UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 File No. 333-164886

Pre-Effective Amendment No. 1 þ

Post-Effective Amendment No. o

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 File No. 811-03330

Amendment No. 304 þ

(Check appropriate box or boxes.)

NATIONWIDE VARIABLE ACCOUNT – II

(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 As soon as possible after effective date.

Title of Securities Being Registered Individual Flexible Premium Deferred Variable Annuity Contract

The Registrant hereby agrees to amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall therefore become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Nationwide Destination SM EV

Nationwide Life Insurance Company

Individual Flexible Premium Deferred Variable Annuity Contracts

Issued by Nationwide Life Insurance Company through its Nationwide Variable Account-II

The date of this prospectus is __________, 2010.

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 advisers, 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 __________, 2010), 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 44.

To obtain free copies of the Statement of Additional Information and other information about the Variable Account that has been filed with the SEC, 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 Nationwide and the variable annuity contract described in this prospectus (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 web site (www.sec.gov) that contains the prospectus, the Statement of Additional Information, material incorporated by reference, and other information.

Before investing, understand that annuities and/or life insurance products are not insured by the FDIC or any other Federal government agency, and are not deposits or obligations of, guaranteed by, or insured by the depository institution where offered or any of its affiliates.  Variable annuity contracts and the associated optional benefit riders involve investment risk and may lose value.  These securities have not been approved or disapproved by the SEC, nor has the SEC passed upon the accuracy or adequacy of the prospectus.  Any representation to the contrary is a criminal offense.

This contract contains features that apply credits to the Contract Value.  The benefit of the credits may be more than offset by the additional fees that the Contract Owner will pay in connection with the credits.  A contract without credits may cost less.

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

·   AllianceBernstein Variable Products Series Fund, Inc.

·   American Century Variable Portfolios II, Inc.

·   American Century Variable Portfolios, Inc.

·   BlackRock Variable Series Funds, Inc.

·   Dreyfus

·   Dreyfus Investment Portfolios

·   Dreyfus Variable Investment Fund

·   Fidelity Variable Insurance Products Fund

·   Franklin Templeton Variable Insurance Products Trust

·    Invesco

·   Ivy Funds Variable Insurance Portfolios, Inc.

·   Janus Aspen Series

·   MFS® Variable Insurance Trust

·    MFS® Variable Insurance Trust II

·   Nationwide Variable Insurance Trust

·   Neuberger Berman Advisers Management Trust

·   Oppenheimer Variable Account Funds

·   PIMCO Variable Insurance Trust

·    T. Rowe Price Equity Series, Inc.

·    Van Eck Variable Insurance Products Trust

·   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 Sub-Accounts of the Nationwide Variable Account-II (the “Variable Account”) may be allocated to the Fixed Account.

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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.

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

Co-Annuitant(s)- The person(s) designated by the Contract Owner to receive the Spousal Protection Feature.

Contract Owner(s)- 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 value of all Accumulation Units in a cont r act plus any amount held in the Fixed Account.

Contract Anniversary- Each recurring one-year anniversary of the date the contract was issued.

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

Current Income Benefit Base- For purposes of the 5% Lifetime Income Option and the 10% Life t ime Income Option, it is equal to the Original Income Benefit Base adjusted throughout the life of the contract to account for subsequent purchase payments, excess withdrawals, and reset opportunities.  This amount is multiplied by the Lifetime Withdrawal Percentage to arrive at the benefit amount for any given year.

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.

Extra Value Credit (“Credit”)- The amount Nationwide applies to the C ontract Value that is equal to 5% of each purchase payment made during the first Contract Year.

FDIC- Federal Deposit Insurance Corporation.

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 that varies depending on the type of allocation (e.g., new purchase payment, transfer, Dollar Cost Averaging allocation, Enhanced Dollar Cost Averaging allocation, etc.).

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

Investment-Only Contract- A contract purchased by a qualified pension, profit-sharing or stock bonus plan as defined by Section 401(a) of the Internal Revenue Code.

Lifetime Withdrawal Percentage- An age-based percentage used to determine the annual amount available for surrender under a lifetime income option.  The applicable percentage is multiplied by the Current Income Benefit Base to arrive at the benefit amount for any given year.

Monthly Contract Anniversary- Each recurring one-month anniversary of the date the contract was issued.

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 investment option 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, IRA, Roth IRA, SEP IRA, Simple IRA, or Tax Sheltered Annuity.

Original Income Benefit Base- For purposes of the 5% Lifetime Income Option and the 10% Lifetime Income Option, the initial benefit base calculated on the date the contract is issued, which is equal to the Contract Value.

Qualified Plan- A retirement plan that receives favorable tax treatment under Section 401 of the Internal Revenue Code, including Investment-Only Contracts.  In this prospectus, all provisions applicable to Qualified Plans also apply to Investment-Only Contracts unless specifically stated otherwise.

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

SEC- Securities and Exchange Commission.

SEP IRA- An annuity contract which qualifies for favorable tax treatment under Section 408(k) of the Internal Revenue Code.

Simple IRA- An annuity contract which qualifies for favorable tax treatment under Section 408(p) of the Internal Revenue Code.

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.  Contracts issued pursuant to this prospectus cannot be issued as Tax Sheltered Annuities.

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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 p.m. Eastern Time.

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-II, 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.

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Table of Contents	Page
Glossary of Special Terms	2
Contract Expenses	6
Underlying Mutual Fund Annual Expenses	7
Example	8
Synopsis of the Contracts	8
Surrenders
Minimum Initial and Subsequent Purchase Payments
Extra Value Credits
Dollar Limit Restrictions
Charges and Expenses
Annuity Payments
Taxation
Death Benefit
Ten Day Free Look
Condensed Financial Information	11
Financial Statements	11
Nationwide Life Insurance Company	11
Nationwide Investment Services Corporation	11
Investing in the Contract	11
The Variable Account and Underlying Mutual Funds
The Fixed Account
The Contract in General	13
Distribution, Promotional and Sales Expenses
Underlying Mutual Fund Payments
Profitability
Contract Modification
Standard Charges and Deductions	15
Mortality and Expense Risk Charge
Administrative Charge
Contract Maintenance Charge
Contingent Deferred Sales Charge
Premium Taxes
Short-Term Trading Fees
Optional Contract Benefits, Charges and Deductions	17
Death Benefit Options
Beneficiary Protector II Option
10% and 5% Lifetime Income Option
10% and 5% Spousal Continuation Benefit
Income Benefit Investment Options
Removal of Variable Account Charges	25
Ownership and Interests in the Contract	25
Contract Owner
Joint Owner
Contingent Owner
Annuitant
Contingent Annuitant
Co-Annuitant
Joint Annuitant
Beneficiary and Contingent Beneficiary
Changes to the Parties to the Contract
Operation of the Contract	27
Extra Value Credits
Pricing
Application and Allocation of Purchase Payments
Determining the Contract Value
Transfer Requests

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Table of Contents (continued)	Page
Transfer Restrictions
Transfers Prior to Annuitization
Transfers After Annuitization
Right to Examine and Cancel	30
Surrender (Redemption) Prior to Annuitization	31
Partial Surrenders (Partial Redemptions)
Full Surrenders (Full Redemptions)
Surrender (Redemption) After Annuitization	31
Assignment	31
Contract Owner Services	32
Asset Rebalancing
Dollar Cost Averaging
Enhanced Fixed Account Dollar Cost Averaging
Dollar Cost Averaging for Living Benefits
Fixed Account Interest Out Dollar Cost Averaging
Systematic Withdrawals
Custom Portfolio Asset Rebalancing Service
Death Benefits	34
Death of Contract Owner
Death of Annuitant
Death of Contract Owner/Annuitant
Death Benefit Payment
Death Benefit Calculations
Spousal Protection Feature
Annuity Commencement Date	38
Annuitizing the Contract	39
Annuitization Date
Annuitization
Fixed Annuity Payments
Variable Annuity Payments
Frequency and Amount of Annuity Payments
Annuity Payment Options	40
Annuity Payment Options for Contracts with Total Purchase Payments Less Than or Equal to $2,000,000
Annuity Payment Options for Contracts with Total Purchase Payments Greater Than $2,000,000
Annuitization of Amounts Greater than $5,000,000
Statements and Reports	41
Legal Proceedings	41
Table of Contents of Statement of Additional Information	44
Appendix A: Underlying Mutual Funds	45
Appendix B: Condensed Financial Information	54
Appendix C: Contract Types and Tax Information	55
Appendix D: State Variations	64

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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)	8%

Range of CDSC over time:

Number of Completed Years from Date of Purchase Payment	0	1	2	3	4	5	6	7	8+
CDSC Percentage	8%	8%	8%	7%	6%	5%	4%	3%	0%

Maximum Premium Tax Charge (as a percentage of purchase payments)	5%1
Maximum Short-Term Trading Fee (as a percentage of transaction amount2)	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	$303
Variable Account Annual Expenses (assessed as an annualized percentage of Daily Net Assets)
Maximum Mortality and Expense Risk Charge                                                                                                                                              Administrative Charge	1.65%4 0.20%
Death Benefit Options (assessed as an annualized percentage of Daily Net Assets) (eligible applicants may purchase one)
One-Year Enhanced Death Benefit Option Charge                                                                                                                                              Total Variable Account Charges (including this option only)	0.20% 2.05 %
One-Month Enhanced Death Benefit Option Charge                                                                                                                                              Total Variable Account Charges (including this option only)	0.35% 2.20 %
Combination Enhanced Death Benefit Option Charge                                                                                                                                              Total Variable Account Charges (including this option only)	0.45% 2.30 %
Beneficiary Protector II Option Charge (assessed as an annualized percentage of Daily Net Assets) Total Variable Account Charges (including this option only)	0.35%5 2.20 %
Lifetime Income Options (assessed annually as a percentage of the Current Income Benefit Base6) (eligible applicants may purchase one)
5% Lifetime Income Option Charge (only available in NY)	1.00%7
10% Lifetime Income Option Charge	1.20%8
Spousal Continuation Benefits (assessed annually as a percentage of the Current Income Benefit Base) (eligible applicants may purchase the option that corresponds to the elected lifetime income option)
5% Spousal Continuation Benefit Charge (only available in NY)	0.15%
10% Spousal Continuation Benefit Charge (not available in NY)	0.30%9

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The next table shows the fees and expenses that a Contract Owner would pay if he/she elected all of the optional benefits available under the contract (and the most expensive of mutually exclusive optional benefits).

Summary of Maximum Contract Expenses (annualized rate, as a percentage of the Daily Net Assets)
Mortality and Expense Risk Charge (applicable to all contracts)	1.65%
Administrative Charge (applicable to all contracts)	0.20%
Combination Enhanced Death Benefit Option Charge	0.45%
Beneficiary Protector II Option Charge	0.35%
10% Lifetime Income Option Charge	1.20%10
10% Spousal Continuation Benefit Charge	0.30%10
Maximum Possible Total Variable Account Charges	4.15%11

Underlying Mutual Fund Annual Expenses

The next table provides the minimum and maximum total operating expenses, as of December 31, 2009, charged by the underlying mutual funds that you may pay periodically during the life of the Contract.  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 average underlying mutual fund assets)	0. 45 %	1.94 %

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 f und prospectuses for specific expense information.

____________________________

1 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.

2 The transaction amount is the amount of the transfer determined to be engaged in short-term trading.  See “Short-Term Trading Fees” later in this prospectus.

3 On each contract’s Contract Anniversary, Nationwide deducts the Contract Maintenance Charge if the Contract Value is less than $50,000 on such Contract Anniversary.  This charge is permanently waived for any contracts valued at $50,000 or more on any Contract Anniversary.

4 Beginning in the 9th Contract Year, the Mortality and Expense Charge will be equal to an annualized rate of 1.30% of the Daily Net Assets of the Variable Account.

5 In addition to the 0.35% charge assessed to Variable Account allocations, allocations made to the Fixed Account will be assessed a fee of 0.35% by decreasing the interest credited to amounts allocated to the Fixed Account.

6 For information about how the Current Income Benefit Base is calculated, please see “Determination of the Income Benefit Base Prior to the First Surrender” later in this prospectus.

7 Currently, the charge associated with the 5% Lifetime Income Option is equal to 0.85% of the Current Income Benefit Base.

8 Currently, the charge associated with the 10% Lifetime Income Option is equal to 1.00% of the Current Income Benefit Base.

9 Currently, the charge associated with the 10% Spousal Continuation Benefit is equal to 0.20% of the Current Income Benefit Base.

10 This charge is a percentage of the Current Income Benefit Base. For purposes of this table, Nationwide assumes the Current Income Benefit Base is equal to the Daily Net Assets.

11 The Maximum Possible Total Variable Account Charges associated with a particular contract may be higher or lower than 4.15% depending on whether the Current Income Benefit Base is higher or lower than the Daily Net Assets.  For purposes of this table, Nationwide assumes the Current Income Benefit Base is equal to the Daily Net Assets.

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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 following Example assumes:

·   a $10,000 investment in the contract for the time periods indicated (without application of the Credit) ;

·   a 5% return each year;

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

·   the maximum Contingent Deferred Sales Charge;

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

·   the total Variable Account charges associated with the most expensive allowable combination of optional benefits (4.15%).1

For those contracts that do not elect the most expensive combination of optional benefits, the expenses would be lower.

	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 ( 1.94 %)	$1,391	$2,609	$3,692	$6,216	*	$1,979	$3,242	$6,216	$671	$1,979	$3,242	$6,216
Minimum Total Underlying Mutual Fund Operating Expenses (0. 45 %)	$1,235	$2,171	$3,015	$5,112	*	$1,541	$2,565	$5,112	$515	$1,541	$2,565	$5,112

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

1 The total Variable Account charges associated with the most expensive allowable combination of optional benefits may be higher or lower than 4.15% depending on whether the Current Income Benefit Base is higher or lower than the Daily Net Assets.  For purposes of this table, Nationwide assumes the Current Income Benefit Base is equal to the Daily Net Assets.

Synopsis of the Contracts

The annuity described in this prospectus is intended to provide benefits to a single or joint owner and his/her beneficiaries.  The contracts described in this prospectus are individual flexible purchase payment contracts.

The contracts can be categorized as:

·   Charitable Remainder Trusts;

·   Individual Retirement Annuities (“IRAs”);

·   Investment-Only Contracts (Qualified Plans);

·   Non-Qualified Contracts;

·   Roth IRAs;

·   Simplified Employee Pension IRAs (“SEP IRAs”); and

·   Simple IRAs.

For more detailed information with regard to the differences in contract types, please see “Appendix C: Contract Types and Tax Information” later in this 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.

Minimum Initial and Subsequent Purchase Payments

For Non-Qualified Contracts, the minimum initial purchase payment is $10,000.  For all other contract types, the minimum initial purchase payment is $3,000.  A Contract Owner will meet the minimum initial purchase payment requirement by making purchase payments equal to required minimum over the course of the first Contract Year.

The minimum subsequent purchase payment for all contracts is $500.  However, for subsequent purchase payments sent via electronic deposit, the minimum subsequent purchase payment is $150.  Subsequent purchase payments may not be permitted in all states.

Credits applied to the contract cannot be used to meet the minimum purchase payment requirements.

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

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contract immediately and will receive the next calculated Accumulation Unit value.  See “Pricing” later in this prospectus.  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), the Annuitant or Co-Annuitant. If upon notification of death of the Contract Owner(s), the Annuitant or Co-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 any negative investment performance.

Extra Value Credits

For the first Contract Year, Nationwide will apply a Credit to the contract equal to 5% of each purchase payment made to the contract.  The Credit, which is funded from Nationwide’s general account, will be allocated among the Sub-Accounts and the Fixed Account at the same time and in the same proportion that the purchase payment is allocated to the contract.

Dollar Limit Restrictions

In addition to the potential purchase payment restriction listed above, certain features of the contract have additional purchase payment and/or Contract Value limitations associated with them:

Annuitization.  Annuity payment options will be limited if the Contract Owner submits total purchase payments in excess of $2,000,000.  Furthermore, if the amount to be annuitized is greater than $5,000,000, we may limit both the amount that can be annuitized on a single life and the annuity payment options.  See the “Annuity Payment Options” section for additional information.

Death benefit calculations.  Purchase payments up to $3,000,000 will result in a higher death benefit payment than purchase payments in excess of $3,000,000. See the “Death Benefit Calculations” section for additional information.

Optional riders.  If the Contract Owner elects either the10% Lifetime Income Option or the 5% Lifetime Income Option, subsequent purchase payments may be limited to an aggregate total of $50,000 per calendar year.

Charges and Expenses

Mortality and Expense Risk Charge

Nationwide deducts a Mortality and Expense Risk Charge equal to an annualized rate of 1.65% of the Daily Net Assets of the Variable Account from the date of contract issuance through the end of the 8th Contract Year.  Beginning in the 9th Contract Year, the amount of the Mortality and Expense Risk Charge will be equal to an annualized rate of 1.30% of the Daily Net Assets of the Variable Account.

The Mortality and Expense Risk Charge compensates Nationwide for providing the insurance benefits under the contract, including the contract’s standard death benefit that provides a guaranteed death benefit to the beneficiary(ies) even if the market declines.  It also compensates Nationwide for assuming the risk that Annuitants will live longer than assumed.  A portion of the Mortality and Expense Charge may be used to compensate Nationwide for providing the Credits.  Finally, the Mortality and Expense Risk Charge compensates Nationwide for guaranteeing that charges will not increase regardless of actual expenses.  Nationwide may realize a profit from this charge, which Nationwide may use to finance the distribution of the contracts.

Administrative Charge

Nationwide deducts an Administrative Charge equal to an annualized rate of 0.20% of the Daily Net Assets of the Variable Account.

The Administrative Charge reimburses Nationwide for administrative costs it incurs resulting from providing contract benefits, including preparation of the contract and prospectus, confirmation statements, annual account statements and annual reports, legal and accounting fees as well as various related expenses.  Nationwide may realize a profit from this charge, which Nationwide may use to finance the distribution of the contracts.

Contract Maintenance Charge

A $30 Contract Maintenance Charge is assessed on each Contract Anniversary and upon full surrender of the contract.  If, on any Contract Anniversary (or on the date of a full surrender) the Contract Value is $50,000 or more, Nationwide will waive the Contract Maintenance Charge from that point forward.

Contingent Deferred Sales Charge

Nationwide does not deduct a sales charge from purchase payments upon deposit into the contract.  However, Nationwide may deduct a Contingent Deferred Sales Charge (“CDSC”) if any amount is withdrawn from the contract.  This CDSC reimburses Nationwide for sales expenses.  A portion of the CDSC may be used to compensate Nationwide for providing the Credits.  The amount of the CDSC will not exceed 8% of purchase payments surrendered.

Death Benefit Options

The contract contains a standard death benefit at no additional charge.  In lieu of the standard death benefit, an applicant may elect one of the following death benefit options at the time of application:

Death Benefit Options	Charge*
One-Year Enhanced Death Benefit Option1	0.20%
One-Month Enhanced Death Benefit Option2	0.35%
Combination Enhanced Death Benefit Option2	0.45%

*The charges shown are the annualized rates charged as a percentage of the Daily Net Assets of the Variable Account.

1The One-Year Enhanced Death Benefit is only available for contracts with Annuitants age 80 or younger at the time of application.

2The Combination Enhanced Death Benefit Option and the One-Month Enhanced Death Benefit Option are only available

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for contracts with Annuitants age 75 or younger at the time of application.

For more information about the standard and optional death benefits, please see the “Death Benefit Calculations” provision.

Beneficiary Protector II Option

A Beneficiary Protector II Option is available under the contract at the time of application.  This option is only available for contracts with Annuitantsage 75 or younger at the time of application.  If the Contract Owner of an eligible contract elects the Beneficiary Protector II Option, Nationwide will deduct an additional charge at an annualized rate of 0.35% of the Daily Net Assets of the Variable Account.  Additionally, allocations made to the Fixed Account will be assessed a fee of 0.35%.

10% Lifetime Income Option

The 10% Lifetime Income Option is available under the contract at the time of application.  The Contract Owner (or the Annuitant in the case of a non-natural Contract Owner) must be between age 45 and 85 at the time of application.

If the Contract Owner elects the 10% Lifetime Income Option, Nationwide will deduct an additional charge not to exceed 1.20% of the Current Income Benefit Base, which is the amount upon which the annual benefit is based.  The current charge for the 10% Lifetime Income Option is 1.00% of the Current Income Benefit Base.  The charge is deducted on each Contract Anniversary and is taken from the Sub-Accounts proportionally based on contract allocations at the time the charge is deducted.

5% Lifetime Income Option

The 5% Lifetime Income Option is available under the contract at the time of application for contracts issued in the State of New York.  The Contract Owner (or the Annuitant in the case of a non-natural Contract Owner) must be between age 45 and 85 at the time of application.

If the Contract Owner elects the 5% Lifetime Income Option, Nationwide will deduct an additional charge not to exceed 1.00% of the Current Income Benefit Base, which is the amount upon which the annual benefit is based.  The current charge for the 5% Lifetime Income Option is 0.85% of the Current Income Benefit Base.  The charge is deducted on each Contract Anniversary and is taken from the Sub-Accounts proportionally based on contract allocations at the time the charge is deducted.

10% and 5% Spousal Continuation Benefit

The 10% or 5% Spousal Continuation Benefit is only available for election at the time of application if and when the 10% or 5% Lifetime Income Option is elected, respectively.  The Contract Owner’s spouse (or the Annuitant’s spouse in the case of a non-natural Contract Owner) must be between age 45 and 85 at the time of application.

If the Contract Owner elects the 10% Spousal Continuation Benefit, Nationwide will deduct an additional charge not to exceed 0.30% of the Current Income Benefit Base.  Currently, the charge for the 10% Spousal Continuation Benefit is 0.20% of the Current Income Benefit Base.  The 10% Spousal Continuation Benefit is not available for contracts issued in the State of New York.

If the Contract Owner elects the 5% Spousal Continuation Benefit, Nationwide will deduct an additional charge not to exceed 0.15% of the Current Income Benefit Base.  The charge is deducted at the same time and in the same manner as the respective lifetime income option charge.  The 5% Spousal Continuation Benefit is only available for contracts issued in the State of New York.

Charges for Optional Benefits

The charges associated with optional benefits are assessed prior to annuitization.

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 expense applicable to the fund (see “The Variable Account and Underlying Mutual Funds” for information on how to obtain an underlying mutual fund prospectus).

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.

Annuity Payments

On the Annuitization Date, annuity payments begin.  Annuity payments will be based on the annuity payment option chosen prior to annuitization.  Annuity payments will generally be sent within 3 days after each annuity payment date and received by the Annuitant within 7 to 10 days thereafter.

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”).

Death Benefit

An applicant may elect the standard death benefit (at no additional cost) or may elect the One-Year Enhanced Death Benefit Option for an additional charge of 0.20% of the Daily Net Assets of the Variable Account, the One-Month Enhanced Death Benefit Option for an additional charge of 0.35% of the

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Daily Net Assets of the Variable Account, or the Combination Enhanced Death Benefit Option for an additional charge of 0.45% of the Daily Net Assets of the Variable Account.

For more information about the standard and optional death benefits, please see the “Death Benefits” section later in the prospectus.

Ten Day Free Look

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 Credits, and applicable federal and state income tax withholding.  Otherwise, Nationwide will return the Contract Value, less any Credits, applicable federal and state income tax withholding.  See “Right to Examine and Cancel” and “Extra Value Credits” 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 the assessment of Variable Account charges which may vary from contract to contract (for more information on the calculation of Accumulation Unit values, see “Determining Variable Account Value – Valuing an Accumulation Unit”).  Since this annuity contract was not available as of December 31, 2009, there are no Accumulation Unit values available.

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-II is a variable account that invests in the underlying mutual funds listed in Appendix A.  Nationwide established the Variable Account on October 7, 1981 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.

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 free of charge 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.

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

The investment advisers of the underlying mutual funds may manage publicly traded mutual funds with similar names and investment objectives.  However, the underlying mutual funds are NOT directly related to any publicly traded mutual fund.  Contract Owners should not compare the performance of a publicly traded fund with the performance of underlying mutual funds participating in the Variable Account.  The

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performance of the underlying mutual funds could differ substantially from that of any publicly traded funds.

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.

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

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 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 Variable Account

Nationwide may deregister the Variable Account under the 1940 Act in the event the Variable 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 affected Contract Owners will be notified in the event Nationwide deregisters the 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. 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

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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.  Rates will vary depending on the dollar cost averaging program elected (see “Contract Owner Services”).

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 which the 12 month anniversary of 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 the rate will not be less than the minimum interest rate required by applicable state law.

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 value will not be less than the amount of the purchase payments allocated to the Fixed Account, plus interest credited as described above, plus any applicable Extra Value Credit, less any surrenders and any applicable charges including CDSC.  Additionally, Nationwide guarantees that interest credited to Fixed Account allocations will not be less than the minimum interest required by applicable state law.

Fixed Account Interest Rate Guarantee Period

The Fixed Account interest rate guarantee period is the period of time that the Fixed Account interest rate is guaranteed to remain the same.  During a Fixed Account interest rate guarantee period, transfers cannot be made from the Fixed Account, and amounts transferred to the Fixed Account must remain on deposit.

For new purchase payments allocated to the Fixed Account and transfers to the Fixed Account, the Fixed Account interest rate guarantee 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 1 year anniversary because guaranteed terms end on the last day of a calendar quarter.

The Contract in General

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.

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.

If this contract is purchased to replace another variable annuity, be aware that the mortality tables used to determine the amount of annuity payments may be less favorable than those in the contract being replaced.

These contracts are offered to customers of various financial institutions and brokerage firms.  No financial institution or brokerage firm is responsible for any of the contractual insurance benefits and features guaranteed under the contracts.  These guarantees are the sole responsibility of Nationwide.

In general, deferred variable annuities are long-term investments; they are not intended as short-term investments.  Deferred variable annuities are not intended to be sold to a terminally ill Contract Owner or Annuitant.  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 8.00% 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.

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

Furthermore, Nationwide benefits from assets invested in Nationwide’s affiliated underlying mutual funds (i.e., Nationwide Variable Insurance Trust) 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

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 adviser or subadviser is one of our affiliates or whether the underlying mutual fund, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates.

There may be underlying mutual funds with lower fees, as well as other variable 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.

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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 contract, but no modification will affect the amount or term of any contract unless a modification is required to conform the contract to applicable federal or state law.  No modification will affect the method by which Contract Value is determined.

Standard 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 1.65% of the Daily Net Assets of the Variable Account for the first 8 Contract Years.  Beginning with the 9th Contract Year, the charge is equal to an annualized rate of 1.30% of the Daily Net Assets of the Variable Account.  This fee compensates Nationwide for providing the insurance benefits under the contract, including the contract’s standard death benefit.  It also compensates Nationwide for assuming the risk that Annuitants will live longer than assumed.  A portion of the Mortality and Expense Risk Charge is used to compensate Nationwide for Credits applied to the contract.  Finally, the Mortality and Expense Risk Charge compensates Nationwide for guaranteeing that charges will not increase regardless of actual expenses.  Nationwide may realize a profit from this charge, which Nationwide may use to finance the distribution of the contracts.

Administrative Charge

Nationwide deducts an Administrative Charge from the Variable Account.  This amount is computed on a daily basis and is equal to an annualized rate of 0.20% of the Daily Net Assets of the Variable Account.  This fee reimburses Nationwide for administrative costs it incurs resulting from providing contract benefits, including preparation of the contract and prospectus, confirmation statements, annual account statements and annual reports, legal and accounting fees, as well as various related expenses.  Nationwide may realize a profit from this charge, which Nationwide may use to finance the distribution of the contracts.

Contract Maintenance Charge

Nationwide deducts a Contract Maintenance Charge of $30 on each Contract Anniversary that occurs before annuitization and upon full surrender of the contract.  This charge reimburses Nationwide for administrative expenses involved in issuing and maintaining the contract.

If, on any Contract Anniversary (or on the date of a full surrender), the Contract Value is $50,000 or more, Nationwide will waive the Contract Maintenance Charge from that point forward.

The deduction of the Contract Maintenance Charge will be taken proportionately from each Sub-Account and the Fixed Account based on the value in each option as compared to the total Contract Value.

Nationwide will not increase the Contract Maintenance Charge.  Nationwide will not reduce or eliminate the Contract Maintenance Charge where it would be discriminatory or unlawful.

Contingent Deferred Sales Charge

No sales charge deduction is made from purchase payments upon deposit into the contracts.  However, if any part of the contract is surrendered, Nationwide may deduct a CDSC.  The CDSC will not exceed 8% of purchase payments surrendered.

The CDSC is calculated by multiplying the applicable CDSC percentage (noted below) by the amount of purchase payments surrendered.

For purposes of calculating the CDSC, surrenders are considered to come first from the oldest purchase payment made to the contract, then the next oldest purchase payment, and so forth.  Earnings are not subject to the CDSC, but may not be distributed prior to the distribution of all purchase payments.  (For tax purposes, a surrender is usually treated as a withdrawal of earnings first.)

The CDSC applies as follows:

Number of Completed Years from Date of Purchase Payment	CDSC Percentage
0	8%
1	8%
2	8%
3	7%
4	6%
5	5%
6	4%
7	3%
8+	0%

The CDSC is used to cover sales expenses, including commissions, production of sales material, and other promotional expenses.  A portion of the CDSC may be used to compensate Nationwide for Credits applied to the contract.  If expenses are greater than the CDSC, the shortfall will be made up from Nationwide's general assets, which may indirectly include portions of the Variable Account charges, since Nationwide may generate a profit from these charges.

All or a portion of any withdrawal may be subject to federal income taxes.  Contract Owners taking withdrawals before age 59½ may be subject to a 10% penalty tax.

Waiver of Contingent Deferred Sales Charge

The maximum amount that can be withdrawn annually without a CDSC is the greater of:

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(1)   10% of (purchase payments that are subject to CDSC minus purchase payments previously withdrawn that were already subject to the CDSC); or

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

This CDSC-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.

Note: CDSC-free withdrawals do not count as “purchase payments previously withdrawn that were subject to CDSC” and, therefore, do not reduce the amount used to calculate subsequent CDSC-free withdrawal amounts.  

In addition, no CDSC will be deducted:

(1)   upon the annuitization of contracts which have been in force for at least 2 years;

(2)   upon payment of a death benefit.  However, additional purchase payments made to the contract after receiving the benefit of an increased Contract Value (under the Spousal Protection Feature) are subject to the CDSC provisions of the contract; or

(3)   from any values which have been held under a contract for at least seven years.

No CDSC applies to transfers among Sub-Accounts or between or among the various investment options in the contract.

A contract held by a Charitable Remainder Trust (within the meaning of Internal Revenue Code Section 664) may withdraw CDSC-free the greater of the amount that would otherwise be available for withdrawal without a CDSC; and the difference between:

(a)   the Contract Value at the close of the day prior to the date of the withdrawal; and

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

This contract is not designed for and does not support active trading strategies.  In order to protect investors in this contract that do not utilize such strategies, Nationwide may initiate certain exchange offers intended to provide Contract Owners that meet certain criteria with an alternate variable annuity designed to accommodate active trading.  If this contract is exchanged as part of an exchange offer, the exchange will be made on the basis of the relative Net Asset Values of the exchanged contract.  Furthermore, no CDSC will be assessed on the exchanged assets and Nationwide will “tack” the contract’s CDSC schedule onto the new contract.  This means that the CDSC schedule will not start anew on the exchanged assets in the new contract; rather, the CDSC schedule from the exchanged contract will be applied to the exchanged assets both in terms of percentages and the number of completed Contract Years.  This enables the Contract Owner to exchange into the new contract without having to start a new CDSC schedule on exchanged assets.  However, if subsequent purchase payments are made to the new contract, they will be subject to any applicable CDSC schedule that is part of the new contract.

The CDSC will not be eliminated if to do so would be unfairly discriminatory or prohibited by state law.

The waiver of CDSC only applies to partial surrenders.  If the Contract Owner elects to surrender the contract in full, where permitted by state law, Nationwide will assess a CDSC on the entire amount surrendered.  For purposes of the CDSC free withdrawal privilege, a full surrender is:

·   multiple surrenders taken within a one-year period that deplete the entire Contract Value; or

·   any single surrender of 90% or more of the Contract Value.

Long-Term Care/Nursing Home and Terminal Illness Waiver

The contract includes a Long-Term Care/Nursing Home and Terminal Illness Waiver at no additional charge.

Under this provision, no CDSC will be charged if:

(1)   the third Contract Anniversary has passed; and

(2)   the Contract Owner has been confined to a long-term care facility or hospital for a continuous 90-day period that began after the contract issue date; or

(3)   the Contract Owner has been diagnosed by a physician, at any time after contract issuance, to have a terminal illness; and

(4)   Nationwide receives and records such a letter from that physician indicating such diagnosis.

Written notice and proof of terminal illness or confinement for 90 days in a hospital or long term care facility must be received in a form satisfactory to Nationwide and recorded at Nationwide's home office prior to waiver of the CDSC.

In the case of joint ownership, the waivers will apply if either joint owner meets the qualifications listed above.

For those contracts that have a non-natural person as Contract Owner as an agent for a natural person, the Annuitant may exercise the right of the Contract Owner for purposes described in this provision.  If the non-natural Contract Owner does not own the contract as an agent for a natural person (e.g., the Contract Owner is a corporation or a trust for the benefit of an entity), the Annuitant may not exercise the rights described in this provision.

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.

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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.

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.

To determine whether a particular underlying mutual fund assesses (or reserves the right to assess) a short-term trading fee, please see “Appendix A: Underlying Mutual Funds” later 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;

·   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.

Optional Contract Benefits, Charges and Deductions

For an additional charge, the following optional benefits are available to Contract Owners.  Not all optional benefits are available in every state.  Unless otherwise indicated:

(1)   optional benefits must be elected at the time of application;

(2)   optional benefits, once elected, may not be terminated; and

(3)   the charges associated with the optional benefits will be assessed until annuitization.

Death Benefit Options

For an additional charge, the Contract Owner may elect one of the following death benefit options in lieu of the standard death benefit.

One-Year Enhanced Death Benefit Option

Applicants with Annuitants age 80 or younger at the time of application can elect the One-Year Enhanced Death Benefit Option for an additional charge equal to an annualized rate of 0.20% of the Daily Net Assets of the Variable Account.  Nationwide may realize a profit from the charge assessed for this option.

If the Annuitant dies before the Annuitization Date, the death benefit will be the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered; or

(3)   the highest Contract Value on any Contract Anniversary prior to the Annuitant's 86th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Contract Anniversary.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrenders.

Note: For Contract Owners who have elected this option, if the total of all purchase payments made to the contract is

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greater than $3,000,000, the death benefit will be adjusted as described in the “Death Benefits” provisionlater in this prospectus.

The One-Year Enhanced Death Benefit Option also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse.  Please see “Spousal Protection Feature” later in this prospectus.

One-Month Enhanced Death Benefit Option

Applicants with Annuitants age 75 or younger at the time of application can elect the One-Month Enhanced Death Benefit Option for an additional charge equal to an annualized rate of 0.35% of the Daily Net Assets of the Variable Account.  Nationwide may realize a profit from the charge assessed for this option.

If the Annuitant dies before the Annuitization Date, the death benefit will be the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered; or

(3)   the highest Contract Value on any Monthly Contract Anniversary prior to the Annuitant’s 81st birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Monthly Contract Anniversary.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrenders.

Note: For Contract Owners who that have elected this option, if the total of all purchase payments made to the contract is greater than $3,000,000, the death benefit will be adjusted as described in the “Death Benefits” provision later in this prospectus.

The One-Month Enhanced Death Benefit Option also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse.  Please see “Spousal Protection Feature” later in this prospectus.

Combination Enhanced Death Benefit Option

Applicants with Annuitants age 75 or younger at the time of application can elect the Combination Enhanced Death Benefit Option for an additional charge equal to an annualized rate of 0.45% of the Daily Net Assets of the Variable Account.  Nationwide may realize a profit from the charge assessed for this option.

If the Annuitant dies before the Annuitization Date, the death benefit will be the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered;

(3)   the highest Contract Value on any Contract Anniversary before the Annuitant's 81st birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Contract Anniversary; or

(4)   the 5% interest anniversary value (as described in the “Death Benefits” provision later in this prospectus).

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrenders.

Note: For Contract Owners who have elected this option, if the total of all purchase payments made to the contract is greater than $3,000,000, the death benefit will be adjusted as described in the “Death Benefits” provisionlater in this prospectus.

The Combination Enhanced Death Benefit Option also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse.  Please see “Spousal Protection Feature” later in this prospectus.

Beneficiary Protector II Option

The Beneficiary Protector II Option provides that upon the death of the Annuitant (and potentially, the Co-Annuitant, if one is named), and in addition to any death benefit payable, Nationwide will credit an additional amount to the contract (the “benefit”).  This benefit is intended to offset any taxes that might be owed in connection with investment gains accrued under the contract.

The amount of the benefit depends on the Annuitant’s age at the time of application and, if applicable, the Co-Annuitant’s age at the time of the first Annuitant’s death.

The charge associated with the Beneficiary Protector II Option is equal to an annualized rate of 0.35% of the Daily Net Assets of the Variable Account .   In addition, allocations to the Fixed Account will be assessed a fee of 0.35% by decreasing the interest Nationwide credits to amounts allocated to the Fixed Account.  Nationwide may realize a profit from the charge assessed for this option.  The Beneficiary Protector II Option is only available for contracts with Annuitants age 75 or younger at the time of application.

After the death of the last surviving Annuitant or after all applicable benefits have been credited to the contract, the charge associated with the Beneficiary Protector II Option will be removed and the beneficiary may:

(a)   take distribution of the contract in the form of the death benefit or required distributions as applicable; or

(b)   if the beneficiary is the deceased Annuitant’s surviving spouse, continue the contract as the new beneficial Contract Owner and subject to any mandatory distribution rules.

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Calculation of the First Benefit

The formula for determining the first benefit, which is paid upon the first Annuitant’s death, is as follows:

 Earnings Percentage x Adjusted Earnings.

If the Annuitant is age 70 or younger at the time of application, the Earnings Percentage will be 40%.  If the Annuitant is age 71 through age 75 at the time of application, the Earnings Percentage will be 25%.

Adjusted Earnings = (a) – (b); where:

a =   the Contract Value on the date the death benefit is calculated and prior to any death benefit calculation; and

b =   purchase payments, proportionally adjusted for surrenders.

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

There is a limit on the amount of Adjusted Earnings used in the first benefit calculation.

Maximum Adjusted Earnings from the Date of the First Benefit = 200% of the total of all purchase payments that were applied to the contract more than 12 months before the date of the Co-Annuitant’s death (regardless of the date of the Annuitant’s death), proportionally adjusted for any and all surrenders taken from the contract .

The benefit will either be paid in addition to the death benefit, or will be credited to the contract if there is a Co-Annuitant named to the contract.

If there is no Co-Annuitant named to the contract, the charge associated with the Beneficiary Protector II Option will be removed after the benefit is paid.

Calculation of the Second Benefit

If a Co-Annuitant is named under the contract, a second benefit will be paid upon the death of the Co-Annuitant if the Co-Annuitant is age 75 or younger at the date of the first Annuitant’s death.  If the Co-Annuitant is older than age 75 at the date of the first Annuitant’s death, no second benefit will be paid and the charge associated with the Beneficiary Protector II Option will be removed.

The calculation of the second benefit will be based on earnings to the contract after the first benefit was calculated.  The formula for calculating the second benefit is as follows:

Earnings Percentage x Adjusted Earnings from the Date of the First Benefit.

If the Co-Annuitant is age 70 or younger at the time of the first Annuitant’s death, the Earnings Percentage will be 40%.  If the Co-Annuitant is age 71 through age 75 at the time of the first Annuitant’s death, the Earnings Percentage will be 25%.

Adjusted Earnings from the Date of the First Benefit =

(a) – (b) – (c), where:

a =   Contract Value on the date the second death benefit is calculated (before the second death benefit is calculated);

b =   the Contract Value on the date the first benefit and the first death benefit were calculated (after the first benefit and the first death benefit were applied), proportionately adjusted for surrenders; and

c =   purchase payments made after the first benefit was applied, proportionately adjusted for surrenders.

The adjustment for amounts surrendered will reduce the beginning Contract Value and purchase payments in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

There is a limit on the amount of Adjusted Earnings from the Date of the First Benefit used in the second benefit calculation.

Maximum Adjusted Earnings from the Date of the First Benefit = 200% of the total of all purchase payments that were applied to the contract more than 12 months before the date of the Co-Annuitant’s death (regardless of the date of the Annuitant’s death), proportionally adjusted for any and all surrenders taken from the contract .

After the second benefit is applied, the charge associated with the Beneficiary Protector II Option will be removed.

How the Benefit is Allocated

Any amounts credited to the contract pursuant to the Beneficiary Protector II Option will be allocated among the Sub-Accounts and the Fixed Account in the same proportion as each purchase payment is allocated to the contract on the date the benefit is applied.

10% and 5% Lifetime Income Option

The 10% Lifetime Income Option and the 5% Lifetime Income Option (collectively, the “Lifetime Income Options”) provide for lifetime withdrawals, up to a certain amount each year, even after the Contract Value is zero.  The age of the person upon which the benefit depends (the “determining life”) must be between 45 and 85 years old at the time of application.  For most contracts, the determining life is that of the Contract Owner.  For those contracts where the Contract Owner is a non-natural person, for purposes of this option, the determining life is that of the Annuitant, and all references in this option to “Contract Owner” shall mean Annuitant.  If in addition to the Annuitant, a Co-Annuitant or joint annuitant has been elected, the determining life will be that of the younger Annuitant.  The determining life may not be changed.

Although the tax treatment for surrenders under withdrawal benefits such as the Lifetime Income Optionsis not clear, Nationwide will treat the following amount of each surrender as a taxable distribution: the excess of the greater of (a) the Contract Value immediately before the surrender; or (b) the guaranteed benefit amount immediately before the surrender;

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over the remaining investment in the c ontract after the surrender.

For any surrender taken when the Contract Value is less than or equal to the total investment in the contract, Nationwide treats the surrender as a tax-free return of investment to the extent that the investment has not already been surrendered tax-free.   Please consult a qualified tax advis e r.

Availability

The 10% Lifetime Income Option is available under the contract at the time of application. The 5% Lifetime Income Option is available under the contract at the time of application for contracts issued in the State of New York.  The Lifetime Income Options are not available on beneficially owned contracts (contracts opened by a beneficiary after a contract owner’s death) .

Lifetime Income Option Charge

In exchange for the 10% Lifetime Income Option, Nationwide will assess an annual charge not to exceed 1.20% of the Current Income Benefit Base.  The current charge for the 10% Lifetime Income Option is 1.00% of the Current Income Benefit Base.  In exchange for the 5% Lifetime Income Option, Nationwide will assess an annual charge not to exceed 1.00% of the Current Income Benefit Base.  The current charge for the 5% Lifetime Income Option is 0.85% of the Current Income Benefit Base.  The charge associated with the respective Lifetime Income Option will not change, except, possibly, upon the Contract Owner’s election to reset the benefit base, as discussed herein.

The charge will be assessed on each Contract Anniversary (the “L.inc Anniversary”) and will be deducted via redemption of Accumulation Units.  A prorated charge will also be deducted upon full surrender of the contract.  Accumulation Units will be redeemed proportionally from each Sub-Account in which the Contract Owner is invested at the time the charge is taken.  Amounts redeemed as the Lifetime Income Option charge will not negatively impact calculations associated with other benefits elected or available under the contract, will not be subject to a CDSC, and will not reduce amounts available under the CDSC-free withdrawal privilege.  (See below for an explanation of what happens if application of the CDSC causes the gross surrender (the surrender amount plus the CDSC) to exceed the Lifetime Withdrawal Percentage limit).

Lifetime Income Option Investment Requirements

Election of either of the Lifetime Income Options requires that the Contract Owner, until annuitization, allocate the entire Contract Value to the Custom Portfolio Asset Rebalancing Service (see “Contract Owner Services”) or to a limited set of investment options currently available in the contract. For the list of investment options available under each Lifetime Income Option, please see “Income Benefit Investment Options” later in this prospectus.  Allocation requests to investment options other than those listed in the “Income Benefit Investment Options” section will not be honored; they will be treated as though no allocation request was submitted.  The Contract Owner may elect Dollar Cost Averaging for Living Benefits described in the “Contract Owner Services” provision.  Allocation to the Fixed Account is not permitted (except as the originating account when the Contract Owner elects Dollar Cost Averaging for Living Benefits).

Transfers Among Permitted Investment Options

The Contract Owner may reallocate the Contract Value among the limited set of investment options in accordance with the “Transfers Prior to Annuitization” provision.  The Contract Owner may reallocate the Contract Value within the Custom Portfolio Asset Rebalancing Service in accordance with that provision.  Additionally, Contract Owners may change from the Custom Portfolio Asset Rebalancing Service to the permitted investment options, and vice versa.

Subsequent Purchase Payments

Where permitted by state law, subsequent purchase payments are permitted under the elected Lifetime Income Option as long as the Contract Value is greater than zero.  There may be instances where a subsequent purchase payment creates a financial risk that Nationwide is unwilling to bear.  If this occurs, Nationwide may exercise its right to refuse subsequent purchase payments which total in aggregate $50,000 or more in any calendar year.  If Nationwide exercises this right to refuse a purchase payment, the entire purchase payment that causes the aggregate amount to exceed $50,000 will be immediately returned to the Contract Owner in the same form in which it was received.

Determination of the Income Benefit Base Prior to the First Surrender

Upon contract issuance, the Original Income Benefit Base is equal to the Contract Value.   Thereafter, Nationwide tracks, on a continuous basis, the Current Income Benefit Base.  The Current Income Benefit Base from the date of contract issuance until the first surrender will reflect any additional purchase payments and reset opportunities, as described below.

10% Lifetime Income Option.  Provided no surrenders are taken from the contract, the Current Income Benefit Base for the 10% Lifetime Income Option will equal the greater of:

(1) the highest Contract Value on any L.inc Anniversary plus purchase payments submitted after that L.inc Anniversary; or

(2) the sum of the following calculations:

(a) Original Income Benefit Base with Roll-up: the Original Income Benefit Base, plus 10% of the Original Income Benefit Base for each L.inc Anniversary up to and including the 10th L.inc Anniversary; plus

(b) Purchase Payments with Roll-up:any purchase payments submitted after contract issuance and before the 10th L.inc Anniversary, increased by simple interest at an annual rate of 10% each year through the 10th L.inc Anniversary; plus

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(c) Purchase Payments with No Roll-up: any purchase payments submitted after the 10th L.inc Anniversary.

5% Lifetime Income Option.  Provided no surrenders are taken from the contract, the Current Income Benefit Base for the 5% Lifetime Income Option will equal the greater of:

(1) the highest Contract Value on any L.inc Anniversary plus purchase payments submitted after that L.inc Anniversary; or

(2) the sum of the following calculations:

(a) Original Income Benefit Base with Roll-up: the Original Income Benefit Base, plus 5% of the Original Income Benefit Base for each L.inc Anniversary up to and including the 10th L.inc Anniversary; plus

(b) Purchase Payments with Roll-up:any purchase payments submitted after contract issuance and before the 10th L.inc Anniversary, increased by simple interest at an annual rate of 5% each year through the 10th L.inc Anniversary; plus

(c) Purchase Payments with No Roll-up: any purchase payments submitted after the 10th L.inc Anniversary.

Regardless of which Lifetime Income Option is elected, when a purchase payment is made on a date other than a L.inc Anniversary, simple interest is calculated using a prorated method based upon the number of days from the date of the purchase payment to the next L.inc Anniversary.

However, if at any time prior to the first surrender the Contract Value equals zero, no further Income Benefit Base calculations will be made.  The Current Income Benefit Base will be set equal to the Income Benefit Base calculated on the most recent L.inc anniversary, and the annual benefit amount will be based on that Current Income Benefit Base.

Lifetime Income Surrenders

At any time after the Lifetime Income Option is elected, the Contract Owner may begin taking the lifetime income benefit by taking a surrender from the contract.  The first surrender under the contract constitutes the first lifetime income surrender, even if such surrender is taken to meet minimum distribution requirements under the Internal Revenue Code.  Nationwide will surrender Accumulation Units proportionally from the Sub-Accounts as of the date of the surrender request.  As with any surrender, lifetime income surrenders reduce the Contract Value and consequently, the amount available for annuitization.

At the time of the first surrender, the Current Income Benefit Base is locked in and will not change unless the Contract Owner takes excess surrenders, elects a reset opportunity (both discussed later in this provision), or submits additional purchase payments.  Additional purchase payments submitted after the first surrender from the contract will increase the Current Income Benefit Base by the amount of the purchase payment.

Simultaneously, the Lifetime Withdrawal Percentage is determined based on the age of the Contract Owner as indicated in the following table:

Contract Owner’s Age (at time of first surrender)	Lifetime Withdrawal Percentage
45 up to 59½	3%
59½ through 64	4%
65 through 80	5%
81 and older	6%

A Contract Owner will receive the 6% Lifetime Withdrawal Percentage only if he or she does not take a surrender from the contract prior to age 81.  Note: The Internal Revenue Code requires that IRAs, SEP IRAs, and Simple IRAs begin distributions no later than April 1 of the calendar year following the calendar year in which the Contract Owner reaches age 70½.  Thus, if the contract is subject to these minimum distribution rules and distributions are taken at the latest date possible under the tax rules, the maximum Lifetime Withdrawal Percentage available to that contract is 5%.  Contract Owners may be eligible to take the minimum required distributions from other IRA, SEP IRA, or Simple IRA contracts or accounts, and thus may be able to receive a Lifetime Withdrawal Percentage greater than 5%.  Consult a qualified tax advis e r.

At the time of the first surrender and on each L.inc Anniversary thereafter, the Lifetime Withdrawal Percentage is multiplied by the Current Income Benefit Base to determine the benefit amount for that year.  The benefit amount is the maximum amount that can be surrendered from the contract before the next L.inc Anniversary without reducing the Current Income Benefit Base.  The ability to surrender the current benefit amount will continue until the earlier of the Contract Owner’s death or annuitization.

The Contract Owner can elect to set up systematic surrenders or can request each surrender separately.  All lifetime income surrender requests must be made on a Nationwide form available by contacting Nationwide’s home office at the phone number and address shown on page 1 of this prospectus.

Each year’s benefit amount is non-cumulative.  A Contract Owner cannot take a previous year’s benefit amount in a subsequent year without causing an excess surrender (see below) that will reduce the Current Income Benefit Base.   Although surrenders up to the benefit amount do not reduce the Current Income Benefit Base, they do reduce the Contract Value and the death benefit, and are subject to the CDSC provisions of the contract.

If a CDSC does apply, application of the CDSC could cause the gross surrender (the surrender amount plus the CDSC) to exceed the Lifetime Withdrawal Percentage limit.  To avoid this, the Contract Owner can request to receive the surrender net of the CDSC amount.  The gross amount of the surrender (including the CDSC) is the amount used to determine whether the surrender exceeds the Lifetime Withdrawal Percentage limit.

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Impact of Withdrawals in Excess of the Withdrawal Percentage Limit

The Contract Owner is permitted to surrender Contract Value in excess of that year’s benefit amount provided that the Contract Value is greater than zero.  Surrenders in excess of the benefit amount will reduce the Current Income Benefit Base, and consequently, the benefit amount calculated for subsequent years.  In the event of excess surrenders, the Current Income Benefit Base will be reduced by the greater of:

(1)   the dollar amount of the surrender in excess of the benefit amount; or

(2)   a figure representing the proportional amount of the withdrawal.  This amount is determined by the following formula:

dollar amount of the excess surrender	X	Current Income Benefit Base prior to the surrender
Contract Value (reduced by the amount of the benefit amount surrendered)

In situations where the Contract Value exceeds the existing Current Income Benefit Base, excess surrenders will typically result in a dollar amount reduction to the new Current Income Benefit Base.  In situations where the Contract Value is less than the existing Current Income Benefit Base, excess surrenders will typically result in a proportional reduction to the new Current Income Benefit Base.

Currently, Nationwide allows for an “RMD privilege” whereby Nationwide permits a Contract Owner to surrender Contract Value in excess of the benefit amount without reducing the Current Income Benefit Base if such excess surrender is for the sole purpose of meeting Internal Revenue Code required minimum distributions for this contract.  This RMD privilege does not apply to beneficially owned contracts.  In order to qualify for the RMD privilege, the Contract Owner must:

(1) be at least 70 ½ years old as of the date of the request;

(2) own the contract as an IRA, SEP IRA, Simple IRA, or Investment-Only Contract; and

(3) submit a completed administrative form in advance of the withdrawal to Nationwide’s home office which can be obtained by contacting Nationwide’s home office at the telephone number listed on page 1 of this prospectus.

Nationwide reserves the right to modify or eliminate the RMD privilege if there is any change to the Internal Revenue Code or IRS rules relating to required minimum distributions, including the issuance of relevant IRS guidance.  If Nationwide exercises this right, Nationwide will provide notice to Contract Owners and any surrender in excess of the benefit amount will reduce the remaining Current Income Benefit Base.

Once the Contract Value falls to zero, the Contract Owner is no longer permitted to submit additional purchase payments or take surrenders in excess of the benefit amount.  Additionally, there is no Contract Value to annuitize, making the payment of the benefit associated with this option the only income stream producing benefit remaining in the contract.

Reset Opportunities

Nationwide offers an automatic reset of the income benefit base.  If, on any L.inc Anniversary, the Contract Value exceeds the Current Income Benefit Base, Nationwide will automatically reset the Current Income Benefit Base to equal that Contract Value.  This higher amount will be the new Current Income Benefit Base.  This automatic reset will continue until any terms and conditions associated with the Lifetime Income Option change.

In the event one or more terms and conditions of the Lifetime Income Option change, the reset opportunities still exist, but are not longer automatic.  An election to reset the Current Income Benefit Base must be made by the Contract Owner to Nationwide.  On or about each L.inc Anniversary, Nationwide will provide the Contract Owner with information necessary to make this determination.  Specifically, Nationwide will provide: the Contract Value; the Current Income Benefit Base; the current terms and conditions associated with the respective Lifetime Income Option; and instructions on how to communicate an election to reset the benefit base.

If the Contract Owner elects to reset the Current Income Benefit Base, it will be at the then current terms and conditions of the respective Lifetime Income Option as described in the most current prospectus.  If Nationwide does not receive a Contract Owner’s election to reset the Current Income Benefit Base within 60 days after the L.inc Anniversary, Nationwide will assume that the Contract Owner does not wish to reset the Current Income Benefit Base.  If the Current Income Benefit Base is not reset, it will remain the same and the terms and conditions of the Lifetime Income Option will not change (as applicable to that particular contract).

Contract Owners may cancel the automatic reset feature of the Lifetime Income Option by notifying Nationwide as to such election.  Nationwide reserves the right to modify or terminate the automatic reset feature at any time upon written notice to Contract Owners.

Settlement Options

If, after beginning the lifetime income surrenders, a Contract Owner’s Contract Value falls to zero and there is still a positive Current Income Benefit Base, Nationwide will provide the Contract Owner with one or more settlement options (in addition to the ability to continue annual benefit payments).  Specifically, Nationwide will provide a notification to the Contract Owner describing the following three options, along with instructions on how to submit the election to Nationwide:

(1)   The Contract Owner can continue to take annual surrenders of no more than the annual benefit amount until the death of the Contract Owner;

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(2)   The Contract Owner can elect the Age Based Lump Sum Settlement Option, as described below; or

(3)   If the Contract Owner qualifies after a medical examination, the Contract Owner can elect the Underwritten Lump Sum Settlement Option, as described below.

The options above each result in a different amount ultimately received under the respective Lifetime Income Option.  The Underwritten Lump Sum Settlement Option will generally pay a larger amount than the Age Based Lump Sum Settlement Option when a Contract Owner is healthier than the normal population.  Regardless of age or health, the Underwritten Lump Sum Settlement Option amount will never be less than the Age Based Lump Sum Settlement Option amount.  Election of the Age Based Lump Sum Settlement Option enables the Contract Owner to receive payment without a medical exam, which could potentially delay payment.  Before selecting a settlement option, consult with a qualified financial advis e r to determine which option is best for you based on your individual financial situation and needs.

The Contract Owner will have 60 days from the date of Nationwide’s notification letter to make an election.  Once the Contract Owner makes an election, the election is irrevocable.  If the Contract Owner does not make an election within the 60 days of the date of the notification letter, Nationwide will assume that the Contract Owner intends to continue to take surrenders of the annual benefit amount.   If the Contract Owner had requested systematic surrenders of the annual benefit amount prior to the notice, those systematic surrenders will continue.  If the Contract Owner had not requested systematic surrenders prior to the notice, the Contract Owner may request systematic surrenders by contacting Nationwide at the phone number and address shown on page 1.  If a Contract Owner does not establish systematic surrenders of the annual benefit amount and fails to request their benefit amount in a given year, that year’s annual benefit amount is forfeited.

Age Based Lump Sum Settlement Option.  Under the Age Based Lump Sum Settlement Option, in lieu of taking surrenders of the annual benefit amount, Nationwide will pay the Contract Owner a lump sum equal to the Contract Owner’s most recently calculated annual benefit amount multiplied by the Annual Benefit Multiplier listed below:

Contract Owner’s Age (as of the date the Age Based Lump Sum Option is elected)	Annual Benefit Multiplier
Up to Age 70	5.5
71-75	4.5
76-80	3.5
81-85	2.5
86-90	2.0
91-95	1.5
96+	1.0

For contracts that have elected the Spousal Continuation Benefit, if both spouses are living on the date the Age Based Lump Sum Settlement Option is elected, Nationwide will use the age of the younger spouse minus three years to determine the Annual Benefit Multiplier.  If only one spouse is living on the date the Age Based Lump Sum Settlement Option is elected, Nationwide will use the age of the living spouse to determine the Annual Benefit Multiplier.

Underwritten Lump Sum Settlement Option.  Under the Underwritten Lump Sum Settlement Option, in lieu of taking surrenders of the annual benefit amount, for those who qualify based on a medical exam, Nationwide will pay the Contract Owner a lump sum based upon the attained age, sex, and health of the Contract Owner (and spouse if the Spousal Continuation Benefit is elected).  Once Nationwide receives the Contract Owner’s election to take the Underwritten Lump Sum Settlement Option, Nationwide will provide the Contract Owner with a medical examination form, which must be completed by a certified physician chosen by the Contract Owner and returned to Nationwide’s home office within 30 days.  Upon completion of underwriting by Nationwide, the lump sum settlement amount is issued to the Contract Owner. If Nationwide does not receive the completed form within the 30-day period, Nationwide will pay the Contract Owner the amount that would be payable under the Age Based Lump Sum Settlement Option.

Annuitization

If the Contract Owner elects to annuitize the contract, the Lifetime Income Option will terminate.  Specifically, the charge associated with the option will no longer be assessed and all benefits associated with the Lifetime Income Option will terminate.

Death of Determining Life

For contracts with no Spousal Continuation Benefit, upon the death of the determining life, the benefits associated with the option terminate.  If the Contract Owner is also the Annuitant, the death benefit will be paid in accordance with the “Death Benefits” provision.  If the Contract Owner is not the Annuitant, the Contract Value will be distributed in accordance with the “Required Distributions” section of “Appendix C: Contract Types and Tax Information.”

For contracts with the Spousal Continuation Benefit, upon the death of the determining life, the surviving spouse continues to receive the same benefit associated with the elected Lifetime Income Option which had been received by the deceased spouse, for the remainder of the survivor’s lifetime.  The Contract Value will reflect the death benefit and Spousal Protection Feature.

10% and 5% Spousal Continuation Benefit

At the time the 10% Lifetime Income Option or the 5% Lifetime Income Option is elected (at time of application), the Contract Owner may elect the corresponding Spousal Continuation Benefit (not available for contracts issued as Charitable Remainder Trusts).  The charge for the 10% Spousal Continuation Benefit will not exceed 0.30% of the Current Income Benefit Base.  The current charge for the 10% Spousal Continuation Benefit is 0.20% of the Current Income

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Benefit Base.  The 10% Spousal Continuation Benefit is only available for contracts issued in jurisdictions other than the State of New York.  The charge for the 5% Spousal Continuation Benefit will not exceed 0.15% of the Current Income Benefit Base.  The 5% Spousal Continuation Benefit is only available for contracts issued in the State of New York.

The Spousal Continuation Benefit allows a surviving spouse to continue to receive, for the duration of his/her lifetime, the benefit associated with the respective Lifetime Income Option, provided that the following conditions are satisfied:

(1)   Both spouses must be between 45 and 85 years old at the time of application.

(2)   Both spouses must be at least age 45 before either spouse is eligible to begin withdrawals. Note: the Internal Revenue Code imposes a penalty tax if a distribution is made before the Contract Owner reaches age 59½ unless certain exceptions are met.  See “Federal Tax Considerations” in “Appendix C: Contract Types and Tax Information” for additional information.

(3)   Once the Spousal Continuation Benefit is elected, it may not be removed from the contract, except as provided below.

(4)   The Lifetime Withdrawal Percentage will be based on the age of the younger spouse as of the date of the first surrender from the contract.

(5)   One or both spouses (or a revocable trust of which either or both of the spouses is/are grantor(s)) must be named as the Contract Owner.  For contracts issued as IRAs and Roth IRAs, only the person for whom the IRA or Roth IRA was established may be named as the Contract Owner.

(6)   Both spouses must be named as beneficiaries.  For contracts with non-natural owners, both spouses must be named as Co-Annuitants.

(7)   No person other than the spouse may be named as Contract Owner, Annuitant or beneficiary.

(8)   If both spouses are alive upon annuitization, the Contract Owner must specify which spouse is the Annuitant upon whose continuation of life any annuity payments involving life contingencies depend (for IRA and Roth IRA contracts, this person must be the Contract Owner).

Note: The Spousal Continuation Benefit is distinct from the Spousal Protection Feature associated with the death benefits. The Spousal Continuation Benefit allows a surviving spouse to continue receiving the lifetime income payments associated with the elected Lifetime Income Option.  In contrast, the Spousal Protection Feature is a death benefit bump-up feature associated with the death benefits.

Marriage Termination

If, prior to taking any surrenders from the contract, the marriage terminates due to divorce, dissolution, or annulment, the Contract Owner may remove the Spousal Continuation Benefit from the contract. Nationwide will remove the benefit and the associated charge upon the Contract Owner’s written request and evidence of the marriage termination satisfactory to Nationwide.  Once the Spousal Continuation Benefit is removed from the contract, the benefit may not be re-elected or added to cover a subsequent spouse.

If, after taking any surrender from the contract, the marriage terminates due to divorce, dissolution, or annulment, the Contract Owner may not remove the Spousal Continuation Benefit from the contract.

Risks Associated with Electing the Spousal Continuation Benefit

There are situations where a Contract Owner who elects the Spousal Continuation Benefit will not receive the benefits associated with the option.  This will occur if:

(1)   your spouse (as indicated at the time of application) dies before you;

(2)   the contract is annuitized; or

(3)   withdrawals are taken after the withdrawal start date and the marriage terminates due to divorce, dissolution, or annulment.

Additionally, in the situations described in (1) and (3) above, not only will the Contract Owner not receive the benefits associated with the Spousal Continuation Benefit, but he/she must continue to pay for the option and comply with all of the terms and conditions associated with the respective Lifetime Income Option, including the investment option requirements, until annuitization.

Note: Some states have different requirements relating to spousal benefits.  Please see “Appendix D: State Variations.”

Income Benefit Investment Options

The following investment options are the only investment options available for contracts that have elected a Lifetime Income Option:

Custom Portfolio Asset Rebalancing Service (see “Contract Owner Services” later in this prospectus)

·    Balanced

·    Capital Appreciation

·    Conservative

·    Moderate

·    Moderately Conservative

Fidelity Variable Insurance Products Fund

·   VIP Freedom 2010 Portfolio: Service Class 2

·   VIP Freedom 2020 Portfolio: Service Class 2

Nationwide Variable Insurance Trust

·   American Funds NVIT Asset Allocation Fund: Class II

·   NVIT Cardinal Balanced Fund: Class II

·   NVIT Cardinal Capital Appreciation Fund: Class II

·   NVIT Cardinal Conservative Fund: Class II

·   NVIT Cardinal Moderate Fund: Class II

·   NVIT Cardinal Moderately Conservative Fund: Class II

·   NVIT Investor Destinations Balanced Fund: Class II

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·   NVIT Investor Destinations Capital Appreciation Fund: Class II

·   NVIT Investor Destinations Conservative Fund: Class II

·   NVIT Investor Destinations Moderate Fund: Class II

·    NVIT Investor Destinations Moderately Conservative Fund: Class II

Static Asset Allocation Model (see below)

·   American Funds Option (33% NVIT - American Funds NVIT Asset Allocation Fund, 33% NVIT - American Funds NVIT Bond Fund and 34% NVIT - American Funds NVIT Growth-Income Fund)

Note: Some of the investment options listed above are funds of funds.  Please refer to “Appendix A: Underlying Mutual Funds” for more information.

Static Asset Allocation Model

A Static Asset Allocation Model is an allocation strategy comprised of two or more underlying mutual funds that together provide a unique allocation mix not available as a single underlying mutual fund.  Contract Owners that elect a Static Asset Allocation Model directly own Sub-Account units of the underlying mutual funds that comprise the particular model.  In other words, a Static Asset Allocation Model is not a portfolio of underlying mutual funds with one Accumulation Unit/Annuity Unit value, but rather, direct investment in a certain allocation of Sub-Accounts.  There is no additional charge associated with investing in a Static Asset Allocation Model.

The Static Asset Allocation Model is just that: static.  The allocations or “split” between one or more Sub-Accounts is not monitored and adjusted to reflect changing market conditions.  However, a Contract Owner’s investment in a Static Asset Allocation Model is rebalanced quarterly to ensure that the assets are allocated to the percentages in the same proportion that they were allocated at the time of election.  The entire contract value must be allocated to the elected model.

With respect to transferring into and out of a Static Asset Allocation Model, the model is treated like an underlying mutual fund and is subject to the “Transfers Prior to Annuitization” provision.  You may request to transfer from a model to a permitted underlying mutual fund.  Each transfer into or out of a Static Asset Allocation Model is considered one transfer event.

For additional information about the underlying mutual funds that comprise the Static Asset Allocation Model, see “Appendix A: Underlying Mutual Funds.”

Removal of Variable Account Charges

The Mortality and Expense Risk Charge and the Administrative Charge apply for the life of the contract.  The charge for each optional benefit is assessed until annuitization, except for the Beneficiary Protector II Option Charge, which is removed after the benefit associated with that feature is paid.  To remove the charge, Nationwide systematically re-rates the contract.  This re-rating results in lower contract charges, but no change in Contract Value or any other contractual benefit.

Re-rating involves two steps: the adjustment of contract expenses and the adjustment of the number of units in the contract.

The first step, the adjustment of contract expenses, involves removing the charge from the unit value calculation.  For example, on a contract in its third Contract Year where the only optional benefit elected is the Beneficiary Protector II Option, the Variable Account value will be calculated using unit values with Variable Account charges of 2.20%.  Once the benefit is paid, the charge associated with the Beneficiary Protector II option will be removed.  From that point on (until the end of the 8th Contract Year), the Variable Account value will be calculated using the unit values with Variable Account charges at 1.85%.  Thus, the Beneficiary Protector II Option charge is no longer included in the daily Sub-Account valuation for the contract.

The second step of the re-rating process, the adjustment of the number of units in the contract, is necessary in order to keep the re-rating process from altering the Contract Value.  Generally, for any given Sub-Account, the higher the Variable Account charges, the lower the unit value, and vice versa.  For example, Sub-Account X with charges of 2.20% will have a lower unit value than Sub-Account X with charges of 1.85% (higher expenses result in lower unit values).  When, upon re-rating, the unit values used in calculating Variable Account value are dropped from the higher expense level to the lower expense level, the higher unit values will cause an incidental increase in the Contract Value.  In order to avoid this incidental increase, Nationwide adjusts the number of units in the contract down so that the Contract Value after the re-rating is the same as the Contract Value before the re-rating.

Ownership and Interests in the Contract

Contract Owner

Prior to the Annuitization Date, the Contract Owner has all rights under the contract, unless a joint owner is named.  If a joint owner is named, each joint owner has all rights under the contract.  Purchasers who name someone other than themselves as the Contract Owner will have no rights under the contract.

On the Annuitization Date, the Annuitant becomes the Contract Owner, unless the Contract Owner is a Charitable Remainder Trust.  If the Contract Owner is a Charitable Remainder Trust, the Charitable Remainder Trust continues to be the Contract Owner after annuitization.

Contract Owners of Non-Qualified Contracts may name a new Contract Owner at any time before the Annuitization Date.  Any change of Contract Owner automatically revokes any prior Contract Owner designation.  Changes in contract ownership may result in federal income taxation and may be subject to state and federal gift taxes.

Joint Owner

Joint owners each own an undivided interest in the contract.

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Non-Qualified Contract Owners can name a joint owner at any time before annuitization.  However, joint owners must be spouses at the time joint ownership is requested, unless state law requires Nationwide to allow non-spousal joint owners.

Generally, the exercise of any ownership rights under the contract must be in writing and signed by both joint owners.  However, if a written election, signed by both Contract Owners, authorizing Nationwide to allow the exercise of ownership rights independently by either joint owner is submitted, Nationwide will permit joint owners to act independently.  If such an authorization is submitted, Nationwide will not be liable for any loss, liability, cost, or expense for acting in accordance with the instructions of either joint owner.

If either joint owner dies before the Annuitization Date, the contract continues with the surviving joint owner as the remaining Contract Owner.

Contingent Owner

The contingent owner succeeds to the rights of a Contract Owner if a Contract Owner who is not the Annuitant dies before the Annuitization Date, and there is no surviving joint owner.

If a Contract Owner who is the Annuitant dies before the Annuitization Date, the contingent owner will not have any rights under the contract, unless such contingent owner is also the beneficiary.

The Contract Owner may name a contingent owner at any time before the Annuitization Date.

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 85 or younger at the time of contract issuance, unless Nationwide approves a request for an Annuitant of greater age.

Only Non-Qualified Contract Owners may name someone other than himself/herself as the Annuitant.

The Contract Owner may not name a new Annuitant without Nationwide's consent.

Contingent Annuitant

If the Annuitant dies before the Annuitization Date, the contingent annuitant becomes the Annuitant.  The contingent annuitant must be age 85 or younger at the time of contract issuance, unless Nationwide approves a request for a contingent annuitant of greater age.

If a contingent annuitant is named, all provisions of the contract that are based on the Annuitant's death prior to the Annuitization Date will be based on the death of the last survivor of the Annuitant and contingent annuitant.

Co-Annuitant

A Co-Annuitant, if named, must be the Annuitant's spouse.  The Co-Annuitant must be at the time of application and will receive the benefit of the Spousal Protection Feature, provided all of the requirements set forth in the “Spousal Protection Feature” provision are met.

If either Co-Annuitant dies before the Annuitization Date, the surviving Co-Annuitant may continue the contract and will receive the benefit of the Spousal Protection Feature.

Joint Annuitant

The joint annuitant is designated as a second person (in addition to the Annuitant) upon whose continuation of life any annuity payment involving life contingencies depends.  The joint annuitant is named at the time of annuitization.

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 joint owner.  The Contract Owner can name more than one beneficiary.  Multiple beneficiaries will share the death benefit equally, unless otherwise specified.

A contingent beneficiary will succeed to the rights of the beneficiary if no beneficiary is alive when a death benefit is paid.  The Contract Owner can name more than one contingent beneficiary.  Multiple contingent beneficiaries will share the death benefit equally, unless otherwise specified.

Changes to the Parties to the Contract

Prior to the Annuitization Date (and subject to any existing assignments), the Contract Owner may request to change the following:

·   Contract Owner (Non-Qualified Contracts only);

·   joint owner (must be the Contract Owner's spouse);

·   contingent owner;

·   Annuitant (subject to Nationwide's underwriting and approval);

·   contingent annuitant (subject to Nationwide's underwriting and approval);

·   Co-Annuitant (must be the Annuitant's spouse);

·   beneficiary; or

·   contingent beneficiary.

The Contract Owner must submit the request to Nationwide in writing and Nationwide must receive the request at its home office before the Annuitization Date.  Once Nationwide receives and records the change request, the change will be effective as of the date the written request was signed, whether or not the Contract Owner or Annuitant is living at the time it was recorded.  The change will not affect any action taken by Nationwide before the change was recorded.

In addition to the above requirements, any request to change the Contract Owner must be signed by the existing Contract Owner and the person designated as the new Contract Owner.  Nationwide may require a signature guarantee.

If the Contract Owner is not a natural person and there is a change of the Annuitant, distributions will be made as if the Contract Owner died at the time of the change, regardless of whether the Contract Owner named a contingent annuitant.

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Nationwide reserves the right to reject any change request that would alter the nature of the risk that Nationwide assumed when it originally issued the contract.

Operation of the Contract

Extra Value Credits

For the first Contract Year, Nationwide will apply a Credit to the contract equal to 5% of each purchase payment made to the contract.  The Credit, which is funded from Nationwide’s general account, will be allocated among the Sub-Accounts and the Fixed Account in the same proportion and at the same time that the purchase payment is allocated to the contract.  For purposes of all benefits and taxes under these contracts, Credits are considered earnings, not purchase payments.

Recapture of Credits

If the Contract Owner cancels the contract pursuant to the contractual free-look provision, Nationwide will recapture all Credits applied to the contract.  In those states that require the return of purchase payments for IRAs that are surrendered pursuant to the contractual free-look, Nationwide will recapture all of the Credits applied to the contract, but under no circumstances will the amount returned be less than the purchase payments made to the contract.  In those states that allow a return of contract value, the Contract Owner will retain any earnings attributable to the Credits, but all losses attributable to the Credits will be incurred by Nationwide.

After the expiration of the free-look period, the Credits will be fully vested and no longer subject to recapture.

Pricing

Generally, Nationwide prices Accumulation Unit values of the Sub-Accounts on each day that the New York Stock Exchange is open.  (Pricing is the calculation of a new Accumulation Unit value that reflects that day's investment experience.)

Accumulation Units are not 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, surrenders or transfers 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.

Application and Allocation of Purchase Payments

Initial Purchase Payments

Initial purchase payments wills be priced at the Accumulation Unit value next determined no later than 2 business days after receipt of an order to purchase if the application and all necessary information are complete and are received at Nationwide's home office before the close of the New York Stock Exchange, which generally occurs at 4:00 p.m. Eastern Time.  If the order is received after the close of the New York Stock Exchange, the initial purchase payment will be priced within 2 business days after the next business day.

If an incomplete application is not completed within 5 business days of receipt at Nationwide's home office, the prospective purchaser will be informed of the reason for the delay.  The purchase payment will be returned unless the prospective purchaser specifically consents to allow Nationwide to hold the purchase payment until the application is completed.

In some states, Nationwide will allocate initial purchase payments to the money market Sub-Account during the free look period.  After the free look period, Nationwide will reallocate the Contract Value among the investment options based on the instructions contained on the application.  In other states, Nationwide will immediately allocate initial purchase payments to the investment options based on the instructions contained on the application.

Subsequent Purchase Payments

Any subsequent purchase payment received at Nationwide's home office (along with all necessary information) before the close of the New York Stock Exchange will be priced at the Accumulation Unit value next determined after receipt of the purchase payment.  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.

Allocation of Purchase Payments

Nationwide allocates purchase payments to Sub-Accounts 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.

Contract Owners can change allocations or make exchanges among the Sub-Accounts.  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.  In the event that Nationwide receives such a request, Nationwide will inform the Contract Owner that the allocation instructions are invalid and that the contract's allocations among the Sub-Accounts prior to the request will remain in effect.  Certain transactions may be subject to conditions imposed by the underlying mutual funds.

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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 (including any Credits applied to the contract); and

(2)   amounts allocated to the Fixed Account (including any Credits applied to the contract).

If 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

Sub-Account allocations 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.

(c)   is a factor representing the daily total Variable Account charges, which may include charges for optional benefits elected by the Contract Owner.  The factor is equal to an annualized rate ranging from 1. 85 % to 2.65% of the Daily Net Assets of the Variable Account, depending on which optional benefits the Contract Owner elects.

Note: The range shown above reflects only those Variable Account charges that are assessed daily as part of the daily Accumulation Unit calculation.  It does not reflect the cost of other optional benefits that assess charges via the redemption of Accumulation Units (e.g., the Lifetime Income Options).

Based on the change in 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, plus any Credits applied, minus amounts previously transferred or surrendered;

(2)   adding any interest earned on the amounts allocated to the Fixed Account; and

(3)   subtracting charges deducted in accordance with the contract.

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 the 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”).

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

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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 process 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 trade 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 two 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.

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.

Managers of Multiple Contracts

Some investment advisers/representatives manage the assets of multiple Nationwide contracts pursuant to trading authority granted or conveyed by multiple Contract Owners.  These multi-contract advisers 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 advisers, 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 advisersto continue to submit transfer requests via the internet or telephone.  However, transfer requests submitted by multi-contract advisers 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 advisers 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.

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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 requests to exchange into an underlying mutual fund 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 requests to exchange into an underlying mutual fund.  If an underlying mutual fund refuses to accept a purchase or request to exchange into the underlying mutual fund 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

A Contract Owner may request to transfer allocations from the Fixed Account to the Sub-Accounts only upon reaching the end of a Fixed Account interest rate guarantee period.  Fixed Account transfers must be made within 45 days after the end of the interest rate guarantee period.  The Fixed Account interest rate guarantee period is the period of time that the Fixed Account interest rate is guaranteed to remain the same.

Normally, Nationwide will permit 100% of the maturing Fixed Account allocations to be transferred.  However, Nationwide may limit the amount that can be transferred from the Fixed Account.  Nationwide will determine the amount that may be transferred and will declare this amount at the end of the Fixed Account interest rate guarantee period.  The maximum transferable amount will never be less than 10% of the Fixed Account allocation reaching the end of a Fixed Account interest rate guarantee period.

Contract Owners who use Dollar Cost Averaging may transfer from the Fixed Account under the terms of that program.

Nationwide is required by state law to reserve the right to postpone the transfer of assets from the Fixed Account for a period of up to 6 months from the date of the transfer request.

Transfers from the Sub-Accounts

A Contract Owner may request to transfer allocations from the Sub-Accounts to the Fixed Account.  Nationwide reserves the right to limit or refuse transfers to the Fixed Account.

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, the portion of the Contract Value allocated to fixed annuity payments and the portion of the Contract Value allocated to variable annuity payments may not be changed.

After annuitization, transfers among Sub-Accounts 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.  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 for free look cancellations, Nationwide will return all purchase payments applied to the contract, less any applicable federal and state income tax withholding.  Nationwide will recapture all of the Credits applied to the contract, but under no circumstances will the amount returned be less than the purchase payments made to the contract.

Where state law requires the return of Contract Value for free look cancellations, Nationwide will return the Contract Value as of the date of the cancellation, less any applicable federal and state income tax withholding.  Nationwide willl recapture all of the Credits applied to the contract.  The Contract Owner will retain any earnings attributable to the Credits, but all losses attributable to the Credits will be incurred by Nationwide.

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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.

Allocation of Purchase Payments during Free Look Period

Where state law requires the return of purchase payments for free look cancellations, Nationwide will allocate initial purchase payments allocated to Sub-Accounts to the money market Sub-Account during the free look period.

Where state law requires the return of Contract Value for free look cancellations, Nationwide will immediately allocate initial purchase payments to the investment options based on the instructions contained on the application.

Surrender (Redemption) Prior to Annuitization

Prior to annuitization and before the Annuitant's death, Contract Owners may generally surrender some or all of their Contract Value.  Surrenders from the contract may be subject to federal income tax and/or a tax penalty.  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 amounts surrendered from the Sub-Accounts within 7 days (See “Pricing”).  However, Nationwide may suspend or postpone payment when it is unable to price a purchase payment or transfer.

Nationwide is required by state law to reserve the right to postpone payment of assets in the Fixed Account for a period of up to 6 months from the date of the surrender request.

Partial Surrenders (Partial Redemptions)

If a Contract Owner requests a partial surrender, 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.

Partial surrenders are subject to the CDSC provisions of the contract.  If a CDSC is assessed, the Contract Owner may elect to have the CDSC deducted from either:

(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 deducted from the amount requested by the Contract Owner.

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 advis e r(s) to manage their assets, for which the investment advis e r assesses a fee.  Investment advis e rs 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 advis e r 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)

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

·   Variable Account charges;

·   underlying mutual fund charges;

·   a $30 Contract Maintenance Charge (this charge will be waived upon full surrender if the Contract Value is equal to or greater than $50,000 at the time of the full surrender or on any Contract Anniversary prior to the full surrender);

·   the investment performance of the underlying mutual funds;

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

·   Extra Value Credits (if applicable).

Full surrenders are subject to the CDSC provisions of the contract, where permitted by state law.  The CDSC-free withdrawal privilege does not apply to full surrenders of the contract.  For purposes of the CDSC free withdrawal privilege, a full surrender is:

·   multiple surrenders taken within a Contract Year that deplete the entire Contract Value; or

·   any single net surrender of 90% or more of the Contract Value.

Surrender (Redemption) After Annuitization

After the Annuitization Date, surrenders other than regularly scheduled annuity payments are not permitted.

Assignment

Contract rights are personal to the Contract Owner and may not be assigned without Nationwide's written consent.  Nationwide reserves the right to refuse to recognize assignments that alter the nature of the risks that Nationwide assumed when it originally issued the contract.

A Non-Qualified Contract Owner may assign some or all rights under the contract.  An assignment must occur before

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annuitization while the Annuitant is alive.  Once proper notice of assignment is recorded by Nationwide's home office, the assignment will become effective.

Investment-Only Contracts, IRAs, Roth IRAs, SEP IRAs, and Simple IRAs may not be assigned, pledged or otherwise transferred except where allowed by law.

Nationwide is not responsible for the validity or tax consequences of any assignment.  Nationwide is not liable for any payment or settlement made before the assignment is recorded.  Assignments will not be recorded until Nationwide

receives sufficient direction from the Contract Owner and the assignee regarding the proper allocation of contract rights.

Amounts pledged or assigned will be treated as distributions and will be included in gross income to the extent that the cash value exceeds the investment in the contract for the taxable year in which it was pledged or assigned.  Amounts assigned may be subject to a tax penalty equal to 10% of the amount included in gross income.

Assignment of the entire Contract Value may cause the portion of the Contract Value exceeding the total investment in the contract and previously taxed amounts to be included in gross income for federal income tax purposes each year that the assignment is in effect.

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.

Contract Owners should consult a financial adviser to discuss the use of Asset Rebalancing.

Nationwide reserves the right to stop establishing new Asset Rebalancing programs.

Dollar Cost Averaging

Dollar Cost Averaging is a long-term transfer program that allows you to make regular, level investments over time.  It involves the automatic transfer of a specified amount from the Fixed Account and/or certain Sub-Accounts into other Sub-Accounts.  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:

Fidelity Variable Insurance Products Fund

·   VIP Investment Grade Bond Portfolio: Service Class 2

Neuberger Berman Advisers Management Trust

·   AMT Short Duration Bond Portfolio:  I Class

Nationwide Variable Insurance Trust

·   NVIT Government Bond Fund: Class I

·   NVIT Investor Destinations Funds: Class II

Ø   NVIT Investor Destinations Conservative Fund: Class II

·   NVIT Money Market Fund: Class I

to any other underlying mutual fund(s).  Dollar Cost Averaging transfers may not be directed to the Fixed Account.

Transfers occur monthly or on another frequency if permitted by Nationwide.  Dollar Cost Averaging transfers are not considered transfer events.  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.

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 whether any Enhanced Fixed Account Dollar Cost Averaging programs are available.

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

Nationwide may, periodically, offer Enhanced Fixed Account Dollar Cost Averaging programs.  Only new purchase payments to the contract are eligible for Enhanced Fixed Account Dollar Cost Averaging.

Enhanced Fixed Account Dollar Cost Averaging involves the automatic transfer of a specific amount from the Fixed Account into the Sub-Accounts.  Enhanced Fixed Account Dollar Cost Averaging transfers may not be directed to the Fixed Account.  Amounts allocated to the Fixed Account as part of an Enhanced Fixed Account Dollar Cost Averaging program earn a higher rate of interest than other assets allocated to the Fixed Account.  Each enhanced interest rate is guaranteed for as long as the corresponding program is in effect.

Transfers occur monthly or on another frequency if permitted by Nationwide.  Enhanced Fixed Account Dollar Cost Averaging transfers are not considered transfer events.  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.  For Enhanced Fixed Account Dollar Cost Averaging, when a

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Contract Owner instructs Nationwide to stop the transfers, Nationwide will automatically transfer any amount remaining in the Fixed Account as part of the program according to future investment allocation instructions .

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 transfers as part of an Enhanced Fixed Account Dollar Cost Averaging program, for a period of up to 6 months from the date of the transfer request.

Dollar Cost Averaging for Living Benefits

Nationwide may periodically offer Dollar Cost Averaging programs with the Lifetime Income Options referred to as “Dollar Cost Averaging for Living Benefits.”  Dollar Cost Averaging for Living Benefits involves the automatic transfer of a specific amount from the Fixed Account into another Sub-Account(s).  With this service, the Contract Owner benefits from the ability to invest in the Sub-Account over a period of time, thereby smoothing out the effects of market volatility.

Only new purchase payments to the contract are eligible for Dollar Cost Averaging for Living Benefits.  Nationwide reserves the right to require a minimum balance to establish this program.  Additionally, only those Sub-Accounts available for the elected Lifetime Income Option are available for use in Dollar Cost Averaging for Living Benefits -- transfers may not be directed to the Fixed Account or to any investment option that is unavailable with the respective Lifetime Income Option.  Please refer to “Income Benefit Investment Options” earlier in this prospectus for the investment options available for each Lifetime Income Option.

Once a Dollar Cost Averaging for Living Benefits program has begun, no transfers among or between Sub-Accounts is permitted until the Dollar Cost Averaging for Living Benefits program is completed or terminated.  The interest rate credited on amounts applied to the Fixed Account as part of Dollar Cost Averaging for Living Benefits programs may vary depending on the Lifetime Income Option elected.

Fixed Account Interest Out Dollar Cost Averaging

Nationwide may, periodically, offer Fixed Account Interest Out Dollar Cost Averaging programs.  Fixed Account Interest Out Dollar Cost Averaging involves the automatic transfer of the interest earned on Fixed Account allocations into any other Sub-Accounts.  Fixed Account Interest Out Dollar Cost Averaging transfers may not be directed to the Fixed Account.

Transfers occur monthly or on another frequency if permitted by Nationwide.  Fixed Account Interest Out Dollar Cost Averaging transfers are not considered transfer events.  Nationwide will continue to process transfers until the Contract Owner instructs Nationwide in writing to stop the transfers.

Nationwide reserves the right to stop establishing new Fixed Account Interest Out 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.

Systematic Withdrawals

Systematic Withdrawals allow Contract Owners 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.

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

(1)   10% of the net difference of purchase payments that are subject to CDSC minus purchase payments surrendered that were subject to CDSC;

(2)   an amount withdrawn to meet minimum distribution requirements for this contract under the Internal Revenue Code; or

(3)   a percentage of the Contract Value based on the Contract Owner's age, as shown in the table below:

Contract Owner's Age	Percentage of Contract Value
Under age 59½	5%
59½ through age 61	7%
62 through age 64	8%
65 through age 74	10%
75 and over	13%

The Contract Owner's age is determined as of the date the request for Systematic Withdrawals is recorded by Nationwide's home office.  For joint owners, the older joint owner's age will be used.

In any given Contract Year, any amount surrendered in excess of the greatest of (1), (2), or (3) above will be subject to the CDSC provisions (see “Contingent Deferred Sales Charge” earlier in this prospectus).

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 reserves the right to stop establishing new Systematic Withdrawal programs.  Systematic Withdrawals are not available before the end of the ten-day free-look period.

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Custom Portfolio Asset Rebalancing Service

For Contract Owners that have elected a Lifetime Income Option, Nationwide makes available the Custom Portfolio Asset Rebalancing Service (“Custom Portfolio”) at no extra charge.  Custom Portfolio is an asset allocation program that Contract Owners can use to build their own customized portfolio of investments, subject to certain limitations.  Asset allocation is the process of investing in different asset classes (such as equity funds, fixed income funds, and money market funds) and may reduce the risk and volatility of investing. There are no guarantees that Custom Portfolio will result in a profit or protect against loss in a declining market.

Each model is comprised of different percentages of standardized asset categories designed to meet different investment goals, risk tolerances, and investment time horizons. The Contract Owner selects their model, then selects the specific underlying mutual funds (also classified according to standardized asset categories) and investment percentages within the model’s parameters, enabling the Contract Owner to create their own unique “Custom Portfolio.”  Only one “Custom Portfolio” may be created and in effect at a time and the entire Variable Account Contract Value must participate in the model.

Note: Contract Owners should consult with a qualified investment advis e r regarding the use of Custom Portfolio and to determine which model is appropriate for them.

Once the Contract Owner creates their “Custom Portfolio,” that Contract Owner’s model is static.  This means that the percentage allocated to each underlying mutual fund will not change over time, except for quarterly rebalancing, as described below.  Note: allocation percentages within a particular model may subsequently change, but any such changes will not apply to existing model participants; the changes will only apply to participants that elect the model after the change implementation date.

To participate in Custom Portfolio, eligible Contract Owners must submit the proper administrative form to Nationwide’s home office.  While Custom Portfolio is elected, Contract Owners cannot participate in Asset Rebalancing.

Asset Allocation Models available with Custom Portfolio

The following models are available with Custom Portfolio:

Conservative:	Designed for Contract Owners that are willing to accept very little risk but still want to see a small amount of growth.
Moderately Conservative:	Designed for Contract Owners that are willing to accept some market volatility in exchange for greater potential income and growth.
Balanced:	Designed for Contract Owners that are willing to accept some market volatility in exchange for potential long-term returns.
Moderate:	Designed for Contract Owners that are willing to accept some short-term price fluctuations in exchange for potential long-term returns.

Capital Appreciation: Designed for Contract Owners that are willing to accept more short-term price fluctuations in exchange for potential long-term returns.

The specific underlying mutual funds available to comprise the equity and fixed income components of the models are contained in the election form, which is provided to Contract Owners at the time Custom Portfolio is elected.  At that time, Contract Owners elect their model and the specific underlying mutual funds and percentages that will comprise their “Custom Portfolio.”

Quarterly Rebalancing

At the end of each calendar quarter, Nationwide will reallocate the Variable Account Contract Value so that the percentages allocated to each underlying mutual fund match the most recently provided percentages provided by the Contract Owner.  If the end of a calendar quarter is a Saturday, Sunday, recognized holiday, or any other day that the New York Stock Exchange is closed, the quarterly rebalancing will occur on the next business day.  Rebalancing will be priced using the unit value determined on the last Valuation Date of the calendar quarter.  Each quarterly rebalancing is considered a transfer event.  However, quarterly rebalancing transfers within your Custom Portfolio are not subject to Short-Term Trading Fees.

Changing Models or Underlying Mutual Fund Allocations

Contract Owners who have elected a Lifetime Income Option may change the underlying mutual fund allocations within their elected model, percentages within their elected model and/or may change models and create a new “Custom Portfolio” within that new model.  To implement one of these changes, Contract Owners must submit new allocation instructions to Nationwide’s home office in writing on Nationwide’s administrative form.  Any model and percentage changes will be subject to Short-Term Trading Fees and will count as a transfer event, as described in the “Transfer Restrictions” provision.

Nationwide reserves the right to limit the number of model changes a Contract Owner can make each year.

Terminating Participation in Custom Portfolio

Contract Owners can terminate participation in Custom Portfolio by submitting a written request to Nationwide’s home office.  In order for the termination to be effective, the termination request must contain valid reallocation instructions that are in accordance with the terms and conditions of the elected Lifetime Income Option.  Termination is effective on the date the termination request is received at Nationwide’s home office in good order.

Death Benefits

Death of Contract Owner

If a Contract Owner (including a joint owner) who is not the Annuitant dies before the Annuitization Date, no death benefit is payable and the surviving joint owner becomes the Contract Owner.

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If no joint owner is named, the contingent owner becomes the Contract Owner.

If no contingent owner is named, the beneficiary becomes the Contract Owner.

If no beneficiary survives the Contract Owner, the last surviving Contract Owner's estate becomes the Contract Owner.

Distributions will be made pursuant to the “Required Distributions for Non-Qualified Contracts” in “Appendix C: Contract Types and Tax Information.”

Death of Annuitant

If the Annuitant who is not a Contract Owner dies before the Annuitization Date, the contingent annuitant becomes the Annuitant and no death benefit is payable.  If no contingent annuitant is named, a death benefit is payable to the beneficiary.  Multiple beneficiaries will share the death benefit equally unless otherwise specified.

If no beneficiaries survive the Annuitant, the contingent beneficiary receives the death benefit.  Multiple 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.

If the Contract Owner is a Charitable Remainder Trust and the Annuitant dies before the Annuitization Date, the death benefit will accrue to the Charitable Remainder Trust.  Any designation in conflict with the Charitable Remainder Trust's right to the death benefit will be void.

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 of Contract Owner/Annuitant

If a Contract Owner (including a joint owner) who is also the Annuitant dies before the Annuitization Date, a death benefit is payable to the surviving joint owner.

If there is no surviving joint owner, the death benefit is payable to the beneficiary.  Multiple beneficiaries will share the death benefit equally unless otherwise specified.

If no beneficiaries survive the Contract Owner/Annuitant, the contingent beneficiary receives the death benefit.  Multiple contingent beneficiaries will share the death benefit equally unless otherwise specified.

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

If the Contract Owner/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

The recipient of the death benefit may elect to receive the death benefit:

(1)   in a lump sum;

(2)   as an annuity (please see the “Annuity Payment Options” section for additional information); or

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

Nationwide will pay (or will begin to pay) the death benefit upon receiving proof of death and the instructions as to the payment of the death benefit.  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.  Contract Value will continue to be allocated according to the most recent allocation instructions until the death benefit is paid.

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 all the information necessary to pay that beneficiary’s portion of the death benefit proceeds.   At the time the first beneficiary’s proceeds are paid, the remaining portion(s) of the death benefit proceeds that are allocated to Sub-Accounts will be allocated to the available money market Sub-Account until instructions are received from the remaining beneficiary(ies).

Death Benefit Calculations

An applicant may elect either the standard death benefit or an available death benefit option that is offered under the contract for an additional charge.  If no election is made at the time of application, the death benefit will be the standard death benefit.

The value of each component of the applicable death benefit calculation will be determined as of the date of the Annuitant's death, except for the Contract Value component, which will be 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).

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.

Standard Death Benefit

If the Annuitant dies before the Annuitization Date, the standard death benefit will be the greater of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit; or

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(2)   the total 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).

The standard death benefit also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse

One-Year Enhanced Death Benefit Option

For an additional charge at an annualized rate of 0.20% of the Daily Net Assets of the Variable Account, an applicant can elect the One-Year Enhanced Death Benefit Option at the time of application.  The One-Year Enhanced Death Benefit Option is only available for contracts with Annuitants age 80 or younger at the time of application.

If the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is less than or equal to $3,000,000, the death benefit will be the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered; or

(3)   the highest Contract Value on any Contract Anniversary prior to the Annuitant's 86th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Contract Anniversary.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

If Nationwide does not receive all information necessary to pay the death benefit within one year of the Annuitant's death, the death benefit will be the greater of (1) or (2) above.

If the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is greater than $3,000,000, the death benefit will be determined using the following formula:

(A x F) + B(1 - F), where

A = the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered; or

(3)   the highest Contract Value on any Contract Anniversary prior to the Annuitant's 86th birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Contract Anniversary.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

If Nationwide does not receive all information necessary to pay the death benefit within one year of the Annuitant's death, the calculation for A above will be the greater of (1) or (2) above.

B = the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit; and

F = the ratio of $3,000,000 to the total of all purchase payments made to the contract.

The practical effect of this formula is that the beneficiary recovers a lesser percentage of purchase payments in excess of $3,000,000 than for purchase payments up to $3,000,000.  In no event will the beneficiary receive less than the Contract Value.

The One-Year Enhanced Death Benefit Option also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse.

One-Month Enhanced Death Benefit Option

For an additional charge at an annualized rate of 0.35% of the Daily Net Assets of the Variable Account, an applicant can elect the One-Month Enhanced Death Benefit Option at the time of application.  The One-Month Enhanced Death Benefit Option is only available for contracts with Annuitants age 75 or younger at the time of application.

If the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is less than or equal to $3,000,000, the death benefit will be the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered; or

(3)   the highest Contract Value on any Monthly Contract Anniversary prior to the Annuitant’s 81st birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Monthly Contract Anniversary.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

If Nationwide does not receive all information necessary to pay the death benefit within one year of the Annuitant’s death, the death benefit will be the greater of (1) or (2) above.

If the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is greater than $3,000,000, the death benefit will be determined using the following formula:

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(A x F) + B(1 - F), where

A = the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered; or

(3)   the highest Contract Value on any Monthly Contract Anniversary prior to the Annuitant’s 81st birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Monthly Contract Anniversary.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

If Nationwide does not receive all information necessary to pay the death benefit within one year of the Annuitant’s death, the calculation for A above will be the greater of (1) or (2) above.

B = the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit; and

F = the ratio of $3,000,000 to the total of all purchase payments made to the contract.

The practical effect of this formula is that the beneficiary recovers a lesser percentage of purchase payments in excess of $3,000,000 than for purchase payments up to $3,000,000.  In no event will the beneficiary receive less than the Contract Value.

The One-Month Enhanced Death Benefit Option also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse.

Combination Enhanced Death Benefit Option

For an additional charge at an annualized rate of 0.45% of the Daily Net Assets of the Variable Account, an applicant can elect the Combination Enhanced Death Benefit Option at the time of application.  The Combination Enhanced Death Benefit Option is only available for contracts with Annuitants age 75 or younger at the time of application.

If the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is less than or equal to $3,000,000, the death benefit will be the greatest of:

(1)   the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2)   the total of all purchase payments, less an adjustment for amounts surrendered;

(3)   the highest Contract Value on any Contract Anniversary before the Annuitant's 81st birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Contract Anniversary; or

(4)   the 5% interest anniversary value.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

If Nationwide does not receive all information necessary to pay the death benefit within one year of the Annuitant's death, the death benefit will be the greater of (1) or (2) above.

The 5% interest anniversary value is equal to purchase payments, accumulated at 5% annual compound interest until the last Contract Anniversary prior to the Annuitant's 81st birthday, proportionately adjusted for amounts surrendered.  The adjustment for amounts surrendered will reduce the accumulated value as of the most recent Contract Anniversary prior to each partial surrender in the same proportion that the Contract Value was reduced on the date of the partial surrender.  Such total accumulated amount, after the surrender adjustment, shall not exceed 200% of purchase payments adjusted for amounts surrendered.

For example, assume Joe purchases a contract in 2008 for $100,000.  In the year 2021, his contract stands as follows:

Total purchase payments:	$100,000
Contract Value:	$120,000
Highest anniversary Contract Value:	$125,000
5% interest anniversary value:	$197,933

If Joe dies in 2021, his death benefit would be $197,933.

However if he dies the next year, his death benefit would be $200,000 instead of $207,829 (calculation: 105% X $197,933) since the 5% interest anniversary value is limited to 200% of his initial purchase payment of $100,000.

Following is an example of how a surrender would impact the death benefit calculation.  In the year 2015, his contract stands as follows:

Total purchase payments:	$100,000
Contract Value:	$120,000
Highest anniversary Contract Value:	$120,000
5% interest anniversary value:	$155,133

In 2016, Joe takes a partial surrender of $60,000.  After his surrender, the highest Contract Anniversary value is $60,000 (calculation: $120,000 -– $60,000) and the 5% interest anniversary value is $77,566 (calculation: ($60,000/$120,000) x $155,133).  After the date of the withdrawal, the 5% interest anniversary value is limited to $80,000 (calculation: 200% ($100,000 - $60,000).

If, after the first Contract Anniversary, the Fixed Account allocation becomes greater than 30% of the Contract Value solely due to the application of additional purchase payments, additional surrenders, or transfers among investment options, then for purposes of calculating the 5% interest anniversary value, 0% will accrue for that year.  If, however, the 30% threshold is reached due to a combination of market performance and Contract Owner actions, and would not have been reached

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but for the market performance, interest will continue to accrue at 5%.

If the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is greater than $3,000,000, the death benefit will be determined using the following formula:

(A x F) + B(1 - F), where

A = the greatest of:

(1) the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit;

(2) the total of all purchase payments, less an adjustment for amounts surrendered;

(3) the highest Contract Value on any Contract Anniversary before the Annuitant's 81st birthday, less an adjustment for amounts subsequently surrendered, plus purchase payments received after that Contract Anniversary; or

(4) the 5% interest anniversary value.

The adjustment for amounts surrendered will reduce items (2) and (3) above in the same proportion that the Contract Value was reduced on the date(s) of the partial surrender(s).

If Nationwide does not receive all information necessary to pay the death benefit within one year of the Annuitant's death, the calculation for A above will be the greater of (1) or (2) above.

B = the Contract Value as of the date that Nationwide receives all the information necessary to pay the death benefit; and

F = the ratio of $3,000,000 to the total of all purchase payments made to the contract.

The practical effect of this formula is that the beneficiary recovers a lesser percentage of purchase payments in excess of $3,000,000 that for purchase payments up to $3,000,000.  In no event will the beneficiary receive less than the Contract Value.

The Combination Enhanced Death Benefit also includes the Spousal Protection Feature, which allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse.

Spousal Protection Feature

The standard death benefit and all of the death benefit options include a Spousal Protection Feature at no additional charge.  The Spousal Protection Feature is not available for contracts issued as Charitable Remainder Trusts.  The Spousal Protection Feature allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse, provided the conditions described below are satisfied:

(1)   One or both spouses (or a revocable trust of which either or both of the spouses is/are grantor(s)) must be named as the Contract Owner.  For contracts issued as IRAs and Roth IRAs, only the person for whom the IRA or Roth IRA was established may be named as the Contract Owner;

(2)   The spouses must be Co-Annuitants;

(3) (a)  Both spouses must be age 85 or younger at the time the contract is issued for the standard death benefit;

(b)  Both spouses must be age 80 or younger at the time the contract is issued for the One-Year Enhanced Death Benefit Option;

(c)  Both spouses must be age 75 or younger at the time the contract is issued for the Combination Enhanced Death Benefit Option or the One-Month Enhanced Death Benefit Option;

(4)   Both spouses must be named as beneficiaries;

(5)   No person other than the spouse may be named as Contract Owner, Annuitant or primary beneficiary;

(6)   If both spouses are alive upon annuitization, the Contract Owner must specify which spouse is the Annuitant upon whose continuation of life any annuity payments involving life contingencies depend (for IRA and Roth IRA contracts, this person must be the Contract Owner); and

(7)   If the Contract Owner requests to add a Co-Annuitant after contract issuance, the date of marriage must be after the contract issue date and Nationwide will require the Contract Owner to provide a copy of the marriage certificate.  The new Co-Annuitant must meet the age requirement of the respective death benefit option on the date the Co-Annuitant is added.

If a Co-Annuitant dies before the Annuitization Date, the surviving spouse may continue the contract as its sole Contract Owner.  Additionally, if the death benefit value is higher than the Contract Value at the time of the first Co-Annuitant’s death, Nationwide will adjust the Contract Value to equal the death benefit value.  The surviving Co-Annuitant may then name a new beneficiary but may not name another Co-Annuitant.

If the marriage terminates due to the death of a spouse, divorce, dissolution, or annulment, the surviving spouse may not elect the Spousal Protection Option to cover a subsequent spouse.

Additional purchase payments made to the contract after receiving the benefit of the Spousal Protection Feature are subject to the CDSC provisions of the contract.

Note: Some states have different requirements relating to spousal benefits.  Please see “Appendix D: State Variations.”

Annuity Commencement Date

The Annuity Commencement Date is the date on which annuity payments are scheduled to begin.  Generally, the Contract Owner designates the Annuity Commencement Date at the time of application.  If no Annuity Commencement Date

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is designated at the time of application, Nationwide will establish the Annuity Commencement Date as the date the Annuitant reaches age 90 for Non-Qualified Contracts and the date the Contract Owner reaches age 70½ for all other contract types.

The Contract Owner may change the Annuity Commencement Date before annuitization.  This change must be in writing and approved by Nationwide.  The Annuity Commencement Date may not be later than the first day of the first calendar month after the Annuitant's 90th birthday (or the 90th birthday of the oldest Annuitant if there are joint annuitants) unless approved by Nationwide.

Annuity Commencement Date and Lifetime Income Option

If the Contract Owner elected a Lifetime Income Option, Nationwide will, approximately three months before the Annuity Commencement Date, notify the Contract Owner of the impending Annuity Commencement Date and give the Contract Owner the opportunity to defer the Annuity Commencement Date in order to preserve the benefit associated with the Lifetime Income Option.  Deferring the Annuity Commencement Date may have negative tax consequences.  See “Required Distributions for IRAs, SEP IRAs, Simple IRAs and Roth IRAs” in “Appendix C: Contract Types and Tax Information,” and the “10% Lifetime Income Option” and the “5% Lifetime Income Option” provisions in this prospectus.  Consult a qualified tax advis e r.

Annuitizing the Contract

Annuitization Date

The Annuitization Date is the date that annuity payments begin.  Annuity payments will not begin until the Contract Owner affirmatively elects to begin annuity payments.  If the Contract Owner has elected a Lifetime Income Option, an election to begin annuity payments will terminate all benefits, conditions, guarantees, and charges associated with the Lifetime Income Option.

The Annuitization Date 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.

On the Annuitization Date, the Annuitant becomes the Contract Owner unless the Contract Owner is a Charitable Remainder Trust.

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.

Any allocations in the Fixed Account that are to be annuitized as a variable payment annuity must be moved to the Variable Account prior to the Annuitization Date.  There are no restrictions on Fixed Account transfers made in anticipation of annuitization.

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 by the Contract Owner.

Fixed Annuity Payments

Fixed annuity payments provide for level annuity payments.  Premium taxes are deducted prior to determining fixed annuity payments.  The fixed annuity payments will remain level unless the annuity payment option provides otherwise.

Variable Annuity Payments

Variable 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 “Appendix A: Underlying Mutual Funds.”  The Static Asset Allocation Models are not available after annuitization.

First Variable Annuity Payment

The following factors determine the amount of the first variable annuity payment:

·   the portion of purchase payments allocated to provide variable annuity payments;

·   the Variable Account value on the Annuitization Date;

·   the adjusted age and sex of the Annuitant (and joint annuitant, if any) in accordance with the contract;

·   the annuity payment option elected;

·   the frequency of annuity payments;

·   the Annuitization Date;

·   the assumed investment return (the net investment return required to maintain level variable annuity payments);

·   the deduction of applicable premium taxes; and

·   the date the contract was issued.

Subsequent Variable Annuity Payments

Variable annuity payments after the first will vary with the performance of the underlying mutual funds chosen by the Contract Owner after the investment performance is adjusted by the assumed investment return factor.

The dollar amount of each subsequent variable annuity payment is determined by taking the portion of the first annuity payment funded by a particular Sub-Account divided

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by the Annuity Unit value for that Sub-Account as of the Annuitization Date.  This establishes the number of Annuity Units provided by each Sub-Account for each variable annuity payment after the first.

The number of Annuity Units comprising each variable annuity payment, on a Sub-Account basis, will remain constant, unless the Contract Owner transfers value from one underlying mutual fund to another.  After annuitization, transfers among Sub-Accounts may only be made on the anniversary of the Annuitization Date.

The number of Annuity Units for each Sub-Account is multiplied by the Annuity Unit value for that Sub-Account for the Valuation Period for which the payment is due.  The sum of these results for all the Sub-Accounts in which the Contract Owner invests establishes the dollar amount of the variable annuity payment.

Subsequent variable annuity payments may be more or less than the previous variable annuity payment, depending on whether the net investment performance of the elected underlying mutual funds is greater or lesser than the assumed investment return.

Assumed Investment Return

An assumed investment return is the net investment return required to maintain level variable annuity payments.  Nationwide uses a 3.5% assumed investment return factor.  Therefore, if the net investment performance of each Sub-Account in which the Contract Owner invests exactly equals 3.5% for every payment period, then each payment will be the same amount.  To the extent that investment performance is not equal to 3.5% for given payment periods, the amount of the payments in those periods will not be the same.  Payments will increase from one payment date to the next if the annualized net rate of return is greater than 3.5% during that time.  Conversely, payments will decrease from one payment to the next if the annualized net rate of return is less than 3.5% during that time.

Nationwide uses the assumed investment rate of return to determine the amount of the first variable annuity payment.

Value of an Annuity Unit

Annuity Unit values for Sub-Accounts are determined by:

(1)   multiplying the Annuity Unit value for each Sub-Account for the immediately preceding Valuation Period by the net investment factor for the Sub-Account for the subsequent Valuation Period (see “Determining the Contract Value – Determining Variable Account Value – Valuing an Accumulation Unit”); and then

(2)   multiplying the result from (1) by a factor to neutralize the assumed investment return factor.

Frequency and Amount of Annuity Payments

Annuity payments are based on the annuity payment option elected.

If the net amount to be annuitized is less than $2,000, Nationwide reserves the right to pay this amount in a lump sum instead of periodic annuity payments.

Nationwide reserves the right to change the frequency of payments if the amount of any payment becomes less than $100.  The payment frequency will be changed to an interval that will result in payments of at least $100.

Annuity payments will generally be sent within 3 days after each annuity payment date and received by the Annuitant within 7 to 10 days thereafter.

Annuity Payment Options

The Annuitant must elect an annuity payment option before the Annuitization Date.  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.  Additionally, the annuity payment options available may be limited based on the Annuitant's age (and the joint annuitant's age, if applicable) or requirements under the Internal Revenue Code.

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.  If you are permitted to submit purchase payments in excess of $1,000,000, additional restrictions apply, as follows.

Annuity Payment Options for Contracts with Total Purchase Payments Less Than or Equal to $2,000,000

If, at the Annuitization Date, the total of all purchase payments made to the contract is less than or equal to $2,000,000, the annuity payment options available are:

·   Single Life;

·   Standard Joint and Survivor; and

·   Single Life with a 10 or 20 Year Term Certain.

Each of the annuity payment options is discussed more thoroughly below.

Single Life

The Single Life annuity payment option provides for annuity payments to be paid during the lifetime of the Annuitant.

Payments will cease with the last payment before the Annuitant's death.  For example, if the Annuitant dies before the second annuity payment date, the Annuitant will receive only one payment.  The Annuitant will only receive two annuity payments if he or she dies before the third payment date, and so on.  No death benefit will be paid.

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No withdrawals other than the scheduled annuity payments are permitted.

Standard Joint and Survivor

The Standard Joint and Survivor annuity payment option provides for annuity payments to continue during the joint lifetimes of the Annuitant and joint annuitant.  After the death of either the Annuitant or joint annuitant, payments will continue for the life of the survivor.

Payments will cease with the last payment due prior to the death of the last survivor of the Annuitant and joint annuitant.  As is the case of the Single Life annuity payment option, there is no guaranteed number of payments.  Therefore, it is possible that if the Annuitant dies before the second annuity payment date, the Annuitant will receive only one annuity payment.  No death benefit will be paid.

No withdrawals other than the scheduled annuity payments are permitted.

Single Life with a 10 or 20 Year Term Certain

The Single Life with a 10 or 20 Year Term Certain annuity payment option provides that monthly annuity payments will be paid during the Annuitant's lifetime or for the term selected, whichever is longer.  The term may be either 10 or 20 years.

If the Annuitant dies before the end of the 10 or 20 year term, payments will be paid to the beneficiary for the remainder of the term.

No withdrawals other than the scheduled annuity payments are permitted.

Any Other Option

Annuity payment options not set forth in this provision may be available.  Any annuity payment option not set forth in this provision must be approved by Nationwide.

Annuity Payment Options for Contracts with Total Purchase Payments Greater Than $2,000,000

If, at the Annuitization Date, the total of all purchase payments made to the contract is greater than $2,000,000, Nationwide may limit the annuity payment option to the longer of:

(1)   a Fixed Life Annuity with a 20 Year Term Certain; or

(2)   a Fixed Life Annuity with a Term Certain to Age 95.

Annuitization of Amounts Greater than $5,000,000

Additionally, we may limit the amount that may be annuitized on a single life to $5,000,000.  If the total amount to be annuitized is greater than $5,000,000, the Contract Owner must:

(1) reduce the amount to be annuitized to $5,000,000 or less by taking a partial surrender from the contract;

(2) reduce the amount to be annuitized to $5,000,000 or less by exchanging the portion of the Contract Value in excess of $5,000,000 to another annuity contract; or

(3) annuitize the portion of the Contract Value in excess of $5,000,000 under an annuity payment option with a term certain, if available.

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 CONTRACT OWNER 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

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comprise the life insurance and retirement savings operations of the Nationwide group of companies (Nationwide). This group includes Nationwide Financial Network (NFN), an affiliated distribution network that markets directly to its customer base.  NFS is incorporated in Delaware and maintains its principal executive offices in Columbus, Ohio.

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

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

The financial services industry, including mutual fund, variable annuity, retirement plan, life insurance and distribution companies, has also been the subject of increasing scrutiny on a broad range of issues by regulators, legislators and the media over the past few years.  Numerous regulatory agencies, including the SEC, the Financial Industry Regulatory Authority and the New York State Attorney General, have commenced industry-wide investigations on such issues as late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues.  The Company has responded to information requests and/or subpoenas from the SEC in 2003 and the New York State Attorney General in 2005 in connection with investigations regarding market timing in certain mutual funds offered in insurance products sponsored by the Company.  The Company is not aware of any further action on these matters.

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

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

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

On September 10, 2009, NRS was named in a lawsuit filed in the Circuit Court for Montgomery County, Alabama entitled Twanna Brown, Individually and on behalf of all other persons in Alabama who are similarly situated, v. Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc., Edwin "Mac" McArthur, Steve Walkley, Glenn Parker, Ulysses Lavender, Diana McLain, Randy Hebson, and Robert Wagstaff; and Unknown

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Defendants A-Z.   On January 22, 2010, Brown filed an Amended Complaint alleging in Count One, that all the defendants were involved in a civil conspiracy and seeks to recover actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Two, although NRS is not named, it is alleged that the remaining defendants breached their fiduciary duties and seeks actual damages, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. In Count Three, although NRS is not named, the plaintiff seeks declaratory relief that the individual defendants breached their fiduciary duties, seeks injunctive relief permanently removing said defendants from their respective offices in the Alabama State Employees Association (ASEA) and PEBCO and costs and attorneys fees. In Count Four, it alleges that any money Nationwide paid belonged exclusively to ASEA for the use and benefit of its membership at large and not for the personal benefit of the individual defendants.  Plaintiff seeks to recover actual damages from the individual defendants, forfeiture of all other payments and/or salaries to be the fruit of such other payments, punitive damages and costs and attorneys fees. On February 5, 2010, the Company filed a motion to dismiss, or in the alternative, a motion to stay the amended complaint.  On February 9, 2010, the individual defendants filed a motion to dismiss the amended complaint.  On December 13, 2009, the plaintiff filed a motion to consolidate this case with Nationwide Retirement Solutions, Inc. v. Alabama State Personnel Board, PEBCO, Inc. and Alabama State Employees Association. The Company continues to defend this case vigorously.

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

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

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

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including interest.  On January 25, 2007, NFS, NLIC and NRS filed a motion to dismiss.  On September 17, 2007, the Court granted the motion to dismiss.  On October 1, 2007, the plaintiff filed a motion to vacate judgment and for leave to file an amended complaint.  On September 15, 2008, the Court denied the plaintiffs' motion to vacate judgment and for leave to file an amended complaint.  On February 3, 2010, the Sixth Circuit Court of Appeals affirmed the District Court's dismissal of this case.   NFS, NLIC and NRS continue to defend this lawsuit vigorously.

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

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

Table of Contents of 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
Condensed Financial Information	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. 811-03330

Securities Act of 1933 Registration File No. 333- 164886

44

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.

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

Investment Adviser:	AllianceBernstein L.P.
Investment Objective:	Long-term growth of capital.

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

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

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

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

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

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

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

Investment Adviser:	The Dreyfus Corporation
Sub-adviser:	Mellon Capital Management
Investment Objective:	To match performance of the S&P SmallCap 600 Index®.

Dreyfus Stock Index Fund, Inc.: Service Shares

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

Dreyfus Variable Investment Fund - Appreciation Portfolio: Service Shares

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

Fidelity Variable Insurance Products Fund - Fidelity VIP Freedom Fund 2010 Portfolio: Service Class 2

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

45

Fidelity Variable Insurance Products Fund - Fidelity VIP Freedom Fund 2020 Portfolio: Service Class 2

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

Fidelity Variable Insurance Products Fund - Fidelity VIP Freedom Fund 2030 Portfolio: Service Class 2

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

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

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

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

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

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

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

Fidelity Variable Insurance Products Fund - VIP Investment Grade Bond Portfolio: Service Class 2

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

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

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

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

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

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

Investment Adviser:	Franklin Advisors, Inc.
Investment Objective:	Maximum income while maintaining prospects for capital appreciation.

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Franklin Templeton Variable Insurance Products Trust - Franklin Small Cap Value Securities Fund: Class 2

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

Franklin Templeton Variable Insurance Products Trust - Franklin Templeton VIP Founding Funds Allocation Fund: Class 2

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

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

Investment Adviser:	Franklin Advisors, Inc.
Investment Objective:	High current income, consistent with preservation of capital, with capital appreciation as a secondary consideration.
Designation:	STTF

Invesco - Invesco V.I. Capital Development Fund: Series II

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

Ivy Funds Variable Insurance Portfolios, Inc. - Asset Strategy

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

Janus Aspen Series - Forty Portfolio: Service Shares

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

Janus Aspen Series - Global Technology Portfolio: Service II Shares

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

Janus Aspen Series - Overseas Portfolio: Service II Shares

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

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

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

MFS® Variable Insurance Trust II - MFS® International Value Portfolio: Service Class

Investment Adviser:	Massachusetts Financial Services Company
Investment Objective:	The fund's investment objective is to seek capital appreciation.  MFS normally invests the fund's assets primarily in foreign equity securities, including emerging market equity securities.

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

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

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

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

47

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

Investment Adviser:	Capital Research and Management Company
Investment Objective:	The Fund seeks to maximize an investors level of current income and preserve the investor's capital.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Adviser:	Nationwide Fund Advisors
Sub-adviser:	Neuberger Berman Management Inc.
Investment Objective:	The Fund seeks long-term total return by investing primarily in securities of companies that meet the fund's financial criteria and social policy.

Nationwide Variable Insurance Trust - NVIT Cardinal SM Aggressive Fund: Class II

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

Nationwide Variable Insurance Trust - NVIT Cardinal SM Balanced Fund: Class II

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

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

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

Nationwide Variable Insurance Trust - NVIT Cardinal SM Conservative Fund: Class II

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

Nationwide Variable Insurance Trust - NVIT Cardinal SM Moderate Fund: Class II

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

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

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

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

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

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

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

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

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

Nationwide Variable Insurance Trust - NVIT Emerging Markets Fund: Class VI

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

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

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

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

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

49

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

50

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

51

Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class II

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

Nationwide Variable Insurance Trust - NVIT Real Estate Fund: Class II

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Adviser:	OppenheimerFunds, Inc.
Investment Objective:	High total return which includes growth in the value of its shares as well as current income from equity and debt securities.

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

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

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

Investment Adviser:

Pacific Investment Management Company LLC

Investment Objective:

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

PIMCO Variable Insurance Trust - Low Duration Portfolio: Advisor Class

Investment Adviser:

Pacific Investment Management Company LLC

Investment Objective:

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

T. Rowe Price Equity Series, Inc. - T. Rowe Price Health Sciences Portfolio: II

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

Van Eck Variable Insurance Products Trust - Van Eck VIP Global Hard Assets Fund: Class R1

Investment Adviser:	Van Eck Associates Corporation
Investment Objective:	Long-term capital appreciation by investing primarily in hard asset securities.  Income is a secondary consideration.
Designation:	STTF

Wells Fargo Advantage Funds - Wells Fargo Advantage VT Small Cap Growth Fund

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

53

Appendix B: Condensed Financial Information

Because the contracts described in this prospectus have not been previously made available for sale, there are no Accumulation Unit values for the year ending December 31, 2009.  The Statement of Additional Information is available FREE OF CHARGE by:

calling:	1-800-848-6331, TDD 1-800-238-3035
writing:	Nationwide Life Insurance Company
	5100 Rings Road, RR1-04-F4
	Dublin, Ohio 43017-1522
checking on-line at:	www.nationwide.com

54

Appendix C: Contract Types and Tax Information

The contracts described in this prospectus are classified according to the tax treatment to which they are subject under the Internal Revenue 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 Internal Revenue Code.  Non-Qualified Contracts that are issued to Charitable Remainder Trusts will differ from other Non-Qualified Contracts in three respects:

(1)   Waiver of CDSC.  In addition to the CDSC-free withdrawal privilege available to all contracts, 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 adviser 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 Internal Revenue 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 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.

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.

IRAs may receive rollover contributions from other Individual Retirement Accounts, other Individual Retirement 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 Internal Revenue 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 Internal Revenue 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.

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

Non-Qualified Contracts

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

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.

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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 non-natural persons, such as trusts, corporations and partnerships are generally subject to current income tax on the income earned inside the contract, unless the non-natural 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 Internal Revenue 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 IRAs 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 IRA or another eligible retirement plan; however, the amount rolled over from the IRA or other 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 IRA 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 Internal Revenue 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 Internal Revenue 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 Internal Revenue 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 IRAs 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 Internal Revenue 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 Internal Revenue Code to ensure distribution of the entire Contract Value within the required statutory period.

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

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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 Internal Revenue 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 and Individual Retirement Accounts as described in Sections 401 and 408(a) of the Internal Revenue 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 contracts.  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.  Contract Owners and prospective Contract Owners should consult a financial consultant, tax adviser 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 was 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 both 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 Internal Revenue 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 five-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 five-year rule generally is satisfied if the distribution is not made within the five 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 IRA 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 Internal Revenue Code);

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·   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.

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 Internal Revenue 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 Internal Revenue 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 Internal Revenue 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 Internal Revenue 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 Internal Revenue Code.

If the Annuitant dies before the contract is completely distributed, the balance may be included in the Annuitant’s

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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 Internal Revenue 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 thedirect transfer and the distribution or surrender, one of the conditions described under section 72(q)(2) of the Internal Revenue Code that would exempt the distribution from the 10% early distribution penalty (such as turning age 59½, orbecoming 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 June30, 2008. Please discuss any tax consequences concerning any contemplated or completed transactions with a professional tax advisor.

Taxation of Lifetime Surrenders Under the 10% Lifetime Income Option or the 5% Lifetime Income Option

While the tax treatment for surrenders for benefits such as the Lifetime Income Options is not clear under federal tax law, Nationwide intends to treat surrenders under these options as taxable to the extent that the cash value of the contract exceeds the Contract Owner’s investment at the time of the surrender.  Specifically, we intend to treat the following amount of each surrender as a taxable distribution:

The greater of:

(1)   A – C; or

(2)   B – C,

Where

A = the Contract Value immediately before the surrender;

B = the guaranteed annual benefit amount immediately before the surrender; and

C = the remaining investment in the contract.

In certain circumstances, this treatment could result in your Contract Value being less than your investment in the contract after such a surrender.  If you subsequently surrender your contract under such circumstances, you would have a loss that may be deductible.  If you purchase one of these options in an IRA, surrenders in excess of the annual benefit amount may be required to satisfy the minimum distribution requirements under the Internal Revenue Code.  Please consult a qualified 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 Internal Revenue 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 adviser. 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.  Under some circumstances, the Internal Revenue 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 Internal Revenue 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

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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 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.

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 Internal Revenue 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:

(1)   an individual who is two or more generations younger than the Contract Owner; or

(2)   certain trusts, as described in Section 2613 of the Internal Revenue 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 will 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

Internal Revenue 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.

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 adviser for more information.

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

·   generally lowering federal income tax rates;

·   increasing the amounts that may be contributed to various retirement plans, such as IRAs and Qualified Plans;

·   increasing the portability of various retirement plans by permitting IRAs, Qualified Plans and certain governmental 457 plans to “roll” money from one plan to another;

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·   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 are scheduled to “sunset,” or become ineffective, after December 31, 2010 unless they are extended by additional legislation.  If changes resulting from EGTRRA are not extended, beginning January 1, 2011, the Internal Revenue Code will be restored to its pre-EGTRRA form.

This creates uncertainty as to future tax requirements and implications.  Please consult a qualified tax or financial adviser for further information relating to EGTRRA and other tax issues.

Required Distributions

Any distribution paid that is NOT due to payment of the death benefit may be subject to a CDSC.

The Internal Revenue 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 adviser for more specific required distribution information.

If you purchase a Lifetime Income Option, surrenders in excess of the annual benefit amount may be required to satisfy the minimum distribution requirements under the Internal Revenue Code.  Please consult a qualified tax advisor.

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 Internal Revenue 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, and Roth IRAs 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 zero.

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 zero.

Required Distributions for Non-Qualified Contracts

Internal Revenue 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 Internal Revenue Code by reason of Section 72(s)(5) or any other law or rule.

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Required Distributions for IRAs, SEP IRAs, Simple IRAs and Roth IRAs

Distributions from an 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 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.

The Worker, Retiree, and Employer Recovery Act of 2008 provides that the normal required distribution rules will not be applicable to defined contribution plans (which generally includes IRAs, TSAs and SEP IRAs) during 2009.  However, annuitized distributions from such plans may not receive the same exception and should continue to be made.  Consequently, if you desire to forego the distribution that would be required to be made to you during 2009, you should consult with your advisor and notify us of your decision.

If the Contract Owner’s entire interest in an 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 an IRA, SEP IRA or Simple IRA) or before the entire Contract Value is distributed (in the case of Roth IRAs), 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 one 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 one 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 fifth year following the Contract Owner’s death.

If the Contract Owner dies on or after the required beginning date, the interest in the 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 one 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 one 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 one 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 one 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 one for each year thereafter.

62

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.”

63

Appendix D: State Variations

Described below are the variations to certain prospectus disclosures 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.

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.  Nationwide will allocate initial purchase payments allocated to Sub-Accounts to the Fixed 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.

Hawaii – Joint owners are not limited to spouses.  See “Ownership and Interests in the Contract” 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 63 years of age or the sixth Contract Anniversary.  See “Synopsis of the Contracts” subsection “Minimum Initial and Subsequent Purchase Payments" earlier in this prospectus for more information.

Massachusetts – The Long-Term Care/Nursing Home Waiver is not available.  See “Standard Charges and Deductions” subsection “Contingent Deferred Sales Charge” subsection “Long-Term Care/Nursing Home and Terminal Illness Waiver” 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 sixth Contract Anniversary.  See “Synopsis of the Contracts” subsection “Minimum Initial and Subsequent Purchase Payments" earlier in this prospectus for more information.

For purposes of the 10% Lifetime Income Option, Underwritten Lump Sum Settlement Option, the settlement amount shall be based upon the attained age, and health information provided by the Contract Owner.  See "10% and 5% Lifetime Income Option" earlier in this prospectus for more information.

New Jersey – Charitable Remainder Trust contract type is not available.  See “Synopsis of the Contracts” earlier in this prospectus for more information.

The Beneficiary Protector II Option is not available. See “Optional Contract Benefits, Charges and Deductions” subsection “Beneficiary Protector II Option" earlier in this prospectus for more information.

The Long-Term Care/Nursing Home and Terminal Illness Waiver is not available. See “Standard Charges and Deductions” subsection “Contingent Deferred Sales Charge” subsection “Long-Term Care/Nursing Home and Terminal Illness Wavier” earlier in this prospectus for more information.

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 “Standard Charges and Deductions” subsection “Contingent Deferred Sales Charge” subsection “Waiver of Contingent Deferred Sales Charge” earlier in this prospectus for more information.

The age based component of the calculation to determine the withdrawal amount that may be surrendered without CDSC under the Systematic Withdrawals program is not available.  See “Contract Owner Services” earlier in this prospectus for more information.

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

Total purchase payments may not exceed $2,000,000 or ($1,000,000 if an optional rider is elected).  See “Synopsis of the Contracts” subsection “Minimum Initial and Subsequent Purchase Payments" earlier in this prospectus for more information.

A Contract Owner cannot meet the minimum initial purchase payment requirement by making purchase payments equal to the required minimum over the course of the first Contract Year.  See “Synopsis of the Contracts” subsection "Minimum Initial and Subsequent Purchase Payments" earlier in this prospectus for more information.

The calculations used to determine the amount of the One-Year Enhanced Death Benefit, One-Month Enhanced Death Benefit and Combination Enhanced Death Benefit if the Annuitant dies prior to the Annuitization Date and the total of all purchase payments made to the contract is greater than $3,000,000 are not applicable.  See “Death Benefits” subsection “Death Benefit Calculations“ subsections “One-Year Enhanced Death Benefit Option,” “One-Month Enhanced death Benefit Option” and “Combination Enhanced Death Benefit Option” earlier in this prospectus for more information.

New York- The Long-Term Care/Nursing Home and Terminal Illness Waiver is not available.  See “Standard Charges and Deductions” subsection “Contingent Deferred Sales Charge” subsection “Long-Term Care/Nursing Home and Terminal Illness Wavier” earlier in this prospectus for more information.

The Beneficiary Protector II Option is not available.  See “Optional Contract Benefits, Charges and Deductions” subsection “Beneficiary Protector II Option” earlier in this prospectus for more information.

64

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

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.

The Combination Enhanced Death Benefit Option is not available.  See “Death Benefits” subsection “Death Benefit Calculations” subsection “Combination Enhanced Death Benefit Option” earlier in this prospectus for more information.

For purpose of the 10% Lifetime Income Option, the Spousal Continuation Benefit is not available.  See “Optional Contract Benefits, Charges and Deductions” subsection “10% and 5% Spousal Continuation Benefit” earlier in this prospectus for more information.

The 5% Lifetime Income Option is only available for contracts issued in the State of New York.  See “Optional Contract Benefits, Charges and Deductions” subsection “5% Lifetime Income Option” earlier in this prospectus for more information.

The 10% Lifetime Income Option requires that the age of the person upon which the benefit depends (the “determining life”) must be between 57 and 85 years old at the time of application.  See “Optional Contract Benefits, Charges and Deductions” subsection “10% Lifetime Income Option” earlier in this prospectus for more information.

The Fixed Account may be restricted or eliminated.   See "Investing in the Contract" subsection "The Fixed Account" earlier in this prospectus for more information.

North Dakota - The Beneficiary Protector II Option is not available.  See “Optional Contract Benefits, Charges and Deductions” subsection “Beneficiary Protector II Option” earlier in this prospectus for more information.

Oregon - 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 sixth Contract Anniversary.  See “Synopsis of the Contracts” subsection “Minimum Initial and Subsequent Purchase Payments” earlier in this prospectus for more information.

Joint owners are not limited to spouses.  See “Ownership and Interests in 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” subsection “Transfers from the Fixed Account” earlier in this prospectus for more information.

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” earlier in this prospectus for more information.

Pennsylvania - The Long-Term Care/Nursing Home and Terminal Illness Waiver is not available.  See “Standard Charges and Deductions” subsection “Contingent Deferred Sales Charge” subsection “Long-Term Care/Nursing Home and Terminal Illness Waiver” earlier in this prospectus for more information.

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

Puerto Rico - Nationwide will not charge premium taxes against the contract.  See "Synopsis of the Contracts" subsection "Taxation" earlier in this prospectus for more information.

Texas - CDSC will not apply if the Contract Owner (or Annuitant if the contract has a non-natural owner) is confined to a long-term care facility or hospital for a continuous 90 day period after the first Contract Anniversary.  Written proof of confinement is a bill or a statement from the physician or from the long-term care facility or hospital, as defined in the contract that demonstrates the continuous 90-day confinement of the Contract Owner at the time of withdrawal or surrender occurring after the first Contract Anniversary.  The request for waiver must be received by Nationwide during the period of confinement or no later than 91 days after the confinement period ends.  If the request for waiver is received later than 91 days after the confinement period ends, the CDSC, if applicable, will be assessed.  See “Contingent Deferred Sales Charge” subsection “Long-Term Care/Nursing Home and Terminal Illness Waiver” earlier in this prospectus for more information.

CDSC will not be charged if the Contract Owner (or a joint owner) is diagnosed by a physician (who is not a party to the contract or an immediate family member of a party to the contract) to have a terminal illness at any time after the contract has been issued.  Written notice requesting a terminal illness waiver of CDSC and proof of terminal illness must be provided by the physician to Nationwide and recorded at Nationwide prior to the waiver of surrender charges.  See “Contingent Deferred Sales Charge” subsection “Long-Term Care/Nursing Home and Terminal Illness Waiver” earlier in this prospectus for more information.

Vermont - Joint owners are not limited to spouses.  See “Ownership and Interests in the Contract” earlier in this prospectus for more information.

Washington - The Beneficiary Protector II Option is not available.  See “Optional Contract Benefits, Charges and Deductions” subsection “Beneficiary Protector II Option” earlier in this prospectus for more information.

65

The 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 “Standard Charges and Deductions” subsection “Contingent Deferred Sales Charge” subsection “Waiver of Contingent Deferred Sales Charge” 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 sixth Contract Anniversary.  See “Synopsis of the Contracts” subsection "Minimum Initial and Subsequent Purchase Payments" earlier in this prospectus for more information.

The Combination Enhanced Death Benefit Option is not available.  See “Death Benefits” subsection “Death Benefit Calculations” subsection “Combined Enhanced Death Benefit Option” earlier in this prospectus for more information.

The age based component of the calculation to determine the withdrawal amount that may be surrendered without CDSC under the Systematic Withdrawals program is not available.  See “Contract Owner Services” subsection “Systematic Withdrawals” earlier in this prospectus for more information.

66

STATEMENT OF ADDITIONAL INFORMATION

_____________, 2010

Individual Flexible Premium Deferred Variable Annuity Contracts

Issued by Nationwide Life Insurance Company

through its Nationwide Variable Account-II

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 _________, 2010.  The prospectus may be obtained from Nationwide Life Insurance Company by writing 5100 Rings Road, RR1-04-F4, Dublin, Ohio 43017-1522, or calling 1-800-848-6331, TDD 1-800-238-3035.  Capitalized terms in this Statement of Additional Information correspond to terms defined in the prospectus.

Table of Contents of 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
Condensed Financial Information	2
Financial Statements	3

General Information and History

The Nationwide Variable Account-II 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 1981 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 $140 billion as of December 31, 2009.

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 purchase payment amount) 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.

1

Independent Registered Public Accounting Firm

The financial statements of Nationwide Variable Account-II and the consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.  The audit report of KPMG LLP covering the December 31, 2009 consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.   KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Purchase of Securities Being Offered

The contracts will be sold by licensed insurance agents in the states where the contracts may be lawfully sold. Such agents will be registered representatives of broker-dealers registered under the Securities Exchange Act of 1934 who are members of theFinancial 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, 2009, 2008 and 2007, 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 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.

Condensed Financial Information

The contracts were not available for sale as of December 31, 2009.  Therefore, no Condensed Financial Information is available.

2

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and

Contract Owners of Nationwide Variable Account-II:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide Variable Account-II (comprised of the sub-accounts listed in note 1(b) (collectively, “the Accounts”)) as of December 31, 2009, and the related statements of operations and changes in contract owners’ equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Accounts as of December 31, 2009, and the results of their operations, changes in contract owners’ equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles.

/s/    KPMG LLP

Columbus, Ohio

March 10, 2010

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2009

Assets:
Investments at fair value:
Balanced Portfolio - Class S Shares (ALBS)
18,750 shares (cost $257,488)	$	220,312
MidCap Growth Portfolio - Class S Shares (ALMCS)
41,685 shares (cost $716,887)		432,686
Growth Fund - Class 1 (AFGF)
221,525 shares (cost $11,216,429)		10,289,853
High-Income Bond Fund - Class 1 (AFHY)
165,430 shares (cost $1,490,490)		1,735,362
U.S. Government/AAA - Rated Securities Fund - Class 1 (AFGC)
111,300 shares (cost $1,327,375)		1,355,630
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class III (MLVGA3)
2,100,135 shares (cost $27,129,538)		28,183,805
Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)
290,301 shares (cost $1,682,840)		1,701,165
U.S. Equity Flex I Portfolio (WSCP)
2,804,064 shares (cost $33,402,398)		34,966,676
Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)
1,090,415 shares (cost $4,688,398)		6,073,614
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
486,875 shares (cost $13,265,296)		13,598,431
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
3,282,808 shares (cost $110,347,659)		108,890,727
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)
1,110,655 shares (cost $4,595,569)		5,164,545
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
521,155 shares (cost $1,835,292)		2,371,257
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
4,289,451 shares (cost $217,190,330)		194,440,807
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
211,498 shares (cost $6,546,648)		9,534,336
Investors Growth Stock Series - Service Class (MIGSC)
1,395,786 shares (cost $12,951,004)		13,427,458
Value Series - Service Class (MVFSC)
29,059,375 shares (cost $292,393,976)		339,413,504

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

Core Plus Fixed Income Portfolio - Class I (MSVFI)
208,416 shares (cost $2,152,015)	$	2,069,567
Core Plus Fixed Income Portfolio - Class II (MSVF2)
2,487,981 shares (cost $24,162,524)		24,506,612
Emerging Markets Debt Portfolio - Class I (MSEM)
571,711 shares (cost $4,565,498)		4,430,760
Emerging Markets Debt Portfolio - Class II (MSEMB)
174,502 shares (cost $1,377,777)		1,345,407
U.S. Real Estate Portfolio - Class I (MSVRE)
3,487 shares (cost $28,722)		35,397
U.S. Real Estate Portfolio - Class II (MSVREB)
1,103 shares (cost $9,053)		11,147
Managed Allocation Fund - Moderate Growth II (VFMG2)
525,290 shares (cost $5,201,975)		4,554,269
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)
159,732 shares (cost $1,794,560)		1,760,252
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
5,471 shares (cost $69,371)		69,695
American Century NVIT Multi Cap Value Fund - Class II (NVAMV2)
340,737 shares (cost $4,120,416)		4,337,579
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
80,707,248 shares (cost $1,309,411,535)		1,265,489,654
American Funds NVIT Bond Fund - Class II (GVABD2)
48,931,670 shares (cost $519,209,664)		521,122,282
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
4,477,237 shares (cost $97,564,252)		88,514,982
American Funds NVIT Growth Fund - Class II (GVAGR2)
3,094,684 shares (cost $179,199,580)		142,386,405
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
14,672,005 shares (cost $476,156,677)		491,952,336
Federated NVIT High Income Bond Fund - Class I (HIBF)
1,536,028 shares (cost $11,609,958)		10,137,784
Federated NVIT High Income Bond Fund - Class III (HIBF3)
10,751,736 shares (cost $61,955,075)		70,853,938
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
52,743 shares (cost $694,430)		599,158
Gartmore NVIT Emerging Markets Fund - Class II (GEM2)
192,534 shares (cost $2,469,543)		2,166,006

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
3,588,356 shares (cost $54,540,723)	$	40,691,957
Gartmore NVIT Emerging Markets Fund - Class VI (GEM6)
4,834,268 shares (cost $67,035,748)		54,772,254
Gartmore NVIT Global Utilities Fund - Class II (GVGU2)
43,239 shares (cost $490,016)		350,666
Gartmore NVIT Global Utilities Fund - Class III (GVGU)
433,751 shares (cost $4,471,145)		3,517,719
Gartmore NVIT International Equity Fund - Class I (GIG)
7,930 shares (cost $59,126)		63,519
Gartmore NVIT International Equity Fund - Class III (GIG3)
4,354,350 shares (cost $37,491,379)		34,921,884
Gartmore NVIT International Equity Fund - Class VI (NVIE6)
2,055,564 shares (cost $14,224,717)		16,444,515
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)
248,041 shares (cost $3,617,821)		2,534,983
Gartmore NVIT Worldwide Leaders Fund - Class VI (NVGWL6)
53,474 shares (cost $512,405)		547,037
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
12,080,794 shares (cost $91,945,735)		102,082,706
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class II (NVNMO2)
1,359,734 shares (cost $9,432,520)		11,435,366
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
190,918 shares (cost $1,668,995)		1,609,442
Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)
33,408,430 shares (cost $305,377,308)		281,298,979
NVIT Cardinal Aggressive Fund - Class II (NVCRA2)
1,266,940 shares (cost $9,361,520)		10,654,966
NVIT Cardinal Balanced Fund - Class II (NVCRB2)
43,828,786 shares (cost $385,230,246)		418,126,617
NVIT Cardinal Capital Appreciation Fund - Class II (NVCCA2)
59,439,295 shares (cost $494,446,021)		540,303,195
NVIT Cardinal Conservative Fund - Class II (NVCCN2)
19,331,182 shares (cost $184,006,269)		194,471,692
NVIT Cardinal Moderate Fund - Class II (NVCMD2)
53,441,922 shares (cost $456,343,709)		498,078,711
NVIT Cardinal Moderately Aggressive Fund - Class II (NVCMA2)
20,743,851 shares (cost $162,057,920)		183,375,644

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

NVIT Cardinal Moderately Conservative Fund - Class II (NVCMC2)
18,081,371 shares (cost $164,616,354)	$	176,474,177
NVIT Core Bond Fund - Class I (NVCBD1)
289,152 shares (cost $2,970,838)		2,952,245
NVIT Core Bond Fund - Class II (NVCBD2)
19,987,654 shares (cost $203,970,866)		203,674,193
NVIT Core Plus Bond Fund - Class II (NVLCP2)
1,266,177 shares (cost $13,362,416)		13,649,385
NVIT Fund - Class I (TRF)
18,220,212 shares (cost $189,118,967)		147,765,917
NVIT Fund - Class II (TRF2)
35,148,631 shares (cost $380,494,090)		283,649,456
NVIT Global Financial Services Fund - Class II (GVGF2)
93,291 shares (cost $1,121,920)		694,086
NVIT Global Financial Services Fund - Class III (GVGFS)
298,209 shares (cost $2,052,810)		2,227,624
NVIT Government Bond Fund - Class I (GBF)
51,393,817 shares (cost $596,078,112)		603,363,409
NVIT Growth Fund - Class I (CAF)
3,029,304 shares (cost $26,682,875)		35,624,615
NVIT Health Sciences Fund - Class II (GVGH2)
133,607 shares (cost $1,391,392)		1,265,261
NVIT Health Sciences Fund - Class III (GVGHS)
444,995 shares (cost $4,379,579)		4,280,850
NVIT Health Sciences Fund - Class VI (GVGH6)
1,478,771 shares (cost $14,358,160)		14,122,259
NVIT International Index Fund - Class VIII (GVIX8)
1,469,456 shares (cost $12,899,243)		11,902,590
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
45,325,551 shares (cost $500,947,887)		373,029,282
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
4,870,326 shares (cost $56,875,109)		58,590,026
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
8,907,348 shares (cost $110,139,304)		114,993,867
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
28,750,098 shares (cost $284,189,390)		283,763,469
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
221,528,884 shares (cost $2,469,380,467)		2,151,045,467

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
153,662,280 shares (cost $1,771,841,869)	$	1,442,888,810
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
61,006,861 shares (cost $647,703,776)		598,477,310
NVIT Leaders Fund - Class III (GVUSL)
327,500 shares (cost $4,004,541)		2,816,497
NVIT Mid Cap Index Fund - Class I (MCIF)
6,004,918 shares (cost $103,678,309)		88,992,886
NVIT Money Market Fund - Class I (SAM)
612,166,355 shares (cost $612,166,355)		612,166,355
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
5,513,468 shares (cost $41,969,174)		47,636,363
NVIT Multi-Manager International Growth Fund - Class VI (NVMIG6)
31,439,414 shares (cost $285,746,208)		271,007,752
NVIT Multi-Manager International Value Fund - Class II (GVDIV2)
105,437 shares (cost $1,484,884)		1,032,224
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
875,718 shares (cost $12,826,303)		8,573,283
NVIT Multi-Manager International Value Fund - Class VI (GVDIV6)
4,465,802 shares (cost $43,305,403)		43,541,569
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
405,042 shares (cost $3,074,589)		3,519,819
NVIT Multi-Manager Large Cap Growth Fund - Class II (NVMLG2)
19,037,007 shares (cost $132,499,808)		165,241,222
NVIT Multi-Manager Large Cap Value Fund - Class II (NVMLV2)
4,655,699 shares (cost $34,657,469)		38,828,526
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
23,651,832 shares (cost $175,537,924)		198,438,874
NVIT Multi-Manager Mid Cap Growth Fund - Class II (NVMMG2)
20,199,770 shares (cost $170,179,107)		168,668,082
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
36,681,534 shares (cost $319,982,415)		334,902,403
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
471,349 shares (cost $7,377,501)		5,797,590
NVIT Multi-Manager Small Cap Growth Fund - Class II (SCGF2)
949,105 shares (cost $14,207,190)		11,455,697
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)
4,454,286 shares (cost $51,008,871)		36,970,572

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

NVIT Multi-Manager Small Cap Value Fund - Class II (SCVF2)
3,212,127 shares (cost $30,381,666)	$	26,275,198
NVIT Multi-Manager Small Company Fund - Class I (SCF)
5,938,943 shares (cost $122,709,113)		85,817,724
NVIT Multi-Manager Small Company Fund - Class II (SCF2)
3,038,979 shares (cost $52,708,368)		42,940,779
NVIT Multi-Sector Bond Fund - Class I (MSBF)
9,079,853 shares (cost $79,969,318)		75,090,382
NVIT Short Term Bond Fund - Class II (NVSTB2)
7,449,317 shares (cost $75,739,918)		76,355,495
NVIT Technology & Communications Fund - Class I (GGTC)
51,115 shares (cost $167,660)		173,791
NVIT Technology & Communications Fund - Class II (GGTC2)
221,816 shares (cost $823,783)		743,085
NVIT Technology & Communications Fund - Class III (GGTC3)
1,611,773 shares (cost $4,394,058)		5,528,383
NVIT Technology & Communications Fund - Class VI (GGTC6)
4,414,808 shares (cost $13,286,109)		14,877,903
NVIT U.S. Growth Leaders Fund - Class II (GVUG2)
1,975,256 shares (cost $17,634,761)		14,597,140
NVIT U.S. Growth Leaders Fund - Class III (GVUGL)
323,121 shares (cost $3,113,627)		2,442,799
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
42,482 shares (cost $578,702)		598,143
Oppenheimer NVIT Large Cap Growth Fund - Class II (NVOLG2)
116,286 shares (cost $1,529,845)		1,636,146
Templeton NVIT International Value Fund - Class III (NVTIV3)
22,877,272 shares (cost $260,061,069)		317,994,082
Van Kampen NVIT Comstock Value Fund - Class II (EIF2)
9,636,349 shares (cost $87,698,456)		85,185,326
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
8,392,452 shares (cost $52,488,288)		61,264,901
Van Kampen NVIT Real Estate Fund - Class II (NVRE2)
7,041,551 shares (cost $43,863,485)		51,262,494
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)
23,404,536 shares (cost $291,762,200)		262,598,891
Foreign Bond Portfolio (Unhedged) - Advisor Class (PMVFAD)
662,807 shares (cost $7,311,519)		7,052,264

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

Low Duration Portfolio - Advisor Class (PMVLAD)
15,137,792 shares (cost $155,334,733)	$	153,043,079
V.I. Basic Value Fund - Series II (AVBV2)
1,836 shares (cost $10,085)		10,923
V.I. Capital Appreciation Fund - Series II (AVCA2)
387,722 shares (cost $9,964,782)		7,754,437
V.I. Capital Development Fund - Series II (AVCD2)
1,768,965 shares (cost $25,119,712)		19,440,929
VPS Growth and Income Portfolio - Class B (ALVGIB)
604,486 shares (cost $13,234,456)		9,115,654
VPS Small/Mid Cap Value Portfolio: Class B (ALVSVB)
1,575,178 shares (cost $18,147,097)		21,044,375
Money Market Portfolio(TM) (CHSMM)
17,177,763 shares (cost $17,177,763)		17,177,763
VP Balanced Fund - Class I (ACVB)
7,037,718 shares (cost $44,560,447)		40,466,877
VP Capital Appreciation Fund - Class I (ACVCA)
9,908 shares (cost $92,142)		106,706
VP Income & Growth Fund - Class I (ACVIG)
2,934,083 shares (cost $19,768,456)		15,785,365
VP Income & Growth Fund - Class II (ACVIG2)
1,178,424 shares (cost $8,253,611)		6,339,919
VP Inflation Protection Fund - Class II (ACVIP2)
14,151,471 shares (cost $147,722,729)		151,845,289
VP International Fund - Class I (ACVI)
4,599 shares (cost $31,246)		35,554
VP International Fund - Class III (ACVI3)
47 shares (cost $315)		363
VP Mid Cap Value Fund - Class I (ACVMV1)
451,522 shares (cost $4,909,167)		5,472,448
VP Mid Cap Value Fund - Class II (ACVMV2)
3,007,959 shares (cost $33,083,354)		36,486,543
VP Ultra(R) Fund - Class II (ACVU2)
1,654 shares (cost $11,262)		13,296
VP Value Fund - Class I (ACVV)
11,322,525 shares (cost $80,383,041)		59,782,930
VP Value Fund - Class II (ACVV2)
14,429,475 shares (cost $96,139,089)		76,331,922

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

VP Vista(SM) Fund - Class I (ACVVS1)
730 shares (cost $8,369)	$	9,632
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
4,277,477 shares (cost $51,571,635)		41,705,403
Stock Index Fund, Inc. - Initial Shares (DSIF)
9,593,832 shares (cost $243,219,019)		252,413,713
Stock Index Fund, Inc. - Service Shares (DSIFS)
3,511,153 shares (cost $103,634,652)		92,483,773
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)
1,718,129 shares (cost $39,688,247)		45,118,066
Appreciation Portfolio - Initial Shares (DCAP)
823,104 shares (cost $27,822,436)		25,845,478
Appreciation Portfolio - Service Shares (DCAPS)
750,654 shares (cost $24,547,459)		23,427,916
Developing Leaders Portfolio - Service Shares (DVDLS)
59,525 shares (cost $1,964,299)		1,383,371
Growth and Income Portfolio - Initial Shares (DGI)
883,766 shares (cost $16,828,670)		14,900,291
Capital Appreciation Fund II - Service Shares (FCA2S)
298,262 shares (cost $1,724,272)		1,703,078
Clover Value Fund II - Service Shares (FALFS)
102,373 shares (cost $1,319,445)		924,428
Market Opportunity Fund II - Service Shares (FVMOS)
736,109 shares (cost $7,510,446)		7,250,671
Quality Bond Fund II - Primary Shares (FQB)
1,156,252 shares (cost $12,381,400)		12,950,022
Quality Bond Fund II - Service Shares (FQBS)
4,824,488 shares (cost $52,526,412)		53,793,039
Contrafund Portfolio - Service Class 2 (FC2)
11,410,061 shares (cost $331,888,463)		231,510,138
Equity-Income Portfolio - Initial Class (FEIP)
23,389,583 shares (cost $525,449,207)		393,178,893
Fidelity(R) VIP Fund - Value Strategies Portfolio - Service Class 2 (FVSS2)
1,624,068 shares (cost $16,928,544)		12,619,012
High Income Portfolio - Initial Class (FHIP)
12,280,322 shares (cost $72,206,293)		64,962,901
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)
13,501,694 shares (cost $189,749,681)		175,522,016

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

VIP Fund - Contrafund Portfolio - Initial Class (FCP)
18,187,651 shares (cost $443,717,837)	$	375,029,364
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
4,658,989 shares (cost $101,680,618)		78,224,434
VIP Fund - Equity-Income Portfolio - Service Class 2 (FEI2)
7,109,014 shares (cost $161,914,795)		117,796,364
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
537,620 shares (cost $5,528,649)		5,252,552
VIP Fund - Freedom Fund 2010 Portfolio - Service Class 2 (FF10S2)
6,268,608 shares (cost $66,747,508)		61,056,238
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
775,114 shares (cost $7,791,921)		7,363,586
VIP Fund - Freedom Fund 2020 Portfolio - Service Class 2 (FF20S2)
12,040,819 shares (cost $126,410,327)		114,146,961
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
600,498 shares (cost $6,094,528)		5,416,493
VIP Fund - Freedom Fund 2030 Portfolio - Service Class 2 (FF30S2)
2,096,691 shares (cost $22,475,344)		18,870,218
VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)
990,518 shares (cost $14,695,054)		14,372,417
VIP Fund - Growth Portfolio - Initial Class (FGP)
11,795,491 shares (cost $390,412,200)		354,336,543
VIP Fund - Growth Portfolio - Service Class 2 (FG2)
1,506,795 shares (cost $56,170,003)		44,827,166
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)
4,772,804 shares (cost $20,592,889)		25,152,678
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
2,328,721 shares (cost $28,258,736)		28,852,853
VIP Fund - Investment Grade Bond Portfolio - Service Class 2 (FIGBP2)
41,918,245 shares (cost $511,198,364)		513,917,689
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
874,699 shares (cost $24,153,946)		22,226,105
VIP Fund - Mid Cap Portfolio - Service Class 2 (FMC2)
7,488,473 shares (cost $221,987,210)		187,960,666
VIP Fund - Overseas Portfolio - Initial Class (FOP)
4,860,741 shares (cost $79,114,401)		73,154,150
VIP Fund - Overseas Portfolio - Initial Class R (FOPR)
2,343,451 shares (cost $45,112,486)		35,198,637

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

VIP Fund - Overseas Portfolio - Service Class 2 (FO2)
261,634 shares (cost $4,613,285)	$	3,903,581
VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)
3,582,226 shares (cost $67,247,449)		53,016,951
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
907,832 shares (cost $7,864,223)		6,999,387
Franklin Income Securities Fund - Class 2 (FTVIS2)
7,956,643 shares (cost $130,197,418)		112,347,794
Franklin Rising Dividends Securities Fund - Class 2 (FTVRD2)
4,348,673 shares (cost $76,807,751)		68,969,952
Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)
14,281,260 shares (cost $153,279,139)		182,371,691
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
3,790,535 shares (cost $42,700,234)		36,881,905
Templeton Foreign Securities Fund - Class 2 (TIF2)
418,430 shares (cost $5,647,615)		5,627,886
Templeton Foreign Securities Fund - Class 3 (TIF3)
6,867,226 shares (cost $76,744,010)		91,814,811
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
4,505,917 shares (cost $75,549,691)		78,087,536
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
1,647,042 shares (cost $10,810,684)		11,759,877
Growth Portfolio - I Class Shares (AMTG)
6,638 shares (cost $80,590)		94,063
International Portfolio - S Class Shares (AMINS)
9 shares (cost $87)		88
Partners Portfolio- I Class Shares (AMTP)
4,512 shares (cost $43,701)		44,265
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
398,668 shares (cost $4,852,033)		4,086,352
Socially Responsive Portfolio - I Class Shares (AMSRS)
2,233,426 shares (cost $33,893,176)		27,024,450
Balanced Fund/VA - Non-Service Shares (OVMS)
4,949,891 shares (cost $74,640,095)		50,983,879
Capital Appreciation Fund/VA - Service Class (OVCAFS)
1,095,756 shares (cost $40,690,174)		40,148,494
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
1,284,035 shares (cost $45,295,441)		47,432,267

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

Core Bond Fund/VA - Non-Service Shares (OVB)
6,026,762 shares (cost $65,156,459)	$	42,609,207
Global Securities Fund/VA - Class 3 (OVGS3)
2,477,242 shares (cost $71,590,777)		66,068,044
Global Securities Fund/VA - Class 4 (OVGS4)
2,548,732 shares (cost $79,509,061)		67,082,613
Global Securities Fund/VA - Non-Service Shares (OVGS)
5,086,630 shares (cost $113,264,402)		134,795,700
Global Securities Fund/VA - Service Class (OVGSS)
427,166 shares (cost $11,474,300)		11,225,928
High Income Fund/VA - Class 3 (OVHI3)
192,691 shares (cost $319,040)		383,456
High Income Fund/VA - Class 4 (OVHI4)
3,533,105 shares (cost $5,759,571)		7,101,541
High Income Fund/VA - Non-Service Shares (OVHI)
22,504 shares (cost $176,840)		44,558
High Income Fund/VA - Service Class (OVHIS)
1,833,831 shares (cost $14,704,984)		3,649,324
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
763,761 shares (cost $15,613,026)		13,885,181
Main Street Fund(R)/VA - Service Class (OVGIS)
17,035,163 shares (cost $374,789,446)		307,314,341
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
311,423 shares (cost $3,897,713)		4,484,492
Main Street Small Cap Fund(R)/VA - Service Class (OVSCS)
2,499,549 shares (cost $24,443,642)		35,693,559
MidCap Fund/VA - Non-Service Shares (OVAG)
231,893 shares (cost $10,915,864)		8,468,727
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
258,302 shares (cost $5,556,556)		3,719,545
Putnam VT International Equity Fund - IB Shares (PVTIGB)
61,491 shares (cost $898,993)		681,323
Putnam VT Voyager Fund - IB Shares (PVTVB)
88,758 shares (cost $2,468,143)		2,875,757
Diversified Stock Fund Class A Shares (VYDS)
60,643 shares (cost $572,141)		531,839
Blue Chip Growth Portfolio - II (TRBCG2)
3,961,986 shares (cost $35,780,597)		37,638,866

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

Equity Income Portfolio - II (TREI2)
4,246,808 shares (cost $89,420,601)	$	74,786,298
Limited-Term Bond Portfolio - II (TRLT2)
3 shares (cost $13)		13
Worldwide Insurance Trust - Worldwide Bond Fund - Class R1 (VWBFR)
566,727 shares (cost $6,567,464)		6,659,045
Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)
1,136,094 shares (cost $13,388,609)		13,349,100
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Class R1 (VWEMR)
1,779,721 shares (cost $19,937,328)		19,950,677
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
1,950,943 shares (cost $29,576,537)		21,889,582
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Class R1 (VWHAR)
1,063,856 shares (cost $34,295,882)		31,128,427
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)
1,124,544 shares (cost $26,121,883)		32,904,166
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
3,821,692 shares (cost $33,619,879)		35,256,258
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
2,731 shares (cost $36,871)		42,881
Advantage Funds Variable Trust - VT Large Company Growth Fund (WFVLCG)
11,566 shares (cost $100,955)		103,748
Advantage Funds Variable Trust - VT Money Market Fund (WFVMM)
156,780 shares (cost $156,780)		156,780
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
17,297 shares (cost $223,126)		259,630
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
1,584,147 shares (cost $9,066,530)		10,059,335
Advantage Funds Variable Trust - VT Small-Mid Cap Value Fund (WFVSMV)
1,232 shares (cost $11,066)		9,643

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

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

Advantage Funds Variable Trust - VT Total Return Bond Fund (WFVTRB)
25,104 shares (cost $259,655)	$	259,575
Total Investments		21,471,659,903
Accounts Receivable U.S. Real Estate Portfolio - Class I (MSVRE)		5,875
Accounts Receivable U.S. Real Estate Portfolio - Class II (MSVREB)		2,508
Accounts Receivable V.I. Basic Value Fund - Series II (AVBV2)		1,828
Accounts Receivable VP Ultra(R) Fund - Class II (ACVU2)		433
Accounts Receivable Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)		21,323
Total Assets	$	21,471,691,870
Accounts Payable Credit Suisse Trust- International Equity Flex III Portfolio (CSIEF3)		56,722
Accounts Payable VP International Fund - Class I (ACVI)		747
Accounts Payable VP International Fund - Class III (ACVI3)		7
Accounts Payable Growth Portfolio - I Class Shares (AMTG)		74,249
Accounts Payable International Portfolio - S Class Shares (AMINS)		88
Accounts Payable Partners Portfolio- I Class Shares (AMTP)		23,015
Accounts Payable Limited-Term Bond Portfolio - II (TRLT2)		2
Accounts Payable Advantage Funds Variable Trust - VT Discovery Fund (SVDF)		3,617
Other Accounts Payable		253,123
	$	21,471,280,300
Contract Owners’ Equity:
Accumulation units		21,462,886,103
Contracts in payout (annuitization) period		8,394,197
Total Contract Owners’ Equity (note 5)	$	21,471,280,300

See accompanying notes to financial statements.

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS

Year Ended December 31, 2009

Investment Activity:	Total			ALBS		ALMCS		AFGF		AFHY		AFGC		MLVGA3		CSIEF3
Reinvested dividends	$	345,105,437		5,728		-		80,075		113,973		37,970		345,479		-
Mortality and expense risk charges (note 2)		(295,502,556	)	(2,028	)	(3,645	)	(123,183	)	(18,720	)	(19,040	)	(119,334	)	(1,233	)
Net investment income (loss)		49,602,881		3,700		(3,645	)	(43,108	)	95,253		18,930		226,145		(1,233	)
Realized gain (loss) on investments		(1,638,769,490	)	(12,724	)	(45,009	)	(359,600	)	1,167		1,011		19,518		52
Change in unrealized gain (loss) on investments		5,024,146,648		57,489		187,323		3,503,727		393,367		(10,779	)	1,054,267		18,325
Net gain (loss) on investments		3,385,377,158		44,765		142,314		3,144,127		394,534		(9,768	)	1,073,785		18,377
Reinvested capital gains		266,022,593		-		-		-		-		12,897		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,701,002,632		48,465		138,669		3,101,019		489,787		22,059		1,299,930		17,144
Investment Activity:	WSCP			JPMMV1		JABS		JACAS		JAGTS2		JAGTS		JARLCS		JAIGS2
Reinvested dividends	$	368,018		-		332,903		11,477		-		-		18,666		630,618
Mortality and expense risk charges (note 2)		(424,427	)	(52,350	)	(171,097	)	(1,333,930	)	(51,931	)	(26,821	)	(33,475	)	(2,356,317	)
Net investment income (loss)		(56,409	)	(52,350	)	161,806		(1,322,453	)	(51,931	)	(26,821	)	(14,809	)	(1,725,699	)
Realized gain (loss) on investments		335,321		120,458		98,845		1,346,294		77,619		3,692		(1,782,822	)	(13,207,264	)
Change in unrealized gain (loss) on investments		6,359,410		1,385,216		1,901,259		30,329,801		1,695,971		901,951		2,118,307		94,042,772
Net gain (loss) on investments		6,694,731		1,505,674		2,000,104		31,676,095		1,773,590		905,643		335,485		80,835,508
Reinvested capital gains		-		-		444,011		-		-		-		-		4,306,852
Net increase (decrease) in contract owners’ equity resulting from operations	$	6,638,322		1,453,324		2,605,921		30,353,642		1,721,659		878,822		320,676		83,416,661

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	JAIGS			MIGSC		MVFSC		MSVFI		MSVF2		MSEM		MSEMB		MSVRE
Reinvested dividends	$	33,225		54,128		3,090,429		234,876		12,896,456		347,645		101,811		1,640,097
Mortality and expense risk charges (note 2)		(111,662	)	(196,947	)	(4,713,440	)	(32,532	)	(1,725,831	)	(58,061	)	(18,917	)	(388,143	)
Net investment income (loss)		(78,437	)	(142,819	)	(1,623,011	)	202,344		11,170,625		289,584		82,894		1,251,954
Realized gain (loss) on investments		520,950		(264,896	)	(6,438,115	)	(321,844	)	(36,883,147	)	(117,690	)	(89,704	)	(66,930,523	)
Change in unrealized gain (loss) on investments		3,836,579		4,149,861		77,682,129		310,295		32,378,594		914,507		320,524		68,126,489
Net gain (loss) on investments		4,357,529		3,884,965		71,244,014		(11,549	)	(4,504,553	)	796,817		230,820		1,195,966
Reinvested capital gains		235,876		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,514,968		3,742,146		69,621,003		190,795		6,666,072		1,086,401		313,714		2,447,920
Investment Activity:	MSVREB			VFMG2		NVAGF3		NVAMV1		NVAMV2		GVAAA2		GVABD2		GVAGG2
Reinvested dividends	$	1,053,693		518		57,673		345		24,746		748,122		1,397,673		-
Mortality and expense risk charges (note 2)		(316,464	)	(64,890	)	(7,905	)	(161	)	(21,055	)	(15,120,785	)	(7,345,653	)	(1,012,227	)
Net investment income (loss)		737,229		(64,372	)	49,768		184		3,691		(14,372,663	)	(5,947,980	)	(1,012,227	)
Realized gain (loss) on investments		(57,817,100	)	(880,284	)	12,227		394		10,546		(967,861	)	(5,520,833	)	(2,346,433	)
Change in unrealized gain (loss) on investments		58,458,616		1,768,219		(34,308	)	324		217,163		183,848,906		48,539,026		20,478,116
Net gain (loss) on investments		641,516		887,935		(22,081	)	718		227,709		182,881,045		43,018,193		18,131,683
Reinvested capital gains		-		25,226		7,662		2,329		157,670		23,952,905		133,572		5,145,844
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,378,745		848,789		35,349		3,231		389,070		192,461,287		37,203,785		22,265,300

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	GVAGR2			GVAGI2		HIBF		HIBF3		GEM		GEM2		GEM3		GEM6
Reinvested dividends	$	-		-		883,942		4,951,434		6,462		21,967		433,826		458,660
Mortality and expense risk charges (note 2)		(1,734,567	)	(6,898,859	)	(140,715	)	(760,867	)	(6,768	)	(29,136	)	(446,762	)	(640,134	)
Net investment income (loss)		(1,734,567	)	(6,898,859	)	743,227		4,190,567		(306	)	(7,169	)	(12,936	)	(181,474	)
Realized gain (loss) on investments		(14,738,005	)	(12,387,580	)	(868,839	)	(6,795,418	)	(13,506	)	(151,694	)	(5,122,632	)	(14,512,801	)
Change in unrealized gain (loss) on investments		37,729,828		111,016,457		3,419,998		20,803,406		249,347		1,060,048		21,233,938		33,590,395
Net gain (loss) on investments		22,991,823		98,628,877		2,551,159		14,007,988		235,841		908,354		16,111,306		19,077,594
Reinvested capital gains		13,208,018		9,902,860		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	34,465,274		101,632,878		3,294,386		18,198,555		235,535		901,185		16,098,370		18,896,120
Investment Activity:	GVGU2			GVGU		GIG		GIG3		NVIE6		GEF3		NVGWL6		NVNMO1
Reinvested dividends	$	12,887		141,691		717		144,686		50,100		23,937		2,224		69,882
Mortality and expense risk charges (note 2)		(5,296	)	(50,296	)	(796	)	(280,518	)	(132,952	)	(30,947	)	(2,373	)	(512,001	)
Net investment income (loss)		7,591		91,395		(79	)	(135,832	)	(82,852	)	(7,010	)	(149	)	(442,119	)
Realized gain (loss) on investments		(23,217	)	(1,835,008	)	2,830		(3,448,615	)	(1,111,808	)	(915,157	)	8,059		588,120
Change in unrealized gain (loss) on investments		33,458		1,849,941		13,373		8,852,276		3,598,820		1,375,926		34,632		10,150,274
Net gain (loss) on investments		10,241		14,933		16,203		5,403,661		2,487,012		460,769		42,691		10,738,394
Reinvested capital gains		-		-		-		-		-		-		-		221,132
Net increase (decrease) in contract owners’ equity resulting from operations	$	17,832		106,328		16,124		5,267,829		2,404,160		453,759		42,542		10,517,407

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	NVNMO2			NVNSR1		NVNSR2		NVCRA2		NVCRB2		NVCCA2		NVCCN2		NVCMD2
Reinvested dividends	$	-		8,002		1,129,647		72,295		6,254,610		5,665,665		3,799,581		6,135,803
Mortality and expense risk charges (note 2)		(91,964	)	(21,557	)	(4,996,722	)	(116,195	)	(5,376,582	)	(4,758,415	)	(1,979,842	)	(4,251,068	)
Net investment income (loss)		(91,964	)	(13,555	)	(3,867,075	)	(43,900	)	878,028		907,250		1,819,739		1,884,735
Realized gain (loss) on investments		(66,350	)	(343,055	)	(36,769,848	)	(415,017	)	-		(1,407,350	)	353,906		(652,099	)
Change in unrealized gain (loss) on investments		2,292,034		758,225		109,745,964		2,541,584		48,916,872		68,998,819		12,131,843		58,689,713
Net gain (loss) on investments		2,225,684		415,170		72,976,116		2,126,567		48,916,872		67,591,469		12,485,749		58,037,614
Reinvested capital gains		23,974		-		-		2,352		-		-		350,618		23,073
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,157,694		401,615		69,109,041		2,085,019		49,794,900		68,498,719		14,656,106		59,945,422
Investment Activity:	NVCMA2			NVCMC2		NVCBD1		NVCBD2		NVLCP2		TRF		TRF2		GVGF2
Reinvested dividends	$	2,201,747		2,754,748		55,724		3,263,100		335,468		1,819,595		3,263,545		5,557
Mortality and expense risk charges (note 2)		(2,416,026	)	(1,619,467	)	(19,641	)	(1,764,895	)	(105,931	)	(1,797,359	)	(5,141,628	)	(9,030	)
Net investment income (loss)		(214,279	)	1,135,281		36,083		1,498,205		229,537		22,236		(1,878,083	)	(3,473	)
Realized gain (loss) on investments		(3,971,723	)	(305,054	)	41,990		355,131		75,296		(17,933,556	)	(90,782,560	)	(90,836	)
Change in unrealized gain (loss) on investments		44,166,282		15,150,108		(22,864	)	(290,103	)	270,795		47,498,047		149,784,333		267,529
Net gain (loss) on investments		40,194,559		14,845,054		19,126		65,028		346,091		29,564,491		59,001,773		176,693
Reinvested capital gains		67,529		101,727		12,928		968,892		240,567		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	40,047,809		16,082,062		68,137		2,532,125		816,195		29,586,727		57,123,690		173,220

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	GVGFS			GBF		CAF		GVGH2		GVGHS		GVGH6		GVIX8		GVIDA
Reinvested dividends	$	23,131		21,195,980		177,346		1,759		11,975		19,202		236,422		3,689,921
Mortality and expense risk charges (note 2)		(27,441	)	(10,329,512	)	(425,965	)	(18,599	)	(54,365	)	(199,065	)	(126,875	)	(6,671,745	)
Net investment income (loss)		(4,310	)	10,866,468		(248,619	)	(16,840	)	(42,390	)	(179,863	)	109,547		(2,981,824	)
Realized gain (loss) on investments		(1,002,849	)	1,805,355		(448,767	)	(69,342	)	(760,771	)	(3,364,043	)	(1,419,623	)	(23,868,768	)
Change in unrealized gain (loss) on investments		1,661,926		(15,554,220	)	9,649,201		278,625		1,386,647		5,119,108		3,407,422		85,687,122
Net gain (loss) on investments		659,077		(13,748,865	)	9,200,434		209,283		625,876		1,755,065		1,987,799		61,818,354
Reinvested capital gains		-		8,836,233		-		-		-		-		-		19,329,241
Net increase (decrease) in contract owners’ equity resulting from operations	$	654,767		5,953,836		8,951,815		192,443		583,486		1,575,202		2,097,346		78,165,771
Investment Activity:	NVDBL2			NVDCA2		GVIDC		GVIDM		GVDMA		GVDMC		GVUSL		MCIF
Reinvested dividends	$	476,596		971,779		4,443,777		28,951,102		17,035,538		9,089,435		22,348		715,622
Mortality and expense risk charges (note 2)		(237,914	)	(456,313	)	(3,840,258	)	(34,136,389	)	(22,502,799	)	(9,487,314	)	(34,692	)	(1,060,285	)
Net investment income (loss)		238,682		515,466		603,519		(5,185,287	)	(5,467,261	)	(397,879	)	(12,344	)	(344,663	)
Realized gain (loss) on investments		34,592		14,184		(2,135,252	)	(8,238,065	)	(24,234,809	)	(4,659,856	)	(1,095,850	)	(4,294,187	)
Change in unrealized gain (loss) on investments		1,714,917		4,854,563		18,290,179		278,674,054		247,531,738		60,421,548		1,815,308		24,206,416
Net gain (loss) on investments		1,749,509		4,868,747		16,154,927		270,435,989		223,296,929		55,761,692		719,458		19,912,229
Reinvested capital gains		385,931		576,469		1,321,137		43,913,323		55,805,571		8,567,242		-		2,214,895
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,374,122		5,960,682		18,079,583		309,164,025		273,635,239		63,931,055		707,114		21,782,461

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	SAM			NVMIG3		NVMIG6		GVDIV2		GVDIV3		GVDIV6		NVMLG1		NVMLG2
Reinvested dividends	$	329,543		160,611		2,401,910		17,307		175,573		1,313,669		11,024		352,824
Mortality and expense risk charges (note 2)		(10,367,431	)	(250,379	)	(4,185,495	)	(14,548	)	(112,779	)	(1,088,184	)	(18,032	)	(1,332,116	)
Net investment income (loss)		(10,037,888	)	(89,768	)	(1,783,585	)	2,759		62,794		225,485		(7,008	)	(979,292	)
Realized gain (loss) on investments		-		(135,374	)	(11,054,510	)	(216,109	)	(3,666,379	)	(124,261,973	)	52,549		1,452,779
Change in unrealized gain (loss) on investments		-		6,322,921		84,231,085		427,220		5,548,736		129,977,230		447,033		32,814,686
Net gain (loss) on investments		-		6,187,547		73,176,575		211,111		1,882,357		5,715,257		499,582		34,267,465
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	(10,037,888	)	6,097,779		71,392,990		213,870		1,945,151		5,940,742		492,574		33,288,173
Investment Activity:	NVMLV2			NVMMG1		NVMMG2		NVMMV2		SCGF		SCGF2		SCVF		SCVF2
Reinvested dividends	$	190,789		-		-		2,150,292		-		-		197,934		97,712
Mortality and expense risk charges (note 2)		(283,993	)	(998,275	)	(2,422,724	)	(3,253,535	)	(65,258	)	(147,566	)	(453,184	)	(324,119	)
Net investment income (loss)		(93,204	)	(998,275	)	(2,422,724	)	(1,103,243	)	(65,258	)	(147,566	)	(255,250	)	(226,407	)
Realized gain (loss) on investments		20,789		1,169,167		(8,125,079	)	(28,914,331	)	(513,450	)	(1,457,954	)	(6,879,061	)	(2,835,775	)
Change in unrealized gain (loss) on investments		4,641,851		23,108,328		44,098,043		83,167,865		1,748,706		3,868,968		14,575,750		8,514,583
Net gain (loss) on investments		4,662,640		24,277,495		35,972,964		54,253,534		1,235,256		2,411,014		7,696,689		5,678,808
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	4,569,436		23,279,220		33,550,240		53,150,291		1,169,998		2,263,448		7,441,439		5,452,401

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	SCF			SCF2		MSBF		NVSTB2		GGTC		GGTC2		GGTC3		GGTC6
Reinvested dividends	$	206,888		57,827		6,059,975		1,015,346		-		-		-		-
Mortality and expense risk charges (note 2)		(1,017,550	)	(565,565	)	(939,721	)	(733,624	)	(1,932	)	(9,307	)	(50,639	)	(141,378	)
Net investment income (loss)		(810,662	)	(507,738	)	5,120,254		281,722		(1,932	)	(9,307	)	(50,639	)	(141,378	)
Realized gain (loss) on investments		(10,059,363	)	(42,981,547	)	(3,174,720	)	205,956		(7,364	)	(70,350	)	(1,141,728	)	(2,422,623	)
Change in unrealized gain (loss) on investments		32,766,156		52,465,466		9,790,510		767,682		71,933		342,305		2,800,319		6,279,749
Net gain (loss) on investments		22,706,793		9,483,919		6,615,790		973,638		64,569		271,955		1,658,591		3,857,126
Reinvested capital gains		-		-		-		230,664		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	21,896,131		8,976,181		11,736,044		1,486,024		62,637		262,648		1,607,952		3,715,748
Investment Activity:	GVUG2			GVUGL		NVOLG1		NVOLG2		NVTIV3		EIF2		NVRE1		NVRE2
Reinvested dividends	$	-		-		654		57		994,965		944,417		493,504		382,083
Mortality and expense risk charges (note 2)		(218,450	)	(32,612	)	(1,304	)	(5,308	)	(2,643,638	)	(1,514,432	)	(294,119	)	(292,408	)
Net investment income (loss)		(218,450	)	(32,612	)	(650	)	(5,251	)	(1,648,673	)	(570,015	)	199,385		89,675
Realized gain (loss) on investments		(2,984,177	)	(970,740	)	5,718		1,627		3,445,315		(40,893,495	)	(69,898	)	(154,468	)
Change in unrealized gain (loss) on investments		6,234,180		1,488,522		19,440		106,301		57,933,012		60,015,533		9,105,111		8,274,525
Net gain (loss) on investments		3,250,003		517,782		25,158		107,928		61,378,327		19,122,038		9,035,213		8,120,057
Reinvested capital gains		-		-		9,860		25,634		530,532		-		195,773		165,020
Net increase (decrease) in contract owners’ equity resulting from operations	$	3,031,553		485,170		34,368		128,311		60,260,186		18,552,023		9,430,371		8,374,752

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	AMTB			PMVFAD		PMVLAD		AVBV2		AVCA2		AVCD2		ALVGIB		ALVSVB
Reinvested dividends	$	20,423,127		39,327		1,614,513		111		19,683		-		304,489		109,709
Mortality and expense risk charges (note 2)		(5,054,743	)	(34,270	)	(1,092,095	)	(234,538	)	(120,598	)	(264,531	)	(134,264	)	(227,257	)
Net investment income (loss)		15,368,384		5,057		522,418		(234,427	)	(100,915	)	(264,531	)	170,225		(117,548	)
Realized gain (loss) on investments		(25,869,568	)	267,920		67,791		(20,552,126	)	(645,614	)	(2,615,542	)	(1,426,904	)	(3,399,584	)
Change in unrealized gain (loss) on investments		41,225,297		(259,254	)	(2,291,654	)	27,703,473		1,982,553		8,246,231		2,686,885		8,029,882
Net gain (loss) on investments		15,355,729		8,666		(2,223,863	)	7,151,347		1,336,939		5,630,689		1,259,981		4,630,298
Reinvested capital gains		-		96,384		6,691,974		-		-		-		-		578,687
Net increase (decrease) in contract owners’ equity resulting from operations	$	30,724,113		110,107		4,990,529		6,916,920		1,236,024		5,366,158		1,430,206		5,091,437
Investment Activity:	CHSMM			ACVB		ACVCA		ACVIG		ACVIG2		ACVIP2		ACVI		ACVI2
Reinvested dividends	$	24,862		2,152,041		618,872		742,670		263,885		2,480,859		554,562		30,954
Mortality and expense risk charges (note 2)		(216,104	)	(535,537	)	(568,450	)	(203,310	)	(87,857	)	(2,195,736	)	(204,166	)	(13,172	)
Net investment income (loss)		(191,242	)	1,616,504		50,422		539,360		176,028		285,123		350,396		17,782
Realized gain (loss) on investments		-		(2,212,965	)	4,551,873		(1,165,437	)	(572,077	)	(202,624	)	(9,145	)	(106,214	)
Change in unrealized gain (loss) on investments		-		5,655,141		8,972,785		2,933,568		1,228,206		11,207,481		3,849,929		318,636
Net gain (loss) on investments		-		3,442,176		13,524,658		1,768,131		656,129		11,004,857		3,840,784		212,422
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	(191,242	)	5,058,680		13,575,080		2,307,491		832,157		11,289,980		4,191,180		230,204

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	ACVI3			ACVI4		ACVMV1		ACVMV2		ACVU1		ACVU2		ACVV		ACVV2
Reinvested dividends	$	320,367		179,033		170,761		1,025,722		5,940		14,365		3,341,831		3,725,944
Mortality and expense risk charges (note 2)		(116,379	)	(81,382	)	(57,865	)	(510,984	)	(15,643	)	(80,554	)	(755,494	)	(1,093,941	)
Net investment income (loss)		203,988		97,651		112,896		514,738		(9,703	)	(66,189	)	2,586,337		2,632,003
Realized gain (loss) on investments		(2,231,080	)	(5,595,137	)	(943,068	)	(3,319,997	)	(945,133	)	(4,034,923	)	(11,135,716	)	(10,840,268	)
Change in unrealized gain (loss) on investments		4,460,584		6,920,566		1,832,781		10,421,729		1,249,487		5,190,116		17,564,038		19,372,709
Net gain (loss) on investments		2,229,504		1,325,429		889,713		7,101,732		304,354		1,155,193		6,428,322		8,532,441
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,433,492		1,423,080		1,002,609		7,616,470		294,651		1,089,004		9,014,659		11,164,444
Investment Activity:	ACVVS1			ACVVS2		DVSCS		DSIF		DSIFS		DSRG		DCAP		DCAPS
Reinvested dividends	$	-		-		884,480		4,787,313		1,441,052		391,401		647,162		404,971
Mortality and expense risk charges (note 2)		(27,942	)	(122,171	)	(527,689	)	(3,086,817	)	(1,193,696	)	(530,778	)	(319,399	)	(305,874	)
Net investment income (loss)		(27,942	)	(122,171	)	356,791		1,700,496		247,356		(139,377	)	327,763		99,097
Realized gain (loss) on investments		(2,967,805	)	(9,420,126	)	(6,783,770	)	(2,732,992	)	(2,976,952	)	(3,369,538	)	(701,338	)	(1,271,428	)
Change in unrealized gain (loss) on investments		3,303,758		10,407,868		8,152,379		37,276,545		15,639,657		14,809,941		3,053,834		3,564,180
Net gain (loss) on investments		335,953		987,742		1,368,609		34,543,553		12,662,705		11,440,403		2,352,496		2,292,752
Reinvested capital gains		-		-		5,995,719		14,946,956		4,719,219		-		1,888,385		1,333,884
Net increase (decrease) in contract owners’ equity resulting from operations	$	308,011		865,571		7,721,119		51,191,005		17,629,280		11,301,026		4,568,644		3,725,733

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	DVDLS			DGI		FCA2S		FALFS		FVMOS		FQB		FQBS		FC2
Reinvested dividends	$	15,510		179,951		12,757		19,490		139,416		814,316		3,146,760		2,354,634
Mortality and expense risk charges (note 2)		(17,185	)	(181,876	)	(25,540	)	(13,844	)	(141,670	)	(165,224	)	(808,662	)	(3,252,943	)
Net investment income (loss)		(1,675	)	(1,925	)	(12,783	)	5,646		(2,254	)	649,092		2,338,098		(898,309	)
Realized gain (loss) on investments		(312,921	)	(505,313	)	(83,452	)	(342,280	)	(266,274	)	(230,073	)	(1,124,820	)	(25,070,556	)
Change in unrealized gain (loss) on investments		585,449		3,764,193		257,704		455,714		2,896		1,713,072		7,035,508		85,069,691
Net gain (loss) on investments		272,528		3,258,880		174,252		113,434		(263,378	)	1,482,999		5,910,688		59,999,135
Reinvested capital gains		-		-		-		-		141,524		-		-		56,790
Net increase (decrease) in contract owners’ equity resulting from operations	$	270,853		3,256,955		161,469		119,080		(124,108	)	2,132,091		8,248,786		59,157,616
Investment Activity:	FEIP			FVSS2		FHIP		FAMP		FCP		FNRS2		FEI2		FF10S
Reinvested dividends	$	7,905,057		37,690		4,664,584		3,799,811		4,560,332		152,603		2,123,067		185,517
Mortality and expense risk charges (note 2)		(4,730,952	)	(166,459	)	(818,222	)	(2,166,271	)	(4,476,721	)	(1,020,117	)	(1,577,662	)	(64,985	)
Net investment income (loss)		3,174,105		(128,769	)	3,846,362		1,633,540		83,611		(867,514	)	545,405		120,532
Realized gain (loss) on investments		(50,571,509	)	(2,813,966	)	(5,007,873	)	(12,329,833	)	(22,120,802	)	(7,593,646	)	(9,021,837	)	(569,649	)
Change in unrealized gain (loss) on investments		136,199,989		7,500,826		22,366,884		50,035,162		120,739,144		32,669,819		33,325,206		1,402,363
Net gain (loss) on investments		85,628,480		4,686,860		17,359,011		37,705,329		98,618,342		25,076,173		24,303,369		832,714
Reinvested capital gains		-		-		-		265,459		90,297		-		-		39,659
Net increase (decrease) in contract owners’ equity resulting from operations	$	88,802,585		4,558,091		21,205,373		39,604,328		98,792,250		24,208,659		24,848,774		992,905

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	FF10S2			FF20S		FF20S2		FF30S		FF30S2		FGOP		FGP		FG2
Reinvested dividends	$	2,097,794		213,209		3,196,965		101,752		337,464		58,429		1,399,018		78,532
Mortality and expense risk charges (note 2)		(898,512	)	(79,819	)	(1,334,934	)	(55,777	)	(283,852	)	(166,939	)	(4,255,566	)	(619,287	)
Net investment income (loss)		1,199,282		133,390		1,862,031		45,975		53,612		(108,510	)	(2,856,548	)	(540,755	)
Realized gain (loss) on investments		(911,806	)	(870,487	)	(646,486	)	(333,035	)	(701,172	)	(52,792	)	(34,977,296	)	(3,073,061	)
Change in unrealized gain (loss) on investments		9,253,943		2,145,104		17,608,358		1,423,051		4,641,420		4,766,496		114,061,560		12,898,364
Net gain (loss) on investments		8,342,137		1,274,617		16,961,872		1,090,016		3,940,248		4,713,704		79,084,264		9,825,303
Reinvested capital gains		364,305		75,482		1,023,590		54,824		203,381		-		276,561		34,803
Net increase (decrease) in contract owners’ equity resulting from operations	$	9,905,724		1,483,489		19,847,493		1,190,815		4,197,241		4,605,194		76,504,277		9,319,351
Investment Activity:	FHIPR			FIGBS		FIGBP2		FMCS		FMC2		FOP		FOPR		FO2
Reinvested dividends	$	1,802,261		2,005,607		35,896,043		110,622		734,006		1,389,325		673,539		66,373
Mortality and expense risk charges (note 2)		(283,407	)	(325,827	)	(7,538,405	)	(228,776	)	(2,528,817	)	(876,549	)	(429,252	)	(54,124	)
Net investment income (loss)		1,518,854		1,679,780		28,357,638		(118,154	)	(1,794,811	)	512,776		244,287		12,249
Realized gain (loss) on investments		(2,269,294	)	(137,050	)	(2,273,040	)	(2,099,856	)	(9,843,428	)	(1,424,829	)	(2,206,520	)	(249,330	)
Change in unrealized gain (loss) on investments		7,925,431		1,554,955		24,991,543		7,712,842		61,150,148		15,401,818		8,971,600		1,052,564
Net gain (loss) on investments		5,656,137		1,417,905		22,718,503		5,612,986		51,306,720		13,976,989		6,765,080		803,234
Reinvested capital gains		-		99,280		1,820,102		99,218		853,680		213,223		104,674		11,985
Net increase (decrease) in contract owners’ equity resulting from operations	$	7,174,991		3,196,965		52,896,243		5,594,050		50,365,589		14,702,988		7,114,041		827,468

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	FO2R			FVSS		FTVIS2		FTVRD2		FTVSV2		FTVDM3		TIF2		TIF3
Reinvested dividends	$	892,533		30,594		7,316,293		935,527		837,893		1,121,683		174,078		9,723,407
Mortality and expense risk charges (note 2)		(673,045	)	(77,830	)	(1,403,543	)	(1,057,386	)	(1,866,710	)	(425,320	)	(76,022	)	(3,016,268	)
Net investment income (loss)		219,488		(47,236	)	5,912,750		(121,859	)	(1,028,817	)	696,363		98,056		6,707,139
Realized gain (loss) on investments		(3,191,714	)	(3,081,921	)	(4,985,586	)	(2,416,337	)	(16,701,595	)	(5,727,648	)	(177,966	)	(162,481,939	)
Change in unrealized gain (loss) on investments		13,102,396		5,693,877		25,793,817		11,464,029		59,711,793		19,304,931		1,398,505		177,706,175
Net gain (loss) on investments		9,910,682		2,611,956		20,808,231		9,047,692		43,010,198		13,577,283		1,220,539		15,224,236
Reinvested capital gains		136,178		-		-		-		2,307,442		105,137		214,753		11,753,408
Net increase (decrease) in contract owners’ equity resulting from operations	$	10,266,348		2,564,720		26,720,981		8,925,833		44,288,823		14,378,783		1,533,348		33,684,783
Investment Activity:	FTVGI3			FTVFA2		AMTG		AMGP		AMINS		AMMCGS		AMTP		AMRS
Reinvested dividends	$	10,131,528		252,019		-		-		3		-		959		-
Mortality and expense risk charges (note 2)		(1,070,856	)	(94,358	)	(521,354	)	(64,397	)	(72,568	)	(41,169	)	(619,027	)	(82,223	)
Net investment income (loss)		9,060,672		157,661		(521,354	)	(64,397	)	(72,565	)	(41,169	)	(618,068	)	(82,223	)
Realized gain (loss) on investments		1,282,583		(366,788	)	15,857,466		(1,070,340	)	(4,434,330	)	(1,421,498	)	(39,029,244	)	(5,457,396	)
Change in unrealized gain (loss) on investments		517,648		1,969,640		(7,397,692	)	2,228,008		5,866,895		1,979,893		64,756,294		7,341,128
Net gain (loss) on investments		1,800,231		1,602,852		8,459,774		1,157,668		1,432,565		558,395		25,727,050		1,883,732
Reinvested capital gains		-		-		-		-		-		-		4,259		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	10,860,903		1,760,513		7,938,420		1,093,271		1,360,000		517,226		25,113,241		1,801,509

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	AMFAS			AMSRS		OVMS		OVCAFS		OVGR		OVB		OVGS3		OVGS4
Reinvested dividends	$	-		525,760		-		2,472		139,218		-		1,313,431		1,080,534
Mortality and expense risk charges (note 2)		(58,760	)	(371,087	)	(662,696	)	(575,445	)	(558,521	)	(573,349	)	(771,010	)	(841,060	)
Net investment income (loss)		(58,760	)	154,673		(662,696	)	(572,973	)	(419,303	)	(573,349	)	542,421		239,474
Realized gain (loss) on investments		(795,653	)	(3,148,859	)	(9,090,699	)	(1,313,445	)	(1,103,830	)	(7,488,091	)	(1,860,430	)	(3,022,142	)
Change in unrealized gain (loss) on investments		1,557,483		9,269,298		18,670,311		14,525,185		16,507,254		11,077,767		18,953,659		19,828,717
Net gain (loss) on investments		761,830		6,120,439		9,579,612		13,211,740		15,403,424		3,589,676		17,093,229		16,806,575
Reinvested capital gains		-		-		-		-		-		-		1,254,910		1,230,433
Net increase (decrease) in contract owners’ equity resulting from operations	$	703,070		6,275,112		8,916,916		12,638,767		14,984,121		3,016,327		18,890,560		18,276,482
Investment Activity:	OVGS			OVGSS		OVHI3		OVHI4		OVHI		OVHIS		OVGI		OVGIS
Reinvested dividends	$	2,791,288		196,214		-		-		-		-		246,861		3,739,367
Mortality and expense risk charges (note 2)		(1,612,334	)	(144,061	)	(4,231	)	(101,425	)	(629	)	(52,789	)	(167,672	)	(4,507,201	)
Net investment income (loss)		1,178,954		52,153		(4,231	)	(101,425	)	(629	)	(52,789	)	79,189		(767,834	)
Realized gain (loss) on investments		3,579,671		(361,081	)	(396,093	)	(7,209,790	)	(63,621	)	(3,280,723	)	(625,644	)	(44,657,022	)
Change in unrealized gain (loss) on investments		31,457,106		3,214,090		458,920		8,369,274		74,958		4,048,215		3,511,423		106,998,606
Net gain (loss) on investments		35,036,777		2,853,009		62,827		1,159,484		11,337		767,492		2,885,779		62,341,584
Reinvested capital gains		2,661,461		217,587		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	38,877,192		3,122,749		58,596		1,058,059		10,708		714,703		2,964,968		61,573,750

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	OVSC			OVSCS		OVAG		PVGIB		PVTIGB		PVTVB		VYDS		TRBCG2
Reinvested dividends	$	29,537		1,111,874		-		90,470		-		11,770		3,890		-
Mortality and expense risk charges (note 2)		(45,019	)	(1,668,375	)	(96,213	)	(53,975	)	(9,572	)	(29,806	)	(6,862	)	(1,560,777	)
Net investment income (loss)		(15,482	)	(556,501	)	(96,213	)	36,495		(9,572	)	(18,036	)	(2,972	)	(1,560,777	)
Realized gain (loss) on investments		(1,394,041	)	(63,027,490	)	(484,379	)	(764,407	)	(85,763	)	(17,492	)	(208,750	)	(68,892,479	)
Change in unrealized gain (loss) on investments		2,392,360		84,946,606		2,598,202		1,539,993		218,372		862,924		314,884		92,320,448
Net gain (loss) on investments		998,319		21,919,116		2,113,823		775,586		132,609		845,432		106,134		23,427,969
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	982,837		21,362,615		2,017,610		812,081		123,037		827,396		103,162		21,867,192
Investment Activity:	TREI2			TRLT2		VWBFR		VWBF		VWEMR		VWEM		VWHAR		VWHA
Reinvested dividends	$	1,131,260		850,062		281,265		536,946		19,269		28,455		66,671		76,300
Mortality and expense risk charges (note 2)		(1,042,613	)	(416,790	)	(95,923	)	(186,139	)	(179,337	)	(225,594	)	(343,131	)	(381,066	)
Net investment income (loss)		88,647		433,272		185,342		350,807		(160,068	)	(197,139	)	(276,460	)	(304,766	)
Realized gain (loss) on investments		(7,374,597	)	640,243		(33,812	)	(343,676	)	(7,094,950	)	(2,002,801	)	(2,020,117	)	1,937,785
Change in unrealized gain (loss) on investments		21,418,095		984,066		140,956		563,603		15,689,932		13,234,015		13,200,812		10,727,210
Net gain (loss) on investments		14,043,498		1,624,309		107,144		219,927		8,594,982		11,231,214		11,180,695		12,664,995
Reinvested capital gains		-		-		-		-		779,004		1,150,378		132,212		151,307
Net increase (decrease) in contract owners’ equity resulting from operations	$	14,132,145		2,057,581		292,486		570,734		9,213,918		12,184,453		11,036,447		12,511,536

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	WRASP			SVDF		WFVLCG		WFVMM		SVOF		WFVSCG		WFVSMV		WFVTRB
Reinvested dividends	$	6,509		-		332		212		-		-		102		3,575
Mortality and expense risk charges (note 2)		(154,352	)	(260,026	)	(1,839	)	(1,102	)	(1,222,661	)	(45,813	)	(88	)	(1,040	)
Net investment income (loss)		(147,843	)	(260,026	)	(1,507	)	(890	)	(1,222,661	)	(45,813	)	14		2,535
Realized gain (loss) on investments		115,041		5,880,079		(1,012	)	-		(73,824,875	)	70,675		(782	)	54
Change in unrealized gain (loss) on investments		1,636,378		520,989		32,776		-		114,309,554		992,805		4,712		148
Net gain (loss) on investments		1,751,419		6,401,068		31,764		-		40,484,679		1,063,480		3,930		202
Reinvested capital gains		175,910		-		-		-		-		-		-		106
Net increase (decrease) in contract owners’ equity resulting from operations	$	1,779,486		6,141,042		30,257		(890	)	39,262,018		1,017,667		3,944		2,843
Investment Activity:	WIEP			WVCP		BF		VFLG2		VFLV2		MBVAG2		MBVCG2		SGRF
Reinvested dividends	$	6,923		36,565		16,719		-		3,006		-		408		-
Mortality and expense risk charges (note 2)		(139,254	)	(18,163	)	(8,682	)	(2,676	)	(3,637	)	(610	)	(902	)	(19,446	)
Net investment income (loss)		(132,331	)	18,402		8,037		(2,676	)	(631	)	(610	)	(494	)	(19,446	)
Realized gain (loss) on investments		2,885,809		(24,024	)	(1,104,294	)	(306,922	)	(618,233	)	(166,434	)	(60,514	)	(3,260,173	)
Change in unrealized gain (loss) on investments		(674,791	)	375,927		1,050,764		304,960		544,112		139,766		44,039		3,428,292
Net gain (loss) on investments		2,211,018		351,903		(53,530	)	(1,962	)	(74,121	)	(26,668	)	(16,475	)	168,119
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	2,078,687		370,305		(45,493	)	(4,638	)	(74,752	)	(27,278	)	(16,969	)	148,673

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF OPERATIONS, Continued

Year Ended December 31, 2009

Investment Activity:	SGRF2			JPMCVP		PISVP1
Reinvested dividends	$	-		132,828		5,704
Mortality and expense risk charges (note 2)		(91,071	)	(21,949	)	(1,646	)
Net investment income (loss)		(91,071	)	110,879		4,058
Realized gain (loss) on investments		(10,460,572	)	(3,380,741	)	(861,598	)
Change in unrealized gain (loss) on investments		11,179,144		3,002,269		807,528
Net gain (loss) on investments		718,572		(378,472	)	(54,070	)
Reinvested capital gains		-		12,024		-
Net increase (decrease) in contract owners’ equity resulting from operations	$	627,501		(255,569	)	(50,012	)

See accompanying notes to financial statements.

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2009 and 2008

	Total					ALBS				ALMCS				AFGF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	49,602,881		126,228,065		3,700		(2,305	)	(3,645	)	(6,746	)	(43,108	)	(33,996	)
Realized gain (loss) on investments		(1,638,769,490	)	(310,427,981	)	(12,724	)	(4,584	)	(45,009	)	(149,290	)	(359,600	)	(203,295	)
Change in unrealized gain (loss) on investments		5,024,146,648		(8,653,538,654	)	57,489		(108,519	)	187,323		(555,854	)	3,503,727		(8,557,306	)
Reinvested capital gains		266,022,593		1,250,139,523		-		25,679		-		214,876		-		1,504,481
Net increase (decrease) in contract owners’ equity resulting from operations		3,701,002,632		(7,587,599,047	)	48,465		(89,729	)	138,669		(497,014	)	3,101,019		(7,290,116	)
Equity transactions:
Purchase payments received from contract owners (note 3)		3,692,844,513		3,842,471,180		-		-		-		6,553		25,996		61,398
Transfers between funds		-		-		7,072		(54,028	)	31,665		(60,412	)	(166,604	)	(185,975	)
Redemptions (note 3)		(1,877,272,449	)	(2,376,357,188	)	(8,320	)	(384	)	(5,564	)	(139,531	)	(1,525,292	)	(1,301,749	)
Annuity benefits		(1,682,121	)	(2,149,504	)	-		-		-		-		(472	)	(667	)
Contract maintenance charges (note 2)		(34,430,609	)	(23,305,962	)	(8	)	(5	)	(39	)	(12	)	(4,634	)	(5,075	)
Contingent deferred sales charges (note 2)		(17,198,031	)	(21,839,980	)	-		-		-		-		(2,515	)	(1,883	)
Adjustments to maintain reserves		1,535,292		627		(7	)	(20	)	(10	)	(3	)	268		229
Net equity transactions		1,763,796,595		1,418,819,173		(1,263	)	(54,437	)	26,052		(193,405	)	(1,673,253	)	(1,433,722	)
Net change in contract owners’ equity		5,464,799,227		(6,168,779,874	)	47,202		(144,166	)	164,721		(690,419	)	1,427,766		(8,723,838	)
Contract owners’ equity beginning of period		16,006,481,073		22,175,260,947		173,104		317,270		267,952		958,371		8,862,395		17,586,233
Contract owners’ equity end of period	$	21,471,280,300		16,006,481,073		220,306		173,104		432,673		267,952		10,290,161		8,862,395
CHANGES IN UNITS:
Beginning units		1,454,565,115		1,216,943,704		18,716		23,143		35,463		52,160		185,887		204,499
Units purchased		888,311,585		851,755,113		2,396		6,639		5,759		6,910		496		1,406
Units redeemed		(574,564,175	)	(614,133,702	)	(2,401	)	(11,066	)	(2,901	)	(23,607	)	(29,901	)	(20,018	)
Ending units		1,768,312,525		1,454,565,115		18,711		18,716		38,321		35,463		156,482		185,887

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AFHY					AFGC				MLVGA3			CSIEF3
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	95,253		40,903		18,930		23,930		226,145		-	(1,233	)	-
Realized gain (loss) on investments		1,167		(112,801	)	1,011		(9,493	)	19,518		-	52		-
Change in unrealized gain (loss) on investments		393,367		(66,558	)	(10,779	)	79,800		1,054,267		-	18,325		-
Reinvested capital gains		-		-		12,897		-		-		-	-		-
Net increase (decrease) in contract owners’ equity resulting from operations		489,787		(138,456	)	22,059		94,237		1,299,930		-	17,144		-
Equity transactions:
Purchase payments received from contract owners (note 3)		5,459		2,469		52,886		43,875		14,104,617		-	1		-
Transfers between funds		652		87,135		(38,207	)	202,246		13,167,385		-	1,677,185		-
Redemptions (note 3)		(61,209	)	(102,509	)	(199,930	)	(272,926	)	(386,948	)	-	(11,760	)	-
Annuity benefits		(1,070	)	(2,852	)	(237	)	(1,585	)	-		-	-		-
Contract maintenance charges (note 2)		(694	)	(561	)	(1,052	)	(946	)	(643	)	-	(49	)	-
Contingent deferred sales charges (note 2)		-		(445	)	-		(188	)	(537	)	-	(3	)	-
Adjustments to maintain reserves		636		373		74		147		(143	)	-	(38,075	)	-
Net equity transactions		(56,226	)	(16,390	)	(186,466	)	(29,377	)	26,883,731		-	1,627,299		-
Net change in contract owners’ equity		433,561		(154,846	)	(164,407	)	64,860		28,183,661		-	1,644,443		-
Contract owners’ equity beginning of period		1,302,258		1,457,104		1,520,105		1,455,245		-		-	-		-
Contract owners’ equity end of period	$	1,735,819		1,302,258		1,355,698		1,520,105		28,183,661		-	1,644,443		-
CHANGES IN UNITS:
Beginning units		42,363		35,586		48,345		49,215		-		-	-		-
Units purchased		50,187		65,926		2,683		11,737		2,409,651		-	162,407		-
Units redeemed		(51,517	)	(59,149	)	(8,529	)	(12,607	)	(70,883	)	-	(1,177	)	-
Ending units		41,033		42,363		42,499		48,345		2,338,768		-	161,230		-

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	WSCP					JPMMV1			JABS				JACAS
	2009			2008		2009		2008	2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(56,409	)	(620,002	)	(52,350	)	-	161,806		125,934		(1,322,453	)	(1,202,245	)
Realized gain (loss) on investments		335,321		3,205,001		120,458		-	98,845		308,033		1,346,294		5,447,413
Change in unrealized gain (loss) on investments		6,359,410		(22,557,519	)	1,385,216		-	1,901,259		(3,702,766	)	30,329,801		(52,133,402	)
Reinvested capital gains		-		-		-		-	444,011		878,177		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		6,638,322		(19,972,520	)	1,453,324		-	2,605,921		(2,390,622	)	30,353,642		(47,888,234	)
Equity transactions:
Purchase payments received from contract owners (note 3)		654,609		1,694,645		16,373		-	90,629		92,722		17,346,363		20,346,851
Transfers between funds		(1,219,878	)	(3,587,750	)	5,141,431		-	1,268,903		524,745		6,936,783		29,860,354
Redemptions (note 3)		(4,438,788	)	(7,660,323	)	(534,065	)	-	(979,595	)	(1,356,200	)	(8,372,768	)	(10,166,360	)
Annuity benefits		(2,226	)	(3,488	)	-		-	-		-		(686	)	(700	)
Contract maintenance charges (note 2)		(25,375	)	(29,426	)	(1,921	)	-	(1,332	)	(1,174	)	(76,618	)	(34,096	)
Contingent deferred sales charges (note 2)		(14,104	)	(17,023	)	(1,610	)	-	(15,404	)	(24,357	)	(74,858	)	(71,277	)
Adjustments to maintain reserves		(1,326	)	(784	)	682		-	(309	)	(252	)	(2,861	)	1,719
Net equity transactions		(5,047,088	)	(9,604,149	)	4,620,890		-	362,892		(764,516	)	15,755,355		39,936,491
Net change in contract owners’ equity		1,591,234		(29,576,669	)	6,074,214		-	2,968,813		(3,155,138	)	46,108,997		(7,951,743	)
Contract owners’ equity beginning of period		33,374,110		62,950,779		-		-	10,629,343		13,784,481		62,781,105		70,732,848
Contract owners’ equity end of period	$	34,965,344		33,374,110		6,074,214		-	13,598,156		10,629,343		108,890,102		62,781,105
CHANGES IN UNITS:
Beginning units		2,973,366		3,619,869		-		-	848,549		908,896		6,759,021		4,763,489
Units purchased		85,441		159,549		607,494		-	158,019		156,392		4,021,501		5,477,446
Units redeemed		(526,294	)	(806,052	)	(91,892	)	-	(130,200	)	(216,739	)	(2,822,147	)	(3,481,914	)
Ending units		2,532,513		2,973,366		515,602		-	876,368		848,549		7,958,375		6,759,021

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	JAGTS2					JAGTS				JARLCS				JAIGS2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(51,931	)	(52,967	)	(26,821	)	(33,407	)	(14,809	)	(44,748	)	(1,725,699	)	2,413,896
Realized gain (loss) on investments		77,619		128,343		3,692		38,484		(1,782,822	)	(306,315	)	(13,207,264	)	888,368
Change in unrealized gain (loss) on investments		1,695,971		(2,559,215	)	901,951		(1,494,358	)	2,118,307		(2,186,695	)	94,042,772		(164,883,295	)
Reinvested capital gains		-		-		-		-		-		315,293		4,306,852		29,018,198
Net increase (decrease) in contract owners’ equity resulting from operations		1,721,659		(2,483,839	)	878,822		(1,489,281	)	320,676		(2,222,465	)	83,416,661		(132,562,833	)
Equity transactions:
Purchase payments received from contract owners (note 3)		102,217		365,224		-		27		47,451		599,323		8,676,868		26,061,804
Transfers between funds		1,196,390		(135,789	)	(50,583	)	(102,694	)	(3,655,957	)	67,925		3,456,988		25,621,230
Redemptions (note 3)		(583,035	)	(688,250	)	(159,089	)	(298,831	)	(305,303	)	(352,383	)	(14,062,429	)	(18,399,288	)
Annuity benefits		-		-		(318	)	(2,111	)	-		-		(7,349	)	(9,306	)
Contract maintenance charges (note 2)		(2,286	)	(2,457	)	(2,065	)	(2,238	)	(4,832	)	(3,940	)	(310,406	)	(248,258	)
Contingent deferred sales charges (note 2)		(2,637	)	(7,011	)	(286	)	(993	)	(6,798	)	(4,733	)	(136,077	)	(158,807	)
Adjustments to maintain reserves		(78	)	(61	)	(148	)	(42	)	(38	)	(335	)	76,341		(1,829	)
Net equity transactions		710,571		(468,344	)	(212,489	)	(406,882	)	(3,925,477	)	305,857		(2,306,064	)	32,865,546
Net change in contract owners’ equity		2,432,230		(2,952,183	)	666,333		(1,896,163	)	(3,604,801	)	(1,916,608	)	81,110,597		(99,697,287	)
Contract owners’ equity beginning of period		2,732,234		5,684,417		1,704,844		3,601,007		3,604,801		5,521,409		113,326,651		213,023,938
Contract owners’ equity end of period	$	5,164,464		2,732,234		2,371,177		1,704,844		-		3,604,801		194,437,248		113,326,651
CHANGES IN UNITS:
Beginning units		342,194		394,297		628,439		733,774		333,684		321,741		8,802,005		7,719,861
Units purchased		218,356		89,588		-		11		42,163		116,016		3,164,155		4,890,572
Units redeemed		(142,884	)	(141,691	)	(62,368	)	(105,346	)	(375,847	)	(104,073	)	(3,318,730	)	(3,808,428	)
Ending units		417,666		342,194		566,071		628,439		-		333,684		8,647,430		8,802,005

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	JAIGS					MIGSC				MVFSC				MSVFI
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(78,437	)	158,819		(142,819	)	(239,834	)	(1,623,011	)	(489,019	)	202,344		108,965
Realized gain (loss) on investments		520,950		1,200,673		(264,896	)	296,205		(6,438,115	)	(859,714	)	(321,844	)	(119,033	)
Change in unrealized gain (loss) on investments		3,836,579		(11,032,905	)	4,149,861		(8,713,387	)	77,682,129		(36,555,708	)	310,295		(437,219	)
Reinvested capital gains		235,876		1,749,821		-		884,134		-		3,527,887		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		4,514,968		(7,923,592	)	3,742,146		(7,772,882	)	69,621,003		(34,376,554	)	190,795		(447,287	)
Equity transactions:
Purchase payments received from contract owners (note 3)		1		16		188,142		235,657		20,597,621		17,889,714		126,119		244,265
Transfers between funds		(565,795	)	(569,698	)	(718,949	)	(1,661,844	)	193,679,815		7,683,235		(815,884	)	312,810
Redemptions (note 3)		(809,687	)	(1,825,649	)	(1,387,814	)	(1,760,534	)	(16,296,041	)	(7,284,229	)	(430,071	)	(663,809	)
Annuity benefits		-		-		-		-		(1,807	)	(1,856	)	-		-
Contract maintenance charges (note 2)		(4,857	)	(5,719	)	(1,353	)	(1,548	)	(872,738	)	(39,200	)	(850	)	(1,420	)
Contingent deferred sales charges (note 2)		(2,332	)	(5,216	)	(17,783	)	(26,310	)	(246,961	)	(71,790	)	(1,024	)	(2,703	)
Adjustments to maintain reserves		(431	)	(159	)	(35	)	(358	)	1,246,895		(612	)	808		(105	)
Net equity transactions		(1,383,101	)	(2,406,425	)	(1,937,792	)	(3,214,937	)	198,106,784		18,175,262		(1,120,902	)	(110,962	)
Net change in contract owners’ equity		3,131,867		(10,330,017	)	1,804,354		(10,987,819	)	267,727,787		(16,201,292	)	(930,107	)	(558,249	)
Contract owners’ equity beginning of period		6,402,172		16,732,189		11,622,597		22,610,416		71,681,902		87,883,194		2,999,638		3,557,887
Contract owners’ equity end of period	$	9,534,039		6,402,172		13,426,951		11,622,597		339,409,689		71,681,902		2,069,531		2,999,638
CHANGES IN UNITS:
Beginning units		711,183		879,729		1,184,843		1,427,758		5,622,918		4,556,477		312,617		328,510
Units purchased		4,011		2		79,443		45,321		19,970,632		2,760,441		88,322		209,243
Units redeemed		(112,406	)	(168,548	)	(268,031	)	(288,236	)	(3,320,653	)	(1,694,000	)	(201,565	)	(225,136	)
Ending units		602,788		711,183		996,255		1,184,843		22,272,897		5,622,918		199,374		312,617

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	MSVF2					MSEM				MSEMB				MSVRE
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	11,170,625		6,402,303		289,584		335,121		82,894		95,545		1,251,954		2,027,730
Realized gain (loss) on investments		(36,883,147	)	(5,301,604	)	(117,690	)	(302,007	)	(89,704	)	(89,035	)	(66,930,523	)	2,376,340
Change in unrealized gain (loss) on investments		32,378,594		(36,033,941	)	914,507		(1,228,571	)	320,524		(357,750	)	68,126,489		(81,704,272	)
Reinvested capital gains		-		-		-		238,029		-		70,024		-		36,706,467
Net increase (decrease) in contract owners’ equity resulting from operations		6,666,072		(34,933,242	)	1,086,401		(957,428	)	313,714		(281,216	)	2,447,920		(40,593,735	)
Equity transactions:
Purchase payments received from contract owners (note 3)		2,620,763		32,437,863		-		(253	)	-		-		745,024		3,320,519
Transfers between funds		(192,753,077	)	(53,307,697	)	(304,590	)	(670,164	)	(69,763	)	(135,747	)	(56,957,139	)	(8,237,395	)
Redemptions (note 3)		(6,736,700	)	(14,800,091	)	(627,664	)	(1,064,832	)	(211,428	)	(227,330	)	(5,271,515	)	(16,854,491	)
Annuity benefits		(484	)	(157	)	-		-		-		-		(7,927	)	(10,608	)
Contract maintenance charges (note 2)		(256,029	)	(536,688	)	(3,207	)	(3,433	)	(306	)	(266	)	(21,019	)	(45,151	)
Contingent deferred sales charges (note 2)		(90,086	)	(254,674	)	(1,009	)	(3,772	)	(4,280	)	(3,208	)	(14,348	)	(52,621	)
Adjustments to maintain reserves		178,618		(862	)	(32	)	(16	)	(115	)	(112	)	3,444		1,594
Net equity transactions		(197,036,995	)	(36,462,306	)	(936,502	)	(1,742,470	)	(285,892	)	(366,663	)	(61,523,480	)	(21,878,153	)
Net change in contract owners’ equity		(190,370,923	)	(71,395,548	)	149,899		(2,699,898	)	27,822		(647,879	)	(59,075,560	)	(62,471,888	)
Contract owners’ equity beginning of period		214,876,940		286,272,488		4,280,827		6,980,725		1,317,461		1,965,340		59,116,832		121,588,720
Contract owners’ equity end of period	$	24,506,017		214,876,940		4,430,726		4,280,827		1,345,283		1,317,461		41,272		59,116,832
CHANGES IN UNITS:
Beginning units		22,132,369		25,887,057		256,891		351,451		91,031		113,859		2,056,027		2,592,043
Units purchased		873,668		6,060,614		3		-		-		-		113,849		342,609
Units redeemed		(20,686,902	)	(9,815,302	)	(49,984	)	(94,560	)	(18,494	)	(22,828	)	(2,169,876	)	(878,625	)
Ending units		2,319,135		22,132,369		206,910		256,891		72,537		91,031		-		2,056,027

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	MSVREB					VFMG2				NVAGF3			NVAMV1
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	737,229		890,316		(64,372	)	(11,264	)	49,768		-	184		-
Realized gain (loss) on investments		(57,817,100	)	(10,999,719	)	(880,284	)	(146,529	)	12,227		-	394		-
Change in unrealized gain (loss) on investments		58,458,616		(48,143,342	)	1,768,219		(2,529,186	)	(34,308	)	-	324		-
Reinvested capital gains		-		27,428,028		25,226		375,196		7,662		-	2,329		-
Net increase (decrease) in contract owners’ equity resulting from operations		1,378,745		(30,824,717	)	848,789		(2,311,783	)	35,349		-	3,231		-
Equity transactions:
Purchase payments received from contract owners (note 3)		588,205		3,411,631		9,543		34,646		737,506		-	797		-
Transfers between funds		(41,945,950	)	(3,947,039	)	(961,621	)	(263,545	)	1,002,127		-	65,674		-
Redemptions (note 3)		(2,760,743	)	(7,599,851	)	(432,753	)	(735,098	)	(14,581	)	-	-		-
Annuity benefits		(5,442	)	(10,188	)	-		-		-		-	-		-
Contract maintenance charges (note 2)		(4,594	)	(10,148	)	(1,699	)	(2,056	)	(27	)	-	(7	)	-
Contingent deferred sales charges (note 2)		(46,447	)	(132,793	)	(6,666	)	(4,877	)	(123	)	-	-		-
Adjustments to maintain reserves		(4,040	)	(717	)	(2,743	)	(109	)	(57	)	-	4		-
Net equity transactions		(44,179,011	)	(8,289,105	)	(1,395,939	)	(971,039	)	1,724,845		-	66,468		-
Net change in contract owners’ equity		(42,800,266	)	(39,113,822	)	(547,150	)	(3,282,822	)	1,760,194		-	69,699		-
Contract owners’ equity beginning of period		42,813,921		81,927,743		5,101,299		8,384,121		-		-	-		-
Contract owners’ equity end of period	$	13,655		42,813,921		4,554,149		5,101,299		1,760,194		-	69,699		-
CHANGES IN UNITS:
Beginning units		3,061,013		3,568,905		567,913		651,956		-		-	-		-
Units purchased		313,220		1,176,390		10,470		12,294		171,252		-	5,917		-
Units redeemed		(3,374,206	)	(1,684,282	)	(170,423	)	(96,337	)	(15,553	)	-	(322	)	-
Ending units		27		3,061,013		407,960		567,913		155,699		-	5,595		-

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVAMV2				GVAAA2				GVABD2				GVAGG2
	2009			2008	2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	3,691		-	(14,372,663	)	8,527,925		(5,947,980	)	12,623,639		(1,012,227	)	873,431
Realized gain (loss) on investments		10,546		-	(967,861	)	(8,426	)	(5,520,833	)	(1,107,239	)	(2,346,433	)	(541,185	)
Change in unrealized gain (loss) on investments		217,163		-	183,848,906		(230,496,031	)	48,539,026		(42,404,672	)	20,478,116		(34,038,519	)
Reinvested capital gains		157,670		-	23,952,905		7,726,101		133,572		198,457		5,145,844		2,196,350
Net increase (decrease) in contract owners’ equity resulting from operations		389,070		-	192,461,287		(214,250,431	)	37,203,785		(30,689,815	)	22,265,300		(31,509,923	)
Equity transactions:
Purchase payments received from contract owners (note 3)		3,179,594		-	492,950,710		248,396,163		173,717,962		90,238,362		15,317,189		15,712,870
Transfers between funds		791,681		-	9,346,514		145,373,791		20,338,341		130,224,709		5,452,070		9,682,475
Redemptions (note 3)		(21,260	)	-	(34,651,835	)	(28,276,708	)	(16,049,975	)	(13,369,608	)	(5,262,339	)	(7,761,292	)
Annuity benefits		-		-	(2,334	)	(2,955	)	(210	)	-		(1,174	)	-
Contract maintenance charges (note 2)		(1,127	)	-	(3,734,141	)	(2,105,668	)	(754,523	)	(227,954	)	(82,671	)	(37,970	)
Contingent deferred sales charges (note 2)		(379	)	-	(515,423	)	(323,689	)	(282,812	)	(186,091	)	(49,079	)	(63,605	)
Adjustments to maintain reserves		(52	)	-	27,605		(262	)	21,238		(808	)	6,556		2,971
Net equity transactions		3,948,457		-	463,421,096		363,060,672		176,990,021		206,678,610		15,380,552		17,535,449
Net change in contract owners’ equity		4,337,527		-	655,882,383		148,810,241		214,193,806		175,988,795		37,645,852		(13,974,474	)
Contract owners’ equity beginning of period		-		-	609,597,149		460,786,908		306,925,600		130,936,805		50,870,236		64,844,710
Contract owners’ equity end of period	$	4,337,527		-	1,265,479,532		609,597,149		521,119,406		306,925,600		88,516,088		50,870,236
CHANGES IN UNITS:
Beginning units		-		-	81,161,084		42,263,897		33,032,987		12,421,457		6,969,825		5,365,947
Units purchased		369,575		-	67,596,456		46,307,079		25,075,596		26,107,114		3,855,621		3,688,385
Units redeemed		(20,385	)	-	(10,255,334	)	(7,409,892	)	(7,313,781	)	(5,495,584	)	(2,131,691	)	(2,084,507	)
Ending units		349,190		-	138,502,206		81,161,084		50,794,802		33,032,987		8,693,755		6,969,825

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVAGR2					GVAGI2				HIBF				HIBF3
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(1,734,567	)	749,332		(6,898,859	)	2,488,825		743,227		931,082		4,190,567		2,715,104
Realized gain (loss) on investments		(14,738,005	)	(463,206	)	(12,387,580	)	-		(868,839	)	(830,001	)	(6,795,418	)	(3,097,300	)
Change in unrealized gain (loss) on investments		37,729,828		(80,329,880	)	111,016,457		(92,277,536	)	3,419,998		(3,973,615	)	20,803,406		(10,412,486	)
Reinvested capital gains		13,208,018		7,748,903		9,902,860		65,984		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		34,465,274		(72,294,851	)	101,632,878		(89,722,727	)	3,294,386		(3,872,534	)	18,198,555		(10,794,682	)
Equity transactions:
Purchase payments received from contract owners (note 3)		26,497,378		36,392,316		170,711,985		88,885,170		48		80		4,738,785		3,843,612
Transfers between funds		(8,236,059	)	18,006,009		7,220,754		154,504,897		(704,785	)	(1,683,295	)	23,732,554		1,215,930
Redemptions (note 3)		(8,889,548	)	(10,219,568	)	(12,195,578	)	(7,859,811	)	(956,679	)	(1,755,261	)	(5,978,036	)	(4,842,559	)
Annuity benefits		(187	)	-		(1,682	)	(883	)	(260	)	(178	)	(7,798	)	(6,990	)
Contract maintenance charges (note 2)		(136,267	)	(149,137	)	(695,470	)	(150,540	)	(1,435	)	(1,536	)	(5,007	)	(3,836	)
Contingent deferred sales charges (note 2)		(101,955	)	(117,815	)	(261,313	)	(117,963	)	(19,299	)	(26,780	)	(73,686	)	(50,361	)
Adjustments to maintain reserves		(100,589	)	1,661		135,912		(9,261	)	(463	)	(260	)	2,122		(434	)
Net equity transactions		9,032,773		43,913,466		164,914,608		235,251,609		(1,682,873	)	(3,467,230	)	22,408,934		155,362
Net change in contract owners’ equity		43,498,047		(28,381,385	)	266,547,486		145,528,882		1,611,513		(7,339,764	)	40,607,489		(10,639,320	)
Contract owners’ equity beginning of period		98,887,216		127,268,601		225,400,858		79,871,976		8,525,920		15,865,684		30,245,809		40,885,129
Contract owners’ equity end of period	$	142,385,263		98,887,216		491,948,344		225,400,858		10,137,433		8,525,920		70,853,298		30,245,809
CHANGES IN UNITS:
Beginning units		15,955,035		11,269,769		38,038,535		8,176,408		833,712		1,099,805		3,688,239		3,534,655
Units purchased		6,604,527		7,670,142		35,144,378		32,655,573		1,892		-		5,264,322		2,594,510
Units redeemed		(5,755,341	)	(2,984,876	)	(8,620,657	)	(2,793,446	)	(146,112	)	(266,093	)	(2,937,797	)	(2,440,926	)
Ending units		16,804,221		15,955,035		64,562,256		38,038,535		689,492		833,712		6,014,764		3,688,239

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GEM					GEM2				GEM3				GEM6
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(306	)	(1,798	)	(7,169	)	(28,909	)	(12,936	)	(137,206	)	(181,474	)	(424,820	)
Realized gain (loss) on investments		(13,506	)	88,957		(151,694	)	214,525		(5,122,632	)	3,931,627		(14,512,801	)	(721,388	)
Change in unrealized gain (loss) on investments		249,347		(1,048,078	)	1,060,048		(4,449,186	)	21,233,938		(63,187,446	)	33,590,395		(70,764,600	)
Reinvested capital gains		-		205,161		-		894,114		-		12,320,324		-		14,918,890
Net increase (decrease) in contract owners’ equity resulting from operations		235,535		(755,758	)	901,185		(3,369,456	)	16,098,370		(47,072,701	)	18,896,120		(56,991,918	)
Equity transactions:
Purchase payments received from contract owners (note 3)		-		2,018		2		54		1,246,746		2,806,420		5,582,825		9,510,638
Transfers between funds		(39,904	)	(55,727	)	(182,671	)	(1,063,063	)	465,710		(14,653,649	)	3,202,579		(21,822,485	)
Redemptions (note 3)		(82,113	)	(104,842	)	(348,089	)	(408,302	)	(5,221,848	)	(9,031,132	)	(5,221,001	)	(7,803,509	)
Annuity benefits		(922	)	(5,717	)	-		-		(4,681	)	(4,511	)	(6,463	)	(9,080	)
Contract maintenance charges (note 2)		(259	)	(451	)	(517	)	(764	)	(20,129	)	(26,943	)	(7,044	)	(8,056	)
Contingent deferred sales charges (note 2)		(255	)	(189	)	(4,021	)	(9,133	)	(15,853	)	(28,596	)	(71,105	)	(129,210	)
Adjustments to maintain reserves		411		1,703		(139	)	(292	)	(319	)	(20,234	)	(1,641	)	(12,871	)
Net equity transactions		(123,042	)	(163,205	)	(535,435	)	(1,481,500	)	(3,550,374	)	(20,958,645	)	3,478,150		(20,274,573	)
Net change in contract owners’ equity		112,493		(918,963	)	365,750		(4,850,956	)	12,547,996		(68,031,346	)	22,374,270		(77,266,491	)
Contract owners’ equity beginning of period		487,145		1,406,108		1,800,059		6,651,015		28,144,302		96,175,648		32,397,202		109,663,693
Contract owners’ equity end of period	$	599,638		487,145		2,165,809		1,800,059		40,692,298		28,144,302		54,771,472		32,397,202
CHANGES IN UNITS:
Beginning units		33,579		40,673		88,202		134,775		1,827,343		2,599,261		2,681,445		3,749,821
Units purchased		-		71		260		-		400,550		600,333		1,544,209		1,328,948
Units redeemed		(7,713	)	(7,165	)	(22,315	)	(46,573	)	(590,479	)	(1,372,251	)	(1,366,963	)	(2,397,324	)
Ending units		25,866		33,579		66,147		88,202		1,637,414		1,827,343		2,858,691		2,681,445

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVGU2					GVGU				GIG				GIG3
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	7,591		7,613		91,395		130,651		(79	)	88		(135,832	)	(18,605	)
Realized gain (loss) on investments		(23,217	)	11,283		(1,835,008	)	(1,145,758	)	2,830		3,733		(3,448,615	)	621,425
Change in unrealized gain (loss) on investments		33,458		(305,200	)	1,849,941		(2,502,951	)	13,373		(73,028	)	8,852,276		(20,554,644	)
Reinvested capital gains		-		7,334		-		93,739		-		14,111		-		4,015,655
Net increase (decrease) in contract owners’ equity resulting from operations		17,832		(278,970	)	106,328		(3,424,319	)	16,124		(55,096	)	5,267,829		(15,936,169	)
Equity transactions:
Purchase payments received from contract owners (note 3)		-		-		106,055		234,481		-		-		488,133		960,920
Transfers between funds		(12,351	)	(130,877	)	(1,203,978	)	(2,473,042	)	-		-		18,024,650		(4,070,673	)
Redemptions (note 3)		(58,442	)	(137,571	)	(652,910	)	(1,786,383	)	(13,941	)	(6,410	)	(3,649,230	)	(3,965,983	)
Annuity benefits		-		-		-		(577	)	-		-		(2,966	)	(7,650	)
Contract maintenance charges (note 2)		(62	)	(71	)	(1,999	)	(2,993	)	(67	)	(68	)	(10,253	)	(9,177	)
Contingent deferred sales charges (note 2)		(668	)	(432	)	(1,368	)	(6,173	)	-		(26	)	(7,452	)	(10,881	)
Adjustments to maintain reserves		(32	)	(115	)	(924	)	(2,813	)	(9	)	(47	)	14,142		191
Net equity transactions		(71,555	)	(269,066	)	(1,755,124	)	(4,037,500	)	(14,017	)	(6,551	)	14,857,024		(7,103,253	)
Net change in contract owners’ equity		(53,723	)	(548,036	)	(1,648,796	)	(7,461,819	)	2,107		(61,647	)	20,124,853		(23,039,422	)
Contract owners’ equity beginning of period		404,326		952,362		5,166,421		12,628,240		61,400		123,047		14,827,720		37,867,142
Contract owners’ equity end of period	$	350,603		404,326		3,517,625		5,166,421		63,507		61,400		34,952,573		14,827,720
CHANGES IN UNITS:
Beginning units		23,118		35,923		340,376		549,810		7,437		7,935		1,123,906		1,528,618
Units purchased		-		-		35,047		155,805		-		-		1,451,530		261,187
Units redeemed		(4,209	)	(12,805	)	(158,011	)	(365,239	)	(1,430	)	(498	)	(503,421	)	(665,899	)
Ending units		18,909		23,118		217,412		340,376		6,007		7,437		2,072,015		1,123,906

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVIE6					GEF3				NVGWL6			NVNMO1
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	(82,852	)	12,967		(7,010	)	(31,043	)	(149	)	-	(442,119	)	(313	)
Realized gain (loss) on investments		(1,111,808	)	(674,758	)	(915,157	)	(182,098	)	8,059		-	588,120		(12,474	)
Change in unrealized gain (loss) on investments		3,598,820		(1,379,023	)	1,375,926		(3,463,851	)	34,632		-	10,150,274		(13,303	)
Reinvested capital gains		-		555,554		-		899,110		-		-	221,132		-
Net increase (decrease) in contract owners’ equity resulting from operations		2,404,160		(1,485,260	)	453,759		(2,777,882	)	42,542		-	10,517,407		(26,090	)
Equity transactions:
Purchase payments received from contract owners (note 3)		2,363,567		1,048,409		53,758		190,960		357,931		-	842,403		920
Transfers between funds		9,684,968		3,757,297		(294,808	)	(1,191,214	)	148,158		-	96,754,857		94,850
Redemptions (note 3)		(772,853	)	(535,352	)	(424,347	)	(1,016,808	)	(1,061	)	-	(5,977,965	)	(4,353	)
Annuity benefits		-		-		-		-		-		-	(8,793	)	-
Contract maintenance charges (note 2)		(8,538	)	(476	)	(1,383	)	(1,832	)	(533	)	-	(20,848	)	(10	)
Contingent deferred sales charges (note 2)		(8,002	)	(3,296	)	(869	)	(4,490	)	-		-	(16,852	)	-
Adjustments to maintain reserves		(1,088	)	(58	)	(35	)	(77	)	(53	)	-	(53,427	)	(8	)
Net equity transactions		11,258,054		4,266,524		(667,684	)	(2,023,461	)	504,442		-	91,519,375		91,399
Net change in contract owners’ equity		13,662,214		2,781,264		(213,925	)	(4,801,343	)	546,984		-	102,036,782		65,309
Contract owners’ equity beginning of period		2,781,264		-		2,748,870		7,550,213		-		-	65,309		-
Contract owners’ equity end of period	$	16,443,478		2,781,264		2,534,945		2,748,870		546,984		-	102,102,091		65,309
CHANGES IN UNITS:
Beginning units		510,631		-		249,753		376,901		-		-	12,714		-
Units purchased		2,236,631		804,829		17,275		55,737		46,750		-	14,478,505		16,482
Units redeemed		(377,858	)	(294,198	)	(80,328	)	(182,885	)	(5,538	)	-	(1,333,101	)	(3,768	)
Ending units		2,369,404		510,631		186,700		249,753		41,212		-	13,158,118		12,714

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVNMO2					NVNSR1				NVNSR2				NVCRA2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(91,964	)	(6,195	)	(13,555	)	(4,633	)	(3,867,075	)	(1,387,743	)	(43,900	)	21,171
Realized gain (loss) on investments		(66,350	)	(137,486	)	(343,055	)	(72,125	)	(36,769,848	)	(3,913,076	)	(415,017	)	(184,138	)
Change in unrealized gain (loss) on investments		2,292,034		(289,189	)	758,225		(817,778	)	109,745,964		(133,824,294	)	2,541,584		(1,248,138	)
Reinvested capital gains		23,974		-		-		-		-		-		2,352		85,124
Net increase (decrease) in contract owners’ equity resulting from operations		2,157,694		(432,870	)	401,615		(894,536	)	69,109,041		(139,125,113	)	2,085,019		(1,325,981	)
Equity transactions:
Purchase payments received from contract owners (note 3)		3,249,490		714,662		130,480		75,494		6,399,492		3,630,688		3,053,438		3,246,074
Transfers between funds		5,477,366		566,947		(179,894	)	2,547,964		(31,644,463	)	397,446,743		1,377,295		2,643,727
Redemptions (note 3)		(291,262	)	(5,382	)	(309,192	)	(159,988	)	(15,107,123	)	(7,704,356	)	(224,408	)	(196,801	)
Annuity benefits		-		-		-		-		(1,044	)	(194	)	-		-
Contract maintenance charges (note 2)		(2,994	)	(3	)	(1,283	)	(553	)	(1,121,891	)	(491,316	)	(1,555	)	(215	)
Contingent deferred sales charges (note 2)		(5,726	)	(66	)	(1,097	)	(889	)	(284,591	)	(146,603	)	(1,413	)	(251	)
Adjustments to maintain reserves		8,351		34		1,297		(39	)	328,074		10,849		(114	)	(36	)
Net equity transactions		8,435,225		1,276,192		(359,689	)	2,461,989		(41,431,546	)	392,745,811		4,203,243		5,692,498
Net change in contract owners’ equity		10,592,919		843,322		41,926		1,567,453		27,677,495		253,620,698		6,288,262		4,366,517
Contract owners’ equity beginning of period		843,322		-		1,567,453		-		253,620,698		-		4,366,517		-
Contract owners’ equity end of period	$	11,436,241		843,322		1,609,379		1,567,453		281,298,193		253,620,698		10,654,779		4,366,517
CHANGES IN UNITS:
Beginning units		165,613		-		255,949		-		41,560,970		-		688,094		-
Units purchased		1,632,425		227,026		74,631		295,913		7,904,924		43,850,216		827,711		760,717
Units redeemed		(306,852	)	(61,413	)	(128,130	)	(39,964	)	(13,713,050	)	(2,289,246	)	(195,443	)	(72,623	)
Ending units		1,491,186		165,613		202,450		255,949		35,752,844		41,560,970		1,320,362		688,094

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVCRB2					NVCCA2				NVCCN2				NVCMD2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	878,028		547,993		907,250		487,875		1,819,739		293,229		1,884,735		507,024
Realized gain (loss) on investments		-		-		(1,407,350	)	(88,603	)	353,906		(289,119	)	(652,099	)	-
Change in unrealized gain (loss) on investments		48,916,872		(16,020,501	)	68,998,819		(23,141,646	)	12,131,843		(1,666,421	)	58,689,713		(16,954,710	)
Reinvested capital gains		-		661,128		-		1,022,826		350,618		78,376		23,073		670,143
Net increase (decrease) in contract owners’ equity resulting from operations		49,794,900		(14,811,380	)	68,498,719		(21,719,548	)	14,656,106		(1,583,935	)	59,945,422		(15,777,543	)
Equity transactions:
Purchase payments received from contract owners (note 3)		204,557,114		43,186,562		332,501,041		59,959,588		110,675,186		21,912,130		331,730,585		85,686,807
Transfers between funds		28,466,804		113,901,917		36,126,460		72,716,703		28,440,708		28,618,092		11,596,049		36,370,815
Redemptions (note 3)		(5,762,697	)	(791,634	)	(6,311,280	)	(771,468	)	(6,094,387	)	(1,590,700	)	(9,206,693	)	(1,439,755	)
Annuity benefits		-		-		-		-		-		-		-		-
Contract maintenance charges (note 2)		(293,515	)	(7,564	)	(544,441	)	(23,260	)	(436,529	)	(22,818	)	(674,224	)	(11,237	)
Contingent deferred sales charges (note 2)		(110,682	)	(7,000	)	(123,533	)	(7,518	)	(32,353	)	(68,260	)	(139,380	)	(6,617	)
Adjustments to maintain reserves		2,583		(158	)	(1,557	)	(122	)	(2,481	)	(13	)	2,017		(162	)
Net equity transactions		226,859,607		156,282,123		361,646,690		131,873,923		132,550,144		48,848,431		333,308,354		120,599,851
Net change in contract owners’ equity		276,654,507		141,470,743		430,145,409		110,154,375		147,206,250		47,264,496		393,253,776		104,822,308
Contract owners’ equity beginning of period		141,470,743		-		110,154,375		-		47,264,496		-		104,822,308		-
Contract owners’ equity end of period	$	418,125,250		141,470,743		540,299,784		110,154,375		194,470,746		47,264,496		498,076,084		104,822,308
CHANGES IN UNITS:
Beginning units		17,964,614		-		15,353,953		-		5,226,256		-		13,903,119		-
Units purchased		28,898,910		18,770,628		50,114,144		15,894,579		19,227,749		6,246,078		46,074,924		14,697,180
Units redeemed		(1,808,775	)	(806,014	)	(3,905,889	)	(540,626	)	(5,141,438	)	(1,019,822	)	(5,009,258	)	(794,061	)
Ending units		45,054,749		17,964,614		61,562,208		15,353,953		19,312,567		5,226,256		54,968,785		13,903,119

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVCMA2					NVCMC2				NVCBD1				NVCBD2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(214,279	)	462,115		1,135,281		208,427		36,083		6,138		1,498,205		34,746
Realized gain (loss) on investments		(3,971,723	)	(562,543	)	(305,054	)	(291,914	)	41,990		(6,692	)	355,131		(4,359	)
Change in unrealized gain (loss) on investments		44,166,282		(22,848,558	)	15,150,108		(3,292,285	)	(22,864	)	4,272		(290,103	)	(6,570	)
Reinvested capital gains		67,529		1,049,798		101,727		114,676		12,928		-		968,892		-
Net increase (decrease) in contract owners’ equity resulting from operations		40,047,809		(21,899,188	)	16,082,062		(3,261,096	)	68,137		3,718		2,532,125		23,817
Equity transactions:
Purchase payments received from contract owners (note 3)		54,401,673		100,023,474		106,100,414		28,008,430		59,176		7,945		5,594,869		792,318
Transfers between funds		(1,406,821	)	19,845,537		18,871,580		16,824,730		2,741,095		466,944		199,148,499		2,035,592
Redemptions (note 3)		(4,461,643	)	(2,281,490	)	(3,882,006	)	(2,030,164	)	(337,571	)	(54,751	)	(5,975,921	)	(103,187	)
Annuity benefits		-		-		-		-		-		-		(592	)	-
Contract maintenance charges (note 2)		(775,245	)	(19,445	)	(199,127	)	(4,212	)	(722	)	(47	)	(287,863	)	(559	)
Contingent deferred sales charges (note 2)		(98,419	)	(7,934	)	(23,180	)	(13,163	)	(1,658	)	-		(110,299	)	(75	)
Adjustments to maintain reserves		6,552		(161	)	(557	)	(92	)	(78	)	6		23,221		(59	)
Net equity transactions		47,666,097		117,559,981		120,867,124		42,785,529		2,460,242		420,097		198,391,914		2,724,030
Net change in contract owners’ equity		87,713,906		95,660,793		136,949,186		39,524,433		2,528,379		423,815		200,924,039		2,747,847
Contract owners’ equity beginning of period		95,660,793		-		39,524,433		-		423,815		-		2,747,847		-
Contract owners’ equity end of period	$	183,374,699		95,660,793		176,473,619		39,524,433		2,952,194		423,815		203,671,886		2,747,847
CHANGES IN UNITS:
Beginning units		14,026,096		-		4,777,489		-		42,991		-		279,918		-
Units purchased		9,962,217		15,187,849		15,166,146		5,484,014		334,006		68,502		20,310,321		314,418
Units redeemed		(2,410,113	)	(1,161,753	)	(1,544,272	)	(706,525	)	(97,974	)	(25,511	)	(1,099,908	)	(34,500	)
Ending units		21,578,200		14,026,096		18,399,363		4,777,489		279,023		42,991		19,490,331		279,918

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVLCP2					TRF				TRF2				GVGF2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	229,537		20,373		22,236		141,218		(1,878,083	)	(2,154,051	)	(3,473	)	2,170
Realized gain (loss) on investments		75,296		(9,090	)	(17,933,556	)	(5,868,022	)	(90,782,560	)	(6,988,911	)	(90,836	)	(82,202	)
Change in unrealized gain (loss) on investments		270,795		16,174		47,498,047		(142,301,333	)	149,784,333		(259,873,044	)	267,529		(528,767	)
Reinvested capital gains		240,567		-		-		35,459,862		-		65,856,346		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		816,195		27,457		29,586,727		(112,568,275	)	57,123,690		(203,159,660	)	173,220		(608,799	)
Equity transactions:
Purchase payments received from contract owners (note 3)		4,018,629		577,870		2,337,834		4,918,810		5,221,864		44,578,887		-		-
Transfers between funds		7,567,657		1,628,979		(3,177,912	)	(8,741,990	)	(42,424,041	)	55,656,769		(6,359	)	(88,300	)
Redemptions (note 3)		(937,444	)	(34,044	)	(20,852,738	)	(36,610,286	)	(15,783,210	)	(19,908,808	)	(94,642	)	(67,375	)
Annuity benefits		-		-		(62,558	)	(113,249	)	(815	)	(188	)	-		-
Contract maintenance charges (note 2)		(5,092	)	(179	)	(131,797	)	(160,726	)	(1,149,440	)	(1,044,804	)	(101	)	(128	)
Contingent deferred sales charges (note 2)		(9,800	)	(883	)	(27,635	)	(66,796	)	(296,831	)	(411,934	)	(1,069	)	(1,480	)
Adjustments to maintain reserves		(195	)	17		36,326		(14,164	)	286,017		(879	)	(71	)	(18	)
Net equity transactions		10,633,755		2,171,760		(21,878,480	)	(40,788,401	)	(54,146,456	)	78,869,043		(102,242	)	(157,301	)
Net change in contract owners’ equity		11,449,950		2,199,217		7,708,247		(153,356,676	)	2,977,234		(124,290,617	)	70,978		(766,100	)
Contract owners’ equity beginning of period		2,199,217		-		140,087,415		293,444,091		280,668,416		404,959,033		623,060		1,389,160
Contract owners’ equity end of period	$	13,649,167		2,199,217		147,795,662		140,087,415		283,645,650		280,668,416		694,038		623,060
CHANGES IN UNITS:
Beginning units		224,113		-		3,836,090		4,753,992		28,046,162		23,169,599		55,720		65,660
Units purchased		1,297,466		264,266		111,311		117,311		5,164,544		7,811,740		-		-
Units redeemed		(307,950	)	(40,153	)	(697,253	)	(1,035,213	)	(10,120,504	)	(2,935,177	)	(7,816	)	(9,940	)
Ending units		1,213,629		224,113		3,250,148		3,836,090		23,090,202		28,046,162		47,904		55,720

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVGFS					GBF				CAF				GVGH2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(4,310	)	22,436		10,866,468		17,419,780		(248,619	)	(484,811	)	(16,840	)	(23,817	)
Realized gain (loss) on investments		(1,002,849	)	(1,027,206	)	1,805,355		(5,766,811	)	(448,767	)	1,530,565		(69,342	)	(18,289	)
Change in unrealized gain (loss) on investments		1,661,926		(809,971	)	(15,554,220	)	27,289,008		9,649,201		(23,224,436	)	278,625		(622,134	)
Reinvested capital gains		-		-		8,836,233		-		-		-		-		132,482
Net increase (decrease) in contract owners’ equity resulting from operations		654,767		(1,814,741	)	5,953,836		38,941,977		8,951,815		(22,178,682	)	192,443		(531,758	)
Equity transactions:
Purchase payments received from contract owners (note 3)		33,318		102,633		32,982,531		62,701,970		804,025		1,708,798		156		-
Transfers between funds		(321,859	)	1,071,229		(76,356,141	)	104,224,844		(614,686	)	(2,681,188	)	(107,751	)	(157,411	)
Redemptions (note 3)		(195,594	)	(368,193	)	(67,569,894	)	(73,321,377	)	(4,549,491	)	(7,534,551	)	(158,789	)	(145,569	)
Annuity benefits		-		-		(30,879	)	(28,423	)	(10,385	)	(19,292	)	-		-
Contract maintenance charges (note 2)		(693	)	(963	)	(1,531,608	)	(1,215,104	)	(39,938	)	(44,511	)	(241	)	(259	)
Contingent deferred sales charges (note 2)		(102	)	(634	)	(603,001	)	(692,113	)	(12,398	)	(24,109	)	(1,743	)	(1,966	)
Adjustments to maintain reserves		(91	)	(90	)	146,610		9,817		(385	)	3,401		(121	)	(130	)
Net equity transactions		(485,021	)	803,982		(112,962,382	)	91,679,614		(4,423,258	)	(8,591,452	)	(268,489	)	(305,335	)
Net change in contract owners’ equity		169,746		(1,010,759	)	(107,008,546	)	130,621,591		4,528,557		(30,770,134	)	(76,046	)	(837,093	)
Contract owners’ equity beginning of period		2,057,788		3,068,547		710,367,559		579,745,968		31,095,923		61,866,057		1,341,247		2,178,340
Contract owners’ equity end of period	$	2,227,534		2,057,788		603,359,013		710,367,559		35,624,480		31,095,923		1,265,201		1,341,247
CHANGES IN UNITS:
Beginning units		212,769		168,520		51,150,296		42,800,012		2,568,010		3,094,521		104,433		124,698
Units purchased		107,256		169,198		13,108,786		24,461,705		120,945		161,267		219		-
Units redeemed		(143,098	)	(124,949	)	(20,940,312	)	(16,111,421	)	(454,392	)	(687,778	)	(20,344	)	(20,265	)
Ending units		176,927		212,769		43,318,770		51,150,296		2,234,563		2,568,010		84,308		104,433

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVGHS					GVGH6				GVIX8				GVIDA
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(42,390	)	(60,173	)	(179,863	)	(247,810	)	109,547		26,204		(2,981,824	)	527,177
Realized gain (loss) on investments		(760,771	)	(449,322	)	(3,364,043	)	(1,313,775	)	(1,419,623	)	(472,078	)	(23,868,768	)	1,799,691
Change in unrealized gain (loss) on investments		1,386,647		(2,027,689	)	5,119,108		(6,408,550	)	3,407,422		(4,570,675	)	85,687,122		(300,876,772	)
Reinvested capital gains		-		509,267		-		1,634,517		-		12,607		19,329,241		81,756,834
Net increase (decrease) in contract owners’ equity resulting from operations		583,486		(2,027,917	)	1,575,202		(6,335,618	)	2,097,346		(5,003,942	)	78,165,771		(216,793,070	)
Equity transactions:
Purchase payments received from contract owners (note 3)		138,360		265,986		1,234,322		1,792,888		2,413,222		2,071,638		8,850,569		11,265,451
Transfers between funds		(387,868	)	342,680		(2,621,415	)	6,210,066		2,080,517		(1,262,371	)	(11,706,288	)	(1,389,851	)
Redemptions (note 3)		(567,066	)	(916,430	)	(1,260,467	)	(1,603,825	)	(1,190,985	)	(893,035	)	(42,313,980	)	(47,108,261	)
Annuity benefits		-		-		-		-		-		-		(10,154	)	(5,864	)
Contract maintenance charges (note 2)		(2,338	)	(2,522	)	(1,377	)	(1,404	)	(9,473	)	(6,013	)	(71,461	)	(77,819	)
Contingent deferred sales charges (note 2)		(2,496	)	(4,497	)	(21,253	)	(24,512	)	(3,321	)	(4,589	)	(541,548	)	(646,844	)
Adjustments to maintain reserves		(205	)	(93	)	106		(283	)	(312	)	(303	)	(8,125	)	(4,625	)
Net equity transactions		(821,613	)	(314,876	)	(2,670,084	)	6,372,930		3,289,648		(94,673	)	(45,800,987	)	(37,967,813	)
Net change in contract owners’ equity		(238,127	)	(2,342,793	)	(1,094,882	)	37,312		5,386,994		(5,098,615	)	32,364,784		(254,760,883	)
Contract owners’ equity beginning of period		4,518,907		6,861,700		15,216,848		15,179,536		6,515,309		11,613,924		340,661,882		595,422,765
Contract owners’ equity end of period	$	4,280,780		4,518,907		14,121,966		15,216,848		11,902,303		6,515,309		373,026,666		340,661,882
CHANGES IN UNITS:
Beginning units		425,425		476,539		1,764,395		1,289,936		996,023		994,418		28,976,150		31,376,425
Units purchased		160,519		258,162		755,606		1,611,370		873,931		516,219		3,113,268		2,166,636
Units redeemed		(243,080	)	(309,276	)	(1,119,954	)	(1,136,911	)	(432,416	)	(514,614	)	(6,698,991	)	(4,566,911	)
Ending units		342,864		425,425		1,400,047		1,764,395		1,437,538		996,023		25,390,427		28,976,150

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVDBL2				NVDCA2			GVIDC				GVIDM
	2009			2008	2009		2008	2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	238,682		-	515,466		-	603,519		3,227,836		(5,185,287	)	20,354,527
Realized gain (loss) on investments		34,592		-	14,184		-	(2,135,252	)	(809,758	)	(8,238,065	)	2,749,896
Change in unrealized gain (loss) on investments		1,714,917		-	4,854,563		-	18,290,179		(19,003,897	)	278,674,054		(756,815,995	)
Reinvested capital gains		385,931		-	576,469		-	1,321,137		3,249,361		43,913,323		176,276,488
Net increase (decrease) in contract owners’ equity resulting from operations		2,374,122		-	5,960,682		-	18,079,583		(13,336,458	)	309,164,025		(557,435,084	)
Equity transactions:
Purchase payments received from contract owners (note 3)		44,132,605		-	94,850,043		-	78,335,251		35,256,794		290,612,645		181,168,496
Transfers between funds		12,346,092		-	14,399,883		-	18,880,778		49,392,147		(18,667,189	)	70,769,721
Redemptions (note 3)		(256,859	)	-	(192,464	)	-	(24,793,832	)	(31,747,845	)	(151,113,671	)	(176,289,322	)
Annuity benefits		-		-	-		-	(19,655	)	(9,017	)	(42,091	)	(16,430	)
Contract maintenance charges (note 2)		(5,685	)	-	(23,579	)	-	(572,316	)	(279,020	)	(2,973,755	)	(2,095,467	)
Contingent deferred sales charges (note 2)		(249	)	-	(696	)	-	(335,351	)	(437,246	)	(1,963,677	)	(3,179,421	)
Adjustments to maintain reserves		(151	)	-	(394	)	-	(2,988	)	(613	)	(24,516	)	(3,603	)
Net equity transactions		56,215,753		-	109,032,793		-	71,491,887		52,175,200		115,827,746		70,353,974
Net change in contract owners’ equity		58,589,875		-	114,993,475		-	89,571,470		38,838,742		424,991,771		(487,081,110	)
Contract owners’ equity beginning of period		-		-	-		-	194,190,309		155,351,567		1,726,038,400		2,213,119,510
Contract owners’ equity end of period	$	58,589,875		-	114,993,475		-	283,761,779		194,190,309		2,151,030,171		1,726,038,400
CHANGES IN UNITS:
Beginning units		-		-	-		-	17,322,335		12,824,884		149,844,350		145,018,915
Units purchased		5,296,533		-	9,688,321		-	12,053,707		10,611,071		31,163,181		27,292,458
Units redeemed		(210,348	)	-	(172,002	)	-	(5,831,200	)	(6,113,620	)	(21,906,270	)	(22,467,023	)
Ending units		5,086,185		-	9,516,319		-	23,544,842		17,322,335		159,101,261		149,844,350

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVDMA					GVDMC				GVUSL				MCIF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(5,467,261	)	11,373,537		(397,879	)	7,163,665		(12,344	)	(27,951	)	(344,663	)	(196,383	)
Realized gain (loss) on investments		(24,234,809	)	5,248,200		(4,659,856	)	(2,303,693	)	(1,095,850	)	(569,854	)	(4,294,187	)	1,187,109
Change in unrealized gain (loss) on investments		247,531,738		(757,715,705	)	60,421,548		(123,547,592	)	1,815,308		(2,627,709	)	24,206,416		(51,644,636	)
Reinvested capital gains		55,805,571		160,150,500		8,567,242		26,949,413		-		-		2,214,895		6,693,594
Net increase (decrease) in contract owners’ equity resulting from operations		273,635,239		(580,943,468	)	63,931,055		(91,738,207	)	707,114		(3,225,514	)	21,782,461		(43,960,316	)
Equity transactions:
Purchase payments received from contract owners (note 3)		96,413,181		173,375,309		96,514,150		61,809,695		151,308		279,142		6,848,398		7,581,291
Transfers between funds		(37,110,674	)	(2,417,980	)	4,879,922		59,643,269		(401,176	)	105,123		1,861,958		(3,937,868	)
Redemptions (note 3)		(99,729,157	)	(124,241,518	)	(44,506,000	)	(54,352,009	)	(489,840	)	(958,807	)	(9,315,166	)	(13,432,112	)
Annuity benefits		(31,857	)	(41,224	)	(101,172	)	(72,696	)	(3,504	)	(2,667	)	(4,503	)	(6,544	)
Contract maintenance charges (note 2)		(3,500,933	)	(2,658,313	)	(792,290	)	(492,590	)	(1,246	)	(1,831	)	(44,335	)	(38,051	)
Contingent deferred sales charges (note 2)		(1,638,108	)	(2,591,429	)	(608,151	)	(836,910	)	(1,212	)	(2,538	)	(69,319	)	(102,645	)
Adjustments to maintain reserves		19,740		1,747		(19,731	)	8,046		(112	)	(101	)	(2,447	)	(8,130	)
Net equity transactions		(45,577,808	)	41,426,592		55,366,728		65,706,805		(745,782	)	(581,679	)	(725,414	)	(9,944,059	)
Net change in contract owners’ equity		228,057,431		(539,516,876	)	119,297,783		(26,031,402	)	(38,668	)	(3,807,193	)	21,057,047		(53,904,375	)
Contract owners’ equity beginning of period		1,214,824,493		1,754,341,369		479,176,280		505,207,682		2,855,066		6,662,259		67,933,508		121,837,883
Contract owners’ equity end of period	$	1,442,881,924		1,214,824,493		598,474,063		479,176,280		2,816,398		2,855,066		88,990,555		67,933,508
CHANGES IN UNITS:
Beginning units		102,697,193		100,235,949		42,212,488		37,093,457		344,880		397,523		5,965,468		6,776,727
Units purchased		11,939,661		16,868,580		12,733,726		13,641,421		41,072		107,066		1,510,389		1,871,331
Units redeemed		(15,022,159	)	(14,407,336	)	(8,175,872	)	(8,522,390	)	(128,441	)	(159,709	)	(1,768,602	)	(2,682,590	)
Ending units		99,614,695		102,697,193		46,770,342		42,212,488		257,511		344,880		5,707,255		5,965,468

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SAM					NVMIG3				NVMIG6				GVDIV2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(10,037,888	)	3,396,402		(89,768	)	(10,162	)	(1,783,585	)	(2,147,134	)	2,759		990
Realized gain (loss) on investments		-		-		(135,374	)	(93,110	)	(11,054,510	)	(3,263,169	)	(216,109	)	1,690
Change in unrealized gain (loss) on investments		-		-		6,322,921		(655,732	)	84,231,085		(98,969,541	)	427,220		(1,294,257	)
Reinvested capital gains		-		-		-		-		-		-		-		252,332
Net increase (decrease) in contract owners’ equity resulting from operations		(10,037,888	)	3,396,402		6,097,779		(759,004	)	71,392,990		(104,379,844	)	213,870		(1,039,245	)
Equity transactions:
Purchase payments received from contract owners (note 3)		306,399,948		1,430,358,609		445,197		79,857		5,250,614		3,075,087		102		-
Transfers between funds		(128,024,350	)	(901,317,576	)	42,413,850		2,295,639		4,576,132		312,984,584		(138,911	)	(292,353	)
Redemptions (note 3)		(355,206,069	)	(369,678,377	)	(2,746,691	)	(172,747	)	(12,856,665	)	(7,259,908	)	(105,450	)	(86,340	)
Annuity benefits		(130,883	)	(117,752	)	(473	)	-		(667	)	(109	)	-		-
Contract maintenance charges (note 2)		(398,366	)	(281,792	)	(10,048	)	(582	)	(990,489	)	(501,462	)	(121	)	(169	)
Contingent deferred sales charges (note 2)		(1,867,886	)	(2,116,021	)	(6,102	)	(771	)	(243,462	)	(137,315	)	(1,332	)	(1,487	)
Adjustments to maintain reserves		(53,418	)	29,626		(11,992	)	(26	)	106,912		(511	)	(118	)	(45	)
Net equity transactions		(179,281,024	)	156,876,717		40,083,741		2,201,370		(4,157,625	)	308,160,366		(245,830	)	(380,394	)
Net change in contract owners’ equity		(189,318,912	)	160,273,119		46,181,520		1,442,366		67,235,365		203,780,522		(31,960	)	(1,419,639	)
Contract owners’ equity beginning of period		801,487,966		641,214,847		1,442,366		-		203,780,522		-		1,064,102		2,483,741
Contract owners’ equity end of period	$	612,169,054		801,487,966		47,623,886		1,442,366		271,015,887		203,780,522		1,032,142		1,064,102
CHANGES IN UNITS:
Beginning units		58,886,454		46,091,872		236,983		-		33,672,563		-		93,231		114,548
Units purchased		71,458,840		213,942,367		6,153,712		284,810		7,247,503		35,617,350		104		-
Units redeemed		(83,047,205	)	(201,147,785	)	(578,861	)	(47,827	)	(7,427,706	)	(1,944,787	)	(22,542	)	(21,317	)
Ending units		47,298,089		58,886,454		5,811,834		236,983		33,492,360		33,672,563		70,793		93,231

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVDIV3					GVDIV6				NVMLG1				NVMLG2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	62,794		68,195		225,485		(227,518	)	(7,008	)	(17	)	(979,292	)	(1,418	)
Realized gain (loss) on investments		(3,666,379	)	(1,013,137	)	(124,261,973	)	(3,524,196	)	52,549		(3,419	)	1,452,779		(25,339	)
Change in unrealized gain (loss) on investments		5,548,736		(11,226,552	)	129,977,230		(123,480,526	)	447,033		(1,802	)	32,814,686		(73,273	)
Reinvested capital gains		-		2,344,677		-		25,226,921		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		1,945,151		(9,826,817	)	5,940,742		(102,005,319	)	492,574		(5,238	)	33,288,173		(100,030	)
Equity transactions:
Purchase payments received from contract owners (note 3)		244,051		879,493		8,996,305		22,048,620		54,407		6,402		2,615,394		642,606
Transfers between funds		(1,570,156	)	(4,327,626	)	(86,753,689	)	(62,323,275	)	3,195,072		38,487		133,308,953		328,367
Redemptions (note 3)		(1,487,682	)	(3,148,934	)	(3,956,349	)	(11,602,213	)	(251,512	)	(244	)	(4,217,360	)	(397,261	)
Annuity benefits		-		-		(135	)	(50	)	-		-		(113	)	-
Contract maintenance charges (note 2)		(4,576	)	(6,726	)	(199,600	)	(378,836	)	(964	)	(5	)	(311,406	)	(34,781	)
Contingent deferred sales charges (note 2)		(2,257	)	(10,611	)	(59,484	)	(168,618	)	(1,269	)	(18	)	(79,477	)	(6,797	)
Adjustments to maintain reserves		(1,567	)	509		(207,465	)	(1,122	)	(51	)	(7,896	)	20,893		199,076
Net equity transactions		(2,822,187	)	(6,613,895	)	(82,180,417	)	(52,425,494	)	2,995,683		36,726		131,336,884		731,210
Net change in contract owners’ equity		(877,036	)	(16,440,712	)	(76,239,675	)	(154,430,813	)	3,488,257		31,488		164,625,057		631,180
Contract owners’ equity beginning of period		9,450,119		25,890,831		119,780,045		274,210,858		31,488		-		631,180		-
Contract owners’ equity end of period	$	8,573,083		9,450,119		43,540,370		119,780,045		3,519,745		31,488		165,256,237		631,180
CHANGES IN UNITS:
Beginning units		801,982		1,163,407		14,917,379		17,958,586		4,988		-		100,379		-
Units purchased		70,737		99,236		1,874,134		5,189,283		482,107		8,950		22,082,604		119,739
Units redeemed		(304,871	)	(460,661	)	(12,570,023	)	(8,230,490	)	(51,375	)	(3,962	)	(1,494,750	)	(19,360	)
Ending units		567,848		801,982		4,221,490		14,917,379		435,720		4,988		20,688,233		100,379

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVMLV2					NVMMG1				NVMMG2				NVMMV2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(93,204	)	970		(998,275	)	(4,409	)	(2,422,724	)	(908,477	)	(1,103,243	)	(199,894	)
Realized gain (loss) on investments		20,789		(15,992	)	1,169,167		(109,822	)	(8,125,079	)	(1,317,448	)	(28,914,331	)	(2,224,745	)
Change in unrealized gain (loss) on investments		4,641,851		(470,794	)	23,108,328		(207,378	)	44,098,043		(45,609,068	)	83,167,865		(68,247,877	)
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		4,569,436		(485,816	)	23,279,220		(321,609	)	33,550,240		(47,834,993	)	53,150,291		(70,672,516	)
Equity transactions:
Purchase payments received from contract owners (note 3)		4,069,434		2,614,895		1,128,561		21,417		5,399,640		1,767,510		4,840,550		2,741,504
Transfers between funds		28,279,924		1,304,010		184,258,383		877,821		54,869,670		132,040,874		125,492,177		243,858,343
Redemptions (note 3)		(1,440,211	)	(51,743	)	(10,636,171	)	(56,205	)	(7,741,011	)	(2,660,483	)	(16,416,866	)	(6,184,704	)
Annuity benefits		-		-		(6,273	)	-		(550	)	(54	)	(264	)	(98	)
Contract maintenance charges (note 2)		(15,992	)	(1,795	)	(51,803	)	(170	)	(532,964	)	(157,062	)	(604,548	)	(417,361	)
Contingent deferred sales charges (note 2)		(13,482	)	(113	)	(15,464	)	(162	)	(142,911	)	(51,527	)	(145,719	)	(116,420	)
Adjustments to maintain reserves		(3,203	)	(4	)	42,971		(5,516	)	106,925		(186,150	)	(645,361	)	(554	)
Net equity transactions		30,876,470		3,865,250		174,720,204		837,185		51,958,799		130,753,108		112,519,969		239,880,710
Net change in contract owners’ equity		35,445,906		3,379,434		197,999,424		515,576		85,509,039		82,918,115		165,670,260		169,208,194
Contract owners’ equity beginning of period		3,379,434		-		515,576		-		82,918,115		-		169,208,194		-
Contract owners’ equity end of period	$	38,825,340		3,379,434		198,515,000		515,576		168,427,154		82,918,115		334,878,454		169,208,194
CHANGES IN UNITS:
Beginning units		538,618		-		82,831		-		13,384,980		-		25,339,928		-
Units purchased		5,081,868		560,274		27,408,665		121,649		12,612,549		14,178,502		25,673,168		27,273,886
Units redeemed		(688,148	)	(21,656	)	(2,084,991	)	(38,818	)	(4,173,956	)	(793,522	)	(12,043,393	)	(1,933,958	)
Ending units		4,932,338		538,618		25,406,505		82,831		21,823,573		13,384,980		38,969,703		25,339,928

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SCGF					SCGF2				SCVF				SCVF2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(65,258	)	(100,242	)	(147,566	)	(288,642	)	(255,250	)	(127,762	)	(226,407	)	(142,734	)
Realized gain (loss) on investments		(513,450	)	(273,768	)	(1,457,954	)	(3,277,649	)	(6,879,061	)	(4,646,271	)	(2,835,775	)	(3,340,844	)
Change in unrealized gain (loss) on investments		1,748,706		(4,480,517	)	3,868,968		(7,898,515	)	14,575,750		(15,763,686	)	8,514,583		(5,751,018	)
Reinvested capital gains		-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		1,169,998		(4,854,527	)	2,263,448		(11,464,806	)	7,441,439		(20,537,719	)	5,452,401		(9,234,596	)
Equity transactions:
Purchase payments received from contract owners (note 3)		226,326		617,494		1,327,561		2,099,517		1,060,529		2,222,401		1,582,546		1,907,884
Transfers between funds		94,852		(372,164	)	(137,185	)	(7,287,769	)	(2,418,903	)	(7,480,926	)	4,199,882		(1,943,708	)
Redemptions (note 3)		(683,620	)	(1,243,052	)	(983,942	)	(1,315,039	)	(5,766,650	)	(9,590,975	)	(1,986,353	)	(2,723,480	)
Annuity benefits		(1,453	)	(1,951	)	-		-		(7,105	)	(12,634	)	(202	)	(168	)
Contract maintenance charges (note 2)		(3,606	)	(4,510	)	(5,390	)	(3,704	)	(22,897	)	(28,224	)	(8,598	)	(6,642	)
Contingent deferred sales charges (note 2)		(4,233	)	(8,750	)	(15,120	)	(18,475	)	(16,753	)	(40,587	)	(35,358	)	(52,541	)
Adjustments to maintain reserves		(136	)	(22	)	(620	)	(275	)	563		8,369		(926	)	(528	)
Net equity transactions		(371,870	)	(1,012,955	)	185,304		(6,525,745	)	(7,171,216	)	(14,922,576	)	3,750,991		(2,819,183	)
Net change in contract owners’ equity		798,128		(5,867,482	)	2,448,752		(17,990,551	)	270,223		(35,460,295	)	9,203,392		(12,053,779	)
Contract owners’ equity beginning of period		4,999,327		10,866,809		9,006,487		26,997,038		36,701,133		72,161,428		17,071,111		29,124,890
Contract owners’ equity end of period	$	5,797,455		4,999,327		11,455,239		9,006,487		36,971,356		36,701,133		26,274,503		17,071,111
CHANGES IN UNITS:
Beginning units		1,159,659		1,333,156		968,639		1,534,096		2,629,323		3,462,637		1,254,598		1,429,150
Units purchased		230,318		314,278		302,320		692,193		179,120		279,906		737,314		399,346
Units redeemed		(320,346	)	(487,775	)	(287,598	)	(1,257,650	)	(681,707	)	(1,113,220	)	(418,075	)	(573,898	)
Ending units		1,069,631		1,159,659		983,361		968,639		2,126,736		2,629,323		1,573,837		1,254,598

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SCF					SCF2				MSBF				NVSTB2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(810,662	)	(628,394	)	(507,738	)	(875,646	)	5,120,254		3,352,870		281,722		107,005
Realized gain (loss) on investments		(10,059,363	)	2,600,156		(42,981,547	)	(4,588,442	)	(3,174,720	)	(2,469,376	)	205,956		(6,169	)
Change in unrealized gain (loss) on investments		32,766,156		(80,834,655	)	52,465,466		(54,288,868	)	9,790,510		(14,608,639	)	767,682		(152,105	)
Reinvested capital gains		-		24,186,634		-		18,955,245		-		1,473,787		230,664		-
Net increase (decrease) in contract owners’ equity resulting from operations		21,896,131		(54,676,259	)	8,976,181		(40,797,711	)	11,736,044		(12,251,358	)	1,486,024		(51,269	)
Equity transactions:
Purchase payments received from contract owners (note 3)		1,753,715		4,043,063		3,610,529		12,024,898		10,666,411		6,997,174		15,679,382		4,983,930
Transfers between funds		(3,782,633	)	(9,284,263	)	(27,561,474	)	(1,699,612	)	8,885,948		(2,814,864	)	48,375,379		11,559,450
Redemptions (note 3)		(11,056,796	)	(19,098,257	)	(3,529,629	)	(7,154,280	)	(6,373,222	)	(7,184,441	)	(4,995,336	)	(509,049	)
Annuity benefits		(13,824	)	(20,131	)	(5,230	)	(5,436	)	(4,591	)	(4,544	)	(13,213	)	(5,464	)
Contract maintenance charges (note 2)		(51,600	)	(58,417	)	(30,979	)	(100,187	)	(62,661	)	(35,639	)	(85,949	)	(6,122	)
Contingent deferred sales charges (note 2)		(24,926	)	(49,015	)	(50,035	)	(113,785	)	(47,012	)	(58,954	)	(44,702	)	(17,594	)
Adjustments to maintain reserves		998		1,309		(179,004	)	(733	)	(1,040	)	(418	)	(5,959	)	24
Net equity transactions		(13,175,066	)	(24,465,711	)	(27,745,822	)	2,950,865		13,063,833		(3,101,686	)	58,909,602		16,005,175
Net change in contract owners’ equity		8,721,065		(79,141,970	)	(18,769,641	)	(37,846,846	)	24,799,877		(15,353,044	)	60,395,626		15,953,906
Contract owners’ equity beginning of period		77,098,560		156,240,530		61,709,335		99,556,181		50,289,643		65,642,687		15,953,906		-
Contract owners’ equity end of period	$	85,819,625		77,098,560		42,939,694		61,709,335		75,089,520		50,289,643		76,349,532		15,953,906
CHANGES IN UNITS:
Beginning units		3,418,854		4,226,617		4,915,642		4,806,056		4,888,835		5,127,598		1,618,282		-
Units purchased		160,135		245,726		662,365		1,339,837		3,037,805		2,260,043		7,625,908		1,837,099
Units redeemed		(716,437	)	(1,053,489	)	(3,012,582	)	(1,230,251	)	(1,927,821	)	(2,498,806	)	(1,880,879	)	(218,817	)
Ending units		2,862,552		3,418,854		2,565,425		4,915,642		5,998,819		4,888,835		7,363,311		1,618,282

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GGTC					GGTC2				GGTC3				GGTC6
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(1,932	)	(2,897	)	(9,307	)	(14,563	)	(50,639	)	(54,115	)	(141,378	)	(147,037	)
Realized gain (loss) on investments		(7,364	)	4,755		(70,350	)	(13,335	)	(1,141,728	)	(686,461	)	(2,422,623	)	(1,237,458	)
Change in unrealized gain (loss) on investments		71,933		(184,347	)	342,305		(774,070	)	2,800,319		(2,582,469	)	6,279,749		(6,238,541	)
Reinvested capital gains		-		31,306		-		141,073		-		574,822		-		1,280,684
Net increase (decrease) in contract owners’ equity resulting from operations		62,637		(151,183	)	262,648		(660,895	)	1,607,952		(2,748,223	)	3,715,748		(6,342,352	)
Equity transactions:
Purchase payments received from contract owners (note 3)		-		-		(1	)	809		235,413		247,281		1,369,305		1,056,718
Transfers between funds		(7,668	)	(5,879	)	(31,794	)	(185,303	)	1,717,498		(790,842	)	5,910,132		(5,042,206	)
Redemptions (note 3)		(16,379	)	(52,997	)	(79,254	)	(95,808	)	(430,584	)	(490,237	)	(776,148	)	(945,279	)
Annuity benefits		-		-		-		-		(957	)	(1,304	)	-		-
Contract maintenance charges (note 2)		(390	)	(487	)	(246	)	(271	)	(2,068	)	(2,080	)	(1,096	)	(881	)
Contingent deferred sales charges (note 2)		(1	)	(46	)	(1,479	)	(1,001	)	(3,115	)	(4,445	)	(9,397	)	(19,629	)
Adjustments to maintain reserves		(50	)	(37	)	(197	)	(45	)	(58	)	343		(548	)	(264	)
Net equity transactions		(24,488	)	(59,446	)	(112,971	)	(281,619	)	1,516,129		(1,041,284	)	6,492,248		(4,951,541	)
Net change in contract owners’ equity		38,149		(210,629	)	149,677		(942,514	)	3,124,081		(3,789,507	)	10,207,996		(11,293,893	)
Contract owners’ equity beginning of period		135,605		346,234		593,313		1,535,827		2,404,249		6,193,756		4,669,470		15,963,363
Contract owners’ equity end of period	$	173,754		135,605		742,990		593,313		5,528,330		2,404,249		14,877,466		4,669,470
CHANGES IN UNITS:
Beginning units		69,320		89,808		59,489		77,916		328,516		430,126		677,283		1,169,229
Units purchased		-		-		-		-		383,539		191,566		1,265,448		364,731
Units redeemed		(10,288	)	(20,488	)	(9,839	)	(18,427	)	(208,212	)	(293,176	)	(501,300	)	(856,677	)
Ending units		59,032		69,320		49,650		59,489		503,843		328,516		1,441,431		677,283

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	GVUG2					GVUGL				NVOLG1			NVOLG2
	2009			2008		2009		2008		2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	(218,450	)	(311,336	)	(32,612	)	(71,465	)	(650	)	-	(5,251	)	-
Realized gain (loss) on investments		(2,984,177	)	(1,122,555	)	(970,740	)	(737,233	)	5,718		-	1,627		-
Change in unrealized gain (loss) on investments		6,234,180		(12,259,077	)	1,488,522		(2,929,553	)	19,440		-	106,301		-
Reinvested capital gains		-		3,863,225		-		1,066,610		9,860		-	25,634		-
Net increase (decrease) in contract owners’ equity resulting from operations		3,031,553		(9,829,743	)	485,170		(2,671,641	)	34,368		-	128,311		-
Equity transactions:
Purchase payments received from contract owners (note 3)		1,410,916		1,499,037		117,302		243,721		1,721		-	1,036,588		-
Transfers between funds		(1,331,849	)	(269,587	)	(405,055	)	462,688		576,193		-	486,223		-
Redemptions (note 3)		(1,304,545	)	(1,765,627	)	(559,750	)	(1,121,741	)	(14,126	)	-	(13,989	)	-
Annuity benefits		-		-		(453	)	(628	)	-		-	-		-
Contract maintenance charges (note 2)		(7,818	)	(3,924	)	(1,659	)	(2,124	)	(14	)	-	(180	)	-
Contingent deferred sales charges (note 2)		(21,038	)	(41,705	)	(3,158	)	(2,681	)	-		-	(806	)	-
Adjustments to maintain reserves		(624	)	(268	)	(68	)	77		-		-	(33	)	-
Net equity transactions		(1,254,958	)	(582,074	)	(852,841	)	(420,688	)	563,774		-	1,507,803		-
Net change in contract owners’ equity		1,776,595		(10,411,817	)	(367,671	)	(3,092,329	)	598,142		-	1,636,114		-
Contract owners’ equity beginning of period		12,820,073		23,231,890		2,810,413		5,902,742		-		-	-		-
Contract owners’ equity end of period	$	14,596,668		12,820,073		2,442,742		2,810,413		598,142		-	1,636,114		-
CHANGES IN UNITS:
Beginning units		1,047,552		1,094,930		270,231		329,074		-		-	-		-
Units purchased		304,431		328,528		31,885		178,685		49,010		-	129,675		-
Units redeemed		(387,644	)	(375,906	)	(113,119	)	(237,528	)	(2,799	)	-	(2,960	)	-
Ending units		964,339		1,047,552		188,997		270,231		46,211		-	126,715		-

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	NVTIV3				EIF2				NVRE1				NVRE2
	2009			2008	2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(1,648,673	)	-	(570,015	)	(127,895	)	199,385		20,598		89,675		37,683
Realized gain (loss) on investments		3,445,315		-	(40,893,495	)	(40,346,197	)	(69,898	)	(99,705	)	(154,468	)	(145,295	)
Change in unrealized gain (loss) on investments		57,933,012		-	60,015,533		(38,696,150	)	9,105,111		(328,498	)	8,274,525		(875,516	)
Reinvested capital gains		530,532		-	-		1,829,623		195,773		-		165,020		-
Net increase (decrease) in contract owners’ equity resulting from operations		60,260,186		-	18,552,023		(77,340,619	)	9,430,371		(407,605	)	8,374,752		(983,128	)
Equity transactions:
Purchase payments received from contract owners (note 3)		13,108,600		-	9,172,596		25,035,928		884,803		27,355		2,257,172		1,749,887
Transfers between funds		252,916,536		-	(20,957,790	)	(166,120,494	)	53,822,228		1,295,747		40,568,817		1,066,015
Redemptions (note 3)		(7,524,221	)	-	(7,213,997	)	(10,822,473	)	(3,673,530	)	(95,501	)	(1,694,404	)	(52,248	)
Annuity benefits		(342	)	-	(4,138	)	(6,504	)	(523	)	-		-		-
Contract maintenance charges (note 2)		(629,450	)	-	(271,313	)	(333,824	)	(11,034	)	(86	)	(2,944	)	(40	)
Contingent deferred sales charges (note 2)		(151,389	)	-	(95,496	)	(207,660	)	(7,478	)	(136	)	(21,447	)	(641	)
Adjustments to maintain reserves		10,444		-	32,377		(1,635	)	(6,092	)	(23	)	(5,402	)	(82	)
Net equity transactions		257,730,178		-	(19,337,761	)	(152,456,662	)	51,008,374		1,227,356		41,101,792		2,762,891
Net change in contract owners’ equity		317,990,364		-	(785,738	)	(229,797,281	)	60,438,745		819,751		49,476,544		1,779,763
Contract owners’ equity beginning of period		-		-	85,969,004		315,766,285		819,751		-		1,779,763		-
Contract owners’ equity end of period	$	317,990,364		-	85,183,266		85,969,004		61,258,496		819,751		51,256,307		1,779,763
CHANGES IN UNITS:
Beginning units		-		-	8,010,536		18,188,564		146,484		-		319,169		-
Units purchased		26,923,342		-	3,531,170		3,161,290		9,503,135		229,503		7,699,110		406,534
Units redeemed		(2,238,195	)	-	(5,267,533	)	(13,339,318	)	(1,173,345	)	(83,019	)	(868,989	)	(87,365	)
Ending units		24,685,147		-	6,274,173		8,010,536		8,476,274		146,484		7,149,290		319,169

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AMTB					PMVFAD			PMVLAD			AVBV2
	2009			2008		2009		2008	2009		2008	2009		2008
Investment activity:
Net investment income (loss)	$	15,368,384		11,643,554		5,057		-	522,418		-	(234,427	)	(428,899	)
Realized gain (loss) on investments		(25,869,568	)	(6,916,343	)	267,920		-	67,791		-	(20,552,126	)	(980,116	)
Change in unrealized gain (loss) on investments		41,225,297		(69,873,829	)	(259,254	)	-	(2,291,654	)	-	27,703,473		(30,516,067	)
Reinvested capital gains		-		-		96,384		-	6,691,974		-	-		6,864,081
Net increase (decrease) in contract owners’ equity resulting from operations		30,724,113		(65,146,618	)	110,107		-	4,990,529		-	6,916,920		(25,061,001	)
Equity transactions:
Purchase payments received from contract owners (note 3)		12,142,456		46,151,488		3,054,536		-	18,935,893		-	410,097		1,909,197
Transfers between funds		(107,449,358	)	(16,349,739	)	4,015,655		-	133,318,248		-	(26,975,706	)	(2,612,477	)
Redemptions (note 3)		(27,353,558	)	(32,682,793	)	(127,679	)	-	(3,929,404	)	-	(1,525,336	)	(3,601,566	)
Annuity benefits		(105,435	)	(109,799	)	-		-	(180	)	-	(3,430	)	(6,468	)
Contract maintenance charges (note 2)		(792,369	)	(820,871	)	(251	)	-	(223,873	)	-	(7,026	)	(10,992	)
Contingent deferred sales charges (note 2)		(438,151	)	(403,006	)	(104	)	-	(55,923	)	-	(18,349	)	(54,007	)
Adjustments to maintain reserves		(58,456	)	(501	)	(855	)	-	(7,352	)	-	1,695		(926	)
Net equity transactions		(124,054,871	)	(4,215,221	)	6,941,302		-	148,037,409		-	(28,118,055	)	(4,377,239	)
Net change in contract owners’ equity		(93,330,758	)	(69,361,839	)	7,051,409		-	153,027,938		-	(21,201,135	)	(29,438,240	)
Contract owners’ equity beginning of period		355,927,502		425,289,341		-		-	-		-	21,213,886		50,652,126
Contract owners’ equity end of period	$	262,596,744		355,927,502		7,051,409		-	153,027,938		-	12,751		21,213,886
CHANGES IN UNITS:
Beginning units		38,156,662		38,220,042		-		-	-		-	2,569,381		2,902,901
Units purchased		7,473,530		11,189,513		1,118,523		-	15,001,314		-	775,808		488,063
Units redeemed		(20,729,653	)	(11,252,893	)	(469,179	)	-	(987,661	)	-	(3,345,189	)	(821,583	)
Ending units		24,900,539		38,156,662		649,344		-	14,013,653		-	-		2,569,381

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AVCA2					AVCD2				ALVGIB				ALVSVB
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(100,915	)	(215,299	)	(264,531	)	(335,078	)	170,225		35,630		(117,548	)	(131,725	)
Realized gain (loss) on investments		(645,614	)	87,480		(2,615,542	)	(849,393	)	(1,426,904	)	(777,482	)	(3,399,584	)	(1,592,136	)
Change in unrealized gain (loss) on investments		1,982,553		(6,888,377	)	8,246,231		(13,524,418	)	2,686,885		(9,465,089	)	8,029,882		(5,296,111	)
Reinvested capital gains		-		-		-		2,534,704		-		2,653,838		578,687		669,521
Net increase (decrease) in contract owners’ equity resulting from operations		1,236,024		(7,016,196	)	5,366,158		(12,174,185	)	1,430,206		(7,553,103	)	5,091,437		(6,350,451	)
Equity transactions:
Purchase payments received from contract owners (note 3)		228,424		747,816		3,026,379		2,308,849		242,776		181,053		6,100,315		2,587,624
Transfers between funds		(515,751	)	(2,274,283	)	(483,498	)	(2,556,881	)	(813,001	)	(1,323,322	)	(907,961	)	9,031,174
Redemptions (note 3)		(836,042	)	(1,418,392	)	(1,242,572	)	(1,721,565	)	(1,099,031	)	(1,651,289	)	(1,060,791	)	(1,221,058	)
Annuity benefits		(1,054	)	(1,368	)	-		-		-		-		(1,053	)	(1,307	)
Contract maintenance charges (note 2)		(2,991	)	(2,937	)	(18,226	)	(9,692	)	(1,071	)	(1,315	)	(14,028	)	(1,650	)
Contingent deferred sales charges (note 2)		(10,639	)	(17,143	)	(20,477	)	(35,193	)	(11,520	)	(15,630	)	(9,085	)	(15,711	)
Adjustments to maintain reserves		(452	)	(487	)	(930	)	(190	)	(481	)	(113	)	(389	)	(87	)
Net equity transactions		(1,138,505	)	(2,966,794	)	1,260,676		(2,014,672	)	(1,682,328	)	(2,810,616	)	4,107,008		10,378,985
Net change in contract owners’ equity		97,519		(9,982,990	)	6,626,834		(14,188,857	)	(252,122	)	(10,363,719	)	9,198,445		4,028,534
Contract owners’ equity beginning of period		7,656,524		17,639,514		12,813,434		27,002,291		9,367,499		19,731,218		11,845,334		7,816,800
Contract owners’ equity end of period	$	7,754,043		7,656,524		19,440,268		12,813,434		9,115,377		9,367,499		21,043,779		11,845,334
CHANGES IN UNITS:
Beginning units		804,764		1,044,738		1,176,724		1,288,902		891,778		1,095,470		934,857		394,975
Units purchased		111,391		156,250		436,569		370,858		55,438		57,087		983,740		979,830
Units redeemed		(228,649	)	(396,224	)	(334,525	)	(483,036	)	(213,797	)	(260,779	)	(745,986	)	(439,948	)
Ending units		687,506		804,764		1,278,768		1,176,724		733,419		891,778		1,172,611		934,857

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	CHSMM					ACVB				ACVCA				ACVIG
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(191,242	)	253,898		1,616,504		768,191		50,422		(1,575,013	)	539,360		190,085
Realized gain (loss) on investments		-		-		(2,212,965	)	(1,104,791	)	4,551,873		5,473,465		(1,165,437	)	208,041
Change in unrealized gain (loss) on investments		-		-		5,655,141		(17,216,134	)	8,972,785		(82,357,794	)	2,933,568		(13,619,377	)
Reinvested capital gains		-		-		-		4,415,765		-		9,948,547		-		3,083,841
Net increase (decrease) in contract owners’ equity resulting from operations		(191,242	)	253,898		5,058,680		(13,136,969	)	13,575,080		(68,510,795	)	2,307,491		(10,137,410	)
Equity transactions:
Purchase payments received from contract owners (note 3)		4,385,177		9,962,432		687,329		1,334,843		671,313		2,200,741		425,211		1,249,253
Transfers between funds		(7,742,722	)	(1,639,364	)	(755,632	)	(2,815,950	)	(78,119,518	)	(6,497,441	)	(648,492	)	(2,075,781	)
Redemptions (note 3)		(5,069,072	)	(4,945,856	)	(7,896,741	)	(10,653,581	)	(6,489,214	)	(16,686,951	)	(2,747,404	)	(4,593,071	)
Annuity benefits		(30,144	)	(31,171	)	(19,393	)	(14,148	)	(17,449	)	(30,100	)	(4,914	)	(9,324	)
Contract maintenance charges (note 2)		(943	)	(972	)	(28,044	)	(31,189	)	(42,119	)	(74,252	)	(12,060	)	(14,945	)
Contingent deferred sales charges (note 2)		-		-		(15,661	)	(19,145	)	(8,626	)	(20,604	)	(8,056	)	(20,251	)
Adjustments to maintain reserves		(82	)	243		10,348		(5,796	)	(715	)	(3,448	)	(554	)	3
Net equity transactions		(8,457,786	)	3,345,312		(8,017,794	)	(12,204,966	)	(84,006,328	)	(21,112,055	)	(2,996,269	)	(5,464,116	)
Net change in contract owners’ equity		(8,649,028	)	3,599,210		(2,959,114	)	(25,341,935	)	(70,431,248	)	(89,622,850	)	(688,778	)	(15,601,526	)
Contract owners’ equity beginning of period		25,826,679		22,227,469		43,435,525		68,777,460		70,538,795		160,161,645		16,473,641		32,075,167
Contract owners’ equity end of period	$	17,177,651		25,826,679		40,476,411		43,435,525		107,547		70,538,795		15,784,863		16,473,641
CHANGES IN UNITS:
Beginning units		2,367,841		2,030,093		2,314,333		2,885,081		2,882,462		3,530,839		1,902,498		2,391,422
Units purchased		629,697		1,563,593		104,674		149,630		77,568		237,473		122,354		212,092
Units redeemed		(1,408,751	)	(1,225,845	)	(533,728	)	(720,378	)	(2,960,030	)	(885,850	)	(460,487	)	(701,016	)
Ending units		1,588,787		2,367,841		1,885,279		2,314,333		-		2,882,462		1,564,365		1,902,498

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVIG2					ACVIP2				ACVI				ACVI2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	176,028		29,802		285,123		3,487,871		350,396		(216,363	)	17,782		(21,411	)
Realized gain (loss) on investments		(572,077	)	(137,133	)	(202,624	)	(850,110	)	(9,145	)	2,950,088		(106,214	)	105,657
Change in unrealized gain (loss) on investments		1,228,206		(5,069,288	)	11,207,481		(8,364,625	)	3,849,929		(31,398,271	)	318,636		(1,847,797	)
Reinvested capital gains		-		1,184,600		-		-		-		4,385,457		-		268,891
Net increase (decrease) in contract owners’ equity resulting from operations		832,157		(3,992,019	)	11,289,980		(5,726,864	)	4,191,180		(24,279,089	)	230,204		(1,494,660	)
Equity transactions:
Purchase payments received from contract owners (note 3)		122,695		160,347		29,026,252		16,337,034		(1,394	)	29,167		(1,643	)	-
Transfers between funds		(439,864	)	(1,023,013	)	6,687,516		49,176,521		(28,438,546	)	(1,873,224	)	(1,679,249	)	(115,871	)
Redemptions (note 3)		(691,657	)	(824,435	)	(15,901,690	)	(18,196,008	)	(2,198,676	)	(7,544,488	)	(170,082	)	(312,236	)
Annuity benefits		-		-		(18,530	)	(17,191	)	(9,698	)	(16,625	)	-		-
Contract maintenance charges (note 2)		(1,238	)	(1,313	)	(99,207	)	(43,400	)	(11,256	)	(21,043	)	(172	)	(382	)
Contingent deferred sales charges (note 2)		(7,655	)	(9,720	)	(161,053	)	(150,711	)	(2,320	)	(5,706	)	(3,420	)	(3,625	)
Adjustments to maintain reserves		(415	)	(324	)	(21,716	)	(1,513	)	(159	)	(1,988	)	(40	)	(63	)
Net equity transactions		(1,018,134	)	(1,698,458	)	19,511,572		47,104,732		(30,662,049	)	(9,433,907	)	(1,854,606	)	(432,177	)
Net change in contract owners’ equity		(185,977	)	(5,690,477	)	30,801,552		41,377,868		(26,470,869	)	(33,712,996	)	(1,624,402	)	(1,926,837	)
Contract owners’ equity beginning of period		6,525,719		12,216,196		121,020,718		79,642,850		26,505,676		60,218,672		1,624,402		3,551,239
Contract owners’ equity end of period	$	6,339,742		6,525,719		151,822,270		121,020,718		34,807		26,505,676		-		1,624,402
CHANGES IN UNITS:
Beginning units		602,251		727,674		10,709,237		6,820,642		1,852,745		2,292,787		128,519		152,551
Units purchased		39,610		35,352		6,663,755		9,379,817		1		25		1,880		-
Units redeemed		(138,213	)	(160,775	)	(4,990,625	)	(5,491,222	)	(1,852,746	)	(440,067	)	(130,399	)	(24,032	)
Ending units		503,648		602,251		12,382,367		10,709,237		-		1,852,745		-		128,519

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVI3					ACVI4				ACVMV1				ACVMV2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	203,988		(124,113	)	97,651		(133,561	)	112,896		(66,524	)	514,738		(829,196	)
Realized gain (loss) on investments		(2,231,080	)	1,841,427		(5,595,137	)	751,428		(943,068	)	(854,150	)	(3,319,997	)	(7,112,926	)
Change in unrealized gain (loss) on investments		4,460,584		(18,705,807	)	6,920,566		(10,985,764	)	1,832,781		(803,204	)	10,421,729		(5,479,215	)
Reinvested capital gains		-		2,548,520		-		1,584,327		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		2,433,492		(14,439,973	)	1,423,080		(8,783,570	)	1,002,609		(1,723,878	)	7,616,470		(13,421,337	)
Equity transactions:
Purchase payments received from contract owners (note 3)		490,575		2,021,786		112,832		1,485,832		182,296		297,075		7,893,643		10,824,397
Transfers between funds		(16,792,113	)	(1,527,717	)	(10,153,729	)	(1,513,937	)	364,378		1,098,432		(4,075,724	)	6,157,103
Redemptions (note 3)		(1,497,357	)	(4,723,752	)	(503,635	)	(1,335,186	)	(584,248	)	(968,838	)	(2,578,139	)	(3,575,869	)
Annuity benefits		(389	)	(3,739	)	-		-		(475	)	(583	)	(64	)	(76	)
Contract maintenance charges (note 2)		(5,154	)	(10,257	)	(5,573	)	(6,608	)	(2,057	)	(2,172	)	(33,898	)	(46,525	)
Contingent deferred sales charges (note 2)		(9,555	)	(26,291	)	(6,329	)	(18,299	)	(1,684	)	(2,395	)	(33,262	)	(70,081	)
Adjustments to maintain reserves		(393	)	(150	)	(99	)	(476	)	(1,050	)	(4	)	(740	)	(582	)
Net equity transactions		(17,814,386	)	(4,270,120	)	(10,556,533	)	(1,388,674	)	(42,840	)	421,515		1,171,816		13,288,367
Net change in contract owners’ equity		(15,380,894	)	(18,710,093	)	(9,133,453	)	(10,172,244	)	959,769		(1,302,363	)	8,788,286		(132,970	)
Contract owners’ equity beginning of period		15,381,250		34,091,343		9,133,453		19,305,697		4,512,607		5,814,970		27,697,559		27,830,529
Contract owners’ equity end of period	$	356		15,381,250		-		9,133,453		5,472,376		4,512,607		36,485,845		27,697,559
CHANGES IN UNITS:
Beginning units		1,568,771		1,893,113		943,918		1,081,252		566,200		544,568		2,949,866		2,191,006
Units purchased		96,761		286,486		84,830		367,090		305,302		540,746		1,911,374		6,567,379
Units redeemed		(1,665,532	)	(610,828	)	(1,028,748	)	(504,424	)	(336,124	)	(519,114	)	(1,823,170	)	(5,808,519	)
Ending units		-		1,568,771		-		943,918		535,378		566,200		3,038,070		2,949,866

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVU1					ACVU2				ACVV				ACVV2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(9,703	)	(39,139	)	(66,189	)	(213,195	)	2,586,337		1,066,775		2,632,003		559,190
Realized gain (loss) on investments		(945,133	)	(160,010	)	(4,034,923	)	(322,735	)	(11,135,716	)	(4,301,880	)	(10,840,268	)	(7,305,365	)
Change in unrealized gain (loss) on investments		1,249,487		(1,877,650	)	5,190,116		(8,385,285	)	17,564,038		(35,779,967	)	19,372,709		(31,535,146	)
Reinvested capital gains		-		511,993		-		2,339,161		-		11,805,540		-		10,753,584
Net increase (decrease) in contract owners’ equity resulting from operations		294,651		(1,564,806	)	1,089,004		(6,582,054	)	9,014,659		(27,209,532	)	11,164,444		(27,527,737	)
Equity transactions:
Purchase payments received from contract owners (note 3)		58,184		206,585		87,731		263,514		1,544,112		3,710,303		6,366,984		7,568,576
Transfers between funds		(2,001,353	)	(738,829	)	(8,487,920	)	(1,378,995	)	(4,659,121	)	(10,174,729	)	(8,025,228	)	(30,522	)
Redemptions (note 3)		(195,066	)	(631,416	)	(543,515	)	(1,445,503	)	(9,430,977	)	(15,459,272	)	(5,348,599	)	(7,506,778	)
Annuity benefits		-		-		(3,825	)	(6,086	)	(25,963	)	(31,982	)	(5,180	)	(6,538	)
Contract maintenance charges (note 2)		(945	)	(1,912	)	(1,276	)	(2,170	)	(33,770	)	(41,310	)	(71,058	)	(36,824	)
Contingent deferred sales charges (note 2)		(2,471	)	(3,698	)	(9,569	)	(22,156	)	(27,418	)	(47,861	)	(65,413	)	(126,133	)
Adjustments to maintain reserves		(4	)	(56	)	302		(433	)	(542	)	3,193		(2,130	)	(578	)
Net equity transactions		(2,141,655	)	(1,169,326	)	(8,958,072	)	(2,591,829	)	(12,633,679	)	(22,041,658	)	(7,150,624	)	(138,797	)
Net change in contract owners’ equity		(1,847,004	)	(2,734,132	)	(7,869,068	)	(9,173,883	)	(3,619,020	)	(49,251,190	)	4,013,820		(27,666,534	)
Contract owners’ equity beginning of period		1,847,004		4,581,136		7,882,797		17,056,680		63,401,884		112,653,074		72,316,886		99,983,420
Contract owners’ equity end of period	$	-		1,847,004		13,729		7,882,797		59,782,864		63,401,884		76,330,706		72,316,886
CHANGES IN UNITS:
Beginning units		259,464		371,822		868,516		1,079,627		3,763,741		4,831,480		5,916,904		5,881,576
Units purchased		37,922		52,561		37,609		195,819		257,189		484,315		1,209,254		2,046,396
Units redeemed		(297,386	)	(164,919	)	(906,125	)	(406,930	)	(1,020,219	)	(1,552,054	)	(1,818,598	)	(2,011,068	)
Ending units		-		259,464		-		868,516		3,000,711		3,763,741		5,307,560		5,916,904

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	ACVVS1					ACVVS2				DVSCS				DSIF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(27,942	)	(102,981	)	(122,171	)	(412,904	)	356,791		(297,850	)	1,700,496		2,582,898
Realized gain (loss) on investments		(2,967,805	)	(795,743	)	(9,420,126	)	(3,006,762	)	(6,783,770	)	(3,516,194	)	(2,732,992	)	5,656,285
Change in unrealized gain (loss) on investments		3,303,758		(4,296,789	)	10,407,868		(13,687,213	)	8,152,379		(21,355,555	)	37,276,545		(168,144,260	)
Reinvested capital gains		-		440,464		-		1,199,839		5,995,719		6,476,393		14,946,956		-
Net increase (decrease) in contract owners’ equity resulting from operations		308,011		(4,755,049	)	865,571		(15,907,040	)	7,721,119		(18,693,206	)	51,191,005		(159,905,077	)
Equity transactions:
Purchase payments received from contract owners (note 3)		96,084		462,143		121,082		2,968,968		5,162,353		5,287,868		5,273,315		12,316,477
Transfers between funds		(3,768,080	)	(3,450,251	)	(12,924,234	)	(9,785,775	)	(2,313,592	)	4,561,416		(6,693,029	)	(16,341,811	)
Redemptions (note 3)		(366,044	)	(1,028,529	)	(567,821	)	(2,609,875	)	(3,636,181	)	(5,585,685	)	(36,443,730	)	(61,431,940	)
Annuity benefits		(1,743	)	(359	)	-		-		(4,012	)	(5,203	)	(99,738	)	(151,569	)
Contract maintenance charges (note 2)		(1,157	)	(2,988	)	(7,869	)	(9,137	)	(19,090	)	(15,192	)	(179,897	)	(210,970	)
Contingent deferred sales charges (note 2)		(1,331	)	(1,609	)	(7,916	)	(71,144	)	(36,421	)	(66,343	)	(86,795	)	(156,662	)
Adjustments to maintain reserves		81		1,042		(1,910	)	(332	)	(75	)	11,543		(2,921	)	40,218
Net equity transactions		(4,042,190	)	(4,020,551	)	(13,388,668	)	(9,507,295	)	(847,018	)	4,188,404		(38,232,795	)	(65,936,257	)
Net change in contract owners’ equity		(3,734,179	)	(8,775,600	)	(12,523,097	)	(25,414,335	)	6,874,101		(14,504,802	)	12,958,210		(225,841,334	)
Contract owners’ equity beginning of period		3,743,896		12,519,496		12,523,097		37,937,432		34,830,629		49,335,431		239,456,508		465,297,842
Contract owners’ equity end of period	$	9,717		3,743,896		-		12,523,097		41,704,730		34,830,629		252,414,718		239,456,508
CHANGES IN UNITS:
Beginning units		560,487		951,361		1,499,857		2,291,468		2,849,922		2,789,752		11,829,308		14,260,866
Units purchased		71,109		485,752		225,386		1,475,763		1,074,035		1,571,725		638,747		901,740
Units redeemed		(631,596	)	(876,626	)	(1,725,243	)	(2,267,374	)	(1,182,026	)	(1,511,555	)	(2,462,568	)	(3,333,298	)
Ending units		-		560,487		-		1,499,857		2,741,931		2,849,922		10,005,487		11,829,308

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	DSIFS					DSRG				DCAP				DCAPS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	247,356		252,035		(139,377	)	(311,002	)	327,763		245,544		99,097		15,292
Realized gain (loss) on investments		(2,976,952	)	1,002,340		(3,369,538	)	(6,076,910	)	(701,338	)	1,553,867		(1,271,428	)	132,170
Change in unrealized gain (loss) on investments		15,639,657		(47,525,903	)	14,809,941		(16,689,844	)	3,053,834		(16,138,718	)	3,564,180		(8,439,529	)
Reinvested capital gains		4,719,219		-		-		-		1,888,385		2,604,428		1,333,884		1,429,961
Net increase (decrease) in contract owners’ equity resulting from operations		17,629,280		(46,271,528	)	11,301,026		(23,077,756	)	4,568,644		(11,734,879	)	3,725,733		(6,862,106	)
Equity transactions:
Purchase payments received from contract owners (note 3)		9,962,850		9,967,791		1,056,220		2,399,674		547,589		1,378,999		4,671,011		1,801,955
Transfers between funds		(234,526	)	(4,029,597	)	(699,154	)	(2,989,401	)	(854,347	)	(1,566,848	)	(1,592,282	)	3,009,492
Redemptions (note 3)		(8,413,768	)	(10,684,717	)	(5,115,033	)	(9,931,828	)	(3,609,451	)	(5,785,964	)	(1,827,265	)	(1,596,643	)
Annuity benefits		(32,498	)	(36,345	)	(2,639	)	(7,490	)	(4,242	)	(4,653	)	(8,861	)	(10,838	)
Contract maintenance charges (note 2)		(33,888	)	(22,521	)	(46,365	)	(52,268	)	(16,853	)	(19,321	)	(14,120	)	(5,305	)
Contingent deferred sales charges (note 2)		(103,370	)	(143,724	)	(13,983	)	(36,264	)	(11,334	)	(21,882	)	(23,550	)	(27,844	)
Adjustments to maintain reserves		(2,195	)	1,492		(287	)	3,746		2,438		3,246		(1,375	)	(476	)
Net equity transactions		1,142,605		(4,947,621	)	(4,821,241	)	(10,613,831	)	(3,946,200	)	(6,016,423	)	1,203,558		3,170,341
Net change in contract owners’ equity		18,771,885		(51,219,149	)	6,479,785		(33,691,587	)	622,444		(17,751,302	)	4,929,291		(3,691,765	)
Contract owners’ equity beginning of period		73,710,552		124,929,701		38,638,185		72,329,772		25,225,732		42,977,034		18,498,046		22,189,811
Contract owners’ equity end of period	$	92,482,437		73,710,552		45,117,970		38,638,185		25,848,176		25,225,732		23,427,337		18,498,046
CHANGES IN UNITS:
Beginning units		6,903,789		7,232,672		2,380,596		2,887,153		2,251,894		2,667,862		1,678,407		1,388,567
Units purchased		2,167,187		1,795,788		85,728		123,980		250,357		259,379		708,681		633,546
Units redeemed		(2,070,591	)	(2,124,671	)	(360,538	)	(630,537	)	(596,126	)	(675,347	)	(618,109	)	(343,706	)
Ending units		7,000,385		6,903,789		2,105,786		2,380,596		1,906,125		2,251,894		1,768,979		1,678,407

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	DVDLS					DGI				FCA2S				FALFS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(1,675	)	(17,381	)	(1,925	)	(154,519	)	(12,783	)	(40,278	)	5,646		(955	)
Realized gain (loss) on investments		(312,921	)	(471,383	)	(505,313	)	289,902		(83,452	)	74,309		(342,280	)	(319,001	)
Change in unrealized gain (loss) on investments		585,449		(569,521	)	3,764,193		(13,969,271	)	257,704		(993,863	)	455,714		(629,269	)
Reinvested capital gains		-		109,712		-		2,875,266		-		57,519		-		395,831
Net increase (decrease) in contract owners’ equity resulting from operations		270,853		(948,573	)	3,256,955		(10,958,622	)	161,469		(902,313	)	119,080		(553,394	)
Equity transactions:
Purchase payments received from contract owners (note 3)		8,279		16,386		412,574		863,225		31,930		46,785		22,124		35,715
Transfers between funds		5,547		(204,289	)	(437,048	)	(1,070,537	)	(166,484	)	(142,954	)	(17,407	)	(126,176	)
Redemptions (note 3)		(130,889	)	(241,992	)	(2,404,748	)	(4,036,911	)	(289,466	)	(191,860	)	(96,604	)	(250,624	)
Annuity benefits		(96	)	(80	)	(757	)	(707	)	-		-		-		-
Contract maintenance charges (note 2)		(366	)	(453	)	(12,311	)	(14,857	)	(360	)	(368	)	(230	)	(327	)
Contingent deferred sales charges (note 2)		(2,006	)	(3,884	)	(7,805	)	(10,118	)	(5,652	)	(1,902	)	(2,844	)	(3,429	)
Adjustments to maintain reserves		(107	)	(127	)	(174	)	(316	)	(172	)	(198	)	(82	)	2,258
Net equity transactions		(119,638	)	(434,439	)	(2,450,269	)	(4,270,221	)	(430,204	)	(290,497	)	(95,043	)	(342,583	)
Net change in contract owners’ equity		151,215		(1,383,012	)	806,686		(15,228,843	)	(268,735	)	(1,192,810	)	24,037		(895,977	)
Contract owners’ equity beginning of period		1,232,028		2,615,040		14,093,474		29,322,317		1,971,709		3,164,519		900,294		1,796,271
Contract owners’ equity end of period	$	1,383,243		1,232,028		14,900,160		14,093,474		1,702,974		1,971,709		924,331		900,294
CHANGES IN UNITS:
Beginning units		145,489		189,656		1,549,201		1,896,207		173,986		192,944		95,239		123,768
Units purchased		15,635		33,234		73,374		99,197		21,135		17,557		17,076		13,542
Units redeemed		(30,440	)	(77,401	)	(333,852	)	(446,203	)	(61,075	)	(36,515	)	(26,159	)	(42,071	)
Ending units		130,684		145,489		1,288,723		1,549,201		134,046		173,986		86,156		95,239

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FVMOS					FQB				FQBS				FC2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(2,254	)	(66,537	)	649,092		626,415		2,338,098		1,821,339		(898,309	)	(2,770,700	)
Realized gain (loss) on investments		(266,274	)	(782,026	)	(230,073	)	(415,572	)	(1,124,820	)	(886,850	)	(25,070,556	)	(12,810,315	)
Change in unrealized gain (loss) on investments		2,896		(255,965	)	1,713,072		(1,429,335	)	7,035,508		(6,204,635	)	85,069,691		(165,897,358	)
Reinvested capital gains		141,524		-		-		-		-		-		56,790		9,589,329
Net increase (decrease) in contract owners’ equity resulting from operations		(124,108	)	(1,104,528	)	2,132,091		(1,218,492	)	8,248,786		(5,270,146	)	59,157,616		(171,889,044	)
Equity transactions:
Purchase payments received from contract owners (note 3)		339,875		392,337		236,706		682,154		785,805		4,553,687		4,233,973		24,540,391
Transfers between funds		(698,208	)	8,099,609		1,174,874		(591,959	)	2,266,645		(1,231,820	)	(13,251,234	)	(22,808,450	)
Redemptions (note 3)		(1,207,853	)	(1,362,130	)	(2,281,306	)	(3,190,091	)	(5,676,163	)	(6,367,770	)	(20,224,818	)	(31,452,400	)
Annuity benefits		-		-		(618	)	(628	)	-		-		(13,242	)	(17,617	)
Contract maintenance charges (note 2)		(1,743	)	(1,634	)	(6,382	)	(6,742	)	(15,807	)	(13,411	)	(75,834	)	(65,845	)
Contingent deferred sales charges (note 2)		(8,812	)	(16,249	)	(7,576	)	(11,311	)	(74,155	)	(77,276	)	(263,909	)	(455,251	)
Adjustments to maintain reserves		252		(1,312	)	(201	)	2,976		(418	)	1,091		(1,428	)	(1,646	)
Net equity transactions		(1,576,489	)	7,110,621		(884,503	)	(3,115,601	)	(2,714,093	)	(3,135,499	)	(29,596,492	)	(30,260,818	)
Net change in contract owners’ equity		(1,700,597	)	6,006,093		1,247,588		(4,334,093	)	5,534,693		(8,405,645	)	29,561,124		(202,149,862	)
Contract owners’ equity beginning of period		8,951,034		2,944,941		11,702,252		16,036,345		48,257,499		56,663,144		201,947,608		404,097,470
Contract owners’ equity end of period	$	7,250,437		8,951,034		12,949,840		11,702,252		53,792,192		48,257,499		231,508,732		201,947,608
CHANGES IN UNITS:
Beginning units		918,459		295,662		1,061,286		1,330,368		4,844,381		5,168,222		16,338,369		18,440,700
Units purchased		888,808		2,376,509		358,525		431,388		1,006,715		1,451,987		1,352,059		3,715,233
Units redeemed		(1,060,818	)	(1,753,712	)	(431,422	)	(700,470	)	(1,285,122	)	(1,775,828	)	(3,636,588	)	(5,817,564	)
Ending units		746,449		918,459		988,389		1,061,286		4,565,974		4,844,381		14,053,840		16,338,369

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FEIP					FVSS2				FHIP				FAMP
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	3,174,105		5,677,503		(128,769	)	(178,921	)	3,846,362		5,290,875		1,633,540		2,556,993
Realized gain (loss) on investments		(50,571,509	)	(22,853,554	)	(2,813,966	)	(2,317,552	)	(5,007,873	)	(3,647,174	)	(12,329,833	)	(9,709,223	)
Change in unrealized gain (loss) on investments		136,199,989		(291,661,312	)	7,500,826		(11,614,273	)	22,366,884		(23,167,718	)	50,035,162		(90,964,532	)
Reinvested capital gains		-		644,601		-		3,632,807		-		-		265,459		24,368,853
Net increase (decrease) in contract owners’ equity resulting from operations		88,802,585		(308,192,762	)	4,558,091		(10,477,939	)	21,205,373		(21,524,017	)	39,604,328		(73,747,909	)
Equity transactions:
Purchase payments received from contract owners (note 3)		6,205,838		15,056,540		410,715		207,268		(2,165	)	897		2,373,177		5,213,048
Transfers between funds		(12,821,287	)	(30,606,125	)	(131,406	)	(2,333,561	)	(3,080,145	)	(7,375,107	)	(3,384,618	)	(5,935,338	)
Redemptions (note 3)		(52,695,712	)	(101,550,592	)	(1,068,457	)	(1,402,382	)	(9,258,000	)	(14,961,277	)	(23,729,695	)	(37,525,307	)
Annuity benefits		(136,425	)	(212,404	)	-		-		(10,106	)	(11,911	)	(40,929	)	(55,470	)
Contract maintenance charges (note 2)		(244,126	)	(298,088	)	(1,935	)	(2,429	)	(40,517	)	(43,012	)	(119,993	)	(132,736	)
Contingent deferred sales charges (note 2)		(90,150	)	(184,181	)	(9,856	)	(28,661	)	(12,509	)	(23,303	)	(30,770	)	(41,623	)
Adjustments to maintain reserves		(650	)	15,230		(882	)	(389	)	333		(4,812	)	2,460		(5,658	)
Net equity transactions		(59,782,512	)	(117,779,620	)	(801,821	)	(3,560,154	)	(12,403,109	)	(22,418,525	)	(24,930,368	)	(38,483,084	)
Net change in contract owners’ equity		29,020,073		(425,972,382	)	3,756,270		(14,038,093	)	8,802,264		(43,942,542	)	14,673,960		(112,230,993	)
Contract owners’ equity beginning of period		364,158,836		790,131,218		8,862,131		22,900,224		56,161,208		100,103,750		160,850,055		273,081,048
Contract owners’ equity end of period	$	393,178,909		364,158,836		12,618,401		8,862,131		64,963,472		56,161,208		175,524,015		160,850,055
CHANGES IN UNITS:
Beginning units		13,248,157		16,421,321		844,676		1,045,050		3,333,874		4,420,785		6,966,315		8,375,163
Units purchased		362,215		496,435		178,519		104,473		318		-		147,832		289,886
Units redeemed		(2,514,851	)	(3,669,599	)	(244,837	)	(304,847	)	(627,418	)	(1,086,911	)	(1,167,151	)	(1,698,734	)
Ending units		11,095,521		13,248,157		778,358		844,676		2,706,774		3,333,874		5,946,996		6,966,315

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FCP					FNRS2				FEI2				FF10S
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	83,611		(2,198,685	)	(867,514	)	(1,737,258	)	545,405		922,667		120,532		81,885
Realized gain (loss) on investments		(22,120,802	)	(17,816,928	)	(7,593,646	)	(2,801,675	)	(9,021,837	)	(5,151,988	)	(569,649	)	(296,731	)
Change in unrealized gain (loss) on investments		120,739,144		(275,843,406	)	32,669,819		(73,540,004	)	33,325,206		(72,236,312	)	1,402,363		(1,585,913	)
Reinvested capital gains		90,297		16,152,805		-		3,709,816		-		147,652		39,659		225,333
Net increase (decrease) in contract owners’ equity resulting from operations		98,792,250		(279,706,214	)	24,208,659		(74,369,121	)	24,848,774		(76,317,981	)	992,905		(1,575,426	)
Equity transactions:
Purchase payments received from contract owners (note 3)		6,821,498		16,761,861		6,422,976		13,947,269		12,481,142		13,979,845		92,303		260,274
Transfers between funds		(12,398,175	)	(27,428,407	)	(413,486	)	10,630,753		(2,674,115	)	(6,409,760	)	488,214		2,427,197
Redemptions (note 3)		(50,794,183	)	(83,447,730	)	(6,702,847	)	(13,721,131	)	(10,433,888	)	(13,282,440	)	(825,662	)	(1,752,731	)
Annuity benefits		(87,479	)	(126,245	)	(768	)	(1,017	)	(1,254	)	(1,681	)	(7,636	)	(9,088	)
Contract maintenance charges (note 2)		(207,672	)	(245,299	)	(15,951	)	(18,714	)	(82,234	)	(46,832	)	(2,329	)	(2,045	)
Contingent deferred sales charges (note 2)		(113,711	)	(169,102	)	(68,245	)	(185,659	)	(251,129	)	(186,746	)	(1,589	)	(619	)
Adjustments to maintain reserves		(10,335	)	7,927		(1,918	)	2,373		(1,855	)	(927	)	671		1,600
Net equity transactions		(56,790,057	)	(94,646,995	)	(780,239	)	10,653,874		(963,333	)	(5,948,541	)	(256,028	)	924,588
Net change in contract owners’ equity		42,002,193		(374,353,209	)	23,428,420		(63,715,247	)	23,885,441		(82,266,522	)	736,877		(650,838	)
Contract owners’ equity beginning of period		333,018,872		707,372,081		54,795,336		118,510,583		93,909,332		176,175,854		4,516,200		5,167,038
Contract owners’ equity end of period	$	375,021,065		333,018,872		78,223,756		54,795,336		117,794,773		93,909,332		5,253,077		4,516,200
CHANGES IN UNITS:
Beginning units		15,111,468		18,212,023		5,594,487		5,413,172		9,142,932		9,650,205		534,668		450,333
Units purchased		720,719		1,249,080		2,296,029		4,290,235		2,091,396		2,227,397		130,499		344,061
Units redeemed		(3,124,645	)	(4,349,635	)	(2,377,984	)	(4,108,920	)	(2,260,364	)	(2,734,670	)	(157,074	)	(259,726	)
Ending units		12,707,542		15,111,468		5,512,532		5,594,487		8,973,964		9,142,932		508,093		534,668

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FF10S2					FF20S				FF20S2				FF30S
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	1,199,282		458,338		133,390		91,404		1,862,031		662,201		45,975		48,944
Realized gain (loss) on investments		(911,806	)	(138,352	)	(870,487	)	(274,304	)	(646,486	)	21,400		(333,035	)	(109,513	)
Change in unrealized gain (loss) on investments		9,253,943		(16,682,727	)	2,145,104		(2,577,127	)	17,608,358		(32,866,723	)	1,423,051		(2,111,373	)
Reinvested capital gains		364,305		2,023,856		75,482		333,979		1,023,590		3,851,746		54,824		293,628
Net increase (decrease) in contract owners’ equity resulting from operations		9,905,724		(14,338,885	)	1,483,489		(2,426,048	)	19,847,493		(28,331,376	)	1,190,815		(1,878,314	)
Equity transactions:
Purchase payments received from contract owners (note 3)		13,346,968		9,245,526		480,799		719,159		38,725,970		22,776,707		703,602		578,100
Transfers between funds		(379,216	)	4,366,667		1,127,121		2,450,958		317,281		(2,330,118	)	675,431		1,649,955
Redemptions (note 3)		(3,310,622	)	(3,195,339	)	(1,157,533	)	(1,265,296	)	(4,458,010	)	(2,832,453	)	(551,964	)	(501,886	)
Annuity benefits		-		-		-		-		-		-		-		-
Contract maintenance charges (note 2)		(84,731	)	(39,167	)	(3,846	)	(3,543	)	(236,602	)	(93,340	)	(3,668	)	(3,146	)
Contingent deferred sales charges (note 2)		(52,216	)	(64,656	)	(9,415	)	(3,114	)	(75,540	)	(64,725	)	(2,624	)	(3,986	)
Adjustments to maintain reserves		(404	)	(264	)	(79	)	(41	)	(514	)	(362	)	(48	)	(52	)
Net equity transactions		9,519,779		10,312,767		437,047		1,898,123		34,272,585		17,455,709		820,729		1,718,985
Net change in contract owners’ equity		19,425,503		(4,026,118	)	1,920,536		(527,925	)	54,120,078		(10,875,667	)	2,011,544		(159,329	)
Contract owners’ equity beginning of period		41,630,317		45,656,435		5,443,001		5,970,926		60,026,433		70,902,100		3,404,900		3,564,229
Contract owners’ equity end of period	$	61,055,820		41,630,317		7,363,537		5,443,001		114,146,511		60,026,433		5,416,444		3,404,900
CHANGES IN UNITS:
Beginning units		4,645,289		3,748,220		715,854		521,510		6,972,856		5,452,403		481,061		307,780
Units purchased		1,631,776		1,573,560		274,223		414,570		4,330,773		2,745,262		201,147		254,240
Units redeemed		(696,703	)	(676,491	)	(228,058	)	(220,226	)	(856,892	)	(1,224,809	)	(92,238	)	(80,959	)
Ending units		5,580,362		4,645,289		762,019		715,854		10,446,737		6,972,856		589,970		481,061

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FF30S2					FGOP				FGP				FG2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	53,612		60,859		(108,510	)	(210,662	)	(2,856,548	)	(3,096,547	)	(540,755	)	(707,628	)
Realized gain (loss) on investments		(701,172	)	(195,897	)	(52,792	)	1,772,452		(34,977,296	)	(38,233,407	)	(3,073,061	)	6,074,074
Change in unrealized gain (loss) on investments		4,641,420		(9,367,301	)	4,766,496		(17,621,870	)	114,061,560		(284,292,945	)	12,898,364		(42,230,125	)
Reinvested capital gains		203,381		1,294,149		-		-		276,561		-		34,803		-
Net increase (decrease) in contract owners’ equity resulting from operations		4,197,241		(8,208,190	)	4,605,194		(16,060,080	)	76,504,277		(325,622,899	)	9,319,351		(36,863,679	)
Equity transactions:
Purchase payments received from contract owners (note 3)		1,763,108		2,613,199		393,498		827,653		6,322,299		15,928,324		5,668,639		11,554,495
Transfers between funds		846,790		725,979		(30,944	)	(1,519,935	)	(9,988,799	)	(22,846,169	)	(2,521,812	)	(21,081,780	)
Redemptions (note 3)		(1,296,683	)	(605,084	)	(1,980,402	)	(3,782,398	)	(44,789,037	)	(86,975,995	)	(4,010,606	)	(6,360,602	)
Annuity benefits		-		-		-		-		(124,189	)	(249,627	)	(865	)	(1,241	)
Contract maintenance charges (note 2)		(3,841	)	(3,615	)	(11,949	)	(14,775	)	(299,334	)	(366,984	)	(25,263	)	(11,925	)
Contingent deferred sales charges (note 2)		(18,558	)	(29,498	)	(7,364	)	(11,890	)	(100,844	)	(190,856	)	(46,451	)	(129,239	)
Adjustments to maintain reserves		(302	)	(220	)	(478	)	(44	)	(437	)	(9,836	)	(967	)	(637	)
Net equity transactions		1,290,514		2,700,761		(1,637,639	)	(4,501,389	)	(48,980,341	)	(94,711,143	)	(937,325	)	(16,030,929	)
Net change in contract owners’ equity		5,487,755		(5,507,429	)	2,967,555		(20,561,469	)	27,523,936		(420,334,042	)	8,382,026		(52,894,608	)
Contract owners’ equity beginning of period		13,382,199		18,889,628		11,404,425		31,965,894		326,812,342		747,146,384		36,444,309		89,338,917
Contract owners’ equity end of period	$	18,869,954		13,382,199		14,371,980		11,404,425		354,336,278		326,812,342		44,826,335		36,444,309
CHANGES IN UNITS:
Beginning units		1,631,753		1,398,391		1,893,306		2,355,583		10,315,116		12,473,199		3,750,535		4,763,730
Units purchased		350,148		465,516		155,429		255,235		263,397		479,120		1,160,938		2,037,068
Units redeemed		(198,719	)	(232,154	)	(391,109	)	(717,512	)	(1,792,485	)	(2,637,203	)	(1,258,686	)	(3,050,263	)
Ending units		1,783,182		1,631,753		1,657,626		1,893,306		8,786,028		10,315,116		3,652,787		3,750,535

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FHIPR					FIGBS				FIGBP2				FMCS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	1,518,854		960,686		1,679,780		573,111		28,357,638		9,553,189		(118,154	)	(183,971	)
Realized gain (loss) on investments		(2,269,294	)	(1,763,206	)	(137,050	)	(193,446	)	(2,273,040	)	(4,179,131	)	(2,099,856	)	(1,347,315	)
Change in unrealized gain (loss) on investments		7,925,431		(2,437,907	)	1,554,955		(1,327,820	)	24,991,543		(29,568,921	)	7,712,842		(10,922,741	)
Reinvested capital gains		-		-		99,280		16,585		1,820,102		351,270		99,218		2,951,026
Net increase (decrease) in contract owners’ equity resulting from operations		7,174,991		(3,240,427	)	3,196,965		(931,570	)	52,896,243		(23,843,593	)	5,594,050		(9,503,001	)
Equity transactions:
Purchase payments received from contract owners (note 3)		1,391,891		2,490,054		701,306		1,162,018		33,194,622		54,687,190		1,000,536		1,242,554
Transfers between funds		6,050,206		4,981,696		10,837,872		2,734,818		52,988,373		(36,533,551	)	4,985,955		3,881,020
Redemptions (note 3)		(3,699,310	)	(2,179,479	)	(4,537,863	)	(4,592,430	)	(28,789,262	)	(27,861,079	)	(2,968,787	)	(3,115,704	)
Annuity benefits		-		-		(4,333	)	(4,346	)	(8,897	)	(7,410	)	(1,224	)	(1,648	)
Contract maintenance charges (note 2)		(6,972	)	(4,253	)	(8,770	)	(7,149	)	(1,316,304	)	(980,104	)	(7,737	)	(7,176	)
Contingent deferred sales charges (note 2)		(7,703	)	(7,054	)	(17,973	)	(13,406	)	(457,895	)	(505,009	)	(7,974	)	(11,593	)
Adjustments to maintain reserves		8,803		16		20		(98	)	33,581		(1,076	)	(98	)	397
Net equity transactions		3,736,915		5,280,980		6,970,259		(720,593	)	55,644,218		(11,201,039	)	3,000,671		1,987,850
Net change in contract owners’ equity		10,911,906		2,040,553		10,167,224		(1,652,163	)	108,540,461		(35,044,632	)	8,594,721		(7,515,151	)
Contract owners’ equity beginning of period		14,240,462		12,199,909		18,685,488		20,337,651		405,374,787		440,419,419		13,631,379		21,146,530
Contract owners’ equity end of period	$	25,152,368		14,240,462		28,852,712		18,685,488		513,915,248		405,374,787		22,226,100		13,631,379
CHANGES IN UNITS:
Beginning units		1,960,090		1,244,598		1,760,865		1,827,483		38,795,425		39,988,032		2,030,889		1,880,661
Units purchased		2,390,042		2,792,494		1,510,402		790,286		14,598,605		11,211,521		1,262,057		974,883
Units redeemed		(1,910,299	)	(2,077,002	)	(887,877	)	(856,904	)	(10,061,677	)	(12,404,128	)	(895,729	)	(824,655	)
Ending units		2,439,833		1,960,090		2,383,390		1,760,865		43,332,353		38,795,425		2,397,217		2,030,889

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FMC2					FOP				FOPR				FO2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(1,794,811	)	(2,673,061	)	512,776		1,227,832		244,287		613,111		12,249		51,280
Realized gain (loss) on investments		(9,843,428	)	(5,827,333	)	(1,424,829	)	6,254,700		(2,206,520	)	2,224,031		(249,330	)	87,804
Change in unrealized gain (loss) on investments		61,150,148		(116,415,162	)	15,401,818		(82,518,425	)	8,971,600		(41,003,814	)	1,052,564		(4,593,216	)
Reinvested capital gains		853,680		31,427,590		213,223		14,196,989		104,674		7,179,319		11,985		822,369
Net increase (decrease) in contract owners’ equity resulting from operations		50,365,589		(93,487,966	)	14,702,988		(60,838,904	)	7,114,041		(30,987,353	)	827,468		(3,631,763	)
Equity transactions:
Purchase payments received from contract owners (note 3)		22,745,137		31,139,795		927		(11,571	)	1,698,782		4,566,925		113		(167	)
Transfers between funds		(4,399,233	)	(15,335,365	)	(1,856,109	)	(4,060,821	)	(2,466,935	)	(5,043,846	)	(269,686	)	(557,841	)
Redemptions (note 3)		(13,174,342	)	(17,969,094	)	(8,431,504	)	(16,807,021	)	(5,668,926	)	(9,493,858	)	(677,127	)	(473,569	)
Annuity benefits		(9,512	)	(12,539	)	(15,745	)	(25,661	)	(1,643	)	(2,336	)	-		-
Contract maintenance charges (note 2)		(149,811	)	(69,752	)	(52,795	)	(63,642	)	(16,481	)	(20,961	)	(592	)	(774	)
Contingent deferred sales charges (note 2)		(165,128	)	(273,436	)	(5,128	)	(10,816	)	(16,455	)	(32,545	)	(6,179	)	(7,550	)
Adjustments to maintain reserves		(2,892	)	(3,479	)	748		2,591		110		(9,386	)	(262	)	(218	)
Net equity transactions		4,844,219		(2,523,870	)	(10,359,606	)	(20,976,941	)	(6,471,548	)	(10,036,007	)	(953,733	)	(1,040,119	)
Net change in contract owners’ equity		55,209,808		(96,011,836	)	4,343,382		(81,815,845	)	642,493		(41,023,360	)	(126,265	)	(4,671,882	)
Contract owners’ equity beginning of period		132,748,225		228,760,061		68,811,576		150,627,421		34,555,458		75,578,818		4,029,619		8,701,501
Contract owners’ equity end of period	$	187,958,033		132,748,225		73,154,958		68,811,576		35,197,951		34,555,458		3,903,354		4,029,619
CHANGES IN UNITS:
Beginning units		8,779,121		8,968,155		3,742,007		4,559,645		3,203,770		3,885,215		286,835		341,789
Units purchased		2,808,022		3,298,099		-		-		286,249		515,738		-		-
Units redeemed		(2,505,076	)	(3,487,133	)	(557,952	)	(817,638	)	(878,485	)	(1,197,183	)	(61,954	)	(54,954	)
Ending units		9,082,067		8,779,121		3,184,055		3,742,007		2,611,534		3,203,770		224,881		286,835

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FO2R					FVSS				FTVIS2				FTVRD2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	219,488		403,086		(47,236	)	(65,277	)	5,912,750		4,364,117		(121,859	)	159,462
Realized gain (loss) on investments		(3,191,714	)	778,749		(3,081,921	)	(1,887,361	)	(4,985,586	)	(2,934,344	)	(2,416,337	)	376,867
Change in unrealized gain (loss) on investments		13,102,396		(38,945,580	)	5,693,877		(6,183,535	)	25,793,817		(43,482,423	)	11,464,029		(31,168,994	)
Reinvested capital gains		136,178		7,101,800		-		2,098,363		-		2,533,976		-		738,658
Net increase (decrease) in contract owners’ equity resulting from operations		10,266,348		(30,661,945	)	2,564,720		(6,037,810	)	26,720,981		(39,518,674	)	8,925,833		(29,894,007	)
Equity transactions:
Purchase payments received from contract owners (note 3)		6,869,227		9,704,743		227,963		621,435		9,424,692		20,534,987		1,190,922		841,265
Transfers between funds		4,039,139		(8,438,623	)	403,046		(1,670,391	)	1,426,480		(3,303,357	)	(3,419,898	)	(9,232,143	)
Redemptions (note 3)		(3,619,830	)	(6,502,983	)	(1,009,455	)	(1,338,013	)	(8,993,697	)	(14,126,080	)	(6,864,871	)	(7,905,203	)
Annuity benefits		(5,308	)	(7,195	)	(1,108	)	(1,652	)	(14,388	)	(20,210	)	(4,094	)	(6,273	)
Contract maintenance charges (note 2)		(40,104	)	(14,892	)	(3,642	)	(4,279	)	(13,873	)	(13,345	)	(9,766	)	(10,764	)
Contingent deferred sales charges (note 2)		(42,068	)	(60,537	)	(8,783	)	(10,903	)	(66,084	)	(66,637	)	(74,913	)	(147,926	)
Adjustments to maintain reserves		(653	)	(459	)	(54	)	(82	)	23,745		(1,253	)	(2,070	)	(1,279	)
Net equity transactions		7,200,403		(5,319,946	)	(392,033	)	(2,403,885	)	1,786,875		3,004,105		(9,184,690	)	(16,462,323	)
Net change in contract owners’ equity		17,466,751		(35,981,891	)	2,172,687		(8,441,695	)	28,507,856		(36,514,569	)	(258,857	)	(46,356,330	)
Contract owners’ equity beginning of period		35,549,509		71,531,400		4,826,544		13,268,239		83,863,571		120,378,140		69,227,295		115,583,625
Contract owners’ equity end of period	$	53,016,260		35,549,509		6,999,231		4,826,544		112,371,427		83,863,571		68,968,438		69,227,295
CHANGES IN UNITS:
Beginning units		3,739,265		4,158,503		634,932		841,048		10,666,736		10,613,089		6,005,955		7,191,142
Units purchased		1,849,285		1,663,221		372,235		126,574		2,516,184		3,826,878		349,332		317,559
Units redeemed		(1,076,666	)	(2,082,459	)	(414,175	)	(332,690	)	(2,476,486	)	(3,773,231	)	(1,173,063	)	(1,502,746	)
Ending units		4,511,884		3,739,265		592,992		634,932		10,706,434		10,666,736		5,182,224		6,005,955

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FTVSV2					FTVDM3				TIF2				TIF3
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(1,028,817	)	(288,440	)	696,363		470,357		98,056		72,550		6,707,139		2,424,086
Realized gain (loss) on investments		(16,701,595	)	(3,081,708	)	(5,727,648	)	(3,006,698	)	(177,966	)	285,311		(162,481,939	)	(462,609	)
Change in unrealized gain (loss) on investments		59,711,793		(29,546,354	)	19,304,931		(33,613,986	)	1,398,505		(5,172,569	)	177,706,175		(195,001,260	)
Reinvested capital gains		2,307,442		4,959,744		105,137		8,020,747		214,753		791,782		11,753,408		30,093,721
Net increase (decrease) in contract owners’ equity resulting from operations		44,288,823		(27,956,758	)	14,378,783		(28,129,580	)	1,533,348		(4,022,926	)	33,684,783		(162,946,062	)
Equity transactions:
Purchase payments received from contract owners (note 3)		7,292,513		6,614,969		900,004		4,579,194		9,873		240		12,467,713		45,352,141
Transfers between funds		87,122,390		10,769,000		4,014,508		(9,723,919	)	(431,845	)	(1,010,456	)	(190,620,641	)	105,133,869
Redemptions (note 3)		(7,938,017	)	(6,034,552	)	(2,900,889	)	(4,096,581	)	(447,109	)	(921,631	)	(10,563,420	)	(17,474,546	)
Annuity benefits		(5,201	)	(7,064	)	-		-		(350	)	(263	)	(318	)	(112	)
Contract maintenance charges (note 2)		(279,709	)	(16,944	)	(4,914	)	(4,953	)	(434	)	(596	)	(557,398	)	(737,024	)
Contingent deferred sales charges (note 2)		(111,460	)	(65,128	)	(28,606	)	(40,311	)	(5,677	)	(8,216	)	(144,859	)	(295,887	)
Adjustments to maintain reserves		(3,209	)	(574	)	(763	)	(296	)	(306	)	(215	)	183,889		(1,162	)
Net equity transactions		86,077,307		11,259,707		1,979,340		(9,286,866	)	(875,848	)	(1,941,137	)	(189,235,034	)	131,977,279
Net change in contract owners’ equity		130,366,130		(16,697,051	)	16,358,123		(37,416,446	)	657,500		(5,964,063	)	(155,550,251	)	(30,968,783	)
Contract owners’ equity beginning of period		52,002,721		68,699,772		20,523,237		57,939,683		4,970,188		10,934,251		247,363,644		278,332,427
Contract owners’ equity end of period	$	182,368,851		52,002,721		36,881,360		20,523,237		5,627,688		4,970,188		91,813,393		247,363,644
CHANGES IN UNITS:
Beginning units		3,847,456		3,336,527		2,181,313		2,877,413		358,613		462,809		25,106,259		16,511,364
Units purchased		9,591,118		2,181,594		928,612		898,785		-		-		3,952,853		11,702,008
Units redeemed		(2,761,979	)	(1,670,665	)	(802,445	)	(1,594,885	)	(58,026	)	(104,196	)	(22,199,347	)	(3,107,113	)
Ending units		10,676,595		3,847,456		2,307,480		2,181,313		300,587		358,613		6,859,765		25,106,259

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	FTVGI3					FTVFA2				AMTG				AMGP
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	9,060,672		1,644,726		157,661		61,007		(521,354	)	(1,396,437	)	(64,397	)	(95,648	)
Realized gain (loss) on investments		1,282,583		1,664,983		(366,788	)	(222,094	)	15,857,466		8,772,847		(1,070,340	)	926,217
Change in unrealized gain (loss) on investments		517,648		(1,226,528	)	1,969,640		(1,020,448	)	(7,397,692	)	(65,611,990	)	2,228,008		(6,509,053	)
Reinvested capital gains		-		-		-		82,293		-		-		-		441,400
Net increase (decrease) in contract owners’ equity resulting from operations		10,860,903		2,083,181		1,760,513		(1,099,242	)	7,938,420		(58,235,580	)	1,093,271		(5,237,084	)
Equity transactions:
Purchase payments received from contract owners (note 3)		2,668,657		10,685,522		6,321,411		3,293,358		571,976		2,631,410		98,483		472,361
Transfers between funds		1,582,994		19,578,727		1,620,700		877,152		(69,785,469	)	(5,390,896	)	(8,566,303	)	(650,151	)
Redemptions (note 3)		(9,167,943	)	(9,521,295	)	(948,779	)	(61,177	)	(5,764,253	)	(15,054,296	)	(641,337	)	(1,968,691	)
Annuity benefits		(17,021	)	(8,798	)	-		-		(11,806	)	(22,641	)	(12	)	(23	)
Contract maintenance charges (note 2)		(11,751	)	(8,568	)	(603	)	(64	)	(38,813	)	(67,876	)	(4,096	)	(7,321	)
Contingent deferred sales charges (note 2)		(82,461	)	(63,625	)	(3,751	)	(26	)	(11,533	)	(30,501	)	(3,916	)	(5,998	)
Adjustments to maintain reserves		(24,041	)	3,595		(42	)	256		(48,091	)	(1,321	)	190		(94	)
Net equity transactions		(5,051,566	)	20,665,558		6,988,936		4,109,499		(75,087,989	)	(17,936,121	)	(9,116,991	)	(2,159,917	)
Net change in contract owners’ equity		5,809,337		22,748,739		8,749,449		3,010,257		(67,149,569	)	(76,171,701	)	(8,023,720	)	(7,397,001	)
Contract owners’ equity beginning of period		72,254,357		49,505,618		3,010,257		-		67,169,383		143,341,084		8,023,720		15,420,721
Contract owners’ equity end of period	$	78,063,694		72,254,357		11,759,706		3,010,257		19,814		67,169,383		-		8,023,720
CHANGES IN UNITS:
Beginning units		5,797,396		4,159,217		456,888		-		2,411,370		2,896,657		928,163		1,105,261
Units purchased		2,258,541		4,652,546		1,154,824		579,634		35,779		97,490		29,042		103,249
Units redeemed		(2,695,060	)	(3,014,367	)	(219,971	)	(122,746	)	(2,447,137	)	(582,777	)	(957,205	)	(280,347	)
Ending units		5,360,877		5,797,396		1,391,741		456,888		12		2,411,370		-		928,163

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AMINS					AMMCGS				AMTP				AMRS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(72,565	)	(2,789,841	)	(41,169	)	(119,115	)	(618,068	)	(1,160,892	)	(82,223	)	(82,849	)
Realized gain (loss) on investments		(4,434,330	)	(39,714,244	)	(1,421,498	)	823,706		(39,029,244	)	430,341		(5,457,396	)	(575,132	)
Change in unrealized gain (loss) on investments		5,866,895		4,414,284		1,979,893		(4,987,095	)	64,756,294		(108,474,235	)	7,341,128		(6,852,966	)
Reinvested capital gains		-		1,035		-		-		4,259		21,625,094		-		27,332
Net increase (decrease) in contract owners’ equity resulting from operations		1,360,000		(38,088,766	)	517,226		(4,282,504	)	25,113,241		(87,579,692	)	1,801,509		(7,483,615	)
Equity transactions:
Purchase payments received from contract owners (note 3)		24,481		30,883,696		50,329		86,080		997,299		3,747,736		140,028		1,045,318
Transfers between funds		(8,545,390	)	(271,128,744	)	(5,056,437	)	(1,071,305	)	(90,706,823	)	(6,713,471	)	(9,599,543	)	(1,088,053	)
Redemptions (note 3)		(563,846	)	(7,125,192	)	(323,000	)	(862,499	)	(6,887,642	)	(19,892,990	)	(605,109	)	(917,406	)
Annuity benefits		(137	)	(567	)	-		-		(11,737	)	(27,970	)	-		-
Contract maintenance charges (note 2)		(2,587	)	(299,202	)	(450	)	(966	)	(33,737	)	(64,786	)	(6,101	)	(7,274	)
Contingent deferred sales charges (note 2)		(10,980	)	(147,591	)	(5,711	)	(9,573	)	(12,819	)	(36,006	)	(5,878	)	(10,738	)
Adjustments to maintain reserves		(203	)	(23,716	)	(18	)	(111	)	49,686		(4,762	)	(339	)	(335	)
Net equity transactions		(9,098,662	)	(247,841,316	)	(5,335,287	)	(1,858,374	)	(96,605,773	)	(22,992,249	)	(10,076,942	)	(978,488	)
Net change in contract owners’ equity		(7,738,662	)	(285,930,082	)	(4,818,061	)	(6,140,878	)	(71,492,532	)	(110,571,941	)	(8,275,433	)	(8,462,103	)
Contract owners’ equity beginning of period		7,738,662		293,668,744		4,818,061		10,958,939		71,513,782		182,085,723		8,275,433		16,737,536
Contract owners’ equity end of period	$	-		7,738,662		-		4,818,061		21,250		71,513,782		-		8,275,433
CHANGES IN UNITS:
Beginning units		1,025,292		20,563,376		400,219		507,184		4,031,046		4,821,251		1,216,019		1,309,013
Units purchased		71,444		4,427,649		23,346		44,307		220,012		296,845		407,193		448,561
Units redeemed		(1,096,736	)	(23,965,733	)	(423,565	)	(151,272	)	(4,251,058	)	(1,087,050	)	(1,623,212	)	(541,555	)
Ending units		-		1,025,292		-		400,219		-		4,031,046		-		1,216,019

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	AMFAS					AMSRS				OVMS				OVCAFS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(58,760	)	(86,385	)	154,673		(4,375,923	)	(662,696	)	1,526,556		(572,973	)	(858,109	)
Realized gain (loss) on investments		(795,653	)	(211,104	)	(3,148,859	)	(950,599	)	(9,090,699	)	(5,275,870	)	(1,313,445	)	785,484
Change in unrealized gain (loss) on investments		1,557,483		(2,468,343	)	9,269,298		(50,706,776	)	18,670,311		(48,998,634	)	14,525,185		(30,391,351	)
Reinvested capital gains		-		187,423		-		2,713,949		-		6,658,903		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		703,070		(2,578,409	)	6,275,112		(53,319,349	)	8,916,916		(46,089,045	)	12,638,767		(30,463,976	)
Equity transactions:
Purchase payments received from contract owners (note 3)		105,248		397,168		410,334		46,225,071		1,114,483		2,224,523		1,547,335		3,218,037
Transfers between funds		(62,224	)	335,102		(1,468,124	)	(454,123,273	)	(2,901,639	)	(6,680,025	)	(3,491,963	)	(3,581,330	)
Redemptions (note 3)		(361,534	)	(474,467	)	(2,398,598	)	(14,201,621	)	(8,471,447	)	(16,122,495	)	(3,783,354	)	(5,118,259	)
Annuity benefits		-		-		(2,385	)	(3,746	)	(12,249	)	(14,739	)	-		-
Contract maintenance charges (note 2)		(1,304	)	(984	)	(10,330	)	(535,421	)	(34,905	)	(46,481	)	(12,191	)	(9,871	)
Contingent deferred sales charges (note 2)		(3,770	)	(3,758	)	(33,633	)	(277,421	)	(13,922	)	(30,360	)	(59,317	)	(97,866	)
Adjustments to maintain reserves		(300	)	(283	)	(1,631	)	(14,130	)	(1,461	)	(162	)	(1,844	)	(523	)
Net equity transactions		(323,884	)	252,778		(3,504,367	)	(422,930,541	)	(10,321,140	)	(20,669,739	)	(5,801,334	)	(5,589,812	)
Net change in contract owners’ equity		379,186		(2,325,631	)	2,770,745		(476,249,890	)	(1,404,224	)	(66,758,784	)	6,837,433		(36,053,788	)
Contract owners’ equity beginning of period		3,706,928		6,032,559		24,253,008		500,502,898		52,387,569		119,146,353		33,310,024		69,363,812
Contract owners’ equity end of period	$	4,086,114		3,706,928		27,023,753		24,253,008		50,983,345		52,387,569		40,147,457		33,310,024
CHANGES IN UNITS:
Beginning units		406,370		392,938		2,392,040		29,683,131		2,972,160		3,793,326		3,576,621		3,981,882
Units purchased		113,019		183,533		161,426		5,126,351		84,968		105,577		475,266		593,773
Units redeemed		(147,946	)	(170,101	)	(495,458	)	(32,417,442	)	(652,399	)	(926,743	)	(1,016,224	)	(999,034	)
Ending units		371,443		406,370		2,058,008		2,392,040		2,404,729		2,972,160		3,035,663		3,576,621

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	OVGR					OVB				OVGS3				OVGS4
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(419,303	)	(789,330	)	(573,349	)	2,874,069		542,421		225,138		239,474		(176,251	)
Realized gain (loss) on investments		(1,103,830	)	2,599,937		(7,488,091	)	(2,817,013	)	(1,860,430	)	3,119,139		(3,022,142	)	(553,759	)
Change in unrealized gain (loss) on investments		16,507,254		(38,741,679	)	11,077,767		(34,742,735	)	18,953,659		(52,083,596	)	19,828,717		(45,533,159	)
Reinvested capital gains		-		-		-		-		1,254,910		5,983,984		1,230,433		5,591,832
Net increase (decrease) in contract owners’ equity resulting from operations		14,984,121		(36,931,072	)	3,016,327		(34,685,679	)	18,890,560		(42,755,335	)	18,276,482		(40,671,337	)
Equity transactions:
Purchase payments received from contract owners (note 3)		1,164,832		2,962,134		967,262		2,358,634		3,466,774		8,062,393		2,894,575		5,741,670
Transfers between funds		(1,831,921	)	(4,256,541	)	(1,291,294	)	(6,919,838	)	(2,115,944	)	(7,797,458	)	(3,744,690	)	(8,941,891	)
Redemptions (note 3)		(6,596,198	)	(11,259,806	)	(8,187,848	)	(14,719,464	)	(10,282,368	)	(14,006,293	)	(4,250,857	)	(6,378,346	)
Annuity benefits		(15,107	)	(16,600	)	(8,547	)	(13,895	)	(10,102	)	(13,922	)	-		-
Contract maintenance charges (note 2)		(36,661	)	(43,748	)	(26,715	)	(37,593	)	(30,897	)	(35,584	)	(9,317	)	(10,104	)
Contingent deferred sales charges (note 2)		(24,739	)	(46,118	)	(17,654	)	(26,530	)	(52,262	)	(70,898	)	(64,159	)	(88,268	)
Adjustments to maintain reserves		(361	)	851		2,604		(16,532	)	(1,300	)	(6,525	)	(2,023	)	(507	)
Net equity transactions		(7,340,155	)	(12,659,828	)	(8,562,192	)	(19,375,218	)	(9,026,099	)	(13,868,287	)	(5,176,471	)	(9,677,446	)
Net change in contract owners’ equity		7,643,966		(49,590,900	)	(5,545,865	)	(54,060,897	)	9,864,461		(56,623,622	)	13,100,011		(50,348,783	)
Contract owners’ equity beginning of period		39,788,032		89,378,932		48,155,292		102,216,189		56,202,162		112,825,784		53,981,607		104,330,390
Contract owners’ equity end of period	$	47,431,998		39,788,032		42,609,427		48,155,292		66,066,623		56,202,162		67,081,618		53,981,607
CHANGES IN UNITS:
Beginning units		3,977,449		4,805,480		3,473,316		4,466,808		4,134,462		4,898,499		5,863,169		6,661,852
Units purchased		192,523		309,176		205,355		210,261		428,687		626,175		561,561		850,439
Units redeemed		(846,204	)	(1,137,207	)	(838,712	)	(1,203,753	)	(1,037,705	)	(1,390,212	)	(1,120,657	)	(1,649,122	)
Ending units		3,323,768		3,977,449		2,839,959		3,473,316		3,525,444		4,134,462		5,304,073		5,863,169

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	OVGS					OVGSS				OVHI3				OVHI4
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	1,178,954		523,675		52,153		(19,690	)	(4,231	)	21,362		(101,425	)	444,606
Realized gain (loss) on investments		3,579,671		14,571,089		(361,081	)	205,519		(396,093	)	(304,175	)	(7,209,790	)	(3,271,125	)
Change in unrealized gain (loss) on investments		31,457,106		(119,409,989	)	3,214,090		(8,774,045	)	458,920		(388,706	)	8,369,274		(6,889,235	)
Reinvested capital gains		2,661,461		13,114,068		217,587		1,073,516		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		38,877,192		(91,201,157	)	3,122,749		(7,514,700	)	58,596		(671,519	)	1,058,059		(9,715,754	)
Equity transactions:
Purchase payments received from contract owners (note 3)		5,379		2,978		-		392		47,205		82,434		1,023,270		2,125,672
Transfers between funds		(4,921,085	)	(12,042,430	)	(579,629	)	(2,102,702	)	84,840		517,811		2,029,683		3,348,619
Redemptions (note 3)		(16,458,494	)	(27,599,474	)	(769,962	)	(1,479,756	)	(60,076	)	(129,846	)	(1,165,305	)	(1,059,579	)
Annuity benefits		(30,650	)	(41,466	)	-		-		-		-		-		-
Contract maintenance charges (note 2)		(71,378	)	(82,306	)	(1,217	)	(1,498	)	(302	)	(230	)	(577	)	(916	)
Contingent deferred sales charges (note 2)		(15,211	)	(36,774	)	(13,353	)	(19,408	)	(794	)	(209	)	(2,640	)	(9,956	)
Adjustments to maintain reserves		1,684		33,911		(248	)	(343	)	42		(14,104	)	(290	)	(1,667	)
Net equity transactions		(21,489,755	)	(39,765,561	)	(1,364,409	)	(3,603,315	)	70,915		455,856		1,884,141		4,402,173
Net change in contract owners’ equity		17,387,437		(130,966,718	)	1,758,340		(11,118,015	)	129,511		(215,663	)	2,942,200		(5,313,581	)
Contract owners’ equity beginning of period		117,412,600		248,379,318		9,467,392		20,585,407		252,740		468,403		4,158,939		9,472,520
Contract owners’ equity end of period	$	134,800,037		117,412,600		11,225,732		9,467,392		382,251		252,740		7,101,139		4,158,939
CHANGES IN UNITS:
Beginning units		4,605,983		5,756,123		675,950		862,593		126,679		48,923		2,070,239		991,751
Units purchased		60		4		-		-		287,182		180,064		3,852,811		2,688,244
Units redeemed		(770,992	)	(1,150,144	)	(91,416	)	(186,643	)	(260,784	)	(102,308	)	(3,081,371	)	(1,609,756	)
Ending units		3,835,051		4,605,983		584,534		675,950		153,077		126,679		2,841,679		2,070,239

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	OVHI					OVHIS				OVGI				OVGIS
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(629	)	24,514		(52,789	)	1,024,178		79,189		49,367		(767,834	)	(2,055,223	)
Realized gain (loss) on investments		(63,621	)	(123,326	)	(3,280,723	)	(2,165,204	)	(625,644	)	439,049		(44,657,022	)	(4,650,030	)
Change in unrealized gain (loss) on investments		74,958		(193,406	)	4,048,215		(14,303,261	)	3,511,423		(11,241,564	)	106,998,606		(195,684,358	)
Reinvested capital gains		-		-		-		-		-		1,372,064		-		24,059,956
Net increase (decrease) in contract owners’ equity resulting from operations		10,708		(292,218	)	714,703		(15,444,287	)	2,964,968		(9,381,084	)	61,573,750		(178,329,655	)
Equity transactions:
Purchase payments received from contract owners (note 3)		-		(12	)	(67	)	4,546		527,853		1,404,950		9,191,540		44,131,538
Transfers between funds		(5,578	)	(54,310	)	(343,583	)	(4,372,402	)	(549,434	)	(1,354,116	)	(19,062,783	)	26,238,707
Redemptions (note 3)		(11,677	)	(112,505	)	(395,145	)	(2,181,812	)	(1,996,915	)	(3,920,948	)	(15,485,711	)	(20,776,884	)
Annuity benefits		-		-		(773	)	(2,944	)	(8,737	)	(8,536	)	(673	)	(149	)
Contract maintenance charges (note 2)		(22	)	(117	)	(720	)	(2,031	)	(10,399	)	(12,837	)	(919,116	)	(900,873	)
Contingent deferred sales charges (note 2)		(206	)	(3	)	(4,684	)	(21,980	)	(13,587	)	(19,254	)	(263,893	)	(393,034	)
Adjustments to maintain reserves		(24	)	(30	)	(351	)	(712	)	(3,065	)	242		(494,093	)	(1,071	)
Net equity transactions		(17,507	)	(166,977	)	(745,323	)	(6,577,335	)	(2,054,284	)	(3,910,499	)	(27,034,729	)	48,298,234
Net change in contract owners’ equity		(6,799	)	(459,195	)	(30,620	)	(22,021,622	)	910,684		(13,291,583	)	34,539,021		(130,031,421	)
Contract owners’ equity beginning of period		51,336		510,531		3,679,597		25,701,219		12,974,505		26,266,088		272,773,273		402,804,694
Contract owners’ equity end of period	$	44,537		51,336		3,648,977		3,679,597		13,885,189		12,974,505		307,312,294		272,773,273
CHANGES IN UNITS:
Beginning units		23,524		49,246		1,274,342		1,877,575		2,022,607		2,487,109		27,005,578		24,014,369
Units purchased		-		-		370		7		231,562		279,986		5,769,332		7,491,233
Units redeemed		(7,022	)	(25,722	)	(255,583	)	(603,240	)	(544,073	)	(744,488	)	(8,524,853	)	(4,500,024	)
Ending units		16,502		23,524		1,019,129		1,274,342		1,710,096		2,022,607		24,250,057		27,005,578

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	OVSC					OVSCS				OVAG				PVGIB
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(15,482	)	(31,327	)	(556,501	)	(2,375,054	)	(96,213	)	(162,354	)	36,495		30,478
Realized gain (loss) on investments		(1,394,041	)	(357,562	)	(63,027,490	)	(6,421,937	)	(484,379	)	197,485		(764,407	)	(610,222	)
Change in unrealized gain (loss) on investments		2,392,360		(1,543,450	)	84,946,606		(71,083,896	)	2,598,202		(7,546,706	)	1,539,993		(2,900,852	)
Reinvested capital gains		-		221,525		-		9,799,136		-		-		-		973,768
Net increase (decrease) in contract owners’ equity resulting from operations		982,837		(1,710,814	)	21,362,615		(70,081,751	)	2,017,610		(7,511,575	)	812,081		(2,506,828	)
Equity transactions:
Purchase payments received from contract owners (note 3)		192,583		364,635		4,758,071		21,061,258		369,284		967,480		24,796		58,637
Transfers between funds		1,058,592		381,324		(90,017,951	)	38,121,966		(110,211	)	(928,902	)	(172,997	)	(311,802	)
Redemptions (note 3)		(391,722	)	(480,271	)	(5,736,367	)	(8,881,039	)	(894,023	)	(2,111,631	)	(362,188	)	(676,400	)
Annuity benefits		(313	)	(372	)	(156	)	(59	)	-		-		-		-
Contract maintenance charges (note 2)		(1,552	)	(1,617	)	(296,486	)	(379,953	)	(8,434	)	(10,809	)	(699	)	(977	)
Contingent deferred sales charges (note 2)		(1,717	)	(1,786	)	(99,648	)	(175,869	)	(6,848	)	(23,441	)	(4,284	)	(15,573	)
Adjustments to maintain reserves		2,688		(46	)	410,232		(1,041	)	(100	)	(97	)	(420	)	(142	)
Net equity transactions		858,559		261,867		(90,982,305	)	49,745,263		(650,332	)	(2,107,400	)	(515,792	)	(946,257	)
Net change in contract owners’ equity		1,841,396		(1,448,947	)	(69,619,690	)	(20,336,488	)	1,367,278		(9,618,975	)	296,289		(3,453,085	)
Contract owners’ equity beginning of period		2,643,093		4,092,040		105,311,971		125,648,459		7,101,334		16,720,309		3,423,016		6,876,101
Contract owners’ equity end of period	$	4,484,489		2,643,093		35,692,281		105,311,971		8,468,612		7,101,334		3,719,305		3,423,016
CHANGES IN UNITS:
Beginning units		440,857		418,752		8,337,343		6,050,092		2,176,324		2,576,050		387,088		468,881
Units purchased		487,088		239,302		5,540,801		5,302,603		250,797		316,968		20,759		36,053
Units redeemed		(375,402	)	(217,197	)	(11,796,592	)	(3,015,352	)	(444,032	)	(716,694	)	(78,393	)	(117,846	)
Ending units		552,543		440,857		2,081,552		8,337,343		1,983,089		2,176,324		329,454		387,088

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	PVTIGB					PVTVB				VYDS				TRBCG2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(9,572	)	7,880		(18,036	)	(29,047	)	(2,972	)	(5,483	)	(1,560,777	)	(3,075,467	)
Realized gain (loss) on investments		(85,763	)	12,316		(17,492	)	(36,556	)	(208,750	)	14,968		(68,892,479	)	(1,341,937	)
Change in unrealized gain (loss) on investments		218,372		(833,657	)	862,924		(756,377	)	314,884		(507,003	)	92,320,448		(101,401,814	)
Reinvested capital gains		-		192,364		-		-		-		127,929		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		123,037		(621,097	)	827,396		(821,980	)	103,162		(369,589	)	21,867,192		(105,819,218	)
Equity transactions:
Purchase payments received from contract owners (note 3)		-		-		18,592		34,791		209,407		44,635		4,478,977		25,390,342
Transfers between funds		(40,284	)	(123,387	)	987,079		(48,541	)	400		(41,110	)	(129,747,549	)	105,779,333
Redemptions (note 3)		(122,128	)	(55,007	)	(141,675	)	(243,758	)	(341,734	)	(131,922	)	(5,708,687	)	(11,097,363	)
Annuity benefits		-		-		-		-		-		-		(2,374	)	(1,113	)
Contract maintenance charges (note 2)		(105	)	(137	)	(355	)	(367	)	(145	)	(175	)	(277,042	)	(488,777	)
Contingent deferred sales charges (note 2)		(3,832	)	(613	)	(2,546	)	(3,785	)	(4,127	)	-		(83,512	)	(185,760	)
Adjustments to maintain reserves		(47	)	(139	)	(263	)	(137	)	(65	)	-		(54,308	)	(885	)
Net equity transactions		(166,396	)	(179,283	)	860,832		(261,797	)	(136,264	)	(128,572	)	(131,394,495	)	119,395,777
Net change in contract owners’ equity		(43,359	)	(800,380	)	1,688,228		(1,083,777	)	(33,102	)	(498,161	)	(109,527,303	)	13,576,559
Contract owners’ equity beginning of period		724,632		1,525,012		1,187,340		2,271,117		564,917		1,063,078		147,165,140		133,588,581
Contract owners’ equity end of period	$	681,273		724,632		2,875,568		1,187,340		531,815		564,917		37,637,837		147,165,140
CHANGES IN UNITS:
Beginning units		61,180		71,037		142,184		168,443		57,375		66,078		19,673,406		10,055,319
Units purchased		-		-		121,467		10,344		22,285		3,099		2,970,721		12,281,690
Units redeemed		(14,394	)	(9,857	)	(50,497	)	(36,603	)	(36,595	)	(11,802	)	(19,038,484	)	(2,663,603	)
Ending units		46,786		61,180		213,154		142,184		43,065		57,375		3,605,643		19,673,406

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	TREI2					TRLT2				VWBFR				VWBF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	88,647		470,585		433,272		884,495		185,342		614,508		350,807		1,343,185
Realized gain (loss) on investments		(7,374,597	)	(1,046,707	)	640,243		(28,663	)	(33,812	)	(42,948	)	(343,676	)	(371,189	)
Change in unrealized gain (loss) on investments		21,418,095		(34,340,847	)	984,066		(1,262,177	)	140,956		(458,896	)	563,603		(583,411	)
Reinvested capital gains		-		2,107,353		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		14,132,145		(32,809,616	)	2,057,581		(406,345	)	292,486		112,664		570,734		388,585
Equity transactions:
Purchase payments received from contract owners (note 3)		7,269,697		16,738,483		612,105		5,361,860		159,514		448,071		21		-
Transfers between funds		(2,520,084	)	7,299,559		(39,509,863	)	13,383,565		(522,331	)	708,740		(831,967	)	(1,281,269	)
Redemptions (note 3)		(4,224,319	)	(7,204,544	)	(8,929,203	)	(3,734,295	)	(1,288,898	)	(2,150,571	)	(1,774,252	)	(2,817,333	)
Annuity benefits		(2,476	)	(3,457	)	-		-		(2,006	)	(1,516	)	(2,422	)	(2,538	)
Contract maintenance charges (note 2)		(92,720	)	(35,967	)	(36,329	)	(51,706	)	(2,388	)	(2,594	)	(8,966	)	(8,944	)
Contingent deferred sales charges (note 2)		(42,850	)	(85,680	)	(204,363	)	(84,785	)	(2,658	)	(3,862	)	(1,260	)	(1,750	)
Adjustments to maintain reserves		(912	)	5,242		(43,867	)	417		605		3,575		759		(2,298	)
Net equity transactions		386,336		16,713,636		(48,111,520	)	14,875,056		(1,658,162	)	(998,157	)	(2,618,087	)	(4,114,132	)
Net change in contract owners’ equity		14,518,481		(16,095,980	)	(46,053,939	)	14,468,711		(1,365,676	)	(885,493	)	(2,047,353	)	(3,725,547	)
Contract owners’ equity beginning of period		60,267,747		76,363,727		46,053,950		31,585,239		8,025,025		8,910,518		15,396,685		19,122,232
Contract owners’ equity end of period	$	74,786,228		60,267,747		11		46,053,950		6,659,349		8,025,025		13,349,332		15,396,685
CHANGES IN UNITS:
Beginning units		7,723,076		6,128,523		4,360,949		2,984,605		642,414		731,903		703,225		889,847
Units purchased		2,619,950		3,457,161		1,390,271		2,850,776		123,723		498,428		116		-
Units redeemed		(2,566,738	)	(1,862,608	)	(5,751,219	)	(1,474,432	)	(256,559	)	(587,917	)	(122,238	)	(186,622	)
Ending units		7,776,288		7,723,076		1		4,360,949		509,578		642,414		581,103		703,225

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	VWEMR					VWEM				VWHAR				VWHA
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(160,068	)	(276,248	)	(197,139	)	(380,161	)	(276,460	)	(416,429	)	(304,766	)	(500,253	)
Realized gain (loss) on investments		(7,094,950	)	(6,921,436	)	(2,002,801	)	(92,397	)	(2,020,117	)	287,404		1,937,785		5,962,740
Change in unrealized gain (loss) on investments		15,689,932		(22,684,555	)	13,234,015		(40,435,269	)	13,200,812		(27,898,131	)	10,727,210		(37,368,416	)
Reinvested capital gains		779,004		11,631,611		1,150,378		15,223,007		132,212		6,617,535		151,307		8,257,790
Net increase (decrease) in contract owners’ equity resulting from operations		9,213,918		(18,250,628	)	12,184,453		(25,684,820	)	11,036,447		(21,409,621	)	12,511,536		(23,648,139	)
Equity transactions:
Purchase payments received from contract owners (note 3)		483,773		934,783		(63,047	)	(109	)	950,351		1,483,188		(3	)	(348	)
Transfers between funds		3,807,044		(7,027,224	)	(712,494	)	(2,457,480	)	1,334,326		1,123,860		(1,027,034	)	(3,564,995	)
Redemptions (note 3)		(1,716,563	)	(2,883,313	)	(1,750,466	)	(4,000,717	)	(3,514,636	)	(5,905,125	)	(3,337,710	)	(6,382,193	)
Annuity benefits		(3,045	)	(3,759	)	(6,134	)	(14,082	)	(4,456	)	(2,101	)	(5,495	)	(10,577	)
Contract maintenance charges (note 2)		(5,498	)	(6,659	)	(11,660	)	(13,922	)	(10,616	)	(12,808	)	(15,467	)	(18,850	)
Contingent deferred sales charges (note 2)		(3,705	)	(8,254	)	(2,503	)	(4,502	)	(3,379	)	(7,187	)	(2,101	)	(3,372	)
Adjustments to maintain reserves		4,236		331		90,339		2,584		(55	)	(161	)	(5,467	)	8,518
Net equity transactions		2,566,242		(8,994,095	)	(2,455,965	)	(6,488,228	)	(1,248,465	)	(3,320,334	)	(4,393,277	)	(9,971,817	)
Net change in contract owners’ equity		11,780,160		(27,244,723	)	9,728,488		(32,173,048	)	9,787,982		(24,729,955	)	8,118,259		(33,619,956	)
Contract owners’ equity beginning of period		8,174,742		35,419,465		12,183,835		44,356,883		21,340,390		46,070,345		24,785,827		58,405,783
Contract owners’ equity end of period	$	19,954,902		8,174,742		21,912,323		12,183,835		31,128,372		21,340,390		32,904,086		24,785,827
CHANGES IN UNITS:
Beginning units		763,916		1,152,258		1,264,058		1,599,935		1,219,284		1,400,348		892,365		1,118,247
Units purchased		464,471		278,549		-		59		448,815		753,375		-		-
Units redeemed		(342,252	)	(666,891	)	(182,242	)	(335,936	)	(525,045	)	(934,439	)	(131,077	)	(225,882	)
Ending units		886,135		763,916		1,081,816		1,264,058		1,143,054		1,219,284		761,288		892,365

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	WRASP				SVDF				WFVLCG				WFVMM
	2009			2008	2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(147,843	)	-	(260,026	)	(713,564	)	(1,507	)	(1,977	)	(890	)	253
Realized gain (loss) on investments		115,041		-	5,880,079		3,564,253		(1,012	)	609		-		-
Change in unrealized gain (loss) on investments		1,636,378		-	520,989		(31,921,510	)	32,776		(51,732	)	-		-
Reinvested capital gains		175,910		-	-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		1,779,486		-	6,141,042		(29,070,821	)	30,257		(53,100	)	(890	)	253
Equity transactions:
Purchase payments received from contract owners (note 3)		10,534,446		-	162,878		795,007		-		45		139,306		-
Transfers between funds		23,698,656		-	(35,453,430	)	(1,750,799	)	-		-		(195,649	)	202,791
Redemptions (note 3)		(753,769	)	-	(3,046,839	)	(7,473,539	)	(3,809	)	(5,759	)	(4,400	)	(2,200	)
Annuity benefits		-		-	(9,498	)	(16,627	)	-		-		-		-
Contract maintenance charges (note 2)		(970	)	-	(15,802	)	(27,318	)	(29	)	(35	)	(30	)	(30	)
Contingent deferred sales charges (note 2)		(1,591	)	-	(4,436	)	(10,655	)	-		(168	)	-		-
Adjustments to maintain reserves		(168	)	-	11,002		(6,920	)	(20	)	(17	)	2		45
Net equity transactions		33,476,604		-	(38,356,125	)	(8,490,851	)	(3,858	)	(5,934	)	(60,771	)	200,606
Net change in contract owners’ equity		35,256,090		-	(32,215,083	)	(37,561,672	)	26,399		(59,034	)	(61,661	)	200,859
Contract owners’ equity beginning of period		-		-	32,254,347		69,816,019		77,336		136,370		218,444		17,585
Contract owners’ equity end of period	$	35,256,090		-	39,264		32,254,347		103,735		77,336		156,783		218,444
CHANGES IN UNITS:
Beginning units		-		-	1,508,012		1,793,964		11,776		12,402		20,154		1,632
Units purchased		3,367,695		-	23,949		107,174		2,141		-		26,587		18,728
Units redeemed		(389,676	)	-	(1,531,961	)	(393,126	)	(2,716	)	(626	)	(31,994	)	(206	)
Ending units		2,978,019		-	-		1,508,012		11,201		11,776		14,747		20,154

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SVOF					WFVSCG			WFVSMV				WFVTRB
	2009			2008		2009		2008	2009		2008		2009	2008
Investment activity:
Net investment income (loss)	$	(1,222,661	)	1,305,772		(45,813	)	-	14		(87	)	2,535	841
Realized gain (loss) on investments		(73,824,875	)	(7,092,700	)	70,675		-	(782	)	(310	)	54	(1	)
Change in unrealized gain (loss) on investments		114,309,554		(152,729,190	)	992,805		-	4,712		(6,144	)	148	(559	)
Reinvested capital gains		-		51,688,115		-		-	-		2,098		106	-
Net increase (decrease) in contract owners’ equity resulting from operations		39,262,018		(106,828,003	)	1,017,667		-	3,944		(4,443	)	2,843	281
Equity transactions:
Purchase payments received from contract owners (note 3)		1,221,716		4,928,968		2,421,575		-	-		11,333		233,380	-
Transfers between funds		(171,342,569	)	(11,139,737	)	6,815,945		-	(830	)	783		-	-
Redemptions (note 3)		(13,202,435	)	(33,723,685	)	(194,957	)	-	-		(1,514	)	-	-
Annuity benefits		(34,542	)	(42,388	)	-		-	-		-		-	-
Contract maintenance charges (note 2)		(67,767	)	(117,994	)	(756	)	-	-		-		-	-
Contingent deferred sales charges (note 2)		(23,398	)	(69,229	)	(140	)	-	-		-		-	-
Adjustments to maintain reserves		19,703		14,276		(65	)	-	1		(1	)	29	(1	)
Net equity transactions		(183,429,292	)	(40,149,789	)	9,041,602		-	(829	)	10,601		233,409	(1	)
Net change in contract owners’ equity		(144,167,274	)	(146,977,792	)	10,059,269		-	3,115		6,158		236,252	280
Contract owners’ equity beginning of period		144,448,227		291,426,019		-		-	6,526		368		23,352	23,072
Contract owners’ equity end of period	$	280,953		144,448,227		10,059,269		-	9,641		6,526		259,604	23,352
CHANGES IN UNITS:
Beginning units		4,815,928		5,757,665		-		-	1,260		39		2,116	2,116
Units purchased		69,629		181,645		904,420		-	102		1,409		19,232	-
Units redeemed		(4,885,557	)	(1,123,382	)	(129,409	)	-	(187	)	(188	)	-	-
Ending units		-		4,815,928		775,011		-	1,175		1,260		21,348	2,116

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	WIEP					WVCP				BF				VFLG2
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(132,331	)	98,226		18,402		10,018		8,037		43,358		(2,676	)	(9,189	)
Realized gain (loss) on investments		2,885,809		1,819,938		(24,024	)	62,433		(1,104,294	)	(155,553	)	(306,922	)	(14,031	)
Change in unrealized gain (loss) on investments		(674,791	)	(16,519,318	)	375,927		(1,453,797	)	1,050,764		(1,136,182	)	304,960		(415,411	)
Reinvested capital gains		-		-		-		-		-		340,160		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		2,078,687		(14,601,154	)	370,305		(1,381,346	)	(45,493	)	(908,217	)	(4,638	)	(438,631	)
Equity transactions:
Purchase payments received from contract owners (note 3)		(4,631	)	598		-		-		38,684		508,008		3,518		17,061
Transfers between funds		(19,424,482	)	(1,133,926	)	(1,651,216	)	(99,463	)	(2,038,455	)	(191,551	)	(633,983	)	3,759
Redemptions (note 3)		(1,161,756	)	(4,085,991	)	(124,719	)	(295,926	)	(171,915	)	(469,649	)	(6,438	)	(70,267	)
Annuity benefits		(5,074	)	(9,663	)	(157	)	(293	)	-		-		-		-
Contract maintenance charges (note 2)		(7,185	)	(13,018	)	(1,452	)	(1,817	)	(751	)	(2,549	)	(34	)	(158	)
Contingent deferred sales charges (note 2)		(2,105	)	(3,058	)	(61	)	(166	)	(716	)	(6,627	)	(178	)	(273	)
Adjustments to maintain reserves		(2,027	)	354		(131	)	(242	)	(20	)	(28	)	(13	)	(66	)
Net equity transactions		(20,607,260	)	(5,244,704	)	(1,777,736	)	(397,907	)	(2,173,173	)	(162,396	)	(637,128	)	(49,944	)
Net change in contract owners’ equity		(18,528,573	)	(19,845,858	)	(1,407,431	)	(1,779,253	)	(2,218,666	)	(1,070,613	)	(641,766	)	(488,575	)
Contract owners’ equity beginning of period		18,528,573		38,374,431		1,407,431		3,186,684		2,218,666		3,289,279		641,766		1,130,341
Contract owners’ equity end of period	$	-		18,528,573		-		1,407,431		-		2,218,666		-		641,766
CHANGES IN UNITS:
Beginning units		1,761,884		2,123,568		184,626		219,613		243,504		265,247		85,778		90,603
Units purchased		-		-		-		-		27,484		100,214		1,648		7,443
Units redeemed		(1,761,884	)	(361,684	)	(184,626	)	(34,987	)	(270,988	)	(121,957	)	(87,426	)	(12,268	)
Ending units		-		1,761,884		-		184,626		-		243,504		-		85,778

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	VFLV2					MBVAG2				MBVCG2				SGRF
	2009			2008		2009		2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(631	)	(2,425	)	(610	)	(3,103	)	(494	)	1,513		(19,446	)	(123,059	)
Realized gain (loss) on investments		(618,233	)	(35,752	)	(166,434	)	(9,530	)	(60,514	)	(455	)	(3,260,173	)	(85,726	)
Change in unrealized gain (loss) on investments		544,112		(612,992	)	139,766		(153,303	)	44,039		(45,297	)	3,428,292		(5,035,578	)
Reinvested capital gains		-		-		-		27,030		-		5,733		-		-
Net increase (decrease) in contract owners’ equity resulting from operations		(74,752	)	(651,169	)	(27,278	)	(138,906	)	(16,969	)	(38,506	)	148,673		(5,244,363	)
Equity transactions:
Purchase payments received from contract owners (note 3)		3,982		35,992		150		600		(1,693	)	-		80,187		612,424
Transfers between funds		(761,228	)	30,223		(138,737	)	(111,280	)	(177,764	)	145,955		(5,012,035	)	(2,909,573	)
Redemptions (note 3)		(80,405	)	(114,095	)	(548	)	(13,080	)	(2,494	)	(507	)	(273,144	)	(1,243,542	)
Annuity benefits		-		-		-		-		-		-		(557	)	(2,902	)
Contract maintenance charges (note 2)		(99	)	(371	)	(60	)	(67	)	-		(11	)	(1,369	)	(4,717	)
Contingent deferred sales charges (note 2)		(142	)	(1,047	)	-		-		-		(3	)	(2,330	)	(9,344	)
Adjustments to maintain reserves		(18	)	66		12		(21	)	(4	)	(4	)	(4,350	)	285
Net equity transactions		(837,910	)	(49,232	)	(139,183	)	(123,848	)	(181,955	)	145,430		(5,213,598	)	(3,557,369	)
Net change in contract owners’ equity		(912,662	)	(700,401	)	(166,461	)	(262,754	)	(198,924	)	106,924		(5,064,925	)	(8,801,732	)
Contract owners’ equity beginning of period		912,662		1,613,063		166,461		429,215		198,924		92,000		5,064,925		13,866,657
Contract owners’ equity end of period	$	-		912,662		-		166,461		-		198,924		-		5,064,925
CHANGES IN UNITS:
Beginning units		105,574		111,241		22,130		33,329		22,506		8,194		1,380,783		2,013,233
Units purchased		5,695		11,553		23		1,612		4,397		15,171		86,728		336,292
Units redeemed		(111,269	)	(17,220	)	(22,153	)	(12,811	)	(26,903	)	(859	)	(1,467,511	)	(968,742	)
Ending units		-		105,574		-		22,130		-		22,506		-		1,380,783

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY, Continued

Years Ended December 31, 2009 and 2008

	SGRF2					JPMCVP				PISVP1
	2009			2008		2009		2008		2009		2008
Investment activity:
Net investment income (loss)	$	(91,071	)	(2,479,111	)	110,879		(18,465	)	4,058		(3,653	)
Realized gain (loss) on investments		(10,460,572	)	(18,926,375	)	(3,380,741	)	(282,010	)	(861,598	)	(92,857	)
Change in unrealized gain (loss) on investments		11,179,144		(29,421,175	)	3,002,269		(4,220,454	)	807,528		(490,494	)
Reinvested capital gains		-		-		12,024		757,541		-		153,345
Net increase (decrease) in contract owners’ equity resulting from operations		627,501		(50,826,661	)	(255,569	)	(3,763,388	)	(50,012	)	(433,659	)
Equity transactions:
Purchase payments received from contract owners (note 3)		544,446		27,669,502		(17	)	2,388		-		266
Transfers between funds		(18,955,609	)	(238,033,667	)	(5,708,844	)	(1,897,401	)	(586,886	)	(67,029	)
Redemptions (note 3)		(948,937	)	(7,438,982	)	(199,390	)	(1,524,694	)	(9,064	)	(27,061	)
Annuity benefits		-		-		-		-		-		-
Contract maintenance charges (note 2)		(7,599	)	(246,501	)	(1,034	)	(3,944	)	(82	)	(56	)
Contingent deferred sales charges (note 2)		(12,302	)	(157,220	)	(13	)	(3,168	)	-		-
Adjustments to maintain reserves		1,218		(768	)	(49	)	(107	)	2		(10	)
Net equity transactions		(19,378,783	)	(218,207,636	)	(5,909,347	)	(3,426,926	)	(596,030	)	(93,890	)
Net change in contract owners’ equity		(18,751,282	)	(269,034,297	)	(6,164,916	)	(7,190,314	)	(646,042	)	(527,549	)
Contract owners’ equity beginning of period		18,751,282		287,785,579		6,164,916		13,355,230		646,042		1,173,591
Contract owners’ equity end of period	$	-		18,751,282		-		6,164,916		-		646,042
CHANGES IN UNITS:
Beginning units		2,006,297		16,359,805		654,300		934,069		105,733		117,897
Units purchased		188,149		4,189,570		-		3		1,946		782
Units redeemed		(2,194,446	)	(18,543,078	)	(654,300	)	(279,772	)	(107,679	)	(12,946	)
Ending units		-		2,006,297		-		654,300		-		105,733

See accompanying notes to financial statements.

NATIONWIDE VARIABLE ACCOUNT-II

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide Variable Account-II (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on October 7, 1981. The Account is registered as a unit investment trust under the Investment Company Act of 1940.

The Company offers tax qualified and non-tax qualified Individual Deferred Variable Annuity Contracts, and Individual Modified Single Premium Deferred Variable Annuity Contracts through the Account. The primary distribution for the contracts is through the brokerage community; however, other distributors are 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 expenses.

With certain exceptions, contract owners in either the accumulation or the payout phase may invest in the following:

ALGER AMERICAN FUNDS

Balanced Portfolio - Class S Shares (ALBS)

MidCap Growth Portfolio - Class S Shares (ALMCS)

AMERICAN FUNDS GROUP (THE)

Growth Fund - Class 1 (AFGF)

High-Income Bond Fund - Class 1 (AFHY)

U.S. Government/AAA-Rated Securities Fund - Class 1 (AFGC)

BB&T FUNDS

Capital Manager Equity VIF (BBCMAG)*

Large Cap VIF (BBGI)*

Mid Cap Growth VIF (BBCA)*

BLACKROCK FUNDS

Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class III (MLVGA3)

CREDIT SUISSE ASSET MANAGEMENT

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

U.S. Equity Flex I Portfolio (WSCP)

J.P. MORGAN INVESTMENT MANAGEMENT INC.

Insurance Trust - Insurance Trust Diversified Mid Cap Growth Portfolio 1 (OGGO)*

Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)

JPMorgan Insurance Trust Balanced Portfolio 1 (OGAA)*

JPMorgan Insurance Trust Core Bond Portfolio 1 (OGBDP)*

JPMorgan Insurance Trust Equity Index Portfolio 1 (OGEI)*

JPMorgan Insurance Trust Intrepid Growth Portfolio - Class 1 (OGLG)*

JPMorgan Insurance Trust Intrepid Mid Cap Portfolio 1 (OGDMP)*

JPMorgan Insurance Trust U.S. Equity Portfolio 1 (OGDEP)*

JANUS FUNDS

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

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

Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)

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

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

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

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

MASSACHUSETTS FINANCIAL SERVICES CO.

Investors Growth Stock Series - Service Class (MIGSC)

Value Series - Service Class (MVFSC)

MORGAN STANLEY

Core Plus Fixed Income Portfolio - Class I (MSVFI)

Core Plus Fixed Income Portfolio - Class II (MSVF2)

Emerging Markets Debt Portfolio - Class I (MSEM)

Emerging Markets Debt Portfolio - Class II (MSEMB)

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

U.S. Real Estate Portfolio - Class II (MSVREB)

MTB GROUP OF FUNDS

Managed Allocation Fund - Moderate Growth II (VFMG2)

NATIONWIDE FUNDS GROUP

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

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

American Century NVIT Multi Cap Value Fund - Class II (NVAMV2)

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

American Funds NVIT Bond Fund - Class II (GVABD2)

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

American Funds NVIT Growth Fund - Class II (GVAGR2)

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

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

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

Gartmore NVIT Emerging Markets Fund - Class I (GEM)

Gartmore NVIT Emerging Markets Fund - Class II (GEM2)

Gartmore NVIT Emerging Markets Fund - Class III (GEM3)

Gartmore NVIT Emerging Markets Fund - Class VI (GEM6)

Gartmore NVIT Global Utilities Fund - Class II (GVGU2)

Gartmore NVIT Global Utilities Fund - Class III (GVGU)

Gartmore NVIT International Equity Fund - Class I (GIG)

Gartmore NVIT International Equity Fund - Class III (GIG3)

Gartmore NVIT International Equity Fund - Class VI (NVIE6)

Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)

Gartmore NVIT Worldwide Leaders Fund - Class VI (NVGWL6)

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

Neuberger Berman NVIT Multi Cap Opportunities Fund - Class II (NVNMO2)

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

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

NVIT Cardinal Aggressive Fund - Class II (NVCRA2)

NVIT Cardinal Balanced Fund - Class II (NVCRB2)

NVIT Cardinal Capital Appreciation Fund - Class II (NVCCA2)

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

NVIT Cardinal Conservative Fund - Class II (NVCCN2)

NVIT Cardinal Moderate Fund - Class II (NVCMD2)

NVIT Cardinal Moderately Aggressive Fund - Class II (NVCMA2)

NVIT Cardinal Moderately Conservative Fund - Class II (NVCMC2)

NVIT Core Bond Fund - Class I (NVCBD1)

NVIT Core Bond Fund - Class II (NVCBD2)

NVIT Core Plus Bond Fund - Class II (NVLCP2)

NVIT Fund - Class I (TRF)

NVIT Fund - Class II (TRF2)

NVIT Global Financial Services Fund - Class II (GVGF2)

NVIT Global Financial Services Fund - Class III (GVGFS)

NVIT Government Bond Fund - Class I (GBF)

NVIT Growth Fund - Class I (CAF)

NVIT Health Sciences Fund - Class II (GVGH2)

NVIT Health Sciences Fund - Class III (GVGHS)

NVIT Health Sciences Fund - Class VI (GVGH6)

NVIT International Index Fund - Class VIII (GVIX8)

NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)

NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)

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

NVIT Investor Destinations Conservative Fund - Class II (GVIDC)

NVIT Investor Destinations Moderate Fund - Class II (GVIDM)

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

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

NVIT Leaders Fund - Class III (GVUSL)

NVIT Mid Cap Index Fund - Class I (MCIF)

NVIT Money Market Fund - Class I (SAM)

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

NVIT Multi-Manager International Growth Fund - Class VI (NVMIG6)

NVIT Multi-Manager International Value Fund - Class II (GVDIV2)

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

NVIT Multi-Manager International Value Fund - Class VI (GVDIV6)

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

NVIT Multi-Manager Large Cap Growth Fund - Class II (NVMLG2)

NVIT Multi-Manager Large Cap Value Fund - Class II (NVMLV2)

NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)

NVIT Multi-Manager Mid Cap Growth Fund - Class II (NVMMG2)

NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)

NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)

NVIT Multi-Manager Small Cap Growth Fund - Class II (SCGF2)

NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)

NVIT Multi-Manager Small Cap Value Fund - Class II (SCVF2)

NVIT Multi-Manager Small Company Fund - Class I (SCF)

NVIT Multi-Manager Small Company Fund - Class II (SCF2)

NVIT Multi-Sector Bond Fund - Class I (MSBF)

NVIT Short Term Bond Fund - Class II (NVSTB2)

NVIT Technology & Communications Fund - Class I (GGTC)

NVIT Technology & Communications Fund - Class II (GGTC2)

NVIT Technology & Communications Fund - Class III (GGTC3)

NVIT Technology & Communications Fund - Class VI (GGTC6)

NVIT U.S. Growth Leaders Fund - Class II (GVUG2)

NVIT U.S. Growth Leaders Fund - Class III (GVUGL)

Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)

Oppenheimer NVIT Large Cap Growth Fund - Class II (NVOLG2)

Templeton NVIT International Value Fund - Class III (NVTIV3)

Van Kampen NVIT Comstock Value Fund - Class II (EIF2)

Van Kampen NVIT Real Estate Fund - Class I (NVRE1)

Van Kampen NVIT Real Estate Fund - Class II (NVRE2)

NEUBERGER & BERMAN MANAGEMENT, INC.

Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)

PIMCO FUNDS

Foreign Bond Portfolio (Unhedged) - Advisor Class (PMVFAD)

Low Duration Portfolio - Advisor Class (PMVLAD)

Portfolios of the AIM Variable Insurance Funds

V.I. Basic Value Fund - Series II (AVBV2)

V.I. Capital Appreciation Fund - Series II (AVCA2)

V.I. Capital Development Fund - Series II (AVCD2)

Portfolios of the AllianceBernstein Variable Products Series Fund, Inc.

VPS Growth and Income Portfolio - Class B (ALVGIB)

VPS Small/Mid Cap Value Portfolio: Class B (ALVSVB)

Portfolios of the American Century Variable Portfolios, Inc.

Money Market Portfolio(TM) (CHSMM)

VP Balanced Fund - Class I (ACVB)

VP Capital Appreciation Fund - Class I (ACVCA)

VP Income & Growth Fund - Class I (ACVIG)

VP Income & Growth Fund - Class II (ACVIG2)

VP Inflation Protection Fund - Class II (ACVIP2)

VP International Fund - Class I (ACVI)

VP International Fund - Class II (ACVI2)*

VP International Fund - Class III (ACVI3)

VP International Fund - Class IV (ACVI4)*

VP Mid Cap Value Fund - Class I (ACVMV1)

VP Mid Cap Value Fund - Class II (ACVMV2)

VP Ultra(R) Fund - Class I (ACVU1)*

VP Ultra(R) Fund - Class II (ACVU2)

VP Value Fund - Class I (ACVV)

VP Value Fund - Class II (ACVV2)

VP Vista(SM) Fund - Class I (ACVVS1)

VP Vista(SM) Fund - Class II (ACVVS2)*

Portfolios of the Dreyfus Investment Portfolios

Small Cap Stock Index Portfolio - Service Shares (DVSCS)

Stock Index Fund, Inc. - Initial Shares (DSIF)

Stock Index Fund, Inc. - Service Shares (DSIFS)

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)

Portfolios of the Dreyfus Variable Investment Fund

Appreciation Portfolio - Initial Shares (DCAP)

Appreciation Portfolio - Service Shares (DCAPS)

Developing Leaders Portfolio - Service Shares (DVDLS)

Growth and Income Portfolio - Initial Shares (DGI)

Portfolios of the Federated Insurance Series

Capital Appreciation Fund II - Service Shares (FCA2S)

Clover Value Fund II - Service Shares (FALFS)

Market Opportunity Fund II - Service Shares (FVMOS)

Quality Bond Fund II - Primary Shares (FQB)

Quality Bond Fund II - Service Shares (FQBS)

Portfolios of the Fidelity (R Variable Insurance Products Fund FidelityR)

Contrafund Portfolio - Service Class 2 (FC2)

Equity-Income Portfolio - Initial Class (FEIP)

Fidelity(R) VIP Fund - Value Strategies Portfolio - Service Class 2 (FVSS2)

High Income Portfolio - Initial Class (FHIP)

VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)

VIP Fund - Contrafund Portfolio - Initial Class (FCP)

VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)

VIP Fund - Equity-Income Portfolio - Service Class 2 (FEI2)

VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)

VIP Fund - Freedom Fund 2010 Portfolio - Service Class 2 (FF10S2)

VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)

VIP Fund - Freedom Fund 2020 Portfolio - Service Class 2 (FF20S2)

VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)

VIP Fund - Freedom Fund 2030 Portfolio - Service Class 2 (FF30S2)

VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)

VIP Fund - Growth Portfolio - Initial Class (FGP)

VIP Fund - Growth Portfolio - Service Class 2 (FG2)

VIP Fund - High Income Portfolio - Initial Class R (FHIPR)

VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)

VIP Fund - Investment Grade Bond Portfolio - Service Class 2 (FIGBP2)

VIP Fund - Mid Cap Portfolio - Service Class (FMCS)

VIP Fund - Mid Cap Portfolio - Service Class 2 (FMC2)

VIP Fund - Overseas Portfolio - Initial Class (FOP)

VIP Fund - Overseas Portfolio - Initial Class R (FOPR)

VIP Fund - Overseas Portfolio - Service Class 2 (FO2)

VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)

VIP Fund - Value Strategies Portfolio - Service Class (FVSS)

Portfolios of the Franklin Templeton Variable Insurance Products Trust

Franklin Income Securities Fund - Class 2 (FTVIS2)

Franklin Rising Dividends Securities Fund - Class 2 (FTVRD2)

Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)

Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)

Templeton Foreign Securities Fund - Class 2 (TIF2)

Templeton Foreign Securities Fund - Class 3 (TIF3)

Templeton Global Bond Securities Fund - Class 3 (FTVGI3)

VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)

Portfolios of the Neuberger Berman Advisers Management Trust

Growth Portfolio - I Class Shares (AMTG)

Guardian Portfolio - I Class Shares (AMGP)*

International Portfolio - S Class Shares (AMINS)

Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)*

Partners Portfolio - I Class Shares (AMTP)

Regency Portfolio - S Class Shares (AMRS)*

Small-Cap Growth Portfolio - S Class Shares (AMFAS)

Socially Responsive Portfolio - I Class Shares (AMSRS)

Portfolios of the Oppenheimer Variable Account Funds

Balanced Fund/VA - Non-Service Shares (OVMS)

Capital Appreciation Fund/VA - Service Class (OVCAFS)

Capital Appreciation Fund/VA - Non-Service Shares (OVGR)

Core Bond Fund/VA - Non-Service Shares (OVB)

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

Global Securities Fund/VA - Class 3 (OVGS3)

Global Securities Fund/VA - Class 4 (OVGS4)

Global Securities Fund/VA - Non-Service Shares (OVGS)

Global Securities Fund/VA - Service Class (OVGSS)

High Income Fund/VA - Class 3 (OVHI3)

High Income Fund/VA - Class 4 (OVHI4)

High Income Fund/VA - Non-Service Shares (OVHI)

High Income Fund/VA - Service Class (OVHIS)

Main Street Fund(R)/VA - Non-Service Shares (OVGI)

Main Street Fund(R)/VA - Service Class (OVGIS)

Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)

Main Street Small Cap Fund(R)/VA - Service Class (OVSCS)

MidCap Fund/VA - Non-Service Shares (OVAG)

Portfolios of the Putnam Variable Trust

Putnam VT Growth and Income Fund - IB Shares (PVGIB)

Putnam VT International Equity Fund - IB Shares (PVTIGB)

Putnam VT Voyager Fund - IB Shares (PVTVB)

Portfolios of the Van Kampen - The Universal Institutional Funds, Inc.

Global Real Estate Portfolio - Class II (VKVGR2)*

Portfolios of the Victory Variable Insurance Funds

Diversified Stock Fund Class A Shares (VYDS)

T. ROWE PRICE

Blue Chip Growth Portfolio - II (TRBCG2)

Equity Income Portfolio - II (TREI2)

Limited-Term Bond Portfolio - II (TRLT2)

VAN ECK ASSOCIATES CORPORATION

Worldwide Insurance Trust - Worldwide Bond Fund - Class R1 (VWBFR)

Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)

Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Class R1 (VWEMR)

Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)

Worldwide Insurance Trust - Worldwide Hard Assets Fund - Class R1 (VWHAR)

Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)

WADDELL & REED, INC.

Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)

Ivy Fund Variable Insurance Portfolios, Inc. - Pathfinder Conservative (WRPCP)*

Ivy Fund Variable Insurance Portfolios, Inc. - Pathfinder Moderate (WRPMP)*

Ivy Fund Variable Insurance Portfolios, Inc. - Pathfinder Moderately Aggressive (WRPMAP)*

Ivy Fund Variable Insurance Portfolios, Inc. - Pathfinder Moderately Conservative (WRPMCP)*

WELLS FARGO FUNDS

Advantage Funds Variable Trust - VT Asset Allocation Fund (WFVAA)*

Advantage Funds Variable Trust - VT Discovery Fund (SVDF)

Advantage Funds Variable Trust - VT Large Company Growth Fund (WFVLCG)

Advantage Funds Variable Trust - VT Money Market Fund (WFVMM)

Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)

Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)

Advantage Funds Variable Trust - VT Small-Mid Cap Value Fund (WFVSMV)

Advantage Funds Variable Trust - VT Total Return Bond Fund (WFVTRB)

Z CLOSED FUNDS

International Equity Flex I Portfolio (obsolete) (WIEP)*

International Equity Flex II Portfolio (obsolete) (WVCP)*

Variable Contracts Trust - Small Cap Value VCT Portfolio - Class I Shares (obsolete) (PISVP1) *

Large Cap Growth Fund II (obsolete) (VFLG2)*

Large Cap Growth Fund II (obsolete) (VFLV2)*

Managed Allocation Fund - Aggressive Growth II (obsolete) (MBVAG2)*

Managed Allocation Fund - Conservative Growth II (obsolete) (MBVCG2)*

NVIT Mid Cap Growth Fund - Class I (obsolete) (SGRF)*

Series Trust II - Mid Cap Value Portfolio (obsolete) (JPMCVP)*

J.P. Morgan NVIT Balanced Fund - Class I (obsolete) (BF)*

* At December 31, 2009, contract owners were not invested in the fund.

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 if a prior period purchase payment is refunded to a contract owner due to a contract cancellation during the free look period, and/or if a gain is realized by the contract owner during the free look period.

(c) Security Valuation, Transactions and Related Investment Income

Investments in underlying mutual funds are valued at the closing net asset value per share at December 31, 2009 of such funds, which represents fair value. The cost of investments sold is determined on a first in - first out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed), and dividends and capital gain distributions are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

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

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

(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

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.

(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 BOA IV contracts issued prior to December 15, 1988, the contingent deferred sales charge will be equal to 5% of the lesser of purchase payments or the amount redeemed. For America’s Vision, America’s Future II, All American Gold, Future Venue, Choice Venue II and for BOA IV contracts issued on or after December 15, 1988, the contingent deferred sales charge will not exceed 7% of purchase payments redeemed, such charge declining a specified percentage each year. After the purchase payment has been held in the contract for 7 years this charge is 0%. For Achiever contracts, this charge will not exceed 8% of purchase payments redeemed, such charge declining a specified percentage each year. After the purchase payment has been held in the contract for 8 years this charge is 0%. For Elite Venue and Nationwide Destination L contracts, the contingent deferred sales charge will not exceed 7% of purchase payments redeemed, such charge declining a specified percentage each year. After the purchase payment has been held in the contract for 4 years this charge is 0%. No contingent deferred sales charge is deducted on NEBA, Nationwide Destination C (formerly Exclusive Venue), Income Architect or Schwab contracts. No sales charges are deducted on redemptions used to purchase units in the fixed investment options of the company.

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

The Company may deduct a contract maintenance charge of up to $30, dependent upon contract type and issue date, which is satisfied by redeeming units. The Company deducts a mortality and expense risk charge assessed through a reduction of the unit value. The Option tables on the following two pages illustrate 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 - II Options	BOA         IV	America’s     Vision	NEBA	Schwab     Custom     Solutions	Schwab     Income     Choice
Variable Account Charges - Recurring	1.30%	1.40%	0.80%	0.95%	0.65%
Death Benefit Options - Allows enhanced provisions in place of the standard death benefit.
One-Year Enhanced	-	-	-	0.10%	0.20%
Combination Enhanced	-	-	-	0.40%	-
Return of Premium					0.10%
Beneficiary Protector II Option	-	-	-	0.35%	-
Upon death of the annuitant, in addition to any death benefit payable, the contract will be credited an additional amount.
Spousal Continuation Benefit Option	-	-	-	-	0.30%
Capital Preservation and Income Options:
Capital Preservation Plus Option	-	-	-	0.50%	-
Lifetime Income Option
5% Lifetime Income Option (New York)	-	-	-	-	1.00%(13)
7% Lifetime Income Option (Non-New York)	-	-	-	-	1.00%(14)
Maximum Variable Account Charges*	1.30%	1.40%	0.80%	2.20%	2.15%

Nationwide Variable Account - II Options	America’s         Future II	All             American             Gold	Achiever	Income             Architect
Variable Account Charges - Recurring	1.15%	1.15%	1.55%	0.40%
CDSC Options:
Four Year CDSC	0.30%	0.50%	0.20%	-
No CDSC	0.35%	0.55%	0.25%	-
Death Benefit Options - Allows enhanced provisions in place of the standard death benefit.
One-Year Enhanced II	0.20%(2)	0.20%(2)	-	-
One-Year Enhanced	0.10%(4)	0.10%(4)	-	-
One-Month Enhanced	-	0.35%(2)	0.20%(2)	-
Combination Enhanced II	-	-	0.45%(12)	-
Combination Enhanced	-	0.40%(5)	0.30%(5)	-
Beneficiary Protector II Option	-	0.35%	0.35%	-
Upon death of the annuitant, in addition to any death benefit payable, the contract will be credited an additional amount.
Capital Preservation and Income Options:
Capital Preservation Plus Lifetime Income Option	1.00%	1.00%	1.00%	-
Capital Preservation Plus Option	0.50%(17)	0.50%(17)	0.50%(17)	-
Lifetime Income Option
5% Lifetime Income Option (New York)	1.00%(13)	1.00%(13)	1.00%(13)	-
7% Lifetime Income Option (Non-New York)	1.00%(14)	1.00%(14)	1.00%(14)	-
10% Lifetime Income Option	1.20%(15)	1.20%(15)	1.20%(15)	-
Spousal Continuation Benefit Option
5% Spousal Continuation Benefit (New York)	0.15%	0.15%	0.15%	-
7% Spousal Continuation Benefit (Non-New York)	0.15%	0.15%	0.15%	-
10% Spousal Continuation Benefit (Non-New York)	0.30%(16)	0.30%(16)	0.30%(16)	-
Guaranteed Lifetime Withdrawal Fee	-	-	-	0.60%(18)
Spousal Continuation Benefit Option	-	-	-	0.10%(18)
Extra Value Options (EV):
Fee assessed to assets of the variable account and to allocations made to the fixed account or guaranteed term options in exchange for application of Extra Value Credit of purchase payments made during the first 12 months contract is in force.
3% Extra Value Credit Option	0.30%	0.45%(17)	0.10%	-
4% Extra Value Credit Option	0.40%	-	0.25%	-
5% Extra Value Credit Option	-	0.70%(17)	0.45%(10)	-
5% Extra Value Credit Option	-	-	0.55%(11)	-
Maximum Variable Account Charges*	3.55%	4.60%(1)	4.60%(1)	1.10%(1)

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

Nationwide Variable Account - II Options	Future   Venue	Destination C	Destination L	Elite   Venue	Choice   Venue II
Variable Account Charges - Recurring	1.10%	1.60%	1.75%	1.75%	1.50%
Death Benefit Options - Allows enhanced provisions in place of the standard death benefit.
One-Year Enhanced II	0.15% (3)	-	-	-	-
One-Year Enhanced	0.10% (4)	-	0.20%	-	-
One-Month Enhanced II	0.35% (3)	0.20% (2)	-	0.20% (2)	0.20% (2)
One-Month Enhanced	0.30% (6)	0.20% (6)	0.35%	0.20% (6)	0.20% (6)
Combination Enhanced II	0.45% (3)	0.35% (2)	-	0.35% (2)	0.35% (2)
Combination Enhanced	0.40% (7)	0.30% (7)	0.45%	0.30% (7)	0.30% (7)
Return of Premium
Spousal Protection Annuity Option - Allows a surviving spouse to continue the contract while receiving the economic benefit of the death benefit upon the death of the other spouse
Spousal Protection Annuity Option II	0.20% (3)	-	-	-	-
Spousal Protection Annuity Option	0.10% (8)	0.20%	-	0.20%	0.20%
Beneficiary Protector II Option	0.35%	0.35%	0.35%	0.35%	0.35%
Upon death of the annuitant, in addition to any death benefit payable, the contract will be credited an additional amount.
Capital Preservation and Income Options:
Capital Preservation Plus Lifetime Income Option	1.00%	-	1.00% (17)	1.00%	1.00%
Capital Preservation Plus Option	0.50% (17)	0.50% (17)	-	0.50% (17)	0.50% (17)
Lifetime Income Option
5% Lifetime Income Option (New York)	1.00% (13)	-	1.00% (13)	1.00% (13)	1.00% (13)
7% Lifetime Income Option (Non-New York)	1.00% (14)	-	-	1.00% (14)	1.00% (14)
10% Lifetime Income Option	1.20% (15)	-	1.20% (15)	1.20% (15)	1.20% (15)
Spousal Continuation Benefit Option
5% Spousal Continuation Benefit (New York)	0.15%	-	0.15%	0.15%	0.15%
7% Spousal Continuation Benefit (Non-New York)	0.15%	-	-	0.15%	0.15%
10% Spousal Continuation Benefit (Non-New York)	0.30% (16)	-	0.30% (16)	0.30% (16)	0.30% (16)
Extra Value Options (EV):
Fee assessed to assets of the variable account and to allocations made to the fixed account or guaranteed term options in exchange for application of Extra Value Credit of purchase payments made during the first 12 months contract is in force.
3% Extra Value Credit Option	0.45%	-	-	-	-
Maximum Variable Account Charges*	4.05% (1)	3.00%	4.05% (1)	4.15% (1)	3.90% (1)

(*) The contract charges indicated in bold, when summarized, represent the Maximum Variable Account Charges if all optional benefits available under the contract are elected including the most expensive of the mutually exclusive optional benefits.

(1) The total variable account charges associated with this product may be higher or lower than this amount, depending on whether the Current Income Benefit Base or Guaranteed Lifetime Withdrawal Base is higher or lower than the daily net assets. For purposes of this table, the Company assumes the Current Income Benefit Base or Guaranteed Lifetime Withdrawal Base is equal to the daily net assets.

(2) Available beginning May 1, 2004 or a later date if state law requires

(3) Available beginning September 1, 2004 or a later date if state law requires

(4) Available until state approval is received for the One-Year Enhanced Death Benefit II Option

(5) Available until state approval is received for the One-Month Enhanced Death Benefit Option

(6) Available until state approval is received for the One-Month Enhanced Death Benefit II Option

(7) Available until state approval is received for the Combination Enhanced Death Benefit II Option

(8) Available until state approval is received for the Spousal Protection Annuity II Option

(9) Available until state approval is received for the 5% Extra Value Option

(10) Non-NY residents

(11) NY residents

(12) Available beginning May 1, 2007 or a later date if state law requires

(13) Currently, the charge associated with the 5% Lifetime Income Option is equal to 0.60% of the current income base and is assessed through the reduction of units.

(14) Currently, the charge associated with the 7% Lifetime Income Option is equal to 0.70% of the current income base and is assessed through the reduction of units.

(15) Currently, the charge associated with the 10% Lifetime Income Option is equal to 0.75% of the current income base and is assessed through the reduction of units.

(16) Currently, the charge associated with the 10% Spousal Continuation Benefit is equal to 0.20% of the current income base and is assessed through the reduction of units.

(17) No longer available.

(18) This charge is a percentage of the Guaranteed Lifetime Withdrawal Base.

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

The following table provides mortality and expense risk charges by asset fee rates for the period ended December 31, 2009.

	Total		ALBS		ALMCS		AFGF		AFHY		AFGC		MLVGA3		CSIEF3
0.45%	$	306	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		16,872		-		-		-		-		-		-		-
0.75%		66,225		-		-		-		-		-		301		-
0.8%		174,125		-		-		-		-		-		5		2
0.85%		154,732		-		-		-		-		-		8		-
0.9%		31		-		-		-		-		-		1		-
0.95%		324,714		735		868		-		-		-		43		-
1.05%		310,653		1,202		2,153		-		-		-		46		-
1.1%		3,369,420		-		-		-		-		-		1,535		-
1.15%		24,246,992		-		-		-		-		-		5,171		-
1.2%		252,502		-		-		-		-		-		26		-
1.25%		3,066,043		-		-		-		-		-		8,089		-
1.3%		40,850,827		-		-		123,183		18,720		19,040		12,401		851
1.35%		5,974,507		-		43		-		-		-		3,619		-
1.4%		17,718,649		-		-		-		-		-		4,756		380
1.45%		4,998,445		91		581		-		-		-		2,884		-
1.5%		4,129,236		-		-		-		-		-		13,968		-
1.55%		22,686,094		-		-		-		-		-		12,412		-
1.6%		1,286,647		-		-		-		-		-		3,163		-
1.65%		9,297,347		-		-		-		-		-		3,469		-
1.7%		2,935,539		-		-		-		-		-		2,248		-
1.75%		44,471,654		-		-		-		-		-		18,970		-
1.8%		7,158,080		-		-		-		-		-		6,530		-
1.85%		3,203,612		-		-		-		-		-		836		-
1.9%		2,735,559		-		-		-		-		-		80		-
1.95%		6,836,870		-		-		-		-		-		5,970		-
2%		14,740,395		-		-		-		-		-		3,375		-
2.05%		3,614,322		-		-		-		-		-		11		-
2.1%		3,985,498		-		-		-		-		-		2,054		-
2.15%		10,141,135		-		-		-		-		-		1,130		-
2.2%		4,084,814		-		-		-		-		-		581		-
2.25%		6,493,149		-		-		-		-		-		36		-
2.3%		2,237,938		-		-		-		-		-		1,085		-
2.35%		26,324,774		-		-		-		-		-		3,716		-
2.4%		3,118,875		-		-		-		-		-		578		-
2.45%		1,748,115		-		-		-		-		-		232		-
2.5%		6,768,505		-		-		-		-		-		-		-
2.55%		2,477,170		-		-		-		-		-		-		-
2.6%		1,235,218		-		-		-		-		-		-		-
2.65%		190,321		-		-		-		-		-		5		-
2.7%		980,761		-		-		-		-		-		-		-
2.75%		241,888		-		-		-		-		-		-		-
2.8%		281,248		-		-		-		-		-		-		-
2.85%		130,139		-		-		-		-		-		-		-
2.9%		192,417		-		-		-		-		-		-		-
2.95%		105,579		-		-		-		-		-		-		-
3%		54,147		-		-		-		-		-		-		-
3.05%		44,874		-		-		-		-		-		-		-
3.1%		30,890		-		-		-		-		-		-		-
3.15%		399		-		-		-		-		-		-		-
3.2%		2,530		-		-		-		-		-		-		-
3.25%		11,242		-		-		-		-		-		-		-
3.3%		532		-		-		-		-		-		-		-
Totals	$	295,502,556	$	2,028	$	3,645	$	123,183	$	18,720	$	19,040	$	119,334	$	1,233
	WSCP		JPMMV1		JABS		JACAS		JAGTS2		JAGTS		JARLCS		JAIGS2
0.45%	$	-	$	-	$	-	$	2	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		100
0.75%		-		-		-		48		-		-		-		1,303
0.8%		1,341		21		-		2,029		109		37		2		4,539
0.85%		-		-		-		2,440		-		-		-		4,593
0.9%		-		-		-		-		-		-		-		-
0.95%		-		-		9,899		7,693		-		-		1,133		17,533
1.05%		-		-		17,467		8,742		-		-		2,128		15,626
1.1%		-		-		417		5,649		-		-		380		18,322
1.15%		-		-		19,354		104,033		-		-		2,853		239,460
1.2%		-		-		188		92		-		-		55		1,052
1.25%		-		-		10,839		15,329		-		-		362		26,869
1.3%		287,901		37,590		209		267,893		41,677		16,857		624		461,522
1.35%		-		-		50		51,132		-		-		866		75,624
1.4%		135,185		14,739		1,685		82,993		10,145		9,927		95		115,154
1.45%		-		-		7,631		31,802		-		-		368		45,439
1.5%		-		-		8,398		15,688		-		-		1,896		31,570
1.55%		-		-		33,881		120,694		-		-		2,875		243,933
1.6%		-		-		4,360		7,352		-		-		53		14,541
1.65%		-		-		14,758		59,498		-		-		890		81,186
1.7%		-		-		5,479		11,238		-		-		1,257		30,545
1.75%		-		-		5,848		152,510		-		-		6,214		376,247
1.8%		-		-		11,086		25,422		-		-		1,270		77,836
1.85%		-		-		1,047		13,088		-		-		393		16,323
1.9%		-		-		216		14,431		-		-		132		14,278
1.95%		-		-		3,336		21,902		-		-		952		57,334
2%		-		-		1,014		58,005		-		-		483		75,806
2.05%		-		-		5,801		9,508		-		-		269		14,036
2.1%		-		-		988		30,135		-		-		214		39,192
2.15%		-		-		368		24,320		-		-		1,337		89,416
2.2%		-		-		-		68,764		-		-		275		24,085
2.25%		-		-		1,476		7,305		-		-		1,466		9,348
2.3%		-		-		2,197		21,916		-		-		77		8,604
2.35%		-		-		3		44,435		-		-		2,759		74,840
2.4%		-		-		-		9,566		-		-		339		19,722
2.45%		-		-		3,102		3,679		-		-		425		11,294
2.5%		-		-		-		21,862		-		-		-		431
2.55%		-		-		-		4,625		-		-		-		10,602
2.6%		-		-		-		5,179		-		-		987		1,897
2.65%		-		-		-		443		-		-		-		862
2.7%		-		-		-		1,155		-		-		-		2,212
2.75%		-		-		-		712		-		-		5		839
2.8%		-		-		-		488		-		-		41		650
2.85%		-		-		-		75		-		-		-		95
2.9%		-		-		-		-		-		-		-		770
2.95%		-		-		-		58		-		-		-		180
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		134
3.1%		-		-		-		-		-		-		-		342
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		27
3.25%		-		-		-		-		-		-		-		4
3.3%		-		-		-		-		-		-		-		-
	$	424,427	$	52,350	$	171,097	$	1,333,930	$	51,931	$	26,821	$	33,475	$	2,356,317

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	JAIGS		MIGSC		MVFSC		MSVFI		MSVF2		MSEM		MSEMB		MSVRE
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		589		-		187		-		-		-
0.75%		-		-		2,275		-		890		-		-		-
0.8%		331		-		190		-		-		22		-		1,935
0.85%		-		-		5,416		-		1,548		-		-		-
0.9%		-		-		1		-		-		-		-		-
0.95%		98		131		1,080		-		4,140		-		-		-
1.05%		258		-		378		-		1,145		-		-		-
1.1%		71		607		48,400		-		14,787		-		352		-
1.15%		6,625		16,113		416,743		-		133,062		-		3,340		-
1.2%		-		1,301		3,646		-		982		-		-		-
1.25%		4,744		11,248		39,393		-		17,010		-		1,504		-
1.3%		52,596		235		95,100		22,020		1,426		41,154		-		263,787
1.35%		-		2,064		102,671		-		31,528		-		-		-
1.4%		26,874		2,333		75,659		10,512		17,163		16,885		357		122,421
1.45%		849		5,174		85,054		-		31,035		-		1,750		-
1.5%		908		19,584		79,425		-		46,373		-		4,067		-
1.55%		4,667		25,584		398,794		-		130,723		-		2,476		-
1.6%		2,007		2,982		18,200		-		5,925		-		156		-
1.65%		1,245		12,274		126,813		-		47,402		-		352		-
1.7%		2,497		5,460		60,608		-		28,174		-		327		-
1.75%		586		17,115		989,261		-		291,494		-		710		-
1.8%		3,115		12,642		128,923		-		47,853		-		1,219		-
1.85%		589		10,949		51,727		-		20,277		-		237		-
1.9%		-		2,485		26,562		-		4,228		-		271		-
1.95%		785		3,855		139,634		-		39,139		-		161		-
2%		-		7,958		311,103		-		144,720		-		1		-
2.05%		1,793		10,704		50,072		-		17,061		-		484		-
2.1%		759		6,380		72,748		-		14,627		-		736		-
2.15%		265		4,519		235,363		-		63,513		-		417		-
2.2%		-		1,638		65,657		-		30,175		-		-		-
2.25%		-		4,214		106,569		-		61,015		-		-		-
2.3%		-		3,758		24,725		-		7,617		-		-		-
2.35%		-		2,648		700,664		-		368,285		-		-		-
2.4%		-		331		66,681		-		20,824		-		-		-
2.45%		-		1,647		37,259		-		16,831		-		-		-
2.5%		-		564		27,751		-		9,501		-		-		-
2.55%		-		107		53,736		-		23,961		-		-		-
2.6%		-		101		37,085		-		19,496		-		-		-
2.65%		-		8		1,223		-		621		-		-		-
2.7%		-		197		14,434		-		5,168		-		-		-
2.75%		-		15		3,830		-		2,577		-		-		-
2.8%		-		22		1,773		-		689		-		-		-
2.85%		-		-		551		-		174		-		-		-
2.9%		-		-		3,516		-		1,508		-		-		-
2.95%		-		-		550		-		170		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		791		-		638		-		-		-
3.1%		-		-		517		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		41		-		-		-		-		-
3.25%		-		-		259		-		169		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	111,662	$	196,947	$	4,713,440	$	32,532	$	1,725,831	$	58,061	$	18,917	$	388,143
	MSVREB		VFMG2		NVAGF3		NVAMV1		NVAMV2		GVAAA2		GVABD2		GVAGG2
0.45%	$	-	$	-	$	-	$	-	$	2	$	65	$	35	$	1
0.65%		-		-		-		-		-		380		10		-
0.75%		-		-		-		-		-		862		346		688
0.8%		-		-		-		-		-		514		405		620
0.85%		-		-		-		-		-		-		-		-
0.9%		-		-		-		-		-		-		1		-
0.95%		2,376		-		35		-		-		125		4,127		995
1.05%		591		-		46		-		-		5,400		4,494		2,095
1.1%		1,977		-		46		-		1,782		404,217		144,082		13,035
1.15%		61,388		26,165		876		-		2,787		1,754,717		528,542		121,286
1.2%		205		-		-		-		-		2,641		2,739		1,131
1.25%		11,392		22,255		587		-		94		140,490		43,683		17,595
1.3%		431		-		382		160		37		148,756		117,383		101,498
1.35%		16,381		2,588		52		-		495		358,596		103,957		49,995
1.4%		4,579		237		935		1		-		217,464		78,263		39,024
1.45%		16,407		108		410		-		687		271,039		122,207		31,300
1.5%		11,643		-		145		-		161		234,118		72,970		34,921
1.55%		62,270		210		1,263		-		3,314		1,683,272		545,277		121,009
1.6%		2,316		348		55		-		-		57,642		17,082		9,094
1.65%		15,528		2,323		367		-		4		383,109		131,953		35,215
1.7%		4,892		-		-		-		45		170,656		101,877		25,311
1.75%		29,272		7,111		776		-		5,925		3,407,830		1,038,339		193,317
1.8%		23,895		-		767		-		243		291,895		106,604		34,525
1.85%		6,485		935		270		-		22		144,688		71,301		10,649
1.9%		2,316		410		-		-		4		111,274		101,889		8,606
1.95%		5,643		1,456		386		-		747		451,345		123,046		21,354
2%		10,179		32		60		-		1,026		625,460		170,258		35,028
2.05%		3,628		-		-		-		620		126,005		120,685		7,610
2.1%		7,011		-		-		-		460		199,595		65,717		16,443
2.15%		2,735		-		426		-		37		291,054		214,240		10,870
2.2%		5,668		554		-		-		123		213,401		118,355		7,003
2.25%		1,054		-		-		-		-		485,611		477,861		6,308
2.3%		1,890		-		-		-		2,279		138,058		113,340		6,898
2.35%		287		109		-		-		142		1,156,330		1,074,134		19,791
2.4%		680		-		21		-		-		233,410		202,952		3,703
2.45%		1,394		-		-		-		12		85,032		59,156		1,071
2.5%		31		-		-		-		-		1,003,144		983,483		16,411
2.55%		332		-		-		-		-		110,500		93,483		1,562
2.6%		-		49		-		-		-		36,696		40,332		3,492
2.65%		46		-		-		-		-		16,307		15,193		653
2.7%		44		-		-		-		-		70,798		67,091		506
2.75%		-		-		-		-		7		14,691		13,889		162
2.8%		1,498		-		-		-		-		31,786		13,918		576
2.85%		-		-		-		-		-		18,796		19,175		-
2.9%		-		-		-		-		-		3,730		2,931		631
2.95%		-		-		-		-		-		12,923		12,621		101
3%		-		-		-		-		-		1,704		1,655		-
3.05%		-		-		-		-		-		4,073		3,952		106
3.1%		-		-		-		-		-		586		568		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		52		38
	$	316,464	$	64,890	$	7,905	$	161	$	21,055	$	15,120,785	$	7,345,653	$	1,012,227

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	GVAGR2		GVAGI2		HIBF		HIBF3		GEM		GEM2		GEM3		GEM6
0.45%	$	3	$	38	$	-	$	1	$	-	$	-	$	-	$	-
0.65%		-		11		-		-		-		-		-		-
0.75%		8		495		-		198		-		-		-		828
0.8%		1,552		295		-		322		41		-		2,026		-
0.85%		750		76		-		172		-		-		-		261
0.9%		-		-		-		-		-		-		-		-
0.95%		1,431		542		704		6,838		-		-		-		1,205
1.05%		1,595		662		69		3,582		-		-		-		2,279
1.1%		32,219		137,589		1,120		1,184		-		200		-		3,660
1.15%		198,978		442,968		18,351		143,319		-		5,945		-		122,285
1.2%		1,083		1,676		5,788		232		-		556		-		303
1.25%		21,244		34,098		10,378		15,659		-		1,504		-		13,233
1.3%		119,730		40,491		32		41,682		3,266		-		356,795		531
1.35%		72,674		95,185		5,621		30,799		-		-		-		29,154
1.4%		49,757		17,036		864		32,904		3,461		1,899		87,941		6,735
1.45%		40,484		83,219		5,664		38,313		-		888		-		28,923
1.5%		58,953		59,533		4,437		55,635		-		660		-		23,925
1.55%		235,496		489,409		24,748		110,962		-		4,935		-		111,909
1.6%		21,190		13,522		3,203		7,163		-		154		-		5,934
1.65%		59,188		95,502		13,641		44,643		-		1,233		-		29,789
1.7%		31,189		86,397		3,908		6,627		-		680		-		11,677
1.75%		351,328		950,445		7,690		71,988		-		799		-		71,876
1.8%		68,360		68,909		14,603		49,749		-		4,240		-		40,937
1.85%		22,041		56,439		9,407		16,142		-		1,920		-		11,775
1.9%		13,694		106,348		2,652		7,401		-		744		-		5,642
1.95%		45,810		113,146		341		7,212		-		805		-		18,899
2%		63,969		176,522		1,288		25,503		-		-		-		27,187
2.05%		7,656		113,590		1,016		4,763		-		132		-		2,459
2.1%		34,500		50,945		3,180		8,483		-		155		-		25,480
2.15%		31,456		211,982		1,343		2,591		-		851		-		9,553
2.2%		19,887		116,157		86		5,142		-		-		-		4,390
2.25%		16,967		492,582		-		4,487		-		448		-		3,236
2.3%		14,718		124,639		48		2,327		-		-		-		4,162
2.35%		47,594		1,110,162		533		3,582		-		-		-		2,432
2.4%		5,353		212,672		-		191		-		-		-		688
2.45%		3,814		58,540		-		8,508		-		388		-		11,701
2.5%		25,823		1,038,052		-		24		-		-		-		470
2.55%		3,551		97,896		-		1,317		-		-		-		1,566
2.6%		2,610		36,967		-		-		-		-		-		-
2.65%		2,345		17,729		-		509		-		-		-		718
2.7%		2,500		70,125		-		19		-		-		-		101
2.75%		276		13,053		-		534		-		-		-		456
2.8%		467		20,353		-		160		-		-		-		3,775
2.85%		577		19,645		-		-		-		-		-		-
2.9%		1,346		3,071		-		-		-		-		-		-
2.95%		61		13,464		-		-		-		-		-		-
3%		-		1,779		-		-		-		-		-		-
3.05%		296		4,253		-		-		-		-		-		-
3.1%		6		613		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		38		37		-		-		-		-		-		-
	$	1,734,567	$	6,898,859	$	140,715	$	760,867	$	6,768	$	29,136	$	446,762	$	640,134
	GVGU2		GVGU		GIG		GIG3		NVIE6		GEF3		NVGWL6		NVNMO1
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		-
0.8%		-		211		45		708		-		347		-		1,585
0.85%		-		-		-		-		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		-		-		-		-		128		-		-		-
1.05%		-		-		-		-		160		-		-		-
1.1%		-		-		-		-		1,482		-		148		-
1.15%		894		-		-		-		14,213		-		362		-
1.2%		-		-		-		-		-		-		-		-
1.25%		926		-		-		-		1,470		-		18		-
1.3%		-		37,367		168		180,945		536		21,468		17		322,457
1.35%		-		-		-		-		4,808		-		73		-
1.4%		31		12,718		583		98,865		1,014		9,132		-		187,959
1.45%		49		-		-		-		10,427		-		6		-
1.5%		53		-		-		-		4,993		-		178		-
1.55%		1,337		-		-		-		17,239		-		148		-
1.6%		-		-		-		-		1,853		-		133		-
1.65%		199		-		-		-		4,954		-		-		-
1.7%		151		-		-		-		3,921		-		-		-
1.75%		30		-		-		-		26,768		-		103		-
1.8%		963		-		-		-		3,623		-		47		-
1.85%		125		-		-		-		3,247		-		69		-
1.9%		-		-		-		-		2,333		-		-		-
1.95%		-		-		-		-		5,308		-		39		-
2%		-		-		-		-		4,902		-		64		-
2.05%		-		-		-		-		971		-		-		-
2.1%		538		-		-		-		3,035		-		176		-
2.15%		-		-		-		-		1,759		-		-		-
2.2%		-		-		-		-		1,778		-		4		-
2.25%		-		-		-		-		674		-		-		-
2.3%		-		-		-		-		2,529		-		626		-
2.35%		-		-		-		-		4,512		-		148		-
2.4%		-		-		-		-		489		-		-		-
2.45%		-		-		-		-		99		-		-		-
2.5%		-		-		-		-		2,422		-		14		-
2.55%		-		-		-		-		560		-		-		-
2.6%		-		-		-		-		363		-		-		-
2.65%		-		-		-		-		-		-		-		-
2.7%		-		-		-		-		-		-		-		-
2.75%		-		-		-		-		379		-		-		-
2.8%		-		-		-		-		-		-		-		-
2.85%		-		-		-		-		3		-		-		-
2.9%		-		-		-		-		-		-		-		-
2.95%		-		-		-		-		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	5,296	$	50,296	$	796	$	280,518	$	132,952	$	30,947	$	2,373	$	512,001

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	NVNMO2		NVNSR1		NVNSR2		NVCRA2		NVCRB2		NVCCA2		NVCCN2		NVCMD2
0.45%	$	-	$	-	$	-	$	-	$	2	$	68	$	2	$	3
0.65%		-		-		773		-		3		51		-		1
0.75%		210		-		3,516		-		-		-		-		-
0.8%		-		1		-		29		6		508		-		-
0.85%		-		-		7,184		-		-		-		-		-
0.9%		-		-		-		-		-		21		-		-
0.95%		123		-		-		-		-		-		-		-
1.05%		207		-		-		-		-		-		-		-
1.1%		1,567		-		49,400		2,080		193,388		174,288		65,381		297,837
1.15%		5,538		-		421,589		11,640		275,586		621,244		272,125		671,149
1.2%		46		-		4,303		183		1,347		697		608		4,979
1.25%		1,503		-		24,761		5,297		28,851		55,585		21,817		61,377
1.3%		332		18,823		6,520		8,453		30,886		33,309		30,332		52,769
1.35%		3,358		-		91,981		909		59,270		183,663		51,125		122,171
1.4%		1,514		2,733		46,938		1,623		14,606		5,069		18,060		15,539
1.45%		1,912		-		61,866		1,083		44,253		65,708		110,891		104,624
1.5%		3,041		-		60,499		1,674		23,641		57,454		17,710		46,554
1.55%		10,653		-		381,858		23,762		322,221		474,039		241,926		592,990
1.6%		912		-		15,327		5,042		2,376		268		8,868		5,444
1.65%		15,524		-		121,511		1,489		91,267		72,633		82,010		153,558
1.7%		420		-		58,998		387		33,215		88,516		9,097		46,688
1.75%		17,069		-		1,122,482		17,894		579,070		1,168,073		427,550		1,150,938
1.8%		1,492		-		109,799		6,929		23,635		50,628		47,589		71,424
1.85%		1,394		-		38,578		186		70,638		118,280		21,464		40,413
1.9%		1,116		-		9,797		59		92,173		304,047		6,436		89,133
1.95%		7,591		-		146,065		5,485		53,439		149,560		68,676		144,786
2%		3,293		-		382,197		6,740		143,856		138,169		155,414		181,867
2.05%		591		-		44,505		631		55,847		41,589		5,287		20,064
2.1%		1,440		-		64,667		5,545		45,447		77,561		125,490		53,848
2.15%		2,894		-		293,693		114		105,865		113,190		3,832		59,244
2.2%		1,982		-		75,078		5,786		139,221		137,640		35,231		89,496
2.25%		315		-		131,551		-		188,496		34,598		24,062		3,965
2.3%		1,383		-		14,717		273		87,526		144,124		15,956		41,935
2.35%		1,628		-		931,713		1,810		654,038		141,519		40,215		60,273
2.4%		171		-		80,919		-		123,796		33,021		8,855		19,008
2.45%		407		-		45,172		86		74,689		31,110		4,715		8,369
2.5%		846		-		2,755		-		1,643,027		178,304		37,251		11,772
2.55%		553		-		71,464		686		49,497		42,127		10,190		17,044
2.6%		-		-		41,544		320		15,455		-		5,205		1,036
2.65%		915		-		1,858		-		1,580		-		1,066		1,822
2.7%		-		-		16,249		-		76,302		11,220		3,059		-
2.75%		24		-		4,802		-		8,175		-		-		3,205
2.8%		-		-		1,990		-		249		593		-		-
2.85%		-		-		663		-		15,495		6,039		902		1,551
2.9%		-		-		5,065		-		-		-		-		328
2.95%		-		-		699		-		4,032		3,212		668		3,864
3%		-		-		-		-		373		690		-		-
3.05%		-		-		520		-		2,802		-		777		-
3.1%		-		-		735		-		941		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		59		-		-		-		-		-
3.25%		-		-		362		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	91,964	$	21,557	$	4,996,722	$	116,195	$	5,376,582	$	4,758,415	$	1,979,842	$	4,251,068
	NVCMA2		NVCMC2		NVCBD1		NVCBD2		NVLCP2		TRF		TRF2		GVGF2
0.45%	$	-	$	8	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		503		-		-		720		-
0.75%		-		-		-		1,761		69		-		2,989		-
0.8%		49		7		66		-		141		20,251		-		-
0.85%		-		-		-		5,383		171		-		6,856		-
0.9%		-		1		-		-		-		-		-		-
0.95%		-		-		-		1,391		-		-		799		201
1.05%		-		-		-		1,357		17		-		1,547		-
1.1%		46,394		77,343		-		18,471		1,961		-		50,372		-
1.15%		405,313		193,778		-		130,232		9,360		-		451,097		1,992
1.2%		-		1,436		-		1,426		-		-		4,649		303
1.25%		19,006		24,232		-		10,096		743		-		27,695		1,300
1.3%		36,301		24,121		13,879		2,142		2,924		1,304,710		6,320		-
1.35%		82,361		35,415		-		36,473		1,341		-		103,864		-
1.4%		8,932		4,811		5,696		19,785		6,267		472,398		47,952		134
1.45%		58,537		28,170		-		20,247		3,036		-		64,512		403
1.5%		30,077		24,748		-		19,627		987		-		63,929		162
1.55%		355,634		227,282		-		107,555		14,953		-		421,046		881
1.6%		93		2,522		-		8,045		1,070		-		14,707		50
1.65%		106,665		46,206		-		40,654		9,355		-		128,141		199
1.7%		9,624		17,577		-		23,227		1,302		-		63,572		-
1.75%		679,743		308,061		-		324,814		14,298		-		1,182,230		38
1.8%		19,285		42,498		-		40,892		1,859		-		117,141		3,203
1.85%		31,062		19,553		-		16,490		4,166		-		42,868		57
1.9%		14,503		39,022		-		3,673		1,821		-		12,481		-
1.95%		56,789		29,466		-		40,226		5,646		-		154,487		14
2%		192,532		77,098		-		149,057		4,568		-		372,649		7
2.05%		11,898		3,862		-		16,486		274		-		47,455		-
2.1%		17,306		32,095		-		17,157		629		-		70,655		80
2.15%		34,919		26,117		-		84,258		3,398		-		312,762		6
2.2%		80,357		38,309		-		29,481		5,940		-		72,626		-
2.25%		714		25,578		-		66,102		1,037		-		118,348		-
2.3%		58,189		54,967		-		4,211		2,226		-		13,775		-
2.35%		27,741		33,212		-		411,109		3,452		-		888,521		-
2.4%		7,695		23,804		-		26,763		535		-		84,849		-
2.45%		8,036		1,958		-		21,484		31		-		42,416		-
2.5%		10,963		81,694		-		3,005		693		-		3,026		-
2.55%		735		5,142		-		29,069		48		-		70,749		-
2.6%		3,067		7,323		-		18,752		-		-		39,232		-
2.65%		-		1,964		-		618		-		-		1,851		-
2.7%		1,506		33,475		-		6,628		1,613		-		17,345		-
2.75%		-		1,105		-		2,574		-		-		5,419		-
2.8%		-		-		-		1,150		-		-		1,922		-
2.85%		-		4,742		-		269		-		-		725		-
2.9%		-		856		-		1,757		-		-		4,925		-
2.95%		-		19,909		-		150		-		-		738		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		157		-		-		515		-
3.1%		-		-		-		-		-		-		773		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		62		-
3.25%		-		-		-		188		-		-		316		-
3.3%		-		-		-		-		-		-		-		-
	$	2,416,026	$	1,619,467	$	19,641	$	1,764,895	$	105,931	$	1,797,359	$	5,141,628	$	9,030

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	GVGFS		GBF		CAF		GVGH2		GVGHS		GVGH6		GVIX8		GVIDA
0.45%	$	-	$	2	$	-	$	-	$	-	$	-	$	1	$	-
0.65%		-		1,035		-		-		-		-		-		-
0.75%		-		5,988		-		-		-		-		-		-
0.8%		222		3,943		4,483		-		109		-		26		3,459
0.85%		-		13,317		-		-		-		-		175		778
0.9%		-		-		-		-		-		-		-		-
0.95%		-		17,685		-		228		-		781		701		917
1.05%		-		13,087		-		-		-		965		1,285		1,526
1.1%		-		71,245		-		48		-		661		670		8,374
1.15%		-		902,627		-		2,438		-		29,760		16,957		206,757
1.2%		-		6,420		-		-		-		50		230		3,114
1.25%		-		92,318		-		3,673		-		4,434		605		38,013
1.3%		21,637		1,373,801		317,512		-		39,583		64		12,010		133,479
1.35%		-		207,605		-		-		-		6,883		4,374		55,899
1.4%		5,582		702,360		103,970		392		14,673		1,819		9,764		64,135
1.45%		-		185,627		-		643		-		6,948		4,236		37,559
1.5%		-		147,122		-		744		-		5,900		3,118		74,062
1.55%		-		769,564		-		2,651		-		36,579		15,092		157,212
1.6%		-		38,114		-		-		-		2,849		736		23,870
1.65%		-		307,019		-		973		-		18,624		2,069		484,567
1.7%		-		113,115		-		851		-		5,120		1,485		64,796
1.75%		-		1,597,274		-		304		-		21,202		16,649		848,913
1.8%		-		283,223		-		3,624		-		20,477		11,570		68,853
1.85%		-		85,055		-		1,250		-		4,372		779		123,893
1.9%		-		24,826		-		191		-		2,108		519		208,862
1.95%		-		200,557		-		16		-		2,098		3,604		261,743
2%		-		549,244		-		-		-		7,062		9,114		444,778
2.05%		-		71,956		-		245		-		1,129		687		344,183
2.1%		-		118,301		-		166		-		9,806		1,175		195,131
2.15%		-		377,377		-		8		-		871		2,108		424,645
2.2%		-		157,803		-		118		-		3,019		1,176		58,116
2.25%		-		193,900		-		-		-		19		584		645,356
2.3%		-		25,658		-		-		-		1,006		1,072		168,734
2.35%		-		1,243,485		-		-		-		390		3,055		810,641
2.4%		-		118,904		-		36		-		1,278		124		60,492
2.45%		-		62,401		-		-		-		2,305		171		155,671
2.5%		-		18,618		-		-		-		35		674		50,609
2.55%		-		95,463		-		-		-		68		-		167,776
2.6%		-		58,471		-		-		-		123		144		114,592
2.65%		-		9,740		-		-		-		110		-		23,980
2.7%		-		24,851		-		-		-		19		-		58,806
2.75%		-		23,731		-		-		-		131		136		7,041
2.8%		-		6,096		-		-		-		-		-		30,936
2.85%		-		791		-		-		-		-		-		2,508
2.9%		-		7,018		-		-		-		-		-		16,990
2.95%		-		894		-		-		-		-		-		1,417
3%		-		-		-		-		-		-		-		7,016
3.05%		-		625		-		-		-		-		-		6,242
3.1%		-		711		-		-		-		-		-		5,304
3.15%		-		-		-		-		-		-		-		-
3.2%		-		57		-		-		-		-		-		-
3.25%		-		488		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	27,441	$	10,329,512	$	425,965	$	18,599	$	54,365	$	199,065	$	126,875	$	6,671,745

	NVDBL2		NVDCA2		GVIDC		GVIDM		GVDMA		GVDMC		GVUSL		MCIF
0.45%	$	-	$	23	$	-	$	1	$	-	$	10	$	-	$	1
0.65%		25		187		2,016		2,055		1,570		1,401		-		-
0.75%		80		1,118		979		4,669		1,130		3,460		-		-
0.8%		-		-		126		6,164		5,522		2,591		398		1,586
0.85%		37		-		-		6,250		1,687		2,611		-		69
0.9%		-		-		-		5		-		-		-		-
0.95%		-		-		2,042		8,713		7,011		3,399		-		943
1.05%		-		-		1,302		5,307		8,567		876		-		1,221
1.1%		24,831		29,000		61,249		325,425		153,389		102,709		-		3,154
1.15%		52,493		85,823		493,767		2,654,672		2,086,964		818,714		-		94,029
1.2%		-		-		12,784		21,636		42,110		5,324		-		1,231
1.25%		4,317		7,559		60,764		329,112		212,580		137,193		-		22,958
1.3%		3,720		3,474		114,721		452,516		341,302		128,815		28,754		340,187
1.35%		6,422		18,655		81,174		653,215		455,826		229,208		-		27,263
1.4%		246		399		139,302		482,048		336,049		164,900		5,540		112,868
1.45%		905		18,020		103,888		339,729		289,935		165,555		-		30,948
1.5%		2,542		9,306		58,794		345,380		229,445		109,560		-		15,456
1.55%		33,861		84,211		475,967		2,080,423		1,877,163		628,296		-		83,899
1.6%		1,103		2,583		16,522		167,006		79,849		47,616		-		8,025
1.65%		4,196		10,793		215,146		1,423,619		1,324,374		312,671		-		36,792
1.7%		120		917		24,687		292,403		203,697		56,440		-		11,476
1.75%		39,479		111,185		588,860		5,908,812		5,286,305		1,307,300		-		64,506
1.8%		961		4,133		283,935		632,639		444,320		308,437		-		31,971
1.85%		125		2,851		79,323		348,988		383,984		89,428		-		10,286
1.9%		4,977		355		69,337		395,883		359,478		143,145		-		6,198
1.95%		9,281		32,240		72,059		981,392		1,022,177		194,813		-		19,476
2%		8,816		13,376		318,018		3,620,843		1,029,120		686,864		-		33,280
2.05%		134		132		25,881		604,869		597,376		127,065		-		27,892
2.1%		8,904		10,321		67,209		395,853		482,413		70,760		-		8,018
2.15%		1,649		3,315		49,540		1,854,524		1,532,580		377,467		-		13,429
2.2%		1,573		982		97,005		680,498		258,535		117,312		-		9,074
2.25%		6,047		-		32,332		871,087		554,463		541,506		-		6,406
2.3%		3,211		410		28,148		218,494		276,076		55,985		-		8,034
2.35%		479		2,289		125,904		5,720,546		1,527,179		1,682,125		-		13,106
2.4%		622		-		20,072		442,812		255,665		205,577		-		2,700
2.45%		4		668		18,098		204,611		134,160		68,630		-		2,261
2.5%		12,616		-		40,886		520,949		164,662		338,333		-		5,256
2.55%		1,468		1,894		32,209		587,744		200,419		105,332		-		390
2.6%		991		-		13,112		202,341		98,440		29,248		-		196
2.65%		-		94		3,036		12,311		34,353		158		-		528
2.7%		24		-		3,819		198,014		70,374		68,647		-		407
2.75%		-		-		3,855		23,089		23,875		5,327		-		354
2.8%		-		-		1,756		17,765		20,743		10,980		-		4,054
2.85%		-		-		-		15,120		3,579		4,836		-		-
2.9%		-		-		634		46,072		36,893		7,944		-		-
2.95%		327		-		-		10,614		3,362		5,797		-		90
3%		-		-		-		2,095		27,950		10,230		-		-
3.05%		1,328		-		-		1,725		10,325		839		-		267
3.1%		-		-		-		9,765		4,910		-		-		-
3.15%		-		-		-		-		399		-		-		-
3.2%		-		-		-		-		-		1,880		-		-
3.25%		-		-		-		6,586		514		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	237,914	$	456,313	$	3,840,258	$	34,136,389	$	22,502,799	$	9,487,314	$	34,692	$	1,060,285

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	SAM		NVMIG3		NVMIG6		GVDIV2		GVDIV3		GVDIV6		NVMLG1		NVMLG2
0.45%	$	4	$	-	$	1	$	-	$	-	$	1	$	-	$	-
0.65%		224		-		589		-		-		52		-		223
0.75%		1,486		-		2,723		-		-		275		-		945
0.8%		19,795		765		-		-		191		-		83		-
0.85%		1,813		-		5,748		-		-		540		-		2,075
0.9%		-		-		-		-		-		-		-		-
0.95%		13,010		-		427		464		-		3,315		-		198
1.05%		9,624		-		654		9		-		2,012		-		443
1.1%		66,473		-		41,902		-		-		15,216		-		13,413
1.15%		811,896		-		376,030		2,432		-		130,168		-		118,289
1.2%		2,221		-		3,828		-		-		1,468		-		1,577
1.25%		118,606		-		23,660		632		-		11,921		-		8,545
1.3%		2,626,348		172,432		5,035		-		78,188		2,556		13,804		1,675
1.35%		205,179		-		82,341		-		-		29,133		-		26,334
1.4%		1,356,887		77,182		40,382		448		34,400		10,984		4,145		13,073
1.45%		295,630		-		58,577		438		-		20,440		-		17,393
1.5%		303,215		-		51,320		708		-		21,892		-		17,293
1.55%		898,466		-		354,273		4,295		-		119,095		-		116,929
1.6%		70,603		-		10,990		187		-		5,030		-		4,182
1.65%		294,838		-		106,624		484		-		34,250		-		35,794
1.7%		102,808		-		50,300		80		-		18,829		-		18,724
1.75%		708,763		-		971,746		93		-		226,517		-		305,898
1.8%		521,821		-		99,964		863		-		32,208		-		33,821
1.85%		141,076		-		35,737		632		-		13,951		-		11,508
1.9%		56,229		-		8,866		401		-		8,967		-		3,481
1.95%		130,641		-		128,651		170		-		31,650		-		41,530
2%		375,287		-		307,722		-		-		63,719		-		95,799
2.05%		101,325		-		38,031		1,527		-		15,714		-		13,304
2.1%		138,730		-		60,542		590		-		17,988		-		21,204
2.15%		177,580		-		252,469		95		-		38,943		-		82,255
2.2%		149,827		-		59,959		-		-		13,261		-		18,439
2.25%		98,177		-		92,656		-		-		19,154		-		28,030
2.3%		49,297		-		10,996		-		-		11,651		-		4,844
2.35%		276,722		-		686,373		-		-		118,363		-		205,416
2.4%		41,890		-		68,052		-		-		10,289		-		21,392
2.45%		87,212		-		34,865		-		-		6,330		-		10,223
2.5%		42,936		-		2,766		-		-		11,150		-		3,909
2.55%		21,436		-		53,692		-		-		7,915		-		16,507
2.6%		20,501		-		29,564		-		-		5,881		-		8,953
2.65%		3,657		-		1,735		-		-		949		-		508
2.7%		4,149		-		12,656		-		-		2,189		-		3,966
2.75%		8,682		-		4,730		-		-		1,164		-		1,364
2.8%		8,651		-		1,578		-		-		1,382		-		563
2.85%		1,625		-		508		-		-		62		-		157
2.9%		1,472		-		4,066		-		-		1,330		-		1,258
2.95%		185		-		625		-		-		69		-		194
3%		-		-		-		-		-		-		-		-
3.05%		304		-		443		-		-		54		-		136
3.1%		-		-		788		-		-		83		-		260
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		63		-		-		6		-		20
3.25%		115		-		248		-		-		41		-		72
3.3%		15		-		-		-		-		27		-		-
	$	10,367,431	$	250,379	$	4,185,495	$	14,548	$	112,779	$	1,088,184	$	18,032	$	1,332,116
	NVMLV2		NVMMG1		NVMMG2		NVMMV2		SCGF		SCGF2		SCVF		SCVF2
0.45%	$	1	$	-	$	-	$	1	$	-	$	1	$	-	$	-
0.65%		-		-		305		335		-		-		-		-
0.75%		157		-		1,369		1,598		-		-		-		-
0.8%		42		1,839		-		1,104		151		-		2,227		-
0.85%		-		-		2,894		3,265		-		-		-		273
0.9%		1		-		-		-		-		-		-		-
0.95%		297		-		1,835		3		-		152		-		790
1.05%		251		-		1,620		-		-		-		-		147
1.1%		2,769		-		24,784		25,062		-		742		-		1,223
1.15%		25,679		-		231,569		210,961		-		25,010		-		43,373
1.2%		684		-		2,113		2,099		-		15		-		361
1.25%		7,069		-		20,722		12,948		-		5,084		-		17,592
1.3%		7,864		818,037		2,558		660,787		53,459		107		325,466		98
1.35%		5,929		-		56,525		50,715		-		3,666		-		15,507
1.4%		5,283		178,399		22,111		226,617		11,648		2,503		125,491		2,989
1.45%		6,780		-		37,758		31,572		-		9,370		-		18,487
1.5%		9,317		-		34,998		28,424		-		6,148		-		6,894
1.55%		36,939		-		215,202		204,549		-		26,946		-		56,975
1.6%		2,277		-		6,773		6,058		-		1,678		-		3,150
1.65%		13,041		-		78,035		61,265		-		6,478		-		16,098
1.7%		6,388		-		31,168		29,660		-		4,732		-		4,780
1.75%		59,623		-		529,815		570,936		-		18,357		-		23,776
1.8%		20,433		-		60,962		54,999		-		7,288		-		25,364
1.85%		7,957		-		25,099		20,604		-		2,730		-		8,645
1.9%		1,466		-		9,951		5,701		-		1,845		-		6,350
1.95%		8,384		-		73,951		77,940		-		4,741		-		7,375
2%		12,310		-		163,722		167,743		-		3,441		-		24,952
2.05%		6,972		-		22,400		22,448		-		1,763		-		2,454
2.1%		3,837		-		33,965		35,436		-		1,945		-		5,362
2.15%		6,462		-		134,433		150,848		-		2,005		-		3,273
2.2%		3,065		-		33,344		33,778		-		938		-		2,167
2.25%		3,370		-		57,946		52,840		-		1,854		-		1,728
2.3%		3,094		-		8,403		6,942		-		563		-		3,581
2.35%		3,964		-		369,498		370,545		-		4,527		-		5,461
2.4%		956		-		37,493		40,153		-		614		-		394
2.45%		1,149		-		22,144		19,501		-		45		-		2,510
2.5%		8,229		-		6,776		6,006		-		2,001		-		968
2.55%		176		-		27,259		29,607		-		-		-		406
2.6%		570		-		17,964		15,675		-		117		-		165
2.65%		778		-		879		760		-		160		-		-
2.7%		273		-		6,778		6,934		-		-		-		245
2.75%		22		-		2,698		2,482		-		-		-		-
2.8%		44		-		1,340		832		-		-		-		10,185
2.85%		-		-		223		280		-		-		-		-
2.9%		-		-		2,209		2,268		-		-		-		21
2.95%		91		-		324		362		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		234		263		-		-		-		-
3.1%		-		-		403		463		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		32		36		-		-		-		-
3.25%		-		-		140		130		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	283,993	$	998,275	$	2,422,724	$	3,253,535	$	65,258	$	147,566	$	453,184	$	324,119

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	SCF		SCF2		MSBF		NVSTB2		GGTC		GGTC2		GGTC3		GGTC6
0.45%	$	-	$	-	$	3	$	2	$	-	$	-	$	-	$	-
0.65%		-		1		-		-		-		-		-		-
0.75%		-		4		-		-		-		-		-		-
0.8%		5,617		-		134		110		5		-		208		-
0.85%		-		15		9		522		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		-		3,633		4,253		472		-		-		-		192
1.05%		-		1,910		4,151		778		-		-		-		352
1.1%		-		4,658		6,811		13,245		-		12		-		527
1.15%		-		105,134		87,511		85,618		-		2,227		-		17,570
1.2%		-		602		424		292		-		-		-		78
1.25%		-		29,874		22,722		5,274		-		1,734		-		2,724
1.3%		690,827		1,867		128,073		43,634		1,644		-		37,645		3
1.35%		-		45,782		26,677		17,503		-		-		-		4,990
1.4%		321,106		6,164		66,019		19,240		283		195		12,786		1,316
1.45%		-		32,696		45,076		26,001		-		196		-		4,424
1.5%		-		22,691		16,540		15,657		-		316		-		2,488
1.55%		-		74,368		85,754		75,262		-		802		-		21,929
1.6%		-		5,871		12,259		6,044		-		47		-		1,020
1.65%		-		31,343		37,591		18,974		-		404		-		22,341
1.7%		-		22,532		10,656		8,958		-		178		-		8,278
1.75%		-		63,878		113,364		117,029		-		181		-		11,785
1.8%		-		26,706		36,292		14,507		-		548		-		7,926
1.85%		-		8,075		14,487		14,580		-		288		-		2,111
1.9%		-		10,516		9,828		13,231		-		796		-		674
1.95%		-		11,696		21,935		16,308		-		555		-		6,449
2%		-		14,445		20,091		31,751		-		7		-		7,859
2.05%		-		5,665		10,118		12,288		-		56		-		353
2.1%		-		5,828		9,646		13,951		-		76		-		4,426
2.15%		-		7,603		10,256		11,952		-		360		-		2,784
2.2%		-		3,201		9,541		17,795		-		-		-		2,956
2.25%		-		1,683		14,527		11,102		-		-		-		412
2.3%		-		4,498		5,245		8,722		-		-		-		1,040
2.35%		-		7,515		52,489		32,479		-		-		-		1,172
2.4%		-		1,239		4,238		8,730		-		-		-		891
2.45%		-		418		5,766		6,745		-		329		-		1,097
2.5%		-		950		37,755		48,103		-		-		-		68
2.55%		-		959		1,166		2,945		-		-		-		432
2.6%		-		312		4,837		5,876		-		-		-		-
2.65%		-		16		-		2,035		-		-		-		72
2.7%		-		185		699		2,281		-		-		-		81
2.75%		-		14		697		1,931		-		-		-		488
2.8%		-		198		513		297		-		-		-		70
2.85%		-		290		1,423		559		-		-		-		-
2.9%		-		428		-		672		-		-		-		-
2.95%		-		100		145		133		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		1		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		1		-		-		-		-		-		-
3.3%		-		-		-		36		-		-		-		-
	$	1,017,550	$	565,565	$	939,721	$	733,624	$	1,932	$	9,307	$	50,639	$	141,378
	GVUG2		GVUGL		NVOLG1		NVOLG2		NVTIV3		EIF2		NVRE1		NVRE2
0.45%	$	-	$	-	$	-	$	-	$	3	$	1	$	-	$	-
0.65%		-		-		-		-		481		34		-		-
0.75%		-		-		-		-		1,882		474		-		79
0.8%		-		112		13		-		-		117		1,475		-
0.85%		-		-		-		-		4,399		849		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		134		-		-		-		-		281		-		2,131
1.05%		-		-		-		50		-		124		-		458
1.1%		363		-		-		383		28,062		17,037		-		1,501
1.15%		25,502		-		-		1,229		240,925		146,276		-		61,437
1.2%		589		-		-		-		2,275		1,581		-		159
1.25%		3,836		-		-		68		13,264		22,488		-		9,217
1.3%		-		24,135		601		105		14,029		46,836		201,369		333
1.35%		11,236		-		-		122		53,505		31,805		-		15,298
1.4%		1,133		8,365		690		77		26,013		24,462		91,275		3,329
1.45%		6,658		-		-		44		32,967		23,122		-		14,048
1.5%		8,964		-		-		113		31,342		52,963		-		10,884
1.55%		38,070		-		-		1,378		220,337		162,615		-		51,674
1.6%		3,205		-		-		39		5,946		10,980		-		2,377
1.65%		14,899		-		-		318		64,314		45,101		-		12,373
1.7%		3,581		-		-		20		31,882		36,977		-		4,353
1.75%		32,486		-		-		856		633,272		324,423		-		38,517
1.8%		17,600		-		-		41		58,606		52,487		-		21,421
1.85%		3,102		-		-		27		20,028		20,121		-		5,958
1.9%		4,063		-		-		59		5,270		10,077		-		1,915
1.95%		5,368		-		-		68		86,440		50,599		-		5,293
2%		6,448		-		-		114		189,373		89,200		-		6,979
2.05%		6,346		-		-		-		23,712		17,483		-		2,741
2.1%		3,053		-		-		-		40,226		33,230		-		6,883
2.15%		5,319		-		-		-		163,196		74,223		-		1,827
2.2%		4,449		-		-		131		36,971		24,814		-		4,659
2.25%		1,292		-		-		23		53,215		13,784		-		664
2.3%		450		-		-		-		8,936		13,340		-		2,119
2.35%		2,219		-		-		-		417,452		103,701		-		859
2.4%		1,863		-		-		-		43,525		17,250		-		1,249
2.45%		2,099		-		-		43		22,410		8,223		-		1,154
2.5%		2,707		-		-		-		1,197		13,135		-		75
2.55%		563		-		-		-		34,016		11,227		-		220
2.6%		321		-		-		-		17,523		3,916		-		-
2.65%		-		-		-		-		1,125		1,479		-		38
2.7%		242		-		-		-		7,785		2,194		-		36
2.75%		1		-		-		-		2,447		2,391		-		-
2.8%		177		-		-		-		986		1,220		-		150
2.85%		-		-		-		-		340		67		-		-
2.9%		28		-		-		-		2,581		888		-		-
2.95%		84		-		-		-		395		320		-		-
3%		-		-		-		-		-		113		-		-
3.05%		-		-		-		-		283		88		-		-
3.1%		-		-		-		-		517		281		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		41		22		-		-
3.25%		-		-		-		-		144		13		-		-
3.3%		-		-		-		-		-		-		-		-
	$	218,450	$	32,612	$	1,304	$	5,308	$	2,643,638	$	1,514,432	$	294,119	$	292,408

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	AMTB		PMVFAD		PMVLAD		AVBV2		AVCA2		AVCD2		ALVGIB		ALVSVB
0.45%	$	-	$	-	$	2	$	-	$	-	$	-	$	-	$	-
0.65%		678		-		189		-		-		-		-		-
0.75%		4,558		79		862		-		-		-		-		-
0.8%		241		41		16		5		104		111		-		36
0.85%		7,437		100		1,973		-		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		6,865		-		2,418		390		779		1,029		2,166		1,047
1.05%		1,071		-		434		85		1,421		142		1,697		1,703
1.1%		45,547		317		12,848		1,341		548		1,638		432		4,504
1.15%		374,157		11,508		94,519		24,687		11,552		24,378		12,079		21,068
1.2%		4,202		25		761		933		-		303		694		320
1.25%		34,060		759		7,783		8,448		2,984		7,947		13,155		5,907
1.3%		306,772		2,713		16,775		6,013		3,450		6,946		1,391		7,332
1.35%		74,423		1,077		20,897		5,288		1,179		6,846		64		3,980
1.4%		195,600		1,503		19,676		4,868		2,489		4,497		1,524		5,500
1.45%		79,974		735		15,304		7,321		2,844		8,543		11,607		6,418
1.5%		68,193		859		16,055		10,950		5,668		6,410		11,270		6,810
1.55%		375,464		5,715		96,983		32,984		14,126		28,195		19,560		32,542
1.6%		10,197		248		5,702		2,442		996		2,517		2,885		1,329
1.65%		139,733		704		28,759		14,777		3,977		10,673		8,930		13,539
1.7%		61,493		40		12,189		9,051		4,362		4,204		3,248		9,673
1.75%		805,165		2,551		238,263		22,838		13,976		36,933		8,202		26,460
1.8%		140,918		813		23,558		23,025		5,896		8,758		15,848		19,000
1.85%		48,133		60		8,950		7,478		4,857		4,605		1,369		4,255
1.9%		21,988		43		6,034		1,633		4,050		2,426		3,100		2,682
1.95%		104,076		720		36,282		5,341		3,012		11,963		2,341		8,033
2%		388,105		1,973		72,121		8,088		4,527		7,690		1,702		8,115
2.05%		50,648		141		9,616		8,364		5,052		7,452		2,338		1,766
2.1%		55,233		592		13,827		3,947		2,301		14,787		2,490		2,398
2.15%		189,465		2		55,658		7,391		4,317		14,474		1,655		5,903
2.2%		90,276		752		28,303		1,270		414		3,123		47		1,249
2.25%		155,299		-		23,129		4,804		3,153		2,422		754		1,417
2.3%		16,874		70		4,479		2,303		1,496		6,694		2,385		6,472
2.35%		916,232		-		162,942		4,265		5,069		10,448		20		5,546
2.4%		63,894		94		15,348		1,183		1,080		2,518		584		2,244
2.45%		45,921		36		12,913		940		808		3,655		-		525
2.5%		16,712		-		740		472		1,678		6,415		-		6,756
2.55%		61,204		-		12,254		140		287		2,323		83		420
2.6%		42,393		-		6,960		1,072		1,001		140		511		1,363
2.65%		2,209		-		749		88		-		3		-		3
2.7%		14,830		-		2,815		134		96		236		-		230
2.75%		10,583		-		1,166		3		-		2,198		-		488
2.8%		17,477		-		346		61		385		-		133		187
2.85%		1,075		-		111		-		13		486		-		3
2.9%		3,814		-		909		-		-		-		-		34
2.95%		453		-		138		115		651		337		-		-
3%		-		-		-		-		-		66		-		-
3.05%		629		-		100		-		-		-		-		-
3.1%		78		-		164		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		6		-		13		-		-		-		-		-
3.25%		388		-		62		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	5,054,743	$	34,270	$	1,092,095	$	234,538	$	120,598	$	264,531	$	134,264	$	227,257
	CHSMM		ACVB		ACVCA		ACVIG		ACVIG2		ACVIP2		ACVI		ACVI2
0.45%	$	-	$	-	$	-	$	-	$	-	$	3	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		2,146		-		-		-		-		579		-		-
0.8%		-		1,342		847		278		-		1,428		662		-
0.85%		22,545		-		-		-		-		6,041		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		86,288		-		-		-		4,190		11,047		-		46
1.05%		97,624		-		-		-		3,140		6,615		-		-
1.1%		-		-		-		-		-		15,687		-		190
1.15%		-		-		-		-		13,131		224,106		-		2,901
1.2%		-		-		-		-		7		2,435		-		119
1.25%		-		-		-		-		4,874		53,404		-		1,166
1.3%		-		366,270		472,190		150,418		-		236,796		122,141		-
1.35%		2,834		-		-		-		277		43,648		-		-
1.4%		-		167,925		95,413		52,614		2,703		134,233		81,363		493
1.45%		3,022		-		-		-		5,283		74,231		-		958
1.5%		-		-		-		-		2,966		45,053		-		1,494
1.55%		1,556		-		-		-		17,938		267,605		-		983
1.6%		-		-		-		-		1,040		36,786		-		410
1.65%		-		-		-		-		3,845		93,479		-		574
1.7%		-		-		-		-		664		19,298		-		704
1.75%		-		-		-		-		2,011		225,618		-		135
1.8%		-		-		-		-		8,053		98,255		-		1,133
1.85%		89		-		-		-		2,596		38,416		-		313
1.9%		-		-		-		-		1,236		11,516		-		137
1.95%		-		-		-		-		4,240		44,972		-		122
2%		-		-		-		-		373		89,364		-		-
2.05%		-		-		-		-		1,370		25,493		-		932
2.1%		-		-		-		-		6,209		81,395		-		174
2.15%		-		-		-		-		158		31,272		-		188
2.2%		-		-		-		-		417		103,787		-		-
2.25%		-		-		-		-		33		23,413		-		-
2.3%		-		-		-		-		144		30,021		-		-
2.35%		-		-		-		-		95		47,586		-		-
2.4%		-		-		-		-		171		7,496		-		-
2.45%		-		-		-		-		-		11,640		-		-
2.5%		-		-		-		-		-		34,093		-		-
2.55%		-		-		-		-		119		7,085		-		-
2.6%		-		-		-		-		551		8,834		-		-
2.65%		-		-		-		-		-		141		-		-
2.7%		-		-		-		-		-		239		-		-
2.75%		-		-		-		-		-		148		-		-
2.8%		-		-		-		-		23		493		-		-
2.85%		-		-		-		-		-		467		-		-
2.9%		-		-		-		-		-		825		-		-
2.95%		-		-		-		-		-		301		-		-
3%		-		-		-		-		-		80		-		-
3.05%		-		-		-		-		-		260		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		52		-		-
	$	216,104	$	535,537	$	568,450	$	203,310	$	87,857	$	2,195,736	$	204,166	$	13,172

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	ACVI3		ACVI4		ACVMV1		ACVMV2		ACVU1		ACVU2		ACVV		ACVV2
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		428		-		-		-		384
0.8%		345		-		959		-		57		-		2,213		-
0.85%		-		-		-		276		-		-		-		2,234
0.9%		-		-		-		-		-		-		-		-
0.95%		-		559		-		140		-		330		-		3,366
1.05%		-		896		-		488		-		631		-		4,227
1.1%		-		872		-		5,802		-		527		-		13,992
1.15%		-		13,729		-		55,196		-		6,201		-		157,730
1.2%		-		240		-		207		-		727		-		916
1.25%		-		3,251		-		7,031		-		2,696		-		36,344
1.3%		93,074		218		38,305		409		11,552		10		538,908		1,153
1.35%		-		2,681		-		15,884		-		1,588		-		60,632
1.4%		22,960		1,489		18,601		6,605		4,034		1,379		214,373		22,692
1.45%		-		4,097		-		17,507		-		2,257		-		45,580
1.5%		-		1,000		-		10,026		-		2,680		-		28,408
1.55%		-		15,667		-		74,273		-		7,427		-		123,625
1.6%		-		1,424		-		3,972		-		1,607		-		12,430
1.65%		-		2,840		-		15,753		-		5,137		-		61,927
1.7%		-		744		-		8,084		-		5,164		-		22,946
1.75%		-		7,781		-		80,930		-		6,108		-		137,297
1.8%		-		6,432		-		22,811		-		5,259		-		66,200
1.85%		-		3,957		-		10,958		-		1,671		-		26,812
1.9%		-		927		-		5,375		-		1,053		-		15,604
1.95%		-		1,623		-		20,057		-		2,797		-		21,298
2%		-		2,840		-		15,965		-		2,731		-		29,893
2.05%		-		1,274		-		3,474		-		3,505		-		26,089
2.1%		-		552		-		17,648		-		2,659		-		15,603
2.15%		-		1,236		-		17,161		-		6,470		-		33,861
2.2%		-		471		-		37,765		-		418		-		8,368
2.25%		-		1,307		-		3,876		-		3,535		-		15,861
2.3%		-		84		-		5,276		-		880		-		13,282
2.35%		-		2,236		-		16,258		-		1,512		-		36,659
2.4%		-		270		-		3,179		-		816		-		10,909
2.45%		-		348		-		2,690		-		138		-		6,065
2.5%		-		-		-		17,885		-		1,625		-		15,184
2.55%		-		-		-		1,327		-		308		-		1,059
2.6%		-		-		-		1,469		-		172		-		2,622
2.65%		-		78		-		672		-		49		-		403
2.7%		-		16		-		3,076		-		208		-		3,408
2.75%		-		92		-		-		-		-		-		137
2.8%		-		151		-		346		-		247		-		5,676
2.85%		-		-		-		476		-		-		-		1,146
2.9%		-		-		-		69		-		32		-		1,739
2.95%		-		-		-		128		-		-		-		143
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		32		-		-		-		37
	$	116,379	$	81,382	$	57,865	$	510,984	$	15,643	$	80,554	$	755,494	$	1,093,941
	ACVVS1		ACVVS2		DVSCS		DSIF		DSIFS		DSRG		DCAP		DCAPS
0.45%	$	-	$	-	$	1	$	-	$	3	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		25		-		115		-		-		388
0.8%		284		-		339		7,156		-		1,908		777		-
0.85%		-		-		69		-		1,409		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		-		289		2,384		-		15,720		-		-		3,240
1.05%		-		510		2,544		-		11,540		-		-		1,940
1.1%		-		1,289		2,943		-		7,298		-		-		2,145
1.15%		-		12,295		63,893		-		221,241		-		-		34,928
1.2%		-		25		612		-		8,542		-		-		25
1.25%		-		1,227		13,516		-		40,321		-		-		9,857
1.3%		21,374		232		101,409		2,053,318		1,250		414,162		230,282		660
1.35%		-		2,990		13,005		-		45,283		-		-		6,321
1.4%		6,284		1,497		36,283		1,026,343		37,109		114,708		88,340		4,639
1.45%		-		1,995		25,279		-		64,142		-		-		14,000
1.5%		-		3,532		13,660		-		44,701		-		-		12,252
1.55%		-		16,632		60,436		-		154,068		-		-		47,345
1.6%		-		1,026		4,883		-		19,176		-		-		1,825
1.65%		-		5,819		14,522		-		68,847		-		-		17,243
1.7%		-		2,792		3,329		-		12,360		-		-		6,382
1.75%		-		16,011		54,190		-		115,095		-		-		36,739
1.8%		-		6,075		34,258		-		53,178		-		-		13,400
1.85%		-		2,474		6,529		-		25,760		-		-		11,073
1.9%		-		780		4,860		-		15,744		-		-		4,128
1.95%		-		4,948		12,550		-		20,599		-		-		13,529
2%		-		3,768		13,204		-		58,349		-		-		8,715
2.05%		-		1,386		2,706		-		37,197		-		-		3,581
2.1%		-		867		7,960		-		14,736		-		-		4,940
2.15%		-		8,331		5,484		-		21,600		-		-		8,787
2.2%		-		1,178		5,145		-		8,865		-		-		1,690
2.25%		-		1,979		1,053		-		11,902		-		-		5,577
2.3%		-		492		4,026		-		9,086		-		-		6,986
2.35%		-		10,001		8,580		-		15,069		-		-		6,128
2.4%		-		2,675		1,212		-		13,558		-		-		1,471
2.45%		-		3,710		369		-		1,754		-		-		998
2.5%		-		314		3,454		-		9,865		-		-		8,100
2.55%		-		783		67		-		849		-		-		156
2.6%		-		2,943		2,422		-		3,500		-		-		4,552
2.65%		-		35		266		-		854		-		-		8
2.7%		-		179		23		-		2,059		-		-		426
2.75%		-		278		101		-		397		-		-		908
2.8%		-		814		74		-		14		-		-		707
2.85%		-		-		-		-		541		-		-		19
2.9%		-		-		24		-		-		-		-		-
2.95%		-		-		-		-		-		-		-		-
3%		-		-		-		-		-		-		-		66
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	27,942	$	122,171	$	527,689	$	3,086,817	$	1,193,696	$	530,778	$	319,399	$	305,874

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	DVDLS		DGI		FCA2S		FALFS		FVMOS		FQB		FQBS		FC2
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		-
0.8%		-		460		-		-		15		836		-		-
0.85%		-		-		-		-		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		325		-		148		48		-		-		2,840		1,838
1.05%		94		-		116		-		46		-		1,500		3,356
1.1%		-		-		856		-		192		-		2,446		20,572
1.15%		6,417		-		3,678		1,438		9,360		-		92,260		461,903
1.2%		-		-		261		574		278		-		8,120		4,988
1.25%		815		-		2,305		1,195		587		-		39,640		123,650
1.3%		-		126,490		-		-		30,212		111,838		1,055		6,598
1.35%		59		-		-		-		2,901		-		32,573		195,365
1.4%		216		54,926		452		23		18,879		52,550		7,874		53,686
1.45%		566		-		1,717		720		6,270		-		36,660		156,137
1.5%		317		-		1,948		1,284		1,131		-		33,274		126,906
1.55%		2,657		-		4,491		3,531		17,755		-		103,505		423,707
1.6%		144		-		973		1,155		2,680		-		8,686		52,722
1.65%		864		-		1,208		987		5,876		-		50,655		195,308
1.7%		729		-		916		506		4,101		-		17,761		59,927
1.75%		383		-		846		143		7,848		-		104,079		391,707
1.8%		1,130		-		1,383		456		11,792		-		88,182		195,253
1.85%		358		-		978		180		1,390		-		13,109		92,347
1.9%		-		-		674		188		119		-		6,618		23,534
1.95%		511		-		148		383		714		-		16,374		85,587
2%		73		-		42		-		11,564		-		22,984		100,184
2.05%		390		-		1,712		181		375		-		14,041		68,638
2.1%		75		-		33		91		2,422		-		11,622		71,048
2.15%		-		-		136		396		78		-		27,981		100,385
2.2%		-		-		99		-		1,030		-		6,921		32,161
2.25%		868		-		355		322		23		-		11,186		43,115
2.3%		-		-		12		-		1,724		-		6,790		26,949
2.35%		-		-		33		-		2,285		-		16,840		76,023
2.4%		194		-		-		39		-		-		5,170		17,449
2.45%		-		-		11		-		12		-		5,237		9,310
2.5%		-		-		-		-		-		-		718		9,047
2.55%		-		-		9		-		-		-		97		6,509
2.6%		-		-		-		-		-		-		8,370		6,282
2.65%		-		-		-		-		1		-		-		1,431
2.7%		-		-		-		-		-		-		1,851		5,874
2.75%		-		-		-		4		-		-		351		1,521
2.8%		-		-		-		-		10		-		1,241		1,472
2.85%		-		-		-		-		-		-		-		68
2.9%		-		-		-		-		-		-		-		132
2.95%		-		-		-		-		-		-		51		108
3%		-		-		-		-		-		-		-		146
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	17,185	$	181,876	$	25,540	$	13,844	$	141,670	$	165,224	$	808,662	$	3,252,943
	FEIP		FVSS2		FHIP		FAMP		FCP		FNRS2		FEI2		FF10S
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	1	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		579		-		-
0.8%		5,643		-		1,620		983		7,428		1,536		-		30
0.85%		-		-		-		-		-		3,051		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		-		-		-		-		-		1,568		224		-
1.05%		-		-		-		-		-		1,739		706		-
1.1%		-		175		-		-		-		3,532		13,162		-
1.15%		-		20,689		-		-		-		101,324		245,377		-
1.2%		-		5,264		-		-		-		963		3,631		-
1.25%		-		7,397		-		-		-		10,730		55,635		-
1.3%		3,292,188		34		514,769		1,747,201		3,101,397		178,151		4,691		47,110
1.35%		-		6,318		-		-		-		33,833		61,794		-
1.4%		1,433,121		2,630		301,833		418,087		1,367,896		56,167		16,403		17,845
1.45%		-		4,546		-		-		-		31,498		68,007		-
1.5%		-		6,889		-		-		-		21,558		51,138		-
1.55%		-		25,270		-		-		-		143,928		206,946		-
1.6%		-		3,187		-		-		-		6,824		22,777		-
1.65%		-		16,029		-		-		-		37,629		92,738		-
1.7%		-		1,622		-		-		-		14,961		22,391		-
1.75%		-		10,263		-		-		-		89,778		195,385		-
1.8%		-		9,379		-		-		-		49,728		107,020		-
1.85%		-		5,643		-		-		-		10,767		46,668		-
1.9%		-		1,810		-		-		-		4,260		16,230		-
1.95%		-		5,181		-		-		-		16,109		34,725		-
2%		-		3,963		-		-		-		32,558		61,816		-
2.05%		-		7,736		-		-		-		1,935		38,037		-
2.1%		-		4,141		-		-		-		100,154		26,802		-
2.15%		-		5,540		-		-		-		9,314		46,400		-
2.2%		-		1,104		-		-		-		39,020		26,362		-
2.25%		-		2,840		-		-		-		440		18,978		-
2.3%		-		595		-		-		-		7,130		13,178		-
2.35%		-		3,381		-		-		-		1,109		42,245		-
2.4%		-		462		-		-		-		1,945		6,161		-
2.45%		-		488		-		-		-		3,129		7,610		-
2.5%		-		165		-		-		-		393		11,953		-
2.55%		-		304		-		-		-		1,362		6,178		-
2.6%		-		3,083		-		-		-		-		1,563		-
2.65%		-		191		-		-		-		765		115		-
2.7%		-		-		-		-		-		92		1,330		-
2.75%		-		-		-		-		-		535		350		-
2.8%		-		140		-		-		-		23		2,061		-
2.85%		-		-		-		-		-		-		5		-
2.9%		-		-		-		-		-		-		408		-
2.95%		-		-		-		-		-		-		423		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		38		-
	$	4,730,952	$	166,459	$	818,222	$	2,166,271	$	4,476,721	$	1,020,117	$	1,577,662	$	64,985

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	FF10S2		FF20S		FF20S2		FF30S		FF30S2		FGOP		FGP		FG2
0.45%	$	3	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		-
0.8%		-		142		-		603		-		428		6,088		-
0.85%		-		-		-		-		-		-		-		344
0.9%		-		-		-		-		-		-		-		-
0.95%		-		-		-		-		-		-		-		235
1.05%		-		-		-		-		-		-		-		1,372
1.1%		12,799		-		32,930		-		723		-		-		5,579
1.15%		60,600		-		152,977		-		13,218		-		-		86,923
1.2%		30		-		1,099		-		162		-		-		5,877
1.25%		1,369		-		10,377		-		1,272		-		-		20,236
1.3%		457		70,697		2,014		49,183		-		114,768		3,376,018		4,151
1.35%		10,756		-		23,779		-		15,121		-		-		15,285
1.4%		3,566		8,980		7,817		5,991		41		51,743		873,460		6,666
1.45%		37,055		-		54,490		-		4,217		-		-		26,384
1.5%		9,724		-		9,104		-		2,414		-		-		19,548
1.55%		73,856		-		185,369		-		31,431		-		-		79,676
1.6%		8,885		-		9,657		-		1,182		-		-		5,720
1.65%		18,323		-		31,440		-		6,492		-		-		37,164
1.7%		4,737		-		9,426		-		1,932		-		-		10,441
1.75%		130,914		-		374,394		-		70,394		-		-		79,690
1.8%		20,502		-		12,702		-		2,093		-		-		48,178
1.85%		13,732		-		5,107		-		1,161		-		-		13,218
1.9%		1,423		-		7,934		-		743		-		-		5,769
1.95%		18,209		-		66,667		-		12,130		-		-		18,030
2%		68,874		-		90,480		-		5,908		-		-		22,621
2.05%		1,776		-		7,943		-		8,952		-		-		23,300
2.1%		36,008		-		14,190		-		6,016		-		-		11,996
2.15%		134,472		-		103,715		-		36,351		-		-		19,374
2.2%		15,351		-		25,330		-		399		-		-		7,167
2.25%		11,231		-		2,947		-		9,708		-		-		6,025
2.3%		3,003		-		2,347		-		11,047		-		-		4,559
2.35%		173,344		-		65,113		-		24,318		-		-		9,036
2.4%		3,297		-		13,579		-		4,742		-		-		6,642
2.45%		9,960		-		2,214		-		3,042		-		-		5,436
2.5%		1,042		-		1,892		-		859		-		-		5,379
2.55%		9,950		-		5,474		-		7,192		-		-		3,821
2.6%		1,592		-		858		-		37		-		-		1,130
2.65%		-		-		-		-		-		-		-		576
2.7%		1,672		-		-		-		555		-		-		132
2.75%		-		-		23		-		-		-		-		215
2.8%		-		-		-		-		-		-		-		724
2.85%		-		-		78		-		-		-		-		489
2.9%		-		-		1,468		-		-		-		-		-
2.95%		-		-		-		-		-		-		-		58
3%		-		-		-		-		-		-		-		121
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	898,512	$	79,819	$	1,334,934	$	55,777	$	283,852	$	166,939	$	4,255,566	$	619,287
	FHIPR		FIGBS		FIGBP2		FMCS		FMC2		FOP		FOPR		FO2
0.45%	$	-	$	-	$	2	$	-	$	3	$	-	$	-	$	-
0.65%		-		-		1,039		-		-		-		-		-
0.75%		-		-		5,112		-		274		-		-		-
0.8%		247		1,187		-		1,475		-		361		1,108		-
0.85%		-		-		10,104		-		3,383		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		-		-		1,484		-		1,100		-		-		-
1.05%		-		-		2,282		-		3,318		-		-		-
1.1%		-		-		72,963		-		22,110		-		-		919
1.15%		-		-		804,100		-		343,195		-		-		17,068
1.2%		-		-		5,827		-		2,891		-		-		-
1.25%		-		-		81,466		-		61,238		-		-		6,686
1.3%		185,039		220,478		10,050		176,904		7,079		699,368		351,453		1,135
1.35%		-		-		188,283		-		118,622		-		-		-
1.4%		98,121		104,162		77,390		50,397		26,609		176,820		76,691		1,902
1.45%		-		-		149,760		-		87,130		-		-		2,711
1.5%		-		-		125,787		-		81,061		-		-		3,907
1.55%		-		-		637,378		-		320,570		-		-		4,140
1.6%		-		-		30,161		-		33,364		-		-		537
1.65%		-		-		230,921		-		126,974		-		-		3,374
1.7%		-		-		96,535		-		50,329		-		-		3,193
1.75%		-		-		1,494,992		-		367,006		-		-		912
1.8%		-		-		215,819		-		146,275		-		-		4,378
1.85%		-		-		72,766		-		47,177		-		-		696
1.9%		-		-		34,716		-		31,412		-		-		362
1.95%		-		-		188,961		-		61,994		-		-		650
2%		-		-		528,542		-		95,908		-		-		270
2.05%		-		-		71,484		-		71,514		-		-		508
2.1%		-		-		110,890		-		50,367		-		-		327
2.15%		-		-		344,251		-		85,245		-		-		274
2.2%		-		-		110,669		-		28,785		-		-		-
2.25%		-		-		200,992		-		42,555		-		-		28
2.3%		-		-		32,818		-		29,391		-		-		147
2.35%		-		-		1,205,321		-		87,753		-		-		-
2.4%		-		-		107,275		-		23,426		-		-		-
2.45%		-		-		59,198		-		11,323		-		-		-
2.5%		-		-		33,615		-		26,354		-		-		-
2.55%		-		-		88,498		-		9,582		-		-		-
2.6%		-		-		56,804		-		7,086		-		-		-
2.65%		-		-		3,315		-		1,459		-		-		-
2.7%		-		-		22,060		-		2,652		-		-		-
2.75%		-		-		10,236		-		2,639		-		-		-
2.8%		-		-		2,847		-		8,097		-		-		-
2.85%		-		-		856		-		-		-		-		-
2.9%		-		-		8,460		-		1,253		-		-		-
2.95%		-		-		719		-		276		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		568		-		-		-		-		-
3.1%		-		-		566		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		45		-		-		-		-		-
3.25%		-		-		478		-		-		-		-		-
3.3%		-		-		-		-		38		-		-		-
	$	283,407	$	325,827	$	7,538,405	$	228,776	$	2,528,817	$	876,549	$	429,252	$	54,124

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	FO2R		FVSS		FTVIS2		FTVRD2		FTVSV2		FTVDM3		TIF2		TIF3
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		205		-		-		145
0.75%		26		-		-		-		950		-		-		823
0.8%		-		860		424		-		1,241		273		-		832
0.85%		46		-		-		-		2,121		-		-		2,408
0.9%		-		-		-		-		-		-		-		-
0.95%		439		-		255		1,666		3,052		232		296		1,870
1.05%		788		-		1,305		1,681		2,663		696		31		2,186
1.1%		7,347		-		15,457		5,769		20,444		3,005		832		32,603
1.15%		93,247		-		154,402		114,521		191,339		44,327		11,800		306,533
1.2%		959		-		2,146		4,581		9,715		219		548		3,443
1.25%		13,183		-		23,356		43,421		29,511		4,850		7,320		28,081
1.3%		1,821		60,942		142,197		2,455		63,802		49,623		150		35,396
1.35%		24,036		-		80,771		35,894		61,144		15,623		-		77,886
1.4%		6,346		16,028		90,461		11,542		39,567		20,161		2,683		35,988
1.45%		30,844		-		40,653		30,913		53,200		12,938		3,983		67,474
1.5%		25,840		-		46,924		43,942		41,009		14,612		5,500		71,902
1.55%		102,319		-		190,317		151,315		184,083		65,267		12,516		321,896
1.6%		5,639		-		20,529		14,267		11,734		5,596		6,990		19,796
1.65%		21,907		-		70,860		80,919		50,872		15,082		2,955		83,628
1.7%		26,692		-		21,411		15,566		24,720		10,919		2,371		47,471
1.75%		84,271		-		225,017		92,002		336,195		49,686		1,641		641,725
1.8%		54,040		-		84,245		66,289		70,902		27,214		7,475		93,397
1.85%		14,740		-		19,027		30,329		27,588		5,957		1,067		37,369
1.9%		10,854		-		2,647		13,547		8,117		2,408		1,650		17,464
1.95%		16,130		-		27,840		25,068		55,346		14,979		1,530		95,557
2%		37,068		-		58,241		42,006		105,855		11,812		761		173,724
2.05%		3,992		-		4,184		52,083		17,837		1,654		1,045		30,219
2.1%		11,648		-		19,310		33,267		30,701		23,884		1,612		48,196
2.15%		8,759		-		20,614		29,185		76,982		8,081		844		130,749
2.2%		6,549		-		5,934		27,127		26,461		2,153		-		39,120
2.25%		3,426		-		7,770		19,141		28,111		826		422		49,909
2.3%		7,125		-		5,791		18,177		10,580		4,270		-		23,950
2.35%		21,487		-		9,633		22,868		206,762		110		-		343,117
2.4%		1,985		-		2,326		3,529		18,621		1,070		-		36,727
2.45%		4,213		-		2,133		5,979		11,255		5,194		-		17,845
2.5%		8,943		-		811		6,859		9,504		399		-		33,629
2.55%		1,399		-		4,183		2,371		16,592		1,413		-		26,286
2.6%		2,198		-		1,045		4,536		9,883		-		-		20,574
2.65%		660		-		-		857		474		218		-		783
2.7%		1,062		-		121		1,487		4,303		19		-		7,608
2.75%		158		-		377		1,282		884		58		-		2,357
2.8%		10,422		-		176		604		543		492		-		1,698
2.85%		380		-		-		22		159		-		-		824
2.9%		-		-		-		131		1,084		-		-		1,800
2.95%		57		-		650		125		146		-		-		476
3%		-		-		-		63		-		-		-		-
3.05%		-		-		-		-		191		-		-		340
3.1%		-		-		-		-		176		-		-		317
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		14		-		-		25
3.25%		-		-		-		-		72		-		-		95
3.3%		-		-		-		-		-		-		-		27
	$	673,045	$	77,830	$	1,403,543	$	1,057,386	$	1,866,710	$	425,320	$	76,022	$	3,016,268
	FTVGI3		FTVFA2		AMTG		AMGP		AMINS		AMMCGS		AMTP		AMRS
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		-
0.8%		273		-		1,113		407		21		-		1,655		53
0.85%		257		143		-		-		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		598		-		-		-		222		363		-		1
1.05%		1,429		81		-		-		102		936		-		-
1.1%		5,035		1,245		-		-		679		91		-		2,163
1.15%		142,100		6,090		-		-		7,483		7,696		-		8,755
1.2%		404		-		-		-		-		-		-		14
1.25%		20,711		966		-		-		1,310		3,667		-		1,691
1.3%		174,145		10,436		441,619		45,056		5,269		101		386,838		5,443
1.35%		49,781		5,337		-		-		2,284		-		-		5,540
1.4%		69,304		2,052		78,622		18,934		3,176		936		230,534		2,112
1.45%		67,681		925		-		-		2,377		4,801		-		2,437
1.5%		42,653		3,721		-		-		1,471		1,304		-		1,157
1.55%		112,676		22,967		-		-		11,886		6,653		-		11,976
1.6%		9,212		8,756		-		-		1,253		469		-		912
1.65%		71,222		1,833		-		-		2,214		3,434		-		3,730
1.7%		11,731		1,548		-		-		1,142		1,138		-		1,407
1.75%		99,113		19,816		-		-		14,852		1,526		-		11,704
1.8%		67,425		928		-		-		2,525		4,072		-		3,047
1.85%		13,473		1,711		-		-		1,262		851		-		1,265
1.9%		3,503		28		-		-		111		670		-		42
1.95%		12,526		671		-		-		2,723		422		-		3,900
2%		43,571		2,575		-		-		2,806		82		-		2,518
2.05%		4,380		13		-		-		326		677		-		1,335
2.1%		9,719		-		-		-		1,738		116		-		453
2.15%		14,442		246		-		-		1,261		176		-		4,483
2.2%		6,217		306		-		-		1,057		359		-		405
2.25%		3,428		-		-		-		190		41		-		877
2.3%		3,478		430		-		-		1,075		400		-		541
2.35%		1,205		163		-		-		1,666		-		-		3,186
2.4%		817		-		-		-		6		47		-		358
2.45%		1,925		-		-		-		13		141		-		281
2.5%		292		-		-		-		-		-		-		129
2.55%		1,196		216		-		-		68		-		-		100
2.6%		319		-		-		-		-		-		-		195
2.65%		1,192		1,155		-		-		-		-		-		-
2.7%		273		-		-		-		-		-		-		-
2.75%		1,129		-		-		-		-		-		-		-
2.8%		2,021		-		-		-		-		-		-		-
2.85%		-		-		-		-		-		-		-		-
2.9%		-		-		-		-		-		-		-		-
2.95%		-		-		-		-		-		-		-		13
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	1,070,856	$	94,358	$	521,354	$	64,397	$	72,568	$	41,169	$	619,027	$	82,223

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	AMFAS		AMSRS		OVMS		OVCAFS		OVGR		OVB		OVGS3		OVGS4
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		29
0.8%		54		64		978		-		1,232		1,056		953		-
0.85%		-		-		-		-		-		-		-		7
0.9%		-		-		-		-		-		-		-		-
0.95%		181		5,746		-		577		-		-		-		7,374
1.05%		175		3,597		-		407		-		-		-		4,662
1.1%		224		5,277		-		2,856		-		-		-		6,196
1.15%		4,000		51,373		-		86,009		-		-		-		177,723
1.2%		35		-		-		2,033		-		-		-		1,459
1.25%		2,231		6,384		-		25,775		-		-		-		36,795
1.3%		3,217		44,390		448,664		824		427,685		355,552		641,990		1,175
1.35%		1,427		12,089		-		15,615		-		-		-		76,969
1.4%		2,371		10,877		213,054		5,273		129,604		216,741		128,067		15,808
1.45%		3,128		10,651		-		30,715		-		-		-		54,095
1.5%		1,822		13,315		-		22,633		-		-		-		31,734
1.55%		7,720		32,792		-		79,380		-		-		-		123,214
1.6%		1,476		3,227		-		6,644		-		-		-		10,203
1.65%		4,404		19,243		-		38,750		-		-		-		64,120
1.7%		1,609		2,140		-		10,285		-		-		-		9,380
1.75%		7,597		66,715		-		58,124		-		-		-		79,692
1.8%		1,738		12,506		-		43,393		-		-		-		42,192
1.85%		1,003		6,945		-		11,119		-		-		-		12,755
1.9%		862		6,789		-		4,014		-		-		-		3,769
1.95%		2,697		4,274		-		12,416		-		-		-		15,051
2%		2,451		6,687		-		22,204		-		-		-		18,366
2.05%		1,889		7,225		-		15,096		-		-		-		4,492
2.1%		843		5,983		-		10,050		-		-		-		12,544
2.15%		1,368		4,733		-		18,486		-		-		-		5,819
2.2%		1,257		6,449		-		8,786		-		-		-		15,901
2.25%		236		1,886		-		8,681		-		-		-		1,866
2.3%		294		5,252		-		7,150		-		-		-		2,334
2.35%		1,512		5,043		-		12,779		-		-		-		1,907
2.4%		761		5,755		-		5,952		-		-		-		3,015
2.45%		22		193		-		1,547		-		-		-		129
2.5%		92		1,656		-		5,162		-		-		-		152
2.55%		41		385		-		1,563		-		-		-		-
2.6%		-		484		-		744		-		-		-		-
2.65%		-		218		-		32		-		-		-		3
2.7%		-		367		-		171		-		-		-		130
2.75%		-		235		-		-		-		-		-		-
2.8%		23		101		-		-		-		-		-		-
2.85%		-		-		-		-		-		-		-		-
2.9%		-		-		-		117		-		-		-		-
2.95%		-		41		-		83		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	58,760	$	371,087	$	662,696	$	575,445	$	558,521	$	573,349	$	771,010	$	841,060
	OVGS		OVGSS		OVHI3		OVHI4		OVHI		OVHIS		OVGI		OVGIS
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		562
0.75%		-		-		-		-		-		-		-		2,468
0.8%		1,078		-		138		-		16		-		150		-
0.85%		-		-		-		-		-		-		-		5,627
0.9%		-		-		-		-		-		-		-		-
0.95%		-		6		-		155		-		504		-		970
1.05%		-		185		-		146		-		529		-		733
1.1%		-		1,528		-		757		-		217		-		43,745
1.15%		-		23,714		-		12,216		-		7,598		-		402,617
1.2%		-		949		-		-		-		238		-		4,256
1.25%		-		27,450		-		2,506		-		3,268		-		39,600
1.3%		1,036,145		2,425		3,440		-		442		-		135,179		5,506
1.35%		-		-		-		5,149		-		2,338		-		96,107
1.4%		575,111		2,561		653		558		171		1,663		32,343		43,340
1.45%		-		9,159		-		8,092		-		2,948		-		69,838
1.5%		-		6,710		-		2,143		-		1,345		-		72,485
1.55%		-		19,132		-		17,657		-		10,004		-		408,337
1.6%		-		750		-		560		-		419		-		15,093
1.65%		-		12,322		-		2,589		-		3,266		-		130,957
1.7%		-		1,960		-		1,100		-		858		-		65,353
1.75%		-		4,306		-		14,981		-		3,197		-		999,769
1.8%		-		17,318		-		13,863		-		7,262		-		138,562
1.85%		-		3,984		-		1,307		-		1,114		-		42,461
1.9%		-		2,266		-		1,372		-		592		-		13,912
1.95%		-		1,226		-		1,208		-		238		-		133,501
2%		-		860		-		5,664		-		1,665		-		308,007
2.05%		-		1,546		-		125		-		568		-		49,361
2.1%		-		2,334		-		1,048		-		1,283		-		69,203
2.15%		-		1,036		-		959		-		234		-		264,791
2.2%		-		-		-		1,514		-		910		-		62,825
2.25%		-		124		-		116		-		188		-		88,460
2.3%		-		210		-		275		-		24		-		14,425
2.35%		-		-		-		855		-		91		-		681,441
2.4%		-		-		-		196		-		-		-		68,759
2.45%		-		-		-		1,144		-		194		-		34,117
2.5%		-		-		-		-		-		-		-		11,956
2.55%		-		-		-		84		-		-		-		56,070
2.6%		-		-		-		-		-		-		-		32,278
2.65%		-		-		-		-		-		-		-		2,527
2.7%		-		-		-		19		-		34		-		14,144
2.75%		-		-		-		281		-		-		-		4,905
2.8%		-		-		-		2,786		-		-		-		1,801
2.85%		-		-		-		-		-		-		-		706
2.9%		-		-		-		-		-		-		-		3,772
2.95%		-		-		-		-		-		-		-		571
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		383
3.1%		-		-		-		-		-		-		-		626
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		50
3.25%		-		-		-		-		-		-		-		224
3.3%		-		-		-		-		-		-		-		-
	$	1,612,334	$	144,061	$	4,231	$	101,425	$	629	$	52,789	$	167,672	$	4,507,201

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	OVSC		OVSCS		OVAG		PVGIB		PVTIGB		PVTVB		VYDS		TRBCG2
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		97		-		-		-		-		-		96
0.75%		-		494		-		-		-		-		-		593
0.8%		181		-		338		-		-		-		-		381
0.85%		-		1,169		-		-		-		-		-		1,075
0.9%		-		-		-		-		-		-		-		-
0.95%		-		1,238		-		-		-		20		-		4,604
1.05%		-		2,029		-		79		-		-		-		623
1.1%		-		17,275		-		398		-		-		-		15,741
1.15%		-		164,528		-		7,772		1,650		3,144		298		151,515
1.2%		-		1,221		-		-		-		-		-		938
1.25%		-		18,040		-		1,716		732		2,827		3,313		10,773
1.3%		36,365		1,878		82,585		-		-		-		-		48,652
1.35%		-		50,265		-		1,257		-		350		974		35,244
1.4%		8,473		15,016		13,290		241		887		239		-		33,925
1.45%		-		36,857		-		1,507		572		1,188		-		23,851
1.5%		-		27,651		-		1,683		1,104		934		14		26,880
1.55%		-		179,703		-		8,506		1,288		2,962		40		167,953
1.6%		-		9,770		-		623		26		850		462		7,745
1.65%		-		62,448		-		8,362		385		3,789		238		40,273
1.7%		-		21,473		-		518		51		278		-		22,182
1.75%		-		329,115		-		3,538		529		2,243		36		302,800
1.8%		-		68,471		-		2,053		1,147		2,288		344		42,939
1.85%		-		16,319		-		1,386		379		436		82		21,137
1.9%		-		7,954		-		492		-		223		-		5,586
1.95%		-		50,868		-		773		-		237		379		39,661
2%		-		109,641		-		2,174		-		1,564		-		107,260
2.05%		-		13,278		-		2,997		460		1,798		-		14,099
2.1%		-		33,879		-		1,495		64		244		682		30,742
2.15%		-		82,735		-		2,104		-		65		-		85,305
2.2%		-		20,362		-		285		-		99		-		24,831
2.25%		-		25,700		-		1,836		-		1,037		-		28,497
2.3%		-		6,298		-		340		-		686		-		8,378
2.35%		-		212,767		-		609		-		532		-		184,072
2.4%		-		20,476		-		249		298		221		-		24,639
2.45%		-		11,911		-		181		-		586		-		10,231
2.5%		-		5,077		-		460		-		396		-		4,817
2.55%		-		17,461		-		-		-		-		-		15,303
2.6%		-		9,027		-		265		-		330		-		8,449
2.65%		-		712		-		-		-		-		-		593
2.7%		-		3,962		-		-		-		178		-		3,984
2.75%		-		1,251		-		-		-		-		-		1,591
2.8%		-		8,046		-		76		-		62		-		740
2.85%		-		178		-		-		-		-		-		192
2.9%		-		1,172		-		-		-		-		-		1,249
2.95%		-		144		-		-		-		-		-		237
3%		-		-		-		-		-		-		-		-
3.05%		-		115		-		-		-		-		-		117
3.1%		-		192		-		-		-		-		-		205
3.15%		-		-		-		-		-		-		-		-
3.2%		-		15		-		-		-		-		-		16
3.25%		-		70		-		-		-		-		-		63
3.3%		-		27		-		-		-		-		-		-
	$	45,019	$	1,668,375	$	96,213	$	53,975	$	9,572	$	29,806	$	6,862	$	1,560,777
	TREI2		TRLT2		VWBFR		VWBF		VWEMR		VWEM		VWHAR		VWHA
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		-
0.8%		176		353		24		52		832		874		1,626		2,291
0.85%		40		-		-		-		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		1,490		862		-		-		-		-		-		-
1.05%		2,050		1,044		-		-		-		-		-		-
1.1%		11,006		3,335		-		-		-		-		-		-
1.15%		120,883		56,910		-		-		-		-		-		-
1.2%		869		382		-		-		-		-		-		-
1.25%		11,856		3,697		-		-		-		-		-		-
1.3%		71,928		35,136		62,296		129,972		140,733		161,340		261,364		280,057
1.35%		42,565		12,821		-		-		-		-		-		-
1.4%		31,266		18,738		33,603		56,115		37,772		63,380		80,141		98,718
1.45%		39,136		18,558		-		-		-		-		-		-
1.5%		23,926		11,432		-		-		-		-		-		-
1.55%		143,171		29,155		-		-		-		-		-		-
1.6%		6,136		4,908		-		-		-		-		-		-
1.65%		34,958		11,871		-		-		-		-		-		-
1.7%		14,071		7,909		-		-		-		-		-		-
1.75%		201,851		66,182		-		-		-		-		-		-
1.8%		35,603		13,758		-		-		-		-		-		-
1.85%		18,736		8,161		-		-		-		-		-		-
1.9%		8,495		1,464		-		-		-		-		-		-
1.95%		20,322		5,316		-		-		-		-		-		-
2%		31,367		13,776		-		-		-		-		-		-
2.05%		7,011		9,686		-		-		-		-		-		-
2.1%		20,943		10,817		-		-		-		-		-		-
2.15%		32,294		10,635		-		-		-		-		-		-
2.2%		17,560		10,911		-		-		-		-		-		-
2.25%		15,416		11,497		-		-		-		-		-		-
2.3%		8,445		892		-		-		-		-		-		-
2.35%		32,095		21,945		-		-		-		-		-		-
2.4%		3,778		2,995		-		-		-		-		-		-
2.45%		2,929		1,584		-		-		-		-		-		-
2.5%		16,750		1,163		-		-		-		-		-		-
2.55%		1,818		641		-		-		-		-		-		-
2.6%		4,775		5,687		-		-		-		-		-		-
2.65%		536		53		-		-		-		-		-		-
2.7%		1,058		172		-		-		-		-		-		-
2.75%		64		1,421		-		-		-		-		-		-
2.8%		4,938		308		-		-		-		-		-		-
2.85%		-		-		-		-		-		-		-		-
2.9%		57		615		-		-		-		-		-		-
2.95%		207		-		-		-		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		38		-		-		-		-		-		-		-
	$	1,042,613	$	416,790	$	95,923	$	186,139	$	179,337	$	225,594	$	343,131	$	381,066

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	WRASP		SVDF		WFVLCG		WFVMM		SVOF		WFVSCG		WFVSMV		WFVTRB
0.45%	$	2	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		31		-		-		-		-		79		-		-
0.8%		28		145		-		-		1,451		7		-		-
0.85%		-		-		-		-		-		689		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		1		-		-		-		-		72		-		-
1.05%		135		-		-		-		-		-		-		-
1.1%		780		-		-		-		-		606		88		-
1.15%		12,585		-		-		70		-		4,813		-		286
1.2%		-		-		-		-		-		-		-		-
1.25%		2,608		-		-		-		-		150		-		754
1.3%		18,279		191,648		-		-		928,937		8,411		-		-
1.35%		5,336		-		-		-		-		647		-		-
1.4%		6,500		68,233		-		1,032		292,273		5,116		-		-
1.45%		12,162		-		-		-		-		2,596		-		-
1.5%		13,613		-		-		-		-		939		-		-
1.55%		14,035		-		-		-		-		3,799		-		-
1.6%		1,443		-		-		-		-		802		-		-
1.65%		5,226		-		-		-		-		1,233		-		-
1.7%		4,072		-		-		-		-		93		-		-
1.75%		16,861		-		71		-		-		6,750		-		-
1.8%		11,728		-		-		-		-		1,520		-		-
1.85%		254		-		-		-		-		356		-		-
1.9%		193		-		185		-		-		63		-		-
1.95%		2,875		-		-		-		-		1,404		-		-
2%		6,986		-		175		-		-		1,252		-		-
2.05%		494		-		-		-		-		911		-		-
2.1%		5,111		-		454		-		-		323		-		-
2.15%		1,596		-		-		-		-		131		-		-
2.2%		7,814		-		954		-		-		170		-		-
2.25%		807		-		-		-		-		16		-		-
2.3%		2,079		-		-		-		-		1,818		-		-
2.35%		226		-		-		-		-		862		-		-
2.4%		243		-		-		-		-		11		-		-
2.45%		226		-		-		-		-		115		-		-
2.5%		-		-		-		-		-		59		-		-
2.55%		-		-		-		-		-		-		-		-
2.6%		-		-		-		-		-		-		-		-
2.65%		6		-		-		-		-		-		-		-
2.7%		-		-		-		-		-		-		-		-
2.75%		-		-		-		-		-		-		-		-
2.8%		17		-		-		-		-		-		-		-
2.85%		-		-		-		-		-		-		-		-
2.9%		-		-		-		-		-		-		-		-
2.95%		-		-		-		-		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	154,352	$	260,026	$	1,839	$	1,102	$	1,222,661	$	45,813	$	88	$	1,040
	WIEP		WVCP		BF		VFLG2		VFLV2		MBVAG2		MBVCG2		SGRF
0.45%	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
0.65%		-		-		-		-		-		-		-		-
0.75%		-		-		-		-		-		-		-		-
0.8%		127		41		20		-		-		-		-		51
0.85%		-		-		-		-		-		-		-		-
0.9%		-		-		-		-		-		-		-		-
0.95%		-		-		-		-		-		-		-		-
1.05%		-		-		-		-		-		-		-		-
1.1%		-		-		-		-		-		-		-		-
1.15%		-		-		-		1,067		1,084		96		157		-
1.2%		-		-		-		-		-		-		-		-
1.25%		-		-		-		680		950		-		-		-
1.3%		71,130		12,360		6,921		-		-		-		-		15,365
1.35%		-		-		-		11		166		253		35		-
1.4%		67,997		5,762		1,741		26		21		-		-		4,030
1.45%		-		-		-		126		120		-		-		-
1.5%		-		-		-		190		108		-		-		-
1.55%		-		-		-		4		3		-		531		-
1.6%		-		-		-		-		142		-		-		-
1.65%		-		-		-		225		162		-		-		-
1.7%		-		-		-		-		-		-		-		-
1.75%		-		-		-		56		660		142		15		-
1.8%		-		-		-		-		-		-		-		-
1.85%		-		-		-		-		7		119		-		-
1.9%		-		-		-		168		-		-		164		-
1.95%		-		-		-		20		104		-		-		-
2%		-		-		-		-		-		-		-		-
2.05%		-		-		-		-		-		-		-		-
2.1%		-		-		-		60		-		-		-		-
2.15%		-		-		-		-		-		-		-		-
2.2%		-		-		-		-		17		-		-		-
2.25%		-		-		-		-		14		-		-		-
2.3%		-		-		-		-		-		-		-		-
2.35%		-		-		-		43		43		-		-		-
2.4%		-		-		-		-		36		-		-		-
2.45%		-		-		-		-		-		-		-		-
2.5%		-		-		-		-		-		-		-		-
2.55%		-		-		-		-		-		-		-		-
2.6%		-		-		-		-		-		-		-		-
2.65%		-		-		-		-		-		-		-		-
2.7%		-		-		-		-		-		-		-		-
2.75%		-		-		-		-		-		-		-		-
2.8%		-		-		-		-		-		-		-		-
2.85%		-		-		-		-		-		-		-		-
2.9%		-		-		-		-		-		-		-		-
2.95%		-		-		-		-		-		-		-		-
3%		-		-		-		-		-		-		-		-
3.05%		-		-		-		-		-		-		-		-
3.1%		-		-		-		-		-		-		-		-
3.15%		-		-		-		-		-		-		-		-
3.2%		-		-		-		-		-		-		-		-
3.25%		-		-		-		-		-		-		-		-
3.3%		-		-		-		-		-		-		-		-
	$	139,254	$	18,163	$	8,682	$	2,676	$	3,637	$	610	$	902	$	19,446

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	SGRF2		JPMCVP		PISVP1
0.45%	$	-	$	-	$	-
0.65%		-		-		-
0.75%		-		-		-
0.8%		-		8		-
0.85%		-		-		-
0.9%		-		-		-
0.95%		600		-		837
1.05%		350		-		809
1.1%		1,162		-		-
1.15%		12,455		-		-
1.2%		97		-		-
1.25%		2,761		-		-
1.3%		-		15,663		-
1.35%		4,330		-		-
1.4%		750		6,278		-
1.45%		2,254		-		-
1.5%		2,662		-		-
1.55%		11,090		-		-
1.6%		525		-		-
1.65%		6,655		-		-
1.7%		2,079		-		-
1.75%		16,923		-		-
1.8%		3,066		-		-
1.85%		2,081		-		-
1.9%		1,025		-		-
1.95%		2,697		-		-
2%		3,100		-		-
2.05%		1,023		-		-
2.1%		1,806		-		-
2.15%		2,464		-		-
2.2%		1,169		-		-
2.25%		1,924		-		-
2.3%		1,157		-		-
2.35%		2,017		-		-
2.4%		806		-		-
2.45%		647		-		-
2.5%		801		-		-
2.55%		149		-		-
2.6%		98		-		-
2.65%		54		-		-
2.7%		75		-		-
2.75%		143		-		-
2.8%		29		-		-
2.85%		-		-		-
2.9%		47		-		-
2.95%		-		-		-
3%		-		-		-
3.05%		-		-		-
3.1%		-		-		-
3.15%		-		-		-
3.2%		-		-		-
3.25%		-		-		-
3.3%		-		-		-
	$	91,071	$	21,949	$	1,646

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

(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, 2009 and 2008, total transfers to the Account from the fixed account were $948,657,740 and $311,309,289, respectively, and total transfers from the Account to the fixed account were $269,451,440 and $314,743,184, 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 contracts with the Extra Value option, the Company contributed $8,137,915 and $15,745,223 to the Account in the form of bonus credits to the contract owner accounts for the years ended December 31, 2009 and 2008, respectively. These amounts are included in purchase payments received from contract owners and are credited at the time the related purchase payment from the contract owner is received.

For guaranteed minimum death benefits, the Company contributed $67,645,662 and $36,092,569 to the Account in the form of additional premium to contract owner accounts for the years ended December 31, 2009 and 2008, respectively. These amounts are included in purchase payments received from contract owners and are credited at time of annuitant death.

For Purchase Payment Credits, the Company contributed $2,275,248 and $3,684,202 to the Account in the form of additional credit to the contract owner accounts for the years ended December 31, 2009 and 2008, respectively. These amounts are included in purchase payments received from contract owners and, as applicable, are applied to a contract when cumulative purchase payments reach certain aggregate levels.

(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.

The Account categorizes financial assets recorded at fair value as follows:

• Level 1 – Unadjusted quoted prices accessible in active markets for identical assets at the measurement date. The assets utilizing Level 1 valuations represent investments in publicly-traded registered mutual funds with quoted market prices.  

• Level 2 – Unadjusted quoted prices for similar assets in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means. The assets utilizing Level 2 valuations represent investments in privately-traded registered mutual funds only offered through insurance products. These funds have no unfunded commitments or restrictions and the Account always has the ability to redeem its interest in the funds with the investee at NAV daily. The investment objectives of these mutual funds are described by the fund name in note 1(b) and in more detail in the applicable product prospectus.  

• Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. The Account invests only in funds with fair value measurements in the first two levels of the fair value hierarchy.  

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2009:

	Level 1	Level 2		Level 3	Total
Separate Account Investments	0	$	21,471,659,903	0	$	21,471,659,903

Net Accounts Payable of $379,603 are measured at settlement value which approximates the fair value due to the short-term nature of such liabilities.

The Account did not have any assets or liabilities reported at fair value on a nonrecurring basis required to be disclosed under FASB ASC 820.

The cost of purchases and sales of Investments for the year ended December 31, 2009 are as follows:

	Purchases of Investments		Sales of Investments
Balanced Portfolio - Class S Shares (ALBS)	$	27,179	$	37,461
MidCap Growth Portfolio - Class S Shares (ALMCS)		50,700		73,298
Growth Fund - Class 1 (AFGF)		87,997		2,163,998
High-Income Bond Fund - Class 1 (AFHY)		1,783,362		1,743,327
U.S. Government/AAA-Rated Securities Fund - Class 1 (AFGC)		130,512		284,092
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class III (MLVGA3)		27,241,774		112,237
Credit Suisse Trust - International Equity Flex III Portfolio (CSIEF3)		1,695,637		12,797
U.S. Equity Flex I Portfolio (WSCP)		453,217		5,221,026
Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)		5,514,916		826,517
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)		2,553,690		1,486,052
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)		26,027,837		10,247,700
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)		1,845,108		1,108,823
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)		-		235,581
Janus Aspen Series - INTECH Risk - Managed Core Portfolio - Service Shares (JARLCS)		401,916		6,125,155
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)		32,189,143		45,117,539
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)		370,478		1,074,967
Investors Growth Stock Series - Service Class (MIGSC)		318,590		2,663,853
Value Series - Service Class (MVFSC)		216,928,338		26,879,168
Core Plus Fixed Income Portfolio - Class I (MSVFI)		879,920		2,120,335
Core Plus Fixed Income Portfolio - Class II (MSVF2)		15,542,035		238,291,422
Emerging Markets Debt Portfolio - Class I (MSEM)		350,088		1,114,574
Emerging Markets Debt Portfolio - Class II (MSEMB)		101,811		394,528
U.S. Real Estate Portfolio - Class I (MSVRE)		4,505,597		131,712,391
U.S. Real Estate Portfolio - Class II (MSVREB)		3,567,626		104,829,383
Managed Allocation Fund - Moderate Growth II (VFMG2)		194,597		2,416,970
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)		1,921,567		127,007
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)		72,725		3,354
American Century NVIT Multi Cap Value Fund - Class II (NVAMV2)		4,207,269		86,853
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)		478,757,985		6,714,490

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

American Funds NVIT Bond Fund - Class II (GVABD2)	196,133,350	30,476,261
American Funds NVIT Global Growth Fund - Class II (GVAGG2)	26,462,081	9,301,151
American Funds NVIT Growth Fund - Class II (GVAGR2)	39,538,398	33,772,715
American Funds NVIT Growth - Income Fund - Class II (GVAGI2)	193,769,335	38,243,455
Federated NVIT High Income Bond Fund - Class I (HIBF)	883,943	2,692,236
Federated NVIT High Income Bond Fund - Class III (HIBF3)	42,996,095	23,191,710
Gartmore NVIT Emerging Markets Fund - Class I (GEM)	14,921	152,013
Gartmore NVIT Emerging Markets Fund - Class II (GEM2)	22,289	716,543
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)	3,803,338	12,488,282
Gartmore NVIT Emerging Markets Fund - Class VI (GEM6)	13,385,575	24,601,198
Gartmore NVIT Global Utilities Fund - Class II (GVGU2)	13,389	100,568
Gartmore NVIT Global Utilities Fund - Class III (GVGU)	462,841	3,961,535
Gartmore NVIT International Equity Fund - Class I (GIG)	717	11,986
Gartmore NVIT International Equity Fund - Class III (GIG3)	20,588,498	9,346,355
Gartmore NVIT International Equity Fund - Class VI (NVIE6)	12,667,103	2,602,729
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)	176,666	1,766,530
Gartmore NVIT Worldwide Leaders Fund - Class VI (NVGWL6)	554,318	41,913
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)	101,422,422	9,555,308
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class II (NVNMO2)	9,319,113	1,019,071
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)	377,047	1,093,320
Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)	39,348,050	121,416,175
NVIT Cardinal Aggressive Fund - Class II (NVCRA2)	4,992,615	1,245,789
NVIT Cardinal Balanced Fund - Class II (NVCRB2)	227,738,847	-
NVIT Cardinal Capital Appreciation Fund - Class II (NVCCA2)	368,946,092	7,796,211
NVIT Cardinal Conservative Fund - Class II (NVCCN2)	158,009,241	22,933,901
NVIT Cardinal Moderate Fund - Class II (NVCMD2)	338,322,793	3,756,267
NVIT Cardinal Moderately Aggressive Fund - Class II (NVCMA2)	59,299,165	15,750,756
NVIT Cardinal Moderately Conservative Fund - Class II (NVCMC2)	124,205,656	2,406,116
NVIT Core Bond Fund - Class I (NVCBD1)	3,329,612	778,312
NVIT Core Bond Fund - Class II (NVCBD2)	207,593,786	6,377,399
NVIT Core Plus Bond Fund - Class II (NVLCP2)	12,629,477	1,450,195
NVIT Fund - Class I (TRF)	2,204,042	42,051,699
NVIT Fund - Class II (TRF2)	43,692,924	190,496,946
NVIT Global Financial Services Fund - Class II (GVGF2)	5,557	202,077
NVIT Global Financial Services Fund - Class III (GVGFS)	828,041	2,320,165
NVIT Government Bond Fund - Class I (GBF)	102,389,387	193,830,516
NVIT Growth Fund - Class I (CAF)	637,153	5,757,065
NVIT Health Sciences Fund - Class II (GVGH2)	9,251	363,938
NVIT Health Sciences Fund - Class III (GVGHS)	1,248,999	2,873,781
NVIT Health Sciences Fund - Class VI (GVGH6)	4,974,580	11,188,503
NVIT International Index Fund - Class VIII (GVIX8)	5,105,940	3,126,233
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)	26,194,057	79,515,968
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)	57,159,279	284,170
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)	110,377,865	238,560
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)	93,631,922	22,349,423
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)	193,429,827	47,100,922
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)	106,428,362	125,896,451
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)	90,066,915	31,178,663
NVIT Leaders Fund - Class III (GVUSL)	233,654	2,087,564
NVIT Mid Cap Index Fund - Class I (MCIF)	12,514,356	15,666,531
NVIT Money Market Fund - Class I (SAM)	167,202,107	356,514,536
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)	44,049,770	4,178,716
NVIT Multi-Manager International Growth Fund - Class VI (NVMIG6)	30,908,969	47,913,327
NVIT Multi-Manager International Value Fund - Class II (GVDIV2)	17,307	476,427
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)	646,866	7,072,563
NVIT Multi-Manager International Value Fund - Class VI (GVDIV6)	9,074,945	215,291,346
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)	3,330,392	289,092
NVIT Multi-Manager Large Cap Growth Fund - Class II (NVMLG2)	140,163,991	8,368,642
NVIT Multi-Manager Large Cap Value Fund - Class II (NVMLV2)	34,287,100	3,479,865
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)	188,960,239	14,145,299
NVIT Multi-Manager Mid Cap Growth Fund - Class II (NVMMG2)	69,321,024	27,669,545
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)	194,449,153	111,923,272
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)	560,944	1,511,482
NVIT Multi-Manager Small Cap Growth Fund - Class II (SCGF2)	1,572,324	2,992,319
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)	821,383	15,120,188
NVIT Multi-Manager Small Cap Value Fund - Class II (SCVF2)	7,217,945	6,528,711
NVIT Multi-Manager Small Company Fund - Class I (SCF)	812,421	24,859,561
NVIT Multi-Manager Small Company Fund - Class II (SCF2)	3,933,168	75,167,707
NVIT Multi-Sector Bond Fund - Class I (MSBF)	28,530,698	13,520,742
NVIT Short Term Bond Fund - Class II (NVSTB2)	67,812,111	8,178,249
NVIT Technology & Communications Fund - Class I (GGTC)	-	33,764
NVIT Technology & Communications Fund - Class II (GGTC2)	203	192,747
NVIT Technology & Communications Fund - Class III (GGTC3)	2,928,863	2,604,832
NVIT Technology & Communications Fund - Class VI (GGTC6)	8,936,837	5,008,331
NVIT U.S. Growth Leaders Fund - Class II (GVUG2)	2,313,910	6,771,213
NVIT U.S. Growth Leaders Fund - Class III (GVUGL)	220,293	2,076,356
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)	607,318	28,615
Oppenheimer NVIT Large Cap Growth Fund - Class II (NVOLG2)	1,540,129	10,284
Templeton NVIT International Value Fund - Class III (NVTIV3)	276,548,540	16,487,470
Van Kampen NVIT Comstock Value Fund - Class II (EIF2)	26,758,321	87,558,706
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)	59,521,390	8,181,371
Van Kampen NVIT Real Estate Fund - Class II (NVRE2)	46,023,110	4,814,980
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)	60,472,294	195,027,247
Foreign Bond Portfolio (Unhedged) - Advisor Class (PMVFAD)	11,239,927	3,928,409
Low Duration Portfolio - Advisor Class (PMVLAD)	157,223,712	1,888,980
V.I. Basic Value Fund - Series II (AVBV2)	5,197,348	54,104,447
V.I. Capital Appreciation Fund - Series II (AVCA2)	380,583	2,265,545
V.I. Capital Development Fund - Series II (AVCD2)	3,302,544	4,921,525
VPS Growth and Income Portfolio - Class B (ALVGIB)	445,621	3,384,502
VPS Small/Mid Cap Value Portfolio: Class B (ALVSVB)	10,673,594	9,504,551
Money Market Portfolio(TM) (CHSMM)	5,624,708	14,273,632
VP Balanced Fund - Class I (ACVB)	2,631,236	11,264,360
VP Capital Appreciation Fund - Class I (ACVCA)	1,007,453	80,414,705

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

VP Income & Growth Fund - Class I (ACVIG)	1,143,862	4,765,828
VP Income & Growth Fund - Class II (ACVIG2)	416,775	1,830,936
VP Inflation Protection Fund - Class II (ACVIP2)	39,498,065	19,891,943
VP International Fund - Class I (ACVI)	643,190	30,970,641
VP International Fund - Class II (ACVI2)	62,553	2,005,635
VP International Fund - Class III (ACVI3)	608,136	20,449,702
VP International Fund - Class IV (ACVI4)	898,274	16,952,540
VP Mid Cap Value Fund - Class I (ACVMV1)	2,151,611	3,024,541
VP Mid Cap Value Fund - Class II (ACVMV2)	12,702,465	14,335,556
VP Ultra(R) Fund - Class I (ACVU1)	245,228	3,341,764
VP Ultra(R) Fund - Class II (ACVU2)	355,923	13,415,914
VP Value Fund - Class I (ACVV)	3,749,878	24,932,444
VP Value Fund - Class II (ACVV2)	8,954,439	24,312,545
VP Vista(SM) Fund - Class I (ACVVS1)	274,044	7,311,762
VP Vista(SM) Fund - Class II (ACVVS2)	1,655,731	24,586,821
Small Cap Stock Index Portfolio - Service Shares (DVSCS)	12,495,367	13,772,890
Stock Index Fund, Inc. - Initial Shares (DSIF)	20,870,934	45,165,677
Stock Index Fund, Inc. - Service Shares (DSIFS)	16,809,629	13,676,754
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)	626,132	8,955,913
Appreciation Portfolio - Initial Shares (DCAP)	3,670,042	6,102,630
Appreciation Portfolio - Service Shares (DCAPS)	6,757,040	5,391,672
Developing Leaders Portfolio - Service Shares (DVDLS)	121,999	556,212
Growth and Income Portfolio - Initial Shares (DGI)	344,989	3,302,709
Capital Appreciation Fund II - Service Shares (FCA2S)	167,460	693,838
Clover Value Fund II - Service Shares (FALFS)	148,267	579,921
Market Opportunity Fund II - Service Shares (FVMOS)	7,218,026	8,921,426
Quality Bond Fund II - Primary Shares (FQB)	3,595,513	4,060,892
Quality Bond Fund II - Service Shares (FQBS)	8,586,233	10,086,643
Contrafund Portfolio - Service Class 2 (FC2)	3,998,865	59,507,123
Equity-Income Portfolio - Initial Class (FEIP)	7,999,171	115,171,212
Fidelity(R) VIP Fund - Value Strategies Portfolio - Service Class 2 (FVSS2)	1,361,459	5,105,611
High Income Portfolio - Initial Class (FHIP)	4,664,584	18,234,702
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)	4,222,343	39,592,717
VIP Fund - Contrafund Portfolio - Initial Class (FCP)	5,243,013	83,972,272
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)	12,373,475	21,613,686
VIP Fund - Equity-Income Portfolio - Service Class 2 (FEI2)	11,831,395	21,270,051
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)	1,358,162	2,023,663
VIP Fund - Freedom Fund 2010 Portfolio - Service Class 2 (FF10S2)	14,256,034	4,084,222
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)	2,169,005	2,393,556
VIP Fund - Freedom Fund 2020 Portfolio - Service Class 2 (FF20S2)	38,959,787	2,447,866
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)	1,465,205	876,697
VIP Fund - Freedom Fund 2030 Portfolio - Service Class 2 (FF30S2)	2,905,927	2,059,482
VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)	559,899	2,358,464
VIP Fund - Growth Portfolio - Initial Class (FGP)	1,675,580	88,215,017
VIP Fund - Growth Portfolio - Service Class 2 (FG2)	5,261,242	9,777,131
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)	15,493,131	12,506,381
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)	13,487,016	4,874,720
VIP Fund - Investment Grade Bond Portfolio - Service Class 2 (FIGBP2)	152,350,158	68,799,555
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)	6,541,878	5,659,276
VIP Fund - Mid Cap Portfolio - Service Class 2 (FMC2)	20,785,787	26,726,833
VIP Fund - Overseas Portfolio - Initial Class (FOP)	1,602,548	12,662,009
VIP Fund - Overseas Portfolio - Initial Class R (FOPR)	1,287,932	9,623,212
VIP Fund - Overseas Portfolio - Service Class 2 (FO2)	78,358	1,257,031
VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)	12,317,310	7,952,532
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)	2,434,077	5,955,144
Franklin Income Securities Fund - Class 2 (FTVIS2)	18,195,558	15,505,871
Franklin Rising Dividends Securities Fund - Class 2 (FTVRD2)	1,381,031	13,103,391
Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)	118,050,798	47,393,973
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)	7,879,432	10,825,909
Templeton Foreign Securities Fund - Class 2 (TIF2)	407,879	1,148,757
Templeton Foreign Securities Fund - Class 3 (TIF3)	42,929,803	376,185,552
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)	24,374,364	19,056,704
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)	8,020,726	1,240,492
Growth Portfolio - I Class Shares (AMTG)	202,145	59,879,745
Guardian Portfolio - I Class Shares (AMGP)	307,608	10,559,413
International Portfolio - S Class Shares (AMINS)	436,309	14,042,261
Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)	263,838	7,061,957
Partners Portfolio- I Class Shares (AMTP)	3,339,514	139,570,174
Regency Portfolio - S Class Shares (AMRS)	2,667,673	18,284,431
Small-Cap Growth Portfolio - S Class Shares (AMFAS)	824,133	2,002,344
Socially Responsive Portfolio - I Class Shares (AMSRS)	1,024,747	7,523,119
Balanced Fund/VA - Non-Service Shares (OVMS)	159,990	20,234,662
Capital Appreciation Fund/VA - Service Class (OVCAFS)	1,924,048	9,611,152
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)	621,683	9,484,419
Core Bond Fund/VA - Non-Service Shares (OVB)	717,333	17,359,032
Global Securities Fund/VA - Class 3 (OVGS3)	3,341,915	12,435,984
Global Securities Fund/VA - Class 4 (OVGS4)	4,208,286	10,936,308
Global Securities Fund/VA - Non-Service Shares (OVGS)	5,454,361	19,497,852
Global Securities Fund/VA - Service Class (OVGSS)	413,802	1,869,520
High Income Fund/VA - Class 3 (OVHI3)	556,602	898,900
High Income Fund/VA - Class 4 (OVHI4)	5,887,708	11,315,967
High Income Fund/VA - Non-Service Shares (OVHI)	-	81,745
High Income Fund/VA - Service Class (OVHIS)	10,299	4,089,346
Main Street Fund(R)/VA - Non-Service Shares (OVGI)	947,271	3,547,717

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

Main Street Fund(R)/VA - Service Class (OVGIS)		49,190,334		121,648,635
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)		2,846,996		3,397,961
Main Street Small Cap Fund(R)/VA - Service Class (OVSCS)		59,026,317		213,592,040
MidCap Fund/VA - Non-Service Shares (OVAG)		554,199		1,785,080
Putnam VT Growth and Income Fund - IB Shares (PVGIB)		175,082		1,418,643
Putnam VT International Equity Fund - IB Shares (PVTIGB)		-		261,732
Putnam VT Voyager Fund - IB Shares (PVTVB)		1,293,539		468,115
Diversified Stock Fund Class A Shares (VYDS)		174,762		522,706
Blue Chip Growth Portfolio - II (TRBCG2)		7,087,772		208,935,088
Equity Income Portfolio - II (TREI2)		11,960,702		18,854,876
Limited-Term Bond Portfolio - II (TRLT2)		10,051,375		57,094,698
Worldwide Insurance Trust - Worldwide Bond Fund - Class R1 (VWBFR)		1,171,126		2,676,066
Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)		559,281		3,173,507
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Class R1 (VWEMR)		6,127,510		10,040,987
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)		1,249,759		4,777,982
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Class R1 (VWHAR)		5,174,845		8,587,653
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)		229,392		2,835,898
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)		35,579,059		1,959,180
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)		1,172,852		33,912,474
Advantage Funds Variable Trust - VT Large Company Growth Fund (WFVLCG)		332		6,698
Advantage Funds Variable Trust - VT Money Market Fund (WFVMM)		139,562		201,179
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)		4,666,621		263,150,710
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)		9,375,523		308,994
Advantage Funds Variable Trust - VT Small-Mid Cap Value Fund (WFVSMV)		630		2,230
Advantage Funds Variable Trust - VT Total Return Bond Fund (WFVTRB)		237,061		984
International Equity Flex I Portfolio (obsolete) (WIEP)		75,445		17,929,507
International Equity Flex II Portfolio (obsolete) (WVCP)		36,565		1,820,098
J.P. Morgan NVIT Balanced Fund - Class I (obsolete) (BF)		204,225		3,473,678
Large Cap Growth Fund II (obsolete) (VFLG2)		7,593		954,331
Large Cap Value Fund II (obsolete) (VFLV2)		45,398		1,502,186
Managed Allocation Fund - Aggressive Growth II (obsolete) (MBVAG2)		83		306,327
Managed Allocation Fund - Conservative Growth II (obsolete) (MBVCG2)		38,880		281,847
NVIT Mid Cap Growth Fund - Class I (obsolete) (SGRF)		204,602		8,697,689
NVIT Mid Cap Growth Fund - Class II (obsolete) (SGRF2)		718,498		30,649,318
Series Trust II - Mid Cap Value Portfolio (obsolete) (JPMCVP)		144,852		9,312,085
Variable Contracts Trust - Small Cap Value VCT Portfolio - Class I Shares (obsolete) (PISVP1)		5,704		1,459,277
Total	$	6,528,661,767	$	6,087,611,304

(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, 2009. 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-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
Balanced Portfolio - Class S Shares (ALBS)
2009	0.95%	to	1.05	%	18,711	$	11.82	to	11.74	$	220,306	2.91	%	27.28%	to	27.15	%
2008	0.95%	to	1.45	%	18,716		9.29	to	9.04		173,104	0.00	%	-32.55%	to	-32.89	%
2007	0.95%	to	1.45	%	23,143		13.77	to	13.47		317,270	0.00	%	13.39%	to	12.82	%
2006	0.95%	to	1.45	%	19,445		12.14	to	11.94		235,534	0.81	%	3.47%	to	2.95	%
2005	0.95%	to	1.45	%	37,454		11.73	to	11.6		439,160	1.78	%	7.13%	to	6.59	%
MidCap Growth Portfolio - Class S Shares (ALMCS)
2009	0.95%	to	1.45	%	38,321		11.39	to	11.03		432,673	0.00	%	49.88%	to	49.12	%
2008	0.95%	to	1.45	%	35,463		7.6	to	7.4		267,952	0.00	%	-58.87%	to	-59.08	%
2007	0.95%	to	1.80	%	52,160		18.48	to	17.8		958,371	0.00	%	30.02%	to	28.9	%
2006	0.95%	to	1.80	%	42,969		14.21	to	13.81		608,077	0.00	%	8.84%	to	7.91	%
2005	0.95%	to	1.80	%	31,739		13.06	to	12.8		413,029	0.00	%	8.5%	to	7.57	%
Growth Fund - Class 1 (AFGF)
2009	1.30%				156,482		65.75				10,287,967	0.86	%	37.93%
2008	1.30%				185,887		47.67				8,860,655	1.05	%	-44.56%
2007	1.30%				204,499		85.98				17,582,665	0.98	%	11.17%
2006	1.30%				243,531		77.34				18,835,011	0.92	%	9.05%
2005	1.30%				304,890		70.93				21,624,645	0.86	%	14.99%
High-Income Bond Fund - Class 1 (AFHY)
2009	1.30%				41,033		42.12				1,728,444	7.90	%	37.64%
2008	1.30%				42,363		30.6				1,296,441	5.45	%	-24.74%
2007	1.30%				35,586		40.66				1,446,977	10.75	%	0.29%
2006	1.30%				35,506		40.54				1,439,550	4.68	%	9.45%
2005	1.30%				51,290		37.04				1,899,949	5.71	%	1.13%
U.S. Government/AAA-Rated Securities Fund - Class 1 (AFGC)
2009	1.30%				42,499		31.88				1,354,789	2.60	%	1.45%
2008	1.30%				48,345		31.42				1,519,125	3.08	%	6.44%
2007	1.30%				49,215		29.52				1,452,853	7.14	%	5.43%
2006	1.30%				62,699		28				1,755,517	3.68	%	2.6%
2005	1.30%				88,729		27.29				2,421,277	3.90	%	1.37%
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class III (MLVGA3)
2009	0.75%	to	2.65	%	2,338,768		12.12	to	11.96		28,183,661	2.59	%	21.17%	to	19.62	%	*
Credit Suisse Trust- International Equity Flex III Portfolio (CSIEF3)
2009	0.80%	to	1.40	%	161,230		10.1	to	10.1		1,628,659	0.00	%	1.04%	to	1.01	%	*
U.S. Equity Flex I Portfolio (WSCP)
2009	0.80%	to	1.40	%	2,532,513		13.36	to	13.66		34,947,501	1.16	%	23.67%	to	22.92	%
2008	0.80%	to	1.40	%	2,973,366		10.8	to	11.11		33,357,355	0.08	%	-35.12%	to	-35.52	%
2007	0.80%	to	1.40	%	3,619,869		16.65	to	17.24		62,919,860	0.00	%	-1.63%	to	-2.23	%
2006	0.80%	to	1.40	%	4,550,318		16.92	to	17.63		80,816,137	0.00	%	3.93%	to	3.3	%
2005	0.80%	to	1.40	%	5,728,799		16.28	to	17.07		98,399,267	0.00	%	-3.46%	to	-4.04	%
Insurance Trust - Insurance Trust Mid Cap Value Portfolio 1 (JPMMV1)
2009	0.80%	to	1.40	%	515,602		12.14	to	11.73		6,074,214	0.00	%	25.68%	to	24.92	%
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
2009	0.95%	to	2.45	%	876,368		15.02	to	14.75		13,598,156	2.79	%	24.39%	to	22.51	%
2008	0.95%	to	2.55	%	848,549		12.08	to	11.96		10,629,343	2.43	%	-16.86%	to	-18.2	%
2007	0.95%	to	2.55	%	908,896		14.53	to	14.63		13,784,481	2.33	%	9.23%	to	7.46	%
2006	0.95%	to	2.55	%	946,961		13.3	to	13.61		13,298,761	2.03	%	9.37%	to	7.61	%
2005	0.95%	to	2.55	%	889,457		12.16	to	12.65		11,543,065	1.93	%	6.64%	to	4.92	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
2009	0.40%	to	2.95	%	7,958,375	$	8.39	to	15.52	$	108,881,608	0.01	%	45.43%	to	41.71	%
2008	0.80%	to	2.85	%	6,759,021		6.45	to	11.01		62,774,776	0.01	%	-44.76%	to	-45.9	%
2007	0.80%	to	2.85	%	4,763,489		11.67	to	20.36		70,732,848	0.18	%	35.54%	to	32.72	%
2006	0.80%	to	2.80	%	3,715,916		8.61	to	15.37		36,031,995	0.13	%	8.25%	to	6.07	%
2005	0.80%	to	2.80	%	4,486,139		7.95	to	14.49		39,249,662	0.01	%	11.66%	to	9.41	%
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)
2009	0.80%	to	1.40	%	417,666		12.87	to	12.29		5,164,464	0.00	%	55.84%	to	54.9	%
2008	0.80%	to	1.40	%	342,194		8.26	to	7.93		2,732,234	0.09	%	-44.35%	to	-44.68	%
2007	0.80%	to	1.40	%	394,297		14.84	to	14.34		5,684,417	0.33	%	20.78%	to	20.04	%
2006	0.80%	to	1.40	%	411,359		12.29	to	11.94		4,935,597	0.00	%	7.08%	to	6.43	%
2005	0.80%	to	1.40	%	465,574		11.48	to	11.22		5,242,415	0.00	%	10.44%	to	9.77	%
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
2009	0.80%	to	1.40	%	566,071		4.4	to	4.15		2,364,877	0.00	%	55.64%	to	54.7	%
2008	0.80%	to	1.40	%	628,439		2.83	to	2.68		1,696,007	0.09	%	-44.42%	to	-44.76	%
2007	0.80%	to	1.40	%	733,774		5.09	to	4.86		3,581,793	0.31	%	20.72%	to	19.99	%
2006	0.80%	to	1.40	%	957,855		4.22	to	4.05		3,893,993	0.00	%	6.97%	to	6.32	%
2005	0.80%	to	1.40	%	1,331,430		3.94	to	3.81		5,087,677	0.00	%	10.66%	to	9.99	%
Janus Aspen Series - INTECH Risk-Managed Core Portfolio - Service Shares (JARLCS)
2008	0.80%	to	2.60	%	333,684		6.32	to	10.35		3,604,801	0.69	%	-36.75%	to	-37.9	%
2007	0.80%	to	2.60	%	321,741		10	to	16.66		5,521,409	0.50	%	-0.03%	to	3.36	%	*
2006	0.95%	to	2.50	%	237,661		15.64	to	16.18		3,888,158	0.15	%	9.72%	to	8.01	%
2005	0.95%	to	2.50	%	177,552		14.26	to	14.98		2,697,907	1.32	%	9.86%	to	8.15	%
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
2009	0.65%	to	3.25	%	8,647,430		8.63	to	20.24		194,404,524	0.41	%	77.91%	to	73.25	%
2008	0.65%	to	3.25	%	8,802,005		4.85	to	11.68		113,283,262	2.77	%	-52.52%	to	-53.77	%
2007	0.80%	to	3.25	%	7,719,861		29.56	to	25.27		212,963,970	0.45	%	27.04%	to	23.89	%
2006	0.80%	to	3.25	%	6,010,855		23.27	to	20.4		131,707,793	1.95	%	45.53%	to	41.94	%
2005	0.80%	to	2.20	%	1,666,749		15.99	to	14.63		25,822,972	1.10	%	30.96%	to	29.12	%
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
2009	0.80%	to	2.15	%	602,788		14.15	to	31.6		9,534,039	0.41	%	77.64%	to	75.22	%
2008	0.80%	to	2.15	%	711,183		7.97	to	18.03		6,402,172	2.65	%	-52.61%	to	-53.26	%
2007	0.80%	to	2.15	%	879,729		16.81	to	38.58		16,732,189	0.44	%	26.99%	to	25.25	%
2006	0.80%	to	2.15	%	1,090,672		13.24	to	30.8		16,201,270	1.82	%	45.46%	to	43.49	%
2005	0.80%	to	2.45	%	1,379,274		9.1	to	21.28		14,034,749	0.98	%	30.89%	to	28.72	%
Investors Growth Stock Series - Service Class (MIGSC)
2009	0.95%	to	2.80	%	996,255		11.67	to	11.37		13,426,951	0.45	%	37.77%	to	35.2	%
2008	0.95%	to	2.80	%	1,184,843		8.47	to	8.41		11,622,597	0.30	%	-37.58%	to	-38.75	%
2007	0.95%	to	3.15	%	1,427,758		13.57	to	13.5		22,610,416	0.09	%	9.96%	to	7.51	%
2006	0.95%	to	3.15	%	1,642,788		12.34	to	12.55		23,833,223	0.00	%	6.29%	to	3.93	%
2005	0.95%	to	3.15	%	1,866,912		11.61	to	12.08		25,659,631	0.14	%	3.24%	to	0.95	%
Value Series - Service Class (MVFSC)
2009	0.65%	to	3.25	%	22,272,897		8.33	to	12.93		339,364,913	1.18	%	21.66%	to	18.47	%
2008	0.80%	to	3.05	%	5,622,918		7.91	to	11.04		71,657,666	1.02	%	-33.28%	to	-34.8	%
2007	0.80%	to	3.15	%	4,556,477		11.85	to	16.86		87,844,770	0.73	%	6.73%	to	4.19	%
2006	0.80%	to	3.15	%	3,466,377		11.1	to	16.18		63,110,866	0.70	%	11.02%	to	16.72	%	*
2005	1.10%	to	3.15	%	1,732,243		15.74	to	13.86		26,565,220	0.77	%	5.3%	to	3.12	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
Core Plus Fixed Income Portfolio - Class I (MSVFI)
2009	0.80%	to	1.40	%	199,374	$	10.59	to	10.35	$	2,069,531	9.61	%	8.77%	to	8.11	%
2008	0.80%	to	1.40	%	312,617		9.73	to	9.58		2,999,638	4.42	%	-10.92%	to	-11.46	%
2007	1.30%	to	1.40	%	328,510		10.83	to	10.82		3,557,887	4.01	%	4.08%	to	3.97	%
2006	0.80%	to	1.40	%	136,094		10.44	to	10.4		1,416,424	1.17	%	4.45%	to	4.03	%	*
Core Plus Fixed Income Portfolio - Class II (MSVF2)
2009	0.95%	to	3.05	%	2,319,135		11.15	to	9.59		24,504,304	12.99	%	8.34%	to	6.05	%
2008	0.65%	to	3.25	%	22,132,369		8.92	to	8.94		214,874,888	4.27	%	-11.04%	to	-13.37	%
2007	0.95%	to	3.25	%	25,887,057		11.6	to	10.32		286,272,488	3.60	%	4.21%	to	1.78	%
2006	0.95%	to	3.25	%	10,572,601		11.13	to	10.14		113,144,737	3.36	%	2.58%	to	0.2	%
2005	0.95%	to	2.90	%	1,959,026		10.85	to	10.22		20,680,370	2.78	%	2.95%	to	0.93	%
Emerging Markets Debt Portfolio - Class I (MSEM)
2009	0.80%	to	1.40	%	206,910		22.88	to	21.22		4,430,726	8.01	%	29.17%	to	28.39	%
2008	0.80%	to	1.40	%	256,891		17.71	to	16.52		4,280,827	7.11	%	-15.66%	to	-16.17	%
2007	0.80%	to	1.40	%	351,451		21	to	19.71		6,980,725	7.33	%	5.68%	to	5.03	%
2006	0.80%	to	1.40	%	498,158		19.88	to	18.77		9,413,461	8.31	%	9.92%	to	9.26	%
2005	0.80%	to	1.40	%	725,492		18.08	to	17.18		12,534,982	7.55	%	11.36%	to	10.68	%
Emerging Markets Debt Portfolio - Class II (MSEMB)
2009	1.10%	to	2.15	%	72,537		19.03	to	17.66		1,345,283	7.91	%	28.68%	to	27.32	%
2008	1.10%	to	2.15	%	91,031		14.79	to	13.87		1,317,461	7.10	%	-15.92%	to	-16.81	%
2007	1.10%	to	2.15	%	113,859		17.59	to	16.68		1,965,340	7.38	%	5.22%	to	4.1	%
2006	1.10%	to	2.15	%	145,536		16.72	to	16.02		2,396,495	8.35	%	9.59%	to	8.43	%
2005	1.10%	to	2.45	%	171,015		15.26	to	14.64		2,577,975	7.16	%	10.91%	to	9.4	%
U.S. Real Estate Portfolio - Class I (MSVRE)
2008	0.80%	to	1.40	%	2,056,027		30.32	to	28.44		59,067,311	3.36	%	-38.39%	to	-38.77	%
2007	0.80%	to	1.40	%	2,592,043		49.21	to	46.45		121,497,196	1.18	%	-17.74%	to	-18.24	%
2006	0.80%	to	1.40	%	3,810,701		59.82	to	56.82		218,265,572	1.07	%	36.94%	to	36.12	%
2005	0.80%	to	1.40	%	4,368,496		43.68	to	41.74		183,618,271	1.20	%	16.12%	to	15.42	%
U.S. Real Estate Portfolio - Class II (MSVREB)
2009	1.35%				27		17.96				485	5.06	%	26.76%
2008	0.95%	to	2.80	%	3,061,013		11.91	to	12.96		42,791,166	2.76	%	-38.64%	to	-39.8	%
2007	0.95%	to	2.70	%	3,568,905		19.41	to	21.64		81,882,876	1.04	%	-18.06%	to	-19.52	%
2006	0.95%	to	2.80	%	4,145,461		23.69	to	26.78		116,700,717	0.94	%	36.36%	to	33.83	%
2005	0.95%	to	2.70	%	3,310,194		17.37	to	20.07		68,799,980	1.14	%	15.65%	to	13.61	%
Managed Allocation Fund - Moderate Growth II (VFMG2)
2009	1.15%	to	2.35	%	407,960		11.11	to	10.37		4,554,149	0.01	%	24.18%	to	22.67	%
2008	1.15%	to	2.60	%	567,913		8.95	to	8.36		5,101,299	1.30	%	-29.89%	to	-30.92	%
2007	1.15%	to	2.60	%	651,956		12.76	to	12.1		8,384,121	2.05	%	5.65%	to	4.1	%
2006	1.15%	to	2.60	%	703,592		12.08	to	11.62		8,580,243	2.61	%	9.15%	to	7.56	%
2005	1.15%	to	2.60	%	659,109		11.07	to	10.81		7,392,704	1.78	%	2.8%	to	1.3	%
AllianceBernstein NVIT Global Fixed Income Fund - Class III (NVAGF3)
2009	0.80.%	to	2.40	%	155,699		11.36	to	11.24		1,760,194	6.49	%	13.58%	to	12.35	%	*
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
2009	0.80%	to	1.40	%	5,595		12.5	to	12.45		69,699	1.43	%	24.97%	to	24.47	%	*
American Century NVIT Multi Cap Value Fund - Class II (NVAMV2)
2009	1.10%	to	2.75	%	349,190		12.46	to	12.32		4,337,527	1.09	%	24.59%	to	23.2	%	*
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
2009	0.65%	to	3.35	%	138,502,206		8.64	to	8.56		1,265,434,415	0.08	%	22.61%	to	19.18	%
2008	0.80%	to	3.10	%	81,161,084		7.7	to	7.23		609,557,811	3.17	%	-30.34%	to	-31.96	%
2007	0.80%	to	2.95	%	42,263,897		11.06	to	10.66		460,727,179	2.72	%	5.29%	to	2.99	%
2006	0.80%	to	2.70	%	12,975,664		10.5	to	10.37		135,528,888	3.29	%	5.01%	to	3.67	%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
American Funds NVIT Bond Fund - Class II (GVABD2)
2009	0.75	%	to	3.35	%	50,794,802	$	9.98	to	9.68	$	521,115,164	0.36	%	11.31	%	to	8.39	%
2008	0.80	%	to	3.10	%	33,032,987		9.57	to	8.99		306,925,600	7.38	%	-10.59	%	to	-12.67	%
2007	0.80	%	to	2.95	%	12,421,457		10.71	to	10.32		130,936,805	8.10	%	2.15	%	to	-0.07	%
2006	1.05	%	to	2.70	%	1,749,769		10.47	to	10.35		18,258,647	0.44	%	4.65	%	to	3.49	%	*
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
2009	0.75	%	to	3.30	%	8,693,755		8.75	to	9.53		88,480,893	0.00	%	40.54	%	to	36.93	%
2008	0.75	%	to	3.05	%	6,969,825		6.22	to	7		50,870,236	2.90	%	-39.1	%	to	-40.51	%
2007	0.80	%	to	3.05	%	5,365,947		12.23	to	11.78		64,844,710	2.79	%	13.44	%	to	10.86	%
2006	0.80	%	to	2.50	%	2,159,481		10.78	to	10.66		23,167,616	0.10	%	7.85	%	to	6.62	%	*
American Funds NVIT Growth Fund - Class II (GVAGR2)
2009	0.75	%	to	3.30	%	16,804,221		7.75	to	7.94		142,381,453	0.00	%	37.74	%	to	34.2	%
2008	0.65	%	to	3.25	%	15,955,035		5.63	to	5.92		98,887,216	2.18	%	-44.58	%	to	-46.03	%
2007	0.80	%	to	3.25	%	11,269,769		11.44	to	10.98		127,268,601	0.71	%	11	%	to	8.24	%
2006	0.80	%	to	3.10	%	4,677,116		10.31	to	10.15		47,960,489	1.16	%	3.09	%	to	1.5	%	*
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
2009	0.75	%	to	3.35	%	64,562,256		8.08	to	7.29		491,918,665	0.00	%	29.71	%	to	26.15	%
2008	0.80	%	to	3.10	%	38,038,535		6.05	to	5.81		225,395,652	3.41	%	-38.56	%	to	-39.99	%
2007	0.80	%	to	2.95	%	8,176,408		9.84	to	9.7		79,871,976	2.28	%	-1.61	%	to	-3.04	%	*
Federated NVIT High Income Bond Fund - Class I (HIBF)
2009	0.95	%	to	2.35	%	689,492		13.67	to	13.88		10,134,551	9.64	%	44.61	%	to	42.57	%
2008	0.95	%	to	2.35	%	833,712		9.45	to	9.73		8,523,732	8.79	%	-28.67	%	to	-29.68	%
2007	0.95	%	to	2.35	%	1,099,805		13.25	to	13.84		15,862,330	7.26	%	2.15	%	to	0.7	%
2006	0.95	%	to	2.35	%	1,370,433		12.98	to	13.75		19,466,090	6.92	%	9.56	%	to	8.01	%
2005	0.95	%	to	2.35	%	1,835,081		11.84	to	12.73		23,862,058	7.21	%	1.41	%	to	-0.02	%
Federated NVIT High Income Bond Fund - Class III (HIBF3)
2009	0.75	%	to	2.80	%	6,014,764		10.4	to	11.07		70,825,989	9.70	%	44.98	%	to	41.99	%
2008	0.80	%	to	2.75	%	3,688,239		7.78	to	7.81		30,220,484	8.86	%	-28.67	%	to	-30.08	%
2007	0.80	%	to	2.80	%	3,534,655		10.9	to	11.15		40,885,129	8.09	%	2.34	%	to	0.26	%
2006	0.80	%	to	2.45	%	2,697,783		10.65	to	11.19		30,684,739	7.38	%	6.54	%	to	7.9	%	*
2005	0.95	%	to	2.35	%	1,650,804		10.47	to	10.38		17,226,530	8.47	%	4.74	%	to	3.76	%	*
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
2009	0.80	%	to	1.40	%	25,866		23.62	to	22.34		580,996	1.17	%	62.01	%	to	61.03	%
2008	0.80	%	to	1.40	%	33,579		14.58	to	13.87		468,183	1.15	%	-58.1	%	to	-58.36	%
2007	0.80	%	to	1.40	%	40,673		34.8	to	33.31		1,361,399	0.67	%	44.41	%	to	43.53	%
2006	0.80	%	to	1.40	%	52,896		24.1	to	23.21		1,232,735	0.66	%	35.63	%	to	34.81	%
2005	0.80	%	to	1.40	%	71,734		17.77	to	17.21		1,239,682	0.59	%	31.58	%	to	30.79	%
Gartmore NVIT Emerging Markets Fund - Class II (GEM2)
2009	1.10	%	to	2.45	%	66,147		33.93	to	30.87		2,165,809	1.16	%	61.29	%	to	59.09	%
2008	1.10	%	to	2.45	%	88,202		21.04	to	19.41		1,800,059	0.82	%	-58.39	%	to	-58.96	%
2007	1.10	%	to	2.45	%	134,775		50.56	to	47.29		6,651,015	0.42	%	43.59	%	to	41.62	%
2006	1.10	%	to	2.45	%	171,105		35.22	to	33.39		5,894,605	0.52	%	34.82	%	to	32.99	%
2005	1.10	%	to	2.45	%	229,328		26.12	to	25.11		5,880,895	0.39	%	30.88	%	to	29.1	%
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
2009	0.80	%	to	1.40	%	1,637,414		25.84	to	24.66		40,653,617	1.30	%	62.18	%	to	61.2	%
2008	0.80	%	to	1.40	%	1,827,343		15.93	to	15.3		28,122,168	1.09	%	-58.17	%	to	-58.42	%
2007	0.80	%	to	1.40	%	2,599,261		38.08	to	36.8		96,119,470	0.68	%	44.38	%	to	43.5	%
2006	0.80	%	to	1.40	%	2,337,802		26.38	to	25.64		60,183,472	0.78	%	35.55	%	to	34.74	%
2005	0.80	%	to	1.40	%	2,370,880		19.46	to	19.03		45,251,879	0.50	%	31.6	%	to	30.8	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
Gartmore NVIT Emerging Markets Fund - Class VI (GEM6)
2009	0.75	%	to	2.80	%	2,858,691	$	6.91	to	18.26	$	54,764,422	1.12	%	61.87	%	to	58.52	%
2008	0.75	%	to	2.80	%	2,681,445		4.27	to	11.52		32,388,303	0.99	%	-58.18	%	to	-59.05	%
2007	0.95	%	to	2.80	%	3,749,821		13.46	to	28.12		109,631,081	0.59	%	34.62	%	to	41.36	%	*
2006	1.10	%	to	2.80	%	2,839,512		20.83	to	19.89		58,358,811	0.62	%	35.06	%	to	32.74	%
2005	1.10	%	to	2.75	%	1,795,459		15.42	to	15		27,469,297	0.51	%	31.03	%	to	28.86	%
Gartmore NVIT Global Utilities Fund - Class II (GVGU2)
2009	1.15	%	to	2.10	%	18,909		19.01	to	17.79		350,603	3.61	%	6.47	%	to	5.45	%
2008	1.15	%	to	2.10	%	23,118		17.85	to	16.87		404,326	2.63	%	-33.94	%	to	-34.57	%
2007	0.95	%	to	2.10	%	35,923		25.25	to	25.78		952,362	2.10	%	18.91	%	to	17.53	%
2006	0.95	%	to	2.10	%	46,958		21.23	to	21.94		1,053,325	2.21	%	36.03	%	to	34.45	%
2005	0.95	%	to	2.10	%	54,377		15.61	to	16.32		902,655	1.71	%	5.18	%	to	3.96	%
Gartmore NVIT Global Utilities Fund - Class III (GVGU)
2009	0.80	%	to	1.40	%	217,412		16.85	to	16.08		3,517,625	3.67	%	7.11	%	to	6.47	%
2008	0.80	%	to	1.40	%	340,376		15.73	to	15.1		5,166,421	2.86	%	-33.44	%	to	-33.84	%
2007	0.80	%	to	1.40	%	549,810		23.63	to	22.83		12,602,303	2.41	%	19.42	%	to	18.7	%
2006	0.80	%	to	1.40	%	703,436		19.78	to	19.23		13,573,005	2.45	%	36.49	%	to	35.67	%
2005	0.80	%	to	1.40	%	442,364		14.49	to	14.18		6,284,975	2.27	%	5.63	%	to	4.99	%
Gartmore NVIT International Equity Fund - Class I (GIG)
2009	0.80	%	to	1.40	%	6,007		11.09	to	10.49		63,507	1.18	%	28.68	%	to	27.91	%
2008	0.80	%	to	1.40	%	7,437		8.62	to	8.2		61,400	1.38	%	-46.49	%	to	-46.81	%
2007	0.80	%	to	1.40	%	7,935		16.11	to	15.42		123,047	0.38	%	26.12	%	to	25.36	%
2006	0.80	%	to	1.40	%	10,735		12.77	to	12.3		133,086	1.00	%	31.9	%	to	31.11	%
2005	0.80	%	to	1.40	%	15,486		9.68	to	9.38		146,183	0.96	%	29.17	%	to	28.39	%
Gartmore NVIT International Equity Fund - Class III (GIG3)
2009	0.80	%	to	1.40	%	2,072,015		17.56	to	16.76		34,894,818	0.69	%	28.63	%	to	27.86	%
2008	0.80	%	to	1.40	%	1,123,906		13.65	to	13.11		14,805,125	1.25	%	-46.47	%	to	-46.8	%
2007	0.80	%	to	1.40	%	1,528,618		25.5	to	24.63		37,816,487	0.44	%	26.13	%	to	25.36	%
2006	0.80	%	to	1.40	%	1,396,070		20.21	to	19.65		27,532,803	1.27	%	31.89	%	to	31.1	%
2005	0.80	%	to	1.40	%	847,716		15.33	to	14.99		12,738,956	0.74	%	29.14	%	to	28.36	%
Gartmore NVIT International Equity Fund - Class VI (NVIE6)
2009	0.40	%	to	2.75	%	2,369,404		7.35	to	6.81		16,443,478	0.61	%	28.93	%	to	25.89	%
2008	1.10	%	to	2.60	%	510,631		5.47	to	5.41		2,781,264	1.52	%	-45.33	%	to	-45.88	%	*
Gartmore NVIT Worldwide Leaders Fund - Class III (GEF3)
2009	0.80	%	to	1.40	%	186,700		13.99	to	13.51		2,534,945	1.02	%	24	%	to	23.25	%
2008	0.80	%	to	1.40	%	249,753		11.28	to	10.96		2,748,870	0.67	%	-44.77	%	to	-45.11	%
2007	0.80	%	to	1.40	%	376,901		20.42	to	19.97		7,550,213	0.49	%	18.98	%	to	18.25	%
2006	0.80	%	to	1.40	%	384,266		17.17	to	16.89		6,502,021	0.82	%	24.81	%	to	24.06	%
2005	0.80	%	to	1.40	%	219,580		13.75	to	13.62		2,992,804	0.44	%	18.39	%	to	17.67	%
Gartmore NVIT Worldwide Leaders Fund - Class VI (NVGWL6)
2009	1.10	%	to	2.50	%	41,212		13.32	to	13.19		546,984	0.90	%	33.18	%	to	31.92	%	*
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
2009	0.80	%	to	1.40	%	13,158,118		7.82	to	7.74		101,993,343	0.18	%	51.74	%	to	50.82	%
2008	1.30	%	to	1.40	%	12,714		5.14	to	5.13		65,309	0.00	%	-48.63	%	to	-48.66	%	*
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class II (NVNMO2)
2009	0.75	%	to	2.75	%	1,491,186		7.79	to	7.53		11,436,241	0.00	%	51.82	%	to	48.76	%
2008	1.10	%	to	2.75	%	165,613		5.12	to	5.06		843,322	0.00	%	-48.84	%	to	-49.41	%	*
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
2009	0.80	%	to	1.40	%	202,450		8.02	to	7.94		1,609,379	0.49	%	30.48	%	to	29.69	%
2008	0.80	%	to	1.40	%	255,949		6.15	to	6.12		1,567,453	0.43	%	-38.55	%	to	-38.8	%	*
Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)
2009	0.65	%	to	3.25	%	35,752,844		8.02	to	7.67		281,271,459	0.41	%	30.42	%	to	27	%
2008	0.65	%	to	3.25	%	41,560,970		6.15	to	6.04		253,618,648	0.39	%	-38.5	%	to	-39.59	%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
NVIT Cardinal Aggressive Fund - Class II (NVCRA2)
2009	0.80%	to	2.60	%	1,320,362	$	8.18	to	7.93	$	10,654,779	0.99	%	28.16	%	to	25.84	%
2008	0.80%	to	2.60	%	688,094		6.38	to	6.3		4,366,517	1.64	%	-36.21	%	to	-36.99	%	*
NVIT Cardinal Balanced Fund - Class II (NVCRB2)
2009	0.80%	to	3.10	%	45,054,749		9.45	to	9.08		418,125,250	2.30	%	18.86	%	to	16.11	%
2008	1.10%	to	3.10	%	17,964,614		7.93	to	7.82		141,470,743	1.93	%	-20.7	%	to	-21.77	%	*
NVIT Cardinal Capital Appreciation Fund - Class II (NVCCA2)
2009	0.80%	to	3.00	%	61,562,208		8.89	to	8.57		540,299,784	1.96	%	23.17	%	to	20.44	%
2008	0.80%	to	2.95	%	15,353,953		7.22	to	7.12		110,154,375	1.75	%	-27.78	%	to	-28.83	%	*
NVIT Cardinal Conservative Fund - Class II (NVCCN2)
2009	1.10%	to	3.05	%	19,312,567		10.15	to	9.82		194,470,746	3.10	%	11.78	%	to	9.57	%
2008	1.10%	to	2.95	%	5,226,256		9.08	to	8.97		47,264,496	2.21	%	-9.18	%	to	-10.32	%	*
NVIT Cardinal Moderate Fund - Class II (NVCMD2)
2009	0.80%	to	2.95	%	54,968,785		9.17	to	8.84		498,076,084	2.23	%	20.97	%	to	18.35	%
2008	0.80%	to	2.95	%	13,903,119		7.58	to	7.47		104,822,308	1.77	%	-24.19	%	to	-25.29	%	*
NVIT Cardinal Moderately Aggressive Fund - Class II (NVCMA2)
2009	0.80%	to	2.70	%	21,578,200		8.61	to	8.34		183,374,699	1.47	%	25.57	%	to	23.16	%
2008	1.10%	to	2.70	%	14,026,096		6.84	to	6.77		95,660,793	1.72	%	-31.56	%	to	-32.31	%	*
NVIT Cardinal Moderately Conservative Fund - Class II (NVCMC2)
2009	0.80%	to	2.95	%	18,399,363		9.72	to	9.37		176,473,619	2.81	%	16.74	%	to	14.21	%
2008	1.10%	to	2.95	%	4,777,489		8.31	to	8.21		39,524,433	1.94	%	-16.89	%	to	-17.93	%	*
NVIT Core Bond Fund - Class I (NVCBD1)
2009	0.80%	to	1.40	%	279,023		10.67	to	10.57		2,952,194	3.81	%	7.91	%	to	7.26	%
2008	1.30%	to	1.40	%	42,991		9.86	to	9.85		423,815	3.07	%	-1.41	%	to	-1.48	%	*
NVIT Core Bond Fund - Class II (NVCBD2)
2009	0.40%	to	3.25	%	19,490,331		10.87	to	10.2		203,646,838	3.50	%	8.16	%	to	5.06	%
2008	1.05%	to	2.70	%	279,918		9.85	to	9.74		2,747,847	3.51	%	-1.46	%	to	-2.56	%	*
NVIT Core Plus Bond Fund - Class II (NVLCP2)
2009	0.80%	to	2.70	%	1,213,629		11.41	to	11.05		13,649,167	5.17	%	15.5	%	to	13.29	%
2008	0.80%	to	2.70	%	224,113		9.88	to	9.75		2,199,217	2.74	%	-1.24	%	to	-2.5	%	*
NVIT Fund - Class I (TRF)
2009	0.80%	to	1.40	%	3,250,148		18.16	to	20.33		147,253,756	1.33	%	25.09	%	to	24.33	%
2008	0.80%	to	1.40	%	3,836,090		14.51	to	16.35		139,622,623	1.38	%	-42.02	%	to	-42.37	%
2007	0.80%	to	1.40	%	4,753,992		25.03	to	28.38		292,472,857	1.05	%	7.31	%	to	6.66	%
2006	0.80%	to	1.40	%	5,881,078		23.33	to	26.61		329,928,198	1.04	%	12.72	%	to	12.04	%
2005	0.80%	to	1.40	%	7,471,589		20.7	to	23.75		359,061,978	0.87	%	6.58	%	to	5.94	%
NVIT Fund - Class II (TRF2)
2009	0.65%	to	3.25	%	23,090,202		7.45	to	10.26		283,628,433	1.14	%	24.74	%	to	21.48	%
2008	0.65%	to	3.25	%	28,046,162		5.97	to	8.44		280,666,419	1.23	%	-41.99	%	to	-43.51	%
2007	0.95%	to	3.25	%	23,169,599		10.1	to	14.95		404,959,033	0.93	%	1.03	%	to	4.37	%	*
2006	1.10%	to	3.25	%	11,257,455		16.96	to	14.32		185,406,908	0.96	%	12.16	%	to	9.73	%
2005	1.10%	to	2.95	%	1,503,114		15.12	to	13.16		22,317,067	0.68	%	5.87	%	to	3.89	%
NVIT Global Financial Services Fund - Class II (GVGF2)
2009	0.95%	to	2.15	%	47,904		12.37	to	13.9		694,038	0.89	%	30.29	%	to	28.71	%
2008	0.95%	to	2.15	%	55,720		9.49	to	10.8		623,060	1.65	%	-46.85	%	to	-47.5	%
2007	0.95%	to	2.15	%	65,660		17.86	to	20.57		1,389,160	2.84	%	-2.35	%	to	-3.54	%
2006	0.95%	to	2.30	%	85,448		18.29	to	21.2		1,862,421	1.63	%	18.95	%	to	17.33	%
2005	0.95%	to	2.30	%	91,491		15.38	to	18.07		1,683,814	1.68	%	9.74	%	to	8.25	%
NVIT Global Financial Services Fund - Class III (GVGFS)
2009	0.80%	to	1.40	%	176,927		13.1	to	12.5		2,227,534	1.11	%	30.88	%	to	30.08	%
2008	0.80%	to	1.40	%	212,769		10.01	to	9.61		2,057,788	2.14	%	-46.64	%	to	-46.97	%
2007	0.80%	to	1.40	%	168,520		18.76	to	18.13		3,068,547	3.09	%	-1.92	%	to	-2.51	%
2006	0.80%	to	1.40	%	230,182		19.13	to	18.59		4,294,613	2.27	%	19.38	%	to	18.66	%
2005	0.80%	to	1.40	%	235,707		16.02	to	15.67		3,701,998	1.28	%	10.28	%	to	9.62	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
NVIT Government Bond Fund - Class I (GBF)
2009	0.65%	to	3.25	%	43,318,770	$	11	to	10.54	$	603,120,896	3.35	%	2.02	%	to	-0.65	%
2008	0.65%	to	3.25	%	51,150,296		10.78	to	10.61		710,154,637	4.30	%	7.02	%	to	4.22	%
2007	0.80%	to	3.25	%	42,800,012		18.15	to	10.18		579,531,623	4.58	%	6.3	%	to	3.66	%
2006	0.80%	to	3.25	%	24,042,781		17.07	to	9.82		364,128,878	4.10	%	2.52	%	to	-0.01	%
2005	0.80%	to	2.95	%	14,001,716		16.65	to	9.9		277,933,074	3.61	%	2.44	%	to	0.23	%
NVIT Growth Fund - Class I (CAF)
2009	0.80%	to	1.40	%	2,234,563		13.21	to	14.44		35,566,596	0.55	%	32.4	%	to	31.6	%
2008	0.80%	to	1.40	%	2,568,010		9.98	to	10.98		31,041,966	0.27	%	-39.2	%	to	-39.57	%
2007	0.80%	to	1.40	%	3,094,521		16.41	to	18.16		61,757,970	0.17	%	18.58	%	to	17.86	%
2006	0.80%	to	1.40	%	3,637,231		13.84	to	15.41		61,410,149	0.05	%	5.32	%	to	4.69	%
2005	0.80%	to	1.40	%	4,490,233		13.14	to	14.72		72,042,518	0.08	%	5.65	%	to	5.01	%
NVIT Health Sciences Fund - Class II (GVGH2)
2009	0.95%	to	2.40	%	84,308		12.16	to	14.17		1,265,201	0.14	%	17.71	%	to	15.99	%
2008	0.95%	to	2.40	%	104,433		10.33	to	12.22		1,341,247	0.10	%	-26.11	%	to	-27.19	%
2007	0.95%	to	2.40	%	124,698		13.98	to	16.78		2,178,340	0.01	%	11.85	%	to	10.2	%
2006	0.95%	to	2.40	%	146,024		12.5	to	15.23		2,295,803	0.00	%	1.46	%	to	-0.02	%
2005	0.95%	to	2.40	%	164,699		12.32	to	15.23		2,566,533	0.00	%	7.16	%	to	5.6	%
NVIT Health Sciences Fund - Class III (GVGHS)
2009	0.80%	to	1.40	%	342,864		13	to	12.41		4,280,780	0.29	%	18.16	%	to	17.45	%
2008	0.80%	to	1.40	%	425,425		11.01	to	10.57		4,518,907	0.27	%	-25.83	%	to	-26.28	%
2007	0.80%	to	1.40	%	476,539		14.84	to	14.34		6,861,700	0.07	%	12.32	%	to	11.63	%
2006	0.80%	to	1.40	%	539,659		13.21	to	12.84		6,954,737	0.00	%	1.88	%	to	1.27	%
2005	0.80%	to	1.40	%	681,589		12.97	to	12.68		8,666,245	0.00	%	7.56	%	to	6.91	%
NVIT Health Sciences Fund - Class VI (GVGH6)
2009	0.95%	to	2.75	%	1,400,047		10.46	to	9.43		14,121,966	0.15	%	17.83	%	to	15.69	%
2008	0.95%	to	2.60	%	1,764,395		8.88	to	8.21		15,216,848	0.03	%	-26.15	%	to	-27.38	%
2007	0.95%	to	2.60	%	1,289,936		12.03	to	11.31		15,179,536	0.06	%	11.9	%	to	10.02	%
2006	0.95%	to	2.50	%	1,150,570		10.75	to	10.31		12,177,962	0.00	%	1.45	%	to	-0.14	%
2005	0.95%	to	2.75	%	981,490		10.59	to	10.28		10,290,290	0.00	%	7.21	%	to	5.27	%
NVIT International Index Fund - Class VIII (GVIX8)
2009	0.80%	to	2.75	%	1,437,538		8.52	to	7.92		11,902,303	2.84	%	27.58	%	to	25.07	%
2008	0.80%	to	2.75	%	996,023		6.68	to	6.33		6,515,309	1.84	%	-43.55	%	to	-44.66	%
2007	0.80%	to	2.60	%	994,418		11.83	to	11.48		11,613,924	1.36	%	8.51	%	to	6.53	%
2006	0.80%	to	2.50	%	344,723		10.9	to	10.78		3,735,515	1.44	%	9.05	%	to	7.8	%	*
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
2009	0.80%	to	3.10	%	25,390,427		12.62	to	12.71		372,961,401	1.08	%	26.19	%	to	23.26	%
2008	0.80%	to	3.10	%	28,976,150		10	to	10.31		340,600,981	2.05	%	-37.35	%	to	-38.81	%
2007	0.80%	to	3.10	%	31,376,425		15.96	to	16.85		595,372,007	1.99	%	5.11	%	to	2.66	%
2006	0.80%	to	3.15	%	31,476,825		15.19	to	16.39		574,617,190	2.05	%	15.94	%	to	13.2	%
2005	0.80%	to	3.15	%	28,651,809		13.1	to	14.48		456,283,327	2.09	%	7.07	%	to	4.54	%
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
2009	0.75%	to	3.05	%	5,086,185		11.58	to	11.4		58,589,875	1.75	%	15.82	%	to	14.02	%	*
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
2009	0.65%	to	2.65	%	9,516,319		12.15	to	11.99		114,993,475	1.84	%	21.52	%	to	19.88	%	*
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
2009	0.65%	to	2.85	%	23,544,842		10.22	to	10.85		283,709,134	1.88	%	8.38	%	to	5.98	%
2008	0.65%	to	2.90	%	17,322,335		9.43	to	10.21		194,173,796	3.48	%	-6.63	%	to	-8.75	%
2007	0.80%	to	2.90	%	12,824,884		12.51	to	11.19		155,324,013	3.57	%	4.53	%	to	2.31	%
2006	0.80%	to	2.90	%	11,627,252		11.96	to	10.94		135,903,498	3.06	%	5.32	%	to	3.09	%
2005	0.80%	to	2.90	%	10,630,963		11.36	to	10.61		119,046,011	2.93	%	2.48	%	to	0.32	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
2009	0.65	%	to	3.25	%	159,101,261	$	9.17	to	11.66	$	2,150,669,858	1.54	%	18.36	%	to	15.26	%
2008	0.65	%	to	3.25	%	149,844,350		7.75	to	10.12		1,725,868,410	2.83	%	-23.7	%	to	-25.69	%
2007	0.75	%	to	3.25	%	145,018,915		10.15	to	13.62		2,213,097,547	2.80	%	1.55	%	to	2.21	%	*
2006	0.80	%	to	3.25	%	119,084,540		13.55	to	13.32		1,748,946,215	2.59	%	10.46	%	to	7.74	%
2005	0.80	%	to	3.25	%	68,034,438		12.27	to	12.36		912,007,522	2.38	%	4.5	%	to	1.93	%
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
2009	0.65	%	to	3.15	%	99,614,695		8.58	to	12.41		1,442,819,680	1.32	%	23.58	%	to	20.47	%
2008	0.65	%	to	3.25	%	102,697,193		6.95	to	10.24		1,214,743,220	2.48	%	-31.84	%	to	-33.62	%
2007	0.80	%	to	3.25	%	100,235,949		15.31	to	15.43		1,754,174,386	2.38	%	5.3	%	to	2.68	%
2006	0.80	%	to	3.25	%	84,334,918		14.54	to	15.03		1,411,443,294	2.32	%	13.63	%	to	10.83	%
2005	0.80	%	to	3.25	%	54,186,761		12.79	to	13.56		803,417,643	2.25	%	6.22	%	to	3.6	%
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
2009	0.65	%	to	3.20	%	46,770,342		9.73	to	11.21		598,037,127	1.73	%	13.82	%	to	10.9	%
2008	0.65	%	to	3.20	%	42,212,488		8.55	to	10.11		478,690,281	3.20	%	-15.6	%	to	-17.76	%
2007	0.80	%	to	3.00	%	37,093,457		13.43	to	12.41		505,146,597	3.22	%	5.01	%	to	2.67	%
2006	0.80	%	to	3.00	%	26,410,052		12.79	to	12.09		346,803,038	2.80	%	7.56	%	to	5.18	%
2005	0.80	%	to	3.00	%	21,337,805		11.89	to	11.49		262,262,110	2.75	%	3.65	%	to	1.36	%
NVIT Leaders Fund - Class III (GVUSL)
2009	0.80	%	to	1.40	%	257,511		11.35	to	10.83		2,809,711	0.84	%	32.82	%	to	32.02	%
2008	0.80	%	to	1.40	%	344,880		8.54	to	8.2		2,847,343	0.77	%	-50.34	%	to	-50.64	%
2007	0.80	%	to	1.40	%	397,523		17.2	to	16.62		6,641,009	1.16	%	10.66	%	to	9.99	%
2006	0.80	%	to	1.40	%	416,108		15.55	to	15.11		6,311,879	0.74	%	15.2	%	to	14.5	%
2005	0.80	%	to	1.40	%	335,241		13.49	to	13.2		4,438,380	1.75	%	9.42	%	to	8.76	%
NVIT Mid Cap Index Fund - Class I (MCIF)
2009	0.80	%	to	3.05	%	5,707,255		14.59	to	14.3		88,938,969	0.99	%	35.66	%	to	32.58	%
2008	0.80	%	to	3.05	%	5,965,468		10.76	to	10.79		67,891,140	1.25	%	-36.97	%	to	-38.41	%
2007	0.80	%	to	3.05	%	6,776,727		17.07	to	17.51		121,741,631	1.44	%	6.69	%	to	4.26	%
2006	0.80	%	to	2.95	%	7,922,124		16	to	16.86		132,450,412	1.14	%	9.01	%	to	6.66	%
2005	0.80	%	to	3.00	%	9,202,373		14.67	to	15.79		140,639,610	1.01	%	11.2	%	to	8.75	%
NVIT Money Market Fund - Class I (SAM)
2009	0.40	%	to	3.30	%	47,298,089		10.13	to	9.23		611,884,145	0.05	%	-0.36	%	to	-3.26	%
2008	0.65	%	to	3.25	%	58,886,454		10.2	to	9.57		801,127,428	1.98	%	1.39	%	to	-1.26	%
2007	0.80	%	to	3.25	%	46,091,872		14.17	to	9.69		640,751,455	4.69	%	3.95	%	to	1.37	%
2006	0.80	%	to	3.25	%	30,582,760		13.64	to	9.56		454,065,260	4.85	%	3.7	%	to	1.14	%
2005	0.80	%	to	2.90	%	25,994,392		13.15	to	9.55		403,550,772	2.81	%	1.85	%	to	-0.3	%
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
2009	0.80	%	to	1.40	%	5,811,834		8.27	to	8.18		47,623,886	0.86	%	35.37	%	to	34.55	%
2008	0.80	%	to	1.40	%	236,983		6.11	to	6.08		1,442,366	0.11	%	-38.93	%	to	-39.17	%	*
NVIT Multi-Manager International Growth Fund - Class VI (NVMIG6)
2009	0.65	%	to	3.25	%	33,492,360		8.25	to	7.89		271,002,647	1.03	%	35.22	%	to	31.68	%
2008	0.65	%	to	3.25	%	33,672,563		6.1	to	5.99		203,779,302	0.00	%	-39.02	%	to	-40.09	%	*
NVIT Multi-Manager International Value Fund - Class II (GVDIV2)
2009	0.95	%	to	2.15	%	70,793		12.94	to	14.06		1,032,142	1.79	%	28.28	%	to	26.72	%
2008	0.95	%	to	2.20	%	93,231		10.09	to	11.08		1,064,102	1.54	%	-46.99	%	to	-47.74	%
2007	0.95	%	to	2.30	%	114,548		19.03	to	21.03		2,483,741	1.68	%	1.73	%	to	0.33	%
2006	0.95	%	to	2.30	%	138,583		18.71	to	20.96		2,966,966	1.79	%	21.24	%	to	19.6	%
2005	0.95	%	to	2.30	%	159,058		15.43	to	17.53		2,822,637	1.12	%	10.73	%	to	9.22	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
2009	0.80	%	to	1.40	%	567,848	$	15.64	to	15.02	$	8,573,083	2.08	%	28.8	%	to	28.02	%
2008	0.80	%	to	1.40	%	801,982		12.15	to	11.74		9,450,119	1.71	%	-46.76	%	to	-47.09	%
2007	0.80	%	to	1.40	%	1,163,407		22.81	to	22.18		25,890,831	2.19	%	2.1	%	to	1.48	%
2006	0.80	%	to	1.40	%	1,414,407		22.34	to	21.85		30,988,347	2.04	%	21.77	%	to	21.03	%
2005	0.80	%	to	1.40	%	1,317,124		18.35	to	18.06		23,825,534	1.54	%	11.16	%	to	10.49	%
NVIT Multi-Manager International Value Fund - Class VI (GVDIV6)
2009	0.40	%	to	3.30	%	4,221,490		7.13	to	9.34		43,539,817	1.99	%	28.97	%	to	25.22	%
2008	0.65	%	to	3.25	%	14,917,379		5.44	to	7.48		119,779,486	1.55	%	-46.8	%	to	-48.2	%
2007	0.95	%	to	3.25	%	17,958,586		15.73	to	14.43		274,210,858	2.13	%	1.72	%	to	-0.66	%
2006	0.95	%	to	3.25	%	8,623,100		15.46	to	14.53		130,577,252	1.68	%	21.25	%	to	18.44	%
2005	0.95	%	to	2.90	%	2,983,147		12.75	to	12.34		37,643,603	1.41	%	10.74	%	to	8.57	%
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
2009	0.80	%	to	1.40	%	435,720		8.15	to	8.07		3,519,745	0.80	%	28.74	%	to	27.96	%
2008	0.80	%	to	1.40	%	4,988		6.33	to	6.3		31,488	0.49	%	-36.7	%	to	-36.95	%	*
NVIT Multi-Manager Large Cap Growth Fund - Class II (NVMLG2)
2009	0.65	%	to	3.25	%	20,688,233		8.14	to	7.79		165,234,419	0.48	%	28.51	%	to	25.15	%
2008	1.10	%	to	2.60	%	100,379		6.31	to	6.25		631,180	0.35	%	-36.86	%	to	-37.51	%	*
NVIT Multi-Manager Large Cap Value Fund - Class II (NVMLV2)
2009	0.40	%	to	2.95	%	4,932,338		8.54	to	7.69		38,825,340	1.10	%	26.9	%	to	23.65	%
2008	0.80	%	to	2.75	%	538,618		6.31	to	6.23		3,379,434	0.97	%	-36.85	%	to	-37.69	%	*
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
2009	0.80	%	to	1.40	%	25,406,505		7.88	to	7.8		198,383,368	0.00	%	26.1	%	to	25.34	%
2008	0.80	%	to	1.40	%	82,831		6.25	to	6.22		515,576	0.00	%	-37.54	%	to	-37.79	%	*
NVIT Multi-Manager Mid Cap Growth Fund - Class II (NVMMG2)
2009	0.65	%	to	3.25	%	21,823,573		7.86	to	7.52		168,407,542	0.00	%	25.88	%	to	22.59	%
2008	0.65	%	to	3.25	%	13,384,980		6.24	to	6.13		82,917,533	0.00	%	-37.57	%	to	-38.67	%	*
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
2009	0.65	%	to	3.25	%	38,969,703		8.72	to	8.34		334,877,361	1.06	%	29.62	%	to	26.23	%
2008	0.65	%	to	3.25	%	25,339,928		6.73	to	6.61		169,207,097	1.07	%	-32.72	%	to	-33.9	%	*
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
2009	0.80	%	to	1.40	%	1,069,631		5.69	to	5.37		5,784,908	0.00	%	26.44	%	to	25.68	%
2008	0.80	%	to	1.40	%	1,159,659		4.5	to	4.27		4,987,989	0.00	%	-46.85	%	to	-47.17	%
2007	0.80	%	to	1.40	%	1,333,156		8.47	to	8.08		10,842,638	0.00	%	8.87	%	to	8.21	%
2006	0.80	%	to	1.40	%	1,582,686		7.78	to	7.47		11,881,738	0.00	%	2.38	%	to	1.77	%
2005	0.80	%	to	1.40	%	2,005,492		7.6	to	7.34		14,778,743	0.00	%	7.23	%	to	6.58	%
NVIT Multi-Manager Small Cap Growth Fund - Class II (SCGF2)
2009	0.95	%	to	2.65	%	983,361		7.04	to	10.84		11,455,239	0.00	%	25.98	%	to	23.82	%
2008	0.95	%	to	2.65	%	968,639		5.59	to	8.75		9,006,487	0.00	%	-47.04	%	to	-47.96	%
2007	0.95	%	to	2.80	%	1,534,096		10.55	to	15.18		26,997,038	0.00	%	5.55	%	to	6.42	%	*
2006	1.10	%	to	2.50	%	874,697		16.77	to	15.87		14,347,686	0.00	%	1.86	%	to	0.42	%
2005	1.10	%	to	2.50	%	833,849		16.47	to	15.81		13,450,257	0.00	%	6.55	%	to	5.05	%
NVIT Multi-Manager Small Cap Value Fund - Class I (SCVF)
2009	0.80	%	to	1.40	%	2,126,736		18.45	to	17.19		36,900,577	0.58	%	25.21	%	to	24.45	%
2008	0.80	%	to	1.40	%	2,629,323		14.74	to	13.81		36,629,666	1.08	%	-32.7	%	to	-33.1	%
2007	0.80	%	to	1.40	%	3,462,637		21.9	to	20.65		72,051,759	1.12	%	-7.64	%	to	-8.21	%
2006	0.80	%	to	1.40	%	4,662,412		23.71	to	22.5		105,594,388	0.43	%	16.36	%	to	15.66	%
2005	0.80	%	to	1.40	%	5,997,704		20.38	to	19.45		117,326,190	0.06	%	2.25	%	to	1.63	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
NVIT Multi-Manager Small Cap Value Fund - Class II (SCVF2)
2009	0.85%	to	2.90	%	1,573,837	$	8.43	to	13.66	$	26,272,189	0.48	%	24.79%	to	22.21	%
2008	0.85%	to	2.90	%	1,254,598		6.75	to	11.18		17,069,075	0.90	%	-32.88%	to	-34.27	%
2007	0.95%	to	2.70	%	1,429,150		14.6	to	19.38		29,121,568	0.90	%	-8.12%	to	-9.75	%
2006	0.95%	to	2.70	%	1,931,451		15.89	to	21.48		43,101,602	0.22	%	15.99%	to	13.94	%
2005	0.95%	to	2.50	%	1,711,970		13.7	to	18.96		33,130,471	0.00	%	1.81%	to	0.22	%
NVIT Multi-Manager Small Company Fund - Class I (SCF)
2009	0.80%	to	1.40	%	2,862,552		32.25	to	29.62		85,697,283	0.27	%	33.62%	to	32.82	%
2008	0.80%	to	1.40	%	3,418,854		24.14	to	22.3		76,995,047	0.79	%	-38.68%	to	-39.06	%
2007	0.80%	to	1.40	%	4,226,617		39.37	to	36.59		156,048,695	0.09	%	1.31%	to	0.69	%
2006	0.80%	to	1.40	%	5,162,695		38.86	to	36.34		189,121,006	0.10	%	11.14%	to	10.47	%
2005	0.80%	to	1.40	%	6,249,268		34.96	to	32.89		206,998,058	0.00	%	11.42%	to	10.75	%
NVIT Multi-Manager Small Company Fund - Class II (SCF2)
2009	0.85%	to	2.95	%	2,565,425		8.26	to	13.92		42,920,845	0.15	%	33.29%	to	30.46	%
2008	0.65%	to	3.25	%	4,915,642		6.21	to	10.48		61,690,354	0.61	%	-38.76%	to	-40.36	%
2007	0.95%	to	3.25	%	4,806,056		16.16	to	17.57		99,556,181	0.00	%	0.92%	to	-1.44	%
2006	0.95%	to	3.25	%	4,583,575		16.02	to	17.83		94,540,917	0.06	%	10.69%	to	8.13	%
2005	0.95%	to	2.90	%	3,282,029		14.47	to	16.65		61,689,901	0.00	%	10.95%	to	8.77	%
NVIT Multi-Sector Bond Fund - Class I (MSBF)
2009	0.80%	to	2.95	%	5,998,819		14.93	to	10.7		75,080,727	10.13	%	23.38%	to	20.71	%
2008	0.80%	to	2.95	%	4,888,835		12.1	to	8.86		50,278,472	7.18	%	-17.95%	to	-19.73	%
2007	0.80%	to	2.95	%	5,127,598		14.75	to	11.04		65,624,015	3.96	%	3.78%	to	1.52	%
2006	0.80%	to	2.70	%	4,491,128		14.21	to	11.36		56,418,087	4.15	%	4%	to	2.02	%
2005	0.80%	to	2.35	%	4,431,813		13.67	to	11.25		54,176,221	4.11	%	1.36%	to	-0.21	%
NVIT Short Term Bond Fund - Class II (NVSTB2)
2009	0.80%	to	3.3	%	7,363,311		10.51	to	10.07		76,304,875	2.29	%	6.25%	to	3.58	%
2008	0.80%	to	2.90	%	1,618,282		9.89	to	9.75		15,898,860	2.47	%	-1.1%	to	-2.5	%	*
NVIT Technology & Communications Fund - Class I (GGTC)
2009	0.8%	to	1.40	%	59,032		3.09	to	2.92		173,754	0.00	%	51.25%	to	50.33	%
2008	0.80%	to	1.40	%	69,320		2.04	to	1.94		135,605	0.00	%	-48.98%	to	-49.29	%
2007	0.80%	to	1.40	%	89,808		4	to	3.83		346,234	0.00	%	19.13%	to	18.4	%
2006	0.80%	to	1.40	%	134,349		3.36	to	3.23		437,058	0.00	%	10.28%	to	9.62	%
2005	0.80%	to	1.40	%	206,846		3.05	to	2.95		613,233	0.00	%	-1.31%	to	-1.91	%
NVIT Technology & Communications Fund - Class II (GGTC2)
2009	1.15%	to	2.45	%	49,650		15.3	to	13.97		742,990	0.00	%	50.52%	to	48.54	%
2008	1.15%	to	2.45	%	59,489		10.17	to	9.41		593,313	0.00	%	-49.38%	to	-50.05	%
2007	0.95%	to	2.45	%	77,916		13.74	to	18.83		1,535,827	0.00	%	18.85%	to	17.04	%
2006	0.95%	to	2.45	%	86,480		11.56	to	16.09		1,441,736	0.00	%	9.63%	to	7.97	%
2005	0.95%	to	2.45	%	103,102		10.55	to	14.9		1,576,432	0.00	%	-1.72%	to	-3.2	%
NVIT Technology & Communications Fund - Class III (GGTC3)
2009	0.80%	to	1.40	%	503,843		11.39	to	10.87		5,508,883	0.00	%	51.23%	to	50.31	%
2008	0.80%	to	1.40	%	328,516		7.53	to	7.23		2,390,551	0.00	%	-49%	to	-49.31	%
2007	0.80%	to	1.40	%	430,126		14.77	to	14.27		6,165,718	0.00	%	19.22%	to	18.49	%
2006	0.80%	to	1.40	%	503,432		12.38	to	12.04		6,083,287	0.00	%	10.2%	to	9.53	%
2005	0.80%	to	1.40	%	399,751		11.24	to	10.99		4,406,502	0.00	%	-1.31%	to	-1.9	%
NVIT Technology & Communications Fund - Class VI (GGTC6)
2009	0.95%	to	2.80	%	1,441,431		10.73	to	9.64		14,877,466	0.00	%	51.04%	to	48.22	%
2008	0.95%	to	2.80	%	677,283		7.1	to	6.5		4,669,470	0.00	%	-49.29%	to	-50.25	%
2007	0.95%	to	2.80	%	1,169,229		14.01	to	13.07		15,963,363	0.00	%	18.76%	to	16.53	%
2006	0.95%	to	2.45	%	606,445		11.79	to	11.33		7,020,073	0.00	%	10.14%	to	8.48	%
2005	0.95%	to	2.50	%	335,200		10.71	to	10.43		3,556,148	0.00	%	-1.72%	to	-3.25	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
NVIT U.S. Growth Leaders Fund - Class II (GVUG2)
2009	0.95%	to	2.95	%	964,339	$	8.1	to	12.26	$	14,596,668	0.00	%	24.49%	to	21.97	%
2008	0.95%	to	2.95	%	1,047,552		6.51	to	10.06		12,820,073	0.00	%	-42.03%	to	-43.2	%
2007	0.95%	to	2.95	%	1,094,930		11.22	to	17.7		23,231,890	0.00	%	12.24%	to	18.5	%	*
2006	1.10%	to	2.95	%	1,117,672		18.07	to	14.94		19,776,812	0.17	%	-1.6%	to	-3.43	%
2005	1.10%	to	2.95	%	1,053,974		18.36	to	15.47		19,056,867	0.00	%	10.47%	to	8.41	%
NVIT U.S. Growth Leaders Fund - Class III (GVUGL)
2009	0.80%	to	1.40	%	188,997		13.43	to	12.82		2,437,489	0.00	%	24.78%	to	24.03	%
2008	0.80%	to	1.40	%	270,231		10.76	to	10.33		2,805,775	0.00	%	-41.73%	to	-42.08	%
2007	0.80%	to	1.40	%	329,074		18.46	to	17.84		5,894,162	0.00	%	21.45%	to	20.71	%
2006	0.80%	to	1.40	%	454,175		15.2	to	14.78		6,733,083	0.25	%	-1.08%	to	-1.68	%
2005	0.80%	to	1.40	%	651,383		15.37	to	15.03		9,813,069	0.00	%	11.1%	to	10.43	%
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
2009	0.8%	to	1.40	%	46,211		12.99	to	12.94		598,142	0.34	%	29.9%	to	29.38	%	*
Oppenheimer NVIT Large Cap Growth Fund - Class II (NVOLG2)
2009	1.05%	to	2.45	%	126,715		12.95	to	12.82		1,636,114	0.01	%	29.46%	to	28.24	%	*
Templeton NVIT International Value Fund - Class III (NVTIV3)
2009	0.65%	to	3.25	%	24,685,147		12.98	to	12.75		317,975,246	0.42	%	29.78%	to	27.5	%	*
Van Kampen NVIT Comstock Value Fund - Class II (EIF2)
2009	0.65%	to	3.25	%	6,274,173		7.92	to	11.2		85,166,606	1.05	%	27.43%	to	24.1	%
2008	0.65%	to	3.25	%	8,010,536		6.21	to	9.03		85,951,615	1.57	%	-37.63%	to	-39.26	%
2007	0.80%	to	3.25	%	18,188,564		12.93	to	14.86		315,762,751	1.56	%	-3.39%	to	-5.79	%
2006	0.80%	to	3.25	%	11,215,121		13.38	to	15.77		203,267,045	1.51	%	14.64%	to	11.81	%
2005	0.80%	to	3.00	%	3,772,570		11.67	to	14.2		60,363,959	1.31	%	3.12%	to	0.84	%
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
2009	0.8%	to	1.40	%	8,476,274		7.29	to	7.22		61,240,260	2.17	%	29.79%	to	29	%
2008	0.80%	to	1.40	%	146,484		5.62	to	5.59		819,751	4.56	%	-43.84%	to	-44.06	%	*
Van Kampen NVIT Real Estate Fund - Class II (NVRE2)
2009	0.75%	to	2.70	%	7,149,290		7.26	to	7.02		51,256,307	1.92	%	29.54%	to	26.99	%
2008	0.95%	to	2.80	%	319,169		5.6	to	5.53		1,779,763	3.53	%	-44.02%	to	-44.73	%	*
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)
2009	0.40%	to	3.25	%	24,900,539		9.7	to	8.87		262,364,479	7.00	%	12.87%	to	9.64	%
2008	0.65%	to	3.25	%	38,156,662		8.59	to	8.09		355,647,246	4.55	%	-13.99%	to	-16.24	%
2007	0.80%	to	3.25	%	38,220,042		15.25	to	9.66		424,912,124	3.23	%	3.93%	to	1.35	%
2006	0.80%	to	3.25	%	19,400,879		14.68	to	9.53		224,892,310	3.51	%	3.37%	to	0.82	%
2005	0.80%	to	2.75	%	8,471,408		14.2	to	9.59		116,762,312	2.78	%	0.63%	to	-1.34	%
Foreign Bond Portfolio (Unhedged) - Advisor Class (PMVFAD)
2009	0.75%	to	2.45	%	649,344		10.91	to	10.79		7,051,409	0.97	%	9.11%	to	7.86	%	*
Low Duration Portfolio - Advisor Class (PMVLAD)
2009	0.65%	to	3.25	%	14,013,653		11	to	10.81		153,020,206	1.62	%	9.98%	to	8.05	%	*
V.I. Basic Value Fund - Series II (AVBV2)
2008	0.80%	to	2.95	%	2,569,381		5.12	to	7.08		21,201,989	0.47	%	-52.29%	to	-53.33	%
2007	0.80%	to	2.95	%	2,902,901		10.74	to	15.16		50,651,888	0.35	%	0.55%	to	-1.64	%
2006	0.95%	to	2.95	%	3,021,464		14.14	to	15.42		52,769,013	0.12	%	11.87%	to	9.62	%
2005	0.95%	to	2.95	%	3,126,816		12.64	to	14.06		49,174,442	0.00	%	4.43%	to	2.33	%
V.I. Capital Appreciation Fund - Series II (AVCA2)
2009	0.8%	to	2.95	%	687,506		7.49	to	9.6		7,749,730	0.27	%	19.75%	to	17.16	%
2008	0.80%	to	2.95	%	804,764		6.25	to	8.2		7,651,910	0.00	%	-43.09%	to	-44.32	%
2007	0.80%	to	2.95	%	1,044,738		10.99	to	14.72		17,629,535	0.00	%	10.83%	to	8.42	%
2006	0.80%	to	2.95	%	936,992		9.91	to	13.58		14,402,186	0.00	%	-0.88%	to	2.94	%	*
2005	0.95%	to	2.95	%	783,186		12.18	to	13.19		11,580,313	0.00	%	7.55%	to	5.38	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return***					Inception Date*
V.I. Capital Development Fund - Series II (AVCD2)
2009	0.80	%	to	3.00	%	1,278,768	$	8.19	to	12.88	$	19,440,268	0.00	%	40.85	%	to	37.73	%
2008	0.80	%	to	3.00	%	1,176,724		5.82	to	9.35		12,813,434	0.00	%	-47.55	%	to	-48.72	%
2007	0.80	%	to	3.00	%	1,288,902		11.09	to	18.24		27,002,291	0.00	%	9.66	%	to	7.21	%
2006	0.80	%	to	3.00	%	1,088,041		10.12	to	17.01		20,992,339	0.00	%	1.15	%	to	12.78	%	*
2005	0.95	%	to	3.00	%	938,234		13.62	to	15.09		15,894,114	0.00	%	8.23	%	to	6	%
VPS Growth and Income Portfolio - Class B (ALVGIB)
2009	0.95	%	to	2.80	%	733,419		10.63	to	10.47		9,115,377	3.52	%	19.21	%	to	16.98	%
2008	0.95	%	to	2.80	%	891,778		8.92	to	8.95		9,367,499	1.77	%	-41.26	%	to	-42.36	%
2007	0.95	%	to	2.90	%	1,095,470		15.18	to	15.45		19,731,218	1.22	%	3.86	%	to	1.8	%
2006	0.95	%	to	2.90	%	1,318,088		14.62	to	15.18		23,041,761	1.14	%	15.88	%	to	13.6	%
2005	0.95	%	to	2.90	%	1,458,592		12.61	to	13.36		22,196,589	1.24	%	3.6	%	to	1.57	%
VPS Small/Mid Cap Value Portfolio: Class B (ALVSVB)
2009	0.40	%	to	2.90	%	1,172,611		9.31	to	15.26		21,042,602	0.78	%	42.09	%	to	38.52	%
2008	0.80	%	to	2.80	%	934,857		6.22	to	11.08		11,843,636	0.28	%	-37.79	%	to	-37.55	%	*
2007	0.95	%	to	2.40	%	394,975		16.31	to	19.59		7,812,720	0.80	%	0.56	%	to	-0.92	%
2006	0.95	%	to	2.40	%	436,802		16.22	to	19.77		8,743,128	0.23	%	13.12	%	to	11.47	%
2005	0.95	%	to	2.40	%	472,597		14.34	to	17.73		8,416,951	0.55	%	5.62	%	to	4.08	%
Money Market Portfolio(TM) (CHSMM)
2009	0.75	%	to	1.55	%	1,588,787		10.11	to	10.54		17,129,897	0.11	%	-0.65	%	to	-1.45	%
2008	0.75	%	to	1.85	%	2,367,841		10.18	to	10.52		25,748,263	2.08	%	1.35	%	to	0.23	%
2007	0.95	%	to	1.85	%	2,030,093		10.92	to	10.5		22,118,985	4.51	%	3.74	%	to	2.79	%
2006	0.95	%	to	1.85	%	1,650,023		10.53	to	10.21		17,343,382	4.15	%	3.61	%	to	2.67	%
2005	0.95	%	to	1.90	%	1,114,003		10.16	to	9.94		11,301,111	3.00	%	1.77	%	to	0.8	%
VP Balanced Fund - Class I (ACVB)
2009	0.80	%	to	1.40	%	1,885,279		18.7	to	20.03		40,271,753	5.37	%	14.56	%	to	13.87	%
2008	0.80	%	to	1.40	%	2,314,333		16.32	to	17.59		43,388,355	2.68	%	-20.97	%	to	-21.45	%
2007	0.80	%	to	1.40	%	2,885,081		20.65	to	22.39		68,694,053	2.18	%	4.09	%	to	3.46	%
2006	0.80	%	to	1.40	%	3,544,356		19.84	to	21.64		81,354,666	1.99	%	8.74	%	to	8.09	%
2005	0.80	%	to	1.40	%	4,467,709		18.24	to	20.02		94,404,446	1.89	%	4.1	%	to	3.47	%
VP Capital Appreciation Fund - Class I (ACVCA)
2008	0.80	%	to	1.40	%	2,882,462		11.93	to	14.27		70,456,060	0.00	%	-46.62	%	to	-46.94	%
2007	0.80	%	to	1.40	%	3,530,839		22.34	to	26.89		159,958,937	0.00	%	44.63	%	to	43.75	%
2006	0.80	%	to	1.40	%	3,982,752		15.45	to	18.71		124,686,439	0.00	%	16.28	%	to	15.58	%
2005	0.80	%	to	1.40	%	4,837,975		13.28	to	16.19		129,211,185	0.00	%	21.09	%	to	20.36	%
VP Income & Growth Fund - Class I (ACVIG)
2009	0.80	%	to	1.40	%	1,564,365		10.71	to	9.98		15,758,920	4.85	%	17.15	%	to	16.44	%
2008	0.80	%	to	1.40	%	1,902,498		9.15	to	8.57		16,446,480	2.09	%	-35.11	%	to	-35.5	%
2007	0.80	%	to	1.40	%	2,391,422		14.09	to	13.29		32,022,315	1.98	%	-0.87	%	to	-1.47	%
2006	0.80	%	to	1.40	%	2,937,946		14.22	to	13.49		39,889,470	1.85	%	16.15	%	to	15.45	%
2005	0.80	%	to	1.40	%	3,657,933		12.24	to	11.69		42,972,046	2.07	%	3.8	%	to	3.17	%
VP Income & Growth Fund - Class II (ACVIG2)
2009	0.95	%	to	2.85	%	503,648		11.16	to	9.01		6,339,742	4.46	%	16.66	%	to	14.25	%
2008	0.95	%	to	2.85	%	602,251		9.57	to	7.88		6,525,719	1.80	%	-35.35	%	to	-36.67	%
2007	0.95	%	to	2.85	%	727,674		14.8	to	12.45		12,216,196	1.71	%	-1.38	%	to	-3.23	%
2006	0.95	%	to	2.85	%	861,606		15.01	to	12.86		14,784,058	1.57	%	15.71	%	to	13.54	%
2005	0.95	%	to	2.85	%	974,803		12.97	to	11.33		14,596,589	1.77	%	3.53	%	to	1.59	%
VP Inflation Protection Fund - Class II (ACVIP2)
2009	0.40	%	to	3.30	%	12,382,367		10.76	to	10.83		151,758,191	1.80	%	9.77	%	to	6.58	%
2008	0.75	%	to	3.05	%	10,709,237		10.07	to	10.32		120,944,215	4.72	%	-2.33	%	to	-4.59	%
2007	0.80	%	to	3.05	%	6,820,642		11.89	to	10.81		79,613,998	4.31	%	8.61	%	to	6.14	%
2006	0.80	%	to	3.00	%	6,878,406		10.94	to	10.21		74,548,587	3.41	%	0.78	%	to	-1.45	%
2005	0.80	%	to	3.00	%	7,317,685		10.86	to	10.36		79,291,554	4.66	%	0.75	%	to	-1.48	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
VP International Fund - Class I (ACVI)
2008	0.80	%	to	1.40	%	1,852,745	$	15.27	to	14.16	$	26,470,256	0.84	%	-45.27	%	to	-45.6	%
2007	0.80	%	to	1.40	%	2,292,787		27.9	to	26.02		60,157,680	0.72	%	17.11	%	to	16.4	%
2006	0.80	%	to	1.40	%	2,905,577		23.82	to	22.36		65,448,602	1.67	%	24.03	%	to	23.28	%
2005	0.80	%	to	1.40	%	3,664,642		19.21	to	18.13		66,905,080	1.18	%	12.35	%	to	11.67	%
VP International Fund - Class II (ACVI2)
2008	0.95	%	to	2.15	%	128,519		11.38	to	12.17		1,624,402	0.67	%	-45.42	%	to	-46.09	%
2007	0.95	%	to	2.15	%	152,551		20.85	to	22.58		3,551,239	0.56	%	16.79	%	to	15.37	%
2006	0.95	%	to	2.15	%	167,745		17.86	to	19.57		3,361,447	1.45	%	23.56	%	to	22.07	%
2005	0.95	%	to	2.15	%	187,627		14.45	to	16.03		3,059,229	1.01	%	12.03	%	to	10.68	%
VP International Fund - Class III (ACVI3)
2008	0.80	%	to	1.40	%	1,568,771		10.15	to	9.75		15,380,530	0.83	%	-45.27	%	to	-45.6	%
2007	0.80	%	to	1.40	%	1,893,113		18.55	to	17.92		34,085,680	0.70	%	17.11	%	to	16.4	%
2006	0.80	%	to	1.40	%	2,121,586		15.84	to	15.4		32,787,298	1.62	%	24.03	%	to	23.28	%
2005	0.80	%	to	1.40	%	2,307,236		12.77	to	12.49		28,896,626	1.13	%	12.2	%	to	11.52	%
VP International Fund - Class IV (ACVI4)
2008	0.95	%	to	2.80	%	943,918		9.95	to	9.11		9,133,453	0.68	%	-45.47	%	to	-46.5	%
2007	0.95	%	to	2.80	%	1,081,252		18.24	to	17.03		19,305,697	0.42	%	16.77	%	to	14.58	%
2006	0.95	%	to	2.65	%	741,894		15.62	to	14.92		11,421,722	1.45	%	23.68	%	to	21.57	%
2005	0.95	%	to	2.65	%	771,337		12.63	to	12.27		9,654,221	0.89	%	11.9	%	to	9.99	%
VP Mid Cap Value Fund - Class I (ACVMV1)
2009	0.80	%	to	1.40	%	535,378		10.4	to	10.17		5,462,541	3.84	%	28.91	%	to	28.13	%
2008	0.80	%	to	1.40	%	566,200		8.07	to	7.94		4,504,507	0.09	%	-24.95	%	to	-25.41	%
2007	0.80	%	to	1.40	%	544,568		10.75	to	10.64		5,803,553	0.95	%	-3.09	%	to	-3.68	%
2006	0.80	%	to	1.40	%	299,448		11.09	to	11.05		3,310,661	1.20	%	10.94	%	to	10.5	%	*
VP Mid Cap Value Fund - Class II (ACVMV2)
2009	0.75	%	to	3.30	%	3,038,070		9.67	to	11.11		36,485,640	3.39	%	28.83	%	to	25.52	%
2008	0.75	%	to	2.90	%	2,949,866		7.51	to	8.99		27,697,339	0.09	%	-25.08	%	to	-26.7	%
2007	1.10	%	to	2.90	%	2,191,006		12.88	to	12.26		27,830,212	0.66	%	-3.5	%	to	-5.27	%
2006	1.10	%	to	2.90	%	1,253,439		13.35	to	12.95		16,593,330	0.67	%	18.91	%	to	16.75	%
2005	1.15	%	to	2.90	%	483,218		11.22	to	11.09		5,404,126	1.28	%	12.21	%	to	10.89	%	*
VP Ultra(R) Fund - Class I (ACVU1)
2008	0.80	%	to	1.40	%	259,464		7.37	to	7.08		1,847,004	0.00	%	-41.95	%	to	-42.3	%
2007	0.80	%	to	1.40	%	371,822		12.7	to	12.27		4,581,136	0.00	%	20.04	%	to	19.31	%
2006	0.80	%	to	1.40	%	423,522		10.58	to	10.28		4,369,846	0.00	%	-4.05	%	to	-4.63	%
2005	0.80	%	to	1.40	%	704,273		11.02	to	10.78		7,610,398	0.00	%	1.35	%	to	0.74	%
VP Ultra(R) Fund - Class II (ACVU2)
2008	0.95	%	to	2.90	%	868,516		7.82	to	7.74		7,868,731	0.00	%	-42.2	%	to	-43.34	%
2007	0.95	%	to	2.90	%	1,079,627		13.53	to	13.65		17,056,680	0.00	%	19.69	%	to	17.32	%
2006	0.95	%	to	2.90	%	1,132,582		11.31	to	11.64		15,069,024	0.00	%	-4.3	%	to	-6.18	%
2005	0.95	%	to	2.90	%	1,111,532		11.82	to	12.4		15,585,166	0.00	%	1.01	%	to	-0.97	%
VP Value Fund - Class I (ACVV)
2009	0.80	%	to	1.40	%	3,000,711		21.33	to	19.71		59,752,569	5.88	%	18.9	%	to	18.19	%
2008	0.80	%	to	1.40	%	3,763,741		17.94	to	16.68		63,351,622	2.53	%	-27.36	%	to	-27.8	%
2007	0.80	%	to	1.40	%	4,831,480		24.7	to	23.1		112,542,386	1.78	%	-5.9	%	to	-6.47	%
2006	0.80	%	to	1.40	%	6,165,160		26.25	to	24.7		153,403,265	1.35	%	17.71	%	to	17	%
2005	0.80	%	to	1.40	%	7,260,905		22.3	to	21.11		154,247,554	0.93	%	4.2	%	to	3.57	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
VP Value Fund - Class II (ACVV2)
2009	0.75	%	to	3.30	%	5,307,560	$	8.68	to	11.81	$	76,316,151	5.43	%	18.82	%	to	15.77	%
2008	0.75	%	to	2.95	%	5,916,904		7.31	to	10.41		72,299,440	2.22	%	-27.35	%	to	-28.97	%
2007	0.95	%	to	2.95	%	5,881,576		14.49	to	14.65		99,951,941	1.51	%	-6.21	%	to	-8.12	%
2006	0.95	%	to	2.95	%	5,699,037		15.45	to	15.95		104,054,486	1.05	%	17.34	%	to	14.98	%
2005	0.95	%	to	2.95	%	4,664,738		13.16	to	13.87		73,014,202	0.59	%	3.86	%	to	1.77	%
VP Vista(SM) Fund - Class I (ACVVS1)
2008	0.80	%	to	1.40	%	560,487		6.77	to	6.66		3,740,623	0.00	%	-49.04	%	to	-49.34	%
2007	0.80	%	to	1.40	%	951,361		13.28	to	13.14		12,519,496	0.00	%	38.65	%	to	37.81	%
2006	1.30	%	to	1.40	%	15,762				9.54		150,403	0.00	%	-4.56	%	to	-4.63	%	*
VP Vista(SM) Fund - Class II (ACVVS2)
2008	0.95	%	to	2.80	%	1,499,857		6.31	to	8.04		12,523,097	0.00	%	-49.2	%	to	-50.15	%
2007	0.95	%	to	2.80	%	2,291,468		12.42	to	16.13		37,937,432	0.00	%	24.25	%	to	35.61	%	*
2006	1.10	%	to	2.90	%	242,388		12.25	to	11.88		2,936,912	0.00	%	7.68	%	to	5.73	%
2005	1.10	%	to	2.90	%	106,490		11.37	to	11.23		1,205,764	0.00	%	13.72	%	to	12.35	%	*
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
2009	0.40	%	to	2.90	%	2,741,931		9.06	to	14.26		41,696,031	2.51	%	24.53	%	to	21.4	%
2008	0.80	%	to	2.80	%	2,849,922		10.29	to	11.82		34,819,726	0.81	%	-31.47	%	to	-32.85	%
2007	0.80	%	to	2.70	%	2,789,752		15.01	to	19.17		49,316,620	0.40	%	-1.45	%	to	-3.35	%
2006	0.80	%	to	2.50	%	3,003,653		15.23	to	20		53,124,303	0.42	%	13.5	%	to	11.56	%
2005	0.80	%	to	2.50	%	3,454,461		13.42	to	17.92		52,798,571	0.00	%	6.38	%	to	4.56	%
Stock Index Fund, Inc. - Initial Shares (DSIF)
2009	0.80	%	to	1.40	%	10,005,487		21.14	to	24.87		251,973,988	2.07	%	25.32	%	to	24.57	%
2008	0.80	%	to	1.40	%	11,829,308		16.87	to	19.97		239,007,065	2.04	%	-37.64	%	to	-38.02	%
2007	0.80	%	to	1.40	%	14,260,866		27.05	to	32.22		464,467,374	1.71	%	4.41	%	to	3.77	%
2006	0.80	%	to	1.40	%	17,471,027		25.91	to	31.05		547,761,774	1.59	%	14.58	%	to	13.89	%
2005	0.80	%	to	1.40	%	21,479,216		22.61	to	27.26		590,648,682	1.54	%	3.86	%	to	3.23	%
Stock Index Fund, Inc. - Service Shares (DSIFS)
2009	0.75	%	to	2.85	%	7,000,385		7.98	to	11.11		92,376,592	1.85	%	25.1	%	to	22.45	%
2008	0.95	%	to	2.85	%	6,903,789		9.2	to	9.08		73,597,957	1.77	%	-37.92	%	to	-39.11	%
2007	0.95	%	to	2.90	%	7,232,672		14.82	to	14.87		124,891,794	1.53	%	3.99	%	to	1.93	%
2006	0.95	%	to	2.90	%	7,034,417		14.25	to	14.59		117,546,992	1.41	%	14.11	%	to	11.87	%
2005	0.95	%	to	3.00	%	6,341,787		12.49	to	13		93,210,382	1.41	%	3.44	%	to	1.31	%
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DSRG)
2009	0.80	%	to	1.40	%	2,105,786		16.95	to	20.29		45,091,981	0.98	%	32.69	%	to	31.88	%
2008	0.80	%	to	1.40	%	2,380,596		12.77	to	15.38		38,616,074	0.77	%	-34.95	%	to	-35.34	%
2007	0.80	%	to	1.40	%	2,887,153		19.64	to	23.79		72,290,938	0.55	%	6.92	%	to	6.27	%
2006	0.80	%	to	1.40	%	3,504,269		18.37	to	22.39		82,432,140	0.11	%	8.33	%	to	7.68	%
2005	0.80	%	to	1.40	%	4,359,987		16.95	to	20.79		95,023,542	0.00	%	2.79	%	to	2.17	%
Appreciation Portfolio - Initial Shares (DCAP)
2009	0.80	%	to	1.40	%	1,906,125		14.46	to	13.41		25,808,007	2.70	%	21.58	%	to	20.84	%
2008	0.80	%	to	1.40	%	2,251,894		11.9	to	11.1		25,206,414	2.03	%	-30.12	%	to	-30.54	%
2007	0.80	%	to	1.40	%	2,667,862		17.02	to	15.98		42,947,989	1.61	%	6.27	%	to	5.62	%
2006	0.80	%	to	1.40	%	3,227,567		16.02	to	15.12		49,149,665	1.58	%	15.55	%	to	14.85	%
2005	0.80	%	to	1.40	%	4,029,605		13.86	to	13.17		53,378,443	0.02	%	3.55	%	to	2.92	%
Appreciation Portfolio - Service Shares (DCAPS)
2009	0.75	%	to	3.00	%	1,768,979		8.63	to	11.21		23,417,821	2.14	%	21.31	%	to	18.56	%
2008	0.75	%	to	3.00	%	1,678,407		7.12	to	9.45		18,482,018	1.65	%	-30.25	%	to	-31.83	%
2007	0.95	%	to	3.00	%	1,388,567		14.34	to	13.87		22,154,594	1.41	%	5.83	%	to	3.63	%
2006	0.95	%	to	3.00	%	1,641,093		13.55	to	13.38		24,926,948	1.35	%	15.11	%	to	12.73	%
2005	0.95	%	to	3.00	%	1,814,647		11.77	to	11.87		24,136,811	0.00	%	3.13	%	to	1	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
Developing Leaders Portfolio - Service Shares (DVDLS)
2009	0.95	%	to	2.40	%	130,684	$	8.54	to	9.95	$	1,382,149	1.28	%	24.57	%	to	22.74	%
2008	0.95	%	to	2.40	%	145,489		6.85	to	8.11		1,231,064	0.56	%	-38.36	%	to	-39.27	%
2007	0.95	%	to	2.40	%	189,656		11.12	to	13.35		2,613,330	0.53	%	-12.13	%	to	-13.42	%
2006	0.95	%	to	2.40	%	278,075		12.65	to	15.42		4,374,516	0.17	%	2.54	%	to	1.04	%
2005	0.95	%	to	2.40	%	339,465		12.34	to	15.26		5,241,910	0.00	%	4.56	%	to	3.03	%
Growth and Income Portfolio - Initial Shares (DGI)
2009	0.80	%	to	1.40	%	1,288,723		12.39	to	11.44		14,891,654	1.32	%	27.76	%	to	26.98	%
2008	0.80	%	to	1.40	%	1,549,201		9.69	to	9.01		14,086,099	0.63	%	-40.89	%	to	-41.25	%
2007	0.80	%	to	1.40	%	1,896,207		16.4	to	15.34		29,317,204	0.75	%	7.57	%	to	6.92	%
2006	0.80	%	to	1.40	%	2,372,008		15.25	to	14.35		34,268,064	0.76	%	13.6	%	to	12.91	%
2005	0.80	%	to	1.40	%	2,832,165		13.42	to	12.71		36,194,164	1.29	%	2.53	%	to	1.91	%
Capital Appreciation Fund II - Service Shares (FCA2S)
2009	0.95	%	to	2.25	%	134,046		11.39	to	9.41		1,702,974	0.76	%	12.19	%	to	10.58	%
2008	0.95	%	to	2.55	%	173,986		10.15	to	10.97		1,971,709	0.02	%	-30.34	%	to	-31.46	%
2007	0.95	%	to	3.15	%	192,944		14.57	to	14.35		3,164,519	0.55	%	8.59	%	to	6.17	%
2006	0.95	%	to	3.15	%	212,094		13.42	to	13.52		3,225,966	0.53	%	14.69	%	to	12.15	%
2005	1.05	%	to	3.15	%	236,710		11.67	to	12.06		3,170,136	0.84	%	0.63	%	to	-1.5	%
Clover Value Fund II - Service Shares (FALFS)
2009	0.95	%	to	2.40	%	86,156		9.69	to	10.39		924,331	2.19	%	13.42	%	to	11.76	%
2008	0.95	%	to	2.75	%	95,239		8.54				900,294	1.53	%	-34.59	%	to	-35.78	%
2007	0.95	%	to	2.75	%	123,768		13.06	to	13.3		1,796,271	1.29	%	-10.72	%	to	-12.36	%
2006	0.95	%	to	2.75	%	147,270		14.63	to	15.17		2,411,405	1.22	%	15.38	%	to	13.29	%
2005	0.95	%	to	2.75	%	177,529		12.68	to	13.39		2,536,537	1.27	%	3.78	%	to	1.9	%
Market Opportunity Fund II - Service Shares (FVMOS)
2009	0.80	%	to	2.65	%	746,449		9.98	to	9.32		7,250,437	1.52	%	0.47	%	to	-1.4	%
2008	0.80	%	to	2.80	%	918,459		9.94	to	9.41		8,951,034	1.07	%	-1.66	%	to	-3.64	%
2007	0.80	%	to	2.35	%	295,662		10.1	to	9.84		2,944,941	1.37	%	-2.28	%	to	-3.81	%
2006	1.15	%	to	2.30	%	326,855		10.32	to	10.24		3,358,443	0.00	%	3.16	%	to	2.37	%	*
Quality Bond Fund II - Primary Shares (FQB)
2009	0.80	%	to	1.40	%	988,389		13.65	to	13.03		12,949,621	6.58	%	19.47	%	to	18.75	%
2008	0.80	%	to	1.40	%	1,061,286		11.42	to	10.97		11,701,500	5.61	%	-8.03	%	to	-8.59	%
2007	0.80	%	to	1.40	%	1,330,368		12.42	to	12		16,034,879	4.53	%	4.54	%	to	3.9	%
2006	0.80	%	to	1.40	%	1,361,037		11.88	to	11.55		15,768,662	4.34	%	3.32	%	to	2.7	%
2005	0.80	%	to	1.40	%	1,866,157		11.5	to	11.25		21,031,569	3.80	%	0.49	%	to	-0.12	%
Quality Bond Fund II - Service Shares (FQBS)
2009	0.95	%	to	2.95	%	4,565,974		12.27	to	10.54		53,792,192	6.26	%	19.01	%	to	16.61	%
2008	0.95	%	to	2.95	%	4,844,381		10.31	to	9.04		48,257,499	4.88	%	-8.43	%	to	-10.28	%
2007	0.95	%	to	2.95	%	5,168,222		11.26	to	10.07		56,663,144	4.31	%	4.14	%	to	2.02	%
2006	0.95	%	to	2.95	%	4,875,943		10.81	to	9.88		51,727,060	3.80	%	2.94	%	to	0.86	%
2005	0.95	%	to	2.95	%	4,648,453		10.51	to	9.79		48,245,065	3.29	%	0.03	%	to	-1.98	%
Contrafund Portfolio - Service Class 2 (FC2)
2009	0.95	%	to	3.10	%	14,053,840		8.45	to	13.83		231,399,877	1.15	%	34.18	%	to	31.27	%
2008	0.95	%	to	3.10	%	16,338,369		6.29	to	10.54		201,905,123	0.73	%	-43.24	%	to	-44.47	%
2007	0.95	%	to	3.10	%	18,440,700		11.09	to	18.97		404,049,775	0.79	%	10.88	%	to	13.65	%	*
2006	1.10	%	to	3.10	%	16,826,492		19.42	to	16.7		319,679,085	1.04	%	10.21	%	to	7.99	%
2005	1.10	%	to	3.10	%	13,262,039		17.62	to	15.46		229,643,763	0.09	%	15.37	%	to	13.04	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**			Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***	Total Return****			Inception Date*
Equity-Income Portfolio - Initial Class (FEIP)
2009	0.80%	to	1.40%	11,095,521	$	19.99	to	24.53	$	392,467,682	2.23%	29.17%	to	28.39%
2008	0.80%	to	1.40%	13,248,157		15.48	to	19.11		363,508,408	2.28%	-43.11%	to	-43.46%
2007	0.80%	to	1.40%	16,421,321		27.21	to	33.8		788,830,764	1.74%	0.71%	to	0.1%
2006	0.80%	to	1.40%	19,837,866		27.02	to	33.76		941,295,561	3.26%	19.23%	to	18.52%
2005	0.80%	to	1.40%	24,111,620		22.66	to	28.49		951,276,572	1.68%	5.02%	to	4.39%
Fidelity(R) VIP Fund - Value Strategies Portfolio - Service Class 2 (FVSS2)
2009	1.10%	to	3.10%	778,358		17.06	to	13.21		12,618,401	0.37%	55.42%	to	52.28%
2008	1.10%	to	3.10%	844,676		10.98	to	8.68		8,862,131	0.49%	-51.82%	to	-52.8%
2007	1.10%	to	3.10%	1,045,050		22.79	to	18.38		22,900,224	0.63%	4.28%	to	2.15%
2006	1.10%	to	3.10%	1,184,531		21.85	to	18		25,032,411	0.35%	14.74%	to	12.42%
2005	1.10%	to	3.10%	1,244,308		19.04	to	16.01		23,050,709	0.00%	1.3%	to	-0.74%
High Income Portfolio - Initial Class (FHIP)
2009	0.80%	to	1.40%	2,706,774		15.77	to	16.7		64,906,933	7.64%	42.81%	to	41.94%
2008	0.80%	to	1.40%	3,333,874		11.05	to	11.77		56,114,072	7.80%	-25.59%	to	-26.04%
2007	0.80%	to	1.40%	4,420,785		14.84	to	15.91		100,020,943	6.64%	1.96%	to	1.34%
2006	0.80%	to	1.40%	7,076,863		14.56	to	15.7		153,544,649	7.13%	10.35%	to	9.68%
2005	0.80%	to	1.40%	8,818,397		13.19	to	14.31		171,137,153	14.50%	1.88%	to	1.27%
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)
2009	0.80%	to	1.40%	5,946,996		20.66	to	19.89		175,392,894	2.33%	28.08%	to	27.31%
2008	0.80%	to	1.40%	6,966,315		16.13	to	15.62		160,712,631	2.43%	-29.29%	to	-29.72%
2007	0.80%	to	1.40%	8,375,163		22.81	to	22.23		272,815,879	6.05%	14.58%	to	13.88%
2006	0.80%	to	1.40%	10,118,900		19.91	to	19.52		286,791,929	2.82%	6.46%	to	5.82%
2005	0.80%	to	1.40%	12,409,816		18.7	to	18.45		329,413,384	2.78%	3.21%	to	2.59%
VIP Fund - Contrafund Portfolio - Initial Class (FCP)
2009	0.80%	to	1.40%	12,707,542		29.3	to	29.18		374,619,416	1.36%	34.62%	to	33.81%
2008	0.80%	to	1.40%	15,111,468		21.76	to	21.8		332,663,039	0.91%	-42.97%	to	-43.32%
2007	0.80%	to	1.40%	18,212,023		38.16	to	38.47		706,656,295	0.90%	16.65%	to	15.94%
2006	0.80%	to	1.40%	21,578,263		32.72	to	33.18		721,451,899	1.27%	10.83%	to	10.16%
2005	0.80%	to	1.40%	24,802,463		29.52	to	30.12		752,002,828	0.29%	16%	to	15.31%
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
2009	0.75%	to	2.75%	5,512,532		7.45	to	13.56		78,214,047	0.23%	46.47%	to	43.51%
2008	0.75%	to	2.80%	5,594,487		5.08	to	9.43		54,788,140	0.00%	-54.75%	to	-55.69%
2007	0.80%	to	2.80%	5,413,172		13.59	to	21.28		118,510,583	0.13%	44.47%	to	41.54%
2006	0.80%	to	2.80%	2,923,524		9.41	to	15.03		44,870,467	0.90%	-5.92%	to	13.36%	*
2005	1.10%	to	2.75%	1,080,443		13.42	to	13.27		14,439,718	0.70%	34.16%	to	32.67%	*
VIP Fund - Equity-Income Portfolio - Service Class 2 (FEI2)
2009	0.95%	to	3.3%	8,973,964		6.91	to	10.76		117,787,793	2.15%	28.65%	to	25.6%
2008	0.95%	to	2.95%	9,142,932		5.37	to	8.75		93,902,730	2.22%	-43.36%	to	-44.5%
2007	0.95%	to	2.95%	9,650,205		9.48	to	15.76		176,168,699	1.71%	-5.21%	to	-1.73%	*
2006	1.10%	to	2.95%	9,285,688		18.74	to	16.04		170,040,794	2.92%	18.61%	to	16.4%
2005	1.10%	to	2.95%	8,101,371		15.8	to	13.78		125,643,989	1.28%	4.41%	to	2.47%
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
2009	0.80%	to	1.40%	508,093		10.41	to	10.18		5,184,551	3.74%	23.16%	to	22.41%
2008	0.80%	to	1.40%	534,668		8.45	to	8.31		4,453,816	2.86%	-25.68%	to	-26.13%
2007	0.80%	to	1.40%	450,333		11.37	to	11.25		5,074,439	3.44%	7.77%	to	7.12%
2006	1.30%	to	1.40%	162,866		10.51				1,711,515	3.28%	5.13%	to	5.05%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
VIP Fund - Freedom Fund 2010 Portfolio - Service Class 2 (FF10S2)
2009	1.10	%	to	2.70	%	5,580,362	$	11.3	to	10.47	$	61,055,820	4.30	%	22.59	%	to	20.61	%
2008	1.10	%	to	2.70	%	4,645,289		9.22	to	8.68		41,630,317	2.85	%	-25.99	%	to	-27.19	%
2007	1.10	%	to	2.70	%	3,748,220		12.45	to	11.92		45,656,435	2.62	%	7.22	%	to	5.48	%
2006	1.10	%	to	2.70	%	2,744,382		11.62	to	11.3		31,383,195	2.38	%	8.38	%	to	6.63	%
2005	1.15	%	to	2.70	%	851,649		10.71	to	10.6		9,071,545	0.85	%	7.14	%	to	6.02	%	*
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
2009	0.80	%	to	1.40	%	762,019		9.85	to	9.63		7,363,537	3.51	%	27.75	%	to	26.97	%
2008	0.80	%	to	1.40	%	715,854		7.71	to	7.58		5,443,001	2.80	%	-33.25	%	to	-33.65	%
2007	0.80	%	to	1.40	%	521,510		11.55	to	11.43		5,970,926	3.23	%	9.28	%	to	8.62	%
2006	1.30	%	to	1.40	%	138,522		10.53				1,458,810	2.86	%	5.33	%	to	5.25	%	*
VIP Fund - Freedom Fund 2020 Portfolio - Service Class 2 (FF20S2)
2009	1.10	%	to	2.85	%	10,446,737		11.19	to	10.3		114,146,511	3.98	%	27.13	%	to	24.88	%
2008	1.10	%	to	2.90	%	6,972,856		8.8	to	8.23		60,026,433	2.68	%	-33.54	%	to	-34.75	%
2007	1.10	%	to	2.90	%	5,452,403		13.25	to	12.61		70,902,100	2.44	%	8.75	%	to	6.76	%
2006	1.10	%	to	2.90	%	3,209,353		12.18	to	11.81		38,598,876	1.89	%	10.48	%	to	8.47	%
2005	1.15	%	to	2.90	%	1,450,199		11.02	to	10.89		15,908,277	1.01	%	10.21	%	to	8.91	%	*
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
2009	0.80	%	to	1.40	%	589,970		9.35	to	9.15		5,416,444	2.40	%	30.35	%	to	29.56	%
2008	0.80	%	to	1.40	%	481,061		7.17	to	7.06		3,404,900	2.59	%	-38.57	%	to	-38.94	%
2007	0.80	%	to	1.40	%	307,780		11.68	to	11.56		3,564,229	3.24	%	10.31	%	to	9.64	%
2006	0.80	%	to	1.40	%	85,450		10.59	to	10.55		901,603	2.10	%	5.88	%	to	5.46	%	*
VIP Fund - Freedom Fund 2030 Portfolio - Service Class 2 (FF30S2)
2009	1.10	%	to	2.70	%	1,783,182		10.93	to	10.13		18,869,954	2.17	%	29.74	%	to	27.64	%
2008	1.10	%	to	2.70	%	1,631,753		8.43	to	7.94		13,382,199	2.19	%	-38.85	%	to	-39.84	%
2007	1.10	%	to	2.70	%	1,398,391		13.78	to	13.2		18,889,628	2.17	%	9.85	%	to	8.07	%
2006	1.10	%	to	2.90	%	1,094,121		12.55	to	12.17		13,545,883	1.72	%	11.69	%	to	9.66	%
2005	1.15	%	to	2.90	%	626,404		11.23	to	11.1		6,999,070	0.99	%	12.29	%	to	10.97	%	*
VIP Fund - Growth Opportunities Portfolio - Initial Class (FGOP)
2009	0.80	%	to	1.40	%	1,657,626		9.27	to	8.59		14,371,980	0.47	%	44.68	%	to	43.81	%
2008	0.80	%	to	1.40	%	1,893,306		6.4	to	5.97		11,404,425	0.37	%	-55.38	%	to	-55.65	%
2007	0.80	%	to	1.40	%	2,355,583		14.35	to	13.47		31,965,894	0.00	%	22.19	%	to	21.45	%
2006	0.80	%	to	1.40	%	2,712,499		11.75	to	11.09		30,268,618	0.72	%	4.61	%	to	3.98	%
2005	0.80	%	to	1.40	%	3,577,040		11.23	to	10.67		38,352,113	0.93	%	8.02	%	to	7.37	%
VIP Fund - Growth Portfolio - Initial Class (FGP)
2009	0.80	%	to	1.40	%	8,786,028		16.02	to	20.53		353,773,768	0.43	%	27.26	%	to	26.49	%
2008	0.80	%	to	1.40	%	10,315,116		12.59	to	16.23		326,253,847	0.76	%	-47.59	%	to	-47.91	%
2007	0.80	%	to	1.40	%	12,473,199		24.02	to	31.16		745,751,636	0.84	%	25.94	%	to	25.18	%
2006	0.80	%	to	1.40	%	15,379,782		19.07	to	24.89		723,221,795	0.41	%	6	%	to	5.36	%
2005	0.80	%	to	1.40	%	19,493,494		17.99	to	23.63		851,535,193	0.51	%	4.95	%	to	4.32	%
VIP Fund - Growth Portfolio - Service Class 2 (FG2)
2009	0.85	%	to	3.00	%	3,652,787		6.85	to	10.16		44,823,650	0.21	%	26.88	%	to	24.13	%
2008	0.85	%	to	3.00	%	3,750,535		5.4	to	8.19		36,441,386	0.53	%	-47.76	%	to	-48.89	%
2007	0.95	%	to	3.00	%	4,763,730		11.9	to	16.02		89,331,698	0.32	%	19.02	%	to	22.84	%	*
2006	1.10	%	to	3.00	%	3,396,781		15.59	to	13.04		51,229,656	0.16	%	5.4	%	to	3.38	%
2005	1.10	%	to	3.00	%	3,421,593		14.79	to	12.61		49,127,180	0.25	%	4.35	%	to	2.35	%
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)
2009	0.80	%	to	1.40	%	2,439,833		10.46	to	10.29		25,152,368	8.56	%	42.67	%	to	41.8	%
2008	0.80	%	to	1.40	%	1,960,090		7.33	to	7.26		14,240,462	8.85	%	-25.48	%	to	-25.94	%
2007	0.80	%	to	1.40	%	1,244,598		9.84	to	9.8		12,199,909	16.76	%	-1.62	%	to	-2.02	%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
2009	0.80	%	to	1.40	%	2,383,390	$	12.53	to	12.04	$	28,829,928	8.21	%	14.75	%	to	14.05	%
2008	0.80	%	to	1.40	%	1,760,865		10.92	to	10.55		18,661,455	4.21	%	-4.12	%	to	-4.7	%
2007	0.80	%	to	1.40	%	1,827,483		11.39	to	11.07		20,308,029	3.93	%	3.37	%	to	2.74	%
2006	0.80	%	to	1.40	%	1,663,367		11.02	to	10.78		17,973,250	3.75	%	3.47	%	to	2.84	%
2005	0.80	%	to	1.40	%	1,541,808		10.65	to	10.48		16,185,460	3.17	%	1.27	%	to	0.65	%
VIP Fund - Investment Grade Bond Portfolio - Service Class 2 (FIGBP2)
2009	0.65	%	to	3.25	%	43,332,353		11.06	to	10.5		513,869,040	8.32	%	14.72	%	to	11.72	%
2008	0.65	%	to	3.25	%	38,795,425		9.64	to	9.4		405,358,697	3.91	%	-4.09	%	to	-6.6	%
2007	0.95	%	to	3.25	%	39,988,032		10.15	to	10.06		440,398,413	2.72	%	1.47	%	to	0.68	%	*
2006	1.10	%	to	3.25	%	17,350,200		11.06	to	10		187,123,591	2.12	%	2.99	%	to	0.76	%
2005	1.10	%	to	2.90	%	6,089,737		10.74	to	10.02		64,530,741	2.84	%	0.78	%	to	-1.05	%
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
2009	0.80	%	to	1.40	%	2,397,217		9.44	to	9.23		22,207,442	0.64	%	38.89	%	to	38.06	%
2008	0.80	%	to	1.40	%	2,030,889		6.8	to	6.69		13,616,500	0.35	%	-39.99	%	to	-40.36	%
2007	0.80	%	to	1.40	%	1,880,661		11.33	to	11.22		21,120,448	0.77	%	14.56	%	to	13.86	%
2006	0.80	%	to	1.40	%	1,041,179		9.89	to	9.85		10,260,773	0.00	%	-1.1	%	to	-1.5	%	*
VIP Fund - Mid Cap Portfolio - Service Class 2 (FMC2)
2009	0.75	%	to	3.30	%	9,082,067		8.59	to	18.1		187,933,011	0.47	%	38.7	%	to	35.14	%
2008	0.75	%	to	3.10	%	8,779,121		6.19	to	13.55		132,721,800	0.24	%	-40.06	%	to	-41.48	%
2007	0.95	%	to	3.10	%	8,968,155		10.66	to	23.16		228,696,376	0.50	%	6.62	%	to	11.74	%	*
2006	1.10	%	to	3.10	%	8,219,016		23.02	to	20.73		184,744,089	0.17	%	11.17	%	to	8.93	%
2005	1.10	%	to	3.10	%	7,193,078		20.7	to	19.03		146,085,937	0.00	%	16.72	%	to	14.37	%
VIP Fund - Overseas Portfolio - Initial Class (FOP)
2009	0.80	%	to	1.40	%	3,184,055		18.48	to	18.45		73,086,949	2.10	%	25.52	%	to	24.76	%
2008	0.80	%	to	1.40	%	3,203,770		14.72	to	14.79		68,743,113	2.41	%	-44.26	%	to	-44.59	%
2007	0.80	%	to	1.40	%	3,885,215		26.41	to	26.69		150,451,052	3.32	%	16.37	%	to	15.66	%
2006	0.80	%	to	1.40	%	5,556,872		22.7	to	23.07		158,028,879	0.90	%	17.14	%	to	16.43	%
2005	0.80	%	to	1.40	%	6,764,235		19.38	to	19.82		164,441,055	0.66	%	18.1	%	to	17.38	%
VIP Fund - Overseas Portfolio - Initial Class R (FOPR)
2009	0.80	%	to	1.40	%	2,611,534		14.02	to	13.38		35,178,482	2.07	%	25.59	%	to	24.83	%
2008	0.80	%	to	1.40	%	3,742,007		11.16	to	10.72		34,538,550	2.39	%	-44.26	%	to	-44.6	%
2007	0.80	%	to	1.40	%	4,559,645		20.03	to	19.35		75,531,894	3.35	%	16.41	%	to	15.7	%
2006	0.80	%	to	1.40	%	4,321,249		17.2	to	16.72		72,538,615	0.89	%	17.08	%	to	16.37	%
2005	0.80	%	to	1.40	%	4,309,892		14.69	to	14.37		62,111,628	0.64	%	18.16	%	to	17.45	%
VIP Fund - Overseas Portfolio - Service Class 2 (FO2)
2009	1.10	%	to	2.30	%	224,881		18.23	to	16.77		3,903,354	1.77	%	24.83	%	to	23.32	%
2008	1.10	%	to	2.30	%	286,835		14.61	to	13.6		4,029,619	2.20	%	-44.58	%	to	-45.25	%
2007	1.10	%	to	2.30	%	341,789		26.35	to	24.83		8,701,501	2.94	%	15.76	%	to	14.35	%
2006	1.10	%	to	2.30	%	395,811		22.77	to	21.72		8,723,911	0.71	%	16.48	%	to	15.07	%
2005	1.10	%	to	2.30	%	445,790		19.55	to	18.87		8,474,142	0.53	%	17.48	%	to	16.06	%
VIP Fund - Overseas Portfolio - Service Class 2 R (FO2R)
2009	0.75	%	to	2.95	%	4,511,884		7.19	to	10.88		53,010,704	2.15	%	25.25	%	to	22.48	%
2008	0.95	%	to	2.85	%	3,739,265		5.9	to	8.93		35,540,446	2.29	%	-44.48	%	to	-45.55	%
2007	0.95	%	to	2.80	%	4,158,503		10.63	to	16.43		71,506,434	3.02	%	6.3	%	to	13.77	%	*
2006	1.10	%	to	2.65	%	3,262,947		15.12	to	14.5		48,966,115	0.68	%	16.52	%	to	14.7	%
2005	1.10	%	to	2.75	%	2,671,311		12.98	to	12.62		34,592,870	0.39	%	17.44	%	to	15.49	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
2009	0.80	%	to	1.40	%	592,992	$	12.28	to	11.72	$	6,997,937	0.52	%	56.14	%	to	55.19	%
2008	0.80	%	to	1.40	%	634,932		7.87	to	7.55		4,824,772	0.60	%	-51.57	%	to	-51.86	%
2007	0.80	%	to	1.40	%	841,048		16.24	to	15.69		13,262,544	0.93	%	4.75	%	to	4.11	%
2006	0.80	%	to	1.40	%	959,780		15.5	to	15.07		14,522,707	0.54	%	15.27	%	to	14.58	%
2005	0.80	%	to	1.40	%	1,313,761		13.45	to	13.15		17,327,837	0.00	%	1.74	%	to	1.12	%
Franklin Income Securities Fund - Class 2 (FTVIS2)
2009	0.80	%	to	2.95	%	10,706,434		10.78	to	9.95		112,298,334	7.94	%	34.51	%	to	31.6	%
2008	0.80	%	to	2.95	%	10,666,736		8.01	to	7.56		83,813,696	5.45	%	-30.22	%	to	-31.73	%
2007	0.80	%	to	2.95	%	10,613,089		11.48	to	11.07		120,358,043	3.75	%	2.92	%	to	0.68	%
2006	0.80	%	to	2.80	%	4,753,427		11.16	to	11.01		52,751,296	0.46	%	11.57	%	to	10.07	%	*
Franklin Rising Dividends Securities Fund - Class 2 (FTVRD2)
2009	0.95	%	to	3.00	%	5,182,224		11.6	to	11.22		68,954,337	1.46	%	16.23	%	to	13.82	%
2008	0.95	%	to	3.00	%	6,005,955		9.98	to	9.86		69,210,732	1.80	%	-27.79	%	to	-29.29	%
2007	0.95	%	to	3.00	%	7,191,142		13.82	to	13.94		115,583,625	2.42	%	-3.62	%	to	-5.62	%
2006	0.95	%	to	3.00	%	8,485,936		14.33	to	14.78		142,480,300	1.10	%	16.01	%	to	13.62	%
2005	0.95	%	to	3.00	%	8,398,809		12.36	to	13		122,425,253	0.91	%	2.45	%	to	0.33	%
Franklin Small Cap Value Securities Fund - Class 2 (FTVSV2)
2009	0.65	%	to	3.25	%	10,676,595		8.85	to	14.23		182,350,127	0.77	%	28.32	%	to	24.96	%
2008	0.75	%	to	3.05	%	3,847,456		6.89	to	11.52		51,984,101	1.08	%	-33.52	%	to	-35.06	%
2007	0.80	%	to	3.05	%	3,336,527		9.87	to	17.74		68,664,008	0.72	%	-3.16	%	to	-5.37	%
2006	0.80	%	to	2.80	%	3,184,805		10.19	to	18.93		68,147,428	0.58	%	1.91	%	to	13.71	%	*
2005	0.95	%	to	2.65	%	2,432,175		15.07	to	18.19		45,353,134	0.81	%	7.74	%	to	5.89	%
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
2009	0.80	%	to	2.80	%	2,307,480		10.99	to	15.11		36,881,360	4.14	%	71.25	%	to	67.8	%
2008	0.80	%	to	2.80	%	2,181,313		6.42	to	9.01		20,523,237	2.72	%	-53.05	%	to	-54	%
2007	0.80	%	to	2.80	%	2,877,413		13.67	to	19.58		57,939,683	1.81	%	27.66	%	to	25.08	%
2006	0.80	%	to	2.80	%	1,703,817		10.71	to	15.66		27,220,949	1.21	%	7.06	%	to	24.59	%	*
2005	1.10	%	to	2.75	%	588,613		12.71	to	12.57		7,454,753	0.17	%	27.11	%	to	25.7	%	*
Templeton Foreign Securities Fund - Class 2 (TIF2)
2009	0.95	%	to	2.25	%	300,587		16.08	to	17.84		5,623,798	3.46	%	35.74	%	to	33.96	%
2008	0.95	%	to	2.25	%	358,613		11.85	to	13.32		4,967,042	2.39	%	-40.95	%	to	-41.72	%
2007	0.95	%	to	2.25	%	462,809		20.06	to	22.86		10,928,425	1.98	%	14.35	%	to	12.85	%
2006	0.95	%	to	2.25	%	531,179		17.54	to	20.25		11,028,499	1.19	%	20.29	%	to	18.72	%
2005	0.95	%	to	2.25	%	634,836		14.58	to	17.06		11,022,531	1.12	%	9.13	%	to	7.7	%
Templeton Foreign Securities Fund - Class 3 (TIF3)
2009	0.80	%	to	3.30	%	6,859,765		10.04	to	12.14		91,812,073	5.47	%	36.1	%	to	32.67	%
2008	0.65	%	to	3.25	%	25,106,259		6.17	to	9.17		247,362,383	2.54	%	-40.78	%	to	-42.33	%
2007	0.80	%	to	3.25	%	16,511,364		12.48	to	15.91		278,332,427	1.98	%	14.52	%	to	11.67	%
2006	0.80	%	to	3.25	%	8,716,921		10.89	to	14.24		129,480,230	1.07	%	8.94	%	to	17.53	%	*
2005	0.95	%	to	2.90	%	3,144,611		12.6	to	12.19		39,198,071	1.15	%	9.09	%	to	6.95	%
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
2009	0.80	%	to	2.75	%	5,360,877		14.32	to	13.7		77,988,157	14.04	%	17.74	%	to	15.42	%
2008	0.80	%	to	2.80	%	5,797,396		12.17	to	11.85		72,143,518	3.87	%	5.36	%	to	3.23	%
2007	0.80	%	to	2.80	%	4,159,217		11.55	to	11.48		49,473,961	2.64	%	10.14	%	to	7.91	%
2006	1.10	%	to	2.65	%	1,905,578		10.95	to	10.66		20,725,398	2.53	%	11.61	%	to	9.86	%
2005	1.15	%	to	2.65	%	501,187		9.81	to	9.71		4,902,407	0.88	%	-1.94	%	to	-2.93	%	*
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
2009	0.80	%	to	2.65	%	1,391,741		8.55	to	8.29		11,759,706	4.02	%	29.21	%	to	26.8	%
2008	0.80	%	to	2.65	%	456,888		6.62	to	6.54		3,010,257	3.50	%	-33.79	%	to	-34.62	%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return***					Inception Date*
Growth Portfolio - I Class Shares (AMTG)
2009	1.30	%				12	$	42.58			$	511	0.00	%	28.66	%
2008	0.80	%	to	1.40	%	2,411,370		12.76	to	14.52		67,084,772	0.00	%	-44.13	%	to	-44.47	%
2007	0.80	%	to	1.40	%	2,896,657		22.83	to	26.15		143,154,846	0.00	%	21.71	%	to	20.97	%
2006	0.80	%	to	1.40	%	3,507,840		18.76	to	21.62		141,328,488	0.00	%	13.16	%	to	12.48	%
2005	0.80	%	to	1.40	%	4,407,773		16.58	to	19.22		155,259,354	0.00	%	12.59	%	to	11.91	%
Guardian Portfolio - I Class Shares (AMGP)
2008	0.80	%	to	1.40	%	928,163		9.15	to	8.57		8,023,491	0.53	%	-37.75	%	to	-38.13	%
2007	0.80	%	to	1.40	%	1,105,261		14.69	to	13.86		15,420,332	0.26	%	6.52	%	to	5.88	%
2006	0.80	%	to	1.40	%	1,399,614		13.79	to	13.09		18,425,578	0.61	%	12.47	%	to	11.79	%
2005	0.80	%	to	1.40	%	1,777,747		12.26	to	11.71		20,912,861	0.14	%	7.53	%	to	6.88	%
International Portfolio - S Class Shares (AMINS)
2008	0.80	%	to	3.25	%	1,025,292		5.65	to	7.1		7,732,508	0.00	%	-46.87	%	to	-48.18	%
2007	0.80	%	to	3.25	%	20,563,376		10.64	to	13.71		293,656,493	2.14	%	2.38	%	to	-0.16	%
2006	0.80	%	to	3.25	%	10,936,799		10.39	to	13.73		153,950,501	0.34	%	3.93	%	to	19.45	%	*
2005	1.10	%	to	2.90	%	816,611		11.66	to	11.52		9,478,809	0.19	%	16.64	%	to	15.23	%	*
Mid-Cap Growth Portfolio - S Class Shares (AMMCGS)
2008	0.95	%	to	2.45	%	400,219		10.54	to	11.44		4,818,061	0.00	%	-44.05	%	to	-44.9	%
2007	0.95	%	to	2.80	%	507,184		18.83	to	20.39		10,958,939	0.00	%	21.03	%	to	18.76	%
2006	0.95	%	to	2.80	%	502,810		15.56	to	17.17		9,020,221	0.00	%	13.39	%	to	11.27	%
2005	0.95	%	to	2.80	%	497,419		13.72	to	15.43		7,966,901	0.00	%	12.35	%	to	10.26	%
Partners Portfolio- I Class Shares (AMTP)
2008	0.80	%	to	1.40	%	4,031,046		14.91	to	17.56		71,403,179	0.49	%	-52.77	%	to	-53.06	%
2007	0.80	%	to	1.40	%	4,821,251		31.57	to	37.41		181,803,724	0.61	%	8.46	%	to	7.8	%
2006	0.80	%	to	1.40	%	5,867,088		29.1	to	34.71		205,069,108	0.68	%	11.35	%	to	10.67	%
2005	0.80	%	to	1.40	%	7,134,701		26.14	to	31.36		225,087,003	0.95	%	17.1	%	to	16.4	%
Regency Portfolio - S Class Shares (AMRS)
2008	0.80	%	to	2.95	%	1,216,019		5.6	to	6.46		8,275,433	0.93	%	-46.38	%	to	-47.55	%
2007	0.80	%	to	2.95	%	1,309,013		10.44	to	12.31		16,737,536	0.38	%	2.22	%	to	0	%
2006	0.80	%	to	2.55	%	1,440,361		10.21	to	12.39		18,134,505	0.33	%	2.14	%	to	8.11	%	*
2005	1.10	%	to	2.70	%	345,932		11.58	to	11.45		3,990,761	0.00	%	15.77	%	to	14.53	%	*
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
2009	0.80	%	to	2.80	%	371,443		7.12	to	9.44		4,086,114	0.00	%	21.77	%	to	19.32	%
2008	0.80	%	to	2.80	%	406,370		5.85	to	7.91		3,706,928	0.00	%	-39.96	%	to	-41.17	%
2007	0.80	%	to	2.80	%	392,938		9.74	to	13.45		6,032,559	0.00	%	-0.29	%	to	-2.32	%
2006	0.80	%	to	2.50	%	399,331		9.77	to	15.09		6,218,632	0.00	%	-2.34	%	to	2.63	%	*
2005	0.95	%	to	2.50	%	361,496		12.43	to	14.71		5,431,443	0.00	%	1.92	%	to	0.33	%
Socially Responsive Portfolio - I Class Shares (AMSRS)
2009	0.80	%	to	2.95	%	2,058,008		11.32	to	11.95		27,018,092	2.16	%	30.38	%	to	27.55	%
2008	0.80	%	to	3.05	%	2,392,040		8.68	to	9.31		24,246,445	0.27	%	-39.93	%	to	-41.29	%
2007	0.80	%	to	3.25	%	29,683,131		14.45	to	15.71		500,470,234	0.10	%	6.75	%	to	4.1	%
2006	0.80	%	to	3.25	%	14,567,602		13.54	to	15.09		232,049,667	0.09	%	12.8	%	to	10.02	%
2005	0.80	%	to	3.00	%	2,318,131		12	to	13.81		33,095,968	0.00	%	6	%	to	3.66	%
Balanced Fund/VA - Non-Service Shares (OVMS)
2009	0.80	%	to	1.40	%	2,404,729		16.46	to	17.26		50,938,065	0.00	%	20.92	%	to	20.19	%
2008	0.80	%	to	1.40	%	2,972,160		13.61	to	14.36		52,339,138	2.98	%	-43.92	%	to	-44.26	%
2007	0.80	%	to	1.40	%	3,793,326		24.27	to	25.77		119,039,885	2.68	%	2.95	%	to	2.33	%
2006	0.80	%	to	1.40	%	4,523,880		23.58	to	25.18		137,769,586	2.17	%	10.26	%	to	9.59	%
2005	0.80	%	to	1.40	%	5,647,775		21.38	to	22.98		155,150,510	1.80	%	3.06	%	to	2.44	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
Capital Appreciation Fund/VA - Service Class (OVCAFS)
2009	0.95%	to	2.95	%	3,035,663	$	11.08	to	10.93	$	40,147,457	0.01	%	42.78%	to	39.9	%
2008	0.95%	to	2.95	%	3,576,621		7.76	to	7.81		33,310,024	0.00	%	-46.18%	to	-47.27	%
2007	0.95%	to	2.95	%	3,981,882		14.42	to	14.82		69,363,812	0.01	%	12.77%	to	10.48	%
2006	0.95%	to	2.95	%	4,129,863		12.79	to	13.41		64,078,686	0.19	%	6.66%	to	4.51	%
2005	0.95%	to	2.90	%	4,173,108		11.99	to	12.85		61,055,416	0.66	%	3.87%	to	1.83	%
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
2009	0.80%	to	1.40	%	3,323,768		15.19	to	14.08		47,274,803	0.33	%	43.36%	to	42.5	%
2008	0.80%	to	1.40	%	3,977,449		10.59	to	9.88		39,665,920	0.15	%	-45.95%	to	-46.28	%
2007	0.80%	to	1.40	%	4,805,480		19.6	to	18.39		89,129,237	0.24	%	13.23%	to	12.54	%
2006	0.80%	to	1.40	%	6,037,158		17.31	to	16.34		99,391,010	0.39	%	7.09%	to	6.44	%
2005	0.80%	to	1.40	%	7,865,933		16.16	to	15.36		121,515,526	0.95	%	4.26%	to	3.63	%
Core Bond Fund/VA - Non-Service Shares (OVB)
2009	0.80%	to	1.40	%	2,839,959		11.72	to	11.75		42,563,966	0.00	%	8.74%	to	8.08	%
2008	0.80%	to	1.40	%	3,473,316		10.78	to	10.87		48,106,805	4.82	%	-39.54%	to	-39.9	%
2007	0.80%	to	1.40	%	4,466,808		17.82	to	18.09		102,125,225	5.26	%	3.55%	to	2.92	%
2006	0.80%	to	1.40	%	5,265,751		17.21	to	17.57		115,936,276	5.40	%	4.44%	to	3.81	%
2005	0.80%	to	1.40	%	6,433,177		16.48	to	16.93		135,323,164	5.43	%	1.77%	to	1.15	%
Global Securities Fund/VA - Class 3 (OVGS3)
2009	0.80%	to	1.40	%	3,525,444		19.39	to	18.62		66,015,905	2.26	%	38.58%	to	37.74	%
2008	0.80%	to	1.40	%	4,134,462		13.99	to	13.52		56,156,335	1.57	%	-40.67%	to	-41.03	%
2007	0.80%	to	1.40	%	4,898,499		23.58	to	22.92		112,720,550	1.39	%	5.48%	to	4.84	%
2006	0.80%	to	1.40	%	5,524,646		22.35	to	21.86		121,147,673	0.98	%	16.75%	to	16.05	%
2005	0.80%	to	1.40	%	5,308,749		19.15	to	18.84		100,226,186	0.96	%	13.43%	to	12.74	%
Global Securities Fund/VA - Class 4 (OVGS4)
2009	0.75%	to	2.70	%	5,304,073		8.31	to	11.77		67,081,618	1.89	%	38.33%	to	35.62	%
2008	0.95%	to	2.70	%	5,863,169		9.43	to	8.68		53,981,607	1.24	%	-40.91%	to	-41.96	%
2007	0.95%	to	2.70	%	6,661,852		15.96	to	14.96		104,330,390	1.12	%	5.05%	to	3.18	%
2006	0.95%	to	2.70	%	6,304,392		15.2	to	14.5		94,470,011	0.85	%	16.29%	to	14.24	%
2005	0.95%	to	2.50	%	5,674,152		13.07	to	12.73		73,470,008	0.64	%	12.97%	to	11.2	%
Global Securities Fund/VA - Non-Service Shares (OVGS)
2009	0.80%	to	1.40	%	3,835,051		34.48	to	32.9		134,559,408	2.32	%	38.65%	to	37.82	%
2008	0.80%	to	1.40	%	4,605,983		24.87	to	23.88		117,211,377	1.61	%	-40.67%	to	-41.03	%
2007	0.80%	to	1.40	%	5,756,123		41.92	to	40.49		248,042,653	1.41	%	5.46%	to	4.82	%
2006	0.80%	to	1.40	%	7,165,665		39.75	to	38.62		294,029,956	1.05	%	16.75%	to	16.05	%
2005	0.80%	to	1.40	%	8,956,758		34.04	to	33.28		315,862,240	1.04	%	13.4%	to	12.71	%
Global Securities Fund/VA - Service Class (OVGSS)
2009	0.95%	to	2.30	%	584,534		15.66	to	18.35		11,225,732	2.01	%	38.03%	to	36.15	%
2008	0.95%	to	2.30	%	675,950		11.35	to	13.48		9,467,392	1.32	%	-40.9%	to	-41.71	%
2007	0.95%	to	2.30	%	862,593		19.2	to	23.12		20,585,407	1.22	%	5.07%	to	3.63	%
2006	0.95%	to	2.30	%	967,988		18.27	to	22.31		22,124,575	0.88	%	16.25%	to	14.67	%
2005	0.95%	to	2.30	%	1,118,144		15.72	to	19.46		22,094,897	0.85	%	12.98%	to	11.44	%
High Income Fund/VA - Class 3 (OVHI3)
2009	0.80%	to	1.40	%	153,077		2.53	to	2.49		382,251	0.00	%	25.74%	to	24.98	%
2008	0.80%	to	1.40	%	126,679		2.01	to	1.99		252,740	4.88	%	-79.06%	to	-79.19	%
2007	0.80%	to	1.40	%	48,923		9.61	to	9.57		468,403	0.00	%	-3.91%	to	-4.3	%	*
High Income Fund/VA - Class 4 (OVHI4)
2009	0.95%	to	2.80	%	2,841,679		2.54	to	2.42		7,101,139	0.00	%	25.22%	to	22.88	%
2008	0.95%	to	2.80	%	2,070,239		2.03	to	1.97		4,158,939	5.83	%	-78.83%	to	-79.23	%
2007	0.95%	to	2.75	%	991,751		9.59	to	9.47		9,472,520	0.00	%	-4.12%	to	-5.29	%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**			Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***	Total Return****			Inception Date*
High Income Fund/VA - Non-Service Shares (OVHI)
2009	0.80%	to	1.40%	16,502	$	2.75	to	2.69	$	44,537	0.00%	24.31%	to	23.56%
2008	0.80%	to	1.40%	23,524		2.21	to	2.18		51,336	8.75%	-78.84%	to	-78.97%
2007	0.80%	to	1.40%	49,246		10.46	to	10.35		510,531	7.99%	-0.91%	to	-1.51%
2006	1.30%	to	1.40%	87,967		10.52	to	10.51		924,954	0.00%	5.16%	to	5.09%	*
High Income Fund/VA - Service Class (OVHIS)
2009	0.95%	to	2.70%	1,019,129		3.29	to	3.31		3,646,990	0.00%	24.75%	to	22.55%
2008	0.95%	to	2.70%	1,274,342		2.64	to	2.7		3,677,309	7.68%	-78.78%	to	-79.15%
2007	0.95%	to	2.70%	1,877,575		12.44	to	12.94		25,692,805	8.06%	-1.42%	to	-3.17%
2006	0.95%	to	2.75%	3,180,409		12.62	to	12.22		44,449,263	7.17%	8.19%	to	6.23%
2005	0.95%	to	2.45%	3,038,153		11.66	to	12.67		39,502,363	5.82%	1.04%	to	-0.49%
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
2009	0.80%	to	1.40%	1,710,096		8.52	to	8.03		13,848,126	1.95%	27.26%	to	26.49%
2008	0.80%	to	1.40%	2,022,607		6.69	to	6.35		12,938,096	1.56%	-38.96%	to	-39.33%
2007	0.80%	to	1.40%	2,487,109		10.97	to	10.47		26,194,088	1.03%	3.58%	to	2.95%
2006	0.80%	to	1.40%	2,841,846		10.59	to	10.17		29,040,677	1.13%	14.11%	to	13.42%
2005	0.80%	to	1.40%	3,231,392		9.28	to	8.96		29,087,134	1.38%	5.13%	to	4.5%
Main Street Fund(R)/VA - Service Class (OVGIS)
2009	0.65%	to	3.25%	24,250,057		7.96	to	10.62		307,298,432	1.47%	27.16%	to	23.83%
2008	0.65%	to	3.25%	27,005,578		6.26	to	8.57		272,771,613	1.22%	-39.02%	to	-40.62%
2007	0.95%	to	3.25%	24,014,369		14.72	to	14.44		402,804,694	0.63%	3.16%	to	0.75%
2006	0.95%	to	3.25%	14,409,505		14.27	to	14.33		236,003,634	0.48%	13.67%	to	11.04%
2005	0.95%	to	2.95%	3,831,295		12.56	to	13.01		55,729,762	0.95%	4.74%	to	2.63%
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
2009	0.80%	to	1.40%	552,543		8.26	to	8.08		4,477,598	0.88%	36.1%	to	35.27%
2008	0.80%	to	1.40%	440,857		6.07	to	5.97		2,638,595	0.51%	-38.33%	to	-38.7%
2007	0.80%	to	1.40%	418,752		9.84	to	9.74		4,084,325	0.29%	-2%	to	-2.6%
2006	0.80%	to	1.40%	227,665		10.04	to	10		2,277,965	0.00%	0.41%	to	0.01%	*
Main Street Small Cap Fund(R)/VA - Service Class (OVSCS)
2009	0.95%	to	3.30%	2,081,552		13.34	to	13.88		35,691,628	1.16%	35.58%	to	32.36%
2008	0.65%	to	3.25%	8,337,343		6.27	to	10.52		105,311,346	0.29%	-38.41%	to	-40.02%
2007	0.95%	to	3.25%	6,050,092		16.03	to	17.54		125,648,459	0.13%	-2.33%	to	-4.61%
2006	0.95%	to	3.25%	3,305,000		16.41	to	18.39		70,852,158	0.01%	13.57%	to	10.94%
2005	0.95%	to	2.90%	1,105,896		14.45	to	16.74		21,104,247	0.00%	8.68%	to	6.54%
MidCap Fund/VA - Non-Service Shares (OVAG)
2009	0.80%	to	1.40%	1,983,089		4.49	to	4.23		8,468,612	0.00%	31.55%	to	30.75%
2008	0.80%	to	1.40%	2,176,324		3.41	to	3.24		7,101,334	0.00%	-49.48%	to	-49.78%
2007	0.80%	to	1.40%	2,576,050		6.75	to	6.45		16,720,309	0.00%	5.48%	to	4.84%
2006	0.80%	to	1.40%	3,147,364		6.4	to	6.15		19,465,941	0.00%	2.13%	to	1.52%
2005	0.80%	to	1.40%	4,765,383		6.27	to	6.06		28,985,432	0.00%	11.43%	to	10.76%
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
2009	1.05%	to	2.60%	329,454		10.67	to	10.56		3,719,305	2.72%	28.45%	to	26.44%
2008	1.05%	to	2.80%	387,088		8.31	to	8.26		3,423,016	2.18%	-39.34%	to	-40.42%
2007	1.05%	to	2.80%	468,881		13.69	to	13.86		6,876,101	1.36%	-7.03%	to	-8.68%
2006	1.05%	to	2.80%	551,603		14.73	to	15.18		8,748,454	1.52%	14.7%	to	12.67%
2005	0.95%	to	2.80%	644,011		12.87	to	13.47		8,937,063	1.64%	4.23%	to	2.29%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**					Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****					Inception Date*
Putnam VT International Equity Fund - IB Shares (PVTIGB)
2009	1.15	%	to	2.40	%	46,786	$	14.93	to	13.72	$	681,273	0.00	%	23.2	%	to	21.64	%
2008	1.15	%	to	2.40	%	61,180		12.12	to	11.28		724,632	2.19	%	-44.6	%	to	-45.3	%
2007	1.15	%	to	2.40	%	71,037		21.88	to	20.62		1,525,012	2.96	%	7.11	%	to	5.75	%
2006	1.15	%	to	2.40	%	87,538		20.43	to	19.5		1,761,143	0.61	%	26.25	%	to	24.66	%
2005	1.15	%	to	2.65	%	92,906		16.18	to	15.53		1,485,977	1.49	%	10.91	%	to	9.23	%
Putnam VT Voyager Fund - IB Shares (PVTVB)
2009	0.95	%	to	2.80	%	213,154		12.92	to	12.5		2,875,568	0.65	%	62.34	%	to	59.31	%
2008	1.15	%	to	2.80	%	142,184		8.63	to	7.85		1,187,340	0.00	%	-37.76	%	to	-38.8	%
2007	1.15	%	to	2.80	%	168,443		13.87	to	12.82		2,271,117	0.00	%	4.3	%	to	2.55	%
2006	0.95	%	to	2.80	%	213,216		12.21	to	12.5		2,766,251	0.10	%	4.44	%	to	2.49	%
2005	0.95	%	to	2.80	%	276,236		11.69	to	12.2		3,456,648	0.71	%	4.69	%	to	2.74	%
Diversified Stock Fund Class A Shares (VYDS)
2009	1.15	%	to	2.10	%	43,065		12.53	to	11.78		531,815	0.81	%	25.6	%	to	24.39	%
2008	1.15	%	to	2.10	%	57,375		9.98	to	9.47		564,917	0.75	%	-38.58	%	to	-39.17	%
2007	1.15	%	to	2.10	%	66,078		16.25	to	15.57		1,063,078	0.66	%	8.68	%	to	7.63	%
2006	1.15	%	to	2.10	%	65,321		14.95	to	14.47		969,737	0.30	%	12.38	%	to	11.3	%
2005	1.15	%	to	2.10	%	64,852		13.3	to	13		859,735	0.07	%	7.5	%	to	6.47	%
Blue Chip Growth Portfolio - II (TRBCG2)
2009	0.80	%	to	2.95	%	3,605,643		9.45	to	9.84		37,628,164	0.00	%	40.66	%	to	37.61	%
2008	0.65	%	to	3.25	%	19,673,406		5.86	to	7.07		147,156,139	0.12	%	-43.02	%	to	-44.52	%
2007	0.80	%	to	3.25	%	10,055,319		11.81	to	12.74		133,588,581	0.14	%	11.58	%	to	8.81	%
2006	0.80	%	to	2.90	%	1,860,568		10.59	to	11.78		22,408,234	0.29	%	5.86	%	to	6.17	%	*
2005	1.10	%	to	2.90	%	596,546		11.23	to	11.1		6,676,122	0.19	%	12.32	%	to	10.96	%	*
Equity Income Portfolio - II (TREI2)
2009	0.80	%	to	3.30	%	7,776,288		8.86	to	8.87		74,780,990	1.74	%	24.25	%	to	21.12	%
2008	0.80	%	to	2.95	%	7,723,076		7.13	to	7.43		60,261,084	2.21	%	-36.78	%	to	-38.15	%
2007	0.80	%	to	2.95	%	6,128,523		11.28	to	12.01		76,349,143	1.66	%	2.2	%	to	-0.03	%
2006	0.80	%	to	2.95	%	4,412,317		11.04	to	12.01		54,220,730	1.32	%	10.35	%	to	15.16	%	*
2005	1.10	%	to	2.80	%	1,288,795		10.56	to	10.44		13,568,484	1.31	%	5.59	%	to	4.39	%	*
Limited-Term Bond Portfolio - II (TRLT2)
2009	1.30	%				1		11.34				11	3.05	%	5.96	%
2008	0.80	%	to	2.90	%	4,360,949		10.79	to	10.08		46,053,950	3.75	%	0.5	%	to	-1.63	%
2007	0.80	%	to	2.90	%	2,984,605		10.74	to	10.25		31,585,239	3.11	%	4.38	%	to	2.16	%
2006	1.10	%	to	2.80	%	897,335		10.34	to	10.05		9,206,800	3.73	%	2.88	%	to	1.12	%
2005	1.10	%	to	2.70	%	297,273		10.05	to	9.95		2,977,178	2.51	%	0.54	%	to	-0.54	%	*
Worldwide Insurance Trust - Worldwide Bond Fund - Class R1 (VWBFR)
2009	0.80	%	to	1.40	%	509,578		13.43	to	12.98		6,638,304	3.92	%	5.13	%	to	4.5	%
2008	0.80	%	to	1.40	%	642,414		12.77	to	12.42		8,003,418	8.12	%	2.87	%	to	2.25	%
2007	0.80	%	to	1.40	%	731,903		12.42	to	12.15		8,910,518	5.57	%	8.94	%	to	8.27	%
2006	0.80	%	to	1.40	%	690,934		11.4	to	11.22		7,763,189	7.87	%	5.55	%	to	4.91	%
2005	0.80	%	to	1.40	%	653,908		10.8	to	10.69		6,998,382	6.56	%	-3.89	%	to	-4.47	%
Worldwide Insurance Trust -Worldwide Bond Fund -Initial Class (VWBF)
2009	0.80	%	to	1.40	%	581,103		18.61	to	19.39		13,329,078	3.83	%	5.13	%	to	4.5	%
2008	0.80	%	to	1.40	%	703,225		17.7	to	18.55		15,375,868	9.07	%	2.78	%	to	2.16	%
2007	0.80	%	to	1.40	%	889,847		17.22	to	18.16		19,097,162	6.47	%	8.83	%	to	8.17	%
2006	0.80	%	to	1.40	%	1,107,173		15.82	to	16.79		21,961,040	8.79	%	5.63	%	to	4.99	%
2005	0.80	%	to	1.40	%	1,440,459		14.98	to	15.99		26,984,368	7.64	%	-3.81	%	to	-4.39	%

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**				Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***		Total Return****				Inception Date*
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Class R1 (VWEMR)
2009	0.80%	to	1.40	%	886,135	$	23.16	to	22.37	$	19,920,111	0.14	%	111.69%	to	110.41	%
2008	0.80%	to	1.40	%	763,916		10.94	to	10.63		8,156,428	0.00	%	-65.03%	to	-65.25	%
2007	0.80%	to	1.40	%	1,152,258		31.28	to	30.6		35,362,793	0.40	%	36.46%	to	35.63	%
2006	0.80%	to	1.40	%	1,106,434		22.92	to	22.56		25,013,200	0.53	%	38.42%	to	37.59	%
2005	0.80%	to	1.40	%	877,819		16.56	to	16.4		14,412,087	0.59	%	30.81%	to	30.02	%
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
2009	0.80%	to	1.40	%	1,081,816		21.67	to	20.02		21,882,865	0.17	%	111.47%	to	110.2	%
2008	0.80%	to	1.40	%	1,264,058		10.25	to	9.53		12,153,665	0.00	%	-65.06%	to	-65.27	%
2007	0.80%	to	1.40	%	1,599,935		29.33	to	27.43		44,248,455	0.46	%	36.51%	to	35.68	%
2006	0.80%	to	1.40	%	2,079,717		21.49	to	20.22		42,350,828	0.63	%	38.38%	to	37.55	%
2005	0.80%	to	1.40	%	2,663,102		15.53	to	14.7		39,392,769	0.84	%	30.94%	to	30.15	%
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Class R1 (VWHAR)
2009	0.80%	to	1.40	%	1,143,054		28.03	to	27.09		31,107,182	0.26	%	56.36%	to	55.41	%
2008	0.80%	to	1.40	%	1,219,284		17.93	to	17.43		21,333,920	0.35	%	-46.53%	to	-46.85	%
2007	0.80%	to	1.40	%	1,400,348		33.53	to	32.79		46,055,901	0.11	%	44.16%	to	43.28	%
2006	0.80%	to	1.40	%	1,470,219		23.26	to	22.89		33,718,368	0.07	%	23.54%	to	22.8	%
2005	0.80%	to	1.40	%	1,551,985		18.83	to	18.64		28,960,958	0.19	%	50.41%	to	49.5	%
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)
2009	0.80%	to	1.40	%	761,288		38.92	to	37.02		32,875,757	0.27	%	56.27%	to	55.33	%
2008	0.80%	to	1.40	%	892,365		24.91	to	23.83		24,758,601	0.31	%	-46.56%	to	-46.88	%
2007	0.80%	to	1.40	%	1,118,247		46.61	to	44.87		58,352,118	0.12	%	44.19%	to	43.31	%
2006	0.80%	to	1.40	%	1,340,984		32.32	to	31.31		48,678,714	0.07	%	23.5%	to	22.75	%
2005	0.80%	to	1.40	%	1,699,058		26.17	to	25.51		49,998,755	0.35	%	50.46%	to	49.56	%
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
2009	0.75%	to	2.80	%	2,978,019		11.91	to	11.74		35,256,090	0.04	%	19.06%	to	17.41	%	*
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
2008	0.80%	to	1.40	%	1,508,012		15.55	to	18.44		32,197,505	0.00	%	-44.8%	to	-45.14	%
2007	0.80%	to	1.40	%	1,793,964		28.18	to	33.62		69,679,934	0.00	%	21.34%	to	20.6	%
2006	0.80%	to	1.40	%	2,138,630		23.22	to	27.88		68,607,503	0.00	%	13.73%	to	13.04	%
2005	0.80%	to	1.40	%	2,486,339		20.42	to	24.66		70,294,123	0.00	%	7.41%	to	6.76	%
Advantage Funds Variable Trust - VT Large Company Growth Fund (WFVLCG)
2009	1.60%	to	2.20	%	11,201		9.46	to	9.17		103,735	0.38	%	41.08%	to	40.22	%
2008	1.75%	to	2.20	%	11,776		6.66	to	6.54		77,336	0.27	%	-40.06%	to	-40.34	%
2007	1.75%	to	2.20	%	12,402		11.12	to	10.96		136,370	0.00	%	5.72%	to	5.23	%
2006	1.40%	to	2.20	%	13,143		10.6	to	10.41		137,213	0.00	%	0.92%	to	0.1	%
2005	1.40%	to	2.20	%	13,234		10.5	to	10.4		137,863	0.18	%	4.22%	to	3.38	%
Advantage Funds Variable Trust - VT Money Market Fund (WFVMM)
2009	1.15%	to	1.60	%	14,747		10.83	to	10.58		156,783	0.24	%	-1.04%	to	-1.49	%
2008	1.15%	to	1.40	%	20,154		10.95	to	10.84		218,444	1.76	%	1.1%	to	0.84	%
2007	1.15%	to	1.40	%	1,632		10.83	to	10.74		17,585	4.60	%	3.47%	to	3.2	%
2006	1.15%	to	1.40	%	1,635		10.47	to	10.41		17,055	26.87	%	3.22%	to	2.96	%
2005	1.40%				1,058		10.11				10,698	34.36	%	1.11%
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
2008	0.80%	to	1.40	%	4,815,928		20.38	to	23.63		144,228,895	1.88	%	-40.58%	to	-40.94	%
2007	0.80%	to	1.40	%	5,757,665		34.29	to	40.01		291,024,130	0.62	%	5.78%	to	5.13	%
2006	0.80%	to	1.40	%	7,005,669		32.42	to	38.06		334,888,686	0.00	%	11.32%	to	10.65	%
2005	0.80%	to	1.40	%	8,710,393		29.12	to	34.39		373,720,329	0.00	%	7.02%	to	6.38	%
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
2009	0.75%	to	2.50	%	775,011		13.14	to	12.45		10,059,269	0.00	%	31.36%	to	48.83	%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**			Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***	Total Return****			Inception Date*
Advantage Funds Variable Trust - VT Small-Mid Cap Value Fund (WFVSMV)
2009	1.10%			1,175	$	8.2			$	9,641	1.27%	58.42%
2008	1.10%	to	1.25%	1,260		5.18	to	5.17		6,526	0.00%	-45.16%	to	-45.24%
2007	1.25%			39		9.43				368	0.00%	-5.65%			*
Advantage Funds Variable Trust - VT Total Return Bond Fund (WFVTRB)
2009	1.15%	to	1.25%	21,348		12.22	to	12.15		259,604	3.69%	10.71%	to	10.59%
2008	1.15%			2,116		11.04				23,352	4.80%	1.21%
2007	1.15%			2,116		10.9				23,072	4.56%	4.96%
2006	1.15%			2,116		10.39				21,981	4.32%	2.63%
2005	1.15%			2,116		10.12				21,419	0.49%	0.73%
Financial Investors First Horizon Core Equity Portfolio (obsolete) (FHGIP)
2005	1.55%	to	2.35%	56,260		10.89	to	10.68		604,067	1.26%	-4.24%	to	-5.02%
First Horizon Capital Appreciation Portfolio (obsolete) (FHCAP)
2005	1.55%	to	2.30%	4,666		11.89	to	11.69		55,110	0.00%	1.46%	to	0.69%
International Equity Flex I Portfolio (obsolete) (WIEP)
2008	0.80%	to	1.40%	1,761,884		10.95	to	10.4		18,463,105	1.68%	-41.51%	to	-41.86%
2007	0.80%	to	1.40%	2,123,568		18.72	to	17.89		38,252,943	1.05%	15.66%	to	14.96%
2006	0.80%	to	1.40%	2,629,775		16.18	to	15.57		41,181,190	0.99%	17.71%	to	17%
2005	0.80%	to	1.40%	3,268,498		13.75	to	13.3		43,719,660	0.84%	16.5%	to	15.8%
International Equity Flex II Portfolio (obsolete) (WVCP)
2008	0.80%	to	1.40%	184,626		8.13	to	7.56		1,407,276	1.73%	-47.18%	to	-47.5%
2007	0.80%	to	1.40%	219,613		15.39	to	14.39		3,186,083	0.00%	-4.73%	to	-5.31%
2006	0.80%	to	1.40%	285,608		16.15	to	15.2		4,372,655	0.00%	12.3%	to	11.62%
2005	0.80%	to	1.40%	377,164		14.38	to	13.62		5,168,448	0.00%	15.22%	to	14.52%
J.P. Morgan NVIT Balanced Fund - Class I (obsolete) (BF)
2008	0.80%	to	1.40%	243,504		9.34	to	9.08		2,218,666	2.75%	-26.14%	to	-26.59%
2007	0.80%	to	1.40%	265,247		12.64	to	12.36		3,289,279	2.30%	3.78%	to	3.15%
2006	0.80%	to	1.40%	285,299		12.18	to	11.99		3,426,244	2.46%	11.35%	to	10.68%
2005	0.80%	to	1.40%	230,571		10.94	to	10.83		2,499,509	2.31%	1.72%	to	1.11%
Large Cap Growth Fund II (obsolete) (VFLG2)
2008	1.15%	to	2.35%	85,778		7.46	to	7.05		641,766	0.42%	-39.76%	to	-40.49%
2007	1.15%	to	2.35%	90,603		12.39	to	11.85		1,130,341	0.38%	7.89%	to	6.58%
2006	1.15%	to	2.35%	91,381		11.48	to	11.12		1,057,960	0.54%	9.08%	to	7.76%
2005	1.15%	to	2.35%	87,319		10.53	to	10.32		928,731	0.45%	0.85%	to	-0.37%
Large Cap Value Fund II (obsolete) (VFLV2)
2008	1.15%	to	2.40%	105,574		8.62	to	8.13		912,662	1.27%	-40.1%	to	-40.86%
2007	1.15%	to	2.35%	111,241		14.39	to	13.77		1,613,063	1.08%	0.39%	to	-0.83%
2006	1.15%	to	2.35%	100,046		14.34	to	13.89		1,450,895	1.01%	16.26%	to	14.85%
2005	1.15%	to	2.35%	82,930		12.33	to	12.09		1,038,567	0.97%	9.02%	to	7.7%
Managed Allocation Fund - Aggressive Growth II (obsolete) (MBVAG2)
2008	1.15%	to	1.85%	22,130		7.61	to	7.42		166,461	0.45%	-41.31%	to	-41.73%
2007	1.15%	to	1.85%	33,329		12.97	to	12.73		429,215	1.38%	6.46%	to	5.7%
2006	1.15%	to	1.85%	27,147		12.19	to	12.04		329,302	3.32%	13.51%	to	12.71%
2005	1.35%	to	1.75%	11,254		10.72	to	10.69		120,559	1.08%	7.21%	to	6.92%	*
Managed Allocation Fund - Conservative Growth II (obsolete) (MBVCG2)
2008	1.15%	to	1.75%	22,506		8.94	to	8.74		198,924	2.65%	-20.62%	to	-21.1%
2007	1.15%	to	1.75%	8,194		11.26	to	11.08		92,000	2.66%	3.94%	to	3.3%
2006	1.15%	to	1.75%	8,142		10.83	to	10.72		88,038	3.85%	5.73%	to	5.09%
2005	1.25%	to	1.75%	3,652		10.24	to	10.2		37,354	3.18%	2.39%	to	2.04%	*

(Continued)

NATIONWIDE VARIABLE ACCOUNT-II NOTES TO FINANCIAL STATEMENTS

	Contract Expense Rate**			Units	Unit Fair Value				Contract Owners’ Equity		Investment Income Ratio***	Total Return****			Inception Date*
NVIT Mid Cap Growth Fund - Class I (obsolete) (SGRF)
2008	0.80%	to	1.40%	1,380,783	$	3.82	to	3.63	$	5,042,610	0.00%	-46.54%	to	-46.87%
2007	0.80%	to	1.40%	2,013,233		7.15	to	6.82		13,821,540	0.00%	8.14%	to	7.48%
2006	0.80%	to	1.40%	2,500,190		6.61	to	6.35		15,951,881	0.00%	9.03%	to	8.37%
2005	0.80%	to	1.40%	2,707,801		6.06	to	5.86		15,930,090	0.00%	8.87%	to	8.21%
NVIT Mid Cap Growth Fund - Class II (obsolete) (SGRF2)
2008	0.95%	to	3.20%	2,006,297		8.26	to	8.54		18,751,282	0.00%	-46.79%	to	-48.01%
2007	0.95%	to	3.25%	16,359,805		15.52	to	16.39		287,785,579	0.00%	7.69%	to	5.18%
2006	0.95%	to	3.25%	7,591,461		14.41	to	15.58		124,920,647	0.00%	8.61%	to	6.09%
2005	0.95%	to	2.90%	1,755,225		13.27	to	14.83		26,824,934	0.00%	8.56%	to	6.43%
Series Trust II - Mid Cap Value Portfolio (obsolete) (JPMCVP)
2008	0.80%	to	1.40%	654,300		9.66	to	9.39		6,164,916	1.13%	-33.74%	to	-34.14%
2007	0.80%	to	1.40%	934,069		14.58	to	14.26		13,355,230	0.93%	1.63%	to	1.01%
2006	0.80%	to	1.40%	1,328,877		14.35	to	14.12		18,795,204	0.59%	15.91%	to	15.21%
2005	0.80%	to	1.40%	2,326,240		12.38	to	12.25		28,535,450	0.22%	8.34%	to	7.69%
Small Cap Value II VCT Portfolio - Class I (obsolete) (SFRSCV)
2005	0.95%	to	1.05%	80,124		15.46	to	15.43		1,237,644	0.48%	13.86%	to	13.74%
Variable Contracts Trust - Small Cap Value VCT Portfolio - Class I Shares (obsolete) (PISVP1)
2008	0.95%	to	1.05%	105,733		6.12	to	6.1		646,042	0.60%	-38.59%	to	-38.65%
2007	0.95%	to	1.05%	117,897		9.96	to	9.95		1,173,591	0.73%	-7.85%	to	-7.94%
2006	0.95%	to	1.05%	124,148		10.81	to	10.8		1,341,708	0.26%	8.1%	to	8.04%	*
2009	Reserves for annuity contracts in payout phase:									8,394,197
2009	Contract owners equity:								$	21,471,280,300
2008	Reserves for annuity contracts in payout phase:									7,453,205
2008	Contract owners equity:								$	16,006,481,073
2007	Reserves for annuity contracts in payout phase:									12,121,909
2007	Contract owners equity:								$	22,175,260,947
2006	Reserves for annuity contracts in payout phase:									11,157,956
2006	Contract owners equity:								$	17,880,717,436
2005	Reserves for annuity contracts in payout phase:									9,694,221
2005	Contract owners equity:								$	13,950,161,968

* Denotes the minimum and/or maximum of the total return ranges, for underlying mutual fund options that were added and funded during the reporting period. One or both of the returns presented may not be annualized. Minimum and maximum ranges are not shown for underlying mutual fund options for which a single contract expense rate (product option) exists. In such case, the total return presented is representative of all units issued and outstanding at period end.

** 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 owner accounts through the redemption of units.

*** This represents the dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by average net assets. The ratios exclude those expenses, such as mortality and expense charges or contract maintenance charges, that result in direct reductions to the contractholder accounts through reductions in unit values or redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.

**** This represents the 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 the value for expenses assessed. It does not include any expenses assessed through the redemption of units, the inclusion of which would result in a reduction of 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.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

Nationwide Life Insurance Company:

We have audited the accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (the Company) as of December 31, 2009 and 2008, and the related consolidated statements of income (loss), changes in equity and cash flows for each of the years in the three-year period ended December 31, 2009. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of evaluating other-than-temporary impairments of debt securities due to the adoption of new accounting requirements issued by the FASB, as of January 1, 2009.

/s/ KPMG LLP

Columbus, Ohio

March 1, 2010

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Income (Loss)

(in millions)

	Years ended December 31,
	2009			2008			2007
Revenues:
Policy charges	$	1,245.1		$	1,340.5		$	1,383.9
Premiums		469.7			394.1			407.0
Net investment income		1,879.1			1,864.7			2,192.2
Net realized investment gains (losses)		453.8			(347.8	)		(47.2	)
Other-than-temporary impairment losses (consisting of $992.1 of total other-than-temporary impairment losses, net of $417.5 recognized in other comprehensive income, for the year ended December 31, 2009)		(574.6	)		(1,130.7	)		(117.7	)
Other income		(3.9	)		(4.2	)		8.9
Total revenues		3,469.2			2,116.6			3,827.1
Benefits and expenses:
Interest credited to policyholder accounts		1,100.1			1,172.6			1,311.0
Benefits and claims		812.1			856.1			672.5
Policyholder dividends		87.0			93.1			83.1
Amortization of deferred policy acquisition costs		465.6			691.6			382.1
Amortization of value of business acquired and other intangible assets		62.8			30.9			48.5
Interest expense, primarily with Nationwide Financial Services, Inc. (NFS)		55.3			61.8			70.0
Other operating expenses		579.8			631.6			630.8
Total benefits and expenses		3,162.7			3,537.7			3,198.0
Income (loss) from continuing operations before federal income tax expense (benefit)		306.5			(1,421.1	)		629.1
Federal income tax expense (benefit)		47.9			(533.8	)		147.3
Income (loss) from continuing operations		258.6			(887.3	)		481.8
Cumulative effect of adoption of accounting principle, net of taxes		—			—			(6.0	)
Net income (loss)		258.6			(887.3	)		475.8
Less: Net loss attributable to noncontrolling interest		52.3			72.3			50.9
Net income (loss) attributable to NLIC	$	310.9		$	(815.0	)	$	526.7

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Balance Sheets

(in millions, except for share and per share amounts)

	December 31,
	2009			2008
Assets
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (amortized cost $25,103.1 and $24,122.6)	$	24,749.7		$	21,387.5
Equity securities (amortized cost $48.8 and $62.2)		52.6			54.1
Mortgage loans on real estate, net		6,829.0			7,770.1
Short-term investments, including amounts managed by a related party		1,003.4			2,913.0
Other investments		1,516.8			1,733.2
Total investments		34,151.5			33,857.9
Cash and cash equivalents		49.1			42.0
Accrued investment income		401.9			342.9
Deferred policy acquisition costs		3,983.1			4,523.8
Value of business acquired		276.9			334.0
Goodwill		199.8			199.8
Other assets		2,085.2			3,662.2
Separate account assets		57,846.2			48,841.0
Total assets	$	98,993.7		$	91,803.6
Liabilities and Shareholder’s Equity
Liabilities:
Future policy benefits and claims	$	33,149.4		$	35,714.5
Short-term debt		150.0			249.7
Long-term debt, payable to NFS		700.0			700.0
Other liabilities		1,826.4			2,589.6
Separate account liabilities		57,846.2			48,841.0
Total liabilities		93,672.0			88,094.8
Shareholder’s equity:
Common stock ($1 par value; authorized - 5,000,000 shares; issued and outstanding - 3,814,779 shares)		3.8			3.8
Additional paid-in capital		1,717.7			1,697.7
Retained earnings		3,515.2			2,952.6
Accumulated other comprehensive loss		(265.6	)		(1,361.3	)
Total shareholder’s equity		4,971.1			3,292.8
Noncontrolling interest		350.6			416.0
Total equity		5,321.7			3,708.8
Total liabilities and equity	$	98,993.7		$	91,803.6

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Condensed Consolidated Statements of Changes in Equity

(in millions)

	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total shareholder’s equity			Non- controlling interest			Total equity
Balance as of December 31, 2006	$	3.8	$	1,358.8	$	4,311.3		$	24.6		$	5,698.5		$	445.5		$	6,144.0
Dividends to NFS		—		—		(612.5	)		—			(612.5	)		—			(612.5	)
Member contributions to noncontrolling interest		—		—		—			—			—			70.7			70.7
Other, net		—		—		2.6			—			2.6			0.4			3.0
Comprehensive income (loss):
Net income (loss)		—		—		526.7			—			526.7			(50.9	)		475.8
Other comprehensive loss, net of taxes		—		—		—			(111.7	)		(111.7	)		—			(111.7	)
Total comprehensive income (loss)												415.0			(50.9	)		364.1
Balance as of December 31, 2007	$	3.8	$	1,358.8	$	4,228.1		$	(87.1	)	$	5,503.6		$	465.7		$	5,969.3
Dividends to NFS		—		—		(460.5	)		—			(460.5	)		—			(460.5	)
Capital contributed by NFS		—		338.9		—			—			338.9			—			338.9
Member contributions to noncontrolling interest		—		—		—			—			—			23.0			23.0
Other, net		—		—		—			—			—			(0.4	)		(0.4	)
Comprehensive loss:
Net loss		—		—		(815.0	)		—			(815.0	)		(72.3	)		(887.3	)
Other comprehensive loss, net of taxes		—		—		—			(1,274.2	)		(1,274.2	)		—			(1,274.2	)
Total comprehensive loss												(2,089.2	)		(72.3	)		(2,161.5	)
Balance as of December 31, 2008	$	3.8	$	1,697.7	$	2,952.6		$	(1,361.3	)	$	3,292.8		$	416.0		$	3,708.8
Cumulative effect of change in accounting principle, net of taxes		—		—		249.7			(249.7	)		—			—			—
Capital contributed by NFS		—		20.0		—			—			20.0			—			20.0
Other, net		—		—		2.0			—			2.0			(13.1	)		(11.1	)
Comprehensive income (loss):
Net income (loss)		—		—		310.9			—			310.9			(52.3	)		258.6
Other comprehensive income, net of taxes		—		—		—			1,345.4			1,345.4			—			1,345.4
Total comprehensive income (loss)												1,656.3			(52.3	)		1,604.0
Balance as of December 31, 2009	$	3.8	$	1,717.7	$	3,515.2		$	(265.6	)	$	4,971.1		$	350.6		$	5,321.7

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2009			2008			2007
Cash flows from operating activities:
Net income (loss)	$	258.6		$	(887.3	)	$	475.8
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment (gains) losses		(453.8	)		347.8			47.2
Other-than-temporary impairment losses		574.6			1,130.7			117.7
Interest credited to policyholder accounts		1,100.1			1,172.6			1,311.0
Capitalization of deferred policy acquisition costs		(513.0	)		(587.6	)		(631.3	)
Amortization of deferred policy acquisition costs		465.6			691.6			382.1
Amortization and depreciation		51.1			48.1			81.7
Decrease (increase) in other assets		291.6			(727.2	)		552.7
(Decrease) increase in policy and other liabilities		(1,859.9	)		583.0			(50.6	)
Decrease (increase) in derivative assets		582.3			(1,030.7	)		(146.9	)
Increase in derivative liabilities		57.0			153.9			96.4
Other, net		57.4			51.0			10.0
Net cash provided by operating activities		611.6			945.9			2,245.8
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale		3,889.2			4,271.5			4,582.7
Proceeds from sale of securities available-for-sale		4,210.5			4,308.8			4,977.9
Proceeds from repayments or sales of mortgage loans on real estate		773.1			869.1			2,653.7
Cost of securities available-for-sale acquired		(9,205.7	)		(7,255.5	)		(8,400.2	)
Cost of mortgage loans on real estate originated or acquired		(35.7	)		(371.8	)		(1,944.0	)
Net decrease (increase) in short-term investments		1,909.6			(1,856.8	)		831.5
Collateral (paid) received, net		(868.6	)		592.2			(207.3	)
Other, net		207.7			15.3			(156.2	)
Net cash provided by investing activities		880.1			572.8			2,338.1
Cash flows from financing activities:
Net (decrease) increase in short-term debt		(99.7	)		(35.6	)		210.1
Capital contributed by NFS		20.0			—			—
Cash dividends paid to NFS		—			(280.7	)		(612.5	)
Investment and universal life insurance product deposits and other additions		3,877.1			3,862.3			3,913.8
Investment and universal life insurance product withdrawals and other deductions		(5,301.4	)		(5,305.9	)		(8,101.8	)
Other, net		19.4			281.9			0.3
Net cash used in financing activities		(1,484.6	)		(1,478.0	)		(4,590.1	)
Net increase (decrease) in cash and cash equivalents		7.1			40.7			(6.2	)
Cash and cash equivalents, beginning of period		42.0			1.3			7.5
Cash and cash equivalents, end of period	$	49.1		$	42.0		$	1.3

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements

December 31, 2009, 2008 and 2007

(1) Nature of Operations  

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

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

On August 6, 2008, NFS entered into a definitive agreement for NMIC, and Nationwide Corporation (Nationwide Corp.)., to acquire all of the outstanding publicly held Class A common shares of NFS for $52.25 per share in cash. The transaction closed on January 1, 2009 and NFS became a privately held subsidiary of Nationwide Corp.

Wholly-owned subsidiaries of NLIC as of December 31, 2009 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC). NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis. NISC is a registered broker-dealer.

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

The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker-dealers, financial institutions, wirehouse and regional firms, pension plan administrators, and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (NRS), and Nationwide Financial Network (NFN) producers. The Company also distributes products through the agency distribution force of its ultimate parent company, NMIC.

As of December 31, 2009 and 2008, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

On December 31, 2009, NLIC merged with its affiliate, Nationwide Life Insurance Company of America and subsidiaries (NLICA), with NLIC as the surviving entity. In addition, NLIC’s subsidiary, Nationwide Life and Annuity Insurance Company (NLAIC), merged with a subsidiary of NLICA, Nationwide Life and Annuity Company of America (NLACA), effective as of December 31, 2009, with NLAIC as the surviving entity. The mergers were completed to streamline the enterprise’s capital structure and create operational efficiencies. See Note 2 (p) for further information.

(2) Summary of Significant Accounting Policies  

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The Company’s most critical estimates include those used to determine the following: the balance, recoverability and amortization of deferred policy acquisition costs (DAC); whether an available-for-sale security is other-than-temporarily impaired, valuation allowances for mortgage loans on real estate; valuation of derivatives; the liability for future policy benefits and claims, including the valuation of embedded derivatives resulting from living benefit contracts; and the federal income tax provision. Although some variability is inherent in these estimates, recorded amounts reflect management’s best estimates based on facts and circumstances as of the balance sheet date. Management believes the amounts provided are appropriate.

Certain items in the 2008 and 2007 consolidated financial statements and related notes have been reclassified to conform to the current presentation.

(a) Consolidation Policy

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. All significant intercompany balances and transactions were eliminated in consolidation.

(b) Subsequent events

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the SEC.

(c) Valuation of Investments, Investment Income, Related Gains and Losses and Other-Than-Temporary Impairment Evaluations

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

For fixed maturity and marketable equity securities for which market quotations are available, the Company generally uses independent pricing services to assist in determining the fair value measurement. For certain fixed maturity securities not priced by independent services (generally investment grade private placement securities without quoted market prices), an internally developed pricing model or “corporate pricing matrix” is most often used. The corporate pricing matrix is developed by obtaining private spreads versus the U.S. Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the U.S. Treasury yield to create an estimated market yield for that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. See Note 4 for further information regarding these alternative pricing processes.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

As a result of the Company’s adoption of guidance impacting Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 320-10, Investments – Debt and Equity Securities, in the first quarter of 2009, for all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and amount of the cash flows. The Company evaluates its intent to sell on an individual security basis.

Additionally, debt securities that become other-than-temporarily impaired (where the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security prior to recovery of the security’s amortized cost) are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment being recognized in a separate component of other comprehensive income, net of applicable taxes and other offsets.

The Company’s practice is to disclose as part of the separate component of accumulated other comprehensive income both the non-credit portion of the other-than-temporary impairment recognized in other comprehensive income and any subsequent changes in the fair value of those debt securities.

Prior to 2009, an other-than-temporary impairment charge was taken when the Company did not have the ability and intent to hold the security until the forecasted recovery or if it was probable that the Company would not recover all contractual amounts when due. Many criteria were considered during this process including, but not limited to, specific credit issues and financial prospects related to the issuer, the quality of the underlying collateral, management’s intent and ability to hold the security until recovery, current economic conditions that could affect the creditworthiness of the issuer in the future, the current fair value as compared to the amortized cost of the security, the extent and duration of the unrealized loss, and the rating of the affected security. Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment equal to the difference between the estimated fair value of the security and its amortized cost.

The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan is impaired, a provision for loss is established equal to either the difference between the carrying value and the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

In addition to the valuation allowance on loan-specific reserves, the Company maintains an allowance not yet specifically identified by loan for probable losses inherent in the loan portfolio as of the balance sheet date. The valuation allowance for mortgage loans on real estate reflects management’s best estimate of probable credit losses, including losses incurred at the balance sheet date but not yet identified by specific loan. Management’s periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.

Changes in the valuation allowance are recorded in net realized investment gains and losses, while loan-specific reserves are included in other-than-temporary impairment losses. Loans in default or in the process of foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received. Interest income on mortgage loans is recognized over the life of the loan using the effective-yield method.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

Impairment losses for other-than-temporary declines in the fair values of applicable investments are included in other-than-temporary impairment losses in the consolidated statements of income (loss).

(d) Derivative Instruments

The Company uses derivative instruments in efforts to manage exposures and mitigate risks associated with interest rates, equities, foreign currency and credit. These derivative instruments primarily include interest rate swaps, futures contracts, credit default swaps, cross-currency swaps and other traditional swap agreements. Certain features embedded in the Company’s investment portfolio, equity-indexed life and annuity contracts and certain variable life and annuity contracts are derivatives requiring separate accounting under the provisions of FASB ASC 815-15 Embedded Derivatives. All derivative instruments are carried at fair value and are reflected as an asset or liability. See Note 5 for a discussion on the Company’s use of derivative instruments.

(e) Revenues and Benefits

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

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

(f) Cash and Cash Equivalents

Cash and cash equivalents consist of short-term highly liquid investments with original maturities of less than three months at the time of purchase. The Company carries cash and cash equivalents at cost, which approximates fair value.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(g) Deferred Policy Acquisition Costs

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

For investment and universal life insurance products, the Company amortizes DAC with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, asset fees, cost of insurance charges, administrative fees, surrender charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses. The Company adjusts the DAC asset related to investment and universal life insurance products to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(c).

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

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

See Note 7 for a discussion of assumption changes that impacted DAC amortization and related balances for 2007, 2008 and 2009.

Traditional life insurance products. Generally, DAC related to traditional life insurance products is amortized with interest over the premium-paying period of the related policies in proportion to the ratio of actual annual premium revenue to the anticipated total premium revenue. Such anticipated premium revenue is estimated using the same assumptions as those used for computing liabilities for future policy benefits at issuance. Under existing accounting guidance, the concept of DAC unlocking does not apply to traditional life insurance products, although evaluations of DAC for recoverability at the time of policy issuance and loss recognition testing at each reporting period are required.

(h) Value of Business Acquired

As a result of the acquisition of NFN in 2002 and the application of purchase accounting, the Company reports an intangible asset representing the estimated fair value of the business in force and the portion of the purchase price that was allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts existing as of the closing date of the NFN acquisition. The value assigned to VOBA was supported by an independent valuation study commissioned by the Company and executed by a team of qualified valuation experts, including actuarial consultants. The expected future cash flows used in determining such value were based on actuarially determined projections by major lines of business of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, changes in reserves, operating expenses, investment income and other factors. These projections considered all known or expected factors at the valuation date based on the judgment of management. The actual experience on purchased business, to some extent, has and may continue to vary from projections due to differences in renewal premiums, investment spreads, investment gains and losses, mortality and morbidity costs, or other factors.

Amortization of VOBA occurs with interest over the anticipated lives of the major lines of business to which it relates (initially ranging from 13 to 30 years) in relation to estimated gross profits, gross margins or premiums, as appropriate. If estimated gross profits, gross margins or premiums differ from expectations, the amortization of VOBA is adjusted on a retrospective or prospective basis, as appropriate. The VOBA asset related to investment products and universal life insurance products is adjusted annually for the impact of net unrealized gains and losses on securities available-for-sale had such gains and losses been realized and allocated to the product lines, as described in Note 2(c). The recoverability of VOBA is evaluated annually. If the evaluation indicates that the existing insurance liabilities, together with the present value of future net cash flows from the blocks of business acquired, is insufficient to recover VOBA, the difference, if any, is charged to expense as accelerated amortization of VOBA.

For those products amortized in relation to estimated gross profits, the most significant assumptions involved in the estimation of future gross profits include future net separate account performance, surrender/lapse rates, interest margins and mortality. The Company’s long-term assumption for net separate account performance is currently 7%. If actual net separate account performance varies from the 7% assumption, the Company assumes different performance levels over the next three years such that the mean return equals the long-term assumption. The assumed net separate account return assumptions used in the VOBA models are intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, the Company’s reversion to the mean process generally limits returns to 0-15% during the three-year reversion period.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The use of discount rates was necessary to establish fair values of VOBA acquired in the NFN transaction. In selecting the appropriate discount rates, management considered its weighted average cost of capital as well as the weighted average cost of capital required by market participants. In addition, consideration was given to the perceived risk of the assets acquired, which includes the expected growth and competitive profile of the life insurance market and the nature of the assumptions used in the valuation process. An after-tax discount rate of 11.0% was used to value VOBA, while after-tax discount rates ranging from 11.0% to 12.5% were used to value the other intangible assets acquired in the NFN transaction, as well as for net realized gains and losses, net of taxes, allocated to the closed block.

(i) Goodwill

In connection with acquisitions of operating entities, the Company recognizes the excess of the purchase price over the fair value of net assets acquired as goodwill. Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually in the third quarter. Goodwill of a reporting unit also is tested for impairment on an interim basis in addition to the annual evaluation if an event occurs or circumstances change which would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The process of evaluating goodwill for impairment requires several judgments and assumptions to be made to determine the fair value of the reporting units, including the method used to determine fair value; discount rates; expected levels of cash flows, revenues and earnings; and the selection of comparable companies used to develop market-based assumptions. The Company performed its annual impairment test as of June 30, 2009.

(j) Closed Block

In connection with the sponsored demutualization of Provident Mutual Life Insurance Company (Provident) prior to its acquisition, Provident established a closed block for the benefit of certain classes of individual participating policies that had a dividend scale payable in 2001. Assets were allocated to the closed block in an amount that produces cash flows which, together with anticipated revenues from closed block business, is reasonably expected to be sufficient to provide for (1) payment of policy benefits, specified expenses and taxes, and (2) the continuation of dividends throughout the life of the Provident policies included in the closed block based upon the dividend scales payable for 2001, if the experience underlying such dividend scales continues.

Assets allocated to the closed block benefit only the holders of the policies included in the closed block and will not revert to the benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without the approval of the Pennsylvania Insurance Department (PID). The closed block will remain in effect as long as any policy in the closed block is in force.

If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will increase. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from the Company’s assets outside of the closed block, which are general account assets.

The assets and liabilities allocated to the closed block are recorded in the Company’s consolidated financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date Provident was acquired by the Company represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income, for the benefit of stockholders, over the period the policies in the closed block remain in force.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income. This is because the excess cumulative earnings over expected cumulative earnings, which represents undistributed accumulated earnings attributable to policyholders, is recorded as a policyholder dividend obligation. Therefore, the excess will be paid to closed block policyholders as an additional policyholder dividend expense in the future unless it is otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, actual earnings will be recognized in income.

The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholder benefits, policyholder dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions, net investment income, and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies for the purpose of the amortization of VOBA.

(k) Separate Accounts

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

(l) Future Policy Benefits and Claims

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

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

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

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

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

(m) Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 4% of the Company’s life insurance in force in 2009 (5% in 2008 and 6% in 2007), 51% of the number of life insurance policies in force in 2009 (54% in 2008 and 56% in 2007) and 12% of life insurance statutory premiums in 2009 (12% in 2008 and 12% in 2007). The provision for policyholder dividends was based on the current dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(n) Federal Income Taxes

The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. Any such change could significantly affect the amounts reported in the consolidated statements of income (loss).

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

(o) Reinsurance Ceded

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded generally are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder.

(p) NLICA Merger

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity. In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity. The merger was accounted for at historical cost in a manner similar to a pooling of interests because the involved entities are under common control. NLICA and subsidiaries are reflected in the Company’s current and prior year consolidated financial statements at the historical cost of the transferred net assets to provide comparative information as though the companies were combined for all periods presented. This presentation is consistent for both GAAP and Statutory reporting. Since NLICA and NLACA are wholly-owned subsidiaries, there is no noncontrolling interest impact.

The Company has presented its consolidated financial statements and accompanying notes as applicable for all years presented to reflect the NLICA merger.

The following tables summarize the impact of the items described above for the years ended December 31 (in millions):

	2009
Total revenues	$	375.5
Total benefits and expenses		357.3
Federal income tax benefit		(4.9	)
Net income	$	23.1
	2008
Total revenues	$	411.0
Total benefits and expenses		395.7
Federal income tax expense		0.5
Net income	$	14.8
	2007
Total revenues	$	510.0
Total benefits and expenses		412.7
Federal income tax expense		(18.8	)
Net income	$	78.5

(q) Change in Accounting Principle

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities (FASB Staff Position (FSP), FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). The Company adopted this guidance as of January 1, 2009. The adoption of this guidance resulted in a cumulative-effect adjustment of $249.7 million, net of taxes, as an adjustment to the opening balance of retained earnings with a corresponding adjustment to the opening balance of AOCI.

Historically, the Company accrued for legal costs associated with litigation defense and regulatory investigations by estimating the ultimate costs of such activity. Beginning April 1, 2007, the Company’s accrual for such legal expenses includes only the amount for services that have been provided but not yet paid. The Company believes the newly adopted accounting principle is preferable because it more accurately reflects expenses in the periods in which they are incurred. The Company continues to estimate and accrue the ultimate amounts expected to be paid for litigation and regulatory investigation loss contingencies. The Company has presented its consolidated financial statements and accompanying notes as applicable for all periods presented to retroactively apply the adoption of this change in accounting principle, which lowered net income by $1.9 million in 2007.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(3) Recently Issued Accounting Standards  

In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-02, which amends FASB ASC 810, Consolidation. This guidance clarifies the scope of the decrease in the ownership provisions and applies to a subsidiary or group of assets that is a business or nonprofit activity, a subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture, and an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity. This guidance would not be applied to sales of in-substance real estate. If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance of the transaction causing the decrease in ownership is addressed in other GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, or sales of in substance real estate, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in FASB ASC 810-10. This guidance also expands the disclosures about the deconsolidation of a subsidiary or derecognition of a group of assets within the scope of FASB ASC 810-10. In addition to existing disclosures, this guidance requires for such a deconsolidation or derecognition additional disclosures regarding valuation techniques, the nature of continuing involvement with the subsidiary or entity acquiring the group of assets, and whether the transaction was with a related party or whether the former subsidiary or entity acquiring the group of assets will be a related party. The Company adopted this guidance effective December 31, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the Company. The guidance will be applied to prospective transactions, as is required.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures. This guidance requires new disclosures and provides amendments to clarify existing disclosures. The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements and the reasons for the transfers and further disaggregating activity in Level 3 fair value measurements. The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. The guidance also includes conforming amendments to the guidance on employers’ disclosures about the postretirement benefit plan assets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company will adopt this guidance for the fiscal period beginning January 1, 2010, except for the new disclosure regarding the activity in level 3 measurements, which the Company will adopt for the fiscal period beginning January 1, 2011.

In September 2009 the FASB issued ASU 2009-12, which amends FASB ASC 820, Fair Value Measurements and Disclosures. This guidance applies to reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or nonrecurring basis but does not have a readily determinable fair value and has attributes of a investment company. For these investments, this update allows, as a practical expedient, the use of NAV as the basis to estimate fair value as long as it is not probable, as of the measurement date, that the investment will be sold and NAV is not the value that will be used in the sale. The NAV must be calculated consistent with the American Institute of Certified Public Accountants Audit and Accounting Guide, Investment Companies, which generally requires these investments to be measured at fair value. Additionally, the guidance provides updated disclosures for investments within its scope and notes that if the investor can redeem the investment with the investee on the measurement date at NAV, the investment should likely be classified as Level 2 in the fair value hierarchy. Investments that cannot be redeemed with the investee at NAV would generally be classified as Level 3 in the fair value hierarchy. If the investment is not redeemable with the investee on the measurement date, but will be at a future date, the length of time until the investment is redeemable should be considered in determining classification as Level 2 or 3. This guidance is effective for interim and annual periods ending after December 15, 2009 with early adoption permitted. The Company adopted this guidance effective December 31, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the Company. See the required disclosures and updated fair value hierarchy disclosed within Note 4.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In August 2009 the FASB issued ASU 2009-05, which amends FASB ASC 820-10, Fair Value Measurements and Disclosures. This guidance clarifies how the fair value of a liability should be determined. It reiterates that fair value is the price that would be paid to transfer the liability in an orderly transaction between market participants at the measurement date. It notes that the liability should reflect the company’s nonperformance risk and should not reflect restrictions on the transfer of the liability. To determine the exit price, the guidance permits companies to look to the identical liability traded as an asset, similar liabilities traded as assets, or another valuation technique to measure the price the company would pay to transfer the liability. The Company adopted this guidance effective the reporting period ending December 31, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the company.

In June 2009, the FASB issued guidance under FASB ASC 105, Generally Accepted Accounting Principles (Statement of Financial Accounting Standard (SFAS) No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162 (SFAS 168)). This guidance establishes the FASB ASC as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS 168 and the ASC are effective for financial statements issued for interim and annual periods ending after September 15, 2009. The ASC supersedes all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the ASC have become non-authoritative. Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FSPs, or EITF Abstracts. Instead, the FASB will issue Accounting Standards Updates, which will serve only to update the ASC, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the ASC. The Company adopted SFAS 168 effective September 30, 2009. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements but will alter the references to accounting literature within the consolidated financial statements.

In June 2009, the FASB issued guidance under FASB ASC 810 Consolidation (SFAS No. 167, Amendments to FASB Interpretation No. 46(R)). In February 2010, this guidance was amended by ASU 2010-10, which defers the application of SFAS No. 167 for certain interests in an entity that has all of the attributes of an investment company, or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those investment companies apply, or the entity is a registered money market fund. An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of variable interest entities before the SFAS No. 167 amendments. ASU 2010-10 also clarifies other aspects of the SFAS No. 167 amendments. FASB ASC 810, Consolidation changes the consolidation guidance applicable to a variable interest entity (VIE). It also amends the guidance governing the determination of whether an entity is the VIE’s primary beneficiary (the reporting entity that must consolidate the VIE) by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include consideration of who has the power to direct the activities of the entity that most significantly impacts the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. This guidance also requires continuous reassessment of whether an enterprise is the primary beneficiary of a VIE. Before this guidance, FASB Interpretation No. 46(R) required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred. This guidance also requires enhanced disclosures about an entity’s involvement with a VIE. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company is in the process of determining the impact of adopting this guidance.

In June 2009, the FASB issued guidance under FASB ASC 860, Transfers and Servicing (SFAS No. 166, Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140). This guidance eliminates the concept of a qualifying special-purpose entity (QSPE) and clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale and the unit of account eligible for sale accounting. Additionally, this guidance requires a transferor to initially measure and recognize all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale at fair value. Additionally, on and after the effective date, existing QSPEs (as defined under previous accounting standards) must be evaluated for consolidation in accordance with the applicable consolidation guidance. This guidance also establishes new requirements for reporting a transfer of a portion of a financial asset as a sale. This guidance requires enhanced disclosures about, among other things, a transferor’s continuing involvement with transfers of financial assets accounted for as sales, the risks inherent in the transferred financial assets that have been retained, and the nature and financial effect of restrictions on the transferor’s assets that continue to be reported in the consolidated balance sheets. This guidance is effective for fiscal and interim reporting periods beginning after November 15, 2009. The Company adopted this guidance effective January 1, 2010. The guidance will be applied to prospective transactions, as is required.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In May 2009, the FASB issued guidance under FASB ASC 855, Subsequent Events (SFAS No. 165, Subsequent Events). This guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures an entity should make about events or transactions that occurred after the balance sheet date. This guidance is effective for fiscal years and interim periods ending after June 15, 2009. The Company adopted this guidance effective June 30, 2009. The adoption of this guidance did not have a material impact on the consolidated financial statements of the Company. See Note 2 (b) for the required disclosure.

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). This guidance is designed to create greater clarity and consistency in accounting for and presentation of impairment losses on debt securities. This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted. As of the beginning of the interim period of adoption, this guidance requires a cumulative-effect adjustment to reclassify the non-credit component of previously recognized other-than-temporary impairment losses on debt securities from retained earnings to the beginning balance of AOCI. The Company adopted this guidance as of January 1, 2009. The adoption of this guidance resulted in a cumulative-effect adjustment of $249.7 million, net of taxes, as an adjustment to the opening balance of retained earnings with a corresponding adjustment to the opening balance of AOCI.

In April 2009, the FASB issued guidance under FASB ASC 820-10, Fair Value Measurements and Disclosures (FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly). This guidance provides guidelines for making fair value measurements more consistent with the principles presented in the previous standard SFAS No. 157, Fair Value Measurements. This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted. The Company elected to early adopt this guidance as of January 1, 2009.

In December 2008, the FASB issued guidance under FASB ASC 715, Compensation – Retirement Benefits (FSP FAS 132R-1). This guidance amends previous SFAS No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefit, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The portion of this guidance related to the disclosures about plan assets is effective for fiscal years ending after December 15, 2009. This guidance will have no impact on the Company’s disclosures.

In November 2008, the FASB issued guidance under FASB ASC 350-30, Intangibles – Goodwill and Other, General Intangibles Other than Goodwill (EITF 08-7, Accounting for Defensive Intangible Assets). This guidance requires defensive intangible assets acquired in a business combination or asset acquisition to be accounted for as a separate unit of accounting. In doing so, the asset should not be included as part of the cost of an entity’s existing intangible asset(s) because the defensive intangible asset is separately identifiable. This guidance is effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted this guidance effective January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations. The Company will apply this guidance prospectively for intangible assets acquired on or after January 1, 2009.

In November 2008, the FASB issued guidance under FASB ASC 323-10, Investments – Equity Method and Joint Ventures (EITF 08-6, Equity Method Investment Accounting Considerations). This guidance clarifies how to account for certain transactions and impairment considerations involving equity method investments. Specifically, this guidance notes: 1) an entity shall measure its equity method investment initially at cost; 2) an equity method investor is required to recognize other-than-temporary impairments of an equity method investment in accordance with paragraph 35-32A and an equity method investor shall not separately test an investee’s underlying indefinite-lived intangible asset(s) for impairment; and 3) an equity method investor shall account for a share issuance by an investee as if the investor had sold a proportionate share of its investment and any gain or loss to the investor resulting from an investee’s share issuance shall be recognized in earnings. This guidance is effective on a prospective basis in fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Company adopted this guidance prospectively beginning January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In April 2008, the FASB issued guidance under FASB ASC 350-30, General Intangibles other than Goodwill (FSP FAS 142-3, Determination of the Useful Life of Intangible Assets). This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previous SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). This guidance is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The amended factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142 are to be applied prospectively to intangible assets acquired after the effective date. The Company adopted this guidance effective January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations. The Company will apply this guidance prospectively to intangible assets acquired after January 1, 2009.

In March 2008, the FASB issued guidance under FASB ASC 815, Derivatives and Hedging (SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133). This guidance amends and expands the disclosure requirements of previous SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), with the intent to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. This guidance requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about derivative instrument fair values and related gains and losses, and disclosures about credit-risk-related contingent features in derivative agreements. This guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company adopted this guidance effective January 1, 2009. See Note 5 for required disclosures.

In February 2008, the FASB issued guidance under FASB ASC 820, Fair Value Measurements and Disclosures (FSP FAS 157-2, Effective Date of FASB Statement No. 157). This guidance delayed the effective date of SFAS 157 for nonfinancial assets and liabilities until fiscal years and interim periods beginning after November 15, 2008. FASB ASC 820 applies to nonfinancial assets and liabilities, except for items recognized or disclosed at fair value in the Company’s financial statements on a recurring basis (at least annually), and is effective upon issuance. The Company adopted this guidance effective January 1, 2009. On the date of adoption, there was no impact to the Company’s financial position or results of operations.

In December 2007, the FASB issued guidance under FASB ASC 805, Business Combination, (SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R), which replaced SFAS No. 141, Business Combinations). The objective of this guidance is to improve the relevance, representational faithfulness, and comparability of the information a reporting entity provides in its financial reports about a business combination and its effects. Accordingly, this guidance establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This guidance applies to all transactions or other events in which an entity obtains control of one or more businesses and retains the fundamental requirements in the previous standard that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. This guidance defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date the acquirer achieves control. This guidance is applicable prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier application is prohibited. The Company adopted this guidance effective January 1, 2009. The Company applied this guidance prospectively to business combination on or after January 1, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In April 2009, the FASB issued guidance under FASB ASC 805-20, Business Combinations – Identifiable Assets and Liabilities, and Any Noncontrolling Interest (FSP FAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies). This guidance amends previous business combination guidance related to contingencies. First, this guidance requires the acquirer to recognize the contingency at fair value, at the acquisition date, if the acquisition-date fair value of that asset or liability can be determined during the measurement period. Second, if the first criteria is not applicable as the fair value of the asset or liability cannot be determined during the measurement period, then the contingency shall be recognized if both (a) information available before the end of the measurement period indicates it is probable an asset existed or a liability had been incurred at the acquisition date and (b) the amount of the asset or liability can be reasonably estimated. If neither of these acquisition date recognition criterion apply, the acquirer shall not recognize an asset or liability as of the acquisition date. In periods after the acquisition date, the acquirer shall account for an asset or a liability arising from a contingency that does not meet the recognition criteria at the acquisition date in accordance with other applicable GAAP, including FASB ASC 450, Contingencies, as appropriate. The Company will apply this guidance prospectively to any business combination on or after January 1, 2009.

In December 2007, the FASB issued guidance under FASB ASC 810, Consolidation (SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51). The objective of this guidance is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance also amends certain consolidation procedures prescribed by previous Accounting Research Bulletin No. 51, Consolidated Financial Statements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company adopted this guidance effective January 1, 2009. The required presentation of noncontrolling interests is reflected in the consolidated financial statements. As a result of adoption, the Company reclassified $416.0 million from other liabilities to equity as of December 31, 2008, representing the noncontrolling interest of low-income-housing tax credit funds (LIHTC Funds). See Note 20 for further discussion on the LIHTC Funds. The accounting requirements of this guidance will be applied to any transactions involving noncontrolling interests on or after January 1, 2009.

In September 2005, the FASB issued guidance under FASB ASC 944-30, Financial Services – Insurance – Acquisition Costs, (Statement of Position No. 05-1). This guidance provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in FASB ASC 944, Financial Services – Insurance. This guidance defines an internal replacement as a modification in product benefits, features, rights or coverages that occurs as a result of the exchange of a contract for a new contract, or by amendment, endorsement or rider to a contract, or by the election of a new feature or coverage within a contract. This guidance was effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Retrospective application of this guidance to previously issued financial statements was not permitted. Initial application was required as of the beginning of an entity’s fiscal year. The Company adopted this guidance effective January 1, 2007, which resulted in a $6.0 million charge, net of taxes, as the cumulative effect of adoption of this accounting principle.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(4) Fair Value Measurements  

Fair Value Option

Effective January 1, 2008, the Company elected fair value treatment for commercial mortgage loans held for sale. Accordingly, the Company now records in earnings all market fluctuations associated with this portfolio. The Company previously recorded such loans at the lower of cost or market value. Balances for these loans are measured at fair value prospectively with unrealized gains and losses included as a component of net realized investment gains and losses. The Company will assess the fair value option election for newly acquired financial assets or liabilities on a prospective basis. The fair value election is an irreversible election.

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company categorizes its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Company categorizes financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

• Level 1 – Unadjusted quoted prices accessible in active markets for identical assets or liabilities at the measurement date.  

• Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means.  

• Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate about the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs.  

For certain residential mortgage-backed securities backed by Prime, sub-prime and Alt-A collateral, which are included in Level 3 financial assets, the Company utilizes internal pricing models to assist in determining the estimated fair values. As of December 31, 2008, these investments were priced solely with the assistance of independent pricing services. As a result of continued low levels of activity in these markets during 2009, management believes that prices are no longer representative of the investments’ fair value, which is the price that would be received upon the sale of the investment in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. The Company believes that a weighting of internal pricing models and independent pricing services represents a better estimate of the investments’ fair value and complies with FASB ASC 820, Fair Value Measurements and Disclosures.

Therefore, management determined that the use of multiple valuation techniques, considering both an income approach that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs and a market approach that observes quotes provided by independent pricing services produces a result more representative of an investment’s fair value.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The income approach incorporates cash flows for each investment adjusted for expected losses in different interest rate and housing scenarios. The adjusted cash flows are then discounted using a risk premium that market participants would demand because of the risk in the cash flows. The risk premium is reflective of an orderly transaction between market participants at the measurement date under current market conditions and includes items such as liquidity and structure risk. The income approach also includes a weighting of external third party values. As sufficient information is often not available to conclude whether such prices are based on orderly transactions, this weighting methodology is designed to incorporate external prices into the Company’s internal valuation process.

In addition to weighting external prices in developing the internal values, the Company further calibrates those values to market indications through obtaining pricing from two independent pricing services (the market approach). The Company calibrates the prices obtained from the independent pricing services and the price developed internally by utilizing the median value to determine the estimated fair value.

In addition, certain of the Company’s investments in corporate debt securities, mortgage-backed securities and other asset-backed securities were valued with the assistance of independent pricing services and non-binding broker quotes. The Company’s policy is to use the pricing obtained from our primary independent pricing service even in cases where a price is obtained from both an independent pricing service and a broker. In the event that pricing information is not available from an independent pricing service, non-binding broker quotes are used to assist in the valuation of the investments. In many cases, only one broker quote is available. The Company’s policy is generally not to adjust the values obtained from brokers.

Broker quotes are considered unobservable inputs as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and the transaction volume in the same or similar investments has decreased such that generally only one quotation is available. As the brokers often do not provide the necessary transparency into their quotes and methodologies, the Company periodically performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value.

For investments valued with the assistance of independent pricing services, the Company obtained the pricing services’ methodologies and classified these investments accordingly in the fair value hierarchy. The Company periodically reviews and tests the pricing and related methodologies obtained from these independent pricing services against secondary sources to ensure that management can validate the investment’s fair value and related categorization. If large variances are observed between the price obtained from the independent pricing services and secondary sources, the Company analyzes the causes driving the variance and resolves any differences.

As of December 31, 2009, 68% of the prices of fixed maturity securities were valued with the assistance of independent pricing services, 13% were valued with the assistance of the Company’s internal pricing processes, 11% were valued with the assistance of the Company’s pricing matrices, 6% were valued with the assistance of broker quotes and 2% were valued from other sources compared to 78%, 4%, 12%, 5% and 1%, respectively, as of December 31, 2008.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

The Company uses NAV to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values included in separate account assets.

All but one of these mutual funds are included in Level 2 and had fair values totaling $44.00 billion as of December 31, 2009. See the following paragraph for discussion of the mutual fund considered Level 3. These funds have no unfunded commitments or restrictions and the Company always has the ability to redeem the separate account investment in these funds with the investee at NAV daily. These mutual funds are primarily invested in domestic and international equity funds.

The Company’s separate account assets include an investment in a mutual fund that may not be redeemed until a seven year guarantee period expires in 2016; however, NAV has been used to estimate the fair value of this investment as a practical expedient. This fund has no unfunded commitments or other restrictions. The investment strategy of this fund is to build a portfolio where the assets shall be sufficient to achieve a target portfolio value by the end of the seven year guarantee period. The Company’s portion of the net asset value of this fund reported in separate account assets was $975.9 million as of December 31, 2009 and is included in Level 3.

Since separate account assets include mutual fund investments not directed by the Company, the contractholders have the ability to select and change investment categories, which may result in the underlying mutual funds being purchased and sold in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2009:

(in millions)	Level 1			Level 2			Level 3			Total
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	747.9		$	4.4		$	1.6		$	753.9
Obligations of states and political subdivisions		—			548.9			—			548.9
Debt securities issued by foreign governments		—			75.1			—			75.1
Corporate securities		1.8			14,557.0			1,402.2			15,961.0
Residential mortgage-backed securities		229.3			3,245.9			2,033.7			5,508.9
Commercial mortgage-backed securities		—			678.8			405.3			1,084.1
Collateralized debt obligations		—			131.5			240.5			372.0
Other asset-backed securities		—			278.6			167.2			445.8
Total fixed maturity securities		979.0			19,520.2			4,250.5			24,749.7
Equity securities		12.6			32.4			7.6			52.6
Total securities available-for-sale		991.6			19,552.6			4,258.1			24,802.3
Mortgage loans held for sale1		—			—			47.9			47.9
Short-term investments		56.1			947.3			—			1,003.4
Total investments		1,047.7			20,499.9			4,306.0			25,853.6
Cash and cash equivalents		49.1			—			—			49.1
Derivative assets2		—			497.5			331.2			828.7
Separate account assets3,5		11,607.8			44,610.9			1,627.5			57,846.2
Total assets	$	12,704.6		$	65,608.3		$	6,264.7		$	84,577.6
Liabilities
Future policy benefits and claims4	$	—		$	—		$	(310.9	)	$	(310.9	)
Derivative liabilities2		(10.3	)		(404.0	)		(1.5	)		(415.8	)
Total liabilities	$	(10.3	)	$	(404.0	)	$	(312.4	)	$	(726.7	)

1 Elected to be carried at fair value.  

2 Comprised of interest rate swaps, cross-currency swaps, credit default swaps, other non-hedging derivative instruments, equity option contracts and interest rate futures contracts.  

3 Comprised of public, privately registered and non-registered mutual funds and investments in securities.  

4 Related to embedded derivatives associated with living benefit contracts. The Company’s guaranteed minimum accumulation benefits (GMABs), guaranteed lifetime withdrawal benefits (GLWBs) and hybrid GMABs/GLWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings. This balance also includes embedded derivatives associated with fixed equity-indexed annuities (EIA) of $45.0 million that provide for interest earnings that are linked to the performance of specified equity market indices.  

5 The fair value of separate account liabilities is set to equal the fair value of separate account assets  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2008:

(in millions)	Level 1			Level 2			Level 3			Total
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	609.2		$	4.3		$	1.9		$	615.4
Obligations of states and political subdivisions		—			224.7			—			224.7
Debt securities issued by foreign governments		—			55.5			—			55.5
Corporate securities		2.0			11,263.8			1,327.3			12,593.1
Residential mortgage-backed securities		600.7			2,398.1			3,035.9			6,034.7
Commercial mortgage-backed securities		—			700.0			263.4			963.4
Collateralized debt obligations		—			73.0			250.4			323.4
Other asset-backed securities		—			465.5			111.8			577.3
Total fixed maturity securities		1,211.9			15,184.9			4,990.7			21,387.5
Equity securities		1.4			34.8			17.9			54.1
Total securities available-for-sale		1,213.3			15,219.7			5,008.6			21,441.6
Mortgage loans held for sale1		—			—			124.5			124.5
Short-term investments		158.7			2,754.3			—			2,913.0
Total investments		1,372.0			17,974.0			5,133.1			24,479.1
Cash and cash equivalents		42.0			—			—			42.0
Derivative assets2		—			708.5			597.6			1,306.1
Separate account assets3,5		9,975.7			36,723.5			2,141.8			48,841.0
Total assets	$	11,389.7		$	55,406.0		$	7,872.5		$	74,668.2
Liabilities
Future policy benefits and claims4	$	—		$	—		$	(1,739.7	)	$	(1,739.7	)
Derivative liabilities2		(6.0	)		(385.9	)		(4.2	)		(396.1	)
Total liabilities	$	(6.0	)	$	(385.9	)	$	(1,743.9	)	$	(2,135.8	)

1 Elected to be carried at fair value.  

2 Comprised of interest rate swaps, cross-currency swaps, credit default swaps, other non-hedging derivative instruments, equity option contracts and interest rate futures contracts.  

3 Comprised of public, privately registered and non-registered mutual funds and investments in securities.  

4 Related to embedded derivatives associated with living benefit contracts. The Company’s GMABs, GLWBs and hybrid GMABs/GMWBs are considered embedded derivatives requiring the related liabilities to be separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings. This balance also includes embedded derivatives associated with fixed EIAs of $41.7 million that provide for interest earnings that are linked to the performance of specified equity market indices.  

5 The fair value of separate account liabilities is set to equal the fair value of separate account assets.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2009:

				Net investment gains (losses)																	Change in unrealized gains (losses) in earnings due to assets still held
(in millions)	Balance as of December 31, 2008			In earnings (realized and unrealized)1			In OCI (unrealized)2			Purchases, issuances, sales and settlements			Transfers in to Level 3		Transfers out of Level 3			Balance as of December 31, 2009
Assets
Investments:
Securities available-for-sale3:
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1.9		$	—		$	(0.2	)	$	(0.1	)	$	—	$	—		$	1.6		$	—
Corporate securities		1,327.3			(80.3	)		260.3			(400.8	)		487.1		(191.4	)		1,402.2		$	—
Residential mortgage-backed securities		3,035.9			(111.0	)		388.7			(431.2	)		0.9		(849.6	)		2,033.7			—
Commercial mortgage-backed securities		263.4			(20.3	)		139.1			(7.1	)		94.1		(63.9	)		405.3			—
Collateralized debt obligations		250.4			(53.0	)		77.1			(18.2	)		—		(15.8	)		240.5			—
Other asset-backed securities		111.8			(16.5	)		43.5			(12.0	)		48.6		(8.2	)		167.2			—
Total fixed maturity securities		4,990.7			(281.1	)		908.5			(869.4	)		630.7		(1,128.9	)		4,250.5			—
Equity securities		17.9			1.4			0.7			3.9			—		(16.3	)		7.6			—
Total securities available-for-sale		5,008.6			(279.7	)		909.2			(865.5	)		630.7		(1,145.2	)		4,258.1			—
Mortgage loans held for sale		124.5			(7.6	)		—			(69.0	)		—		—			47.9			(2.8	)
Total investments		5,133.1			(287.3	)		909.2			(934.5	)		630.7		(1,145.2	)		4,306.0			(2.8	)
Derivative assets		597.6			(311.5	)		(12.0	)		57.1			—		—			331.2			(309.5	)
Separate account assets4,6		2,141.8			(646.7	)		—			400.0			14.7		(282.3	)		1,627.5			217.7
Total assets	$	7,872.5		$	(1,245.5	)	$	897.2		$	(477.4	)	$	645.4	$	(1,427.5	)	$	6,264.7		$	(94.6	)
Liabilities
Future policy benefits and claims5	$	(1,739.7	)	$	1,437.7		$	—		$	(8.9	)	$	—	$	—		$	(310.9	)	$	1,437.7
Derivative liabilities		(4.2	)		2.7			—			—			—		—			(1.5	)		2.7
Total liabilities	$	(1,743.9	)	$	1,440.4		$	—		$	(8.9	)	$	—	$	—		$	(312.4	)	$	1,440.4

1 Includes gains and losses on sales of financial instruments, changes in market value of certain instruments and other-than-temporary impairments. The net unrealized loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

2 Includes changes in market value of certain instruments.  

3 Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other ABSs, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the National Association of Insurance Commissioners (NAIC) (see Note 6 for a discussion of NAIC designations. Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.  

4 Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions. The net unrealized investment loss on these non-registered mutual funds is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

5 Relates to GMAB, GLWB and hybrid GMAB/GLWB embedded derivatives associated with contracts with living benefit riders. This balance also includes embedded derivatives associated with EIAs. Related derivatives are internally valued. The valuation of guaranteed minimum benefit embedded derivatives is based on capital market and actuarial assumptions, including risk margin considerations reflecting policyholder behavior. The Company uses both observable and unobservable inputs, such as published swap rates and historical volatilities as well as implied volatilities, in its capital market assumptions. Actuarial assumptions, including lapse behavior and mortality rates, are either based on annuity experience or pricing assumptions if experience has not yet developed.  

6 The value of separate account liabilities is set to equal the fair value of separate account assets.  

The following table summarizes financial instruments for which the Company used significant unobservable inputs (Level 3) to determine fair value measurements for the year ended December 31, 2008:

				Net investment gains (losses)																	Change in unrealized gains (losses) in earnings due to assets still held
(in millions)	Balance as of December 31, 2007			In earnings (realized and unrealized)1			In OCI (unrealized)2			Purchases, issuances, sales and settlements			Transfers in to Level 3		Transfers out of Level 3			Balance as of December 31, 2008
Assets
Investments:
Securities available-for-sale3:
U.S Treasury securities and obligations of U.S. government corporations and agencies	$	1.6		$	—		$	0.4		$	(0.1	)	$	—	$	—		$	1.9		$	—
Fixed maturity securities Corporate securities		1,515.7			(189.4	)		(250.3	)		(384.1	)		901.2		(265.8	)		1,327.3			—
Residential mortgage-backed securities		193.3			(402.8	)		(711.6	)		(290.5	)		4,290.4		(42.9	)		3,035.9			—
Commercial mortgage-backed securities		87.6			(12.8	)		(306.7	)		187.1			371.6		(63.4	)		263.4			—
Collateralized debt obligations		532.6			(281.1	)		(97.4	)		23.4			78.0		(5.1	)		250.4			—
Other asset-backed securities		122.3			(13.4	)		(39.9	)		(37.2	)		127.8		(47.8	)		111.8			—
Total fixed maturity securities		2,453.1			(899.5	)		(1,405.5	)		(501.4	)		5,769.0		(425.0	)		4,990.7			—
Equity securities		1.4			(54.9	)		(9.4	)		40.3			40.5		—			17.9			—
Total securities available-for-sale		2,454.5			(954.4	)		(1,414.9	)		(461.1	)		5,809.5		(425.0	)		5,008.6			—
Mortgage loans held for sale		86.1			(49.3	)		—			87.7			—		—			124.5			(49.3	)
Short-term investments		382.7			(0.2	)		—			(1.3	)		—		(381.2	)		—			—
Total investments		2,923.3			(1,003.9	)		(1,414.9	)		(374.7	)		5,809.5		(806.2	)		5,133.1			(49.3	)
Derivative assets		166.6			405.4			4.4			21.2			—		—		$	597.6			394.0
Separate account assets4,6		2,258.6			305.9			—			511.4			23.9		(958.0	)	$	2,141.8			329.7
Total assets	$	5,348.5		$	(292.6	)	$	(1,410.5	)	$	157.9		$	5,833.4	$	(1,764.2	)	$	7,872.5		$	674.4
Liabilities
Future policy benefits and claims5	$	(128.9	)	$	(1,602.1	)	$	—		$	(8.7	)	$	—	$	—		$	(1,739.7	)	$	(1,602.1	)
Derivative liabilities		(16.3	)		3.9			—			8.2			—		—		$	(4.2	)		12.0
Total liabilities	$	(145.2	)	$	(1,598.2	)	$	—		$	(0.5	)	$	—	$	—		$	(1,743.9	)	$	(1,590.1	)

1 Includes gains and losses on sales of financial instruments, changes in market value of certain instruments and other-than-temporary impairments. The net unrealized loss on separate account assets is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

2 Includes changes in market value of certain instruments.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

3 Includes certain collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other ABSs, certain broker or internally priced securities and securities that are at or near default based on ratings assigned by the NAIC (see Note 6 for a discussion of NAIC designations). Equity securities represent holdings in non-registered mutual funds with significant unobservable inputs.  

4 Comprised of non-registered mutual funds with significant unobservable and/or liquidity restrictions. The net unrealized investment loss on these non-registered mutual funds is attributable to contractholders and, therefore, is not included in the Company’s earnings.  

5 Relates to GMAB, GLWB and hybrid GMAB/GLWB embedded derivatives associated with contracts with living benefit riders. This balance also includes embedded derivatives associated with EIAs. Related derivatives are internally valued. The valuation of guaranteed minimum benefit embedded derivatives is based on capital market and actuarial assumptions, including risk margin considerations reflecting policyholder behavior. The Company uses both observable and unobservable inputs, such as published swap rates and historical volatilities as well as implied volatilities, in its capital market assumptions. Actuarial assumptions, including lapse behavior and mortality rates, are either based on annuity experience or pricing assumptions if experience has not yet developed.  

6 The value of separate account liabilities is set to equal the fair value of separate account assets.  

Transfers

The Company reviews its fair value hierarchy classifications quarterly. Changes in observability of significant valuation inputs identified during these reviews may trigger reclassification of fair value hierarchy levels of financial assets and liabilities. Reclassifications in/out of Level 3 are reported as transfers at the beginning of the period in which the change occurs. During 2008, the Company’s investments in residential mortgage-backed securities backed by prime collateral were classified as Level 3 financial assets because of their inactive markets and resulting illiquidity. As of December 31, 2009, these securities are no longer considered inactive due to increased trading volume and market activity and as a result were transferred out of Level 3. In addition, the Company was able to gain additional observable valuation inputs in the pricing of certain corporate securities, residential mortgage-backed securities and commercial mortgage-backed securities, which led to transferring these securities out of Level 3.

Additionally, certain corporate securities and commercial mortgage-backed securities had significant changes in key valuation inputs, which led to transfers into Level 3, primarily related to ratings downgrades and changes in pricing sources.

Fair Value on a Nonrecurring Basis

In 2009, certain mortgage loans on real estate held for investment were measured at the estimated fair value of the collateral on a non-recurring basis in periods subsequent to initial recognition due to these loans having specific reserves applied to them during the period. The application of these specific reserves adjusts the amortized cost basis of the loan to the estimated fair value of the collateral. The estimated fair value of the collateral supporting these loans was $154.8 million when the specific reserves were recorded.

Financial Instruments Not Carried at Fair Value

In estimating fair value for its disclosures for financial instruments not carried at fair value (and not included in the fair value disclosures above), the Company used the following methods and assumptions:

Mortgage loans on real estate held for investment, net: The fair values of mortgage loans held for investment on real estate are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. As commercial mortgage loans held for sale are included in the above fair value disclosure, they are excluded from financial instruments not carried at fair value in the table below.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

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

Long-term debt, payable to Nationwide Financial Services, Inc. (NFS): The fair values for long-term debt are based on estimated market prices.

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

	2009						2008
(in millions)	Carrying value			Estimated fair value			Carrying value			Estimated fair value
Assets
Investments:
Mortgage loans on real estate, net	$	6,781.1		$	5,946.3		$	7,645.6		$	6,845.6
Policy loans		1,050.4			1,050.4			1,095.6			1,095.6
Liabilities
Investment contracts		(18,723.8	)		(18,315.5	)		(20,093.2	)		(19,621.5	)
Short-term debt		(150.0	)		(150.0	)		(249.7	)		(249.7	)
Long-term debt, payable to NFS		(700.0	)		(716.6	)		(700.0	)		(568.7	)

(5) Derivative Financial Instruments  

Qualitative Disclosures

The Company recognizes all of its derivative instruments as either assets or liabilities at fair value. The accounting for changes in the fair value (e.g., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship.

For derivative instruments that are designated and qualify as a cash flow hedge (e.g., hedging the exposure to variability in expected future cash flows that is attributable to interest rate risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction impacts earnings (e.g., interest income on a floating rate asset). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (ineffectiveness), or components of fair value that are excluded from the assessment of effectiveness, are recognized in the consolidated statements of income (loss) during the period.

For derivative instruments that are designated and qualify as a fair value hedge (e.g., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the hedged item are both recognized in net realized investment gains and losses.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

For derivative instruments that are not designated as a hedging instrument, the gain or loss on the derivative instrument is recognized in net realized investment gains and losses.

The Company’s derivative activities primarily are with financial institutions and corporations. In order to minimize credit risk, the Company enters into master netting agreements, which reduce risk by permitting the closeout and netting of transactions with the same counterparty upon occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. Generally, the Company accepts collateral in the form of cash, U.S. Treasury securities and other marketable securities.

As of December 31, 2009 and 2008, the Company had received $532.4 million and $1.02 billion, respectively, of cash for derivative collateral, which is in turn invested in short-term investments. The Company also held $32.3 million and $35.4 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2009 and 2008, respectively. As of December 31, 2009 and 2008, the Company had pledged fixed maturity securities with a fair value of $55.6 million and $24.5 million, respectively, as collateral to various derivative counterparties. There are no contingent features associated with the Company’s derivative instruments which would require additional collateral to be pledged to counterparties.

The Company periodically evaluates the risks within the derivative portfolios due to credit exposure. When evaluating this risk, the Company considers several factors which include, but are not limited to, the counterparty risk associated with derivative receivables, the Company’s own credit as it relates to derivative payables, the collateral thresholds associated with each counterparty, and changes in relevant market data in order to gain insight into the probability of default by the counterparty. In addition, the effect that the Company’s exposure to credit risk could have on the effectiveness of the Company’s hedging relationships is considered. As of December 31, 2009, the impact of the exposure to credit risk on both the fair value measurement of derivative assets and liabilities and the effectiveness of the Company’s hedging relationships was immaterial.

The Company is exposed to certain other risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk, foreign currency exchange risk, equity risk and credit risk.

Derivatives Qualifying for Hedge Accounting – Interest Rate Risk Management

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

In using these interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap is intended to match the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap. The net receipt of a fixed rate will offset the fixed rate paid on the liability. These interest rate swaps are designated as hedging instruments in cash flow hedging relationships.

The Company periodically participates in a medium-term note (MTN) program. Under this program, NLIC issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust. The proceeds from these funding agreements are generally used to purchase fixed rate assets (generally available-for-sale corporate bonds, available-for-sale private placement bonds or held for investment commercial mortgage loans). In a rising interest rate environment, the Company is exposed to narrowing margins as interest expense will increase while interest income remains constant. To manage this risk, the Company has entered into pay fixed/receive variable interest rate swaps. The interest rate swap agreement utilized by the Company effectively modifies its exposure to interest rate risk by converting the Company’s floating rate funding agreements associated with the MTN program to a fixed rate, thus reducing the impact of interest rate changes on future interest expense. These interest rate swaps are designated as hedging instruments in cash flow hedging relationships.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Derivatives Qualifying for Hedge Accounting – Foreign Currency Risk Management

The Company purchases foreign-denominated fixed rate assets and the associated investment income is exposed to changes in the exchange rates of the foreign currencies. To manage this risk, the Company has entered into pay fixed foreign currency/receive fixed U.S. dollar cross-currency swaps. As foreign exchange rates change, the increase or decrease in the cash flows of the derivative instrument will offset the changes in the functional-currency equivalent cash flows of the asset. These cross-currency swaps are designated as hedging instruments in cash flow hedging relationships.

The Company also purchases foreign-denominated fixed rate assets, funded with proceeds from funding agreements under a variable rate MTNs. The value of these investments is exposed to both changes in the exchange rates of the foreign currencies and changes in interest rates. To manage this risk, the Company has entered into pay fixed foreign currency/receive variable U.S. cross-currency interest rate swaps. As foreign exchange rates and interest rates change, the increase or decrease in the value of the derivative instrument will offset the changes in the asset’s value (relative to foreign currency and interest rate changes). These cross-currency interest rate swaps are designated as hedging instruments in fair value hedging relationships.

In addition, the Company periodically participates in a fixed rate foreign denominated MTN program. Under this program, NLIC issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust, and the value of these liabilities is exposed to both changes in the exchange rates of the foreign currencies and changes in interest rates. To manage this risk, the Company has entered into receive fixed foreign currency/pay variable U.S. cross-currency interest rate swaps. As foreign exchange rates and interest rates change, the increase or decrease in the value of the derivative instrument will offset the changes in the liability’s value (relative to foreign currency and interest rate changes). These cross-currency interest rate swaps are designated as hedging instruments in fair value hedging relationships.

Derivatives Not Qualifying for Hedge Accounting – Interest Rate Risk Management

The Company enters into commercial mortgage loan commitments that are held for sale, which exposes the Company to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to the loans being funded. In an effort to manage this risk, the Company enters into short U.S. Treasury futures and/or pay fixed interest rate swaps during the commitment period. If interest rates rise or fall, the gains or losses on short U.S. Treasury futures will offset the change in fair value of the commitment attributable to the change in interest rates.

The Company may use pay fixed, receive variable interest rate swaps to hedge the value of a portfolio of fixed-rate assets, relative to changes in interest rates. The interest rate swaps mitigate the risk of a loss of value due to increasing interest rates, with the fluctuations in the fair values of the derivatives offsetting changes in the fair values of the portfolios resulting from changes in interest rates.

The Company offers a variety of variable annuity programs with a guaranteed minimum balance or guaranteed withdrawal benefits, and options are utilized to economically hedge a portion of these products. See Derivatives Not Qualifying for Hedge Accounting – Equity Market Risk Management below for further explanation. As interest rates are a component of the option’s value, the effectiveness of economically hedging the annuity products may be adversely affected by changes in interest rates. The Company enters into interest rate swaps to mitigate this risk. The fluctuation in the fair values of the derivatives offsets the changes in the fair values of the options resulting from changes in interest rates.

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

In addition, the Company may use pay fixed/receive variable interest rate swaps as hedges against the negative effects of adverse interest rate movements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Derivatives Not Qualifying for Hedge Accounting – Foreign Currency Risk Management

The Company periodically participates in a variable rate foreign denominated MTN program. Under this program, NLIC issues funding agreements to an unconsolidated third party trust to secure notes issued to investors by the trust. As such, the cash flows related to these MTNs are exposed to changes in the exchange rates of the foreign currencies. Because the Company desires to retain the variable interest rate, it has entered into receive variable foreign currency/pay variable U.S. dollar cross-currency swaps. The basis swap converts the debt instrument to a U.S. dollar variable rate, thereby eliminating foreign exchange risk. While the receive-side terms of the basis swap will be consistent with the terms of the liability, the Company is not able to match the pay-side terms of the derivative to a specific asset. Therefore, these basis swaps do not receive hedge accounting treatment. The Company also uses currency contracts, primarily futures, to hedge foreign currency denominated investments in certain alternative investments.

Derivatives Not Qualifying for Hedge Accounting – Equity Market Risk Management

The Company offers a variety of variable annuity programs with a guaranteed minimum balance or guaranteed withdrawal benefits. The contractholders may elect to invest in equity funds. Adverse changes in the equity markets expose the Company to losses if the changes result in contractholder’s account balances falling below the guaranteed minimum. To mitigate a portion of the risk associated with these liabilities, the Company enters into equity index futures and options. The changes in value of the futures and options will offset a portion of the changes in the annuity accounts relative to changes in the equity market.

The Company offers a variety of variable annuity programs with a guaranteed minimum balance or guaranteed withdrawal benefits, where the contractholder elects to invest in funds with a foreign equity index. Adverse changes in the foreign equity index expose the Company to losses if the change results in contractholder’s account balances falling below the guaranteed minimum. To mitigate this risk, the Company enters into total return swaps, where the Company pays the total return on the foreign index and receives one-month U.S. London Interbank Offered Rate (LIBOR). The changes in cash flows of the total return swap will offset a portion of the changes in the annuity accounts relative to changes in the foreign index.

The Company’s living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contractholder persistency, contractholder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility. The Company does not expect any meaningful level of claims under the living benefit features for several years and believes the impact of claims is expected to be mitigated by its economic hedging program.

Derivatives Not Qualifying for Hedge Accounting – Credit Risk

The Company enters into two distinct types of credit derivative contracts (or credit default swaps) which allows the Company to either sell or buy credit protection on a specific creditor or credit index.

The Company sells credit default protection to counterparties on selected debt instruments with specific creditor or credit index exposure and combines the credit default swap with selected assets the Company owns to enhance spreads. These selected assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. When the Company sells these instruments, it receives periodic premium payments similar to the risk premium received on an equivalent maturity bond from the same creditor. In return, the Company agrees to provide for losses if a credit event occurs during the lifetime of the contract, by buying a pre-determined cash bond from the counterparty at face value. In such a contract, a credit event will be defined in the trade settlement documentation and may include, but is not limited to, creditor bankruptcy or restructuring. The combined credit default swap and investments provide cash flows with the duration and credit spread targeted by the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company.

Quantitative Disclosure

The following table presents the fair value of derivative instruments, location of the related instruments in the consolidated balance sheets and the related notional amounts of the derivative instruments as of December 31, 2009:

	Derivative assets					Derivative liabilities
(in millions)	Balance sheet location	Fair value		Notional		Balance sheet location	Fair value		Notional
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets	$	3.8	$	86.4	Other liabilities	$	69.0	$	1,216.1
Cross-currency swaps	Other assets		33.8		93.1	Other liabilities		35.9		215.9
Total derivatives designated as hedging instruments			37.6		179.5			104.9		1,432.0
Derivatives not designated as hedging instruments:
Interest rate contracts	Other assets		410.0		7,456.7	Other liabilities		239.1		5,162.0
Cross-currency swaps	Other assets		48.6		210.8	Other liabilities		48.5		209.6
Credit default swaps	Other assets		0.5		28.5	Other liabilities		3.2		81.5
Total return swaps	Other assets		0.8		85.4	Other liabilities		8.3		555.8
Equity contracts	Other assets		331.2		2,504.6	Other liabilities		10.3		995.7
Embedded derivatives on guaranteed benefit annuity programs	N/A		—		—	Future policy benefits and claims		310.9		N/A
Other embedded derivatives	N/A		—		—	Other liabilities		1.5		N/A
Total derivatives not designated as hedging instruments			791.1		10,286.0			621.8		7,004.6
Total derivatives		$	828.7	$	10,465.5		$	726.7	$	8,436.6

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table presents the gains (losses) for derivative instruments designated and qualifying as hedging instruments in fair value hedges and the location of these instruments in the consolidated financial statements for the year ended December 31, 2009:

(in millions)	Location of gain (loss) recognized on derivatives	Amount of gain (loss) recognized on derivatives1,2
Derivatives in fair value hedging relationships:
Interest rate contracts	Net realized investment gains (losses)	$	24.9
Cross-currency swaps	Net realized investment gains (losses)		(2.4	)
Total		$	22.5
Underlying fair value hedge relationships:
Interest rate contracts	Net realized investment gains (losses)	$	(35.3	)
Cross-currency swaps	Net realized investment gains (losses)		2.5
Total		$	(32.8	)
1         Excludes ($36.9) million of periodic settlements in interest rate contracts which are recorded in net investment income. 2        Includes $7.5 million of cash received in the termination of cash flow hedging instruments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following tables present the gains (losses) for derivative instruments designated and qualifying as hedging instruments in cash flow hedges and the location of these instruments in the consolidated financial statements for the year ended December 31, 2009:

(in millions)	Amount of gain (loss) recognized in OCI on derivatives
Derivatives in cash flow hedging relationships:
Interest rate contracts	$	12.6
Cross-currency swaps		(4.4	)
Currency contracts		(18.8	)
Other embedded derivatives		(12.0	)
Total	$	(22.6	)

(in millions)	Location of realized gain (loss) reclassified from AOCI into income1	Amount of realized gain (loss) reclassified from AOCI into income
Derivatives in cash flow hedging relationships:
Interest rate contracts	Interest credited to policyholder accounts	$	(3.8	)
Cross-currency swaps	Net realized investment gains (losses)		(10.9	)
Currency contracts	Net realized investment gains (losses)		(3.8	)
Other embedded derivatives	N/A		—
Total		$	(18.5	)

1 Effective portion.  

(in millions)	Location of realized gain (loss) recognized in income on derivatives1	Amount of realized gain (loss) recognized in income on derivatives1,2,3
Derivatives in cash flow hedging relationships:
Interest rate contracts	Net realized investment gains (losses)	$	0.1
Cross-currency swaps	Net realized investment gains (losses)		(1.3	)
Currency contracts	Net realized investment gains (losses)		(2.8	)
Other embedded derivatives	N/A		—
Total		$	(4.0	)

1 Ineffective portion and amounts excluded from the measurement of ineffectiveness.  

2 Excludes 0.2 million of periodic settlements in interest rate contracts.  

3 Includes $16.5 million of cash received in termination of cash flow hedging instrument.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table presents the gains (losses) for derivative instruments not designated and qualifying as hedging instruments and the location of these instruments in the consolidated financial statements for the year ended December 31, 2009:

(in millions)	Location of realized gain (loss) in income on derivatives	Amount of realized gain (loss) recognized in income on derivatives1
Derivatives not designated as hedging instruments:
Interest rate contracts	Net realized investment gains (losses)	$	(197.2	)
Cross-currency swaps	Net realized investment gains (losses)		3.3
Credit default swaps	Net realized investment gains (losses)		7.9
Equity total return swaps	Net realized investment gains (losses)		7.0
Equity contracts	Net realized investment gains (losses)		(738.7	)
Embedded derivatives on guaranteed benefit annuity programs	Net realized investment gains (losses)		1,432.0
Other embedded derivatives	Net realized investment gains (losses)		2.6
Total		$	516.9
1         Excludes net interest settlements and other revenue on embedded derivatives on guaranteed benefit annuity programs that are also recorded in net realized investment gains (losses).

In addition to the net realized investment gains (losses) listed in the previous tables, $(151.3) million of net interest settlements on all derivative instruments and $63.2 million of other revenue on embedded derivatives on guaranteed benefit annuity programs are also recorded in net realized investment gains (losses) for the year ended December 31, 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Credit Derivatives

The Company had exposure to credit protection contracts for the years ended December 31, 2009, 2008, and 2007 and had experienced no credit event losses in 2009, credit event losses of $18.8 million in 2008 and no credit event losses in 2007 on such contracts. The following table presents the Company’s outstanding exposure to credit protection contracts, all of which are related to corporate debt instruments, as of the dates indicated, by contract maturity and industry exposure:

	Less than or equal to one year					One to three years					Three to five years					Total
(in millions)	Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value			Maximum potential risk		Estimated fair value
December 31, 2009:
Single sector exposure:
Consumer goods	$	—	$	—		$	—	$	—		$	—	$	—		$	—	$	—
Financial		35.0		(2.5	)		9.0		0.2			—		—			44.0		(2.3	)
Oil & gas pipelines		15.0		—			—		—			—		—			15.0		—
Services		—		—			—		—			10.0		0.2			10.0		0.2
Utilities		—		—			—		—			—		—			—		—
Total single sector exposure		50.0		(2.5	)		9.0		0.2			10.0		0.2			69.0		(2.1	)
Index exposure:
Corporate bonds		—		—			—		—			—		—			—		—
Total index exposure		—		—			—		—			—		—			—		—
Total	$	50.0	$	(2.5	)	$	9.0	$	0.2		$	10.0	$	0.2		$	69.0	$	(2.1	)
December 31, 2008:
Single sector exposure:
Consumer goods	$	—	$	—		$	6.0	$	(0.8	)	$	—	$	—		$	6.0	$	(0.8	)
Financial		—		—			35.0		(5.8	)		13.0		(0.5	)		48.0		(6.3	)
Oil & gas pipelines		10.0		—			15.0		(0.8	)		—		—			25.0		(0.8	)
Services		—		—			—		—			35.0		(3.0	)		35.0		(3.0	)
Utilities		4.5		—			—		—			—		—			4.5		—
Total single sector exposure		14.5		—			56.0		(7.4	)		48.0		(3.5	)		118.5		(10.9	)
Index exposure:
Corporate bonds		—		—			—		—			110.9		(0.3	)		110.9		(0.3	)
Total index exposure		—		—			—		—			110.9		(0.3	)		110.9		(0.3	)
Total	$	14.5	$	—		$	56.0	$	(7.4	)	$	158.9	$	(3.8	)	$	229.4	$	(11.2	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(6) Investments  

Fixed Maturity Securities and Equity Securities Available-for-Sale

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

(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
December 31, 2009:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	136.7	$	15.4	$	1.0	$	151.1
U. S. Government agencies		551.3		57.2		5.7		602.8
Obligations of states and political subdivisions		567.6		4.4		23.1		548.9
Debt securities issued by foreign governments		69.9		5.3		0.1		75.1
Corporate securities
Public		10,929.8		597.2		175.2		11,351.8
Private		4,499.5		193.1		83.4		4,609.2
Residential mortgage-backed securities		6,078.9		95.2		665.2		5,508.9
Commercial mortgage-backed securities		1,284.9		6.5		207.3		1,084.1
Collateralized debt obligations		531.1		11.8		170.9		372.0
Other asset-backed securities		453.4		20.4		28.0		445.8
Total fixed maturity securities		25,103.1		1,006.5		1,359.9		24,749.7
Equity securities		48.8		4.6		0.8		52.6
Total securities available-for-sale	$	25,151.9	$	1,011.1	$	1,360.7	$	24,802.3
December 31, 2008:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	79.1	$	22.6	$	—	$	101.7
U. S. Government agencies		420.4		93.3		—		513.7
Obligations of states and political subdivisions		230.5		1.6		7.4		224.7
Debt securities issued by foreign governments		50.1		5.4		—		55.5
Corporate securities
Public		8,881.9		109.9		1,040.7		7,951.1
Private		4,997.8		45.2		401.0		4,642.0
Residential mortgage-backed securities		6,807.8		90.5		863.6		6,034.7
Commercial mortgage-backed securities		1,418.1		0.6		455.3		963.4
Collateralized debt obligations		557.8		6.3		240.7		323.4
Other asset-backed securities		679.1		3.6		105.4		577.3
Total fixed maturity securities		24,122.6		379.0		3,114.1		21,387.5
Equity securities		62.2		0.7		8.8		54.1
Total securities available-for-sale	$	24,184.8	$	379.7	$	3,122.9	$	21,441.6

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The market value of the Company’s general account investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads. The Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell debt securities in unrealized loss positions. The Company may realize investment losses to the extent its liquidity needs require the disposition of general account fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments.

For securities available-for-sale as of the dates indicated, the following table summarizes the Company’s gross unrealized losses based on the amount of time each type of security has been in an unrealized loss position:

	Less than or equal to one year					More than one year					Total
(in millions, except number of securities)	Estimated fair value		Gross unrealized losses		Number of securities	Estimated fair value		Gross unrealized losses		Number of securities	Estimated fair value		Gross unrealized losses		Number of securities
December 31, 2009:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations	$	50.9	$	1.0	2	$	—	$	—	—	$	50.9	$	1.0	2
U.S. Government agencies		154.6		5.7	8		—		—	—		154.6		5.7	8
Obligations of states and political subdivisions		318.2		11.5	35		79.1		11.6	13		397.3		23.1	48
Debt securities issued by foreign governments		1.6		0.1	2		—		—	—		1.6		0.1	2
Corporate securities
Public		1,197.9		32.0	160		1,117.5		143.2	201		2,315.4		175.2	361
Private		278.8		19.0	47		972.6		64.4	73		1,251.4		83.4	120
Residential mortgage-backed securities		936.7		104.2	117		2,375.1		561.0	341		3,311.8		665.2	458
Commercial mortgage-backed securities		42.7		5.2	11		699.3		202.1	101		742.0		207.3	112
Collateralized debt obligations		29.9		28.9	13		277.2		142.0	45		307.1		170.9	58
Other asset-backed securities		5.4		0.2	12		247.5		27.8	33		252.9		28.0	45
Total fixed maturity securities		3,016.7		207.8	407		5,768.3		1,152.1	807		8,785.0		1,359.9	1,214
Equity securities		16.7		0.1	13		2.4		0.7	75		19.1		0.8	88
Total	$	3,033.4	$	207.9	420	$	5,770.7	$	1,152.8	882	$	8,804.1	$	1,360.7	1,302
December 31, 2008:
Fixed maturity securities:
Obligations of states and political subdivisions	$	94.9	$	3.5	16	$	29.3	$	3.9	9	$	124.2	$	7.4	25
Corporate securities
Public		4,109.4		676.9	692		1,350.3		363.8	289		5,459.7		1,040.7	981
Private		2,259.4		282.1	231		996.5		118.9	105		3,255.9		401.0	336
Residential mortgage-backed securities		820.3		187.8	138		2,281.4		675.8	323		3,101.7		863.6	461
Commercial mortgage-backed securities		539.9		190.4	96		410.9		264.9	96		950.8		455.3	192
Collateralized debt obligations		151.0		100.8	24		122.6		139.9	36		273.6		240.7	60
Other asset-backed securities		325.5		41.7	38		228.7		63.7	26		554.2		105.4	64
Total fixed maturity securities		8,300.4		1,483.2	1,235		5,419.7		1,630.9	884	$	13,720.1	$	3,114.1	2,119
Equity securities		19.2		8.6	81		3.4		0.2	6		22.6		8.8	87
Total	$	8,319.6	$	1,491.8	1,316	$	5,423.1	$	1,631.1	890	$	13,742.7	$	3,122.9	2,206

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The weighted estimated fair value to amortized cost for non-investment grade fixed maturity securities that have an estimated fair value of less than 80% and have been in an unrealized loss position for more than one year was 65% and 64% as of December 31, 2009 and December 31, 2008, respectively.

The table below summarizes the amortized cost and estimated fair values of fixed maturity securities available-for-sale, by maturity, as of December 31, 2009. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(in millions)	Amortized cost		Estimated fair value
Fixed maturity securities available-for-sale:
Due in one year or less	$	1,002.3	$	1,024.5
Due after one year through five years		7,213.2		7,507.1
Due after five years through ten years		5,265.4		5,516.8
Due after ten years		3,273.9		3,290.5
Subtotal		16,754.8		17,338.9
Residential mortgage-backed securities		6,078.9		5,508.9
Commercial mortgage-backed securities		1,284.9		1,084.1
Collateralized debt obligations		531.1		372.0
Other asset-backed securities		453.4		445.8
Total	$	25,103.1	$	24,749.7

The NAIC assigns credit quality ratings (NAIC designations) to securities for the purpose of statutory reporting. These NAIC designations are generally based on the credit ratings assigned by nationally recognized statistical rating agencies organizations (NRSRO) unless a security is not rated by an NRSRO, in which case the NAIC rates it using an alternative approach. For 2009 statutory reporting, the NAIC modified its ratings approach for residential mortgage-backed securities, which are not backed by U.S. government agencies. Under the modified approach, the NAIC designation for this type of security is based on an insurer’s reported carrying value for the security relative to a NAIC-prescribed ratings matrix for the security, with a higher NAIC designation afforded securities with lower carrying values. In effect, this process rates the credit quality of a security based on an independent market view of the expected discounted future cash flows from the security versus its statutory carrying value. Under this process, NAIC designations for these residential mortgage-backed securities could be higher or lower than the related NRSRO ratings. NAIC designations range from class 1 (highest quality) to class 6 (lowest quality). Of the Company’s general account fixed maturity securities, 91% and 93% were in the two highest NAIC designations categories as of December 31, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table shows the equivalent designation between the NAIC and NRSRO and summarizes the credit quality, as determined by NAIC designations, of the Company’s fixed maturity securities portfolio as of the dates indicated:

(in millions)		December 31, 2009				December 31, 2008
NAIC Desingations1,2	NRSRO equivalent designation	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
1	AAA/AA/A	$	15,322.9	$	15,195.7	$	15,423.0	$	13,960.4
2	BBB		7,139.5		7,275.0		6,610.4		5,802.2
3	BB		1,551.1		1,404.3		1,233.3		990.0
4	B		724.1		616.7		556.0		386.2
5	CCC and lower		253.5		187.6		190.5		148.2
6	In or near default		112.0		70.4		109.4		100.5
	Total	$	25,103.1	$	24,749.7	$	24,122.6	$	21,387.5

1 NAIC designations are assigned at least annually. Some ratings for securities shown have been assigned to securities not yet assigned an NAIC designation in a manner approximating equivalent NRSRO categories.  

2 Class 1 and class 2 NAIC designations are generally considered to represent investment grade ratings and are considered as such by the Company in reporting its credit quality information.  

Other-Than-Temporary Impairment Evaluations

When evaluating whether a residential mortgage-backed security, commercial mortgage-backed security, collateralized debt obligation and other asset-backed securities are other-than-temporarily impaired, the Company examines characteristics of the underlying collateral, such as delinquency prepayment and default rates, the quality of the underlying borrower, the type of collateral in the pool, the vintage year of the collateral, subordination levels within the structure of the collateral pool, the quality of any credit guarantors, the Company’s intent to sell the security and whether it is more likely than not it will be required to sell the security before the recovery of its amortized cost basis.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt position, the Company’s intent to sell the security and whether it is more likely than not it will be required to sell the security before the recovery of its amortized cost basis. A similar analysis is performed to evaluate U.S. Treasury securities and obligations of U.S. Government corporations, U.S. Government agencies, obligations of states and political subdivisions, and debt securities issued by foreign governments.

For all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and amount of the cash flows. The Company evaluates its intent to sell on an individual security basis.

To the extent that the present value of the cash flows generated by a security is less than the amortized cost, an other-than-temporary impairment is recognized through earnings. It is reasonably possible that further declines in estimated fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments in the near term, which could be significant.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Under the current other-than temporary impairment model, which was amended by the FASB and adopted by the Company in the first quarter of 2009, debt securities that become other-than-temporarily impaired (where the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security prior to recovery of the security’s amortized cost) are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment being recognized in a separate component of other comprehensive income, net of applicable taxes and other offsets. For securities that are other-than-temporarily impaired, a discussion of the estimate of the credit loss portion that is recognized in earnings is provided, as applicable in the respective section of this footnote.

Corporate Securities

Corporate securities include conventional bonds, private placement fixed maturity securities, syndicated corporate bank loans and hybrid securities with both debt and equity-like features. For these corporate securities, the following table summarizes, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of estimated fair value to amortized cost	Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total
December 31, 2009:
99.9% - 80.0%	$	27.1	$	104.1	$	131.2	$	13.1	$	45.5	$	58.6	$	40.2	$	149.6	$	189.8
79.9% - 50.0%		8.5		45.6		54.1		2.3		12.4		14.7		10.8		58.0		68.8
Below 50.0%		—		—		—		—		—		—		—		—		—
Total	$	35.6	$	149.7	$	185.3	$	15.4	$	57.9	$	73.3	$	51.0	$	207.6	$	258.6
December 31, 2008:
99.9% - 80.0%	$	355.7	$	116.8	$	472.5	$	31.0	$	23.4	$	54.4	$	386.7	$	140.2	$	526.9
79.9% - 50.0%		327.5		121.9		449.4		118.4		126.0		244.4		445.9		247.9		693.8
Below 50.0%		79.3		41.5		120.8		47.1		53.1		100.2		126.4		94.6		221.0
Total	$	762.5	$	280.2	$	1,042.7	$	196.5	$	202.5	$	399.0	$	959.0	$	482.7	$	1,441.7

Judgments regarding whether a corporate debt security is other-than-temporarily impaired include analyzing the issuer’s financial condition. An analysis of the issuer’s financial condition includes whether there has been a decline in the overall value of the issuer or its ability to service the specific security. The total enterprise value of the company issuing the security is determined through asset coverage, cash flow multiples, or other industry standards. Several factors assessed when determining the enterprise value include, but are not limited to, credit quality ratings, cash flow sustainability, liquidity, strength, industry, and market position. Sources of information include, but are not limited to, management projections, independent consultants, street research, peer analysis, and internal analysis.

If the company has concerns regarding the viability of the issuer or its ability to service the specific security after this analysis, a recovery value analysis is prepared to determine if the recovery value has declined below the amortized cost of the security. The recovery value is combined with the estimated timing to recovery, any other applicable cash flows that are expected and the security’s effective yield to arrive at the expected present value of cash flows. If a recovery estimate is not feasible, then the market’s view of cash flows implied by the current fair value, market discount rates, and effective yield are the primary factors used to estimate recovery.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The Company held hybrid securities issued by institutions in the financial sector with both debt and equity-like features, classified as corporate fixed maturity securities, with estimated fair values of $608.9 million and $661.2 million, and gross unrealized losses of $101.3 million and $379.9 million, as of December 31, 2009 and 2008, respectively. Of these unrealized losses as of December 31, 2009, $98.8 million, or 98%, were in an unrealized loss position for more than one year, evaluated under the debt model, compared to $106.3 million, or 18%, as of December 31, 2008. The Company evaluates such securities for other-than-temporary impairment using the criteria of either a debt or an equity security depending on the facts and circumstances of the individual issuer and security.

The Company invests in private placement fixed maturity securities because of the generally higher nominal yield available compared to comparably rated public fixed maturity securities, more restrictive financial and business covenants available in private fixed maturity security loan agreements, and stronger prepayment protection. Although private placement fixed maturity securities are not registered with the SEC and generally are less liquid than public fixed maturity securities, restrictive financial and business covenants included in private placement fixed maturity security loan agreements generally are designed to compensate for the impact of increased liquidity risk. A significant portion of the private placement fixed maturity securities that the Company holds are participations in issues that are also owned by other investors. In addition, some of these securities are rated by NRSROs, and substantially all have been assigned a rating by the NAIC, as shown in a previous table in this footnote summarizing the credit quality of the Company’s fixed maturity securities portfolio.

Residential Mortgage-Backed Securities

Residential mortgage-backed securities are a type of fixed income security backed by residential mortgage loans, which have been are sold into a trust or special purpose entity, formed for the purpose of securitizing and tranching the cash flows of the mortgage loans. The following tables summarize the distribution by collateral classification of the Company’s residential mortgage-backed securities as of dates indicated:

	As of December 31, 2009					As of December 31, 2008
in millions	Amortized cost		Estimated fair value		% of estimated fair value total	Amortized cost		Estimated fair value		% of estimated fair value total
Government agency	$	2,546.9	$	2,620.9	48%	$	2,928.5	$	3,002.4	50%
Prime		1,120.3		959.7	17%		1,341.6		1,041.4	17%
Alt-A		1,830.6		1,451.7	26%		1,850.7		1,451.6	24%
Sub-prime		577.3		473.7	9%		675.8		528.7	9%
Other residential mortgage collateral		3.8		2.9	—		11.2		10.6	—
Total	$	6,078.9	$	5,508.9	100%	$	6,807.8	$	6,034.7	100%

The Company considers Alt-A collateral to be mortgages whose underwriting standards do not qualify the mortgage for regular conforming or jumbo loan programs. Typical underwriting characteristics that cause a mortgage to fall into the Alt-A classification may include, but are not limited to, inadequate loan documentation of a borrower’s financial information, debt-to-income ratios above normal lending limits, loan-to-value ratios above normal lending limits that do not have primary mortgage insurance, a borrower who is a temporary resident, and loans securing non-conforming types of real estate. Alt-A mortgages are generally issued to borrowers having higher Fair Isaac Credit Organization (FICO) scores, and the lender typically charges a slightly higher interest rate for such mortgages.

The Company considers sub-prime collateral to be mortgages that are first or second lien mortgage loans issued to sub-prime borrowers, as demonstrated by recent delinquent rent or housing payments or substandard FICO scores. Second-lien mortgage loans are also considered sub-prime. The Company considers prime collateral to be mortgages whose underwriting standards qualify the mortgage for regular conforming or jumbo loan programs. In addition, government agency collateral is considered to be mortgages securitized by government agencies both implicitly and explicitly backed by the full faith and credit of the U.S. Government.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

For residential mortgage-backed securities, the following table summarizes as of the dates indicated the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of estimated fair value to amortized cost	Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total
December 31, 2009:
99.9% - 80.0%	$	29.0	$	134.1	$	163.1	$	11.5	$	41.5	$	53.0	$	40.5	$	175.6	$	216.1
79.9% - 50.0%		17.4		197.6		215.0		19.5		140.4		159.9		36.9		338.0		374.9
Below 50.0%		10.3		33.8		44.1		16.5		13.6		30.1		26.8		47.4		74.2
Total	$	56.7	$	365.5	$	422.2	$	47.5	$	195.5	$	243.0	$	104.2	$	561.0	$	665.2
December 31, 2008:
99.9% - 80.0%	$	47.7	$	124.5	$	172.2	$	6.0	$	10.3	$	16.3	$	53.7	$	134.8	$	188.5
79.9% - 50.0%		91.7		441.6		533.3		17.1		22.2		39.3		108.8		463.8		572.6
Below 50.0%		13.0		74.4		87.4		12.3		2.8		15.1		25.3		77.2		102.5
Total	$	152.4	$	640.5	$	792.9	$	35.4	$	35.3	$	70.7	$	187.8	$	675.8	$	863.6

The Company evaluates its residential mortgage-backed securities for other-than-temporary impairment using multiple inputs. Loan level defaults are estimated using an option pricing approach in which the probability of borrower default increases as home equity declines. Other factors which influence the probability of default are debt-servicing, missed refinancing opportunities and geography. Loan level characteristics such as issuer, FICO score, payment terms, level of documentation, residency type, dwelling type and loan purpose are also utilized in the model along with historical performance, to estimate or measure the loan’s propensity to default. Additionally, the model takes into account loan age, seasonality, payment changes and exposure to refinancing as additional drivers of default. For transactions where loan level data is not available, the model uses a proxy based on the collateral characteristics. Loss severity in the model is a function of multiple factors, including but not limited to, the unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property valuation and loan-to-value ratio at origination. Prepayment speeds, both actual and estimated, are also considered. The cash flows generated by the collateral securing these securities are then determined based on these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to determine the cash flows associated with the residential mortgage-backed security held by the Company.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Commercial Mortgage-Backed Securities

The Company owns and manages commercial mortgage-backed securities, which are trust certificates or bonds offered to investors that are collateralized by a pool of commercial mortgage loans from which the principal and interest paid on those mortgages flows to investors. These investments in commercial mortgage-backed securities are generally characterized by securities that are collateralized by static, heterogeneous pools of mortgages on commercial real estate properties. Deals are generally diversified across property types, geography, borrowers, tenants, loan size, coupon and vintages. For commercial mortgage-backed securities, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade vs. non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of estimated fair value to amortized cost	Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total
December 31, 2009:
99.9% - 80.0%	$	4.2	$	54.0	$	58.2	$	—	$	—	$	—	$	4.2	$	54.0	$	58.2
79.9% - 50.0%		—		85.2		85.2		—		—		—		—		85.2		85.2
Below 50.0%		1.0		62.9		63.9		—		—		—		1.0		62.9		63.9
Total	$	5.2	$	202.1	$	207.3	$	—	$	—	$	—	$	5.2	$	202.1	$	207.3
December 31, 2008:
99.9% - 80.0%	$	19.8	$	36.7	$	56.5	$	—	$	—	$	—	$	19.8	$	36.7	$	56.5
79.9% - 50.0%		129.6		40.9		170.5		—		—		—		129.6		40.9		170.5
Below 50.0%		41.0		187.3		228.3		—		—		—		41.0		187.3		228.3
Total	$	190.4	$	264.9	$	455.3	$	—	$	—	$	—	$	190.4	$	264.9	$	455.3

Commercial mortgage-backed securities’ cash flows are generated by an industry standard fixed income analytics system designed for asset backed securities. In addition, a third party default model is generally utilized within this service to apply loan specific probability of default, refinance risk and loss severity ratios to generate estimated cash flows. Default and prepayment assumptions are deal specific and include, but are not limited to, delinquency, property type, loan size, debt service coverage ratio, loan to value ratios and loan age.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Collateralized Debt Obligations

Collateralized debt obligations are asset-backed securities whose value is derived from the credit quality of the underlying corporate obligations. For collateralized debt obligations, the following tables summarize, as of the dates indicated, the Company’s gross unrealized loss position categorized as investment grade versus non-investment grade, for the period of time indicated, and based on the ratio of estimated fair value to amortized cost (in millions):

	Period of time for which unrealized loss has existed
	Investment Grade						Non-Investment Grade						Total
Ratio of estimated fair value to amortized cost	Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total
December 31, 2009:
99.9% - 80.0%	$	0.4	$	3.6	$	4.0	$	0.3	$	15.8	$	16.1	$	0.7	$	19.4	$	20.1
79.9% - 50.0%		—		29.0		29.0		4.2		31.4		35.6		4.2		60.4		64.6
Below 50.0%		—		9.6		9.6		24.0		52.6		76.6		24.0		62.2		86.2
Total	$	0.4	$	42.2	$	42.6	$	28.5	$	99.8	$	128.3	$	28.9	$	142.0	$	170.9
December 31, 2008:
99.9% - 80.0%	$	7.0	$	0.2	$	7.2	$	0.1	$	0.6	$	0.7	$	7.1	$	0.8	$	7.9
79.9% - 50.0%		25.8		37.2		63.0		—		—		—		25.8		37.2		63.0
Below 50.0%		66.5		99.8		166.3		1.4		2.1		3.5		67.9		101.9		169.8
Total	$	99.3	$	137.2	$	236.5	$	1.5	$	2.7	$	4.2	$	100.8	$	139.9	$	240.7

To generate the expected cash flows, agency NRSRO of the underlying corporate securities were used to develop default probabilities. Historical and forecasted loss severities were then applied to develop the expected losses within the security’s collateral pool. An independent data provider is then used to model each security’s structure and waterfall to determine cash flows at the security level. If a recovery estimate is not feasible, then the market’s view of cash flows implied by the current fair value, market discount rates, and effective yield are the primary factors used to estimate recovery.

Within the collateralized debt obligations security type are Pooled Trust Preferreds. Pooled Trust Preferreds are collateralized debt obligations where the collateral is regional bank and insurance company trust preferred securities. All banks in the pools were screened using data provided by U.S. Bank Rating service. The rating service score is a combination of the bank’s liquidity, asset quality, capital adequacy and profitability. The results of the analysis, as well as management’s evaluation of the results and broker research, are used to generate default rates which are modeled to create cash flows from the entire collateral pool underlying each pooled trust preferred security. An independent data provider is then used to model each security’s structure and payment waterfall to determine cash flows at the security level.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Unrealized Gains and Losses

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

(in millions)	2009			2008
Net unrealized losses, before adjustments and taxes	$	(349.6	)	$	(2,743.2	)
Change in fair value attributable to fixed maturity securities designated in fair value hedging relationships		(35.1	)		(57.7	)
Total net unrealized losses, before adjustments and taxes		(384.7	)		(2,800.9	)
Adjustment to deferred policy acquisition costs		31.0			615.9
Adjustment to value of business acquired		0.2			9.6
Adjustment to future policy benefits and claims		19.5			46.9
Adjustment to policyholder dividend obligation		(16.4	)		74.9
Deferred federal income tax benefit		122.6			718.8
Net unrealized losses	$	(227.8	)	$	(1,334.8	)

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

(in millions)	20091		2008			2007
Fixed maturity securities	$	2,381.7	$	(2,682.2	)	$	(132.1	)
Equity securities		11.9		(14.2	)		(4.5	)
Net increase (decrease)	$	2,393.6	$	(2,696.4	)	$	(136.6	)

1 Includes the $384.2 million cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.  

The following table summarizes the Company’s accumulated other comprehensive losses recognized on debt securities which have credit losses in earnings, based on the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities before federal income tax benefit, for the years ended December 31:

(in millions)	2009
Cumulative adoption of accounting principle as of January 1	$	(384.2	)
Net unrealized gains in the period		38.3
Total1	$	(345.9	)

1 Includes $417.5 million of other-than-temporary impairment losses recognized in other comprehensive income for the year ended December 31, 2009.  

The Company’s practice is to disclose in the table above both the non-credit portion of the other-than-temporary impairment losses recognized in other comprehensive income and any subsequent changes in the fair value of those debt securities, which could result in a net unrealized gain.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Mortgage Loans on Real Estate, Securitization and Real Estate

As of December 31, 2009 and 2008, the carrying value, net of specific reserves, of commercial mortgage loans on real estate considered specifically reserved was $154.8 million and $39.9 million, respectively, for which a $36.4 million and $14.4 million specific reserve had been established, respectively. No specific reserve exists for collateral dependent commercial mortgage loans for which the fair value of the collateral is estimated to be greater than the carrying value.

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

(in millions)	2009		2008		2007
Allowance, beginning of period	$	42.4	$	24.8	$	36.0
Net change in allowance		35.0		17.6		(11.2	)
Allowance, end of period	$	77.4	$	42.4	$	24.8

The Company has securitized commercial mortgage loans on real estate to third parties. The Company, as the transferor, has continuing involvement in these loans which consists of receiving servicing fees on loans which the Company has transferred.

The Company did not participate in any securitization arrangements during the years ended December 31, 2009 and 2008. The Company received $0.6 million, during the years ended December 31, 2009 and 2008, in servicing fees related to financial assets where there is a continuing involvement from the securitization of commercial mortgage loans on real estate. During 2007, the Company received proceeds of $928.0 million from the securitization of commercial mortgage loans on real estate to third parties, experienced realized losses of $7.3 million on these loans, and received $0.7 million in servicing fees related to loans securitized in 2007 and before.

The Company provided a representations and warranties letter to the transferee for each securitization arrangement. If it is found that the Company has made a misrepresentation, it could be required to provide financial support to the transferee or its beneficial interest holders. For the years ended December 31, 2009, 2008 and 2007, the Company was not required to provide any financial or other support that it was not previously contractually required to provide to the transferee or its beneficial interest holders.

Real estate held for use was $1.8 million and $9.8 million as of December 31, 2009 and 2008, respectively. These assets are carried at cost less accumulated depreciation, which was $0.4 million and $2.1 million as of December 31, 2009 and 2008, respectively. The carrying value of real estate held for sale was $7.1 million and $6.8 million as of December 31, 2009 and 2008, respectively.

Securities Lending

The Company, through an agent, lends certain portfolio holdings and in turn receives cash collateral with the objective of increasing the yield on its investments. The cash collateral is invested in high-quality, short-term and long-term investments. The Company’s policy requires the maintenance of collateral of a minimum of 102% of the fair value of the securities loaned. Net returns on the investments, after payment of a rebate to the borrower, are shared between the Company and its agent. Both the borrower and the Company can request or return the loaned securities at any time. The Company maintains ownership of the loaned securities at all times and is entitled to receive from the borrower any payments for interest or dividends received on such securities during the loan term. The Company recognizes loaned securities as part of its investments available-for-sale. The Company also recognizes the short-term and other long-term investments acquired with the cash collateral and its obligation to return such collateral to the borrower in short-term investments and fixed maturity securities and other liabilities, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

As of December 31, 2009 and December 31, 2008, the Company had received $41.4 million and $419.9 million, respectively, of cash collateral on securities lending. The Company had not received any non-cash collateral on securities lending as of December 31, 2009 and December 31, 2008. As of December 31, 2009 and December 31, 2008, the Company had loaned securities with a fair value of $40.0 million and $407.1 million, respectively.

Assets on Deposit, Held in Trust and Pledged as Collateral

Fixed maturity securities with an amortized cost of $19.2 million and $28.0 million were on deposit with various regulatory agencies as required by law as of December 31, 2009 and 2008, respectively,. These securities continue to be included in fixed maturity securities on the consolidated balance sheets.

Net Investment Income

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

(in millions)	2009		2008			2007
Securities available-for-sale:
Fixed maturity securities	$	1,465.1	$	1,477.3		$	1,518.5
Equity securities		1.9		5.3			5.0
Mortgage loans on real estate		445.4		497.1			554.1
Short-term investments		6.4		16.8			31.2
Other		17.0		(75.1	)		152.0
Gross investment income		1,935.8		1,921.4			2,260.8
Less investment expenses		56.7		56.7			68.6
Net investment income	$	1,879.1	$	1,864.7		$	2,192.2

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Net Realized Investment Gains and Losses

The following table summarizes net realized investment gains (losses) from continuing operations by source for the years ended December 31:

(in millions)	2009			2008			2007
Total net derivatives gains (losses)1,2		399.8			(330.3	)		(55.9	)
Total realized gains on sales		191.7			40.2			93.3
Total realized losses on sales		(112.8	)		(40.7	)		(85.2	)
Valuation (losses) gains3		(20.7	)		(55.8	)		1.9
Other		(4.2	)		38.8			(1.3	)
Net realized investment gains (losses)	$	453.8		$	(347.8	)	$	(47.2	)

1 Includes gains of $413.6 million and losses of $500.7 million, and $26.7 million on derivatives and embedded derivatives associated with living benefit contracts for the years ended December 31, 2009, 2008, and 2007, respectively.  

2 Includes losses of $171.8 million and gains of $109.4 million on derivatives associated with death benefit contracts for the years ended December 31, 2009 and 2008, respectively. There were no material gains or losses on derivatives associated with death benefit contracts during 2007.  

3 Includes valuation of trading securities, mark-to-market valuation of mortgage loans held for sale, and changes in the valuation allowance not related to specific mortgage loans on real estate.  

Proceeds from the sale of securities available-for-sale during 2009, 2008 and 2007 were $4.21 billion, $4.31 billion and $4.98 billion, respectively. During 2009 and 2008, gross gains of $189.0 million and $35.7 million, respectively, and gross losses of $70.3 million and $25.3 million, respectively, were realized on those sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Other-Than-Temporary and Other Investment Impairment Losses

The following table summarizes other-than-temporary impairments for the years ended December 31:

(in millions)	Gross		Included in OCI			Net
2009:
Fixed maturity securities1	$	906.8	$	(417.5	)	$	489.3
Equity securities		7.1		—			7.1
Mortgage loans		71.8		—			71.8
Other		6.4		—			6.4
Total other-than-temporary impairment losses	$	992.1	$	(417.5	)	$	574.6
			2008			2007
Total Impairments:
Fixed maturity securities1			$	1,052.2		$	108.5
Equity securities				60.2			—
Mortgage loans				14.6			4.1
Other				3.7			5.1
Total other-than-temporary impairment losses			$	1,130.7		$	117.7

1 Declines in the creditworthiness of the issuer of hybrid securities with both debt and equity-like features requires the use of the equity model in analyzing the security for other-than-temporary impairment. For the year ended December 31, 2009, the Company recognized $167.6 million in other-than-temporary impairments related to these securities compared to $89.5 million and none for the years ended December 31, 2008 and 2007, respectively.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the other-than-temporary-impairment losses on debt securities held as of December 31, 2009 that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security prior to recovery of the amortized cost basis and for which the non-credit portion of the loss is included in other comprehensive income:

(in millions)
Cumulative credit loss as of January 1, 20091	$	507.5
New credit losses		168.4
Incremental credit losses2		71.9
Subtotal		747.8
Less:
Losses related to securities included in the beginning balance sold or paid down during the period		(267.3	)
Losses related to securities included in the beginning balance for which there was a change in intent3		(63.1	)
Increases in cash flows expected to be collected for securities included in the beginning balance		—
Cumulative credit loss as of December 31, 20091	$	417.4

1 The cumulative credit loss amount excludes other-than-temporary-impairment losses on securities held as of the periods indicated that the Company intends to sell or it is more likely than not that the Company will be required to sell the security before the recovery of the amortized cost basis.  

2 On securities included in the beginning balance.  

3 Securities for which a credit-related other-than-temporary impairment loss was previously recorded that the Company now intends to sell or is more likely than not it will be required to sell before recovery of the amortized cost basis and has transferred the non-credit portion of loss previously recorded in other comprehensive income to earnings during the period. Also includes hybrid securities that had previously been evaluated for other-than-temporary impairment based on the criteria as a debt security, but in the current period are evaluated as an equity security due to declines in the creditworthiness of the issuer.  

(7) Deferred Policy Acquisition Costs  

During the fourth quarter of 2009, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by the continued market recovery and favorable market performance compared to assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a increase in DAC and other related balances, including sales inducement assets, and an decrease in DAC amortization and other related balances of $218.5 million pre-tax in the Individual Investments segment. The Company used the reversion to the mean process with the anchor date that was reset during the second quarter 2007 unlocking as described below. The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable. The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

During the second quarter of 2009, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA and unearned revenue reserves. The review covered all assumptions including mortality, lapses, expenses and general and separate account returns. As a result of this review, certain assumptions were unlocked (DAC unlock). The unlocked assumptions primarily related to lower expected investment spreads and separate account returns across all segments.

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during 2009 was as follows:

(in millions)	DAC			VOBA			Unearned Revenue Reserves		Sales Inducement Assets		Total
Segment:
Individual Investments	$	191.9		$	—		$	—	$	10.9	$	202.8
Retirement Plans		(8.2	)		—			—		—		(8.2	)
Individual Protection		(43.9	)		(13.2	)		10.9		—		(46.2	)
Total	$	139.8		$	(13.2	)	$	10.9	$	10.9	$	148.4

During the fourth quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters, which primarily was driven by continued unfavorable market performance compared to assumed net separate account returns. Management made a determination that it was not reasonably possible to get back within the preset parameters during the remaining prescribed period. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances of $243.1 million pre-tax in the Individual Investments segment. The Company used the reversion to the mean process with the anchor date that was reset during the second quarter 2007 unlocking as described below. The Company evaluated the assumed separate account performance level over the next three years and determined that the assumptions inherent in the reversion period were reasonable. The annual net separate account growth rate for the mean reversion period is 15%, the maximum rate under the Company’s parameters.

During the third quarter of 2008, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by unfavorable market performance compared to the assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a decrease in DAC and an increase in DAC amortization and other related balances totaling $177.2 million pre-tax in the Individual Investments segment.

At the end of the second quarter of 2008, the Company determined as part of its comprehensive annual study of assumptions that certain assumptions should be unlocked. The unlocked assumptions primarily related to lapse and spread assumptions in the Individual Investments segment, the assumed growth rate on deposits per contract in the Retirement Plans segment, and mortality and lapse assumptions in the Individual Protection segment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of assumptions during the year ended December 31, 2008 was as follows:

(in millions)	DAC			VOBA			Unearned Revenue Reserves		Sales Inducement Assets			Total
Segment:
Individual Investments	$	(429.1	)	$	(2.6	)	$	—	$	(0.6	)	$	(432.3	)
Retirement Plans		(2.3	)		—			—		—			(2.3	)
Individual Protection		(2.8	)		7.5			3.2		—			7.9
Total	$	(434.2	)	$	4.9		$	3.2	$	(0.6	)	$	(426.7	)

During the second quarter of 2007, the Company conducted its annual comprehensive review of model assumptions used to project DAC and other related balances, including sales inducement assets, VOBA, unearned revenue reserves, and guaranteed minimum death and income benefit reserves. This review included all assumptions, including expected separate account investment returns during the three-year reversion period, lapse rates, mortality and expenses. The Company determined as part of this annual review that the overall separate account returns were expected to exceed previous estimates due to favorable financial market trends. Additionally, while the Company estimated that the overall profitability of its variable products had improved, it expected the long-term net growth in separate account investment performance to moderate.

Accordingly, the second quarter 2007 unlocking process included changes in several assumptions, including assumptions affecting net separate account investment performance. This unlocking resulted in a net increase in DAC and a benefit to DAC amortization and other related balances totaling $216.5 million pre-tax. First, the Company reset the anchor date for its reversion to the mean calculations, which increased the annual net separate account growth rate to 7% during the first three years of the projection period from 0% (which was the rate of return for the three-year reversion period required from the previous anchor date). Second, as a result of its current analysis, including its evaluation of ongoing trends and expectations regarding financial market performance, the Company unlocked and reset its long-term assumption for net separate account growth rates to 7% from 8%. This decreased the net separate account growth rate by 1% to 7% for all years subsequent to the three-year reversion period. The combination of resetting these two factors resulted in a $161.9 million increase in DAC and benefit to DAC amortization and other related balances. The impact of changing the annual net separate account growth rate from 0% to 7% during the three-year reversion period had a much larger effect on the DAC balance when compared to the 1% incremental change in the long-term assumption for net separate account investment performance. The remainder of the increase in DAC and benefit to DAC amortization and other related balances resulting from the DAC unlocking process primarily was related to the recorded balance of individual variable annuity DAC falling outside the Company’s preset parameters for the prescribed period, which was driven by favorable market performance in excess of the assumed net separate account returns. Accordingly, the Company recalculated DAC using revised best estimate assumptions, which resulted in a $78.8 million increase in DAC and benefit to DAC amortization and other related balances. This was partially offset by a $24.2 million decrease in DAC and increase in DAC amortization and other related balances due to increasing estimated lapse rates for fixed annuity and BOLI products.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The pre-tax positive (negative) impact on the Company’s assets and liabilities as a result of the unlocking of these assumptions during the second quarter of 2007 was as follows:

(in millions)	DAC			VOBA		Unearned Revenue Reserves		Sales Inducement Assets		Total
Segment:
Individual Investments	$	(208.9	)	$	—	$	—	$	12.5	$	(196.4	)
Retirement Plans		(10.5	)		—		—		—		(10.5	)
Individual Protection		(16.4	)		5.1		1.7		—		(9.6	)
Total	$	(235.8	)	$	5.1	$	1.7	$	12.5	$	(216.5	)

The following table presents a reconciliation of DAC for the years ended December 31:

(in millions)	2009			2008
Balance at beginning of period	$	4,523.8		$	4,095.6
Capitalization of DAC		513.0			587.6
Amortization of DAC, excluding unlocks		(605.4	)		(257.4	)
Amortization of DAC, related to unlocks		139.8			(434.2	)
Adjustments to DAC related to unrealized gains and losses on securities available-for-sale and other		(588.1	)		532.2
Balance at end of period	$	3,983.1		$	4,523.8

(8) Value of Business Acquired and Other Intangible Assets  

The following table presents a reconciliation of VOBA for the years ended December 31:

(in millions)	2009			2008
Balance at beginning of period	$	334.0		$	354.8
Amortization of VOBA		(49.4	)		(31.4	)
Net realized losses on investments		1.7			1.9
Other		—			0.5
Subtotal		286.3			325.8
Change in unrealized (loss) gain on available-for-sale securities		(9.4	)		8.2
Balance at end of period	$	276.9		$	334.0

Interest on the unamortized VOBA balance (at interest rates ranging from 4.50% to 7.56%) is included in amortization and was $20.1 million, $22.4 million and $24.8 million during the years ended December 31, 2009, 2008 and 2007, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes intangible assets as of December 31:

(in millions)	Initial useful life1	2009				2008
		Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Amortizing:
VOBA	28 years	$	594.9	$	318.0	$	594.9	$	270.5
Distribution forces	20 years		7.0		7.0		7.0		1.3
Total intangible assets		$	601.9	$	325.0	$	601.9	$	271.8

1 The initial useful life was based on applicable assumptions. Actual periods are subject to revision based on variances from assumptions and other relevant factors.  

During the fourth quarter of 2009, the Company recorded a $5.4 million pre-tax impairment charge on intangible assets associated with the NFN retirement services distribution channel.

During 2009, the Company fully amortized intangible assets related to NLICA and NLACA state insurance licenses, which resulted in a $7.8 million pre-tax charge. The state insurance licenses had indefinite useful lives and were not previously amortized. Due to the merger with NLIC and NLAIC, respectively, on December 31, 2009, the NLICA and NLACA state insurance licenses are no longer required as the surviving entities have the required state insurance licenses to conduct business on existing NLICA and NLACA products. The Company will surrender the state insurance licenses back to each state. See Note 1 for a description of the merger transaction between these entities.

During 2008, the Company recorded a $19.7 million pre-tax impairment charge on career agency force and independent agency force intangible assets associated with its plan to exit the NFN professional consulting group sales channel and selling arrangement changes for the independent agency force.

The Company’s annual impairment testing performed as of June 30, did not result in material impairment losses on intangible assets during 2009, 2008 and 2007.

Based on current assumptions, which are subject to change, the following table summarizes estimated amortization for the next five years ended December 31:

(in millions)	VOBA
2010	$	28.8
2011		24.2
2012		21.9
2013		19.4
2014		16.0

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(9) Goodwill  

The following table summarizes changes in the carrying value of goodwill by segment for the years indicated:

(in millions)	Retirement Plans		Individual Protection		Total
Balance as of December 31, 2007	$	25.4	$	174.4	$	199.8
Adjustments		—		—		—
Balance as of December 31, 2008		25.4		174.4		199.8
Adjustments		—		—		—
Balance as of December 31, 2009	$	25.4	$	174.4	$	199.8

The Company’s 2009 annual impairment testing did not result in any impairments on existing goodwill. As of the 2009 annual impairment testing, the fair value of the reporting units with goodwill was in excess of the carrying value. The goodwill balances as of 12/31/09 have not been previously impaired.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(10) Closed Block  

The amounts shown in the following tables for assets, liabilities, revenues and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following table summarizes financial information for the closed block as of December 31:

(in millions)	2009			2008
Liabilities:
Future policyholder benefits	$	1,818.0		$	1,844.2
Policyholder funds and accumulated dividends		142.9			142.7
Policyholder dividends payable		28.7			31.7
Policyholder dividend obligation		48.7			(62.2	)
Other policy obligations and liabilities		13.8			9.2
Total liabilities		2,052.1			1,965.6
Assets:
Fixed maturity securities available-for-sale, at estimated fair value		1,236.2			1,082.1
Mortgage loans on real estate		263.2			294.8
Policy loans		190.5			197.9
Other assets		135.4			152.3
Total assets		1,825.3			1,727.1
Excess of reported liabilities over assets		226.8			238.5
Portion of above representing other comprehensive income:
Increase (decrease) in unrealized gain on fixed maturity securities available-for-sale		90.8			(88.6	)
Adjustment to policyholder dividend obligation		(90.8	)		88.6
Total		—			—
Maximum future earnings to be recognized from assets and liabilities	$	226.8		$	238.5
Other comprehensive income:
Fixed maturity securities available-for-sale:
Fair value	$	1,236.2		$	1,082.1
Amortized cost		1,252.6			1,157.0
Shadow policyholder dividend obligation		(16.4	)		74.9
Net unrealized appreciation	$	—		$	—

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes closed block operations for the years ended December 31:

(in millions)	2009			2008			2007
Revenues:
Premiums	$	89.6		$	92.9		$	95.7
Net investment income		105.6			108.9			102.5
Realized investment gains (losses)		1.8			(40.9	)		(1.5	)
Realized (losses) gains credited to to policyholder benefit obligation		(5.8	)		36.9			(2.5	)
Total revenues		191.2			197.8			194.2
Benefits and expenses:
Policy and contract benefits		132.9			131.1			136.4
Change in future policyholder benefits and interest credited to policyholder accounts		(24.4	)		(17.4	)		(19.3	)
Policyholder dividends		59.2			62.9			61.1
Change in policyholder dividend obligation		4.4			2.6			(3.6	)
Other expenses		1.1			1.2			1.2
Total benefits and expenses		173.2			180.4			175.8
Total revenues, net of benefits and expenses, before federal income tax expense		18.0			17.4			18.4
Federal income tax expense		6.3			6.1			6.4
Revenues, net of benefits and expenses and federal income tax expense	$	11.7		$	11.3		$	12.0
Maximum future earnings from assets and liabilities:
Beginning of period	$	238.5		$	249.8		$	261.8
Change during period		(11.7	)		(11.3	)		(12.0	)
End of period	$	226.8		$	238.5		$	249.8

Cumulative closed block earnings from inception through December 31, 2009 and 2008 were higher than expected as determined in the actuarial calculation. Therefore, policyholder dividend obligations (excluding the adjustment for unrealized gains on available-for-sale securities) were $32.3 million and $12.7 million as of December 31, 2009 and 2008, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(11) Variable Contracts  

The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contractholders. The Company provides five primary guarantee types under non-traditional variable annuity contracts: (1) guaranteed minimum death benefits (GMDB); (2) GMAB; (3) guaranteed minimum income benefits (GMIB); (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.

The GMDB provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death. The Company has offered six primary GMDB types:

• Return of premium – provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as “net premiums.” There are two variations of this benefit. In general, there is no lock in age for this benefit. However, for some contracts the GMDB reverts to the account value at a specified age, typically age 75.  

• Reset – provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock-in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90, and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.  

• Ratchet – provides the greater of a return of premium death benefit or the highest specified “anniversary” account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference based on the definition of anniversary: monthaversary – evaluated monthly; annual – evaluated annually; and five-year – evaluated every fifth year.  

• Rollup – provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit: for certain contracts, this GMDB locks in at age 86, and for others the GMDB reverts to the account value at age 75.  

• Combo – provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86.  

• Earnings enhancement – provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.  

The GMAB, offered in the Company’s Capital Preservation Plus contract rider, is a living benefit that provides the contractholder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified time period, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

The GLWB, offered in the Company’s L.inc, is a living benefit that provides for enhanced retirement income security without the liquidity loss associated with annuitization. The withdrawal rates vary based on the age when withdrawals begin and are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder. The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a ratchet feature that is driven by account performance and a roll-up feature that is driven by policy duration.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The GMIB is a living benefit that provides the contractholder with a guaranteed annuitization value. The GMIB types are:

• Ratchet – provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.  

• Rollup – provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.  

• Combo – provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.  

In January 2009, the Company decided to simplify its living benefit guarantees and only offer L.inc on new sales.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

All GMAB contracts with the hybrid GMAB/GLWB rider are included with GMAB contracts in the following tables. The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of December 31 (a contract may contain multiple guarantees):

	2009									2008
(in millions)	General account value		Separate account value		Total account value		Net amount at risk1		Wtd. avg. attained age	General account value		Separate account value		Total account value		Net amount at risk1		Wtd. avg. attained age
GMDB:
Return of premium	$	728.8	$	5,859.6	$	6,588.4	$	99.5	61	$	912.1	$	5,082.2	$	5,994.3	$	440.6	60
Reset		1,622.4		12,406.1		14,028.5		899.5	64		2,282.3		10,259.8		12,542.1		2,477.7	64
Ratchet		1,181.3		13,835.5		15,016.8		1,772.4	67		1,877.7		10,545.7		12,423.4		3,775.3	67
Rollup		41.8		258.7		300.5		17.7	73		48.5		241.9		290.4		25.9	72
Combo		229.1		1,577.3		1,806.4		325.6	69		306.0		1,398.1		1,704.1		621.2	69
Subtotal		3,803.4		33,937.2		37,740.6		3,114.7	65		5,426.6		27,527.7		32,954.3		7,340.7	65
Earnings enhancement		16.5		373.4		389.9		19.6	64		28.1		305.4		333.5		7.2	63
Total - GMDB	$	3,819.9	$	34,310.6	$	38,130.5	$	3,134.3	65	$	5,454.7	$	27,833.1	$	33,287.8	$	7,347.9	65
GMAB2:
5 Year	$	383.0	$	2,639.8	$	3,022.8	$	171.5	N/A	$	607.0	$	2,260.6	$	2,867.6	$	499.0	N/A
7 Year		393.6		2,151.9		2,545.5		180.4	N/A		451.6		1,814.3		2,265.9		482.9	N/A
10 Year		70.2		684.6		754.8		39.5	N/A		80.2		597.7		677.9		132.2	N/A
Total - GMAB	$	846.8	$	5,476.3	$	6,323.1	$	391.4	N/A	$	1,138.8	$	4,672.6	$	5,811.4	$	1,114.1	N/A
GMIB3:
Ratchet	$	16.3	$	242.0	$	258.3	$	0.3	N/A	$	16.2	$	228.5	$	244.7	$	5.6	N/A
Rollup		46.6		625.6		672.2		0.4	N/A		47.1		612.4		659.5		1.3	N/A
Combo		—		0.2		0.2		—	N/A		—		0.1		0.1		—	N/A
Total - GMIB	$	62.9	$	867.8	$	930.7	$	0.7	N/A	$	63.3	$	841.0	$	904.3	$	6.9	N/A
GLWB:
L.inc	$	229.7	$	7,056.7	$	7,286.4	$	67.3	N/A	$	72.4	$	3,248.4	$	3,320.8	$	571.5	N/A
Porfolio income insurance		—		20.7		20.7		—	N/A		—		—		—		—	N/A
Total - GLWB	$	229.7	$	7,077.4	$	7,307.1	$	67.3	N/A	$	72.4	$	3,248.4	$	3,320.8	$	571.5	N/A

1 Net amount at risk is calculated on a seriatim basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance.  

2 GMAB contracts with the hybrid GMAB/GLWB rider had account values of $5.32 billion and $4.59 billion as of December 31, 2009 and 2008, respectively.  

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

Net amount at risk is highly sensitive to changes in financial market movements. See Note 5, Derivatives Not Qualifying for Hedge Accounting – Equity Market Risk Management, for a discussion of the Company’s risk management practices with respect to financial market exposure.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

(in millions)	2009		2008
Mutual funds:
Bond	$	4,920.2	$	4,370.3
Domestic equity		24,598.8		18,676.2
International equity		3,046.9		2,421.4
Total mutual funds		32,565.9		25,467.9
Money market funds		1,473.4		2,146.4
Total	$	34,039.3	$	27,614.3

The following table summarizes the reserve balances, net of reinsurance, for variable annuity contracts with guarantees as of December 31:

(in millions)	2009		2008
Living benefit riders	$	265.9	$	1,698.0
GMDB		67.0		193.4
GMIB		3.1		5.5

The Company’s living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract. The embedded derivatives are carried at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions.Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contractholder persistency, contractholder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility. As of December 31, 2009 and 2008, the net balance of the embedded derivatives for living benefits was a liability of $265.9 million and a liability of $1.70 billion, respectively. The GLWB component of living benefit riders was immaterial in 2009 and $699.9 million in 2008, respectively.

The Company’s incurred and paid amounts for living benefit features were immaterial for the years ended December 31, 2009 and 2008. The incurred and paid amounts were immaterial for 2008. The Company does not expect any meaningful level of claims under the living benefit features for several years and believes the impact of claims is expected to be mitigated by its economic hedging program.

During the year ended December 31, 2009, the Company recorded net realized investment gains on living benefit embedded derivatives and related economic hedging gains of $413.6 million. These gains were comprised of $1.50 billion of net realized investment gains on living benefit embedded derivatives and $1.08 billion of related economic hedging losses. The net realized investment gains on living benefit embedded derivatives primarily resulted from higher interest rates, lower volatility assumptions and an increase to the nonperformance component of the discount rate. The increase in net realized investment gains on embedded derivatives increased amortization of DAC by $389.6 million in 2009 compared to 2008, which is included in the Corporate and Other segment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

The Company’s incurred and paid amounts for GMDBs were $132.4 million for the year ended December 31, 2009 compared to $67.1 million for the year ended December 31, 2008.

The following assumptions and methodology were used to determine the GMDB claim reserves as of December 31, 2009 and 2008:

• Data used was based on a combination of historical numbers and future projections generally involving 250 and 50 probabilistically generated economic scenarios as of December 31, 2009 and 2008, respectively  

• Mean gross equity performance – 10.4% and 8.1% as of December 31, 2009 and 2008, respectively  

• Equity volatility – 18.0% and 18.7% as of December 31, 2009 and 2008, respectively  

• Mortality – 91% of Annuity 2000 Basic table for males, 101% for females as of December 31, 2009; and 100% of Annuity 2000 tables as of December 31, 2008  

• Asset fees – equivalent to mutual fund and product loads  

• Discount rate – approximately 7.0%  

Lapse rate assumptions vary by duration as shown below:

December 31, 2009 Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	1.0%	2.0%	2.5%	3.0%	5.0%	6.0%	7.0%	7.0%	10.0%	10.0%
Maximum	3.5%	2.0%	4.0%	4.5%	35.0%	40.0%	18.5%	32.5%	32.5%	18.5%
December 31, 2008 Duration (years)	1	2	3	4	5	6	7	8	9	10+
Minimum	1.0%	2.0%	2.0%	3.0%	4.5%	6.0%	7.0%	7.0%	11.5%	11.5%
Maximum	1.5%	2.5%	4.0%	4.5%	40.0%	41.5%	21.5%	35.0%	35.0%	18.5%

The Company’s incurred and paid amounts for GMIBs were $7.2 million for the years ended December 31, 2009. The incurred and paid amounts were immaterial for 2008.

The Company did not transfer assets from the general account to the separate account for any of its variable annuity contracts during the years ended December 31, 2009 and 2008.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following table summarizes account balances of variable universal life insurance contracts that were invested in separate accounts as of December 31:

(in millions)	2009		2008
Mutual funds:
Bond	$	452.8	$	412.7
Domestic equity		2,996.3		2,459.5
International equity		416.9		334.6
Total mutual funds		3,866.0		3,206.8
Money market funds		257.0		295.0
Total	$	4,123.0	$	3,501.8

(12) Short-Term Debt  

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

(in millions)	2009		2008
$800.0 million commercial paper program	$	150.0	$	149.9
$350.0 million securities lending program facility		—		99.8
Total short-term debt	$	150.0	$	249.7

The Company has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility contingent on the liquidity of the securities lending program. The borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. London Interbank Offered Rate (LIBOR). On July 31, 2009, the Company paid down the $99.7 million principal balance on the securities lending program facility. The Company had no amounts outstanding under this agreement as of December 31, 2009 compared to $99.8 million as of December 31, 2008.

The Company has available as a source of funds a $1.00 billion revolving credit facility entered into by NFS, NLIC and NMIC with a maturity of May 13, 2010. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility contains covenants, including, but not limited to, requirements that NMIC maintain statutory surplus in excess of $5.30 billion, the Company’s debt not exceed 40% of tangible net worth, as defined, and that NLIC maintain statutory surplus in excess of $1.67 billion. A breach by any borrower of the financial covenants will impact the availability of the line for the other borrowers and may accelerate payment. NMIC had no amounts outstanding under this agreement as of December 31, 2009. NLIC also has an $800.0 million commercial paper program and rating agency guidelines recommend that NLIC maintain minimum liquidity backup, which includes cash and liquid assets as well as committed bank lines, equal to 50% of any amounts outstanding under the commercial paper program. Therefore, availability under the aggregate $1.00 billion credit facility is reduced by the amount outstanding in excess of available cash and liquid assets. NLIC had $150.0 million of commercial paper outstanding at December 31, 2009 at a weighted average interest rate of 0.29% and $149.9 million outstanding at December 31, 2008 at a weighted average interest rate of 2.07%.

The Company paid interest on short-term debt totaling $1.3 million, $8.3 million, and $15.0 million in 2009, 2008 and 2007, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(13) Long-Term Debt  

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

(in millions)	2009		2008
8.15% surplus note, due June 27, 2032	$	300.0	$	300.0
7.50% surplus note, due December 17, 2031		300.0		300.0
6.75% surplus note, due December 23, 2033		100.0		100.0
Total long-term debt	$	700.0	$	700.0

The Company made interest payments to NFS on surplus notes totaling $53.7 million in 2009, 2008 and 2007. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance (ODI).

On September 30, 2009, the Company sold NLICA, a 5.75%, $200.0 million surplus note maturing on September 30, 2010. Due to the merger of NLICA with and into the Company on December 31, 2009, the note was redeemed, in whole, by the Company at a redemption price equal to 100% of the aggregate principal amount outstanding plus accrued interest.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(14) Federal Income Taxes  

Effective January 1, 2009, pursuant to the merger agreement dated August 6, 2008 whereby NMIC and its affiliates purchased all of the NFS common stock they did not already own, Nationwide Corporation will own more than 80% of the value of NFS, meeting the requirements for NFS to join the NMIC consolidated federal income tax return. However, the life insurance company subsidiaries will not be eligible to join the NMIC consolidated federal income tax return until 2014. NFS will file a one day life/non-life, federal income tax return (January 1, 2009) with all of its downstream subsidiaries.

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax asset (liability) as of December 31:

(in millions)	2009			2008
Deferred tax assets:
Future policy benefits and claims	$	1,108.5		$	955.6
Securities available-for-sale		—			809.2
Derivatives		62.6			229.7
Capital loss carryforward		102.8			—
Other		267.1			258.0
Gross deferred tax assets		1,541.0			2,252.5
Less valuation allowance		(23.7	)		(23.7	)
Deferred tax assets, net of valuation allowance		1,517.3			2,228.8
Deferred tax liabilities:
Deferred policy acquisition costs		(1,083.7	)		(1,293.6	)
Securities available-for-sale		(215.9	)		—
Value of business acquired		(95.6	)		(112.9	)
Other		(96.9	)		(168.3	)
Gross deferred tax liabilities		(1,492.1	)		(1,574.8	)
Net deferred tax asset (liability)	$	25.2		$	654.0

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income taxes paid within the statutory carryback period can offset nearly all future deductible amounts. Because it is more likely than not that certain deferred tax assets will not be realized, the Company established a valuation allowance of $23.7 million, $23.7 million and $23.7 million as of December 31, 2009, 2008 and 2007, respectively. No additional valuation allowances are required to be recognized as the Company has prudent and feasible tax planning strategies that would, if necessary, be implemented to utilize deferred tax assets.

The Company’s current federal income tax (liability) asset was $(108.5) million and $132.1 million as of December 31, 2009 and 2008, respectively.

Total federal income taxes (refunded) paid were $(59.0) million, $(40.9) million, and $117.9 million during the years ended December 31, 2009, 2008 and 2007, respectively.

As of December 31, 2009, the Company has $293.7 million of capital loss carryforwards that can carry forward for five tax years and are expected to be fully utilized. In addition, the Company has $6.7 million in low income housing credit carryforwards which can be carried forward for twenty years. The Company expects that they will be fully utilized. The Company has $22.7 million in Alternative Minimum Tax (AMT) credit carryforwards, which can be carried forward until utilized. The Company expects to fully realize the AMT credits in the future.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

(in millions)	2009			2008			2007
Current	$	165.0		$	(130.8	)	$	108.0
Deferred		(117.1	)		(403.0	)		39.3
Federal income tax expense (benefit)	$	47.9		$	(533.8	)	$	147.3

Total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to income (loss) from continuing operations before federal income tax expense (benefit) as follows for the years ended December 31:

	2009					2008					2007
(dollars in millions)	Amount			%		Amount			%		Amount			%
Computed tax expense (benefit)	$	107.3		35.0		$	(497.4	)	35.0		$	220.2		35.0
DRD		(56.1	)	(18.3	)		(42.1	)	3.0			(67.5	)	(10.7	)
Impact of noncontrolling interest		18.3		6.0			25.3		(1.8	)		17.8		2.8
Tax credits		(21.4	)	(7.0	)		(25.8	)	1.8			(22.3	)	(3.6	)
Other, net		(0.2	)	(0.1	)		6.2		(0.4	)		(0.9	)	(0.1	)
Total	$	47.9		15.6		$	(533.8	)	37.6		$	147.3		23.4

During 2009, the Company recorded $8.7 million of net federal income tax expense adjustments primarily related to differences between the 2008 estimated tax liability and the amounts reported on the Company’s 2008 tax returns. These changes in estimates primarily were driven by the Company’s separate account dividends received deduction (DRD) and foreign tax credit.

During the third quarter of 2008, the Company refined its separate account DRD calculation and estimation process. As a result, the Company reduced its third quarter separate account DRD projection from a federal income tax benefit of $14.3 million to a $4.4 million benefit. This reduction in estimate primarily was driven by the assumptions used in the estimation process regarding future dividend income within the separate accounts. The assumptions used in the separate account DRD calculation are based on the Company’s best estimate of future events.

In addition, during 2008, the Company recorded $11.9 million of net federal income tax expense adjustments primarily related to differences between the 2007 estimated tax liability and the amounts expected to be reported on the Company’s 2007 tax returns when filed. These changes in estimates primarily were driven by the Company’s separate account DRD.

During 2007, the Company recorded $7.6 million of net federal income tax expense adjustments primarily related to differences between the 2006 estimated tax liability and the amounts the Company reported on its 2006 tax returns.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

A rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties, is as follows:

(in millions)	2009			2008
Balance at beginning of period	$	44.0		$	8.8
Additions for current year tax positions		36.8			37.7
Additions for prior years tax positions		14.9			0.3
Reductions for prior years tax positions		(1.1	)		(2.8	)
Balance at end of period	$	94.6		$	44.0

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate on December 31, 2009, is $43.0 million.

The Company has included tax on permanent uncertain tax positions and interest and penalties on all uncertain tax positions in determining the potential impact on the effective tax rate above. An uncertain tax timing position may result in the acceleration of cash payments to the IRS, but will not impact the effective tax rate.

During the years ended December 31, 2009, and 2008, the Company incurred $0.2 million and $1.0 million in interest and penalties, respectively. The Company accrued $3.8 million and $2.2 million for the payment of interest and penalties at December 31, 2009 and 2008, respectively. Interest expense and any associated penalties are shown as income tax expense.

Management is not aware of any reasonable possibility of a significant increase or decrease to the total of the uncertain tax positions within the next 12 months.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years through 2002. The IRS recently completed an audit of the Company’s tax years 2003 through 2005. The statute remains open for these years as the Company completes the appeals process. See “Tax Matters” in Note 18 for more information on the Company’s tax years 2003 through 2005 audit and the related appeals process.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(15) Shareholder’s Equity, Regulatory Risk-Based Capital, Statutory Results and Dividend Restrictions  

Regulatory Risk-Based Capital

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

Statutory Results

The Company and its subsidiary are required to prepare statutory financial statements in conformity with the NAIC’s Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable state department of insurance. Statutory accounting practices focus on insurer solvency and differ from GAAP materially. The principal differences include charging policy acquisition and certain sales inducement costs to expense as incurred, establishing future policy benefits and claims reserves using different actuarial assumptions, excluding certain assets from statutory admitted assets; and valuing investments and establishing deferred taxes on a different basis. The following tables summarize the statutory net income (loss) and statutory capital and surplus for the Company and its insurance subsidiary for the years ended December 31:

(in millions)	20091			2008			2007
Statutory net income (loss)
NLIC	$	397.3		$	(919.4	)	$	410.8
NLAIC		(61.1	)		(90.3	)		(4.0	)
Statutory capital and surplus
NLIC	$	3,129.6		$	2,749.9		$	2,599.9
NLAIC		213.5			122.6			256.6

1 Unaudited as of the date of this report.  

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity. In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity. See Note 2 (p) for details on the accounting treatment of this transaction.

NLIC received approval from the Ohio Department of Insurance (ODI) regarding the use of a permitted practice related to the statutory accounting provision for the admissibility of deferred tax assets as of December 31, 2008. The permitted practice modifies the practice prescribed by the NAIC by increasing the threshold for admissibility of deferred tax assets from 10% to 15% of statutory capital and surplus. The permitted practice resulted in an increase of NLIC’s estimated statutory surplus of $68.9 million as of December 31, 2008. The permitted practice had no impact on NLIC’s statutory net income. The benefits of this permitted practice was not considered by the Company when determining capital and surplus available for dividends during 2009.

In 2009, the NAIC adopted Statement of Statutory Accounting Principles No. 10R, Income Tax Revised – a temporary replacement of SSAP 10, which is similar to the ODI permitted practice adopted in 2008 with the exception of limiting capital and surplus available for dividends.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Dividend Restrictions

The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state. The State of Ohio insurance laws require Ohio-domiciled life insurance companies to seek prior regulatory approval to pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer for the prior year. NLIC’s statutory capital and surplus as of December 31, 2009 was $3.13 billion, and statutory net income for the year ended December 31, 2009 was $397.3 million. During the year ended December 31, 2009, NLIC did not pay any dividends to NFS during 2009. As of January 1, 2010, NLIC has the ability to pay dividends to NFS totaling $397.3 million upon providing prior notice to the ODI.

The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the State of Ohio insurance laws as the amount equal to the Company’s unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurer’s policyholder surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on NLIC’s participating policies (measured before dividends to policyholders) available for the benefit of the Company and its shareholder.

The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Comprehensive Gain (Loss)

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

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

(in millions)	2009			2008			2007
Net unrealized losses on securities available-for-sale arising during the period:
Net unrealized gains (losses) before adjustments	$	2,373.9		$	(3,827.8	)	$	(273.1	)
Net non-credit gains		38.4			—			—
Net adjustment to DAC		(584.9	)		528.8			3.8
Net adjustment to VOBA		(9.4	)		8.2			8.0
Net adjustment to future policy benefits and claims		(27.4	)		127.8			5.9
Net adjustment to policyholder dividend obligation		(91.3	)		88.7			2.2
Related federal income tax (expense) benefit		(594.8	)		1,076.1			88.6
Net unrealized gains (losses)		1,104.5			(1,998.2	)		(164.6	)
Reclassification adjustment for net realized losses on securities available-for-sale realized during the period:
Net realized losses		388.2			1,102.1			105.0
Related federal income tax benefit		(135.9	)		(385.7	)		(36.8	)
Net reclassification adjustment		252.3			716.4			68.2
Other comprehensive gain (loss) on securities available-for-sale		1,356.8			(1,281.8	)		(96.4	)
Accumulated net holding (losses) gains on cash flow hedges:
Unrealized holding (losses) gains		(4.1	)		16.5			(17.2	)
Related federal income tax benefit (expense)		1.5			(5.8	)		6.0
Other comprehensive (loss) income on cash flow hedges		(2.6	)		10.7			(11.2	)
Other unrealized (losses) gains:
Net unrealized (losses) gains		(13.5	)		7.4			(7.4	)
Related federal income tax benefit (expense)		4.7			(2.5	)		2.7
Other net unrealized (losses) gains		(8.8	)		4.9			(4.7	)
Unrecognized amounts on pension plans:
Net unrecognized amounts		—			(12.3	)		1.0
Related federal income tax benefit (expense)		—			4.3			(0.4	)
Other comprehensive (loss) income on unrecognized pension amounts		—			(8.0	)		0.6
Total other comprehensive income (loss)	$	1,345.4		$	(1,274.2	)	$	(111.7	)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The adjustments to DAC and VOBA represent the changes in amortization of DAC and VOBA that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a discount rate that would have been required had such unrealized amounts been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate.

The adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities resulted in a cumulative-effect adjustment of $235.0 million, net of taxes, to reclassify the non-credit component of previously recognized other-than-temporary impairment losses from the beginning balance of retained earnings to AOCI.

Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2009, 2008 and 2007.

(16) Employee Benefit Plans  

The Company, excluding certain affiliated companies, participates in a qualified defined benefit pension plan (the Nationwide Retirement Plan or the NRP), several non-qualified defined benefit supplemental executive retirement plans, postretirement benefit plans (life and health care), and the Nationwide Savings Plan 401(k), all sponsored by NMIC. Effective January 30, 2008, NMIC merged the Nationwide Life Insurance Company of America (NLICA) Retirement Plan into the NRP.

The NRP covers all employees of participating employers who have completed at least one year of service and who are at least 21 years of age. Plan assets are invested in a third-party trust and group annuity contracts issued by NLIC. All participants are eligible for benefits based on an account balance formula. However, participants hired prior to 2002 are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if such benefits are of greater value than the account balance feature.

Effective January 1, 2010, NMIC amended the NRP to eliminate the company-paid early retirement enhancement (an additional benefit for associates retiring between ages 55 and 65), which is part of the FAP formula and to stop pay credits under the account balance formula for participants eligible for the account balance formula. An affected associate’s benefits, however, will not be less than the NRP benefit he or she accrued as of December 31, 2009, under the greater of the FAP formula or the account balance formula.

The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work benefits the Company. In addition, separate non-qualified defined benefit pension plans sponsored by NMIC cover certain executives with at least one year of service. The Company’s portion of expense relating to these plans was $11.0 million, $4.6 million, and $11.8 million for the years ended December 31, 2009, 2008 and 2007, respectively. The 2008 expense includes a gain of $5.4 million due to the merger of the NLICA Retirement Plan into the NRP.

See Note 17 for more information on group annuity contracts issued by the Company for various employee benefit plans sponsored by NMIC or its affiliates.

In addition to the NRP, the Company and certain affiliated companies participate in life and health care benefit plans sponsored by NMIC for qualifying retirees. Contributory post-retirement life and health care benefits are generally available to associates, hired prior to and continuously employed since June 1, 2000, for health care benefits, and prior to December 31, 1994, for life benefits, who have attained age 55, and have accumulated 15 years of service with the Company. The associate subsidy for the post-retirement death benefit was capped beginning in 2007. Employer subsidies for retiree life insurance ended as of December 31, 2008. No future employer contributions are anticipated for retiree life insurance and settlement accounting was applied during 2008. Post-retirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and co-insurance. In addition, there are caps on the Company’s contribution to the cost of the post-retirement health care benefits. The Company does not receive a Medicare Part D subsidy from the government. The Company’s policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested in a group annuity contract issued by NLIC and a third-party trust.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

On September 3, 2009, NMIC announced changes to the post-retirement health care benefits available under the health care defined benefit plans. On December 31, 2009, each eligible associate’s current cost-sharing percentage was fixed and, following this date, Company contributions towards the cost of post-retirement health care coverage for eligible associates will be based only on service through December 31, 2009. This modification does not impact former associates receiving Nationwide-sponsored retiree health care benefits prior to January 1, 2010. Additionally, effective January 1, 2010, all associates not considered to be highly compensated employees, as defined by IRC 414, became eligible to receive an annual retiree health care credit up to a maximum of $1,000 per year, not to exceed a maximum lifetime benefit amount of $25,000, which includes any years of cost-sharing service earned by December 31, 2009. The credit is equal to one-third of otherwise unmatched Health Savings Account contributions and/or Nationwide Savings Plan (NSP) 401(a) contributions. No contributions will be made by NMIC if the associate does not make eligible contributions.

The Company’s portion of expense relating to these plans was immaterial for the years ended December 31, 2009, 2008 and 2007.

Defined Contribution Plans

NMIC sponsors the NSP, a defined contribution retirement savings plan (a 401(k) plan) covering substantially all of the Company’s associates. Associates may make salary deferral contributions of up to 80%. Salary deferrals of up to 6% are subject to a 50% Company match. In addition, NMIC sponsors the NLICA Producer’s Pension Plan, a defined contribution money purchase plan, covering statutory employees of NLICA. However, this plan has no active participants, and is in the process of being terminated. The Company’s expense for contributions to these plans was $8.7 million, $6.1 million, and $8.0 million for the years ended December 31, 2009, 2008 and 2007, respectively.

(17) Related Party Transactions  

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

In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides data processing, systems development, hardware and software support, telephone, mail and other services to the Company, based on specified rates for units of service consumed. For the years ended December 31, 2009, 2008 and 2007, the Company made payments to NMIC and NSC totaling $233.1 million, $285.2 million, and $287.1 million, respectively.

The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $3.10 billion and $2.96 billion as of December 31, 2009 and 2008, respectively. Total revenues from these contracts were $143.1 million, $137.9 million and $132.3 million for the years ended December 31, 2009, 2008 and 2007, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $115.7 million, $115.6 million, and $110.1 million for the years ended December 31, 2009, 2008 and 2007, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties.

The Company leases office space from NMIC. For the years ended December 31, 2009, 2008 and 2007, the Company made lease payments to NMIC of $23.8 million, $21.5 million, and $23.0 million, respectively. In addition, the Company leases office space to an affiliate of NMIC.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC for the years ended December 31, 2009, 2008 and 2007 were $176.8 million, $202.3 million, and $317.6 million, respectively, while benefits, claims and expenses ceded during these years were $196.2 million, $218.9 million, and $348.1 million, respectively.

Funds of Nationwide Funds Group (NFG), an affiliate, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2009 and 2008, customer allocations to NFG funds totaled $23.73 billion and $18.08 billion, respectively. For the years ended December 31, 2009, 2008, and 2007, NFG paid the Company $78.8 million, $76.7 million, and $79.6 million, respectively, for the distribution and servicing of these funds.

The Company also participates in intercompany repurchase agreements with affiliates whereby the seller transfers securities to the buyer at a stated value. Upon demand or after a stated period, the seller repurchases the securities at the original sales price plus interest. As of December 31, 2009 and 2008, the Company had no outstanding borrowings from affiliated entities under such agreements. During 2009, the Company had no outstanding borrowings at any given time. During 2008 and 2007, the most the Company had outstanding at any given time was $151.6 million and $178.2 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements during these years were immaterial.

The Company and various affiliates have agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC for the benefit of the Company were $918.7 million and $2.58 billion as of December 31, 2009 and 2008, respectively, and are included in short-term investments on the consolidated balance sheets.

Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2009, 2008 and 2007 were $48.3 million, $52.7 million, and $59.5 million, respectively.

An affiliate of the Company is currently developing a browser-based policy administration and online brokerage software application for defined benefit plans. In connection with the development of this application, the Company made net payments, which were expensed, to that affiliate related to development totaling $11.2 million, $11.0 million, and $9.4 million for the years ended December 31, 2009, 2008 and 2007, respectively.

The Company entered into a note purchase agreement with an affiliate on November 17, 2006 to purchase $25.0 million of the affiliate’s 5.6% senior notes due November 16, 2016. The notes are secured by certain pledged mortgage servicing rights. The note is payable in seven equal principal installments of $3.8 million, which begin November 6, 2010. Interest is payable semi-annually on each May 16 and November 16.

Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 14. Effective October 1, 2002, NLIC began filing a consolidated federal income tax return with NLAIC. Total payments to (from) NMIC were $4.0 million and ($22.5) million during the years ended December 31, 2009 and 2008, respectively. These payments related to tax years prior to deconsolidation. There were no payments during 2007.

During 2009, NLIC received a $20.0 million capital contribution from NFS.

During 2009, NLIC did not pay dividends to NFS. In 2008 and 2007, NLIC paid dividends to NFS totaling $460.5 million, and $612.5 million, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

During 2009, the Company sold, at fair value, commercial mortgage loans with a carrying value of $273.2 million to Nationwide Mutual Insurance Company (NMIC). The sale resulted in a net realized loss of $33.5 million to the Company.

During 2009, the Company sold private equity investments to NMIC for $61.0 million, including the one private equity investment that is considered a VIE (See Note 20). The private equity investments were carried and sold at fair value. No gain or loss was recognized on the sale.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(18) Contingencies  

Legal Matters

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

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

The financial services industry, including mutual fund, variable annuity, retirement plan, life insurance and distribution companies, has also been the subject of increasing scrutiny on a broad range of issues by regulators, legislators and the media over the past few years. Numerous regulatory agencies, including the SEC, the Financial Industry Regulatory Authority and the New York State Attorney General, have commenced industry-wide investigations on such issues as late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund and life insurance companies on those issues. The Company has responded to information requests and/or subpoenas from the SEC in 2003 and the New York State Attorney General in 2005 in connection with investigations regarding market timing in certain mutual funds offered in insurance products sponsored by the Company. The Company is not aware of any further action on these matters.

In addition, state and federal regulators and other governmental bodies have commenced investigations, proceedings or inquiries relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales and replacements by producers on behalf of the issuer. Also under investigation are compensation and revenue sharing arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, funding agreements issued to back MTN programs, recordkeeping and retention compliance by broker-dealers, and supervision of former registered representatives. Related investigations, proceedings or inquiries may be commenced in the future. The Company and/or its affiliates have been contacted by, self reported or received subpoenas from state and federal regulatory agencies and other governmental bodies, state securities law regulators and state attorneys general for information relating to certain of these investigations, including those relating to compensation, revenue sharing and bidding arrangements, anti-competitive activities, unsuitable sales or replacement practices, fee arrangements in retirement plans, the use of side agreements and finite reinsurance agreements, and funding agreements backing the MTN program. The Company is cooperating with regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

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

On November 15, 2006, NFS, NLIC and NRS were named in a lawsuit filed in the United States District Court for the Southern District of Ohio entitled Kevin Beary, Sheriff of Orange County, Florida, In His Official Capacity, Individually and On Behalf of All Others Similarly Situated v. Nationwide Life Insurance Co., Nationwide Retirement Solutions, Inc. and Nationwide Financial Services, Inc. The plaintiff sought to represent a class of all sponsors of 457(b) deferred compensation plans in the United States that had variable annuity contracts with the defendants at any time during the class period, or in the alternative, all sponsors of 457(b) deferred compensation plans in Florida that had variable annuity contracts with the defendants during the class period. The class period is from January 1, 1996 until the class notice is provided. The plaintiff alleged that the defendants breached their fiduciary duties by arranging for and retaining service payments from certain mutual funds. The complaint sought an accounting, a declaratory judgment, a permanent injunction and disgorgement or restitution of the service fee payments allegedly received by the defendants, including interest. On January 25, 2007, NFS, NLIC and NRS filed a motion to dismiss. On September 17, 2007, the Court granted the motion to dismiss. On October 1, 2007, the plaintiff filed a motion to vacate judgment and for leave to file an amended complaint. On September 15, 2008, the Court denied the plaintiffs’ motion to vacate judgment and for leave to file an amended complaint. On February 3, 2010, the Sixth Circuit Court of Appeals affirmed the District Court’s dismissal of this case. NFS, NLIC and NRS continue to defend this lawsuit vigorously.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

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

Tax Matters

Management has established tax reserves in accordance with current accounting guidance, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These reserves are reviewed regularly and are adjusted as events occur that management believes impact its liability for additional taxes, such as lapsing of applicable statutes of limitations; conclusion of tax audits or substantial agreement on the deductibility/nondeductibility of uncertain items; additional exposure based on current calculations; identification of new issues; release of administrative guidance; or rendering of a court decision affecting a particular tax issue. Management believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years.

The separate account dividends received deduction (DRD) is a significant component of the Company’s federal income tax provision. On August 16, 2007, the IRS issued Revenue Ruling 2007-54. This ruling took a position with respect to the DRD that could have significantly reduced the Company’s DRD. The Company believes that the position taken by the IRS in the ruling was contrary to existing law and the relevant legislative history.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

In Revenue Ruling 2007-61, released September 25, 2007, the IRS and the U.S. Department of the Treasury suspended Revenue Ruling 2007-54 and informed taxpayers of their intention to address certain issues in connection with the DRD in future tax regulations. Final tax regulations could impact the Company’s DRD in periods subsequent to their effective date.

The IRS recently completed an audit of the Company’s tax years 2003 through 2005. As a result of this audit, the Company received a Revenue Agent’s Report (RAR) and 30-Day Letter (requiring payment of additional tax due or the preparation of protest to start the appeals process) from the IRS in July 2009. The RAR includes an adjustment to reduce the Company’s DRD for the above tax years resulting in additional tax due of $151.0 million. The Company is currently at appeals on this issue and believes that it will ultimately prevail based on technical merits.

(19) Guarantees  

Since 2002, the Company has sold $696.1 million of credit enhanced equity interests in LIHTC Funds to unrelated third parties. The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 3.75% to 7.75% over periods ending between 2002 and 2025. As of December 31, 2009 and 2008, the Company held guarantee reserves totaling $5.5 million and $5.1 million, respectively, on these transactions. These guarantees are in effect for periods of approximately 15 years each. The LIHTC Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by stabilization collateral set aside by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $985.9 million. The Company does not anticipate making any material payments related to these guarantees.

As of December 31, 2009, the Company did not hold any stabilization reserves as collateral for certain properties owned by the LIHTC Funds, as the LIHTC Funds have met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant, among others. Properties meeting the necessary criteria are considered to have “stabilized.” The properties are evaluated regularly, and the collateral is released when stabilized. During 2009, the stabilization reserve was not increased and the remainder of the stabilization reserve, $0.8 million, was released into income. In 2008, $0.8 million of the stabilization reserve was released into income.

To the extent there are cash deficits in any specific property owned by the LIHTC Funds, property reserves, property operating guarantees and reserves held by the LIHTC Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it may recover any such funding out of the cash flow distributed from the sale of the underlying properties of the LIHTC Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors.

(20) Variable Interest Entities  

In the normal course of business, the Company has relationships with variable interest entities (VIEs). The Company’s VIEs are conduits that assist the Company in structured products transactions involving the sale of LIHTC Funds to third party investors, other structured product issuances, and private equity investments.

The Company considers many factors when determining whether it is (or is not) the primary beneficiary of a VIE. There is a review of the entity’s contract and other deal related information, such as 1) the entity’s equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity, 2) whether the contractual or ownership interest in the entity changes with the change in fair value of the entity, and 3) the extent to which, through the variable interest, the Company shares in the entity’s expected losses and residual returns.

The Company was not required to provide financial or other support outside previous contractual requirements to any VIE.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

LIHTC Funds

The Company provides guarantees to limited partners related to the amount of tax credits that will be generated by the funds (see Note 19). The results of operations and financial position of each VIE of which the Company is the primary beneficiary are consolidated along with corresponding noncontrolling interest in the accompanying consolidated financial statements.

The Company had relationships with 19 LIHTC Funds that are considered VIEs as of December 31, 2009 and December 31, 2008, where the Company was the primary beneficiary. Net assets of these consolidated VIEs were $350.6 million and $416.0 million as of December 31, 2009 and December 31, 2008, respectively. The following table summarizes the components of net assets as of December 31:

(in millions)	2009			2008
Other long-term investments	$	314.3		$	371.1
Short-term investments		16.4			20.9
Other assets		33.8			41.6
Other liabilities		(13.9	)		(17.6	)

The Company’s total loss exposure from consolidated VIEs was immaterial as of December 31, 2009 and December 31, 2008 (except for the impact of guarantees disclosed in Note 19). Creditors (or beneficial interest holders) of the consolidated VIEs have no recourse to the general credit of the Company.

These LIHTC Funds are financed through the sale of these funds into the secondary market. The proceeds from these sales are used to participate in low-income housing projects that provide tax benefits to the investors.

In addition to the consolidated VIEs described above, the Company holds variable interests in other LIHTC Funds that qualify as VIEs where the Company is not the primary beneficiary. The carrying amount of these unconsolidated VIEs was $110.0 million and $156.3 million as of December 31, 2009 and 2008, respectively. The total exposure to loss on these unconsolidated VIEs was $122.9 million and $179.6 million as of December 31, 2009 and 2008, respectively. The total exposure to loss is determined by adding any unfunded commitments to the carrying amount of the VIEs.

Structured Products

The Company had a relationship with one structured product investment that is considered a VIE as of December 31, 2009 and December 31, 2008, where the Company was the primary beneficiary. Net assets of this consolidated VIE were $9.2 million and $8.9 million as of December 31, 2009 and December 31, 2008, respectively. Creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the Company. There are no arrangements that would require the Company to provide financial support to the VIE.

The Company was invested in 7 and 12 structured product investments that are considered VIEs as of December 31, 2009 and 2008, respectively, where the Company is not the primary beneficiary. These structured products are in the form of synthetic collateralized debt obligations and collateralized lease obligations. The carrying amount on these unconsolidated VIEs was $31.8 million and $17.8 million as of December 31, 2009 and 2008, respectively. The total exposure to loss on these unconsolidated VIEs is determined to be the carrying amount of the VIEs.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

Private Equity Investments

The Company had a relationship with one private equity investment that is considered a VIE as of December 31, 2008, where the Company was the primary beneficiary. On September 30, 2009, NLIC sold this private equity investment, which had net assets of $14.1 million, to NMIC.

(21) Segment Information  

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

The primary segment profitability measure that management uses is pre-tax operating earnings (loss), which is calculated by adjusting income from continuing operations before federal income taxes and discontinued operations to exclude: (1) net realized investment gains and losses, except for operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment, net realized gains and losses related to hedges on GMDB contracts and securitizations); (2) other-than-temporary impairment losses; (3) the adjustment to amortization of DAC and VOBA related to net realized investment gains and losses; and (4) net loss attributable to noncontrolling interest.

Individual Investments

The Individual Investments segment consists of individual annuity products marketed under the The BEST of AMERICA®, Nationwide DestinationSM, and other Nationwide-specific or private label brands. Deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, deferred variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while deferred fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. Immediate annuities differ from deferred annuities in that the initial premium is exchanged for a stream of income for a certain period or for the owner’s lifetime without future access to the original investment. Portfolio income insurance is a form of deferred annuity that provides the income protection features common to today’s variable annuities to owners of specific managed account investments whose assets are outside of the annuity product. The majority of assets and recent sales for the Individual Investments segment consist of deferred variable annuities.

Retirement Plans

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

Individual Protection

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

Corporate and Other

The Corporate and Other segment includes the MTN program; structured products business; non-operating realized gains and losses and related amortization, including mark-to-market adjustments on embedded derivatives, net of economic hedges, related to products with living benefits; and other revenues and expenses not allocated to other segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

The following tables summarize the Company’s business segment operating results for the years ended December 31:

(in millions)	Individual Investments			Retirement Plans		Individual Protection		Corporate and Other			Total
2009
Revenues:
Policy charges	$	521.9		$	93.2	$	633.7	$	(3.7	)	$	1,245.1
Premiums		191.2			—		278.5		—			469.7
Net investment income		562.0			679.0		491.8		146.3			1,879.1
Non-operating net realized investment gains1		—			—		—		619.1			619.1
Other-than-temporary impairments losses		—			—		—		(574.6	)		(574.6	)
Other income2		(168.1	)		0.1		0.2		(1.4	)		(169.2	)
Total revenues		1,107.0			772.3		1,404.2		185.7			3,469.2
Benefits and expenses:
Interest credited to policyholder accounts		393.6			432.5		200.8		73.2			1,100.1
Benefits and claims		247.3			—		537.8		27.0			812.1
Policyholder dividends		—			—		87.0		—			87.0
Amortization of DAC		(1.4	)		44.5		158.1		264.4			465.6
Amortization of VOBA and other intangible assets		0.9			8.9		45.0		8.0			62.8
Interest expense		—			—		—		55.3			55.3
Other operating expenses		178.8			150.8		183.9		66.3			579.8
Total benefits and expenses		819.2			636.7		1,212.6		494.2			3,162.7
Income (loss) from continuing operations before federal income tax expense (benefit)		287.8			135.6		191.6		(308.5	)	$	306.5
Less: non-operating net realized investment gains1		—			—		—		(619.1	)
Less: non-operating other-than-temporary impairment losses		—			—		—		574.6
Less: adjustment to amortization related to net realized investment gains and losses		—			—		—		296.5
Less: net loss attributable to noncontrolling interest		—			—		—		52.3
Pre-tax operating earnings (loss)	$	287.8		$	135.6	$	191.6	$	(4.2	)
Assets as of year end	$	48,890.6		$	25,034.7	$	22,115.1	$	2,953.3		$	98,993.7

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).  

2 Includes operating items discussed above.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(in millions)	Individual Investments			Retirement Plans		Individual Protection		Corporate and Other			Total
2008
Revenues:
Policy charges	$	602.9		$	119.9	$	617.7	$	—		$	1,340.5
Premiums		120.2			—		273.9		—			394.1
Net investment income		530.4			650.7		485.8		197.8			1,864.7
Non-operating net realized investment losses1		—			—		—		(386.8	)		(386.8	)
Other-than-temporary impairments losses		—			—		—		(1,130.7	)		(1,130.7	)
Other income2		109.5			0.9		—		(75.6	)		34.8
Total revenues		1,363.0			771.5		1,377.4		(1,395.3	)		2,116.6
Benefits and expenses:
Interest credited to policyholder accounts		379.1			435.9		196.2		161.4			1,172.6
Benefits and claims		378.5			—		489.4		(11.8	)		856.1
Policyholder dividends		—			—		93.1		—			93.1
Amortization of DAC		647.7			40.6		129.9		(126.6	)		691.6
Amortization of VOBA and other intangible assets		7.8			1.3		22.1		(0.3	)		30.9
Interest expense		—			—		—		61.8			61.8
Other operating expenses		189.9			152.3		191.7		97.7			631.6
Total benefits and expenses		1,603.0			630.1		1,122.4		182.2			3,537.7
(Loss) income from continuing operations before federal income tax expense		(240.0	)		141.4		255.0		(1,577.5	)	$	(1,421.1	)
Less: non-operating net realized investment losses1		—			—		—		386.8
Less: non-operating other-than-temporary impairment losses		—			—		—		1,130.7
Less: adjustment to amortization related to net realized investment gains and losses		—			—		—		(139.2	)
Less: net loss attributable to noncontrolling interest		—			—		—		72.3
Pre-tax operating (loss) earnings	$	(240.0	)	$	141.4	$	255.0	$	(126.9	)
Assets as of year end	$	42,508.1		$	22,497.8	$	20,360.3	$	6,437.4		$	91,803.6

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).  

2 Includes operating items discussed above.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2009, 2008 and 2007

(in millions)	Individual Investments		Retirement Plans		Individual Protection		Corporate and Other			Total
2007
Revenues:
Policy charges	$	662.6	$	147.3	$	574.0	$	—		$	1,383.9
Premiums		133.3		—		273.7		—			407.0
Net investment income		642.9		655.0		471.2		423.1			2,192.2
Non-operating net realized investment losses1		—		—		—		(36.9	)		(36.9	)
Other-than-temporary impairments losses		—		—		—		(117.7	)		(117.7	)
Other income2		3.1		—		—		(4.5	)		(1.4	)
Total revenues		1,441.9		802.3		1,318.9		264.0			3,827.1
Benefits and expenses:
Interest credited to policyholder accounts		444.3		443.3		192.0		231.4			1,311.0
Benefits and claims		233.5		—		439.0		—			672.5
Policyholder dividends		—		—		83.1		—			83.1
Amortization of DAC		287.1		27.4		93.1		(25.5	)		382.1
Amortization of VOBA and other intangible assets		5.3		2.5		40.5		0.2			48.5
Interest expense		—		—		—		70.0			70.0
Other operating expenses		194.8		179.9		187.2		68.9			630.8
Total benefits and expenses		1,165.0		653.1		1,034.9		345.0			3,198.0
Income (loss) from continuing operations before federal income tax expense		276.9		149.2		284.0		(81.0	)	$	629.1
Less: non-operating net realized investment losses1		—		—		—		36.9
Less: non-operating other-than-temporary impairment losses		—		—		—		117.7
Less: adjustment to amortization related to net realized investment gains and losses		—		—		—		(25.5	)
Less: net loss attributable to noncontrolling interest		—		—		—		50.9
Pre-tax operating earnings	$	276.9	$	149.2	$	284.0	$	99.0
Assets as of year end	$	56,564.4	$	27,963.2	$	22,874.1	$	10,222.0		$	117,623.7

1 Excluding periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations.  

2 Includes operating items discussed above.  

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

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

As of December 31, 2009 (in millions)

Column A	Column B		Column C		Column D
Type of investment	Cost		Market value		Amount at which shown in the consolidated balance sheet
Fixed maturity securities available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government corporations	$	136.7	$	151.1	$	151.1
U.S. Government agencies		551.3		602.8		602.8
Obligations of states and political subdivisions		567.6		548.9		548.9
Foreign governments		69.9		75.1		75.1
Public utilities		2,487.3		2,598.6		2,598.6
All other corporate		21,290.3		20,773.2		20,773.2
Total fixed maturity securities available-for-sale		25,103.1		24,749.7		24,749.7
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies		28.2		31.5		31.5
Industrial, miscellaneous and all other		1.1		1.9		1.9
Nonredeemable preferred stocks		19.5		19.2		19.2
Total equity securities available-for-sale		48.8		52.6		52.6
Mortgage loans on real estate, net		6,916.4				6,829.0	1
Real estate, net:
Investment properties		11.4				8.9	2
Total real estate, net		11.4				8.9
Policy loans		1,050.4				1,050.4
Other long-term investments		457.5				457.5
Short-term investments, including amounts managed by a related party		1,003.4				1,003.4
Total investments	$	34,591.0			$	34,151.5

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

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

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule III        Supplementary Insurance Information

As of December 31, 2009, 2008 and 2007 and for each of the years then ended (in millions)

Column A	Column B		Column C		Column D			Column E		Column F
Year: Segment	Deferred policy acquisition costs		Future policy benefits, losses, claims and loss expenses		Unearned premiums1			Other policy claims and benefits payable1		Premium revenue
2009
Individual Investments	$	1,911.5	$	10,870.4						$	191.2
Retirement Plans		270.6		11,702.4							—
Individual Protection		1,770.0		8,745.3							278.5
Corporate and Other		31.0		1,831.3
Total	$	3,983.1	$	33,149.4						$	469.7
2008
Individual Investments	$	1,883.0	$	12,476.8						$	120.2
Retirement Plans		290.1		11,497.5							—
Individual Protection		1,734.8		8,350.6							273.9
Corporate and Other		615.9		3,389.6							—
Total	$	4,523.8	$	35,714.5						$	394.1
2007
Individual Investments	$	2,078.1	$	11,316.4						$	133.3
Retirement Plans		292.9		10,973.1							—
Individual Protection		1,637.6		8,191.7							273.7
Corporate and Other		87.0		4,973.4							—
Total	$	4,095.6	$	35,454.6						$	407.0
Column A	Column G		Column H		Column I			Column J		Column K
Year: Segment	Net investment income2		Benefits, claims, losses and settlement expenses		Amortization of deferred policy acquisition costs			Other operating expenses2		Premiums written
2009
Individual Investments	$	562.0	$	640.9	$	(1.4	)	$	179.7
Retirement Plans		679.0		432.5		44.5			159.7
Individual Protection		491.8		825.6		158.1			228.9
Corporate and Other		146.3		100.2		264.4			129.6
Total	$	1,879.1	$	1,999.2	$	465.6		$	697.9
2008
Individual Investments	$	530.4	$	757.6	$	647.7		$	197.7
Retirement Plans		650.7		435.9		40.6			153.6
Individual Protection		485.8		778.7		129.9			213.8
Corporate and Other		197.8		149.6		(126.6	)		159.2
Total	$	1,864.7	$	2,121.8	$	691.6		$	724.3
2007
Individual Investments	$	642.9	$	677.8	$	287.1		$	200.1
Retirement Plans		655.0		443.3		27.4			182.4
Individual Protection		471.2		714.1		93.1			227.7
Corporate and Other		423.1		231.4		(25.5	)		139.1
Total	$	2,192.2	$	2,066.6	$	382.1		$	749.3

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

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

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule IV        Reinsurance

As of December 31, 2009, 2008 and 2007 and for each of the years then ended (dollars in millions)

Column A	Column B		Column C		Column D		Column E		Column F
	Gross amount		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
2009
Life insurance in force	$	208,484.5	$	76,136.2	$	8.2	$	132,356.5	0.0%
Premiums:
Life insurance1	$	549.9	$	80.5	$	0.3	$	469.7	0.1%
Accident and health insurance		212.0		222.7		11.7		1.0	NM
Total	$	761.9	$	303.2	$	12.0	$	470.7	2.5%
2008
Life insurance in force	$	208,071.0	$	75,091.7	$	12.3	$	132,991.6	0.0%
Premiums:
Life insurance1	$	476.8	$	83.7	$	1.0	$	394.1	0.3%
Accident and health insurance		182.9		209.3		26.4		—	NM
Total	$	659.7	$	293.0	$	27.4	$	394.1	7.0%
2007
Life insurance in force	$	200,600.5	$	76,178.6	$	14.0	$	124,435.9	0.0%
Premiums:
Life insurance1	$	497.5	$	92.5	$	2.0	$	407.0	0.5%
Accident and health insurance		289.2		316.8		27.6		—	NM
Total	$	786.7	$	409.3	$	29.6	$	407.0	7.3%

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

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule V        Valuation and Qualifying Accounts

Years ended December 31, 2009, 2008 and 2007 (in millions)

Column A	Column B		Column C				Column D		Column E
Description	Balance at beginning of period		Charged (credited) to costs and expenses		Charged to other accounts		Deductions1		Balance at end of period
2009
Valuation allowances - mortgage loans on real estate	$	42.4	$	84.8	$	—	$	49.8	$	77.4
2008
Valuation allowances - mortgage loans on real estate	$	24.8	$	20.8	$	—	$	3.2	$	42.4
2007
Valuation allowances - mortgage loans on real estate	$	36.0	$	1.1	$	—	$	12.3	$	24.8

1 Amounts represent transfers to real estate owned, recoveries and sales to NMIC.  

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

PART C. OTHER INFORMATION

Item 24. (a) Financial Statements and Exhibits

Nationwide Variable Account-II:

Report of Independent Registered Public Accounting Firm

Statement of Assets, Liabilities and Contract

Owners’ Equity as of December 31, 2009.

Statements of Operations for the year ended December 31, 2009.

Statements of Changes in Contract Owners’ Equity for the years

ended December 31, 2009 and 2008.

Notes to Financial Statements.

Nationwide Life Insurance Company and subsidiaries:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Income (Loss) for the

years ended December 31, 2009, 2008 and

2007.

Consolidated Balance Sheets as of December

31, 2009 and 2008.

Consolidated Statements of Changes in Shareholder’s

Equity as of December 31, 2009, 2008 and 2007.

Consolidated Statements of Cash Flows for

the years ended December 31, 2009, 2008

and 2007.

Notes to Consolidated Financial Statements.

Financial Statement Schedules.

Item 24. (b) Exhibits

(1) Resolution of the Depositor’s Board of Directors authorizing the establishment of the Registrant – Filed with Post-Effective Amendment No. 16 on April 30, 2007 (File No. 333-103093) as Exhibit (1) and hereby incorporated by reference.

(2) Not Applicable.

(3) Underwriting or Distribution of Contracts between the Depositor and NISC as Principal Underwriter – Filed with Post-Effective Amendment No. 16 on April 19, 2007 (File No. 333-103093) as Exhibit (3) and hereby incorporated by reference.

(4) The form of the variable annuity contract – Attached hereto.

(5) Variable Annuity Application – Attached hereto .

(6) Articles of Incorporation of Depositor –

(1) Filed with Post-Effective Amendment No. 16 on April 30, 2007 (File No. 333-103093) as Exhibit (6) and hereby incorporated by reference.

(2) 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.

(3) 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.

(4) 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 with Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc., as amended, dated May 1, 2003, as document "frankfpa99h8.htm".

(5)   Fund Participation Agreement, Service and Institutional Shares, with Janus Aspen Series, dated December 31, 1999, under document “janusfpa99h9a.htm” .

(6)   Amended and Restated Fund Participation Agreement with MFS Variable Insurance Trust and Massachusetts Financial Services Company dated February 1, 2003, as amended, under document “mfsfpa99h11.htm” .

(7)   Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust) dated February 1, 2003, as amended, under document “nwfpa99h12a.htm” .

(8)   Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust), American Funds Insurance Series, and Capital Research and Management Company dated May 1, 2006, under document “nwfpa99h12b.htm” .

(9)   Fund Participation Agreement with Neuberger Berman Advisers Management Trust / Lehman Brothers Advisers Management Trust (formerly, Neuberger Berman Advisers Management Trust) dated January 1, 2006, under document “neuberfpa99h13.htm” .

(10)   Fund Participation Agreement with Oppenheimer Variable Account Funds and Oppenheimer Funds, Inc. dated April 13, 2007, under document “oppenfpa99h14.htm” .

(11)    Fund Participation Agreement with T. Rowe Price Equity Series, Inc., T. Rowe Price International Series, Inc., T. Rowe Price Fixed Income Series, Inc., and T. Rowe Price Investment Services, Inc. dated October 1, 2002, as amended, under document "trowefpa99h15.htm".

The following Fund Participation Agreements were previously filed on September 27, 2007 with pre-effective amendment number 3 of registration statement (333-137202) under Exhibit 26(h), and are hereby incorporated by reference.  For information regarding payments Nationwide receives from underlying mutual funds, please see the "Information on Underlying Mutual Fund Payments" section of the prospectus and/or the underlying mutual fund prospectuses.

(12)   Fund Participation Agreement (Amended and Restated) with Alliance Capital Management L.P. and Alliance-Bernstein Investment Research and Management, Inc. dated June 1, 2003, as document “alliancebernsteinfpa.htm”.

(13)   Fund Participation Agreement with BlackRock (formerly FAM Distributors, Inc. and FAM Variable Series Funds, Inc.), as amended, dated April 13, 2004, as document "blackrockfpa.htm".

(14)   Fund Participation Agreement with PIMCO Variable Insurance Trust and PIMCO Fund Distributors, LLC, as amended, dated March 28, 2002, as document "pimcofpa.htm".

(15)    Fund Participation Agreement with Van Eck Investment Trust, Van Eck Associates Corporation, Van Eck Securities Corporation, as amended, dated September 1, 1989, as document “vaneckfpa.htm”.

(16)   Fund Participation Agreement with Waddell & Reed Services Company, Waddell & Reed, Inc., and W&R Target Funds, Inc., as amended, dated December 1, 2000, as document "waddellreedfpa.htm".

(17)   Fund Participation Agreement with Wells Fargo Management, LLC, Stephens, Inc., as amended, dated November 15, 2004 as document "wellsfargofpa.htm".

The following Fund Participation Agreement is attached hereto.

(18)    Fund Participation Agreement with INVESCO Funds Group, Inc., and INVESCO Distributors, Inc., as amended, dated August 1, 2001.

(9) Opinion of Counsel – Filed with initial Registration Statement on February 12, 2010 (File No. 333-164886) as Exhibit (9) and hereby incorporated by reference .

(10) Consent of Independent Registered Public Accounting Firm – Attached hereto.

(11) Not Applicable.

(12) Not Applicable.

(99) Power of Attorney -Attached hereto.

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-Chief Administrative Officer	Terri L. Hill
Executive Vice President-Chief Human Resources Officer	Gale V. King
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Marketing Officer	James R. Lyski
Executive Vice President-Chief Investment Officer	Gail G. Snyder
Executive Vice President-Finance	Lawrence A. Hilsheimer
Executive Vice President	Mark A. Pizzi
Executive Vice President and Director	Mark R. Thresher
Senior Vice President and Treasurer	Harry H. Hallowell
Senior Vice President-Associate Services	Robert J. Puccio
Senior Vice President-Business Transformation Office	Gregory S. Moran
Senior Vice President-Chief Compliance Officer	Carol Baldwin Moody
Senior Vice President-Chief Financial Officer and Director	Timothy G. Frommeyer
Senior Vice President-Chief Litigation Counsel	Randolph C. Wiseman
Senior Vice President-Chief Risk Officer	Michael W. Mahaffey
Senior Vice President-CIO IT Infrastructure	Robert J. Dickson
Senior Vice President-Customer Insight/Analytic	Paul D. Ballew
Senior Vice President-Customer Relationships	David R. Jahn
Senior Vice President-Division General Counsel	Roger A. Craig
Senior Vice President-Division General Counsel	Thomas W. Dietrich
Senior Vice President-Division General Counsel	Sandra L. Neely
Senior Vice President-Government Relations	Jeffrey D. Rouch
Senior Vice President-Head of Taxation	Pamela A. Biesecker
Senior Vice President-Human Resources	Kim R. Geyer
Senior Vice President-Individual Investments Business Head	Eric S. Henderson
Senior Vice President-Individual Protection Business Head and Director	Peter A. Golato
Senior Vice President-PCIO Information Technology	Srinivas Koushik
Senior Vice President-NF Marketing	Gordon E. Hecker
Senior Vice President-CIO NF Systems	Susan Gueli
Senior Vice President, Chief Financial Officer – Property and Casualty	Michael P. Leach
Senior Vice President-Distribution and Sales	John L. Carter
Senior Vice President-President – NW Retirement Plans	Anne L. Arvia
Senior Vice President-President-Investment Management Group	Michael S. Spangler
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Human Resources	Kim R. Geyer
Senior Vice President-Marketing Services	Jennifer M. Hanley
Senior Vice President-Property and Casualty Personal Lines Product Pricing	J. Lynn Greenstein
Senior Vice President-Property and Casualty/Farm Product Pricing	James R. Burke
Senior Vice President – Internal Audit	Kai V. Monahan
Senior Vice President	Matthew Jauchius
Vice President – Corporate Governance and Secretary	Robert W. Horner, III
Director	Stephen S. Rasmussen

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

One Nationwide Plaza, Columbus, Ohio 43215

Item 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.
1717 Brokerage Services, Inc.	Pennsylvania		The company is a multi-state licensed insurance agency.
AGMC Reinsurance, Ltd.	Turks & Caicos Islands		The company is in the business of reinsurance of mortgage guaranty risks.
ALLIED General Agency Company	Iowa		The company acts as a managing general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.	Iowa		The company is a property and casualty insurance holding company.
ALLIED Property and Casualty Insurance Company	Iowa		The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.	Texas		The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies.
AMCO Insurance Company	Iowa		The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.	Florida		The company is an underwriting manager for ocean cargo and hull insurance.
Atlantic Floridian Insurance Company	Ohio		The company writes personal lines residential property insurance in the State of Florida.
Freedom Specialty Insurance Company	Ohio		The company operates as a multi-line insurance company.
Audenstar Limited	England		The company is an investment holding company.
Champions of the Community, Inc.	Ohio		The company raises money to enable it to make gifts and grants to charitable organizations.
Colonial County Mutual Insurance Company*	Texas		The company underwrites non-standard automobile and motorcycle insurance and various other commercial liability coverages in Texas.
Crestbrook Insurance Company*	Ohio		The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Depositors Insurance Company	Iowa		The company underwrites general property and casualty insurance.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
DVM Insurance Agency, Inc.	California		The company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company.
Farmland Mutual Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Better Health, Inc.  (fka Future Health Holding Company)	Maryland		The company provides population health management.
Gates, McDonald & Company*	Ohio		The company provides services to employers for managing workers’ and unemployment compensation matters and employee leave administration.
Gates, McDonald & Company of New York, Inc.	New York		The company provides workers’ compensation and self-insured claims administration services to employers with exposure in New York.
GatesMcDonald Health Plus Inc.	Ohio		The company provides medical management and cost containment services to employers.
Insurance Intermediaries, Inc.	Ohio		The company is an insurance agency and provides commercial property and casualty brokerage services.
Life REO Holdings, LLC	Ohio		The company is an investment company.
Lone Star General Agency, Inc.	Texas		The company acts as general agent to market nonstandard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
National Casualty Company	Wisconsin		The company underwrites various property and casualty coverage, as well as some individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England		This is a limited liability company organized for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds.  The company is currently inactive.
Nationwide Advantage Mortgage Company*	Iowa		The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America*	Ohio		The company is a property and casualty insurer that writes personal lines business.
Nationwide Agribusiness Insurance Company	Iowa		The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*	Ohio		The purpose of the company is to develop Nationwide Arena and to engage in related development activity.
Nationwide Asset Management Holdings	England and Wales		The company operates as an investment holding company.
Nationwide Asset Management, LLC	Ohio		The company provides investment advisory services as a registered investment adviser to affiliated and non-affiliated clients.

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

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Fund Distributors LLC (successor to Gartmore Distribution Services, Inc.)	Delaware		The company is a limited purpose broker-dealer.
Nationwide Fund Management LLC (successor to Gartmore Investors Services, Inc.)	Delaware		The company provides administration, transfer and dividend disbursing agent services to various mutual fund entities.
Nationwide General Insurance Company	Ohio		The company transacts a general insurance business, except life insurance, and primarily provides automobile and fire insurance to select customers.
Nationwide Global Funds	Luxembourg		The exclusive purpose of the Company is to invest the funds available to it in transferable securities and other assets permitted by law with the aim of spreading investment risks and affording its shareholders the results of the management of its assets.
Nationwide Global Holdings, Inc.	Ohio		The company is a holding company for the international operations of Nationwide.
Nationwide Global Ventures, Inc.	Delaware		The company acts as a holding company.
Nationwide Indemnity Company*	Ohio		The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide insurance organization.
Nationwide Insurance Company of America	Wisconsin		The company is an independent agency personal lines underwriter of property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio		The company transacts general insurance business, except life insurance.
Nationwide International Underwriters	California		The company is a special risks, excess and surplus lines under­writing manager.
Nationwide Investment Advisors, LLC	Ohio		The company provides investment advisory services.
Nationwide Investment Services Corporation**	Oklahoma		This is a limited purpose broker-dealer and distributor of variable annuities and variable life products for Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. The company also provides educational services to retirement plan sponsors and its participants.
Nationwide Life and Annuity Insurance Company**	Ohio		The company engages in underwriting life insurance and granting, purchasing and disposing of annuities.
Nationwide Life Insurance Company*	Ohio		The company pro­vides individual life insurance, group life and health insurance, fixed and variable annuity products and other life insurance products.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Lloyds	Texas		The company markets commercial and property insurance in Texas.
Nationwide Mutual Capital, LLC	Ohio		The company acts as a private equity fund investing in companies for investment purposes and to create strategic opportunities for Nationwide.
Nationwide Mutual Capital I, LLC*	Delaware		The business of the company is to achieve long term capital appreciation through a portfolio of primarily domestic equity investments in financial service and related companies.
Nationwide Mutual Fire Insurance Company	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Mutual Insurance Company*	Ohio		The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Private Equity Fund, LLC	Ohio		The company invests in private equity funds.
Nationwide Property and Casualty Insurance Company	Ohio		The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC	Ohio		The company provides alarm systems and security guard services.
Nationwide Realty Services, Ltd.	Ohio		The company provides relocation services for associates.
Nationwide Realty Investors, Ltd.*	Ohio		The company is engaged in the business of developing, owning and operating real estate and real estate investment.
Nationwide Retirement Solutions, Inc.*	Delaware		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Arizona	Arizona		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio	Ohio		The company provides retirement products, marketing, education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas	Texas		The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Insurance Agency, Inc.	Massachusetts		The company markets and administers deferred compensation plans for public employees.
Nationwide SA Capital Trust	Delaware		The trust acts as a registered investment adviser.
Nationwide Sales Solutions, Inc.	Iowa		The company engages in the direct marketing of property and casualty insurance products.
Nationwide Securities, LLC	Delaware		The company is a registered broker-dealer and provides investment management and administrative services.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Nationwide Separate Accounts, LLC	Delaware		The company has deregistered as an investment adviser and acts as a holding company.
Nationwide Services Company, LLC	Ohio		The company performs shared services functions for the Nationwide organization.
Newhouse Capital Partners, LLC	Delaware		The company is an investment holding company.
Newhouse Capital Partners II, LLC	Delaware		The company is an investment holding company.
NF Reinsurance Ltd.*	Bermuda		The company serves as a captive reinsurer for Nationwide Life Insurance Company’s universal life, term life and annuity business.
NFS Distributors, Inc.	Delaware		The company acts primarily as a holding company for Nationwide Financial Services, Inc.’s distribution companies.
NMC CPC WT Investment, LLC	Delaware		The business of the company is to hold and exercise rights in a specific private equity investment.
NWD Asset Management Holdings, Inc.	Delaware		The company is an investment holding company.
NWD Investment Management, Inc.	Delaware		The company acts as a holding company and provides other business services for the NWD Investments group of companies.
NWD Management & Research Trust	Delaware		The company acts as a holding company for the NWD Investments group of companies and as a registered investment adviser.
NWD MGT, LLC	Delaware		The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to the NWD Investments management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC.
Pension Associates, Inc.	Wisconsin		The company provides pension plan administration and record keeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa		The company is an insurance agency.
Privilege Underwriters, Inc.	Florida		The company acts as a holding company for the PURE Group of insurance companies.
Privilege Underwriters, Reciprocal Exchange	Florida		The company acts as a reciprocal insurance company.
Pure Insurance Company	Florida		The company acts as a captive reinsurance company.
Pure Risk Management, LLC	Florida		The company acts as an attorney-in-fact for Privilege Underwriters Reciprocal Exchange.
Registered Investment Advisors Services, Inc.	Texas		The company is a technology company that facilitates third-party money management services for registered investment advisers.
Retention Alternatives, Ltd.*	Bermuda		The company is a captive insurer and writes first dollar insurance policies in workers’ compensation, general liability and automobile liability for its affiliates in the United States.

COMPANY	STATE/COUNTRY OF ORGANIZATION	NO. VOTING SECURITIES (see attached chart unless otherwise indicated)	PRINCIPAL BUSINESS
Riverview International Group, Inc.	Delaware		The company is an insurance company.
RP&C International, Inc.	Ohio		The company is an investment-banking firm that provides specialist advisory services and innovative financial solutions to public and private companies internationally.
Scottsdale Indemnity Company	Ohio		The company is engaged in a general insurance business, except life insurance.
Scottsdale Insurance Company	Ohio		The company primarily provides excess and surplus lines of property and casualty insurance.
Scottsdale Surplus Lines Insurance Company	Arizona		The company provides excess and surplus lines coverage on a non-admitted basis.
THI Holdings (Delaware), Inc.*	Delaware		The company acts as a holding company for subsidiaries of the Nationwide group of companies.
Titan Auto Insurance of New Mexico, Inc.	New Mexico		The company is an insurance agency that operates employee agent storefronts.
Titan Indemnity Company	Texas		The company is a multi-line insurance company and is operating primarily as a property and casualty insurance company.
Titan Insurance Company	Michigan		The company is a property and casualty insurance company.
Titan Insurance Services, Inc.	Texas		The company is a Texas grandfathered managing general agency.
Veterinary Pet Insurance Company*	California		The company provides pet insurance.
Victoria Automobile Insurance Company	Indiana		The company is a property and casualty insurance company.
Victoria Fire & Casualty Company	Ohio		The company is a property and casualty insurance company.
Victoria National Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Select Insurance Company	Ohio		The company is a property and casualty insurance company.
Victoria Specialty Insurance Company	Ohio		The company is a property and casualty insurance company.
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

Not applicable.

Item 28. Indemnification

Provision is made in Nationwide's Amended and Restated 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
Senior Vice President, Treasurer and Director	James D. Benson
Vice President-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Kathy R. Richards
Associate Vice President-Financial Systems & Treasury Services and Assistant Treasurer	Terry C. Smetzer
Associate Vice President	John J. Humphries, Jr.
Assistant Secretary	Mark E. Hartman
Director	John L. Carter
Director	Eric S. Henderson

The business address of the Directors and Officers of Nationwide Investment Services Corporation is:

One Nationwide Plaza, Columbus, Ohio 43215

(c)

Name of Principal Underwriter	Net Underwriting Discounts and Commissions	Compensation on Redemption or Annuitization	Brokerage Commissions	Compensation
Nationwide Investment Services Corporation	N/A	N/A	N/A	N/A

Item 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.

Nationwide Life Insurance Company represents that the fees and charges deducted under the contract in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred and risks assumed by Nationwide Life Insurance Company.

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT-II, has caused this Registration Statement to be signed on its behalf in the City of Columbus, and State of Ohio, on this 13 th   day of May , 2010.

NATIONWIDE VARIABLE ACCOUNT-II

(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 13 th   day of May , 2010.

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 A. GOLATO
Peter A. 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