'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. 21	þ

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	o
Amendment No. 53	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.

SVP and Secretary

One Nationwide Plaza

Columbus, Ohio 43215-2220

(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:  May 1, 2008

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

o           Immediately upon filing pursuant to paragraph (b)

þ           On May 1, 2008 pursuant to paragraph (b)

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

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

If appropriate, check the following box:

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

The Best of America® MSPVL

Individual 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, 2008

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 the 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 Securities and Exchange Commission (SEC) nor has the SEC passed upon the accuracy or adequacy of the prospectus.  Any representation to the contrary is a criminal offense.

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

The 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 the policy is to provide life insurance protection for the beneficiary you name.  If your primary need is not life insurance protection, then purchasing the policy may not be in your best 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 the policy to replace existing life insurance, please carefully consider its advantages versus those of the policy you intend to replace, as well as any replacement costs.  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 the policy this prospectus describes.  These differences in charges may be attributable to differences in sales and related expenses incurred in one distribution channel versus another.

Table Of Contents

	Page
In Summary: Policy Benefits	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
Beneficiaries
Purchasing the Policy
Coverage
Coverage Effective Date
Temporary Insurance Coverage
Right to Cancel (Examination Right)
Changing the Amount of Insurance Coverage
Exchanging the Policy
Terminating the Policy
Assigning the Policy
Proceeds Upon Maturity
Reminders, Reports and Illustrations
Errors or Misstatements
Incontestability
If We Modify the Policy
Riders	22
Long-term Care Rider
Premium	22
Initial Premium
Additional Premiums
Policy Charges	24
Surrender Charge
Short-Term Trading Fees
Cost of Insurance Charge
Mortality and Expense Risk Charge
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

Table Of Contents (continued)

	Page
Surrenders	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
Surrendering 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	38
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	43
Appendix A: Sub-Account Information	44
Appendix B: Definitions	60

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" section of this prospectus.

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" section of this prospectus.

Coverage Flexibility

Subject to conditions, you may choose to:

·   change your beneficiaries; and/or

·   change who owns the policy.

For more information, see the "Beneficiaries"; and "Assigning the Policy" sections of this prospectus.

Access To Cash Value

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

·   Take a policy loan of an amount no greater 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 the "Policy Loans" section of this prospectus.

·   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 the "Partial Surrender section of this prospectus.

·   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 the "Full Surrender" and "The Payout Options" sections of this prospectus.

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 the "Premium" section of this prospectus.

Investment Options

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

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

·   The variable investment options constitute the available mutual funds, and we have divided Nationwide VLI Separate Account-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 the " Appendix A: Sub-Account Information," and the "Policy Investment Option" sections of this prospectus.

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 the "Sub-Account Portfolio Transfers section of this prospectus.  We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-Account Investment Experience.  For more information, see the "Sub-Account Portfolio Transfers," and "Modes to Make a Transfer" section of this prospectus.  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 the "Dollar Cost Averaging sections of this prospectus.

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 the "Taxes" section of this prospectus.  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 the "Assigning the Policy" section of this prospectus.

Examination Right

For a limited time, you may cancel the policy, and you will receive a refund.  For more information, see the "Right to Cancel (Examination Right)" of this prospectus.

Rider

You may purchase a Long-term Care Rider.  Availability will vary by state.  For more information, see the "Rider" section of this prospectus.

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 the "Surrenders" and "Net Effect Of Policy Loans" sections of this prospectus.

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 be less favorable when compared to having the policy treated as a life insurance contract.  For example, distributions and loans from modified endowment contracts may currently be taxed as ordinary income not a return of investment.  For more detailed information concerning the tax consequences of this policy please see the Taxes provision. For detailed information regarding tax treatment on modified endowment contracts, please see the Periodic Withdrawals, Non-Periodic Withdrawals and Loans section of the Taxes provision. 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 thirty days of the end of a calendar quarter, but not within twelve months of a previous request.  We may also limit what percentage of Cash Value you will be permitted to transfer to or from the fixed account.  For more information, see "The Fixed Investment Option" section of this prospectus.

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 the "Sub-Account Portfolio Transfers," "Modes to Make a Transfer" and "Short-Term Trading Fees," sections of this prospectus.  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 may be important to you in two ways. It will provide economic protection to a beneficiary.

·   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.  It is similar in that:

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

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

·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.)

·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.

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

·         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.

·         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.

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

·         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.

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 the "Charges" section of this prospectus.

Transaction Fees
Charge	When Charge Is Deducted	Amount Deducted
Surrender Charge (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
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

^{_______________________________________}

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

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses

Charge

When Charge Is Deducted

Amount Deducted From Cash Values

Cost Of Insurance Charge(4), (5), (6) Representative – For An Age 50 Male With A Single Premium Of $50,000 and A Specified Amount Of $165,397

Monthly

Minimum

Maximum

Representative(7)

$0.06

$83.33

$0.54

Per $1,000 of Net Amount at Risk (Death Benefit less Cash Value)

Per $1,000 of Cash Value

Proportionately From Your Chosen Variable And Fixed Investment Options

Mortality And Expense Risk Charge

Monthly

Maximum And Current Charge

$0.75 Per $1,000 Of Cash Value

Proportionately From Your Chosen Variable Investment Options

Tax Expense Charge(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 Charge(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 Charge (10), (11), (12)

Annually (Accrues Daily)

Maximum Guaranteed

Currently

$60

$60

Per $1,000 Of An Outstanding Policy Loan

Long-term Care Rider Charge(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

^{_______________________________________}

The next item shows the minimum and maximum total operating expenses, as of December 31, 2007, charged by the Sub-Account portfolios that you may pay periodically during the time that you own the policy.  The table does not reflect Short-Term Trading Fees.  More detail concerning each Sub-Account portfolio’s fees and expenses is contained in the prospectus for the mutual fund that corresponds to the Sub-Account portfolio.  Please contact us, at the telephone numbers or address on the cover page of this prospectus, for free copies of the prospectuses for the mutual funds available under the policy.

Total Annual Sub-Account Portfolio Operating Expenses
Total Annual Sub-Account Portfolio Operating Expenses	Maximum	Minimum
(expenses that are deducted from the Sub-Account portfolio assets, including management fees, distribution (12b-1) fees, and other expenses)	2.46%	0.27%

⁽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 to the variable account.  Sub-Accounts that may assess a short-term fee are listed in the "Variable Investment Options" section of this prospectus with an "†" symbol, and in the descriptions provided in the "Appendix A: Sub-Account Information".  For more information about transactions subject to short-term trading fees, see "Short-Term Trading Fees" section of this prospectus.

 ⁽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.

⁽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 the "Policy Loans" section of this prospectus.

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 the "Policy Loans" section of this prospectus.

⁽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 the "Collateral and Interest" section of this prospectus.

⁽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.

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.  You may also 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 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.  We use the general account to support our insurance and annuity obligations.  Any amounts in excess of the separate account liabilities are deposited into our general account.  We bear the full investment risk for all amounts allocated to the fixed account.

We guarantee that the amounts you allocate to the fixed investment option will be credited interest daily at a net effective annual interest rate of no less than the stated interest crediting rate 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 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.

Underlying mutual funds in the variable account are NOT publicly traded mutual funds.  They are only available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies, or in some cases, through participation in certain qualified pension or retirement plans.

The investment advisers of the underlying mutual funds may manage publicly traded mutual funds with similar names and investment objectives.  However, the underlying mutual funds are NOT directly related to any publicly traded mutual fund.  Policy owners should not compare the performance of a publicly traded fund with the performance of underlying mutual funds participating in the separate account.  The performance of the underlying mutual funds could differ substantially from that of any publicly traded funds.

The particular underlying mutual funds available under the policy may change from time to time.  Specifically, underlying mutual funds or underlying mutual fund share classes that are currently available may be removed or closed

off to future investment.  New underlying mutual funds or new share classes of currently available underlying mutual funds may be added.  Policy owners will receive notice of any such changes that affect their contract.  Additionally, not all of the underlying mutual funds are available in every state.

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

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

The Sub-Accounts available through the 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. Capital Development Fund: Series I Shares

AllianceBernstein Variable Products Series Fund, Inc.

·   AllianceBernstein Small/Mid Cap Value Portfolio:

Class A

American Century Variable Portfolios, Inc.

·   American Century VP Mid Cap Value Fund: Class I

·   American Century VP Value 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

Fidelity Variable Insurance Products Fund

·   VIP Energy Portfolio: Service Class 2†

·   VIP Equity-Income Portfolio: Initial Class*

·   VIP Freedom 2010 Portfolio: Service Class,

·   VIP Freedom 2020 Portfolio: Service Class,

·   VIP Freedom 2030 Portfolio: Service Class,

·   VIP Growth Portfolio: Initial Class

·   VIP Investment Grade Bond Portfolio: Service Class*

·   VIP Mid Cap Portfolio: Service Class

·   VIP Overseas Portfolio: Service Class R†

Franklin Templeton Variable Insurance Products Trust

·   Franklin Income Securities Fund: Class 2

·   Franklin Small Cap Value Securities Fund: Class 1

·   Franklin Templeton VIP Founding Funds Allocation Fund: Class 2

·   Templeton Foreign Securities Fund: Class 3†

·   Templeton Global Income Securities Fund: Class 3†

Janus Aspen Series

·   Forty Portfolio: Service Shares

·   International Growth Portfolio: Service II Shares†

Lehman Brothers Advisers Management Trust

·   AMT Short Duration Bond Portfolio: I Class*

MFS® Variable Insurance Trust

·   MFS Value Series: Initial Class

Nationwide Variable Insurance Trust (“NVIT”)

·   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 Fund: Class II

·   American Funds NVIT Growth-Income Fund: Class II

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

·   Gartmore NVIT Emerging Markets Fund: Class III†

·   Gartmore NVIT International Equity Fund: Class III†

·   Lehman Brothers NVIT Core Plus Bond Fund: Class I

·   Neuberger Berman NVIT Multi Cap Opportunities Fund: Class I

·   Neuberger Berman NVIT Socially Responsible Fund: Class I

·   NVIT Cardinal Aggressive Fund: Class I

·   NVIT Cardinal Balanced Fund: Class I

·   NVIT Cardinal Capital Appreciation Fund: Class I

·   NVIT Cardinal Conservative Fund: Class I

·   NVIT Cardinal Moderate Fund: Class I

·   NVIT Cardinal Moderately Aggressive Fund: Class I

·   NVIT Cardinal Moderately Conservative Fund: Class I

·   NVIT Core Bond Fund: Class I

·   NVIT Government Bond Fund: Class I (formerly, Nationwide NVIT Government Bond Fund: Class I)

·   NVIT Health Sciences Fund: Class III† (formerly, Nationwide NVIT Global Health Sciences Fund:

Class III)

·   NVIT International Index Fund: Class VI†

·   NVIT Investor Destinations Funds: Class II (formerly, Nationwide NVIT Investor Destinations Funds: Class II)

Ø   NVIT Investor Destinations Conservative Fund: Class II (formerly, Nationwide NVIT Investor Destinations Conservative Fund: Class II)

Ø   NVIT Investor Destinations Moderately Conservative Fund: Class II (formerly, Nationwide NVIT Investor Destinations Moderately Conservative Fund: Class II)

Ø   NVIT Investor Destinations Moderate Fund: Class II (formerly, Nationwide NVIT Investor Destinations Moderate Fund: Class II)

Ø   NVIT Investor Destinations Moderately Aggressive Fund: Class II (formerly, Nationwide NVIT Investor Destinations Moderately Aggressive Fund: Class II)

Ø   NVIT Investor Destinations Aggressive Fund: Class II (formerly, Nationwide NVIT Investor Destinations Aggressive Fund: Class II)

·   NVIT Mid Cap Growth Fund: Class I (formerly, Nationwide NVIT Mid Cap Growth Fund: Class I)

·   NVIT Mid Cap Index Fund: Class I

·   NVIT Money Market Fund: Class I (formerly, Nationwide NVIT Money Market Fund: Class I)

·   NVIT Multi-Manager International Growth Fund:

Class III†

·   NVIT Multi-Manager International Value Fund: Class III† (formerly, NVIT International Value Fund: Class III)

·   NVIT Multi-Manager Large Cap Growth Fund: Class I

·   NVIT Multi-Manager Large Cap Value Fund: Class I

·   NVIT Multi-Manager Mid Cap Growth Fund: Class I

·   NVIT Multi-Manager Mid Cap Value Fund: Class II

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

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

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

·   NVIT Nationwide Fund: Class I

·   NVIT Short Term Bond Fund: Class II

·   NVIT Technology and Communications Fund: Class III† (formerly, Nationwide NVIT Global Technology and Communications Fund: Class III)

·   NVIT U.S. Growth Leaders Fund: Class I (formerly, Nationwide NVIT U.S. Growth Leaders Fund: Class I)

·   Van Kampen NVIT Comstock Value Fund: Class I*

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

·   Van Kampen NVIT Real Estate Fund: Class I

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

Van Kampen

The Universal Institutional Funds, Inc.

·   Core Plus Fixed Income Portfolio: Class I*

The following Sub-Accounts are only available in policies issued before May 1, 2008:

AIM Variable Insurance Funds

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

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

American Century Variable Portfolios, Inc.

·   American Century VP International Fund: Class III†

·   American Century VP Vista Fund: Class I

Federated Insurance Series

·   Federated Market Opportunity Fund II: Service Shares

·   Federated Quality Bond Fund II: Primary Shares

Fidelity Variable Insurance Products Fund

·   VIP Contrafund® Portfolio: Initial Class

Franklin Templeton Variable Insurance Products Trust

·   Templeton Developing Markets Securities Fund: Class 3†

Janus Aspen Series

·   INTECH Risk-Managed Core Portfolio: Service Shares

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

T. Rowe Price Equity Series, Inc.

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

Van Kampen

The Universal Institutional Funds, Inc.

·   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

·   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

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

·   NVIT Global Financial Services Fund: Class I (formerly, 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

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 Asset Manager Portfolio: Initial Class

·   VIP High Income Portfolio: Initial Class R†*

Janus Aspen Series

·   Global Technology Portfolio: Service Shares

Nationwide Variable Insurance Trust

·   Gartmore NVIT International Equity Fund: Class I (formerly, Gartmore NVIT International Growth Fund: Class I)

·   NVIT Growth Fund: Class I (formerly, 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 Advantage 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

·   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 Advantage 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:

American Century Variable Portfolios, Inc.

·   American Century VP International Fund: Class I

Fidelity Variable Insurance Products Fund

·   VIP Overseas Portfolio: Initial Class

Franklin Templeton Variable Insurance Products Trust

·   Templeton Foreign Securities Fund: Class 1

Nationwide Variable Insurance Trust

·   Federated NVIT High Income Bond Fund: Class I*

·   Gartmore NVIT Emerging Markets Fund: Class I

·   NVIT Health Sciences Fund: Class I (formerly,Nationwide NVIT Global Health Sciences Fund: Class I)

·   NVIT Multi-Manager International Value Fund: Class I (formerly, NVIT International Value Fund: Class I)

·   NVIT Technology and Communications Fund: Class I (formerly, Nationwide NVIT Global Technology and Communications 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.

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 Accumulation Units on any day that the New York Stock Exchange (NYSE) is open for business.  Any transaction that you submit on a day when the NYSE is closed will not be effective until the next day that the NYSE is open for business.  Accordingly, we will not price Accumulation Units on these recognized holidays:

·   New Year's Day

·   Martin Luther King, Jr. Day

·   Presidents’ Day

·   Good Friday

·   Memorial Day

·   Independence Day

·   Labor Day

·   Thanksgiving

·   Christmas

In addition, we will not price Sub-Account Units if:

·   trading on the NYSE 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 NYSE 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 NYSE, 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 Net Asset Value ("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 use the NAV to calculate the value of your corresponding Sub-Account Portfolio Allocation in Units).

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.  We do not guarantee the Cash Value of the Policy.  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.  As such, if the policy’s Cash Value is part of the Death Benefit option you have chosen, then your Death Benefit will fluctuate.

We will determine the value of the assets in the separate account at the end of each Valuation Period.  We will determine the Cash Value at least monthly. To determine the number of 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.

We will credit interest to the Cash Value in the policy loan and fixed accounts 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 "The Fixed Investment Option" and the "Loan Amount And Interest" sections of this prospectus.

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 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 the "In Summary: Fee Table, and the "How Sub-Account Investment Experience Is Determined" sections of this prospectus.

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 the policy because the frequent movement between or among Sub-Accounts may negatively impact other investors in the policy.  Short-term trading can result in:

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

·   mutual fund managers taking actions that negatively impact performance,such as, keeping a larger portion of the mutual fund assets in cash or liquidating investments prematurely in order to support redemption requests; and/or

·   increased administrative costs due to frequent purchases and redemptions.

To protect policy owners from the negative impact of these practices, we have implemented, or reserve the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies.  We cannot guarantee that our attempts to deter active trading strategies will be successful.  If our actions do not successfully deter active trading strategies, the performance of Sub-Accounts that are actively traded will be adversely impacted. Policy owners remaining in the affected Sub-Account will bear any resulting increased costs.

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

U.S. Mail Restrictions.  We monitor transfer activity in order to identify those who may be engaged in harmful trading practices.  We produce and examine transaction reports.  Generally, a policy may appear on these reports if the policy owner (or a third party acting on their behalf) engages in a certain number of  transfer events  in a given period.  A "transfer event" is any transfer, or combination of transfers, occurring in a given Valuation Period.  For example, if a policy owner executes multiple transfers involving ten Sub-Accounts in one day, this counts as one transfer event.  A single transfer occurring in a given Valuation Period that involves only two Sub-Accounts or one Sub-Account if the transfer is made to or from a fixed investment option will also count as 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
Six or more transfer events in one calendar quarter	Nationwide will mail a letter to the policy owner notifying them that: 1.they have been identified as engaging in harmful trading practices; and 2. if their transfer events exceed eleven in two consecutive calendar quarters or twenty in one calendar year, the policy owner will be limited to submitting transfer requests via U.S. mail.
More than eleven transfer events in two consecutive calendar quarters OR More than twenty transfer events in one calendar year	Nationwide will automatically limit the policy owner to submitting transfer requests via U.S. mail.

Each January 1, we will start the monitoring anew so that each policy starts with zero 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.  In the event a restriction we impose results in a transfer request being rejected, we will notify you that your transfer request has been rejected.  If a short-term trading fee is assessed on your transfer, we will provide you a confirmation of the amount of the fee assessed.

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 sixty 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.

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

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

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

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

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

Fixed Account Transfers

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

Modes to Make a Transfer

You can submit transfer requests in writing to our Home Office via first class U.S. mail. Our contact information is on the first page of this prospectus.  When we have received your transfer request we will process it at the end of the current Valuation Period.  This is when the Accumulation Unit value will be next determined.  We may also allow you to use other methods 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 eighty or younger, although these ages may vary in your state.  It is nonparticipating, meaning we will not be contributing any operating profits or surplus earnings toward the Proceeds from the policy.  The policy will comprise and be evidenced by: Policy Data Pages; a written contract; any Riders; any endorsements; and the application, including any supplemental application.  The benefits described in the policy and this prospectus, including any optional riders or modifications in coverage, may be subject to our underwriting and approval.

We will consider the statements you make in the application as representations.  We will rely on them as being true and complete.  However, we will not void the policy or deny a claim unless a statement is a material misrepresentation.

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

In order to comply with the USA Patriot Act and rules promulgated thereunder, Nationwide has implemented procedures designed to prevent policies described in this prospectus from being used to facilitate money laundering or the financing of terrorist activities.

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 the "Taxes" section of this prospectus.

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/ordirect us to distribute Proceeds other than described below.

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

Purchasing the Policy

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

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

We reserve the right to modify the minimum Specified Amount on a prospective basis to newly issued policies at any time.

Coverage

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

Coverage Effective Date

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

Temporary Insurance Coverage

Temporary insurance coverage, equal to the Specified Amount up to $1,000,000, may be available for no charge before full insurance coverage takes effect.  You must submit a temporary insurance agreement and make an initial Premium payment.  The amount of the initial Premium will depend on the initial Specified Amount, and your choice of Death Benefit 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, when we allocate the Net Premium depends on the right to examine law of the state in which we issued the Policy.

Right To Cancel (Examination Right)

For a limited time, you may cancel the policy and receive a refund.  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. Your written request must be received, if returned by means other than U.S. mail, or post-marked, if returned by U.S. mail, by the last day of the free look period.  When you cancel the policy during the free look period the amount we refund will be Cash Value or, in certain states, the greater of the initial Premium payment or the policy's Cash Value.  If we do not receive your policy at our Home Office on the close of business on the date the free look period expires, you will not be allowed to cancel your policy free of charge.  Within 7 days, we will refund the amount prescribed by law.  If the policy is canceled, we will treat the policy as if it was never issued.

Changing the Amount of Insurance 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.

Exchanging the Policy

You have an exchange right under the policy.  At any time within the first twenty-four  months of coverage from the Policy Date, you may surrender 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 the "In Summary: Fee Tables" section of this prospectus.  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.

Terminating the Policy

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 the "Surrenders" section of this prospectus.

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 the "Surrendering The Policy" section of this prospectus.  The Cash Surrender Value will be reduced by the amount of a policy loan, if any.  For more information, see the "Policy Loans" section of this prospectus.

Assigning the Policy

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. For more information, see the "Policy Loans" section of this Prospectus.

Proceeds Upon Maturity

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

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

We may offer to extend the Maturity Date to coincide with the Insured's death, after which we will pay the Proceeds to your beneficiary.  During this time, you will still be able to request partial surrenders, and you will still have in effect the Long-term care Rider (though you will not be charged for it), the termination of benefits

under which will coincide with the policy's extended Maturity Date (unless you decide otherwise).  The Maturity Date extension will either be for the policy value as defined below, or for the Specified Amount, subject to the law of the state in which you lived at the time you purchased the policy.  It is your choice, and, in any event, the policy will be endorsed so that:

·   no additional Premium payments will be allowed;

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

·   no additional periodic charges will be deducted;

·   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 "The Payout Options" and the "The Death Benefit" sections of this prospectus.

Reminders, Reports and Illustrations

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

·   the Specified Amount;

·   the current Cash Value;

·   Premiums paid;

·   the Cash Surrender Value;

·   all charges since the last report; and

·   outstanding policy Indebtedness.

You may obtain copies of confirmation statements and reports by calling our service center or submitting a written request. You may receive information faster from us and reduce the amount of mail you receive by signing up for our eDelivery program.  We will notify you by 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 reminders, transaction confirmations and reports to the address you provide on the application, or to another you may specify.

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

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 thirty days for regular delivery to resume.

Errors or Misstatements

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

Incontestability

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

If We Modify the Policy

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

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

Riders

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 of the Riders 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 the "In Summary: Fee Tables", and the "Charges" sections of this prospectus.

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 thirty 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

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

Initial Premium

The initial premium must be at least $10,000 for issue ages 0-70 and $50,000 for issue ages 71-80.  The amount of your initial Premium will depend on the initial Specified Amount of insurance and any Riders you select.  Generally, the higher the required initial Specified Amount, the higher the initial Premium will be.  Also, the age, health, and activities of the Insured will affect our determination of the risk of issuing the policy.  In general, the greater this risk, the higher the initial Premium will be, or the lower the Specified Amount will be.

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

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.

Additional 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, "Changing the Amount of Insurance Coverage" section of this prospectus.  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 Internal Revenue Service (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 where 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 the "Lapse" section of this prospectus.  We will let you know ahead of time.

If you decide to make an additional 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.

Policy 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 the "In Summary: Fee Table" section of this prospectus.  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 from 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 sixty days after the date of the allocation to that Sub-Account.  The fee is assessed against the amount transferred and is paid to the mutual fund.  For more information on the operating charges and the 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 Charge

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

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

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

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

Short-term trading fees are intended to compensate the mutual fund, and policy owners with interests allocated in the mutual fund, for the negative impact on fund performance that may result from frequent, short-term trading strategies.  Short-term trading fees are not intended to affect the large majority of policy owners not engaged in such strategies.

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

For a complete list of the Sub-Accounts that assess (or reserve the right to assess) a Short-Term Trading Fee, please see “Appendix A: Sub-Account Information” later in this prospectus.

If a short-term trading fee is assessed, the mutual fund will charge the separate account 1% of the amount determined to be engaged in short-term trading.  The separate account will then pass the short-term trading fee on to the specific policy owner that engaged in short-term trading by deducting an amount equal to the fee from

that policy owner’s sub-account value.  All such fees will be remitted to the mutual fund. None of the fee proceeds will be retained by us or the separate account.

Transfers will be considered to be made on a first in/first out (FIFO) basis for purposes of determining short-term trading fees.  In other words, units held the longest time will be treated as being transferred first, and units held for the shortest time will be treated as being transferred last.

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

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

·policy loans or surrenders; or

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

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

Cost of Insurance Charge

The cost of insurance charge compensates us for 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; how long the policy has been In Force; and the Specified Amount.

Mortality and Expense Risk Charge

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.

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, Promotiona, 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 (and not the policy owners) is the underlying mutual fund shareholder.  When the separate account aggregates transactions, the underlying mutual fund does not incur the expense of processing individual transactions it would normally incur if it sold its shares directly to the public.  We incur these expenses instead.

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

An investment 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 amount of these payments is typically based on a percentage of assets invested in the underlying mutual funds attributable to the policies and other variable policies we and our affiliates issue, but in some cases may involve a flat fee.  These payments may be used by us for any corporate

purpose, which include reducing the prices of the policies, paying expenses that we or our affiliates incur in promoting, marketing, and administering the policies and the underlying mutual funds, and achieving a profit.

We or our affiliates receive the following types of payments:

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

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

·   Payments by an underlying mutual fund’s 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 underlying mutual fund charges.

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

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

Amount of Payments We Receive.  For the year ended December 31, 2007, the underlying mutual fund payments we and our affiliates received from the underlying mutual funds did not exceed 0.55% (as a percentage of the average daily net assets invested in the underlying mutual funds) offered through the policy or other variable policies that we and our affiliates issue.  Payments from investment 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 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 the "Cash Value" section of this prospectus.  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 the "Surrendering The Policy" section of this prospectus.

The Payout Options

You have a number of options of receiving Proceeds, besides in a lump sum, that you may elect upon application.  You may elect one or a combination of 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 the "Valuation of Accumulation Unit" section of this prospectus.

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 twelve-, six-, three- or one-month intervals or left to accumulate.  You may withdraw any outstanding balance by making a written request of us at our Home Office.  We will pay interest on the outstanding balance at a rate of at least 2.5% per 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, not to exceed thirty years.  Each payment will consist of a portion of the Proceeds plus interest at a stated rate.  The Proceeds can be paid at the beginning of twelve-, 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 (ten, fifteen or twenty years), and, then, for the rest of your life, if you outlive the guaranteed period.  The Proceeds can be paid at the beginning of twelve-, 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 twelve-, 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 twelve-, 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 twelve-, six-, three- or one-month intervals.  As the payments are based on your lifetime, you may not withdraw any amount you designate to this option after payments begin.  Also, payments will cease upon your death.  We will make no payments to your estate.

Policy Owner Services

Dollar Cost Averaging

You may elect to participate in a dollar cost averaging program at the time of application or at a later date by submitting an election form.  An election to participate in the program that is submitted after application will be effective on the date provided on the election form or, if the date provided has passed upon our receipt of your

submitted election form participation will be effective at the beginning of the next policy month..  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, and it does not count as a transfer event.  For more information regarding transfer events, see the "Modes To Make A Transfer" section of this prospectus.

On a monthly basis, or such other frequency as we may permit, a specified dollar amount of your Premium is systematically and automatically transferred from the fixed account to a Sub-Account portfolio.  You may also have Premium transferred from the:

Federated Insurance Series

·   Federated Quality Bond Fund II: Primary Shares (available only for policies issued prior to May 1, 2008)

Fidelity Variable Insurance Products Fund

·   VIP High Income Portfolio: Initial Class R (available only for policies issued prior to May 1, 2003)

Nationwide Variable Insurance Trust (“NVIT”)

·   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 thirty days before we do so.

Asset Rebalancing

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

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 value 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, or at the time of a new loan, a loan repayment, the

Insured’s Death, a policy lapse, or a full surrender.  If you do not pay the interest, we will add it to the loan amount.  The guaranteed policy loan amount interest rate in all policy years is 6%.

Collateral and Interest

As collateral or security, we will transfer to the loan account an amount equal to the amount of the policy loan.  You may request that we transfer this amount from specific Sub-Account portfolios. We will only make a transfer from the fixed investment option if the loan amount exceeds 90% of the Cash Value you have allocated to Sub-Account portfolios.

Total policy indebtedness is composed of two components:

i.preferred loans; and

ii.regular loans.

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

·   the premiums excluding any 1035 Exchange amount; less

·   any withdrawals not taxed as distributions; plus

·   any loans previously taxed as distributions; plus

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

Any additional loan amounts will be treated as regular loans.

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

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 the "In Summary: Fee Tables" section of this prospectus.  The amount transferred to the loan account is part of our General Account and will not be affected by the investment experience of the Sub-Accounts. The loan account is credited interest at a different rate than the fixed investment options.  Whether repaid, a policy loan will affect the policy, the net Cash Surrender Value and the Death Benefit.  If your total Indebtedness ever exceeds the policy's Cash Value, your policy may Lapse.  Repaying a policy loan will cause the Death Benefit 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 insufficient to cover 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 sixty-one days, the policy and all Riders will Lapse.  The Grace Period will not alter the operation of the policy or the payment of Proceeds.

Reinstatement

You may reinstate a Lapsed policy by:

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

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

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

·   paying additional Premiums at least equal to 3 times the maximum guaranteed cost of insurance charges; For more information, see the "In Summary: Fee Tables" section of this prospectus; 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 of Which to be Aware

Federal Income Tax.  Generally, the United States assesses a tax on income, which is broadly defined to include all items of income from whatever source, unless 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 the 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 2008, 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 2008, 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 2008, 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.

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

We will also monitor compliance with Code Section 817(h) and the regulations applicable to Section 817(h) and, to the extent necessary, will change the objectives or assets of the underlying investment options 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 investment options 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 investment options available in a variable insurance product does not exceed 20, the number of investment options 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 investment options, if any, that would cause the policy to not provide the desired tax treatment.  Should the U.S. Secretary of the Treasury issue additional rules or regulations limiting: the number of underlying investment options, transfers between underlying investment

options, exchanges of underlying investment options or changes in the investment objectives of underlying investment options such that the policy would no longer qualify as life insurance under Section 7702 of the Code, we will take whatever steps are available to remain in compliance.

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, and amounts used to pay the Premium on any rider to the policy.

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

The policies offered by this prospectus may or may not be issued as modified endowment contracts.  If a policy is issued as a modified endowment contract, it will always be a modified endowment contract; a policy that is not issued as a modified endowment contract can become a modified endowment contract due to subsequent transactions with respect to the policy, such as payment of additional Premiums.  If the policy is not issued as a modified endowment contract, we will monitor it and advise you if  the payment of a Premium, or other transaction, may cause the policy to become a modified endowment contract.

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 policy for purposes of determining the amount that is includible in income when a distribution occurs.

The Code provides special rules for the taxation of surrenders, partial surrenders, loans, collateral assignments and other pre-death distributions from modified endowment contracts.  Under these special rules, such transactions are taxable to the extent that at the time of the transaction the Cash Value of the policy exceeds the investment in the policy (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.

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

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

Surrendering the Policy

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 policy (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:

·   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 the 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 had been 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 policies owned by the employer of the Insured.  These provisions are generally effective for life insurance policies issued after August 17, 2006,  If a life insurance policy was issued on or before August 17, 2006, but materially modified after that date, it will be treated as having been issued after  that date for purposes of section 101(j).  Policies issued August 17, 2006 pursuant to a Section 1035 exchange generally are excluded from the operation of these new provisions, provided that the policy received

in the exchange does not have a material increase in death benefit or other material change with respect to the old policy.

New Section 101(j) provides the general rule that, with respect to an employer-owned life insurance policy, the amount of death benefit payable directly or indirectly to the employer that may be excluded from income cannot exceed the sum of Premiums and other payments paid by the policyholder for the policy.  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 policy are made as a nontaxable return of premium, it appears that the reduction would apply for Section 101(j) purposes and reduce the amount of Premiums for this purpose.

There are 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 policy is issued; (b) the employee provides written consent to being insured under the policy 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 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 policy is issued, and the Insured is either a director, a “highly compensated employee” (within the meaning of Section 414(q) of the Code without regard to paragraph (1)(B)(ii) thereof), or a “highly compensated individual” (within the meaning of Section 105(h)(5), except “35%” is substituted for “25%” in paragraph (C) thereof), then the new Section 101(j) would not apply.

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

It is 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 in the policy that may be exercised by the policy owner, such as the right to borrow on the policy or the right to name a new beneficiary.

If the beneficiary is two or more generations younger than the Insured, the Death Benefit may be subject to the GSTT.  Pursuant to regulations issued by the U.S. Secretary of the Treasury, we may be required to withhold a portion of the Proceeds and pay them directly to the IRS as the GSTT 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 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, Taxation of Death Benefits, Special federal income tax considerations for life insurance policies owned by employers, above; and 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 the 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 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.

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.  For purposes of federal securities laws, the separate account is, and will remain, fully funded at all times.  This registration, however, does not involve the SEC's supervision of this account's management or investment practice or policies.

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

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

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

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.

Deregistration of the Separate Account. We may deregister Nationwide Separate Account-2 under the 1940 Act in the event the separate account meets an exemption from registration under the 1940 Act, if there are no shareholders in the separate account or for any other purpose approved by the SEC.

No deregistration may take place without the prior approval of the SEC.  All policy owners will be notified in the event we deregister Separate Account-2.

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.

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

Substitution of Securities. We may substitute, eliminate, or combine shares of another underlying mutual fund for shares already purchased or to be purchased in the future if either of the following occurs:

(1) shares of a current underlying mutual fund are no longer available for investment; or

(2) further investment in an underlying mutual fund is inappropriate.

No substitution of shares may take place without the prior approval of the SEC. All affected policy owners will be notified in the event there is a substitution, elimination or combination of shares.

In February 2008, we filed an application with the SEC for an order permitting us to substitute assets allocated to certain underlying mutual funds into other underlying mutual funds available under the policy that have similar investment objectives and strategies.  If and when we receive SEC approval for these substitutions,

affected policy owners will be notified in advance of the specific details relating to the substitutions and will be given an opportunity to make alternate investment allocations.

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.

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

In addition, state and federal regulators and other governmental bodies have commenced investigations, proceedings or inquiries relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer.  Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, funding agreements issued to back medium-term note (MTN) programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives.  Related investigations, proceedings or inquiries may be commenced in the future.  Nationwide and/or its affiliates have been contacted by or received

subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, and funding agreements backing the Nationwide MTN program.  Nationwide is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including mutual fund, retirement plan, life insurance and annuity companies.  These proceedings also could affect the outcome of one or more of Nationwide’s litigation matters.  There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on Nationwide in the future.

On November 20, 2007, Nationwide and Nationwide Retirement Solutions, Inc. (NRS) were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v NLIC, NRS, Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z.  The plaintiffs purport to represent a class of all participants in the Alabama State Employees Association (ASEA) plan, excluding members of the Board of Control during the Class Period and excluding ASEA’s directors, officers and board members during the class period.  The class period is the date from which Nationwide and/or NRS first made a payment to ASEA or PEBCO arising out of the funding agreement dated March 24, 2004 to the date class notice is provided.  The plaintiffs allege that the defendants breached their fiduciary duties, converted plan participants’ properties, and breached their contract when payments were made and the plan was administered under the funding agreement.  The complaint seeks a declaratory judgment, an injunction, disgorgement of amounts paid, compensatory and punitive damages, interest, attorneys’ fees and costs, and such other equitable and legal relief to which the plaintiffs and class members may be entitled.  On January 9, 2008, Nationwide and NRS filed a Notice of Removal to the United States District Court Northern District of Alabama, Southern Division.  On January 16, 2008, Nationwide and NRS filed a motion to dismiss.  On January 24, 2008, the plaintiffs filed a motion to remand.  The motions have been fully briefed.  Nationwide and NRS intend to defendthis casevigorously.

On July 11, 2007, Nationwide was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al.  The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries).  The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties.  The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees.  On October 12, 2007, Nationwide filed a motion to dismiss.  The motion has been fully briefed.  Nationwide intends to defend this lawsuit vigorously.

On November 15, 2006, Nationwide Financial Services, Inc. (NFS), Nationwide and NRS were named in a lawsuit filed in the United States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc.  The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period.  The class period is from January 1, 1996 until the class notice is provided.  The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds.  The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest.  On January 25, 2007, NFS, Nationwide and NRS filed a motion to dismiss.  On September 17, 2007, the Court granted the motion to dismiss.  On October 1, 2007, the plaintiff filed a motion

to vacate judgment and for leave to file an amended complaint.  On October 25, 2007, NFS, Nationwide and NRS filed their opposition to the plaintiff’s motion.  NFS, Nationwide and NRS continue to defend this lawsuit vigorously.

On February 11, 2005, Nationwide was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company.  The plaintiff claims that the total of modal payments that policyholders paid per year exceeded the guaranteed maximum premium provided for in the policy.The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment.  The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees.  On February 2, 2006, the court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims.  The court certified a class consisting of all residents of the United States and the Virgin Islands who, during the class period, paid premiums on a modal basis to Nationwide for term life insurance policies issued by Nationwide during the class period that provide for guaranteed maximum premiums, excluding certain specified products.  Excluded from the class are Nationwide; any parent, subsidiary or affiliate of Nationwide; all employees, officers and directors of Nationwide; and any justice, judge or magistrate judge of the State of Ohio who may hear the case.  The class period is from February 10, 1990 through February 2, 2006, the date the class was certified.  On January 26, 2007, the plaintiff filed a motion for summary judgment.  On April 30, 2007, Nationwide filed a motion for summary judgment.  On February 4, 2008, the Court entered its ruling on the parties’ pending motions for summary judgment.  The Court granted Nationwide’s motion for summary judgment for some of the plaintiffs’ causes of action, including breach of contract claims on all decreasing term policies, plaintiff Carr’s individual claims for fraud by omission, violation of the Ohio Deceptive Trade Practices Act and all unjust enrichment claims.  However, several claims against Nationwide remain, including plaintiff Carr’s individual claim for breach of contract and the plaintiff Class’ claims for breach of contract for the term life policies in 43 of 51 jurisdictions.  The Court has requested additional briefing on Nationwide’s affirmative defense that the doctrine of voluntary payment acts as a defense to the breach of contract claims. Nationwide continues to defend this lawsuit vigorously.

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

On August 15, 2001, NFS and Nationwide were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company.  Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from Nationwide.  The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that Nationwide and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds.  The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and Nationwide, other

unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees.  To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class.  On September 25, 2007, NFS’ and Nationwide’s motion to dismiss the plaintiffs’ fifth amended complaint was denied.  On October 12, 2007, NFS and Nationwide filed their answer to the plaintiffs’ fifth amended complaint and amended counterclaims.  On November 1, 2007, the plaintiffs filed a motion to dismiss NFS’ and Nationwide’s amended counterclaims.  On November 15, 2007, the plaintiffs filed a motion for class certification.  On February 8, 2008, the Court denied the plaintiffs’ motion to dismiss the amended counterclaim, with the exception that it was tentatively granting the plaintiffs’ motion to dismiss with respect to the Companies’ claim that it could recover any “disgorgement remedy” from plan sponsors.  NFS and Nationwide continue to defend this lawsuit vigorously.

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.

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 the "Voting Rights," section of this prospectus.

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

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

Investment Adviser:	Invesco Aim Advisors, Inc.
Sub-adviser:	Invesco Trimark Investment Management, Inc.; Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited
Investment Objective:	Long-term growth of capital.

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

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

Investment Adviser:	Invesco Aim Advisors, Inc.
Sub-adviser:	Invesco Trimark Investment Management, Inc.; Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited
Investment Objective:	Growth of capital.

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

Investment Adviser:	Invesco Aim Advisors, Inc.
Sub-adviser:	Invesco Trimark Investment Management, Inc.; Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited
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

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

American Century Variable Portfolios, Inc. - American Century VP 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

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

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 with income as a secondary objective.

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

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

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
Sub-adviser:	Mellon Capital Management
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
Sub-adviser:	Boston Company Asset Management
Investment Objective:	Capital growth with current income as a secondary goal.

Dreyfus Stock Index Fund, Inc.: Initial Shares

Investment Adviser:	The Dreyfus Corporation
Sub-adviser:	Mellon Capital Management
Investment Objective:	To match performance of the S&P 500.

Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

Investment Adviser:	The Dreyfus Corporation
Sub-adviser:	Fayez Sarofim
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
Sub-adviser:	Franklin Portfolio Associates
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
Sub-adviser:	Boston Company Asset Management
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.

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

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

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

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

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

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

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	Fidelity Research & Analysis Company
Investment Objective:	High total return.

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

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	Fidelity Research & Analysis Company
Investment Objective:	Long-term capital appreciation.

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	Fidelity Research & Analysis Company
Investment Objective:	Reasonable income.

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

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

The assets of each 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 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 VIP Freedom Funds for

more information.

Fidelity Variable Insurance Products Fund - VIP Freedom 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 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 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 VIP Freedom Funds for

more information.

Fidelity Variable Insurance Products Fund - VIP Freedom 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 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 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 VIP Freedom Funds for

more information.

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

This sub-account is only available in policies issued before May 1, 2002

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	Fidelity Research & Analysis Company
Investment Objective:	Capital growth.

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

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

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

This 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 Investment Grade Bond Portfolio: Service Class

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

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	Fidelity Research & Analysis Company
Investment Objective:	Long-term growth of capital.

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

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	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 - VIP Value Strategies Portfolio: Service Class

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

Investment Adviser:	Fidelity Management & Research Company
Sub-adviser:	Fidelity Research & Analysis Company
Investment Objective:	Capital appreciation.

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 - Franklin Templeton VIP Founding Funds Allocation Fund: Class 2

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

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

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

Investment 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 consistent with preservation of capital, with capital appreciation as 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 growth of capital.

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

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

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 growth of capital.

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 growth of capital.

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:	Capital appreciation.

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

Investment Adviser:	Massachusetts Financial Services Company
Investment Objective:	Capital appreciation.

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:	Seeks returns from both capital gains as well as income generated by dividends paid by stock issuers.

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

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Federated Investment Management Company
Investment Objective:	High current income.

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

Investment Adviser:	Nationwide Fund Advisors
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:	Nationwide Fund Advisors
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:	Nationwide Fund Advisors
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:	Nationwide Fund Advisors
Sub-adviser:	Gartmore Global Partners
Investment Objective:	Long-term capital growth.

Nationwide Variable Insurance Trust - Gartmore NVIT International Equity Fund: Class I

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

Investment Adviser:	Nationwide Fund Advisors
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 - Gartmore NVIT International Equity Fund: Class III

Investment Adviser:	Nationwide Fund Advisors
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.

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

prospectus).

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Lehman Brothers Asset Management LLC
Investment Objective:	The fund seeks long-term total return.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Neuberger Berman Management Inc.
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Neuberger Berman Management Inc.
Investment Objective:	The Fund seeks long-term growth of capital.

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

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

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

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

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

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

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

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

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

Investment Adviser:	Nationwide Fund Advisors
Investment Objective:	Seeks a high level of total return consistent with a moderate level of risk as compared to other Cardinal Funds

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

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

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

Investment Adviser:	Nationwide Fund Advisors
Investment Objective:	Seeks a high level of total return consistent with a moderately conservative level of risk.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Nationwide Asset Management, LLC
Investment Objective:	The Fund seeks a high level of current income.

Nationwide Variable Insurance Trust - NVIT Global Financial Services Fund: Class I

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Gartmore Global Partners
Investment Objective:	Long-term capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Nationwide Asset Management, LLC
Investment Objective:	To provide a high level of income as is consistent with the preservation of capital.

Nationwide Variable Insurance Trust - NVIT Growth Fund: Class I

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Nationwide Asset Management, LLC
Investment Objective:	Long-term capital appreciation.

Nationwide Variable Insurance Trust - NVIT 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:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
Investment Objective:	Long-term capital appreciation.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
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 International Index Fund: Class VI

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	BlackRock Investment Management, LLC
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 Investor Destinations Aggressive Fund: Class II

Investment Adviser:	Nationwide Fund Advisors
Investment Objective:	To maximize growth of capital consistent with a more 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 - NVIT Investor Destinations Conservative Fund: Class II

Investment Adviser:	Nationwide Fund Advisors
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 - NVIT Investor Destinations Moderate Fund: Class II

Investment Adviser:	Nationwide Fund Advisors
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.

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

Investment Adviser:	Nationwide Fund Advisors
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 - NVIT Investor Destinations Moderately Conservative Fund: Class II

Investment Adviser:	Nationwide Fund Advisors
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 - NVIT Mid Cap Growth Fund: Class I

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	NorthPointe Capital, LLC
Investment Objective:	Long-term capital appreciation.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	BlackRock Investment Management, LLC
Investment Objective:	Capital appreciation.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Nationwide Asset Management, LLC
Investment Objective:	High level of current income as is consistent with the preservation of capital and maintenance of liquidity.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	AIM Capital Management, Inc. and American Century Global Investment Management Inc.
Investment Objective:	The fund seeks long-term capital growth.

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 Multi-Manager International Value Fund: Class I

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	AllianceBernstein Management; JP Morgan Investment Management, Inc.
Investment Objective:	Long-term capital appreciation.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	AllianceBernstein Management; JP Morgan Investment Management, Inc.
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 Multi-Manager Large Cap Growth Fund: Class I

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Goldman Sachs Asset Management; Neuberger Berman Management Inc. and Wells Fargo Investment Management
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Goldman Sachs Asset Management, L.P., Wellington Management Company, LLP, and Deutsche Investment Management Americas Inc., doing business as Deutsche Asset Management
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Neuberger Berman Management Inc. and American Century Investment Management Inc.
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	American Century Investment Management; RiverSource Investment Management; Thompson, Siegel & Walmsley, Inc.
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Oberweis Asset Management, Inc.; Waddell & Reed Investment Management Company
Investment Objective:	Capital growth.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.; Epoch Investment Partners, Inc.; J.P. Morgan Investment Management Inc.
Investment Objective:	Capital appreciation.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.: American Century Investment Management Inc.; Gartmore Global Partners; Morgan Stanley Investment Management; Neuberger Berman Management, Inc.; Putnam Investment Management, LLC; Waddell & Reed Investment Management Company
Investment Objective:	Long-term growth of capital.

Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class I

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
Investment Objective:	Total return through a flexible combination of capital appreciation and current income.

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:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
Investment Objective:	High total return from a concentrated portfolio of U.S. securities.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Nationwide Asset Management, LLC
Investment Objective:	Seeks to provide a high level of current income.

Nationwide Variable Insurance Trust - NVIT 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:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
Investment Objective:	Long-term capital appreciation.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
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 U.S. Growth Leaders Fund: Class I

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
Investment Objective:	Long-term growth of capital.

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

Investment Adviser:	Nationwide Fund Advisors
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:	Nationwide Fund Advisors
Sub-adviser:	Van Kampen Asset Management
Investment Objective:	Above average total return over a market cycle of three to five years.

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Van Kampen Asset Management
Investment Objective:	The fund seeks current income and long-term capital appreciation.

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

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

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

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

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

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

prospectus).

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

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

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

Oppenheimer Variable Account Funds - Oppenheimer High Income Fund/VA: 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.

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

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

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

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

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.

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.

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 the "Voting Rights" section of this prospectus.

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

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 Office is 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.

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.

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.

Outside back cover page

To learn more about the policy, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus.  For a free copy of the SAI, to receive personalized illustrations of Death Benefits, net Cash Surrender Values, and Cash Values, and to request other information about the policy please call our Service Center at 1-800-547-7548 (TDD: 1-800-238-3035) or write to us at our Service Center at Nationwide Life Insurance Company, 5100 Rings Road, RR1-04-D4, Dublin, 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 20549-8090. 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

Individual 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, 2008 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 FREE OF CHARGE by writing or calling us at our address or phone number shown above.

The date of this Statement of Additional Information is May 1, 2008.

Table of Contents

Nationwide Life Insurance Company	1	Underwriting Procedure	2
Nationwide VLI Separate Account-2	1	Illustrations	2
Nationwide Investment Services Corporation  (NISC)	1	Advertising	2
Services	2	Tax Definition of Life Insurance	3
Independent Registered Public Accounting Firm	2	Financial Statements	5

Nationwide Life Insurance Company

We are a stock life insurance company organized under the laws of the State of Ohio in March 1929.Our Home Office is located 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 of Nationwide Corporation is held by Nationwide Mutual Insurance Company, which holds 95.2%, and Nationwide Mutual Fire Insurance Company, which holds 4.8%, the ultimate controlling persons of the Nationwide group of companies.  On March 10, 2008, NFS announced that it received an offer from Nationwide Mutual, Nationwide Mutual Fire and Nationwide Corporation to acquire by merger all of NFS’ outstanding publicly held shares of Class A common stock for $47.20 per share in cash.  NFS’ board of directors has appointed a special committee of the board, comprised entirely of independent, non-affiliated directors, to consider the proposal.  The Nationwide group of companies is one of America's largest insurance and financial services family of companies, with combined assets of over $160 billion as of December 31, 2007.

Nationwide 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 that are member firms of the Financial Industry Regulatory Authority (FINRA).

Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 99% of the target premium plus 4% of any excess premium payments.  We pay gross renewal commissions in years two through ten on the sale of the policies provided by NISC that will not exceed 3% of actual Premium payment, and that will not exceed 2% in policy years eleven and thereafter.

We 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 for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.  The audit report of KPMG LLP covering the December 31, 2007 consolidated financial statements and schedules of Nationwide Life Insurance Company contains an explanatory paragraph that states that Nationwide Life Insurance Company adopted the American Institute of Certified Public Accountants' Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts, in 2007.  KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Underwriting Procedure

We underwrite the policies issued through Nationwide VLI Separate Account-2.  The policy's Specified Amount depends upon the Insured's sex, issue age, risk class and length of time the policy has been In Force.  The Specified Amount will vary depending upon other risk factors.  Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO).  Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the guaranteed cost of insurance rate on a standard basis.  That is, guaranteed cost of insurance rates for substandard risks are guaranteed cost of insurance rates for standard risks times a percentage greater than 100%.  These mortality tables are sex distinct.

Illustrations

Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insured's age and premium class, the Death Benefits option, face amount, planned periodic Premiums, and Riders requested.  We reserve the right to charge a reasonable fee of no more than $25 for this service to persons who request more than one policy illustration during a policy year.

Advertising

Rating Agencies

Independent financial rating services, including Moody's, Standard & Poor's and A.M. Best Company rank and rate us.  The purpose of these ratings is to reflect the financial strength or claims-paying ability of Nationwide.  The ratings are not intended to reflect the Investment Experience or financial strength of the variable account.  We may advertise these ratings from time to time.  In addition, we may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend us or the policies.  Furthermore, we may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions.

Money Market Yields

We may advertise the "yield" and "effective yield" for the money market sub-account.  Yield and effective yield are annualized, which means that it is assumed that the underlying mutual fund generates the same level of net income throughout a year.

Yield is a measure of the net dividend and interest income earned over a specific seven-day period (which period will be stated in the advertisement) expressed as a percentage of the offering price of the underlying mutual fund’s units.  The effective yield is calculated similarly, but reflects assumed compounding, calculated under rules prescribed by the SEC.  Thus, effective yield will be slightly higher than yield, due to the compounding.

Historical Performance of the Sub-Accounts

We will advertise historical performance of the sub-accounts in accordance with SEC prescribed calculations.  Please note that performance information is annualized.  However, if a sub-account has been available in the variable account for less than one year, the performance information for that sub-account is not annualized.  Performance information is based on historical earnings and is not intended to predict or project future results.

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.

Guideline Premium/Cash Value Corridor Test

Table of Applicable Percentages of Cash Value

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

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

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, 2007, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Accounts as of December 31, 2007, and the results of their operations, changes in contract owners’ equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Columbus, Ohio

March 18, 2008

106

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2007

Assets:
Investments at fair value:
AIM VIF – Basic Value Fund – Series I (AIMBValue)
70,258 shares (cost $943,335)	$	894,381
AIM VIF – Capital Appreciation Fund – Series I (AIMCapAp)
12,124 shares (cost $350,547)		356,072
AIM VIF – Capital Development Fund – Series I (AIMCapDev)
34,361 shares (cost $647,149)		647,712
AllianceBernstein VPS – Growth and Income Portfolio – Class A (AlVGrIncA)
35,517 shares (cost $914,431)		952,571
AllianceBernstein VPS – Small/Mid Cap Value Portfolio – Class A (AlVSmMdCpA)
61,262 shares (cost $1,146,051)		1,048,199
American Century VP – Balanced Fund – Class I (ACVPBal)
642,202 shares (cost $4,153,753)		4,707,339
American Century VP – Capital Appreciation Fund – Class I (ACVPCapAp)
1,334,546 shares (cost $11,340,472)		21,326,052
American Century VP – Income & Growth Fund – Class I (ACVPIncGr)
354,382 shares (cost $2,522,614)		2,998,071
American Century VP – Inflation Protection Fund – Class II (ACVPInflPro2)
85,992 shares (cost $884,927)		907,217
American Century VP – International Fund – Class I (ACVPInt)
784,080 shares (cost $4,949,273)		9,299,195
American Century VP – International Fund – Class III (ACVPInt3)
301,693 shares (cost $2,931,623)		3,578,085
American Century VP – Mid Cap Value Fund – Class I (ACVPMdCpV)
88,661 shares (cost $1,231,175)		1,147,271
American Century VP – Ultra® Fund – Class I (ACVPUltra)
80,847 shares (cost $874,711)		982,286
American Century VP – Value Fund – Class I (ACVPVal)
1,598,095 shares (cost $12,805,947)		11,937,770
American Century VP – VistaSM Fund – Class I (ACVPVista1)
82,287 shares (cost $1,723,192)		1,810,321
Credit Suisse Trust – Global Small Cap Portfolio (CSTGlobSmCp)
50,821 shares (cost $695,323)		715,561
Credit Suisse Trust – International Focus Portfolio (CSTIntFoc)
477,097 shares (cost $4,591,372)		7,561,991
Credit Suisse Trust – Small Cap Core I Portfolio (CSTSmCapGr)
643,971 shares (cost $8,028,525)		9,962,232
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares (DryIPSmCap)
100,501 shares (cost $1,749,086)		1,772,837
Dreyfus Stock Index Fund, Inc. – Initial Shares (DryStkIx)
1,890,934 shares (cost $55,598,806)		70,720,936
Dreyfus VIF – Appreciation Portfolio – Initial Shares (DryVApp)
123,876 shares (cost $4,306,898)		5,557,098

(Continued)

2

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Dreyfus VIF – Developing Leaders Portfolio – Initial Shares (DryVDevLd) 6,020 shares (cost $249,215)	$	194,701
Dreyfus VIF – Growth and Income Portfolio – Initial Shares (DryVGroInc) 90,127 shares (cost $1,782,157)		2,291,931
Federated IS – American Leaders Fund II – Primary Shares (FedAmLead) 7,956 shares (cost $154,462)		136,280
Federated IS – Capital Appreciation Fund II – Primary Shares (FedCapAp)
1,936 shares (cost $14,294)		14,310
Federated IS – Market Opportunity Fund II – Service Shares (FedMrkOp)
328 shares (cost $3,339)		3,366
Federated IS – Quality Bond Fund II – Primary Shares (FedQualBd)
110,065 shares (cost $1,218,223)		1,248,135
Fidelity® VIP – Equity-Income Portfolio – Initial Class (FidVIPEI)
3,079,196 shares (cost $71,735,301)		73,623,577
Fidelity® VIP – Growth Portfolio – Initial Class (FidVIPGr)
2,034,040 shares (cost $87,818,886)		91,775,888
Fidelity® VIP – High Income Portfolio – Initial Class (FidVIPHI)
2,603,105 shares (cost $16,535,354)		15,566,566
Fidelity® VIP – High Income Portfolio – Initial Class R (FidVIPHIR)
270,430 shares (cost $1,744,906)		1,611,764
Fidelity® VIP – Overseas Portfolio – Initial Class (FidVIPOv)
683,759 shares (cost $9,786,571)		17,312,773
Fidelity® VIP – Overseas Portfolio – Service Class R (FidVIPOvSR)
239,889 shares (cost $5,336,141)		6,042,793
Fidelity® VIP II – Asset Manager Portfolio – Initial Class (FidVIPAM)
1,270,518 shares (cost $19,102,565)		21,052,491
Fidelity® VIP II – Contrafund® Portfolio – Initial Class (FidVIPCon)
2,730,078 shares (cost $70,765,464)		76,169,184
Fidelity® VIP II – Investment Grade Bond Portfolio – Service Class (FidVIPIGBdS)
280,698 shares (cost $3,492,437)		3,556,446
Fidelity® VIP III – Growth Opportunities Portfolio – Initial Class (FidVIPGrOp)
200,620 shares (cost $3,142,035)		4,487,873
Fidelity® VIP III – Mid Cap Portfolio – Service Class (FidVIPMCapS)
290,342 shares (cost $9,548,340)		10,446,498
Fidelity® VIP III – Value Strategies Portfolio – Service Class (FidVIPVaIS)
113,334 shares (cost $1,515,529)		1,421,202
Fidelity® VIP IV – Energy Portfolio – Service Class 2 (FidVIPEnergyS2)
267,823 shares (cost $6,007,872)		7,081,239
Fidelity® VIP IV – Freedom Fund 2010 Portfolio – Service Class (FidVIPFree10S)
85,786 shares (cost $1,042,501)		1,025,146
Fidelity® VIP IV – Freedom Fund 2020 Portfolio – Service Class (FidVIPFree20S)
62,043 shares (cost $763,472)		782,977
Fidelity® VIP IV – Freedom Fund 2030 Portfolio – Service Class (FidVIPFree30S)
53,225 shares (cost $690,615)		692,459
Franklin Templeton VIP – Developing Markets Securities Fund – Class 3 (FrVIPDevMrk3)
190,470 shares (cost $2,632,367)		3,039,896
Franklin Templeton VIP – Foreign Securities Fund – Class 1 (FrVIPForSec)
39,981 shares (cost $607,760)		822,809

(Continued)

3

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Franklin Templeton VIP – Foreign Securities Fund – Class 3 (FrVIPForSec3)
134,515 shares (cost $2,425,748)	$	2,714,504
Franklin Templeton VIP – Global Income Securities Fund – Class 3 (FrVIPGlInc3)
103,944 shares (cost $1,672,779)		1,736,908
Franklin Templeton VIP – Income Securities Fund – Class 2 (FrVIPIncSec2)
73,049 shares (cost $1,284,474)		1,264,486
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1 (FrVIPRisDiv)
206,704 shares (cost $3,911,343)		4,053,459
Franklin Templeton VIP – Small Cap Value Securities Fund – Class 1 (FrVIPSCapV1)
180,050 shares (cost $3,225,197)		3,129,277
Janus Aspen Series – Balanced Portfolio – Service Shares (JAspBal)
8,420 shares (cost $247,137)		261,678
Janus Aspen Series – Forty Portfolio – Service Shares (JAspForty)
104,871 shares (cost $3,230,483)		4,278,728
Janus Aspen Series – Global Technology Portfolio – Service Shares (JAspGlTechS)
267,724 shares (cost $1,099,535)		1,386,809
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares (JAspRMgCore)
11,303 shares (cost $145,168)		150,218
Janus Aspen Series – International Growth Portfolio – Service II Shares (JAspIntGroS2)
97,225 shares (cost $5,300,419)		6,298,209
Janus Aspen Series – International Growth Portfolio – Service Shares (JAspIntGroS)
75,628 shares (cost $3,687,842)		4,878,735
Lehman Brothers AMT – Short Duration Bond Portfolio – I Class (LBTShrtDBd)
281,267 shares (cost $3,642,729)		3,656,467
MFS VIT – Investors Growth Stock Series – Initial Class (MFSInvGrSt)
20,287 shares (cost $193,057)		239,795
MFS VIT – Value Series – Initial Class (MFSValue)
87,589 shares (cost $1,284,263)		1,335,728
Nationwide VIT – American Funds Asset Allocation Fund – Class II (NVITAstAll2)
51,089 shares (cost $981,744)		988,565
Nationwide VIT – American Funds Bond Fund – Class II (NVITBnd2)
80,626 shares (cost $936,054)		904,621
Nationwide VIT – American Funds Global Growth Fund – Class II (NVITGlobGr2)
57,093 shares (cost $1,367,691)		1,488,979
Nationwide VIT – American Funds Growth – Income Fund – Class II (NVITGroInc2)
8,237 shares (cost $368,961)		358,802
Nationwide VIT – American Funds Growth Fund – Class II (NVITGrowth2)
22,205 shares (cost $1,510,203)		1,602,296
Nationwide VIT – Federated High Income Bond Fund – Class I (NVITFHiInc)
26,399 shares (cost $208,159)		201,689
Nationwide VIT – Federated High Income Bond Fund – Class III (NVITFHiInc3)
86,843 shares (cost $694,583)		662,615
Nationwide VIT – Gartmore Emerging Markets Fund – Class I (NVITEmMrkts)
159,394 shares (cost $2,446,819)		3,603,904
Nationwide VIT – Gartmore Emerging Markets Fund – Class III (NVITEmMrkts3)
350,846 shares (cost $6,727,851)		7,925,608
Nationwide VIT – Gartmore Global Utilities Fund – Class I (NVITGlUtl)
188,596 shares (cost $2,436,140)		2,312,188

(Continued)

4

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Nationwide VIT – Gartmore International Growth Fund – Class I (NVITIntGro)
203,907 shares (cost $2,706,558)	$	2,866,934
Nationwide VIT – Global Financial Services Fund – Class I (NVITGlFin)
71,857 shares (cost $944,257)		782,526
Nationwide VIT – Global Health Sciences Fund – Class I (NVITGlHlth)
34,337 shares (cost $366,274)		404,145
Nationwide VIT – Global Health Sciences Fund – Class III (NVITGlHlth3)
46,463 shares (cost $523,297)		548,260
Nationwide VIT – Global Technology and Communications Fund – Class I (NVITGlTech)
108,233 shares (cost $416,291)		556,315
Nationwide VIT – Global Technology and Communications Fund – Class III (NVITGlTech3)
148,377 shares (cost $717,520)		768,592
Nationwide VIT – Government Bond Fund – Class I (NVITGvtBd)
971,582 shares (cost $11,423,027)		11,299,495
Nationwide VIT – Growth Fund – Class I (NVITGrowth)
1,210,997 shares (cost $15,078,577)		17,559,464
Nationwide VIT – International Index Fund – Class VI (NVITIntIdx6)
33,216 shares (cost $378,466)		385,975
Nationwide VIT – International Value Fund – Class I (NVITIntValI)
38,730 shares (cost $614,704)		677,008
Nationwide VIT – International Value Fund – Class III (NVITIntVal3)
125,378 shares (cost $2,223,248)		2,185,334
Nationwide VIT – Investor Destinations Aggressive Fund – Class II (NVITIDAgg2)
332,338 shares (cost $4,371,158)		4,519,790
Nationwide VIT – Investor Destinations Conservative Fund – Class II (NVITIDCon2)
86,587 shares (cost $902,778)		900,508
Nationwide VIT – Investor Destinations Moderate Fund – Class II (NVITIDMod2)
564,994 shares (cost $6,586,962)		7,028,530
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II (NVITIDModAg2)
554,000 shares (cost $6,723,538)		7,390,366
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II (NVITIDModCon2)
198,793 shares (cost $2,235,365)		2,256,300
Nationwide VIT – Mid Cap Growth Fund – Class I (NVITMdCpGr)
36,849 shares (cost $1,005,444)		1,198,692
Nationwide VIT – Mid Cap Index Fund – Class I (NVITMidCap)
349,836 shares (cost $5,914,001)		6,709,860
Nationwide VIT – Money Market Fund – Class I (NVITMyMkt)
36,100,441 shares (cost $36,100,441)		36,100,441
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class I (NVITSmCapGr)
95,477 shares (cost $1,649,364)		1,719,537
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I (NVITSmCapVal)
898,029 shares (cost $10,845,901)		8,872,529
Nationwide VIT – Multi-Manager Small Company Fund – Class I (NVITSmComp)
1,240,192 shares (cost $26,609,627)		27,544,669
Nationwide VIT – Nationwide Fund – Class I (NVITNWFund)
5,585,888 shares (cost $72,950,078)		75,912,216
Nationwide VIT – Nationwide Leaders Fund – Class I (NVITNWLead)
56,399 shares (cost $773,976)		735,448

(Continued)

5

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Nationwide VIT – U.S. Growth Leaders Fund – Class I (NVITUSGro)
71,714 shares (cost $837,134)	$	925,823
Nationwide VIT – Van Kampen Comstock Value Fund – Class I (NVITVKVal)
82,640 shares (cost $998,563)		950,359
Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I (NVITMltSec)
165,125 shares (cost $1,628,560)		1,628,131
Neuberger Berman AMT – Balanced Portfolio – I Class Shares (NBTBal)
19,898 shares (cost $253,950)		260,265
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares (NBTAFasc)
6,905 shares (cost $100,660)		100,122
Neuberger Berman AMT – Growth Portfolio – Class I (NBTAGro)
1,006,327 shares (cost $10,363,883)		19,422,115
Neuberger Berman AMT – Guardian Portfolio – I Class Shares (NBTAGuard)
87,633 shares (cost $1,297,720)		1,849,922
Neuberger Berman AMT – International Portfolio – Class S (NBTAInt)
33,606 shares (cost $467,661)		457,371
Neuberger Berman AMT – Mid-Cap Growth Portfolio – Class S (NBTAMCGrS)
30,362 shares (cost $771,979)		854,089
Neuberger Berman AMT – Partners Portfolio – Class I (NBTAPart)
1,349,518 shares (cost $22,968,805)		28,029,484
Neuberger Berman AMT – Regency Portfolio – Class S (NBTARegS)
16,038 shares (cost $286,455)		278,576
Neuberger Berman AMT – Socially Responsive Portfolio Class I (NBTSocRes)
25,856 shares (cost $422,324)		463,088
Oppenheimer VAF – Balanced Fund – Non-Service Shares (OppBal)
765,508 shares (cost $11,717,547)		12,561,987
Oppenheimer VAF – Capital Appreciation Fund – Non-Service Shares (OppCapAp)
222,759 shares (cost $7,263,703)		10,509,747
Oppenheimer VAF – Core Bond Fund – Non-Service Shares (OppBdFd)
978,600 shares (cost $10,780,903)		10,823,312
Oppenheimer VAF – Global Securities Fund – Class 3 (OppGlSec3)
220,838 shares (cost $7,521,202)		8,131,252
Oppenheimer VAF – Global Securities Fund – Non-Service Shares (OppGlSec)
877,535 shares (cost $21,177,746)		32,117,768
Oppenheimer VAF – High Income Fund – Class 3 (OppHighInc3)
12,893 shares (cost $106,078)		102,885
Oppenheimer VAF – High Income Fund – Non-Service Shares (OppHighInc)
55,603 shares (cost $456,051)		442,047
Oppenheimer VAF – Main Street Small Cap Fund® – Non-Service Shares (OppMStSCap)
65,539 shares (cost $1,211,515)		1,192,816
Oppenheimer VAF – Main Street® – Non-Service Shares (OppMSt)
76,597 shares (cost $1,720,425)		1,961,658
Oppenheimer VAF – Mid Cap Fund – Non-Service Shares (OppMidCap)
23,666 shares (cost $1,130,700)		1,279,616
Putnam VT – Growth and Income Fund – IB Shares (PVTGroInc)
4,593 shares (cost $118,136)		106,181
Putnam VT – International Equity Fund – IB Shares (PVTIntlEq)
26,599 shares (cost $496,888)		504,315

(Continued)

6

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Putnam VT – Voyager Fund – IB Shares (PVTVoygr)
2,318 shares (cost $65,317)	$	73,548
T. Rowe Price Blue Chip Growth Portfolio – II (TRoeBlChip2)
57,232 shares (cost $665,862)		669,618
T. Rowe Price Equity Income Portfolio – II (TRowEqInc2)
64,041 shares (cost $1,585,540)		1,514,571
T. Rowe Price Limited Term Bond Portfolio – Class II (TRowLtdTBd2)
80,176 shares (cost $394,119)		396,873
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares (DrySRGro)
278,159 shares (cost $8,716,033)		8,483,853
Van Eck Worldwide Insurance Trust – Bond Fund – Initial Class (VEWrldBd)
267,346 shares (cost $3,177,606)		3,240,230
Van Eck Worldwide Insurance Trust – Emerging Markets Fund – Initial Class (VEWrldEMkt)
509,596 shares (cost $10,245,788)		14,125,996
Van Eck Worldwide Insurance Trust – Hard Assets Fund – Initial Class (VEWrldHAs)
382,297 shares (cost $11,314,991)		15,746,819
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I (VKUCorPlus)
48,562 shares (cost $553,303)		562,353
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I (VKUEmMkt)
276,097 shares (cost $2,357,188)		2,355,104
Van Kampen UIF – U.S. Real Estate Portfolio – Class I (VKUUSRE)
728,898 shares (cost $16,031,676)		16,072,195
Wells Fargo AVT – Discovery FundSM (WFVDisc)
448,567 shares (cost $5,471,768)		9,020,686
Wells Fargo AVT – Opportunity FundSM (WFVOpp)
1,432,748 shares (cost $28,110,655)		31,563,436
Total Investments		1,012,418,914
Accounts Receivable		183,495
Total Assets		1,012,602,409
Accounts Payable		–
Contract Owners Equity (note 7)	$	1,012,602,409

See accompanying notes to financial statements.

7

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS

Year Ended December 31, 2007

Investment activity:		Total		AIMBValue		AIMCapAp		AIMCapDev		AlVGrIncA		AlVSmMdCpA		ACVPBal		ACVPCapAp
Reinvested dividends	$	16,047,604		5,496		–		–		16,764		15,038		105,996		–
Mortality and expense risk charges (note 3)		(5,995,014	)	(6,372	)	(853	)	(2,516	)	(4,820	)	(8,035	)	(30,786	)	(113,921	)
Net investment income (loss)		10,052,590		(876	)	(853	)	(2,516	)	11,944		7,003		75,210		(113,921	)
Proceeds from mutual fund shares sold		211,008,828		749,472		236,142		93,181		443,654		997,512		894,354		2,288,328
Cost of mutual fund shares sold		(182,140,052	)	(627,736	)	(223,532	)	(69,034	)	(383,608	)	(878,225	)	(797,443	)	(1,481,279	)
Realized gain (loss) on investments		28,868,776		121,736		12,610		24,147		60,046		119,287		96,911		807,049
Change in unrealized gain (loss) on investments		1,175,696		(153,770	)	4,289		(31,006	)	(79,613	)	(219,358	)	(207,365	)	5,759,766
Net gain (loss) on investments		30,044,472		(32,034	)	16,899		(6,859	)	(19,567	)	(100,071	)	(110,454	)	6,566,815
Reinvested capital gains		59,266,158		51,237		–		51,509		56,897		111,212		258,071		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	99,363,220		18,327		16,046		42,134		49,274		18,144		222,827		6,452,894
Investment activity:		ACVPIncGr		ACVPInflPro2		ACVPInt		ACVPInt3		ACVPMdCpV		ACVPUltra		ACVPVal		ACVPVista1
Reinvested dividends	$	64,325		36,865		71,251		16,339		8,591		–		232,053		–
Mortality and expense risk charges (note 3)		(19,276	)	(4,204	)	(58,730	)	(14,767	)	(7,231	)	(3,189	)	(80,694	)	(3,330	)
Net investment income (loss)		45,049		32,661		12,521		1,572		1,360		(3,189	)	151,359		(3,330	)
Proceeds from mutual fund shares sold		1,178,088		368,796		2,741,145		325,208		737,710		125,492		4,185,429		730,760
Cost of mutual fund shares sold		(667,236	)	(378,745	)	(1,318,236	)	(265,256	)	(697,024	)	(116,800	)	(3,550,268	)	(660,530	)
Realized gain (loss) on investments		510,852		(9,949	)	1,422,909		59,952		40,686		8,692		635,161		70,230
Change in unrealized gain (loss) on investments		(556,432	)	48,315		148,771		350,687		(94,273	)	110,894		(2,727,985	)	86,032
Net gain (loss) on investments		(45,580	)	38,366		1,571,680		410,639		(53,587	)	119,586		(2,092,824	)	156,262
Reinvested capital gains		–		–		–		–		13,080		–		1,203,357		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	(531	)	71,027		1,584,201		412,211		(39,147	)	116,397		(738,108	)	152,932

(Continued)

8

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		CSTGlobSmCp		CSTIntFoc		CSTSmCapGr		DryIPSmCap		DryStkIx		DryVApp		DryVDevLd		DryVGroInc
Reinvested dividends	$	–		83,974		–		7,542		1,278,701		93,816		2,143		17,911
Mortality and expense risk charges (note 3)		(5,020	)	(42,408	)	(63,195	)	(10,927	)	(431,654	)	(35,695	)	(1,582	)	(12,962	)
Net investment income (loss)		(5,020	)	41,566		(63,195	)	(3,385	)	847,047		58,121		561		4,949
Proceeds from mutual fund shares sold		399,098		1,495,179		1,592,175		781,361		11,068,196		1,142,001		172,902		360,185
Cost of mutual fund shares sold		(290,428	)	(842,362	)	(907,245	)	(613,148	)	(11,053,247	)	(748,322	)	(171,372	)	(281,700	)
Realized gain (loss) on investments		108,670		652,817		684,930		168,213		14,949		393,679		1,530		78,485
Change in unrealized gain (loss) on investments		(126,367	)	457,108		(729,126	)	(260,015	)	2,668,625		(74,888	)	(63,224	)	(14,780	)
Net gain (loss) on investments		(17,697	)	1,109,925		(44,196	)	(91,802	)	2,683,574		318,791		(61,694	)	63,705
Reinvested capital gains		–		–		–		80,999		–		–		37,460		107,884
Net increase (decrease) in contract owners’ equity resulting from operations	$	(22,717	)	1,151,491		(107,391	)	(14,188	)	3,530,621		376,912		(23,673	)	176,538
Investment activity:		FedAmLead		FedCapAp		FedMrkOp		FedQualBd		FidVIPEI		FidVIPGr		FidVIPHI		FidVIPHIR
Reinvested dividends	$	2,840		77		18		64,318		1,402,843		698,818		1,310,798		134,135
Mortality and expense risk charges (note 3)		(983	)	(85	)	(14	)	(8,183	)	(475,675	)	(525,924	)	(102,335	)	(3,886	)
Net investment income (loss)		1,857		(8	)	4		56,135		927,168		172,894		1,208,463		130,249
Proceeds from mutual fund shares sold		64,154		9,503		3,259		325,170		8,759,064		9,539,558		5,865,992		319,436
Cost of mutual fund shares sold		(67,201	)	(7,783	)	(3,316	)	(348,405	)	(7,397,394	)	(10,477,094	)	(6,045,948	)	(323,880	)
Realized gain (loss) on investments		(3,047	)	1,720		(57	)	(23,235	)	1,361,670		(937,536	)	(179,956	)	(4,444	)
Change in unrealized gain (loss) on investments		(37,768	)	(1,071	)	27		25,413		(7,496,224	)	20,372,292		(589,939	)	(133,142	)
Net gain (loss) on investments		(40,815	)	649		(30	)	2,178		(6,134,554	)	19,434,756		(769,895	)	(137,586	)
Reinvested capital gains		21,161		–		–		–		6,185,875		75,097		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	(17,797	)	641		(26	)	58,313		978,489		19,682,747		438,568		(7,337	)

(Continued)

9

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		FidVIPOv		FidVIPOvSR		FidVIPAM		FidVIPCon		FidVIPIGBdS		FidVIPGrOp		FidVIPMCapS		FidVIPVaIS
Reinvested dividends	$	578,448		181,133		1,253,683		686,413		146,290		–		72,569		14,773
Mortality and expense risk charges (note 3)		(101,705	)	(29,910	)	(127,607	)	(430,620	)	(18,055	)	(26,879	)	(58,040	)	(9,518	)
Net investment income (loss)		476,743		151,223		1,126,076		255,793		128,235		(26,879	)	14,529		5,255
Proceeds from mutual fund shares sold		3,167,179		1,406,623		2,693,031		9,194,612		717,226		766,393		2,427,924		1,716,288
Cost of mutual fund shares sold		(1,568,711	)	(1,083,583	)	(2,841,731	)	(7,092,823	)	(715,271	)	(423,409	)	(2,030,234	)	(1,604,127	)
Realized gain (loss) on investments		1,598,468		323,040		(148,700	)	2,101,789		1,955		342,984		397,690		112,161
Change in unrealized gain (loss) on investments		(557,205	)	(23,209	)	1,290,334		(9,286,236	)	607		569,338		90,453		(237,678	)
Net gain (loss) on investments		1,041,263		299,831		1,141,634		(7,184,447	)	2,562		912,322		488,143		(125,517	)
Reinvested capital gains		1,185,300		366,243		573,845		18,328,735		–		–		879,087		196,544
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,703,306		817,297		2,841,555		11,400,081		130,797		885,443		1,381,759		76,282
Investment activity:		FidVIPEnergyS2		FidVIPFree10S		FidVIPFree20S		FidVIPFree30S		FrVIPDevMrk3		FrVIPForSec		FrVIPForSec3		FrVIPGlInc3
Reinvested dividends	$	6,232		24,207		15,708		13,796		50,834		22,975		44,225		27,088
Mortality and expense risk charges (note 3)		(26,992	)	(1,763	)	(3,367	)	(2,958	)	(12,523	)	(5,522	)	(10,242	)	(5,069	)
Net investment income (loss)		(20,760	)	22,444		12,341		10,838		38,311		17,453		33,983		22,019
Proceeds from mutual fund shares sold		1,435,344		109,311		190,686		112,856		635,633		488,515		276,009		279,144
Cost of mutual fund shares sold		(1,257,175	)	(100,044	)	(151,998	)	(101,906	)	(486,893	)	(332,484	)	(213,108	)	(263,546	)
Realized gain (loss) on investments		178,169		9,267		38,688		10,950		148,740		156,031		62,901		15,598
Change in unrealized gain (loss) on investments		1,369,655		(22,637	)	(17,734	)	(1,752	)	177,835		(74,954	)	97,283		52,885
Net gain (loss) on investments		1,547,824		(13,370	)	20,954		9,198		326,575		81,077		160,184		68,483
Reinvested capital gains		287,074		20,602		21,697		23,865		168,029		47,573		95,906		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,814,138		29,676		54,992		43,901		532,915		146,103		290,073		90,502

(Continued)

10

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		FrVIPIncSec2		FrVIPRisDiv		FrVIPSCapV1		JAspBal		JAspForty		JAspGlTechS		JAspRMgCore		JAspIntGroS2
Reinvested dividends	$	28,341		112,850		31,969		4,965		6,010		4,567		757		24,976
Mortality and expense risk charges (note 3)		(4,516	)	(24,928	)	(20,959	)	(1,304	)	(18,109	)	(6,640	)	(1,150	)	(28,961	)
Net investment income (loss)		23,825		87,922		11,010		3,661		(12,099	)	(2,073	)	(393	)	(3,985	)
Proceeds from mutual fund shares sold		184,819		1,115,275		969,057		243,508		1,134,169		345,828		271,827		2,135,502
Cost of mutual fund shares sold		(170,986	)	(879,219	)	(847,599	)	(201,461	)	(695,018	)	(229,951	)	(262,985	)	(1,586,965	)
Realized gain (loss) on investments		13,833		236,056		121,458		42,047		439,151		115,877		8,842		548,537
Change in unrealized gain (loss) on investments		(35,376	)	(509,454	)	(487,268	)	(18,385	)	540,465		112,471		4,969		655,312
Net gain (loss) on investments		(21,543	)	(273,398	)	(365,810	)	23,662		979,616		228,348		13,811		1,203,849
Reinvested capital gains		5,256		63,951		244,614		–		–		–		1,665		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	7,538		(121,525	)	(110,186	)	27,323		967,517		226,275		15,083		1,199,864
Investment activity:		JAspIntGroS		LBTShrtDBd		MFSInvGrSt		MFSValue		NVITAstAll2		NVITBnd2		NVITGlobGr2		NVITGroInc2
Reinvested dividends	$	21,192		100,898		904		11,161		17,787		51,410		33,315		4,303
Mortality and expense risk charges (note 3)		(30,374	)	(20,953	)	(1,562	)	(6,638	)	(3,347	)	(3,107	)	(6,622	)	(315	)
Net investment income (loss)		(9,182	)	79,945		(658	)	4,523		14,440		48,303		26,693		3,988
Proceeds from mutual fund shares sold		3,169,721		1,609,594		92,727		553,576		108,637		208,815		224,714		2,958
Cost of mutual fund shares sold		(1,856,462	)	(1,650,263	)	(74,701	)	(450,208	)	(99,627	)	(200,160	)	(194,453	)	(2,921	)
Realized gain (loss) on investments		1,313,259		(40,669	)	18,026		103,368		9,010		8,655		30,261		37
Change in unrealized gain (loss) on investments		(135,689	)	120,290		9,766		(52,992	)	(652	)	(41,696	)	90,156		(10,159	)
Net gain (loss) on investments		1,177,570		79,621		27,792		50,376		8,358		(33,041	)	120,417		(10,122	)
Reinvested capital gains		–		–		–		19,114		372		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,168,388		159,566		27,134		74,013		23,170		15,262		147,110		(6,134	)

(Continued)

11

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		NVITGrowth2		NVITFHiInc		NVITFHiInc3		NVITEmMrkts		NVITEmMrkts3		NVITGlUtl		NVITIntGro		NVITGlFin
Reinvested dividends	$	8,104		16,747		50,813		20,439		37,463		58,318		9,978		30,215
Mortality and expense risk charges (note 3)		(6,992	)	(968	)	(3,404	)	(20,663	)	(26,290	)	(16,023	)	(18,246	)	(5,701	)
Net investment income (loss)		1,112		15,779		47,409		(224	)	11,173		42,295		(8,268	)	24,514
Proceeds from mutual fund shares sold		204,064		62,990		403,234		530,602		1,680,633		1,585,161		2,656,143		409,125
Cost of mutual fund shares sold		(173,600	)	(62,741	)	(409,618	)	(281,448	)	(1,187,362	)	(1,297,810	)	(2,215,451	)	(403,776	)
Realized gain (loss) on investments		30,464		249		(6,384	)	249,154		493,271		287,351		440,692		5,349
Change in unrealized gain (loss) on investments		67,722		(9,291	)	(35,536	)	491,434		741,466		(356,418	)	(153,096	)	(173,066	)
Net gain (loss) on investments		98,186		(9,042	)	(41,920	)	740,588		1,234,737		(69,067	)	287,596		(167,717	)
Reinvested capital gains		352		–		–		301,255		488,860		421,869		203,237		127,951
Net increase (decrease) in contract owners’ equity resulting from operations	$	99,650		6,737		5,489		1,041,619		1,734,770		395,097		482,565		(15,252	)
Investment activity:		NVITGlHlth		NVITGlHlth3		NVITGlTech		NVITGlTech3		NVITGvtBd		NVITGrowth		NVITIntIdx6		NVITIntValI
Reinvested dividends	$	345		417		–		–		497,772		29,788		3,899		16,267
Mortality and expense risk charges (note 3)		(3,218	)	(2,447	)	(3,531	)	(2,437	)	(66,924	)	(113,009	)	(1,251	)	(4,379	)
Net investment income (loss)		(2,873	)	(2,030	)	(3,531	)	(2,437	)	430,848		(83,221	)	2,648		11,888
Proceeds from mutual fund shares sold		91,233		354,938		134,120		164,517		2,260,546		2,032,839		9,610		237,355
Cost of mutual fund shares sold		(85,169	)	(337,040	)	(93,975	)	(134,730	)	(2,431,785	)	(3,842,896	)	(7,454	)	(195,010	)
Realized gain (loss) on investments		6,064		17,898		40,145		29,787		(171,239	)	(1,810,057	)	2,156		42,345
Change in unrealized gain (loss) on investments		40,103		24,158		55,567		28,926		444,552		4,820,907		5,211		(84,773	)
Net gain (loss) on investments		46,167		42,056		95,712		58,713		273,313		3,010,850		7,367		(42,428	)
Reinvested capital gains		8,521		8,113		–		–		–		–		543		55,037
Net increase (decrease) in contract owners’ equity resulting from operations	$	51,815		48,139		92,181		56,276		704,161		2,927,629		10,558		24,497

(Continued)

12

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		NVITIntVal3		NVITIDAgg2		NVITIDCon2		NVITIDMod2		NVITIDModAg2		NVITIDModCon2		NVITMdCpGr		NVITMidCap
Reinvested dividends	$	48,651		85,275		24,477		193,841		169,990		73,275		–		98,801
Mortality and expense risk charges (note 3)		(12,359	)	(24,917	)	(3,881	)	(40,657	)	(46,009	)	(18,649	)	(8,719	)	(40,733	)
Net investment income (loss)		36,292		60,358		20,596		153,184		123,981		54,626		(8,719	)	58,068
Proceeds from mutual fund shares sold		491,026		625,039		324,847		2,203,109		1,426,472		1,841,540		600,219		1,727,404
Cost of mutual fund shares sold		(410,502	)	(516,681	)	(319,421	)	(1,838,832	)	(1,123,539	)	(1,701,161	)	(395,608	)	(1,148,739	)
Realized gain (loss) on investments		80,524		108,358		5,426		364,277		302,933		140,379		204,611		578,665
Change in unrealized gain (loss) on investments		(227,805	)	(142,271	)	(7,091	)	(250,262	)	(198,904	)	(125,658	)	(66,657	)	(339,345	)
Net gain (loss) on investments		(147,281	)	(33,913	)	(1,665	)	114,015		104,029		14,721		137,954		239,320
Reinvested capital gains		158,785		143,661		12,858		112,849		149,917		60,436		–		212,900
Net increase (decrease) in contract owners’ equity resulting from operations	$	47,796		170,106		31,789		380,048		377,927		129,783		129,235		510,288
Investment activity:		NVITMyMkt		NVITSmCapGr		NVITSmCapVal		NVITSmComp		NVITNWFund		NVITNWLead		NVITUSGro		NVITVKVal
Reinvested dividends	$	1,473,769		–		120,810		26,489		822,045		7,953		–		17,742
Mortality and expense risk charges (note 3)		(173,543	)	(8,972	)	(58,741	)	(167,158	)	(505,231	)	(3,697	)	(4,206	)	(5,382	)
Net investment income (loss)		1,300,226		(8,972	)	62,069		(140,669	)	316,814		4,256		(4,206	)	12,360
Proceeds from mutual fund shares sold		23,889,368		612,903		3,933,491		4,508,335		8,198,880		176,505		451,088		369,337
Cost of mutual fund shares sold		(23,889,368	)	(571,470	)	(3,844,342	)	(3,462,290	)	(11,139,266	)	(166,634	)	(437,393	)	(324,840	)
Realized gain (loss) on investments		–		41,433		89,149		1,046,045		(2,940,386	)	9,871		13,695		44,497
Change in unrealized gain (loss) on investments		–		88,470		(2,150,010	)	(4,422,642	)	4,596,818		(52,502	)	140,753		(124,443	)
Net gain (loss) on investments		–		129,903		(2,060,861	)	(3,376,597	)	1,656,432		(42,631	)	154,448		(79,946	)
Reinvested capital gains		–		–		1,325,777		4,100,839		3,721,687		109,742		–		44,501
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,300,226		120,931		(673,015	)	583,573		5,694,933		71,367		150,242		(23,085	)

(Continued)

13

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		NVITMltSec		NBTBal		NBTAFasc		NBTAGro		NBTAGuard		NBTAInt		NBTAMCGrS		NBTAPart
Reinvested dividends	$	61,169		746		–		–		5,093		7,567		–		178,199
Mortality and expense risk charges (note 3)		(8,885	)	(540	)	(597	)	(119,531	)	(11,677	)	(2,278	)	(4,448	)	(152,561	)
Net investment income (loss)		52,284		206		(597	)	(119,531	)	(6,584	)	5,289		(4,448	)	25,638
Proceeds from mutual fund shares sold		470,582		158,188		117,561		2,597,244		361,596		97,373		484,107		2,980,939
Cost of mutual fund shares sold		(477,009	)	(139,043	)	(115,865	)	(1,164,217	)	(220,860	)	(79,800	)	(397,786	)	(2,121,564	)
Realized gain (loss) on investments		(6,427	)	19,145		1,696		1,433,027		140,736		17,573		86,321		859,375
Change in unrealized gain (loss) on investments		12,993		515		(2,811	)	2,424,218		(6,334	)	(42,678	)	57,288		(1,353,429	)
Net gain (loss) on investments		6,566		19,660		(1,115	)	3,857,245		134,402		(25,105	)	143,609		(494,054	)
Reinvested capital gains		73		–		757		–		–		27,077		–		2,788,543
Net increase (decrease) in contract owners’ equity resulting from operations	$	58,923		19,866		(955	)	3,737,714		127,818		7,261		139,161		2,320,127
Investment activity:		NBTARegS		NBTSocRes		OppBal		OppCapAp		OppBdFd		OppGlSec3		OppGlSec		OppHighInc3
Reinvested dividends	$	1,751		429		343,427		25,388		584,983		98,713		474,725		–
Mortality and expense risk charges (note 3)		(1,132	)	(2,546	)	(82,654	)	(67,670	)	(60,074	)	(45,691	)	(204,699	)	(302	)
Net investment income (loss)		619		(2,117	)	260,773		(42,282	)	524,909		53,022		270,026		(302	)
Proceeds from mutual fund shares sold		228,816		205,146		2,219,469		2,456,759		2,049,550		898,899		6,613,068		2,431
Cost of mutual fund shares sold		(229,107	)	(169,086	)	(2,194,819	)	(1,509,042	)	(1,975,446	)	(714,342	)	(4,000,494	)	(2,511	)
Realized gain (loss) on investments		(291	)	36,060		24,650		947,717		74,104		184,557		2,612,574		(80	)
Change in unrealized gain (loss) on investments		(9,805	)	(5,060	)	(925,301	)	489,293		(188,237	)	(204,740	)	(2,586,681	)	(3,193	)
Net gain (loss) on investments		(10,096	)	31,000		(900,651	)	1,437,010		(114,133	)	(20,183	)	25,893		(3,273	)
Reinvested capital gains		11,358		1,612		1,074,036		–		–		359,391		1,725,651		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,881		30,495		434,158		1,394,728		410,776		392,230		2,021,570		(3,575	)

(Continued)

14

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		OppHighInc		OppMStSCap		OppMSt		OppMidCap		PVTGroInc		PVTIntlEq		PVTVoygr		TRoeBlChip2
Reinvested dividends	$	45,481		4,279		21,148		–		1,506		12,504		–		567
Mortality and expense risk charges (note 3)		(3,667	)	(7,444	)	(10,126	)	(9,076	)	(696	)	(2,769	)	(267	)	(2,417	)
Net investment income (loss)		41,814		(3,165	)	11,022		(9,076	)	810		9,735		(267	)	(1,850	)
Proceeds from mutual fund shares sold		1,077,234		359,316		736,396		586,964		8,962		85,717		19,911		715,098
Cost of mutual fund shares sold		(1,084,172	)	(351,262	)	(558,136	)	(470,669	)	(9,053	)	(65,418	)	(16,488	)	(652,932	)
Realized gain (loss) on investments		(6,938	)	8,054		178,260		116,295		(91	)	20,299		3,423		62,166
Change in unrealized gain (loss) on investments		(38,746	)	(76,840	)	(99,839	)	(10,721	)	(25,028	)	(53,099	)	917		(20,940	)
Net gain (loss) on investments		(45,684	)	(68,786	)	78,421		105,574		(25,119	)	(32,800	)	4,340		41,226
Reinvested capital gains		–		45,630		–		–		17,302		54,130		–		–
Net increase (decrease) in contract owners’ equity resulting from operations	$	(3,870	)	(26,321	)	89,443		96,498		(7,007	)	31,065		4,073		39,376
Investment activity:		TRowEqInc2		TRowLtdTBd2		DrySRGro		VEWrldBd		VEWrldEMkt		VEWrldHAs		VKUCorPlus		VKUEmMkt
Reinvested dividends	$	23,154		9,051		45,684		167,502		54,597		15,105		12,373		184,643
Mortality and expense risk charges (note 3)		(8,475	)	(1,139	)	(56,119	)	(18,953	)	(71,571	)	(79,210	)	(2,365	)	(11,833	)
Net investment income (loss)		14,679		7,912		(10,435	)	148,549		(16,974	)	(64,105	)	10,008		172,810
Proceeds from mutual fund shares sold		541,090		290,955		919,421		681,053		3,411,793		3,542,554		419,036		964,037
Cost of mutual fund shares sold		(484,751	)	(288,816	)	(1,203,279	)	(743,635	)	(1,773,105	)	(1,839,394	)	(416,487	)	(1,005,622	)
Realized gain (loss) on investments		56,339		2,139		(283,858	)	(62,582	)	1,638,688		1,703,160		2,549		(41,585	)
Change in unrealized gain (loss) on investments		(144,478	)	2,506		885,971		154,431		82,871		1,644,501		8,225		(66,085	)
Net gain (loss) on investments		(88,139	)	4,645		602,113		91,849		1,721,559		3,347,661		10,774		(107,670	)
Reinvested capital gains		90,216		–		–		–		2,156,585		1,473,529		–		78,893
Net increase (decrease) in contract owners’ equity resulting from operations	$	16,756		12,557		591,678		240,398		3,861,170		4,757,085		20,782		144,033

(Continued)

15

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2007

Investment activity:		VKUUSRE		WFVDisc		WFVOpp
Reinvested dividends	$	253,725		–		205,981
Mortality and expense risk charges (note 3)		(138,412	)	(51,938	)	(205,408	)
Net investment income (loss)		115,313		(51,938	)	573
Proceeds from mutual fund shares sold		8,314,603		1,310,106		4,906,176
Cost of mutual fund shares sold		(4,375,496	)	(663,611	)	(4,812,965	)
Realized gain (loss) on investments		3,939,107		646,495		93,211
Change in unrealized gain (loss) on investments		(9,669,937	)	1,097,061		(2,882,045	)
Net gain (loss) on investments		(5,730,830	)	1,743,556		(2,788,834	)
Reinvested capital gains		1,981,393		–		4,826,981
Net increase (decrease) in contract owners’ equity resulting from operations	$	(3,634,124	)	1,691,618		2,038,720

See accompanying notes to financial statements.

16

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2007 and 2006

		Total				AIMBValue				AIMCapAp				AIMCapDev
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	10,052,590		8,458,577		(876	)	(340	)	(853	)	(518	)	(2,516	)	(2,227	)
Realized gain (loss) on investments		28,868,776		15,670,805		121,736		34,978		12,610		9,324		24,147		44,552
Change in unrealized gain (loss) on investments		1,175,696		59,883,124		(153,770	)	26,733		4,289		(2,526	)	(31,006	)	(2,722	)
Reinvested capital gains		59,266,158		33,553,421		51,237		55,210		–		–		51,509		6,748
Net increase (decrease) in contract owners’ equity resulting from operations		99,363,220		117,565,927		18,327		116,581		16,046		6,280		42,134		46,351
Equity transactions:
Purchase payments received from contract owners (note 6)		55,497,734		57,002,649		57,807		53,182		2,406		1,925		18,311		20,007
Transfers between funds		–		–		(423,267	)	423,535		291,250		(18,532	)	243,796		113,190
Surrenders (note 6)		(68,359,807	)	(69,702,501	)	(48,933	)	(14,004	)	(1,849	)	(1,854	)	(32,818	)	(3,655	)
Death benefits (note 4)		(5,434,611	)	(5,384,769	)	(2,325	)	(1,660	)	–		–		–		(821	)
Net policy repayments (loans) (note 5)		(4,131,238	)	(3,089,028	)	2,583		(24,667	)	(13,302	)	31		5		(4,123	)
Deductions for surrender charges (note 2d)		(145,897	)	(622,220	)	–		(22	)	–		–		–		(808	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(44,157,865	)	(44,413,062	)	(33,736	)	(30,050	)	(6,562	)	(4,257	)	(19,916	)	(16,711	)
Asset charges (note 3):
MSP contracts		(443,125	)	(424,218	)	(24	)	(19	)	(62	)	(35	)	(191	)	(72	)
LSFP contracts		(477,048	)	(461,922	)	(133	)	(118	)	–		–		(272	)	(231	)
Adjustments to maintain reserves		63,926		956,504		14		(26	)	25		18		27		22
Net equity transactions		(67,587,931	)	(66,138,567	)	(448,014	)	406,151		271,906		(22,704	)	208,942		106,798
Net change in contract owners’ equity		31,775,289		51,427,360		(429,687	)	522,732		287,952		(16,424	)	251,076		153,149
Contract owners’ equity beginning of period		980,827,120		929,399,760		1,324,164		801,432		68,206		84,630		396,749		243,600
Contract owners’ equity end of period	$	1,012,602,409		980,827,120		894,477		1,324,164		356,158		68,206		647,825		396,749
CHANGES IN UNITS:
Beginning units		39,194,736		40,704,624		77,830		53,106		4,562		5,992		21,102		15,036
Units purchased		9,576,655		10,587,187		3,057		32,232		18,196		2,692		14,928		10,145
Units redeemed		(11,003,143	)	(12,097,075	)	(28,863	)	(7,508	)	(1,448	)	(4,122	)	(4,854	)	(4,079	)
Ending units		37,768,248		39,194,736		52,024		77,830		21,310		4,562		31,176		21,102

(Continued)

17

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		AlVGrIncA				AlVSmMdCpA				ACVPBal				ACVPCapAp
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	11,944		9,548		7,003		(2,225	)	75,210		68,582		(113,921	)	(96,111	)
Realized gain (loss) on investments		60,046		35,576		119,287		30,805		96,911		34,165		807,049		330,891
Change in unrealized gain (loss) on investments		(79,613	)	53,118		(219,358	)	46,899		(207,365	)	7,456		5,759,766		1,928,710
Reinvested capital gains		56,897		52,880		111,212		70,543		258,071		343,547		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		49,274		151,122		18,144		146,022		222,827		453,750		6,452,894		2,163,490
Equity transactions:
Purchase payments received from contract owners (note 6)		92,686		115,628		101,090		90,901		247,508		327,424		820,317		765,972
Transfers between funds		(97,308	)	22,114		(164,777	)	63,950		(281,095	)	(442,403	)	1,808,115		(211,697	)
Surrenders (note 6)		(113,037	)	(103,010	)	(54,820	)	(31,726	)	(238,164	)	(394,033	)	(1,226,171	)	(1,198,454	)
Death benefits (note 4)		–		–		–		–		(12,260	)	(12,437	)	(105,352	)	(165,926	)
Net policy repayments (loans) (note 5)		(3,921	)	(13,854	)	(22,625	)	(27,219	)	(11,028	)	(52,335	)	(21,094	)	(94,347	)
Deductions for surrender charges (note 2d)		–		(1,956	)	–		(1,877	)	(433	)	(3,701	)	(983	)	(3,610	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(35,072	)	(35,794	)	(51,287	)	(38,224	)	(233,628	)	(246,231	)	(822,833	)	(767,284	)
Asset charges (note 3):
MSP contracts		(1,045	)	(1,147	)	(515	)	(334	)	(4,305	)	(4,975	)	(7,062	)	(5,771	)
LSFP contracts		(1,796	)	(1,365	)	(319	)	(129	)	(1,120	)	(1,147	)	(2,664	)	(2,500	)
Adjustments to maintain reserves		2		34		2		106		42		822		58,330		126,244
Net equity transactions		(159,491	)	(19,350	)	(193,251	)	55,448		(534,483	)	(829,016	)	500,603		(1,557,373	)
Net change in contract owners’ equity		(110,217	)	131,772		(175,107	)	201,470		(311,656	)	(375,266	)	6,953,497		606,117
Contract owners’ equity beginning 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
Contract owners’ equity end of period	$	952,701		1,062,918		1,048,340		1,223,447		4,707,795		5,019,451		21,511,456		14,557,959
CHANGES IN UNITS:
Beginning units		63,416		64,958		62,084		59,044		225,298		264,940		607,730		720,786
Units purchased		12,276		13,974		9,288		14,297		32,345		27,737		177,481		104,513
Units redeemed		(21,532	)	(15,516	)	(18,934	)	(11,257	)	(56,223	)	(67,379	)	(145,159	)	(217,569	)
Ending units		54,160		63,416		52,438		62,084		201,420		225,298		640,052		607,730

(Continued)

18

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		ACVPIncGr				ACVPInflPro2				ACVPInt				ACVPInt3
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	45,049		44,231		32,661		25,187		12,521		101,478		1,572		11,159
Realized gain (loss) on investments		510,852		255,013		(9,949	)	(8,698	)	1,422,909		854,426		59,952		267,118
Change in unrealized gain (loss) on investments		(556,432	)	243,170		48,315		(8,024	)	148,771		1,225,587		350,687		148,652
Reinvested capital gains		–		–		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		(531	)	542,414		71,027		8,465		1,584,201		2,181,491		412,211		426,929
Equity transactions:
Purchase payments received from contract owners (note 6)		133,766		137,970		35,325		35,285		26,424		10,447		442,168		565,664
Transfers between funds		(409,736	)	(164,490	)	36,554		(107,852	)	(738,490	)	(861,287	)	824,237		(106,353	)
Surrenders (note 6)		(218,369	)	(308,975	)	(52,612	)	(180,674	)	(1,237,535	)	(581,619	)	(352,754	)	(220,922	)
Death benefits (note 4)		(32,341	)	(10,551	)	(3,138	)	(316	)	(59,007	)	(12,907	)	(7,370	)	(872	)
Net policy repayments (loans) (note 5)		(56,271	)	46,341		(11,805	)	(24,236	)	(133,378	)	(124,163	)	179,491		83,718
Deductions for surrender charges (note 2d)		(398	)	(5,700	)	–		(2,081	)	(1,611	)	(7,053	)	(245	)	(1,813	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(137,906	)	(148,138	)	(30,268	)	(38,167	)	(340,495	)	(374,063	)	(123,406	)	(91,911	)
Asset charges (note 3):
MSP contracts		(2,763	)	(2,367	)	(810	)	(873	)	(2,803	)	(2,785	)	(475	)	(731	)
LSFP contracts		(1,023	)	(977	)	(673	)	(474	)	(5,027	)	(5,694	)	(2,018	)	(1,311	)
Adjustments to maintain reserves		21		42		(117	)	160		70		85		5		64
Net equity transactions		(725,020	)	(456,845	)	(27,544	)	(319,228	)	(2,491,852	)	(1,959,039	)	959,633		225,533
Net change in contract owners’ equity		(725,551	)	85,569		43,483		(310,763	)	(907,651	)	222,452		1,371,844		652,462
Contract owners’ equity beginning 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
Contract owners’ equity end of period	$	2,998,223		3,723,774		907,299		863,816		9,299,538		10,207,189		3,578,191		2,206,347
CHANGES IN UNITS:
Beginning units		261,470		297,572		78,218		107,722		455,896		549,068		152,658		133,622
Units purchased		22,872		54,380		35,571		11,699		73,717		88,332		110,858		56,124
Units redeemed		(74,400	)	(90,482	)	(38,703	)	(41,203	)	(157,955	)	(181,504	)	(52,954	)	(37,088	)
Ending units		209,942		261,470		75,086		78,218		371,658		455,896		210,562		152,658

(Continued)

19

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		ACVPMdCpV				ACVPUltra				ACVPVal				ACVPVista1
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	1,360		2,538		(3,189	)	(3,185	)	151,359		104,468		(3,330	)	(260	)
Realized gain (loss) on investments		40,686		20,373		8,692		13,937		635,161		688,599		70,230		719
Change in unrealized gain (loss) on investments		(94,273	)	10,804		110,894		(32,309	)	(2,727,985	)	242,399		86,032		1,061
Reinvested capital gains		13,080		18,160		–		–		1,203,357		1,177,539		–		117
Net increase (decrease) in contract owners’ equity resulting from operations		(39,147	)	51,875		116,397		(21,557	)	(738,108	)	2,213,005		152,932		1,637
Equity transactions:
Purchase payments received from contract owners (note 6)		64,969		31,883		17,833		30,683		576,999		608,706		58,493		2,572
Transfers between funds		550,648		496,403		374,123		(188,618	)	(983,577	)	(140,596	)	1,616,035		10,306
Surrenders (note 6)		(45,347	)	(1,559	)	(24,736	)	(14,930	)	(877,514	)	(902,976	)	(794	)	–
Death benefits (note 4)		(4,306	)	–		–		–		(51,631	)	(8,081	)	–		–
Net policy repayments (loans) (note 5)		(7,193	)	1,333		(15,111	)	(14,299	)	(151,157	)	(66,301	)	(30,428	)	(29	)
Deductions for surrender charges (note 2d)		–		–		–		(61	)	(3,386	)	(6,367	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(45,230	)	(9,282	)	(24,268	)	(22,383	)	(492,229	)	(499,627	)	(26,363	)	(2,566	)
Asset charges (note 3):
MSP contracts		(576	)	(227	)	(335	)	(345	)	(8,495	)	(7,479	)	(187	)	–
LSFP contracts		(215	)	(158	)	(415	)	(602	)	(7,460	)	(8,181	)	(327	)	–
Adjustments to maintain reserves		51		(4	)	(10	)	16		(22	)	1,797		(6	)	31
Net equity transactions		512,801		518,389		327,081		(210,539	)	(1,998,472	)	(1,029,105	)	1,616,423		10,314
Net change in contract owners’ equity		473,654		570,264		443,478		(232,096	)	(2,736,580	)	1,183,900		1,769,355		11,951
Contract owners’ equity beginning of period		673,721		103,457		538,896		770,992		14,674,701		13,490,801		41,012		29,061
Contract owners’ equity end of period	$	1,147,375		673,721		982,374		538,896		11,938,121		14,674,701		1,810,367		41,012
CHANGES IN UNITS:
Beginning units		49,904		9,176		50,294		69,460		569,670		616,380		3,316		2,548
Units purchased		51,251		41,564		37,950		7,963		107,240		145,948		105,829		2,998
Units redeemed		(13,693	)	(836	)	(12,198	)	(27,129	)	(187,720	)	(192,658	)	(4,039	)	(2,230	)
Ending units		87,462		49,904		76,046		50,294		489,190		569,670		105,106		3,316

(Continued)

20

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		CSTGlobSmCp				CSTIntFoc				CSTSmCapGr				DryIPSmCap
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(5,020	)	(6,024	)	41,566		31,381		(63,195	)	(78,172	)	(3,385	)	(4,383	)
Realized gain (loss) on investments		108,670		138,726		652,817		513,060		684,930		996,247		168,213		169,056
Change in unrealized gain (loss) on investments		(126,367	)	(20,240	)	457,108		651,016		(729,126	)	(366,875	)	(260,015	)	45,191
Reinvested capital gains		–		–		–		–		–		–		80,999		43,700
Net increase (decrease) in contract owners’ equity resulting from operations		(22,717	)	112,462		1,151,491		1,195,457		(107,391	)	551,200		(14,188	)	253,564
Equity transactions:
Purchase payments received from contract owners (note 6)		40,676		47,889		317,248		377,303		689,357		775,675		101,584		117,090
Transfers between funds		(77,335	)	(48,464	)	(723,999	)	(150,794	)	(629,296	)	(1,026,283	)	(137,368	)	21,029
Surrenders (note 6)		(154,047	)	(64,785	)	(400,777	)	(482,407	)	(853,637	)	(1,029,079	)	(203,532	)	(189,949	)
Death benefits (note 4)		(15,380	)	(28,137	)	(33,962	)	(57,139	)	(25,797	)	(25,938	)	(6,109	)	–
Net policy repayments (loans) (note 5)		40,474		8,868		(46,279	)	(56,763	)	68,471		(5,522	)	(35,405	)	(5,330	)
Deductions for surrender charges (note 2d)		(105	)	(1,512	)	(352	)	(7,246	)	(630	)	(18,438	)	–		(26	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(32,438	)	(44,982	)	(324,550	)	(328,515	)	(530,735	)	(613,043	)	(76,070	)	(79,874	)
Asset charges (note 3):
MSP contracts		(471	)	(719	)	(4,522	)	(4,257	)	(3,662	)	(3,915	)	(1,925	)	(2,052	)
LSFP contracts		(929	)	(976	)	(6,224	)	(6,344	)	(7,369	)	(9,076	)	(1,922	)	(1,800	)
Adjustments to maintain reserves		47		22		52		172		(92	)	262		51		(58	)
Net equity transactions		(199,508	)	(132,796	)	(1,223,365	)	(715,990	)	(1,293,390	)	(1,955,357	)	(360,696	)	(140,970	)
Net change in contract owners’ equity		(222,225	)	(20,334	)	(71,874	)	479,467		(1,400,781	)	(1,404,157	)	(374,884	)	112,594
Contract owners’ equity beginning of period		937,897		958,231		7,634,180		7,154,713		11,363,068		12,767,225		2,147,852		2,035,258
Contract owners’ equity end of period	$	715,672		937,897		7,562,306		7,634,180		9,962,287		11,363,068		1,772,968		2,147,852
CHANGES IN UNITS:
Beginning units		61,072		67,546		469,340		517,716		653,228		757,296		139,398		150,290
Units purchased		11,044		13,854		95,551		166,651		132,562		172,749		14,762		36,205
Units redeemed		(21,986	)	(20,328	)	(161,879	)	(215,027	)	(195,174	)	(276,817	)	(37,922	)	(47,097	)
Ending units		50,130		61,072		403,012		469,340		590,616		653,228		116,238		139,398

(Continued)

21

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		DryStkIx				DryVApp				DryVDevLd				DryVGroInc
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	847,047		789,532		58,121		48,818		561		(711	)	4,949		3,586
Realized gain (loss) on investments		14,949		(629,731	)	393,679		435,347		1,530		4,376		78,485		1,109
Change in unrealized gain (loss) on investments		2,668,625		10,398,460		(74,888	)	398,055		(63,224	)	(33,937	)	(14,780	)	285,427
Reinvested capital gains		–		–		–		–		37,460		37,304		107,884		–
Net increase (decrease) in contract owners’ equity resulting from operations		3,530,621		10,558,261		376,912		882,220		(23,673	)	7,032		176,538		290,122
Equity transactions:
Purchase payments received from contract owners (note 6)		3,670,007		4,144,765		272,701		312,847		21,945		31,506		123,182		128,783
Transfers between funds		(3,139,761	)	(3,413,229	)	(670,433	)	(325,424	)	(102,081	)	9,961		(77,069	)	5,480
Surrenders (note 6)		(6,154,095	)	(6,390,077	)	(312,989	)	(208,368	)	(47,261	)	(83,602	)	(103,244	)	(208,235	)
Death benefits (note 4)		(412,680	)	(337,394	)	(17,316	)	(3,569	)	–		(122	)	–		(88,276	)
Net policy repayments (loans) (note 5)		213,150		(609,188	)	(1,192	)	(60,634	)	(9,423	)	(5,510	)	(19,680	)	3,442
Deductions for surrender charges (note 2d)		(18,138	)	(52,509	)	(1,254	)	(6,416	)	(432	)	(165	)	(599	)	(3,525	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,229,990	)	(3,403,423	)	(215,276	)	(234,430	)	(17,251	)	(23,256	)	(116,217	)	(119,441	)
Asset charges (note 3):
MSP contracts		(29,838	)	(29,388	)	(1,061	)	(1,107	)	(19	)	(118	)	(1,663	)	(1,590	)
LSFP contracts		(62,431	)	(65,134	)	(6,678	)	(6,453	)	(48	)	(366	)	(3,507	)	(2,824	)
Adjustments to maintain reserves		(572	)	4,280		56		221		(42	)	3		(46	)	95
Net equity transactions		(9,164,348	)	(10,151,297	)	(953,442	)	(533,333	)	(154,612	)	(71,669	)	(198,843	)	(286,091	)
Net change in contract owners’ equity		(5,633,727	)	406,964		(576,530	)	348,887		(178,285	)	(64,637	)	(22,305	)	4,031
Contract owners’ equity beginning of period		76,355,443		75,948,479		6,134,082		5,785,195		373,040		437,677		2,314,371		2,310,340
Contract owners’ equity end of period	$	70,721,716		76,355,443		5,557,552		6,134,082		194,755		373,040		2,292,066		2,314,371
CHANGES IN UNITS:
Beginning units		2,637,338		2,948,454		401,382		420,248		24,156		29,256		155,594		177,166
Units purchased		462,178		533,365		49,115		117,685		3,339		6,692		42,891		24,311
Units redeemed		(769,940	)	(844,481	)	(106,413	)	(136,551	)	(13,221	)	(11,792	)	(57,679	)	(45,883	)
Ending units		2,329,576		2,637,338		344,084		401,382		14,274		24,156		140,806		155,594

(Continued)

22

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FedAmLead				FedCapAp				FedMrkOp			FedQualBd
Investment activity:		2007		2006		2007		2006		2007		2006	2007		2006
Net investment income (loss)	$	1,857		1,651		(8	)	46		4		–	56,135		37,075
Realized gain (loss) on investments		(3,047	)	(74	)	1,720		5,377		(57	)	–	(23,235	)	(24,945	)
Change in unrealized gain (loss) on investments		(37,768	)	3,883		(1,071	)	(973	)	27		–	25,413		38,596
Reinvested capital gains		21,161		22,481		–		–		–		–	–		–
Net increase (decrease) in contract owners’ equity resulting from operations		(17,797	)	27,941		641		4,450		(26	)	–	58,313		50,726
Equity transactions:
Purchase payments received from contract owners (note 6)		5,363		4,941		562		2,133		140		–	50,537		78,133
Transfers between funds		(49,599	)	13,529		4,043		(17,732	)	3,406		–	(90,971	)	205,525
Surrenders (note 6)		–		(17,795	)	(882	)	(1,014	)	–		–	(31,850	)	(57,324	)
Death benefits (note 4)		–		–		–		–		–		–	(13,509	)	(863	)
Net policy repayments (loans) (note 5)		–		–		870		(2,459	)	–		–	(21,626	)	(13,410	)
Deductions for surrender charges (note 2d)		–		–		–		–		–		–	(269	)	(261	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(4,408	)	(4,261	)	(386	)	(1,329	)	(154	)	–	(60,951	)	(69,013	)
Asset charges (note 3):
MSP contracts		–		–		–		–		–		–	(1,680	)	(1,682	)
LSFP contracts		(43	)	(47	)	–		–		–		–	(412	)	(379	)
Adjustments to maintain reserves		(45	)	29		(8	)	(2	)	21		–	37		3
Net equity transactions		(48,732	)	(3,604	)	4,199		(20,403	)	3,413		–	(170,694	)	140,729
Net change in contract owners’ equity		(66,529	)	24,337		4,840		(15,953	)	3,387		–	(112,381	)	191,455
Contract owners’ equity beginning of period		202,845		178,508		9,499		25,452		–		–	1,360,658		1,169,203
Contract owners’ equity end of period	$	136,316		202,845		14,339		9,499		3,387		–	1,248,277		1,360,658
CHANGES IN UNITS:
Beginning units		12,188		12,490		638		1,960		–		–	113,684		100,922
Units purchased		434		3,461		325		458		353		–	14,666		47,356
Units redeemed		(3,494	)	(3,763	)	(83	)	(1,780	)	(19	)	–	(28,798	)	(34,594	)
Ending units		9,128		12,188		880		638		334		–	99,552		113,684

(Continued)

23

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FidVIPEI				FidVIPGr				FidVIPHI				FidVIPHIR
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	927,168		2,018,674		172,894		(210,949	)	1,208,463		1,380,815		130,249		–
Realized gain (loss) on investments		1,361,670		(376,266	)	(937,536	)	(3,385,408	)	(179,956	)	(302,665	)	(4,444	)	–
Change in unrealized gain (loss) on investments		(7,496,224	)	2,830,737		20,372,292		8,485,090		(589,939	)	869,670		(133,142	)	–
Reinvested capital gains		6,185,875		9,044,526		75,097		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		978,489		13,517,671		19,682,747		4,888,733		438,568		1,947,820		(7,337	)	–
Equity transactions:
Purchase payments received from contract owners (note 6)		3,345,212		3,692,252		5,096,379		5,488,181		461,252		1,001,448		615,225		–
Transfers between funds		(835,153	)	(1,100,538	)	(2,056,318	)	(5,811,691	)	(2,976,142	)	780,432		1,026,834		–
Surrenders (note 6)		(4,740,013	)	(6,003,272	)	(5,366,336	)	(5,709,362	)	(1,034,168	)	(1,783,680	)	(184,653	)	–
Death benefits (note 4)		(688,300	)	(613,030	)	(434,382	)	(286,030	)	(303,082	)	(190,989	)	(2,404	)	–
Net policy repayments (loans) (note 5)		(363,676	)	(202,336	)	338,138		(585,121	)	(172,479	)	15,180		242,086		–
Deductions for surrender charges (note 2d)		(8,911	)	(37,613	)	(13,222	)	(41,734	)	(657	)	(15,389	)	(19	)	–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,367,164	)	(3,388,475	)	(4,194,506	)	(4,323,254	)	(785,072	)	(914,286	)	(77,612	)	–
Asset charges (note 3):
MSP contracts		(36,311	)	(36,652	)	(22,609	)	(21,734	)	(10,762	)	(12,781	)	(369	)	–
LSFP contracts		(28,153	)	(29,239	)	(28,479	)	(28,131	)	(8,257	)	(9,012	)	–		–
Adjustments to maintain reserves		(215	)	98,232		(5,751	)	294,974		(16	)	14,015		482		–
Net equity transactions		(6,722,684	)	(7,620,671	)	(6,687,086	)	(11,023,902	)	(4,829,383	)	(1,115,062	)	1,619,570		–
Net change in contract owners’ equity		(5,744,195	)	5,897,000		12,995,661		(6,135,169	)	(4,390,815	)	832,758		1,612,233		–
Contract owners’ equity beginning of period		79,366,129		73,469,129		78,764,241		84,899,410		19,958,228		19,125,470		–		–
Contract owners’ equity end of period	$	73,621,934		79,366,129		91,759,902		78,764,241		15,567,413		19,958,228		1,612,233		–
CHANGES IN UNITS:
Beginning units		1,852,320		2,082,710		2,405,354		2,764,316		819,864		865,500		–		–
Units purchased		217,529		340,139		331,094		423,537		55,028		186,842		178,928		–
Units redeemed		(399,363	)	(570,529	)	(506,886	)	(782,499	)	(221,922	)	(232,478	)	(15,348	)	–
Ending units		1,670,486		1,852,320		2,229,562		2,405,354		652,970		819,864		163,580		–

(Continued)

24

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FidVIPOv				FidVIPOvSR				FidVIPAM				FidVIPCon
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	476,743		51,409		151,223		8,701		1,126,076		434,934		255,793		448,681
Realized gain (loss) on investments		1,598,468		1,488,094		323,040		326,549		(148,700	)	(342,324	)	2,101,789		1,897,820
Change in unrealized gain (loss) on investments		(557,205	)	1,075,141		(23,209	)	353,098		1,290,334		1,259,086		(9,286,236	)	(669,773	)
Reinvested capital gains		1,185,300		106,712		366,243		24,549		573,845		–		18,328,735		5,670,529
Net increase (decrease) in contract owners’ equity resulting from operations		2,703,306		2,721,356		817,297		712,897		2,841,555		1,351,696		11,400,081		7,347,257
Equity transactions:
Purchase payments received from contract owners (note 6)		(4,110	)	98,138		863,147		945,685		985,595		1,057,356		3,016,116		3,311,632
Transfers between funds		(880,656	)	(560,429	)	(124,894	)	1,375,984		(594,319	)	(1,314,025	)	(1,839,315	)	(287,965	)
Surrenders (note 6)		(1,020,631	)	(1,268,080	)	(603,929	)	(372,853	)	(1,330,995	)	(1,186,526	)	(3,919,910	)	(3,678,724	)
Death benefits (note 4)		(55,402	)	(58,159	)	(5,818	)	(2,678	)	(381,570	)	(219,592	)	(201,440	)	(161,026	)
Net policy repayments (loans) (note 5)		(176,753	)	(316,052	)	258,317		101,435		110,306		129,784		(426,311	)	(1,201,916	)
Deductions for surrender charges (note 2d)		(34	)	(12,157	)	(60	)	(752	)	(672	)	(4,100	)	(15,133	)	(43,786	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(520,895	)	(578,144	)	(314,836	)	(261,397	)	(854,572	)	(912,028	)	(2,679,960	)	(2,746,468	)
Asset charges (note 3):
MSP contracts		(6,114	)	(5,967	)	(985	)	(431	)	(6,246	)	(6,405	)	(28,893	)	(27,697	)
LSFP contracts		(9,752	)	(9,916	)	(3,861	)	(2,851	)	(3,966	)	(4,762	)	(37,323	)	(37,269	)
Adjustments to maintain reserves		(1,184	)	21,747		(8	)	65		(22	)	14,727		303		2,056
Net equity transactions		(2,675,531	)	(2,689,019	)	67,073		1,782,207		(2,076,461	)	(2,445,571	)	(6,131,866	)	(4,871,163	)
Net change in contract owners’ equity		27,775		32,337		884,370		2,495,104		765,094		(1,093,875	)	5,268,215		2,476,094
Contract owners’ equity beginning of period		17,276,378		17,244,041		5,158,362		2,663,258		20,287,358		21,381,233		70,901,911		68,425,817
Contract owners’ equity end of period	$	17,304,153		17,276,378		6,042,732		5,158,362		21,052,452		20,287,358		76,170,126		70,901,911
CHANGES IN UNITS:
Beginning units		643,078		745,818		353,120		213,864		809,630		915,956		2,222,974		2,281,934
Units purchased		32,409		87,006		104,148		188,205		81,680		74,849		391,794		664,564
Units redeemed		(126,217	)	(189,746	)	(102,850	)	(48,949	)	(168,184	)	(181,175	)	(572,424	)	(723,524	)
Ending units		549,270		643,078		354,418		353,120		723,126		809,630		2,042,344		2,222,974

(Continued)

25

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FidVIPIGBdS				FidVIPGrOp				FidVIPMCapS				FidVIPVaIS
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	128,235		82,031		(26,879	)	1,943		14,529		(32,649	)	5,255		(2,137	)
Realized gain (loss) on investments		1,955		(17,203	)	342,984		114,590		397,690		545,254		112,161		(69,573	)
Change in unrealized gain (loss) on investments		607		53,613		569,338		67,686		90,453		(603,741	)	(237,678	)	102,652
Reinvested capital gains		–		6,072		–		–		879,087		1,019,980		196,544		183,028
Net increase (decrease) in contract owners’ equity resulting from operations		130,797		124,513		885,443		184,219		1,381,759		928,844		76,282		213,970
Equity transactions:
Purchase payments received from contract owners (note 6)		178,197		214,010		240,727		262,293		550,803		616,546		61,110		126,297
Transfers between funds		182,392		740,901		(105,380	)	(118,787	)	(92,253	)	1,052,459		(216,363	)	396,071
Surrenders (note 6)		(65,858	)	(279,429	)	(236,382	)	(343,652	)	(372,320	)	(596,579	)	(82,877	)	(178,270	)
Death benefits (note 4)		–		–		–		(9,295	)	(3,026	)	(36,060	)	(1,159	)	–
Net policy repayments (loans) (note 5)		(14,024	)	2,999		(67,773	)	12,016		(104,821	)	(85,500	)	(22,592	)	(11,845	)
Deductions for surrender charges (note 2d)		–		(3,097	)	(1,059	)	(7,002	)	(1,561	)	(2,905	)	–		(3,744	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(232,528	)	(150,448	)	(183,430	)	(180,221	)	(384,224	)	(362,880	)	(54,693	)	(51,174	)
Asset charges (note 3):
MSP contracts		(1,461	)	(1,205	)	(1,480	)	(1,332	)	(3,898	)	(3,391	)	(770	)	(688	)
LSFP contracts		(1,338	)	(1,284	)	(3,953	)	(3,481	)	(2,782	)	(2,580	)	(2,246	)	(1,036	)
Adjustments to maintain reserves		(24	)	49		44		(6	)	(329	)	(44	)	7		52
Net equity transactions		45,356		522,496		(358,686	)	(389,467	)	(414,411	)	579,066		(319,583	)	275,663
Net change in contract owners’ equity		176,153		647,009		526,757		(205,248	)	967,348		1,507,910		(243,301	)	489,633
Contract owners’ equity beginning of period		3,380,377		2,733,368		3,961,258		4,166,506		9,476,965		7,969,055		1,664,640		1,175,007
Contract owners’ equity end of period	$	3,556,530		3,380,377		4,488,015		3,961,258		10,444,313		9,476,965		1,421,339		1,664,640
CHANGES IN UNITS:
Beginning units		303,418		255,724		334,824		369,344		413,956		390,220		106,224		86,996
Units purchased		46,008		210,778		78,231		55,136		90,946		147,940		11,256		56,916
Units redeemed		(41,812	)	(163,084	)	(104,219	)	(89,656	)	(108,544	)	(124,204	)	(31,522	)	(37,688	)
Ending units		307,614		303,418		308,836		334,824		396,358		413,956		85,958		106,224

(Continued)

26

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FidVIPEnergyS2				FidVIPFree10S				FidVIPFree20S				FidVIPFree30S
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(20,760	)	3,871		22,444		3,311		12,341		3,426		10,838		4,682
Realized gain (loss) on investments		178,169		118,582		9,267		2,880		38,688		2,207		10,950		356
Change in unrealized gain (loss) on investments		1,369,655		(346,483	)	(22,637	)	3,962		(17,734	)	23,797		(1,752	)	3,034
Reinvested capital gains		287,074		520,211		20,602		984		21,697		3,207		23,865		3,726
Net increase (decrease) in contract owners’ equity resulting from operations		1,814,138		296,181		29,676		11,137		54,992		32,637		43,901		11,798
Equity transactions:
Purchase payments received from contract owners (note 6)		236,470		309,550		25,341		4,333		23,421		4,049		21,416		9,134
Transfers between funds		1,516,011		1,941,205		753,886		176,255		397,528		69,862		323,165		306,056
Surrenders (note 6)		(149,865	)	(234,415	)	(2,014	)	(2,719	)	(30,647	)	–		(6,361	)	–
Death benefits (note 4)		(55,715	)	(1,509	)	–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(64,753	)	(30,615	)	(3,356	)	(14,989	)	1,489		(244	)	(35,136	)	(17	)
Deductions for surrender charges (note 2d)		–		(1,539	)	–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(189,056	)	(144,256	)	(10,241	)	(4,612	)	(23,137	)	(9,774	)	(19,998	)	(4,493	)
Asset charges (note 3):
MSP contracts		(3,537	)	(1,954	)	(936	)	(385	)	(1,434	)	(586	)	–		–
LSFP contracts		(1,167	)	(626	)	–		–		–		–		–		–
Adjustments to maintain reserves		140		(8	)	4		(9	)	(2	)	20		40		4
Net equity transactions		1,288,528		1,835,833		762,684		157,874		367,218		63,327		283,126		310,684
Net change in contract owners’ equity		3,102,666		2,132,014		792,360		169,011		422,210		95,964		327,027		322,482
Contract owners’ equity beginning of period		3,978,811		1,846,797		232,838		63,827		360,829		264,865		365,511		43,029
Contract owners’ equity end of period	$	7,081,477		3,978,811		1,025,198		232,838		783,039		360,829		692,538		365,511
CHANGES IN UNITS:
Beginning units		254,880		137,232		19,770		5,924		29,288		23,914		28,804		3,818
Units purchased		123,855		139,698		72,628		15,820		42,255		7,475		26,460		25,371
Units redeemed		(65,871	)	(22,050	)	(11,814	)	(1,974	)	(13,639	)	(2,101	)	(5,926	)	(385	)
Ending units		312,864		254,880		80,584		19,770		57,904		29,288		49,338		28,804

(Continued)

27

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FrVIPDevMrk3				FrVIPForSec				FrVIPForSec3				FrVIPGlInc3
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	38,311		7,050		17,453		10,254		33,983		10,356		22,019		3,397
Realized gain (loss) on investments		148,740		94,811		156,031		130,073		62,901		45,063		15,598		6,953
Change in unrealized gain (loss) on investments		177,835		160,456		(74,954	)	90,707		97,283		154,011		52,885		11,113
Reinvested capital gains		168,029		–		47,573		–		95,906		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		532,915		262,317		146,103		231,034		290,073		209,430		90,502		21,463
Equity transactions:
Purchase payments received from contract owners (note 6)		104,622		122,854		(188	)	4		142,842		144,772		32,923		6,095
Transfers between funds		939,170		742,462		(370,182	)	(191,796	)	843,210		643,714		1,255,440		318,410
Surrenders (note 6)		(101,367	)	(43,074	)	(30,370	)	(229,919	)	(73,968	)	(28,386	)	(1,941	)	(12,879	)
Death benefits (note 4)		–		–		(5,314	)	–		(1,414	)	–		–		–
Net policy repayments (loans) (note 5)		(19,847	)	(15,918	)	(10,707	)	(37,025	)	(27,364	)	(15,744	)	(4,789	)	(3,917	)
Deductions for surrender charges (note 2d)		(679	)	(362	)	(45	)	(1,941	)	(120	)	(22	)	–		(379	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(75,532	)	(45,872	)	(28,623	)	(35,042	)	(63,688	)	(38,367	)	(19,616	)	(5,582	)
Asset charges (note 3):
MSP contracts		(1,810	)	(1,169	)	(634	)	(558	)	(2,771	)	(2,294	)	(352	)	(45	)
LSFP contracts		(232	)	(162	)	(499	)	(695	)	(780	)	(613	)	(293	)	(44	)
Adjustments to maintain reserves		61		45		(10	)	56		57		(23	)	16		29
Net equity transactions		844,386		758,804		(446,572	)	(496,916	)	816,004		703,037		1,261,388		301,688
Net change in contract owners’ equity		1,377,301		1,021,121		(300,469	)	(265,882	)	1,106,077		912,467		1,351,890		323,151
Contract owners’ equity beginning of period		1,662,765		641,644		1,123,402		1,389,284		1,608,540		696,073		385,096		61,945
Contract owners’ equity end of period	$	3,040,066		1,662,765		822,933		1,123,402		2,714,617		1,608,540		1,736,986		385,096
CHANGES IN UNITS:
Beginning units		102,256		50,268		54,046		81,054		118,236		61,834		34,906		6,292
Units purchased		65,822		61,197		297		5,759		78,871		64,406		121,204		31,310
Units redeemed		(22,126	)	(9,209	)	(20,049	)	(32,767	)	(23,507	)	(8,004	)	(14,012	)	(2,696	)
Ending units		145,952		102,256		34,294		54,046		173,600		118,236		142,098		34,906

(Continued)

28

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		FrVIPIncSec2				FrVIPRisDiv				FrVIPSCapV1				JAspBal
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	23,825		(389	)	87,922		23,225		11,010		6,532		3,661		3,604
Realized gain (loss) on investments		13,833		1,010		236,056		79,445		121,458		252,240		42,047		3,914
Change in unrealized gain (loss) on investments		(35,376	)	15,388		(509,454	)	452,466		(487,268	)	116,649		(18,385	)	16,786
Reinvested capital gains		5,256		–		63,951		18,463		244,614		116,222		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		7,538		16,009		(121,525	)	573,599		(110,186	)	491,643		27,323		24,304
Equity transactions:
Purchase payments received from contract owners (note 6)		70,039		26,918		272,661		288,749		224,756		220,474		7,970		14,264
Transfers between funds		952,227		288,860		(163,233	)	797,123		(173,214	)	167,582		(35,563	)	27,506
Surrenders (note 6)		(43,889	)	–		(172,228	)	(273,861	)	(145,104	)	(304,775	)	–		(140	)
Death benefits (note 4)		–		–		(46,742	)	(1,686	)	–		(4,464	)	–		–
Net policy repayments (loans) (note 5)		(13,203	)	(801	)	(40,458	)	(39,417	)	(25,660	)	(4,647	)	(1,557	)	(6,380	)
Deductions for surrender charges (note 2d)		–		–		(574	)	(1,234	)	(680	)	(871	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(34,928	)	(2,947	)	(143,395	)	(138,979	)	(110,151	)	(109,416	)	(8,193	)	(9,207	)
Asset charges (note 3):
MSP contracts		(1,146	)	(190	)	(1,073	)	(900	)	(455	)	(660	)	(272	)	(603	)
LSFP contracts		–		–		(2,169	)	(1,807	)	(826	)	(880	)	–		–
Adjustments to maintain reserves		(19	)	43		(3	)	236		(58	)	171		50		19
Net equity transactions		929,081		311,883		(297,214	)	628,224		(231,392	)	(37,486	)	(37,565	)	25,459
Net change in contract owners’ equity		936,619		327,892		(418,739	)	1,201,823		(341,578	)	454,157		(10,242	)	49,763
Contract owners’ equity beginning of period		327,892		–		4,472,362		3,270,539		3,471,005		3,016,848		272,027		222,264
Contract owners’ equity end of period	$	1,264,511		327,892		4,053,623		4,472,362		3,129,427		3,471,005		261,785		272,027
CHANGES IN UNITS:
Beginning units		29,332		–		274,062		234,296		167,288		170,032		19,476		17,536
Units purchased		93,663		29,694		63,863		88,447		23,689		69,419		4,527		8,882
Units redeemed		(13,443	)	(362	)	(82,603	)	(48,681	)	(36,163	)	(72,163	)	(6,863	)	(6,942	)
Ending units		109,552		29,332		255,322		274,062		154,814		167,288		17,140		19,476

(Continued)

29

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		JAspForty				JAspGlTechS				JAspRMgCore				JAspIntGroS2
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(12,099	)	(12,074	)	(2,073	)	(6,855	)	(393	)	(955	)	(3,985	)	20,414
Realized gain (loss) on investments		439,151		216,183		115,877		166,660		8,842		(10,542	)	548,537		(1,079	)
Change in unrealized gain (loss) on investments		540,465		(7,039	)	112,471		(79,000	)	4,969		19,487		655,312		342,478
Reinvested capital gains		–		–		–		–		1,665		14,511		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		967,517		197,070		226,275		80,805		15,083		22,501		1,199,864		361,813
Equity transactions:
Purchase payments received from contract owners (note 6)		157,602		144,539		83,566		86,368		17,395		16,211		324,636		132,126
Transfers between funds		1,024,588		(125,033	)	117,012		(128,569	)	(45,858	)	(66,989	)	2,261,046		2,436,285
Surrenders (note 6)		(154,881	)	(250,901	)	(75,283	)	(90,510	)	–		(13,972	)	(99,526	)	(45,650	)
Death benefits (note 4)		(16,240	)	(16,125	)	(9,228	)	(444	)	–		–		(18,717	)	–
Net policy repayments (loans) (note 5)		(59,764	)	(10,918	)	23,631		402		(19,138	)	1,236		(78,857	)	45,949
Deductions for surrender charges (note 2d)		(406	)	(1,318	)	(517	)	(1,203	)	–		(141	)	–		(848	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(123,844	)	(110,682	)	(49,328	)	(56,014	)	(14,732	)	(12,706	)	(185,825	)	(31,532	)
Asset charges (note 3):
MSP contracts		(1,083	)	(2,054	)	(573	)	(668	)	(93	)	(344	)	(2,178	)	(381	)
LSFP contracts		(2,052	)	(1,212	)	(1,411	)	(1,094	)	(109	)	–		–		–
Adjustments to maintain reserves		52		208		15		56		(20	)	20		11		127
Net equity transactions		823,972		(373,496	)	87,884		(191,676	)	(62,555	)	(76,685	)	2,200,590		2,536,076
Net change in contract owners’ equity		1,791,489		(176,426	)	314,159		(110,871	)	(47,472	)	(54,184	)	3,400,454		2,897,889
Contract owners’ equity beginning of period		2,487,380		2,663,806		1,072,703		1,183,574		197,773		251,957		2,897,889		–
Contract owners’ equity end of period	$	4,278,869		2,487,380		1,386,862		1,072,703		150,301		197,773		6,298,343		2,897,889
CHANGES IN UNITS:
Beginning units		285,306		331,492		249,722		296,802		11,346		16,002		250,138		–
Units purchased		180,836		69,327		82,861		70,064		2,233		4,554		254,072		254,903
Units redeemed		(108,068	)	(115,513	)	(67,141	)	(117,144	)	(5,407	)	(9,210	)	(77,558	)	(4,765	)
Ending units		358,074		285,306		265,442		249,722		8,172		11,346		426,652		250,138

(Continued)

30

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		JAspIntGroS				LBTShrtDBd				MFSInvGrSt				MFSValue
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(9,182	)	58,384		79,945		97,569		(658	)	(1,862	)	4,523		1,237
Realized gain (loss) on investments		1,313,259		987,377		(40,669	)	(50,801	)	18,026		12,601		103,368		11,064
Change in unrealized gain (loss) on investments		(135,689	)	536,030		120,290		91,438		9,766		10,130		(52,992	)	82,597
Reinvested capital gains		–		–		–		–		–		–		19,114		12,250
Net increase (decrease) in contract owners’ equity resulting from operations		1,168,388		1,581,791		159,566		138,206		27,134		20,869		74,013		107,148
Equity transactions:
Purchase payments received from contract owners (note 6)		808,580		233,735		141,453		154,573		17,082		22,125		65,786		84,841
Transfers between funds		(994,215	)	1,317,534		135,383		(59,355	)	(41,308	)	(20,929	)	378,505		451,701
Surrenders (note 6)		(1,058,520	)	(341,870	)	(325,168	)	(357,449	)	(40,051	)	(11,057	)	(47,779	)	(30,642	)
Death benefits (note 4)		(16,090	)	(188,919	)	(314	)	(36,090	)	–		(2,317	)	(6,837	)	–
Net policy repayments (loans) (note 5)		(95,616	)	(103,277	)	(85,061	)	103,738		6,014		(19,306	)	(34,173	)	(3,840	)
Deductions for surrender charges (note 2d)		672		(2,064	)	(147	)	(1,997	)	–		(33	)	–		(264	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(155,820	)	(159,849	)	(137,326	)	(152,278	)	(13,459	)	(16,589	)	(33,930	)	(16,853	)
Asset charges (note 3):
MSP contracts		(988	)	(1,589	)	(5,401	)	(5,450	)	–		–		(336	)	(135	)
LSFP contracts		(6,331	)	(3,471	)	(1,565	)	(1,518	)	(85	)	(64	)	(934	)	(396	)
Adjustments to maintain reserves		108		241		51		4,038		53		(32	)	38		5
Net equity transactions		(1,518,220	)	750,471		(278,095	)	(351,788	)	(71,754	)	(48,202	)	320,340		484,417
Net change in contract owners’ equity		(349,832	)	2,332,262		(118,529	)	(213,582	)	(44,620	)	(27,333	)	394,353		591,565
Contract owners’ equity beginning of period		5,228,733		2,896,471		3,775,287		3,988,869		284,511		311,844		941,512		349,947
Contract owners’ equity end of period	$	4,878,901		5,228,733		3,656,758		3,775,287		239,891		284,511		1,335,865		941,512
CHANGES IN UNITS:
Beginning units		380,508		312,446		215,938		235,258		20,452		23,984		52,354		23,408
Units purchased		22,947		166,137		35,224		49,327		3,803		3,448		35,803		32,298
Units redeemed		(123,777	)	(98,075	)	(57,104	)	(68,647	)	(8,727	)	(6,980	)	(19,225	)	(3,352	)
Ending units		279,678		380,508		194,058		215,938		15,528		20,452		68,932		52,354

(Continued)

31

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITAstAll2				NVITBnd2				NVITGlobGr2				NVITGroInc2
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	14,440		5,724		48,303		(622	)	26,693		(540	)	3,988		–
Realized gain (loss) on investments		9,010		585		8,655		12		30,261		220		37		–
Change in unrealized gain (loss) on investments		(652	)	7,473		(41,696	)	10,263		90,156		31,132		(10,159	)	–
Reinvested capital gains		372		–		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		23,170		13,782		15,262		9,653		147,110		30,812		(6,134	)	–
Equity transactions:
Purchase payments received from contract owners (note 6)		37,287		6,127		33,756		4,728		80,742		11,294		35,251		–
Transfers between funds		621,660		357,636		517,779		345,842		529,333		854,107		332,866		–
Surrenders (note 6)		(31,288	)	–		(6,547	)	–		(100,578	)	–		–		–
Death benefits (note 4)		–		–		–		–		–		–		–		–
Net policy repayments (loans) (note 5)		(10,199	)	325		449		–		(19,513	)	(664	)	(1,963	)	–
Deductions for surrender charges (note 2d)		–		–		–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(25,291	)	(2,872	)	(14,433	)	(1,664	)	(37,838	)	(5,050	)	(1,218	)	–
Asset charges (note 3):
MSP contracts		(1,518	)	(255	)	(204	)	–		(713	)	(65	)	–		–
LSFP contracts		–		–		–		–		–		–		–		–
Adjustments to maintain reserves		37		40		4		41		(3	)	73		25		–
Net equity transactions		590,688		361,001		530,804		348,947		451,430		859,695		364,961		–
Net change in contract owners’ equity		613,858		374,783		546,066		358,600		598,540		890,507		358,827		–
Contract owners’ equity beginning of period		374,783		–		358,600		–		890,507		–		–		–
Contract owners’ equity end of period	$	988,641		374,783		904,666		358,600		1,489,047		890,507		358,827		–
CHANGES IN UNITS:
Beginning units		35,632		–		34,162		–		82,430		–		–		–
Units purchased		64,078		36,101		56,189		34,323		52,897		83,024		36,717		–
Units redeemed		(10,804	)	(469	)	(6,311	)	(161	)	(14,191	)	(594	)	(319	)	–
Ending units		88,906		35,632		84,040		34,162		121,136		82,430		36,398		–

(Continued)

32

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITGrowth2				NVITFHiInc				NVITFHiInc3				NVITEmMrkts
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	1,112		2,798		15,779		20,206		47,409		18,929		(224	)	404
Realized gain (loss) on investments		30,464		(2,426	)	249		2		(6,384	)	(6,648	)	249,154		347,440
Change in unrealized gain (loss) on investments		67,722		24,372		(9,291	)	8,965		(35,536	)	7,599		491,434		331,985
Reinvested capital gains		352		–		–		–		–		–		301,255		25,537
Net increase (decrease) in contract owners’ equity resulting from operations		99,650		24,744		6,737		29,173		5,489		19,880		1,041,619		705,366
Equity transactions:
Purchase payments received from contract owners (note 6)		87,108		17,581		(28	)	(20	)	102,999		113,350		198		138,829
Transfers between funds		870,992		644,667		(43,864	)	(84,978	)	301,379		44,100		434,873		(501,480	)
Surrenders (note 6)		(25,662	)	(32,491	)	(7,418	)	(14,910	)	(81,540	)	(14,896	)	(44,565	)	(208,079	)
Death benefits (note 4)		–		–		–		–		–		–		–		(43,065	)
Net policy repayments (loans) (note 5)		(32,080	)	(30	)	(1,235	)	(4,206	)	58,637		(2,496	)	(71,267	)	(26,268	)
Deductions for surrender charges (note 2d)		–		(918	)	–		–		(10	)	–		–		(822	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(44,057	)	(6,959	)	(8,755	)	(13,402	)	(30,077	)	(17,251	)	(72,679	)	(77,463	)
Asset charges (note 3):
MSP contracts		(198	)	(50	)	(548	)	(765	)	(478	)	(280	)	–		(218	)
LSFP contracts		–		–		(175	)	(179	)	(126	)	(99	)	(1,217	)	(1,003	)
Adjustments to maintain reserves		15		39		(22	)	45		(15	)	33		94		540
Net equity transactions		856,118		621,839		(62,045	)	(118,415	)	350,769		122,461		245,437		(719,029	)
Net change in contract owners’ equity		955,768		646,583		(55,308	)	(89,242	)	356,258		142,341		1,287,056		(13,663	)
Contract owners’ equity beginning of period		646,583		–		257,084		346,326		306,431		164,090		2,317,172		2,330,835
Contract owners’ equity end of period	$	1,602,351		646,583		201,776		257,084		662,689		306,431		3,604,228		2,317,172
CHANGES IN UNITS:
Beginning units		62,626		–		18,872		28,010		26,516		15,630		95,972		130,590
Units purchased		87,199		66,974		1,232		1,698		37,221		17,552		23,982		11,202
Units redeemed		(10,405	)	(4,348	)	(5,750	)	(10,836	)	(7,929	)	(6,666	)	(16,148	)	(45,820	)
Ending units		139,420		62,626		14,354		18,872		55,808		26,516		103,806		95,972

(Continued)

33

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITEmMrkts3				NVITGlUtl				NVITIntGro				NVITGlFin
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	11,173		5,474		42,295		34,641		(8,268	)	1,040		24,514		9,363
Realized gain (loss) on investments		493,271		211,906		287,351		(14,217	)	440,692		169,443		5,349		23,758
Change in unrealized gain (loss) on investments		741,466		421,457		(356,418	)	390,133		(153,096	)	227,862		(173,066	)	5,779
Reinvested capital gains		488,860		30,546		421,869		132,217		203,237		1,912		127,951		102,103
Net increase (decrease) in contract owners’ equity resulting from operations		1,734,770		669,383		395,097		542,774		482,565		400,257		(15,252	)	141,003
Equity transactions:
Purchase payments received from contract owners (note 6)		413,503		296,509		91,867		95,595		220,200		219,677		30,637		38,692
Transfers between funds		3,408,357		647,225		(466,133	)	530,402		216,474		954,881		(112,089	)	112,365
Surrenders (note 6)		(239,734	)	(119,029	)	(147,504	)	(25,253	)	(98,278	)	(59,366	)	(13,454	)	(9,544	)
Death benefits (note 4)		–		–		(4,445	)	(48,745	)	(4,622	)	(4,036	)	–		–
Net policy repayments (loans) (note 5)		(47,217	)	(7,648	)	48,201		46,899		(52,343	)	(10,594	)	21,838		(87,224	)
Deductions for surrender charges (note 2d)		–		(383	)	–		–		–		(128	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(172,952	)	(96,841	)	(80,736	)	(65,591	)	(68,672	)	(38,764	)	(32,683	)	(29,186	)
Asset charges (note 3):
MSP contracts		(2,942	)	(1,288	)	(836	)	(590	)	(404	)	(772	)	(210	)	(77	)
LSFP contracts		(3,120	)	(1,883	)	(1,643	)	(906	)	(1,112	)	(675	)	(737	)	(110	)
Adjustments to maintain reserves		403		90		127		(8	)	43		(4	)	(62	)	138
Net equity transactions		3,356,298		716,752		(561,102	)	531,803		211,286		1,060,219		(106,760	)	25,054
Net change in contract owners’ equity		5,091,068		1,386,135		(166,005	)	1,074,577		693,851		1,460,476		(122,012	)	166,057
Contract owners’ equity beginning of period		2,835,133		1,448,998		2,478,457		1,403,880		2,173,239		712,763		904,679		738,622
Contract owners’ equity end of period	$	7,926,201		2,835,133		2,312,452		2,478,457		2,867,090		2,173,239		782,667		904,679
CHANGES IN UNITS:
Beginning units		157,004		109,046		125,056		96,608		169,108		73,566		47,062		46,080
Units purchased		173,561		62,414		24,711		51,214		90,476		105,418		12,149		15,512
Units redeemed		(27,849	)	(14,456	)	(52,883	)	(22,766	)	(83,228	)	(9,876	)	(18,071	)	(14,530	)
Ending units		302,716		157,004		96,884		125,056		176,356		169,108		41,140		47,062

(Continued)

34

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITGlHlth				NVITGlHlth3				NVITGlTech				NVITGlTech3
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(2,873	)	(4,417	)	(2,030	)	(3,035	)	(3,531	)	(3,449	)	(2,437	)	(2,004	)
Realized gain (loss) on investments		6,064		6,406		17,898		(19,028	)	40,145		23,742		29,787		21,276
Change in unrealized gain (loss)on investments		40,103		7,171		24,158		32,536		55,567		29,036		28,926		5,799
Reinvested capital gains		8,521		–		8,113		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		51,815		9,160		48,139		10,473		92,181		49,329		56,276		25,071
Equity transactions:
Purchase payments received from contract owners (note 6)		–		(8	)	24,204		45,867		(25	)	(9	)	60,949		55,504
Transfers between funds		(69,676	)	(245,618	)	112,482		(61,862	)	28,137		(76,033	)	402,186		(169,289	)
Surrenders (note 6)		(2,450	)	(33,641	)	(24,517	)	(3,119	)	(19,297	)	(38,278	)	(32,344	)	(5,475	)
Death benefits (note 4)		–		–		(2,906	)	–		(959	)	(46	)	–		(73	)
Net policy repayments (loans) (note 5)		(3,127	)	(29,834	)	(1,604	)	58		(18,140	)	(1,640	)	22,956		649
Deductions for surrender charges (note 2d)		–		–		–		–		–		(526	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(12,404	)	(20,759	)	(16,311	)	(15,575	)	(19,424	)	(23,666	)	(20,836	)	(15,626	)
Asset charges (note 3):
MSP contracts		(252	)	(335	)	(8	)	(84	)	–		–		(11	)	–
LSFP contracts		(106	)	(292	)	(94	)	(66	)	(159	)	(335	)	(22	)	(142	)
Adjustments to maintain reserves		(8	)	(16	)	(31	)	33		(7	)	13		33		(23	)
Net equity transactions		(88,023	)	(330,503	)	91,215		(34,748	)	(29,874	)	(140,520	)	432,911		(134,475	)
Net change in contract owners’ equity		(36,208	)	(321,343	)	139,354		(24,275	)	62,307		(91,191	)	489,187		(109,404	)
Contract owners’ equity beginning of period		440,426		761,769		408,953		433,228		494,028		585,219		279,489		388,893
Contract owners’ equity end of period	$	404,218		440,426		548,307		408,953		556,335		494,028		768,676		279,489
CHANGES IN UNITS:
Beginning units		33,282		58,678		37,422		40,502		146,526		191,526		20,636		31,690
Units purchased		1,461		6,633		27,119		9,778		16,755		43,336		30,553		6,194
Units redeemed		(7,549	)	(32,029	)	(20,035	)	(12,858	)	(24,395	)	(88,336	)	(3,767	)	(17,248	)
Ending units		27,194		33,282		44,506		37,422		138,886		146,526		47,422		20,636

(Continued)

35

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITGvtBd				NVITGrowth				NVITIntIdx6				NVITIntValI
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	430,848		394,994		(83,221	)	(101,952	)	2,648		115		11,888		14,359
Realized gain (loss) on investments		(171,239	)	(151,082	)	(1,810,057	)	(2,360,079	)	2,156		(8	)	42,345		72,763
Change in unrealized gain (loss) on investments		444,552		(31,557	)	4,820,907		3,319,647		5,211		2,298		(84,773	)	42,289
Reinvested capital gains		–		89,332		–		–		543		–		55,037		63,340
Net increase (decrease) in contract owners’ equity resulting from operations		704,161		301,687		2,927,629		857,616		10,558		2,405		24,497		192,751
Equity transactions:
Purchase payments received from contract owners (note 6)		602,352		709,052		1,633,268		1,873,914		7,956		258		(203	)	(52	)
Transfers between funds		382,878		142,389		(689,019	)	(762,149	)	357,926		14,888		(142,532	)	(242,421	)
Surrenders (note 6)		(819,647	)	(678,489	)	(1,325,699	)	(1,076,839	)	(3,221	)	–		(48,664	)	(37,392	)
Death benefits (note 4)		(67,562	)	(163,762	)	(87,576	)	(113,328	)	–		–		–		–
Net policy repayments (loans) (note 5)		(50,671	)	(72,413	)	(3,743	)	(43,902	)	(445	)	–		(7,091	)	(44,009	)
Deductions for surrender charges (note 2d)		(2,196	)	(9,132	)	(4,135	)	(19,139	)	–		–		–		(420	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(525,426	)	(574,799	)	(1,248,902	)	(1,285,998	)	(4,051	)	(299	)	(24,230	)	(35,188	)
Asset charges (note 3):
MSP contracts		(11,173	)	(11,130	)	(4,347	)	(4,301	)	–		–		(338	)	(464	)
LSFP contracts		(4,866	)	(4,773	)	(8,699	)	(8,473	)	–		–		(65	)	(59	)
Adjustments to maintain reserves		113		21,487		265		2,309		20		31		69		(30	)
Net equity transactions		(496,198	)	(641,570	)	(1,738,587	)	(1,437,906	)	358,185		14,878		(223,054	)	(360,035	)
Net change in contract owners’ equity		207,963		(339,883	)	1,189,042		(580,290	)	368,743		17,283		(198,557	)	(167,284	)
Contract owners’ equity beginning of period		11,093,374		11,433,257		16,371,335		16,951,625		17,283		–		875,642		1,042,926
Contract owners’ equity end of period	$	11,301,337		11,093,374		17,560,377		16,371,335		386,026		17,283		677,085		875,642
CHANGES IN UNITS:
Beginning units		494,136		531,932		937,894		1,012,300		1,582		–		38,784		56,386
Units purchased		93,776		124,704		215,288		197,568		32,017		1,612		2,196		116
Units redeemed		(115,084	)	(162,500	)	(309,364	)	(271,974	)	(1,205	)	(30	)	(11,730	)	(17,718	)
Ending units		472,828		494,136		843,818		937,894		32,394		1,582		29,250		38,784

(Continued)

36

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITIntVal3				NVITIDAgg2				NVITIDCon2				NVITIDMod2
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	36,292		19,878		60,358		35,204		20,596		10,430		153,184		124,854
Realized gain (loss) on investments		80,524		48,968		108,358		93,337		5,426		1,388		364,277		215,562
Change in unrealized gain (loss) on investments		(227,805	)	119,180		(142,271	)	186,054		(7,091	)	7,780		(250,262	)	271,956
Reinvested capital gains		158,785		87,625		143,661		33,920		12,858		4,883		112,849		57,432
Net increase (decrease) in contract owners’ equity resulting from operations		47,796		275,651		170,106		348,515		31,789		24,481		380,048		669,804
Equity transactions:
Purchase payments received from contract owners (note 6)		126,294		111,921		280,127		173,028		26,450		22,438		470,597		420,655
Transfers between funds		19,917		815,174		1,617,405		830,577		443,761		(67,715	)	(963,507	)	1,488,410
Surrenders (note 6)		(77,167	)	(12,250	)	(58,738	)	(235,406	)	–		(202,298	)	(398,274	)	(199,610	)
Death benefits (note 4)		–		(2,235	)	(6,375	)	–		–		–		(15,842	)	(160,250	)
Net policy repayments (loans) (note 5)		(11,578	)	(1,177	)	(212,269	)	(49,119	)	(10,305	)	99,499		39,800		16,702
Deductions for surrender charges (note 2d)		–		(44	)	–		(768	)	–		(2,180	)	(81	)	(478	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(62,342	)	(38,661	)	(162,086	)	(97,766	)	(34,836	)	(26,058	)	(356,953	)	(322,494	)
Asset charges (note 3):
MSP contracts		(470	)	(424	)	(797	)	(175	)	(251	)	(121	)	(11,053	)	(8,513	)
LSFP contracts		(759	)	(458	)	–		–		(288	)	(99	)	(851	)	(823	)
Adjustments to maintain reserves		(42	)	22		32		9		33		(5	)	(2	)	41
Net equity transactions		(6,147	)	871,868		1,457,299		620,380		424,564		(176,539	)	(1,236,166	)	1,233,640
Net change in contract owners’ equity		41,649		1,147,519		1,627,405		968,895		456,353		(152,058	)	(856,118	)	1,903,444
Contract owners’ equity beginning of period		2,143,777		996,258		2,892,503		1,923,608		444,253		596,311		7,884,800		5,981,356
Contract owners’ equity end of period	$	2,185,426		2,143,777		4,519,908		2,892,503		900,606		444,253		7,028,682		7,884,800
CHANGES IN UNITS:
Beginning units		153,920		87,332		188,908		146,078		36,936		52,378		575,574		484,140
Units purchased		28,548		74,875		130,334		71,709		38,999		8,142		71,214		179,203
Units redeemed		(29,302	)	(8,287	)	(40,046	)	(28,879	)	(4,819	)	(23,584	)	(159,706	)	(87,769	)
Ending units		153,166		153,920		279,196		188,908		71,116		36,936		487,082		575,574

(Continued)

37

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITIDModAg2				NVITIDModCon2				NVITMdCpGr				NVITMidCap
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	123,981		94,529		54,626		48,089		(8,719	)	(8,447	)	58,068		39,768
Realized gain (loss) on investments		302,933		204,996		140,379		15,365		204,611		78,557		578,665		522,315
Change in unrealized gain (loss) on investments		(198,904	)	406,666		(125,658	)	87,209		(66,657	)	53,734		(339,345	)	(36,528	)
Reinvested capital gains		149,917		71,094		60,436		34,355		–		–		212,900		103,301
Net increase (decrease) in contract owners’ equity resulting from operations		377,927		777,285		129,783		185,018		129,235		123,844		510,288		628,856
Equity transactions:
Purchase payments received from contract owners (note 6)		405,928		395,805		183,625		291,005		52,919		59,057		259,335		291,169
Transfers between funds		946,432		1,062,660		25,337		(50,241	)	(301,001	)	208,658		(461,186	)	(171,589	)
Surrenders (note 6)		(666,186	)	(150,919	)	(664,396	)	(21,949	)	(67,940	)	(127,333	)	(468,682	)	(333,966	)
Death benefits (note 4)		–		–		–		(25,518	)	–		–		(10,448	)	(16,715	)
Net policy repayments (loans) (note 5)		(172,324	)	(119,817	)	(10,594	)	35,403		(21,931	)	(24,046	)	(53,720	)	(107,579	)
Deductions for surrender charges (note 2d)		(819	)	(2,371	)	–		(181	)	–		(4,907	)	(237	)	(3,703	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(391,605	)	(342,248	)	(80,916	)	(85,286	)	(48,872	)	(54,942	)	(267,526	)	(285,811	)
Asset charges (note 3):
MSP contracts		(5,261	)	(2,580	)	(1,705	)	(1,221	)	(430	)	(444	)	(4,519	)	(5,190	)
LSFP contracts		(1,994	)	(1,570	)	(21	)	–		(553	)	(823	)	(3,922	)	(3,939	)
Adjustments to maintain reserves		8		1,237		(119	)	(21	)	(10	)	24		(90	)	781
Net equity transactions		114,179		840,197		(548,789	)	141,991		(387,818	)	55,244		(1,010,995	)	(636,542	)
Net change in contract owners’ equity		492,106		1,617,482		(419,006	)	327,009		(258,583	)	179,088		(500,707	)	(7,686	)
Contract owners’ equity beginning of period		6,898,450		5,280,968		2,675,249		2,348,240		1,457,322		1,278,234		7,210,731		7,218,417
Contract owners’ equity end of period	$	7,390,556		6,898,450		2,256,243		2,675,249		1,198,739		1,457,322		6,710,024		7,210,731
CHANGES IN UNITS:
Beginning units		470,490		411,372		209,012		198,412		219,832		210,238		447,638		491,188
Units purchased		155,493		151,964		24,621		106,475		38,403		52,529		56,916		107,211
Units redeemed		(149,087	)	(92,846	)	(66,403	)	(95,875	)	(91,451	)	(42,935	)	(116,410	)	(150,761	)
Ending units		476,896		470,490		167,230		209,012		166,784		219,832		388,144		447,638

(Continued)

38

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITMyMkt				NVITSmCapGr				NVITSmCapVal				NVITSmComp
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	1,300,226		1,072,289		(8,972	)	(8,928	)	62,069		(18,858	)	(140,669	)	(155,927	)
Realized gain (loss) on investments		–		–		41,433		176,700		89,149		680,552		1,046,045		774,570
Change in unrealized gain (loss) on investments		–		–		88,470		(152,111	)	(2,150,010	)	386,882		(4,422,642	)	2,061,580
Reinvested capital gains		–		–		–		–		1,325,777		911,820		4,100,839		580,447
Net increase (decrease) in contract owners’ equity resulting from operations		1,300,226		1,072,289		120,931		15,661		(673,015	)	1,960,396		583,573		3,260,670
Equity transactions:
Purchase payments received from contract owners (note 6)		6,078,889		3,658,857		65,813		75,195		469,422		519,804		1,266,101		1,337,872
Transfers between funds		8,614,030		4,530,350		280,244		258,701		(1,933,070	)	(2,640,164	)	(882,929	)	(1,170,958	)
Surrenders (note 6)		(5,798,357	)	(8,338,109	)	(63,312	)	(94,261	)	(456,149	)	(844,018	)	(2,197,463	)	(1,524,616	)
Death benefits (note 4)		(148,700	)	(88,855	)	(7,821	)	–		(24,170	)	(49,644	)	(166,560	)	(123,522	)
Net policy repayments (loans) (note 5)		(468,504	)	2,882,025		(26,223	)	(33,295	)	(157,882	)	(101,082	)	(72,672	)	(473,911	)
Deductions for surrender charges (note 2d)		(24,664	)	(36,231	)	(625	)	(4,420	)	(1,323	)	(7,012	)	(3,076	)	(14,535	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,868,973	)	(1,781,025	)	(60,800	)	(64,663	)	(363,080	)	(422,536	)	(1,155,722	)	(1,229,903	)
Asset charges (note 3):
MSP contracts		(24,284	)	(25,952	)	(432	)	(445	)	(6,176	)	(6,603	)	(17,239	)	(17,226	)
LSFP contracts		(22,048	)	(17,609	)	(862	)	(843	)	(12,692	)	(12,656	)	(16,884	)	(16,505	)
Adjustments to maintain reserves		(615	)	23,903		20		23		(129	)	1,302		(184	)	1,746
Net equity transactions		6,336,774		807,354		186,002		135,992		(2,485,249	)	(3,562,609	)	(3,246,628	)	(3,231,558	)
Net change in contract owners’ equity		7,637,000		1,879,643		306,933		151,653		(3,158,264	)	(1,602,213	)	(2,663,055	)	29,112
Contract owners’ equity beginning of period		28,462,929		26,583,286		1,412,676		1,261,023		12,031,142		13,633,355		30,208,105		30,178,993
Contract owners’ equity end of period	$	36,099,929		28,462,929		1,719,609		1,412,676		8,872,878		12,031,142		27,545,050		30,208,105
CHANGES IN UNITS:
Beginning units		1,855,436		1,821,092		179,264		164,700		506,404		680,010		822,602		909,012
Units purchased		1,057,744		648,048		75,738		72,557		94,730		50,594		139,300		236,546
Units redeemed		(762,536	)	(613,704	)	(55,642	)	(57,993	)	(198,794	)	(224,200	)	(228,934	)	(322,956	)
Ending units		2,150,644		1,855,436		199,360		179,264		402,340		506,404		732,968		822,602

(Continued)

39

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITNWFund				NVITNWLead				NVITUSGro				NVITVKVal
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	316,814		303,925		4,256		1,873		(4,206	)	(3,065	)	12,360		10,466
Realized gain (loss) on investments		(2,940,386	)	(3,408,067	)	9,871		(23,559	)	13,695		6,918		44,497		28,626
Change in unrealized gain (loss) on investments		4,596,818		12,236,368		(52,502	)	43,954		140,753		(24,714	)	(124,443	)	47,073
Reinvested capital gains		3,721,687		–		109,742		39,071		–		13,100		44,501		42,502
Net increase (decrease) in contract owners’ equity resulting from operations		5,694,933		9,132,226		71,367		61,339		150,242		(7,761	)	(23,085	)	128,667
Equity transactions:
Purchase payments received from contract owners (note 6)		5,551,188		5,894,796		16,622		28,328		20,966		41,473		60,106		54,382
Transfers between funds		(2,488,578	)	(2,621,391	)	156,223		118,672		18,772		(176,078	)	109,276		161,047
Surrenders (note 6)		(4,697,688	)	(3,779,834	)	(3,133	)	(60,657	)	(31,876	)	(45,827	)	(108,271	)	(62,690	)
Death benefits (note 4)		(399,632	)	(447,645	)	–		–		–		(1,780	)	(52,967	)	(1,841	)
Net policy repayments (loans) (note 5)		(495,927	)	(431,905	)	(3,122	)	(22,229	)	20,125		(8,920	)	(10,008	)	(23,247	)
Deductions for surrender charges (note 2d)		(10,966	)	(49,358	)	–		(80	)	–		(4,205	)	–		(551	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(4,963,358	)	(5,064,681	)	(23,050	)	(14,705	)	(24,932	)	(28,676	)	(48,517	)	(43,638	)
Asset charges (note 3):
MSP contracts		(26,086	)	(25,693	)	(576	)	(496	)	(116	)	(182	)	(21	)	(6	)
LSFP contracts		(18,519	)	(20,923	)	(199	)	(5	)	(1,264	)	(899	)	(1,174	)	(829	)
Adjustments to maintain reserves		(333	)	198,038		(2	)	(10	)	42		63		5		(17	)
Net equity transactions		(7,549,899	)	(6,348,596	)	142,763		48,818		1,717		(225,031	)	(51,571	)	82,610
Net change in contract owners’ equity		(1,854,966	)	2,783,630		214,130		110,157		151,959		(232,792	)	(74,656	)	211,277
Contract owners’ equity beginning of period		77,760,634		74,977,004		521,407		411,250		773,985		1,006,777		1,025,117		813,840
Contract owners’ equity end of period	$	75,905,668		77,760,634		735,537		521,407		925,944		773,985		950,461		1,025,117
CHANGES IN UNITS:
Beginning units		2,038,686		2,249,770		33,192		30,358		50,634		65,614		58,134		53,318
Units purchased		310,137		382,150		15,813		13,796		14,803		12,809		18,982		22,592
Units redeemed		(544,981	)	(593,234	)	(6,917	)	(10,962	)	(16,007	)	(27,789	)	(21,876	)	(17,776	)
Ending units		1,803,842		2,038,686		42,088		33,192		49,430		50,634		55,240		58,134

(Continued)

40

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NVITMltSec				NBTBal				NBTAFasc				NBTAGro
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	52,284		46,560		206		21		(597	)	(548	)	(119,531	)	(113,010	)
Realized gain (loss) on investments		(6,427	)	(2,420	)	19,145		3,433		1,696		8,663		1,433,027		944,961
Change in unrealized gain (loss) on investments		12,993		2,462		515		565		(2,811	)	(5,402	)	2,424,218		1,330,092
Reinvested capital gains		73		2,816		–		–		757		2,187		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		58,923		49,418		19,866		4,019		(955	)	4,900		3,737,714		2,162,043
Equity transactions:
Purchase payments received from contract owners (note 6)		63,723		53,050		4,349		3,565		4,581		4,812		1,065,617		1,023,355
Transfers between funds		207,016		470,478		210,694		(2,596	)	12,957		(6,498	)	(737,651	)	(11,964	)
Surrenders (note 6)		(38,063	)	(90,680	)	(10,182	)	(5,397	)	(2,522	)	(3,450	)	(1,100,321	)	(1,027,708	)
Death benefits (note 4)		(71,510	)	–		–		–		–		–		(110,677	)	(132,006	)
Net policy repayments (loans) (note 5)		(5,525	)	9,444		(875	)	133		736		(18,866	)	(93,855	)	(155,030	)
Deductions for surrender charges (note 2d)		(245	)	(963	)	–		–		–		–		(2,499	)	(13,235	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(52,941	)	(48,683	)	(4,377	)	(2,476	)	(6,398	)	(7,671	)	(967,453	)	(961,623	)
Asset charges (note 3):
MSP contracts		(803	)	(906	)	–		–		–		(27	)	(3,093	)	(3,240	)
LSFP contracts		(514	)	(590	)	–		–		(23	)	(27	)	(8,676	)	(7,445	)
Adjustments to maintain reserves		2		(53	)	15		(22	)	6		(15	)	(1,105	)	93,964
Net equity transactions		101,140		391,097		199,624		(6,793	)	9,337		(31,742	)	(1,959,713	)	(1,194,932	)
Net change in contract owners’ equity		160,063		440,515		219,490		(2,774	)	8,382		(26,842	)	1,778,001		967,111
Contract owners’ equity beginning of period		1,468,158		1,027,643		40,835		43,609		91,819		118,661		17,638,101		16,670,990
Contract owners’ equity end of period	$	1,628,221		1,468,158		260,325		40,835		100,201		91,819		19,416,102		17,638,101
CHANGES IN UNITS:
Beginning units		102,380		74,450		2,232		2,306		6,150		8,286		700,290		754,106
Units purchased		36,901		45,808		14,956		873		3,155		1,826		75,423		151,002
Units redeemed		(30,369	)	(17,878	)	(988	)	(947	)	(2,631	)	(3,962	)	(163,035	)	(204,818	)
Ending units		108,912		102,380		16,200		2,232		6,674		6,150		612,678		700,290

(Continued)

41

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NBTAGuard			NBTAInt				NBTAMCGrS				NBTAPart
Investment activity:		2007	2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(6,584)	1,512		5,289		(987	)	(4,448	)	(3,800	)	25,638		35,690
Realized gain (loss) on investments		140,736	101,526		17,573		70,204		86,321		71,600		859,375		1,168,643
Change in unrealized gain (loss) on investments		(6,334)	130,653		(42,678	)	(8,136	)	57,288		(7,589	)	(1,353,429	)	(1,230,740	)
Reinvested capital gains		–	–		27,077		2,236		–		–		2,788,543		2,986,619
Net increase (decrease) in contract owners’ equity resulting from operations		127,818	233,691		7,261		63,317		139,161		60,211		2,320,127		2,960,212
Equity transactions:
Purchase payments received from contract owners (note 6)		67,700	78,174		17,755		27,950		24,807		28,300		1,450,430		1,479,060
Transfers between funds		(149,614)	49,637		179,999		(468,151	)	281,723		208,831		(730,913	)	(1,708,268	)
Surrenders (note 6)		(137,786)	(172,564	)	(41,955	)	(12,520	)	(69,861	)	(3,137	)	(988,140	)	(1,116,320	)
Death benefits (note 4)		(915)	(16,775	)	–		–		–		(257	)	(161,926	)	(147,455	)
Net policy repayments (loans) (note 5)		(19,180)	(17,230	)	(15,412	)	7,843		(18,683	)	(5,183	)	(153,328	)	(105,429	)
Deductions for surrender charges (note 2d)		(310)	(1,096	)	–		–		–		–		(1,200	)	(22,631	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(70,162)	(77,522	)	(14,131	)	(7,484	)	(31,697	)	(25,823	)	(1,129,513	)	(1,175,888	)
Asset charges (note 3):
MSP contracts		(807)	(1,127	)	(248	)	(132	)	(8	)	(2	)	(14,282	)	(15,017	)
LSFP contracts		(1,092)	(1,333	)	(419	)	(305	)	(14	)	(102	)	(27,676	)	(25,482	)
Adjustments to maintain reserves		241	36		(7	)	105		2		14		76		889
Net equity transactions		(311,925)	(159,800	)	125,582		(452,694	)	186,269		202,641		(1,756,472	)	(2,836,541	)
Net change in contract owners’ equity		(184,107)	73,891		132,843		(389,377	)	325,430		262,852		563,655		123,671
Contract owners’ equity beginning of period		2,034,168	1,960,277		324,659		714,036		528,750		265,898		27,466,634		27,342,963
Contract owners’ equity end of period	$	1,850,061	2,034,168		457,502		324,659		854,180		528,750		28,030,289		27,466,634
CHANGES IN UNITS:
Beginning units		145,720	157,638		22,564		61,076		29,138		16,656		836,852		918,584
Units purchased		23,780	23,931		14,938		14,675		17,593		18,384		141,796		150,485
Units redeemed		(45,822)	(35,849	)	(6,546	)	(53,187	)	(8,119	)	(5,902	)	(193,096	)	(232,217	)
Ending units		123,678	145,720		30,956		22,564		38,612		29,138		785,552		836,852

(Continued)

42

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		NBTARegS				NBTSocRes				OppBal				OppCapAp
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	619		80		(2,117	)	(1,336	)	260,773		205,776		(42,282	)	(30,793	)
Realized gain (loss) on investments		(291	)	3,920		36,060		6,609		24,650		41,678		947,717		894,643
Change in unrealized gain (loss) on investments		(9,805	)	(1,287	)	(5,060	)	34,903		(925,301	)	486,525		489,293		(18,989	)
Reinvested capital gains		11,358		9,918		1,612		3,663		1,074,036		650,195		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		1,881		12,631		30,495		43,839		434,158		1,384,174		1,394,728		844,861
Equity transactions:
Purchase payments received from contract owners (note 6)		8,866		13,499		29,427		60,778		580,866		636,886		642,650		691,678
Transfers between funds		118,806		65,765		113,916		152,802		(336,046	)	(841,229	)	(1,299,921	)	(1,498,356	)
Surrenders (note 6)		(4,896	)	(5,026	)	(99,111	)	(16,680	)	(1,052,336	)	(781,266	)	(813,615	)	(1,100,399	)
Death benefits (note 4)		–		–		–		–		(196,189	)	(122,860	)	(51,775	)	(857	)
Net policy repayments (loans) (note 5)		(7,891	)	1,289		(25,983	)	17,583		(14,448	)	(27,076	)	(228	)	(111,248	)
Deductions for surrender charges (note 2d)		–		(86	)	–		–		(2,530	)	(6,059	)	(5,507	)	(16,789	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(8,400	)	(4,020	)	(15,500	)	(11,535	)	(573,966	)	(616,833	)	(505,197	)	(570,516	)
Asset charges (note 3):
MSP contracts		(2	)	–		(111	)	(81	)	(8,257	)	(9,176	)	(4,398	)	(4,501	)
LSFP contracts		(526	)	(538	)	(226	)	(170	)	(3,765	)	(3,632	)	(6,000	)	(6,059	)
Adjustments to maintain reserves		6		42		8		34		72		13,967		(12	)	928
Net equity transactions		105,963		70,925		2,420		202,731		(1,606,599	)	(1,757,278	)	(2,044,003	)	(2,616,119	)
Net change in contract owners’ equity		107,844		83,556		32,915		246,570		(1,172,441	)	(373,104	)	(649,275	)	(1,771,258	)
Contract owners’ equity beginning of period		170,807		87,251		430,277		183,707		13,735,121		14,108,225		11,159,267		12,930,525
Contract owners’ equity end of period	$	278,651		170,807		463,192		430,277		12,562,680		13,735,121		10,509,992		11,159,267
CHANGES IN UNITS:
Beginning units		13,288		7,502		25,806		12,464		478,632		523,202		672,526		846,284
Units purchased		10,801		6,499		12,372		16,093		64,101		76,165		91,175		110,061
Units redeemed		(2,981	)	(713	)	(12,296	)	(2,751	)	(121,431	)	(120,735	)	(204,313	)	(283,819	)
Ending units		21,108		13,288		25,882		25,806		421,302		478,632		559,388		672,526

(Continued)

43

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		OppBdFd				OppGlSec3				OppGlSec				OppHighInc3
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	524,909		517,980		53,022		9,497		270,026		142,602		(302	)	–
Realized gain (loss) on investments		74,104		(61,428	)	184,557		91,819		2,612,574		2,094,212		(80	)	–
Change in unrealized gain (loss) on investments		(188,237	)	59,204		(204,740	)	528,285		(2,586,681	)	1,394,466		(3,193	)	–
Reinvested capital gains		–		–		359,391		213,406		1,725,651		1,920,739		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		410,776		515,756		392,230		843,007		2,021,570		5,552,019		(3,575	)	–
Equity transactions:
Purchase payments received from contract owners (note 6)		510,870		625,793		1,369,384		1,677,980		640		44,188		17,626		–
Transfers between funds		(49,592	)	86,471		413,420		1,648,556		(1,846,255	)	(1,513,966	)	90,873		–
Surrenders (note 6)		(911,939	)	(459,829	)	(752,642	)	(440,872	)	(2,146,176	)	(2,151,334	)	(1,596	)	–
Death benefits (note 4)		(39,203	)	(29,886	)	(41,749	)	(6,803	)	(218,520	)	(211,952	)	–		–
Net policy repayments (loans) (note 5)		(76,963	)	(35,645	)	386,022		309,643		(467,073	)	(704,823	)	1,312		–
Deductions for surrender charges (note 2d)		(1,752	)	(8,577	)	(426	)	(2,417	)	(2,237	)	(20,300	)	–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(456,084	)	(492,130	)	(371,984	)	(257,243	)	(1,051,117	)	(1,210,228	)	(1,755	)	–
Asset charges (note 3):
MSP contracts		(6,943	)	(7,449	)	(2,706	)	(2,048	)	(14,632	)	(14,159	)	–		–
LSFP contracts		(6,684	)	(6,411	)	(2,911	)	(1,984	)	(10,982	)	(12,028	)	–		–
Adjustments to maintain reserves		(91	)	9,216		17		10		207		2,798		33		–
Net equity transactions		(1,038,381	)	(318,447	)	996,425		2,924,822		(5,756,145	)	(5,791,804	)	106,493		–
Net change in contract owners’ equity		(627,605	)	197,309		1,388,655		3,767,829		(3,734,575	)	(239,785	)	102,918		–
Contract owners’ equity beginning of period		11,451,238		11,253,929		6,742,484		2,974,655		35,853,755		36,093,540		–		–
Contract owners’ equity end of period	$	10,823,633		11,451,238		8,131,139		6,742,484		32,119,180		35,853,755		102,918		–
CHANGES IN UNITS:
Beginning units		477,286		494,198		479,820		247,696		902,632		1,029,012		–		–
Units purchased		72,782		156,167		235,329		285,602		112,831		158,662		10,961		–
Units redeemed		(114,992	)	(173,079	)	(168,529	)	(53,478	)	(238,077	)	(285,042	)	(267	)	–
Ending units		435,076		477,286		546,620		479,820		777,386		902,632		10,694		–

(Continued)

44

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		OppHighInc				OppMStSCap				OppMSt				OppMidCap
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	41,814		40,309		(3,165	)	(4,855	)	11,022		11,780		(9,076	)	(12,067	)
Realized gain (loss) on investments		(6,938	)	(5,076	)	8,054		102,276		178,260		72,433		116,295		125,208
Change in unrealized gain (loss) on investments		(38,746	)	17,994		(76,840	)	(29,831	)	(99,839	)	185,311		(10,721	)	(71,606	)
Reinvested capital gains		–		–		45,630		25,550		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		(3,870	)	53,227		(26,321	)	93,140		89,443		269,524		96,498		41,535
Equity transactions:
Purchase payments received from contract owners (note 6)		12,695		35,573		63,584		90,956		99,392		95,216		102,708		128,202
Transfers between funds		(191,521	)	113,167		131,907		398,737		(220,379	)	392,275		(301,045	)	(251,389	)
Surrenders (note 6)		(14,172	)	(66,566	)	(37,735	)	(31,182	)	(210,786	)	(44,398	)	(59,970	)	(153,575	)
Death benefits (note 4)		–		–		–		–		(55,034	)	(79,297	)	(20,699	)	(12,151	)
Net policy repayments (loans) (note 5)		(1,099	)	(22,757	)	(23,689	)	(11,558	)	(58,836	)	(73,454	)	(30,598	)	918
Deductions for surrender charges (note 2d)		(87	)	(439	)	–		(787	)	(239	)	(148	)	(88	)	(1,752	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(22,982	)	(22,996	)	(46,893	)	(38,278	)	(83,795	)	(79,006	)	(85,091	)	(107,289	)
Asset charges (note 3):
MSP contracts		(648	)	(717	)	(221	)	(128	)	(2,795	)	(2,757	)	(602	)	(483	)
LSFP contracts		(457	)	(398	)	(707	)	(225	)	(1,177	)	(1,103	)	(270	)	(420	)
Adjustments to maintain reserves		49		(64	)	(52	)	3		34		98		5		317
Net equity transactions		(218,222	)	34,803		86,194		407,538		(533,615	)	207,426		(395,650	)	(397,622	)
Net change in contract owners’ equity		(222,092	)	88,030		59,873		500,678		(444,172	)	476,950		(299,152	)	(356,087	)
Contract owners’ equity beginning of period		664,225		576,195		1,133,028		632,350		2,405,945		1,928,995		1,578,859		1,934,946
Contract owners’ equity end of period	$	442,133		664,225		1,192,901		1,133,028		1,961,773		2,405,945		1,279,707		1,578,859
CHANGES IN UNITS:
Beginning units		49,608		46,888		55,332		35,404		222,728		205,266		245,818		308,834
Units purchased		2,774		12,764		18,569		29,626		27,285		87,812		33,623		57,133
Units redeemed		(19,254	)	(10,044	)	(14,817	)	(9,698	)	(75,837	)	(70,350	)	(91,865	)	(120,149	)
Ending units		33,128		49,608		59,084		55,332		174,176		222,728		187,576		245,818

(Continued)

45

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		PVTGroInc				PVTIntlEq				PVTVoygr				TRoeBlChip2
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	810		707		9,735		(684	)	(267	)	(251	)	(1,850	)	(770	)
Realized gain (loss) on investments		(91	)	9,397		20,299		29,844		3,423		3,324		62,166		7,612
Change in unrealized gain (loss) on investments		(25,028	)	6,494		(53,099	)	37,078		917		1,141		(20,940	)	23,688
Reinvested capital gains		17,302		2,275		54,130		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		(7,007	)	18,873		31,065		66,238		4,073		4,214		39,376		30,530
Equity transactions:
Purchase payments received from contract owners (note 6)		4,826		5,428		20,459		30,702		2,398		2,383		30,729		18,007
Transfers between funds		2,777		30,462		129,508		(23,641	)	(9,237	)	(27,059	)	314,976		136,078
Surrenders (note 6)		(1,062	)	(35,269	)	(19,739	)	(10,603	)	(882	)	–		(35,013	)	(54,370	)
Death benefits (note 4)		–		–		(4,534	)	–		–		–		–		–
Net policy repayments (loans) (note 5)		(2,759	)	(2,775	)	(4,912	)	(1,039	)	881		(482	)	(20,696	)	121
Deductions for surrender charges (note 2d)		–		(411	)	–		–		–		–		–		–
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(6,397	)	(12,309	)	(17,929	)	(11,802	)	(4,277	)	(4,925	)	(15,562	)	(15,811	)
Asset charges (note 3):
MSP contracts		–		–		(1	)	(10	)	(213	)	(196	)	(429	)	(256	)
LSFP contracts		(1	)	(114	)	(157	)	(26	)	(76	)	(100	)	–		(111	)
Adjustments to maintain reserves		11		(29	)	(51	)	28		(5	)	10		32		13
Net equity transactions		(2,605	)	(15,017	)	102,644		(16,391	)	(11,411	)	(30,369	)	274,037		83,671
Net change in contract owners’ equity		(9,612	)	3,856		133,709		49,847		(7,338	)	(26,155	)	313,413		114,201
Contract owners’ equity beginning of period		115,838		111,982		370,460		320,613		80,963		107,118		356,290		242,089
Contract owners’ equity end of period	$	106,226		115,838		504,169		370,460		73,625		80,963		669,703		356,290
CHANGES IN UNITS:
Beginning units		7,034		7,844		17,808		19,614		5,916		8,234		29,062		21,492
Units purchased		1,122		4,968		10,147		8,618		357		391		30,196		21,990
Units redeemed		(1,258	)	(5,778	)	(5,559	)	(10,424	)	(1,173	)	(2,709	)	(10,488	)	(14,420	)
Ending units		6,898		7,034		22,396		17,808		5,100		5,916		48,770		29,062

(Continued)

46

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		TRowEqInc2				TRowLtdTBd2				DrySRGro				VEWrldBd
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	14,679		6,599		7,912		1,528		(10,435	)	(49,304	)	148,549		230,704
Realized gain (loss) on investments		56,339		1,102		2,139		(54	)	(283,858	)	(435,841	)	(62,582	)	(64,415	)
Change in unrealized gain (loss) on investments		(144,478	)	82,943		2,506		312		885,971		1,181,954		154,431		(4,075	)
Reinvested capital gains		90,216		30,539		–		–		–		–		–		–
Net increase (decrease) in contract owners’ equity resulting from operations		16,756		121,183		12,557		1,786		591,678		696,809		240,398		162,214
Equity transactions:
Purchase payments received from contract owners (note 6)		79,115		94,354		2,271		1,316		749,177		833,043		149,050		150,914
Transfers between funds		270,046		789,443		327,843		26,415		(310,224	)	(428,466	)	300,154		(71,300	)
Surrenders (note 6)		(40,851	)	(3,239	)	–		(514	)	(592,352	)	(736,233	)	(135,076	)	(505,868	)
Death benefits (note 4)		–		–		–		–		(43,342	)	(64,260	)	(24,930	)	(1,420	)
Net policy repayments (loans) (note 5)		(42,121	)	(5,594	)	1,772		(97	)	(18,488	)	145,274		(8,828	)	139,390
Deductions for surrender charges (note 2d)		–		(183	)	–		–		(1,368	)	(7,417	)	(332	)	(2,160	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(56,704	)	(31,449	)	(9,448	)	(1,420	)	(542,630	)	(570,614	)	(122,647	)	(133,845	)
Asset charges (note 3):
MSP contracts		(207	)	(49	)	(102	)	–		(2,229	)	(2,468	)	(1,432	)	(1,176	)
LSFP contracts		(669	)	(333	)	(17	)	–		(2,817	)	(2,992	)	(381	)	(454	)
Adjustments to maintain reserves		11		58		59		(21	)	(26	)	1,201		38		2,192
Net equity transactions		208,620		843,008		322,378		25,679		(764,299	)	(832,932	)	155,616		(423,727	)
Net change in contract owners’ equity		225,376		964,191		334,935		27,465		(172,621	)	(136,123	)	396,014		(261,513	)
Contract owners’ equity beginning of period		1,289,316		325,125		62,012		34,547		8,657,082		8,793,205		2,844,471		3,105,984
Contract owners’ equity end of period	$	1,514,692		1,289,316		396,947		62,012		8,484,461		8,657,082		3,240,485		2,844,471
CHANGES IN UNITS:
Beginning units		103,122		30,698		5,960		3,428		362,908		398,460		144,434		167,104
Units purchased		35,155		77,295		34,604		2,763		84,968		86,163		38,401		24,635
Units redeemed		(20,135	)	(4,871	)	(4,308	)	(231	)	(117,362	)	(121,715	)	(30,405	)	(47,305	)
Ending units		118,142		103,122		36,256		5,960		330,514		362,908		152,430		144,434

(Continued)

47

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		VEWrldEMkt				VEWrldHAs				VKUCorPlus				VKUEmMkt
Investment activity:		2007		2006		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	(16,974	)	1,284		(64,105	)	(65,291	)	10,008		11,934		172,810		183,241
Realized gain (loss) on investments		1,638,688		1,637,462		1,703,160		2,448,894		2,549		(4,884	)	(41,585	)	48,041
Change in unrealized gain (loss) on investments		82,871		639,534		1,644,501		(885,664	)	8,225		277		(66,085	)	(46,208	)
Reinvested capital gains		2,156,585		939,523		1,473,529		642,387		–		1,911		78,893		42,664
Net increase (decrease) in contract owners’ equity resulting from operations		3,861,170		3,217,803		4,757,085		2,140,326		20,782		9,238		144,033		227,738
Equity transactions:
Purchase payments received from contract owners (note 6)		406,654		468,520		375,964		932,089		12,085		8,687		79,438		95,715
Transfers between funds		(351,722	)	(72,994	)	857,604		(496,466	)	250,442		51,665		(167,106	)	(232,754	)
Surrenders (note 6)		(539,830	)	(645,512	)	(742,511	)	(1,134,179	)	(32,927	)	(84,046	)	(66,100	)	(142,002	)
Death benefits (note 4)		(34,771	)	(289,173	)	(9,881	)	(164,468	)	–		–		(10,830	)	(9,746	)
Net policy repayments (loans) (note 5)		(109,248	)	(765	)	(175,768	)	(189,311	)	(11,075	)	8,821		(14,311	)	(14,640	)
Deductions for surrender charges (note 2d)		(741	)	(5,179	)	(389	)	(4,653	)	–		(328	)	–		(1,416	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(375,189	)	(326,146	)	(411,823	)	(406,102	)	(18,481	)	(16,071	)	(87,068	)	(97,504	)
Asset charges (note 3):
MSP contracts		(5,985	)	(4,313	)	(8,046	)	(6,868	)	(97	)	(79	)	(881	)	(1,080	)
LSFP contracts		(9,420	)	(7,724	)	(3,194	)	(3,074	)	(74	)	(61	)	(3,737	)	(4,327	)
Adjustments to maintain reserves		279		513		1,154		(11,966	)	28		36		9		253
Net equity transactions		(1,019,973	)	(882,773	)	(116,890	)	(1,484,998	)	199,901		(31,376	)	(270,586	)	(407,501	)
Net change in contract owners’ equity		2,841,197		2,335,030		4,640,195		655,328		220,683		(22,138	)	(126,553	)	(179,763	)
Contract owners’ equity beginning of period		11,285,298		8,950,268		11,110,432		10,455,104		341,760		363,898		2,481,886		2,661,649
Contract owners’ equity end of period	$	14,126,495		11,285,298		15,750,627		11,110,432		562,443		341,760		2,355,333		2,481,886
CHANGES IN UNITS:
Beginning units		508,528		562,354		304,462		347,218		30,284		33,292		120,794		143,840
Units purchased		102,968		98,786		58,662		56,622		26,797		10,102		30,254		31,041
Units redeemed		(148,818	)	(152,612	)	(58,104	)	(99,378	)	(9,693	)	(13,110	)	(41,962	)	(54,087	)
Ending units		462,678		508,528		305,020		304,462		47,388		30,284		109,086		120,794

(Continued)

48

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2007 and 2006

		VKUUSRE				WFVDisc				WFVOpp
Investment activity:		2007		2006		2007		2006		2007		2006
Net investment income (loss)	$	115,313		100,766		(51,938	)	(50,456	)	573		(215,703	)
Realized gain (loss) on investments		3,939,107		1,979,110		646,495		369,770		93,211		55
Change in unrealized gain (loss) on investments		(9,669,937	)	3,692,843		1,097,061		714,074		(2,882,045	)	263,654
Reinvested capital gains		1,981,393		1,496,337		–		–		4,826,981		3,582,720
Net increase (decrease) in contract owners’ equity resulting from operations		(3,634,124	)	7,269,056		1,691,618		1,033,388		2,038,720		3,630,726
Equity transactions:
Purchase payments received from contract owners (note 6)		747,226		915,299		326,377		374,181		1,400,462		1,611,457
Transfers between funds		(5,815,128	)	987,861		(247,675	)	(33,725	)	(1,163,843	)	(1,406,170	)
Surrenders (note 6)		(1,087,998	)	(1,291,997	)	(573,020	)	(628,573	)	(2,863,802	)	(1,992,977	)
Death benefits (note 4)		(45,939	)	(99,378	)	(3,839	)	(8,451	)	(232,086	)	(113,092	)
Net policy repayments (loans) (note 5)		(145,577	)	(165,156	)	(28,890	)	(29,981	)	3,830		(27,911	)
Deductions for surrender charges (note 2d)		(2,184	)	(16,388	)	(354	)	(1,140	)	(2,618	)	(13,532	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(793,076	)	(830,874	)	(316,893	)	(322,344	)	(1,383,823	)	(1,464,476	)
Asset charges (note 3):
MSP contracts		(9,033	)	(9,590	)	(2,827	)	(2,219	)	(8,032	)	(7,783	)
LSFP contracts		(10,311	)	(10,154	)	(633	)	(870	)	(7,683	)	(7,925	)
Adjustments to maintain reserves		(241	)	317		191		970		11,453		3,144
Net equity transactions		(7,162,261	)	(520,060	)	(847,563	)	(652,152	)	(4,246,142	)	(3,419,265	)
Net change in contract owners’ equity		(10,796,385	)	6,748,996		844,055		381,236		(2,207,422	)	211,461
Contract owners’ equity beginning of period		26,868,542		20,119,546		8,177,366		7,796,130		33,782,998		33,571,537
Contract owners’ equity end of period	$	16,072,157		26,868,542		9,021,421		8,177,366		31,575,576		33,782,998
CHANGES IN UNITS:
Beginning units		473,108		482,116		240,618		263,596		746,196		831,198
Units purchased		37,574		107,910		31,233		68,246		87,677		146,683
Units redeemed		(175,324	)	(116,918	)	(52,539	)	(91,224	)	(173,225	)	(231,685	)
Ending units		335,358		473,108		219,312		240,618		660,648		746,196

See accompanying notes to financial statements.

49

NATIONWIDE VLI SEPARATE ACCOUNT-2

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

(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 VIF);

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

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

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

Portfolios of the AllianceBernstein Variable Products Series Fund, Inc. (AllianceBernstein VPS);

AllianceBernstein VPS – Growth and Income Portfolio – Class A (AlVGrIncA)

AllianceBernstein VPS – Small/Mid Cap Value Portfolio – Class A (AlVSmMdCpA)

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

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

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

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

American Century VP – Inflation Protection Fund – Class II (ACVPInflPro2)

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

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

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

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

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

American Century VP – Vista^SM Fund – Class I (ACVPVista1)

Portfolios of the Credit Suisse Trust;

Credit Suisse Trust – Global Small Cap Portfolio (CSTGlobSmCp)

Credit Suisse Trust – International Focus Portfolio (CSTIntFoc)

Credit Suisse Trust – Small Cap Core I Portfolio (CSTSmCapGr)

Portfolios of the Dreyfus Investment Portfolios (Dreyfus IP);

Dreyfus IP – European Equity Portfolio (DryIPEuroEq)*

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

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

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

Dreyfus VIF – Appreciation Portfolio – Initial Shares (DryVApp)

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

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

(Continued)

50

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

Portfolios of the Federated Insurance Series (Federated IS);

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

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

Federated IS – Market Opportunity Fund II – Service Shares (FedMrkOp)

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

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

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

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

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

Fidelity^® VIP – High Income Portfolio – Initial Class R (FidVIPHIR)

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

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

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

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

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

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

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

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

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

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

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

Fidelity^® VIP IV – Energy Portfolio – Service Class 2 (FidVIPEnergyS2)

Fidelity^® VIP IV – Freedom Fund 2010 Portfolio – Service Class (FidVIPFree10S)

Fidelity^® VIP IV – Freedom Fund 2020 Portfolio – Service Class (FidVIPFree20S)

Fidelity^® VIP IV – Freedom Fund 2030 Portfolio – Service Class (FidVIPFree30S)

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

Franklin Templeton VIP – Developing Markets Securities Fund – Class 3 (FrVIPDevMrk3)

Franklin Templeton VIP – Foreign Securities Fund – Class 1 (FrVIPForSec)

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

Franklin Templeton VIP – Global Income Securities Fund – Class 3 (FrVIPGlInc3)

Franklin Templeton VIP – Income Securities Fund – Class 2 (FrVIPIncSec2)

Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1 (FrVIPRisDiv)

Franklin Templeton VIP – Small Cap Value Securities Fund – Class 1 (FrVIPSCapV1)

Portfolios of the Janus Aspen Series;

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

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

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

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

Janus Aspen Series – International Growth Portfolio – Service II Shares (JAspIntGroS2)

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

Portfolio of the Lehman Brothers Advisers Management Trust (Lehman Brothers AMT);

Lehman Brothers AMT – Short Duration Bond Portfolio – I Class

(formerly Neuberger Berman AMT – Limited Maturity Bond Portfolio – Class I) (LBTShrtDBd)

Portfolios of the MFS Variable Insurance Trust (MFS VIT);

MFS VIT – Investors Growth Stock Series – Initial Class (MFSInvGrSt)

MFS VIT – Value Series – Initial Class (MFSValue)

(Continued)

51

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

Portfolios of the Nationwide Variable Insurance Trust (Nationwide VIT) (formerly Gartmore GVIT);

Nationwide VIT – American Funds Asset Allocation Fund – Class II (NVITAstAll2)

Nationwide VIT – American Funds Bond Fund – Class II (NVITBnd2)

Nationwide VIT – American Funds Global Growth Fund – Class II (NVITGlobGr2)

Nationwide VIT – American Funds Growth – Income Fund – Class II (NVITGroInc2)

Nationwide VIT – American Funds Growth Fund – Class II (NVITGrowth2)

Nationwide VIT – Federated High Income Bond Fund – Class I (NVITFHiInc)

Nationwide VIT – Federated High Income Bond Fund – Class III (NVITFHiInc3)

Nationwide VIT – Gartmore Emerging Markets Fund – Class I (NVITEmMrkts)

Nationwide VIT – Gartmore Emerging Markets Fund – Class III (NVITEmMrkts3)

Nationwide VIT – Gartmore Global Utilities Fund – Class I (NVITGlUtl)

Nationwide VIT – Gartmore International Growth Fund – Class I (NVITIntGro)

Nationwide VIT – Global Financial Services Fund – Class I (NVITGlFin)

Nationwide VIT – Global Health Sciences Fund – Class I (NVITGlHlth)

Nationwide VIT – Global Health Sciences Fund – Class III (NVITGlHlth3)

Nationwide VIT – Global Technology and Communications Fund – Class I (NVITGlTech)

Nationwide VIT – Global Technology and Communications Fund – Class III (NVITGlTech3)

Nationwide VIT – Government Bond Fund – Class I (NVITGvtBd)

Nationwide VIT – Growth Fund – Class I (NVITGrowth)

Nationwide VIT – International Index Fund – Class VI (NVITIntIdx6)

Nationwide VIT – International Value Fund – Class I (NVITIntValI)

Nationwide VIT – International Value Fund – Class III (NVITIntVal3)

Nationwide VIT – Investor Destinations Aggressive Fund – Class II (NVITIDAgg2)

Nationwide VIT – Investor Destinations Conservative Fund – Class II (NVITIDCon2)

Nationwide VIT – Investor Destinations Moderate Fund – Class II (NVITIDMod2)

Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II (NVITIDModAg2)

Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II (NVITIDModCon2)

Nationwide VIT – Mid Cap Growth Fund – Class I (NVITMdCpGr)

Nationwide VIT – Mid Cap Index Fund – Class I (NVITMidCap)

Nationwide VIT – Money Market Fund – Class I (NVITMyMkt)

Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class I

(formerly Gartmore GVIT – Small Cap Growth Fund – Class I) (NVITSmCapGr)

Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I

(formerly Gartmore GVIT – Small Cap Value Fund – Class I) (NVITSmCapVal)

Nationwide VIT – Multi-Manager Small Company Fund – Class I

(formerly Gartmore GVIT – Small Company Fund – Class I) (NVITSmComp)

Nationwide VIT – Nationwide Fund – Class I (NVITNWFund)

Nationwide VIT – Nationwide Leaders Fund – Class I (NVITNWLead)

Nationwide VIT – U.S. Growth Leaders Fund – Class I (NVITUSGro)

Nationwide VIT – Van Kampen Comstock Value Fund – Class I (NVITVKVal)

Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I (NVITMltSec)

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

Neuberger Berman AMT – Balanced Portfolio – I Class Shares (NBTBal)

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

Neuberger Berman AMT – Growth Portfolio – Class I (NBTAGro)

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

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

Neuberger Berman AMT – Mid Cap Growth Portfolio – Class S (NBTAMCGrS)

Neuberger Berman AMT – Partners Portfolio – Class I (NBTAPart)

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

Neuberger Berman AMT – Socially Responsive Portfolio Class I (NBTSocRes)

(Continued)

52

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

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

Oppenheimer VAF – Balanced Fund – Non-Service Shares (OppBal)

Oppenheimer VAF – Capital Appreciation Fund – Non-Service Shares (OppCapAp)

Oppenheimer VAF – Core Bond Fund – Non-Service Shares (OppBdFd)

Oppenheimer VAF – Global Securities Fund – Class 3 (OppGlSec3)

Oppenheimer VAF – Global Securities Fund – Non-Service Shares (OppGlSec)

Oppenheimer VAF – High Income Fund – Class 3 (OppHighInc3)

Oppenheimer VAF – High Income Fund – Non-Service Shares (OppHighInc)

Oppenheimer VAF – Main Street Small Cap Fund^®– Non-Service Shares (OppMStSCap)

Oppenheimer VAF – Main Street^®– Non-Service Shares (OppMSt)

Oppenheimer VAF – Mid Cap Fund – Non-Service Shares (OppMidCap)

Portfolios of the Putnam Variable Trust (Putnam VT);

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

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

Putnam VT – Voyager Fund – IB Shares (PVTVoygr)

Strong Variable Insurance Funds, Inc. – Strong International Stock Fund II (StVIFIntStk2)*

Portfolios T. Rowe Price;

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)

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

Turner GVIT Growth Focus Fund – Class I (TurnGrowth)*

Portfolios of the Van Eck Worldwide Insurance Trust;

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

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

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

Portfolio of the Van Kampen Life Investment Trust (Van Kampen LIT);

Van Kampen LIT – Morgan Stanley Real Estate Securities Fund (VKLRealEst)*

Portfolios of the Van Kampen – The Universal Institutional Funds, Inc. (Van Kampen UIF);

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

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

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

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

Wells Fargo AVT – Discovery Fund^SM (WFVDisc)

Wells Fargo AVT – Opportunity Fund^SM (WFVOpp)

At December 31, 2007, 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.

(Continued)

53

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

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

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

(c) Security Valuation, Transactions and Related Investment Income  

Investments in underlying mutual funds are valued on the closing net asset value per share at December 31, 2007 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 FASB issued SFAS 157, Fair Value Measurements (SFAS 157). SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt SFAS 157 effective January 1, 2008. SFAS 157 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

(Continued)

54

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, 2007 and 2006, total front-end sales charge deductions were $3,025,837 and $3,219,241, 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)

55

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)

56

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

The following table provides mortality and expense risk charges by contract type for the period ended December 31, 2007:

	Total		AIMBValue	AIMCapAp	AIMCapDev	AlVGrIncA
Single Premium contracts issued prior to April 16,1990	$	766,441	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		5,130	–	–	–	–
Multiple Payment and Flexible Premium contracts		5,223,443	6,372	853	2,516	4,820
Total	$	5,995,014	6,372	853	2,516	4,820
	AlVSmMdCpA		ACVPBal	ACVPCapAp	ACVPIncGr	ACVPInflPro2
Single Premium contracts issued prior to April 16,1990	$	–	5,465	20,312	2,205	–
Single Premium contracts issued on or after April 16, 1990		–	–	130	–	–
Multiple Payment and Flexible Premium contracts		8,035	25,321	93,479	17,071	4,204
Total	$	8,035	30,786	113,921	19,276	4,204
	ACVPInt		ACVPInt3	ACVPMdCpV	ACVPUltra	ACVPVal
Single Premium contracts issued prior to April 16,1990	$	9,227	–	–	147	16,392
Single Premium contracts issued on or after April 16, 1990		12	–	–	–	–
Multiple Payment and Flexible Premium contracts		49,491	14,767	7,231	3,042	64,302
Total	$	58,730	14,767	7,231	3,189	80,694
	ACVPVista1		CSTGlobSmCp	CSTIntFoc	CSTSmCapGr	DryIPSmCap
Single Premium contracts issued prior to April 16,1990	$	–	601	4,828	5,517	3,085
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		3,330	4,419	37,580	57,678	7,842
Total	$	3,330	5,020	42,408	63,195	10,927
	DryStkIx		DryVApp	DryVDevLd	DryVGroInc	FedAmLead
Single Premium contracts issued prior to April 16,1990	$	43,018	9,871	–	2,241	–
Single Premium contracts issued on or after April 16, 1990		207	–	–	–	–
Multiple Payment and Flexible Premium contracts		388,429	25,824	1,582	10,721	983
Total	$	431,654	35,695	1,582	12,962	983
	FedCapAp		FedMrkOp	FedQualBd	FidVIPEI	FidVIPGr
Single Premium contracts issued prior to April 16,1990	$	–	–	3,543	74,683	64,200
Single Premium contracts issued on or after April 16, 1990		–	–	–	870	823
Multiple Payment and Flexible Premium contracts		85	14	4,640	400,122	460,901
Total	$	85	14	8,183	475,675	525,924

(Continued)

57

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

	FidVIPHI		FidVIPHIR	FidVIPOv	FidVIPOvSR	FidVIPAM
Single Premium contracts issued prior to April 16,1990	$	19,457	–	23,905	–	27,939
Single Premium contracts issued on or after April 16, 1990		277	–	381	–	208
Multiple Payment and Flexible Premium contracts		82,601	3,886	77,419	29,910	99,460
Total	$	102,335	3,886	101,705	29,910	127,607
	FidVIPCon		FidVIPIGBdS	FidVIPGrOp	FidVIPMCapS	FidVIPVaIS
Single Premium contracts issued prior to April 16,1990	$	52,504	–	1,050	–	2,340
Single Premium contracts issued on or after April 16, 1990		–	–	74	–	–
Multiple Payment and Flexible Premium contracts		378,116	18,055	25,755	58,040	7,178
Total	$	430,620	18,055	26,879	58,040	9,518
	FidVIPEnergyS2		FidVIPFree10S	FidVIPFree20S	FidVIPFree30S	FrVIPDevMrk3
Single Premium contracts issued prior to April 16,1990	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		26,992	1,763	3,367	2,958	12,523
Total	$	26,992	1,763	3,367	2,958	12,523
	FrVIPForSec		FrVIPForSec3	FrVIPGlInc3	FrVIPIncSec2	FrVIPRisDiv
Single Premium contracts issued prior to April 16,1990	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		5,522	10,242	5,069	4,516	24,928
Total	$	5,522	10,242	5,069	4,516	24,928
	FrVIPSCapV1		JAspBal	JAspForty	JAspGlTechS	JAspRMgCore
Single Premium contracts issued prior to April 16,1990	$	–	–	1,374	922	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		20,959	1,304	16,735	5,718	1,150
Total	$	20,959	1,304	18,109	6,640	1,150
	JAspIntGroS2		JAspIntGroS	LBTShrtDBd	MFSInvGrSt	MFSValue
Single Premium contracts issued prior to April 16,1990	$	–	12,418	6,716	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	95	–	–
Multiple Payment and Flexible Premium contracts		28,961	17,956	14,142	1,562	6,638
Total	$	28,961	30,374	20,953	1,562	6,638
	NVITAstAll2		NVITBnd2	NVITGlobGr2	NVITGroInc2	NVITGrowth2
Single Premium contracts issued prior to April 16,1990	$	–	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		3,347	3,107	6,622	315	6,992
Total	$	3,347	3,107	6,622	315	6,992

(Continued)

58

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

	NVITFHiInc		NVITFHiInc3	NVITEmMrkts	NVITEmMrkts3	NVITGlUtl
Single Premium contracts issued prior to April 16,1990	$	–	–	10,890	–	6,392
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		968	3,404	9,773	26,290	9,631
Total	$	968	3,404	20,663	26,290	16,023
	NVITIntGro		NVITGlFin	NVITGlHlth	NVITGlHlth3	NVITGlTech
Single Premium contracts issued prior to April 16,1990	$	9,160	1,144	2,327	–	1,166
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		9,086	4,557	891	2,447	2,365
Total	$	18,246	5,701	3,218	2,447	3,531
	NVITGlTech3		NVITGvtBd	NVITGrowth	NVITIntIdx6	NVITIntValI
Single Premium contracts issued prior to April 16,1990	$	–	19,515	3,470	–	–
Single Premium contracts issued on or after April 16, 1990		–	182	–	–	–
Multiple Payment and Flexible Premium contracts		2,437	47,227	109,539	1,251	4,379
Total	$	2,437	66,924	113,009	1,251	4,379
	NVITIntVal3		NVITIDAgg2	NVITIDCon2	NVITIDMod2	NVITIDModAg2
Single Premium contracts issued prior to April 16,1990	$	–	50	701	6,199	4,485
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		12,359	24,867	3,180	34,458	41,524
Total	$	12,359	24,917	3,881	40,657	46,009
	NVITIDModCon2		NVITMdCpGr	NVITMidCap	NVITMyMkt	NVITSmCapGr
Single Premium contracts issued prior to April 16,1990	$	6,338	1,938	6,501	51,327	1,955
Single Premium contracts issued on or after April 16, 1990		–	–	8	489	16
Multiple Payment and Flexible Premium contracts		12,311	6,781	34,224	121,727	7,001
Total	$	18,649	8,719	40,733	173,543	8,972
	NVITSmCapVal		NVITSmComp	NVITNWFund	NVITNWLead	NVITUSGro
Single Premium contracts issued prior to April 16,1990	$	10,100	7,600	19,131	262	970
Single Premium contracts issued on or after April 16, 1990		201	142	148	–	–
Multiple Payment and Flexible Premium contracts		48,440	159,416	485,952	3,435	3,236
Total	$	58,741	167,158	505,231	3,697	4,206
	NVITVKVal		NVITMltSec	NBTBal	NBTAFasc	NBTAGro
Single Premium contracts issued prior to April 16,1990	$	–	2,278	–	–	14,434
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	499
Multiple Payment and Flexible Premium contracts		5,382	6,607	540	597	104,598
Total	$	5,382	8,885	540	597	119,531

(Continued)

59

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

	NBTAGuard		NBTAInt	NBTAMCGrS	NBTAPart	NBTARegS
Single Premium contracts issued prior to April 16,1990	$	826	–	–	14,087	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		10,851	2,278	4,448	138,474	1,132
Total	$	11,677	2,278	4,448	152,561	1,132
	NBTSocRes		OppBal	OppCapAp	OppBdFd	OppGlSec3
Single Premium contracts issued prior to April 16,1990	$	–	18,469	7,398	7,406	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		2,546	64,185	60,272	52,668	45,691
Total	$	2,546	82,654	67,670	60,074	45,691
	OppGlSec		OppHighInc3	OppHighInc	OppMStSCap	OppMSt
Single Premium contracts issued prior to April 16,1990	$	25,870	–	–	–	819
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		178,829	302	3,667	7,444	9,307
Total	$	204,699	302	3,667	7,444	10,126
	OppMidCap		PVTGroInc	PVTIntlEq	PVTVoygr	TRoeBlChip2
Single Premium contracts issued prior to April 16,1990	$	1,016	–	–	–	–
Single Premium contracts issued on or after April 16, 1990		–	–	–	–	–
Multiple Payment and Flexible Premium contracts		8,060	696	2,769	267	2,417
Total	$	9,076	696	2,769	267	2,417
	TRowEqInc2		TRowLtdTBd2	DrySRGro	VEWrldBd	VEWrldEMkt
Single Premium contracts issued prior to April 16,1990	$	–	–	1,652	7,038	12,353
Single Premium contracts issued on or after April 16, 1990		–	–	–	118	–
Multiple Payment and Flexible Premium contracts		8,475	1,139	54,467	11,797	59,218
Total	$	8,475	1,139	56,119	18,953	71,571
	VEWrldHAs		VKUCorPlus	VKUEmMkt	VKUUSRE	WFVDisc
Single Premium contracts issued prior to April 16,1990	$	22,405	–	1,267	17,289	4,746
Single Premium contracts issued on or after April 16, 1990		–	–	118	–	–
Multiple Payment and Flexible Premium contracts		56,805	2,365	10,448	121,123	47,192
Total	$	79,210	2,365	11,833	138,412	51,938
	WFVOpp
Single Premium contracts issued prior to April 16,1990	$	21,507
Single Premium contracts issued on or after April 16, 1990		132
Multiple Payment and Flexible Premium contracts		183,769
Total	$	205,408

(Continued)

60

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

(4) Death Benefits

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

(5) Policy Loans (Net of Repayments)  

Contract provisions allow contract owners to borrow up to 90% (50% during 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 credited back to the Account.

(6) Related Party Transactions  

The Company performs various services on behalf of the Mutual Fund Companies in which the Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, 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, 2007 and 2006, total transfers into the Account from the fixed account were $25,005,246 and $25,634,866, respectively, and total transfers from the Account to the fixed account were $26,261,704 and $30,150,545, respectively.

(Continued)

61

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, 2007.

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Modified Single Premium contracts and Last Survivor Flexible Premium contracts
AIM VIF – Basic Value Fund – Series I
2007	0.00%	1,070	$	17.641592	$	18,877	0.50%	1.54%
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 VIF – Capital Appreciation Fund – Series I
2007	0.00%	692		17.125365		11,851	0.00%	12.01%
2005	0.00%	780		14.382523		11,218	0.04%	8.84%
2004	0.00%	76		13.214909		1,004	0.00%	6.63%
2003	0.00%	78		12.393708		967	0.00%	23.94%	05/01/03
AIM VIF – Capital Development Fund – Series I
2007	0.00%	2,980		21.270438		63,386	0.00%	10.84%
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 VPS – Growth and Income Portfolio – Class A
2007	0.00%	18,646		17.929588		334,315	1.55%	5.12%
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 VPS – Small/Mid Cap Value Portfolio – Class A
2007	0.00%	4,368		20.478040		89,448	1.06%	1.70%
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 VP – Balanced Fund – Class I
2007	0.00%	27,022		21.683809		585,940	2.12%	4.94%
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%
American Century VP – Capital Appreciation Fund – Class I
2007	0.00%	57,452		23.730825		1,363,383	0.00%	45.80%
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%
American Century VP – Income & Growth Fund – Class I
2007	0.00%	27,666		15.233128		421,440	1.88%	-0.07%
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%
American Century VP – Inflation Protection Fund – Class II
2007	0.00%	16,186		12.340997		199,751	4.41%	9.49%
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

(Continued)

62

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

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century VP – International Fund – Class I
2007	0.00%	38,002	$	27.938306	$	1,061,712	0.72%	18.06%
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%
American Century VP – International Fund – Class III
2007	0.00%	25,082		17.230511		432,176	0.60%	18.06%
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 VP – Mid Cap Value Fund – Class I
2007	0.00%	3,036		13.306496		40,399	0.70%	-2.31%
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 VP – Ultra® Fund – Class I
2007	0.00%	9,952		13.288079		132,243	0.00%	21.02%
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%
American Century VP – Value Fund – Class I
2007	0.00%	72,996		26.987072		1,969,948	1.65%	-5.14%
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%
American Century VP – VistaSM Fund – Class I
2007	0.00%	5,970		17.466180		104,273	0.00%	39.77%
Credit Suisse Trust – Global Small Cap Portfolio
2007	0.00%	8,174		16.814740		137,444	0.00%	-3.96%
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%
Credit Suisse Trust – International Focus Portfolio
2007	0.00%	56,358		17.966043		1,012,530	1.08%	16.60%
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%
Credit Suisse Trust – Small Cap Core I Portfolio
2007	0.00%	94,682		14.178269		1,342,427	0.00%	-0.83%
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%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares
2007	0.00%	26,930		15.709599		423,060	0.37%	-0.65%
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%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2007	0.00%	420,020		26.340376		11,063,485	1.70%	5.26%
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%

(Continued)

63

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

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2007	0.00%	53,388	$	18.514426	$	988,448	1.61%	7.13%
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%
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares
2007	0.00%	178		14.026060		2,497	0.83%	-11.06%
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 VIF – Growth and Income Portfolio – Initial Shares
2007	0.00%	33,820		17.918567		606,006	0.76%	8.45%
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%
Federated IS – 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 IS – Quality Bond Fund II – Primary Shares
2007	0.00%	17,856		12.999880		232,126	4.97%	5.38%
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%
Fidelity® VIP – Equity-Income Portfolio – Initial Class
2007	0.00%	278,062		26.368140		7,331,978	1.77%	1.53%
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%
Fidelity® VIP – Growth Portfolio – Initial Class
2007	0.00%	275,376		24.975885		6,877,759	0.82%	26.96%
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%
Fidelity® VIP – High Income Portfolio – Initial Class
2007	0.00%	140,988		15.287268		2,155,321	7.41%	2.79%
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%
Fidelity® VIP – High Income Portfolio – Initial Class R
2007	0.00%	10,246		9.890596		101,339	11.21%	-1.09%	05/01/07
Fidelity® VIP – Overseas Portfolio – Initial Class
2007	0.00%	74,300		26.138222		1,942,070	3.29%	17.31%
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%
Fidelity® VIP – Overseas Portfolio – Service Class R
2007	0.00%	38,404		17.283296		663,748	3.21%	17.23%
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

(Continued)

64

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

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® VIP II – Asset Manager Portfolio – Initial Class
2007	0.00%	54,336	$	22.938056	$	1,246,362	6.08%	15.50%
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%
Fidelity® VIP II – Contrafund® Portfolio – Initial Class
2007	0.00%	224,578		38.182151		8,574,871	0.93%	17.59%
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%
Fidelity® VIP II – Investment Grade Bond Portfolio – Service Class
2007	0.00%	30,732		11.826500		363,452	4.06%	4.21%
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® VIP III – Growth Opportunities Portfolio – Initial Class
2007	0.00%	45,896		15.610808		716,474	0.00%	23.18%
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%
Fidelity® VIP III – Mid Cap Portfolio – Service Class
2007	0.00%	30,584		27.011367		826,116	0.70%	15.49%
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® VIP III – Value Strategies Portfolio – Service Class
2007	0.00%	21,268		16.996302		361,477	0.83%	5.60%
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%
Fidelity® VIP IV – Energy Portfolio – Service Class 2
2007	0.00%	27,034		22.953063		620,513	0.12%	45.64%
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® VIP IV – Freedom Fund 2010 Portfolio – Service Class
2007	0.00%	4,590		12.888793		59,160	5.88%	8.65%
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® VIP IV – Freedom Fund 2020 Portfolio – Service Class
2007	0.00%	8,938		13.695591		122,411	2.17%	10.17%
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 VIP – Developing Markets Securities Fund – Class 3
2007	0.00%	12,404		21.120230		261,975	2.20%	28.70%
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 VIP – Foreign Securities Fund – Class 1
2007	0.00%	5,050		24.554735		124,001	2.23%	15.79%
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 VIP – Foreign Securities Fund – Class 3
2007	0.00%	29,610		15.828965		468,696	2.03%	15.45%
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

(Continued)

65

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 VIP – Global Income Securities Fund – Class 3
2007	0.00%	12,206	$	12.380292	$	151,114	2.64%	11.03%
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
Franklin Templeton VIP – Income Securities Fund – Class 2
2007	0.00%	11,684		11.637657		135,974	3.26%	3.76%
2006	0.00%	7,444		11.216304		83,494	0.00%	12.16%	05/01/06
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1
2007	0.00%	26,128		16.266644		425,015	2.53%	-2.41%
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 VIP – Small Cap Value Securities Fund – Class 1
2007	0.00%	7,310		20.738061		151,595	0.88%	-2.14%
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
Gartmore GVIT –Small Cap Growth Fund: Class I–Intial Funding by Depositor
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%
Janus Aspen Series – Balanced Portfolio – Service Shares
2007	0.00%	624		15.660699		9,772	1.92%	10.29%
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%
Janus Aspen Series – Forty Portfolio – Service Shares
2007	0.00%	51,646		12.409688		640,911	0.19%	36.63%
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%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2007	0.00%	53,308		5.412137		288,510	0.37%	21.70%
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%
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2007	0.00%	848		18.842190		15,978	0.36%	6.13%
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
2007	0.00%	20,534		14.893765		305,829	0.50%	28.07%
2006	0.00%	26,134		11.629148		303,916	1.97%	16.29%	05/01/06
Janus Aspen Series – International Growth Portfolio – Service Shares
2007	0.00%	65,132		17.876194		1,164,312	0.43%	28.02%
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%
Lehman Brothers AMT – Short Duration Bond Portfolio – I Class
2007	0.00%	47,302		16.571972		783,887	2.65%	4.77%
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%

(Continued)

66

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
MFS VIT – Investors Growth Stock Series – Initial Class
2007	0.00%	760	$	15.850552	$	12,046	0.34%	11.36%
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 VIT – Value Series – Initial Class
2007	0.00%	9,498		19.812092		188,175	0.91%	7.91%
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
Nationwide VIT – American Funds Asset Allocation Fund – Class II
2007	0.00%	18,106		11.205324		202,884	2.56%	6.14%
2006	0.00%	9,828		10.556998		103,754	3.56%	5.57%	05/01/06
Nationwide VIT – American Funds Bond Fund – Class II
2007	0.00%	6,166		10.853118		66,920	8.87%	2.98%
Nationwide VIT – American Funds Global Growth Fund – Class II
2007	0.00%	8,996		12.399481		111,546	2.69%	14.36%
2006	0.00%	2,236		10.842096		24,243	0.07%	8.42%	05/01/06
Nationwide VIT – American Funds Growth Fund – Class II
2007	0.00%	4,432		11.597638		51,401	0.68%	11.90%
2006	0.00%	288		10.364424		2,985	1.29%	3.64%	05/01/06
Nationwide VIT – Federated High Income Bond Fund – Class I
2007	0.00%	5,886		14.296317		84,148	7.20%	3.13%
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
Nationwide VIT – Federated High Income Bond Fund – Class III
2007	0.00%	9,004		12.027193		108,293	8.02%	3.17%
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
Nationwide VIT – Gartmore Emerging Markets Fund – Class I
2007	0.00%	4,872		36.889137		179,724	0.71%	45.58%
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%
Nationwide VIT – Gartmore Emerging Markets Fund – Class III
2007	0.00%	44,814		26.524857		1,188,685	0.74%	45.55%
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
Nationwide VIT – Gartmore Global Utilities Fund – Class I
2007	0.00%	13,688		24.676248		337,768	2.36%	20.43%
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%
Nationwide VIT – Gartmore International Growth Fund – Class I
2007	0.00%	13,744		17.076402		234,698	0.38%	27.15%
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%
Nationwide VIT – Global Financial Services Fund – Class I
2007	0.00%	6,516		19.621675		127,855	3.13%	-1.05%
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%

(Continued)

67

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***
Nationwide VIT – Global Health Sciences Fund – Class I
2007	0.00%	2,924	$	15.497697	$	45,315	0.08%	13.16%
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%
Nationwide VIT – Global Health Sciences Fund – Class III
2007	0.00%	1,306		12.491648		16,314	0.09%	13.23%
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
Nationwide VIT – Global Technology and Communications Fund – Class I
2007	0.00%	10,448		4.241547		44,316	0.00%	20.09%
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%
Nationwide VIT – Global Technology and Communications Fund – Class III
2007	0.00%	1,330		16.444438		21,871	0.00%	20.19%
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
Nationwide VIT – Government Bond Fund – Class I
2007	0.00%	97,024		20.096370		1,949,830	4.45%	7.16%
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%
Nationwide VIT – Growth Fund – Class I
2007	0.00%	104,626		15.454811		1,616,975	0.17%	19.54%
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%
Nationwide VIT – International Value Fund – Class I
2007	0.00%	1,206		23.734976		28,624	2.06%	2.92%
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
Nationwide VIT – International Value Fund – Class III
2007	0.00%	10,900		14.468946		157,712	2.12%	2.93%
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
Nationwide VIT – Investor Destinations Aggressive Fund – Class II
2007	0.00%	5,888		16.743624		98,586	2.03%	5.96%
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%
Nationwide VIT – Investor Destinations Conservative Fund – Class II
2007	0.00%	4,112		13.117367		53,939	3.97%	5.38%
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%
Nationwide VIT – Investor Destinations Moderate Fund – Class II
2007	0.00%	89,402		14.896957		1,331,818	2.62%	5.66%
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%

(Continued)

68

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***
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II
2007	0.00%	50,888	$	16.055259	$	817,020	2.25%	6.15%
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%
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II
2007	0.00%	13,564		14.088774		191,100	2.92%	5.86%
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%
Nationwide VIT – Mid Cap Growth Fund – Class I
2007	0.00%	16,598		7.604065		126,212	0.00%	9.01%2
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%
Nationwide VIT – Mid Cap Index Fund – Class I
2007	0.00%	51,172		18.152010		928,875	1.35%	7.56%
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%
Nationwide VIT – Money Market Fund – Class I
2007	0.00%	553,934		15.235553		8,439,491	4.64%	4.79%2
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%
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class I
2007	0.00%	17,950		9.004045		161,623	0.00%	9.75%
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I
2007	0.00%	71,274		23.666727		1,686,822	1.10%	-6.89%
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%
Nationwide VIT – Multi-Manager Small Company Fund – Class I
2007	0.00%	118,982		32.550692		3,872,946	0.09%	2.13%
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%
Nationwide VIT – Nationwide Fund – Class I
2007	0.00%	215,182		24.661007		5,306,605	1.05%	8.18%
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%
Nationwide VIT – Nationwide Leaders Fund – Class I
2007	0.00%	5,280		17.979434		94,931	1.15%	11.56%
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%
Nationwide VIT – U.S. Growth Leaders Fund – Class I
2007	0.00%	10,106		19.237188		194,411	0.00%	22.49%
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%

(Continued)

69

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***
Nationwide VIT – Van Kampen Comstock Value Fund – Class I
2007	0.00%	8,692	$	17.592080	$	152,910	1.71%	-2.22%
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
Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I
2007	0.00%	9,784		15.689482		153,506	4.10%	4.62%
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%
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares
2007	0.00%	544		15.355015		8,353	0.00%	0.52%
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 AMT – Growth Portfolio- Class I
2007	0.00%	64,996		22.802283		1,482,057	0.00%	22.70%
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%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2007	0.00%	13,170		15.878484		209,120	0.26%	7.39%
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%
Neuberger Berman AMT – International Portfolio – Class S
2007	0.00%	5,680		14.972222		85,042	1.68%	3.21%
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 AMT – Mid-Cap Growth Portfolio – Class S
2007	0.00%	950		22.685497		21,551	0.00%	22.20%
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 AMT – Partners Portfolio- Class I
2007	0.00%	179,968		29.127775		5,242,067	0.64%	9.34%
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%
Neuberger Berman AMT – Regency Portfolio – Class S
2007	0.00%	6,414		13.332382		85,514	0.66%	3.05%
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 AMT – Socially Responsive Portfolio Class I
2007	0.00%	2,698		18.328379		49,450	0.09%	7.61%
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 VAF – Balanced Fund – Non-Service Shares
2007	0.00%	51,554		24.570849		1,266,726	2.57%	3.79%
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%

(Continued)

70

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Oppenheimer VAF – Capital Appreciation Fund – Non-Service Shares
2007	0.00%	58,424	$	21.319679	$	1,245,581	0.23%	14.15%
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%
Oppenheimer VAF – Core Bond Fund – Non-Service Shares
2007	0.00%	85,066		19.378308		1,648,435	5.26%	4.39%
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%
Oppenheimer VAF – Global Securities Fund – Class 3
2007	0.00%	48,132		15.092302		726,423	1.25%	6.34%
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 VAF – Global Securities Fund – Non-Service Shares
2007	0.00%	69,624		42.082850		2,929,976	1.37%	6.32%
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%
Oppenheimer VAF – High Income Fund – Non-Service Shares
2007	0.00%	8,188		13.627157		111,579	6.11%	-0.10%
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 VAF – Main Street Small Cap Fund®– Non-Service Shares
2007	0.00%	6,170		20.683895		127,620	0.32%	-1.21%
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
Oppenheimer VAF – Main Street®– Non-Service Shares
2007	0.00%	39,470		11.662711		460,327	1.00%	4.42%
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%
Oppenheimer VAF – Mid Cap Fund – Non-Service Shares
2007	0.00%	13,234		7.183358		95,065	0.00%	6.33%
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%
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 VT – International Equity Fund – IB Shares
2007	0.00%	1,362		23.093467		31,453	2.65%	8.37%
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 VT – Voyager Fund – IB Shares
2007	0.00%	2,622		14.640393		38,387	0.00%	5.52%
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

(Continued)

71

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***
T. Rowe Price Blue Chip Growth Portfolio – II
2007	0.00%	2,696	$	13.915435	$	37,516	0.12%	12.49%
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
2007	0.00%	8,510		13.002714		110,653	1.53%	3.03%
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
T. Rowe Price Limited Term Bond Portfolio – Class II
2007	0.00%	3,446		11.086232		38,203	3.91%	5.23%
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares
2007	0.00%	29,132		19.305130		562,397	0.53%	7.79%
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%
Turner GVIT Growth Focus Fund – Class I
2003	0.00%	35,452		3.336873		118,299	0.00%	50.96%
Van Eck Worldwide Insurance Trust – Bond Fund – Initial Class
2007	0.00%	12,120		19.230801		233,077	5.77%	9.71%
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%
Van Eck Worldwide Insurance Trust – Emerging Markets Fund – Initial Class
2007	0.00%	66,814		32.046703		2,141,168	0.43%	37.61%
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%
Van Eck Worldwide Insurance Trust – Hard Assets Fund – Initial Class
2007	0.00%	38,468		39.522005		1,520,332	0.11%	45.36%
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%
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I
2007	0.00%	1,932		12.175696		23,523	3.05%	5.45%
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 UIF – Emerging Markets Debt Portfolio – Class I
2007	0.00%	11,312		22.844597		258,418	7.41%	6.53%
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%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2007	0.00%	38,256		49.750947		1,903,272	1.10%	-17.07%
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%
Wells Fargo AVT – Discovery FundSM
2007	0.00%	14,270		29.066542		414,780	0.00%	22.32%
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%

(Continued)

72

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 AVT – Opportunity FundSM
2007	0.00%	55,488	$	32.499052	$	1,803,307	0.61%	6.63%
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%
Single Premium contracts issued prior to April 16, 1990 (policy years 11 and thereafter)
AIM VIF – Basic Value Fund – Series I
2007	0.50%	40,204		17.234687		692,903	0.50%	1.03%
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 VIF – Capital Appreciation Fund – Series I
2007	0.50%	17,866		16.730402		298,905	0.00%	11.45%
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 VIF – Capital Development Fund – Series I
2007	0.50%	23,104		20.779892		480,099	0.00%	10.29%
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 VPS – Growth and Income Portfolio – Class A
2007	0.50%	20,390		17.516124		357,154	1.55%	4.59%
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 VPS – Small/Mid Cap Value Portfolio – Class A
2007	0.50%	38,038		20.005857		760,983	1.06%	1.19%
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 VP – Balanced Fund – Class I
2007	0.50%	72,948		27.155398		1,980,932	2.12%	4.41%
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%
American Century VP – Capital Appreciation Fund – Class I
2007	0.50%	191,634		58.930990		11,293,181	0.00%	45.07%
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%
American Century VP – Income & Growth Fund – Class I
2007	0.50%	111,674		14.514258		1,620,865	1.88%	-0.57%
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%
American Century VP – Inflation Protection Fund – Class II
2007	0.50%	44,004		12.055397		530,486	4.41%	8.94%
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)

73

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century VP – International Fund – Class I
2007	0.50%	180,196	$	28.924155	$	5,212,017	0.72%	17.46%
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%
American Century VP – International Fund – Class III
2007	0.50%	129,282		17.002494		2,198,116	0.60%	17.46%
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 VP – Mid Cap Value Fund – Class I
2007	0.50%	69,408		13.130382		911,354	0.70%	-2.80%
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 VP – Ultra® Fund – Class I
2007	0.50%	51,430		12.916798		664,311	0.00%	20.41%
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 VP – Value Fund – Class I
2007	0.50%	241,306		25.400814		6,129,369	1.65%	-5.61%
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%
American Century VP – VistaSM Fund – Class I
2007	0.50%	80,738		17.235095		1,391,527	0.00%	39.07%
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
2007	0.50%	19,506		15.825884		308,700	0.00%	-4.44%
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%
Credit Suisse Trust – International Focus Portfolio
2007	0.50%	215,496		19.806457		4,268,212	1.08%	16.01%
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%
Credit Suisse Trust – Small Cap Core I Portfolio
2007	0.50%	277,018		19.080287		5,285,583	0.00%	-1.33%
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%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares
2007	0.50%	47,664		15.270683		727,862	0.37%	-1.15%
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%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2007	0.50%	950,264		36.056885		34,263,560	1.70%	4.73%
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%

(Continued)

74

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2007	0.50%	117,308	$	17.518498	$	2,055,060	1.61%	6.60%
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%
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares
2007	0.50%	9,412		13.702540		128,968	0.83%	-11.51%
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 VIF – Growth and Income Portfolio – Initial Shares
2007	0.50%	42,986		16.865204		724,968	0.76%	7.90%
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 IS – American Leaders Fund II – Primary Shares
2007	0.50%	7,374		14.973799		110,417	1.55%	-10.12%
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 IS – Capital Appreciation Fund II – Primary Shares
2007	0.50%	254		16.457068		4,180	0.71%	9.33%
2005	0.50%	1,354		13.017510		17,626	1.07%	1.41%
2004	0.50%	1,276		12.836844		16,380	0.28%	6.86%
Federated IS – Market Opportunity Fund II – Service Shares
2007	0.50%	246		10.155871		2,498	0.57%	-1.98%
Federated IS – Quality Bond Fund II – Primary Shares
2007	0.50%	26,966		12.636630		340,759	4.97%	4.86%
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® VIP – Equity-Income Portfolio – Initial Class
2007	0.50%	592,452		68.682638		40,691,166	1.77%	1.02%
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%
Fidelity® VIP – Growth Portfolio – Initial Class
2007	0.50%	622,446		77.381327		48,165,697	0.82%	26.33%
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%
Fidelity® VIP – High Income Portfolio – Initial Class
2007	0.50%	247,158		32.546729		8,044,184	7.41%	2.27%
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%
Fidelity® VIP – High Income Portfolio – Initial Class R
2007	0.50%	122,470		9.857586		1,207,259	11.21%	-1.42%	05/01/07
Fidelity® VIP – Overseas Portfolio – Initial Class
2007	0.50%	220,112		45.333254		9,978,393	3.29%	16.72%
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%

(Continued)

75

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

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® VIP – Overseas Portfolio – Service Class R
2007	0.50%	238,614	$	17.054609	$	4,069,468	3.21%	16.64%
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
Fidelity® VIP II – Asset Manager Portfolio – Initial Class
2007	0.50%	306,478		40.213337		12,324,503	6.08%	14.92%
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%
Fidelity® VIP II – Contrafund® Portfolio – Initial Class
2007	0.50%	1,000,686		42.579734		42,608,944	0.93%	17.00%
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%
Fidelity® VIP II – Investment Grade Bond Portfolio – Service Class
2007	0.50%	239,992		11.553678		2,772,790	4.06%	3.69%
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® VIP III – Growth Opportunities Portfolio – Initial Class
2007	0.50%	94,062		14.770825		1,389,373	0.00%	22.57%
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%
Fidelity® VIP III – Mid Cap Portfolio – Service Class
2007	0.50%	272,886		26.388591		7,201,077	0.70%	14.91%
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® VIP III – Value Strategies Portfolio – Service Class
2007	0.50%	40,724		16.521474		672,821	0.83%	5.07%
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® VIP IV – Energy Portfolio – Service Class 2
2007	0.50%	214,326		22.649325		4,854,339	0.12%	44.91%
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® VIP IV – Freedom Fund 2010 Portfolio – Service Class
2007	0.50%	71,358		12.718211		907,546	5.88%	8.10%
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® VIP IV – Freedom Fund 2020 Portfolio – Service Class
2007	0.50%	38,608		13.514322		521,761	2.17%	9.61%
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® VIP IV – Freedom Fund 2030 Portfolio – Service Class
2007	0.50%	35,470		14.068082		498,995	2.76%	10.65%
2006	0.50%	17,674		12.713976		224,707	5.31%	12.59%
Franklin Templeton VIP – Developing Markets Securities Fund – Class 3
2007	0.50%	102,474		20.840783		2,135,638	2.20%	28.05%
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)

76

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 VIP – Foreign Securities Fund – Class 1
2007	0.50%	21,480	$	23.988549	$	515,274	2.23%	15.21%
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 VIP – Foreign Securities Fund – Class 3
2007	0.50%	118,810		15.619506		1,855,754	2.03%	14.87%2
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 VIP – Global Income Securities Fund – Class 3
2007	0.50%	120,218		12.216405		1,468,632	2.64%	10.48%
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
Franklin Templeton VIP – Income Securities Fund – Class 2
2007	0.50%	81,232		11.541005		937,499	3.26%	3.24%
2006	0.50%	8,720		11.179202		97,483	0.00%	11.79%	05/01/06
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1
2007	0.50%	167,510		15.891491		2,661,984	2.53%	-2.90%
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 VIP – Small Cap Value Securities Fund – Class 1
2007	0.50%	109,944		20.259847		2,227,449	0.88%	-2.63%
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
Gartmore GVIT – Small Cap Growth Fund: Class I – Intial Funding by Depositor
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%
Janus Aspen Series – Balanced Portfolio – Service Shares
2007	0.50%	13,348		15.299488		204,218	1.92%	9.73%
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
2007	0.50%	198,870		11.942871		2,375,079	0.19%	35.95%
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%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2007	0.50%	126,802		5.208409		660,437	0.37%	21.09%
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%
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2007	0.50%	5,388		18.407712		99,181	0.36%	5.60%
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
2007	0.50%	326,560		14.770042		4,823,305	0.50%	27.43%
2006	0.50%	121,018		11.590627		1,402,674	1.97%	15.91%	05/01/06

(Continued)

77

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 – International Growth Portfolio – Service Shares
2007	0.50%	103,560	$	17.203858	$	1,781,632	0.43%	27.38%
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%
Lehman Brothers AMT – Short Duration Bond Portfolio – I Class
2007	0.50%	68,620		24.470719		1,679,181	2.65%	4.25%
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%
MFS VIT – Investors Growth Stock Series – Initial Class
2007	0.50%	10,876		15.485007		168,415	0.34%	10.80%
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 VIT – Value Series – Initial Class
2007	0.50%	49,510		19.355242		958,278	0.91%	7.37%
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%
Nationwide VIT – American Funds Asset Allocation Fund – Class II
2007	0.50%	52,982		11.112234		588,748	2.56%	5.61%
2006	0.50%	2,762		10.522054		29,062	3.56%	5.22%	05/01/06
Nationwide VIT – American Funds Bond Fund – Class II
2007	0.50%	70,206		10.762995		755,627	8.87%	2.47%
2006	0.50%	22,766		10.504005		239,134	0.05%	5.04%	05/01/06
Nationwide VIT – American Funds Global Growth Fund – Class II
2007	0.50%	88,882		12.296498		1,092,937	2.69%	13.79%
2006	0.50%	64,864		10.806217		700,934	0.07%	8.06%	05/01/06
Nationwide VIT – American Funds Growth – Income Fund – Class II
2007	0.50%	34,752		9.859308		342,631	3.27%	-1.41%	05/01/07
Nationwide VIT – American Funds Growth Fund – Class II
2007	0.50%	107,408		11.501279		1,235,329	0.68%	11.34%
2006	0.50%	44,756		10.330117		462,335	1.29%	3.30%	05/01/06
Nationwide VIT – Federated High Income Bond Fund – Class I
2007	0.50%	5,162		13.966626		72,096	7.20%	2.62%
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%
Nationwide VIT – Federated High Income Bond Fund – Class III
2007	0.50%	35,436		11.868017		420,555	8.02%	2.65%
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
Nationwide VIT – Gartmore Emerging Markets Fund – Class I
2007	0.50%	37,816		35.576728		1,345,370	0.71%	44.85%
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%
Nationwide VIT – Gartmore Emerging Markets Fund – Class III
2007	0.50%	196,328		26.174039		5,138,697	0.74%	44.82%
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
Nationwide VIT – Gartmore Global Utilities Fund – Class I
2007	0.50%	44,614		23.987048		1,070,158	2.36%	19.83%
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%

(Continued)

78

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***
Nationwide VIT – Gartmore International Growth Fund – Class I
2007	0.50%	64,516	$	16.468629	$	1,062,490	0.38%	26.51%
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%
Nationwide VIT – Global Financial Services Fund – Class I
2007	0.50%	20,752		19.073551		395,814	3.13%	-1.55%
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%
Nationwide VIT – Global Health Sciences Fund – Class I
2007	0.50%	7,226		15.064598		108,857	0.08%	12.59%
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%
Nationwide VIT – Global Health Sciences Fund – Class III
2007	0.50%	38,088		12.326279		469,483	0.09%	12.66%
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
Nationwide VIT – Global Technology and Communications Fund – Class I
2007	0.50%	53,296		4.090476		218,006	0.00%	19.49%
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%
Nationwide VIT – Global Technology and Communications Fund – Class III
2007	0.50%	37,420		16.226798		607,207	0.00%	19.58%
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
Nationwide VIT – Government Bond Fund – Class I
2007	0.50%	132,504		35.151974		4,657,777	4.45%	6.62%
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%
Nationwide VIT – Growth Fund – Class I
2007	0.50%	262,256		22.910775		6,008,488	0.17%	18.94%
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%
Nationwide VIT – International Index Fund – Class VI
2007	0.50%	31,716		11.917827		377,986	1.82%	8.95%
2006	0.50%	530		10.938962		5,798	1.38%	9.39%	05/01/06
Nationwide VIT – International Value Fund – Class I
2007	0.50%	22,414		23.187675		519,729	2.06%	2.40%
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
Nationwide VIT – International Value Fund – Class III
2007	0.50%	111,682		14.277421		1,594,531	2.12%	2.42%
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
Nationwide VIT – Investor Destinations Aggressive Fund – Class II
2007	0.50%	199,734		16.254455		3,246,567	2.03%	5.43%
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%

(Continued)

79

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***
Nationwide VIT – Investor Destinations Conservative Fund – Class II
2007	0.50%	41,486	$	12.734093	$	528,287	3.97%	4.85%
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%
Nationwide VIT – Investor Destinations Moderate Fund – Class II
2007	0.50%	214,672		14.461679		3,104,518	2.62%	5.13%
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%	85,142		11.844428		1,008,103	2.27%	8.99%
2003	0.50%	16,518		10.867503		179,509	2.06%	19.45%
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II
2007	0.50%	210,008		15.586169		3,273,220	2.25%	5.62%
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%
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II
2007	0.50%	22,454		13.677144		307,107	2.92%	5.33%
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%
Nationwide VIT – Mid Cap Growth Fund – Class I
2007	0.50%	83,188		7.317914		608,763	0.00%	8.47%
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%
Nationwide VIT – Mid Cap Index Fund – Class I
2007	0.50%	221,386		17.469317		3,867,462	1.35%	7.02%
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%
Nationwide VIT – Money Market Fund – Class I
2007	0.50%	847,514		20.635458		17,488,840	4.64%	4.27%
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%
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class I
2007	0.50%	126,230		8.665238		1,093,813	0.00%	9.20%
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I
2007	0.50%	195,390		22.549722		4,405,990	1.10%	-7.36%
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%
Nationwide VIT – Multi-Manager Small Company Fund – Class I
2007	0.50%	385,134		40.445411		15,576,903	0.09%	1.62%
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%
Nationwide VIT – Nationwide Fund – Class I
2007	0.50%	592,642		54.197488		32,119,708	1.05%	7.64%
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%

(Continued)

80

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***
Nationwide VIT – Nationwide Leaders Fund – Class I
2007	0.50%	28,472	$	17.477126	$	497,609	1.15%	11.00	%
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	%
Nationwide VIT – U.S.Growth Leaders Fund – Class I
2007	0.50%	28,912		18.699798		540,649	0.00%	21.87	%
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	%
Nationwide VIT – Van Kampen Comstock Value Fund – Class I
2007	0.50%	36,330		17.186389		624,382	1.71%	-2.71	%
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
Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I
2007	0.50%	61,778		15.099593		932,823	4.10%	4.10	%
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	%
Neuberger Berman AMT – Balanced Portfolio – I Class Shares
2007	0.50%	14,752		14.559590		214,783	0.81%	15.02	%
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 AMT – Fasciano Portfolio – S Class Shares
2007	0.50%	5,616		15.000871		84,245	0.00%	0.01	%
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 AMT – Growth Portfolio- Class I
2007	0.50%	180,172		54.020381		9,732,960	0.00%	22.08	%
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	%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2007	0.50%	58,036		15.129140		878,035	0.26%	6.85	%
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	%
Neuberger Berman AMT – International Portfolio – Class S
2007	0.50%	17,036		14.774055		251,691	1.68%	2.70	%
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
Neuberger Berman AMT – Mid-Cap Growth Portfolio – Class S
2007	0.50%	31,008		22.162337		687,210	0.00%	21.59	%
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

(Continued)

81

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Neuberger Berman AMT – Partners Portfolio- Class I
2007	0.50%	325,884	$	41.589921	$	13,553,490	0.64%	8.79	%
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	%
Neuberger Berman AMT – Regency Portfolio – Class S
2007	0.50%	13,016		13.155851		171,237	0.66%	2.54	%
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 AMT – Socially Responsive Portfolio Class I
2007	0.50%	17,622		17.905737		315,535	0.09%	7.07	%
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 VAF – Balanced Fund – Non-Service Shares
2007	0.50%	155,028		40.315421		6,250,019	2.57%	3.27	%
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	%
Oppenheimer VAF – Capital Appreciation Fund – Non-Service Shares
2007	0.50%	221,522		20.172546		4,468,663	0.23%	13.58	%
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	%
Oppenheimer VAF – Core Bond Fund – Non-Service Shares
2007	0.50%	210,962		29.144443		6,148,370	5.26%	3.87	%
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	%
Oppenheimer VAF – Global Securities Fund – Class 3
2007	0.50%	337,926		14.892546		5,032,578	1.25%	5.80	%
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 VAF – Global Securities Fund – Non-Service Shares
2007	0.50%	400,936		49.082767		19,679,048	1.37%	5.79	%
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	%
Oppenheimer VAF – High Income Fund – Class 3
2007	0.50%	7,982		9.628770		76,857	0.00%	-3.71	%   05/01/07
Oppenheimer VAF – High Income Fund – Non-Service Shares
2007	0.50%	17,012		13.312822		226,478	6.11%	-0.60	%
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
Oppenheimer VAF – Main Street Small Cap Fund®– Non-Service Shares
2007	0.50%	38,846		20.206983		784,960	0.32%	-1.71	%
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 VAF – Main Street®– Non-Service Shares
2007	0.50%	98,264		11.224071		1,102,922	1.00%	3.90	%
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%	26.90	%

(Continued)

82

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Oppenheimer VAF – Mid Cap Fund – Non-Service Shares
2007	0.50%	97,260	$	6.913096	$	672,368	0.00%	5.80	%
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	%
Putnam VT – Growth and Income Fund – IB Shares
2007	0.50%	5,046		15.457268		77,997	1.31%	-6.51	%
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 VT – International Equity Fund – IB Shares
2007	0.50%	15,198		22.560940		342,881	2.65%	7.82	%
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 VT – Voyager Fund – IB Shares
2007	0.50%	1,450		14.302715		20,739	0.00%	4.99	%
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	%
T. Rowe Price Blue Chip Growth Portfolio – II
2007	0.50%	41,802		13.731252		573,994	0.12%	11.92	%
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
2007	0.50%	84,110		12.830632		1,079,184	1.53%	2.51	%
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
2007	0.50%	30,906		10.939079		338,083	3.91%	4.70	%
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
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares
2007	0.50%	133,118		28.017912		3,729,688	0.53%	7.25	%
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	%
Turner GVIT Growth Focus Fund – Class I
2003	0.50%	17,823		3.283013		58,513	0.00%	50.21	%
Van Eck Worldwide Insurance Trust – Bond Fund – Initial Class
2007	0.50%	62,084		25.275372		1,569,196	5.77%	9.16	%
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	%
Van Eck Worldwide Insurance Trust – Emerging Markets Fund – Initial Class
2007	0.50%	266,244		30.162210		8,030,507	0.43%	36.92	%
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	%
Van Eck Worldwide Insurance Trust – Hard Assets Fund – Initial Class
2007	0.50%	157,032		55.552048		8,723,449	0.11%	44.63	%
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	%

(Continued)

83

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I
2007	0.50%	34,752	$	11.894818	$	413,369	3.05%	4.92	%
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 UIF – Emerging Markets Debt Portfolio – Class I
2007	0.50%	69,830		21.615486		1,509,409	7.41%	6.00	%
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	%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2007	0.50%	173,362		51.418211		8,913,964	1.10%	-17.49	%
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	%
Wells Fargo AVT – Discovery FundSM
2007	0.50%	135,048		45.401702		6,131,409	0.00%	21.71	%
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	%
Wells Fargo AVT – Opportunity FundSM
2007	0.50%	313,396		60.885541		19,081,285	0.61%	6.10	%
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	%
Multiple Payment contracts and Flexible Premium contracts
AIM VIF – Basic Value Fund – Series I
2007	0.80%	10,750		16.995087		182,697	0.50%	0.73	%
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 VIF – Capital Appreciation Fund – Series I
2007	0.80%	2,752		16.497826		45,402	0.00%	11.12	%
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 VIF – Capital Development Fund – Series I
2007	0.80%	5,092		20.491015		104,340	0.00%	9.96	%
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 VPS – Growth and Income Portfolio – Class A
2007	0.80%	15,124		17.272663		261,232	1.55%	4.28	%
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 VPS – Small/Mid Cap Value Portfolio – Class A
2007	0.80%	10,032		19.727780		197,909	1.06%	0.89	%
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

(Continued)

84

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century VP – Balanced Fund – Class I
2007	0.80%	62,528	$	26.600354	$	1,663,267	2.12%	4.09	%
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	%
American Century VP – Capital Appreciation Fund – Class I
2007	0.80%	170,672		36.529047		6,234,486	0.00%	44.64	%
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	%
American Century VP – Income & Growth Fund – Class I
2007	0.80%	55,800		14.099337		786,743	1.88%	-0.87	%
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	%
American Century VP – Inflation Protection Fund – Class II
2007	0.80%	14,896		11.886541		177,062	4.41%	8.61	%
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 VP – International Fund – Class I
2007	0.80%	73,188		28.238561		2,066,724	0.72%	17.11	%
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	%
American Century VP – International Fund – Class III
2007	0.80%	56,198		16.867137		947,899	0.60%	17.11	%
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 VP – Mid Cap Value Fund – Class I
2007	0.80%	15,018		13.025836		195,622	0.70%	-3.09	%
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 VP – Ultra® Fund – Class I
2007	0.80%	11,886		12.699015		150,940	0.00%	20.05	%
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	%
American Century VP – Value Fund – Class I
2007	0.80%	102,224		24.709849		2,525,940	1.65%	-5.90	%
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	%
American Century VP – VistaSM Fund – Class I
2007	0.80%	18,398		17.097896		314,567	0.00%	38.65	%
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
2007	0.80%	13,468		15.395235		207,343	0.00%	-4.73	%
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	%

(Continued)

85

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 – International Focus Portfolio
2007	0.80%	91,976	$	19.310277	$	1,776,082	1.08%	15.66	%
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	%
Credit Suisse Trust – Small Cap Core I Portfolio
2007	0.80%	153,520		18.601963		2,855,773	0.00%	-1.63	%
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	%
Dreyfus IP – Small Cap Stock Index Portfolio – Service Shares
2007	0.80%	22,938		15.013257		344,374	0.37%	-1.45	%
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	%
Dreyfus Stock Index Fund, Inc. – Initial Shares
2007	0.80%	618,332		35.246027		21,793,746	1.70%	4.41	%
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	%
Dreyfus VIF – Appreciation Portfolio – Initial Shares
2007	0.80%	94,654		17.027724		1,611,742	1.61%	6.27	%
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	%
Dreyfus VIF – Developing Leaders Portfolio – Initial Shares
2007	0.80%	4,684		13.512011		63,290	0.83%	-11.77	%
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 VIF – Growth and Income Portfolio – Initial Shares
2007	0.80%	47,184		16.406411		774,120	0.76%	7.58	%
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	%
Federated IS – American Leaders Fund II – Primary Shares
2007	0.80%	1,754		14.765636		25,899	1.55%	-10.39	%
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 IS – Capital Appreciation Fund II – Primary Shares
2007	0.80%	626		16.228297		10,159	0.71%	9.00	%
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 IS – Market Opportunity Fund II – Service Shares
2007	0.80%	88		10.105146		889	0.57%	-2.27	%
Federated IS – Quality Bond Fund II – Primary Shares
2007	0.80%	22,236		12.423584		276,251	4.97%	4.54	%
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	%

(Continued)

86

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® VIP – Equity-Income Portfolio – Initial Class
2007	0.80%	336,206	$	56.363167	$	18,949,635	1.77%	0.72	%
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	%
Fidelity® VIP – Growth Portfolio – Initial Class
2007	0.80%	558,044		52.956740		29,552,191	0.82%	25.95	%
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	%
Fidelity® VIP – High Income Portfolio – Initial Class
2007	0.80%	118,930		30.491108		3,626,307	7.41%	1.96	%
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	%
Fidelity® VIP – High Income Portfolio – Initial Class R
2007	0.80%	30,864		9.837843		303,635	11.21%	-1.62	%   05/01/07
Fidelity® VIP – Overseas Portfolio – Initial Class
2007	0.80%	85,536		34.384792		2,941,138	3.29%	16.37	%
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	%
Fidelity® VIP – Overseas Portfolio – Service Class R
2007	0.80%	77,400		16.918813		1,309,516	3.21%	16.29	%
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® VIP II – Asset Manager Portfolio – Initial Class
2007	0.80%	132,782		34.628652		4,598,062	6.08%	14.58	%
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	%
Fidelity® VIP II – Contrafund® Portfolio – Initial Class
2007	0.80%	469,988		41.513259		19,510,734	0.93%	16.65	%
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	%
Fidelity® VIP II – Investment Grade Bond Portfolio – Service Class
2007	0.80%	36,890		11.393001		420,288	4.06%	3.38	%
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® VIP III – Growth Opportunities Portfolio – Initial Class
2007	0.80%	156,642		14.356892		2,248,892	0.00%	22.20	%
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	%
Fidelity® VIP III – Mid Cap Portfolio – Service Class
2007	0.80%	92,888		26.021877		2,417,120	0.70%	14.56	%
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

(Continued)

87

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® VIP III – Value Strategies Portfolio – Service Class
2007	0.80%	11,738	$	16.242952	$	190,660	0.83%	4.75	%
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	%
Fidelity® VIP IV – Energy Portfolio – Service Class 2
2007	0.80%	71,504		22.469019		1,606,625	0.12%	44.48	%
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® VIP IV – Freedom Fund 2010 Portfolio – Service Class
2007	0.80%	4,636		12.616940		58,492	5.88%	7.78	%
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® VIP IV – Freedom Fund 2020 Portfolio – Service Class
2007	0.80%	10,358		13.406718		138,867	2.17%	9.28	%
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® VIP IV – Freedom Fund 2030 Portfolio – Service Class
2007	0.80%	13,868		13.956079		193,543	2.76%	10.32	%
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 VIP – Developing Markets Securities Fund – Class 3
2007	0.80%	31,074		20.674924		642,453	2.20%	27.67	%
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 VIP – Foreign Securities Fund – Class 1
2007	0.80%	7,764		23.655125		183,658	2.23%	14.86	%
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 VIP – Foreign Securities Fund – Class 3
2007	0.80%	25,180		15.495120		390,167	2.03%	14.52	%
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 VIP – Global Income Securities Fund – Class 3
2007	0.80%	9,674		12.119103		117,240	2.64%	10.14	%
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
Franklin Templeton VIP – Income Securities Fund – Class 2
2007	0.80%	16,636		11.483411		191,038	3.26%	2.93	%
2006	0.80%	13,168		11.157005		146,915	0.00%	11.57	%   05/01/06
Franklin Templeton VIP – Rising Dividends Securities Fund – Class 1
2007	0.80%	61,684		15.670578		966,624	2.53%	-3.20	%
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 VIP – Small Cap Value Securities Fund – Class 1
2007	0.80%	37,560		19.978249		750,383	0.88%	-2.92	%
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
Gartmore GVIT – Small Cap Growth Fund: Class I – Intial Funding by Depositor
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	%

(Continued)

88

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
2007	0.80%	3,168	$	15.086774	$	47,795	1.92%	9.40	%
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
2007	0.80%	84,802		11.671311		989,751	0.19%	35.54	%
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	%
Janus Aspen Series – Global Technology Portfolio – Service Shares
2007	0.80%	63,600		5.089898		323,718	0.37%	20.72	%
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	%
Janus Aspen Series – INTECH Risk-Managed Core Portfolio – Service Shares
2007	0.80%	1,936		18.151877		35,142	0.36%	5.28	%
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
2007	0.80%	79,558		14.696304		1,169,209	0.50%	27.05	%
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
2007	0.80%	63,014		16.812702		1,059,436	0.43%	26.99	%
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	%
Lehman Brothers AMT – Short Duration Bond Portfolio – I Class
2007	0.80%	30,596		19.629002		600,569	2.65%	3.93	%
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	%
MFS VIT – Investors Growth Stock Series – Initial Class
2007	0.80%	3,892		15.269711		59,430	0.34%	10.47	%
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 VIT – Value Series – Initial Class
2007	0.80%	9,924		19.086229		189,412	0.91%	7.04	%
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
Nationwide VIT – American Funds Asset Allocation Fund – Class II
2007	0.80%	17,818		11.056758		197,009	2.56%	5.29	%
2006	0.80%	23,042		10.501149		241,967	3.56%	5.01	%   05/01/06
Nationwide VIT – American Funds Bond Fund – Class II
2007	0.80%	7,668		10.709255		82,119	8.87%	2.16	%
2006	0.80%	11,396		10.483128		119,466	0.05%	4.83	%   05/01/06
Nationwide VIT – American Funds Global Growth Fund – Class II
2007	0.80%	23,258		12.235118		284,564	2.69%	13.45	%
2006	0.80%	15,330		10.784738		165,330	0.07%	7.85	%   05/01/06

(Continued)

89

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***
Nationwide VIT – American Funds Growth – Income Fund – Class II
2007	0.80%	1,646	$	9.839552	$	16,196	3.27%	-1.60	%   05/01/07
Nationwide VIT – American Funds Growth Fund – Class II
2007	0.80%	27,580		11.443839		315,621	0.68%	11.00	%
2006	0.80%	17,582		10.309581		181,263	1.29%	3.10	%   05/01/06
Nationwide VIT – Federated High Income Bond Fund – Class I
2007	0.80%	3,306		13.772430		45,532	7.20%	2.31	%
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
Nationwide VIT – Federated High Income Bond Fund – Class III
2007	0.80%	11,368		11.773527		133,841	8.02%	2.34	%
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
Nationwide VIT – Gartmore Emerging Markets Fund – Class I
2007	0.80%	13,266		34.811779		461,813	0.71%	44.41	%
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	%
Nationwide VIT – Gartmore Emerging Markets Fund – Class III
2007	0.80%	61,574		25.965810		1,598,819	0.74%	44.38	%
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
Nationwide VIT – Gartmore Global Utilities Fund – Class I
2007	0.80%	18,462		23.582792		435,386	2.36%	19.47	%
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	%
Nationwide VIT – Gartmore International Growth Fund – Class I
2007	0.80%	24,468		16.114464		394,289	0.38%	26.13	%
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	%
Nationwide VIT – Global Financial Services Fund – Class I
2007	0.80%	8,522		18.752014		159,805	3.13%	-1.85	%
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	%
Nationwide VIT – Global Health Sciences Fund – Class I
2007	0.80%	2,752		14.810633		40,759	0.08%	12.25	%
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	%
Nationwide VIT – Global Health Sciences Fund – Class III
2007	0.80%	5,112		12.228112		62,510	0.09%	12.32	%
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
Nationwide VIT – Global Technology and Communications Fund – Class I
2007	0.80%	35,194		4.002446		140,862	0.00%	19.13	%
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	%

(Continued)

90

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***
Nationwide VIT – Global Technology and Communications Fund – Class III
2007	0.80%	8,672	$	16.097584	$	139,598	0.00%	19.22	%
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
Nationwide VIT – Government Bond Fund – Class I
2007	0.80%	102,864		26.510441		2,726,970	4.45%	6.30	%
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	%
Nationwide VIT – Growth Fund – Class I
2007	0.80%	427,558		22.441944		9,595,233	0.17%	18.59	%
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	%
Nationwide VIT – International Index Fund – Class VI
2007	0.80%	678		11.858321		8,040	1.82%	8.62	%
2006	0.80%	1,052		10.917219		11,485	1.38%	9.17	%   05/01/06
Nationwide VIT – International Value Fund – Class I
2007	0.80%	5,630		22.865372		128,732	2.06%	2.09	%
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
Nationwide VIT – International Value Fund – Class III
2007	0.80%	30,584		14.163711		433,183	2.12%	2.11	%
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
Nationwide VIT – Investor Destinations Aggressive Fund – Class II
2007	0.80%	73,246		15.967821		1,169,579	2.03%	5.11	%
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	%
Nationwide VIT – Investor Destinations Conservative Fund – Class II
2007	0.80%	19,826		12.509560		248,015	3.97%	4.54	%
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	%
Nationwide VIT – Investor Destinations Moderate Fund – Class II
2007	0.80%	137,718		14.206661		1,956,513	2.62%	4.81	%
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	%
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II
2007	0.80%	177,620		15.311321		2,719,597	2.25%	5.30	%
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	%
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II
2007	0.80%	100,130		13.435963		1,345,343	2.92%	5.01	%
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	%

(Continued)

91

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

	Contract Expense Rate*	Units	Units Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Nationwide VIT – Mid Cap Growth Fund – Class I
2007	0.80%	39,732	$	7.151367	$	284,138	0.00%	8.14	%
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	%
Nationwide VIT – Mid Cap Index Fund – Class I
2007	0.80%	81,490		17.072106		1,391,206	1.35%	6.70	%
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	%
Nationwide VIT – Money Market Fund – Class I
2007	0.80%	329,710		16.477531		5,432,807	4.64%	3.95	%
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	%
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class I
2007	0.80%	29,062		8.468125		246,101	0.00%	8.87	%
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I
2007	0.80%	92,646		21.905042		2,029,415	1.10%	-7.64	%
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	%
Nationwide VIT – Multi-Manager Small Company Fund – Class I
2007	0.80%	190,308		39.414039		7,500,807	0.09%	1.31	%
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	%
Nationwide VIT – Nationwide Fund – Class I
2007	0.80%	846,056		43.389809		36,710,208	1.05%	7.31	%
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	%
Nationwide VIT – Nationwide Leaders Fund – Class I
2007	0.80%	7,118		17.182548		122,305	1.15%	10.67	%
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	%
Nationwide VIT – U.S. Growth Leaders Fund – Class I
2007	0.80%	7,828		18.384573		143,914	0.00%	21.50	%
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	%
Nationwide VIT – Van Kampen Comstock Value Fund – Class I
2007	0.80%	10,218		16.947459		173,169	1.71%	-3.00	%
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
Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I
2007	0.80%	19,404		14.756333		286,332	4.10%	3.79	%
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	%

(Continued)

92

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Neuberger Berman AMT – Balanced Portfolio – I Class Shares
2007	0.80%	1,448	$	31.451710	$	45,542	0.81%	14.68	%
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	%
Neuberger Berman AMT – Fasciano Portfolio – S Class Shares
2007	0.80%	514		14.792303		7,603	0.00%	-0.29	%
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 AMT – Growth Portfolio- Class I
2007	0.80%	185,704		36.562250		6,789,756	0.00%	21.71	%
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	%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2007	0.80%	47,724		14.696621		701,382	0.26%	6.53	%
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	%
Neuberger Berman AMT – International Portfolio – Class S
2007	0.80%	8,240		14.656417		120,769	1.68%	2.39	%
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 AMT – Mid-Cap Growth Portfolio – Class S
2007	0.80%	6,654		21.854333		145,419	0.00%	21.22	%
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
Neuberger Berman AMT – Partners Portfolio- Class I
2007	0.80%	193,268		40.603834		7,847,422	0.64%	8.46	%
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	%
Neuberger Berman AMT – Regency Portfolio – Class S
2007	0.80%	1,678		13.051065		21,900	0.66%	2.23	%
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 AMT – Socially Responsive Portfolio Class I
2007	0.80%	5,562		17.656802		98,207	0.09%	6.75	%
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 VAF – Balanced Fund – Non-Service Shares
2007	0.80%	85,350		37.948682		3,238,920	2.57%	2.96	%
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	%
Oppenheimer VAF – Capital Appreciation Fund – Non-Service Shares
2007	0.80%	209,154		19.607337		4,100,953	0.23%	13.23	%
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	%

(Continued)

93

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Oppenheimer VAF – Core Bond Fund – Non-Service Shares
2007	0.80%	87,142	$	26.282217	$	2,290,285	5.26%	3.56	%
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	%
Oppenheimer VAF – Global Securities Fund – Class 3
2007	0.80%	160,562		14.773970		2,372,138	1.25%	5.49	%
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 VAF – Global Securities Fund – Non-Service Shares
2007	0.80%	148,584		47.979344		7,128,963	1.37%	5.47	%
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	%
Oppenheimer VAF – High Income Fund – Class 3
2007	0.80%	2,712		9.609476		26,061	0.00%	-3.91	%   05/01/07
Oppenheimer VAF – High Income Fund – Non-Service Shares
2007	0.80%	7,928		13.127703		104,076	6.11%	-0.90	%
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 VAF – Main Street Small Cap Fund®– Non-Service Shares
2007	0.80%	14,068		19.926143		280,321	0.32%	-2.00	%
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
Oppenheimer VAF – Main Street®– Non-Service Shares
2007	0.80%	29,480		10.968850		323,362	1.00%	3.59	%
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	%
Oppenheimer VAF – Mid Cap Fund – Non-Service Shares
2007	0.80%	67,290		6.755828		454,600	0.00%	5.48	%
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	%
Putnam VT – Growth and Income Fund – IB Shares
2007	0.80%	1,852		15.242345		28,229	1.31%	-6.79	%
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 VT – International Equity Fund – IB Shares
2007	0.80%	5,836		22.247335		129,835	2.65%	7.50	%
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 VT – Voyager Fund – IB Shares
2007	0.80%	1,028		14.103871		14,499	0.00%	4.68	%
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

(Continued)

94

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***
T. Rowe Price Blue Chip Growth Portfolio – II
2007	0.80%	4,272	$	13.621873	$	58,193	0.12%	11.59	%
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
2007	0.80%	25,522		12.728449		324,855	1.53%	2.20	%
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
2007	0.80%	1,904		10.851378		20,661	3.91%	4.38	%
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
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares
2007	0.80%	147,566		27.387135		4,041,410	0.53%	6.92	%
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	%
Turner GVIT Growth Focus Fund – Class I
2003	0.80%	103,819		3.251119		337,528	0.00%	49.76	%
Van Eck Worldwide Insurance Trust – Bond Fund – Initial Class
2007	0.80%	24,290		22.571765		548,268	5.77%	8.83	%
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	%
Van Eck Worldwide Insurance Trust – Emerging Markets Fund – Initial Class
2007	0.80%	93,500		29.341648		2,743,444	0.43%	36.51	%
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	%
Van Eck Worldwide Insurance Trust – Hard Assets Fund – Initial Class
2007	0.80%	41,152		65.808830		2,708,165	0.11%	44.19	%
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	%
Van Kampen UIF – Core Plus Fixed Income Portfolio – Class I
2007	0.80%	10,704		11.729400		125,551	3.05%	4.61	%
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 UIF – Emerging Markets Debt Portfolio – Class I
2007	0.80%	20,760		21.010045		436,169	7.41%	5.68	%
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	%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2007	0.80%	84,232		50.130463		4,222,589	1.10%	-17.74	%
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	%
Wells Fargo AVT – Discovery FundSM
2007	0.80%	44,382		44.472235		1,973,767	0.00%	21.34	%
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	%

(Continued)

95

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 AVT – Opportunity FundSM
2007	0.80%	145,372	$	59.639193	$	8,669,869	0.61%	5.78	%
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	%
Single Premium contracts issued on or after April 16, 1990 (policy years 11 and thereafter)
American Century VP – Balanced Fund – Class I
2007	1.00%	38,914		12.269595		477,459	2.12%	3.89	%
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 VP – Capital Appreciation Fund – Class I
2007	1.00%	220,292		11.894815		2,620,333	0.00%	44.35	%
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 VP – Income & Growth Fund – Class I
2007	1.00%	14,802		11.429189		169,175	1.88%	-1.07	%
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 VP – International Fund – Class I
2007	1.00%	79,918		11.883894		949,737	0.72%	16.88	%
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 VP – Ultra® Fund – Class I
2007	1.00%	2,778		12.555821		34,880	0.00%	19.81	%
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 VP – Value Fund – Class I
2007	1.00%	72,664		18.067598		1,312,864	1.65%	-6.09	%
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
2007	1.00%	8,982		6.923255		62,185	0.00%	-4.92	%
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
2007	1.00%	39,182		12.900878		505,482	1.08%	15.43	%
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 Core I Portfolio
2007	1.00%	65,396		7.317026		478,504	0.00%	-1.83	%
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 IP – Small Cap Stock Index Portfolio – Service Shares
2007	1.00%	18,706		14.844030		277,672	0.37%	-1.65	%
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 Stock Index Fund, Inc. – Initial Shares
2007	1.00%	340,954		10.560744		3,600,728	1.70%	4.20	%
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 VIF – Appreciation Portfolio – Initial Shares
2007	1.00%	78,734		11.460137		902,302	1.61%	6.06	%
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 VIF – Growth and Income Portfolio – Initial Shares
2007	1.00%	16,816		11.118706		186,972	0.76%	7.36	%
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)

96

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

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Federated IS – Quality Bond Fund II – Primary Shares
2007	1.00%	32,494	$	12.283540	$	399,141	4.97%	4.33	%
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® VIP – Equity-Income Portfolio – Initial Class
2007	1.00%	463,760		14.336823		6,648,845	1.77%	0.51	%
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® VIP – Growth Portfolio – Initial Class
2007	1.00%	773,552		9.252332		7,157,160	0.82%	25.69	%
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® VIP – High Income Portfolio – Initial Class
2007	1.00%	145,894		11.937443		1,741,601	7.41%	1.76	%
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® VIP – Overseas Portfolio – Initial Class
2007	1.00%	169,320		14.425299		2,442,492	3.29%	16.14	%
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® VIP II – Asset Manager Portfolio – Initial Class
2007	1.00%	229,524		12.562122		2,883,308	6.08%	14.35	%
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® VIP II – Contrafund® Portfolio – Initial Class
2007	1.00%	346,744		15.752271		5,462,005	0.93%	16.42	%
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® VIP III – Growth Opportunities Portfolio – Initial Class
2007	1.00%	12,236		10.892121		133,276	0.00%	21.95	%
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® VIP III – Value Strategies Portfolio – Service Class
2007	1.00%	12,228		16.059906		196,381	0.83%	4.54	%
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 – Small Cap Growth Fund: Class I – Intial Funding by Depositor
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	%
Janus Aspen Series – Forty Portfolio – Service Shares
2007	1.00%	22,756		12.002478		273,128	0.19%	35.27	%
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
2007	1.00%	21,732		5.254782		114,197	0.37%	20.48	%
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
2007	1.00%	47,972		18.208982		873,521	0.43%	26.74	%
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	%
Lehman Brothers AMT – Short Duration Bond Portfolio – I Class
2007	1.00%	47,540		12.476258		593,121	2.65%	3.72	%
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	%
Nationwide VIT – Gartmore Emerging Markets Fund – Class I
2007	1.00%	47,852		33.798406		1,617,321	0.71%	44.12	%
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	%

(Continued)

97

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***
Nationwide VIT – Gartmore Global Utilities Fund – Class I
2007	1.00%	20,120	$	23.317091	$	469,140	2.36%	19.23	%
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	%
Nationwide VIT – Gartmore International Growth Fund – Class I
2007	1.00%	73,628		15.966923		1,175,613	0.38%	25.87	%
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	%
Nationwide VIT – Global Financial Services Fund – Class I
2007	1.00%	5,350		18.540690		99,193	3.13%	-2.04	%
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	%
Nationwide VIT – Global Health Sciences Fund – Class I
2007	1.00%	14,292		14.643631		209,287	0.08%	12.03	%
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	%
Nationwide VIT – Global Technology and Communications Fund – Class I
2007	1.00%	39,948		3.833761		153,151	0.00%	18.89	%
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	%
Nationwide VIT – Government Bond Fund – Class I
2007	1.00%	140,436		14.004670		1,966,760	4.45%	6.09	%
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	%
Nationwide VIT – Growth Fund – Class I
2007	1.00%	49,378		6.879197		339,681	0.17%	18.35	%
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	%
Nationwide VIT – Investor Destinations Aggressive Fund – Class II
2007	1.00%	328		15.779509		5,176	2.03%	4.90	%
2006	1.00%	290		15.042687		4,362	2.11%	15.71	%
Nationwide VIT – Investor Destinations Conservative Fund – Class II
2007	1.00%	5,692		12.362022		70,365	3.97%	4.33	%
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	%
Nationwide VIT – Investor Destinations Moderate Fund – Class II
2007	1.00%	45,290		14.039145		635,833	2.62%	4.60	%
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	%
Nationwide VIT – Investor Destinations Moderately Aggressive Fund – Class II
2007	1.00%	38,380		15.130768		580,719	2.25%	5.09	%
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	%
Nationwide VIT – Investor Destinations Moderately Conservative Fund – Class II
2007	1.00%	31,082		13.277544		412,693	2.92%	4.80	%
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	%
Nationwide VIT – Mid Cap Growth Fund – Class I
2007	1.00%	27,266		6.587921		179,626	0.00%	7.92	%
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	%
Nationwide VIT – Mid Cap Index Fund – Class I
2007	1.00%	34,096		15.323833		522,481	1.35%	6.48	%
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	%
Nationwide VIT – Money Market Fund – Class I
2007	1.00%	419,234		11.293879		4,734,778	4.64%	3.74	%
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	%
Nationwide VIT – Multi-Manager Small Cap Growth Fund – Class I
2007	1.00%	26,118		8.349478		218,072	0.00%	8.65	%

(Continued)

98

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***
Nationwide VIT – Multi-Manager Small Cap Value Fund – Class I
2007	1.00%	43,030	$	17.444838	$	750,651	1.10%	-7.83	%
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	%
Nationwide VIT – Multi-Manager Small Company Fund – Class I
2007	1.00%	38,152		15.198601		579,857	0.09%	1.11	%
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	%
Nationwide VIT – Nationwide Fund – Class I
2007	1.00%	149,962		11.797304		1,769,147	1.05%	7.10	%
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	%
Nationwide VIT – Nationwide Leaders Fund – Class I
2007	1.00%	1,218		16.988891		20,692	1.15%	10.44	%
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	%
Nationwide VIT – U.S. Growth Leaders Fund – Class I
2007	1.00%	2,584		18.177321		46,970	0.00%	21.26	%
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	%
Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I
2007	1.00%	17,946		14.240475		255,560	4.10%	3.58	%
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	%
Neuberger Berman AMT – Growth Portfolio- Class I
2007	1.00%	181,806		7.762827		1,411,329	0.00%	21.47	%
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 AMT – Guardian Portfolio – I Class Shares
2007	1.00%	4,748		12.957908		61,524	0.26%	6.31	%
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 AMT – Partners Portfolio- Class I
2007	1.00%	86,432		16.050889		1,387,310	0.64%	8.24	%
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	%
Oppenheimer VAF – Balanced Fund – Non-Service Shares
2007	1.00%	129,370		13.967806		1,807,015	2.57%	2.75	%
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 VAF – Capital Appreciation Fund – Non-Service Shares
2007	1.00%	70,288		9.884979		694,795	0.23%	13.01	%
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 VAF – Core Bond Fund – Non-Service Shares
2007	1.00%	51,906		14.189932		736,543	5.26%	3.35	%
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 VAF – Global Securities Fund – Non-Service Shares
2007	1.00%	157,904		14.984363		2,366,091	1.37%	5.26	%
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 VAF – Main Street®– Non-Service Shares
2007	1.00%	6,962		10.795993		75,162	1.00%	3.38	%
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 VAF – Mid Cap Fund – Non-Service Shares
2007	1.00%	9,792		5.889904		57,674	0.00%	5.27	%
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	%

(Continued)

99

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***
The Dreyfus Socially Responsible Growth Fund, Inc.– Initial Shares
2007	1.00%	20,698	$	7.293750	$	150,966	0.53%	6.71%
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%
Van Eck Worldwide Insurance Trust – Bond Fund – Initial Class
2007	1.00%	53,936		16.500009		889,944	5.77%	8.61%
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 – Emerging Markets Fund – Initial Class
2007	1.00%	36,120		33.537534		1,211,376	0.43%	36.24%
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 – Hard Assets Fund – Initial Class
2007	1.00%	68,368		40.935533		2,798,681	0.11%	43.90%
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 UIF – Emerging Markets Debt Portfolio – Class I
2007	1.00%	7,184		21.065858		151,337	7.41%	5.47%
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 UIF – U.S.Real Estate Portfolio – Class I
2007	1.00%	39,508		26.129688		1,032,332	1.10%	-17.90%
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 AVT – Discovery FundSM
2007	1.00%	25,612		19.579303		501,465	0.00%	21.10%
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 AVT – Opportunity FundSM
2007	1.00%	146,392		13.806187		2,021,115	0.61%	5.57%
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 VP – Balanced Fund – Class I
2007	1.30%	8		24.593469		197	2.12%	3.57%
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%
American Century VP – Capital Appreciation Fund – Class I
2007	1.30%	2		36.460250		73	0.00%	43.91%
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%
American Century VP – Income & Growth Fund – Class I
2005	1.30%	8,246		11.784027		97,171	2.03%	3.28%
2004	1.30%	31,276		11.409408		356,841	1.44%	11.53%
2003	1.30%	21,876		10.229575		223,782	1.30%	27.68%
American Century VP – International Fund – Class I
2007	1.30%	354		26.406669		9,348	0.72%	16.52%
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%
American Century VP – Ultra®Fund – Class I
2004	1.30%	8,076		10.732849		86,678	0.00%	9.25%
2003	1.30%	1,710		9.824442		16,800	0.00%	23.29%

(Continued)

100

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

	Contract Expense Rate*	Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
American Century VP – Value Fund – Class I
2005	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%
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%
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%
Credit Suisse Trust – Small Cap Core I 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%
Dreyfus IP – 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 Stock Index Fund, Inc.– Initial Shares
2007	1.30%	6		32.822912		197	1.70%	3.89%2
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%
Dreyfus VIF – 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%
Dreyfus VIF – Growth and Income Portfolio – Initial Shares
2005	1.30%	7,396		12.832801		94,911	1.34%	2.02%
2004	1.30%	20,464		12.578597		257,408	1.23%	6.08%
2003	1.30%	19,988		11.857652		237,011	0.84%	24.94%
Federated IS – Quality Bond Fund II – Primary Shares
2005	1.30%	296		11.292632		3,343	3.65%	-0.01%
2004	1.30%	5,244		11.293463		59,223	4.98%	2.28%
2003	1.30%	11,443		11.041537		126,348	3.93%	3.29%
Fidelity® VIP – Equity-Income Portfolio – Initial Class
2007	1.30%	6		51.725856		310	1.77%	0.21%
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%
Fidelity® VIP – Growth Portfolio – Initial Class
2007	1.30%	144		49.269736		7,095	0.82%	25.32%
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%
Fidelity® VIP – 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%

(Continued)

101

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

	Contract Expense Rate*	Units	Unit     Fair Value		Contract Owners’ Equity		Investment Income Ratio**	Total Return***
Fidelity® VIP – Overseas Portfolio – Initial Class
2007	1.30%	2	$	30.061976	$	60	3.29%	15.79%
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%
Fidelity® VIP II – Asset Manager Portfolio – Initial Class
2007	1.30%	6		36.160198		217	6.08%	14.00%
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%
Fidelity® VIP II – Contrafund® Portfolio – Initial Class
2007	1.30%	348		38.999532		13,572	0.93%	16.07%
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%
Fidelity® VIP III – Growth Opportunities Portfolio – Initial Class
2005	1.30%	844		10.765183		9,086	0.95%	7.49%
2004	1.30%	18,258		10.015165		182,857	0.53%	5.81%
2003	1.30%	18,158		9.465516		171,875	0.74%	28.20%
Fidelity® VIP III – Value Strategies Portfolio – Service Class
2005	1.30%	1,814		13.207092		23,958	0.00%	1.23%
2004	1.30%	23,932		13.046144		312,220	0.00%	12.52%
2003	1.30%	40,013		11.594984		463,950	0.00%	55.76%
Gartmore GVIT – Small Cap Growth Fund: Class I – Intial Funding by Depositor
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%
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%
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%
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%
Lehman Brothers AMT – Short Duration Bond Portfolio – I Class
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%
Nationwide VIT – Gartmore 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%
Nationwide VIT – Gartmore 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%
Nationwide VIT – Gartmore 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%
Nationwide VIT – 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%

(Continued)

102

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***
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – Money Market Fund – Class I
2007	1.30%	252		15.923976		4,013	4.64%	3.42%
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%
Nationwide VIT – Multi-Manager 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%
Nationwide VIT – Multi-Manager Small Company Fund – Class I
2007	1.30%	392		37.083919		14,537	0.09%	0.81%
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%

(Continued)

103

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***
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – 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%
Nationwide VIT – Van Kampen Multi Sector Bond Fund – Class I
2005	1.30%	2,220		13.288789		29,501	3.89%	0.86%
2004	1.30%	8,078		13.174974		106,427	4.85%	5.16%
2003	1.30%	10,621		12.528743		133,068	5.47%	10.67%
Neuberger Berman AMT – 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%
Neuberger Berman AMT – Guardian Portfolio – I Class Shares
2004	1.30%	4,968		11.032769		54,811	0.12%	14.32%
2003	1.30%	6,729		9.650858		64,941	0.84%	30.06%
Neuberger Berman AMT – 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%
Oppenheimer VAF – Balanced Fund – 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%
Oppenheimer VAF – Capital Appreciation Fund – 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%
Oppenheimer VAF – Core Bond Fund – 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%
Oppenheimer VAF – Global Securities Fund – Non-Service Shares
2007	1.30%	338		44.680582		15,102	1.37%	4.94%
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%
Oppenheimer VAF – Main Street®– 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%
Oppenheimer VAF – Mid Cap Fund – 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%

(Continued)

104

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***
The Dreyfus Socially Responsible Growth Fund, Inc. – Initial Shares
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	%
Turner GVIT Growth Focus Fund – Class I
2003	1.30%	41,875		3.198637		133,943	0.00%	49.02	%
Van Eck Worldwide Insurance Trust – 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	%
Van Eck Worldwide Insurance Trust – 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	%
Van Eck Worldwide Insurance Trust – 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	%
Van Kampen UIF – Emerging Markets Debt Portfolio – Class I
2005	1.30%	374		17.336446		6,484	7.52%	10.81	%
2004	1.30%	12,540		15.645892		196,199	6.41%	8.64	%
2003	1.30%	28,152		14.401515		405,431	0.00%	26.21	%
Van Kampen UIF – U.S. Real Estate Portfolio – Class I
2005	1.30%	7,386		42.223333		311,862	1.22%	15.54	%
2004	1.30%	39,270		36.542922		1,435,041	1.55%	34.63	%
2003	1.30%	45,256		27.142344		1,228,354	0.00%	35.74	%
Wells Fargo AVT – 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	%
Wells Fargo AVT – 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	%
Contract Owners’ Equity Total By Year
2007					$	1,012,602,409
2006					$	980,827,120
2005					$	929,399,760
2004					$	915,627,476
2003					$	881,562,186

* 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, such as mortality and expense charges or cost of insurance charges, 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.  

105

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

Nationwide Life Insurance Company:

We have audited the accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholder’s equity and cash flows for each of the years in the three-year period ended December 31, 2007. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, the Company adopted the American Institute of Certified Public Accountants’ Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts, in 2007.

/s/ KPMG LLP

Columbus, Ohio

February 29, 2008

F-2

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

See accompanying notes to consolidated financial statements.

F-3

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

See accompanying notes to consolidated financial statements.

F-4

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Changes in Shareholder’s Equity

(in millions)

	Capital shares		Additional paid-in capital		Retained earnings			Accumlated other comprehensive income (loss)			Total shareholder’s equity
Balance as of December 31, 2004	$	3.8	$	274.4	$	3,554.6		$	393.8		$	4,226.6
Dividends to NFS		—		—		(185.0	)		—			(185.0	)
Comprehensive income:
Net income		—		—		524.8			—			524.8
Other comprehensive loss, net of taxes		—		—		—			(300.2	)		(300.2	)
Total comprehensive income												224.6
Balance as of December 31, 2005		3.8		274.4		3,894.4			93.6			4,266.2
Dividends to NFS		—		—		(375.0	)		—			(375.0	)
Comprehensive income:
Net income		—		—		619.4			—			619.4
Other comprehensive loss, net of taxes		—		—		—			(64.9	)		(64.9	)
Total comprehensive income												554.5
Balance as of December 31, 2006		3.8		274.4		4,138.8			28.7			4,445.7
Dividends to NFS		—		—		(537.5	)		—			(537.5	)
Comprehensive income:
Net income		—		—		448.2			—			448.2
Other comprehensive loss, net of taxes		—		—		—			(119.2	)		(119.2	)
Total comprehensive income												329.0
Balance as of December 31, 2007	$	3.8	$	274.4	$	4,049.5		$	(90.5	)	$	4,237.2

See accompanying notes to consolidated financial statements.

F-5

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

See accompanying notes to consolidated financial statements.

F-6

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements

December 31, 2007, 2006 and 2005

(1) Nature of Operations  

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

All of the outstanding shares of NLIC’s common stock are owned by NFS, a holding company formed by Nationwide Corporation (Nationwide Corp.), a majority-owned subsidiary of NMIC.

Wholly-owned subsidiaries of NLIC as of December 31, 2007 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker/dealer.

The Company is a leading provider of long-term savings and retirement products in the United States of America (U.S.). The Company develops and sells a diverse range of products including individual annuities, private and public sector group retirement plans, other investment products sold to institutions, life insurance and advisory services.

The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker/dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), Nationwide Financial Network (NFN) producers; and Mullin TBG Insurance Agency Services, LLC, a joint venture between NFS’ majority-owned subsidiary, TBG Insurance Services Corporation d/b/a TBG Financial, and MC Insurance Agency Services, LLC d/b/a Mullin Consulting. The Company also distributes products through the agency distribution force of its ultimate majority parent company, NMIC.

As of December 31, 2007 and 2006, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

(2) Summary of Significant Accounting Policies  

The Company’s significant accounting policies that materially affect financial reporting are summarized below. The accompanying consolidated financial statements were prepared in accordance with United States generally accepted accounting principles (GAAP).

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ significantly from those estimates.

The Company’s most significant estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition costs (DAC) for investment and universal life insurance products; impairment losses on investments; valuation allowances for mortgage loans on real estate; the liability for future policy benefits and claims; and federal income tax provision. Although some variability is inherent in these estimates, recorded amounts reflect management’s best estimates based on facts and circumstances as of the balance sheet date. Management believes the amounts provided are appropriate.

Certain items in the 2006 and 2005 consolidated financial statements and related notes have been reclassified to conform to the current presentation.

F-7

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(a) Consolidation Policy

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. Minority interest expense is included in other operating expenses in the consolidated statements of income, and minority interest is included in other liabilities on the consolidated balance sheets. All significant intercompany balances and transactions were eliminated.

(b) Valuation of Investments, Investment Income and Related Gains and Losses

The Company is required to classify its fixed maturity securities and marketable equity securities as held-to-maturity, available-for-sale or trading. All fixed maturity and marketable equity securities are classified as available-for-sale. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of adjustments to DAC, future policy benefits and claims, and deferred federal income taxes reported as a separate component of accumulated other comprehensive income (AOCI) in shareholder’s equity. The adjustment to DAC represents the changes in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.

The fair value of fixed maturity and marketable equity securities is generally obtained from independent pricing services based on market quotations. For fixed maturity securities not priced by independent services (generally private placement securities), an internally developed pricing model or “corporate pricing matrix” is most often used. The corporate pricing matrix is developed by obtaining private spreads versus the U.S. Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the U.S. Treasury yield to create an estimated market yield for that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. Additionally, a “structured product model” is used to value certain fixed maturity securities with complex cash flows, such as certain mortgage-backed and asset-backed securities,. The structured product model uses third party pricing tools. For securities for which quoted market prices are not available and for which the Company’s structured product model is not suitable for estimating fair values, fair values are determined using other modeling techniques, primarily a commercial software application utilized in valuing complex securitized investments with variable cash flows. The company also utilized broker quotes in pricing securities or to validate modeled prices. As of December 31, 2007, 70% of the fair values of fixed maturity securities were obtained from independent pricing services, 17% from the Company’s pricing matrices and 13% from other sources compared to 71%, 20% and 9%, respectively, in 2006.

Management regularly reviews each investment in its fixed maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments.

For debt and equity securities not subject to Emerging Issues Task Force Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets (EITF 99-20), an other-than-temporary impairment charge is taken when the Company does not have the ability and intent to hold the security until the forecasted recovery or if it is no longer probable that the Company will recover all amounts due under the contractual terms of the security. Many criteria are considered during this process including, but not limited to, the current fair value as compared to cost or amortized cost, as appropriate, of the security; the amount and length of time a security’s fair value has been below cost or amortized cost; specific credit issues and financial prospects related to the issuer; management’s intent to hold or dispose of the security; and current economic conditions. Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment.

F-8

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

In addition to the above, for certain securitized financial assets with contractual cash flows, including asset-backed securities, EITF 99-20 also requires the Company to periodically update its best estimate of cash flows over the life of the security. If the fair value of a securitized financial asset is not greater than or equal to its carrying value based on current information and events, and if there has been an adverse change in estimated cash flows since the last revised estimate (considering both timing and amount), then the Company recognizes an other-than-temporary impairment and writes down the investment to fair value.

For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income. All other investment income is recorded using the interest method without anticipating the impact of prepayments.

The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan is impaired, a provision for loss is established equal to either the difference between the carrying value and the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. In addition to the valuation allowance on specific loans, the Company maintains an allowance not yet specifically identified by loan for probable losses inherent in the loan portfolio as of the balance sheet date. The valuation allowance account for mortgage loans on real estate reflects management’s best estimate of probable credit losses, including losses incurred at the balance sheet date but not yet identified by specific loan. Management’s periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Changes in the valuation allowance are recorded in net realized investment gains and losses. Loans in foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received.

The Company grants mainly commercial mortgage loans on real estate to customers throughout the U.S. As of December 31, 2007, the Company’s largest exposure to any single borrower, region and property type was 2%, 24% and 33%, respectively, of the Company’s general account mortgage loan portfolio, compared to 3%, 26% and 33%, respectively, as of December 31, 2006.

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

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

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

F-9

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(c) Derivative Instruments

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

The Company enters into interest rate swaps, cross-currency swaps or Euro futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short U.S. Treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in net realized investment gains and losses. Changes in the fair value of the hedged item that are attributable to the risk being hedged are also recorded in net realized investment gains and losses.

Accrued interest receivable or payable under interest rate and foreign currency swaps are recognized as an adjustment to net investment income or interest credited to policyholder accounts consistent with the nature of the hedged item, except for interest rate swaps hedging the anticipated sale of investments where amounts receivable or payable under the swaps are recorded as net realized investment gains and losses, and except for interest rate swaps hedging the anticipated purchase of investments where amounts receivable or payable under the swaps are initially recorded in AOCI to the extent the hedging relationship is effective.

The Company periodically may enter into a derivative transaction that will not qualify for hedge accounting. The Company does not enter into speculative positions. Although these transactions do not qualify for hedge accounting, or have not been designated in hedging relationships by the Company, they are part of its overall risk management strategy. For example, the Company may sell credit default protection through a credit default swap. Although the credit default swap is not effective in hedging specific investments, the income stream allows the Company to manage overall investment yields while exposing the Company to acceptable credit risk. The Company may enter into a cross-currency basis swap (pay a variable U.S. rate and receive a variable foreign-denominated rate) to eliminate the foreign currency exposure of a variable rate foreign-denominated liability. Although basis swaps may qualify for hedge accounting, the Company has chosen not to designate these derivatives as hedging instruments due to the difficulty in assessing and monitoring effectiveness for both sides of the basis swap. Derivative instruments that do not qualify for hedge accounting or are not designated as hedging instruments are carried at fair value, with changes in fair value recorded in net realized investment gains and losses.

F-10

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(d) Revenues and Benefits

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

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

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

The Company has deferred certain costs of acquiring investment and universal life insurance products business, principally commissions, certain expenses of the policy issue and underwriting department, and certain variable sales expenses that relate to and vary with the production of new and renewal business. In addition, the Company defers sales inducements, such as interest credit bonuses and jumbo deposit bonuses. Investment products primarily consist of individual and group variable and fixed deferred annuities in the Individual Investments and Retirement Plans segments. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, BOLI and other interest-sensitive life insurance policies in the Individual Protection segment. DAC are subject to recoverability testing in the year of policy issuance and loss recognition testing at the end of each reporting period.

For investment and universal life insurance products, DAC is being amortized with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administration fees, surrender charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses. The DAC asset related to investment and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(b) to the audited consolidated financial statements included in the F pages of this report.

F-11

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The assumptions used in the estimation of future gross profits are based on the Company’s current best estimates of future events and are reviewed as part of an annual process during the second quarter. During the annual process, the Company performs a comprehensive study of assumptions, including mortality and persistency studies, maintenance expense studies, and an evaluation of projected general and separate account investment returns. The most significant assumptions that are involved in the estimation of future gross profits include future net separate account investment performance, surrender/lapse rates, interest margins and mortality. Currently, the Company’s long-term assumption for net separate account investment performance is approximately 7% growth per year and varies by product. This assumption, like others, is reviewed as part of the annual process. If this assumption were unlocked, the date of the unlocking could become the anchor date used in the reversion to the mean process (defined below). Variances from the long-term assumption are expected since the majority of the investments in the underlying separate accounts are in equity securities, which strongly correlate with the Standard & Poor’s (S&P) 500 Index in the aggregate. The reversion to the mean process is based on actual net separate account investment performance from the anchor date to the valuation date. The Company then assumes different performance levels over the next three years such that the separate account mean return measured from the anchor date to the end of the life of the product equals the long-term assumption. The assumed net separate account investment performance used in the DAC models is intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, and as part of its pre-set parameters, the Company’s reversion to the mean process generally limits net separate account investment performance to 0-15% during the three-year reversion period. See below for a discussion of current year assumption changes.

Changes in assumptions can have a significant impact on the amount of DAC reported for investment and universal life insurance products and their related amortization patterns. In the event actual experience differs from assumptions or future assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense, which could be significant. In general, increases in the estimated long-term general and separate account returns result in increased expected future profitability and may lower the rate of DAC amortization, while increases in long-term lapse/surrender and mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization.

In addition to the comprehensive annual study of assumptions, management evaluates the appropriateness of the individual variable annuity DAC balance quarterly within pre-set parameters. These parameters are designed to appropriately reflect the Company’s long-term expectations with respect to individual variable annuity contracts while also evaluating the potential impact of short-term experience on the Company’s recorded individual variable annuity DAC balance. If the recorded balance of individual variable annuity DAC falls outside of these parameters for a prescribed time period, or if the recorded balance falls outside of these parameters and management determines it is not reasonably possible to get back within the parameters during this time period, assumptions are required to be unlocked, and DAC is recalculated using revised best estimate assumptions. When DAC assumptions are unlocked and revised, the Company continues to use the reversion to the mean process. See below for a discussion of current year assumption changes.

At the end of the second quarter of 2007, the Company determined as part of its analysis of DAC that the overall profitability of separate account products is expected to exceed previous estimates due to favorable financial market trends. Accordingly, the Company unlocked its DAC assumptions after completing a comprehensive review of assumptions used to project DAC and other related balances, including sales inducement assets, unearned revenue reserves, and guaranteed minimum death and income benefit reserves. This review covered all assumptions including expected separate account investment returns, lapse rates, mortality and expenses. Additionally, while the Company estimates that the overall profitability of its variable products has improved, it also expects the long-term net growth in separate account investment performance to moderate. As a result of its current analysis, including its evaluation of ongoing trends and expectations regarding financial market performance, the Company reduced its long-term net separate account growth rate assumption from approximately 8% to approximately 7%. The Company unlocked assumptions, as appropriate, for all investment products and variable universal life insurance products in order to remain consistent across product lines using revised assumptions which reflect the Company’s current best estimate of future events. Therefore, in the second quarter of 2007, the Company recorded a net increase in DAC and a benefit to DAC amortization and other related balances totaling $221.6 million pre-tax, which was reported in the following segments in the pre-tax amounts indicated: Individual Investments - $196.4 million; Retirement Plans - $10.5 million; and Individual Protection - $14.7 million.

F-12

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The most significant assumption changes that resulted from the Company’s unlocking decisions were resetting the anchor date for reversion to the mean calculations to June 30, 2007, resulting in resetting the assumption for net separate account growth to approximately 7% during the three-year reversion period; resetting the long-term assumption for net separate account growth and the discount rate used to calculate the present value of estimated gross profits to approximately 7% (formerly approximately 8%); and increasing estimated lapse rates for fixed annuity and bank-owned life insurance products.

During the second quarter of 2007, the Company added a new feature to its existing guaranteed minimum withdrawal benefit rider, Lifetime Income (L.inc). This new feature results in a substantial change in the existing contracts and, therefore, an extinguishment of the DAC associated with those contracts pursuant to Statement of Position (SOP) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). As a result, existing DAC and other related balances were eliminated resulting in a $135.0 million pre-tax charge.

(f) Separate Accounts

Separate account assets and liabilities represent contractholders’ funds that have been legally segregated into accounts with specific investment objectives. Separate account assets are recorded at fair value based primarily on market quotations of the underlying securities. Investment income and realized investment gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income except for (1) the fees the Company receives, which are assessed on a daily or monthly basis and recognized as revenue when assessed and earned, and (2) the activity related to contract guarantees, which are riders to existing variable annuity contracts.

(g) Future Policy Benefits and Claims

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

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

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

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

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

(h) Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 6% in 2007 (8% in 2006 and 10% in 2005) of the Company’s life insurance in force, 48% of the number of life insurance policies in force in 2007 (50% in 2006 and 52% in 2005) and 7% of life insurance statutory premiums in 2007 (5% in 2006 and 5% in 2005). The provision for policyholder dividends was based on the current dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.

F-13

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(i) Federal Income Taxes

The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. Any such change could significantly affect the amounts reported in the consolidated statements of income. Management has established reserves in accordance with FIN 48 based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Management evaluates the appropriateness of such reserves quarterly based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums and other rulings issued by the Internal Revenue Service (IRS) or the tax courts.

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

(j) Reinsurance Ceded

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

(k) Change in Accounting Principle

Historically, the Company accrued for legal costs associated with litigation defense and regulatory investigations by estimating the ultimate costs of such activity. Beginning April 1, 2007, the Company’s accrual for such legal expenses includes only the amount for services that have been provided but not yet paid. The Company believes the newly adopted accounting principle is preferable because it more accurately reflects expenses in the periods in which they are incurred. The Company continues to estimate and accrue the ultimate amounts expected to be paid for litigation and regulatory investigation loss contingencies. The Company has presented its condensed consolidated financial statements and accompanying notes as applicable for all periods presented to retroactively apply the adoption of this change in accounting principle.

The following table summarizes the impact of the change in accounting principle described above for the years ended December 31:

(in millions)	2007			2006			2005
Other operating expenses	$	2.8		$	5.0		$	(0.5	)
Net income		(1.9	)		(3.1	)		0.3

The cumulative effect of the change on retained earnings as of January 1, 2006 was an $11.0 million increase.

F-14

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(3) Recently Issued Accounting Standards  

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations (SFAS 141R), which replaces SFAS No. 141, Business Combinations (SFAS 141). The objective of SFAS 141R is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. Accordingly, SFAS 141R establishes principles and requirements for how the acquirer: 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; 2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and 3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R applies to all transactions or other events in which an entity obtains control of one or more businesses and retains the fundamental requirements in SFAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R is applicable prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier application is prohibited. The Company currently is evaluating the impact of adopting SFAS 141R.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51 (SFAS 160). The objective of SFAS 160 is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 also amends certain consolidation procedures prescribed by Accounting Research Bulletin No. 51, Consolidated Financial Statements, for consistency with the requirements of SFAS 141R. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company currently is evaluating the impact of adopting SFAS 160.

In June 2007, the Accounting Standards Executive Committee (AcSEC) of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies (SOP 07-1). SOP 07-1 provides guidance for determining whether an entity is within the scope of the AICPA Audit and Accounting Guide Investment Companies (the Guide). For those entities that are investment companies under SOP 07-1, this SOP also addresses whether the specialized industry accounting principles of the Guide (i.e., fair value accounting) should be retained by a parent company in consolidation or by an investor that has the ability to exercise significant influence over the investment company and applies the equity method of accounting to its investment in the entity (referred to as an equity method investor). In addition, SOP 07-1 includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain investment company accounting in the parent company’s consolidated financial statements or the financial statements of an equity method investor. The provisions of SOP 07-1 were to be effective for fiscal years beginning on or after December 15, 2007. On February 14, 2008, the FASB issued FASB Staff Position (FSP) SOP 07-1-1, which delays indefinitely the effective date of SOP 07-1. The Company will monitor the FASB and AICPA deliberations regarding this standard.

In April 2007, the FASB issued FSP FIN 39-1, An Amendment of FASB Interpretation No. 39 (FSP FIN 39-1). FSP FIN 39-1 addresses whether a reporting entity that is party to a master netting arrangement can offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments that have been offset under the same master netting arrangement in accordance with paragraph 10 of Interpretation 39. FSP FIN 39-1 is effective for fiscal years beginning after November 15, 2007, with early application permitted. FSP FIN 39-1 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

F-15

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. In addition, SFAS 159 does not establish requirements for recognizing and measuring dividend income, interest income or interest expense, nor does it eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS No. 157, Fair Value Measurements (SFAS 157), and SFAS No. 107, Disclosures about Fair Value of Financial Instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company will elect adoption of SFAS 159 for certain financial instruments effective January 1, 2008, which is not expected to have a material impact on the Company’s financial position or results of operations. The Company will assess election for new financial assets or liabilities on a prospective basis.

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end balance sheet, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end balance sheet is effective for fiscal years ending after December 15, 2008. The Company adopted SFAS 158 effective December 31, 2006. The adoption of SFAS 158 did not have a material impact on the Company’s financial position or results of operations.

In September 2006, the FASB issued SFAS 157. SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements. SFAS 157 also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. For recurring fair value measurements using significant unobservable inputs, the reporting entity shall disclose the effect of the measurements on earnings for the period. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt SFAS 157 effective January 1, 2008. SFAS 157 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108 (SAB 108). SAB 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB 108 requires registrants to quantify misstatements using both the balance sheet and income-statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB 108 does not change the SEC’s previous guidance in SAB No. 99 on evaluating the materiality of misstatements. The Company adopted SAB 108 effective December 31, 2006. SAB 108 did not have a material impact on the Company’s financial position or results of operations upon adoption.

F-16

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

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

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

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

In September 2005, AcSEC issued SOP 05-1. SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, issued by the FASB. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights or coverages that occurs as a result of the exchange of a contract for a new contract, or by amendment, endorsement or rider to a contract, or by the election of a new feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Retrospective application of SOP 05-1 to previously issued financial statements is not permitted. Initial application of SOP 05-1 is required as of the beginning of an entity’s fiscal year. The Company adopted SOP 05-1 effective January 1, 2007, which resulted in a $6.0 million charge, net of taxes, as the cumulative effect of adoption of this accounting principle.

F-17

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

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

(4) Fair Value of Financial Instruments  

Assets and liabilities that are presented at fair value in the consolidated balance sheets are not included in the disclosures below, including investment securities, cash, separate accounts, securities lending collateral and derivative financial instruments. Those financial assets and liabilities not presented at fair value are discussed below.

The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought or sold, or in the case of liabilities incurred or settled, in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is based on the best information available in the circumstances. Such estimates of fair value consider prices for similar assets or similar liabilities and the results of valuation techniques to the extent available in the circumstances. Examples of valuation techniques include the present value of estimated expected future cash flows using discount rates commensurate with the risks involved, option-pricing models, matrix pricing, option-adjusted spread models and fundamental analysis. Valuation techniques for measuring assets and liabilities must be consistent with the objective of measuring fair value and should incorporate assumptions that market participants would use in their estimates of values, future revenues and future expenses, including assumptions about interest rates, default, prepayment and volatility.

Many of the Company’s assets and liabilities subject to these disclosure requirements are not actively traded, requiring fair values to be estimated by management using matrix pricing, present value or other suitable valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments.

The tax ramifications of the related unrealized gains and losses can have a significant effect on the estimates of fair value and have not been considered in arriving at such estimates.

In estimating its fair value disclosures, the Company used the following methods and assumptions:

Mortgage loans on real estate, net: The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Estimated fair value is based on the present value of expected future cash flows discounted at the loan’s effective interest rate.

Policy loans: The carrying amount reported in the consolidated balance sheets approximates fair value.

Investment contracts: The fair values of the Company’s liabilities under investment type contracts are based on one of two methods. For investment contracts without defined maturities, fair value is the amount payable on demand, net of certain surrender charges. For investment contracts with known or determined maturities, fair value is estimated using discounted cash flow analysis. Interest rates used in this analysis are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued.

Short-term debt: The carrying amount reported in the consolidated balance sheets approximates fair value.

F-18

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

Long-term debt, payable to NFS: The fair values for long-term debt are based on estimated market prices.

The following table summarizes the carrying values and estimated fair values of financial instruments subject to disclosure requirements as of December 31:

	2007						2006
(in millions)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Assets
Investments:
Mortgage loans on real estate, net	$	7,615.4		$	7,659.9		$	8,202.2		$	8,060.7
Policy loans		687.9			687.9			639.2			639.2
Liabilities
Investment contracts		(24,671.0	)		(23,084.7	)		(27,124.7	)		(25,455.2	)
Short-term debt		(285.3	)		(285.3	)		(75.2	)		(75.2	)
Long-term debt, payable to NFS		(700.0	)		(751.3	)		(700.0	)		(809.3	)

(5) Derivative Financial Instruments  

Qualitative Disclosure

Interest Rate Risk Management

The Company periodically purchases fixed rate investments to back variable rate liabilities. As a result, the Company can be exposed to interest rate risk due to the mismatch between variable rate liabilities and fixed rate assets. In an effort to mitigate the risk from this mismatch, the Company enters into various types of derivative instruments, with fluctuations in the fair values of the derivatives offsetting changes in the fair values of the investments resulting from changes in interest rates. The Company principally uses pay fixed/receive variable interest rate swaps to manage this risk.

Under these interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments. The fixed interest paid on the swap offsets the fixed interest received on the investment, resulting in the Company receiving the variable interest payments on the swap, generally 3-month U.S. London Interbank Offered Rate (LIBOR), and the credit spread on the investment. The net receipt of a variable rate will then more closely match the variable rate paid on the liability.

As a result of entering into fixed rate commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to funding of the loans. In an effort to manage this risk, the Company enters into short U.S. Treasury futures and/or pay fixed interest rate swaps during the commitment period. With short U.S. Treasury futures or pay fixed interest rate swaps, if interest rates rise/fall, the gains/losses on the futures will offset the change in fair value of the commitment attributable to the change in interest rates.

The Company periodically purchases variable rate investments such as commercial mortgage loans and corporate bonds. As a result, the Company can be exposed to variability in cash flows and investment income due to changes in interest rates. Such variability poses risks to the Company when the assets are funded with fixed rate liabilities. In an effort to manage this risk, the Company may enter into receive fixed/pay variable interest rate swaps.

In using these interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap offsets the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap and the credit spread on the investment. The net receipt of a fixed rate will then more closely match the fixed rate paid on the liability.

F-19

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The Company manages interest rate risk at the segment level. Different segments may simultaneously hedge interest rate risks associated with owning fixed and variable rate investments considering the risk relevant to a particular segment.

Foreign Currency Risk Management

In conjunction with the Company’s MTN program, the Company periodically issues both fixed and variable rate liabilities denominated in foreign currencies. As a result, the Company is exposed to changes in the fair value of liabilities due to changes in foreign currency exchange rates and related interest rates. In an effort to manage these risks, the Company enters into cross-currency interest rate swaps.

The Company is exposed to changes in the fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and related interest rates. In an effort to manage this risk, the Company uses cross-currency interest rate hedges to swap these asset characteristics to variable U.S. dollar rate instruments. Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in a foreign currency, and receive a variable U.S. dollar rate, generally 3-month U.S. LIBOR. These derivative instruments are designated as a fair value hedge of a fixed rate foreign denominated asset.

Cross-currency interest rate swaps on variable rate investments are structured to pay a variable rate, in a foreign currency, and receive a fixed U.S. dollar rate. The terms of the foreign currency paid on the swap will exactly match the terms of the foreign currency received on the asset, thus eliminating currency risk. These derivative instruments are designated as a cash flow hedge.

Equity Market Risk Management

Asset fees calculated as a percentage of separate account assets are a significant source of revenue to the Company. As of December 31, 2007 and 2006, approximately 82% of separate account assets were invested in equity mutual funds. Gains and losses in the equity markets result in corresponding increases and decreases in the Company’s separate account assets and asset fee revenue. In addition, a decrease in separate account assets may decrease the Company’s expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in guaranteed contract claims, which also may require the Company to accelerate amortization of DAC.

The Company’s long-term assumption for net separate account returns is 7% annual growth. If equity markets were unchanged throughout a given year, the Company estimates that its net earnings per diluted share, calculated using current weighted average diluted shares outstanding, would be approximately $0.05 to $0.10 less than if the Company’s long-term assumption for net separate account returns were realized. This analysis assumes no other factors change and that an unlocking of DAC assumptions would not be required. However, as it does each quarter, the Company would evaluate its DAC balance and underlying assumptions to determine the need for unlocking. The Company can provide no assurance that the experience of flat equity market returns would not result in changes to other factors affecting profitability, including the possibility of unlocking of DAC assumptions.

Many of the Company’s individual variable annuity contracts offer GMDB features. A GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on premiums paid less amounts withdrawn or contract value on a specified anniversary date. A decline in the stock market causing the contract value to fall below this specified amount, which varies from contract to contract based on the date the contract was entered into as well as the GMDB feature elected, will increase the net amount at risk, which is the GMDB in excess of the contract value. This could result in additional GMDB claims.

F-20

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

In an effort to mitigate this risk, the Company implemented a GMDB economic hedging program for certain new and existing business. Prior to implementation of the GMDB hedging program in 2000, the Company managed this risk primarily by entering into reinsurance arrangements. The GMDB economic hedging program is designed to offset changes in the economic value of the designated GMDB obligation. Currently the program shorts S&P 500 Index futures, which provides an offset to changes in the value of the designated obligation. The futures are not designated as hedges and, therefore, hedge accounting is not applied. The Company’s economic and accounting hedges are not perfectly offset. Therefore, the economic hedging activity is likely to lead to earnings volatility. This volatility was negligible in 2007. As of December 31, 2007 and 2006, the Company’s net amount at risk was $519.9 million and $562.4 million before reinsurance, respectively, and $317.2 million and $193.0 million net of reinsurance, respectively. As of December 31, 2007 and 2006, the Company’s reserve for GMDB claims was $47.4 million and $29.3 million, respectively.

The Company also offers certain variable annuity products with guaranteed minimum accumulation benefit (GMAB), guaranteed lifetime withdrawal benefit (GLWB) and hybrid GMAB/GLWB riders (collectively referred to as living benefits). A GMAB provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the time of issuance of a variable annuity contract. In some cases, the contractholder also has the option, after a specified time, to drop the rider and continue the variable annuity contract without the GMAB. The design of the GMAB rider limits the risk to the Company in a variety of ways including asset allocation requirements, which serve to reduce the Company’s potential exposure to underlying fund performance risks. Specifically, the terms in the GMAB rider limit policyholder asset allocation by either (1) requiring partial allocation of assets to a guaranteed term option (a fixed rate investment option) and excluding certain funds that are highly volatile or difficult to hedge or (2) requiring all assets be allocated to one of the approved asset allocation funds or models defined by the Company.

Beginning in March 2005, the Company began offering a hybrid GMAB/GLWB through its Capital Preservation Plus Lifetime Income (CPPLI) contract rider. This living benefit combines a GMAB feature in its first 5-10 years with a lifetime withdrawal benefit election at the end of the GMAB feature. Upon maturity of the GMAB, the contractholder can elect the lifetime withdrawal benefit, which would continue for the duration of the insured’s life; elect a new CPPLI rider; or drop the rider completely and continue the variable annuity contract without any rider. If the lifetime withdrawal benefit is elected and the insured’s contract value is exhausted through such withdrawals and market conditions, the Company will continue to fund future withdrawals at a pre-defined level until the insured’s death. In some cases, the contractholder has the right to drop the GLWB portion of this rider or periodically reset the guaranteed withdrawal basis to a higher level. This benefit requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy as previously described above.

In March 2006, the Company added Lifetime Income (L.inc), a stand-alone GLWB, to complement CPPLI in its product offerings. This rider is very similar to the hybrid benefit discussed above in that L.inc and CPPLI both have guaranteed withdrawal rates that increase based on the age at which the contractholder begins taking income. The withdrawal rates are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder. The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a ratchet feature that is driven by account performance and a roll-up feature that is driven by policy duration. Generally, the longer the contractholder waits before commencing withdrawals, the greater the guaranteed lifetime income. One key difference between L.inc and CPPLI is that the charge associated with L.inc is assessed against the benefit base. This is a risk mitigation feature as it alleviates much of the uncertainty around account performance and customer withdrawal patterns, both of which can lead to lower than expected revenue streams if the charge were assessed on account value. In June 2007, the Company added a feature to L.inc to allow for a lump settlement in lieu of lifetime withdrawals in certain situations.

F-21

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The Company’s living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contractholder persistency, contractholder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility. As of December 31, 2007 and 2006, the net balance of the embedded derivatives for living benefits was a liability of $91.9 million and an asset of $23.7 million, respectively.

Similar to the Company’s economic hedging for GMDBs, the living benefits features are also being economically hedged. The primary risks being hedged are the exposures associated with declining equity market returns and downward interest rate movements. The Company employs a variety of instruments to mitigate this exposure including S&P 500 Index futures, U.S. Treasury futures, interest rate swaps and long-dated over-the-counter put options. The positions used in the economic hedging program are not designated as hedges and, therefore, hedge accounting is not applied. The living benefits hedging program is designed to offset changes in the economic value of the living benefits obligation to contractholders. Changes in the fair value of the embedded derivatives are likely to create volatility in earnings. The hedging activity associated with changes in the economic value of the living benefits obligations will likely mitigate a portion of this earnings volatility.

Other Non-Hedging Derivatives

The Company periodically enters into basis swaps (receive one variable rate, pay another variable rate) to better match the cash flows received from the specific variable-rate investments with the variable rate paid on a group of liabilities. While the pay-side terms of the basis swap will be consistent with the terms of the asset, the Company is not able to match the receive-side terms of the derivative to a specific liability. Therefore, basis swaps do not receive hedge accounting treatment.

The Company sells credit default protection on selected debt instruments and combines the credit default swap with selected assets the Company owns to replicate a higher yielding bond. These selected assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. The combined credit default swap and investments provide cash flows with the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment.

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

Quantitative Disclosure

Fair Value Hedges

During the years ended December 31, 2007, 2006 and 2005, a net loss of $2.4 million, a net gain of $2.9 million and a net gain of $4.1 million, respectively, were recognized in net realized investment gains and losses. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness. There were also no gains or losses recognized in earnings as a result of hedged firm commitments no longer qualifying as fair value hedges.

Cash Flow Hedges

For the years ended December 31, 2007, 2006 and 2005, the ineffective portion of cash flow hedges was a net loss of $1.4 million, a net loss of $1.5 million and a net gain of $3.1 million, respectively. There were no net gains or losses attributable to the portion of the derivative instruments’ changes in fair value excluded from the assessment of hedge effectiveness.

F-22

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

In general, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows associated with forecasted transactions, other than those relating to variable interest on existing financial instruments, is twelve months or less. However, in 2003 the Company entered into a hedge of a forecasted purchase of shares of a mutual fund tied to the S&P 500 Index where delivery of the shares will occur in 2033.

During 2007, the Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Additionally, no amounts were reclassified from AOCI into earnings due to the probability that a forecasted transaction would not occur.

Other Derivative Instruments, Including Embedded Derivatives

Net realized investment gains and losses for the years ended December 31, 2007, 2006 and 2005 included net losses of $12.4 million, $0.5 million and $9.1 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. In addition, the Individual Investments segment included net losses of $51.8 million (recorded as a $41.7 million net realized loss, net investment income of $2.6 million and annuity expense of $12.7 million) and $11.4 million (recorded as net investment income of $10.7 million and annuity expense of $22.1 million) for the years ended December 31, 2007 and 2006, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2007, 2006 and 2005, net losses of $0.5 million, $10.6 million and $80.7 million, respectively, were recorded in net realized investment gains and losses reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate MTNs denominated in foreign currencies. No additional net gains were recorded in net realized investment gains and losses to reflect the change in spot rates of these foreign currency denominated obligations during the year ended December 31, 2007 compared to $14.1 million and $78.3 million during the years ended December 31, 2006 and 2005, respectively.

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

(in millions)	2007		2006
Interest rate swaps:
Pay fixed/receive variable rate swaps hedging investments	$	1,692.9	$	1,930.5
Pay variable/receive fixed rate swaps hedging investments		21.0		60.4
Pay fixed/receive variable rate swaps hedging liabilities		1,120.7		1,048.8
Pay variable/receive fixed rate swaps hedging liabilities		343.1		—
Cross-currency interest rate swaps:
Hedging foreign currency denominated investments		375.5		452.9
Hedging foreign currency denominated liabilities		1,144.1		1,137.1
Credit default swaps		300.3		376.8
Other non-hedging instruments		518.1		101.8
Equity option contracts		2,361.8		1,640.7
Interest rate futures contracts		371.3		214.2
Total	$	8,248.8	$	6,963.2

The notional value is the amount upon which exchanges of interest are based. Exposure to a counterparty arises if the net expected cash flows are positive, as calculated based on forward interest rate curves and notional contract values.

F-23

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(6) Investments  

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

(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
December 31, 2007:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	110.8	$	14.3	$	0.4	$	124.7
Agencies not backed by the full faith and credit of the U. S. Government		406.1		61.2		—		467.3
Obligations of states and political subdivisions		245.3		1.6		2.7		244.2
Debt securities issued by foreign governments		40.0		2.5		0.1		42.4
Corporate securities
Public		8,253.8		133.4		161.6		8,225.6
Private		5,474.2		131.7		57.6		5,548.3
Mortgage-backed securities		5,855.9		31.3		98.4		5,788.8
Asset-backed securities		3,635.1		31.2		174.2		3,492.1
Total fixed maturity securities		24,021.2		407.2		495.0		23,933.4
Equity securities		69.6		4.8		1.5		72.9
Total securities available-for-sale	$	24,090.8	$	412.0	$	496.5	$	24,006.3
December 31, 2006:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	123.7	$	11.4	$	1.4	$	133.7
Agencies not backed by the full faith and credit of the U. S. Government		559.4		46.2		2.2		603.4
Obligations of states and political subdivisions		266.0		0.7		7.2		259.5
Debt securities issued by foreign governments		34.9		1.7		0.1		36.5
Corporate securities
Public		8,602.0		168.8		109.9		8,660.9
Private		6,015.4		128.8		71.4		6,072.8
Mortgage-backed securities		6,089.1		21.3		112.8		5,997.6
Asset-backed securities		3,506.7		43.3		39.0		3,511.0
Total fixed maturity securities		25,197.2		422.2		344.0		25,275.4
Equity securities		28.5		6.2		0.3		34.4
Total securities available-for-sale	$	25,225.7	$	428.4	$	344.3	$	25,309.8

The market value of the Company’s general account investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads. In addition, the Company may be likely to experience realized investment losses to the extent its liquidity needs require the disposition of general account fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments.

F-24

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The table below summarizes the amortized cost and estimated fair value of fixed maturity securities available-for-sale, by maturity, as of December 31, 2007. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(in millions)	Amortized cost		Estimated fair value
Fixed maturity securities available-for-sale:
Due in one year or less	$	1,389.8	$	1,392.5
Due after one year through five years		6,267.3		6,375.0
Due after five years through ten years		3,732.8		3,758.7
Due after ten years		3,140.3		3,126.3
Subtotal		14,530.2		14,652.5
Mortgage-backed securities		5,855.9		5,788.8
Asset-backed securities		3,635.1		3,492.1
Total	$	24,021.2	$	23,933.4

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

(in millions)	2007			2006
Net unrealized (losses) gains, before adjustments and taxes	$	(84.5	)	$	84.1
Adjustment to DAC		87.1			83.3
Adjustment to future policy benefits and claims		(77.7	)		(83.1	)
Deferred federal income tax benefit (expense)		26.1			(29.5	)
Net unrealized (losses) gains	$	(49.0	)	$	54.8

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

(in millions)	2007			2006			2005
Fixed maturity securities	$	(166.0	)	$	(161.0	)	$	(704.1	)
Equity securities		(2.6	)		(1.1	)		(3.4	)
Net decrease	$	(168.6	)	$	(162.1	)	$	(707.5	)

F-25

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

For securities available-for-sale as of the dates indicated, the following table summarizes the Company’s gross unrealized losses based on the amount of time each type of security has been in an unrealized loss position:

	Less than or equal to one year				More than one year				Total
(in millions)	Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses
December 31, 2007:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	16.4	$	0.4	$	2.6	$	—	$	19.0	$	0.4
Agencies not backed by the full faith and credit of the U.S. Government		—		—		13.9		—		13.9		—
Obligations of states and political subdivisions		15.4		0.1		149.6		2.6		165.0		2.7
Debt securities issued by foreign governments		11.5		0.1		—		—		11.5		0.1
Corporate securities
Public		2,354.0		95.2		1,966.8		66.4		4,320.8		161.6
Private		680.6		17.1		1,814.7		40.5		2,495.3		57.6
Mortgage-backed securities		1,227.8		23.7		2,466.4		74.7		3,694.2		98.4
Asset-backed securities		1,453.8		127.1		1,078.1		47.1		2,531.9		174.2
Total fixed maturity securities		5,759.5		263.7		7,492.1		231.3		13,251.6		495.0
Equity securities		17.1		1.5		0.1		—		17.2		1.5
Total	$	5,776.6	$	265.2	$	7,492.2	$	231.3	$	13,268.8	$	496.5
% of gross unrealized losses				53%				47%
December 31, 2006:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	49.8	$	0.8	$	17.7	$	0.6	$	67.5	$	1.4
Agencies not backed by the full faith and credit of the U.S. Government		31.7		0.1		120.3		2.1		152.0		2.2
Obligations of states and political subdivisions		82.4		1.0		156.3		6.2		238.7		7.2
Debt securities issued by foreign governments		12.8		0.1		—		—		12.8		0.1
Corporate securities
Public		2,445.0		24.3		2,964.6		85.6		5,409.6		109.9
Private		1,162.7		13.5		1,872.3		57.9		3,035.0		71.4
Mortgage-backed securities		767.8		6.4		3,809.5		106.4		4,577.3		112.8
Asset-backed securities		539.2		4.2		1,336.6		34.8		1,875.8		39.0
Total fixed maturity securities		5,091.4		50.4		10,277.3		293.6		15,368.7		344.0
Equity securities		0.1		—		3.4		0.3		3.5		0.3
Total	$	5,091.5	$	50.4	$	10,280.7	$	293.9	$	15,372.2	$	344.3
% of gross unrealized losses				15%				85%

F-26

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The Company has assets that have been in an unrealized loss position for more than one year that are not other-than-temporarily impaired. The Company reviews each asset in an unrealized loss position and evaluates whether or not the loss is other-than-temporary. This evaluation considers several factors, including the extent of the unrealized loss, the rating of the affected security, the Company’s ability and intent to hold the security until recovery, and economic conditions that could affect the creditworthiness of the issuer. As of December 31, 2007, assets that have been in an unrealized loss position for more than one year totaled $231.3 million, or 47% of the Company’s total unrealized losses. Of this total, $209.3 million, or 90%, were classified as investment grade securities, as defined by the National Association of Insurance Commissioners (NAIC).

As noted in the table above, the majority of the increases in the Company’s unrealized losses from December 31, 2006 to December 31, 2007 were attributable to corporate securities and asset-backed securities (ABSs). These increased loss positions primarily were driven by the combined impacts of interest rate movements, volatility in investment quality ratings and credit spreads, and illiquid markets.

As of December 31, 2007, 69% of the Company’s corporate securities in unrealized loss positions, or $150.2 million, were classified as investment grade, as defined by the NAIC. Of these investment grade corporate securities, 57%, or $84.9 million, have been in an unrealized loss position for more than one year, but 87% of those investments have ratios of estimated fair value to amortized cost of at least 90%. Of the Company’s corporate securities in unrealized loss positions classified as non-investment grade, 68% have been in an unrealized loss position for less than one year.

As of December 31, 2007, 100% of the Company’s ABSs in unrealized loss positions, or $174.2 million, were classified as investment grade, as defined by the NAIC. Of these investment grade ABSs, 72%, or $126.9 million, have been in an unrealized loss position for less than one year, but 33% of those investments have ratios of estimated fair value to amortized cost of at least 90%. Of the Company’s ABSs in unrealized loss positions that have been in loss positions for more than one year, 57% have ratios of estimated fair value to amortized cost of at least 90%.

For fixed maturity securities that are available-for-sale as of December 31, 2007, the following table summarizes the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, as defined by the NAIC, in an unrealized loss position for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of estimated fair value to amortized cost	Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total
99.9% - 95.0%	$	55.2	$	93.5	$	148.7	$	13.1	$	5.2	$	18.3	$	68.3	$	98.7	$	167.0
94.9% - 90.0%		49.9		84.6		134.5		13.2		4.4		17.6		63.1		89.0		152.1
89.9% - 85.0%		34.6		19.2		53.8		3.1		6.3		9.4		37.7		25.5		63.2
84.9% - 80.0%		16.3		6.2		22.5		3.0		0.2		3.2		19.3		6.4		25.7
Below 80.0%		60.5		5.8		66.3		14.9		5.8		20.7		75.4		11.6		87.0
Total	$	216.5	$	209.3	$	425.8	$	47.3	$	21.9	$	69.2	$	263.8	$	231.2	$	495.0

As noted in the table above, as of December 31, 2007, 64% of the Company’s investments in an unrealized loss position had ratios of estimated fair value to amortized cost of at least 90%. In addition, 86% of the Company’s investments in an unrealized loss position were classified as investment grade, as defined by the NAIC. Of the Company’s investments in unrealized loss positions classified as non-investment grade, 68% have been in an unrealized loss position for less than one year.

The NAIC assigns securities quality ratings and uniform valuations (called NAIC Designations), which are used by insurers when preparing their annual statements. The NAIC assigns designations to publicly traded and privately placed securities. The designations assigned by the NAIC range from class 1 (highest quality) to class 6 (lowest quality). Of the Company’s general account fixed maturity securities, 94% were in the two highest NAIC Designations as of December 31, 2007 and 2006.

F-27

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The following table summarizes the credit quality, as determined by NAIC Designation, of the Company’s general account fixed maturity securities portfolio as of December 31:

(in millions)		2007				2006
NAIC designation1	Rating agency equivalent designation2	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
1	Aaa/Aa/A	$	16,765.5	$	16,662.7	$	17,433.9	$	17,426.3
2	Baa		5,730.3		5,784.3		6,117.2		6,175.8
3	Ba		1,101.6		1,078.3		1,024.8		1,033.6
4	B		325.0		316.8		590.4		596.6
5	Caa and lower		60.2		52.7		12.6		20.3
6	In or near default		38.6		38.6		18.3		22.8
	Total	$	24,021.2	$	23,933.4	$	25,197.2	$	25,275.4
1	NAIC Designations are assigned at least annually. Some designations for securities shown have been assigned to securities not yet assigned an NAIC Designation in a manner approximating equivalent public rating categories.
2	Comparisons between NAIC and Moody’s designations are published by the NAIC. If no Moody’s rating is available, the Company assigns internal ratings corresponding to public ratings.

Recent conditions in the securities markets, including changes in interest rates, investment quality ratings, liquidity and credit spreads, have resulted in declines in the values of investment securities, including mortgage-backed securities (MBSs) and ABSs. When evaluating whether these securities are other-than-temporarily impaired, the Company considers characteristics of the underlying collateral, such as delinquency and default rates, the quality of the underlying borrower, the type of collateral in the pool, the vintage year of the collateral, subordination levels within the structure of the collateral pool, expected future cash flows, and the Company’s ability and intent to hold the security to recovery. These same factors also affect the estimated fair value of these securities.

The Company’s investments in MBSs and ABSs include securities that are supported by Alt-A and Sub-prime collateral. The Company considers Alt-A collateral to be mortgages whose underwriting standards do not qualify the mortgage for regular conforming or jumbo loan programs. Typical underwriting characteristics that cause a mortgage to fall into the Alt-A classification may include, but are not limited to, inadequate loan documentation of a borrower’s financial information, debt-to-income ratios above normal lending limits, loan-to-value ratios above normal lending limits that do not have primary mortgage insurance, a borrower who is a temporary resident, and loans securing non-conforming types of real estate. Alt-A mortgages are generally issued to borrowers having higher Fair Isaac Credit Organization (FICO) scores, and the lender typically issues a slightly higher interest rate for such mortgages. The Company considers Sub-prime collateral to be mortgages that are first-lien mortgage loans issued to Sub-prime borrowers, as demonstrated by recent delinquent rent or housing payments or substandard FICO scores. Second-lien mortgage loans are also considered Sub-prime. The amortized cost and estimated fair value of the Company’s investments in securities containing Alt-A collateral totaled $1,199.5 and $1,953.6, respectively, and the amortized cost and estimated fair value of the Company’s investments in securities containing Sub-prime collateral totaled $755.7 and $707.1, respectively. As of December 31, 2007, 100.0% and 91.7% of securities containing Alt-A and Sub-prime collateral, respectively, were rated AA or better. In addition, 56.5% and 70.9% of Alt-A and Sub-prime collateral, respectively, was originated in 2005 or earlier.

Proceeds from the sale of securities available-for-sale during 2007, 2006 and 2005 were $4.65 billion, $2.27 billion and $2.62 billion, respectively. During 2007, gross gains of $70.0 million ($61.6 million and $71.9 million in 2006 and 2005, respectively) and gross losses of $70.2 million ($64.1 million and $22.6 million in 2006 and 2005, respectively) were realized on those sales.

Real estate held for use was $17.8 million and $38.8 million as of December 31, 2007 and 2006, respectively. These assets are carried at cost less accumulated depreciation, which was $3.6 million and $15.1 million as of December 31, 2007 and 2006, respectively. There was no real estate held for sale as of December 31, 2007 compared to real estate held for sale with a carrying value of $16.0 million as of December 31, 2006.

The carrying value of commercial mortgage loans on real estate considered to be impaired was $7.4 million as of December 31, 2007 ($17.5 million as of December 31, 2006), for which the related valuation allowance was $3.0 million ($12.3 million as of December 31, 2006). No valuation allowance exists for collateral dependent commercial mortgage loans for which the fair value of the collateral is estimated to be greater than the carrying value. During 2007, the average carrying value of impaired mortgage loans on real estate was $3.7 million ($3.5 million in 2006). Interest income on those loans, which is recognized on a cash basis, was $0.4 million in 2007 ($1.9 million in 2006).

F-28

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

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

(in millions)	2007			2006		2005
Allowance, beginning of period	$	34.3		$	31.1	$	33.3
Net (reductions) additions to allowance		(11.2	)		3.2		(2.2	)
Allowance, end of period	$	23.1		$	34.3	$	31.1

The following table summarizes net realized investment (losses) gains from continuing operations by source for the years ended December 31:

(in millions)	2007			2006			2005
Total realized gains on sales, net of hedging losses	$	65.4		$	88.8		$	75.6
Total realized losses on sales, net of hedging gains		(79.9	)		(64.8	)		(22.9	)
Total other-than-temporary and other investment impairments		(116.4	)		(17.1	)		(36.8	)
Credit default swaps		(7.5	)		(1.1	)		(7.5	)
Periodic net coupon settlements on non-qualifying derivatives		1.7			1.9			1.1
Other derivatives		(29.5	)		(0.6	)		1.1
Net realized investment (losses) gains	$	(166.2	)	$	7.1		$	10.6

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

(in millions)	2007		2006		2005
Securities available-for-sale:
Fixed maturity securities	$	1,370.5	$	1,419.2	$	1,466.2
Equity securities		4.0		2.6		2.4
Mortgage loans on real estate		512.6		535.4		577.3
Short-term investments		28.7		47.3		18.8
Other		124.3		120.9		97.8
Gross investment income		2,040.1		2,125.4		2,162.5
Less investment expenses		64.3		66.9		57.3
Net investment income	$	1,975.8	$	2,058.5	$	2,105.2

Fixed maturity securities with an amortized cost of $8.3 million and $8.1 million as of December 31, 2007 and 2006, respectively, were on deposit with various regulatory agencies as required by law.

As of December 31, 2007 and 2006, the Company had received $551.9 million and $802.3 million, respectively, of cash collateral on securities lending. The Company had not received any non-cash collateral on securities lending as of December 31, 2007 and 2006. As of December 31, 2007 and 2006, the Company had loaned securities with a fair value of $541.2 million and $778.6 million, respectively.

As of December 31, 2007 and 2006, the Company had received $245.4 million and $171.0 million, respectively, of cash for derivative collateral. The Company also held $18.5 million and $12.8 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2007 and 2006, respectively. As of December 31, 2007, the Company had pledged fixed maturity securities with a fair value of $18.8 million as collateral to various derivative counterparties compared to none as of December 31, 2006.

(7) Variable Annuity Contracts  

The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contractholders. The Company provides five primary guarantee types under non-traditional variable annuity contracts: (1) GMDB; (2) GMAB; (3) guaranteed minimum income benefits (GMIB); (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.

F-29

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:

• Return of premium– provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.  

• Reset– provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.  

• Ratchet– provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.  

• Rollup– provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit. For certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.  

• Combo– provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.  

• Earnings enhancement– provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.  

The GMAB, offered in the Company’s Capital Preservation Plus (CPP) contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified time period, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:

• Ratchet– provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.  

• Rollup– provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.  

• Combo– provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.  

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

F-30

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of December 31:

	2007					2006
(in millions)	Account value		Net amount at risk1		Wtd. avg. attained age	Account value		Net amount at risk1		Wtd. avg. attained age
GMDB:
Return of premium	$	9,082.6	$	18.7	62	$	9,231.4	$	33.9	60
Reset		17,915.0		61.1	64		17,587.0		47.5	63
Ratchet		15,789.2		132.2	66		13,481.0		30.3	66
Rollup		467.0		8.4	71		538.4		11.3	70
Combo		2,555.5		47.0	68		2,588.7		28.9	68
Subtotal		45,809.3		267.4	66		43,426.5		151.9	65
Earnings enhancement		519.2		49.8	62		477.8		41.1	61
Total - GMDB	$	46,328.5	$	317.2	65	$	43,904.3	$	193.0	64
GMAB2:
5 Year	$	2,985.6	$	4.6	N/A	$	2,131.1	$	0.1	N/A
7 Year		2,644.1		6.2	N/A		1,865.7		0.1	N/A
10 Year		927.3		1.3	N/A		784.0		—	N/A
Total - GMAB	$	6,557.0	$	12.1	N/A	$	4,780.8	$	0.2	N/A
GMIB3:
Ratchet	$	425.2	$	—	N/A	$	450.6	$	—	N/A
Rollup		1,119.9		—	N/A		1,187.1		—	N/A
Combo		0.3		—	N/A		0.5		—	N/A
Total - GMIB	$	1,545.4	$	—	N/A		1,638.2	$	—	N/A
GLWB:
L.inc	$	2,865.8	$	—	N/A	$	993.8	$	—	N/A

¹   Net amount at risk is calculated on a seriatum basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance, with the earliest annuitizations beginning in 2007.  

²   GMAB contracts with the hybrid GMAB/GLWB rider had account values of $4.77 billion and $2.95 billion as of December 31, 2007 and 2006, respectively.  

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

F-31

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

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

(in millions)	2007		2006
Mutual funds:
Bond	$	5,143.6	$	4,467.3
Domestic equity		31,217.7		29,808.4
International equity		3,987.3		3,420.5
Total mutual funds		40,348.6		37,696.2
Money market funds		1,728.2		1,414.4
Total	$	42,076.8	$	39,110.6

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

The Company’s living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions.

The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2007 and 2006:

• Data used was based on a combination of historical numbers and future projections generally involving 50 probabilistically generated economic scenarios  

• Mean gross equity performance – 8.1%  

• Equity volatility – 18.7%  

• Mortality – 100% of Annuity 2000 table  

• Asset fees – equivalent to mutual fund and product loads  

• Discount rate – 7.0% and 8.0% as of December 31, 2007 and 2006, respectively  

Lapse rate assumptions vary by duration as shown below:

Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	4.00%	5.00%	6.00%	7.00%	8.00%	9.50%	10.00%	11.00%	14.00%	14.00%
Maximum	4.00%	5.00%	6.00%	7.00%	35.00%	35.00%	23.00%	35.00%	35.00%	23.00%

F-32

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(8) Short-Term Debt  

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

(in millions)	2007		2006
$800.0 million commercial paper program	$	199.7	$	—
$350.0 million securities lending program facility		85.6		75.2
Total short-term debt	$	285.3	$	75.2

The Company has available as a source of funds a $1.00 billion revolving variable rate credit facility entered into by NFS, NLIC and NMIC with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company’s debt not exceed 40% of tangible net worth, as defined, and that NLIC maintain statutory surplus, as defined, in excess of $1.67 billion. As of December 31, 2007, the Company and NLIC were in compliance with all covenants. The Company had no amounts outstanding under this agreement as of December 31, 2007 and 2006. NLIC also has an $800.0 million commercial paper program and is required to maintain an available credit facility equal to 50% of any amounts outstanding under the commercial paper program. Therefore, borrowing capacity under the aggregate $1.00 billion revolving credit facility is reduced by 50% of any amounts outstanding under the commercial paper program. NLIC had $199.7 million of commercial paper outstanding at December 31, 2007 at a weighted average interest rate of 4.39% and no commercial paper outstanding at December 31, 2006.

NLIC has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR (4.60% and 5.32% as of December 31, 2007 and 2006, respectively). NLIC had $85.6 million and $75.2 million outstanding under this agreement as of December 31, 2007 and 2006, respectively. As of December 31, 2007, the Company had not provided any guarantees on such borrowings, either directly or indirectly.

The Company paid interest on short-term debt totaling $15.0 million, $11.7 million and $11.5 million in 2007, 2006 and 2005, respectively.

(9) Long-Term Debt  

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

(in millions)	2007		2006
8.15% surplus note, due June 27, 2032	$	300.0	$	300.0
7.50% surplus note, due December 17, 2031		300.0		300.0
6.75% surplus note, due December 23, 2033		100.0		100.0
Total long-term debt	$	700.0	$	700.0

The Company made interest payments to NFS on surplus notes totaling $53.7 million in 2007, 2006 and 2005. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).

F-33

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(10) Federal Income Taxes  

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

Under Internal Revenue Code (IRC) regulations, NFS and its subsidiaries cannot file a life/non-life consolidated federal income tax return until five full years following NFS’ departure from the NMIC consolidated federal income tax return group. Therefore, NFS and its direct non-life insurance company subsidiaries will file a consolidated federal income tax return; NLIC and NLAIC will file a consolidated federal income tax return; and the direct non-life insurance companies under NLIC will file separate federal income tax returns, until 2008, when NFS will become eligible to file a single life/non-life consolidated federal income tax return with all of its eligible subsidiaries.

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31:

(in millions)	2007			2006
Deferred tax assets:
Future policy benefits	$	622.0		$	607.8
Other		213.2			138.6
Gross deferred tax assets		835.2			746.4
Less valuation allowance		(7.0	)		(7.0	)
Deferred tax assets, net of valuation allowance		828.2			739.4
Deferred tax liabilities:
Deferred policy acquisition costs		1,112.6			1,022.2
Other		130.8			173.9
Gross deferred tax liabilities		1,243.4			1,196.1
Net deferred tax liability	$	415.2		$	456.7

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income taxes paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged during 2007, 2006 and 2005.

The Company’s current federal income tax asset was $12.7 million and $12.6 million as of December 31, 2007 and 2006, respectively.

Total federal income taxes paid (refunded) were $99.1 million, $(4.3) million and $182.2 million during the years ended December 31, 2007, 2006 and 2005, respectively.

During the second quarter of 2007, the Company recorded $6.8 million of net federal income tax expense adjustments primarily related to differences between the 2006 estimated tax liability and the amounts the Company reported on its 2006 tax returns. The Company recorded an additional $1.5 million and $0.2 million of such adjustments during the third and fourth quarters of 2007, respectively.

F-34

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

Through June 2006, the Company’s federal income tax returns for tax years 2000-2002 were under IRS examination pursuant to a routine audit. In accordance with its regular practice, management established tax reserves based on the current facts and circumstances regarding each tax exposure item for which the ultimate deductibility is open to interpretation. These reserves are reviewed regularly and are adjusted as events occur that management believes impacts the Company’s liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/non-deductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. A significant component of the Company’s tax reserve as of December 31, 2005 was related to the separate account dividends received deduction (DRD). See “Tax Matters” in Note 14 for more information regarding DRD.

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

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

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

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

(in millions)	2007		2006			2005
Current	$	106.5	$	(61.8	)	$	90.6
Deferred		22.0		90.5			5.2
Federal income tax expense	$	128.5	$	28.7		$	95.8

Total federal income tax expense differs from the amount computed by applying the U.S. federal income tax rate to income from continuing operations before federal income taxes as follows for the years ended December 31:

	2007					2006					2005
(dollars in millions)	Amount			%		Amount			%		Amount			%
Computed (expected) tax expense	$	204.0		35.0		$	226.8		35.0		$	217.2		35.0
DRD		(61.0	)	(10.5	)		(67.5	)	(10.4	)		(107.5	)	(17.3	)
Reserve release		—		—			(110.9	)	(17.1	)		—		—
Other, net		(14.5	)	(2.4	)		(19.7	)	(3.1	)		(13.9	)	(2.3	)
Total	$	128.5		22.1		$	28.7		4.4		$	95.8		15.4

F-35

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

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

Regulatory Risk-Based Capital

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

Dividend Restrictions

The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state. The State of Ohio insurance laws require Ohio-domiciled life insurance companies to seek prior regulatory approval to pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer for the prior year. During the year ended December 31, 2007, NLIC paid dividends of $537.5 million to NFS, including a $242.5 million extraordinary dividend paid after obtaining approval from the ODI. NLIC’s statutory capital and surplus as of December 31, 2007 was $2.50 billion, and statutory net income for 2007 was $309.0 million. As of January 1, 2008, NLIC could not pay dividends to NFS without obtaining prior approval. As of April 2008, NLIC will be able to pay dividends to NFS totaling $246.5 million upon providing prior notice to the ODI. On February 20, 2008, NLIC declared a dividend of $246.5 million payable to NFS in April 2008. NLIC will provide notice to the ODI before paying this dividend to NFS.

The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the State of Ohio insurance laws as the amount equal to the Company’s unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurer’s policyholder surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on NLIC’s participating policies (measured before dividends to policyholders) available for the benefit of the Company and its shareholder.

The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends.

F-36

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

Comprehensive Income

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

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

(in millions)	2007			2006			2005
Net unrealized losses on securities available-for-sale arising during the period:
Net unrealized losses before adjustments	$	(276.3	)	$	(171.3	)	$	(687.2	)
Net adjustment to deferred policy acquisition costs		3.8			40.9			187.0
Net adjustment to future policy benefits and claims		5.4			21.5			17.0
Related federal income tax benefit		93.3			38.1			169.1
Net unrealized losses		(173.8	)		(70.8	)		(314.1	)
Reclassification adjustment for net realized losses (gains) on securities available-for-sale realized during the period:
Net unrealized losses (gains)		107.7			9.2			(20.3	)
Related federal income tax (benefit) expense		(37.7	)		(3.2	)		7.1
Net reclassification adjustment		70.0			6.0			(13.2	)
Other comprehensive loss on securities available-for-sale		(103.8	)		(64.8	)		(327.3	)
Accumulated net holding (losses) gains on cash flow hedges:
Unrealized holding (losses) gains		(17.2	)		(0.2	)		41.7
Related federal income tax benefit (expense)		6.0			0.1			(14.6	)
Other comprehensive (loss) income on cash flow hedges		(11.2	)		(0.1	)		27.1
Other net unrealized losses		(4.2	)		—			—
Total other comprehensive loss	$	(119.2	)	$	(64.9	)	$	(300.2	)

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2007, 2006 and 2005.

F-37

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(12) Employee Benefit Plans  

Defined Benefit Plans

The Company and certain affiliated companies participate in a qualified defined benefit pension plan sponsored by NMIC. This plan covers all employees of participating companies who have completed at least one year of service. Plan contributions are invested in a group annuity contract issued by NLIC. All participants are eligible for benefits based on an account balance feature. Participants last hired before 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature. The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. A separate non-qualified defined benefit pension plan sponsored by NMIC covers certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $13.5 million, $19.9 million and $16.6 million for the years ended December 31, 2007, 2006 and 2005, respectively.

In addition to the NMIC pension plan, the Company and certain affiliated companies participate in life and health care defined benefit plans sponsored by NMIC for qualifying retirees. Postretirement life and health care benefits are contributory. The level of contribution required by a qualified retiree depends on the retiree’s years of service and date of hire. In general, postretirement benefits are available to full-time employees who are credited with 120 months of retiree life and health service. Postretirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and coinsurance. In addition, there are caps on the Company’s portion of the per-participant cost of the postretirement health care benefits. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested primarily in group annuity contracts issued by NLIC. The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2007, 2006 and 2005.

Defined Contribution Plans

NMIC sponsors a defined contribution retirement savings plan covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company’s expense for contributions to these plans was $7.3 million, $6.6 million and $6.2 million for the years ended December 31, 2007, 2006 and 2005, respectively.

(13) Related Party Transactions  

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

In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides computer, telephone, mail, employee benefits administration and other services to NMIC and certain of its direct and indirect subsidiaries, including the Company, based on specified rates for units of service consumed. For the years ended December 31, 2007, 2006 and 2005, the Company made payments to NMIC and NSC totaling $285.6 million, $261.7 million and $274.1 million, respectively.

F-38

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $2.90 billion and $5.48 billion as of December 31, 2007 and 2006, respectively. Total revenues from these contracts were $130.8 million, $133.4 million and $136.2 million for the years ended December 31, 2007, 2006 and 2005, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $109.7 million, $110.7 million and $107.3 million for the years ended December 31, 2007, 2006 and 2005, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated.

The Company leases office space from NMIC. For the years ended December 31, 2007, 2006 and 2005, the Company made lease payments to NMIC of $23.0 million, $19.3 million and $18.7 million, respectively.

NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC for the years ended December 31, 2007, 2006 and 2005 were $317.6 million, $430.8 million and $429.5 million, respectively, while benefits, claims and expenses ceded during these years were $348.1 million, $470.4 million and $398.8 million, respectively.

Funds of Nationwide Funds Group (NFG), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2007 and 2006, customer allocations to NFG funds totaled $21.41 billion and $18.26 billion, respectively. For the years ended December 31, 2007, 2006 and 2005, NFG paid the Company $76.9 million, $64.4 million and $51.6 million, respectively, for the distribution and servicing of these funds.

Under a marketing agreement with NMIC, NLIC makes payments to cover a portion of the agent marketing allowance that is paid to Nationwide agents. These costs cover product development and promotion, sales literature, rent and similar items. Payments under this agreement totaled $20.1 million, $28.3 million and $26.5 million for the years ended December 31, 2007, 2006 and 2005, respectively.

The Company also participates in intercompany repurchase agreements with affiliates whereby the seller transfers securities to the buyer at a stated value. Upon demand or after a stated period, the seller repurchases the securities at the original sales price plus interest. As of December 31, 2007 and 2006, the Company had no outstanding borrowings from affiliated entities under such agreements. During 2007, 2006 and 2005, the most the Company had outstanding at any given time was $178.2 million, $191.5 million and $55.3 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements during these years were immaterial.

The Company and various affiliates have agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC for the benefit of the Company were $368.2 million and $601.3 million as of December 31, 2007 and 2006, respectively, and are included in short-term investments on the consolidated balance sheets.

Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2007, 2006 and 2005 were $59.5 million, $58.1 million and $59.0 million, respectively.

F-39

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

An affiliate of the Company is currently developing a browser-based policy administration and online brokerage software application for defined benefit plans. In connection with the development of this application, the Company made net payments, which were expensed, to that affiliate related to development totaling $9.4 million, $6.9 million and $2.9 million for the years ended December 31, 2007, 2006 and 2005, respectively.

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

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 10. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. There were no payments (from) to NMIC for the year ended December 31, 2007 compared to $(15.3) million and $45.0 million for the years ended December 31, 2006 and 2005, respectively. These payments related to tax years prior to deconsolidation.

In 2007, 2006 and 2005, NLIC paid dividends to NFS totaling $537.5 million, $375.0 million and $185.0 million, respectively.

(14) Contingencies  

Legal Matters

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

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

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

F-40

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

In addition, state and federal regulators and other governmental bodies have commenced investigations, proceedings or inquiries relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker/dealers, and supervision of former registered representatives. Related investigations, proceedings or inquiries may be commenced in the future. The Company and/or its affiliates have been contacted by or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, and funding agreements backing the NLIC MTN program. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

These proceedings are expected to continue in the future and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including mutual fund, retirement plan, life insurance and annuity companies. These proceedings also could affect the outcome of one or more of the Company’s litigation matters. There can be no assurance that any litigation or regulatory actions will not have a material adverse effect on the Company in the future.

On November 20, 2007, NLIC and NRS were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v NLIC, NRS, Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. The plaintiffs purport to represent a class of all participants in the Alabama State Employees Association (ASEA) plan, excluding members of the Board of Control during the Class Period and excluding ASEA’s directors, officers and board members during the class period. The class period is the date from which NLIC and/or NRS first made a payment to ASEA or PEBCO arising out of the funding agreement dated March 24, 2004 to the date class notice is provided. The plaintiffs allege that the defendants breached their fiduciary duties, converted plan participants’ properties, and breached their contract when payments were made and the plan was administered under the funding agreement. The complaint seeks a declaratory judgment, an injunction, disgorgement of amounts paid, compensatory and punitive damages, interest, attorneys’ fees and costs, and such other equitable and legal relief to which the plaintiffs and class members may be entitled. On January 9, 2008, NLIC and NRS filed a Notice of Removal to the United States District Court Northern District of Alabama, Southern Division. On January 16, 2008, NLIC and NRS filed a motion to dismiss. On January 24, 2008, the plaintiffs filed a motion to remand. The motions have been fully briefed. NLIC and NRS intend to defend this case vigorously.

On July 11, 2007, NLIC was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al. The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries). The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties. The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On October 12, 2007, NLIC filed a motion to dismiss. The motion has been fully briefed. NLIC intends to defend this lawsuit vigorously.

F-41

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

On November 15, 2006, NFS, NLIC and NRS were named in a lawsuit filed in the United States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff seeks to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The class period is from January 1, 1996 until the class notice is provided. The plaintiff alleges that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint seeks an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, NFS, NLIC and NRS filed a motion to dismiss. On September 17, 2007, the Court granted the motion to dismiss. On October 1, 2007, the plaintiff filed a motion to vacate judgment and for leave to file an amended complaint. On October 25, 2007, NFS, NLIC and NRS filed their opposition to the plaintiff’s motion. NFS, NLIC and NRS continue to defend this lawsuit vigorously.

On February 11, 2005, NLIC was named in a class action lawsuit filed in Common Pleas Court, Franklin County, Ohio entitled Michael Carr v. Nationwide Life Insurance Company. The plaintiff claims that the total of modal payments that policyholders paid per year exceeded the guaranteed maximum premium provided for in the policy. The complaint seeks recovery for breach of contract, fraud by omission, violation of the Ohio Deceptive Trade Practices Act and unjust enrichment. The complaint also seeks unspecified compensatory damages, disgorgement of all amounts in excess of the guaranteed maximum premium and attorneys’ fees. On February 2, 2006, the court granted the plaintiff’s motion for class certification on the breach of contract and unjust enrichment claims. The court certified a class consisting of all residents of the United States and the Virgin Islands who, during the class period, paid premiums on a modal basis to NLIC for term life insurance policies issued by NLIC during the class period that provide for guaranteed maximum premiums, excluding certain specified products. Excluded from the class are NLIC; any parent, subsidiary or affiliate of NLIC; all employees, officers and directors of NLIC; and any justice, judge or magistrate judge of the State of Ohio who may hear the case. The class period is from February 10, 1990 through February 2, 2006, the date the class was certified. On January 26, 2007, the plaintiff filed a motion for summary judgment. On April 30, 2007, NLIC filed a motion for summary judgment. On February 4, 2008, the Court entered its ruling on the parties’ pending motions for summary judgment. The court granted NLIC’s motion for summary judgment for some of the plaintiffs’ causes of action, including breach of contract claims on all decreasing term policies, plaintiff Carr’s individual claims for fraud by omission, violation of the Ohio Deceptive Trade Practices Act and all unjust enrichment claims. However, several claims against NLIC remain, including plaintiff Carr’s individual claim for breach of contract and the plaintiff Class’ claims for breach of contract for the term life policies in 43 of 51 jurisdictions. The Court has requested additional briefing on NLIC’s affirmative defense that the doctrine of voluntary payment acts as a defense to the breach of contract claims. NLIC continues to defend this lawsuit vigorously.

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

F-42

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. Currently, the plaintiffs’ fifth amended complaint, filed March 21, 2006, purports to represent a class of qualified retirement plans under ERISA that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. To date, the District Court has rejected the plaintiffs’ request for certification of the alleged class. On September 25, 2007, NFS’ and NLIC’s motion to dismiss the plaintiffs’ fifth amended complaint was denied. On October 12, 2007, NFS and NLIC filed their answer to the plaintiffs’ fifth amended complaint and amended counterclaims. On November 1, 2007, the plaintiffs filed a motion to dismiss NFS’ and NLIC’s amended counterclaims. On November 15, 2007, the plaintiffs filed a motion for class certification. On February 8, 2008, the Court denied the plaintiffs’ motion to dismiss the amended counterclaim, with the exception that it was tentatively granting the plaintiffs’ motion to dismiss with respect to NFS’ and NLIC’s claim that it could recover any “disgorgement remedy” from plan sponsors. NFS and NLIC continue to defend this lawsuit vigorously.

Tax Matters

Management has established tax reserves in accordance with the requirements of FIN 48. See Note 3 for a summary of the provisions of FIN 48. These reserves are reviewed regularly and are adjusted as events occur that management believes impact its liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/nondeductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. Management believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years.

The separate account DRD is a significant component of the Company’s federal income tax provision. On August 16, 2007, the IRS issued Revenue Ruling 2007-54. This ruling took a position with respect to the DRD that could have significantly reduced the Company’s DRD. The Company believes that the position taken by the IRS in the ruling was contrary to existing law and the relevant legislative history.

In Revenue Ruling 2007-61, released September 25, 2007, the IRS and the U.S. Department of the Treasury suspended Revenue Ruling 2007-54 and informed taxpayers of their intention to address certain issues in connection with the DRD in future tax regulations. Final tax regulations could impact the Company’s DRD in periods subsequent to their effective date.

(15) Guarantees  

Since 2001, the Company has sold $677.2 million of credit enhanced equity interests in Low-Income-Housing Tax Credit Funds (Tax Credit Funds) to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 5.25% over periods ending between 2002 and 2022. As of December 31, 2007, the Company held guarantee reserves totaling $6.0 million on these transactions. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $1.28 billion. The Company does not anticipate making any payments related to these guarantees.

As of December 31, 2007, the Company held stabilization reserves of $1.6 million as collateral for certain properties owned by the Tax Credit Funds that had not met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized.

F-43

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

To the extent there are cash deficits in any specific property owned by the Tax Credit Funds, property reserves, property operating guarantees and reserves held by the Tax Credit Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the Tax Credit Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

(16) Variable Interest Entities  

As of December 31, 2007 and 2006, the Company had relationships with 19 and 18 variable interest entities (VIEs), respectively, each of which the Company was the primary beneficiary. Each VIE is a conduit that assists the Company in structured products transactions involving the sale of Tax Credit Funds to third party investors for which the Company provides guaranteed returns (see Note 15). The results of operations and financial position of these VIEs are included along with corresponding minority interest liabilities in the accompanying consolidated financial statements.

VIE net assets were $465.7 million and $445.5 million as of December 31, 2007 and 2006, respectively. The following table summarizes the components of net assets as of December 31:

(in millions)	2007			2006
Other long-term investments	$	434.1		$	432.5
Short-term investments		31.9			33.7
Other assets		38.1			37.8
Other liabilities		(38.4	)		(58.5	)

The Company’s total loss exposure from VIEs of which the Company is the primary beneficiary was immaterial as of December 31, 2007 and 2006 (except for the impact of guarantees disclosed in Note 15).

In addition to the VIEs described above, the Company holds variable interests, in the form of limited partnerships or similar investments, in Tax Credit Funds of which the Company is not the primary beneficiary. These investments have been held by the Company for periods of 1 to 10 years and allow the Company to utilize certain tax credits and realize other tax benefits from affordable housing projects. The Company also has certain investments in other securitization transactions that qualify as VIEs, but of which the Company is not the primary beneficiary. The total exposure to loss on these VIEs was $201.3 million and $68.9 million as of December 31, 2007 and 2006, respectively.

F-44

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(17) Segment Information  

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

The primary segment profitability measure that management uses is pre-tax operating earnings, which is calculated by adjusting income from continuing operations before federal income taxes to exclude (1) net realized investment gains and losses, except for periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations and (2) the adjustment to amortization of DAC related to net realized investment gains and losses.

Individual Investments

The Individual Investments segment consists of individual The BEST of AMERICA^® and private label deferred variable annuity products, deferred fixed annuity products, income products and advisory services. Individual deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, individual variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while individual fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods.

Retirement Plans

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

Individual Protection

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

Corporate and Other

The Corporate and Other segment includes the MTN program; structured products business; and other revenues and expenses not allocated to other segments.

F-45

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

The following tables summarize the Company’s business segment operating results for the years ended December 31:

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2007
Revenues:
Policy charges	$	656.9	$	139.5	$	411.9	$	—		$	1,208.3
Premiums		133.1		—		158.6		—			291.7
Net investment income		609.1		639.4		330.2		397.1			1,975.8
Non-operating net realized investment losses1		—		—		—		(156.0	)		(156.0	)
Other income		3.1		—		—		(5.8	)		(2.7	)
Total revenues		1,402.2		778.9		900.7		235.3			3,317.1
Benefits and expenses:
Interest credited to policyholder accounts		419.7		433.7		178.0		231.2			1,262.6
Benefits and claims		234.2		—		245.1		—			479.3
Policyholder dividends		—		—		24.5		—			24.5
Amortization of DAC		287.1		26.7		80.2		(25.5	)		368.5
Interest expense		—		—		—		70.0			70.0
Other operating expenses		191.6		173.6		147.1		17.2			529.5
Total benefits and expenses		1,132.6		634.0		674.9		292.9			2,734.4
Income (loss) from continuing operations before federal income tax expense		269.6		144.9		225.8		(57.6	)	$	582.7
Less: non-operating net realized investment losses1		—		—		—		156.0
Less: adjustment to amortization related to net realized investment gains and losses		—		—		—		(25.5	)
Pre-tax operating earnings	$	269.6	$	144.9	$	225.8	$	72.9
Assets as of year end	$	55,692.9	$	26,912.6	$	18,251.1	$	8,683.4		$	109,540.0

¹   Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations.  

F-46

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2006
Revenues:
Policy charges	$	581.7	$	160.2	$	390.7	$	—		$	1,132.6
Premiums		142.5		—		165.8		—			308.3
Net investment income		739.5		636.0		328.2		354.8			2,058.5
Non-operating net realized investment gains1		—		—		—		1.0			1.0
Other income		2.6		—		0.3		3.4			6.3
Total revenues		1,466.3		796.2		885.0		359.2			3,506.7
Benefits and expenses:
Interest credited to policyholder accounts		501.7		440.5		179.2		208.7			1,330.1
Benefits and claims		202.8		—		247.5		—			450.3
Policyholder dividends		—		—		25.6		—			25.6
Amortization of DAC		352.7		37.9		69.6		(9.9	)		450.3
Interest expense		—		—		—		65.5			65.5
Other operating expenses		206.3		179.1		142.4		9.0			536.8
Total benefits and expenses		1,263.5		657.5		664.3		273.3			2,858.6
Income from continuing operations before federal income tax expense		202.8		138.7		220.7		85.9		$	648.1
Less: non-operating net realized investment gains1		—		—		—		(1.0	)
Less: adjustment to amortization related to net realized investment gains and losses		—		—		—		(9.9	)
Pre-tax operating earnings	$	202.8	$	138.7	$	220.7	$	75.0
Assets as of year end	$	55,404.6	$	28,817.2	$	16,948.8	$	8,791.8		$	109,962.4

¹   Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations.  

F-47

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2007, 2006 and 2005

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2005
Revenues:
Policy charges	$	532.4	$	145.0	$	377.7	$	—		$	1,055.1
Premiums		96.7		—		163.3		—			260.0
Net investment income		822.4		642.9		332.8		307.1			2,105.2
Non-operating net realized investment gains1		—		—		—		9.5			9.5
Other income		1.3		0.2		—		1.8			3.3
Total revenues		1,452.8		788.1		873.8		318.4			3,433.1
Benefits and expenses:
Interest credited to policyholder accounts		557.7		444.8		182.4		146.1			1,331.0
Benefits and claims		149.1		—		228.4		—			377.5
Policyholder dividends		—		—		33.1		—			33.1
Amortization of DAC		329.1		47.2		89.0		1.0			466.3
Interest expense		—		—		—		66.3			66.3
Other operating expenses		193.1		181.8		148.1		15.3			538.3
Total benefits and expenses		1,229.0		673.8		681.0		228.7			2,812.5
Income from continuing operations before federal income tax expense		223.8		114.3		192.8		89.7		$	620.6
Less: non-operating net realized investment gains1		—		—		—		(9.5	)
Less: adjustment to amortization related to net realized investment gains and losses		—		—		—		1.0
Pre-tax operating earnings	$	223.8	$	114.3	$	192.8	$	81.2
Assets as of year end	$	52,929.2	$	29,987.2	$	14,728.7	$	9,313.4		$	106,958.5

¹   Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to securitizations.  

F-48

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, 2007 (in millions)

Column A	Column B		Column C		Column D
Type of investment	Cost		Market value		Amount at which shown in the consolidated balance sheet
Fixed maturity securities available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government corporations	$	110.8	$	124.7	$	124.7
Agencies not backed by the full faith and credit of the U.S. Government		406.1		467.3		467.3
Obligations of states and political subdivisions		245.3		244.2		244.2
Foreign governments		40.0		42.4		42.4
Public utilities		1,345.3		1,358.8		1,358.8
All other corporate		21,873.7		21,696.0		21,696.0
Total fixed maturity securities available-for-sale		24,021.2		23,933.4		23,933.4
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies		15.5		18.5		18.5
Industrial, miscellaneous and all other		2.3		1.6		1.6
Nonredeemable preferred stocks		51.8		52.8		52.8
Total equity securities available-for-sale		69.6		72.9		72.9
Mortgage loans on real estate, net		7,619.2				7,615.4	1
Real estate, net:
Investment properties		11.1				8.6	2
Acquired in satisfaction of debt		10.4				9.2	2
Total real estate, net		21.5				17.8
Policy loans		687.9				687.9
Other long-term investments		625.1				625.1
Short-term investments, including amounts managed by a related party		965.4				959.1	3
Total investments	$	34,009.9			$	33,911.6

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

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

³   Difference from Column B primarily is due to unrealized gains and/or losses from securities lending.  

See accompanying report of independent registered public accounting firm.

F-49

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule III        Supplementary Insurance Information

As of December 31, 2007, 2006 and 2005 and for each of the years then ended (in millions)

Column A	Column B		Column C		Column D			Column E		Column F
Year: Segment	Deferred policy acquisition costs		Future policy benefits, losses, claims and loss expenses		Unearned premiums1			Other policy claims and benefits payable1		Premium revenue
2007
Individual Investments	$	2,078.1	$	10,748.6						$	133.1
Retirement Plans		289.7		10,693.7							—
Individual Protection		1,542.5		5,635.9							158.6
Corporate and Other		87.1		4,920.2							—
Total	$	3,997.4	$	31,998.4						$	291.7
2006
Individual Investments	$	1,945.0	$	13,004.4						$	142.5
Retirement Plans		288.6		10,839.0							—
Individual Protection		1,441.0		5,574.1							165.8
Corporate and Other		83.4		4,991.9							—
Total	$	3,758.0	$	34,409.4						$	308.3
2005
Individual Investments	$	1,936.4	$	14,970.9						$	96.7
Retirement Plans		290.3		10,847.3							—
Individual Protection		1,328.7		5,531.9							163.3
Corporate and Other		42.5		4,591.0							—
Total	$	3,597.9	$	35,941.1						$	260.0
Column A	Column G		Column H		Column I			Column J		Column K
Year: Segment	Net investment income2		Benefits, claims, losses and settlement expenses		Amortization of deferred policy acquisition costs			Other operating expenses2		Premiums written
2007
Individual Investments	$	609.1	$	653.9	$	287.1			191.6
Retirement Plans		639.4		433.7		26.7			173.6
Individual Protection		330.2		447.6		80.2			147.1
Corporate and Other		397.1		231.2		(25.5	)		87.1
Total	$	1,975.8	$	1,766.4	$	368.5		$	599.4
2006
Individual Investments	$	739.5	$	704.5	$	352.7		$	206.3
Retirement Plans		636.0		440.5		37.9			179.1
Individual Protection		328.2		452.3		69.6			142.4
Corporate and Other		354.8		208.7		(9.9	)		74.5
Total	$	2,058.5	$	1,806.0	$	450.3		$	602.3
2005
Individual Investments	$	822.4	$	706.8	$	329.1		$	193.1
Retirement Plans		642.9		444.8		47.2			181.8
Individual Protection		332.8		443.9		89.0			148.1
Corporate and Other		307.1		146.1		1.0			81.6
Total	$	2,105.2	$	1,741.6	$	466.3		$	604.6

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

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

F-50

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule IV         Reinsurance

As of December 31, 2007, 2006 and 2005 and for each of the years then ended (dollars in millions)

Column A	Column B		Column C		Column D		Column E		Column F
	Gross amount		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
2007
Life insurance in force	$	156,899.3	$	58,529.0	$	4.4	$	98,374.7	0.0%
Premiums:
Life insurance 1	$	364.2	$	72.7	$	0.2	$	291.7	0.0%
Accident and health insurance		289.2		316.8		27.6		—	NM
Total	$	653.4	$	389.5	$	27.8	$	291.7	9.5%
2006
Life insurance in force	$	151,109.9	$	58,189.8	$	7.9	$	92,928.0	0.0%
Premiums:
Life insurance 1	$	336.4	$	28.4	$	0.3	$	308.3	0.1%
Accident and health insurance		388.9		417.4		28.5		—	N/A
Total	$	725.3	$	445.8	$	28.8	$	308.3	9.3%
2005
Life insurance in force	$	142,308.1	$	52,339.1	$	10.6	$	89,979.6	0.0%
Premiums:
Life insurance 1	$	311.5	$	51.8	$	0.3	$	260.0	0.1%
Accident and health insurance		415.2		445.1		29.9		—	N/A
Total	$	726.7	$	496.9	$	30.2	$	260.0	11.6%

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

F-51

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, 2007, 2006 and 2005 (in millions)

Column A	Column B		Column C				Column D		Column E
Description	Balance at beginning of period		Charged (credited) to costs and expenses		Charged to other accounts		Deductions1		Balance at end of period
2007
Valuation allowances - mortgage loans on real estate	$	34.3	$	1.1	$	—	$	12.3	$	23.1
2006
Valuation allowances - mortgage loans on real estate	$	31.1	$	6.0	$	—	$	2.8	$	34.3
2005
Valuation allowances - mortgage loans on real estate	$	33.3	$	1.6	$	—	$	3.8	$	31.1

¹   Amounts represent transfers to real estate owned and recoveries.  

F-52

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 (033-62795) 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 (033-62795) and hereby incorporated by reference.

(e) The form of the contract application – Filed previously with initial registration statement (033-62795) and hereby incorporated by reference.

(f) Articles of Incorporation of Depositor – Filed previously with initial registration statement (033-62795) and hereby incorporated by reference.

(g) Reinsurance Contracts -Filed previously with registration statement (333-46338) and hereby incorporated by reference.

(h) Participation Agreements –

1.   Fund Participation Agreement with AIM filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

2.   Fund Participation Agreement with AllianceBernstein filed previously on September 27, 2007, with Pre-Effective Amendment No. 3 (File No. 333-137202) as exhibit 24(b) and hereby incorporated by reference.

3.   Fund Participation Agreement with American Century filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

4.   Fund Participation Agreement with Credit Suisse filed on April 22, 2008, with Post-Effective Amendment No. 21 (File No. 033-60063) as exhibit 26(h) and hereby incorporated by reference.  NEBA ONLY:  Fund Participation Agreement with Credit Suisse is currently being filed as exhibit 26(h).

5.   Fund Participation Agreement with Dreyfus filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

6.   Fund Participation Agreement with Federated filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

7.   Fund Participation Agreement with Fidelity filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

8.   Fund Participation Agreement with Franklin filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

9.   Fund Participation Agreement with Janus filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

10.   Fund Participation Agreement with MFS®/Massachusetts filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

11.   Fund Participation Agreement with Nationwide (NVIT) filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

12.   Fund Participation Agreement with Neuberger Berman/Lehman Brothers filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

13.   Fund Participation Agreement with Oppenheimer filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

14.   Fund Participation Agreement with Putnam filed previously on September 27, 2007, with Pre-Effective Amendment No. 3 (File No. 333-137202) as exhibit 24(b) and hereby incorporated by reference.

15.   Fund Participation Agreement with T. Rowe Price filed previously on July 17, 2007, with Pre-Effective Amendment No. 1 (File No. 333-140608) as exhibit 24(b) and hereby incorporated by reference.

16.   Fund Participation Agreement with Van Eck filed previously on September 27, 2007, with Pre-Effective Amendment No. 3 (File No. 333-137202) as exhibit 24(b) and hereby incorporated by reference.

17.   Fund Participation Agreement with Van Kampen filed on April 23, 2008, with Post-Effective Amendment No. 25 (File No. 033-89560) as exhibit 26(h) and hereby incorporated by reference.

18.   Fund Participation Agreement with Wells Fargo filed previously on September 27, 2007, with Pre-Effective Amendment No. 3 (File No. 333-137202) as exhibit 24(b) 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 (033-62795) 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 - Filed previously with registration statement (333-140608) on July 17, 2007 under document “redeemexempt.htm” and hereby incorporated by reference. 

(99)      Power of Attorney – Attached hereto.

Item 27. Directors and Officers of the Depositor

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

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

One Nationwide Plaza, Columbus, Ohio 43215

Item 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.
AGMC Reinsurance, Ltd.	Turks & Caicos Islands		The company is in the business of reinsurance of mortgage guaranty risks.
ALLIED General Agency Company	Iowa		The company acts as a general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.	Iowa		The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company	Iowa		The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.	Texas		The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
AMCO Insurance Company	Iowa		The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.	Florida		The company is an underwriting manager for ocean cargo and hull insurance.
Atlantic Floridian Insurance Company (f.k.a. Nationwide Atlantic Insurance Company)	Ohio		The company writes personal lines residential property insurance in the State of Florida.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 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.

Although Nationwide is of the opinion that the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding is permitted, Nationwide has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide for liabilities arising under the Securities Act of 1933 (the 1933 "Act") is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act #.  Nationwide and the directors, officers and/or controlling persons will be governed by the final adjudication of such issue.  Nationwide will not be required to seek the court's determination if, in the opinion of Nationwide's counsel, the matter has been settled by controlling precedent.

Item 30.                 Principal Underwriter

(a) Nationwide Investment Services Corporation ("NISC") serves as principal underwriter and general distributor for the following separate investment accounts of Nationwide or its affiliates:

Multi-Flex Variable Account	Nationwide VLI Separate Account-2
Nationwide Variable Account	Nationwide VLI Separate Account-3
Nationwide Variable Account-II	Nationwide VLI Separate Account-4
Nationwide Variable Account-4	Nationwide VLI Separate Account-6
Nationwide Variable Account-5	Nationwide VLI Separate Account-7
Nationwide Variable Account-6	Nationwide VL Separate Account-C
Nationwide Variable Account-7	Nationwide VL Separate Account-D
Nationwide Variable Account-8	Nationwide VL Separate Account-G
Nationwide Variable Account-9
Nationwide Variable Account-10
Nationwide Variable Account-11
Nationwide Variable Account-13
Nationwide Variable Account-14
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C

(b) Directors and Officers of NISC:

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

The business address of the Directors and Officers of Nationwide Investment Services Corporation is:

One Nationwide Plaza, Columbus, Ohio 43215

(c)

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

Item 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 18^th day of April 2008.

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 18^thday of April 2008.

W. G. JURGENSEN
W. G. Jurgensen, Director and Chief Executive Officer
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