485BPOS

'33 Act File No. 033-42180

'40 Act File No. 811-05311

UNITED STATES

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. 37	þ

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	o
Amendment No. 62	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

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

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

Robert W. Horner, III

Vice President and Secretary

One Nationwide Plaza

Columbus, Ohio 43215

(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: May 1, 2010

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

o            Immediately upon filing pursuant to paragraph (b)

þ            On May 1, 2010 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 ® FPVUL

Financial Horizons Life Insurance FPVUL

Individual Flexible 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, 2010

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 adviser, you should use this prospectus to compare the benefits and risks of this policy versus those of other life insurance policies and alternative investment instruments.

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

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

You should read your policy along with this prospectus.

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

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

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

This prospectus is not an offering in any jurisdiction where such offering may not lawfully be made.

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

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

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

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

Table of Contents	Page
In Summary: Policy Benefits	1
In Summary: Policy Risks	2
In Summary: Variable Universal Life Insurance and the Policy	4
In Summary: Fee Tables	5
The Policy	9
Policy Owner
The Beneficiaries
To Purchase
Coverage
Coverage Effective Date
Temporary Insurance Coverage
Right To Cancel (Examination Right)
To Change Coverage
Sub-Account Transfers
Fixed Account Transfers
Modes to Make a Transfer
To Exchange
To Terminate (Surrender)
To Assign
Proceeds Upon Maturity
Reminders, Reports and Illustrations
Errors or Misstatements
Incontestability
If We Modify the Policy
Riders                                                                                                                                    0;	15
Accidental Death Benefit Rider
Base Insured Term Rider
Change of Insured Rider
Children's Insurance Rider
Guaranteed Minimum Death Benefit Rider
Spouse Life Insurance Rider
Waiver of Monthly Deductions Rider
Premium                                                                                                                                    60;	16
Initial Premium
Subsequent Premiums
Charges                                                                                                                                    60;	17
Sales Load
Premium Taxes
Surrender Charges
Partial Surrender Fee
Short-Term Trading Fees
Cost of Insurance
Mortality and Expense Risk
Administrative
Increase Charge
Policy Loan Interest
Children's Insurance Rider
Change of Insured Rider
Spouse Life Insurance Rider
Accidental Death Benefit Rider
Based Insured Term Rider
Waiver of Monthly Deductions Rider
Guaranteed Minimum Death Benefit Rider
Reduction of Charges
A Note on Charges
Information on Underlying Mutual Fund Payments

Table of Contents (continued)	Page
To Allocate Net Premium and Sub-Account Valuation	23
The Fixed Investment Option
Variable Investment Options
Allocation of Net Premium and Cash Value
When Accumulation Units are Valued
How Investment Experience is Determined
Cash Value
Dollar Cost Averaging
Automated Income Monitor
The Death Benefit	28
Calculation of the Death Benefit Proceeds
Death Benefit Options
The Minimum Required Death Benefit
Changes in the Death Benefit Option
Suicide
Surrenders                                                                                                                                   60;	30
Full Surrender
Partial Surrender
Reduction of Specified Amount on a Partial Surrender
Income Tax Withholding
Policy Loans	31
Loan Amount and Interest
Collateral and Interest
Repayment
Net Effect of Policy Loans
Lapse                                                                                                                                   &# 160;	32
Grace Period
Reinstatement
Taxes                                                                                                                                   &# 160;	33
Types of Taxes
Buying the Policy
Investment Gain in the Policy
Periodic Withdrawals, Non-Periodic Withdrawals and Loans
Surrendering the Policy; Maturity
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	42
Appendix A:  Sub-Account Information	44
Appendix B:  Definitions	58
Appendix C: Illustrations of Surrender Charges	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.   We will pay the death benefit Proceeds upon the Insured's death if the Insured dies while your policy is In Force.  The policy is In Force when: the policy has been issued; the Insured is living; the policy has not been surrendered for its Cash Surrender Value; and the policy has not Lapsed.

Your Choice of Death Benefit Options

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

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

For more information, see "The Death Benefit," beginning on page 28.

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 "Proceeds Upon Maturity," beginning on page 13.

Coverage Flexibility

Subject to conditions, you may choose to:

ü      Change the Death Benefit option;

ü      Increase or decrease the Specified Amount;

ü      Change your beneficiaries; and

ü      Change who owns the policy.

For more information, see: "Changes In The Death Benefit Option," beginning on page 29; "To Change Coverage," beginning on page 10; "The Beneficiaries," beginning on page 9; and "To Assign," beginning on page 13.

Access to Cash Value

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

ü Take a policy loan of an amount no greater than 90% of the Cash Value of the variable account, less any surrender charges and interest due on the next anniversary of the Policy Date.  The minimum amount is $200.  For more information, see "Policy Loans," beginning on page 31.

ü      Take a partial surrender of no less than $500.  For more information, see "Partial Surrender," beginning on page 30.

ü Surrender the policy at any time while the Insured is alive.  The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans, surrender charges and policy indebtedness or other indebtedness.  You may choose to receive the Cash Surrender Value in a lump sum, or you will have available the same payout options as if it constituted a Death Benefit.  For more information, see "Full Surrender," beginning on page 30 and "Proceeds Upon Maturity," beginning on page 13.

Premium Flexibility

While we would like you to select a premium payment plan, you will not be required to make your Premium payments accordingly.  Within limits, you may vary the frequency and amount, and you might even be able to skip needing to make a Premium payment.  For more information, see "Premium," beginning on page 16.

Investment Options

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

ü The fixed investment option will earn interest daily at an annual effective rate of at least 4%.

ü The variable investment options constitute the limitedly available mutual funds, and we have divided Nationwide VLI Separate Account-2 into an equal number of Sub-Account portfolios, identified in the "Available Sub-Accounts" section, to account for your allocations.  Your Investment Experience will depend on the market performance of the Sub-Account portfolios you have chosen.

1

For more information, see "Appendix A: Sub-Account Information," beginning on page 44 and "To Allocate Net Premium And Sub-Account Valuation," beginning on page 23.

Transfers Between and Among Investment Options

You may transfer between the fixed and variable investment options, subject to conditions.  You may transfer among the Sub-Account portfolios of the variable investment option within limits.  We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-Account Investment Experience.  For more information, see "Sub-Account Portfolio Transfers," beginning on page 11 and "Modes t o Make A Transfer," beginning on page 13.  We also offer dollar cost averaging, an automated investment strategy that spreads out transfers over time to try to reduce the investment risks of market fluctuations.  For more information, see "Dollar Cost Averaging," beginning on page 26.

Taxes

Unless you make a withdrawal, generally, you will not be taxed on any earnings.  This is known as tax deferral.  Also, your beneficiary generally will not have to include the Proceeds as taxable income.  For more information, see "Taxes," beginning on page 33.  Unlike other variable insurance products Nationwide offers, these Individual Flexible Premium Variable Universal Life Insurance Policies do not require distributions to be made before the death of the Insured.

Assignment

You may assign the policy as collateral for a loan or another obligation while the Insured is alive.  Prior to being recorded, assignments will not affect any payments made or actions taken by Nationwide.  Nationwide is not responsible for any assignment not submitted for recording, nor is Nationwide responsible for the sufficiency or validity of any assignment.  For more information, see "To Assign," beginning on page 13.

Examination Right

For a limited time, you may cancel the policy, and you will receive a refund.  For more information, see "Right To Cancel (Examination Right)," beginning on page 10.

Riders

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

ü Accidental Death Benefit Rider

ü Base Insured Term Rider

ü Change Of Insured Rider (There is no charge for this Rider.)

ü Children's Insurance Rider

ü Guaranteed Minimum Death Benefit Rider

ü Spouse Life InsuranceRider

ü Waiver of Monthly Deductions Rider

For more information, see "Riders," beginning on page 15.

In Summary: Policy Risks

Improper Use

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

Unfavorable Investment Experience

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

2

Effect of Partial Surrenders and Policy Loans on Investment Returns

Partial surrenders or policy loans may accelerate a Lapse because the amount of either or both will no longer be available to generate any investment return.  A partial surrender will proportionately reduce the amount of Cash Value allocated among the Sub-Account portfolios you have chosen, and to the fixed account, too, if there is not enough Cash Value in the Sub-Account portfolios.  Thus, the remainder of your policy's Cash Value is all that would be available to generate enough of an investment return to cover policy and Sub-Account portfolio charges and keep the policy In Force, at least until you repay the policy loan or make another Premium payment.  There will always be a Grace Period and the opportunity to reinstate insurance coverage.  Under certain circumstances, however, the policy could terminate without value and insurance coverage would cease.

Reduction of the Death Benefit

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

Adverse Tax Consequences

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

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

Fixed Account Transfer Restrictions and Limitations

We will not honor a request to transfer Cash Value to or from the fixed account until after the first year.  Then, we will only honor a transfer request from the fixed account that is made within 30 days of the end of a calendar quarter, but not within 12 months of a previous request.  We may also limit what percentage of Cash Value you will be permitted to transfer to or from the fixed account.

Sub-Account Portfolio Limitations

Frequent trading among the Sub-Accounts may dilute the value of your Sub-Account units, cause the Sub-Account to incur higher transaction costs, and interfere with the Sub-Accounts' ability to pursue its stated investment objective.  This disruption to the Sub-Account may result in lower Investment Experience and Cash Value.  We have instituted procedures to minimize disruptive transfers, including, but not limited to, transfer restrictions and short-term trading fees.  For more information, see "Sub-Account Portfolio Transfers," beginning on page 11, "Modes t o Make A Transfer," beginning on page 13, and "Short-Term Trading Fees," beginning on page 19.  While we expect these procedures to reduce the adverse effect of disruptive transfers, we cannot assure you that we have eliminated these risks.

Sub-Account Portfolio Investment Risk

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

3

In Summary: Variable Universal Life Insurance and the Policy

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

ü It will provide economic protection to a beneficiary.

ü It may build Cash Value.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ü You may be able to vary the timing and amount of Premium payments.

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

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

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

ü The policy will pay a Death Benefit to the beneficiary.  You have a choice of one of two options.

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

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

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

4

In Summary: Fee Tables

The following tables describe the fees 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 fees and expenses that you will pay at the time that you buy the policy, surrender the policy or transfer Cash Value between investment options.

For more information, see "Charges," beginning on page 17.

Transaction Fees
Charge	When Charge Is Deducted	Amount Deducted
Sales Load 1	Upon Making A Premium Payment	Maximum Guaranteed		Currently2
		$25		$25
		Per $1,000 Of Premium Payment
Premium Taxes	Upon Making A Premium Payment	$35 Per $1,000 Of Premium Payment
Surrender Charges3, 4, 5 Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $250,000 And Death Benefit Option One	Upon Surrender Or Policy Lapse	Minimum 6	Maximum7		Representative8
		$357	$19,298		$1,704
		Proportionately From The Policy's Cash Value
Illustration Charge 9	Upon Requesting An Illustration	Maximum Guaranteed		Currently
		$25		$0
Partial Surrender Fee	Upon A Partial Surrender	Maximum Guaranteed 10		Currently
		$25		$0
		From The Policy's Available Cash Value
Short-Term Trading Fee 11	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 Insurance12, 13 Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $250,000 And Death Benefit Option One	Monthly	Minimum	Maximum	Representative14
		$.05	$83.33	$0.11
		Per $1,000 Of Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options
Flat Extra 15	Monthly	Maximum
		$2.08 per $1,000 of Net Amount At Risk for each Flat Extra assessed

5

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses (Continued)
Mortality And Expense Risk	Daily based on annualized rate	Maximum Guaranteed
		$8.00 Per $1,000 Of Variable Cash Value16
		Proportionately From Your Chosen Variable Investment Options
Administrative	Monthly	Maximum Guaranteed	Currently
		$2517	$12.5016
		Proportionately From Your Chosen Variable And Fixed Investment Options
Increase Charge	Monthly18	Maximum Guaranteed
		$0.17 per $1,000 of Specified Amount Increase
		Proportionally From Your Chosen Variable And Fixed Investment Options
Policy Loan Interest19, 20, 21	Annually	Current and Maximum Guaranteed: $60 per $1,000 of outstanding policy loan

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses For Riders
Optional Charge22	When Optional Charge Is Deducted	Amount Deducted From Cash Value
Accidental Death Benefit Rider23 Representative - For An Age 35 Male Non-tobacco Preferred With An Accidental Death Benefit Of $100,000	Monthly	Minimum	Maximum	Representative14
		$0.05	$0.75	$0.06
		Per $1,000 Of Accidental Death Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Base Insured Term Rider2 3 Representative - For An Age 35 Male Non-tobacco Preferred With Base Specified Amount of $250,000 and Additional Death Benefit Of $250,000	Monthly	Minimum	Maximum	Representative14
		$0. 02	$83.33	$0. 03
		Per $1,000 Of Additional Protection - Proportionately From Your Chosen Variable And Fixed Investment Options
Children's Insurance Rider	Monthly	Maximum Guaranteed
		$0.43 Per $1,000 of Rider Specified Amount
		Proportionally From Your Chosen Variable And Fixed Investment Options
Guaranteed Minimum Death Benefit Rider	Monthly	Maximum Guaranteed
		$0.01 Per $1,000 of Rider Specified Amount
		Proportionally From Your Chosen Variable and Fixed Investment Options

6

Periodic Charges Other Than Sub-Account Portfolio Operating Expenses For Riders (Continued)
Spouse Life Insurance Rider24 Representative Spouse - For An Age 35 Female Non-tobacco With A Spouse Life Specified Amount Of $100,000	Monthly	Minimum	Maximum	Representative14
		$0.10	$10.23	$0.15
		Per $1,000 Of Spouse Death Benefit - Proportionately From Your Chosen Variable And Fixed Investment Options
Waiver of Monthly Deductions Rider2 3 Representative - For An Age 35 Male Non-tobacco Preferred With A Specified Amount Of $250,000 And Death Benefit Option One	Monthly	Minimum	Maximum	Representative14
		$85	$855	$85
		Per $1,000 Of Deduction Waiver Benefit - Proportionately From Your Chosen Variable and Fixed Investment Options

The next item shows the minimum and maximum total operating expenses, as of December 31, 2009 , 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)	1.99 %	0.29 %

 

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

 

2 Currently, the sales load is reduced to $5 per $1,000 of Premium payment on any portion of the annual Premium in excess of the break point Premium, as shown on the Policy Data Page.

 

3 This charge is comprised of two components.  There is an underwriting component, which is based on the Insured's age (when the policy was issued).  There is also a sales expense component, which is based on and varies by the Insured's sex, age (when the policy was issued) and underwriting class.  The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date.  A surrender charge will apply if you surrender the policy in the first nine years, or lapse the policy, or if you request to decrease the Specified Amount.  We will calculate a separate surrender charge based on the Specified Amount, and each increase in the Specified Amount, which, when added together, will amount to your surrender charge.  For more information, see "Surrender Charges," beginning on page 18.

 

4 To be able to present dollar amounts of this charge here, for a full surrender occurring in the first year from the Policy Date, we assume an aggregate first year Premium in excess of the surrender target premium.  The surrender target premium is an assumed Premium payment amount we use in calculating the surrender charge.  The surrender charge is based on the lesser of the surrender target premium and the Premiums you pay in the first year from the Policy Date.  The surrender target premium varies by: the Insured's sex; age (when the policy was issued); underwriting class and the Specified Amount (and any increases).  The surrender charge for decreases in the Specified Amount will be a fraction of the charge for a full surrender.

 

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

 

6 The amount is based on a female who is age 18 and is a non-tobacco user.  We assume a policy with a Specified Amount of $500,000 and Death Benefit Option One.  The stated surrender charge is for a surrender occurring in the first year from the Policy Date.

 

7 The amount is based on a male who is age 75 or older and uses tobacco (representing our greatest underwriting risk).  We assume a policy with a Specified Amount of $500,000 and Death Benefit Option One.  The stated surrender charge is for a surrender occurring in the first year from the Policy Date.

 

8 This amount may not be representative of your cost.

 

9 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.

7

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

11 Short-term trading fees are only assessed in connection with Sub-Accounts that correspond to underlying mutual fund s that assess a short-term trading fee to the Variable Account.  Sub-Accounts that may assess a short-term trading fee are identified in the "Appendix A: Sub-Account Information" section of this prospectus .  For more information about transactions subject to short-term trading fees, see the "Short-Term Trading Fees" section of this prospectus.

 

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

 

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

 

14 This amount may not be representative of your cost.

 

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

 

16 During the first through ninth year from the Policy Date, this annualized charge is $8.00 per $1,000 of Cash Value in the variable investment options.  Thereafter, this annualized charge is $ $8.00 per $1,000 on the first $25,000 of Cash Value in the variable investment options and $5.00 per $1,000 on additional Cash Value in the Variable account options.

 

17 During the first year from the Policy Date, the monthly maximum guaranteed amount is $25, and the current amount deducted on a monthly basis is $12.50.  Thereafter, the monthly maximum guaranteed amount is $7.50, and the current amount deducted on a monthly basis is $5.

 

18 The increase charge will be de ducted upon a request to increase the Specified Amount and on a monthly basis for twelve months after the increase.

 

19 On the amount of an outstanding loan, we not only charge, but also credit, interest, so there is a net cost to you.  Also, there are ordinary and preferred loans on which interest rates vary.  For more information, see "Policy Loans," beginning on page 31.

 

20 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 also credit interest daily on the portion of your policy's Cash Value corresponding to, and serving as collateral or security to ensure repayment of, the loan.  During policy years two through 14, it is 5.1% (current and guaranteed), and thereafter, 6% per annum currently (guaranteed 5.1% minimally).

 

21 Your net cost for a loan through years two through 14 from the Policy Date is 0.9% per annum currently.  Thereafter, there is no cost (a net zero cost) for a loan currently.  For more information, see "Collateral and Interest," beginning on page 31.

 

22 Rider charges are taken from the policy's Cash Value at the beginning of the month starting with the Policy Date and we will not pro-rate the monthly fee should the Rider terminate before the beginning of the next month.  The amounts presented here may not be representative of your cost.  Ask for an illustration, or see the Policy Data Page, for more information on your cost.

 

23 This charge varies by policy based on individual characteristics of the person being insured.

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

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The Policy

The policy is a legal contract between you and us.  Any change must be in writing, signed by our president and corporate secretary, and attached to or endorsed on the policy.   This prospectus discloses all material provisions of the policy.  In addition to the terms and conditions of the policy, policy owner rights are governed by this prospectus and protected by federal securities laws and regulations.   You may exercise all policy rights and options while the Insured is alive.  You may also change the policy, but only in accordance with its terms.

Generally, the policy is available for an insured between the ages of 0 and 80 (although these ages may vary in your state).  It is nonparticipating, meaning we will not be contributing any operating profits or surplus earnings toward the Proceeds from the policy.  The policy will comprise and be evidenced by: a written contract; any Riders; any endorsements; Policy Data Pages; and the application, including any supplemental application.  The benefits described in the policy and this prospectus, including any optionalriders ormodifications in coverage, may be subject to our underwriting and approval.  We will consider the statements you make in the application as representations.  We will rely on them as being true and complete.  However, we will not void the policy or deny a claim unless a statement is a material misrepresentation.

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

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

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

Policy Owner

The policy belongs to the owner named in the application.  You may also name a contingent owner.  A contingent owner will become the owner if the owner dies before any Proceeds become payable.  Otherwise, ownership will pass to the owner's estate, if the owner is not the Insured.  To the extent permitted by law, policy benefits are not subject to any legal process for the payment of any claim, and no right or benefit will be subject to claims of creditors (except as may be provided by assignment).  You may name different owners or contingent owners (so long as the Insured is alive) by submitting your written request to our Home Office, which will become effective when signed rather than on the date which we received it.  However, this change will not affect any payment made or action taken by Nationwide before it was received.  Nationwide may require that the policy be submitted for endorsement before making a change.  There may be adverse tax consequences.  For more information, see "Taxes," beginning on page 33.

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

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

· assigning, exchanging, and/or converting the policy;

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

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

These rights are explained in greater detail throughout this prospectus.

The Beneficiaries

The principal right of a beneficiary is to receive Proceeds constituting the Death Benefit upon the Insured's death.  So long as the Insured is alive, you may: name more than one beneficiary; designate primary and contingent beneficiaries; change or add beneficiaries; and direct us to distribute Proceeds other than described below.

If a primary beneficiary dies before the Insured, we will pay the Death Benefit to the remaining primary beneficiaries.  We will pay multiple primary beneficiaries in equal shares, unless otherwise provided.  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.  If no named beneficiary survives the Insured, the Proceeds will be paid to the owner or the owner's estate.  To change or add beneficiaries, you must submit your written request to us at our Home Office, which will become effective when signed, rather than the date on which we received it.  The change will not affect any payment we made, or action we took, before we recorded the change.

To Purchase

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

We must receive evidence of insurability that satisfies our underwriting standards (this may require a medical examination) before we will issue a policy.  We can provide you with the details of our underwriting standards.   We reserve the right to reject any

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application for any reason permitted by law.  Additionally, we reserve the right to modify our underwriting standards on a prospective basis to newly issued policies at any time.

The minimum initial Specified Amount in most states is $50,000 ($100,000 in Pennsylvania and New Jersey).  We reserve the right to modify the minimum Specified Amount on a prospective basis to newly issued policies at any.

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.   Coverage will also end if the policy Lapses .

Temporary Insurance Coverage

Upon payment of the initial Premium, temporary insurance may be provided.  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 to our home office at the address listed in this prospectus or to an authorized representative.  The amount of the initial Premium will depend on the initial Specified Amount, and your choice of Death Benefit option and any Riders, for purposes of this policy.  During this time, we will deposit your initial Premium payment into an interest-bearing checking account.  Temporary insurance coverage will terminate on the date full insurance coverage takes effect, or five days from the date we mail a termination notice (accompanied by a refund equal to the Premium payment you submitted).  If we issue the policy, what we do with the Net Premium depends on the right tot examine law of the state in which you live.  Issuance of the continuing insurance coverage is dependent upon completion of all underwriting requirements, payment of initial Premium, and delivery of the policy while the Insured is still living.

Right To Cancel (Examination Right)

For a limited time, commonly referred to as the "free look" period, you may cancel the policy and receive a refund.  The free look period expires ten days after you receive the policy or longer if required by state law.  If you decide to cancel 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 the 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 by the close of business on the date the free-look period expires, you will not be allowed to cancel your policy free of charge.  Within seven days of a cancellation request, we will refund the amount prescribed by law.  If the policy is canceled, we will treat the policy as if it was never issued.

To Change Coverage

After the first year from the Policy Date, you may request to change the Specified Amount; however, no change will take effect unless the new Cash Surrender Value would be sufficient to keep the policy In Force for at least three months.  Changes to the Specified Amount will alter the Death Benefit.  For more information, see "Changes In The Death Benefit Option," beginning on page 29.

You may request to increase the Specified Amount, by at least $10,000, which will increase the Net Amount At Risk.  Because the cost of insurance charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will also cause the policy's cost of insurance charge to increase.  As a result, there will be a corresponding increase in the periodic charges we deduct from the policy's Cash Value.   An additional Underwriting and Distribution Charge and Surrender Charge schedule will also apply whenever you increase the base Policy Specified Amount.   Also, an increase in the Specified Amount may cause an increase to the amount of your subsequent Premium payments and the likelihood that the entire policy is at risk of lapsing sooner.  For more information, see "Lapse," beginning on page 32.

You may request to decrease the Specified Amount.  We first apply decreases to the amount of insurance coverage as a result of any prior Specified Amount increases, starting with the most recent.  Then we will decrease the initial Specified Amount.  However, we will deny a request which would reduce the amount of your coverage below the minimum initial Specified Amount or that would disqualify the policy as a contract for life insurance.  For more information, see "To Purchase," beginning on page 9.

To change the Specified Amount, you must submit your written request to us at our Home Office.  You must provide us with evidence of insurability that satisfies our underwriting standards.  The Insured must be 80 or younger.  Changes will become

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effective on the next monthly anniversary from the Policy Date after we approve the request.  We reserve the right to limit the number of changes to one each year from the Policy Date.

Sub-Account Transfers

We will determine the amount you have available for transfers among the Sub-Accounts in Accumulation Units based on the Net Asset Value (NAV) per share of the mutual fund in which a Sub-Account 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).  An Accumulation Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests , however, because the Accumulation Unit value will reflect the deduction for any transaction fees and periodic charges.  For more information, see "In Summary: Fee Tables," beginning on page 5, and "How Investment Experience Is Determined," beginning on page 25.  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.   Transfers will be implemented by redeeming Accumulation Units from the Sub-Account(s) indicated by the policy owner and using the redemption proceeds to purchase Accumulation Units in another Sub-Account(s) as directed by the policy owner.  The net result is that the policy owner ' s Cash Value will not change (except due to standard market fluctuations), but the number and allocation of Accumulation Units within the policy will change.

Neither the policies nor the mutual funds are designed to support active trading strategies that require frequent movement between or among Sub-Accounts (sometimes referred to as "market-timing" or "short-term trading").  If you intend to use an active trading strategy, you should consult your registered representative and request information on other Nationwide policies that offer mutual funds that are designed specifically to support active trading strategies.

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

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

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

· increased administrative costs due to frequent purchases and redemptions.

To protect investors in this policy from the negative impact of these practices, we have implemented, or reserve the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies.  We cannot guarantee that our attempts to deter active trading strategies will be successful.  If active trading strategies are not successfully deterred by our actions, the performance of Sub-Accounts that are actively traded will be adversely impacted.  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 60 days after the date of the allocation to the Sub-Account.  The fee is assessed against the amount transferred and is paid to the mutual fund.  Redemption fees compensate the mutual fund for any negative impact on fund performance resulting from short-term trading.

U.S. Mail Restrictions.  We monitor transfer activity in order to identify those who may be engaged in harmful trading practices.  Transaction reports are produced and examined.  Generally, a policy may appear on these reports if the policy owner (or a third party acting on their behalf) engages in a certain number of "transfer events" in a given period.  A "transfer event" is any transfer, or combination of transfers, occurring in a given Valuation Period.  For example, if a policy owner executes multiple transfers involving 10 Sub-Accounts in 1 day, this counts as 1 transfer event.  A single transfer occurring in a given Valuation Period that involves only 2 Sub-Accounts (or one Sub-Account if the transfer is made to or from a fixed investment option) will also count as 1 transfer event.

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

Trading Behavior	Nationwide's Response
6 or more transfer events in one calendar quarter	Nationwide will mail a letter to the policy owner notifying them that: 1.they have been identified as engaging in harmful trading practices; and 2.if their transfer events exceed 11 in 2 consecutive calendar quarters or 20 in one calendar year, the policy owner will be limited to submitting transfer requests via U.S. mail.
More than 11 transfer events in 2 consecutive calendar quarters OR More than 20 transfer events in one calendar year	Nationwide will automatically limit the policy owner to submitting transfer requests via U.S. mail.

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

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

Other Restrictions.  We reserve the right to refuse or limit transfer requests, or take any other action we deem necessary, in order to protect policy owners and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some policy owners (or third parties acting on their behalf).  In particular, trading strategies designed to avoid or take advantage of Nationwide's monitoring procedures (and other measures aimed at curbing harmful trading practices) that are nevertheless determined by us to constitute harmful trading practices, may be restricted.

Any restrictions that we implement will be applied consistently and uniformly.  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 60 days of the date of allocation to the Sub-Account.  The separate account will collect the short-term trading fees at the time of the transfer by reducing the amount transferred.  We will remit all such fees to the underlying mutual fund.

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

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

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

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

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

Fixed Account Transfers

Prior to the policy's Maturity Date, you may also make transfers involving the fixed account.  These transfers will be in dollars, and we reserve the right to limit their timing and amount, including that you may not request a transfer involving the fixed account before the end of the first year from the Policy Date.  Also, you may not make more than one transfer every 12 months.

On transfers to the fixed account, we may not permit you to transfer over 25% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period.

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On transfers from the fixed account, we may not permit you to transfer over 25% of the Cash Value of the fixed account as of the end of the previous policy year (subject to state restrictions).

Modes to Make a Transfer

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

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

When we have received your transfer request we will process it at the end of the current Valuation Period.  This is when the Accumulation Unit value will be next determined.  For more information regarding valuation of Accumulation Units, see the " When Accumulation Units are Valued " section of this prospectus.

To Exchange

You have an exchange right under the policy.  At any time within the first 24 months of coverage from the Policy Date, you may surrender this policy and use the Cash Surrender Value to purchase a new policy on the Insured's life without evidence of insurability.  Afterwards, you may also surrender the policy and use the Cash Surrender Value to purchase a new policy on the same Insured's life, but subject to evidence of insurability that satisfies our underwriting standards.

The new policy may be one of our available individual 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 Indebtedness to the new policy.

You must make your request on our official forms to the Home Office.  The policy must be In Force and not in a Grace Period.  You must pay a surrender charge.  For more information, see "In Summary: Fee Tables," beginning on page 5.  The exchange may have tax consequences.  For more information, see "Exchanging t he Policy For Another Life Insurance Policy," beginning on page 36.  The new policy will take effect on the exchange date only if the Insured is alive.  This policy will terminate when the new policy takes effect.

To Terminate (Surrender)

You have the right to terminate (surrender) the policy.  Or you may surrender the policy for its Cash Surrender Value.  The policy will automatically terminate when the Insured dies, the policy matures, or the Grace Period ends.  For more information, see "Surrenders," beginning on page 30.

Generally, if the policy has a Cash Surrender Value in excess of the Premiums you have paid, upon surrender the excess will be included in your income for federal tax purposes.  For more information, see "Surrendering the Policy; Maturity," beginning on page 35.  The Cash Surrender Value will be reduced by the outstanding amount of a policy loan.  For more information, see "Policy Loans," beginning on page 31.

To Assign

You may assign any rights under the policy while the Insured is alive.  If you do, your beneficiary's interest will be subject to the person(s) to whom you have assigned rights.  Your assignment must be in writing signed and recorded at our Home Office before it will become effective.  Prior to being recorded, assignments will not affect any payments made or actions taken by Nationwide.  Nationwide is not responsible for any assignment not submitted for recording, nor is Nationwide responsible for the sufficiency or validity of any assignment.  Your assignment will be subject to any outstanding policy loans.  For more information, see "Policy Loans," beginning on page 31.

Proceeds Upon Maturity

If the policy is In Force on the Maturity Date, we will pay you the Proceeds, which will equal the policy's Cash Value, less any indebtedness.

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.  The Maturity Date extension will either be for

13

the policy value, or for the Specified Amount (subject to the law of the state in which you lived at the time you purchased the policy).  It is your choice, and, in any event, your policy will be endorsed so that:

·      no changes to the Specified Amount will be allowed;

·      no additional Premium payments will be allowed;

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

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

· the monthly policy expense charges and administrative charges will no longer be deducted from the Cash Value since the Death Benefit will be equal to the Cash Value.  The Cost of Insurance Charges after that time will be zero.

The primary purpose of Maturity Date extension is to continue the life insurance coverage, and avoid current income taxes on any earnings in excess of your cost basis if the maturity Proceeds are taken.  See, "Surrendering the Policy ; Maturity " in the "Taxes" section of this prospectus for additional information.

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

The Maturity Date will not be extended, however, beyond when the policy would fail the definition of life insurance under the Code.  For more information, see "The Death Benefit," beginning on page 28.

Reminders, Reports and Illustrations

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

· the Specified Amount

· the current Cash Value

· minimum monthly Premiums

· the Cash Surrender Value

· Premiums paid

· outstanding Indebtedness

· all charges since the last report

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

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

IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS

When multiple copies of the same disclosure document(s), such as prospectuses, supplements, proxy statements and semi-annual and annual reports are required to be mailed to your household, we will mail only one copy of each document, unless notified otherwise by you.  Household delivery will continue for the life of the contracts.  Please call 1-866-223-0303 to resume regular delivery.  Please allow 30 days for regular delivery to resume.

Errors or Misstatements

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

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

Incontestability

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

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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

Riders are available for you to purchase to design the policy to meet your specific needs.  You may purchase any of them simultaneously.  Once the policy is In Force, to add a Rider, we may require further evidence of insurability.  You will be charged for a Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; or you decide you no longer need the benefit and let us know in writing at our Home Office.  For more information on the costs of the Riders, see "In Summary: Fee Tables," beginning on page 5, and "Charges," beginning on page 17.

Accidental Death Benefit Rider

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

Base Insured Term Rider

Subject to our underwriting approval, this Rider is available when the policy is In Force.  The benefit is term life insurance on the Insured, in addition to the Death Benefit, payable to the beneficiary upon the Insured's death.

The benefit amount varies monthly and is based on the Death Benefit option you have chosen.  You may renew coverage annually until the Insured reaches Attained Age 95, when this Rider's term expires.  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.

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

Change of Insured Rider

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

Children's Insurance Rider

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

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

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Guaranteed Minimum Death Benefit Rider

This Rider is only available when you purchase the policy and has no loan value or Cash Surrender Value.  The purpose of this Rider is to keep the death benefit In Force and to prevent the policy from lapsing.  The benefit is a death benefit payable to the beneficiary you designate, less any policy loans outstanding and any withdrawals.

There is no charge for this Rider during the first three policy years.  In the first month of the third Policy year, this charge will begin and after the third Policy year, this Rider ensures that the base Policy will remain In Force even if the Cash Surrender Value is zero or less, as long as: 1) the Rider is In Force; 2) the Insured is alive; and 3) you have met the annual Rider Minimum Premium requirement.  The annual Rider Minimum Premium is shown on the Policy Data Page and is based on the issue age, sex, Specified Amount, Death Benefit Option and underwriting class of the Insured.

On each policy anniversary, we will determine if the Rider Minimum Premium requirement has been met.  This requirement shall be met if the sum of all previous Premium payments under the policy, less any partial withdrawals and existing policy indebtedness is greater than or equal to the sum of the annual Rider Minimum Premiums for the previous policy years.  If this requirement is met, the policy is guaranteed to remain In Force during the next policy year, provided there are no new loans or partial withdrawals.  If this requirement is not met, we will notify you of the Premium payments required in order to continue benefits under this Rider.  A grace period of 61 days will be provided and if the required Premiums are not received during this grace period, the Rider will terminate without value.  During this grace period, the Rider charge will still apply.  During any policy year when benefits are being paid under the Waiver Monthly Deduction Rider, the annual Rider Minimum Premium that policy year will be equal to zero.

Spouse Life Insurance Rider

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

Waiver of Monthly Deductions Rider

Subject to our underwriting approval, you may purchase this Rider at any time so long as the policy is In Force and it is before the Policy Date on or following when the Insured reaches age 65.  If an Insured becomes disabled, as defined in this Rider, for six consecutive months within the first three years from the Policy Date, the benefit is a credit to your policy in an amount necessary to keep the policy In Force.  The benefit for subsequent years, however, is a waiver of your policy's monthly charges.  So, say you become totally disabled for six consecutive months two years and eight months from the Policy Date.  For the first four months, the benefit would be a credit equal to the amount necessary to keep the policy In Force.  After that, the Rider's benefit is a waiver of your policy's monthly charges.

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

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

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.

Premium

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

Initial Premium

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

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Depending on the right to examine law of the state in which you live, initial Net Premium designated to be allocated to the Sub-Accounts may not be so allocated immediately upon our receipt.  (Any initial Net Premium designated to be allocated to fixed investment options will be so allocated immediately upon receipt.)  If you live in a state that requires us to refund the initial Premium upon exercise of the free-look provision, we will hold all of the initial Net Premium designated to be allocated to the Sub-Accounts in the available money market Sub-Account until the free-look period expires.  At the expiration of the free-look period, we will transfer the variable account Cash Value to the Sub-Accounts based on the allocation instructions in effect at the time of the transfer.  If you live in a state that requires us to refund the Cash Value upon exercise of the free-look provision, we will allocate all of the initial Net Premium to the available money market Sub-Account.  On the next Valuation Period, we will allocate all of the Cash Value to the designated Sub-Accounts based on the allocation instructions in effect at that time.

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

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

Subsequent Premiums

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

· During the first 3 policy years, the total Premium payments, less any policy Indebtedness, less any partial surrender fee, must be greater than or equal to the minimum Premium requirement in order to guarantee that the policy will remain In Force.

· After the first 3 policy years, each premium payment must be at least equal to the minimum monthly Premium.

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

· We will refund Premium payments that exceed the applicable premium limit established by the 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 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;

· We may require that policy Indebtedness be repaid prior to accepting any additional Premium payments.  Some, but not all, of the situations when we might exercise this right include when interest rates are low, when your policy loans exceed 90% of the Cash Value of your Sub-Account portfolio allocations, or when a Premium payment may alter the character of the policy for tax purposes.  For more information, see "Lapse," beginning on page 32.  We will let you know ahead of time; and

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

Charges

Please read and consider the following, which we intend to be an amplification (but it may also be duplicative), in conjunction with the fee tables, and the accompanying footnotes, appearing earlier in the prospectus.  See "In Summary: Fee Tables," beginning on page 5.  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.  We will deduct all other charges from the policy's Cash Value (rather than a Premium payment), in proportion to the balances of your Sub-Account portfolio, and the fixed account, allocations.   These charges are assessed by redeeming Accumulation Units.  The number of Accumulation Units redeemed is determined by dividing the dollar amount of the charge by the Accumulation Unit value for the Sub-Account.   We will only deduct the mortality and expense risk charge from the Cash Value of the Sub-Account portfolios.  We will transfer the loan interest charge from your investment options to the loan account.  We take the monthly periodic charges in advance and we will not pro-rate any monthly Rider charge should the Rider terminate before the beginning of the next month.

There are also operating charges associated with the Sub-Account portfolios.  While you will not pay them directly, they will affect the value of the assets in the Sub-Account portfolios.  On a daily basis, the manager of each mutual fund that comprises the policy's available variable investment options deducts operating charges from that mutual fund's assets before calculating the NAV.  (We use NAV to calculate the value of your corresponding Sub-Account portfolio allocation in Accumulation Units.)  In addition, some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to that Sub-Account.  The fee is assessed against the amount transferred and is paid to the mutual fund.  For more information on the operating charges and short-term trading fees assessed by the mutual funds held by the Sub-Account portfolios, please see the prospectus for the mutual fund and "Short-Term Trading Fees"in this prospectus.

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Sales Load

This charge compensates us for our sales expenses.  The sales load portion of the Premium Load charge is guaranteed not to exceed $25 per $1,000 of Premium and covers our sales expenses.  Currently, this charge is equal to $25 per $1,000 of Premium up to the break point Premium, and $5 per $1,000 of Premium in excess of the break point Premium.  The break point Premium is shown in the Policy Data Page.  Sales load is assessed at each time each premium payment is submitted.  We may earn a profit from this charge.

Premium Taxes

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

Surrender Charges

A surrender charge will apply if you surrender or lapse the policy during the first nine years from the Policy Date and this charge compensates us for policy underwriting and sales expenses.  The charge will be deducted proportionally from the Cash Value in each Sub-Account and the fixed account.  The surrender charge is reduced by any partial surrender charge actually paid on previous decreases in the Specified Amount.  We may earn a profit from this charge.

The following tables illustrate the maximum initial surrender charge per $1,000 of initial Specified Amount for policies which are issued on a standard basis (see Appendix C for specific examples).

Initial Specified Amount $50,000-$99,999

Issue Age	Male Non-Tobacco	Female Non-Tobacco	Male Standard	Female Standard
25	$7.776	$7.521	$8.369	$7.818
35	$8.817	$8.398	$9.811	$8.891
45	$12.191	$11.396	$13.887	$12.169
55	$15.636	$14.011	$18.415	$15.116
65	$22.295	$19.086	$26.577	$20.641

Initial Specified Amount $100,000 or More

Issue Age	Male Non-Tobacco	Female Non-Tobacco	Male Standard	Female Standard
25	$5.776	$5.521	$6.369	$5.818
35	$6.817	$6.398	$7.811	$6.891
45	$9.691	$8.896	$11.387	$9.669
55	$13.136	$11.511	$15.915	$12.616
65	$21.295	$18.086	$25.577	$19.641

Special guaranteed maximum surrender charges apply in Pennsylvania (see Appendix C).  Ask for an illustration or see the Policy Data Page for more information on your cost.

The surrender charge amount decreases over time and we will deduct the surrender charge based on the following schedule:

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

There are two components of the surrender charge meant to cover our policy underwriting (the underwriting component) and sales expenses (the sales component), including processing the application; conducting any medical exams; determining insurability (and the Insured's underwriting class); and establishing policy records.  For additional information on the components of this charge, see the Statement of Additional Information.

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

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

· you have not invoked the Waiver of Monthly Deductions Rider.

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

Partial Surrender Fee

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

Short-Term Trading Fees

Some mutual funds may assess (or reserve the right to assess) a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of allocation to the Sub-Account.

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

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

For a 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;

· policy loans or surrenders; or

· payment of the death benefit proceeds upon the Insured's death.

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

Cost of Insurance

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

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

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

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

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There will be a separate cost of insurance rate for the initial Specified Amount and any Specified Amount increase.  An increase in the Specified Amount may cause an increase in the Net Amount At Risk.  Because the Cost of Insurance Charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will usually cause the policy's Cost of Insurance Charge to increase.  An increase in the Specified Amount may require you to make larger or additional Premium payments in order to avoid Lapsing the Policy.

The rate class of an insured may affect the cost of insurance rate.  Nationwide currently places I nsureds into both standard rate classes and substandard rate classes that involve a higher mortality risk.  In an otherwise identical polity, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks.  Nationwide may also issue certain policies on a "non medical" basis to certain categories of individuals.  Due to the underwriting criteria established for policies issued on a non medical basis, actual rates will be higher than the current cost of insurance rates being charged that are medically underwritten.

Mortality and Expense Risk

Though the maximum guaranteed mortality and expense risk charge is higher, currently, we deduct this charge on a daily basis according to the following schedule.  During the first through ninth year from the Policy Date, the annualized charge is $8.00 per $1,000 of Cash Value.  After the ninth year, this annualized charge is $8.00 per $1,000 on the first $25,000 of Cash Value and $5.00 per $1,000 of additional Cash Value.  This charge compensates us for assuming risks associated with mortality and expense costs, and we may profit from it.  The mortality risk is that the Insured does not live as long as expected.  The expense risk is that the costs of issuing and administering the policy are more than expected.

Administrative

Currently, we deduct $12.50 per month through the first year from the Policy Date for the administrative charge.  The maximum guaranteed administrative charge is $25 per month in the first policy year.  Thereafter, we currently deduct $5 per month, and the maximum guaranteed administrative charge is $7.50 per month.  This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping.

Increase Charge

The increase charge is deducted proportionally from the Cash Value in the Sub-Accounts and the fixed account when the p olicy o wner requests an increase in the Specified Amount.  It is used to cover the cost of underwriting the requested increase and processing and distribution expenses related to the increase.

The increase charge is comprised of two components: underwriting and administration; and sales.  The underwriting and administration component is equal to $1.50 per year per $1,000 of increase.  The sales component is equal to $0.54 per year per $1,000 of increase.  Together, the maximum charge totals $2.04 per year ($0.17 per month).

Policy Loan Interest

We will charge interest on the amount of an outstanding policy loan, at the rate of 6.0% per annum, which will have accrued daily and become due and payable at the end of the year from the Policy Date.  If left unpaid, we will add it to the loan amount.  As collateral or security for repayment, we will transfer an equal amount of Cash Value to the policy loan account, on which interest will accrue and be credited daily.  During years two through 14 from the Policy Date, the current and guaranteed interest crediting rate is 5.1%.  Thereafter, the current interest crediting rate is 6.0% per annum for all loans (guaranteed minimum of 5.1%).  Accordingly, your net cost for an ordinary loan during years one through 14 from the Policy Date is 0.9% per annum currently.  Thereafter, there is no cost (a net cost of zero) for a loan currently.  For more information, see "Collateral and Interest," beginning on page 31.

Children's Insurance Rider

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

Change of Insured Rider

There is no charge for this Rider and you may elect it at any time.  The costs and benefits under the policy after the change will be based on, and could change with the underwriting classification and characteristics of the new Insured, but this Rider's benefit will have no impact on the policy's Specified Amount .

Spouse Life Insurance Rider

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

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Accidental Death Benefit Rider

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

Base Insured Term Rider

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

Waiver of Monthly Deductions Rider

This charge for this Rider compensates us for waiving monthly charges (excluding this Rider's charge) upon the Insured's total disability, as defined in this Rider, for six consecutive months.  However, during the first three years from the Policy Date, we will instead credit your policy with the minimum monthly Premium payment due during the Insured's total disability.  The charge is the product of the amount of periodic charges deducted from the policy on a monthly basis (excluding the cost for this Rider) and the deduction waiver cost rate.  We base the deduction waiver cost rate on our expectations as to the likelihood of the Insured's total disability for six consecutive months.  The deduction waiver cost rate varies by: the Insured's sex; Attained Age; underwriting class; and any Substandard Ratings.

Guaranteed Minimum Death Benefit Rider

There is no charge for this Rider during the first three policy years.  The charge subsequently assessed compensates us for guaranteeing the minimum death benefit.  The Rider charge does not vary by insured.

Reduction of Charges

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

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

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

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

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

A Note on Charges

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

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

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

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

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

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

Information on Underlying Mutual Fund Payments

Our Relationship with the Underlying Mutual Funds.  The underlying mutual funds incur expenses each time they sell, administer, or redeem their shares.  The separate account aggregates policy owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each underlying mutual fund daily.  The separate account (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, 2009 , the underlying mutual fund payments we and our affiliates received from the underlying mutual funds did not exceed .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.

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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.

To Allocate Net Premium And Sub-Account Valuation

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

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

The Fixed Investment Option

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

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

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 the statements made by prospectus disclosure.

Interest rates are set at the beginning of each calendar quarter.  You may receive a different interest rate depending on the rates in effect when you purchase the policy.  The rate may also vary for Net Premiums versus a transfer of Accumulation Units from a Sub-Account portfolio.  In honoring your request to transfer an amount out of the fixed account, we will do so on a last-in, first out basis (LIFO).  Interest we credit to the fixed investment option may not increase the Cash Surrender Value enough to cover the policy's charges.  If not, the policy may Lapse.  For more information, see "Lapse," beginning on page 32.

It is important to remember any guaranteed benefits or interest crediting associated with the fixed account is subject to our claims paying ability.

Variable Investment Options

The variable investment options constitute the limitedly available mutual funds, and we have divided the separate account into an equal number of Sub-Account portfolios to account for your allocations.  Each Sub-Account portfolio invests in a mutual fund that is registered with the SEC.  (This registration does not involve the SEC's supervision of the management or investment

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practices or policies of these mutual funds.)  The "Available Sub-Accounts" section identifies the available mutual funds, by name, investment type and adviser.  Your choices and any changes will appear on the Policy Data Page.

We may offer additional underlying mutual funds, or a different set of underlying mutual funds, through specific distribution arrangements.  Examples of these arrangements include, but are not limited to, distribution through broker-dealer firms or financial institutions.  These distribution arrangements may be exclusive or non-exclusive.

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 policy.  Additionally, not all of the underlying mutual funds are available in every state.

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

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

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

· AllianceBernstein Variable Products Series Fund, Inc.

· American Century Variable Portfolios II, Inc.

· American Century Variable Portfolios, Inc.

· BlackRock Variable Series Funds, Inc.

· Credit Suisse Trust

· Dreyfus

· Dreyfus Investment Portfolios

· Dreyfus Variable Investment Fund

· Federated Insurance Series

· Fidelity Variable Insurance Products Fund

· Franklin Templeton Variable Insurance Products Trust

· Invesco

· Ivy Funds Variable Insurance Portfolios, Inc.

· Janus Aspen Series

· MFS® Variable Insurance Trust

· Nationwide Variable Insurance Trust

· Neuberger Berman Advisers Management Trust

· Oppenheimer Variable Account Funds

· PIMCO Variable Insurance Trust

· Putnam Variable Trust

· T. Rowe Price Equity Series, Inc.

· The Universal Institutional Funds, Inc.

· Van Eck Variable Insurance Products Trust

· Wells Fargo Advantage Funds

Allocation of Net Premium and Cash Value

We allocate your Net Premium payments to Sub-Accounts or the fixed account per your instructions.  Shares of the underlying mutual funds allocated to the Sub-Accounts are purchased at Net Asset Value, then converted into Accumulation Units.  You must specify your Net Premium payments in whole percentages.  The sum of allocations must equal 100%.

You may change the allocation of Net Premiums or may transfer Cash Value from one Sub-Account to another.  Changes are subject to the terms and conditions imposed by each underlying mutual fund and those found in this prospectus.  Net Premiums allocated to the fixed account at the time of application may not be transferred from the fixed account prior to the first policy anniversary (see "Fixed Account Transfers").

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When Accumulation Units are Valued

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

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

· New Year's Day

· Martin Luther King, Jr. Day

· Presidents' Day

· Good Friday

· Memorial Day

· Independence Day

· Labor Day

· Thanksgiving

· Christmas

In addition, we will not price Accumulation Units if:

· trading on the New York Stock Exchange is restricted;

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

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

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

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

How Investment Experience is Determined

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

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

We determine the net investment factor for any Valuation Period by dividing 1) by 2) and subtracting 3) from the result where:

1) is the sum of:

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

b) 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);

c) 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;

2) is the NAV per share of the mutual fund determined as of the end of the immediately preceding Valuation Period; and.

3) is a factor representing the daily mortality and expense risk charge.  This factor is equal to an annualized rate of 0.80% of the daily net assets of the variable account.  Each policy anniversary starting on the 10th, the mortality and expense risk charge is

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reduced to an annualized rate of 0.50% of the daily net assets of the variable account if the Cash Surrender Value is $25,000 or more each anniversary.  For policies issued in New York, the charge is reduced regardless of the Cash Surrender Value on each anniversary.

Cash Value

The policy has a Cash Value.  There is no guaranteed Cash Value.  Rather, it will be based on the values, and vary with the Investment Experience of the Sub-Account portfolios to which you have allocated Net Premium, as well as the values of, and any daily crediting of interest to, the policy loan (if you have taken a policy loan) and fixed accounts.  It will also vary because we deduct the policy's periodic charges from the Cash Value.  So, if the policy's Cash Value is part of the Death Benefit option you have chosen, then your Death Benefit will fluctuate.

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

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

The Cash Value in the policy loan and fixed accounts will be credited interest daily at the guaranteed minimum annual effective rate stated on the Policy Data Page.  For there to be Cash Value in the policy loan account, you must have taken a policy loan.  We may decide to credit interest in excess of the guaranteed minimum annual effective rate.  For the fixed account, we will guarantee the current rate in effect through the end of the calendar quarter.  Upon request, we will inform you of the current applicable rates for each account. For more information, see "The Fixed Investment Option," beginning on page 23 and "Policy Loan Interest," beginning on page 20.

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

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 at the end of the Valuation Period coinciding with the date you request or, if that date has passed or no date is specified, then at the end of the Valuation Period during which we receive your request.

Dollar cost averaging is an investment strategy designed to 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 "Modes to Make a Transfer," beginning on page 13.

On a monthly basis (or another frequency we may permit), a specified dollar amount of your Premium is systematically and automatically transferred from the fixed account and the following Sub-Accounts:

Federated Insurance Series

· Federated Quality Bond Fund II: Primary Shares

Fidelity Variable Insurance Products Fund

· VIP High Income Portfolio: Initial Class R

Nationwide Variable Insurance Trust

· Federated NVIT High Income Bond Fund: Class III

· NVIT Government Bond Fund: Class I

· NVIT Money Market Fund: Class I

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

Dollar cost averaging transfers may not be directed to the fixed account.   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

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you have Premium transferred from the fixed account, the amount must be no more than 1/30th of the fixed account value at the time you elect to participate in the program.

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

Automated Income Monitor

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

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

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

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

1. Payment type:

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

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

2. Illustration assumptions:

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

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

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

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

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

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

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

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

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

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

c. or to prevent your policy from becoming a MEC. See, "When the Policy is Life Insurance that is a Modified Endowment Contract" in the "Taxes" section of this prospectus for additional information.

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Note:  Partial surrenders and policy loans taken under the Automated Income Monitor program are subject to the same terms and conditions as other partial surrenders and policy loans.  Refer to the "Partial Surrenders" and "Policy Loans" sections of this prospectus for additional information.

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

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

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

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

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

d. upon a change of policy owner;

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

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

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

h. your Policy's Maturity Date.

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

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 during the Insured's lifetime 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 will depend on which option you have chosen and the tax test you have elected, as discussed in greater detail below.  Also, the Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and take into account any insurance provided by Riders, as well as outstanding Indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period.

Death Benefit Options

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

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

Option One

The Death Benefit will be the greater of the Specified Amount or the applicable percentage of Cash Value.  Under Option One, the amount of the Death Benefit will ordinarily not change for several years to reflect investment performance and may not change at all.  If investment performance is favorable, the amount of Death Benefit may increase.  To see how and when investment performance may begin to affect Death Benefits, please see the illustrations.

Option Two

The Death Benefit will be the greater of the Specified Amount plus the Cash Value as of the date of death or the applicable percentage of Cash Value, and will vary directly with investment performance.

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In connection with both Death Benefit options, the term "applicable percentage" means:

1) 250% when the Insured is Attained Age 40 or less at the beginning of a policy year; and

2)      when the Insured is above Attained Age 40, the percentage shown in the "Applicable Percentage of Cash Value Table."

Applicable Percentage of Cash Value Table

Attained Age	Percentage of Cash Value	Attained Age	Percentage of Cash Value	Attained Age	Percentage of Cash Value
0-40	250%	60	130%	80	105%
41	243%	61	128%	81	105%
42	236%	62	126%	82	105%
43	229%	63	124%	83	105%
44	222%	64	122%	84	105%
45	215%	65	120%	85	105%
46	209%	66	119%	86	105%
47	203%	67	118%	87	105%
48	197%	68	117%	88	105%
49	191%	69	116%	89	105%
50	185%	70	115%	90	105%
51	178%	71	113%	91	104%
52	171%	72	111%	92	103%
53	164%	73	109%	93	102%
54	157%	74	107%	94	101%
55	150%	75	105%	95	101%
56	146%	76	105%
57	142%	77	105%
58	138%	78	105%
59	134%	79	105%

The Minimum Required Death Benefit

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

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

· the cash value accumulation test; or

· the guideline premium/cash value corridor test.

If you do not elect a test, we will assume that you intended to elect the guideline premium/cash value corridor test.

The cash value accumulation test determines the Minimum Required Death Benefit by multiplying the Cash Value by a percentage described in the federal tax regulations.  The percentages depend upon the Insured's age, sex, and underwriting classification.  Under the cash value accumulation test, there is no limit to the amount that may be paid in Premiums as long as there is sufficient Death Benefit in relation to the Cash Value at all times.

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

Regardless of which test you elect, we will monitor compliance to ensure that the policy meets the statutory definition of life insurance for federal tax purposes.  As a result, the Proceeds payable under a policy should be excludable from gross income of the beneficiary for federal income tax purposes.  We may refuse additional Premium payments or return Premium payments to you so that the policy continues to meet the Code's definition of life insurance.

Changes in the Death Benefit Option

After the first year from the Policy Date, you may elect to change the Death Benefit option under the policy from either Option One to Option Two, or from Option Two to Option One.  We will permit only one change of Death Benefit option per policy year.  The effective date of a change will be the monthly anniversary date following the date we approve the change.

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Upon effecting a Death Benefit option change, we will adjust the Specified Amount so that the Net Amount At Risk remains the same.  The policy's charges going forward will be based on the adjusted Specified Amount causing the charges to be higher or lower than they were prior to the change.  We will refuse a Death Benefit option change that would reduce the Specified Amount to a level where the Premium you have already paid would exceed any premium limit under the tax tests for life insurance.

If Option One is changed to Option Two, policy charges will decrease.  If Option Two is changed to Option One, policy charges will increase.

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

Suicide

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

Surrenders

Full Surrender

You may surrender the policy for the Cash Surrender Value at any time while the Insured is alive.  We calculate the Cash Surrender Value based on the policy's Cash Value.  For more information, see "Cash Value," beginning on page 26.  To derive the Cash Surrender Value, we will deduct from the Cash Value Indebtedness and the surrender charge.  The effective date of a surrender will coincide with the date on which we receive the policy and your written request at our Home Office.  We reserve the right to postpone payment of that portion of the Cash Surrender Value attributable to the fixed account for up to six months.

Policy Restoration after a Full Surrender.   Prior to the Insured's death, we will permit restoration of a surrendered policy pursuant to the established procedures to meet the requirements of state insurance law regarding the replacement of life insurance (i.e. use of the Proceeds from a surrendered policy to purchase a new policy).  Restored policies will be treated as if they were never surrendered for all purposes, including Investment Experience, interest, and deduction of charges.

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

Partial Surrender

You may request, in writing to our Home Office, a partial surrender of the policy's Cash Surrender Value at any time after it has been In Force for one year from the Policy Date.  Currently, we do not charge a surrender fee for partial surrenders.

Partial surrenders are permitted if they satisfy the following requirements:

1) the minimum amount of any partial surrender is $500;

2) partial surrenders may not reduce the specified amount to less than $50,000;

3) after a partial surrender, the Cash Surrender Value is greater than $500 or an amount equal to three times the current monthly deduction if higher;

4) maximum total partial surrenders in any policy year are limited to 10% of the total net Premium payments applied to the policy.  Currently, this requirement is waived beginning in the 15th year if the Cash Surrender Value is $10,000 or more after the withdrawal; and

5) after the partial surrender, the policy continues to qualify as life insurance under Section 7702 of the Code.

When a partial surrender is made, the Cash Value will be reduced by the amount of the partial surrender.  Under Death Benefit Option One, the Specified Amount is reduced by the amount of the partial surrender, unless the Death Benefit is based on the applicable percentage of Cash Value.  In that case, a partial surrender will decrease the Specified Amount proportionally based on the applicable percentage of Cash Value by the amount the partial surrender exceeds the difference between the Death Benefit and Specified Amount.

Partial surrenders may be subject to income tax penalties.  They could also cause your policy to become a "modified endowment contract" under the Code, which could change the income tax treatment of any distribution from the policy.  For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals a nd Loans," beginning on page 34.

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Reduction of Specified Amount on a Partial Surrender

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

When you take a partial surrender, we will reduce the Specified Amount to ensure that the Net Amount At Risk does not increase.  Because your Net Amount At Risk is the same before and after the reduction, a partial surrender by itself does not alter the policy's cost of insurance.  The policy's charges going forward will be based on a new Specified Amount that will change the calculation of those charges.  Depending on changes in variables such as the Cash Value, these charges may increase or decrease after the reduction in Specified Amount.

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

· against the most recent increase in the Specified Amount;

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

· against the Specified Amount under the original application.

Income Tax Withholding

Federal law requires Nationwide to withhold income tax from any portion of surrender proceeds subject to tax.  Nationwide will withhold income tax unless the policy owner advises Nationwide, in writing, of his or her request not to withhold.  If a policy owner requests that taxes not be withheld, or if the taxes withheld are insufficient, the policy owner may be liable for payment of an estimated tax.  Policy owners should consult a tax adviser.

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

1. the value each year of the life insurance protection provided;

2. an amount equal to any employer-paid premiums; or

3. some or all of the amount by which the current value exceeds the employer's interest in the policy.

Participants 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.

Policy Loans

While the policy is In Force, you may take an advance of money from the Cash Value at any time after the first policy year using the policy as security.  We call this advance a policy loan.  You must make your request in writing at our Home Office.  You may increase your risk of Lapse if you take a policy loan.  There also may be adverse tax consequences.  You should obtain competent tax advice before you decide to take a policy loan.

Loan Amount and Interest

The minimum policy loan you may take is $200.  Maximum policy Indebtedness is limited to 90% of the Cash Value of the variable account, less any surrender charges, less interest due on the next policy anniversary.

For policies issued in Texas, maximum policy Indebtedness is limited to 90% of the Cash Value in the Sub-Accounts and 100% of the Cash Value in the fixed account, less surrender charges and interest due on the next policy anniversary.  For more information, see "Full Surrender," beginning on page 30.  We charge interest, at the maximum guaranteed rate of 6% per annum, on the amount of an outstanding loan, 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 left unpaid, we will add the interest to the loan amount.

Collateral and Interest

As collateral or security, we will transfer a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations, unless you instruct otherwise.  We will only make a transfer from the fixed investment option when sufficient amounts are not available in the Sub-Accounts.  The amount taken out of the variable account will not be affected by the variable account's Investment Experience while the loan is outstanding.

Currently, policy loans are credited with an annual effective rate of 5.1% during policy years 2 through 14 and an annual effective rate of 6% during the 15th and subsequent policy years.  Nationwide guarantees the rate will never be lower than 5.1%.  Nationwide may change the current interest crediting rate on policy loans at any time at its sole discretion.

Amounts transferred to the policy loan account will earn interest daily from the date of transfer.  The earned interest is transferred from the policy loan account to the variable account or the fixed account on each policy anniversary, at the time a new loan is

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requested or at the time of loan repayment.  The earned interest will be allocated according to the fund allocation factors in effect at the time of the transfer.

If it is determined that such loans will be treated, as a result of the differential between the interest crediting rate and the loan interest rate, as taxable distributions under any applicable ruling, regulation, or court decision, Nationwide retains the right to increase the net cost (by decreasing the interest crediting rate) on all subsequent policy loans to an amount that would result in the transaction being treated as a loan under federal tax law.

Repayment

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

Net Effect of Policy Loans

We will charge interest on the loan amount at the same time as the collateral amount will be credited interest.  In effect, we will net the loan amount interest rate against the interest crediting rate, so that your actual cost of a policy loan will be less than the loan amount interest rate.  For more information, see "In Summary: Fee Tables," in particular, the footnotes, beginning on page 5.  Nevertheless, keep in mind that the Cash Value we transferred to the loan account will neither be affected by the Investment Experience of the Sub-Account portfolios, nor credited with the interest rates accruing on the fixed account.  Whether repaid, a policy loan will affect the policy, the net Cash Surrender Value and the Death Benefit.  If your total Indebtedness ever exceeds the policy's Cash Value, your policy may Lapse.  Repaying a policy loan will cause the Death Benefit and net Cash Surrender Value to increase accordingly.

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.  Even if it is repaid, a policy loan will affect the policy, the Cash Surrender Value and the Death Benefit.  If your total indebtedness ever exceeds the policy's Cash Value, your policy may lapse.

Lapse

The policy is at risk of Lapsing when the Cash Surrender Value is insufficient to cover the monthly deduction of periodic charges.  There is a Grace Period before your policy will Lapse.  Also, you may reinstate a policy that has Lapsed, subject to conditions.

Grace Period

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

The policies will not Lapse during the first three policy years provided that on each monthly anniversary date 1) is greater than or equal to 2), where:

1) is the sum of all Premiums paid to date minus any policy Indebtedness, minus any partial surrenders; and

2) is the sum of monthly Premiums required since the Policy Date, including the monthly minimum Premium for the current monthly anniversary date.

If 1) is less than 2) and the Cash Surrender Value is less than zero, a Grace Period of 61 days from the monthly anniversary day will be allowed for the payment of sufficient Premium to satisfy the minimum Premium requirement.  If sufficient Premium is not paid by the end of the Grace Period, the policy will Lapse without value.  In any event, the policy will not Lapse as long as there is a positive Cash Surrender Value.

Beginning with the fourth policy year, if the Cash Surrender Value on a monthly anniversary day is not sufficient to cover the current policy charges, a Grace Period of 61 days from the monthly anniversary day will be allowed for the payment of sufficient Premium to cover the current policy charges due, plus an amount equal to three times the current monthly deduction.

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; and

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

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· paying an amount of Premium equal to the minimum monthly Premiums missed since the beginning of the Grace Period, if the policy terminated in the first 3 policy years; or

· paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period if the policy terminated in the fourth or later policy year; and

· paying sufficient Premium to keep the policy In Force for three months from the date of reinstatement; and

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

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

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

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

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

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

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

Taxes

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

Types of Taxes

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

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

The federal gift tax is imposed on the value of the property (including cash) transferred by gift.  Each donor is allowed to exclude an amount (in 2009 and 2010, up to $13,000 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 $13,000 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 2009, an estate of less than $3,500,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability.  Pursuant to the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), the federal estate (but not federal gift) tax was repealed for decedents who die after December 31, 2009 and before January 1, 2011, and will be reinstated with respect to decedents who die after December 31, 2010.  If Congress has not acted further, the size of estates that will not incur an estate tax will revert to $1 million.  However, it is possible that new tax legislation will be introduced and passed that (a) may impose an estate tax on decedents who die during 2010, whether before or after the date that the legislation is passed, and/or (b) may make further changes to the estate tax for 2011 and beyond.  Those changes could include changing the threshold at which an estate would pay a federal estate tax and changing the tax rates applicable to such estates.

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

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 2009, 45%), and there is a provision for an exemption (for 2009, $3.5 million).  As with the estate tax, the GSTT tax has been repealed for 2010; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011 at a rate of 55%.

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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 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 mutual funds, 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.

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

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When the Policy is Life Insurance that is a Modified Endowment Contract.   Section 7702A of the Code defines modified endowment contracts as those life insurance policies issued or materially changed on or after June 21, 1988 on which the total Premiums paid during the first seven years exceed the amount that would have been paid if the policy provided for paid up benefits after seven level annual Premiums.  Under certain conditions, a policy may become a modified endowment contract, or may become subject to a new seven 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 be fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Code.  You should carefully consider this potential tax ramification and seek further information before requesting any changes in the terms of the policy.

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

Surrendering the Policy; Maturity

A full surrender, cancellation of the policy by Lapse, or the maturity of the policy on its Maturity Date may have adverse tax consequences.  If the amount you receive (or are deemed to receive upon maturity) 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.

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

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;

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

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

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

Exchanging the Policy for Another Life Insurance Policy

Generally, you will pay taxes on amounts that you receive in excess of your Premium payments when you completely surrender the policy.  If, however, you exchange the policy for another life insurance policy, modified endowment contract, or annuity contract, you will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035.  To meet Section 1035 requirements, the Insured named in the policy must be the Insured for the new policy.  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 advisers in structuring any policy exchange transaction.

Taxation of Death Benefits

Federal Income Tax.   The Death Benefit is generally excludable from the beneficiary's gross income under Section 101 of the Code.  However, if the policy had been transferred to a new policy owner for valuable consideration (e.g., through a sale of the contract), 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 advisers 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, adding Sections 101(j) and 6039I to the Internal Revenue Code ("Code"), which affect the tax treatment of life insurance policies owned by the employer of the Insured.  These provisions are generally effective for life insurance policies issued after August 17, 2006.  If a life insurance policy was issued on or before August 17, 2006, but materially modified after that date, it will be treated as having been issued after that date for purposes of Section 101(j).  Policies issued after August 17, 2006 pursuant to a Section 1035 exchange generally are excluded from the operation of these provisions, provided that the policy received in the exchange does not have a material increase in death benefit or other material change with respect to the old policy.

Section 101(j) provides the general rule that, with respect to an employer-owned life insurance policy, the amount of death benefit payable directly or indirectly to the employer that may be excluded from income cannot exceed the sum of Premiums and other payments paid by the 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 two exceptions to this general rule of taxability, provided that statutory notice, consent, and information requirements are satisfied.  These requirements are that, prior to the issuance of the policy to a 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 two 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 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 Section 101(j) would not apply.

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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.

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

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

Tax Changes

The foregoing 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 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.

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

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

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

Income, gains, and losses, whether or not realized, from the assets in the account will be credited to, or charged against, the account without regard to our other income, gains, or losses.  Income, gains, and losses credited to, or charged against, a Sub-Account reflect the Sub-Account's own Investment Experience and not the Investment Experience of our other assets.  Its assets are held separately from our other assets and are not part of our general account.  We may not use the separate account's assets to pay any of our liabilities other than those arising from the policies.  We hold assets in the separate account equal to its liabilities.  If the separate account's assets exceed the required reserves and its other liabilities, we may transfer the excess to our general account.  The separate account may include other Sub-Accounts that are not available under the policies, and are not discussed in this prospectus.

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

Addition, Deletion or Substitution of Mutual Funds

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

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

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

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

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

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

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

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

The portfolios that 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.  We will not make any such changes without receiving necessary approval(s) of the SEC and applicable state insurance departments.  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.

In April 2009, Nationwide filed an application with the SEC for an order permitting it to substitute assets allocated to certain underlying mutual funds into other underlying mutual funds available under the policy that have similar investment objectives and strategies.  If and when Nationwide receives 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.

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.

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

Deregistration of the Separate Account. We may deregister Nationwide VLI Separate Account-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 Nationwide VLI Separate Account-2.

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Voting Rights

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

Before a vote of a portfolio's shareholders occurs, you will have the right to instruct us based on the number of portfolio shares that corresponds to the amount of policy account value you have in the portfolio (as of a date set by the 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 NAV 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 Financial Services, Inc. (NFS, or collectively with its subsidiaries, "the Company") was formed in November 1996. NFS is the holding company for Nationwide Life Insurance Company (NLIC), Nationwide Life and Annuity Insurance Company (NLAIC) and other companies that comprise the life insurance and retirement savings operations of the Nationwide group of companies (Nationwide). This group includes Nationwide Financial Network (NFN), an affiliated distribution network that markets directly to its customer base. NFS is incorporated in Delaware and maintains its principal executive offices in Columbus, Ohio.

The Company is a 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 position or results of operations in a particular 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 on a broad range of issues 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 on such issues as 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 responded to information requests and/or subpoenas from the SEC in 2003 and the New York State Attorney General in 2005 in connection with investigations regarding market timing in certain mutual funds offered in insurance products sponsored by the Company.  The Company is not aware of any further action on 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 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, self reported or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to 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

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and finite reinsurance agreements, and funding agreements backing the MTN program.  The Company is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC ' s operations.

A promotional and marketing arrangement associated with the Company ' s offering of a retirement plan product and related services in Alabama is under investigation by the Alabama Attorney General, which assumed the investigation from the Alabama Securities Commission.  The Company currently expects that any damages paid to settle this matter will not have a material adverse impact on its consolidated financial position.  It is not possible to predict what effect, if any, the outcome of this investigation may have on the Company's retirement plan operations with respect to promotional and marketing arrangements in general in the future.

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 ' s consolidated financial position or results of operations in the future.

On September 10, 2009, NRS was named in a lawsuit filed in the Circuit Court for Montgomery County, Alabama entitled Twanna Brown, Individually and on behalf of all other persons in Alabama who are similarly situated, v. Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc., Edwin " Mac " McArthur, Steve Walkley, Glenn Parker, Ulysses Lavender, Diana McLain, Randy Hebson, and Robert Wagstaff; and Unknown Defendants A-Z .  On January 22, 2010, Brown filed an Amended Complaint alleging in Count One, that all the defendants were involved in a civil conspiracy and seeks to recover actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Two, although NRS is not named, it is alleged that the remaining defendants breached their fiduciary duties and seeks actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Three, although NRS is not named, the plaintiff seeks declaratory relief that the individual defendants breached their fiduciary duties, seeks injunctive relief permanently removing said defendants from their respective offices in the Alabama State Employees Association (ASEA) and PEBCO and costs and attorneys fees. In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants.  Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On February 5, 2010, the Company filed a motion to dismiss, or in the alternative, a motion to stay the amended complaint.  On February 9, 2010, the individual defendants filed a motion to dismiss the amended complaint.  On December 13, 2009, the plaintiff filed a motion to consolidate this case with Nationwide Retirement Solutions, Inc. v. Alabama State Personnel Board, PEBCO, Inc. and Alabama State Employees Association . The Company continues to defend this case vigorously.

On November 20, 2007, NRS and NLIC were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z . On December 2, 2008, NRS and NLIC were named in an Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin, Steven E. Coker, Sandra H. Turner, and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the ASEA Plan, excluding members of the Deferred Compensation Committee, members of the Board of Control, ASEA's directors, officers and board members, and PEBCO directors, officers and board members. The class period is from November 20, 2001 to the date of trial.  In the amended class action complaint, the plaintiffs allege breach of fiduciary duty, wantonness and breach of contract.  The amended class action complaint seeks a declaratory judgment, an injunction, an appointment of an independent fiduciary to protect Plan participants, disgorgement of amounts paid, reformation of Plan documents, compensatory damages and punitive damages, plus interest, attorneys' fees and costs and such other equitable and legal relief to which plaintiffs and class members may be entitled.  Also, on December 2, 2008, the plaintiffs filed a motion for preliminary injunction seeking an order requiring periodic payments made by NRS and/or NLIC to ASEA or PEBCO to be held in a trust account for the benefit of Plan participants.  On December 16, 2008, the Companies filed their Answer. On April 28, 2009, the court entered an order denying the plaintiffs ' motion for preliminary injunction.  NRS and NLIC continue to defend this case vigorously.

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On July 11, 2007, NLIC was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al .  The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries).  The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties.  The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys ' fees.    On May 23, 2008, the Court granted the defendants ' motion to dismiss.  On June 19, 2008, the plaintiffs filed a notice of appeal.  On July 10, 2009, the Court of Appeals heard oral argument.  NLIC continues to defend this lawsuit vigorously.

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 sought 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 alleged that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds.  The complaint sought 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 September 15, 2008, the Court denied the plaintiffs ' motion to vacate judgment and for leave to file an amended complaint.  On February 3, 2010, the Sixth Circuit Court of Appeals affirmed the District Court ' s dismissal of this case.   NFS, NLIC and NRS continue to defend this lawsuit vigorously.

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company .  In the plaintiffs' sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees under ERISA that purchased variable annuities from NLIC.  The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds.  The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys ' fees.  On November 6, 2009, the Court granted the plaintiff ' s motion for class certification and certified a class of " All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participant's had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009 " .  Also on November 6, 2009, the Court denied plaintiffs' motion to strike NFS and NLIC ' s counterclaim for breach of fiduciary duty against the Trustees, in the event NFS and NLIC are held to be a fiduciary at trial, and granted H. Grady Chandler ' s motion to intervene.  On November 23, 2009, NFS and NLIC filed a rule 23(f) petition asking the Second Circuit Court of Appeals to hear an appeal of the District Court's order granting class certification. On December 2, 2009, NFS and NLIC filed an answer to the 6th Amended Complaint.  On January 29, 2010, the Companies filed a motion for class certification against the four named plaintiffs, as trustees of their respective retirement plans and against the trustees of other ERISA retirement plans who become members of the class certified in this lawsuit, for breach of fiduciary duty to the plans because the trustees approved and accepted the advantages of the allegedly unlawful " revenue sharing " payments.  NFS and NLIC continue to defend this lawsuit vigorously.

Nationwide Investment Services Corporation

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

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consider the consolidated financial statements of the company only as bearing on our ability to meet the obligations under the policy.  You should not consider the consolidated financial statements of the company and subsidiaries as affecting the investment performance of the assets of the separate account.

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Appendix A: Sub-Account Information

Below is a list of the available Sub-Accounts and information about the corresponding underlying mutual funds in which they invest.  The underlying mutual funds in which the Sub-Accounts invest are designed primarily as investments for variable annuity contracts and variable life insurance policies issued by insurance companies.  There is no guarantee that the investment objectives will be met.

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

Designations Key:

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

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

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

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

Investment 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 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.  Income is a secondary objective.

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 Value Fund: Class I

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

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

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

Investment Adviser:	BlackRock Advisors, LLC
Sub-adviser:	BlackRock Investment Management, LLC; BlackRock Asset Management U.K. Limited
Investment Objective:	Seek high total investment return.

Credit Suisse Trust - International Equity Flex III Portfolio

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

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

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

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

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

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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
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 & Co.
Investment Objective:	Long-term capital growth consistent with the preservation of capital.

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

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

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

Dreyfus Variable Investment Fund - Opportunistic Small Cap Portfolio: Initial Shares (formerly, 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.

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 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 - Fidelity VIP Freedom Fund 2010 Portfolio: Service Class

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

45

Fidelity Variable Insurance Products Fund - VIP Asset Manager Portfolio: Growth Initial Class (formerly, 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 Boston, MA
Sub-adviser:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research & Analysis Company, Fidelity Investments Money Management, Inc., Fidelity Investments Japan Limited, Fidelity International Investment Advisors, Fidelity International Investment Advisors (U.K.) Limited
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 Boston, MA
Sub-adviser:	FMR Co., Inc., Fidelity Investments Money Management, Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research & Analysis Company, Fidelity Investments Japan Limited, Fidelity International Investment Advisors, Fidelity International Investment Advisors (U.K.) Limited
Investment Objective:	Long-term capital appreciation.

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

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

Designation: STTF

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

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

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

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

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

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

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

Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: 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 Boston, MA
Sub-adviser:	FMR Co., Inc., Fidelity Research & Analysis Company, Fidelity Investments Japan Limited, Fidelity International Investment Advisors, Fidelity International Investment Advisors (U.K.) Limited
Investment Objective:	High level of current income while also considering growth of capital.

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

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

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

Designation: STTF

46

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

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

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

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

Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: 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 Boston, MA
Sub-adviser:	FMR Co., Inc., Fidelity Management & Research (U.K.) Inc., Fidelity Research & Analysis Company, Fidelity International Investment Advisors, Fidelity International Investment Advisors (U.K.) Limited, Fidelity Investments Japan Limited
Investment Objective:	Long-term capital growth.

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

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

Designation: STTF

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

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

Investment 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.

Designation: FF

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

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

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

47

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

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

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

Franklin Templeton Variable Insurance Products Trust - Templeton Global Bond 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.

Invesco - Invesco V.I. Capital Appreciation Fund: Series I (formerly, 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 Advisors, Inc.
Investment Objective:	Long-term growth of capital.

Invesco - Invesco V.I. Capital Development Fund: Series I (formerly, AIM Variable Insurance Funds - AIM V.I. Capital Development Fund: Series I Shares)

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

Ivy Funds Variable Insurance Portfolios, Inc. - Asset Strategy

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

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 capital growth, 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 II Shares

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

Designation: STTF

Janus Aspen Series - Global Technology Portfolio: Service Shares

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

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

Janus Aspen Series - Overseas Portfolio: Service II Shares

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

Designation: STTF

Janus Aspen Series - Overseas Portfolio: Service Shares

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

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

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

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

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

48

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

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

Nationwide Variable Insurance Trust - AllianceBernstein NVIT Global Fixed Income Fund: Class III

This sub-account is only available in policies issued before May 1, 2010

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	AllianceBernstein L.P.
Investment Objective:	The Fund seeks a high level of current income consistent with preserving capital.

Designation: STTF

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

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

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

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

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

Investment Adviser:	Capital Research and Management Company
Investment Objective:	The Fund seeks to maximize an investors 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:	The Fund is designed for investors seeking capital appreciation through stocks.

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

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

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

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

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

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

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

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

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

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

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Gartmore Global Partners
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity securities of companies in Europe, Australasia, the Far East and other regions, including developing countries.

49

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Gartmore Global Partners
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity securities of companies in Europe, Australasia, the Far East and other regions, including developing countries.

Designation: STTF

Nationwide Variable Insurance Trust - Gartmore NVIT Worldwide Leaders Fund: Class III

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Gartmore Global Partners
Investment Objective:	The fund seeks long-term capital growth.

Designation: STTF

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 by investing primarily in securities of

companies that meet the fund's financial criteria and social policy.

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

50

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

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

Designation: FF

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

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

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

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

Nationwide Variable Insurance Trust - NVIT Emerging Markets Fund: Class I (formerly, 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:	Baring International Investment Limited
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.

Nationwide Variable Insurance Trust - NVIT Emerging Markets Fund: Class III (formerly, Nationwide Variable Insurance Trust - Gartmore NVIT Emerging Markets Fund: Class III)

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

Designation: STTF

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

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

Nationwide Variable Insurance Trust - NVIT Growth Fund: Class I

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.
Investment Objective:	The Fund seeks long-term capital appreciation.

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

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

Designation: STTF

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

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

Designation: STTF, FF

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

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

Designation: STTF, FF

51

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

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

Designation: STTF, FF

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

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

Designation: STTF, FF

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

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

Designation: STTF, FF

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

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

Designation: STTF, FF

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

Investment Adviser:	Nationwide Fund Advisors
Investment Objective:	The NVIT Investor Destinations Moderately Conservative Fund ("Moderately Conservative Fund" or the "Fund") seeks a high level of total return consistent with a moderately conservative level of risk.

Designation: STTF, FF

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

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

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

52

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 L.P.; JPMorgan Investment Management, Inc.
Investment Objective:	The Fund seeks long-term capital appreciation.

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

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.; Neuberger Berman Management Inc.; Wells Capital Management, Inc.
Investment Objective:	The fund seeks long-term capital growth.

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

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:	The Fund seeks capital appreciation.

Designation: STTF

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Aberdeen Asset Management, Inc.; Gartmore Global Partners; Morgan Stanley Investment Management; Neuberger Berman Management, Inc.; Putnam Investment Management, LLC; Waddell & Reed Investment Management Company
Investment Objective:	The Fund seeks capital appreciation.

Designation: STTF

53

Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class I

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

Designation: STTF

Nationwide Variable Insurance Trust - NVIT Real Estate Fund: Class I (formerly, Nationwide Variable Insurance Trust - Van Kampen NVIT Real Estate Fund: Class I)

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

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

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

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

Designation: STTF

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Van Kampen Asset Management
Investment Objective:	The Fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks, and convertible securities.

Designation: STTF

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

Investment Adviser:	Neuberger Berman Management LLC
Sub-adviser:	Neuberger Berman, LLC
Investment Objective:	Growth of capital and reasonable current income without undue risk to principal.

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

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

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

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

Investment Adviser:	Neuberger Berman Management LLC
Sub-adviser:	Neuberger Berman, LLC
Investment Objective:	Long-term capital growth.

54

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

Oppenheimer Variable Account Funds - Oppenheimer 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

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

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.

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

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

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

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 Small- & Mid-Cap Growth Fund/VA: Non-Service Shares (formerly, 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.

55

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

Investment Adviser:

Pacific Investment Management Company LLC

Investment Objective:

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

PIMCO Variable Insurance Trust - Low Duration Portfolio: Administrative Class

Investment Adviser:

Pacific Investment Management Company LLC

Investment Objective:

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

Putnam Variable Trust - Putnam VT Growth & 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
Sub-adviser:	Putnam Investments Limited and Putnam Advisory Company, LLC
Investment Objective:	Capital appreciation.

Putnam Variable Trust - Putnam VT Voyager Fund: Class IB

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

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

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

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

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: II

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

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 Health Sciences Portfolio: II

Investment Adviser:	T. Rowe Price Investment Services
Investment Objective:	Long-term capital appreciation.

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

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

Investment 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.

56

Van Eck Variable Insurance Products Trust - Van Eck VIP Emerging Markets Fund: Initial Class (formerly, 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 Variable Insurance Products Trust - Van Eck VIP Global Bond Fund: Initial Class (formerly, 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 Variable Insurance Products Trust - Van Eck VIP Global Hard Assets Fund: Initial Class (formerly, 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 Funds - Wells Fargo Advantage VT Small Cap Growth Fund (formerly, Wells Fargo Advantage Funds® Variable Trust - VT Small Cap Growth Fund)

Investment Adviser:                                                          Wells Fargo Funds Management, LLC

Sub-adviser:	Wells Capital Management Incorporated
Investment Objective:	Long-term capital appreciation.

57

Appendix B: Definitions

Attained Age – The Insured's age upon the issue of full insurance coverage plus the number of full years since the Policy Date.

Cash Surrender Value – The Cash Value, subject to Indebtedness and the surrender charge.

Cash Value – The total of the Sub-Accounts you have chosen, which will vary with Investment Experience, and the policy loan and fixed accounts, to which interest will be credited daily.  We will deduct partial surrenders and the policy's periodic charges from the Cash Value.

Code – The Internal Revenue Code of 1986, as amended.

Death Benefit – The amount we pay to the beneficiary upon the Insured's death, before payment of any unpaid outstanding loan balances or charges.

FDIC – Federal Deposit Insurance Corporation.

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

Home Office – Our Home Offices is located at One Nationwide Plaza, Columbus, Ohio 43215.

In Force – Anytime during which benefits are payable under the policy and any elected Rider(s).

Indebtedness – The total amount of all outstanding policy loans, including principal and interest due.

Insured – The person whose life we insure under the policy, and whose death triggers the Death Benefit.

Investment Experience – The performance of a mutual fund in which a Sub-Account portfolio invests.

Lapse – The policy terminates without value.

Maturity Date – The policy anniversary on or next following the Insured's 100th birthday.

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

Net Asset Value (NAV) – The price 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.

58

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.

Substandard Rating – An underwriting classification based on medical and/or non-medical factors used to determine what to charge for life insurance based on characteristics of the Insured beyond traditional factors for standard risks, which include age, sex, and smoking habits of the Insured.  Substandard Ratings are shown in the Policy Data Pages as rate class multiples (medical factors) and/or monthly flat extras (medical and/or non-medical factors).  The higher the rate class multiple or monthly flat extra, the greater the risk assessed and the higher the cost of coverage.

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, Nationwide or the company – Nationwide Life Insurance Company.

Valuation Period – The period during which we determine the change in the value of the Sub-Accounts.  One Valuation Period ends and another begins with the close of trading on the New York Stock Exchange.

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

59

Appendix C: Illustrations of Surrender Charges

Example 1.  A female non-tobacco user, age 45, purchases a policy with a Specified Amount of $50,000 and a scheduled Premium of $750.  She now wishes to surrender the policy during the first policy year.  By using the "Initial Surrender Charge" table reproduced below (also see "Surrender Charges"), the total surrender charge per thousand, multiplied by the Specified Amount expressed in thousands, equals the total surrender charge of $569.80 ($11.396 x 50=569.80).

Example 2.  A male non-tobacco user, age 35, purchases a policy with a Specified Amount of $100,000 and a scheduled Premium of $1,100.  He now wants to surrender the policy in the sixth policy year.  The total initial surrender charge is calculated using the method illustrated above.  (Surrender charge per 1,000=6.817 x 100 for a total of $681.70 maximum initial surrender charge).  Because the fifth policy year has been completed, the maximum initial surrender charge is reduced by multiplying it by the applicable percentage factor from the "Reductions to Surrender Charges" table below.  (Also see "Reductions to Surrender Charges").  In this case, $681.70 x 60%=$409.02, which is the amount we deduct as a total surrender charge.

The following tables illustrate the maximum initial surrender charge per $1,000 of initial Specified Amount for policies that are issued on a standard basis:

Initial Specified Amount $50,000-$99,999

Issue	Male	Female	Male	Female
Age	Non-Tobacco	Non-Tobacco	Standard	Standard
25	$7.776	$7.521	$8.369	$7.818
35	8.817	8.398	9.811	8.891
45	12.191	11.396	13.887	12.169
55	15.636	14.011	18.415	15.116
65	22.295	19.086	26.577	20.641

Initial Specified Amount $100,000 or More

Issue	Male	Female	Male	Female
Age	Non-Tobacco	Non-Tobacco	Standard	Standard
25	$5.776	$5.521	$6.369	$5.818
35	6.817	6.398	7.811	6.891
45	9.691	8.896	11.387	9.669
55	13.136	11.511	15.915	12.616
65	21.295	18.086	25.577	19.641

Reductions to Surrender Charges

	Surrender Charge		Surrender Charge
Completed	as a % of Initial	Completed	as a % of Initial
Policy Years	Surrender Charges	Policy Years	Surrender Charges
0	100%	5	60%
1	100%	6	50%
2	90%	7	40%
3	80%	8	30%
4	70%	9+	0%

60

The current surrender charges are the same for all states.  However, in Pennsylvania, the guaranteed maximum surrender charges are spread out over 14 years.  The guaranteed maximum surrender charges in subsequent years in Pennsylvania are reduced in the following manner:

Completed Policy Years	Surrender Charge as a % of Initial Surrender Charges	Completed Policy Years	Surrender Charge as a % of Initial Surrender Charges	Completed Policy Years	Surrender Charge as a % of Initial Surrender Charges
0	100%	5	60%	10	20%
1	100%	6	50%	11	15%
2	90%	7	40%	12	10%
3	80%	8	30%	13	5%
4	70%	9	25%	14+	0%

The illustrations of current values in this prospectus are the same for Pennsylvania.  However, the illustrations of guaranteed values in this prospectus do not reflect guaranteed maximum surrender charges which are spread out over 14 years.  If this policy is issued in Pennsylvania, please contact the home office for an illustration.

Nationwide has no plans to change the current surrender charges.

61

Outside back cover page

To learn more about this policy, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus.  For a free copy of the SAI, to receive personalized illustrations of Death Benefits, net cash surrender values, and cash values, and to request other information about this policy please call our Service Center at 1-800-547-7548 (TDD: 1-800-238-3035) or write to us at our Service Center at Nationwide Life Insurance Company, 5100 Rings Road, RR1-04-D4, Dublin, OH 43017-1522.

The SAI has been filed with the SEC and is incorporated by reference into this prospectus.  The SEC maintains an Internet website (http://www.sec.gov) that contains the SAI and other information about us and the policy.  Information about us and the policy (including the SAI) may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 100 F Street NE, Washington, D.C. 20549.  Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090.

Investment Company Act of 1940 Registration File No.811-05311.

Securities Act of 1933 Registration File No. 033-42180.

Nationwide VLI Separate Account-2

(Registrant)

Nationwide Life Insurance Company

(Depositor)

One Nationwide Plaza

5100 Rings Road, RR1-04-D4

Columbus, OH 43017-1522

1-800-547-7548

TDD: 1-800-238-3035

STATEMENT OF ADDITIONAL INFORMATION

Individual Flexible Premium Variable Universal Life Insurance Policies

This Statement of Additional Information ("SAI'') contains additional information regarding the individual flexible premium variable universal life insurance policy offered by us, Nationwide Life Insurance Company.  This SAI is not a prospectus and should be read together with the policy prospectus dated May 1, 2010 and the prospectuses for the variable investment options.  The prospectus is incorporated by reference in this SAI.  You may obtain a copy of these prospectuses FREE OF CHARGE by writing or calling us at our address or phone number shown above.

The date of this Statement of Additional Information is May 1, 2010 .

Table of Contents

	Page
Nationwide Life Insurance Company	1
Nationwide VLI Separate Account-2	1
Nationwide Investment Services Corporation (NISC)	2
Services                                                                                                                                   &# 160;	2
Underwriting Procedure	2
Policy Restoration Procedure	3
Maximum Surrender Charge and Maximum Surrender Charge Calculation	3
Illustrations                                                                                                                                   60;	5
Advertising                                                                                                                                    ;	6
Tax Definition of Life Insurance	6
State Regulation	9
Financial Statements	10

Nationwide Life Insurance Company

We are a stock life insurance company organized under the laws of the State of Ohio in March 1981 with our Home Office at One Nationwide Plaza, Columbus, Ohio 43215.  We provide life insurance, annuities and retirement products.  We are admitted to do business in all states, the District of Columbia and Puerto Rico.  Nationwide is a member of the Nationwide group of companies and all of our common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company.  Nationwide Corporation owns all of NFS's common stock and is a holding company, as well.  All of Nationwide Corporation's common stock is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), the ultimate controlling persons of the Nationwide group of companies.  The Nationwide group of companies is one of America's largest insurance and financial services family of companies, with combined assets of over $140 billion as of December 31, 2009.

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.

1

Nationwide Investment Services Corporation (NISC)

The policies are distributed by NISC, located at One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide.  For contract issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation.

The policies will be sold on a continuous basis by licensed insurance agents in those states where the policies may lawfully be sold.  Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the 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 2 through 10 on the sale of the policies provided by NISC that will not exceed 4% of actual premium payment, and that will not exceed 1% in policy years 11 and thereafter.

We paid no underwriting commissions to NISC for this separate account in 2009 , 2008 , and 2007 .

Services

We have responsibility for administration of the policies and the variable account.  We also maintain the records of the name, address, taxpayer identification number, and other pertinent information for each policy owner and the number and type of policy issued to each policy owner and records with respect to the policy value of each policy.

We are the custodian of the assets of the variable account.  We will maintain a record of all purchases and redemption of shares of the mutual funds.

Independent Registered Public Accounting Firm

The financial statements of Nationwide VLI Separate Account-2 and the consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries 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, 2009 consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009 .  KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Underwriting Procedure

We underwrite the policies issued through Nationwide VLI Separate Account-2.  The policy's cost of insurance depends upon the Insured's sex, issue age, risk class, and length of time the policy has been In Force.  The rates will vary depending upon tobacco use and other risk factors.  Monthly cost of insurance rates will not exceed those guaranteed in the policy.  Guaranteed cost of insurance rates for policies issued on Specified Amounts less than $100,000 are based on the 1980 Commissioners ' Extended Term Mortality Table, Age Last Birthday (1980 CET).  Guaranteed cost of insurance rates for policies issued on Specified Amounts $100,000 or more are based on the 1980 Commissioners ' Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO).  For policies issued in Texas on a standard basis ( " Special Class – Standard " in Texas), guaranteed cost of insurance rates for Specified Amounts less than $100,000 are based on 130% of the 1980 CSO.  Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the standard guaranteed cost of insurance rate on a standard basis.  That is, standard guaranteed cost of insurance rates for substandard risks are guaranteed cost of insurance rates for standard risks times a percentage greater than 100%.  These mortality tables are sex distinct.  In addition, separate mortality tables will be used for tobacco and non-tobacco.   As a component of base policy and Rider cost of insurance charges, we may deduct a "flat extra charge," which is an additional factor in determining the constant charge per $1,000 of Specified Amount, for certain activities or medical conditions of the Insured.  We apply the same flat extra charge to all Insureds that engage in the same activity or have the same medical condition irrespective of their sex, issue age, underwriting class, or Substandard Rating, if any.

The rate class of an insured may affect the cost of insurance rate.  We currently place I nsureds into both standard rate classes and substandard rate classes that involve a higher mortality risk.  In an otherwise identical policy, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks.  Any change in the cost of insurance rates will apply to all I nsureds of the same age, gender, risk class and whose policies have been in effect for the same length of time.  The cost of insurance rates, policy charges, and payment options for policies issued in some states or in connection with certain employee benefit arrangements may be issued on a gender-neutral (unisex) basis.  The unisex rates will be higher than those applicable to females and lower than those applicable to males.  If the rating class for any increase in the Specified Amount of insurance coverage is not the same as the rating class at issue, the cost of insurance rate used after such increase will be a composite rate based upon a weighted average of the rates of the different rating classes.  The actual charges made during the policy year will be shown in the annual report delivered to policy owners.

2

Policy Restoration Procedure

Requests to restore a surrendered policy must meet the following requirements:

·    the request must be in writing and signed by the policy owner (if the surrender was a Code Section1035 exchange to a new policy with a different insurer, the signature of an officer of the replacing insurer is also required);

·    the written request must be received by us within thirty days of the date the policy was surrendered (periods up to sixty days will be permitted based on the right to examine period applicable to replaced life insurance policies in the state where the policy was issued);

·    the surrender Proceeds must be returned in their entirety; and

·    the Insured must be alive on the date the restoration request is received.

No proof of insurability or additional underwriting will be required for requests to restore a surrendered policy that meet the above requirements.

A restored policy will be treated as if it had never been surrendered for all purposes, including Investment Experience, accrual of interest, and deduction of charges, resulting in the following:

·    the returned surrender proceeds and any amount taken as a surrender charge will be used to purchase Accumulation Units according to your allocations in affect on, and priced as of, the surrender date;

·    any charges that would otherwise have been assessed during the period of surrender will be assessed as of the date(s) they were due resulting in the cancellation of Accumulation Units priced as of the applicable date(s);

·    interest will be credited on any allocation to a fixed investment option at the rate(s) in effect during the period of surrender;

·    interest charged and credited on any Indebtedness will accrue at the rates in effect for the period of surrender; and

·    any transfer of loan interest charged or credited that would have occurred during the period of surrender will been transferred as of the date(s) such transfers would have otherwise occurred.

Policy restoration is not a contract right of the policy, it is an administrative procedure based on requirements of state insurance law and the terms are subject to change without notice at any time.

Maximum Surrender Charge and Maximum Surrender Charge Calculation

The surrender charge equals the underwriting component and 26.5% of the sales component.  The underwriting component is designed to cover the administrative expenses associated with underwriting and issuing policies and varies by issue age in the following manner:

Per $1,000 of Initial Specified Amount

Issue Age	Specified Amounts less than $100,000	Specified Amounts $100,000 or more
0-35	$6.00	$4.00
36-55	$7.50	$5.00
56-80	$7.50	$6.50

The sales expense component will not exceed 26 ½% of the lesser of the Guideline Level Premium required in the first year, or Premiums paid in the first policy year.  The sales component is designed to reimburse us for expenses incurred in the distribution of the policies.

The maximum surrender charge under the policy is based on the following calculation.

Maximum Surrender Charge                                                      26.50% multiplied by the lesser of (a) or (b),where:

(a) = the Specified Amount multiplied by the rate indicated on the chart "Surrender Target Factor" below divided by 1,000; and

(b) = Premiums paid by the policy owner during the first two policy years

Plus (c) multiplied by (d) where:

(c) = the Specified Amount divided by 1,000; and

(d) = the applicable rate from the "Administrative Target Factor" chart below.

3

The Surrender Target Factor allows the company to account for the probability that our costs incurred in the sales process will not be recouped.  The Administrative Target Factor allows the company to account for the probability (at various ages) that death will occur and no CDSC will be recouped.

Surrender Target Factor

Age	Male Non-Tobacco	Female Non-Tobacco	Male Tobacco	Female Tobacco
0	N/A	N/A	3.43	2.61
1	N/A	N/A	3.46	2.64
2	N/A	N/A	3.58	2.73
3	N/A	N/A	3.72	2.83
4	N/A	N/A	3.86	2.93
5	N/A	N/A	4.01	3.04
6	N/A	N/A	4.18	3.16
7	N/A	N/A	4.35	3.28
8	N/A	N/A	4.54	3.42
9	N/A	N/A	4.75	3.56
10	N/A	N/A	4.96	3.70
11	N/A	N/A	5.19	3.86
12	N/A	N/A	5.42	4.03
13	N/A	N/A	5.67	4.20
14	N/A	N/A	5.92	4.38
15	N/A	N/A	6.17	4.57
16	N/A	N/A	6.14	4.76
17	N/A	N/A	6.66	4.96
18	5.21	4.36	6.91	5.17
19	5.40	4.54	7.17	5.39
20	5.63	4.76	7.47	5.65
21	5.84	4.96	7.76	5.90
22	6.07	5.17	8.06	6.15
23	6.31	5.39	8.38	6.42
24	6.56	5.62	8.73	6.70
25	6.84	5.86	9.11	7.00
26	7.13	6.12	9.51	7.32
27	7.45	6.39	9.94	7.65
28	7.78	6.68	10.41	8.01
29	8.14	6.99	10.90	8.38
30	8.56	7.34	11.46	8.81
31	8.96	7.68	12.03	9.22
32	9.39	8.04	12.62	9.66
33	9.85	8.42	13.26	10.12
34	10.34	8.82	13.93	10.61
35	10.85	9.24	14.65	11.13
36	11.39	9.69	15.41	11.67
37	11.97	10.16	16.21	12.24
38	12.58	10.66	17.06	12.85
39	13.23	11.18	17.96	13.48
40	13.95	11.77	18.94	14.17
41	14.67	12.35	19.95	14.86
42	15.44	12.95	21.00	15.58
43	16.26	13.60	22.12	16.34
44	17.12	14.27	23.30	17.13
45	18.04	14.99	24.55	17.96
46	19.02	15.74	25.86	18.83
47	20.06	16.55	27.26	19.75

4

Age	Male Non-Tobacco	Female Non-Tobacco	Male Tobacco	Female Tobacco
48	21.16	17.39	28.74	20.72
49	22.34	18.29	30.31	21.75
50	23.64	19.29	32.02	22.87
51	24.98	20.30	33.79	24.02
52	26.41	21.38	35.67	25.23
53	27.93	22.52	37.66	26.50
54	29.56	23.73	39.76	27.85
55	31.29	25.02	41.99	29.27
56	33.14	26.40	44.34	30.79
57	35.11	27.87	46.83	32.40
58	37.22	29.44	49.48	34.13
59	39.49	31.14	52.30	35.98
60	42.01	33.07	55.42	38.09
61	44.61	35.05	58.63	40.26
62	47.40	37.18	62.04	42.59
63	50.38	39.47	65.65	45.08
64	53.58	41.92	69.47	47.74
65	56.99	44.55	73.51	50.56
66	60.65	47.37	77.78	53.58
67	64.57	50.41	82.30	56.81
68	68.78	53.71	87.12	60.31
69	73.33	57.30	92.26	64.13
70	78.52	61.49	98.10	68.57
71	83.82	65.79	103.99	73.14
72	89.50	70.49	110.27	78.11
73	95.58	75.59	116.89	83.47
74	102.05	81.11	123.85	89.23
75	108.92	87.06	131.11	95.38
76	116.22	93.48	138.65	101.95
77	123.91	100.35	146.41	108.92
78	132.14	107.81	154.56	116.44
79	141.00	115.96	163.19	124.59
80	150.61	124.91	172.42	133.51
81	160.93	134.65	182.18	143.16
82	172.06	145.31	192.54	153.68
83	183.91	156.85	203.37	165.03
84	196.41	169.27	214.56	177.14
85	209.46	182.58	226.02	189.97

Administrative Target Factor

Issue Age	Administrative Target Component
0 through 35	4.00
36 through 55	5.00
56 through 85	6.50

Illustrations

Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insured's age and premium class, the Death Benefit option, face amount, planned periodic Premiums, and Riders requested.

5

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.  Both tests are available to individual flexible premium policies such as this one.

The tables below show, numerically, the requirements for each test.

Guideline Premium/Cash Value Corridor Test

Table of Applicable Percentages of Cash Value

Attained Age of Insured	Percentage of Cash Value
0-40	250%
41	243%
42	236%
43	229%
44	222%
45	215%
46	209%
47	203%
48	197%
49	191%
50	185%
51	178%
52	171%
53	164%
54	157%
55	150%
56	146%
57	142%

6

Attained Age of Insured	Percentage of Cash Value
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%

Cash Value Accumulation Test

The Cash Value Accumulation Test also requires the Death Benefit to exceed an applicable percentage of the cash value.  These applicable percentages are calculated by determining net single premiums, as defined in Code Section 7702(b), for each policy year given a set of actuarial assumptions.  The relevant material assumptions include an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Revenue Code Section 7702 for the Cash Value Accumulation Test.  The resulting net single premiums are then inverted (i.e., multiplied by 1/net single premium) to give the applicable cash value percentages.  These premiums vary with the ages, sexes, and risk classifications of the Insureds.

7

The table below provides an example of applicable percentages for the Cash Value Accumulation Test.  This example is for a male non-tobacco preferred issue age 55.

Policy Year	Percentage of Cash Value
1	221%
2	215%
3	209%
4	203%
5	197%
6	192%
7	187%
8	182%
9	177%
10	172%
11	168%
12	164%
13	160%
14	157%
15	153%
16	150%
17	147%
18	144%
19	141%
20	138%
21	136%
22	133%
23	131%
24	129%
25	127%
26	125%
27	124%
28	122%
29	120%
30	119%
31	118%
32	117%
33	115%
34	114%
35	113%
36	112%
37	111%
38	110%
39	109%
40	108%
41	107%
42	106%
43	104%
44	103%
45	102%

8

State Regulation

Nationwide is subject to the laws of Ohio governing insurance companies and to regulation by the Ohio Insurance Department.  An annual statement in a prescribed form is filed with the Insurance Department each year covering the operation of Nationwide for the preceding year and its financial condition as of the end of such year.  Regulation by the Insurance Department includes periodic examination to determine Nationwide's contract liabilities and reserves so that the Insurance Department may certify the items are correct.  Nationwide's books and accounts are subject to review by the Insurance Department at all times and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners.  Such regulation does not, however, involve any supervision of management or investment practices or policies.  In addition, Nationwide is subject to regulation under the insurance laws of other jurisdictions in which it may operate.

9

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

Contract Owners of Nationwide VLI Separate Account-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, 2009, 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, 2009, 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, 2009, 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 10, 2010

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2009

Assets:
Investments at fair value:
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)
69,905 shares (cost $1,016,910)	$	1,042,279
Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)
171,282 shares (cost $1,013,569)		1,003,715
U.S. Equity Flex I Portfolio (WSCP)
501,022 shares (cost $6,694,371)		6,247,747
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
39,237 shares (cost $1,000,260)		1,095,901
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
165,285 shares (cost $5,614,374)		5,482,495
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
356,301 shares (cost $1,502,417)		1,621,171
Janus Aspen Series - INTECH Risk - Managed Core Portfolio - Service Shares (JARLCS)
1,275 shares (cost $10,318)		12,235
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
128,271 shares (cost $6,311,961)		5,814,537
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
83,837 shares (cost $3,991,512)		3,779,389
Investors Growth Stock Series - Initial Class (MIGIC)
25,360 shares (cost $243,623)		249,293
Value Series - Initial Class (MVFIC)
139,903 shares (cost $1,744,753)		1,650,858
Core Plus Fixed Income Portfolio - Class I (MSVFI)
21,866 shares (cost $223,936)		217,130
Emerging Markets Debt Portfolio - Class I (MSEM)
239,966 shares (cost $1,736,975)		1,859,734
U.S. Real Estate Portfolio - Class I (MSVRE)
132,561 shares (cost $1,266,672)		1,345,495
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)
3,097 shares (cost $33,834)		34,126
AllianceBernstein NVIT Global Fixed Income Fund - Class VI (NVAGF6)
973 shares (cost $10,214)		10,721
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
1,462 shares (cost $16,469)		18,623

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
68,992 shares (cost $1,145,472)	$	1,081,801
American Funds NVIT Bond Fund - Class II (GVABD2)
140,241 shares (cost $1,496,738)		1,493,567
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
79,712 shares (cost $1,588,042)		1,575,909
American Funds NVIT Growth Fund - Class II (GVAGR2)
37,985 shares (cost $2,124,707)		1,747,691
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
24,939 shares (cost $922,212)		836,217
Federated NVIT High Income Bond Fund - Class I (HIBF)
23,603 shares (cost $176,303)		155,780
Federated NVIT High Income Bond Fund - Class III (HIBF3)
509,225 shares (cost $3,116,826)		3,355,792
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
165,449 shares (cost $2,042,395)		1,879,498
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
317,679 shares (cost $4,584,811)		3,602,478
Gartmore NVIT Global Utilities Fund - Class I (GVGU1)
109,420 shares (cost $1,130,579)		884,110
Gartmore NVIT International Equity Fund - Class I (GIG)
129,368 shares (cost $1,406,475)		1,036,235
Gartmore NVIT International Equity Fund - Class III (GIG3)
482,730 shares (cost $3,458,229)		3,871,497
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)
7,070 shares (cost $69,416)		72,256
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
1,593,243 shares (cost $12,121,796)		13,462,900
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
3,679 shares (cost $29,480)		31,013
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)
10,833 shares (cost $71,880)		91,101
NVIT Cardinal Balanced Fund - Class I (NVCRB1)
24,277 shares (cost $214,965)		231,846
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)
31,767 shares (cost $278,402)		288,758
NVIT Cardinal Conservative Fund - Class I (NVCCN1)
15,419 shares (cost $147,921)		155,119

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

NVIT Cardinal Moderate Fund - Class I (NVCMD1)
94,117 shares (cost $806,956)	$	878,114
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)
21,137 shares (cost $167,442)		186,854
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)
47,304 shares (cost $423,318)		461,217
NVIT Core Bond Fund - Class I (NVCBD1)
13,300 shares (cost $140,091)		135,796
NVIT Core Plus Bond Fund - Class I (NVLCP1)
1,783 shares (cost $19,589)		19,236
NVIT Fund - Class I (TRF)
5,524,014 shares (cost $60,208,367)		44,799,750
NVIT Global Financial Services Fund - Class I (GVGF1)
72,252 shares (cost $472,492)		538,997
NVIT Government Bond Fund - Class I (GBF)
1,012,153 shares (cost $11,822,923)		11,882,672
NVIT Growth Fund - Class I (CAF)
988,238 shares (cost $10,967,402)		11,621,681
NVIT Health Sciences Fund - Class I (GVGH1)
18,847 shares (cost $164,274)		180,934
NVIT Health Sciences Fund - Class III (GVGHS)
47,316 shares (cost $406,099)		455,183
NVIT International Index Fund - Class VI (GVIX6)
65,922 shares (cost $604,230)		533,967
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
252,042 shares (cost $2,255,654)		2,074,307
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
3,485 shares (cost $42,437)		41,919
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
1,573 shares (cost $17,558)		20,308
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
126,360 shares (cost $1,215,290)		1,247,176
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
510,867 shares (cost $5,692,069)		4,960,520
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
582,483 shares (cost $6,829,400)		5,469,512
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
262,353 shares (cost $2,785,171)		2,573,684

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

NVIT Leaders Fund - Class I (GVUS1)
14,480 shares (cost $149,403)	$	124,237
NVIT Mid Cap Index Fund - Class I (MCIF)
317,339 shares (cost $4,969,970)		4,702,967
NVIT Money Market Fund - Class I (SAM)
23,547,907 shares (cost $23,547,907)		23,547,907
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
625,071 shares (cost $4,760,028)		5,400,610
NVIT Multi-Manager International Value Fund - Class I (GVDIVI)
32,185 shares (cost $475,344)		316,376
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
106,946 shares (cost $1,521,174)		1,046,998
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
36,290 shares (cost $280,144)		315,356
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)
54,798 shares (cost $414,762)		457,563
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
3,144,376 shares (cost $23,336,494)		26,381,313
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
2,098,015 shares (cost $17,180,831)		19,154,877
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
66,007 shares (cost $849,408)		811,891
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)
610,185 shares (cost $6,997,623)		5,064,533
NVIT Multi-Manager Small Company Fund - Class I (SCF)
1,189,054 shares (cost $24,461,115)		17,181,834
NVIT Multi-Sector Bond Fund - Class I (MSBF)
180,181 shares (cost $1,456,898)		1,490,094
NVIT Short Term Bond Fund - Class II (NVSTB2)
193,759 shares (cost $1,995,507)		1,986,027
NVIT Technology & Communications Fund - Class I (GGTC)
91,381 shares (cost $265,335)		310,694
NVIT Technology & Communications Fund - Class III (GGTC3)
131,401 shares (cost $360,552)		450,707
NVIT U.S. Growth Leaders Fund - Class I (GVUG1)
64,133 shares (cost $589,423)		480,996
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
446 shares (cost $5,867)		6,279

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Templeton NVIT International Value Fund - Class III (NVTIV3)
911 shares (cost $12,252)	$	12,659
Van Kampen NVIT Comstock Value Fund - Class I (EIF)
67,458 shares (cost $766,517)		599,030
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
1,077,494 shares (cost $6,753,194)		7,865,704
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)
243,713 shares (cost $2,955,709)		2,734,465
V.I. Basic Value Fund - Series I (AVBVI)
3,832 shares (cost $21,273)		22,915
V.I. Capital Appreciation Fund - Series I (AVCA)
3,935 shares (cost $91,880)		80,006
V.I. Capital Development Fund - Series I (AVCDI)
20,990 shares (cost $258,132)		236,981
VPS Growth and Income Portfolio - Class A (ALVGIA)
27,214 shares (cost $481,952)		413,646
VPS Small/Mid Cap Value Portfolio: Class A (ALVSVA)
52,321 shares (cost $809,587)		701,629
VP Balanced Fund - Class I (ACVB)
679,839 shares (cost $4,388,991)		3,909,073
VP Capital Appreciation Fund - Class I (ACVCA)
127,293 shares (cost $1,395,251)		1,370,942
VP Income & Growth Fund - Class I (ACVIG)
309,690 shares (cost $2,218,927)		1,666,134
VP Inflation Protection Fund - Class II (ACVIP2)
175,513 shares (cost $1,793,438)		1,883,254
VP International Fund - Class I (ACVI)
106,764 shares (cost $913,279)		825,287
VP International Fund - Class III (ACVI3)
28,321 shares (cost $156,413)		218,921
VP Mid Cap Value Fund - Class I (ACVMV1)
82,388 shares (cost $956,815)		998,548
VP Ultra(R) Fund - Class I (ACVU1)
5,989 shares (cost $43,199)		48,634
VP Value Fund - Class I (ACVV)
1,398,192 shares (cost $9,935,677)		7,382,454
VP Vista(SM) Fund - Class I (ACVVS1)
2,886 shares (cost $32,680)		38,063

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Small Cap Stock Index Portfolio - Service Shares (DVSCS)
141,037 shares (cost $1,661,437)	$	1,375,106
Stock Index Fund, Inc. - Initial Shares (DSIF)
1,611,751 shares (cost $43,712,191)		42,405,180
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)
226,333 shares (cost $6,437,966)		5,943,503
Appreciation Portfolio - Initial Shares (DCAP)
130,606 shares (cost $4,478,513)		4,101,029
Developing Leaders Portfolio - Initial Shares (DSC)
4,696 shares (cost $84,208)		110,307
Growth and Income Portfolio - Initial Shares (DGI)
84,108 shares (cost $1,705,855)		1,418,065
Capital Appreciation Fund II - Primary Shares (FVCA2P)
12,622 shares (cost $64,494)		72,199
Clover Value Fund II - Primary Shares (FALF)
4,884 shares (cost $57,937)		44,248
Market Opportunity Fund II - Service Shares (FVMOS)
29,824 shares (cost $302,889)		293,771
Quality Bond Fund II - Primary Shares (FQB)
186,757 shares (cost $1,950,700)		2,091,680
Equity-Income Portfolio - Initial Class (FEIP)
2,465,238 shares (cost $55,592,841)		41,440,643
High Income Portfolio - Initial Class (FHIP)
2,324,789 shares (cost $13,165,739)		12,298,134
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)
1,083,308 shares (cost $15,180,002)		14,082,998
VIP Fund - Contrafund Portfolio - Initial Class (FCP)
2,134,919 shares (cost $54,740,473)		44,022,037
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
247,609 shares (cost $5,240,754)		4,157,356
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
37,181 shares (cost $319,980)		363,256
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
79,369 shares (cost $835,818)		754,002
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
66,639 shares (cost $710,427)		601,080
VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)
162,694 shares (cost $2,614,411)		2,360,684

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

VIP Fund - Growth Portfolio - Initial Class (FGP)
1,635,167 shares (cost $67,676,511)	$	49,120,426
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)
614,479 shares (cost $2,926,472)		3,238,306
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
351,777 shares (cost $4,275,425)		4,358,516
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
302,027 shares (cost $8,899,152)		7,674,517
VIP Fund - Overseas Portfolio - Initial Class (FOP)
552,037 shares (cost $9,157,770)		8,308,159
VIP Fund - Overseas Portfolio - Service Class R (FOSR)
321,826 shares (cost $6,337,460)		4,817,734
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
165,318 shares (cost $1,402,865)		1,274,599
Franklin Income Securities Fund - Class 2 (FTVIS2)
74,147 shares (cost $1,121,253)		1,046,962
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)
149,946 shares (cost $2,778,366)		2,418,622
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)
205,732 shares (cost $3,304,603)		2,674,512
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
179,520 shares (cost $1,712,249)		1,746,733
Templeton Foreign Securities Fund - Class 1 (TIF)
23,280 shares (cost $361,664)		318,470
Templeton Foreign Securities Fund - Class 3 (TIF3)
92,908 shares (cost $1,453,897)		1,242,176
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
143,181 shares (cost $2,398,882)		2,481,318
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
4,199 shares (cost $28,172)		29,980
Balanced Portfolio - I Class Shares (AMBP)
5,361 shares (cost $47,278)		48,247
Growth Portfolio - I Class Shares (AMTG)
123,801 shares (cost $1,804,138)		1,754,264
Guardian Portfolio - I Class Shares (AMGP)
6,821 shares (cost $82,405)		109,004
International Portfolio - S Class Shares (AMINS)
1,755 shares (cost $15,621)		16,694

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)
450 shares (cost $7,732)	$	9,395
Partners Portfolio - I Class Shares (AMTP)
323,616 shares (cost $2,557,344)		3,174,676
Regency Portfolio - S Class Shares (AMRS)
1,750 shares (cost $16,744)		23,120
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
7,982 shares (cost $91,803)		81,820
Socially Responsive Portfolio - I Class Shares (AMSRS)
25,138 shares (cost $357,103)		304,172
Balanced Fund/VA - Non-Service Shares (OVMS)
628,955 shares (cost $9,439,509)		6,478,237
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
176,851 shares (cost $6,121,536)		6,532,890
Core Bond Fund/VA - Non-Service Shares (OVB)
723,118 shares (cost $7,708,864)		5,112,446
Global Securities Fund/VA - Class 3 (OVGS3)
265,997 shares (cost $8,216,194)		7,094,146
Global Securities Fund/VA - Non-Service Shares (OVGS)
649,330 shares (cost $16,517,838)		17,207,241
High Income Fund/VA - Class 3 (OVHI3)
79,865 shares (cost $138,608)		158,930
High Income Fund/VA - Non-Service Shares (OVHI)
36,372 shares (cost $275,647)		72,017
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
63,108 shares (cost $1,353,413)		1,147,301
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
63,112 shares (cost $931,262)		908,814
MidCap Fund/VA - Non-Service Shares (OVAG)
21,174 shares (cost $958,078)		773,279
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)
16,252 shares (cost $181,293)		172,923
Low Duration Portfolio - Administrative Class (PMVLDA)
153,792 shares (cost $1,602,097)		1,554,833
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
3,925 shares (cost $77,217)		56,523
Putnam VT International Equity Fund - IB Shares (PVTIGB)
18,369 shares (cost $201,556)		203,528

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

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

Putnam VT Voyager Fund - IB Shares (PVTVB)
19,793 shares (cost $483,030)	$	641,301
Blue Chip Growth Portfolio - II (TRBCG2)
110,868 shares (cost $952,805)		1,053,243
Equity Income Portfolio - II (TREI2)
72,744 shares (cost $1,485,007)		1,281,016
Limited-Term Bond Portfolio - II (TRLT2)
7,076 shares (cost $35,490)		35,522
Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)
239,878 shares (cost $2,742,629)		2,818,561
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
752,931 shares (cost $9,490,318)		8,447,887
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)
422,034 shares (cost $13,447,511)		12,348,703
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
136,153 shares (cost $1,189,615)		1,256,055
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
25,517 shares (cost $439,595)		400,616
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
132,746 shares (cost $2,016,703)		1,992,519
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
22,281 shares (cost $130,481)		141,482
Total Investments		647,758,161
Accounts Receivable - International Equity Flex II Portfolio (obsolete) (WVCP)		359
Other Accounts Receivable		3,147
Total Assets		647,761,667
Accounts Payable - Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)		19,972
	$	647,741,695
Contract Owners’ Equity:
Accumulation units		647,741,695
Total Contract Owners’ Equity (note 8)	$	647,741,695

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS

Year Ended December 31, 2009

Investment Activity:	Total			MLVGA2		CSIEF3		WSCP		JABS		JACAS		JAGTS		JARLCS
Reinvested dividends	$	10,186,120		11,921		-		63,816		21,351		550		-		537
Asset charges (note 3)		(3,158,411	)	(1,358	)	(26	)	(29,906	)	(3,521	)	(20,772	)	(4,939	)	(256	)
Net investment income (loss)		7,027,709		10,563		(26	)	33,910		17,830		(20,222	)	(4,939	)	281
Realized gain (loss) on investments		(80,284,445	)	11,412		10,207		(2,991	)	(69,129	)	(284,300	)	(9,765	)	(41,070	)
Change in unrealized gain (loss) on investments		219,114,353		25,369		(9,854	)	1,182,566		195,066		1,772,505		486,148		51,000
Net gain (loss) on investments		138,829,908		36,781		353		1,179,575		125,937		1,488,205		476,383		9,930
Reinvested capital gains		5,942,878		-		-		-		19,453		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	151,800,495		47,344		327		1,213,485		163,220		1,467,983		471,444		10,211
Investment Activity:	JAIGS2			JAIGS		MIGIC		MVFIC		MSVFI		MSEM		MSVRE		NVAGF3
Reinvested dividends	$	18,232		10,370		1,182		19,476		17,874		152,182		243,607		1,122
Asset charges (note 3)		(22,704	)	(13,161	)	(947	)	(6,938	)	(2,072	)	(9,398	)	(24,895	)	(63	)
Net investment income (loss)		(4,472	)	(2,791	)	235		12,538		15,802		142,784		218,712		1,059
Realized gain (loss) on investments		(572,981	)	(394,797	)	(2,313	)	(268,426	)	(89,415	)	(218,375	)	(10,299,056	)	19
Change in unrealized gain (loss) on investments		2,767,010		1,700,932		60,513		545,254		99,546		556,675		10,773,973		292
Net gain (loss) on investments		2,194,029		1,306,135		58,200		276,828		10,131		338,300		474,917		311
Reinvested capital gains		122,370		70,851		-		-		-		-		-		152
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,311,927		1,374,195		58,435		289,366		25,933		481,084		693,629		1,522

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	NVAGF6			NVAMV1		GVAAA2		GVABD2		GVAGG2		GVAGR2		GVAGI2		HIBF
Reinvested dividends	$	388		145		802		4,612		-		-		-		13,060
Asset charges (note 3)		-		(15	)	(4,736	)	(6,563	)	(6,344	)	(7,196	)	(3,301	)	(406	)
Net investment income (loss)		388		130		(3,934	)	(1,951	)	(6,344	)	(7,196	)	(3,301	)	12,654
Realized gain (loss) on investments		53		90		(118,629	)	(28,143	)	(267,361	)	(168,204	)	(39,663	)	(2,841	)
Change in unrealized gain (loss) on investments		506		2,154		302,509		173,429		583,424		451,517		206,182		40,108
Net gain (loss) on investments		559		2,244		183,880		145,286		316,063		283,313		166,519		37,267
Reinvested capital gains		48		708		25,668		441		94,004		166,988		16,986		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	995		3,082		205,614		143,776		403,723		443,105		180,204		49,921
Investment Activity:	HIBF3			GEM		GEM3		GVGU1		GIG		GIG3		GEF3		NVNMO1
Reinvested dividends	$	236,547		17,559		37,365		33,406		10,880		260		261		9,283
Asset charges (note 3)		(10,058	)	(9,461	)	(13,850	)	(4,840	)	(5,359	)	(7,653	)	(82	)	(27,677	)
Net investment income (loss)		226,489		8,098		23,515		28,566		5,521		(7,393	)	179		(18,394	)
Realized gain (loss) on investments		27,275		(452,840	)	(2,000,342	)	(395,118	)	(319,916	)	15,499		13		176,443
Change in unrealized gain (loss) on investments		525,707		1,093,745		3,351,776		399,661		562,874		427,679		2,841		1,341,840
Net gain (loss) on investments		552,982		640,905		1,351,434		4,543		242,958		443,178		2,854		1,518,283
Reinvested capital gains		-		-		-		-		-		-		-		29,376
Net increase (decrease) in contract owners’ equity resulting from operations	$	779,471		649,003		1,374,949		33,109		248,479		435,785		3,033		1,529,265

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	NVNSR1			NVCRA1		NVCRB1		NVCCA1		NVCCN1		NVCMD1		NVCMA1		NVCMC1
Reinvested dividends	$	46		666		3,663		3,777		3,166		12,615		2,091		7,416
Asset charges (note 3)		(48	)	(472	)	(889	)	(1,121	)	(477	)	(3,128	)	(914	)	(870	)
Net investment income (loss)		(2	)	194		2,774		2,656		2,689		9,487		1,177		6,546
Realized gain (loss) on investments		612		(15,988	)	12		(15,240	)	(1,945	)	(25,086	)	(9,013	)	(82	)
Change in unrealized gain (loss) on investments		1,527		25,609		25,049		62,440		10,388		144,263		40,832		37,676
Net gain (loss) on investments		2,139		9,621		25,061		47,200		8,443		119,177		31,819		37,594
Reinvested capital gains		-		19		-		-		285		41		69		273
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,137		9,834		27,835		49,856		11,417		128,705		33,065		44,413
Investment Activity:	NVCBD1			NVLCP1		TRF		GVGF1		GBF		CAF		GVGH1		GVGHS
Reinvested dividends	$	4,472		381		537,992		5,316		464,519		57,154		713		1,486
Asset charges (note 3)		(413	)	(35	)	(245,815	)	(2,734	)	(82,376	)	(60,875	)	(1,709	)	(2,288	)
Net investment income (loss)		4,059		346		292,177		2,582		382,143		(3,721	)	(996	)	(802	)
Realized gain (loss) on investments		1,244		177		(7,995,401	)	(211,816	)	95,531		(658,597	)	(99,895	)	(114,154	)
Change in unrealized gain (loss) on investments		(4,369	)	(354	)	16,953,546		359,464		(384,218	)	3,636,017		128,129		200,579
Net gain (loss) on investments		(3,125	)	(177	)	8,958,145		147,648		(288,687	)	2,977,420		28,234		86,425
Reinvested capital gains		1,086		340		-		-		177,374		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,020		509		9,250,322		150,230		270,830		2,973,699		27,238		85,623

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	GVIX6			GVIDA		NVDBL2		NVDCA2		GVIDC		GVIDM		GVDMA		GVDMC
Reinvested dividends	$	6,960		25,808		252		309		18,852		70,809		65,987		44,186
Asset charges (note 3)		(1,248	)	(13,773	)	(21	)	(60	)	(5,498	)	(21,310	)	(27,590	)	(17,593	)
Net investment income (loss)		5,712		12,035		231		249		13,354		49,499		38,397		26,593
Realized gain (loss) on investments		(75,669	)	(1,135,522	)	(1	)	252		(35,621	)	(273,498	)	(324,366	)	(82,458	)
Change in unrealized gain (loss) on investments		127,924		1,576,024		(518	)	2,750		107,690		908,238		1,169,710		349,270
Net gain (loss) on investments		52,255		440,502		(519	)	3,002		72,069		634,740		845,344		266,812
Reinvested capital gains		-		116,847		299		107		6,222		105,442		213,950		39,489
Net increase (decrease) in contract owners’ equity resulting from operations	$	57,967		569,384		11		3,358		91,645		789,681		1,097,691		332,894
Investment Activity:	GVUS1			MCIF		SAM		NVMIG3		GVDIVI		GVDIV3		NVMLG1		NVMLV1
Reinvested dividends	$	1,978		41,227		15,161		17,703		5,890		18,783		1,125		2,899
Asset charges (note 3)		(1,178	)	(21,235	)	(155,771	)	(11,019	)	(1,453	)	(4,242	)	(659	)	(1,088	)
Net investment income (loss)		800		19,992		(140,610	)	6,684		4,437		14,541		466		1,811
Realized gain (loss) on investments		(210,379	)	(409,379	)	-		57,845		(38,442	)	(354,770	)	7,291		6,796
Change in unrealized gain (loss) on investments		290,240		1,647,145		-		640,587		107,015		538,289		35,793		49,270
Net gain (loss) on investments		79,861		1,237,766		-		698,432		68,573		183,519		43,084		56,066
Reinvested capital gains		-		132,345		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	80,661		1,390,103		(140,610	)	705,116		73,010		198,060		43,550		57,877

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	NVMMG1			NVMMV2		SCGF		SCVF		SCF		MSBF		NVSTB2		GGTC
Reinvested dividends	$	-		84,655		-		26,240		41,112		133,065		23,473		-
Asset charges (note 3)		(56,454	)	(40,487	)	(4,187	)	(21,299	)	(76,681	)	(7,013	)	(4,402	)	(2,074	)
Net investment income (loss)		(56,454	)	44,168		(4,187	)	4,941		(35,569	)	126,052		19,071		(2,074	)
Realized gain (loss) on investments		150,206		75,165		(358,073	)	(895,528	)	(1,397,208	)	(183,361	)	8,184		(51,089	)
Change in unrealized gain (loss) on investments		3,045,427		1,974,047		547,591		1,924,031		5,954,673		324,190		(9,264	)	177,618
Net gain (loss) on investments		3,195,633		2,049,212		189,518		1,028,503		4,557,465		140,829		(1,080	)	126,529
Reinvested capital gains		-		-		-		-		-		-		6,394		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,139,179		2,093,380		185,331		1,033,444		4,521,896		266,881		24,385		124,455
Investment Activity:	GGTC3			GVUG1		NVOLG1		NVTIV3		EIF		NVRE1		AMTB		AVBVI
Reinvested dividends	$	-		-		6		39		5,709		62,828		193,784		324
Asset charges (note 3)		(1,596	)	(2,430	)	(26	)	(12	)	(2,509	)	(15,119	)	(13,130	)	(704	)
Net investment income (loss)		(1,596	)	(2,430	)	(20	)	27		3,200		47,709		180,654		(380	)
Realized gain (loss) on investments		(129,555	)	(209,319	)	941		16		(58,039	)	35,768		(167,698	)	(243,656	)
Change in unrealized gain (loss) on investments		274,483		316,232		412		408		186,203		1,141,555		297,416		333,443
Net gain (loss) on investments		144,928		106,913		1,353		424		128,164		1,177,323		129,718		89,787
Reinvested capital gains		-		-		104		21		-		25,038		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	143,332		104,483		1,437		472		131,364		1,250,070		310,372		89,407

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	AVCA			AVCDI		ALVGIA		ALVSVA		ACVB		ACVCA		ACVIG		ACVIP2
Reinvested dividends	$	460		-		19,164		5,980		207,550		85,740		83,390		27,399
Asset charges (note 3)		(306	)	(903	)	(1,866	)	(2,687	)	(21,790	)	(39,925	)	(7,775	)	(6,679	)
Net investment income (loss)		154		(903	)	17,298		3,293		185,760		45,815		75,615		20,720
Realized gain (loss) on investments		(9,497	)	(70,651	)	(318,433	)	(180,121	)	(133,660	)	472,010		(153,204	)	(52,343	)
Change in unrealized gain (loss) on investments		24,573		147,507		361,513		347,973		439,091		1,590,741		347,057		159,445
Net gain (loss) on investments		15,076		76,856		43,080		167,852		305,431		2,062,751		193,853		107,102
Reinvested capital gains		-		-		-		23,335		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	15,230		75,953		60,378		194,480		491,191		2,108,566		269,468		127,822
Investment Activity:	ACVI			ACVI3		ACVMV1		ACVU1		ACVV		ACVVS1		DVSCS		DSIF
Reinvested dividends	$	82,893		43,842		31,330		923		396,758		-		26,552		798,059
Asset charges (note 3)		(13,936	)	(6,015	)	(4,195	)	(992	)	(34,077	)	(2,307	)	(5,090	)	(190,724	)
Net investment income (loss)		68,957		37,827		27,135		(69	)	362,681		(2,307	)	21,462		607,335
Realized gain (loss) on investments		(43,968	)	(986,776	)	(127,323	)	(155,354	)	(1,068,970	)	(751,238	)	(286,202	)	(2,289,404	)
Change in unrealized gain (loss) on investments		707,554		1,343,745		316,901		209,208		1,911,775		813,819		332,193		8,161,497
Net gain (loss) on investments		663,586		356,969		189,578		53,854		842,805		62,581		45,991		5,872,093
Reinvested capital gains		-		-		-		-		-		-		179,994		2,467,459
Net increase (decrease) in contract owners’ equity resulting from operations	$	732,543		394,796		216,713		53,785		1,205,486		60,274		247,447		8,946,887

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	DSRG			DCAP		DSC		DGI		FVCA2P		FALF		FVMOS		FQB
Reinvested dividends	$	50,801		95,980		2,260		17,199		1,740		956		4,179		104,018
Asset charges (note 3)		(31,313	)	(19,227	)	(652	)	(6,062	)	(526	)	(230	)	(1,508	)	(10,347	)
Net investment income (loss)		19,488		76,753		1,608		11,137		1,214		726		2,671		93,671
Realized gain (loss) on investments		(621,107	)	(94,927	)	(90,896	)	(42,235	)	(5,242	)	(79,078	)	1,739		(53,184	)
Change in unrealized gain (loss) on investments		2,134,876		470,553		116,860		363,806		12,506		74,821		(10,571	)	263,048
Net gain (loss) on investments		1,513,769		375,626		25,964		321,571		7,264		(4,257	)	(8,832	)	209,864
Reinvested capital gains		-		280,064		-		-		-		-		4,242		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,533,257		732,443		27,572		332,708		8,478		(3,531	)	(1,919	)	303,535
Investment Activity:	FEIP			FHIP		FAMP		FCP		FNRS2		FF10S		FF20S		FF30S
Reinvested dividends	$	830,679		875,618		302,302		541,036		8,126		12,873		21,870		11,327
Asset charges (note 3)		(208,152	)	(63,928	)	(79,569	)	(208,479	)	(17,603	)	(2,072	)	(3,511	)	(3,177	)
Net investment income (loss)		622,527		811,690		222,733		332,557		(9,477	)	10,801		18,359		8,150
Realized gain (loss) on investments		(4,141,410	)	(1,001,506	)	(1,002,406	)	(3,403,697	)	(681,476	)	(123,800	)	(128,187	)	(30,149	)
Change in unrealized gain (loss) on investments		13,456,571		4,248,208		4,158,742		15,345,247		2,000,398		180,691		252,728		152,638
Net gain (loss) on investments		9,315,161		3,246,702		3,156,336		11,941,550		1,318,922		56,891		124,541		122,489
Reinvested capital gains		-		-		21,106		10,716		-		4,737		9,217		6,723
Net increase (decrease) in contract owners’ equity resulting from operations	$	9,937,688		4,058,392		3,400,175		12,284,823		1,309,445		72,429		152,117		137,362

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	FGOP			FGP		FHIPR		FIGBS		FMCS		FOP		FOSR		FVSS
Reinvested dividends	$	9,618		194,935		226,673		329,274		39,136		157,651		87,482		5,208
Asset charges (note 3)		(10,015	)	(257,460	)	(13,518	)	(18,002	)	(33,472	)	(42,355	)	(19,982	)	(4,174	)
Net investment income (loss)		(397	)	(62,525	)	213,155		311,272		5,664		115,296		67,500		1,034
Realized gain (loss) on investments		(146,762	)	(5,256,306	)	(322,408	)	(28,931	)	(917,843	)	226,630		(481,927	)	(322,411	)
Change in unrealized gain (loss) on investments		925,998		16,323,642		979,571		219,877		3,081,963		1,378,448		1,382,081		746,805
Net gain (loss) on investments		779,236		11,067,336		657,163		190,946		2,164,120		1,605,078		900,154		424,394
Reinvested capital gains		-		38,375		-		15,861		34,403		24,404		13,194		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	778,839		11,043,186		870,318		518,079		2,204,187		1,744,778		980,848		425,428
Investment Activity:	FTVIS2			FTVRDI		FTVSVI		FTVDM3		TIF		TIF3		FTVGI3		FTVFA2
Reinvested dividends	$	60,642		46,388		43,718		44,394		13,089		49,197		358,746		677
Asset charges (note 3)		(3,734	)	(12,608	)	(11,646	)	(6,255	)	(1,589	)	(5,420	)	(12,266	)	(80	)
Net investment income (loss)		56,908		33,780		32,072		38,139		11,500		43,777		346,480		597
Realized gain (loss) on investments		(140,222	)	(270,608	)	(284,296	)	(435,084	)	(51,231	)	(514,026	)	(14,861	)	1,672
Change in unrealized gain (loss) on investments		305,858		630,706		757,121		1,050,776		118,728		791,793		85,365		2,345
Net gain (loss) on investments		165,636		360,098		472,825		615,692		67,497		277,767		70,504		4,017
Reinvested capital gains		-		-		101,518		4,161		14,644		59,468		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	222,544		393,878		606,415		657,992		93,641		381,012		416,984		4,614

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	AMBP			AMTG		AMGP		AMINS		AMMCGS		AMTP		AMRS		AMFAS
Reinvested dividends	$	1,440		-		1,096		506		-		67,976		180		-
Asset charges (note 3)		(687	)	(37,241	)	(3,152	)	(574	)	(942	)	(38,965	)	(299	)	(418	)
Net investment income (loss)		753		(37,241	)	(2,056	)	(68	)	(942	)	29,011		(119	)	(418	)
Realized gain (loss) on investments		(95,075	)	1,742,544		(83,275	)	(144,596	)	(169,871	)	(8,969,691	)	(93,995	)	(22,473	)
Change in unrealized gain (loss) on investments		117,163		(249,783	)	243,444		180,074		209,833		13,210,302		120,645		43,512
Net gain (loss) on investments		22,088		1,492,761		160,169		35,478		39,962		4,240,611		26,650		21,039
Reinvested capital gains		-		-		-		-		-		301,955		261		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	22,841		1,455,520		158,113		35,410		39,020		4,571,577		26,792		20,621
Investment Activity:	AMSRS			OVMS		OVGR		OVB		OVGS3		OVGS		OVHI3		OVHI
Reinvested dividends	$	5,801		-		18,334		-		123,640		367,187		-		-
Asset charges (note 3)		(1,379	)	(36,811	)	(30,695	)	(24,687	)	(31,095	)	(82,184	)	(524	)	(252	)
Net investment income (loss)		4,422		(36,811	)	(12,361	)	(24,687	)	92,545		285,003		(524	)	(252	)
Realized gain (loss) on investments		(31,315	)	(722,147	)	59,339		(999,223	)	(302,676	)	109,741		(111,237	)	(48,614	)
Change in unrealized gain (loss) on investments		97,758		1,981,232		2,018,895		1,397,183		2,101,638		4,426,591		135,141		63,913
Net gain (loss) on investments		66,443		1,259,085		2,078,234		397,960		1,798,962		4,536,332		23,904		15,299
Reinvested capital gains		-		-		-		-		118,131		350,108		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	70,865		1,222,274		2,065,873		373,273		2,009,638		5,171,443		23,380		15,047

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	OVGI			OVSC		OVAG		PMVFBA		PMVLDA		PVGIB		PVTIGB		PVTVB
Reinvested dividends	$	21,687		4,758		-		790		9,879		1,305		-		737
Asset charges (note 3)		(4,371	)	(3,595	)	(3,892	)	(270	)	(1,831	)	(297	)	(1,310	)	(1,695	)
Net investment income (loss)		17,316		1,163		(3,892	)	520		8,048		1,008		(1,310	)	(958	)
Realized gain (loss) on investments		(172,947	)	(113,308	)	(64,898	)	2,271		7,261		(7,476	)	(190,014	)	(1,222	)
Change in unrealized gain (loss) on investments		381,743		350,389		256,856		(8,370	)	(47,264	)	19,983		248,181		172,708
Net gain (loss) on investments		208,796		237,081		191,958		(6,099	)	(40,003	)	12,507		58,167		171,486
Reinvested capital gains		-		-		-		2,855		61,353		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	226,112		238,244		188,066		(2,724	)	29,398		13,515		56,857		170,528
Investment Activity:	TRBCG2			TREI2		TRLT2		VWBF		VWEM		VWHA		WRASP		SVDF
Reinvested dividends	$	-		17,878		39,287		110,201		9,012		23,140		429		-
Asset charges (note 3)		(4,033	)	(5,241	)	(5,795	)	(18,358	)	(29,833	)	(54,094	)	(1,907	)	(17,392	)
Net investment income (loss)		(4,033	)	12,637		33,492		91,843		(20,821	)	(30,954	)	(1,478	)	(17,392	)
Realized gain (loss) on investments		(102,921	)	(176,347	)	35,744		(55,525	)	(2,812,387	)	(823,411	)	2,617		451,192
Change in unrealized gain (loss) on investments		411,120		404,989		38,155		108,778		6,703,119		4,897,070		66,440		584,502
Net gain (loss) on investments		308,199		228,642		73,899		53,253		3,890,732		4,073,659		69,057		1,035,694
Reinvested capital gains		-		-		-		-		364,335		45,887		11,582		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	304,166		241,279		107,391		145,096		4,234,246		4,088,592		79,161		1,018,302

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	SVOF			WFVSCG		WIEP		WVCP		SGRF
Reinvested dividends	$	-		-		52,092		9,508		-
Asset charges (note 3)		(66,698	)	(303	)	(12,362	)	(1,783	)	(725	)
Net investment income (loss)		(66,698	)	(303	)	39,730		7,725		(725	)
Realized gain (loss) on investments		(8,320,287	)	11,345		174,949		(200,469	)	(289,267	)
Change in unrealized gain (loss) on investments		13,359,229		11,001		302,922		291,127		299,926
Net gain (loss) on investments		5,038,942		22,346		477,871		90,658		10,659
Reinvested capital gains		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,972,244		22,043		517,601		98,383		9,934

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2009 and 2008

	Total					MLVGA2			CSIEF3			WSCP
	2009			2008		2009		2008	2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	7,027,709		10,006,884		10,563		-	(26	)	-	33,910		(37,008	)
Realized gain (loss) on investments		(80,284,445	)	(15,282,527	)	11,412		-	10,207		-	(2,991	)	380,793
Change in unrealized gain (loss) on investments		219,114,353		(426,828,784	)	25,369		-	(9,854	)	-	1,182,566		(3,562,897	)
Reinvested capital gains		5,942,878		59,451,887		-		-	-		-	-		-
Net increase (decrease) in contract owners’ equity resulting from operations		151,800,495		(372,652,540	)	47,344		-	327		-	1,213,485		(3,219,112	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		40,674,819		45,880,649		50,762		-	13,724		-	494,184		561,472
Transfers between funds		-		-		1,050,487		-	982,529		-	(292,715	)	(402,015	)
Surrenders (note 6)		(68,744,314	)	(69,589,065	)	(54,891	)	-	-		-	(645,054	)	(645,944	)
Death benefits (note 4)		(8,263,634	)	(5,248,165	)	-		-	-		-	(6,683	)	(24,127	)
Net policy repayments (loans) (note 5)		8,679,157		692,692		(17,794	)	-	-		-	210,014		10,729
Deductions for surrender charges (note 2d)		(100,842	)	(77,526	)	-		-	-		-	(9	)	(2,686	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(42,685,872	)	(44,068,901	)	(33,254	)	-	(2,336	)	-	(456,024	)	(499,662	)
Asset charges (note 3):
MSP contracts		(262,061	)	(355,063	)	(248	)	-	(17	)	-	(2,022	)	(2,774	)
SL contracts or LSFP contracts		(158,413	)	(296,649	)	-		-	(64	)	-	(1,720	)	(3,704	)
Adjustments to maintain reserves		(24,358	)	(61,123	)	(127	)	-	(10,420	)	-	48		(190	)
Net equity transactions		(70,885,518	)	(73,123,151	)	994,935		-	983,416		-	(699,981	)	(1,008,901	)
Net change in contract owners’ equity		80,914,977		(445,775,691	)	1,042,279		-	983,743		-	513,504		(4,228,013	)
Contract owners’ equity beginning of period		566,826,718		1,012,602,409		-		-	-		-	5,734,274		9,962,287
Contract owners’ equity end of period	$	647,741,695		566,826,718		1,042,279		-	983,743		-	6,247,778		5,734,274
CHANGES IN UNITS:
Beginning units		35,017,446		37,768,248		-		-	-		-	522,829		590,616
Units purchased		16,004,127		6,209,846		95,374		-	97,578		-	48,370		62,480
Units redeemed		(12,232,368	)	(8,960,648	)	(9,552	)	-	(237	)	-	(119,577	)	(130,267	)
Ending units		38,789,205		35,017,446		85,822		-	97,341		-	451,622		522,829

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	JABS					JACAS				JAGTS				JARLCS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	17,830		12,118		(20,222	)	(23,589	)	(4,939	)	(4,256	)	281		239
Realized gain (loss) on investments		(69,129	)	(77,884	)	(284,300	)	402,342		(9,765	)	69,988		(41,070	)	(8,502	)
Change in unrealized gain (loss) on investments		195,066		(113,967	)	1,772,505		(2,952,629	)	486,148		(654,669	)	51,000		(54,132	)
Reinvested capital gains		19,453		45,702		-		-		-		-		-		7,105
Net increase (decrease) in contract owners’ equity resulting from operations		163,220		(134,031	)	1,467,983		(2,573,876	)	471,444		(588,937	)	10,211		(55,290	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		112,259		9,553		234,996		298,610		129,144		88,255		5,581		13,530
Transfers between funds		471,070		329,429		1,333,111		1,517,687		524,022		(110,098	)	(85,089	)	1,291
Surrenders (note 6)		(14,013	)	(1,950	)	(289,289	)	(289,197	)	(62,680	)	(46,680	)	(34,025	)	(1,224	)
Death benefits (note 4)		-		-		(98	)	(1,287	)	(19,418	)	(284	)	-		-
Net policy repayments (loans) (note 5)		(52,769	)	(2,033	)	(17,186	)	(42,355	)	(31,607	)	(5,520	)	24,743		103
Deductions for surrender charges (note 2d)		-		-		(12	)	(395	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(31,398	)	(14,543	)	(225,831	)	(200,420	)	(60,983	)	(49,512	)	(6,221	)	(11,490	)
Asset charges (note 3):
MSP contracts		(138	)	(81	)	(1,482	)	(1,140	)	(352	)	(487	)	-		(4	)
SL contracts or LSFP contracts		(125	)	(226	)	(1,408	)	(2,972	)	(705	)	(1,239	)	(40	)	(42	)
Adjustments to maintain reserves		57		(155	)	61		(1,846	)	24		(77	)	41		(141	)
Net equity transactions		484,943		319,994		1,032,862		1,276,685		477,445		(125,642	)	(95,010	)	2,023
Net change in contract owners’ equity		648,163		185,963		2,500,845		(1,297,191	)	948,889		(714,579	)	(84,799	)	(53,267	)
Contract owners’ equity beginning of period		447,748		261,785		2,981,678		4,278,869		672,283		1,386,862		97,034		150,301
Contract owners’ equity end of period	$	1,095,911		447,748		5,482,523		2,981,678		1,621,172		672,283		12,235		97,034
CHANGES IN UNITS:
Beginning units		35,039		17,140		449,410		358,074		230,028		265,442		8,304		8,172
Units purchased		40,041		19,409		191,484		167,777		182,699		28,274		646		1,936
Units redeemed		(6,514	)	(1,510	)	(72,219	)	(76,441	)	(57,849	)	(63,688	)	(8,119	)	(1,804	)
Ending units		68,566		35,039		568,675		449,410		354,878		230,028		831		8,304

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	JAIGS2					JAIGS				MIGIC				MVFIC
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(4,472	)	122,804		(2,791	)	84,540		235		36		12,538		8,703
Realized gain (loss) on investments		(572,981	)	(109,102	)	(394,797	)	63,421		(2,313	)	(349	)	(268,426	)	(120,418	)
Change in unrealized gain (loss) on investments		2,767,010		(4,262,223	)	1,700,932		(3,103,948	)	60,513		(101,581	)	545,254		(690,613	)
Reinvested capital gains		122,370		806,091		70,851		555,219		-		9,401		-		56,873
Net increase (decrease) in contract owners’ equity resulting from operations		2,311,927		(3,442,430	)	1,374,195		(2,400,768	)	58,435		(92,493	)	289,366		(745,455	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		365,986		431,309		36,535		24,832		11,100		14,179		42,619		139,702
Transfers between funds		919,305		396,020		1,033,564		(307,655	)	49,305		6,440		228,733		1,030,188
Surrenders (note 6)		(443,314	)	(342,714	)	(369,129	)	(79,929	)	(6,630	)	(29,080	)	(292,215	)	(166,254	)
Death benefits (note 4)		(6,282	)	(12,596	)	-		(71	)	-		-		(14,616	)	(2,485	)
Net policy repayments (loans) (note 5)		2,809		(136,042	)	(85,012	)	(32,493	)	1,549		21,584		(19,642	)	(5,353	)
Deductions for surrender charges (note 2d)		(13	)	(3,119	)	(2,394	)	(86	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(257,922	)	(263,886	)	(138,117	)	(143,803	)	(12,222	)	(12,556	)	(96,941	)	(70,869	)
Asset charges (note 3):
MSP contracts		(1,257	)	(1,465	)	(604	)	(747	)	-		-		(364	)	(283	)
SL contracts or LSFP contracts		-		-		(2,361	)	(5,288	)	(48	)	(68	)	(343	)	(663	)
Adjustments to maintain reserves		40		(137	)	46		(220	)	20		(115	)	61		(195	)
Net equity transactions		579,352		67,370		472,528		(545,460	)	43,074		384		(152,708	)	923,788
Net change in contract owners’ equity		2,891,279		(3,375,060	)	1,846,723		(2,946,228	)	101,509		(92,109	)	136,658		178,333
Contract owners’ equity beginning of period		2,923,283		6,298,343		1,932,673		4,878,901		147,782		239,891		1,514,198		1,335,865
Contract owners’ equity end of period	$	5,814,562		2,923,283		3,779,396		1,932,673		249,291		147,782		1,650,856		1,514,198
CHANGES IN UNITS:
Beginning units		416,575		426,652		232,586		279,678		15,241		15,528		116,474		68,932
Units purchased		120,143		75,179		76,484		6,971		6,873		1,989		7,101		57,510
Units redeemed		(71,572	)	(85,256	)	(56,162	)	(54,063	)	(3,645	)	(2,276	)	(19,582	)	(9,968	)
Ending units		465,146		416,575		252,908		232,586		18,469		15,241		103,993		116,474

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	MSVFI					MSEM				MSVRE				NVAGF3
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	15,802		34,882		142,784		131,296		218,712		403,514		1,059		-
Realized gain (loss) on investments		(89,415	)	(24,673	)	(218,375	)	(96,663	)	(10,299,056	)	(445,707	)	19		-
Change in unrealized gain (loss) on investments		99,546		(115,402	)	556,675		(431,832	)	10,773,973		(10,735,669	)	292		-
Reinvested capital gains		-		-		-		81,645		-		5,230,541		152		-
Net increase (decrease) in contract owners’ equity resulting from operations		25,933		(105,193	)	481,084		(315,554	)	693,629		(5,547,321	)	1,522		-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		10,700		18,351		77,307		77,658		270,810		548,744		-		-
Transfers between funds		(165,853	)	334,225		791		(335,762	)	(6,931,226	)	(532,408	)	32,879		-
Surrenders (note 6)		(391,610	)	(9,769	)	(158,357	)	(71,152	)	(864,063	)	(1,196,916	)	-		-
Death benefits (note 4)		-		-		(16,874	)	(6,683	)	(27,364	)	(179,983	)	-		-
Net policy repayments (loans) (note 5)		(728	)	138		(8,836	)	(24,285	)	50,347		(52,719	)	-		-
Deductions for surrender charges (note 2d)		-		-		-		-		(2,161	)	(1	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(24,456	)	(36,611	)	(100,374	)	(90,648	)	(330,944	)	(609,613	)	(275	)	-
Asset charges (note 3):
MSP contracts		(75	)	(96	)	(989	)	(1,082	)	(1,709	)	(5,534	)	-		-
SL contracts or LSFP contracts		(41	)	(151	)	(708	)	(940	)	(2,311	)	(5,401	)	-		-
Adjustments to maintain reserves		54		(127	)	120		(288	)	178		(695	)	(6	)	-
Net equity transactions		(572,009	)	305,960		(207,920	)	(453,182	)	(7,838,443	)	(2,034,526	)	32,598		-
Net change in contract owners’ equity		(546,076	)	200,767		273,164		(768,736	)	(7,144,814	)	(7,581,847	)	34,120		-
Contract owners’ equity beginning of period		763,210		562,443		1,586,597		2,355,333		8,490,310		16,072,157		-		-
Contract owners’ equity end of period	$	217,134		763,210		1,859,761		1,586,597		1,345,496		8,490,310		34,120		-
CHANGES IN UNITS:
Beginning units		71,700		47,388		86,443		109,086		290,222		335,358		-		-
Units purchased		1,565		35,400		9,827		7,258		13,064		39,572		3,023		-
Units redeemed		(54,523	)	(11,088	)	(17,999	)	(29,901	)	(251,555	)	(84,708	)	(25	)	-
Ending units		18,742		71,700		78,271		86,443		51,731		290,222		2,998		-

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVAGF6				NVAMV1			GVAAA2				GVABD2
	2009			2008	2009		2008	2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	388		-	130		-	(3,934	)	23,983		(1,951	)	59,880
Realized gain (loss) on investments		53		-	90		-	(118,629	)	(60,518	)	(28,143	)	(63,167	)
Change in unrealized gain (loss) on investments		506		-	2,154		-	302,509		(373,002	)	173,429		(145,166	)
Reinvested capital gains		48		-	708		-	25,668		14,350		441		1,035
Net increase (decrease) in contract owners’ equity resulting from operations		995		-	3,082		-	205,614		(395,187	)	143,776		(147,418	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		5,499		-	5,543		-	72,027		57,923		35,871		97,393
Transfers between funds		4,934		-	10,943		-	6,804		422,134		259,409		671,905
Surrenders (note 6)		-		-	-		-	(84,724	)	(44,977	)	(67,025	)	(283,265	)
Death benefits (note 4)		-		-	-		-	-		(28,159	)	-		(29,020	)
Net policy repayments (loans) (note 5)		-		-	-		-	(2,610	)	(21,057	)	8,934		(17,817	)
Deductions for surrender charges (note 2d)		-		-	-		-	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(692	)	-	(929	)	-	(50,975	)	(40,829	)	(46,602	)	(35,890	)
Asset charges (note 3):
MSP contracts		-		-	-		-	(1,044	)	(1,707	)	(594	)	(736	)
SL contracts or LSFP contracts		(15	)	-	(16	)	-	-		-		-		-
Adjustments to maintain reserves		2		-	11		-	48		(109	)	38		(55	)
Net equity transactions		9,728		-	15,552		-	(60,474	)	343,219		190,031		402,515
Net change in contract owners’ equity		10,723		-	18,634		-	145,140		(51,968	)	333,807		255,097
Contract owners’ equity beginning of period		-		-	-		-	936,673		988,641		1,159,763		904,666
Contract owners’ equity end of period	$	10,723		-	18,634		-	1,081,813		936,673		1,493,570		1,159,763
CHANGES IN UNITS:
Beginning units		-		-	-		-	120,488		88,906		120,147		84,040
Units purchased		1,002		-	1,566		-	18,449		49,788		26,066		60,365
Units redeemed		(63	)	-	(81	)	-	(25,439	)	(18,206	)	(7,572	)	(24,258	)
Ending units		939		-	1,485		-	113,498		120,488		138,641		120,147

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVAGG2					GVAGR2				GVAGI2				HIBF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(6,344	)	32,366		(7,196	)	22,997		(3,301	)	12,810		12,654		14,628
Realized gain (loss) on investments		(267,361	)	(56,626	)	(168,204	)	2,867		(39,663	)	(46,688	)	(2,841	)	(11,408	)
Change in unrealized gain (loss) on investments		583,424		(716,844	)	451,517		(920,627	)	206,182		(282,018	)	40,108		(54,160	)
Reinvested capital gains		94,004		49,565		166,988		88,613		16,986		239		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		403,723		(691,539	)	443,105		(806,150	)	180,204		(315,657	)	49,921		(50,940	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		95,416		133,746		97,995		88,801		17,472		27,425		-		-
Transfers between funds		165,496		306,882		317,015		452,776		96,149		609,116		-		(12,333	)
Surrenders (note 6)		(92,415	)	(81,865	)	(105,135	)	(142,604	)	(19,922	)	(65,858	)	(147	)	(15,075	)
Death benefits (note 4)		-		-		(6,651	)	-		-		-		-		(1,827	)
Net policy repayments (loans) (note 5)		(7,713	)	(24,696	)	(17,533	)	(23,303	)	(12	)	(20,134	)	(218	)	(609	)
Deductions for surrender charges (note 2d)		-		(26	)	-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(62,384	)	(56,028	)	(81,279	)	(70,867	)	(18,703	)	(12,362	)	(6,219	)	(7,297	)
Asset charges (note 3):
MSP contracts		(591	)	(1,073	)	(344	)	(433	)	(170	)	(135	)	(473	)	(491	)
SL contracts or LSFP contracts		-		-		-		-		-		-		(57	)	(136	)
Adjustments to maintain reserves		43		(108	)	24		(69	)	28		(50	)	40		(131	)
Net equity transactions		97,852		276,832		204,092		304,301		74,842		538,002		(7,074	)	(37,899	)
Net change in contract owners’ equity		501,575		(414,707	)	647,197		(501,849	)	255,046		222,345		42,847		(88,839	)
Contract owners’ equity beginning of period		1,074,340		1,489,047		1,100,502		1,602,351		581,172		358,827		112,937		201,776
Contract owners’ equity end of period	$	1,575,915		1,074,340		1,747,699		1,100,502		836,218		581,172		155,784		112,937
CHANGES IN UNITS:
Beginning units		143,134		121,136		172,541		139,420		95,644		36,398		11,167		14,354
Units purchased		27,514		40,580		52,818		58,152		15,492		64,533		5		170
Units redeemed		(21,519	)	(18,582	)	(26,941	)	(25,031	)	(5,308	)	(5,287	)	(598	)	(3,357	)
Ending units		149,129		143,134		198,418		172,541		105,828		95,644		10,574		11,167

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	HIBF3					GEM				GEM3				GVGU1
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	226,489		79,852		8,098		8,890		23,515		37,390		28,566		41,914
Realized gain (loss) on investments		27,275		(92,752	)	(452,840	)	367,426		(2,000,342	)	(36,098	)	(395,118	)	(221,691	)
Change in unrealized gain (loss) on investments		525,707		(254,774	)	1,093,745		(2,413,728	)	3,351,776		(5,531,866	)	399,661		(522,176	)
Reinvested capital gains		-		-		-		409,664		-		1,178,652		-		21,235
Net increase (decrease) in contract owners’ equity resulting from operations		779,471		(267,674	)	649,003		(1,627,748	)	1,374,949		(4,351,922	)	33,109		(680,718	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		165,027		140,722		24,993		1,094		214,983		331,324		23,639		98,291
Transfers between funds		1,874,478		249,188		384,959		(790,405	)	(68,779	)	(326,453	)	(149,999	)	(402,582	)
Surrenders (note 6)		(70,330	)	(26,471	)	(70,276	)	(90,982	)	(500,101	)	(461,432	)	(68,345	)	(102,044	)
Death benefits (note 4)		-		(6,247	)	(29,610	)	(21,723	)	(11,960	)	(1,845	)	(48,569	)	-
Net policy repayments (loans) (note 5)		(28,238	)	(6,332	)	(4,563	)	(16,344	)	(18,933	)	(50,698	)	(6,721	)	(12,823	)
Deductions for surrender charges (note 2d)		-		-		-		-		(1,134	)	(1,379	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(69,001	)	(39,580	)	(59,750	)	(71,516	)	(194,263	)	(246,421	)	(45,939	)	(62,152	)
Asset charges (note 3):
MSP contracts		(729	)	(577	)	-		-		(1,619	)	(2,302	)	(270	)	(584	)
SL contracts or LSFP contracts		(310	)	(219	)	(280	)	(612	)	(1,181	)	(2,697	)	(736	)	(1,658	)
Adjustments to maintain reserves		76		(118	)	44		(1,015	)	57		(1,911	)	87		(324	)
Net equity transactions		1,870,973		310,366		245,517		(991,503	)	(582,930	)	(763,814	)	(296,853	)	(483,876	)
Net change in contract owners’ equity		2,650,444		42,692		894,520		(2,619,251	)	792,019		(5,115,736	)	(263,744	)	(1,164,594	)
Contract owners’ equity beginning of period		705,381		662,689		984,977		3,604,228		2,810,465		7,926,201		1,147,858		2,312,452
Contract owners’ equity end of period	$	3,355,825		705,381		1,879,497		984,977		3,602,484		2,810,465		884,114		1,147,858
CHANGES IN UNITS:
Beginning units		82,956		55,808		66,869		103,806		255,830		302,716		71,830		96,884
Units purchased		204,082		37,019		24,162		3,278		34,463		28,476		4,556		9,390
Units redeemed		(15,323	)	(9,871	)	(11,370	)	(40,215	)	(88,978	)	(75,362	)	(24,816	)	(34,444	)
Ending units		271,715		82,956		79,661		66,869		201,315		255,830		51,570		71,830

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GIG					GIG3				GEF3			NVNMO1
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	5,521		11,191		(7,393	)	243		179		-	(18,394	)	(6	)
Realized gain (loss) on investments		(319,916	)	(145,125	)	15,499		(5,992	)	13		-	176,443		(16	)
Change in unrealized gain (loss) on investments		562,874		(1,093,489	)	427,679		(14,411	)	2,841		-	1,341,840		(736	)
Reinvested capital gains		-		237,212		-		5,376		-		-	29,376		-
Net increase (decrease) in contract owners’ equity resulting from operations		248,479		(990,211	)	435,785		(14,784	)	3,033		-	1,529,265		(758	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		48,891		50,189		87,688		681		34		-	318,598		-
Transfers between funds		(134,453	)	(835,423	)	3,777,109		36,945		69,298		-	12,913,731		1,676
Surrenders (note 6)		(33,717	)	(65,164	)	(314,802	)	(11	)	-		-	(1,001,584	)	-
Death benefits (note 4)		(645	)	-		(7,859	)	-		-		-	(2,772	)	-
Net policy repayments (loans) (note 5)		(5,619	)	4,527		(28,606	)	93		-		-	65,646		-
Deductions for surrender charges (note 2d)		-		-		-		-		-		-	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(52,830	)	(62,936	)	(99,157	)	(420	)	(108	)	-	(357,706	)	(35	)
Asset charges (note 3):
MSP contracts		(290	)	(432	)	(1,130	)	(37	)	-		-	(3,156	)	-
SL contracts or LSFP contracts		(394	)	(673	)	-		-		-		-	(5	)	-
Adjustments to maintain reserves		38		(194	)	29		(12	)	4		-	67		(2	)
Net equity transactions		(179,019	)	(910,106	)	3,413,272		37,239		69,228		-	11,932,819		1,639
Net change in contract owners’ equity		69,460		(1,900,317	)	3,849,057		22,455		72,261		-	13,462,084		881
Contract owners’ equity beginning of period		966,773		2,867,090		22,455		-		-		-	881		-
Contract owners’ equity end of period	$	1,036,233		966,773		3,871,512		22,455		72,261		-	13,462,965		881
CHANGES IN UNITS:
Beginning units		109,827		176,356		4,079		-		-		-	171		-
Units purchased		6,547		8,318		612,025		4,169		5,414		-	1,887,171		177
Units redeemed		(25,250	)	(74,847	)	(70,259	)	(90	)	(8	)	-	(173,955	)	(6	)
Ending units		91,124		109,827		545,845		4,079		5,406		-	1,713,387		171

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVNSR1					NVCRA1				NVCRB1				NVCCA1
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(2	)	1		194		554		2,774		959		2,656		1,803
Realized gain (loss) on investments		612		-		(15,988	)	(75	)	12		(33,841	)	(15,240	)	(1,469	)
Change in unrealized gain (loss) on investments		1,527		6		25,609		(6,387	)	25,049		(8,167	)	62,440		(52,084	)
Reinvested capital gains		-		-		19		2,722		-		518		-		1,368
Net increase (decrease) in contract owners’ equity resulting from operations		2,137		7		9,834		(3,186	)	27,835		(40,531	)	49,856		(50,382	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		1,293		423		5,429		1,150		78,961		710		56,959		3,297
Transfers between funds		27,340		-		(45,230	)	127,836		41,715		149,909		66,070		194,195
Surrenders (note 6)		-		-		(986	)	-		-		-		(7,112	)	-
Death benefits (note 4)		-		-		-		-		-		-		-		-
Net policy repayments (loans) (note 5)		-		-		-		-		1,733		621		36		-
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(185	)	(1	)	(2,963	)	(783	)	(23,926	)	(5,144	)	(20,161	)	(3,965	)
Asset charges (note 3):
MSP contracts		-		-		-		-		(36	)	-		(36	)	-
SL contracts or LSFP contracts		-		-		-		-		-		-		-		-
Adjustments to maintain reserves		2		(4	)	13		(12	)	18		(15	)	7		(7	)
Net equity transactions		28,450		418		(43,737	)	128,191		98,465		146,081		95,763		193,520
Net change in contract owners’ equity		30,587		425		(33,903	)	125,005		126,300		105,550		145,619		143,138
Contract owners’ equity beginning of period		425		-		125,005		-		105,550		-		143,138		-
Contract owners’ equity end of period	$	31,012		425		91,102		125,005		231,850		105,550		288,757		143,138
CHANGES IN UNITS:
Beginning units		69		-		19,559		-		13,239		-		19,781		-
Units purchased		3,804		70		4,746		19,679		14,060		13,966		18,274		20,274
Units redeemed		(25	)	(1	)	(13,203	)	(120	)	(2,898	)	(727	)	(5,773	)	(493	)
Ending units		3,848		69		11,102		19,559		24,401		13,239		32,282		19,781

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVCCN1					NVCMD1				NVCMA1				NVCMC1
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	2,689		528		9,487		3,605		1,177		810		6,546		503
Realized gain (loss) on investments		(1,945	)	(179	)	(25,086	)	(6,005	)	(9,013	)	(824	)	(82	)	(148	)
Change in unrealized gain (loss) on investments		10,388		(3,190	)	144,263		(73,105	)	40,832		(21,419	)	37,676		223
Reinvested capital gains		285		85		41		2,532		69		956		273		192
Net increase (decrease) in contract owners’ equity resulting from operations		11,417		(2,756	)	128,705		(72,973	)	33,065		(20,477	)	44,413		770
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		12,545		1,292		119,143		316		12,863		2,596		30,167		1,182
Transfers between funds		122,527		52,137		296,813		468,436		66,144		108,687		342,588		63,638
Surrenders (note 6)		(33,558	)	-		(3,142	)	(10,107	)	-		-		-		-
Death benefits (note 4)		-		-		-		-		-		-		-		-
Net policy repayments (loans) (note 5)		10,223		-		12,514		2,944		220		(3,342	)	(3,392	)	383
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(17,524	)	(1,040	)	(52,384	)	(11,579	)	(10,413	)	(2,486	)	(16,621	)	(1,103	)
Asset charges (note 3):
MSP contracts		(130	)	(15	)	(566	)	-		-		-		(808	)	-
SL contracts or LSFP contracts		-		-		-		-		-		-		-		-
Adjustments to maintain reserves		21		(16	)	20		(22	)	4		(13	)	(2	)	(3	)
Net equity transactions		94,104		52,358		372,398		449,988		68,818		105,442		351,932		64,097
Net change in contract owners’ equity		105,521		49,602		501,103		377,015		101,883		84,965		396,345		64,867
Contract owners’ equity beginning of period		49,602		-		377,015		-		84,965		-		64,867		-
Contract owners’ equity end of period	$	155,123		49,602		878,118		377,015		186,848		84,965		461,212		64,867
CHANGES IN UNITS:
Beginning units		5,445		-		49,590		-		12,378		-		7,773		-
Units purchased		15,335		5,562		54,063		52,939		10,955		13,039		42,690		8,004
Units redeemed		(5,678	)	(117	)	(8,462	)	(3,349	)	(1,697	)	(661	)	(3,332	)	(231	)
Ending units		15,102		5,445		95,191		49,590		21,636		12,378		47,131		7,773

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVCBD1					NVLCP1				TRF				GVGF1
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	4,059		256		346		3		292,177		472,384		2,582		8,067
Realized gain (loss) on investments		1,244		(158	)	177		-		(7,995,401	)	(4,546,171	)	(211,816	)	(249,384	)
Change in unrealized gain (loss) on investments		(4,369	)	75		(354	)	1		16,953,546		(35,324,300	)	359,464		(131,228	)
Reinvested capital gains		1,086		-		340		-		-		9,583,600		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		2,020		173		509		4		9,250,322		(29,814,487	)	150,230		(372,545	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,479		151		2,416		167		4,469,521		4,992,536		64,825		48,889
Transfers between funds		120,229		16,262		16,515		-		(798,299	)	(1,800,074	)	28,042		19,979
Surrenders (note 6)		-		-		(29	)	-		(4,175,649	)	(4,602,104	)	(21,948	)	(12,512	)
Death benefits (note 4)		-		-		-		-		(304,220	)	(498,485	)	(32,411	)	-
Net policy repayments (loans) (note 5)		(2,439	)	-		-		-		1,285,364		297,738		(4,474	)	(67,219	)
Deductions for surrender charges (note 2d)		-		-		-		-		(3,642	)	(1,263	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(2,780	)	(239	)	(343	)	-		(4,544,578	)	(4,811,045	)	(21,378	)	(22,242	)
Asset charges (note 3):
MSP contracts		-		-		-		-		(12,422	)	(19,381	)	(33	)	(34	)
SL contracts or LSFP contracts		(59	)	-		-		-		(5,890	)	(9,834	)	(142	)	(574	)
Adjustments to maintain reserves		(13	)	(2	)	9		(12	)	196		208		39		(166	)
Net equity transactions		117,417		16,172		18,568		155		(4,089,619	)	(6,451,704	)	12,520		(33,879	)
Net change in contract owners’ equity		119,437		16,345		19,077		159		5,160,703		(36,266,191	)	162,750		(406,424	)
Contract owners’ equity beginning of period		16,345		-		159		-		39,639,477		75,905,668		376,243		782,667
Contract owners’ equity end of period	$	135,782		16,345		19,236		159		44,800,180		39,639,477		538,993		376,243
CHANGES IN UNITS:
Beginning units		1,649		-		16		-		1,622,115		1,803,842		37,173		41,140
Units purchased		11,485		1,674		1,688		16		196,282		182,101		15,415		8,878
Units redeemed		(502	)	(25	)	(31	)	-		(354,511	)	(363,828	)	(12,052	)	(12,845	)
Ending units		12,632		1,649		1,673		16		1,463,886		1,622,115		40,536		37,173

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GBF					CAF				GVGH1				GVGHS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	382,143		492,424		(3,721	)	(45,750	)	(996	)	(1,690	)	(802	)	(1,052	)
Realized gain (loss) on investments		95,531		(123,195	)	(658,597	)	(1,037,461	)	(99,895	)	263		(114,154	)	(80,767	)
Change in unrealized gain (loss) on investments		(384,218	)	567,500		3,636,017		(5,462,625	)	128,129		(149,340	)	200,579		(176,458	)
Reinvested capital gains		177,374		-		-		-		-		32,434		-		58,100
Net increase (decrease) in contract owners’ equity resulting from operations		270,830		936,729		2,973,699		(6,545,836	)	27,238		(118,333	)	85,623		(200,177	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		603,723		711,251		1,302,824		1,476,883		-		-		37,054		29,513
Transfers between funds		(2,745,589	)	4,330,480		(383,491	)	(445,026	)	(154,543	)	118,391		(161,538	)	246,388
Surrenders (note 6)		(1,107,357	)	(497,718	)	(1,176,916	)	(1,041,927	)	(1,160	)	(911	)	(77,559	)	(10,967	)
Death benefits (note 4)		(126,230	)	(116,995	)	(25,543	)	(67,965	)	(35,800	)	(1,218	)	-		-
Net policy repayments (loans) (note 5)		60,231		(214,412	)	379,586		27,195		(4,162	)	(29,906	)	6,005		11,121
Deductions for surrender charges (note 2d)		-		(20	)	(3,339	)	(4,083	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(829,454	)	(662,659	)	(1,189,957	)	(1,200,750	)	(10,459	)	(11,991	)	(31,861	)	(25,935	)
Asset charges (note 3):
MSP contracts		(12,358	)	(12,177	)	(2,479	)	(3,167	)	(109	)	(125	)	(25	)	(21	)
SL contracts or LSFP contracts		(3,162	)	(3,864	)	(3,033	)	(4,995	)	(46	)	(76	)	(362	)	(343	)
Adjustments to maintain reserves		229		(149	)	114		(395	)	50		(115	)	32		(75	)
Net equity transactions		(4,159,967	)	3,533,737		(1,102,234	)	(1,264,230	)	(206,229	)	74,049		(228,254	)	249,681
Net change in contract owners’ equity		(3,889,137	)	4,470,466		1,871,465		(7,810,066	)	(178,991	)	(44,284	)	(142,631	)	49,504
Contract owners’ equity beginning of period		15,771,803		11,301,337		9,750,311		17,560,377		359,934		404,218		597,811		548,307
Contract owners’ equity end of period	$	11,882,666		15,771,803		11,621,776		9,750,311		180,943		359,934		455,180		597,811
CHANGES IN UNITS:
Beginning units		659,060		472,828		761,318		843,818		32,799		27,194		65,060		44,506
Units purchased		27,990		264,322		129,275		155,632		659		11,778		7,609		26,843
Units redeemed		(243,283	)	(78,090	)	(207,948	)	(238,132	)	(19,653	)	(6,173	)	(30,951	)	(6,289	)
Ending units		443,767		659,060		682,645		761,318		13,805		32,799		41,718		65,060

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVIX6					GVIDA				NVDBL2			NVDCA2
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	5,712		6,157		12,035		48,584		231		-	249		-
Realized gain (loss) on investments		(75,669	)	(8,862	)	(1,135,522	)	(123,041	)	(1	)	-	252		-
Change in unrealized gain (loss) on investments		127,924		(205,696	)	1,576,024		(1,906,004	)	(518	)	-	2,750		-
Reinvested capital gains		-		575		116,847		518,286		299		-	107		-
Net increase (decrease) in contract owners’ equity resulting from operations		57,967		(207,826	)	569,384		(1,462,175	)	11		-	3,358		-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		6,156		4,017		154,941		232,455		235		-	18,999		-
Transfers between funds		221,991		106,218		264,173		(198,944	)	41,739		-	556		-
Surrenders (note 6)		(16,698	)	(2,993	)	(990,008	)	(785,152	)	-		-	-		-
Death benefits (note 4)		(3,435	)	-		(15,952	)	(19,775	)	-		-	-		-
Net policy repayments (loans) (note 5)		1,449		263		160,907		(11,426	)	-		-	(102	)	-
Deductions for surrender charges (note 2d)		-		-		(443	)	-		-		-	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(9,493	)	(9,600	)	(167,231	)	(175,108	)	(68	)	-	(2,504	)	-
Asset charges (note 3):
MSP contracts		(21	)	(2	)	(403	)	(630	)	-		-	-		-
SL contracts or LSFP contracts		-		-		(73	)	(25	)	-		-	-		-
Adjustments to maintain reserves		20		(72	)	57		(140	)	(1	)	-	5		-
Net equity transactions		199,969		97,831		(594,032	)	(958,745	)	41,905		-	16,954		-
Net change in contract owners’ equity		257,936		(109,995	)	(24,648	)	(2,420,920	)	41,916		-	20,312		-
Contract owners’ equity beginning of period		276,031		386,026		2,098,988		4,519,908		-		-	-		-
Contract owners’ equity end of period	$	533,967		276,031		2,074,340		2,098,988		41,916		-	20,312		-
CHANGES IN UNITS:
Beginning units		40,920		32,394		206,398		279,196		-		-	-		-
Units purchased		24,734		11,571		65,470		21,917		3,619		-	1,901		-
Units redeemed		(4,204	)	(3,045	)	(110,742	)	(94,715	)	(6	)	-	(231	)	-
Ending units		61,450		40,920		161,126		206,398		3,613		-	1,670		-

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVIDC					GVIDM				GVDMA				GVDMC
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	13,354		24,733		49,499		135,769		38,397		126,421		26,593		60,263
Realized gain (loss) on investments		(35,621	)	(23,113	)	(273,498	)	(90,026	)	(324,366	)	(94,442	)	(82,458	)	(17,593	)
Change in unrealized gain (loss) on investments		107,690		(73,535	)	908,238		(2,081,356	)	1,169,710		(3,196,425	)	349,270		(581,692	)
Reinvested capital gains		6,222		15,025		105,442		493,348		213,950		703,320		39,489		129,982
Net increase (decrease) in contract owners’ equity resulting from operations		91,645		(56,890	)	789,681		(1,542,265	)	1,097,691		(2,461,126	)	332,894		(409,040	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		39,378		29,904		299,598		337,041		350,481		382,555		197,105		186,967
Transfers between funds		428,901		155,787		269,698		14,799		89,512		574,827		28,035		553,266
Surrenders (note 6)		(123,388	)	(42,171	)	(537,561	)	(724,604	)	(639,862	)	(428,349	)	(215,495	)	(179,032	)
Death benefits (note 4)		-		-		-		(172,288	)	(15,487	)	(5,329	)	-		(3,261	)
Net policy repayments (loans) (note 5)		(9,418	)	(53,816	)	47,335		(116,741	)	58,088		(115,456	)	29,425		19,854
Deductions for surrender charges (note 2d)		-		-		-		-		-		(179	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(62,539	)	(49,554	)	(352,557	)	(360,243	)	(390,645	)	(406,891	)	(121,305	)	(98,694	)
Asset charges (note 3):
MSP contracts		(437	)	(189	)	(8,791	)	(9,699	)	(3,336	)	(4,216	)	(1,527	)	(1,596	)
SL contracts or LSFP contracts		(320	)	(237	)	(757	)	(713	)	(1,354	)	(1,853	)	(86	)	(30	)
Adjustments to maintain reserves		52		(140	)	49		(151	)	70		(155	)	52		(84	)
Net equity transactions		272,229		39,584		(282,986	)	(1,032,599	)	(552,533	)	(5,046	)	(83,796	)	477,390
Net change in contract owners’ equity		363,874		(17,306	)	506,695		(2,574,864	)	545,158		(2,466,172	)	249,098		68,350
Contract owners’ equity beginning of period		883,300		900,606		4,453,818		7,028,682		4,924,384		7,390,556		2,324,593		2,256,243
Contract owners’ equity end of period	$	1,247,174		883,300		4,960,513		4,453,818		5,469,542		4,924,384		2,573,691		2,324,593
CHANGES IN UNITS:
Beginning units		74,456		71,116		402,318		487,082		464,722		476,896		204,094		167,230
Units purchased		41,731		21,103		47,398		68,848		48,326		111,074		25,400		59,929
Units redeemed		(19,634	)	(17,763	)	(72,106	)	(153,612	)	(96,076	)	(123,248	)	(31,135	)	(23,065	)
Ending units		96,553		74,456		377,610		402,318		416,972		464,722		198,359		204,094

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVUS1					MCIF				SAM				NVMIG3
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	800		1,647		19,992		39,795		(140,610	)	569,128		6,684		(1	)
Realized gain (loss) on investments		(210,379	)	(77,696	)	(409,379	)	68,127		-		-		57,845		(1	)
Change in unrealized gain (loss) on investments		290,240		(276,877	)	1,647,145		(2,710,007	)	-		-		640,587		(5	)
Reinvested capital gains		-		-		132,345		345,867		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		80,661		(352,926	)	1,390,103		(2,256,218	)	(140,610	)	569,128		705,116		(7	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		19,489		11,475		331,069		200,629		1,766,659		2,357,487		115,018		18
Transfers between funds		(206,888	)	(44,006	)	320,670		(144,973	)	(525,683	)	14,867,022		4,852,400		1,451
Surrenders (note 6)		(59,757	)	(25,770	)	(667,033	)	(421,446	)	(12,952,416	)	(16,305,953	)	(133,668	)	-
Death benefits (note 4)		-		-		(88,124	)	(79,629	)	(1,133,972	)	(374,013	)	(11,418	)	-
Net policy repayments (loans) (note 5)		9,148		(5,009	)	32,674		2,563		1,998,870		1,552,252		(1,375	)	-
Deductions for surrender charges (note 2d)		-		-		(3,165	)	-		(4,444	)	(2,880	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(14,702	)	(21,999	)	(366,761	)	(248,482	)	(2,062,890	)	(2,071,291	)	(126,055	)	(7	)
Asset charges (note 3):
MSP contracts		(262	)	(396	)	(2,032	)	(3,016	)	(26,386	)	(29,949	)	(846	)	-
SL contracts or LSFP contracts		(51	)	(221	)	(1,383	)	(2,337	)	(11,472	)	(20,899	)	(19	)	-
Adjustments to maintain reserves		34		(128	)	100		(221	)	(416	)	(562	)	27		2
Net equity transactions		(252,989	)	(86,054	)	(443,985	)	(696,912	)	(12,952,150	)	(28,786	)	4,694,064		1,464
Net change in contract owners’ equity		(172,328	)	(438,980	)	946,118		(2,953,130	)	(13,092,760	)	540,342		5,399,180		1,457
Contract owners’ equity beginning of period		296,557		735,537		3,756,894		6,710,024		36,640,271		36,099,929		1,457		-
Contract owners’ equity end of period	$	124,229		296,557		4,703,012		3,756,894		23,547,511		36,640,271		5,400,637		1,457
CHANGES IN UNITS:
Beginning units		33,991		42,088		343,666		388,144		2,100,716		2,150,644		238		-
Units purchased		1,140		2,149		65,898		61,000		228,267		934,218		686,847		239
Units redeemed		(24,513	)	(10,246	)	(94,539	)	(105,478	)	(950,766	)	(984,146	)	(36,896	)	(1	)
Ending units		10,618		33,991		315,025		343,666		1,378,217		2,100,716		650,189		238

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVDIVI					GVDIV3				NVMLG1				NVMLV1
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	4,437		5,567		14,541		17,572		466		3		1,811		407
Realized gain (loss) on investments		(38,442	)	(17,065	)	(354,770	)	(107,080	)	7,291		(45	)	6,796		(20,030	)
Change in unrealized gain (loss) on investments		107,015		(328,287	)	538,289		(974,551	)	35,793		(580	)	49,270		(6,469	)
Reinvested capital gains		-		67,064		-		210,461		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		73,010		(272,721	)	198,060		(853,598	)	43,550		(622	)	57,877		(26,092	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2		(1	)	53,139		91,287		7,922		(32	)	8,821		-
Transfers between funds		(12,870	)	(83,599	)	58,972		(406,113	)	280,455		1,982		316,813		121,373
Surrenders (note 6)		(7,753	)	(20,492	)	(115,001	)	(76,806	)	(6,648	)	-		(11,721	)	-
Death benefits (note 4)		-		-		(3,956	)	(5,456	)	(2,944	)	-		-		-
Net policy repayments (loans) (note 5)		(4,252	)	(2,477	)	(11,110	)	17,168		(1,923	)	-		1,690		-
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(12,426	)	(16,669	)	(46,069	)	(53,585	)	(6,241	)	(8	)	(10,179	)	(835	)
Asset charges (note 3):
MSP contracts		(80	)	(144	)	(212	)	(333	)	(130	)	(5	)	(187	)	-
SL contracts or LSFP contracts		(21	)	(51	)	(241	)	(453	)	-		-		-		-
Adjustments to maintain reserves		46		(212	)	14,698		1,181		1		(4	)	14		(4	)
Net equity transactions		(37,354	)	(123,645	)	(49,780	)	(433,110	)	270,492		1,933		305,251		120,534
Net change in contract owners’ equity		35,656		(396,366	)	148,280		(1,286,708	)	314,042		1,311		363,128		94,442
Contract owners’ equity beginning of period		280,719		677,085		898,718		2,185,426		1,311		-		94,442		-
Contract owners’ equity end of period	$	316,375		280,719		1,046,998		898,718		315,353		1,311		457,570		94,442
CHANGES IN UNITS:
Beginning units		22,711		29,250		117,983		153,166		206		-		14,906		-
Units purchased		1,310		-		14,152		17,544		40,667		208		43,670		15,035
Units redeemed		(4,236	)	(6,539	)	(25,916	)	(52,727	)	(2,371	)	(2	)	(1,715	)	(129	)
Ending units		19,785		22,711		106,219		117,983		38,502		206		56,861		14,906

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVMMG1					NVMMV2			SCGF				SCVF
	2009			2008		2009		2008	2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(56,454	)	-		44,168		-	(4,187	)	(6,678	)	4,941		42,426
Realized gain (loss) on investments		150,206		(775	)	75,165		-	(358,073	)	(105,359	)	(895,528	)	(751,712	)
Change in unrealized gain (loss) on investments		3,045,427		(609	)	1,974,047		-	547,591		(655,281	)	1,924,031		(1,883,749	)
Reinvested capital gains		-		-		-		-	-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		3,139,179		(1,384	)	2,093,380		-	185,331		(767,318	)	1,033,444		(2,593,035	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		668,649		(24	)	392,261		-	34,385		46,867		242,365		338,074
Transfers between funds		23,993,647		3,046		17,853,536		-	(184,267	)	53,917		(419,326	)	(665,221	)
Surrenders (note 6)		(665,007	)	-		(717,594	)	-	(42,074	)	(51,190	)	(413,725	)	(458,039	)
Death benefits (note 4)		(59,489	)	-		(35,512	)	-	(3,633	)	(44,869	)	(80,345	)	(80,363	)
Net policy repayments (loans) (note 5)		64,720		-		21,551		-	211		(23,201	)	60,812		(131,703	)
Deductions for surrender charges (note 2d)		(742	)	-		(441	)	-	-		-		(1,285	)	(161	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(758,266	)	(22	)	(450,258	)	-	(55,967	)	(54,853	)	(302,226	)	(321,728	)
Asset charges (note 3):
MSP contracts		(2,879	)	(13	)	(2,024	)	-	(128	)	(284	)	(2,441	)	(3,619	)
SL contracts or LSFP contracts		(110	)	-		(22	)	-	(208	)	(393	)	(3,423	)	(6,159	)
Adjustments to maintain reserves		41		(4	)	73		-	34		(69	)	149		(355	)
Net equity transactions		23,240,564		2,983		17,061,570		-	(251,647	)	(74,075	)	(919,445	)	(1,329,274	)
Net change in contract owners’ equity		26,379,743		1,599		19,154,950		-	(66,316	)	(841,393	)	113,999		(3,922,309	)
Contract owners’ equity beginning of period		1,599		-		-		-	878,216		1,719,609		4,950,569		8,872,878
Contract owners’ equity end of period	$	26,381,342		1,599		19,154,950		-	811,900		878,216		5,064,568		4,950,569
CHANGES IN UNITS:
Beginning units		255		-		-		-	190,708		199,360		331,900		402,340
Units purchased		3,539,540		260		2,341,212		-	17,221		30,147		26,848		30,415
Units redeemed		(203,552	)	(5	)	(148,049	)	-	(68,789	)	(38,799	)	(90,029	)	(100,855	)
Ending units		3,336,243		255		2,193,163		-	139,140		190,708		268,719		331,900

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SCF					MSBF				NVSTB2				GGTC
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(35,569	)	68,494		126,052		81,141		19,071		918		(2,074	)	(2,248	)
Realized gain (loss) on investments		(1,397,208	)	(323,111	)	(183,361	)	(94,596	)	8,184		(4,418	)	(51,089	)	12,645
Change in unrealized gain (loss) on investments		5,954,673		(14,168,996	)	324,190		(290,565	)	(9,264	)	(216	)	177,618		(272,283	)
Reinvested capital gains		-		4,526,102		-		28,486		6,394		-		-		42,632
Net increase (decrease) in contract owners’ equity resulting from operations		4,521,896		(9,897,511	)	266,881		(275,534	)	24,385		(3,716	)	124,455		(219,254	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		916,572		1,003,351		45,711		51,062		8,824		101		57,009		-
Transfers between funds		(1,072,590	)	(1,017,464	)	388,190		(199,231	)	1,988,452		32,659		(19,651	)	(93,259	)
Surrenders (note 6)		(1,170,355	)	(1,408,827	)	(65,495	)	(197,346	)	(6,964	)	(477	)	(20,017	)	(39,754	)
Death benefits (note 4)		(107,842	)	(122,544	)	(559	)	(3,711	)	-		-		-		(1,191	)
Net policy repayments (loans) (note 5)		141,790		(1,738	)	(18,268	)	(10,045	)	(3,744	)	704		(7,303	)	(1,114	)
Deductions for surrender charges (note 2d)		(6,943	)	(231	)	-		(92	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(1,034,016	)	(1,074,871	)	(57,865	)	(59,783	)	(52,432	)	(1,632	)	(12,334	)	(13,159	)
Asset charges (note 3):
MSP contracts		(7,209	)	(10,633	)	(699	)	(596	)	(130	)	(2	)	-		-
SL contracts or LSFP contracts		(4,753	)	(8,825	)	(288	)	(397	)	-		-		(21	)	(29	)
Adjustments to maintain reserves		215		(574	)	60		(120	)	7		(13	)	12		(26	)
Net equity transactions		(2,345,131	)	(2,642,356	)	290,787		(420,259	)	1,934,013		31,340		(2,305	)	(148,532	)
Net change in contract owners’ equity		2,176,765		(12,539,867	)	557,668		(695,793	)	1,958,398		27,624		122,150		(367,786	)
Contract owners’ equity beginning of period		15,005,183		27,545,050		932,428		1,628,221		27,624		-		188,549		556,335
Contract owners’ equity end of period	$	17,181,948		15,005,183		1,490,096		932,428		1,986,022		27,624		310,699		188,549
CHANGES IN UNITS:
Beginning units		646,383		732,968		75,257		108,912		2,787		-		91,773		138,886
Units purchased		41,936		75,354		32,276		8,711		191,688		3,067		38,921		2,535
Units redeemed		(136,779	)	(161,939	)	(10,218	)	(42,366	)	(6,429	)	(280	)	(29,141	)	(49,648	)
Ending units		551,540		646,383		97,315		75,257		188,046		2,787		101,553		91,773

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GGTC3					GVUG1				NVOLG1			NVTIV3
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	(1,596	)	(2,068	)	(2,430	)	(3,941	)	(20	)	-	27		-
Realized gain (loss) on investments		(129,555	)	(104,633	)	(209,319	)	(22,295	)	941		-	16		-
Change in unrealized gain (loss) on investments		274,483		(235,401	)	316,232		(513,347	)	412		-	408		-
Reinvested capital gains		-		59,682		-		152,707		104		-	21		-
Net increase (decrease) in contract owners’ equity resulting from operations		143,332		(282,420	)	104,483		(386,876	)	1,437		-	472		-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		96,813		198,922		33,077		40,871		25,056		-	711		-
Transfers between funds		34,593		(283,889	)	(52,541	)	19,206		(20,155	)	-	11,617		-
Surrenders (note 6)		(36,934	)	(177,558	)	(51,544	)	(51,424	)	-		-	-		-
Death benefits (note 4)		(3,442	)	-		(32,861	)	(3,251	)	-		-	-		-
Net policy repayments (loans) (note 5)		19,402		23,591		966		8,762		-		-	-		-
Deductions for surrender charges (note 2d)		-		-		(288	)	-		-		-	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(27,194	)	(22,813	)	(36,689	)	(35,299	)	(60	)	-	(141	)	-
Asset charges (note 3):
MSP contracts		(41	)	(90	)	(57	)	(103	)	-		-	-		-
SL contracts or LSFP contracts		(91	)	(64	)	(230	)	(1,022	)	-		-	-		-
Adjustments to maintain reserves		35		(123	)	44		(181	)	2		-	(9	)	-
Net equity transactions		83,141		(262,024	)	(140,123	)	(22,441	)	4,843		-	12,178		-
Net change in contract owners’ equity		226,473		(544,444	)	(35,640	)	(409,317	)	6,280		-	12,650		-
Contract owners’ equity beginning of period		224,232		768,676		516,627		925,944		-		-	-		-
Contract owners’ equity end of period	$	450,705		224,232		480,987		516,627		6,280		-	12,650		-
CHANGES IN UNITS:
Beginning units		27,060		47,422		47,190		49,430		-		-	-		-
Units purchased		16,197		4,855		3,793		6,451		489		-	986		-
Units redeemed		(7,498	)	(25,217	)	(15,850	)	(8,691	)	(5	)	-	(12	)	-
Ending units		35,759		27,060		35,133		47,190		484		-	974		-

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	EIF					NVRE1				AMTB				AVBVI
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	3,200		11,666		47,709		1,537		180,654		132,547		(380	)	1,227
Realized gain (loss) on investments		(58,039	)	(53,146	)	35,768		(1,677	)	(167,698	)	(80,350	)	(243,656	)	(93,509	)
Change in unrealized gain (loss) on investments		186,203		(305,486	)	1,141,555		(29,044	)	297,416		(532,398	)	333,443		(282,847	)
Reinvested capital gains		-		10,754		25,038		-		-		-		-		77,915
Net increase (decrease) in contract owners’ equity resulting from operations		131,364		(336,212	)	1,250,070		(29,184	)	310,372		(480,201	)	89,407		(297,214	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		52,275		61,635		157,282		770		108,542		112,203		33,999		26,513
Transfers between funds		(30,232	)	(77,097	)	6,752,852		91,431		178,916		(140,823	)	(251,203	)	(288,887	)
Surrenders (note 6)		(21,827	)	(46,663	)	(167,752	)	(308	)	(452,591	)	(415,631	)	(65,362	)	(77,091	)
Death benefits (note 4)		-		(5,622	)	(3,451	)	-		(220,431	)	(20,590	)	(4,245	)	-
Net policy repayments (loans) (note 5)		(57	)	12,555		6,209		(1,116	)	191,297		218,018		(12,931	)	13,822
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(44,532	)	(46,019	)	(188,183	)	(1,444	)	(148,655	)	(152,021	)	(11,604	)	(25,983	)
Asset charges (note 3):
MSP contracts		(15	)	(22	)	(1,391	)	(5	)	(4,310	)	(4,543	)	(240	)	(218	)
SL contracts or LSFP contracts		(192	)	(660	)	(77	)	-		(697	)	(946	)	(104	)	(97	)
Adjustments to maintain reserves		37		(142	)	87		(20	)	173		(380	)	425		(153	)
Net equity transactions		(44,543	)	(102,035	)	6,555,576		89,308		(347,756	)	(404,713	)	(311,265	)	(352,094	)
Net change in contract owners’ equity		86,821		(438,247	)	7,805,646		60,124		(37,384	)	(884,914	)	(221,858	)	(649,308	)
Contract owners’ equity beginning of period		512,214		950,461		60,124		-		2,771,844		3,656,758		245,169		894,477
Contract owners’ equity end of period	$	599,035		512,214		7,865,770		60,124		2,734,460		2,771,844		23,311		245,169
CHANGES IN UNITS:
Beginning units		47,456		55,240		10,683		-		167,488		194,058		29,537		52,024
Units purchased		6,228		5,020		1,119,993		11,239		25,561		24,107		2,530		8,381
Units redeemed		(10,244	)	(12,804	)	(56,611	)	(556	)	(38,081	)	(50,677	)	(30,216	)	(30,868	)
Ending units		43,440		47,456		1,074,065		10,683		154,968		167,488		1,851		29,537

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AVCA					AVCDI				ALVGIA				ALVSVA
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	154		(762	)	(903	)	(1,714	)	17,298		12,550		3,293		2,197
Realized gain (loss) on investments		(9,497	)	(40,201	)	(70,651	)	(73,292	)	(318,433	)	(51,327	)	(180,121	)	(58,993	)
Change in unrealized gain (loss) on investments		24,573		(41,973	)	147,507		(169,220	)	361,513		(467,959	)	347,973		(358,078	)
Reinvested capital gains		-		-		-		35,053		-		130,982		23,335		89,366
Net increase (decrease) in contract owners’ equity resulting from operations		15,230		(82,936	)	75,953		(209,173	)	60,378		(375,754	)	194,480		(325,508	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,887		3,297		14,034		18,868		84,447		85,138		34,970		43,630
Transfers between funds		(688	)	(192,743	)	(6,086	)	(235,650	)	(112,719	)	(65,912	)	41,878		(61,193	)
Surrenders (note 6)		(2,432	)	-		(8,282	)	(18,275	)	(80,364	)	(25,195	)	(63,829	)	(116,558	)
Death benefits (note 4)		-		-		(97	)	-		(36,204	)	-		(9,248	)	(9,633	)
Net policy repayments (loans) (note 5)		(9	)	(7,790	)	1,223		(7,924	)	763		(9,678	)	(15,051	)	6,728
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(3,475	)	(7,216	)	(14,265	)	(20,214	)	(27,436	)	(34,171	)	(32,223	)	(33,902	)
Asset charges (note 3):
MSP contracts		(107	)	(84	)	(246	)	(261	)	(141	)	(667	)	(318	)	(462	)
SL contracts or LSFP contracts		(25	)	-		(136	)	(190	)	(298	)	(1,113	)	(165	)	(233	)
Adjustments to maintain reserves		30		(91	)	50		(163	)	43		(171	)	49		(122	)
Net equity transactions		(3,819	)	(204,627	)	(13,805	)	(263,809	)	(171,909	)	(51,769	)	(43,937	)	(171,745	)
Net change in contract owners’ equity		11,411		(287,563	)	62,148		(472,982	)	(111,531	)	(427,523	)	150,543		(497,253	)
Contract owners’ equity beginning of period		68,595		356,158		174,843		647,825		525,178		952,701		551,087		1,048,340
Contract owners’ equity end of period	$	80,006		68,595		236,991		174,843		413,647		525,178		701,630		551,087
CHANGES IN UNITS:
Beginning units		7,156		21,310		15,929		31,176		50,347		54,160		42,949		52,438
Units purchased		1,902		513		1,861		1,943		8,172		12,218		5,969		3,963
Units redeemed		(2,191	)	(14,667	)	(2,591	)	(17,190	)	(25,430	)	(16,031	)	(10,463	)	(13,452	)
Ending units		6,867		7,156		15,199		15,929		33,089		50,347		38,455		42,949

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVB					ACVCA				ACVIG				ACVIP2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	185,760		82,581		45,815		(95,659	)	75,615		38,005		20,720		68,242
Realized gain (loss) on investments		(133,660	)	7,669		472,010		1,317,200		(153,204	)	45,361		(52,343	)	(42,098	)
Change in unrealized gain (loss) on investments		439,091		(1,472,594	)	1,590,741		(11,600,631	)	347,057		(1,375,307	)	159,445		(91,919	)
Reinvested capital gains		-		313,273		-		1,295,445		-		300,385		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		491,191		(1,069,071	)	2,108,566		(9,083,645	)	269,468		(991,556	)	127,822		(65,775	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		245,781		253,506		432,710		704,743		91,428		113,315		50,288		217,091
Transfers between funds		(293,076	)	805,122		(9,817,300	)	(1,510,326	)	(210,147	)	(78,774	)	431,698		746,500
Surrenders (note 6)		(262,038	)	(361,924	)	(447,741	)	(771,456	)	(121,155	)	(164,876	)	(119,305	)	(63,756	)
Death benefits (note 4)		(36,263	)	(43,133	)	(246,184	)	(111,509	)	(8,675	)	(2,646	)	(6,525	)	-
Net policy repayments (loans) (note 5)		(1,602	)	22,622		124,805		(78,777	)	(7,045	)	38,974		(24,891	)	(180,914	)
Deductions for surrender charges (note 2d)		-		(212	)	(7	)	-		-		(87	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(284,771	)	(257,361	)	(533,018	)	(880,225	)	(123,061	)	(131,914	)	(76,137	)	(55,918	)
Asset charges (note 3):
MSP contracts		(2,642	)	(3,312	)	(1,986	)	(5,513	)	(1,769	)	(2,277	)	(1,691	)	(1,603	)
SL contracts or LSFP contracts		(621	)	(859	)	(978	)	(1,819	)	(398	)	(737	)	(328	)	(699	)
Adjustments to maintain reserves		202		(256	)	(554	)	(21,078	)	74		(222	)	(350	)	37
Net equity transactions		(635,030	)	414,193		(10,490,253	)	(2,675,960	)	(380,748	)	(229,244	)	252,759		660,738
Net change in contract owners’ equity		(143,839	)	(654,878	)	(8,381,687	)	(11,759,605	)	(111,280	)	(1,220,800	)	380,581		594,963
Contract owners’ equity beginning of period		4,052,917		4,707,795		9,751,851		21,511,456		1,777,423		2,998,223		1,502,262		907,299
Contract owners’ equity end of period	$	3,909,078		4,052,917		1,370,164		9,751,851		1,666,143		1,777,423		1,882,843		1,502,262
CHANGES IN UNITS:
Beginning units		225,679		201,420		498,333		640,052		189,405		209,942		126,827		75,086
Units purchased		14,500		65,671		28,414		34,243		13,068		33,035		44,213		79,940
Units redeemed		(46,483	)	(41,412	)	(384,320	)	(175,962	)	(51,846	)	(53,572	)	(26,089	)	(28,199	)
Ending units		193,696		225,679		142,427		498,333		150,627		189,405		144,951		126,827

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVI					ACVI3				ACVMV1				ACVU1
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	68,957		21,981		37,827		8,631		27,135		(4,120	)	(69	)	(2,632	)
Realized gain (loss) on investments		(43,968	)	686,446		(986,776	)	(33,580	)	(127,323	)	(92,873	)	(155,354	)	(13,935	)
Change in unrealized gain (loss) on investments		707,554		(5,145,468	)	1,343,745		(1,927,700	)	316,901		(191,264	)	209,208		(311,349	)
Reinvested capital gains		-		696,172		-		278,631		-		-		-		78,593
Net increase (decrease) in contract owners’ equity resulting from operations		732,543		(3,740,869	)	394,796		(1,674,018	)	216,713		(288,257	)	53,785		(249,323	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		29		(1,235	)	218,223		440,182		40,109		53,510		18,703		18,162
Transfers between funds		(3,452,953	)	(581,978	)	(2,245,870	)	919		63,617		28,432		(301,217	)	(395,240	)
Surrenders (note 6)		(183,566	)	(642,694	)	(130,888	)	(173,818	)	(52,055	)	(96,405	)	(11,516	)	(25,226	)
Death benefits (note 4)		(213,274	)	(10,330	)	(5,619	)	(580	)	(8,739	)	-		-		-
Net policy repayments (loans) (note 5)		9,921		80,488		72,213		(9,276	)	(2,104	)	(1,263	)	209		1,502
Deductions for surrender charges (note 2d)		(552	)	-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(160,693	)	(301,401	)	(94,999	)	(147,240	)	(54,645	)	(48,470	)	(17,544	)	(25,196	)
Asset charges (note 3):
MSP contracts		(852	)	(2,190	)	(224	)	(584	)	(256	)	(210	)	(158	)	(353	)
SL contracts or LSFP contracts		(1,435	)	(2,955	)	(859	)	(1,525	)	(65	)	(73	)	(69	)	(172	)
Adjustments to maintain reserves		77		(339	)	34		(128	)	75		1,272		64		(142	)
Net equity transactions		(4,003,298	)	(1,462,634	)	(2,187,989	)	107,950		(14,063	)	(63,207	)	(311,528	)	(426,665	)
Net change in contract owners’ equity		(3,270,755	)	(5,203,503	)	(1,793,193	)	(1,566,068	)	202,650		(351,464	)	(257,743	)	(675,988	)
Contract owners’ equity beginning of period		4,096,035		9,299,538		2,012,123		3,578,191		795,911		1,147,375		306,386		982,374
Contract owners’ equity end of period	$	825,280		4,096,035		218,930		2,012,123		998,561		795,911		48,643		306,386
CHANGES IN UNITS:
Beginning units		296,608		371,658		215,550		210,562		80,555		87,462		40,756		76,046
Units purchased		903		13,788		27,606		50,689		7,974		8,484		3,323		3,239
Units redeemed		(225,941	)	(88,838	)	(225,941	)	(45,701	)	(10,355	)	(15,391	)	(39,270	)	(38,529	)
Ending units		71,570		296,608		17,215		215,550		78,174		80,555		4,809		40,756

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVV					ACVVS1				DVSCS				DSIF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	362,681		186,246		(2,307	)	(7,845	)	21,462		5,589		607,335		861,818
Realized gain (loss) on investments		(1,068,970	)	(741,744	)	(751,238	)	(108,622	)	(286,202	)	(128,115	)	(2,289,404	)	(676,962	)
Change in unrealized gain (loss) on investments		1,911,775		(3,596,820	)	813,819		(895,565	)	332,193		(642,274	)	8,161,497		(24,590,637	)
Reinvested capital gains		-		1,245,215		-		74,587		179,994		226,751		2,467,459		-
Net increase (decrease) in contract owners’ equity resulting from operations		1,205,486		(2,907,103	)	60,274		(937,445	)	247,447		(538,049	)	8,946,887		(24,405,781	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		353,417		419,705		31,531		126,698		72,086		77,601		2,858,252		3,126,985
Transfers between funds		(485,622	)	(956,294	)	(754,220	)	93,610		152,215		(45,427	)	(524,735	)	(4,069,904	)
Surrenders (note 6)		(178,377	)	(1,014,677	)	(207,208	)	(77,465	)	(88,992	)	(141,408	)	(3,832,092	)	(3,766,811	)
Death benefits (note 4)		(190,376	)	(140,940	)	-		(516	)	-		-		(1,126,262	)	(246,150	)
Net policy repayments (loans) (note 5)		(194,335	)	376,948		17,817		(12,903	)	1,006		9,125		632,252		139,051
Deductions for surrender charges (note 2d)		(7	)	(883	)	-		-		(292	)	(5,101	)	(14,376	)	(12,453	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(414,578	)	(410,036	)	(38,443	)	(73,212	)	(61,932	)	(71,732	)	(2,895,335	)	(3,030,123	)
Asset charges (note 3):
MSP contracts		(4,129	)	(5,933	)	(68	)	(191	)	(1,028	)	(1,496	)	(16,064	)	(22,106	)
SL contracts or LSFP contracts		(2,853	)	(4,803	)	(120	)	(380	)	(596	)	(1,082	)	(19,964	)	(36,340	)
Adjustments to maintain reserves		136		(372	)	26		(93	)	86		(287	)	174		(1,537	)
Net equity transactions		(1,116,724	)	(1,737,285	)	(950,685	)	55,548		72,553		(179,807	)	(4,938,150	)	(7,919,388	)
Net change in contract owners’ equity		88,762		(4,644,388	)	(890,411	)	(881,897	)	320,000		(717,856	)	4,008,737		(32,325,169	)
Contract owners’ equity beginning of period		7,293,733		11,938,121		928,470		1,810,367		1,055,112		1,772,968		38,396,547		70,721,716
Contract owners’ equity end of period	$	7,382,495		7,293,733		38,059		928,470		1,375,112		1,055,112		42,405,284		38,396,547
CHANGES IN UNITS:
Beginning units		407,405		489,190		105,453		105,106		100,682		116,238		2,042,056		2,329,576
Units purchased		31,802		25,724		6,690		17,711		25,549		12,514		252,180		253,595
Units redeemed		(94,877	)	(107,509	)	(108,680	)	(17,364	)	(21,127	)	(28,070	)	(515,623	)	(541,115	)
Ending units		344,330		407,405		3,463		105,453		105,104		100,682		1,778,613		2,042,056

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	DSRG					DCAP				DSC				DGI
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	19,488		10,935		76,753		67,476		1,608		502		11,137		3,132
Realized gain (loss) on investments		(621,107	)	(405,373	)	(94,927	)	42,297		(90,896	)	(30,430	)	(42,235	)	18,536
Change in unrealized gain (loss) on investments		2,134,876		(2,397,159	)	470,553		(2,098,237	)	116,860		(36,247	)	363,806		(1,161,371	)
Reinvested capital gains		-		-		280,064		351,174		-		8,018		-		229,922
Net increase (decrease) in contract owners’ equity resulting from operations		1,533,257		(2,791,597	)	732,443		(1,637,290	)	27,572		(58,157	)	332,708		(909,781	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		576,928		658,519		209,359		252,170		16,751		36,063		91,447		109,072
Transfers between funds		(166,170	)	(304,418	)	16,056		32,808		(26,957	)	(30,448	)	(50,704	)	4,754
Surrenders (note 6)		(531,739	)	(471,697	)	(274,461	)	(275,680	)	(26,388	)	(18,330	)	(121,008	)	(58,062	)
Death benefits (note 4)		(99,225	)	(44,400	)	(61,854	)	(7,868	)	-		-		(3,072	)	(13,477	)
Net policy repayments (loans) (note 5)		137,215		35,947		404		6,252		21,978		153		(4,675	)	(11,179	)
Deductions for surrender charges (note 2d)		(505	)	(891	)	(616	)	(595	)	-		-		(2,521	)	(195	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(525,890	)	(540,537	)	(219,227	)	(219,484	)	(12,892	)	(13,710	)	(115,403	)	(116,905	)
Asset charges (note 3):
MSP contracts		(1,326	)	(1,692	)	(708	)	(900	)	-		-		(737	)	(956	)
SL contracts or LSFP contracts		(897	)	(1,493	)	(2,345	)	(4,798	)	(12	)	(17	)	(1,000	)	(2,164	)
Adjustments to maintain reserves		16		(319	)	104		(267	)	27		(89	)	56		(192	)
Net equity transactions		(611,593	)	(670,981	)	(333,288	)	(218,362	)	(27,493	)	(26,378	)	(207,617	)	(89,304	)
Net change in contract owners’ equity		921,664		(3,462,578	)	399,155		(1,855,652	)	79		(84,535	)	125,091		(999,085	)
Contract owners’ equity beginning of period		5,021,883		8,484,461		3,701,900		5,557,552		110,220		194,755		1,292,981		2,292,066
Contract owners’ equity end of period	$	5,943,547		5,021,883		4,101,055		3,701,900		110,299		110,220		1,418,072		1,292,981
CHANGES IN UNITS:
Beginning units		300,201		330,514		329,459		344,084		13,008		14,274		133,481		140,806
Units purchased		35,824		44,565		51,879		52,883		2,596		3,034		15,064		25,510
Units redeemed		(68,202	)	(74,878	)	(86,112	)	(67,508	)	(5,209	)	(4,300	)	(34,115	)	(32,835	)
Ending units		267,823		300,201		295,226		329,459		10,395		13,008		114,430		133,481

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FVCA2P					FALF				FVMOS				FQB
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	1,214		(83	)	726		1,391		2,671		1,713		93,671		62,172
Realized gain (loss) on investments		(5,242	)	(1,933	)	(79,078	)	(6,372	)	1,739		(6,805	)	(53,184	)	(29,219	)
Change in unrealized gain (loss) on investments		12,506		(4,817	)	74,821		(70,329	)	(10,571	)	1,426		263,048		(151,981	)
Reinvested capital gains		-		292		-		30,551		4,242		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		8,478		(6,541	)	(3,531	)	(44,759	)	(1,919	)	(3,666	)	303,535		(119,028	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,860		1,408		3,869		5,639		34,703		22,242		60,312		55,108
Transfers between funds		17,583		36,480		(39,858	)	(8,031	)	75,436		236,765		658,181		312,248
Surrenders (note 6)		(721	)	-		-		-		(59,071	)	-		(130,975	)	(46,475	)
Death benefits (note 4)		-		-		-		-		-		-		(2,296	)	(5,653	)
Net policy repayments (loans) (note 5)		1,072		537		-		-		16,121		592		(19,346	)	(60,672	)
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		(198	)	-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(2,518	)	(749	)	(1,397	)	(3,893	)	(21,455	)	(8,251	)	(90,376	)	(66,843	)
Asset charges (note 3):
MSP contracts		-		-		-		-		(605	)	(486	)	(1,641	)	(1,605	)
SL contracts or LSFP contracts		-		-		-		-		-		-		(613	)	(485	)
Adjustments to maintain reserves		46		(72	)	16		(117	)	21		(55	)	86		137
Net equity transactions		18,322		37,604		(37,370	)	(6,402	)	45,150		250,807		473,134		185,760
Net change in contract owners’ equity		26,800		31,063		(40,901	)	(51,161	)	43,231		247,141		776,669		66,732
Contract owners’ equity beginning of period		45,402		14,339		85,155		136,316		250,528		3,387		1,315,009		1,248,277
Contract owners’ equity end of period	$	72,202		45,402		44,254		85,155		293,759		250,528		2,091,678		1,315,009
CHANGES IN UNITS:
Beginning units		3,936		880		8,634		9,128		24,932		334		113,494		99,552
Units purchased		1,863		3,131		403		1,432		8,919		25,578		62,710		34,398
Units redeemed		(247	)	(75	)	(5,105	)	(1,926	)	(4,846	)	(980	)	(25,944	)	(20,456	)
Ending units		5,552		3,936		3,932		8,634		29,005		24,932		150,260		113,494

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FEIP					FHIP				FAMP				FCP
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	622,527		1,062,247		811,690		1,044,676		222,733		352,026		332,557		247,457
Realized gain (loss) on investments		(4,141,410	)	(1,435,329	)	(1,001,506	)	(425,055	)	(1,002,406	)	(847,773	)	(3,403,697	)	(1,708,440	)
Change in unrealized gain (loss) on investments		13,456,571		(29,497,045	)	4,248,208		(4,147,025	)	4,158,742		(7,205,671	)	15,345,247		(31,467,403	)
Reinvested capital gains		-		60,582		-		-		21,106		1,825,304		10,716		1,775,353
Net increase (decrease) in contract owners’ equity resulting from operations		9,937,688		(29,809,545	)	4,058,392		(3,527,404	)	3,400,175		(5,876,114	)	12,284,823		(31,153,033	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		2,455,280		2,813,064		28,354		26,129		711,585		797,558		2,137,372		2,551,876
Transfers between funds		(1,270,227	)	(2,139,955	)	(213,276	)	(100,301	)	(652,745	)	(672,840	)	(2,989,906	)	(1,501,664	)
Surrenders (note 6)		(3,910,307	)	(3,825,474	)	(1,039,086	)	(491,902	)	(1,413,302	)	(1,195,351	)	(3,970,568	)	(3,830,157	)
Death benefits (note 4)		(436,420	)	(478,240	)	(99,000	)	(290,416	)	(188,887	)	(134,979	)	(155,968	)	(337,563	)
Net policy repayments (loans) (note 5)		446,043		203,693		(33,352	)	(196,326	)	84,942		20,757		195,386		(127,983	)
Deductions for surrender charges (note 2d)		(17,015	)	(2,895	)	(4,180	)	(607	)	(669	)	(220	)	(1,211	)	(4,943	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(2,969,720	)	(3,111,920	)	(688,321	)	(675,186	)	(928,364	)	(907,220	)	(2,513,604	)	(2,652,418	)
Asset charges (note 3):
MSP contracts		(17,293	)	(25,842	)	(6,742	)	(7,931	)	(4,125	)	(5,212	)	(16,491	)	(23,665	)
SL contracts or LSFP contracts		(6,817	)	(14,785	)	(3,079	)	(4,924	)	(1,565	)	(2,897	)	(13,110	)	(24,523	)
Adjustments to maintain reserves		243		(502	)	217		(252	)	540		(413	)	207		(672	)
Net equity transactions		(5,726,233	)	(6,582,856	)	(2,058,465	)	(1,741,716	)	(2,392,590	)	(2,100,817	)	(7,327,893	)	(5,951,712	)
Net change in contract owners’ equity		4,211,455		(36,392,401	)	1,999,927		(5,269,120	)	1,007,585		(7,976,931	)	4,956,930		(37,104,745	)
Contract owners’ equity beginning of period		37,229,533		73,621,934		10,298,293		15,567,413		13,075,521		21,052,452		39,065,381		76,170,126
Contract owners’ equity end of period	$	41,440,988		37,229,533		12,298,220		10,298,293		14,083,106		13,075,521		44,022,311		39,065,381
CHANGES IN UNITS:
Beginning units		1,468,505		1,670,486		598,157		652,970		641,239		723,126		1,814,238		2,042,344
Units purchased		93,606		109,912		13,177		56,426		36,310		40,854		95,249		206,695
Units redeemed		(306,666	)	(311,893	)	(99,269	)	(111,239	)	(135,879	)	(122,741	)	(403,348	)	(434,801	)
Ending units		1,255,445		1,468,505		512,065		598,157		541,670		641,239		1,506,139		1,814,238

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FNRS2					FF10S				FF20S				FF30S
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(9,477	)	(32,398	)	10,801		16,349		18,359		19,591		8,150		9,144
Realized gain (loss) on investments		(681,476	)	(84,046	)	(123,800	)	(107,080	)	(128,187	)	(15,489	)	(30,149	)	(63,287	)
Change in unrealized gain (loss) on investments		2,000,398		(4,157,163	)	180,691		(120,059	)	252,728		(354,048	)	152,638		(263,829	)
Reinvested capital gains		-		211,141		4,737		33,809		9,217		43,814		6,723		44,634
Net increase (decrease) in contract owners’ equity resulting from operations		1,309,445		(4,062,466	)	72,429		(176,981	)	152,117		(306,132	)	137,362		(273,338	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		236,866		275,297		11,431		23,486		29,341		25,881		42,857		54,063
Transfers between funds		260,248		393,308		(294,920	)	(222,307	)	(103,735	)	256,224		51,268		46,006
Surrenders (note 6)		(346,255	)	(299,160	)	(4,253	)	(23,664	)	(2,579	)	(12,565	)	(3,978	)	(51,447	)
Death benefits (note 4)		(33,618	)	(2,288	)	(1,781	)	-		-		-		-		-
Net policy repayments (loans) (note 5)		36,297		(111,550	)	(1,009	)	(3,491	)	4,481		2,999		(15,777	)	435
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(265,001	)	(307,759	)	(17,421	)	(22,378	)	(41,473	)	(31,764	)	(41,556	)	(37,189	)
Asset charges (note 3):
MSP contracts		(1,262	)	(2,789	)	(229	)	(802	)	(502	)	(1,265	)	-		(90	)
SL contracts or LSFP contracts		(611	)	(1,300	)	-		-		-		-		-		-
Adjustments to maintain reserves		35		(1,568	)	23		(66	)	25		(85	)	25		(91	)
Net equity transactions		(113,301	)	(57,809	)	(308,159	)	(249,222	)	(114,442	)	239,425		32,839		11,687
Net change in contract owners’ equity		1,196,144		(4,120,275	)	(235,730	)	(426,203	)	37,675		(66,707	)	170,201		(261,651	)
Contract owners’ equity beginning of period		2,961,202		7,081,477		598,995		1,025,198		716,332		783,039		430,887		692,538
Contract owners’ equity end of period	$	4,157,346		2,961,202		363,265		598,995		754,007		716,332		601,088		430,887
CHANGES IN UNITS:
Beginning units		288,368		312,864		63,034		80,584		79,058		57,904		49,973		49,338
Units purchased		53,962		37,184		2,917		11,357		7,995		24,896		10,091		21,611
Units redeemed		(66,665	)	(61,680	)	(34,929	)	(28,907	)	(21,807	)	(3,742	)	(6,680	)	(20,976	)
Ending units		275,665		288,368		31,022		63,034		65,246		79,058		53,384		49,973

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FGOP					FGP				FHIPR				FIGBS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(397	)	(4,605	)	(62,525	)	144,446		213,155		158,631		311,272		135,375
Realized gain (loss) on investments		(146,762	)	88,819		(5,256,306	)	(2,562,727	)	(322,408	)	(85,512	)	(28,931	)	(50,645	)
Change in unrealized gain (loss) on investments		925,998		(2,525,563	)	16,323,642		(38,836,729	)	979,571		(534,596	)	219,877		(200,795	)
Reinvested capital gains		-		-		38,375		-		-		-		15,861		2,999
Net increase (decrease) in contract owners’ equity resulting from operations		778,839		(2,441,349	)	11,043,186		(41,255,010	)	870,318		(461,477	)	518,079		(113,066	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		195,138		227,860		3,956,462		4,538,552		753,819		787,514		150,186		198,817
Transfers between funds		(98,755	)	40,154		(1,368,369	)	(2,886,422	)	519,767		48,558		970,442		(186,724	)
Surrenders (note 6)		(244,357	)	(207,748	)	(3,906,289	)	(4,410,207	)	(612,064	)	(253,439	)	(123,018	)	(114,598	)
Death benefits (note 4)		(88,059	)	(2,278	)	(1,106,153	)	(348,101	)	(2,522	)	(8,388	)	(102,184	)	(40,634	)
Net policy repayments (loans) (note 5)		57,122		11,057		1,089,762		229,705		269,945		275,342		(9,894	)	4,970
Deductions for surrender charges (note 2d)		(8	)	(2,538	)	(11,745	)	(6,936	)	(76	)	(121	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(166,179	)	(180,283	)	(3,882,075	)	(4,253,155	)	(324,349	)	(234,636	)	(156,717	)	(188,565	)
Asset charges (note 3):
MSP contracts		(877	)	(1,144	)	(10,453	)	(18,218	)	(1,177	)	(909	)	(1,433	)	(1,605	)
SL contracts or LSFP contracts		(1,200	)	(2,580	)	(9,125	)	(18,333	)	-		-		(868	)	(1,176	)
Adjustments to maintain reserves		23		(158	)	(3,368	)	(2,678	)	62		(67	)	71		(97	)
Net equity transactions		(347,152	)	(117,658	)	(5,251,353	)	(7,175,793	)	603,405		613,854		726,585		(329,612	)
Net change in contract owners’ equity		431,687		(2,559,007	)	5,791,833		(48,430,803	)	1,473,723		152,377		1,244,664		(442,678	)
Contract owners’ equity beginning of period		1,929,008		4,488,015		43,329,099		91,759,902		1,764,610		1,612,233		3,113,852		3,556,530
Contract owners’ equity end of period	$	2,360,695		1,929,008		49,120,932		43,329,099		3,238,333		1,764,610		4,358,516		3,113,852
CHANGES IN UNITS:
Beginning units		297,576		308,836		1,982,815		2,229,562		239,614		163,580		279,635		307,614
Units purchased		92,308		85,131		167,754		145,627		154,704		125,038		103,969		22,341
Units redeemed		(144,232	)	(96,391	)	(430,197	)	(392,374	)	(86,791	)	(49,004	)	(43,278	)	(50,320	)
Ending units		245,652		297,576		1,720,372		1,982,815		307,527		239,614		340,326		279,635

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FMCS					FOP				FOSR				FVSS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	5,664		(14,679	)	115,296		244,292		67,500		118,681		1,034		2,107
Realized gain (loss) on investments		(917,843	)	(333,004	)	226,630		842,010		(481,927	)	(129,120	)	(322,411	)	(156,651	)
Change in unrealized gain (loss) on investments		3,081,963		(5,204,756	)	1,378,448		(9,754,261	)	1,382,081		(3,608,460	)	746,805		(780,745	)
Reinvested capital gains		34,403		1,450,355		24,404		1,659,711		13,194		603,345		-		238,185
Net increase (decrease) in contract owners’ equity resulting from operations		2,204,187		(4,102,084	)	1,744,778		(7,008,248	)	980,848		(3,015,554	)	425,428		(697,104	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		475,431		516,035		1,312		12		731,624		793,422		71,587		45,258
Transfers between funds		183,382		302,262		(281,846	)	(681,569	)	(50,432	)	603,939		242,601		(53,255	)
Surrenders (note 6)		(650,930	)	(728,349	)	(714,161	)	(962,876	)	(869,849	)	(356,406	)	(49,095	)	(40,749	)
Death benefits (note 4)		(22,835	)	(15,236	)	(40,247	)	(67,621	)	(25,490	)	(20,404	)	(35,639	)	(11,692	)
Net policy repayments (loans) (note 5)		(56,894	)	(60,723	)	36,190		(150,550	)	572,888		164,641		32,203		13,061
Deductions for surrender charges (note 2d)		-		(3,819	)	-		(3,181	)	(7	)	(786	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(400,245	)	(401,950	)	(384,050	)	(470,276	)	(370,844	)	(354,973	)	(49,174	)	(37,145	)
Asset charges (note 3):
MSP contracts		(1,983	)	(3,783	)	(2,766	)	(4,292	)	(777	)	(1,087	)	(182	)	(329	)
SL contracts or LSFP contracts		(826	)	(1,463	)	(2,056	)	(5,107	)	(1,119	)	(2,604	)	(753	)	(1,618	)
Adjustments to maintain reserves		175		(59	)	333		420		50		(2,049	)	33		(168	)
Net equity transactions		(474,725	)	(397,085	)	(1,387,291	)	(2,345,040	)	(13,956	)	823,693		211,581		(86,637	)
Net change in contract owners’ equity		1,729,462		(4,499,169	)	357,487		(9,353,288	)	966,892		(2,191,861	)	637,009		(783,741	)
Contract owners’ equity beginning of period		5,945,144		10,444,313		7,950,865		17,304,153		3,850,871		6,042,732		637,598		1,421,339
Contract owners’ equity end of period	$	7,674,606		5,945,144		8,308,352		7,950,865		4,817,763		3,850,871		1,274,607		637,598
CHANGES IN UNITS:
Beginning units		374,639		396,358		456,952		549,270		404,291		354,418		79,227		85,958
Units purchased		43,428		61,062		6,564		4,086		89,264		120,175		34,329		7,020
Units redeemed		(71,104	)	(82,781	)	(87,927	)	(96,404	)	(91,722	)	(70,302	)	(12,499	)	(13,751	)
Ending units		346,963		374,639		375,589		456,952		401,833		404,291		101,057		79,227

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FTVIS2					FTVRDI				FTVSVI				FTVDM3
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	56,908		51,627		33,780		53,608		32,072		25,713		38,139		41,943
Realized gain (loss) on investments		(140,222	)	(64,802	)	(270,608	)	(12,080	)	(284,296	)	(22,002	)	(435,084	)	(185,209	)
Change in unrealized gain (loss) on investments		305,858		(360,161	)	630,706		(1,132,566	)	757,121		(1,291,291	)	1,050,776		(1,423,821	)
Reinvested capital gains		-		23,851		-		26,328		101,518		221,202		4,161		372,119
Net increase (decrease) in contract owners’ equity resulting from operations		222,544		(349,485	)	393,878		(1,064,710	)	606,415		(1,066,378	)	657,992		(1,194,968	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		40,876		42,077		144,927		212,811		158,748		203,293		73,066		103,140
Transfers between funds		164,055		(77,738	)	(492,396	)	18,186		86,020		232,636		362,877		(943,069	)
Surrenders (note 6)		(55,332	)	(80,825	)	(209,922	)	(201,613	)	(214,475	)	(176,054	)	(47,882	)	(87,764	)
Death benefits (note 4)		-		-		(2,560	)	(13,279	)	(4,313	)	(282	)	(1,801	)	(7,839	)
Net policy repayments (loans) (note 5)		(11,467	)	(8,243	)	(169,532	)	22,813		(23,544	)	(59,739	)	(44,352	)	(3,202	)
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(50,657	)	(52,114	)	(134,769	)	(135,536	)	(98,484	)	(97,133	)	(73,885	)	(84,089	)
Asset charges (note 3):
MSP contracts		(516	)	(691	)	(286	)	(831	)	(588	)	(442	)	(391	)	(848	)
SL contracts or LSFP contracts		-		-		(671	)	(1,387	)	(172	)	(294	)	(157	)	(250	)
Adjustments to maintain reserves		36		(54	)	71		(182	)	46		(169	)	82		31
Net equity transactions		86,995		(177,588	)	(865,138	)	(99,018	)	(96,762	)	101,816		267,557		(1,023,890	)
Net change in contract owners’ equity		309,539		(527,073	)	(471,260	)	(1,163,728	)	509,653		(964,562	)	925,549		(2,218,858	)
Contract owners’ equity beginning of period		737,438		1,264,511		2,889,895		4,053,623		2,164,865		3,129,427		821,208		3,040,066
Contract owners’ equity end of period	$	1,046,977		737,438		2,418,635		2,889,895		2,674,518		2,164,865		1,746,757		821,208
CHANGES IN UNITS:
Beginning units		91,335		109,552		250,263		255,322		160,287		154,814		83,754		145,952
Units purchased		20,429		8,698		17,164		44,208		23,530		34,091		33,106		7,839
Units redeemed		(15,727	)	(26,915	)	(88,682	)	(49,267	)	(30,415	)	(28,618	)	(13,208	)	(70,037	)
Ending units		96,037		91,335		178,745		250,263		153,402		160,287		103,652		83,754

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	TIF					TIF3				FTVGI3				FTVFA2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	11,500		14,001		43,777		42,403		346,480		93,394		597		288
Realized gain (loss) on investments		(51,231	)	(342	)	(514,026	)	13,770		(14,861	)	50,067		1,672		(105	)
Change in unrealized gain (loss) on investments		118,728		(376,971	)	791,793		(1,292,270	)	85,365		(67,057	)	2,345		(537	)
Reinvested capital gains		14,644		61,369		59,468		199,441		-		-		-		295
Net increase (decrease) in contract owners’ equity resulting from operations		93,641		(301,943	)	381,012		(1,036,656	)	416,984		76,404		4,614		(59	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		-		11		89,311		123,082		115,932		250,447		672		(260	)
Transfers between funds		(31,476	)	(55,306	)	(470,941	)	(140,802	)	(4,536	)	912,720		14,464		10,761
Surrenders (note 6)		(105,509	)	(48,047	)	(114,136	)	(147,861	)	(632,296	)	(32,712	)	(2,681	)	-
Death benefits (note 4)		-		-		(2,459	)	-		(5,550	)	-		-		-
Net policy repayments (loans) (note 5)		(1,361	)	(9,109	)	(18,230	)	(7,946	)	(2,451	)	(197,317	)	3,756		-
Deductions for surrender charges (note 2d)		-		(2,404	)	(13	)	(301	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(15,057	)	(26,984	)	(53,590	)	(68,206	)	(85,918	)	(63,877	)	(1,109	)	(142	)
Asset charges (note 3):
MSP contracts		(47	)	(467	)	(1,476	)	(2,234	)	(1,586	)	(1,176	)	(32	)	-
SL contracts or LSFP contracts		(34	)	(254	)	(355	)	(533	)	(325	)	(343	)	-		-
Adjustments to maintain reserves		31		(146	)	37		(150	)	81		(147	)	11		(13	)
Net equity transactions		(153,453	)	(142,706	)	(571,852	)	(244,951	)	(616,649	)	867,595		15,081		10,346
Net change in contract owners’ equity		(59,812	)	(444,649	)	(190,840	)	(1,281,607	)	(199,665	)	943,999		19,695		10,287
Contract owners’ equity beginning of period		378,284		822,933		1,433,010		2,714,617		2,680,985		1,736,986		10,287		-
Contract owners’ equity end of period	$	318,472		378,284		1,242,170		1,433,010		2,481,320		2,680,985		29,982		10,287
CHANGES IN UNITS:
Beginning units		26,503		34,294		154,395		173,600		207,527		142,098		1,551		-
Units purchased		-		3,280		11,322		11,553		11,962		91,956		3,972		1,574
Units redeemed		(10,143	)	(11,071	)	(67,629	)	(30,758	)	(56,902	)	(26,527	)	(2,037	)	(23	)
Ending units		16,360		26,503		98,088		154,395		162,587		207,527		3,486		1,551

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AMBP					AMTG				AMGP				AMINS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	753		8,106		(37,241	)	(87,788	)	(2,056	)	(205	)	(68	)	(1,570	)
Realized gain (loss) on investments		(95,075	)	(2,637	)	1,742,544		812,672		(83,275	)	61,132		(144,596	)	(12,061	)
Change in unrealized gain (loss) on investments		117,163		(122,509	)	(249,783	)	(8,858,322	)	243,444		(769,048	)	180,074		(168,711	)
Reinvested capital gains		-		-		-		-		-		57,134		-		50
Net increase (decrease) in contract owners’ equity resulting from operations		22,841		(117,040	)	1,455,520		(8,133,438	)	158,113		(650,987	)	35,410		(182,292	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		7,081		13,420		507,047		958,494		51,000		51,585		8,751		16,021
Transfers between funds		(114,597	)	40,595		(8,807,216	)	(455,531	)	(1,089,516	)	(63,928	)	(202,470	)	(66,121	)
Surrenders (note 6)		-		-		(852,280	)	(977,494	)	(16,521	)	(120,528	)	(10,624	)	(18,632	)
Death benefits (note 4)		-		-		(70,205	)	(124,393	)	-		-		-		(820	)
Net policy repayments (loans) (note 5)		(43,334	)	(2,589	)	338,090		25,020		834		50,335		775		(1,257	)
Deductions for surrender charges (note 2d)		-		-		(1,939	)	(429	)	-		(2,140	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(7,017	)	(11,379	)	(576,566	)	(935,771	)	(40,598	)	(66,903	)	(6,347	)	(12,861	)
Asset charges (note 3):
MSP contracts		-		-		(846	)	(2,015	)	(252	)	(595	)	(32	)	(88	)
SL contracts or LSFP contracts		-		-		(2,881	)	(5,421	)	(299	)	(534	)	(72	)	(128	)
Adjustments to maintain reserves		8		(72	)	178		311		45		(179	)	18		(34	)
Net equity transactions		(157,859	)	39,975		(9,466,618	)	(1,517,229	)	(1,095,307	)	(152,887	)	(210,001	)	(83,920	)
Net change in contract owners’ equity		(135,018	)	(77,065	)	(8,011,098	)	(9,650,667	)	(937,194	)	(803,874	)	(174,591	)	(266,212	)
Contract owners’ equity beginning of period		183,260		260,325		9,765,435		19,416,102		1,046,187		1,850,061		191,290		457,502
Contract owners’ equity end of period	$	48,242		183,260		1,754,337		9,765,435		108,993		1,046,187		16,699		191,290
CHANGES IN UNITS:
Beginning units		19,249		16,200		542,560		612,678		111,984		123,678		24,289		30,956
Units purchased		652		4,056		38,629		57,487		4,445		9,375		1,323		2,552
Units redeemed		(16,577	)	(1,007	)	(378,334	)	(127,605	)	(107,127	)	(21,069	)	(24,064	)	(9,219	)
Ending units		3,324		19,249		202,855		542,560		9,302		111,984		1,548		24,289

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AMMCGS					AMTP				AMRS				AMFAS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(942	)	(2,904	)	29,011		6,279		(119	)	1,363		(418	)	(480	)
Realized gain (loss) on investments		(169,871	)	(4,873	)	(8,969,691	)	342,579		(93,995	)	(21,799	)	(22,473	)	(3,067	)
Change in unrealized gain (loss) on investments		209,833		(290,281	)	13,210,302		(17,653,649	)	120,645		(106,389	)	43,512		(52,957	)
Reinvested capital gains		-		-		301,955		3,525,524		261		478		-		4,125
Net increase (decrease) in contract owners’ equity resulting from operations		39,020		(298,058	)	4,571,577		(13,779,267	)	26,792		(126,347	)	20,621		(52,379	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		15,957		22,394		688,890		1,136,221		6,418		6,530		3,689		3,778
Transfers between funds		(330,700	)	(192,130	)	(12,299,036	)	(852,825	)	(121,775	)	(11,356	)	10,969		41,721
Surrenders (note 6)		(30,373	)	(38,516	)	(1,187,690	)	(1,391,602	)	(19,844	)	(1,473	)	(22,868	)	(5,790	)
Death benefits (note 4)		-		-		(140,035	)	(11,651	)	-		-		-		-
Net policy repayments (loans) (note 5)		2,146		5,405		58,627		80,628		(153	)	(811	)	(2,687	)	433
Deductions for surrender charges (note 2d)		-		-		-		(413	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(12,817	)	(26,807	)	(620,472	)	(1,066,822	)	(5,026	)	(7,895	)	(8,401	)	(7,357	)
Asset charges (note 3):
MSP contracts		(31	)	(75	)	(3,609	)	(10,364	)	-		-		-		-
SL contracts or LSFP contracts		(39	)	(75	)	(9,363	)	(17,841	)	(95	)	(419	)	(18	)	(21	)
Adjustments to maintain reserves		46		(135	)	65		(619	)	19		(96	)	32		(99	)
Net equity transactions		(355,811	)	(229,939	)	(13,512,623	)	(2,135,288	)	(140,456	)	(15,520	)	(19,284	)	32,665
Net change in contract owners’ equity		(316,791	)	(527,997	)	(8,941,046	)	(15,914,555	)	(113,664	)	(141,867	)	1,337		(19,714	)
Contract owners’ equity beginning of period		326,183		854,180		12,115,734		28,030,289		136,784		278,651		80,487		100,201
Contract owners’ equity end of period	$	9,392		326,183		3,174,688		12,115,734		23,120		136,784		81,824		80,487
CHANGES IN UNITS:
Beginning units		26,201		38,612		711,690		785,552		19,235		21,108		8,901		6,674
Units purchased		1,422		1,478		61,116		105,357		651		1,080		1,924		3,318
Units redeemed		(27,065	)	(13,889	)	(590,986	)	(179,219	)	(17,691	)	(2,953	)	(3,424	)	(1,091	)
Ending units		558		26,201		181,820		711,690		2,195		19,235		7,401		8,901

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AMSRS					OVMS				OVGR				OVB
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	4,422		5,442		(36,811	)	235,502		(12,361	)	(34,756	)	(24,687	)	383,601
Realized gain (loss) on investments		(31,315	)	(8,400	)	(722,147	)	(331,150	)	59,339		339,049		(999,223	)	(206,549	)
Change in unrealized gain (loss) on investments		97,758		(191,453	)	1,981,232		(5,786,944	)	2,018,895		(4,853,585	)	1,397,183		(4,036,010	)
Reinvested capital gains		-		25,299		-		713,901		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		70,865		(169,112	)	1,222,274		(5,168,691	)	2,065,873		(4,549,292	)	373,273		(3,858,958	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		24,751		27,700		436,879		585,480		483,068		527,843		401,566		453,034
Transfers between funds		(23,489	)	24,207		(186,810	)	(303,726	)	(87,333	)	(326,922	)	(459,411	)	(460,068	)
Surrenders (note 6)		(8,623	)	(72,312	)	(783,688	)	(796,755	)	(579,308	)	(456,484	)	(687,393	)	(662,375	)
Death benefits (note 4)		-		(10,994	)	(141,617	)	(49,655	)	(71,402	)	(43,763	)	(161,576	)	(85,657	)
Net policy repayments (loans) (note 5)		4,787		6,841		115,605		62,444		54,917		(30,451	)	299,521		(17,023	)
Deductions for surrender charges (note 2d)		-		-		(626	)	-		(4,265	)	(661	)	(970	)	(276	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(15,525	)	(17,750	)	(501,653	)	(561,282	)	(459,385	)	(488,499	)	(356,088	)	(471,122	)
Asset charges (note 3):
MSP contracts		(83	)	(102	)	(3,448	)	(5,985	)	(2,271	)	(3,462	)	(3,763	)	(5,911	)
SL contracts or LSFP contracts		(12	)	(77	)	(841	)	(2,126	)	(1,882	)	(3,237	)	(1,969	)	(5,372	)
Adjustments to maintain reserves		49		(147	)	292		(449	)	107		(243	)	118		(799	)
Net equity transactions		(18,145	)	(42,634	)	(1,065,907	)	(1,072,054	)	(667,754	)	(825,879	)	(969,965	)	(1,255,569	)
Net change in contract owners’ equity		52,720		(211,746	)	156,367		(6,240,745	)	1,398,119		(5,375,171	)	(596,692	)	(5,114,527	)
Contract owners’ equity beginning of period		251,446		463,192		6,321,935		12,562,680		5,134,821		10,509,992		5,709,106		10,823,633
Contract owners’ equity end of period	$	304,166		251,446		6,478,302		6,321,935		6,532,940		5,134,821		5,112,414		5,709,106
CHANGES IN UNITS:
Beginning units		23,325		25,882		375,146		421,302		504,124		559,388		380,913		435,076
Units purchased		2,985		4,589		25,347		33,220		65,885		95,331		33,202		25,534
Units redeemed		(4,719	)	(7,146	)	(79,722	)	(79,376	)	(123,420	)	(150,595	)	(95,013	)	(79,697	)
Ending units		21,591		23,325		320,771		375,146		446,589		504,124		319,102		380,913

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	OVGS3					OVGS				OVHI3				OVHI
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	92,545		64,062		285,003		254,770		(524	)	5,736		(252	)	23,417
Realized gain (loss) on investments		(302,676	)	(38,743	)	109,741		890,878		(111,237	)	(16,997	)	(48,614	)	(39,633	)
Change in unrealized gain (loss) on investments		2,101,638		(3,833,736	)	4,426,591		(14,677,210	)	135,141		(111,625	)	63,913		(253,539	)
Reinvested capital gains		118,131		440,445		350,108		1,699,138		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		2,009,638		(3,367,972	)	5,171,443		(11,832,424	)	23,380		(122,886	)	15,047		(269,755	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		1,002,423		1,117,869		220		(3,495	)	19,666		18,810		3,409		3,411
Transfers between funds		(108,866	)	(233,099	)	(861,103	)	(1,518,166	)	85,737		61,315		(5,578	)	(79,716	)
Surrenders (note 6)		(648,541	)	(619,788	)	(1,463,831	)	(1,474,058	)	(39,687	)	(2,916	)	(3,103	)	(6,946	)
Death benefits (note 4)		(24,893	)	(37,387	)	(430,834	)	(166,282	)	-		-		-		-
Net policy repayments (loans) (note 5)		326,759		408,024		(167,745	)	(383,499	)	26,045		433		(326	)	(8,296	)
Deductions for surrender charges (note 2d)		-		(170	)	(4,426	)	(422	)	-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(454,271	)	(400,832	)	(823,738	)	(926,388	)	(7,434	)	(6,048	)	(3,686	)	(13,684	)
Asset charges (note 3):
MSP contracts		(1,090	)	(1,695	)	(7,421	)	(10,538	)	(65	)	(71	)	(80	)	(299	)
SL contracts or LSFP contracts		(1,205	)	(1,752	)	(3,121	)	(5,433	)	-		-		(67	)	(357	)
Adjustments to maintain reserves		71		(171	)	278		(839	)	(9	)	(296	)	13		(107	)
Net equity transactions		90,387		230,999		(3,761,721	)	(4,489,120	)	84,253		71,227		(9,418	)	(105,994	)
Net change in contract owners’ equity		2,100,025		(3,136,973	)	1,409,722		(16,321,544	)	107,633		(51,659	)	5,629		(375,749	)
Contract owners’ equity beginning of period		4,994,166		8,131,139		15,797,636		32,119,180		51,259		102,918		66,384		442,133
Contract owners’ equity end of period	$	7,094,191		4,994,166		17,207,358		15,797,636		158,892		51,259		72,013		66,384
CHANGES IN UNITS:
Beginning units		564,201		546,620		649,618		777,386		25,357		10,694		23,367		33,128
Units purchased		134,786		159,895		2,352		17,662		48,590		17,267		1,090		314
Units redeemed		(122,303	)	(142,314	)	(155,636	)	(145,430	)	(11,644	)	(2,604	)	(4,218	)	(10,075	)
Ending units		576,684		564,201		496,334		649,618		62,303		25,357		20,239		23,367

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	OVGI					OVSC				OVAG				PMVFBA
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	17,316		16,796		1,163		772		(3,892	)	(5,819	)	520		-
Realized gain (loss) on investments		(172,947	)	(1,864	)	(113,308	)	(55,522	)	(64,898	)	(2,162	)	2,271		-
Change in unrealized gain (loss) on investments		381,743		(829,089	)	350,389		(354,138	)	256,856		(590,571	)	(8,370	)	-
Reinvested capital gains		-		103,443		-		52,671		-		-		2,855		-
Net increase (decrease) in contract owners’ equity resulting from operations		226,112		(710,714	)	238,244		(356,217	)	188,066		(598,552	)	(2,724	)	-
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		97,543		79,428		46,251		40,918		78,729		85,976		1,145		-
Transfers between funds		(116,356	)	(94,002	)	204,376		(273,881	)	38,369		(49,406	)	178,893		-
Surrenders (note 6)		(59,409	)	(74,574	)	(41,485	)	(41,348	)	(33,300	)	(81,439	)	-		-
Death benefits (note 4)		-		-		(1,642	)	(16,422	)	(1,799	)	(557	)	-		-
Net policy repayments (loans) (note 5)		(15,446	)	610		787		(1,134	)	(18,747	)	49,526		(2,544	)	-
Deductions for surrender charges (note 2d)		-		(351	)	-		-		-		(249	)	-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(67,025	)	(75,959	)	(42,985	)	(38,810	)	(82,124	)	(80,252	)	(1,820	)	-
Asset charges (note 3):
MSP contracts		(1,367	)	(1,996	)	(53	)	(69	)	(120	)	(269	)	(27	)	-
SL contracts or LSFP contracts		(257	)	(614	)	(183	)	(350	)	(85	)	(130	)	-		-
Adjustments to maintain reserves		40		(133	)	52		(146	)	20		(79	)	(34	)	-
Net equity transactions		(162,277	)	(167,591	)	165,118		(331,242	)	(19,057	)	(76,879	)	175,613		-
Net change in contract owners’ equity		63,835		(878,305	)	403,362		(687,459	)	169,009		(675,431	)	172,889		-
Contract owners’ equity beginning of period		1,083,468		1,961,773		505,442		1,192,901		604,276		1,279,707		-		-
Contract owners’ equity end of period	$	1,147,303		1,083,468		908,804		505,442		773,285		604,276		172,889		-
CHANGES IN UNITS:
Beginning units		156,989		174,176		40,422		59,084		174,953		187,576		-		-
Units purchased		15,235		16,494		18,964		5,322		46,449		29,164		16,215		-
Units redeemed		(42,287	)	(33,681	)	(6,107	)	(23,984	)	(50,335	)	(41,787	)	(396	)	-
Ending units		129,937		156,989		53,279		40,422		171,067		174,953		15,819		-

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	PMVLDA				PVGIB				PVTIGB				PVTVB
	2009			2008	2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	8,048		-	1,008		1,642		(1,310	)	5,833		(958	)	(167	)
Realized gain (loss) on investments		7,261		-	(7,476	)	(26,388	)	(190,014	)	(15,704	)	(1,222	)	(2,398	)
Change in unrealized gain (loss) on investments		(47,264	)	-	19,983		(28,723	)	248,181		(253,636	)	172,708		(22,668	)
Reinvested capital gains		61,353		-	-		18,045		-		60,435		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		29,398		-	13,515		(35,424	)	56,857		(203,072	)	170,528		(25,233	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		15,430		-	5,256		4,129		17,214		20,815		57,004		3,155
Transfers between funds		1,654,036		-	(436	)	(21,155	)	(53,828	)	(28,434	)	404,222		(4,440	)
Surrenders (note 6)		(28,764	)	-	(4,246	)	-		(38,887	)	(44,085	)	(1,472	)	(6,818	)
Death benefits (note 4)		-		-	-		-		-		-		-		-
Net policy repayments (loans) (note 5)		(94,048	)	-	12		(2,046	)	(2,234	)	8,290		(4,284	)	-
Deductions for surrender charges (note 2d)		-		-	-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(20,973	)	-	(4,243	)	(5,017	)	(16,138	)	(16,970	)	(19,986	)	(4,541	)
Asset charges (note 3):
MSP contracts		(247	)	-	-		-		-		-		(132	)	(133	)
SL contracts or LSFP contracts		-		-	-		-		(43	)	(63	)	(68	)	(47	)
Adjustments to maintain reserves		(201	)	-	29		(76	)	33		(91	)	42		(104	)
Net equity transactions		1,525,233		-	(3,628	)	(24,165	)	(93,883	)	(60,538	)	435,326		(12,928	)
Net change in contract owners’ equity		1,554,631		-	9,887		(59,589	)	(37,026	)	(263,610	)	605,854		(38,161	)
Contract owners’ equity beginning of period		-		-	46,637		106,226		240,559		504,169		35,464		73,625
Contract owners’ equity end of period	$	1,554,631		-	56,524		46,637		203,533		240,559		641,318		35,464
CHANGES IN UNITS:
Beginning units		-		-	4,977		6,898		19,161		22,396		3,901		5,100
Units purchased		155,769		-	783		424		1,581		2,669		42,183		515
Units redeemed		(14,580	)	-	(1,086	)	(2,345	)	(7,665	)	(5,904	)	(2,186	)	(1,714	)
Ending units		141,189		-	4,674		4,977		13,077		19,161		43,898		3,901

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	TRBCG2					TREI2				TRLT2				VWBF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(4,033	)	(3,079	)	12,637		22,229		33,492		34,081		91,843		273,928
Realized gain (loss) on investments		(102,921	)	(62,852	)	(176,347	)	(113,773	)	35,744		(6,980	)	(55,525	)	(117,440	)
Change in unrealized gain (loss) on investments		411,120		(314,438	)	404,989		(538,011	)	38,155		(40,878	)	108,778		(95,471	)
Reinvested capital gains		-		-		-		42,804		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		304,166		(380,369	)	241,279		(586,751	)	107,391		(13,777	)	145,096		61,017
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		33,016		38,009		45,948		66,890		11,824		173,789		85,438		108,224
Transfers between funds		249,640		256,809		201,782		149,358		(1,506,941	)	997,833		(251,923	)	207,377
Surrenders (note 6)		(26,624	)	(19,950	)	(60,005	)	(116,663	)	(9,750	)	(666	)	(161,620	)	(188,823	)
Death benefits (note 4)		-		-		-		(10,860	)	-		-		(6,045	)	(19,682	)
Net policy repayments (loans) (note 5)		(2,907	)	(12,084	)	(19,004	)	(16,082	)	(3,803	)	(961	)	(2,195	)	(67,490	)
Deductions for surrender charges (note 2d)		-		-		-		-		-		-		-		-
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(30,403	)	(25,118	)	(66,288	)	(62,595	)	(63,957	)	(51,840	)	(172,892	)	(154,769	)
Asset charges (note 3):
MSP contracts		(158	)	(280	)	(45	)	(68	)	(141	)	(115	)	(1,073	)	(1,904	)
SL contracts or LSFP contracts		(55	)	(62	)	(140	)	(362	)	(158	)	(144	)	(191	)	(297	)
Adjustments to maintain reserves		60		(144	)	29		(100	)	135		(170	)	190		(354	)
Net equity transactions		222,569		237,180		102,277		9,518		(1,572,791	)	1,117,726		(510,311	)	(117,718	)
Net change in contract owners’ equity		526,735		(143,189	)	343,556		(577,233	)	(1,465,400	)	1,103,949		(365,215	)	(56,701	)
Contract owners’ equity beginning of period		526,514		669,703		937,459		1,514,692		1,500,896		396,947		3,183,784		3,240,485
Contract owners’ equity end of period	$	1,053,249		526,514		1,281,015		937,459		35,496		1,500,896		2,818,569		3,183,784
CHANGES IN UNITS:
Beginning units		67,158		48,770		115,290		118,142		136,079		36,256		141,973		152,430
Units purchased		36,004		24,943		30,636		25,941		2,352		105,304		7,136		24,032
Units redeemed		(7,902	)	(6,555	)	(19,561	)	(28,793	)	(135,487	)	(5,481	)	(27,371	)	(34,489	)
Ending units		95,260		67,158		126,365		115,290		2,944		136,079		121,738		141,973

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	VWEM					VWHA				WRASP			SVDF
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	(20,821	)	(44,508	)	(30,954	)	(47,448	)	(1,478	)	-	(17,392	)	(40,919	)
Realized gain (loss) on investments		(2,812,387	)	(766,696	)	(823,411	)	878,227		2,617		-	451,192		302,092
Change in unrealized gain (loss) on investments		6,703,119		(11,625,758	)	4,897,070		(10,427,706	)	66,440		-	584,502		(4,172,398	)
Reinvested capital gains		364,335		4,614,460		45,887		2,230,752		11,582		-	-		-
Net increase (decrease) in contract owners’ equity resulting from operations		4,234,246		(7,822,502	)	4,088,592		(7,366,175	)	79,161		-	1,018,302		(3,911,225	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		421,617		384,120		727,325		406,903		30,571		-	163,019		292,856
Transfers between funds		781,019		(1,656,316	)	1,642,278		421,092		1,191,497		-	(5,065,427	)	23,032
Surrenders (note 6)		(379,228	)	(612,874	)	(870,843	)	(884,774	)	(34,077	)	-	(243,213	)	(316,597	)
Death benefits (note 4)		(4,815	)	(14,697	)	(42,652	)	(124,529	)	-		-	(5,178	)	(12,879	)
Net policy repayments (loans) (note 5)		(144,106	)	(182,129	)	(89,836	)	(337,743	)	2,359		-	43,149		(94,283	)
Deductions for surrender charges (note 2d)		-		(3,545	)	-		-		-		-	-		(62	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(334,971	)	(330,611	)	(455,133	)	(494,629	)	(13,324	)	-	(193,327	)	(315,059	)
Asset charges (note 3):
MSP contracts		(3,064	)	(3,464	)	(4,568	)	(7,192	)	(131	)	-	(816	)	(2,051	)
SL contracts or LSFP contracts		(2,288	)	(4,557	)	(1,261	)	(2,137	)	-		-	(274	)	(362	)
Adjustments to maintain reserves		658		(488	)	225		(6,828	)	7		-	551		(499	)
Net equity transactions		334,822		(2,424,561	)	905,535		(1,029,837	)	1,176,902		-	(5,301,516	)	(425,904	)
Net change in contract owners’ equity		4,569,068		(10,247,063	)	4,994,127		(8,396,012	)	1,256,063		-	(4,283,214	)	(4,337,129	)
Contract owners’ equity beginning of period		3,879,432		14,126,495		7,354,615		15,750,627		-		-	4,684,292		9,021,421
Contract owners’ equity end of period	$	8,448,500		3,879,432		12,348,742		7,354,615		1,256,063		-	401,078		4,684,292
CHANGES IN UNITS:
Beginning units		362,729		462,678		265,366		305,020		-		-	204,783		219,312
Units purchased		72,855		27,773		56,959		24,911		109,477		-	10,239		16,840
Units redeemed		(66,108	)	(127,722	)	(32,402	)	(64,565	)	(4,164	)	-	(190,291	)	(31,369	)
Ending units		369,476		362,729		289,923		265,366		105,313		-	24,731		204,783

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SVOF					WFVSCG			WIEP				WVCP
	2009			2008		2009		2008	2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(66,698	)	338,413		(303	)	-	39,730		69,809		7,725		6,743
Realized gain (loss) on investments		(8,320,287	)	(1,054,048	)	11,345		-	174,949		272,365		(200,469	)	(3,387	)
Change in unrealized gain (loss) on investments		13,359,229		(16,836,194	)	11,001		-	302,922		(3,273,541	)	291,127		(311,364	)
Reinvested capital gains		-		5,761,705		-		-	-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		4,972,244		(11,790,124	)	22,043		-	517,601		(2,931,367	)	98,383		(308,008	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		669,169		1,207,952		23,718		-	180,516		259,226		22,676		31,502
Transfers between funds		(18,461,490	)	(968,586	)	100,440		-	(4,291,976	)	(294,235	)	(418,701	)	(51,220	)
Surrenders (note 6)		(986,376	)	(1,782,655	)	(375	)	-	(157,488	)	(287,519	)	(19,953	)	(44,625	)
Death benefits (note 4)		(188,066	)	(124,210	)	-		-	(12,773	)	(8,170	)	-		(1,506	)
Net policy repayments (loans) (note 5)		221,411		(199,686	)	(1,705	)	-	50,774		(38,576	)	9,815		16,835
Deductions for surrender charges (note 2d)		(3,871	)	(562	)	-		-	(285	)	(2,332	)	(7	)	(25	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(807,764	)	(1,324,857	)	(2,638	)	-	(187,843	)	(311,117	)	(25,726	)	(26,272	)
Asset charges (note 3):
MSP contracts		(2,606	)	(6,041	)	(2	)	-	(1,481	)	(3,692	)	(178	)	(284	)
SL contracts or LSFP contracts		(2,205	)	(3,544	)	-		-	(869	)	(2,329	)	(247	)	(497	)
Adjustments to maintain reserves		162		(1,430	)	1		-	(38,083	)	(288	)	2,937		(212	)
Net equity transactions		(19,561,636	)	(3,203,619	)	119,439		-	(4,459,508	)	(689,032	)	(429,384	)	(76,304	)
Net change in contract owners’ equity		(14,589,392	)	(14,993,743	)	141,482		-	(3,941,907	)	(3,620,399	)	(331,001	)	(384,312	)
Contract owners’ equity beginning of period		16,581,833		31,575,576		-		-	3,941,907		7,562,306		331,360		715,672
Contract owners’ equity end of period	$	1,992,441		16,581,833		141,482		-	-		3,941,907		359		331,360
CHANGES IN UNITS:
Beginning units		588,080		660,648		-		-	356,969		403,012		44,035		50,130
Units purchased		24,249		34,331		11,204		-	17,499		32,557		3,071		5,869
Units redeemed		(477,790	)	(106,899	)	(447	)	-	(374,468	)	(78,600	)	(47,072	)	(11,964	)
Ending units		134,539		588,080		10,757		-	-		356,969		34		44,035

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SGRF
	2009			2008
Investment activity:
Net investment income (loss)	$	(725	)	(4,548	)
Realized gain (loss) on investments		(289,267	)	1,758
Change in unrealized gain (loss) on investments		299,926		(493,174	)
Reinvested capital gains		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		9,934		(495,964	)
Equity transactions:
Purchase payments received from contract owners (notes 2a and 6)		11,166		48,533
Transfers between funds		(475,798	)	(97,662	)
Surrenders (note 6)		(22,839	)	(156,351	)
Death benefits (note 4)		-		(25,084	)
Net policy repayments (loans) (note 5)		1,547		58,777
Deductions for surrender charges (note 2d)		-		(120	)
Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)		(12,104	)	(41,983	)
Asset charges (note 3):
MSP contracts		(68	)	(349	)
SL contracts or LSFP contracts		(50	)	(267	)
Adjustments to maintain reserves		17		(74	)
Net equity transactions		(498,129	)	(214,580	)
Net change in contract owners’ equity		(488,195	)	(710,544	)
Contract owners’ equity beginning of period		488,195		1,198,739
Contract owners’ equity end of period	$	-		488,195
CHANGES IN UNITS:
Beginning units		126,290		166,784
Units purchased		4,489		15,503
Units redeemed		(130,779	)	(55,997	)
Ending units		-		126,290

See accompanying notes to financial statements.

NATIONWIDE VLI SEPARATE ACCOUNT-2

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

(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 and certain other fees, were offered for purchase. Beginning December 31, 1990, contracts with a front-end sales charge and certain other fees, are offered for purchase. See note 2 for a discussion of policy charges and note 3 for asset charges.

With certain exceptions, contract owners may invest in the following:

BLACKROCK FUNDS

Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)

CREDIT SUISSE ASSET MANAGEMENT

Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)

U.S. Equity Flex I Portfolio (WSCP)

JANUS FUNDS

Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)

Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)

Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)

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

Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)

Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)

MASSACHUSETTS FINANCIAL SERVICES CO.

Investors Growth Stock Series - Initial Class (MIGIC)

Value Series - Initial Class (MVFIC)

MORGAN STANLEY

Core Plus Fixed Income Portfolio - Class I (MSVFI)

Emerging Markets Debt Portfolio - Class I (MSEM)

U.S. Real Estate Portfolio - Class I (MSVRE)

NATIONWIDE FUNDS GROUP

AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)

AllianceBernstein NVIT Global Fixed Income Fund - Class VI (NVAGF6)

American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)

American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)

American Funds NVIT Bond Fund - Class II (GVABD2)

American Funds NVIT Global Growth Fund - Class II (GVAGG2)

American Funds NVIT Growth Fund - Class II (GVAGR2)

American Funds NVIT Growth-Income Fund - Class II (GVAGI2)

Federated NVIT High Income Bond Fund - Class I (HIBF)

Federated NVIT High Income Bond Fund - Class III (HIBF3)

Gartmore NVIT Emerging Markets Fund - Class I (GEM)

Gartmore NVIT Emerging Markets Fund - Class III (GEM3)

Gartmore NVIT Global Utilities Fund - Class I (GVGU1)

Gartmore NVIT International Equity Fund - Class I (GIG)

Gartmore NVIT International Equity Fund - Class III (GIG3)

Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)

Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)

Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)

Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)*

NVIT Cardinal Aggressive Fund - Class I (NVCRA1)

NVIT Cardinal Balanced Fund - Class I (NVCRB1)

NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)

NVIT Cardinal Conservative Fund - Class I (NVCCN1)

NVIT Cardinal Moderate Fund - Class I (NVCMD1)

NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)

NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)

NVIT Core Bond Fund - Class I (NVCBD1)

NVIT Core Plus Bond Fund - Class I (NVLCP1)

NVIT Fund - Class I (TRF)

NVIT Global Financial Services Fund - Class I (GVGF1)

NVIT Government Bond Fund - Class I (GBF)

NVIT Growth Fund - Class I (CAF)

NVIT Health Sciences Fund - Class I (GVGH1)

NVIT Health Sciences Fund - Class III (GVGHS)

NVIT International Index Fund - Class VI (GVIX6)

NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)

NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)

NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)

NVIT Investor Destinations Conservative Fund - Class II (GVIDC)

NVIT Investor Destinations Moderate Fund - Class II (GVIDM)

NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)

NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)

NVIT Leaders Fund - Class I (GVUS1)

NVIT Mid Cap Index Fund - Class I (MCIF)

NVIT Money Market Fund - Class I (SAM)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)

NVIT Multi-Manager International Value Fund - Class I (GVDIVI)

NVIT Multi-Manager International Value Fund - Class III (GVDIV3)

NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)

NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)

NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)

NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)

NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)

NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)

NVIT Multi-Manager Small Company Fund - Class I (SCF)

NVIT Multi-Sector Bond Fund - Class I (MSBF)

NVIT Short Term Bond Fund - Class II (NVSTB2)

NVIT Technology & Communications Fund - - Class I (GGTC)

NVIT Technology & Communications Fund - - Class III (GGTC3)

NVIT U.S. Growth Leaders Fund - Class I (GVUG1)

Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)

Templeton NVIT International Value Fund - Class III (NVTIV3)

Van Kampen NVIT Comstock Value Fund - Class I (EIF)

Van Kampen NVIT Real Estate Fund - Class I (NVRE1)

NEUBERGER & BERMAN MANAGEMENT, INC.

Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)

Portfolios of the AIM Variable Insurance Funds

V.I. Basic Value Fund - Series I (AVBVI)

V.I. Capital Appreciation Fund - Series I (AVCA)

V.I. Capital Development Fund - Series I (AVCDI)

Portfolios of the AllianceBernstein Variable Products Series Fund, Inc.

VPS Growth and Income Portfolio - Class A (ALVGIA)

VPS Small/Mid Cap Value Portfolio: Class A (ALVSVA)

Portfolios of the American Century Variable Portfolios, Inc.

VP Balanced Fund - Class I (ACVB)

VP Capital Appreciation Fund - Class I (ACVCA)

VP Income & Growth Fund - Class I (ACVIG)

VP Inflation Protection Fund - Class II (ACVIP2)

VP International Fund - Class I (ACVI)

VP International Fund - Class III (ACVI3)

VP Mid Cap Value Fund - Class I (ACVMV1)

VP Ultra(R) Fund - Class I (ACVU1)

VP Value Fund - Class I (ACVV)

VP Vista(SM) Fund - Class I (ACVVS1)

Portfolios of the Dreyfus Investment Portfolios

Small Cap Stock Index Portfolio - Service Shares (DVSCS)

Stock Index Fund, Inc. - Initial Shares (DSIF)

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

Portfolios of the Dreyfus Variable Investment Fund

Appreciation Portfolio - Initial Shares (DCAP)

Developing Leaders Portfolio - Initial Shares (DSC)

Growth and Income Portfolio - Initial Shares (DGI)

Portfolios of the Federated Insurance Series

Capital Appreciation Fund II - Primary Shares (FVCA2P)

Clover Value Fund II - Primary Shares (FALF)

Market Opportunity Fund II - Service Shares (FVMOS)

Quality Bond Fund II - Primary Shares (FQB)

Portfolios of the Fidelity Variable Insurance Products Fund Fidelity

Equity-Income Portfolio - Initial Class (FEIP)

High Income Portfolio - Initial Class (FHIP)

VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)

VIP Fund - Contrafund Portfolio - Initial Class (FCP)

VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)

VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)

VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)

VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)

VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)

VIP Fund - Growth Portfolio - Initial Class (FGP)

VIP Fund - High Income Portfolio - Initial Class R (FHIPR)

VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)

VIP Fund - Mid Cap Portfolio - Service Class (FMCS)

VIP Fund - Overseas Portfolio - Initial Class (FOP)

VIP Fund - Overseas Portfolio - Service Class R (FOSR)

VIP Fund - Value Strategies Portfolio - Service Class (FVSS)

Portfolios of the Franklin Templeton Variable Insurance Products Trust

Franklin Income Securities Fund - Class 2 (FTVIS2)

Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)

Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)

Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)

Templeton Foreign Securities Fund - Class 1 (TIF)

Templeton Foreign Securities Fund - Class 3 (TIF3)

Templeton Global Bond Securities Fund - Class 3 (FTVGI3)

VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)

Portfolios of the Neuberger Berman Advisers Management Trust

Balanced Portfolio - I Class Shares (AMBP)

Growth Portfolio - I Class Shares (AMTG)

Guardian Portfolio - I Class Shares (AMGP)

International Portfolio - S Class Shares (AMINS)

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)

Partners Portfolio - I Class Shares (AMTP)

Regency Portfolio - S Class Shares (AMRS)

Small-Cap Growth Portfolio - S Class Shares (AMFAS)

Socially Responsive Portfolio - I Class Shares (AMSRS)

Portfolios of the Oppenheimer Variable Account Funds

Balanced Fund/VA - Non-Service Shares (OVMS)

Capital Appreciation Fund/VA - Non-Service Shares (OVGR)

Core Bond Fund/VA - Non-Service Shares (OVB)

Global Securities Fund/VA - Class 3 (OVGS3)

Global Securities Fund/VA - Non-Service Shares (OVGS)

High Income Fund/VA - Class 3 (OVHI3)

High Income Fund/VA - Non-Service Shares (OVHI)

Main Street Fund(R)/VA - Non-Service Shares (OVGI)

Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)

MidCap Fund/VA - Non-Service Shares (OVAG)

Portfolios of the PIMCO Variable Insurance Trust

Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)

Low Duration Portfolio - Administrative Class (PMVLDA)

Portfolios of the Putnam Variable Trust

Putnam VT Growth and Income Fund - IB Shares (PVGIB)

Putnam VT International Equity Fund - IB Shares (PVTIGB)

Putnam VT Voyager Fund - IB Shares (PVTVB)

T. ROWE PRICE

Blue Chip Growth Portfolio - II (TRBCG2)

Equity Income Portfolio - II (TREI2)

Limited-Term Bond Portfolio - II (TRLT2)

VAN ECK ASSOCIATES CORPORATION

Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)

Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)

Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)

WADDELL & REED, INC.

Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)

WELLS FARGO FUNDS

Advantage Funds Variable Trust - VT Discovery Fund (SVDF)

Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)

Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)

Z CLOSED FUNDS

International Equity Flex I Portfolio (obsolete) (WIEP)*

International Equity Flex II Portfolio (obsolete) (WVCP)*

* At December 31, 2009, contract owners were not invested in this fund.

The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners and certain policy and assets charges (see notes 2 and 3). The accompanying financial statements include only contract owners’ purchase payments pertaining to the variable portions of their contracts and exclude any purchase payments for fixed dollar benefits, the latter being included in the accounts of the Company.

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

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

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.

(c) Security Valuation, Transactions and Related Investment Income

Investments in underlying mutual funds are valued at the closing net asset value per share at December 31, 2009 of such funds, which represents fair value. The cost of investments sold is determined on a first in – first out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed), and dividends and capital gain distributions are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

Operations of the Account form a part of, and are taxed with, operations of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code. The Company does not provide for income taxes within the Account. Taxes are generally the responsibility of the contract owner upon termination or withdrawal.

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

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

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

(f) Recently Issued Accounting Standards

In September 2006, the FASB issued FASB ASC 820, Fair Value Measurements and Disclosures (SFAS No. 157, Fair Value Measurements). FASB ASC 820 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements and also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. FASB ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances.

FASB ASC 820 was effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Account adopted FASB ASC 820 effective January 1, 2008. The adoption of FASB ASC 820 did not have a material impact on the Account’s financial position or results of operations.

In September 2009 the FASB issued ASU 2009-12, which amends FASB ASC 820, Fair Value Measurements and Disclosures. This guidance applies to reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or nonrecurring basis if the investment does not have a readily determinable fair value and the investee has attributes of an investment company. For these investments, this update allows, as a practical expedient, the use of net asset value (NAV) as the basis to estimate fair value as long as it is not probable, as of the measurement date that the investment will be sold and NAV is not the value that will be used in the sale. The NAVs must be calculated consistent with the American Institute of Certified Public Accountants Audit and Accounting Guide, Investment Companies, which generally requires these investments to be measured at fair value. Additionally, the guidance provided updated disclosures for investments within its scope and noted that if the investor can redeem the investment with the investee on the measurement date at NAV, the investment should likely be classified as Level 2 in the fair value hierarchy. Investments that cannot be redeemed with the investee at NAV would generally be classified as Level 3 in the fair value hierarchy. If the investment is not redeemable with the investee on the measurement date, but will be at a future date, the length of time until the investment is redeemable should be considered in determining classification as Level 2 or 3. This guidance is effective for interim and annual periods ending after December 15, 2009 with early adoption permitted. The Account adopted this guidance effective the period ending December 31, 2009. The adoption of this guidance did not have a material impact on the financial statements of the Account.

(g) Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued with the SEC.

(2) Policy Charges

(a) Deductions from 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, 2009 and 2008, total front-end sales charge deductions were $2,314,954 and $2,621,205, respectively and were recognized as a reduction of purchase payments on the Statement of Changes in Contract Owners’ Equity.

(b) Cost of Insurance

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

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 totaling less than $25,000 – $10/month

Purchase payments totaling $25,000 or more – none

Contracts issued on or after April 16, 1990:

Purchase payments totaling less than $25,000 – $90/year ($65/year in New York)

Purchase payments totaling $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 Company deducts a monthly administrative charge equal to an annualized rate of 0.30% multiplied by the policy’s cash value to cover administrative, premium tax and deferred acquisition costs. For policy years 11 and later, this monthly charge is reduced to an annualized rate of 0.15% of the policy’s cash value. The monthly charge is subject to a $10 minimum.

For last survivor flexible premium contracts, the Company deducts a monthly administrative charge equal to the sum of the per policy charge and the per $1,000 basic coverage charge. For policy years one through ten the per policy charge is $10. Additionally, there is a $0.04 per $1,000 basic coverage charge (not less than $20 or more than $80 per policy per year). For policy years eleven and after, the per policy charge is $5. Additionally, there is a $0.02 per $1,000 basic coverage charge (not less than $10 or more than $40 per policy per year).

(d) Surrender Charges

Policy surrenders result in a withdrawal of contract value from the Account and payment of the surrender proceeds to the policy owner or designee. The surrender proceeds consist of the contract value, less any outstanding policy loans, and less a surrender charge, if applicable. The charge is determined according to contract type.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

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.

The charges above are assessed against each contract by liquidating units.

(3) Asset Charges

The Company deducts a charge related to the assumption of mortality and expense risk.

For modified single premium contracts (MSP), the Company deducts a charge equal to an annualized rate of 0.90%. For flexible premium contracts and last survivor flexible premium contracts (LSFP), the Company deducts a charge equal to an annualized rate of 0.80% in policy years one through ten. In policy years eleven and after, the charge will continue to be deducted, but may be reduced for policies at specified asset levels. This charge is assessed monthly by liquidating units.

For single premium contracts issued prior to April 16, 1990, the Company deducts a charge 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. For multiple payment contracts, the Company deducts a charge equal to an annualized rate of 0.80%. For flexible premium and Variable Executive Life contracts, the charge is equal to an annualized rate of 0.80% during the first ten policy years, and 0.50% thereafter. This charge is assessed through a reduction in the unit value.

The following table provides mortality and expense risk charges by contract type for those charges that are assessed through a reduction in the unit value for the period ended December 31, 2009:

	Total		MLVGA2	CSIEF3	WSCP	JABS
Single Premium issue prior to April 16, 1990	$	3,559	-	-	-	-
Single Premium issue after to April 16, 1990		447,094	-	16	2,699	-
Multiples Payment and Flexible Premium contracts		2,697,675	1,358	10	27,151	3,521
Variable Executive Life		10,083	-	-	56	-
Total		3,158,411	1,358	26	29,906	3,521
	JACAS		JAGTS	JARLCS	JAIGS2	JAIGS
Single Premium issue prior to April 16, 1990		-	-	-	-	-
Single Premium issue after to April 16, 1990		3,151	1,076	-	-	5,588
Multiples Payment and Flexible Premium contracts		17,594	3,834	256	22,622	7,549
Variable Executive Life		27	29	-	82	24
Total		20,772	4,939	256	22,704	13,161
	MIGIC		MVFIC	MSVFI	MSEM	MSVRE
Single Premium issue prior to April 16, 1990		-	-	-	113	-
Single Premium issue after to April 16, 1990		-	-	-	2,205	5,939
Multiples Payment and Flexible Premium contracts		947	6,938	2,026	7,080	18,876
Variable Executive Life		-	-	46	-	80
Total		947	6,938	2,072	9,398	24,895
	NVAGF3		NVAMV1	GVAAA2	GVABD2	GVAGG2
Single Premium issue prior to April 16, 1990		-	-	-	-	-
Single Premium issue after to April 16, 1990		-	-	-	-	-
Multiples Payment and Flexible Premium contracts		63	15	4,736	6,563	6,344
Variable Executive Life		-	-	-	-	-
Total		63	15	4,736	6,563	6,344
	GVAGR2		GVAGI2	HIBF	HIBF3	GEM
Single Premium issue prior to April 16, 1990		-	-	-	-	-
Single Premium issue after to April 16, 1990		-	-	-	-	5,498
Multiples Payment and Flexible Premium contracts		7,179	3,301	406	10,041	3,963
Variable Executive Life		17	-	-	17	-
Total		7,196	3,301	406	10,058	9,461
	GEM3		GVGU1	GIG	GIG3	GEF3
Single Premium issue prior to April 16, 1990		-	-	-	-	-
Single Premium issue after to April 16, 1990		-	2,114	1,778	-	-
Multiples Payment and Flexible Premium contracts		13,835	2,726	3,554	7,600	82
Variable Executive Life		15	-	27	53	-
Total		13,850	4,840	5,359	7,653	82

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	NVNMO1	NVNSR1	NVCRA1	NVCRB1	NVCCA1
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	-	-	-	-
Multiples Payment and Flexible Premium contracts	27,560	48	472	889	1,121
Variable Executive Life	117	-	-	-	-
Total	27,677	48	472	889	1,121
	NVCCN1	NVCMD1	NVCMA1	NVCMC1	NVCBD1
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	-	-	-	174
Multiples Payment and Flexible Premium contracts	477	3,128	914	870	239
Variable Executive Life	-	-	-	-	-
Total	477	3,128	914	870	413
	NVLCP1	TRF	GVGF1	GBF	CAF
Single Premium issue prior to April 16, 1990	-	92	-	197	-
Single Premium issue after to April 16, 1990	-	9,920	970	32,253	1,668
Multiples Payment and Flexible Premium contracts	35	235,213	1,764	49,922	59,105
Variable Executive Life	-	590	-	4	102
Total	35	245,815	2,734	82,376	60,875
	GVGH1	GVGHS	GVIX6	GVIDA	NVDBL2
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	1,247	-	-	2,843	-
Multiples Payment and Flexible Premium contracts	462	2,288	1,248	10,930	21
Variable Executive Life	-	-	-	-	-
Total	1,709	2,288	1,248	13,773	21
	NVDCA2	GVIDC	GVIDM	GVDMA	GVDMC
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	243	1,954	4,091	3,513
Multiples Payment and Flexible Premium contracts	60	5,255	19,356	23,445	14,080
Variable Executive Life	-	-	-	54	-
Total	60	5,498	21,310	27,590	17,593
	GVUS1	MCIF	SAM	NVMIG3	GVDIVI
Single Premium issue prior to April 16, 1990	-	-	483	-	-
Single Premium issue after to April 16, 1990	123	2,915	46,605	-	-
Multiples Payment and Flexible Premium contracts	1,055	18,284	107,307	11,019	1,453
Variable Executive Life	-	36	1,376	-	-
Total	1,178	21,235	155,771	11,019	1,453
	GVDIV3	NVMLG1	NVMLV1	NVMMG1	NVMMV2
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	-	-	321	-
Multiples Payment and Flexible Premium contracts	4,242	651	1,085	56,028	40,462
Variable Executive Life	-	8	3	105	25
Total	4,242	659	1,088	56,454	40,487
	SCGF	SCVF	SCF	MSBF	NVSTB2
Single Premium issue prior to April 16, 1990	-	123	89	-	-
Single Premium issue after to April 16, 1990	713	3,269	3,140	1,981	-
Multiples Payment and Flexible Premium contracts	3,459	17,864	72,767	5,032	4,402
Variable Executive Life	15	43	685	-	-
Total	4,187	21,299	76,681	7,013	4,402
	GGTC	GGTC3	GVUG1	NVOLG1	NVTIV3
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	1,216	-	199	18	-
Multiples Payment and Flexible Premium contracts	858	1,596	2,231	8	12
Variable Executive Life	-	-	-	-	-
Total	2,074	1,596	2,430	26	12
	EIF	NVRE1	AMTB	AVBVI	AVCA
Single Premium issue prior to April 16, 1990	-	-	72	-	-
Single Premium issue after to April 16, 1990	-	3	4,365	-	-
Multiples Payment and Flexible Premium contracts	2,509	15,049	8,623	701	306
Variable Executive Life	-	67	70	3	-
Total	2,509	15,119	13,130	704	306
	AVCDI	ALVGIA	ALVSVA	ACVB	ACVCA
Single Premium issue prior to April 16, 1990	-	-	-	-	91
Single Premium issue after to April 16, 1990	-	-	-	5,687	9,746
Multiples Payment and Flexible Premium contracts	903	1,866	2,687	16,103	29,996
Variable Executive Life	-	-	-	-	92
Total	903	1,866	2,687	21,790	39,925

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	ACVIG	ACVIP2	ACVI	ACVI3	ACVMV1
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	600	-	4,267	-	-
Multiples Payment and Flexible Premium contracts	7,120	6,419	9,669	6,015	4,195
Variable Executive Life	55	260	-	-	-
Total	7,775	6,679	13,936	6,015	4,195
	ACVU1	ACVV	ACVVS1	DVSCS	DSIF
Single Premium issue prior to April 16, 1990	-	-	-	-	116
Single Premium issue after to April 16, 1990	177	6,128	-	1,443	19,713
Multiples Payment and Flexible Premium contracts	805	27,791	2,307	3,647	170,221
Variable Executive Life	10	158	-	-	674
Total	992	34,077	2,307	5,090	190,724
	DSRG	DCAP	DSC	DGI	FVCA2P
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	941	6,228	-	1,028	-
Multiples Payment and Flexible Premium contracts	30,372	12,999	652	5,020	526
Variable Executive Life	-	-	-	14	-
Total	31,313	19,227	652	6,062	526
	FALF	FVMOS	FQB	FEIP	FHIP
Single Premium issue prior to April 16, 1990	-	-	-	501	219
Single Premium issue after to April 16, 1990	-	-	5,005	33,468	16,966
Multiples Payment and Flexible Premium contracts	230	1,508	5,340	173,141	46,518
Variable Executive Life	-	-	2	1,042	225
Total	230	1,508	10,347	208,152	63,928
	FAMP	FCP	FNRS2	FF10S	FF20S
Single Premium issue prior to April 16, 1990	172	-	-	-	-
Single Premium issue after to April 16, 1990	19,266	27,547	-	-	-
Multiples Payment and Flexible Premium contracts	60,038	180,283	17,547	2,072	3,511
Variable Executive Life	93	649	56	-	-
Total	79,569	208,479	17,603	2,072	3,511
	FF30S	FGOP	FGP	FHIPR	FIGBS
Single Premium issue prior to April 16, 1990	-	41	510	-	-
Single Premium issue after to April 16, 1990	-	533	34,293	-	-
Multiples Payment and Flexible Premium contracts	3,177	9,441	221,364	13,471	17,976
Variable Executive Life	-	-	1,293	47	26
Total	3,177	10,015	257,460	13,518	18,002
	FMCS	FOP	FOSR	FVSS	FTVIS2
Single Premium issue prior to April 16, 1990	-	217	-	-	-
Single Premium issue after to April 16, 1990	-	11,111	-	917	-
Multiples Payment and Flexible Premium contracts	33,409	31,002	19,948	3,257	3,734
Variable Executive Life	63	25	34	-	-
Total	33,472	42,355	19,982	4,174	3,734
	FTVRDI	FTVSVI	FTVDM3	TIF	TIF3
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	-	-	-	-
Multiples Payment and Flexible Premium contracts	12,608	11,646	6,227	1,589	5,420
Variable Executive Life	-	-	28	-	-
Total	12,608	11,646	6,255	1,589	5,420
	FTVGI3	FTVFA2	AMBP	AMTG	AMGP
Single Premium issue prior to April 16, 1990	-	-	-	308	-
Single Premium issue after to April 16, 1990	-	-	-	7,295	362
Multiples Payment and Flexible Premium contracts	12,085	78	687	29,589	2,790
Variable Executive Life	181	2	-	49	-
Total	12,266	80	687	37,241	3,152
	AMINS	AMMCGS	AMTP	AMRS	AMFAS
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	-	6,355	-	-
Multiples Payment and Flexible Premium contracts	574	942	32,501	299	402
Variable Executive Life	-	-	109	-	16
Total	574	942	38,965	299	418

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	AMSRS	OVMS	OVGR	OVB	OVGS3
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	-	8,944	3,993	3,996	-
Multiples Payment and Flexible Premium contracts	1,379	27,860	26,686	20,691	30,873
Variable Executive Life	-	7	16	-	222
Total	1,379	36,811	30,695	24,687	31,095
	OVGS	OVHI3	OVHI	OVGI	OVSC
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	10,646	-	-	257	-
Multiples Payment and Flexible Premium contracts	71,110	524	252	4,114	3,595
Variable Executive Life	428	-	-	-	-
Total	82,184	524	252	4,371	3,595
	OVAG	PMVFBA	PMVLDA	PVGIB	PVTIGB
Single Premium issue prior to April 16, 1990	-	-	-	-	-
Single Premium issue after to April 16, 1990	345	-	-	-	-
Multiples Payment and Flexible Premium contracts	3,547	270	1,831	297	1,310
Variable Executive Life	-	-	-	-	-
Total	3,892	270	1,831	297	1,310
	PVTVB	TRBCG2	TREI2	TRLT2	VWBF
Single Premium issue prior to April 16, 1990	-	-	-	-	124
Single Premium issue after to April 16, 1990	-	-	-	-	7,116
Multiples Payment and Flexible Premium contracts	1,667	3,993	5,241	5,795	11,045
Variable Executive Life	28	40	-	-	73
Total	1,695	4,033	5,241	5,795	18,358
	VWEM	VWHA	WRASP	SVDF	SVOF
Single Premium issue prior to April 16, 1990	-	-	-	-	91
Single Premium issue after to April 16, 1990	5,635	15,637	-	2,672	12,093
Multiples Payment and Flexible Premium contracts	24,136	38,355	1,907	14,720	54,511
Variable Executive Life	62	102	-	-	3
Total	29,833	54,094	1,907	17,392	66,698
	WFVSCG	WIEP	WVCP	SGRF
Single Premium issue prior to April 16, 1990	-	-	-	-
Single Premium issue after to April 16, 1990	-	2,380	332	164
Multiples Payment and Flexible Premium contracts	246	9,932	1,435	561
Variable Executive Life	57	50	16	-
Total	303	12,362	1,783	725

(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, 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 contract 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, but are included in Net Policy (Loans) Repayments. The fixed account assets are not reflected in the accompanying financial statements. For the periods ended December 31, 2009 and 2008, total transfers into the Account from the fixed account were $28,174,896 and $24,207,234, respectively, and total transfers from the Account to the fixed account were $28,764,656 and $31,489,904, respectively.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

(7) Fair Value Measurement

FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Account generally uses the market approach as the valuation technique due to the nature of the mutual fund investments offered in the Account. This technique maximizes the use of observable inputs and minimizes the use of unobservable inputs.

In accordance with FASB ASC 820, the Account categorized its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Account categorizes financial assets recorded at fair value as follows:

• Level 1 – Unadjusted quoted prices accessible in active markets for identical assets at the measurement date. The assets utilizing Level 1 valuations represent investments in publicly-traded registered mutual funds with quoted market prices.  

• Level 2 – Unadjusted quoted prices for similar assets in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means. The assets utilizing Level 2 valuations represent investments in privately-traded registered mutual funds only offered through insurance products. These funds have no unfunded commitments or restrictions and the Account always has the ability to redeem its interest in the funds with the investee at NAV daily. The investment objectives of these mutual funds are described by the fund name in note 1(b) and in more detail in the applicable product prospectus.  

• Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Account invests only in funds with fair value measurements in the first two levels of the fair value hierarchy.  

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2009:

	Level 1	Level 2		Level 3	Total
Separate Account Investments	0	$	647,758,161	0	$	647,758,161

Net Accounts Payable of $16,934 are measured at settlement value which approximates the fair value due to the short-term nature of such liabilities.

The Account did not have any assets or liabilities reported at fair value on a nonrecurring basis required to be disclosed under FASB ASC 820.

The cost of purchases and sales of Investments for the year ended December 31, 2009 are as follows:

	Purchases of Investments		Sales of Investments
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)	$	1,202,439	$	185,529
Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)		1,951,321		937,752
U.S. Equity Flex I Portfolio (WSCP)		177,677		846,867
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)		869,487		416,446
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)		2,098,987		1,370,753
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)		812,816		350,096
Janus Aspen Series - INTECH Risk-Managed Core Portfolio - Service Shares (JARLCS)		19,101		154,941
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)		1,588,241		1,464,071
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)		1,687,285		1,541,578
Investors Growth Stock Series - Initial Class (MIGIC)		57,638		16,662
Value Series - Initial Class (MVFIC)		405,924		814,581
Core Plus Fixed Income Portfolio - Class I (MSVFI)		45,976		691,641
Emerging Markets Debt Portfolio - Class I (MSEM)		1,302,394		1,586,012
U.S. Real Estate Portfolio - Class I (MSVRE)		493,086		18,412,277
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)		34,153		319
AllianceBernstein NVIT Global Fixed Income Fund - Class VI (NVAGF6)		10,869		654
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)		17,310		841
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)		274,946		432,363
American Funds NVIT Bond Fund - Class II (GVABD2)		368,978		208,623
American Funds NVIT Global Growth Fund - Class II (GVAGG2)		788,587		870,480
American Funds NVIT Growth Fund - Class II (GVAGR2)		619,575		423,929
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)		152,430		103,594
Federated NVIT High Income Bond Fund - Class I (HIBF)		13,060		10,360
Federated NVIT High Income Bond Fund - Class III (HIBF3)		3,921,357		1,796,696
Gartmore NVIT Emerging Markets Fund - Class I (GEM)		944,107		1,143,409
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)		688,250		3,248,155
Gartmore NVIT Global Utilities Fund - Class I (GVGU1)		146,927		810,419
Gartmore NVIT International Equity Fund - Class I (GIG)		157,730		651,191
Gartmore NVIT International Equity Fund - Class III (GIG3)		3,924,462		503,112
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)		69,585		169
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)		13,377,532		1,257,356
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)		30,747		1,690
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)		53,063		112,587
NVIT Cardinal Balanced Fund - Class I (NVCRB1)		122,589		21,355
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)		140,727		57,556
NVIT Cardinal Conservative Fund - Class I (NVCCN1)		160,473		65,359
NVIT Cardinal Moderate Fund - Class I (NVCMD1)		453,674		96,855
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)		91,844		30,799
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)		378,796		20,125
NVIT Core Bond Fund - Class I (NVCBD1)		291,410		167,592
NVIT Core Plus Bond Fund - Class I (NVLCP1)		27,004		7,581
NVIT Fund - Class I (TRF)		739,566		12,532,832
NVIT Global Financial Services Fund - Class I (GVGF1)		260,048		456,813
NVIT Government Bond Fund - Class I (GBF)		1,926,169		5,431,118
NVIT Growth Fund - Class I (CAF)		189,657		1,954,463
NVIT Health Sciences Fund - Class I (GVGH1)		72,613		379,784

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

NVIT Health Sciences Fund - Class III (GVGHS)	169,266	512,508
NVIT International Index Fund - Class VI (GVIX6)	327,742	197,751
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)	1,002,999	2,603,759
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)	42,524	87
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)	19,967	2,409
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)	629,285	373,143
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)	674,022	1,075,612
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)	685,419	1,310,081
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)	408,439	508,653
NVIT Leaders Fund - Class I (GVUS1)	27,721	490,324
NVIT Mid Cap Index Fund - Class I (MCIF)	1,114,090	1,815,269
NVIT Money Market Fund - Class I (SAM)	11,344,718	24,437,329
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)	5,525,859	767,293
NVIT Multi-Manager International Value Fund - Class I (GVDIVI)	5,890	77,296
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)	223,173	613,215
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)	339,555	61,308
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)	423,253	109,409
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)	24,805,073	1,470,790
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)	18,518,129	1,337,298
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)	234,639	848,559
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)	165,264	1,975,509
NVIT Multi-Manager Small Company Fund - Class I (SCF)	605,847	4,384,146
NVIT Multi-Sector Bond Fund - Class I (MSBF)	1,454,278	1,220,838
NVIT Short Term Bond Fund - Class II (NVSTB2)	2,662,830	695,176
NVIT Technology & Communications Fund - Class I (GGTC)	311,617	367,099
NVIT Technology & Communications Fund - Class III (GGTC3)	282,168	330,212
NVIT U.S. Growth Leaders Fund - Class I (GVUG1)	74,299	426,216
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)	30,634	24,767
Templeton NVIT International Value Fund - Class III (NVTIV3)	12,352	100
Van Kampen NVIT Comstock Value Fund - Class I (EIF)	44,512	143,933
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)	7,284,817	620,811
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)	976,278	1,311,229
V.I. Basic Value Fund - Series I (AVBVI)	215,489	771,215
V.I. Capital Appreciation Fund - Series I (AVCA)	21,271	34,463
V.I. Capital Development Fund - Series I (AVCDI)	63,521	148,930
VPS Growth and Income Portfolio - Class A (ALVGIA)	136,765	609,852
VPS Small/Mid Cap Value Portfolio: Class A (ALVSVA)	192,868	390,348
VP Balanced Fund - Class I (ACVB)	479,254	1,062,260
VP Capital Appreciation Fund - Class I (ACVCA)	375,831	10,352,276
VP Income & Growth Fund - Class I (ACVIG)	143,755	602,184
VP Inflation Protection Fund - Class II (ACVIP2)	1,076,128	854,577
VP International Fund - Class I (ACVI)	143,567	4,122,000
VP International Fund - Class III (ACVI3)	180,576	3,317,563
VP Mid Cap Value Fund - Class I (ACVMV1)	281,631	395,956
VP Ultra(R) Fund - Class I (ACVU1)	22,847	489,862
VP Value Fund - Class I (ACVV)	650,366	2,473,584
VP Vista(SM) Fund - Class I (ACVVS1)	48,871	1,753,138
Small Cap Stock Index Portfolio - Service Shares (DVSCS)	546,148	558,440
Stock Index Fund, Inc. - Initial Shares (DSIF)	4,630,017	8,784,256
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)	120,210	1,333,631
Appreciation Portfolio - Initial Shares (DCAP)	756,695	828,230
Developing Leaders Portfolio - Initial Shares (DSC)	59,106	175,915
Growth and Income Portfolio - Initial Shares (DGI)	34,342	273,131
Capital Appreciation Fund II - Primary Shares (FVCA2P)	149,100	134,852
Clover Value Fund II - Primary Shares (FALF)	4,583	120,322
Market Opportunity Fund II - Service Shares (FVMOS)	277,866	224,084
Quality Bond Fund II - Primary Shares (FQB)	1,471,356	957,807
Equity-Income Portfolio - Initial Class (FEIP)	1,083,794	10,329,629
High Income Portfolio - Initial Class (FHIP)	1,606,272	3,854,714
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)	477,828	3,629,281
VIP Fund - Contrafund Portfolio - Initial Class (FCP)	1,167,955	11,557,028
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)	932,696	1,737,061
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)	154,927	571,372
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)	130,328	345,406
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)	94,910	77,373
VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)	185,340	679,713
VIP Fund - Growth Portfolio - Initial Class (FGP)	463,063	10,995,466
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)	1,643,554	1,149,464
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)	2,024,011	999,266
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)	1,074,302	2,426,936
VIP Fund - Overseas Portfolio - Initial Class (FOP)	191,744	1,212,500
VIP Fund - Overseas Portfolio - Service Class R (FOSR)	759,113	1,174,408
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)	537,528	647,368
Franklin Income Securities Fund - Class 2 (FTVIS2)	427,569	423,926
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)	290,043	1,392,109
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)	529,380	776,930
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)	709,420	834,739
Templeton Foreign Securities Fund - Class 1 (TIF)	27,733	206,304
Templeton Foreign Securities Fund - Class 3 (TIF3)	310,883	1,293,553
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)	975,335	1,260,415
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)	31,198	13,860
Balanced Portfolio - I Class Shares (AMBP)	17,447	269,635
Growth Portfolio - I Class Shares (AMTG)	123,878	7,885,229

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

Guardian Portfolio - I Class Shares (AMGP)			91,942		1,272,624
International Portfolio - S Class Shares (AMINS)			6,479		361,163
Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)			31,158		557,829
Partners Portfolio- I Class Shares (AMTP)			587,536		22,739,197
Regency Portfolio - S Class Shares (AMRS)			5,477		239,805
Small-Cap Growth Portfolio - S Class Shares (AMFAS)			19,506		61,713
Socially Responsive Portfolio - I Class Shares (AMSRS)			35,072		80,160
Balanced Fund/VA - Non-Service Shares (OVMS)			74,473		1,899,523
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)			223,293		844,262
Core Bond Fund/VA - Non-Service Shares (OVB)			267,646		2,262,125
Global Securities Fund/VA - Class 3 (OVGS3)			1,043,865		1,045,587
Global Securities Fund/VA - Non-Service Shares (OVGS)			722,568		3,739,958
High Income Fund/VA - Class 3 (OVHI3)			152,115		179,845
High Income Fund/VA - Non-Service Shares (OVHI)			3,128		61,426
Main Street Fund(R)/VA - Non-Service Shares (OVGI)			238,599		556,557
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)			357,001		304,080
MidCap Fund/VA - Non-Service Shares (OVAG)			98,393		186,271
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)			275,288		93,995
Low Duration Portfolio - Administrative Class (PMVLDA)			1,757,796		155,699
Putnam VT Growth and Income Fund - IB Shares (PVGIB)			4,353		14,477
Putnam VT International Equity Fund - IB Shares (PVTIGB)			144,403		429,645
Putnam VT Voyager Fund - IB Shares (PVTVB)			508,096		74,992
Blue Chip Growth Portfolio - II (TRBCG2)			434,663		319,109
Equity Income Portfolio - II (TREI2)			332,741		394,220
Limited-Term Bond Portfolio - II (TRLT2)			880,334		2,384,009
Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)			487,827		961,979
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)			2,520,252		4,655,044
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)			3,672,439		3,575,729
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)			1,268,004		78,389
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)			55,476		4,923,818
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)			197,637		28,147,107
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)			189,082		58,601
International Equity Flex I Portfolio (obsolete) (WIEP)			112,461		4,357,419
International Equity Flex II Portfolio (obsolete) (WVCP)			63,413		685,982
NVIT Mid Cap Growth Fund - Class I (obsolete) (SGRF)			84,510		872,651
	Total	$	168,586,709	$	306,787,065

(8) Financial Highlights

The following tabular presentation is a summary of units, unit fair values and contract owners’ equity outstanding for variable life contract as of the end of the periods indicated, and the contract expense rate, investment income ratio and total return for each of the periods in the five year period ended December 31, 2009.

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)
2009	0.00	%	11,131	$	12.182592	$	135,604	2.53	%	21.83	%	5/1/2009
2009	0.50	%	65,483		12.142000		795,095	2.53	%	21.42	%	5/1/2009
2009	0.80	%	9,208		12.117715		111,580	2.53	%	21.18	%	5/1/2009
Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)
2009	0.00	%	36,441		10.108851		368,377	0.00	%	1.09	%	12/11/2009
2009	0.50	%	23,959		10.106089		242,132	0.00	%	1.06	%	12/11/2009
2009	0.80	%	6,772		10.104432		68,427	0.00	%	1.04	%	12/11/2009
2009	1.00	%	30,169		10.103328		304,807	0.00	%	1.03	%	12/11/2009
U.S. Equity Flex I Portfolio (WSCP)
2009	0.00	%	48,415		11.560237		559,689	1.14	%	24.67	%
2009	0.50	%	261,548		15.402040		4,028,373	1.14	%	24.04	%
2009	0.80	%	91,575		14.925949		1,366,844	1.14	%	23.67	%
2009	1.00	%	50,084		5.847611		292,872	1.14	%	23.43	%
2008	0.00	%	85,320		9.272942		791,167	0.08	%	-34.60	%
2008	0.50	%	271,597		12.416573		3,372,304	0.08	%	-34.92	%
2008	0.80	%	107,043		12.068936		1,291,895	0.08	%	-35.12	%
2008	1.00	%	58,869		4.737770		278,908	0.08	%	-35.25	%
2007	0.00	%	94,682		14.178269		1,342,427	0.00	%	-0.83	%
2007	0.50	%	277,018		19.080287		5,285,583	0.00	%	-1.33	%
2007	0.80	%	153,520		18.601963		2,855,773	0.00	%	-1.63	%
2007	1.00	%	65,396		7.317026		478,504	0.00	%	-1.83	%
2006	0.00	%	104,538		14.297420		1,494,624	0.00	%	4.77	%
2006	0.50	%	219,292		19.337639		4,240,590	0.00	%	4.25	%
2006	0.80	%	270,450		18.909841		5,114,166	0.00	%	3.94	%
2006	1.00	%	51,800		7.453113		386,071	0.00	%	3.73	%
2006	1.30	%	7,148		17.853550		127,617	0.00	%	3.42	%
2005	0.00	%	127,936		13.646704		1,745,905	0.00	%	-2.68	%
2005	0.50	%	125,444		18.549847		2,326,967	0.00	%	-3.16	%
2005	0.80	%	443,896		18.193863		8,076,183	0.00	%	-3.45	%
2005	1.00	%	41,474		7.185242		298,001	0.00	%	-3.65	%
2005	1.30	%	18,546		17.263500		320,169	0.00	%	-3.93	%
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
2009	0.00	%	4,468		16.508530		73,760	2.97	%	25.58	%
2009	0.50	%	59,924		15.967283		956,823	2.97	%	24.96	%
2009	0.80	%	4,174		15.651080		65,328	2.97	%	24.58	%
2008	0.00	%	1,888		13.145664		24,819	2.61	%	-16.06	%
2008	0.50	%	29,964		12.778352		382,891	2.61	%	-16.48	%
2008	0.80	%	3,187		12.562910		40,038	2.61	%	-16.73	%
2007	0.00	%	624		15.660699		9,772	1.92	%	10.29	%
2007	0.50	%	13,348		15.299488		204,218	1.92	%	9.73	%
2007	0.80	%	3,168		15.086774		47,795	1.92	%	9.40	%
2006	0.00	%	4,932		14.199918		70,034	1.96	%	10.41	%
2006	0.50	%	9,396		13.942298		131,002	1.96	%	9.87	%
2006	0.80	%	5,148		13.789981		70,991	1.96	%	9.54	%
2005	0.00	%	5,050		12.860543		64,946	2.56	%	7.66	%
2005	0.50	%	1,282		12.690331		16,269	2.56	%	7.13	%
2005	0.80	%	11,204		12.589281		141,050	2.56	%	6.81	%
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
2009	0.00	%	75,049		10.091229		757,337	0.01	%	46.01	%
2009	0.50	%	369,606		9.614858		3,553,709	0.01	%	45.29	%
2009	0.80	%	66,045		9.339933		616,856	0.01	%	44.85	%
2009	1.00	%	57,975		9.566552		554,621	0.01	%	44.56	%
2008	0.00	%	66,848		6.911095		461,993	0.01	%	-44.31	%
2008	0.50	%	285,769		6.617843		1,891,174	0.01	%	-44.59	%
2008	0.80	%	70,867		6.447916		456,944	0.01	%	-44.75	%
2008	1.00	%	25,926		6.617584		171,567	0.01	%	-44.86	%
2007	0.00	%	51,646		12.409688		640,911	0.19	%	36.63	%
2007	0.50	%	198,870		11.942871		2,375,079	0.19	%	35.95	%
2007	0.80	%	84,802		11.671311		989,751	0.19	%	35.54	%
2007	1.00	%	22,756		12.002478		273,128	0.19	%	35.27	%
2006	0.00	%	29,426		9.082400		267,259	0.14	%	9.12	%
2006	0.50	%	81,402		8.784776		715,098	0.14	%	8.57	%
2006	0.80	%	164,548		8.610938		1,416,913	0.14	%	8.25	%
2006	1.00	%	9,930		8.873089		88,110	0.14	%	8.03	%
2005	0.00	%	51,138		8.323593		425,652	0.01	%	12.56	%
2005	0.50	%	44,888		8.091082		363,192	0.01	%	12.00	%
2005	0.80	%	225,546		7.954734		1,794,158	0.01	%	11.66	%
2005	1.00	%	8,522		8.213276		69,994	0.01	%	11.44	%
2005	1.30	%	1,398		7.732522		10,810	0.01	%	11.11	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

,	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
2009	0.00	%	72,366	$	4.757691	$	344,295	0.00	%	56.90	%
2009	0.50	%	214,031		4.532982		970,199	0.00	%	56.11	%
2009	0.80	%	27,209		4.403280		119,809	0.00	%	55.65	%
2009	1.00	%	41,272		4.527754		186,869	0.00	%	55.34	%
2008	0.00	%	53,775		3.032378		163,066	0.09	%	-43.97	%
2008	0.50	%	125,263		2.903630		363,717	0.09	%	-44.25	%
2008	0.80	%	36,446		2.829026		103,107	0.09	%	-44.42	%
2008	1.00	%	14,544		2.914815		42,393	0.09	%	-44.53	%
2007	0.00	%	53,308		5.412137		288,510	0.37	%	21.70	%
2007	0.50	%	126,802		5.208409		660,437	0.37	%	21.09	%
2007	0.80	%	63,600		5.089898		323,718	0.37	%	20.72	%
2007	1.00	%	21,732		5.254782		114,197	0.37	%	20.48	%
2006	0.00	%	47,252		4.447186		210,138	0.00	%	7.83	%
2006	0.50	%	75,318		4.301344		323,969	0.00	%	7.29	%
2006	0.80	%	109,934		4.216170		463,500	0.00	%	6.97	%
2006	1.00	%	17,218		4.361506		75,096	0.00	%	6.76	%
2005	0.00	%	48,024		4.124323		198,066	0.00	%	11.55	%
2005	0.50	%	36,250		4.009018		145,327	0.00	%	10.99	%
2005	0.80	%	195,006		3.941403		768,597	0.00	%	10.66	%
2005	1.00	%	17,522		4.085406		71,584	0.00	%	10.44	%
Janus Aspen Series - INTECH Risk-Managed Core Portfolio - Service Shares (JARLCS)
2009	0.00	%	831		14.723271		12,235	0.97	%	22.55	%
2008	0.00	%	975		12.013653		11,713	0.70	%	-36.24	%
2008	0.50	%	5,976		11.677947		69,787	0.70	%	-36.56	%
2008	0.80	%	1,353		11.481055		15,534	0.70	%	-36.75	%
2007	0.00	%	848		18.842190		15,978	0.36	%	6.13	%
2007	0.50	%	5,388		18.407712		99,181	0.36	%	5.60	%
2007	0.80	%	1,936		18.151877		35,142	0.36	%	5.28	%
2006	0.00	%	2,146		17.753498		38,099	0.10	%	10.77	%
2006	0.50	%	5,540		17.431528		96,571	0.10	%	10.22	%
2006	0.80	%	3,660		17.241178		63,103	0.10	%	9.89	%
2005	0.00	%	1,406		16.027544		22,535	1.43	%	10.91	%
2005	0.50	%	3,292		15.815517		52,065	1.43	%	10.36	%
2005	0.80	%	11,304		15.689665		177,356	1.43	%	10.03	%
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
2009	0.00	%	13,452		12.746144		171,461	0.43	%	79.07	%
2009	0.50	%	382,278		12.514261		4,783,927	0.43	%	78.18	%
2009	0.80	%	69,416		12.377175		859,174	0.43	%	77.65	%
2008	0.00	%	13,505		7.117893		96,127	2.89	%	-52.21	%
2008	0.50	%	335,798		7.023415		2,358,449	2.89	%	-52.45	%
2008	0.80	%	67,272		6.967336		468,707	2.89	%	-52.59	%
2007	0.00	%	20,534		14.893765		305,829	0.50	%	28.07	%
2007	0.50	%	326,560		14.770042		4,823,305	0.50	%	27.43	%
2007	0.80	%	79,558		14.696304		1,169,209	0.50	%	27.05	%
2006	0.00	%	26,134		11.629148		303,916	1.97	%	16.29	%	5/1/2006
2006	0.50	%	121,018		11.590627		1,402,674	1.97	%	15.91	%	5/1/2006
2006	0.80	%	102,986		11.567583		1,191,299	1.97	%	15.68	%	5/1/2006

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
2009	0.00	%	45,724	$	15.292392	$	699,229	0.41	%	79.07	%
2009	0.50	%	85,296		14.570522		1,242,807	0.41	%	78.18	%
2009	0.80	%	21,214		14.153914		300,261	0.41	%	77.65	%
2009	1.00	%	100,674		15.268085		1,537,099	0.41	%	77.29	%
2008	0.00	%	64,411		8.539839		550,060	2.75	%	-52.23	%
2008	0.50	%	100,327		8.177488		820,423	2.75	%	-52.47	%
2008	0.80	%	34,313		7.967521		273,390	2.75	%	-52.61	%
2008	1.00	%	33,535		8.611907		288,800	2.75	%	-52.71	%
2007	0.00	%	65,132		17.876194		1,164,312	0.43	%	28.02	%
2007	0.50	%	103,560		17.203858		1,781,632	0.43	%	27.38	%
2007	0.80	%	63,014		16.812702		1,059,436	0.43	%	26.99	%
2007	1.00	%	47,972		18.208982		873,521	0.43	%	26.74	%
2006	0.00	%	53,060		13.963792		740,919	1.92	%	46.63	%
2006	0.50	%	107,512		13.506291		1,452,088	1.92	%	45.90	%
2006	0.80	%	110,056		13.239048		1,457,037	1.92	%	45.46	%
2006	1.00	%	109,880		14.367390		1,578,689	1.92	%	45.17	%
2005	0.00	%	38,214		9.523236		363,921	1.14	%	31.94	%
2005	0.50	%	62,034		9.257232		574,263	1.14	%	31.28	%
2005	0.80	%	171,522		9.101228		1,561,061	1.14	%	30.89	%
2005	1.00	%	35,600		9.896611		352,319	1.14	%	30.63	%
2005	1.30	%	5,076		8.846998		44,907	1.14	%	30.24	%
Investors Growth Stock Series - Initial Class (MIGIC)
2009	0.00	%	844		13.963862		11,785	0.67	%	39.55	%
2009	0.50	%	15,623		13.505951		211,003	0.67	%	38.86	%
2009	0.80	%	2,002		13.238396		26,503	0.67	%	38.44	%
2008	0.00	%	784		10.006089		7,845	0.56	%	-36.87	%
2008	0.50	%	10,324		9.726449		100,416	0.56	%	-37.19	%
2008	0.80	%	4,133		9.562409		39,521	0.56	%	-37.38	%
2007	0.00	%	760		15.850552		12,046	0.34	%	11.36	%
2007	0.50	%	10,876		15.485007		168,415	0.34	%	10.80	%
2007	0.80	%	3,892		15.269711		59,430	0.34	%	10.47	%
2006	0.00	%	804		14.233850		11,444	0.00	%	7.58	%
2006	0.50	%	9,652		13.975658		134,893	0.00	%	7.04	%
2006	0.80	%	9,996		13.822967		138,174	0.00	%	6.72	%
2005	0.00	%	704		13.231476		9,315	0.38	%	4.49	%
2005	0.50	%	9,568		13.056404		124,924	0.38	%	3.97	%
2005	0.80	%	13,712		12.952455		177,604	0.38	%	3.66	%
Value Series - Initial Class (MVFIC)
2009	0.00	%	9,300		16.390924		152,436	1.34	%	22.71	%
2009	0.50	%	85,805		15.853449		1,360,305	1.34	%	22.10	%
2009	0.80	%	8,888		15.539458		138,115	1.34	%	21.74	%
2008	0.00	%	10,025		13.356934		133,903	0.99	%	-32.58	%
2008	0.50	%	98,196		12.983695		1,274,947	0.99	%	-32.92	%
2008	0.80	%	8,253		12.764787		105,348	0.99	%	-33.12	%
2007	0.00	%	9,498		19.812092		188,175	0.91	%	7.91	%
2007	0.50	%	49,510		19.355242		958,278	0.91	%	7.37	%
2007	0.80	%	9,924		19.086229		189,412	0.91	%	7.04	%
2006	0.00	%	6,766		18.360218		124,225	0.80	%	20.84	%
2006	0.50	%	22,532		18.027234		406,190	0.80	%	20.24	%
2006	0.80	%	23,056		17.830357		411,097	0.80	%	19.88	%
2005	0.00	%	2,450		15.193770		37,225	0.65	%	6.66	%
2005	0.50	%	8,422		14.992740		126,269	0.65	%	6.13	%
2005	0.80	%	12,536		14.873414		186,453	0.65	%	5.81	%
Core Plus Fixed Income Portfolio - Class I (MSVFI)
2009	0.00	%	1,129		11.987667		13,534	4.15	%	9.64	%
2009	0.50	%	14,932		11.594606		173,131	4.15	%	9.10	%
2009	0.80	%	2,681		11.364963		30,469	4.15	%	8.77	%
2008	0.00	%	6,559		10.933218		71,711	4.73	%	-10.20	%
2008	0.50	%	60,672		10.627725		644,805	4.73	%	-10.65	%
2008	0.80	%	4,469		10.448514		46,694	4.73	%	-10.92	%
2007	0.00	%	1,932		12.175696		23,523	3.05	%	5.45	%
2007	0.50	%	34,752		11.894818		413,369	3.05	%	4.92	%
2007	0.80	%	10,704		11.729400		125,551	3.05	%	4.61	%
2006	0.00	%	1,480		11.546094		17,088	3.94	%	3.73	%
2006	0.50	%	13,740		11.336567		155,764	3.94	%	3.22	%
2006	0.80	%	15,064		11.212678		168,908	3.94	%	2.91	%
2005	0.00	%	1,144		11.130805		12,734	3.62	%	4.21	%
2005	0.50	%	10,072		10.983426		110,625	3.62	%	3.70	%
2005	0.80	%	22,076		10.895944		240,539	3.62	%	3.39	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Emerging Markets Debt Portfolio - Class I (MSEM)
2009	0.00	%	12,742	$	25.290832	$	322,256	8.37	%	30.21	%
2009	0.50	%	47,197		23.692027		1,118,193	8.37	%	29.56	%
2009	0.80	%	7,957		22.890693		182,141	8.37	%	29.17	%
2009	1.00	%	10,375		22.859877		237,171	8.37	%	28.91	%
2008	0.00	%	13,545		19.423315		263,089	7.05	%	-14.98	%
2008	0.50	%	55,882		18.286566		1,021,890	7.05	%	-15.40	%
2008	0.80	%	10,382		17.721099		183,980	7.05	%	-15.65	%
2008	1.00	%	6,634		17.732649		117,638	7.05	%	-15.82	%
2007	0.00	%	11,312		22.844597		258,418	7.41	%	6.53	%
2007	0.50	%	69,830		21.615486		1,509,409	7.41	%	6.00	%
2007	0.80	%	20,760		21.010045		436,169	7.41	%	5.68	%
2007	1.00	%	7,184		21.065858		151,337	7.41	%	5.47	%
2006	0.00	%	34,466		21.443912		739,086	7.72	%	10.81	%
2006	0.50	%	51,120		20.392381		1,042,459	7.72	%	10.26	%
2006	0.80	%	31,246		19.881064		621,204	7.72	%	9.93	%
2006	1.00	%	3,962		19.973989		79,137	7.72	%	9.71	%
2005	0.00	%	37,616		19.352478		727,963	7.52	%	12.25	%
2005	0.50	%	28,944		18.495488		535,333	7.52	%	11.69	%
2005	0.80	%	68,904		18.085748		1,246,180	7.52	%	11.36	%
2005	1.00	%	8,002		18.206549		145,689	7.52	%	11.14	%
2005	1.30	%	374		17.336446		6,484	7.52	%	10.81	%
U.S. Real Estate Portfolio - Class I (MSVRE)
2009	0.00	%	15,029		39.660220		596,053	5.11	%	28.36	%
2009	0.80	%	7		39.326304		275	5.11	%	27.33	%
2009	1.00	%	36,695		20.416080		749,168	5.11	%	27.08	%
2008	0.00	%	35,291		30.898769		1,090,448	3.46	%	-37.89	%
2008	0.50	%	164,177		31.774120		5,216,580	3.46	%	-38.20	%
2008	0.80	%	48,939		30.885042		1,511,483	3.46	%	-38.39	%
2008	1.00	%	41,815		16.065985		671,799	3.46	%	-38.51	%
2007	0.00	%	38,256		49.750947		1,903,272	1.10	%	-17.07	%
2007	0.50	%	173,362		51.418211		8,913,964	1.10	%	-17.49	%
2007	0.80	%	84,232		50.130463		4,222,589	1.10	%	-17.74	%
2007	1.00	%	39,508		26.129688		1,032,332	1.10	%	-17.90	%
2006	0.00	%	45,458		59.991892		2,727,111	1.08	%	38.04	%
2006	0.50	%	158,492		62.315078		9,876,441	1.08	%	37.36	%
2006	0.80	%	195,750		60.938109		11,928,635	1.08	%	36.95	%
2006	1.00	%	73,408		31.826979		2,336,355	1.08	%	36.68	%
2005	0.00	%	49,280		43.458397		2,141,630	1.22	%	17.05	%
2005	0.50	%	94,426		45.366664		4,283,793	1.22	%	16.47	%
2005	0.80	%	267,504		44.496942		11,903,110	1.22	%	16.12	%
2005	1.00	%	63,520		23.286362		1,479,150	1.22	%	15.89	%
2005	1.30	%	7,386		42.223333		311,862	1.22	%	15.54	%
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)
2009	0.50	%	2,998		11.381006		34,120	3.82	%	13.81	%	5/1/2009
AllianceBernstein NVIT Global Fixed Income Fund - Class VI (NVAGF6)
2009	0.00	%	939		11.419762		10,723	3.79	%	14.20	%	5/1/2009
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
2009	0.00	%	929		12.564442		11,672	0.89	%	25.64	%	5/1/2009
2009	0.50	%	552		12.522611		6,912	0.89	%	25.23	%	5/1/2009
2009	0.80	%	4		12.497580		50	0.89	%	24.98	%	5/1/2009
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
2009	0.00	%	6,425		9.711378		62,396	0.08	%	23.41	%
2009	0.50	%	92,676		9.534796		883,647	0.08	%	22.80	%
2009	0.80	%	14,397		9.430409		135,770	0.08	%	22.43	%
2008	0.00	%	17,836		7.868935		140,350	2.61	%	-29.78	%
2008	0.50	%	90,933		7.764576		706,056	2.61	%	-30.13	%
2008	0.80	%	11,719		7.702635		90,267	2.61	%	-30.34	%
2007	0.00	%	18,106		11.205324		202,884	2.56	%	6.14	%
2007	0.50	%	52,982		11.112234		588,748	2.56	%	5.61	%
2007	0.80	%	17,818		11.056758		197,009	2.56	%	5.29	%
2006	0.00	%	9,828		10.556998		103,754	3.56	%	5.57	%	5/1/2006
2006	0.50	%	2,762		10.522054		29,062	3.56	%	5.22	%	5/1/2006
2006	0.80	%	23,042		10.501149		241,967	3.56	%	5.01	%	5/1/2006

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
American Funds NVIT Bond Fund - Class II (GVABD2)
2009	0.00	%	7,087	$	10.970085	$	77,745	0.35	%	12.15	%
2009	0.50	%	122,112		10.770767		1,315,240	0.35	%	11.59	%
2009	0.80	%	9,442		10.652882		100,585	0.35	%	11.26	%
2008	0.00	%	6,155		9.781713		60,206	5.27	%	-9.87	%
2008	0.50	%	104,841		9.652092		1,011,935	5.27	%	-10.32	%
2008	0.80	%	9,151		9.575122		87,622	5.27	%	-10.59	%
2007	0.00	%	6,166		10.853118		66,920	8.87	%	2.98	%
2007	0.50	%	70,206		10.762995		755,627	8.87	%	2.47	%
2007	0.80	%	7,668		10.709255		82,119	8.87	%	2.16	%
2006	0.50	%	22,766		10.504005		239,134	0.05	%	5.04	%	5/1/2006
2006	0.80	%	11,396		10.483128		119,466	0.05	%	4.83	%	5/1/2006
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
2009	0.00	%	6,075		10.774250		65,454	0.00	%	41.60	%
2009	0.50	%	118,760		10.578350		1,256,285	0.00	%	40.90	%
2009	0.80	%	24,294		10.462500		254,176	0.00	%	40.47	%
2008	0.00	%	9,676		7.608765		73,622	2.74	%	-38.64	%
2008	0.50	%	112,338		7.507854		843,417	2.74	%	-38.94	%
2008	0.80	%	21,120		7.447945		157,301	2.74	%	-39.13	%
2007	0.00	%	8,996		12.399481		111,546	2.69	%	14.36	%
2007	0.50	%	88,882		12.296498		1,092,937	2.69	%	13.79	%
2007	0.80	%	23,258		12.235118		284,564	2.69	%	13.45	%
2006	0.00	%	2,236		10.842096		24,243	0.07	%	8.42	%	5/1/2006
2006	0.50	%	64,864		10.806217		700,934	0.07	%	8.06	%	5/1/2006
2006	0.80	%	15,330		10.784738		165,330	0.07	%	7.85	%	5/1/2006
American Funds NVIT Growth Fund - Class II (GVAGR2)
2009	0.00	%	5,838		8.979238		52,421	0.00	%	38.78	%
2009	0.50	%	166,832		8.815893		1,470,773	0.00	%	38.09	%
2009	0.80	%	25,748		8.719320		224,505	0.00	%	37.68	%
2008	0.00	%	4,646		6.470039		30,060	2.07	%	-44.21	%
2008	0.50	%	139,829		6.384181		892,694	2.07	%	-44.49	%
2008	0.80	%	28,066		6.333211		177,748	2.07	%	-44.66	%
2007	0.00	%	4,432		11.597638		51,401	0.68	%	11.90	%
2007	0.50	%	107,408		11.501279		1,235,329	0.68	%	11.34	%
2007	0.80	%	27,580		11.443839		315,621	0.68	%	11.00	%
2006	0.00	%	288		10.364424		2,985	1.29	%	3.64	%	5/1/2006
2006	0.50	%	44,756		10.330117		462,335	1.29	%	3.30	%	5/1/2006
2006	0.80	%	17,582		10.309581		181,263	1.29	%	3.10	%	5/1/2006
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
2009	0.00	%	2,815		8.007342		22,541	0.00	%	30.69	%
2009	0.50	%	99,198		7.901119		783,775	0.00	%	30.04	%
2009	0.80	%	3,815		7.838054		29,902	0.00	%	29.65	%
2008	0.00	%	2,747		6.126963		16,831	2.44	%	-38.06	%
2008	0.50	%	89,642		6.075985		544,663	2.44	%	-38.37	%
2008	0.80	%	3,255		6.045597		19,678	2.44	%	-38.56	%
2007	0.50	%	34,752		9.859308		342,631	3.27	%	-1.41	%	5/1/2007
2007	0.80	%	1,646		9.839552		16,196	3.27	%	-1.60	%	5/1/2007
Federated NVIT High Income Bond Fund - Class I (HIBF)
2009	0.00	%	5,085		15.030278		76,429	9.75	%	46.00	%
2009	0.50	%	3,955		14.537578		57,496	9.75	%	45.27	%
2009	0.80	%	1,534		14.249701		21,859	9.75	%	44.84	%
2008	0.00	%	5,154		10.294917		53,060	8.80	%	-27.99	%
2008	0.50	%	4,252		10.007295		42,551	8.80	%	-28.35	%
2008	0.80	%	1,761		9.838552		17,326	8.80	%	-28.56	%
2007	0.00	%	5,886		14.296317		84,148	7.20	%	3.13	%
2007	0.50	%	5,162		13.966626		72,096	7.20	%	2.62	%
2007	0.80	%	3,306		13.772430		45,532	7.20	%	2.31	%
2006	0.00	%	6,018		13.861826		83,420	7.10	%	10.60	%
2006	0.50	%	4,224		13.610399		57,490	7.10	%	10.05	%
2006	0.80	%	8,630		13.461693		116,174	7.10	%	9.72	%
2005	0.00	%	8,510		12.532998		106,656	6.81	%	2.38	%
2005	0.50	%	4,370		12.367140		54,044	6.81	%	1.87	%
2005	0.80	%	15,130		12.268656		185,625	6.81	%	1.57	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Federated NVIT High Income Bond Fund - Class III (HIBF3)
2009	0.00	%	13,384	$	12.632602	$	169,075	11.37	%	46.08	%
2009	0.50	%	250,028		12.341429		3,085,703	11.37	%	45.35	%
2009	0.80	%	8,303		12.169932		101,047	11.37	%	44.92	%
2008	0.00	%	12,655		8.647843		109,438	9.56	%	-28.10	%
2008	0.50	%	59,880		8.490785		508,428	9.56	%	-28.46	%
2008	0.80	%	10,421		8.397926		87,515	9.56	%	-28.67	%
2007	0.00	%	9,004		12.027193		108,293	8.02	%	3.17	%
2007	0.50	%	35,436		11.868017		420,555	8.02	%	2.65	%
2007	0.80	%	11,368		11.773527		133,841	8.02	%	2.34	%
2006	0.00	%	4,016		11.657910		46,818	7.03	%	10.60	%
2006	0.50	%	13,398		11.561576		154,902	7.03	%	10.05	%
2006	0.80	%	9,102		11.504161		104,711	7.03	%	9.72	%
2005	0.00	%	1,936		10.540776		20,407	6.33	%	5.41	%	5/2/2005
2005	0.50	%	4,790		10.505908		50,323	6.33	%	5.06	%	5/2/2005
2005	0.80	%	8,904		10.485051		93,359	6.33	%	4.85	%	5/2/2005
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
2009	0.00	%	4,227		25.446836		107,564	1.30	%	63.31	%
2009	0.50	%	30,891		24.296820		750,553	1.30	%	62.50	%
2009	0.80	%	4,456		23.631906		105,304	1.30	%	62.01	%
2009	1.00	%	40,087		22.852194		916,076	1.30	%	61.69	%
2008	0.00	%	4,604		15.581599		71,738	1.08	%	-57.76	%
2008	0.50	%	37,210		14.951961		556,362	1.08	%	-57.97	%
2008	0.80	%	6,102		14.586450		89,007	1.08	%	-58.10	%
2008	1.00	%	18,953		14.133405		267,870	1.08	%	-58.18	%
2007	0.00	%	4,872		36.889137		179,724	0.71	%	45.58	%
2007	0.50	%	37,816		35.576728		1,345,370	0.71	%	44.85	%
2007	0.80	%	13,266		34.811779		461,813	0.71	%	44.41	%
2007	1.00	%	47,852		33.798406		1,617,321	0.71	%	44.12	%
2006	0.00	%	5,092		25.339713		129,030	0.72	%	36.72	%
2006	0.50	%	36,644		24.561198		900,021	0.72	%	36.04	%
2006	0.80	%	24,800		24.105617		597,819	0.72	%	35.63	%
2006	1.00	%	29,436		23.450961		690,302	0.72	%	35.36	%
2005	0.00	%	11,646		18.534273		215,850	0.61	%	32.64	%
2005	0.50	%	39,142		18.054599		706,693	0.61	%	31.98	%
2005	0.80	%	57,534		17.772777		1,022,539	0.61	%	31.58	%
2005	1.00	%	19,494		17.324605		337,726	0.61	%	31.32	%
2005	1.30	%	2,774		17.312824		48,026	0.61	%	30.93	%
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
2009	0.00	%	35,576		18.287102		650,582	1.28	%	63.48	%
2009	0.50	%	129,200		17.865296		2,308,196	1.28	%	62.67	%
2009	0.80	%	36,539		17.616947		643,706	1.28	%	62.18	%
2008	0.00	%	29,125		11.185864		325,788	1.12	%	-57.83	%
2008	0.50	%	183,967		10.982610		2,020,438	1.12	%	-58.04	%
2008	0.80	%	42,738		10.862450		464,239	1.12	%	-58.17	%
2007	0.00	%	44,814		26.524857		1,188,685	0.74	%	45.55	%
2007	0.50	%	196,328		26.174039		5,138,697	0.74	%	44.82	%
2007	0.80	%	61,574		25.965810		1,598,819	0.74	%	44.38	%
2006	0.00	%	26,004		18.224168		473,901	0.78	%	36.64	%
2006	0.50	%	59,452		18.073662		1,074,515	0.78	%	35.97	%
2006	0.80	%	71,548		17.983970		1,286,717	0.78	%	35.56	%
2005	0.00	%	17,390		13.336908		231,929	0.19	%	33.37	%	5/2/2005
2005	0.50	%	42,298		13.292850		562,261	0.19	%	32.93	%	5/2/2005
2005	0.80	%	49,358		13.266490		654,807	0.19	%	32.66	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Gartmore NVIT Global Utilities Fund - Class I (GVGU1)
2009	0.00	%	11,222	$	17.873386	$	200,575	3.74	%	8.01	%
2009	0.50	%	22,312		17.201149		383,792	3.74	%	7.47	%
2009	0.80	%	4,599		16.809985		77,309	3.74	%	7.15	%
2009	1.00	%	13,437		16.554172		222,438	3.74	%	6.93	%
2008	0.00	%	18,550		16.548066		306,967	3.10	%	-32.94	%
2008	0.50	%	25,030		16.005503		400,618	3.10	%	-33.27	%
2008	0.80	%	14,161		15.688527		222,165	3.10	%	-33.47	%
2008	1.00	%	14,089		15.480718		218,108	3.10	%	-33.61	%
2007	0.00	%	13,688		24.676248		337,768	2.36	%	20.43	%
2007	0.50	%	44,614		23.987048		1,070,158	2.36	%	19.83	%
2007	0.80	%	18,462		23.582792		435,386	2.36	%	19.47	%
2007	1.00	%	20,120		23.317091		469,140	2.36	%	19.23	%
2006	0.00	%	10,732		20.489395		219,892	2.82	%	37.56	%
2006	0.50	%	31,924		20.017433		639,037	2.82	%	36.88	%
2006	0.80	%	44,146		19.739493		871,420	2.82	%	36.47	%
2006	1.00	%	38,254		19.556346		748,108	2.82	%	36.20	%
2005	0.00	%	12,822		14.894755		190,981	2.16	%	6.39	%
2005	0.50	%	18,728		14.624338		273,885	2.16	%	5.86	%
2005	0.80	%	52,446		14.464451		758,603	2.16	%	5.54	%
2005	1.00	%	8,262		14.358831		118,633	2.16	%	5.33	%
2005	1.30	%	4,350		14.201823		61,778	2.16	%	5.02	%
Gartmore NVIT International Equity Fund - Class I (GIG)
2009	0.00	%	12,461		11.949736		148,906	1.12	%	29.72	%
2009	0.50	%	54,336		11.409586		619,951	1.12	%	29.08	%
2009	0.80	%	6,545		11.097348		72,632	1.12	%	28.69	%
2009	1.00	%	17,782		10.951765		194,744	1.12	%	28.43	%
2008	0.00	%	13,969		9.211762		128,679	1.24	%	-46.06	%
2008	0.50	%	63,423		8.839463		560,625	1.24	%	-46.33	%
2008	0.80	%	9,215		8.623393		79,465	1.24	%	-46.49	%
2008	1.00	%	23,220		8.527308		198,004	1.24	%	-46.59	%
2007	0.00	%	13,744		17.076402		234,698	0.38	%	27.15	%
2007	0.50	%	64,516		16.468629		1,062,490	0.38	%	26.51	%
2007	0.80	%	24,468		16.114464		394,289	0.38	%	26.13	%
2007	1.00	%	73,628		15.966923		1,175,613	0.38	%	25.87	%
2006	0.00	%	15,102		13.430598		202,829	0.78	%	32.96	%
2006	0.50	%	25,884		13.017827		336,953	0.78	%	32.30	%
2006	0.80	%	90,176		12.776337		1,152,119	0.78	%	31.91	%
2006	1.00	%	37,946		12.684823		481,338	0.78	%	31.65	%
2005	0.00	%	3,756		10.100861		37,939	1.03	%	30.21	%
2005	0.50	%	4,962		9.839331		48,823	1.03	%	29.56	%
2005	0.80	%	37,028		9.685731		358,643	1.03	%	29.17	%
2005	1.00	%	24,308		9.635544		234,221	1.03	%	28.92	%
2005	1.30	%	3,512		9.434995		33,136	1.03	%	28.53	%
Gartmore NVIT International Equity Fund - Class III (GIG3)
2009	0.00	%	44,927		7.153834		321,400	0.02	%	29.67	%
2009	0.50	%	399,958		7.094353		2,837,443	0.02	%	29.02	%
2009	0.80	%	100,960		7.058922		712,669	0.02	%	28.64	%
2008	0.00	%	1,565		5.516874		8,634	1.08	%	-44.83	%	5/1/2008
2008	0.50	%	2,344		5.498438		12,888	1.08	%	-45.02	%	5/1/2008
2008	0.80	%	170		5.487410		933	1.08	%	-45.13	%	5/1/2008
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)
2009	0.50	%	5,406		13.366903		72,261	0.74	%	33.67	%	5/1/2009
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
2009	0.00	%	119,590		7.927018		947,992	0.18	%	52.96	%
2009	0.50	%	1,236,830		7.861103		9,722,848	0.18	%	52.20	%
2009	0.80	%	356,967		7.821802		2,792,125	0.18	%	51.74	%
2008	0.80	%	171		5.154692		881	0.00	%	-48.45	%	5/1/2008

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
2009	0.50	%	3,846	$	8.059273	$	30,996	0.44	%	30.88	%
2009	0.80	%	2		8.018999		16	0.44	%	30.49	%
2008	0.50	%	69		6.157812		425	0.43	%	-38.42	%	5/1/2008
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)
2009	0.50	%	5,424		8.226880		44,623	0.88	%	28.65	%
2009	0.80	%	5,678		8.185776		46,479	0.88	%	28.27	%
2008	0.50	%	14,331		6.394590		91,641	2.22	%	-36.05	%	5/1/2008
2008	0.80	%	5,228		6.381765		33,364	2.22	%	-36.18	%	5/1/2008
NVIT Cardinal Balanced Fund - Class I (NVCRB1)
2009	0.00	%	458		9.593104		4,394	2.36	%	19.88	%
2009	0.50	%	17,112		9.513461		162,794	2.36	%	19.28	%
2009	0.80	%	6,831		9.465975		64,662	2.36	%	18.93	%
2008	0.50	%	10,972		7.975427		87,506	0.89	%	-20.25	%	5/1/2008
2008	0.80	%	2,267		7.959456		18,044	0.89	%	-20.41	%	5/1/2008
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)
2009	0.00	%	509		9.025006		4,594	1.80	%	24.25	%
2009	0.50	%	27,157		8.950049		243,056	1.80	%	23.63	%
2009	0.80	%	4,616		8.905361		41,107	1.80	%	23.26	%
2008	0.50	%	15,452		7.239333		111,862	1.66	%	-27.61	%	5/1/2008
2008	0.80	%	4,329		7.224834		31,276	1.66	%	-27.75	%	5/1/2008
NVIT Cardinal Conservative Fund - Class I (NVCCN1)
2009	0.00	%	1,920		10.351566		19,875	3.09	%	13.22	%
2009	0.50	%	11,740		10.265671		120,519	3.09	%	12.66	%
2009	0.80	%	1,442		10.214479		14,729	3.09	%	12.32	%
2008	0.00	%	288		9.142885		2,633	1.89	%	-8.57	%	5/1/2008
2008	0.50	%	3,870		9.112447		35,265	1.89	%	-8.88	%	5/1/2008
2008	0.80	%	1,287		9.094234		11,704	1.89	%	-9.06	%	5/1/2008
NVIT Cardinal Moderate Fund - Class I (NVCMD1)
2009	0.00	%	7,297		9.305236		67,900	2.08	%	22.00	%
2009	0.50	%	69,130		9.227958		637,929	2.08	%	21.40	%
2009	0.80	%	18,764		9.181897		172,289	2.08	%	21.03	%
2008	0.00	%	6,475		7.626933		49,384	1.65	%	-23.73	%	5/1/2008
2008	0.50	%	36,096		7.601493		274,383	1.65	%	-23.99	%	5/1/2008
2008	0.80	%	7,019		7.586279		53,248	1.65	%	-24.14	%	5/1/2008
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)
2009	0.50	%	7,130		8.664997		61,781	1.62	%	26.06	%
2009	0.80	%	14,506		8.621717		125,067	1.62	%	25.68	%
2008	0.50	%	3,677		6.873896		25,275	1.88	%	-31.26	%	5/1/2008
2008	0.80	%	8,701		6.860115		59,690	1.88	%	-31.40	%	5/1/2008
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)
2009	0.00	%	11,907		9.853071		117,321	3.06	%	17.64	%
2009	0.50	%	29,224		9.771284		285,556	3.06	%	17.05	%
2009	0.80	%	6,000		9.722537		58,335	3.06	%	16.70	%
2008	0.50	%	6,389		8.348025		53,336	2.83	%	-16.52	%	5/1/2008
2008	0.80	%	1,384		8.331322		11,531	2.83	%	-16.69	%	5/1/2008
NVIT Core Bond Fund - Class I (NVCBD1)
2009	0.00	%	5,380		10.818752		58,205	5.39	%	8.78	%
2009	0.50	%	4,328		10.728983		46,435	5.39	%	8.24	%
2009	0.80	%	872		10.675484		9,309	5.39	%	7.92	%
2009	1.00	%	2,052		10.639980		21,833	5.39	%	7.70	%
2008	0.50	%	1,649		9.912085		16,345	2.32	%	-0.88	%	5/1/2008
NVIT Core Plus Bond Fund - Class I (NVLCP1)
2009	0.50	%	1,483		11.504485		17,061	5.73	%	16.04	%
2009	0.80	%	190		11.447139		2,175	5.73	%	15.70	%
2008	0.50	%	16		9.914010		159	2.82	%	-0.86	%	5/1/2008

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Fund - Class I (TRF)
2009	0.00	%	179,695	$	18.174730	$	3,265,908	1.35	%	26.10	%
2009	0.50	%	502,814		39.544533		19,883,545	1.35	%	25.47	%
2009	0.80	%	653,320		31.469156		20,559,429	1.35	%	25.09	%
2009	1.00	%	128,057		8.521969		1,091,298	1.35	%	24.84	%
2008	0.00	%	193,391		14.413309		2,787,404	1.40	%	-41.55	%
2008	0.50	%	557,930		31.517666		17,584,651	1.40	%	-41.85	%
2008	0.80	%	726,828		25.156819		18,284,680	1.40	%	-42.02	%
2008	1.00	%	143,966		6.826209		982,742	1.40	%	-42.14	%
2007	0.00	%	215,182		24.661007		5,306,605	1.05	%	8.18	%
2007	0.50	%	592,642		54.197488		32,119,708	1.05	%	7.64	%
2007	0.80	%	846,056		43.389809		36,710,208	1.05	%	7.31	%
2007	1.00	%	149,962		11.797304		1,769,147	1.05	%	7.10	%
2006	0.00	%	247,594		22.796000		5,644,153	1.08	%	13.63	%
2006	0.50	%	467,698		50.351226		23,549,168	1.08	%	13.06	%
2006	0.80	%	1,155,132		40.432316		46,704,662	1.08	%	12.72	%
2006	1.00	%	167,948		11.015308		1,849,999	1.08	%	12.50	%
2006	1.30	%	314		40.292927		12,652	1.08	%	12.16	%
2005	0.00	%	271,134		20.062025		5,439,497	0.91	%	7.44	%
2005	0.50	%	297,534		44.533940		13,250,361	0.91	%	6.91	%
2005	0.80	%	1,522,010		35.868129		54,591,651	0.91	%	6.59	%
2005	1.00	%	153,820		9.791361		1,506,107	0.91	%	6.38	%
2005	1.30	%	5,272		35.923101		189,387	0.91	%	6.06	%
NVIT Global Financial Services Fund - Class I (GVGF1)
2009	0.00	%	4,227		13.889643		58,712	1.17	%	31.75	%
2009	0.50	%	24,715		13.366897		330,363	1.17	%	31.10	%
2009	0.80	%	3,898		13.062701		50,918	1.17	%	30.70	%
2009	1.00	%	7,696		12.863780		99,000	1.17	%	30.44	%
2008	0.00	%	4,535		10.542078		47,808	1.83	%	-46.27	%
2008	0.50	%	16,943		10.196244		172,755	1.83	%	-46.54	%
2008	0.80	%	6,792		9.994191		67,881	1.83	%	-46.70	%
2008	1.00	%	8,903		9.861725		87,799	1.83	%	-46.81	%
2007	0.00	%	6,516		19.621675		127,855	3.13	%	-1.05	%
2007	0.50	%	20,752		19.073551		395,814	3.13	%	-1.55	%
2007	0.80	%	8,522		18.752014		159,805	3.13	%	-1.85	%
2007	1.00	%	5,350		18.540690		99,193	3.13	%	-2.04	%
2006	0.00	%	1,856		19.830405		36,805	1.89	%	20.32	%
2006	0.50	%	19,458		19.373628		376,972	1.89	%	19.72	%
2006	0.80	%	20,092		19.104581		383,849	1.89	%	19.37	%
2006	1.00	%	5,656		18.927318		107,053	1.89	%	19.13	%
2005	0.00	%	952		16.481268		15,690	2.00	%	11.15	%
2005	0.50	%	7,780		16.182094		125,897	2.00	%	10.60	%
2005	0.80	%	31,498		16.005171		504,131	2.00	%	10.27	%
2005	1.00	%	5,612		15.888310		89,165	2.00	%	10.05	%
2005	1.30	%	238		15.714600		3,740	2.00	%	9.72	%
NVIT Government Bond Fund - Class I (GBF)
2009	0.00	%	90,071		22.229504		2,002,234	3.32	%	2.69	%
2009	0.50	%	154,092		38.496449		5,931,995	3.32	%	2.18	%
2009	0.80	%	67,098		28.859126		1,936,390	3.32	%	1.87	%
2009	1.00	%	132,506		15.184570		2,012,047	3.32	%	1.67	%
2008	0.00	%	101,325		21.647591		2,193,442	4.34	%	7.72	%
2008	0.50	%	180,930		37.676575		6,816,823	4.34	%	7.18	%
2008	0.80	%	84,645		28.329345		2,397,937	4.34	%	6.86	%
2008	1.00	%	292,160		14.935656		4,363,601	4.34	%	6.65	%
2007	0.00	%	97,024		20.096370		1,949,830	4.45	%	7.16	%
2007	0.50	%	132,504		35.151974		4,657,777	4.45	%	6.62	%
2007	0.80	%	102,864		26.510441		2,726,970	4.45	%	6.30	%
2007	1.00	%	140,436		14.004670		1,966,760	4.45	%	6.09	%
2006	0.00	%	95,134		18.753954		1,784,139	4.11	%	3.34	%
2006	0.50	%	106,356		32.969134		3,506,465	4.11	%	2.83	%
2006	0.80	%	157,392		24.939296		3,925,246	4.11	%	2.52	%
2006	1.00	%	127,692		13.201192		1,685,687	4.11	%	2.32	%
2006	1.30	%	7,562		25.368610		191,837	4.11	%	2.01	%
2005	0.00	%	105,202		18.147625		1,909,166	3.64	%	3.26	%
2005	0.50	%	64,816		32.062663		2,078,174	3.64	%	2.75	%
2005	0.80	%	225,488		24.326268		5,485,282	3.64	%	2.44	%
2005	1.00	%	119,678		12.902408		1,544,134	3.64	%	2.24	%
2005	1.30	%	16,748		24.868713		416,501	3.64	%	1.93	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Growth Fund - Class I (CAF)
2009	0.00	%	80,041	$	12.643680	$	1,012,013	0.56	%	33.47	%
2009	0.50	%	310,833		18.556714		5,768,039	0.56	%	32.81	%
2009	0.80	%	257,511		18.068103		4,652,735	0.56	%	32.41	%
2009	1.00	%	34,260		5.516318		188,989	0.56	%	32.14	%
2008	0.00	%	94,951		9.472940		899,465	0.27	%	-38.71	%
2008	0.50	%	306,649		13.972794		4,284,743	0.27	%	-39.01	%
2008	0.80	%	323,554		13.645751		4,415,137	0.27	%	-39.20	%
2008	1.00	%	36,164		4.174493		150,966	0.27	%	-39.32	%
2007	0.00	%	104,626		15.454811		1,616,975	0.17	%	19.54	%
2007	0.50	%	262,256		22.910775		6,008,488	0.17	%	18.94	%
2007	0.80	%	427,558		22.441944		9,595,233	0.17	%	18.59	%
2007	1.00	%	49,378		6.879197		339,681	0.17	%	18.35	%
2006	0.00	%	118,580		12.928125		1,533,017	0.05	%	6.17	%
2006	0.50	%	165,708		19.261676		3,191,814	0.05	%	5.64	%
2006	0.80	%	597,654		18.924499		11,310,303	0.05	%	5.32	%
2006	1.00	%	55,020		5.812653		319,812	0.05	%	5.11	%
2006	1.30	%	932		17.584603		16,389	0.05	%	4.80	%
2005	0.00	%	135,380		12.177042		1,648,528	0.08	%	6.50	%
2005	0.50	%	111,080		18.233340		2,025,359	0.08	%	5.97	%
2005	0.80	%	720,822		17.967853		12,951,624	0.08	%	5.65	%
2005	1.00	%	38,158		5.529847		211,008	0.08	%	5.44	%
2005	1.30	%	6,860		16.779162		115,105	0.08	%	5.13	%
NVIT Health Sciences Fund - Class I (GVGH1)
2009	0.00	%	1,969		13.810897		27,194	0.30	%	19.16	%
2009	0.50	%	4,346		13.291259		57,764	0.30	%	18.57	%
2009	0.80	%	905		12.988959		11,755	0.30	%	18.21	%
2009	1.00	%	6,585		12.791190		84,230	0.30	%	17.98	%
2008	0.00	%	2,092		11.589966		24,246	0.29	%	-25.21	%
2008	0.50	%	6,829		11.209779		76,552	0.29	%	-25.59	%
2008	0.80	%	1,704		10.987732		18,723	0.29	%	-25.81	%
2008	1.00	%	22,174		10.842090		240,413	0.29	%	-25.96	%
2007	0.00	%	2,924		15.497697		45,315	0.08	%	13.16	%
2007	0.50	%	7,226		15.064598		108,857	0.08	%	12.59	%
2007	0.80	%	2,752		14.810633		40,759	0.08	%	12.25	%
2007	1.00	%	14,292		14.643631		209,287	0.08	%	12.03	%
2006	0.00	%	4,354		13.695316		59,629	0.00	%	2.71	%
2006	0.50	%	7,120		13.379661		95,263	0.00	%	2.20	%
2006	0.80	%	3,876		13.193822		51,139	0.00	%	1.89	%
2006	1.00	%	17,932		13.071309		234,395	0.00	%	1.69	%
2005	0.00	%	7,210		13.334230		96,140	0.00	%	8.44	%
2005	0.50	%	7,318		13.092046		95,808	0.00	%	7.90	%
2005	0.80	%	24,756		12.948895		320,563	0.00	%	7.58	%
2005	1.00	%	19,108		12.854278		245,620	0.00	%	7.36	%
2005	1.30	%	286		12.713706		3,636	0.00	%	7.04	%
NVIT Health Sciences Fund - Class III (GVGHS)
2009	0.00	%	8,049		11.124833		89,544	0.29	%	19.11	%
2009	0.50	%	31,770		10.868248		345,284	0.29	%	18.52	%
2009	0.80	%	1,899		10.717146		20,352	0.29	%	18.16	%
2008	0.00	%	9,167		9.339799		85,618	0.28	%	-25.23	%
2008	0.50	%	52,395		9.170101		480,467	0.28	%	-25.61	%
2008	0.80	%	3,498		9.069777		31,726	0.28	%	-25.83	%
2007	0.00	%	1,306		12.491648		16,314	0.09	%	13.23	%
2007	0.50	%	38,088		12.326279		469,483	0.09	%	12.66	%
2007	0.80	%	5,112		12.228112		62,510	0.09	%	12.32	%
2006	0.00	%	3,408		11.032385		37,598	0.00	%	2.70	%
2006	0.50	%	19,322		10.941189		211,406	0.00	%	2.19	%
2006	0.80	%	14,692		10.886820		159,949	0.00	%	1.89	%
2005	0.00	%	230		10.742057		2,471	0.00	%	7.42	%	5/2/2005
2005	0.50	%	20,616		10.706525		220,726	0.00	%	7.07	%	5/2/2005
2005	0.80	%	19,656		10.685265		210,030	0.00	%	6.85	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT International Index Fund - Class VI (GVIX6)
2009	0.00	%	21,817	$	8.793694	$	191,852	2.63	%	28.62	%
2009	0.50	%	38,936		8.633738		336,163	2.63	%	27.98	%
2009	0.80	%	697		8.539143		5,952	2.63	%	27.59	%
2008	0.00	%	326		6.837123		2,229	2.05	%	-43.11	%
2008	0.50	%	39,457		6.746415		266,193	2.05	%	-43.39	%
2008	0.80	%	1,137		6.692562		7,609	2.05	%	-43.56	%
2007	0.50	%	31,716		11.917827		377,986	1.82	%	8.95	%
2007	0.80	%	678		11.858321		8,040	1.82	%	8.62	%
2006	0.50	%	530		10.938962		5,798	1.38	%	9.39	%	5/1/2006
2006	0.80	%	1,052		10.917219		11,485	1.38	%	9.17	%	5/1/2006
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
2009	0.00	%	5,371		13.451838		72,250	1.15	%	27.21	%
2009	0.50	%	118,079		12.928735		1,526,612	1.15	%	26.57	%
2009	0.80	%	36,824		12.624661		464,891	1.15	%	26.19	%
2009	1.00	%	852		12.425900		10,587	1.15	%	25.94	%
2008	0.00	%	5,689		10.574854		60,160	1.95	%	-36.84	%
2008	0.50	%	147,039		10.214579		1,501,941	1.95	%	-37.16	%
2008	0.80	%	53,348		10.004311		533,710	1.95	%	-37.35	%
2008	1.00	%	322		9.866526		3,177	1.95	%	-37.47	%
2007	0.00	%	5,888		16.743624		98,586	2.03	%	5.96	%
2007	0.50	%	199,734		16.254455		3,246,567	2.03	%	5.43	%
2007	0.80	%	73,246		15.967821		1,169,579	2.03	%	5.11	%
2007	1.00	%	328		15.779509		5,176	2.03	%	4.90	%
2006	0.00	%	1,756		15.802084		27,748	2.11	%	16.87	%
2006	0.50	%	95,776		15.417742		1,476,650	2.11	%	16.29	%
2006	0.80	%	91,086		15.191606		1,383,743	2.11	%	15.94	%
2006	1.00	%	290		15.042687		4,362	2.11	%	15.71	%
2005	0.00	%	530		13.521320		7,166	1.95	%	7.93	%
2005	0.50	%	59,996		13.258370		795,449	1.95	%	7.39	%
2005	0.80	%	85,552		13.103041		1,120,991	1.95	%	7.07	%
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
2009	0.50	%	3,613		11.601491		41,916	0.61	%	16.01	%	5/1/2009
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
2009	0.50	%	1,619		12.163837		19,693	1.57	%	21.64	%	5/1/2009
2009	0.80	%	51		12.139517		619	1.57	%	21.40	%	5/1/2009
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
2009	0.00	%	9,384		13.447193		126,188	1.79	%	9.08	%
2009	0.50	%	70,008		12.924398		904,811	1.79	%	8.54	%
2009	0.80	%	15,117		12.620548		190,785	1.79	%	8.22	%
2009	1.00	%	2,044		12.421919		25,390	1.79	%	8.00	%
2008	0.00	%	4,138		12.327359		51,011	3.40	%	-6.02	%
2008	0.50	%	51,425		11.907464		612,341	3.40	%	-6.49	%
2008	0.80	%	16,459		11.662459		191,952	3.40	%	-6.77	%
2008	1.00	%	2,434		11.501879		27,996	3.40	%	-6.96	%
2007	0.00	%	4,112		13.117367		53,939	3.97	%	5.38	%
2007	0.50	%	41,486		12.734093		528,287	3.97	%	4.85	%
2007	0.80	%	19,826		12.509560		248,015	3.97	%	4.54	%
2007	1.00	%	5,692		12.362022		70,365	3.97	%	4.33	%
2006	0.00	%	3,274		12.447546		40,753	2.89	%	6.16	%
2006	0.50	%	7,634		12.144751		92,713	2.89	%	5.64	%
2006	0.80	%	20,230		11.966643		242,085	2.89	%	5.32	%
2006	1.00	%	5,798		11.849304		68,702	2.89	%	5.11	%
2005	0.00	%	966		11.724859		11,326	2.78	%	3.31	%
2005	0.50	%	8,068		11.496816		92,756	2.78	%	2.79	%
2005	0.80	%	40,486		11.362140		460,008	2.78	%	2.49	%
2005	1.00	%	2,858		11.273191		32,219	2.78	%	2.28	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
2009	0.00	%	92,413	$	13.630962	$	1,259,678	1.55	%	19.14	%
2009	0.50	%	181,042		13.100931		2,371,819	1.55	%	18.54	%
2009	0.80	%	87,135		12.792885		1,114,708	1.55	%	18.19	%
2009	1.00	%	17,020		12.591533		214,308	1.55	%	17.95	%
2008	0.00	%	91,097		11.441586		1,042,294	2.78	%	-23.20	%
2008	0.50	%	198,084		11.051801		2,189,185	2.78	%	-23.58	%
2008	0.80	%	97,732		10.824352		1,057,886	2.78	%	-23.81	%
2008	1.00	%	15,405		10.675316		164,453	2.78	%	-23.96	%
2007	0.00	%	89,402		14.896957		1,331,818	2.62	%	5.66	%
2007	0.50	%	214,672		14.461679		3,104,518	2.62	%	5.13	%
2007	0.80	%	137,718		14.206661		1,956,513	2.62	%	4.81	%
2007	1.00	%	45,290		14.039145		635,833	2.62	%	4.60	%
2006	0.00	%	90,888		14.099052		1,281,435	2.50	%	11.35	%
2006	0.50	%	199,278		13.756055		2,741,279	2.50	%	10.80	%
2006	0.80	%	241,266		13.554301		3,270,192	2.50	%	10.47	%
2006	1.00	%	41,320		13.421439		554,574	2.50	%	10.25	%
2006	1.30	%	2,822		13.224582		37,320	2.50	%	9.92	%
2005	0.00	%	72,624		12.661618		919,537	2.36	%	5.34	%
2005	0.50	%	129,056		12.415323		1,602,272	2.36	%	4.82	%
2005	0.80	%	234,442		12.269879		2,876,575	2.36	%	4.51	%
2005	1.00	%	36,840		12.173861		448,485	2.36	%	4.30	%
2005	1.30	%	11,178		12.031239		134,485	2.36	%	3.99	%
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
2009	0.00	%	50,619		13.702388		693,601	1.32	%	24.39	%
2009	0.50	%	233,130		13.169552		3,070,218	1.32	%	23.77	%
2009	0.80	%	96,148		12.859856		1,236,449	1.32	%	23.40	%
2009	1.00	%	37,075		12.657436		469,274	1.32	%	23.15	%
2008	0.00	%	52,343		11.015454		576,582	2.47	%	-31.39	%
2008	0.50	%	254,606		10.640174		2,709,052	2.47	%	-31.73	%
2008	0.80	%	119,944		10.421164		1,249,956	2.47	%	-31.94	%
2008	1.00	%	37,829		10.277660		388,794	2.47	%	-32.07	%
2007	0.00	%	50,888		16.055259		817,020	2.25	%	6.15	%
2007	0.50	%	210,008		15.586169		3,273,220	2.25	%	5.62	%
2007	0.80	%	177,620		15.311321		2,719,597	2.25	%	5.30	%
2007	1.00	%	38,380		15.130768		580,719	2.25	%	5.09	%
2006	0.00	%	47,128		15.125018		712,812	2.27	%	14.54	%
2006	0.50	%	152,382		14.757103		2,248,717	2.27	%	13.97	%
2006	0.80	%	247,768		14.540668		3,602,712	2.27	%	13.63	%
2006	1.00	%	23,212		14.398126		334,209	2.27	%	13.40	%
2005	0.00	%	25,104		13.204972		331,498	2.14	%	7.07	%
2005	0.50	%	81,078		12.948162		1,049,811	2.14	%	6.54	%
2005	0.80	%	281,378		12.796464		3,600,643	2.14	%	6.22	%
2005	1.00	%	1,550		12.696312		19,679	2.14	%	6.01	%
2005	1.30	%	22,262		12.547596		279,335	2.14	%	5.69	%
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
2009	0.00	%	16,706		13.712188		229,076	1.78	%	14.56	%
2009	0.50	%	37,901		13.179057		499,499	1.78	%	13.99	%
2009	0.80	%	119,770		12.869197		1,541,344	1.78	%	13.65	%
2009	1.00	%	23,982		12.666675		303,772	1.78	%	13.42	%
2008	0.00	%	14,736		11.969310		176,380	3.21	%	-15.04	%
2008	0.50	%	41,276		11.561611		477,217	3.21	%	-15.47	%
2008	0.80	%	110,626		11.323691		1,252,695	3.21	%	-15.72	%
2008	1.00	%	37,456		11.167796		418,301	3.21	%	-15.89	%
2007	0.00	%	13,564		14.088774		191,100	2.92	%	5.86	%
2007	0.50	%	22,454		13.677144		307,107	2.92	%	5.33	%
2007	0.80	%	100,130		13.435963		1,345,343	2.92	%	5.01	%
2007	1.00	%	31,082		13.277544		412,693	2.92	%	4.80	%
2006	0.00	%	13,888		13.308971		184,835	2.76	%	8.42	%
2006	0.50	%	18,590		12.985235		241,396	2.76	%	7.88	%
2006	0.80	%	99,224		12.794782		1,269,549	2.76	%	7.56	%
2006	1.00	%	77,310		12.669367		979,469	2.76	%	7.35	%
2005	0.00	%	9,208		12.275099		113,029	2.75	%	4.49	%
2005	0.50	%	18,510		12.036367		222,793	2.75	%	3.97	%
2005	0.80	%	88,944		11.895366		1,058,021	2.75	%	3.66	%
2005	1.00	%	6,244		11.802269		73,693	2.75	%	3.45	%
2005	1.30	%	75,506		11.663995		880,702	2.75	%	3.14	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Leaders Fund - Class I (GVUS1)
2009	0.00	%	3,522	$	12.049802	$	42,439	0.79	%	33.79	%
2009	0.50	%	5,347		11.596383		62,006	0.79	%	33.12	%
2009	0.80	%	1,533		11.332557		17,373	0.79	%	32.72	%
2009	1.00	%	216		11.160018		2,411	0.79	%	32.46	%
2008	0.00	%	4,220		9.006647		38,008	0.78	%	-49.91	%
2008	0.50	%	26,001		8.711189		226,500	0.78	%	-50.16	%
2008	0.80	%	2,524		8.538594		21,551	0.78	%	-50.31	%
2008	1.00	%	1,246		8.425426		10,498	0.78	%	-50.41	%
2007	0.00	%	5,280		17.979434		94,931	1.15	%	11.56	%
2007	0.50	%	28,472		17.477126		497,609	1.15	%	11.00	%
2007	0.80	%	7,118		17.182548		122,305	1.15	%	10.67	%
2007	1.00	%	1,218		16.988891		20,692	1.15	%	10.44	%
2006	0.00	%	4,904		16.116355		79,035	0.97	%	16.05	%
2006	0.50	%	15,828		15.745056		249,213	0.97	%	15.47	%
2006	0.80	%	10,376		15.526442		161,102	0.97	%	15.12	%
2006	1.00	%	2,084		15.382337		32,057	0.97	%	14.89	%
2005	0.00	%	2,942		13.887943		40,858	1.54	%	10.31	%
2005	0.50	%	9,478		13.635788		129,240	1.54	%	9.76	%
2005	0.80	%	12,432		13.486728		167,667	1.54	%	9.44	%
2005	1.00	%	3,916		13.388228		52,428	1.54	%	9.22	%
2005	1.30	%	1,590		13.241863		21,055	1.54	%	8.89	%
NVIT Mid Cap Index Fund - Class I (MCIF)
2009	0.00	%	35,437		15.772556		558,932	0.98	%	36.76	%
2009	0.50	%	223,509		15.028105		3,358,917	0.98	%	36.07	%
2009	0.80	%	34,428		14.598417		502,594	0.98	%	35.67	%
2009	1.00	%	21,651		13.051063		282,569	0.98	%	35.39	%
2008	0.00	%	46,729		11.533383		538,943	1.24	%	-36.46	%
2008	0.50	%	218,000		11.044098		2,407,613	1.24	%	-36.78	%
2008	0.80	%	44,095		10.760553		474,487	1.24	%	-36.97	%
2008	1.00	%	34,842		9.639266		335,851	1.24	%	-37.10	%
2007	0.00	%	51,172		18.152010		928,875	1.35	%	7.56	%
2007	0.50	%	221,386		17.469317		3,867,462	1.35	%	7.02	%
2007	0.80	%	81,490		17.072106		1,391,206	1.35	%	6.70	%
2007	1.00	%	34,096		15.323833		522,481	1.35	%	6.48	%
2006	0.00	%	58,484		16.876236		986,990	1.13	%	9.89	%
2006	0.50	%	202,754		16.323372		3,309,629	1.13	%	9.34	%
2006	0.80	%	141,094		16.000413		2,257,562	1.13	%	9.02	%
2006	1.00	%	41,104		14.390791		591,519	1.13	%	8.80	%
2006	1.30	%	4,202		15.476230		65,031	1.13	%	8.47	%
2005	0.00	%	65,296		15.357475		1,002,782	1.03	%	12.10	%
2005	0.50	%	137,224		14.928625		2,048,566	1.03	%	11.54	%
2005	0.80	%	229,268		14.677115		3,364,993	1.03	%	11.21	%
2005	1.00	%	43,640		13.226964		577,225	1.03	%	10.99	%
2005	1.30	%	15,760		14.267251		224,852	1.03	%	10.66	%
NVIT Money Market Fund - Class I (SAM)
2009	0.00	%	293,432		15.554967		4,564,325	0.05	%	0.04	%
2009	0.50	%	625,978		20.857934		13,056,608	0.05	%	-0.46	%
2009	0.80	%	140,909		16.554897		2,332,734	0.05	%	-0.76	%
2009	1.00	%	317,630		11.301196		3,589,599	0.05	%	-0.96	%
2009	1.30	%	268		15.837870		4,245	0.05	%	-1.26	%
2008	0.00	%	426,717		15.548444		6,634,785	2.06	%	2.05	%
2008	0.50	%	1,022,503		20.953951		21,425,478	2.06	%	1.54	%
2008	0.80	%	217,188		16.681402		3,623,000	2.06	%	1.24	%
2008	1.00	%	434,025		11.410562		4,952,469	2.06	%	1.03	%
2008	1.30	%	283		16.039742		4,539	2.06	%	0.73	%
2007	0.00	%	553,934		15.235553		8,439,491	4.64	%	4.79	%
2007	0.50	%	847,514		20.635458		17,488,840	4.64	%	4.27	%
2007	0.80	%	329,710		16.477531		5,432,807	4.64	%	3.95	%
2007	1.00	%	419,234		11.293879		4,734,778	4.64	%	3.74	%
2007	1.30	%	252		15.923976		4,013	4.64	%	3.42	%
2006	0.00	%	307,156		14.538752		4,465,665	4.49	%	4.53	%
2006	0.50	%	485,516		19.791189		9,608,939	4.49	%	4.01	%
2006	0.80	%	566,642		15.851431		8,982,087	4.49	%	3.70	%
2006	1.00	%	495,002		10.886811		5,388,993	4.49	%	3.49	%
2006	1.30	%	1,120		15.396940		17,245	4.49	%	3.18	%
2005	0.00	%	309,850		13.908651		4,309,596	2.64	%	2.67	%
2005	0.50	%	305,794		19.028333		5,818,750	2.64	%	2.16	%
2005	0.80	%	727,730		15.286397		11,124,370	2.64	%	1.85	%
2005	1.00	%	408,430		10.519895		4,296,641	2.64	%	1.64	%
2005	1.30	%	69,288		14.923119		1,033,993	2.64	%	1.34	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
2009	0.00	%	32,180	$	8.379106	$	269,640	0.84	%	36.46	%
2009	0.50	%	513,260		8.309496		4,264,932	0.84	%	35.78	%
2009	0.80	%	104,749		8.268003		866,065	0.84	%	35.37	%
2008	0.50	%	238		6.119892		1,457	0.10	%	-38.80	%	5/1/2008
NVIT Multi-Manager International Value Fund - Class I (GVDIVI)
2009	0.00	%	955		16.546611		15,802	2.11	%	29.86	%
2009	0.50	%	16,368		16.003937		261,952	2.11	%	29.21	%
2009	0.80	%	2,462		15.686900		38,621	2.11	%	28.82	%
2008	0.00	%	1,177		12.742294		14,998	1.71	%	-46.31	%
2008	0.50	%	16,733		12.386191		207,258	1.71	%	-46.58	%
2008	0.80	%	4,801		12.177329		58,463	1.71	%	-46.74	%
2007	0.00	%	1,206		23.734976		28,624	2.06	%	2.92	%
2007	0.50	%	22,414		23.187675		519,729	2.06	%	2.40	%
2007	0.80	%	5,630		22.865372		128,732	2.06	%	2.09	%
2006	0.00	%	2,190		23.062454		50,507	2.08	%	22.67	%
2006	0.50	%	22,408		22.644248		507,412	2.08	%	22.06	%
2006	0.80	%	14,186		22.396963		317,723	2.08	%	21.70	%
2005	0.00	%	3,908		18.800450		73,472	1.34	%	12.09	%
2005	0.50	%	24,690		18.551760		458,043	1.34	%	11.54	%
2005	0.80	%	27,788		18.404112		511,413	1.34	%	11.20	%
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
2009	0.00	%	9,171		10.082162		92,464	2.14	%	29.84	%
2009	0.50	%	87,232		9.849548		859,196	2.14	%	29.19	%
2009	0.80	%	9,816		9.712549		95,338	2.14	%	28.80	%
2008	0.00	%	7,281		7.765128		56,538	1.67	%	-46.33	%
2008	0.50	%	88,977		7.624008		678,361	1.67	%	-46.60	%
2008	0.80	%	21,725		7.540568		163,819	1.67	%	-46.76	%
2007	0.00	%	10,900		14.468946		157,712	2.12	%	2.93	%
2007	0.50	%	111,682		14.277421		1,594,531	2.12	%	2.42	%
2007	0.80	%	30,584		14.163711		433,183	2.12	%	2.11	%
2006	0.00	%	10,116		14.056822		142,199	2.01	%	22.75	%
2006	0.50	%	98,312		13.940694		1,370,538	2.01	%	22.14	%
2006	0.80	%	45,492		13.871454		631,040	2.01	%	21.77	%
2005	0.00	%	6,630		11.451970		75,927	0.95	%	14.52	%	5/2/2005
2005	0.50	%	44,904		11.414099		512,539	0.95	%	14.14	%	5/2/2005
2005	0.80	%	35,798		11.391430		407,790	0.95	%	13.91	%	5/2/2005
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
2009	0.00	%	4,410		8.259762		36,426	0.86	%	29.78	%
2009	0.50	%	26,167		8.191112		214,337	0.86	%	29.13	%
2009	0.80	%	7,925		8.150192		64,590	0.86	%	28.74	%
2008	0.00	%	206		6.364575		1,311	0.22	%	-36.35	%	5/1/2008
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)
2009	0.00	%	6,514		8.111157		52,836	1.29	%	27.59	%
2009	0.50	%	44,311		8.043706		356,425	1.29	%	26.96	%
2009	0.80	%	6,036		8.003520		48,309	1.29	%	26.58	%
2008	0.50	%	14,906		6.335825		94,442	0.64	%	-36.64	%	5/1/2008

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
2009	0.00	%	115,105	$	7.982859	$	918,867	0.00	%	27.12	%
2009	0.50	%	2,272,347		7.916522		17,989,085	0.00	%	26.49	%
2009	0.80	%	940,788		7.876972		7,410,561	0.00	%	26.11	%
2009	1.00	%	8,003		7.850719		62,829	0.00	%	25.86	%
2008	0.00	%	205		6.279727		1,287	0.00	%	-37.20	%	5/1/2008
2008	0.80	%	50		6.246185		312	0.00	%	-37.54	%	5/1/2008
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
2009	0.00	%	70,473		8.817001		621,361	0.64	%	30.47	%
2009	0.50	%	1,512,728		8.743730		13,226,885	0.64	%	29.82	%
2009	0.80	%	609,962		8.700057		5,306,704	0.64	%	29.43	%
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
2009	0.00	%	16,609		6.149352		102,135	0.00	%	27.46	%
2009	0.50	%	85,760		5.858978		502,466	0.00	%	26.83	%
2009	0.80	%	17,399		5.691397		99,025	0.00	%	26.45	%
2009	1.00	%	19,372		5.589217		108,274	0.00	%	26.19	%
2008	0.00	%	17,888		4.824485		86,300	0.00	%	-46.42	%
2008	0.50	%	130,619		4.619718		603,423	0.00	%	-46.69	%
2008	0.80	%	21,966		4.501065		98,870	0.00	%	-46.85	%
2008	1.00	%	20,235		4.429099		89,623	0.00	%	-46.95	%
2007	0.00	%	17,950		9.004045		161,623	0.00	%	9.75	%
2007	0.50	%	126,230		8.665238		1,093,813	0.00	%	9.20	%
2007	0.80	%	29,062		8.468125		246,101	0.00	%	8.87	%
2007	1.00	%	26,118		8.349478		218,072	0.00	%	8.65	%
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)
2009	0.00	%	53,851		20.267143		1,091,406	0.58	%	26.22	%
2009	0.50	%	157,034		19.118176		3,002,204	0.58	%	25.59	%
2009	0.80	%	32,510		18.460331		600,145	0.58	%	25.21	%
2009	1.00	%	25,324		14.642760		370,813	0.58	%	24.96	%
2008	0.00	%	60,976		16.057560		979,126	1.09	%	-32.15	%
2008	0.50	%	175,334		15.223184		2,669,142	1.09	%	-32.49	%
2008	0.80	%	60,213		14.743543		887,753	1.09	%	-32.69	%
2008	1.00	%	35,377		11.718013		414,548	1.09	%	-32.83	%
2007	0.00	%	71,274		23.666727		1,686,822	1.10	%	-6.89	%
2007	0.50	%	195,390		22.549722		4,405,990	1.10	%	-7.36	%
2007	0.80	%	92,646		21.905042		2,029,415	1.10	%	-7.64	%
2007	1.00	%	43,030		17.444838		750,651	1.10	%	-7.83	%
2006	0.00	%	98,728		25.419000		2,509,567	0.43	%	17.29	%
2006	0.50	%	176,848		24.341439		4,304,735	0.43	%	16.71	%
2006	0.80	%	175,584		23.717026		4,164,330	0.43	%	16.36	%
2006	1.00	%	53,404		18.925926		1,010,720	0.43	%	16.13	%
2006	1.30	%	1,840		22.711726		41,790	0.43	%	15.78	%
2005	0.00	%	107,082		21.671283		2,320,604	0.06	%	3.07	%
2005	0.50	%	164,618		20.856322		3,433,326	0.06	%	2.56	%
2005	0.80	%	287,838		20.382189		5,866,769	0.06	%	2.25	%
2005	1.00	%	105,618		16.297231		1,721,281	0.06	%	2.05	%
2005	1.30	%	14,854		19.615792		291,373	0.06	%	1.75	%
NVIT Multi-Manager Small Company Fund - Class I (SCF)
2009	0.00	%	77,583		27.102331		2,102,680	0.27	%	34.70	%
2009	0.50	%	340,812		33.340069		11,362,696	0.27	%	34.03	%
2009	0.80	%	103,817		32.295248		3,352,796	0.27	%	33.63	%
2009	1.00	%	29,328		12.403715		363,776	0.27	%	33.36	%
2008	0.00	%	95,931		20.120207		1,930,152	0.82	%	-38.19	%
2008	0.50	%	389,374		24.875036		9,685,692	0.82	%	-38.50	%
2008	0.80	%	127,206		24.167902		3,074,302	0.82	%	-38.68	%
2008	1.00	%	33,872		9.300801		315,037	0.82	%	-38.80	%
2007	0.00	%	118,982		32.550692		3,872,946	0.09	%	2.13	%
2007	0.50	%	385,134		40.445411		15,576,903	0.09	%	1.62	%
2007	0.80	%	190,308		39.414039		7,500,807	0.09	%	1.31	%
2007	1.00	%	38,152		15.198601		579,857	0.09	%	1.11	%
2007	1.30	%	392		37.083919		14,537	0.09	%	0.81	%
2006	0.00	%	127,382		31.871050		4,059,798	0.11	%	12.04	%
2006	0.50	%	319,750		39.800578		12,726,235	0.11	%	11.48	%
2006	0.80	%	325,094		38.902849		12,647,083	0.11	%	11.15	%
2006	1.00	%	49,560		15.031685		744,970	0.11	%	10.93	%
2006	1.30	%	816		36.787497		30,019	0.11	%	10.60	%
2005	0.00	%	133,578		28.446533		3,799,831	0.00	%	12.32	%
2005	0.50	%	159,914		35.701630		5,709,190	0.00	%	11.76	%
2005	0.80	%	568,428		35.000912		19,895,498	0.00	%	11.42	%
2005	1.00	%	40,176		13.551021		544,426	0.00	%	11.20	%
2005	1.30	%	6,916		33.263194		230,048	0.00	%	10.87	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Sector Bond Fund - Class I (MSBF)
2009	0.00	%	12,961	$	16.140130	$	209,192	10.24	%	24.38	%
2009	0.50	%	63,508		15.378776		976,675	10.24	%	23.76	%
2009	0.80	%	8,435		14.939280		126,013	10.24	%	23.39	%
2009	1.00	%	12,411		14.359495		178,216	10.24	%	23.14	%
2008	0.00	%	7,635		12.976596		99,076	6.56	%	-17.29	%
2008	0.50	%	52,478		12.426396		652,112	6.56	%	-17.70	%
2008	0.80	%	10,404		12.107507		125,967	6.56	%	-17.95	%
2008	1.00	%	4,740		11.660904		55,273	6.56	%	-18.11	%
2007	0.00	%	9,784		15.689482		153,506	4.10	%	4.62	%
2007	0.50	%	61,778		15.099593		932,823	4.10	%	4.10	%
2007	0.80	%	19,404		14.756333		286,332	4.10	%	3.79	%
2007	1.00	%	17,946		14.240475		255,560	4.10	%	3.58	%
2006	0.00	%	10,602		14.995990		158,987	4.42	%	4.84	%
2006	0.50	%	39,090		14.504882		566,996	4.42	%	4.32	%
2006	0.80	%	37,902		14.217959		538,889	4.42	%	4.00	%
2006	1.00	%	14,786		13.748525		203,286	4.42	%	3.80	%
2005	0.00	%	14,212		14.303985		203,288	3.89	%	2.18	%
2005	0.50	%	11,354		13.904678		157,874	3.89	%	1.67	%
2005	0.80	%	44,454		13.670462		607,707	3.89	%	1.37	%
2005	1.00	%	2,210		13.245485		29,273	3.89	%	1.17	%
2005	1.30	%	2,220		13.288789		29,501	3.89	%	0.86	%
NVIT Short Term Bond Fund - Class II (NVSTB2)
2009	0.00	%	3,355		10.650192		35,731	2.72	%	7.11	%
2009	0.50	%	177,387		10.561833		1,873,532	2.72	%	6.58	%
2009	0.80	%	7,304		10.509149		76,759	2.72	%	6.26	%
2008	0.00	%	259		9.943310		2,575	1.15	%	-0.57	%	5/1/2008
2008	0.50	%	2,297		9.910227		22,764	1.15	%	-0.90	%	5/1/2008
2008	0.80	%	231		9.890421		2,285	1.15	%	-1.10	%	5/1/2008
NVIT Technology & Communications Fund - Class I (GGTC)
2009	0.00	%	1,823		3.325931		6,063	0.00	%	52.47	%
2009	0.50	%	43,071		3.175501		136,772	0.00	%	51.71	%
2009	0.80	%	6,450		3.088555		19,921	0.00	%	51.25	%
2009	1.00	%	50,209		2.946550		147,943	0.00	%	50.95	%
2008	0.00	%	2,006		2.181418		4,376	0.00	%	-48.57	%
2008	0.50	%	49,323		2.093189		103,242	0.00	%	-48.83	%
2008	0.80	%	22,045		2.041986		45,016	0.00	%	-48.98	%
2008	1.00	%	18,399		1.951999		35,915	0.00	%	-49.08	%
2007	0.00	%	10,448		4.241547		44,316	0.00	%	20.09	%
2007	0.50	%	53,296		4.090476		218,006	0.00	%	19.49	%
2007	0.80	%	35,194		4.002446		140,862	0.00	%	19.13	%
2007	1.00	%	39,948		3.833761		153,151	0.00	%	18.89	%
2006	0.00	%	11,308		3.531877		39,938	0.00	%	11.17	%
2006	0.50	%	55,710		3.423239		190,709	0.00	%	10.62	%
2006	0.80	%	51,828		3.359674		174,125	0.00	%	10.29	%
2006	1.00	%	27,680		3.224567		89,256	0.00	%	10.07	%
2005	0.00	%	15,970		3.177040		50,737	0.00	%	-0.52	%
2005	0.50	%	33,760		3.094710		104,477	0.00	%	-1.01	%
2005	0.80	%	124,346		3.046342		378,800	0.00	%	-1.31	%
2005	1.00	%	15,226		2.929673		44,607	0.00	%	-1.50	%
2005	1.30	%	2,224		2.967380		6,599	0.00	%	-1.80	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Technology & Communications Fund - Class III (GGTC3)
2009	0.00	%	4,024	$	12.888766	$	51,864	0.00	%	52.44	%
2009	0.50	%	27,463		12.591433		345,799	0.00	%	51.68	%
2009	0.80	%	4,272		12.416314		53,042	0.00	%	51.23	%
2008	0.00	%	635		8.454726		5,369	0.00	%	-48.59	%
2008	0.50	%	20,999		8.301071		174,314	0.00	%	-48.84	%
2008	0.80	%	5,426		8.210206		44,549	0.00	%	-49.00	%
2007	0.00	%	1,330		16.444438		21,871	0.00	%	20.19	%
2007	0.50	%	37,420		16.226798		607,207	0.00	%	19.58	%
2007	0.80	%	8,672		16.097584		139,598	0.00	%	19.22	%
2006	0.00	%	172		13.682536		2,353	0.00	%	11.08	%
2006	0.50	%	12,314		13.569468		167,094	0.00	%	10.53	%
2006	0.80	%	8,150		13.502082		110,042	0.00	%	10.20	%
2005	0.00	%	2,428		12.317458		29,907	0.00	%	23.17	%	5/2/2005
2005	0.50	%	18,758		12.276743		230,287	0.00	%	22.77	%	5/2/2005
2005	0.80	%	10,504		12.252375		128,699	0.00	%	22.52	%	5/2/2005
NVIT U.S. Growth Leaders Fund - Class I (GVUG1)
2009	0.00	%	3,678		14.212216		52,273	0.00	%	25.84	%
2009	0.50	%	26,597		13.677495		363,780	0.00	%	25.21	%
2009	0.80	%	4,858		13.366367		64,934	0.00	%	24.84	%
2008	0.00	%	9,519		11.293974		107,507	0.00	%	-41.29	%
2008	0.50	%	28,348		10.923540		309,661	0.00	%	-41.58	%
2008	0.80	%	6,758		10.707131		72,359	0.00	%	-41.76	%
2008	1.00	%	2,565		10.565207		27,100	0.00	%	-41.88	%
2007	0.00	%	10,106		19.237188		194,411	0.00	%	22.49	%
2007	0.50	%	28,912		18.699798		540,649	0.00	%	21.87	%
2007	0.80	%	7,828		18.384573		143,914	0.00	%	21.50	%
2007	1.00	%	2,584		18.177321		46,970	0.00	%	21.26	%
2006	0.00	%	9,376		15.705651		147,256	0.25	%	-0.29	%
2006	0.50	%	18,158		15.343823		278,613	0.25	%	-0.78	%
2006	0.80	%	13,106		15.130732		198,303	0.25	%	-1.08	%
2006	1.00	%	9,994		14.990265		149,813	0.25	%	-1.28	%
2005	0.00	%	5,658		15.751023		89,119	0.00	%	11.96	%
2005	0.50	%	14,474		15.465102		223,842	0.00	%	11.41	%
2005	0.80	%	30,714		15.296041		469,803	0.00	%	11.07	%
2005	1.00	%	13,390		15.184319		203,318	0.00	%	10.85	%
2005	1.30	%	1,378		15.018298		20,695	0.00	%	10.52	%
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
2009	0.80	%	91		12.990421		1,182	0.07	%	29.90	%	5/1/2009
2009	1.00	%	393		12.973105		5,098	0.07	%	29.73	%	5/1/2009
Templeton NVIT International Value Fund - Class III (NVTIV3)
2009	0.50	%	868		12.990964		11,276	0.77	%	29.91	%	5/1/2009
2009	0.80	%	106		12.965005		1,374	0.77	%	29.65	%	5/1/2009
Van Kampen NVIT Comstock Value Fund - Class I (EIF)
2009	0.00	%	4,308		14.249315		61,386	1.11	%	28.55	%
2009	0.50	%	33,022		13.781994		455,109	1.11	%	27.91	%
2009	0.80	%	6,110		13.508987		82,540	1.11	%	27.52	%
2008	0.00	%	6,958		11.084763		77,128	1.98	%	-36.99	%
2008	0.50	%	33,463		10.774963		360,563	1.98	%	-37.31	%
2008	0.80	%	7,035		10.593240		74,523	1.98	%	-37.49	%
2007	0.00	%	8,692		17.592080		152,910	1.71	%	-2.22	%
2007	0.50	%	36,330		17.186389		624,382	1.71	%	-2.71	%
2007	0.80	%	10,218		16.947459		173,169	1.71	%	-3.00	%
2006	0.00	%	7,610		17.990877		136,911	1.74	%	15.91	%
2006	0.50	%	28,342		17.664583		500,650	1.74	%	15.33	%
2006	0.80	%	22,182		17.471634		387,556	1.74	%	14.98	%
2005	0.00	%	5,522		15.522071		85,713	1.69	%	4.25	%
2005	0.50	%	15,396		15.316704		235,816	1.69	%	3.73	%
2005	0.80	%	32,400		15.194781		492,311	1.69	%	3.42	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
2009	0.00	%	65,646	$	7.388147	$	485,002	2.18	%	30.84	%
2009	0.50	%	805,068		7.326555		5,898,375	2.18	%	30.18	%
2009	0.80	%	203,153		7.289844		1,480,954	2.18	%	29.79	%
2009	1.00	%	198		7.265473		1,439	2.18	%	29.53	%
2008	0.00	%	215		5.646840		1,214	3.65	%	-43.53	%	5/1/2008
2008	0.50	%	10,242		5.627880		57,641	3.65	%	-43.72	%	5/1/2008
2008	0.80	%	226		5.616528		1,269	3.65	%	-43.83	%	5/1/2008
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)
2009	0.00	%	44,762		16.258487		727,762	7.24	%	13.33	%
2009	0.50	%	48,176		23.768919		1,145,091	7.24	%	12.76	%
2009	0.80	%	16,879		18.952010		319,891	7.24	%	12.42	%
2009	1.00	%	45,151		11.997871		541,716	7.24	%	12.20	%
2008	0.00	%	42,417		14.346598		608,540	4.47	%	-13.43	%
2008	0.50	%	68,340		21.078952		1,440,536	4.47	%	-13.86	%
2008	0.80	%	18,838		16.857653		317,564	4.47	%	-14.12	%
2008	1.00	%	37,893		10.693363		405,204	4.47	%	-14.29	%
2007	0.00	%	47,302		16.571972		783,887	2.65	%	4.77	%
2007	0.50	%	68,620		24.470719		1,679,181	2.65	%	4.25	%
2007	0.80	%	30,596		19.629002		600,569	2.65	%	3.93	%
2007	1.00	%	47,540		12.476258		593,121	2.65	%	3.72	%
2006	0.00	%	50,648		15.817282		801,114	3.06	%	4.20	%
2006	0.50	%	55,674		23.474013		1,306,892	3.06	%	3.68	%
2006	0.80	%	50,380		18.886370		951,495	3.06	%	3.37	%
2006	1.00	%	58,744		12.028394		706,596	3.06	%	3.17	%
2006	1.30	%	492		18.678278		9,190	3.06	%	2.86	%
2005	0.00	%	52,164		15.179497		791,823	2.61	%	1.44	%
2005	0.50	%	38,328		22.640077		867,749	2.61	%	0.94	%
2005	0.80	%	93,430		18.269985		1,706,965	2.61	%	0.64	%
2005	1.00	%	47,674		11.659063		555,834	2.61	%	0.44	%
2005	1.30	%	3,662		18.158987		66,498	2.61	%	0.14	%
V.I. Basic Value Fund - Series I (AVBVI)
2009	0.00	%	1,851		12.593649		23,311	0.19	%	48.00	%
2008	0.00	%	5,955		8.509083		50,672	0.76	%	-51.77	%
2008	0.50	%	19,612		8.271175		162,214	0.76	%	-52.01	%
2008	0.80	%	3,970		8.131642		32,283	0.76	%	-52.15	%
2007	0.00	%	1,070		17.641592		18,877	0.50	%	1.54	%
2007	0.50	%	40,204		17.234687		692,903	0.50	%	1.03	%
2007	0.80	%	10,750		16.995087		182,697	0.50	%	0.73	%
2006	0.00	%	1,192		17.373346		20,709	0.55	%	13.20	%
2006	0.50	%	55,976		17.058177		954,849	0.55	%	12.64	%
2006	0.80	%	20,662		16.871856		348,606	0.55	%	12.30	%
2005	0.00	%	1,026		15.346928		15,746	0.09	%	5.74	%
2005	0.50	%	27,146		15.143837		411,095	0.09	%	5.21	%
2005	0.80	%	24,934		15.023289		374,591	0.09	%	4.90	%
V.I. Capital Appreciation Fund - Series I (AVCA)
2009	0.00	%	2,297		11.924271		27,390	0.62	%	21.08	%
2009	0.50	%	4,175		11.533213		48,151	0.62	%	20.47	%
2009	0.80	%	395		11.304770		4,465	0.62	%	20.11	%
2008	0.00	%	681		9.848393		6,707	0.00	%	-42.49	%
2008	0.50	%	5,870		9.573139		56,194	0.00	%	-42.78	%
2008	0.80	%	605		9.411708		5,694	0.00	%	-42.95	%
2007	0.00	%	692		17.125365		11,851	0.00	%	12.01	%
2007	0.50	%	17,866		16.730402		298,905	0.00	%	11.45	%
2007	0.80	%	2,752		16.497826		45,402	0.00	%	11.12	%
2006	0.50	%	2,876		15.011307		43,173	0.04	%	5.77	%
2006	0.80	%	1,686		14.847340		25,033	0.04	%	5.46	%
2005	0.00	%	780		14.382523		11,218	0.04	%	8.84	%
2005	0.50	%	288		14.192232		4,087	0.04	%	8.29	%
2005	0.80	%	4,924		14.079275		69,326	0.04	%	7.97	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
V.I. Capital Development Fund - Series I (AVCDI)
2009	0.00	%	3,822	$	16.042234	$	61,313	0.00	%	42.37	%
2009	0.50	%	8,616		15.516104		133,687	0.00	%	41.66	%
2009	0.80	%	2,761		15.208702		41,991	0.00	%	41.24	%
2008	0.00	%	3,277		11.267930		36,925	0.00	%	-47.03	%
2008	0.50	%	9,085		10.952988		99,508	0.00	%	-47.29	%
2008	0.80	%	3,567		10.768244		38,410	0.00	%	-47.45	%
2007	0.00	%	2,980		21.270438		63,386	0.00	%	10.84	%
2007	0.50	%	23,104		20.779892		480,099	0.00	%	10.29	%
2007	0.80	%	5,092		20.491015		104,340	0.00	%	9.96	%
2006	0.00	%	2,070		19.189430		39,722	0.00	%	16.52	%
2006	0.50	%	11,446		18.841359		215,658	0.00	%	15.94	%
2006	0.80	%	7,586		18.635564		141,369	0.00	%	15.59	%
2005	0.00	%	2,094		16.468791		34,486	0.00	%	9.60	%
2005	0.50	%	3,614		16.250893		58,731	0.00	%	9.06	%
2005	0.80	%	9,328		16.121553		150,382	0.00	%	8.73	%
VPS Growth and Income Portfolio - Class A (ALVGIA)
2009	0.00	%	6,768		12.867191		87,085	4.22	%	20.82	%
2009	0.50	%	22,233		12.445189		276,694	4.22	%	20.22	%
2009	0.80	%	4,088		12.198669		49,868	4.22	%	19.86	%
2008	0.00	%	16,526		10.649521		175,994	2.08	%	-40.60	%
2008	0.50	%	28,510		10.351889		295,132	2.08	%	-40.90	%
2008	0.80	%	5,311		10.177334		54,052	2.08	%	-41.08	%
2007	0.00	%	18,646		17.929588		334,315	1.55	%	5.12	%
2007	0.50	%	20,390		17.516124		357,154	1.55	%	4.59	%
2007	0.80	%	15,124		17.272663		261,232	1.55	%	4.28	%
2006	0.00	%	19,406		17.056580		331,000	1.47	%	17.29	%
2006	0.50	%	15,978		16.747221		267,587	1.47	%	16.70	%
2006	0.80	%	28,032		16.564321		464,331	1.47	%	16.35	%
2005	0.00	%	17,122		14.542693		249,000	1.68	%	4.87	%
2005	0.50	%	10,070		14.350279		144,507	1.68	%	4.35	%
2005	0.80	%	37,766		14.236062		537,639	1.68	%	4.03	%
VPS Small/Mid Cap Value Portfolio: Class A (ALVSVA)
2009	0.00	%	3,930		18.846934		74,068	1.08	%	42.86	%
2009	0.50	%	29,568		18.228862		538,991	1.08	%	42.14	%
2009	0.80	%	4,957		17.867799		88,571	1.08	%	41.72	%
2008	0.00	%	5,223		13.192861		68,906	0.75	%	-35.58	%
2008	0.50	%	30,212		12.824196		387,445	0.75	%	-35.90	%
2008	0.80	%	7,514		12.607947		94,736	0.75	%	-36.09	%
2007	0.00	%	4,368		20.478040		89,448	1.06	%	1.70	%
2007	0.50	%	38,038		20.005857		760,983	1.06	%	1.19	%
2007	0.80	%	10,032		19.727780		197,909	1.06	%	0.89	%
2006	0.00	%	2,614		20.134859		52,633	0.39	%	14.42	%
2006	0.50	%	36,812		19.769734		727,763	0.39	%	13.85	%
2006	0.80	%	22,658		19.553834		443,051	0.39	%	13.51	%
2005	0.00	%	3,250		17.597332		57,191	0.72	%	6.91	%
2005	0.50	%	26,464		17.364568		459,536	0.72	%	6.38	%
2005	0.80	%	29,330		17.226379		505,250	0.72	%	6.06	%
VP Balanced Fund - Class I (ACVB)
2009	0.00	%	22,461		19.949729		448,091	5.53	%	15.48	%
2009	0.50	%	86,103		24.735048		2,129,762	5.53	%	14.91	%
2009	0.80	%	29,897		24.084460		720,053	5.53	%	14.56	%
2009	1.00	%	55,234		11.064741		611,150	5.53	%	14.33	%
2009	1.30	%	1		22.045707		22	5.53	%	13.99	%
2008	0.00	%	23,201		17.275155		400,801	2.47	%	-20.33	%
2008	0.50	%	98,678		21.526265		2,124,169	2.47	%	-20.73	%
2008	0.80	%	46,134		21.023041		969,877	2.47	%	-20.97	%
2008	1.00	%	57,666		9.677622		558,070	2.47	%	-21.13	%
2007	0.00	%	27,022		21.683809		585,940	2.12	%	4.94	%
2007	0.50	%	72,948		27.155398		1,980,932	2.12	%	4.41	%
2007	0.80	%	62,528		26.600354		1,663,267	2.12	%	4.09	%
2007	1.00	%	38,914		12.269595		477,459	2.12	%	3.89	%
2007	1.30	%	8		24.593469		197	2.12	%	3.57	%
2006	0.00	%	29,950		20.663955		618,885	1.93	%	9.62	%
2006	0.50	%	58,648		26.008605		1,525,353	1.93	%	9.07	%
2006	0.80	%	90,872		25.553959		2,322,139	1.93	%	8.75	%
2006	1.00	%	44,838		11.810656		529,566	1.93	%	8.53	%
2006	1.30	%	990		23.745073		23,508	1.93	%	8.21	%
2005	0.00	%	40,316		18.850696		759,985	1.83	%	4.93	%
2005	0.50	%	50,386		23.844923		1,201,450	1.83	%	4.41	%
2005	0.80	%	119,320		23.498278		2,803,815	1.83	%	4.10	%
2005	1.00	%	52,040		10.882231		566,311	1.83	%	3.89	%
2005	1.30	%	2,878		21.944037		63,155	1.83	%	3.58	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VP Capital Appreciation Fund - Class I (ACVCA)
2009	0.00	%	13,421	$	17.505890	$	234,947	1.33	%	37.07	%
2009	0.50	%	504		43.039250		21,692	1.33	%	36.39	%
2009	0.80	%	465		26.518517		12,331	1.33	%	35.98	%
2009	1.00	%	128,037		8.600594		1,101,194	1.33	%	35.71	%
2008	0.00	%	41,738		12.771185		533,044	0.00	%	-46.18	%
2008	0.50	%	182,727		31.556083		5,766,148	0.00	%	-46.45	%
2008	0.80	%	130,432		19.501606		2,543,633	0.00	%	-46.61	%
2008	1.00	%	143,436		6.337501		909,026	0.00	%	-46.72	%
2007	0.00	%	57,452		23.730825		1,363,383	0.00	%	45.80	%
2007	0.50	%	191,634		58.930990		11,293,181	0.00	%	45.07	%
2007	0.80	%	170,672		36.529047		6,234,486	0.00	%	44.64	%
2007	1.00	%	220,292		11.894815		2,620,333	0.00	%	44.35	%
2007	1.30	%	2		36.460250		73	0.00	%	43.91	%
2006	0.00	%	58,212		16.275964		947,456	0.00	%	17.22	%
2006	0.50	%	148,624		40.621668		6,037,355	0.00	%	16.64	%
2006	0.80	%	250,368		25.255777		6,323,238	0.00	%	16.29	%
2006	1.00	%	149,970		8.240477		1,235,824	0.00	%	16.06	%
2006	1.30	%	556		25.335087		14,086	0.00	%	15.71	%
2005	0.00	%	73,308		13.885054		1,017,886	0.00	%	22.06	%
2005	0.50	%	104,698		34.827698		3,646,390	0.00	%	21.46	%
2005	0.80	%	365,618		21.718376		7,940,629	0.00	%	21.09	%
2005	1.00	%	171,146		7.100441		1,215,212	0.00	%	20.85	%
2005	1.30	%	6,016		21.895512		131,723	0.00	%	20.49	%
VP Income & Growth Fund - Class I (ACVIG)
2009	0.00	%	26,440		11.767915		311,144	5.01	%	18.10	%
2009	0.50	%	101,794		11.100863		1,130,001	5.01	%	17.51	%
2009	0.80	%	15,113		10.718927		161,995	5.01	%	17.16	%
2009	1.00	%	7,280		8.654230		63,003	5.01	%	16.92	%
2008	0.00	%	29,644		9.964615		295,391	2.06	%	-34.59	%
2008	0.50	%	123,288		9.446908		1,164,690	2.06	%	-34.91	%
2008	0.80	%	27,111		9.149298		248,047	2.06	%	-35.11	%
2008	1.00	%	9,362		7.401733		69,295	2.06	%	-35.24	%
2007	0.00	%	27,666		15.233128		421,440	1.88	%	-0.07	%
2007	0.50	%	111,674		14.514258		1,620,865	1.88	%	-0.57	%
2007	0.80	%	55,800		14.099337		786,743	1.88	%	-0.87	%
2007	1.00	%	14,802		11.429189		169,175	1.88	%	-1.07	%
2006	0.00	%	28,052		15.243369		427,607	1.88	%	17.09	%
2006	0.50	%	110,050		14.597227		1,606,425	1.88	%	16.50	%
2006	0.80	%	99,066		14.222782		1,408,994	1.88	%	16.16	%
2006	1.00	%	24,302		11.552475		280,748	1.88	%	15.93	%
2005	0.00	%	27,378		13.018850		356,430	2.03	%	4.63	%
2005	0.50	%	83,992		12.529281		1,052,359	2.03	%	4.11	%
2005	0.80	%	157,452		12.244450		1,927,913	2.03	%	3.80	%
2005	1.00	%	20,504		9.965424		204,331	2.03	%	3.59	%
2005	1.30	%	8,246		11.784027		97,171	2.03	%	3.28	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VP Inflation Protection Fund - Class II (ACVIP2)
2009	0.00	%	22,549	$	13.385524	$	301,830	1.82	%	10.21	%
2009	0.50	%	108,771		12.945320		1,408,075	1.82	%	9.66	%
2009	0.80	%	13,631		12.687145		172,938	1.82	%	9.33	%
2008	0.00	%	25,234		12.144940		306,465	4.87	%	-1.59	%
2008	0.50	%	84,313		11.804557		995,278	4.87	%	-2.08	%
2008	0.80	%	17,280		11.604121		200,519	4.87	%	-2.38	%
2007	0.00	%	16,186		12.340997		199,751	4.41	%	9.49	%
2007	0.50	%	44,004		12.055397		530,486	4.41	%	8.94	%
2007	0.80	%	14,896		11.886541		177,062	4.41	%	8.61	%
2006	0.00	%	14,560		11.270913		164,104	3.22	%	1.59	%
2006	0.50	%	25,006		11.065707		276,709	3.22	%	1.08	%
2006	0.80	%	38,652		10.943891		423,003	3.22	%	0.78	%
2005	0.00	%	10,992		11.094803		121,954	4.38	%	1.56	%
2005	0.50	%	24,828		10.947391		271,802	4.38	%	1.06	%
2005	0.80	%	71,902		10.859530		780,822	4.38	%	0.75	%
VP International Fund - Class I (ACVI)
2009	0.00	%	16,897		20.620545		348,425	3.20	%	33.76	%
2009	0.80	%	572		20.510931		11,732	3.20	%	32.70	%
2009	1.00	%	54,101		8.597301		465,123	3.20	%	32.43	%
2008	0.00	%	31,455		15.415539		484,896	0.86	%	-44.82	%
2008	0.50	%	167,006		15.879697		2,652,005	0.86	%	-45.10	%
2008	0.80	%	35,916		15.456745		555,144	0.86	%	-45.26	%
2008	1.00	%	62,231		6.491776		403,990	0.86	%	-45.37	%
2007	0.00	%	38,002		27.938306		1,061,712	0.72	%	18.06	%
2007	0.50	%	180,196		28.924155		5,212,017	0.72	%	17.46	%
2007	0.80	%	73,188		28.238561		2,066,724	0.72	%	17.11	%
2007	1.00	%	79,918		11.883894		949,737	0.72	%	16.88	%
2007	1.30	%	354		26.406669		9,348	0.72	%	16.52	%
2006	0.00	%	42,276		23.665218		1,000,471	1.65	%	25.03	%
2006	0.50	%	181,244		24.623712		4,462,900	1.65	%	24.40	%
2006	0.80	%	165,218		24.112654		3,983,844	1.65	%	24.03	%
2006	1.00	%	60,986		10.167970		620,104	1.65	%	23.79	%
2006	1.30	%	6,172		22.662010		139,870	1.65	%	23.42	%
2005	0.00	%	52,474		18.928348		993,246	1.27	%	13.25	%
2005	0.50	%	109,946		19.793391		2,176,204	1.27	%	12.69	%
2005	0.80	%	311,096		19.440637		6,047,904	1.27	%	12.35	%
2005	1.00	%	61,088		8.214210		501,790	1.27	%	12.13	%
2005	1.30	%	14,464		18.362361		265,593	1.27	%	11.80	%
VP International Fund - Class III (ACVI3)
2009	0.00	%	17,215		12.717392		218,930	3.37	%	33.76	%
2008	0.00	%	25,760		9.507294		244,908	0.79	%	-44.82	%
2008	0.50	%	146,762		9.334573		1,369,961	0.79	%	-45.10	%
2008	0.80	%	43,028		9.232446		397,254	0.79	%	-45.26	%
2007	0.00	%	25,082		17.230511		432,176	0.60	%	18.06	%
2007	0.50	%	129,282		17.002494		2,198,116	0.60	%	17.46	%
2007	0.80	%	56,198		16.867137		947,899	0.60	%	17.11	%
2006	0.00	%	20,366		14.595156		297,245	1.19	%	25.03	%
2006	0.50	%	52,054		14.474561		753,459	1.19	%	24.40	%
2006	0.80	%	80,238		14.402688		1,155,643	1.19	%	24.03	%
2005	0.00	%	20,404		11.673757		238,191	0.00	%	16.74	%	5/2/2005
2005	0.50	%	43,276		11.635157		503,523	0.00	%	16.35	%	5/2/2005
2005	0.80	%	69,942		11.612061		812,171	0.00	%	16.12	%	5/2/2005
VP Mid Cap Value Fund - Class I (ACVMV1)
2009	0.00	%	3,761		13.081223		49,198	3.82	%	29.94	%
2009	0.50	%	65,407		12.779527		835,871	3.82	%	29.30	%
2009	0.80	%	9,006		12.601860		113,492	3.82	%	28.91	%
2008	0.00	%	4,099		10.066767		41,264	0.09	%	-24.35	%
2008	0.50	%	66,882		9.883888		661,054	0.09	%	-24.73	%
2008	0.80	%	9,574		9.775760		93,593	0.09	%	-24.95	%
2007	0.00	%	3,036		13.306496		40,399	0.70	%	-2.31	%
2007	0.50	%	69,408		13.130382		911,354	0.70	%	-2.80	%
2007	0.80	%	15,018		13.025836		195,622	0.70	%	-3.09	%
2006	0.00	%	5,932		13.620466		80,797	1.31	%	20.30	%
2006	0.50	%	28,362		13.507944		383,112	1.31	%	19.70	%
2006	0.80	%	15,610		13.440882		209,812	1.31	%	19.34	%
2005	0.00	%	956		11.322176		10,824	1.06	%	13.22	%	5/2/2005
2005	0.50	%	2,498		11.284751		28,189	1.06	%	12.85	%	5/2/2005
2005	0.80	%	5,722		11.262347		64,443	1.06	%	12.62	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VP Ultra(R) Fund - Class I (ACVU1)
2009	0.00	%	2,677	$	10.457353	$	27,994	0.46	%	34.48	%
2009	1.00	%	2,132		9.685187		20,649	0.46	%	33.14	%
2008	0.00	%	5,710		7.776182		44,402	0.00	%	-41.48	%
2008	0.50	%	26,006		7.521089		195,593	0.00	%	-41.77	%
2008	0.80	%	6,452		7.372083		47,565	0.00	%	-41.95	%
2008	1.00	%	2,588		7.274343		18,826	0.00	%	-42.06	%
2007	0.00	%	9,952		13.288079		132,243	0.00	%	21.02	%
2007	0.50	%	51,430		12.916798		664,311	0.00	%	20.41	%
2007	0.80	%	11,886		12.699015		150,940	0.00	%	20.05	%
2007	1.00	%	2,778		12.555821		34,880	0.00	%	19.81	%
2006	0.00	%	9,430		10.980437		103,546	0.00	%	-3.28	%
2006	0.50	%	21,516		10.727394		230,811	0.00	%	-3.76	%
2006	0.80	%	18,008		10.578387		190,496	0.00	%	-4.04	%
2006	1.00	%	1,340		10.480144		14,043	0.00	%	-4.24	%
2005	0.00	%	9,754		11.352287		110,730	0.00	%	2.17	%
2005	0.50	%	20,298		11.146133		226,244	0.00	%	1.66	%
2005	0.80	%	34,120		11.024259		376,148	0.00	%	1.35	%
2005	1.00	%	5,288		10.943695		57,870	0.00	%	1.15	%
VP Value Fund - Class I (ACVV)
2009	0.00	%	56,018		23.686331		1,326,861	5.84	%	19.86	%
2009	0.50	%	202,297		22.072010		4,465,101	5.84	%	19.27	%
2009	0.80	%	43,721		21.343028		933,139	5.84	%	18.91	%
2009	1.00	%	42,294		15.543434		657,394	5.84	%	18.67	%
2008	0.00	%	61,645		19.761076		1,218,172	2.47	%	-26.78	%
2008	0.50	%	229,017		18.506594		4,238,325	2.47	%	-27.14	%
2008	0.80	%	63,519		17.949130		1,140,111	2.47	%	-27.36	%
2008	1.00	%	53,224		13.097945		697,125	2.47	%	-27.51	%
2007	0.00	%	72,996		26.987072		1,969,948	1.65	%	-5.14	%
2007	0.50	%	241,306		25.400814		6,129,369	1.65	%	-5.61	%
2007	0.80	%	102,224		24.709849		2,525,940	1.65	%	-5.90	%
2007	1.00	%	72,664		18.067598		1,312,864	1.65	%	-6.09	%
2006	0.00	%	72,824		28.448790		2,071,755	1.39	%	18.65	%
2006	0.50	%	213,238		26.911603		5,738,576	1.39	%	18.06	%
2006	0.80	%	200,588		26.258655		5,267,171	1.39	%	17.71	%
2006	1.00	%	83,020		19.238731		1,597,199	1.39	%	17.48	%
2005	0.00	%	73,392		23.976512		1,759,684	0.88	%	5.03	%
2005	0.50	%	121,762		22.794288		2,775,478	0.88	%	4.51	%
2005	0.80	%	333,368		22.307840		7,436,720	0.88	%	4.20	%
2005	1.00	%	71,670		16.376728		1,173,720	0.88	%	3.99	%
2005	1.30	%	16,188		21.324425		345,200	0.88	%	3.68	%
VP Vista(SM) Fund - Class I (ACVVS1)
2009	0.00	%	3,463		10.990064		38,059	0.00	%	22.47	%
2008	0.00	%	4,820		8.973691		43,253	0.00	%	-48.62	%
2008	0.50	%	85,867		8.810636		756,543	0.00	%	-48.88	%
2008	0.80	%	14,766		8.714227		128,674	0.00	%	-49.03	%
2007	0.00	%	5,970		17.466180		104,273	0.00	%	39.77	%
2007	0.50	%	80,738		17.235095		1,391,527	0.00	%	39.07	%
2007	0.80	%	18,398		17.097896		314,567	0.00	%	38.65	%
2006	0.50	%	1,972		12.392995		24,439	0.00	%	8.47	%
2006	0.80	%	1,344		12.331439		16,573	0.00	%	8.14	%
2005	0.50	%	242		11.425723		2,765	0.00	%	14.26	%	5/2/2005
2005	0.80	%	2,306		11.403054		26,295	0.00	%	14.03	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
2009	0.00	%	23,938	$	13.569574	$	324,828	2.51	%	25.03	%
2009	0.50	%	57,317		13.059017		748,504	2.51	%	24.40	%
2009	0.80	%	10,571		12.761955		134,907	2.51	%	24.03	%
2009	1.00	%	13,278		12.567656		166,873	2.51	%	23.78	%
2008	0.00	%	20,630		10.853308		223,904	0.87	%	-30.91	%
2008	0.50	%	48,249		10.497320		506,485	0.87	%	-31.26	%
2008	0.80	%	13,403		10.289367		137,908	0.87	%	-31.46	%
2008	1.00	%	18,400		10.153007		186,815	0.87	%	-31.60	%
2007	0.00	%	26,930		15.709599		423,060	0.37	%	-0.65	%
2007	0.50	%	47,664		15.270683		727,862	0.37	%	-1.15	%
2007	0.80	%	22,938		15.013257		344,374	0.37	%	-1.45	%
2007	1.00	%	18,706		14.844030		277,672	0.37	%	-1.65	%
2006	0.00	%	29,498		15.813075		466,454	0.36	%	14.41	%
2006	0.50	%	46,836		15.448774		723,559	0.36	%	13.84	%
2006	0.80	%	42,596		15.234242		648,918	0.36	%	13.50	%
2006	1.00	%	20,468		15.092865		308,921	0.36	%	13.28	%
2005	0.00	%	38,236		13.821296		528,471	0.00	%	7.23	%
2005	0.50	%	38,160		13.570376		517,846	0.00	%	6.70	%
2005	0.80	%	52,974		13.422021		711,018	0.00	%	6.38	%
2005	1.00	%	15,334		13.324009		204,310	0.00	%	6.17	%
2005	1.30	%	5,586		13.178346		73,614	0.00	%	5.85	%
Stock Index Fund, Inc. - Initial Shares (DSIF)
2009	0.00	%	340,061		20.917605		7,113,262	2.10	%	26.33	%
2009	0.50	%	917,137		28.348457		25,999,419	2.10	%	25.70	%
2009	0.80	%	259,068		27.544961		7,136,018	2.10	%	25.33	%
2009	1.00	%	262,346		8.220290		2,156,560	2.10	%	25.08	%
2009	1.30	%	1		25.395713		25	2.10	%	24.70	%
2008	0.00	%	383,007		16.557351		6,341,581	2.05	%	-37.14	%
2008	0.50	%	952,613		22.551717		21,483,059	2.05	%	-37.46	%
2008	0.80	%	384,851		21.978365		8,458,396	2.05	%	-37.64	%
2008	1.00	%	321,585		6.572170		2,113,511	2.05	%	-37.77	%
2007	0.00	%	420,020		26.340376		11,063,485	1.70	%	5.26	%
2007	0.50	%	950,264		36.056885		34,263,560	1.70	%	4.73	%
2007	0.80	%	618,332		35.246027		21,793,746	1.70	%	4.41	%
2007	1.00	%	340,954		10.560744		3,600,728	1.70	%	4.20	%
2007	1.30	%	6		32.822912		197	1.70	%	3.89	%
2006	0.00	%	481,242		25.025241		12,043,197	1.65	%	15.50	%
2006	0.50	%	710,704		34.429253		24,469,008	1.65	%	14.92	%
2006	0.80	%	1,054,364		33.756668		35,591,815	1.65	%	14.58	%
2006	1.00	%	377,588		10.134844		3,826,795	1.65	%	14.35	%
2006	1.30	%	13,440		31.594380		424,628	1.65	%	14.01	%
2005	0.00	%	514,448		21.667325		11,146,712	1.60	%	4.69	%
2005	0.50	%	544,048		29.958454		16,298,837	1.60	%	4.17	%
2005	0.80	%	1,502,104		29.461184		44,253,762	1.60	%	3.86	%
2005	1.00	%	344,792		8.862854		3,055,841	1.60	%	3.65	%
2005	1.30	%	43,062		27.711836		1,193,327	1.60	%	3.34	%
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)
2009	0.00	%	25,239		16.932768		427,366	0.97	%	33.76	%
2009	0.50	%	124,121		24.330103		3,019,877	0.97	%	33.09	%
2009	0.80	%	100,952		23.639940		2,386,499	0.97	%	32.69	%
2009	1.00	%	17,511		6.270634		109,805	0.97	%	32.42	%
2008	0.00	%	26,451		12.659521		334,857	0.76	%	-34.42	%
2008	0.50	%	136,568		18.281160		2,496,621	0.76	%	-34.75	%
2008	0.80	%	117,793		17.815941		2,098,593	0.76	%	-34.95	%
2008	1.00	%	19,389		4.735242		91,812	0.76	%	-35.08	%
2007	0.00	%	29,132		19.305130		562,397	0.53	%	7.79	%
2007	0.50	%	133,118		28.017912		3,729,688	0.53	%	7.25	%
2007	0.80	%	147,566		27.387135		4,041,410	0.53	%	6.92	%
2007	1.00	%	20,698		7.293750		150,966	0.53	%	6.71	%
2006	0.00	%	35,276		17.910706		631,818	0.11	%	9.20	%
2006	0.50	%	88,854		26.125145		2,321,324	0.11	%	8.66	%
2006	0.80	%	216,438		25.614125		5,543,870	0.11	%	8.33	%
2006	1.00	%	21,910		6.835295		149,761	0.11	%	8.12	%
2006	1.30	%	430		23.974748		10,309	0.11	%	7.79	%
2005	0.00	%	40,512		16.401660		664,464	0.00	%	3.62	%
2005	0.50	%	50,962		24.043585		1,225,309	0.00	%	3.10	%
2005	0.80	%	285,024		23.643910		6,739,082	0.00	%	2.79	%
2005	1.00	%	20,360		6.322127		128,719	0.00	%	2.59	%
2005	1.30	%	1,602		22.241255		35,630	0.00	%	2.28	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Appreciation Portfolio - Initial Shares (DCAP)
2009	0.00	%	53,869	$	15.985658	$	861,131	2.65	%	22.56	%
2009	0.50	%	142,023		14.975150		2,126,816	2.65	%	21.95	%
2009	0.80	%	31,383		14.468488		454,065	2.65	%	21.58	%
2009	1.00	%	67,951		9.698799		659,043	2.65	%	21.34	%
2008	0.00	%	53,547		13.043268		698,428	1.97	%	-29.55	%
2008	0.50	%	129,485		12.279988		1,590,074	1.97	%	-29.90	%
2008	0.80	%	62,193		11.900157		740,106	1.97	%	-30.11	%
2008	1.00	%	84,234		7.993118		673,292	1.97	%	-30.25	%
2007	0.00	%	53,388		18.514426		988,448	1.61	%	7.13	%
2007	0.50	%	117,308		17.518498		2,055,060	1.61	%	6.60	%
2007	0.80	%	94,654		17.027724		1,611,742	1.61	%	6.27	%
2007	1.00	%	78,734		11.460137		902,302	1.61	%	6.06	%
2006	0.00	%	57,100		17.281782		986,790	1.49	%	16.48	%
2006	0.50	%	100,824		16.434584		1,657,000	1.49	%	15.90	%
2006	0.80	%	155,994		16.022432		2,499,403	1.49	%	15.55	%
2006	1.00	%	77,230		10.805247		834,489	1.49	%	15.32	%
2006	1.30	%	10,234		15.282356		156,400	1.49	%	14.98	%
2005	0.00	%	63,038		14.837109		935,302	0.02	%	4.38	%
2005	0.50	%	71,712		14.180252		1,016,894	0.02	%	3.86	%
2005	0.80	%	211,690		13.866041		2,935,302	0.02	%	3.55	%
2005	1.00	%	21,248		9.369677		199,087	0.02	%	3.34	%
2005	1.30	%	52,560		13.291662		698,610	0.02	%	3.03	%
Developing Leaders Portfolio - Initial Shares (DSC)
2009	0.00	%	184		11.032594		2,030	2.01	%	26.04	%
2009	0.50	%	6,951		10.670685		74,172	2.01	%	25.41	%
2009	0.80	%	3,260		10.459262		34,097	2.01	%	25.03	%
2008	0.00	%	175		8.753397		1,532	0.93	%	-37.59	%
2008	0.50	%	9,322		8.508710		79,318	0.93	%	-37.90	%
2008	0.80	%	3,511		8.365189		29,370	0.93	%	-38.09	%
2007	0.00	%	178		14.026060		2,497	0.83	%	-11.06	%
2007	0.50	%	9,412		13.702540		128,968	0.83	%	-11.51	%
2007	0.80	%	4,684		13.512011		63,290	0.83	%	-11.77	%
2006	0.00	%	3,288		15.770049		51,852	0.43	%	3.77	%
2006	0.50	%	9,442		15.484023		146,200	0.43	%	3.25	%
2006	0.80	%	11,426		15.314886		174,988	0.43	%	2.95	%
2005	0.00	%	5,054		15.197076		76,806	0.00	%	5.80	%
2005	0.50	%	6,920		14.996047		103,773	0.00	%	5.27	%
2005	0.80	%	17,282		14.876684		257,099	0.00	%	4.96	%
Growth and Income Portfolio - Initial Shares (DGI)
2009	0.00	%	23,756		13.751257		326,675	1.34	%	28.79	%
2009	0.50	%	56,255		12.813906		720,846	1.34	%	28.14	%
2009	0.80	%	20,532		12.390653		254,405	1.34	%	27.76	%
2009	1.00	%	13,887		8.363624		116,146	1.34	%	27.50	%
2008	0.00	%	31,342		10.677601		334,657	0.66	%	-40.41	%
2008	0.50	%	57,462		9.999637		574,599	0.66	%	-40.71	%
2008	0.80	%	28,885		9.698392		280,138	0.66	%	-40.89	%
2008	1.00	%	15,792		6.559473		103,587	0.66	%	-41.01	%
2007	0.00	%	33,820		17.918567		606,006	0.76	%	8.45	%
2007	0.50	%	42,986		16.865204		724,968	0.76	%	7.90	%
2007	0.80	%	47,184		16.406411		774,120	0.76	%	7.58	%
2007	1.00	%	16,816		11.118706		186,972	0.76	%	7.36	%
2006	0.00	%	38,470		16.523102		635,644	0.77	%	14.51	%
2006	0.50	%	10,806		15.630140		168,899	0.77	%	13.94	%
2006	0.80	%	83,514		15.250864		1,273,661	0.77	%	13.60	%
2006	1.00	%	22,804		10.356384		236,167	0.77	%	13.38	%
2005	0.00	%	35,564		14.429123		513,157	1.34	%	3.35	%
2005	0.50	%	11,612		13.717541		159,288	1.34	%	2.84	%
2005	0.80	%	98,630		13.424762		1,324,084	1.34	%	2.53	%
2005	1.00	%	23,964		9.134532		218,900	1.34	%	2.33	%
2005	1.30	%	7,396		12.832801		94,911	1.34	%	2.02	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Capital Appreciation Fund II - Primary Shares (FVCA2P)
2009	0.50	%	4,369	$	13.059781	$	57,058	1.80	%	12.91	%
2009	0.80	%	1,183		12.801099		15,144	1.80	%	12.58	%
2008	0.50	%	3,309		11.566132		38,272	0.21	%	-29.72	%
2008	0.80	%	627		11.371112		7,130	0.21	%	-29.93	%
2007	0.50	%	254		16.457068		4,180	0.71	%	9.33	%
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	0.50	%	1,354		13.017510		17,626	1.07	%	1.41	%
2005	0.80	%	606		12.913893		7,826	1.07	%	1.10	%
Clover Value Fund II - Primary Shares (FALF)
2009	0.50	%	3,849		11.259563		43,338	2.05	%	14.14	%
2009	0.80	%	83		11.036543		916	2.05	%	13.80	%
2008	0.50	%	8,553		9.864306		84,369	1.80	%	-34.12	%
2008	0.80	%	81		9.697968		786	1.80	%	-34.32	%
2007	0.50	%	7,374		14.973799		110,417	1.55	%	-10.12	%
2007	0.80	%	1,754		14.765636		25,899	1.55	%	-10.39	%
2006	0.00	%	406		16.967010		6,889	1.47	%	16.81	%
2006	0.50	%	10,000		16.659331		166,593	1.47	%	16.23	%
2006	0.80	%	1,782		16.477377		29,363	1.47	%	15.88	%
2005	0.00	%	362		14.525597		5,258	1.33	%	5.02	%
2005	0.50	%	6,978		14.333441		100,019	1.33	%	4.50	%
2005	0.80	%	5,150		14.219360		73,230	1.33	%	4.19	%
Market Opportunity Fund II - Service Shares (FVMOS)
2009	0.00	%	5,927		10.283025		60,947	1.19	%	1.28	%
2009	0.50	%	21,405		10.096031		216,106	1.19	%	0.78	%
2009	0.80	%	1,673		9.985463		16,706	1.19	%	0.48	%
2008	0.00	%	7,008		10.152569		71,149	1.51	%	-0.86	%
2008	0.50	%	15,633		10.017981		156,611	1.51	%	-1.36	%
2008	0.80	%	2,291		9.938077		22,768	1.51	%	-1.65	%
2007	0.50	%	246		10.155871		2,498	0.57	%	-1.98	%
2007	0.80	%	88		10.105146		889	0.57	%	-2.27	%
Quality Bond Fund II - Primary Shares (FQB)
2009	0.00	%	29,675		14.515295		430,741	5.89	%	20.43	%
2009	0.50	%	70,869		13.969361		989,995	5.89	%	19.83	%
2009	0.80	%	12,329		13.651720		168,312	5.89	%	19.48	%
2009	1.00	%	37,387		13.443967		502,630	5.89	%	19.24	%
2008	0.00	%	22,443		12.052470		270,494	5.12	%	-7.29	%
2008	0.50	%	40,508		11.657260		472,212	5.12	%	-7.75	%
2008	0.80	%	16,052		11.426394		183,416	5.12	%	-8.03	%
2008	1.00	%	34,491		11.275015		388,887	5.12	%	-8.21	%
2007	0.00	%	17,856		12.999880		232,126	4.97	%	5.38	%
2007	0.50	%	26,966		12.636630		340,759	4.97	%	4.86	%
2007	0.80	%	22,236		12.423584		276,251	4.97	%	4.54	%
2007	1.00	%	32,494		12.283540		399,141	4.97	%	4.33	%
2006	0.00	%	19,464		12.335785		240,104	3.43	%	4.15	%
2006	0.50	%	24,568		12.051517		296,082	3.43	%	3.64	%
2006	0.80	%	39,918		11.884116		474,390	3.43	%	3.33	%
2006	1.00	%	29,734		11.773803		350,082	3.43	%	3.12	%
2005	0.00	%	19,802		11.843786		234,531	3.65	%	1.30	%
2005	0.50	%	16,246		11.628696		188,920	3.65	%	0.79	%
2005	0.80	%	60,574		11.501519		696,693	3.65	%	0.49	%
2005	1.00	%	4,004		11.417503		45,716	3.65	%	0.29	%
2005	1.30	%	296		11.292632		3,343	3.65	%	-0.01	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Equity-Income Portfolio - Initial Class (FEIP)
2009	0.00	%	200,574	$	19.689180	$	3,949,138	2.24	%	30.21	%
2009	0.50	%	500,783		50.774293		25,426,903	2.24	%	29.56	%
2009	0.80	%	202,135		41.417283		8,371,882	2.24	%	29.17	%
2009	1.00	%	351,952		10.492986		3,693,027	2.24	%	28.91	%
2009	1.30	%	1		37.630730		38	2.24	%	28.53	%
2008	0.00	%	231,255		15.121228		3,496,860	2.40	%	-42.65	%
2008	0.50	%	576,617		39.190034		22,597,640	2.40	%	-42.94	%
2008	0.80	%	240,665		32.063918		7,716,663	2.40	%	-43.11	%
2008	1.00	%	419,968		8.139596		3,418,370	2.40	%	-43.23	%
2007	0.00	%	278,062		26.368140		7,331,978	1.77	%	1.53	%
2007	0.50	%	592,452		68.682638		40,691,166	1.77	%	1.02	%
2007	0.80	%	336,206		56.363167		18,949,635	1.77	%	0.72	%
2007	1.00	%	463,760		14.336823		6,648,845	1.77	%	0.51	%
2007	1.30	%	6		51.725856		310	1.77	%	0.21	%
2006	0.00	%	307,480		25.970609		7,985,443	3.30	%	20.19	%
2006	0.50	%	491,100		67.988158		33,388,984	3.30	%	19.60	%
2006	0.80	%	547,442		55.961825		30,635,853	3.30	%	19.24	%
2006	1.00	%	502,702		14.263392		7,170,236	3.30	%	19.00	%
2006	1.30	%	3,596		51.616411		185,613	3.30	%	18.65	%
2005	0.00	%	348,510		21.607366		7,530,383	1.64	%	5.87	%
2005	0.50	%	344,836		56.848284		19,603,335	1.64	%	5.34	%
2005	0.80	%	824,566		46.932598		38,699,025	1.64	%	5.02	%
2005	1.00	%	537,298		11.985917		6,440,009	1.64	%	4.81	%
2005	1.30	%	27,500		43.504590		1,196,376	1.64	%	4.50	%
High Income Portfolio - Initial Class (FHIP)
2009	0.00	%	100,115		16.508703		1,652,769	7.68	%	43.96	%
2009	0.50	%	190,562		34.797509		6,631,083	7.68	%	43.24	%
2009	0.80	%	61,557		32.404743		1,994,739	7.68	%	42.81	%
2009	1.00	%	159,831		12.636025		2,019,629	7.68	%	42.53	%
2008	0.00	%	120,515		11.467804		1,382,042	8.25	%	-24.98	%
2008	0.50	%	231,676		24.293166		5,628,144	8.25	%	-25.36	%
2008	0.80	%	80,105		22.690582		1,817,629	8.25	%	-25.58	%
2008	1.00	%	165,861		8.865726		1,470,478	8.25	%	-25.73	%
2007	0.00	%	140,988		15.287268		2,155,321	7.41	%	2.79	%
2007	0.50	%	247,158		32.546729		8,044,184	7.41	%	2.27	%
2007	0.80	%	118,930		30.491108		3,626,307	7.41	%	1.96	%
2007	1.00	%	145,894		11.937443		1,741,601	7.41	%	1.76	%
2006	0.00	%	171,428		14.872903		2,549,632	7.80	%	11.24	%
2006	0.50	%	261,306		31.824106		8,315,830	7.80	%	10.68	%
2006	0.80	%	240,204		29.904168		7,183,101	7.80	%	10.35	%
2006	1.00	%	136,954		11.731213		1,606,637	7.80	%	10.13	%
2006	1.30	%	9,972		30.387910		303,028	7.80	%	9.80	%
2005	0.00	%	185,840		13.370516		2,484,777	16.14	%	2.70	%
2005	0.50	%	175,964		28.752380		5,059,384	16.14	%	2.19	%
2005	0.80	%	356,194		27.098684		9,652,389	16.14	%	1.88	%
2005	1.00	%	126,486		10.651851		1,347,310	16.14	%	1.68	%
2005	1.30	%	21,016		27.674631		581,610	16.14	%	1.38	%
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)
2009	0.00	%	37,939		21.110749		800,921	2.27	%	29.11	%
2009	0.50	%	232,760		36.641407		8,528,654	2.27	%	28.47	%
2009	0.80	%	84,006		31.363945		2,634,760	2.27	%	28.08	%
2009	1.00	%	186,964		11.332339		2,118,739	2.27	%	27.83	%
2009	1.30	%	1		32.425044		32	2.27	%	27.45	%
2008	0.00	%	49,593		16.350697		810,880	2.55	%	-28.72	%
2008	0.50	%	271,683		28.521671		7,748,853	2.55	%	-29.07	%
2008	0.80	%	107,493		24.486999		2,632,181	2.55	%	-29.29	%
2008	1.00	%	212,470		8.865285		1,883,607	2.55	%	-29.43	%
2007	0.00	%	54,336		22.938056		1,246,362	6.08	%	15.50	%
2007	0.50	%	306,478		40.213337		12,324,503	6.08	%	14.92	%
2007	0.80	%	132,782		34.628652		4,598,062	6.08	%	14.58	%
2007	1.00	%	229,524		12.562122		2,883,308	6.08	%	14.35	%
2007	1.30	%	6		36.160198		217	6.08	%	14.00	%
2006	0.00	%	66,348		19.859153		1,317,615	2.71	%	7.32	%
2006	0.50	%	286,878		34.991020		10,038,154	2.71	%	6.78	%
2006	0.80	%	202,948		30.222570		6,133,610	2.71	%	6.46	%
2006	1.00	%	252,802		10.985811		2,777,235	2.71	%	6.25	%
2006	1.30	%	654		31.718247		20,744	2.71	%	5.93	%
2005	0.00	%	71,156		18.505123		1,316,751	2.76	%	4.04	%
2005	0.50	%	288,746		32.768260		9,461,704	2.76	%	3.53	%
2005	0.80	%	261,190		28.387536		7,414,541	2.76	%	3.22	%
2005	1.00	%	287,746		10.339381		2,975,116	2.76	%	3.01	%
2005	1.30	%	7,118		29.941319		213,122	2.76	%	2.70	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Contrafund Portfolio - Initial Class (FCP)
2009	0.00	%	179,893	$	29.787895	$	5,358,634	1.36	%	35.71	%
2009	0.50	%	895,768		32.887636		29,459,692	1.36	%	35.03	%
2009	0.80	%	202,693		31.871810		6,460,193	1.36	%	34.63	%
2009	1.00	%	227,784		12.045454		2,743,762	1.36	%	34.36	%
2009	1.30	%	1		29.643503		30	1.36	%	33.96	%
2008	0.00	%	205,267		21.949689		4,505,547	0.95	%	-42.51	%
2008	0.50	%	1,037,409		24.355264		25,266,370	0.95	%	-42.80	%
2008	0.80	%	283,459		23.673901		6,710,580	0.95	%	-42.97	%
2008	1.00	%	288,102		8.965097		2,582,862	0.95	%	-43.09	%
2008	1.30	%	1		22.129119		22	0.95	%	-43.26	%
2007	0.00	%	224,578		38.182151		8,574,871	0.93	%	17.59	%
2007	0.50	%	1,000,686		42.579734		42,608,944	0.93	%	17.00	%
2007	0.80	%	469,988		41.513259		19,510,734	0.93	%	16.65	%
2007	1.00	%	346,744		15.752271		5,462,005	0.93	%	16.42	%
2007	1.30	%	348		38.999532		13,572	0.93	%	16.07	%
2006	0.00	%	244,798		32.470034		7,948,599	1.27	%	11.72	%
2006	0.50	%	755,746		36.392149		27,503,221	1.27	%	11.16	%
2006	0.80	%	854,560		35.587790		30,411,902	1.27	%	10.83	%
2006	1.00	%	364,854		13.531021		4,936,847	1.27	%	10.61	%
2006	1.30	%	3,016		33.601299		101,342	1.27	%	10.28	%
2005	0.00	%	264,040		29.064668		7,674,235	0.29	%	16.94	%
2005	0.50	%	418,680		32.738236		13,706,845	0.29	%	16.36	%
2005	0.80	%	1,315,976		32.110552		42,256,716	0.29	%	16.01	%
2005	1.00	%	210,686		12.233291		2,577,383	0.29	%	15.78	%
2005	1.30	%	72,552		30.469674		2,210,636	0.29	%	15.43	%
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
2009	0.00	%	23,134		15.444750		357,299	0.24	%	47.57	%
2009	0.50	%	203,763		15.088373		3,074,452	0.24	%	46.84	%
2009	0.80	%	48,768		14.878509		725,595	0.24	%	46.40	%
2008	0.00	%	27,453		10.465765		287,317	0.00	%	-54.40	%
2008	0.50	%	197,262		10.275549		2,026,975	0.00	%	-54.63	%
2008	0.80	%	63,653		10.163079		646,910	0.00	%	-54.77	%
2007	0.00	%	27,034		22.953063		620,513	0.12	%	45.64	%
2007	0.50	%	214,326		22.649325		4,854,339	0.12	%	44.91	%
2007	0.80	%	71,504		22.469019		1,606,625	0.12	%	44.48	%
2006	0.00	%	28,390		15.759845		447,422	0.73	%	16.62	%
2006	0.50	%	115,990		15.629664		1,812,885	0.73	%	16.04	%
2006	0.80	%	110,500		15.552071		1,718,504	0.73	%	15.69	%
2005	0.00	%	11,834		13.514321		159,928	0.65	%	35.14	%	5/2/2005
2005	0.50	%	42,914		13.469693		578,038	0.65	%	34.70	%	5/2/2005
2005	0.80	%	82,484		13.442988		1,108,831	0.65	%	34.43	%	5/2/2005
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
2009	0.00	%	1,759		11.989176		21,089	2.95	%	24.15	%
2009	0.50	%	25,742		11.712729		301,509	2.95	%	23.53	%
2009	0.80	%	3,521		11.549915		40,667	2.95	%	23.16	%
2008	0.00	%	8,703		9.656832		84,043	2.31	%	-25.08	%
2008	0.50	%	52,567		9.481428		498,410	2.31	%	-25.45	%
2008	0.80	%	1,764		9.377717		16,542	2.31	%	-25.67	%
2007	0.00	%	4,590		12.888793		59,160	5.88	%	8.65	%
2007	0.50	%	71,358		12.718211		907,546	5.88	%	8.10	%
2007	0.80	%	4,636		12.616940		58,492	5.88	%	7.78	%
2006	0.00	%	8,244		11.863160		97,800	3.42	%	9.78	%
2006	0.50	%	1,822		11.765134		21,436	3.42	%	9.24	%
2006	0.80	%	9,704		11.706711		113,602	3.42	%	8.91	%
2005	0.00	%	2,002		10.806063		21,634	0.56	%	8.06	%	5/2/2005
2005	0.50	%	1,590		10.770315		17,125	0.56	%	7.70	%	5/2/2005
2005	0.80	%	2,332		10.748937		25,067	0.56	%	7.49	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
2009	0.00	%	469	$	11.867504	$	5,566	3.20	%	28.78	%
2009	0.50	%	48,825		11.593819		566,068	3.20	%	28.13	%
2009	0.80	%	15,952		11.432637		182,373	3.20	%	27.75	%
2008	0.00	%	13,010		9.215628		119,895	2.88	%	-32.71	%
2008	0.50	%	54,125		9.048213		489,735	2.88	%	-33.05	%
2008	0.80	%	11,923		8.949218		106,702	2.88	%	-33.25	%
2007	0.00	%	8,938		13.695591		122,411	2.17	%	10.17	%
2007	0.50	%	38,608		13.514322		521,761	2.17	%	9.61	%
2007	0.80	%	10,358		13.406718		138,867	2.17	%	9.28	%
2006	0.00	%	7,022		12.431698		87,295	1.69	%	11.81	%
2006	0.50	%	6,200		12.328971		76,440	1.69	%	11.25	%
2006	0.80	%	16,066		12.267747		197,094	1.69	%	10.92	%
2005	0.00	%	5,140		11.118664		57,150	0.86	%	11.19	%	5/2/2005
2005	0.50	%	3,540		11.081899		39,230	0.86	%	10.82	%	5/2/2005
2005	0.80	%	15,234		11.059893		168,486	0.86	%	10.60	%	5/2/2005
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
2009	0.50	%	28,422		11.333383		322,117	2.30	%	30.75	%
2009	0.80	%	24,962		11.175826		278,971	2.30	%	30.36	%
2008	0.50	%	25,922		8.668038		224,693	2.06	%	-38.39	%
2008	0.80	%	24,051		8.573208		206,194	2.06	%	-38.57	%
2007	0.50	%	35,470		14.068082		498,995	2.76	%	10.65	%
2007	0.80	%	13,868		13.956079		193,543	2.76	%	10.32	%
2006	0.50	%	17,674		12.713976		224,707	5.31	%	12.59	%
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	%	5/2/2005
VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)
2009	0.00	%	35,449		10.241993		363,068	0.47	%	45.85	%
2009	0.50	%	176,900		9.594280		1,697,228	0.47	%	45.12	%
2009	0.80	%	29,637		9.269518		274,721	0.47	%	44.69	%
2009	1.00	%	3,666		7.004350		25,678	0.47	%	44.40	%
2008	0.00	%	43,142		7.022261		302,954	0.42	%	-55.02	%
2008	0.50	%	133,046		6.611121		879,583	0.42	%	-55.24	%
2008	0.80	%	101,332		6.406522		649,186	0.42	%	-55.38	%
2008	1.00	%	20,056		4.850665		97,285	0.42	%	-55.47	%
2007	0.00	%	45,896		15.610808		716,474	0.00	%	23.18	%
2007	0.50	%	94,062		14.770825		1,389,373	0.00	%	22.57	%
2007	0.80	%	156,642		14.356892		2,248,892	0.00	%	22.20	%
2007	1.00	%	12,236		10.892121		133,276	0.00	%	21.95	%
2006	0.00	%	47,470		12.672871		601,581	0.69	%	5.46	%
2006	0.50	%	47,778		12.051402		575,792	0.69	%	4.93	%
2006	0.80	%	228,606		11.749061		2,685,906	0.69	%	4.62	%
2006	1.00	%	10,970		8.931581		97,979	0.69	%	4.41	%
2005	0.00	%	52,346		12.017274		629,056	0.95	%	8.89	%
2005	0.50	%	36,764		11.485107		422,238	0.95	%	8.35	%
2005	0.80	%	267,592		11.230531		3,005,200	0.95	%	8.03	%
2005	1.00	%	11,798		8.554456		100,925	0.95	%	7.81	%
2005	1.30	%	844		10.765183		9,086	0.95	%	7.49	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Growth Portfolio - Initial Class (FGP)
2009	0.00	%	206,766	$	16.928202	$	3,500,177	0.44	%	28.29	%
2009	0.50	%	557,057		51.924855		28,925,104	0.44	%	27.65	%
2009	0.80	%	370,706		35.322377		13,094,217	0.44	%	27.26	%
2009	1.00	%	585,826		6.146674		3,600,881	0.44	%	27.01	%
2009	1.30	%	17		32.535551		553	0.44	%	26.63	%
2008	0.00	%	243,890		13.195602		3,218,275	0.79	%	-47.17	%
2008	0.50	%	596,470		40.678515		24,263,514	0.79	%	-47.43	%
2008	0.80	%	450,264		27.755083		12,497,115	0.79	%	-47.59	%
2008	1.00	%	692,175		4.839505		3,349,784	0.79	%	-47.69	%
2008	1.30	%	16		25.693435		411	0.79	%	-47.85	%
2007	0.00	%	275,376		24.975885		6,877,759	0.82	%	26.96	%
2007	0.50	%	622,446		77.381327		48,165,697	0.82	%	26.33	%
2007	0.80	%	558,044		52.956740		29,552,191	0.82	%	25.95	%
2007	1.00	%	773,552		9.252332		7,157,160	0.82	%	25.69	%
2007	1.30	%	144		49.269736		7,095	0.82	%	25.32	%
2006	0.00	%	294,384		19.671592		5,791,002	0.40	%	6.85	%
2006	0.50	%	528,784		61.254324		32,390,306	0.40	%	6.32	%
2006	0.80	%	830,726		42.046610		34,929,212	0.40	%	6.00	%
2006	1.00	%	747,634		7.360951		5,503,297	0.40	%	5.79	%
2006	1.30	%	3,826		39.316236		150,424	0.40	%	5.47	%
2005	0.00	%	341,122		18.410455		6,280,211	0.51	%	5.80	%
2005	0.50	%	390,486		57.613946		22,497,439	0.51	%	5.27	%
2005	0.80	%	1,251,056		39.666280		49,624,738	0.51	%	4.96	%
2005	1.00	%	746,748		6.958097		5,195,945	0.51	%	4.75	%
2005	1.30	%	34,904		37.275932		1,301,079	0.51	%	4.44	%
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)
2009	0.00	%	13,217		10.684849		141,222	9.14	%	43.81	%
2009	0.50	%	224,364		10.543267		2,365,530	9.14	%	43.10	%
2009	0.80	%	69,946		10.459227		731,581	9.14	%	42.67	%
2008	0.00	%	18,296		7.429579		135,932	10.31	%	-24.88	%
2008	0.50	%	168,238		7.367822		1,239,548	10.31	%	-25.26	%
2008	0.80	%	53,080		7.331018		389,130	10.31	%	-25.48	%
2007	0.00	%	10,246		9.890596		101,339	11.21	%	-1.09	%	5/1/2007
2007	0.50	%	122,470		9.857586		1,207,259	11.21	%	-1.42	%	5/1/2007
2007	0.80	%	30,864		9.837843		303,635	11.21	%	-1.62	%	5/1/2007
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
2009	0.00	%	27,224		13.222437		359,968	8.76	%	15.67	%
2009	0.50	%	290,648		12.788918		3,717,073	8.76	%	15.10	%
2009	0.80	%	22,454		12.535648		281,475	8.76	%	14.75	%
2008	0.00	%	35,155		11.430864		401,852	4.47	%	-3.35	%
2008	0.50	%	220,280		11.111478		2,447,636	4.47	%	-3.83	%
2008	0.80	%	24,200		10.924128		264,364	4.47	%	-4.12	%
2007	0.00	%	30,732		11.826500		363,452	4.06	%	4.21	%
2007	0.50	%	239,992		11.553678		2,772,790	4.06	%	3.69	%
2007	0.80	%	36,890		11.393001		420,288	4.06	%	3.38	%
2006	0.00	%	27,706		11.348586		314,424	3.27	%	4.30	%
2006	0.50	%	224,730		11.142647		2,504,087	3.27	%	3.78	%
2006	0.80	%	50,982		11.020863		561,866	3.27	%	3.47	%
2005	0.00	%	24,210		10.880732		263,423	1.67	%	2.08	%
2005	0.50	%	47,416		10.736671		509,090	1.67	%	1.57	%
2005	0.80	%	184,098		10.651144		1,960,854	1.67	%	1.27	%
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
2009	0.00	%	23,116		22.878053		528,849	0.60	%	40.01	%
2009	0.50	%	277,478		22.127965		6,140,023	0.60	%	39.32	%
2009	0.80	%	46,369		21.689786		1,005,734	0.60	%	38.90	%
2008	0.00	%	26,488		16.339788		432,808	0.35	%	-39.51	%
2008	0.50	%	283,059		15.883241		4,495,894	0.35	%	-39.81	%
2008	0.80	%	65,092		15.615472		1,016,442	0.35	%	-39.99	%
2007	0.00	%	30,584		27.011367		826,116	0.70	%	15.49	%
2007	0.50	%	272,886		26.388591		7,201,077	0.70	%	14.91	%
2007	0.80	%	92,888		26.021877		2,417,120	0.70	%	14.56	%
2006	0.00	%	29,260		23.389128		684,366	0.25	%	12.59	%
2006	0.50	%	217,404		22.965001		4,992,683	0.25	%	12.03	%
2006	0.80	%	167,292		22.714275		3,799,916	0.25	%	11.70	%
2005	0.00	%	37,294		20.773676		774,733	0.00	%	18.20	%
2005	0.50	%	105,862		20.498936		2,170,058	0.00	%	17.62	%
2005	0.80	%	247,064		20.335877		5,024,263	0.00	%	17.26	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
VIP Fund - Overseas Portfolio - Initial Class (FOP)
2009	0.00	%	52,438	$	18.585431	$	974,583	2.07	%	26.53	%
2009	0.50	%	158,444		31.912691		5,056,374	2.07	%	25.90	%
2009	0.80	%	44,371		24.060407		1,067,584	2.07	%	25.52	%
2009	1.00	%	120,336		10.053608		1,209,811	2.07	%	25.27	%
2008	0.00	%	56,196		14.688536		825,437	2.41	%	-43.80	%
2008	0.50	%	188,778		25.347887		4,785,123	2.41	%	-44.09	%
2008	0.80	%	57,353		19.168350		1,099,362	2.41	%	-44.25	%
2008	1.00	%	154,625		8.025502		1,240,943	2.41	%	-44.37	%
2007	0.00	%	74,300		26.138222		1,942,070	3.29	%	17.31	%
2007	0.50	%	220,112		45.333254		9,978,393	3.29	%	16.72	%
2007	0.80	%	85,536		34.384792		2,941,138	3.29	%	16.37	%
2007	1.00	%	169,320		14.425299		2,442,492	3.29	%	16.14	%
2007	1.30	%	2		30.061976		60	3.29	%	15.79	%
2006	0.00	%	89,902		22.280924		2,003,100	0.91	%	18.08	%
2006	0.50	%	218,334		38.837994		8,479,655	0.91	%	17.49	%
2006	0.80	%	153,216		29.547189		4,527,102	0.91	%	17.14	%
2006	1.00	%	180,844		12.420750		2,246,218	0.91	%	16.91	%
2006	1.30	%	782		25.962703		20,303	0.91	%	16.56	%
2005	0.00	%	101,850		18.869419		1,921,850	0.71	%	19.05	%
2005	0.50	%	187,952		33.055758		6,212,896	0.71	%	18.45	%
2005	0.80	%	287,574		25.223510		7,253,626	0.71	%	18.10	%
2005	1.00	%	162,770		10.624371		1,729,329	0.71	%	17.87	%
2005	1.30	%	5,672		22.274316		126,340	0.71	%	17.51	%
VIP Fund - Overseas Portfolio - Service Class R (FOSR)
2009	0.00	%	37,807		12.269434		463,870	2.17	%	26.49	%
2009	0.50	%	307,164		11.986428		3,681,799	2.17	%	25.86	%
2009	0.80	%	56,862		11.819747		672,094	2.17	%	25.48	%
2008	0.00	%	43,474		9.699843		421,691	2.68	%	-43.88	%
2008	0.50	%	292,626		9.523623		2,786,860	2.68	%	-44.16	%
2008	0.80	%	68,191		9.419422		642,320	2.68	%	-44.33	%
2007	0.00	%	38,404		17.283296		663,748	3.21	%	17.23	%
2007	0.50	%	238,614		17.054609		4,069,468	3.21	%	16.64	%
2007	0.80	%	77,400		16.918813		1,309,516	3.21	%	16.29	%
2006	0.00	%	31,164		14.743687		459,472	0.77	%	17.95	%
2006	0.50	%	201,906		14.621895		2,952,248	0.77	%	17.36	%
2006	0.80	%	120,050		14.549286		1,746,642	0.77	%	17.01	%
2005	0.00	%	21,148		12.499996		264,350	0.00	%	25.00	%	5/2/2005
2005	0.50	%	108,508		12.458682		1,351,867	0.00	%	24.59	%	5/2/2005
2005	0.80	%	84,208		12.433969		1,047,040	0.00	%	24.34	%	5/2/2005
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
2009	0.00	%	21,462		13.061648		280,329	0.57	%	57.40	%
2009	0.50	%	63,858		12.570115		802,702	0.57	%	56.61	%
2009	0.80	%	6,437		12.284130		79,073	0.57	%	56.14	%
2009	1.00	%	9,300		12.097114		112,503	0.57	%	55.83	%
2008	0.00	%	20,161		8.298533		167,307	0.65	%	-51.17	%
2008	0.50	%	42,082		8.026295		337,763	0.65	%	-51.42	%
2008	0.80	%	6,539		7.867248		51,444	0.65	%	-51.57	%
2008	1.00	%	10,445		7.762982		81,084	0.65	%	-51.66	%
2007	0.00	%	21,268		16.996302		361,477	0.83	%	5.60	%
2007	0.50	%	40,724		16.521474		672,821	0.83	%	5.07	%
2007	0.80	%	11,738		16.242952		190,660	0.83	%	4.75	%
2007	1.00	%	12,228		16.059906		196,381	0.83	%	4.54	%
2006	0.00	%	14,632		16.095011		235,502	0.41	%	16.20	%
2006	0.50	%	50,330		15.724226		791,400	0.41	%	15.62	%
2006	0.80	%	26,916		15.505844		417,355	0.41	%	15.27	%
2006	1.00	%	14,346		15.361961		220,383	0.41	%	15.04	%
2005	0.00	%	9,800		13.851491		135,745	0.00	%	2.55	%
2005	0.50	%	16,310		13.600017		221,816	0.00	%	2.04	%
2005	0.80	%	47,774		13.451310		642,623	0.00	%	1.74	%
2005	1.00	%	11,298		13.353090		150,863	0.00	%	1.54	%
2005	1.30	%	1,814		13.207092		23,958	0.00	%	1.23	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Franklin Income Securities Fund - Class 2 (FTVIS2)
2009	0.00	%	9,101	$	11.100337	$	101,024	8.10	%	35.59	%
2009	0.50	%	74,134		10.898585		807,956	8.10	%	34.92	%
2009	0.80	%	12,802		10.779315		137,997	8.10	%	34.52	%
2008	0.00	%	5,556		8.186428		45,484	5.40	%	-29.66	%
2008	0.50	%	70,902		8.077889		572,738	5.40	%	-30.01	%
2008	0.80	%	14,877		8.013465		119,216	5.40	%	-30.22	%
2007	0.00	%	11,684		11.637657		135,974	3.26	%	3.76	%
2007	0.50	%	81,232		11.541005		937,499	3.26	%	3.24	%
2007	0.80	%	16,636		11.483411		191,038	3.26	%	2.93	%
2006	0.00	%	7,444		11.216304		83,494	0.00	%	12.16	%	5/1/2006
2006	0.50	%	8,720		11.179202		97,483	0.00	%	11.79	%	5/1/2006
2006	0.80	%	13,168		11.157005		146,915	0.00	%	11.57	%	5/1/2006
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)
2009	0.00	%	13,906		13.984451		194,468	1.83	%	17.67	%
2009	0.50	%	144,617		13.525832		1,956,065	1.83	%	17.09	%
2009	0.80	%	20,222		13.257914		268,102	1.83	%	16.74	%
2008	0.00	%	20,335		11.884088		241,663	2.04	%	-26.94	%
2008	0.50	%	189,411		11.551986		2,188,073	2.04	%	-27.31	%
2008	0.80	%	40,517		11.357193		460,159	2.04	%	-27.53	%
2007	0.00	%	26,128		16.266644		425,015	2.53	%	-2.41	%
2007	0.50	%	167,510		15.891491		2,661,984	2.53	%	-2.90	%
2007	0.80	%	61,684		15.670578		966,624	2.53	%	-3.20	%
2006	0.00	%	23,316		16.669002		388,654	1.22	%	17.43	%
2006	0.50	%	137,920		16.366662		2,257,290	1.22	%	16.84	%
2006	0.80	%	112,826		16.187918		1,826,418	1.22	%	16.50	%
2005	0.00	%	20,818		14.195085		295,513	1.09	%	3.68	%
2005	0.50	%	76,976		14.007257		1,078,223	1.09	%	3.17	%
2005	0.80	%	136,502		13.895780		1,896,802	1.09	%	2.86	%
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)
2009	0.00	%	6,834		18.034685		123,249	1.94	%	29.54	%
2009	0.50	%	131,099		17.443192		2,286,785	1.94	%	28.90	%
2009	0.80	%	15,469		17.097660		264,484	1.94	%	28.51	%
2008	0.00	%	6,079		13.921598		84,629	1.44	%	-32.87	%
2008	0.50	%	125,323		13.532546		1,695,939	1.44	%	-33.21	%
2008	0.80	%	28,885		13.304370		384,297	1.44	%	-33.41	%
2007	0.00	%	7,310		20.738061		151,595	0.88	%	-2.14	%
2007	0.50	%	109,944		20.259847		2,227,449	0.88	%	-2.63	%
2007	0.80	%	37,560		19.978249		750,383	0.88	%	-2.92	%
2006	0.00	%	9,688		21.190555		205,294	0.82	%	17.30	%
2006	0.50	%	98,784		20.806303		2,055,330	0.82	%	16.72	%
2006	0.80	%	58,816		20.579116		1,210,381	0.82	%	16.37	%
2005	0.00	%	8,690		18.064784		156,983	0.91	%	8.99	%
2005	0.50	%	47,146		17.825857		840,418	0.91	%	8.45	%
2005	0.80	%	114,196		17.684023		2,019,445	0.91	%	8.12	%
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
2009	0.00	%	7,269		17.256364		125,437	3.67	%	72.63	%
2009	0.50	%	81,267		16.858387		1,370,031	3.67	%	71.77	%
2009	0.80	%	15,116		16.624073		251,289	3.67	%	71.26	%
2008	0.00	%	4,930		9.996007		49,280	2.79	%	-52.67	%
2008	0.50	%	63,172		9.814382		619,994	2.79	%	-52.91	%
2008	0.80	%	15,652		9.707016		151,934	2.79	%	-53.05	%
2007	0.00	%	12,404		21.120230		261,975	2.20	%	28.70	%
2007	0.50	%	102,474		20.840783		2,135,638	2.20	%	28.05	%
2007	0.80	%	31,074		20.674924		642,453	2.20	%	27.67	%
2006	0.00	%	13,590		16.410826		223,023	1.19	%	28.17	%
2006	0.50	%	47,562		16.275260		774,084	1.19	%	27.53	%
2006	0.80	%	41,104		16.194484		665,658	1.19	%	27.15	%
2005	0.00	%	14,152		12.804274		181,206	0.53	%	28.04	%	5/2/2005
2005	0.50	%	17,310		12.761961		220,910	0.53	%	27.62	%	5/2/2005
2005	0.80	%	18,806		12.736654		239,526	0.53	%	27.37	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Templeton Foreign Securities Fund - Class 1 (TIF)
2009	0.00	%	176	$	20.155256	$	3,547	4.14	%	37.34	%
2009	0.50	%	14,701		19.494379		286,587	4.14	%	36.66	%
2009	0.80	%	1,483		19.108316		28,338	4.14	%	36.25	%
2008	0.00	%	1,659		14.675305		24,346	2.70	%	-40.23	%
2008	0.50	%	22,899		14.265245		326,660	2.70	%	-40.53	%
2008	0.80	%	1,945		14.024745		27,278	2.70	%	-40.71	%
2007	0.00	%	5,050		24.554735		124,001	2.23	%	15.79	%
2007	0.50	%	21,480		23.988549		515,274	2.23	%	15.21	%
2007	0.80	%	7,764		23.655125		183,658	2.23	%	14.86	%
2006	0.00	%	6,940		21.206570		147,174	1.41	%	21.70	%
2006	0.50	%	26,826		20.821962		558,570	1.41	%	21.09	%
2006	0.80	%	20,280		20.594561		417,658	1.41	%	20.73	%
2005	0.00	%	8,296		17.425708		144,564	1.37	%	10.48	%
2005	0.50	%	26,236		17.195159		451,132	1.37	%	9.93	%
2005	0.80	%	46,522		17.058302		793,586	1.37	%	9.60	%
Templeton Foreign Securities Fund - Class 3 (TIF3)
2009	0.00	%	12,029		12.945045		155,716	3.88	%	37.20	%
2009	0.50	%	75,293		12.646528		952,195	3.88	%	36.51	%
2009	0.80	%	10,766		12.470682		134,259	3.88	%	36.10	%
2008	0.00	%	25,525		9.435374		240,838	2.47	%	-40.39	%
2008	0.50	%	112,327		9.263979		1,040,595	2.47	%	-40.69	%
2008	0.80	%	16,543		9.162606		151,577	2.47	%	-40.87	%
2007	0.00	%	29,610		15.828965		468,696	2.03	%	15.45	%
2007	0.50	%	118,810		15.619506		1,855,754	2.03	%	14.87	%
2007	0.80	%	25,180		15.495120		390,167	2.03	%	14.52	%
2006	0.00	%	28,060		13.711150		384,735	1.38	%	21.46	%
2006	0.50	%	54,682		13.597883		743,559	1.38	%	20.86	%
2006	0.80	%	35,494		13.530342		480,246	1.38	%	20.50	%
2005	0.00	%	21,384		11.288544		241,394	0.39	%	12.89	%	5/2/2005
2005	0.50	%	21,078		11.251218		237,153	0.39	%	12.51	%	5/2/2005
2005	0.80	%	19,372		11.228867		217,526	0.39	%	12.29	%	5/2/2005
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
2009	0.00	%	16,059		15.605635		250,611	14.02	%	18.69	%
2009	0.50	%	131,249		15.245867		2,001,005	14.02	%	18.09	%
2009	0.80	%	15,279		15.033976		229,704	14.02	%	17.74	%
2008	0.00	%	19,081		13.148675		250,890	4.26	%	6.21	%
2008	0.50	%	169,130		12.909918		2,183,454	4.26	%	5.68	%
2008	0.80	%	19,316		12.768726		246,641	4.26	%	5.36	%
2007	0.00	%	12,206		12.380292		151,114	2.64	%	11.03	%
2007	0.50	%	120,218		12.216405		1,468,632	2.64	%	10.48	%
2007	0.80	%	9,674		12.119103		117,240	2.64	%	10.14	%
2006	0.00	%	1,668		11.150160		18,598	2.45	%	12.84	%
2006	0.50	%	14,172		11.057995		156,714	2.45	%	12.28	%
2006	0.80	%	19,066		11.003055		209,784	2.45	%	11.95	%
2005	0.00	%	1,034		9.881172		10,217	7.95	%	-1.19	%	5/2/2005
2005	0.50	%	2,394		9.848458		23,577	7.95	%	-1.52	%	5/2/2005
2005	0.80	%	2,864		9.828879		28,150	7.95	%	-1.71	%	5/2/2005
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
2009	0.00	%	1,014		8.669683		8,791	4.16	%	30.25	%
2009	0.50	%	1,011		8.597673		8,692	4.16	%	29.60	%
2009	0.80	%	1,461		8.554781		12,499	4.16	%	29.21	%
2008	0.50	%	1,402		6.633927		9,301	7.17	%	-33.66	%	5/1/2008
2008	0.80	%	149		6.620645		986	7.17	%	-33.79	%	5/1/2008
Balanced Portfolio - I Class Shares (AMBP)
2009	0.50	%	2,307		10.742321		24,783	1.16	%	21.86	%
2009	0.80	%	1,017		23.066620		23,459	1.16	%	21.49	%
2008	0.50	%	17,915		8.815611		157,932	3.77	%	-39.45	%
2008	0.80	%	1,334		18.986328		25,328	3.77	%	-39.63	%
2007	0.50	%	14,752		14.559590		214,783	0.81	%	15.02	%
2007	0.80	%	1,448		31.451710		45,542	0.81	%	14.68	%
2006	0.50	%	1,380		12.657889		17,468	0.77	%	10.12	%
2006	0.80	%	852		27.426214		23,367	0.77	%	9.79	%
2005	0.50	%	1,038		11.494958		11,932	1.03	%	8.64	%
2005	0.80	%	1,268		24.981076		31,676	1.03	%	8.31	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Growth Portfolio - I Class Shares (AMTG)
2009	0.00	%	49,082	$	16.741370	$	821,700	0.00	%	30.36	%
2009	0.50	%	1,850		39.266295		72,643	0.00	%	29.71	%
2009	0.80	%	542		26.417094		14,318	0.00	%	29.32	%
2009	1.00	%	151,381		5.586407		845,676	0.00	%	29.06	%
2008	0.00	%	63,596		12.842535		816,734	0.00	%	-43.68	%
2008	0.50	%	175,438		30.272680		5,310,978	0.00	%	-43.96	%
2008	0.80	%	144,350		20.427668		2,948,734	0.00	%	-44.13	%
2008	1.00	%	159,176		4.328471		688,989	0.00	%	-44.24	%
2007	0.00	%	64,996		22.802283		1,482,057	0.00	%	22.70	%
2007	0.50	%	180,172		54.020381		9,732,960	0.00	%	22.08	%
2007	0.80	%	185,704		36.562250		6,789,756	0.00	%	21.71	%
2007	1.00	%	181,806		7.762827		1,411,329	0.00	%	21.47	%
2006	0.00	%	77,208		18.584451		1,434,868	0.00	%	14.07	%
2006	0.50	%	157,596		44.249809		6,973,593	0.00	%	13.50	%
2006	0.80	%	262,710		30.039737		7,891,739	0.00	%	13.16	%
2006	1.00	%	200,916		6.390816		1,284,017	0.00	%	12.94	%
2006	1.30	%	1,860		28.970099		53,884	0.00	%	12.60	%
2005	0.00	%	74,162		16.292408		1,208,278	0.00	%	13.50	%
2005	0.50	%	111,124		38.986368		4,332,321	0.00	%	12.93	%
2005	0.80	%	370,758		26.545874		9,842,095	0.00	%	12.60	%
2005	1.00	%	189,716		5.658791		1,073,563	0.00	%	12.37	%
2005	1.30	%	8,346		25.728636		214,731	0.00	%	12.04	%
Guardian Portfolio - I Class Shares (AMGP)
2009	0.00	%	4,964		12.922921		64,149	0.18	%	29.69	%
2009	0.80	%	2		11.770887		24	0.18	%	28.65	%
2009	1.00	%	4,336		10.336808		44,820	0.18	%	28.40	%
2008	0.00	%	10,705		9.964594		106,671	0.55	%	-37.24	%
2008	0.50	%	58,317		9.446847		550,912	0.55	%	-37.56	%
2008	0.80	%	38,898		9.149198		355,886	0.55	%	-37.75	%
2008	1.00	%	4,064		8.050613		32,718	0.55	%	-37.87	%
2007	0.00	%	13,170		15.878484		209,120	0.26	%	7.39	%
2007	0.50	%	58,036		15.129140		878,035	0.26	%	6.85	%
2007	0.80	%	47,724		14.696621		701,382	0.26	%	6.53	%
2007	1.00	%	4,748		12.957908		61,524	0.26	%	6.31	%
2006	0.00	%	20,178		14.786128		298,354	0.67	%	13.38	%
2006	0.50	%	44,048		14.159327		623,690	0.67	%	12.81	%
2006	0.80	%	73,922		13.796076		1,019,834	0.67	%	12.48	%
2006	1.00	%	7,572		12.188388		92,290	0.67	%	12.25	%
2005	0.00	%	23,910		13.041591		311,824	0.14	%	8.39	%
2005	0.50	%	42,392		12.551167		532,069	0.14	%	7.85	%
2005	0.80	%	88,548		12.265806		1,086,113	0.14	%	7.53	%
2005	1.00	%	2,788		10.858076		30,272	0.14	%	7.32	%
International Portfolio - S Class Shares (AMINS)
2009	0.00	%	1,548		10.787351		16,699	0.42	%	34.51	%
2008	0.00	%	3,270		8.019658		26,224	0.00	%	-46.44	%
2008	0.50	%	15,954		7.873922		125,621	0.00	%	-46.70	%
2008	0.80	%	5,065		7.787751		39,445	0.00	%	-46.86	%
2007	0.00	%	5,680		14.972222		85,042	1.68	%	3.21	%
2007	0.50	%	17,036		14.774055		251,691	1.68	%	2.70	%
2007	0.80	%	8,240		14.656417		120,769	1.68	%	2.39	%
2006	0.00	%	5,640		14.506093		81,814	0.00	%	23.45	%
2006	0.50	%	8,138		14.386244		117,075	0.00	%	22.84	%
2006	0.80	%	8,786		14.314811		125,770	0.00	%	22.47	%
2005	0.00	%	2,516		11.750261		29,564	0.22	%	17.50	%	5/2/2005
2005	0.50	%	490		11.711411		5,739	0.22	%	17.11	%	5/2/2005
2005	0.80	%	58,070		11.688169		678,732	0.22	%	16.88	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)
2009	0.00	%	558	$	16.830660	$	9,392	0.00	%	31.34	%
2008	0.00	%	976		12.814531		12,507	0.00	%	-43.51	%
2008	0.50	%	22,678		12.456353		282,485	0.00	%	-43.79	%
2008	0.80	%	2,547		12.246316		31,191	0.00	%	-43.96	%
2007	0.00	%	950		22.685497		21,551	0.00	%	22.20	%
2007	0.50	%	31,008		22.162337		687,210	0.00	%	21.59	%
2007	0.80	%	6,654		21.854333		145,419	0.00	%	21.22	%
2006	0.50	%	17,228		18.227772		314,028	0.00	%	13.90	%
2006	0.80	%	11,910		18.028719		214,722	0.00	%	13.56	%
2005	0.00	%	2,328		16.217741		37,755	0.00	%	13.42	%
2005	0.50	%	5,284		16.003177		84,561	0.00	%	12.86	%
2005	0.80	%	9,044		15.875842		143,581	0.00	%	12.52	%
Partners Portfolio - I Class Shares (AMTP)
2009	0.00	%	105,319		21.642878		2,279,406	0.78	%	56.07	%
2009	0.80	%	56		29.690132		1,663	0.78	%	54.83	%
2009	1.00	%	76,445		11.689700		893,619	0.78	%	54.52	%
2008	0.00	%	180,300		13.867013		2,500,222	0.51	%	-52.39	%
2008	0.50	%	356,536		19.700792		7,024,042	0.51	%	-52.63	%
2008	0.80	%	109,268		19.175837		2,095,305	0.51	%	-52.77	%
2008	1.00	%	65,586		7.565098		496,165	0.51	%	-52.87	%
2007	0.00	%	179,968		29.127775		5,242,067	0.64	%	9.34	%
2007	0.50	%	325,884		41.589921		13,553,490	0.64	%	8.79	%
2007	0.80	%	193,268		40.603834		7,847,422	0.64	%	8.46	%
2007	1.00	%	86,432		16.050889		1,387,310	0.64	%	8.24	%
2006	0.00	%	188,418		26.640503		5,019,550	0.71	%	12.24	%
2006	0.50	%	241,712		38.230288		9,240,719	0.71	%	11.68	%
2006	0.80	%	317,204		37.436671		11,875,062	0.71	%	11.35	%
2006	1.00	%	89,328		14.828703		1,324,618	0.71	%	11.13	%
2006	1.30	%	190		35.184666		6,685	0.71	%	10.80	%
2005	0.00	%	203,136		23.735143		4,821,462	1.02	%	18.04	%
2005	0.50	%	163,828		34.231207		5,608,030	1.02	%	17.46	%
2005	0.80	%	450,896		33.621038		15,159,592	1.02	%	17.11	%
2005	1.00	%	78,466		13.343910		1,047,043	1.02	%	16.87	%
2005	1.30	%	22,258		31.756491		706,836	1.02	%	16.53	%
Regency Portfolio - S Class Shares (AMRS)
2009	0.00	%	2,195		10.532952		23,120	0.22	%	46.16	%
2008	0.00	%	6,436		7.206627		46,382	0.97	%	-45.95	%
2008	0.50	%	10,755		7.075613		76,098	0.97	%	-46.22	%
2008	0.80	%	2,044		6.998160		14,304	0.97	%	-46.38	%
2007	0.00	%	6,414		13.332382		85,514	0.66	%	3.05	%
2007	0.50	%	13,016		13.155851		171,237	0.66	%	2.54	%
2007	0.80	%	1,678		13.051065		21,900	0.66	%	2.23	%
2006	0.00	%	4,738		12.937253		61,297	0.44	%	10.94	%
2006	0.50	%	5,576		12.830334		71,542	0.44	%	10.38	%
2006	0.80	%	2,974		12.766616		37,968	0.44	%	10.05	%
2005	0.00	%	2,786		11.661977		32,490	0.00	%	16.62	%	5/2/2005
2005	0.50	%	2,318		11.623425		26,943	0.00	%	16.23	%	5/2/2005
2005	0.80	%	2,398		11.600355		27,818	0.00	%	16.00	%	5/2/2005
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
2009	0.00	%	646		11.408745		7,370	0.00	%	22.75	%
2009	0.50	%	6,371		11.034565		70,301	0.00	%	22.14	%
2009	0.80	%	384		10.815956		4,153	0.00	%	21.78	%
2008	0.00	%	605		9.293948		5,623	0.00	%	-39.47	%
2008	0.50	%	7,742		9.034200		69,943	0.00	%	-39.78	%
2008	0.80	%	554		8.881843		4,921	0.00	%	-39.96	%
2007	0.00	%	544		15.355015		8,353	0.00	%	0.52	%
2007	0.50	%	5,616		15.000871		84,245	0.00	%	0.01	%
2007	0.80	%	514		14.792303		7,603	0.00	%	-0.29	%
2006	0.00	%	34		15.276302		519	0.00	%	5.25	%
2006	0.50	%	3,464		14.999207		51,957	0.00	%	4.73	%
2006	0.80	%	2,652		14.835360		39,343	0.00	%	4.42	%
2005	0.00	%	854		14.513954		12,395	0.00	%	2.90	%
2005	0.50	%	5,906		14.321953		84,585	0.00	%	2.39	%
2005	0.80	%	1,526		14.207958		21,681	0.00	%	2.08	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Socially Responsive Portfolio - I Class Shares (AMSRS)
2009	0.00	%	984	$	14.587514	$	14,354	2.20	%	31.43	%
2009	0.50	%	17,264		14.109102		243,580	2.20	%	30.77	%
2009	0.80	%	3,343		13.829593		46,232	2.20	%	30.38	%
2008	0.00	%	1,900		11.099348		21,089	1.91	%	-39.44	%
2008	0.50	%	17,024		10.789157		183,675	1.91	%	-39.74	%
2008	0.80	%	4,401		10.607196		46,682	1.91	%	-39.93	%
2007	0.00	%	2,698		18.328379		49,450	0.09	%	7.61	%
2007	0.50	%	17,622		17.905737		315,535	0.09	%	7.07	%
2007	0.80	%	5,562		17.656802		98,207	0.09	%	6.75	%
2006	0.00	%	1,732		17.031699		29,499	0.17	%	13.70	%
2006	0.50	%	14,184		16.722808		237,196	0.17	%	13.14	%
2006	0.80	%	9,890		16.540130		163,582	0.17	%	12.80	%
2005	0.00	%	2,042		14.979202		30,588	0.00	%	6.86	%
2005	0.50	%	2,512		14.781029		37,130	0.00	%	6.33	%
2005	0.80	%	7,910		14.663357		115,987	0.00	%	6.01	%
Balanced Fund/VA - Non-Service Shares (OVMS)
2009	0.00	%	39,179		16.930557		663,322	0.00	%	21.89	%
2009	0.50	%	128,001		27.502607		3,520,361	0.00	%	21.29	%
2009	0.80	%	51,885		25.732996		1,335,156	0.00	%	20.92	%
2009	1.00	%	101,706		9.433696		959,463	0.00	%	20.68	%
2008	0.00	%	45,187		13.889629		627,631	2.88	%	-43.47	%
2008	0.50	%	155,033		22.675909		3,515,514	2.88	%	-43.75	%
2008	0.80	%	60,265		21.280608		1,282,476	2.88	%	-43.92	%
2008	1.00	%	114,661		7.817080		896,314	2.88	%	-44.04	%
2007	0.00	%	51,554		24.570849		1,266,726	2.57	%	3.79	%
2007	0.50	%	155,028		40.315421		6,250,019	2.57	%	3.27	%
2007	0.80	%	85,350		37.948682		3,238,920	2.57	%	2.96	%
2007	1.00	%	129,370		13.967806		1,807,015	2.57	%	2.75	%
2006	0.00	%	64,490		23.674314		1,526,757	2.13	%	11.15	%
2006	0.50	%	124,154		39.040157		4,846,992	2.13	%	10.59	%
2006	0.80	%	146,968		36.859294		5,417,137	2.13	%	10.26	%
2006	1.00	%	143,020		13.594148		1,944,235	2.13	%	10.04	%
2005	0.00	%	72,064		21.300283		1,534,984	1.76	%	3.89	%
2005	0.50	%	102,966		35.300804		3,634,783	1.76	%	3.37	%
2005	0.80	%	211,716		33.428671		7,077,385	1.76	%	3.06	%
2005	1.00	%	127,708		12.353496		1,577,640	1.76	%	2.86	%
2005	1.30	%	8,748		32.399586		283,432	1.76	%	2.55	%
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
2009	0.00	%	47,969		16.786468		805,230	0.33	%	44.52	%
2009	0.50	%	249,796		15.724961		3,928,032	0.33	%	43.80	%
2009	0.80	%	87,828		15.192792		1,334,353	0.33	%	43.37	%
2009	1.00	%	60,996		7.628780		465,325	0.33	%	43.08	%
2008	0.00	%	52,077		11.615515		604,901	0.15	%	-45.52	%
2008	0.50	%	253,957		10.935515		2,777,151	0.15	%	-45.79	%
2008	0.80	%	132,297		10.597162		1,401,973	0.15	%	-45.95	%
2008	1.00	%	65,793		5.331812		350,796	0.15	%	-46.06	%
2007	0.00	%	58,424		21.319679		1,245,581	0.23	%	14.15	%
2007	0.50	%	221,522		20.172546		4,468,663	0.23	%	13.58	%
2007	0.80	%	209,154		19.607337		4,100,953	0.23	%	13.23	%
2007	1.00	%	70,288		9.884979		694,795	0.23	%	13.01	%
2006	0.00	%	68,276		18.677035		1,275,193	0.38	%	7.95	%
2006	0.50	%	195,220		17.761150		3,467,332	0.38	%	7.41	%
2006	0.80	%	329,602		17.315647		5,707,272	0.38	%	7.09	%
2006	1.00	%	77,536		8.747201		678,223	0.38	%	6.88	%
2006	1.30	%	1,892		16.515549		31,247	0.38	%	6.56	%
2005	0.00	%	81,160		17.301818		1,404,216	0.93	%	5.10	%
2005	0.50	%	154,400		16.535627		2,553,101	0.93	%	4.58	%
2005	0.80	%	488,450		16.169181		7,897,836	0.93	%	4.26	%
2005	1.00	%	112,070		8.184351		917,220	0.93	%	4.06	%
2005	1.30	%	10,204		15.499156		158,153	0.93	%	3.75	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Core Bond Fund/VA - Non-Service Shares (OVB)
2009	0.00	%	77,718	$	12.946581	$	1,006,182	0.00	%	9.61	%
2009	0.50	%	149,430		19.277481		2,880,634	0.00	%	9.07	%
2009	0.80	%	46,461		17.280243		802,857	0.00	%	8.74	%
2009	1.00	%	45,493		9.292438		422,741	0.00	%	8.52	%
2008	0.00	%	78,790		11.811237		930,607	4.71	%	-39.05	%
2008	0.50	%	190,845		17.675063		3,373,197	4.71	%	-39.35	%
2008	0.80	%	61,738		15.891423		981,105	4.71	%	-39.54	%
2008	1.00	%	49,540		8.562713		424,197	4.71	%	-39.66	%
2007	0.00	%	85,066		19.378308		1,648,435	5.26	%	4.39	%
2007	0.50	%	210,962		29.144443		6,148,370	5.26	%	3.87	%
2007	0.80	%	87,142		26.282217		2,290,285	5.26	%	3.56	%
2007	1.00	%	51,906		14.189932		736,543	5.26	%	3.35	%
2006	0.00	%	87,354		18.563148		1,621,565	5.20	%	5.28	%
2006	0.50	%	192,508		28.059142		5,401,609	5.20	%	4.76	%
2006	0.80	%	146,462		25.379927		3,717,195	5.20	%	4.44	%
2006	1.00	%	50,010		13.730362		686,655	5.20	%	4.23	%
2006	1.30	%	952		25.434609		24,214	5.20	%	3.92	%
2005	0.00	%	91,754		17.632382		1,617,842	5.34	%	2.59	%
2005	0.50	%	85,328		26.785454		2,285,549	5.34	%	2.08	%
2005	0.80	%	276,654		24.300441		6,722,814	5.34	%	1.77	%
2005	1.00	%	32,080		13.172613		422,577	5.34	%	1.57	%
2005	1.30	%	8,382		24.474528		205,145	5.34	%	1.27	%
Global Securities Fund/VA - Class 3 (OVGS3)
2009	0.00	%	35,638		12.609317		449,371	2.12	%	39.70	%
2009	0.50	%	424,101		12.318451		5,224,267	2.12	%	39.00	%
2009	0.80	%	116,945		12.147187		1,420,553	2.12	%	38.58	%
2008	0.00	%	38,920		9.026171		351,299	1.48	%	-40.19	%
2008	0.50	%	398,806		8.862171		3,534,287	1.48	%	-40.49	%
2008	0.80	%	126,475		8.765213		1,108,580	1.48	%	-40.67	%
2007	0.00	%	48,132		15.092302		726,423	1.25	%	6.34	%
2007	0.50	%	337,926		14.892546		5,032,578	1.25	%	5.80	%
2007	0.80	%	160,562		14.773970		2,372,138	1.25	%	5.49	%
2006	0.00	%	44,318		14.192798		628,996	0.80	%	17.69	%
2006	0.50	%	200,308		14.075542		2,819,444	0.80	%	17.10	%
2006	0.80	%	235,194		14.005648		3,294,044	0.80	%	16.75	%
2005	0.00	%	28,160		12.059670		339,600	0.00	%	20.60	%	5/2/2005
2005	0.50	%	63,366		12.019802		761,647	0.00	%	20.20	%	5/2/2005
2005	0.80	%	156,170		11.995949		1,873,407	0.00	%	19.96	%	5/2/2005
Global Securities Fund/VA - Non-Service Shares (OVGS)
2009	0.00	%	44,678		35.181581		1,571,843	2.37	%	39.77	%
2009	0.50	%	297,880		40.624738		12,101,297	2.37	%	39.07	%
2009	0.80	%	60,528		39.473604		2,389,258	2.37	%	38.66	%
2009	1.00	%	93,248		12.278657		1,144,960	2.37	%	38.38	%
2008	0.00	%	56,933		25.170686		1,433,043	1.59	%	-40.19	%
2008	0.50	%	367,478		29.210698		10,734,289	1.59	%	-40.49	%
2008	0.80	%	83,287		28.468276		2,371,037	1.59	%	-40.67	%
2008	1.00	%	141,920		8.873074		1,259,267	1.59	%	-40.78	%
2007	0.00	%	69,624		42.082850		2,929,976	1.37	%	6.32	%
2007	0.50	%	400,936		49.082767		19,679,048	1.37	%	5.79	%
2007	0.80	%	148,584		47.979344		7,128,963	1.37	%	5.47	%
2007	1.00	%	157,904		14.984363		2,366,091	1.37	%	5.26	%
2007	1.30	%	338		44.680582		15,102	1.37	%	4.94	%
2006	0.00	%	80,632		39.581622		3,191,545	1.04	%	17.69	%
2006	0.50	%	342,600		46.398150		15,896,006	1.04	%	17.11	%
2006	0.80	%	314,678		45.492106		14,315,365	1.04	%	16.76	%
2006	1.00	%	160,988		14.236174		2,291,853	1.04	%	16.52	%
2006	1.30	%	3,734		42.577872		158,986	1.04	%	16.18	%
2005	0.00	%	90,550		33.631650		3,045,346	1.07	%	14.31	%
2005	0.50	%	262,628		39.620511		10,405,456	1.07	%	13.74	%
2005	0.80	%	519,226		38.963173		20,230,692	1.07	%	13.40	%
2005	1.00	%	136,196		12.217371		1,663,957	1.07	%	13.17	%
2005	1.30	%	20,412		36.649419		748,088	1.07	%	12.84	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
High Income Fund/VA - Class 3 (OVHI3)
2009	0.00	%	3,525	$	2.584961	$	9,112	0.00	%	26.75	%
2009	0.50	%	51,883		2.550630		132,334	0.00	%	26.12	%
2009	0.80	%	6,895		2.530249		17,446	0.00	%	25.74	%
2008	0.00	%	1,322		2.039384		2,696	5.94	%	-78.89	%
2008	0.50	%	19,624		2.022384		39,687	5.94	%	-79.00	%
2008	0.80	%	4,411		2.012256		8,876	5.94	%	-79.06	%
2007	0.50	%	7,982		9.628770		76,857	0.00	%	-3.71	%	5/1/2007
2007	0.80	%	2,712		9.609476		26,061	0.00	%	-3.91	%	5/1/2007
High Income Fund/VA - Non-Service Shares (OVHI)
2009	0.00	%	7,571		3.642267		27,576	0.00	%	25.32	%
2009	0.50	%	9,956		3.522783		35,073	0.00	%	24.69	%
2009	0.80	%	2,712		3.452973		9,364	0.00	%	24.32	%
2008	0.00	%	6,661		2.906468		19,360	8.31	%	-78.67	%
2008	0.50	%	13,066		2.825197		36,914	8.31	%	-78.78	%
2008	0.80	%	3,640		2.777517		10,110	8.31	%	-78.84	%
2007	0.00	%	8,188		13.627157		111,579	6.11	%	-0.10	%
2007	0.50	%	17,012		13.312822		226,478	6.11	%	-0.60	%
2007	0.80	%	7,928		13.127703		104,076	6.11	%	-0.90	%
2006	0.00	%	9,746		13.641009		132,945	6.97	%	9.42	%
2006	0.50	%	22,010		13.393515		294,791	6.97	%	8.88	%
2006	0.80	%	17,852		13.247178		236,489	6.97	%	8.55	%
2005	0.00	%	8,710		12.466334		108,582	6.75	%	2.31	%
2005	0.50	%	17,466		12.301306		214,855	6.75	%	1.80	%
2005	0.80	%	20,712		12.203356		252,756	6.75	%	1.50	%
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
2009	0.00	%	29,189		9.205990		268,714	2.19	%	28.29	%
2009	0.50	%	82,465		8.771479		723,340	2.19	%	27.65	%
2009	0.80	%	15,097		8.520671		128,637	2.19	%	27.26	%
2009	1.00	%	3,186		8.352856		26,612	2.19	%	27.01	%
2008	0.00	%	30,415		7.176149		218,263	1.52	%	-38.47	%
2008	0.50	%	103,392		6.871720		710,481	1.52	%	-38.78	%
2008	0.80	%	19,090		6.695296		127,813	1.52	%	-38.96	%
2008	1.00	%	4,092		6.576580		26,911	1.52	%	-39.08	%
2007	0.00	%	39,470		11.662711		460,327	1.00	%	4.42	%
2007	0.50	%	98,264		11.224071		1,102,922	1.00	%	3.90	%
2007	0.80	%	29,480		10.968850		323,362	1.00	%	3.59	%
2007	1.00	%	6,962		10.795993		75,162	1.00	%	3.38	%
2006	0.00	%	40,880		11.168617		456,573	1.11	%	15.02	%
2006	0.50	%	116,614		10.802733		1,259,750	1.11	%	14.45	%
2006	0.80	%	57,418		10.588991		607,999	1.11	%	14.11	%
2006	1.00	%	7,816		10.443096		81,623	1.11	%	13.88	%
2005	0.00	%	44,198		9.709756		429,152	1.25	%	5.98	%
2005	0.50	%	48,678		9.438598		459,452	1.25	%	5.45	%
2005	0.80	%	92,862		9.279543		861,717	1.25	%	5.13	%
2005	1.00	%	16,864		9.169966		154,642	1.25	%	4.92	%
2005	1.30	%	2,664		9.020429		24,030	1.25	%	4.61	%
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
2009	0.00	%	4,551		17.642817		80,292	0.68	%	37.20	%
2009	0.50	%	39,875		17.064211		680,435	0.68	%	36.51	%
2009	0.80	%	8,853		16.726211		148,077	0.68	%	36.10	%
2008	0.00	%	4,707		12.859537		60,530	0.59	%	-37.83	%
2008	0.50	%	28,448		12.500175		355,605	0.59	%	-38.14	%
2008	0.80	%	7,267		12.289407		89,307	0.59	%	-38.33	%
2007	0.00	%	6,170		20.683895		127,620	0.32	%	-1.21	%
2007	0.50	%	38,846		20.206983		784,960	0.32	%	-1.71	%
2007	0.80	%	14,068		19.926143		280,321	0.32	%	-2.00	%
2006	0.00	%	2,530		20.937110		52,971	0.14	%	15.00	%
2006	0.50	%	28,656		20.557489		589,095	0.14	%	14.43	%
2006	0.80	%	24,146		20.333041		490,962	0.14	%	14.08	%
2005	0.00	%	1,242		18.206560		22,613	0.00	%	9.92	%
2005	0.50	%	6,094		17.965801		109,484	0.00	%	9.37	%
2005	0.80	%	28,068		17.822891		500,253	0.00	%	9.05	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
MidCap Fund/VA - Non-Service Shares (OVAG)
2009	0.00	%	5,414	$	4.851779	$	26,268	0.00	%	32.61	%
2009	0.50	%	101,283		4.622700		468,201	0.00	%	31.95	%
2009	0.80	%	47,057		4.490472		211,308	0.00	%	31.55	%
2009	1.00	%	17,313		3.899260		67,508	0.00	%	31.29	%
2008	0.00	%	8,824		3.658769		32,285	0.00	%	-49.07	%
2008	0.50	%	100,993		3.503491		353,828	0.00	%	-49.32	%
2008	0.80	%	55,717		3.413488		190,189	0.00	%	-49.47	%
2008	1.00	%	9,419		2.970003		27,974	0.00	%	-49.57	%
2007	0.00	%	13,234		7.183358		95,065	0.00	%	6.33	%
2007	0.50	%	97,260		6.913096		672,368	0.00	%	5.80	%
2007	0.80	%	67,290		6.755828		454,600	0.00	%	5.48	%
2007	1.00	%	9,792		5.889904		57,674	0.00	%	5.27	%
2006	0.00	%	16,826		6.755577		113,669	0.00	%	2.96	%
2006	0.50	%	84,198		6.534169		550,164	0.00	%	2.44	%
2006	0.80	%	125,750		6.404804		805,404	0.00	%	2.14	%
2006	1.00	%	13,928		5.595113		77,929	0.00	%	1.93	%
2006	1.30	%	5,116		6.194874		31,693	0.00	%	1.63	%
2005	0.00	%	17,266		6.561616		113,293	0.00	%	12.33	%
2005	0.50	%	62,332		6.378300		397,572	0.00	%	11.77	%
2005	0.80	%	203,896		6.270767		1,278,584	0.00	%	11.43	%
2005	1.00	%	14,778		5.488955		81,116	0.00	%	11.21	%
2005	1.30	%	10,562		6.095550		64,381	0.00	%	10.88	%
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)
2009	0.00	%	1,048		10.965488		11,492	0.82	%	9.65	%	4/30/2009
2009	0.50	%	13,390		10.928657		146,335	0.82	%	9.29	%	4/30/2009
2009	0.80	%	1,381		10.906528		15,062	0.82	%	9.07	%	4/30/2009
Low Duration Portfolio - Administrative Class (PMVLDA)
2009	0.00	%	9,815		11.045905		108,416	1.46	%	10.46	%	4/30/2009
2009	0.50	%	128,861		11.008805		1,418,606	1.46	%	10.09	%	4/30/2009
2009	0.80	%	2,513		10.986514		27,609	1.46	%	9.87	%	4/30/2009
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
2009	0.50	%	3,027		12.178324		36,864	2.66	%	29.16	%
2009	0.80	%	1,647		11.937066		19,660	2.66	%	28.78	%
2008	0.50	%	3,157		9.428528		29,766	2.66	%	-39.00	%
2008	0.80	%	1,820		9.269509		16,871	2.66	%	-39.19	%
2007	0.50	%	5,046		15.457268		77,997	1.31	%	-6.51	%
2007	0.80	%	1,852		15.242345		28,229	1.31	%	-6.79	%
2006	0.50	%	4,488		16.533564		74,203	1.14	%	15.33	%
2006	0.80	%	2,546		16.352963		41,635	1.14	%	14.99	%
2005	0.00	%	1,222		14.527575		17,753	1.56	%	5.23	%
2005	0.50	%	486		14.335363		6,967	1.56	%	4.70	%
2005	0.80	%	6,136		14.221232		87,261	1.56	%	4.39	%
Putnam VT International Equity Fund - IB Shares (PVTIGB)
2009	0.00	%	482		16.132414		7,776	0.00	%	24.63	%
2009	0.50	%	10,114		15.603325		157,812	0.00	%	24.01	%
2009	0.80	%	2,481		15.294248		37,945	0.00	%	23.64	%
2008	0.00	%	482		12.943794		6,239	2.10	%	-43.95	%
2008	0.50	%	15,376		12.582056		193,462	2.10	%	-44.23	%
2008	0.80	%	3,303		12.369896		40,858	2.10	%	-44.40	%
2007	0.00	%	1,362		23.093467		31,453	2.65	%	8.37	%
2007	0.50	%	15,198		22.560940		342,881	2.65	%	7.82	%
2007	0.80	%	5,836		22.247335		129,835	2.65	%	7.50	%
2006	0.00	%	232		21.310423		4,944	0.44	%	27.72	%
2006	0.50	%	7,758		20.923951		162,328	0.44	%	27.08	%
2006	0.80	%	9,818		20.695424		203,188	0.44	%	26.70	%
2005	0.00	%	178		16.685441		2,970	1.11	%	12.20	%
2005	0.50	%	1,404		16.464692		23,116	1.11	%	11.64	%
2005	0.80	%	18,032		16.333628		294,528	1.11	%	11.31	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Putnam VT Voyager Fund - IB Shares (PVTVB)
2009	0.00	%	3,029	$	15.109296	$	45,766	0.21	%	63.90	%
2009	0.50	%	34,997		14.613809		511,439	0.21	%	63.08	%
2009	0.80	%	5,872		14.324349		84,113	0.21	%	62.59	%
2008	0.00	%	2,053		9.218880		18,926	0.00	%	-37.03	%
2008	0.50	%	1,698		8.961220		15,216	0.00	%	-37.35	%
2008	0.80	%	150		8.810096		1,322	0.00	%	-37.53	%
2007	0.00	%	2,622		14.640393		38,387	0.00	%	5.52	%
2007	0.50	%	1,450		14.302715		20,739	0.00	%	4.99	%
2007	0.80	%	1,028		14.103871		14,499	0.00	%	4.68	%
2006	0.00	%	2,660		13.874456		36,906	0.13	%	5.44	%
2006	0.50	%	1,246		13.622763		16,974	0.13	%	4.91	%
2006	0.80	%	2,010		13.473959		27,083	0.13	%	4.60	%
2005	0.00	%	2,746		13.159164		36,135	0.60	%	5.69	%
2005	0.50	%	2,788		12.985042		36,202	0.60	%	5.17	%
2005	0.80	%	2,700		12.881691		34,781	0.60	%	4.85	%
Blue Chip Growth Portfolio - II (TRBCG2)
2009	0.00	%	2,666		11.315697		30,168	0.00	%	41.79	%
2009	0.50	%	89,247		11.054670		986,596	0.00	%	41.08	%
2009	0.80	%	3,347		10.900900		36,485	0.00	%	40.66	%
2008	0.00	%	4,116		7.980543		32,848	0.10	%	-42.65	%
2008	0.50	%	59,543		7.835510		466,550	0.10	%	-42.94	%
2008	0.80	%	3,499		7.749732		27,116	0.10	%	-43.11	%
2007	0.00	%	2,696		13.915435		37,516	0.12	%	12.49	%
2007	0.50	%	41,802		13.731252		573,994	0.12	%	11.92	%
2007	0.80	%	4,272		13.621873		58,193	0.12	%	11.59	%
2006	0.00	%	3,280		12.370493		40,575	0.24	%	9.33	%
2006	0.50	%	16,190		12.268264		198,623	0.24	%	8.79	%
2006	0.80	%	9,592		12.207295		117,092	0.24	%	8.46	%
2005	0.00	%	2,948		11.314946		33,356	0.29	%	13.15	%	5/2/2005
2005	0.50	%	818		11.277528		9,225	0.29	%	12.78	%	5/2/2005
2005	0.80	%	17,726		11.255124		199,508	0.29	%	12.55	%	5/2/2005
Equity Income Portfolio - II (TREI2)
2009	0.00	%	5,619		10.380043		58,325	1.76	%	25.25	%
2009	0.50	%	108,382		10.140580		1,099,056	1.76	%	24.63	%
2009	0.80	%	12,364		9.999548		123,634	1.76	%	24.25	%
2008	0.00	%	5,181		8.287351		42,937	2.16	%	-36.26	%
2008	0.50	%	94,290		8.136757		767,215	2.16	%	-36.58	%
2008	0.80	%	15,819		8.047714		127,307	2.16	%	-36.77	%
2007	0.00	%	8,510		13.002714		110,653	1.53	%	3.03	%
2007	0.50	%	84,110		12.830632		1,079,184	1.53	%	2.51	%
2007	0.80	%	25,522		12.728449		324,855	1.53	%	2.20	%
2006	0.00	%	8,360		12.620348		105,506	1.59	%	18.65	%
2006	0.50	%	58,750		12.516081		735,320	1.59	%	18.06	%
2006	0.80	%	36,012		12.453914		448,490	1.59	%	17.70	%
2005	0.00	%	3,790		10.636871		40,314	1.20	%	6.37	%	5/2/2005
2005	0.50	%	5,032		10.601687		53,348	1.20	%	6.02	%	5/2/2005
2005	0.80	%	21,876		10.580627		231,462	1.20	%	5.81	%	5/2/2005
Limited-Term Bond Portfolio - II (TRLT2)
2009	0.00	%	2,944		12.056984		35,496	3.37	%	7.35	%
2008	0.00	%	3,811		11.230967		42,801	3.77	%	1.31	%
2008	0.50	%	129,334		11.026485		1,426,099	3.77	%	0.80	%
2008	0.80	%	2,934		10.905102		31,996	3.77	%	0.50	%
2007	0.00	%	3,446		11.086232		38,203	3.91	%	5.23	%
2007	0.50	%	30,906		10.939079		338,083	3.91	%	4.70	%
2007	0.80	%	1,904		10.851378		20,661	3.91	%	4.38	%
2006	0.50	%	1,008		10.448149		10,532	3.80	%	3.51	%
2006	0.80	%	4,952		10.395898		51,480	3.80	%	3.20	%
2005	0.50	%	540		10.094160		5,451	1.39	%	0.94	%	5/2/2005
2005	0.80	%	2,888		10.073971		29,094	1.39	%	0.74	%	5/2/2005

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)
2009	0.00	%	7,706	$	21.116276	$	162,722	3.78	%	5.98	%
2009	0.50	%	56,273		27.477379		1,546,235	3.78	%	5.45	%
2009	0.80	%	12,645		24.391466		308,430	3.78	%	5.14	%
2009	1.00	%	45,114		17.759052		801,182	3.78	%	4.93	%
2008	0.00	%	8,784		19.924512		175,017	8.29	%	3.61	%
2008	0.50	%	70,651		26.056562		1,840,922	8.29	%	3.09	%
2008	0.80	%	17,432		23.199721		404,418	8.29	%	2.78	%
2008	1.00	%	45,106		16.925172		763,427	8.29	%	2.58	%
2007	0.00	%	12,120		19.230801		233,077	5.77	%	9.71	%
2007	0.50	%	62,084		25.275372		1,569,196	5.77	%	9.16	%
2007	0.80	%	24,290		22.571765		548,268	5.77	%	8.83	%
2007	1.00	%	53,936		16.500009		889,944	5.77	%	8.61	%
2006	0.00	%	10,512		17.528628		184,261	8.51	%	6.48	%
2006	0.50	%	48,396		23.154258		1,120,573	8.51	%	5.95	%
2006	0.80	%	42,580		20.739979		883,108	8.51	%	5.63	%
2006	1.00	%	42,236		15.191481		641,627	8.51	%	5.42	%
2006	1.30	%	710		20.988551		14,902	8.51	%	5.11	%
2005	0.00	%	12,460		16.461869		205,115	7.55	%	-3.03	%
2005	0.50	%	43,868		21.853802		958,683	7.55	%	-3.51	%
2005	0.80	%	64,726		19.633767		1,270,815	7.55	%	-3.80	%
2005	1.00	%	44,648		14.409920		643,374	7.55	%	-3.99	%
2005	1.30	%	1,402		19.968392		27,996	7.55	%	-4.28	%
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
2009	0.00	%	56,278		24.061426		1,354,129	0.15	%	113.17	%
2009	0.50	%	227,315		22.420831		5,096,591	0.15	%	112.11	%
2009	0.80	%	40,628		21.680199		880,823	0.15	%	111.48	%
2009	1.00	%	45,255		24.681404		1,116,957	0.15	%	111.06	%
2008	0.00	%	56,089		11.287193		633,087	0.00	%	-64.78	%
2008	0.50	%	227,426		10.570206		2,403,940	0.00	%	-64.96	%
2008	0.80	%	58,189		10.251688		596,535	0.00	%	-65.06	%
2008	1.00	%	21,025		11.694155		245,870	0.00	%	-65.13	%
2007	0.00	%	66,814		32.046703		2,141,168	0.43	%	37.61	%
2007	0.50	%	266,244		30.162210		8,030,507	0.43	%	36.92	%
2007	0.80	%	93,500		29.341648		2,743,444	0.43	%	36.51	%
2007	1.00	%	36,120		33.537534		1,211,376	0.43	%	36.24	%
2006	0.00	%	71,040		23.287309		1,654,330	0.60	%	39.49	%
2006	0.50	%	193,210		22.028276		4,256,083	0.60	%	38.80	%
2006	0.80	%	204,428		21.493674		4,393,909	0.60	%	38.38	%
2006	1.00	%	39,850		24.616702		980,976	0.60	%	38.11	%
2005	0.00	%	83,034		16.694466		1,386,208	0.73	%	32.00	%
2005	0.50	%	142,848		15.870762		2,267,107	0.73	%	31.34	%
2005	0.80	%	293,746		15.531958		4,562,451	0.73	%	30.95	%
2005	1.00	%	33,638		17.824242		599,572	0.73	%	30.69	%
2005	1.30	%	9,088		14.846881		134,928	0.73	%	30.30	%
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)
2009	0.00	%	33,188		33.543671		1,113,247	0.25	%	57.54	%
2009	0.50	%	158,845		46.678903		7,414,710	0.25	%	56.75	%
2009	0.80	%	23,299		54.965986		1,280,653	0.25	%	56.28	%
2009	1.00	%	74,591		34.054133		2,540,132	0.25	%	55.97	%
2008	0.00	%	31,247		21.292768		665,335	0.27	%	-46.12	%
2008	0.50	%	155,614		29.779289		4,634,074	0.27	%	-46.39	%
2008	0.80	%	25,576		35.171514		899,547	0.27	%	-46.56	%
2008	1.00	%	52,929		21.834128		1,155,659	0.27	%	-46.66	%
2007	0.00	%	38,468		39.522005		1,520,332	0.11	%	45.36	%
2007	0.50	%	157,032		55.552048		8,723,449	0.11	%	44.63	%
2007	0.80	%	41,152		65.808830		2,708,165	0.11	%	44.19	%
2007	1.00	%	68,368		40.935533		2,798,681	0.11	%	43.90	%
2006	0.00	%	42,234		27.189640		1,148,327	0.07	%	24.49	%
2006	0.50	%	127,868		38.410275		4,911,445	0.07	%	23.87	%
2006	0.80	%	71,458		45.639544		3,261,311	0.07	%	23.50	%
2006	1.00	%	62,902		28.446616		1,789,349	0.07	%	23.26	%
2005	0.00	%	54,640		21.840496		1,193,365	0.30	%	51.67	%
2005	0.50	%	94,726		31.007818		2,937,247	0.30	%	50.92	%
2005	0.80	%	119,090		36.954214		4,400,877	0.30	%	50.47	%
2005	1.00	%	66,950		23.079126		1,545,147	0.30	%	50.17	%
2005	1.30	%	11,812		32.040853		378,467	0.30	%	49.72	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
2009	0.00	%	7,118	$	11.965580	$	85,171	0.07	%	19.66	%	5/1/2009
2009	0.50	%	91,769		11.925721		1,094,411	0.07	%	19.26	%	5/1/2009
2009	0.80	%	6,426		11.901851		76,481	0.07	%	19.02	%	5/1/2009
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
2009	0.00	%	3,962		22.692436		89,907	0.00	%	40.30	%
2009	1.00	%	20,769		14.982478		311,171	0.00	%	38.91	%
2008	0.00	%	11,945		16.173785		193,196	0.00	%	-44.36	%
2008	0.50	%	133,624		25.136864		3,358,888	0.00	%	-44.63	%
2008	0.80	%	35,861		24.548248		880,325	0.00	%	-44.80	%
2008	1.00	%	23,353		10.785912		251,883	0.00	%	-44.91	%
2007	0.00	%	14,270		29.066542		414,780	0.00	%	22.32	%
2007	0.50	%	135,048		45.401702		6,131,409	0.00	%	21.71	%
2007	0.80	%	44,382		44.472235		1,973,767	0.00	%	21.34	%
2007	1.00	%	25,612		19.579303		501,465	0.00	%	21.10	%
2006	0.00	%	14,944		23.762009		355,099	0.00	%	14.64	%
2006	0.50	%	128,414		37.303028		4,790,231	0.00	%	14.07	%
2006	0.80	%	70,852		36.649699		2,596,704	0.00	%	13.73	%
2006	1.00	%	25,940		16.167820		419,393	0.00	%	13.51	%
2006	1.30	%	468		34.057941		15,939	0.00	%	13.17	%
2005	0.00	%	16,270		20.726714		337,224	0.00	%	8.27	%
2005	0.50	%	83,820		32.700726		2,740,975	0.00	%	7.73	%
2005	0.80	%	130,268		32.224282		4,197,793	0.00	%	7.41	%
2005	1.00	%	30,292		14.243955		431,478	0.00	%	7.20	%
2005	1.30	%	2,946		30.095203		88,660	0.00	%	6.88	%
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
2009	0.00	%	21,340		28.761168		613,763	0.00	%	47.74	%
2009	0.50	%	416		53.345920		22,192	0.00	%	47.00	%
2009	0.80	%	145		51.940893		7,531	0.00	%	46.56	%
2009	1.00	%	112,638		11.976020		1,348,955	0.00	%	46.27	%
2008	0.00	%	47,683		19.467920		928,289	1.89	%	-40.10	%
2008	0.50	%	285,615		36.289861		10,364,929	1.89	%	-40.40	%
2008	0.80	%	117,513		35.440201		4,164,684	1.89	%	-40.58	%
2008	1.00	%	137,269		8.187802		1,123,931	1.89	%	-40.69	%
2007	0.00	%	55,488		32.499052		1,803,307	0.61	%	6.63	%
2007	0.50	%	313,396		60.885541		19,081,285	0.61	%	6.10	%
2007	0.80	%	145,372		59.639193		8,669,869	0.61	%	5.78	%
2007	1.00	%	146,392		13.806187		2,021,115	0.61	%	5.57	%
2006	0.00	%	63,616		30.477301		1,938,844	0.00	%	12.22	%
2006	0.50	%	290,006		57.385680		16,642,192	0.00	%	11.66	%
2006	0.80	%	232,092		56.380823		13,085,538	0.00	%	11.33	%
2006	1.00	%	160,034		13.078165		2,092,951	0.00	%	11.11	%
2006	1.30	%	448		52.395225		23,473	0.00	%	10.77	%
2005	0.00	%	70,754		27.158853		1,921,597	0.00	%	7.88	%
2005	0.50	%	200,868		51.392952		10,323,199	0.00	%	7.35	%
2005	0.80	%	373,488		50.644296		18,915,037	0.00	%	7.03	%
2005	1.00	%	179,860		11.770963		2,117,125	0.00	%	6.81	%
2005	1.30	%	6,228		47.299447		294,581	0.00	%	6.50	%
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
2009	0.00	%	101		13.201660		1,333	0.00	%	32.02	%	5/1/2009
2009	0.50	%	8,394		13.157716		110,446	0.00	%	31.58	%	5/1/2009
2009	0.80	%	2,262		13.131409		29,703	0.00	%	31.31	%	5/1/2009

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*		Units	Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
International Equity Flex I Portfolio (obsolete) (WIEP)
2008	0.00	%	49,413	$	10.593841	$	523,473	1.70	%	-41.03	%
2008	0.50	%	212,070		11.620666		2,464,395	1.70	%	-41.33	%
2008	0.80	%	62,405		11.295534		704,898	1.70	%	-41.51	%
2008	1.00	%	33,081		7.531248		249,141	1.70	%	-41.62	%
2007	0.00	%	56,358		17.966043		1,012,530	1.08	%	16.60	%
2007	0.50	%	215,496		19.806457		4,268,212	1.08	%	16.01	%
2007	0.80	%	91,976		19.310277		1,776,082	1.08	%	15.66	%
2007	1.00	%	39,182		12.900878		505,482	1.08	%	15.43	%
2006	0.00	%	90,002		15.408829		1,386,825	1.03	%	18.65	%
2006	0.50	%	169,282		17.072863		2,890,128	1.03	%	18.06	%
2006	0.80	%	174,476		16.695427		2,912,951	1.03	%	17.71	%
2006	1.00	%	25,416		11.176387		284,059	1.03	%	17.48	%
2006	1.30	%	10,164		15.763156		160,217	1.03	%	17.13	%
2005	0.00	%	94,820		12.986442		1,231,374	0.91	%	17.44	%
2005	0.50	%	62,308		14.460784		901,023	0.91	%	16.85	%
2005	0.80	%	320,444		14.183450		4,545,001	0.91	%	16.51	%
2005	1.00	%	15,960		9.513742		151,839	0.91	%	16.27	%
2005	1.30	%	24,184		13.458367		325,477	0.91	%	15.93	%
International Equity Flex II Portfolio (obsolete) (WVCP)
2009	0.50	%	5		10.887915		54	2.83	%	29.85	%
2009	0.80	%	29		10.529632		305	2.83	%	29.48	%
2008	0.00	%	8,201		8.953554		73,428	1.73	%	-46.75	%
2008	0.50	%	19,954		8.384838		167,311	1.73	%	-47.02	%
2008	0.80	%	7,287		8.132149		59,259	1.73	%	-47.18	%
2008	1.00	%	8,593		3.649703		31,362	1.73	%	-47.28	%
2007	0.00	%	8,174		16.814740		137,444	0.00	%	-3.96	%
2007	0.50	%	19,506		15.825884		308,700	0.00	%	-4.44	%
2007	0.80	%	13,468		15.395235		207,343	0.00	%	-4.73	%
2007	1.00	%	8,982		6.923255		62,185	0.00	%	-4.92	%
2006	0.00	%	11,692		17.507392		204,696	0.00	%	13.20	%
2006	0.50	%	16,544		16.560881		273,983	0.00	%	12.64	%
2006	0.80	%	24,796		16.158907		400,676	0.00	%	12.30	%
2006	1.00	%	8,040		7.281318		58,542	0.00	%	12.08	%
2005	0.00	%	12,466		15.465259		192,790	0.00	%	16.14	%
2005	0.50	%	12,544		14.702300		184,426	0.00	%	15.57	%
2005	0.80	%	36,140		14.388419		519,997	0.00	%	15.22	%
2005	1.00	%	3,714		6.496475		24,128	0.00	%	14.99	%
2005	1.30	%	2,682		13.753775		36,888	0.00	%	14.65	%
NVIT Mid Cap Growth Fund - Class I (obsolete) (SGRF)
2008	0.00	%	15,105		4.097736		61,896	0.00	%	-46.11	%
2008	0.50	%	73,346		3.923801		287,795	0.00	%	-46.38	%
2008	0.80	%	17,878		3.822964		68,347	0.00	%	-46.54	%
2008	1.00	%	19,961		3.514695		70,157	0.00	%	-46.65	%
2007	0.00	%	16,598		7.604065		126,212	0.00	%	9.01	%
2007	0.50	%	83,188		7.317914		608,763	0.00	%	8.47	%
2007	0.80	%	39,732		7.151367		284,138	0.00	%	8.14	%
2007	1.00	%	27,266		6.587921		179,626	0.00	%	7.92	%
2006	0.00	%	19,038		6.975264		132,795	0.00	%	9.91	%
2006	0.50	%	92,144		6.746610		621,660	0.00	%	9.36	%
2006	0.80	%	77,924		6.612974		515,309	0.00	%	9.03	%
2006	1.00	%	30,726		6.104214		187,558	0.00	%	8.82	%
2005	0.00	%	24,418		6.346461		154,968	0.00	%	9.74	%
2005	0.50	%	72,740		6.169108		448,741	0.00	%	9.20	%
2005	0.80	%	88,246		6.065031		535,215	0.00	%	8.87	%
2005	1.00	%	24,834		5.609609		139,309	0.00	%	8.65	%

(Continued)

NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate*	Units	Unit Fair Value	Contract Owners’ Equity	Investment Income Ratio**		Total Return***	Inception Date****
2009	Contract owners equity:				$	647,741,695
2008	Contract owners equity:				$	566,826,718
2007	Contract owners equity:				$	1,012,602,409
2006	Contract owners equity:				$	980,827,120
2005	Contract owners equity:				$	929,399,760

* This represents the annual contract expense rate of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying mutual funds and charges made directly to contract 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 policy and asset charges, that result in direct reductions to the contractholder accounts either through reductions in the 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 and includes a deduction only for expenses assessed through a reduction in the unit values. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Total return is not annualized if the underlying mutual fund option is initially offered, funded, or both, during the period presented.

**** This represents the date the underlying mutual fund option was initially added and funded. Total returns presented in years of initial offering represent the return for the period from the initial offering through year end.

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, 2009 and 2008, and the related consolidated statements of income (loss), changes in equity and cash flows for each of the years in the three-year period ended December 31, 2009. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.

/s/ KPMG LLP

Columbus, Ohio

March 1, 2010

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Income (Loss)

(in millions)

	Years ended December 31,
	2009			2008			2007
Revenues:
Policy charges	$	1,245.1		$	1,340.5		$	1,383.9
Premiums		469.7			394.1			407.0
Net investment income		1,879.1			1,864.7			2,192.2
Net realized investment gains (losses)		453.8			(347.8	)		(47.2	)
Other-than-temporary impairment losses (consisting of $992.1 of total other-than-temporary impairment losses, net of $417.5 recognized in other comprehensive income, for the year ended December 31, 2009)		(574.6	)		(1,130.7	)		(117.7	)
Other income		(3.9	)		(4.2	)		8.9
Total revenues		3,469.2			2,116.6			3,827.1
Benefits and expenses:
Interest credited to policyholder accounts		1,100.1			1,172.6			1,311.0
Benefits and claims		812.1			856.1			672.5
Policyholder dividends		87.0			93.1			83.1
Amortization of deferred policy acquisition costs		465.6			691.6			382.1
Amortization of value of business acquired and other intangible assets		62.8			30.9			48.5
Interest expense, primarily with Nationwide Financial Services, Inc. (NFS)		55.3			61.8			70.0
Other operating expenses		579.8			631.6			630.8
Total benefits and expenses		3,162.7			3,537.7			3,198.0
Income (loss) from continuing operations before federal income tax expense (benefit)		306.5			(1,421.1	)		629.1
Federal income tax expense (benefit)		47.9			(533.8	)		147.3
Income (loss) from continuing operations		258.6			(887.3	)		481.8
Cumulative effect of adoption of accounting principle, net of taxes		—			—			(6.0	)
Net income (loss)		258.6			(887.3	)		475.8
Less: Net loss attributable to noncontrolling interest		52.3			72.3			50.9
Net income (loss) attributable to NLIC	$	310.9		$	(815.0	)	$	526.7

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Balance Sheets

(in millions, except for share and per share amounts)

	December 31,
	2009			2008
Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (amortized cost $25,103.1 and $24,122.6)	$	24,749.7		$	21,387.5
Equity securities (amortized cost $48.8 and $62.2)		52.6			54.1
Mortgage loans on real estate, net		6,829.0			7,770.1
Short-term investments, including amounts managed by a related party		1,003.4			2,913.0
Other investments		1,516.8			1,733.2
Total investments		34,151.5			33,857.9
Cash and cash equivalents		49.1			42.0
Accrued investment income		401.9			342.9
Deferred policy acquisition costs		3,983.1			4,523.8
Value of business acquired		276.9			334.0
Goodwill		199.8			199.8
Other assets		2,085.2			3,662.2
Separate account assets		57,846.2			48,841.0
Total assets	$	98,993.7		$	91,803.6
Liabilities and Shareholder’s Equity
Liabilities:
Future policy benefits and claims	$	33,149.4		$	35,714.5
Short-term debt		150.0			249.7
Long-term debt, payable to NFS		700.0			700.0
Other liabilities		1,826.4			2,589.6
Separate account liabilities		57,846.2			48,841.0
Total liabilities		93,672.0			88,094.8
Shareholder’s equity:
Common stock ($1 par value; authorized - 5,000,000 shares; issued and outstanding - 3,814,779 shares)		3.8			3.8
Additional paid-in capital		1,717.7			1,697.7
Retained earnings		3,515.2			2,952.6
Accumulated other comprehensive loss		(265.6	)		(1,361.3	)
Total shareholder’s equity		4,971.1			3,292.8
Noncontrolling interest		350.6			416.0
Total equity		5,321.7			3,708.8
Total liabilities and equity	$	98,993.7		$	91,803.6

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Condensed Consolidated Statements of Changes in Equity

(in millions)

	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total shareholder’s equity			Non- controlling interest			Total equity
Balance as of December 31, 2006	$	3.8	$	1,358.8	$	4,311.3		$	24.6		$	5,698.5		$	445.5		$	6,144.0
Dividends to NFS		—		—		(612.5	)		—			(612.5	)		—			(612.5	)
Member contributions to noncontrolling interest		—		—		—			—			—			70.7			70.7
Other, net		—		—		2.6			—			2.6			0.4			3.0
Comprehensive income (loss):
Net income (loss)		—		—		526.7			—			526.7			(50.9	)		475.8
Other comprehensive loss, net of taxes		—		—		—			(111.7	)		(111.7	)		—			(111.7	)
Total comprehensive income (loss)												415.0			(50.9	)		364.1
Balance as of December 31, 2007	$	3.8	$	1,358.8	$	4,228.1		$	(87.1	)	$	5,503.6		$	465.7		$	5,969.3
Dividends to NFS		—		—		(460.5	)		—			(460.5	)		—			(460.5	)
Capital contributed by NFS		—		338.9		—			—			338.9			—			338.9
Member contributions to noncontrolling interest		—		—		—			—			—			23.0			23.0
Other, net		—		—		—			—			—			(0.4	)		(0.4	)
Comprehensive loss:
Net loss		—		—		(815.0	)		—			(815.0	)		(72.3	)		(887.3	)
Other comprehensive loss, net of taxes		—		—		—			(1,274.2	)		(1,274.2	)		—			(1,274.2	)
Total comprehensive loss												(2,089.2	)		(72.3	)		(2,161.5	)
Balance as of December 31, 2008	$	3.8	$	1,697.7	$	2,952.6		$	(1,361.3	)	$	3,292.8		$	416.0		$	3,708.8
Cumulative effect of change in accounting principle, net of taxes		—		—		249.7			(249.7	)		—			—			—
Capital contributed by NFS		—		20.0		—			—			20.0			—			20.0
Other, net		—		—		2.0			—			2.0			(13.1	)		(11.1	)
Comprehensive income (loss):
Net income (loss)		—		—		310.9			—			310.9			(52.3	)		258.6
Other comprehensive income, net of taxes		—		—		—			1,345.4			1,345.4			—			1,345.4
Total comprehensive income (loss)												1,656.3			(52.3	)		1,604.0
Balance as of December 31, 2009	$	3.8	$	1,717.7	$	3,515.2		$	(265.6	)	$	4,971.1		$	350.6		$	5,321.7

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2009			2008			2007
Cash flows from operating activities:
Net income (loss)	$	258.6		$	(887.3	)	$	475.8
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment (gains) losses		(453.8	)		347.8			47.2
Other-than-temporary impairment losses		574.6			1,130.7			117.7
Interest credited to policyholder accounts		1,100.1			1,172.6			1,311.0
Capitalization of deferred policy acquisition costs		(513.0	)		(587.6	)		(631.3	)
Amortization of deferred policy acquisition costs		465.6			691.6			382.1
Amortization and depreciation		51.1			48.1			81.7
Decrease (increase) in other assets		291.6			(727.2	)		552.7
(Decrease) increase in policy and other liabilities		(1,859.9	)		583.0			(50.6	)
Decrease (increase) in derivative assets		582.3			(1,030.7	)		(146.9	)
Increase in derivative liabilities		57.0			153.9			96.4
Other, net		57.4			51.0			10.0
Net cash provided by operating activities		611.6			945.9			2,245.8
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale		3,889.2			4,271.5			4,582.7
Proceeds from sale of securities available-for-sale		4,210.5			4,308.8			4,977.9
Proceeds from repayments or sales of mortgage loans on real estate		773.1			869.1			2,653.7
Cost of securities available-for-sale acquired		(9,205.7	)		(7,255.5	)		(8,400.2	)
Cost of mortgage loans on real estate originated or acquired		(35.7	)		(371.8	)		(1,944.0	)
Net decrease (increase) in short-term investments		1,909.6			(1,856.8	)		831.5
Collateral (paid) received, net		(868.6	)		592.2			(207.3	)
Other, net		207.7			15.3			(156.2	)
Net cash provided by investing activities		880.1			572.8			2,338.1
Cash flows from financing activities:
Net (decrease) increase in short-term debt		(99.7	)		(35.6	)		210.1
Capital contributed by NFS		20.0			—			—
Cash dividends paid to NFS		—			(280.7	)		(612.5	)
Investment and universal life insurance product deposits and other additions		3,877.1			3,862.3			3,913.8
Investment and universal life insurance product withdrawals and other deductions		(5,301.4	)		(5,305.9	)		(8,101.8	)
Other, net		19.4			281.9			0.3
Net cash used in financing activities		(1,484.6	)		(1,478.0	)		(4,590.1	)
Net increase (decrease) in cash and cash equivalents		7.1			40.7			(6.2	)
Cash and cash equivalents, beginning of period		42.0			1.3			7.5
Cash and cash equivalents, end of period	$	49.1		$	42.0		$	1.3

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements

December 31, 2009, 2008 and 2007

(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.

On August 6, 2008, NFS entered into a definitive agreement for NMIC, and Nationwide Corporation (Nationwide Corp.)., to acquire all of the outstanding publicly held Class A common shares of NFS for $52.25 per share in cash. The transaction closed on January 1, 2009 and NFS became a privately held subsidiary of Nationwide Corp.

Wholly-owned subsidiaries of NLIC as of December 31, 2009 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker-dealer.

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

The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker-dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), and Nationwide Financial Network (NFN) producers. The Company also distributes products through the agency distribution force of its ultimate parent company, NMIC.

As of December 31, 2009 and 2008, 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.

On December 31, 2009, NLIC merged with its affiliate, Nationwide Life Insurance Company of America and subsidiaries (NLICA), with NLIC as the surviving entity. In addition, NLIC’s subsidiary, Nationwide Life and Annuity Insurance Company (NLAIC), merged with a subsidiary of NLICA, Nationwide Life and Annuity Company of America (NLACA), effective as of December 31, 2009, with NLAIC as the surviving entity. The mergers were completed to streamline the enterprise’s capital structure and create operational efficiencies. See Note 2 (p) for further information.

(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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The Company’s most critical estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition costs (DAC); whether an available-for-sale security is other-than-temporarily impaired, valuation allowances for mortgage loans on real estate; valuation of derivatives; the liability for future policy benefits and claims, including the valuation of embedded derivatives resulting from living benefit contracts; and the federal income tax provision. Although some variability is inherent in these estimates, recorded amounts reflect management’s best estimates based on facts and circumstances as of the balance sheet date. Management believes the amounts provided are appropriate.

Certain items in the 2008 and 2007 consolidated financial statements and related notes have been reclassified to conform to the current presentation.

(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. All significant intercompany balances and transactions were eliminated in consolidation.

(b) Subsequent events

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the SEC.

(c) Valuation of Investments, Investment Income, Related Gains and Losses and Other-Than-Temporary Impairment Evaluations

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, value of business acquired (VOBA), future policy benefits and claims, policyholder dividend obligation and deferred federal income taxes reported as a separate component of accumulated other comprehensive income (loss) (AOCI) in shareholder’s equity. The adjustment to DAC and VOBA represents the changes in amortization of DAC and VOBA that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate. Net realized gains and losses on the sale of investments are determined using the specific identification method.

For fixed maturity and marketable equity securities for which market quotations are available, the Company generally uses independent pricing services to assist in determining the fair value measurement. For certain fixed maturity securities not priced by independent services (generally investment grade private placement securities without quoted market prices), 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. See Note 4 for further information regarding these alternative pricing processes.

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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.

As a result of the Company’s adoption of guidance impacting Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 320-10, Investments – Debt and Equity Securities, in the first quarter of 2009, for all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and amount of the cash flows. The Company evaluates its intent to sell on an individual security basis.

Additionally, debt securities that become other-than-temporarily impaired (where the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security prior to recovery of the security’s amortized cost) are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment being recognized in a separate component of other comprehensive income, net of applicable taxes and other offsets.

The Company’s practice is to disclose as part of the separate component of accumulated other comprehensive income both the non-credit portion of the other-than-temporary impairment recognized in other comprehensive income and any subsequent changes in the fair value of those debt securities.

Prior to 2009, an other-than-temporary impairment charge was taken when the Company did not have the ability and intent to hold the security until the forecasted recovery or if it was probable that the Company would not recover all contractual amounts when due. Many criteria were considered during this process including, but not limited to, specific credit issues and financial prospects related to the issuer, the quality of the underlying collateral, management’s intent and ability to hold the security until recovery, current economic conditions that could affect the creditworthiness of the issuer in the future, the current fair value as compared to the amortized cost of the security, the extent and duration of the unrealized loss, and the rating of the affected security. Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment equal to the difference between the estimated fair value of the security and its amortized cost.

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 loan-specific reserves, 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 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, while loan-specific reserves are included in other-than-temporary impairment losses. Loans in default or in the process of 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. Interest income on mortgage loans is recognized over the life of the loan using the effective-yield method.

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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.

Impairment losses for other-than-temporary declines in the fair values of applicable investments are included in other-than-temporary impairment losses in the consolidated statements of income (loss).

(d) Derivative Instruments

The Company uses derivative instruments in efforts to manage exposures and mitigate risks associated with interest rates, equities, foreign currency and credit. These derivative instruments primarily include interest rate swaps, futures contracts, credit default swaps, cross-currency swaps and other traditional swap agreements. Certain features embedded in the Company’s investment portfolio, equity-indexed life and annuity contracts and certain variable life and annuity contracts are derivatives requiring separate accounting under the provisions of FASB ASC 815-15 Embedded Derivatives. All derivative instruments are carried at fair value and are reflected as an asset or liability. See Note 5 for a discussion on the Company’s use of derivative instruments.

(e) Revenues and Benefits

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

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

(f) Cash and Cash Equivalents

Cash and cash equivalents consist of short-term highly liquid investments with original maturities of less than three months at the time of purchase. The Company carries cash and cash equivalents at cost, which approximates fair value.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(g) Deferred Policy Acquisition Costs

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 is subject to recoverability testing in the year of policy issuance and loss recognition testing at the end of each reporting period.

For investment and universal life insurance products, the Company amortizes DAC with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administrative fees, surrender charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses. The Company adjusts the DAC asset related to investment and universal life insurance products to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(c).

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. The Company reviews this assumption, like others, as part of its annual process. If this assumption were unlocked, the date of the unlocking could become the anchor date used in the reversion to the mean process (defined below). Variances from the long-term assumption are expected since the majority of the investments in the underlying separate accounts are in equity securities, which strongly correlate in the aggregate with the Standard & Poor’s (S&P) 500 Index. The Company bases its reversion to the mean process on actual net separate account investment performance from the anchor date to the valuation date. The Company then assumes different performance levels over the next three years such that the separate account mean return measured from the anchor date to the end of the life of the product equals the long-term assumption. The assumed net separate account investment performance used in the DAC models is intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, and as part of its pre-set parameters, the Company’s reversion to the mean process generally limits net separate account investment performance to 0-15% during the three-year reversion period.

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

See Note 7 for a discussion of assumption changes that impacted DAC amortization and related balances for 2007, 2008 and 2009.

Traditional life insurance products. Generally, DAC related to traditional life insurance products is amortized with interest over the premium-paying period of the related policies in proportion to the ratio of actual annual premium revenue to the anticipated total premium revenue. Such anticipated premium revenue is estimated using the same assumptions as those used for computing liabilities for future policy benefits at issuance. Under existing accounting guidance, the concept of DAC unlocking does not apply to traditional life insurance products, although evaluations of DAC for recoverability at the time of policy issuance and loss recognition testing at each reporting period are required.

(h) Value of Business Acquired

As a result of the acquisition of NFN in 2002 and the application of purchase accounting, the Company reports an intangible asset representing the estimated fair value of the business in force and the portion of the purchase price that was allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts existing as of the closing date of the NFN acquisition. The value assigned to VOBA was supported by an independent valuation study commissioned by the Company and executed by a team of qualified valuation experts, including actuarial consultants. The expected future cash flows used in determining such value were based on actuarially determined projections by major lines of business of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, changes in reserves, operating expenses, investment income and other factors. These projections considered all known or expected factors at the valuation date based on the judgment of management. The actual experience on purchased business, to some extent, has and may continue to vary from projections due to differences in renewal premiums, investment spreads, investment gains and losses, mortality and morbidity costs, or other factors.

Amortization of VOBA occurs with interest over the anticipated lives of the major lines of business to which it relates (initially ranging from 13 to 30 years) in relation to estimated gross profits, gross margins or premiums, as appropriate. If estimated gross profits, gross margins or premiums differ from expectations, the amortization of VOBA is adjusted on a retrospective or prospective basis, as appropriate. The VOBA asset related to investment products and universal life insurance products is adjusted annually for the impact of net unrealized gains and losses on securities available-for-sale had such gains and losses been realized and allocated to the product lines, as described in Note 2(c). The recoverability of VOBA is evaluated annually. If the evaluation indicates that the existing insurance liabilities, together with the present value of future net cash flows from the blocks of business acquired, is insufficient to recover VOBA, the difference, if any, is charged to expense as accelerated amortization of VOBA.

For those products amortized in relation to estimated gross profits, the most significant assumptions involved in the estimation of future gross profits include future net separate account performance, surrender/lapse rates, interest margins and mortality. The Company’s long-term assumption for net separate account performance is currently 7%. If actual net separate account performance varies from the 7% assumption, the Company assumes different performance levels over the next three years such that the mean return equals the long-term assumption. The assumed net separate account return assumptions used in the VOBA models are intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, the Company’s reversion to the mean process generally limits returns to 0-15% during the three-year reversion period.

Changes in assumptions can have a significant impact on the amount of VOBA reported for all products and their related amortization patterns. In the event actual experience differs from assumptions or assumptions are revised, the Company is required to record an increase or decrease in VOBA amortization expense (VOBA unlocking), 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 VOBA 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 VOBA amortization.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The use of discount rates was necessary to establish fair values of VOBA acquired in the NFN transaction. In selecting the appropriate discount rates, management considered its weighted average cost of capital as well as the weighted average cost of capital required by market participants. In addition, consideration was given to the perceived risk of the assets acquired, which includes the expected growth and competitive profile of the life insurance market and the nature of the assumptions used in the valuation process. An after-tax discount rate of 11.0% was used to value VOBA, while after-tax discount rates ranging from 11.0% to 12.5% were used to value the other intangible assets acquired in the NFN transaction, as well as for net realized gains and losses, net of taxes, allocated to the closed block.

(i) Goodwill

In connection with acquisitions of operating entities, the Company recognizes the excess of the purchase price over the fair value of net assets acquired as goodwill. Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually in the third quarter. Goodwill of a reporting unit also is tested for impairment on an interim basis in addition to the annual evaluation if an event occurs or circumstances change which would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The process of evaluating goodwill for impairment requires several judgments and assumptions to be made to determine the fair value of the reporting units, including the method used to determine fair value; discount rates; expected levels of cash flows, revenues and earnings; and the selection of comparable companies used to develop market-based assumptions. The Company performed its annual impairment test as of June 30, 2009.

(j) Closed Block

In connection with the sponsored demutualization of Provident Mutual Life Insurance Company (Provident) prior to its acquisition, Provident established a closed block for the benefit of certain classes of individual participating policies that had a dividend scale payable in 2001. Assets were allocated to the closed block in an amount that produces cash flows which, together with anticipated revenues from closed block business, is reasonably expected to be sufficient to provide for (1) payment of policy benefits, specified expenses and taxes, and (2) the continuation of dividends throughout the life of the Provident policies included in the closed block based upon the dividend scales payable for 2001, if the experience underlying such dividend scales continues.

Assets allocated to the closed block benefit only the holders of the policies included in the closed block and will not revert to the benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without the approval of the Pennsylvania Insurance Department (PID). The closed block will remain in effect as long as any policy in the closed block is in force.

If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will increase. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from the Company’s assets outside of the closed block, which are general account assets.

The assets and liabilities allocated to the closed block are recorded in the Company’s consolidated financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date Provident was acquired by the Company represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income, for the benefit of stockholders, over the period the policies in the closed block remain in force.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income. This is because the excess cumulative earnings over expected cumulative earnings, which represents undistributed accumulated earnings attributable to policyholders, is recorded as a policyholder dividend obligation. Therefore, the excess will be paid to closed block policyholders as an additional policyholder dividend expense in the future unless it is otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, actual earnings will be recognized in income.

The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholder benefits, policyholder dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions, net investment income, and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies for the purpose of the amortization of VOBA.

(k) Separate Accounts

Separate account assets and liabilities represent contractholders’ funds that have been legally segregated into accounts with specific investment objectives. Separate account assets are recorded at fair value and the Company primarily uses net asset value (NAV) to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values. The Company also uses market quotations to determine the underlying fair value of mutual funds when available. Investment income and realized investment gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income (loss) 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.

(l) 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 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%.

(m) Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 4% of the Company’s life insurance in force in 2009 (5% in 2008 and 6% in 2007), 51% of the number of life insurance policies in force in 2009 (54% in 2008 and 56% in 2007) and 12% of life insurance statutory premiums in 2009 (12% in 2008 and 12% in 2007). 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(n) 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 (loss).

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.

(o) Reinsurance Ceded

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded generally are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder.

(p) NLICA Merger

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity. In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity. The merger was accounted for at historical cost in a manner similar to a pooling of interests because the involved entities are under common control. NLICA and subsidiaries are reflected in the Company’s current and prior year consolidated financial statements at the historical cost of the transferred net assets to provide comparative information as though the companies were combined for all periods presented. This presentation is consistent for both GAAP and Statutory reporting. Since NLICA and NLACA are wholly-owned subsidiaries, there is no noncontrolling interest impact.

The Company has presented its consolidated financial statements and accompanying notes as applicable for all years presented to reflect the NLICA merger.

The following tables summarize the impact of the items described above for the years ended December 31 (in millions):

	2009
Total revenues	$	375.5
Total benefits and expenses		357.3
Federal income tax benefit		(4.9	)
Net income	$	23.1
	2008
Total revenues	$	411.0
Total benefits and expenses		395.7
Federal income tax expense		0.5
Net income	$	14.8
	2007
Total revenues	$	510.0
Total benefits and expenses		412.7
Federal income tax expense		(18.8	)
Net income	$	78.5

(q) Change in Accounting Principle

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities (FASB Staff Position (FSP), FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). The Company adopted this guidance as of January 1, 2009. The adoption of this guidance resulted in a cumulative-effect adjustment of $249.7 million, net of taxes, as an adjustment to the opening balance of retained earnings with a corresponding adjustment to the opening balance of AOCI.

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 consolidated financial statements and accompanying notes as applicable for all periods presented to retroactively apply the adoption of this change in accounting principle, which lowered net income by $1.9 million in 2007.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(3) Recently Issued Accounting Standards  

In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-02, which amends FASB ASC 810, Consolidation. This guidance clarifies the scope of the decrease in the ownership provisions and applies to a subsidiary or group of assets that is a business or nonprofit activity, a subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture, and an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity. This guidance would not be applied to sales of in-substance real estate. If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance of the transaction causing the decrease in ownership is addressed in other GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, or sales of in substance real estate, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in FASB ASC 810-10. This guidance also expands the disclosures about the deconsolidation of a subsidiary or derecognition of a group of assets within the scope of FASB ASC 810-10. In addition to existing disclosures, this guidance requires for such a deconsolidation or derecognition additional disclosures regarding valuation techniques, the nature of continuing involvement with the subsidiary or entity acquiring the group of assets, and whether the transaction was with a related party or whether the former subsidiary or entity acquiring the group of assets will be a related party. The Company adopted this guidance effective December 31, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the Company. The guidance will be applied to prospective transactions, as is required.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures. This guidance requires new disclosures and provides amendments to clarify existing disclosures. The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements and the reasons for the transfers and further disaggregating activity in Level 3 fair value measurements. The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. The guidance also includes conforming amendments to the guidance on employers’ disclosures about the postretirement benefit plan assets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company will adopt this guidance for the fiscal period beginning January 1, 2010, except for the new disclosure regarding the activity in level 3 measurements, which the Company will adopt for the fiscal period beginning January 1, 2011.

In September 2009 the FASB issued ASU 2009-12, which amends FASB ASC 820, Fair Value Measurements and Disclosures. This guidance applies to reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or nonrecurring basis but does not have a readily determinable fair value and has attributes of a investment company. For these investments, this update allows, as a practical expedient, the use of NAV as the basis to estimate fair value as long as it is not probable, as of the measurement date, that the investment will be sold and NAV is not the value that will be used in the sale. The NAV must be calculated consistent with the American Institute of Certified Public Accountants Audit and Accounting Guide, Investment Companies, which generally requires these investments to be measured at fair value. Additionally, the guidance provides updated disclosures for investments within its scope and notes that if the investor can redeem the investment with the investee on the measurement date at NAV, the investment should likely be classified as Level 2 in the fair value hierarchy. Investments that cannot be redeemed with the investee at NAV would generally be classified as Level 3 in the fair value hierarchy. If the investment is not redeemable with the investee on the measurement date, but will be at a future date, the length of time until the investment is redeemable should be considered in determining classification as Level 2 or 3. This guidance is effective for interim and annual periods ending after December 15, 2009 with early adoption permitted. The Company adopted this guidance effective December 31, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the Company. See the required disclosures and updated fair value hierarchy disclosed within Note 4.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In August 2009 the FASB issued ASU 2009-05, which amends FASB ASC 820-10, Fair Value Measurements and Disclosures. This guidance clarifies how the fair value of a liability should be determined. It reiterates that fair value is the price that would be paid to transfer the liability in an orderly transaction between market participants at the measurement date. It notes that the liability should reflect the company’s nonperformance risk and should not reflect restrictions on the transfer of the liability. To determine the exit price, the guidance permits companies to look to the identical liability traded as an asset, similar liabilities traded as assets, or another valuation technique to measure the price the company would pay to transfer the liability. The Company adopted this guidance effective the reporting period ending December 31, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the company.

In June 2009, the FASB issued guidance under FASB ASC 105, Generally Accepted Accounting Principles (Statement of Financial Accounting Standard (SFAS) No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162 (SFAS 168)). This guidance establishes the FASB ASC as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS 168 and the ASC are effective for financial statements issued for interim and annual periods ending after September 15, 2009. The ASC supersedes all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the ASC have become non-authoritative. Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FSPs, or EITF Abstracts. Instead, the FASB will issue Accounting Standards Updates, which will serve only to update the ASC, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the ASC. The Company adopted SFAS 168 effective September 30, 2009. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements but will alter the references to accounting literature within the consolidated financial statements.

In June 2009, the FASB issued guidance under FASB ASC 810 Consolidation (SFAS No. 167, Amendments to FASB Interpretation No. 46(R)). In February 2010, this guidance was amended by ASU 2010-10, which defers the application of SFAS No. 167 for certain interests in an entity that has all of the attributes of an investment company, or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those investment companies apply, or the entity is a registered money market fund. An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of variable interest entities before the SFAS No. 167 amendments. ASU 2010-10 also clarifies other aspects of the SFAS No. 167 amendments. FASB ASC 810, Consolidation changes the consolidation guidance applicable to a variable interest entity (VIE). It also amends the guidance governing the determination of whether an entity is the VIE’s primary beneficiary (the reporting entity that must consolidate the VIE) by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include consideration of who has the power to direct the activities of the entity that most significantly impacts the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. This guidance also requires continuous reassessment of whether an enterprise is the primary beneficiary of a VIE. Before this guidance, FASB Interpretation No. 46(R) required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred. This guidance also requires enhanced disclosures about an entity’s involvement with a VIE. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company is in the process of determining the impact of adopting this guidance.

In June 2009, the FASB issued guidance under FASB ASC 860, Transfers and Servicing (SFAS No. 166, Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140). This guidance eliminates the concept of a qualifying special-purpose entity (QSPE) and clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale and the unit of account eligible for sale accounting. Additionally, this guidance requires a transferor to initially measure and recognize all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale at fair value. Additionally, on and after the effective date, existing QSPEs (as defined under previous accounting standards) must be evaluated for consolidation in accordance with the applicable consolidation guidance. This guidance also establishes new requirements for reporting a transfer of a portion of a financial asset as a sale. This guidance requires enhanced disclosures about, among other things, a transferor’s continuing involvement with transfers of financial assets accounted for as sales, the risks inherent in the transferred financial assets that have been retained, and the nature and financial effect of restrictions on the transferor’s assets that continue to be reported in the consolidated balance sheets. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company adopted this guidance effective January 1, 2010. The guidance will be applied to prospective transactions, as is required.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In May 2009, the FASB issued guidance under FASB ASC 855, Subsequent Events (SFAS No. 165, Subsequent Events). This guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures an entity should make about events or transactions that occurred after the balance sheet date. This guidance is effective for fiscal years and interim periods ending after June 15, 2009. The Company adopted this guidance effective June 30, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the Company. See Note 2 (b) for the required disclosure.

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). This guidance is designed to create greater clarity and consistency in accounting for and presentation of impairment losses on debt securities. This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted. As of the beginning of the interim period of adoption, this guidance requires a cumulative-effect adjustment to reclassify the non-credit component of previously recognized other-than-temporary impairment losses on debt securities from retained earnings to the beginning balance of AOCI. The Company adopted this guidance as of January 1, 2009. The adoption of this guidance resulted in a cumulative-effect adjustment of $249.7 million, net of taxes, as an adjustment to the opening balance of retained earnings with a corresponding adjustment to the opening balance of AOCI.

In April 2009, the FASB issued guidance under FASB ASC 820-10, Fair Value Measurements and Disclosures (FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly). This guidance provides guidelines for making fair value measurements more consistent with the principles presented in the previous standard SFAS No. 157, Fair Value Measurements. This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted. The Company elected to early adopt this guidance as of January 1, 2009.

In December 2008, the FASB issued guidance under FASB ASC 715, Compensation – Retirement Benefits (FSP FAS 132R-1). This guidance amends previous SFAS No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefit, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The portion of this guidance related to the disclosures about plan assets is effective for fiscal years ending after December 15, 2009. This guidance will have no impact on the Company’s disclosures.

In November 2008, the FASB issued guidance under FASB ASC 350-30, Intangibles – Goodwill and Other, General Intangibles Other than Goodwill (EITF 08-7, Accounting for Defensive Intangible Assets). This guidance requires defensive intangible assets acquired in a business combination or asset acquisition to be accounted for as a separate unit of accounting. In doing so, the asset should not be included as part of the cost of an entity’s existing intangible asset(s) because the defensive intangible asset is separately identifiable. This guidance is effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted this guidance effective January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations. The Company will apply this guidance prospectively for intangible assets acquired on or after January 1, 2009.

In November 2008, the FASB issued guidance under FASB ASC 323-10, Investments – Equity Method and Joint Ventures (EITF 08-6, Equity Method Investment Accounting Considerations). This guidance clarifies how to account for certain transactions and impairment considerations involving equity method investments. Specifically, this guidance notes: 1) an entity shall measure its equity method investment initially at cost; 2) an equity method investor is required to recognize other-than-temporary impairments of an equity method investment in accordance with paragraph 35-32A and an equity method investor shall not separately test an investee’s underlying indefinite-lived intangible asset(s) for impairment; and 3) an equity method investor shall account for a share issuance by an investee as if the investor had sold a proportionate share of its investment and any gain or loss to the investor resulting from an investee’s share issuance shall be recognized in earnings. This guidance is effective on a prospective basis in fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Company adopted this guidance prospectively beginning January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In April 2008, the FASB issued guidance under FASB ASC 350-30, General Intangibles other than Goodwill (FSP FAS 142-3, Determination of the Useful Life of Intangible Assets). This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previous SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). This guidance is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The amended factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142 are to be applied prospectively to intangible assets acquired after the effective date. The Company adopted this guidance effective January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations. The Company will apply this guidance prospectively to intangible assets acquired after January 1, 2009.

In March 2008, the FASB issued guidance under FASB ASC 815, Derivatives and Hedging (SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133). This guidance amends and expands the disclosure requirements of previous SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), with the intent to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. This guidance requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about derivative instrument fair values and related gains and losses, and disclosures about credit-risk-related contingent features in derivative agreements. This guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company adopted this guidance effective January 1, 2009. See Note 5 for required disclosures.

In February 2008, the FASB issued guidance under FASB ASC 820, Fair Value Measurements and Disclosures (FSP FAS 157-2, Effective Date of FASB Statement No. 157). This guidance delayed the effective date of SFAS 157 for nonfinancial assets and liabilities until fiscal years and interim periods beginning after November 15, 2008. FASB ASC 820 applies to nonfinancial assets and liabilities, except for items recognized or disclosed at fair value in the Company’s financial statements on a recurring basis (at least annually), and is effective upon issuance. The Company adopted this guidance effective January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations.

In December 2007, the FASB issued guidance under FASB ASC 805, Business Combination, (SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R), which replaced SFAS No. 141, Business Combinations). The objective of this guidance is to improve the relevance, representational faithfulness, and comparability of the information a reporting entity provides in its financial reports about a business combination and its effects. Accordingly, this guidance establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This guidance applies to all transactions or other events in which an entity obtains control of one or more businesses and retains the fundamental requirements in the previous standard that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. This guidance 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 the acquirer achieves control. This guidance 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 adopted this guidance effective January 1, 2009. The Company applied this guidance prospectively to business combination on or after January 1, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In April 2009, the FASB issued guidance under FASB ASC 805-20, Business Combinations – Identifiable Assets and Liabilities, and Any Noncontrolling Interest (FSP FAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies). This guidance amends previous business combination guidance related to contingencies. First, this guidance requires the acquirer to recognize the contingency at fair value, at the acquisition date, if the acquisition-date fair value of that asset or liability can be determined during the measurement period. Second, if the first criteria is not applicable as the fair value of the asset or liability cannot be determined during the measurement period, then the contingency shall be recognized if both (a) information available before the end of the measurement period indicates it is probable an asset existed or a liability had been incurred at the acquisition date and (b) the amount of the asset or liability can be reasonably estimated. If neither of these acquisition date recognition criterion apply, the acquirer shall not recognize an asset or liability as of the acquisition date. In periods after the acquisition date, the acquirer shall account for an asset or a liability arising from a contingency that does not meet the recognition criteria at the acquisition date in accordance with other applicable GAAP, including FASB ASC 450, Contingencies, as appropriate. The Company will apply this guidance prospectively to any business combination on or after January 1, 2009.

In December 2007, the FASB issued guidance under FASB ASC 810, Consolidation (SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51). The objective of this guidance 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. This guidance also amends certain consolidation procedures prescribed by previous Accounting Research Bulletin No. 51, Consolidated Financial Statements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company adopted this guidance effective January 1, 2009. The required presentation of noncontrolling interests is reflected in the consolidated financial statements. As a result of adoption, the Company reclassified $416.0 million from other liabilities to equity as of December 31, 2008, representing the noncontrolling interest of low-income-housing tax credit funds (LIHTC Funds). See Note 20 for further discussion on the LIHTC Funds. The accounting requirements of this guidance will be applied to any transactions involving noncontrolling interests on or after January 1, 2009.

In September 2005, the FASB issued guidance under FASB ASC 944-30, Financial Services – Insurance – Acquisition Costs, (Statement of Position No. 05-1). This guidance 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 FASB ASC 944, Financial Services – Insurance. This guidance 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. This guidance was effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Retrospective application of this guidance to previously issued financial statements was not permitted. Initial application was required as of the beginning of an entity’s fiscal year. The Company adopted this guidance 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(4) Fair Value Measurements  

Fair Value Option

Effective January 1, 2008, the Company elected fair value treatment for commercial mortgage loans held for sale. Accordingly, the Company now records in earnings all market fluctuations associated with this portfolio. The Company previously recorded such loans at the lower of cost or market value. Balances for these loans are measured at fair value prospectively with unrealized gains and losses included as a component of net realized investment gains and losses. The Company will assess the fair value option election for newly acquired financial assets or liabilities on a prospective basis. The fair value election is an irreversible election.

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company categorizes its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Company categorizes financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

• Level 1 – Unadjusted quoted prices accessible in active markets for identical assets or liabilities at the measurement date.  

• Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means.  

• Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate about the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs.  

For certain residential mortgage-backed securities backed by Prime, sub-prime and Alt-A collateral, which are included in Level 3 financial assets, the Company utilizes internal pricing models to assist in determining the estimated fair values. As of December 31, 2008, these investments were priced solely with the assistance of independent pricing services. As a result of continued low levels of activity in these markets during 2009, management believes that prices are no longer representative of the investments’ fair value, which is the price that would be received upon the sale of the investment in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. The Company believes that a weighting of internal pricing models and independent pricing services represents a better estimate of the investments’ fair value and complies with FASB ASC 820, Fair Value Measurements and Disclosures.

Therefore, management determined that the use of multiple valuation techniques, considering both an income approach that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs and a market approach that observes quotes provided by independent pricing services produces a result more representative of an investment’s fair value.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The income approach incorporates cash flows for each investment adjusted for expected losses in different interest rate and housing scenarios. The adjusted cash flows are then discounted using a risk premium that market participants would demand because of the risk in the cash flows. The risk premium is reflective of an orderly transaction between market participants at the measurement date under current market conditions and includes items such as liquidity and structure risk. The income approach also includes a weighting of external third party values. As sufficient information is often not available to conclude whether such prices are based on orderly transactions, this weighting methodology is designed to incorporate external prices into the Company’s internal valuation process.

In addition to weighting external prices in developing the internal values, the Company further calibrates those values to market indications through obtaining pricing from two independent pricing services (the market approach). The Company calibrates the prices obtained from the independent pricing services and the price developed internally by utilizing the median value to determine the estimated fair value.

In addition, certain of the Company’s investments in corporate debt securities, mortgage-backed securities and other asset-backed securities were valued with the assistance of independent pricing services and non-binding broker quotes. The Company’s policy is to use the pricing obtained from our primary independent pricing service even in cases where a price is obtained from both an independent pricing service and a broker. In the event that pricing information is not available from an independent pricing service, non-binding broker quotes are used to assist in the valuation of the investments. In many cases, only one broker quote is available. The Company’s policy is generally not to adjust the values obtained from brokers.

Broker quotes are considered unobservable inputs as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and the transaction volume in the same or similar investments has decreased such that generally only one quotation is available. As the brokers often do not provide the necessary transparency into their quotes and methodologies, the Company periodically performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value.

For investments valued with the assistance of independent pricing services, the Company obtained the pricing services’ methodologies and classified these investments accordingly in the fair value hierarchy. The Company periodically reviews and tests the pricing and related methodologies obtained from these independent pricing services against secondary sources to ensure that management can validate the investment’s fair value and related categorization. If large variances are observed between the price obtained from the independent pricing services and secondary sources, the Company analyzes the causes driving the variance and resolves any differences.

As of December 31, 2009, 68% of the prices of fixed maturity securities were valued with the assistance of independent pricing services, 13% were valued with the assistance of the Company’s internal pricing processes, 11% were valued with the assistance of the Company’s pricing matrices, 6% were valued with the assistance of broker quotes and 2% were valued from other sources compared to 78%, 4%, 12%, 5% and 1%, respectively, as of December 31, 2008.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

The Company uses NAV to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values included in separate account assets.

All but one of these mutual funds are included in Level 2 and had fair values totaling $44.00 billion as of December 31, 2009. See the following paragraph for discussion of the mutual fund considered Level 3. These funds have no unfunded commitments or restrictions and the Company always has the ability to redeem the separate account investment in these funds with the investee at NAV daily. These mutual funds are primarily invested in domestic and international equity funds.

The Company’s separate account assets include an investment in a mutual fund that may not be redeemed until a seven year guarantee period expires in 2016; however, NAV has been used to estimate the fair value of this investment as a practical expedient. This fund has no unfunded commitments or other restrictions. The investment strategy of this fund is to build a portfolio where the assets shall be sufficient to achieve a target portfolio value by the end of the seven year guarantee period. The Company’s portion of the net asset value of this fund reported in separate account assets was $975.9 million as of December 31, 2009 and is included in Level 3.

Since separate account assets include mutual fund investments not directed by the Company, the contractholders have the ability to select and change investment categories, which may result in the underlying mutual funds being purchased and sold in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2009:

(in millions)	Level 1			Level 2			Level 3			Total
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	747.9		$	4.4		$	1.6		$	753.9
Obligations of states and political subdivisions		—			548.9			—			548.9
Debt securities issued by foreign governments		—			75.1			—			75.1
Corporate securities		1.8			14,557.0			1,402.2			15,961.0
Residential mortgage-backed securities		229.3			3,245.9			2,033.7			5,508.9
Commercial mortgage-backed securities		—			678.8			405.3			1,084.1
Collateralized debt obligations		—			131.5			240.5			372.0
Other asset-backed securities		—			278.6			167.2			445.8
Total fixed maturity securities		979.0			19,520.2			4,250.5			24,749.7
Equity securities		12.6			32.4			7.6			52.6
Total securities available-for-sale		991.6			19,552.6			4,258.1			24,802.3
Mortgage loans held for sale1		—			—			47.9			47.9
Short-term investments		56.1			947.3			—			1,003.4
Total investments		1,047.7			20,499.9			4,306.0			25,853.6
Cash and cash equivalents		49.1			—			—			49.1
Derivative assets2		—			497.5			331.2			828.7
Separate account assets3,5		11,607.8			44,610.9			1,627.5			57,846.2
Total assets	$	12,704.6		$	65,608.3		$	6,264.7		$	84,577.6
Liabilities
Future policy benefits and claims4	$	—		$	—		$	(310.9	)	$	(310.9	)
Derivative liabilities2		(10.3	)		(404.0	)		(1.5	)		(415.8	)
Total liabilities	$	(10.3	)	$	(404.0	)	$	(312.4	)	$	(726.7	)

1 Elected to be carried at fair value.  

2 Comprised of interest rate swaps, cross-currency swaps, credit default swaps, other non-hedging derivative instruments, equity option contracts and interest rate futures contracts.  

3 Comprised of public, privately registered and non-registered mutual funds and investments in securities.  

4 Related to embedded derivatives associated with living benefit contracts. The Company’s guaranteed minimum accumulation benefits (GMABs), guaranteed lifetime withdrawal benefits (GLWBs) and hybrid GMABs/GLWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings. This balance also includes embedded derivatives associated with fixed equity-indexed annuities (EIA) of $45.0 million that provide for interest earnings that are linked to the performance of specified equity market indices.  

5 The fair value of separate account liabilities is set to equal the fair value of separate account assets  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2008:

(in millions)	Level 1			Level 2			Level 3			Total
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	609.2		$	4.3		$	1.9		$	615.4
Obligations of states and political subdivisions		—			224.7			—			224.7
Debt securities issued by foreign governments		—			55.5			—			55.5
Corporate securities		2.0			11,263.8			1,327.3			12,593.1
Residential mortgage-backed securities		600.7			2,398.1			3,035.9			6,034.7
Commercial mortgage-backed securities		—			700.0			263.4			963.4
Collateralized debt obligations		—			73.0			250.4			323.4
Other asset-backed securities		—			465.5			111.8			577.3
Total fixed maturity securities		1,211.9			15,184.9			4,990.7			21,387.5
Equity securities		1.4			34.8			17.9			54.1
Total securities available-for-sale		1,213.3			15,219.7			5,008.6			21,441.6
Mortgage loans held for sale1		—			—			124.5			124.5
Short-term investments		158.7			2,754.3			—			2,913.0
Total investments		1,372.0			17,974.0			5,133.1			24,479.1
Cash and cash equivalents		42.0			—			—			42.0
Derivative assets2		—			708.5			597.6			1,306.1
Separate account assets3,5		9,975.7			36,723.5			2,141.8			48,841.0
Total assets	$	11,389.7		$	55,406.0		$	7,872.5		$	74,668.2
Liabilities
Future policy benefits and claims4	$	—		$	—		$	(1,739.7	)	$	(1,739.7	)
Derivative liabilities2		(6.0	)		(385.9	)		(4.2	)		(396.1	)
Total liabilities	$	(6.0	)	$	(385.9	)	$	(1,743.9	)	$	(2,135.8	)

1 Elected to be carried at fair value.  

2 Comprised of interest rate swaps, cross-currency swaps, credit default swaps, other non-hedging derivative instruments, equity option contracts and interest rate futures contracts.  

3 Comprised of public, privately registered and non-registered mutual funds and investments in securities.  

4 Related to embedded derivatives associated with living benefit contracts. The Company’s GMABs, GLWBs and hybrid GMABs/GMWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings. This balance also includes embedded derivatives associated with fixed EIAs of $41.7 million that provide for interest earnings that are linked to the performance of specified equity market indices.  

5 The fair value of separate account liabilities is set to equal the fair value of separate account assets.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2009:

				Net investment gains (losses)																	Change in unrealized gains (losses) in earnings due to assets still held
(in millions)	Balance as of December 31, 2008			In earnings (realized and unrealized)1			In OCI (unrealized)2			Purchases, issuances, sales and settlements			Transfers in to Level 3		Transfers out of Level 3			Balance as of December 31, 2009
Assets
Investments:
Securities available-for-sale3:
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1.9		$	—		$	(0.2	)	$	(0.1	)	$	—	$	—		$	1.6		$	—
Corporate securities		1,327.3			(80.3	)		260.3			(400.8	)		487.1		(191.4	)		1,402.2		$	—
Residential mortgage-backed securities		3,035.9			(111.0	)		388.7			(431.2	)		0.9		(849.6	)		2,033.7			—
Commercial mortgage-backed securities		263.4			(20.3	)		139.1			(7.1	)		94.1		(63.9	)		405.3			—
Collateralized debt obligations		250.4			(53.0	)		77.1			(18.2	)		—		(15.8	)		240.5			—
Other asset-backed securities		111.8			(16.5	)		43.5			(12.0	)		48.6		(8.2	)		167.2			—
Total fixed maturity securities		4,990.7			(281.1	)		908.5			(869.4	)		630.7		(1,128.9	)		4,250.5			—
Equity securities		17.9			1.4			0.7			3.9			—		(16.3	)		7.6			—
Total securities available-for-sale		5,008.6			(279.7	)		909.2			(865.5	)		630.7		(1,145.2	)		4,258.1			—
Mortgage loans held for sale		124.5			(7.6	)		—			(69.0	)		—		—			47.9			(2.8	)
Total investments		5,133.1			(287.3	)		909.2			(934.5	)		630.7		(1,145.2	)		4,306.0			(2.8	)
Derivative assets		597.6			(311.5	)		(12.0	)		57.1			—		—			331.2			(309.5	)
Separate account assets4,6		2,141.8			(646.7	)		—			400.0			14.7		(282.3	)		1,627.5			217.7
Total assets	$	7,872.5		$	(1,245.5	)	$	897.2		$	(477.4	)	$	645.4	$	(1,427.5	)	$	6,264.7		$	(94.6	)
Liabilities
Future policy benefits and claims5	$	(1,739.7	)	$	1,437.7		$	—		$	(8.9	)	$	—	$	—		$	(310.9	)	$	1,437.7
Derivative liabilities		(4.2	)		2.7			—			—			—		—			(1.5	)		2.7
Total liabilities	$	(1,743.9	)	$	1,440.4		$	—		$	(8.9	)	$	—	$	—		$	(312.4	)	$	1,440.4

1 Includes gains and losses on sales of financial instruments, changes in market value of certain instruments and other-than-temporary impairments. The net unrealized loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

2 Includes changes in market value of certain instruments.  

3 Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other ABSs, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the National Association of Insurance Commissioners (NAIC) (see Note 6 for a discussion of NAIC designations. Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.  

4 Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions. The net unrealized investment loss on these non-registered mutual funds is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

5 Relates to GMAB, GLWB and hybrid GMAB/GLWB embedded derivatives associated with contracts with living benefit riders. This balance also includes embedded derivatives associated with EIAs. Related derivatives are internally valued. The valuation of guaranteed minimum benefit embedded derivatives is based on capital market and actuarial assumptions, including risk margin considerations reflecting policyholder behavior. The Company uses both observable and unobservable inputs, such as published swap rates and historical volatilities as well as implied volatilities, in its capital market assumptions. Actuarial assumptions, including lapse behavior and mortality rates, are either based on annuity experience or pricing assumptions if experience has not yet developed.  

6 The value of separate account liabilities is set to equal the fair value of separate account assets.  

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2008:

				Net investment gains (losses)																	Change in unrealized gains (losses) in earnings due to assets still held
(in millions)	Balance as of December 31, 2007			In earnings (realized and unrealized)1			In OCI (unrealized)2			Purchases, issuances, sales and settlements			Transfers in to Level 3		Transfers out of Level 3			Balance as of December 31, 2008
Assets
Investments:
Securities available-for-sale3:
U.S Treasury securities and obligations of U.S. government corporations and agencies	$	1.6		$	—		$	0.4		$	(0.1	)	$	—	$	—		$	1.9		$	—
Fixed maturity securities Corporate securities		1,515.7			(189.4	)		(250.3	)		(384.1	)		901.2		(265.8	)		1,327.3			—
Residential mortgage-backed securities		193.3			(402.8	)		(711.6	)		(290.5	)		4,290.4		(42.9	)		3,035.9			—
Commercial mortgage-backed securities		87.6			(12.8	)		(306.7	)		187.1			371.6		(63.4	)		263.4			—
Collateralized debt obligations		532.6			(281.1	)		(97.4	)		23.4			78.0		(5.1	)		250.4			—
Other asset-backed securities		122.3			(13.4	)		(39.9	)		(37.2	)		127.8		(47.8	)		111.8			—
Total fixed maturity securities		2,453.1			(899.5	)		(1,405.5	)		(501.4	)		5,769.0		(425.0	)		4,990.7			—
Equity securities		1.4			(54.9	)		(9.4	)		40.3			40.5		—			17.9			—
Total securities available-for-sale		2,454.5			(954.4	)		(1,414.9	)		(461.1	)		5,809.5		(425.0	)		5,008.6			—
Mortgage loans held for sale		86.1			(49.3	)		—			87.7			—		—			124.5			(49.3	)
Short-term investments		382.7			(0.2	)		—			(1.3	)		—		(381.2	)		—			—
Total investments		2,923.3			(1,003.9	)		(1,414.9	)		(374.7	)		5,809.5		(806.2	)		5,133.1			(49.3	)
Derivative assets		166.6			405.4			4.4			21.2			—		—		$	597.6			394.0
Separate account assets4,6		2,258.6			305.9			—			511.4			23.9		(958.0	)	$	2,141.8			329.7
Total assets	$	5,348.5		$	(292.6	)	$	(1,410.5	)	$	157.9		$	5,833.4	$	(1,764.2	)	$	7,872.5		$	674.4
Liabilities
Future policy benefits and claims5	$	(128.9	)	$	(1,602.1	)	$	—		$	(8.7	)	$	—	$	—		$	(1,739.7	)	$	(1,602.1	)
Derivative liabilities		(16.3	)		3.9			—			8.2			—		—		$	(4.2	)		12.0
Total liabilities	$	(145.2	)	$	(1,598.2	)	$	—		$	(0.5	)	$	—	$	—		$	(1,743.9	)	$	(1,590.1	)

1 Includes gains and losses on sales of financial instruments, changes in market value of certain instruments and other-than-temporary impairments. The net unrealized loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

2 Includes changes in market value of certain instruments.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

3 Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other ABSs, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the NAIC (see Note 6 for a discussion of NAIC designations). Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.  

4 Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions. The net unrealized investment loss on these non-registered mutual funds is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

5 Relates to GMAB, GLWB and hybrid GMAB/GLWB embedded derivatives associated with contracts with living benefit riders. This balance also includes embedded derivatives associated with EIAs. Related derivatives are internally valued. The valuation of guaranteed minimum benefit embedded derivatives is based on capital market and actuarial assumptions, including risk margin considerations reflecting policyholder behavior. The Company uses both observable and unobservable inputs, such as published swap rates and historical volatilities as well as implied volatilities, in its capital market assumptions. Actuarial assumptions, including lapse behavior and mortality rates, are either based on annuity experience or pricing assumptions if experience has not yet developed.  

6 The value of separate account liabilities is set to equal the fair value of separate account assets.  

Transfers

The Company reviews its fair value hierarchy classifications quarterly. Changes in observability of significant valuation inputs identified during these reviews may trigger reclassification of fair value hierarchy levels of financial assets and liabilities. Reclassifications in/out of Level 3 are reported as transfers at the beginning of the period in which the change occurs. During 2008, the Company’s investments in residential mortgage-backed securities backed by prime collateral were classified as Level 3 financial assets because of their inactive markets and resulting illiquidity. As of December 31, 2009, these securities are no longer considered inactive due to increased trading volume and market activity and as a result were transferred out of Level 3. In addition, the Company was able to gain additional observable valuation inputs in the pricing of certain corporate securities, residential mortgage-backed securities and commercial mortgage-backed securities, which led to transferring these securities out of Level 3.

Additionally, certain corporate securities and commercial mortgage-backed securities had significant changes in key valuation inputs, which led to transfers into Level 3, primarily related to ratings downgrades and changes in pricing sources.

Fair Value on a Nonrecurring Basis

In 2009, certain mortgage loans on real estate held for investment were measured at the estimated fair value of the collateral on a non-recurring basis in periods subsequent to initial recognition due to these loans having specific reserves applied to them during the period. The application of these specific reserves adjusts the amortized cost basis of the loan to the estimated fair value of the collateral. The estimated fair value of the collateral supporting these loans was $154.8 million when the specific reserves were recorded.

Financial Instruments Not Carried at Fair Value

In estimating fair value for its disclosures for financial instruments not carried at fair value (and not included in the fair value disclosures above), the Company used the following methods and assumptions:

Mortgage loans on real estate held for investment, net: The fair values of mortgage loans held for investment 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. As commercial mortgage loans held for sale are included in the above fair value disclosure, they are excluded from financial instruments not carried at fair value in the table below.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

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

Long-term debt, payable to Nationwide Financial Services, Inc. (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:

	2009						2008
(in millions)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Assets
Investments:
Mortgage loans on real estate, net	$	6,781.1		$	5,946.3		$	7,645.6		$	6,845.6
Policy loans		1,050.4			1,050.4			1,095.6			1,095.6
Liabilities
Investment contracts		(18,723.8	)		(18,315.5	)		(20,093.2	)		(19,621.5	)
Short-term debt		(150.0	)		(150.0	)		(249.7	)		(249.7	)
Long-term debt, payable to NFS		(700.0	)		(716.6	)		(700.0	)		(568.7	)

(5) Derivative Financial Instruments  

Qualitative Disclosures

The Company recognizes all of its derivative instruments as either assets or liabilities at fair value. The accounting for changes in the fair value (e.g., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship.

For derivative instruments that are designated and qualify as a cash flow hedge (e.g., hedging the exposure to variability in expected future cash flows that is attributable to interest rate risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction impacts earnings (e.g., interest income on a floating rate asset). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (ineffectiveness), or components of fair value that are excluded from the assessment of effectiveness, are recognized in the consolidated statements of income (loss) during the period.

For derivative instruments that are designated and qualify as a fair value hedge (e.g., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the hedged item are both recognized in net realized investment gains and losses.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

For derivative instruments that are not designated as a hedging instrument, the gain or loss on the derivative instrument is recognized in net realized investment gains and losses.

The Company’s derivative activities primarily are with financial institutions and corporations. In order to minimize credit risk, the Company enters into master netting agreements, which reduce risk by permitting the closeout and netting of transactions with the same counterparty upon occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. Generally, the Company accepts collateral in the form of cash, U.S. Treasury securities and other marketable securities.

As of December 31, 2009 and 2008, the Company had received $532.4 million and $1.02 billion, respectively, of cash for derivative collateral, which is in turn invested in short-term investments. The Company also held $32.3 million and $35.4 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2009 and 2008, respectively. As of December 31, 2009 and 2008, the Company had pledged fixed maturity securities with a fair value of $55.6 million and $24.5 million, respectively, as collateral to various derivative counterparties. There are no contingent features associated with the Company’s derivative instruments which would require additional collateral to be pledged to counterparties.

The Company periodically evaluates the risks within the derivative portfolios due to credit exposure. When evaluating this risk, the Company considers several factors which include, but are not limited to, the counterparty risk associated with derivative receivables, the Company’s own credit as it relates to derivative payables, the collateral thresholds associated with each counterparty, and changes in relevant market data in order to gain insight into the probability of default by the counterparty. In addition, the effect that the Company’s exposure to credit risk could have on the effectiveness of the Company’s hedging relationships is considered. As of December 31, 2009, the impact of the exposure to credit risk on both the fair value measurement of derivative assets and liabilities and the effectiveness of the Company’s hedging relationships was immaterial.

The Company is exposed to certain other risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk, foreign currency exchange risk, equity risk and credit risk.

Derivatives Qualifying for Hedge Accounting – Interest Rate Risk Management

The Company periodically purchases variable rate investments (e.g., commercial mortgage loans and corporate bonds). As a result, the Company is exposed to variability in cash flows and investment income due to changes in interest rates. Such variability poses risks to the Company when the investments 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 is intended to match the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap. The net receipt of a fixed rate will offset the fixed rate paid on the liability. These interest rate swaps are designated as hedging instruments in cash flow hedging relationships.

The Company periodically participates in a medium-term note (MTN) program. Under this program, NLIC issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust. The proceeds from these funding agreements are generally used to purchase fixed rate assets (generally available-for-sale corporate bonds, available-for-sale private placement bonds or held for investment commercial mortgage loans). In a rising interest rate environment, the Company is exposed to narrowing margins as interest expense will increase while interest income remains constant. To manage this risk, the Company has entered into pay fixed/receive variable interest rate swaps. The interest rate swap agreement utilized by the Company effectively modifies its exposure to interest rate risk by converting the Company’s floating rate funding agreements associated with the MTN program to a fixed rate, thus reducing the impact of interest rate changes on future interest expense. These interest rate swaps are designated as hedging instruments in cash flow hedging relationships.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Derivatives Qualifying for Hedge Accounting – Foreign Currency Risk Management

The Company purchases foreign-denominated fixed rate assets and the associated investment income is exposed to changes in the exchange rates of the foreign currencies. To manage this risk, the Company has entered into pay fixed foreign currency/receive fixed U.S. dollar cross-currency swaps. As foreign exchange rates change, the increase or decrease in the cash flows of the derivative instrument will offset the changes in the functional-currency equivalent cash flows of the asset. These cross-currency swaps are designated as hedging instruments in cash flow hedging relationships.

The Company also purchases foreign-denominated fixed rate assets, funded with proceeds from funding agreements under a variable rate MTNs. The value of these investments is exposed to both changes in the exchange rates of the foreign currencies and changes in interest rates. To manage this risk, the Company has entered into pay fixed foreign currency/receive variable U.S. cross-currency interest rate swaps. As foreign exchange rates and interest rates change, the increase or decrease in the value of the derivative instrument will offset the changes in the asset’s value (relative to foreign currency and interest rate changes). These cross-currency interest rate swaps are designated as hedging instruments in fair value hedging relationships.

In addition, the Company periodically participates in a fixed rate foreign denominated MTN program. Under this program, NLIC issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust, and the value of these liabilities is exposed to both changes in the exchange rates of the foreign currencies and changes in interest rates. To manage this risk, the Company has entered into receive fixed foreign currency/pay variable U.S. cross-currency interest rate swaps. As foreign exchange rates and interest rates change, the increase or decrease in the value of the derivative instrument will offset the changes in the liability’s value (relative to foreign currency and interest rate changes). These cross-currency interest rate swaps are designated as hedging instruments in fair value hedging relationships.

Derivatives Not Qualifying for Hedge Accounting – Interest Rate Risk Management

The Company enters into commercial mortgage loan commitments that are held for sale, which exposes the Company to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to the loans being funded. In an effort to manage this risk, the Company enters into short U.S. Treasury futures and/or pay fixed interest rate swaps during the commitment period. If interest rates rise or fall, the gains or losses on short U.S. Treasury futures will offset the change in fair value of the commitment attributable to the change in interest rates.

The Company may use pay fixed, receive variable interest rate swaps to hedge the value of a portfolio of fixed-rate assets, relative to changes in interest rates. The interest rate swaps mitigate the risk of a loss of value due to increasing interest rates, with the fluctuations in the fair values of the derivatives offsetting changes in the fair values of the portfolios resulting from changes in interest rates.

The Company offers a variety of variable annuity programs with a guaranteed minimum balance or guaranteed withdrawal benefits, and options are utilized to economically hedge a portion of these products. See Derivatives Not Qualifying for Hedge Accounting – Equity Market Risk Management below for further explanation. As interest rates are a component of the option’s value, the effectiveness of economically hedging the annuity products may be adversely affected by changes in interest rates. The Company enters into interest rate swaps to mitigate this risk. The fluctuation in the fair values of the derivatives offsets the changes in the fair values of the options resulting from changes in interest rates.

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.

In addition, the Company may use pay fixed/receive variable interest rate swaps as hedges against the negative effects of adverse interest rate movements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Derivatives Not Qualifying for Hedge Accounting – Foreign Currency Risk Management

The Company periodically participates in a variable rate foreign denominated MTN program. Under this program, NLIC issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust. As such, the cash flows related to these MTNs are exposed to changes in the exchange rates of the foreign currencies. Because the Company desires to retain the variable interest rate, it has entered into receive variable foreign currency/pay variable U.S. dollar cross-currency swaps. The basis swap converts the debt instrument to a U.S. dollar variable rate, thereby eliminating foreign exchange risk. While the receive-side terms of the basis swap will be consistent with the terms of the liability, the Company is not able to match the pay-side terms of the derivative to a specific asset. Therefore, these basis swaps do not receive hedge accounting treatment. The Company also uses currency contracts, primarily futures, to hedge foreign currency denominated investments in certain alternative investments.

Derivatives Not Qualifying for Hedge Accounting – Equity Market Risk Management

The Company offers a variety of variable annuity programs with a guaranteed minimum balance or guaranteed withdrawal benefits. The contractholders may elect to invest in equity funds. Adverse changes in the equity markets expose the Company to losses if the changes result in contractholder’s account balances falling below the guaranteed minimum. To mitigate a portion of the risk associated with these liabilities, the Company enters into equity index futures and options. The changes in value of the futures and options will offset a portion of the changes in the annuity accounts relative to changes in the equity market.

The Company offers a variety of variable annuity programs with a guaranteed minimum balance or guaranteed withdrawal benefits, where the contractholder elects to invest in funds with a foreign equity index. Adverse changes in the foreign equity index expose the Company to losses if the change results in contractholder’s account balances falling below the guaranteed minimum. To mitigate this risk, the Company enters into total return swaps, where the Company pays the total return on the foreign index and receives one-month U.S. London Interbank Offered Rate (LIBOR). The changes in cash flows of the total return swap will offset a portion of the changes in the annuity accounts relative to changes in the foreign index.

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. The Company does not expect any meaningful level of claims under the living benefit features for several years and believes the impact of claims is expected to be mitigated by its economic hedging program.

Derivatives Not Qualifying for Hedge Accounting – Credit Risk

The Company enters into two distinct types of credit derivative contracts (or credit default swaps) which allows the Company to either sell or buy credit protection on a specific creditor or credit index.

The Company sells credit default protection to counterparties on selected debt instruments with specific creditor or credit index exposure and combines the credit default swap with selected assets the Company owns to enhance spreads. These selected assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. When the Company sells these instruments, it receives periodic premium payments similar to the risk premium received on an equivalent maturity bond from the same creditor. In return, the Company agrees to provide for losses if a credit event occurs during the lifetime of the contract, by buying a pre-determined cash bond from the counterparty at face value. In such a contract, a credit event will be defined in the trade settlement documentation and may include, but is not limited to, creditor bankruptcy or restructuring. The combined credit default swap and investments provide cash flows with the duration and credit spread targeted by the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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.

Quantitative Disclosure

The following table presents the fair value of derivative instruments, location of the related instruments in the consolidated balance sheets and the related notional amounts of the derivative instruments as of December 31, 2009:

	Derivative assets					Derivative liabilities
(in millions)	Balance sheet location	Fair value		Notional		Balance sheet location	Fair value		Notional
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets	$	3.8	$	86.4	Other liabilities	$	69.0	$	1,216.1
Cross-currency swaps	Other assets		33.8		93.1	Other liabilities		35.9		215.9
Total derivatives designated as hedging instruments			37.6		179.5			104.9		1,432.0
Derivatives not designated as hedging instruments:
Interest rate contracts	Other assets		410.0		7,456.7	Other liabilities		239.1		5,162.0
Cross-currency swaps	Other assets		48.6		210.8	Other liabilities		48.5		209.6
Credit default swaps	Other assets		0.5		28.5	Other liabilities		3.2		81.5
Total return swaps	Other assets		0.8		85.4	Other liabilities		8.3		555.8
Equity contracts	Other assets		331.2		2,504.6	Other liabilities		10.3		995.7
Embedded derivatives on guaranteed benefit annuity programs	N/A		—		—	Future policy benefits and claims		310.9		N/A
Other embedded derivatives	N/A		—		—	Other liabilities		1.5		N/A
Total derivatives not designated as hedging instruments			791.1		10,286.0			621.8		7,004.6
Total derivatives		$	828.7	$	10,465.5		$	726.7	$	8,436.6

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table presents the gains (losses) for derivative instruments designated and qualifying as hedging instruments in fair value hedges and the location of these instruments in the consolidated financial statements for the year ended December 31, 2009:

(in millions)	Location of gain (loss) recognized on derivatives	Amount of gain (loss) recognized on derivatives1,2
Derivatives in fair value hedging relationships:
Interest rate contracts	Net realized investment gains (losses)	$	24.9
Cross-currency swaps	Net realized investment gains (losses)		(2.4	)
Total		$	22.5
Underlying fair value hedge relationships:
Interest rate contracts	Net realized investment gains (losses)	$	(35.3	)
Cross-currency swaps	Net realized investment gains (losses)		2.5
Total		$	(32.8	)
1         Excludes ($36.9) million of periodic settlements in interest rate contracts which are recorded in net investment income. 2        Includes $7.5 million of cash received in the termination of cash flow hedging instruments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following tables present the gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges and the location of these instruments in the consolidated financial statements for the year ended December 31, 2009:

(in millions)	Amount of gain (loss) recognized in OCI on derivatives
Derivatives in cash flow hedging relationships:
Interest rate contracts	$	12.6
Cross-currency swaps		(4.4	)
Currency contracts		(18.8	)
Other embedded derivatives		(12.0	)
Total	$	(22.6	)

(in millions)	Location of realized gain (loss) reclassified from AOCI into income1	Amount of realized gain (loss) reclassified from AOCI into income
Derivatives in cash flow hedging relationships:
Interest rate contracts	Interest credited to policyholder accounts	$	(3.8	)
Cross-currency swaps	Net realized investment gains (losses)		(10.9	)
Currency contracts	Net realized investment gains (losses)		(3.8	)
Other embedded derivatives	N/A		—
Total		$	(18.5	)

1 Effective portion.  

(in millions)	Location of realized gain (loss) recognized in income on derivatives1	Amount of realized gain (loss) recognized in income on derivatives1,2,3
Derivatives in cash flow hedging relationships:
Interest rate contracts	Net realized investment gains (losses)	$	0.1
Cross-currency swaps	Net realized investment gains (losses)		(1.3	)
Currency contracts	Net realized investment gains (losses)		(2.8	)
Other embedded derivatives	N/A		—
Total		$	(4.0	)

1 Ineffective portion and amounts excluded from the measurement of ineffectiveness.  

2 Excludes 0.2 million of periodic settlements in interest rate contracts.  

3 Includes $16.5 million of cash received in termination of cash flow hedging instrument.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table presents the gains (losses) for derivative instruments not designated and qualifying as hedging instruments and the location of these instruments in the consolidated financial statements for the year ended December 31, 2009:

(in millions)	Location of realized gain (loss) in income on derivatives	Amount of realized gain (loss) recognized in income on derivatives1
Derivatives not designated as hedging instruments:
Interest rate contracts	Net realized investment gains (losses)	$	(197.2	)
Cross-currency swaps	Net realized investment gains (losses)		3.3
Credit default swaps	Net realized investment gains (losses)		7.9
Equity total return swaps	Net realized investment gains (losses)		7.0
Equity contracts	Net realized investment gains (losses)		(738.7	)
Embedded derivatives on guaranteed benefit annuity programs	Net realized investment gains (losses)		1,432.0
Other embedded derivatives	Net realized investment gains (losses)		2.6
Total		$	516.9
1         Excludes net interest settlements and other revenue on embedded derivatives on guaranteed benefit annuity programs that are also recorded in net realized investment gains (losses).

In addition to the net realized investment gains (losses) listed in the previous tables, $(151.3) million of net interest settlements on all derivative instruments and $63.2 million of other revenue on embedded derivatives on guaranteed benefit annuity programs are also recorded in net realized investment gains (losses) for the year ended December 31, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Credit Derivatives

The Company had exposure to credit protection contracts for the years ended December 31, 2009, 2008, and 2007 and had experienced no credit event losses in 2009, credit event losses of $18.8 million in 2008 and no credit event losses in 2007 on such contracts. The following table presents the Company’s outstanding exposure to credit protection contracts, all of which are related to corporate debt instruments, as of the dates indicated, by contract maturity and industry exposure:

	Less than or equal to one year					One to three years					Three to five years					Total
(in millions)	Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value
December 31, 2009:
Single sector exposure:
Consumer goods	$	—	$	—		$	—	$	—		$	—	$	—		$	—	$	—
Financial		35.0		(2.5	)		9.0		0.2			—		—			44.0		(2.3	)
Oil & gas pipelines		15.0		—			—		—			—		—			15.0		—
Services		—		—			—		—			10.0		0.2			10.0		0.2
Utilities		—		—			—		—			—		—			—		—
Total single sector exposure		50.0		(2.5	)		9.0		0.2			10.0		0.2			69.0		(2.1	)
Index exposure:
Corporate bonds		—		—			—		—			—		—			—		—
Total index exposure		—		—			—		—			—		—			—		—
Total	$	50.0	$	(2.5	)	$	9.0	$	0.2		$	10.0	$	0.2		$	69.0	$	(2.1	)
December 31, 2008:
Single sector exposure:
Consumer goods	$	—	$	—		$	6.0	$	(0.8	)	$	—	$	—		$	6.0	$	(0.8	)
Financial		—		—			35.0		(5.8	)		13.0		(0.5	)		48.0		(6.3	)
Oil & gas pipelines		10.0		—			15.0		(0.8	)		—		—			25.0		(0.8	)
Services		—		—			—		—			35.0		(3.0	)		35.0		(3.0	)
Utilities		4.5		—			—		—			—		—			4.5		—
Total single sector exposure		14.5		—			56.0		(7.4	)		48.0		(3.5	)		118.5		(10.9	)
Index exposure:
Corporate bonds		—		—			—		—			110.9		(0.3	)		110.9		(0.3	)
Total index exposure		—		—			—		—			110.9		(0.3	)		110.9		(0.3	)
Total	$	14.5	$	—		$	56.0	$	(7.4	)	$	158.9	$	(3.8	)	$	229.4	$	(11.2	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(6) Investments  

Fixed Maturity Securities and Equity Securities Available-for-Sale

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

(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
December 31, 2009:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	136.7	$	15.4	$	1.0	$	151.1
U. S. Government agencies		551.3		57.2		5.7		602.8
Obligations of states and political subdivisions		567.6		4.4		23.1		548.9
Debt securities issued by foreign governments		69.9		5.3		0.1		75.1
Corporate securities
Public		10,929.8		597.2		175.2		11,351.8
Private		4,499.5		193.1		83.4		4,609.2
Residential mortgage-backed securities		6,078.9		95.2		665.2		5,508.9
Commercial mortgage-backed securities		1,284.9		6.5		207.3		1,084.1
Collateralized debt obligations		531.1		11.8		170.9		372.0
Other asset-backed securities		453.4		20.4		28.0		445.8
Total fixed maturity securities		25,103.1		1,006.5		1,359.9		24,749.7
Equity securities		48.8		4.6		0.8		52.6
Total securities available-for-sale	$	25,151.9	$	1,011.1	$	1,360.7	$	24,802.3
December 31, 2008:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	79.1	$	22.6	$	—	$	101.7
U. S. Government agencies		420.4		93.3		—		513.7
Obligations of states and political subdivisions		230.5		1.6		7.4		224.7
Debt securities issued by foreign governments		50.1		5.4		—		55.5
Corporate securities
Public		8,881.9		109.9		1,040.7		7,951.1
Private		4,997.8		45.2		401.0		4,642.0
Residential mortgage-backed securities		6,807.8		90.5		863.6		6,034.7
Commercial mortgage-backed securities		1,418.1		0.6		455.3		963.4
Collateralized debt obligations		557.8		6.3		240.7		323.4
Other asset-backed securities		679.1		3.6		105.4		577.3
Total fixed maturity securities		24,122.6		379.0		3,114.1		21,387.5
Equity securities		62.2		0.7		8.8		54.1
Total securities available-for-sale	$	24,184.8	$	379.7	$	3,122.9	$	21,441.6

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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. The Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell debt securities in unrealized loss positions. The Company may realize investment losses to the extent its liquidity needs require the disposition of general account fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments.

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, except number of securities)	Estimated fair value		Gross unrealized losses		Number of securities	Estimated fair value		Gross unrealized losses		Number of securities	Estimated fair value		Gross unrealized losses		Number of securities
December 31, 2009:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	50.9	$	1.0	2	$	—	$	—	—	$	50.9	$	1.0	2
U.S. Government agencies		154.6		5.7	8		—		—	—		154.6		5.7	8
Obligations of states and political subdivisions		318.2		11.5	35		79.1		11.6	13		397.3		23.1	48
Debt securities issued by foreign governments		1.6		0.1	2		—		—	—		1.6		0.1	2
Corporate securities
Public		1,197.9		32.0	160		1,117.5		143.2	201		2,315.4		175.2	361
Private		278.8		19.0	47		972.6		64.4	73		1,251.4		83.4	120
Residential mortgage-backed securities		936.7		104.2	117		2,375.1		561.0	341		3,311.8		665.2	458
Commercial mortgage-backed securities		42.7		5.2	11		699.3		202.1	101		742.0		207.3	112
Collateralized debt obligations		29.9		28.9	13		277.2		142.0	45		307.1		170.9	58
Other asset-backed securities		5.4		0.2	12		247.5		27.8	33		252.9		28.0	45
Total fixed maturity securities		3,016.7		207.8	407		5,768.3		1,152.1	807		8,785.0		1,359.9	1,214
Equity securities		16.7		0.1	13		2.4		0.7	75		19.1		0.8	88
Total	$	3,033.4	$	207.9	420	$	5,770.7	$	1,152.8	882	$	8,804.1	$	1,360.7	1,302
December 31, 2008:
Fixed maturity securities:
Obligations of states and political subdivisions	$	94.9	$	3.5	16	$	29.3	$	3.9	9	$	124.2	$	7.4	25
Corporate securities
Public		4,109.4		676.9	692		1,350.3		363.8	289		5,459.7		1,040.7	981
Private		2,259.4		282.1	231		996.5		118.9	105		3,255.9		401.0	336
Residential mortgage-backed securities		820.3		187.8	138		2,281.4		675.8	323		3,101.7		863.6	461
Commercial mortgage-backed securities		539.9		190.4	96		410.9		264.9	96		950.8		455.3	192
Collateralized debt obligations		151.0		100.8	24		122.6		139.9	36		273.6		240.7	60
Other asset-backed securities		325.5		41.7	38		228.7		63.7	26		554.2		105.4	64
Total fixed maturity securities		8,300.4		1,483.2	1,235		5,419.7		1,630.9	884	$	13,720.1	$	3,114.1	2,119
Equity securities		19.2		8.6	81		3.4		0.2	6		22.6		8.8	87
Total	$	8,319.6	$	1,491.8	1,316	$	5,423.1	$	1,631.1	890	$	13,742.7	$	3,122.9	2,206

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The weighted estimated fair value to amortized cost for non-investment grade fixed maturity securities that have an estimated fair value of less than 80% and have been in an unrealized loss position for more than one year was 65% and 64% as of December 31, 2009 and December 31, 2008, respectively.

The table below summarizes the amortized cost and estimated fair values of fixed maturity securities available-for-sale, by maturity, as of December 31, 2009. 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	$	1,002.3	$	1,024.5
Due after one year through five years		7,213.2		7,507.1
Due after five years through ten years		5,265.4		5,516.8
Due after ten years		3,273.9		3,290.5
Subtotal		16,754.8		17,338.9
Residential mortgage-backed securities		6,078.9		5,508.9
Commercial mortgage-backed securities		1,284.9		1,084.1
Collateralized debt obligations		531.1		372.0
Other asset-backed securities		453.4		445.8
Total	$	25,103.1	$	24,749.7

The NAIC assigns credit quality ratings (NAIC designations) to securities for the purpose of statutory reporting. These NAIC designations are generally based on the credit ratings assigned by nationally recognized statistical rating agencies organizations (NRSRO) unless a security is not rated by an NRSRO, in which case the NAIC rates it using an alternative approach. For 2009 statutory reporting, the NAIC modified its ratings approach for residential mortgage-backed securities, which are not backed by U.S. government agencies. Under the modified approach, the NAIC designation for this type of security is based on an insurer’s reported carrying value for the security relative to a NAIC-prescribed ratings matrix for the security, with a higher NAIC designation afforded securities with lower carrying values. In effect, this process rates the credit quality of a security based on an independent market view of the expected discounted future cash flows from the security versus its statutory carrying value. Under this process, NAIC designations for these residential mortgage-backed securities could be higher or lower than the related NRSRO ratings. NAIC designations range from class 1 (highest quality) to class 6 (lowest quality). Of the Company’s general account fixed maturity securities, 91% and 93% were in the two highest NAIC designations categories as of December 31, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table shows the equivalent designation between the NAIC and NRSRO and summarizes the credit quality, as determined by NAIC designations, of the Company’s fixed maturity securities portfolio as of the dates indicated:

(in millions)		December 31, 2009				December 31, 2008
NAIC Desingations1,2	NRSRO equivalent designation	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
1	AAA/AA/A	$	15,322.9	$	15,195.7	$	15,423.0	$	13,960.4
2	BBB		7,139.5		7,275.0		6,610.4		5,802.2
3	BB		1,551.1		1,404.3		1,233.3		990.0
4	B		724.1		616.7		556.0		386.2
5	CCC and lower		253.5		187.6		190.5		148.2
6	In or near default		112.0		70.4		109.4		100.5
	Total	$	25,103.1	$	24,749.7	$	24,122.6	$	21,387.5

1 NAIC designations are assigned at least annually. Some ratings for securities shown have been assigned to securities not yet assigned an NAIC designation in a manner approximating equivalent NRSRO categories.  

2 Class 1 and class 2 NAIC designations are generally considered to represent investment grade ratings and are considered as such by the Company in reporting its credit quality information.  

Other-Than-Temporary Impairment Evaluations

When evaluating whether a residential mortgage-backed security, commercial mortgage-backed security, collateralized debt obligation and other asset-backed securities are other-than-temporarily impaired, the Company examines characteristics of the underlying collateral, such as delinquency prepayment and default rates, the quality of the underlying borrower, the type of collateral in the pool, the vintage year of the collateral, subordination levels within the structure of the collateral pool, the quality of any credit guarantors, the Company’s intent to sell the security and whether it is more likely than not it will be required to sell the security before the recovery of its amortized cost basis.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt position, the Company’s intent to sell the security and whether it is more likely than not it will be required to sell the security before the recovery of its amortized cost basis. A similar analysis is performed to evaluate U.S. Treasury securities and obligations of U.S. Government corporations, U.S. Government agencies, obligations of states and political subdivisions, and debt securities issued by foreign governments.

For all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and amount of the cash flows. The Company evaluates its intent to sell on an individual security basis.

To the extent that the present value of the cash flows generated by a security is less than the amortized cost, an other-than-temporary impairment is recognized through earnings. It is reasonably possible that further declines in estimated fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments in the near term, which could be significant.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Under the current other-than temporary impairment model, which was amended by the FASB and adopted by the Company in the first quarter of 2009, debt securities that become other-than-temporarily impaired (where the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security prior to recovery of the security’s amortized cost) are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment being recognized in a separate component of other comprehensive income, net of applicable taxes and other offsets. For securities that are other-than-temporarily impaired, a discussion of the estimate of the credit loss portion that is recognized in earnings is provided, as applicable in the respective section of this footnote.

Corporate Securities

Corporate securities include conventional bonds, private placement fixed maturity securities, syndicated corporate bank loans and hybrid securities with both debt and equity-like features. For these corporate securities, the following table summarizes, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of 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
December 31, 2009:
99.9% - 80.0%	$	27.1	$	104.1	$	131.2	$	13.1	$	45.5	$	58.6	$	40.2	$	149.6	$	189.8
79.9% - 50.0%		8.5		45.6		54.1		2.3		12.4		14.7		10.8		58.0		68.8
Below 50.0%		—		—		—		—		—		—		—		—		—
Total	$	35.6	$	149.7	$	185.3	$	15.4	$	57.9	$	73.3	$	51.0	$	207.6	$	258.6
December 31, 2008:
99.9% - 80.0%	$	355.7	$	116.8	$	472.5	$	31.0	$	23.4	$	54.4	$	386.7	$	140.2	$	526.9
79.9% - 50.0%		327.5		121.9		449.4		118.4		126.0		244.4		445.9		247.9		693.8
Below 50.0%		79.3		41.5		120.8		47.1		53.1		100.2		126.4		94.6		221.0
Total	$	762.5	$	280.2	$	1,042.7	$	196.5	$	202.5	$	399.0	$	959.0	$	482.7	$	1,441.7

Judgments regarding whether a corporate debt security is other-than-temporarily impaired include analyzing the issuer’s financial condition. An analysis of the issuer’s financial condition includes whether there has been a decline in the overall value of the issuer or its ability to service the specific security. The total enterprise value of the company issuing the security is determined through asset coverage, cash flow multiples, or other industry standards. Several factors assessed when determining the enterprise value include, but are not limited to, credit quality ratings, cash flow sustainability, liquidity, strength, industry, and market position. Sources of information include, but are not limited to, management projections, independent consultants, street research, peer analysis, and internal analysis.

If the company has concerns regarding the viability of the issuer or its ability to service the specific security after this analysis, a recovery value analysis is prepared to determine if the recovery value has declined below the amortized cost of the security. The recovery value is combined with the estimated timing to recovery, any other applicable cash flows that are expected and the security’s effective yield to arrive at the expected present value of cash flows. If a recovery estimate is not feasible, then the market’s view of cash flows implied by the current fair value, market discount rates, and effective yield are the primary factors used to estimate recovery.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The Company held hybrid securities issued by institutions in the financial sector with both debt and equity-like features, classified as corporate fixed maturity securities, with estimated fair values of $608.9 million and $661.2 million, and gross unrealized losses of $101.3 million and $379.9 million, as of December 31, 2009 and 2008, respectively. Of these unrealized losses as of December 31, 2009, $98.8 million, or 98%, were in an unrealized loss position for more than one year, evaluated under the debt model, compared to $106.3 million, or 18%, as of December 31, 2008. The Company evaluates such securities for other-than-temporary impairment using the criteria of either a debt or an equity security depending on the facts and circumstances of the individual issuer and security.

The Company invests in private placement fixed maturity securities because of the generally higher nominal yield available compared to comparably rated public fixed maturity securities, more restrictive financial and business covenants available in private fixed maturity security loan agreements, and stronger prepayment protection. Although private placement fixed maturity securities are not registered with the SEC and generally are less liquid than public fixed maturity securities, restrictive financial and business covenants included in private placement fixed maturity security loan agreements generally are designed to compensate for the impact of increased liquidity risk. A significant portion of the private placement fixed maturity securities that the Company holds are participations in issues that are also owned by other investors. In addition, some of these securities are rated by NRSROs, and substantially all have been assigned a rating by the NAIC, as shown in a previous table in this footnote summarizing the credit quality of the Company’s fixed maturity securities portfolio.

Residential Mortgage-Backed Securities

Residential mortgage-backed securities are a type of fixed income security backed by residential mortgage loans, which have been are sold into a trust or special purpose entity, formed for the purpose of securitizing and tranching the cash flows of the mortgage loans. The following tables summarize the distribution by collateral classification of the Company’s residential mortgage-backed securities as of dates indicated:

	As of December 31, 2009					As of December 31, 2008
in millions	Amortized cost		Estimated fair value		% of estimated fair value total	Amortized cost		Estimated fair value		% of estimated fair value total
Government agency	$	2,546.9	$	2,620.9	48%	$	2,928.5	$	3,002.4	50%
Prime		1,120.3		959.7	17%		1,341.6		1,041.4	17%
Alt-A		1,830.6		1,451.7	26%		1,850.7		1,451.6	24%
Sub-prime		577.3		473.7	9%		675.8		528.7	9%
Other residential mortgage collateral		3.8		2.9	—		11.2		10.6	—
Total	$	6,078.9	$	5,508.9	100%	$	6,807.8	$	6,034.7	100%

The Company considers Alt-A collateral to be mortgages whose underwriting standards do not qualify the mortgage for regular conforming or jumbo loan programs. Typical underwriting characteristics that cause a mortgage to fall into the Alt-A classification may include, but are not limited to, inadequate loan documentation of a borrower’s financial information, debt-to-income ratios above normal lending limits, loan-to-value ratios above normal lending limits that do not have primary mortgage insurance, a borrower who is a temporary resident, and loans securing non-conforming types of real estate. Alt-A mortgages are generally issued to borrowers having higher Fair Isaac Credit Organization (FICO) scores, and the lender typically charges a slightly higher interest rate for such mortgages.

The Company considers sub-prime collateral to be mortgages that are first or second lien mortgage loans issued to sub-prime borrowers, as demonstrated by recent delinquent rent or housing payments or substandard FICO scores. Second-lien mortgage loans are also considered sub-prime. The Company considers prime collateral to be mortgages whose underwriting standards qualify the mortgage for regular conforming or jumbo loan programs. In addition, government agency collateral is considered to be mortgages securitized by government agencies both implicitly and explicitly backed by the full faith and credit of the U.S. Government.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

For residential mortgage-backed securities, the following table summarizes as of the dates indicated the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of 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
December 31, 2009:
99.9% - 80.0%	$	29.0	$	134.1	$	163.1	$	11.5	$	41.5	$	53.0	$	40.5	$	175.6	$	216.1
79.9% - 50.0%		17.4		197.6		215.0		19.5		140.4		159.9		36.9		338.0		374.9
Below 50.0%		10.3		33.8		44.1		16.5		13.6		30.1		26.8		47.4		74.2
Total	$	56.7	$	365.5	$	422.2	$	47.5	$	195.5	$	243.0	$	104.2	$	561.0	$	665.2
December 31, 2008:
99.9% - 80.0%	$	47.7	$	124.5	$	172.2	$	6.0	$	10.3	$	16.3	$	53.7	$	134.8	$	188.5
79.9% - 50.0%		91.7		441.6		533.3		17.1		22.2		39.3		108.8		463.8		572.6
Below 50.0%		13.0		74.4		87.4		12.3		2.8		15.1		25.3		77.2		102.5
Total	$	152.4	$	640.5	$	792.9	$	35.4	$	35.3	$	70.7	$	187.8	$	675.8	$	863.6

The Company evaluates its residential mortgage-backed securities for other-than-temporary impairment using multiple inputs. Loan level defaults are estimated using an option pricing approach in which the probability of borrower default increases as home equity declines. Other factors which influence the probability of default are debt-servicing, missed refinancing opportunities and geography. Loan level characteristics such as issuer, FICO score, payment terms, level of documentation, residency type, dwelling type and loan purpose are also utilized in the model along with historical performance, to estimate or measure the loan’s propensity to default. Additionally, the model takes into account loan age, seasonality, payment changes and exposure to refinancing as additional drivers of default. For transactions where loan level data is not available, the model uses a proxy based on the collateral characteristics. Loss severity in the model is a function of multiple factors, including but not limited to, the unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property valuation and loan-to-value ratio at origination. Prepayment speeds, both actual and estimated, are also considered. The cash flows generated by the collateral securing these securities are then determined based on these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to determine the cash flows associated with the residential mortgage-backed security held by the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Commercial Mortgage-Backed Securities

The Company owns and manages commercial mortgage-backed securities, which are trust certificates or bonds offered to investors that are collateralized by a pool of commercial mortgage loans from which the principal and interest paid on those mortgages flows to investors. These investments in commercial mortgage-backed securities are generally characterized by securities that are collateralized by static, heterogeneous pools of mortgages on commercial real estate properties. Deals are generally diversified across property types, geography, borrowers, tenants, loan size, coupon and vintages. For commercial mortgage-backed securities, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of 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
December 31, 2009:
99.9% - 80.0%	$	4.2	$	54.0	$	58.2	$	—	$	—	$	—	$	4.2	$	54.0	$	58.2
79.9% - 50.0%		—		85.2		85.2		—		—		—		—		85.2		85.2
Below 50.0%		1.0		62.9		63.9		—		—		—		1.0		62.9		63.9
Total	$	5.2	$	202.1	$	207.3	$	—	$	—	$	—	$	5.2	$	202.1	$	207.3
December 31, 2008:
99.9% - 80.0%	$	19.8	$	36.7	$	56.5	$	—	$	—	$	—	$	19.8	$	36.7	$	56.5
79.9% - 50.0%		129.6		40.9		170.5		—		—		—		129.6		40.9		170.5
Below 50.0%		41.0		187.3		228.3		—		—		—		41.0		187.3		228.3
Total	$	190.4	$	264.9	$	455.3	$	—	$	—	$	—	$	190.4	$	264.9	$	455.3

Commercial mortgage-backed securities’ cash flows are generated by an industry standard fixed income analytics system designed for asset backed securities. In addition, a third party default model is generally utilized within this service to apply loan specific probability of default, refinance risk and loss severity ratios to generate estimated cash flows. Default and prepayment assumptions are deal specific and include, but are not limited to, delinquency, property type, loan size, debt service coverage ratio, loan to value ratios and loan age.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Collateralized Debt Obligations

Collateralized debt obligations are asset-backed securities whose value is derived from the credit quality of the underlying corporate obligations. For collateralized debt obligations, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade versus non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of 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
December 31, 2009:
99.9% - 80.0%	$	0.4	$	3.6	$	4.0	$	0.3	$	15.8	$	16.1	$	0.7	$	19.4	$	20.1
79.9% - 50.0%		—		29.0		29.0		4.2		31.4		35.6		4.2		60.4		64.6
Below 50.0%		—		9.6		9.6		24.0		52.6		76.6		24.0		62.2		86.2
Total	$	0.4	$	42.2	$	42.6	$	28.5	$	99.8	$	128.3	$	28.9	$	142.0	$	170.9
December 31, 2008:
99.9% - 80.0%	$	7.0	$	0.2	$	7.2	$	0.1	$	0.6	$	0.7	$	7.1	$	0.8	$	7.9
79.9% - 50.0%		25.8		37.2		63.0		—		—		—		25.8		37.2		63.0
Below 50.0%		66.5		99.8		166.3		1.4		2.1		3.5		67.9		101.9		169.8
Total	$	99.3	$	137.2	$	236.5	$	1.5	$	2.7	$	4.2	$	100.8	$	139.9	$	240.7

To generate the expected cash flows, agency NRSRO of the underlying corporate securities were used to develop default probabilities. Historical and forecasted loss severities were then applied to develop the expected losses within the security’s collateral pool. An independent data provider is then used to model each security’s structure and waterfall to determine cash flows at the security level. If a recovery estimate is not feasible, then the market’s view of cash flows implied by the current fair value, market discount rates, and effective yield are the primary factors used to estimate recovery.

Within the collateralized debt obligations security type are Pooled Trust Preferreds. Pooled Trust Preferreds are collateralized debt obligations where the collateral is regional bank and insurance company trust preferred securities. All banks in the pools were screened using data provided by U.S. Bank Rating service. The rating service score is a combination of the bank’s liquidity, asset quality, capital adequacy and profitability. The results of the analysis, as well as management’s evaluation of the results and broker research, are used to generate default rates which are modeled to create cash flows from the entire collateral pool underlying each pooled trust preferred security. An independent data provider is then used to model each security’s structure and payment waterfall to determine cash flows at the security level.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Unrealized Gains and Losses

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

(in millions)	2009			2008
Net unrealized losses, before adjustments and taxes	$	(349.6	)	$	(2,743.2	)
Change in fair value attributable to fixed maturity securities designated in fair value hedging relationships		(35.1	)		(57.7	)
Total net unrealized losses, before adjustments and taxes		(384.7	)		(2,800.9	)
Adjustment to deferred policy acquisition costs		31.0			615.9
Adjustment to value of business acquired		0.2			9.6
Adjustment to future policy benefits and claims		19.5			46.9
Adjustment to policyholder dividend obligation		(16.4	)		74.9
Deferred federal income tax benefit		122.6			718.8
Net unrealized losses	$	(227.8	)	$	(1,334.8	)

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

(in millions)	20091		2008			2007
Fixed maturity securities	$	2,381.7	$	(2,682.2	)	$	(132.1	)
Equity securities		11.9		(14.2	)		(4.5	)
Net increase (decrease)	$	2,393.6	$	(2,696.4	)	$	(136.6	)

1 Includes the $384.2 million cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.  

The following table summarizes the Company’s accumulated other comprehensive losses recognized on debt securities which have credit losses in earnings, based on the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities before federal income tax benefit, for the years ended December 31:

(in millions)	2009
Cumulative adoption of accounting principle as of January 1	$	(384.2	)
Net unrealized gains in the period		38.3
Total1	$	(345.9	)

1 Includes $417.5 million of other-than-temporary impairment losses recognized in other comprehensive income for the year ended December 31, 2009.  

The Company’s practice is to disclose in the table above both the non-credit portion of the other-than-temporary impairment losses recognized in other comprehensive income and any subsequent changes in the fair value of those debt securities, which could result in a net unrealized gain.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Mortgage Loans on Real Estate, Securitization and Real Estate

As of December 31, 2009 and 2008, the carrying value, net of specific reserves, of commercial mortgage loans on real estate considered specifically reserved was $154.8 million and $39.9 million, respectively, for which a $36.4 million and $14.4 million specific reserve had been established, respectively. No specific reserve exists for collateral dependent commercial mortgage loans for which the fair value of the collateral is estimated to be greater than the carrying value.

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

(in millions)	2009		2008		2007
Allowance, beginning of period	$	42.4	$	24.8	$	36.0
Net change in allowance		35.0		17.6		(11.2	)
Allowance, end of period	$	77.4	$	42.4	$	24.8

The Company has securitized commercial mortgage loans on real estate to third parties. The Company, as the transferor, has continuing involvement in these loans which consists of receiving servicing fees on loans which the Company has transferred.

The Company did not participate in any securitization arrangements during the years ended December 31, 2009 and 2008. The Company received $0.6 million, during the years ended December 31, 2009 and 2008, in servicing fees related to financial assets where there is a continuing involvement from the securitization of commercial mortgage loans on real estate. During 2007, the Company received proceeds of $928.0 million from the securitization of commercial mortgage loans on real estate to third parties, experienced realized losses of $7.3 million on these loans, and received $0.7 million in servicing fees related to loans securitized in 2007 and before.

The Company provided a representations and warranties letter to the transferee for each securitization arrangement. If it is found that the Company has made a misrepresentation, it could be required to provide financial support to the transferee or its beneficial interest holders. For the years ended December 31, 2009, 2008 and 2007, the Company was not required to provide any financial or other support that it was not previously contractually required to provide to the transferee or its beneficial interest holders.

Real estate held for use was $1.8 million and $9.8 million as of December 31, 2009 and 2008, respectively. These assets are carried at cost less accumulated depreciation, which was $0.4 million and $2.1 million as of December 31, 2009 and 2008, respectively. The carrying value of real estate held for sale was $7.1 million and $6.8 million as of December 31, 2009 and 2008, respectively.

Securities Lending

The Company, through an agent, lends certain portfolio holdings and in turn receives cash collateral with the objective of increasing the yield on its investments. The cash collateral is invested in high-quality, short-term and long-term investments. The Company’s policy requires the maintenance of collateral of a minimum of 102% of the fair value of the securities loaned. Net returns on the investments, after payment of a rebate to the borrower, are shared between the Company and its agent. Both the borrower and the Company can request or return the loaned securities at any time. The Company maintains ownership of the loaned securities at all times and is entitled to receive from the borrower any payments for interest or dividends received on such securities during the loan term. The Company recognizes loaned securities as part of its investments available-for-sale. The Company also recognizes the short-term and other long-term investments acquired with the cash collateral and its obligation to return such collateral to the borrower in short-term investments and fixed maturity securities and other liabilities, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

As of December 31, 2009 and December 31, 2008, the Company had received $41.4 million and $419.9 million, respectively, of cash collateral on securities lending. The Company had not received any non-cash collateral on securities lending as of December 31, 2009 and December 31, 2008. As of December 31, 2009 and December 31, 2008, the Company had loaned securities with a fair value of $40.0 million and $407.1 million, respectively.

Assets on Deposit, Held in Trust and Pledged as Collateral

Fixed maturity securities with an amortized cost of $19.2 million and $28.0 million were on deposit with various regulatory agencies as required by law as of December 31, 2009 and 2008, respectively,. These securities continue to be included in fixed maturity securities on the consolidated balance sheets.

Net Investment Income

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

(in millions)	2009		2008			2007
Securities available-for-sale:
Fixed maturity securities	$	1,465.1	$	1,477.3		$	1,518.5
Equity securities		1.9		5.3			5.0
Mortgage loans on real estate		445.4		497.1			554.1
Short-term investments		6.4		16.8			31.2
Other		17.0		(75.1	)		152.0
Gross investment income		1,935.8		1,921.4			2,260.8
Less investment expenses		56.7		56.7			68.6
Net investment income	$	1,879.1	$	1,864.7		$	2,192.2

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Net Realized Investment Gains and Losses

The following table summarizes net realized investment gains (losses) from continuing operations by source for the years ended December 31:

(in millions)	2009			2008			2007
Total net derivatives gains (losses)1,2		399.8			(330.3	)		(55.9	)
Total realized gains on sales		191.7			40.2			93.3
Total realized losses on sales		(112.8	)		(40.7	)		(85.2	)
Valuation (losses) gains3		(20.7	)		(55.8	)		1.9
Other		(4.2	)		38.8			(1.3	)
Net realized investment gains (losses)	$	453.8		$	(347.8	)	$	(47.2	)

1 Includes gains of $413.6 million and losses of $500.7 million, and $26.7 million on derivatives and embedded derivatives associated with living benefit contracts for the years ended December 31, 2009, 2008, and 2007, respectively.  

2 Includes losses of $171.8 million and gains of $109.4 million on derivatives associated with death benefit contracts for the years ended December 31, 2009 and 2008, respectively. There were no material gains or losses on derivatives associated with death benefit contracts during 2007.  

3 Includes valuation of trading securities, mark-to-market valuation of mortgage loans held for sale, and changes in the valuation allowance not related to specific mortgage loans on real estate.  

Proceeds from the sale of securities available-for-sale during 2009, 2008 and 2007 were $4.21 billion, $4.31 billion and $4.98 billion, respectively. During 2009 and 2008, gross gains of $189.0 million and $35.7 million, respectively, and gross losses of $70.3 million and $25.3 million, respectively, were realized on those sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Other-Than-Temporary and Other Investment Impairment Losses

The following table summarizes other-than-temporary impairments for the years ended December 31:

(in millions)	Gross		Included in OCI			Net
2009:
Fixed maturity securities1	$	906.8	$	(417.5	)	$	489.3
Equity securities		7.1		—			7.1
Mortgage loans		71.8		—			71.8
Other		6.4		—			6.4
Total other-than-temporary impairment losses	$	992.1	$	(417.5	)	$	574.6
			2008			2007
Total Impairments:
Fixed maturity securities1			$	1,052.2		$	108.5
Equity securities				60.2			—
Mortgage loans				14.6			4.1
Other				3.7			5.1
Total other-than-temporary impairment losses			$	1,130.7		$	117.7

1 Declines in the creditworthiness of the issuer of hybrid securities with both debt and equity-like features requires the use of the equity model in analyzing the security for other-than-temporary impairment. For the year ended December 31, 2009, the Company recognized $167.6 million in other-than-temporary impairments related to these securities compared to $89.5 million and none for the years ended December 31, 2008 and 2007, respectively.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the other-than-temporary-impairment losses on debt securities held as of December 31, 2009 that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security prior to recovery of the amortized cost basis and for which the non-credit portion of the loss is included in other comprehensive income:

(in millions)
Cumulative credit loss as of January 1, 20091	$	507.5
New credit losses		168.4
Incremental credit losses2		71.9
Subtotal		747.8
Less:
Losses related to securities included in the beginning balance sold or paid down during the period		(267.3	)
Losses related to securities included in the beginning balance for which there was a change in intent3		(63.1	)
Increases in cash flows expected to be collected for securities included in the beginning balance		—
Cumulative credit loss as of December 31, 20091	$	417.4

1 The cumulative credit loss amount excludes other-than-temporary-impairment losses on securities held as of the periods indicated that the Company intends to sell or it is more likely than not that the Company will be required to sell the security before the recovery of the amortized cost basis.  

2 On securities included in the beginning balance.  

3 Securities for which a credit-related other-than-temporary impairment loss was previously recorded that the Company now intends to sell or is more likely than not it will be required to sell before recovery of the amortized cost basis and has transferred the non-credit portion of loss previously recorded in other comprehensive income to earnings during the period. Also includes hybrid securities that had previously been evaluated for other-than-temporary impairment based on the criteria as a debt security, but in the current period are evaluated as an equity security due to declines in the creditworthiness of the issuer.  

(7) Deferred Policy Acquisition Costs  

During the fourth quarter of 2009, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by the continued market recovery and favorable market performance compared to assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a increase in DAC and other related balances, including sales inducement assets, and an decrease in DAC amortization and other related balances of $218.5 million pre-tax in the Individual Investments segment. The Company used the reversion to the mean process with the anchor date that was reset during the second quarter 2007 unlocking as described below. The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable. The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

During the second quarter of 2009, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA and unearned revenue reserves. The review covered all assumptions including mortality, lapses, expenses and general and separate account returns. As a result of this review, certain assumptions were unlocked (DAC unlock). The unlocked assumptions primarily related to lower expected investment spreads and separate account returns across all segments.

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during 2009 was as follows:

(in millions)	DAC			VOBA			Unearned Revenue Reserves		Sales Inducement Assets		Total
Segment:
Individual Investments	$	191.9		$	—		$	—	$	10.9	$	202.8
Retirement Plans		(8.2	)		—			—		—		(8.2	)
Individual Protection		(43.9	)		(13.2	)		10.9		—		(46.2	)
Total	$	139.8		$	(13.2	)	$	10.9	$	10.9	$	148.4

During the fourth quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters, which primarily was driven by continued unfavorable market performance compared to assumed net separate account returns. Management made a determination that it was not reasonably possible to get back within the preset parameters during the remaining prescribed period. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances of $243.1 million pre-tax in the Individual Investments segment. The Company used the reversion to the mean process with the anchor date that was reset during the second quarter 2007 unlocking as described below. The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable. The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

During the third quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by unfavorable market performance compared to the assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances totaling $177.2 million pre-tax in the Individual Investments segment.

At the end of the second quarter of 2008, the Company determined as part of its comprehensive annual study of assumptions that certain assumptions should be unlocked. The unlocked assumptions primarily related to lapse and spread assumptions in the Individual Investments segment, the assumed growth rate on deposits per contract in the Retirement Plans segment, and mortality and lapse assumptions in the Individual Protection segment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during the year ended December 31, 2008 was as follows:

(in millions)	DAC			VOBA			Unearned Revenue Reserves		Sales Inducement Assets			Total
Segment:
Individual Investments	$	(429.1	)	$	(2.6	)	$	—	$	(0.6	)	$	(432.3	)
Retirement Plans		(2.3	)		—			—		—			(2.3	)
Individual Protection		(2.8	)		7.5			3.2		—			7.9
Total	$	(434.2	)	$	4.9		$	3.2	$	(0.6	)	$	(426.7	)

During the second quarter of 2007, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA, unearned revenue reserves, and guaranteed minimum death and income benefit reserves. This review included all assumptions, including expected separate account investment returns during the three-year reversion period, lapse rates, mortality and expenses. The Company determined as part of this annual review that the overall separate account returns were expected to exceed previous estimates due to favorable financial market trends. Additionally, while the Company estimated that the overall profitability of its variable products had improved, it expected the long-term net growth in separate account investment performance to moderate.

Accordingly, the second quarter 2007 unlocking process included changes in several assumptions, including assumptions affecting net separate account investment performance. This unlocking resulted in a net increase in DAC and a benefit to DAC amortization and other related balances totaling $216.5 million pre-tax. First, the Company reset the anchor date for its reversion to the mean calculations, which increased the annual net separate account growth rate to 7% during the first three years of the projection period from 0% (which was the rate of return for the three-year reversion period required from the previous anchor date). Second, as a result of its current analysis, including its evaluation of ongoing trends and expectations regarding financial market performance, the Company unlocked and reset its long-term assumption for net separate account growth rates to 7% from 8%. This decreased the net separate account growth rate by 1% to 7% for all years subsequent to the three-year reversion period. The combination of resetting these two factors resulted in a $161.9 million increase in DAC and benefit to DAC amortization and other related balances. The impact of changing the annual net separate account growth rate from 0% to 7% during the three-year reversion period had a much larger effect on the DAC balance when compared to the 1% incremental change in the long-term assumption for net separate account investment performance. The remainder of the increase in DAC and benefit to DAC amortization and other related balances resulting from the DAC unlocking process primarily was related to the recorded balance of individual variable annuity DAC falling outside the Company’s preset parameters for the prescribed period, which was driven by favorable market performance in excess of the assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a $78.8 million increase in DAC and benefit to DAC amortization and other related balances. This was partially offset by a $24.2 million decrease in DAC and increase in DAC amortization and other related balances due to increasing estimated lapse rates for fixed annuity and BOLI products.

During the second quarter of 2007, the Company added a new feature to its existing GLWB rider, Lifetime Income (L.inc). This new feature resulted in a substantial change in the existing contracts and, therefore, an extinguishment of the DAC associated with those contracts pursuant to 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. As a result, the Company eliminated existing DAC and other related balances resulting in a $135.0 million pre-tax charge.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of these assumptions during the second quarter of 2007 was as follows:

(in millions)	DAC			VOBA		Unearned Revenue Reserves		Sales Inducement Assets		Total
Segment:
Individual Investments	$	(208.9	)	$	—	$	—	$	12.5	$	(196.4	)
Retirement Plans		(10.5	)		—		—		—		(10.5	)
Individual Protection		(16.4	)		5.1		1.7		—		(9.6	)
Total	$	(235.8	)	$	5.1	$	1.7	$	12.5	$	(216.5	)

The following table presents a reconciliation of DAC for the years ended December 31:

(in millions)	2009			2008
Balance at beginning of period	$	4,523.8		$	4,095.6
Capitalization of DAC		513.0			587.6
Amortization of DAC, excluding unlocks		(605.4	)		(257.4	)
Amortization of DAC, related to unlocks		139.8			(434.2	)
Adjustments to DAC related to unrealized gains and losses on securities available-for-sale and other		(588.1	)		532.2
Balance at end of period	$	3,983.1		$	4,523.8

(8) Value of Business Acquired and Other Intangible Assets  

The following table presents a reconciliation of VOBA for the years ended December 31:

(in millions)	2009			2008
Balance at beginning of period	$	334.0		$	354.8
Amortization of VOBA		(49.4	)		(31.4	)
Net realized losses on investments		1.7			1.9
Other		—			0.5
Subtotal		286.3			325.8
Change in unrealized (loss) gain on available-for-sale securities		(9.4	)		8.2
Balance at end of period	$	276.9		$	334.0

Interest on the unamortized VOBA balance (at interest rates ranging from 4.50% to 7.56%) is included in amortization and was $20.1 million, $22.4 million and $24.8 million during the years ended December 31, 2009, 2008 and 2007, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes intangible assets as of December 31:

(in millions)	Initial useful life1	2009				2008
		Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Amortizing:
VOBA	28 years	$	594.9	$	318.0	$	594.9	$	270.5
Distribution forces	20 years		7.0		7.0		7.0		1.3
Total intangible assets		$	601.9	$	325.0	$	601.9	$	271.8

1 The initial useful life was based on applicable assumptions. Actual periods are subject to revision based on variances from assumptions and other relevant factors.  

During the fourth quarter of 2009, the Company recorded a $5.4 million pre-tax impairment charge on intangible assets associated with the NFN retirement services distribution channel.

During 2009, the Company fully amortized intangible assets related to NLICA and NLACA state insurance licenses, which resulted in a $7.8 million pre-tax charge. The state insurance licenses had indefinite useful lives and were not previously amortized. Due to the merger with NLIC and NLAIC, respectively, on December 31, 2009, the NLICA and NLACA state insurance licenses are no longer required as the surviving entities have the required state insurance licenses to conduct business on existing NLICA and NLACA products. The Company will surrender the state insurance licenses back to each state. See Note 1 for a description of the merger transaction between these entities.

During 2008, the Company recorded a $19.7 million pre-tax impairment charge on career agency force and independent agency force intangible assets associated with its plan to exit the NFN professional consulting group sales channel and selling arrangement changes for the independent agency force.

The Company’s annual impairment testing performed as of June 30, did not result in material impairment losses on intangible assets during 2009, 2008 and 2007.

Based on current assumptions, which are subject to change, the following table summarizes estimated amortization for the next five years ended December 31:

(in millions)	VOBA
2010	$	28.8
2011		24.2
2012		21.9
2013		19.4
2014		16.0

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(9) Goodwill  

The following table summarizes changes in the carrying value of goodwill by segment for the years indicated:

(in millions)	Retirement Plans		Individual Protection		Total
Balance as of December 31, 2007	$	25.4	$	174.4	$	199.8
Adjustments		—		—		—
Balance as of December 31, 2008		25.4		174.4		199.8
Adjustments		—		—		—
Balance as of December 31, 2009	$	25.4	$	174.4	$	199.8

The Company’s 2009 annual impairment testing did not result in any impairments on existing goodwill. As of the 2009 annual impairment testing, the fair value of the reporting units with goodwill was in excess of the carrying value. The goodwill balances as of 12/31/09 have not been previously impaired.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(10) Closed Block  

The amounts shown in the following tables for assets, liabilities, revenues and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following table summarizes financial information for the closed block as of December 31:

(in millions)	2009			2008
Liabilities:
Future policyholder benefits	$	1,818.0		$	1,844.2
Policyholder funds and accumulated dividends		142.9			142.7
Policyholder dividends payable		28.7			31.7
Policyholder dividend obligation		48.7			(62.2	)
Other policy obligations and liabilities		13.8			9.2
Total liabilities		2,052.1			1,965.6
Assets:
Fixed maturity securities available-for-sale, at estimated fair value		1,236.2			1,082.1
Mortgage loans on real estate		263.2			294.8
Policy loans		190.5			197.9
Other assets		135.4			152.3
Total assets		1,825.3			1,727.1
Excess of reported liabilities over assets		226.8			238.5
Portion of above representing other comprehensive income:
Increase (decrease) in unrealized gain on fixed maturity securities available-for-sale		90.8			(88.6	)
Adjustment to policyholder dividend obligation		(90.8	)		88.6
Total		—			—
Maximum future earnings to be recognized from assets and liabilities	$	226.8		$	238.5
Other comprehensive income:
Fixed maturity securities available-for-sale:
Fair value	$	1,236.2		$	1,082.1
Amortized cost		1,252.6			1,157.0
Shadow policyholder dividend obligation		(16.4	)		74.9
Net unrealized appreciation	$	—		$	—

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes closed block operations for the years ended December 31:

(in millions)	2009			2008			2007
Revenues:
Premiums	$	89.6		$	92.9		$	95.7
Net investment income		105.6			108.9			102.5
Realized investment gains (losses)		1.8			(40.9	)		(1.5	)
Realized (losses) gains credited to to policyholder benefit obligation		(5.8	)		36.9			(2.5	)
Total revenues		191.2			197.8			194.2
Benefits and expenses:
Policy and contract benefits		132.9			131.1			136.4
Change in future policyholder benefits and interest credited to policyholder accounts		(24.4	)		(17.4	)		(19.3	)
Policyholder dividends		59.2			62.9			61.1
Change in policyholder dividend obligation		4.4			2.6			(3.6	)
Other expenses		1.1			1.2			1.2
Total benefits and expenses		173.2			180.4			175.8
Total revenues, net of benefits and expenses, before federal income tax expense		18.0			17.4			18.4
Federal income tax expense		6.3			6.1			6.4
Revenues, net of benefits and expenses and federal income tax expense	$	11.7		$	11.3		$	12.0
Maximum future earnings from assets and liabilities:
Beginning of period	$	238.5		$	249.8		$	261.8
Change during period		(11.7	)		(11.3	)		(12.0	)
End of period	$	226.8		$	238.5		$	249.8

Cumulative closed block earnings from inception through December 31, 2009 and 2008 were higher than expected as determined in the actuarial calculation. Therefore, policyholder dividend obligations (excluding the adjustment for unrealized gains on available-for-sale securities) were $32.3 million and $12.7 million as of December 31, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(11) Variable 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) guaranteed minimum death benefits (GMDB); (2) GMAB; (3) guaranteed minimum income benefits (GMIB); (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.

The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:

• Return of premium – provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.  

• Reset – provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.  

• Ratchet – provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.  

• Rollup – provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit: for certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.  

• Combo – provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.  

• Earnings enhancement – provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.  

The GMAB, offered in the Company’s Capital Preservation Plus contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified time period, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

The GLWB, offered in the Company’s L.inc, is a living benefit that provides for enhanced retirement income security without the liquidity loss associated with annuitization. The withdrawal rates vary based on the age when withdrawals begin and are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder. The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a ratchet feature that is driven by account performance and a roll-up feature that is driven by policy duration.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:

• Ratchet – provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.  

• Rollup – provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.  

• Combo – provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.  

In January 2009, the Company decided to simplify its living benefit guarantees and only offer L.inc on new sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables. The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of December 31 (a contract may contain multiple guarantees):

	2009									2008
(in millions)	General account value		Separate account value		Total account value		Net amount at risk1		Wtd. avg. attained age	General account value		Separate account value		Total account value		Net amount at risk1		Wtd. avg. attained age
GMDB:
Return of premium	$	728.8	$	5,859.6	$	6,588.4	$	99.5	61	$	912.1	$	5,082.2	$	5,994.3	$	440.6	60
Reset		1,622.4		12,406.1		14,028.5		899.5	64		2,282.3		10,259.8		12,542.1		2,477.7	64
Ratchet		1,181.3		13,835.5		15,016.8		1,772.4	67		1,877.7		10,545.7		12,423.4		3,775.3	67
Rollup		41.8		258.7		300.5		17.7	73		48.5		241.9		290.4		25.9	72
Combo		229.1		1,577.3		1,806.4		325.6	69		306.0		1,398.1		1,704.1		621.2	69
Subtotal		3,803.4		33,937.2		37,740.6		3,114.7	65		5,426.6		27,527.7		32,954.3		7,340.7	65
Earnings enhancement		16.5		373.4		389.9		19.6	64		28.1		305.4		333.5		7.2	63
Total - GMDB	$	3,819.9	$	34,310.6	$	38,130.5	$	3,134.3	65	$	5,454.7	$	27,833.1	$	33,287.8	$	7,347.9	65
GMAB2:
5 Year	$	383.0	$	2,639.8	$	3,022.8	$	171.5	N/A	$	607.0	$	2,260.6	$	2,867.6	$	499.0	N/A
7 Year		393.6		2,151.9		2,545.5		180.4	N/A		451.6		1,814.3		2,265.9		482.9	N/A
10 Year		70.2		684.6		754.8		39.5	N/A		80.2		597.7		677.9		132.2	N/A
Total - GMAB	$	846.8	$	5,476.3	$	6,323.1	$	391.4	N/A	$	1,138.8	$	4,672.6	$	5,811.4	$	1,114.1	N/A
GMIB3:
Ratchet	$	16.3	$	242.0	$	258.3	$	0.3	N/A	$	16.2	$	228.5	$	244.7	$	5.6	N/A
Rollup		46.6		625.6		672.2		0.4	N/A		47.1		612.4		659.5		1.3	N/A
Combo		—		0.2		0.2		—	N/A		—		0.1		0.1		—	N/A
Total - GMIB	$	62.9	$	867.8	$	930.7	$	0.7	N/A	$	63.3	$	841.0	$	904.3	$	6.9	N/A
GLWB:
L.inc	$	229.7	$	7,056.7	$	7,286.4	$	67.3	N/A	$	72.4	$	3,248.4	$	3,320.8	$	571.5	N/A
Porfolio income insurance		—		20.7		20.7		—	N/A		—		—		—		—	N/A
Total - GLWB	$	229.7	$	7,077.4	$	7,307.1	$	67.3	N/A	$	72.4	$	3,248.4	$	3,320.8	$	571.5	N/A

1 Net amount at risk is calculated on a seriatim basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance.  

2 GMAB contracts with the hybrid GMAB/GLWB rider had account values of $5.32 billion and $4.59 billion as of December 31, 2009 and 2008, respectively.  

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

Net amount at risk is highly sensitive to changes in financial market movements. See Note 5, Derivatives Not Qualifying for Hedge Accounting – Equity Market Risk Management, for a discussion of the Company’s risk management practices with respect to financial market exposure.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

(in millions)	2009		2008
Mutual funds:
Bond	$	4,920.2	$	4,370.3
Domestic equity		24,598.8		18,676.2
International equity		3,046.9		2,421.4
Total mutual funds		32,565.9		25,467.9
Money market funds		1,473.4		2,146.4
Total	$	34,039.3	$	27,614.3

The following table summarizes the reserve balances, net of reinsurance, for variable annuity contracts with guarantees as of December 31:

(in millions)	2009		2008
Living benefit riders	$	265.9	$	1,698.0
GMDB		67.0		193.4
GMIB		3.1		5.5

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, 2009 and 2008, the net balance of the embedded derivatives for living benefits was a liability of $265.9 million and a liability of $1.70 billion, respectively. The GLWB component of living benefit riders was immaterial in 2009 and $699.9 million in 2008, respectively.

The Company’s incurred and paid amounts for living benefit features were immaterial for the years ended December 31, 2009 and 2008. The incurred and paid amounts were immaterial for 2008. The Company does not expect any meaningful level of claims under the living benefit features for several years and believes the impact of claims is expected to be mitigated by its economic hedging program.

During the year ended December 31, 2009, the Company recorded net realized investment gains on living benefit embedded derivatives and related economic hedging gains of $413.6 million. These gains were comprised of $1.50 billion of net realized investment gains on living benefit embedded derivatives and $1.08 billion of related economic hedging losses. The net realized investment gains on living benefit embedded derivatives primarily resulted from higher interest rates, lower volatility assumptions and an increase to the nonperformance component of the discount rate. The increase in net realized investment gains on embedded derivatives increased amortization of DAC by $389.6 million in 2009 compared to 2008, which is included in the Corporate and Other segment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

The Company’s incurred and paid amounts for GMDBs were $132.4 million for the year ended December 31, 2009 compared to $67.1 million for the year ended December 31, 2008.

The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2009 and 2008:

• Data used was based on a combination of historical numbers and future projections generally involving 250 and 50 probabilistically generated economic scenarios as of December 31, 2009 and 2008, respectively  

• Mean gross equity performance – 10.4% and 8.1% as of December 31, 2009 and 2008, respectively  

• Equity volatility – 18.0% and 18.7% as of December 31, 2009 and 2008, respectively  

• Mortality – 91% of Annuity 2000 Basic table for males, 101% for females as of December 31, 2009; and 100% of Annuity 2000 tables as of December 31, 2008  

• Asset fees – equivalent to mutual fund and product loads  

• Discount rate – approximately 7.0%  

Lapse rate assumptions vary by duration as shown below:

December 31, 2009 Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	1.0%	2.0%	2.5%	3.0%	5.0%	6.0%	7.0%	7.0%	10.0%	10.0%
Maximum	3.5%	2.0%	4.0%	4.5%	35.0%	40.0%	18.5%	32.5%	32.5%	18.5%
December 31, 2008 Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	1.0%	2.0%	2.0%	3.0%	4.5%	6.0%	7.0%	7.0%	11.5%	11.5%
Maximum	1.5%	2.5%	4.0%	4.5%	40.0%	41.5%	21.5%	35.0%	35.0%	18.5%

The Company’s incurred and paid amounts for GMIBs were $7.2 million for the years ended December 31, 2009. The incurred and paid amounts were immaterial for 2008.

The Company did not transfer assets from the general account to the separate account for any of its variable annuity contracts during the years ended December 31, 2009 and 2008.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes account balances of variable universal life insurance contracts that were invested in separate accounts as of December 31:

(in millions)	2009		2008
Mutual funds:
Bond	$	452.8	$	412.7
Domestic equity		2,996.3		2,459.5
International equity		416.9		334.6
Total mutual funds		3,866.0		3,206.8
Money market funds		257.0		295.0
Total	$	4,123.0	$	3,501.8

(12) Short-Term Debt  

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

(in millions)	2009		2008
$800.0 million commercial paper program	$	150.0	$	149.9
$350.0 million securities lending program facility		—		99.8
Total short-term debt	$	150.0	$	249.7

The Company has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. London Interbank Offered Rate (LIBOR). On July 31, 2009, the Company paid down the $99.7 million principal balance on the securities lending program facility. The Company had no amounts outstanding under this agreement as of December 31, 2009 compared to $99.8 million as of December 31, 2008.

The Company has available as a source of funds a $1.00 billion revolving credit facility entered into by NFS, NLIC and NMIC with a maturity of May 13, 2010. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility contains covenants, including, but not limited to, requirements that NMIC maintain statutory surplus in excess of $5.30 billion, the Company’s debt not exceed 40% of tangible net worth, as defined, and that NLIC maintain statutory surplus in excess of $1.67 billion. A breach by any borrower of the financial covenants will impact the availability of the line for the other borrowers and may accelerate payment. NMIC had no amounts outstanding under this agreement as of December 31, 2009. NLIC also has an $800.0 million commercial paper program and rating agency guidelines recommend that NLIC maintain minimum liquidity backup, which includes cash and liquid assets as well as committed bank lines, equal to 50% of any amounts outstanding under the commercial paper program. Therefore, availability under the aggregate $1.00 billion credit facility is reduced by the amount outstanding in excess of available cash and liquid assets. NLIC had $150.0 million of commercial paper outstanding at December 31, 2009 at a weighted average interest rate of 0.29% and $149.9 million outstanding at December 31, 2008 at a weighted average interest rate of 2.07%.

The Company paid interest on short-term debt totaling $1.3 million, $8.3 million, and $15.0 million in 2009, 2008 and 2007, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(13) Long-Term Debt  

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

(in millions)	2009		2008
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 2009, 2008 and 2007. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).

On September 30, 2009, the Company sold NLICA, a 5.75%, $200.0 million surplus note maturing on September 30, 2010. Due to the merger of NLICA with and into the Company on December 31, 2009, the note was redeemed, in whole, by the Company at a redemption price equal to 100% of the aggregate principal amount outstanding plus accrued interest.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(14) Federal Income Taxes  

Effective January 1, 2009, pursuant to the merger agreement dated August 6, 2008 whereby NMIC and its affiliates purchased all of the NFS common stock they did not already own, Nationwide Corporation will own more than 80% of the value of NFS, meeting the requirements for NFS to join the NMIC consolidated federal income tax return. However, the life insurance company subsidiaries will not be eligible to join the NMIC consolidated federal income tax return until 2014. NFS will file a one day life/non-life, federal income tax return (January 1, 2009) with all of its downstream subsidiaries.

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax asset (liability) as of December 31:

(in millions)	2009			2008
Deferred tax assets:
Future policy benefits and claims	$	1,108.5		$	955.6
Securities available-for-sale		—			809.2
Derivatives		62.6			229.7
Capital loss carryforward		102.8			—
Other		267.1			258.0
Gross deferred tax assets		1,541.0			2,252.5
Less valuation allowance		(23.7	)		(23.7	)
Deferred tax assets, net of valuation allowance		1,517.3			2,228.8
Deferred tax liabilities:
Deferred policy acquisition costs		(1,083.7	)		(1,293.6	)
Securities available-for-sale		(215.9	)		—
Value of business acquired		(95.6	)		(112.9	)
Other		(96.9	)		(168.3	)
Gross deferred tax liabilities		(1,492.1	)		(1,574.8	)
Net deferred tax asset (liability)	$	25.2		$	654.0

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. Because it is more likely than not that certain deferred tax assets will not be realized, the Company established a valuation allowance of $23.7 million, $23.7 million and $23.7 million as of December 31, 2009, 2008 and 2007, respectively. No additional valuation allowances are required to be recognized as the Company has prudent and feasible tax planning strategies that would, if necessary, be implemented to utilize deferred tax assets.

The Company’s current federal income tax (liability) asset was $(108.5) million and $132.1 million as of December 31, 2009 and 2008, respectively.

Total federal income taxes (refunded) paid were $(59.0) million, $(40.9) million, and $117.9 million during the years ended December 31, 2009, 2008 and 2007, respectively.

As of December 31, 2009, the Company has $293.7 million of capital loss carryforwards that can carry forward for five tax years and are expected to be fully utilized. In addition, the Company has $6.7 million in low income housing credit carryforwards which can be carried forward for twenty years. The Company expects that they will be fully utilized. The Company has $22.7 million in Alternative Minimum Tax (AMT) credit carryforwards, which can be carried forward until utilized. The Company expects to fully realize the AMT credits in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

(in millions)	2009			2008			2007
Current	$	165.0		$	(130.8	)	$	108.0
Deferred		(117.1	)		(403.0	)		39.3
Federal income tax expense (benefit)	$	47.9		$	(533.8	)	$	147.3

Total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to income (loss) from continuing operations before federal income tax expense (benefit) as follows for the years ended December 31:

	2009					2008					2007
(dollars in millions)	Amount			%		Amount			%		Amount			%
Computed tax expense (benefit)	$	107.3		35.0		$	(497.4	)	35.0		$	220.2		35.0
DRD		(56.1	)	(18.3	)		(42.1	)	3.0			(67.5	)	(10.7	)
Impact of noncontrolling interest		18.3		6.0			25.3		(1.8	)		17.8		2.8
Tax credits		(21.4	)	(7.0	)		(25.8	)	1.8			(22.3	)	(3.6	)
Other, net		(0.2	)	(0.1	)		6.2		(0.4	)		(0.9	)	(0.1	)
Total	$	47.9		15.6		$	(533.8	)	37.6		$	147.3		23.4

During 2009, the Company recorded $8.7 million of net federal income tax expense adjustments primarily related to differences between the 2008 estimated tax liability and the amounts reported on the Company’s 2008 tax returns. These changes in estimates primarily were driven by the Company’s separate account dividends received deduction (DRD) and foreign tax credit.

During the third quarter of 2008, the Company refined its separate account DRD calculation and estimation process. As a result, the Company reduced its third quarter separate account DRD projection from a federal income tax benefit of $14.3 million to a $4.4 million benefit. This reduction in estimate primarily was driven by the assumptions used in the estimation process regarding future dividend income within the separate accounts. The assumptions used in the separate account DRD calculation are based on the Company’s best estimate of future events.

In addition, during 2008, the Company recorded $11.9 million of net federal income tax expense adjustments primarily related to differences between the 2007 estimated tax liability and the amounts expected to be reported on the Company’s 2007 tax returns when filed. These changes in estimates primarily were driven by the Company’s separate account DRD.

During 2007, the Company recorded $7.6 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

A rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties, is as follows:

(in millions)	2009			2008
Balance at beginning of period	$	44.0		$	8.8
Additions for current year tax positions		36.8			37.7
Additions for prior years tax positions		14.9			0.3
Reductions for prior years tax positions		(1.1	)		(2.8	)
Balance at end of period	$	94.6		$	44.0

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate on December 31, 2009, is $43.0 million.

The Company has included tax on permanent uncertain tax positions and interest and penalties on all uncertain tax positions in determining the potential impact on the effective tax rate above. An uncertain tax timing position may result in the acceleration of cash payments to the IRS, but will not impact the effective tax rate.

During the years ended December 31, 2009, and 2008, the Company incurred $0.2 million and $1.0 million in interest and penalties, respectively. The Company accrued $3.8 million and $2.2 million for the payment of interest and penalties at December 31, 2009 and 2008, respectively. Interest expense and any associated penalties are shown as income tax expense.

Management is not aware of any reasonable possibility of a significant increase or decrease to the total of the uncertain tax positions within the next 12 months.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years through 2002. The IRS recently completed an audit of the Company’s tax years 2003 through 2005. The statute remains open for these years as the Company completes the appeals process. See “Tax Matters” in Note 18 for more information on the Company’s tax years 2003 through 2005 audit and the related appeals process.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(15) Shareholder’s Equity, Regulatory Risk-Based Capital, Statutory Results 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.

Statutory Results

The Company and its subsidiary are required to prepare statutory financial statements in conformity with the NAIC’s Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable state department of insurance. Statutory accounting practices focus on insurer solvency and differ from GAAP materially. The principal differences include charging policy acquisition and certain sales inducement costs to expense as incurred, establishing future policy benefits and claims reserves using different actuarial assumptions, excluding certain assets from statutory admitted assets; and valuing investments and establishing deferred taxes on a different basis. The following tables summarize the statutory net income (loss) and statutory capital and surplus for the Company and its insurance subsidiary for the years ended December 31:

(in millions)	20091			2008			2007
Statutory net income (loss)
NLIC	$	397.3		$	(919.4	)	$	410.8
NLAIC		(61.1	)		(90.3	)		(4.0	)
Statutory capital and surplus
NLIC	$	3,129.6		$	2,749.9		$	2,599.9
NLAIC		213.5			122.6			256.6

1 Unaudited as of the date of this report.  

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity. In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity. See Note 2 (p) for details on the accounting treatment of this transaction.

NLIC received approval from the Ohio Department of Insurance (ODI) regarding the use of a permitted practice related to the statutory accounting provision for the admissibility of deferred tax assets as of December 31, 2008. The permitted practice modifies the practice prescribed by the NAIC by increasing the threshold for admissibility of deferred tax assets from 10% to 15% of statutory capital and surplus. The permitted practice resulted in an increase of NLIC’s estimated statutory surplus of $68.9 million as of December 31, 2008. The permitted practice had no impact on NLIC’s statutory net income. The benefits of this permitted practice was not considered by the Company when determining capital and surplus available for dividends during 2009.

In 2009, the NAIC adopted Statement of Statutory Accounting Principles No. 10R, Income Tax Revised – a temporary replacement of SSAP 10, which is similar to the ODI permitted practice adopted in 2008 with the exception of limiting capital and surplus available for dividends.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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. NLIC’s statutory capital and surplus as of December 31, 2009 was $3.13 billion, and statutory net income for the year ended December 31, 2009 was $397.3 million. During the year ended December 31, 2009, NLIC did not pay any dividends to NFS during 2009. As of January 1, 2010, NLIC has the ability to pay dividends to NFS totaling $397.3 million upon providing prior notice to the ODI.

The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the State of Ohio insurance laws as the amount equal to the Company’s unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurer’s policyholder surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Comprehensive Gain (Loss)

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

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

(in millions)	2009			2008			2007
Net unrealized losses on securities available-for-sale arising during the period:
Net unrealized gains (losses) before adjustments	$	2,373.9		$	(3,827.8	)	$	(273.1	)
Net non-credit gains		38.4			—			—
Net adjustment to DAC		(584.9	)		528.8			3.8
Net adjustment to VOBA		(9.4	)		8.2			8.0
Net adjustment to future policy benefits and claims		(27.4	)		127.8			5.9
Net adjustment to policyholder dividend obligation		(91.3	)		88.7			2.2
Related federal income tax (expense) benefit		(594.8	)		1,076.1			88.6
Net unrealized gains (losses)		1,104.5			(1,998.2	)		(164.6	)
Reclassification adjustment for net realized losses on securities available-for-sale realized during the period:
Net realized losses		388.2			1,102.1			105.0
Related federal income tax benefit		(135.9	)		(385.7	)		(36.8	)
Net reclassification adjustment		252.3			716.4			68.2
Other comprehensive gain (loss) on securities available-for-sale		1,356.8			(1,281.8	)		(96.4	)
Accumulated net holding (losses) gains on cash flow hedges:
Unrealized holding (losses) gains		(4.1	)		16.5			(17.2	)
Related federal income tax benefit (expense)		1.5			(5.8	)		6.0
Other comprehensive (loss) income on cash flow hedges		(2.6	)		10.7			(11.2	)
Other unrealized (losses) gains:
Net unrealized (losses) gains		(13.5	)		7.4			(7.4	)
Related federal income tax benefit (expense)		4.7			(2.5	)		2.7
Other net unrealized (losses) gains		(8.8	)		4.9			(4.7	)
Unrecognized amounts on pension plans:
Net unrecognized amounts		—			(12.3	)		1.0
Related federal income tax benefit (expense)		—			4.3			(0.4	)
Other comprehensive (loss) income on unrecognized pension amounts		—			(8.0	)		0.6
Total other comprehensive income (loss)	$	1,345.4		$	(1,274.2	)	$	(111.7	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The adjustments to DAC and VOBA represent the changes in amortization of DAC and VOBA that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.

The adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities resulted in a cumulative-effect adjustment of $235.0 million, net of taxes, to reclassify the non-credit component of previously recognized other-than-temporary impairment losses from the beginning balance of retained earnings to AOCI.

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2009, 2008 and 2007.

(16) Employee Benefit Plans  

The Company, excluding certain affiliated companies, participates in a qualified defined benefit pension plan (the Nationwide Retirement Plan or the NRP), several non-qualified defined benefit supplemental executive retirement plans, postretirement benefit plans (life and health care), and the Nationwide Savings Plan 401(k), all sponsored by NMIC. Effective January 30, 2008, NMIC merged the Nationwide Life Insurance Company of America (NLICA) Retirement Plan into the NRP.

The NRP covers all employees of participating employers who have completed at least one year of service and who are at least 21 years of age. Plan assets are invested in a third-party trust and group annuity contracts issued by NLIC. All participants are eligible for benefits based on an account balance formula. However, participants hired prior to 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature.

Effective January 1, 2010, NMIC amended the NRP to eliminate the company-paid early retirement enhancement (an additional benefit for associates retiring between ages 55 and 65), which is part of the FAP formula and to stop pay credits under the account balance formula for participants eligible for the account balance formula. An affected associate’s benefits, however, will not be less than the NRP benefit he or she accrued as of December 31, 2009, under the greater of the FAP formula or the account balance formula.

The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. In addition, separate non-qualified defined benefit pension plans sponsored by NMIC cover certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $11.0 million, $4.6 million, and $11.8 million for the years ended December 31, 2009, 2008 and 2007, respectively. The 2008 expense includes a gain of $5.4 million due to the merger of the NLICA Retirement Plan into the NRP.

See Note 17 for more information on group annuity contracts issued by the Company for various employee benefit plans sponsored by NMIC or its affiliates.

In addition to the NRP, the Company and certain affiliated companies participate in life and health care benefit plans sponsored by NMIC for qualifying retirees. Contributory post-retirement life and health care benefits are generally available to associates, hired prior to and continuously employed since June 1, 2000, for health care benefits, and prior to December 31, 1994, for life benefits, who have attained age 55, and have accumulated 15 years of service with the Company. The associate subsidy for the post-retirement death benefit was capped beginning in 2007. Employer subsidies for retiree life insurance ended as of December 31, 2008. No future employer contributions are anticipated for retiree life insurance and settlement accounting was applied during 2008. Post-retirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and co-insurance. In addition, there are caps on the Company’s contribution to the cost of the post-retirement health care benefits. The Company does not receive a Medicare Part D subsidy from the government. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested in a group annuity contract issued by NLIC and a third-party trust.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

On September 3, 2009, NMIC announced changes to the post-retirement health care benefits available under the health care defined benefit plans. On December 31, 2009, each eligible associate’s current cost-sharing percentage was fixed and, following this date, Company contributions towards the cost of post-retirement health care coverage for eligible associates will be based only on service through December 31, 2009. This modification does not impact former associates receiving Nationwide-sponsored retiree health care benefits prior to January 1, 2010. Additionally, effective January 1, 2010, all associates not considered to be highly compensated employees, as defined by IRC 414, became eligible to receive an annual retiree health care credit up to a maximum of $1,000 per year, not to exceed a maximum lifetime benefit amount of $25,000, which includes any years of cost-sharing service earned by December 31, 2009. The credit is equal to one-third of otherwise unmatched Health Savings Account contributions and/or Nationwide Savings Plan (NSP) 401(a) contributions. No contributions will be made by NMIC if the associate does not make eligible contributions.

The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2009, 2008 and 2007.

Defined Contribution Plans

NMIC sponsors the NSP, a defined contribution retirement savings plan (a 401(k) plan) covering substantially all of the Company’s associates. Associates may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. In addition, NMIC sponsors the NLICA Producer’s Pension Plan, a defined contribution money purchase plan, covering statutory employees of NLICA. However, this plan has no active participants, and is in the process of being terminated. The Company’s expense for contributions to these plans was $8.7 million, $6.1 million, and $8.0 million for the years ended December 31, 2009, 2008 and 2007, respectively.

(17) Related Party Transactions  

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

In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides data processing, systems development, hardware and software support, telephone, mail and other services to the Company, based on specified rates for units of service consumed. For the years ended December 31, 2009, 2008 and 2007, the Company made payments to NMIC and NSC totaling $233.1 million, $285.2 million, and $287.1 million, respectively.

The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $3.10 billion and $2.96 billion as of December 31, 2009 and 2008, respectively. Total revenues from these contracts were $143.1 million, $137.9 million and $132.3 million for the years ended December 31, 2009, 2008 and 2007, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $115.7 million, $115.6 million, and $110.1 million for the years ended December 31, 2009, 2008 and 2007, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties.

The Company leases office space from NMIC. For the years ended December 31, 2009, 2008 and 2007, the Company made lease payments to NMIC of $23.8 million, $21.5 million, and $23.0 million, respectively. In addition, the Company leases office space to an affiliate of NMIC.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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, 2009, 2008 and 2007 were $176.8 million, $202.3 million, and $317.6 million, respectively, while benefits, claims and expenses ceded during these years were $196.2 million, $218.9 million, and $348.1 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, 2009 and 2008, customer allocations to NFG funds totaled $23.73 billion and $18.08 billion, respectively. For the years ended December 31, 2009, 2008, and 2007, NFG paid the Company $78.8 million, $76.7 million, and $79.6 million, respectively, for the distribution and servicing of these funds.

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, 2009 and 2008, the Company had no outstanding borrowings from affiliated entities under such agreements. During 2009, the Company had no outstanding borrowings at any given time. During 2008 and 2007, the most the Company had outstanding at any given time was $151.6 million and $178.2 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 $918.7 million and $2.58 billion as of December 31, 2009 and 2008, 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, 2009, 2008 and 2007 were $48.3 million, $52.7 million, and $59.5 million, respectively.

An affiliate of the Company is currently developing a browser-based policy administration and online brokerage software application for defined benefit plans. In connection with the development of this application, the Company made net payments, which were expensed, to that affiliate related to development totaling $11.2 million, $11.0 million, and $9.4 million for the years ended December 31, 2009, 2008 and 2007, respectively.

The Company entered into a note purchase agreement with an affiliate on November 17, 2006 to purchase $25.0 million of the affiliate’s 5.6% senior notes due November 16, 2016. The notes are secured by certain pledged mortgage servicing rights. The note is payable in seven equal principal installments of $3.8 million, which begin November 6, 2010. Interest is payable semi-annually on each May 16 and November 16.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 14. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. Total payments to (from) NMIC were $4.0 million and ($22.5) million during the years ended December 31, 2009 and 2008, respectively. These payments related to tax years prior to deconsolidation. There were no payments during 2007.

During 2009, NLIC received a $20.0 million capital contribution from NFS.

During 2009, NLIC did not pay dividends to NFS. In 2008 and 2007, NLIC paid dividends to NFS totaling $460.5 million, and $612.5 million, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

During 2009, the Company sold, at fair value, commercial mortgage loans with a carrying value of $273.2 million to Nationwide Mutual Insurance Company (NMIC). The sale resulted in a net realized loss of $33.5 million to the Company.

During 2009, the Company sold private equity investments to NMIC for $61.0 million, including the one private equity investment that is considered a VIE (See Note 20). The private equity investments were carried and sold at fair value. No gain or loss was recognized on the sale.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(18) 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 position or results of operations in a particular 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 on a broad range of issues 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 on such issues as 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 responded to information requests and/or subpoenas from the SEC in 2003 and the New York State Attorney General in 2005 in connection with investigations regarding market timing in certain mutual funds offered in insurance products sponsored by the Company. The Company is not aware of any further action on 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 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, self reported or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to 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 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.

A promotional and marketing arrangement associated with the Company’s offering of a retirement plan product and related services in Alabama is under investigation by the Alabama Attorney General, which assumed the investigation from the Alabama Securities Commission. The Company currently expects that any damages paid to settle this matter will not have a material adverse impact on its consolidated financial position. It is not possible to predict what effect, if any, the outcome of this investigation may have on the Company’s retirement plan operations with respect to promotional and marketing arrangements in general in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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’s consolidated financial position or results of operations in the future.

On September 10, 2009, NRS was named in a lawsuit filed in the Circuit Court for Montgomery County, Alabama entitled Twanna Brown, Individually and on behalf of all other persons in Alabama who are similarly situated, v Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc., Edwin “Mac” McArthur, Steve Walkley, Glenn Parker, Ulysses Lavender, Diana McLain, Randy Hebson, and Robert Wagstaff; and Unknown Defendants A-Z. On January 22, 2010, Brown filed an Amended Complaint alleging in Count One, that all the defendants were involved in a civil conspiracy and seeks to recover actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Two, although NRS is not named, it is alleged that the remaining defendants breached their fiduciary duties and seeks actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Three, although NRS is not named, the plaintiff seeks declaratory relief that the individual defendants breached their fiduciary duties, seeks injunctive relief permanently removing said defendants from their respective offices in the Alabama State Employees Association (ASEA) and PEBCO and costs and attorneys fees. In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants. Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On February 5, 2010, the Company filed a motion to dismiss, or in the alternative, a motion to stay the amended complaint. On February 9, 2010, the individual defendants filed a motion to dismiss the amended complaint. On December 13, 2009, the plaintiff filed a motion to consolidate this case with Nationwide Retirement Solutions, Inc. v. Alabama State Personnel Board, PEBCO, Inc. and Alabama State Employees Association. The Company continues to defend this case vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

On November 20, 2007, NRS and NLIC were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. On December 2, 2008, NRS and NLIC were named in an Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin, Steven E. Coker, Sandra H. Turner, and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the ASEA Plan, excluding members of the Deferred Compensation Committee, members of the Board of Control, ASEA’s directors, officers and board members, and PEBCO directors, officers and board members. The class period is from November 20, 2001 to the date of trial. In the amended class action complaint, the plaintiffs allege breach of fiduciary duty, wantonness and breach of contract. The amended class action complaint seeks a declaratory judgment, an injunction, an appointment of an independent fiduciary to protect Plan participants, disgorgement of amounts paid, reformation of Plan documents, compensatory damages and punitive damages, plus interest, attorneys’ fees and costs and such other equitable and legal relief to which plaintiffs and class members may be entitled. Also, on December 2, 2008, the plaintiffs filed a motion for preliminary injunction seeking an order requiring periodic payments made by NRS and/or NLIC to ASEA or PEBCO to be held in a trust account for the benefit of Plan participants. On December 16, 2008, the Companies filed their Answer. On April 28, 2009, the court entered an order denying the plaintiffs’ motion for preliminary injunction. NRS and NLIC continue to defend this case vigorously.

On July 11, 2007, NLIC was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al. The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries). The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties. The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On May 23, 2008, the Court granted the defendants’ motion to dismiss. On June 19, 2008, the plaintiffs filed a notice of appeal. On July 10, 2009, the Court of Appeals heard oral argument. NLIC continues to defend this lawsuit vigorously.

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 sought 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 alleged that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint sought 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 September 15, 2008, the Court denied the plaintiffs’ motion to vacate judgment and for leave to file an amended complaint. On February 3, 2010, the Sixth Circuit Court of Appeals affirmed the District Court’s dismissal of this case. NFS, NLIC and NRS continue to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. In the plaintiffs’ sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees under ERISA that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On November 6, 2009, the Court granted the plaintiff’s motion for class certification and certified a class of “All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participant’s had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009”. Also on November 6, 2009, the Court denied plaintiffs’ motion to strike NFS and NLIC’s counterclaim for breach of fiduciary duty against the Trustees, in the event NFS and NLIC are held to be a fiduciary at trial, and granted H. Grady Chandler’s motion to intervene. On November 23, 2009, NFS and NLIC filed a rule 23(f) petition asking the Second Circuit Court of Appeals to hear an appeal of the District Court’s order granting class certification. On December 2, 2009, NFS and NLIC filed an answer to the 6th Amended Complaint. On January 29, 2010, the Companies filed a motion for class certification against the four named plaintiffs, as trustees of their respective retirement plans and against the trustees of other ERISA retirement plans who become members of the class certified in this lawsuit, for breach of fiduciary duty to the plans because the trustees approved and accepted the advantages of the allegedly unlawful “revenue sharing” payments. NFS and NLIC continue to defend this lawsuit vigorously.

Tax Matters

Management has established tax reserves in accordance with current accounting guidance, which 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. 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 dividends received deduction (DRD) is a significant component of the Company’s federal income tax provision. On August 16, 2007, the IRS issued Revenue Ruling 2007-54. This ruling took a position with respect to the DRD that could have significantly reduced the Company’s DRD. The Company believes that the position taken by the IRS in the ruling was contrary to existing law and the relevant legislative history.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In Revenue Ruling 2007-61, released September 25, 2007, the IRS and the U.S. Department of the Treasury suspended Revenue Ruling 2007-54 and informed taxpayers of their intention to address certain issues in connection with the DRD in future tax regulations. Final tax regulations could impact the Company’s DRD in periods subsequent to their effective date.

The IRS recently completed an audit of the Company’s tax years 2003 through 2005. As a result of this audit, the Company received a Revenue Agent’s Report (RAR) and 30-Day Letter (requiring payment of additional tax due or the preparation of protest to start the appeals process) from the IRS in July 2009. The RAR includes an adjustment to reduce the Company’s DRD for the above tax years resulting in additional tax due of $151.0 million. The Company is currently at appeals on this issue and believes that it will ultimately prevail based on technical merits.

(19) Guarantees  

Since 2002, the Company has sold $696.1 million of credit enhanced equity interests in LIHTC Funds to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 7.75% over periods ending between 2002 and 2025. As of December 31, 2009 and 2008, the Company held guarantee reserves totaling $5.5 million and $5.1 million, respectively, on these transactions. These guarantees are in effect for periods of approximately 15 years each. The LIHTC Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $985.9 million. The Company does not anticipate making any material payments related to these guarantees.

As of December 31, 2009, the Company did not hold any stabilization reserves as collateral for certain properties owned by the LIHTC Funds, as the LIHTC Funds have met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized. During 2009, the stabilization reserve was not increased and the remainder of the stabilization reserve, $0.8 million, was released into income. In 2008, $0.8 million of the stabilization reserve was released into income.

To the extent there are cash deficits in any specific property owned by the LIHTC Funds, property reserves, property operating guarantees and reserves held by the LIHTC Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the LIHTC Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

(20) Variable Interest Entities  

In the normal course of business, the Company has relationships with variable interest entities (VIEs). The Company’s VIEs are conduits that assist the Company in structured products transactions involving the sale of LIHTC Funds to third party investors, other structured product issuances, and private equity investments.

The Company considers many factors when determining whether it is (or is not) the primary beneficiary of a VIE. There is a review of the entity’s contract and other deal related information, such as 1) the entity’s equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity, 2) whether the contractual or ownership interest in the entity changes with the change in fair value of the entity, and 3) the extent to which, through the variable interest, the Company shares in the entity’s expected losses and residual returns.

The Company was not required to provide financial or other support outside previous contractual requirements to any VIE.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

LIHTC Funds

The Company provides guarantees to limited partners related to the amount of tax credits that will be generated by the funds (see Note 19). The results of operations and financial position of each VIE of which the Company is the primary beneficiary are consolidated along with corresponding noncontrolling interest in the accompanying consolidated financial statements.

The Company had relationships with 19 LIHTC Funds that are considered VIEs as of December 31, 2009 and December 31, 2008, where the Company was the primary beneficiary. Net assets of these consolidated VIEs were $350.6 million and $416.0 million as of December 31, 2009 and December 31, 2008, respectively. The following table summarizes the components of net assets as of December 31:

(in millions)	2009			2008
Other long-term investments	$	314.3		$	371.1
Short-term investments		16.4			20.9
Other assets		33.8			41.6
Other liabilities		(13.9	)		(17.6	)

The Company’s total loss exposure from consolidated VIEs was immaterial as of December 31, 2009 and December 31, 2008 (except for the impact of guarantees disclosed in Note 19). Creditors (or beneficial interest holders) of the consolidated VIEs have no recourse to the general credit of the Company.

These LIHTC Funds are financed through the sale of these funds into the secondary market. The proceeds from these sales are used to participate in low-income housing projects that provide tax benefits to the investors.

In addition to the consolidated VIEs described above, the Company holds variable interests in other LIHTC Funds that qualify as VIEs where the Company is not the primary beneficiary. The carrying amount of these unconsolidated VIEs was $110.0 million and $156.3 million as of December 31, 2009 and 2008, respectively. The total exposure to loss on these unconsolidated VIEs was $122.9 million and $179.6 million as of December 31, 2009 and 2008, respectively. The total exposure to loss is determined by adding any unfunded commitments to the carrying amount of the VIEs.

Structured Products

The Company had a relationship with one structured product investment that is considered a VIE as of December 31, 2009 and December 31, 2008, where the Company was the primary beneficiary. Net assets of this consolidated VIE were $9.2 million and $8.9 million as of December 31, 2009 and December 31, 2008, respectively. Creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the Company. There are no arrangements that would require the Company to provide financial support to the VIE.

The Company was invested in 7 and 12 structured product investments that are considered VIEs as of December 31, 2009 and 2008, respectively, where the Company is not the primary beneficiary. These structured products are in the form of synthetic collateralized debt obligations and collateralized lease obligations. The carrying amount on these unconsolidated VIEs was $31.8 million and $17.8 million as of December 31, 2009 and 2008, respectively. The total exposure to loss on these unconsolidated VIEs is determined to be the carrying amount of the VIEs.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Private Equity Investments

The Company had a relationship with one private equity investment that is considered a VIE as of December 31, 2008, where the Company was the primary beneficiary. On September 30, 2009, NLIC sold this private equity investment, which had net assets of $14.1 million, to NMIC.

(21) Segment Information  

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

The primary segment profitability measure that management uses is pre-tax operating earnings (loss), which is calculated by adjusting income from continuing operations before federal income taxes and discontinued operations to exclude: (1) net realized investment gains and losses, except for operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment, net realized gains and losses related to hedges on GMDB contracts and securitizations); (2) other-than-temporary impairment losses; (3) the adjustment to amortization of DAC and VOBA related to net realized investment gains and losses; and (4) net loss attributable to noncontrolling interest.

Individual Investments

The Individual Investments segment consists of individual annuity products marketed under the The BEST of AMERICA®, Nationwide DestinationSM, and other Nationwide-specific or private label brands. Deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, deferred variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while deferred fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. Immediate annuities differ from deferred annuities in that the initial premium is exchanged for a stream of income for a certain period or for the owner’s lifetime without future access to the original investment. Portfolio income insurance is a form of deferred annuity that provides the income protection features common to today’s variable annuities to owners of specific managed account investments whose assets are outside of the annuity product. The majority of assets and recent sales for the Individual Investments segment consist of deferred variable annuities.

Retirement Plans

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

Individual Protection

The Individual Protection segment consists of 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; non-operating realized gains and losses and related amortization, including mark-to-market adjustments on embedded derivatives, net of economic hedges, related to products with living benefits; and other revenues and expenses not allocated to other segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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
2009
Revenues:
Policy charges	$	521.9		$	93.2	$	633.7	$	(3.7	)	$	1,245.1
Premiums		191.2			—		278.5		—			469.7
Net investment income		562.0			679.0		491.8		146.3			1,879.1
Non-operating net realized investment gains1		—			—		—		619.1			619.1
Other-than-temporary impairments losses		—			—		—		(574.6	)		(574.6	)
Other income2		(168.1	)		0.1		0.2		(1.4	)		(169.2	)
Total revenues		1,107.0			772.3		1,404.2		185.7			3,469.2
Benefits and expenses:
Interest credited to policyholder accounts		393.6			432.5		200.8		73.2			1,100.1
Benefits and claims		247.3			—		537.8		27.0			812.1
Policyholder dividends		—			—		87.0		—			87.0
Amortization of DAC		(1.4	)		44.5		158.1		264.4			465.6
Amortization of VOBA and other intangible assets		0.9			8.9		45.0		8.0			62.8
Interest expense		—			—		—		55.3			55.3
Other operating expenses		178.8			150.8		183.9		66.3			579.8
Total benefits and expenses		819.2			636.7		1,212.6		494.2			3,162.7
Income (loss) from continuing operations before federal income tax expense (benefit)		287.8			135.6		191.6		(308.5	)	$	306.5
Less: non-operating net realized investment gains1		—			—		—		(619.1	)
Less: non-operating other-than-temporary impairment losses		—			—		—		574.6
Less: adjustment to amortization related to net realized investment gains and losses		—			—		—		296.5
Less: net loss attributable to noncontrolling interest		—			—		—		52.3
Pre-tax operating earnings (loss)	$	287.8		$	135.6	$	191.6	$	(4.2	)
Assets as of year end	$	48,890.6		$	25,034.7	$	22,115.1	$	2,953.3		$	98,993.7

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).  

2 Includes operating items discussed above.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(in millions)	Individual Investments			Retirement Plans		Individual Protection		Corporate and Other			Total
2008
Revenues:
Policy charges	$	602.9		$	119.9	$	617.7	$	—		$	1,340.5
Premiums		120.2			—		273.9		—			394.1
Net investment income		530.4			650.7		485.8		197.8			1,864.7
Non-operating net realized investment losses1		—			—		—		(386.8	)		(386.8	)
Other-than-temporary impairments losses		—			—		—		(1,130.7	)		(1,130.7	)
Other income2		109.5			0.9		—		(75.6	)		34.8
Total revenues		1,363.0			771.5		1,377.4		(1,395.3	)		2,116.6
Benefits and expenses:
Interest credited to policyholder accounts		379.1			435.9		196.2		161.4			1,172.6
Benefits and claims		378.5			—		489.4		(11.8	)		856.1
Policyholder dividends		—			—		93.1		—			93.1
Amortization of DAC		647.7			40.6		129.9		(126.6	)		691.6
Amortization of VOBA and other intangible assets		7.8			1.3		22.1		(0.3	)		30.9
Interest expense		—			—		—		61.8			61.8
Other operating expenses		189.9			152.3		191.7		97.7			631.6
Total benefits and expenses		1,603.0			630.1		1,122.4		182.2			3,537.7
(Loss) income from continuing operations before federal income tax expense		(240.0	)		141.4		255.0		(1,577.5	)	$	(1,421.1	)
Less: non-operating net realized investment losses1		—			—		—		386.8
Less: non-operating other-than-temporary impairment losses		—			—		—		1,130.7
Less: adjustment to amortization related to net realized investment gains and losses		—			—		—		(139.2	)
Less: net loss attributable to noncontrolling interest		—			—		—		72.3
Pre-tax operating (loss) earnings	$	(240.0	)	$	141.4	$	255.0	$	(126.9	)
Assets as of year end	$	42,508.1		$	22,497.8	$	20,360.3	$	6,437.4		$	91,803.6

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).  

2 Includes operating items discussed above.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2007
Revenues:
Policy charges	$	662.6	$	147.3	$	574.0	$	—		$	1,383.9
Premiums		133.3		—		273.7		—			407.0
Net investment income		642.9		655.0		471.2		423.1			2,192.2
Non-operating net realized investment losses1		—		—		—		(36.9	)		(36.9	)
Other-than-temporary impairments losses		—		—		—		(117.7	)		(117.7	)
Other income2		3.1		—		—		(4.5	)		(1.4	)
Total revenues		1,441.9		802.3		1,318.9		264.0			3,827.1
Benefits and expenses:
Interest credited to policyholder accounts		444.3		443.3		192.0		231.4			1,311.0
Benefits and claims		233.5		—		439.0		—			672.5
Policyholder dividends		—		—		83.1		—			83.1
Amortization of DAC		287.1		27.4		93.1		(25.5	)		382.1
Amortization of VOBA and other intangible assets		5.3		2.5		40.5		0.2			48.5
Interest expense		—		—		—		70.0			70.0
Other operating expenses		194.8		179.9		187.2		68.9			630.8
Total benefits and expenses		1,165.0		653.1		1,034.9		345.0			3,198.0
Income (loss) from continuing operations before federal income tax expense		276.9		149.2		284.0		(81.0	)	$	629.1
Less: non-operating net realized investment losses1		—		—		—		36.9
Less: non-operating other-than-temporary impairment losses		—		—		—		117.7
Less: adjustment to amortization related to net realized investment gains and losses		—		—		—		(25.5	)
Less: net loss attributable to noncontrolling interest		—		—		—		50.9
Pre-tax operating earnings	$	276.9	$	149.2	$	284.0	$	99.0
Assets as of year end	$	56,564.4	$	27,963.2	$	22,874.1	$	10,222.0		$	117,623.7

1 Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations.  

2 Includes operating items discussed above.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

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

As of December 31, 2009 (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	$	136.7	$	151.1	$	151.1
U.S. Government agencies		551.3		602.8		602.8
Obligations of states and political subdivisions		567.6		548.9		548.9
Foreign governments		69.9		75.1		75.1
Public utilities		2,487.3		2,598.6		2,598.6
All other corporate		21,290.3		20,773.2		20,773.2
Total fixed maturity securities available-for-sale		25,103.1		24,749.7		24,749.7
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies		28.2		31.5		31.5
Industrial, miscellaneous and all other		1.1		1.9		1.9
Nonredeemable preferred stocks		19.5		19.2		19.2
Total equity securities available-for-sale		48.8		52.6		52.6
Mortgage loans on real estate, net		6,916.4				6,829.0	1
Real estate, net:
Investment properties		11.4				8.9	2
Total real estate, net		11.4				8.9
Policy loans		1,050.4				1,050.4
Other long-term investments		457.5				457.5
Short-term investments, including amounts managed by a related party		1,003.4				1,003.4
Total investments	$	34,591.0			$	34,151.5

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.  

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule III        Supplementary Insurance Information

As of December 31, 2009, 2008 and 2007 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
2009
Individual Investments	$	1,911.5	$	10,870.4						$	191.2
Retirement Plans		270.6		11,702.4							—
Individual Protection		1,770.0		8,745.3							278.5
Corporate and Other		31.0		1,831.3
Total	$	3,983.1	$	33,149.4						$	469.7
2008
Individual Investments	$	1,883.0	$	12,476.8						$	120.2
Retirement Plans		290.1		11,497.5							—
Individual Protection		1,734.8		8,350.6							273.9
Corporate and Other		615.9		3,389.6							—
Total	$	4,523.8	$	35,714.5						$	394.1
2007
Individual Investments	$	2,078.1	$	11,316.4						$	133.3
Retirement Plans		292.9		10,973.1							—
Individual Protection		1,637.6		8,191.7							273.7
Corporate and Other		87.0		4,973.4							—
Total	$	4,095.6	$	35,454.6						$	407.0
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
2009
Individual Investments	$	562.0	$	640.9	$	(1.4	)	$	179.7
Retirement Plans		679.0		432.5		44.5			159.7
Individual Protection		491.8		825.6		158.1			228.9
Corporate and Other		146.3		100.2		264.4			129.6
Total	$	1,879.1	$	1,999.2	$	465.6		$	697.9
2008
Individual Investments	$	530.4	$	757.6	$	647.7		$	197.7
Retirement Plans		650.7		435.9		40.6			153.6
Individual Protection		485.8		778.7		129.9			213.8
Corporate and Other		197.8		149.6		(126.6	)		159.2
Total	$	1,864.7	$	2,121.8	$	691.6		$	724.3
2007
Individual Investments	$	642.9	$	677.8	$	287.1		$	200.1
Retirement Plans		655.0		443.3		27.4			182.4
Individual Protection		471.2		714.1		93.1			227.7
Corporate and Other		423.1		231.4		(25.5	)		139.1
Total	$	2,192.2	$	2,066.6	$	382.1		$	749.3

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.  

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule IV        Reinsurance

As of December 31, 2009, 2008 and 2007 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
2009
Life insurance in force	$	208,484.5	$	76,136.2	$	8.2	$	132,356.5	0.0%
Premiums:
Life insurance1	$	549.9	$	80.5	$	0.3	$	469.7	0.1%
Accident and health insurance		212.0		222.7		11.7		1.0	NM
Total	$	761.9	$	303.2	$	12.0	$	470.7	2.5%
2008
Life insurance in force	$	208,071.0	$	75,091.7	$	12.3	$	132,991.6	0.0%
Premiums:
Life insurance1	$	476.8	$	83.7	$	1.0	$	394.1	0.3%
Accident and health insurance		182.9		209.3		26.4		—	NM
Total	$	659.7	$	293.0	$	27.4	$	394.1	7.0%
2007
Life insurance in force	$	200,600.5	$	76,178.6	$	14.0	$	124,435.9	0.0%
Premiums:
Life insurance1	$	497.5	$	92.5	$	2.0	$	407.0	0.5%
Accident and health insurance		289.2		316.8		27.6		—	NM
Total	$	786.7	$	409.3	$	29.6	$	407.0	7.3%

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

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

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, 2009, 2008 and 2007 (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
2009
Valuation allowances - mortgage loans on real estate	$	42.4	$	84.8	$	—	$	49.8	$	77.4
2008
Valuation allowances - mortgage loans on real estate	$	24.8	$	20.8	$	—	$	3.2	$	42.4
2007
Valuation allowances - mortgage loans on real estate	$	36.0	$	1.1	$	—	$	12.3	$	24.8

1 Amounts represent transfers to real estate owned, recoveries and sales to NMIC.  

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

 

PART C. OTHER INFORMATION

Item 26.                   Exhibits

a)   Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant – Filed previously on Form N8B-2 for the NW VLI Separate Account – 2 (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 Post-Effective Amendment No. 18 (033-42180) and hereby incorporated by reference.

d)   The form of the contract – Filed previously with initial registration statement (033-42180) and hereby incorporated by reference.

e)   The form of the contract application – Filed previously with initial registration statement (033-42180) and hereby incorporated by reference.

f)    Depositor ' s Certificate of Incorporation and By-Laws.

1)    Amended Articles of Incorporation for Nationwide Life Insurance Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document " exhibitf1.htm " and hereby incorporated by reference.

2)    Amended and Restated Code of Regulations of Nationwide Life Insurance Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document " exhibitf2.htm " and hereby incorporated by reference.

3)    Articles of Merger of Nationwide Life Insurance Company of America with and into Nationwide Life Insurance Company, effective December 31, 2009. Filed previously with initial registration statement (333-164119) on January 4, 2010 as document " exhibitf3.htm " and hereby incorporated by reference.

g)   Reinsurance Contracts -Filed previously with registration statement (333-31725) and hereby incorporated by reference.

h)   Participation Agreements - The following Fund Participation Agreements were previously filed on July 17, 2007 with pre-effective amendment number 1 of registration statement (333-140608) under Exhibit 26(h), and are hereby incorporated by reference.

1)   Fund Participation Agreement with AIM Variable Insurance Funds, AIM Advisors, Inc., and AIM Distributors dated January 6, 2003, under document "aimfpa99h1.htm"

2)   Amended and Restated Fund Participation and Shareholder Services Agreement with American Century Investment Services, Inc. dated September 15, 2004, as amended, under document "amcentfpa99h2"

3)   Restated and Amended Fund Participation Agreement with The Dreyfus Corporation dated January 27, 2000, as amended, under document "dreyfusfpa99h3.htm"

4)   Fund Participation Agreement with Federated Insurance Series and Federated Securities Corp. dated April 1, 2006, as amended, under document "fedfpa99h4.htm"

5)   Fund Participation Agreement with Fidelity Variable Insurance Products Fund dated May 1, 1988, as amended, including Fidelity Variable Insurance Products Fund IV and Fidelity Variable Insurance Products Fund V, under document "fidifpa99h5.htm"

6)   Amended and Restated Fund Participation Agreement with Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc. dated May 1, 2003; as amended, under document "frankfpa99h8.htm"

7)   Fund Participation Agreement, Service and Institutional Shares, with Janus Aspen Series, dated December 31, 1999, under document "janusfpa99h9a.htm"

8)   Fund Participation Agreement, Service II Shares, with Janus Aspen Series, dated May 5, 2002, under document "janusfpa99h9b.htm"

9)    Amended and Restated Fund Participation Agreement with MFS Variable Insurance Trust and Massachusetts Financial Services Company dated February 1, 2003, as amended, under document "mfsfpa99h11.htm"

10)   Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust) dated February 1,2003, as amended, under document "nwfpa99h12a.htm"

11)   Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust), American Funds Insurance Series, and Capital Research and Management Company dated May 1, 2006, as amended, under document "nwfpa99h12b.htm"

12)   Fund Participation Agreement with Neuberger Berman Advisers Management Trust / Lehman Brothers Advisers Management Trust (formerly, Neuberger Berman Advisers Management Trust) dated January 1, 2006, under document "neuberfpa99h13.htm"

13)   Fund Participation Agreement with Oppenheimer Variable Account Funds and Oppenheimer Funds, Inc. dated April 13, 2007, under document "oppenfpa99h14.htm"

14)   Fund Participation Agreement with T. Rowe Price Equity Series, Inc., T. Rowe Price International Series, Inc., T. Rowe Price Fixed Income Series, Inc., and T. Rowe Price Investment Services, Inc. dated October 1, 2002, as amended, under document "trowefpa99h15.htm"

15)   Fund Participation Agreement with The Universal Institutional Funds, Inc., Morgan Stanley Distribution, Inc., and Morgan Stanley Investment Management, Inc. dated February 1, 2002, as amended, under document "univfpa99h16.htm"

The following Fund Participation Agreements were previously filed on September 27, 2007 with pre-effective amendment number 3 of registration statement (333-137202) under Exhibit 26(h), and are hereby incorporated by reference.  For information regarding payments Nationwide receives from underlying mutual funds, please see the "Information on Underlying Mutual Fund Payments" section of the prospectus and/or the underlying mutual fund prospectuses.

16)   Fund Participation Agreement (Amended and Restated) with Alliance Capital Management L.P. and Alliance-Bernstein Investment Research and Management, Inc. dated June 1, 2003, as document "alliancebernsteinfpa.htm".

17)   Fund Participation Agreement with BlackRock (formerly FAM Distributors, Inc. and FAM Variable Series Funds, Inc.) dated April 13, 2004, as amended, as document "blackrockfpa.htm".

18)   Fund Participation Agreement with PIMCO Variable Insurance Trust and PIMCO Fund Distributors, LLC dated March 28, 2002, as amended, as document "pimcofpa.htm".

19)   Fund Participation Agreement with Putnam Variable Trust and Putnam Retail Management, L.P., dated February 1, 2002, as document "putnamfpa.htm".

20)   Fund Participation Agreement Van Eck Investment Trust, Van Eck Associates Corporation, Van Eck Securities Corporation dated September 1, 1989, as amended, as document "vaneckfpa.htm".

21)   Fund Participation Agreement with Waddell & Reed Services Company, Waddell & Reed, Inc., and W&R Target Funds, Inc. dated December 1, 2000, as amended, as document "waddellreedfpa.htm".

22)   Fund Participation Agreement with Wells Fargo Management, LLC, Stephens, Inc. dated November 15, 2004, as amended, as document "wellsfargofpa.htm".

The following Fund Participation Agreements were previously filed, and are hereby incorporated by reference.  For information regarding payments Nationwide receives from underlying mutual funds, please see the "Information on Underlying Mutual Fund Payments" section of the prospectus and/or the underlying mutual fund prospectuses.

23)   Fund Participation Agreement with Credit Suisse Asset Management, LLC and Provident Distributors, Inc. dated January 3, 2000, filed April 22, 2008 with post-effective amendment number 21 with registration statement (033-60063), as document "creditsuissefpa.htm".

i)   Not Applicable

j)   Not Applicable

k)   Opinion of Counsel – Filed previously with the registration statement on Form S-6 (033-42180) and hereby incorporated by reference.

l)    Not Applicable

m)   Not Applicable

n)   Consent of Independent Registered Public Accounting Firm – Attached hereto.

o)   Not Applicable

p)   Not Applicable

q)   Redeemability Exemption   – Filed previously with registration statement (333-31725) on December 21, 2009 under document " exhibit_26q.htm " and is hereby incorporated by reference.

99)   Power of Attorney – Attached hereto.

Item 27. Directors and Officers of the Depositor

President and Chief Operating Officer and Director	Kirt A. Walker
Executive Vice President and Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President-Chief Administrative Officer	Terri L. Hill
Executive Vice President-Chief Human Resources Officer	Gale V. King
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing Officer	James R. Lyski
Executive Vice President-Chief Investment Officer	Gail G. Snyder
Executive Vice President-Finance	Lawrence A. Hilsheimer
Executive Vice President	Mark A. Pizzi
Executive Vice President and Director	Mark R. Thresher
Senior Vice President and Treasurer	Harry H. Hallowell
Senior Vice President-Associate Services	Robert J. Puccio
Senior Vice President-Business Transformation Office	Gregory S. Moran
Senior Vice President-Chief Compliance Officer	Carol Baldwin Moody
Senior Vice President-Chief Financial Officer and Director	Timothy G. Frommeyer
Senior Vice President-Chief Litigation Counsel	Randolph C. Wiseman
Senior Vice President-Chief Risk Officer	Michael W. Mahaffey
Senior Vice President-CIO IT Infrastructure	Robert J. Dickson
Senior Vice President-Customer Insight/Analytic	Paul D. Ballew
Senior Vice President-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-Human Resources	Kim R. Geyer
Senior Vice President-Individual Investments Business Head	Eric S. Henderson
Senior Vice President-Individual Protection Business Head and Director	Peter A. Golato
Senior Vice President-PCIO Information Technology	Srinivas Koushik
Senior Vice President-NF Marketing	Gordon E. Hecker
Senior Vice President-CIO NF Systems	Susan Gueli
Senior Vice President, Chief Financial Officer – Property and Casualty	Michael P. Leach
Senior Vice President-Distribution and Sales	John L. Carter
Senior Vice President-President – NW Retirement Plans	Anne L. Arvia
Senior Vice President-President-Investment Management Group	Michael S. Spangler
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Human Resources	Kim R. Geyer
Senior Vice President-Marketing Services	Jennifer M. Hanley
Senior Vice President-Property and Casualty Personal Lines Product Pricing	J. Lynn Greenstein
Senior Vice President-Property and Casualty/Farm Product Pricing	James R. Burke
Senior Vice President – Internal Audit	Kai V. Monahan
Senior Vice President	Matthew Jauchius
Vice President – Corporate Governance and Secretary	Robert W. Horner, III
Director	Stephen S. Rasmussen

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

One Nationwide Plaza, Columbus, Ohio 43215

Item 28. Persons Controlled by or Under Common Control with the Depositor or Registrant.

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

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
1492 Capital, LLC	Ohio		The company acts as an investment holding company.
1717 Brokerage Services, Inc.	Pennsylvania		The company is a multi-state licensed insurance agency.
AGMC Reinsurance, Ltd.	Turks & Caicos Islands		The company is in the business of reinsurance of mortgage guaranty risks.
ALLIED General Agency Company	Iowa		The company acts as a managing general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.	Iowa		The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company	Iowa		The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.	Texas		The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
AMCO Insurance Company	Iowa		The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.	Florida		The company is an underwriting manager for ocean cargo and hull insurance.
Atlantic Floridian Insurance Company	Ohio		The company writes personal lines residential property insurance in the State of Florida.
Freedom Specialty Insurance Company	Ohio		The company operates as a multi-line insurance company.
Audenstar Limited	England		The company is an investment holding company.
Champions of the Community, Inc.	Ohio		The company raises money to enable it to make gifts and grants to charitable organizations.
Colonial County Mutual Insurance Company*	Texas		The company underwrites non-standard automobile and motorcycle insurance and various other commercial liability coverages in Texas.
Crestbrook Insurance Company*	Ohio		The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Depositors Insurance Company	Iowa		The company underwrites general property and casualty insurance.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
DVM Insurance Agency, Inc.	California		The company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
Farmland Mutual Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Better Health, Inc.  (fka Future Health Holding Company)	Maryland		The company provides population health management.
Gates, McDonald & Company*	Ohio		The company provides services to employers for managing workers ' and unemployment compensation matters and employee leave administration.
Gates, McDonald & Company of New York, Inc.	New York		The company provides workers ' compensation and self-insured claims administration services to employers with exposure in New York.
GatesMcDonald Health Plus Inc.	Ohio		The company provides medical management and cost containment services to employers.
Insurance Intermediaries, Inc.	Ohio		The company is an insurance agency and provides commercial property and casualty brokerage services.
Life REO Holdings, LLC	Ohio		The company is an investment company.
Lone Star General Agency, Inc.	Texas		The company acts as general agent to market nonstandard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as some individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England		This is a limited liability company organized for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds.  The company is currently inactive.
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Ohio		The company is a property and casualty insurer that writes personal lines business.
Nationwide Agribusiness Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*	Ohio		The purpose of the company is to develop Nationwide Arena and to engage in related development activity.
Nationwide Asset Management Holdings	England and Wales		The company operates as an investment holding company.
Nationwide Asset Management, LLC	Ohio		The company provides investment advisory services as a registered investment adviser to affiliated and non-affiliated clients.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Assurance Company	Wisconsin		The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Bank*	United States		This is a federal savings bank chartered by the Office of Thrift Supervision in the United States Department of Treasury to exercise deposit, lending, agency, custody and fiduciary powers and to engage in activities permissible for federal savings banks under the Home Owners ' Loan Act of 1933.
Nationwide Better Health Holding Company (fka Nationwide Better Health, Inc.)	Ohio		The company provides health management services.
Nationwide Cash Management Company	Ohio		The company buys and sells investment securities of a short-term nature as the agent for other corporations, foundations and insurance company separate accounts.
Nationwide Community Development Corporation, LLC	Ohio		The company holds investments in low-income housing funds.
Nationwide Corporation	Ohio		The company acts primarily as a holding company for entities affiliated with Nationwide Mutual Insurance.
Nationwide Emerging Managers, LLC	Delaware		The company acquires and holds interests in registered investment advisers 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 Structured Products, LLC	Ohio		The company captures and reports the results of the structured products business unit.
Nationwide Foundation*	Ohio		The company contributes to non-profit activities and projects.
Nationwide Fund Advisors (fka Gartmore Mutual Fund Capital Trust)	Delaware		The trust acts as a registered investment adviser.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Fund Distributors LLC (successor to Gartmore Distribution Services, Inc.)	Delaware		The company is a limited purpose broker-dealer.
Nationwide Fund Management LLC (successor to Gartmore Investors Services, Inc.)	Delaware		The company provides administration, transfer and dividend disbursing agent services to various mutual fund entities.
Nationwide General Insurance Company	Ohio		The company transacts a general insurance business, except life insurance, and primarily provides automobile and fire insurance to select customers.
Nationwide Global Funds	Luxembourg		The exclusive purpose of the Company is to invest the funds available to it in transferable securities and other assets permitted by law with the aim of spreading investment risks and affording its shareholders the results of the management of its assets.
Nationwide Global Holdings, Inc.	Ohio		The company is a holding company for the international operations of Nationwide.
Nationwide Global Ventures, Inc.	Delaware		The company acts as a holding company.
Nationwide Indemnity Company*	Ohio		The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide insurance organization.
Nationwide Insurance Company of America	Wisconsin		The company is an independent agency personal lines underwriter of property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio		The company transacts general insurance business, except life insurance.
Nationwide International Underwriters	California		The company is a special risks, 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 distributor of variable annuities and variable life products for Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. The company also provides educational services to retirement plan sponsors and its participants.
Nationwide Life and Annuity Insurance Company**	Ohio		The company engages in underwriting life insurance and granting, purchasing and disposing of annuities.
Nationwide Life Insurance Company*	Ohio		The company pro­vides individual life insurance, group life and health insurance, fixed and variable annuity products and other life insurance products.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Lloyds	Texas		The company markets commercial and property insurance in Texas.
Nationwide Mutual Capital, LLC	Ohio		The company acts as a private equity fund investing in companies for investment purposes and to create strategic opportunities for Nationwide.
Nationwide Mutual Capital I, LLC*	Delaware		The business of the company is to achieve long term capital appreciation through a portfolio of primarily domestic equity investments in financial service and related companies.
Nationwide Mutual Fire Insurance Company	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Mutual Insurance Company*	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Private Equity Fund, LLC	Ohio		The company invests in private equity funds.
Nationwide Property and Casualty Insurance Company	Ohio		The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC	Ohio		The company provides alarm systems and security guard services.
Nationwide Realty Services, Ltd.	Ohio		The company provides relocation services for associates.
Nationwide Realty Investors, Ltd.*	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investment.
Nationwide Retirement Solutions, Inc.*	Delaware		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Arizona	Arizona		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio	Ohio		The company provides retirement products, marketing, education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas	Texas		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Insurance Agency, Inc.	Massachusetts		The company markets and administers deferred compensation plans for public employees.
Nationwide SA Capital Trust	Delaware		The trust acts as a registered investment adviser.
Nationwide Sales Solutions, Inc.	Iowa		The company engages in the direct marketing of property and casualty insurance products.
Nationwide Securities, LLC	Delaware		The company is a registered broker-dealer and provides investment management and administrative services.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Separate Accounts, LLC	Delaware		The company has deregistered as an investment adviser and acts as a holding company.
Nationwide Services Company, LLC	Ohio		The company performs shared services functions for the Nationwide organization.
Newhouse Capital Partners, LLC	Delaware		The company is an investment holding company.
Newhouse Capital Partners II, LLC	Delaware		The company is an investment holding company.
NF Reinsurance Ltd.*	Bermuda		The company serves as a captive reinsurer for Nationwide Life Insurance Company ' s universal life, term life and annuity business.
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc. ' s distribution companies.
NMC CPC WT Investment, LLC	Delaware		The business of the company is to hold and exercise rights in a specific private equity investment.
NWD Asset Management Holdings, Inc.	Delaware		The company is an investment holding company.
NWD Investment Management, Inc.	Delaware		The company acts as a holding company and provides other business services for the NWD Investments group of companies.
NWD Management & Research Trust	Delaware		The company acts as a holding company for the NWD Investments group of companies and as a registered investment adviser.
NWD MGT, LLC	Delaware		The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to the NWD Investments management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC.
Pension Associates, Inc.	Wisconsin		The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa		The company is an insurance agency.
Privilege Underwriters, Inc.	Florida		The company acts as a holding company for the PURE Group of insurance companies.
Privilege Underwriters, Reciprocal Exchange	Florida		The company acts as a reciprocal insurance company.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Pure Insurance Company	Florida		The company acts as a captive reinsurance company.
Pure Risk Management, LLC	Florida		The company acts as an attorney-in-fact for Privilege Underwriters Reciprocal Exchange.
Registered Investment Advisors Services, Inc.	Texas		The company is a technology company that facilitates third-party money management services for registered investment advisers.
Retention Alternatives, Ltd.*	Bermuda		The company is a captive insurer and writes first dollar insurance policies in workers ' compensation, general liability and automobile liability for its affiliates in the United States.
Riverview International Group, Inc.	Delaware		The company is an insurance company.
RP&C International, Inc.	Ohio		The company is an investment-banking firm that provides specialist advisory services and innovative financial solutions to public and private companies internationally.
Scottsdale Indemnity Company	Ohio		The company is engaged in a general insurance business, except life insurance.
Scottsdale Insurance Company	Ohio		The company primarily provides excess and surplus lines of property and casualty insurance.
Scottsdale Surplus Lines Insurance Company	Arizona		The company provides excess and surplus lines coverage on a non-admitted basis.
THI Holdings (Delaware), Inc.*	Delaware		The company acts as a holding company for subsidiaries of the Nationwide group of companies.
Titan Auto Insurance of New Mexico, Inc.	New Mexico		The company is an insurance agency that operates employee agent storefronts.
Titan Indemnity Company	Texas		The company is a multi-line insurance company and is operating primarily as a property and casualty insurance company.
Titan Insurance Company	Michigan		The company is a property and casualty insurance company.
Titan Insurance Services, Inc.	Texas		The company is a Texas grandfathered managing general agency.
Veterinary Pet Insurance Company*	California		The company provides pet insurance.
Victoria Automobile Insurance Company	Indiana		The company is a property and casualty insurance company.
Victoria Fire & Casualty Company	Ohio		The company is a property and casualty insurance company.
Victoria National Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Select Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Specialty Insurance Company	Ohio		The company is a property and casualty insurance company.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
VPI Services, Inc.	California		The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance Company policies, including pet indemnification and a lost pet recovery program.
Western Heritage Insurance Company	Arizona		The company underwrites excess and surplus lines of property and casualty insurance.
Whitehall Holdings, Inc.	Texas		The company acts as a holding company for the Titan group of agencies.
W.I. of Florida (d.b.a. Titan Auto Insurance)	Florida		The company is an insurance agency and operates as an employee agent storefront for Titan Indemnity Company in Florida.

	COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart  unless otherwise indicated)	PRINCIPAL BUSINESS
*	MFS Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide Multi-Flex Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-A	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-B	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-C	Ohio		Issuer of Annuity Contracts
*	Nationwide VA Separate Account-D	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-II	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-3	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-4	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-5	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-6	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-7	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-8	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-9	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-10	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-11	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-12	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-13	Ohio		Issuer of Annuity Contracts
*	Nationwide Variable Account-14	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-15	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-16	Ohio		Issuer of Annuity Contracts
	Nationwide Variable Account-17	Ohio		Issuer of Annuity Contracts
*	Nationwide Provident VA Separate Account 1	Pennsylvania		Issuer of Annuity Contracts
*	Nationwide Provident VA Separate Account A	Delaware		Issuer of Annuity Contracts
	Nationwide VL Separate Account-A	Ohio		Issuer of Life Insurance Policies
	Nationwide VL Separate Account-B	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-C	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-D	Ohio		Issuer of Life Insurance Policies
*	Nationwide VL Separate Account-G	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-2	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-3	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-4	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-5	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-6	Ohio		Issuer of Life Insurance Policies
*	Nationwide VLI Separate Account-7	Ohio		Issuer of Life Insurance Policies
*	Nationwide Provident VLI Separate Account 1	Pennsylvania		Issuer of Life Insurance Policies
*	Nationwide Provident VLI Separate Account A	Delaware		Issuer of Life Insurance Policies

Item 29. Indemnification

Ohio's General Corporation Law expressly authorizes and Nationwide's Amended and Restated Code of Regulations provides for indemnification by Nationwide of any person who, because such person is or was a director, officer or employee of Nationwide was or is a party; or is threatened to be made a party to:

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

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

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

o any threatened, pending or completed investigative action or proceeding.

The indemnification will be for actual and reasonable expenses, including attorney's fees, judgments, fines and amounts paid in settlement by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the Ohio's General Corporation Law.

Although Nationwide is of the opinion that the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding is permitted, Nationwide has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide for liabilities arising under the Securities Act of 1933 ("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)  

MFS Variable Account	Nationwide VLI Separate Account
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-3	Nationwide VLI Separate Account-5
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 Provident VA Separate Account 1
Nationwide Variable Account-10	Nationwide Provident VA Separate Account A
Nationwide Variable Account-11	Nationwide Provident VLI Separate Account 1
Nationwide Variable Account-12	Nationwide Provident VLI Separate Account A
Nationwide Variable Account-13
Nationwide Variable Account-14
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C
Nationwide VA Separate Account-D

(b)   Directors and Officers of NISC:

President	Robert O. Cline
Senior Vice President, Treasurer and Director	James D. Benson
Vice President-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Kathy R. Richards
Associate Vice President-Financial Systems & Treasury Services and Assistant Treasurer	Terry C. Smetzer
Associate Vice President	John J. Humphries, Jr.
Assistant Secretary	Mark E. Hartman
Director	John L. Carter
Director	Eric S. Henderson

The business address of the Directors and Officers of Nationwide Investment Services Corporation is:

One Nationwide Plaza, Columbus, Ohio 43215

(c)

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

Item 31. Location of Accounts and Records

Timothy G. Frommeyer

Nationwide Life Insurance Company

One Nationwide Plaza

Columbus, OH  43215

Item 32. Management Services

Not Applicable

Item 33. Fee Representation

Nationwide Life Insurance Company represents that the fees and charges deducted under the contract in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred and risks assumed by Nationwide Life Insurance Company.

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VLI SEPARATE ACCOUNT-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 28 th   day of April , 2010 .

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 28 th   day of April , 2010 .

KIRT A. WALKER
Kirt A. Walker, President, Chief Operating Officer and Director
MARK R. THRESHER
Mark R. Thresher, Executive Vice President and Director
TIMOTHY G. FROMMEYER
Timothy G. Frommeyer, Senior Vice President-Chief Financial Officer and Director
PETER GOLATO
Peter Golato, Senior Vice President-Individual Protection Business Head and Director
STEPHEN S. RASMUSSEN
Stephen S. Rasmussen, Director
	BY /s/TIMOTHY D. CRAWFORD
	Timothy D. Crawford
	Attorney-in-Fact

EX-99.N OTH OPINIONS

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Nationwide Life Insurance Company:

We consent to the use of our reports with respect to Nationwide VLI Separate Account-2 dated March 10, 2010 and Nationwide Life Insurance Company and subsidiaries dated March 1, 2010, included herein, and to the reference to our firm under the heading “Independent Registered Public Accounting Firm” in the Statement of Additional Information (File No. 033-42180, Post-Effective Amendment No. 37) on Form N-6.  Our report for Nationwide Life Insurance Company and subsidiaries refers to the Company’s change in its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.

/s/ KPMG LLP

Columbus, Ohio

April 26, 2010

EX-99

POWER OF ATTORNEY

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

Variable Annuities and Variable Life Insurance Policies

Separate Account (1940 Act File No.)	1933 Act File Nos.
MFS Variable Account (811-2662)	002-73432
Multi-Flex Variable Account (811-3338)	033-23905, 002-75174
Nationwide Variable Account (811-2716)	002-58043, 333-80481, 033-60239
Nationwide Variable Account-II (811-3330)	002-75059, 033-67636, 033-60063, 333-103093, 333-103094, 333-103095, 333-104513, 333-104511, 333-104512, 333-104510, 333-105992, 333-147273, 333-140621, 333-144053, 333-147198, 333-151990, 333-160635, 333-164886, Individual Flexible Premium Deferred Variable Annuity Contract (1933 Act No. TBD)
Nationwide Variable Account-3 (811-5405)	033-18422, 033-24434
Nationwide Variable Account-4 (811-5701)	033-25734, 033-26454, 333-62692, 333-135650, 333-140812
Nationwide Variable Account-5 (811-8142)	033-71440
Nationwide Variable Account-6 (811-8684)	033-82370, 333-21909
Nationwide Variable Account-7 (811-8666)	033-82190, 033-82174, 033-89560
Nationwide Variable Account-8 (811-7357)	033-62637, 033-62659
Nationwide Variable Account-9 (811-08241)	333-28995, 333-52579, 333-56073, 333-53023, 333-79327, 333-69014, 333-75360
Nationwide Variable Account-10 (811-09407)	333-81701
Nationwide Variable Account-11 (811-10591)	333-74904, 333-74908
Nationwide Variable Account-12 (811-21099)	333-88612, 333-108894
Nationwide Variable Account-13 (811-21139)	333-91890
Nationwide Variable Account-14 (811-21205)	333-104339
Nationwide VA Separate Account-A (811-5606)	033-85164, 033-22940
Nationwide VA Separate Account-B (811-06399)	033-86408, 033-93482, 333-11415
Nationwide VA Separate Account-C (811-7908)	033-66496, 333-44485
Nationwide VA Separate Account-D (811-10139)	333-45976
Nationwide VLI Separate Account (811-4399)	033-00145, 033-44290, 033-35698
Nationwide VLI Separate Account-2 (811-5311)	033-16999, 033-62795, 033-42180, 033-35783, 033-63179, 333-27133
Nationwide VLI Separate Account-3 (811-6140)	033-44789, 033-44296
Nationwide VLI Separate Account-4 (811-8301)	333-31725, 333-43671, 333-52617, 333-94037, 333-52615, 333-53728, 333-69160, 333-83010, 333-137202, 333-153343, Future Corporate Flexible Premium Variable Universal Life Insurance (1933 Act File No. TBD)
Nationwide VLI Separate Account-5 (811-10143)	333-46338, 333-46412, 333-66572, 333-121881, 333-125481, 333-125482
Nationwide VLI Separate Account-6 (811-21398)	333-106908
Nationwide VLI Separate Account-7 (811-21610)	333-117998, 333-121879, 333-146649, 333-140606, 333-149295, 333-156020
Nationwide VL Separate Account-A (811-6137)	033-44792, 033-44300, 033-35775, 333-27123, 333-22677
Nationwide VL Separate Account-B (811-07819)	333-12333
Nationwide VL Separate Account-C (811-8351)	333-43639, 333-36869
Nationwide VL Separate Account-D (811-08891)	333-59517

Nationwide VL Separate Account-G (811-21697)	333-121878, 333-140608, 333-146073, 333-146650, 333-149213, 333-155153, 333-156020
Nationwide Provident VA Separate Account 1 (811-7708)	333-164127; 333-164125; 333-164126; 333-164124
Nationwide Provident VLI Separate Account 1 (811-4460)	333-164180; 333-164117; 333-164178; 333-164179; 333-164119; 333-164120; 333-164115; 333-164118; 333-164116
Nationwide Provident VA Separate Account A (811-6484)	333-164131; 333-164130; 333-164132; 333-164129; 333-164128
Nationwide Provident VLI Separate Account A (811-8722)	333-164188; 333-164123; 333-164185; 333-164122; 333-164121

General Account Products

Insurance Company	1933 Act File Nos.
Nationwide Life Insurance Company	333-133163, 333-49112, 333-149613, 333-155368, 333-160418
Nationwide Life and Annuity Insurance Company	333-47640, Individual Supplemental Immediate Fixed Income Annuity Contract (1933 Act File No. TBD), Individual Supplemental Immediate Fixed Income Annuity Contract (1933 Act File No. TBD)

Unregistered Private Placement Accounts

Account Name	CIK Number
Nationwide BOLI Private Placement Variable Account	0001343394
Nationwide Private Placement Variable Account – E	No CIK Number
Nationwide Private Placement Variable Account	0001135856
Nationwide Private Placement Variable Account – II	No CIK Number

hereby constitute and appoint Stephen S. Rasmussen, Kirt A. Walker, Peter A. Golato, John L. Carter, Eric S. Henderson, Jamie Ruff Casto, Timothy D. Crawford, Stephen M. Jackson, Keith W. Hinze and Paige L. Ryan, and each of them with power to act without the others, as his/her attorney, with full power of substitution for and in his/her name, place and stead, in any and all capacities, to approve, and sign such Registration Statements, and any and all amendments thereto, with power to affix the corporate seal of said corporation thereto and to attest said seal and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, hereby granting unto said attorneys, and each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof.  This instrument may be executed in one or more counterparts.

IN WITNESS WHEREOF, the undersigned have herewith set their names as of this 10th day of March, 2010.

/s/TIMOTHY G. FROMMEYER	/s/PETER A. GOLATO
TIMOTHY G. FROMMEYER, Director	PETER A. GOLATO, Director
/s/KIRT A. WALKER	/s/MARK R. THRESHER
KIRT A. WALKER, Director	MARK R. THRESHER, Director
/s/STEPHEN S. RASMUSSEN
STEPHEN S. RASMUSSEN, Director