	8,701		(5,997	)	434,934		450,415		448,681		(254,940	)	82,031		20,737
Realized gain (loss) on investments		326,549		11,146		(342,324	)	(349,641	)	1,897,820		692,489		(17,203	)	(4,025	)
Change in unrealized gain (loss) on investments		353,098		376,763		1,259,086		564,829		(669,773	)	9,019,770		53,613		(13,301	)
Reinvested capital gains		24,549		–		–		7,706		5,670,529		11,226		6,072		20,900
Net increase (decrease) in contract owners’ equity resulting from operations		712,897		381,912		1,351,696		673,309		7,347,257		9,468,545		124,513		24,311
Equity transactions:
Purchase payments received from contract owners (note 6)		945,685		680,560		1,057,356		1,143,732		3,311,632		3,426,214		214,010		121,204
Transfers between funds		1,375,984		1,623,842		(1,314,025	)	(512,764	)	(287,965	)	2,390,668		740,901		1,813,088
Surrenders (note 6)		(372,853	)	(119,598	)	(1,186,526	)	(1,877,914	)	(3,678,724	)	(3,532,336	)	(279,429	)	(61,552	)
Death benefits (note 4)		(2,678	)	(1,624	)	(219,592	)	(272,552	)	(161,026	)	(203,908	)	–		–
Net policy repayments (loans) (note 5)		101,435		175,084		129,784		148,348		(1,201,916	)	(273,738	)	2,999		(2,788	)
Deductions for surrender charges (note 2d)		(752	)	(466	)	(4,100	)	(14,732	)	(43,786	)	(101,032	)	(3,097	)	(1,578	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(261,397	)	(75,868	)	(912,028	)	(980,678	)	(2,746,468	)	(2,656,078	)	(150,448	)	(76,578	)
Asset charges (note 3):
MSP contracts		(431	)	(41	)	(6,405	)	(6,788	)	(27,697	)	(23,286	)	(1,205	)	(1,017	)
LSFP contracts		(2,851	)	(661	)	(4,762	)	(4,954	)	(37,269	)	(31,998	)	(1,284	)	(1,105	)
Adjustments to maintain reserves		65		118		14,727		(13,081	)	2,056		7,607		49		(34	)
Net equity transactions		1,782,207		2,281,346		(2,445,571	)	(2,391,383	)	(4,871,163	)	(997,887	)	522,496		1,789,640
Net change in contract owners’ equity		2,495,104		2,663,258		(1,093,875	)	(1,718,074	)	2,476,094		8,470,658		647,009		1,813,951
Contract owners’ equity beginning of period		2,663,258		–		21,381,233		23,099,307		68,425,817		59,955,159		2,733,368		919,417
Contract owners’ equity end of period	$	5,158,362		2,663,258		20,287,358		21,381,233		70,901,911		68,425,817		3,380,377		2,733,368
CHANGES IN UNITS:
Beginning units		213,864		–		915,956		829,310		2,281,934		2,196,532		255,724		87,010
Units purchased		188,205		227,292		74,849		512,422		664,564		595,164		210,778		183,122
Units redeemed		(48,949	)	(13,428	)	(181,175	)	(425,776	)	(723,524	)	(509,762	)	(163,084	)	(14,408	)
Ending units		353,120		213,864		809,630		915,956		2,222,974		2,281,934		303,418		255,724

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPGrOp					FidVIPMCapS				FidVIPVaIS				FidVIPEnergyS2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	1,943		12,284		(32,649	)	(41,647	)	(2,137	)	(9,405	)	3,871		2,772
Realized gain (loss) on investments		114,590		(241,983	)	545,254		274,318		(69,573	)	(17,903	)	118,582		49,408
Change in unrealized gain (loss) on investments		67,686		525,041		(603,741	)	801,405		102,652		(45,834	)	(346,483	)	50,196
Reinvested capital gains		–		–		1,019,980		79,678		183,028		59,032		520,211		85,592
Net increase (decrease) in contract owners’ equity resulting from operations		184,219		295,342		928,844		1,113,754		213,970		(14,110	)	296,181		187,968
Equity transactions:
Purchase payments received from contract owners (note 6)		262,293		344,226		616,546		533,880		126,297		76,358		309,550		58,540
Transfers between funds		(118,787	)	(421,544	)	1,052,459		2,962,566		396,071		(613,290	)	1,941,205		1,649,170
Surrenders (note 6)		(343,652	)	(238,812	)	(596,579	)	(620,812	)	(178,270	)	(211,158	)	(234,415	)	(3,970	)
Death benefits (note 4)		(9,295	)	(5,844	)	(36,060	)	–		–		–		(1,509	)	–
Net policy repayments (loans) (note 5)		12,016		(36,264	)	(85,500	)	(33,242	)	(11,845	)	(12,436	)	(30,615	)	(15,300	)
Deductions for surrender charges (note 2d)		(7,002	)	(6,722	)	(2,905	)	(8,674	)	(3,744	)	(2,170	)	(1,539	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(180,221	)	(195,190	)	(362,880	)	(267,044	)	(51,174	)	(68,474	)	(144,256	)	(29,276	)
Asset charges (note 3):
MSP contracts		(1,332	)	(1,755	)	(3,391	)	(3,034	)	(688	)	(868	)	(1,954	)	(379	)
LSFP contracts		(3,481	)	(3,432	)	(2,580	)	(1,614	)	(1,036	)	(707	)	(626	)	(41	)
Adjustments to maintain reserves		(6	)	24		(44	)	32		52		(35	)	(8	)	85
Net equity transactions		(389,467	)	(565,313	)	579,066		2,562,058		275,663		(832,780	)	1,835,833		1,658,829
Net change in contract owners’ equity		(205,248	)	(269,971	)	1,507,910		3,675,812		489,633		(846,890	)	2,132,014		1,846,797
Contract owners’ equity beginning of period		4,166,506		4,436,477		7,969,055		4,293,243		1,175,007		2,021,897		1,846,797		–
Contract owners’ equity end of period	$	3,961,258		4,166,506		9,476,965		7,969,055		1,664,640		1,175,007		3,978,811		1,846,797
CHANGES IN UNITS:
Beginning units		369,344		422,878		390,220		247,050		86,996		152,482		137,232		–
Units purchased		55,136		50,100		147,940		193,614		56,916		29,683		139,698		140,962
Units redeemed		(89,656	)	(103,634	)	(124,204	)	(50,444	)	(37,688	)	(95,169	)	(22,050	)	(3,730	)
Ending units		334,824		369,344		413,956		390,220		106,224		86,996		254,880		137,232

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FidVIPFree10S					FidVIPFree20S				FidVIPFree30S				FrVIPIncSec2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	3,311		213		3,426		960		4,682		168		(389	)	–
Realized gain (loss) on investments		2,880		42		2,207		176		356		15		1,010		–
Change in unrealized gain (loss) on investments		3,962		1,320		23,797		13,443		3,034		563		15,388		–
Reinvested capital gains		984		–		3,207		–		3,726		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		11,137		1,575		32,637		14,579		11,798		746		16,009		–
Equity transactions:
Purchase payments received from contract owners (note 6)		4,333		2,332		4,049		1,000		9,134		1,226		26,918		–
Transfers between funds		176,255		72,488		69,862		252,104		306,056		41,294		288,860		–
Surrenders (note 6)		(2,719	)	–		–		–		–		–		–		–
Death benefits (note 4)		–		–		–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(14,989	)	(11,606	)	(244	)	(44	)	(17	)	–		(801	)	–
Deductions for surrender charges (note 2d)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(4,612	)	(938	)	(9,774	)	(2,492	)	(4,493	)	(272	)	(2,947	)	–
Asset charges (note 3):
MSP contracts		(385	)	(80	)	(586	)	(331	)	–		–		(190	)	–
LSFP contracts		–		–		–		–		–		–		–		–
Adjustments to maintain reserves		(9	)	56		20		49		4		35		43		–
Net equity transactions		157,874		62,252		63,327		250,286		310,684		42,283		311,883		–
Net change in contract owners’ equity		169,011		63,827		95,964		264,865		322,482		43,029		327,892		–
Contract owners’ equity beginning of period		63,827		–		264,865		–		43,029		–		–		–
Contract owners’ equity end of period	$	232,838		63,827		360,829		264,865		365,511		43,029		327,892		–
CHANGES IN UNITS:
Beginning units		5,924		–		23,914		–		3,818		–		–		–
Units purchased		15,820		7,128		7,475		24,209		25,371		3,842		29,694		–
Units redeemed		(1,974	)	(1,204	)	(2,101		(295	)	(385	)	(24	)	(362	)	–
Ending units		19,770		5,924		29,288		23,914		28,804		3,818		29,332		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FrVIPRisDiv					FrVIPSmCapV1				FrVIPDevMrk3				FrVIPForSec
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	23,225		14,646		6,532		6,455		7,050		923		10,254		12,363
Realized gain (loss) on investments		79,445		72,059		252,240		147,731		94,811		8,409		130,073		103,694
Change in unrealized gain (loss) on investments		452,466		(2,803	)	116,649		40,513		160,456		69,238		90,707		20,664
Reinvested capital gains		18,463		19,938		116,222		17,618		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		573,599		103,840		491,643		212,317		262,317		78,570		231,034		136,721
Equity transactions:
Purchase payments received from contract owners (note 6)		288,749		321,422		220,474		268,370		122,854		16,080		4		46,438
Transfers between funds		797,123		923,274		167,582		1,024,200		742,462		563,464		(191,796	)	(246,220	)
Surrenders (note 6)		(273,861	)	(441,810	)	(304,775	)	(223,060	)	(43,074	)	(8,354	)	(229,919	)	(42,594	)
Death benefits (note 4)		(1,686	)	–		(4,464	)	–		–		–		–		(50	)
Net policy repayments (loans) (note 5)		(39,417	)	(10,662	)	(4,647	)	(40,146	)	(15,918	)	(400	)	(37,025	)	(12,664	)
Deductions for surrender charges (note 2d)		(1,234	)	(3,596	)	(871	)	(3,312	)	(362	)	–		(1,941	)	(166	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(138,979	)	(135,758	)	(109,416	)	(107,762	)	(45,872	)	(7,172	)	(35,042	)	(49,820	)
Asset charges (note 3):
MSP contracts		(900	)	(1,993	)	(660	)	(734	)	(1,169	)	(611	)	(558	)	(1,866	)
LSFP contracts		(1,807	)	(1,476	)	(880	)	(689	)	(162	)	(4	)	(695	)	(827	)
Adjustments to maintain reserves		236		(88	)	171		(76	)	45		71		56		6
Net equity transactions		628,224		649,313		(37,486	)	916,791		758,804		563,074		(496,916	)	(307,763	)
Net change in contract owners’ equity		1,201,823		753,153		454,157		1,129,108		1,021,121		641,644		(265,882	)	(171,042	)
Contract owners’ equity beginning of period		3,270,539		2,517,386		3,016,848		1,887,740		641,644		–		1,389,284		1,560,326
Contract owners’ equity end of period	$	4,472,362		3,270,539		3,471,005		3,016,848		1,662,765		641,644		1,123,402		1,389,284
CHANGES IN UNITS:
Beginning units		234,296		185,710		170,032		115,218		50,268		–		81,054		99,854
Units purchased		88,447		85,734		69,419		75,591		61,197		52,129		5,759		19,547
Units redeemed		(48,681	)	(37,148	)	(72,163	)	(20,777	)	(9,209	)	(1,861	)	(32,767	)	(38,347	)
Ending units		274,062		234,296		167,288		170,032		102,256		50,268		54,046		81,054

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	FrVIPForSec3					FrVIPGlInc3				GVITAstAll2			GVITBnd2
Investment activity:	2006			2005		2006		2005		2006		2005	2006		2005
Net investment income (loss)	$	10,356		489		3,397		3,108		5,724		–	(622	)	–
Realized gain (loss) on investments		45,063		2,773		6,953		(3,777	)	585		–	12		–
Change in unrealized gain (loss) on investments		154,011		37,464		11,113		132		7,473		–	10,263		–
Reinvested capital gains		–		–		–		–		–		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		209,430		40,726		21,463		(537	)	13,782		–	9,653		–
Equity transactions:
Purchase payments received from contract owners (note 6)		144,772		82,782		6,095		16,760		6,127		–	4,728		–
Transfers between funds		643,714		598,340		318,410		47,002		357,636		–	345,842		–
Surrenders (note 6)		(28,386	)	(17,022	)	(12,879	)	–		–		–	–		–
Death benefits (note 4)		–		–		–		–		–		–	–		–
Net policy repayments (loans) (note 5)		(15,744	)	(918	)	(3,917	)	–		325		–	–		–
Deductions for surrender charges (note 2d)		(22	)	(28	)	(379	)	–		–		–	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(38,367	)	(7,438	)	(5,582	)	(1,264	)	(2,872	)	–	(1,664	)	–
Asset charges (note 3):
MSP contracts		(2,294	)	(198	)	(45	)	(39	)	(255	)	–	–		–
LSFP contracts		(613	)	(261	)	(44	)	(10	)	–		–	–		–
Adjustments to maintain reserves		(23	)	90		29		33		40		–	41		–
Net equity transactions		703,037		655,347		301,688		62,482		361,001		–	348,947		–
Net change in contract owners’ equity		912,467		696,073		323,151		61,945		374,783		–	358,600		–
Contract owners’ equity beginning of period		696,073		–		61,945		–		–		–	–		–
Contract owners’ equity end of period	$	1,608,540		696,073		385,096		61,945		374,783		–	358,600		–
CHANGES IN UNITS:
Beginning units		61,834		–		6,292		–		–		–	–		–
Units purchased		64,406		64,552		31,310		6,425		36,101		–	34,323		–
Units redeemed		(8,004	)	(2,718	)	(2,696	)	(133	)	(469	)	–	(161	)	–
Ending units		118,236		61,834		34,906		6,292		35,632		–	34,162		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITGlobGr2				GVITGrowth2			GVITIntValI				GVITIntVal3
Investment activity:	2006			2005	2006		2005	2006		2005		2006		2005
Net investment income (loss)	$	(540	)	–	2,798		–	14,359		9,434		19,878		3,888
Realized gain (loss) on investments		220		–	(2,426	)	–	72,763		123,406		48,968		614
Change in unrealized gain (loss) on investments		31,132		–	24,372		–	42,289		(63,445	)	119,180		70,712
Reinvested capital gains		–		–	–		–	63,340		53,106		87,625		11,850
Net increase (decrease) in contract owners’ equity resulting from operations		30,812		–	24,744		–	192,751		122,501		275,651		87,064
Equity transactions:
Purchase payments received from contract owners (note 6)		11,294		–	17,581		–	(52	)	40,142		111,921		88,134
Transfers between funds		854,107		–	644,667		–	(242,421	)	(382,668	)	815,174		845,398
Surrenders (note 6)		–		–	(32,491	)	–	(37,392	)	(174,560	)	(12,250	)	(1,262	)
Death benefits (note 4)		–		–	–		–	–		–		(2,235	)	–
Net policy repayments (loans) (note 5)		(664	)	–	(30	)	–	(44,009	)	(20,866	)	(1,177	)	(11,818	)
Deductions for surrender charges (note 2d)		–		–	(918	)	–	(420	)	(3,928	)	(44	)	(8	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(5,050	)	–	(6,959	)	–	(35,188	)	(51,900	)	(38,661	)	(11,126	)
Asset charges (note 3):
MSP contracts		(65	)	–	(50	)	–	(464	)	(679	)	(424	)	(152	)
LSFP contracts		–		–	–		–	(59	)	(237	)	(458	)	(86	)
Adjustments to maintain reserves		73		–	39		–	(30	)	(3,019	)	22		114
Net equity transactions		859,695		–	621,839		–	(360,035	)	(597,715	)	871,868		909,194
Net change in contract owners’ equity		890,507		–	646,583		–	(167,284	)	(475,214	)	1,147,519		996,258
Contract owners’ equity beginning of period		–		–	–		–	1,042,926		1,518,140		996,258		–
Contract owners’ equity end of period	$	890,507		–	646,583		–	875,642		1,042,926		2,143,777		996,258
CHANGES IN UNITS:
Beginning units		–		–	–		–	56,386		91,502		87,332		–
Units purchased		83,024		–	66,974		–	116		18,401		74,875		91,263
Units redeemed		(594	)	–	(4,348	)	–	(17,718	)	(53,517	)	(8,287	)	(3,931	)
Ending units		82,430		–	62,626		–	38,784		56,386		153,920		87,332

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITEmMrkts					GVITEmMrkts3				GVITFHiInc				GVITFHiInc3
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	404		(1,453	)	5,474		(692	)	20,206		31,914		18,929		7,547
Realized gain (loss) on investments		347,440		93,446		211,906		9,394		2		(17,651	)	(6,648	)	494
Change in unrealized gain (loss) on investments		331,985		292,891		421,457		34,834		8,965		(11,541	)	7,599		(4,029	)
Reinvested capital gains		25,537		193,400		30,546		104,312		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		705,366		578,284		669,383		147,848		29,173		2,722		19,880		4,012
Equity transactions:
Purchase payments received from contract owners (note 6)		138,829		43,378		296,509		74,318		(20	)	10,724		113,350		93,216
Transfers between funds		(501,480	)	14,646		647,225		1,253,186		(84,978	)	(287,434	)	44,100		72,750
Surrenders (note 6)		(208,079	)	(99,968	)	(119,029	)	(28,716	)	(14,910	)	(100,240	)	(14,896	)	(734	)
Death benefits (note 4)		(43,065	)	–		–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(26,268	)	(39,768	)	(7,648	)	17,840		(4,206	)	(3,496	)	(2,496	)	1,294
Deductions for surrender charges (note 2d)		(822	)	(2,288	)	(383	)	(238	)	–		(1,270	)	–		(2	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(77,463	)	(90,432	)	(96,841	)	(14,816	)	(13,402	)	(25,634	)	(17,251	)	(6,442	)
Asset charges (note 3):
MSP contracts		(218	)	(938	)	(1,288	)	(189	)	(765	)	(799	)	(280	)	(53	)
LSFP contracts		(1,003	)	(986	)	(1,883	)	(330	)	(179	)	(172	)	(99	)	(23	)
Adjustments to maintain reserves		540		(80	)	90		95		45		(6	)	33		72
Net equity transactions		(719,029	)	(176,436	)	716,752		1,301,150		(118,415	)	(408,327	)	122,461		160,078
Net change in contract owners’ equity		(13,663	)	401,848		1,386,135		1,448,998		(89,242	)	(405,605	)	142,341		164,090
Contract owners’ equity beginning of period		2,330,835		1,928,987		1,448,998		–		346,326		751,931		164,090		–
Contract owners’ equity end of period	$	2,317,172		2,330,835		2,835,133		1,448,998		257,084		346,326		306,431		164,090
CHANGES IN UNITS:
Beginning units		130,590		142,194		109,046		–		28,010		62,024		15,630		–
Units purchased		11,202		37,963		62,414		111,672		1,698		3,549		17,552		19,348
Units redeemed		(45,820	)	(49,567	)	(14,456	)	(2,626	)	(10,836	)	(37,563	)	(6,666	)	(3,718	)
Ending units		95,972		130,590		157,004		109,046		18,872		28,010		26,516		15,630

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITGlFin					GVITGlHlth				GVITGlHlth3				GVITGlTech
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	9,363		7,534		(4,417	)	(7,197	)	(3,035	)	(882	)	(3,449	)	(5,066	)
Realized gain (loss) on investments		23,758		8,751		6,406		23,078		(19,028	)	858		23,742		(81,565	)
Change in unrealized gain (loss) on investments		5,779		(21,076	)	7,171		(32,124	)	32,536		(31,731	)	29,036		42,968
Reinvested capital gains		102,103		67,106		–		88,424		–		41,196		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		141,003		62,315		9,160		72,181		10,473		9,441		49,329		(43,663	)
Equity transactions:
Purchase payments received from contract owners (note 6)		38,692		39,184		(8	)	54,890		45,867		32,238		(9	)	47,736
Transfers between funds		112,365		150,044		(245,618	)	(202,846	)	(61,862	)	396,302		(76,033	)	(267,874	)
Surrenders (note 6)		(9,544	)	(36,400	)	(33,641	)	(124,996	)	(3,119	)	(12,484	)	(38,278	)	(24,454	)
Death benefits (note 4)		–		–		–		–		–		–		(46	)	–
Net policy repayments (loans) (note 5)		(87,224	)	7,182		(29,834	)	(52,312	)	58		13,346		(1,640	)	(20,444	)
Deductions for surrender charges (note 2d)		–		(466	)	–		(2,604	)	–		(24	)	(526	)	(532	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(29,186	)	(24,736	)	(20,759	)	(36,958	)	(15,575	)	(5,622	)	(23,666	)	(42,052	)
Asset charges (note 3):
MSP contracts		(77	)	(99	)	(335	)	(624	)	(84	)	(17	)	–		(115	)
LSFP contracts		(110	)	(144	)	(292	)	(475	)	(66	)	–		(335	)	(376	)
Adjustments to maintain reserves		138		(10	)	(16	)	5		33		48		13		(13	)
Net equity transactions		25,054		134,555		(330,503	)	(365,920	)	(34,748	)	423,787		(140,520	)	(308,124	)
Net change in contract owners’ equity		166,057		196,870		(321,343	)	(293,739	)	(24,275	)	433,228		(91,191	)	(351,787	)
Contract owners’ equity beginning of period		738,622		541,752		761,769		1,055,508		433,228		–		585,219		937,006
Contract owners’ equity end of period	$	904,679		738,622		440,426		761,769		408,953		433,228		494,028		585,219
CHANGES IN UNITS:
Beginning units		46,080		37,388		58,678		87,634		40,502		–		191,526		302,962
Units purchased		15,512		24,968		6,633		30,026		9,778		41,388		43,336		34,385
Units redeemed		(14,530	)	(16,276	)	(32,029	)	(58,982	)	(12,858	)	(886	)	(88,336	)	(145,821	)
Ending units		47,062		46,080		33,282		58,678		37,422		40,502		146,526		191,526

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITGlTech3					GVITGlUtl				GVITGvtBd				GVITGrowth
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(2,004	)	(558	)	34,641		19,748		394,994		363,429		(101,952	)	(104,011	)
Realized gain (loss) on investments		21,276		1,637		(14,217	)	89,704		(151,082	)	(176,624	)	(2,360,079	)	(2,735,024	)
Change in unrealized gain (loss) on investments		5,799		16,348		390,133		(229,966	)	(31,557	)	99,562		3,319,647		3,772,943
Reinvested capital gains		–		–		132,217		195,266		89,332		22,538		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		25,071		17,427		542,774		74,752		301,687		308,905		857,616		933,908
Equity transactions:
Purchase payments received from contract owners (note 6)		55,504		44,160		95,595		109,630		709,052		703,036		1,873,914		2,125,034
Transfers between funds		(169,289	)	318,266		530,402		307,898		142,389		(365,628	)	(762,149	)	(552,550	)
Surrenders (note 6)		(5,475	)	(182	)	(25,253	)	(142,162	)	(678,489	)	(1,291,822	)	(1,076,839	)	(1,200,768	)
Death benefits (note 4)		(73	)	–		(48,745	)	–		(163,762	)	(100,232	)	(113,328	)	(76,034	)
Net policy repayments (loans) (note 5)		649		14,038		46,899		(6,664	)	(72,413	)	(114,420	)	(43,902	)	19,472
Deductions for surrender charges (note 2d)		–		(10	)	–		(3,028	)	(9,132	)	(15,586	)	(19,139	)	(45,926	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(15,626	)	(4,928	)	(65,591	)	(63,040	)	(574,799	)	(630,986	)	(1,285,998	)	(1,386,344	)
Asset charges (note 3):
MSP contracts		–		–		(590	)	(637	)	(11,130	)	(12,578	)	(4,301	)	(4,544	)
LSFP contracts		(142	)	(38	)	(906	)	(951	)	(4,773	)	(4,419	)	(8,473	)	(9,044	)
Adjustments to maintain reserves		(23	)	160		(8	)	50		21,487		(6,920	)	2,309		1,480
Net equity transactions		(134,475	)	371,466		531,803		201,096		(641,570	)	(1,839,555	)	(1,437,906	)	(1,129,224	)
Net change in contract owners’ equity		(109,404	)	388,893		1,074,577		275,848		(339,883	)	(1,530,650	)	(580,290	)	(195,316	)
Contract owners’ equity beginning of period		388,893		–		1,403,880		1,128,032		11,433,257		12,963,907		16,951,625		17,146,941
Contract owners’ equity end of period	$	279,489		388,893		2,478,457		1,403,880		11,093,374		11,433,257		16,371,335		16,951,625
CHANGES IN UNITS:
Beginning units		31,690		–		96,608		82,240		531,932		559,802		1,012,300		1,056,188
Units purchased		6,194		32,305		51,214		51,024		124,704		211,849		197,568		244,346
Units redeemed		(17,248	)	(615	)	(22,766	)	(36,656	)	(162,500	)	(239,719	)	(271,974	)	(288,234	)
Ending units		20,636		31,690		125,056		96,608		494,136		531,932		937,894		1,012,300

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITIntGro					GVITIntIdx6			GVITIDAgg2				GVITIDCon2
Investment activity:	2006			2005		2006		2005	2006		2005		2006		2005
Net investment income (loss)	$	1,040		706		115		–	35,204		21,630		10,430		12,518
Realized gain (loss) on investments		169,443		38,855		(8	)	–	93,337		91,653		1,388		5,406
Change in unrealized gain (loss) on investments		227,862		69,474		2,298		–	186,054		(4,619	)	7,780		(15,757	)
Reinvested capital gains		1,912		1,588		–		–	33,920		35,342		4,883		13,526
Net increase (decrease) in contract owners’ equity resulting from operations		400,257		110,623		2,405		–	348,515		144,006		24,481		15,693
Equity transactions:
Purchase payments received from contract owners (note 6)		219,677		15,074		258		–	173,028		157,642		22,438		48,316
Transfers between funds		954,881		453,534		14,888		–	830,577		636,636		(67,715	)	(36,184	)
Surrenders (note 6)		(59,366	)	(81,924	)	–		–	(235,406	)	(399,694	)	(202,298	)	(19,258	)
Death benefits (note 4)		(4,036	)	–		–		–	–		–		–		–
Net policy repayments (loans) (note 5)		(10,594	)	(23,764	)	–		–	(49,119	)	145,236		99,499		7,482
Deductions for surrender charges (note 2d)		(128	)	(1,424	)	–		–	(768	)	(2,106	)	(2,180	)	(408	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(38,764	)	(14,910	)	(299	)	–	(97,766	)	(69,670	)	(26,058	)	(28,918	)
Asset charges (note 3):
MSP contracts		(772	)	(229	)	–		–	(175	)	(14	)	(121	)	(265	)
LSFP contracts		(675	)	(28	)	–		–	–		–		(99	)	(109	)
Adjustments to maintain reserves		(4	)	88		31		–	9		21		(5	)	25
Net equity transactions		1,060,219		346,417		14,878		–	620,380		468,051		(176,539	)	(29,319	)
Net change in contract owners’ equity		1,460,476		457,040		17,283		–	968,895		612,057		(152,058	)	(13,626	)
Contract owners’ equity beginning of period		712,763		255,723		–		–	1,923,608		1,311,551		596,311		609,937
Contract owners’ equity end of period	$	2,173,239		712,763		17,283		–	2,892,503		1,923,608		444,253		596,311
CHANGES IN UNITS:
Beginning units		73,566		34,358		–		–	146,078		106,736		52,378		54,920
Units purchased		105,418		64,382		1,612		–	71,709		82,019		8,142		17,854
Units redeemed		(9,876	)	(25,174	)	(30	)	–	(28,879	)	(42,677	)	(23,584	)	(20,396	)
Ending units		169,108		73,566		1,582		–	188,908		146,078		36,936		52,378

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITIDMod2					GVITIDModAg2				GVITIDModCon2				GVITMdCpGr
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	124,854		89,651		94,529		66,893		48,089		37,727		(8,447	)	(8,160	)
Realized gain (loss) on investments		215,562		114,999		204,996		178,974		15,365		44,205		78,557		58,185
Change in unrealized gain (loss) on investments		271,956		(43,991	)	406,666		(41,664	)	87,209		(45,321	)	53,734		61,864
Reinvested capital gains		57,432		93,246		71,094		102,524		34,355		40,334		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		669,804		253,905		777,285		306,727		185,018		76,945		123,844		111,889
Equity transactions:
Purchase payments received from contract owners (note 6)		420,655		418,850		395,805		392,234		291,005		208,524		59,057		54,032
Transfers between funds		1,488,410		1,074,126		1,062,660		1,142,442		(50,241	)	565,274		208,658		19,446
Surrenders (note 6)		(199,610	)	(351,472	)	(150,919	)	(206,032	)	(21,949	)	(28,196	)	(127,333	)	(93,482	)
Death benefits (note 4)		(160,250	)	(1,148	)	–		(80,942	)	(25,518	)	(211,024	)	–		–
Net policy repayments (loans) (note 5)		16,702		64,184		(119,817	)	(78,268	)	35,403		1,878		(24,046	)	(10,446	)
Deductions for surrender charges (note 2d)		(478	)	(9,268	)	(2,371	)	(3,466	)	(181	)	(736	)	(4,907	)	(1,892	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(322,494	)	(284,726	)	(342,248	)	(296,694	)	(85,286	)	(81,718	)	(54,942	)	(69,030	)
Asset charges (note 3):
MSP contracts		(8,513	)	(5,493	)	(2,580	)	(1,615	)	(1,221	)	(1,044	)	(444	)	(430	)
LSFP contracts		(823	)	(724	)	(1,570	)	(900	)	–		(17	)	(823	)	(651	)
Adjustments to maintain reserves		41		20		1,237		(102	)	(21	)	20		24		1
Net equity transactions		1,233,640		904,349		840,197		866,657		141,991		452,961		55,244		(102,452	)
Net change in contract owners’ equity		1,903,444		1,158,254		1,617,482		1,173,384		327,009		529,906		179,088		9,437
Contract owners’ equity beginning of period		5,981,356		4,823,102		5,280,968		4,107,584		2,348,240		1,818,334		1,278,234		1,268,797
Contract owners’ equity end of period	$	7,884,800		5,981,356		6,898,450		5,280,968		2,675,249		2,348,240		1,457,322		1,278,234
CHANGES IN UNITS:
Beginning units		484,140		409,194		411,372		340,366		198,412		158,844		210,238		226,164
Units purchased		179,203		170,263		151,964		143,297		106,475		71,917		52,529		74,321
Units redeemed		(87,769	)	(95,317	)	(92,846	)	(72,291	)	(95,875	)	(32,349	)	(42,935	)	(90,247	)
Ending units		575,574		484,140		470,490		411,372		209,012		198,412		219,832		210,238

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITMdCpIdx					GVITMyMkt				GVITNWFund				GVITNWLead
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	39,768		24,676		1,072,289		573,998		303,925		148,385		1,873		2,374
Realized gain (loss) on investments		522,315		636,460		–		–		(3,408,067	)	(2,531,902	)	(23,559	)	11,604
Change in unrealized gain (loss) on investments		(36,528	)	(355,770	)	–		–		12,236,368		7,142,405		43,954		(39,955	)
Reinvested capital gains		103,301		415,044		–		–		–		–		39,071		56,438
Net increase (decrease) in contract owners’ equity resulting from operations		628,856		720,410		1,072,289		573,998		9,132,226		4,758,888		61,339		30,461
Equity transactions:
Purchase payments received from contract owners (note 6)		291,169		439,202		3,658,857		3,098,610		5,894,796		6,837,524		28,328		8,860
Transfers between funds		(171,589	)	151,132		4,530,350		7,508,134		(2,621,391	)	(1,605,702	)	118,672		292,428
Surrenders (note 6)		(333,966	)	(950,394	)	(8,338,109	)	(11,194,006	)	(3,779,834	)	(4,096,384	)	(60,657	)	(74,082	)
Death benefits (note 4)		(16,715	)	(876	)	(88,855	)	(356,008	)	(447,645	)	(356,444	)	–		–
Net policy repayments (loans) (note 5)		(107,579	)	82,918		2,882,025		2,290,152		(431,905	)	43,084		(22,229	)	(4,668	)
Deductions for surrender charges (note 2d)		(3,703	)	(8,884	)	(36,231	)	(105,694	)	(49,358	)	(98,438	)	(80	)	(172	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(285,811	)	(278,424	)	(1,781,025	)	(1,879,132	)	(5,064,681	)	(5,265,766	)	(14,705	)	(10,544	)
Asset charges (note 3):
MSP contracts		(5,190	)	(4,804	)	(25,952	)	(24,149	)	(25,693	)	(24,634	)	(496	)	(336	)
LSFP contracts		(3,939	)	(3,397	)	(17,609	)	(18,073	)	(20,923	)	(20,184	)	(5	)	(12	)
Adjustments to maintain reserves		781		(2	)	23,903		15,000		198,038		(40,828	)	(10	)	24
Net equity transactions		(636,542	)	(573,529	)	807,354		(665,166	)	(6,348,596	)	(4,627,772	)	48,818		211,498
Net change in contract owners’ equity		(7,686	)	146,881		1,879,643		(91,168	)	2,783,630		131,116		110,157		241,959
Contract owners’ equity beginning of period		7,218,417		7,071,536		26,583,286		26,674,454		74,977,004		74,845,888		411,250		169,291
Contract owners’ equity end of period	$	7,210,731		7,218,417		28,462,929		26,583,286		77,760,634		74,977,004		521,407		411,250
CHANGES IN UNITS:
Beginning units		491,188		533,950		1,821,092		1,778,058		2,249,770		2,310,270		30,358		13,742
Units purchased		107,211		171,696		648,048		1,071,035		382,150		576,159		13,796		27,437
Units redeemed		(150,761	)	(214,458	)	(613,704	)	(1,028,001	)	(593,234	)	(636,659	)	(10,962	)	(10,821	)
Ending units		447,638		491,188		1,855,436		1,821,092		2,038,686		2,249,770		33,192		30,358

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITSmCapGr					GVITSmCapVal				GVITSmComp				GVITTGroFoc
Investment activity:	2006			2005		2006		2005		2006		2005		2006	2005
Net investment income (loss)	$	(8,928	)	(9,083	)	(18,858	)	(84,819	)	(155,927	)	(187,960	)	–	–
Realized gain (loss) on investments		176,700		132,806		680,552		1,337,766		774,570		727,928		–	–
Change in unrealized gain (loss) on investments		(152,111	)	(49,894	)	386,882		(2,634,618	)	2,061,580		(995,207	)	–	–
Reinvested capital gains		–		–		911,820		1,564,872		580,447		3,550,094		–	–
Net increase (decrease) in contract owners’ equity resulting from operations		15,661		73,829		1,960,396		183,201		3,260,670		3,094,855		–	–
Equity transactions:
Purchase payments received from contract owners (note 6)		75,195		64,152		519,804		642,074		1,337,872		1,457,404		–	148
Transfers between funds		258,701		(534,830	)	(2,640,164	)	(647,828	)	(1,170,958	)	270,824		–	(18	)
Surrenders (note 6)		(94,261	)	(96,302	)	(844,018	)	(838,592	)	(1,524,616	)	(1,681,274	)	–	–
Death benefits (note 4)		–		(30	)	(49,644	)	(17,284	)	(123,522	)	(79,856	)	–	–
Net policy repayments (loans) (note 5)		(33,295	)	(57,338	)	(101,082	)	(131,392	)	(473,911	)	(51,224	)	–	(124	)
Deductions for surrender charges (note 2d)		(4,420	)	(1,110	)	(7,012	)	(10,918	)	(14,535	)	(38,284	)	–	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(64,663	)	(76,020	)	(422,536	)	(512,442	)	(1,229,903	)	(1,257,290	)	–	(8	)
Asset charges (note 3):
MSP contracts		(445	)	(985	)	(6,603	)	(8,307	)	(17,226	)	(15,783	)	–	–
LSFP contracts		(843	)	(1,086	)	(12,656	)	(11,286	)	(16,505	)	(14,861	)	–	–
Adjustments to maintain reserves		23		(6	)	1,302		2,355		1,746		272,757		–	2
Net equity transactions		135,992		(703,555	)	(3,562,609	)	(1,533,620	)	(3,231,558	)	(1,137,587	)	–	–
Net change in contract owners’ equity		151,653		(629,726	)	(1,602,213	)	(1,350,419	)	29,112		1,957,268		–	–
Contract owners’ equity beginning of period		1,261,023		1,890,749		13,633,355		14,983,774		30,178,993		28,221,725		–	–
Contract owners’ equity end of period	$	1,412,676		1,261,023		12,031,142		13,633,355		30,208,105		30,178,993		–	–
CHANGES IN UNITS:
Beginning units		164,700		265,602		680,010		746,406		909,012		925,912		–	–
Units purchased		72,557		49,153		50,594		224,334		236,546		190,821		–	853
Units redeemed		(57,993	)	(150,055	)	(224,200	)	(290,730	)	(322,956	)	(207,721	)	–	(853	)
Ending units		179,264		164,700		506,404		680,010		822,602		909,012		–	–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	GVITUSGro					GVITVKVal				GVITMltSec				JanBal
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(3,065	)	(6,036	)	10,466		7,161		46,560		35,376		3,604		3,290
Realized gain (loss) on investments		6,918		24,938		28,626		33,920		(2,420	)	7,465		3,914		869
Change in unrealized gain (loss) on investments		(24,714	)	(91,765	)	47,073		(30,719	)	2,462		(34,567	)	16,786		11,177
Reinvested capital gains		13,100		161,958		42,502		20,414		2,816		5,570		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		(7,761	)	89,095		128,667		30,776		49,418		13,844		24,304		15,336
Equity transactions:
Purchase payments received from contract owners (note 6)		41,473		20,500		54,382		68,698		53,050		54,556		14,264		6,342
Transfers between funds		(176,078	)	151,248		161,047		234,646		470,478		(55,206	)	27,506		115,096
Surrenders (note 6)		(45,827	)	(124,464	)	(62,690	)	(57,654	)	(90,680	)	(164,012	)	(140	)	(2,538	)
Death benefits (note 4)		(1,780	)	–		(1,841	)	–		–		–		–		–
Net policy repayments (loans) (note 5)		(8,920	)	25,118		(23,247	)	864		9,444		20,336		(6,380	)	(360	)
Deductions for surrender charges (note 2d)		(4,205	)	(1,082	)	(551	)	(270	)	(963	)	(3,366	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(28,676	)	(31,880	)	(43,638	)	(36,178	)	(48,683	)	(47,972	)	(9,207	)	(5,420	)
Asset charges (note 3):
MSP contracts		(182	)	(173	)	(6	)	(17	)	(906	)	(1,034	)	(603	)	(401	)
LSFP contracts		(899	)	(231	)	(829	)	(330	)	(590	)	(634	)	–		–
Adjustments to maintain reserves		63		(236	)	(17	)	44		(53	)	21		19		(2	)
Net equity transactions		(225,031	)	38,800		82,610		209,803		391,097		(197,311	)	25,459		112,717
Net change in contract owners’ equity		(232,792	)	127,895		211,277		240,579		440,515		(183,467	)	49,763		128,053
Contract owners’ equity beginning of period		1,006,777		878,882		813,840		573,261		1,027,643		1,211,110		222,264		94,211
Contract owners’ equity end of period	$	773,985		1,006,777		1,025,117		813,840		1,468,158		1,027,643		272,027		222,264
CHANGES IN UNITS:
Beginning units		65,614		63,712		53,318		38,956		74,450		89,396		17,536		7,980
Units purchased		12,809		26,621		22,592		21,993		45,808		14,376		8,882		10,287
Units redeemed		(27,789	)	(24,719	)	(17,776	)	(7,631	)	(17,878	)	(29,322	)	(6,942	)	(731	)
Ending units		50,634		65,614		58,134		53,318		102,380		74,450		19,476		17,536

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	JanForty					JanGlTech				JanRMgCore				JanIntGroS2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(12,074	)	(16,462	)	(6,855	)	(7,187	)	(955	)	1,573		20,414		–
Realized gain (loss) on investments		216,183		203,945		166,660		96,191		(10,542	)	4,248		(1,079	)	–
Change in unrealized gain (loss) on investments		(7,039	)	86,853		(79,000	)	20,130		19,487		(20,802	)	342,478		–
Reinvested capital gains		–		–		–		–		14,511		41,532		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		197,070		274,336		80,805		109,134		22,501		26,551		361,813		–
Equity transactions:
Purchase payments received from contract owners (note 6)		144,539		183,122		86,368		101,390		16,211		19,358		132,126		–
Transfers between funds		(125,033	)	72,786		(128,569	)	(69,038	)	(66,989	)	145,336		2,436,285		–
Surrenders (note 6)		(250,901	)	(199,394	)	(90,510	)	(25,024	)	(13,972	)	(14,380	)	(45,650	)	–
Death benefits (note 4)		(16,125	)	(4,622	)	(444	)	(3,500	)	–		–		–		–
Net policy repayments (loans) (note 5)		(10,918	)	(54,628	)	402		(15,226	)	1,236		(930	)	45,949		–
Deductions for surrender charges (note 2d)		(1,318	)	(2,784	)	(1,203	)	(342	)	(141	)	(242	)	(848	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(110,682	)	(119,602	)	(56,014	)	(53,312	)	(12,706	)	(12,036	)	(31,532	)	–
Asset charges (note 3):
MSP contracts		(2,054	)	(1,888	)	(668	)	(616	)	(344	)	(90	)	(381	)	–
LSFP contracts		(1,212	)	(1,478	)	(1,094	)	(889	)	–		–		–		–
Adjustments to maintain reserves		208		(42	)	56		18		20		38		127		–
Net equity transactions		(373,496	)	(128,530	)	(191,676	)	(66,539	)	(76,685	)	137,054		2,536,076		–
Net change in contract owners’ equity		(176,426	)	145,806		(110,871	)	42,595		(54,184	)	163,605		2,897,889		–
Contract owners’ equity beginning of period		2,663,806		2,518,000		1,183,574		1,140,979		251,957		88,352		–		–
Contract owners’ equity end of period	$	2,487,380		2,663,806		1,072,703		1,183,574		197,773		251,957		2,897,889		–
CHANGES IN UNITS:
Beginning units		331,492		351,590		296,802		318,846		16,002		6,186		–		–
Units purchased		69,327		76,865		70,064		77,013		4,554		12,211		254,903		–
Units redeemed		(115,513	)	(96,963	)	(117,144	)	(99,057	)	(9,210	)	(2,395	)	(4,765	)	–
Ending units		285,306		331,492		249,722		296,802		11,346		16,002		250,138		–

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	JanIntGroS					MFSInvGrStl				MFSValueI				NBAMTBal
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	58,384		9,165		(1,862	)	(889	)	1,237		21		21		109
Realized gain (loss) on investments		987,377		268,467		12,601		7,919		11,064		9,662		3,433		1,738
Change in unrealized gain (loss) on investments		536,030		291,505		10,130		9,290		82,597		4,912		565		637
Reinvested capital gains		–		–		–		–		12,250		5,236		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,581,791		569,137		20,869		16,320		107,148		19,831		4,019		2,484
Equity transactions:
Purchase payments received from contract owners (note 6)		233,735		128,112		22,125		27,122		84,841		24,214		3,565		2,420
Transfers between funds		1,317,534		738,664		(20,929	)	54,014		451,701		145,716		(2,596	)	9,052
Surrenders (note 6)		(341,870	)	(100,680	)	(11,057	)	(23,910	)	(30,642	)	(7,942	)	(5,397	)	(15,950	)
Death benefits (note 4)		(188,919	)	(3,574	)	(2,317	)	–		–		–		–		–
Net policy repayments (loans) (note 5)		(103,277	)	(122,300	)	(19,306	)	(2,476	)	(3,840	)	(3,332	)	133		76
Deductions for surrender charges (note 2d)		(2,064	)	(1,488	)	(33	)	(142	)	(264	)	(462	)	–		(350	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(159,849	)	(91,098	)	(16,589	)	(17,532	)	(16,853	)	(10,682	)	(2,476	)	(2,260	)
Asset charges (note 3):
MSP contracts		(1,589	)	(744	)	–		–		(135	)	(56	)	–		–
LSFP contracts		(3,471	)	(1,797	)	(64	)	(42	)	(396	)	(205	)	–		–
Adjustments to maintain reserves		241		32		(32	)	(2	)	5		53		(22	)	45
Net equity transactions		750,471		545,127		(48,202	)	37,032		484,417		147,304		(6,793	)	(6,967	)
Net change in contract owners’ equity		2,332,262		1,114,264		(27,333	)	53,352		591,565		167,135		(2,774	)	(4,483	)
Contract owners’ equity beginning of period		2,896,471		1,782,207		311,844		258,492		349,947		182,812		43,609		48,092
Contract owners’ equity end of period	$	5,228,733		2,896,471		284,511		311,844		941,512		349,947		40,835		43,609
CHANGES IN UNITS:
Beginning units		312,446		255,024		23,984		20,652		23,408		12,970		2,306		2,306
Units purchased		166,137		141,436		3,448		9,922		32,298		12,042		873		848
Units redeemed		(98,075	)	(84,014	)	(6,980	)	(6,590	)	(3,352	)	(1,604	)	(947	)	(848	)
Ending units		380,508		312,446		20,452		23,984		52,354		23,408		2,232		2,306

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTFasc					NBAMTGro				NBAMTGuard				NBAMTInt
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(548	)	(632	)	(113,010	)	(114,795	)	1,512		(9,613	)	(987	)	(114	)
Realized gain (loss) on investments		8,663		1,761		944,961		829,726		101,526		241,921		70,204		(56	)
Change in unrealized gain (loss) on investments		(5,402	)	1,137		1,330,092		1,131,493		130,653		(74,766	)	(8,136	)	40,524
Reinvested capital gains		2,187		572		–		–		–		–		2,236		3,464
Net increase (decrease) in contract owners’ equity resulting from operations		4,900		2,838		2,162,043		1,846,424		233,691		157,542		63,317		43,818
Equity transactions:
Purchase payments received from contract owners (note 6)		4,812		8,162		1,023,355		1,271,972		78,174		107,446		27,950		2,266
Transfers between funds		(6,498	)	968		(11,964	)	(1,072,358	)	49,637		(338,946	)	(468,151	)	670,592
Surrenders (note 6)		(3,450	)	(364	)	(1,027,708	)	(1,526,768	)	(172,564	)	(46,544	)	(12,520	)	(938	)
Death benefits (note 4)		–		–		(132,006	)	(121,564	)	(16,775	)	(850	)	–		–
Net policy repayments (loans) (note 5)		(18,866	)	114		(155,030	)	55,140		(17,230	)	(55,134	)	7,843		–
Deductions for surrender charges (note 2d)		–		(12	)	(13,235	)	(27,324	)	(1,096	)	(1,098	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(7,671	)	(8,144	)	(961,623	)	(969,830	)	(77,522	)	(90,028	)	(7,484	)	(1,652	)
Asset charges (note 3):
MSP contracts		(27	)	(60	)	(3,240	)	(2,851	)	(1,127	)	(1,502	)	(132	)	(64	)
LSFP contracts		(27	)	(18	)	(7,445	)	(6,410	)	(1,333	)	(1,668	)	(305	)	(19	)
Adjustments to maintain reserves		(15	)	55		93,964		(20,500	)	36		2		105		33
Net equity transactions		(31,742	)	701		(1,194,932	)	(2,420,493	)	(159,800	)	(428,322	)	(452,694	)	670,218
Net change in contract owners’ equity		(26,842	)	3,539		967,111		(574,069	)	73,891		(270,780	)	(389,377	)	714,036
Contract owners’ equity beginning of period		118,661		115,122		16,670,990		17,245,059		1,960,277		2,231,057		714,036		–
Contract owners’ equity end of period	$	91,819		118,661		17,638,101		16,670,990		2,034,168		1,960,277		324,659		714,036
CHANGES IN UNITS:
Beginning units		8,286		8,244		754,106		730,188		157,638		193,216		61,076		–
Units purchased		1,826		3,059		151,002		361,914		23,931		27,210		14,675		61,230
Units redeemed		(3,962	)	(3,017	)	(204,818	)	(337,996	)	(35,849	)	(62,788	)	(53,187	)	(154	)
Ending units		6,150		8,286		700,290		754,106		145,720		157,638		22,564		61,076

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTLMat					NBAMTMCGrS				NBAMTPart				NBAMTRegS
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	97,569		89,799		(3,800	)	(1,542	)	35,690		95,725		80		(171	)
Realized gain (loss) on investments		(50,801	)	(78,403	)	71,600		47,042		1,168,643		935,379		3,920		109
Change in unrealized gain (loss) on investments		91,438		21,009		(7,589	)	2,625		(1,230,740	)	2,841,210		(1,287	)	3,213
Reinvested capital gains		–		–		–		–		2,986,619		5,916		9,918		–
Net increase (decrease) in contract owners’ equity resulting from operations		138,206		32,405		60,211		48,125		2,960,212		3,878,230		12,631		3,151
Equity transactions:
Purchase payments received from contract owners (note 6)		154,573		225,792		28,300		23,360		1,479,060		1,593,968		13,499		4,370
Transfers between funds		(59,355	)	(836,846	)	208,831		(31,402	)	(1,708,268	)	2,194,314		65,765		80,522
Surrenders (note 6)		(357,449	)	(798,462	)	(3,137	)	(12,588	)	(1,116,320	)	(1,285,982	)	(5,026	)	(46	)
Death benefits (note 4)		(36,090	)	(40	)	(257	)	–		(147,455	)	(90,206	)	–		–
Net policy repayments (loans) (note 5)		103,738		60,978		(5,183	)	252		(105,429	)	(134,670	)	1,289		(62	)
Deductions for surrender charges (note 2d)		(1,997	)	(27,730	)	–		–		(22,631	)	(28,382	)	(86	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(152,278	)	(173,380	)	(25,823	)	(12,258	)	(1,175,888	)	(1,203,698	)	(4,020	)	(696	)
Asset charges (note 3):
MSP contracts		(5,450	)	(5,400	)	(2	)	(55	)	(15,017	)	(14,116	)	–		–
LSFP contracts		(1,518	)	(1,717	)	(102	)	(392	)	(25,482	)	(22,397	)	(538	)	(17	)
Adjustments to maintain reserves		4,038		(406	)	14		(5	)	889		11,046		42		29
Net equity transactions		(351,788	)	(1,557,211	)	202,641		(33,088	)	(2,836,541	)	1,019,877		70,925		84,100
Net change in contract owners’ equity		(213,582	)	(1,524,806	)	262,852		15,037		123,671		4,898,107		83,556		87,251
Contract owners’ equity beginning of period		3,988,869		5,513,675		265,898		250,861		27,342,963		22,444,856		87,251		–
Contract owners’ equity end of period	$	3,775,287		3,988,869		528,750		265,898		27,466,634		27,342,963		170,807		87,251
CHANGES IN UNITS:
Beginning units		235,258		304,988		16,656		17,720		918,584		842,520		7,502		–
Units purchased		49,327		86,624		18,384		5,934		150,485		253,312		6,499		7,574
Units redeemed		(68,647	)	(156,354	)	(5,902	)	(6,998	)	(232,217	)	(177,248	)	(713	)	(72	)
Ending units		215,938		235,258		29,138		16,656		836,852		918,584		13,288		7,502

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	NBAMTSocRes					OppGlSec3				OppBal				OppCapAp
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(1,336	)	(1,548	)	9,497		(7,511	)	205,776		153,996		(30,793	)	29,698
Realized gain (loss) on investments		6,609		22,056		91,819		12,271		41,678		58,011		894,643		824,220
Change in unrealized gain (loss) on investments		34,903		(11,609	)	528,285		286,506		486,525		(289,228	)	(18,989	)	(343,491	)
Reinvested capital gains		3,663		344		213,406		–		650,195		525,540		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		43,839		9,243		843,007		291,266		1,384,174		448,319		844,861		510,427
Equity transactions:
Purchase payments received from contract owners (note 6)		60,778		13,606		1,677,980		1,150,944		636,886		814,120		691,678		873,822
Transfers between funds		152,802		8,030		1,648,556		1,553,416		(841,229	)	(1,510,072	)	(1,498,356	)	(1,112,944	)
Surrenders (note 6)		(16,680	)	(93,274	)	(440,872	)	(199,424	)	(781,266	)	(708,646	)	(1,100,399	)	(911,922	)
Death benefits (note 4)		–		–		(6,803	)	(6,350	)	(122,860	)	(61,648	)	(857	)	(7,502	)
Net policy repayments (loans) (note 5)		17,583		(10,538	)	309,643		255,630		(27,076	)	(24,094	)	(111,248	)	(8,372	)
Deductions for surrender charges (note 2d)		–		–		(2,417	)	(906	)	(6,059	)	(18,606	)	(16,789	)	(24,374	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(11,535	)	(7,764	)	(257,243	)	(68,940	)	(616,833	)	(669,256	)	(570,516	)	(653,916	)
Asset charges (note 3):
MSP contracts		(81	)	(64	)	(2,048	)	(860	)	(9,176	)	(9,239	)	(4,501	)	(4,960	)
LSFP contracts		(170	)	(18	)	(1,984	)	(396	)	(3,632	)	(3,920	)	(6,059	)	(6,231	)
Adjustments to maintain reserves		34		22		10		275		13,967		(7,348	)	928		(338	)
Net equity transactions		202,731		(90,000	)	2,924,822		2,683,389		(1,757,278	)	(2,198,709	)	(2,616,119	)	(1,856,737	)
Net change in contract owners’ equity		246,570		(80,757	)	3,767,829		2,974,655		(373,104	)	(1,750,390	)	(1,771,258	)	(1,346,310	)
Contract owners’ equity beginning of period		183,707		264,464		2,974,655		–		14,108,225		15,858,615		12,930,525		14,276,835
Contract owners’ equity end of period	$	430,277		183,707		6,742,484		2,974,655		13,735,121		14,108,225		11,159,267		12,930,525
CHANGES IN UNITS:
Beginning units		12,464		19,112		247,696		–		523,202		515,596		846,284		916,154
Units purchased		16,093		6,113		285,602		264,357		76,165		235,916		110,061		248,511
Units redeemed		(2,751	)	(12,761	)	(53,478	)	(16,661	)	(120,735	)	(228,310	)	(283,819	)	(318,381	)
Ending units		25,806		12,464		479,820		247,696		478,632		523,202		672,526		846,284

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	OppBdFd					OppGlSec				OppHighInc				OppMSt
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	517,980		555,683		142,602		135,727		40,309		40,432		11,780		9,719
Realized gain (loss) on investments		(61,428	)	5,790		2,094,212		1,456,861		(5,076	)	6,196		72,433		73,904
Change in unrealized gain (loss) on investments		59,204		(330,503	)	1,394,466		2,816,700		17,994		(35,276	)	185,311		(4,654	)
Reinvested capital gains		–		–		1,920,739		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		515,756		230,970		5,552,019		4,409,288		53,227		11,352		269,524		78,969
Equity transactions:
Purchase payments received from contract owners (note 6)		625,793		765,224		44,188		655,236		35,573		45,286		95,216		104,358
Transfers between funds		86,471		(349,990	)	(1,513,966	)	(1,906,256	)	113,167		(30,540	)	392,275		439,782
Surrenders (note 6)		(459,829	)	(1,329,182	)	(2,151,334	)	(2,043,212	)	(66,566	)	(91,762	)	(44,398	)	(219,672	)
Death benefits (note 4)		(29,886	)	(8,662	)	(211,952	)	(12,008	)	–		–		(79,297	)	–
Net policy repayments (loans) (note 5)		(35,645	)	116,484		(704,823	)	(596,226	)	(22,757	)	(22,672	)	(73,454	)	(44,696	)
Deductions for surrender charges (note 2d)		(8,577	)	(14,108	)	(20,300	)	(33,896	)	(439	)	(2,040	)	(148	)	(2,496	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(492,130	)	(540,300	)	(1,210,228	)	(1,407,740	)	(22,996	)	(23,802	)	(79,006	)	(69,568	)
Asset charges (note 3):
MSP contracts		(7,449	)	(8,128	)	(14,159	)	(13,732	)	(717	)	(732	)	(2,757	)	(1,063	)
LSFP contracts		(6,411	)	(6,051	)	(12,028	)	(11,136	)	(398	)	(308	)	(1,103	)	(1,048	)
Adjustments to maintain reserves		9,216		(1,476	)	2,798		1,779		(64	)	44		98		(71	)
Net equity transactions		(318,447	)	(1,376,189	)	(5,791,804	)	(5,367,191	)	34,803		(126,526	)	207,426		205,526
Net change in contract owners’ equity		197,309		(1,145,219	)	(239,785	)	(957,903	)	88,030		(115,174	)	476,950		284,495
Contract owners’ equity beginning of period		11,253,929		12,399,148		36,093,540		37,051,443		576,195		691,369		1,928,995		1,644,500
Contract owners’ equity end of period	$	11,451,238		11,253,929		35,853,755		36,093,540		664,225		576,195		2,405,945		1,928,995
CHANGES IN UNITS:
Beginning units		494,198		538,742		1,029,012		1,094,866		46,888		57,270		205,266		185,346
Units purchased		156,167		123,487		158,662		280,077		12,764		12,996		87,812		85,392
Units redeemed		(173,079	)	(168,031	)	(285,042	)	(345,931	)	(10,044	)	(23,378	)	(70,350	)	(65,472	)
Ending units		477,286		494,198		902,632		1,029,012		49,608		46,888		222,728		205,266

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	OppMStSCap					OppMidCap				PVTGroIncIB				PVTIntEqIB
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(4,855	)	(4,033	)	(12,067	)	(14,677	)	707		874		(684	)	772
Realized gain (loss) on investments		102,276		27,197		125,208		265,782		9,397		4,234		29,844		18,426
Change in unrealized gain (loss) on investments		(29,831	)	16,728		(71,606	)	(73,853	)	6,494		(87	)	37,078		9,869
Reinvested capital gains		25,550		13,920		–		–		2,275		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		93,140		53,812		41,535		177,252		18,873		5,021		66,238		29,067
Equity transactions:
Purchase payments received from contract owners (note 6)		90,956		47,892		128,202		147,500		5,428		4,690		30,702		7,090
Transfers between funds		398,737		112,184		(251,389	)	(274,800	)	30,462		51,834		(23,641	)	171,922
Surrenders (note 6)		(31,182	)	(21,312	)	(153,575	)	(174,922	)	(35,269	)	(22,422	)	(10,603	)	(11,238	)
Death benefits (note 4)		–		–		(12,151	)	(8,766	)	–		–		–		–
Net policy repayments (loans) (note 5)		(11,558	)	(6,416	)	918		(10,654	)	(2,775	)	(2	)	(1,039	)	(1,574	)
Deductions for surrender charges (note 2d)		(787	)	(216	)	(1,752	)	(3,076	)	(411	)	(778	)	–		(26	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(38,278	)	(24,324	)	(107,289	)	(120,362	)	(12,309	)	(5,558	)	(11,802	)	(7,460	)
Asset charges (note 3):
MSP contracts		(128	)	(142	)	(483	)	(721	)	–		–		(10	)	(63	)
LSFP contracts		(225	)	(53	)	(420	)	(576	)	(114	)	(111	)	(26	)	(4	)
Adjustments to maintain reserves		3		57		317		(158	)	(29	)	34		28		(8	)
Net equity transactions		407,538		107,670		(397,622	)	(446,535	)	(15,017	)	27,687		(16,391	)	158,639
Net change in contract owners’ equity		500,678		161,482		(356,087	)	(269,283	)	3,856		32,708		49,847		187,706
Contract owners’ equity beginning of period		632,350		470,868		1,934,946		2,204,229		111,982		79,274		320,613		132,907
Contract owners’ equity end of period	$	1,133,028		632,350		1,578,859		1,934,946		115,838		111,982		370,460		320,613
CHANGES IN UNITS:
Beginning units		35,404		28,790		308,834		390,550		7,844		5,796		19,614		9,052
Units purchased		29,626		9,829		57,133		62,529		4,968		4,153		8,618		11,550
Units redeemed		(9,698	)	(3,215	)	(120,149	)	(144,245	)	(5,778	)	(2,105	)	(10,424	)	(988	)
Ending units		55,332		35,404		245,818		308,834		7,034		7,844		17,808		19,614

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	PVTVoyIB					TRoeBlChip2				TRowEqInc2				TRowLtdTBd2
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	(251	)	182		(770	)	(6	)	6,599		1,414		1,528		164
Realized gain (loss) on investments		3,324		795		7,612		168		1,102		2,420		(54	)	(1	)
Change in unrealized gain (loss) on investments		1,141		3,168		23,688		1,009		82,943		(9,434	)	312		(62	)
Reinvested capital gains		–		–		–		–		30,539		12,064		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		4,214		4,145		30,530		1,171		121,183		6,464		1,786		101
Equity transactions:
Purchase payments received from contract owners (note 6)		2,383		3,564		18,007		1,292		94,354		12,674		1,316		98
Transfers between funds		(27,059	)	52,596		136,078		242,994		789,443		311,286		26,415		34,504
Surrenders (note 6)		–		(2,990	)	(54,370	)	–		(3,239	)	–		(514	)	–
Death benefits (note 4)		–		–		–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(482	)	(34	)	121		–		(5,594	)	46		(97	)	(10	)
Deductions for surrender charges (note 2d)		–		–		–		–		(183	)	–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(4,925	)	(3,374	)	(15,811	)	(3,320	)	(31,449	)	(5,266	)	(1,420	)	(178	)
Asset charges (note 3):
MSP contracts		(196	)	(190	)	(256	)	(42	)	(49	)	–		–		–
LSFP contracts		(100	)	(108	)	(111	)	(50	)	(333	)	(133	)	–		–
Adjustments to maintain reserves		10		–		13		44		58		54		(21	)	32
Net equity transactions		(30,369	)	49,464		83,671		240,918		843,008		318,661		25,679		34,446
Net change in contract owners’ equity		(26,155	)	53,609		114,201		242,089		964,191		325,125		27,465		34,547
Contract owners’ equity beginning of period		107,118		53,509		242,089		–		325,125		–		34,547		–
Contract owners’ equity end of period	$	80,963		107,118		356,290		242,089		1,289,316		325,125		62,012		34,547
CHANGES IN UNITS:
Beginning units		8,234		4,322		21,492		–		30,698		–		3,428		–
Units purchased		391		4,455		21,990		21,801		77,295		31,225		2,763		3,446
Units redeemed		(2,709	)	(543	)	(14,420	)	(309	)	(4,871	)	(527	)	(231	)	(18	)
Ending units		5,916		8,234		29,062		21,492		103,122		30,698		5,960		3,428

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	VEWrldBd					VEWrldEMkt				VEWrldHAs				VKCorPlus
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	230,704		234,470		1,284		5,720		(65,291	)	(33,271	)	11,934		7,542
Realized gain (loss) on investments		(64,415	)	(27,287	)	1,637,462		696,415		2,448,894		1,358,582		(4,884	)	(442	)
Change in unrealized gain (loss) on investments		(4,075	)	(346,641	)	639,534		1,334,255		(885,664	)	1,986,081		277		246
Reinvested capital gains		–		–		939,523		–		642,387		–		1,911		1,912
Net increase (decrease) in contract owners’ equity resulting from operations		162,214		(139,458	)	3,217,803		2,036,390		2,140,326		3,311,392		9,238		9,258
Equity transactions:
Purchase payments received from contract owners (note 6)		150,914		149,562		468,520		353,284		932,089		621,334		8,687		5,030
Transfers between funds		(71,300	)	(374,642	)	(72,994	)	1,107,540		(496,466	)	1,387,764		51,665		168,874
Surrenders (note 6)		(505,868	)	(215,630	)	(645,512	)	(376,808	)	(1,134,179	)	(991,560	)	(84,046	)	(8,026	)
Death benefits (note 4)		(1,420	)	(11,218	)	(289,173	)	(7,398	)	(164,468	)	(39,474	)	–		–
Net policy repayments (loans) (note 5)		139,390		(9,374	)	(765	)	(48,756	)	(189,311	)	(33,512	)	8,821		(1,000	)
Deductions for surrender charges (note 2d)		(2,160	)	(2,308	)	(5,179	)	(11,754	)	(4,653	)	(10,622	)	(328	)	(44	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(133,845	)	(153,478	)	(326,146	)	(282,468	)	(406,102	)	(345,372	)	(16,071	)	(12,346	)
Asset charges (note 3):
MSP contracts		(1,176	)	(1,329	)	(4,313	)	(3,275	)	(6,868	)	(5,608	)	(79	)	(64	)
LSFP contracts		(454	)	(596	)	(7,724	)	(6,149	)	(3,074	)	(1,890	)	(61	)	–
Adjustments to maintain reserves		2,192		(745	)	513		(653	)	(11,966	)	7,525		36		(28	)
Net equity transactions		(423,727	)	(619,758	)	(882,773	)	723,563		(1,484,998	)	588,585		(31,376	)	152,396
Net change in contract owners’ equity		(261,513	)	(759,216	)	2,335,030		2,759,953		655,328		3,899,977		(22,138	)	161,654
Contract owners’ equity beginning of period		3,105,984		3,865,200		8,950,268		6,190,315		10,455,104		6,555,127		363,898		202,244
Contract owners’ equity end of period	$	2,844,471		3,105,984		11,285,298		8,950,268		11,110,432		10,455,104		341,760		363,898
CHANGES IN UNITS:
Beginning units		167,104		186,970		562,354		517,510		347,218		302,712		33,292		19,166
Units purchased		24,635		77,210		98,786		173,072		56,622		153,010		10,102		16,131
Units redeemed		(47,305	)	(97,076	)	(152,612	)	(128,228	)	(99,378	)	(108,504	)	(13,110	)	(2,005	)
Ending units		144,434		167,104		508,528		562,354		304,462		347,218		30,284		33,292

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2006 and 2005

	VKEmMkt					VKUSRealEst				WFAVTDisc				WFAVTOpp
Investment activity:	2006			2005		2006		2005		2006		2005		2006		2005
Net investment income (loss)	$	183,241		176,187		100,766		99,923		(50,456	)	(54,490	)	(215,703	)	(239,912	)
Realized gain (loss) on investments		48,041		34,234		1,979,110		1,909,179		369,770		289,653		55		(490,049	)
Change in unrealized gain (loss) on investments		(46,208	)	24,829		3,692,843		366,974		714,074		(437,422	)	263,654		3,022,828
Reinvested capital gains		42,664		40,480		1,496,337		519,092		–		715,214		3,582,720		–
Net increase (decrease) in contract owners’ equity resulting from operations		227,738		275,730		7,269,056		2,895,168		1,033,388		512,955		3,630,726		2,292,867
Equity transactions:
Purchase payments received from contract owners (note 6)		95,715		345,778		915,299		950,232		374,181		396,298		1,611,457		1,963,664
Transfers between funds		(232,754	)	(22,574	)	987,861		(651,482	)	(33,725	)	(689,072	)	(1,406,170	)	(2,083,948	)
Surrenders (note 6)		(142,002	)	(139,664	)	(1,291,997	)	(1,252,896	)	(628,573	)	(425,832	)	(1,992,977	)	(2,472,238	)
Death benefits (note 4)		(9,746	)	–		(99,378	)	(32,252	)	(8,451	)	(30,356	)	(113,092	)	(185,056	)
Net policy repayments (loans) (note 5)		(14,640	)	(9,176	)	(165,156	)	26,554		(29,981	)	61,912		(27,911	)	(300,760	)
Deductions for surrender charges (note 2d)		(1,416	)	(1,984	)	(16,388	)	(21,224	)	(1,140	)	(6,028	)	(13,532	)	(28,846	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(97,504	)	(101,168	)	(830,874	)	(779,820	)	(322,344	)	(335,386	)	(1,464,476	)	(1,573,710	)
Asset charges (note 3):
MSP contracts		(1,080	)	(1,143	)	(9,590	)	(8,279	)	(2,219	)	(1,928	)	(7,783	)	(8,121	)
LSFP contracts		(4,327	)	(4,366	)	(10,154	)	(8,725	)	(870	)	(840	)	(7,925	)	(8,407	)
Adjustments to maintain reserves		253		11		317		(9,658	)	970		5,691		3,144		582
Net equity transactions		(407,501	)	65,714		(520,060	)	(1,787,550	)	(652,152	)	(1,025,541	)	(3,419,265	)	(4,696,840	)
Net change in contract owners’ equity		(179,763	)	341,444		6,748,996		1,107,618		381,236		(512,586	)	211,461		(2,403,973	)
Contract owners’ equity beginning of period		2,661,649		2,320,205		20,119,546		19,011,928		7,796,130		8,308,716		33,571,537		35,975,510
Contract owners’ equity end of period	$	2,481,886		2,661,649		26,868,542		20,119,546		8,177,366		7,796,130		33,782,998		33,571,537
CHANGES IN UNITS:
Beginning units		143,840		140,706		482,116		498,620		263,596		284,110		831,198		802,158
Units purchased		31,041		35,963		107,910		146,492		68,246		87,076		146,683		332,641
Units redeemed		(54,087	)	(32,829	)	(116,918	)	(162,996	)	(91,224	)	(107,590	)	(231,685	)	(303,601	)
Ending units		120,794		143,840		473,108		482,116		240,618		263,596		746,196		831,198

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

NOTES TO FINANCIAL STATEMENTS

December 31, 2006 and 2005

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide 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:

Portfolios of the AIM Variable Insurance Funds;

AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I (AIMBValue)

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

AIM Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I (AIMCapDev)

Portfolios of the AllianceBernstein Variable Products Series Fund Inc.;

AllianceBernstein Variable Products Series Fund Inc. – Growth and Income Portfolio –

Class A (AlVPGrIncA)

AllianceBernstein Variable Products Series Fund Inc. – Small-Mid Cap Value Portfolio –

Class A (AlVPSmMdCpA)

Portfolios of the American Century Variable Portfolios Inc.;

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

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

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

American Century Variable Portfolios Inc. – Inflation Protection Fund – Class II (ACVPInflPro2)

American Century Variable Portfolios Inc. – International Fund – Class I (ACVPInt)

American Century Variable Portfolios Inc. – International Fund – Class III (ACVPInt3)

American Century Variable Portfolios Inc. – Mid Cap Value Fund – Class I (ACVPMdCpV)

American Century Variable Portfolios Inc. – Ultra^®Fund – Class I (ACVPUltra)

American Century Variable Portfolios Inc. – Value Fund – Class I (ACVPVal)

American Century Variable Portfolios Inc. – Vista^SM Fund – Class I (ACVPVista)

Portfolios of the Credit Suisse Trust;

Credit Suisse Trust – Global Small Cap Portfolio (CSTGlSmCp)

Credit Suisse Trust – International Focus Portfolio (CSTIntFoc)

Credit Suisse Trust – Small Cap Growth Portfolio (CSTSmCapGr)

Portfolios of the Dreyfus Investment Portfolios;

Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap)

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

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

Portfolios of the Dreyfus Variable Investment Fund;

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

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

Dreyfus Variable Investment Fund – Growth and Income Portfolio – Initial Shares (DryVIGrInc)

(Continued)

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

Portfolios of the Federated Insurance Series;

    Federated Insurance Series – Federated American Leaders Fund II – Primary Shares (FedAmLead)

    Federated Insurance Series – Federated Capital Appreciation Fund II – Primary Shares (FedCapAp)

    Federated Insurance Series – Federated Market Opportunity Fund II – Service Shares (FedMrkOp)*

    Federated Insurance Series – Federated Quality Bond Fund II – Primary Shares (FedQualBd)

Portfolios of the Fidelity^®Variable Insurance Products Fund;

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

    Fidelity^®Variable Insurance Products Fund – Growth Portfolio – Initial Class (FidVIPGr)

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

    Fidelity^®Variable Insurance Products Fund – Overseas Portfolio – Initial Class (FidVIPOv)

    Fidelity^®Variable Insurance Products Fund – Overseas Portfolio – Service Class R (FidVIPOvSR)

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

    Fidelity^®Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class (FidVIPAM)

    Fidelity^®Variable Insurance Products Fund II – Contrafund^®Portfolio – Initial Class (FidVIPCon)

    Fidelity^®Variable Insurance Products Fund II – Investment Grade Bond Portfolio –

        Service Class (FidVIPIGBdS)

Portfolios of the Fidelity^®Variable Insurance Products Fund III;

    Fidelity^®Variable Insurance Products Fund III – Growth Opportunities Portfolio –

        Initial Class (FidVIPGrOp)

    Fidelity^®Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class (FidVIPMCapS)

    Fidelity^®Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class (FidVIPVaIS)

Portfolios of the Fidelity^®Variable Insurance Products Fund IV;

    Fidelity^®Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2 (FidVIPEnergyS2)

        (formerly Fidelity^®Variable Insurance Products Fund IV – Natural Resources Portfolio – Service Class 2)

    Fidelity^®Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio –

        Service Class (FidVIPFree10S)

    Fidelity^®Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio –

        Service Class (FidVIPFree20S)

    Fidelity^®Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio –

        Service Class (FidVIPFree30S)

Portfolios of the Franklin Templeton Variable Insurance Products Trust;

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

        Class 2 (FrVIPIncSec2)

    Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund –

        Class 1 (FrVIPRisDiv)

    Franklin Templeton Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund –

        Class 1 (FrVIPSmCapV1)

    Franklin Templeton Variable Insurance Products Trust – Templeton Developing Markets Securities Fund –

        Class 3 (FrVIPDevMrk3)

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

        Class 1 (FrVIPForSec)

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

        Class 3 (FrVIPForSec3)

    Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund –

        Class 3 (FrVIPGlInc3)

Portfolios of the Gartmore Variable Insurance Trust (GVIT);

    Gartmore GVIT – American Funds GGVIT Asset Allocation Fund – Class II (GVITAstAll2)

    Gartmore GVIT – American Funds GGVIT Bond Fund – Class II (GVITBnd2)

    Gartmore GVIT – American Funds GGVIT Global Growth Fund – Class II (GVITGlobGr2)

    Gartmore GVIT – American Funds GGVIT Growth Fund – Class II (GVITGrowth2)

    Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I (GVITIntValI)

    Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class III (GVITIntVal3)

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

(Continued)

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

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

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

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

    Gartmore GVIT – Global Financial Services Fund – Class I (GVITGlFin)

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

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

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

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

    Gartmore GVIT – Global Utilities Fund – Class I (GVITGlUtl)

    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 – International Index Fund – Class VI (GVITIntIdx6)

    Gartmore GVIT – Investor Destinations Aggressive Fund – Class II (GVITIDAgg2)

    Gartmore GVIT – Investor Destinations Conservative Fund – Class II (GVITIDCon2)

    Gartmore GVIT – Investor Destinations Moderate Fund – Class II (GVITIDMod2)

    Gartmore GVIT – Investor Destinations Moderately Aggressive Fund – Class II (GVITIDModAg2)

    Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II (GVITIDModCon2)

    Gartmore GVIT – Mid Cap Growth Fund – Class I (GVITMdCpGr)

    Gartmore GVIT – Mid Cap Index Fund – Class I (GVITMdCpIdx)

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

    Gartmore GVIT – Nationwide Fund – Class I (GVITNWFund)

    Gartmore GVIT – Nationwide Leaders Fund – Class I (GVITNWLead)

    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 GGVIT Comstock Value Fund – Class I (GVITVKVal)

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

Portfolios of the Janus Aspen Series;

    Janus Aspen Series – Balanced Portfolio – Service Shares (JanBal)

    Janus Aspen Series – Forty Portfolio – Service Shares (JanForty)

    Janus Aspen Series – Global Technology Portfolio – Service Shares (JanGlTech)

    Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JanRMgCore)

        (formerly Janus Aspen Series – Risk-Managed Core Portfolio – Service Shares)

    Janus Aspen Series – International Growth Portfolio – Service II Shares (JanIntGroS2)

    Janus Aspen Series – International Growth Portfolio – Service Shares (JanIntGroS)

Portfolios of the MFS Variable Insurance Trust;

    MFS Variable Insurance Trust – Investors Growth Stock Series – Initial Class (MFSInvGrStI)

    MFS Variable Insurance Trust – Value Series – Initial Class (MFSValueI)

Portfolios of the Neuberger Berman Advisers Management Trust;

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

    Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S (NBAMTFasc)

    Neuberger Berman Advisers Management Trust – Growth Portfolio – Class I (NBAMTGro)

    Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares (NBAMTGuard)

    Neuberger Berman Advisers Management Trust – International Portfolio – Class S (NBAMTInt)

    Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio –

        Class I (NBAMTLMat)

    Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio –

        S Class Shares (NBAMTMCGrS)

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

    Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S (NBAMTRegS)

    Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio Class I (NBAMSocRes)

(Continued)

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

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

Portfolios of the Oppenheimer Variable Account Funds;

    Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA –

        Non-Service Shares (OppBal) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Balanced Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA –

        Non-Service Shares (OppCapAp) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Capital Appreciation Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA –

        Non-Service Shares (OppBdFd) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Bond Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA –

        Non-Service Shares (OppGlSec) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Global Securities Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA –

        Non-Service Shares (OppHighInc) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer High Income Fund/VA – Initial Class)

    Oppenheimer Variable Account Funds – Oppenheimer Main Street^® Fund/VA –

        Non-Service Shares (OppMSt) (formerly Oppenheimer Variable Account Funds –

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

    Oppenheimer Variable Account Funds – Oppenheimer Main Street^® Small Cap Fund/VA –

        Non-Service Shares (OppMStSCap) (formerly Oppenheimer Variable Account Funds –

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

    Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA –

        Non-Service Shares (OppMidCap) (formerly Oppenheimer Variable Account Funds –

        Oppenheimer Aggressive Growth Fund/VA – Initial Class)

Portfolios of the Putnam Variable Trust;

    Putnam Variable Trust – Putnam VT Growth & Income Fund – IB Shares (PVTGroIncIB)

    Putnam Variable Trust – Putnam VT International Equity Fund – IB Shares (PVTIntEqIB)

    Putnam Variable Trust – Putnam VT Voyager Fund – IB Shares (PVTVoyIB)

    T. Rowe Price Blue Chip Growth Portfolio – II (TRoeBlChip2)

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

    T. Rowe Price Limited Term Bond Portfolio – Class II (TRowLtdTBd2)

Portfolios of the Van Eck Worldwide Insurance Trust;

    Van Eck Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class (VEWrldBd)

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

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

Portfolios of the Van Kampen – The Universal Institutional Funds Inc.;

    Van Kampen – The Universal Institutional Funds Inc. – Core Plus Fixed Income Portfolio –

        Class I (VKCorPlus)

    Van Kampen – The Universal Institutional Funds Inc. – Emerging Markets Debt Portfolio –

        Class I (VKEmMkt)

    Van Kampen – The Universal Institutional Funds Inc. – U.S. Real Estate Portfolio –

        Class I (VKUSRealEst)

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

    Wells Fargo Advantage Variable Trust Funds^SM–

        Wells Fargo Advantage VT Discovery Fund^SM (WFAVTDisc)

Wells Fargo Advantage Variable Trust Funds^SM–

        Wells Fargo Advantage VT Opportunity Fund^SM (WFAVTOpp)

(Continued)

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

At December 31, 2006, contract owners were invested in all of the above funds, except for those indicated with an asterisk(*). The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners and 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, 2006 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 First in – First out basis, and dividends (which include capital gain distributions) are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

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

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

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

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

(f) New Accounting Pronouncement  

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

(Continued)

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

(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, 2006 and 2005, total front-end sales charge deductions were $3,219,241 and $3,591,203, 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).

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.

(Continued)

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

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.

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.

(Continued)

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

The following table provides mortality, expense and administration charges by contract type for the period ended December 31, 2006:

	Total		AIMBValue	AIMCapAp	AIMCapDev	AlVPGrIncA
Single Premium contracts issued prior to April 16,1990	$	755,551	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		6,714	–	–	–	–
Multiple Payment and Flexible Premium contracts		5,247,520	5,333	556	2,227	4,996
Total	$	6,009,785	5,333	556	2,227	4,996
	AlVPSmMdCpA		ACVPBal	ACVPCapAp	ACVPIncGr	ACVPInfPro2
Single Premium contracts issued prior to April 16,1900	$	–	6,523	14,494	2,879	–
Single Premium contracts issued on or after April 16, 1900		–	–	260	–	–
Multiple Payment and Flexible Premium contracts		6,492	27,390	81,357	18,754	5,337
Total	$	6,492	33,913	96,111	21,633	5,337
	ACVPInt		ACVPInt3	ACVPMdCpV	ACVPUltra	ACVPVal
Single Premium contracts issued prior to April 16,1990	$	7,553	–	–	206	15,253
Single Premium contracts issued on or after April 16, 1900		15	–	–	–	–
Multiple Payment and Flexible Premium contracts		57,303	11,439	1,547	2,979	66,948
Total	$	64,871	11,439	1,547	3,185	82,201
	ACVPVista		CSTGlSmCp	CSTIntFoc	CSTSmCapGr	DryIPSmCap
Single Premium contracts issued prior to April 16,1900	$	–	648	5,733	6,791	3,345
Single Premium contracts issued on or after April 16, 1900		–	–	–	75	34
Multiple Payment and Flexible Premium contracts		260	5,376	40,355	71,306	8,709
Total	$	260	6,024	46,088	78,172	12,088
	DrySRGro		DryStkIx	DryVIApp	DryVIFDevLd	DryVIFGrInc
Single Premium contracts issued prior to April 16,1900	$	1,655	44,228	10,762	–	2,674
Single Premium contracts issued on or after April 16, 1900		–	190	–	–	–
Multiple Payment and Flexible Premium contracts		56,813	420,006	28,234	2,515	10,724
Total	$	58,468	464,424	38,996	2,515	13,398
	FedAmLead		FedCapAp	FedQualBd	FidVIPEI	FidVIPGr
Single Premium contracts issued prior to April 16,1900	$	–	–	2,938	74,564	61,317
Single Premium contracts issued on or after April 16, 1900		–	–	–	761	697
Multiple Payment and Flexible Premium contracts		1,066	161	5,753	404,428	474,287
Total	$	1,066	161	8,691	479,753	536,301

(Continued)

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

	FidVIPHI		FidVIPOv	FidVIPOvSR	FidVIPAM	FidVIPCon
Single Premium contracts issued prior to April 16, 1900	$	18,890	20,977	–	31,610	52,633
Single Premium contracts issued on or after April 16, 1900		264	330	–	186	–
Multiple Payment and Flexible Premium contracts		98,990	80,785	23,968	102,214	396,053
Total	$	118,144	102,092	23,968	134,010	448,686
	FidVIPIGBdS		FidVIPGrOp	FidVIPMCapS	FidVIPVaIS	FidVIPEnergyS2
Single Premium contracts issued prior to April 16, 1900	$	–	896	–	1,930	–
Single Premium contracts issued on or after April 16, 1900		–	63	–	–	–
Multiple Payment and Flexible Premium contracts		17,556	24,342	55,242	5,683	19,848
Total	$	17,556	25,301	55,242	7,613	19,848
	FidVIPFree10S		FidVIPFree20S	FidVIPFree30S	FrVIPIncSec2	FrVIPRisDiv
Single Premium contracts issued prior to April 16, 1900	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		509	1,764	563	389	22,630
Total	$	509	1,764	563	389	22,630
	FrVIPSmCapV1		FrVIPDevMrk3	FrVIPForSec	FrVIPForSec3	FrVIPGlInc3
Single Premium contracts issued prior to April 16, 1900	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		21,096	6,747	6,968	5,032	1,164
Total	$	21,096	6,747	6,968	5,032	1,164
	GVITAstAll2		GVITBnd2	GVITGlobGr2	GVITGrowth2	GVITIntValI
Single Premium contracts issued prior to April 16, 1900	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		464	711	705	983	5,798
Total	$	464	711	705	983	5,798
	GVITIntVal3		GVITEmMrkts	GVITEmMrkts3	GVITFHiInc	GVITFHiInc3
Single Premium contracts issued prior to April 16, 1900	$	–	6,330	–	–	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		7,425	10,247	13,757	1,444	1,486
Total	$	7,425	16,577	13,757	1,444	1,486
	GVITGlFin		GVITGlHlth	GVITGlHlth3	GVITGlTech	GVITGlTech3
Single Premium contracts issued prior to April 16, 1900	$	1,009	2,422	–	707	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		4,632	1,995	3,035	2,742	2,004
Total	$	5,641	4,417	3,035	3,449	2,004

(Continued)

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

	GVITGlUtl		GVITGvtBd	GVITGrowth	GVITIntGro	GVITIntIdx6
Single Premium contracts issued prior to April 16, 1900	$	3,228	20,238	3,457	3,314	–
Single Premium contracts issued on or after April 16, 1900		3	175	–	–	–
Multiple Payment and Flexible Premium contracts		7,500	51,731	106,949	5,982	52
Total	$	10,731	72,144	110,406	9,296	52
	GVITIDAgg2		GVITIDCon2	GVITIDMod2	GVITIDModAg2	GVITIDModCon2
Single Premium contracts issued prior to April 16, 1900	$	20	626	6,096	3,389	11,821
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		15,269	2,977	32,884	35,627	10,981
Total	$	15,289	3,603	38,980	39,016	22,802
	GVITMdCpGr		GVITMdCpIdx	GVITMyMkt	GVITNWFund	GVITNWLead
Single Premium contracts issued prior to April 16, 1900	$	1,545	7,343	58,160	17,799	342
Single Premium contracts issued on or after April 16, 1900		–	10	678	128	–
Multiple Payment and Flexible Premium contracts		6,902	35,599	114,922	488,325	2,368
Total	$	8,447	42,952	173,760	506,252	2,710
	GVITSmCapGr		GVITSmCapVal	GVITSmComp	GVITUSGro	GVITVKVal
Single Premium contracts issued prior to April 16, 1900	$	1,525	13,933	7,832	1,717	–
Single Premium contracts issued on or after April 16, 1900		19	187	129	–	–
Multiple Payment and Flexible Premium contracts		7,384	58,348	180,683	3,488	5,176
Total	$	8,928	72,468	188,644	5,205	5,176
	GVITMltSec		JanBal	JanForty	JanGlTech	JanRMgCore
Single Premium contracts issued prior to April 16, 1900	$	1,450	–	810	719	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		5,916	1,265	14,800	6,136	1,172
Total	$	7,366	1,265	15,610	6,855	1,172
	JanIntGroS2		JanIntGroS	MFSInvGrStl	MFSValueI	NBAMTBal
Single Premium contracts issued prior to April 16, 1900	$	–	10,739	–	–	–
Single Premium contracts issued on or after April 16, 1900		–	452	–	–	–
Multiple Payment and Flexible Premium contracts		4,404	20,047	1,862	3,097	293
Total	$	4,404	31,238	1,862	3,097	293
	NBAMTFasc		NBAMTGro	NBAMTGuard	NBAMTInt	NBAMTLMat
Single Premium contracts issued prior to April 16, 1900	$	–	13,999	536	–	6,907
Single Premium contracts issued on or after April 16, 1900		–	440	–	–	93
Multiple Payment and Flexible Premium contracts		548	98,571	10,839	1,594	16,359
Total	$	548	113,010	11,375	1,594	23,359

(Continued)

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

	NBAMTMCGrS		NBAMTPart	NBAMTRegS	NBAMTSocRes	OppGlSec3
Single Premium contracts issued prior to April 16, 1900	$	–	14,473	–	–	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		3,800	143,746	635	1,852	31,267
Total	$	3,800	158,219	635	1,852	31,267
	OppBal		OppCapAp	OppBdFd	OppGlSec	OppHighInc
Single Premium contracts issued prior to April 16, 1900	$	18,778	8,311	6,510	25,606	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		71,217	67,182	61,620	199,502	3,152
Total	$	89,995	75,493	68,130	225,108	3,152
	OppMSt		OppMStSCap	OppMidCap	PVTGroIncIB	PVTIntEqIB
Single Premium contracts issued prior to April 16, 1900	$	1,297	–	1,319	–	–
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		9,198	6,149	10,748	754	1,911
Total	$	10,495	6,149	12,067	754	1,911
	PVTVoyIB		TRoeBlChip2	TRowEqInc2	TRowLtdTBd2	VEWrldBd
Single Premium contracts issued prior to April 16, 1900	$	–	–	–	–	6,236
Single Premium contracts issued on or after April 16, 1900		–	–	–	–	111
Multiple Payment and Flexible Premium contracts		366	1,427	3,731	372	13,683
Total	$	366	1,427	3,731	372	20,030
	VEWrldEMkt		VEWrldHAs	VKCorPlus	VKEmMkt	VKUSRealEst
Single Premium contracts issued prior to April 16, 1900	$	8,079	20,734	–	999	20,645
Single Premium contracts issued on or after April 16, 1900		846	344	–	109	–
Multiple Payment and Flexible Premium contracts		49,465	51,762	2,445	12,046	127,826
Total	$	58,390	72,840	2,445	13,154	148,471
	WFAVTDisc		WFAVTOpp
Single Premium contracts issued prior to April 16, 1900	$	4,265	21,787
Single Premium contracts issued on or after April 16, 1900		–	115
Multiple Payment and Flexible Premium contracts		46,191	193,801
Total	$	50,456	215,703

(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, 2006 and 2005, total transfers into the Account from the fixed account were $25,634,866 and $24,517,955, respectively, and total transfers from the Account to the fixed account were $30,150,545 and $27,229,398, 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 universal life 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, 2006.

	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 Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.00%	1,192	$	17.373346	$	20,709	0.55%	13.20%
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 Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
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 Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.00%	2,070		19.189430		39,722	0.00%	16.52%
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
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.00%	19,406		17.056580		331,000	1.47%	17.29%
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
AllianceBernstein Variable Products Series Fund, Inc. – Small-Mid Cap Value Portfolio – Class A
2006	0.00%	2,614		20.134859		52,633	0.39%	14.42%
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 Variable Portfolios, Inc. – Balanced Fund – Class I
2006	0.00%	29,950		20.663955		618,885	1.93%	9.62%
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%
American Century Variable Portfolios, Inc. – Capital Appreciation Fund – Class I
2006	0.00%	58,212		16.275964		947,456	0.00%	17.22%
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%
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.00%	28,052		15.243369		427,607	1.88%	17.09%
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%
American Century Variable Portfolios, Inc. – Inflation Protection Fund – Class II
2006	0.00%	14,560		11.270913		164,104	3.22%	1.59%
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 Variable Portfolios, Inc. – International Fund – Class I
2006	0.00%	42,276		23.665218		1,000,471	1.65%	25.03%
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%

(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 Variable Portfolios, Inc. – International Fund – Class III
2006	0.00%	20,366	$	14.595156	$	297,245	1.19%	25.03	%
2005	0.00%	20,404		11.673757		238,191	0.00%	16.74	%	05/02/05
American Century Variable Portfolios, Inc. – Mid Cap Value Fund – Class I
2006	0.00%	5,932		13.620466		80,797	1.31%	20.30	%
2005	0.00%	956		11.322176		10,824	1.06%	13.22	%	05/02/05
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.00%	9,430		10.980437		103,546	0.00%	-3.28	%
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
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.00%	72,824		28.448790		2,071,755	1.39%	18.65	%
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	%
Credit Suisse Trust – Global Small Cap Portfolio
2006	0.00%	11,692		17.507392		204,696	0.00%	13.20	%
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	%
Credit Suisse Trust – International Focus Portfolio
2006	0.00%	90,002		15.408829		1,386,825	1.03%	18.65	%
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	%
Credit Suisse Trust – Small Cap Growth Portfolio
2006	0.00%	104,538		14.297420		1,494,624	0.00%	4.77	%
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	%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.00%	29,498		15.813075		466,454	0.36%	14.41	%
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 Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.00%	35,276		17.910706		631,818	0.11%	9.20	%
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	%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.00%	481,242		25.025241		12,043,197	1.65%	15.50	%
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	%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.00%	57,100		17.281782		986,790	1.49%	16.48	%
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	%

(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 Variable Investment Fund – Developing Leaders Portfolio – Initial Shares
2006	0.00%	3,288	$	15.770049	$	51,852	0.43%	3.77	%
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
Dreyfus Variable Investment Fund – Growth and Income Portfolio – Initial Shares
2006	0.00%	38,470		16.523102		635,644	0.77%	14.51	%
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	%
Federated Insurance Series – Federated American Leaders Fund II – Primary Shares
2006	0.00%	406		16.967010		6,889	1.47%	16.81	%
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 Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.00%	19,464		12.335785		240,104	3.43%	4.15	%
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® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class
2006	0.00%	307,480		25.970609		7,985,443	3.30%	20.19	%
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	%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Initial Class
2006	0.00%	294,384		19.671592		5,791,002	0.40%	6.85	%
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	%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class
2006	0.00%	171,428		14.872903		2,549,632	7.80%	11.24	%
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	%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Initial Class
2006	0.00%	89,902		22.280924		2,003,100	0.91%	18.08	%
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	%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class R
2006	0.00%	31,164		14.743687		459,472	0.77%	17.95	%
2005	0.00%	21,148		12.499996		264,350	0.00%	25.00	%	05/02/05
Fidelity® Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class
2006	0.00%	66,348		19.859153		1,317,615	2.71%	7.32	%
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	%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Initial Class
2006	0.00%	244,798		32.470034		7,948,599	1.27%	11.72	%
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	%

(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® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.00%	27,706	$	11.348586	$	314,424	3.27%	4.30	%
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® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Initial Class
2006	0.00%	47,470		12.672871		601,581	0.69%	5.46	%
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	%
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class
2006	0.00%	29,260		23.389128		684,366	0.25%	12.59	%
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® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.00%	14,632		16.095011		235,502	0.41%	16.20	%
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® Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2
2006	0.00%	28,390		15.759845		447,422	0.73%	16.62	%
2005	0.00%	11,834		13.514321		159,928	0.65%	35.14	%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio – Service Class
2006	0.00%	8,244		11.863160		97,800	3.42%	9.78	%
2005	0.00%	2,002		10.806063		21,634	0.56%	8.06	%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio – Service Class
2006	0.00%	7,022		12.431698		87,295	1.69%	11.81	%
2005	0.00%	5,140		11.118664		57,150	0.86%	11.19	%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund – Class 2
2006	0.00%	7,444		11.216304		83,494	0.00%	12.16	%	05/01/06
Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund – Class 1
2006	0.00%	23,316		16.669002		388,654	1.22%	17.43	%
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 Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 1
2006	0.00%	9,688		21.190555		205,294	0.82%	17.30	%
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 Variable Insurance Products Trust – Templeton Developing Markets Securities Fund – Class 3
2006	0.00%	13,590		16.410826		223,023	1.19%	28.17	%
2005	0.00%	14,152		12.804274		181,206	0.53%	28.04	%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1
2006	0.00%	6,940		21.206570		147,174	1.41%	21.70	%
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 Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 3
2006	0.00%	28,060		13.711150		384,735	1.38%	21.46	%
2005	0.00%	21,384		11.288544		241,394	0.39%	12.89	%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund – Class 3
2006	0.00%	1,668		11.150160		18,598	2.45%	12.84	%
2005	0.00%	1,034		9.881172		10,217	7.95%	-1.19	%	05/02/05
Gartmore GVIT – American Funds GVIT Asset Allocation Fund – Class II
2006	0.00%	9,828		10.556998		103,754	3.56%	5.57	%	05/01/06

(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 – American Funds GVIT Global Growth Fund – Class II
2006	0.00%	2,236	$	10.842096	$	24,243	0.07%	8.42	%	05/01/06
Gartmore GVIT – American Funds GVIT Growth Fund – Class II
2006	0.00%	288		10.364424		2,985	1.29%	3.64	%	05/01/06
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I
2006	0.00%	2,190		23.062454		50,507	2.08%	22.67	%
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 GGVIT International Value Fund – Class III
2006	0.00%	10,116		14.056822		142,199	2.01%	22.75	%
2005	0.00%	6,630		11.451970		75,927	0.95%	14.52	%	05/02/05
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.00%	5,092		25.339713		129,030	0.72%	36.72	%
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	%
Gartmore GVIT – Emerging Markets Fund – Class III
2006	0.00%	26,004		18.224168		473,901	0.78%	36.64	%
2005	0.00%	17,390		13.336908		231,929	0.19%	33.37	%	05/02/05
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.00%	6,018		13.861826		83,420	7.10%	10.60	%
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 – Federated GGVIT High Income Bond Fund – Class III
2006	0.00%	4,016		11.657910		46,818	7.03%	10.60	%
2005	0.00%	1,936		10.540776		20,407	6.33%	5.41	%	05/02/05
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.00%	1,856		19.830405		36,805	1.89%	20.32	%
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
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	0.00%	4,354		13.695316		59,629	0.00%	2.71	%
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 Health Sciences Fund – Class III
2006	0.00%	3,408		11.032385		37,598	0.00%	2.70	%
2005	0.00%	230		10.742057		2,471	0.00%	7.42	%	05/02/05
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.00%	11,308		3.531877		39,938	0.00%	11.17	%
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	%
Gartmore GVIT – Global Technology and Communications Fund – Class III
2006	0.00%	172		13.682536		2,353	0.00%	11.08	%
2005	0.00%	2,428		12.317458		29,907	0.00%	23.17	%	05/02/05
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.00%	10,732		20.489395		219,892	2.82%	37.56	%
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

(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
2006	0.00%	95,134	$	18.753954	$	1,784,139	4.11%	3.34	%
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	%
Gartmore GVIT – Growth Fund: Class I
2006	0.00%	118,580		12.928125		1,533,017	0.05%	6.17	%
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	%
Gartmore GVIT – International Growth Fund – Class I
2006	0.00%	15,102		13.430598		202,829	0.78%	32.96	%
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 – Investor Destinations Aggressive Fund – Class II
2006	0.00%	1,756		15.802084		27,748	2.11%	16.87	%
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 – Investor Destinations Conservative Fund – Class II
2006	0.00%	3,274		12.447546		40,753	2.89%	6.16	%
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 – Investor Destinations Moderate Fund – Class II
2006	0.00%	90,888		14.099052		1,281,435	2.50%	11.35	%
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 – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.00%	47,128		15.125018		712,812	2.27%	14.54	%
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
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	0.00%	13,888		13.308971		184,835	2.76%	8.42	%
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
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.00%	19,038		6.975264		132,795	0.00%	9.91	%
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	%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.00%	58,484		16.876236		986,990	1.13%	9.89	%
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	%

(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
2006	0.00%	307,156	$	14.538752	$	4,465,665	4.49%	4.53	%
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	%
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.00%	247,594		22.796000		5,644,153	1.08%	13.63	%
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	%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	0.00%	4,904		16.116355		79,035	0.97%	16.05	%
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
2006	0.00%	23,198		8.204136		190,320	0.00%	3.21	%
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	%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.00%	98,728		25.419000		2,509,567	0.43%	17.29	%
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	%
Gartmore GVIT – Small Company Fund – Class I
2006	0.00%	127,382		31.871050		4,059,798	0.11%	12.04	%
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	%
Gartmore GVIT – Turner GVIT 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
2006	0.00%	9,376		15.705651		147,256	0.25%	-0.29	%
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 GGVIT Comstock Value Fund: Class I
2006	0.00%	7,610		17.990877		136,911	1.74%	15.91	%
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 – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.00%	10,602		14.995990		158,987	4.42%	4.84	%
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	%
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.00%	4,932		14.199918		70,034	1.96%	10.41	%
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	%

(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***
Janus Aspen Series – Forty Portfolio – Service Shares
2006	0.00	%	29,426	$	9.082400	$	267,259	0.14	%	9.12	%
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	%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	0.00	%	47,252		4.447186		210,138	0.00	%	7.83	%
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	%
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2006	0.00	%	2,146		17.753498		38,099	0.10	%	10.77	%
2005	0.00	%	1,406		16.027544		22,535	1.43	%	10.91	%
Janus Aspen Series – International Growth Portfolio – Service II Shares
2006	0.00	%	26,134		11.629148		303,916	1.97	%	16.29	%	05/01/06
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.00	%	53,060		13.963792		740,919	1.92	%	46.63	%
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	%
MFS® Variable Insurance Trust – Investors Growth Stock Series – Initial Class
2006	0.00	%	804		14.233850		11,444	0.00	%	7.58	%
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® Variable Insurance Trust – Value Series – Initial Class
2006	0.00	%	6,766		18.360218		124,225	0.80	%	20.84	%
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 Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.00	%	34		15.276302		519	0.00	%	5.25	%
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 Advisers Management Trust – Growth Portfolio®– Class I
2006	0.00	%	77,208		18.584451		1,434,868	0.00	%	14.07	%
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	%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.00	%	20,178		14.786128		298,354	0.67	%	13.38	%
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	%
Neuberger Berman Advisers Management Trust – International Portfolio – Class S
2006	0.00	%	5,640		14.506093		81,814	0.00	%	23.45	%
2005	0.00	%	2,516		11.750261		29,564	0.22	%	17.50	%	05/02/05
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I
2006	0.00	%	50,648		15.817282		801,114	3.06	%	4.20	%
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	%

(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 Advisers Management Trust – 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
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	0.00	%	188,418		26.640503		5,019,550	0.71	%	12.24	%
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	%
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S
2006	0.00	%	4,738		12.937253		61,297	0.44	%	10.94	%
2005	0.00	%	2,786		11.661977		32,490	0.00	%	16.62	%	05/02/05
Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio®– Class I
2006	0.00	%	1,732		17.031699		29,499	0.17	%	13.70	%
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
Oppenheimer Global Securities Fund/VA – Class 3
2006	0.00	%	44,318		14.192798		628,996	0.80	%	17.69	%
2005	0.00	%	28,160		12.059670		339,600	0.00	%	20.60	%	05/02/05
Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA – Non-Service Shares
2006	0.00	%	64,490		23.674314		1,526,757	2.13	%	11.15	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.00	%	68,276		18.677035		1,275,193	0.38	%	7.95	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA – Non-Service Shares
2006	0.00	%	87,354		18.563148		1,621,565	5.20	%	5.28	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.00	%	80,632		39.581622		3,191,545	1.04	%	17.69	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA – Non-Service Shares
2006	0.00	%	9,746		13.641009		132,945	6.97	%	9.42	%
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 Variable Account Funds – Oppenheimer Main Street Fund ®/VA – Non-Service Shares
2006	0.00	%	40,880		11.168617		456,573	1.11	%	15.02	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Small Cap Fund®/VA – Non-Service Shares
2006	0.00	%	2,530		20.937110		52,971	0.14	%	15.00	%
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

(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 Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.00%	16,826	$	6.755577	$	113,669	0.00%	2.96	%
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	%
Putnam Variable Trust – Putnam VT Growth and 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 Variable Trust – Putnam VT International Equity Fund – IB Shares
2006	0.00%	232		21.310423		4,944	0.44%	27.72	%
2005	0.00%	178		16.685441		2,970	1.11%	12.20	%
Putnam Variable Trust – Putnam VT Voyager II Fund – IB Shares
2006	0.00%	2,660		13.874456		36,906	0.13%	5.44	%
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 Variable Insurance Funds, Inc. – Strong International Stock Fund II
2002	0.00%	57,275		5.361165		307,061	4.04%	-26.54	%
T. Rowe Price Blue Chip Growth Portfolio – II
2006	0.00%	3,280		12.370493		40,575	0.24%	9.33	%
2005	0.00%	2,948		11.314946		33,356	0.29%	13.15	%	05/02/05
T. Rowe Price Equity Income Portfolio – II
2006	0.00%	8,360		12.620348		105,506	1.59%	18.65	%
2005	0.00%	3,790		10.636871		40,314	1.20%	6.37	%	05/02/05
Van Eck Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class
2006	0.00%	10,512		17.528628		184,261	8.51%	6.48	%
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	%
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.00%	71,040		23.287309		1,654,330	0.60%	39.49	%
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	%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.00%	42,234		27.189640		1,148,327	0.07%	24.49	%
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	%
Van Kampen – The Universal Institutional Funds, Inc. – Core Plus Fixed Income Portfolio – Class I
2006	0.00%	1,480		11.546094		17,088	3.94%	3.73	%
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 – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.00%	34,466		21.443912		739,086	7.72%	10.81	%
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	%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.00%	45,458		59.991892		2,727,111	1.08%	38.04	%
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	%

(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 Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Discovery FundSM
2006	0.00%	14,944	$	23.762009	$	355,099	0.00%	14.64	%
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	%
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM
2006	0.00%	63,616		30.477301		1,938,844	0.00%	12.22	%
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	%
Single Premium contracts issued prior to April 16, 1990 (policy years 11 and thereafter)
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.50%	55,976		17.058177		954,849	0.55%	12.64	%
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 Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2006	0.50%	2,876		15.011307		43,173	0.04%	5.77	%
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 Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.50%	11,446		18.841359		215,658	0.00%	15.94	%
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	%
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.50%	15,978		16.747221		267,587	1.47%	16.70	%
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
AllianceBernstein Variable Products Series Fund, Inc. – Small-Mid Cap Value Portfolio – Class A
2006	0.50%	36,812		19.769734		727,763	0.39%	13.85	%
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 Variable Portfolios, Inc. – Balanced Fund – Class I
2006	0.50%	58,648		26.008605		1,525,353	1.93%	9.07	%
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 Variable Portfolios, Inc. – Capital Appreciation Fund – Class I
2006	0.50%	148,624		40.621668		6,037,355	0.00%	16.64	%
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	%
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.50%	110,050		14.597227		1,606,425	1.88%	16.50	%
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 Variable Portfolios, Inc. – Inflation Protection Fund – Class II
2006	0.50%	25,006		11.065707		276,709	3.22%	1.08	%
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	%

(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 Variable Portfolios, Inc. – International Fund – Class I
2006	0.50%	181,244	$	24.623712	$	4,462,900	1.65%	24.40	%
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 Variable Portfolios, Inc. – International Fund – Class III
2006	0.50%	52,054		14.474561		753,459	1.19%	24.40	%
2005	0.50%	43,276		11.635157		503,523	0.00%	16.35	%	05/02/05
American Century Variable Portfolios, Inc. – Mid Cap Value Fund – Class I
2006	0.50%	28,362		13.507944		383,112	1.31%	19.70	%
2005	0.50%	2,498		11.284751		28,189	1.06%	12.85	%	05/02/05
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.50%	21,516		10.727394		230,811	0.00%	-3.76	%
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	%
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	0.50%	213,238		26.911603		5,738,576	1.39%	18.06	%
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 Variable Portfolios, Inc. – VistaSM Fund – Class I
2006	0.50%	1,972		12.392995		24,439	0.00%	8.47	%
2005	0.50%	242		11.425723		2,765	0.00%	14.26	%	05/02/05
Credit Suisse Trust – Global Small Cap Portfolio
2006	0.50%	16,544		16.560881		273,983	0.00%	12.64	%
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
2006	0.50%	169,282		17.072863		2,890,128	1.03%	18.06	%
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
2006	0.50%	219,292		19.337639		4,240,590	0.00%	4.25	%
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 Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.50%	46,836		15.448774		723,559	0.36%	13.84	%
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 Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.50%	88,854		26.125145		2,321,324	0.11%	8.66	%
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	%

(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 Stock Index Fund, Inc. – Initial Shares
2006	0.50	%	710,704	$	34.429253	$	24,469,008	1.65	%	14.92	%
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	%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.50	%	100,824		16.434584		1,657,000	1.49	%	15.90	%
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 Variable Investment Fund – Developing Leaders Portfolio – Initial Shares
2006	0.50	%	9,442		15.484023		146,200	0.43	%	3.25	%
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 Variable Investment Fund – Growth and Income Portfolio – Initial Shares
2006	0.50	%	10,806		15.630140		168,899	0.77	%	13.94	%
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 Insurance Series – Federated American Leaders Fund II – Primary Shares
2006	0.50	%	10,000		16.659331		166,593	1.47	%	16.23	%
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	%
Federated Insurance Series – Federated 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 Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.50	%	24,568		12.051517		296,082	3.43	%	3.64	%
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® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class
2006	0.50	%	491,100		67.988158		33,388,984	3.30	%	19.60	%
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	%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Initial Class
2006	0.50	%	528,784		61.254324		32,390,306	0.40	%	6.32	%
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	%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class
2006	0.50	%	261,306		31.824106		8,315,830	7.80	%	10.68	%
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	%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Initial Class
2006	0.50	%	218,334		38.837994		8,479,655	0.91	%	17.49	%
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	%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class R
2006	0.50	%	201,906		14.621895		2,952,248	0.77	%	17.36	%
2005	0.50	%	108,508		12.458682		1,351,867	0.00	%	24.59	%	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® Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class
2006	0.50	%	286,878	$	34.991020	$	10,038,154	2.71	%	6.78	%
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	%
Fidelity® Variable Insurance Products Fund II – Contrafund®Portfolio – Initial Class
2006	0.50	%	755,746		36.392149		27,503,221	1.27	%	11.16	%
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® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.50	%	224,730		11.142647		2,504,087	3.27	%	3.78	%
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® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Initial Class
2006	0.50	%	47,778		12.051402		575,792	0.69	%	4.93	%
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	%
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class
2006	0.50	%	217,404		22.965001		4,992,683	0.25	%	12.03	%
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
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.50	%	50,330		15.724226		791,400	0.41	%	15.62	%
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® Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2
2006	0.50	%	115,990		15.629664		1,812,885	0.73	%	16.04	%
2005	0.50	%	42,914		13.469693		578,038	0.65	%	34.70	%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio – Service Class
2006	0.50	%	1,822		11.765134		21,436	3.42	%	9.24	%
2005	0.50	%	1,590		10.770315		17,125	0.56	%	7.70	%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio – Service Class
2006	0.50	%	6,200		12.328971		76,440	1.69	%	11.25	%
2005	0.50	%	3,540		11.081899		39,230	0.86	%	10.82	%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio – Service Class
2006	0.50	%	17,674		12.713976		224,707	5.31	%	12.59	%
Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund – Class 2
2006	0.50	%	8,720		11.179202		97,483	0.00	%	11.79	%	05/01/06
Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund – Class 1
2006	0.50	%	137,920		16.366662		2,257,290	1.22	%	16.84	%
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 Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 1
2006	0.50	%	98,784		20.806303		2,055,330	0.82	%	16.72	%
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 Variable Insurance Products Trust – Templeton Developing Markets Securities Fund – Class 3
2006	0.50	%	47,562		16.275260		774,084	1.19	%	27.53	%
2005	0.50	%	17,310		12.761961		220,910	0.53	%	27.62	%	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***
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1
2006	0.50	%	26,826	$	20.821962	$	558,570	1.41	%	21.09	%
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 Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 3
2006	0.50	%	54,682		13.597883		743,559	1.38	%	20.86	%
2005	0.50	%	21,078		11.251218		237,153	0.39	%	12.51	%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund – Class 3
2006	0.50	%	14,172		11.057995		156,714	2.45	%	12.28	%
2005	0.50	%	2,394		9.848458		23,577	7.95	%	-1.52	%	05/02/05
Gartmore GVIT – American Funds GVIT Asset Allocation Fund – Class II
2006	0.50	%	2,762		10.522054		29,062	3.56	%	5.22	%	05/01/06
Gartmore GVIT – American Funds GVIT Bond Fund – Class II
2006	0.50	%	22,766		10.504005		239,134	0.05	%	5.04	%	05/01/06
Gartmore GVIT – American Funds GVIT Global Growth Fund – Class II
2006	0.50	%	64,864		10.806217		700,934	0.07	%	8.06	%	05/01/06
Gartmore GVIT – American Funds GVIT Growth Fund – Class II
2006	0.50	%	44,756		10.330117		462,335	1.29	%	3.30	%	05/01/06
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I
2006	0.50	%	22,408		22.644248		507,412	2.08	%	22.06	%
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 GGVIT International Value Fund – Class III
2006	0.50	%	98,312		13.940694		1,370,538	2.01	%	22.14	%
2005	0.50	%	44,904		11.414099		512,539	0.95	%	14.14	%	05/02/05
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.50	%	36,644		24.561198		900,021	0.72	%	36.04	%
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 – Emerging Markets Fund – Class III
2006	0.50	%	59,452		18.073662		1,074,515	0.78	%	35.97	%
2005	0.50	%	42,298		13.292850		562,261	0.19	%	32.93	%	05/02/05
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.50	%	4,224		13.610399		57,490	7.10	%	10.05	%
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 – Federated GGVIT High Income Bond Fund – Class III
2006	0.50	%	13,398		11.561576		154,902	7.03	%	10.05	%
2005	0.50	%	4,790		10.505908		50,323	6.33	%	5.06	%	05/02/05
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.50	%	19,458		19.373628		376,972	1.89	%	19.72	%
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
2006	0.50	%	7,120		13.379661		95,263	0.00	%	2.20	%
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 Health Sciences Fund – Class III
2006	0.50	%	19,322		10.941189		211,406	0.00	%	2.19	%
2005	0.50	%	20,616		10.706525		220,726	0.00	%	7.07	%	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 – Global Technology and Communications Fund – Class I
2006	0.50	%	55,710	$	3.423239	$	190,709	0.00	%	10.62	%
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 Technology and Communications Fund – Class III
2006	0.50	%	12,314		13.569468		167,094	0.00	%	10.53	%
2005	0.50	%	18,758		12.276743		230,287	0.00	%	22.77	%	05/02/05
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.50	%	31,924		20.017433		639,037	2.82	%	36.88	%
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	%
Gartmore GVIT – Government Bond Fund – Class I
2006	0.50	%	106,356		32.969134		3,506,465	4.11	%	2.83	%
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	%
Gartmore GVIT – Growth Fund: Class I
2006	0.50	%	165,708		19.261676		3,191,814	0.05	%	5.64	%
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
2006	0.50	%	25,884		13.017827		336,953	0.78	%	32.30	%
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 – International Index Fund – Class VI
2006	0.50	%	530		10.938962		5,798	1.38	%	9.39	%	05/01/06
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.50	%	95,776		15.417742		1,476,650	2.11	%	16.29	%
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 – Investor Destinations Conservative Fund – Class II
2006	0.50	%	7,634		12.144751		92,713	2.89	%	5.64	%
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 – Investor Destinations Moderate Fund – Class II
2006	0.50	%	199,278		13.756055		2,741,279	2.50	%	10.80	%
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 – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.50	%	152,382		14.757103		2,248,717	2.27	%	13.97	%
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 – Investor Destinations Moderately Conservative Fund – Class II
2006	0.50	%	18,590		12.985235		241,396	2.76	%	7.88	%
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	%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.50	%	92,144		6.746610		621,660	0.00	%	9.36	%
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	%

(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 Index Fund – Class I
2006	0.50%	202,754	$	16.323372	$	3,309,629	1.13%	9.34	%
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 – Money Market Fund – Class I
2006	0.50%	485,516		19.791189		9,608,939	4.49%	4.01	%
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	%
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.50%	467,698		50.351226		23,549,168	1.08%	13.06	%
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	%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	0.50%	15,828		15.745056		249,213	0.97%	15.47	%
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
2006	0.50%	68,500		7.935212		543,562	0.00%	2.69	%
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
2006	0.50%	176,848		24.341439		4,304,735	0.43%	16.71	%
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	%
Gartmore GVIT – Small Company Fund – Class I
2006	0.50%	319,750		39.800578		12,726,235	0.11%	11.48	%
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	%
Gartmore GVIT – Turner GVIT 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
2006	0.50%	18,158		15.343823		278,613	0.25%	-0.78	%
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 GGVIT Comstock Value Fund: Class I
2006	0.50%	28,342		17.664583		500,650	1.74%	15.33	%
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 – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.50%	39,090		14.504882		566,996	4.42%	4.32	%
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***
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.50%	9,396	$	13.942298	$	131,002	1.96%	9.87	%
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 Aspen Series – Forty Portfolio – Service Shares
2006	0.50%	81,402		8.784776		715,098	0.14%	8.57	%
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 Aspen Series – Global Technology Portfolio – Service Shares
2006	0.50%	75,318		4.301344		323,969	0.00%	7.29	%
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 Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2006	0.50%	5,540		17.431528		96,571	0.10%	10.22	%
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	%
Janus Aspen Series – International Growth Portfolio – Service II Shares
2006	0.50%	121,018		11.590627		1,402,674	1.97%	15.91	%	05/01/06
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.50%	107,512		13.506291		1,452,088	1.92%	45.90	%
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	%
MFS® Variable Insurance Trust – Investors Growth Stock Series – Initial Class
2006	0.50%	9,652		13.975658		134,893	0.00%	7.04	%
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® Variable Insurance Trust – Value Series – Initial Class
2006	0.50%	22,532		18.027234		406,190	0.80%	20.24	%
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	%
Neuberger Berman Advisers Management Trust – Balanced Portfolio®– I Class Shares
2006	0.50%	1,380		12.657889		17,468	0.77%	10.12	%
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 Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.50%	3,464		14.999207		51,957	0.00%	4.73	%
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 Advisers Management Trust – Growth Portfolio®– Class I
2006	0.50%	157,596		44.249809		6,973,593	0.00%	13.50	%
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	%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.50%	44,048		14.159327		623,690	0.67%	12.81	%
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 Advisers Management Trust – International Portfolio – Class S
2006	0.50%	8,138		14.386244		117,075	0.00%	22.84	%
2005	0.50%	490		11.711411		5,739	0.22%	17.11	%	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***
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I
2006	0.50%	55,674	$	23.474013	$	1,306,892	3.06%	3.68	%
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	%
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio®– S Class Shares
2006	0.50%	17,228		18.227772		314,028	0.00%	13.90	%
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
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	0.50%	241,712		38.230288		9,240,719	0.71%	11.68	%
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 Advisers Management Trust – Regency Portfolio – Class S
2006	0.50%	5,576		12.830334		71,542	0.44%	10.38	%
2005	0.50%	2,318		11.623425		26,943	0.00%	16.23	%	05/02/05
Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio®– Class I
2006	0.50%	14,184		16.722808		237,196	0.17%	13.14	%
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	%
Oppenheimer Global Securities Fund/VA – Class 3
2006	0.50%	200,308		14.075542		2,819,444	0.80%	17.10	%
2005	0.50%	63,366		12.019802		761,647	0.00%	20.20	%	05/02/05
Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA – Non-Service Shares
2006	0.50%	124,154		39.040157		4,846,992	2.13%	10.59	%
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 Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.50%	195,220		17.761150		3,467,332	0.38%	7.41	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA – Non-Service Shares
2006	0.50%	192,508		28.059142		5,401,609	5.20%	4.76	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.50%	342,600		46.398150		15,896,006	1.04%	17.11	%
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 Variable Account Funds – Oppenheimer High Income Fund/VA – Non-Service Shares
2006	0.50%	22,010		13.393515		294,791	6.97%	8.88	%
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 Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.50%	116,614	$	10.802733	$	1,259,750	1.11%	14.45	%
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 Variable Account Funds – Oppenheimer Main Street Small Cap Fund®/VA – Non-Service Shares
2006	0.50%	28,656		20.557489		589,095	0.14%	14.43	%
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 Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.50%	84,198		6.534169		550,164	0.00%	2.44	%
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	%
Putnam Variable Trust – Putnam VT Growth and Income Fund – IB Shares
2006	0.50%	4,488		16.533564		74,203	1.14%	15.33	%
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 Variable Trust – Putnam VT International Equity Fund – IB Shares
2006	0.50%	7,758		20.923951		162,328	0.44%	27.08	%
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 Variable Trust – Putnam VT Voyager II Fund – IB Shares
2006	0.50%	1,246		13.622763		16,974	0.13%	4.91	%
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 Variable Insurance Funds, Inc. – Strong International Stock Fund II
2002	0.50%	392		5.758212		2,257	4.04%	-26.91	%
T. Rowe Price Blue Chip Growth Portfolio – II
2006	0.50%	16,190		12.268264		198,623	0.24%	8.79	%
2005	0.50%	818		11.277528		9,225	0.29%	12.78	%	05/02/05
T. Rowe Price Equity Income Portfolio – II
2006	0.50%	58,750		12.516081		735,320	1.59%	18.06	%
2005	0.50%	5,032		10.601687		53,348	1.20%	6.02	%	05/02/05
T. Rowe Price Limited Term Bond Portfolio – Class II
2006	0.50%	1,008		10.448149		10,532	3.80%	3.51	%
2005	0.50%	540		10.094160		5,451	1.39%	0.94	%	05/02/05
Van Eck Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class
2006	0.50%	48,396		23.154258		1,120,573	8.51%	5.95	%
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	%
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.50%	193,210		22.028276		4,256,083	0.60%	38.80	%
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 Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.50%	127,868		38.410275		4,911,445	0.07%	23.87	%
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	%

(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 – The Universal Institutional Funds, Inc. – Core Plus Fixed Income Portfolio – Class I
2006	0.50%	13,740	$	11.336567	$	155,764	3.94%	3.22	%
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	%
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.50%	51,120		20.392381		1,042,459	7.72%	10.26	%
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	%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.50%	158,492		62.315078		9,876,441	1.08%	37.36	%
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 Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Discovery FundSM
2006	0.50%	128,414		37.303028		4,790,231	0.00%	14.07	%
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 Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM
2006	0.50%	290,006		57.385680		16,642,192	0.00%	11.66	%
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	%
Multiple Payment contracts and Flexible Premium contracts
AIM Variable Insurance Funds – AIM V.I. Basic Value Fund – Series I
2006	0.80%	20,662		16.871856		348,606	0.55%	12.30	%
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 Variable Insurance Funds – AIM V.I. Capital Appreciation Fund – Series I
2006	0.80%	1,686		14.847340		25,033	0.04%	5.46	%
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 Variable Insurance Funds – AIM V.I. Capital Development Fund – Series I Shares
2006	0.80%	7,586		18.635564		141,369	0.00%	15.59	%
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
AllianceBernstein Variable Products Series Fund, Inc. – Growth and Income Portfolio – Class A
2006	0.80%	28,032		16.564321		464,331	1.47%	16.35	%
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
AllianceBernstein Variable Products Series Fund, Inc. – Small-Mid Cap Value Portfolio – Class A
2006	0.80%	22,658		19.553834		443,051	0.39%	13.51	%
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 Variable Portfolios, Inc. – Balanced Fund – Class I
2006	0.80%	90,872		25.553959		2,322,139	1.93%	8.75	%
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	%

(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 Variable Portfolios, Inc. – Capital Appreciation Fund – Class I
2006	0.80%	250,368	$	25.255777	$	6,323,238	0.00	%	16.29	%
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	%
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	0.80%	99,066		14.222782		1,408,994	1.88	%	16.16	%
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	%
American Century Variable Portfolios, Inc. – Inflation Protection Fund – Class II
2006	0.80%	38,652		10.943891		423,003	3.22	%	0.78	%
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 Variable Portfolios, Inc. – International Fund – Class I
2006	0.80%	165,218		24.112654		3,983,844	1.65	%	24.03	%
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	%
American Century Variable Portfolios, Inc. – International Fund – Class III
2006	0.80%	80,238		14.402688		1,155,643	1.19	%	24.03	%
2005	0.80%	69,942		11.612061		812,171	0.00	%	16.12	%	05/02/05
American Century Variable Portfolios, Inc. – Mid Cap Value Fund – Class I
2006	0.80%	15,610		13.440882		209,812	1.31	%	19.34	%
2005	0.80%	5,722		11.262347		64,443	1.06	%	12.62	%	05/02/05
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	0.80%	18,008		10.578387		190,496	0.00	%	-4.04	%
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 Variable Portfolios, Inc. – Value Fund – Class I
2006	0.80%	200,588		26.258655		5,267,171	1.39	%	17.71	%
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	%
American Century Variable Portfolios, Inc. – VistaSM Fund – Class I
2006	0.80%	1,344		12.331439		16,573	0.00	%	8.14	%
2005	0.80%	2,306		11.403054		26,295	0.00	%	14.03	%	05/02/05
Credit Suisse Trust – Global Small Cap Portfolio
2006	0.80%	24,796		16.158907		400,676	0.00	%	12.30	%
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	%
Credit Suisse Trust – International Focus Portfolio
2006	0.80%	174,476		16.695427		2,912,951	1.03	%	17.71	%
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	%

(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***
Credit Suisse Trust – Small Cap Growth Portfolio
2006	0.80	%	270,450	$	18.909841	$	5,114,166	0.00	%	3.94	%
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	%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	0.80	%	42,596		15.234242		648,918	0.36	%	13.50	%
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 Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	0.80	%	216,438		25.614125		5,543,870	0.11	%	8.33	%
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	%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	0.80	%	1,054,364		33.756668		35,591,815	1.65	%	14.58	%
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	%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	0.80	%	155,994		16.022432		2,499,403	1.49	%	15.55	%
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	%
Dreyfus Variable Investment Fund – Developing Leaders Portfolio – Initial Shares
2006	0.80	%	11,426		15.314886		174,988	0.43	%	2.95	%
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 Variable Investment Fund – Growth and Income Portfolio – Initial Shares
2006	0.80	%	83,514		15.250864		1,273,661	0.77	%	13.60	%
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	%
Federated Insurance Series – Federated American Leaders Fund II – Primary Shares
2006	0.80	%	1,782		16.477377		29,363	1.47	%	15.88	%
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 Insurance Series – Federated Capital Appreciation Fund II – Primary Shares
2006	0.80	%	638		14.888388		9,499	0.79	%	15.29	%
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 Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	0.80	%	39,918		11.884116		474,390	3.43	%	3.33	%
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

(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® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class
2006	0.80	%	547,442	$	55.961825	$	30,635,853	3.30	%	19.24	%
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	%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Initial Class
2006	0.80	%	830,726		42.046610		34,929,212	0.40	%	6.00	%
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	%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class
2006	0.80	%	240,204		29.904168		7,183,101	7.80	%	10.35	%
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	%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Initial Class
2006	0.80	%	153,216		29.547189		4,527,102	0.91	%	17.14	%
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	%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Service Class R
2006	0.80	%	120,050		14.549286		1,746,642	0.77	%	17.01	%
2005	0.80	%	84,208		12.433969		1,047,040	0.00	%	24.34	%	05/02/05
Fidelity® Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class
2006	0.80	%	202,948		30.222570		6,133,610	2.71	%	6.46	%
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	%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Initial Class
2006	0.80	%	854,560		35.587790		30,411,902	1.27	%	10.83	%
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	%
Fidelity® Variable Insurance Products Fund II – Investment Grade Bond Portfolio – Service Class
2006	0.80	%	50,982		11.020863		561,866	3.27	%	3.47	%
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® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Initial Class
2006	0.80	%	228,606		11.749061		2,685,906	0.69	%	4.62	%
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	%
Fidelity® Variable Insurance Products Fund III – Mid Cap Portfolio – Service Class
2006	0.80	%	167,292		22.714275		3,799,916	0.25	%	11.70	%
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® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	0.80	%	26,916		15.505844		417,355	0.41	%	15.27	%
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

(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® Variable Insurance Products Fund IV – Energy Portfolio – Service Class 2
2006	0.80%	110,500	$	15.552071	$	1,718,504	0.73%	15.69%
2005	0.80%	82,484		13.442988		1,108,831	0.65%	34.43%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2010 Portfolio – Service Class
2006	0.80%	9,704		11.706711		113,602	3.42%	8.91%
2005	0.80%	2,332		10.748937		25,067	0.56%	7.49%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2020 Portfolio – Service Class
2006	0.80%	16,066		12.267747		197,094	1.69%	10.92%
2005	0.80%	15,234		11.059893		168,486	0.86%	10.60%	05/02/05
Fidelity® Variable Insurance Products Fund IV – Freedom Fund 2030 Portfolio – Service Class
2006	0.80%	11,130		12.650838		140,804	5.31%	12.25%
2005	0.80%	3,818		11.269912		43,029	1.32%	12.70%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Franklin Income Securities Fund – Class 2
2006	0.80%	13,168		11.157005		146,915	0.00%	11.57%	05/01/06
Franklin Templeton Variable Insurance Products Trust – Franklin Rising Dividends Securities Fund – Class 1
2006	0.80%	112,826		16.187918		1,826,418	1.22%	16.50%
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 Variable Insurance Products Trust – Franklin Small Cap Value Securities Fund – Class 1
2006	0.80%	58,816		20.579116		1,210,381	0.82%	16.37%
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 Variable Insurance Products Trust – Templeton Developing Markets Securities Fund – Class 3
2006	0.80%	41,104		16.194484		665,658	1.19%	27.15%
2005	0.80%	18,806		12.736654		239,526	0.53%	27.37%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 1
2006	0.80%	20,280		20.594561		417,658	1.41%	20.73%
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 Variable Insurance Products Trust – Templeton Foreign Securities Fund – Class 3
2006	0.80%	35,494		13.530342		480,246	1.38%	20.50%
2005	0.80%	19,372		11.228867		217,526	0.39%	12.29%	05/02/05
Franklin Templeton Variable Insurance Products Trust – Templeton Global Income Securities Fund – Class 3
2006	0.80%	19,066		11.003055		209,784	2.45%	11.95%
2005	0.80%	2,864		9.828879		28,150	7.95%	-1.71%	05/02/05
Gartmore GVIT – American Funds GVIT Asset Allocation Fund – Class II
2006	0.80%	23,042		10.501149		241,967	3.56%	5.01%	05/01/06
Gartmore GVIT – American Funds GVIT Bond Fund – Class II
2006	0.80%	11,396		10.483128		119,466	0.05%	4.83%	05/01/06
Gartmore GVIT – American Funds GVIT Global Growth Fund – Class II
2006	0.80%	15,330		10.784738		165,330	0.07%	7.85%	05/01/06
Gartmore GVIT – American Funds GVIT Growth Fund – Class II
2006	0.80%	17,582		10.309581		181,263	1.29%	3.10%	05/01/06
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class I
2006	0.80%	14,186		22.396963		317,723	2.08%	21.70%
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
Gartmore GVIT – Dreyfus GGVIT International Value Fund – Class III
2006	0.80%	45,492		13.871454		631,040	2.01%	21.77%
2005	0.80%	35,798		11.391430		407,790	0.95%	13.91%	05/02/05
Gartmore GVIT – Emerging Markets Fund – Class I
2006	0.80%	24,800		24.105617		597,819	0.72%	35.63%
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%

(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 – Emerging Markets Fund – Class III
2006	0.80	%	71,548	$	17.983970	$	1,286,717	0.78	%	35.56	%
2005	0.80	%	49,358		13.266490		654,807	0.19	%	32.66	%	05/02/05
Gartmore GVIT – Federated GGVIT High Income Bond Fund – Class I
2006	0.80	%	8,630		13.461693		116,174	7.10	%	9.72	%
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 – Federated GGVIT High Income Bond Fund – Class III
2006	0.80	%	9,102		11.504161		104,711	7.03	%	9.72	%
2005	0.80	%	8,904		10.485051		93,359	6.33	%	4.85	%	05/02/05
Gartmore GVIT – Global Financial Services Fund – Class I
2006	0.80	%	20,092		19.104581		383,849	1.89	%	19.37	%
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
2006	0.80	%	3,876		13.193822		51,139	0.00	%	1.89	%
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 Health Sciences Fund – Class III
2006	0.80	%	14,692		10.886820		159,949	0.00	%	1.89	%
2005	0.80	%	19,656		10.685265		210,030	0.00	%	6.85	%	05/02/05
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	0.80	%	51,828		3.359674		174,125	0.00	%	10.29	%
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	%
Gartmore GVIT – Global Technology and Communications Fund – Class III
2006	0.80	%	8,150		13.502082		110,042	0.00	%	10.20	%
2005	0.80	%	10,504		12.252375		128,699	0.00	%	22.52	%	05/02/05
Gartmore GVIT – Global Utilities Fund – Class I
2006	0.80	%	44,146		19.739493		871,420	2.82	%	36.47	%
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
2006	0.80	%	157,392		24.939296		3,925,246	4.11	%	2.52	%
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	%
Gartmore GVIT – Growth Fund: Class I
2006	0.80	%	597,654		18.924499		11,310,303	0.05	%	5.32	%
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	%
Gartmore GVIT – International Growth Fund – Class I
2006	0.80	%	90,176		12.776337		1,152,119	0.78	%	31.91	%
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	%

(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 – International Index Fund – Class VI
2006	0.80%	1,052	$	10.917219	$	11,485	1.38%	9.17	%	05/01/06
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	0.80%	91,086		15.191606		1,383,743	2.11%	15.94	%
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 – Investor Destinations Conservative Fund – Class II
2006	0.80%	20,230		11.966643		242,085	2.89%	5.32	%
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 – Investor Destinations Moderate Fund – Class II
2006	0.80%	241,266		13.554301		3,270,192	2.50%	10.47	%
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 – Investor Destinations Moderately Aggressive Fund – Class II
2006	0.80%	247,768		14.540668		3,602,712	2.27%	13.63	%
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 – Investor Destinations Moderately Conservative Fund – Class II
2006	0.80%	99,224		12.794782		1,269,549	2.76%	7.56	%
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
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	0.80%	77,924		6.612974		515,309	0.00%	9.03	%
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	%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	0.80%	141,094		16.000413		2,257,562	1.13%	9.02	%
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	%
Gartmore GVIT – Money Market Fund – Class I
2006	0.80%	566,642		15.851431		8,982,087	4.49%	3.70	%
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	%
Gartmore GVIT – Nationwide® Fund – Class I
2006	0.80%	1,155,132		40.432316		46,704,662	1.08%	12.72	%
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	%

(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 – Nationwide® Leaders Fund – Class I
2006	0.80%	10,376	$	15.526442	$	161,102	0.97%	15.12	%
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
2006	0.80%	62,918		7.778128		489,384	0.00%	2.39	%
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	%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	0.80%	175,584		23.717026		4,164,330	0.43%	16.36	%
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	%
Gartmore GVIT – Small Company Fund – Class I
2006	0.80%	325,094		38.902849		12,647,083	0.11%	11.15	%
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	%
Gartmore GVIT – Turner GVIT 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	%
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2006	0.80%	13,106		15.130732		198,303	0.25%	-1.08	%
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 GGVIT Comstock Value Fund: Class I
2006	0.80%	22,182		17.471634		387,556	1.74%	14.98	%
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 – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	0.80%	37,902		14.217959		538,889	4.42%	4.00	%
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	%
Janus Aspen Series – Balanced Portfolio – Service Shares
2006	0.80%	5,148		13.789981		70,991	1.96%	9.54	%
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 Aspen Series – Forty Portfolio – Service Shares
2006	0.80%	164,548		8.610938		1,416,913	0.14%	8.25	%
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	%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	0.80%	109,934		4.216170		463,500	0.00%	6.97	%
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	%

(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***
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2006	0.80%	3,660	$	17.241178	$	63,103	0.10%	9.89	%
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
Janus Aspen Series – International Growth Portfolio – Service II Shares
2006	0.80%	102,986		11.567583		1,191,299	1.97%	15.68	%	05/01/06
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	0.80%	110,056		13.239048		1,457,037	1.92%	45.46	%
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	%
MFS® Variable Insurance Trust – Investors Growth Stock Series – Initial Class
2006	0.80%	9,996		13.822967		138,174	0.00%	6.72	%
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
MFS® Variable Insurance Trust – Value Series – Initial Class
2006	0.80%	23,056		17.830357		411,097	0.80%	19.88	%
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 Advisers Management Trust – Balanced Portfolio®– I Class Shares
2006	0.80%	852		27.426214		23,367	0.77%	9.79	%
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	%
Neuberger Berman Advisers Management Trust – Fasciano Portfolio – Class S
2006	0.80%	2,652		14.835360		39,343	0.00%	4.42	%
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 Advisers Management Trust – Growth Portfolio®– Class I
2006	0.80%	262,710		30.039737		7,891,739	0.00%	13.16	%
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	%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	0.80%	73,922		13.796076		1,019,834	0.67%	12.48	%
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	%
Neuberger Berman Advisers Management Trust – International Portfolio – Class S
2006	0.80%	8,786		14.314811		125,770	0.00%	22.47	%
2005	0.80%	58,070		11.688169		678,732	0.22%	16.88	%	05/02/05
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I
2006	0.80%	50,380		18.886370		951,495	3.06%	3.37	%
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	%
Neuberger Berman Advisers Management Trust – Mid Cap Growth Portfolio®– S Class Shares
2006	0.80%	11,910		18.028719		214,722	0.00%	13.56	%
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

(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 Advisers Management Trust – Partners Portfolio®– Class I
2006	0.80%	317,204	$	37.436671	$	11,875,062	0.71%	11.35	%
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	%
Neuberger Berman Advisers Management Trust – Regency Portfolio – Class S
2006	0.80%	2,974		12.766616		37,968	0.44%	10.05	%
2005	0.80%	2,398		11.600355		27,818	0.00%	16.00	%	05/02/05
Neuberger Berman Advisers Management Trust – Socially Responsive Portfolio®– Class I
2006	0.80%	9,890		16.540130		163,582	0.17%	12.80	%
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
Oppenheimer Global Securities Fund/VA – Class 3
2006	0.80%	235,194		14.005648		3,294,044	0.80%	16.75	%
2005	0.80%	156,170		11.995949		1,873,407	0.00%	19.96	%	05/02/05
Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA – Non-Service Shares
2006	0.80%	146,968		36.859294		5,417,137	2.13%	10.26	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	0.80%	329,602		17.315647		5,707,272	0.38%	7.09	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA – Non-Service Shares
2006	0.80%	146,462		25.379927		3,717,195	5.20%	4.44	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	0.80%	314,678		45.492106		14,315,365	1.04%	16.76	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer High Income Fund/VA – Non-Service Shares
2006	0.80%	17,852		13.247178		236,489	6.97%	8.55	%
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 Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	0.80%	57,418		10.588991		607,999	1.11%	14.11	%
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	%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Small Cap Fund®/VA – Non-Service Shares
2006	0.80%	24,146		20.333041		490,962	0.14%	14.08	%
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

(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 Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	0.80%	125,750	$	6.404804	$	805,404	0.00%	2.14	%
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	%
Putnam Variable Trust – Putnam VT Growth and Income Fund – IB Shares
2006	0.80%	2,546		16.352963		41,635	1.14%	14.99	%
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 Variable Trust – Putnam VT International Equity Fund – IB Shares
2006	0.80%	9,818		20.695424		203,188	0.44%	26.70	%
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 Variable Trust – Putnam VT Voyager II Fund – IB Shares
2006	0.80%	2,010		13.473959		27,083	0.13%	4.60	%
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 Variable Insurance Funds, Inc. – Strong International Stock Fund II
2002	0.80%	199,430		5.696130		1,135,979	4.04%	-27.13	%
T. Rowe Price Blue Chip Growth Portfolio – II
2006	0.80%	9,592		12.207295		117,092	0.24%	8.46	%
2005	0.80%	17,726		11.255124		199,508	0.29%	12.55	%	05/02/05
T. Rowe Price Equity Income Portfolio – II
2006	0.80%	36,012		12.453914		448,490	1.59%	17.70	%
2005	0.80%	21,876		10.580627		231,462	1.20%	5.81	%	05/02/05
T. Rowe Price Limited Term Bond Portfolio – Class II
2006	0.80%	4,952		10.395898		51,480	3.80%	3.20	%
2005	0.80%	2,888		10.073971		29,094	1.39%	0.74	%	05/02/05
Van Eck Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class
2006	0.80%	42,580		20.739979		883,108	8.51%	5.63	%
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	%
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	0.80%	204,428		21.493674		4,393,909	0.60%	38.38	%
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	%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	0.80%	71,458		45.639544		3,261,311	0.07%	23.50	%
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	%
Van Kampen – The Universal Institutional Funds, Inc. – Core Plus Fixed Income Portfolio – Class I
2006	0.80%	15,064		11.212678		168,908	3.94%	2.91	%
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 – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	0.80%	31,246		19.881064		621,204	7.72%	9.93	%
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	%

(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 – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	0.80%	195,750	$	60.938109	$	11,928,635	1.08%	36.95%
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%
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Discovery FundSM
2006	0.80%	70,852		36.649699		2,596,704	0.00%	13.73%
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%
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM
2006	0.80%	232,092		56.380823		13,085,538	0.00%	11.33%
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%
American Century Variable Portfolios, Inc. – Balanced Fund – Class I
2006	1.00%	44,838		11.810656		529,566	1.93%	8.53%
2005	1.00%	52,040		10.882231		566,311	1.83%	3.89%
American Century Variable Portfolios, Inc. – Capital Appreciation Fund – Class I
2006	1.00%	149,970		8.240477		1,235,824	0.00%	16.06%
2005	1.00%	171,146		7.100441		1,215,212	0.00%	20.85%
American Century Variable Portfolios, Inc. – Income & Growth Fund – Class I
2006	1.00%	24,302		11.552475		280,748	1.88%	15.93%
2005	1.00%	20,504		9.965424		204,331	2.03%	3.59%
American Century Variable Portfolios, Inc. – International Fund – Class I
2006	1.00%	60,986		10.167970		620,104	1.65%	23.79%
2005	1.00%	61,088		8.214210		501,790	1.27%	12.13%
American Century Variable Portfolios, Inc. – Ultra® Fund – Class I
2006	1.00%	1,340		10.480144		14,043	0.00%	-4.24%
2005	1.00%	5,288		10.943695		57,870	0.00%	1.15%
American Century Variable Portfolios, Inc. – Value Fund – Class I
2006	1.00%	83,020		19.238731		1,597,199	1.39%	17.48%
2005	1.00%	71,670		16.376728		1,173,720	0.88%	3.99%
Credit Suisse Trust – Global Small Cap Portfolio
2006	1.00%	8,040		7.281318		58,542	0.00%	12.08%
2005	1.00%	3,714		6.496475		24,128	0.00%	14.99%
Credit Suisse Trust – International Focus Portfolio
2006	1.00%	25,416		11.176387		284,059	1.03%	17.48%
2005	1.00%	15,960		9.513742		151,839	0.91%	16.27%
Credit Suisse Trust – Small Cap Growth Portfolio
2006	1.00%	51,800		7.453113		386,071	0.00%	3.73%
2005	1.00%	41,474		7.185242		298,001	0.00%	-3.65%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
2006	1.00%	20,468		15.092865		308,921	0.36%	13.28%
2005	1.00%	15,334		13.324009		204,310	0.00%	6.17%
Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	1.00%	21,910		6.835295		149,761	0.11%	8.12%
2005	1.00%	20,360		6.322127		128,719	0.00%	2.59%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	1.00%	377,588		10.134844		3,826,795	1.65%	14.35%
2005	1.00%	344,792		8.862854		3,055,841	1.60%	3.65%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	1.00%	77,230		10.805247		834,489	1.49%	15.32%
2005	1.00%	21,248		9.369677		199,087	0.02%	3.34%
Dreyfus Variable Investment Fund – Growth and Income Portfolio – Initial Shares
2006	1.00%	22,804		10.356384		236,167	0.77%	13.38%
2005	1.00%	23,964		9.134532		218,900	1.34%	2.33%

(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 Insurance Series – Federated Quality Bond Fund II – Primary Shares
2006	1.00%	29,734	$	11.773803	$	350,082	3.43%	3.12%
2005	1.00%	4,004		11.417503		45,716	3.65%	0.29%
Fidelity® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class
2006	1.00%	502,702		14.263392		7,170,236	3.30%	19.00%
2005	1.00%	537,298		11.985917		6,440,009	1.64%	4.81%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Initial Class
2006	1.00%	747,634		7.360951		5,503,297	0.40%	5.79%
2005	1.00%	746,748		6.958097		5,195,945	0.51%	4.75%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class
2006	1.00%	136,954		11.731213		1,606,637	7.80%	10.13%
2005	1.00%	126,486		10.651851		1,347,310	16.14%	1.68%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Initial Class
2006	1.00%	180,844		12.420750		2,246,218	0.91%	16.91%
2005	1.00%	162,770		10.624371		1,729,329	0.71%	17.87%
Fidelity® Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class
2006	1.00%	252,802		10.985811		2,777,235	2.71%	6.25%
2005	1.00%	287,746		10.339381		2,975,116	2.76%	3.01%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Initial Class
2006	1.00%	364,854		13.531021		4,936,847	1.27%	10.61%
2005	1.00%	210,686		12.233291		2,577,383	0.29%	15.78%
Fidelity® Variable Insurance Products Fund III – Growth Opportunities Portfolio – Initial Class
2006	1.00%	10,970		8.931581		97,979	0.69%	4.41%
2005	1.00%	11,798		8.554456		100,925	0.95%	7.81%
Fidelity® Variable Insurance Products Fund III – Value Strategies Portfolio – Service Class
2006	1.00%	14,346		15.361961		220,383	0.41%	15.04%
2005	1.00%	11,298		13.353090		150,863	0.00%	1.54%
Gartmore GVIT – Emerging Markets Fund – Class I
2006	1.00%	29,436		23.450961		690,302	0.72%	35.36%
2005	1.00%	19,494		17.324605		337,726	0.61%	31.32%
Gartmore GVIT – Global Financial Services Fund – Class I
2006	1.00%	5,656		18.927318		107,053	1.89%	19.13%
2005	1.00%	5,612		15.888310		89,165	2.00%	10.05%
Gartmore GVIT – Global Health Sciences Fund – Class I
2006	1.00%	17,932		13.071309		234,395	0.00%	1.69%
2005	1.00%	19,108		12.854278		245,620	0.00%	7.36%
Gartmore GVIT – Global Technology and Communications Fund – Class I
2006	1.00%	27,680		3.224567		89,256	0.00%	10.07%
2005	1.00%	15,226		2.929673		44,607	0.00%	-1.50%
Gartmore GVIT – Global Utilities Fund – Class I
2006	1.00%	38,254		19.556346		748,108	2.82%	36.20%
2005	1.00%	8,262		14.358831		118,633	2.16%	5.33%
Gartmore GVIT – Government Bond Fund – Class I
2006	1.00%	127,692		13.201192		1,685,687	4.11%	2.32%
2005	1.00%	119,678		12.902408		1,544,134	3.64%	2.24%
Gartmore GVIT – Growth Fund: Class I
2006	1.00%	55,020		5.812653		319,812	0.05%	5.11%
2005	1.00%	38,158		5.529847		211,008	0.08%	5.44%
Gartmore GVIT – International Growth Fund – Class I
2006	1.00%	37,946		12.684823		481,338	0.78%	31.65%
2005	1.00%	24,308		9.635544		234,221	1.03%	28.92%
Gartmore GVIT – Investor Destinations Aggressive Fund – Class II
2006	1.00%	290		15.042687		4,362	2.11%	15.71%
Gartmore GVIT – Investor Destinations Conservative Fund – Class II
2006	1.00%	5,798		11.849304		68,702	2.89%	5.11%
2005	1.00%	2,858		11.273191		32,219	2.78%	2.28%
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	1.00%	41,320		13.421439		554,574	2.50%	10.25%
2005	1.00%	36,840		12.173861		448,485	2.36%	4.30%

(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 – Investor Destinations Moderately Aggressive Fund – Class II
2006	1.00%	23,212	$	14.398126	$	334,209	2.27%	13.40%
2005	1.00%	1,550		12.696312		19,679	2.14%	6.01%
Gartmore GVIT – Investor Destinations Moderately Conservative Fund – Class II
2006	1.00%	77,310		12.669367		979,469	2.76%	7.35%
2005	1.00%	6,244		11.802269		73,693	2.75%	3.45%
Gartmore GVIT – Mid Cap Growth Fund – Class I
2006	1.00%	30,726		6.104214		187,558	0.00%	8.82%
2005	1.00%	24,834		5.609609		139,309	0.00%	8.65%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	1.00%	41,104		14.390791		591,519	1.13%	8.80%
2005	1.00%	43,640		13.226964		577,225	1.03%	10.99%
Gartmore GVIT – Money Market Fund – Class I
2006	1.00%	495,002		10.886811		5,388,993	4.49%	3.49%
2005	1.00%	408,430		10.519895		4,296,641	2.64%	1.64%
Gartmore GVIT – Nationwide® Fund – Class I
2006	1.00%	167,948		11.015308		1,849,999	1.08%	12.50%
2005	1.00%	153,820		9.791361		1,506,107	0.91%	6.38%
Gartmore GVIT – Nationwide® Leaders Fund – Class I
2006	1.00%	2,084		15.382337		32,057	0.97%	14.89%
2005	1.00%	3,916		13.388228		52,428	1.54%	9.22%
Gartmore GVIT – Small Cap Growth Fund – Class I
2006	1.00%	24,648		7.684584		189,410	0.00%	2.18%
2005	1.00%	9,740		7.520431		73,249	0.00%	7.02%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	1.00%	53,404		18.925926		1,010,720	0.43%	16.13%
2005	1.00%	105,618		16.297231		1,721,281	0.06%	2.05%
Gartmore GVIT – Small Company Fund – Class I
2006	1.00%	49,560		15.031685		744,970	0.11%	10.93%
2005	1.00%	40,176		13.551021		544,426	0.00%	11.20%
Gartmore GVIT – U.S. Growth Leaders Fund – Class I
2006	1.00%	9,994		14.990265		149,813	0.25%	-1.28%
2005	1.00%	13,390		15.184319		203,318	0.00%	10.85%
Gartmore GVIT – Van Kampen GVIT Multi-Sector Bond Fund – Class I
2006	1.00%	14,786		13.748525		203,286	4.42%	3.80%
2005	1.00%	2,210		13.245485		29,273	3.89%	1.17%
Janus Aspen Series – Forty Portfolio – Service Shares
2006	1.00%	9,930		8.873089		88,110	0.14%	8.03%
2005	1.00%	8,522		8.213276		69,994	0.01%	11.44%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2006	1.00%	17,218		4.361506		75,096	0.00%	6.76%
2005	1.00%	17,522		4.085406		71,584	0.00%	10.44%
Janus Aspen Series – International Growth Portfolio – Service Shares
2006	1.00%	109,880		14.367390		1,578,689	1.92%	45.17%
2005	1.00%	35,600		9.896611		352,319	1.14%	30.63%
Neuberger Berman Advisers Management Trust – Growth Portfolio®– Class I
2006	1.00%	200,916		6.390816		1,284,017	0.00%	12.94%
2005	1.00%	189,716		5.658791		1,073,563	0.00%	12.37%
Neuberger Berman Advisers Management Trust – Guardian Portfolio – I Class Shares
2006	1.00%	7,572		12.188388		92,290	0.67%	12.25%
2005	1.00%	2,788		10.858076		30,272	0.14%	7.32%
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I
2006	1.00%	58,744		12.028394		706,596	3.06%	3.17%
2005	1.00%	47,674		11.659063		555,834	2.61%	0.44%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	1.00%	89,328		14.828703		1,324,618	0.71%	11.13%
2005	1.00%	78,466		13.343910		1,047,043	1.02%	16.87%

(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***
Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA – Non-Service Shares
2006	1.00%	143,020	$	13.594148	$	1,944,235	2.13%	10.04%
2005	1.00%	127,708		12.353496		1,577,640	1.76%	2.86%
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	1.00%	77,536		8.747201		678,223	0.38%	6.88%
2005	1.00%	112,070		8.184351		917,220	0.93%	4.06%
Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA – Non-Service Shares
2006	1.00%	50,010		13.730362		686,655	5.20%	4.23%
2005	1.00%	32,080		13.172613		422,577	5.34%	1.57%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	1.00%	160,988		14.236174		2,291,853	1.04%	16.52%
2005	1.00%	136,196		12.217371		1,663,957	1.07%	13.17%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
2006	1.00%	7,816		10.443096		81,623	1.11%	13.88%
2005	1.00%	16,864		9.169966		154,642	1.25%	4.92%
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	1.00%	13,928		5.595113		77,929	0.00%	1.93%
2005	1.00%	14,778		5.488955		81,116	0.00%	11.21%
Van Eck Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class
2006	1.00%	42,236		15.191481		641,627	8.51%	5.42%
2005	1.00%	44,648		14.409920		643,374	7.55%	-3.99%
Van Eck Worldwide Insurance Trust – Worldwide Emerging Markets Fund – Initial Class
2006	1.00%	39,850		24.616702		980,976	0.60%	38.11%
2005	1.00%	33,638		17.824242		599,572	0.73%	30.69%
Van Eck Worldwide Insurance Trust – Worldwide Hard Assets Fund – Initial Class
2006	1.00%	62,902		28.446616		1,789,349	0.07%	23.26%
2005	1.00%	66,950		23.079126		1,545,147	0.30%	50.17%
Van Kampen – The Universal Institutional Funds, Inc. – Emerging Markets Debt Portfolio – Class I
2006	1.00%	3,962		19.973989		79,137	7.72%	9.71%
2005	1.00%	8,002		18.206549		145,689	7.52%	11.14%
Van Kampen – The Universal Institutional Funds, Inc. – U.S. Real Estate Portfolio – Class I
2006	1.00%	73,408		31.826979		2,336,355	1.08%	36.68%
2005	1.00%	63,520		23.286362		1,479,150	1.22%	15.89%
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Discovery FundSM
2006	1.00%	25,940		16.167820		419,393	0.00%	13.51%
2005	1.00%	30,292		14.243955		431,478	0.00%	7.20%
Wells Fargo Advantage Variable Trust FundsSM – Wells Fargo Advantage VT Opportunity FundSM
2006	1.00%	160,034		13.078165		2,092,951	0.00%	11.11%
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 Variable Portfolios, Inc. – Balanced Fund – Class I
2006	1.30%	990		23.745073		23,508	1.93%	8.21%
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%
American Century Variable Portfolios, Inc. – Capital Appreciation Fund – Class I
2006	1.30%	556		25.335087		14,086	0.00%	15.71%
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%
American Century Variable Portfolios, Inc. – 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%

(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 Variable Portfolios, Inc. – International Fund – Class I
2006	1.30%	6,172	$	22.662010	$	139,870	1.65%	23.42%
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%
American Century Variable Portfolios, Inc. – 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 Variable Portfolios, Inc. – 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%
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%
Credit Suisse Trust – International Focus Portfolio
2006	1.30%	10,164		15.763156		160,217	1.03%	17.13%
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%
Credit Suisse Trust – Small Cap Growth Portfolio
2006	1.30%	7,148		17.853550		127,617	0.00%	3.42%
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%
Dreyfus Investment Portfolios – Small Cap Stock Index Portfolio – Service Shares
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 Socially Responsible Growth Fund, Inc. – Initial Shares, The
2006	1.30%	430		23.974748		10,309	0.11%	7.79%
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%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2006	1.30%	13,440		31.594380		424,628	1.65%	14.01%
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%
Dreyfus Variable Investment Fund – Appreciation Portfolio – Initial Shares
2006	1.30%	10,234		15.282356		156,400	1.49%	14.98%
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%
Dreyfus Variable Investment Fund – 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%

(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 Insurance Series – Federated 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® Variable Insurance Products Fund – Equity-Income Portfolio – Initial Class
2006	1.30%	3,596		51.616411		185,613	3.30%	18.65%
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%
Fidelity® Variable Insurance Products Fund – Growth Portfolio – Initial Class
2006	1.30%	3,826		39.316236		150,424	0.40%	5.47%
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%
Fidelity® Variable Insurance Products Fund – High Income Portfolio – Initial Class
2006	1.30%	9,972		30.387910		303,028	7.80%	9.80%
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%
Fidelity® Variable Insurance Products Fund – Overseas Portfolio – Initial Class
2006	1.30%	782		25.962703		20,303	0.91%	16.56%
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%
Fidelity® Variable Insurance Products Fund II – Asset Manager Portfolio – Initial Class
2006	1.30%	654		31.718247		20,744	2.71%	5.93%
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%
Fidelity® Variable Insurance Products Fund II – Contrafund® Portfolio – Initial Class
2006	1.30%	3,016		33.601299		101,342	1.27%	10.28%
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%
Fidelity® Variable Insurance Products Fund 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%
Fidelity® Variable Insurance Products Fund 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 – 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%
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

(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	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%
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
2006	1.30%	7,562		25.368610		191,837	4.11%	2.01%
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%
Gartmore GVIT – Growth Fund: Class I
2006	1.30%	932		17.584603		16,389	0.05%	4.80%
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%
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%
Gartmore GVIT – Investor Destinations 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%
Gartmore GVIT – Investor Destinations Moderate Fund – Class II
2006	1.30%	2,822		13.224582		37,320	2.50%	9.92%
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 – Investor Destinations 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 – Investor Destinations 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
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%
Gartmore GVIT – Mid Cap Index Fund – Class I
2006	1.30%	4,202		15.476230		65,031	1.13%	8.47%
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%

(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
2006	1.30%	1,120	$	15.396940	$	17,245	4.49%	3.18%
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%
Gartmore GVIT – Nationwide® Fund – Class I
2006	1.30%	314		40.292927		12,652	1.08%	12.16%
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%
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%
Gartmore GVIT – Small Cap Value Fund – Class I
2006	1.30%	1,840		22.711726		41,790	0.43%	15.78%
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%
Gartmore GVIT – Small Company Fund – Class I
2006	1.30%	816		36.787497		30,019	0.11%	10.60%
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%
Gartmore GVIT – Turner GVIT 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%
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 GVIT 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%
Janus Aspen Series – 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%
Janus Aspen Series – 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%
Janus Aspen Series – 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%

(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 Advisers Management Trust – Growth Portfolio®– Class I
2006	1.30%	1,860	$	28.970099	$	53,884	0.00%	12.60%
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%
Neuberger Berman Advisers Management Trust – 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%
Neuberger Berman Advisers Management Trust – Limited Maturity Bond Portfolio – Class I
2006	1.30%	492		18.678278		9,190	3.06%	2.86%
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%
Neuberger Berman Advisers Management Trust – Partners Portfolio®– Class I
2006	1.30%	190		35.184666		6,685	0.71%	10.80%
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%
Oppenheimer Variable Account Funds – Oppenheimer Balanced Fund/VA – Non-Service Shares
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%
Oppenheimer Variable Account Funds – Oppenheimer Capital Appreciation Fund/VA – Non-Service Shares
2006	1.30%	1,892		16.515549		31,247	0.38%	6.56%
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%
Oppenheimer Variable Account Funds – Oppenheimer Core Bond Fund/VA – Non-Service Shares
2006	1.30%	952		25.434609		24,214	5.20%	3.92%
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%
Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA – Non-Service Shares
2006	1.30%	3,734		42.577872		158,986	1.04%	16.18%
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%
Oppenheimer Variable Account Funds – Oppenheimer Main Street Fund®/VA – Non-Service Shares
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%
Oppenheimer Variable Account Funds – Oppenheimer Mid Cap Fund/VA – Non-Service Shares
2006	1.30%	5,116		6.194874		31,693	0.00%	1.63%
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%
Strong Variable Insurance Funds, Inc. – Strong International Stock Fund II
2002	1.30%	28,207		5.494908		154,995	4.04%	-27.49%

(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 Worldwide Insurance Trust – Worldwide Bond Fund – Initial Class
2006	1.30	%	710	$	20.988551	$	14,902	8.51	%	5.11%
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%
Van Eck Worldwide Insurance Trust – 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%
Van Eck Worldwide Insurance Trust – 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%
Van Kampen – The Universal Institutional Funds, Inc. – 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%
Van Kampen – The Universal Institutional Funds, Inc. – 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%
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Discovery FundSM
2006	1.30	%	468		34.057941		15,939	0.00	%	13.17%
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%
Wells Fargo Advantage Variable Trust FundsSM– Wells Fargo Advantage VT Opportunity FundSM
2006	1.30	%	448		52.395225		23,473	0.00	%	10.77%
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%
Contract Owners’ Equity Total By Year
2006						$	980,827,120
2005						$	929,399,760
2004						$	915,627,476
2003						$	881,562,186
2002						$	727,023,336

*	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, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006, 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, 2007

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,
	2006		2005		2004
Revenues:
Policy charges	$	1,132.6	$	1,055.1	$	1,025.2
Traditional life insurance and immediate annuity premiums		308.3		260.0		270.4
Net investment income		2,058.5		2,105.2		2,000.5
Net realized gains (losses) on investments, hedging instruments and hedged items		7.1		10.6		(36.4	)
Other income		0.2		2.2		9.8
Total revenues		3,506.7		3,433.1		3,269.5
Benefits and expenses:
Interest credited to policyholder account values		1,330.1		1,331.0		1,277.2
Life insurance and annuity benefits		450.3		377.5		369.2
Policyholder dividends on participating policies		25.6		33.1		36.2
Amortization of deferred policy acquisition costs		450.3		466.3		410.1
Interest expense on debt, primarily with Nationwide Financial Services, Inc. (NFS)		65.5		66.3		59.8
Other operating expenses		531.8		538.8		582.0
Total benefits and expenses		2,853.6		2,813.0		2,734.5
Income from continuing operations before federal income tax expense		653.1		620.1		535.0
Federal income tax expense		30.6		95.6		120.0
Income from continuing operations		622.5		524.5		415.0
Cumulative effect of adoption of accounting principle, net of taxes		—		—		(3.3	)
Net income	$	622.5	$	524.5	$	411.7

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Balance Sheets

(in millions, except per share amounts)

	December 31,
	2006		2005
Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (cost $25,197.2 in 2006; $26,658.9 in 2005)	$	25,275.4	$	27,198.1
Equity securities (cost $28.5 in 2006; $35.1 in 2005)		34.4		42.1
Mortgage loans on real estate, net		8,202.2		8,458.9
Real estate, net		54.8		84.9
Policy loans		639.2		604.7
Other long-term investments		598.9		641.5
Short-term investments, including amounts managed by a related party		1,722.0		1,596.6
Total investments		36,526.9		38,626.8
Cash		0.5		0.9
Accrued investment income		323.6		344.0
Deferred policy acquisition costs		3,758.0		3,597.9
Other assets		2,001.5		1,699.1
Assets held in separate accounts		67,351.9		62,689.8
Total assets	$	109,962.4	$	106,958.5
Liabilities and Shareholder’s Equity
Liabilities:
Future policy benefits and claims	$	34,409.4	$	35,941.1
Short-term debt		75.2		242.3
Long-term debt, payable to NFS		700.0		700.0
Other liabilities		2,988.1		3,130.1
Liabilities related to separate accounts		67,351.9		62,689.8
Total liabilities		105,524.6		102,703.3
Shareholder’s equity:
Common stock, $1 par value; authorized - 5.0 shares; issued and outstanding - 3.8 shares		3.8		3.8
Additional paid-in capital		274.4		274.4
Retained earnings		4,130.9		3,883.4
Accumulated other comprehensive income		28.7		93.6
Total shareholder’s equity		4,437.8		4,255.2
Total liabilities and shareholder’s equity	$	109,962.4	$	106,958.5

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of 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, 2003	$	3.8	$	271.3	$	3,257.2		$	467.3		$	3,999.6
Comprehensive income:
Net income		—		—		411.7			—			411.7
Other comprehensive loss, net of taxes		—		—		—			(73.5	)		(73.5	)
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
Other comprehensive loss, net of taxes		—		—		—			(300.2	)		(300.2	)
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
Comprehensive income:
Net income		—		—		622.5			—			622.5
Other comprehensive loss, net of taxes		—		—		—			(64.9	)		(64.9	)
Total comprehensive income												557.6
Dividends to NFS		—		—		(375.0	)		—			(375.0	)
Balance as of December 31, 2006	$	3.8	$	274.4	$	4,130.9		$	28.7		$	4,437.8

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2006			2005			2004
Cash flows from operating activities:
Net income	$	622.5		$	524.5		$	411.7
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized (gains) losses on investments, hedging instruments and hedged items		(7.1	)		(10.6	)		36.4
Interest credited to policyholder account values		1,330.1			1,331.0			1,277.2
Capitalization of deferred policy acquisition costs		(569.6	)		(460.5	)		(496.4	)
Amortization of deferred policy acquisition costs		450.3			466.3			410.1
Amortization and depreciation		46.6			65.6			73.0
(Increase) decrease in other assets		(298.0	)		591.0			(303.5	)
Increase (decrease) in policy and other liabilities		225.7			(511.1	)		324.4
Other, net		0.1			(114.9	)		1.5
Net cash provided by operating activities		1,800.6			1,881.3			1,734.4
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale		5,128.6			4,198.5			3,099.4
Proceeds from sale of securities available-for-sale		2,267.3			2,619.7			2,485.5
Proceeds from repayments or sales of mortgage loans on real estate		2,430.8			2,854.6			1,920.9
Cost of securities available-for-sale acquired		(5,658.9	)		(6,924.1	)		(6,291.4	)
Cost of mortgage loans on real estate originated or acquired		(2,180.4	)		(2,524.9	)		(2,169.9	)
Net (increase) decrease in short-term investments		(125.4	)		56.9			205.9
Collateral (paid) received - securities lending, net		(332.6	)		36.6			89.4
Other, net		52.1			121.6			(357.2	)
Net cash provided by (used in) investing activities		1,581.5			438.9			(1,017.4	)
Cash flows from financing activities:
Net (decrease) increase in short-term debt		(167.1	)		27.3			15.2
Capital contributed by NFS		—			—			3.1
Cash dividends paid to NFS		(375.0	)		(185.0	)		(125.0	)
Investment and universal life insurance product deposits		3,400.8			2,845.4			3,561.6
Investment and universal life insurance product withdrawals		(6,241.2	)		(5,022.5	)		(4,156.5	)
Net cash used in financing activities		(3,382.5	)		(2,334.8	)		(701.6	)
Net (decrease) increase in cash		(0.4	)		(14.6	)		15.4
Cash, beginning of period		0.9			15.5			0.1
Cash, end of period	$	0.5		$	0.9		$	15.5

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

(1) Nature of Operations  

Nationwide Life Insurance Company (NLIC, or collectively with its subsidiaries, the Company) was incorporated in 1929 and is an Ohio stock legal reserve life insurance company. The Company is a member of the Nationwide group of companies (Nationwide), which is comprised of Nationwide Mutual Insurance Company (NMIC) and all of its subsidiaries and affiliates.

All of the outstanding shares of NLIC’s common stock are owned by 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, 2006 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker/dealer.

The Company is a leading provider of long-term savings and retirement products in the United States of America (U.S.). The Company develops and sells a diverse range of products including individual annuities, private and public sector group retirement plans, other investment products sold to institutions, life insurance and advisory services. The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker/dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), Nationwide Financial Network (NFN) producers and TBG Insurance Services Corporation d/b/a TBG Financial (TBG Financial) through its joint venture with MC Insurance Agency Services, LLC d/b/a Mullin Consulting. The Company also distributes products through the NMIC agency distribution force.

As of December 31, 2006 and 2005, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

(2) Summary of Significant Accounting Policies  

The 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 Company’s most significant estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition (DAC) for investment and universal life insurance products; impairment losses on investments; valuation allowances for mortgage loans on real estate; the liability for future policy benefits and claims; and federal income tax provision. Although some variability is inherent in these estimates, 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. 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, 2006, 2005 and 2004

(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, 2006, 71% of the fair values of fixed maturity securities were obtained from independent pricing services, 20% from the Company’s pricing matrices and 9% from other sources compared to 72%, 20% and 8%, respectively, in 2005.

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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.

The Company grants mainly commercial mortgage loans on real estate to customers throughout the U.S. As of December 31, 2006, the Company had a diversified portfolio with no more than 25.5% of the mortgage loan portfolio in any geographic region of the U.S. and no more than 2.6% with any one borrower, compared to 23.8% and 1.6%, respectively, as of December 31, 2005. As of December 31, 2006 and 2005, 33.4% and 32.0% of the carrying value of the Company’s commercial mortgage loan portfolio financed retail properties, respectively.

Real estate to be held and used is carried at cost less accumulated depreciation. Real estate designated as held for disposal is not depreciated and is carried at the lower of the carrying value at the time of such designation or fair value less cost to sell. Other long-term investments are carried on the equity method of accounting.

Impairment losses are recorded on investments in long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in the Company’s mortgage loan valuation allowance and recognition of impairment losses for other-than-temporary declines in the fair values of applicable investments are included in realized gains and losses on investments, hedging instruments and hedged items.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(c) Derivative Instruments

Derivatives are carried at fair value. On the date the derivative contract is entered into, the Company designates the derivative as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge); a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); a foreign currency fair value or cash flow hedge (foreign currency hedge); or a non-hedge transaction. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for entering into various hedge transactions. This process includes linking all derivatives that are designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used for hedging transactions are expected to be and, for ongoing hedging relationships, have been highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not, or is not expected to be, highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

The Company enters into interest rate swaps, cross-currency swaps or Euro futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short U.S. Treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in 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 are part of its overall risk management strategy. For example, the Company may sell credit default protection through a credit default swap. Although the credit default swap 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(d) Revenues and Benefits

Investment and Universal Life Insurance Products: Investment products consist primarily of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, bank-owned life insurance (BOLI) and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, asset fees, cost of insurance charges, administrative fees and surrender charges that have been earned and assessed against policy account balances during the period. The timing of revenue recognition as it relates to fees assessed on investment contracts and universal life contracts is determined based on the nature of such fees. Asset fees, cost of insurance charges and administrative fees are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. Policy benefits and claims that are charged to expense include interest credited to policy account values and benefits and claims incurred in the period in excess of related policy account values.

Traditional Life Insurance Products: Traditional life insurance products include those products with fixed and guaranteed premiums and benefits and primarily consist of whole life insurance, limited-payment life insurance, term life insurance and certain annuities with life contingencies. Premiums for traditional life insurance products are recognized as revenue when due. Benefits and expenses are associated with earned premiums so that profits are recognized over the life of the contract. This association is accomplished through the provision for future policy benefits and the deferral and amortization of policy acquisition costs.

(e) Deferred Policy Acquisition Costs for Investment and Universal Life Insurance Products

The Company has deferred certain costs of acquiring investment and universal life insurance products business, principally commissions, certain expenses of the policy issue and underwriting department, and certain variable sales expenses that relate to and vary with the production of new and renewal business. 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 in the year of policy issuance and loss recognition testing at the end of each reporting period.

For investment and universal life insurance products, DAC is being amortized with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administration fees, surrender charges, and net realized 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 Standard & Poor’s (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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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 future assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense, which could be significant. In general, increases in the estimated 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. If DAC assumptions were unlocked and revised, the Company would continue to use the reversion to the mean process.

For other investment 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 true-up and 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 contracts, which are riders to existing variable annuity contracts.

(g) Future Policy Benefits and Claims

The process of calculating reserve amounts for a life insurance organization involves the use of a number of assumptions, including those related to persistency (how long a contract stays with a company), mortality (the relative incidence of death in a given time), morbidity (the relative incidence of disability resulting from disease or physical impairment) and interest rates (the rates expected to be paid or received on financial instruments, including insurance or investment contracts).

The Company calculates its liability for future policy benefits and claims for investment products in the accumulation phase and universal life and variable universal life insurance policies as the policy account balance, which represents participants’ net premiums and deposits plus investment performance and interest credited less applicable contract charges.

The Company’s liability for funding agreements to an unrelated third party trust equals the balance that accrues to the benefit of the contractholder, including interest credited. The funding agreements constitute insurance obligations and are considered annuity contracts under Ohio insurance laws.

The liability for future policy benefits and claims for traditional life insurance policies was calculated by the net level premium method using interest rates varying from 2.0% to 10.5% and estimates of mortality, morbidity, investment yields and withdrawals that were used or being experienced at the time the policies were issued.

The liability for future policy benefits for payout annuities was calculated using the present value of future benefits and maintenance costs discounted using interest rates varying generally from 3.0% to 13.0%.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(h) Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 8% in 2006 (10% in 2005 and 11% in 2004) of the Company’s life insurance in force, 50% of the number of life insurance policies in force in 2006 (52% in 2005 and 55% in 2004) and 5% of life insurance statutory premiums in 2006 (5% in 2005 and 7% in 2004). 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.

(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. Management evaluates the appropriateness of such reserves quarterly based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums and other rulings issued by the Internal Revenue Service (IRS) or the tax courts.

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully realized.

(j) Reinsurance Ceded

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related balances of the Company.

(k) Reclassification

Certain items in the 2005 and 2004 consolidated financial statements and related notes have been reclassified to conform to the current presentation.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(3) Recently Issued Accounting Standards  

In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statements No. 115 (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. In addition, SFAS 159 does not establish requirements for recognizing and measuring dividend income, interest income or interest expense, nor does it eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS No. 157, Fair Value Measurements (SFAS 157), and SFAS No. 107, Disclosures about Fair Value of Financial Instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company currently is evaluating the impact of adopting SFAS 159.

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end balance sheet, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end balance sheet is effective for fiscal years ending after December 15, 2008. If in the last quarter of the preceding fiscal year an employer enters into a transaction that results in a settlement or experiences an event that causes a curtailment of the plan, the related gain or loss pursuant to Statement 88 or 106 is required to be recognized in earnings that quarter. The adoption of SFAS 158 did not have a material impact on the Company’s financial position or results of operations.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108 (SAB 108). SAB 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB 108 requires registrants to quantify misstatements using both the balance sheet and income-statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB 108 does not change the SEC’s previous guidance in SAB No. 99 on evaluating the materiality of misstatements. A registrant applying the new guidance for the first time that identifies material errors in existence at the beginning of the first fiscal year ending after November 15, 2006, may correct those errors through a one-time cumulative effect adjustment to beginning-of-year retained earnings. The cumulative effect alternative is available only if the application of the new guidance results in a conclusion that a material error exists as of the beginning of the first fiscal year ending after November 15, 2006, and those misstatements were determined to be immaterial based on a proper application of the registrant’s previous method for quantifying misstatements. Because of the beginning-of-year recognition of the cumulative effect adjustment, misstatements occurring in the year of adoption cannot be included in that adjustment. SAB 108 requires the following disclosures if a cumulative effect adjustment is recorded: the nature and amount of each individual error included in the cumulative effect adjustment; when and how each error arose; and the fact that the errors had previously been considered immaterial. The cumulative effect adjustment is available only for prior-year uncorrected misstatements. The adjustment should not include amounts related to changes in accounting estimates. SAB 108 did not have a material impact on the Company’s financial position or results of operations upon adoption.

In June 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company plans to adopt FIN 48 effective January 1, 2007. FIN 48 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets (SFAS 156).SFAS 156 amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140). SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. SFAS 156 permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. An entity that uses derivative instruments to mitigate the risks inherent in servicing assets and servicing liabilities is required to account for those derivative instruments at fair value. Under SFAS 156, an entity can elect subsequent fair value measurement to account for its separately recognized servicing assets and servicing liabilities. By electing that option, an entity may simplify its accounting because SFAS 156 permits income statement recognition of the potential offsetting changes in fair value of those servicing assets and servicing liabilities and derivative instruments in the same accounting period. SFAS 156 is effective for fiscal years beginning after September 15, 2006, with early adoption permitted. The Company plans to adopt SFAS 156 effective January 1, 2007. SFAS 156 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments (SFAS 155). SFAS 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), and SFAS 140. SFAS 155 also resolves issues addressed in SFAS 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. In summary, SFAS 155: (1) permits an entity to make an irrevocable election to measure any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation at fair value in its entirety, with changes in fair value recognized in earnings; (2) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (3) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (4) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (5) amends SFAS 140 to eliminate the prohibition on a qualifying special purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. 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. The Company elected to early adopt SFAS 155 as of January 1, 2006. On the date of adoption, there was no impact to the Company’s financial position or results of operations.

In September 2005, 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 as a result of the exchange of a contract for a new contract, or by amendment, endorsement or rider to a contract, or by the election of a new feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006, with earlier adoption encouraged. Retrospective application of SOP 05-1 to previously issued financial statements is not permitted. Initial application of SOP 05-1 is required as of the beginning of an entity’s fiscal year. The Company will adopt SOP 05-1 effective January 1, 2007. Although the Company is currently unable to quantify the impact of adoption, SOP 05-1 is not expected to have a material impact on the Company’s financial position and/or results of operations.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS 154), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, with earlier adoption permitted. The Company adopted SFAS 154 effective January 1, 2006. SFAS 154 has not had any impact on the Company’s financial position or results of operations since adoption.

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 guaranteed minimum death benefits (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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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	)

(4) 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.

The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought or sold, or in the case of liabilities incurred or settled, in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is based on the best information available in the circumstances. Such estimates of fair value 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 these disclosure requirements are not actively traded, requiring fair values to be estimated by management using matrix pricing, present value or other suitable valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments.

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).

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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 values of liabilities related to separate accounts are the amounts payable on demand, 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, net of certain surrender charges. For investment contracts with known or determined maturities, fair value is estimated using discounted cash flow analysis. Interest rates used in this analysis are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued.

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.

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.

Other derivatives: The fair values for other derivatives are based on credit event probabilities, equity option index levels and broker valuations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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:

	2006						2005
(in millions)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities	$	25,275.4		$	25,275.4		$	27,198.1		$	27,198.1
Equity securities		34.4			34.4			42.1			42.1
Mortgage loans on real estate, net		8,202.2			8,060.7			8,458.9			8,503.0
Policy loans		639.2			639.2			604.7			604.7
Short-term investments		1,722.0			1,722.0			1,596.6			1,596.6
Cash		0.5			0.5			0.9			0.9
Assets held in separate accounts		67,351.9			67,351.9			62,689.8			62,689.8
Liabilities
Investment contracts		(27,124.7	)		(25,455.2	)		(28,698.1	)		(26,607.2	)
Policy reserves on life insurance contracts		(7,284.7	)		(7,120.4	)		(7,243.0	)		(7,173.1	)
Short-term debt		(75.2	)		(75.2	)		(242.3	)		(242.3	)
Long-term debt, payable to NFS		(700.0	)		(809.3	)		(700.0	)		(822.8	)
Collateral received – securities lending and derivatives		(986.1	)		(986.1	)		(1,359.1	)		(1,359.1	)
Liabilities related to separate accounts		(67,351.9	)		(66,149.8	)		(62,689.8	)		(61,483.5	)
Derivative financial instruments
Interest rate swaps hedging assets		4.2			4.2			3.3			3.3
Cross-currency interest rate swaps		66.1			66.1			178.5			178.5
Interest rate futures contracts		(2.4	)		(2.4	)		1.6			1.6
Other derivatives		128.2			128.2			41.1			41.1

(5) Derivative Financial Instruments  

Qualitative Disclosure

Interest Rate Risk Management

The Company periodically purchases fixed rate investments to back variable rate liabilities. As a result, the Company can be exposed to interest rate risk due to the mismatch between variable rate liabilities and fixed rate assets. In an effort to mitigate 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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. In an effort 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. In an effort to manage this risk, the Company may enter into receive fixed/pay variable interest rate swaps.

In using these interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap offsets the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap and the credit spread on the investment. The net receipt of a fixed rate will then 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. In an effort 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. In an effort to manage this risk, the Company uses cross-currency interest rate hedges to swap these asset characteristics to variable U.S. dollar rate instruments. Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in 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.

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

Asset fees calculated as a percentage of the separate account assets are a significant source of revenue to the Company. As of December 31, 2006, approximately 82% of separate account assets were invested in equity mutual funds (approximately 83% as of December 31, 2005). Gains and losses in the equity markets result in corresponding increases and decreases in the Company’s separate account assets and asset fee revenue. In addition, a decrease in separate account assets may decrease the Company’s expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in guaranteed contract claims, which also may require the Company to accelerate the amortization of DAC.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The Company’s long-term assumption for net separate account returns is 8% annual growth. If equity markets were unchanged throughout a given year, the Company estimates that its net earnings per diluted share, calculated using current weighted average diluted shares outstanding, would be approximately $0.05 to $0.10 less than had the Company’s long-term assumption for net separate account returns been realized. This analysis assumes no other factors change and that an unlocking of DAC assumptions would not be required. However, as it does each quarter, the Company would evaluate its DAC balance and underlying assumptions to determine whether unlocking is appropriate. The Company can provide no assurance that the experience of flat equity market returns would not result in changes to other factors affecting profitability, including the possibility of unlocking of DAC assumptions.

Many of the Company’s individual variable annuity contracts offer GMDB features. A GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on 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 2000, the Company managed this risk primarily by entering into reinsurance arrangements. The GMDB economic hedging program is designed to offset changes in the economic value of the 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 futures are not designated as hedges and, therefore, hedge accounting is not applied. The Company’s economic evaluation of the GMDB obligation is not consistent with current accounting treatment of the GMDB obligation. Therefore, the hedging activity is likely to lead to earnings volatility. This volatility was negligible in 2006. As of December 31, 2006 and 2005, the net amount at risk was $562.4 million and $1.08 billion before reinsurance, respectively, and $119.0 million and $178.4 million net of reinsurance, respectively. As of December 31, 2006 and 2005, the Company’s reserve for GMDB claims was $29.3 million and $26.9 million, respectively. See Note 3 to the audited consolidated financial statements included in the F pages of this report for discussion of the impact of adopting a new accounting principle regarding GMDB reserves in 2004.

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. Subsequent changes in the fair value of the embedded derivative are recognized in earnings. 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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. Quarterly, the Company purchases 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) to the audited consolidated financial statements included in the F pages of this report 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 is likely to create volatility in earnings; however, the economic hedging program provides substantial mitigation of this exposure. This volatility was negligible in 2006 and 2005. As of December 31, 2006 and 2005, the balance of the GMAB embedded derivative was $116.3 million and $67.9 million, respectively. The increase in the balance of the GMAB embedded derivative was driven by the value of new business sold during 2006.

Beginning in March 2005, the Company began offering a hybrid GMAB/guaranteed lifetime withdrawal benefit (GLWB) through its Capital Preservation Plus Lifetime Income (CPPLI) contract rider. This living benefit combines a GMAB feature in its first 5-10 years with a lifetime withdrawal benefit 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 will 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 GLWB portion of this rider or periodically reset the guaranteed withdrawal basis to a higher level. This benefit requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy as previously described above.

In March 2006, the Company added Lifetime Income (L.INC), a stand-alone GLWB, to compliment CPPLI in its product offerings. This rider is very similar to the hybrid benefit discussed above. L.INC provides for enhanced retirement income security via guaranteed accumulation rates and withdrawal rates that increase with age without the liquidity loss associated with annuitization. The lifetime withdrawal feature also is being economically hedged. Currently, the Company is using S&P 500 Index and U.S. Treasury futures to hedge exposure to declining equity and interest rate markets, respectively. Similar to GMDBs, the Company’s economic valuation of the lifetime income obligation is not consistent with the accounting treatment of the obligation. Therefore, hedging activity is likely to create volatility in earnings; however, the economic hedging program provides substantial mitigation of this exposure. This volatility was negligible in 2006.

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 cash flows with the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment.

The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company. The purchased credit default protection does not qualify for hedge accounting treatment.

Quantitative Disclosure

Fair Value Hedges

During the years ended December 31, 2006, 2005 and 2004, a net gain of $2.9 million, a net gain of $4.1 million and a net loss of $11.3 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Cash Flow Hedges

For the years ended December 31, 2006, 2005 and 2004, the ineffective portion of cash flow hedges was a net loss of $1.5 million, a net gain of $3.1 million and a net gain of $1.0 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 $0.8 million in net losses out of AOCI over the next 12-month period.

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.

During 2006, 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, 2006, 2005 and 2004 included a net loss of $0.5 million, a net loss of $9.1 million and a net gain of $8.1 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. In addition, the Individual Investments segment included a loss of $11.4 million and a gain of $5.1 million for the years ended December 31, 2006 and 2005, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2006, 2005 and 2004, net losses of $10.6 million, $80.7 million and $5.9 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 $14.1 million, $78.3 million and $5.9 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, 2006, 2005 and 2004, respectively.

The following table summarizes the notional amount of derivative financial instruments outstanding as of December 31:

(in millions)	2006		2005
Interest rate swaps:
Pay fixed/receive variable rate swaps hedging investments	$	1,930.5	$	2,040.1
Pay variable/receive fixed rate swaps hedging investments		60.4		79.2
Pay variable/receive fixed rate swaps hedging liabilities		—		550.0
Pay variable/receive variable rate swaps hedging liabilities		—		30.0
Pay fixed/receive variable rate swaps hedging liabilities		1,048.8		170.0
Other contracts hedging investments		—		10.0
Cross-currency interest rate swaps:
Hedging foreign currency denominated investments		452.9		439.8
Hedging foreign currency denominated liabilities		1,137.1		1,312.4
Credit default swaps and other non-hedging instruments		478.6		555.3
Equity option contracts		1,640.7		774.4
Interest rate futures contracts		214.2		120.5
Total	$	6,963.2	$	6,081.7

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(6) Investments  

The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale as of the dates indicated:

(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
December 31, 2006:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	123.7	$	11.4	$	1.4	$	133.7
Agencies not backed by the full faith and credit of the U. S. Government		559.4		46.2		2.2		603.4
Obligations of states and political subdivisions		266.0		0.7		7.2		259.5
Debt securities issued by foreign governments		34.9		1.7		0.1		36.5
Corporate securities
Public		8,602.0		168.8		109.9		8,660.9
Private		6,015.4		128.8		71.4		6,072.8
Mortgage-backed securities – U.S. Government-backed		6,089.1		21.3		112.8		5,997.6
Asset-backed securities		3,506.7		43.3		39.0		3,511.0
Total fixed maturity securities		25,197.2		422.2		344.0		25,275.4
Equity securities		28.5		6.2		0.3		34.4
Total securities available-for-sale	$	25,225.7	$	428.4	$	344.3	$	25,309.8
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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The table below summarizes the amortized cost and estimated fair value of fixed maturity securities available-for-sale, by maturity, as of December 31, 2006. 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	$	1,476.3	$	1,488.2
Due after one year through five years		6,350.0		6,406.7
Due after five years through ten years		4,697.0		4,722.5
Due after ten years		3,078.1		3,149.4
Subtotal		15,601.4		15,766.8
Mortgage-backed securities – U.S. Government-backed		6,089.1		5,997.6
Asset-backed securities		3,506.7		3,511.0
Total	$	25,197.2	$	25,275.4

The following table presents the components of net unrealized gains on securities available-for-sale as of December 31:

(in millions)	2006			2005
Net unrealized gains, before adjustments and taxes	$	84.1		$	246.2
Adjustment to DAC		83.3			42.4
Adjustment to future policy benefits and claims		(83.1	)		(104.6	)
Deferred federal income taxes		(29.5	)		(64.4	)
Net unrealized gains	$	54.8		$	119.6

The following table presents an analysis of the net decrease in net unrealized gains on securities available-for-sale before adjustments and taxes for the years ended December 31:

(in millions)	2006			2005			2004
Fixed maturity securities	$	(161.0	)	$	(704.1	)	$	(153.3	)
Equity securities		(1.1	)		(3.4	)		(1.2	)
Net change	$	(162.1	)	$	(707.5	)	$	(154.5	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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, 2006:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	49.8	$	0.8	$	17.7	$	0.6	$	67.5	$	1.4
Agencies not backed by the full faith and credit of the U.S. Government		31.7		0.1		120.3		2.1		152.0		2.2
Obligations of states and political subdivisions		82.4		1.0		156.3		6.2		238.7		7.2
Debt securities issued by foreign governments		12.8		0.1		—		—		12.8		0.1
Corporate securities
Public		2,445.0		24.3		2,964.6		85.6		5,409.6		109.9
Private		1,162.7		13.5		1,872.3		57.9		3,035.0		71.4
Mortgage-backed securities – U.S. Government-backed		767.8		6.4		3,809.5		106.4		4,577.3		112.8
Asset-backed securities		539.2		4.2		1,336.6		34.8		1,875.8		39.0
Total fixed maturity securities		5,091.4		50.4		10,277.3		293.6		15,368.7		344.0
Equity securities		0.1		—		3.4		0.3		3.5		0.3
Total	$	5,091.5	$	50.4	$	10,280.7	$	293.9	$	15,372.2	$	344.3
% of gross unrealized losses				15%				85%
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%

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

Increases in unrealized losses more than one year are primarily due to changes in the interest rate environment. Those securities are not considered other-than-temporarily impaired because the decline in market value is attributed to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold those investments until recovery.

Proceeds from the sale of securities available-for-sale during 2006, 2005 and 2004 were $2.27 billion, $2.62 billion and $2.49 billion, respectively. During 2006, gross gains of $61.6 million ($71.9 million and $61.5 million in 2005 and 2004, respectively) and gross losses of $64.1 million ($22.6 million and $8.7 million in 2005 and 2004, respectively) were realized on those sales.

The Company had $5.1 million and $22.2 million of real estate investments as of December 31, 2006 and 2005, respectively, that were non-income producing during the preceding twelve months.

Real estate held for use is presented at cost less accumulated depreciation of $16.7 million as of December 31, 2006 ($21.5 million as of December 31, 2005). The carrying value of real estate held for sale totaled $42.1 million and $2.5 million as of December 31, 2006 and 2005, respectively.

The recorded investment of mortgage loans on real estate considered to be impaired was $17.5 million as of December 31, 2006 ($29.7 million as of December 31, 2005), for which the related valuation allowance was $12.3 million ($7.1 million as of December 31, 2005). 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 2006, the average recorded investment in impaired mortgage loans on real estate was $3.5 million ($7.4 million in 2005). Interest income on those loans, which is recognized on a cash basis, totaled $1.9 million in 2006 ($2.1 million in 2005).

The following table summarizes activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31:

(in millions)	2006		2005			2004
Allowance, beginning of period	$	31.1	$	33.3		$	29.1
Net additions (reductions) to allowance		3.2		(2.2	)		4.2
Allowance, end of period	$	34.3	$	31.1		$	33.3

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)	2006			2005			2004
Total realized gains on sales, net of hedging losses	$	88.8		$	75.6		$	65.0
Total realized losses on sales, net of hedging gains		(64.8	)		(22.9	)		(12.7	)
Total other-than-temporary and other investment impairments		(17.1	)		(36.8	)		(90.6	)
Credit default swaps		(1.1	)		(7.5	)		0.3
Periodic net coupon settlements on non-qualifying derivatives		1.9			1.1			6.6
Other derivatives		(0.6	)		1.1			(5.0	)
Net realized gains (losses) on investments, hedging instruments and hedged items	$	7.1		$	10.6		$	(36.4	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes net investment income from continuing operations by investment type for the years ended December 31:

(in millions)	2006			2005			2004
Securities available-for-sale:
Fixed maturity securities	$	1,419.2		$	1,466.2		$	1,461.9
Equity securities		2.6			2.4			1.2
Mortgage loans on real estate		535.4			577.3			577.4
Real estate		17.0			16.6			17.9
Short-term investments		47.3			18.8			8.9
Derivatives		(1.9	)		(31.0	)		(94.3	)
Other		105.8			112.2			78.4
Gross investment income		2,125.4			2,162.5			2,051.4
Less investment expenses		66.9			57.3			50.9
Net investment income	$	2,058.5		$	2,105.2		$	2,000.5

Fixed maturity securities with an amortized cost of $8.1 million and $16.4 million as of December 31, 2006 and 2005, respectively, were on deposit with various regulatory agencies as required by law.

As of December 31, 2006, the Company had not pledged any fixed maturity securities as collateral to various derivative counterparties compared to $8.5 million as of December 31, 2005.

As of December 31, 2006 and 2005, the Company had received $802.3 million and $1.10 billion, respectively, of cash collateral on securities lending and $171.0 million and $203.3 million, respectively, of cash for derivative collateral. As of December 31, 2006 and 2005, the Company had not received any non-cash collateral on securities. 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, 2006 and 2005, the Company had loaned securities with a fair value of $778.6 million and $1.07 billion, respectively. The Company also held $12.8 million and $53.2 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2006 and 2005, respectively.

(7) Variable Annuity Contracts  

The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contractholders. The Company provides four primary guarantee types under non-traditional variable annuity contracts: (1) GMDB; (2) GMAB; (3) guaranteed minimum income benefits (GMIB); and (4) a hybrid guarantee with GMAB and GLWB.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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 5 for a complete description of the Company’s hybrid GMAB/GLWB offered through its CPPLI contract rider. All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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:

	2006					2005
(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	$	9,231.4	$	17.1	60	$	9,260.6	$	32.5	60
Reset		17,587.0		24.2	63		16,932.1		58.7	63
Ratchet		13,481.0		16.0	66		11,020.6		28.9	65
Rollup		538.4		5.7	70		592.1		8.4	69
Combo		2,588.7		14.9	68		2,530.6		22.3	68
Subtotal		43,426.5		77.9	65		40,336.0		150.8	64
Earnings enhancement		477.8		41.1	61		418.5		27.6	61
Total - GMDB	$	43,904.3	$	119.0	65	$	40,754.5	$	178.4	63
GMAB2:
5 Year	$	2,131.1	$	0.1	N/A	$	1,041.8	$	0.5	N/A
7 Year		1,865.7		0.1	N/A		1,103.5		0.2	N/A
10 Year		784.0		—	N/A		595.5		0.1	N/A
Total - GMAB	$	4,780.8	$	0.2	N/A	$	2,740.8	$	0.8	N/A
GMIB3:
Ratchet	$	450.6	$	—	N/A	$	444.7	$	—	N/A
Rollup		1,187.1		—	N/A		1,189.3		—	N/A
Combo		0.5		—	N/A		0.5		—	N/A
Total - GMIB	$	1,638.2	$	—	N/A	$	1,634.5	$	—	N/A
GLWB:
Lifetime Income (L.INC)	$	993.8	$	—	N/A	$	—	$	—	N/A
Total - GLWB	$	993.8	$	—	N/A	$	—	$	—	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/GLWB rider had account values of $2.95 billion and $939.1 million as of December 31, 2006 and 2005, respectively.  

³   The weighted average period remaining until expected annuitization is not meaningful and has not been presented because there is currently no material GMIB exposure.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

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		GLWB		Total
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
Expense provision		32.5			—			—		0.3		32.8
Net claims paid		(30.1	)		—			—		—		(30.1	)
Value of new business sold		—			95.2			—		—		95.2
Change in fair value		—			(46.8	)		—		—		(46.8	)
Balance as of December 31, 2006	$	29.3		$	116.3		$	1.2	$	0.3	$	147.1

The following table summarizes account balances of contracts with guarantees that were invested in separate accounts as of December 31:

(in millions)	2006		2005
Mutual funds:
Bond	$	4,467.3	$	3,857.3
Domestic equity		29,808.4		28,011.3
International equity		3,420.5		2,161.4
Total mutual funds		37,696.2		34,030.0
Money market funds		1,414.4		1,350.4
Total	$	39,110.6	$	35,380.4

The Company’s GMDB claim reserves are determined by estimating the expected value of death benefits on contracts that trigger a policy benefit and recognizing the excess ratably over the accumulation period based on total expected assessments. GMIB claim reserves are determined each period by estimating the expected value of annuitization benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total assessments. The Company regularly evaluates its GMDB and GMIB claim reserve estimates and adjusts the additional liability balances as appropriate, with a related charge or credit to other benefits and claims in the period of evaluation if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in calculating GMIB claim reserves are consistent with those used for calculating GMDB claim reserves. In addition, the calculation of GMIB claim reserves assumes benefit utilization ranges from a low of 3% when the contractholder’s annuitization value is at least 10% in the money to 100% utilization when the contractholder is 90% or more in the money.

In accordance with SOP 03-01, GLWB claim reserves for the L.INC rider are determined each period by estimating the expected value of withdrawal benefits in excess of the projected account balance and recognizing such potential additional liabilities of the Company as a benefit reserve expense ratably over the accumulation period. The Company periodically evaluates estimates used and adjusts the additional liability balance as appropriate, with a related charge or credit to life insurance and annuity benefits in the period of evaluation if actual experience or other evidence suggests that earlier assumptions should be revised.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2006 and 2005:

• 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	4.00%	5.00%	6.00%	7.00%	8.00%	9.50%	10.00%	11.00%	14.00%	14.00%
Maximum	4.00%	5.00%	6.00%	7.00%	35.00%	35.00%	23.00%	35.00%	35.00%	23.00%

GMABs and hybrid GMABs/GLWBs 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.

(8) Short-Term Debt  

The following table summarizes short-term debt as of December 31:

(in millions)	2006		2005
$800.0 million commercial paper program	$	—	$	134.7
$350.0 million securities lending program facility		75.2		75.0
$250.0 million securities lending program facility		—		32.6
Total short-term debt	$	75.2	$	242.3

The Company has available as a source of funds a $1.00 billion revolving variable rate credit facility entered into by NFS, NLIC and NMIC with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company 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, 2006, the Company and NLIC were in compliance with all covenants. The Company had no amounts outstanding under this agreement as of December 31, 2006 and 2005. 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 no commercial paper outstanding at December 31, 2006 and $134.7 million outstanding at December 31, 2005 at a weighted average effective interest rate of 4.22%.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

NLIC has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. NLIC had $75.2 million and $75.0 million outstanding under this agreement as of December 31, 2006 and 2005, respectively. As of December 31, 2006, the Company had not provided any guarantees on such borrowings, either directly or indirectly.

The Company paid interest on short-term debt totaling $11.7 million, $11.5 million and $3.6 million in 2006, 2005 and 2004, respectively.

(9) Long-Term Debt  

The following table summarizes surplus notes payable to NFS as of December 31:

(in millions)	2006		2005
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, $53.7 million and $50.7 million in 2006, 2005 and 2004, respectively. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).

(10) Federal Income Taxes  

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, the ultimate majority shareholder of NFS. Effective October 1, 2002, Nationwide Corporation’s ownership in NFS decreased from 79.8% to 63.0%. Therefore, NFS and its subsidiaries, including the Company, no longer qualify to be included in the NMIC consolidated federal income tax return. The members of the NMIC consolidated federal income tax return group participated in a tax sharing arrangement, which 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, 2006, 2005 and 2004

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)	2006			2005
Deferred tax assets:
Future policy benefits	$	607.8		$	630.5
Other		138.6			185.9
Gross deferred tax assets		746.4			816.4
Less valuation allowance		(7.0	)		(7.0	)
Deferred tax assets, net of valuation allowance		739.4			809.4
Deferred tax liabilities:
Deferred policy acquisition costs		1,022.2			970.5
Other		173.9			237.1
Gross deferred tax liabilities		1,196.1			1,207.6
Net deferred tax liability	$	456.7		$	398.2

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income taxes paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged during 2006, 2005 and 2004.

The Company’s current federal income tax (asset) liability was $(12.6) million and $53.8 million as of December 31, 2006 and 2005, respectively.

Through June 2006, the Company’s federal income tax returns for tax years 2000-2002 were under IRS examination pursuant to a routine audit. In accordance with its regular practice, management established tax reserves representing its best estimate of additional amounts the Company could be required to pay if certain positions it had taken were challenged and ultimately denied by the IRS with respect to these tax years. These reserves are reviewed regularly and are adjusted as events occur that management believes impacts the Company’s liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/non-deductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. A significant component of the Company’s tax reserve as of December 31, 2005 was related to the separate account dividends received deduction (DRD).

In July 2006, the Company reached substantial agreement with the IRS on all open issues for tax years 2000-2002, including issues related to the DRD. Accordingly, the Company revised its estimate of amounts that may be due in connection with certain tax positions, including the DRD, for all open tax years. As a result of the revised estimate, $110.9 million of tax reserves were released into earnings during the quarter ended June 30, 2006.

During the third quarter of 2006, the Company recorded $7.8 million of net federal income tax expense adjustments primarily related to differences between the 2005 estimated tax liability and the amounts reported on the Company’s 2005 tax returns.

During the third quarter of 2005, the Company refined its separate account DRD estimation process. As a result, the Company identified and recorded additional federal income tax benefits and recoverables in the amount of $42.6 million related to all tax years (2000 – 2005) that were open at that time. In addition, the Company recorded $5.6 million of net benefit adjustments primarily related to differences between the 2004 estimated tax liability and the amounts reported on the Company’s 2004 tax returns.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

The following table summarizes federal income tax expense attributable to income from continuing operations for the years ended December 31:

(in millions)	2006			2005		2004
Current	$	(61.8	)	$	90.6	$	181.5
Deferred		92.4			5.0		(61.5	)
Federal income tax expense	$	30.6		$	95.6	$	120.0

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:

	2006					2005					2004
(dollars in millions)	Amount			%		Amount			%		Amount			%
Computed (expected) tax expense	$	228.6		35.0		$	217.0		35.0		$	187.2		35.0
Tax exempt interest and DRD		(67.5	)	(10.3	)		(107.5	)	(17.3	)		(47.2	)	(8.8	)
Reserve release		(110.9	)	(17.0	)		—		—			—		—
Other, net		(19.6	)	(3.0	)		(13.9	)	(2.3	)		(20.0	)	(3.8	)
Total	$	30.6		4.7		$	95.6		15.4		$	120.0		22.4

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. The Jobs Creation Act of 2004 had no other significant impact on the Company’s tax position.

Total federal income taxes (refunded) paid were $(4.3) million, $182.2 million and $142.3 million during the years ended December 31, 2006, 2005 and 2004, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(11) Shareholders’ Equity, Regulatory Risk-Based Capital and Dividend Restrictions  

Regulatory Risk-Based Capital

The State of Ohio, where NLIC and NLAIC are domiciled, imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level risk-based capital, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. NLIC and NLAIC each exceeded the minimum risk-based capital requirements for all periods presented herein.

Dividend Restrictions

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, 2006 and 2005 was $2.68 billion and $2.60 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2006, 2005 and 2004 was $537.5 million, $462.5 million and $317.7 million, respectively. As of January 1, 2007, based on statutory financial results as of and for the year ended December 31, 2006, NLIC could pay dividends totaling $162.5 million without obtaining prior approval. As of March 1, 2007, NLIC will be able to pay dividends to NFS totaling $232.5 million upon providing prior notice to the ODI. On February 21, 2007, NLIC declared an ordinary dividend of $232.5 million and an extraordinary dividend of $242.5 million, both payable to NFS in March 2007. NLIC will provide notice to the ODI of the ordinary dividend and seek prior approval from the ODI of the extraordinary dividend before paying these dividends 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, 2006, 2005 and 2004

Comprehensive Income

The Company’s comprehensive income includes net income and certain items that are reported directly within separate components of shareholder’s equity that are not recorded in net income (other comprehensive income or loss).

The following table summarizes the Company’s other comprehensive loss, before and after federal income tax benefit (expense), for the years ended December 31:

(in millions)	2006			2005			2004
Net unrealized losses on securities available-for-sale arising during the period:
Net unrealized losses before adjustments	$	(171.3	)	$	(687.2	)	$	(182.0	)
Net adjustment to deferred policy acquisition costs		40.9			187.0			99.1
Net adjustment to future policy benefits and claims		21.5			17.0			(11.0	)
Related federal income tax benefit		38.1			169.1			33.3
Net unrealized losses		(70.8	)		(314.1	)		(60.6	)
Reclassification adjustment for net realized losses (gains) on securities available-for-sale realized during the period:
Net unrealized losses (gains)		9.2			(20.3	)		27.5
Related federal income tax (benefit) expense		(3.2	)		7.1			(9.6	)
Net reclassification adjustment		6.0			(13.2	)		17.9
Other comprehensive loss on securities available-for-sale		(64.8	)		(327.3	)		(42.7	)
Accumulated net holding (losses) gains on cash flow hedges:
Unrealized holding (losses) gains		(0.2	)		41.7			(47.4	)
Related federal income tax benefit (expense)		0.1			(14.6	)		16.6
Other comprehensive (loss) income on cash flow hedges		(0.1	)		27.1			(30.8	)
Total other comprehensive loss	$	(64.9	)	$	(300.2	)	$	(73.5	)

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2006, 2005 and 2004.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(12) Employee Benefit Plans  

Defined Benefit Plans

The Company and certain affiliated companies participate in a qualified defined benefit pension plan sponsored by NMIC. This plan covers all employees of participating companies who have completed at least one year of service. Plan contributions are invested in a group annuity contract issued by NLIC. All participants are eligible for benefits based on an account balance feature. Participants last hired before 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature. The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. A separate non-qualified defined benefit pension plan sponsored by NMIC covers certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $19.9 million, $16.6 million and $13.7 million for the years ended December 31, 2006, 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. The level of contribution required by a qualified retiree depends on the retiree’s years of service and date of hire. In general, postretirement benefits are available to full-time employees who are credited with 120 months of retiree life and health service. Postretirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and coinsurance. In addition, there are caps on the Company’s portion of the per-participant cost of the postretirement health care benefits. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested primarily in group annuity contracts issued by NLIC. The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2006, 2005 and 2004.

Defined Contribution Plans

NMIC sponsors a defined contribution retirement savings plan covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company’s expense for contributions to these plans was $6.6 million, $6.2 million and $5.8 million for the years ended December 31, 2006, 2005 and 2004, respectively.

(13) Related Party Transactions  

The Company has entered into significant, recurring transactions and agreements with NMIC, other affiliates and subsidiaries as a part of its ongoing operations. These include annuity and life insurance contracts, office space leases, and agreements related to reinsurance, cost sharing, administrative services, marketing, intercompany loans, intercompany repurchases, cash management services and software licensing. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, the number of full-time employees, commission expense and other methods agreed to by the participating companies 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, 2006, 2005 and 2004, the Company made payments to NMIC and NSC totaling $261.7 million, $274.1 million and $194.6 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, 2006, 2005 and 2004

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 $5.48 billion and $6.39 billion as of December 31, 2006 and 2005, respectively. Total revenues from these contracts were $133.4 million, $136.2 million and $136.5 million for the years ended December 31, 2006, 2005 and 2004, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $110.7 million, $107.3 million and $107.9 million for the years ended December 31, 2006, 2005 and 2004, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated.

The Company leases office space from NMIC. For the years ended December 31, 2006, 2005 and 2004, the Company made lease payments to NMIC of $19.3 million, $18.7 million and $18.4 million, respectively.

NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC for the years ended December 31, 2006, 2005 and 2004 were $430.8 million, $429.5 million and $335.6 million, respectively, while benefits, claims and expenses ceded during these years were $470.4 million, $398.8 million and $336.0 million, respectively.

Funds of NWD Investment Management, Inc. (NWD), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2006 and 2005, customer allocations to NWD funds totaled $18.26 billion and $15.70 billion, respectively. For the years ended December 31, 2006, 2005 and 2004, NWD paid the Company $64.4 million, $51.6 million and $44.5 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 $28.3 million, $26.5 million and $23.2 million for the years ended December 31, 2006, 2005 and 2004, 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, 2006 and 2005, the Company had no outstanding borrowings from affiliated entities under such agreements. During 2006, 2005 and 2004, the most the Company had outstanding at any given time was $191.5 million, $55.3 million and $227.7 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements during these years were immaterial.

The Company and various affiliates 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 $601.3 million and $390.9 million as of December 31, 2006 and 2005, respectively, and are included in short-term investments on the consolidated balance sheets.

Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2006, 2005 and 2004 were $58.1 million, $59.0 million and $63.1 million, respectively.

During the years ended December 31, 2006 and 2005, the Company did not purchase any fixed maturity securities available-for-sale from NFN compared to $829.9 million during 2004. NFN recorded gross realized gains of $23.4 million on such transactions during 2004.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 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 $6.9 million, $2.9 million and $2.6 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Historically, the Company has retained funds for certain claim and benefit payments to customers in the form of interest-bearing accounts. During the year ended December 31, 2006, this practice was discontinued. Eligible participant balances totaling $224.7 million were transferred from the Company to interest-bearing deposit accounts of Nationwide Bank, a wholly-owned subsidiary of NFS, in exchange for cash plus a premium of $0.7 million payable to NFS for the value of the relationships acquired by Nationwide Bank.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 10. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. Total payments (from) to NMIC were $(15.3) million, $45.0 million and $37.4 million in the years ended December 31, 2006, 2005 and 2004, respectively. These payments related to tax years prior to deconsolidation.

In 2006, 2005 and 2004, NLIC paid dividends to NFS totaling $375.0 million, $185.0 million and $125.0 million, respectively.

(14) Contingencies  

Legal Matters

The Company is a party to litigation and arbitration proceedings in the ordinary course of its business. It is often not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. The Company does not believe, based on information currently known by management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on the Company’s consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on the Company’s consolidated financial results in a particular quarterly or annual period.

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

The financial services industry, including mutual fund, variable annuity, 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 June 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, 2006, 2005 and 2004

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, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives. 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 certain of these investigations, including those relating to 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 NLIC MTN program. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including 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 November 15, 2006, NFS, NLIC and NRS were named in a lawsuit filed in the Untied States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The Class Period is from January 1, 1996 until the Class Notice is provided. The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, NFS, NLIC and NRS filed a motion to dismiss. NFS, NLIC and NRS intend to defend this lawsuit vigorously.

On February 11, 2005, NLIC was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees. On February 2, 2006, the Court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The Court certified a class consisting of all residents of the United States and the Virgin Islands who, during the Class Period, paid premiums on a modal basis to NLIC for term life insurance policies issued by NLIC during the Class Period that provide for guaranteed maximum premiums, excluding certain specified products. Excluded from the class are NLIC; any parent, subsidiary or affiliate of NLIC; all employees, officers and directors of NLIC; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The Class Period is from February 10, 1990 through February 2, 2006, the date the class was certified. On January 26, 2007, the plaintiff filed a motion for summary judgment. NLIC continues to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

On April 13, 2004, NLIC was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. NLIC removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding entitled In Re Mutual Funds Investment Litigation. In response, on May 13, 2005, the plaintiff filed 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 1, 2006, the District Court granted NLIC’s motion to dismiss the plaintiff’s complaint. On November 29, 2006, the plaintiff filed its appellate brief with the Fourth Circuit Court of Appeals contesting the District Court’s dismissal. NLIC continues to defend this lawsuit vigorously.

On January 21, 2004, NLIC, Nationwide Life Insurance Company of America, NLAIC, NFS and Nationwide Financial Corporation (collectively referred to as the Companies) were 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, the plaintiff alleges that the Companies and/or their affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Companies. 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. On December 30, 2005, the Companies filed a motion for summary judgment. On June 15, 2006, the District Court granted the Companies’ motion for summary judgment on all grounds and dismissed the plaintiff’s entire case with prejudice. The plaintiff appealed the District Court’s decision to the Fifth Circuit Court of Appeals. The appeal has been fully briefed, and the Companies are awaiting a decision. The Companies continue to defend this lawsuit vigorously.

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NLIC and NFS, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class. NFS’ and NLIC’s motion to dismiss the plaintiffs’ fifth amended complaint is currently pending before the court. NFS and NLIC continue 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, 2006, 2005 and 2004

Tax Matters

The Company’s federal income tax returns are routinely audited by the IRS. 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.

(15) Guarantees  

Since 2001, the Company has sold $626.1 million of credit enhanced equity interests in Low-Income-Housing Tax Credit Funds (Tax Credit Funds) to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 5.25% over periods ending between 2002 and 2022. As of December 31, 2006, 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 $1.36 billion. The Company does not anticipate making any payments related to these 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 2006 and 2005, no stabilization collateral amounts were released into income. As of December 31, 2006 and 2005, $2.2 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(16) Variable Interest Entities  

As of December 31, 2006 and 2005, the Company had relationships with 18 and 19 variable interest entities (VIEs), respectively, each of which the Company was the primary beneficiary. As of December 31, 2006, each VIE was a conduit that assists the Company in structured products transactions involving the sale of Tax Credit Funds to third party investors for which the Company provides guaranteed returns (see Note 15). The results of operations and financial position of these VIEs are included along with corresponding minority interest liabilities in the accompanying consolidated financial statements.

VIE net assets were $445.5 million and $440.6 million as of December 31, 2006 and December 31, 2005, respectively. The following table summarizes the components of net assets as of December 31:

(in millions)	2006			2005
Mortgage loans on real estate	$	—		$	31.5
Other long-term investments		432.5			478.6
Short-term investments		33.7			42.3
Other assets		37.8			41.3
Short-term debt		—			(32.6	)
Other liabilities		(58.5	)		(120.5	)

The Company’s total loss exposure from VIEs of which the Company is the primary beneficiary was immaterial as of December 31, 2006 and 2005 (except for the impact of guarantees disclosed in Note 15).

In addition to the VIEs described above, the Company holds variable interests, in the form of limited partnerships or similar investments, in Tax Credit Funds of which the Company is not the primary beneficiary. These investments have been held by the Company for periods of 1 to 10 years and allow the Company to utilize certain tax credits and realize other tax benefits from affordable housing projects. The Company also has certain investments in other securitization transactions that qualify as VIEs, but of which the Company is not the primary beneficiary. The total exposure to loss on these VIEs was $68.9 million and $53.9 million as of December 31, 2006 and 2005, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Notes to Consolidated Financial Statements, Continued

December 31, 2006, 2005 and 2004

(17) Segment Information  

Management views the Company’s business primarily based on its underlying products and uses this basis to define its four reportable segments: Individual Investments, Retirement Plans, Individual Protection, and Corporate and Other.

The primary segment profitability measure that management uses is pre-tax operating earnings, which is calculated by adjusting income from continuing operations before federal income taxes to exclude (1) net realized gains and losses on investments, hedging instruments and hedged items, except for periodic net coupon settlements on non-qualifying derivatives and net realized gains and losses related to securitizations and (2) 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 features, while individual fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods.

Retirement Plans

The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans business. The private sector primarily includes IRC Section 401(k) business, and the public sector primarily includes IRC Section 457 and Section 401(a) business, both in the form of full-service arrangements that provide plan administration and fixed and variable group annuities as well as administration-only business.

Individual Protection

The Individual Protection segment consists of investment life insurance products, including individual variable, COLI and BOLI products; traditional life insurance products; and universal life insurance products. Life insurance products provide a death benefit and generally allow the customer to build cash value on a tax-advantaged basis.

Corporate and Other

The Corporate and Other segment includes certain structured products business; the MTN program; net investment income and certain expenses not allocated to other segments; periodic net coupon settlements on non-qualifying derivatives; 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, 2006, 2005 and 2004

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
2006
Revenues:
Policy charges	$	581.7	$	160.2	$	390.7	$	—		$	1,132.6
Traditional life insurance and immediate annuity premiums		142.5		—		165.8		—			308.3
Net investment income		739.5		636.0		328.2		354.8			2,058.5
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		1.0			1.0
Other income		2.6		—		0.3		3.4			6.3
Total revenues		1,466.3		796.2		885.0		359.2			3,506.7
Benefits and expenses:
Interest credited to policyholder account values		501.7		440.5		179.2		208.7			1,330.1
Life insurance and annuity benefits		202.8		—		247.5		—			450.3
Policyholder dividends on participating policies		—		—		25.6		—			25.6
Amortization of DAC		352.7		37.9		69.6		(9.9	)		450.3
Interest expense on debt		—		—		—		65.5			65.5
Other operating expenses		206.3		179.1		142.4		4.0			531.8
Total benefits and expenses		1,263.5		657.5		664.3		268.3			2,853.6
Income from continuing operations before federal income tax expense		202.8		138.7		220.7		90.9		$	653.1
Net realized gains on investments, hedging instruments and hedged items1		—		—		—		(1.0	)
Adjustment to amortization related to net realized gains and losses		—		—		—		(9.9	)
Pre-tax operating earnings	$	202.8	$	138.7	$	220.7	$	80.0
Assets as of period end	$	55,404.6	$	28,817.2	$	16,948.8	$	8,791.8		$	109,962.4

¹   Excluding periodic net coupon settlements on non-qualifying derivatives 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, 2006, 2005 and 2004

(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
Traditional life insurance and immediate annuity 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 income		1.3		0.2		—		1.8			3.3
Total revenues		1,452.8		788.1		873.8		318.4			3,433.1
Benefits and expenses:
Interest credited to policyholder account values		557.7		444.8		182.4		146.1			1,331.0
Life insurance and annuity benefits		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 and losses		—		—		—		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 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, 2006, 2005 and 2004

(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
Traditional life insurance and immediate annuity 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 income		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
Life insurance and annuity benefits		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 and net realized gains and losses related to securitizations.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule I          Consolidated Summary of Investments – Other Than Investments in Related Parties

As of December 31, 2006 (in millions)

Column A	Column B		Column C		Column D
Type of investment	Cost		Market value		Amount at which shown in the consolidated balance sheet
Fixed maturity securities available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government corporations	$	123.7	$	133.7	$	133.7
Agencies not backed by the full faith and credit of the U.S. Government		559.4		603.4		603.4
Obligations of states and political subdivisions		266.0		259.5		259.5
Foreign governments		34.9		36.5		36.5
Public utilities		1,541.9		1,543.5		1,543.5
All other corporate		22,671.3		22,698.8		22,698.8
Total fixed maturity securities available-for-sale		25,197.2		25,275.4		25,275.4
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies		13.3		17.8		17.8
Industrial, miscellaneous and all other		7.8		9.1		9.1
Nonredeemable preferred stocks		7.4		7.5		7.5
Total equity securities available-for-sale		28.5		34.4		34.4
Mortgage loans on real estate, net		8,222.9				8,202.2	1
Real estate, net:
Investment properties		66.3				49.7	2
Acquired in satisfaction of debt		5.2				5.1	2
Total real estate, net		71.5				54.8
Policy loans		639.2				639.2
Other long-term investments		677.4				574.9	3, 4
Short-term investments, including amounts managed by a related party		1,722.0				1,722.0
Total investments	$	36,558.7			$	36,502.9

¹   Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans on real estate (see Note 6 to the audited consolidated financial statements), hedges and commitment hedges on mortgage loans on real estate.  

²   Difference from Column B primarily results from adjustments for accumulated depreciation.  

³   Difference from Column B primarily is due to operating gains and/or losses of investments in limited partnerships.  

⁴   Amount shown does not agree to the audited consolidated balance sheet due to $24.1 million in unconsolidated related party investments.  

See accompanying report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule III        Supplementary Insurance Information

As of December 31, 2006, 2005 and 2004 and for each of the years then ended (in millions)

Column A	Column B			Column C		Column D			Column E		Column F
Year: Segment	Deferred policy acquisition costs			Future policy benefits, losses, claims and loss expenses		Unearned premiums1			Other policy claims and benefits payable1		Premium revenue
2006
Individual Investments	$	1,945.0		$	13,004.4						$	142.5
Retirement Plans		288.6			10,839.0							—
Individual Protection		1,441.0			5,574.1							165.8
Corporate and Other		83.4			4,991.9							—
Total	$	3,758.0		$	34,409.4						$	308.3
2005
Individual Investments	$	1,936.4		$	14,970.9						$	96.7
Retirement Plans		290.3			10,847.3							—
Individual Protection		1,328.7			5,531.9							163.3
Corporate and Other		42.5			4,591.0							—
Total	$	3,597.9		$	35,941.1						$	260.0
2004
Individual Investments	$	2,015.5		$	15,500.6						$	87.5
Retirement Plans		301.7			10,139.8							—
Individual Protection		1,244.1			5,430.5							182.9
Corporate and Other		(144.7	)		5,312.2							—
Total	$	3,416.6		$	36,383.1						$	270.4
Column A	Column G			Column H		Column I			Column J		Column K
Year: Segment	Net investment income2			Benefits, claims, losses and settlement expenses		Amortization of deferred policy acquisition costs			Other operating expenses2		Premiums written
2006
Individual Investments	$	739.5		$	704.5	$	352.7			206.3
Retirement Plans		636.0			440.5		37.9			179.1
Individual Protection		328.2			452.3		69.6			142.4
Corporate and Other		354.8			208.7		(9.9	)		4.0
Total	$	2,058.5		$	1,806.0	$	450.3		$	531.8
2005
Individual Investments	$	822.4		$	706.8	$	329.1		$	193.1
Retirement Plans		642.9			444.8		47.2			181.8
Individual Protection		332.8			443.9		89.0			148.1
Corporate and Other		307.1			146.1		1.0			15.8
Total	$	2,105.2		$	1,741.6	$	466.3		$	538.8
2004
Individual Investments	$	824.8		$	710.4	$	276.1		$	210.0
Retirement Plans		627.9			435.5		39.6			184.5
Individual Protection		327.2			450.0		94.4			159.7
Corporate and Other		220.6			86.7		—			27.8
Total	$	2,000.5		$	1,682.6	$	410.1		$	582.0

¹   Unearned premiums and other policy claims and benefits payable are included in Column C amounts.  

²   Allocations of net investment income and certain operating expenses are based on numerous assumptions and estimates, and reported segment operating results would change if different methods were applied.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule IV          Reinsurance

As of December 31, 2006, 2005 and 2004 and for each of the years then ended (dollars in millions)

Column A	Column B		Column C		Column D		Column E		Column F
	Gross amount		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
2006
Life insurance in force	$	151,109.9	$	58,189.8	$	7.9	$	92,928.0	0.0%
Premiums:
Life insurance 1	$	336.4	$	28.4	$	0.3	$	308.3	0.1%
Accident and health insurance		388.9		417.4		28.5		—	N/A
Total	$	725.3	$	445.8	$	28.8	$	308.3	9.3%
2005
Life insurance in force	$	142,308.1	$	52,339.1	$	10.6	$	89,979.6	0.0%
Premiums:
Life insurance 1	$	311.5	$	51.8	$	0.3	$	260.0	0.1%
Accident and health insurance		415.2		445.1		29.9		—	N/A
Total	$	726.7	$	496.9	$	30.2	$	260.0	11.6%
2004
Life insurance in force	$	123,756.6	$	46,866.2	$	10.2	$	76,900.6	0.0%
Premiums:
Life insurance 1	$	300.7	$	30.6	$	0.3	$	270.4	0.1%
Accident and health insurance		312.7		345.1		32.4		—	N/A
Total	$	613.4	$	375.7	$	32.7	$	270.4	12.1%

¹   Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment products and universal life insurance products.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(a wholly-owned subsidiary of Nationwide Financial Services, Inc.)

Schedule V        Valuation and Qualifying Accounts

Years ended December 31, 2006, 2005 and 2004 (in millions)

Column A	Column B		Column C				Column D		Column E
Description	Balance at beginning of period		Charged (credited) to costs and expenses		Charged to other accounts		Deductions1		Balance at end of period
2006
Valuation allowances - mortgage loans on real estate	$	31.1	$	6.0	$	—	$	2.8	$	34.3
2005
Valuation allowances - mortgage loans on real estate	$	33.3	$	1.6	$	—	$	3.8	$	31.1
2004
Valuation allowances - mortgage loans on real estate	$	29.1	$	7.5	$	—	$	3.3	$	33.3

¹   Amounts represent transfers to real estate owned and recoveries.  

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 – Attached hereto.

(o) Not Applicable

(p) Not Applicable

(q) Redeemability Exemption Procedures – Filed previously with registration statement (333-46338) and hereby incorporated by reference.

(99)              Power of Attorney – Attached hereto.

Item 27. Directors and Officers of the Depositor

Chairman of the Board and Director	Arden L. Shisler
Chief Executive Officer and Director	W. G. Jurgensen
President and Chief Operating Officer	Mark R. Thresher
Executive Vice President and Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President-Chief Administrative Officer	Terri L. Hill
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing Officer	James R. Lyski
Executive Vice President-Finance, Investments, and Strategy	Robert A. Rosholt
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-CIO Strategic Investments	Gary I. Siroko
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-Health and Productivity	Holly R. Snyder
Senior Vice President-In Retirement Business Head	Keith I. Millner
Senior Vice President-Individual Protection Business Head	Peter A. Golato
Senior Vice President-Information Technology	Srinivas Koushik
Senior Vice President-Internal Audits	Kelly A. Hamilton
Senior Vice President-NF Marketing	Gordon E. Hecker
Senior Vice President-NF Systems	R. Dennis Noice
Senior Vice President-Non-Affiliated Sales	John Laughlin Carter
Senior Vice President-NW Retirement Plans	William S. Jackson
Senior Vice President-President - Nationwide Bank	Anne L. Arvia
Senior Vice President-Property and Casualty Claims	David R. Jahn
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	James R. Burke
Senior Vice President-Property and Casualty Human Resources	Gale V. King
Senior Vice President-Property and Casualty Personal Lines Product Pricing	J. Lynn Greenstein
Vice President-Assistant to the CEO and Secretary	Thomas E. Barnes
Director	Joseph A. Alutto
Director	James G. Brocksmith, Jr.
Director	Keith W. Eckel
Director	Lydia M. Marshall
Director	Donald L. McWhorter
Director	David O. Miller
Director	Martha Miller de Lombera
Director	James F. Patterson
Director	Gerald D. Prothro
Director	Alex Shumate

The business address of the Directors and Officers of the Depositor is:

One Nationwide Plaza, Columbus, Ohio 43215

Item 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 a multi-state licensed insurance agency.
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.
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 General Agency Company	Iowa		The company acts as a general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.	Iowa		The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company	Iowa		The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.	Texas		The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
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.
Atlantic Floridian Insurance Company (f.k.a Nationwide Atlantic Insurance Company)	Ohio		The company writes personal lines residential property insurance in the State of Florida.
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.
CalFarm Insurance Agency	California		The company is an insurance agency.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
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.
Depositors Insurance Company	Iowa		The company underwrites general property and casualty insurance.
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.
F&B, Inc.	Iowa		The company is an insurance agency that places business with carriers other than Farmland Mutual Insurance Company and its affiliates.
Farmland Mutual Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
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.
FutureHealth Technologies Corporation	Maryland		The company is a wholly-owned subsidiary of FutureHealth Holding Company, which provides population health management.
Gartmore Distribution Services, Inc.*	Delaware		The company is a limited purpose broker-dealer.
Gartmore Investor Services, Inc.	Ohio		The company provides transfer and dividend disbursing agent services to various mutual fund entities.
Gartmore Morley Capital Management, Inc.	Oregon		The company is an investment advisor and stable value money manager.
Gartmore Mutual Fund Capital Trust	Delaware		The trust acts as a registered investment advisor.
Gartmore S.A. Capital Trust	Delaware		The trust acts as a registered investment advisor.
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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
GatesMcDonald DTAO, LLC	Ohio		The company provides disability tax reporting services.
GatesMcDonald DTNHP, 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.
GVH Participacoes e Empreedimientos Ltda.	Brazil		The company acts as a holding company.
Insurance Intermediaries, Inc.	Ohio		The company is an insurance agency and provides commercial property and casualty brokerage services.
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 automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
Morely & Associates, Inc. (f.k.a. Gartmore Morley & Associates, Inc.)	Oregon		The company brokers or places book-value maintenance agreements (wrap contracts) and guarantee investment contracts for collective investment trusts and accounts.
Morley Financial Services, Inc. (f.k.a. Gartmore Morley Financial Services, Inc.)	Oregon		The company is a holding company.
Mullen TBG Insurance Agency Services, LLC	Delaware		The company is a joint venture between TBG Insurance Services Corporation and MC Insurance Agency Services LLC. The Company provides financial products and services to executive plan participants.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as individual and group accident and health insurance.
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.
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Ohio		The company provides property and casualty insurance products.
Nationwide Agribusiness Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*	Ohio		The purpose of the company is to develop Nationwide Arena and to engage in related development activity.
Nationwide Asset Management Holdings	England and Wales		The company operates as a holding company.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Global Asset Management, Inc. (f.k.a. Gartmore Global Asset Management , Inc.)	Delaware		The company operates as a holding company.
Nationwide Assurance Company	Wisconsin		The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Bank			This is a federal savings bank chartered by the Office of Thrift Supervision in the United States Department of Treasury to exercise deposit, lending agency custody and fiduciary powers and to engage in activities permissible for federal savings banks under the Home Owners’ Loan act of 1933.
Nationwide Better Health, Inc.	Ohio		The company is a holding company for the health and productivity operations of Nationwide.
Nationwide Cash Management Company*	Ohio		The company buys and sells investment securities of a short-term nature as the agent for other Nationwide corporations, foundations, and insurance company separate accounts.
Nationwide Community Development Corporation, LLC	Ohio		The company holds investments in low-income housing funds.
Nationwide Corporation	Ohio		The company acts primarily as a holding company for entities affiliated with Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company.
Nationwide Document Solutions, Inc. (f.k.a. ALLIED Document Solutions, Inc.)	Iowa		The company provides general printing services to its affiliated companies as well as to certain unaffiliated companies.
Nationwide Emerging Managers, LLC (f.k.a. Gartmore Emerging Managers, LLC)	Delaware		The company acquires and holds interests in registered investment advisors and provides investment management services.
Nationwide Exclusive Agent Risk Purchasing Group, LLC	Ohio		The company's purpose is to provide a mechanism for the purchase of group liability insurance for insurance agents operating nationwide.
Nationwide Financial Assignment Company	Ohio		The company is an administrator of structured settlements.
Nationwide Financial Institution Distributors Agency, Inc.	Delaware		The company is an insurance agency.
Nationwide Financial Institution Distributors Insurance Agency, Inc. of Massachusetts	Massachusetts		The company is an insurance agency.
Nationwide Financial Institution Distributors Insurance Agency, Inc. of New Mexico	New Mexico		The company is an insurance agency.
Nationwide Financial Services Capital Trust	Delaware		The trust's sole purpose is to issue and sell certain securities representing individual beneficial interests in the assets of the trust.
Nationwide Financial Services, Inc.*	Delaware		The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute long-term savings and retirement products.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Financial Sp. Zo.o	Poland		The company is currently inactive.
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 Ventures, Inc. (f.k.a. Gartmore Global Ventures, Inc.)	Delaware		The company acts as a holding company.
Nationwide Indemnity Company*	Ohio		The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide Insurance organization.
Nationwide Insurance Company of America	Wisconsin		The company underwrites general property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio		The company transacts general insurance business except life insurance.
Nationwide International Underwriters	California		The company is a special risk, excess and surplus lines underwriting manager.
Nationwide Investment Advisors, LLC	Ohio		The company provides investment advisory services.
Nationwide Investment Services Corporation**	Oklahoma		This is a limited purpose broker-dealer and acts as an investment advisor.
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.
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 and residential property insurance in Texas.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Management Systems, Inc.	Ohio		The company offers a preferred provider organization and other related products and services.
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 Sales Solutions, Inc.	Iowa		The company engages in direct marketing of property and casualty insurance products.
Nationwide Securities, Inc.*	Ohio		The company is a registered broker-dealer and provides investment management and administrative services.
Nationwide Separate Accounts, LLC (f.k.a. Gartmore Separate Accounts, LLC)	Delaware		The company acts as a registered investment advisor.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Services Company, LLC	Ohio		The company performs shared services functions for the Nationwide organization.
Nationwide Services For You, LLC	Ohio		The company provides consumer services that are related to the business of insurance, including services that help consumers prevent losses and mitigate risks.
Nationwide Services Sp. Zo.o.	Poland		The company is currently inactive.
Newhouse Capital Partners, LLC	Delaware		The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Capital Partners II, LLC	Delaware		The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services.
Newhouse Special Situations Fund I, LLC	Delaware		The company owns and manages contributed securities in order to achieve long-term capital appreciation from the contributed securities and through investments in a portfolio of other equity investments in financial service and other related companies.
NF Reinsurance Ltd.*	Bermuda		The company serves as a captive reinsurer for Nationwide Life Insurance Company’s universal life, term life and annuity business.
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc.'s distribution companies.
NGH UK, Ltd.*	United Kingdom		The company is currently inactive.
NMC CPC WT Investment, LLC	Delaware		The business of the company is to hold and exercise rights in a specific private equity investment.
NorthPointe Capital LLC	Delaware		The company acts as a registered investment advisor.
NWD Investment Management, Inc. (f.k.a. Gartmore Global Investments, Inc.)	Delaware		The company acts as a holding company and provides other business services for the NWD Investments group of companies.
NWD Management & Research Trust (f.k.a. Gartmore Global Asset Management Trust)	Delaware		The company acts as a holding company for the NWD Investments group of companies and as a registered investment advisor.
NWD MGT, LLC (f.k.a. GGI MGT LLC)	Delaware		The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to the NWD Investments management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC.
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.

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

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
TBG Insurance Services Corporation*	Delaware		The company markets and administers executive benefit plans.
THI Holdings (Delaware), Inc.*	Delaware		The company acts as a holding company for subsidiaries of the Nationwide group of companies.
Titan Auto 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 New Mexico, Inc.	New Mexico		The company is an insurance agency that operates employee agent storefronts.
Titan Holdings Service Corporation	Texas		The company is currently inactive.
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.
Union Bond & Trust Company (f.k.a. Gartmore Trust Company)	Oregon		The company is an Oregon state bank with trust powers.
Veterinary Pet Insurance Company*	California		The company provides pet insurance.
Victoria Automobile Insurance Company	Indiana		The company is a property and casualty insurance company.
Victoria Financial Corporation	Delaware		The company acts as a holding company specifically for holding insurance companies of 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.
Vida Seguradora SA	Brazil		The company operates as a licensed insurance company in the categories of life and unrestricted private pension plan in Brazil.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
VPI Services, Inc.	California		The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance Company policies, including pet indemnification and a lost pet recovery program.
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.

	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:

o any threatened, pending or completed civil action, suit or proceeding;

o any threatened, pending or completed criminal action, suit or proceeding;

o any threatened, pending or completed administrative action, suit or proceeding;

o any 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:

President	Keith J. Kelly
Senior Vice President, Treasurer and Director	James D. Benson.
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-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Glenn W. Soden
Assistant Treasurer	Terry C. Smetzer
Director	John Laughlin Carter
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(b) for effectiveness of this Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of Columbus, and State of Ohio, on this 19^th day of April, 2007.

NATIONWIDE VLI SEPARATE ACCOUNT – 2

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

By /s/ TIMOTHY D. CRAWFORD

Timothy D. Crawford

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 19^th day of April, 2007.

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

EX-99

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY and NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY, both Ohio corporations, which have filed or will file with the U.S. Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended; the Investment Company Act of 1940, as amended; and, if applicable, the Securities Exchange Act of 1934, various registration statements and amendments thereto for the registration of current, as well as any future, separate accounts established by said corporations for the purpose of registering under said Act(s) immediate or deferred variable annuity contracts, fixed interest rate options subject to a market value adjustment, group flexible fund retirement annuity contracts and variable life insurance policies in connection with the separate accounts and contracts listed below:

Separate Accounts:	’40 Act Number	’33 Act Number
MFS Variable Account,	811-2662	002-73432
Multi-Flex Variable Account;	811-3338	033-23905, 002-75174
Nationwide Variable Account;	811-2716	002-58043, 333-80481, 033-60239
Nationwide Variable Account-II;	811-3330	002-75059, 033-67636, 033-60063, 333-103093, 333-103094, 333-103095, 333-104513, 333-104511, 333-104512, 333-104510, 333-105992
Nationwide Variable Account-3;	811-5405	033-18422, 033-24434
Nationwide Variable Account-4;	811-5701	033-25734, 033-26454, 333-62692, 333-135650
Nationwide Variable Account-5;	811-8142	033-71440
Nationwide Variable Account-6;	811-8684	033-82370, 333-21909
Nationwide Variable Account-7;	811-8666	033-82190, 033-82174, 033-89560
Nationwide Variable Account-8;	811-7357	033-62637, 033-62659
Nationwide Variable Account-9;	811-08241	333-28995, 333-52579, 333-56073, 333-53023, 333-79327, 333-69014, 333-75360
Nationwide Variable Account-10;	811-09407	333-81701
Nationwide Variable Account-11;	811-10591	333-74904, 333-74908
Nationwide Variable Account-12;	811-21099	333-88612, 333-108894
Nationwide Variable Account-13;	811-21139	333-91890
Nationwide Variable Account-14;	811-21205	333-104339

Separate Accounts:	’40 Act Number	’33 Act Number
Nationwide VA Separate Account-A;	811-5606	033-85164, 333-22940
Nationwide VA Separate Account-B;	811-06399	033-86408, 033-93482, 333-11415
Nationwide VA Separate Account-C;	811-7908	033-66496, 333-44485
Nationwide VA Separate Account-D;	811-10139	333-45976
Nationwide Multiple Maturity Separate Account;	N/A	333-133163
Nationwide Multiple Maturity Separate Account-2;	N/A	333-49112
Nationwide Multiple Maturity Separate Account-A;	N/A	333-47640
Nationwide VLI Separate Account;	811-4399	033-00145, 033-44290, 033-35698
Nationwide VLI Separate Account-2;	811-5311	033-16999, 033-62795, 033-42180, 033-35783, 033-63179, 333-27133
Nationwide VLI Separate Account-3;	811-6140	033-44789, 033-44296
Nationwide VLI Separate Account-4;	811-8301	333-31725, 333-43671, 333-52617, 333-94037, 333-52615, 333-53728, 333-69160, 333-83010
Nationwide VLI Separate Account-5;	811-10143	333-46338, 333-46412, 333-66572, 333-121881, 333-125481, 333-125482
Nationwide VLI Separate Account-6;	811-21398	333-106908
Nationwide VLI Separate Account-7;	811-21610	333-117998, 333-121879
Nationwide VL Separate Account-A;	811-6137	033-44792, 033-44300, 033-35775, 333-27123, 333-22677
Nationwide VL Separate Account-B;	811-07819	333-12333

Separate Accounts:	’40 Act Number	’33 Act Number
Nationwide VL Separate Account-C;	811-8351	333-43639, 333-36869
Nationwide VL Separate Account-D; and	811-08891	333-59517
Nationwide VL Separate Account-G	811-21697	333-121878

As such, the undersigned hereby constitute and appoint W.G. Jurgensen, Mark R. Thresher, Peter A. Golato, Mark D. Phelan, Timothy D. Crawford, Stephen M. Jackson, Jeanny V. Simaitis and W. Michael Stobart, and each of them with power to act without the others, his/her attorney, with full power of substitution for and in his/her name, place and stead, in any and all capacities, to approve, and sign such Applications and Registration Statements, and any and all amendments thereto, with power to affix the corporate seal of said corporation thereto and to attest said seal and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, hereby granting unto said attorneys, and each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof.  This instrument may be executed in one or more counterparts.

IN WITNESS WHEREOF, the undersigned have herewith set their names as of this 29th day of August, 2006.

/s/ W. G. JURGENSEN	/s/ ARDEN L. SHISLER
W. G. JURGENSEN, Director and Chief Executive Officer	ARDEN L. SHISLER, Chairman of the Board
/s/ JOSEPH A. ALUTTO	/s/ JAMES G. BROCKSMITH, JR.
JOSEPH A. ALUTTO, Director	JAMES G. BROCKSMITH, JR., Director
/s/ KEITH W. ECKEL	/s/ LYDIA M. MARSHALL
KEITH W. ECKEL, Director	LYDIA M. MARSHALL, Director
/s/ DONALD L. MCWHORTER	/s/ MARTHA JAMES MILLER DE LOMBERA
DONALD L. MCWHORTER, Director	MARTHA JAMES MILLER DE LOMBERA, Director
/s/ DAVID O. MILLER	/s/ JAMES F. PATTERSON
DAVID O. MILLER, Director	JAMES F. PATTERSON, Director
/s/ GERALD D. PROTHRO	/s/ ALEX SHUMATE
GERALD D. PROTHRO, Director	ALEX SHUMATE, Director

EX-99.N OTH OPINIONS