registrationstatement.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

File No. 002-58043

Pre-Effective Amendment No.

Post-Effective Amendment No. 56

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

File No. 811-02716

Amendment No. 31

(Check appropriate box or boxes.)

NATIONWIDE VARIABLE ACCOUNT

(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

August 26 , 2011

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

o immediately upon filing pursuant to paragraph (b)

þ on August 26 , 2011 pursuant to paragraph (b)

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

o on (date) pursuant to paragraph (a)(1)

If appropriate, check the following box:

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

Title of Securities Being Registered

Deferred Variable Annuity Contract

Nationwide Life Insurance Company:

· Nationwide Variable Account

Prospectus supplement dated August 26, 2011

to Prospectus dated May 1, 2011

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

1.	Effective on or about August 26, 2011, the following underlying mutual fund is available as an investment option under your contract:

Wells Fargo Advantage Funds – Wells Fargo Equity Value Fund: Administrative Class

2.	Effective on or about August 26, 2011, the "Appendix A" is amended to include the following:

Wells Fargo Advantage Funds – Equity Value Fund: Administrative Class

Investment Advisor: Wells Fargo Funds Management, LLC

Sub-Advisor: Systematic Financial Management, L.P.

Investment Objective: This fund seeks long term capital appreciation.

3.	Effective on or about August 26, 2011, the following underlying mutual fund liquidated and has merged into a new underlying mutual fund as indicated below:

Liquidated Underlying Mutual Fund	Merged Underlying Mutual Fund
Wells Fargo Advantage Funds – Wells Fargo Advantage Classic Value: Administrative Class	Wells Fargo Advantage Funds – Wells Fargo Equity Value Fund: Administrative Class

SOLOIST®

NATIONWIDE LIFE INSURANCE COMPANY

Individual Deferred Variable Annuity Contracts

Issued by Nationwide Life Insurance Company through its Nationwide Variable Account

The date of this prospectus is August 26 , 2011

This prospectus contains basic information you should understand about the contracts before investing. Please read this prospectus carefully and keep it for future reference.

Variable annuities are complex investment products with unique benefits and advantages that may be particularly useful in meeting long-term savings and retirement needs. There are costs and charges associated with these benefits and advantages - costs and charges that are different, or do not exist at all, within other investment products. With help from financial consultants and advisors, investors are encouraged to compare and contrast the costs and benefits of the variable annuity described in this prospectus against those of other investment products, especially other variable annuity and variable life insurance products offered by Nationwide and its affiliates. Nationwide offers a wide array of such products, many with different charges, benefit features and underlying investment options. This process of comparison and analysis should aid in determining whether the purchase of the contract described in this prospectus is consistent with your investment objectives, risk tolerance, investment time horizon, marital status, tax situation and other personal characteristics and needs.

The Statement of Additional Information (dated May 1, 2011), which contains additional information about the contracts and the Variable Account, has been filed with the Securities and Exchange Commission ("SEC") and is incorporated herein by reference. The table of contents for the Statement of Additional Information is on page 25. For general information or to obtain free copies of the Statement of Additional Information, call 1-800-848-6331 (TDD 1-800-238-3035) or write:

Nationwide Life Insurance Company

5100 Rings Road (RR1-04-F4)

Dublin, Ohio 43017-1522

Information about this and other Nationwide products can be found at: www.nationwide.com.

Information about us and the product (including the Statement of Additional Information) 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. 20549-0102. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090. The SEC also maintains a website (www.sec.gov) that contains the prospectus, the SAI, material incorporated by reference, and other information.

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.

The Sub-Accounts available under this contract invest in the underlying mutual funds of the portfolio companies listed below.

Aberdeen

·	Aberdeen Global Fixed Income Fund

·	American Century

·	American Century Variable Portfolios, Inc.

·	Credit Suisse

Delaware

Dreyfus

Federated

Fidelity

·	Fidelity Variable Insurance Products Fund

·	Franklin Mutual Series Fund, Inc.

·	Franklin Templeton Variable Insurance Products Trust

Invesco

Janus

Lazard

MFS®

·	Nationwide

·	Nationwide Variable Insurance Trust

·	Neuberger Berman

·	Oppenheimer

·	Oppenheimer Variable Account Funds

Templeton

Virtus

·	Wells Fargo Advantage Funds

For a complete list of the available Sub-Accounts, please refer to "Appendix A: Underlying Mutual Funds." For more information on the underlying mutual funds, please refer to the prospectus for the mutual fund. Purchase payments not invested in the underlying mutual funds of the Nationwide Variable Account may be allocated to the Fixed Account.

Glossary of Special Terms

Accumulation Unit- An accounting unit of measure used to calculate the Contract Value allocated to the Variable Account before the Annuitization Date.

Annuitant- The person upon whose continuation of life benefit payments involving life contingencies depends.

Annuitization Date- The date on which annuity payments begin.

Annuity Commencement Date- The date on which annuity payments are scheduled to begin. This date may be changed by the Contract Owner with Nationwide’s consent.

Annuity Unit- An accounting unit of measure used to calculate variable annuity payments.

Contract Owner- The person(s) who owns all rights under the contract. All references in this prospectus to "you" shall mean the Contract Owner.

Contract Value- The total of all Accumulation Units in a contract, any amount held in the Fixed Account and any amounts transferred as a loan to the collateral Fixed Account.

Contract Year- Each year the contract is in force beginning with the date the contract is issued.

Daily Net Assets- A figure that is calculated at the end of each Valuation Date and represents the sum of all the Contract Owners’ interests in the variable Sub-Accounts after the deduction of contract and underlying mutual fund expenses.

ERISA- The Employee Retirement Income Security Act of 1974, as amended.

Fixed Account- An investment option that is funded by Nationwide’s General Account. Amounts allocated to the Fixed Account will receive periodic interest, subject to a guaranteed minimum crediting rate.

General Account- All assets of Nationwide other than those of the Variable Account or in other separate accounts that have been or may be established by Nationwide.

Individual Retirement Account- An account that qualifies for favorable tax treatment under Section 408(a) of the Internal Revenue Code, but does not include Roth IRAs.

Individual Retirement Annuity- An annuity contract that qualifies for favorable tax treatment under Section 408(b) of the Internal Revenue Code, but does not include Roth IRAs or Simple IRAs.

Nationwide- Nationwide Life Insurance Company. All references in this prospectus to "we" or "us" shall mean Nationwide.

Net Asset Value- The value of one share of an underlying mutual fund at the close of the New York Stock Exchange.

Non-Qualified Contract- A contract which does not qualify for favorable tax treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA, or Simple IRA.

Qualified Plans- Retirement plans which receive favorable tax treatment under Section 401 or 403(a) of the Internal Revenue Code.

Roth IRA- An annuity contract which qualifies for favorable tax treatment under Section 408A of the Internal Revenue Code.

SEC- Securities and Exchange Commission.

Simple IRA- An Individual Retirement Account as defined by Section 408(a) or an Individual Retirement Annuity as defined by Section 408(b) of the Internal Revenue Code to which the only contributions that can be made are contributions under a Simple Plan and rollovers or transfers from another Simple IRA.

Simple Plan- The Savings Incentive Match Plan for Employees of Small Employers. This plan is a written arrangement established under Section 408(p) of the Internal Revenue Code which provides a simplified tax-favored retirement plan for Small Employers. In a Simple Plan, each employee may choose whether to have the Small Employer make payments as contributions under the Simple Plan or to receive these payments directly in cash. A Small Employer that chooses to establish a Simple Plan must make either matching contributions or non-elective contributions. All contributions under a Simple Plan are made to Simple IRAs.

Small Employer- An employer that had no more than 100 employees who earned $5,000 or more in compensation during the preceding calendar year.

Sub-Accounts- Divisions of the Variable Account, each of which invests in a single underlying mutual fund.

Tax Sheltered Annuity- An annuity that qualifies for favorable tax treatment under Section 403(b) of the Internal Revenue Code.

Two-Year Period- The Two-Year Period begins on the first day in which contributions made by a Small Employer are deposited into the individual employee’s Simple IRA.

Valuation Date- Each day the New York Stock Exchange is open for business, or any other day during which there is a sufficient degree of trading of underlying mutual fund shares such that the current Net Asset Value of Accumulation Units or Annuity Units might be materially affected. Values of the Variable Account are determined as of the close of the New York Stock Exchange which generally closes at 4:00 pm EST, but may close earlier on certain days and as conditions warrant.

Valuation Period- The period of time commencing at the close of a Valuation Date and ending at the close of the New York Stock Exchange for the next succeeding Valuation Date.

Variable Account- Nationwide Variable Account, a separate account of Nationwide that contains Variable Account allocations. The Variable Account is divided into Sub-Accounts, each of which invests in shares of a separate underlying mutual fund.

Table of Contents	Page
Glossary of Special Terms	3
Contract Expenses	6
Underlying Mutual Fund Annual Expenses	6
Example	7
Synopsis of the Contracts	7
Charges and Expenses
Annuity Payments
Taxation
Right to Examine and Cancel
Condensed Financial Information	8
Financial Statements	8
Nationwide Life Insurance Company	8
Nationwide Investment Services Corporation	8
Investing in the Contract	8
The Variable Account and Underlying Mutual Funds
The Fixed Account
The Contract in General	10
Distribution, Promotional and Sales Expenses
Underlying Mutual Fund Payments
Profitability
Contract Modification
Charges and Deductions	12
Mortality and Expense Risk Charge
Administration Charge
Contingent Deferred Sales Charge ("CDSC")
Waiver of CDSC
Contract Maintenance Charge
Premium Taxes
Short-Term Trading Fees
Contract Ownership	14
Annuitant
Beneficiary and Contingent Beneficiary
Operation of the Contract	14
Pricing
Allocation of Purchase Payments
Determining the Contract Value
Transfer Requests
Transfer Restrictions
Transfers Prior to Annuitization
Transfers After Annuitization
Right to Examine and Cancel	18
Surrender (Redemption) Prior to Annuitization	17
Partial Surrenders (Partial Redemptions)
Full Surrenders (Full Redemptions)
Surrenders Under a Qualified Plan
Contract Owner Services	18
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
Annuity Commencement Date	19
Annuitizing the Contract	19
Annuitization Date
Annuitization
Fixed Payment Annuity
Variable Payment Annuity
Frequency and Amount of Annuity Payments
Annuity Payment Options

Table of Contents (continued)	Page
Death Benefits	20
Death of Annuitant
Death Benefit Payment
Statements and Reports	21
Legal Proceedings	22
Table of Contents of Statement of Additional Information	25
Appendix A: Underlying Mutual Funds	26
Appendix B: Condensed Financial Information	32
Appendix C: Contract Types and Tax Information	48
Appendix D: State Variations	57

Contract Expenses

The following tables describe the fees and expenses that a Contract Owner will pay when buying, owning, or surrendering the contract.

The first table describes the fees and expenses a Contract Owner will pay at the time the contract is purchased, surrendered, or when cash value is transferred between investment options.

Contract Owner Transaction Expenses
Maximum Contingent Deferred Sales Charge ("CDSC") (as a percentage of purchase payments surrendered)
Maximum CDSC for contracts issued on or after January 1, 1993										7%1
	Number of Completed Years from Date of Purchase Payment	0	1	2	3	4	5	6	7
	CDSC Percentage	7%	6%	5%	4%	3%	2%	1%	0%
Some state jurisdictions require a lower CDSC schedule. Please refer to your contract for state specific information.
Maximum CDSC for contracts issued prior to January 1, 1993										5%2
Maximum Premium Tax Charge (as a percentage of purchase payments)										5%3
Maximum Short-Term Trading Fee (as a percentage of transaction amount)										1%

The next table describes the fees and expenses that a Contract Owner will pay periodically during the life of the contract (not including underlying mutual fund fees and expenses).

Recurring Contract Expenses
Maximum Annual Contract Maintenance Charge	$304
Variable Account Annual Expenses (assessed as an annualized rate of total Variable Account charges as a percentage of the Daily Net Assets)5
Variable Account Annual Expenses for contracts issued on or after January 1, 1993
Mortality and Expense Risk Charge	1.25%
Administration Charge	0.05%
Total Variable Account Annual Expenses	1.30%
Variable Account Annual Expenses for contracts issued prior to January 1, 1993
Mortality and Expense Risk Charge	1.30%

Underlying Mutual Fund Annual Expenses

The next table provides the minimum and maximum total operating expenses, as of December 31, 2010, charged by the underlying mutual funds that you may pay periodically during the life of the contract. The table does not reflect Short-Term Trading Fees. More detail concerning each underlying mutual fund’s fees and expenses is contained in the prospectus for each underlying mutual fund.

Total Annual Underlying Mutual Fund Operating Expenses	Minimum	Maximum

(expenses that are deducted from underlying mutual fund assets, including management fees, distribution (12b-1) fees, and other expenses, as a percentage of underlying mutual fund assets)	0.51%	1.72%

The minimum and maximum underlying mutual fund operating expenses indicated above do not reflect voluntary or contractual reimbursements and/or waivers applied to some underlying mutual funds. Therefore, actual expenses could be lower. Refer to the underlying mutual fund prospectuses for specific expense information.

1 Starting with the second year after a purchase payment has been made, 10% of that purchase payment may be withdrawn without a CDSC. The CDSC is waived:

(1) for first year withdrawals of up to 10% of purchase payments for Individual Retirement Account rollover contracts; or

(2) for any amount withdrawn to meet minimum distribution requirements under the Internal Revenue Code.

This free withdrawal privilege is non-cumulative. Free amounts not taken during any given Contract Year cannot be taken as free amounts in a subsequent Contract Year. The Internal Revenue Code may impose restrictions on surrenders from contracts issued to fund Qualified Plans.

As required by federal law, no CDSC will be assessed to contracts issued under a Simple Plan. References throughout this prospectus to CDSC do not apply to contracts issued under Simple Plans.

2 After the first year from the date of any purchase payment, the Contract Owner may withdraw 5% of that purchase payment without a CDSC.

3 Nationwide will charge between 0% and 5% of purchase payments for premium taxes levied by state or other government entities. The amount assessed to the contract will equal the amount assessed by the state or government entity.

4 The Contract Maintenance Charge is deducted annually from all contracts on each contract anniversary and upon a full surrender of the contract.

5 These charges apply only to Sub-Account allocations. They do not apply to allocations made to the Fixed Account. They are charged on a daily basis at the annualized rate noted above.

Example

This Example is intended to help Contract Owners compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, contract fees, Variable Account annual expenses, and underlying mutual fund fees and expenses. The Example does not reflect premium taxes or Short-Term Trading Fees which, if reflected, would result in higher expenses.

The Example assumes:

·	a $10,000 investment in the contract for the time periods indicated;

·	a 5% return each year;

·	the maximum and the minimum fees and expenses of any of the underlying mutual funds;

·	the 7 year CDSC schedule;

·	a $30 Contract Maintenance Charge expressed as a percentage of the average account size; and

·	the total Variable Account charges associated with the contract (1.30%).

	If you surrender your contract at the end of the applicable time period				If you annuitize your contract at the end of the applicable time period				If you do not surrender your contract
	1 Yr.	3 Yrs.	5 Yrs.	10 Yrs.	1 Yr.	3 Yrs.	5 Yrs.	10 Yrs.	1 Yr.	3 Yrs.	5 Yrs.	10 Yrs.
Maximum Total Underlying Mutual Fund Operating Expenses (1.72%)	$949	$1,422	$1,977	$3,733	*	$1,062	$1,797	$3,733	$349	$1,062	$1,797	$3,733
Minimum Total Underlying Mutual Fund Operating Expenses (0.51%)	$822	$1,043	$1,351	$2,515	*	$683	$1,171	$2,515	$222	$683	$1,171	$2,515

*The contracts sold under this prospectus do not permit annuitization during the first two Contract Years

Synopsis of the Contracts

The contracts described in this prospectus are deferred variable annuity contracts. Contracts issued prior to January 1, 1993 were issued to the trustees of Qualified Plans as Qualified Contracts. Currently (and at all times after January 1, 1993), the contracts are issued to custodians of Individual Retirement Accounts for the benefit of Individual Retirement Account holders.

Contracts issued after January 1, 1993 do not qualify for tax-deferral under federal tax rules governing non-qualified annuities or Individual Retirement Annuities. Such contracts are, however, issued to custodians of Individual Retirement Accounts for the benefit of Individual Retirement Account holders. Such account holders will be the Annuitant under these contracts. Annuity payments under the contracts are deferred until a selected later date.

For more detailed information with regard to the differences in contract types, please see "Appendix C: Contract Types and Tax Information" later in the prospectus. Prospective purchasers may apply to purchase a contract through broker dealers that have entered into a selling agreement with Nationwide Investment Services Corporation.

Surrenders

Contract Owners may generally surrender some or all of their Contract Value at any time prior to annuitization by notifying Nationwide in writing. See the "Surrender (Redemption) Prior to Annuitization" section later in this prospectus. After the Annuitization Date, surrenders are not permitted. See the "Surrender (Redemption) After Annuitization" section later in this prospectus.

Charges and Expenses

Underlying Mutual Fund Annual Expenses

The underlying mutual funds charge fees and expenses that are deducted from underlying mutual fund assets. These fees and expenses are in addition to the fees and expenses assessed by the contract. The prospectus for each underlying mutual fund provides information regarding the fees and expenses applicable to the fund.

Short-Term Trading Fees

Some underlying 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. Any short-term trading fee assessed by any underlying mutual fund available in conjunction with the contracts described in this prospectus will equal 1% of the amount determined to be engaged in short-term trading.

For contracts issued on or after January 1, 1993, Nationwide deducts a Mortality and Expense Risk Charge equal to an annualized rate of 1.25% of the Daily Net Assets of the Variable Account. For contracts issued prior to January 1, 1993, the Mortality and Expense Risk Charge is equal to an annualized rate of 1.30% of the Daily Net Assets of the Variable Account. Nationwide assesses this charge to offset expenses incurred in the day to day business of issuing, distributing and maintaining variable annuity contracts.

For contracts issued on or after January 1, 1993, Nationwide deducts an Administration Charge equal to an annualized rate of 0.05% of the Daily Net Assets of the Variable Account.

Nationwide does not deduct a sales charge from purchase payments upon deposit into the contract. However, if any part of the Contract Value is surrendered, Nationwide will, with certain exceptions, deduct a CDSC not to exceed 7% of purchase payments surrendered. For contracts issued before January 1, 1993, Nationwide will deduct a CDSC not to exceed 5% of purchase payments surrendered.

On each contract anniversary, Nationwide will deduct a Contract Maintenance Charge of $30 from the Contract Value.

Nationwide reserves the right to refuse any purchase payment that would result in the cumulative total for all contracts issued by Nationwide on the life of any one Annuitant to exceed $1,000,000. Its decision as to whether or not to accept a purchase payment in excess of that amount will be based on one or more factors, including, but not limited to: age, spouse age (if applicable), Annuitant age, state of issue, total purchase payments, optional benefits elected, current market conditions, and current hedging costs. All such decisions will be based on internally established actuarial guidelines and will be applied in a non-discriminatory manner. In the event that we do not accept a purchase payment under these guidelines, we will immediately return the purchase payment in its entirety in the same manner as it was received. If we accept the purchase payment, it will be applied to the contract immediately and will receive the next calculated Accumulation Unit value. Any references in this prospectus to purchase payment amounts in excess of $1,000,000 are assumed to have been approved by Nationwide.

Annuity Payments

Annuity payments begin on the Annuitization Date and will be based on the annuity payment option chosen prior to annuitization. Nationwide will send annuity payments no later than 7 days after each annuity payment date.

Taxation

How a contract is taxed depends on the type of contract issued and the purpose for which the contract is purchased. Nationwide will charge against the contract any premium taxes levied by any governmental authority. Premium tax rates currently range from 0% to 5% (see "Federal Tax Considerations" in "Appendix C: Contract Types and Tax Information" and "Premium Taxes").

Right to Examine and Cancel

Under state insurance laws, Contract Owners have the right, during a limited period of time, to examine their contract and decide if they want to keep it or cancel it. This right is referred to as a "free look" right. The length of this time period depends on state law and may vary depending on whether your purchase is replacing another annuity contract you own.

If the Contract Owner elects to cancel the contract pursuant to the free look provision, where required by law, Nationwide will return the greater of the Contract Value or the amount of purchase payment(s) applied during the free look period, less any withdrawals from the contract, and applicable federal and state income tax withholding. Otherwise, Nationwide will return the Contract Value, less any withdrawals from the contract, and applicable federal and state income tax withholding. See "Right to Examine and Cancel" later in this prospectus for more information.

Condensed Financial Information

The value of an Accumulation Unit is determined on the basis of changes in the per share value of the underlying mutual funds and Variable Account charges (for more information on the calculation of Accumulation Unit values, see "Determining Variable Account Value – Valuing an Accumulation Unit"). Please refer to "Appendix B: Condensed Financial Information" for information regarding Accumulation Units.

Financial Statements

Financial statements for the Variable Account and consolidated financial statements for Nationwide are located in the Statement of Additional Information. A current Statement of Additional Information may be obtained without charge by contacting Nationwide’s home office at the telephone number listed on page 1 of this prospectus.

Nationwide Life Insurance Company

Nationwide, the depositor, is a stock life insurance company organized under Ohio law in March, 1929 with its home office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a provider of life insurance, annuities and retirement products. It is admitted to do business in all states, the District of Columbia and Puerto Rico.

Nationwide is a member of the Nationwide group of companies. Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (the "Companies") are the ultimate controlling persons of the Nationwide group of companies. The Companies were organized under Ohio law in December 1925 and 1933 respectively. The Companies engage in a general insurance and reinsurance business, except life insurance.

Nationwide Investment Services Corporation

The contracts are distributed by the general distributor, Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza, Columbus, Ohio 43215. NISC is a wholly owned subsidiary of Nationwide.

Investing in the Contract

The Variable Account and Underlying Mutual Funds

Nationwide Variable Account is a Variable Account that invests in the underlying mutual funds listed in "Appendix A: Underlying Mutual Funds." Nationwide established the Variable Account on March 3, 1976, pursuant to Ohio law. Although the Variable Account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of Nationwide or the Variable Account.

Income, gains, and losses credited to, or charged against, the Variable Account reflect the Variable Account’s own investment experience and not the investment experience of Nationwide’s other assets. The Variable Account’s assets are held separately from Nationwide’s assets and are not chargeable with liabilities incurred in any other business of Nationwide. Nationwide is obligated to pay all amounts promised to Contract Owners under the contracts.

The Variable Account is divided into Sub-Accounts, each corresponding to a single underlying mutual fund. Nationwide uses the assets of each Sub-Account to buy shares of the underlying mutual funds based on Contract Owner instructions. The Sub-Account contains shares attributable to Accumulation Units under Individual Retirement Accounts, Roth IRAs, SEP IRAs, Simple IRAs and Qualified Plans.

Contract Owners receive underlying mutual fund prospectuses when they make their initial Sub-Account allocations and any time they change those allocations. Contract Owners can obtain prospectuses for underlying funds at any other time by contacting Nationwide’s home office at the telephone number listed on page 1 of this prospectus. Contract owners should read these prospectuses carefully before investing.

The particular underlying mutual funds available under the contract 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. Contract Owners will receive notice of any such changes that affect their contract.

Voting Rights

Contract Owners who have allocated assets to the underlying mutual funds are entitled to certain voting rights. Nationwide will vote Contract Owner shares at special shareholder meetings based on Contract Owner instructions. However, if the law changes and Nationwide is allowed to vote in its own right, it may elect to do so.

Contract Owners with voting interests in an underlying mutual fund will be notified of issues requiring the shareholders’ vote as soon as possible before the shareholder meeting. Notification will contain proxy materials and a form with which to give Nationwide voting instructions. Nationwide 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 Contract Owners vote, each vote has a greater impact on, and may control the outcome.

The number of shares which a Contract Owner may vote is determined by dividing the cash value of the amount they have allocated to an underlying mutual fund by the Net Asset Value of that underlying mutual fund. Nationwide will designate a date for this determination not more than 90 days before the shareholder meeting.

Material Conflicts

The underlying mutual funds may be offered through separate accounts of other insurance companies, as well as through other separate accounts of Nationwide. Nationwide does not anticipate any disadvantages to this. However, it is possible that a conflict may arise between the interests of the Variable Account and one or more of the other separate accounts in which these underlying mutual funds participate.

Material conflicts may occur due to a change in law affecting the operations of variable life insurance policies and variable annuity contracts, or differences in the voting instructions of the Contract Owners and those of other companies. If a material conflict occurs, Nationwide will take whatever steps are necessary to protect Contract Owners and variable annuity payees, including withdrawal of the Variable Account from participation in the underlying mutual fund(s) involved in the conflict.

Substitution of Securities

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

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

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

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

Deregistration of the Separate Account

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

No deregistration may take place without the prior approval of the SEC. All Contract Owners will be notified in the event Nationwide deregisters Nationwide Variable Account.

The Fixed Account

The Fixed Account is an investment option that is funded by assets of Nationwide’s General Account. The General Account contains all of Nationwide’s assets other than those in this and other Nationwide separate accounts and is used to support Nationwide’s annuity and insurance obligations. The

General Account is not subject to the same laws as the Variable Account and the SEC has not reviewed material in this prospectus relating to the Fixed Account.

Purchase payments will be allocated to the Fixed Account by election of the Contract Owner. Nationwide reserves the right to limit or refuse purchase payments allocated to the Fixed Account at its sole discretion. Nationwide reserves the right to refuse transfers into the Fixed Account if the Fixed Account value is (or would be after the transfer) equal to or greater than 25% of the Contract Value at the time the transfer is requested. Generally, Nationwide will invoke this right when interest rates are low by historical standards.

The investment income earned by the Fixed Account will be allocated to the contracts at varying guaranteed interest rate(s) depending on the following categories of Fixed Account allocations:

New Money Rate – The rate credited on the Fixed Account allocation when the contract is purchased or when subsequent purchase payments are made. Subsequent purchase payments may receive different New Money Rates than the rate when the contract was issued, since the New Money Rate is subject to change based on market conditions.

Variable Account to Fixed Rate – Allocations transferred from any of the underlying investment options in the Variable Account to the Fixed Account may receive a different rate. The rate may be lower than the New Money Rate. There may be limits on the amount and frequency of movements from the Variable Account to the Fixed Account.

Renewal Rate – The rate available for maturing Fixed Account allocations which are entering a new guarantee period. The Contract Owner will be notified of this rate in a letter issued with the quarterly statements when any of the money in the Contract Owner’s Fixed Account matures. At that time, the Contract Owner will have an opportunity to leave the money in the Fixed Account and receive the Renewal Rate or the Contract Owner can move the money to any of the other underlying mutual fund options.

·	Dollar Cost Averaging Rate – From time to time, Nationwide may offer a more favorable rate for an initial purchase payment into a new contract when used in conjunction with a Dollar Cost Averaging program.

All of these rates are subject to change on a daily basis; however, once applied to the Fixed Account, the interest rates are guaranteed until the end of the calendar quarter during the 12 month anniversary in which the Fixed Account allocation occurs.

Credited interest rates are annualized rates – the effective yield of interest over a one-year period. Interest is credited to each contract on a daily basis. As a result, the credited interest rate is compounded daily to achieve the stated effective yield.

The guaranteed rate for any purchase payment will be effective for not less than twelve months. Nationwide guarantees that this rate will not be less than the minimum interest rate required by applicable state law per year.

Any interest in excess of the minimum interest rate required by applicable state law will be credited to Fixed Account allocations at Nationwide’s sole discretion. The Contract Owner assumes the risk that interest credited to Fixed Account allocations may not exceed the minimum interest rate required by applicable state law for any given year.

Nationwide guarantees that the Fixed Account Contract Value will not be less than the amount of the purchase payments allocated to the Fixed Account, plus interest credited as described above, less any applicable charges including CDSC.

The Contract in General

Not all benefits, programs, features and investment options described in this prospectus are available or approved for use in every state. For more detailed information regarding provisions that vary by state, please see "Appendix D: State Variations" later in this prospectus.

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

In general, deferred variable annuities are long-term investments; they are not intended as short-term investments. Accordingly, Nationwide has designed the contract to offer features, pricing, and investment options that encourage long-term ownership. It is very important that Contract Owners and prospective Contract Owners understand all the costs associated with owning a contract, and if and how those costs change during the lifetime of the contract. Contract and optional charges may not be the same in later Contract Years as they are in early Contract Years. The various contract and optional benefit charges are assessed in order to compensate Nationwide for administrative services, distribution and operational expenses, and assumed actuarial risks associated with the contract.

Following is a discussion of some relevant factors that may be of particular interest to prospective investors.

Distribution, Promotional and Sales Expenses

Nationwide pays commissions to the firms that sell the contracts. The maximum gross commission that Nationwide will pay on the sale of the contracts is 5.25% of purchase payments. Note that the individual registered representatives typically receive only a portion of this amount; the remainder is retained by the firm. Nationwide may also, instead of a premium-based commission, pay an asset-based commission (sometimes referred to as "trails" or "residuals"), or a combination of the two.

In addition to or partially in lieu of commission, Nationwide may also pay the selling firms a marketing allowance, which is based on the firm’s ability and demonstrated willingness to promote and market Nationwide's products. How any marketing allowance is spent is determined by the firm, but

generally will be used to finance firm activities that may contribute to the promotion and marketing of Nationwide's products. For more information on the exact compensation arrangement associated with this contract, please consult your registered representative.

Underlying Mutual Fund Payments

Nationwide’s Relationship with the Underlying Mutual Funds

The underlying mutual funds incur expenses each time they sell, administer, or redeem their shares. The Variable Account aggregates Contract Owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each underlying mutual fund daily. The Variable Account (and not the Contract Owners) is the underlying mutual fund shareholder. When the Variable 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. Nationwide incurs these expenses instead.

Nationwide also incurs the distribution costs of selling the contract (as discussed above), which benefit the underlying mutual funds by providing Contract Owners with Sub-Account options that correspond to the underlying mutual funds.

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

Types of Payments Nationwide Receives

In light of the above, the underlying mutual funds and their affiliates make certain payments to Nationwide or its affiliates (the "payments"). The amount of these payments is typically based on a percentage of assets invested in the underlying mutual funds attributable to the contracts and other variable contracts Nationwide and its 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 contracts, paying expenses that Nationwide or its affiliates incur in promoting, marketing, and administering the contracts and the underlying mutual funds, and achieving a profit.

Nationwide or its affiliates receive the following types of payments:

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

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

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

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

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

Amount of Payments Nationwide Receives

For the year ended December 31, 2010, the underlying mutual fund payments Nationwide and its affiliates received from the underlying mutual funds did not exceed 0.61% (as a percentage of the average Daily Net Assets invested in the underlying mutual funds) offered through this contract or other variable contracts that Nationwide and its affiliates issue. Payments from investment advisors or subadvisors to participate in educational and/or marketing activities have not been taken into account in this percentage.

Most underlying mutual funds or their affiliates have agreed to make payments to Nationwide or its 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 Nationwide and its affiliates receive depends on the assets of the underlying mutual funds attributable to the contract, Nationwide and its 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 amount of payments Nationwide receives, go to www.nationwide.com.

Identification of Underlying Mutual Funds

Nationwide 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 Nationwide considers during the identification process is whether the underlying mutual fund’s advisor or subadvisor is one of our affiliates or whether the underlying mutual fund, its advisor, its subadvisor(s), or an affiliate will make payments to us or our affiliates.

There may be underlying mutual funds with lower fees, as well as other variable contracts that offer underlying mutual funds with lower fees. You should consider all of the fees and

charges of the contract in relation to its features and benefits when making your decision to invest. Please note that higher contract and underlying mutual fund fees and charges have a direct effect on and may lower your investment performance.

Profitability

Nationwide does consider profitability when determining the charges in the contract. In early Contract Years, Nationwide does not anticipate earning a profit, since that is a time when administrative and distribution expenses are typically higher. Nationwide does, however, anticipate earning a profit in later Contract Years. In general, Nationwide's profit will be greater the higher the investment return and the longer the contract is held.

Contract Modification

Nationwide may modify the annuity contracts, but no modification will affect the amount or term of any annuity contract unless a modification is required to conform the annuity contract to applicable federal or state law. No modification will affect the method by which the Contract Values are determined.

Charges and Deductions

Mortality and Expense Risk Charge

Nationwide deducts a Mortality and Expense Risk Charge from the Variable Account.

This amount is computed on a daily basis and is equal to an annualized rate of 1.25% (1.30% for contracts issued prior to January 1, 1993) of the Daily Net Assets of the Variable Account.

The mortality risk component is equal to an annualized rate of 0.80% of the Daily Net Assets of the Variable Account and compensates Nationwide for guaranteeing the annuity purchase rates of the contracts. This guarantee ensures that the annuity purchase rates will not change regardless of the death rates of annuity payees or the general population.

The expense risk component is equal to an annualized rate of 0.45% (0.50% for contracts issued prior to January 1, 1993) of the Daily Net Assets of the Variable Account and compensates Nationwide for guaranteeing that that charges will not increase regardless of actual expenses.

Nationwide expects to generate profit from this charge. If the Mortality and Expense Risk Charge is insufficient to cover actual expenses, the loss is borne by Nationwide.

Administration Charge

For contracts issued on or after January 1, 1993, Nationwide deducts an Administration Charge from the Variable Account. This charge is computed on a daily basis and is equal to an annualized rate of 0.05% of the Daily Net Assets of the Variable Account. The Administration Charge reimburses Nationwide for administrative expenses. Nationwide will monitor this charge to ensure that it does not exceed actual administration expenses.

Contingent Deferred Sales Charge ("CDSC")

No sales charge deduction is made from the purchase payments when amounts are deposited into the contract. However, if any part of the contract is surrendered, Nationwide will, with certain exceptions, deduct a CDSC. The CDSC will not exceed 7% of purchase payments surrendered (5% of purchase payments surrendered for contracts issued prior to January 1, 1993).

The CDSC, when it is applicable, is used to cover sales expenses, including commissions, production of sales literature and other promotional expenses. Any shortfall will be made up from the General Account of Nationwide, which may indirectly include portions of the Mortality and Expense Risk Charge since Nationwide expects to generate a profit from this charge.

Withdrawals may be restricted for contracts issued pursuant to a Qualified Plan. No CDSC is deducted on transfers between the Fixed Account and the Variable Account. The Contract Owner may be subject to a tax penalty if withdrawals are taken prior to age 59½.

For purposes of the CDSC, surrenders under a contract come first from the purchase payments which have been on deposit under the contract for the longest time period. (For tax purposes, a surrender is usually treated as a withdrawal of earnings first.)

For contracts issued on or after January 1, 1993, CDSC is calculated by multiplying the applicable CDSC percentage (noted below) by the amount of the purchase payment surrendered.

Number of Completed Years from Date of Purchase Payment	CDSC Percentage
0	7%
1	6%
2	5%
3	4%
4	3%
5	2%
6	1%
7	0%

Starting with the second year after a purchase payment has been made under the contract, 10% of that purchase payment may be withdrawn each year without imposition of the CDSC. This free withdrawal privilege is non-cumulative and will not exceed 10% of the purchase payment in any year. The CDSC is waived:

a)	for first year withdrawals of up to 10% of purchase payments for Individual Retirement Account rollover contracts; or

b)	for any amount withdrawn from this contract in order to meet minimum distribution requirements under the Internal Revenue Code.

For contracts issued before January 1, 1993, Nationwide may deduct a CDSC equal to 5% of the lesser of the total of all purchase payments made within 8 years of the date of the surrender request, or the amount surrendered. In no event will

any CDSC be charged against any amounts held under the contract for at least 8 years. Certain partial surrenders may be requested for which no CDSC will be assessed. For any purchase payments made, the Contract Owner (or Annuitant, if applicable) may, after the first year from the date of each purchase payment, withdraw without a CDSC, up to 5% of that purchase payment for each year that the purchase payment has remained on deposit (less the amount of such purchase payment previously surrendered free of charge).

Waiver of CDSC

For contracts sold to Qualified Plans established on or after January 1, 1993, as described in Section 401 of the Internal Revenue Code, SEP IRAs sold on or after January 1, 1993, and Roth IRAs, Nationwide will waive the CDSC when:

1)	the plan participant experiences a case of hardship (as defined for purposes of Internal Revenue Code Section 401(k));

2)	the plan participant becomes disabled (within the meaning of Internal Revenue Code Section 72(m)(7));

3)	the plan participant attains age 59 ½ and has participated in the contract for at least 5 years, as determined from the contract anniversary date;

4)	the plan participant has participated in the contract for at least 15 years as determined from the contract anniversary date;

5)	the plan participant dies; or

6)	the plan participant annuitizes after 2 years in the contract.

For Individual Retirement Accounts, Nationwide will waive the CDSC when:

1)	the designated Annuitant dies; or

2)	the Contract Owner annuitizes after 2 years in the contract.

In no event will elimination of the CDSC be permitted where such elimination would be unfairly discriminatory to any person, or where it is prohibited by law.

Contract Maintenance Charge

Each year on the contract anniversary (and on the date of surrender upon full surrender of the contact), Nationwide deducts a Contract Maintenance Charge of $30 from the Contract Value. This charge reimburses Nationwide for administrative expenses relating to the issuance and maintenance of the contract. For contracts issued to Qualified Plans described in Section 401 of the Internal Revenue Code, established on or after January 1, 1993 and SEP IRAs established between January 1, 1993 and August 1, 1994, the Contract Maintenance Charge varies from $0 to $30 depending on certain underwriting considerations. Such underwriting considerations include the size of the group, the average participant account balance transferred to Nationwide, if any, and administrative savings. For contracts issued to Qualified Plans described in Section 401 of the Internal Revenue Code and SEP IRAs established on or after August 1,

1994, the Contract Maintenance Charge varies from $0 to $12. Variances are based on internal underwriting guidelines. The Contract Maintenance Charge will be deducted proportionately from the Fixed Account and Variable Account in the same percentages as purchase payments are allocated at the time of the deduction.

Premium Taxes

Nationwide will charge against the Contract Value any premium taxes levied by a state or other government entity. Premium tax rates currently range from 0% to 5%. This range is subject to change. Nationwide will assess premium taxes to the contract at the time Nationwide is assessed the premium taxes by the state. Premium tax requirements vary from state to state.

Premium taxes may be deducted from death benefit proceeds.

Short-Term Trading Fees

Short-term trading fees are intended to compensate the underlying mutual fund (and Contract Owners with interests allocated in the underlying 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 Contract Owners not engaged in such strategies.

Any short-term trading fee assessed by any underlying mutual fund available in conjunction with the contracts 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 underlying mutual funds that charge such fees (see the underlying mutual fund prospectus). Any short-term trading fees paid are retained by the underlying mutual fund, not by Nationwide, and are part of the underlying mutual fund’s assets. Contract Owners are responsible for monitoring the length of time allocations are held in any particular underlying mutual fund. Nationwide will not provide advance notice of the assessment of any applicable short-term trading fee.

For a complete list of the underlying mutual funds offered under the contract that assess (or reserve the right to assess) a short-term trading fee, please see "Appendix A: Underlying Mutual Funds" earlier in this prospectus.

If a short-term trading fee is assessed, the underlying mutual fund will charge the Variable Account 1% of the amount determined to be engaged in short-term trading. The Variable Account will then pass the short-term trading fee on to the specific Contract Owner that engaged in short-term trading by deducting an amount equal to the short-term trading fee from that Contract Owner’s Sub-Account value. All such fees will be remitted to the underlying mutual fund; none of the fee proceeds will be retained by Nationwide or the Variable Account.

When multiple purchase payments (or exchanges) are made to a Sub-Account that is subject to short-term trading fees, 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 the short-term trading fees. Transactions that are not subject to short-term trading fees include:

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

·	contract surrenders, including CDSC-free withdrawals;

·	surrenders of Annuity Units to make annuity payments;

·	surrenders of Accumulation Units to pay the annual Contract Maintenance Charge;

·	surrenders of Accumulation Units to pay a death benefit; or

·	transfers made upon annuitization of the contract.

New share classes of certain currently available underlying mutual funds may be added as investment options under the contracts. These new share classes may require the assessment of short-term trading or redemption fees. When these new share classes are added, new purchase payment allocations and exchange reallocations to the underlying mutual funds in question may be limited to the new share class.

Contract Ownership

All contract rights are exercised by the Annuitant. Throughout this prospectus, discussions relating to the rights and capabilities of a Contract Owner under the contracts apply to the Annuitant.

The Annuitant exercising the rights of the Contract Owner may request a change in the Annuitant, contingent Annuitant, beneficiary, or contingent beneficiary before the Annuitization Date. These changes must be:

·	on a Nationwide form;

·	signed by the Annuitant; and

·	received at Nationwide’s home office before the Annuitization Date.

Nationwide must review and approve any change requests. If there is a change of Annuitant, distributions will be made as if the Contract Owner died at the time of the change.

Annuitant

The Annuitant is the person who will receive annuity payments and upon whose continuation of life any annuity payment involving life contingencies depends. This person must be age 78 or younger at the time of contract issuance, unless Nationwide approves a request for an Annuitant of greater age.

The Annuitant may be changed prior to the Annuitization Date with the consent of Nationwide.

Although not the Contract Owner, the Annuitant may exercise contract rights if authorized by the holder of the contract (an Individual Retirement Account or Qualified Plan trustee(s)).

Beneficiary and Contingent Beneficiary

The beneficiary is the person who is entitled to the death benefit if the Annuitant dies before the Annuitization Date and there is no contingent Annuitant. More than one beneficiary can be named. Multiple beneficiaries will share the death benefit equally, unless otherwise specified.

The beneficiary or contingent beneficiary may be changed during the Annuitant’s lifetime by submitting a written request to Nationwide. Once recorded, the change will be effective as of the date it was signed, whether or not the Annuitant was living at the time the change was recorded. The change will not affect any action taken by Nationwide before the change was recorded.

Operation of the Contract

The cumulative total of all purchase payments under contracts issued by Nationwide on the life of any one Annuitant cannot exceed $1,000,000 without Nationwide’s prior consent. Any references in this prospectus to purchase payment amounts in excess of $1,000,000 are assumed to have been approved by Nationwide.

Nationwide prohibits subsequent purchase payments made after death of the Contract Owner(s) or the Annuitant. If upon notification of death of the Contract Owner(s) or the Annuitant, it is determined that death occurred prior to a subsequent purchase payment being made, Nationwide reserves the right to return the purchase payment subject to investment performance.

Pricing

Initial purchase payments allocated to Sub-Accounts will be priced at the Accumulation Unit value determined no later than 2 business days after receipt of an order to purchase if the application and all necessary information are complete. If the application is not complete, Nationwide may retain a purchase payment for up to 5 business days while attempting to complete it. If the application is not completed within 5 business days, the prospective purchaser will be informed of the reason for the delay. The purchase payment will be returned unless the prospective purchaser specifically allows Nationwide to hold the purchase payment until the application is completed.

Subsequent purchase payments will be priced based on the next available Accumulation Unit value after the payment is received. If a subsequent purchase payment is received at Nationwide's home office (along with all necessary information) after the close of the New York Stock Exchange, it will be priced at the Accumulation Unit value determined on the following Valuation Date.

Except on the days listed below and on weekends, purchase payments, transfers and surrenders are priced every day. Purchase payments will not be priced when the New York Stock Exchange is closed or on the following nationally recognized holidays:

· New Year's Day	· Independence Day
· Martin Luther King, Jr. Day	· Labor Day
· Presidents’ Day	· Thanksgiving
· Good Friday	· Christmas
· Memorial Day

Nationwide also will not price purchase payments if:

1)	trading on the New York Stock Exchange is restricted;

2)	an emergency exists making disposal or valuation of securities held in the Variable Account impracticable; or

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

Rules and regulations of the SEC will govern as to when the conditions described in (2) and (3) exist.

If Nationwide is closed on days when the New York Stock Exchange is open, Contract Value may change and Contract Owners will not have access to their accounts.

Allocation of Purchase Payments

Nationwide allocates purchase payments to the Sub-Accounts and the Fixed Account as instructed by the Contract Owner. Shares of the underlying mutual funds allocated to the Sub-Accounts are purchased at Net Asset Value, then converted into Accumulation Units. Nationwide reserves the right to limit or refuse purchase payments allocated to the Fixed Account at its sole discretion.

Contract Owners can change allocations or make exchanges among the Sub-Accounts or the Fixed Account. However, no change may be made that would result in an amount less than 1% of the purchase payments being allocated to any Sub-Account. Certain transactions may be subject to conditions imposed by the underlying mutual funds, as well as those set forth in the contract.

Determining the Contract Value

The Contract Value is the sum of:

1)	the value of amounts allocated to the Sub-Accounts of the Variable Account; and

2)	amounts allocated to the Fixed Account.

If part or all of the Contract Value is surrendered, or charges are assessed against the whole Contract Value, Nationwide will deduct a proportionate amount from each Sub-Account and the Fixed Account based on current cash values.

Determining Variable Account Value – Valuing an Accumulation Unit

Purchase payments or transfers allocated to Sub-Accounts are accounted for in Accumulation Units. Accumulation Unit values (for each Sub-Account) are determined by calculating the net investment factor for the underlying mutual funds for the current Valuation Period and multiplying that result with the Accumulation Unit values determined on the previous Valuation Period.

Nationwide uses the net investment factor as a way to calculate the investment performance of a Sub-Account from Valuation Period to Valuation Period. For each Sub-Account, the net investment factor shows the investment performance of the underlying mutual fund in which a particular Sub-Account invests, including the charges assessed against that Sub-Account for a Valuation Period.

The net investment factor for any particular Sub-Account is determined by dividing (a) by (b), and then subtracting (c) from the result, where:

a)	is the sum of:

1)	the Net Asset Value of the underlying mutual fund as of the end of the current Valuation Period; and

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

b)	is the Net Asset Value of the underlying mutual fund determined as of the end of the preceding Valuation Period; and

c)	is a factor representing the daily Variable Account charges. The factor is equal to an annualized rate of 1.30% of the Daily Net Assets of the Variable Account.

Based on the net investment factor, the value of an Accumulation Unit may increase or decrease. Changes in the net investment factor may not be directly proportional to changes in the Net Asset Value of the underlying mutual fund shares because of the deduction of Variable Account charges.

Though the number of Accumulation Units will not change as a result of investment experience, the value of an Accumulation Unit may increase or decrease from Valuation Period to Valuation Period.

Determining Fixed Account Value

Nationwide determines the value of the Fixed Account by:

1)	adding all amounts allocated to the Fixed Account, minus amounts previously transferred or withdrawn; and

2)	adding any interest earned on the amounts allocated.

Transfer Requests

Contract Owners may submit transfer requests in writing, over the telephone, or via the internet. Nationwide will use reasonable procedures to confirm that instructions are genuine and will not be liable for following instructions that it reasonably determined to be genuine. Nationwide may restrict or withdraw the telephone and/or internet transfer privilege at any time.

Generally, Sub-Account transfers will receive the Accumulation Unit value next computed after the transfer request is received. However, if a contract that is limited to submitting transfer requests via U.S. mail submits a transfer request via internet or telephone pursuant to Nationwide's one-

day delay policy, the transfer will be executed on the next business day after the exchange request is received by Nationwide (see "Managers of Multiple Contracts").

Interest Rate Guarantee Period

The interest rate guarantee period is the period of time that the Fixed Account interest rate is guaranteed to remain the same. Within 45 days of the end of an interest rate guarantee period, transfers may be made from the Fixed Account to the Variable Account. Nationwide will determine the amount that may be transferred and will declare this amount at the end of the guarantee period. This amount will not be less than 10% of the amount in the Fixed Account that is maturing.

For new purchase payments allocated to the Fixed Account, or transfers to the Fixed Account from the Variable Account, this period begins on the date of deposit or transfer and ends on the one-year anniversary of the deposit or transfer. The guaranteed interest rate period may last for up to 3 months beyond the one-year anniversary because guaranteed terms end on the last day of a calendar quarter.

During an interest rate guarantee period, transfers cannot be made from the Fixed Account, and amounts transferred to the Fixed Account must remain on deposit.

Transfer Restrictions

Neither the contracts described in this prospectus nor the underlying 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"). A Contract Owner who intends to use an active trading strategy should consult his/her registered representative and request information on other Nationwide variable annuity contracts that offer underlying mutual funds that are designed specifically to support active trading strategies.

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

·	the dilution of the value of the investors’ interests in the underlying mutual fund;

·	underlying mutual fund managers taking actions that negatively impact performance (keeping a larger portion of the underlying 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 contract from the negative impact of these practices, Nationwide has implemented, or reserves the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. Nationwide makes no assurances that all risks associated with short-term trading will be completely eliminated by these processes and/or restrictions.

Nationwide cannot guarantee that its attempts to deter active trading strategies will be successful. If we are unable to deter active trading strategies, the performance of the Sub-Accounts that are actively traded may be adversely impacted.

Redemption Fees

Some underlying 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 underlying mutual fund. Redemption fees compensate the underlying mutual fund for any negative impact on fund performance resulting from short-term trading. For more information on short-term trading fees, please see the "Short-Term Trading Fees" provision.

U.S. Mail Restrictions

Nationwide monitors transfer activity in order to identify those who may be engaged in harmful trading practices. Transaction reports are produced and examined. Generally, a contract may appear on these reports if the Contract 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 on a given trading day (Valuation Period). For example, if a Contract Owner executes multiple transfers involving 10 underlying mutual funds in one day, this counts as one transfer event. A single transfer occurring on a given trading day and involving only 2 underlying mutual funds (or one underlying mutual fund if the transfer is made to or from the Fixed Account) will also count as one transfer event.

As a result of this monitoring process, Nationwide may restrict the method of communication by which transfer orders will be accepted.

In general, Nationwide 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 Contract 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 Contract Owner will be limited to submitting transfer requests via U.S. mail on a Nationwide issued form.
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 Contract Owner to submitting transfer requests via U.S. mail on a Nationwide issued form.

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

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

Managers of Multiple Contracts

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

Nationwide may, as an administrative practice, implement a "one-day delay" program for these multi-contract advisors, which they can use in addition to or in lieu of submitting transfer requests via U.S. mail. The one-day delay option permits multi-contract advisors to continue to submit transfer requests via the internet or telephone. However, transfer requests submitted by multi-contract advisors via the internet or telephone will not receive the next available Accumulation Unit value. Rather, they will receive the Accumulation Unit value that is calculated on the following business day. Transfer requests submitted under the one-day delay program are irrevocable. Multi-contract advisors will receive advance notice of being subject to the one-day delay program.

Other Restrictions

Contract Owners that are required to submit transfer requests via U.S. mail will be required to use a Nationwide issued form for their transfer request. Nationwide will refuse transfer requests that either do not use the Nationwide issued form for their transfer request or fail to provide accurate and complete information on their transfer request form. In the event that a Contract Owner’s transfer request is refused by Nationwide, they will receive notice in writing by U.S. mail and will be required to resubmit their transfer request on a Nationwide issued form.

Nationwide reserves the right to refuse or limit transfer requests, or take any other action it deems necessary, in order to protect Contract Owners, Annuitants, and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some Contract 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 Nationwide to constitute harmful trading practices, may be restricted.

Any restrictions that Nationwide implements will be applied consistently and uniformly.

Underlying Mutual Fund Restrictions and Prohibitions

Pursuant to regulations adopted by the SEC, Nationwide is 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 Nationwide Contract Owner;

(2)

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

(3)

instruct Nationwide to restrict or prohibit further purchases or exchanges by Contract Owners that violate policies established by the underlying mutual fund (whose policies may be more restrictive than Nationwide’s policies).

Nationwide is required to provide such transaction information to the underlying mutual funds upon their request. In addition, Nationwide is required to restrict or prohibit further purchases or exchange requests upon instruction from the underlying mutual fund. Nationwide and any affected Contract 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 Nationwide, Nationwide will keep any affected Contract Owner in their current underlying mutual fund allocation.

Transfers Prior to Annuitization

Transfers from the Fixed Account to the Variable Account

Contract Owners may request to have Fixed Account allocations transferred to the Variable Account only upon reaching the end of an interest rate guarantee period. Normally, Nationwide will permit 100% of such Fixed Account allocations to be transferred to the Variable Account; however Nationwide may, under certain economic conditions and at its discretion, limit the maximum transferable amount. Under no circumstances will the maximum transferable amount be less than 10% of the Fixed Account allocation reaching the end of an interest rate guarantee period. Transfers of the Fixed Account allocations must be made within 45 days after reaching the end of an interest rate guarantee period.

Contract Owners who use Dollar Cost Averaging may transfer from the Fixed Account to the Variable Account under the terms of that program (see "Dollar Cost Averaging").

Transfers to the Fixed Account

Contract Owners may request to have Variable Account allocations transferred to the Fixed Account at any time. Normally, Nationwide will not restrict transfers from the Variable Account to the Fixed Account, however, Nationwide may establish a maximum transfer limit from the Variable Account to the Fixed Account. Except as noted below, the transfer limit will not be less than 10% of the current value of the Variable Account. Nationwide reserves the right to refuse transfers to the Fixed Account from the Variable Account if the Fixed Account value is (or would be after the transfer) equal to or greater than 25% of the Contract Value at the time the transfer is requested. Generally, Nationwide will invoke this right when interest rates are low by historical standards.

Transfers Among the Sub-Accounts

A Contract Owner may request to transfer allocations among the Sub-Accounts at any time, subject to terms and conditions imposed by this prospectus and the underlying mutual funds.

Transfers After Annuitization

After annuitization, transfers may only be made on the anniversary of the Annuitization Date.

Right to Examine and Cancel

If the Contract Owner elects to cancel the contract, he/she may return it to Nationwide’s home office within a certain period of time known as the "free look" period. Depending on the state in which the contract was purchased (and, in some states, if the contract is purchased as a replacement for another annuity contract), the free look period may be 10 days or longer. For ease of administration, Nationwide will honor any free look cancellation that is received at Nationwide’s home office or postmarked within 30 days after the contract issue date. For contracts issued in the State of California, Nationwide will honor any free look cancellation that is received at Nationwide’s home office or postmarked within 35 days after the contract issue date. The contract issue date is the date the initial purchase payment is applied to the contract.

Where state law requires the return of purchase payments upon cancellation of the contract during the free look period, Nationwide will allocate initial purchase payments allocated to Sub-Accounts to the money market Sub-Account during the free look period. After the free look period, Nationwide will reallocate the Contract Value among the Sub-Accounts based on the instructions contained on the application. Where state law requires the return of Contract Value upon cancellation of the contract during the free look period, Nationwide will immediately allocate initial purchase payments to the investment options based on the instructions contained on the application.

Liability of the Variable Account under this provision is limited to the Contract Value in each Sub-Account on the date of revocation. Any additional amounts refunded to the Contract Owner will be paid by Nationwide.

Surrender (Redemption) Prior to Annuitization

Contract Owners may surrender some or all of their Contract Value before the earlier of the Annuitization Date or the Annuitant’s death. Surrenders from the contract may be subject to federal income tax and/or a penalty tax. See "Federal Income Taxes" in "Appendix C: Contract Types and Tax Information." Surrender requests must be in writing and

Nationwide may require additional information. When taking a full surrender, the contract must accompany the written request. Nationwide may require a signature guarantee.

Nationwide will pay any amount surrendered from the Sub-Accounts within 7 days. However, Nationwide may suspend or postpone payment when it is unable to price a purchase payment or transfer (see the "Pricing" sub-section of "The Operation of the Contract" section of this prospectus).

Nationwide may be required by state law to reserve the right to postpone payment of assets in the Fixed Account for a period of up to six months from the date of the surrender request.

Partial Surrenders (Partial Redemptions)

Nationwide will surrender Accumulation Units from the Sub-Accounts and an amount from the Fixed Account. The amount withdrawn from each investment option will be in proportion to the value in each option at the time of the surrender request.

A CDSC may apply. The Contract Owner may direct Nationwide to deduct the CDSC either from:

a)	the amount requested; or

b)	the Contract Value remaining after the Contract Owner has received the amount requested.

If the Contract Owner does not make a specific election, any applicable CDSC will be taken from the Contract Value remaining after the Contract Owner has received the amount requested.

The CDSC deducted is a percentage of the amount requested by the Contract Owner. Amounts deducted for CDSC are not subject to subsequent CDSC.

Partial Surrenders to Pay Investment Advisory Fees

Some Contract Owners utilize an investment advisor(s) to manage their assets, for which the investment advisor assesses a fee. Investment advisors are not endorsed or affiliated with Nationwide and Nationwide makes no representation as to their qualifications. The fees for these investment advisory services are specified in the respective account agreements and are separate from and in addition to the contract fees and expenses described in this prospectus. Some Contract Owners authorize their investment advisor to take a partial surrender(s) from the contract in order to collect investment advisory fees. Surrenders taken from this contract to pay advisory or investment management fees are subject to the CDSC provisions of the contract and may be subject to income tax and/or tax penalties.

Full Surrenders (Full Redemptions)

The Contract Value upon full surrender may be more or less than the total of all purchase payments made to the contract. The Contract Value will reflect:

·	Variable Account charges;

·	the Contract Maintenance Charge;

·	underlying mutual fund charges;

·	investment performance of the underlying mutual funds; and

·	amounts allocated to the Fixed Account and any interest credited.

A CDSC may apply.

Surrenders Under a Qualified Plan

The contract surrender provisions may be modified pursuant to the plan terms and Internal Revenue Code provisions when the contract is issued to fund a Qualified Plan.

Contract Owner Services

Asset Rebalancing

Asset Rebalancing is the automatic reallocation of Contract Values to the Sub-Accounts on a predetermined percentage basis. Asset Rebalancing is not available for assets held in the Fixed Account. Requests for Asset Rebalancing must be on a Nationwide form. Once Asset Rebalancing is elected, it will only be terminated upon specific instruction from the Contract Owner; manual transfers will not automatically terminate the program.

Asset Rebalancing occurs every three months or on another frequency if permitted by Nationwide. If the last day of the three-month period falls on a Saturday, Sunday, recognized holiday, or any other day when the New York Stock Exchange is closed, Asset Rebalancing will occur on the next business day. Each Asset Rebalancing reallocation is considered a transfer event.

Asset Rebalancing may be subject to employer limitations or restrictions for contracts issued to a Qualified Plan. Contract Owners should consult a financial advisor to discuss the use of Asset Rebalancing.

Nationwide reserves the right to stop establishing new Asset Rebalancing programs. Nationwide also reserves the right to assess a processing fee for this service.

Dollar Cost Averaging

Dollar Cost Averaging is a long-term transfer program that allows the Contract Owner to make regular, level investments over time. Dollar Cost Averaging involves the automatic transfer of a specific amount from certain Sub-Accounts and the Fixed Account into other Sub-Accounts. With this service, the Contract Owner benefits from the ability to invest in the Sub-Accounts over a period of time, thereby smoothing out the effects of market volatility. Nationwide does not guarantee that this program will result in profit or protect Contract Owners from loss.

Contract Owners direct Nationwide to automatically transfer specified amounts from the Fixed Account and the following Sub-Account:

·	Nationwide Money Market Fund: Prime Shares

to any other Sub-Account(s). Dollar Cost Averaging transfers may not be directed to the Fixed Account. Transfers from the Fixed Account must be equal to or less than 1/30th of the Fixed Account value at the time the program is requested. Contract Owners that wish to utilize Dollar Cost Averaging from the Fixed Account should first inquire as to whether any Enhanced Fixed Account Dollar Cost Averaging programs are available.

Transfers occur monthly or on another frequency if permitted by Nationwide. Nationwide will process transfers until either the value in the originating investment option is exhausted, or the Contract Owner instructs Nationwide to stop the transfers. When a Contract Owner instructs Nationwide to stop the transfers, all amounts remaining in the originating Fixed Account or Sub-Account will remain allocated to the Fixed Account or Sub-Account, unless Nationwide is instructed otherwise. Dollar Cost Averaging transfers are not considered transfer events.

Nationwide reserves the right to stop establishing new Dollar Cost Averaging programs. Nationwide is required by state law to reserve the right to postpone transfer of assets from the Fixed Account for a period of up to 6 months from the date of the transfer request.

Enhanced Fixed Account Dollar Cost Averaging Program

Nationwide may, periodically, offer Dollar Cost Averaging programs with an enhanced interest rate referred to as "Enhanced Fixed Account Dollar Cost Averaging." Enhanced Fixed Account Dollar Cost Averaging involves the automatic transfer of a specific amount from an enhanced rate Fixed Account into any Sub-Account(s). With this service, the Contract Owner benefits from the ability to invest in the Sub-Accounts over a period of time, thereby smoothing out the effects of market volatility. Nationwide does not guarantee that this program will result in profit or protect Contract Owners from loss.

Only new purchase payments to the contract are eligible for Enhanced Fixed Account Dollar Cost Averaging. Enhanced Fixed Account Dollar Cost Averaging transfers may not be directed to the Fixed Account. Amounts allocated to the enhanced rate Fixed Account as part of an Enhanced Fixed Account Dollar Cost Averaging program earn a higher rate of interest than assets allocated to the standard Fixed Account. Each enhanced rate is guaranteed for as long as the corresponding program is in effect.

Transfers occur monthly or on another frequency if permitted by Nationwide. Nationwide will process transfers until either amounts allocated to the Fixed Account as part of an Enhanced Fixed Account Dollar Cost Averaging program are exhausted or the Contract Owner instructs Nationwide to stop the transfers. When a Contract Owner instructs Nationwide to stop the transfers, Nationwide will automatically reallocate any amount remaining in the enhanced rate Fixed Account according to future investment allocation instructions, unless directed otherwise. Enhanced Fixed Account Dollar Cost Averaging transfers are not considered transfer events.

Nationwide reserves the right to stop establishing new Enhanced Fixed Account Dollar Cost Averaging programs. Nationwide is required by state law to reserve the right to postpone transfer of assets from the Fixed Account, including the enhanced rate Fixed Account, for a period of up to 6 months from the date of the transfer request.

Systematic Withdrawals

Systematic Withdrawals allow Contract Owners (or Annuitants if authorized) to receive a specified amount (of at least $100) on a monthly, quarterly, semi-annual, or annual basis. Requests for Systematic Withdrawals and requests to discontinue Systematic Withdrawals must be in writing. The withdrawals will be taken from the Sub-Accounts and the Fixed Account proportionately unless Nationwide is instructed otherwise.

If the Contract Owner takes Systematic Withdrawals, the maximum amount that can be withdrawn annually without a CDSC is the greater of:

1)	10% of all purchase payments made to the contract as of the withdrawal date; or

2)	an amount withdrawn to meet minimum distribution requirements under the Internal Revenue Code.

The CDSC-free withdrawal privilege for Systematic Withdrawals is non-cumulative. Free amounts not taken during any Contract Year cannot be taken as free amounts in a subsequent Contract Year.

Nationwide will withhold federal income taxes from systematic withdrawals unless otherwise instructed by the Contract Owner. The Internal Revenue Service may impose a 10% penalty tax if the Contract Owner is under age 59½ unless the Contract Owner has made an irrevocable election of distributions of substantially equal payments.

A CDSC may apply to amounts taken through systematic withdrawals.

Nationwide reserves the right to stop establishing new Systematic Withdrawal programs. Nationwide also reserves the right to assess a processing fee for this service. Systematic Withdrawals are not available before the end of the ten-day free look period (see "Right to Examine and Cancel").

Annuity Commencement Date

The Annuity Commencement Date is the date on which annuity payments are scheduled to begin. The Annuity Commencement Date may be changed before annuitization. This change must be in writing and approved by Nationwide.

Annuitizing the Contract

Annuitization Date

The Annuitization Date is the date that annuity payments begin. It will be the first day of a calendar month unless otherwise agreed. The Annuitization Date must be at least 2 years after the contract is issued, but may not be later than either:

·	the age (or date) specified in your contract; or

·	the age (or date) specified by state law, where applicable.

If the contract is issued to fund a Qualified Plan, annuitization may occur during the first 2 years subject to Nationwide’s approval.

The Internal Revenue Code may require that distributions be made prior to the Annuitization Dates specified above (see "Required Distributions" in "Appendix C: Contract Types and Tax Information").

Annuitization

Annuitization is the period during which annuity payments are received. It is irrevocable once payments have begun. Upon arrival of the Annuitization Date, the Annuitant must choose:

1)	an annuity payment option; and

2)	either a fixed payment annuity, variable payment annuity, or an available combination.

Nationwide guarantees that each payment under a fixed payment annuity will be the same throughout annuitization. Under a variable payment annuity, the amount of each payment will vary with the performance of the underlying mutual funds chosen.

Fixed Payment Annuity

A fixed payment annuity is an annuity where the amount of the annuity payment remains level.

The first payment under a fixed payment annuity is determined on the Annuitization Date based on the Annuitant’s age (in accordance with the contract) by:

1)	deducting applicable premium taxes from the total Contract Value; then

2)	applying the Contract Value amount specified by the Annuitant to the fixed payment annuity table for the annuity payment option elected.

Subsequent payments will remain level unless the annuity payment option elected provides otherwise. Nationwide does not credit discretionary interest during annuitization.

Variable Payment Annuity

A variable payment annuity is an annuity where the amount of the annuity payments will vary depending on the performance of the underlying mutual funds selected. The underlying mutual funds available during annuitization are those underlying mutual funds shown in the "Appendix A: Underlying Mutual Funds."

The first payment under a variable payment annuity is determined on the Annuitization Date based on the Annuitant’s age (in accordance with the contract) by:

1)	deducting applicable premium taxes from the total Contract Value; then

2)	applying the Contract Value amount specified by the Annuitant to the variable payment annuity table for the annuity payment option elected.

The dollar amount of the first payment is converted into a set number of Annuity Units that will represent each monthly payment. This is done by dividing the dollar amount of the first payment by the value of an Annuity Unit as of the Annuitization Date. This number of Annuity Units remains fixed during annuitization.

The second and subsequent payments are determined by multiplying the fixed number of Annuity Units by the Annuity Unit value for the Valuation Period in which the payment is due. The amount of the second and subsequent payments will vary with the performance of the selected underlying mutual funds. Nationwide guarantees that variations in mortality experience from assumptions used to calculate the first payment will not affect the dollar amount of the second and subsequent payments.

Value of an Annuity Unit

Annuity Unit values for Sub-Accounts are determined by:

1)	multiplying the Annuity Unit value for the immediately preceding Valuation Period by the net investment factor for the subsequent Valuation Period (see "Determining the Contract Value"); and then

2)	multiplying the result from (1) by an interest factor to neutralize the assumed investment rate of 3.5% per year built into the purchase rate basis for variable payment annuities.

Nationwide reserves the right to refuse purchase payments in excess of $1,000,000 (see "Synopsis of the Contracts"). If you do not submit purchase payments in excess of $1,000,000, or if Nationwide has refused to accept purchase payments in excess of $1,000,000, the references in this provision to purchase payments in excess of $1,000,000 will not apply to your contract.

Assumed Investment Rate

An assumed investment rate is the percentage rate of return assumed to determine the amount of the first payment under a variable payment annuity. Nationwide uses the assumed investment rate of 3.5% to calculate the first annuity payment and to calculate the investment performance of an underlying mutual fund in order to determine subsequent payments under a variable payment annuity. An assumed investment rate is the percentage rate of return required to maintain level variable annuity payments. Subsequent variable annuity payments may be more or less than the first payment based on whether actual investment performance of the underlying mutual funds is higher or lower than the assumed investment rate of 3.5%.

Exchanges Among Underlying Mutual Funds

Exchanges among underlying mutual funds during annuitization must be requested in writing. Exchanges will occur on each anniversary of the Annuitization Date.

Frequency and Amount of Annuity Payments

Payments are made based on the annuity payment option selected, unless:

·	the amount to be distributed is less than $500, in which case Nationwide may make one lump sum payment of the Contract Value; or

·	an annuity payment would be less than $100, in which case Nationwide can change the frequency of payments to intervals that will result in payments of at least $100. Payments will be made at least annually.

Nationwide will send annuity payments no later than 7 days after each annuity payment date.

Annuity Payment Options

An annuity payment option must be elected before the Annuitization Date. The annuity payment options are:

Life Annuity - An annuity payable periodically, but at least annually, for the lifetime of the Annuitant. Payments will end upon the Annuitant’s death. For example, if the Annuitant dies before the second annuity payment date, the Annuitant will receive only one annuity payment. The Annuitant will only receive two annuity payments if he or she dies before the third annuity payment date, and so on.

Joint and Survivor Annuity - An annuity payable periodically, but at least annually, during the joint lifetimes of the Annuitant and a designated second individual. If one of these parties dies, payments will continue for the lifetime of the survivor. As is the case of the Single Life annuity payment option, there is no guaranteed number of payments. Therefore, it is possible that if both Annuitants die before the second annuity payment date, the Annuitants will receive only one annuity payment. No death benefit will be paid.

Life Annuity with 120 or 240 Monthly Payments Guaranteed - An annuity payable monthly during the lifetime of the Annuitant. If the Annuitant dies before all of the guaranteed payments have been made, payments will continue to the end of the guaranteed period and will be paid to a designee chosen by the Annuitant at the time the annuity payment option was elected.

The designee may elect to receive the present value of the remaining guaranteed payments in a lump sum. The present value will be computed as of the date Nationwide receives the notice of the Annuitant’s death.

If the Annuitant does not elect an annuity payment option, a variable payment life annuity with a guarantee period of 240 months will be assumed as the automatic form of payment upon annuitization. Once elected or assumed, the annuity payment option may not be changed.

Not all of the annuity payment options may be available in all states. Annuitants may request other options before the Annuitization Date. These options are subject to Nationwide’s approval.

Qualified Contracts, IRAs, SEP IRAs and Simple IRAs are subject to the "minimum distribution" requirements set forth in the plan, contract, and the Internal Revenue Code.

Death Benefits

Death of Annuitant

If the Annuitant dies prior to the Annuitization Date, then the contingent Annuitant becomes the Annuitant and no death benefit is payable. In the event there is no living contingent Annuitant, then, upon the Annuitant's death, a death benefit will be payable to the beneficiary.

If no beneficiary survives the Annuitant, the contingent beneficiary receives the death benefit. Contingent beneficiaries will share the death benefit equally, unless otherwise specified.

If no beneficiaries or contingent beneficiaries survive the Annuitant, the Contract Owner or the last surviving Contract Owner’s estate will receive the death benefit.

The beneficiary may elect to receive the death benefit:

1)	in a lump sum;

2)	as an annuity; or

3)	in any other manner permitted by law and approved by Nationwide.

The beneficiary must notify Nationwide of this election within 60 days of the Annuitant’s death.

If the Annuitant dies after the Annuitization Date, any benefit that may be payable will be paid according to the selected annuity payment option.

Death Benefit Payment

Contract Value will continue to be allocated according to the most recent allocation instructions until the death benefit is paid. The death benefit value is determined as of the date Nationwide receives:

1)	proper proof of the Annuitant’s death;

2)	an election specifying the distribution method; and

3)	any state required form(s).

If the recipient of the death benefit does not elect the form in which to receive the death benefit payment, Nationwide will pay the death benefit in a lump sum.

If the contract has multiple beneficiaries entitled to receive a portion of the death benefit, the Contract Value will continue to be allocated according to the most recent allocation instructions until the first beneficiary provides Nationwide with instructions for payment of death benefit proceeds. After the first beneficiary provides these instructions, the variable portion of the Contract Value for all beneficiaries will be allocated to the available money market Sub-Account until instructions are received from the beneficiary(ies) to allocate their Contract Value in another manner. Any Contract Value allocated to the Fixed Account will remain invested and will not be allocated to the available money market Sub-Account.

For contracts issued on or after the later of May 1, 1998 or a date on which state insurance authorities approve applicable contract modifications:

·	If the Annuitant dies prior to his or her 75th birthday and prior to the Annuitization Date, the dollar amount of the death benefit will be the greater of:

1)	the Contract Value; or

2)	the sum of all purchase payments, less an adjustment for amounts surrendered.

The adjustment for amounts surrendered will reduce item (2) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

·	If the Annuitant dies on or after his or her 75th birthday and prior to annuitization, the death benefit will equal the Contract Value.

If the Annuitant dies after the Annuitization Date, any payment that may be payable will be determined according to the selected annuity payment option.

For contracts issued prior to May 1, 1998 or a date prior to approval of applicable contract modifications by state insurance authorities:

·	If the Annuitant dies prior to his or her 75th birthday and prior to the Annuitization Date, the dollar amount of the death benefit will be the greater of:

1)	the Contract Value; or

2)	the sum of all purchase payments, less any amounts surrendered.

·	If the Annuitant dies on or after his or her 75th birthday and prior to annuitization, the death benefit will equal the Contract Value.

If the Annuitant dies after the Annuitization Date, any payment that may be payable will be determined according to the selected annuity payment option.

Statements and Reports

Nationwide will mail Contract Owners statements and reports. Therefore, Contract Owners should promptly notify Nationwide of any address change.

These mailings will contain:

·	statements showing the contract’s quarterly activity;

confirmation statements showing transactions that affect the contract's value. Confirmation statements will not be sent for recurring transactions (i.e., Dollar Cost Averaging or salary reduction programs). Instead, confirmation of recurring transactions will appear in the contract’s quarterly statements; and

·	semi-annual and annual reports of allocated underlying mutual funds.

Contract Owners can receive information from Nationwide faster and reduce the amount of mail they receive by signing up for Nationwide’s eDelivery program. Nationwide will notify Contract Owners by email when important documents (statements, prospectuses and other documents) are ready for a Contract Owner to view, print, or download from Nationwide’s secure server. To choose this option, go to www.nationwide.com/login.

Contract Owners should review statements and confirmations carefully. All errors or corrections must be reported to Nationwide immediately to assure proper crediting to the contract. Unless Nationwide is notified within 30 days of receipt of the statement, Nationwide will assume statements and confirmation statements are correct.

IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS

When multiple copies of the same disclosure document(s), such as prospectuses, supplements, proxy statements and semi-annual and annual reports are required to be mailed to multiple Contract Owners in the same household, Nationwide will mail only one copy of each document, unless notified otherwise by the Contract Owner(s). Household delivery will continue for the life of the contracts.

A Contract Owner can revoke their consent to household delivery and reinstitute individual delivery by calling 1-866-223-0303 or by writing to the address on page 1 of this prospectus. Nationwide will reinstitute individual delivery within 30 days after receiving such notification.

Legal Proceedings

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

The Company is a subject to legal and regulatory proceedings in the ordinary course of its business. The Company's legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates. The Company's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted. Regulatory proceedings also could affect the outcome of one or more of the Company's litigations matters. Furthermore, it is often not possible to determine the ultimate outcomes of the pending regulatory investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs' claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. Management believes, however, that based on their currently known information, the ultimate outcome of all pending legal and regulatory matters is not likely to have a material adverse effect on the Company's consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that such outcomes could materially affect the Company's consolidated financial position or results of operations in a particular quarter or annual period.

The financial services industry has been the subject of increasing scrutiny on a broad range of issues by regulators and legislators. The Company and/or its affiliates have been contacted by, self reported or received subpoenas from state and federal regulatory agencies, including the Securities and Exchange Commission, and other governmental bodies, state securities law regulators and state attorneys general for information relating to, among other things, compensation, the allocation of compensation, revenue sharing and bidding arrangements, market-timing, anticompetitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, and the use of side agreements and finite reinsurance agreements. The Company is cooperating with regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC's operations.

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

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

In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants. Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On March 10, 2011, the plaintiff filed a Notice of Dismissal. The Company continues to defend this case vigorously.

On November 20, 2007, NRS and NLIC were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. On March 12, 2010, NRS and NLIC were named in a Second Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Steven E. Coker, Sandra H. Turner, David N. Lichtenstein and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the ASEA Plan, excluding members of the Deferred Compensation Committee, ASEA's directors, officers and board members, and PEBCO's directors, officers and board members. The class period is from November 20, 2001 to the date of trial. In the second amended class action complaint, the plaintiffs allege breach of fiduciary duty, wantonness and breach of contract. The second amended class action complaint seeks a disgorgement of amounts paid, compensatory damages and punitive damages, plus interest, attorneys' fees and costs and such other equitable and legal relief to which plaintiffs and class members may be entitled. On April 2, 2010, NRS and NLIC filed an answer. On June 4, 2010, the plaintiffs filed a motion for class certification. On July 8, 2010, the defendants filed their briefs in opposition to plaintiffs' motion for class certification. On October 17, 2010, Twanna Brown filed a motion to intervene in this case. On October 22, 2010, the parties to this action executed a stipulation of settlement that agrees to certify a class for settlement purposes only, that provides for payments to the settlement class, and that provides for releases, certain bar orders, and dismissal of the case, subject to the Circuit Courts' approval. After a hearing on November 5, 2010, on November 9, 2010, the Court denied Brown's motion to intervene. On November 13, 2010, the Court issued a Preliminary Approval Order and held a Settlement Fairness Hearing on January 26, 2011. On November 22, 2010, Brown filed a Notice of Appeal with the Supreme Court of Alabama, appealing the Preliminary Approval Order. On January 25, 2011, the Alabama Supreme Court dismissed the appeal. Class notices were sent out on November 24, 2010. On December 3, 2010, Brown filed a motion with the trial court to stay this case. On December 22, 2010, Brown filed with the Alabama Supreme Court, a motion to stay all further Gwin trial court proceedings until Ms. Brown's appeal of the certification order is decided. On January 25, 2011, the Alabama Supreme Court denied Brown's motion to stay. On February 28, 2011, the Court entered its Order permitting ASEA/PEBCO to assert indemnification claims for attorneys' fees and costs, but barring them from asserting any other claims for indemnification. On March 3, 2011, ASEA and PEBCO filed a cross claim against NLIC and NRS seeking indemnification. On March 9, 2011, the Court severed the cross claim. NRS and NLIC continue to defend this case vigorously.

On July 11, 2007, NLIC was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on Behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et al. The plaintiffs seek to represent a class of all current or former NEA members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries). The plaintiffs allege that the defendants violated ERISA by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties. The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys' fees. On May 23, 2008, the Court granted the defendants' motion to dismiss. On June 19, 2008, the plaintiffs filed a notice of appeal. On December 20, 2010, the 9th Circuit Court of Appeals affirmed the dismissal of this case and entered judgment. The plaintiffs did not file a writ of certiorari with the US Supreme Court. NLIC intends to continue to defend this case vigorously.

to the date of November 6, 2009". On October 20, 2010, the Second Circuit Court of Appeals granted NLIC's 23(f) petition agreeing to hear an appeal of the District Court's order granting class certification. On October 21, 2010, the District Court dismissed NFS from the lawsuit. On October 27, 2010, the District Court stayed the underlying action pending a decision from the Second Circuit Court of Appeals. On March 2, 2011, the Company filed its brief in the 2nd Circuit Court of Appeals. NLIC continues to defend this lawsuit vigorously.

On May 14, 2010, NLIC was named in a lawsuit filed in the Western District of New York entitled Sandra L. Meidenbauer, on behalf of herself and all others similarly situated v. Nationwide Life Insurance Company. The plaintiff claims to represent a class of all individuals who purchased a variable life insurance policy from NLIC during an unspecified period. The complaint claims breach of contract, alleging that NLIC charged excessive monthly deductions and costs of insurance resulting in reduced policy values and, in some cases, premature lapsing of policies. The complaint seeks reimbursement of excessive charges, costs, interest, attorney's fees, and other relief. NLIC filed a motion to dismiss the complaint on July 23, 2010. NLIC filed a motion to disqualify the proposed class representative on August 27, 2010. Plaintiff filed a motion to amend the complaint on September 17, 2010, and NLIC filed an opposition to the motion to amend on November 2, 2010. Those motions have been fully briefed. NLIC continues to vigorously defend this case.

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

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

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

Table of Contents of the Statement of Additional Information	Page
General Information and History	1
Services	1
Purchase of Securities Being Offered	2
Underwriters	2
Advertising	2
Annuity Payments	2
Financial Statements	3

To learn more about this product, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus. For a free copy of the SAI and to request other information about this product please call our Service Center at 1-800-848-6331 (TDD 1-800-238-3035) or write to us at Nationwide Life Insurance Company, 5100 Rings Road, RR1-04-F4, Dublin, Ohio 43017-1522.

The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SEC maintains an internet website (http://www.sec.gov) that contains the SAI and other information about us and the product. Information about us and the product (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- 02716

Securities Act of 1933 Registration File No. 002-58043

Appendix A: Underlying Mutual Funds

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.

Aberdeen Global Fixed Income Fund: Institutional Service Class

Investment Advisor:	Aberdeen Asset Management, Inc.
Investment Objective:	Seeks to maximize total investment return consistent with prudent investment management, consisting of a combination of interest income, currency gains and capital appreciation.

Designation: STTF

Aberdeen Small Cap Fund: Class A

This underlying mutual fund is only available in contracts issued before May 1, 2004

Investment Advisor:	Aberdeen Asset Management, Inc.
Investment Objective:	Capital growth.

Designation: STTF

American Century Growth Fund: Investor Class

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

American Century Income & Growth Fund: Investor Class

Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	The fund seeks long-term capital growth.

American Century International Growth Fund: Investor Class

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 2004

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

Designation: STTF

American Century Short Term Government Fund: Investor Class

Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	Seeks income and investment returns by investing in various types of U.S. government

securities.

American Century Ultra® Fund: Investor Class

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

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

This underlying mutual fund is only available in contracts issued before May 1, 2008

Investment Advisor:	American Century Global Investment Management, Inc.
Investment Objective:	Capital growth.

Designation: STTF

Credit Suisse Large Cap Blend Fund: Common Class

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

Delaware High-Yield Opportunities Fund: Institutional Class

Investment Advisor:	Delaware Management Company, Inc.
Investment Objective:	The fund seeks total return with current income; high current income is a secondary consideration.

Dreyfus Appreciation Fund, Inc.

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

Dreyfus Balanced Opportunity Fund: Class Z

Investment Advisor:	The Dreyfus Corporation
Sub-advisor:	EACM Advisers/Boston Company Asset Management/Standish Mellon
Investment Objective:	The fund seeks high total return through a combination of capital appreciation and current income.

Dreyfus Intermediate Term Income Fund: Class A

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	Seeks to maximize total return, consisting of capital appreciation and current income.

Dreyfus S&P 500 Index Fund

Investment Advisor:	The Dreyfus Corporation
Sub-advisor:	Mellon Capital Management
Investment Objective:	To match performance of the S&P 500 Composite Stock Price Index.

Federated Bond Fund: Class F Shares

Investment Advisor:	Federated Investment Management Company
Investment Objective:	High level of current income, as is consistent with the preservation of capital.

Federated High Yield Trust

Investment Advisor:	Federated Investment Management Company
Investment Objective:	High current income.

Designation: STTF

Fidelity Advisor Balanced Fund: Class T

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	Income and growth of capital.

Fidelity Advisor Equity Income Fund: Class T

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	Seeks a yield from dividend and interest income which exceeds the composite dividend yield on securities comprising the S&P 500 Index.

Fidelity Advisor Growth Opportunities Fund: Class T

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

Fidelity Advisor High Income Advantage Fund: Class T

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 2004

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	Seeks high level of income and the potential for capital gains.

Fidelity Asset Manager 50%

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	High total return with reduced risk over the long term by allocating its assets among stocks, bonds, and short term instruments.

Fidelity Capital & Income Fund

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 1999

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	Seeks to provide a combination of income and capital growth.

Fidelity Equity-Income Fund

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

Fidelity Magellan® Fund

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

Fidelity Puritan Fund

Investment Advisor:	Fidelity Management & Research Company Boston, MA
Sub-advisor:	FMR Co., Inc., Fidelity Research & Analysis Company
Investment Objective:	Income and capital growth consistent with reasonable risk.

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

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective December 1, 1993

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

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

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

Designation: STTF

Franklin Mutual Series Fund, Inc. - Mutual Shares Fund: Class A

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

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

This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2009

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

Designation: STTF

Invesco Dynamics Fund: Investor Class

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

Janus Fund: Class T

This underlying mutual fund is only available in contracts for which good order applications were received before May 24, 2004

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

Janus Twenty Fund: Class T

This underlying mutual fund is only available in contracts for which good order applications were received before May 24, 2004

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

Janus Worldwide Fund: Class T

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 2004

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term growth of capital in a manner consistent with the preservation of capital.

Designation: STTF

Lazard U.S. Small-Mid Cap Equity Portfolio: Open Shares

Investment Advisor:	Lazard Asset Management LLC
Investment Objective:	The fund seeks long-term capital appreciation.

Designation: STTF

MFS® Strategic Income Fund: Class A

Investment Advisor:	Massachusetts Financial Services Company
Investment Objective:	To seek total return with an emphasis on high current income, but also considering capital appreciation.

Nationwide Bond Fund: Class D

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Nationwide Asset Management, LLC
Investment Objective:	The investment seeks income consistent with capital preservation

Designation: STTF

Nationwide Fund: Class A

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective February 25, 2011

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

Nationwide Fund: Class D

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

Designation: STTF

Nationwide Government Bond Fund: Class D

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Nationwide Asset Management, LLC
Investment Objective:	The investment seeks current income consistent with capital preservation.

Designation: STTF

Nationwide Growth Fund: Class A

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Turner Investment Partners, Inc.
Investment Objective:	The investment seeks long-term capital appreciation.

Designation: STTF

Nationwide Growth Fund: Class D

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective December 19, 2003

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Turner Investment Partners, Inc.
Investment Objective:	The investment seeks long-term capital appreciation.

Designation: STTF

Nationwide Money Market Fund: Prime Shares

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

Nationwide S&P 500 Index Fund: Service Class

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	BlackRock Investment Management, LLC
Investment Objective:	The investment seeks to provide investment results that correspond to the price and yield of the S&P 500 Index.

Designation: STTF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: STTF

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

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

Designation: STTF

Neuberger Berman Genesis Fund: Trust Class

This underlying mutual fund is only available in contracts issued before May 1, 2006

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman, LLC
Investment Objective:	The investment seeks growth of capital.

Neuberger Berman Guardian Fund: Investor Class

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman, LLC
Investment Objective:	The investment seeks long-term growth of capital and, secondarily, current income.

Neuberger Berman Partners Fund: Investor Class

This underlying mutual fund is only available in contracts for which good order applications were received before June 15, 2009

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman, LLC
Investment Objective:	The investment seeks growth of capital.

Neuberger Berman Short Duration Bond Fund: Investor Class

This underlying mutual fund is only available in contracts for which good order applications were received before June 15, 2009

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

Neuberger Berman Socially Responsive Fund: Trust Class

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

Oppenheimer Global Fund: Class A

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 2004

Investment Advisor:	OppenheimerFunds, Inc.
Investment Objective:	The investment seeks capital appreciation.

Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA: Class 4

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

Designation: STTF

Templeton Foreign Fund: Class A

This underlying mutual fund is no longer available to receive transfers or new purchase payments effective May 1, 2004

Investment Advisor:	Templeton Global Advisors Limited
Investment Objective:	Long-term capital growth.

The Dreyfus Third Century Fund, Inc.: Class Z

This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2004

Investment Advisor:	The Dreyfus Corporation
Sub-advisor:	Mellon Capital Management
Investment Objective:	Capital growth with current income as a secondary goal.

Virtus Balanced Fund: Class A

Investment Advisor:	Virtus Investment Advisers, Inc.
Sub-advisor:	SCM Advisors
Investment Objective:	Reasonable income, long-term capital growth and conservation of capital.

Wells Fargo Advantage Funds - Wells Fargo Advantage Classic Value Fund: Administrative Class

Investment Advisor:	Wells Fargo Funds Management, LLC
Sub-advisor:	Wells Capital Management Inc.
Investment Objective:	Current income and capital growth in the value of its shares.

Wells Fargo Advantage Funds - Wells Fargo Advantage Common Stock Fund: Investor Class

This underlying mutual fund is only available in contracts issued before May 1, 2004

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

Wells Fargo Advantage Funds - Wells Fargo Advantage Large Cap Growth Fund: Investor Class

This underlying mutual fund is only available in contracts issued before May 1, 2004

Investment Advisor:	Wells Fargo Funds Management, LLC
Sub-advisor:	Wells Capital Management Inc.
Investment Objective:	Capital growth.

Appendix B: Condensed Financial Information

The following tables reflect accumulation unit values for the units of the Sub-Accounts. As used in this appendix, the term "Period" is defined as a complete calendar year, unless otherwise noted. Those Periods with an asterisk (*) reflect Accumulation Unit information for a partial year only.

The following Sub-Accounts were available effective May 1, 2011, therefore, no Condensed Financial Information is available:

Nationwide Fund: Class A

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Aberdeen Global Fixed Income Fund: Institutional Service Class – NQ	10.549735	10.955114	3.84%	234,344	2010
	10.000000	10.549735	5.50%	89,576	2009*


Aberdeen Small Cap Fund: Class A – NQ	18.648184	23.508324	26.06%	0	2010
	13.738096	18.648184	35.74%	75,542	2009
	25.251905	13.738096	-45.60%	81,505	2008
	27.230810	25.251905	-7.27%	116,143	2007
	21.360114	27.230810	27.48%	167,885	2006
	17.664141	21.360114	20.92%	162,859	2005
	14.230056	17.664141	24.13%	178,413	2004
	9.740635	14.230056	46.09%	131,084	2003
	12.116293	9.740635	-19.61%	66,028	2002
	12.512899	12.116293	-3.17%	36,890	2001

American Century Growth Fund: Investor Class – NQ	82.015831	95.227762	16.11%	0	2010
	61.334447	82.015831	33.72%	55,963	2009
	99.980990	61.334447	-38.65%	60,777	2008
	85.141823	99.980990	17.43%	70,103	2007
	79.912245	85.141823	6.54%	82,939	2006
	77.223763	79.912245	3.48%	93,010	2005
	71.188047	77.223763	8.48%	103,411	2004
	57.972941	71.188047	22.80%	111,223	2003
	79.512370	57.972941	-27.09%	122,347	2002
	99.058910	79.512370	-19.73%	138,099	2001

American Century Income & Growth Fund: Investor Class – NQ	16.445959	18.521282	12.62%	0	2010
	14.130376	16.445959	16.39%	175,496	2009
	21.918313	14.130376	-35.53%	191,548	2008
	22.273869	21.918313	-1.60%	253,051	2007
	19.258791	22.273869	15.66%	302,859	2006
	18.619717	19.258791	3.43%	357,907	2005
	16.697268	18.619717	11.51%	404,011	2004
	13.050867	16.697268	27.94%	431,937	2003
	16.400321	13.050867	-20.42%	459,146	2002
	18.136235	16.400321	-9.57%	524,128	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

American Century International Growth Fund: Investor Class – NQ	23.240709	26.081800	12.22%	79,296	2010
	17.569048	23.240709	32.28%	35,850	2009
	32.490550	17.569048	-45.93%	38,918	2008
	28.074719	32.490550	15.73%	47,089	2007
	22.754543	28.074719	23.38%	58,485	2006
	20.340371	22.754543	11.87%	73,235	2005
	17.871836	20.340371	13.81%	91,338	2004
	14.441600	17.871836	23.75%	115,663	2003
	18.119357	14.441600	-20.30%	109,800	2002
	25.077938	18.119357	-27.75%	123,761	2001

American Century Short Term Government: Investor Class – NQ	30.352033	30.638192	0.94%	0	2010
	29.946463	30.352033	1.35%	42,021	2009
	28.972208	29.946463	3.36%	44,898	2008
	27.601340	28.972208	4.97%	47,948	2007
	26.889244	27.601340	2.65%	53,625	2006
	26.797259	26.889244	0.34%	60,197	2005
	26.972536	26.797259	-0.65%	70,340	2004
	27.026869	26.972536	-0.20%	77,580	2003
	26.022142	27.026869	3.86%	102,559	2002
	24.610929	26.022142	5.73%	71,996	2001

American Century Ultra® Fund: Investor Class – NQ	18.961139	21.814917	15.05%	338,737	2010
	14.192489	18.961139	33.60%	277,603	2009
	24.681509	14.192489	-42.50%	313,110	2008
	20.527884	24.681509	20.23%	382,733	2007
	21.503621	20.527884	-4.54%	486,618	2006
	21.334246	21.503621	0.79%	618,581	2005
	19.526904	21.334246	9.26%	708,437	2004
	15.723098	19.526904	24.19%	801,688	2003
	20.728384	15.723098	-24.15%	875,966	2002
	24.597823	20.728384	-15.73%	995,997	2001

American Century Variable Portfolios, Inc. – American Century VP International Fund: Class IV – NQ	12.905418	14.411081	11.67%	0	2010
	9.785076	12.905418	31.89%	92,441	2009
	18.009807	9.785076	-45.67%	99,378	2008
	15.477711	18.009807	16.36%	136,418	2007
	12.558427	15.477711	23.25%	89,367	2006
	11.262256	12.558427	11.51%	41,478	2005
	10.000000	11.262256	12.62%	26,325	2004*

Credit Suisse Large Cap Blend Fund: Common Class - NQ	10.000000	10.619435	6.19%	0	2010*
Credit Suisse Large Cap Blend Fund: Common Class - NQ

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Delaware High-Yield Opportunities Fund: Institutional Class – NQ	13.409347	15.440728	15.15%	0	2010
	10.000000	13.409347	34.09%	51,698	2009*


Dreyfus Appreciation Fund, Inc. – NQ	12.239306	13.923603	13.76%	234,846	2010
	10.247505	12.239306	19.44%	110,097	2009
	15.352184	10.247505	-33.25%	118,113	2008
	14.600148	15.352184	5.15%	151,929	2007
	12.722959	14.600148	14.75%	187,163	2006
	12.377658	12.722959	2.79%	213,752	2005
	11.878945	12.377658	4.20%	226,598	2004
	9.997121	11.878945	18.82%	218,248	2003
	12.224747	9.997121	-18.22%	206,442	2002
	13.878593	12.224747	-11.92%	173,920	2001

Dreyfus Balanced Opportunity Fund: Class Z – NQ	9.494402	10.617811	11.83%	165,521	2010
	7.883643	9.494402	20.43%	65,248	2009
	11.063044	7.883643	-28.74%	69,693	2008
	10.664454	11.063044	3.74%	98,358	2007
	9.864760	10.664454	8.11%	103,792	2006
	10.128127	9.864760	-2.60%	120,137	2005
	10.000000	10.128127	1.28%	132,614	2004*

Dreyfus Intermediate Term Income Fund: Class A – NQ	10.700287	11.513495	7.60%	0	2010
	9.258117	10.700287	15.58%	148,448	2009
	10.000000	9.258117	-7.42%	171,020	2008*

Dreyfus S&P 500 Index Fund – NQ	26.170165	29.590879	13.07%	550,828	2010
	21.037370	26.170165	24.40%	359,565	2009
	33.984921	21.037370	-38.10%	390,208	2008
	32.787023	33.984921	3.65%	472,197	2007
	28.825519	32.787023	13.74%	560,996	2006
	27.967641	28.825519	3.07%	624,278	2005
	25.670476	27.967641	8.95%	688,018	2004
	20.305178	25.670476	20.90%	712,645	2003
	26.550137	20.305178	-23.52%	723,651	2002
	30.697964	26.550137	-13.51%	789,038	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Federated Bond Fund: Class F Shares – NQ	18.170017	19.879497	9.41%	275,280	2010
	14.563247	18.170017	24.77%	81,072	2009
	16.458348	14.563247	-11.51%	90,719	2008
	15.874110	16.458348	3.68%	100,249	2007
	15.197498	15.874110	4.45%	114,791	2006
	15.112552	15.197498	0.56%	134,181	2005
	14.339221	15.112552	5.39%	130,569	2004
	12.871381	14.339221	11.40%	126,027	2003
	12.195901	12.871381	5.54%	134,479	2002
	11.514205	12.195901	5.92%	123,470	2001

Federated High Yield Trust – NQ	14.098872	16.196889	14.88%	0	2010
	9.184845	14.098872	53.50%	96,655	2009
	12.946951	9.184845	-29.06%	85,570	2008
	12.717425	12.946951	1.80%	79,111	2007
	11.585665	12.717425	9.77%	128,016	2006
	11.459485	11.585665	1.10%	117,766	2005
	10.400769	11.459485	10.18%	149,650	2004
	8.580012	10.400769	21.22%	121,542	2003
	8.687742	8.580012	-1.24%	85,284	2002
	8.971948	8.687742	-3.17%	49,468	2001

Fidelity Advisor Balanced Fund: Class T – NQ	15.359638	17.132244	11.54%	0	2010
	12.259147	15.359638	25.29%	70,667	2009
	18.259649	12.259147	-32.86%	68,727	2008
	17.095850	18.259649	6.81%	76,411	2007
	15.563508	17.095850	9.85%	73,978	2006
	15.021462	15.563508	3.61%	73,624	2005
	14.499103	15.021462	3.60%	85,032	2004
	12.496654	14.499103	16.02%	83,222	2003
	13.924940	12.496654	-10.26%	85,330	2002
	14.384426	13.924940	-3.19%	86,449	2001

Fidelity Advisor Equity Income Fund: Class T	17.950917	20.043620	11.66%	0	2010
	14.635198	17.950917	22.66%	103,627	2009
	25.030175	14.635198	-41.53%	127,058	2008
	24.538931	25.030175	2.00%	152,823	2007
	21.279508	24.538931	15.32%	185,764	2006
	20.305263	21.279508	4.80%	200,849	2005
	18.385959	20.305263	10.44%	207,283	2004
	14.506340	18.385959	26.74%	182,727	2003
	17.422645	14.506340	-16.74%	173,217	2002
	18.092498	17.422645	-3.70%	145,153	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Fidelity Advisor Growth Opportunities Fund: Class T – NQ	11.417505	13.907808	21.81%	0	2010
	7.875789	11.417505	44.97%	152,316	2009
	17.883749	7.875789	-55.96%	170,528	2008
	14.748710	17.883749	21.26%	223,593	2007
	14.245507	14.748710	3.53%	235,646	2006
	13.309487	14.245507	7.01%	294,745	2005
	12.607995	13.309487	5.56%	330,246	2004
	9.882801	12.607995	27.58%	370,410	2003
	12.909284	9.882801	-23.44%	375,670	2002
	15.413519	12.909284	-16.25%	414,206	2001

Fidelity Advisor High Income Advantage Fund: Class T – NQ	20.907088	24.319659	16.32%	0	2010
	12.503411	20.907088	67.21%	29,631	2009
	20.744811	12.503411	-39.73%	33,218	2008
	20.561464	20.744811	0.89%	45,868	2007
	18.028079	20.561464	14.05%	75,586	2006
	17.462087	18.028079	3.24%	103,633	2005
	15.410426	17.462087	13.31%	137,174	2004
	10.878719	15.410426	41.66%	191,012	2003
	11.483101	10.878719	-5.26%	174,086	2002
	11.774147	11.483101	-2.47%	184,770	2001

Fidelity Asset Manager 50% – NQ	21.583277	24.181900	12.04%	135,268	2010
	16.700070	21.583277	29.24%	76,622	2009
	23.435864	16.700070	-28.74%	84,558	2008
	22.332743	23.435864	4.94%	96,919	2007
	20.722377	22.332743	7.77%	114,368	2006
	20.181802	20.722377	2.68%	155,361	2005
	19.400449	20.181802	4.03%	193,635	2004
	16.774479	19.400449	15.65%	231,667	2003
	18.484216	16.774479	-9.25%	242,946	2002
	19.494857	18.484216	-5.18%	284,944	2001

Fidelity Capital & Income Fund – NQ	92.198442	106.589493	15.61%	0	2010
	54.264341	92.198442	69.91%	4,474	2009
	80.733607	54.264341	-32.79%	4,633	2008
	78.796409	80.733607	2.46%	4,873	2007
	70.620759	78.796409	11.58%	5,825	2006
	68.113552	70.620759	3.68%	6,768	2005
	61.305695	68.113552	11.10%	7,899	2004
	44.643248	61.305695	37.32%	11,090	2003
	45.417819	44.643248	-1.71%	12,054	2002
	48.286748	45.417819	-5.94%	13,985	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Fidelity Equity-Income Fund – NQ	87.664859	99.617103	13.63%	110,594	2010
	68.567882	87.664859	27.85%	61,956	2009
	119.045787	68.567882	-42.40%	70,057	2008
	118.959170	119.045787	0.07%	78,213	2007
	100.596791	118.959170	18.25%	93,962	2006
	96.389416	100.596791	4.36%	104,703	2005
	87.753466	96.389416	9.84%	112,880	2004
	68.411071	87.753466	28.27%	119,162	2003
	83.671321	68.411071	-18.24%	121,343	2002
	89.259809	83.671321	-6.26%	137,625	2001

Fidelity Magellan® Fund – NQ	25.054565	27.797155	10.95%	340,110	2010
	17.986592	25.054565	39.30%	317,718	2009
	36.015823	17.986592	-50.06%	340,577	2008
	30.710930	36.015823	17.27%	409,548	2007
	29.020029	30.710930	5.83%	510,738	2006
	27.627451	29.020029	5.04%	636,228	2005
	26.040039	27.627451	6.10%	737,378	2004
	21.136094	26.040039	23.20%	837,429	2003
	28.053548	21.136094	-24.66%	941,898	2002
	32.174567	28.053548	-12.81%	1,116,333	2001

Fidelity Puritan Fund – NQ	30.432253	34.254588	12.56%	0	2010
	24.337414	30.432253	25.04%	174,283	2009
	34.808803	24.337414	-30.08%	192,799	2008
	33.218761	34.808803	4.79%	239,711	2007
	29.321694	33.218761	13.29%	286,741	2006
	28.381949	29.321694	3.31%	333,373	2005
	26.314924	28.381949	7.85%	379,995	2004
	21.817307	26.314924	20.61%	407,038	2003
	24.004249	21.817307	-9.11%	455,032	2002
	25.581595	24.004249	-2.35%	526,520	2001

Fidelity Variable Insurance Products Fund – VIP High Income Portfolio: Initial Class – NQ	28.023266	31.482570	12.34%	1,090	2010
	19.722453	28.023266	42.09%	871	2009
	26.637843	19.722453	-25.96%	872	2008
	26.258980	26.637843	1.44%	873	2007
	23.916395	26.258980	9.79%	873	2006
	23.593274	23.916395	1.37%	874	2005
	21.811575	23.593274	8.17%	875	2004
	17.364297	21.811575	25.61%	2,909	2003
	17.007355	17.364297	2.10%	2,911	2002
	19.523183	17.007355	-12.89%	4,118	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Fidelity Variable Insurance Products Fund – VIP Overseas Portfolio: Service Class 2R – NQ	11.975415	13.335822	11.36%	0	2010
	9.614219	11.975415	24.56%	102,352	2009
	17.377893	9.614219	-44.68%	104,292	2008
	15.041844	17.377893	15.53%	122,554	2007
	12.935248	15.041844	16.29%	114,973	2006
	11.036651	12.935248	17.20%	40,437	2005
	10.000000	11.036651	10.37%	4,863	2004*

Franklin Mutual Series Fund, Inc. – Mutual Shares Fund: Class A – NQ	15.824543	17.401163	9.96%	218,016	2010
	12.541243	15.824543	26.18%	167,045	2009
	20.529099	12.541243	-38.91%	192,643	2008
	20.200778	20.529099	1.63%	235,262	2007
	17.347392	20.200778	16.45%	259,879	2006
	15.980051	17.347392	8.56%	274,228	2005
	14.265169	15.980051	12.02%	263,872	2004
	11.454096	14.265169	24.54%	242,606	2003
	13.068429	11.454096	-12.35%	225,245	2002
	11.864272	13.068429	10.15%	162,850	2001

Franklin Templeton Variable Insurance Products Trust – Templeton Foreign Securities Fund: Class 3 – NQ	13.633200	14.587296	7.00%	0	2010
	10.067797	13.633200	35.41%	146,340	2009
	17.112903	10.067797	-41.17%	150,599	2008
	15.019561	17.112903	13.94%	166,873	2007
	12.528108	15.019561	19.89%	188,243	2006
	11.524879	12.528108	8.70%	165,821	2005
	10.000000	11.524879	15.25%	128,669	2004*

Invesco Dynamics Fund: Investor Class – NQ	10.947208	13.340040	21.86%	307,060	2010
	7.763338	10.947208	41.01%	240,997	2009
	14.859286	7.763338	-47.75%	253,602	2008
	13.401402	14.859286	10.88%	312,108	2007
	11.651509	13.401402	15.02%	333,686	2006
	10.695979	11.651509	8.93%	350,957	2005
	9.680909	10.695979	10.49%	412,876	2004
	7.093317	9.680909	36.48%	499,079	2003
	10.740031	7.093317	-33.95%	473,937	2002
	16.215857	10.740031	-33.77%	593,472	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Janus Fund: Class T – NQ	17.574011	19.290620	9.77%	0	2010
	12.967919	17.574011	35.52%	216,561	2009
	21.839754	12.967919	-40.62%	236,557	2008
	19.205480	21.839754	13.72%	292,830	2007
	17.594483	19.205480	9.16%	334,262	2006
	17.143281	17.594483	2.63%	378,582	2005
	16.591456	17.143281	3.33%	482,022	2004
	12.763024	16.591456	30.00%	577,726	2003
	17.851634	12.763024	-28.51%	637,137	2002
	24.478898	17.851634	-27.07%	748,308	2001

Janus Twenty Fund: Class T – NQ	36.195576	38.216172	5.58%	0	2010
	25.597243	36.195576	41.40%	439,791	2009
	44.694406	25.597243	-42.73%	474,798	2008
	33.313122	44.694406	34.16%	552,948	2007
	30.054447	33.313122	10.84%	638,145	2006
	27.827846	30.054447	8.00%	732,111	2005
	22.756872	27.827846	22.28%	825,021	2004
	18.399796	22.756872	23.68%	911,549	2003
	24.536301	18.399796	-25.01%	1,021,448	2002
	35.116816	24.536301	-30.13%	1,153,020	2001

Janus Worldwide Fund: Class T – NQ	13.920206	15.885426	14.12%	201,045	2010
	10.243736	13.920206	35.89%	180,217	2009
	18.877687	10.243736	-45.74%	204,627	2008
	17.511092	18.877687	7.80%	268,591	2007
	15.047725	17.511092	16.37%	324,086	2006
	14.403955	15.047725	4.47%	416,804	2005
	13.828124	14.403955	4.16%	531,118	2004
	11.277094	13.828124	22.62%	722,175	2003
	15.443379	11.277094	-26.98%	829,941	2002
	20.289932	15.443379	-23.89%	972,867	2001

Lazard U.S. Small- Mid Cap Equity Portfolio: Open Shares – NQ	18.731525	22.806510	21.75%	169,401	2010
	12.247135	18.731525	52.95%	99,016	2009
	19.012543	12.247135	-35.58%	103,477	2008
	20.626027	19.012543	-7.82%	108,034	2007
	17.895709	20.626027	15.26%	128,506	2006
	17.445631	17.895709	2.58%	148,480	2005
	15.383568	17.445631	13.40%	167,386	2004
	11.248436	15.383568	36.76%	144,630	2003
	13.868643	11.248436	-18.89%	138,231	2002
	11.940435	13.868643	16.15%	86,606	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

MFS® Strategic Income Fund: Class A – NQ	15.016726	16.288195	8.47%	146,955	2010
	12.174056	15.016726	23.35%	69,165	2009
	13.987361	12.174056	-12.96%	56,766	2008
	13.682758	13.987361	2.23%	62,675	2007
	12.976541	13.682758	5.44%	66,662	2006
	12.878519	12.976541	0.76%	78,799	2005
	12.045630	12.878519	6.91%	69,176	2004
	10.725862	12.045630	12.30%	61,538	2003
	10.119915	10.725862	7.26%	39,645	2002
	10.000000	10.119915	1.20%	34,722	2001

Nationwide Bond Fund: Class D – NQ	66.475212	70.929496	6.70%	70	2010
	58.077823	66.475212	14.46%	70	2009
	61.698018	58.077823	-5.87%	71	2008
	58.919156	61.698018	4.72%	71	2007
	57.178623	58.919156	3.04%	71	2006
	56.173955	57.178623	1.79%	72	2005
	54.292441	56.173955	3.47%	72	2004
	51.704249	54.292441	5.01%	72	2003
	47.942060	51.704249	7.85%	72	2002
	44.223337	47.942060	8.41%	73	2001

Nationwide Bond Fund: Class D – Q	66.761427	71.234893	6.70%	18,174	2010
	58.327880	66.761427	14.46%	18,205	2009
	61.963663	58.327880	-5.87%	18,611	2008
	59.172838	61.963663	4.72%	19,920	2007
	57.424811	59.172838	3.04%	24,458	2006
	56.415812	57.424811	1.79%	28,025	2005
	54.526197	56.415812	3.47%	32,581	2004
	51.926861	54.526197	5.01%	36,726	2003
	48.148472	51.926861	7.85%	39,588	2002
	44.413739	48.148472	8.41%	34,762	2001

Nationwide Fund: Class D – NQ	108.998542	121.324448	11.31%	55	2010
	87.776814	108.998542	24.18%	55	2009
	152.049479	87.776814	-42.27%	55	2008
	142.775094	152.049479	6.50%	55	2007
	127.060545	142.775094	12.37%	55	2006
	119.902142	127.060545	5.97%	55	2005
	110.666875	119.902142	8.35%	56	2004
	88.216785	110.666875	25.45%	56	2003
	107.853019	88.216785	-18.21%	60	2002
	124.107265	107.853019	-13.10%	92	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Nationwide Fund: Class D – Q	104.645167	116.478791	11.31%	21,924	2010
	84.271014	104.645167	24.18%	23,539	2009
	145.976641	84.271014	-42.27%	24,470	2008
	137.072660	145.976641	6.50%	29,165	2007
	121.985746	137.072660	12.37%	35,190	2006
	115.113262	121.985746	5.97%	42,114	2005
	106.246840	115.113262	8.35%	48,114	2004
	84.693403	106.246840	25.45%	50,848	2003
	103.545349	84.693403	-18.21%	51,953	2002
	119.150408	103.545349	-13.10%	53,874	2001

Nationwide Government Bond Fund: Class D – NQ	18.515189	19.178040	3.58%	249,243	2010
	18.133780	18.515189	2.10%	103,198	2009
	17.014622	18.133780	6.58%	111,812	2008
	16.004119	17.014622	6.31%	106,977	2007
	15.613505	16.004119	2.50%	128,756	2006
	15.392337	15.613505	1.44%	160,857	2005
	15.079382	15.392337	2.08%	201,541	2004
	14.993745	15.079382	0.57%	256,407	2003
	13.690706	14.993745	9.52%	288,740	2002
	12.848276	13.690706	6.56%	90,136	2001

Nationwide Growth Fund: Class A– NQ	11.025351	13.214101	19.85%	93,365	2010
	8.424717	11.025351	30.87%	22,868	2009
	13.962273	8.424717	-39.66%	21,063	2008
	11.860321	13.962273	17.72%	23,239	2007
	11.335970	11.860321	4.63%	21,329	2006
	10.823294	11.335970	4.74%	33,644	2005
	10.172955	10.823294	6.39%	27,895	2004
	10.000000	10.172955	1.73%	20,015	2003*

Nationwide Growth Fund: Class D – NQ	69.861368	83.974377	20.20%	113	2010
	53.159100	69.861368	31.42%	114	2009
	87.868286	53.159100	-39.50%	114	2008
	74.442189	87.868286	18.04%	114	2007
	70.942653	74.442189	4.93%	115	2006
	67.454082	70.942653	5.17%	115	2005
	63.214237	67.454082	6.71%	115	2004
	48.146131	63.214237	31.30%	116	2003
	68.419812	48.146131	-29.63%	116	2002
	96.002074	68.419812	-28.73%	179	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Nationwide Growth Fund: Class D – Q	66.164459	79.530639	20.20%	4,820	2010
	50.346039	66.164459	31.42%	5,083	2009
	83.218499	50.346039	-39.50%	6,081	2008
	70.502878	83.218499	18.04%	7,556	2007
	67.188539	70.502878	4.93%	11,312	2006
	63.884588	67.188539	5.17%	15,446	2005
	59.869104	63.884588	6.71%	18,003	2004
	45.598362	59.869104	31.30%	21,965	2003
	64.799205	45.598362	-29.63%	19,736	2002
	90.921898	64.799205	-28.73%	20,929	2001

Nationwide Money Market Fund: Prime Shares – Pre 12/25/82 – Q	31.086120	30.682048	-1.30%	1,425	2010
	31.488615	31.086120	-1.28%	2,228	2009
	31.250402	31.488615	0.76%	2,384	2008
	30.198044	31.250402	3.48%	2,887	2007
	29.261448	30.198044	3.20%	3,618	2006
	28.862163	29.261448	1.38%	4,426	2005
	29.000231	28.862163	-0.48%	5,046	2004
	29.202279	29.000231	-0.69%	7,279	2003
	29.257720	29.202279	-0.19%	9,859	2002
	28.654201	29.257720	2.11%	13,826	2001

Nationwide Money Market Fund: Prime Shares – On and After 12/25/82 – NQ	31.282581	30.875958	-1.30%	219	2010
	31.687620	31.282581	-1.28%	221	2009
	31.447901	31.687620	0.76%	223	2008
	30.388893	31.447901	3.48%	818	2007
	29.446377	30.388893	3.20%	820	2006
	29.044569	29.446377	1.38%	823	2005
	29.183509	29.044569	-0.48%	825	2004
	29.386834	29.183509	-0.69%	828	2003
	29.442625	29.386834	-0.19%	830	2002
	28.835292	29.442625	2.11%	833	2001

Nationwide Money Market Fund: Prime Shares – On and After 12/25/82 – Q	24.687267	24.366370	-1.30%	362,623	2010
	25.006911	24.687267	-1.28%	386,001	2009
	24.817732	25.006911	0.76%	439,069	2008
	23.981996	24.817732	3.48%	437,536	2007
	23.238189	23.981996	3.20%	441,698	2006
	22.921094	23.238189	1.38%	387,807	2005
	23.030742	22.921094	-0.48%	412,802	2004
	23.191202	23.030742	-0.69%	464,750	2003
	23.235229	23.191202	-0.19%	622,931	2002
	22.755940	23.235229	2.11%	645,265	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Nationwide S&P 500 Index Fund: Service Class – NQ	8.863308	10.007110	12.90%	0	2010
	7.129157	8.863308	24.32%	102,329	2009
	11.549381	7.129157	-38.27%	96,783	2008
	11.171053	11.549381	3.39%	123,444	2007
	9.828260	11.171053	13.66%	103,561	2006
	9.552030	9.828260	2.89%	123,029	2005
	8.774483	9.552030	8.86%	117,458	2004
	6.956820	8.774483	26.13%	115,360	2003
	9.115203	6.956820	-23.68%	88.783	2002
	10.535005	9.115203	-13.48%	97,115	2001

NVIT NVIT Investor Destinations Aggressive Fund: Class II – NQ	11.217984	12.691970	13.14%	0	2010
	8.934928	11.217984	25.55%	127,979	2009
	14.333878	8.934928	-37.67%	105,895	2008
	13.706996	14.333878	4.57%	88,935	2007
	11.882640	13.706996	15.35%	71,502	2006
	11.154028	11.882640	6.53%	23,675	2005
	10.000000	11.154028	11.54%	8,041	2004*

NVIT NVIT Investor Destinations Conservative Fund: Class II – NQ	11.474587	11.992806	4.52%	152,265	2010
	10.657533	11.474587	7.67%	26,698	2009
	11.489938	10.657533	-7.24%	11,637	2008
	11.047610	11.489938	4.00%	9,730	2007
	10.542864	11.047610	4.79%	4,407	2006
	10.339434	10.542864	1.97%	2,999	2005
	10.000000	10.339434	3.39%	30	2004*

NVIT NVIT Investor Destinations Moderate Fund: Class II – NQ	11.437006	12.520363	9.47%	221,981	2010
	9.726441	11.437006	17.59%	136,654	2009
	12.830858	9.726441	-24.19%	118,611	2008
	12.304405	12.830858	4.28%	117,113	2007
	11.195043	12.304405	9.91%	91,582	2006
	10.766688	11.195043	3.98%	81,006	2005
	10.000000	10.766688	7.67%	47,710	2004*

NVIT NVIT Investor Destinations Moderately Aggressive Fund: Class II – NQ	11.445822	12.746997	11.37%	330,958	2010
	9.322569	11.445822	22.78%	190,707	2009
	13.767168	9.322569	-32.28%	176,763	2008
	13.141252	13.767168	4.76%	154,475	2007
	11.623695	13.141252	13.06%	172,773	2006
	10.998532	11.623695	5.68%	83,390	2005
	10.000000	10.998532	9.99%	48,890	2004*

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

NVIT NVIT Investor Destinations Moderately Conservative Fund: Class II – NQ	11.550912	12.371750	7.11%	0	2010
	10.215525	11.550912	13.07%	42,401	2009
	12.182922	10.215525	-16.15%	39,270	2008
	11.660994	12.182922	4.48%	18,241	2007
	10.896378	11.660994	7.02%	13,163	2006
	10.565533	10.896378	3.13%	7,930	2005
	10.000000	10.565533	5.66%	1,048	2004*

NVIT NVIT Multi-Manager International Growth Fund: Class VI - Q/NQ	8.155696	9.161036	12.33%	0	2010
	6.071023	8.155696	34.34%	1,551	2009
	10.000000	6.071023	-39.29%	58	2008*

NVIT Templeton NVIT International Value Fund: Class III – NQ	12.921098	13.562540	4.96%	22,219	2010
	10.000000	12.921098	29.21%	2,858	2009*


Neuberger Berman Genesis Fund: Trust Class – NQ	24.194600	28.985077	19.80%	0	2010
	19.417000	24.194600	24.61%	248,226	2009
	29.298334	19.417000	-33.73%	292,463	2008
	24.372349	29.298334	20.21%	340,984	2007
	23.022028	24.372349	5.87%	406,765	2006
	20.055163	23.022028	14.79%	503,739	2005
	17.121334	20.055163	17.14%	489,521	2004
	13.175921	17.121334	29.94%	391,151	2003
	13.761547	13.175921	-4.26%	366,489	2002
	12.440853	13.761547	10.62%	246,948	2001

Neuberger Berman Guardian Fund: Investor Class – NQ	19.303970	22.770658	17.96%	0	2010
	15.020634	19.303970	28.52%	78,552	2009
	24.631927	15.020634	-39.02%	93,599	2008
	23.192677	24.631927	6.21%	99,765	2007
	20.706712	23.192677	12.01%	123,393	2006
	19.346184	20.706712	7.03%	148,320	2005
	16.888413	19.346184	14.55%	167,915	2004
	12.661621	16.888413	33.38%	193,334	2003
	17.277066	12.661621	-26.71%	241,595	2002
	17.835033	17.277066	-3.13%	291,417	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Neuberger Berman Partners Fund: Investor Class – NQ	30.458601	34.693280	13.90%	269,627	2010
	19.768724	30.458601	54.07%	115,319	2009
	41.715684	19.768724	-52.61%	124,627	2008
	38.391972	41.715684	8.66%	142,633	2007
	34.362750	38.391972	11.73%	174,025	2006
	29.506359	34.362750	16.46%	208,718	2005
	25.076617	29.506359	17.66%	185,415	2004
	18.698477	25.076617	34.11%	201,663	2003
	25.200975	18.698477	-25.80%	209,534	2002
	26.331332	25.200975	-4.29%	247,749	2001

Neuberger Berman Short Duration Bond Fund: Investor Class – NQ	14.165466	14.815507	4.59%	174,545	2010
	12.661390	14.165466	11.88%	51,020	2009
	15.277793	12.661390	-17.13%	59,144	2008
	14.693581	15.277793	3.98%	69,314	2007
	14.289778	14.693581	2.83%	66,777	2006
	14.253528	14.289778	0.25%	72,068	2005
	14.308826	14.232843	-0.53%	90,347	2004
	14.139142	14.308826	1.20%	97,424	2003
	13.629612	14.139142	3.74%	89,370	2002
	12.738631	13.629612	6.99%	87,855	2001

Neuberger Berman Socially Responsive Fund: Trust Class – NQ	11.087395	13.412151	20.97%	0	2010
	8.618537	11.087395	28.65%	15,734	2009
	14.292033	8.618537	-39.70%	15,403	2008
	13.494580	14.292033	5.91%	16,896	2007
	11.970241	13.494580	12.73%	16,472	2006
	11.286514	11.970241	6.06%	10,495	2005
	10.000000	11.286514	12.87%	2,209	2004*

Oppenheimer Global Fund: Class A – NQ	46.469590	53.056989	14.18%	472,552	2010
	33.822234	46.469590	37.39%	99,144	2009
	58.109405	33.822234	-41.80%	112,726	2008
	55.563680	58.109405	4.58%	137,806	2007
	47.958787	55.563680	15.86%	179,886	2006
	42.684257	47.958787	12.36%	235,061	2005
	36.442041	42.684257	17.13%	295,122	2004
	25.805611	36.442041	41.22%	361,814	2003
	33.714330	25.805611	-23.46%	353,717	2002
	38.730878	33.714330	-12.95%	374,899	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Oppenheimer Variable Account Funds – Oppenheimer Global Securities Fund/VA: Class 4 – NQ	12.764029	14.572100	14.17%	299,278	2010
	9.278310	12.764029	37.57%	217,183	2009
	15.758973	9.278310	-41.12%	223,964	2008
	15.055531	15.758973	4.67%	252,968	2007
	12.992657	15.055531	15.88%	283,767	2006
	11.541948	12.992657	12.57%	235,836	2005
	10.000000	11.541948	15.42%	150,174	2004*

Templeton Foreign Fund: Class A – NQ	24.154422	25.867577	7.09%	0	2010
	16.344198	24.154422	47.79%	58,953	2009
	30.717251	16.344198	-46.79%	78,668	2008
	26.546102	30.717251	15.71%	98,529	2007
	22.425179	26.546102	18.38%	129,308	2006
	20.536047	22.425179	9.20%	186,854	2005
	17.611532	20.536047	16.61%	231,234	2004
	13.671456	17.611532	28.82%	290,467	2003
	15.162264	13.671456	-9.83%	289,598	2002
	16.685027	15.162264	-9.13%	315,340	2001

The Dreyfus Third Century Fund, Inc.: Class Z – NQ	19.347463	21.863890	13.01%	0	2010
	14.705790	19.347463	31.56%	26,615	2009
	22.678149	14.705790	-35.15%	28,727	2008
	21.364058	22.678149	6.15%	32,090	2007
	19.856213	21.364058	7.59%	35,337	2006
	19.443020	19.856213	2.13%	42,784	2005
	18.596846	19.443020	4.55%	48,888	2004
	14.968630	18.596846	24.24%	54,525	2003
	21.473521	14.968630	-30.29%	59,417	2002
	28.523380	21.473521	-24.72%	70,673	2001

Virtus Balanced Fund: Class A – NQ	20.200179	22.294929	10.37%	55,447	2010
	16.588127	20.200179	21.77%	33,587	2009
	22.663423	16.588127	-26.81%	32,818	2008
	21.689141	22.663423	4.49%	40,077	2007
	19.491747	21.689141	11.27%	43,232	2006
	19.460657	19.491747	0.16%	57,925	2005
	18.398365	19.460657	5.77%	58,000	2004
	15.717371	18.398365	17.06%	53,906	2003
	18.006514	15.717371	-12.71%	48,209	2002
	17.900599	18.006514	0.59%	48,287	2001

Sub-Account	Accumulation Unit Value at Beginning of Period	Accumulation Unit Value at End of Period	Percent Change in Accumulation Unit Value	Number of Accumulation Units at End of the Period	Period

Wells Fargo Advantage Funds - Wells Fargo Advantage Classic Value Fund: Administrative Class - NQ	22.838980	25.647974	12.30%	110,830	2010
	18.317345	22.838980	24.68%	30,885	2009
	28.456655	18.317345	-35.63%	32,482	2008
	27.994979	28.456655	1.65%	33,367	2007
	24.230616	27.994979	15.54%	35,469	2006
	23.641567	24.230616	2.49%	44,805	2005
	21.686551	23.641567	9.01%	46,314	2004
	16.713543	21.686551	29.75%	39,991	2003
	19.323871	16.713543	-13.51%	35,669	2002
	20.691982	19.323871	-6.61%	37,440	2001

Wells Fargo Advantage Funds - Wells Fargo Advantage Common Stock Fund: Investor Class – NQ	19.768091	24.368741	23.27%	0	2010
	14.176017	19.768091	39.45%	86,055	2009
	22.071262	14.176017	-35.77%	98,905	2008
	20.341056	22.071262	8.51%	119,251	2007
	17.871679	20.341056	13.82%	131,761	2006
	16.165231	17.871679	10.56%	149,433	2005
	14.894822	16.165231	8.53%	167,705	2004
	10.880293	14.894822	36.90%	172,532	2003
	13.653826	10.880293	-20.31%	178,942	2002
	14.074339	13.653826	-2.99%	152,176	2001

Wells Fargo Advantage Funds - Wells Fargo Advantage Large Cap Growth Fund: Investor Class – NQ	23.192832	26.728194	15.24%	0	2010
	17.218890	23.192832	34.69%	63,733	2009
	28.518338	17.218890	-39.62%	61,544	2008
	24.462177	28.518338	16.58%	67,346	2007
	23.859871	24.462177	2.52%	78,113	2006
	22.409845	23.859871	6.47%	86,404	2005
	20.898525	22.409845	7.23%	89,846	2004
	16.694016	20.898525	25.19%	104,342	2003
	24.126803	16.694016	-30.81%	109,741	2002
	36.094318	24.126803	-33.16%	139,555	2001

Appendix C: Contract Types and Tax Information

Types of Contracts

The contracts described in this prospectus are classified according to the tax treatment to which they are subject under the Code (the "Code"). Following is a general description of the various contract types. Eligibility requirements, tax benefits (if any), limitations, and other features of the contracts will differ depending on contract type.

Charitable Remainder Trusts

Charitable Remainder Trusts are trusts that meet the requirements of Section 664 of the Code. Non-Qualified Contracts that are issued to Charitable Remainder Trusts will differ from other Non-Qualified Contracts in three respects:

(1)	Waiver of sales charges. In addition to any sales load waivers included in the contract, Charitable Remainder Trusts may also withdraw the difference between:

(a)	the contract value on the day before the withdrawal; and

(b)	the total amount of purchase payments made to the contract (less an adjustment for amounts surrendered).

(2)	Contract ownership at annuitization. On the annuitization date, if the contract owner is a Charitable Remainder Trust, the Charitable Remainder Trust will continue to be the contract owner and the annuitant will NOT become the contract owner.

(3)

Recipient of death benefit proceeds. With respect to the death benefit proceeds, if the contract owner is a Charitable Remainder Trust, the death benefit is payable to the Charitable Remainder Trust. Any designation in conflict with the Charitable Remainder Trust’s right to the death benefit will be void.

While these provisions are intended to facilitate a Charitable Remainder Trust's ownership of this contract, the rules governing Charitable Remainder Trusts are numerous and complex. A Charitable Remainder Trust that is considering purchasing this contract should seek the advice of a qualified tax and/or financial advisor prior to purchasing the contract. An annuity that has a Charitable Remainder Trust endorsement is not a charitable remainder trust; the endorsement is merely to facilitate ownership of the contract by a Charitable Remainder Trust.

Investment Only (Qualified Plans)

Contracts that are owned by Qualified Plans are not intended to confer tax benefits on the beneficiaries of the plan; they are used as investment vehicles for the plan. The income tax consequences to the beneficiary of a Qualified Plan are controlled by the operation of the plan, not by operation of the assets in which the plan invests.

Beneficiaries of Qualified Plans should contact their employer and/or trustee of the plan to obtain and review the plan, trust,

summary plan description, and other documents for the tax and other consequences of being a participant in a Qualified Plan.

Individual Retirement Annuities (IRAs)

IRAs are contracts that satisfy the provisions of Section 408(b) of the Code, including the following requirements:

·	the contract is not transferable by the owner;

·	the premiums are not fixed;

·	if the contract owner is younger than age 50, the annual premium cannot exceed $5,000; if the contract owner is age 50 or older, the annual premium cannot exceed $6,000 (although rollovers of greater amounts from Qualified Plans, Tax Sheltered Annuities and other IRAs can be received);

·	certain minimum distribution requirements must be satisfied after the owner attains the age of 70½;

·	the entire interest of the owner in the contract is nonforfeitable; and

·	after the death of the owner, additional distribution requirements may be imposed to ensure distribution of the entire balance in the contract within the statutory period of time.

Depending on the circumstance of the owner, all or a portion of the contributions made to the account may be deducted for federal income tax purposes.

IRAs may receive rollover contributions from other Individual Retirement Accounts, other Individual Retirement Annuities, Tax Sheltered Annuities, certain 457 governmental plans and qualified retirement plans (including 401(k) plans).

When the owner of an IRA attains the age of 70½, the Code requires that certain minimum distributions be made. In addition, upon the death of the owner of an IRA, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period. Due to recent changes in Treasury Regulations, the amount used to compute the mandatory distributions may exceed the contract value.

Failure to make the mandatory distributions can result in an additional penalty tax of 50% of the excess of the amount required to be distributed over the amount that was actually distributed.

For further details regarding IRAs, please refer to the disclosure statement provided when the IRA was established and the annuity contract’s IRA endorsement.

As used herein, the term "individual retirement plans" shall refer to both individual retirement annuities and individual retirement accounts that are described in Section 408 of the Code.

Non-Qualified Contracts

A Non-Qualified Contract is a contract that does not qualify for certain tax benefits under the Code, and which is not an IRA, a Roth IRA, a SEP IRA, a Simple IRA, or a Tax Sheltered Annuity.

Upon the death of the owner of a Non-Qualified Contract, mandatory distribution requirements are imposed to ensure distribution of the entire balance in the contract within a required period.

Non-Qualified contracts that are owned by natural persons allow the deferral of taxation on the income earned in the contract until it is distributed or deemed to be distributed. Non-Qualified contracts that are owned by nonnatural persons, such as trusts, corporations and partnerships are generally subject to current income tax on the income earned inside the contract, unless the nonnatural person owns the contract as an "agent" of a natural person.

Roth IRAs

Roth IRA contracts are contracts that satisfy the provisions of Section 408A of the Code, including the following requirements:

·	the contract is not transferable by the owner;

·	the premiums are not fixed;

·	if the contract owner is younger than age 50, the annual premium cannot exceed $5,000; if the contract owner is age 50 or older, the annual premium cannot exceed $6,000 (although rollovers of greater amounts from other Roth IRAs and other individual retirement plans can be received);

·	the entire interest of the owner in the contract is nonforfeitable; and

·	after the death of the owner, certain distribution requirements may be imposed to ensure distribution of the entire balance in the contract within the statutory period of time.

A Roth IRA can receive a rollover from an individual retirement plan or another eligible retirement plan; however, the amount rolled over from the individual retirement plan or another eligible retirement plan to the Roth IRA is required to be included in the owner's federal gross income at the time of the rollover, and will be subject to federal income tax.

There are income limitations on eligibility to participate in a Roth IRA and additional income limitations for eligibility to roll over amounts from an individual retirement plan or other eligible retirement plan to a Roth IRA.

For further details regarding Roth IRAs, please refer to the disclosure statement provided when the Roth IRA was established and the annuity contract’s IRA endorsement.

Simplified Employee Pension IRAs (SEP IRA)

A SEP IRA is a written plan established by an employer for the benefit of employees which permits the employer to make contributions to an IRA established for the benefit of each employee.

An employee may make deductible contributions to a SEP IRA subject to the same restrictions and limitations as an IRA. In addition, the employer may make contributions to the SEP IRA, subject to dollar and percentage limitations imposed by both the Code and the written plan.

A SEP IRA plan must satisfy:

·	minimum participation rules;

·	top-heavy contribution rules;

·	nondiscriminatory allocation rules; and

·	requirements regarding a written allocation formula.

In addition, the plan cannot restrict withdrawals of non-elective contributions, and must restrict withdrawals of elective contributions before March 15th of the following year.

When the owner of a SEP IRA attains the age of 70½, the Code requires that certain minimum distributions be made. Due to recent changes in Treasury Regulations, the amount used to compute the minimum distributions may exceed the contract value. In addition, upon the death of the owner of a SEP IRA, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period.

Simple IRAs

A Simple IRA is an individual retirement annuity that is funded exclusively by a qualified salary reduction arrangement and satisfies:

·	vesting requirements;

·	participation requirements; and

·	administrative requirements.

The funds contributed to a Simple IRA cannot be commingled with funds in other individual retirement plans or SEP IRAs.

A Simple IRA cannot receive rollover distributions except from another Simple IRA.

When the owner of Simple IRA attains the age of 70½, the Code requires that certain minimum distributions be made. Due to recent changes in Treasury Regulations, the amount used to compute the minimum distributions may exceed the contract value.

In addition, upon the death of the owner of a Simple IRA, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period.

Tax Sheltered Annuities

Certain tax-exempt organizations (described in section 501(c)(3) of the Code) and public school systems may establish a plan under which annuity contracts can be purchased for their employees. These annuity contracts are often referred to as Tax Sheltered Annuities.

Purchase payments made to Tax Sheltered Annuities are excludable from the income of the employee, up to statutory maximum amounts. These amounts should be set forth in the plan adopted by the employer.

Tax Sheltered Annuities may receive rollover contributions from Individual Retirement Accounts, Individual Retirement Annuities, other Tax Sheltered Annuities, certain 457 governmental plans, and qualified retirement plans (including 401(k) plans).

The owner's interest in the contract is nonforfeitable (except for failure to pay premiums) and cannot be transferred.

When the owner of a Tax Sheltered Annuity attains the age of 70½, the Code requires that certain minimum distributions be made. Due to recent changes in Treasury Regulations, the amount used to compute the minimum distributions may exceed the contract value. In addition, upon the death of the owner of a Tax Sheltered Annuity, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period.

Final 403(b) Regulations issued by the Internal Revenue Service impose certain restrictions on non-taxable transfers or exchanges of one 403(b) Tax Sheltered Annuity contract for another. Nationwide will no longer issue or accept applications for new and/or in-service transfers to new or existing Nationwide individual 403(b) Tax Sheltered Annuity contracts used for salary reduction plans not subject to ERISA. Nationwide will continue to accept applications and in-service transfers for individual 403(b) Tax Sheltered Annuity contracts used for 403(b) plans that are subject to ERISA and certain state Optional Retirement Plans and/or Programs that have purchased at least one individual annuity contract issued by Nationwide prior to September 25, 2007.

Commencing in 2009, Tax Sheltered Annuities must be issued pursuant to a written plan, and the plan must satisfy various administrative requirements. You should check with your employer to ensure that these requirements will be satisfied in a timely manner.

Federal Tax Considerations

Federal Income Taxes

The tax consequences of purchasing a contract described in this prospectus will depend on:

·	the type of contract purchased;

·	the purposes for which the contract is purchased; and

·	the personal circumstances of individual investors having interests in the contracts.

Existing tax rules are subject to change, and may affect individuals differently depending on their situation. Nationwide does not guarantee the tax status of any contracts or any transactions involving the contracts.

Representatives of the Internal Revenue Service have informally suggested, from time to time, that the number of underlying mutual funds available or the number of transfer opportunities available under a variable product may be relevant in determining whether the product qualifies for the desired tax treatment. In 2003, the Internal Revenue Service issued formal guidance, in Revenue Ruling 2003-91, that indicates that if the number of underlying mutual funds available in a variable insurance product does not exceed 20, the number of underlying mutual funds alone would not cause the contract to not qualify for the desired tax treatment. The Internal Revenue Service 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 contract, when determining whether the contract qualifies for the desired tax treatment. The revenue ruling did not indicate the actual number of underlying mutual funds that would cause the contract to not provide the desired tax treatment. Should the U.S. Secretary of the Treasury issue additional rules or regulations limiting the number of underlying mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds such that the contract would no longer qualify for tax deferred treatment under Section 72 of the Code, Nationwide will take whatever steps are available to remain in compliance.

If the contract is purchased as an investment of certain retirement plans (such as qualified retirement plans, Individual Retirement Accounts, and custodial accounts as described in Sections 401 and 408(a), of the Code), tax advantages enjoyed by the contract owner and/or annuitant may relate to participation in the plan rather than ownership of the annuity contract. Such plans are permitted to purchase investments other than annuities and retain tax-deferred status.

The following is a brief summary of some of the federal income tax considerations related to the types of contracts sold in connection with this prospectus. In addition to the federal income tax, distributions from annuity contracts may be subject to state and local income taxes. The tax rules across all states and localities are not uniform and therefore will not be discussed in this prospectus. Tax rules that may apply to contracts issued in U.S. territories such as Puerto Rico and Guam are also not discussed. Nothing in this prospectus should be considered to be tax advice. Purchasers and prospective purchasers of the contract should consult a financial consultant, tax advisor or legal counsel to discuss the taxation and use of the contracts.

IRAs, SEP IRAs and Simple IRAs

Distributions from IRAs, SEP IRAs and Simple IRAs are generally taxed as ordinary income when received. If any of the amounts contributed to the Individual Retirement Annuity were nondeductible for federal income tax purposes, then a portion of each distribution is excludable from income.

If distributions of income from an IRA are made prior to the date that the owner attains the age of 59½ years, the income is subject to the regular income tax, and an additional penalty tax of 10% is generally applicable. (For Simple IRAs, the 10% penalty is increased to 25% if the distribution is made during the 2-year period beginning on the date that the individual first participated in the Simple IRA.) The 10% penalty tax can be avoided if the distribution is:

·	made to a beneficiary on or after the death of the owner;

·	attributable to the owner becoming disabled (as defined in the Code);

·	part of a series of substantially equal periodic payments made not less frequently than annually made for the life (or life expectancy) of the owner, or the joint lives (or

joint life expectancies) of the owner and his or her designated beneficiary;

·	used for qualified higher education expenses; or

·	used for expenses attributable to the purchase of a home for a qualified first-time buyer.

If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.

Roth IRAs

Distributions of earnings from Roth IRAs are taxable or nontaxable depending upon whether they are "qualified distributions" or "non-qualified distributions." A "qualified distribution" is one that satisfies the 5-year rule and meets one of the following requirements:

·	it is made on or after the date on which the contract owner attains age 59½;

·	it is made to a beneficiary (or the contract owner’s estate) on or after the death of the contract owner;

·	it is attributable to the contract owner’s disability; or

·	it is used for expenses attributable to the purchase of a home for a qualified first-time buyer.

The 5-year rule generally is satisfied if the distribution is not made within the 5-year period beginning with the first taxable year in which a contribution is made to any Roth IRA established for the owner.

A qualified distribution is not included in gross income for federal income tax purposes.

A non-qualified distribution is not includable in gross income to the extent that the distribution, when added to all previous distributions, does not exceed the total amount of contributions made to the Roth IRA. Any non-qualified distribution in excess of total contributions is includable in the contract owner’s gross income as ordinary income in the year that it is distributed to the contract owner.

Special rules apply for Roth IRAs that have proceeds received from an individual retirement plan prior to January 1, 1999 if the owner elected the special 4-year income averaging provisions that were in effect for 1998.

If non-qualified distributions of income from a Roth IRA are made prior to the date that the owner attains the age of 59½ years, the income is subject to both the regular income tax and an additional penalty tax of 10%. The penalty tax can be avoided if the distribution is:

·	made to a beneficiary on or after the death of the owner;

·	attributable to the owner becoming disabled (as defined in the Code);

·	part of a series of substantially equal periodic payments made not less frequently than annually made for the life (or life expectancy) of the owner, or the joint lives (or joint life expectancies) of the owner and his or her designated beneficiary;

·	for qualified higher education expenses; or

·	used for expenses attributable to the purchase of a home for a qualified first-time buyer.

If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.

Tax Sheltered Annuities

Distributions from Tax Sheltered Annuities are generally taxed when received. A portion of each distribution after the annuitization date is excludable from income based on a formula established pursuant to the Code. The formula excludes from income the amount invested in the contract divided by the number of anticipated payments until the full investment in the contract is recovered. Thereafter, all distributions are fully taxable.

If a distribution of income is made from a Tax Sheltered Annuity prior to the date that the owner attains the age of 59½ years, the income is subject to both the regular income tax and an additional penalty tax of 10%. The penalty tax can be avoided if the distribution is:

·	made to a beneficiary on or after the death of the owner;

·	attributable to the owner becoming disabled (as defined in the Code);

·	part of a series of substantially equal periodic payments made not less frequently than annually made for the life (or life expectancy) of the owner, or the joint lives (or joint life expectancies) of the owner and his or her designated beneficiary; or

·	made to the owner after separation from service with his or her employer after age 55.

A loan from a Tax Sheltered Annuity generally is not considered to be a distribution, and is therefore generally not taxable. However, if the loan is not repaid in accordance with the repayment schedule, the entire balance of the loan would be treated as being in default, and the defaulted amount would be treated as being distributed to the participant as a taxable distribution.

If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.

Non-Qualified Contracts - Natural Persons as Contract Owners

Generally, the income earned inside a non-qualified annuity contract that is owned by a natural person is not taxable until it is distributed from the contract.

Distributions before the annuitization date are taxable to the contract owner to the extent that the cash value of the contract exceeds the contract owner’s investment in the contract at the time of the distribution. In general, the investment in the contract is equal to the purchase payments made with after-tax dollars. Distributions, for this purpose, include full and partial surrenders, any portion of the contract that is assigned or pledged, amounts borrowed from the contract, or any portion of the contract that is transferred by gift. For these purposes, a transfer by gift may occur upon annuitization if the contract owner and the annuitant are not the same individual.

With respect to annuity distributions on or after the annuitization date, a portion of each annuity payment is excludable from taxable income. The amount excludable from each annuity payment is determined by multiplying the annuity payment by a fraction which is equal to the contract owner’s investment in the contract, divided by the expected return on the contract. Once the entire investment in the contract is recovered, all distributions are fully includable in income. The maximum amount excludable from income is the investment in the contract. If the annuitant dies before the entire investment in the contract has been excluded from income, and as a result of the annuitant's death no more payments are due under the contract, then the unrecovered investment in the contract may be deducted on his or her final tax return.

In determining the taxable amount of a distribution, all annuity contracts issued after October 21, 1988 by the same company to the same contract owner during the same calendar year will be treated as one annuity contract.

A special rule applies to distributions from contracts that have investments that were made prior to August 14, 1982. For those contracts, distributions that are made prior to the annuitization date are treated first as a recovery of the investment in the contract as of that date. A distribution in excess of the amount of the investment in the contract as of August 14, 1982, will be treated as taxable income.

The Code imposes a penalty tax if a distribution is made before the contract owner reaches age 59½. The amount of the penalty is 10% of the portion of any distribution that is includable in gross income. The penalty tax does not apply if the distribution is:

·	the result of a contract owner’s death;

·	the result of a contract owner’s disability (as defined in the Code);

one of a series of substantially equal periodic payments made over the life (or life expectancy) of the contract owner or the joint lives (or joint life expectancies) of the contract owner and the beneficiary selected by the contract owner to receive payment under the annuity payment option selected by the contract owner; or

·	is allocable to an investment in the contract before August 14, 1982.

If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.

Non-Qualified Contracts - Non-Natural Persons as Contract Owners

The previous discussion related to the taxation of non-qualified contracts owned by individuals. Different rules (the so-called "non-natural persons" rules) apply if the contract owner is not a natural person.

Generally, contracts owned by corporations, partnerships, trusts, and similar entities are not treated as annuity contracts under the Code. Therefore, income earned under a non-qualified contract that is owned by a non-natural person is taxed as ordinary income during the taxable year that it is earned. Taxation is not deferred, even if the income is not distributed out of the contract. The income is taxable as ordinary income, not capital gain.

The non-natural persons rules do not apply to all entity-owned contracts. For purposes of the non-natural persons rule, a contract that is owned by a non-natural person as an agent of an individual is treated as owned by the individual. This would cause the contract to be treated as an annuity under the Code, allowing tax deferral. However, this exception does not apply when the non-natural person is an employer that holds the contract under a non-qualified deferred compensation arrangement for one or more employees.

The non-natural persons rules also do not apply to contracts that are:

·	acquired by the estate of a decedent by reason of the death of the decedent;

·	issued in connection with certain qualified retirement plans and individual retirement plans;

·	purchased by an employer upon the termination of certain qualified retirement plans; or

·	immediate annuities within the meaning of Section 72(u) of the Code.

If the annuitant dies before the contract is completely distributed, the balance may be included in the annuitant’s gross estate for tax purposes, depending on the obligations that the non-natural owner may have owed to the annuitant.

Exchanges

As a general rule, federal income tax law treats exchanges of property in the same manner as a sale of the property. However, pursuant to Section 1035 of the Code, an annuity contract may be exchanged tax-free for another annuity, provided that the obligee (the person to whom the annuity obligation is owed) is the same for both contracts. If the exchange includes the receipt of property in addition to another annuity contract, such as cash, special rules may cause a portion of the transaction to be taxable.

Tax Treatment of a Partial 1035 Exchange With Subsequent Withdrawal

In March 2008, the IRS issued Rev. Proc. 2008-24, which addresses the income tax consequences of the direct transfer of a portion of the cash value of an annuity contract in exchange for the issuance of a second annuity contract. A direct transfer that satisfies the revenue procedure will be treated as a tax-free exchange under Section 1035 of the Code if, for a period of at least 12 months from the date of the direct transfer, there are no distributions or surrenders from either annuity contract involved in the exchange. In addition, the tax-free status of the exchange may still be preserved despite a distribution or surrender from either contract if the contract owner can show that between the date of the direct transfer and the distribution or surrender, 1 of the conditions described under Section 72(q)(2) of the Code that would exempt the distribution from the 10% early distribution penalty (such as turning age 59½, or becoming disabled; but not a series of substantially equal periodic payments or an immediate annuity) or "other similar

life event" such as divorce or loss of employment occurred. Absent a showing of such an occurrence, Rev. Proc. 2008-24 concludes that the direct transfer would fail to qualify as a tax-free 1035 exchange, and the full amount transferred from the original contract would be treated as a taxable distribution, followed by the purchase of a new annuity contract. Rev. Proc. 2008-24 applies to direct transfers completed on or after June 30, 2008. Please discuss any tax consequences concerning any contemplated or completed transactions with a professional tax advisor.

Same-Sex Marriages, Domestic Partnership and Other Similar Relationships

Pursuant to Section 3 of the federal Defense of Marriage Act ("DOMA"), same-sex marriages currently are not recognized for purposes of federal law. Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Code Sections 72(s) and 401(a)(9) are currently NOT available to a same-sex spouse. Same-sex spouses who own or are considering the purchase of annuity products that provide benefits based upon status as a spouse should consult a tax advisor. To the extent that an annuity contract or certificate accords to spouses other rights or benefits that are not affected by DOMA, same-sex spouses remain entitled to such rights or benefits to the same extent as any annuity holder’s spouse.

Withholding

Pre-death distributions from the contracts are subject to federal income tax. Nationwide will withhold the tax from the distributions unless the contract owner requests otherwise. If the distribution is from a Tax Sheltered Annuity, it will be subject to mandatory 20% withholding that cannot be waived, unless:

the distribution is made directly to another Tax Sheltered Annuity, qualified pension or profit-sharing plan described in Section 401(a), an eligible deferred compensation plan described in Section 457(b) which is maintained by an eligible employer described in section 457(e)(1)(A) or individual retirement plans; or

·	the distribution satisfies the minimum distribution requirements imposed by the Code.

In addition, under some circumstances, the Code will not permit contract owners to waive withholding. Such circumstances include:

·	if the payee does not provide Nationwide with a taxpayer identification number; or

·	if Nationwide receives notice from the Internal Revenue Service that the taxpayer identification number furnished by the payee is incorrect.

If a contract owner is prohibited from waiving withholding, as described above, the distribution will be subject to mandatory back-up withholding. The mandatory back-up withholding rate is established by Section 3406 of the Code and is applied against the amount of income that is distributed.

Non-Resident Aliens

Generally, a pre-death distribution from a contract to a non-resident alien is subject to federal income tax at a rate of 30% of the amount of income that is distributed.

Nationwide is required to withhold this amount and send it to the Internal Revenue Service. Some distributions to non-resident aliens may be subject to a lower (or no) tax if a treaty applies. In order to obtain the benefits of such a treaty, the non-resident alien must:

(1)	provide Nationwide with a properly completed withholding certificate claiming the treaty benefit of a lower tax rate or exemption from tax; and

(2)	provide Nationwide with an individual taxpayer identification number.

If the non-resident alien does not meet the above conditions, Nationwide will withhold 30% of income from the distribution.

Another exemption from the 30% withholding rate is for the non-resident alien to provide Nationwide with sufficient evidence that:

1)	the distribution is connected to the non-resident alien’s conduct of business in the United States;

2)	the distribution is includable in the non-resident alien’s gross income for United States federal income tax purposes; and

3)	provide Nationwide with a properly completed withholding certificate claiming the exemption.

Note that for the preceding exemption, the distributions would be subject to the same withholding rules that are applicable to payments to United States persons, including back-up withholding, which is currently at a rate of 28%, if a correct taxpayer identification number is not provided.

This prospectus does not address any tax matters that may arise by reason of application of the laws of a non-resident alien’s country of citizenship and/or country of residence. Purchasers and prospective purchasers should consult a financial consultant, tax advisor or legal counsel to discuss the applicability of laws of those jurisdictions to the purchase or ownership of a contract.

Federal Estate, Gift and Generation Skipping Transfer Taxes

The following transfers may be considered a gift for federal gift tax purposes:

·	a transfer of the contract from one contract owner to another; or

·	a distribution to someone other than a contract owner.

Upon the contract owner’s death, the value of the contract may be subject to estate taxes, even if all or a portion of the value is also subject to federal income taxes.

Section 2612 of the Code may require Nationwide to determine whether a death benefit or other distribution is a

"direct skip" and the amount of the resulting generation skipping transfer tax, if any. A direct skip is when property is transferred to, or a death benefit or other distribution is made to:

a)	an individual who is 2 or more generations younger than the contract owner; or

b)	certain trusts, as described in Section 2613 of the Code (generally, trusts that have no beneficiaries who are not 2 or more generations younger than the contract owner).

If the contract owner is not an individual, then for this purpose only, "contract owner" refers to any person:

·	who would be required to include the contract, death benefit, distribution, or other payment in his or her federal gross estate at his or her death; or

·	who is required to report the transfer of the contract, death benefit, distribution, or other payment for federal gift tax purposes.

If a transfer is a direct skip, Nationwide may be required to deduct the amount of the transfer tax from the death benefit, distribution or other payment, and remit it directly to the Internal Revenue Service.

Charge for Tax

Nationwide is not required to maintain a capital gain reserve liability on non-qualified contracts. If tax laws change requiring a reserve, Nationwide may implement and adjust a tax charge.

Diversification

Code Section 817(h) contains rules on diversification requirements for variable annuity contracts. A variable annuity contract that does not meet these diversification requirements will not be treated as an annuity, unless:

·	the failure to diversify was accidental;

·	the failure is corrected; and

·	a fine is paid to the Internal Revenue Service.

The amount of the fine will be the amount of tax that would have been paid by the contract owner if the income, for the period the contract was not diversified, had been received by the contract owner.

If the violation is not corrected, the contract owner will be considered the owner of the underlying securities and will be taxed on the earnings of his or her contract. Nationwide believes that the investments underlying this contract meet these diversification requirements.

Required Distributions

The Code requires that certain distributions be made from the contracts issued in conjunction with this prospectus. Following is an overview of the required distribution rules applicable to each type of contract. Please consult a qualified tax or financial advisor for more specific required distribution information.

Required Distributions – General Information

In general, a beneficiary is an individual or other entity that the contract owner designates to receive death proceeds upon the contract owner’s death. The distribution rules in the Code make a distinction between "beneficiary" and "designated beneficiary" when determining the life expectancy that may be used for payments that are made from IRAs, SEP IRAs, Simple IRAs, Roth IRAs and Tax Sheltered Annuities after the death of the annuitant, or that are made from non-qualified contracts after the death of the contract owner. A designated beneficiary is a natural person who is designated by the contract owner as the beneficiary under the contract. Non-natural beneficiaries (e.g. charities or certain trusts) are not designated beneficiaries for the purpose of required distributions and the life expectancy of such a beneficiary is 0.

Life expectancies and joint life expectancies will be determined in accordance with the relevant guidance provided by the Internal Revenue Service and the Treasury Department, including but not limited to Treasury Regulation 1.72-9 and Treasury Regulation 1.401(a)(9)-9.

Required distributions paid upon the death of the contract owner are paid to the beneficiary or beneficiaries stipulated by the contract owner. How quickly the distributions must be made may be determined with respect to the life expectancies of the beneficiaries. For non-qualified contracts, the beneficiaries used in the determination of the distribution period are those in effect on the date of the contract owner’s death. For contracts other than non-qualified contracts, the beneficiaries used in the determination of the distribution period do not have to be determined until September 30 of the year following the contract owner’s death. If there is more than one beneficiary, the life expectancy of the beneficiary with the shortest life expectancy is used to determine the distribution period. Any beneficiary that is not a designated beneficiary has a life expectancy of 0.

Required Distributions for Non-Qualified Contracts

Code Section 72(s) requires Nationwide to make certain distributions when a contract owner dies. The following distributions will be made in accordance with the following requirements:

(1)	If any contract owner dies on or after the annuitization date and before the entire interest in the contract has been distributed, then the remaining interest must be distributed at least as rapidly as the distribution method in effect on the contract owner's death.

(2)

If any contract owner dies before the annuitization date, then the entire interest in the contract (consisting of either the death benefit or the Contract Value reduced by charges set forth elsewhere in the contract) will be distributed within 5 years of the contract owner’s death, provided however:

(a)	any interest payable to or for the benefit of a designated beneficiary may be distributed over the life of the designated beneficiary or over a period not longer than the life expectancy of the designated

beneficiary. Payments must begin within one year of the contract owner's death unless otherwise permitted by federal income tax regulations; and

(b)	if the designated beneficiary is the surviving spouse of the deceased contract owner, the spouse can choose to become the contract owner instead of receiving a death benefit. Any distributions required under these distribution rules will be made upon that spouse’s death.

In the event that the contract owner is not a natural person (e.g., a trust or corporation), for purposes of these distribution provisions:

(a)	the death of the annuitant will be treated as the death of a contract owner;

(b)	any change of annuitant will be treated as the death of a contract owner; and

(c)	in either case, the appropriate distribution will be made upon the death or change, as the case may be.

These distribution provisions do not apply to any contract exempt from Section 72(s) of the Code by reason of Section 72(s)(5) or any other law or rule.

Required Distributions for Tax Sheltered Annuities, IRAs, SEP IRAs, Simple IRAs and Roth IRAs

Distributions from a Tax Sheltered Annuity, IRA, SEP IRA or Simple IRA must begin no later than April 1 of the calendar year following the calendar year in which the contract owner reaches age 70½. Distributions may be paid in a lump sum or in substantially equal payments over:

(a)	the life of the contract owner or the joint lives of the contract owner and the contract owner’s designated beneficiary; or

(b)

a period not longer than the period determined under the table in Treasury Regulation 1.401(a)(9)-9, which is the deemed joint life expectancy of the contract owner and a person 10 years younger than the contract owner. If the designated beneficiary is the spouse of the contract owner, the period may not exceed the longer of the period determined under such table or the joint life expectancy of the contract owner and the contract owner’s spouse, determined in accordance with Treasury Regulation 1.72-9, or such additional guidance as may be provided pursuant to Treasury Regulation 1.401(a)(9)-9.

For Tax Sheltered Annuities, required distributions do not have to be withdrawn from this contract if they are being withdrawn from another Tax Sheltered Annuity of the contract owner.

For IRAs, SEP IRAs and Simple IRAs, required distributions do not have to be withdrawn from this contract if they are being withdrawn from another IRA, SEP IRA or Simple IRA of the contract owner.

If the contract owner’s entire interest in a Tax Sheltered Annuity, IRA, SEP IRA or Simple IRA will be distributed in equal or substantially equal payments over a period described in (a) or (b) above, the payments must begin on or before the required beginning date. The required beginning date is April 1 of the calendar year following the calendar year in which the contract owner reaches age 70½. The rules for Roth IRAs do not require distributions to begin during the contract owner’s lifetime, therefore, the required beginning date is not applicable to Roth IRAs.

Due to recent changes in Treasury Regulations, the amount used to compute the minimum distribution requirement may exceed the contract value.

If the contract owner dies before the required beginning date (in the case of a Tax Sheltered Annuity, IRA, SEP IRA or Simple IRA) or before the entire contract value is distributed (in the case of a Roth IRA), any remaining interest in the contract must be distributed over a period not exceeding the applicable distribution period, which is determined as follows:

(a)

if the designated beneficiary is the contract owner’s spouse, the applicable distribution period is the surviving spouse’s remaining life expectancy using the surviving spouse’s birthday for each distribution calendar year after the calendar year of the contract owner’s death. For calendar years after the death of the contract owner’s surviving spouse, the applicable distribution period is the spouse's remaining life expectancy using the spouse’s age in the calendar year of the spouse’s death, reduced by 1 for each calendar year that elapsed since the calendar year immediately following the calendar year of the spouse’s death;

(b)

if the designated beneficiary is not the contract owner’s surviving spouse, the applicable distribution period is the designated beneficiary’s remaining life expectancy using the designated beneficiary’s birthday in the calendar year immediately following the calendar year of the contract owner’s death, reduced by 1 for each calendar year that elapsed thereafter; and

(c)	if there is no designated beneficiary, the entire balance of the contract must be distributed by December 31 of the 5th year following the contract owner’s death.

If the contract owner dies on or after the required beginning date, the interest in the Tax Sheltered Annuity, IRA, SEP IRA, or Simple IRA must be distributed over a period not exceeding the applicable distribution period, which is determined as follows:

(a)

if the designated beneficiary is the contract owner’s spouse, the applicable distribution period is the surviving spouse’s remaining life expectancy using the surviving spouse’s birthday for each distribution calendar year after the calendar year of the contract owner’s death. For calendar years after the death of the contract owner’s surviving spouse, the applicable distribution period is the greater of (a) the contract owner’s remaining life expectancy using the contract owner’s birthday in the calendar year of the contract owner’s death, reduced by 1 for each year thereafter; or (b) the spouse’s remaining life expectancy using the spouse’s age in the calendar year of the spouse’s death, reduced by 1 for each calendar year that elapsed since the calendar year immediately following the calendar year of the spouse’s death;

(b)

if the designated beneficiary is not the contract owner’s surviving spouse, the applicable distribution period is the greater of (a) the contract owner’s remaining life expectancy using the contract owner’s birthday in the calendar year of the contract owner’s death, reduced by 1 for each year thereafter; or (b) the designated beneficiary’s remaining life expectancy using the designated beneficiary’s birthday in the calendar year immediately following the calendar year of the contract owner’s death, reduced by 1 for each calendar year that elapsed thereafter; and

(c)	if there is no designated beneficiary, the applicable distribution period is the contract owner’s remaining life expectancy using the contract owner’s birthday in the calendar year of the contract owner’s death, reduced by 1 for each year thereafter.

If distribution requirements are not met, a penalty tax of 50% is levied on the difference between the amount that should have been distributed for that year and the amount that actually was distributed for that year.

For IRAs, SEP IRAs and Simple IRAs, all or a portion of each distribution will be included in the recipient’s gross income and taxed at ordinary income tax rates. The portion of a distribution that is taxable is based on the ratio between the amount by which non-deductible purchase payments exceed prior non-taxable distributions and total account balances at the time of the distribution. The owner of an IRA, SEP IRA or Simple IRA must annually report the amount of non-deductible purchase payments, the amount of any distribution, the amount by which non-deductible purchase payments for all years exceed non-taxable distributions for all years, and the total balance of all IRAs, SEP IRAs or Simple IRAs.

Distributions from Roth IRAs may be either taxable or nontaxable, depending upon whether they are "qualified distributions" or "non-qualified distributions."

Tax Changes

The foregoing tax information is based on Nationwide’s understanding of federal tax laws. It is NOT intended as tax advice. All information is subject to change without notice. You should consult with your personal tax and/or financial advisor for more information.

In 2001, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) was enacted. EGTRRA made numerous changes to the Code, including the following:

·	generally lowering federal income tax rates;

·	increasing the amounts that may be contributed to various retirement plans, such as individual retirement plans, Tax Sheltered Annuities and Qualified Plans;

·	increasing the portability of various retirement plans by permitting individual retirement plans, Tax Sheltered Annuities, Qualified Plans and certain governmental 457 plans to "roll" money from one plan to another;

·	eliminating and/or reducing the highest federal estate tax rates;

·	increasing the estate tax credit; and

·	for persons dying after 2009, repealing the estate tax.

In 2006, the Pension Protection Act of 2006 made permanent the EGTRRA provisions noted above that increase the amounts that may be contributed to various retirement plans and that increase the portability of various retirement plans. However, all of the other changes resulting from EGTRRA were scheduled to "sunset," or become ineffective, after December 31, 2010 unless they are extended by additional legislation. The sunset date for many of these provisions was extended to December 31, 2012 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. However, if these changes are not further extended (or modified) by new legislation, the Code will be restored to its pre-EGTRRA form after December 31, 2012. This creates uncertainty as to future tax requirements and implications. Please consult a qualified tax or financial advisor for further information relating to these and other tax issues.

State Taxation

The tax rules across the various states and localities are not uniform and therefore are not discussed in this prospectus. Tax rules that may apply to contracts issued in U.S. territories such as Puerto Rico and Guam are also not discussed. Purchasers and prospective purchasers should consult a financial consultant, tax advisor or legal counsel to discuss the taxation and use of the contracts.

Appendix D: State Variations

Described below are the variations to certain prospectus disclosure resulting from state law or the instruction provided by state insurance authorities as of the date of this prospectus. Information regarding a state’s requirements does not mean that Nationwide currently offers contracts within that jurisdiction. These variations are subject to change without notice and additional variations may be imposed as required by specific states. Please contact Nationwide or your registered representative for the most up to date information regarding state variations.

Alabama – Subsequent purchase payments, if any, after the initial purchase payment may be made until the later of the Contract Owner reaching age 63 or the third contract anniversary. See "Operation of the Contract" earlier in this prospectus for more information.

California – For contracts issued in the State of California, Nationwide will allocate initial purchase payments allocated to Sub-Accounts to the Money Market Sub-Account during the free look period. See "Right to Examine and Cancel" earlier in this prospectus for more information.

Joint owners are not limited to spouses. See "Ownership and Interest in the Contract" earlier in this prospectus for more information.

Connecticut – Nationwide cannot require signature guarantees on surrender requests. See "Surrender (Redemption) Prior to Annuitization" earlier in this prospectus for more information.

Joint owners are not limited to spouses. See "Ownership and Interest in the Contract" earlier in this prospectus for more information.

Florida – If the contract is issued to fund a Qualified Plan, annuitization may occur during the first year subject to Nationwide’s approval.

Idaho – If payment of the surrender value is deferred for 30 days or more, interest will be paid at the rate specified by state law. See "Surrender (Redemption) Prior to Annuitization" earlier in this prospectus for more information.

Indiana – Purchase payments, if any, after the initial purchase payment must be at least $500 and may only be made until the later of the Contract Owner reaching 62 years of age or the second contract anniversary. See "Operation of the Contract" earlier in this prospectus for more information.

Massachusetts – Purchase payments, if any, after the initial purchase payment may only be made until the later of the Contract Owner reaching 63 years of age or the third contract anniversary. See "Operation of the Contract" earlier in this prospectus for more information.

Montana – Nationwide shall make payment upon the death of a contract owner, within sixty (60) days of receipt of proof of death. If settlement is made after the first thirty (30) days, settlement shall include interest from the thirtieth day until settlement. Said interest shall be paid in a rate not less than required by Montana law. See "Death Benefits" subsection "Death Benefit Payment" earlier in this prospectus for more information.

New Jersey – For CDSC-free partial surrenders, the amount required to meet IRC minimum distribution requirements is not included in the calculation to determine the amount that may be surrendered without CDSC. See "Charges and Deductions" subsection "Contingent Deferred Sales Charge (CDSC)" subsection "Waiver of CDSC" earlier in this prospectus for more information.

Nationwide cannot require signature guarantee on surrender requests. See "Surrender (Redemption) Prior to Annuitization" earlier in this prospectus for more information.

Joint owners are not limited to spouses. See "Ownership and Interest in the Contract" earlier in this prospectus for more information.

New York – If no purchase payment is received three (3) years prior to the Annuitization Date and, if the net amount to be applied to any annuity payment option at the Annuitization Date is less than $2,000, Nationwide has the right to pay this amount in one lump sum instead of periodic annuity payments. See "Annuitizing the Contract" subsection "Frequency and Amount of Annuity Payments" earlier in this prospectus for more information.

If the contract is issued to fund a Qualified Plan, annuitization may occur during the first year subject to Nationwide’s approval.

Joint owners are not limited to spouses. See "Ownership and Interest in the Contract" earlier in this prospectus for more information.

Oregon – The Enhanced Fixed Account Dollar Cost Averaging program offers a rate of interest of at least 0.05% over the standard declared rate for the Fixed Account. See "Contract Owner Services" subsection "Dollar Cost Averaging" earlier in this prospectus for more information.

Purchase payments, if any, after the initial purchase payment may only be made until the later of the Contract Owner reaching 63 years of age or the third contract anniversary. See "Operation of the Contract" earlier in this prospectus for more information.

The maximum transferable amount from the Fixed Account will never be less than 25% of the allocation reaching the end of an interest rate guarantee period. See "Operation of the Contract" subsection "Transfers Prior to Annuitization" earlier in this prospectus for more information.

Joint owners are not limited to spouses. See "Ownership and Interest in the Contract" earlier in this prospectus for more information.

Puerto Rico – Nationwide will not charge premium taxes against the contract.

Texas – In the event an annuity option is not elected prior to the Annuitization Date, the company will default the annuity payment option to a life annuity with 120 monthly payments guaranteed. See "Annuitizing the Contract" subsection "Annuity Payment Options" earlier in this prospectus for more information.

Nationwide cannot require signature guarantee on surrender requests. See "Surrender (Redemption) Prior to Annuitization" earlier in this prospectus for more information.

Washington – The Contingent Deferred Sales Charge (CDSC)-free withdrawal privilege is available on surrenders (full and partial) of the contract equal to 10% of the net difference of purchase payments still subject to CDSC. See "Charges and Deductions" subsection "Contingent Deferred Sales Charge" earlier in this prospectus for more information.

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2011

Individual Deferred Variable Annuity Contracts

issued by Nationwide Life Insurance Company

through its Nationwide Variable Account

This Statement of Additional Information is not a prospectus. It contains information in addition to and more detailed than set forth in the prospectus and should be read in conjunction with the prospectus dated August 26 , 201 1 . The prospectus may be obtained from Nationwide Life Insurance Company by writing 5100 Rings Road, Dublin, Ohio 43017-1522, or calling 1-800-848-6631, TDD 1-800-238-3035.

Table of Contents of the Statement of Additional Information	Page
General Information and History	1
Services	1
Purchase of Securities Being Offered	2
Underwriters	2
Advertising	2
Annuity Payments	2
Financial Statements	3

General Information and History

Nationwide Variable Account is a separate investment account of Nationwide Life Insurance Company ("Nationwide"). Nationwide is a stock life insurance company organized under the laws of the State of Ohio in March 1929 with its Home Office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide provides life insurance, annuities and retirement products. Nationwide is 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 its common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company. Nationwide Corporation owns all of NFS's common stock and is a holding company, as well. All of Nationwide Corporation's common stock is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), the ultimate controlling persons of the Nationwide group of companies. The Nationwide group of companies is one of America’s largest insurance and financial services family of companies, with combined assets of over $148.7 billion as of December 31, 2010.

Services

Nationwide, which has responsibility for administration of the contracts and the variable account, maintains records of the name, address, taxpayer identification number, and other pertinent information for each contract owner and the number and type of contract issued to each contract owner and records with respect to the contract value.

The custodian of the assets of the variable account is Nationwide. Nationwide will maintain a record of all purchases and redemptions of shares of the underlying mutual funds. Nationwide, or its affiliates may have entered into agreements with the underlying mutual funds and/or their affiliates. The agreements relate to services furnished by Nationwide or an affiliate of Nationwide. Some of the services provided include distribution of underlying fund prospectuses, semi-annual and annual fund reports, proxy materials and fund communications, as well as maintaining the websites and voice response systems necessary for contract owners to execute trades in the funds. Nationwide also acts as a limited agent for the fund for purposes of accepting the trades.

See "Underlying Mutual Fund Payments" located in the prospectus.

Distribution, Promotional, and Sales Expenses

In addition to or partially in lieu of commission, Nationwide may pay the selling firms a marketing allowance, which is based on the firm’s ability and demonstrated willingness to promote and market Nationwide's products. How any marketing allowance is spent is determined by the firm, but generally will be used to finance firm activities, such as training and education, that may contribute to the promotion and marketing of Nationwide's products. Nationwide makes certain assumptions about the amount of marketing allowance it will pay and takes these assumptions into consideration when it determines the charges that will be assessed under the contracts. For the contracts described in the prospectus, Nationwide assumed 0.75% (of the daily net assets of the variable account) for marketing allowance when determining the charges for the contracts. The actual amount of the marketing allowance may be higher or lower than this assumption. If the actual amount of marketing allowance paid is more than what was assumed, Nationwide will fund the difference. Nationwide generally does not profit from any excess marketing allowance if the amount assumed was higher than what is actually paid. Any excess would be spent on additional marketing for the contracts. For more information about marketing allowance or how a particular selling firm uses marketing allowances, please consult with your registered representative.

Independent Registered Public Accounting Firm

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

Purchase of Securities Being Offered

The contracts will be sold by licensed insurance agents in the states where the contracts may be lawfully sold. Agents will be registered representatives of broker-dealers registered under the Securities Exchange Act of 1934 who are members of the Financial Industry Regulatory Authority ("FINRA").

Underwriters

The contracts, which are offered continuously, are distributed by Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide. For contracts issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation. During the fiscal years ended December 31, 2010, 2009, and 2008 no underwriting commissions were paid by Nationwide to NISC.

Advertising

Money Market Yields

Nationwide 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

Nationwide will advertise historical performance of the sub-accounts in accordance with SEC prescribed calculations. 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.

Standardized performance will reflect the maximum variable account charges possible under the contract, the Contract Maintenance Charge, and the standard CDSC schedule. Non-standardized performance, which will be accompanied by standardized performance, will reflect other expense structures contemplated under the contract. The expense assumptions will be stated in the advertisement.

Additional Materials

Nationwide may provide information on various topics to contract owners and prospective contract owners in advertising, sales literature or other materials.

Performance Comparisons

Each sub-account may, from time to time, include in advertisements the ranking of its performance figures compared with performance figures of other annuity contracts’ sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services.

Annuity Payments

See "Frequency and Amount of Annuity Payments" located in the prospectus.

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

Contract Owners of Nationwide Variable Account:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide Variable Account (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2010, and the related statements of operations for the year then ended, the statements of changes in contract owners’ equity for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2010, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Accounts as of December 31, 2010, the results of their operations for the year then ended, the changes in contract owners’ equity for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

Columbus, Ohio

March 9, 2011

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010


Assets:
Investments at fair value:
Aberdeen Small Cap Fund - Class A (PRSCA)
120,479 shares (cost $1,844,668)	$	1,843,332
Global Fixed Income Fund - Institutional Service Class (ADGFIS)
86,983 shares (cost $862,204)		884,621
Income & Growth Fund - Class A (ACIGA)
64,050 shares (cost $1,874,102)		1,536,569
Large Cap Blend Fund - Common Class (CSLCBC)
155,356 shares (cost $1,553,582)		1,631,238
High-Yield Opportunities Fund - Institutional Class (DWHYOI)
179,207 shares (cost $672,306)		741,916
Asset Manager 50% (FAM)
112,789 shares (cost $1,744,383)		1,739,202
Janus Balanced Fund - Class S (JBS)
45,426 shares (cost $1,029,019)		1,139,732
Janus Fund Class - J Shares (JF)
142,774 shares (cost $3,303,719)		4,160,447
Janus Overseas Fund - Class S (JOS)
9,708 shares (cost $432,257)		490,658
Janus Twenty Fund - Class J (JTF)
245,616 shares (cost $11,402,034)		16,144,355
Janus Worldwide Fund - Class J (JWF)
53,004 shares (cost $2,138,976)		2,468,383
Janus Worldwide Fund - Class S (JWS)
5,546 shares (cost $186,641)		261,892
U.S. Small-Mid Cap Equity Portfolio - Open Shares (LSC)
167,115 shares (cost $2,042,553)		2,383,065
MFS Strategic Income Fund - Class A (MSI)
174,614 shares (cost $1,079,987)		1,150,704
Bond Fund - Class D (NBF)
148,504 shares (cost $1,399,780)		1,458,307
Bond Index Fund - Class A (NBIXA)
33,878 shares (cost $389,600)		384,180
Fund - Class D (NF)
205,862 shares (cost $2,985,409)		2,789,435
Government Bond Fund - Class D (NGBF)
362,546 shares (cost $3,916,181)		3,770,477
Growth Fund - Class D (NGF)
49,863 shares (cost $304,627)		444,776
International Index Fund - Class A (NIIXA)
2,212 shares (cost $16,803)		16,389
Investor Destinations Aggressive Fund - Service Class (IDAS)
191,027 shares (cost $1,666,047)		1,635,193
Investor Destinations Conservative Fund - Service Class (IDCS)
161,079 shares (cost $1,575,799)		1,643,005
Investor Destinations Moderate Fund - Service Class (IDMS)
564,401 shares (cost $5,540,338)		5,299,724
Investor Destinations Moderately Aggressive Fund - Service Class (IDMAS)
459,867 shares (cost $4,349,921)		4,193,985
Investor Destinations Moderately Conservative Fund - Service Class (IDMCS)
151,988 shares (cost $1,459,337)		1,524,437
Mid Cap Market Index Fund - Class A (NMCIXA)
68,558 shares (cost $908,580)		1,011,225
Money Market Fund - Prime Shares (MMF)
8,886,308 shares (cost $8,886,308)		8,886,308

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010


Money Market Fund - Service Class (MMFR)
4,484,896 shares (cost $4,484,896)			4,484,896
Nationwide Growth Fund - Class A (NGFA)
56,716 shares (cost $436,301)			491,726
Nationwide Large Cap Value Fund - Class A (PRLVA)
147,206 shares (cost $1,683,320)			1,442,618
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
164,426 shares (cost $1,388,961)			1,525,876
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
21,306 shares (cost $209,813)			217,110
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
218,079 shares (cost $2,177,008)			2,302,913
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
258,292 shares (cost $2,670,499)			2,686,238
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
69,003 shares (cost $643,317)			719,014
NVIT Multi-Manager International Growth Fund - Class VI (NVMIG6)
8,363 shares (cost $76,463)			81,618
S&P 500 Index Fund - Service Class (NIXR)
251,290 shares (cost $2,518,144)			2,633,515
Small Cap Index Fund - Class A (NSCIXA)
61,948 shares (cost $631,812)			735,327
Templeton NVIT International Value Fund - Class III (NVTIV3)
5,127 shares (cost $68,736)			64,245
AIM Small Cap Growth Fund - Investor Class (ASCGI)
12,056 shares (cost $313,758)			354,086
Basic Balanced Fund - Investor Class (ABBLI)
9,004 shares (cost $90,344)			99,139
Dynamics Fund - Investor Class (IDF)
176,723 shares (cost $3,370,003)			3,933,860
American Century International Growth Fund - Class A (TCIGA)
9,927 shares (cost $88,661)			109,889
American Century International Growth Fund - Investor Class (TCIGR)
73,558 shares (cost $639,567)			812,820
Growth Fund - Investor Class (TCG)
233,437 shares (cost $4,604,111)			6,032,013
Income & Growth Fund - Investor Class (IGF)
118,424 shares (cost $3,429,841)			2,843,370
Short-Term Government Fund - Investor Class (BSTG)
240,067 shares (cost $2,309,806)			2,343,055
Ultra(R) Fund - Investor Class (TCUL)
293,561 shares (cost $7,660,561)			6,649,146
VP International Fund - Class IV (ACVI4)
207,961 shares (cost $1,989,391)			1,778,071
Appreciation Fund, Inc. (DAF)
69,304 shares (cost $2,667,531)			2,647,394
Balanced Opportunity Fund - Class Z (DPBOZ)
60,364 shares (cost $1,055,672)			997,819
Dreyfus S&P 500 Index Fund (DSPI)
285,268 shares (cost $9,878,684)			9,864,582
Emerging Leaders Fund (DEL)
495 shares (cost $16,926)			10,401
Intermediate Term Income Fund - Class A (DPITIA)
118,099 shares (cost $1,440,439)			1,544,733
Third Century Fund, Inc. - Class Z (DTC)
64,069 shares (cost $499,902)			637,489
Equity Income Fund - Class I (EIG)
38,664 shares (cost $769,792)			741,584

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010


Bond Fund - Class F Shares (FBDF)
220,849 shares (cost $1,895,659)			2,029,599
Equity Income Fund, Inc. - Class F Shares (FEQIF)
6,589 shares (cost $111,461)			113,007
High Yield Trust (FHYT)
537,716 shares (cost $2,977,317)			3,183,279
Intermediate Corporate Bond Fund - Institutional Service Shares (FIIF)
85,684 shares (cost $834,164)			863,696
Advisor Balanced Fund - Class A (FABA)
18,149 shares (cost $286,447)			270,605
Advisor Balanced Fund - Class T (FAB)
72,323 shares (cost $1,120,995)			1,087,008
Advisor Equity Growth Fund - Class A (FAEGA)
13,617 shares (cost $719,782)			734,914
Advisor Equity Income Fund - Class A (FAEIA)
99,137 shares (cost $2,627,679)			2,267,267
Advisor Equity Income Fund - Class T (FAEI)
78,742 shares (cost $2,164,647)			1,827,599
Advisor Growth Opportunities Fund - Class A (FAGOA)
11,670 shares (cost $337,036)			398,417
Advisor Growth Opportunities Fund - Class T (FAGO)
55,377 shares (cost $1,872,656)			1,906,073
Advisor High Income Advantage Fund - Class T (FAHY)
70,488 shares (cost $668,571)			702,769
Advisor Overseas Fund - Class A (FAOA)
411 shares (cost $8,064)			7,484
Capital & Income Fund (FCI)
50,113 shares (cost $383,533)			472,568
Equity-Income Fund (FEI)
129,484 shares (cost $6,569,919)			5,730,961
High Income Portfolio - Initial Class (FHIP)
4,920 shares (cost $27,932)			27,404
Magellan Fund (FMG)
108,738 shares (cost $9,958,700)			7,793,260
Puritan Fund (FPR)
310,589 shares (cost $5,733,100)			5,562,643
VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)
127,323 shares (cost $2,212,985)			2,098,287
Balance Sheet Investment Fund - Class A (FRBSI)
56,600 shares (cost $3,130,297)			2,673,218
Foreign Fund - Class A (TFF)
234,090 shares (cost $1,754,525)			1,633,948
Mutual Series Funds - Mutual Shares Fund - Class A (TMSF)
259,680 shares (cost $6,209,163)			5,359,803
Small-Mid Cap Growth Fund - Class A (FSCG)
31,378 shares (cost $1,053,534)			1,170,705
Templeton Foreign Securities Fund - Class 3 (TIF3)
200,837 shares (cost $2,934,161)			2,859,918
Genesis Fund - Trust Class (NBGST)
211,042 shares (cost $9,721,195)			10,054,018
Guardian Fund - Investor Class (NBGF)
107,087 shares (cost $1,606,840)			1,588,098
Guardian Fund - Trust Class (NBGT)
13,872 shares (cost $180,394)			160,913
Partners Fund - Investor Class (PF)
134,993 shares (cost $3,696,966)			3,720,394
Partners Fund - Trust Class (NBPT)
13,381 shares (cost $299,145)			283,136

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2010


Short Duration Bond Fund - Investor Class (NLMB)
93,151 shares (cost $774,345)		747,072
Socially Responsive Fund - Trust Class (NBSRT)
70,858 shares (cost $1,135,262)		1,236,475
Champion Income Fund - Class A (OCHI)
31,200 shares (cost $57,726)		60,527
Global Securities Fund/VA - Class 4 (OVGS4)
183,609 shares (cost $5,446,191)		5,522,971
Oppenheimer Capital Appreciation Fund - Class A (OCAF)
31,759 shares (cost $1,317,437)		1,384,048
Oppenheimer Global Fund - Class A (OGF)
89,536 shares (cost $5,011,089)		5,405,262
Oppenheimer Strategic Income Fund - Class A (OSI)
423,534 shares (cost $1,732,047)		1,816,959
PIMCO Total Return Fund - Class A (PMTRA)
382,274 shares (cost $4,173,307)		4,147,671
Putnam International Equity Fund - Class A (PUIGA)
209 shares (cost $4,783)		4,181
Voyager Fund - Class A (PVF)
9,817 shares (cost $198,212)		232,756
Van Kampen Growth and Income Fund - Class A (VKGIA)
90,476 shares (cost $1,795,057)		1,738,958
Van Kampen Mid Cap Growth Fund - Class A (VKGA)
29,983 shares (cost $630,933)		892,306
Van Kampen Real Estate Securities Fund - Class A (VKRES)
51,497 shares (cost $595,365)		900,174
Virtus Balanced Fund - Class A (PBF)
51,312 shares (cost $707,213)		687,586
Advisors Small Cap Fund - Class A (WRASCA)
46,489 shares (cost $558,576)		719,179
Advantage Funds(R) - Common Stock Fund - Investor Class (SCS)
135,354 shares (cost $2,521,801)		2,797,772
Advantage Funds(R) - Growth Fund - Investor Class (SGR)
20,448 shares (cost $479,877)		655,154
Advantage Funds(R) - Large Cap Core - Investor Class (WFLCCI)
12,856 shares (cost $93,931)		108,763
Advantage Funds(R) - Large Cap Growth Fund - Investor Class (STR)
54,449 shares (cost $1,251,750)		1,596,980
Advantage Funds(R) - Mid Cap Growth Fund - Investor Class (WFMCGZ)
34,193 shares (cost $137,874)		206,186

Total Investments	$	225,860,073

Accounts Payable		(42,561	)

	$	225,817,512

Contract Owners’ Equity:
Accumulation units		225,816,185
Contracts in payout (annuitization) period (note 1f)		1,327

Total Contract Owners’ Equity (note 5)	$	225,817,512

See accompanying notes to financial statements.

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	Total			PRSCA			ADGFIS			ACIGA			CSLCBC			WPEG			DWHYOI			FAM
Reinvested dividends	$	2,863,517			6,250			49,763			17,190			4,837			-			58,578			29,845
Mortality and expense risk charges (note 2)		(2,757,520	)		(22,019	)		(12,244	)		(17,409	)		(4,730	)		(15,154	)		(8,602	)		(21,801	)

Net investment income (loss)		105,997			(15,769	)		37,519			(219	)		107			(15,154	)		49,976			8,044

Realized gain (loss) on investments		(4,537,713	)		(344,174	)		15,212			(75,666	)		566			272,320			82,179			(16,461	)
Change in unrealized gain (loss) on investments		27,463,621			769,337			(14,747	)		245,127			77,656			(81,159	)		(44,600	)		195,090

Net gain (loss) on investments		22,925,908			425,163			465			169,461			78,222			191,161			37,579			178,629

Reinvested capital gains		941,163			-			-			-			16,697			-			-			2,693

Net increase (decrease) in contract owners’ equity resulting from operations	$	23,973,068			409,394			37,984			169,242			95,026			176,007			87,555			189,366


Investment Activity:	JBS			JF			JOS			JTF			JWF			JWS			LSC			MSI
Reinvested dividends	$	23,591			9,221			-			38,129			11,162			296			-			56,105
Mortality and expense risk charges (note 2)		(13,824	)		(52,302	)		(4,272	)		(207,427	)		(31,462	)		(3,237	)		(26,679	)		(14,031	)

Net investment income (loss)		9,767			(43,081	)		(4,272	)		(169,298	)		(20,300	)		(2,941	)		(26,679	)		42,074

Realized gain (loss) on investments		62,592			20,363			18,401			567,446			(122,354	)		11,620			(124,204	)		(5,253	)
Change in unrealized gain (loss) on investments		(36,786	)		398,609			47,553			442,246			459,516			28,565			569,082			48,302

Net gain (loss) on investments		25,806			418,972			65,954			1,009,692			337,162			40,185			444,878			43,049

Reinvested capital gains		34,332			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	69,905			375,891			61,682			840,394			316,862			37,244			418,199			85,123

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	NBF			NBIXA			NF			NGBF			NGF			NIIXA			IDAS			IDCS
Reinvested dividends	$	56,062			14,717			22,301			128,783			332			359			22,719			34,517
Mortality and expense risk charges (note 2)		(18,680	)		(5,716	)		(37,721	)		(55,110	)		(5,012	)		(186	)		(19,344	)		(21,237	)

Net investment income (loss)		37,382			9,001			(15,420	)		73,673			(4,680	)		173			3,375			13,280

Realized gain (loss) on investments		6,412			25,712			(772,401	)		161,210			5,117			(122	)		(103,315	)		(1,771	)
Change in unrealized gain (loss) on investments		28,043			(11,817	)		1,095,770			(188,954	)		75,225			867			284,399			76,421

Net gain (loss) on investments		34,455			13,895			323,369			(27,744	)		80,342			745			181,084			74,650

Reinvested capital gains		22,404			-			-			141,138			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	94,241			22,896			307,949			187,067			75,662			918			184,459			87,930


Investment Activity:	IDMS			IDMAS			IDMCS			NMCIXA			MMF			MMFR			NGFA			PRLVA
Reinvested dividends	$	89,417			65,658			28,887			7,135			12			6			-			8,173
Mortality and expense risk charges (note 2)		(61,507	)		(47,256	)		(17,809	)		(10,906	)		(121,318	)		(55,849	)		(5,113	)		(17,560	)

Net investment income (loss)		27,910			18,402			11,078			(3,771	)		(121,306	)		(55,843	)		(5,113	)		(9,387	)

Realized gain (loss) on investments		(131,252	)		(93,556	)		(28,575	)		(36,191	)		-			-			1,563			(196,373	)
Change in unrealized gain (loss) on investments		559,389			511,029			124,251			241,970			-			-			79,485			348,229

Net gain (loss) on investments		428,137			417,473			95,676			205,779			-			-			81,048			151,856

Reinvested capital gains		-			-			-			9,610			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	456,047			435,875			106,754			211,618			(121,306	)		(55,843	)		75,935			142,469

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	GVIDA			GVIDC			GVIDM			GVDMA			GVDMC			NVMIG6			NIXR			NSCIXA
Reinvested dividends	$	22,125			5,811			37,746			42,622			12,265			372			34,524			5,797
Mortality and expense risk charges (note 2)		(17,509	)		(3,064	)		(25,848	)		(30,824	)		(7,859	)		(548	)		(29,297	)		(7,809	)

Net investment income (loss)		4,616			2,747			11,898			11,798			4,406			(176	)		5,227			(2,012	)

Realized gain (loss) on investments		(248,933	)		15,044			(39,186	)		(135,171	)		(4,274	)		6,561			(134,545	)		(38,787	)
Change in unrealized gain (loss) on investments		421,529			(6,267	)		221,207			381,084			43,595			(3,274	)		426,763			193,154

Net gain (loss) on investments		172,596			8,777			182,021			245,913			39,321			3,287			292,218			154,367

Reinvested capital gains		-			482			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	177,212			12,006			193,919			257,711			43,727			3,111			297,445			152,355


Investment Activity:	NVTIV3			ASCGI			ABBLI			IDF			TCIGA			TCIGR			TCG			IGF
Reinvested dividends	$	1,088			-			1,338			-			887			10,905			20,007			39,212
Mortality and expense risk charges (note 2)		(652	)		(4,105	)		(1,404	)		(45,874	)		(1,169	)		(10,088	)		(71,520	)		(36,096	)

Net investment income (loss)		436			(4,105	)		(66	)		(45,874	)		(282	)		817			(51,513	)		3,116

Realized gain (loss) on investments		3,914			(33,944	)		(13,649	)		195,416			593			34,237			5,706			(135,883	)
Change in unrealized gain (loss) on investments		(9,552	)		118,774			18,114			571,757			11,496			57,872			893,866			458,419

Net gain (loss) on investments		(5,638	)		84,830			4,465			767,173			12,089			92,109			899,572			322,536

Reinvested capital gains		8,194			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	2,992			80,725			4,399			721,299			11,807			92,926			848,059			325,652

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	BSTG			TCUL			ACVI4			DAF			DPBOZ			DSPI			DEL			DPITIA
Reinvested dividends	$	24,876			13,257			39,218			29,794			14,205			140,627			2			60,435
Mortality and expense risk charges (note 2)		(30,173	)		(79,394	)		(22,176	)		(31,490	)		(12,456	)		(121,101	)		(104	)		(20,912	)

Net investment income (loss)		(5,297	)		(66,137	)		17,042			(1,696	)		1,749			19,526			(102	)		39,523

Realized gain (loss) on investments		22,888			(215,259	)		(188,020	)		(37,411	)		(68,016	)		182,805			(150	)		16,239
Change in unrealized gain (loss) on investments		(3,970	)		1,152,369			350,142			365,769			173,596			744,964			2,487			61,280

Net gain (loss) on investments		18,918			937,110			162,122			328,358			105,580			927,769			2,337			77,519

Reinvested capital gains		11,923			-			-			-			-			208,695			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	25,544			870,973			179,164			326,662			107,329			1,155,990			2,235			117,042


Investment Activity:	DTC			EIG			FBDF			FEQIF			FHYT			FIIF			FABA			FAB
Reinvested dividends	$	3,534			7,300			115,889			2,834			223,239			38,663			4,761			14,928
Mortality and expense risk charges (note 2)		(7,729	)		(9,095	)		(24,295	)		(1,282	)		(36,610	)		(9,930	)		(3,373	)		(13,644	)

Net investment income (loss)		(4,195	)		(1,795	)		91,594			1,552			186,629			28,733			1,388			1,284

Realized gain (loss) on investments		29,728			(40,487	)		13,062			(2,644	)		553,314			5,032			(9,455	)		(33,284	)
Change in unrealized gain (loss) on investments		48,494			122,150			66,832			11,454			(341,819	)		15,444			39,651			146,685

Net gain (loss) on investments		78,222			81,663			79,894			8,810			211,495			20,476			30,196			113,401

Reinvested capital gains		-			-			-			-			-			-			193			718

Net increase (decrease) in contract owners’ equity resulting from operations	$	74,027			79,868			171,488			10,362			398,124			49,209			31,777			115,403

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	FAEGA			FAEIA			FAEI			FAGOA			FAGO			FAHY			FAOA			FCI
Reinvested dividends	$	-			31,530			20,650			-			-			47,553			85			29,993
Mortality and expense risk charges (note 2)		(8,889	)		(28,881	)		(23,765	)		(4,423	)		(22,288	)		(9,039	)		(88	)		(5,694	)

Net investment income (loss)		(8,889	)		2,649			(3,115	)		(4,423	)		(22,288	)		38,514			(3	)		24,299

Realized gain (loss) on investments		(12,345	)		(210,011	)		(110,035	)		(23,946	)		4,953			(7,001	)		16			19
Change in unrealized gain (loss) on investments		164,070			457,698			311,679			101,368			360,137			74,733			868			39,602

Net gain (loss) on investments		151,725			247,687			201,644			77,422			365,090			67,732			884			39,621

Reinvested capital gains		750			-			-			-			-			-			18			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	143,586			250,336			198,529			72,999			342,802			106,246			899			63,920


Investment Activity:	FEI			FHIP			FMG			FPR			FO2R			FRBSI			TFF			TMSF
Reinvested dividends	$	94,728			2,040			58,867			117,821			23,834			40,762			28,897			148,742
Mortality and expense risk charges (note 2)		(68,570	)		(333	)		(96,936	)		(68,928	)		(24,312	)		(32,456	)		(20,957	)		(67,289	)

Net investment income (loss)		26,158			1,707			(38,069	)		48,893			(478	)		8,306			7,940			81,453

Realized gain (loss) on investments		(147,800	)		(5	)		(503,766	)		(27,443	)		(457,012	)		(340,729	)		(370,974	)		(236,967	)
Change in unrealized gain (loss) on investments		786,148			1,313			1,287,551			606,277			633,934			615,367			464,280			656,698

Net gain (loss) on investments		638,348			1,308			783,785			578,834			176,922			274,638			93,306			419,731

Reinvested capital gains		-			-			7,384			927			3,865			203,634			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	664,506			3,015			753,100			628,654			180,309			486,578			101,246			501,184

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	FSCG			TIF3			NBGST			NBGF			NBGT			PF			NBPT			NLMB
Reinvested dividends	$	-			50,204			-			5,218			528			4,324			19			24,337
Mortality and expense risk charges (note 2)		(13,217	)		(36,383	)		(124,202	)		(19,219	)		(1,711	)		(44,972	)		(2,872	)		(9,750	)

Net investment income (loss)		(13,217	)		13,821			(124,202	)		(14,001	)		(1,183	)		(40,648	)		(2,853	)		14,587

Realized gain (loss) on investments		(68,815	)		(300,682	)		(269,408	)		3,815			(1,751	)		(13,079	)		(6,704	)		(13,530	)
Change in unrealized gain (loss) on investments		344,069			450,838			2,175,443			254,740			27,448			504,365			43,751			32,135

Net gain (loss) on investments		275,254			150,156			1,906,035			258,555			25,697			491,286			37,047			18,605

Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	262,037			163,977			1,781,833			244,554			24,514			450,638			34,194			33,192


Investment Activity:	NBSRT			OCHI			OVGS4			OCAF			OGF			OSI			PMTRA			PUIGA
Reinvested dividends	$	1,895			19,717			64,741			-			44,682			89,001			113,485			84
Mortality and expense risk charges (note 2)		(12,636	)		(2,610	)		(65,184	)		(15,446	)		(67,856	)		(15,196	)		(48,672	)		(53	)

Net investment income (loss)		(10,741	)		17,107			(443	)		(15,446	)		(23,174	)		73,805			64,813			31

Realized gain (loss) on investments		(55,176	)		4,915			(254,765	)		(38,457	)		126,625			(16,611	)		171,237			(10	)
Change in unrealized gain (loss) on investments		291,061			(4,898	)		952,011			147,259			558,684			116,950			(147,613	)		308

Net gain (loss) on investments		235,885			17			697,246			108,802			685,309			100,339			23,624			298

Reinvested capital gains		-			-			-			-			38,026			-			196,207			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	225,144			17,124			696,803			93,356			700,161			174,144			284,644			329

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2010


Investment Activity:	PVF			VKGIA			VKGA			VKRES			PBF			WRASCA			SCS			SGR
Reinvested dividends	$	844			23,948			-			10,417			11,567			-			-			-
Mortality and expense risk charges (note 2)		(2,275	)		(21,644	)		(9,464	)		(11,055	)		(8,554	)		(5,144	)		(33,117	)		(7,115	)

Net investment income (loss)		(1,431	)		2,304			(9,464	)		(638	)		3,013			(5,144	)		(33,117	)		(7,115	)

Realized gain (loss) on investments		17,010			(132,087	)		(82,998	)		(47,800	)		(26,760	)		25,523			(92,770	)		991
Change in unrealized gain (loss) on investments		22,381			313,396			286,779			246,147			87,985			126,831			643,604			136,224

Net gain (loss) on investments		39,391			181,309			203,781			198,347			61,225			152,354			550,834			137,215

Reinvested capital gains		-			-			-			-			-			-			33,273			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	37,960			183,613			194,317			197,709			64,238			147,210			550,990			130,100


Investment Activity:	WFLCCI			STR			SGI			WFMCGZ
Reinvested dividends	$	366			-			332			-
Mortality and expense risk charges (note 2)		(546	)		(18,964	)		(691	)		(3,177	)

Net investment income (loss)		(180	)		(18,964	)		(359	)		(3,177	)

Realized gain (loss) on investments		1,003			59,665			(21,302	)		32,768
Change in unrealized gain (loss) on investments		14,832			173,526			10,016			11,463

Net gain (loss) on investments		15,835			233,191			(11,286	)		44,231

Reinvested capital gains		-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations	$	15,655			214,227			(11,645	)		41,054

See accompanying notes to financial statements.

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	Total						PRSCA						ADGFIS						ACIGA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	105,997			567,491			(15,769	)		(20,007	)		37,519			7,362			(219	)		10,309
Realized gain (loss) on investments		(4,537,713	)		(13,852,897	)		(344,174	)		(360,122	)		15,212			850			(75,666	)		(102,977	)
Change in unrealized gain (loss) on investments		27,463,621			59,806,353			769,337			880,949			(14,747	)		37,165			245,127			307,936
Reinvested capital gains		941,163			659,708			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		23,973,068			47,180,655			409,394			500,820			37,984			45,377			169,242			215,268

Equity transactions:
Purchase payments received from contract owners (note 3)		12,867,600			13,338,565			67,521			103,705			77,158			17,432			48,021			88,009
Transfers between funds		-			-			(81,220	)		(129,650	)		18,122			901,961			(44,489	)		(64,718	)
Redemptions (note 3)		(37,471,593	)		(31,045,652	)		(385,966	)		(142,748	)		(192,646	)		(19,295	)		(119,691	)		(87,213	)
Annuity benefits		(9,425	)		(8,089	)		-			-			-			-			-			-
Contract maintenance charges (note 2)		(218,482	)		(235,627	)		(1,784	)		(1,832	)		(989	)		(422	)		-			-
Contingent deferred sales charges (note 2)		(87,400	)		(106,934	)		(1,477	)		(779	)		(18	)		(44	)		(432	)		(451	)
Adjustments to maintain reserves		(36,004	)		19,383			(18	)		(32	)		1			(6	)		(58	)		(41	)

Net equity transactions		(24,955,304	)		(18,038,354	)		(402,944	)		(171,336	)		(98,372	)		899,626			(116,649	)		(64,414	)

Net change in contract owners’ equity		(982,236	)		29,142,301			6,450			329,484			(60,388	)		945,003			52,593			150,854
Contract owners’ equity beginning of period		226,799,748			197,657,447			1,836,852			1,507,368			945,003			-			1,483,938			1,333,084

Contract owners’ equity end of period	$	225,817,512			226,799,748			1,843,302			1,836,852			884,615			945,003			1,536,531			1,483,938

CHANGES IN UNITS:
Beginning units		13,990,343			15,283,840			103,567			115,944			89,576			-			185,704			193,769
Units purchased		2,678,400			3,193,765			6,259			13,536			14,597			91,463			6,711			17,825
Units redeemed		(4,203,552	)		(4,487,262	)		(28,081	)		(25,913	)		(23,424	)		(1,887	)		(21,602	)		(25,890	)

Ending units		12,465,191			13,990,343			81,745			103,567			80,749			89,576			170,813			185,704

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	CSLCBC					WPEG						DWHYOI						FAM
	2010			2009		2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	107			-		(15,154	)		(7,258	)		49,976			30,884			8,044			17,073
Realized gain (loss) on investments		566			-		272,320			2,955			82,179			6,339			(16,461	)		(53,993	)
Change in unrealized gain (loss) on investments		77,656			-		(81,159	)		398,359			(44,600	)		114,210			195,090			422,004
Reinvested capital gains		16,697			-		-			-			-			-			2,693			-

Net increase (decrease) in contract owners’ equity resulting from operations		95,026			-		176,007			394,056			87,555			151,433			189,366			385,084

Equity transactions:
Purchase payments received from contract owners (note 3)		7,900			-		41,132			61,454			43,626			6,479			70,336			76,950
Transfers between funds		1,545,868			-		(1,565,202	)		4,961			26,079			561,900			17,618			13,758
Redemptions (note 3)		(17,283	)		-		(176,924	)		(178,993	)		(106,276	)		(26,607	)		(188,991	)		(230,613	)
Annuity benefits		-			-		-			-			-			-			-			-
Contract maintenance charges (note 2)		(412	)		-		(1,663	)		(2,178	)		(703	)		(472	)		(2,859	)		(3,089	)
Contingent deferred sales charges (note 2)		-			-		(622	)		(60	)		-			(22	)		(32	)		(438	)
Adjustments to maintain reserves		(7	)		-		(132	)		(10	)		31			525			(6	)		(23	)

Net equity transactions		1,536,066			-		(1,703,411	)		(114,826	)		(37,243	)		541,803			(103,934	)		(143,455	)

Net change in contract owners’ equity		1,631,092			-		(1,527,404	)		279,230			50,312			693,236			85,432			241,629
Contract owners’ equity beginning of period		-			-		1,527,404			1,248,174			693,236			-			1,653,754			1,412,125

Contract owners’ equity end of period	$	1,631,092			-		-			1,527,404			743,548			693,236			1,739,186			1,653,754

CHANGES IN UNITS:
Beginning units		-			-		108,609			118,749			51,698			-			76,622			84,558
Units purchased		155,783			-		4,617			8,580			24,794			57,100			4,267			5,861
Units redeemed		(2,188	)		-		(113,226	)		(18,720	)		(28,337	)		(5,402	)		(8,968	)		(13,797	)

Ending units		153,595			-		-			108,609			48,155			51,698			71,921			76,622

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	JBS						JF						JOS						JTF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	9,767			1,239			(43,081	)		(30,157	)		(4,272	)		(69	)		(169,298	)		(196,978	)
Realized gain (loss) on investments		62,592			7,324			20,363			(213,818	)		18,401			3,633			567,446			(326,175	)
Change in unrealized gain (loss) on investments		(36,786	)		147,498			398,609			1,411,761			47,553			10,848			442,246			5,813,175
Reinvested capital gains		34,332			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		69,905			156,061			375,891			1,167,786			61,682			14,412			840,394			5,290,022

Equity transactions:
Purchase payments received from contract owners (note 3)		14,754			19,552			152,566			174,202			7,600			131			643,667			581,719
Transfers between funds		196,665			1,038,158			(171,727	)		(35,404	)		310,172			161,340			(216,119	)		(463,788	)
Redemptions (note 3)		(323,063	)		(40,343	)		(566,470	)		(443,537	)		(65,228	)		(2,055	)		(2,402,875	)		(1,393,541	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-			(6,746	)		(7,557	)		-			-			(23,419	)		(26,263	)
Contingent deferred sales charges (note 2)		(1,112	)		(26	)		(344	)		(193	)		(109	)		-			(613	)		(905	)
Adjustments to maintain reserves		(185	)		8,869			22			(192	)		(142	)		2,487			2,514			(239	)

Net equity transactions		(112,941	)		1,026,210			(592,699	)		(312,681	)		252,293			161,903			(1,996,845	)		(1,303,017	)

Net change in contract owners’ equity		(43,036	)		1,182,271			(216,808	)		855,105			313,975			176,315			(1,156,451	)		3,987,005
Contract owners’ equity beginning of period		1,182,271			-			4,377,228			3,522,123			176,315			-			17,300,779			13,313,774

Contract owners’ equity end of period	$	1,139,235			1,182,271			4,160,420			4,377,228			490,290			176,315			16,144,328			17,300,779

CHANGES IN UNITS:
Beginning units		102,509			-			315,151			342,863			13,953			-			631,933			702,689
Units purchased		31,058			111,634			10,685			20,075			29,727			15,486			45,301			88,325
Units redeemed		(40,600	)		(9,125	)		(61,100	)		(47,787	)		(10,690	)		(1,533	)		(122,948	)		(159,081	)

Ending units		92,967			102,509			264,736			315,151			32,990			13,953			554,286			631,933

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	JWF						JWS						LSC						MSI
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(20,300	)		(2,236	)		(2,941	)		(800	)		(26,679	)		(19,701	)		42,074			40,785
Realized gain (loss) on investments		(122,354	)		(236,381	)		11,620			5,395			(124,204	)		(249,364	)		(5,253	)		(37,126	)
Change in unrealized gain (loss) on investments		459,516			927,644			28,565			46,686			569,082			935,019			48,302			169,089
Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		316,862			689,027			37,244			51,281			418,199			665,954			85,123			172,748

Equity transactions:
Purchase payments received from contract owners (note 3)		-			-			-			42			229,983			164,014			48,761			65,769
Transfers between funds		(22,676	)		(48,600	)		(10,595	)		243,014			148,277			(48,410	)		89,192			226,370
Redemptions (note 3)		(364,262	)		(212,827	)		(39,151	)		(26,136	)		(376,417	)		(161,164	)		(110,173	)		(116,460	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(4,974	)		(5,282	)		-			-			(2,627	)		(2,365	)		(843	)		(889	)
Contingent deferred sales charges (note 2)		(15	)		(176	)		(20	)		(8	)		(2,086	)		(555	)		-			(71	)
Adjustments to maintain reserves		47			(436	)		(393	)		5,923			(81	)		(86	)		53			105

Net equity transactions		(391,880	)		(267,321	)		(50,159	)		222,835			(2,951	)		(48,566	)		26,990			174,824

Net change in contract owners’ equity		(75,018	)		421,706			(12,915	)		274,116			415,248			617,388			112,113			347,572
Contract owners’ equity beginning of period		2,543,389			2,121,683			274,116			-			1,967,783			1,350,395			1,038,632			691,060

Contract owners’ equity end of period	$	2,468,371			2,543,389			261,201			274,116			2,383,031			1,967,783			1,150,745			1,038,632

CHANGES IN UNITS:
Beginning units		186,615			211,026			22,694			-			105,658			110,931			69,165			56,765
Units purchased		-			-			123			25,640			23,200			19,305			11,577			27,376
Units redeemed		(27,327	)		(24,411	)		(4,075	)		(2,946	)		(23,903	)		(24,578	)		(10,093	)		(14,976	)

Ending units		159,288			186,615			18,742			22,694			104,955			105,658			70,649			69,165

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	NBF						NBIXA						NF						NGBF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	37,382			57,376			9,001			9,635			(15,420	)		(2,841	)		73,673			102,288
Realized gain (loss) on investments		6,412			(23,968	)		25,712			353			(772,401	)		(113,184	)		161,210			47,274
Change in unrealized gain (loss) on investments		28,043			148,676			(11,817	)		2,734			1,095,770			632,917			(188,954	)		(124,564	)
Reinvested capital gains		22,404			-			-			-			-			-			141,138			60,361

Net increase (decrease) in contract owners’ equity resulting from operations		94,241			182,084			22,896			12,722			307,949			516,892			187,067			85,359

Equity transactions:
Purchase payments received from contract owners (note 3)		66,016			68,323			22,601			20,221			155,086			136,605			383,053			247,674
Transfers between funds		79,820			124,128			79,739			(4,829	)		(99,390	)		(35,698	)		300,413			279,597
Redemptions (note 3)		(212,994	)		(185,047	)		(80,647	)		(18,106	)		(276,545	)		(156,075	)		(1,277,165	)		(478,614	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(1,711	)		(1,924	)		-			-			(4,495	)		(4,708	)		(3,354	)		(3,641	)
Contingent deferred sales charges (note 2)		(16	)		(154	)		(107	)		(282	)		(111	)		(89	)		(428	)		(2,510	)
Adjustments to maintain reserves		79			70			13			(1	)		(170	)		(22	)		331			(9	)

Net equity transactions		(68,806	)		5,396			21,599			(2,997	)		(225,625	)		(59,987	)		(597,150	)		42,497

Net change in contract owners’ equity		25,435			187,480			44,495			9,725			82,324			456,905			(410,083	)		127,856
Contract owners’ equity beginning of period		1,432,899			1,245,419			339,699			329,974			2,707,092			2,250,187			4,180,833			4,052,977

Contract owners’ equity end of period	$	1,458,334			1,432,899			384,194			339,699			2,789,416			2,707,092			3,770,750			4,180,833

CHANGES IN UNITS:
Beginning units		31,453			29,775			23,438			23,594			51,653			51,448			244,555			240,841
Units purchased		3,431			14,895			39,903			7,942			128,902			6,204			144,279			83,430
Units redeemed		(7,396	)		(13,217	)		(37,931	)		(8,098	)		(134,362	)		(5,999	)		(176,162	)		(79,716	)

Ending units		27,488			31,453			25,410			23,438			46,193			51,653			212,672			244,555

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	NGF						NIIXA						IDAS						IDCS
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(4,680	)		(3,349	)		173			241			3,375			8,982			13,280			29,093
Realized gain (loss) on investments		5,117			(3,791	)		(122	)		(41	)		(103,315	)		(141,663	)		(1,771	)		(70,916	)
Change in unrealized gain (loss) on investments		75,225			100,449			867			3,384			284,399			419,972			76,421			174,547
Reinvested capital gains		-			-			-			11			-			40,992			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		75,662			93,309			918			3,595			184,459			328,283			87,930			132,724

Equity transactions:
Purchase payments received from contract owners (note 3)		-			-			-			-			166,970			186,803			78,595			41,019
Transfers between funds		(351	)		(3,911	)		-			-			(37,862	)		(172,223	)		(448,269	)		1,150,123
Redemptions (note 3)		(16,971	)		(48,430	)		(1,343	)		(1	)		(321,371	)		(37,250	)		(713,773	)		(391,647	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(960	)		(934	)		-			-			-			-			-			-
Contingent deferred sales charges (note 2)		-			-			-			-			(3,428	)		(204	)		(2,371	)		(320	)
Adjustments to maintain reserves		(44	)		(51	)		(14	)		(4	)		(110	)		(58	)		260			(41	)

Net equity transactions		(18,326	)		(53,326	)		(1,357	)		(5	)		(195,801	)		(22,932	)		(1,085,558	)		799,134

Net change in contract owners’ equity		57,336			39,983			(439	)		3,590			(11,342	)		305,351			(997,628	)		931,858
Contract owners’ equity beginning of period		387,412			347,429			16,826			13,236			1,646,518			1,341,167			2,640,623			1,708,765

Contract owners’ equity end of period	$	444,748			387,412			16,387			16,826			1,635,176			1,646,518			1,642,995			2,640,623

CHANGES IN UNITS:
Beginning units		13,029			14,627			1,611			1,612			166,944			170,493			212,475			148,614
Units purchased		-			-			-			-			16,851			32,732			22,374			125,774
Units redeemed		(277	)		(1,598	)		(134	)		(1	)		(36,903	)		(36,281	)		(107,799	)		(61,913	)

Ending units		12,752			13,029			1,477			1,611			146,892			166,944			127,050			212,475

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	IDMS						IDMAS						IDMCS						NMCIXA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	27,910			54,170			18,402			30,255			11,078			18,089			(3,771	)		(2,365	)
Realized gain (loss) on investments		(131,252	)		(470,779	)		(93,556	)		(197,632	)		(28,575	)		(118,855	)		(36,191	)		(126,825	)
Change in unrealized gain (loss) on investments		559,389			1,156,315			511,029			811,669			124,251			275,565			241,970			366,032
Reinvested capital gains		-			18,942			-			75,502			-			-			9,610			273

Net increase (decrease) in contract owners’ equity resulting from operations		456,047			758,648			435,875			719,794			106,754			174,799			211,618			237,115

Equity transactions:
Purchase payments received from contract owners (note 3)		297,639			373,025			376,468			477,820			81,440			70,799			64,667			48,378
Transfers between funds		(114,600	)		(356,222	)		(23,479	)		32,197			63,666			120,908			(41,950	)		(32,836	)
Redemptions (note 3)		(715,861	)		(989,578	)		(584,977	)		(466,071	)		(252,930	)		(403,629	)		(159,453	)		(73,158	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-			-			-			-			-			-			-
Contingent deferred sales charges (note 2)		(7,559	)		(7,365	)		(4,268	)		(7,468	)		(3,174	)		(3,077	)		(1,339	)		(375	)
Adjustments to maintain reserves		(13	)		(64	)		(96	)		(79	)		118			(41	)		(27	)		(81	)

Net equity transactions		(540,394	)		(980,204	)		(236,352	)		36,399			(110,880	)		(215,040	)		(138,102	)		(58,072	)

Net change in contract owners’ equity		(84,347	)		(221,556	)		199,523			756,193			(4,126	)		(40,241	)		73,516			179,043
Contract owners’ equity beginning of period		5,384,082			5,605,638			3,994,416			3,238,223			1,528,543			1,568,784			937,685			758,642

Contract owners’ equity end of period	$	5,299,735			5,384,082			4,193,939			3,994,416			1,524,417			1,528,543			1,011,201			937,685

CHANGES IN UNITS:
Beginning units		481,308			589,087			378,369			376,422			127,996			148,381			72,630			79,224
Units purchased		39,088			44,139			41,863			74,546			18,120			27,933			7,489			13,259
Units redeemed		(85,975	)		(151,918	)		(63,881	)		(72,599	)		(26,672	)		(48,318	)		(17,071	)		(19,853	)

Ending units		434,421			481,308			356,351			378,369			119,444			127,996			63,048			72,630

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	MMF						MMFR						NGFA						PRLVA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(121,306	)		(131,511	)		(55,843	)		(85,400	)		(5,113	)		(3,855	)		(9,387	)		83
Realized gain (loss) on investments		-			-			-			-			1,563			(8,461	)		(196,373	)		(307,405	)
Change in unrealized gain (loss) on investments		-			-			-			-			79,485			107,030			348,229			497,201
Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		(121,306	)		(131,511	)		(55,843	)		(85,400	)		75,935			94,714			142,469			189,879

Equity transactions:
Purchase payments received from contract owners (note 3)		929,431			1,042,987			221,506			397,225			37,759			46,409			103,317			148,732
Transfers between funds		390,033			1,195,052			362,744			(2,543,368	)		32,509			(19,349	)		(39,838	)		(79,187	)
Redemptions (note 3)		(1,904,055	)		(3,543,913	)		(1,445,729	)		(2,164,079	)		(40,348	)		(41,244	)		(223,764	)		(207,414	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(12,282	)		(15,175	)		-			-			(564	)		(536	)		(1,280	)		(1,378	)
Contingent deferred sales charges (note 2)		(980	)		(3,863	)		(2,056	)		(14,796	)		(29	)		(159	)		(1,637	)		(552	)
Adjustments to maintain reserves		(58	)		(13	)		(76	)		(134	)		(63	)		(13	)		(88	)		(13	)

Net equity transactions		(597,911	)		(1,324,925	)		(863,611	)		(4,325,152	)		29,264			(14,892	)		(163,290	)		(139,812	)

Net change in contract owners’ equity		(719,217	)		(1,456,436	)		(919,454	)		(4,410,552	)		105,199			79,822			(20,821	)		50,067
Contract owners’ equity beginning of period		9,605,483			11,061,919			5,404,293			9,814,845			386,496			306,674			1,463,405			1,413,338

Contract owners’ equity end of period	$	8,886,266			9,605,483			4,484,839			5,404,293			491,695			386,496			1,442,584			1,463,405

CHANGES IN UNITS:
Beginning units		388,450			441,677			481,353			858,237			34,957			36,305			122,770			138,197
Units purchased		156,034			192,172			106,341			228,900			6,478			5,067			13,595			19,194
Units redeemed		(180,217	)		(245,399	)		(183,079	)		(605,784	)		(4,331	)		(6,415	)		(27,192	)		(34,621	)

Ending units		364,267			388,450			404,615			481,353			37,104			34,957			109,173			122,770

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	GVIDA						GVIDC						GVIDM						GVDMA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	4,616			(2,883	)		2,747			1,092			11,898			3,048			11,798			(84	)
Realized gain (loss) on investments		(248,933	)		(133,530	)		15,044			(5,421	)		(39,186	)		(108,090	)		(135,171	)		(126,985	)
Change in unrealized gain (loss) on investments		421,529			353,930			(6,267	)		23,064			221,207			333,889			381,084			467,292
Reinvested capital gains		-			68,508			482			1,320			-			36,244			-			83,311

Net increase (decrease) in contract owners’ equity resulting from operations		177,212			286,025			12,006			20,055			193,919			265,091			257,711			423,534

Equity transactions:
Purchase payments received from contract owners (note 3)		312,112			298,974			44,034			33,551			378,200			315,478			399,962			344,197
Transfers between funds		(183,437	)		25,766			33,058			228,759			149,269			348,481			231,947			131,596
Redemptions (note 3)		(211,539	)		(117,547	)		(177,732	)		(99,256	)		(151,165	)		(340,759	)		(379,421	)		(358,817	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(3,641	)		(3,631	)		(591	)		(591	)		(4,495	)		(4,048	)		(5,776	)		(5,432	)
Contingent deferred sales charges (note 2)		(405	)		(27	)		(5	)		(193	)		(177	)		(475	)		(796	)		(152	)
Adjustments to maintain reserves		(89	)		(49	)		(13	)		2			(60	)		(31	)		(187	)		(13	)

Net equity transactions		(86,999	)		203,486			(101,249	)		162,272			371,572			318,646			245,729			111,379

Net change in contract owners’ equity		90,213			489,511			(89,243	)		182,327			565,491			583,737			503,440			534,913
Contract owners’ equity beginning of period		1,435,666			946,155			306,349			124,022			1,737,400			1,153,663			2,182,798			1,647,885

Contract owners’ equity end of period	$	1,525,879			1,435,666			217,106			306,349			2,302,891			1,737,400			2,686,238			2,182,798

CHANGES IN UNITS:
Beginning units		127,979			105,894			26,698			11,637			151,279			118,611			190,707			176,763
Units purchased		34,289			40,215			7,561			25,530			49,180			68,799			62,076			50,099
Units redeemed		(42,044	)		(18,130	)		(16,156	)		(10,469	)		(17,342	)		(36,131	)		(42,048	)		(36,155	)

Ending units		120,224			127,979			18,103			26,698			183,117			151,279			210,735			190,707

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	GVDMC						NVMIG6						NIXR						NSCIXA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	4,406			1,792			(176	)		(26	)		5,227			14,359			(2,012	)		(2,581	)
Realized gain (loss) on investments		(4,274	)		(28,031	)		6,561			(8,759	)		(134,545	)		(174,300	)		(38,787	)		(175,156	)
Change in unrealized gain (loss) on investments		43,595			74,411			(3,274	)		20,310			426,763			627,143			193,154			286,627
Reinvested capital gains		-			6,742			-			-			-			-			-			82

Net increase (decrease) in contract owners’ equity resulting from operations		43,727			54,914			3,111			11,525			297,445			467,202			152,355			108,972

Equity transactions:
Purchase payments received from contract owners (note 3)		69,572			46,696			10,446			8,157			150,287			195,870			69,608			47,642
Transfers between funds		197,805			31,022			33,211			3,523			76,867			(75,490	)		(17,863	)		(34,462	)
Redemptions (note 3)		(80,764	)		(42,901	)		(7,303	)		(14,226	)		(196,026	)		(307,890	)		(127,369	)		(100,967	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(1,076	)		(944	)		(56	)		(8	)		(1,474	)		(1,482	)		-			-
Contingent deferred sales charges (note 2)		(21	)		(173	)		(103	)		-			(1,225	)		(1,547	)		(932	)		(698	)
Adjustments to maintain reserves		(4	)		(8	)		(28	)		(9	)		2			(247	)		40			(29	)

Net equity transactions		185,512			33,692			36,167			(2,563	)		28,431			(190,786	)		(76,516	)		(88,514	)

Net change in contract owners’ equity		229,239			88,606			39,278			8,962			325,876			276,416			75,839			20,458
Contract owners’ equity beginning of period		489,770			401,164			42,321			33,359			2,307,596			2,031,180			659,475			639,017

Contract owners’ equity end of period	$	719,009			489,770			81,599			42,321			2,633,472			2,307,596			735,314			659,475

CHANGES IN UNITS:
Beginning units		42,401			39,270			5,179			5,488			286,683			316,384			56,625			68,434
Units purchased		22,836			13,050			11,466			3,765			43,701			57,881			8,010			14,770
Units redeemed		(7,120	)		(9,919	)		(7,739	)		(4,074	)		(42,550	)		(87,582	)		(13,960	)		(26,579	)

Ending units		58,117			42,401			8,906			5,179			287,834			286,683			50,675			56,625

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	NVTIV3						ASCGI						ABBLI						IDF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	436			541			(4,105	)		(3,587	)		(66	)		607			(45,874	)		(38,578	)
Realized gain (loss) on investments		3,914			13,984			(33,944	)		(15,592	)		(13,649	)		(3,705	)		195,416			15,443
Change in unrealized gain (loss) on investments		(9,552	)		5,061			118,774			111,571			18,114			29,926			571,757			1,099,955
Reinvested capital gains		8,194			212			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		2,992			19,798			80,725			92,392			4,399			26,828			721,299			1,076,820

Equity transactions:
Purchase payments received from contract owners (note 3)		20,483			8,052			9,011			9,364			18,203			11,261			218,726			215,480
Transfers between funds		6,342			28,439			(40,484	)		45,071			(52,168	)		31,262			(103,047	)		(135,682	)
Redemptions (note 3)		(18,781	)		(2,843	)		(96,041	)		(12,735	)		(2,755	)		(6,127	)		(558,357	)		(347,527	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(166	)		(56	)		-			-			-			-			(4,313	)		(4,506	)
Contingent deferred sales charges (note 2)		-			-			(93	)		(128	)		(6	)		(32	)		(1,147	)		(961	)
Adjustments to maintain reserves		(31	)		1			(14	)		(29	)		(12	)		(23	)		(76	)		(61	)

Net equity transactions		7,847			33,593			(127,621	)		41,543			(36,738	)		36,341			(448,214	)		(273,257	)

Net change in contract owners’ equity		10,839			53,391			(46,896	)		133,935			(32,339	)		63,169			273,085			803,563
Contract owners’ equity beginning of period		53,391			-			400,977			267,042			131,483			68,314			3,660,750			2,857,187

Contract owners’ equity end of period	$	64,230			53,391			354,081			400,977			99,144			131,483			3,933,835			3,660,750

CHANGES IN UNITS:
Beginning units		4,132			-			44,299			39,233			14,367			9,970			414,502			466,348
Units purchased		3,496			11,570			4,332			7,941			2,417			5,306			42,894			40,273
Units redeemed		(2,891	)		(7,438	)		(17,260	)		(2,875	)		(6,571	)		(909	)		(100,517	)		(92,119	)

Ending units		4,737			4,132			31,371			44,299			10,213			14,367			356,879			414,502

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	TCIGA						TCIGR						TCG						IGF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(282	)		(512	)		817			(2,496	)		(51,513	)		(48,521	)		3,116			23,736
Realized gain (loss) on investments		593			(1,484	)		34,237			4,205			5,706			(225,274	)		(135,883	)		(117,541	)
Change in unrealized gain (loss) on investments		11,496			27,208			57,872			203,040			893,866			1,722,082			458,419			502,649
Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		11,807			25,212			92,926			204,749			848,059			1,448,287			325,652			408,844

Equity transactions:
Purchase payments received from contract owners (note 3)		-			-			-			(67	)		203,667			245,394			196,621			162,616
Transfers between funds		-			(9,982	)		(14,643	)		(16,876	)		(29,100	)		(96,353	)		(55,635	)		(60,008	)
Redemptions (note 3)		(2,291	)		(20,638	)		(97,454	)		(37,030	)		(500,872	)		(524,603	)		(503,943	)		(326,081	)
Annuity benefits		-			-			-			-			(9,164	)		(7,850	)		-			-
Contract maintenance charges (note 2)		-			-			(1,188	)		(1,293	)		(6,697	)		(7,151	)		(4,955	)		(5,492	)
Contingent deferred sales charges (note 2)		-			(14	)		-			(45	)		(718	)		(1,487	)		(608	)		(311	)
Adjustments to maintain reserves		(11	)		(39	)		(7	)		(11	)		(40,212	)		5,636			37			(13	)

Net equity transactions		(2,302	)		(30,673	)		(113,292	)		(55,322	)		(383,096	)		(386,414	)		(368,483	)		(229,289	)

Net change in contract owners’ equity		9,505			(5,461	)		(20,366	)		149,427			464,963			1,061,873			(42,831	)		179,555
Contract owners’ equity beginning of period		100,366			105,827			833,179			683,752			5,525,168			4,463,295			2,886,200			2,706,645

Contract owners’ equity end of period	$	109,871			100,366			812,813			833,179			5,990,131			5,525,168			2,843,369			2,886,200

CHANGES IN UNITS:
Beginning units		12,624			17,553			35,850			38,918			189,765			201,215			175,496			191,548
Units purchased		-			-			-			-			20,967			26,004			13,180			17,024
Units redeemed		(298	)		(4,929	)		(4,686	)		(3,068	)		(36,770	)		(37,454	)		(35,157	)		(33,076	)

Ending units		12,326			12,624			31,164			35,850			173,962			189,765			153,519			175,496

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	BSTG						TCUL						ACVI4						DAF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(5,297	)		15,521			(66,137	)		(42,745	)		17,042			12,955			(1,696	)		19,273
Realized gain (loss) on investments		22,888			25,850			(215,259	)		(463,465	)		(188,020	)		(240,128	)		(37,411	)		(125,046	)
Change in unrealized gain (loss) on investments		(3,970	)		(5,017	)		1,152,369			2,176,592			350,142			698,355			365,769			555,235
Reinvested capital gains		11,923			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		25,544			36,354			870,973			1,670,382			179,164			471,182			326,662			449,462

Equity transactions:
Purchase payments received from contract owners (note 3)		151,021			144,358			198,263			246,733			136,338			172,550			147,922			156,808
Transfers between funds		91,154			140,886			(58,660	)		(154,699	)		(178,933	)		(212,564	)		(86,527	)		10,212
Redemptions (note 3)		(444,501	)		(288,398	)		(803,004	)		(766,777	)		(240,805	)		(179,274	)		(356,460	)		(418,727	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(1,820	)		(2,085	)		(9,020	)		(9,791	)		(1,284	)		(1,367	)		(2,164	)		(2,418	)
Contingent deferred sales charges (note 2)		(48	)		(2,325	)		(927	)		(1,190	)		(1,399	)		(1,514	)		(1,425	)		(1,366	)
Adjustments to maintain reserves		46			(103	)		(41	)		(266	)		(89	)		(17	)		(27	)		(68	)

Net equity transactions		(204,148	)		(7,667	)		(673,389	)		(685,990	)		(286,172	)		(222,186	)		(298,681	)		(255,559	)

Net change in contract owners’ equity		(178,604	)		28,687			197,584			984,392			(107,008	)		248,996			27,981			193,903
Contract owners’ equity beginning of period		2,521,535			2,492,848			6,451,550			5,467,158			1,885,079			1,636,083			2,619,402			2,425,499

Contract owners’ equity end of period	$	2,342,931			2,521,535			6,649,134			6,451,550			1,778,071			1,885,079			2,647,383			2,619,402

CHANGES IN UNITS:
Beginning units		136,216			132,980			467,772			532,419			145,746			166,730			252,934			281,538
Units purchased		22,994			59,092			19,527			25,403			13,207			23,106			16,669			30,652
Units redeemed		(40,877	)		(55,856	)		(66,134	)		(90,050	)		(35,732	)		(44,090	)		(44,767	)		(59,256	)

Ending units		118,333			136,216			421,165			467,772			123,221			145,746			224,836			252,934

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	DPBOZ						DSPI						DEL						DPITIA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	1,749			5,661			19,526			44,359			(102	)		(68	)		39,523			55,888
Realized gain (loss) on investments		(68,016	)		(67,366	)		182,805			(31,850	)		(150	)		(176	)		16,239			(13,742	)
Change in unrealized gain (loss) on investments		173,596			240,989			744,964			1,849,729			2,487			1,626			61,280			192,495
Reinvested capital gains		-			-			208,695			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		107,329			179,284			1,155,990			1,862,238			2,235			1,382			117,042			234,641

Equity transactions:
Purchase payments received from contract owners (note 3)		58,823			46,506			670,094			614,897			9			-			93,691			69,838
Transfers between funds		(64,724	)		(27,527	)		(243,348	)		(344,824	)		-			-			95,977			(7,676	)
Redemptions (note 3)		(144,245	)		(99,686	)		(1,111,428	)		(912,842	)		-			-			(347,163	)		(289,165	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(965	)		(1,014	)		(15,330	)		(16,927	)		-			-			(1,998	)		(2,239	)
Contingent deferred sales charges (note 2)		(232	)		(45	)		(1,125	)		(1,624	)		-			-			(1,277	)		(204	)
Adjustments to maintain reserves		(27	)		(42	)		(165	)		7			6			(2	)		(34	)		(82	)

Net equity transactions		(151,370	)		(81,808	)		(701,302	)		(661,313	)		15			(2	)		(160,804	)		(229,528	)

Net change in contract owners’ equity		(44,041	)		97,476			454,688			1,200,925			2,250			1,380			(43,762	)		5,113
Contract owners’ equity beginning of period		1,041,825			944,349			9,409,875			8,208,950			8,159			6,779			1,588,436			1,583,323

Contract owners’ equity end of period	$	997,784			1,041,825			9,864,563			9,409,875			10,409			8,159			1,544,674			1,588,436

CHANGES IN UNITS:
Beginning units		109,528			119,594			359,565			390,208			1,006			1,006			148,448			171,020
Units purchased		10,233			6,561			29,718			34,903			1			-			17,557			10,843
Units redeemed		(26,070	)		(16,627	)		(55,918	)		(65,546	)		-			-			(31,843	)		(33,415	)

Ending units		93,691			109,528			333,365			359,565			1,007			1,006			134,162			148,448

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	DTC						EIG						FBDF						FEQIF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(4,195	)		(1,989	)		(1,795	)		(243	)		91,594			91,198			1,552			1,498
Realized gain (loss) on investments		29,728			3,257			(40,487	)		(88,237	)		13,062			(40,500	)		(2,644	)		(4,005	)
Change in unrealized gain (loss) on investments		48,494			149,419			122,150			221,760			66,832			347,375			11,454			16,495
Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		74,027			150,687			79,868			133,280			171,488			398,073			10,362			13,988

Equity transactions:
Purchase payments received from contract owners (note 3)		17,634			19,347			64,184			60,425			113,951			74,805			6,098			4,700
Transfers between funds		33,009			(2,822	)		(22,887	)		(30,375	)		246,276			61,110			-			13,068
Redemptions (note 3)		(104,611	)		(51,593	)		(83,815	)		(51,499	)		(346,964	)		(350,245	)		(8,789	)		(672	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(818	)		(913	)		(1,066	)		(1,075	)		(1,875	)		(2,038	)		-			-
Contingent deferred sales charges (note 2)		(117	)		(248	)		(57	)		(353	)		(455	)		(273	)		-			-
Adjustments to maintain reserves		50			(4	)		(23	)		(5	)		(9	)		(57	)		(17	)		1

Net equity transactions		(54,853	)		(36,233	)		(43,664	)		(22,882	)		10,924			(216,698	)		(2,708	)		17,097

Net change in contract owners’ equity		19,174			114,454			36,204			110,398			182,412			181,375			7,654			31,085
Contract owners’ equity beginning of period		618,308			503,854			705,382			594,984			1,847,181			1,665,806			105,337			74,252

Contract owners’ equity end of period	$	637,482			618,308			741,586			705,382			2,029,593			1,847,181			112,991			105,337

CHANGES IN UNITS:
Beginning units		44,065			46,872			30,885			32,482			103,439			116,421			12,993			10,426
Units purchased		8,272			3,154			3,408			6,111			21,128			13,817			761			3,485
Units redeemed		(12,856	)		(5,961	)		(5,379	)		(7,708	)		(20,883	)		(26,799	)		(1,059	)		(918	)

Ending units		39,481			44,065			28,914			30,885			103,684			103,439			12,695			12,993

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	FHYT						FIIF						FABA						FAB
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	186,629			190,101			28,733			28,170			1,388			2,325			1,284			4,914
Realized gain (loss) on investments		553,314			(256,944	)		5,032			(17,155	)		(9,455	)		(31,265	)		(33,284	)		(18,829	)
Change in unrealized gain (loss) on investments		(341,819	)		1,143,162			15,444			100,616			39,651			88,436			146,685			229,403
Reinvested capital gains		-			-			-			-			193			337			718			1,199

Net increase (decrease) in contract owners’ equity resulting from operations		398,124			1,076,319			49,209			111,631			31,777			59,833			115,403			216,687

Equity transactions:
Purchase payments received from contract owners (note 3)		152,835			107,400			49,031			18,874			5,364			6,124			70,249			81,142
Transfers between funds		(1,729,641	)		2,785,811			64,272			176,317			4,722			(7,674	)		439			1,081
Redemptions (note 3)		(674,029	)		(297,141	)		(161,807	)		(122,865	)		(70,812	)		(55,708	)		(182,499	)		(54,390	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(1,457	)		(1,478	)		-			-			-			-			(1,349	)		(1,400	)
Contingent deferred sales charges (note 2)		(1,050	)		(566	)		(75	)		(185	)		(140	)		(100	)		(670	)		(222	)
Adjustments to maintain reserves		132			403			34			48			(23	)		(18	)		14			(12	)

Net equity transactions		(2,253,210	)		2,594,429			(48,545	)		72,189			(60,889	)		(57,376	)		(113,816	)		26,199

Net change in contract owners’ equity		(1,855,086	)		3,670,748			664			183,820			(29,112	)		2,457			1,587			242,886
Contract owners’ equity beginning of period		5,038,389			1,367,641			863,050			679,230			299,710			297,253			1,085,420			842,534

Contract owners’ equity end of period	$	3,183,303			5,038,389			863,714			863,050			270,598			299,710			1,087,007			1,085,420

CHANGES IN UNITS:
Beginning units		343,037			146,497			59,189			53,935			28,453			35,526			70,667			68,727
Units purchased		98,641			270,869			16,055			22,168			982			734			7,349			6,787
Units redeemed		(251,522	)		(74,329	)		(19,146	)		(16,914	)		(6,414	)		(7,807	)		(14,568	)		(4,847	)

Ending units		190,156			343,037			56,098			59,189			23,021			28,453			63,448			70,667

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	FAEGA						FAEIA						FAEI						FAGOA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(8,889	)		(7,896	)		2,649			12,064			(3,115	)		3,426			(4,423	)		(2,236	)
Realized gain (loss) on investments		(12,345	)		(51,064	)		(210,011	)		(201,509	)		(110,035	)		(280,625	)		(23,946	)		(75,894	)
Change in unrealized gain (loss) on investments		164,070			213,947			457,698			668,441			311,679			632,861			101,368			190,253
Reinvested capital gains		750			-			-			-			-			-			-			251

Net increase (decrease) in contract owners’ equity resulting from operations		143,586			154,987			250,336			478,996			198,529			355,662			72,999			112,374

Equity transactions:
Purchase payments received from contract owners (note 3)		71,221			56,319			126,447			125,098			148,044			147,096			24,640			40,809
Transfers between funds		(61,793	)		(37,489	)		(55,867	)		34,928			(126,342	)		(43,152	)		(15,398	)		(46,525	)
Redemptions (note 3)		(148,060	)		(93,460	)		(576,352	)		(277,562	)		(250,034	)		(455,129	)		(29,511	)		(32,960	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-			-			-			(3,060	)		(3,512	)		-			-
Contingent deferred sales charges (note 2)		(648	)		(1,149	)		(1,407	)		(1,600	)		139			(276	)		(171	)		(243	)
Adjustments to maintain reserves		(46	)		(29	)		(72	)		(77	)		121			(8	)		(75	)		(53	)

Net equity transactions		(139,326	)		(75,808	)		(507,251	)		(119,213	)		(231,132	)		(354,981	)		(20,515	)		(38,972	)

Net change in contract owners’ equity		4,260			79,179			(256,915	)		359,783			(32,603	)		681			52,484			73,402
Contract owners’ equity beginning of period		730,621			651,442			2,524,127			2,164,344			1,860,200			1,859,519			345,902			272,500

Contract owners’ equity end of period	$	734,881			730,621			2,267,212			2,524,127			1,827,597			1,860,200			398,386			345,902

CHANGES IN UNITS:
Beginning units		124,740			140,144			222,198			234,094			103,627			127,058			54,119			61,783
Units purchased		11,931			18,005			14,024			32,537			9,294			12,115			6,454			18,282
Units redeemed		(33,629	)		(33,409	)		(57,668	)		(44,433	)		(21,740	)		(35,546	)		(9,501	)		(25,946	)

Ending units		103,042			124,740			178,554			222,198			91,181			103,627			51,072			54,119

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	FAGO						FAHY						FAOA						FCI
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(22,288	)		(15,639	)		38,514			33,658			(3	)		40			24,299			22,685
Realized gain (loss) on investments		4,953			(65,602	)		(7,001	)		(137,177	)		16			(40	)		19			(3,446	)
Change in unrealized gain (loss) on investments		360,137			626,114			74,733			412,492			868			2,279			39,602			152,466
Reinvested capital gains		-			1,248			-			1,591			18			21			-			1,886

Net increase (decrease) in contract owners’ equity resulting from operations		342,802			546,121			106,246			310,564			899			2,300			63,920			173,591

Equity transactions:
Purchase payments received from contract owners (note 3)		124,312			170,837			72			-			-			-			-			-
Transfers between funds		(53,899	)		(110,520	)		(31,923	)		(29,232	)		-			(3,235	)		(2,490	)		(11,739	)
Redemptions (note 3)		(241,524	)		(206,323	)		(97,647	)		(165,721	)		(1,718	)		(1	)		(794	)		(249	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(3,735	)		(3,603	)		(1,087	)		(1,034	)		-			-			(607	)		(578	)
Contingent deferred sales charges (note 2)		(948	)		(463	)		(10	)		(109	)		-			-			-			-
Adjustments to maintain reserves		(12	)		(23	)		83			224			(7	)		(10	)		93			64

Net equity transactions		(175,806	)		(150,095	)		(130,512	)		(195,872	)		(1,725	)		(3,246	)		(3,798	)		(12,502	)

Net change in contract owners’ equity		166,996			396,026			(24,266	)		114,692			(826	)		(946	)		60,122			161,089
Contract owners’ equity beginning of period		1,739,069			1,343,043			727,082			612,390			8,321			9,267			412,496			251,407

Contract owners’ equity end of period	$	1,906,065			1,739,069			702,816			727,082			7,495			8,321			472,618			412,496

CHANGES IN UNITS:
Beginning units		152,316			170,528			36,159			53,238			847			1,180			4,474			4,633
Units purchased		15,774			20,928			1,956			4,608			-			-			-			-
Units redeemed		(31,040	)		(39,140	)		(8,264	)		(21,687	)		(169	)		(333	)		(40	)		(159	)

Ending units		137,050			152,316			29,851			36,159			678			847			4,434			4,474

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	FEI						FHIP						FMG						FPR
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	26,158			37,041			1,707			1,471			(38,069	)		(44,961	)		48,893			78,033
Realized gain (loss) on investments		(147,800	)		(222,885	)		(5	)		(55	)		(503,766	)		(837,875	)		(27,443	)		(70,538	)
Change in unrealized gain (loss) on investments		786,148			1,387,964			1,313			5,820			1,287,551			3,175,827			606,277			1,094,984
Reinvested capital gains		-			-			-			-			7,384			2,457			927			3,277

Net increase (decrease) in contract owners’ equity resulting from operations		664,506			1,202,120			3,015			7,236			753,100			2,295,448			628,654			1,105,756

Equity transactions:
Purchase payments received from contract owners (note 3)		208,706			264,144			-			-			308,863			434,152			242,542			198,069
Transfers between funds		104,279			(159,643	)		-			-			(213,059	)		(3,216	)		86,936			(142,779	)
Redemptions (note 3)		(670,524	)		(669,094	)		-			-			(1,001,994	)		(877,035	)		(691,562	)		(541,892	)
Annuity benefits		(261	)		(239	)		-			-			-			-			-			-
Contract maintenance charges (note 2)		(7,482	)		(7,944	)		(20	)		(21	)		(12,777	)		(13,860	)		(6,717	)		(7,354	)
Contingent deferred sales charges (note 2)		(964	)		(1,560	)		-			-			(1,316	)		(986	)		(1,086	)		(195	)
Adjustments to maintain reserves		97			101			(13	)		(5	)		135			(19	)		46			(10	)

Net equity transactions		(366,149	)		(574,235	)		(33	)		(26	)		(920,148	)		(460,964	)		(369,841	)		(494,161	)

Net change in contract owners’ equity		298,357			627,885			2,982			7,210			(167,048	)		1,834,484			258,813			611,595
Contract owners’ equity beginning of period		5,432,647			4,804,762			24,408			17,198			7,960,286			6,125,802			5,303,824			4,692,229

Contract owners’ equity end of period	$	5,731,004			5,432,647			27,390			24,408			7,793,238			7,960,286			5,562,637			5,303,824

CHANGES IN UNITS:
Beginning units		61,956			70,057			871			872			317,718			340,576			174,283			192,799
Units purchased		5,107			5,130			-			-			13,177			25,545			11,624			9,644
Units redeemed		(9,545	)		(13,231	)		(1	)		(1	)		(50,534	)		(48,403	)		(23,516	)		(28,160	)

Ending units		57,518			61,956			870			871			280,361			317,718			162,391			174,283

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	FO2R						FRBSI						TFF						TMSF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(478	)		14,261			8,306			(1,544	)		7,940			5,059			81,453			47,923
Realized gain (loss) on investments		(457,012	)		(353,063	)		(340,729	)		(428,085	)		(370,974	)		(775,122	)		(236,967	)		(444,458	)
Change in unrealized gain (loss) on investments		633,934			746,716			615,367			903,558			464,280			1,428,653			656,698			1,563,622
Reinvested capital gains		3,865			6,148			203,634			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		180,309			414,062			486,578			473,929			101,246			658,590			501,184			1,167,087

Equity transactions:
Purchase payments received from contract owners (note 3)		200,807			192,529			134,605			142,094			-			-			335,168			386,154
Transfers between funds		(93,887	)		(165,230	)		(214,803	)		(91,948	)		(47,003	)		(32,162	)		32,557			(338,615	)
Redemptions (note 3)		(294,752	)		(193,220	)		(509,761	)		(343,041	)		(297,232	)		(545,390	)		(1,018,984	)		(749,690	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(1,343	)		(1,327	)		-			-			(2,090	)		(2,434	)		(3,723	)		(4,266	)
Contingent deferred sales charges (note 2)		(911	)		(2,006	)		(3,081	)		(3,428	)		(238	)		(696	)		(4,723	)		(2,720	)
Adjustments to maintain reserves		1,506			(62	)		(40	)		(71	)		36			(58	)		(122	)		(211	)

Net equity transactions		(188,580	)		(169,316	)		(593,080	)		(296,394	)		(346,527	)		(580,740	)		(659,827	)		(709,348	)

Net change in contract owners’ equity		(8,271	)		244,746			(106,502	)		177,535			(245,281	)		77,850			(158,643	)		457,739
Contract owners’ equity beginning of period		2,106,532			1,861,786			2,779,669			2,602,134			1,879,216			1,801,366			5,518,368			5,060,629

Contract owners’ equity end of period	$	2,098,261			2,106,532			2,673,167			2,779,669			1,633,935			1,879,216			5,359,725			5,518,368

CHANGES IN UNITS:
Beginning units		175,129			192,827			164,620			186,547			88,536			128,037			370,806			429,113
Units purchased		50,175			35,499			9,613			22,142			-			-			38,282			39,922
Units redeemed		(68,797	)		(53,197	)		(42,624	)		(44,069	)		(16,779	)		(39,501	)		(82,620	)		(98,229	)

Ending units		156,507			175,129			131,609			164,620			71,757			88,536			326,468			370,806

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	FSCG						TIF3						NBGST						NBGF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(13,217	)		(12,444	)		13,821			57,247			(124,202	)		(115,546	)		(14,001	)		(10,914	)
Realized gain (loss) on investments		(68,815	)		(120,117	)		(300,682	)		(216,210	)		(269,408	)		(554,503	)		3,815			(108,922	)
Change in unrealized gain (loss) on investments		344,069			514,198			450,838			886,044			2,175,443			2,727,188			254,740			478,898
Reinvested capital gains		-			-			-			110,677			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		262,037			381,637			163,977			837,758			1,781,833			2,057,139			244,554			359,062

Equity transactions:
Purchase payments received from contract owners (note 3)		46,846			69,603			300,278			343,240			381,004			488,951			32,485			82,168
Transfers between funds		(31,102	)		(109,223	)		(79,754	)		(114,244	)		(558,523	)		(439,604	)		(23,113	)		(107,925	)
Redemptions (note 3)		(241,268	)		(129,913	)		(682,074	)		(354,047	)		(1,828,713	)		(1,496,472	)		(180,063	)		(220,307	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-			(1,981	)		(2,139	)		(6,105	)		(6,867	)		(2,111	)		(2,363	)
Contingent deferred sales charges (note 2)		(215	)		(807	)		(3,761	)		(1,162	)		(4,133	)		(5,158	)		(5	)		(182	)
Adjustments to maintain reserves		(44	)		(86	)		(74	)		(53	)		341			(101	)		(18	)		(4	)

Net equity transactions		(225,783	)		(170,426	)		(467,366	)		(128,405	)		(2,016,129	)		(1,459,251	)		(172,825	)		(248,613	)

Net change in contract owners’ equity		36,254			211,211			(303,389	)		709,353			(234,296	)		597,888			71,729			110,449
Contract owners’ equity beginning of period		1,134,419			923,208			3,163,292			2,453,939			10,288,233			9,690,345			1,516,365			1,405,916

Contract owners’ equity end of period	$	1,170,673			1,134,419			2,859,903			3,163,292			10,053,937			10,288,233			1,588,094			1,516,365

CHANGES IN UNITS:
Beginning units		155,606			178,924			231,595			243,351			431,654			506,634			78,552			93,599
Units purchased		6,514			28,807			40,752			55,052			31,622			44,491			1,938			5,583
Units redeemed		(35,457	)		(52,125	)		(76,760	)		(66,808	)		(111,686	)		(119,471	)		(10,747	)		(20,630	)

Ending units		126,663			155,606			195,587			231,595			351,590			431,654			69,743			78,552

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	NBGT						PF						NBPT						NLMB
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(1,183	)		(739	)		(40,648	)		(18,216	)		(2,853	)		(803	)		14,587			25,998
Realized gain (loss) on investments		(1,751	)		(6,317	)		(13,079	)		(86,160	)		(6,704	)		(20,631	)		(13,530	)		(73,050	)
Change in unrealized gain (loss) on investments		27,448			39,079			504,365			1,315,008			43,751			117,280			32,135			123,961
Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		24,514			32,023			450,638			1,210,632			34,194			95,846			33,192			76,909

Equity transactions:
Purchase payments received from contract owners (note 3)		383			1,016			230,307			192,852			11,404			3,329			39,873			24,300
Transfers between funds		(326	)		(4,100	)		50,011			(57,070	)		(2,872	)		(3,872	)		46,474			73,911
Redemptions (note 3)		(8,294	)		(6,815	)		(518,154	)		(292,304	)		(19,829	)		(29,413	)		(94,378	)		(200,343	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-			(4,663	)		(4,732	)		-			-			(812	)		(890	)
Contingent deferred sales charges (note 2)		-			(106	)		(112	)		(626	)		(485	)		(107	)		(3	)		(69	)
Adjustments to maintain reserves		(24	)		6			(79	)		6			5			(23	)		19			46

Net equity transactions		(8,261	)		(9,999	)		(242,690	)		(161,874	)		(11,777	)		(30,086	)		(8,827	)		(103,045	)

Net change in contract owners’ equity		16,253			22,024			207,948			1,048,758			22,417			65,760			24,365			(26,136	)
Contract owners’ equity beginning of period		144,646			122,622			3,512,455			2,463,697			260,739			194,979			722,722			748,858

Contract owners’ equity end of period	$	160,899			144,646			3,720,403			3,512,455			283,156			260,739			747,087			722,722

CHANGES IN UNITS:
Beginning units		14,316			15,586			115,319			124,626			22,103			25,492			51,020			59,145
Units purchased		61			191			18,779			14,272			1,446			397			6,324			15,839
Units redeemed		(883	)		(1,461	)		(26,861	)		(23,579	)		(2,474	)		(3,786	)		(6,918	)		(23,964	)

Ending units		13,494			14,316			107,237			115,319			21,075			22,103			50,426			51,020

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	NBSRT						OCHI						OVGS4						OCAF
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(10,741	)		(6,740	)		17,107			5,331			(443	)		27,992			(15,446	)		(15,110	)
Realized gain (loss) on investments		(55,176	)		(70,911	)		4,915			(211,838	)		(254,765	)		(379,674	)		(38,457	)		(76,816	)
Change in unrealized gain (loss) on investments		291,061			316,162			(4,898	)		216,792			952,011			1,766,558			147,259			574,575
Reinvested capital gains		-			-			-			-			-			96,305			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		225,144			238,511			17,124			10,285			696,803			1,511,181			93,356			482,649

Equity transactions:
Purchase payments received from contract owners (note 3)		87,250			68,068			18,207			11,650			496,322			452,987			51,770			81,165
Transfers between funds		172,651			(68,890	)		(19,741	)		4,545			(153,340	)		(272,212	)		(5,970	)		(21,105	)
Redemptions (note 3)		(273,388	)		(90,547	)		(26,523	)		(13,104	)		(871,369	)		(524,327	)		(239,087	)		(160,134	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(328	)		(260	)		-			-			(3,699	)		(3,586	)		-			-
Contingent deferred sales charges (note 2)		(975	)		(728	)		(6	)		(133	)		(2,444	)		(2,628	)		(644	)		(1,189	)
Adjustments to maintain reserves		(1,369	)		(44	)		701			20			1,043			(318	)		(36	)		(45	)

Net equity transactions		(16,159	)		(92,401	)		(27,362	)		2,978			(533,487	)		(350,084	)		(193,967	)		(101,308	)

Net change in contract owners’ equity		208,985			146,110			(10,238	)		13,263			163,316			1,161,097			(100,611	)		381,341
Contract owners’ equity beginning of period		1,027,469			881,359			71,469			58,206			5,359,597			4,198,500			1,484,634			1,103,293

Contract owners’ equity end of period	$	1,236,454			1,027,469			61,231			71,469			5,522,913			5,359,597			1,384,023			1,484,634

CHANGES IN UNITS:
Beginning units		91,835			101,361			21,838			20,984			418,147			450,764			204,982			216,105
Units purchased		30,318			13,329			243,335			24,207			56,024			85,352			17,461			55,562
Units redeemed		(30,800	)		(22,855	)		(248,533	)		(23,353	)		(96,799	)		(117,969	)		(45,415	)		(66,685	)

Ending units		91,353			91,835			16,640			21,838			377,372			418,147			177,028			204,982

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	OGF						OSI						PMTRA						PUIGA
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(23,174	)		(34,494	)		73,805			47,159			64,813			158,725			31			41
Realized gain (loss) on investments		126,625			(105,132	)		(16,611	)		(16,922	)		171,237			(29,901	)		(10	)		(17	)
Change in unrealized gain (loss) on investments		558,684			1,790,085			116,950			134,203			(147,613	)		268,034			308			709
Reinvested capital gains		38,026			-			-			-			196,207			41,811			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		700,161			1,650,459			174,144			164,440			284,644			438,669			329			733

Equity transactions:
Purchase payments received from contract owners (note 3)		(161	)		(2	)		58,851			44,723			207,801			141,965			-			-
Transfers between funds		(111,096	)		(139,864	)		869,480			190,751			1,017,907			655,557			-			-
Redemptions (note 3)		(1,009,104	)		(550,518	)		(296,801	)		(88,552	)		(1,419,556	)		(1,229,865	)		-			-
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(6,194	)		(6,842	)		-			-			-			-			-			-
Contingent deferred sales charges (note 2)		(437	)		(473	)		(376	)		(2,005	)		(1,262	)		(5,401	)		-			-
Adjustments to maintain reserves		(61	)		(318	)		492			130			474			(557	)		(1	)		(1	)

Net equity transactions		(1,127,053	)		(698,017	)		631,646			145,047			(194,636	)		(438,301	)		(1	)		(1	)

Net change in contract owners’ equity		(426,892	)		952,442			805,790			309,487			90,008			368			328			732
Contract owners’ equity beginning of period		5,832,080			4,879,638			1,011,659			702,172			4,057,102			4,056,734			3,857			3,125

Contract owners’ equity end of period	$	5,405,188			5,832,080			1,817,449			1,011,659			4,147,110			4,057,102			4,185			3,857

CHANGES IN UNITS:
Beginning units		204,845			239,483			62,556			52,611			241,882			270,552			265			265
Units purchased		-			-			57,105			21,636			144,660			85,874			-			-
Units redeemed		(45,519	)		(34,638	)		(22,439	)		(11,691	)		(155,536	)		(114,544	)		-			-

Ending units		159,326			204,845			97,222			62,556			231,006			241,882			265			265

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	PVF						VKGIA						VKGA						VKRES
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(1,431	)		839			2,304			7,701			(9,464	)		(9,327	)		(638	)		4,507
Realized gain (loss) on investments		17,010			26,464			(132,087	)		(183,097	)		(82,998	)		(200,772	)		(47,800	)		(844,143	)
Change in unrealized gain (loss) on investments		22,381			33,600			313,396			597,036			286,779			605,422			246,147			1,014,908
Reinvested capital gains		-			-			-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		37,960			60,903			183,613			421,640			194,317			395,323			197,709			175,272

Equity transactions:
Purchase payments received from contract owners (note 3)		11,246			21,330			91,505			104,282			50,824			43,209			43,306			118,234
Transfers between funds		41,800			44,883			(141,531	)		(53,598	)		64,444			(155,168	)		(52,865	)		55,606
Redemptions (note 3)		(15,237	)		(15,940	)		(510,846	)		(274,184	)		(313,744	)		(94,713	)		(183,037	)		(289,161	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-			-			-			-			-			-			-
Contingent deferred sales charges (note 2)		(6	)		(207	)		(2,574	)		(4,700	)		(1,691	)		(1,009	)		(968	)		(849	)
Adjustments to maintain reserves		(21	)		(1	)		234			(53	)		253			(11	)		(73	)		(70	)

Net equity transactions		37,782			50,065			(563,212	)		(228,253	)		(199,914	)		(207,692	)		(193,637	)		(116,240	)

Net change in contract owners’ equity		75,742			110,968			(379,599	)		193,387			(5,597	)		187,631			4,072			59,032
Contract owners’ equity beginning of period		157,004			46,036			2,118,535			1,925,148			897,880			710,249			896,072			837,040

Contract owners’ equity end of period	$	232,746			157,004			1,738,936			2,118,535			892,283			897,880			900,144			896,072

CHANGES IN UNITS:
Beginning units		11,311			5,382			145,665			162,476			50,066			62,283			52,866			62,570
Units purchased		8,268			20,453			11,805			26,352			8,033			16,838			6,648			39,895
Units redeemed		(5,513	)		(14,524	)		(50,177	)		(43,163	)		(18,562	)		(29,055	)		(16,375	)		(49,599	)

Ending units		14,066			11,311			107,293			145,665			39,537			50,066			43,139			52,866

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	PBF						WRASCA						SCS						SGR
	2010			2009			2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	3,013			7,109			(5,144	)		(3,091	)		(33,117	)		(25,374	)		(7,115	)		(5,918	)
Realized gain (loss) on investments		(26,760	)		(13,690	)		25,523			(57,863	)		(92,770	)		(345,492	)		991			(33,875	)
Change in unrealized gain (loss) on investments		87,985			128,869			126,831			161,119			643,604			1,144,863			136,224			225,688
Reinvested capital gains		-			-			-			-			33,273			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		64,238			122,288			147,210			100,165			550,990			773,997			130,100			185,895

Equity transactions:
Purchase payments received from contract owners (note 3)		49,844			36,495			9,441			18,982			101,523			91,848			52,401			35,114
Transfers between funds		(15,297	)		21,661			406,051			(15,421	)		195,990			(48,917	)		(13,073	)		(32,211	)
Redemptions (note 3)		(88,696	)		(45,291	)		(104,693	)		(11,880	)		(589,917	)		(425,600	)		(47,046	)		(92,928	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(924	)		(1,013	)		-			-			(1,854	)		(1,905	)		-			-
Contingent deferred sales charges (note 2)		(9	)		(65	)		(407	)		(186	)		(818	)		(414	)		(154	)		(320	)
Adjustments to maintain reserves		(43	)		(18	)		(13	)		(37	)		(198	)		(37	)		(34	)		(26	)

Net equity transactions		(55,125	)		11,769			310,379			(8,542	)		(295,274	)		(385,025	)		(7,906	)		(90,371	)

Net change in contract owners’ equity		9,113			134,057			457,589			91,623			255,716			388,972			122,194			95,524
Contract owners’ equity beginning of period		678,463			544,406			261,564			169,941			2,542,019			2,153,047			532,935			437,411

Contract owners’ equity end of period	$	687,576			678,463			719,153			261,564			2,797,735			2,542,019			655,129			532,935

CHANGES IN UNITS:
Beginning units		33,587			32,819			17,748			16,298			147,479			175,388			39,201			46,687
Units purchased		3,201			3,330			26,976			13,724			22,641			16,019			4,917			8,248
Units redeemed		(5,948	)		(2,562	)		(8,501	)		(12,274	)		(40,611	)		(43,928	)		(5,425	)		(15,734	)

Ending units		30,840			33,587			36,223			17,748			129,509			147,479			38,693			39,201

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	WFLCCI					STR						SGI						WFMCGZ
	2010			2009		2010			2009			2010			2009			2010			2009
Investment activity:
Net investment income (loss)	$	(180	)		-		(18,964	)		(14,584	)		(359	)		(636	)		(3,177	)		(3,213	)
Realized gain (loss) on investments		1,003			-		59,665			18,454			(21,302	)		(18,977	)		32,768			(82,367	)
Change in unrealized gain (loss) on investments		14,832			-		173,526			365,683			10,016			50,596			11,463			212,238
Reinvested capital gains		-			-		-			-			-			-			-			-

Net increase (decrease) in contract owners’ equity resulting from operations		15,655			-		214,227			369,553			(11,645	)		30,983			41,054			126,658

Equity transactions:
Purchase payments received from contract owners (note 3)		79			-		78,829			101,339			297			925			16,246			53,954
Transfers between funds		101,523			-		(70,722	)		34,865			(92,040	)		(11,626	)		(28,675	)		(21,247	)
Redemptions (note 3)		(8,459	)		-		(100,871	)		(85,314	)		(10,209	)		(5,170	)		(103,701	)		(49,995	)
Annuity benefits		-			-		-			-			-			-			-			-
Contract maintenance charges (note 2)		-			-		(1,931	)		(2,013	)		-			-			-			-
Contingent deferred sales charges (note 2)		(53	)		-		(698	)		-			-			-			(184	)		(58	)
Adjustments to maintain reserves		(9	)		-		-			-			(46	)		(7	)		(3	)		(40	)

Net equity transactions		93,081			-		(95,393	)		48,877			(101,998	)		(15,878	)		(116,317	)		(17,386	)

Net change in contract owners’ equity		108,736			-		118,834			418,430			(113,643	)		15,105			(75,263	)		109,272
Contract owners’ equity beginning of period		-			-		1,478,149			1,059,719			113,643			98,538			281,446			172,174

Contract owners’ equity end of period	$	108,736			-		1,596,983			1,478,149			-			113,643			206,183			281,446

CHANGES IN UNITS:
Beginning units		-			-		63,733			61,544			17,526			20,927			23,273			21,653
Units purchased		10,063			-		4,369			7,493			80			3,219			1,295			21,943
Units redeemed		(757	)		-		(8,353	)		(5,304	)		(17,606	)		(6,620	)		(10,209	)		(20,323	)

Ending units		9,306			-		59,749			63,733			-			17,526			14,359			23,273

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	DBF					WPGF					BF					JABR
	2010		2009			2010		2009			2010		2009			2010		2009
Investment activity:
Net investment income (loss)	$	-		9,502			-		821			-		778			-		5,599
Realized gain (loss) on investments		-		(100,944	)		-		(26,150	)		-		(70,684	)		-		(216,121	)
Change in unrealized gain (loss) on investments		-		134,050			-		58,723			-		67,028			-		260,743
Reinvested capital gains		-		-			-		-			-		-			-		-

Net increase (decrease) in contract owners’ equity resulting from operations		-		42,608			-		33,394			-		(2,878	)		-		50,221

Equity transactions:
Purchase payments received from contract owners (note 3)		-		2,799			-		24,088			-		32,540			-		23,920
Transfers between funds		-		(421,148	)		-		(907,687	)		-		(172,037	)		-		(1,169,383	)
Redemptions (note 3)		-		(8,695	)		-		(16,937	)		-		(12,017	)		-		(96,168	)
Annuity benefits		-		-			-		-			-		-			-		-
Contract maintenance charges (note 2)		-		(281	)		-		(575	)		-		(204	)		-		-
Contingent deferred sales charges (note 2)		-		(48	)		-		(336	)		-		(42	)		-		(1,036	)
Adjustments to maintain reserves		-		221			-		5			-		(22	)		-		(40	)

Net equity transactions		-		(427,152	)		-		(901,442	)		-		(151,782	)		-		(1,242,707	)

Net change in contract owners’ equity		-		(384,544	)		-		(868,048	)		-		(154,660	)		-		(1,192,486	)
Contract owners’ equity beginning of period		-		384,544			-		868,048			-		154,660			-		1,192,486

Contract owners’ equity end of period	$	-		-			-		-			-		-			-		-

CHANGES IN UNITS:
Beginning units		-		30,808			-		55,748			-		17,226			-		109,127
Units purchased		-		12,572			-		6,226			-		8,028			-		12,567
Units redeemed		-		(43,380	)		-		(61,974	)		-		(25,254	)		-		(121,694	)

Ending units		-		-			-		-			-		-			-		-

(Continued)

NATIONWIDE VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2010 and 2009


	JAIGR					JAWGR					NVOA
	2010		2009			2010		2009			2010		2009
Investment activity:
Net investment income (loss)	$	-		(112	)		-		17,505			-		451
Realized gain (loss) on investments		-		8,408			-		(48,121	)		-		(90,178	)
Change in unrealized gain (loss) on investments		-		3,567			-		70,135			-		108,216
Reinvested capital gains		-		-			-		-			-		-

Net increase (decrease) in contract owners’ equity resulting from operations		-		11,863			-		39,519			-		18,489

Equity transactions:
Purchase payments received from contract owners (note 3)		-		-			-		-			-		33,540
Transfers between funds		-		(51,889	)		-		(266,125	)		-		(97,320	)
Redemptions (note 3)		-		(58	)		-		(10,360	)		-		(89,096	)
Annuity benefits		-		-			-		-			-		-
Contract maintenance charges (note 2)		-		-			-		-			-		-
Contingent deferred sales charges (note 2)		-		-			-		(8	)		-		(51	)
Adjustments to maintain reserves		-		1			-		(17	)		-		(26	)

Net equity transactions		-		(51,946	)		-		(276,510	)		-		(152,953	)

Net change in contract owners’ equity		-		(40,083	)		-		(236,991	)		-		(134,464	)
Contract owners’ equity beginning of period		-		40,083			-		236,991			-		134,464

Contract owners’ equity end of period	$	-		-			-		-			-		-

CHANGES IN UNITS:
Beginning units		-		4,368			-		52,632			-		13,461
Units purchased		-		-			-		-			-		3,604
Units redeemed		-		(4,368	)		-		(52,632	)		-		(17,065	)

Ending units		-		-			-		-			-		-

See accompanying notes to financial statements.

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide Variable Account (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on March 3, 1976. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers Individual Deferred Variable Annuity Contracts through the Account. As of December 25, 1982, only tax qualified contracts are issued. The primary distribution for the contract is through the Company for Individual Retirement Account rollovers; however, other distributors may be utilized.

(b) The Contracts

Only contracts without a front-end sales charge, but with a contingent deferred sales charge and certain other fees, are offered for purchase. See note 2 for a discussion of contract charges.

With certain exceptions, contract owners in either the accumulation or the payout phase may invest in the following:

ABERDEEN FUNDS

Aberdeen Small Cap Fund - Class A (PRSCA)

Global Fixed Income Fund - Institutional Service Class (ADGFIS)

AMERICAN CENTURY INVESTORS, INC.

Income & Growth Fund - Class A (ACIGA)

CREDIT SUISSE ASSET MANAGEMENT

Large Cap Blend Fund - Common Class (CSLCBC)

DELAWARE GROUP FUNDS

High-Yield Opportunities Fund - Institutional Class (DWHYOI)

FIDELITY INVESTMENTS

Asset Manager 50% (FAM)

JANUS FUNDS

Janus Balanced Fund - Class S (JBS)

Janus Fund Class - J Shares (JF)

Janus Overseas Fund - Class S (JOS)

Janus Twenty Fund - Class J (JTF)

Janus Worldwide Fund - Class J (JWF)

Janus Worldwide Fund - Class S (JWS)

LAZARD FUNDS

U.S. Small-Mid Cap Equity Portfolio - Open Shares (LSC)

MASSACHUSETTS FINANCIAL SERVICES CO.

MFS Strategic Income Fund - Class A (MSI)

NATIONWIDE FUNDS GROUP

Bond Fund - Class D (NBF)

Bond Index Fund - Class A (NBIXA)

Fund - Class D (NF)

Government Bond Fund - Class D (NGBF)

Growth Fund - Class D (NGF)

International Index Fund - Class A (NIIXA)

Investor Destinations Aggressive Fund - Service Class (IDAS)

Investor Destinations Conservative Fund - Service Class (IDCS)

Investor Destinations Moderate Fund - Service Class (IDMS)

Investor Destinations Moderately Aggressive Fund - Service Class (IDMAS)

Investor Destinations Moderately Conservative Fund - Service Class (IDMCS)

Mid Cap Market Index Fund - Class A (NMCIXA)

Money Market Fund - Prime Shares (MMF)

Money Market Fund - Service Class (MMFR)

Nationwide Growth Fund - Class A (NGFA)

Nationwide Large Cap Value Fund - Class A (PRLVA)

NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)

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 Multi-Manager International Growth Fund - Class VI (NVMIG6)

S&P 500 Index Fund - Service Class (NIXR)

Small Cap Index Fund - Class A (NSCIXA)

Templeton NVIT International Value Fund - Class III (NVTIV3)

PORTFOLIOS OF THE AIM VARIABLE INSURANCE FUNDS

AIM Small Cap Growth Fund - Investor Class (ASCGI)

Basic Balanced Fund - Investor Class (ABBLI)

Dynamics Fund - Investor Class (IDF)

PORTFOLIOS OF THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

American Century International Growth Fund - Class A (TCIGA)

American Century International Growth Fund - Investor Class (TCIGR)

Growth Fund - Investor Class (TCG)

Income & Growth Fund - Investor Class (IGF)

Short-Term Government Fund - Investor Class (BSTG)

Ultra(R) Fund - Investor Class (TCUL)

VP International Fund - Class IV (ACVI4)

PORTFOLIOS OF THE DREYFUS INVESTMENT PORTFOLIOS

Appreciation Fund, Inc. (DAF)

Balanced Opportunity Fund - Class Z (DPBOZ)

Dreyfus S&P 500 Index Fund (DSPI)

Emerging Leaders Fund (DEL)

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010

Intermediate Term Income Fund - Class A (DPITIA)

Third Century Fund, Inc. - Class Z (DTC)

PORTFOLIOS OF THE EVERGREEN VARIABLE ANNUITY FUNDS

Equity Income Fund - Class I (EIG)

PORTFOLIOS OF THE FEDERATED INSURANCE SERIES

Bond Fund - Class F Shares (FBDF)

Equity Income Fund, Inc. - Class F Shares (FEQIF)

High Yield Trust (FHYT)

Intermediate Corporate Bond Fund - Institutional Service Shares (FIIF)

PORTFOLIOS OF THE FIDELITY(R) VARIABLE INSURANCE PRODUCTS

Advisor Balanced Fund - Class A (FABA)

Advisor Balanced Fund - Class T (FAB)

Advisor Equity Growth Fund - Class A (FAEGA)

Advisor Equity Income Fund - Class A (FAEIA)

Advisor Equity Income Fund - Class T (FAEI)

Advisor Growth Opportunities Fund - Class A (FAGOA)

Advisor Growth Opportunities Fund - Class T (FAGO)

Advisor High Income Advantage Fund - Class T (FAHY)

Advisor Overseas Fund - Class A (FAOA)

Capital & Income Fund (FCI)

Equity-Income Fund (FEI)

High Income Portfolio - Initial Class (FHIP)

Magellan Fund (FMG)

Puritan Fund (FPR)

VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)

PORTFOLIOS OF THE FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Balance Sheet Investment Fund - Class A (FRBSI)

Foreign Fund - Class A (TFF)

Mutual Series Funds - Mutual Shares Fund - Class A (TMSF)

Small-Mid Cap Growth Fund - Class A (FSCG)

Templeton Foreign Securities Fund - Class 3 (TIF3)

PORTFOLIOS OF THE NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST

Genesis Fund - Trust Class (NBGST)

Guardian Fund - Investor Class (NBGF)

Guardian Fund - Trust Class (NBGT)

Partners Fund - Investor Class (PF)

Partners Fund - Trust Class (NBPT)

Short Duration Bond Fund - Investor Class (NLMB)

Socially Responsive Fund - Trust Class (NBSRT)

PORTFOLIOS OF THE OPPENHEIMER VARIABLE ACCOUNT FUNDS

Champion Income Fund - Class A (OCHI)

Global Securities Fund/VA - Class 4 (OVGS4)

Oppenheimer Capital Appreciation Fund - Class A (OCAF)

Oppenheimer Global Fund - Class A (OGF)

Oppenheimer Strategic Income Fund - Class A (OSI)

PORTFOLIOS OF THE PIMCO VARIABLE INSURANCE TRUST

PIMCO Total Return Fund - Class A (PMTRA)

PORTFOLIOS OF THE PUTNAM VARIABLE TRUST

Putnam International Equity Fund - Class A (PUIGA)

Voyager Fund - Class A (PVF)

PORTFOLIOS OF THE VAN KAMPEN - THE UNIVERSAL INSTITUTIONAL FUNDS, INC.

Van Kampen Growth and Income Fund - Class A (VKGIA)

Van Kampen Mid Cap Growth Fund - Class A (VKGA)

Van Kampen Real Estate Securities Fund - Class A (VKRES)

VIRTUS MUTUAL FUNDS

Virtus Balanced Fund - Class A (PBF)

WADDELL & REED, INC.

Advisors Small Cap Fund - Class A (WRASCA)

WELLS FARGO FUNDS

Advantage Funds(R) - Common Stock Fund - Investor Class (SCS)

Advantage Funds(R) - Growth Fund - Investor Class (SGR)

Advantage Funds(R) - Large Cap Core - Investor Class (WFLCCI)

Advantage Funds(R) - Large Cap Growth Fund - Investor Class (STR)

Advantage Funds(R) - Mid Cap Growth Fund - Investor Class (WFMCGZ)

The contract owners’ equity is affected by the investment results of each fund, equity transactions by contract owners and certain contract expenses (see note 2). 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 for premiums applied and subsequently reversed and related gain realized by the contract owner, or a realized gain resulting from transfers made into and out of the fund within the current period, if applicable.

Nationwide (or The Company) allocates purchase payments to sub-accounts and/or the fixed account as instructed by the contract owner. Shares of the sub-accounts are purchased at Net Asset Value, then converted into accumulation units. Certain transactions may be subject to conditions imposed by the underlying mutual funds, as well as those set forth in the contract.

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010

The Company allocates purchase payments to sub-accounts and/or the fixed account as instructed by the contract owner. Shares of the sub-accounts are purchased at Net Asset Value, then converted into accumulation units. Certain transactions may be subject to conditions imposed by the underlying mutual funds, as well as those set forth in the contract.

Investments in underlying mutual funds are valued at the closing net asset value per share at December 31, 2010 of such funds, which represents fair value. The cost of investments sold is determined on a first in – first out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed), and dividends and capital gain distributions are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

Operations of the Account form a part of, and are taxed with, operations of the Company which is taxed as a life insurance company under the Internal Revenue Code. The Company does not provide for income taxes within the Account. Taxes are generally the responsibility of the contract owner upon termination or withdrawal.

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

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

(f) Calculation of Annuity Reserves

At each financial reporting date, the separate account financial statement includes an aggregate amount of net assets allocated to future contract benefits for the contracts in the payout (annuitization) period. The payout (annuitization) period begins when amounts accumulated under the contract (the contract value) are applied according to payment method selected by the contract holder.

Annuity reserves are computed for contracts in the variable payout stage according to industry standard mortality tables. The assumed investment return is 3.5% unless the annuitant elects otherwise, in which case the rate may vary from 3.5% to 7%, as regulated by the laws of the respective states. The mortality risk is fully borne by the Company and may result in additional amounts being transferred into the Account by the Company to cover greater longevity of annuitants than expected. Conversely, if reserves exceed amounts required, transfers may be made to the Company.

(g) Recently Issued Accounting Standards

In September 2006, the FASB issued FASB ASC 820, Fair Value Measurements and Disclosures (SFAS No. 157, Fair Value Measurements). FASB ASC 820 provides enhanced guidance for using fair value to measure assets and liabilities and requires new disclosures about fair value measurements and also provides guidance regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. For assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition, the reporting entity shall disclose information that enables financial statement users to assess the inputs used to develop those measurements. FASB ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances.

FASB ASC 820 was effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Account adopted FASB ASC 820 effective January 1, 2008. The adoption of FASB ASC 820 did not have a material impact on the Account’s financial position or results of operations.

In September 2009 the FASB issued ASU 2009-12, which amends FASB ASC 820, Fair Value Measurements and Disclosures. This guidance applies to reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or nonrecurring basis if the investment does not have a readily determinable fair value and the investee has attributes of an investment company. For these investments, this update allows, as a practical expedient, the use of net asset value (NAV) as the basis to estimate fair value as long as it is not probable, as of the measurement date that the investment will be sold and NAV is not the value that will be used in the sale. The NAVs must be calculated consistent with the American Institute of Certified Public Accountants Audit and Accounting Guide, Investment Companies, which generally requires these investments to be measured at fair value. Additionally, the guidance provided updated disclosures for investments within its scope and noted that if the investor can redeem the investment with the investee on the measurement date at NAV, the investment should likely be classified as Level 2 in the fair value hierarchy. Investments that cannot be redeemed with the investee at NAV would generally be classified as Level 3 in the fair value hierarchy. If the investment is not redeemable with the investee on the measurement date, but will be at a future date, the length of time until the investment is redeemable should be considered in determining classification as Level 2 or 3. This guidance is effective for interim and annual periods ending after December 15, 2009 with early adoption permitted. The Account adopted this guidance effective the period ending December 31, 2009. The adoption of this guidance did not have a material impact on the financial statements of the Account.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures. This guidance requires new disclosures and provides amendments to clarify existing disclosures. The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements, the reasons for the transfers, and further disaggregating activity in level 3 fair value measurements. The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2010, except for the new disclosure regarding the activity in Level 3 measurements, which the Company will adopt for the fiscal period beginning January 1, 2011.

(h) Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued with the SEC.

(2) Expenses

The Company does not deduct a sales charge from purchase payments received from the contract owners. However, if any part of the contract value of such contracts is redeemed, the Company will, with certain exceptions, deduct from a contract owners’ contract value a contingent deferred sales charge. For Soloist contracts issued prior to January 1, 1993, the contingent deferred sales charge will be equal to 5% of purchase payments redeemed from the contract. For Soloist contracts issued on or after January 1, 1993, the Company will deduct a contingent deferred sales charge not to exceed 7% of purchase payments redeemed. This charge declines 1% per year. For both contracts, after the purchase payment has been held in the contract for 7 years, the charge is 0%.

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010

For Successor contracts, the standard contract does not include a contingent deferred sales charge. However, one of two optional contingent deferred sales charge schedules may be elected in return for a reduction in the annual mortality and expense risk charge. No sales charges are deducted on redemptions used to purchase units in the fixed investment options of the Company. On Soloist contracts, the Company deducts a contract maintenance charge of $30, which is satisfied by redeeming units. No contract maintenance charge is deducted on Successor contracts. The Company deducts a mortality and expense risk charge assessed through a reduction of the unit value. The Option table below illustrates the annual rate for all contract level charges by product as well as the maximum variable account charge per product. The table also summarizes the contract level options available to contract holders. The options and related charges are described in more detail in the applicable product prospectus.


Nationwide Variable Account Options	Soloist	Successor
Variable Account Charges - Recurring	1.30%	1.20%
CDSC Options:
Seven Year CDSC		-0.25%
Five Year CDSC		-0.10%
Reduced Purchase Payment Option:
Initial lowered to $1,000 and subsequent lowered to $25.
In states other than Oregon		0.25%
In Oregon only		0.30%
Death Benefit Options:
Five-Year Reset (for contract issued on or after 1-2-01)		0.05%
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrencers or (iii) highest contract value before 86th birthday less surrenders.
One-Year Enhanced (for contracts issues on or after 1-2-01)		0.15%
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrencers or (iii) highest contract value before 86th birthday less surrenders.
Greater of One-Year or 5% Enhanced (for contract issued on or after 1-2-01)		0.20%
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrenders or (iii) highest contract value before 86th birthday less surrenders, or (iv) the 5% interest anniversary value.
Five-Year Reset (for contracts issued prior to 1-2-01)		0.05%
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrencers or (iii) contract value as of the most recent five-year contract anniversary prior to annuitant’s 86th birthday, less adjustment for amounts subsequently surrendered plus purchase payments received after that five-year contract anniversary.
One-Year Step Up (for contracts issued prior to 1-2-01)		0.10%
If death before annuitization, benefit will be greatest of (i) contract value, (ii) purchase payments less surrencers or (iii) highest contract value before 86th birthday less surrenders.
Guaranteed Minimum Income Benefit Options:
Provide for minimum guaranteed value that may replace contract value for annuitization under certain circumstances (for contracts issued prior to May 1, 2003)
Option 1		0.45%
Option 2		0.30%
Beneficiary Protector Option		0.40%
Upon annuitant death, in addition to any death benefit payable, an additional amount will be credited to contract.

Maximum Variable Account Charges*	1.30%	2.55%

*	The contract charges indicated in bold, when summarized, represent the Maximum Variable Account Charge if all optional benefits available under the contract are elected including the most expensive of the mutually exclusive optional benefits.

The following table provides mortality and expense risk charges by asset fee rates for the period ended December 31, 2010.

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Total		PRSCA		ADGFIS		ACIGA		CSLCBC		WPEG		DWHYOI		FAM

0.95%	$	237,923	$	838	$	-	$	3,446	$	-	$	-	$	-	$	-
1%		10,203		30		-		59		-		-		-		-
1.05%		3,337		-		-		464		-		-		-		-
1.1%		88,417		625		-		1,978		-		-		-		-
1.15%		35,444		230		-		455		-		-		-		-
1.2%		223,017		1,549		-		5,011		-		-		-		-
1.25%		30,300		410		-		554		-		-		-		-
1.3%		1,856,549		17,694		12,244		220		4,730		15,154		8,602		21,801
1.35%		50,085		30		-		660		-		-		-		-
1.4%		44,624		125		-		1,842		-		-		-		-
1.45%		137,691		484		-		1,323		-		-		-		-
1.5%		21,865		4		-		410		-		-		-		-
1.55%		326		-		-		34		-		-		-		-
1.6%		4,045		-		-		17		-		-		-		-
1.65%		8,179		-		-		841		-		-		-		-
1.7%		4,213		-		-		-		-		-		-		-
1.75%		380		-		-		14		-		-		-		-
1.8%		292		-		-		-		-		-		-		-
1.9%		609		-		-		81		-		-		-		-
2.05%		21		-		-		-		-		-		-		-

Totals	$	2,757,520	$	22,019	$	12,244	$	17,409	$	4,730	$	15,154	$	8,602	$	21,801


	JBS		JF		JOS		JTF		JWF		JWS		LSC		MSI

0.95%	$	5,076	$	1,609	$	1,247	$	4,872	$	16	$	578	$	423	$	-
1%		88		32		41		29		-		33		-		-
1.05%		-		259		-		45		-		-		-		-
1.1%		39		255		8		1,130		35		-		23		-
1.15%		911		96		94		-		-		-		-		-
1.2%		3,478		1,637		1,282		4,730		125		1,259		345		-
1.25%		984		445		193		1,261		209		204		63		-
1.3%		37		46,534		22		192,645		31,026		-		25,404		14,031
1.35%		791		410		683		461		-		259		6		-
1.4%		620		154		94		851		-		61		-		-
1.45%		1,114		575		272		1,238		51		784		265		-
1.5%		471		261		336		10		-		7		55		-
1.55%		-		-		-		45		-		-		-		-
1.6%		-		-		-		35		-		-		46		-
1.65%		215		26		-		73		-		50		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		-		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		-		9		-		2		-		2		49		-
2.05%		-		-		-		-		-		-		-		-

	$	13,824	$	52,302	$	4,272	$	207,427	$	31,462	$	3,237	$	26,679	$	14,031


	NBF		NBIXA		NF		NGBF		NGF		NIIXA		IDAS		IDCS

0.95%	$	886	$	1,467	$	3,912	$	10,305	$	370	$	-	$	1,675	$	10,107
1%		83		-		28		-		-		-		1,413		201
1.05%		169		-		-		53		-		-		-		-
1.1%		-		165		476		1,297		-		24		528		1,558
1.15%		-		47		170		2,674		-		-		843		991
1.2%		172		1,821		839		4,646		31		123		6,403		2,931
1.25%		121		53		174		227		-		1		434		1,108
1.3%		16,424		62		31,649		26,374		4,566		-		-		-
1.35%		-		170		55		2,077		2		1		2,190		211
1.4%		-		35		-		3,098		-		-		802		-
1.45%		808		1,774		397		4,285		43		37		4,451		2,712
1.5%		-		84		10		41		-		-		523		27
1.55%		-		-		-		-		-		-		-		-
1.6%		-		-		-		-		-		-		10		1,391
1.65%		-		38		11		-		-		-		72		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		-		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		13		-		-		33		-		-		-		-
2.05%		4		-		-		-		-		-		-		-

	$	18,680	$	5,716	$	37,721	$	55,110	$	5,012	$	186	$	19,344	$	21,237

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	IDMS		IDMAS		IDMCS		NMCIXA		MMF		MMFR		NGFA		PRLVA

0.95%	$	14,393	$	7,983	$	2,738	$	2,809	$	-	$	9,364	$	437	$	1,415
1%		298		424		113		180		-		820		-		-
1.05%		-		-		-		-		-		59		-		-
1.1%		5,541		4,874		4,056		812		-		14,248		115		876
1.15%		4,914		1,595		1,023		1,404		-		2,944		-		154
1.2%		9,938		14,852		3,197		2,067		-		13,277		411		1,721
1.25%		1,808		348		929		95		-		1,410		95		68
1.3%		189		170		112		88		121,318		212		3,514		11,119
1.35%		2,193		3,773		1,423		647		-		2,052		318		587
1.4%		2,673		1,357		940		354		-		652		17		53
1.45%		11,107		9,036		2,982		1,887		-		9,184		206		1,438
1.5%		2,935		2,677		245		452		-		1,185		-		89
1.55%		-		-		-		-		-		-		-		-
1.6%		281		26		51		39		-		347		-		8
1.65%		697		122		-		71		-		27		-		32
1.7%		4,213		-		-		-		-		-		-		-
1.75%		308		-		-		1		-		20		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		19		19		-		-		-		48		-		-
2.05%		-		-		-		-		-		-		-		-

	$	61,507	$	47,256	$	17,809	$	10,906	$	121,318	$	55,849	$	5,113	$	17,560


	GVIDA		GVIDC		GVIDM		GVDMA		GVDMC		NVMIG6		NIXR		NSCIXA

0.95%	$	-	$	-	$	227	$	-	$	-	$	-	$	2,709	$	1,572
1%		-		-		-		-		-		76		371		66
1.05%		-		-		-		-		-		-		-		-
1.1%		-		-		319		-		-		18		1,793		660
1.15%		-		-		83		-		-		-		-		291
1.2%		-		-		554		-		-		37		5,484		2,521
1.25%		-		-		40		-		-		79		1,004		212
1.3%		17,509		3,064		23,042		30,824		7,859		309		12,548		-
1.35%		-		-		1		-		-		28		774		659
1.4%		-		-		-		-		-		-		25		239
1.45%		-		-		710		-		-		1		2,945		1,386
1.5%		-		-		-		-		-		-		1,467		163
1.55%		-		-		-		-		-		-		41		-
1.6%		-		-		872		-		-		-		26		-
1.65%		-		-		-		-		-		-		24		40
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		-		1		-
1.8%		-		-		-		-		-		-		84		-
1.9%		-		-		-		-		-		-		-		-
2.05%		-		-		-		-		-		-		1		-

	$	17,509	$	3,064	$	25,848	$	30,824	$	7,859	$	548	$	29,297	$	7,809


	NVTIV3		ASCGI		ABBLI		IDF		TCIGA		TCIGR		TCG		IGF

0.95%	$	-	$	1,277	$	225	$	2,958	$	208	$	-	$	776	$	-
1%		-		20		-		87		-		-		10		-
1.05%		-		15		-		71		-		-		47		-
1.1%		-		12		68		1,998		-		-		2,453		-
1.15%		-		149		33		136		-		-		522		-
1.2%		43		1,535		244		2,403		661		-		3,213		-
1.25%		-		360		101		830		83		-		154		-
1.3%		508		16		-		34,356		-		10,088		60,409		36,096
1.35%		25		51		24		563		11		-		724		-
1.4%		24		15		557		621		39		-		345		-
1.45%		52		292		150		1,572		115		-		2,730		-
1.5%		-		301		-		213		52		-		137		-
1.55%		-		25		-		58		-		-		-		-
1.6%		-		8		-		7		-		-		-		-
1.65%		-		29		-		1		-		-		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		-		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		-		-		-		-		-		-		-		-
2.05%		-		-		2		-		-		-		-		-

	$	652	$	4,105	$	1,404	$	45,874	$	1,169	$	10,088	$	71,520	$	36,096

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	BSTG		TCUL		ACVI4		DAF		DPBOZ		DSPI		DEL		DPITIA

0.95%	$	4,130	$	3,015	$	1,169	$	3,034	$	1,176	$	-	$	-	$	-
1%		1,188		41		37		94		-		-		-		-
1.05%		-		-		30		-		102		-		-		-
1.1%		462		1,329		461		954		287		-		-		-
1.15%		-		32		256		74		42		-		-		-
1.2%		2,708		5,581		2,224		5,844		1,151		-		64		-
1.25%		240		330		189		608		268		-		40		-
1.3%		17,303		65,914		15,016		17,102		7,416		121,101		-		20,912
1.35%		104		608		948		1,443		101		-		-		-
1.4%		34		786		977		366		25		-		-		-
1.45%		3,648		1,375		746		1,287		1,824		-		-		-
1.5%		220		284		104		546		60		-		-		-
1.55%		-		19		-		-		-		-		-		-
1.6%		29		6		3		9		4		-		-		-
1.65%		92		74		16		121		-		-		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		1		-		-		-		-		-		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		14		-		-		8		-		-		-		-
2.05%		-		-		-		-		-		-		-		-

	$	30,173	$	79,394	$	22,176	$	31,490	$	12,456	$	121,101	$	104	$	20,912


	DTC		EIG		FBDF		FEQIF		FHYT		FIIF		FABA		FAB

0.95%	$	286	$	-	$	1,795	$	92	$	11,929	$	2,804	$	712	$	-
1%		-		-		-		-		117		-		-		-
1.05%		-		-		16		-		8		-		82		-
1.1%		4		-		4		-		1,336		1,609		978		-
1.15%		146		-		-		-		113		4		-		-
1.2%		441		-		844		545		2,614		2,669		153		-
1.25%		204		-		207		437		283		60		548		-
1.3%		6,473		9,095		20,181		-		16,245		-		-		13,644
1.35%		6		-		19		4		239		1,665		483		-
1.4%		-		-		4		-		1,471		54		20		-
1.45%		159		-		1,199		204		2,002		493		222		-
1.5%		10		-		-		-		205		34		175		-
1.55%		-		-		-		-		-		-		-		-
1.6%		-		-		-		-		-		-		-		-
1.65%		-		-		-		-		-		537		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		1		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		-		-		12		-		48		-		-		-
2.05%		-		-		14		-		-		-		-		-

	$	7,729	$	9,095	$	24,295	$	1,282	$	36,610	$	9,930	$	3,373	$	13,644


	FAEGA		FAEIA		FAEI		FAGOA		FAGO		FAHY		FAOA		FCI

0.95%	$	1,416	$	6,124	$	-	$	334	$	-	$	460	$	26	$	-
1%		123		110		-		-		-		66		-		-
1.05%		-		317		-		-		-		31		-		-
1.1%		775		1,962		-		340		-		4		-		-
1.15%		131		1,069		-		140		-		-		-		-
1.2%		2,557		5,741		-		2,106		-		279		24		-
1.25%		313		1,406		-		134		-		153		-		-
1.3%		24		218		23,765		-		22,288		8,010		-		5,694
1.35%		244		2,407		-		189		-		-		15		-
1.4%		416		2,586		-		224		-		-		-		-
1.45%		2,093		5,081		-		596		-		28		23		-
1.5%		562		930		-		360		-		-		-		-
1.55%		-		-		-		-		-		-		-		-
1.6%		26		73		-		-		-		-		-		-
1.65%		209		739		-		-		-		-		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		16		-		-		-		-		-		-
1.8%		-		21		-		-		-		-		-		-
1.9%		-		81		-		-		-		8		-		-
2.05%		-		-		-		-		-		-		-		-

	$	8,889	$	28,881	$	23,765	$	4,423	$	22,288	$	9,039	$	88	$	5,694

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	FEI		FHIP		FMG		FPR		FO2R		FRBSI		TFF		TMSF

0.95%	$	-	$	-	$	-	$	-	$	2,524	$	7,529	$	1,307	$	8,774
1%		-		-		-		-		40		328		39		293
1.05%		-		-		-		-		-		-		52		86
1.1%		-		-		-		-		2,260		3,310		740		1,593
1.15%		-		-		-		-		136		1,035		-		1,808
1.2%		-		-		-		-		2,157		6,852		1,238		7,139
1.25%		-		-		-		-		167		1,523		8		1,263
1.3%		68,570		333		96,936		68,928		15,439		233		16,443		34,937
1.35%		-		-		-		-		281		1,928		118		2,263
1.4%		-		-		-		-		50		2,384		394		2,996
1.45%		-		-		-		-		1,159		6,385		553		4,121
1.5%		-		-		-		-		75		242		18		1,085
1.55%		-		-		-		-		-		21		-		20
1.6%		-		-		-		-		-		1		-		213
1.65%		-		-		-		-		24		685		47		604
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		-		-		-
1.8%		-		-		-		-		-		-		-		24
1.9%		-		-		-		-		-		-		-		70
2.05%		-		-		-		-		-		-		-		-

	$	68,570	$	333	$	96,936	$	68,928	$	24,312	$	32,456	$	20,957	$	67,289


	FSCG		TIF3		NBGST		NBGF		NBGT		PF		NBPT		NLMB

0.95%	$	3,324	$	2,553	$	10,851	$	-	$	326	$	-	$	976	$	-
1%		127		131		379		-		48		-		266		-
1.05%		436		55		64		-		-		-		95		-
1.1%		579		858		6,575		-		154		-		67		-
1.15%		285		851		1,167		-		-		-		295		-
1.2%		3,141		2,955		15,027		-		668		-		739		-
1.25%		866		141		982		-		-		-		67		-
1.3%		52		23,488		77,199		19,219		-		44,972		-		9,750
1.35%		586		483		4,197		-		166		-		16		-
1.4%		702		2,659		2,725		-		7		-		-		-
1.45%		2,211		1,704		4,202		-		342		-		265		-
1.5%		476		443		760		-		-		-		85		-
1.55%		-		-		-		-		-		-		-		-
1.6%		64		31		73		-		-		-		-		-
1.65%		341		31		-		-		-		-		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		-		-		-		-
1.8%		27		-		-		-		-		-		-		-
1.9%		-		-		1		-		-		-		1		-
2.05%		-		-		-		-		-		-		-		-

	$	13,217	$	36,383	$	124,202	$	19,219	$	1,711	$	44,972	$	2,872	$	9,750


	NBSRT		OCHI		OVGS4		OCAF		OGF		OSI		PMTRA		PUIGA

0.95%	$	3,247	$	1,717	$	7,786	$	5,038	$	3,465	$	7,311	$	16,921	$	-
1%		133		-		449		72		124		-		182		-
1.05%		-		-		110		56		393		90		-		-
1.1%		2,843		-		2,064		850		1,747		334		3,660		-
1.15%		218		1		1,210		443		392		1,266		2,037		-
1.2%		1,026		273		7,501		5,211		2,131		2,245		11,010		-
1.25%		44		46		1,303		285		986		338		817		-
1.3%		2,545		18		37,194		29		55,613		-		293		-
1.35%		266		77		1,181		689		503		646		2,002		-
1.4%		843		10		848		342		1,084		612		3,372		-
1.45%		1,455		468		4,892		1,606		879		2,266		5,864		53
1.5%		16		-		491		471		433		50		576		-
1.55%		-		-		-		-		44		-		19		-
1.6%		-		-		7		9		10		38		170		-
1.65%		-		-		123		324		1		-		1,634		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		-		2		-		-		-
1.8%		-		-		-		21		-		-		115		-
1.9%		-		-		25		-		49		-		-		-
2.05%		-		-		-		-		-		-		-		-

	$	12,636	$	2,610	$	65,184	$	15,446	$	67,856	$	15,196	$	48,672	$	53

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	PVF		VKGIA		VKGA		VKRES		PBF		WRASCA		SCS		SGR

0.95%	$	498	$	7,884	$	3,404	$	1,938	$	-	$	1,135	$	3,344	$	938
1%		38		494		206		398		-		38		140		-
1.05%		-		76		40		-		-		-		16		-
1.1%		28		1,062		659		1,193		-		747		443		126
1.15%		525		678		224		541		-		316		-		80
1.2%		623		4,512		3,317		2,761		-		1,659		2,635		2,300
1.25%		-		456		223		476		-		135		300		237
1.3%		-		264		-		114		8,554		-		23,492		-
1.35%		279		1,878		404		500		-		71		374		672
1.4%		-		1,416		47		828		-		348		18		328
1.45%		261		2,546		824		2,217		-		653		1,775		2,385
1.5%		14		155		116		30		-		37		570		49
1.55%		-		-		-		-		-		-		-		-
1.6%		9		44		-		7		-		5		-		-
1.65%		-		163		-		45		-		-		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		16		-		-		-		-		-		-
1.8%		-		-		-		-		-		-		-		-
1.9%		-		-		-		7		-		-		10		-
2.05%		-		-		-		-		-		-		-		-

	$	2,275	$	21,644	$	9,464	$	11,055	$	8,554	$	5,144	$	33,117	$	7,115


	WFLCCI		STR		SGI		WFMCGZ

0.95%	$	39	$	-	$	92	$	582
1%		-		-		-		-
1.05%		-		-		-		-
1.1%		-		-		-		36
1.15%		-		-		-		170
1.2%		459		-		543		810
1.25%		-		-		-		160
1.3%		-		18,964		-		-
1.35%		4		-		6		161
1.4%		8		-		8		39
1.45%		11		-		13		1,195
1.5%		2		-		2		24
1.55%		-		-		-		-
1.6%		23		-		27		-
1.65%		-		-		-		-
1.7%		-		-		-		-
1.75%		-		-		-		-
1.8%		-		-		-		-
1.9%		-		-		-		-
2.05%		-		-		-		-

	$	546	$	18,964	$	691	$	3,177

(3) 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. The fixed account assets are not reflected in the accompanying financial statements. In addition, the Account portion of contract owner loans is transferred to the accounts of the Company for administration and collection. Loan repayments are transferred to the Account at the direction of the contract owner. For the years ended December 31, 2010 and 2009, total transfers to the Account from the fixed account were $1,693,023 and $377,977, respectively, and total transfers from the Account to the fixed account were $2,764,763 and $2,164,583, respectively. Transfers from the Account to the fixed account are included in redemptions, and transfers to the Account from the fixed account are included in purchase payments received from contract owners, as applicable, on the accompanying Statements of Changes in Contract Owners’ Equity.

For guaranteed minimum death benefits, the Company contributed $80,817 and $504,776 to the Account in the form of additional premium to contract owner accounts for the years ended December 31, 2010 and 2009, respectively. These amounts are included in purchase payments received from contract owners and are credited at time of annuitant death.

(4) 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.

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010

The Account categorizes financial assets recorded at fair value as follows:

•

Level 1 – Unadjusted quoted prices accessible in active markets for identical assets at the measurement date. The assets utilizing Level 1 valuations represent investments in publicly-traded registered mutual funds with quoted market prices.

•

Level 2 – Unadjusted quoted prices for similar assets in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means. The assets utilizing Level 2 valuations represent investments in privately-traded registered mutual funds only offered through insurance products. These funds have no unfunded commitments or restrictions and the Account always has the ability to redeem its interest in the funds with the investee at NAV daily. The investment objectives of these mutual funds are described by the fund name in note 1(b) and in more detail in the applicable product prospectus.

•

Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Account invests only in funds with fair value measurements in the first two levels of the fair value hierarchy.

The Account recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Level 1 and 2 as of December 31, 2010.

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Separate Account Investments	$	205,976,407	$	19,883,666		0	$	225,860,073

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.


	Purchases of Investments		Sales of Investments
Aberdeen Small Cap Fund - Class A (PRSCA)	$	840,409	$	496,235
Global Fixed Income Fund - Institutional Service Class (ADGFIS)		206,350		221,562
Income & Growth Fund - Class A (ACIGA)		240,682		165,016
Large Cap Blend Fund - Common Class (CSLCBC)		21,543		22,109
Mid-Cap Core Fund - Common Class (WPEG)		1,483,579		1,755,899
High-Yield Opportunities Fund - Institutional Class (DWHYOI)		306,854		389,033
Asset Manager 50% (FAM)		202,328		185,867
Janus Balanced Fund - Class S (JBS)		399,437		462,029
Janus Fund Class - J Shares (JF)		691,117		711,480
Janus Overseas Fund - Class S (JOS)		113,949		132,350
Janus Twenty Fund - Class J (JTF)		2,071,881		2,639,327
Janus Worldwide Fund - Class J (JWF)		545,700		423,346
Janus Worldwide Fund - Class S (JWS)		42,889		54,509
U.S. Small-Mid Cap Equity Portfolio - Open Shares (LSC)		468,450		344,246
MFS Strategic Income Fund - Class A (MSI)		154,377		149,124
Bond Fund - Class D (NBF)		253,112		259,524
Bond Index Fund - Class A (NBIXA)		572,556		598,268
Fund - Class D (NF)		2,179,181		1,406,780
Government Bond Fund - Class D (NGBF)		2,659,524		2,820,734
Growth Fund - Class D (NGF)		18,200		23,317
International Index Fund - Class A (NIIXA)		1,660		1,538
Investor Destinations Aggressive Fund - Service Class (IDAS)		437,920		334,605
Investor Destinations Conservative Fund - Service Class (IDCS)		1,363,238		1,361,467
Investor Destinations Moderate Fund - Service Class (IDMS)		1,017,889		886,637
Investor Destinations Moderately Aggressive Fund - Service Class (IDMAS)		676,719		583,163
Investor Destinations Moderately Conservative Fund - Service Class (IDMCS)		309,300		280,725
Mid Cap Market Index Fund - Class A (NMCIXA)		251,721		215,530
Money Market Fund - Prime Shares (MMF)		3,497,924		3,497,924
Money Market Fund - Service Class (MMFR)		1,835,592		1,835,592
Nationwide Growth Fund - Class A (NGFA)		43,088		44,651
Nationwide Large Cap Value Fund - Class A (PRLVA)		487,526		291,153
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)		686,576		437,643
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)		173,193		188,237
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)		185,851		146,665
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)		512,191		377,020
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)		86,636		82,362
NVIT Multi-Manager International Growth Fund - Class VI (NVMIG6)		53,190		59,751
S&P 500 Index Fund - Service Class (NIXR)		990,054		855,509
Small Cap Index Fund - Class A (NSCIXA)		178,086		139,299
Templeton NVIT International Value Fund - Class III (NVTIV3)		30,690		34,604
AIM Small Cap Growth Fund - Investor Class (ASCGI)		203,475		169,531
Basic Balanced Fund - Investor Class (ABBLI)		73,792		60,143
Dynamics Fund - Investor Class (IDF)		609,509		804,925
American Century International Growth Fund - Class A (TCIGA)		2,886		3,479
American Century International Growth Fund - Investor Class (TCIGR)		89,142		123,379
Growth Fund - Investor Class (TCG)		593,227		598,933
Income & Growth Fund - Investor Class (IGF)		624,768		488,885
Short-Term Government Fund - Investor Class (BSTG)		501,201		524,089
Ultra(R) Fund - Investor Class (TCUL)		1,062,068		846,809
VP International Fund - Class IV (ACVI4)		596,581		408,561
Appreciation Fund, Inc. (DAF)		446,571		409,160
Balanced Opportunity Fund - Class Z (DPBOZ)		314,493		246,477
Dreyfus S&P 500 Index Fund (DSPI)		973,521		1,156,326
Emerging Leaders Fund (DEL)		258		108
Intermediate Term Income Fund - Class A (DPITIA)		301,830		318,069
Third Century Fund, Inc. - Class Z (DTC)		82,648		112,376
Equity Income Fund - Class I (EIG)		148,242		107,755

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


Bond Fund - Class F Shares (FBDF)		330,290		343,352
Equity Income Fund, Inc. - Class F Shares (FEQIF)		12,202		9,558
High Yield Trust (FHYT)		3,158,442		3,711,756
Intermediate Corporate Bond Fund - Institutional Service Shares (FIIF)		288,534		293,566
Advisor Balanced Fund - Class A (FABA)		82,518		73,063
Advisor Balanced Fund - Class T (FAB)		257,466		224,182
Advisor Equity Growth Fund - Class A (FAEGA)		193,216		180,871
Advisor Equity Income Fund - Class A (FAEIA)		811,992		601,981
Advisor Equity Income Fund - Class T (FAEI)		455,396		345,361
Advisor Growth Opportunities Fund - Class A (FAGOA)		86,114		62,168
Advisor Growth Opportunities Fund - Class T (FAGO)		313,936		318,889
Advisor High Income Advantage Fund - Class T (FAHY)		180,573		173,572
Advisor Overseas Fund - Class A (FAOA)		1,799		1,815
Capital & Income Fund (FCI)		9,548		9,567
Equity-Income Fund (FEI)		913,469		765,669
High Income Portfolio - Initial Class (FHIP)		363		358
Magellan Fund (FMG)		1,607,662		1,103,896
Puritan Fund (FPR)		654,852		627,409
VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)		1,194,709		737,697
Balance Sheet Investment Fund - Class A (FRBSI)		1,042,229		701,500
Foreign Fund - Class A (TFF)		738,488		367,514
Mutual Series Funds - Mutual Shares Fund - Class A (TMSF)		1,269,425		1,032,458
Small-Mid Cap Growth Fund - Class A (FSCG)		331,899		263,084
Templeton Foreign Securities Fund - Class 3 (TIF3)		1,188,899		888,217
Genesis Fund - Trust Class (NBGST)		2,683,194		2,413,786
Guardian Fund - Investor Class (NBGF)		203,855		207,670
Guardian Fund - Trust Class (NBGT)		12,114		10,363
Partners Fund - Investor Class (PF)		702,784		689,705
Partners Fund - Trust Class (NBPT)		37,025		30,321
Short Duration Bond Fund - Investor Class (NLMB)		112,400		98,870
Socially Responsive Fund - Trust Class (NBSRT)		410,961		355,785
Champion Income Fund - Class A (OCHI)		870,158		875,073
Global Securities Fund/VA - Class 4 (OVGS4)		1,224,052		969,287
Oppenheimer Capital Appreciation Fund - Class A (OCAF)		337,150		298,693
Oppenheimer Global Fund - Class A (OGF)		1,068,253		1,194,878
Oppenheimer Strategic Income Fund - Class A (OSI)		391,238		374,627
PIMCO Total Return Fund - Class A (PMTRA)		2,396,485		2,567,722
Putnam International Equity Fund - Class A (PUIGA)		65		55
Voyager Fund - Class A (PVF)		64,685		81,695
Van Kampen Growth and Income Fund - Class A (VKGIA)		822,514		690,427
Van Kampen Mid Cap Growth Fund - Class A (VKGA)		425,921		342,923
Van Kampen Real Estate Securities Fund - Class A (VKRES)		346,848		299,048
Virtus Balanced Fund - Class A (PBF)		149,495		122,735
Advisors Small Cap Fund - Class A (WRASCA)		99,124		124,647
Advantage Funds(R) - Common Stock Fund - Investor Class (SCS)		708,873		616,103
Advantage Funds(R) - Growth Fund - Investor Class (SGR)		75,788		76,779
Advantage Funds(R) - Large Cap Core - Investor Class (WFLCCI)		8,016		9,019
Advantage Funds(R) - Large Cap Growth Fund - Investor Class (STR)		118,276		177,941
Advantage Funds(R) - Large Company Core Fund - Investor Class (SGI)		124,467		103,165
Advantage Funds(R) - Mid Cap Growth Fund - Investor Class (WFMCGZ)		95,919		128,687

Total	$	61,529,055	$	56,991,342

(5) Financial Highlights

The Company offers several variable annuity products through the Account that have unique combinations of features and fees that are assessed to the contract owner. Differences in fee structures result in a variety of contract expense rates, unit fair values and total returns. The following tabular presentation is a summary of units, unit fair values and contract owners’ equity outstanding for variable annuity contracts as of the end of the periods indicated, and contract expense rate, investment income ratio and total return for each period in the five-year period ended December 31, 2010. The information is presented as a range of minimum to maximum values based upon product grouping. The range is determined by identifying the lowest and the highest contract expense rate for contracts with units outstanding as of the balance sheet date. The unit fair values and total returns related to these identified contract expense rates are also disclosed as a range below. Accordingly, some individual contract amounts may not be within the ranges presented.

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Aberdeen Small Cap Fund - Class A (PRSCA)
2010		0.95% to 1.50%		81,745	$	19.71 to $ 18.57	$	1,843,302		0.36	%		26.51% to 25.81%
2009		0.95% to 1.50%		103,567		15.58 to 14.76		1,836,852		0.00	%		36.22% to 35.47%
2008		0.95% to 1.50%		115,944		11.44 to 10.90		1,507,368		0.29	%		-45.40% to -45.71%
2007		0.95% to 1.65%		158,170		20.95 to 19.84		3,800,681		0.62	%		-6.94% to -7.60%
2006		0.95% to 1.65%		216,630		22.51 to 21.47		5,654,710		0.19	%		27.94% to 27.03%
Global Fixed Income Fund - Institutional Service Class (ADGFIS)
2010		1.30%		80,749		10.96		884,615		5.34	%		3.84%
2009		1.30%		89,576		10.55		945,003		1.40	%		5.50%		*
Income & Growth Fund - Class A (ACIGA)
2010		0.95% to 1.90%		170,813		9.22 to 8.32		1,536,531		1.19	%		12.75% to 11.67%
2009		0.95% to 1.90%		185,704		8.18 to 7.45		1,483,938		1.97	%		16.46% to 15.35%
2008		0.95% to 1.90%		193,769		7.02 to 6.46		1,333,084		1.41	%		-35.43% to -36.05%
2007		0.95% to 1.90%		236,674		10.88 to 10.10		2,530,492		1.28	%		-1.49% to -2.44%
2006		0.95% to 1.90%		246,562		11.04 to 10.36		2,684,228		1.54	%		15.76% to 14.65%
Large Cap Blend Fund - Common Class (CSLCBC)
2010		1.30%		153,595		10.62		1,631,092		0.31	%		6.19%		*
Mid-Cap Core Fund - Common Class (WPEG)
2009		1.30%		108,609		14.06		1,527,404		0.76	%		33.80%
2008		1.30%		118,749		10.51		1,248,174		0.72	%		-38.99%
2007		1.30%		158,338		17.23		2,727,762		0.00	%		10.13%
2006		1.30%		200,167		15.64		3,131,298		0.00	%		0.39%
High-Yield Opportunities Fund - Institutional Class (DWHYOI)
2010		1.30%		48,155		15.44		743,548		8.90	%		15.15%
2009		1.30%		51,698		13.41		693,236		6.31	%		34.09%		*
Asset Manager 50% (FAM)
2010		1.30%		71,921		24.18		1,739,186		1.80	%		12.04%
2009		1.30%		76,622		21.58		1,653,754		2.46	%		29.24%
2008		1.30%		84,558		16.70		1,412,125		2.87	%		-28.74%
2007		1.30%		96,918		23.44		2,271,357		3.09	%		4.94%
2006		1.30%		114,369		22.33		2,554,173		2.83	%		7.77%
Janus Balanced Fund - Class S (JBS)
2010		0.95% to 1.65%		92,967		12.29 to 12.16		1,139,235		1.95	%		6.49% to 5.74%
2009		0.95% to 1.65%		102,509		11.54 to 11.50		1,182,271		0.65	%		15.43% to 15.03%		*
Janus Fund Class - J Shares (JF)
2010		0.95% to 2.05%		264,736		6.52 to 5.79		4,160,420		0.23	%		10.16% to 8.93%
2009		0.95% to 2.05%		315,151		5.92 to 5.31		4,377,228		0.49	%		36.00% to 34.49%
2008		0.95% to 2.05%		342,863		4.35 to 3.95		3,522,123		0.58	%		-40.41% to -41.07%
2007		0.95% to 2.05%		442,645		7.30 to 6.70		7,474,855		0.50	%		14.12% to 12.85%
2006		0.95% to 2.05%		516,839		6.40 to 5.94		7,573,724		0.33	%		9.54% to 8.33%
Janus Overseas Fund -Class S (JOS)
2010		0.95% to 1.50%		32,990		14.91 to 14.79		490,290		0.00	%		17.85% to 17.19%
2009		0.95% to 1.50%		13,953		12.65 to 12.62		176,315		0.47	%		26.52% to 26.17%		*
Janus Twenty Fund - Class J (JTF)
2010		0.95% to 1.90%		554,286		7.76 to 7.00		16,144,328		0.24	%		5.96% to 4.94%
2009		0.95% to 1.90%		631,933		7.32 to 6.67		17,300,779		0.00	%		41.91% to 40.55%
2008		0.95% to 1.90%		702,689		5.16 to 4.74		13,313,774		0.01	%		-42.52% to -43.08%
2007		0.95% to 1.90%		763,202		8.98 to 8.34		26,571,915		0.21	%		34.64% to 33.35%
2006		0.95% to 1.90%		878,681		6.67 to 6.25		22,841,154		0.57	%		11.23% to 10.17%
Janus Worldwide Fund - Class J (JWF)
2010		0.95% to 1.45%		159,288		6.39 to 6.05		2,468,371		0.47	%		14.52% to 13.94%
2009		0.95% to 1.45%		186,615		5.58 to 5.31		2,543,389		1.21	%		36.37% to 35.68%
2008		0.95% to 1.45%		211,026		4.09 to 3.91		2,121,683		0.80	%		-45.54% to -45.82%
2007		0.95% to 1.45%		284,148		7.51 to 7.22		5,184,712		0.50	%		8.19% to 7.64%
2006		0.95% to 1.50%		340,387		6.94 to 6.69		5,786,091		1.20	%		16.78% to 16.14%
Janus Worldwide Fund - Class S (JWS)
2010		0.95% to 1.65%		18,742		14.00 to 13.85		261,201		0.11	%		15.73% to 14.91%
2009		0.95% to 1.90%		22,694		12.09 to 12.04		274,116		0.29	%		20.94% to 20.37%		*
U.S. Small-Mid Cap Equity Portfolio - Open Shares (LSC)
2010		0.95% to 1.90%		104,955		21.31 to 19.23		2,383,031		0.00	%		22.19% to 21.02%
2009		0.95% to 1.90%		105,658		17.44 to 15.89		1,967,783		0.00	%		53.49% to 52.02%
2008		0.95% to 1.90%		110,931		11.36 to 10.45		1,350,395		0.00	%		-35.35% to -35.98%
2007		0.95% to 1.90%		118,811		17.58 to 16.33		2,240,523		0.00	%		-7.49% to -8.39%
2006		0.95% to 1.90%		139,652		19.00 to 17.82		2,859,414		0.00	%		15.66% to 14.56%
MFS Strategic Income Fund - Class A (MSI)
2010		1.30%		70,649		16.29		1,150,745		5.24	%		8.47%
2009		1.30%		69,165		15.02		1,038,632		6.21	%		23.35%
2008		1.30%		56,765		12.17		691,060		7.47	%		-12.96%
2007		1.30%		62,675		13.99		876,658		5.73	%		2.23%
2006		1.30%		66,662		13.68		912,120		6.00	%		5.44%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Bond Fund - Class D (NBF)
2010		0.95% to 2.05%		27,488	$	17.63 to $ 15.65	$	1,458,334		3.87	%		7.08% to 5.89%
2009		0.95% to 2.05%		31,453		16.46 to 14.78		1,432,899		5.56	%		14.86% to 13.59%
2008		0.95% to 2.05%		29,775		14.33 to 13.01		1,245,419		4.97	%		-5.53% to -6.58%
2007		0.95% to 2.05%		34,015		15.17 to 13.93		1,447,779		4.82	%		5.09% to 3.92%
2006		0.95% to 2.05%		47,041		14.44 to 13.40		1,773,410		4.76	%		3.41% to 2.26%
Bond Index Fund - Class A (NBIXA)
2010		0.95% to 1.65%		25,410		15.64 to 14.55		384,194		3.31	%		4.90% to 4.16%
2009		0.95% to 1.65%		23,438		14.91 to 13.96		339,699		4.07	%		4.00% to 3.27%
2008		0.95% to 1.65%		23,594		14.34 to 13.52		329,974		4.43	%		3.46% to 2.73%
2007		0.95% to 1.65%		23,942		13.86 to 13.16		324,184		4.52	%		5.30% to 4.55%
2006		0.95% to 1.65%		22,784		13.16 to 12.59		294,326		4.03	%		2.76% to 2.04%
Fund - Class D (NF)
2010		0.95% to 1.65%		46,193		9.68 to 8.97		2,789,416		0.75	%		11.70% to 10.91%
2009		0.95% to 1.65%		51,653		8.66 to 8.09		2,707,092		1.18	%		24.62% to 23.74%
2008		0.95% to 1.65%		51,448		6.95 to 6.54		2,250,187		1.44	%		-42.07% to -42.48%
2007		0.95% to 1.65%		61,692		12.00 to 11.37		4,648,533		1.05	%		6.88% to 6.12%
2006		0.95% to 1.65%		63,919		11.23 to 10.71		5,148,271		1.08	%		12.77% to 11.97%
Government Bond Fund - Class D (NGBF)
2010		0.95% to 1.90%		212,672		17.01 to 15.35		3,770,750		2.86	%		3.96% to 2.96%
2009		0.95% to 1.90%		244,555		16.36 to 14.91		4,180,833		3.73	%		2.47% to 1.49%
2008		0.95% to 1.90%		240,841		15.97 to 14.69		4,052,977		4.16	%		6.96% to 5.94%
2007		0.95% to 1.90%		234,956		14.93 to 13.87		3,709,572		4.19	%		6.71% to 5.68%
2006		0.95% to 1.90%		281,627		13.99 to 13.12		4,181,154		4.15	%		2.87% to 1.89%
Growth Fund - Class D (NGF)
2010		0.95% to 1.45%		12,752		6.68 to 6.33		444,748		0.08	%		20.63% to 20.02%
2009		0.95% to 1.45%		13,029		5.54 to 5.27		387,412		0.30	%		31.89% to 31.22%
2008		0.95% to 1.45%		14,627		4.20 to 4.02		347,429		0.35	%		-39.29% to -39.59%
2007		0.95% to 1.45%		18,612		6.91 to 6.65		713,883		0.27	%		18.46% to 17.86%
2006		0.95% to 1.45%		22,617		5.84 to 5.64		870,952		0.00	%		5.30% to 4.77%
International Index Fund - Class A (NIIXA)
2010		1.10% to 1.45%		1,477		11.24 to 10.84		16,387		2.33	%		6.29% to 5.92%
2009		1.10% to 1.90%		1,611		10.58 to 9.81		16,826		2.89	%		27.29% to 26.26%
2008		1.10% to 1.90%		1,612		8.31 to 7.77		13,236		3.10	%		-43.05% to -43.51%
2007		1.10% to 1.90%		1,690		14.59 to 13.75		24,400		2.43	%		8.94% to 8.05%
2006		1.10% to 1.90%		1,781		13.39 to 12.73		23,622		2.31	%		24.26% to 23.25%
Investor Destinations Aggressive Fund - Service Class (IDAS)
2010		0.95% to 1.65%		146,892		11.48 to 10.67		1,635,176		1.46	%		13.48% to 12.68%
2009		0.95% to 1.65%		166,944		10.12 to 9.47		1,646,518		1.86	%		26.06% to 25.17%
2008		0.95% to 1.65%		170,493		8.02 to 7.57		1,341,167		1.97	%		-37.37% to -37.82%
2007		0.95% to 1.65%		167,063		12.81 to 12.17		2,107,296		2.98	%		4.88% to 4.13%
2006		0.95% to 1.65%		149,364		12.22 to 11.69		1,800,016		1.14	%		15.72% to 14.90%
Investor Destinations Conservative Fund - Service Class (IDCS)
2010		0.95% to 1.60%		127,050		13.17 to 12.31		1,642,995		1.79	%		4.86% to 4.17%
2009		0.95% to 1.60%		212,475		12.56 to 11.82		2,640,623		2.57	%		7.78% to 7.07%
2008		0.95% to 1.60%		148,614		11.66 to 11.04		1,708,765		2.84	%		-7.07% to -7.68%
2007		0.95% to 1.55%		181,530		12.54 to 12.00		2,260,989		3.87	%		4.34% to 3.70%
2006		0.95% to 1.55%		171,840		12.02 to 11.57		2,043,840		2.97	%		5.11% to 4.47%
Investor Destinations Moderate Fund - Service Class (IDMS)
2010		0.95% to 1.90%		434,421		12.54 to 11.36		5,299,735		1.76	%		9.68% to 8.63%
2009		0.95% to 1.90%		481,308		11.43 to 10.46		5,384,082		2.24	%		17.94% to 16.81%
2008		0.95% to 1.90%		589,087		9.69 to 8.95		5,605,638		2.47	%		-23.90% to -24.63%
2007		0.95% to 1.90%		629,646		12.74 to 11.88		7,897,722		3.60	%		4.55% to 3.55%
2006		0.95% to 1.90%		778,859		12.18 to 11.47		9,384,597		1.88	%		10.33% to 9.28%
Investor Destinations Moderately Aggressive Fund - Service Class (IDMAS)
2010		0.95% to 1.90%		356,351		12.08 to 10.94		4,193,939		1.69	%		11.72% to 10.65%
2009		0.95% to 1.90%		378,369		10.81 to 9.89		3,994,416		2.10	%		23.09% to 21.91%
2008		0.95% to 1.90%		376,422		8.78 to 8.11		3,238,223		2.24	%		-31.96% to -32.62%
2007		0.95% to 1.90%		373,509		12.91 to 12.04		4,736,061		3.19	%		5.16% to 4.15%
2006		0.95% to 1.90%		317,275		12.28 to 11.56		3,833,765		1.44	%		13.36% to 12.27%
Investor Destinations Moderately Conservative Fund - Service Class (IDMCS)
2010		0.95% to 1.60%		119,444		13.09 to 12.24		1,524,417		1.94	%		7.40% to 6.70%
2009		0.95% to 1.60%		127,996		12.19 to 11.47		1,528,543		2.39	%		13.23% to 12.49%
2008		0.95% to 1.60%		148,381		10.77 to 10.20		1,568,784		2.71	%		-15.80% to -16.35%
2007		0.95% to 1.65%		197,681		12.79 to 12.15		2,496,673		3.58	%		4.78% to 4.03%
2006		0.95% to 1.65%		209,987		12.21 to 11.68		2,535,819		2.46	%		7.47% to 6.71%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Mid Cap Market Index Fund - Class A (NMCIXA)
2010		0.95% to 1.65%		63,048	$	16.42 to $ 15.27	$	1,011,201		0.77	%		24.66% to 23.78%
2009		0.95% to 1.75%		72,630		13.18 to 12.22		937,685		0.87	%		35.23% to 34.14%
2008		0.95% to 1.90%		79,224		9.74 to 9.00		758,642		0.77	%		-37.33% to -37.93%
2007		0.95% to 2.10%		101,347		15.54 to 14.28		1,554,704		1.21	%		6.22% to 4.98%
2006		0.95% to 2.10%		114,194		14.63 to 13.61		1,653,775		1.27	%		8.54% to 7.28%
Money Market Fund - Prime Shares (MMF)
2010		1.30%		364,267		24.37 to 30.88		8,886,266		0.00	%		-1.30% to -1.30%
2009		1.30%		388,450		24.69 to 31.28		9,605,483		0.02	%		-1.28% to -1.28%
2008		1.30%		441,677		25.01 to 31.69		11,061,920		2.09	%		0.76%
2007		1.30%		441,241		31.45		10,974,601		4.69	%		3.48%
2006		1.30%		446,136		23.98 to 30.39		10,726,969		4.53	%		3.20%
Money Market Fund - Service Class (MMFR)
2010		0.95% to 1.90%		404,615		11.35 to 10.24		4,484,839		0.00	%		-0.95% to -1.90%
2009		0.95% to 1.90%		481,353		11.46 to 10.44		5,404,293		0.01	%		-0.95% to -1.90%
2008		0.95% to 1.90%		858,237		11.57 to 10.64		9,814,845		1.95	%		1.03% to 0.07%
2007		0.95% to 1.90%		716,972		11.45 to 10.64		8,125,799		4.38	%		3.75% to 2.75%
2006		0.95% to 1.90%		640,190		11.04 to 10.35		6,997,751		4.18	%		3.39% to 2.40%
Nationwide Growth Fund - Class A (NGFA)
2010		0.95% to 1.45%		37,104		13.55 to 13.07		491,695		0.00	%		20.28% to 19.67%
2009		0.95% to 1.45%		34,957		11.26 to 10.92		386,496		0.11	%		31.33% to 30.67%
2008		0.95% to 1.45%		36,305		8.58 to 8.36		306,674		0.16	%		-39.45% to -39.75%
2007		0.95% to 1.45%		38,025		14.16 to 13.88		532,049		0.24	%		18.14% to 17.54%
2006		0.95% to 1.45%		35,920		11.99 to 11.81		426,705		0.00	%		5.00% to 4.47%
Nationwide Large Cap Value Fund -Class A (PRLVA)
2010		0.95% to 1.65%		109,173		13.84 to 12.83		1,442,584		0.59	%		11.20% to 10.41%
2009		0.95% to 1.65%		122,770		12.45 to 11.62		1,463,405		1.25	%		17.39% to 16.56%
2008		0.95% to 1.65%		138,197		10.60 to 9.97		1,413,338		1.47	%		-34.78% to -35.24%
2007		0.95% to 1.65%		163,103		16.26 to 15.40		2,562,249		1.00	%		-3.44% to -4.13%
2006		0.95% to 1.65%		189,451		16.84 to 16.06		3,086,672		1.12	%		19.89% to 19.05%
NVIT Investor Destinations Aggressive Fund -Class II (GVIDA)
2010		1.30%		120,224		12.69		1,525,879		1.65	%		13.14%
2009		1.30%		127,979		11.22		1,435,666		1.06	%		25.55%
2008		1.30%		105,894		8.93		946,155		2.15	%		-37.67%
2007		1.30%		88,936		14.33		1,274,798		1.92	%		4.57%
2006		1.30%		71,501		13.71		980,064		2.08	%		15.35%
NVIT Investor Destinations Conservative Fund -Class II (GVIDC)
2010		1.30%		18,103		11.99		217,106		2.48	%		4.52%
2009		1.30%		26,698		11.47		306,349		1.81	%		7.67%
2008		1.30%		11,637		10.66		124,022		3.40	%		-7.24%
2007		1.30%		9,730		11.49		111,797		3.81	%		4.00%
2006		1.30%		4,408		11.05		48,698		3.09	%		4.79%
NVIT Investor Destinations Moderate Fund -Class II (GVIDM)
2010		0.95% to 1.60%		183,117		13.14 to 12.99		2,302,891		1.93	%		9.86% to 9.14%
2009		0.95% to 1.60%		151,279		11.96 to 11.90		1,737,400		1.52	%		19.58% to 19.04%		*
2008		1.30%		118,611		9.73		1,153,663		2.78	%		-24.19%
2007		1.30%		117,113		12.83		1,502,660		2.86	%		4.28%
2006		1.30%		91,583		12.30		1,126,874		2.61	%		9.91%
NVIT Investor Destinations Moderately Aggressive Fund -Class II (GVDMA)
2010		1.30%		210,735		12.75		2,686,238		1.82	%		11.37%
2009		1.30%		190,707		11.45		2,182,798		1.31	%		22.78%
2008		1.30%		176,763		9.32		1,647,885		2.48	%		-32.28%
2007		1.30%		154,475		13.77		2,126,683		2.16	%		4.76%
2006		1.30%		172,773		13.14		2,270,454		2.35	%		13.06%
NVIT Investor Destinations Moderately Conservative Fund -Class II (GVDMC)
2010		1.30%		58,117		12.37		719,009		2.04	%		7.11%
2009		1.30%		42,401		11.55		489,770		1.72	%		13.07%
2008		1.30%		39,270		10.22		401,164		3.27	%		-16.15%
2007		1.30%		18,241		12.18		222,229		3.27	%		4.48%
2006		1.30%		13,164		11.66		153,505		2.63	%		7.02%
NVIT Multi-Manager International Growth Fund -Class VI (NVMIG6)
2010		1.10% to 1.45%		8,906		9.21 to 9.12		81,599		0.83	%		12.55% to 12.16%
2009		1.00% to 1.45%		5,179		8.20 to 8.14		42,321		1.08	%		34.75% to 34.13%
2008		1.00% to 1.30%		5,488		6.08 to 6.07		33,359		0.00	%		-39.17% to -39.29%		*
S&P 500 Index Fund - Service Class (NIXR)
2010		0.95% to 2.05%		287,834		8.83 to 7.84		2,633,472		1.47	%		13.30% to 12.05%
2009		0.95% to 2.05%		286,683		7.79 to 6.99		2,307,596		1.95	%		24.77% to 23.38%
2008		0.95% to 2.05%		316,384		6.25 to 5.67		2,031,180		1.61	%		-38.05% to -38.74%
2007		0.95% to 2.05%		371,525		10.08 to 9.25		3,878,814		1.41	%		3.76% to 2.60%
2006		0.95% to 2.25%		429,809		9.72 to 10.48		4,275,167		1.34	%		14.06% to 12.57%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Small Cap Index Fund - Class A (NSCIXA)
2010		0.95% to 1.65%		50,675	$	14.89 to $ 13.85	$	735,314		0.89	%		25.20% to 24.32%
2009		0.95% to 1.65%		56,625		11.90 to 11.14		659,475		0.71	%		25.14% to 24.25%
2008		0.95% to 1.65%		68,434		9.51 to 8.97		639,017		0.70	%		-34.70% to -35.17%
2007		0.95% to 1.65%		70,511		14.56 to 13.83		1,011,989		1.25	%		-3.35% to -4.04%
2006		0.95% to 1.65%		97,827		15.06 to 14.41		1,458,075		1.37	%		16.09% to 15.27%
Templeton NVIT International Value Fund -Class III (NVTIV3)
2010		1.20% to 1.40%		4,737		13.59 to 13.54		64,230		2.18	%		5.07% to 4.86%
2009		1.20% to 1.45%		4,132		12.93 to 12.91		53,391		1.28	%		29.30% to 29.08%		*
AIM Small Cap Growth Fund - Investor Class (ASCGI)
2010		0.95% to 1.65%		31,371		11.40 to 11.02		354,081		0.00	%		25.07% to 24.19%
2009		0.95% to 1.65%		44,299		9.11 to 8.87		400,977		0.00	%		33.17% to 32.23%
2008		0.95% to 1.65%		39,233		6.84 to 6.71		267,042		0.00	%		-39.33% to -39.76%
2007		0.95% to 1.65%		44,612		11.28 to 11.14		501,565		0.00	%		10.32% to 9.54%
2006		0.95% to 1.60%		46,426		10.22 to 10.18		474,066		0.00	%		2.24% to 1.75%		*
Basic Balanced Fund - Investor Class (ABBLI)
2010		0.95% to 2.05%		10,213		9.90 to 9.31		99,144		1.19	%		6.81% to 5.62%
2009		0.95% to 2.05%		14,367		9.27 to 8.82		131,483		1.90	%		33.47% to 31.98%
2008		0.95% to 2.05%		9,970		6.94 to 6.68		68,314		3.27	%		-39.30% to -39.98%
2007		0.95% to 2.05%		14,079		11.44 to 11.13		159,689		2.45	%		1.48% to 0.34%
2006		0.95% to 2.05%		20,074		11.27 to 11.09		225,370		2.21	%		9.62% to 8.40%
Dynamics Fund - Investor Class (IDF)
2010		0.95% to 1.65%		356,879		7.35 to 6.81		3,933,835		0.00	%		22.29% to 21.43%
2009		0.95% to 1.65%		414,502		6.01 to 5.61		3,660,750		0.00	%		41.51% to 40.51%
2008		0.95% to 1.65%		466,348		4.25 to 3.99		2,857,187		0.00	%		-47.57% to -47.94%
2007		0.95% to 1.65%		581,092		8.10 to 7.67		6,784,597		0.00	%		11.27% to 10.48%
2006		0.95% to 1.65%		618,013		7.28 to 6.94		6,513,896		0.00	%		15.43% to 14.61%
American Century International Growth Fund - Class A (TCIGA)
2010		0.95% to 1.50%		12,326		9.15 to 8.62		109,871		0.90	%		12.38% to 11.76%
2009		0.95% to 1.50%		12,624		8.14 to 7.71		100,366		0.61	%		32.46% to 31.73%
2008		0.95% to 1.50%		17,553		6.14 to 5.85		105,827		0.92	%		-45.88% to -46.19%
2007		0.95% to 1.50%		28,857		11.35 to 10.88		323,828		0.33	%		15.78% to 15.14%
2006		0.95% to 1.50%		34,049		9.81 to 9.45		330,497		0.48	%		23.53% to 22.85%
American Century International Growth Fund - Investor Class (TCIGR)
2010		1.30%		31,164		26.08		812,813		1.42	%		12.22%
2009		1.30%		35,850		23.24		833,179		0.96	%		32.28%
2008		1.30%		38,918		17.57		683,752		1.23	%		-45.93%
2007		1.30%		47,089		32.49		1,529,948		0.55	%		15.73%
2006		1.30%		58,486		28.07		1,641,978		0.72	%		23.38%
Growth Fund - Investor Class (TCG)
2010		0.95% to 1.50%		173,962		7.97 to 7.51		5,990,131		0.36	%		16.52% to 15.87%
2009		0.95% to 1.50%		189,765		6.84 to 6.48		5,481,556		0.29	%		34.19% to 33.45%
2008		0.95% to 1.50%		201,215		5.10 to 4.86		4,427,698		0.35	%		-38.44% to -38.78%
2007		0.95% to 1.50%		179,759		8.28 to 7.94		7,896,699		0.13	%		17.85% to 17.19%
2006		0.95% to 1.50%		221,404		7.03 to 6.77		8,016,547		0.07	%		6.92% to 6.33%
Income & Growth Fund - Investor Class (IGF)
2010		1.30%		153,519		18.52		2,843,369		1.43	%		12.62%
2009		1.30%		175,496		16.45		2,886,200		2.22	%		16.39%
2008		1.30%		191,548		14.13		2,706,645		1.61	%		-35.53%
2007		1.30%		253,051		21.92		5,546,451		1.47	%		-1.60%
2006		1.30%		302,858		22.27		6,745,819		1.80	%		15.66%
Short-Term Government Fund - Investor Class (BSTG)
2010		0.95% to 1.90%		118,333		13.65 to 12.31		2,342,931		1.02	%		1.30% to 0.33%
2009		0.95% to 1.90%		136,216		13.47 to 12.27		2,521,535		1.84	%		1.72% to 0.74%
2008		0.95% to 1.90%		132,980		13.24 to 12.18		2,492,848		3.48	%		3.74% to 2.74%
2007		0.95% to 1.90%		140,799		12.77 to 11.86		2,560,887		4.57	%		5.35% to 4.34%
2006		0.95% to 1.90%		158,143		12.12 to 11.36		2,733,820		4.22	%		3.02% to 2.03%
Ultra(R) Fund - Investor Class (TCUL)
2010		0.95% to 1.65%		421,165		7.36 to 6.83		6,649,134		0.22	%		15.46% to 14.64%
2009		0.95% to 1.65%		467,772		6.38 to 5.95		6,451,550		0.52	%		34.07% to 33.13%
2008		0.95% to 1.65%		532,419		4.76 to 4.47		5,467,158		0.35	%		-42.29% to -42.70%
2007		0.95% to 1.85%		630,015		8.24 to 7.68		11,452,579		0.00	%		20.66% to 19.56%
2006		0.95% to 2.25%		791,122		6.83 to 8.66		12,041,818		0.00	%		-4.20% to -5.45%
VP International Fund - Class IV (ACVI4)
2010		0.95% to 1.65%		123,221		14.75 to 14.07		1,778,071		2.27	%		12.06% to 11.27%
2009		0.95% to 1.65%		145,746		13.17 to 12.65		1,885,079		2.03	%		32.36% to 31.42%
2008		0.95% to 1.65%		166,730		9.95 to 9.62		1,636,083		0.64	%		-45.47% to -45.86%
2007		0.95% to 1.90%		211,966		18.24 to 17.61		3,823,715		0.50	%		16.77% to 15.65%
2006		0.95% to 1.90%		142,961		15.62 to 15.23		2,215,512		1.04	%		23.68% to 22.50%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Appreciation Fund, Inc. (DAF)
2010		0.95% to 1.90%		224,836	$	10.39 to $ 9.37	$	2,647,383		1.19	%		14.16% to 13.07%
2009		0.95% to 1.90%		252,934		9.10 to 8.29		2,619,402		2.05	%		19.86% to 18.71%
2008		0.95% to 1.90%		281,538		7.59 to 6.98		2,425,499		1.69	%		-33.01% to -33.66%
2007		0.95% to 1.90%		338,727		11.33 to 10.52		4,412,754		1.28	%		5.53% to 4.51%
2006		0.95% to 1.90%		405,513		10.74 to 10.07		5,045,604		1.32	%		15.16% to 14.06%
Balanced Opportunity Fund -Class Z (DPBOZ)
2010		0.95% to 1.60%		93,691		10.85 to 10.42		997,784		1.44	%		12.23% to 11.49%
2009		0.95% to 1.60%		109,528		9.67 to 9.35		1,041,825		1.86	%		20.86% to 20.07%
2008		0.95% to 1.60%		119,594		8.00 to 7.79		944,349		2.23	%		-28.49% to -28.96%
2007		0.95% to 1.60%		164,480		11.18 to 10.96		1,822,757		2.11	%		4.11% to 3.42%
2006		0.95% to 1.60%		176,376		10.74 to 10.60		1,883,248		1.70	%		8.49% to 7.78%
Dreyfus S&P 500 Index Fund (DSPI)
2010		1.30%		333,365		29.59		9,864,563		1.53	%		13.07%
2009		1.30%		359,565		26.17		9,409,875		1.85	%		24.40%
2008		1.30%		390,208		21.04		8,208,950		1.75	%		-38.10%
2007		1.30%		472,197		33.98		16,047,578		1.49	%		3.65%
2006		1.30%		560,996		32.79		18,393,389		1.35	%		13.74%
Emerging Leaders Fund (DEL)
2010		1.20% to 1.25%		1,007		10.35 to 10.29		10,409		0.02	%		27.34% to 27.28%
2009		1.20% to 1.25%		1,006		8.13 to 8.09		8,159		0.21	%		20.37% to 20.31%
2008		1.20% to 1.25%		1,006		6.75 to 6.72		6,779		0.31	%		-40.12% to -40.15%
2007		1.20% to 1.25%		1,006		11.27 to 11.23		11,325		0.00	%		-12.01% to -12.05%
2006		0.95% to 1.25%		1,754		13.03 to 12.77		22,618		0.00	%		6.05% to 5.73%
Intermediate Term Income Fund -Class A (DPITIA)
2010		1.30%		134,162		11.51		1,544,674		3.80	%		7.60%
2009		1.30%		148,448		10.70		1,588,436		4.80	%		15.58%
2008		1.30%		171,020		9.26		1,583,323		3.07	%		-7.42%		*
Third Century Fund, Inc. - Class Z (DTC)
2010		0.95% to 1.50%		39,481		6.87 to 6.48		637,482		0.59	%		13.41% to 12.78%
2009		0.95% to 1.50%		44,065		6.06 to 5.74		618,308		0.91	%		32.03% to 31.30%
2008		0.95% to 1.50%		46,872		4.59 to 4.37		503,854		0.34	%		-34.92% to -35.29%
2007		0.95% to 1.85%		54,512		7.05 to 6.58		882,684		0.43	%		6.53% to 5.56%
2006		0.95% to 1.85%		58,550		6.62 to 6.23		906,072		0.00	%		7.97% to 7.00%
Equity Income Fund - Class I (EIG)
2010		1.30%		28,914		25.65		741,586		1.06	%		12.30%
2009		1.30%		30,885		22.84		705,382		1.27	%		24.68%
2008		1.30%		32,482		18.32		594,984		1.63	%		-35.63%
2007		1.30%		33,367		28.46		949,513		1.56	%		1.65%
2006		1.30%		35,468		27.99		992,926		2.30	%		15.54%
Bond Fund - Class F Shares (FBDF)
2010		0.95% to 2.05%		103,684		18.69 to 16.59		2,029,593		6.06	%		9.80% to 8.58%
2009		0.95% to 2.05%		103,439		17.02 to 15.28		1,847,181		6.38	%		25.21% to 23.82%
2008		0.95% to 2.05%		116,421		13.59 to 12.34		1,665,806		6.34	%		-11.20% to -12.19%
2007		0.95% to 2.05%		138,311		15.31 to 14.05		2,225,704		5.31	%		4.05% to 2.89%
2006		0.95% to 2.05%		139,144		14.71 to 13.66		2,175,503		5.51	%		4.82% to 3.66%
Equity Income Fund, Inc. -Class F Shares (FEQIF)
2010		0.95% to 1.45%		12,695		9.17 to 8.70		112,991		2.73	%		10.29% to 9.74%
2009		0.95% to 1.45%		12,993		8.31 to 7.93		105,337		2.96	%		14.30% to 13.73%
2008		0.95% to 1.45%		10,426		7.27 to 6.97		74,252		2.68	%		-30.55% to -30.90%
2007		0.95% to 1.50%		13,221		10.47 to 10.05		136,821		2.30	%		0.88% to 0.32%
2006		0.95% to 1.50%		17,923		10.38 to 10.02		183,970		2.34	%		21.52% to 20.84%
High Yield Trust (FHYT)
2010		0.95% to 1.90%		190,156		17.31 to 15.62		3,183,303		7.00	%		15.29% to 14.18%
2009		0.95% to 1.90%		343,037		15.02 to 13.68		5,038,389		7.99	%		54.05% to 52.57%
2008		0.95% to 1.90%		146,497		9.75 to 8.97		1,367,641		8.64	%		-28.81% to -29.49%
2007		0.95% to 1.90%		136,346		13.69 to 12.72		1,793,190		7.65	%		2.17% to 1.18%
2006		0.95% to 1.90%		194,727		13.40 to 12.57		2,507,604		7.75	%		10.16% to 9.10%
Intermediate Corporate Bond Fund -Institutional Service Shares (FIIF)
2010		0.95% to 1.90%		56,098		15.73 to 14.25		863,714		4.49	%		6.02% to 5.00%
2009		0.95% to 1.90%		59,189		14.84 to 13.58		863,050		4.79	%		15.64% to 14.53%
2008		0.95% to 1.90%		53,935		12.83 to 11.85		679,230		5.15	%		-8.13% to -9.01%
2007		0.95% to 1.90%		57,926		13.97 to 13.03		797,935		4.98	%		4.74% to 3.73%
2006		0.95% to 1.90%		54,941		13.34 to 12.56		725,837		4.22	%		3.31% to 2.32%
Advisor Balanced Fund - Class A (FABA)
2010		0.95% to 1.50%		23,021		12.05 to 11.35		270,598		1.64	%		12.19% to 11.57%
2009		0.95% to 1.50%		28,453		10.74 to 10.18		299,710		1.99	%		26.02% to 25.32%
2008		0.95% to 1.50%		35,526		8.52 to 8.12		297,253		1.96	%		-32.50% to -32.87%
2007		0.95% to 1.50%		42,101		12.63 to 12.10		523,426		1.78	%		7.46% to 6.86%
2006		0.95% to 1.50%		48,763		11.75 to 11.32		565,605		1.78	%		10.46% to 9.85%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Advisor Balanced Fund - Class T (FAB)
2010		1.30%		63,448	$	17.13	$	1,087,007		1.43	%		11.54%
2009		1.30%		70,667		15.36		1,085,420		1.84	%		25.29%
2008		1.30%		68,727		12.26		842,534		1.71	%		-32.86%
2007		1.30%		76,411		18.26		1,395,238		1.56	%		6.81%
2006		1.30%		73,978		17.10		1,264,717		1.74	%		9.85%
Advisor Equity Growth Fund -Class A (FAEGA)
2010		0.95% to 1.65%		103,042		7.35 to 6.83		734,881		0.00	%		22.39% to 21.53%
2009		0.95% to 1.65%		124,740		6.00 to 5.62		730,621		0.00	%		26.70% to 25.80%
2008		0.95% to 1.65%		140,144		4.74 to 4.47		651,442		0.11	%		-47.46% to -47.83%
2007		0.95% to 1.65%		157,844		9.02 to 8.56		1,401,468		0.00	%		25.11% to 24.22%
2006		0.95% to 1.65%		125,406		7.21 to 6.89		894,569		0.00	%		5.53% to 4.79%
Advisor Equity Income Fund -Class A (FAEIA)
2010		0.95% to 1.90%		178,554		13.07 to 11.79		2,267,212		1.34	%		12.22% to 11.14%
2009		0.95% to 1.90%		222,198		11.65 to 10.61		2,524,127		1.76	%		23.33% to 22.14%
2008		0.95% to 1.90%		234,094		9.45 to 8.69		2,164,344		1.43	%		-41.18% to -41.74%
2007		0.95% to 1.90%		269,954		16.06 to 14.91		4,262,609		1.12	%		2.58% to 1.59%
2006		0.95% to 1.90%		286,632		15.65 to 14.68		4,428,184		1.09	%		15.96% to 14.86%
Advisor Equity Income Fund - Class T (FAEI)
2010		1.30%		91,181		20.04		1,827,597		1.15	%		11.66%
2009		1.30%		103,627		17.95		1,860,200		1.51	%		22.66%
2008		1.30%		127,058		14.64		1,859,519		1.18	%		-41.53%
2007		1.30%		152,824		25.03		3,825,211		0.86	%		2.00%
2006		1.30%		185,763		24.54		4,558,425		1.03	%		15.32%
Advisor Growth Opportunities Fund -Class A (FAGOA)
2010		0.95% to 1.50%		51,072		8.05 to 7.58		398,386		0.00	%		22.52% to 21.84%
2009		0.95% to 1.50%		54,119		6.57 to 6.22		345,902		0.47	%		45.82% to 45.01%
2008		0.95% to 1.90%		61,783		4.50 to 4.14		272,500		0.00	%		-55.73% to -56.16%
2007		0.95% to 1.90%		68,649		10.17 to 9.45		682,838		0.00	%		21.89% to 20.72%
2006		0.95% to 1.90%		70,456		8.35 to 7.83		576,813		0.00	%		4.03% to 3.04%
Advisor Growth Opportunities Fund -Class T (FAGO)
2010		1.30%		137,050		13.91		1,906,065		0.00	%		21.81%
2009		1.30%		152,316		11.42		1,739,069		0.23	%		44.97%
2008		1.30%		170,528		7.88		1,343,043		0.00	%		-55.96%
2007		1.30%		223,593		17.88		3,998,681		0.00	%		21.26%
2006		1.30%		235,646		14.75		3,475,475		0.00	%		3.53%
Advisor High Income Advantage Fund -Class T (FAHY)
2010		0.95% to 1.90%		29,851		19.44 to 17.54		702,816		6.72	%		16.79% to 15.67%
2009		0.95% to 1.90%		36,159		16.64 to 15.16		727,082		6.50	%		68.01% to 66.40%
2008		0.95% to 1.90%		53,238		9.91 to 9.11		612,390		7.09	%		-39.52% to -40.10%
2007		0.95% to 1.90%		76,043		16.38 to 15.21		1,442,388		6.40	%		1.25% to 0.27%
2006		0.95% to 1.90%		118,500		16.18 to 15.17		2,245,182		6.45	%		14.50% to 13.40%
Advisor Overseas Fund - Class A (FAOA)
2010		0.95% to 1.50%		678		11.24 to 10.62		7,495		1.08	%		12.02% to 11.40%
2009		0.95% to 1.50%		847		10.03 to 9.53		8,321		1.56	%		25.11% to 24.42%
2008		0.95% to 1.50%		1,180		8.02 to 7.66		9,267		1.07	%		-43.58% to -43.89%
2007		0.95% to 1.90%		1,459		14.21 to 13.25		20,229		1.36	%		15.90% to 14.79%
2006		0.95% to 1.90%		1,467		12.26 to 11.55		17,610		0.17	%		17.83% to 16.70%
Capital & Income Fund (FCI)
2010		1.30%		4,434		106.59		472,618		6.92	%		15.61%
2009		1.30%		4,474		92.20		412,496		8.24	%		69.91%
2008		1.30%		4,633		54.26		251,407		7.46	%		-32.79%
2007		1.30%		4,872		80.73		393,334		5.86	%		2.46%
2006		1.30%		5,826		78.80		459,068		6.17	%		11.58%
Equity-Income Fund (FEI)
2010		1.30%		57,518		99.62		5,729,677		1.82	%		13.63%
2009		1.30%		61,956		87.66		5,431,364		2.08	%		27.85%
2008		1.30%		70,057		68.57		4,803,660		2.11	%		-42.40%
2007		1.30%		78,213		119.05		9,310,928		1.73	%		0.07%
2006		1.30%		93,962		118.96		11,177,642		1.61	%		18.25%
High Income Portfolio - Initial Class (FHIP)
2010		1.30%		870		31.48		27,390		7.93	%		12.34%
2009		1.30%		871		28.02		24,408		8.31	%		42.09%
2008		1.30%		872		19.72		17,198		9.00	%		-25.96%
2007		1.30%		872		26.64		23,228		8.43	%		1.44%
2006		1.30%		873		26.26		22,924		7.82	%		9.79%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Magellan Fund (FMG)
2010		1.30%		280,361	$	27.80	$	7,793,238		0.80	%		10.95%
2009		1.30%		317,718		25.05		7,960,286		0.66	%		39.30%
2008		1.30%		340,576		17.99		6,125,802		0.14	%		-50.06%
2007		1.30%		409,548		36.02		14,750,208		0.43	%		17.27%
2006		1.30%		510,739		30.71		15,685,270		0.49	%		5.83%
Puritan Fund (FPR)
2010		1.30%		162,391		34.25		5,562,637		2.25	%		12.56%
2009		1.30%		174,283		30.43		5,303,824		2.92	%		25.04%
2008		1.30%		192,799		24.34		4,692,229		2.78	%		-30.08%
2007		1.30%		239,711		34.81		8,344,053		2.83	%		4.79%
2006		1.30%		286,741		33.22		9,525,181		2.95	%		13.29%
VIP Fund - Overseas Portfolio -Service Class 2 R (FO2R)
2010		0.95% to 1.65%		156,507		13.65 to 13.02		2,098,261		1.22	%		11.75% to 10.97%
2009		0.95% to 1.65%		175,129		12.22 to 11.74		2,106,532		1.99	%		25.00% to 24.12%
2008		0.95% to 1.65%		192,827		9.77 to 9.46		1,861,786		2.31	%		-44.48% to -44.87%
2007		0.95% to 1.65%		206,096		17.60 to 17.15		3,591,592		3.02	%		15.94% to 15.12%
2006		0.95% to 1.60%		188,000		15.18 to 14.92		2,832,836		0.53	%		16.70% to 15.93%
Balance Sheet Investment Fund -Class A (FRBSI)
2010		0.95% to 1.65%		131,609		20.83 to 19.37		2,673,167		1.51	%		20.69% to 19.84%
2009		0.95% to 1.65%		164,620		17.26 to 16.16		2,779,669		1.12	%		21.43% to 20.57%
2008		0.95% to 1.65%		186,547		14.21 to 13.40		2,602,134		1.34	%		-36.62% to -37.07%
2007		0.95% to 1.85%		204,076		22.42 to 20.99		4,507,348		1.04	%		-4.28% to -5.16%
2006		0.95% to 1.85%		200,922		23.43 to 22.13		4,641,285		1.36	%		15.25% to 14.21%
Foreign Fund - Class A (TFF)
2010		0.95% to 1.65%		71,757		16.83 to 15.60		1,633,935		1.76	%		7.47% to 6.71%
2009		0.95% to 1.65%		88,536		15.66 to 14.62		1,879,216		1.55	%		48.31% to 47.26%
2008		0.95% to 1.65%		128,037		10.56 to 9.93		1,801,366		2.68	%		-46.60% to -46.98%
2007		0.95% to 1.65%		171,992		19.78 to 18.73		4,468,461		1.54	%		16.13% to 15.30%
2006		0.95% to 1.65%		222,002		17.03 to 16.24		4,999,740		2.04	%		18.79% to 17.96%
Mutual Series Funds - Mutual Shares Fund -Class A (TMSF)
2010		0.95% to 1.90%		326,468		15.93 to 14.37		5,359,725		2.77	%		10.35% to 9.30%
2009		0.95% to 1.90%		370,806		14.43 to 13.15		5,518,368		2.20	%		26.63% to 25.41%
2008		0.95% to 1.90%		429,113		11.40 to 10.49		5,060,629		0.88	%		-38.69% to -39.28%
2007		0.95% to 1.90%		515,438		18.59 to 17.27		9,963,434		2.55	%		1.99% to 1.00%
2006		0.95% to 1.90%		511,413		18.23 to 17.10		9,777,596		1.70	%		16.86% to 15.74%
Small-Mid Cap Growth Fund -Class A (FSCG)
2010		0.95% to 1.80%		126,663		9.49 to 8.65		1,170,673		0.00	%		27.22% to 26.12%
2009		0.95% to 1.90%		155,606		7.46 to 6.79		1,134,419		0.00	%		41.81% to 40.45%
2008		0.95% to 1.90%		178,924		5.26 to 4.84		923,208		0.00	%		-43.06% to -43.61%
2007		0.95% to 1.90%		216,319		9.24 to 8.58		1,969,995		0.00	%		10.60% to 9.54%
2006		0.95% to 1.90%		289,296		8.35 to 7.83		2,392,681		0.00	%		6.50% to 5.48%
Templeton Foreign Securities Fund -Class 3 (TIF3)
2010		0.95% to 1.65%		195,587		14.94 to 14.25		2,859,903		1.77	%		7.38% to 6.62%
2009		0.95% to 1.65%		231,595		13.91 to 13.36		3,163,292		3.39	%		35.89% to 34.93%
2008		0.95% to 1.65%		243,351		10.24 to 9.90		2,453,939		2.52	%		-40.96% to -41.38%
2007		0.95% to 1.65%		266,843		17.34 to 16.89		4,573,075		2.24	%		14.34% to 13.53%
2006		0.95% to 1.65%		280,958		15.16 to 14.88		4,224,492		1.30	%		20.31% to 19.46%
Genesis Fund - Trust Class (NBGST)
2010		0.95% to 1.90%		351,590		28.62 to 25.83		10,053,937		0.00	%		20.22% to 19.07%
2009		0.95% to 1.90%		431,654		23.81 to 21.69		10,288,233		0.00	%		25.05% to 23.85%
2008		0.95% to 1.90%		506,634		19.04 to 17.51		9,690,345		0.00	%		-33.49% to -34.13%
2007		0.95% to 1.90%		569,440		28.63 to 26.59		16,441,025		0.14	%		20.64% to 19.48%
2006		0.95% to 1.90%		681,574		23.73 to 22.25		16,358,793		1.09	%		6.24% to 5.22%
Guardian Fund - Investor Class (NBGF)
2010		1.30%		69,743		22.77		1,588,094		0.36	%		17.96%
2009		1.30%		78,552		19.30		1,516,365		0.54	%		28.52%
2008		1.30%		93,599		15.02		1,405,916		0.39	%		-39.02%
2007		1.30%		99,765		24.63		2,457,404		0.61	%		6.21%
2006		1.30%		123,393		23.19		2,861,814		0.33	%		12.01%
Guardian Fund - Trust Class (NBGT)
2010		0.95% to 1.45%		13,494		12.22 to 11.58		160,899		0.37	%		18.23% to 17.64%
2009		0.95% to 1.45%		14,316		10.34 to 9.84		144,646		0.59	%		28.57% to 27.92%
2008		0.95% to 1.45%		15,586		8.04 to 7.69		122,622		0.34	%		-38.86% to -39.17%
2007		0.95% to 1.45%		22,233		13.15 to 12.65		287,874		0.72	%		6.36% to 5.82%
2006		0.95% to 1.50%		17,972		12.36 to 11.91		218,524		0.20	%		12.24% to 11.62%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Partners Fund - Investor Class (PF)
2010		1.30%		107,237	$	34.69	$	3,720,403		0.13	%		13.90%
2009		1.30%		115,319		30.46		3,512,455		0.67	%		54.07%
2008		1.30%		124,626		19.77		2,463,697		0.30	%		-52.61%
2007		1.30%		142,633		41.72		5,950,033		0.32	%		8.66%
2006		1.30%		174,025		38.39		6,681,163		0.60	%		11.73%
Partners Fund - Trust Class (NBPT)
2010		0.95% to 1.90%		21,075		13.64 to 12.31		283,156		0.01	%		14.10% to 13.01%
2009		0.95% to 1.90%		22,103		11.95 to 10.89		260,739		0.73	%		54.37% to 52.89%
2008		0.95% to 1.90%		25,492		7.74 to 7.12		194,979		0.27	%		-52.52% to -52.98%
2007		0.95% to 1.90%		27,172		16.31 to 15.15		438,739		0.25	%		8.79% to 7.74%
2006		0.95% to 1.90%		42,201		14.99 to 14.06		621,923		0.45	%		11.97% to 10.90%
Short Duration Bond Fund -Investor Class (NLMB)
2010		1.30%		50,426		14.82		747,087		3.28	%		4.59%
2009		1.30%		51,020		14.17		722,722		4.97	%		11.88%
2008		1.30%		59,145		12.66		748,858		5.17	%		-17.13%
2007		1.30%		69,314		15.28		1,058,965		5.48	%		3.98%
2006		1.30%		66,778		14.69		981,208		4.61	%		2.83%
Socially Responsive Fund -Trust Class (NBSRT)
2010		0.95% to 1.50%		91,353		13.73 to 13.23		1,236,454		0.17	%		21.40% to 20.72%
2009		0.95% to 1.50%		91,835		11.31 to 10.96		1,027,469		0.40	%		29.10% to 28.39%
2008		0.95% to 1.50%		101,361		8.76 to 8.54		881,359		0.44	%		-39.48% to -39.82%
2007		0.95% to 1.50%		129,136		14.48 to 14.19		1,861,389		0.54	%		6.29% to 5.69%
2006		0.95% to 1.50%		120,462		13.62 to 13.42		1,634,820		0.10	%		13.13% to 12.51%
Champion Income Fund - Class A (OCHI)
2010		0.95% to 1.45%		16,640		3.79 to 3.64		61,231		9.74	%		12.73% to 12.16%
2009		0.95% to 1.45%		21,838		3.36 to 3.25		71,469		10.01	%		19.15% to 18.55%
2008		0.95% to 1.45%		20,984		2.82 to 2.74		58,206		9.04	%		-78.71% to -78.82%
2007		0.95% to 1.45%		19,055		13.24 to 12.93		249,351		7.43	%		-1.06% to -1.56%
2006		0.95% to 1.45%		17,997		13.38 to 13.13		238,841		5.62	%		8.16% to 7.61%
Global Securities Fund/VA -Class 4 (OVGS4)
2010		0.95% to 1.90%		377,372		14.92 to 13.99		5,522,913		1.24	%		14.57% to 13.47%
2009		0.95% to 1.90%		418,147		13.02 to 12.33		5,359,597		1.84	%		38.06% to 36.73%
2008		0.95% to 1.90%		450,764		9.43 to 9.02		4,198,500		1.28	%		-40.91% to -41.48%
2007		0.95% to 1.90%		528,809		15.96 to 15.41		8,361,948		1.15	%		5.05% to 4.03%
2006		0.95% to 2.25%		548,551		15.20 to 14.67		8,277,875		0.81	%		16.29% to 14.77%
Oppenheimer Capital Appreciation Fund -Class A (OCAF)
2010		0.95% to 1.80%		177,028		7.97 to 7.30		1,384,023		0.00	%		8.11% to 7.18%
2009		0.95% to 1.80%		204,982		7.37 to 6.81		1,484,634		0.00	%		42.22% to 41.00%
2008		0.95% to 1.80%		216,105		5.18 to 4.83		1,103,293		0.00	%		-46.41% to -46.87%
2007		0.95% to 1.80%		245,700		9.67 to 9.09		2,345,097		0.00	%		12.68% to 11.71%
2006		0.95% to 1.80%		260,714		8.58 to 8.13		2,214,629		0.00	%		6.49% to 5.57%
Oppenheimer Global Fund - Class A (OGF)
2010		0.95% to 1.90%		159,326		13.52 to 12.20		5,405,188		0.84	%		14.58% to 13.48%
2009		0.95% to 1.90%		204,845		11.80 to 10.75		5,832,080		0.60	%		37.88% to 36.56%
2008		0.95% to 1.90%		239,483		8.56 to 7.87		4,879,638		1.38	%		-41.59% to -42.15%
2007		0.95% to 1.90%		304,168		14.65 to 13.61		10,412,275		1.01	%		4.95% to 3.94%
2006		0.95% to 1.90%		393,370		13.96 to 13.09		12,944,367		0.65	%		16.27% to 15.15%
Oppenheimer Strategic Income Fund -Class A (OSI)
2010		0.95% to 1.60%		97,222		18.92 to 17.69		1,817,449		6.47	%		14.86% to 14.10%
2009		0.95% to 1.60%		62,556		16.47 to 15.50		1,011,659		6.74	%		20.93% to 20.14%
2008		0.95% to 1.60%		52,611		13.62 to 12.90		702,172		5.71	%		-17.30% to -17.84%
2007		0.95% to 1.60%		51,188		16.47 to 15.70		828,973		6.73	%		8.18% to 7.47%
2006		0.95% to 1.60%		39,653		15.23 to 14.61		595,446		4.78	%		6.66% to 5.96%
PIMCO Total Return Fund -Class A (PMTRA)
2010		0.95% to 1.80%		231,006		18.34 to 16.79		4,147,110		2.67	%		7.33% to 6.41%
2009		0.95% to 1.80%		241,882		17.09 to 15.78		4,057,102		5.14	%		12.24% to 11.28%
2008		0.95% to 1.80%		270,552		15.22 to 14.18		4,056,734		4.67	%		3.21% to 2.32%
2007		0.95% to 1.80%		252,154		14.75 to 13.86		3,667,101		4.54	%		7.53% to 6.61%
2006		0.95% to 2.25%		274,095		13.72 to 12.03		3,710,444		4.15	%		2.53% to 1.18%
Putnam International Equity Fund -Class A (PUIGA)
2010		1.45% to 1.50%		265		15.79 to 15.73		4,185		2.24	%		8.50% to 8.44%
2009		1.45% to 1.50%		265		14.56 to 14.51		3,857		2.66	%		23.45% to 23.39%
2008		1.45% to 1.50%		265		11.79 to 11.76		3,125		0.00	%		-45.64% to -45.67%
2007		1.45% to 1.50%		265		21.69 to 21.64		5,749		2.77	%		6.82% to 6.77%
2006		1.45% to 1.50%		265		20.31 to 20.27		5,382		2.32	%		26.38% to 26.32%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**			Total Return***		Inception Date****
Voyager Fund - Class A (PVF)
2010		0.95% to 1.60%		14,066	$	16.81 to $ 15.98	$	232,746		0.43	%		19.46% to 18.68%
2009		0.95% to 1.60%		11,311		14.07 to 13.47		157,004		1.79	%		62.42% to 61.36%
2008		0.95% to 1.50%		5,382		8.66 to 8.39		46,036		0.00	%		-37.58% to -37.93%
2007		0.95% to 1.50%		5,061		13.88 to 13.52		69,503		0.00	%		4.29% to 3.71%
2006		1.10% to 1.50%		4,722		13.23 to 13.04		62,246		0.00	%		4.08% to 3.66%
Van Kampen Growth and Income Fund -Class A (VKGIA)
2010		0.95% to 1.75%		107,293		16.43 to 15.44		1,738,936		1.27	%		11.58% to 10.68%
2009		0.95% to 1.75%		145,665		14.72 to 13.95		2,118,535		1.53	%		23.08% to 22.09%
2008		0.95% to 1.90%		162,476		11.96 to 11.33		1,925,148		1.85	%		-32.84% to -33.48%
2007		0.95% to 1.90%		194,088		17.81 to 17.03		3,432,605		1.87	%		1.57% to 0.59%
2006		0.95% to 1.90%		191,891		17.54 to 16.93		3,348,357		1.57	%		14.91% to 13.81%
Van Kampen Mid Cap Growth Fund -Class A (VKGA)
2010		0.95% to 1.50%		39,537		22.86 to 21.91		892,283		0.00	%		26.13% to 25.44%
2009		0.95% to 1.50%		50,066		18.12 to 17.46		897,880		0.00	%		57.79% to 56.92%
2008		0.95% to 1.50%		62,283		11.49 to 11.13		710,249		0.00	%		-48.89% to -49.18%
2007		0.95% to 1.55%		75,338		22.47 to 21.85		1,683,123		0.00	%		21.20% to 20.46%
2006		0.95% to 1.55%		41,717		18.54 to 18.14		767,703		0.00	%		7.97% to 7.32%
Van Kampen Real Estate Securities Fund -Class A (VKRES)
2010		0.95% to 1.90%		43,139		21.27 to 19.76		900,144		1.13	%		23.57% to 22.38%
2009		0.95% to 1.90%		52,866		17.22 to 16.14		896,072		1.75	%		27.29% to 26.07%
2008		0.95% to 1.90%		62,570		13.53 to 12.81		837,040		1.46	%		-39.22%to -39.81%
2007		0.95% to 1.90%		66,818		22.25 to 21.28		1,475,872		1.27	%		-18.13% to -18.92%
2006		0.95% to 1.90%		121,543		27.18 to 26.24		3,282,788		1.32	%		36.14% to 34.84%
Virtus Balanced Fund - Class A (PBF)
2010		1.30%		30,840		22.29		687,576		1.77	%		10.37%
2009		1.30%		33,587		20.20		678,463		2.50	%		21.77%
2008		1.30%		32,819		16.59		544,406		2.82	%		-26.81%
2007		1.30%		40,077		22.66		908,282		2.31	%		4.49%
2006		1.30%		43,231		21.69		937,643		2.24	%		11.27%
Advisors Small Cap Fund -Class A (WRASCA)
2010		0.95% to 1.60%		36,223		20.16 to 19.17		719,153		0.00	%		34.65% to 33.77%
2009		0.95% to 1.60%		17,748		14.97 to 14.33		261,564		0.00	%		41.61% to 40.68%
2008		0.95% to 1.60%		16,298		10.57 to 10.19		169,941		0.00	%		-38.30% to -38.70%
2007		0.95% to 1.60%		16,996		17.14 to 16.62		288,028		0.00	%		6.66% to 5.95%
2006		0.95% to 1.60%		18,050		16.07 to 15.69		288,219		0.00	%		5.16% to 4.47%
Advantage Funds(R) -Common Stock Fund -Investor Class (SCS)
2010		0.95% to 1.90%		129,509		17.24 to 15.56		2,797,735		0.00	%		23.71% to 22.52%
2009		0.95% to 1.90%		147,479		13.94 to 12.70		2,542,019		0.13	%		39.94% to 38.60%
2008		0.95% to 1.90%		175,388		9.96 to 9.16		2,153,047		0.00	%		-35.54% to -36.16%
2007		0.95% to 1.90%		215,499		15.45 to 14.35		4,102,076		0.62	%		8.89% to 7.84%
2006		0.95% to 1.90%		246,991		14.19 to 13.31		4,298,808		0.00	%		14.22% to 13.13%
Advantage Funds(R) - Growth Fund -Investor Class (SGR)
2010		0.95% to 1.50%		38,693		17.31 to 16.63		655,129		0.00	%		24.95% to 24.25%
2009		0.95% to 1.50%		39,201		13.85 to 13.38		532,935		0.00	%		45.93% to 45.12%
2008		0.95% to 1.60%		46,687		9.49 to 9.17		437,411		0.00	%		-41.02% to -41.40%
2007		0.95% to 1.45%		41,166		16.09 to 15.76		654,897		0.00	%		26.20% to 25.56%
2006		0.95% to 1.45%		31,689		12.75 to 12.55		400,625		0.00	%		6.71% to 6.17%
Advantage Funds(R) - Large Cap Core -Investor Class (WFLCCI)
2010		0.95% to 1.60%		9,306		11.70 to 11.66		108,736		0.37	%		16.98% to 16.63%		*
Advantage Funds(R) -Large Cap Growth Fund -Investor Class (STR)
2010		1.30%		59,749		26.73		1,596,983		0.00	%		15.24%
2009		1.30%		63,733		23.19		1,478,149		0.08	%		34.69%
2008		1.30%		61,544		17.22		1,059,719		0.00	%		-39.62%
2007		1.30%		67,345		28.52		1,920,567		0.00	%		16.58%
2006		1.30%		78,113		24.46		1,910,814		0.00	%		2.52%
Advantage Funds(R) -Large Company Core Fund -Investor Class (SGI)
2009		0.95% to 1.60%		17,526		6.62 to 6.23		113,643		0.53	%		37.61% to 36.70%
2008		0.95% to 1.60%		20,927		4.81 to 4.56		98,538		0.89	%		-39.88% to -40.27%
2007		0.95% to 1.85%		20,646		8.00 to 7.49		162,231		0.58	%		1.26% to 0.34%
2006		0.95% to 1.85%		21,787		7.90 to 7.47		169,326		0.28	%		14.30% to 13.26%
Advantage Funds(R) -Mid Cap Growth Fund -Investor Class (WFMCGZ)
2010		0.95% to 1.50%		14,359		14.66 to 14.20		206,183		0.00	%		19.69% to 19.03%
2009		0.95% to 1.50%		23,273		12.24 to 11.93		281,446		0.00	%		52.55% to 51.70%
2008		0.95% to 1.50%		21,653		8.03 to 7.86		172,174		0.00	%		-45.52% to -45.82%
2007		0.95% to 1.50%		27,492		14.73 to 14.51		402,742		0.00	%		17.49% to 16.84%
2006		0.95% to 1.50%		24,109		12.54 to 12.42		301,104		0.00	%		12.71% to 12.08%
A Bonds Plus, Inc. (DBP)
2007		1.30%		124,170		16.05		1,993,145		4.86	%		2.09%
2006		1.30%		145,007		15.72		2,279,940		4.52	%		2.68%

(Continued)

NATIONWIDE VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2010


	Contract Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment Income Ratio**		Total Return***		Inception Date****
Delchester Fund -Institutional Class (obsolete) (DBF)
2008		1.30%		30,808	$	12.48	$	384,544		8.47%		-27.19%
2007		1.30%		23,032		17.14		394,832		8.86%		0.68%
2006		1.30%		26,667		17.03		454,075		7.35%		12.64%
Global Fixed Income Fund -Common Class (obsolete) (WPGF)
2008		1.30%		55,748		15.57		868,048		7.28%		-0.55%
2007		1.30%		46,017		15.66		720,482		5.46%		6.65%
2006		1.30%		49,753		14.68		730,372		2.47%		4.24%
J.P. Morgan NVIT Balanced Fund -Class I (obsolete) (BF)
2008		0.95% to 1.50%		17,226		9.17 to 8.80		154,660		2.77%		-26.26% to -26.67%
2007		0.95% to 1.50%		16,842		12.43 to 12.00		205,864		1.98%		3.63% to 3.05%
2006		0.95% to 1.50%		20,618		12.00 to 11.64		243,931		2.29%		11.19% to 10.57%
Janus Adviser Series -Balanced Fund -Class S (obsolete) (JABR)
2008		0.95% to 1.65%		109,127		11.08 to 10.45		1,192,486		2.09%		-15.63% to -16.22%
2007		0.95% to 1.65%		87,699		13.13 to 12.47		1,134,521		2.43%		8.80% to 8.03%
2006		0.95% to 1.65%		106,188		12.07 to 11.54		1,265,873		1.42%		9.35% to 8.58%
Janus Adviser Series -International Growth Fund -Class S (obsolete) (JAIGR)
2008		1.20% to 1.50%		4,368		9.21 to 8.98		40,083		3.43%		-49.63% to -49.78%
2007		1.20% to 1.90%		4,431		18.28 to 17.37		80,714		2.47%		24.62% to 23.74%
2006		1.20% to 1.90%		4,626		14.67 to 14.03		67,660		0.83%		42.90% to 41.89%
Janus Adviser Series -Worldwide Fund -Class S (obsolete) (JAWGR)
2008		0.95% to 1.90%		52,632		4.60 to 4.24		236,991		0.57%		-45.23% to -45.75%
2007		0.95% to 1.90%		59,906		8.39 to 7.82		493,594		0.17%		7.88% to 6.84%
2006		0.95% to 1.90%		70,080		7.78 to 7.32		536,746		1.72%		15.82% to 14.72%
Value Opportunities Fund -Class A (obsolete) (NVOA)
2008		0.95% to 1.60%		13,461		10.12 to 9.58		134,464		0.22%		-36.46% to -36.87%
2007		0.95% to 1.60%		14,042		15.92 to 15.18		220,907		0.00%		-8.52% to -9.12%
2006		0.95% to 1.60%		17,052		17.41 to 16.71		293,641		0.00%		16.73% to 15.96%

2010		Reserves for annuity contracts in payout phase:							$	1,327
2010		Contract owners equity:							$	225,817,512
2009		Reserves for annuity contracts in payout phase:							$	44,895
2009		Contract owners equity:							$	226,799,748
2008		Reserves for annuity contracts in payout phase:							$	36,699
2008		Contract owners equity:							$	197,657,447
2007		Reserves for annuity contracts in payout phase:							$	71,144
2007		Contract owners equity:							$	341,813,434
2006		Reserves for annuity contracts in payout phase:							$	81,495
2006		Contract owners equity:							$	355,699,377

This represents the range of annual contract expense rates of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying mutual funds and charges made directly to contract owners’ accounts through the redemption of units.

This represents the ratio of dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by average net assets. The ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions to the contractholder accounts through reductions in unit values. 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 range of minimum and maximum total returns for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit values for expenses assessed. The total returns do 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. Minimum and maximum ranges are not shown for underlying mutual fund options for which a single contract expense rate (product option) exists. In such cases, the total return presented is representative of all units issued and outstanding at period end.

****	Subaccounts denoted indicate the underlying mutual fund option was initially added and funded during the period presented.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

Nationwide Life Insurance Company:

We have audited the accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in equity and cash flows for each of the years in the three-year period ended December 31, 2010. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.

/s/ KPMG LLP

Columbus, Ohio

March 1, 2011

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Operations

(in millions)

	Years ended December 31,
	2010	2009	2008

Revenues:
Policy charges	$ 1,399	$ 1,245	$ 1,341
Premiums	484	470	394
Net investment income	1,825	1,879	1,865
Net realized investment gains (losses)	(236)	454	(348)
Other-than-temporary impairment losses (consisting of $394 and
$992 of total other-than-temporary impairment losses, net of $174
and $417 non-credit related recognized in other comprehensive income
for the years ended December 31, 2010 and 2009, respectively)	(220)	(575)	(1,131)
Other income	2	(4)	(4)
Total revenues	$ 3,254	3,469	2,117

Benefits and expenses:
Interest credited to policyholder accounts	$ 1,056	$ 1,100	$ 1,173
Benefits and claims	873	812	856
Policyholder dividends	78	87	93
Amortization of deferred policy acquisition costs	396	466	692
Amortization of value of business acquired and other intangible assets	18	63	31
Interest expense, primarily with Nationwide Financial Services, Inc. (NFS)	55	55	62
Other operating expenses	574	579	631
Total benefits and expenses	$ 3,050	3,162	3,538

Income (loss) from continuing operations before federal income
tax expense (benefit)	$ 204	$ 307	$ (1,421)
Federal income tax expense (benefit)	24	48	(534)
Net income (loss)	$ 180	$ 259	$ (887)
Less: Net loss attributable to noncontrolling interest	60	52	72
Net income (loss) attributable to Nationwide Life Insurance Company	$ 240	$ 311	$ (815)

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Balance Sheets

(in millions, except for share and per share amounts)

	December 31,
	2010	2009

Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (amortized cost $25,613 and $25,103)	$ 26,434	$ 24,750
Equity securities (cost $39 and $49)	42	53
Mortgage loans, net	6,125	6,829
Short-term investments	1,062	1,003
Other investments	1,646	1,517
Total investments	$ 35,309	$ 34,152

Cash and cash equivalents	337	49
Accrued investment income	459	402
Deferred policy acquisition costs	3,973	3,983
Value of business acquired	259	277
Goodwill	200	200
Other assets	1,985	2,080
Separate account assets	64,875	57,846
Total assets	$ 107,397	$ 98,989

Liabilities and Shareholder's Equity
Liabilities:
Future policy benefits and claims	$ 32,676	$ 33,150
Short-term debt	300	150
Long-term debt	978	706
Other liabilities	2,429	1,820
Separate account liabilities	64,875	57,846
Total liabilities	$ 101,258	$ 93,672

Shareholder's equity:
Common stock ($1 par value; authorized - 5,000,000 shares, issued
and outstanding - 3,814,779 shares)	$ 4	$ 4
Additional paid-in capital	1,718	1,718
Retained earnings	3,741	3,510
Accumulated other comprehensive income (loss)	321	(266)
Total shareholder's equity	$ 5,784	$ 4,966
Noncontrolling interest	355	351
Total equity	$ 6,139	$ 5,317
Total liabilities and equity	$ 107,397	$ 98,989

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Changes in Equity

(in millions)

	Class A&B common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Total shareholder's equity	Non-controlling interest	Total equity

Balance as of December 31, 2007	$ 4	$ 1,359	$ 4,228	$ (87)	$ 5,504	$ 466	$ 5,970

Dividends to NFS	-	-	(461)	-	(461)	-	(461)
Capital contributed by NFS	-	339	-	-	339	-	339
Other, net	-	-	-	-	-	22	22
Comprehensive loss:
Net loss	-	-	(815)	-	(815)	(72)	(887)
Other comprehensive loss, net of taxes	-	-	-	(1,274)	(1,274)	-	(1,274)
Total comprehensive loss					(2,089)	(72)	(2,161)

Balance as of December 31, 2008	$ 4	$ 1,698	$ 2,952	$ (1,361)	$ 3,293	$ 416	$ 3,709

Cumulative effect of change in accounting principle, net of taxes	-	-	250	(250)	-	-	-
Capital contributed by NFS	-	20	-	-	20	-	20
Other, net	-	-	(3)	-	(3)	(13)	(16)
Comprehensive income (loss):
Net income (loss)	-	-	311	-	311	(52)	259
Other comprehensive income, net of taxes	-	-		1,345	1,345	-	1,345
Total comprehensive income (loss)					1,656	(52)	1,604

Balance as of December 31, 2009	$ 4	$ 1,718	$ 3,510	$ (266)	$ 4,966	$ 351	$ 5,317

Cumulative effect of change in accounting principle, net of taxes	-	-	(9)	9	-	46	46
Other, net	-	-	-	-	-	18	18

Comprehensive income (loss):
Net income (loss)	-	-	240	-	240	(60)	180
Other comprehensive income, net of taxes	-	-	-	578	578	-	578
Total comprehensive income (loss)					818	(60)	758

Balance as of December 31, 2010	$ 4	$ 1,718	$ 3,741	$ 321	$ 5,784	$ 355	$ 6,139

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2010	2009	2008

Cash flows from operating activities:
Net income (loss)	$ 180	$ 259	$ (887)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment losses (gains)	236	(454)	348
Other-than-temporary impairment losses	220	575	1,131
Interest credited to policyholder accounts	1,056	1,100	1,173
Capitalization of deferred policy acquisition costs	(634)	(513)	(588)
Amortization of deferred policy acquisition costs	396	466	692
Amortization and depreciation	(2)	51	48
Changes in:
Policy liabilities	(579)	(725)	(173)
Other, net	(187)	(147)	(798)
Net cash provided by operating activities	$ 686	$ 612	$ 946

Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale	$ 3,251	$ 3,889	$ 4,272
Proceeds from sale of securities available-for-sale	2,168	4,211	4,309
Proceeds from sales/repayments of mortgage loans	996	773	869
Cost of securities available-for-sale acquired	(5,910)	(9,206)	(7,255)
Cost of mortgage loans originated or acquired	(373)	(36)	(372)
Net (increase) decrease in short-term investments	(44)	1,910	(1,857)
Collateral received (paid), net	(23)	(869)	592
Other, net	(29)	208	15
Net cash provided by investing activities	$ 36	$ 880	$ 573

Cash flows from financing activities:
Net increase (decrease) in short-term debt	$ 150	$ (100)	$ (35)
Net proceeds from issuance of long-term debt	272	-	-
Capital contributed by NFS	-	20	-
Cash dividends paid to NFS	-	-	(281)
Investment and universal life insurance product deposits and other additions	4,540	3,877	3,862
Investment and universal life insurance product withdrawals and other deductions	(5,405)	(5,301)	(5,306)
Other, net	9	19	282
Net cash used in financing activities	$ (434)	$ (1,485)	$ (1,478)

Net increase in cash and cash equivalents	$ 288	$ 7	$ 41
Cash and cash equivalents, beginning of period	49	42	1
Cash and cash equivalents, end of period	$ 337	$ 49	$ 42

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements

December 31, 2010, 2009 and 2008

(1)	Nature of Operations

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

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

Wholly-owned subsidiaries of NLIC as of December 31, 2010 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker-dealer.

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

The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker-dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), and Nationwide Financial Network (NFN) producers. The Company also distributes products through the agency distribution force of its ultimate parent company, NMIC.

On December 31, 2009, NLIC merged with its affiliate, Nationwide Life Insurance Company of America and subsidiaries (NLICA), with NLIC as the surviving entity. In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, Nationwide Life and Annuity Company of America (NLACA), effective as of December 31, 2009, with NLAIC as the surviving entity. The mergers were completed to streamline the enterprise's capital structure and create operational efficiencies. See Note 2 for further information.

In 2010, the Company elected to rely on the exemption pursuant to Rule 12h-7 of the Securities Exchange Act of 1934 (Exchange Act) from its duty under Section 15(d) of the Exchange Act to file reports required by Section 13(a) of the Exchange Act for products that are registered as securities but also are regulated as insurance under state law. Consequently, absent a further change in circumstances, the Company no longer files periodic reports with the United States Securities and Exchange Commission (SEC).

As of December 31, 2010 and 2009, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

(2)	Summary of Significant Accounting Policies

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

Use of Estimates

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The Company’s most critical estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition costs (DAC); whether an available-for-sale security is other-than-temporarily impaired; valuation allowances for mortgage loans; valuation of derivatives; the liability for future policy benefits and claims, including the valuation of embedded derivatives resulting from living benefit contracts; and the federal income tax provision. Although some variability is inherent in these estimates, recorded amounts reflect management’s best estimates based on facts and circumstances as of the balance sheet date. Management believes the amounts provided are appropriate.

Basis of Presentation

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. All significant intercompany balances and transactions were eliminated in consolidation.

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

Investments

The Company classifies fixed maturity and equity securities as either available-for-sale or trading. Purchases and sales of securities are recorded on the trade date. Receivables are recorded for sales of securities and liabilities for purchases not yet settled at the balance sheet date. Realized gains and losses on sales of fixed maturity and equity securities are recognized in income based on the specific identification method. Interest and dividend income are recognized when earned.

Available-for-sale securities. Available-for-sale securities are reported at fair value, with unrealized holdings gains and losses reported as a separate component of other comprehensive income, net of adjustments for DAC, value of business acquired (VOBA), future policy benefits and claims, policyholder dividend obligations, noncontrolling interests and deferred federal income taxes.

For fixed maturity and marketable equity securities for which market quotations are available, the Company generally uses independent pricing services to assist in determining the fair value measurement.

The Company’s investments in corporate debt securities, mortgage-backed securities and other asset-backed securities are valued with the assistance of independent pricing services and non-binding broker quotes. The Company’s policy is to give priority to pricing obtained from our primary independent pricing service. In the event that pricing information is not available from an independent pricing service, non-binding broker quotes are used to assist in the valuation of the investments. In many cases, only one broker quote is available. The Company’s policy is generally not to adjust the values obtained from brokers.

Broker quotes are considered unobservable inputs as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and/or the transaction volume in the same or similar investments has decreased such that generally only one quotation is available. As the brokers often do not provide the necessary transparency into their quotes and methodologies, the Company periodically performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value.

For investments valued with the assistance of independent pricing services, the Company obtains the pricing services’ methodologies, inputs and assumptions and classifies these investments accordingly in the fair value hierarchy. The Company periodically reviews and tests the pricing and related methodologies obtained from these independent pricing services against secondary sources to ensure that management can validate the investment’s fair value and related fair value hierarchy categorization. If large variances are observed between the price obtained from the independent pricing services and secondary sources, the Company analyzes the causes driving the variance.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

For certain fixed maturity securities not priced by independent pricing services (e.g., private placement securities without quoted market prices), a corporate pricing matrix or internally developed pricing model is generally used. The corporate pricing matrix is developed using private spreads for corporate securities with varying weighted average lives and credit quality ratings. The weighted average life and credit quality rating of a fixed maturity security to be priced using the corporate pricing matrix are important inputs into the model and are used to determine a corresponding spread that is added to the appropriate U.S. Treasury yield to create an estimated market yield for that security. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security.

In 2009, certain residential mortgage-backed securities backed by sub-prime and Alt-A collateral experienced low levels of market activity, leading the Company to utilize internal pricing models to assist in determining the estimated fair values of these securities.

As such, the Company used a weighting of internal pricing models and independent pricing services to better estimate the investments’ fair value. Management determined the use of multiple valuation techniques, considering both an income approach that maximized the use of relevant observable inputs and minimized the use of unobservable inputs and a market approach based on that observed quotes provided by independent pricing services produced a result more representative of the securities’ fair value.

The income approach incorporated cash flows for each investment adjusted for expected losses in different interest rate and housing scenarios. The adjusted cash flows were then discounted using a risk premium that market participants would demand because of the risk in the cash flows. The risk premium was reflective of an orderly transaction between market participants at the measurement date under the then current market conditions and included items such as liquidity and structure risk. The income approach also included a weighting of external third-party values. As sufficient information is often not available to conclude whether such prices are based on orderly transactions, this weighting methodology was designed to incorporate external prices into the Company’s internal valuation process.

In addition to weighting external prices when developing the internal values, the Company further calibrated those values to market indications through pricing determined from two independent pricing services (the market approach). The Company calibrated the prices obtained from the independent pricing services and the price developed internally by utilizing the median value to determine the estimated fair value.

In 2010, the markets for these securities began to experience more normal levels of activity and the prices obtained from independent pricing services were more representative of orderly transactions between market participants. As such, these securities were priced solely with the assistance of independent pricing services as of December 31, 2010.

When the collectability of contractual interest payments on fixed maturity securities is considered doubtful, such securities are placed in non-accrual status and any accrued interest is excluded from investment income. These securities are not restored to accrual status until all delinquent interest and principal are paid and the Company determines that payment of future principal and interest is probable.

For investments in beneficial interests of securitized assets, the Company recognizes income and amortizes discounts and premiums using the effective-yield method based on prepayment assumptions and the estimated economic life of the securities. When actual prepayments differ significantly from estimated prepayments, the effective-yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income. All other investment income is recorded using the effective-yield method without anticipating the impact of prepayments.

Mortgage loans, net of allowance. The Company holds commercial mortgage loans that are collateralized by properties throughout the United States. Mortgage loans held for investment are carried at amortized cost less a valuation allowance.

The Company maintains a valuation allowance comprised of specific reserves for impaired loans and non-specific reserves for losses inherent in the balance of the portfolio. Specific reserve changes are included in other-than-temporary impairment losses, while changes in non-specific reserves are recorded in net realized investment gains and losses.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Interest income on performing mortgage loans is recognized over the life of the loan using the effective-yield method. Loans in default or in the process of foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans is included in net investment income in the period received.

Policy loans. Policy loans, which are collateralized by the related insurance policy, are carried at the outstanding principal balance and do not exceed the net cash surrender value of the policy. As such, no valuation allowance for policy loans is required.

Short-term investments. Short-term investments consist of highly liquid debt instruments with maturities of greater than three months and less than twelve months when purchased. The Company carries short-term investments at estimated fair value.

Securities lending. The Company has entered into securities lending agreements with an agent bank whereby eligible securities are loaned to third parties, primarily major brokerage firms. These transactions are used to generate additional income on the securities portfolio. The Company is entitled to receive from the borrower any payments of interest and dividends received on loaned securities during the loan term. The agreements require a minimum of 102% of the fair value of loaned securities to be held as collateral. Cash collateral is invested by the agent bank in investment-grade securities, which are included in the total investments of the Company. Non-cash collateral is recorded off-balance sheet. The Company continues to recognize loaned securities in either available-for-sale investments or short-term investments, and a securities lending payable is recorded in other liabilities for the amount of collateral received. Net income received from securities lending activities is included in net investment income.

Other-than-temporary impairments evaluations. The Company periodically reviews its available-for-sale fixed maturities and equities on a case-by-case basis to determine if any decline in fair value to below cost or amortized cost is other-than-temporary. Factors considered in determining whether a decline is other-than-temporary include the length of time a security has been in an unrealized loss position, the severity of the unrealized loss, reasons for the decline in value and expectations for the amount and timing of a recovery in fair value.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt, the Company’s intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before the recovery of its amortized cost basis. The Company also evaluates U.S. Treasury securities and obligations of U.S. Government corporations, U.S. Government agencies, obligations of states and political subdivisions, and debt securities issued by foreign governments for other-than-temporary impairment by examining similar characteristics referenced above for corporate debt securities.

When evaluating whether residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities are other-than-temporarily impaired, the Company examines characteristics of the underlying collateral, such as delinquency and default rates, the quality of the underlying borrower, the type of collateral in the pool, the vintage year of the collateral, subordination levels within the structure of the collateral pool, the quality of any credit guarantors, the Company’s intent to sell the security and whether it is more likely than not will be required to sell the security before the recovery of its amortized cost basis.

For all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and amount of the cash flows. The Company evaluates its intent to sell on an individual security basis.

To the extent that the present value of cash flows generated by a debt security is less than the amortized cost, or the reference amount if the security is accounted for under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 325, Investments - Other, an other-than-temporary impairment is recognized through earnings.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Other-than-temporary impairment losses on securities (where the Company does not intend to sell the security and it is not more likely than not it will be required to sell the security prior to recovery of the security’s amortized cost) are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment being recognized in other comprehensive income, net of applicable taxes and other offsets.

Prior to 2009, an other-than-temporary impairment charge was taken when the Company did not have the ability and intent to hold the security until the forecasted recovery or if it was probable that the Company would not recover all contractual amounts when due. Many criteria were considered during this process including, but not limited to, specific credit issues and financial prospects related to the issuer, the quality of the underlying collateral, management’s intent and ability to hold the security until recovery, current economic conditions that could affect the creditworthiness of the issuer in the future, the current fair value as compared to the amortized cost of the security, the extent and duration of the unrealized loss, and the rating of the affected security. Other-than-temporary impairment losses resulted in a permanent reduction to the cost basis of the underlying investment equal to the difference between the estimated fair value of the security and its amortized cost.

It is reasonably possible that further declines in estimated fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments in the near term, which could be significant.

The Company considers both the non-credit portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income and any subsequent changes in the fair value of those debt securities as accumulated other comprehensive losses recognized on debt securities which have credit losses in earnings.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery.

Derivative Instruments

The Company uses derivative instruments in efforts to manage exposures and mitigate risks associated with interest rates, equity markets, foreign currency and credit. These derivative instruments primarily include interest rate swaps, futures contracts, credit default swaps, cross-currency swaps and other traditional swap agreements. Certain features embedded in the Company’s investments, equity-indexed annuity contracts and variable annuity contracts are derivatives requiring separate accounting under the provisions of FASB ASC 815-15 Embedded Derivatives. All derivative instruments are carried at fair value and are reflected as an asset or liability. See Note 6 for a discussion on the Company’s use of derivative instruments.

The Company’s derivative transaction counterparties are generally financial institutions and corporations. To reduce the credit risk associated with open contracts, the Company enters into master netting agreements which permit the closeout and netting of transactions with the same counterparty upon the occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. Generally, the Company accepts collateral in the form of cash and marketable securities.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Revenues and Benefits

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

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

Cash and Cash Equivalents

Cash and cash equivalents, which include highly liquid investments with original maturities of less than three months, are carried at cost, which approximates fair value.

Deferred Policy Acquisition Costs

Investment and universal life insurance products. The Company has deferred certain costs of acquiring investment and universal life insurance products, principally commissions, certain expenses of the policy issue and underwriting department, and certain variable sales expenses that relate to and vary with the production of new and renewal business. In addition, the Company defers sales inducements, such as interest credit bonuses and jumbo deposit bonuses. Investment products primarily consist of individual and group variable and fixed deferred annuities in the Individual Investments and Retirement Plans segments. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, BOLI and other interest-sensitive life insurance policies in the Individual Protection segment. DAC is subject to recoverability testing in the year of policy issuance and loss recognition testing at the end of each reporting period. For investment and universal life insurance products, the Company amortizes DAC with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administrative fees, surrender charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses.

The Company adjusts the DAC asset related to investment and universal life insurance products to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale. The adjustment to DAC represents the change in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines.

The assumptions used in the estimation of future gross profits are based on the Company’s current best estimates of future events and are reviewed as part of an annual process during the second quarter. During the annual process, the Company performs a comprehensive study of assumptions, including mortality and persistency studies, maintenance expense studies, and an evaluation of projected general and separate account investment returns. The most significant assumptions that are involved in the estimation of future gross profits include future net separate account investment performance, surrender/lapse rates, interest margins and mortality. Currently, the Company’s long-term assumption for net separate account investment

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

performance is approximately 7% growth per year. The Company reviews this assumption, like others, as part of its annual process. If this assumption were unlocked, the date of the unlocking could become the anchor date used in the reversion to the mean process (defined below). Variances from the long-term assumption are expected since the majority of the investments in the underlying separate accounts are in equity securities, which strongly correlate in the aggregate with the Standard & Poor’s (S&P) 500 Index. The Company bases its reversion to the mean process on actual net separate account investment performance from the anchor date to the valuation date. The Company then assumes different performance levels over the next three years such that the separate account mean return measured from the anchor date to the end of the life of the product equals the long-term assumption. The assumed net separate account investment performance used in the DAC models is intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, and as part of its pre-set parameters, the Company’s reversion to the mean process generally limits net separate account investment performance to 0-15% during the three-year reversion period.

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

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

See Note 7 for a discussion of assumption changes that impacted DAC amortization and related balances for 2010, 2009 and 2008.

Traditional life insurance products. Generally, DAC related to traditional life insurance 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.

Value of Business Acquired

As a result of the acquisition of Provident Mutual Life Insurance Company (Provident) in 2002 and the application of purchase accounting, the Company reports an intangible asset representing the estimated fair value of the business in force and the portion of the purchase price that was allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts existing as of the closing date of the Provident acquisition. The value assigned to VOBA was supported by an independent valuation study commissioned by the Company and executed by a team of qualified valuation experts, including actuarial consultants.

VOBA represents the actuarially-determined value of future cash flows for acquired insurance contracts. Expected future cash flows are determined based on projected future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, changes in reserves, operating expenses, investment income and other factors. VOBA is adjusted for unrealized gains and losses on available-for-sale securities for changes in amortization that would have been

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

required had such unrealized amounts been realized. In the event actual experience differs or assumptions are revised, an increase or decrease in VOBA amortization expense is recorded, which could be significant.

See Note 8 for a discussion of VOBA amortization and related balances for 2010, 2009 and 2008.

Goodwill

In connection with acquisitions of operating entities, the Company recognizes the excess of the purchase price over the fair value of net assets acquired as goodwill. Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually. Goodwill of a reporting unit also is tested for impairment on an interim basis in addition to the annual evaluation if an event occurs or circumstances change which would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The process of evaluating goodwill for impairment requires several judgments and assumptions to be made to determine the fair value of the reporting units, including the method used to determine fair value; discount rates; expected levels of cash flows, revenues and earnings; and the selection of comparable companies used to develop market-based assumptions. The Company performed its annual impairment test during the third quarter.

Closed Block

In connection with the sponsored demutualization of Provident prior to its acquisition, Provident established a closed block for the benefit of certain classes of individual participating policies that had a dividend scale payable in 2001. Assets were allocated to the closed block in an amount that produces cash flows which, together with anticipated revenues from closed block business, is reasonably expected to be sufficient to provide for (1) payment of policy benefits, specified expenses and taxes, and (2) the continuation of dividends throughout the life of the Provident policies included in the closed block based upon the dividend scales payable for 2001, if the experience underlying such dividend scales continues.

Assets allocated to the closed block benefit only the holders of the policies included in the closed block and will not revert to the benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without the approval of the Pennsylvania Insurance Department and Ohio Department of Insurance (ODI). The closed block will remain in effect as long as any policy in the closed block is in force.

If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will increase. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from the Company’s assets outside of the closed block, which are general account assets.

The assets and liabilities allocated to the closed block are recorded in the Company’s consolidated financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date Provident was acquired by the Company represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income, for the benefit of stockholders, over the period the policies in the closed block remain in force.

If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income. This is because the excess cumulative earnings over expected cumulative earnings, which represents undistributed accumulated earnings attributable to policyholders, is recorded as a policyholder dividend obligation. Therefore, the excess will be paid to closed block policyholders as an additional policyholder dividend expense in the future unless it is otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, actual earnings will be recognized in income.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholder benefits, policyholder dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions and net investment income and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies for the purpose of the amortization of VOBA. See Note 10 for further disclosure.

Separate Accounts

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

Future Policy Benefits and Claims

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

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

The Company adjusts future policy benefits and claims related to investments to reflect the impact of unrealized gains and losses on fixed maturity available-for-sale securities. The adjustment to future policy benefits and claims represents the change in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which vary from the then current effective portfolio rate.

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

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

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

Liabilities for Variable Contract Guarantees

The Company offers various guarantees to variable annuity contractholders including a return of no less than total deposits made on the contract less any customer withdrawals, total deposits made on the contract less any customer withdrawals plus a minimum return, or the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees include benefits payable in the event of death, upon annuitization, upon periodic withdrawal or at specified dates during the accumulation period. See Note 11 for accounting policy discussion.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 8% of the Company’s life insurance in force in 2010 (9% in 2009 and 12% in 2008), 44% of the number of life insurance policies in force in 2010 (49% in 2009 and 50% in 2008). The provision for policyholder dividends was based on the current dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.

Federal Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires deferred tax assets and liabilities to be recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when management determines it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to change the provision for federal income taxes recorded in the consolidated financial statements, which could be significant.

The Company has established tax reserves in accordance with the requirements of FASB ASC 740, Income Taxes. These reserves reviewed regularly and are adjusted as events occur that management believes impact its liability for additional taxes, such as lapsing of applicable statutes of limitations, conclusion of tax audits or substantial agreement with taxing authorities on the deductibility/nondeductibility of uncertain items, additional exposure based on current calculations, identification of new issues or release of administrative guidance or rendering of a court decision affecting a particular tax issue.

NLIC filed separate consolidated federal income tax returns, with their subsidiaries, and are eligible to join the Mutual consolidated tax return group in 2014.

Reinsurance ceded

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded generally are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder.

NLICA and Subsidiaries Merger

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity. In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity. The merger was accounted for at historical cost in a manner similar to a pooling of interests because the involved entities were under common control. NLICA and subsidiaries are reflected in the Company’s prior year consolidated financial statements at the historical cost of the transferred net assets to provide comparative information as though the companies were combined for all periods presented. This presentation is consistent for both GAAP and Statutory reporting. Since NLICA and NLACA were wholly-owned subsidiaries, there was no noncontrolling interest impact.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The Company has presented its consolidated financial statements and accompanying notes as applicable for all years presented to reflect the NLICA merger.

The following tables summarize the impact of the items described above on the income statement for the years ended December 31:

(in millions)	2009	2008

Total revenues	$ 375	$ 411
Total benefits and expenses	$ 357	$ 395
Federal income tax (benefit) expense	$ (5)	$ 1
Net income	$ 23	$ 15

The following tables summarize the impact of the items described above on the balance sheet for the years ended December 31:

(in millions)			2009

Total assets			$ 5,926
Total liabilities			$ 4,895
Total shareholder's equity			$ 1,031

The impact of the merger on shareholder’s equity was $1.0 billion and $1.3 billion as of December 31, 2008 and 2007, respectively.

Subsequent events

The Company evaluated subsequent events through the date the consolidated financial statements were issued.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(3)	Recently Issued Accounting Standards

In January 2011, the FASB issued Accounting Standards Update (ASU) 2011-01, which temporarily defers the effective date for disclosures related to troubled debt restructurings contained within ASU 2010-20. This deferral enables public companies to delay the effective date of these disclosures indefinitely until the FASB adopts clarification to the guidance for determining what constitutes a troubled debt restructuring. The effective date for all other disclosures required under ASU 2010-20 are not subject to this deferral. This guidance is effective for the Company immediately. This guidance was adopted by the Company in January 2011 with no impact to the Company's financial statements.

In December 2010, the FASB adopted ASU 2010-29, which amends FASB ASC 805, Business Combinations for public entities that present comparative financial statements. This guidance specifies that an entity should disclose revenue and earnings of the combined entity as though the business combinations that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The revised guidance also expands the pro forma revenue and earnings disclosures to include a description of the nature and amount of any material, nonrecurring pro forma adjustments attributable to the business combinations. This ASU is effective for business combinations that have an acquisition date on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company adopted this guidance prospectively beginning January 1, 2011. On the date of adoption, there was no impact to the Company’s financial statements.

In December 2010, the FASB adopted ASU 2010-28, which amends FASB ASC 350, Intangibles – Goodwill and Other related to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. As a result of this ASU, an entity will be required to perform Step 2 on reporting units that have zero or negative carrying amounts if adverse qualitative factors exist that would indicate that the reporting unit is more likely than not impaired. This will eliminate the ability for entities to pass Step 1 of the impairment test just because the fair value of the reporting unit is generally greater than zero. This guidance is effective for fiscal and interim reporting periods beginning after December 15, 2010. The Company adopted this guidance effective January 1, 2011 with no impact to the Company’s financial statements. The Company will apply this guidance prospectively as is required.

In October 2010, the FASB issued ASU 2010-26, which amends FASB ASC 944, Financial Services - Insurance. This guidance amends Topic 944 by modifying the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal contracts. Under this ASU incremental direct costs of contract acquisition can be capitalized. Additionally, certain costs related directly to underwriting, policy issuance and processing, medical and inspection, and sales force contract selling activities can be capitalized. The costs are limited to the portion of an employee’s total compensation, excluding any compensation that is capitalized as incremental direct costs of contract acquisition, and payroll-related fringe benefits related directly to time spent performing these activities for actual acquired contracts and other costs related directly to these activities that would not have been incurred if the contract had not been acquired. The guidance also specifies that only certain direct-response advertising costs are able to be included in DAC. This guidance is effective for fiscal and interim periods beginning after December 15, 2011, with early adoption permitted, but only at the beginning of an entity’s annual reporting period. The amendments are required to be applied prospectively upon adoption. Retrospective application to all prior periods presented upon the date of adoption also is permitted, but not required. The Company will adopt this guidance effective January 1, 2012. The Company is currently evaluating the impact of adoption and whether prospective application or retrospective application is desired. The adoption of this guidance could have a significant impact on the Company’s financial statements.

In July 2010, the FASB issued ASU 2010-20, which amends FASB ASC 310, Receivables. This guidance amends Topic 310 to improve the disclosures that an entity provides about the credit quality of its financing receivables and the related allowance for credit losses. As a result of this guidance, an entity is required to disaggregate certain existing disclosures by portfolio segment or class. The guidance also provides certain new disclosures about its financing receivables and related allowance for credit losses. For disclosures as of the end of a reporting period, the guidance is effective for the Company for interim and annual reporting periods ending on or after December 15, 2010. For disclosures about activity during a reporting period, the guidance is effective for the Company for interim and annual reporting periods beginning on or after December 15, 2010. The Company adopted the guidance following this incremental approach as of December 31, 2010, with no impact to the consolidated financial statements of the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In April 2010, the FASB issued ASU 2010-18, which amends FASB ASC 310, Receivables. This guidance clarifies that modifications of loans that are accounted for within a pool under FASB ASC Subtopic 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change. The guidance does not affect the accounting for loans under the scope of FASB ASC Subtopic 310-30 that are not accounted for within pools. This guidance is effective for modifications occurring in the interim or annual period ending on or after July 15, 2010, with early adoption permitted. The guidance was adopted on September 30, 2010 and will be applied to prospective transactions as is required. The adoption of this guidance had no impact on the consolidated financial statements of the Company.

In April 2010, the FASB issued ASU 2010-15 which clarifies that an insurance entity should not consider any separate account interests held for the benefit of policy holders in an investment to be the insurer’s interest and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for the benefit of a related party holder and the variable interest entity guidance requires the consideration of related parties. The update also clarifies that for the purpose of evaluating whether the retention of specialized accounting for investments in consolidation is appropriate, a separate account arrangement should be considered a subsidiary. Additionally, the amendments do not require an insurer to consolidate an investment in which a separate account holds a controlling financial interest if the investment is not or would not be consolidated in the standalone financial statements of the separate account. When consolidation is required, the update provides guidance on how an insurer should consolidate an investment fund. The amendments should be applied retrospectively in fiscal years beginning after December 15, 2010, and interim periods within those years with earlier application permitted. The Company early adopted this guidance effective April 1, 2010 resulting in an immaterial impact of adoption.

In March 2010, the FASB issued ASU 2010-11 which clarifies the scope exception for embedded credit derivatives. This scope exception allows for embedded credit-derivative features related only to the transfer of credit risk in the form of subordination of one financial instrument to another to not be subject to potential bifurcation and separate accounting under Subtopic 815-15, Embedded Derivatives. The ASU clarifies how to apply this scope exception including how to determine which embedded credit derivative features, including those in collateralized debt obligations and synthetic collateralized debt obligations, are considered to be embedded derivatives that should not be analyzed for potential bifurcation and separate accounting under Subtopic 815-15. To ease transition, the guidance allows companies to irrevocably elect to apply the fair-value option to any investment in a beneficial interest in securitized financial assets. The amendments are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010 with early adoption permitted at the beginning of the first fiscal quarter beginning after issuance of the ASU. The Company adopted this guidance effective July 1, 2010 and elected fair value treatment for synthetic collateralized debt obligations. The adoption of this guidance resulted in a cumulative effect adjustment of $9 million, net of taxes, to retained earnings with a corresponding adjustment to accumulated other comprehensive income (AOCI). See Note 6 for further discussion on synthetic collateralized debt obligations.

In February 2010, the FASB issued ASU 2010-08 which contained technical corrections to various codification topics. While none of the provisions in the ASU fundamentally change GAAP, certain clarifications made to the guidance on embedded derivatives and hedging (Subtopic 815-15) may cause a change in the application of that Subtopic and, thus, special transition provisions were provided for accounting changes related to that Subtopic. The amendments of this ASU are effective for the first reporting period, including interim periods, beginning after issuance, except for certain amendments related to embedded derivatives and certain changes that affect the calculation of tax benefits attributable to reorganizations. The amendments related to the reorganization guidance in Paragraph 852-740-45-2 should be applied to reorganizations for which the date of the reorganization is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted these provisions as of January 1, 2009 with no impact of adoption. The amendments to the embedded derivative guidance are effective for fiscal years beginning after December 15, 2009. The Company adopted the embedded derivative provisions as of January 1, 2010 with an immaterial impact of adoption. The Company adopted all other ASU 2010-08 provisions as of April 1, 2010 with no impact of adoption.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In February 2010, the FASB issued ASU 2010-10, which defers the application of guidance under FASB ASC 810 for certain interests in an entity that has all of the attributes of an investment company, or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those investment companies apply, or the entity is a registered money market fund. An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of variable interest entities before the guidance amendments. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company adopted this guidance effective January 1, 2010. As a result of the application of this ASU, the Company deferred application for the applicable entities within the scope of the standard.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures. This guidance requires new disclosures and provides amendments to clarify existing disclosures. The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements and the reasons for the transfers and further disaggregating activity in Level 3 fair value measurements. The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. The guidance also includes conforming amendments to the guidance on employers’ disclosures about the postretirement benefit plan assets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2010, except for the new disclosure regarding the activity in level 3 measurements, which the Company will adopt for the fiscal period beginning January 1, 2011. See Note 4 for required disclosures.

In June 2009, the FASB issued guidance under FASB ASC 860, Transfers and Servicing. This guidance eliminates the concept of a qualifying special-purpose entity (QSPE) and clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale and the unit of account eligible for sale accounting. Additionally, this guidance requires a transferor to initially measure and recognize all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale at fair value. Additionally, on and after the effective date, existing QSPEs (as defined under previous accounting standards) must be evaluated for consolidation in accordance with the applicable consolidation guidance. This guidance also establishes new requirements for reporting a transfer of a portion of a financial asset as a sale. This guidance requires enhanced disclosures about, among other things, a transferor’s continuing involvement with transfers of financial assets accounted for as sales, the risks inherent in the transferred financial assets that have been retained, and the nature and financial effect of restrictions on the transferor’s assets that continue to be reported in the consolidated balance sheets. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company adopted this guidance effective January 1, 2010. The guidance will be applied to prospective transactions, as is required. There was no impact on the consolidated financial statements of the Company in the adoption of the guidance.

In June 2009, the FASB issued guidance under FASB ASC 810, Consolidation. This guidance changes the consolidation guidance applicable to a variable interest entity (VIE). It also amends the guidance governing the determination of whether an entity is the VIE’s primary beneficiary (the reporting entity that must consolidate the VIE) by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. FASB ASC 810 also requires continuous reassessment of whether an enterprise is the primary beneficiary of a VIE. Prior guidance required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred. FASB ASC 810 also requires enhanced disclosures about an enterprise’s variable interest with a VIE. See Note 21 for required disclosures. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company adopted this guidance effective January 1, 2010 resulting in an increase to noncontrolling interest of $46 million.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities. This guidance is designed to create greater clarity and consistency in accounting for and presentation of impairment losses on debt securities. This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted. As of the beginning of the interim period of adoption, this guidance requires a cumulative-effect adjustment to reclassify the non-credit component of previously recognized other-than-temporary impairment losses on debt securities from retained earnings to the beginning balance of AOCI. The Company adopted this guidance as of January 1, 2009. The adoption of this guidance resulted in a cumulative-effect adjustment of $250 million, net of taxes, as an adjustment to the opening balance of retained earnings with a corresponding adjustment to the opening balance of AOCI.

(4)	Fair Value Measurements

Fair Value Option

The Company assesses the fair value option election for newly acquired financial assets or liabilities on a prospective basis. Except for synthetic collateralized debt obligations, there are no material assets or liabilities for which the Company elected the fair value option.

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In determining fair value, the Company uses various methods including market, income and cost approaches.

The Company categorizes its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Company categorizes financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

·	Level 1 – Unadjusted quoted prices accessible in active markets for identical assets or liabilities at the measurement date.

·	Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means.

Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate about the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs.

The Company periodically reviews its fair value hierarchy classifications for financial assets and liabilities. Changes in observability of significant valuation inputs identified during these reviews may trigger reclassifications. Reclassifications into/out of Level 3 are reported as transfers at the beginning of the period in which the change occurs.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the sources used in determining the fair values of fixed maturity securities as of the dates indicated:

	December 31,	December 31,
	2010	2009
Independent pricing services	81%	68%
Pricing matrices	10%	11%
Broker quotes	5%	6%
Internal pricing models	2%	13%
Other sources	2%	2%
Total	100%	100%

Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

The Company uses NAV to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values, which are included in separate account assets.

All but one of these mutual funds are included in Level 2 and had fair values totaling $50.0 billion and $44.0 billion as of December 31, 2010 and 2009, respectively. These funds have no unfunded commitments or restrictions and the Company always has the ability to redeem the separate account investment in these funds with the investee at NAV daily. These mutual funds are primarily invested in domestic and international equity funds.

The Company’s separate account assets include an investment in a mutual fund that may not be redeemed until a seven year guarantee period expires in 2016; however, NAV has been used to estimate the fair value of this investment as a practical expedient. This fund has no unfunded commitments or other restrictions. The investment strategy of this fund is to build a portfolio where the assets shall be sufficient to achieve a target portfolio value by the end of the seven year guarantee period. The Company’s portion of the net asset value of this fund reported in separate account assets was $1.3 billion and $976 million as of December 31, 2010 and 2009, respectively, and is included in Level 3.

Since separate account assets include mutual fund investments not directed by the Company, the contractholders have the ability to select and change investment categories, which may result in the underlying mutual funds being purchased and sold in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:

(in millions)	Level 1	Level 2	Level 3	Total

Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$ 572	$ 10	$ 2	$ 584
Obligations of states and political subdivisions	-	1,377	-	1,377
Debt securities issued by foreign governments	123	-	-	123
Corporate public securities	2	12,600	114	12,716
Corporate private securities	-	3,087	1,161	4,248
Residential mortgage-backed securities	540	5,090	9	5,639
Commercial mortgage-backed securities	-	1,184	2	1,186
Collateralized debt obligations	-	61	191	252
Other asset-backed securities	-	293	16	309
Total fixed maturity securities	$ 1,237	$ 23,702	$ 1,495	$ 26,434
Equity securities	10	32	-	42
Total securities available-for-sale	$ 1,247	$ 23,734	$ 1,495	$ 26,476
Trading securities	-	-	45	45
Short-term investments	25	1,037	-	1,062
Total investments	$ 1,272	$ 24,771	$ 1,540	$ 27,583

Cash and cash equivalents	337	-	-	337
Derivative assets	-	627	211	838
Separate account assets1,3	12,325	50,745	1,805	64,875
Total assets	$ 13,934	$ 76,143	$ 3,556	$ 93,633

Liabilities
Future policy benefits and claims2	$ -	$ -	$ (226)	$ (226)
Derivative liabilities	(18)	(524)	(4)	(546)
Total liabilities	$ (18)	$ (524)	$ (230)	$ (772)

__________

Comprised of public, privately registered and non-registered mutual funds and investments in securities.

Related to embedded derivatives associated with living benefit contracts. The Company’s guaranteed minimum accumulation benefits (GMABs), guaranteed lifetime withdrawal benefits (GLWBs) and hybrid GMABs/GLWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings. This balance also includes embedded derivatives associated with fixed equity-indexed annuities (EIA) that provide for interest earnings that are linked to the performance of specified equity market indices.

The value of separate account liabilities is set to equal the fair value of separate account assets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2010:

		Net investment						Change in
		gains (losses)						unrealized
		In earnings		Purchases,				gains (losses)
	Balance as of	(realized		issuances,	Transfers	Transfers	Balance as of	in earnings
	December 31,	and	In OCI	sales and	into	out of	December 31,	due to assets
(in millions)	2009	unrealized)1	(unrealized)2	settlements	Level 3	Level 3	2010	still held

Assets
Investments:
Securities available-for-sale3:
Fixed maturity securities
U.S. Treasury securities and
obligations of U.S.
Government corporations
and agencies	$ 2	$ -	$ -	$ -	$ -	$ -	$ 2	$ -
Corporate public securities	215	1	4	(15)	1	(92)	114	-
Corporate private securities	1,187	3	31	(268)	311	(103)	1,161	-
Residential mortgage-backed
securities	2,034	(1)	4	(12)	2	(2,018)	9	-
Commercial mortgage-backed
securities	405	-	1	-	-	(404)	2	-
Collateralized debt obligations	240	(27)	29	(67)	16	-	191	-
Other asset-backed securities	167	(9)	8	(11)	-	(139)	16	-
Total fixed maturity securities	$ 4,250	$ (33)	$ 77	$ (373)	$ 330	$ (2,756)	$ 1,495	$ -
Equity securities	8	-	-	(7)	-	(1)	-	-
Total securities available for sale	$ 4,258	$ (33)	$ 77	$ (380)	$ 330	$ (2,757)	$ 1,495	$ -
Trading securities	-	(4)	-	49	-	-	45	(4)
Mortgage loans held for sale	48	14	-	(62)	-	-	-	2
Total investments	$ 4,306	$ (23)	$ 77	$ (393)	$ 330	$ (2,757)	$ 1,540	$ (2)

Derivative assets	331	(91)	-	(29)	-	-	211	(69)
Separate account assets4,6	1,628	188	-	(4)	1	(8)	1,805	-
Total assets	$ 6,265	$ 74	$ 77	$ (426)	$ 331	$ (2,765)	$ 3,556	$ (71)

Liabilities
Future policy benefits and claims5	$ (311)	$ 93	$ -	$ (8)	$ -	$ -	$ (226)	$ 93
Derivative liabilities	(2)	(2)	-	-	-	-	(4)	(2)
Total liabilities	$ (313)	$ 91	$ -	$ (8)	$ -	$ -	$ (230)	$ 91

Includes gains and losses on sales of financial instruments, changes in fair value of certain instruments and other-than-temporary impairments. The net unrealized gain/loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.

Includes changes in fair value of certain instruments and non-credit related other-than-temporary impairments.

Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the National Association of Insurance Commissioners (NAIC) (see Note 5 for a discussion of NAIC designations. Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.

Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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.

The value of separate account liabilities is set to equal the fair value of separate account assets.

Transfers during the year ended December 31, 2010

At December 31, 2009, most of the Company’s investments in residential mortgage-backed securities backed by Alt-A and sub-prime collateral were categorized as Level 3 financial assets because there was little market activity in these securities. During 2010, market activity increased in these securities such that they are no longer considered inactive. As such, these securities were transferred out of Level 3 and into Level 2. Additionally, many of the Company’s investments in below investment-grade commercial mortgage-backed securities which were categorized as Level 3 financial assets as of December 31, 2009 were transferred to Level 2 in 2010. This was primarily due to an increase in the observable valuation inputs of market activity and availability of higher quality independent pricing data. There were no significant transfers into or out of Level 1 during the year ended December 31, 2010.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following tables summarize transfers of financial instruments into and out of Level 1 and Level 2 for the year ended December 31, 2010:

(in millions)	Transfers into Level 1	Transfers out of Level 1	Transfers into Level 2	Transfers out of Level 2

Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$ -	$ (6)	$ 6	$ -
Debt securities issued by foreign governments	120	-	-	(120)
Corporate public securities	-	(22)	114	(1)
Corporate private securities	-	-	103	(311)
Residential mortgage-backed securities	-	(41)	2,059	(2)
Commercial mortgage-backed securities	-	-	404	-
Collateralized debt obligations	-	-	-	(16)
Other asset-backed securities	-	-	139	-
Total fixed maturity securities	$ 120	$ (69)	$ 2,825	$ (450)
Equity securities	-	-	1	-
Total securities available-for-sale	$ 120	$ (69)	$ 2,826	$ (450)
Total investments	$ 120	$ (69)	$ 2,826	$ (450)

Separate account assets	-	(1)	8	-
Total assets	$ 120	$ (70)	$ 2,834	$ (450)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2009:

(in millions)	Level 1	Level 2	Level 3	Total

Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$ 748	$ 4	$ 2	$ 754
Obligations of states and political subdivisions	-	549	-	549
Debt securities issued by foreign governments	-	75	-	75
Corporate public securities	2	11,134	215	11,351
Corporate private securities	-	3,423	1,187	4,610
Residential mortgage-backed securities	229	3,246	2,034	5,509
Commercial mortgage-backed securities	-	679	405	1,084
Collateralized debt obligations	-	132	240	372
Other asset-backed securities	-	279	167	446
Total fixed maturity securities	$ 979	$ 19,521	$ 4,250	$ 24,750
Equity securities	13	32	8	53
Total securities available-for-sale	$ 992	$ 19,553	$ 4,258	$ 24,803
Mortgage loans held for sale1	-	-	48	48
Short-term investments	56	947	-	1,003
Total investments	$ 1,048	$ 20,500	$ 4,306	$ 25,854

Cash and cash equivalents	49	-	-	49
Derivative assets	-	498	331	829
Separate account assets2,4	11,607	44,611	1,628	57,846
Total assets	$ 12,704	$ 65,609	$ 6,265	$ 84,578

Liabilities
Future policy benefits and claims3	$ -	$ -	$ (311)	$ (311)
Derivative liabilities	(10)	(404)	(2)	(416)
Total liabilities	$ (10)	$ (404)	$ (313)	$ (727)

__________

Elected to be carried at fair value.

Comprised of public, privately registered and non-registered mutual funds and investments in securities.

Related to embedded derivatives associated with living benefit contracts. The Company’s GMABs, GLWBs and hybrid GMABs/GLWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings. This balance also includes embedded derivatives associated with fixed EIAs that provide for interest earnings that are linked to the performance of specified equity market indices.

The value of separate account liabilities is set to equal the fair value of separate account assets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2009:

	December 31,	and	In OCI	sales and	in to	out of	December 31,	due to assets
(in millions)	2008	unrealized)1	(unrealized)2	settlements	Level 3	Level 3	2009	still held

Assets
Investments:
Securities available-for-sale3:
Fixed maturity securities
U.S. Treasury securities and
obligations of U.S.
Government corporations
and agencies	$ 2	$ -	$ -	$ -	$ -	$ -	$ 2	$ -
Corporate public securities	253	(31)	40	(121)	92	(18)	215	-
Corporate private securities	1,074	(49)	220	(280)	395	(173)	1,187	-
Residential mortgage-backed
securities	3,036	(111)	389	(431)	1	(850)	2,034	-
Commercial mortgage-backed
securities	263	(20)	139	(7)	94	(64)	405	-
Collateralized debt obligations	251	(53)	77	(18)	-	(17)	240	-
Other asset-backed securities	112	(17)	43	(12)	49	(8)	167	-
Total fixed maturity securities	$ 4,991	$ (281)	$ 908	$ (869)	$ 631	$ (1,130)	$ 4,250	$ -
Equity securities	18	1	-	5	-	(16)	8	-
Total securities available for sale	$ 5,009	$ (280)	$ 908	$ (864)	$ 631	$ (1,146)	$ 4,258	$ -
Mortgage loans held for sale	125	(8)	-	(69)	-	-	48	(3)
Total investments	$ 5,134	$ (288)	$ 908	$ (933)	$ 631	$ (1,146)	$ 4,306	$ (3)

Derivative assets	598	(312)	(12)	57	-	-	331	(310)
Separate account assets4,6	2,142	(647)	-	400	15	(282)	1,628	218
Total assets	$ 7,874	$ (1,247)	$ 896	$ (476)	$ 646	$ (1,428)	$ 6,265	$ (95)

Liabilities
Future policy benefits and claims5	$ (1,740)	$ 1,438	$ -	$ (9)	$ -	$ -	$ (311)	$ 1,438
Derivative liabilities	(4)	2	-	-	-	-	(2)	2
Total liabilities	$ (1,744)	$ 1,440	$ -	$ (9)	$ -	$ -	$ (313)	$ 1,440

__________

Includes changes in fair value of certain instruments and non-credit related other-than-temporary impairments.

Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the NAIC (see Note 5 for a discussion of NAIC designations). Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.

Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The value of separate account liabilities is set to equal the fair value of separate account assets.

Transfers during the year ended December 31, 2009

The Company periodically reviews its fair value hierarchy classifications. Changes in observability of significant valuation inputs identified during these reviews may trigger reclassification of fair value hierarchy levels of financial assets and liabilities. During 2008, the Company’s investments in residential mortgage-backed securities backed by prime collateral were classified as Level 3 financial assets because of their inactive markets and resulting illiquidity. As of December 31, 2009, these securities were no longer considered inactive due to increased trading volume and market activity and as a result were transferred out of Level 3. In addition, the Company was able to gain additional observable valuation inputs in the pricing of certain corporate securities, residential mortgage-backed securities and commercial mortgage-backed securities, which led to transferring these securities out of Level 3.

Additionally, certain corporate securities and commercial mortgage-backed securities had significant changes in key valuation inputs, which led to transfers into Level 3, primarily related to ratings downgrades and changes in pricing sources.

Fair Value on a Nonrecurring Basis

The Company measured certain mortgage loans at fair value, or fair value of the collateral, for collateral dependent loans, on a non-recurring basis subsequent to their initial recognition, due to impairments recorded during the year. In determining the estimated fair value for these impaired mortgage loans, the Company primarily uses the direct capitalization method based on management’s view of current market capitalization rates. Alternatively, when deemed more appropriate, the Company may use a discounted cash flow methodology or an independently provided appraisal of value. Each of these methodologies is considered to represent a Level 3 fair value estimate. Refer to Note 5 for further discussion of the carrying value of mortgage loans.

Financial Instruments Not Carried at Fair Value

In estimating fair value for its disclosures for financial instruments not carried at fair value (and not included in the fair value disclosures above), the Company used the following methods and assumptions:

Mortgage loans, net: The fair values of mortgage loans held for investment are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations.

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

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

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

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

	2010		2009
	Carrying	Estimated	Carrying	Estimated
(in millions)	value	fair value	value	fair value

Assets
Investments:
Mortgage loans, net	$ 6,125	$ 5,863	$ 6,781	$ 5,946
Policy loans	$ 1,088	$ 1,088	$ 1,050	$ 1,050

Liabilities
Investment contracts	$ (17,962)	$ (18,973)	$ (18,724)	$ (18,316)
Short-term debt	$ (300)	$ (300)	$ (150)	$ (150)
Long-term debt	$ (978)	$ (1,039)	$ (706)	$ (723)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(5)	Investments

Fixed Maturity Securities and Equity Securities Available-for-Sale

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

		Gross	Gross
	Amortized	unrealized	unrealized	Estimated
(in millions)	cost	gains	losses	fair value

December 31, 2010
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$ 497	$ 87	$ -	$ 584
Obligations of states and political subdivisions	1,410	15	48	1,377
Debt securities issued by foreign governments	110	13	-	123
Corporate public securities	11,921	879	84	12,716
Corporate private securities	4,038	257	47	4,248
Residential mortgage-backed securities	5,811	183	355	5,639
Commercial mortgage-backed securities	1,167	51	32	1,186
Collateralized debt obligations	365	13	126	252
Other asset-backed securities	294	19	4	309
Total fixed maturity securities	$ 25,613	$ 1,517	$ 696	$ 26,434
Equity securities	39	3	-	42
Total securities available-for-sale	$ 25,652	$ 1,520	$ 696	$ 26,476

December 31, 2009
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations	$ 688	$ 73	$ 7	$ 754
Obligations of states and political subdivisions	568	4	23	549
Debt securities issued by foreign governments	70	5	-	75
Corporate public securities	10,929	597	175	11,351
Corporate private securities	4,500	193	83	4,610
Residential mortgage-backed securities	6,079	95	665	5,509
Commercial mortgage-backed securities	1,284	7	207	1,084
Collateralized debt obligations	531	12	171	372
Other asset-backed securities	454	20	28	446
Total fixed maturity securities	$ 25,103	$ 1,006	$ 1,359	$ 24,750
Equity securities	49	5	1	53
Total securities available-for-sale	$ 25,152	$ 1,011	$ 1,360	$ 24,803

The fair value of the Company’s investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads. The Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell debt securities in unrealized loss positions. The Company may realize investment losses to the extent its liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes, for securities available-for-sale, the gross unrealized losses based on the amount of time each type of security has been in an unrealized loss position, as of the dates indicated:

	Less than or equal to one year			More than one year			Total
		Gross	Number		Gross	Number		Gross	Number
	Estimated	unrealized	of	Estimated	unrealized	of	Estimated	unrealized	of
(in millions, except number of securities)	fair value	losses	securities	fair value	losses	securities	fair value	losses	securities

December 31, 2010
Fixed maturity securities:
Obligations of states and
political subdivisions	$ 814	$ 48	77	$ -	$ -	-	$ 814	$ 48	77
Debt securities issued by foreign
governments	20	-	1	-	-	-	20	-	1
Corporate public securities	1,009	28	109	528	56	107	1,537	84	216
Corporate private securities	371	26	41	221	21	22	592	47	63
Residential mortgage-backed securities	562	13	41	1,765	342	281	2,327	355	322
Commercial mortgage-backed securities	40	1	7	182	31	35	222	32	42
Collateralized debt obligations	1	-	2	180	126	46	181	126	48
Other asset-backed securities	27	1	2	62	3	17	89	4	19
Total fixed maturity securities	$ 2,844	$ 117	$ 280	$ 2,938	$ 579	$ 508	$ 5,782	$ 696	$ 788
Equity securities	3	-	3	2	-	40	5	-	43
Total	$ 2,847	$ 117	$ 283	$ 2,940	$ 579	$ 548	$ 5,787	$ 696	$ 831

December 31, 2009
Fixed maturity securities:
U.S. Treasury securities and
obligations of U.S. Government corporations and agencies
corporations and agencies	$ 206	$ 7	10	$ -	$ -	-	$ 206	$ 7	10
Obligations of states and
political subdivisions	318	12	35	79	11	13	397	23	48
Debt securities issued by foreign
governments	1	-	2	-	-	-	1	-	2
Corporate public securities	1,198	32	160	1,117	143	201	2,315	175	361
Corporate private securities	279	19	47	973	64	73	1,252	83	120
Residential mortgage-backed securities	937	103	117	2,375	562	341	3,312	665	458
Commercial mortgage-backed securities	43	5	11	699	202	101	742	207	112
Collateralized debt obligations	30	29	13	277	142	45	307	171	58
Other asset-backed securities	5	-	12	248	28	33	253	28	45
Total fixed maturity securities	$ 3,017	$ 207	$ 407	$ 5,768	$ 1,152	$ 807	$ 8,785	$ 1,359	$ 1,214
Equity securities	17	-	13	3	1	75	20	1	88
Total	$ 3,034	$ 207	420	$ 5,771	$ 1,153	882	$ 8,805	$ 1,360	1,302

The weighted estimated fair value to amortized cost for non-investment grade fixed maturity securities that have an estimated fair value to amortized cost ratio of less than 80% and have been in an unrealized loss position for more than one year was 54% and 65% as of December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The table below summarizes the amortized cost and estimated fair values of fixed maturity securities available-for-sale, by maturity, as of December 31, 2010. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Estimated
(in millions)	cost	fair value

Fixed maturity securities available-for-sale:
Due in one year or less	$ 961	$ 980
Due after one year through five years	6,784	7,195
Due after five years through ten years	6,087	6,588
Due after ten years	4,144	4,285
Subtotal	$ 17,976	$ 19,048
Residential mortgage-backed securities	5,811	5,639
Commercial mortgage-backed securities	1,167	1,186
Collateralized debt obligations	365	252
Other asset-backed securities	294	309
Total	$ 25,613	$ 26,434

The NAIC assigns credit quality ratings (NAIC designations) to securities for the purpose of statutory reporting. These NAIC designations are generally based on the credit ratings assigned by nationally recognized statistical rating agencies organizations (NRSRO) unless a security is not rated by an NRSRO, in which case the NAIC rates it using an alternative approach. Beginning with year-end 2009 statutory reporting, the NAIC modified its ratings approach for residential mortgage-backed securities, which are not backed by U.S. government agencies. Additionally, beginning with year-end 2010 statutory reporting, the NAIC similarly modified its ratings approach for commercial mortgage-backed securities. Under the modified approach, the NAIC designations for these types of securities are based on an insurer’s reported carrying value for the security relative to a NAIC-prescribed ratings matrix for the security, with a higher NAIC designation afforded securities with lower carrying values. In effect, this process rates the credit quality of a security based on an independent market view of the expected discounted future cash flows from the security versus its statutory carrying value. Under this process, NAIC designations for these types of mortgage-backed securities could be higher or lower than the related NRSRO ratings. NAIC designations range from class 1 (highest quality) to class 6 (lowest quality). Of the Company’s fixed maturity securities, 93% and 91% were in the two highest NAIC designations categories as of December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table shows the equivalent designation between the NAIC and NRSRO and summarizes the credit quality, as determined by NAIC designations, of the Company’s fixed maturity securities portfolio as of the dates indicated:

(in millions)		December 31, 2010		December 31, 2009
NAIC Designations1, 2	NRSRO equivalent designation	Amortized cost	Estimated fair value	Amortized cost	Estimated fair value

1	AAA/AA/A	$ 14,879	$ 15,595	$ 15,323	$ 15,196
2	BBB	8,495	8,893	7,140	7,275
3	BB	1,389	1,280	1,551	1,404
4	B	492	437	724	617
5	CCC and lower	260	191	253	188
6	In or near default	98	38	112	70
	Total	$ 25,613	$ 26,434	$ 25,103	$ 24,750

__________

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.

Class 1 and class 2 NAIC designations are generally considered to represent investment grade ratings and are considered as such by the Company in reporting its credit quality information.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Corporate Securities

Corporate securities include conventional bonds, private placement fixed maturity securities, syndicated corporate bank loans and hybrid securities with both debt and equity-like features. For these corporate securities, the following table summarizes, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade			Non-Investment Grade			Total
Ratio of	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total

December 31, 2010
99.9% - 80.0%	$ 37	$ 35	$ 72	$ 4	$ 20	$ 24	$ 41	$ 55	$ 96
79.9% - 50.0%	-	17	17	12	5	17	12	22	34
Below 50.0%	-	-	-	1	-	1	1	-	1
Total	$ 37	$ 52	$ 89	$ 17	$ 25	$ 42	$ 54	$ 77	$ 131

December 31, 2009
99.9% - 80.0%	$ 27	$ 104	$ 131	$ 13	$ 45	$ 58	$ 40	$ 149	$ 189
79.9% - 50.0%	9	46	55	2	12	14	11	58	69
Below 50.0%	-	-	-	-	-	-	-	-	-
Total	$ 36	$ 150	$ 186	$ 15	$ 57	$ 72	$ 51	$ 207	$ 258

Judgments regarding whether a corporate debt security is other-than-temporarily impaired include analyzing the issuer’s financial condition. An analysis of the issuer’s financial condition includes whether there has been a decline in the overall value of the issuer or its ability to service the specific security. The total enterprise value of the company issuing the security is determined through asset coverage, cash flow multiples, or other industry standards. Several factors assessed when determining the enterprise value include, but are not limited to, credit quality ratings, cash flow sustainability, liquidity, strength, industry, and market position. Sources of information include, but are not limited to, management projections, independent consultants, street research, peer analysis, and internal analysis.

If the Company has concerns regarding the viability of the issuer or its ability to service the specific security after this analysis, a recovery value analysis is prepared to determine if the recovery value has declined below the amortized cost of the security. The recovery value is combined with the estimated timing to recovery, any other applicable cash flows that are expected and discounted at the security’s effective yield to arrive at the expected present value of cash flows. If a recovery estimate is not feasible, then the market view of cash flows implied by the current fair value is the primary factor used to estimate recovery and the present value of cash flows.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The Company held hybrid securities issued by institutions in the financial sector with both debt and equity-like features, classified as corporate fixed maturity securities, with estimated fair values of $403 million and $609 million, and gross unrealized losses of $39 million and $101 million, as of December 31, 2010 and 2009, respectively. Of these unrealized losses as of December 31, 2010, $36 million, or 92%, were in an unrealized loss position for more than one year, evaluated under the debt model, compared to $99 million, or 98%, as of December 31, 2009. The Company evaluates such securities for other-than-temporary impairment using the criteria of either a debt or an equity security depending on the facts and circumstances of the individual issuer and security.

The Company invests in private placement fixed maturity securities because of the generally higher nominal yield available compared to comparably rated public fixed maturity securities, more restrictive financial and business covenants available in private fixed maturity security loan agreements, and stronger prepayment protection. Although private placement fixed maturity securities are not registered with the SEC and generally are less liquid than public fixed maturity securities, restrictive financial and business covenants included in private placement fixed maturity security loan agreements generally are designed to compensate for the impact of increased liquidity risk. A significant portion of the private placement fixed maturity securities that the Company holds are participations in large issuances that are also owned by other investors.

Residential Mortgage-Backed Securities

Residential mortgage-backed securities are a type of fixed income security backed by residential mortgage loans, which have been are sold into a trust or special purpose entity, formed for the purpose of securitizing and tranching the cash flows of the mortgage loans. The following tables summarize the distribution by collateral classification of the Company’s residential mortgage-backed securities as of dates indicated:

	December 31, 2010			December 31, 2009
			% of			% of
			estimated			estimated
	Amortized	Estimated	fair value	Amortized	Estimated	fair value
in millions	cost	fair value	total	cost	fair value	total
Government agency	$ 2,795	$ 2,929	52%	$ 2,547	$ 2,621	48%
Prime	973	944	17%	1,120	960	17%
Alt-A	1,545	1,333	23%	1,831	1,452	26%
Sub-prime	498	433	8%	577	474	9%
Other residential mortgage collateral	-	-	-	4	2	-
Total	$ 5,811	$ 5,639	100%	$ 6,079	$ 5,509	100%

The Company considers prime collateral to be mortgages whose underwriting standards qualify the mortgage for regular conforming or jumbo loan programs. In addition, government agency collateral is considered to be mortgages securitized by government agencies both implicitly and explicitly backed by the full faith and credit of the U.S. Government.

The Company considers Alt-A collateral to be mortgages whose underwriting standards do not qualify the mortgage for regular conforming or jumbo loan programs. Typical underwriting characteristics that cause a mortgage to fall into the Alt-A classification may include, but are not limited to, inadequate loan documentation of a borrower’s financial information, debt-to-income ratios above normal lending limits, loan-to-value ratios above normal lending limits that do not have primary mortgage insurance, a borrower who is a temporary resident, and loans securing non-conforming types of real estate. Alt-A mortgages are generally issued to borrowers having higher Fair Isaac Credit Organization (FICO) scores, and the lender typically charges a slightly higher interest rate for such mortgages.

The Company considers sub-prime collateral to be mortgages that are first or second lien mortgage loans issued to sub-prime borrowers, as demonstrated by recent delinquent rent or housing payments or substandard FICO scores. Second-lien mortgage loans are also considered sub-prime.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

For residential mortgage-backed securities, the following table summarizes as of the dates indicated the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade			Non-Investment Grade			Total
Ratio of	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total

December 31, 2010
99.9% - 80.0%	$ 13	$ 97	$ 110	$ -	$ 72	$ 72	$ 13	$ 169	$ 182
79.9% - 50.0%	-	51	51	-	97	97	-	148	148
Below 50.0%	-	11	11	-	14	14	-	25	25
Total	$ 13	$ 159	$ 172	$ -	$ 183	$ 183	$ 13	$ 342	$ 355

December 31, 2009
99.9% - 80.0%	$ 29	$ 134	$ 163	$ 11	$ 42	$ 53	$ 40	$ 176	$ 216
79.9% - 50.0%	17	198	215	20	140	160	37	338	375
Below 50.0%	10	34	44	16	14	30	26	48	74
Total	$ 56	$ 366	$ 422	$ 47	$ 196	$ 243	$ 103	$ 562	$ 665

The Company evaluates its residential mortgage-backed securities for other-than-temporary impairment using multiple inputs. Loan level defaults are estimated using an option pricing approach in which the probability of borrower default increases as home equity declines. Home price appreciation statistics are provided by a third-party. Other factors which influence the probability of default are debt-servicing, missed refinancing opportunities and geography. Loan level characteristics such as issuer, FICO score, payment terms, level of documentation, residency type, dwelling type and loan purpose are also utilized in the model along with historical performance, to estimate or measure the loan’s propensity to default. Additionally, the model takes into account loan age, seasonality, payment changes and exposure to refinancing as additional drivers of default. For transactions where loan level data is not available, the model uses a proxy based on the collateral characteristics. Loss severity in the model is a function of multiple factors, including but not limited to, the unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property valuation and loan-to-value ratio at origination. Prepayment speeds, both actual and estimated, are also considered. The cash flows generated by the collateral securing these securities are then determined based on these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to determine the cash flows associated with the residential mortgage-backed security held by the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Commercial Mortgage-Backed Securities

The Company owns and manages commercial mortgage-backed securities, which are trust certificates or bonds offered to investors that are collateralized by a pool of commercial mortgage loans from which the principal and interest paid on those mortgages flows to investors. These investments in commercial mortgage-backed securities are generally characterized by securities that are collateralized by static, heterogeneous pools of mortgages on commercial real estate properties. Deals are generally diversified across property types, geography, borrowers, tenants, loan size, coupon and vintages. For commercial mortgage-backed securities, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade			Non-Investment Grade			Total
Ratio of	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total

December 31, 2010
99.9% - 80.0%	$ 1	$ 7	$ 8	$ -	$ 4	$ 4	$ 1	$ 11	$ 12
79.9% - 50.0%	-	5	5	-	10	10	-	15	15
Below 50.0%	-	-	-	-	5	5	-	5	5
Total	$ 1	$ 12	$ 13	$ -	$ 19	$ 19	$ 1	$ 31	$ 32

December 31, 2009
99.9% - 80.0%	$ 4	$ 54	$ 58	$ -	$ -	$ -	$ 4	$ 54	$ 58
79.9% - 50.0%	-	85	85	-	-	-	-	85	85
Below 50.0%	1	63	64	-	-	-	1	63	64
Total	$ 5	$ 202	$ 207	$ -	$ -	$ -	$ 5	$ 202	$ 207

Commercial mortgage-backed securities’ cash flows are generated by an industry standard fixed income analytics system designed for asset backed securities. In addition, a third party default model is generally utilized within this service to apply loan specific probability of default, refinance risk and loss severity ratios to generate estimated cash flows. Default and prepayment assumptions are deal specific and include, but are not limited to, delinquency, property type, loan size, debt service coverage ratio, loan to value ratios and loan age.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Collateralized Debt Obligations

Collateralized debt obligations are asset-backed securities whose value is derived from the credit quality of the underlying corporate obligations. For collateralized debt obligations, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade versus non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade			Non-Investment Grade			Total
Ratio of	Less	More		Less	More		Less	More
estimated fair	than or	than		than or	than		than or	than
value to	equal to	one		equal to	one		equal to	one
amortized cost	one year	year	Total	one year	year	Total	one year	year	Total

December 31, 2010
99.9% - 80.0%	$ -	$ 9	$ 9	$ -	$ 3	$ 3	$ -	$ 12	$ 12
79.9% - 50.0%	-	8	8	-	8	8	-	16	16
Below 50.0%	-	-	-	-	98	98	-	98	98
Total	$ -	$ 17	$ 17	$ -	$ 109	$ 109	$ -	$ 126	$ 126

December 31, 2009
99.9% - 80.0%	$ 1	$ 4	$ 5	$ -	$ 15	$ 15	$ 1	$ 19	$ 20
79.9% - 50.0%	-	29	29	4	31	35	4	60	64
Below 50.0%	-	10	10	24	53	77	24	63	87
Total	$ 1	$ 43	$ 44	$ 28	$ 99	$ 127	$ 29	$ 142	$ 171

To generate the expected cash flows, NRSRO ratings of the underlying corporate securities were used to develop default probabilities. Historical and forecasted loss severities were then applied to develop the expected losses within the security’s collateral pool. An independent data provider is then used to model each security’s structure and waterfall to determine cash flows at the security level. If a recovery estimate is not feasible, then the market’s view of cash flows implied by the current fair value, market discount rates, and effective yield are the primary factors used to estimate recovery.

Within the collateralized debt obligations security type are Pooled Trust Preferreds. Pooled Trust Preferreds are collateralized debt obligations where the collateral is regional bank and insurance company trust preferred securities. All banks in the pools were screened using data provided by U.S. Bank Rating service. The rating service score is a combination of the bank’s liquidity, asset quality, capital adequacy and profitability. The results of the analysis, as well as management’s evaluation of the results and broker research, are used to generate default rates which are modeled to create cash flows from the entire collateral pool underlying each pooled trust preferred security.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Unrealized Gains and Losses

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

(in millions)	2010 1	2009 2

Net unrealized gains (losses), before adjustments and taxes	$ 824	$ (350)
Change in fair value attributable to fixed maturity securities designated in fair value
hedging relationships	(20)	(35)
Net unrealized gains (losses), before adjustments and taxes	804	(385)
Adjustment to deferred policy acquisition costs	(217)	31
Adjustment to value of business acquired	1	-
Adjustment to future policy benefits and claims	27	20
Adjustment to policyholder dividend obligation	(90)	(17)
Deferred federal income tax (benefit) expense	(184)	123
Net unrealized gains (losses)	$ 341	$ (228)

__________

Includes the $9 million, net of taxes, cumulative effect of adoption of accounting principle as of July 1, 2010 for the adoption of FASB ASU 2010-11.

Includes the $250 million, net of taxes, cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.

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

(in millions)	2010 1	2009	2	2008

Fixed maturity securities	$ 1,174	$ 2,382		$ (2,682)
Equity securities	(1)	12		(14)
Net increase (decrease)	$ 1,173	$ 2,394		$ (2,696)

__________

Includes the $14 million cumulative effect of adoption of accounting principle as of July 1, 2010 for the adoption of FASB ASU 2010-11.

Includes the $384 million cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The non-credit portion of other-than-temporary impairments and any subsequent changes in the fair value of those debt securities are recognized in other comprehensive income. Cumulative non-credit gains and losses recognized on debt securities which have credit losses in earnings, before federal income tax benefit, for the years ended December 31:

(in millions)	2010	2009

Unrealized losses as of January 1,	$ (346)	$ -
Cumulative adoption of accounting principle as of January 1, 2009	-	(384)
Non-credit losses in the period	(174)	(417)
Net unrealized gains in the period	305	455
Total	$ (215)	$ (346)

Mortgage Loans, Net of Allowance

The Company’s investments in mortgage loans consist primarily of first lien, collateral dependent, non-mezzanine commercial mortgage loans. These loans are further segregated into the following classes based on the unique risk profiles of the underlying property types: office, warehouse, retail, apartment, hotel and other.

The collectability of a mortgage loan is based on the ability of the borrower to repay and/or the value of the underlying collateral. The quality of a loan is generally defined by the specific financial position and condition of a borrower and the underlying collateral. Many of the Company’s commercial mortgage loans are structured with balloon payment maturities, exposing the Company to risks associated with the borrowers’ ability to make the balloon payment or refinance the property.

As part of the underwriting process, specific guidelines are followed to ensure the initial quality of a new mortgage loan. Third-party appraisals are generally obtained to support loaned amounts.

The Company actively monitors the credit quality of its mortgage loans to support the development of the valuation allowance. This monitoring process includes quantitative analyses which facilitate the identification of deteriorating loans, and qualitative analyses which consider other factors relevant to the borrowers’ ability to repay. Loans with deteriorating credit fundamentals are identified for special surveillance procedures and are categorized based on the severity of their deterioration and management’s judgment as to the likelihood of loss.

Mortgage loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan is impaired, a provision for loss is established equal to either the difference between the carrying value and the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

In addition to the loan-specific reserves, the Company maintains a non-specific reserve for losses developed based on loan surveillance categories and property type classes and reflects management’s best estimate of probable credit losses as of the balance sheet date but not yet attributable to specific loans. Management’s periodic evaluation of the adequacy of the non-specific reserve is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The unpaid principal balance, amortized cost and valuation allowance for commercial mortgage loans by class as of December 31, 2010:

(in millions)	Office	Warehouse	Retail	Apartment	Hotel	Other	Total

Commercial mortgage loans subject to non-specific reserves:

Unpaid principal balance	$ 775	$ 1,360	$ 2,276	$ 1,220	$ 223	$ 88	$ 5,942

Amortized cost	$ 774	$ 1,365	$ 2,276	$ 1,222	$ 227	$ 88	$ 5,952

Non-specific reserve	$ (14)	$ (7)	$ (10)	$ (9)	$ (7)	$ -	$ (47)


Commercial mortgage loans subject to specific reserves:

Unpaid principal balance	$ 8	$ 52	$ 49	$ 23	$ 137	$ -	$ 269

Amortized cost	$ 8	$ 52	$ 49	$ 23	$ 137	$ -	$ 269

Specific reserves	$ (1)	$ (8)	$ (14)	$ (4)	$ (22)	$ -	$ (49)

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

(in millions)	2010	2009

Valuation allowance, beginning of period	$ 77	$ 42
Additions	66	85
Deductions	(47)	(50)
Valuation allowance, end of period	$ 96	$ 77

In 2010, management developed an internal credit quality rating process to reflect an internal view of the credit risk associated with individual loans, as well as the portfolio as a whole. This process considers a number of relevant loan quality measurements and factors, including loan-to-value ratio (LTV), debt service coverage ratio (DSC), current market rent expectations, economic vacancy, property characteristics, market area, and borrower strength. LTV is calculated as a ratio of the amortized cost of a loan to the estimated value of the underlying collateral. DSC is the amount of cash flow generated by the underlying collateral of the mortgage loan available to meet periodic interest and principal payments of the loan. This process yields an individual internal credit quality rating score for substantially all of the Company’s commercial mortgage loans which is then translated to a credit quality rating ranging from 1 to 5, with 1 representing the lowest risk profile and lowest potential for loss and 5 representing the highest risk profile and highest potential for loss. These internal ratings by property will be updated at least annually.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the amortized cost of commercial mortgage loans by internal credit quality rating and by class as of December 31, 2010:

(in millions)	Office	Warehouse	Retail	Apartment	Hotel	Other	Total

Rated 1	$ 4	$ -	$ 1	$ -	$ -	$ -	$ 5
Rated 2	173	173	571	108	24	-	1,049
Rated 3	523	1,065	1,643	935	128	16	4,310
Rated 4	66	173	105	202	209	72	827
Rated 5	16	6	5	-	3	-	30
Total commercial mortgage loans	$ 782	$ 1,417	$ 2,325	$ 1,245	$ 364	$ 88	$ 6,221

Internal credit quality ratings are not used to establish the valuation allowance; however, there is a strong correlation between the two processes. For example, loans in the category receiving the highest loss factors for determination of the valuation allowance are generally rated with an internal credit quality rating of 4 or 5, while loans in the category receiving the lowest loss factors for determination of the valuation allowance are generally rated 1, 2 or 3.

While the internal credit ratings above display management’s assessment of relative credit risk in the mortgage loan portfolio for the date indicated based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible.

As of December 31, 2010, the Company’s mortgage loans classified as delinquent and/or in non-accrual status were immaterial in relation to the total mortgage loan portfolio. The Company had no mortgage loans 90 days or more past due and still accruing interest.

The estimated fair value of mortgage loans was $5.9 billion and $6.0 billion at December 31, 2010 and 2009 respectively.

Securities Lending

The estimated fair value of loaned securities was $269 million and $40 million as of December 31, 2010 and 2009, respectively. The Company had received $276 million and $41 million of cash collateral on securities lending as of December 31, 2010 and 2009, respectively. The Company had not received any non-cash collateral on securities lending as of the balance sheet dates.

Assets on Deposit, Held in Trust and Pledged as Collateral

Fixed maturity securities with an amortized cost of $8 million and $19 million were on deposit with various regulatory agencies as required by law as of December 31, 2010 and 2009, respectively. These securities continue to be included in fixed maturity securities on the consolidated balance sheets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Net Investment Income

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

(in millions)	2010	2009	2008

Securities available-for-sale:
Fixed maturity securities	$ 1,474	$ 1,465	$ 1,477
Equity securities	2	2	5
Trading assets	1	-	-
Mortgage loans	396	445	497
Short-term investments	2	6	17
Other	9	17	(75)
Gross investment income	$ 1,884	$ 1,935	$ 1,921
Less investment expenses	59	56	56
Net investment income	$ 1,825	$ 1,879	$ 1,865

Net Realized Investment Gains and Losses

The following table summarizes net realized investment gains (losses) from continuing operations by source for the years ended December 31:

(in millions)	2010	2009	2008

Net derivatives (losses) gains 1,2	$ (385)	$ 400	$ (330)
Realized gains on sales	176	192	40
Realized losses on sales	(43)	(113)	(41)
Valuation gains (losses) 3	17	(21)	(56)
Other	(1)	(4)	39
Net realized investment (losses) gains	$ (236)	$ 454	$ (348)

__________

Includes net losses of $155 million, net gains of $414 million, and net losses $501 million on derivatives and embedded derivatives associated with living benefit contracts for the years ended December 31, 2010, 2009, and 2008, respectively.

Includes net losses of $88 million, net losses of $172 million and net gains of $109 million on derivatives associated with death benefit contracts for the years ended December 31, 2010, 2009 and 2008, respectively.

Includes valuation of trading securities, mark-to-market valuation of mortgage loans held for sale, and changes in the non-specific loss reserves component of the valuation allowance on mortgage loans.

Proceeds from the sale of securities available-for-sale during 2010, 2009 and 2008 were $2.2 billion, $4.2 billion and $4.3 billion, respectively. During 2010, 2009 and 2008, gross gains of $172 million, $189 million and $36 million, respectively, and gross losses of $17 million, $70 million and $25 million, respectively, were realized on those sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Other-Than-Temporary Impairment Losses

The following table summarizes other-than-temporary impairments for the years ended December 31:

		Included in OCI
(in millions)	Gross		Net
2010
Fixed maturity securities1	$ 330	$ (174)	$ 156
Equity securities	5	-	5
Mortgage loans	59	-	59
Total other-than-temporary impairment losses	$ 394	$ (174)	$ 220

2009
Fixed maturity securities1	$ 907	$ (417)	$ 490
Equity securities	7	-	7
Mortgage loans	72	-	72
Other	6	-	6
Total other-than-temporary impairment losses	$ 992	$ (417)	$ 575

2008
Fixed maturity securities1			$ 1,052
Equity securities			60
Mortgage loans			15
Other			4
Total other-than-temporary impairment losses			$ 1,131

__________

Declines in the creditworthiness of the issuer of hybrid securities with both debt and equity-like features requires the use of the equity model in analyzing the security for other-than-temporary impairment. For the year ended December 31, 2010, the Company recognized $6 million in other-than-temporary impairments related to these securities compared to $168 million and $90 million for the years ended December 31, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes the cumulative amounts related to the Company's credit loss portion of the other-than-temporary-impairment losses on debt securities that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security prior to recovery of the amortized cost basis as of December 31:

(in millions)	2010	2009

Cumulative credit loss as of January 1, 1	$ 417	$ 507
New credit losses	31	168
Incremental credit losses2	116	72
Subtotal	$ 564	$ 747
Less:
Losses related to securities included in the beginning balance sold or paid down during the period	(202)	(267)
Losses related to securities included in the beginning balance for which there was a change in intent3	(22)	(63)
Cumulative credit loss as of December 31,1	$ 340	$ 417

__________

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.

Includes losses on securities for which the Company can no longer assert that it does not intend to sell the securities.

Securities for which a credit-related other-than-temporary impairment loss was previously recorded that the Company now intends to sell or is more likely than not it will be required to sell before recovery of the amortized cost basis and has transferred the non-credit portion of loss previously recorded in other comprehensive income to earnings during the period. Also includes hybrid securities that had previously been evaluated for other-than-temporary impairment based on the criteria as a debt security, but in the current period are evaluated as an equity security due to declines in the creditworthiness of the issuer.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(6)	Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations which are managed by using derivative instruments and include interest rate, foreign exchange, equity market and credit risk. To manage these risks and exposures, the Company uses interest rate contracts, primarily interest rate swaps; currency derivatives, primarily cross-currency swaps and futures; equity derivatives, primarily options and futures; credit default swaps and total return swaps. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. The Company recognizes all of its derivative instruments as either assets or liabilities at fair value.

Interest Rate Risk Management: The Company uses interest rate contracts, primarily interest rate swaps, to reduce or alter interest rate exposure arising from mismatches between assets and liabilities. In the case of interest rate swaps, the Company enters into a contractual agreement with a counterparty to exchange, at specified intervals, the difference between fixed and variable rates of interest, calculated on a reference notional amount.

Interest rate swaps are used by the Company in association with fixed and variable rate investments to achieve cash flow streams that support certain financial obligations of the Company and to produce desired investment returns. As such, interest rate swaps are generally used to convert fixed rate cash flow streams to variable rate cash flow streams or vice versa.

In connection with the MTN program, the Company issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust. The proceeds from these funding agreements are generally used to purchase fixed rate investments, generally available-for-sale public or private corporate bonds or commercial mortgage loans. In a rising interest rate environment, the Company is exposed to narrowing margins. To mitigate this risk, the Company enters into interest rate swap contracts to hedge the volatility associated with changes in interest rates.

The Company also enters into interest rate swap transactions which are structured to provide a hedge against the negative impact of higher interest rates on the Company’s capital position.

Foreign Currency Risk Management: As part of its regular investing activities, the Company may purchase foreign currency denominated investments, generally fixed maturity securities. These investments and the associated income expose the Company to volatility associated with movements in foreign exchange rates. In an effort to mitigate this risk, the Company uses cross-currency swaps. As foreign exchange rates change, the increase or decrease in the cash flows of the derivative instrument generally offsets the changes in the functional-currency equivalent cash flows of the hedged asset.

In addition, foreign exchange risks associated with foreign currency-denominated MTNs are managed using cross-currency swaps.

Credit Risk Management: The Company enters into credit derivative contracts, primarily credit default swaps, under which the Company buys and sells credit default protection on standardized credit indices, which are established baskets of creditors, or on specific corporate creditors. These derivatives allow the Company to manage or modify its credit risk profile in general or its credit exposure to specific creditors.

Equity Market Risk Management: The Company offers a variety of variable annuity products available with living benefit features such as GMABs or GLWBs. These living benefit features represent embedded derivatives in variable annuity contracts that are required to be separated from, and valued apart from, the host variable annuity contracts. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of these embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of these embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contract holder persistency, contract holder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility. The Company believes the impact of claims is expected to be mitigated by its economic hedging program.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

These products and related obligations expose the Company to various market risks, predominately interest rate and equity risk. Adverse changes in the equity markets or interest rate movements expose the Company to significant volatility. To mitigate these risks and hedge the living benefit obligations, the Company enters into a variety of derivatives including interest rate swaps, equity index futures, options and total return swaps.

Derivatives Qualifying for Hedge Accounting

Fair Value Hedge Relationship: For derivative instruments that are designated and qualify as a fair value hedge (e.g., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the hedged item, to the extent of the risk being hedged, are recognized in net realized investment gains and losses.

The Company uses derivative instruments that are designated and qualify as fair value hedges in various financial transactions as follows:

·	Interest rate swaps are used to hedge certain fixed rate investments such as commercial mortgage loans and certain fixed maturity securities, and

·	Cross-currency swaps are used to hedge foreign currency-denominated fixed maturity securities.

Cash Flow Hedge Relationship: For derivative instruments that are designated and qualify as a cash flow hedge (e.g., hedging the exposure to the variability in expected future cash flows that is attributable to interest rate risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction impacts earnings in the same line item associated with the forecasted transaction. The ineffective portion of the derivative’s change in value, if any, along with any of the derivative’s change in value that is excluded from the assessment of hedge effectiveness, are recorded in net realized investment gains and losses.

The Company uses derivative instruments that are designated and qualify as a cash flow hedges in various financial transactions as follows:

·	Interest rate swaps are used to hedge cash flows from variable rate investments such as commercial mortgage loans and certain fixed maturity securities,

·	Interest rate swaps are used to hedge payments of funding agreement liabilities associated with the MTN program,

·	Cross-currency swaps are used to hedge interest payments and principal payments on foreign currency-denominated fixed maturity securities, and

·	Cross-currency swaps are used to hedge payments of foreign currency-denominated funding agreement liabilities associated with the MTN program.

Termination: The Company is required to discontinue hedge accounting when it is determined that a derivative instrument no longer qualifies as an effective hedge. Upon such determination, the derivative continues to be carried in the consolidated balance sheet at its fair value with changes in fair value recognized in net realized investment gains and losses. In a discontinued fair value hedge on available-for-sale securities, changes in the fair value of the previously hedged asset or liability are no longer included in net realized gains and losses, rather are included in accumulated other comprehensive income and reclassified to net realized investment gains and losses through maturity of the hedged item.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Derivatives Not Qualifying for Hedge Accounting

For derivatives that are not designated as a hedging instrument, the gain or loss on the derivative is recognized in net realized investment gains and losses. The Company uses these derivatives in various financial transactions as follows:

·	Futures, options, interest rate swaps and total return swaps are used to hedge certain benefit rider obligations included in variable annuity products, as described above,

·	Interest rate swaps, futures and options are used to hedge portfolio duration and other interest rate risks to which the Company is exposed,

·	Cross-currency swaps and futures are used to hedge foreign currency-denominated assets and liabilities, and

·	Credit default swaps are used to either buy or sell credit protection on a credit index or specific creditor.

Credit Risk Associated with Derivatives Transactions

The Company periodically evaluates the risks within the derivative portfolios due to credit exposure. When evaluating this risk, the Company considers several factors which include, but are not limited to, the counterparty risk associated with derivative receivables, the Company’s own credit as it relates to derivative payables, the collateral thresholds associated with each counterparty, and changes in relevant market data in order to gain insight into the probability of default by the counterparty. In addition, the effect the Company’s exposure to credit risk could have on the effectiveness of the Company’s hedging relationships is considered. As of December 31, 2010 and 2009, the impact of the exposure to credit risk on both the fair value measurement of derivative assets and liabilities and the effectiveness of the Company’s hedging relationships was immaterial.

As of December 31, 2010 and 2009, the Company had received $351 million and $532 million, respectively, of cash for derivative collateral, which is included in short-term investments. The Company held no material securities as off-balance sheet collateral on derivative transactions as of December 31, 2010. The Company held $32 million as off-balance sheet collateral on derivative transactions as of December 31, 2009. As of December 31, 2010 and 2009, the Company had pledged fixed maturity securities with a fair value of $28 million and $56 million, respectively, as collateral to derivative counterparties. There are no contingent features associated with the Company’s derivative instruments which would require additional collateral to be pledged to counterparties.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table presents the fair value of derivative instruments, location of the related instruments in the consolidated balance sheets and the related notional amounts of the derivative instruments as of the dates indicated:

	Derivative assets			Derivative liabilities
(in millions)	Balance sheet location	Fair value	Notional amount	Balance sheet location	Fair value	Notional amount

December 31, 2010
Derivatives designated as
hedging instruments:
Interest rate contracts	Other assets	$ 1	$ 78	Other liabilities	$ 37	$ 830
Cross-currency swaps	Other assets	26	132	Other liabilities	18	101
Total derivatives designated as
hedging instruments		$ 27	$ 210		$ 55	$ 931

Derivatives not designated as
hedging instruments:
Interest rate contracts	Other assets	556	10,944	Other liabilities	418	10,225
Cross-currency swaps	Other assets	30	210	Other liabilities	30	210
Credit default swaps	Other assets	1	20	Other liabilities	-	17
Total return swaps	Other assets	12	1,119	Other liabilities	23	1,053
Equity contracts	Other assets	212	2,484	Other liabilities	20	1,124
Embedded derivatives on guaranteed benefit annuity programs	N/A	-	N/A	Future policy benefits and claims	226	N/A
Total derivatives not designated
as hedging instruments		$ 811	$ 14,777		$ 717	$ 12,629

Total derivatives		$ 838	$ 14,987		$ 772	$ 13,560

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

	Derivative assets			Derivative liabilities
(in millions)	Balance sheet location	Fair value	Notional amount	Balance sheet location	Fair value	Notional amount

December 31, 2009
Derivatives designated as
hedging instruments:
Interest rate contracts	Other assets	$ 4	$ 86	Other liabilities	$ 69	$ 1,216
Cross-currency swaps	Other assets	34	93	Other liabilities	36	216
Total derivatives designated as
hedging instruments		$ 38	$ 179		$ 105	$ 1,432

Derivatives not designated as
hedging instruments:
Interest rate contracts	Other assets	409	7,457	Other liabilities	239	5,162
Cross-currency swaps	Other assets	49	211	Other liabilities	49	210
Credit default swaps	Other assets	1	29	Other liabilities	3	82
Total return swaps	Other assets	1	85	Other liabilities	8	556
Equity contracts	Other assets	331	2,505	Other liabilities	10	996
Embedded derivatives on guaranteed benefit annuity programs	N/A	-	-	Future policy benefits and claims	311	N/A
Other embedded derivatives	N/A	-	-	Other liabilities	2	N/A
Total derivatives not designated
as hedging instruments		$ 791	$ 10,287		$ 622	$ 7,006

Total derivatives		$ 829	$ 10,466		$ 727	$ 8,438

The following table presents the gains (losses) for derivative instruments designated and qualifying as hedging instruments in fair value hedges and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010 1	2009 1

Derivatives in fair value hedging relationships:
Interest rate contracts2	Net realized investment gains (losses)	$ 7	$ 25
Cross-currency swaps2	Net realized investment gains (losses)	1	(2)
Total		$ 8	$ 23

Underlying fair value hedge relationships:
Interest rate contracts	Net realized investment gains (losses)	$ (12)	$ (35)
Cross-currency swaps	Net realized investment gains (losses)	(3)	2
Total		$ (15)	$ (33)

__________

Includes $6 million and $8 million of cash paid in the termination of fair value hedging instruments for the years ended December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Excludes $30 million and $37 million of periodic settlements on interest rate contracts which are recorded in net investment income for the years ended December 31, 2010 and 2009, respectively.

The following table present the gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges recognized in AOCI in the consolidated financial statements for the years ended December 31,:

(in millions)	2010	2009

Derivatives in cash flow hedging relationships:
Interest rate contracts	$ 5	$ 12
Cross-currency swaps	(2)	(4)
Currency contracts	22	(19)
Other embedded derivatives	-	(12)
Total	$ 25	$ (23)

The following table presents the gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges reclassified from AOCI into income and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010	2009

Derivatives in cash flow hedging relationships:
Interest rate contracts	Interest credited to policyholder accounts	$ -	$ (4)
Cross-currency swaps	Net realized investment gains (losses)	-	(11)
Currency contracts	Net realized investment gains (losses)	(2)	(4)
Total		$ (2)	$ (19)

The following table presents the realized gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges recognized in income and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010	2009

Derivatives in cash flow hedging relationships:
Cross-currency swaps	Net realized investment gains (losses)	$ -	$ (1)
Credit default swaps	Net realized investment gains (losses)	-	(3)
Total 1,2,3		$ -	$ (4)

__________

Ineffective portion and amounts excluded from the measurement of ineffectiveness.

Excludes $2 million of periodic settlements in interest rate contracts which are recorded in net investment income for the year ended December 31, 2010. Periodic settlements in interest rate contracts for the year ended December 31, 2009 were immaterial.

No cash was paid in the termination of cash flow hedging instruments for the year ended December 31, 2010. Includes $17 million of cash received in the termination of cash flow hedging instruments for the year ended December 31, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table presents the gains (losses) for derivative instruments not designated and qualifying as hedging instruments recognized in income and the location of these instruments in the consolidated financial statements for the years ended December 31:

(in millions)		2010	2009

Derivatives not designated as hedging instruments:
Interest rate contracts	Net realized investment gains (losses)	$ (39)	$ (197)
Cross-currency swaps	Net realized investment gains (losses)	-	3
Credit default swaps	Net realized investment gains (losses)	(5)	8
Equity total return swaps	Net realized investment gains (losses)	(136)	7
Equity contracts	Net realized investment gains (losses)	(389)	(739)
Embedded derivatives on guaranteed
benefit annuity programs	Net realized investment gains (losses)	98	1,432
Other embedded derivatives	Net realized investment gains (losses)	(2)	3
Total		$ (473)	$ 517

The previous tables exclude $16 million and $(151) million of net interest settlements on all derivative instruments and $94 million and $63 million of other revenue related to guaranteed benefits on annuities that are also recorded in net realized investment gains (losses) for the year ended December 31, 2010 and 2009, respectively. The previous tables exclude $13 million in losses relating to foreign denominated cash balances for the year ended December 31, 2010, compared to an immaterial balance for the year ended December 31, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Credit Derivatives

The Company had exposure to credit protection contracts as of the years ended December 31, 2010, 2009 and 2008 and experienced credit event losses of $8 million in 2010, no credit losses in 2009 and credit event losses of $19 million in 2008 on such contracts. The following table presents the Company’s outstanding exposure to credit protection contracts, all of which are related to corporate debt instruments, as of the dates indicated, by contract maturity and industry exposure:

	Less than or equal to one year		One to three years		Three to five years		Total
	Maximum	Estimated	Maximum	Estimated	Maximum	Estimated	Maximum	Estimated
	potential	fair	potential	fair	potential	fair	potential	fair
(in millions)	risk	value	risk	value	risk	value	risk	value

December 31, 2010
Single sector exposure:
Financial	$ 6	$ -	$ 3	$ -	$ -	$ -	$ 9	$ -
Services	-	-	10	1	-	-	10	1
Total	$ 6	$ -	$ 13	$ 1	$ -	$ -	$ 19	$ 1

December 31, 2009
Single sector exposure:
Financial	$ 35	$ (3)	$ 9	$ -	$ -	$ -	$ 44	$ (3)
Oil & gas pipelines	15	-	-	-	-	-	15	-
Services	-	-	-	-	10	-	10	-
Total	$ 50	$ (3)	$ 9	$ -	$ 10	$ -	$ 69	$ (3)

In addition, the Company invests in certain structured securities that contain embedded credit derivatives. These securities are referred to as synthetic collateralized debt obligations and have maturity dates ranging from one to ten years. The credit derivatives embedded in these securities have not been separated from their host contracts for separate fair value reporting, rather, the Company elected to carry the entire security at fair value with any changes in fair value included in earnings. Effective July 1, 2010, these securities had a fair value of $35 million and were transferred from available-for-sale securities to trading securities. At December 31, 2010, the fair value of synthetic collateralized debt obligations, including the embedded credit derivatives, was $45 million. The fair value represents the maximum future potential loss that could be incurred by the Company as there is no future payment obligation associated with these investments. Additionally, there are no recourse provisions related to these investments that would enable the Company to recover any losses on these securities from third parties.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(7) Deferred Policy Acquisition Costs

During the second quarter of 2010, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA and unearned revenue reserves. The review covered all assumptions including mortality, lapses, expenses and general and separate account returns. As a result of this review, certain assumptions were unlocked (DAC unlock). The unlocked assumptions primarily related to lapse assumptions in the Individual Investment segment, market performance assumptions in the Retirement Plans segment, and mortality, lapse and market performance assumptions in the Individual Protection segment.

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during the year ended December 31, 2010 was as follows:

(in millions)	DAC	VOBA	Unearned Revenue Reserves	Sales Inducement Assets	Total

Segment:
Individual Investments	$ 4	$ -	$ -	$ -	$ 4
Retirement Plans	7	-	-	-	7
Individual Protection	(22)	13	1	-	(8)
Total	$ (11)	$ 13	$ 1	$ -	$ 3

During the fourth quarter of 2009, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by the continued market recovery and favorable market performance compared to assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in an increase in DAC and other related balances, including sales inducement assets, and a decrease in DAC amortization and other related balances of $219 million pre-tax in the Individual Investments segment. The Company used the reversion to the mean process with the anchor date that was reset during 2007. The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable. The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

During the second quarter of 2009, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA and unearned revenue reserves. The unlocked assumptions primarily related to lower expected investment spreads and separate account returns across all segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during the year ended December 31, 2009 was as follows:

(in millions)	DAC	VOBA	Unearned Revenue Reserves	Sales Inducement Assets	Total

Segment:
Individual Investments	$ 192	$ -	$ -	$ 11	$ 203
Retirement Plans	(8)	-	-	-	(8)
Individual Protection	(44)	(13)	10	-	(47)
Total	$ 140	$ (13)	$ 10	$ 11	$ 148

During the fourth quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters, which primarily was driven by continued unfavorable market performance compared to assumed net separate account returns. Management made a determination that it was not reasonably possible to get back within the preset parameters during the remaining prescribed period. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances of $243 million pre-tax in the Individual Investments segment. The Company used the reversion to the mean process with the anchor date that was reset during 2007. The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable. The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

During the third quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by unfavorable market performance compared to the assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances totaling $177 million pre-tax in the Individual Investments segment.

At the end of the second quarter of 2008, the Company determined as part of its comprehensive annual study of assumptions that certain assumptions should be unlocked. The unlocked assumptions primarily related to lapse and spread assumptions in the Individual Investments segment, the assumed growth rate on deposits per contract in the Retirement Plans segment, and mortality and lapse assumptions in the Individual Protection segment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of these assumptions during the year ended December 31, 2008 was as follows:

(in millions)	DAC	VOBA	Unearned Revenue Reserves	Sales Inducement Assets	Total

Segment:
Individual Investments	$ (429)	$ (3)	$ -	$ (1)	(433)
Retirement Plans	(2)	-	-	-	(2)
Individual Protection	(3)	8	3	-	8
Total	$ (434)	$ 5	$ 3	$ (1)	$ (427)

The following table presents a reconciliation of DAC for the years ended December 31:

	December 31,	December 31,
(in millions)	2010	2009

Balance at beginning of period	$ 3,983	$ 4,524
Capitalization of DAC	634	513
Amortization of DAC, excluding unlocks	(385)	(606)
Amortization of DAC related to unlocks	(11)	140
Adjustments to DAC related to unrealized gains and losses on securities available-for-sale and other
	(248)	(588)
Balance at end of period	$ 3,973	$ 3,983

(8)	Value of Business Acquired and Other Intangible Assets

The following table presents a reconciliation of VOBA for the years ended December 31:

(in millions)	2010	2009

Balance at beginning of period	$ 277	$ 334
Amortization of VOBA	(20)	(49)
Net realized losses on investments	1	1
Subtotal	$ 258	$ 286
Change in unrealized gain (loss) on available-for-sale securities	1	(9)
Balance at end of period	$ 259	$ 277

Interest on the unamortized VOBA balance (at interest rates ranging from 4.50% to 7.56%) is included in amortization and was $18 million, $20 million and $22 million during the years ended December 31, 2010, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes intangible assets as of December 31:

		2010		2009
	Initial	Gross		Gross
	useful	carrying	Accumulated	carrying	Accumulated
(in millions)	life1	amount	amortization	amount	amortization

Amortizing:
VOBA	28 years	$ 595	$ 336	$ 595	$ 318
Total intangible assets		$ 595	$ 336	$ 595	$ 318

__________

The initial useful life was based on applicable assumptions. Actual periods are subject to revision based on variances from assumptions and other relevant factors.

During 2009, the Company recorded a $5 million pre-tax impairment charge on intangible assets associated with the NFN retirement services distribution channel.

During 2009, the Company fully amortized intangible assets related to NLICA and NLACA state insurance licenses, which resulted in an $8 million pre-tax charge. The state insurance licenses had indefinite useful lives and were not previously amortized. Due to the merger with NLIC and NLAIC, respectively, on December 31, 2009, the NLICA and NLACA state insurance licenses were no longer required as the surviving entities had the required state insurance licenses to conduct business on existing NLICA and NLACA products. The Company surrendered the state insurance licenses back to each state. See Note 1 for a description of the merger transaction between these entities.

During 2008, the Company recorded a $20 million pre-tax impairment charge on career agency force and independent agency force intangible assets associated with its plan to exit the NFN professional consulting group sales channel and selling arrangement changes for the independent agency force.

The Company’s annual impairment testing performed did not result in material impairment losses on intangible assets during 2010, 2009 and 2008.

Based on current assumptions, which are subject to change, the following table summarizes estimated amortization for the next five years ended December 31:

(in millions)							VOBA

2011							$ 23
2012							$ 21
2013							$ 19
2014							$ 15
2015							$ 13

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(9)

Goodwill

The following table summarizes changes in the carrying value of goodwill by segment for the years indicated:

	Retirement	Individual
(in millions)	Plans	Protection	Total
Balance as of December 31, 2008	$ 25	$ 175	$ 200
Adjustments	-	-	-
Balance as of December 31, 2009	$ 25	$ 175	$ 200
Adjustments	-	-	-
Balance as of December 31, 2010	$ 25	$ 175	$ 200

The Company’s annual impairment testing did not result in any impairment on existing goodwill during 2010 and 2009, respectively. As of the 2010 and 2009 annual impairment testing, the fair value of the reporting units with goodwill was in excess of the carrying value. The goodwill balances as of December 31, 2010 and 2009 have not been previously impaired.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(10) Closed Block

The amounts shown in the following tables for assets, liabilities, revenues and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following table summarizes financial information for the closed block as of December 31:

(in millions)	2010	2009

Liabilities:
Future policyholder benefits	$ 1,794	$ 1,818
Policyholder funds and accumulated dividends	143	143
Policyholder dividends payable	28	29
Policyholder dividend obligation	121	49
Other policy obligations and liabilities	13	13
Total liabilities	$ 2,099	$ 2,052

Assets:
Fixed maturity securities available-for-sale, at estimated fair value	$ 1,312	$ 1,236
Mortgage loans	224	263
Policy loans	186	191
Other assets	162	135
Total assets	$ 1,884	$ 1,825
Excess of reported liabilities over assets	215	227

Portion of above representing other comprehensive income:
Increase in unrealized gain on fixed maturity securities available-for-sale	$ 73	$ 91
Adjustment to policyholder dividend obligation	(73)	(91)
Total	$ -	$ -

Maximum future earnings to be recognized from assets and liabilities	$ 215	$ 227

Other comprehensive income:
Fixed maturity securities available-for-sale:
Fair value	$ 1,312	$ 1,236
Amortized cost	1,222	1,253
Shadow policyholder dividend obligation	(90)	(17)
Net unrealized appreciation	$ -	$ -

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes closed block operations for the years ended December 31:

(in millions)	2010	2009	2008

Revenues:
Premiums	$ 83	$ 90	$ 93
Net investment income	101	106	109
Realized investment (losses) gains	(3)	2	(41)
Realized (losses) gains credited to to policyholder benefit obligation	(1)	(7)	37
Total revenues	$ 180	$ 191	$ 198

Benefits and expenses:
Policy and contract benefits	$ 131	$ 133	$ 131
Change in future policyholder benefits and interest credited to
policyholder accounts	(23)	(24)	(17)
Policyholder dividends	56	59	63
Change in policyholder dividend obligation	(3)	4	3
Other expenses	1	1	1
Total benefits and expenses	$ 162	$ 173	$ 181

Total revenues, net of benefits and expenses, before federal income
tax expense	$ 18	$ 18	$ 17
Federal income tax expense	6	6	6
Revenues, net of benefits and expenses and federal income tax
expense	$ 12	$ 12	$ 11

Maximum future earnings from assets and liabilities:
Beginning of period	$ 227	$ 239	$ 250
Change during period	(12)	(12)	(11)
End of period	$ 215	$ 227	$ 239

Cumulative closed block earnings from inception through December 31, 2010 and 2009 were higher than expected as determined in the actuarial calculation. Therefore, policyholder dividend obligations (excluding the adjustment for unrealized gains on available-for-sale securities) were $31 million and $32 million as of December 31, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(11) Variable Contracts

The Company issues variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also provides various forms of guarantees to benefit the related contractholders. The Company provides five primary guarantee types of variable annuity contracts: (1) guaranteed minimum death benefits (GMDB); (2) GMAB; (3) guaranteed minimum income benefits (GMIB); (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.

The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:

Return of premium – provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.

Reset – provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.

Ratchet – provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.

Rollup – provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit: for certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.

·	Combo – provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.

Earnings enhancement – provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.

The GMAB, offered in the Company’s Capital Preservation Plus contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified time period, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

The GLWB, offered in the Company’s L.inc, is a living benefit that provides for enhanced retirement income security without the liquidity loss associated with annuitization. The withdrawal rates vary based on the age when withdrawals begin and are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder. The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a ratchet feature that is driven by account performance and a roll-up feature that is driven by policy duration.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:

·	Ratchet – provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.

·	Rollup – provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.

·	Combo – provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.

In January 2009, the Company simplified its living benefit guarantees and only offer L.inc on new GLWB sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables. The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of December 31 (a contract may contain multiple guarantees):

	2010					2009
	General	Separate	Total	Net	Wtd. avg.	General	Separate	Total	Net	Wtd. avg.
	account	account	account	amount	attained	account	account	account	amount	attained
(in millions)	value	value	value	at risk1	age	value	value	value	at risk1	age

GMDB:
Return of premium	$ 832	$ 8,039	$ 8,871	$ 39	62	$ 729	$ 5,860	$ 6,589	$ 100	61
Reset	1,366	13,242	14,608	305	65	1,622	12,406	14,028	900	64
Ratchet	1,018	15,733	16,751	761	68	1,181	13,836	15,017	1,772	67
Rollup	35	264	299	13	73	42	259	301	18	73
Combo	185	1,731	1,916	192	69	229	1,577	1,806	325	69
Subtotal	$ 3,436	$ 39,009	$ 42,445	$ 1,310	66	$ 3,803	$ 33,938	$ 37,741	$ 3,115	65
Earnings enhancement	25	403	428	29	64	17	373	390	19	64
Total - GMDB	$ 3,461	$ 39,412	$ 42,873	$ 1,339	66	$ 3,820	$ 34,311	$ 38,131	$ 3,134	65

GMAB2:
5 Year	$ 167	$ 2,507	$ 2,674	$ 43	N/A	$ 383	$ 2,640	$ 3,023	$ 172	N/A
7 Year	323	2,192	2,515	52	N/A	394	2,152	2,546	180	N/A
10 Year	68	695	763	13	N/A	70	684	754	39	N/A
Total - GMAB	$ 558	$ 5,394	$ 5,952	$ 108	N/A	$ 847	$ 5,476	$ 6,323	$ 391	N/A

GMIB3:
Ratchet	$ 14	$ 220	$ 234	$ -	N/A	$ 16	$ 242	$ 258	$ -	N/A
Rollup	41	514	555	1	N/A	47	626	673	-	N/A
Total - GMIB	$ 55	$ 734	$ 789	$ 1	N/A	$ 63	$ 868	$ 931	$ -	N/A

GLWB:
L.inc	$ 287	$ 12,030	$ 12,317	$ 430	N/A	$ 230	$ 7,057	$ 7,287	$ 67	N/A
Porfolio income insurance	-	42	42	-	N/A	-	20	20	-	N/A
Total - GLWB	$ 287	$ 12,072	$ 12,359	$ 430	N/A	$ 230	$ 7,077	$ 7,307	$ 67	N/A

__________

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.

GMAB contracts with the hybrid GMAB/GLWB rider had account values of $5.2 billion and $5.3 billion as of December 31, 2010 and 2009, respectively.

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

Net amount at risk is highly sensitive to changes in financial market movements. See Note 6 for a discussion of the Company’s risk management practices with respect to financial market exposure.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes account balances of deferred variable annuity and variable single premium immediate annuity contracts that were invested in separate accounts as of December 31:

(in millions)	2010	2009

Mutual funds:
Bond	$ 4,889	$ 4,920
Domestic equity	29,987	24,599
International equity	2,985	3,047
Total mutual funds	$ 37,861	$ 32,566
Money market funds	1,254	1,473
Total	$ 39,115	$ 34,039

The following table summarizes the reserve balances, net of reinsurance, for variable annuity contracts with guarantees as of December 31:

(in millions)	2010	2009

Living benefit riders	$ 168	$ 266
GMDB	$ 46	$ 67
GMIB	$ 2	$ 3

The Company’s GMAB and GLWB living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contractholder persistency, contractholder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility. As of December 31, 2010 and December 31, 2009, the net balance of the embedded derivatives for living benefits was a liability of $168 million and a liability of $266 million, respectively. The GLWB component of living benefit riders was immaterial in 2010 and 2009, respectively.

The Company’s incurred and paid amounts for living benefit features were immaterial for the years ended December 31, 2010 and 2009. The Company does not expect any meaningful level of claims under the living benefit features for several years and believes the impact of claims is expected to be mitigated by its economic hedging program.

During the year ended December 31, 2010, the Company recorded net realized investment losses on living benefits embedded derivatives and related economic hedging activity of $155 million compared to net realized investments gains of $414 million as of December 31, 2009.

The losses recorded during the year ended December 31, 2010 were comprised of $192 million of net realized investment gains on living benefit embedded derivative liabilities and $347 million of related economic hedging losses. The net realized investment losses were primarily driven by market volatility in the second quarter and mortality and withdrawal assumption updates. Net realized investment losses on living benefit embedded derivatives resulted in lower amortization of DAC of $63 million during the year ended December 31, 2010.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The gains recorded in 2009 were comprised of $1.5 billion of net realized investment gains on living benefit embedded derivative liabilities and $1.1 billion of related economic hedging losses. The net realized investment gains on living benefit embedded derivatives primarily resulted from higher interest rates on living benefit embedded derivatives, lower volatility assumptions and an increase to the nonperformance component of the discount rate. The net realized gains resulted in higher amortization of DAC of $284 million during the year ended December 31, 2009.

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

The Company’s incurred and paid amounts for GMDBs were $62 million for the year ended December 31, 2010 compared to $132 million for the year ended December 31, 2009.

The following assumptions and methodologies were used to determine the GMDB claim reserves as of December 31, 2010 and 2009:

·	Data used was based on a combination of historical numbers and future projections generally involving 250 probabilistically generated economic scenarios

·	Mean gross equity performance –10.4%

·	Equity volatility –18.0%

·	Mortality – 84% of Annuity 2000 Basic table for males, 93% for females as of December 31, 2010; and 91% of Annuity 2000 Basic table for males, 101% for females as of December 31, 2009

·	Asset fees – equivalent to mutual fund and product loads

·	Discount rate – approximately 7.0%

Lapse rate assumptions vary by duration as shown below:

Duration (years)	1	2	3	4	5	6	7	8	9	10+

Minimum	1.0%	2.0%	2.5%	3.0%	5.0%	6.0%	7.0%	7.0%	10.0%	10.0%
Maximum	3.5%	2.0%	4.0%	4.5%	35.0%	40.0%	18.5%	32.5%	32.5%	18.5%

The Company’s incurred and paid amounts for GMIBs were $3 million and $7 million for the years ended December 31, 2010 and 2009.

The Company did not transfer assets from the general account to the separate account to cover guarantees for any of its variable annuity contracts during the years ended December 31, 2010 and 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following table summarizes account balances of variable universal life insurance contracts that were invested in separate accounts as of December 31:

(in millions)	2010	2009

Mutual funds:
Bond	$ 475	$ 453
Domestic equity	3,267	2,996
International equity	452	417
Total mutual funds	$ 4,194	$ 3,866
Money market funds	203	257
Total	$ 4,397	$ 4,123

(12)	Short-Term Debt

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

[Missing Graphic Reference]

In May 2010, NMIC, NFS, and NLIC entered into a $600 million revolving credit facility. The new facility matures in May 2011, with an option to convert the outstanding balances into a one-year term loan. NMIC will guarantee all borrowings under the agreement. The credit may be used for general corporate purposes. The borrower has the ability to draw funds at a variable rate based on the Eurodollar rate. The facility contains financial covenants that require NMIC to maintain a statutory surplus in excess of $7.1 billion and the debt is not to exceed 30% of statutory surplus, both figures determined as of the end of each fiscal quarter. A breach of these and other named covenants will impact the availability of the line for the other borrowers and may accelerate payment. NLIC had no amounts outstanding under this agreement as of December 31, 2010.

In June 2010, NLIC entered into an agreement reducing the commercial paper program from $800 million to $600 million. The rating agency guidelines recommend that NLIC maintain minimum liquidity backup, which includes cash and liquid assets as well as committed bank lines, equal to 50% of any amounts outstanding under the commercial paper program. Therefore, availability under the aggregate $600 million credit facility is reduced by the amount outstanding in excess of available cash and liquid assets. NLIC had $300 million of commercial paper outstanding at December 31, 2010 at a weighted average interest rate of 0.35% and $150 million outstanding at December 31, 2009 at a weighted average interest rate of 0.29%.

The Company has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350 million. The borrowing rate on this program is equal to one-month U.S. London Interbank Offered Rate (LIBOR). The Company had no amounts outstanding under this agreement as of December 31, 2010 and 2009.

The Company paid immaterial interest on short-term debt in 2010, compared to $1 million and $8 million in 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(13) Long-Term Debt

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

(in millions)	2010	2009

8.15% surplus note, due June 27, 2032	$ 300	$ 300
7.50% surplus note, due December 17, 2031	300	300
6.75% surplus note, due December 23, 2033	100	100
Variable funding surplus note, due December 31, 2040	272	-
Other	6	6
Total long-term debt	$ 978	$ 706

On December 31, 2010, Olentangy Reinsurance, LLC, a special purpose financial captive insurance subsidiary of NLAIC, issued a variable funding surplus note to Nationwide Corporation, a majority-owned subsidiary of NMIC. The note is redeemable in full or partial amount at any time subject to proper notice and approval. A redemption premium shall be payable if the note is redeemed on or prior to the third anniversary date of the note’s issuance. The note will mature in full on December 31, 2040. The note bears interest at the rate of three-month U.S. LIBOR plus 2.80% payable quarterly. Olentangy Reinsurance, LLC agrees to draw down or reduce principal amounts in accordance with the terms outlined in the purchase agreement. The maximum amount outstanding under the agreement is $313 million in 2015. As of December 31, 2010, the principal amount outstanding was $272 million.

The Company made interest payments to NFS on surplus notes totaling $54 million in 2010, 2009 and 2008. Payments of interest and principal under the notes require the prior approval of the ODI.

(14)	Federal Income Taxes

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

(in millions)	2010	2009	2008

Current	$ (91)	$ 165	$ (131)
Deferred	115	(117)	(403)
Federal income tax expense (benefit)	$ 24	$ 48	$ (534)

Total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to income (loss) from continuing operations before federal income tax expense (benefit) as follows for the years ended December 31:

	2010		2009		2008
(in millions)	Amount	%	Amount	%	Amount	%

Computed tax expense (benefit)	$ 71	35	$ 107	35	$ (497)	35
DRD	(50)	(25)	(56)	(18)	(42)	3
Impact of noncontrolling interest	21	10	18	6	25	(2)
Tax credits	(27)	(13)	(21)	(7)	(26)	2
Other, net	9	5	-	-	6	-
Total	$ 24	12	$ 48	16	$ (534)	38

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Total federal income taxes refunded were $35 million, $59 million, and $41 million during the years ended December 31, 2010, 2009 and 2008, respectively.

During 2010, there were no material federal income tax expense adjustments.

During 2009, the Company recorded $9 million of net federal income tax expense adjustments primarily related to differences between the 2008 estimated tax liability and the amounts reported on the Company’s 2008 tax returns. These changes in estimates primarily were driven by the Company’s separate account dividends received deduction (DRD) and foreign tax credit.

During 2008, the Company refined its separate account DRD calculation and estimation process. As a result, the Company reduced its third quarter separate account DRD projection from a federal income tax benefit of $14 million to a $4 million benefit. This reduction in estimate primarily was driven by the assumptions used in the estimation process regarding future dividend income within the separate accounts. The assumptions used in the separate account DRD calculation are based on the Company’s best estimate of future events.

In addition, during 2008, the Company recorded $12 million of net federal income tax expense adjustments primarily related to differences between the 2007 estimated tax liability and the amounts expected to be reported on the Company’s 2007 tax returns when filed. These changes in estimates primarily were driven by the Company’s separate account DRD.

As of December 31, 2010, the Company has capital loss carryforwards of $507 million, which expire between 2011 and 2015. In addition, the Company has $67 million in low income housing credit carryforwards, which expire between 2025 and 2030, $5 million in foreign tax credit carryforwards, which will expire in 2020 and $73 million in Alternative Minimum Tax credit carryforwards, which have an unlimited carryforward. The Company expects to fully utilize all carryforwards.

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax (liability) asset as of December 31:

(in millions)	2010	2009

Deferred tax assets:
Future policy benefits and claims	$ 1,030	$ 1,109
Derivatives	27	63
Capital loss carryforward	178	103
Tax credit carryforwards	145	23
Other	236	195
Gross deferred tax assets	$ 1,616	$ 1,493
Less valuation allowance	(24)	(24)
Deferred tax assets, net of valuation allowance	$ 1,592	$ 1,469

Deferred tax liabilities:
Deferred policy acquisition costs	$ (1,071)	$ (1,084)
Securities available-for-sale	(670)	(168)
Value of business acquired	(89)	(96)
Other	(150)	(96)
Gross deferred tax liabilities	$ (1,980)	$ (1,444)
Net deferred tax (liability) asset	$ (388)	$ 25

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Valuation allowances are established when necessary to reduce the deferred tax assets to amounts expected to be realized. Because it is more likely than not that certain deferred tax assets will not be realized, the Company established a valuation allowance of $24 million, $24 million and $24 million as of December 31, 2010, 2009 and 2008, respectively. Based on management’s analysis, it is more likely than not that the results of future operations and the implementation of tax planning strategies will generate sufficient taxable income to enable the Company to realize the deferred tax assets for which the Company has not established valuation allowances.

The Company’s current federal income tax liability was $50 million and $109 million as of December 31, 2010 and 2009, respectively.

A rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties, is as follows:

(in millions)	2010	2009

Balance at beginning of period	$ 95	$ 44
Additions for current year tax positions	18	37
Additions for prior years tax positions	19	15
Reductions for prior years tax positions	(13)	(1)
Balance at end of period	$ 119	$ 95

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate on December 31, 2010, is $47 million.

Interest expense and any associated penalties are shown as income tax expense. The Company incurred interest and penalties of $2 million during the year ended December 31, 2010 and an immaterial balance during the year ended December 31, 2009. The Company had accrued $6 million and $4 million for the payment of interest and penalties at December 31, 2010 and 2009, respectively.

During 2010, the Company had an appeals conference with the Internal Revenue Service (IRS) with respect to our appeal of IRS audit adjustments for the years 2003 to 2005. Though the Company has not yet reached a final settlement with the IRS for these years, it is reasonably possible that this appeal will be resolved in whole or in part within 12 months. As a result, it is reasonably possible that our liability for unrecognized tax benefits could decrease within 12 months by approximately $15 million.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years through 2002. The IRS recently completed an audit of the Company’s tax years 2003 through 2005. The statute remains open for these years as the Company completes the appeals process. See “Tax Matters” in Note 19 for more information on the Company’s tax years 2003 through 2005 audit and the related appeals process.

(15)	Statutory Financial Information

Statutory Results

The Company and its life subsidiary are required to prepare statutory financial statements in conformity with the NAIC’s Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable state department of insurance. Statutory accounting practices focus on insurer solvency and differ from GAAP materially. The principal differences include charging policy acquisition and certain sales inducement costs to expense as incurred, establishing future policy benefits and claims reserves using different actuarial assumptions, excluding certain assets from statutory admitted assets; and valuing investments and establishing deferred taxes on a different basis. The following tables summarize the statutory net income (loss) and statutory capital and surplus for the Company and its primary insurance subsidiary for the years ended December 31:

(in millions)	2010	2009	2008
	(unaudited)
Statutory net income (loss)
NLIC	$ 560	$ 397	$ (871)
NLAIC	$ (50)	$ (61)	$ (90)

Statutory capital and surplus
NLIC	$ 3,686	$ 3,130	$ 2,750
NLAIC	$ 287	$ 214	$ 123

Dividend Restrictions (unaudited)

The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state. The State of Ohio insurance laws require Ohio-domiciled life insurance companies to seek prior regulatory approval to pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer for the prior year. NLIC’s statutory capital and surplus as of December 31, 2010 was $3.7 billion, and statutory net income for the year ended December 31, 2010 was $560 million. During the year ended December 31, 2010, NLIC did not pay any dividends to NFS. As of January 1, 2011, NLIC has the ability to pay dividends to NFS totaling $560 million upon providing prior notice to the ODI.

The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the State of Ohio insurance laws as the amount equal to the Company’s unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurer’s policyholder surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by the Company may also be subject to restrictions set forth in the insurance laws of the state of New York that limit the amount of statutory profits on the Company’s participating policies (measured before dividends to policyholders) that can inure to the benefit of the Company and its stockholders.

The Company currently does not expect such regulatory requirements to impair its ability to pay operating expenses and dividends in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

Regulatory Risk-Based Capital

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

(16)	Other Comprehensive Income

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

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

(in millions)	2010	2009	2008

Net unrealized gains (losses) on securities available-for-sale
arising during the period:
Net unrealized gains (losses) before adjustments	$ 1,039	$ 2,374	$ (3,828)
Net non-credit gains	131	38	-
Net adjustment to DAC	(248)	(585)	529
Net adjustment to VOBA	1	(9)	8
Net adjustment to future policy benefits and claims	7	(27)	128
Net adjustment to policyholder dividend obligation	(73)	(91)	89
Related federal income tax (expense) benefit	(300)	(595)	1,076
Net unrealized gains (losses)	$ 557	$ 1,105	$ (1,998)

Reclassification adjustment for net realized losses on securities
available-for-sale realized during the period:
Net unrealized losses	5	388	1,102
Related federal income tax benefit	(2)	(136)	(386)
Net losses realized on available-for-sale securities	$ 3	$ 252	$ 716

Other comprehensive gain (loss) on securities available-for-sale	$ 560	$ 1,357	$ (1,282)

Accumulated net holding gains (losses) on cash flow hedges:
Unrealized holding gains (losses)	27	(4)	17
Related federal income tax (expense) benefit	(9)	1	(6)
Other comprehensive income (loss) on cash flow hedges	$ 18	$ (3)	$ 11

Other unrealized (losses) gains:
Net unrealized (losses) gains	-	(14)	8
Related federal income tax benefit (expense)	-	5	(3)
Other net unrealized (losses) gains	$ -	$ (9)	$ 5

Unrecognized amounts on pension plans:
Net unrecognized amounts	-	-	(12)
Related federal income tax benefit	-	-	4
Other comprehensive loss on unrecognized pension amounts	$ -	$ -	$ (8)

Total other comprehensive income (loss)	$ 578	$ 1,345	$ (1,274)

The adjustments to DAC and VOBA represent the changes in amortization of DAC and VOBA that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.

As of July 1, 2010, the adoption of FASB ASU 2010-11 resulted in a cumulative effect adjustment of $9 million, net of taxes, to retained earnings with a corresponding adjustment to AOCI, which is excluded from the table above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities during 2009 resulted in a cumulative-effect adjustment of $250 million, net of taxes, to reclassify the non-credit component of previously recognized other-than-temporary impairment losses from the beginning balance of retained earnings to AOCI, which is excluded from the table above.

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2010, 2009 and 2008.

(17)	Employee Benefit Plans

The Company and certain affiliated companies participate in a qualified defined benefit pension plan (the Nationwide Retirement Plan or the NRP), several non-qualified defined benefit supplemental executive retirement plans, postretirement benefit plans (life and health care), and the Nationwide Savings Plan 401(k), all sponsored by NMIC. Effective January 30, 2008, NMIC merged the NLICA Retirement Plan into the NRP.

The NRP covers all employees of participating employers who have completed at least one year of service and who are at least 21 years of age. Plan assets are invested in a third-party trust and group annuity contracts issued by NLIC. All participants are eligible for benefits based on an account balance formula. However, participants hired prior to 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature.

Effective January 1, 2010, NMIC amended the NRP to eliminate the company-paid early retirement enhancement (an additional benefit for associates retiring between ages 55 and 65), which is part of the final average pay formula and to stop pay credits under the account balance formula for participants eligible for the account balance formula. An affected associate’s benefits, however, will not be less than the NRP benefit he or she accrued as of December 31, 2009, under the greater of the final average pay formula or the account balance formula.

The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. In addition, separate non-qualified defined benefit pension plans sponsored by NMIC cover certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $4 million, $11 million, and $5 million for the years ended December 31, 2010, 2009 and 2008, respectively. The 2008 expense includes a gain of $5 million due to the merger of the NLICA Retirement Plan into the NRP.

See Note 18 for more information on group annuity contracts issued by the Company for various employee benefit plans sponsored by NMIC or its affiliates.

In addition to the NRP, the Company and certain affiliated companies participate in life and health care benefit plans sponsored by NMIC for qualifying retirees. Contributory post-retirement life and health care benefits are generally available to associates, hired prior to and continuously employed since June 1, 2000, for health care benefits, and prior to December 31, 1994, for life benefits, who have attained age 55, and have accumulated 15 years of service with the Company. The associate subsidy for the post-retirement death benefit was capped beginning in 2007. Employer subsidies for retiree life insurance ended as of December 31, 2008. No future employer contributions are anticipated for retiree life insurance and settlement accounting was applied during 2008. Post-retirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and co-insurance. In addition, there are caps on the Company’s contribution to the cost of the post-retirement health care benefits. The Company does not receive a Medicare Part D subsidy from the government. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested in a group annuity contract issued by NLIC and a third-party trust.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

On September 3, 2009, NMIC announced changes to the post-retirement health care benefits available under the health care defined benefit plans. On December 31, 2009, each eligible associate’s current cost-sharing percentage was fixed and, following this date, Company contributions towards the cost of post-retirement health care coverage for eligible associates will be based only on service through December 31, 2009. This modification does not impact former associates receiving Nationwide-sponsored retiree health care benefits prior to January 1, 2010. Additionally, effective January 1, 2010, all associates not considered to be highly compensated employees, as defined by IRC 414, became eligible to receive an annual retiree health care credit up to a maximum of $1,000 per year, not to exceed a maximum lifetime benefit amount of $25,000, which includes any years of cost-sharing service earned by December 31, 2009. The credit is equal to one-third of otherwise unmatched Health Savings Account contributions and/or Nationwide Savings Plan (NSP) 401(a) contributions. No contributions will be made by NMIC if the associate does not make eligible contributions.

The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2010, 2009 and 2008.

Defined Contribution Plans

NMIC sponsors the NSP, a defined contribution retirement savings plan (a 401(k) plan) covering substantially all of the Company’s associates. Associates may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. In addition, NMIC sponsors the NLICA Producer’s Pension Plan, a defined contribution money purchase plan, covering statutory employees of NLICA. However, this plan has no active participants, and is in the process of being terminated. The Company’s expense for contributions to these plans was $7 million, $9 million, and $6 million for the years ended December 31, 2010, 2009 and 2008, respectively.

(18)	Related Party Transactions

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

In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides data processing, systems development, hardware and software support, telephone, mail and other services to the Company, based on specified rates for units of service consumed. For the years ended December 31, 2010, 2009 and 2008, the Company made payments to NMIC and NSC totaling $250 million, $241 million, and $285 million, respectively.

The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $3.0 billion and $3.1 billion as of December 31, 2010 and 2009, respectively. Total revenues from these contracts were $139 million, $143 million and $138 million for the years ended December 31, 2010, 2009 and 2008, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $115 million, $116 million, and $116 million for the years ended December 31, 2010, 2009 and 2008, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties.

The Company leases office space from NMIC. For the years ended December 31, 2010, 2009 and 2008, the Company made lease payments to NMIC of $20 million, $21 million, and $22 million, respectively. In addition, the Company leases office space to an affiliate of NMIC.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC for the years ended December 31, 2010, 2009 and 2008 were $209 million, $177 million, and $202 million, respectively, while benefits, claims and expenses ceded during these years were $241 million, $196 million, and $219 million, respectively.

Funds of Nationwide Funds Group (NFG), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2010, 2009 and 2008, customer allocations to NFG funds totaled $30.5 billion, $23.7 billion and $18.1 billion, respectively. For the years ended December 31, 2010, 2009, and 2008, NFG paid the Company $103 million, $79 million, and $77 million, respectively, for the distribution and servicing of these funds.

The Company and various affiliates have agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC for the benefit of the Company were $762 million and $919 million as of December 31, 2010 and 2009, respectively, and are included in short-term investments on the consolidated balance sheets.

Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2010, 2009 and 2008 were $61 million, $48 million, and $53 million, respectively.

An affiliate of the Company is currently developing a browser-based policy administration and online brokerage software application for defined benefit plans. In connection with the development of this application, the Company made net payments, which were expensed, to that affiliate related to development totaling $13 million, $11 million, and $11 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Refer to Note 13 for discussion of variable funding surplus note between Olentangy Reinsurance, LLC and Nationwide Corporation.

The Company entered into a note purchase agreement with an affiliate on November 17, 2006 to purchase $25 million of the affiliate’s 5.6% senior notes due November 16, 2016. The notes are secured by certain pledged mortgage servicing rights. The note is payable in seven equal principal installments of $4 million, which began November 6, 2010. Interest is payable semi-annually on each May 16 and November 16.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 14. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. No payments to (from) NMIC were made for the year ended December 31, 2010. Total payments to (from) NMIC were $4 million and ($23) million during the years ended December 31, 2009 and 2008, respectively. These payments related to tax years prior to deconsolidation.

During 2009, NLIC received a $20 million capital contribution from NFS.

During 2010 and 2009, NLIC did not pay dividends to NFS. In 2008 NLIC paid dividends to NFS totaling $461 million.

During 2010 and 2009, the Company sold, at fair value, commercial mortgage loans with a carrying value of $117 million and $273 million, respectively, to NMIC. The sale resulted in a net realized loss of $21 million and $34 million in 2010 and 2009, respectively to the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

During 2009, the Company sold private equity investments to NMIC for $61 million. The private equity investments were carried and sold at fair value. No gain or loss was recognized on the sale.

(19)	Contingencies

Legal and Regulatory Matters

The Company is a subject to legal and regulatory proceedings in the ordinary course of its business. The Company’s legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates. The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted. Regulatory proceedings also could affect the outcome of one or more of the Company’s litigations matters. Furthermore, it is often not possible to determine the ultimate outcomes of the pending regulatory investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. Management believes, however, that based on their currently known information, the ultimate outcome of all pending legal and regulatory matters is not likely to have a material adverse effect on the Company’s consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that such outcomes could materially affect the Company’s consolidated financial position or results of operations in a particular quarter or annual period.

The financial services industry has been the subject of increasing scrutiny on a broad range of issues by regulators and legislators. The Company and/or its affiliates have been contacted by, self reported or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to, among other things, compensation, revenue sharing and bidding arrangements, market-timing, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, and the use of side agreements and finite reinsurance agreements. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

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

On September 10, 2009, Nationwide Retirement Solutions, Inc. (NRS) was named in a lawsuit filed in the Circuit Court for Montgomery County, Alabama entitled Twanna Brown, Individually and on behalf of all other persons in Alabama who are similarly situated, v Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc., Edwin “Mac” McArthur, Steve Walkley, Glenn Parker, Ulysses Lavender, Diana McLain, Randy Hebson, and Robert Wagstaff; and Unknown Defendants A-Z. On February 17, 2010, Brown filed an Amended Complaint alleging in Count One, that all the defendants were involved in a civil conspiracy and seeks to recover actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Two, although NRS is not named, it is alleged that the remaining defendants breached their fiduciary duties and seeks actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Three, although NRS is not named, the plaintiff seeks declaratory relief that the individual defendants breached their

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

fiduciary duties, seeks injunctive relief permanently removing said defendants from their respective offices in the Alabama State Employees Association (ASEA) and PEBCO and costs and attorneys fees. In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants. Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On March 3, 2010, the Company filed a motion to dismiss the amendment to the complaint. On October 17, 2010, the plaintiff filed motions to intervene in Nationwide Retirement Solutions, Inc. v. Alabama State Personnel Board, PEBCO, Inc. and Alabama State Employees Association and also in Coker, et. al. v. NLIC, et. al. The Company continues to defend this case vigorously.

On November 20, 2007, NRS and NLIC were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. On March 12, 2010, NRS and NLIC were named in a Second Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Steven E. Coker, Sandra H. Turner, David N. Lichtenstein and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the ASEA Plan, excluding members of the Deferred Compensation Committee, ASEA's directors, officers and board members, and PEBCO’s directors, officers and board members. The class period is from November 20, 2001 to the date of trial. In the second amended class action complaint, the plaintiffs allege breach of fiduciary duty, wantonness and breach of contract. The second amended class action complaint seeks a disgorgement of amounts paid, compensatory damages and punitive damages, plus interest, attorneys' fees and costs and such other equitable and legal relief to which plaintiffs and class members may be entitled. On April 2, 2010, NRS and NLIC filed an answer. On June 4, 2010, the plaintiffs filed a motion for class certification. On July 8, 2010, the defendants filed their briefs in opposition to plaintiffs' motion for class certification. On October 17, 2010, Twanna Brown filed a motion to intervene in this case. On October 22, 2010, the parties to this action have executed a stipulation of settlement that agrees to certify a class for settlement purposes only, that provides for payments to the settlement class, and that provides for releases, certain bar orders, and dismissal of the case, subject to the Circuit Courts' approval. After a hearing on November 5, 2010, on November 9, 2010, the Court denied Brown’s motion to intervene. On November 13, 2010, the Court issued a Preliminary Approval Order and held a Settlement Fairness Hearing on January 26, 2011. On November 22, 2010, Brown filed a Notice of Appeal with the Supreme Court of Alabama, appealing the Preliminary Approval Order. On January 25, 2011, the Alabama Supreme Court dismissed the appeal. Class notices were sent out on November 24, 2010. On December 3, 2010, Brown filed a motion with the trial court to stay this case. On December 22, 2010, Brown filed with the Alabama Supreme Court, a motion to stay all further Gwin trial court proceedings until Ms. Brown's appeal of the certification order is decided. On January 25, 2011, the Alabama Supreme Court denied Brown’s motion to stay. NRS and NLIC continue to defend this case vigorously.

On July 11, 2007, NLIC was named in a lawsuit filed in the United States District Court for the Western District of Washington at Tacoma entitled Jerre Daniels-Hall and David Hamblen, Individually and on behalf of All Others Similarly Situated v. National Education Association, NEA Member Benefits Corporation, Nationwide Life Insurance Company, Security Benefit Life Insurance Company, Security Benefit Group, Inc., Security Distributors, Inc., et. al. The plaintiffs seek to represent a class of all current or former National Education Association (NEA) members who participated in the NEA Valuebuilder 403(b) program at any time between January 1, 1991 and the present (and their heirs and/or beneficiaries). The plaintiffs allege that the defendants violated the Employee Retirement Income Security Act of 1974, as amended (ERISA) by failing to prudently and loyally manage plan assets, by failing to provide complete and accurate information, by engaging in prohibited transactions, and by breaching their fiduciary duties when they failed to prevent other fiduciaries from breaching their fiduciary duties. The complaint seeks to have the defendants restore all losses to the plan, restoration of plan assets and profits to participants, disgorgement of endorsement fees, disgorgement of service fee payments, disgorgement of excessive fees charged to plan participants, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On May 23, 2008, the Court granted the defendants’ motion to dismiss. On June 19, 2008, the plaintiffs filed a notice of appeal. On December 20, 2010, the 9th Circuit Court of Appeals affirmed the dismissal of this case. NLIC continues to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. In the plaintiffs' sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees under ERISA that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys’ fees. On November 6, 2009, the Court granted the plaintiffs’ motion for class certification and certified a class of “All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participants had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009”. On November 23, 2009, NFS and NLIC filed a rule 23(f) petition asking the Second Circuit Court of Appeals to hear an appeal of the District Court's order granting class certification. On December 2, 2009, NFS and NLIC filed an answer to the sixth amended complaint and a third amended counterclaim. On January 29, 2010, the Companies filed a motion for class certification against the four named plaintiffs, as trustees of their respective retirement plans and against the trustees of other ERISA retirement plans who become members of the class certified in this lawsuit, for breach of fiduciary duty to the plans because the trustees approved and accepted the advantages of the allegedly unlawful “revenue sharing” payments. On July 23, 2010, the District Court denied the Companies’ motion for class certification and dismissed the counterclaim. On August 6, 2010, the Companies filed a motion for reconsideration of the ruling on the motion for certification of counterclaim defendants’ class certification order and also filed a motion for leave to amend the answer to the plaintiffs’ sixth amended complaint and third amended counterclaim. These motions were denied on November 8, 2010. On October 20, 2010, the Second Circuit Court of Appeals granted NLIC’s 23(f) petition agreeing to hear an appeal of the District Court’s order granting class certification. On October 21, 2010, the Court dismissed NFS from the lawsuit. On October 27, 2010, the District Court stayed the underlying action pending a decision from the Second Circuit Court of Appeals. NFS and NLIC continue to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

NACo, Aiding and Abetting Breach of Fiduciary Duty - Nationwide, Breach of Fiduciary Duty - Nationwide, and Aiding and Abetting Breach of Fiduciary Duty - NACo. The First Amended Complaint asks for actual damages, lost profits, lost opportunity costs, restitution, and/or other injunctive or other relief, including without limitation (a) ordering Nationwide and NACo to restore all plan losses, (b) ordering Nationwide to refund all fees associated with Nationwide’s Plan to Plaintiffs and Class members, (c) ordering NACo and Nationwide to pay the expenses and losses incurred by Plaintiffs and/or any Class member as a proximate result of Defendants’ breaches of fiduciary duty, (d) forcing NACo to forfeit the fees that NACo received from Nationwide for promoting and endorsing its Plan and disgorging all profits, benefits, and other compensation obtained by NACo from its wrongful conduct, and (e) awarding Plaintiff and Class members their reasonable and necessary attorney’s fees and cost incurred in connection with this suit, punitive damages, and pre-judgment and post judgment interest, at the highest rates allowed by law, on the damages awarded. The Company intends to defend this case vigorously.

Tax Matters

The separate account dividends received deduction (DRD) is a significant component of the Company’s federal income tax provision. On August 16, 2007, the IRS issued Revenue Ruling 2007-54. This ruling took a position with respect to the DRD that could have significantly reduced the Company’s DRD. The Company believes that the position taken by the IRS in the ruling was contrary to existing law and the relevant legislative history.

In Revenue Ruling 2007-61, released September 25, 2007, the IRS and the U.S. Department of the Treasury suspended Revenue Ruling 2007-54 and informed taxpayers of their intention to address certain issues in connection with the DRD in future tax regulations. Final tax regulations could impact the Company’s DRD in periods subsequent to their effective date.

The IRS recently completed an audit of the Company’s tax years 2003 through 2005. As a result of this audit, the Company received a Revenue Agent’s Report (RAR) and 30-Day Letter (requiring payment of additional tax due or the preparation of protest to start the appeals process) from the IRS in July 2009. The RAR includes an adjustment to reduce the Company’s DRD for the above tax years resulting in additional tax due of $151 million. The Company is still at appeals on this issue and believes that it will ultimately prevail based on technical merits.

(20) Guarantees

Since 2002, the Company has sold $747 million of credit enhanced equity interests in LIHTC Funds to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 7.75% over periods ending between 2002 and 2025. As of December 31, 2010 and 2009, the Company held guarantee reserves totaling $6 million and $6 million, respectively, on these transactions. These guarantees are in effect for periods of approximately 15 years each. The LIHTC Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $908 million. The Company does not anticipate making any material payments related to these guarantees.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

As of December 31, 2010, the Company did not hold any material stabilization reserves as collateral for certain properties owned by the LIHTC Funds, as the LIHTC Funds have met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized. During 2010, the stabilization reserve was not increased materially and no portion was released into income. In 2009, $1 million of the stabilization reserve was released into income.

To the extent there are cash deficits in any specific property owned by the LIHTC Funds, property reserves, property operating guarantees and reserves held by the LIHTC Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the LIHTC Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

(21) Variable Interest Entities

In the normal course of business, the Company has relationships with VIEs. The Company considers many factors when determining whether it is (or is not) the primary beneficiary of a VIE. There is a review of the entity’s contract and other deal related information, such as 1) the entity's equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity, 2) whether the contractual or ownership interest in the entity changes with the change in fair value of the entity, and 3) the extent to which, through the variable interest, the Company has the power to direct the activities that most significantly impacts the entity’s performance and the obligation to absorb losses of the entity that could potentially be significant to the entity or the right to receive benefits from the entity that could potentially be significant to the entity.

The Company was not required and does not intend to provide financial or other support outside previous contractual requirements to any VIE.

Low-Income-Housing Tax Credit Funds

The Company provides guarantees to limited partners related to the amount of tax credits that will be generated LIHTC Funds. The results of operations and financial position of each VIE of which the Company is the primary beneficiary are consolidated along with corresponding noncontrolling interest in the accompanying consolidated financial statements.

The Company had relationships with 22 and 19 LIHTC Funds that are considered VIEs as of December 31, 2010 and December 31, 2009, respectively, where the Company was the primary beneficiary. Net assets of these consolidated VIEs were $355 million and $351 million as of December 31, 2010 and December 31, 2009, respectively, composed primarily of other long-term investments of $315 million and $314 million as of the same respective dates.

Two LIHTC Funds were consolidated as a result of the adoption of guidance under FASB ASC 810, Consolidation. Previously, the Company was not deemed the primary beneficiary. As the managing member of the LITHC funds, the Company has the power to direct the activities that most significantly impact the economic power of the entities and consolidated the funds. The impact of consolidation was an increase to noncontrolling interest of $46 million.

The Company’s total loss exposure from consolidated VIEs was immaterial as of December 31, 2010 and December 31, 2009 (except for the impact of guarantees disclosed in Note 20 to the 2009 audited consolidated financial statements). Creditors (or beneficial interest holders) of the consolidated VIEs have no recourse to the general credit of the Company.

These LIHTC Funds are financed through the sale of these funds into the secondary market. The proceeds from these sales are used to participate in low-income housing projects that provide tax benefits to the investors.

In addition to the consolidated VIEs described above, the Company holds variable interests in other LIHTC Funds that qualify as VIEs where the Company is not the primary beneficiary. The carrying amount of these unconsolidated VIEs was $157

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

million and $110 million as of December 31, 2010 and December 31, 2009, respectively. The total exposure to loss on these unconsolidated VIEs was $218 million and $123 million as of December 31, 2010 and December 31, 2009, respectively. The total exposure to loss is determined by adding any unfunded commitments to the carrying amount of the VIEs.

Fixed Maturity Securities

The Company invests in fixed maturity securities that could qualify as VIEs, including corporate securities, mortgage-backed securities, and asset-backed securities. The Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impacts the entities’ performances. The Company’s maximum exposure to loss is limited to the carrying values of these securities. There are no liquidity arrangements, guarantees or other commitments by third parties that affect the fair value of the Company’s interest in these assets. Refer to Note 5 for additional disclosures related to these investments.

(22)	Segment Information

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

The primary segment profitability measure that management uses is pre-tax operating earnings (loss), which is calculated by adjusting income from continuing operations before federal income taxes and discontinued operations to exclude: (1) net realized investment gains and losses, except for operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment, trading portfolio realized gains and losses, trading portfolio valuation changes, net realized gains and losses related to hedges on GMDB contracts and securitizations); (2) other-than-temporary impairment losses; (3) the adjustment to amortization of DAC and VOBA related to net realized investment gains and losses; and (4) net loss attributable to noncontrolling interest.

Individual Investments

The Individual Investments segment consists of individual annuity products marketed under the Nationwide DestinationSM and other Nationwide-specific or private label brands. Deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, deferred variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while deferred fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. Immediate annuities differ from deferred annuities in that the initial premium is exchanged for a stream of income for a certain period or for the owner’s lifetime without future access to the original investment. Portfolio income insurance is a form of deferred annuity that provides the income protection features common to today’s variable annuities to owners of specific managed account investments whose assets are outside of the annuity product. The majority of assets and recent sales for the Individual Investments segment consist of deferred variable annuities.

Retirement Plans

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

Individual Protection

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

Corporate and Other

The Corporate and Other segment includes the MTN program; structured products business; non-operating realized gains and losses and related amortization, including mark-to-market adjustments on embedded derivatives, net of economic hedges, related to products with living benefits; other-than-temporary impairment losses, and other revenues and expenses not allocated to other segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

The following tables summarize the Company’s business segment operating results for the years ended December 31:

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2010
Revenues:
Policy charges	$ 646	$ 98	$ 652	$ 3	$ 1,399
Premiums	209	-	275	-	484
Net investment income	569	691	510	55	1,825
Non-operating net realized investment losses1	-	-	-	(177)	(177)
Other-than-temporary impairment losses	-	-	-	(220)	(220)
Other income2	(82)	-	-	25	(57)
Total revenues	$ 1,342	$ 789	$ 1,437	$ (314)	$ 3,254

Benefits and expenses:
Interest credited to policyholder accounts	$ 391	$ 424	$ 199	$ 42	$ 1,056
Benefits and claims	354	-	524	(5)	873
Policyholder dividends	-	-	78	-	78
Amortization of DAC	231	30	184	(49)	396
Amortization of VOBA and other intangible assets	1	-	19	(2)	18
Interest expense	-	-	-	55	55
Other operating expenses	180	143	172	79	574
Total benefits and expenses	$ 1,157	$ 597	$ 1,176	$ 120	$ 3,050


Income (loss) from continuing operations before
federal income tax expense (benefit)	$ 185	$ 192	$ 261	$ (434)	$ 204
Less: non-operating net realized investment losses1	-	-	-	177
Less: non-operating net other-than-temporary impairment losses	-	-	-	220
Less: adjustment to amortization related to net realized investment gains and losses
	-	-	-	(59)
Less: net loss attributable to noncontrolling interest	-	-	-	60
Pre-tax operating earnings (loss)	$ 185	$ 192	$ 261	$ (36)

Assets as of year end	$ 53,113	$ 25,599	$ 22,874	$ 5,811	$ 107,397

_________

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).

Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2009
Revenues:
Policy charges	$ 522	$ 93	$ 634	$ (4)	$ 1,245
Premiums	191	-	279	-	470
Net investment income	562	679	492	146	1,879
Non-operating net realized investment gains1	-	-	-	619	619
Other-than-temporary impairment losses	-	-	-	(575)	(575)
Other income2	(168)	-	-	(1)	(169)
Total revenues	$ 1,107	$ 772	$ 1,405	$ 185	$ 3,469

Benefits and expenses:
Interest credited to policyholder accounts	$ 394	$ 433	$ 201	$ 72	$ 1,100
Benefits and claims	247	-	538	27	812
Policyholder dividends	-	-	87	-	87
Amortization of DAC	(1)	45	158	264	466
Amortization of VOBA and other intangible assets	1	9	45	8	63
Interest expense	-	-	-	55	55
Other operating expenses	178	149	184	68	579
Total benefits and expenses	$ 819	$ 636	$ 1,213	$ 494	$ 3,162


Income (loss) from continuing operations before
federal income tax expense (benefit)	$ 288	$ 136	$ 192	$ (309)	$ 307
Less: non-operating net realized investment gains1	-	-	-	(619)
Less: non-operating net other-than-temporary impairment losses	-	-	-	575
Less: adjustment to amortization related to net realized investment gains and losses
	-	-	-	297
Less: net loss attributable to noncontrolling interest	-	-	-	52
Pre-tax operating earnings (loss)	$ 288	$ 136	$ 192	$ (4)

Assets as of year end	$ 48,891	$ 25,035	$ 22,115	$ 2,948	$ 98,989

__________

Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2010, 2009 and 2008

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2008
Revenues:
Policy charges	$ 603	$ 120	$ 618	$ -	$ 1,341
Premiums	120	-	274	-	394
Net investment income	530	651	486	198	1,865
Non-operating net realized investment losses1	-	-	-	(387)	(387)
Other-than-temporary impairment losses	-	-	-	(1,131)	(1,131)
Other income2	110	1	-	(76)	35
Total revenues	$ 1,363	$ 772	$ 1,378	$ (1,396)	$ 2,117

Benefits and expenses:
Interest credited to policyholder accounts	$ 379	$ 436	$ 196	$ 162	$ 1,173
Benefits and claims	379	-	489	(12)	856
Policyholder dividends	-	-	93	-	93
Amortization of DAC	648	41	130	(127)	692
Amortization of VOBA and other intangible assets	8	1	22	-	31
Interest expense	-	-	-	62	62
Other operating expenses	189	152	193	97	631
Total benefits and expenses	$ 1,603	$ 630	$ 1,123	$ 182	$ 3,538


Income (loss) from continuing operations before
federal income tax expense (benefit)	$ (240)	$ 142	$ 255	$ (1,578)	$ (1,421)
Less: non-operating net realized investment losses1	-	-	-	387
Less: non-operating net other-than-temporary impairment losses	-	-	-	1,131
Less: adjustment to amortization related to net realized investment gains and losses
	-	-	-	(139)
Less: net loss attributable to noncontrolling interest	-	-	-	72
Pre-tax operating earnings (loss)	$ (240)	$ 142	$ 255	$ (127)

Assets as of year end	$ 42,508	$ 22,498	$ 20,360	$ 6,438	$ 91,804

__________

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.

Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

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

As of December 31, 2010 (in millions)

Column A	Column B	Column C	Column D
			Amount at
			which shown
			in the
		Fair	consolidated
Type of investment	Cost	value	balance sheet

Fixed maturity securities available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies	$ 497	$ 584	$ 584
Obligations of states and political subdivisions	1,410	1,377	1,377
Debt securities issued by foreign governments	110	123	123
Public utilities	2,492	2,655	2,655
All other corporate	21,104	21,695	21,695
Total fixed maturity securities available-for-sale	$ 25,613	$ 26,434	$ 26,434
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies	$ 23	$ 24	$ 24
Industrial, miscellaneous and all other	3	4	4
Nonredeemable preferred stocks	13	14	14
Total equity securities available-for-sale	$ 39	$ 42	$ 42
Trading assets	49	45	45
Mortgage loans, net	6,211		6,125
Policy loans	1,088		1,088
Other long-term investments	513		513
Short-term investments, including amounts managed by a related party	1,062		1,062
Total investments	$ 34,575		$ 35,309

__________

1 Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans (see Note 5 to the audited consolidated financial statements), hedges and commitment hedges on mortgage loans.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule III Supplementary Insurance Information

As of December 31, 2010, 2009 and 2008 and for each of the years then ended (in millions)

Column A	Column B	Column C	Column D	Column E	Column F
	Deferred	Future policy
	policy	benefits, losses,		Other policy
	acquisition	claims and	Unearned	claims and	Premium
Year: Segment	costs	loss expenses	premiums1	benefits payable1	revenue
2010
Individual Investments	$ 2,126	$ 10,541			$ 209
Retirement Plans	269	11,874			-
Individual Protection	1,795	9,163			275
Corporate and Other	(217)	1,098			-
Total	$ 3,973	$ 32,676			$ 484
2009
Individual Investments	$ 1,911	$ 10,871			$ 191
Retirement Plans	271	11,703			-
Individual Protection	1,770	8,745			279
Corporate and Other	31	1,831
Total	$ 3,983	$ 33,150			$ 470
2008
Individual Investments	$ 1,883	$ 12,477			$ 120
Retirement Plans	290	11,498			-
Individual Protection	1,735	8,351			274
Corporate and Other	616	3,389			-
Total	$ 4,524	$ 35,715			$ 394

Column A	Column G	Column H	Column I	Column J	Column K
	Net	Benefits, claims,	Amortization	Other
	investment	losses and	of deferred policy	operating	Premiums
Year: Segment	income2	settlement expenses	acquisition costs	expenses2	written
2010
Individual Investments	$ 569	$ 745	$ 231	$ 181
Retirement Plans	691	424	30	143
Individual Protection	510	801	184	191
Corporate and Other	55	37	(49)	132
Total	$ 1,825	$ 2,007	$ 396	$ 647
2009
Individual Investments	$ 562	$ 641	$ (1)	$ 179
Retirement Plans	679	433	45	158
Individual Protection	492	826	158	229
Corporate and Other	146	99	264	131
Total	$ 1,879	$ 1,999	$ 466	$ 697
2008
Individual Investments	$ 530	$ 758	$ 648	$ 197
Retirement Plans	651	436	41	153
Individual Protection	486	778	130	215
Corporate and Other	198	150	(127)	159
Total	$ 1,865	$ 2,122	$ 692	$ 724

________

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule IV Reinsurance

As of December 31, 2010, 2009 and 2008 and for each of the years then ended (dollars in millions)

Column A	Column B	Column C	Column D	Column E	Column F
					Percentage
		Ceded to	Assumed		of amount
	Gross	other	from other	Net	assumed
	amount	companies	companies	amount	to net

2010

Life insurance in force	$ 208,920	$ 64,755	$ 10	$ 144,175	-

Premiums:
Life insurance 1	$ 570	$ 88	$ 1	$ 483	0.2%
Accident and health insurance	238	241	4	1	NM
Total	$ 808	$ 329	$ 5	$ 484	1.0%

2009

Life insurance in force	$ 208,485	$ 76,136	$ 8	$ 132,357	-

Premiums:
Life insurance 1	$ 549	$ 80	$ -	$ 469	-
Accident and health insurance	212	223	12	1	NM
Total	$ 761	$ 303	$ 12	$ 470	2.6%

2008

Life insurance in force	$ 208,071	$ 75,092	$ 12	$ 132,991	-

Premiums:
Life insurance 1	$ 477	$ 84	$ 1	$ 394	0.3%
Accident and health insurance	183	209	26	-	NM
Total	$ 660	$ 293	$ 27	$ 394	6.9%

__________

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule V Valuation and Qualifying Accounts

Years ended December 31, 2010, 2009 and 2008 (in millions)

Column A	Column B	Column C		Column D	Column E
		Charged
	Balance at	(credited) to	Charged to		Balance at
	beginning	costs and	other		end of
Description	of period	expenses	accounts	Deductions1	period

2010
Valuation allowances - mortgage loans on real estate	$ 77	$ 66	$ -	$ 47	$ 96

2009
Valuation allowances - mortgage loans on real estate	$ 42	$ 85	$ -	$ 50	$ 77

2008
Valuation allowances - mortgage loans on real estate	$ 25	$ 20	$ -	$ 3	$ 42

__________

Amounts represent transfers to real estate owned and recoveries.

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a)

Financial Statements:

Nationwide Variable Account:

Report of Independent Registered Public Accounting Firm.

Statement of Assets, Liabilities and Contract

Owners' Equity as of December 31, 2010.

Statement of Operations for the year

ended December 31, 2010.

Statements of Changes in Contract

Owners' Equity for the years ended

December 31, 2010 and 2009.

Notes to Financial Statements.

Nationwide Life Insurance Company and subsidiaries:

Report of Independent Registered Public Accounting Firm.

Consolidated Statements of Operations for the

years ended December 31, 2010, 2009 and

2008.

Consolidated Balance Sheets as of December

31, 2010 and 2009.

Consolidated Statements of Changes in

Equity as of December 31, 2010, 2009 and 2008.

Consolidated Statements of Cash Flows for

the years ended December 31, 2010, 2009

and 2008.

Notes to Consolidated Financial Statements.

Financial Statement Schedules

(b) Exhibits

(1)

Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant *

(2)

Not Applicable

(3)

Underwriting or Distribution of contracts between the Depositor and Principal Underwriter**

(4)

The form of the variable annuity contract*

(5)

Variable Annuity Application*

(6) Depositor’s Certificate of Incorporation and By-Laws.

(a)

Amended Articles of Incorporation for Nationwide Life Insurance Company. Filed previously with initial registration statement (333-164125) on January 4, 2010 as document "exhibit6a.htm" and hereby incorporated by reference.

(b)

Amended and Restated Code of Regulations of Nationwide Life Insurance Company. Filed previously with initial registration statement (333-164125) on January 4, 2010 as document "exhibit6b.htm" and hereby incorporated by reference.

(c)

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 (333-164125) on January 4, 2010 as document "exhibit6c.htm" and hereby incorporated by reference.

(7)

Not Applicable

(8)

Form of Participation Agreements –

The following Fund Participation Agreements were previously filed on July 17, 2007 with pre-effective amendment number 1 of registration statement (333-140608) under Exhibit 26(h), and are hereby incorporated by reference.

(1)

Amended and Restated Fund Participation and Shareholder Services Agreement with American Century Investment Services, Inc. dated September 15, 2004, as amended, under document “amcentfpa99h2”

(2)

Restated and Amended Fund Participation Agreement with The Dreyfus Corporation dated January 27, 2000, as amended, under document “dreyfusfpa99h3.htm”

(3)

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”

(4)

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”

(5)

Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust) dated May 2, 2005, as amended, under document “nwfpa99h12a.htm”

(6)

Fund Participation Agreement with Oppenheimer Variable Account Funds and Oppenheimer Funds, Inc. dated April 13, 2007, under document “oppenfpa99h14.htm”

The following Fund Participation Agreements were previously filed on April 22, 2008 with post-effective amendment number 21 of registration statement (033-60063) under Exhibit 26(h), and are hereby incorporated by reference.

(7)

Participation Agreement with Credit Suisse Asset Management, LLC and Provident Distributors, Inc., dated January 3, 2000, under document “creditsuissefpa.htm”

Attached hereto are electronic file copies of executed Fund Participation Agreements. Specific fee and payment information, if any, has been redacted from the attached copies. 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.

(8)	Fund Participation Agreement with Aberdeen Fund Distributors LLC, dated June 17, 2008, under document “aberdeenfpa.htm”

(9)	Financial Support Agreement with AIM Distributors, Inc., dated January 1, 2005, under document “invescofpa.htm”

(10)	Services Agreement with American Century Investment Services, Inc., dated September 15, 2004, under document “americancenturyfpa.htm”

(11)	Fund Participation Agreement with Delaware Service Company, Inc. and Delaware Distributors, L.P., dated July 1, 2004, under document “delawareretailfpa”

(12)	Restated Service Agreement with the Dreyfus Corporation and Dreyfus Service Corporation, dated June 1, 2003, under document “dreyfusfpa.htm”

(13)	Dealer Agreement with Federated Securities Corp., dated October 26, 2006, under document “federatedfpa.htm”

(14)	Fund Participation Agreement with Fidelity Distributors Corporation, dated September 1, 1992, under document “fidelityfpa.htm”

(15)	Master Shareholder Services Agreement with Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC, dated October 7, 2007, under document “franklintempletonfpa.htm”

(16)	Fund Participation Agreement with Gartmore Mutual Fund Capital Trust, Gartmore Morley Capital Management, Inc., Gartmore Distribution Services, Inc. and Gartmore Mutual Funds, dated October 1, 2002, under document “nationwidefpa.htm”

(17)	Fund Participation Agreement with Janus Distributors LLC and Janus Services LLC, dated July 23, 2009, under document “janusfpa.htm”

(18)	Fund Participation Agreement with Lazard Asset Management, LLC and Lazard Asset Management Securities LLC, dated May 3, 2006, under document “lazardretailfpa.htm”

(19)	Administrative Services Agreement with Neuberger Berman Management Inc., dated January 1, 2006, under document “neubergerbermanfpa.htm”

(20)	Retirement Plan Service Provider Agreement with OppenheimerFunds, Distributor, Inc., OppenheimerFunds, Inc. and OppenheimerFunds Services, dated February 27, 2009, under document “oppenheimerfpa.htm”

(21)	Fund Participation Agreement with Phoenix Equity Planning Corporation, dated March 7, 2007, under document “virtusfpa.htm”

(22)	Fund Participation Agreement with Wells Fargo Funds Management, LLC and Wells Fargo Funds Trust, dated July 1, 2003, under document “wellsfargofpa.htm”

(9)

Opinion of Counsel*

(10)

Consent of Independent Registered Public Accounting Firm – Attached hereto.

(11)

Not Applicable

(12)

Not Applicable

(99)

Power of Attorney – Attached hereto.

Filed previously with this Registration Statement (1933 act File No. 2–58043) and hereby incorporated by reference.

Filed previously with Post-Effective Amendment No. 36 to the Registration Statement (1933 Act File No. 2-58043) and hereby incorporated by reference.

Item 25.

Directors and Officers of the Depositor

President and Chief Operating Officer and Director	Kirt A. Walker
Executive Vice President and Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President-Administration	Terri L. Hill
Executive Vice President-Chief Human Resources Officer	Gale V. King
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing and Strategy Officer	Matthew Jauchius
Executive Vice President-Finance	Lawrence A. Hilsheimer
Executive Vice President	Mark A. Pizzi
Executive Vice President and Director	Mark R. Thresher
Senior Vice President	Harry H. Hallowell
Senior Vice President-Associate Services	Robert J. Puccio
Senior Vice President-Business Transformation Office	Gregory S. Moran
Senior Vice President-Chief Financial Officer and Director	Timothy G. Frommeyer
Senior Vice President-Chief Risk Officer	Michael W. Mahaffey
Senior Vice President-CIO IT Infrastructure	Robert J. Dickson
Senior Vice President-Customer Insight/Analytic	Paul D. Ballew
Senior Vice President-Division General Counsel	Roger A. Craig
Senior Vice President-Deputy General Counsel	Thomas W. Dietrich
Senior Vice President-Deputy General Counsel	Sandra L. Neely
Senior Vice President	Steven M. English
Senior Vice President-Head of Taxation	Pamela A. Biesecker
Senior Vice President-Individual Investments Business Head	Eric S. Henderson
Senior Vice President-Individual Protection Business Head and Director	Peter A. Golato
Senior Vice President-Corporate Marketing	Gordon E. Hecker
Senior Vice President-Corporate Strategy	Katherine M. Liebel
Senior Vice President-CIO NF Systems	Susan Gueli
Senior Vice President-CIO ACS	Daniel G. Greteman
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-NI Brand Marketing	Jennifer M. Hanley
Senior Vice President-President-NW Bank	J. Lynn Greenstein
Senior Vice President-Internal Audit	Kai V. Monahan
Senior Vice President-Enterprise Applications	Mark A. Gaetano
Senior Vice President-Enterprise Chief Technology Officer	Guruprasad C. Vasudeva
Senior Vice President-Nationwide Financial	Steven C. Power
Senior Vice President and Treasurer	David LePaul
Senior Vice President-Controller	James D. Benson
Senior Vice President-Field Operations IC	Jeff M. Rommel
Senior Vice President-Field Operations EC	Amy T. Shore
Senior Vice President-NF Marketing	William J. Burke
Senior Vice President-PCIO Sales Support	Melissa D. Gutierrez
Senior Vice President-Chief Compliance Officer	Sandra L. Rich
Vice President – Corporate Governance and Secretary	Robert W. Horner, III
Director	Stephen S. Rasmussen

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

One Nationwide Plaza, Columbus, Ohio 43215

Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant.

*	Subsidiaries for which separate financial statements are filed
**	Subsidiaries included in the respective consolidated financial statements
***	Subsidiaries included in the respective group financial statements filed for unconsolidated subsidiaries
****	Other subsidiaries

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
1492 Capital, LLC	Ohio		The company acts as an investment holding company.
AGMC Reinsurance, Ltd.	Turks & Caicos Islands		The company is in the business of reinsurance of mortgage guaranty risks.
ALLIED General Agency Company	Iowa		The company acts as a managing general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.	Iowa		The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company	Iowa		The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.	Texas		The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
AMCO Insurance Company	Iowa		The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.	Florida		The company is an underwriting manager for ocean cargo and hull insurance.
Atlantic Floridian Insurance Company	Ohio		The company writes personal lines residential property insurance in the State of Florida.
Freedom Specialty Insurance Company	Ohio		The company operates as a multi-line insurance company.
Audenstar Limited	England		The company is an investment holding company.
Champions of the Community, Inc.	Ohio		The company raises money to enable it to make gifts and grants to charitable organizations.
Colonial County Mutual Insurance Company*	Texas		The company underwrites non-standard automobile and motorcycle insurance and various other commercial liability coverages in Texas.
Crestbrook Insurance Company*	Ohio		The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Depositors Insurance Company	Iowa		The company underwrites general property and casualty insurance.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
DVM Insurance Agency, Inc.	California		The company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
Farmland Mutual Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Freedom Specialty Insurance Company	Ohio		The company operates as a multi-line insurance company.
Gates McDonald of Ohio, LLC	Ohio		The company provides services to employers for managing workers’ and unemployment compensation matters and employee leave administration.
Gates, McDonald & Company of New York, Inc.	New York		The company provides workers’ compensation and self-insured claims administration services to employers with exposure in New York.
Gates McDonald Health Plus LLC	Ohio		The company provides medical management and cost containment services to employers.
Insurance Intermediaries, Inc.	Ohio		The company is an insurance agency and provides commercial property and casualty brokerage services.
Life REO Holdings, LLC	Ohio		The company is an investment company.
Lone Star General Agency, Inc.	Texas		The company acts as general agent to market nonstandard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as some individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England		This is a limited liability company organized for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds. The company is currently inactive.
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Ohio		The company is a property and casualty insurer that writes personal lines business.
Nationwide Agribusiness Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*	Ohio		The purpose of the company is to develop Nationwide Arena and to engage in related development activity.
Nationwide Asset Management Holdings	England and Wales		The company operates as an investment holding company.
Nationwide Asset Management, LLC	Ohio		The company provides investment advisory services as a registered investment advisor to affiliated and non-affiliated clients.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Assurance Company	Wisconsin		The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Bank*	United States		This is a federal savings bank chartered by the Office of Thrift Supervision in the United States Department of Treasury to exercise deposit, lending, agency, custody and fiduciary powers and to engage in activities permissible for federal savings banks under the Home Owners’ Loan Act of 1933.
Nationwide Better Health Holding Company LLC (fka Nationwide Better Health Holding Company, Inc.)	Ohio		The company provides health management services.
Nationwide Better Health (Ohio), LLC (fka Nationwide Better Health, Inc.)	Ohio		The company provides 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 advisors and provides investment management services.
Nationwide Exclusive Agent Risk Purchasing Group, LLC	Ohio		The company’s purpose is to provide a mechanism for the purchase of group liability insurance for insurance agents operating nationwide.
Nationwide Financial Assignment Company	Ohio		The company is an administrator of structured settlements.
Nationwide Financial General Agency, Inc. (fka 1717 Brokerage Services, Inc.)	Pennsylvania		The company is a multi-state licensed insurance agency.
Nationwide Financial Institution Distributors Agency, Inc.	Delaware		The company is an insurance agency.
Nationwide Financial Services Capital Trust	Delaware		The trust’s sole purpose is to issue and sell certain securities representing individual beneficial interests in the assets of the trust.
Nationwide Financial Services, Inc.*	Delaware		The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute long-term savings and retirement products.
Nationwide Financial Structured Products, LLC	Ohio		The company captures and reports the results of the structured products business unit.
Nationwide Fund Advisors (fka Gartmore Mutual Fund Capital Trust)	Delaware		The trust acts as a registered investment advisor.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Fund Distributors LLC (successor to Gartmore Distribution Services, Inc.)	Delaware		The company is a limited purpose broker-dealer.
Nationwide Fund Management LLC (successor to Gartmore Investors Services, Inc.)	Delaware		The company provides administration, transfer and dividend disbursing agent services to various mutual fund entities.
Nationwide General Insurance Company	Ohio		The company transacts a general insurance business, except life insurance, and primarily provides automobile and fire insurance to select customers.
Nationwide Global Holdings, Inc.	Ohio		The company is a holding company for the international operations of Nationwide.
Nationwide Global Ventures, Inc.	Delaware		The company acts as a holding company.
Nationwide Indemnity Company*	Ohio		The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide insurance organization.
Nationwide Insurance Company of America	Wisconsin		The company is an independent agency personal lines underwriter of property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio		The company transacts general insurance business, except life insurance.
Nationwide Insurance Foundation*	Ohio		The company contributes to non-profit activities and projects.
Nationwide Investment Advisors, LLC	Ohio		The company provides investment advisory services.
Nationwide Investment Services Corporation**	Oklahoma		This is a limited purpose broker-dealer and distributor of variable annuities and variable life products for Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. The company also provides educational services to retirement plan sponsors and its participants.
Nationwide Life and Annuity Insurance Company**	Ohio		The company engages in underwriting life insurance and granting, purchasing and disposing of annuities.
Nationwide Life Insurance Company*	Ohio		The company provides individual life insurance, group life and health insurance, fixed and variable annuity products and other life insurance products.
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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Mutual Capital I, LLC*	Delaware		The business of the company is to achieve long term capital appreciation through a portfolio of primarily domestic equity investments in financial service and related companies.
Nationwide Mutual Fire Insurance Company	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Mutual Insurance Company*	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Private Equity Fund, LLC	Ohio		The company invests in private equity funds.
Nationwide Property and Casualty Insurance Company	Ohio		The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC	Ohio		The company provides alarm systems and security guard services.
Nationwide Realty Services, Ltd.	Ohio		The company provides relocation services for associates.
Nationwide Realty Investors, Ltd.*	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investment.
Nationwide Retirement Solutions, Inc.*	Delaware		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Arizona	Arizona		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio	Ohio		The company provides retirement products, marketing, education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas	Texas		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Insurance Agency, Inc.	Massachusetts		The company markets and administers deferred compensation plans for public employees.
Nationwide SA Capital Trust	Delaware		The trust acts as a holding company.
Nationwide Sales Solutions, Inc.	Iowa		The company engages in the direct marketing of property and casualty insurance products.
Nationwide Securities, LLC	Delaware		The company is a registered broker-dealer and provides investment management and administrative services.
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.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc.’s distribution companies.
NMC CPC WT Investment, LLC	Delaware		The business of the company is to hold and exercise rights in a specific private equity investment.
NWD Asset Management Holdings, Inc.	Delaware		The company is an investment holding company.
NWD Investment Management, Inc.	Delaware		The company acts as a holding company and provides other business services for the NWD Investments group of companies.
NWD Management & Research Trust	Delaware		The company acts as a holding company for the NWD Investments group of companies and as a registered investment advisor.
Pension Associates, Inc.	Wisconsin		The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa		The company is an insurance agency.
Privilege Underwriters, Inc.	Florida		The company acts as a holding company for the PURE Group of insurance companies.
Privilege Underwriters, Reciprocal Exchange	Florida		The company acts as a reciprocal insurance company.
Pure Insurance Company	Florida		The company acts as a captive reinsurance company.
Pure Risk Management, LLC	Florida		The company acts as an attorney-in-fact for Privilege Underwriters Reciprocal Exchange.
Registered Investment Advisors Services, Inc.	Texas		The company is a technology company that facilitates third-party money management services for registered investment advisors.
Retention Alternatives, Ltd.*	Bermuda		The company is a captive insurer and writes first dollar insurance policies in workers’ compensation, general liability and automobile liability for its affiliates in the United States.
Riverview International Group, Inc.	Delaware		The company is an insurance company.
RP&C International, Inc.	Ohio		The company is an investment-banking firm that provides specialist advisory services and innovative financial solutions to public and private companies internationally.
Scottsdale Indemnity Company	Ohio		The company is engaged in a general insurance business, except life insurance.
Scottsdale Insurance Company	Ohio		The company primarily provides excess and surplus lines of property and casualty insurance.
Scottsdale Surplus Lines Insurance Company	Arizona		The company provides excess and surplus lines coverage on a non-admitted basis.
THI Holdings (Delaware), Inc.*	Delaware		The company acts as a holding company for subsidiaries of the Nationwide group of companies.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
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.
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 27. Number of Contract Owners

The number of contract owners of Qualified and Non-Qualified Contracts as of February 1, 2011 was 7,089 and 0, respectively.

Item 28. Indemnification

Provision is made in Nationwide's Amended Code of Regulations and expressly authorized by the General Corporation Law of the State of Ohio, for indemnification by Nationwide of any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person is or was a director, officer or employee of Nationwide, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the General Corporation Law of the State of Ohio.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers or persons controlling Nationwide pursuant to the foregoing provisions, Nationwide has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than 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 asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 29. Principal Underwriter

(a)	Nationwide Investment Services Corporation ("NISC") serves as principal underwriter and general distributor for the following separate investment accounts of Nationwide or its affiliates:

MFS Variable Account	Nationwide VA Separate Account-D
Multi-Flex Variable Account	Nationwide VLI Separate Account
Nationwide Variable Account	Nationwide VLI Separate Account-2
Nationwide Variable Account-II	Nationwide VLI Separate Account-3
Nationwide Variable Account-3	Nationwide VLI Separate Account-4
Nationwide Variable Account-4	Nationwide VLI Separate Account-5
Nationwide Variable Account-5	Nationwide VLI Separate Account-6
Nationwide Variable Account-6	Nationwide VLI Separate Account-7
Nationwide Variable Account-7	Nationwide VL Separate Account-C
Nationwide Variable Account-8	Nationwide VL Separate Account-D
Nationwide Variable Account-9	Nationwide VL Separate Account-G
Nationwide Variable Account-10	Nationwide Provident VA Separate Account 1
Nationwide Variable Account-11	Nationwide Provident VA Separate Account A
Nationwide Variable Account-12	Nationwide Provident VLI Separate Account 1
Nationwide Variable Account-13	Nationwide Provident VLI Separate Account A
Nationwide Variable Account-14
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C

(b)	Directors and Officers of NISC:

President	Robert O. Cline
Vice President, Treasurer and Director	Keith Sheridan
Vice President-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Kathy R. Richards
Associate Vice President-Finance Operations and Assistant Treasurer	Terry C. Smetzer
Associate Vice President	John J. Humphries, Jr.
Assistant Secretary	Mark E. Hartman
Assistant Treasurer	Morgan J. Elliot
Assistant Treasurer	Jerry L. Greene
Director	James D. Benson
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 30. Location of Accounts and Records

Timothy G. Frommeyer

Nationwide Life Insurance Company

One Nationwide Plaza

Columbus, OH 43215

Item 31. Management Services

Not Applicable

Item 32. Undertakings

The Registrant hereby undertakes to:

(a)

file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted;

(b)

include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and

(c)

deliver any Statement of Additional Information and any financial statements required to be made available under this form promptly upon written or oral request.

The Registrant hereby represents that any contract offered by the prospectus and which is issued pursuant to Section 403(b) of the Internal Revenue Code is issued by the Registrant in reliance upon, and in compliance with, the Securities and Exchange Commission's no-action letter to the American Council of Life Insurance (publicly available November 28, 1988) which permits withdrawal restrictions to the extent necessary to comply with Internal Revenue Code Section 403(b)(11).

Nationwide Life Insurance Company hereby 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 the 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 VARIABLE ACCOUNT certifies that it meets the requirements of Rule 485(b) under the Securities Act of 1933 for effectiveness of the 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 2 6 th day of August , 2011.

NATIONWIDE VARIABLE ACCOUNT

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

By /s/JAMIE RUFF CASTO

Jamie Ruff Casto

As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 2 6 th day of August , 2011.

KIRT A. WALKER
Kirt A. Walker, President and Chief Operating Officer, and Director
MARK R. THRESHER
Mark R. Thresher, Executive Vice President and Director
TIMOTHY G. FROMMEYER
Timothy G. Frommeyer, Senior Vice President-Chief Financial Officer and Director
PETER GOLATO
Peter Golato, Senior Vice President-Individual Protection Business Head and Director
STEPHEN S. RASMUSSEN
Stephen S. Rasmussen, Director


	By /s/ JAMIE RUFF CASTO
	Jamie Ruff Casto
	Attorney-in-Fact