UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	File No. 002-75174
Pre-Effective Amendment No.	□
Post-Effective Amendment No. 47	☑

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	File No. 811-03338
Amendment No. 73	☑

(Check appropriate box or boxes.)

Nationwide Multi-Flex Variable Account

(Exact Name of Registrant)

Nationwide Life Insurance Company

(Name of Depositor)

One Nationwide Plaza, Columbus, Ohio 43215

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

(614) 249-7111

Depositor's Telephone Number, including Area Code

Robert W. Horner III, Vice President Corporate Governance and Secretary,
One Nationwide Plaza, Columbus, Ohio 43215

(Name and Address of Agent for Service)

May 1, 2014

Approximate Date of Proposed Public Offering

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

□	immediately upon filing pursuant to paragraph (b)
☑	on May 1, 2014 pursuant to paragraph (b)
□	60 days after filing pursuant to paragraph (a)(1)
□	on (date) pursuant to paragraph (a)(1)

If appropriate, check the following box:

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

NEA Valuebuilder

Individual Deferred Variable Annuity Contracts

Issued by

Nationwide Life Insurance Company

through its

Nationwide Multi-Flex Variable Account

The date of this prospectus is May 1, 2014.

This prospectus contains basic information about the contracts that should be understood before investing. Read this prospectus carefully and keep it for future reference. The contract described in this prospectus is no longer available for purchase.

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

The Statement of Additional Information (dated May 1, 2014), which contains additional information about the contracts and the Variable Account, has been filed with the SEC and is incorporated herein by reference. The table of contents for the Statement of Additional Information is on page 36. To obtain free copies of the Statement of Additional Information or to make any other service requests, contact Nationwide by one of the methods described in Contacting the Service Center.

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. 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.

Variable annuities are not insured by the Federal Deposit Insurance Corporation or any other federal government agency, and are not deposits of, guaranteed by, or insured by the depository institution where offered or any of its affiliates. Variable annuity contracts 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.

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

• American Century Variable Portfolios, Inc.

• Dreyfus

• Dreyfus Variable Investment Fund

• Fidelity Variable Insurance Products Fund

• Franklin Templeton Variable Insurance Products Trust

• Guggenheim Variable Funds Trust

• Invesco

• Janus Aspen Series

• Nationwide Variable Insurance Trust

• Neuberger Berman Advisers Management Trust

• PIMCO Variable Insurance Trust

• Royce Capital Fund

For a complete list of the available Sub-Accounts, refer to Appendix A: Underlying Mutual Funds. For more information on the underlying mutual funds, refer to the prospectus for the mutual fund.

Purchase payments not invested in the Sub-Accounts 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(s) whose length of life determines how long annuity payments are paid.

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.

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

Contract Owner(s) – The person(s) who owns all rights under the contract.

Contract Value – The value of all Accumulation Units in a contract plus any amount held in the Fixed Account and the collateral Fixed Account.

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

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

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

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

General Account – All assets of Nationwide other than those of the Variable Account or in other separate accounts of 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 or Simple IRAs.

Nationwide – Nationwide Life Insurance Company.

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

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

Qualified Plan – A retirement plan that receives favorable tax treatment under Section 401 of the Internal Revenue Code, including Investment-Only Contracts.

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.

Service Center – The department of Nationwide responsible for receiving all service and transaction requests relating to the contract. For service and transaction requests submitted other than by telephone (including fax requests), the Service Center is Nationwide's mail and document processing facility. For service and transaction requests communicated by telephone, the Service Center is Nationwide's operations processing facility. Information on how to contact the Service Center is in the Contacting the Service Center provision.

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

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

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 their current Net Asset Value 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. EST.

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 Multi-Flex Variable Account, a separate account that Nationwide established to hold Contract Owner assets allocated to variable investment options. The Variable Account is divided into Sub-Accounts, each of which invests in 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	7
Synopsis of the Contracts	7
Surrenders/Withdrawals	8
Minimum Initial and Subsequent Purchase Payments	8
Mortality and Expense Risk Charge	8
Administration Charge	8
Actuarial Risk Fee	9
School District Processing Fee	9
Contract Exchange Fee	9
Contract Maintenance Charge	9
Contingent Deferred Sales Charge	9
Underlying Mutual Fund Annual Expenses	9
Annuity Payments	10
Taxation	10
Death Benefit	10
Cancellation of the Contract	10
Condensed Financial Information	10
Financial Statements	10
Nationwide Life Insurance Company	10
Security Distributors, Inc.	10
Investing in the Contract	11
The Variable Account and Underlying Mutual Funds	11
The Fixed Account	12
Contacting the Service Center	13
The Contract in General	13
Distribution, Promotional, and Sales Expenses	14
Underlying Mutual Fund Payments	14
Treatment of Unclaimed Property	15
Profitability	16
Contract Modification	16
Charges and Deductions	16
Mortality and Expense Risk Charge	16
Administration Charge	16
Actuarial Risk Fee	16
School District Processing Fee	16
Contract Exchange Fee	17
Contract Maintenance Charge	17
Contingent Deferred Sales Charge	17
Premium Taxes	18
Ownership and Interests in the Contract	18
Contract Owner	18
Contingent Owner	18
Annuitant	18
Joint Annuitant	19
Beneficiary and Contingent Beneficiary	19
Changes to the Parties to the Contract	19
Operation of the Contract	19
Pricing	19
Application and Allocation of Purchase Payments	20
Determining the Contract Value	20
Transfer Requests	21
Transfer Restrictions	21
Transfers Prior to Annuitization	23
Transfers After Annuitization	23

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Table of Contents (continued)

	Page
Right to Examine and Cancel	24
Allocation of Purchase Payments during Free Look Period	24
Surrender/Withdrawal Prior to Annuitization	24
Partial Withdrawals	24
Full Surrenders	25
Surrender/Withdrawal After Annuitization	25
Withdrawals Under Certain Plan Types	25
Withdrawals Under a Texas Optional Retirement Program or a Louisiana Optional Retirement Plan	25
Withdrawals Under a Qualified Contract or Tax Sheltered Annuity	26
Loan Privilege	26
Minimum and Maximum Loan Amounts	26
Maximum Loan Processing Fee	27
How Loan Requests are Processed	27
Loan Interest	27
Loan Repayment	27
Distributions and Annuity Payments	27
Transferring the Contract	27
Grace Period and Loan Default	27
Assignment	28
Contract Owner Services	28
Asset Rebalancing	28
Dollar Cost Averaging	28
Enhanced Fixed Account Dollar Cost Averaging	29
Systematic Withdrawals	29
Death Benefit	29
Death of Contract Owner	29
Death of Annuitant	30
Death of Contract Owner/Annuitant	30
Death Benefit Payment	30
Death Benefit Calculations	30
Annuity Commencement Date	31
Annuitizing the Contract	32
Annuitization Date	32
Annuitization	32
Fixed Annuity Payments	32
Variable Annuity Payments	32
Frequency and Amount of Annuity Payments	33
Annuity Payment Options	34
Annuity Payment Options Available to All Contracts	34
Statements and Reports	34
Legal Proceedings	35
Nationwide Life Insurance Company	35
Security Distributors, Inc.	36
Contents of Statement of Additional Information	36
Appendix A: Underlying Mutual Funds	38
Appendix B: Condensed Financial Information	42
Appendix C: Contract Types and Tax Information	52
Types of Contracts	52
Federal Tax Considerations	54
Required Distributions	59
Tax Changes	61
State Taxation	62

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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)	7% 1

Range of CDSC over time:

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

Some state jurisdictions require a lower CDSC schedule. Please refer to your contract for state specific information.

Maximum Loan Processing Fee	$25 2
Maximum Premium Tax Charge (as a percentage of purchase payments)	5% 3

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 or Administrative Contract Expenses
Annual Loan Interest Charge	2.25% 4
Maximum Annual Contract Maintenance Charge	$30 5
Maximum Contract Exchange Fee (when applicable)	$40 6
Maximum School District Processing Fee (when applicable)	Greater of $30 or 0.40% of Contract Value7
Variable Account Annual Expenses (assessed as an annualized percentage of Daily Net Assets)8
For contracts issued on or after the later of November 3, 1997 or the date on which state insurance authorities approve applicable contract modifications:
Actuarial Risk Fee	1.30%
For contracts issued prior to November 3, 1997 or on a date prior to which state insurance authorities approve applicable contract modifications:
Mortality and Expense Risk Charge	1.25%
Administration Charge	0.05%
Total Variable Account Annual Expenses	1.30%

¹ Starting with the second Contract Year, the Contract Owner may withdraw without a CDSC the greater of:

• 10% of purchase payments made to the contract; or

• any amount withdrawn to meet minimum distribution requirements for this contract under the Internal Revenue Code.

This free withdrawal privilege is non-cumulative. Free amounts not taken during any given Contract Year cannot be taken as free amounts in a subsequent Contract Year.

The Internal Revenue Code may impose restrictions on surrenders from contracts issued as Tax Sheltered Annuities.

2	Nationwide assesses a loan processing fee at the time each new loan is processed. Loans are only available for contracts issued as Tax Sheltered Annuities or contracts issued to fund Qualified Plans. Loans are not available in all states. In addition, some states may not permit Nationwide to assess a loan processing fee.
3	Nationwide will charge between 0% and 5% of purchase payments for premium taxes levied by state or other government entities. The amount assessed to the contract will equal the amount assessed by the state or government entity.
4	The loan interest rate is determined, based on market conditions, at the time of loan application or issuance. The loan balance in the collateral Fixed Account is credited with interest at 2.25% less than the loan interest rate. Thus, the net loan interest charge is an annual rate of 2.25%, which is applied against the outstanding loan balance.
5	The Contract Maintenance Charge is deducted annually from all contracts on each Contract Anniversary and upon a full surrender of the contract.
6	Nationwide may assess a contract exchange fee upon exchange of the contract for another Nationwide contract.
7	Nationwide may assess a school district processing fee to reimburse it for charges assessed to Nationwide by individual school districts for the processing of employee payroll deductions.

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⁸ These charges apply only to Sub-Account allocations. They do not apply to allocations made to the Fixed Account. They are charged on a daily basis at the annualized rate noted above.

Underlying Mutual Fund Annual Expenses

The next table provides the minimum and maximum total operating expenses, as of December 31, 2013, charged by the underlying mutual funds that the Contract Owner 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)	0.29%	2.04%

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

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 which, if reflected, would result in higher expenses.

The Example assumes:

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

• a 5% return each year;

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

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

• the CDSC schedule; and

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

The Example does not reflect the Maximum Contract Exchange Fee or the Maximum School District Processing Fee.

	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 (2.04%)	$982	$1,560	$2,157	$4,031	*	$1,160	$1,957	$4,031	$382	$1,160	$1,957	$4,031
Minimum Total Underlying Mutual Fund Operating Expenses (0.29%)	$798	$1,013	$1,254	$2,277	*	$ 613	$1,054	$2,277	$198	$ 613	$1,054	$2,277

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

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 Deferred Variable Annuity Contracts.

The contracts may be issued as either individual or group contracts. In those states where contracts are issued as group contracts, references throughout this prospectus to "contract(s)" will also mean "certificate(s)" and "Contract Owner" will mean "participant" unless the plan permits or requires the Contract Owner to exercise contract rights under the terms of the plan.

The contracts can be categorized as:

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• Individual Retirement Annuities ("IRAs")

• Non-Qualified Contracts

• Qualified Plans

• Roth IRAs

• Simplified Employee Pension IRAs ("SEP IRAs")

• Tax Sheltered Annuities

Nationwde no longer issues the contract as a Tax Sheltered Annuity, except to participants in ERISA and ORP plans that have purchased a Nationwide individual annuity contract before September 25, 2007.

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

The contracts described in this prospectus are no longer available for purchase.

Surrenders/Withdrawals

Contract Owners may generally withdraw some or all of their Contract Value at any time prior to annuitization by notifying the Service Center in writing (see Surrender/Withdrawal Prior to Annuitization). After the Annuitization Date, withdrawals are not permitted (see Surrender/Withdrawal After Annuitization).

Minimum Initial and Subsequent Purchase Payments

For Non-Qualified Contracts, the minimum initial purchase payment is $1,500. For all other contract types, there is no minimum initial purchase payment. For Non-Qualified Contracts, the minimum subsequent purchase payment is $10. For all other contract types, there is no minimum subsequent purchase payment.

Some states have different minimum initial and subsequent purchase payment amounts, and subsequent purchase payments may not be permitted in all states. Contact the Service Center for information on subsequent purchase payment requirements in a particular state.

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 or owned by any one Contract Owner 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 Nationwide does not accept a purchase payment under these guidelines, the purchase payment will be immediately returned in its entirety in the same manner as it was received. If Nationwide accepts the purchase payment, it will be applied to the contract immediately and will receive the next calculated Accumulation Unit value. Any references in this prospectus to purchase payment amounts in excess of $1,000,000 are assumed to have been approved by Nationwide.

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

Mortality and Expense Risk Charge

For contracts issued before November 3, 1997, or before state approval of applicable contract modifications (whichever is later), Nationwide deducts a Mortality and Expense Risk Charge equal to an annualized rate of 1.25% of the Daily Net Assets. The Mortality and Expense Risk Charge 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. 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.

Administration Charge

For contracts issued before November 3, 1997, or before state approval of applicable contract modifications (whichever is later), Nationwide deducts an Administrative Charge equal to an annualized rate of 0.05% of the Daily Net Assets. 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.

8

Actuarial Risk Fee

For contracts issued on or after the later of November 3, 1997, or the date of state approval of applicable contract modifications (whichever is later), Nationwide deducts an Actuarial Risk Fee equal to an annualized rate of 1.30% of the Daily Net Assets. The Actuarial Risk Fee compensates Nationwide for for actuarial risks, including administrative costs it incurs relating to contract issuance and maintenance, and mortality risk expenses. Nationwide may realize a profit from this charge.

School District Processing Fee

For contracts issued on or after the later of November 3, 1997 or the date of state approval of applicable contract modifications (whichever is later), Nationwide may charge against the contract any charges assessed to Nationwide by individual school districts for the processing of employee payroll deductions.

This charge will not exceed the greater of $30 or 0.40% of the Contract Value. This charge will never exceed the exact amount billed to Nationwide by school districts for this service.

Nationwide will deduct these charges from the contract:

(1)	at the time the contract is surrendered;
(2)	annually;
(3)	at annuitization; or
(4)	on any other date Nationwide becomes subject to these charges.

Nationwide will determine the method that will be used to recoup these expenses. It will be at Nationwide's sole discretion and may be changed without notice to Contract Owners.

Contract Exchange Fee

If a Contract Owner chooses to exchange the contract for another Nationwide contract (or a contract of any of its affiliates), Nationwide will make a determination as to the eligibility of such an exchange. In making the determination, Nationwide will apply its rules and regulations, which may include assessing a reasonable processing fee for the exchange. This fee will never exceed $40. The contract exchange fee will be in addition to any Contract Maintenance Charge that may be applicable.

Contract Maintenance Charge

A $30 Contract Maintenance Charge is assessed on each Contract Anniversary and upon full surrender of the contract.

Nationwide will waive the Contract Maintenance Charge for:

(1)	Tax Sheltered Annuities issued on or after the later of May 1, 1997, or the date state insurance authorities in states having a Unified Billing Authority approve corresponding contract modifications; or
(2)	contracts issued to fund Qualified Plans (as defined by Section 401(k) of the Internal Revenue Code) on or after the later of November 3, 1997, or the date on which state insurance authorities approve applicable contract modifications.

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. The amount of the CDSC will not exceed 7% of purchase payments withdrawn.

Underlying Mutual Fund Annual Expenses

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

9

Annuity Payments

On the Annuitization Date, annuity payments begin (see Annuitizing the Contract). Annuity payments will be based on the annuity payment option chosen prior to annuitization. Nationwide will send annuity payments no later than seven days after each annuity payment date.

Taxation

How distributions from an annuity contract are taxed depends on the type of contract issued and the purpose for which the contract is purchased. Generally, distributions from an annuity contract, including the payment of death benefits, are taxable to the extent they exceed investment in the contract. Nationwide will charge against the contract any premium taxes levied by any governmental authority. Premium tax rates currently range from 0% to 5% (see Premium Taxes and Appendix C: Contract Types and Tax Information).

Death Benefit

The contract contains a standard death benefit (the greatest of (i) Contract Value, (ii) net purchase payments, or (iii) Contract Value as of the most recent five-year Contract Anniversary before the Annuitant's 75th birthday) at no additional charge.

Cancellation of the Contract

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 the purchase is a replacement of another annuity contract.

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

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. Refer to Appendix B: Condensed Financial Information for Accumulation Unit value information.

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 the Service Center.

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. 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. 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.

Security Distributors, Inc.

The contracts are distributed by the general distributor, Security Distributors, Inc. ("SDI"), One Security Benefit Place, Topeka, Kansas, 66636-0001. SDI is registered as a broker/dealer with the NASD and is a wholly-owned subsidiary of Security Benefit Group, Inc., a financial services holding company wholly owned by Security Benefit Life Insurance Company.

10

Investing in the Contract

The Variable Account and Underlying Mutual Funds

Nationwide Multi-Flex Variable Account is a variable account that invests in the underlying mutual funds listed in Appendix A: Underlying Mutual Funds. Nationwide established the Variable Account on 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 of which invests in shares of 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 mutual funds free of charge at any time by contacting the Service Center. 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 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.

Voting Rights

Contract Owners with assets allocated to Sub-Accounts 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 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.

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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 and/or transfers allocated to the Fixed Account at its sole discretion. Generally, Nationwide will invoke this right when interest rates are low by historical standards. The Fixed Account may not be available in every state.

Nationwide reserves the right to refuse transfers to the Fixed Account if the Fixed Account is (or would be after the transfer) equal to or greater than 25% of the Contract Value at the time the transfer is requested. Generally, Nationwide will invoke this right when interest rates are low by historical standards.

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

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

• Variable Account to Fixed Rate – Allocations transferred from any of the Sub-Accounts to the Fixed Account may receive a different rate. The rate may be lower than the New Money Rate. There may be limits on the amount and frequency of movements from the Sub-Accounts 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 a Contract Owner's Fixed Account allocation 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 investment 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.

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The guaranteed rate for any purchase payment will be effective for not less than 12 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.

Nationwide guarantees that the value of Fixed Account allocations will not be less than the amount of the purchase payments allocated to the Fixed Account, plus interest credited as described above, less any withdrawals and any applicable charges.

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 three months beyond the one-year anniversary because guaranteed terms end on the last day of a calendar quarter.

Contacting the Service Center

All inquiries, paperwork, information requests, service requests, and transaction requests should be made to the Service Center:

• by telephone at 1-800-NEA-VALU (1-800-632-8258) (TDD 1-800-238-3035)

• by mail to NEA Valuebuilder Program, One Security Benefit Place, Topeka, Kansas 66636-0001

• by fax at 1-785-438-5177.

Nationwide reserves the right to restrict or remove the ability to submit service requests via phone or fax upon written notice.

Not all methods of communication are available for all types of requests. To determine which methods are permitted for a particular request, refer to the specific transaction provision in this prospectus or call the Service Center. Requests submitted by means other than described in this prospectus could be returned or delayed.

Service and transaction requests will generally be processed on the Valuation Date they are received at the Service Center as long as the request is in good order. Good order generally means that all necessary information to process the request is complete and in a form acceptable to Nationwide. If a request is not in good order, Nationwide will take reasonable actions to obtain the information necessary to process the request. Requests that are not in good order may be delayed or returned. Nationwide reserves the right to process any purchase payment or withdrawal request sent to a location other than the Service Center on the Valuation Date it is received at the Service Center. On any day the post office is closed, Nationwide is unable to retrieve service and transaction requests that are submitted by mail. This will result in a delay of the delivery of those requests to the Service Center.

Nationwide may be required to provide information about one or more contracts to government regulators. If mandated under applicable law, Nationwide may be required to reject a purchase payment and to refuse to process transaction requests for transfers, withdrawals, loans, and/or death benefits until instructed otherwise by the appropriate regulator.

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 record telephone requests. Telephone and computer systems may not always be available. Any telephone system or computer can experience outages or slowdowns for a variety of reasons. The outages or slowdowns could prevent or delay processing. Although Nationwide has taken precautions to support heavy use, it is still possible to incur an outage or delay. To avoid technical difficulties, submit transaction requests by mail.

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.

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Due to state law variations, the options and benefits described in this prospectus may vary or may not be available depending on the state in which the contract is issued. Possible state law variations include, but are not limited to, minimum initial and subsequent purchase payment amounts, investment options, availability of certain optional benefits, free look rights, and annuity payment options. This prospectus describes all the material features of the contract. To review a copy of the contract and any endorsements, contact the Service Center.

The annuity described in this prospectus is intended to provide benefits to a single individual and his/her beneficiaries. It is not intended to be used by institutional investors, in connection with other Nationwide contracts that have the same Annuitant, or in connection with other Nationwide contracts that have different Annuitants, but the same Contract Owner. If Nationwide determines that the risks it intended to assume in issuing the contract have been altered by misusing the contract as described above, Nationwide reserves the right to take any action it deems necessary to reduce or eliminate the altered risk. Nationwide also reserves the right to take any action it deems necessary to reduce or eliminate altered risk resulting from materially false, misleading, incomplete, or otherwise deficient information provided by the Contract Owner.

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. The contracts associated with this prospectus 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 purchasers understand all the costs associated with owning a contract, and if and how those costs change during the lifetime of the contract. Contract charges may not be the same in later Contract Years as they are in early Contract Years. The various contract 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 9.2% of purchase payments. Note: The individual registered representatives typically receive only a portion of this amount; the remainder is retained by the firm. Nationwide may also, instead of a premium-based commission, pay an asset-based commission (sometimes referred to as "trails" or "residuals"), or a combination of the two.

In addition to or partially in lieu of commission, Nationwide may also pay the selling firms a marketing allowance, which is based on the firm's ability and demonstrated willingness to promote and market Nationwide's products. How any marketing allowance is spent is determined by the firm, but generally will be used to finance firm activities that may contribute to the promotion and marketing of Nationwide's products. For more information on the exact compensation arrangement associated with this contract, consult your sales 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.

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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 Nationwide 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 it determined the charges imposed under the contracts (apart from fees and expenses imposed by the underlying mutual funds). Without these payments, Nationwide would have imposed higher charges under the contract.

Amount of Payments Nationwide Receives

For the year ended December 31, 2013, the underlying mutual fund payments Nationwide and its affiliates received from the underlying mutual funds did not exceed 0.75% (as a percentage of the average Daily Net Assets invested in the underlying mutual funds) offered through this contract or other variable contracts that Nationwide and its affiliates issue. Payments from investment advisers or subadvisers to participate in educational and/or marketing activities have not been taken into account in this percentage.

Most underlying mutual funds or their affiliates have agreed to make payments to 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).

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 a Nationwide affiliate or whether the underlying mutual fund, its adviser, its subadviser(s), or an affiliate will make payments to Nationwide or its affiliates.

There may be underlying mutual funds with lower fees, as well as other variable contracts that offer underlying mutual funds with lower fees. The purchaser should consider all of the fees and charges of the contract in relation to its features and benefits when making a decision to invest. Note: Higher contract and underlying mutual fund fees and charges have a direct effect on and may lower investment performance.

Treatment of Unclaimed Property

Every state has unclaimed property laws which generally declare annuity contracts to be abandoned after a period of inactivity of three to five years from the contract's Annuity Commencement Date or the date Nationwide becomes informed that a death benefit is due and payable. For example, if the payment of a death benefit has been triggered, but, if after a thorough search, Nationwide is still unable to locate the beneficiary of the death benefit, or the beneficiary does not come forward to claim the death benefit in a timely manner, Nationwide will escheat the death benefit to the abandoned

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property division or unclaimed property office of the state in which the beneficiary or the Contract Owner last resided, as shown on Nationwide's books and records, or to Ohio, Nationwide's state of domicile. If a claim is subsequently made, the state is obligated to pay any such amount (without interest) to the designated recipient upon presentation of proper documentation.

To prevent escheatment, it is important to update beneficiary designations - including complete names, complete addresses, phone numbers, and social security numbers - as they change. Such updates should be sent to the Service Center.

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.

Charges and Deductions

Mortality and Expense Risk Charge

For contracts issued before November 3, 1997, or before state approval of applicable contract modifications (whichever is later), Nationwide deducts a Mortality and Expense Risk Charge equal to an annualized rate of 1.25% of the Daily Net Assets. The Mortality and Expense Risk Charge 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. 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.

Administration Charge

For contracts issued before November 3, 1997, or before state approval of applicable contract modifications (whichever is later), Nationwide deducts an Administrative Charge equal to an annualized rate of 0.05% of the Daily Net Assets. 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.

Actuarial Risk Fee

For contracts issued on or after the later of November 3, 1997, or the date of state approval of applicable contract modifications (whichever is later), Nationwide deducts an Actuarial Risk Fee equal to an annualized rate of 1.30% of the Daily Net Assets. The Actuarial Risk Fee compensates Nationwide for for actuarial risks, including administrative costs it incurs relating to contract issuance and maintenance, and mortality risk expenses. Nationwide may realize a profit from this charge.

School District Processing Fee

For contracts issued on or after the later of November 3, 1997 or the date of state approval of applicable contract modifications (whichever is later), Nationwide may charge against the contract any charges assessed to Nationwide by individual school districts for the processing of employee payroll deductions.

This charge will not exceed the greater of $30 or 0.40% of the Contract Value. This charge will never exceed the exact amount billed to Nationwide by school districts for this service.

Nationwide will deduct these charges from the contract:

(1)	at the time the contract is surrendered;
(2)	annually;

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(3)	at annuitization; or
(4)	on any other date Nationwide becomes subject to these charges.

Nationwide will determine the method that will be used to recoup these expenses. It will be at Nationwide's sole discretion and may be changed without notice to Contract Owners.

Contract Exchange Fee

If a Contract Owner chooses to exchange the contract for another Nationwide contract (or a contract of any of its affiliates), Nationwide will make a determination as to the eligibility of such an exchange. In making the determination, Nationwide will apply its rules and regulations, which may include assessing a reasonable processing fee for the exchange. This fee will never exceed $40. The contract exchange fee will be in addition to any Contract Maintenance Charge that may be applicable.

Contract Maintenance Charge

A $30 Contract Maintenance Charge is assessed on each Contract Anniversary and upon full surrender of the contract.

This charge reimburses Nationwide for administrative expenses involved in issuing and maintaining the contract.

Nationwide will waive the Contract Maintenance Charge for:

(1)	Tax Sheltered Annuities issued on or after the later of May 1, 1997, or the date state insurance authorities in states having a Unified Billing Authority approve corresponding contract modifications; or
(2)	contracts issued to fund Qualified Plans (as defined by Section 401(k) of the Internal Revenue Code) on or after the later of November 3, 1997, or the date on which state insurance authorities approve applicable contract modifications.

The deduction of the Contract Maintenance Charge will be taken proportionally 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 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 contract. However, if any part of the contract is withdrawn, Nationwide may deduct a CDSC. The CDSC will not exceed 7% of purchase payments withdrawn.

The CDSC is calculated by multiplying the applicable CDSC percentage (noted in the following table) by the amount of purchase payments withdrawn. For purposes of calculating the CDSC, withdrawals are considered to come first from the oldest purchase payment made to the contract, then the next oldest purchase payment, and so forth. CDSC provisions vary by state. Refer to the contract for state specific information.

The CDSC applies as follows:

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

Earnings are not subject to the CDSC, but may not be distributed prior to the distribution of all purchase payments. (For tax purposes, a withdrawal is usually treated as a withdrawal of earnings first.)

The CDSC is used to cover sales expenses, including commissions, production of sales material, and other promotional expenses. 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

Beginning with the second Contract Year, Contract Owner may withdraw without a CDSC the greater of:

(a)	an amount equal to 10% of all purchase payments made to the contract; or
(b)	an amount withdrawn to meet minimum distribution requirements for this contract under the Internal Revenue Code.

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This free withdrawal privilege is non-cumulative. Free amounts not taken during any 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 annuitization;
(2)	upon payment of a death benefit; or
(3)	from any values which have been held under a contract for at least seven years.

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

For Tax Sheltered Annuities, contracts issued to Qualified Plans, and SEP IRAs, Nationwide will waive the CDSC when:

• the plan participant experiences a case of hardship (as provided in Internal Revenue Code Section 403(b) and as defined for purposes of Internal Revenue Code Section 401(k));

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

• the plan participant attains age 59½ and has participated in the contract for at least five years, as determined from the Contract Anniversary immediately preceding the distribution;

• the plan participant has participated in the contract for at least 15 years as determined from the Contract Anniversary immediately preceding the distribution;

• the plan participant dies; or

• the contract is annuitized after two years from the inception of the contract.

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% and vary from state to state. 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 taxes may be deducted from death benefit proceeds.

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.

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.

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 78 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.

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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 (and contingent annuitant, if applicable) dies before the Annuitization Date. 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);

• Contingent Owner;

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

• Contingent Annuitant;

• beneficiary; or

• contingent beneficiary.

The Contract Owner must submit the request to Nationwide in writing and Nationwide must receive the request at the Service Center 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 (unless otherwise specified by the Contract Owner), 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.

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.

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

Pricing

Generally, Nationwide prices Accumulation Units 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

• Martin Luther King, Jr. Day

• Presidents' Day

• Good Friday

• Memorial Day

• Independence Day

• Labor Day

• Thanksgiving

• Christmas

Nationwide also will not price purchase payments, withdrawals, 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.

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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 will be priced at the Accumulation Unit value next determined no later than two business days after receipt of an order to purchase if the application and all necessary information are complete and are received at the Service Center before the close of the New York Stock Exchange, which generally occurs at 4:00 p.m. EST. If the order is received after the close of the New York Stock Exchange, the initial purchase payment will be priced within two business days after the next Valuation Date.

If an incomplete application is not completed within five business days after receipt at the Service Center, 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.

Generally, initial purchase payments are allocated according to Contract Owner instructions on the application. However, 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 the Service Center (along with all necessary information) before the close of the New York Stock Exchange on any Valuation Date will be priced at the Accumulation Unit value next determined after receipt of the purchase payment. If a subsequent purchase payment is received at the Service Center (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 after the time of application by submitting a written request to the Service Center. 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.

Determining the Contract Value

The Contract Value is the sum of the value of amounts allocated to the Sub-Accounts plus any amount held in the Fixed Account and the collateral Fixed Account. 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 Sub-Accounts for the current Valuation Period and multiplying that result with the Accumulation Unit values determined on the previous Valuation Period. For each Sub-Account, the Net Investment Factor is 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.

Nationwide uses the Net Investment Factor as a way to calculate the investment performance of a Sub-Account from Valuation Period to Valuation Period.

The Net Investment Factor for any particular Sub-Account before the Annuitization Date 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

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(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 Variable Account charges, which is equal to 1.30% of the Daily Net Assets.

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, minus amounts previously transferred or withdrawn from the Fixed Account;
(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 or over the telephone to the Service Center. Nationwide may restrict or withdraw the telephone transfer privilege at any time.

Generally, Sub-Account transfers will receive the Accumulation Unit value next computed after the transfer request is received at the Service Center. However, if a contract that is limited to submitting transfer requests via U.S. mail submits a transfer request via telephone pursuant to Nationwide's one-day delay policy, the transfer will be executed on the next Valuation Date after the exchange request is received at the Service Center (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 investment in underlying mutual funds that are designed specifically to support active trading strategies.

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

• the dilution of the value of the investors' interests in the underlying mutual fund;

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

• increased administrative costs due to frequent purchases and redemptions.

To protect investors in this contract from the negative impact of these practices, Nationwide has implemented, or reserves the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. Nationwide makes no assurances that all risks associated with short-term trading will be completely eliminated by these processes and/or restrictions.

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

Redemption Fees

Some underlying mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to the Sub-Account. The fee is assessed against the amount transferred and is paid to the underlying mutual fund. Redemption fees compensate the underlying mutual fund for any negative impact on fund performance resulting from short-term trading.

None of the underlying mutual funds assess a Short-Term Trading Fee.

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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 investment options in one day, this counts as one transfer event. A single transfer occurring on a given trading day and involving only two investment options 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
Six 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 two 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 two consecutive calendar quarters OR More than 20 transfer events in one calendar year	Nationwide will automatically limit the Contract Owner to submitting transfer requests via U.S. mail on a Nationwide issued form.

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

Each January 1, 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 advisors/representatives manage the assets of multiple Nationwide contracts pursuant to trading authority granted or conveyed by multiple Contract Owners. These multi-contract advisors will generally be required by Nationwide to submit all transfer requests via U.S. mail.

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

Other Restrictions

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

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

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

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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 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 a specific Sub-Account upon instruction from the underlying mutual fund in which that Sub-Account invests. 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. If an underlying mutual fund refuses to accept a purchase or request to exchange into the Sub-Account associated with the underlying mutual fund submitted by Nationwide, Nationwide will keep any affected Contract Owner in their current Sub-Account 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.

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 payment or transfer of assets from the Fixed Account for a period of up to six months from the date of the withdrawal or transfer request.

Transfers from the Sub-Accounts

A Contract Owner may request to transfer allocations from the Sub-Accounts to the Fixed Account at any time.

Normally, Nationwide will not restrict transfers from the Sub-Accounts to the Fixed Account; however, Nationwide may establish a maximum transfer limit from the Variable Account to the Fixed Account. Nationwide reserves the right to refuse transfers to the Fixed Account if the Fixed Account value is (or would be after the transfer) equal to or greater than 25% of the Contract Value at the time the transfer is requested. Generally, Nationwide will invoke this right when interest rates are low by historical standards.

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 once per calendar year.

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Right to Examine and Cancel

If the Contract Owner elects to cancel the contract, he/she may return it to the Service Center 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 the Service Center 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 withdrawals from the contract and any applicable federal and state income tax withholding.

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 withdrawals from the contract and any applicable federal and state income tax withholding.

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/Withdrawal Prior to Annuitization

Prior to annuitization and before the Annuitant's death, Contract Owners may generally withdraw some or all of their Contract Value. Withdrawals from the contract may be subject to federal income tax and/or a tax penalty (see Appendix C: Contract Types and Tax Information). Withdrawal requests may be submitted in writing or by telephone to the Service Center and Nationwide may require additional information. Requests submitted by telephone will be subject to dollar amount limitations and may be subject to payment and other restrictions to prevent fraud. Nationwide reserves the right to require written requests to be submitted on current Nationwide forms for withdrawals. Nationwide reserves the right to remove the ability to submit requests by telephone upon written notice. Contact the Service Center for current limitations and restrictions. When taking a full surrender, Nationwide may require that the contract accompany the request. Nationwide may require a signature guarantee.

Surrender and withdrawal requests will receive the Accumulation Unit value next determined at the end of the current Valuation Period if the request and all necessary information is received at the Service Center before the close of the New York Stock Exchange (generally, 4:00 pm EST). If the request and all necessary information is received after the close of the New York Stock Exchange, the request will receive the Accumulation Unit value determined at the end of the next Valuation Day.

Nationwide will pay any amounts withdrawn from the Sub-Accounts within seven days after the request is received in good order at the Service Center (see Determining the Contract Value). 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 or transfer of assets from the Fixed Account for a period of up to six months from the date of the withdrawal or transfer request.

Partial Withdrawals

If a Contract Owner requests a partial withdrawal, Nationwide will redeem 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 withdrawal request, unless Nationwide is instructed otherwise.

Partial withdrawals 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.

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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 Withdrawals to Pay Investment Advisory Fees

Some Contract Owners utilize an investment advisor(s) to manage their assets, for which the investment advisor assesses a fee. Investment advisors are not endorsed or affiliated with Nationwide and Nationwide makes no representation as to their qualifications. The fees for these investment advisory services are specified in the respective account agreements and are separate from and in addition to the contract fees and expenses described in this prospectus. Some Contract Owners authorize their investment advisor to take a partial withdrawal(s) from the contract in order to collect investment advisory fees. Withdrawals 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

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

• the investment performance of the underlying mutual funds

• amounts allocated to the Fixed Account and any interest credited

• a $30 Contract Maintenance Charge

• any outstanding loan balance plus accrued interest

A CDSC may apply.

Surrender/Withdrawal After Annuitization

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

Withdrawals Under Certain Plan Types

Withdrawals Under a Texas Optional Retirement Program or a Louisiana Optional Retirement Plan

Redemption restrictions apply to contracts issued under the Texas Optional Retirement Program or the Louisiana Optional Retirement Plan.

The Texas Attorney General has ruled that participants in contracts issued under the Texas Optional Retirement Program may only take withdrawals if:

• the participant dies;

• the participant retires;

• the participant terminates employment due to total disability; or

• the participant that works in a Texas public institution of higher education terminates employment.

A participant under a contract issued under the Louisiana Optional Retirement Plan may only take distributions from the contract upon retirement or termination of employment. All retirement benefits under this type of plan must be paid as lifetime income; lump sum cash payments are not permitted, except for death benefits.

Due to these restrictions, a participant under either of these plans will not be able to withdraw Cash Value from the contract unless one of the applicable conditions is met. However, Contract Value may be transferred to other carriers, subject to any CDSC.

Nationwide issues this contract to participants in the Texas Optional Retirement Program in reliance upon and in compliance with Rule 6c-7 of the Investment Company Act of 1940. Nationwide issues this contract to participants in the Louisiana Optional Retirement Plan in reliance upon and in compliance with an exemptive order that Nationwide received from the SEC on August 22, 1990.

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Withdrawals Under a Qualified Contract or Tax Sheltered Annuity

Contract Owners of a Tax Sheltered Annuity may withdraw part or all of their Contract Value before the earlier of the Annuitization Date or the Annuitant's death, except as provided below:

(A) Contract Value attributable to contributions made under a qualified cash or deferred arrangement (within the meaning of Internal Revenue Code Section 402(g)(3)(A)), a salary reduction agreement (within the meaning of Internal Revenue Code Section 402(g)(3)(C)), or transfers from a Custodial Account (described in Section 403(b)(7) of the Internal Revenue Code), may be withdrawn only:

(1)	when the Contract Owner reaches age 59½, separates from service, dies, or becomes disabled (within the meaning of Internal Revenue Code Section 72(m)(7)); or
(2)	in the case of hardship (as defined for purposes of Internal Revenue Code Section 401(k)), provided that any such hardship surrender may not include any income earned on salary reduction contributions.

(B) The withdrawal limitations described previously also apply to:

(1)	salary reduction contributions to Tax Sheltered Annuities made for plan years beginning after December 31, 1988;
(2)	earnings credited to such contracts after the last plan year beginning before January 1, 1989, on amounts attributable to salary reduction contributions; and
(3)	all amounts transferred from Internal Revenue Code Section 403(b)(7) Custodial Accounts (except that earnings and employer contributions as of December 31, 1988 in such Custodial Accounts may be withdrawn in the case of hardship).

Any distribution other than the above, including a free look cancellation of the contract (when available) may result in taxes, penalties, and/or retroactive disqualification of a Qualified Contract or Tax Sheltered Annuity.

In order to prevent disqualification of a Tax Sheltered Annuity after a free look cancellation, Nationwide will transfer the proceeds to another Tax Sheltered Annuity upon proper direction by the Contract Owner.

Withdrawal provisions may be modified pursuant to the plan terms and tax provisions of the Internal Revenue Code when a contract is issued to fund a qualified plan.

These provisions explain Nationwide's understanding of current withdrawal restrictions. These restrictions may change.

Distributions pursuant to Qualified Domestic Relations Orders will not violate the restrictions stated previously.

Contract provisions may be modified pursuant to plan terms when the contract is issued to fund a qualified plan.

Loan Privilege

The loan privilege is only available to owners of contracts issued to Qualified Plans and Tax Sheltered Annuities. Loans may be taken from the Contract Value beginning 30 days after the contract is issued up to the Annuitization Date. Loans are subject to the terms of the contract, the plan, and the Internal Revenue Code. Nationwide may modify the terms of a loan to comply with changes in applicable law. Loans are not available in all states.

Minimum and Maximum Loan Amounts

Contract Owners may borrow a minimum of $1,000, unless Nationwide is required by law to allow a lesser minimum amount. Each loan must individually satisfy the contract minimum amount.

Nationwide will calculate the maximum nontaxable loan amount based upon information provided by the participant or the employer. Loans may be taxable if a participant has additional loans from other plans. The total of all outstanding loans must not exceed the following limits:

	Contract Values	Maximum Outstanding Loan Balance Allowed
Non-ERISA Plans	up to $20,000	up to 80% of Contract Value (not more than $10,000)
	$20,000 and over	up to 50% of Contract Value (not more than $50,000*)
ERISA Plans	All	up to 50% of Contract Value (not more than $50,000*)

* The $50,000 limits will be reduced by the highest outstanding balance owed during the previous 12 months.

For salary reduction Tax Sheltered Annuities, loans may be secured only by the Contract Value.

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Maximum Loan Processing Fee

Nationwide charges a Loan Processing Fee at the time each new loan is processed. The Loan Processing Fee will not exceed $25 per loan processed. This fee compensates Nationwide for expenses related to administering and processing loans.

The fee is taken from all of the investment options in proportion to the Contract Value at the time the loan is processed.

How Loan Requests are Processed

All loans are made from the collateral Fixed Account. As collateral for the loan, Nationwide transfers Accumulation Units in proportion to the assets in each Sub-Account to the collateral Fixed Account until the requested amount is reached.

If there are not enough Accumulation Units available in the contract to reach the requested loan amount, Nationwide next transfers Contract Value from the Fixed Account. Contract Value transferred from the Fixed Account to meet the requested loan amount is not subject to the Fixed Account transfer limitations otherwise applicable under the contract.

No CDSC will be deducted on transfers related to loan processing.

Loan Interest

The outstanding loan balance in the collateral Fixed Account is credited with interest until the loan is repaid in full. The credited interest rate will be 2.25% less than the loan interest rate fixed by Nationwide. The credited interest rate is guaranteed never to fall below the minimum interest rate required by applicable state law.

Specific loan terms are disclosed at the time of loan application or issuance.

Loan Repayment

Loans must be repaid in five years. However, if the loan is used to purchase the Contract Owner's principal residence, the Contract Owner has 15 years to repay the loan.

Contract Owners must identify loan repayments as loan repayments or they will be treated as purchase payments and will not reduce the outstanding loan. Payments must be substantially level and made at least quarterly.

Loan repayments will consist of principal and interest in amounts set forth in the loan agreement. Repayments are allocated to the Sub-Accounts in accordance with the contract, unless Nationwide and the Contract Owner have agreed to amend the contract at a later date on a case by case basis.

Distributions and Annuity Payments

Distributions made from the contract while a loan is outstanding will be reduced by the amount of the outstanding loan plus accrued interest if:

• the contract is surrendered;

• the Contract Owner/Annuitant dies;

• the Contract Owner who is not the Annuitant dies prior to annuitization; or

• annuity payments begin.

Transferring the Contract

Nationwide reserves the right to restrict any transfer of the contract while the loan is outstanding.

Grace Period and Loan Default

If a loan payment is not made when due, interest will continue to accrue. A grace period may be available (refer to the terms of the loan agreement). If a loan payment is not made by the end of the applicable grace period, the entire loan will be treated as a deemed distribution and will be taxable to the borrower. This deemed distribution may also be subject to an early withdrawal tax penalty by the Internal Revenue Service.

After default, interest will continue to accrue on the loan. Defaulted amounts, plus interest, are deducted from the Contract Value when the participant is eligible for a distribution of at least that amount. Additional loans are not available while a previous loan is in default.

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Assignment

Contracts other than Non-Qualified Contracts may not be assigned, pledged or otherwise transferred except where allowed by law.

A Non-Qualified Contract Owner may assign some or all rights under the contract while the Annuitant is alive, subject to Nationwide's consent. Nationwide is not responsible for the validity or tax consequences of any assignment and 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 and submitted to the Service Center. 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 designated rebalancing period falls on a Saturday, Sunday, recognized holiday, or any other day when the New York Stock Exchange is closed, Asset Rebalancing will occur on the next business day. Each Asset Rebalancing reallocation is considered a transfer event.

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

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

Dollar Cost Averaging

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

Contract Owners direct Nationwide to automatically transfer specified amounts from the Fixed Account and the following Sub-Account(s) (if available):

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

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

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

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

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

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

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Nationwide reserves the right to stop establishing new Dollar Cost Averaging programs.

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

Enhanced Fixed Account Dollar Cost Averaging

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

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

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

Nationwide reserves the right to stop establishing new Enhanced Fixed Account Dollar Cost Averaging programs.

Nationwide is required by state law to reserve the right to postpone payment or transfer of assets from the Fixed Account for a period of up to six months from the date of the withdrawal or 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 submitted in writing to the Service Center.

The withdrawals will be taken from the Sub-Accounts and the Fixed Account proportionally 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 amount available under the CDSC-free withdrawal privilege (see Contingent Deferred Sales Charge).

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. In any given Contract Year, any amount withdrawn in excess of the amount permitted under this program will be subject to the CDSC provisions (see Contingent Deferred Sales Charge).

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

Death Benefit

Death of Contract Owner

If a Contract Owner who is not the Annuitant dies before the Annuitization Date, no death benefit is payable and the contingent owner becomes the Contract Owner. If there is no surviving contingent owner, the Annuitant becomes the Contract Owner, unless the Contract Owner at the time of application named his or her estate to receive the contract.

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A distribution of the Contract Value will be made in accordance with tax rules and as described in Appendix C: Contract Types and Tax Information. A CDSC may apply.

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 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 who is also the Annuitant 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 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 (see Annuity Payment Options); or
(3)	in any other manner permitted by law and approved by Nationwide.

Premium taxes may be deducted from death benefit proceeds. Nationwide will pay (or will begin to pay) the death benefit after it receives proof of death and the instructions as to the payment of the death benefit. Death benefit claims must be submitted to the Service Center. 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 reallocated to the available money market Sub-Account until instructions are received from the remaining beneficiary(ies).

Any Contract Value not allocated to the Sub-Accounts will remain invested and will not be reallocated to the available money market Sub-Account.

Death Benefit Calculations

The value of each component of the death benefit calculation 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).

For contracts issued on or after the later of November 3, 1997, or the date on which state insurance authorities approve applicable contract modifications, if the Annuitant dies before the first day of the calendar month following his or her 75th birthday, the death benefit will be the greatest of:

(1)	the Contract Value;
(2)	the total of all purchase payments made to the contract, less an adjustment for amounts withdrawn; or

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(3) the highest Contract Value as of the most recent five-year Contract Anniversary before the Annuitant's 75th birthday, less an adjustment for amounts withdrawn, plus purchase payments received after that five-year Contract Anniversary.

Any adjustment for amounts withdrawn will reduce the applicable factor above in the same proportion that the Contract Value was reduced on the date(s) of the partial withdrawal(s).

For contracts issued before November 3, 1997, or before the date on which state insurance authorities approve applicable contract modifications, if the Annuitant dies before the first day of the calendar month following his or her 75th birthday, the death benefit will be the greater of:

(1)	the total of all purchase payments made to the contract, increased at an annual rate of 5% simple interest from the date of each purchase payment for each full year the payment has been in force, less any amounts withdrawn; or
(2)	the Contract Value.

Insurance regulations in the states of New York and North Carolina prohibit the death benefit described immediately above. For contracts issued in the states of New York and North Carolina, the death benefit will be the greater of:

(1)	the total of all purchase payments made to the contract, less any amounts withdrawn; or
(2)	the Contract Value.

For Tax Sheltered Annuities issued on or after the later of May 1, 1997, or the date on which state insurance authorities approve applicable contract modifications and before May 1, 1998, or the date insurance authorities approve applicable contract modifications, in states that use a Unified Billing Authority to process purchase payments, the death benefit will be the greater of:

(1)	the total of all purchase payments made to the contract, less any amounts withdrawn; or
(2)	the Contract Value.

For Tax Sheltered Annuities issued on or after May 1, 1998, or the date on which insurance authorities approve applicable contract modifications in states that use a Unified Billing Authority to process purchase payments, the death benefit will be the greater of;

(1)	the total of all purchase payments made to the contract, less an adjustment for amounts withdrawn; or
(2)	the Contract Value.

Any adjustment for amounts withdrawn will reduce the applicable factor above in the same proportion that the Contract Value was reduced on the date(s) of the partial withdrawal(s).

For all contracts, if the Annuitant dies after the first day of the calendar month following his or her 75th birthday and before the Annuitization Date, the death benefit will equal the Contract Value.

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

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 is designated at the time of application, Nationwide will establish the Annuity Commencement Date as the date the Annuitant reaches age 75.

The Contract Owner may change the Annuity Commencement Date before annuitization. This change must be submitted in writing to the Service Center 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 75th birthday (or the 75th birthday of the oldest Annuitant if there are joint annuitants) unless approved by Nationwide.

Generally, Nationwide will not initiate annuitization until specifically directed to do so. However, for Non-Qualified Contracts only, Nationwide will automatically initiate annuitization within 45 days after the Annuity Commencement Date (whether default or otherwise), unless (1) Nationwide has had direct contact with the Contract Owner (indicating that the contract is not abandoned); or (2) the Contract Owner has taken some type of action which is inconsistent with the desire to annuitize.

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Annuitizing the Contract

Annuitization Date

The Annuitization Date is the date that annuity payments begin.

The Annuitization Date will be the first day of a calendar month unless otherwise agreed. Unless otherwise required by state law, the Annuitization Date must be at least two years after the contract is issued, but may not be later than either:

• the age (or date) specified in the contract; or

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

The Internal Revenue Code may require that distributions be made prior to the Annuitization Date (see Appendix C: Contract Types and Tax Information).

If the contract is issued to fund a Tax Sheltered Annuity, annuitization may occur during the first two Contract Years subject to Nationwide's approval.

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.

Actual purchase rates used to determine annuity payments will be those in effect on the Annuitization Date.

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 Sub-Accounts elected.

Any allocations in the Fixed Account that are to be annuitized as a variable payment annuity must be transferred to one or more Sub-Accounts prior to the Annuitization Date. There are no restrictions on Fixed Account transfers made in anticipation of annuitization.

Any allocations in the Sub-Accounts that are to be annuitized as a fixed payment annuity must be transferred to the Fixed Account prior to the Annuitization Date. Short-term trading fees do not apply to transfers made in anticipation of annuitization.

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 Sub-Accounts selected. The Sub-Accounts available during annuitization are those Sub-Accounts corresponding to the underlying mutual funds shown in Appendix A: Underlying Mutual Funds.

First Variable Annuity Payment

A number of factors determine the amount of the first variable annuity payment, including, but not limited to:

• 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.

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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.

Subsequent Variable Annuity Payments

Variable annuity payments after the first will vary with the performance of the Sub-Accounts 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 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 Sub-Account to another. After annuitization, transfers among Sub-Accounts may only be made once per calendar year.

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 Sub-Accounts is greater or lesser than the assumed investment return.

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

The Net Investment Factor for any particular Sub-Account on or after the Annuitization Date 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 Variable Account charges, which is equal to 1.30% of the Daily Net Assets.

Based on the change in the Net Investment Factor, the value of an Annuity 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 Annuity Units will not change as a result of investment experience, the value of an Annuity Unit may increase or decrease from Valuation Period to Valuation Period.

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 $500, Nationwide reserves the right to pay this amount in a lump sum instead of periodic annuity payments.

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

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 Single Life with a 20 Year Term Certain annuity payment option 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.

Annuity Payment Options Available to All Contracts

• 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. This option is not available if the Annuitant is 86 or older on the Annuitization Date.

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.

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. This option is not available if the Annuitant or joint Annuitant is 86 or older on the Annuitization Date.

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.

Statements and Reports

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

These mailings will contain:

• statements showing the contract's quarterly activity;

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

IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY 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 contacting the Service Center. Nationwide will reinstitute individual delivery within 30 days after receiving such notification.

Legal Proceedings

Nationwide Life Insurance Company

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

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

The various businesses conducted by the Company are subject to oversight by numerous federal and state regulatory entities, including but not limited to the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Department of Labor, the Internal Revenue Service, and state insurance authorities. Such regulatory entities may, in the normal course, be engaged in general or targeted inquiries, examinations and investigations of the Company and/or its affiliates. The financial services industry has been the subject of increasing scrutiny in connection with a broad spectrum of regulatory issues; with respect to all such scrutiny directed at the Company and/or its affiliates, the Company is cooperating with regulators. The Company will cooperate with Nationwide Mutual Insurance Company (NMIC) insofar as any inquiry, examination or investigation encompasses NMIC's operations.

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. On November 18, 2009, the plaintiffs filed a sixth amended complaint amending the list of named plaintiffs and claiming to represent a class of qualified retirement plan trustees under the Employee Retirement Income Security Act of 1974 (ERISA) that purchased variable annuities

35

from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys' fees. On November 6, 2009, the Court granted the plaintiffs' motion for class certification. On October 21, 2010, the District Court dismissed NFS from the lawsuit. On February 6, 2012, the Second Circuit Court of Appeals vacated the November 6, 2009 order granting class certification and remanded the case back to the District Court for further consideration. On September 6, 2013, the District Court granted the plaintiffs' motion for class certification. The case is set for trial beginning February 9, 2015. NLIC continues to defend this lawsuit vigorously.

On November 20, 2007, Nationwide Retirement Solutions, Inc. (NRS) and NLIC were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. On March 12, 2010, NRS and NLIC were named in a Second Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Steven E. Coker, Sandra H. Turner, David N. Lichtenstein and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the Alabama State Employees Association, Inc. (ASEA) Plan, excluding members of the Deferred Compensation Committee, ASEA's directors, officers and board members, and PEBCO's directors, officers and board members. On October 22, 2010, the parties to this action executed a court approved stipulation of settlement that agreed to certify a class for settlement purposes only, that provided for payments to the settlement class, and that provided for releases, certain bar orders, and dismissal of the case. The settlement fund has been paid out. On December 6, 2011, the Court entered an Order that NRS owed indemnification to ASEA and PEBCO for only the Coker (Gwin) class action, and dismissed NLIC. The Company resolved the indemnification claims of ASEA. On February 15, 2013, the Court issued its Order determining the amount of fees due to PEBCO on its indemnification claim. On March 28, 2014, the Alabama Supreme Court reversed the trial Court decision awarding PEBCO its attorney fees and remanded the case back to the trial court to enter a judgment in favor of NRS. NRS continues to defend this case vigorously.

Lehman Brothers Holdings, Inc. (Debtors) and Giddens, James v NLIC and NMIC, et al.In 2012 the Plaintiff, Debtor in Possession Lehman Brothers Special Financing, Inc., filed a class action in the United States Bankruptcy Court for the Southern District of New York seeking the recovery of nearly $3.0 billion in assets from all the named defendants including NLIC and NMIC. This litigation arises from two collateralized debt obligation transactions, 801 Grand and Alta, which resulted in payments to NLIC and NMIC after the Plaintiff and its parent company, Lehman Brothers Holding, Inc. filed for bankruptcy in 2008. This triggered an early termination of the above transactions. The Plaintiff seeks to have sums returned to the bankruptcy estate in addition to prejudgment interest and costs. The case is currently stayed. In 2013, Plaintiff sent correspondence to all defendants inviting settlement discussions and has served NMIC and NLIC with a "SPV Derivatives ADR Notice," formally starting the Alternative Dispute Resolution process. NMIC and NLIC have responded, and are currently taking part in the ADR process. Mediation was scheduled for and proceeded on December 13, 2013, but the parties reached an impasse. The mediator is continuing to work with the parties and is expected to issue a final recommendation shortly. On January 10, 2014, Lehman filed another motion to extend the stay for a final four month period. After a hearing, the court extended the stay to the later of (a) May 20, 2014 or (b) 30 days after the court enters a scheduling order governing the Distributed Action. The parties have been negotiating the proposed scheduling order for the conduct of the Distributed Action litigation, and Lehman filed a revised proposed scheduling order on March 24, 2014. On April 14, 2014, Nationwide and 77 other defendants filed a joint response to the proposed scheduling order, and a hearing on the proposed scheduling order has been scheduled for May 14, 2014.

Security Distributors, Inc.

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

Contents of Statement of Additional Information

General Information and History
Services
Purchase of Securities Being Offered

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Underwriters
Advertising
Annuity Payments
Financial Statements

Investment Company Act of 1940 Registration File No. 811-03338
Securities Act of 1933 Registration File No. 002-75174

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Appendix A: Underlying Mutual Funds

This appendix contains information about the underlying mutual funds in which the Sub-Accounts 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. Refer to the prospectus for each underlying mutual fund for more detailed information.

Designations Key:

FF:

The underlying mutual fund 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. Refer to the prospectus for this underlying mutual fund for more information.

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

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

American Century Variable Portfolios, Inc. - American Century VP Income & Growth Fund: Class I

Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	Capital growth by investing in common stocks. Income is a secondary objective.

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

This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2008

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	Capital growth with current income as a secondary goal.

Dreyfus Stock Index Fund, Inc.: Initial Shares

This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2013

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	To match performance of the S&P 500.

Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares

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

Dreyfus Variable Investment Fund - Opportunistic Small Cap Portfolio: Initial Shares

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	Capital growth.

Dreyfus Variable Investment Fund - Quality Bond Portfolio: Initial Shares

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	Maximum total return.

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

This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2008

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

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

Investment Advisor:	Fidelity Management & Research Company
Sub-advisor:	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.

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

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

Franklin Templeton Variable Insurance Products Trust - Templeton Foreign VIP Fund: Class 1 (formerly, Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 1)

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

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

Guggenheim Variable Funds Trust - Series D (World Equity Income Series) (formerly, Guggenheim SBL Fund - Series D (World Equity Income Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Seeks to provide total return, comprised of capital appreciation and income.

Guggenheim Variable Funds Trust - Series J (StylePlus Mid Growth Series) (formerly, Guggenheim SBL Fund - Series J (StylePlus Mid Growth Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Capital appreciation.

Guggenheim Variable Funds Trust - Series N (Managed Asset Allocation Series) (formerly, Guggenheim SBL Fund - Series N (Managed Asset Allocation Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	High level of total return.

Guggenheim Variable Funds Trust - Series O (All Cap Value Series) (formerly, Guggenheim SBL Fund - Series O (All Cap Value Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Seeks long-term growth of capital.

Guggenheim Variable Funds Trust - Series P (High Yield Series) (formerly, Guggenheim SBL Fund - Series P (High Yield Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	High current income and capital appreciation as a secondary objective.

Guggenheim Variable Funds Trust - Series Q (Small Cap Value Series) (formerly, Guggenheim SBL Fund - Series Q (Small Cap Value Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Long-term capital appreciation.

Guggenheim Variable Funds Trust - Series V (Mid Cap Value Series) (formerly, Guggenheim SBL Fund - Series V (Mid Cap Value Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Long-term growth of capital.

Guggenheim Variable Funds Trust - Series X (StylePlus Small Growth Series) (formerly, Guggenheim SBL Fund - Series X (StylePlus Small Growth Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Long-term growth of capital.

Guggenheim Variable Funds Trust - Series Y (StylePlus Large Growth Series) (formerly, Guggenheim SBL Fund - Series Y (StylePlus Large Growth Series))

Investment Advisor:	Guggenheim Investments
Investment Objective:	Long-term growth of capital.

Invesco - Invesco V.I. American Franchise Fund: Series I Shares

Investment Advisor:	Invesco Advisers, Inc.
Investment Objective:	seek capital growth.

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Invesco - Invesco V.I. Global Health Care Fund: Series I Shares

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

Invesco - Invesco V.I. Global Real Estate Fund: Series I Shares

Investment Advisor:	Invesco Advisers, Inc.
Sub-advisor:	Invesco Asset Management Limited
Investment Objective:	Total return through growth of capital and current income.

Invesco - Invesco V.I. International Growth Fund: Series I Shares

This underlying mutual fund is only available in contracts for which good order applications were received before May 1, 2008

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

Janus Aspen Series - Overseas Portfolio: Institutional Shares

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

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

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

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Neuberger Berman Management LLC
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Neuberger Berman Management LLC
Investment Objective:	The Fund seeks long-term growth of capital by investing primarily in securities of companies that meet the fund's financial criteria and social policy.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	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 Large Cap Growth Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	The Boston Company Asset Management, LLC
Investment Objective:	The Fund seeks long-term capital growth.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	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.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Winslow Capital Management, Inc.; 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 I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Neuberger Berman Management LLC; Wells Capital Management, Inc.
Investment Objective:	The fund seeks long-term capital growth.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	American Century Investment Management, Inc.; Thompson, Siegel & Walmsley LLC; WEDGE Capital Management L.L.P.
Investment Objective:	The fund seeks long-term capital appreciation.

Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class I

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

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

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

PIMCO Variable Insurance Trust - Real Return Portfolio: Administrative Class

Investment Advisor:

Pacific Investment Management Company LLC

Investment Objective:

Seeks maximum real 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 net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or instrumentalities and corporations, which may be represented by forwards or derivatives such as options, futures contracts or swap agreements.

PIMCO Variable Insurance Trust - Total Return Portfolio: Administrative Class

Investment Advisor:

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 objectives by investing under normal circumstances at least 65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying maturities, which may be represented by forwards or derivatives such as option, futures contracts or swap agreements.

Royce Capital Fund - Royce Micro-Cap Portfolio: Investment Class

Investment Advisor:	Royce & Associates, LLC
Investment Objective:	Long-term capital growth.

Designation: FF

41

Appendix B: Condensed Financial Information

The following tables list the Condensed Financial Information (the Accumulation Unit value information for Accumulation Units outstanding) for contracts as of December 31, 2013. The term "Period" is defined as a complete calendar year, unless otherwise noted. Those Periods with an asterisk (*) reflect Accumulation Unit information for a partial year only.

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
American Century Variable Portfolios, Inc. - American Century VP Balanced Fund: Class I - Q/NQ
2013	14.511028	16.818367	15.90%	2,544
2012	13.150636	14.511028	10.34%	2,407
2011	12.648988	13.150636	3.97%	2,446
2010	11.479746	12.648988	10.19%	2,554
2009	10.071610	11.479746	13.98%	2,523
2008	12.808596	10.071610	-21.37%	2,669
2007	12.367801	12.808596	3.56%	2,909
2006	11.430683	12.367801	8.20%	4,203
2005	11.036175	11.430683	3.57%	4,800
2004	10.185550	11.036175	8.35%	1,645
American Century Variable Portfolios, Inc. - American Century VP Income & Growth Fund: Class I - Q/NQ
2013	15.784735	21.160454	34.06%	1,402
2012	13.938033	15.784735	13.25%	1,465
2011	13.695034	13.938033	1.77%	3,991
2010	12.155673	13.695034	12.66%	3,995
2009	10.428550	12.155673	16.56%	4,799
2008	16.152841	10.428550	-35.44%	4,796
2007	16.377810	16.152841	-1.37%	5,220
2006	14.171369	16.377810	15.57%	5,351
2005	13.722025	14.171369	3.27%	5,345
2004	12.304086	13.722025	11.52%	5,602
Dreyfus Socially Responsible Growth Fund, Inc. (The): Initial Shares - Q/NQ
2013	25.422344	33.709594	32.60%	4,091
2012	23.003341	25.422344	10.52%	6,225
2011	23.097529	23.003341	-0.41%	8,059
2010	20.381821	23.097529	13.32%	8,867
2009	15.438795	20.381821	32.02%	9,509
2008	23.854205	15.438795	-35.28%	10,361
2007	22.424260	23.854205	6.38%	11,097
2006	20.804638	22.424260	7.78%	10,831
2005	20.342381	20.804638	2.27%	12,171
2004	19.405114	20.342381	4.83%	12,672
Dreyfus Stock Index Fund, Inc.: Initial Shares - Q/NQ
2013	33.475038	43.621992	30.31%	14,208
2012	29.304986	33.475038	14.23%	15,475
2011	29.142973	29.304986	0.56%	20,355
2010	25.711436	29.142973	13.35%	22,408
2009	20.619961	25.711436	24.69%	23,154
2008	33.236639	20.619961	-37.96%	26,474
2007	31.995347	33.236639	3.88%	28,167
2006	28.065915	31.995347	14.00%	32,765
2005	27.160283	28.065915	3.33%	31,864
2004	24.871495	27.160283	9.20%	31,683

42

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Dreyfus Variable Investment Fund - Appreciation Portfolio: Initial Shares - Q/NQ
2013	18.219052	21.777164	19.53%	1,328
2012	16.716050	18.219052	8.99%	1,330
2011	15.535653	16.716050	7.60%	1,333
2010	13.649413	15.535653	13.82%	2,144
2009	11.283698	13.649413	20.97%	1,973
2008	16.228100	11.283698	-30.47%	2,186
2007	15.348290	16.228100	5.73%	2,132
2006	13.350131	15.348290	14.97%	2,156
2005	12.958165	13.350131	3.02%	4,467
2004	12.498159	12.958165	3.68%	6,659
Dreyfus Variable Investment Fund - Opportunistic Small Cap Portfolio: Initial Shares - Q/NQ
2013	22.656895	33.219217	46.62%	16,617
2012	19.040563	22.656895	18.99%	18,045
2011	22.391202	19.040563	-14.96%	19,796
2010	17.297684	22.391202	29.45%	22,392
2009	13.905033	17.297684	24.40%	23,058
2008	22.575208	13.905033	-38.41%	22,783
2007	25.718654	22.575208	-12.22%	23,909
2006	25.109832	25.718654	2.42%	23,605
2005	24.044779	25.109832	4.43%	27,397
2004	21.880107	24.044779	9.89%	28,483
Dreyfus Variable Investment Fund - Quality Bond Portfolio: Initial Shares - Q/NQ
2013	21.004120	20.411085	-2.82%	1,041
2012	19.889852	21.004120	5.60%	1,045
2011	18.827232	19.889852	5.64%	1,107
2010	17.600948	18.827232	6.97%	1,507
2009	15.512440	17.600948	13.46%	2,497
2008	16.402300	15.512440	-5.43%	3,596
2007	16.050943	16.402300	2.19%	3,519
2006	15.601357	16.050943	2.88%	4,083
2005	15.423994	15.601357	1.15%	4,534
2004	15.117949	15.423994	2.02%	5,784
Fidelity Variable Insurance Products Fund - VIP Contrafund® Portfolio: Service Class 2 - Q/NQ
2013	12.265000	15.852658	29.25%	1,442
2012	10.699883	12.265000	14.63%	5,164
2011	11.150978	10.699883	-4.05%	7,391
2010	9.662249	11.150978	15.41%	9,439
2009	7.226417	9.662249	33.71%	12,891
2008	12.775920	7.226417	-43.44%	11,987
2007	11.035607	12.775920	15.77%	7,490
2006*	10.000000	11.035607	10.36%	28

43

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Fidelity Variable Insurance Products Fund - VIP Equity-Income Portfolio: Initial Class - Q/NQ
2013	32.813740	41.503651	26.48%	15,380
2012	28.341613	32.813740	15.78%	16,657
2011	28.437885	28.341613	-0.34%	21,745
2010	25.021562	28.437885	13.65%	26,752
2009	19.469675	25.021562	28.52%	29,564
2008	34.399609	19.469675	-43.40%	31,400
2007	34.329754	34.399609	0.20%	34,870
2006	28.937089	34.329754	18.64%	36,384
2005	27.692797	28.937089	4.49%	35,818
2004	25.156955	27.692797	10.08%	35,286
Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Initial Class - Q/NQ
2013	22.169780	23.182890	4.57%	5,700
2012	19.664524	22.169780	12.74%	6,009
2011	19.150855	19.664524	2.68%	7,017
2010	17.046557	19.150855	12.34%	8,076
2009	11.997168	17.046557	42.09%	9,439
2008	16.203802	11.997168	-25.96%	9,927
2007	15.973333	16.203802	1.44%	11,645
2006	14.548340	15.973333	9.79%	11,557
2005	14.351788	14.548340	1.37%	11,337
2004	13.267980	14.351788	8.17%	11,638
Franklin Templeton Variable Insurance Products Trust - Templeton Foreign VIP Fund: Class 1 - Q/NQ
2013	27.072505	32.939557	21.67%	3,758
2012	23.128788	27.072505	17.05%	3,861
2011	26.165913	23.128788	-11.61%	4,648
2010	24.394079	26.165913	7.26%	6,228
2009	17.995541	24.394079	35.56%	6,393
2008	30.507646	17.995541	-41.01%	6,879
2007	26.696591	30.507646	14.28%	8,623
2006	22.224937	26.696591	20.12%	10,216
2005	20.381609	22.224937	9.04%	10,685
2004	17.371469	20.381609	17.33%	12,753
Guggenheim Variable Funds Trust - Series D (World Equity Income Series) - Q/NQ
2013	9.790050	11.526303	17.73%	0
2012	8.509267	9.790050	15.05%	0
2011	10.239629	8.509267	-16.90%	0
2010	8.967468	10.239629	14.19%	0
2009	7.588414	8.967468	18.17%	0
2008	12.478455	7.588414	-39.19%	0
2007	11.611969	12.478455	7.46%	0
2006*	10.000000	11.611969	16.12%	0

44

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Guggenheim Variable Funds Trust - Series J (StylePlus Mid Growth Series) - Q/NQ
2013	10.162910	13.092283	28.82%	0
2012	8.892789	10.162910	14.28%	0
2011	9.417106	8.892789	-5.57%	0
2010	7.683587	9.417106	22.56%	0
2009	5.407517	7.683587	42.09%	0
2008	9.126180	5.407517	-40.75%	0
2007	10.323790	9.126180	-11.60%	0
2006*	10.000000	10.323790	3.24%	0
Guggenheim Variable Funds Trust - Series N (Managed Asset Allocation Series) - Q/NQ
2013	12.448553	14.047458	12.84%	0
2012	11.133579	12.448553	11.81%	0
2011	11.206634	11.133579	-0.65%	0
2010	10.269513	11.206634	9.13%	0
2009	8.282144	10.269513	24.00%	0
2008	11.526482	8.282144	-28.15%	0
2007	11.014106	11.526482	4.65%	0
2006*	10.000000	11.014106	10.14%	0
Guggenheim Variable Funds Trust - Series O (All Cap Value Series) - Q/NQ
2013	11.429531	15.027691	31.48%	0
2012	10.026025	11.429531	14.00%	0
2011	10.619379	10.026025	-5.59%	0
2010	9.226215	10.619379	15.10%	0
2009	7.027887	9.226215	31.28%	0
2008	11.564367	7.027887	-39.23%	0
2007	11.396634	11.564367	1.47%	476
2006*	10.000000	11.396634	13.97%	476
Guggenheim Variable Funds Trust - Series P (High Yield Series) - Q/NQ
2013	16.007249	16.965521	5.99%	0
2012	14.119380	16.007249	13.37%	0
2011	14.310203	14.119380	-1.33%	0
2010	12.560370	14.310203	13.93%	0
2009	7.366516	12.560370	70.51%	0
2008	10.659200	7.366516	-30.89%	0
2007	10.580725	10.659200	0.74%	0
2006*	10.000000	10.580725	5.81%	0
Guggenheim Variable Funds Trust - Series Q (Small Cap Value Series) - Q/NQ
2013	14.657801	19.790418	35.02%	204
2012	12.427059	14.657801	17.95%	208
2011	13.198645	12.427059	-5.85%	422
2010	10.971327	13.198645	20.30%	447
2009	7.128610	10.971327	53.91%	2,351
2008	11.760475	7.128610	-39.39%	2,392
2007	10.808181	11.760475	8.81%	216
2006*	10.000000	10.808181	8.08%	0

45

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Guggenheim Variable Funds Trust - Series V (Mid Cap Value Series) - Q/NQ
2013	13.307430	17.511361	31.59%	272
2012	11.512315	13.307430	15.59%	273
2011	12.608615	11.512315	-8.69%	274
2010	10.844411	12.608615	16.27%	275
2009	7.633907	10.844411	42.06%	276
2008	10.812208	7.633907	-29.40%	276
2007	10.755372	10.812208	0.53%	142
2006*	10.000000	10.755372	7.55%	134
Guggenheim Variable Funds Trust - Series X (StylePlus - Small Growth Series) - Q/NQ
2013	10.259439	14.311997	39.50%	0
2012	9.318168	10.259439	10.10%	2,330
2011	9.629298	9.318168	-3.23%	2,331
2010	7.499011	9.629298	28.41%	0
2009	5.619860	7.499011	33.44%	0
2008	10.789150	5.619860	-47.91%	0
2007	10.351888	10.789150	4.22%	0
2006*	10.000000	10.351888	3.52%	0
Guggenheim Variable Funds Trust - Series Y (StylePlus - Large Growth Series) - Q/NQ
2013	9.730988	12.320091	26.61%	0
2012	8.905288	9.730988	9.27%	0
2011	9.429872	8.905288	-5.56%	0
2010	8.190457	9.429872	15.13%	0
2009	6.226170	8.190457	31.55%	0
2008	10.024404	6.226170	-37.89%	0
2007	10.826374	10.024404	-7.41%	0
2006*	10.000000	10.826374	8.26%	0
Invesco - Invesco V.I. American Franchise Fund: Series I Shares - Q/NQ
2013	9.663996	13.366845	38.32%	3,650
2012*	10.000000	9.663996	-3.36%	3,710
Invesco - Invesco V.I. Global Health Care Fund: Series I - Q/NQ
2013	13.313787	18.468303	38.72%	1,342
2012	11.157723	13.313787	19.32%	0
2011	10.874856	11.157723	2.60%	1,562
2010	10.464156	10.874856	3.92%	1,787
2009	8.303907	10.464156	26.01%	1,788
2008	11.786725	8.303907	-29.55%	1,789
2007	10.677037	11.786725	10.39%	1,790
2006*	10.000000	10.677037	6.77%	0

46

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Invesco - Invesco V.I. Global Real Estate Fund: Series I - Q/NQ
2013	11.410916	11.568145	1.38%	108
2012	9.023969	11.410916	26.45%	109
2011	9.779112	9.023969	-7.72%	109
2010	8.431232	9.779112	15.99%	110
2009	6.494699	8.431232	29.82%	110
2008	11.888124	6.494699	-45.37%	109
2007	12.751928	11.888124	-6.77%	103
2006*	10.000000	12.751928	27.52%	97
Invesco - Invesco V.I. International Growth Fund: Series I - Q/NQ
2013	18.846708	22.138590	17.47%	560
2012	16.528273	18.846708	14.03%	529
2011	17.956065	16.528273	-7.95%	657
2010	16.118982	17.956065	11.40%	660
2009	12.075540	16.118982	33.48%	919
2008	20.521458	12.075540	-41.16%	931
2007	18.125204	20.521458	13.22%	848
2006	14.320119	18.125204	26.57%	587
2005	12.302542	14.320119	16.40%	476
2004	10.051603	12.302542	22.39%	419
Janus Aspen Series - Overseas Portfolio: Institutional Shares - Q/NQ
2013	27.873233	31.517345	13.07%	2,026
2012	24.889269	27.873233	11.99%	4,171
2011	37.176251	24.889269	-33.05%	4,991
2010	30.058433	37.176251	23.68%	5,456
2009	16.960749	30.058433	77.22%	9,658
2008	35.885918	16.960749	-52.74%	11,774
2007	28.336913	35.885918	26.64%	11,348
2006	19.526904	28.336913	45.12%	10,496
2005	14.954107	19.526904	30.58%	10,659
2004	12.737304	14.954107	17.40%	7,559
Nationwide Variable Insurance Trust - Federated NVIT High Income Bond Fund: Class I - Q/NQ
2013	20.098521	21.240186	5.68%	82
2012	17.776228	20.098521	13.06%	114
2011	17.347537	17.776228	2.47%	114
2010	15.532705	17.347537	11.68%	115
2009	10.778990	15.532705	44.10%	1,227
2008	15.165895	10.778990	-28.93%	1,229
2007	14.899690	15.165895	1.79%	1,230
2006	13.648215	14.899690	9.17%	1,231
2005	13.505990	13.648215	1.05%	1,259
2004	12.428955	13.505990	8.67%	1,273

47

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Nationwide Variable Insurance Trust - Neuberger Berman NVIT Multi Cap Opportunities Fund: Class I - Q/NQ
2013	8.910183	12.648079	41.95%	0
2012	7.719903	8.910183	15.42%	0
2011	8.849604	7.719903	-12.77%	0
2010	7.755653	8.849604	14.11%	0
2009	5.137150	7.755653	50.97%	0
2008*	10.000000	5.137150	-48.63%	0
Nationwide Variable Insurance Trust - Neuberger Berman NVIT Socially Responsible Fund: Class I - Q/NQ
2013	10.199373	13.969381	36.96%	0
2012	9.268273	10.199373	10.05%	0
2011	9.698486	9.268273	-4.44%	0
2010	7.951186	9.698486	21.98%	0
2009	6.124558	7.951186	29.82%	0
2008*	10.000000	6.124558	-38.75%	0
Nationwide Variable Insurance Trust - NVIT Government Bond Fund: Class I - NQ
2013	58.868655	55.746949	-5.30%	0
2012	57.876730	58.868655	1.71%	0
2011	54.670548	57.876730	5.86%	0
2010	52.862786	54.670548	3.42%	0
2009	52.156832	52.862786	1.35%	0
2008	49.056784	52.156832	6.32%	0
2007	46.385889	49.056784	5.76%	0
2006	45.475702	46.385889	2.00%	0
2005	44.616924	45.475702	1.92%	0
2004	43.776516	44.616924	1.92%	0
Nationwide Variable Insurance Trust - NVIT Government Bond Fund: Class I - Q
2013	58.846913	55.726370	-5.30%	2,658
2012	57.855359	58.846913	1.71%	2,716
2011	54.650359	57.855359	5.86%	2,643
2010	52.843264	54.650359	3.42%	3,693
2009	52.137572	52.843264	1.35%	3,839
2008	49.038674	52.137572	6.32%	4,007
2007	46.368773	49.038674	5.76%	3,260
2006	45.458911	46.368773	2.00%	3,616
2005	44.600457	45.458911	1.92%	3,839
2004	43.760351	44.600457	1.92%	4,009
Nationwide Variable Insurance Trust - NVIT Large Cap Growth Fund: Class I - Q/NQ
2013	15.715168	21.203967	34.93%	0
2012	13.415824	15.715168	17.14%	0
2011	13.902694	13.415824	-3.50%	0
2010	12.946450	13.902694	7.39%	0
2009*	10.000000	12.946450	29.46%	0

48

Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Nationwide Variable Insurance Trust - NVIT Money Market Fund: Class I - NQ
2013	26.954381	26.603979	-1.30%	0
2012	27.310368	26.954381	-1.30%	0
2011	27.669066	27.310368	-1.30%	0
2010	28.033457	27.669066	-1.30%	0
2009	28.390775	28.033457	-1.26%	0
2008	28.185866	28.390775	0.73%	0
2007	27.252995	28.185866	3.42%	0
2006	26.414319	27.252995	3.18%	0
2005	26.065818	26.414319	1.34%	0
2004	26.196581	26.065818	-0.50%	0
Nationwide Variable Insurance Trust - NVIT Money Market Fund: Class I - Q
2013	24.808039	24.485537	-1.30%	7,595
2012	25.135681	24.808039	-1.30%	6,340
2011	25.465814	25.135681	-1.30%	6,347
2010	25.801190	25.465814	-1.30%	5,057
2009	26.130055	25.801190	-1.26%	5,062
2008	25.941461	26.130055	0.73%	9,101
2007	25.082875	25.941461	3.42%	3,385
2006	24.310982	25.082875	3.18%	4,818
2005	23.990230	24.310982	1.34%	1,808
2004	24.110582	23.990230	-0.50%	1,030
Nationwide Variable Insurance Trust - NVIT Multi-Manager Large Cap Growth Fund: Class I - Q/NQ
2013	10.139854	13.484981	32.99%	0
2012	8.829654	10.139854	14.84%	0
2011	9.213458	8.829654	-4.17%	0
2010	8.081308	9.213458	14.01%	0
2009	6.309071	8.081308	28.09%	0
2008*	10.000000	6.309071	-36.91%	0
Nationwide Variable Insurance Trust - NVIT Multi-Manager Mid Cap Growth Fund: Class I - Q/NQ
2013	10.480364	14.372720	37.14%	4,745
2012	9.241391	10.480364	13.41%	5,333
2011	9.776372	9.241391	-5.47%	8,472
2010	7.810388	9.776372	25.17%	11,954
2009	6.224956	7.810388	25.47%	12,117
2008*	10.000000	6.224956	-37.75%	0
Nationwide Variable Insurance Trust - NVIT Multi-Manager Mid Cap Value Fund: Class II - Q/NQ
2013	11.276879	15.101350	33.91%	19,337
2012	9.820513	11.276879	14.83%	23,353
2011	10.186047	9.820513	-3.59%	28,033
2010	8.626530	10.186047	18.08%	32,541
2009	6.698993	8.626530	28.77%	36,913
2008*	10.000000	6.698993	-33.01%	0

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Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class I - NQ
2013	101.309617	131.092754	29.40%	135
2012	89.872231	101.309617	12.73%	140
2011	90.574570	89.872231	-0.78%	145
2010	80.887619	90.574570	11.98%	150
2009	64.992222	80.887619	24.46%	156
2008	112.670062	64.992222	-42.32%	163
2007	105.528470	112.670062	6.77%	165
2006	94.091731	105.528470	12.15%	165
2005	88.724843	94.091731	6.05%	165
2004	81.906372	88.724843	8.32%	165
Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class I - Q
2013	104.309906	134.975081	29.40%	4,794
2012	92.533802	104.309906	12.73%	5,266
2011	93.256923	92.533802	-0.78%	6,775
2010	83.283096	93.256923	11.98%	8,164
2009	66.916953	83.283096	24.46%	8,716
2008	116.006751	66.916953	-42.32%	9,456
2007	108.653662	116.006751	6.77%	10,695
2006	96.878249	108.653662	12.15%	11,521
2005	91.352418	96.878249	6.05%	12,706
2004	84.332018	91.352418	8.32%	13,146
Neuberger Berman Advisers Management Trust - AMT Balanced Portfolio: I Class - Q/NQ
2013	26.441747	30.921875	16.94%	3,841
2012	24.501851	26.441747	7.92%	3,867
2011	24.981653	24.501851	-1.92%	4,385
2010	21.300069	24.981653	17.28%	4,379
2009	17.621624	21.300069	20.87%	5,323
2008	29.340225	17.621624	-39.94%	5,352
2007	25.716074	29.340225	14.09%	5,118
2006	23.542486	25.716074	9.23%	5,201
2005	21.845873	23.542486	7.77%	4,287
2004	20.248421	21.845873	7.89%	4,530
PIMCO Variable Insurance Trust - Real Return Portfolio: Administrative Class - Q/NQ
2013	14.972496	13.313787	-11.08%	1,538
2012	13.949036	14.972496	7.34%	1,597
2011	12.655520	13.949036	10.22%	229
2010	11.860177	12.655520	6.71%	38
2009	10.153568	11.860177	16.81%	38
2008	11.064532	10.153568	-8.23%	38
2007	10.132387	11.064532	9.20%	0
2006*	10.000000	10.132387	1.32%	0

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Additional Contract Options Elected Total - 1.30%
Variable account charges of the daily net assets of the variable account - 1.30%
Period	Beginning Value	Ending Value	Percentage Change	Units
PIMCO Variable Insurance Trust - Total Return Portfolio: Administrative Class - Q/NQ
2013	15.299257	14.781770	-3.38%	11,534
2012	14.143480	15.299257	8.17%	11,539
2011	13.830702	14.143480	2.26%	10,184
2010	12.961276	13.830702	6.71%	1,301
2009	11.516424	12.961276	12.55%	1,337
2008	11.139136	11.516424	3.39%	1,414
2007	10.379205	11.139136	7.32%	959
2006*	10.000000	10.379205	3.79%	0
Royce Capital Fund - Royce Micro-Cap Portfolio: Investment Class - Q/NQ
2013	11.656263	13.919215	19.41%	189
2012	10.975482	11.656263	6.20%	1,762
2011	12.650700	10.975482	-13.24%	1,832
2010	9.862318	12.650700	28.27%	260
2009	6.322436	9.862318	55.99%	261
2008	11.291953	6.322436	-44.01%	259
2007	11.003808	11.291953	2.62%	2,197
2006*	10.000000	11.003808	10.04%	168

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Appendix C: Contract Types and Tax Information

Types of Contracts

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

Non-Qualified Contracts

A non-qualified contract is a contract that does not qualify for certain tax benefits under the Code, and which is not an IRA, Roth IRA, SEP IRA, Simple IRA, or tax sheltered annuity.

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

Non-qualified contracts that are owned by natural persons allow the deferral of taxation on the income earned in the contract until it is distributed or deemed to be distributed. Non-qualified contracts that are owned by 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.

Individual Retirement Annuities (IRAs)

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

• the contract is not transferable by the owner;

• the premiums are not fixed;

• if the contract owner is younger than age 50, the annual premium cannot exceed $5,500; if the contract owner is age 50 or older, the annual premium cannot exceed $6,500 (although rollovers of greater amounts from Qualified Plans, Tax Sheltered Annuities, and other IRAs can be received);

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

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

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

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

IRAs may receive rollover contributions from other individual retirement accounts, other individual retirement annuities, tax sheltered annuities, certain 457 governmental plans, and qualified retirement plans (including 401(k) plans).

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

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

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

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

Roth IRAs

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

• the contract is not transferable by the owner;

• the premiums are not fixed;

• if the contract owner is younger than age 50, the annual premium cannot exceed $5,500; if the contract owner is age 50 or older, the annual premium cannot exceed $6,500 (although rollovers of greater amounts from other Roth IRAs and other individual retirement plans can be received);

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

52

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

A Roth IRA can receive a rollover from an individual retirement plan or another eligible retirement plan; however, the amount rolled over from the individual retirement plan or 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.

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

Simplified Employee Pension IRAs (SEP IRA)

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

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

A SEP IRA plan must satisfy:

• minimum participation rules;

• top-heavy contribution rules;

• nondiscriminatory allocation rules; and

• requirements regarding a written allocation formula.

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

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

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.

Tax Sheltered Annuities

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

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

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

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

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

Final 403(b) Regulations issued by the Internal Revenue Service impose certain restrictions on non-taxable transfers or exchanges of one 403(b) Tax Sheltered Annuity contract for another. Nationwide will no longer issue or accept applications for new and/or in-service transfers to new or existing Nationwide individual 403(b) Tax Sheltered Annuity

53

contracts used for salary reduction plans not subject to ERISA. Nationwide will continue to accept applications and in-service transfers for individual 403(b) Tax Sheltered Annuity contracts used for 403(b) plans that are subject to ERISA and certain state Optional Retirement Plans and/or Programs that have purchased at least one individual annuity contract issued by Nationwide prior to September 25, 2007.

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

Federal Tax Considerations

Federal Income Taxes

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

• the type of contract purchased;

• the purposes for which the contract is purchased; and

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

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

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

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

The following is a brief summary of some of the federal income tax considerations related to the types of contracts sold in connection with this prospectus. In addition to the federal income tax, distributions from annuity contracts may be subject to state and local income taxes. Nothing in this prospectus should be considered to be tax advice. Purchasers and prospective purchasers of the contract should consult a financial consultant, tax advisor, or legal counsel to discuss the taxation and use of the contracts.

IRAs and SEP IRAs

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

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

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

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

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

• used for qualified higher education expenses; or

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

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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 is made after the Roth IRA has satisfied 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 is satisfied if a five taxable-year period, beginning with the first taxable year in which a contribution is made to any Roth IRA established for the owner, has passed.

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

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

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

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

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

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

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

• for qualified higher education expenses; or

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

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

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 reduced by any nontaxable distribution. 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.

Commencing after December 31, 2010, the Code provides that if only a portion of a non-qualified annuity contract is annuitized for either (a) a period of 10 years or greater, or (b) for the life or lives of one or more persons, then the portion of the contract that has been annuitized would be treated as if it were a separate annuity contract. This means that an annuitization date can be established for a portion of the annuity contract (rather than requiring the entire contract to be

55

annuitized at once) and the above description of the taxation of annuity distributions after the annuitization date would apply to the portion of the contract that has been annuitized. The investment in the contract is required to be allocated pro rata between the portion of the contract that is annuitized and the portion that is not. All other benefits under the contract (e.g., death benefit) would also be reduced pro rata. For example, if 1/3 of the cash value of the contract were to be annuitized, the death benefit would also be reduced by 1/3.

In determining the taxable amount of a distribution that is made prior to the annuitization date, 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 the nontaxable recovery of the investment in the contract as of that date. A distribution in excess of the amount of the investment in the contract as of August 14, 1982, will be treated as taxable income.

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

• the result of a contract owner's death;

• the result of a contract owner's disability (as defined in the Code);

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

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

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

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

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

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

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

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

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

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

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

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

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

Tax Sheltered Annuities

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

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

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

56

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

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

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

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

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

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 to the extent of the value of the property, other than the annuity contract received in the exchange.

Tax Treatment of a Partial 1035 Exchange With Subsequent Withdrawal

In June 2011, the Internal Revenue Service issued Rev. Proc. 2011-38, 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. Rev. Proc. 2011-38 modified and superseded prior guidance that was contained in Rev. Proc. 2008-24. A direct transfer that satisfies the revenue procedure will be treated as a tax-free exchange under Section 1035 of the Code if, for a period of at least 180 days from the date of the direct transfer, there are no distributions or surrenders from either annuity contract involved in the exchange. In addition, the 180-day period will be deemed to have been satisfied with respect to amounts received as an annuity for a period of 10 years or more, or as an annuity for the life of one or more persons. The taxation of distributions (other than distributions described in the immediately preceding sentence) received from either contract within the 180-day period will be determined using general tax principles to determine the substance of those payments. For example, they could be treated as taxable "boot" in an otherwise tax-free exchange, or as a distribution from the new contract. Rev. Proc. 2011-38 also removed numerous exceptions to the 180-day waiting period that Rev. Proc. 2008-11 provided for in its 12-month waiting period. Please discuss any tax consequences concerning any contemplated or completed transactions with a professional tax advisor.

Same-Sex Marriages, Domestic Partnership, and Other Similar Relationships

In US. v. Windsor, the United States Supreme Court declared Section 3 of the Defense of Marriage Act to be unconstitutional and concluded that same sex marriages, in states that recognize them, are to be accorded the same federal benefits, rights and obligations as other marriages recognized by that state.

Revenue Ruling 2013-17 declared that the terms "spouse," "husband and wife," "husband" and "wife" do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state. Therefore, the favorable income-deferral options afforded by federal tax law to a married spouse under Code Sections 72 and 401(a)(9) are not available to individuals who have entered into a domestic partnership, civil union or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state.

Withholding

Pre-death distributions from the contracts are subject to federal income tax. Nationwide is required to withhold the tax from the distributions unless the contract owner requests otherwise. Under some circumstances, the Code will not permit contract owners to waive withholding. Such circumstances include:

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

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

If a contract owner is prohibited from waiving withholding, as described above, the distribution will be subject to withholding rates established by Section 3405 of the Code and is applied against the amount of income that is distributed.

57

If the distribution is from a Tax Sheltered Annuity, it will be subject to mandatory 20% withholding that cannot be waived, unless:

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

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

Non-Resident Aliens

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

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

(1)	provide Nationwide with a properly completed withholding certificate claiming the treaty benefit of a lower tax rate or exemption from tax; and
(2)	provide Nationwide with an individual taxpayer identification number.

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

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

(1)	the distribution is connected to the non-resident alien's conduct of business in the United States;
(2)	the distribution is includable in the non-resident alien's gross income for United States federal income tax purposes; and
(3)	provide Nationwide with a properly completed withholding certificate claiming the exemption.

Note that for the preceding exemption, the distributions would be subject to the same withholding rules that are applicable to payments to United States persons.

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

Additional Medicare Tax

Effective January 1, 2013, Section 1411 of the Code imposes a surtax of 3.8% on certain net investment income received by individuals and certain trusts and estates. The surtax is imposed on the lesser of (a) net investment income or (b) the excess of the modified adjusted gross income over a threshold amount. For individuals, the threshold amount is $250,000 (married filing jointly, or qualifying widow(er) with dependent child); $125,000 (married filing separately); or $200,000 (single, or head of household (with qualifying person)). The threshold for an estate or trust that is subject to the surtax is generally equal to the dollar amount at which the highest tax bracket under Code Section 1(e) begins for the taxable year. For 2013, that amount is $11,950.

Modified adjusted gross income is equal to gross income with several modifications; consult with a qualified tax advisor regarding how to determine modified adjusted gross income for purposes of determining the applicability of the surtax.

Net investment income includes, but is not limited to, interest, dividends, capital gains, rent and royalty income, and income from nonqualified annuities. It may also include taxable distributions from, and gain from the sale or surrender of, life insurance contracts. Net investment income does not include, among other things, distributions from certain qualified plans (such as IRAs, Roth IRAs, and plans described in Code Sections 401(a), 401(k), 403(a), 403(b) or 457(b)); however, such distributions, to the extent that they are includible in income for federal income tax purposes, are includible in modified adjusted gross income.

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.

58

Section 2612 of the Code may require Nationwide to determine whether a death benefit or other distribution is a "direct skip" and the amount of the resulting generation skipping transfer tax, if any. A direct skip is when property is transferred to, or a death benefit or other distribution is made to:

a)	an individual who is two or more generations younger than the contract owner; or
b)	certain trusts, as described in Section 2613 of the Code (generally, trusts that have no beneficiaries who are not two 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 payment is subject to the generation skipping transfer tax, Nationwide may be required to deduct the amount of the transfer tax from the death benefit, distribution or other payment, and remit it directly to the Internal Revenue Service.

Charge for Tax

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

Diversification

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

• the failure to diversify was accidental;

• the failure is corrected; and

• a fine is paid to the Internal Revenue Service.

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

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

Required Distributions

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

Required Distributions – General Information

In general, a beneficiary is an individual or other entity that the contract owner designates to receive death proceeds upon the contract owner's death. The distribution rules in the Code make a distinction between "beneficiary" and "designated beneficiary" when determining the life expectancy that may be used for payments that are made from IRAs, SEP IRAs, Simple IRAs, Roth IRAs and Tax Sheltered Annuities after the death of the contract owner, 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.

59

Required Distributions for Non-Qualified Contracts

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

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

(2) If any contract owner dies before the annuitization date, then the entire interest in the contract (consisting of either the death benefit or the contract value reduced by charges set forth elsewhere in the contract) must be distributed within five 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), but is acting as an agent for a natural person, for purposes of these distribution provisions:

(a)	the death of the annuitant will be treated as the death of a contract owner;
(b)	any change of annuitant will be treated as the death of a contract owner; and
(c)	in either case, the appropriate distribution will be made upon the death or change, as the case may be.

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

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

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

(a)

the life of the contract owner or the joint lives of the contract owner and the contract owner's designated beneficiary; or

(b)

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

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

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

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

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

If the contract owner dies before the required beginning date (in the case of a Tax Sheltered Annuity, IRA, or SEP IRA) or before the entire contract value is distributed (in the case of Roth IRAs), any remaining interest in the contract must be distributed by December 31 of the fifth year following the contract owner's death or over a period not exceeding the applicable distribution period, which is determined as follows:

60

(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. Such distributions must begin on or before the later of (a) the end of the calendar year immediately following the calendar year in which the contract owner died; or (b) the end of the calendar year in which the contract owner would have attained 70½;

(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. Such distributions must begin on or before the end of the calendar year immediately following the calendar year in which the contract owner died; 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 Tax Sheltered Annuity, IRA, or SEP 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.

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 and SEP 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 or SEP 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 or SEP IRAs.

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

Tax Changes

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

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

• generally lowering federal income tax rates;

61

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

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

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

• increasing the estate tax credit; and

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

In 2006, the Pension Protection Act of 2006 made permanent the EGTRRA provisions noted above that increase the amounts that may be contributed to various retirement plans and that increase the portability of various retirement plans. However, all of the other changes resulting from EGTRRA were scheduled to "sunset," or become ineffective, after December 31, 2010 unless they were extended by additional legislation. The American Taxpayer Relief Act (ATRA) was enacted on January 1, 2013 and made permanent the lower federal income tax rates established under EGTRRA, except for individuals with taxable income above $400,000 ($450,000 for married couples) whose tax rate will revert to the pre-EGTRRA tax rate of 39.6%. ATRA also permanently provides for a maximum federal estate tax rate of 40% with an annually inflation-adjusted $5 million exclusion for estates of persons dying after December 31, 2012. Consult a qualified tax or financial advisor for further information relating to these and other tax issues.

State Taxation

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

62

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2014

Individual Deferred Variable Annuity Contracts

Issued by Nationwide Life Insurance Company

through its Nationwide Multi-Flex Variable Account

This Statement of Additional Information is not a prospectus. It contains information in addition to and more detailed than set forth in the prospectus and should be read in conjunction with the prospectus dated May 1, 2014. The prospectus may be obtained from NEA Valuebuilder Program, One Security Benefit Place, Topeka, Kansas 66636-0001, or calling 1-800-NEA-VALU (1-800-632-8258). Capitalized terms in this Statement of Additional Information correspond to terms defined in the prospectus.

TABLE OF CONTENTS

	Page
General Information and History	2
Services	2
Purchase of Securities Being Offered	2
Underwriters	3
Advertising	3
Annuity Payments	3

General Information and History

Nationwide Multi-Flex Variable Account (the "Variable Account") is a separate investment account of Nationwide Life Insurance Company ("Nationwide"). Nationwide is a stock life insurance company organized under the laws of the State of Ohio in March 1929 with its Home Office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide provides life insurance, annuities and retirement products. Nationwide is admitted to do business in all states, the District of Columbia and Puerto Rico. Nationwide is a member of the Nationwide group of companies and all of its common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company. Nationwide Corporation owns all of NFS's common stock and is a holding company, as well. All of Nationwide Corporation's common stock is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), the ultimate controlling persons of the Nationwide group of companies. The Nationwide group of companies is one of America's largest insurance and financial services family of companies, with combined assets of over $183.1 billion as of December 31, 2013.

Services

Nationwide and Security Benefit Life ("SBL") have responsibility for administration of the contracts and the Variable Account. Nationwide and SBL maintain records including the name, address, taxpayer identification number, and other pertinent information, such as the number and type of contracts issued to each contract owner and records with respect to Contract Value.

The custodian of the assets of the Variable Account is Nationwide. Nationwide relies on SBL as a third party administrator to maintain records of all purchases and redemptions of shares of the underlying mutual funds and to forward these to Nationwide. Nationwide, or its affiliates may have entered into agreements with the underlying mutual funds and/or their affiliates. The agreements are related 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, consult with your registered representative.

Independent Registered Public Accounting Firm

The financial statements of Nationwide Multi-Flex Variable Account and the consolidated financial statements and schedules of Nationwide Life Insurance Company for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. KPMG LLP is located at 191 West Nationwide Blvd., Suite 500, 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 the Financial Industry Regulatory Authority (FINRA).

2

Underwriters

Effective November 10, 2000, the contracts, which are offered continuously, are distributed by Security Distributors, Inc. ("SDI"), One Security Benefit Place, Topeka, Kansas 66636 – 0001. Prior to November 14, 2000, the contracts were distributed by Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide. No underwriting commissions have been paid by Nationwide to SDI for each of this Variable Account's last three fiscal years.

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. 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 owners and prospective purchasers 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 Annuitizing the Contract located in the prospectus.

3

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and Subsidiaries and Contract Owners of Nationwide Multi-Flex Variable Account:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide Multi-Flex Variable Account (comprised of the sub-accounts listed in note 1(b), (collectively, “the Accounts”)) as of December 31, 2013, and the related statements of operations for the period then ended, the statements of changes in contract owners’ equity for each of the periods in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Accounts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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, 2013, 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, 2013, the results of their operations for the period then ended, the changes in contract owners’ equity for each of the periods in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Columbus, Ohio

March 13, 2014

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2013

Assets:
Investments at fair value:
Stock Index Fund, Inc. - Initial Shares (DSIF)
	1,099,361 shares (cost $30,777,007)	$	44,897,923
Socially Responsible Growth Fund Inc - Initial Shares (DSRG)
	396,153 shares (cost $10,224,788)		17,462,404
Janus Aspen Series - Overseas Portfolio - Institutional Shares (JAIG)
	244,329 shares (cost $10,565,445)		10,266,698
Federated NVIT High Income Bond Fund - Class I (HIBF)
	132,390 shares (cost $908,304)		914,813
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
	26,749 shares (cost $224,931)		304,935
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
	16,636 shares (cost $206,106)		250,867
NVIT Nationwide Fund - Class I (TRF)
	5,238,445 shares (cost $52,010,819)		69,095,093
NVIT Government Bond Fund - Class I (GBF)
	1,832,124 shares (cost $21,292,513)		19,786,940
American Century NVIT Growth Fund - Class I (CAF)
	264,355 shares (cost $3,457,883)		5,316,169
NVIT Money Market Fund - Class I (SAM)
	6,344,263 shares (cost $6,344,263)		6,344,263
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
	10,840 shares (cost $117,622)		142,439
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
	595,056 shares (cost $5,092,939)		8,187,977
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
	1,854,182 shares (cost $16,784,279)		24,549,376
NVIT Large Cap Growth Fund - Class I (NVOLG1)
	2,914 shares (cost $57,052)		68,451
VP Balanced Fund - Class I (ACVB)
	613,536 shares (cost $4,115,343)		4,957,373
VP Capital Appreciation Fund - Class I (ACVCA)
	291,496 shares (cost $2,954,591)		5,328,545
VP Income & Growth Fund - Class I (ACVIG)
	429,529 shares (cost $2,829,954)		3,938,782
Appreciation Portfolio - Initial Shares (DCAP)
	120,058 shares (cost $4,046,716)		5,756,790
Opportunistic Small Cap Portfolio: Initial Shares (DSC)
	880,315 shares (cost $30,770,327)		41,401,205
Quality Bond Portfolio - Initial Shares (DQBP)
	435,272 shares (cost $4,887,522)		5,157,974
Contrafund(R)Portfolio - Service Class 2 (FC2)
	137,965 shares (cost $2,934,917)		4,659,067
Equity-Income Portfolio - Initial Class (FEIP)
	2,160,590 shares (cost $47,900,300)		50,320,131
High Income Portfolio - Initial Class (FHIP)
	1,999,744 shares (cost $11,088,069)		11,598,515
Templeton Foreign Securities Fund - Class 1 (TIF)
	1,091,439 shares (cost $14,922,499)		19,165,675
Balanced Portfolio - I Class Shares (AMBP)
	735,648 shares (cost $7,193,961)		9,997,453
Real Return Portfolio - Administrative Class (PMVRRA)
	164,574 shares (cost $2,309,904)		2,073,633
Total Return Portfolio - Administrative Class (PMVTRA)
	276,459 shares (cost $3,132,463)		3,035,522

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2013

VI American Franchise Fund - Series I Shares (ACEG)
	33,132 shares (cost $1,234,732)	$	1,677,471
VI Global Health Care Fund - Series I Shares (IVHS)
	17,587 shares (cost $360,729)		515,661
VI Global Real Estate Fund - Series I Shares (IVRE)
	67,646 shares (cost $873,884)		1,034,303
VI International Growth Fund - Series I Shares (AVIE)
	40,895 shares (cost $1,155,491)		1,444,413
Micro-Cap Portfolio - Investment Class (ROCMC)
	104,221 shares (cost $1,048,825)		1,337,156
SBL Fund - Series D (World Equity Income Series) (SBLD)
	81,379 shares (cost $811,849)		976,550
SBL Fund - Series J (StylePlus Mid Growth Series) (SBLJ)
	10,770 shares (cost $316,369)		467,955
Series N (Managed Asset Allocation Series) (SBLN)
	13,541 shares (cost $253,219)		351,116
Series O (All Cap Value Series) (SBLO)
	36,927 shares (cost $829,771)		1,213,036
Series P (High Yield Series) (SBLP)
	18,421 shares (cost $531,167)		608,266
Series Q (Small Cap Value Series) (SBLQ)
	37,376 shares (cost $1,321,528)		1,960,753
Series V (Mid Cap Value Series) (SBLV)
	48,298 shares (cost $2,460,703)		4,030,935
SBL Fund - Series X (StylePlus Small Growth Series) (SBLX)
	16,059 shares (cost $299,645)		468,917
SBL Fund - Series Y (StylePlus Large Growth Series) (SBLY)
	3,323 shares (cost $34,570)		44,928
Total Investments		$	391,110,473
Other Accounts Receivable			4,625
Accounts Receivable-Total Return Portfolio - Administrative Class (PMVTRA)			3,344
Accounts Receivable-VI Global Real Estate Fund - Series I Shares (IVRE)			336
Accounts Receivable-NVIT Money Market Fund - Class I (SAM)			(3,368	)
Accounts Receivable-NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)			(36	)
Accounts Receivable-NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)			(6,533	)
Accounts Receivable-NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)			(20,125	)
Accounts Receivable-SBL Fund - Series D (World Equity Income Series) (SBLD)			(640	)
Accounts Receivable-Series N (Managed Asset Allocation Series) (SBLN)			(294	)
Accounts Receivable-Series O (All Cap Value Series) (SBLO)			(840	)
Accounts Receivable-Series V (Mid Cap Value Series) (SBLV)			(1,975	)
Accounts Receivable-SBL Fund - Series X (StylePlus Small Growth Series) (SBLX)			(249	)
Accounts Receivable-SBL Fund - Series Y (StylePlus Large Growth Series) (SBLY)			(34	)
		$	391,084,684
Contract Owners’ Equity:
Accumulation units			390,949,627
Contracts in payout (annuitization) period (note 1f)			135,057
Total Contract Owners’ Equity (note 5)		$	391,084,684

See accompanying notes to financial statements.

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2013

Investment Activity:		Total			DSIF			DSRG			JAIG			HIBF			NVNMO1			NVNSR1			TRF
Reinvested dividends	$		5,841,842			761,686			199,716			326,926			49,089			2,806			1,563			843,483
Mortality and expense risk charges (note 2)			(4,724,022	)		(524,755	)		(201,194	)		(131,037	)		(9,572	)		(3,647	)		(7,013	)		(841,595	)
Net investment income (loss)			1,117,820			236,931			(1,478	)		195,889			39,517			(841	)		(5,450	)		1,888
Realized gain (loss) on investments			8,232,511			1,006,227			516,613			(784,888	)		12,138			19,581			187,724			1,725,429
Change in unrealized gain (loss) on investments			66,176,086			9,269,731			3,957,754			1,861,628			(7,176	)		68,608			(77	)		15,003,704
Net gain (loss) on investments			74,408,597			10,275,958			4,474,367			1,076,740			4,962			88,189			187,647			16,729,133
Reinvested capital gains			5,782,659			454,763			-			-			-			11,782			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$		81,309,076			10,967,652			4,472,889			1,272,629			44,479			99,130			182,197			16,731,021
Investment Activity:		GBF			CAF			SAM			NVMLG1			NVMMG1			NVMMV2			NVOLG1			ACVB
Reinvested dividends	$		400,352			32,655			-			899			-			265,351			309			68,741
Mortality and expense risk charges (note 2)			(268,747	)		(63,821	)		(87,495	)		(1,285	)		(92,946	)		(280,326	)		(735	)		(54,317	)
Net investment income (loss)			131,605			(31,166	)		(87,495	)		(386	)		(92,946	)		(14,975	)		(426	)		14,424
Realized gain (loss) on investments			(156,928	)		412,381			-			1,075			421,941			877,855			15,581			38,312
Change in unrealized gain (loss) on investments			(1,350,914	)		837,967			-			20,997			1,465,166			4,496,576			694			503,798
Net gain (loss) on investments			(1,507,842	)		1,250,348			-			22,072			1,887,107			5,374,431			16,275			542,110
Reinvested capital gains			235,589			-			-			7,573			535,941			1,029,462			-			76,342
Net increase (decrease) in contract owners’ equity resulting from operations	$		(1,140,648	)		1,219,182			(87,495	)		29,259			2,330,102			6,388,918			15,849			632,876

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2013

Investment Activity:		ACVCA			ACVIG			DCAP			DSC			DQBP			FC2			FEIP			FHIP
Reinvested dividends	$		-			79,814			117,512			-			145,989			35,298			1,183,475			671,135
Mortality and expense risk charges (note 2)			(64,724	)		(45,723	)		(76,240	)		(456,938	)		(65,278	)		(52,838	)		(609,496	)		(148,634	)
Net investment income (loss)			(64,724	)		34,091			41,272			(456,938	)		80,711			(17,540	)		573,979			522,501
Realized gain (loss) on investments			244,573			65,839			74,031			272,773			42,068			115,140			445,169			(127,311	)
Change in unrealized gain (loss) on investments			884,273			954,503			932,978			13,995,643			(269,309	)		982,384			7,041,827			138,350
Net gain (loss) on investments			1,128,846			1,020,342			1,007,009			14,268,416			(227,241	)		1,097,524			7,486,996			11,039
Reinvested capital gains			193,356			-			15,280			-			-			1,236			3,137,722			-
Net increase (decrease) in contract owners’ equity resulting from operations	$		1,257,478			1,054,433			1,063,561			13,811,478			(146,530	)		1,081,220			11,198,697			533,540
Investment Activity:		TIF			AMBP			PMVRRA			PMVTRA			ACEG			IVHS			IVRE			AVIE
Reinvested dividends	$		449,044			-			37,957			94,513			6,950			2,768			41,079			16,265
Mortality and expense risk charges (note 2)			(223,211	)		(126,266	)		(27,815	)		(55,863	)		(19,755	)		(5,157	)		(14,058	)		(23,908	)
Net investment income (loss)			225,833			(126,266	)		10,142			38,650			(12,805	)		(2,389	)		27,021			(7,643	)
Realized gain (loss) on investments			489,651			379,489			23,148			22,990			47,033			14,661			102,108			291,813
Change in unrealized gain (loss) on investments			2,834,497			1,303,403			(283,743	)		(257,786	)		478,196			117,981			(109,312	)		(29,189	)
Net gain (loss) on investments			3,324,148			1,682,892			(260,595	)		(234,796	)		525,229			132,642			(7,204	)		262,624
Reinvested capital gains			-			-			16,733			32,990			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$		3,549,981			1,556,626			(233,720	)		(163,156	)		512,424			130,253			19,817			254,981

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENT OF OPERATIONS

Year Ended December 31, 2013

Investment Activity:		ROCMC			SBLD			SBLJ			SBLN			SBLO			SBLP			SBLQ			SBLV
Reinvested dividends	$		6,467			-			-			-			-			-			-			-
Mortality and expense risk charges (note 2)			(16,799	)		(7,151	)		(5,721	)		(4,079	)		(21,193	)		(10,939	)		(20,214	)		(47,602	)
Net investment income (loss)			(10,332	)		(7,151	)		(5,721	)		(4,079	)		(21,193	)		(10,939	)		(20,214	)		(47,602	)
Realized gain (loss) on investments			162,037			367			55,672			6,395			572,824			118,339			119,313			350,620
Change in unrealized gain (loss) on investments			51,907			108,858			64,639			36,783			(79,795	)		(59,724	)		378,073			722,842
Net gain (loss) on investments			213,944			109,225			120,311			43,178			493,029			58,615			497,386			1,073,462
Reinvested capital gains			33,890			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$		237,502			102,074			114,590			39,099			471,836			47,676			477,172			1,025,860
Investment Activity:		SBLX			SBLY
Reinvested dividends	$		-			-
Mortality and expense risk charges (note 2)			(5,358	)		(577	)
Net investment income (loss)			(5,358	)		(577	)
Realized gain (loss) on investments			41,684			9,044
Change in unrealized gain (loss) on investments			106,834			2,517
Net gain (loss) on investments			148,518			11,561
Reinvested capital gains			-			-
Net increase (decrease) in contract owners’ equity resulting from operations	$		143,160			10,984

See accompanying notes to financial statements.

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

		Total						DSIF						DSRG						JAIG
		2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$		1,117,820			1,486,699			236,931			291,829			(1,478	)		(66,796	)		195,889			(67,895	)
Realized gain (loss) on investments			8,232,511			614,526			1,006,227			319,193			516,613			298,345			(784,888	)		138,669
Change in unrealized gain (loss) on investments			66,176,086			29,934,030			9,269,731			2,544,737			3,957,754			1,258,741			1,861,628			25,604
Reinvested capital gains			5,782,659			9,602,864			454,763			1,842,278			-			-			-			1,230,856
Net increase (decrease) in contract owners’ equity resulting from operations			81,309,076			41,638,119			10,967,652			4,998,037			4,472,889			1,490,290			1,272,629			1,327,234
Equity transactions:
Purchase payments received from contract owners (note 3)			6,097,487			6,342,272			656,741			713,638			241,808			292,234			178,142			214,977
Transfers between subaccounts (including fixed account), net (note 3)			(2,292,904	)		(2,909,515	)		(12,376	)		(299,607	)		83,187			(278,721	)		(810,117	)		(881,631	)
Redemptions			(42,610,883	)		(38,949,417	)		(4,364,628	)		(3,373,055	)		(1,614,951	)		(1,388,383	)		(1,383,295	)		(1,726,831	)
Annuity benefits			(11,619	)		(11,505	)		-			-			-			-			-			-
Contract maintenance charges (note 2)			(247,172	)		(245,592	)		(22,580	)		(20,937	)		(8,163	)		(7,613	)		(5,306	)		(6,028	)
Contingent deferred sales charges (note 2)			(309,820	)		(340,496	)		(40,010	)		(43,502	)		(20,888	)		(23,303	)		(8,401	)		(10,514	)
Adjustments to maintain reserves			(17,486	)		(2	)		(7,222	)		(1,681	)		1,435			268			1,981			(2,229	)
Net equity transactions			(39,392,397	)		(36,114,255	)		(3,790,075	)		(3,025,144	)		(1,317,572	)		(1,405,518	)		(2,026,996	)		(2,412,256	)
Net change in contract owners’ equity			41,916,679			5,523,864			7,177,577			1,972,893			3,155,317			84,772			(754,367	)		(1,085,022	)
Contract owners’ equity beginning of period			349,168,005			343,644,141			37,718,186			35,745,293			14,307,102			14,222,330			11,020,898			12,105,920
Contract owners’ equity end of period	$		391,084,684			349,168,005			44,895,763			37,718,186			17,462,419			14,307,102			10,266,531			11,020,898
CHANGES IN UNITS:
Beginning units			13,497,343			14,845,421			1,126,601			1,219,576			562,828			618,362			395,439			486,377
Units purchased			1,062,936			1,193,849			50,496			53,075			18,355			19,006			15,688			25,771
Units redeemed			(2,413,870	)		(2,541,927	)		(147,853	)		(146,050	)		(63,163	)		(74,540	)		(85,412	)		(116,709	)
Ending units			12,146,409			13,497,343			1,029,244			1,126,601			518,020			562,828			325,715			395,439

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

		HIBF						NVNMO1						NVNSR1						TRF
		2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$		39,517			52,360			(841	)		399			(5,450	)		4,528			1,888			62,270
Realized gain (loss) on investments			12,138			8,924			19,581			3,972			187,724			192			1,725,429			(643,880	)
Change in unrealized gain (loss) on investments			(7,176	)		27,762			68,608			13,610			(77	)		47,964			15,003,704			7,948,359
Reinvested capital gains			-			-			11,782			17,529			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations			44,479			89,046			99,130			35,510			182,197			52,684			16,731,021			7,366,749
Equity transactions:
Purchase payments received from contract owners (note 3)			14,509			16,430			5,259			4,684			22,695			13,254			1,173,687			674,991
Transfers between subaccounts (including fixed account), net (note 3)			180,297			108,948			(1,150	)		(5,697	)		(697,039	)		739,076			(379,257	)		(1,031,724	)
Redemptions			(112,079	)		(63,261	)		(42,396	)		(28,888	)		(87,834	)		(24,990	)		(8,691,348	)		(6,922,271	)
Annuity benefits			-			-			-			-			-			-			(9,981	)		(6,015	)
Contract maintenance charges (note 2)			(394	)		(382	)		(146	)		(122	)		(281	)		(214	)		(63,640	)		(66,470	)
Contingent deferred sales charges (note 2)			(519	)		(598	)		(208	)		(197	)		(294	)		(201	)		(35,394	)		(35,914	)
Adjustments to maintain reserves			(91	)		(99	)		53			(19	)		(41	)		65			(1,127	)		(4,915	)
Net equity transactions			81,723			61,038			(38,588	)		(30,239	)		(762,794	)		726,990			(8,007,060	)		(7,392,318	)
Net change in contract owners’ equity			126,202			150,084			60,542			5,271			(580,597	)		779,674			8,723,961			(25,569	)
Contract owners’ equity beginning of period			788,563			638,479			244,437			239,166			831,484			51,810			60,380,848			60,406,417
Contract owners’ equity end of period	$		914,765			788,563			304,979			244,437			250,887			831,484			69,104,809			60,380,848
CHANGES IN UNITS:
Beginning units			39,232			35,910			27,434			30,980			81,518			5,589			581,325			655,935
Units purchased			13,916			8,947			3,497			1,749			13,117			80,205			13,685			10,722
Units redeemed			(10,080	)		(5,625	)		(6,822	)		(5,295	)		(76,676	)		(4,276	)		(80,898	)		(85,332	)
Ending units			43,068			39,232			24,109			27,434			17,959			81,518			514,112			581,325

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

		GBF						CAF						SAM						NVMLG1
		2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$		131,605			209,556			(31,166	)		(35,647	)		(87,495	)		(100,575	)		(386	)		(687	)
Realized gain (loss) on investments			(156,928	)		14,038			412,381			214,243			-			-			1,075			5,682
Change in unrealized gain (loss) on investments			(1,350,914	)		(570,967	)		837,967			375,407			-			-			20,997			4,343
Reinvested capital gains			235,589			757,423			-			-			-			-			7,573			2,109
Net increase (decrease) in contract owners’ equity resulting from operations			(1,140,648	)		410,050			1,219,182			554,003			(87,495	)		(100,575	)		29,259			11,447
Equity transactions:
Purchase payments received from contract owners (note 3)			341,798			285,733			124,807			228,634			193,882			222,674			2,385			2,183
Transfers between subaccounts (including fixed account), net (note 3)			722,363			(121,435	)		216,907			31,280			274,353			863,867			45,115			(6,346	)
Redemptions			(2,733,332	)		(2,430,400	)		(909,894	)		(576,905	)		(1,378,287	)		(2,003,749	)		(6,806	)		(19,890	)
Annuity benefits			(1,239	)		(1,308	)		-			-			(399	)		(4,182	)		-			-
Contract maintenance charges (note 2)			(19,809	)		(22,485	)		(7,060	)		(7,035	)		(7,235	)		(8,235	)		(51	)		(41	)
Contingent deferred sales charges (note 2)			(10,465	)		(11,769	)		(630	)		(144	)		(3,619	)		(4,193	)		(60	)		(41	)
Adjustments to maintain reserves			853			(2,599	)		(155	)		7			575			14,640			(52	)		12
Net equity transactions			(1,699,831	)		(2,304,263	)		(576,025	)		(324,163	)		(920,730	)		(919,178	)		40,531			(24,123	)
Net change in contract owners’ equity			(2,840,479	)		(1,894,213	)		643,157			229,840			(1,008,225	)		(1,019,753	)		69,790			(12,676	)
Contract owners’ equity beginning of period			22,628,216			24,522,429			4,672,901			4,443,061			7,349,120			8,368,873			72,613			85,289
Contract owners’ equity end of period	$		19,787,737			22,628,216			5,316,058			4,672,901			6,340,895			7,349,120			142,403			72,613
CHANGES IN UNITS:
Beginning units			384,448			423,716			217,917			233,176			293,146			329,210			7,161			9,659
Units purchased			29,496			11,736			16,926			14,084			64,997			100,586			4,048			1,608
Units redeemed			(58,926	)		(51,004	)		(41,242	)		(29,343	)		(102,107	)		(136,650	)		(645	)		(4,106	)
Ending units			355,018			384,448			193,601			217,917			256,036			293,146			10,564			7,161

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

		NVMMG1						NVMMV2						NVOLG1						ACVB
		2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$		(92,946	)		(83,692	)		(14,975	)		(29,628	)		(426	)		(269	)		14,424			28,678
Realized gain (loss) on investments			421,941			271,795			877,855			572,640			15,581			2,353			38,312			(13,970	)
Change in unrealized gain (loss) on investments			1,465,166			43,615			4,496,576			271,940			694			7,970			503,798			344,001
Reinvested capital gains			535,941			617,506			1,029,462			1,862,020			-			-			76,342			-
Net increase (decrease) in contract owners’ equity resulting from operations			2,330,102			849,224			6,388,918			2,676,972			15,849			10,054			632,876			358,709
Equity transactions:
Purchase payments received from contract owners (note 3)			98,392			109,036			324,654			360,240			1,253			5,649			56,201			37,421
Transfers between subaccounts (including fixed account), net (note 3)			20,052			(151,781	)		866,693			(503,651	)		30,571			26,773			987,259			66,876
Redemptions			(792,368	)		(639,456	)		(2,298,409	)		(2,156,495	)		(77,365	)		-			(329,547	)		(418,223	)
Annuity benefits			-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)			(3,784	)		(3,407	)		(11,373	)		(9,923	)		(29	)		(38	)		(2,749	)		(2,613	)
Contingent deferred sales charges (note 2)			(7,971	)		(8,769	)		(21,231	)		(23,107	)		(50	)		(37	)		(2,381	)		(3,114	)
Adjustments to maintain reserves			(2,690	)		22			(11,898	)		3,663			(45	)		8			685			(253	)
Net equity transactions			(688,369	)		(694,355	)		(1,151,564	)		(2,329,273	)		(45,665	)		32,355			709,468			(319,906	)
Net change in contract owners’ equity			1,641,733			154,869			5,237,354			347,699			(29,816	)		42,409			1,342,344			38,803
Contract owners’ equity beginning of period			6,539,711			6,384,842			19,291,897			18,944,198			98,250			55,841			3,615,006			3,576,203
Contract owners’ equity end of period	$		8,181,444			6,539,711			24,529,251			19,291,897			68,434			98,250			4,957,350			3,615,006
CHANGES IN UNITS:
Beginning units			624,018			690,999			1,710,281			1,929,143			6,250			4,161			249,134			271,951
Units purchased			38,273			22,146			139,072			62,259			1,582			2,757			85,967			16,713
Units redeemed			(92,950	)		(89,127	)		(224,902	)		(281,121	)		(4,604	)		(668	)		(40,365	)		(39,530	)
Ending units			569,341			624,018			1,624,451			1,710,281			3,228			6,250			294,736			249,134

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

		ACVCA						ACVIG						DCAP						DSC
		2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$		(64,724	)		(60,119	)		34,091			26,385			41,272			152,394			(456,938	)		(382,365	)
Realized gain (loss) on investments			244,573			109,771			65,839			(3,800	)		74,031			96,486			272,773			(928,631	)
Change in unrealized gain (loss) on investments			884,273			295,766			954,503			399,111			932,978			294,611			13,995,643			6,579,037
Reinvested capital gains			193,356			253,062			-			-			15,280			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations			1,257,478			598,480			1,054,433			421,696			1,063,561			543,491			13,811,478			5,268,041
Equity transactions:
Purchase payments received from contract owners (note 3)			6,507			10,469			53,542			59,130			114,303			149,505			530,665			654,661
Transfers between subaccounts (including fixed account), net (note 3)			18,091			(37,267	)		230,421			(66,897	)		(1,086,148	)		75,067			(387,205	)		(546,984	)
Redemptions			(490,828	)		(183,693	)		(517,392	)		(542,602	)		(610,483	)		(569,978	)		(3,296,120	)		(3,327,827	)
Annuity benefits			-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)			(5,526	)		(5,662	)		(1,858	)		(1,711	)		(3,082	)		(3,223	)		(18,529	)		(15,562	)
Contingent deferred sales charges (note 2)			(119	)		-			(3,290	)		(3,996	)		(5,150	)		(6,184	)		(47,232	)		(49,614	)
Adjustments to maintain reserves			(13	)		26			964			(1,410	)		593			(1,328	)		(3,363	)		3,879
Net equity transactions			(471,888	)		(216,127	)		(237,613	)		(557,486	)		(1,589,967	)		(356,141	)		(3,221,784	)		(3,281,447	)
Net change in contract owners’ equity			785,590			382,353			816,820			(135,790	)		(526,406	)		187,350			10,589,694			1,986,594
Contract owners’ equity beginning of period			4,542,958			4,160,605			3,122,538			3,258,328			6,284,076			6,096,726			30,811,947			28,825,353
Contract owners’ equity end of period	$		5,328,548			4,542,958			3,939,358			3,122,538			5,757,670			6,284,076			41,401,641			30,811,947
CHANGES IN UNITS:
Beginning units			131,927			138,330			197,879			233,740			344,900			364,637			1,359,754			1,513,935
Units purchased			621			818			28,826			9,385			12,975			37,549			37,117			51,404
Units redeemed			(12,799	)		(7,221	)		(40,535	)		(45,246	)		(93,519	)		(57,286	)		(150,583	)		(205,585	)
Ending units			119,749			131,927			186,170			197,879			264,356			344,900			1,246,288			1,359,754

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

		DQBP						FC2						FEIP						FHIP
		2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$		80,711			94,042			(17,540	)		(8,760	)		573,979			779,039			522,501			536,494
Realized gain (loss) on investments			42,068			70,285			115,140			(80,602	)		445,169			(662,586	)		(127,311	)		(163,994	)
Change in unrealized gain (loss) on investments			(269,309	)		135,595			982,384			638,869			7,041,827			3,580,654			138,350			1,069,191
Reinvested capital gains			-			-			1,236			-			3,137,722			2,779,875			-			-
Net increase (decrease) in contract owners’ equity resulting from operations			(146,530	)		299,922			1,081,220			549,507			11,198,697			6,476,982			533,540			1,441,691
Equity transactions:
Purchase payments received from contract owners (note 3)			72,538			75,178			93,938			139,156			620,924			762,279			174,282			201,044
Transfers between subaccounts (including fixed account), net (note 3)			432,728			9,476			209,909			(317,386	)		(696,973	)		(1,260,222	)		(34,951	)		29,998
Redemptions			(549,262	)		(560,702	)		(525,097	)		(502,855	)		(4,584,900	)		(4,954,442	)		(1,203,104	)		(1,165,197	)
Annuity benefits			-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)			(2,640	)		(2,780	)		(2,147	)		(2,067	)		(26,992	)		(25,741	)		(6,029	)		(6,158	)
Contingent deferred sales charges (note 2)			(4,455	)		(5,455	)		(2,583	)		(2,541	)		(43,018	)		(47,175	)		(14,124	)		(17,288	)
Adjustments to maintain reserves			814			(1,285	)		1,243			238			580			(3,472	)		(1,570	)		2,294
Net equity transactions			(50,277	)		(485,568	)		(224,737	)		(685,455	)		(4,730,379	)		(5,528,773	)		(1,085,496	)		(955,307	)
Net change in contract owners’ equity			(196,807	)		(185,646	)		856,483			(135,948	)		6,468,318			948,209			(551,956	)		486,384
Contract owners’ equity beginning of period			5,354,395			5,540,041			3,802,460			3,938,408			43,848,497			42,900,288			12,148,649			11,662,265
Contract owners’ equity end of period	$		5,157,588			5,354,395			4,658,943			3,802,460			50,316,815			43,848,497			11,596,693			12,148,649
CHANGES IN UNITS:
Beginning units			254,971			278,534			311,148			369,430			1,336,415			1,513,759			547,978			593,197
Units purchased			32,985			14,907			36,465			54,705			33,662			38,705			17,135			23,380
Units redeemed			(35,257	)		(38,470	)		(52,748	)		(112,987	)		(157,638	)		(216,049	)		(64,825	)		(68,599	)
Ending units			252,699			254,971			294,865			311,148			1,212,439			1,336,415			500,288			547,978

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

	TIF						AMBP						PMVRRA						PMVTRA
	2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$	225,833			315,424			(126,266	)		(129,822	)		10,142			(4,833	)		38,650			60,392
Realized gain (loss) on investments		489,651			169,672			379,489			193,702			23,148			85,110			22,990			67,070
Change in unrealized gain (loss) on investments		2,834,497			2,079,704			1,303,403			729,934			(283,743	)		(36,681	)		(257,786	)		138,791
Reinvested capital gains		-			-			-			-			16,733			118,083			32,990			92,685
Net increase (decrease) in contract owners’ equity resulting from operations		3,549,981			2,564,800			1,556,626			793,814			(233,720	)		161,679			(163,156	)		358,938
Equity transactions:
Purchase payments received from contract owners (note 3)		274,459			308,792			124,635			130,291			76,915			82,750			131,540			127,498
Transfers between subaccounts (including fixed account), net (note 3)		513,823			(274,244	)		(85,747	)		(157,523	)		173,071			142,902			(1,366,601	)		954,210
Redemptions		(1,945,572	)		(1,923,849	)		(1,390,534	)		(1,048,886	)		(319,169	)		(328,156	)		(565,231	)		(591,803	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(9,007	)		(8,201	)		(7,234	)		(7,677	)		(1,156	)		(1,195	)		(2,210	)		(2,310	)
Contingent deferred sales charges (note 2)		(17,055	)		(18,706	)		(8,263	)		(9,604	)		(1,206	)		(1,252	)		(2,139	)		(2,716	)
Adjustments to maintain reserves		1,858			(2,942	)		23			(154	)		(422	)		(714	)		724			(246	)
Net equity transactions		(1,181,494	)		(1,919,150	)		(1,367,120	)		(1,093,553	)		(71,967	)		(105,665	)		(1,803,917	)		484,633
Net change in contract owners’ equity		2,368,487			645,650			189,506			(299,739	)		(305,687	)		56,014			(1,967,073	)		843,571
Contract owners’ equity beginning of period		16,797,486			16,151,836			9,807,432			10,107,171			2,379,486			2,323,472			5,005,939			4,162,368
Contract owners’ equity end of period	$	19,165,973			16,797,486			9,996,938			9,807,432			2,073,799			2,379,486			3,038,866			5,005,939
CHANGES IN UNITS:
Beginning units		620,520			698,307			370,925			412,530			158,844			166,439			328,221			295,172
Units purchased		47,233			26,326			9,634			9,586			34,852			45,891			57,813			97,521
Units redeemed		(85,908	)		(104,113	)		(57,248	)		(51,191	)		(39,165	)		(53,486	)		(180,184	)		(64,472	)
Ending units		581,845			620,520			323,311			370,925			154,531			158,844			205,850			328,221

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

	ACEG						IVHS						IVRE						AVIE
	2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$	(12,805	)		(12,333	)		(2,389	)		(3,246	)		27,021			(6,364	)		(7,643	)		5,517
Realized gain (loss) on investments		47,033			(5,297	)		14,661			6,209			102,108			(41,419	)		291,813			(34,817	)
Change in unrealized gain (loss) on investments		478,196			(35,456	)		117,981			40,318			(109,312	)		262,198			(29,189	)		295,235
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		512,424			(53,086	)		130,253			43,281			19,817			214,415			254,981			265,935
Equity transactions:
Purchase payments received from contract owners (note 3)		29,210			25,272			10,762			7,501			44,128			37,638			53,846			69,216
Transfers between subaccounts (including fixed account), net (note 3)		(68,919	)		1,573,528			78,080			56,406			8,531			139,499			(886,873	)		257,056
Redemptions		(233,462	)		(103,657	)		(16,330	)		(11,696	)		(142,792	)		(73,319	)		(222,570	)		(195,454	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(792	)		(507	)		(227	)		(127	)		(565	)		(469	)		(963	)		(1,041	)
Contingent deferred sales charges (note 2)		(1,502	)		(1,035	)		(159	)		(174	)		(488	)		(543	)		(1,121	)		(1,450	)
Adjustments to maintain reserves		(120	)		160			6			(111	)		115			(242	)		(213	)		130
Net equity transactions		(275,585	)		1,493,761			72,132			51,799			(91,071	)		102,564			(1,057,894	)		128,457
Net change in contract owners’ equity		236,839			1,440,675			202,385			95,080			(71,254	)		316,979			(802,913	)		394,392
Contract owners’ equity beginning of period		1,440,675			-			313,310			218,230			1,105,893			788,914			2,247,503			1,853,111
Contract owners’ equity end of period	$	1,677,514			1,440,675			515,695			313,310			1,034,639			1,105,893			1,444,590			2,247,503
CHANGES IN UNITS:
Beginning units		138,918			-			23,646			19,636			96,248			86,790			119,231			112,106
Units purchased		4,196			150,359			7,299			8,024			18,906			24,777			13,923			28,295
Units redeemed		(26,122	)		(11,441	)		(2,894	)		(4,014	)		(26,342	)		(15,319	)		(67,907	)		(21,170	)
Ending units		116,992			138,918			28,051			23,646			88,812			96,248			65,247			119,231

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

	ROCMC						SBLD						SBLJ						SBLN
	2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$	(10,332	)		(18,013	)		(7,151	)		(4,692	)		(5,721	)		(5,481	)		(4,079	)		(3,656	)
Realized gain (loss) on investments		162,037			(4,392	)		367			(14,379	)		55,672			41,612			6,395			9,043
Change in unrealized gain (loss) on investments		51,907			81,998			108,858			71,808			64,639			22,541			36,783			27,526
Reinvested capital gains		33,890			29,438			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		237,502			89,031			102,074			52,737			114,590			58,672			39,099			32,913
Equity transactions:
Purchase payments received from contract owners (note 3)		30,849			40,831			14,451			10,778			11,439			13,963			9,777			6,297
Transfers between subaccounts (including fixed account), net (note 3)		(135,825	)		(137,007	)		514,129			(8,334	)		(21,362	)		(10,558	)		43,809			21,197
Redemptions		(148,459	)		(134,359	)		(28,673	)		(49,683	)		(64,574	)		(46,355	)		(26,797	)		(60,950	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(676	)		(731	)		(286	)		(188	)		(229	)		(219	)		(163	)		(146	)
Contingent deferred sales charges (note 2)		(420	)		(607	)		(359	)		(321	)		(288	)		(346	)		(178	)		(326	)
Adjustments to maintain reserves		13			(43	)		(557	)		(8	)		(221	)		233			(180	)		154
Net equity transactions		(254,518	)		(231,916	)		498,705			(47,756	)		(75,235	)		(43,282	)		26,268			(33,774	)
Net change in contract owners’ equity		(17,016	)		(142,885	)		600,779			4,981			39,355			15,390			65,367			(861	)
Contract owners’ equity beginning of period		1,354,214			1,497,099			375,131			370,150			428,552			413,162			285,455			286,316
Contract owners’ equity end of period	$	1,337,198			1,354,214			975,910			375,131			467,907			428,552			350,822			285,455
CHANGES IN UNITS:
Beginning units		116,339			136,595			38,357			43,547			42,347			46,685			22,965			25,771
Units purchased		8,766			11,155			51,183			5,498			5,002			6,315			4,623			4,434
Units redeemed		(28,904	)		(31,411	)		(4,752	)		(10,688	)		(11,439	)		(10,653	)		(2,565	)		(7,240	)
Ending units		96,201			116,339			84,788			38,357			35,910			42,347			25,023			22,965

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

	SBLO						SBLP						SBLQ						SBLV
	2013			2012			2013			2012			2013			2012			2013			2012
Investment activity:
Net investment income (loss)	$	(21,193	)		(25,298	)		(10,939	)		(11,210	)		(20,214	)		(16,672	)		(47,602	)		(42,456	)
Realized gain (loss) on investments		572,824			17,144			118,339			58,544			119,313			196,927			350,620			124,034
Change in unrealized gain (loss) on investments		(79,795	)		264,604			(59,724	)		62,921			378,073			32,716			722,842			408,757
Reinvested capital gains		-			-			-			-			-			-			-			-
Net increase (decrease) in contract owners’ equity resulting from operations		471,836			256,450			47,676			110,255			477,172			212,971			1,025,860			490,335
Equity transactions:
Purchase payments received from contract owners (note 3)		44,584			66,576			22,059			24,968			29,961			33,453			77,120			101,339
Transfers between subaccounts (including fixed account), net (note 3)		(1,191,253	)		11,513			(363,081	)		121,570			274,146			(147,475	)		76,784			(323,714	)
Redemptions		(139,571	)		(192,690	)		(80,721	)		(85,342	)		(120,498	)		(142,035	)		(523,295	)		(238,626	)
Annuity benefits		-			-			-			-			-			-			-			-
Contract maintenance charges (note 2)		(848	)		(1,012	)		(438	)		(448	)		(822	)		(686	)		(1,918	)		(1,712	)
Contingent deferred sales charges (note 2)		(947	)		(1,344	)		(479	)		(589	)		(723	)		(863	)		(2,144	)		(2,094	)
Adjustments to maintain reserves		365			(1,701	)		(363	)		174			130			(92	)		(252	)		168
Net equity transactions		(1,287,670	)		(118,658	)		(423,023	)		60,333			182,194			(257,698	)		(373,705	)		(464,639	)
Net change in contract owners’ equity		(815,834	)		137,792			(375,347	)		170,588			659,366			(44,727	)		652,155			25,696
Contract owners’ equity beginning of period		2,028,030			1,890,238			983,702			813,114			1,301,413			1,346,140			3,376,805			3,351,109
Contract owners’ equity end of period	$	1,212,196			2,028,030			608,355			983,702			1,960,779			1,301,413			4,028,960			3,376,805
CHANGES IN UNITS:
Beginning units		178,210			189,213			61,443			57,586			89,199			108,822			254,660			292,162
Units purchased		12,917			37,582			9,760			20,970			26,534			16,263			37,492			29,250
Units redeemed		(110,152	)		(48,585	)		(35,333	)		(17,113	)		(16,203	)		(35,886	)		(61,268	)		(66,752	)
Ending units		80,975			178,210			35,870			61,443			99,530			89,199			230,884			254,660

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2013 and 2012

	SBLX						SBLY						AVCA
	2013			2012			2013			2012			2013		2012
Investment activity:
Net investment income (loss)	$	(5,358	)		(5,069	)		(577	)		(787	)		-		(6,243	)
Realized gain (loss) on investments		41,684			42,329			9,044			1,116			-		73,193
Change in unrealized gain (loss) on investments		106,834			3,317			2,517			4,131			-		143,748
Reinvested capital gains		-			-			-			-			-		-
Net increase (decrease) in contract owners’ equity resulting from operations		143,160			40,577			10,984			4,460			-		210,698
Equity transactions:
Purchase payments received from contract owners (note 3)		8,244			8,465			596			1,388			-		12,056
Transfers between subaccounts (including fixed account), net (note 3)		(47,744	)		(4,268	)		(20,602	)		8,316			-		(1,574,601	)
Redemptions		(33,721	)		(36,673	)		(9,189	)		(4,094	)		-		(101,697	)
Annuity benefits		-			-			-			-			-		-
Contract maintenance charges (note 2)		(212	)		(202	)		(23	)		(32	)		-		(242	)
Contingent deferred sales charges (note 2)		(231	)		(248	)		(26	)		(37	)		-		(585	)
Adjustments to maintain reserves		112			(315	)		(13	)		24			-		(309	)
Net equity transactions		(73,552	)		(33,241	)		(29,257	)		5,565			-		(1,665,378	)
Net change in contract owners’ equity		69,608			7,336			(18,273	)		10,025			-		(1,454,680	)
Contract owners’ equity beginning of period		399,060			391,724			63,167			53,142			-		1,454,680
Contract owners’ equity end of period	$	468,668			399,060			44,894			63,167			-		-
CHANGES IN UNITS:
Beginning units		39,074			42,202			6,492			5,971			-		155,581
Units purchased		3,492			6,242			410			1,364			-		1,780
Units redeemed		(9,677	)		(9,370	)		(3,258	)		(843	)		-		(157,361	)
Ending units		32,889			39,074			3,644			6,492			-		-

See accompanying notes to financial statements.

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2013

(1) Background and Summary of Significant Accounting Policies

(a) Organization and Nature of Operations

The Nationwide Multi-Flex Variable Account (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 through the Account. The primary distribution for the contracts is through Company agents and an affiliated sales organization; however, other distributors may be utilized.

Effective July 1, 2000, the Company entered into a reinsurance agreement with Security Benefit Life Insurance Company (SBL) to sell, transfer and cede on an indemnity basis all of its obligations in connection with annuity contracts issued pursuant to the NEA Valuebuilder Annuity program (Program). Under the agreement, the Company continued to provide administrative and support services for contracts issued under the Program until September 2001. Thereafter, SBL assumed full responsibility for servicing the contracts and receives all fees and charges of the contracts. The Company is paid a Supplemental Capital Charge by SBL to meet the capital needs of the reinsured contracts. The ceding of risk does not discharge the Company from its primary obligation, including regulatory record keeping and reporting, to the contract owners of the Account.

(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 payout phase may invest in any of the following:

DREYFUS CORPORATION

Stock Index Fund, Inc. - Initial Shares (DSIF)

Socially Responsible Growth Fund Inc - Initial Shares (DSRG)

JANUS FUNDS

Janus Aspen Series - Overseas Portfolio - Institutional Shares (JAIG)

NATIONWIDE FUNDS GROUP

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

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

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

NVIT Nationwide Fund - Class I (TRF)

NVIT Government Bond Fund - Class I (GBF)

American Century NVIT Growth Fund - Class I (CAF)

NVIT Money Market Fund - Class I (SAM)

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

NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)

NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)

NVIT Large Cap Growth Fund - Class I (NVOLG1)

PORTFOLIOS OF THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

VP Balanced Fund - Class I (ACVB)

VP Capital Appreciation Fund - Class I (ACVCA)

VP Income & Growth Fund - Class I (ACVIG)

PORTFOLIOS OF THE DREYFUS VARIABLE INVESTMENT FUND

Appreciation Portfolio - Initial Shares (DCAP)

Opportunistic Small Cap Portfolio: Initial Shares (DSC)

Quality Bond Portfolio - Initial Shares (DQBP)

PORTFOLIOS OF THE FIDELITY(R) VARIABLE INSURANCE PRODUCTS

Contrafund(R)Portfolio - Service Class 2 (FC2)

Equity-Income Portfolio - Initial Class (FEIP)

High Income Portfolio - Initial Class (FHIP)

PORTFOLIOS OF THE FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Templeton Foreign Securities Fund - Class 1 (TIF)

PORTFOLIOS OF THE NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST

Balanced Portfolio - I Class Shares (AMBP)

PORTFOLIOS OF THE PIMCO VARIABLE INSURANCE TRUST

Real Return Portfolio - Administrative Class (PMVRRA)

Total Return Portfolio - Administrative Class (PMVTRA)

PORTFOLIOS OF THE INVESCO INVESTMENTS TRUST

VI American Franchise Fund - Series I Shares (ACEG)

VI Global Health Care Fund - Series I Shares (IVHS)

VI Global Real Estate Fund - Series I Shares (IVRE)

VI International Growth Fund - Series I Shares (AVIE)

ROYCE CAPITAL FUNDS

Micro-Cap Portfolio - Investment Class (ROCMC)

GUGGENHEIM INVESTMENTS

SBL Fund - Series D (World Equity Income Series) (SBLD)

SBL Fund - Series J (StylePlus Mid Growth Series) (SBLJ)

Series N (Managed Asset Allocation Series) (SBLN)

Series O (All Cap Value Series) (SBLO)

Series P (High Yield Series) (SBLP)

Series Q (Small Cap Value Series) (SBLQ)

Series V (Mid Cap Value Series) (SBLV)

SBL Fund - Series X (StylePlus Small Growth Series) (SBLX)

SBL Fund - Series Y (StylePlus Large Growth Series) (SBLY)

WELLS FARGO FUNDS

Advantage VT Opportunity Fund - Class 2 (SVOF)*

*At December 31, 2013, contract owners were not invested in this fund.

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2013

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.

The Company allocates purchase payments to sub-accounts and/or the fixed account as instructed by the contract owner. Shares of the sub-accounts are purchased at Net Asset Value, then converted into accumulation units. Certain transactions may be subject to conditions imposed by the underlying mutual funds, as well as those set forth in the contract.

(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, 2013 of such funds. The cost of investments sold is determined on a first in - first out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed), and dividends and capital gain distributions are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds.

(d) Federal Income Taxes

Operations of the Account form a part of, and are taxed with, operations of the Company which is taxed as a life insurance company under the Internal Revenue Code. The Company does not provide for income taxes within the Account. Taxes are generally the responsibility of the contract owner upon termination or withdrawal.

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

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

(f) Calculation of Annuity Reserves

At each financial reporting date, the separate account financial statement includes an aggregate amount of net assets allocated to future contract benefits for the contracts in the payout (annuitization) period. The payout (annuitization) period begins when amounts accumulated under the contract (the contract value) are applied according to payment method selected by the contract owner.

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

There are no recently issued accounting standards applicable to 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 Multi-Flex Annuity contracts issued prior to February 1, 1989, the contingent deferred sales charge will be equal to 5% of the lesser of the total of all purchase payments or the amount redeemed. For Multi-Flex Annuity contracts issued on or after February 1, 1989, the Company will deduct a contingent deferred sales charge not to exceed 7% of purchase payments redeemed. This charge declines 1% per year. For both contracts, after the purchase payment has been held in the contract for 7 years, the charge is 0%. No sales charges are deducted on redemptions used to purchase units in the fixed investment options of the Company.

The following additional contract charges are deducted by the Company: (a) an annual contract maintenance charge of up to $30, dependent upon contract type and issue date, which is satisfied by redeeming units; and (b) for Multi-Flex Annuity contracts, a mortality and expense risk charge assessed through a reduction of unit value equal to an annualized rate of 1.25% and an administrative charge of 0.05%, for a total variable account charge of 1.30%; for NEA Valuebuilder Annuity contracts issued before November 3, 1997, or in states which have not approved the applicable contract modifications, a mortality and expense risk charge assessed through a reduction of unit values equal to an annualized rate of 1.25% and an administrative charge of 0.05%, for a total variable account charge of 1.30% ; for NEA Valuebuilder Annuity contracts issued on or after the later of November 3, 1997, or the date on which state insurance authorities approve corresponding contract modifications, an actuarial risk fee assessed through a reduction of unit values equal to an annualized rate of 1.30%.

(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, 2013 and 2012, total transfers to the Account from the fixed account were $214,529 and $206,514, respectively, and total transfers from the Account to the fixed account were $1,568,278 and $1,001,321, respectively. Transfers from the Account to the fixed account, and transfers to the Account from the fixed account are included in transfers between subaccounts (including fixed account), net, on the accompanying Statements of Changes in Contract Owners’ Equity.

For guaranteed minimum death benefits, the Company contributed $358 and $0 to the Account in the form of additional premium to contract owner accounts for the years ended December 31, 2013 and 2012, respectively. These amounts are included in purchase payments received from contract owners and are credited at time of annuitant death.

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2013

(4) Fair Value Measurement

FASB ASC 820, Fair Value Measurements and Disclosures, 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:

Ÿ Level 1 – Unadjusted quoted prices accessible in active markets and mutual funds where the value per share (unit) is determined and published and is the basis for current transactions for identical assets or liabilities at the measurement date.

Ÿ 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.

Ÿ Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate about the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs.

The Account recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between Level 1 and 2 as of December 31, 2013.

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2013:

	Level 1		Level 2		Level 3		Total
Separate Account Investments		$    391,110,473		$0		$0		$    391,110,473

The cost of purchases and proceeds from sales of Investments for the year ended December 31, 2013 are as follows:

		Purchases of Investments		Sales of Investments
Stock Index Fund, Inc. - Initial Shares (DSIF)		$	1,958,251	$	5,049,434
Socially Responsible Growth Fund Inc - Initial Shares (DSRG)			376,081		1,696,575
Janus Aspen Series - Overseas Portfolio - Institutional Shares (JAIG)			475,873		2,308,971
Federated NVIT High Income Bond Fund - Class I (HIBF)			314,883		193,554
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)			47,610		75,310
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)			132,324		900,526
NVIT Nationwide Fund - Class I (TRF)			1,752,087		9,759,610
NVIT Government Bond Fund - Class I (GBF)			2,016,505		3,351,426
American Century NVIT Growth Fund - Class I (CAF)			375,844		982,924
NVIT Money Market Fund - Class I (SAM)			1,264,758		2,274,240
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)			55,483		7,713
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)			826,859		1,069,547
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)			2,552,853		2,678,040
NVIT Large Cap Growth Fund - Class I (NVOLG1)			31,980		78,026
VP Balanced Fund - Class I (ACVB)			1,396,593		597,058
VP Capital Appreciation Fund - Class I (ACVCA)			216,154		559,409
VP Income & Growth Fund - Class I (ACVIG)			525,027		729,518
Appreciation Portfolio - Initial Shares (DCAP)			232,722		1,766,734
Opportunistic Small Cap Portfolio: Initial Shares (DSC)			130,942		3,806,312
Quality Bond Portfolio - Initial Shares (DQBP)			652,176		622,557
Contrafund(R)Portfolio - Service Class 2 (FC2)			377,459		619,746
Equity-Income Portfolio - Initial Class (FEIP)			4,514,988		5,534,266
High Income Portfolio - Initial Class (FHIP)			763,911		1,325,342
Templeton Foreign Securities Fund - Class 1 (TIF)			1,232,458		2,189,989
Balanced Portfolio - I Class Shares (AMBP)			79,999		1,573,421
Real Return Portfolio - Administrative Class (PMVRRA)			390,602		435,272
Total Return Portfolio - Administrative Class (PMVTRA)			757,389		2,490,393
VI American Franchise Fund - Series I Shares (ACEG)			32,580		320,852
VI Global Health Care Fund - Series I Shares (IVHS)			110,416		40,678
VI Global Real Estate Fund - Series I Shares (IVRE)			179,443		243,608
VI International Growth Fund - Series I Shares (AVIE)			198,669		1,263,993
Micro-Cap Portfolio - Investment Class (ROCMC)			114,304		345,281
SBL Fund - Series D (World Equity Income Series) (SBLD)			538,093		45,982
SBL Fund - Series J (StylePlus Mid Growth Series) (SBLJ)			40,970		121,704
Series N (Managed Asset Allocation Series) (SBLN)			52,168		29,799
Series O (All Cap Value Series) (SBLO)			99,912		1,409,141
Series P (High Yield Series) (SBLP)			119,471		553,069
Series Q (Small Cap Value Series) (SBLQ)			415,016		253,166
Series V (Mid Cap Value Series) (SBLV)			454,768		875,825
SBL Fund - Series X (StylePlus Small Growth Series) (SBLX)			29,223		108,246
SBL Fund - Series Y (StylePlus Large Growth Series) (SBLY)			4,431		34,252
	Total	$	25,841,275	$	58,321,509

(5) Financial Highlights

The following tabular presentation is a summary of units, unit fair values, contract owners’ equity outstanding and contract expense rates for variable annuity contracts as of December 31, 2013, and the investment income ratio and total return for each of the periods in the five year period ended December 31, 2013. Total return and investment income ratio for periods with no ending contract owners’ equity were considered to be irrelevant, and therefore are not presented. Contract owner’s equity presented below may not agree to the contract owner’s equity presented in the Statements of Changes due to reserves for annuity contracts in payout.

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS December 31, 2013

	Contract Expense Rate*		Units		Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Stock Index Fund, Inc. - Initial Shares (DSIF)
2013		1.30%		1,029,244		$43.62		$  44,895,763		1.84%		30.31%
2012		1.30%		1,126,601		33.48		37,718,186		2.06%		14.23%
2011		1.30%		1,219,576		29.30 to 29.31		35,745,293		1.80%		0.56%
2010		1.30%		1,380,108		29.14		40,216,683		1.81%		13.35%
2009		1.30%		1,534,085		25.71		39,443,591		2.43%		24.69%
Socially Responsible Growth Fund Inc - Initial Shares (DSRG)
2013		1.30%		518,020		33.71		17,462,419		1.25%		32.60%
2012		1.30%		562,828		25.42		14,307,102		0.82%		10.52%
2011		1.30%		618,362		23.00		14,222,330		0.91%		-0.41%
2010		1.30%		704,270		23.10		16,268,592		0.88%		13.32%
2009		1.30%		786,996		20.38		16,040,426		0.94%		32.02%
Janus Aspen Series - Overseas Portfolio - Institutional Shares (JAIG)
2013		1.30%		325,715		31.52		10,266,531		3.16%		13.07%
2012		1.30%		395,439		27.87		11,020,898		0.69%		11.99%
2011		1.30%		486,377		24.89		12,105,920		0.47%		-33.05%
2010		1.30%		573,356		37.18		21,317,356		0.69%		23.68%
2009		1.30%		645,335		30.06		19,398,755		0.93%		77.22%
Federated NVIT High Income Bond Fund - Class I (HIBF)
2013		1.30%		43,068		21.24		914,765		6.38%		5.68%
2012		1.30%		39,232		20.10		788,563		8.38%		13.06%
2011		1.30%		35,910		17.78		638,  479		7.87%		2.47%
2010		1.30%		49,838		17.35		864,689		8.34%		11.68%
2009		1.30%		50,503		15.53		784,449		9.61%		44.10%
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
2013		1.30%		24,109		12.65		304,979		0.97%		41.98%
2012		1.30%		27,434		8.91		244,437		1.47%		15.41%
2011		1.30%		30,980		7.72		239,166		0.59%		-12.77%
2010		1.30%		32,460		8.85		287,271		0.19%		14.05%
2009		1.30%		43,371		7.76		336,559		0.13%		50.97%
Neuberger Berman NVIT Socially Responsible Fund - Class I (NVNSR1)
2013		1.30%		17,959		13.97		250,887		0.27%		36.96%
2012		1.30%		81,518		10.20		831,484		2.21%		10.03%
2011		1.30%		5,589		9.27		51,810		0.73%		-4.43%
2010		1.30%		4,410		9.70		42,777		2.91%		22.01%
2009		1.30%		1,677		7.95		13,334		0.57%		29.82%
NVIT Nationwide Fund - Class I (TRF)
2013		1.30%		514,112		131.09 to 134.98		68,973,455		1.30%		29.40%
2012		1.30%		581,325		104.31		60,268,729		1.40%		12.73%
2011		1.30%		655,935		89.87 to 92.53		60,335,274		1.14%		-0.78%
2010		1.30%		732,447		90.57 to 93.26		67,919,693		1.01%		11.98%
2009		1.30%		828,101		80.89 to 83.28		68,577,532		1.51%		24.46%
NVIT Government Bond Fund - Class I (GBF)
2013		1.30%		355,018		55.73 to 55.75		19,785,602		1.91%		-5.30%
2012		1.30%		384,448		58.87		22,625,324		2.17%		1.71%
2011		1.30%		423,716		57.86 to 57.88		24,516,408		2.89%		5.86%
2010		1.30%		492,428		54.65 to 54.67		26,912,874		2.91%		3.42%
2009		1.30%		548,861		52.84 to 52.86		29,004,723		3.31%		1.35%
American Century NVIT Growth Fund - Class I (CAF)
2013		1.30%		193,601		27.46		5,316,058		0.67%		28.05%
2012		1.30%		217,917		21.44		4,672,901		0.56%		12.54%
2011		1.30%		233,176		19.05		4,443,061		0.58%		-1.98%
2010		1.30%		249,414		19.44		4,848,428		0.64%		17.70%
2009		1.30%		258,697		16.52		4,272,690		0.55%		31.74%
NVIT Money Market Fund - Class I (SAM)
2013		1.30%		256,036		24.49 to 26.60		6,339,327		0.00%		-1.30%
2012		1.30%		293,146		26.95		7,347,368		0.00%		-1.30%
2011		1.30%		329,210		25.14 to 27.31		8,360,096		0.00%		-1.30%
2010		1.30%		405,986		25.47 to 27.67		10,469,081		0.00%		-1.30%
2009		1.30%		492,641		25.80 to 28.04		12,868,032		0.04%		-1.26% to -1.27%
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
2013		1.30%		10,564		13.48		142,403		0.88%		32.94%
2012		1.30%		7,161		10.14		72,613		0.41%		14.84%
2011		1.30%		9,659		8.83		85,289		0.01%		-4.13%
2010		1.30%		11,470		9.21		105,639		0.06%		13.99%
2009		1.30%		9,149		8.08		73,936		0.00%		28.05%

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS

December 31, 2013

	Contract Expense Rate*		Units		Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
2013		1.30%		569,341		$14.37		$  8,181,444		0.00%		37.14%
2012		1.30%		624,018		10.48		6,539,711		0.00%		13.41%
2011		1.30%		690,999		9.24		6,384,842		0.00%		-5.47%
2010		1.30%		792,662		9.78		7,752,201		0.00%		25.17%
2009		1.30%		873,956		7.81		6,825,933		0.00%		25.56%
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
2013		1.30%		1,624,451		15.10		24,529,251		1.20%		33.91%
2012		1.30%		1,710,281		11.28		19,291,897		1.12%		14.83%
2011		1.30%		1,929,143		9.82		18,944,198		0.79%		-3.59%
2010		1.30%		2,232,677		10.19		22,750,850		1.33%		18.08%
2009		1.30%		2,489,175		8.63		21,481,461		1.18%		28.81%
NVIT Large Cap Growth Fund - Class I (NVOLG1)
2013		1.30%		3,228		21.20		68,434		0.51%		34.86%
2012		1.30%		6,250		15.72		98,250		0.92%		17.14%
2011		1.30%		4,161		13.42		55,841		0.72%		-3.45%
2010		1.30%		3,132		13.90		43,535		0.09%		7.34%
2009		1.30%		2,676		12.95		34,654		0.13%		29.46%	****
VP Balanced Fund - Class I (ACVB)
2013		1.30%		294,736		16.82		4,957,350		1.62%		15.90%
2012		1.30%		249,134		14.51		3,615,006		2.06%		10.34%
2011		1.30%		271,951		13.15		3,576,203		1.89%		3.97%
2010		1.30%		295,694		12.65		3,740,450		1.89%		10.19%
2009		1.30%		329,045		11.48		3,777,424		5.51%		13.98%
VP Capital Appreciation Fund - Class I (ACVCA)
2013		1.30%		119,749		44.50		5,328,548		0.00%		29.22%
2012		1.30%		131,927		34.44		4,542,958		0.00%		14.49%
2011		1.30%		138,330		30.08		4,160,605		0.00%		-7.72%
2010		1.30%		147,740		32.59		4,815,335		0.00%		29.59%
2009		1.30%		162,639		25.15		4,090,655		1.49%		35.29%
VP Income & Growth Fund - Class I (ACVIG)
2013		1.30%		186,170		21.16		3,939,358		2.22%		34.06%
2012		1.30%		197,879		15.78		3,122,538		2.08%		13.25%
2011		1.30%		233,740		13.94		3,258,328		1.53%		1.77%
2010		1.30%		261,412		13.70		3,581,325		1.51%		12.66%
2009		1.30%		306,469		12.16		3,726,654		6.28%		16.56%
Appreciation Portfolio - Initial Shares (DCAP)
2013		1.30%		264,356		21.78		5,757,670		1.94%		19.53%
2012		1.30%		344,900		18.22		6,284,076		3.70%		8.99%
2011		1.30%		364,637		16.72		6,096,726		1.67%		7.60%
2010		1.30%		399,463		15.54		6,207,645		2.22%		13.82%
2009		1.30%		447,701		13.65		6,111,118		2.85%		20.97%
Opportunistic Small Cap Portfolio: Initial Shares (DSC)
2013		1.30%		1,246,288		33.22		41,401,641		0.00%		46.62%
2012		1.30%		1,359,754		22.66		30,811,947		0.00%		18.99%
2011		1.30%		1,513,935		19.04		28,825,353		0.41%		-14.96%
2010		1.30%		1,678,257		22.39		37,576,224		0.76%		29.45%
2009		1.30%		1,842,173		17.30		31,869,522		1.91%		24.40%
Quality Bond Portfolio - Initial Shares (DQBP)
2013		1.30%		252,699		20.41		5,157,588		2.81%		-2.82%
2012		1.30%		254,971		21.00		5,354,395		2.98%		5.60%
2011		1.30%		278,534		19.89		5,540,041		3.65%		5.64%
2010		1.30%		315,909		18.83		5,948,563		3.91%		6.97%
2009		1.30%		356,513		17.60		6,274,964		4.52%		13.46%
Contrafund(R)Portfolio - Service Class 2 (FC2)
2013		1.30%		294,865		15.80 to 15.85		4,658,943		0.84%		29.30% to 29.25%
2012		1.30%		311,148		12.27		3,802,460		1.06%		14.63%
2011		1.30%		369,430		10.70		3,938,408		0.79%		-4.05%
2010		1.30%		367,397		11.11 to 11.15		4,082,156		1.03%		15.41%
2009		1.30%		380,484		9.63 to 9.66		3,664,536		1.15%		33.71%
Equity-Income Portfolio - Initial Class (FEIP)
2013		1.30%		1,212,439		41.50		50,316,815		2.47%		26.48%
2012		1.30%		1,336,415		32.81		43,848,497		3.06%		15.78%
2011		1.30%		1,513,759		28.34		42,900,288		2.40%		-0.34%
2010		1.30%		1,696,082		28.44		48,236,094		1.81%		13.65%
2009		1.30%		1,875,058		25.02		46,916,913		2.63%		28.52%

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS

December 31, 2013

	Contract Expense Rate*		Units		Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
High Income Portfolio - Initial Class (FHIP)
2013		1.30%		500,288		$23.18		$  11,596,693		5.68%		4.57%
2012		1.30%		547,978		22.17		12,148,649		5.74%		12.74%
2011		1.30%		593,197		19.66		11,662,265		6.57%		2.68%
2010		1.30%		658,388		19.15		12,608,138		7.53%		12.34%
2009		1.30%		743,170		17.05		12,671,017		7.95%		42.09%
Templeton Foreign Securities Fund - Class 1 (TIF)
2013		1.30%		581,845		32.94		19,165,973		2.54%		21.67%
2012		1.30%		620,520		27.07		16,797,486		3.24%		17.05%
2011		1.30%		698,307		23.13		16,151,836		1.91%		-11.61%
2010		1.30%		768,334		26.17		20,107,276		2.08%		7.26%
2009		1.30%		856,838		24.39		20,901,796		5.73%		35.56%
Balanced Portfolio - I Class Shares (AMBP)
2013		1.30%		323,311		30.92		9,996,938		0.00%		16.94%
2012		1.30%		370,925		26.44		9,807,432		0.00%		7.92%
2011		1.30%		412,530		24.50		10,107,171		0.29%		-1.92%
2010		1.30%		460,032		24.98		11,491,834		0.99%		17.28%
2009		1.30%		501,931		21.30		10,691,173		3.83%		20.87%
Real Return Portfolio - Administrative Class (PMVRRA)
2013		1.30%		154,531		13.42		2,073,799		1.72%		-10.40%
2012		1.30%		158,844		14.98		2,379,486		1.04%		7.34%
2011		1.30%		166,439		13.95		2,323,472		2.02%		10.22%
2010		1.30%		120,971		12.66		1,531,493		1.43%		6.71%
2009		1.30%		109,739		11.86 to 11.87		1,302,602		3.02%		16.81% to 16.95%
Total Return Portfolio - Administrative Class (PMVTRA)
2013		1.30%		205,850		14.76 to 14.81		3,038,866		2.14%		-3.21% to -3.23%
2012		1.30%		328,221		15.30		5,005,939		2.56%		8.17%
2011		1.30%		295,172		14.14		4,162,368		2.63%		2.26%
2010		1.30%		259,980		13.79 to 13.83		3,585,177		2.42%		6.71%
2009		1.30%		236,312		12.92 to 12.96		3,053,206		5.12%		12.55% to 12.64%
VI American Franchise Fund - Series I Shares (ACEG)
2013		1.30%		116,992		13.37 to 14.37		1,677,514		0.45%		38.32% to 38.31%
2012		1.30%		138,918		10.39		1,440,675		0.00%		-3.36%	****
VI Global Health Care Fund - Series I Shares (IVHS)
2013		1.30%		28,051		18.38 to 18.47		515,695		0.68%		38.72% to 39.38%
2012		1.30%		23,646		13.25		313,310		0.00%		19.26%
2011		1.30%		19,636		11.16		218,230		0.00%		2.60%
2010		1.30%		20,788		10.83 to 10.87		225,203		0.00%		3.92%
2009		1.30%		15,908		10.42 to 10.46		165,840		0.34%		26.01%
VI Global Real Estate Fund - Series I Shares (IVRE)
2013		1.30%		88,812		11.57 to 11.65		1,034,639		3.70%		1.38% to 1.39%
2012		1.30%		96,248		11.49		1,105,893		0.57%		26.45%
2011		1.30%		86,790		9.02		788,914		3.68%		-7.72%
2010		1.30%		77,016		9.78 to 9.85		758,600		4.84%		15.99%
2009		1.30%		83,877		8.43 to 8.49		712,109		0.00%		29.82%
VI International Growth Fund - Series I Shares (AVIE)
2013		1.30%		65,247		22.14		1,444,590		0.85%		17.47%
2012		1.30%		119,231		18.85		2,247,503		1.54%		14.03%
2011		1.30%		112,106		16.53		1,853,111		1.50%		-7.95%
2010		1.30%		113,552		17.96		2,039,391		2.26%		11.40%
2009		1.30%		134,717		16.12		2,171,653		1.83%		33.48%
Micro-Cap Portfolio - Investment Class (ROCMC)
2013		1.30%		96,201		13.90 to 13.92		1,337,198		0.48%		19.41%
2012		1.30%		116,339		11.66		1,354,214		0.00%		6.20%
2011		1.30%		136,595		10.98		1,497,099		2.27%		-13.24%
2010		1.30%		139,465		12.63 to 12.65		1,761,461		1.95%		28.27%
2009		1.30%		141,676		9.85 to 9.86		1,395,512		0.00%		55.99% to 56.10%
SBL Fund - Series D (World Equity Income Series) (SBLD)
2013		1.30%		84,788		11.51		975,910		0.00%		17.69%
2012		1.30%		38,357		9.78		375,131		0.00%		15.06%
2011		1.30%		43,547		8.50		370,150		0.00%		-16.91%
2010		1.30%		55,042		10.23		563,080		0.00%		14.17%
2009		1.30%		61,716		8.96		552,975		0.00%		18.21%
SBL Fund - Series J (StylePlus Mid Growth Series) (SBLJ)
2013		1.30%		35,910		13.03		467,907		0.00%		28.75%
2012		1.30%		42,347		10.12		428,552		0.00%		14.35%
2011		1.30%		46,685		8.85		413,162		0.00%		-5.55%
2010		1.30%		51,870		9.37		486,022		0.00%		22.48%
2009		1.30%		45,011		7.65		344,334		0.00%		42.19%

(Continued)

NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT NOTES TO FINANCIAL STATEMENTS

December 31, 2013

	Contract Expense Rate*		Units		Unit Fair Value		Contract Owners’ Equity		Investment Income Ratio**		Total Return***		Inception Date****
Series N (Managed Asset Allocation Series) (SBLN)
2013		1.30%		25,023		$14.02		$  350,822		0.00%		12.79%
2012		1.30%		22,965		12.43		285,455		0.00%		11.88%
2011		1.30%		25,771		11.11		286,316		0.00%		-0.71%
2010		1.30%		28,617		11.19		320,224		0.00%		9.17%
2009		1.30%		36,928		10.25		378,540		0.00%		23.94%
Series O (All Cap Value Series) (SBLO)
2013		1.30%		80,975		14.97		1,212,196		0.00%		31.55%
2012		1.30%		178,210		11.38		2,028,030		0.00%		13.91%
2011		1.30%		189,213		9.99		1,890,238		0.00%		-5.58%
2010		1.30%		179,564		10.58		1,899,787		0.00%		15.13%
2009		1.30%		213,205		9.19		1,959,354		0.00%		31.29%
Series P (High Yield Series) (SBLP)
2013		1.30%		35,870		16.96		608,355		0.00%		5.93%
2012		1.30%		61,443		16.01		983,702		0.00%		13.39%
2011		1.30%		57,586		14.12		813,114		0.00%		-1.33%
2010		1.30%		49,960		14.31		714,928		0.00%		13.93%
2009		1.30%		65,600		12.56		823,936		0.00%		70.42%
Series Q (Small Cap Value Series) (SBLQ)
2013		1.30%		99,530		19.70 to 19.79		1,960,779		0.00%		35.02%
2012		1.30%		89,199		14.66		1,301,413		0.00%		17.95%
2011		1.30%		108,822		12.43		1,346,140		0.00%		-5.85%
2010		1.30%		112,351		13.14 to 13.20		1,476,319		0.00%		20.30%
2009		1.30%		123,810		10.92 to 10.97		1,352,238		0.00%		53.80% to 53.91%
Series V (Mid Cap Value Series) (SBLV)
2013		1.30%		230,884		17.45 to 17.51		4,028,960		0.00%		31.60% to 31.59%
2012		1.30%		254,660		13.31		3,376,805		0.00%		15.59%
2011		1.30%		292,162		11.51		3,351,109		0.00%		-8.69%
2010		1.30%		307,847		12.57 to 12.61		3,869,647		0.00%		16.27%
2009		1.30%		301,666		10.81 to 10.84		3,261,019		0.00%		42.05% to 42.06%
SBL Fund - Series X (StylePlus Small Growth Series) (SBLX)
2013		1.30%		32,889		14.25		468,668		0.00%		39.57%
2012		1.30%		39,074		10.26		399,060		0.00%		10.10%
2011		1.30%		42,202		9.32		391,724		0.00%		-3.23%
2010		1.30%		37,695		9.59		361,495		0.00%		28.38%
2009		1.30%		42,126		7.47		314,681		0.00%		33.39%
SBL Fund - Series Y (StylePlus Large Growth Series) (SBLY)
2013		1.30%		3,644		12.32		44,894		0.00%		26.62%
2012		1.30%		6,492		9.73		63,167		0.00%		9.33%
2011		1.30%		5,971		8.90		53,142		0.00%		-5.62%
2010		1.30%		5,485		9.43		51,724		0.00%		15.14%
2009		1.30%		6,147		8.19		50,345		0.00%		31.46%
Advantage VT Opportunity Fund - Class 2 (SVOF)
2009		1.30%		1		27.48		24		0.00%		45.82%
V.I. Capital Appreciation Fund - Series I (obsolete) (AVCA)
2011		1.30%		155,581		9.35		1,454,680		0.15%		-9.11%
2010		1.30%		179,236		10.29		1,844,320		0.77%		13.99%
2009		1.30%		198,489		9.02		1,791,122		0.87%		19.50%
2013		Reserves for annuity contracts in payout phase:						135,057
2013		Contract owners equity:						$  391,084,684
2012		Reserves for annuity contracts in payout phase:						116,763
2012		Contract owners equity:						$  349,168,005
2011		Reserves for annuity contracts in payout phase:						85,941
2011		Contract owners equity:						$  343,644,141
2010		Reserves for annuity contracts in payout phase:						121,951
2010		Contract owners equity:						$  399,805,531
2009		Reserves for annuity contracts in payout phase:						150,511
2009		Contract owners equity:						$  389,631,848

     * This represents the range of annual contract expense rates of the variable account at the period end 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 ratio of dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by monthly average net assets (excluding months where net assets are zero). The investment income ratio for subaccounts initially funded during the period presented has not been annualized. The ratios exclude those expenses that result in direct reductions to the contract owner accounts through reductions in unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.

 *** This represents the range of minimum and maximum total returns for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit values for expenses assessed. The total returns do not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Total return is not annualized if the underlying mutual fund option is initially offered, funded, or both, during the period presented. Minimum and maximum ranges are not shown for underlying mutual fund options for which a single contract expense rate (product option) exists. In such cases, the total return presented is representative of all units issued and outstanding at period end.

**** Subaccounts denoted indicate the underlying mutual fund option was initially added and funded during the period presented.

	KPMG LLP
	Suite 500
	191 West Nationwide Blvd. Columbus, OH 43215-2568

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, 2013 and 2012, and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2013. 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, 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.

/s/ KPMG LLP

Columbus, Ohio

February 28, 2014

KPMG  LLP  is  a  Delaware  limited  liability  partnership,

the U.S. member firm of KPMG International Cooperative

(“KPMG International”), a Swiss entity.

1

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Operations

(in millions)

	Year ended December 31,
	2013			2012			2011
				(As Adjusted)
Revenues
Policy charges	$	1,849		$	1,670		$	1,506
Premiums		724			635			531
Net investment income		1,849			1,825			1,844
Net realized investment gains (losses), net of other-than-temporary impairment losses		678			319			(1,676	)
Other revenues		17			7			3
Total revenues	$	5,117		$	4,456		$	2,208
Benefits and expenses
Interest credited to policyholder account values	$	1,067		$	1,038		$	1,033
Benefits and claims		1,354			1,227			1,062
Policyholder dividends		59			54			67
Amortization of deferred policy acquisition costs		374			575			65
Other expenses, net of deferrals		922			863			830
Total benefits and expenses	$	3,776		$	3,757		$	3,057
Income (loss) before federal income taxes and noncontrolling interests	$	1,341		$	699		$	(849	)
Federal income tax expense (benefit)		313			99			(427	)
Net income (loss)	$	1,028		$	600		$	(422	)
Less: Loss attributable to noncontrolling interest, net of tax		(82	)		(61	)		(56	)
Net income (loss) attributable to Nationwide Life Insurance Company	$	1,110		$	661		$	(366	)

See accompanying notes to consolidated financial statements and Note 2 for disclosure of the change in accounting principle.

2

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Comprehensive Income (Loss)

(in millions)

	Year ended December 31,
	2013			2012			2011
				(As Adjusted)
Net income (loss)	$	1,028		$	600		$	(422	)
Other comprehensive (loss) income, net of tax
Changes in:
Net unrealized (losses) gains on available-for-sale securities		(663	)		571			317
Other		(7	)		(5	)		12
Total other comprehensive (loss) income, net of tax	$	(670	)	$	566		$	329
Total comprehensive income (loss)	$	358		$	1,166		$	(93	)
Less: Comprehensive loss attributable to noncontrolling interests, net of tax		(82	)		(61	)		(56	)
Total comprehensive income (loss) attributable to Nationwide Life Insurance Company	$	440		$	1,227		$	(37	)

See accompanying notes to consolidated financial statements and Note 2 for disclosure of the change in accounting principle.

3

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,
	2013		2012
Assets
Investments
Fixed maturity securities, available-for-sale	$	32,249	$	31,811
Mortgage loans, net of allowance		6,341		5,827
Policy loans		987		980
Short-term investments		411		1,034
Other investments		767		639
Total investments	$	40,755	$	40,291
Cash and cash equivalents		61		62
Accrued investment income		603		566
Deferred policy acquisition costs		3,778		3,249
Goodwill		200		200
Other assets		3,979		4,362
Separate account assets		84,069		71,440
Total assets	$	133,445	$	120,170
Liabilities and equity
Liabilities
Future policy benefits and claims	$	36,765	$	36,154
Short-term debt		278		300
Long-term debt		707		1,038
Other liabilities		4,122		4,507
Separate account liabilities		84,069		71,440
Total liabilities	$	125,941	$	113,439
Shareholder’s equity
Common stock ($1 par value; authorized - 5,000,000 shares, issued and outstanding - 3,814,779 shares)	$	4	$	4
Additional paid-in capital		1,718		1,718
Retained earnings		4,520		3,410
Accumulated other comprehensive income		582		1,252
Total shareholder’s equity	$	6,824	$	6,384
Noncontrolling interest		680		347
Total equity	$	7,504	$	6,731
Total liabilities and equity	$	133,445	$	120,170

See accompanying notes to consolidated financial statements and Note 2 for disclosure of the change in accounting principle.

4

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Changes in Equity

(in millions)

	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income			Total shareholder’s equity			Non-controlling interest			Total equity
Balance as of December 31, 2010	$	4	$	1,718	$	3,155		$	357		$	5,234		$	355		$	5,589
Comprehensive (loss) income:
Net loss		—		—		(366	)		—			(366	)		(56	)		(422	)
Other comprehensive income		—		—		—			329			329			—			329
Total comprehensive (loss) income		—		—		(366	)		329			(37	)		(56	)		(93	)
Change in noncontrolling interest		—		—		—			—			—			46			46
Balance as of December 31, 2011	$	4	$	1,718	$	2,789		$	686		$	5,197		$	345		$	5,542
Cash dividend paid		—		—		(40	)		—			(40	)		—			(40	)
Comprehensive income (loss):
Net income (loss)		—		—		661			—			661			(61	)		600
Other comprehensive income		—		—		—			566			566			—			566
Total comprehensive income (loss)		—		—		661			566			1,227			(61	)		1,166
Change in noncontrolling interest		—		—		—			—			—			63			63
Balance as of December 31, 2012	$	4	$	1,718	$	3,410		$	1,252		$	6,384		$	347		$	6,731
Comprehensive income (loss):
Net income (loss)		—		—		1,110			—			1,110			(82	)		1,028
Other comprehensive loss		—		—		—			(670	)		(670	)		—			(670	)
Total comprehensive income (loss)		—		—		1,110			(670	)		440			(82	)		358
Change in noncontrolling interest		—		—		—			—			—			415			415
Balance as of December 31, 2013	$	4	$	1,718	$	4,520		$	582		$	6,824		$	680		$	7,504

See accompanying notes to consolidated financial statements and Note 2 for disclosure of the change in accounting principle.

5

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Cash Flows

(in millions)

	Year ended December 31,
	2013			2012			2011
				(As Adjusted)
Cash flows from operating activities:
Net income (loss)	$	1,028		$	600		$	(422	)
Adjustments to net income (loss):
Net realized investment (gains) losses, net of other-than-temporary impairment losses		(678	)		(319	)		1,676
Interest credited to policyholder account values		1,067			1,038			1,033
Capitalization of deferred policy acquisition costs		(604	)		(470	)		(604	)
Amortization of deferred policy acquisition costs		374			575			65
Amortization and depreciation		77			80			48
Deferred tax expense (benefit)		346			243			(482	)
Changes in:
Policy liabilities		(475	)		(548	)		(608	)
Derivatives, net		(483	)		(490	)		(364	)
Other, net		88			(84	)		(265	)
Net cash provided by operating activities	$	740		$	625		$	77
Cash flows from investing activities:
Proceeds from maturities of available-for-sale securities	$	3,689		$	2,909		$	2,705
Proceeds from sales of available-for-sale securities		1,091			796			1,585
Purchases of available-for-sale securities		(6,842	)		(5,167	)		(6,176	)
Proceeds from repayments and sales of mortgage loans		1,091			1,048			1,124
Issuances and purchases of mortgage loans		(1,593	)		(1,114	)		(751	)
Net decrease (increase) in short-term investments		654			98			(61	)
Collateral (paid) received, net		(637	)		(208	)		359
Other, net		42			(12	)		104
Net cash used in investing activities	$	(2,505	)	$	(1,650	)	$	(1,111	)
Cash flows from financing activities:
Net change in short-term debt	$	(22	)	$	(477	)	$	477
Proceeds from issuance of long-term debt		2			13			13
Cash dividend paid to Nationwide Financial Services, Inc.		—			(40	)		—
Repayments of long-term debt		(299	)		—			—
Investment and universal life insurance product deposits		6,139			5,566			5,314
Investment and universal life insurance product withdrawals		(4,034	)		(4,063	)		(5,024	)
Other, net		(22	)		39			(34	)
Net cash provided by financing activities	$	1,764		$	1,038		$	746
Net (decrease) increase in cash and cash equivalents	$	(1	)	$	13		$	(288	)
Cash and cash equivalents, beginning of period		62			49			337
Cash and cash equivalents, end of period	$	61		$	62		$	49

See accompanying notes to consolidated financial statements and Note 2 for disclosure of the change in accounting principle.

6

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements

December 31, 2013, 2012 and 2011

(1) Nature of Operations

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

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

Wholly-owned subsidiaries of NLIC as of December 31, 2013 include Nationwide Life and Annuity Insurance Company (“NLAIC”), Nationwide Investment Services Corporation (“NISC”) and Nationwide Investment Advisor (“NIA”). NLAIC primarily offers universal life insurance, variable universal life insurance, term life insurance, corporate-owned life insurance (“COLI”) and individual annuity contracts on a non-participating basis. NISC is a registered broker-dealer. NIA is a registered investment advisor.

The Company is a leading provider of long-term savings and retirement products in the United States (“U.S.”). The Company develops and sells a diverse range of products and services including individual annuities, private and public sector group retirement plans, 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, which includes the agency distribution force of the Company’s ultimate parent company, NMIC.

As of December 31, 2013 and 2012, 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 the Company is overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

(2) Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. The consolidated financial statements include majority-owned subsidiaries and consolidated variable interest entities (“VIEs”). All significant intercompany accounts and transactions have been eliminated.

Entities in which NLIC does not have a controlling interest, but the Company has significant influence over the operating and financing decisions and also certain other investments, are reported using the equity method.

7

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Use of Estimates

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The preparation of the consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates include the balance and amortization of deferred policy acquisition costs (“DAC”), legal and regulatory reserves, certain investment and derivative valuations including investment impairment losses, future policy benefits and claims including the valuation of embedded derivatives resulting from living benefit guarantees on variable annuity contracts, goodwill, provision for income taxes and valuation of deferred tax assets. Actual results could differ significantly from those estimates.

Revenues and Benefits

Investment and universal life insurance products. Investment products are long duration contracts that do not subject the Company to significant risk arising from mortality (the relative incidence of death in a given time) or morbidity (the relative incidence of disability resulting from disease or physical impairment). These include variable and fixed deferred annuity contracts in the accumulation phase with both individuals and groups and certain annuities without life contingencies. Universal life insurance products include long duration insurance contracts that do not have fixed or guaranteed terms. These include universal life insurance, variable universal life insurance, COLI, bank-owned life insurance (“BOLI”) and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, surrender charges and other policy charges earned and assessed against policy account balances during the period. Policy charges are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Assessments for services provided in future periods are recorded as unearned revenue and recognized as revenue over the periods benefited. Surrender charges are recognized as revenue 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 terms, primarily consisting of whole life insurance, term life insurance and certain annuities with life contingencies. Premiums for traditional life insurance products are generally recognized as revenue when due. For certain annuities with life contingencies, any excess of gross premium over the net premium is deferred and recognized with the amount of expected future benefits. 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.

Future Policy Benefits and Claims

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

8

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The Company offers certain universal life insurance, variable universal life insurance and variable annuity products with secondary guarantees, guaranteed minimum death benefits (“GMDB”), and guaranteed minimum income benefits (“GMIB”). Liabilities for these guarantees are calculated by multiplying the current benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative secondary guarantee benefit payments plus interest. The Company regularly evaluates its experience and assumptions and adjusts the benefit ratio as appropriate. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes with a related charge or credit to other benefits and claims in the period of evaluation. Determination of the expected benefit payments and assessments are based on a range of scenarios and assumptions including those related to market rates of return and volatility, contract surrenders and mortality experience. The accounting for these guarantees impacts estimated gross profits used to calculate the balance and amortization of DAC and other. Refer to Note 4 for further discussion of these guarantees.

Guarantees to variable annuity contractholders can include a return of no less than the total deposits made on the contract less any customer withdrawals, total deposits made on the contract less any customer withdrawals plus a minimum return, or the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. In addition, these guarantees can include benefits payable in the event of death, upon annuitization, upon periodic withdrawal or at specified dates during the accumulation period. Refer to Note 4 for further discussion of these guarantees.

The Company’s guaranteed minimum accumulation benefit (“GMAB”) and guaranteed living withdrawal benefit (“GLWB”) are living benefit guarantees which represent embedded derivatives in variable annuity contracts that are required to be separated from, and valued apart from, the host variable annuity contracts. The embedded derivatives are held at fair value and include the present value of attributed fees. 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 derivatives incorporate numerous assumptions including, but not limited to, mortality, lapse rates, index volatility, wait period (the number of years the policyholder is assumed to wait prior to beginning withdrawals once eligible), efficiency of benefit utilization (the percent of the maximum permitted withdrawal that a policyholder takes) and discounting, including liquidity and non-performance risk (the risk that the liability will not be fulfilled and affects the value at which the liability is transferred). The assumptions used to calculate the fair value of embedded derivatives are reviewed as part of an annual comprehensive study of assumptions. Quarterly, consideration is given as to whether adjustments to these assumptions are necessary.

The Company’s equity indexed products (life and annuity) have the policyholders’ interest credits based on market performance with caps and floors. The interest credits represent embedded derivatives within the insurance contract and therefore are required to be separated from, and valued apart from, the host contracts. The embedded derivatives are held at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of interest credited. 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, mortality, lapse rates and index volatility. The assumptions used to calculate the fair value of embedded derivatives are reviewed as part of an annual comprehensive study of assumptions. Quarterly, consideration is given as to whether adjustments to these assumptions are necessary.

Traditional life insurance products. The process of calculating reserve amounts for traditional life insurance products involves the use of a number of assumptions, including those related to persistency, mortality, morbidity, interest rates (the rates expected to be paid or received on financial instruments) and certain other expenses.

9

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The liability for future policy benefits and claims for traditional life insurance policies was determined using the net level premium method with weighted average interest rates of 6.6% and estimates of mortality, morbidity, investment yields and persistency that were used or being experienced at the time the policies were issued with a provision for adverse deviation.

The liability for future policy benefits for certain annuities with life contingencies was calculated using the present value of future benefits and certain expenses discounted using weighted average interest rates of 5.3% with a provision for adverse deviation.

Reinsurance ceded

The Company cedes insurance to other companies in order to limit potential losses and to diversify its exposures. Such agreements do not relieve the original insurer from its primary obligation to the policyholder in the event the reinsurer is unable to meet the obligations it has assumed. Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company.

Deferred Policy Acquisition Costs

The Company has deferred certain acquisition costs that are directly related to the successful acquisition of new and renewal insurance and investment contracts. The methods and assumptions used to amortize and assess recoverability of the DAC balance depend on the type of product.

Investment and universal life insurance products. For certain investment and universal life insurance products, DAC is amortized with interest over the lives of the policies in relation to the present value of estimated gross profits, which is determined primarily from projected interest margins, policy charges and net realized investment gains and losses, less policy benefits and other expenses. The DAC asset related to investment and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on available-for-sale securities with the corresponding adjustment recorded in accumulated other comprehensive income (“AOCI”). This adjustment to DAC represents the change in amortization that would have been required as a charge or credit to operations had such unrealized amounts been realized. DAC for investment and universal life insurance products is subject to recoverability testing in the year of policy issuance and DAC for universal life insurance products is also subject to loss recognition testing at the end of each reporting period.

The Company regularly evaluates and adjusts the DAC balance when actual gross profits in a given reporting period vary from management’s initial estimates. Additionally, 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 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, renewal premiums and mortality. The Company refers to this process as “unlocking.” Quarterly, consideration is given as to whether adjustments to these assumptions are necessary. The Company uses a reversion to the mean process to determine the assumption for the future net separate account investment performance. This process 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 Company’s long-term assumption for net separate account investment performance is approximately 7% growth per year.

10

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Changes in assumptions and the emergence of actual gross profits can have a significant impact on the amount of DAC reported for investment and universal life insurance products and their related amortization patterns. Additionally, the amortization of DAC can be affected by the change in the valuation of the Company’s variable annuity guarantees. See Future Policy Benefits and Claims for further discussion of the valuation of the Company’s variable annuity guarantees. In the event actual experience differs from assumptions or future assumptions are revised, the Company will record an increase or decrease in DAC amortization expense, which could be significant.

Traditional life insurance. DAC is amortized with interest over the premium-paying period of the related policies in proportion to premium revenue recognized. These assumptions are consistent with those used in the calculation of liabilities for future policy benefits at issuance. DAC is evaluated for recoverability at the time of policy issuance, and loss recognition testing is conducted each reporting period.

Refer to Note 5 for discussion regarding assumption changes impacting DAC amortization and related balances.

Investments

Available-for-sale securities. Available-for-sale securities are reported at fair value, with unrealized holding gains and losses reported as a separate component of other comprehensive income, net of adjustments for DAC, future policy benefits and claims, policyholder dividend obligations and deferred federal income taxes. Realized gains and losses on sales of available-for-sale securities are recognized in income based on the specific identification method. Interest and dividend income is recognized when earned.

As of December 31, 2013 and 2012, 99% of fixed maturity securities were priced using external source data. Independent pricing services are most often utilized (86% as of December 31, 2013 and 2012) to determine the fair value of securities for which market quotations are available. For these securities, the Company obtains the pricing services’ methodologies, inputs and assumptions and classifies the investments accordingly in the fair value hierarchy.

A corporate pricing matrix or an internally developed pricing model is used in valuing certain corporate debt securities. The corporate pricing matrix is developed using private spreads for corporate securities with varying weighted average lives and credit quality ratings. The weighted average life and credit quality rating of a particular fixed maturity security to be priced using the corporate pricing matrix are important inputs into the model and are used to determine a corresponding spread that is added to the appropriate U.S. Treasury yield to create an estimated market yield for that security. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular security.

Non-binding broker quotes are also utilized to determine the fair value of certain corporate debt, mortgage-backed and other asset-backed securities when quotes are not available from independent pricing services, corporate pricing matrix or internal pricing models. These securities are classified with the lowest priority in the fair value hierarchy as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and/or the transaction volume in the same or similar investments has decreased. Inputs used in the development of prices are not provided to the Company by the brokers, as the brokers often do not provide the necessary transparency into their quotes and methodologies. The Company performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value at least annually. Price movements of broker quotes are subject to validation and require approval from the Company’s management. Management uses its knowledge of the investment and current market conditions to determine if the price is indicative of the investment’s fair value.

When the collectability of contractual interest payments on fixed maturity securities is considered doubtful, such securities are placed in non-accrual status and any accrued interest is excluded from investment income. These securities are not restored to accrual status until the Company determines that payment of future principal and interest is probable.

11

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

For investments in certain residential and commercial mortgage-backed securities, the Company recognizes income and amortizes discounts and premiums using the effective-yield method based on prepayment assumptions and the estimated economic life of the securities. When actual prepayments differ significantly from estimated prepayments, the effective-yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income in the period the estimates are revised. All other investment income is recorded using the effective-yield method without anticipating the impact of prepayments.

The Company periodically reviews its available-for-sale securities to determine if any decline in fair value to below amortized cost is other-than-temporary. Factors considered in determining whether a decline is other-than-temporary include the length of time a security has been in an unrealized loss position, the severity of the unrealized loss, reasons for the decline in value and expectations for the amount and timing of a recovery in fair value.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt, the Company’s intent to sell the security and whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost basis. The Company evaluates U.S. Treasury securities and obligations of U.S. Government corporations and agencies and obligations of states, political subdivisions and foreign governments for other-than-temporary impairment by examining similar characteristics.

When evaluating whether residential mortgage-backed securities, commercial mortgage-backed securities and other asset-backed securities are other-than-temporarily impaired, the Company examines characteristics of the underlying collateral, such as delinquency and default rates, the quality of the underlying borrower, the type of collateral in the pool, the vintage year of the collateral, subordination levels within the structure of the collateral pool, the quality of any credit guarantors, the Company’s intent to sell the security and whether it is more likely than not it will be required to sell the security before the recovery of its amortized cost basis.

The Company evaluates its intent to sell on an individual security basis. Other-than-temporary impairment losses on debt securities when the Company does not intend to sell the security and it is not more likely than not it will be required to sell the security prior to recovery of the security’s amortized cost basis are bifurcated with the credit portion of the impairment loss being recognized in earnings and the non-credit loss portion of the impairment and any subsequent changes in the fair value of those debt securities being recognized in other comprehensive income, net of applicable taxes and other offsets. To estimate the credit portion of an impairment loss recognized in earnings, the Company considers the timing and present value of the cash flows. To the extent that the present value of cash flows generated by a debt security is less than the amortized cost, an other-than-temporary impairment is recognized through earnings.

It is reasonably possible that further declines in 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.

Mortgage loans, net of allowance. The Company holds commercial mortgage loans that are collateralized by properties throughout the U.S. These mortgage loans are further segregated into the following classes based on the unique risk profiles of the underlying property types: office, industrial, retail, apartment and other. Mortgage loans held-for-investment are held at amortized cost less a valuation allowance.

As part of the underwriting process, specific guidelines are followed to ensure the initial quality of a new mortgage loan. Third-party appraisals are generally obtained to support loaned amounts as the loans are usually collateral dependent.

12

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The collectability and value of a mortgage loan are based on the ability of the borrower to repay and/or the value of the underlying collateral. Many of the Company’s commercial mortgage loans are structured with balloon payment maturities, exposing the Company to risks associated with the borrowers’ ability to make the balloon payment or refinance the property.

The Company actively monitors the credit quality of its mortgage loans to support the development of the valuation allowance. This monitoring process includes quantitative analyses which facilitate the identification of deteriorating loans, and qualitative analyses, which consider other factors relevant to the borrowers’ ability to repay. Loans with deteriorating credit fundamentals are identified through special surveillance procedures and are evaluated based on the severity of their deterioration and management’s judgment as to the likelihood of loss.

Mortgage loans require a loan-specific reserve 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 requires a loan-specific reserve, a provision for loss is established equal to the difference between the carrying value and either the fair value of the collateral less costs to sell or the present value of expected future cash flows discounted at the loan’s market interest rate. Loan-specific reserve charges are recorded in net realized investment gains and losses. In the event a loan-specific reserve charge is reversed, the recovery is recorded in net realized investment gains and losses.

In addition to the loan-specific reserves, the Company maintains a non-specific reserve based primarily on loan surveillance categories and property type classes, which reflects management’s best estimate of probable credit losses inherent in the portfolio as of the balance sheet date but not yet attributable to specific loans. Management’s periodic evaluation of the adequacy of the non-specific reserve is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Non-specific reserve changes are recorded in net realized investment gains and losses.

Interest income on performing mortgage loans is recognized over the life of the loan using the effective-yield method. Loans in default or in the process of foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans is included in net investment income in the period received. Loans are considered delinquent when contractual payments are 90 days past due.

Policy loans. Policy loans, which are collateralized by the related insurance policy, are held at the outstanding principal balance and do not exceed the net cash surrender value of the policy. As such, no valuation allowance for policy loans is required.

Short-term investments. Short-term investments consist of highly liquid mutual funds and government agency discount notes with maturities of twelve months or less at acquisition. The Company and various affiliates maintains 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 are included in short-term investments on the consolidated balance sheets. The Company carries short-term investments at fair value.

Other investments. Other investments consist primarily of equity method investments in joint ventures and partnerships, equity securities, capital stock with the Federal Home Loan Bank of Cincinnati (“FHLB”) and trading securities.

13

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Securities lending. The Company has entered into securities lending agreements with a custodial bank whereby eligible securities are loaned to third parties, primarily major brokerage firms. These transactions are used to generate additional income on the securities portfolio. The Company is entitled to receive from the borrower any payments of interest and dividends received on loaned securities during the loan term. The agreements require a minimum of 102% of the fair value of loaned securities to be held as collateral. Cash collateral is invested by the custodial bank in investment-grade securities, which are included in the total investments of the Company. Periodically, the Company may receive non-cash collateral, which would be recorded off-balance sheet. The Company recognizes loaned securities in either available-for-sale or other investments. A securities lending payable is recorded in other liabilities for the amount of cash collateral received. Net income received from securities lending activities is included in net investment income.

Variable interest entities. In the normal course of business, the Company has relationships with VIEs. If the Company determines that it has a variable interest and is the primary beneficiary, it consolidates the VIE. This determination is based on a review of the entity’s contract and other deal related information, such as the entity’s equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity. The Company is the primary beneficiary if the Company has the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and the obligation to absorb losses or receive benefits from the entity that could be potentially significant to the VIE.

The majority of the VIEs consolidated by the Company are due to guarantees provided to limited partners related to the amount of tax credits that will be generated by the Low-Income-Housing Tax Credit Funds (“Tax Credit Funds”). The results of operations and financial position of each VIE for which the Company is the primary beneficiary as well as the corresponding noncontrolling interests, are recorded in the consolidated financial statements. Ownership interests held by unrelated third parties in the consolidated VIEs are presented as noncontrolling interests in the equity section of the consolidated financial statements. Loss attributable to noncontrolling interests is excluded from the net income attributable to NLIC on the consolidated statements of operations.

The Company invests in fixed maturity securities that could qualify as VIEs, including corporate securities, mortgage-backed securities and asset-backed securities. The Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impact the entities’ performance. The Company’s maximum exposure to loss is limited to the carrying values of these securities. There are no liquidity arrangements, guarantees or other commitments by third parties that affect the fair value of the Company’s interest in these assets. Refer to Note 6 for additional disclosures related to these investments.

The Company is not required and does not intend to provide financial or other support outside of contractual requirements to any VIE.

Derivative Instruments

The Company uses derivative instruments to manage exposures and mitigate risks primarily associated with interest rates, equity markets and foreign currency. These derivative instruments primarily include interest rate swaps, futures contracts and options. Certain features embedded in the Company’s indexed products and certain variable annuity contracts require derivative accounting. Refer to the prior discussion of Future Policy Benefits and Claims for a description of the valuation applicable to these products. All derivative instruments are held at fair value and are reflected as assets or liabilities in the consolidated balance sheets.

14

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Fair value of derivative instruments is determined using various valuation techniques relying predominantly on observable market inputs. These inputs include interest rate swap curves, credit spreads, interest rates, counterparty credit risk, equity volatility and equity index levels. In cases where observable inputs are not available, the Company will utilize non-binding broker quotes to determine fair value, and these instruments are classified accordingly in the fair value hierarchy. Price movements of these broker quotes are subject to validation and require approval from the Company’s management. Management uses models to internally value the instruments for comparison to the values received through broker quotes.

For derivatives that are not designated for hedge accounting, the gain or loss on the derivative is primarily recognized in net realized investment gains and losses.

For derivative instruments that are designated and qualify for fair value hedge accounting, the gain or loss on the derivative instrument, as well as the hedged item to the extent of the risk being hedged, are recognized in net realized investment gains and losses.

For derivative instruments that are designated and qualify for cash flow hedge accounting, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods that the hedged transaction impacts earnings. The ineffective portion of the derivative’s change in value, if any, along with any of the derivative’s change in value that is excluded from the assessment of hedge effectiveness, are recorded in net realized investment gains and losses.

The Company’s derivative transaction counterparties are generally financial institutions. To reduce the credit risk associated with open contracts, the Company enters into master netting agreements, which permit the closeout and netting of transactions with the same counterparty upon the occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. The Company accepts collateral in the form of cash and marketable securities.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In determining fair value, the Company uses various methods, primarily market and income approaches.

The Company categorizes its fair value measurements 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.

15

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The Company categorizes assets and liabilities held 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 and mutual funds where the value per share (unit) is determined and published daily and is the basis for current transactions.

• 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. Primary inputs to this valuation technique may include comparative trades, bid/asks, interest rate movements, U.S. Treasury rates, London Interbank Offered Rate (“LIBOR”), prime rates, cash flows, maturity dates, call ability, estimated prepayments, and/or underlying collateral values.

• Level 3 – Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate about the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs.

The Company reviews its fair value hierarchy classifications for assets and liabilities quarterly. Changes in observability of significant valuation inputs identified during these reviews may trigger reclassifications. Reclassifications are reported as transfers at the beginning of the period in which the change occurs.

Fair Value Option

The Company assesses the fair value option election for newly acquired assets or liabilities on a prospective basis. There are no material assets or liabilities for which the Company elected the fair value option.

Federal Income Taxes

The Company recognizes deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded to reduce a deferred tax asset to the amount expected to be realized. Interest expense and any associated penalties which relate to tax years still subject to review by the Internal Revenue Service (“IRS”) are recorded as income tax expense.

The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to change the provision for federal income taxes recorded in the consolidated financial statements, which could be significant.

Tax 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 with taxing authorities 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.

16

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

NLIC files a separate consolidated federal income tax return, with its subsidiaries, and is eligible to join the NMIC consolidated federal tax return group in 2015.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of less than three months.

Goodwill

In connection with business acquisitions, the Company recognizes goodwill as the excess of the purchase price over the fair value of net assets acquired as goodwill. Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually. Goodwill of a reporting unit 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. If a reporting unit’s fair value is less than its carrying value, the Company will calculate implied goodwill. An impairment would be recognized on a reporting unit for the amount that the carrying value of its goodwill exceeds the implied value of its goodwill.

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 2013 annual impairment test and determined that no impairment was required.

Closed Block

In connection with the sponsored demutualization of Provident Mutual Life Insurance Company (“Provident”) prior to its acquisition by the Company, Provident established a closed block for the benefit of certain classes of individual participating policies that had a dividend scale payable in 2001. Assets were allocated to the closed block in an amount that produces cash flows which, together with anticipated revenues from closed block business, is reasonably expected to be sufficient to provide for (1) payment of policy benefits, specified expenses and taxes, and (2) the continuation of dividends throughout the life of the Provident policies included in the closed block based upon the dividend scales payable for 2001, if the experience underlying such dividend scales continues.

Assets allocated to the closed block benefit only the holders of the policies included in the closed block and will not revert to the benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without the approval of the Pennsylvania Insurance Department and Ohio Department of Insurance (“ODI”). The closed block will remain in effect as long as any policy in the closed block is in force.

If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will increase. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from the Company’s assets outside of the closed block, which are general account assets.

The assets and liabilities allocated to the closed block are recorded in the Company’s consolidated financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date Provident was acquired by the Company represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income, for the benefit of stockholders, over the period the policies in the closed block remain in force.

17

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income. This is because the excess actual 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 and net investment income and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies. See Note 10 for further disclosure.

Separate Accounts

Separate account assets and liabilities represent contractholders’ funds that have been legally segregated into accounts with specific investment objectives. In the separate account, investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. Separate account assets are primarily comprised of public, privately registered and non-registered mutual funds. Separate account assets are recorded at fair value based on the methodology that would be applicable to the underlying assets. The value of separate account liabilities is set to equal the fair value for separate account assets.

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 2013 (5% in 2012 and 2011) and 38% of the number of life insurance policies in force in 2013 (40% in 2012 and 42% in 2011). The provision for policyholder dividends was based on the respective year’s dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.

Change in Accounting Principle

In October 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-26, which amends FASB Accounting Standards Codification (“ASC”) 944, Financial Services – Insurance. The amended guidance modifies the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal insurance and investment contracts. Under the amended guidance, acquisition costs are to include only those costs that are directly related to the successful acquisition of new or renewal insurance and investment contracts. The methods and assumptions used to amortize and assess recoverability of DAC were not impacted as a result of adopting this guidance.

The Company adjusted the presentation of its consolidated financial statements and accompanying notes for all periods presented, to reflect the retrospective adoption of this change in accounting principle.

18

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following tables summarize the impact of the retrospective change in accounting principle on the consolidated statements of operations for the periods indicated:

	Year ended December 31, 2011
(in millions)	As Originally Reported			As Adjusted			Effect of Change
Amortization of deferred policy acquisition costs	$	76		$	65		$	11
Other expenses, net of deferrals1	$	620		$	760		$	(140	)
Federal income tax benefit	$	(382	)	$	(427	)	$	45
Net loss attributable to Nationwide Life Insurance Company	$	(282	)	$	(366	)	$	(84	)

¹  Excludes interest expense, which is included in other expenses, net of deferrals on the consolidated statements of operations.

Subsequent Events

The Company evaluated subsequent events through February 28, 2014, the date the consolidated financial statements were issued.

(3) Recently Issued Accounting Standards

Adopted Accounting Standards

On January 1, 2013, the Company adopted ASU 2011-11, which expands the disclosure requirements within ASC 210-10, Balance Sheet – Offsetting. The new disclosures require improved information about certain financial instruments and derivatives that are either offset in accordance with GAAP or subject to enforceable master offsetting arrangements irrespective of GAAP. The Company also adopted ASU 2013-01, which clarifies the scope of these disclosures. The adoption of this guidance resulted in increased disclosures only and had no impact on the Company’s consolidated financial statements.

On January 1, 2013, the Company adopted ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which amends FASB ASC 220, Comprehensive Income. The amended guidance requires entities to provide information about the amounts reclassified out of accumulated other comprehensive income by significant component. For significant amounts reclassified into net income in their entirety in the same reporting period, the amended guidance also requires entities to present or disclose the effect of these reclassifications on line items of net income. The adoption of this guidance resulted in increased disclosures only and had no impact on the Company’s consolidated financial statements.

On July 17, 2013, the Company adopted ASU 2013-10, which permits the Overnight Index Swap Rate to be designed as a U.S. benchmark interest rate for hedge accounting purposes. This guidance is applied prospectively on new or redesigned hedging relationships and accordingly had no impact to the Company’s consolidated financial statements.

On January 1, 2012, the Company adopted ASU 2011-04, which amends existing guidance in ASC 820, Fair Value Measurements and Disclosures. The guidance in this ASU clarifies existing fair value measurement guidance and expands disclosures primarily related to Level 3 fair value measurements. The Company also adopted ASU 2013-03, which clarifies the applicability of these disclosures. The adoption of this guidance resulted in increased disclosures only and had no impact on the Company’s consolidated financial statements.

19

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

On January 1, 2012, the Company adopted ASU 2011-05, which amends existing guidance in ASC 220, Comprehensive Income. The amended guidance requires reporting entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. The Company elected two separate but consecutive statements of operations and comprehensive income and adopted ASU 2011-05 retrospectively.

Pending Accounting Standards

In February 2013, the FASB issued ASU 2013-04, which amends existing guidance in ASC 405, Liabilities. The ASU provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The guidance is effective retrospectively for the Company’s annual and interim periods beginning January 1, 2014. The Company is currently in the process of determining the impact of adoption.

In June 2013, the FASB issued ASU 2013-08, which amends existing guidance in ASC 946, Financial Services – Investment Companies. The amended guidance modifies the definition of investment companies and requires new disclosures around the status and operations of investment companies. In addition, the guidance requires an investment company to measure its noncontrolling interests in another investment company at fair value rather than the equity method of accounting. The Company will adopt the ASU for interim and annual reporting periods beginning January 1, 2014. The Company is currently in the process of determining the impact of adoption.

In July 2013, the FASB issued ASU 2013-11, which amends existing guidance in ASC 740, Income Taxes. The amended guidance provides clarification on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The Company will adopt the ASU for interim and annual periods beginning January 1, 2014. The Company is currently in the process of determining the impact of adoption.

In January 2014, the FASB issued ASU 2014-01, which amends existing guidance in ASC 323, Equity Method and Joint Ventures. The amended guidance permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. The Company will adopt the ASU for interim and annual reporting periods beginning January 1, 2015. The Company is currently in the process of determining the impact of adoption.

(4) Certain Long-Duration Contracts

Variable Annuity Contracts

Contractholder assets are invested in general and separate account investment options as directed by the contractholder. The Company issues variable annuity contracts through its separate accounts. The Company also provides various forms of guarantees to benefit the related contractholders. The Company provides five primary guarantee types: (1) GMDB; (2) GMAB; (3) GLWB; (4) a hybrid guarantee with GMAB and GLWB; and (5) GMIB.

The GMDB, offered on every variable annuity contract, 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 by having the death benefit paid into the contract and having a second death benefit paid upon the survivor’s death.

20

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The GMAB, which was offered in the Company’s Capital Preservation Plus product, is a living benefit that provides the contractholder with a guaranteed return of deposits, 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 guarantee 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 Lifetime Income products, are living benefits that provide 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 feature driven by account performance and policy duration.

The GMIB, which was offered with several variable annuity contracts, is a living benefit that provides the contractholder with a guaranteed annuitization stream of income.

The following table summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts, as of the dates indicated (a contract may contain multiple guarantees):

	December 31, 2013								December 31, 2012
(in millions)	General account value		Separate account value		Net amount at risk1		Average age2		General account value		Separate account value		Net amount at risk1		Average age2
Contracts with GMDB:
Return of net deposits	$	916	$	19,927	$	13		64	$	836	$	14,963	$	24		64
Minimum return or anniversary contract value		2,031		33,520		237		69		2,048		29,787		561		68
Total contracts with GMDB	$	2,947	$	53,447	$	250		67	$	2,884	$	44,750	$	585		66
GMAB Return of net deposits3	$	92	$	2,383	$	—		64	$	165	$	3,230	$	12		64
GLWB Minimum return or anniversary contract value	$	178	$	28,071	$	74		64	$	128	$	22,031	$	613		65
GMIB Minimum return or anniversary contract value	$	49	$	510	$	—		64	$	49	$	514	$	1		65

¹  Net amount at risk is calculated on a policy-level basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit).

²  Represents the weighted average attained age of contractholders.

³  Contracts with the hybrid accumulation/withdrawal benefits are included with the accumulation benefits contracts.

21

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes the reserve balances for guarantees on variable annuity contracts, as of the dates indicated:

(in millions)	December 31, 2013			December 31, 2012
GMDB	$	55		$	65
GMAB1, 2	$	(19	)	$	57
GLWB1	$	(1,075	)	$	600
GMIB	$	2		$	2

¹  The fair value of the living benefit liability includes the present value of attributed fees.

²  Contracts with the hybrid accumulation/withdrawal benefits are included with the accumulation benefits contracts.

Paid claims for GMDBs were $22 million and $30 million for the years ended December 31, 2013 and 2012, respectively.

Paid claims for GMABs, GLWBs and GMIBs were immaterial for the years ended December 31, 2013 and 2012.

The following table summarizes account balances of deferred variable annuity contracts with guarantees invested in separate accounts, as of the dates indicated:

(in millions)	December 31, 2013		December 31, 2012
Mutual funds:
Bond	$	5,685	$	5,634
Domestic equity		43,505		35,277
International equity		3,179		2,614
Total mutual funds	$	52,369	$	43,525
Money market funds		1,078		1,225
Total1	$	53,447	$	44,750

¹  Excludes $30.6 billion and $26.7 billion as of December 31, 2013 and 2012, respectively, of separate account assets not related to deferred variable annuity contracts with guarantees and are primarily attributable to retirement plan, variable universal life and COLI products.

The Company did not transfer any assets from the general account to the separate account to cover guarantees for any of its variable annuity contracts during the years ended December 31, 2013 and 2012.

Universal and Variable Universal Life Insurance Contracts

The Company offers certain universal life and variable universal life insurance products with secondary guarantees. These no-lapse guarantees provide that a policy will not lapse so long as the policyholder makes minimum premium payments. The reserve balances on these guarantees were $325 million and $216 million as of December 31, 2013 and 2012, respectively. Paid claims on contracts maintained in force by these guarantees were immaterial for the years ended December 31, 2013 and 2012.

22

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes information regarding universal and variable universal life insurance contracts with no-lapse guarantees invested in general and separate accounts, as of the dates indicated:

(in millions)	General account value		Separate account value		Adjusted insurance in force1		Average age2
December 31, 2013	$	1,270	$	362	$	16,960		55
December 31, 2012	$	992	$	328	$	12,321		56

¹  The adjusted insurance in force is calculated on a policy-level basis and equals the respective guaranteed death benefit less the account value (or zero if the account value exceeds the guaranteed benefit).

²  Represents the weighted average attained age of contractholders.

(5) Deferred Policy Acquisition Costs

The following table summarizes changes in the DAC balance, as of the dates indicated:

(in millions)	December 31, 2013			December 31, 2012			December 31, 20111
Balance at beginning of year	$	3,249		$	3,487		$	3,125
Capitalization of DAC		604			470			604
Amortization of DAC, excluding unlocks		(373	)		(525	)		(200	)
Amortization of DAC related to unlocks		(1	)		(50	)		135
Adjustments to DAC related to unrealized gains and losses on available-for-sale securities		299			(133	)		(177	)
Balance at end of year	$	3,778		$	3,249		$	3,487

¹  The balances reflect a change in accounting principle, as described in Note 2.

During 2013, the net change in DAC amortization as a result of the annual comprehensive review of model assumptions was immaterial.

During 2012, the Company incurred additional DAC amortization of $50 million as a result of the annual comprehensive review of model assumptions, as well as a deviation from equity market performance as compared to assumed net separate account returns. The updated assumptions were primarily related to actual gross profits and the in force block of business deviating from expectations, renewal premiums, general account margins and lapses.

During 2011, the Company recognized a reduction in DAC amortization of $135 million as a result of the annual comprehensive review of model assumptions. The updated assumptions related to interest spread, mortality, maintenance expense and market performance assumptions. The 2011 reduction in DAC amortization reflects the impact of the retrospective change in accounting principle described in Note 2.

23

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(6) Investments

Available-for-Sale Securities

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

(in millions)	Amortized cost		Unrealized gains		Unrealized losses		Fair value
December 31, 2013
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	484	$	79	$	2	$	561
Obligations of states, political subdivisions and foreign governments		1,892		111		40		1,963
Corporate public securities		18,004		1,076		295		18,785
Corporate private securities		4,374		258		38		4,594
Residential mortgage-backed securities		3,919		163		79		4,003
Commercial mortgage-backed securities		1,439		86		21		1,504
Other asset-backed securities		890		26		77		839
Total fixed maturity securities	$	31,002	$	1,799	$	552	$	32,249
Equity securities		6		18		—		24
Total available-for-sale securities	$	31,008	$	1,817	$	552	$	32,273
December 31, 2012
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	476	$	121	$	—	$	597
Obligations of states, political subdivisions and foreign governments		1,820		301		1		2,120
Corporate public securities		16,152		1,891		33		18,010
Corporate private securities		4,216		392		19		4,589
Residential mortgage-backed securities		4,506		267		106		4,667
Commercial mortgage-backed securities		1,219		133		15		1,337
Other asset-backed securities		533		45		87		491
Total fixed maturity securities	$	28,922	$	3,150	$	261	$	31,811
Equity securities		15		5		—		20
Total available-for-sale securities	$	28,937	$	3,155	$	261	$	31,831

The fair value of the Company’s investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads. The Company has the ability and intent to hold equity securities until recovery. The Company does not have the intent to sell, nor is it more likely than not it will be required to sell, debt securities in an unrealized loss position.

24

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes the amortized cost and fair value of fixed maturity securities, by contractual maturity, as of December 31, 2013. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without early redemption penalties.

(in millions)	Amortized cost		Fair value
Fixed maturity securities:
Due in one year or less	$	1,081	$	1,097
Due after one year through five years		8,927		9,685
Due after five years through ten years		7,805		7,967
Due after ten years		6,941		7,154
Subtotal	$	24,754	$	25,903
Residential mortgage-backed securities		3,919		4,003
Commercial mortgage-backed securities		1,439		1,504
Other asset-backed securities		890		839
Total fixed maturity securities	$	31,002	$	32,249

The following table summarizes components of net unrealized gains and losses, as of the dates indicated:

(in millions)	December 31, 2013			December 31, 2012
Net unrealized gains on available-for-sale securities, before adjustments, taxes and fair value hedging	$	1,265		$	2,894
Change in fair value attributable to fixed maturity securities designated in fair value hedging relationships		—			(4	)
Net unrealized gains on available-for-sale securities, before adjustments and taxes1	$	1,265		$	2,890
Adjustment to DAC and other		(176	)		(482	)
Adjustment to future policy benefits and claims		(89	)		(295	)
Adjustment to policyholder dividend obligation		(85	)		(177	)
Deferred federal income tax expense		(314	)		(672	)
Net unrealized gains on available-for-sale securities	$	601		$	1,264

¹  Includes net unrealized losses of $(40) million and $(48) million as of December 31, 2013 and 2012, respectively, related to the non-credit portion of other-than-temporarily impaired securities.

25

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes the change in net unrealized gains and losses reported in accumulated other comprehensive income, for the years ended:

(in millions)	December 31, 2013			December 31, 2012
Balance at beginning of year	$	1,264		$	693
Unrealized gains and losses arising during the period:
Net unrealized (losses) gains on available-for-sale securities before adjustments		(1,657	)		990
Non-credit impairments and subsequent changes in fair value of impaired debt securities		8			178
Net adjustment to DAC and other		306			(135	)
Net adjustment to future policy benefits and claims		206			(112	)
Net adjustment to policyholder dividend obligation		92			(45	)
Related federal income tax benefit (expense)		366			(308	)
Change in unrealized (losses) gains on available-for-sale securities	$	(679	)	$	568
Reclassification adjustment for net losses realized on available-for-sale securities, net of tax benefit ($8 and $2 as of December 31, 2013 and 2012, respectively)		(16	)		(3	)
Change in net unrealized (losses) gains on available-for-sale securities	$	(663	)	$	571
Balance at end of year	$	601		$	1,264

26

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes by asset class available-for-sale securities, in an unrealized loss position based on the amount of time each type of security has been in an unrealized loss position, as well as the related fair value and number of securities, as of the dates indicated:

	Less than or equal to one year						More than one year						Total
(in millions, except number of securities)	Fair value		Unrealized losses		Number of securities		Fair value		Unrealized losses		Number of securities		Fair value		Unrealized losses		Number of securities
December 31, 2013
Fixed maturity securities:
Corporate public securities	$	4,889	$	256		346	$	442	$	39		34	$	5,331	$	295		380
Residential mortgage-backed securities		725		16		70		604		63		148		1,329		79		218
Other asset-backed securities		507		6		32		144		71		40		651		77		72
Other		1,838		85		126		222		16		20		2,060		101		146
Total	$	7,959	$	363		574	$	1,412	$	189		242	$	9,371	$	552		816
December 31, 2012
Fixed maturity securities:
Corporate public securities	$	710	$	11		68	$	150	$	22		10	$	860	$	33		78
Residential mortgage-backed securities		89		2		12		1,029		104		190		1,118		106		202
Other asset-backed securities		27		1		5		163		86		46		190		87		51
Other		326		4		23		284		31		36		610		35		59
Total	$	1,152	$	18		108	$	1,626	$	243		282	$	2,778	$	261		390

The following table summarizes gross unrealized losses based on the ratio of fair value to amortized cost, for available-for-sale securities in an unrealized loss position, as of the dates indicated:

	December 31, 2013						December 31, 2012
(in millions)	Less than or equal to one year		More than one year		Total		Less than or equal to one year		More than one year		Total
99.9% - 80.0%	$	363	$	107	$	470	$	18	$	85	$	103
Less than 80.0%
Residential mortgage-backed securities		—		21		21		—		50		50
Other asset-backed securities		—		61		61		—		72		72
Other		—		—		—		—		36		36
Total	$	363	$	189	$	552	$	18	$	243	$	261

27

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Residential mortgage-backed securities are assessed for impairment using default estimates based on loan level data, where available. Where loan level data is not available, a proxy based on collateral characteristics is used. The impairment assessment considers loss severity as a function of multiple factors, including unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property value, loan-to-value (“LTV”) ratio at origination and prepayment speeds. Cash flows generated by the collateral are then utilized, along with consideration for the instrument’s position in the overall structure, to determine cash flows associated with the security.

Certain other asset-backed securities are assessed for impairment using expected cash flows based on various inputs including default estimates based on the underlying corporate securities, historical and forecasted loss severities or other market inputs when recovery estimates are not feasible. When the collateral is regional bank and insurance company trust preferred securities, default estimates used to estimate cash flows are based on U.S. Bank Rating service data and broker research.

The Company believes the unrealized losses on these available-for-sale securities represent temporary fluctuations in economic factors that are not indicative of other-than-temporary impairment.

Mortgage Loans, Net of Allowance

The following table summarizes the amortized cost of mortgage loans by method of evaluation for credit loss, and the related valuation allowances by type of credit loss, as of the dates indicated:

(in millions)	December 31, 2013		December 31, 2012
Amortized cost:
Loans with non-specific reserves	$	6,350	$	5,820
Loans with specific reserves		26		51
Total amortized cost	$	6,376	$	5,871
Valuation allowance:
Non-specific reserves	$	29	$	33
Specific reserves		6		11
Total valuation allowance	$	35	$	44
Mortgage loans, net of allowance	$	6,341	$	5,827

The following table summarizes activity in the valuation allowance for mortgage loans, for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Balance at beginning of year	$	44		$	60		$	96
Current period provision1		(4	)		2			25
Recoveries2		(5	)		(15	)		(7	)
Charge offs and other		—			(3	)		(54	)
Balance at end of year	$	35		$	44		$	60

¹  Includes specific reserve provisions and all changes in non-specific reserves.

²  Includes recoveries on sales and increases in the valuation of loans with specific reserves.

28

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes impaired commercial mortgage loans by class, for the years ended:

(in millions)	Office			Industrial			Retail			Other		Total
December 31, 2013
Amortized cost	$	—		$	26		$	—		$	—	$	26
Specific reserves		—			(6	)		—			—		(6	)
Carrying value of impaired mortgage loans, net of allowance	$	—		$	20		$	—		$	—	$	20
December 31, 2012
Amortized cost	$	13		$	26		$	12		$	—	$	51
Specific reserves		(2	)		(7	)		(2	)		—		(11	)
Carrying value of impaired mortgage loans, net of allowance	$	11		$	19		$	10		$	—	$	40

The following table summarizes average recorded investment and interest income recognized for impaired commercial mortgage loans by class, for the years ended:

(in millions)	Office		Industrial		Retail		Other		Total
December 31, 2013
Average recorded investment	$	5	$	20	$	5	$	—	$	30
Interest income recognized	$	1	$	1	$	1	$	—	$	3
December 31, 2012
Average recorded investment	$	9	$	20	$	11	$	34	$	74
Interest income recognized	$	1	$	2	$	1	$	6	$	10

As of December 31, 2013 and 2012, the Company’s mortgage loans classified as delinquent and/or in non-accrual status were immaterial in relation to the total mortgage loan portfolio. The Company had no mortgage loans 90 days or more past due and still accruing interest.

Management evaluates the credit quality of individual mortgage loans and the portfolio as a whole through a number of loan quality measurements, including, but not limited to, LTV and debt service coverage (“DSC”) ratios. The LTV ratio is calculated as a ratio of the amortized cost of a loan to the estimated value of the underlying collateral. DSC is the amount of cash flow generated by the underlying collateral of the mortgage loan available to meet periodic interest and principal payments of the loan. This process identifies mortgage loans representing the lowest risk profile and lowest potential for loss and those representing the highest risk profile and highest potential for loss. These factors are updated and evaluated at least annually.

29

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes the LTV ratio and DSC ratios of the mortgage loan portfolio, as of the dates indicated:

	LTV ratio								DSC ratio
(in millions)	Less than 80%		80% - less than 90%		90% or greater		Total		Greater than 1.10			1.00-1.10			Less than 1.00			Total
December 31, 2013:
Apartment	$	1,788	$	52	$	30	$	1,870	$	1,857		$	6		$	7		$	1,870
Industrial		951		52		86		1,089		893			122			74			1,089
Office		837		30		38		905		800			43			62			905
Retail		2,236		41		21		2,298		2,214			61			23			2,298
Other		213		—		1		214		214			—			—			214
Total	$	6,025	$	175	$	176	$	6,376	$	5,978		$	232		$	166		$	6,376
Weighted average DSC ratio		1.77		1.22		1.00		1.74		n/a			n/a			n/a			n/a
Weighted average LTV ratio		n/a		n/a		n/a		n/a		60	%		61	%		91	%		61	%
December 31, 2012:
Apartment	$	1,119	$	129	$	62	$	1,310	$	1,303		$	5		$	2		$	1,310
Industrial		922		76		162		1,160		951			121			88			1,160
Office		776		55		42		873		783			16			74			873
Retail		1,940		250		86		2,276		2,139			92			45			2,276
Other		189		57		6		252		252			—			—			252
Total	$	4,946	$	567	$	358	$	5,871	$	5,428		$	234		$	209		$	5,871
Weighted average DSC ratio		1.74		1.27		1.07		1.65		n/a			n/a			n/a			n/a
Weighted average LTV ratio		n/a		n/a		n/a		n/a		66	%		76	%		96	%		68	%

While these loan quality measurements contribute to management’s assessment of relative credit risk in the mortgage loan portfolio for the dates indicated based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible.

Available-For-Sale Securities on Deposit, Held in Trust and Pledged as Collateral

Available-for-sale securities with a carrying value of $8 million and $9 million were on deposit with various regulatory agencies as required by law as of December 31, 2013 and 2012, respectively. Additionally, available-for-sale securities with a carrying value of $849 million and $73 million were pledged as collateral to secure recoveries under reinsurance contracts and other funding agreements as of December 31, 2013 and 2012, respectively. These securities are primarily included in fixed maturity securities in the consolidated balance sheets.

30

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Tax Credit Funds

The Company has sold $1.2 billion and $0.9 billion in Tax Credit Funds to unrelated third parties as of December 31, 2013 and 2012, respectively. The Company has guaranteed after-tax benefits to the third party investors through periods ending in 2028. The Company held immaterial reserves on these transactions as of December 31, 2013 and 2012. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, the Company must fund any shortfall. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $796 million, but the company does not anticipate making any material payments related to the guarantees. The Company’s risks are mitigated in the following ways: (1) the Company has the right to buyout the equity related to the guarantee under certain circumstances, (2) the Company may replace underperforming properties to mitigate exposure to guarantee payments and (3) the Company oversees the asset management of the deals.

Consolidated VIEs

The Company has relationships with VIEs where the Company is the primary beneficiary. These consolidated VIEs are primarily made up of Low-Income-Housing Tax Credit Funds with guarantees to limited partners. Net assets (controlling and noncontrolling interests) of all consolidated VIEs totaled $680 million and $347 million as of December 31, 2013 and 2012, respectively, which were composed primarily of other investments of $554 million, other assets of $182 million and other liabilities of $82 million as of December 31, 2013, and other investments of $348 million as of December 31, 2012. The Company’s general credit is not exposed to the creditors or beneficial interest holders of these consolidated VIEs.

Unconsolidated VIEs

In addition to the consolidated VIEs, the Company holds investments in VIEs where the Company is not the primary beneficiary, which are primarily investments in Tax Credit Funds without guarantees to limited partners. The carrying value of these investments was $104 million and $222 million as of December 31, 2013 and 2012, respectively. In addition, the Company has made commitments for further investments in these VIEs of $29 million and $66 million as of December 31, 2013 and 2012, respectively.

Net Investment Income

The following table summarizes net investment income by investment type, for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Fixed maturity securities, available-for-sale	$	1,565		$	1,506		$	1,502
Mortgage loans		348			366			370
Policy loans		52			53			56
Other		(57	)		(45	)		(34	)
Gross investment income	$	1,908		$	1,880		$	1,894
Investment expenses		59			55			50
Net investment income	$	1,849		$	1,825		$	1,844

31

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Net Realized Investment Gains and Losses, Net of Other-Than-Temporary Impairments

The following table summarizes net realized investment gains and losses, net of other-than-temporary impairments, by source, for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Net derivative gains (losses)	$	705		$	314		$	(1,636	)
Realized gains on sales		32			48			64
Realized losses on sales		(54	)		(23	)		(45	)
Other		—			12			(19	)
Net realized investment gains (losses) before other-than-temporary impairments on fixed maturity securities	$	683		$	351		$	(1,636	)
Other-than-temporary impairments on fixed maturity securities1		(5	)		(32	)		(40	)
Net realized investment gains (losses), net of other-than-temporary impairments	$	678		$	319		$	(1,676	)

¹  Other-than-temporary impairments on fixed maturity securities are net $6 million, $36 million and $95 million of non-credit losses included in other comprehensive income for the years ended December 31, 2013, 2012 and 2011, respectively.

Proceeds from the sale of available-for-sale securities were $1.1 billion, $0.8 billion and $1.6 billion during the years ended December 31, 2013, 2012 and 2011, respectively. Gross gains of $31 million, $47 million and $50 million and gross losses of $50 million, $20 million and $39 million were realized on sales of available-for-sale securities during the years ended December 31, 2013, 2012 and 2011, respectively.

The following table summarizes the cumulative credit losses, for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Cumulative credit losses at beginning of year1	$	(289	)	$	(328	)	$	(340	)
New credit losses		(3	)		(18	)		(8	)
Incremental credit losses		(3	)		(10	)		(29	)
Losses related to securities included in the beginning balance sold or paid down during the period		23			67			49
Cumulative credit losses at end of year1	$	(272	)	$	(289	)	$	(328	)

¹  Cumulative credit losses are defined as amounts related to the Company’s credit portion of the other-than-temporary impairment losses on debt securities that the Company does not intend to sell and that it is not more likely than not the Company will be required to sell prior to recovery of the amortized cost basis.

32

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(7) Derivative Instruments

The Company is exposed to certain risks related to its ongoing business operations which are managed using derivative instruments.

Interest rate risk management. The Company uses interest rate contracts, primarily interest rate swaps, to reduce or alter interest rate exposure arising from mismatches between assets and liabilities. In the case of interest rate swaps, the Company enters into a contractual agreement with a counterparty to exchange, at specified intervals, the difference between fixed and variable rates of interest, calculated on a reference notional amount.

Interest rate swaps are used by the Company in association with fixed and variable rate investments to achieve cash flow streams that support certain financial obligations of the Company and to produce desired investment returns. As such, interest rate swaps are generally used to convert fixed rate cash flow streams to variable rate cash flow streams or vice versa. The Company also enters into interest rate swap transactions which are structured to provide an offset against the negative impact of higher interest rates on the Company’s capital position.

Equity market and interest rate risk management. The Company has a variety of variable annuity products with guaranteed benefit features. These products and related obligations expose the Company to various market risks, primarily equity and interest rate risks. Adverse changes in the equity markets or interest rate movements expose the Company to significant volatility. To mitigate these risks and hedge the guaranteed benefit obligations, the Company enters into a variety of derivatives including interest rate swaps, equity index futures, options and total return swaps.

Foreign currency risk management. As part of its regular investing activities, the Company may purchase foreign currency denominated investments. These investments and the associated income expose the Company to volatility associated with movements in foreign exchange rates. As foreign exchange rates change, the increase or decrease in the cash flows of the derivative instrument generally offsets the changes in the functional-currency equivalent cash flows of the hedged item. To mitigate this risk, the Company uses cross-currency swaps and futures, which are primarily included in other derivative contracts in the following tables.

Credit risk associated with derivative transactions. The Company periodically evaluates the risks within the derivative portfolios due to credit exposure. When evaluating this risk, the Company considers several factors which include, but are not limited to, the counterparty credit 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 impact the Company’s exposure to credit risk could have on the effectiveness of the Company’s hedging relationships is considered. As of December 31, 2013 and 2012, the impact of the exposure to credit risk on the fair value measurement of derivatives and the effectiveness of the Company’s hedging relationships was immaterial.

33

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes the fair value and related notional amounts of derivative instruments, as of the dates indicated:

	Derivative assets				Derivative liabilities
(in millions)	Fair value		Notional		Fair value		Notional
December 31, 2013
Derivatives designated and qualifying as hedging instruments	$	1	$	6	$	26	$	345
Derivatives not designated as hedging instruments:
Interest rate contracts	$	1,787	$	26,156	$	2,100	$	29,715
Equity contracts		343		6,556		—		—
Total return swaps		6		1,101		52		1,183
Other derivative contracts		—		—		5		2
Total derivative positions1	$	2,137	$	33,819	$	2,183	$	31,245
December 31, 2012
Derivatives designated and qualifying as hedging instruments	$	4	$	79	$	21	$	192
Derivatives not designated as hedging instruments:
Interest rate contracts	$	1,960	$	21,216	$	2,065	$	23,746
Equity contracts		822		7,445		—		—
Total return swaps		4		1,513		32		1,551
Other derivative contracts		—		10		5		17
Total derivative positions1	$	2,790	$	30,263	$	2,123	$	25,506

¹  Derivative assets and liabilities are included in other assets and other liabilities, respectively, in the consolidated balance sheets. As of December 31, 2013 and 2012, derivative assets exclude $196 million and $170 million, respectively, of accrued interest receivable, and derivative liabilities exclude $227 million and $179 million, respectively, of accrued interest payable.

The fair value of the Company’s derivative positions, subject to offsetting by master netting agreements of $1.7 billion and $2.0 billion as of December 31, 2013 and 2012, respectively, and by collateral received from or posted with counterparties, resulted in immaterial net uncollateralized derivative asset and liability positions as of December 31, 2013 and 2012. As of December 31, 2013 and 2012, the Company held cash collateral from derivative counterparties of $382 million and $798 million, respectively. The Company held $29 million of securities as off-balance sheet collateral as of December 31, 2013. No securities were held as off-balance sheet collateral as of December 31, 2012. As of December 31, 2013 and 2012, the Company had posted cash collateral of $435 million and $228 million, respectively, and pledged securities with a fair value of $173 million and $148 million, respectively, with derivative counterparties.

34

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes gains and losses for derivative instruments recognized in net realized investment gains and losses in the consolidated statements of operations, for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Derivatives designated and qualifying as hedging instruments	$	(1	)	$	(1	)	$	(4	)
Derivatives not designated as hedging instruments:
Interest rate contracts	$	(209	)	$	(125	)	$	(44	)
Equity contracts		(776	)		(665	)		(45	)
Total return swaps		(321	)		(343	)		(17	)
Other derivative contracts		(9	)		(1	)		(6	)
Net interest settlements		14			53			34
Total derivative losses1	$	(1,302	)	$	(1,082	)	$	(82	)
Change in embedded derivatives on guaranteed benefit annuity programs2		1,751			1,185			(1,674	)
Other revenue on guaranteed benefit annuity programs		256			211			120
Change in embedded derivative liabilities and related fees	$	2,007		$	1,396		$	(1,554	)
Net realized derivative gains (losses)	$	705		$	314		$	(1,636	)

¹  Included in total derivative losses are economic hedging losses of $1.8 billion, $827 million and gains of $1.0 billion related to the guaranteed benefit annuity programs for the years ended December 31, 2013, 2012 and 2011, respectively.

²  As part of the Company’s annual comprehensive review of DAC model assumptions, all relevant assumptions impacting the fair value of embedded derivatives on annuity programs are also reviewed and updated. For the individual variable annuity business, the change in the embedded derivatives on guaranteed benefit annuity programs for the year ended December 31, 2013 includes model enhancements and updated assumptions for discounting, benefit utilization, mortality and lapse rates. The change in embedded derivatives on guaranteed benefit annuity programs for the year ended December 31, 2012 included updated assumptions for lapse rates, mortality, withdrawal behavior and benefit utilization.

35

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(8) Fair Value Measurements

The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2013:

(in millions)	Level 1		Level 2			Level 3			Total
Assets
Investments:
Fixed maturity securities, available-for-sale:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	557	$	1		$	3		$	561
Obligations of states, political subdivisions and foreign governments		63		1,900			—			1,963
Corporate public securities		1		18,705			79			18,785
Corporate private securities		—		3,791			803			4,594
Residential mortgage-backed securities		791		3,203			9			4,003
Commercial mortgage-backed securities		—		1,504			—			1,504
Other asset-backed securities		—		645			194			839
Total fixed maturity securities, available-for-sale, at fair value	$	1,412	$	29,749		$	1,088		$	32,249
Other investments at fair value		64		357			45			466
Investments at fair value	$	1,476	$	30,106		$	1,133		$	32,715
Derivative assets		—		1,794			343			2,137
Separate account assets		80,647		1,339			2,083			84,069
Assets at fair value	$	82,123	$	33,239		$	3,559		$	118,921
Liabilities
Future policy benefits and claims:
Embedded derivatives on living benefits	$	—	$	—		$	1,094		$	1,094
Embedded derivatives on indexed products		—		—			(84	)		(84	)
Total future policy benefits and claims	$	—	$	—		$	1,010		$	1,010
Derivative liabilities		—		(2,178	)		(5	)		(2,183	)
Liabilities at fair value	$	—	$	(2,178	)	$	1,005		$	(1,173	)

36

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2013:

	Balance as of December 31, 2012			Net gains (losses)																Balance as of December 31, 2013
(in millions)				In operations1			In other comprehensive income			Purchases		Sales			Transfers into Level 3		Transfers out of Level 3
Assets
Investments:
Fixed maturity securities, available-for-sale:
Corporate private securities	$	772		$	(1	)$		(2	)$		91	$	(117	)$		127	$	(67	)$		803
Other asset-backed securities		291			—			10			6		(62	)		15		(66	)		194
Other		134			—			(7	)		18		(53	)		—		(1	)		91
Total fixed maturity securities, available-for-sale, at fair value2	$	1,197			(1	)		1			115		(232	)		142		(134	)		1,088
Other investments at fair value		62			(6	)		6			5		(22	)		—		—			45
Derivative assets3		822			(447	)		—			129		(161	)		—		—			343
Separate account assets		2,025			58			—			—		—			—		—			2,083
Assets at fair value	$	4,106		$	(396	)$		7		$	249	$	(415	)$		142	$	(134	)$		3,559
Liabilities
Future policy benefits and claims:
Embedded derivatives on living benefits	$	(657	)$		1,751		$	—		$	—	$	—		$	—	$	—		$	1,094
Embedded derivatives on indexed products		(91	)		7			—			—		—			—		—			(84	)
Total future policy benefits and claims	$	(748	)$		1,758		$	—		$	—	$	—		$	—	$	—		$	1,010
Derivative liabilities3		(5	)		—			—			—		—			—		—			(5	)
Liabilities at fair value	$	(753	)$		1,758		$	—		$	—	$	—		$	—	$	—		$	1,005

¹  Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized (losses) gains included in operations on assets and liabilities still held at the end of the year was $(6) million for other investments at fair value, $(297) million for derivative assets and $1.8 billion for future policy benefits and claims.

²  Non-binding broker quotes were utilized to determine a fair value of $924 million of total fixed maturity securities as of December 31, 2013.

³  Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities.

Transfers into and out of Level 3 during the year ended December 31, 2013 are primarily due to certain corporate private securities and other asset-backed securities, which changed pricing sources between broker quotes and independent pricing services. There were no transfers between Levels 1 and 2 during the year ended December 31, 2013.

37

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

As discussed in Note 2, the valuation of embedded derivatives in living benefit guarantees and equity indexed products incorporates many inputs. Significant unobservable inputs for living benefit guarantees include discounting, index volatility, mortality, lapse rates, wait period and benefit utilization, while significant unobservable inputs for equity indexed products include mortality, lapse rates and index volatility. For both products, the Company derives these inputs, which vary widely by product, attained age, policy duration, benefits in the money (living benefit guarantees only) and the existence of surrender charges, from current experience and industry data. The fair value for these benefits is calculated using the mean of discounted cash flows across numerous random scenarios, an approach that is commonly used by the insurance industry for this type of valuation. This process considers a broader range of assumptions than what would be found in a deterministic approach.

Living Benefit Guarantees

The following table summarizes significant unobservable inputs used for fair value measurements for living benefits liabilities classified as Level 3 as of December 31, 2013:

Unobservable Inputs	Range
Mortality	0.1%-8%2
Lapse	0%-35%
Wait period	0 yrs – 30 yrs3
Efficiency of benefit utilization1	65%-100%
Discount rate	See footnote 4
Index volatility	15%-25%

¹  The unobservable input is not applicable to GMABs.

²  Represents the mortality for the majority of business with living benefits, with policyholders ranging from 45 to 85.

³  A portion of the contractholders could never use the benefit, which would extend the range to an indeterminate period.

⁴  Incorporates the liquidity and non-performance risk adjustment. The liquidity spread takes into consideration market observables for spreads in illiquid assets. The non-performance risk adjustment reflects an additional spread over LIBOR determined by market observables for similarly rated public bonds.

The following changes in any of the significant unobservable inputs presented in the table above may result in a change in the fair value measurements of the living benefits liability:

Higher mortality rates tend to decrease the value of the liability and lower mortality rates tend to increase the value of the liability.

Higher lapse rates tend to decrease the value of the liability and lower lapse rates tend to increase the value of the liability. Factors that impact the predicted lapse rate can include: age, policy duration, policy size, benefit in-the-moneyness and applicable surrender charges. All else being equal, policies that are in-the-money will have lower lapse rates than policies that are out-of-the-money, and policies that have a surrender charge present will have lower lapse rates than policies without a surrender charge.

The assumed wait period and the efficiency of utilization determine the timing and amount of living benefits withdrawals. These assumptions vary by the product type, age of the policyholder and policy duration. Many products have a bonus feature which enhances the guarantee on every policy anniversary for the first ten years so long as withdrawals have not commenced. All else being equal, policies commencing withdrawals at a time around the year ten bonus will have higher liability values than policies commencing withdrawals 20 years after issue or policies commencing withdrawals only one year after issue. In addition, policies that are assumed to withdraw the maximum permitted amount will have a higher liability value than a policy that is assumed to withdraw less than the maximum allowed amount.

38

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

A higher discount rate tends to decrease the value of the liability and a lower discount rate tends to increase the value of the liability.

Higher index volatility tends to increase the value of the liability and lower index volatility tends to decrease the value of the liability.

Equity Indexed Products

The following table summarizes significant unobservable inputs used for fair value measurements for indexed universal life equity indexed products classified as Level 3 as of December 31, 2013:

Unobservable Inputs	Range
Mortality	0%-4%1
Lapse	0%-10%
Index volatility	15%-25%

¹  Represents the mortality for the majority of business, with policyholders ranging from 0 to 75.

The following changes in any of the significant unobservable inputs presented in the table above may result in a change in the fair value measurements of the equity indexed products:

Higher mortality rates tend to decrease the value of the liability and lower mortality rates tend to increase the value of the liability.

Higher lapse rates tend to decrease the value of the liability and lower lapse rates tend to increase the value of the liability. Factors that impact the predicted lapse rate can include: age, policy duration, policy size, and applicable surrender charges. All else being equal, policies with a surrender charge present will have lower lapse rates than policies without a surrender charge.

Higher index volatility tends to increase the value of the liability and lower index volatility tends to decrease the value of the liability.

Separate Accounts

The Company’s separate account assets include an investment in a mutual fund with a non-readily determinable fair value. Net asset value has been used to estimate the fair value of this investment as a practical expedient. The investments are included in Level 3 as they may not be redeemed until a seven year guarantee period expires in 2016. 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 net asset value of this fund reported in separate account assets was $1.7 billion and $1.6 billion as of December 31, 2013 and 2012, respectively.

39

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2012:

(in millions)	Level 1		Level 2			Level 3			Total
Assets
Investments:
Fixed maturity securities, available-for-sale:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	592	$	2		$	3		$	597
Obligations of states, political subdivisions and foreign governments		73		2,047			—			2,120
Corporate public securities		1		17,890			119			18,010
Corporate private securities		—		3,817			772			4,589
Residential mortgage-backed securities		484		4,173			10			4,667
Commercial mortgage-backed securities		—		1,335			2			1,337
Other asset-backed securities		—		200			291			491
Total fixed maturity securities, available-for-sale, at fair value	$	1,150	$	29,464		$	1,197		$	31,811
Other investments at fair value		45		1,001			62			1,108
Investments at fair value	$	1,195	$	30,465		$	1,259		$	32,919
Derivative assets		—		1,968			822			2,790
Separate account assets		68,185		1,230			2,025			71,440
Assets at fair value	$	69,380	$	33,663		$	4,106		$	107,149
Liabilities
Future policy benefits and claims:
Embedded derivatives on living benefits	$	—	$	—		$	(657	)	$	(657	)
Embedded derivatives on indexed products		—		—			(91	)		(91	)
Total future policy benefits and claims	$	—	$	—		$	(748	)	$	(748	)
Derivative liabilities		—		(2,118	)		(5	)		(2,123	)
Liabilities at fair value	$	—	$	(2,118	)	$	(753	)	$	(2,871	)

40

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2012:

	Balance as of December 31, 2011			Net gains (losses)															Balance as of December 31, 2012
(in millions)				In operations1			In other comprehensive income		Purchases		Sales			Transfers into Level 3		Transfers out of Level 3
Assets
Investments:
Fixed maturity securities, available-for-sale:
Corporate private securities	$	1,209		$	2		$	13	$	69	$	(187	)$		40	$	(374	)$		772
Other asset-backed securities		251			2			53		36		(61	)		10		—			291
Other		131			—			11		2		(8	)		1		(3	)		134
Total fixed maturity securities, available-for-sale, at fair value2	$	1,591			4			77		107		(256	)		51		(377	)		1,197
Other investments at fair value		43			16			3		—		—			—		—			62
Derivative assets3		1,004			(353	)		—		350		(179	)		—		—			822
Separate account assets		1,952			73			—		—		—			—		—			2,025
Assets at fair value	$	4,590		$	(260	)$		80	$	457	$	(435	)$		51	$	(377	)$		4,106
Liabilities
Future policy benefits and claims:
Embedded derivatives on living benefits	$	(1,842	)$		1,185		$	—	$	—	$	—		$	—	$	—		$	(657	)
Embedded derivatives on indexed products		(63	)		(28	)		—		—		—			—		—			(91	)
Total future policy benefits and claims	$	(1,905	)$		1,157		$	—	$	—	$	—		$	—	$	—		$	(748	)
Derivative liabilities3		(6	)		1			—		—		—			—		—			(5	)
Liabilities at fair value	$	(1,911	)$		1,158		$	—	$	—	$	—		$	—	$	—		$	(753	)

¹  Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized gains (losses) included in operations on assets and liabilities still held as of the end of the year was $16 million for other investments at fair value, $(257) million for derivative assets, $1.2 billion for future policy benefits and claims and $(1) million for derivative liabilities.

²  Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2012.

³  Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities.

During the year ended December 31, 2012, transfers from Level 1 to Level 2 within the debt securities issued by foreign governments were $42 million. There were no transfers from Level 2 to Level 1 during the year ended December 31, 2012.

Transfers into and out of Level 3 during the year ended December 31, 2012 represented changes in the sources used to price certain securities and changes in the Company’s assumptions related to the observability of certain inputs.

41

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Financial Instruments Not Carried at Fair Value

The following table summarizes the carrying value and fair value of the Company’s financial instruments not carried at fair value as of the dates indicated. The valuation techniques used to estimate these fair values are described below.

	December 31, 2013								December 31, 2012
(in millions)	Carrying value		Fair value		Level 2		Level 3		Carrying value		Fair value		Level 2		Level 3
Assets
Investments:
Mortgage loans, net of allowance	$	6,341	$	6,481	$	—	$	6,481	$	5,827	$	5,988	$	—	$	5,988
Policy loans	$	987	$	987	$	—	$	987	$	980	$	980	$	—	$	980
Liabilities
Investment contracts	$	21,874	$	20,436	$	—	$	20,436	$	20,123	$	19,561	$	—	$	19,561
Short-term debt	$	278	$	278	$	—	$	278	$	300	$	300	$	—	$	300
Long-term debt	$	707	$	1,004	$	997	$	7	$	1,038	$	1,323	$	1,282	$	41

Mortgage loans, net of allowance. The fair values of mortgage loans are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.

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

Investment contracts. For investment contracts without defined maturities, fair value is the amount payable on demand, net of 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. The fair value of adjustable rate contracts approximates their carrying value.

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

Long-term debt. The fair value for long-term debt are based on estimated market prices using observable inputs from similar debt instruments.

42

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(9) Goodwill

The following table summarizes changes in the carrying value of goodwill by segment for the years indicated:

(in millions)	Retirement Plans		Individual Products & Solutions - Life and NBSG		Total
Balance as of December 31, 20111	$	25	$	175	$	200
Adjustments		—		—		—
Balance as of December 31, 20121	$	25	$	175	$	200
Adjustments		—		—		—
Balance as of December 31, 20131	$	25	$	175	$	200

¹ The goodwill balances have not been previously impaired.

43

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(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 the dates indicated:

(in millions)	December 31, 2013			December 31, 2012
Liabilities:
Future policyholder benefits	$	1,703		$	1,732
Policyholder funds and accumulated dividends		141			142
Policyholder dividends payable		23			24
Policyholder dividend obligation		113			198
Other policy obligations and liabilities		29			32
Total liabilities	$	2,009		$	2,128
Assets:
Fixed maturity securities, available-for-sale	$	1,320		$	1,511
Mortgage loans, net of allowance		257			183
Policy loans		157			164
Other assets		93			77
Total assets	$	1,827		$	1,935
Excess of reported liabilities over assets		182			193
Portion of above representing other comprehensive income:
(Decrease) increase in unrealized gain on fixed maturity securities, available-for-sale	$	(92	)	$	45
Adjustment to policyholder dividend obligation		92			(45	)
Total	$	—		$	—
Maximum future earnings to be recognized from assets and liabilities	$	182		$	193
Other comprehensive income:
Fixed maturity securities, available-for-sale:
Fair value	$	1,320		$	1,511
Amortized cost		1,235			1,334
Shadow policyholder dividend obligation		(85	)		(177	)
Net unrealized appreciation	$	—		$	—

44

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table summarizes closed block operations for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Revenues:
Premiums	$	66		$	73		$	77
Net investment income		94			98			102
Realized investment gains (losses)		—			1			(3	)
Realized losses credited to policyholder benefit obligation		(4	)		(5	)		(1	)
Total revenues	$	156		$	167		$	175
Benefits and expenses:
Policy and contract benefits	$	123		$	134		$	145
Change in future policyholder benefits and interest credited to policyholder accounts		(29	)		(27	)		(35	)
Policyholder dividends		44			50			55
Change in policyholder dividend obligation		3			(8	)		(8	)
Other expenses		(2	)		1			1
Total benefits and expenses	$	139		$	150		$	158
Total revenues, net of benefits and expenses, before federal income tax expense	$	17		$	17		$	17
Federal income tax expense		6			6			6
Revenues, net of benefits and expenses and federal income tax expense	$	11		$	11		$	11
Maximum future earnings from assets and liabilities:
Beginning of period	$	193		$	204		$	215
Change during period		(11	)		(11	)		(11	)
End of period	$	182		$	193		$	204

Cumulative closed block earnings from inception through December 31, 2013, 2012 and 2011 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 $28 million, $21 million and $23 million as of December 31, 2013, 2012 and 2011, respectively.

45

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(11) Short-Term Debt

The Company classifies debt as short-term if the maturity date at inception is less than one year and all other debt instruments as long-term.

The following table summarizes the carrying value of short-term debt and weighted average annual interest rates, as of the dates indicated:

(in millions)	December 31, 2013		December 31, 2012
$600 million commercial paper program (0.24% and 0.29%, respectively)	$	278	$	300
Total short-term debt	$	278	$	300

In March 2012, NLIC entered into an agreement with the FHLB that allows the Company access to borrow up to $250 million and expires on March 28, 2014. The Company had $4.3 billion in eligible collateral and no amounts outstanding under the agreement as of December 31, 2013. Additionally, as part of the agreement, NLIC purchased $25 million in capital stock with the FHLB.

In May 2011, NMIC, NFS, and NLIC entered into a $600 million revolving variable rate credit facility upon expiration of its existing facility of the same amount. The new facility matures on May 6, 2015 and is subject to various covenants, as defined in the agreement. NLIC had no amounts outstanding under the facility as of December 31, 2013 and 2012.

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. The maximum amount available under the agreement is $350 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. The Company had no amounts outstanding under this agreement as of December 31, 2013 and 2012.

The terms of each debt instrument contain various restrictive covenants, including, but not limited to, minimum statutory surplus and minimum net worth requirements, and maximum debt to tangible net worth requirements, as defined in the agreements. The Company was in compliance with all covenants as of December 31, 2013 and 2012.

The amount of interest paid on short-term debt was immaterial in 2013, 2012 and 2011.

(12) Long-Term Debt

The following table summarizes the carrying value of long-term debt, as of the dates indicated:

(in millions)	December 31, 2013		December 31, 2012
8.15% surplus note, due June 26, 2032, payable to NFS	$	300	$	300
7.50% surplus note, due December 17, 2031, payable to NFS		300		300
6.75% surplus note, due December 23, 2033, payable to NFS		100		100
Variable funding surplus note, repaid June 2013		—		297
Other		7		41
Total long-term debt	$	707	$	1,038

46

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

On December 31, 2010, Olentangy Reinsurance, LLC (Olentangy), a special purpose financial captive insurance company subsidiary of NLAIC domiciled in the State of Vermont, issued a variable funding surplus note due on December 31, 2040 to Nationwide Corporation, a majority-owned subsidiary of NMIC. In June 2013, the Company paid the outstanding balance of the surplus note. The Company made interest payments on this surplus note totaling $5 million and $10 million for the years ending December 31, 2013 and 2012, respectively. Any payment of interest or principal on the note requires the prior approval of the State of Vermont.

The Company made interest payments to NFS on surplus notes totaling $54 million for the years ended December 31, 2013, 2012 and 2011. Payments of interest and principal under the notes require the prior approval of the ODI.

(13) Federal Income Taxes

The following table summarizes the federal income tax expense (benefit) attributable to income (loss) before loss attributable to noncontrolling interests, for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 20111
Current tax (benefit) expense	$	(33	)	$	(144	)	$	55
Deferred tax expense (benefit)		346			243			(482	)
Total tax expense (benefit)	$	313		$	99		$	(427	)

¹  The balances reflect a change in accounting principle, as described in Note 2.

The following table summarizes how the total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to income (loss) before loss attributable to noncontrolling interests, for the years ended:

	December 31, 2013						December 31, 2012						December 31, 20111
(in millions)	Amount			%			Amount			%			Amount			%
Rate reconciliation:
Computed (expected tax expense (benefit))	$	469			35	%	$	245			35	%	$	(297	)		35	%
Dividends received deduction		(112	)		(8	)%		(75	)		(11	)%		(99	)		12	%
Tax credits		(82	)		(6	)%		(85	)		(12	)%		(30	)		3	%
Other, net		38			2	%		14			2	%		(1	)		—	%
Total	$	313			23	%	$	99			14	%	$	(427	)		50	%

¹  The balances reflect a change in accounting principle, as described in Note 2.

The Company’s current federal income tax (liability) receivable was $(13) million and $61 million as of December 31, 2013 and 2012, respectively.

Total federal income taxes (refunded) paid were $(107) million, $(95) million and $121 million for the years ended December 31, 2013, 2012 and 2011, respectively.

During 2013 and 2011, the Company recorded a tax benefit of $13 million and $10 million, respectively. These changes in estimates were primarily driven by differences in the Company’s separate account dividends received deduction (“DRD”) between the previous year’s estimate and the amount reported on the previous year’s tax return. No material changes in estimated income tax expense were recorded in 2012.

47

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

As of December 31, 2013, the Company has gross federal net operating loss carryforwards of $797 million, which expire between 2027 and 2028. In addition, the Company has $222 million in low-income-housing credit carryforwards, which expire between 2024 and 2033, $90 million in alternative minimum tax credit carryforwards, which have an unlimited carryforward and $40 million in foreign tax credit carryforwards which expire between 2019 and 2023. The Company expects to fully utilize all carryforwards.

The following table summarizes the tax effects of temporary differences that gave rise to significant components of the net deferred tax liability included in other liabilities in the consolidated balance sheets, as of the dates indicated:

(in millions)	December 31, 2013			December 31, 2012
Deferred tax assets:
Future policy benefits and claims	$	1,244		$	1,295
Derivatives, including embedded derivatives		—			94
Tax credit carryforwards		352			288
Other		845			478
Gross deferred tax assets	$	2,441		$	2,155
Valuation allowance		(17	)		(18	)
Net deferred tax assets		2,424			2,137
Deferred tax liabilities:
Deferred policy acquisition costs	$	(1,048	)	$	(874	)
Available-for-sale securities		(821	)		(1,338	)
Derivatives, including embedded derivatives		(600	)		—
Other		(255	)		(239	)
Gross deferred tax liabilities	$	(2,724	)	$	(2,451	)
Net deferred tax liability	$	(300	)	$	(314	)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Valuation allowances are established when necessary to reduce the deferred tax assets to amounts expected to be realized. The valuation allowance was $17 million and $18 million as of December 31, 2013 and 2012, respectively. The change in the valuation allowance for the years ended December 31, 2013 and 2011 was $1 million and $6 million, respectively, while there was no change in the valuation allowance for the year ended December 31, 2012. Based on management’s analysis, it is more likely than not that the results of future operations and the implementation of tax planning strategies will generate sufficient taxable income to enable the Company to realize the deferred tax assets for which the Company has not established valuation allowances.

48

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following table is a rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties:

(in millions)	2013			2012			2011
Balance at beginning of period	$	36		$	76		$	119
Additions for current year tax positions		2			(2	)		9
Additions for prior years tax positions		—			25			—
Reductions for prior years tax positions		(2	)		(63	)		(52	)
Balance at end of period	$	36		$	36		$	76

The Company does not anticipate any significant changes to unrecognized tax benefits during the next twelve 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 through the 2005 tax year. In 2013, the IRS commenced an examination of the Company’s U.S. income tax returns for the years 2009 through 2010. Any adjustments that may result from IRS examination of tax returns are not expected to have a material effect on the results of operations, cash flows or financial position of the Company.

(14) Statutory Financial Information

Statutory Results

The Company’s life insurance subsidiaries are required to prepare statutory financial statements in conformity with the statutory accounting practices prescribed and permitted by insurance regulatory authorities, subject to any deviations prescribed or permitted by the applicable state department of insurance. Olentangy was granted a permitted practice from the State of Vermont that changed NLAIC’s valuation of this subsidiary by $66 million as of December 31, 2013, which also allowed NLIC to admit additional deferred tax assets of $10 million as of December 31, 2013. Statutory accounting practices focus on insurer solvency and materially differ from GAAP primarily due to charging policy acquisition and other 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 table summarizes the statutory net income (loss) and statutory capital and surplus for the Company’s primary life insurance subsidiary for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Statutory net income (loss)
NLIC	$	262		$	764		$	18
NLAIC	$	(103	)	$	(54	)	$	(61	)
Statutory capital and surplus
NLIC	$	3,550		$	3,837		$	3,591
NLAIC	$	534		$	311		$	302

49

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Dividend Restrictions

The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state. The State of Ohio insurance laws require Ohio-domiciled life insurance companies to seek prior regulatory approval to pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer for the prior year. During the years ended December 31, 2013 and 2011, NLIC did not pay any dividends to NFS. During the year ended December 31, 2012, NLIC paid a cash dividend of $40 million to NFS. As of January 1, 2014, NLIC has the ability to pay dividends to NFS totaling $355 million without obtaining prior approval.

The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned capital and 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 capital and surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by the Company may also be subject to restrictions set forth in the insurance laws of the state of New York that limit the amount of statutory profits on the Company’s participating policies (measured before dividends to policyholders) available for the benefit of the Company and its stockholders.

The Company currently does not expect such regulatory requirements to impair the ability to pay operating expenses and dividends in the future.

Regulatory Risk-Based Capital

The National Association of Insurance Commissioners’ (“NAIC”) Risk-Based Capital (“RBC”) model law requires every insurer to calculate its total adjusted capital and RBC requirement to ensure insurer solvency. Regulatory guidelines provide for an insurance commissioner to intervene if the insurer experiences financial difficulty, as evidenced by a company’s total adjusted capital falling below established relationships to required RBC. The model includes components for asset risk, liability risk, interest rate exposure and other factors. The State of Ohio, where NLIC and NLAIC are domiciled, imposes minimum RBC requirements that are developed by the NAIC. The formulas in the model for determining the amount of RBC 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 RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, all of which require specified corrective action. NLIC and NLAIC each exceeded the minimum RBC requirements for all periods presented herein.

(15) 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, employee benefit plans, office space cost sharing arrangements, 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, 2013, 2012 and 2011, the Company made payments to NMIC and NSC totaling $277 million, $283 million and $241 million, respectively.

50

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

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 $3.3 billion and $3.2 billion as of December 31, 2013 and 2012, respectively. Total revenues from these contracts were $137 million, $140 million and $148 million for the years ended December 31, 2013, 2012 and 2011, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $109 million, $113 million and $122 million for the years ended December 31, 2013, 2012 and 2011, respectively. The terms of these contracts are materially consistent with what the Company offers to unaffiliated parties.

The Company has a cost sharing arrangement with NMIC to occupy office space. For the years ended December 31, 2013, 2012 and 2011, the Company made payments to NMIC of $16 million, $15 million and $14 million, respectively. In addition, an affiliate of NMIC has a cost sharing arrangement with the Company to occupy office space.

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, 2013, 2012 and 2011 were $179 million, $161 million and $203 million, respectively, while benefits, claims and expenses ceded during these years were $178 million, $167 million and $212 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, 2013 and 2012, customer allocations to NFG funds totaled $53.2 billion and $45.0 billion, respectively. For the years ended December 31, 2013, 2012 and 2011, NFG paid the Company $163 million, $144 million and $129 million, respectively, for the distribution and servicing of these funds.

Amounts on deposit with NCMC for the benefit of the Company were $228 million and $854 million as of December 31, 2013 and 2012, respectively.

Refer to Note 12 for discussion of variable funding surplus note between Olentangy Reinsurance, LLC and Nationwide Corporation.

Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates were $54 million for the years ended December 31, 2013 and 2012 and $64 million for the year ended December 31, 2011.

The Company provides financing to Nationwide Realty Investors, LTD, a subsidiary of NMIC. As of December 31, 2013 and 2012, the Company had notes receivable outstanding of $146 million and $126 million, respectively.

51

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(16) Contingencies

Legal and Regulatory Matters

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

The various businesses conducted by the Company are subject to oversight by numerous federal and state regulatory entities, including but not limited to the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Department of Labor, the IRS and state insurance authorities. Such regulatory entities may, in the normal course, be engaged in general or targeted inquiries, examinations and investigations of the Company and/or its affiliates. The financial services industry has been the subject of increasing scrutiny in connection with a broad spectrum of regulatory issues; with respect to all such scrutiny directed at the Company and/or its affiliates, the Company is cooperating with regulators. The Company will cooperate with NMIC insofar as any inquiry, examination or investigation encompasses NMIC’s operations.

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. On November 18, 2009, the plaintiffs filed a sixth amended complaint amending the list of named plaintiffs and claiming to represent a class of qualified retirement plan trustees under the Employee Retirement Income Security Act of 1974 (“ERISA”) that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that NLIC and NFS breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by NFS and NLIC, other unspecified relief for restitution, declaratory and injunctive relief and attorneys’ fees. On November 6, 2009, the Court granted the plaintiffs’ motion for class certification. On October 21, 2010, the District Court dismissed NFS from the lawsuit. On February 6, 2012, the Second Circuit Court of Appeals vacated the November 6, 2009 order granting class certification and remanded the case back to the District Court for further consideration. On September 6, 2013, the District Court granted the plaintiffs’ motion for class certification. The case is set for trial beginning August 11, 2014. NLIC continues to defend this lawsuit vigorously.

52

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

On November 20, 2007, NRS and NLIC were named in a lawsuit filed in the Circuit Court of Jefferson County, Alabama entitled Ruth A. Gwin and Sandra H. Turner, and a class of similarly situated individuals v Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc., Alabama State Employees Association, PEBCO, Inc. and Fictitious Defendants A to Z. On March 12, 2010, NRS and NLIC were named in a Second Amended Class Action Complaint filed in the Circuit Court of Jefferson County, Alabama entitled Steven E. Coker, Sandra H. Turner, David N. Lichtenstein and a class of similarly situated individuals v. Nationwide Life Insurance Company, Nationwide Retirement Solutions, Inc, Alabama State Employees Association, Inc., PEBCO, Inc. and Fictitious Defendants A to Z claiming to represent a class of all participants in the Alabama State Employees Association, Inc. (“ASEA”) Plan, excluding members of the Deferred Compensation Committee, ASEA’s directors, officers and board members, and PEBCO’s directors, officers and board members. On October 22, 2010, the parties to this action executed a court approved stipulation of settlement that agreed to certify a class for settlement purposes only, that provided for payments to the settlement class, and that provided for releases, certain bar orders, and dismissal of the case. The settlement fund has been paid out. On December 6, 2011, the Court entered an Order that NRS owes indemnification to ASEA and PEBCO for only the Coker (Gwin) class action, and dismissed NLIC. The Company has resolved the indemnification claims of ASEA. On February 15, 2013, the Court issued its Order determining the amount of fees due to PEBCO on its indemnification claim. On March 28, 2013, the Company filed a notice of appeal to the Alabama Supreme Court. The case is fully briefed. NRS continues to defend this case vigorously.

On June 8, 2011, NMIC and NLIC were named in a lawsuit filed in Court of Common Pleas, Cuyahoga County, Ohio entitled Stanley Andrews and Donald C. Clark v. Nationwide Mutual Insurance Company and Nationwide Life Insurance Company. The complaint alleges that NMIC and NLIC have an obligation to review the Social Security Administration Death Master File database for all life insurance policyholders who have at least a 70% probability of being deceased according to actuarial tables. The complaint further alleges that NMIC and NLIC are not conducting such a review. The complaint seeks injunctive relief and declaratory judgment requiring NMIC and NLIC to conduct such a review, and alleges NMIC and NLIC have violated the covenant of good faith and fair dealing and have been unjustly enriched by not having conducted such reviews. The lower court granted Nationwide’s motion to dismiss. Plaintiffs appealed. The Court of Appeals affirmed the dismissal on October 24, 2012. Plaintiffs filed a petition for rehearing en banc on November 5, 2012. The Court of Appeals denied the petition on December 14, 2012. Plaintiffs filed a notice of appeal to the Ohio Supreme Court on January 24, 2013. Nationwide filed its memorandum in opposition to plaintiffs’ petition for jurisdiction to the Ohio Supreme Court on February 27, 2013. The Ohio Supreme Court denied plaintiffs’ petition for review of the decision of the Court of Appeals on April 24, 2013. Plaintiffs’ time to file a petition for writ of certiorari to the U.S. Supreme Court has expired, concluding this matter.

In 2012, the Plaintiff, Debtor in Possession Lehman Brothers Special Financing, Inc., filed a class action in the United States Bankruptcy Court for the Southern District of New York seeking the recovery of nearly $3.0 billion in assets from all the named defendants including NLIC and NMIC. This litigation arises from two collateralized debt obligation transactions, 801 Grand and Alta, which resulted in payments to NLIC and NMIC after the Plaintiff and its parent company, Lehman Brothers Holding, Inc. filed for bankruptcy in 2008. This triggered an early termination of the above transactions. The Plaintiff seeks to have sums returned to the bankruptcy estate in addition to prejudgment interest and costs. The case is currently stayed. In 2013, Plaintiff sent correspondence to all defendants inviting settlement discussions and has served NMIC and NLIC with a “SPV Derivatives ADR Notice,” formally starting the Alternative Dispute Resolution process. NMIC and NLIC have responded, and are currently taking part in the ADR process. Mediation was scheduled for and proceeded on December 13, 2013, but the parties reached an impasse. On January 10, 2014, Lehman filed another motion to extend the stay for a final four month period. After a hearing, the court extended the stay to the later of (a) May 20, 2014 or (b) 30 days after the court enters a scheduling order governing the Distributed Action. The parties are negotiating the proposed scheduling order for the conduct of the Distributed Action litigation, which will be finalized by March 24, 2014.

53

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

Tax Matters

The Company’s federal income tax returns are routinely audited by the IRS. The Company has established tax reserves as described in Note 2. The Company 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.

Indemnifications

In the normal course of business, the Company provides standard indemnifications to contractual counterparties. The types of indemnifications typically provided include breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated, and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations.

(17) Reinsurance

The following table summarizes the effects of reinsurance on life, accident and health insurance in force and premiums for the years ended:

(in millions)	December 31, 2013			December 31, 2012			December 31, 2011
Premiums
Direct	$	1,015		$	890		$	832
Assumed from other companies		—			—			—
Ceded to other companies		(291	)		(255	)		(301	)
Net	$	724		$	635		$	531
Life, accident and health insurance in force
Direct	$	228,095		$	216,002		$	209,732
Assumed from other companies		6			5			5
Ceded to other companies		(58,310	)		(59,895	)		(60,499	)
Net	$	169,791		$	156,112		$	149,238

Total amounts recoverable under reinsurance contracts totaled $675 million, $684 million and $704 million as of December 31, 2013, 2012 and 2011, respectively.

(18) 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 Products and Solutions-Annuity (formerly named Individual Investments), Retirement Plans, Individual Products and Solutions-Life and NBSG (formerly named Individual Protection) and Corporate and Other.

54

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The primary segment profitability measure that management uses is a non-GAAP financial measure called pre-tax operating earnings (loss), which is calculated by adjusting income before federal income taxes to exclude: (1) net realized investment gains and losses, except for operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to hedges on GMDB contracts); (2) the adjustment to amortization of DAC and other related to net realized investment gains and losses; and (3) net losses attributable to noncontrolling interest.

Due to a change in the manner in which we view our reportable segments, certain prior period amounts have been restated.

Individual Products and Solutions-Annuity

The Individual Products & Solutions-Annuity segment consists of individual annuity products marketed under the Nationwide DestinationSM and other Nationwide-specific or private label brands. Deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, deferred variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while deferred fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. Immediate annuities differ from deferred annuities in that the initial premium is exchanged for a stream of income for a certain period or for the owner’s lifetime without future access to the original investment. The majority of assets and recent sales for the Individual Products & Solutions-Annuity segment consist of deferred variable annuities.

Retirement Plans

The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans businesses. 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. The Retirement Plan segment also includes managed account services and stable value wrap products.

Individual Products and Solutions-Life and NBSG

The Individual Products & Solutions-Life and NBSG segment consists of life insurance products, including individual variable universal life, COLI and BOLI products; traditional life insurance products; fixed universal life insurance products; and indexed universal life 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 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 included in the Individual Products & Solutions-Annuity segment and other revenues and expenses not allocated to other segments.

55

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

The following tables summarize the Company’s business segment operating results for the years ended:

(in millions)	Individual Products and Solutions- Annuity			Retirement Plans			Individual Products and Solutions-Life and NBSG		Corporate and Other			Total
December 31, 2013
Revenues:
Policy charges	$	1,021		$	101		$	727	$	—		$	1,849
Premiums		416			—			282		26			724
Net investment income		546			743			544		16			1,849
Non-operating net realized investment gains, net of other-than-temporary impairment losses1		—			—			—		791			791
Other revenues2		(109	)		—			—		13			(96	)
Total revenues	$	1,874		$	844		$	1,553	$	846		$	5,117
Benefits and expenses:
Interest credited to policyholder accounts	$	377		$	473		$	213	$	4		$	1,067
Benefits and claims		688			—			636		30			1,354
Policyholder dividends		—			—			61		(2	)		59
Amortization of DAC		185			(2	)		125		66			374
Other expenses, net of deferrals		303			151			284		184			922
Total benefits and expenses	$	1,553		$	622		$	1,319	$	282		$	3,776
Income before federal income taxes and noncontrolling interests	$	321		$	222		$	234	$	564		$	1,341
Less:    non-operating net realized investment gains, net of other-than-temporary impairment losses1		—			—			—		(791	)
Less:    adjustment to amortization of DAC and other related to net realized investment gains and losses		—			—			—		70
Less:    net loss attributable to noncontrolling interest		—			—			—		82
Pre-tax operating earnings (loss)	$	321		$	222		$	234	$	(75	)
Assets as of year end	$	68,805		$	29,904		$	27,183	$	7,553		$	133,445

¹  Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to hedges on GMDB contracts).

²  Includes operating items discussed above.

56

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(in millions)	Individual Products and Solutions- Annuity			Retirement Plans		Individual Products and Solutions-Life and NBSG		Corporate and Other			Total
December 31, 2012
Revenues:
Policy charges	$	899		$	94	$	677	$	—		$	1,670
Premiums		334			—		274		27			635
Net investment income		551			736		534		4			1,825
Non-operating net realized investment gains, net of other-than-temporary impairment losses1		—			—		—		428			428
Other revenues2		(124	)		—		—		22			(102	)
Total revenues	$	1,660		$	830	$	1,485	$	481		$	4,456
Benefits and expenses:
Interest credited to policyholder accounts	$	375		$	457	$	199	$	7		$	1,038
Benefits and claims		595			—		589		43			1,227
Policyholder dividends		—			—		57		(3	)		54
Amortization of DAC		185			14		150		226			575
Other expenses, net of deferrals		285			163		250		165			863
Total benefits and expenses	$	1,440		$	634	$	1,245	$	438		$	3,757
Income before federal income taxes and noncontrolling interests	$	220		$	196	$	240	$	43		$	699
Less:    non-operating net realized investment gains, net of other-than-temporary impairment losses1		—			—		—		(428	)
Less:    adjustment to amortization of DAC and other related to net realized investment gains and losses		—			—		—		243
Less:    net loss attributable to noncontrolling interest		—			—		—		61
Pre-tax operating earnings (loss)	$	220		$	196	$	240	$	(81	)
Assets as of year end	$	58,707		$	27,842	$	25,301	$	8,320		$	120,170

¹  Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to hedges on GMDB contracts).

²  Includes operating items discussed above.

57

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2013, 2012 and 2011

(in millions)	Individual Products and Solutions- Annuity			Retirement Plans		Individual Products and Solutions-Life and NBSG		Corporate and Other			Total
December 31, 20113
Revenues:
Policy charges	$	781		$	96	$	629	$	—		$	1,506
Premiums		234			—		272		25			531
Net investment income		527			715		531		71			1,844
Non-operating net realized investment losses, net of other-than-temporary impairment losses1		—			—		—		(1,613	)		(1,613	)
Other revenues2		(59	)		—		—		(1	)		(60	)
Total revenues	$	1,483		$	811	$	1,432	$	(1,518	)	$	2,208
Benefits and expenses:
Interest credited to policyholder accounts	$	374		$	441	$	198	$	20		$	1,033
Benefits and claims		476			—		577		9			1,062
Policyholder dividends		—			—		67		—			67
Amortization of DAC		80			11		75		(101	)		65
Other expenses, net of deferrals		269			166		235		160			830
Total benefits and expenses	$	1,199		$	618	$	1,152	$	88		$	3,057
Income (loss) before federal income taxes and noncontrolling interests	$	284		$	193	$	280	$	(1,606	)	$	(849	)
Less:    non-operating net realized investment losses, net of other-than-temporary impairment losses1		—			—		—		1,613
Less:    adjustment to amortization of DAC and other related to net realized investment gains and losses		—			—		—		(115	)
Less:    net loss attributable to noncontrolling interest		—			—		—		56
Pre-tax operating earnings (loss)	$	284		$	193	$	280	$	(52	)
Assets as of year end	$	57,741		$	25,114	$	22,503	$	6,628		$	111,986

¹  Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to hedges on GMDB contracts).

²  Includes operating items discussed above.

³  The balances reflect a change in accounting principle, as described in Note 2.

58

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, 2013 (in millions)

Column A	Column B		Column C		Column D
Type of investment	Cost		Fair 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 and agencies	$	484	$	561	$	561
Obligations of states, political subdivisions and foreign governments		1,892		1,963		1,963
Public utilities		2,616		2,759		2,759
All other corporate, mortgage-backed and asset-backed securities		26,010		26,966		26,966
Total fixed maturity securities, available-for-sale	$	31,002	$	32,249	$	32,249
Equity securities, available-for-sale:
Common stocks:
Industrial, miscellaneous and all other	$	6	$	14	$	14
Nonredeemable preferred stocks		—		10		10
Total equity securities, available-for-sale	$	6	$	24	$	24
Trading assets		30		31		31
Mortgage loans, net of allowance		6,376				6,341	1
Policy loans		987				987
Other investments		712				712
Short-term investments		411				411
Total investments	$	39,524			$	40,755

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

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

59

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule III Supplementary Insurance Information

As of December 31, 2013, 2012 and 2011 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 costs3			Future policy benefits, losses, claims and loss expenses		Unearned premiums1			Other policy claims and benefits payable1		Premium revenue
2013
IPS - Annuity	$	2,214		$	10,985						$	416
Retirement Plans		179			14,313							—
IPS - Life and NBSG		1,557			10,068							282
Corporate and Other		(172	)		1,399							26
Total	$	3,778		$	36,765						$	724
2012
IPS - Annuity	$	2,110		$	12,214						$	334
Retirement Plans		168			13,628							—
IPS - Life and NBSG		1,442			9,564							301
Corporate and Other		(471	)		748							—
Total	$	3,249		$	36,154						$	635
2011
IPS - Annuity	$	2,232		$	12,550						$	234
Retirement Plans		172			12,638							—
IPS - Life and NBSG		1,421			9,338							297
Corporate and Other		(338	)		726							—
Total	$	3,487		$	35,252						$	531
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 costs3			Other operating expenses2,3		Premiums written
2013
IPS - Annuity	$	546		$	1,065	$	185		$	303
Retirement Plans		743			473		(2	)		151
IPS - Life and NBSG		544			910		125			284
Corporate and Other		16			32		66			184
Total	$	1,849		$	2,480	$	374		$	922
2012
IPS - Annuity	$	551		$	970	$	185		$	285
Retirement Plans		736			457		14			163
IPS - Life and NBSG		536			868		150			255
Corporate and Other		2			24		226			160
Total	$	1,825		$	2,319	$	575		$	863
2011
IPS - Annuity	$	527		$	850	$	80		$	269
Retirement Plans		715			441		11			166
IPS - Life and NBSG		533			863		75			238
Corporate and Other		69			8		(101	)		157
Total	$	1,844		$	2,162	$	65		$	830

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.

³  The 2011 balances reflect a change in accounting principle, as described in Note 2.

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

60

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule IV Reinsurance

As of December 31, 2013, 2012 and 2011 and for each of the years then ended (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
2013
Life, accident and health insurance in force	$	228,095	$	(58,310	)	$	6	$	169,791		—
Premiums:
Life insurance1	$	783	$	(59	)	$	—	$	724		—
Accident and health insurance		232		(232	)		—		—		—
Total	$	1,015	$	(291	)	$	—	$	724		—
2012
Life, accident and health insurance in force	$	216,002	$	(59,895	)	$	5	$	156,112		—
Premiums:
Life insurance1	$	701	$	(66	)	$	—	$	635		—
Accident and health insurance		189		(189	)		—		—		—
Total	$	890	$	(255	)	$	—	$	635		—
2011
Life, accident and health insurance in force	$	209,732	$	(60,499	)	$	5	$	149,238		—
Premiums:
Life insurance1	$	596	$	(65	)	$	—	$	531		—
Accident and health insurance		236		(236	)		—		—		—
Total	$	832	$	(301	)	$	—	$	531		—

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.

61

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, 2013, 2012 and 2011 (in millions)

Column A	Column B		Column C					Column D		Column E
Description	Balance at beginning of period		Charged to costs and expenses			Charged to other accounts		Deductions1		Balance at end of period
2013
Valuation allowances - mortgage loans	$	44	$	(4	)	$	—	$	5	$	35
2012
Valuation allowances - mortgage loans	$	60	$	1		$	—	$	17	$	44
2011
Valuation allowances - mortgage loans	$	96	$	25		$	—	$	61	$	60

¹ Amounts generally represent payoffs, sales and recoveries.

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

62

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a)	Financial Statements
	Nationwide Multi-Flex Variable Account:

Report of Independent Registered Public Accounting Firm.

Statement of Assets, Liabilities and Contract Owners' Equity as of December 31, 2013.

Statement of Operations for the year ended December 31, 2013.

Statements of Changes in Contract Owners Equity for the years ended December 31, 2013 and 2012.

Notes to Financial Statements.

Nationwide Life Insurance Company and subsidiaries:

Report of Independent Registered Public Accounting Firm.

Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011.

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011.

Consolidated Balance Sheets as of December 31, 2013 and 2012.

Consolidated Statements of Changes in Equity as of December 31, 2013, 2012 and 2011.

Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011.

Notes to Consolidated Financial Statements.

Financial Statement Schedules.

(b) Exhibits

(1)	Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant - Filed with Post-Effective Amendment No. 22 on April 27, 2007 (File No. 33-23905) and hereby incorporated by reference.
(2)	Not Applicable
(3)	Underwriting or Distribution of contracts between the Registrant and SDI as Principal Underwriter - Filed previously with Post-Effective Amendment No. 30 on November 16, 2000 (File No. 2-75174) and hereby incorporated by reference.
(4)	Variable Annuity Contract – Filed previously with Post-Effective Amendment No. 39 on April 27, 2007 (File No. 2-75174) and hereby incorporated by reference.
(5)	Variable Annuity Application – Filed previously with Post-Effective Amendment No. 39 on April 27, 2007 (File No. 2-75174) and hereby incorporated by reference.
(6)	Depositor's Certificate of Incorporation and By-Laws.

(a)	Amended and Restated Articles of Incorporation for Nationwide Life Insurance Company, filed previously on January 4, 2010, with Form N-4 (File No. 333-164125), and hereby incorporated by reference.
(b)	Amended and Restated Code of Regulations of Nationwide Life Insurance Company, filed previously on January 4, 2010, with Form N-4 (File No. 333-164125), and hereby incorporated by reference.
(c)	Articles of Merger of Nationwide Life Insurance Company of America with and into Nationwide Life Insurance Company, effective December 31, 2009, filed previously on January 4, 2010, with Form N-4 (File No. 333-164125), and hereby incorporated by reference.

(7)	Not Applicable
(8)	Applicable Fund Participation Agreements
	The following Fund Participation Agreements were filed previously with Pre-Effective Amendment No. 1 on July 17, 2007 (File No. 333-140608 under Exhibit 26(h)), and are hereby incorporated by reference.

(1) Fund Participation Agreement with AIM Variable Insurance Funds, AIM Advisors, Inc., and AIM Distributors dated January 6, 2003, under document "aimfpa99h1.htm".

(2)	Amended and Restated Fund Participation and Shareholder Services Agreement with American Century Investment Services, Inc. dated September 15, 2004, as amended, under document "amcentfpa99h2".
(3)	Restated and Amended Fund Participation Agreement with The Dreyfus Corporation dated January 27, 2000, as amended, under document "dreyfusfpa99h3.htm".
(4)	Fund Participation Agreement with 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".
(5)	Amended and Restated Fund Participation Agreement with Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc. dated May 1, 2003; as amended, under document "frankfpa99h8.htm".
(6)	Fund Participation Agreement, Service and Institutional Shares, with Janus Aspen Series, dated December 31, 1999, under document "janusfpa99h9a.htm".
(7)	Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust) dated May 2, 2005, as amended, under document "nwfpa99h12a.htm".
(8)	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".

The following Fund Participation Agreements were filed previously with Pre-Effective Amendment No. 3 on September 27, 2007 (File No. 333-137202 under Exhibit 26(h)), and are hereby incorporated by reference.

(9)	Fund Participation Agreement with PIMCO Variable Insurance Trust and PIMCO Fund Distributors, LLC dated March 28, 2002, as amended, as document "pimcofpa.htm".
(10)	Fund Participation Agreement with Royce & Associates dated February 14, 2002, as amended, as document "roycefpa.htm".

The following Fund Participation Agreement was filed previously with Post-Effective Amendment No. 30 on April 22, 2008 (File No. 333-28995 under Exhibit 24(b)) and is hereby incorporated by reference.

(11) Fund Participation Agreement Security Distributors, Inc. and Security Benefit Life Insurance Company dated June 9, 2006, as amended, as document "sbl_fpa.htm".

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.

(9)	Opinion of Counsel – Filed previously with Post-Effective Amendment No. 39 on April 27, 2007 (File No. 2-75174) 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

The business address of the Directors and Officers of the Depositor is:
One Nationwide Plaza, Columbus, Ohio 43215

President and Chief Operating Officer and Director	Kirt A. Walker
Executive Vice President-Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President	Terri L. Hill
Executive Vice President-Chief Marketing Officer	Matthew Jauchius
Executive Vice President-Chief Information Officer	Michael C. Keller
Executive Vice President-Chief Human Resources Officer	Gale V. King
Executive Vice President	Mark A. Pizzi
Executive Vice President and Director	Mark R. Thresher
Senior Vice President-Government Relations	Steven M. English
Senior Vice President	Harry H. Hallowell
Senior Vice President and Treasurer	David LaPaul
Senior Vice President-Business Transformation Office	Mark A. Gaetano
Senior Vice President-Chief Claims Officer	David A. Bano
Senior Vice President-Chief Compliance Officer	Sandra L. Rich
Senior Vice President-Chief Economist	David W. Berson
Senior Vice President-Chief Financial Officer and Director	Timothy G. Frommeyer
Senior Vice President-Chief Financial Officer-Property and Casualty	Michael P. Leach
Senior Vice President-Chief Risk Officer	Michael W. Mahaffey
Senior Vice President-CIO Allied Group	Daniel G. Greteman
Senior Vice President-CIO Enterprise Applications	Michael A. Richardson
Senior Vice President-CIO IT Infrastructure	Gregory S. Moran
Senior Vice President-CIO NF Systems	Susan J. Gueli
Senior Vice President-Controller	James D. Benson
Senior Vice President-Corporate Strategy	Katherine M. Liebel
Senior Vice President-Deputy General Counsel	Sandra L. Neely
Senior Vice President-NW Retirement Plans and Director	John L. Carter
Senior Vice President-Enterprise Chief Technology Officer	Guruprasad C. Vasudeva
Senior Vice President-Field Operations EC	Amy T. Shore
Senior Vice President-Field Operations IC	Thomas E. Clark
Senior Vice President-Head of Taxation	Pamela A. Biesecker
Senior Vice President-Individual Products & Solutions and Director	Eric S. Henderson
Senior Vice President-Internal Audit	Kai V. Monahan
Senior Vice President-Investment Management Group	Michael S. Spangler
Senior Vice President-IT Finance & Head of Sourcing	Andrew Walker
Senior Vice President-IT Strategic Initiatives	Tammy Craig
Senior Vice President-Nationwide Financial	Steven C. Power
Senior Vice President-Nationwide Financial Network	Peter A. Golato
Senior Vice President-Corporate Marketing	William J. Burke
Senior Vice President-NFS Legal	Rae Ann Dankovic
Senior Vice President-NF Distribution and Sales	David L. Giertz
Senior Vice President-NI Brand Marketing	Jennifer M. Hanley
Senior Vice President-NW Retirement Plans	Anne L. Arvia
Senior Vice President-Personal Lines Product Management	Eric E. Smith
Senior Vice President-PCIO Sales Support	Melissa D. Gutierrez
Senior Vice President-President-Nationwide Bank	J. Lynn Anderson
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Senior Vice President-Talent, Div & Org Effect	Terri L Forgy
Senior Vice President-Trial Division	Peter J. Hersha
Vice President-Corporate Governance and Secretary	Robert W. Horner, III
Director	Stephen S. Rasmussen

Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant.

Following is a list of entities directly or indirectly controlled by or under common control with the depositor or registrant. Ownership is indicated through indentation. Unless otherwise indicated, each subsidiary is either wholly-owned or majority-owned by the parent company immediately preceding it. (For example, Nationwide Fund Distributors, LLC is either wholly-owned or majority owned by NFS Distributors, Inc.) Separate accounts that have been established pursuant to board resolution but are not, and have never been, active are omitted.

Company	Jurisdiction of Domicile	Brief Description of Business
Nationwide Financial Services, Inc.	Delaware	The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute life insurance, long-term savings and retirement products.
NFS Distributors, Inc.	Delaware	The company acts primarily as a holding company for Nationwide Financial Services, Inc. companies.
Nationwide Financial General Agency, Inc.	Pennsylvania	The company is a multi-state licensed insurance agency.
Nationwide Financial Institution Distributors Agency, Inc.	Delaware	The company is an insurance agency.
Nationwide Fund Distributors, LLC	Delaware	The company is a limited purpose broker-dealer.
Nationwide Fund Management, LLC	Delaware	The company provides administration, transfer and dividend disbursing agent services to various mutual fund entities.
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 Insurance Agency, Inc.	Massachusetts	The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio, Inc.1	Ohio	The company provides retirement products, marketing and education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas, Inc.1	Texas	The company markets and administers deferred compensation plans for public employees.
Nationwide Securities, LLC	Delaware	The company is a registered broker-dealer.
Nationwide Bank	Federal	This is a federally chartered savings bank supervised by the Office of the Office of the Comptroller of the Currency 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 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 Life Insurance Company2	Ohio	A stock corporation. The corporation provides individual life insurance, group and health insurance, fixed and variable annuity products and other life insurance products.
MFS Variable Account2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Multi-Flex Variable Account2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-II2,3	Ohio	A separate account issuing variable annuity contracts.

Company	Jurisdiction of Domicile	Brief Description of Business
Nationwide Variable Account-32,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-42,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-52,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-62,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-72,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-82,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-92,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-102,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-112,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-122,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-132,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Variable Account-142,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Provident VA Separate Account 12,3	Pennsylvania	A separate account issuing variable annuity contracts.
Nationwide VLI Separate Account2,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VLI Separate Account-22,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VLI Separate Account-32,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VLI Separate Account-42,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VLI Separate Account-52,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VLI Separate Account-62,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VLI Separate Account-72,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide Provident VLI Separate Account 12,3	Pennsylvania	A separate account issuing variable life insurance policies.
Nationwide Investment Services Corporation3	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 Financial Assignment Company3	Ohio	The company is an administrator of structured settlements.
Nationwide Investment Advisors, LLC3	Ohio	The company provides investment advisory services.
Life Reo Holdings, LLC3	Ohio	The company is an investment holding company.
Nationwide Life and Annuity Insurance Company2,3	Ohio	The company engages in underwriting life insurance and granting, purchasing and disposing of annuities.

Company	Jurisdiction of Domicile	Brief Description of Business
Nationwide VA Separate Account-A2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide VA Separate Account-B2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide VA Separate Account-C2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide VA Separate Account-D2,3	Ohio	A separate account issuing variable annuity contracts.
Nationwide Provident VA Separate Account A2,3	Delaware	A separate account issuing variable annuity contracts.
Nationwide VL Separate Account-A2,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VL Separate Account-B2,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VL Separate Account-C2,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VL Separate Account-D2,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide VL Separate Account-G2,3	Ohio	A separate account issuing variable life insurance policies.
Nationwide Provident VLI Separate Account A2,3	Delaware	A separate account issuing variable life insurance policies.
Olentangy Reinsurance, LLC3	Vermont	The company is a captive life reinsurance company.
Registered Investment Advisors Services, Inc.3	Texas	The company is a technology company that facilitates third-party money management services for registered investment advisors
Nationwide Fund Advisors3,4	Delaware	The trust acts as a registered investment advisor.

1	This subsidiary/entity is controlled by its immediate parent through contractual association.
2	This subsidiary/entity files separate financial statements.
3	Information for this subsidiary/entity is included in the consolidated financial statements of its immediate parent.
4	This subsidiary/entity is a business trust.

Item 27. Number of Contract Owners

The number of Contract Owners of Qualified and Non-Qualified Contracts as of March 1, 2014, was 142 and 2 respectively.

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

Security Distributors, Inc. ("SDI")

(a) Security Distributors, Inc. ("SDI"), a subsidiary of Security Benefit Corporation, serves as principal underwriter and general distributor for contracts issued by the following separate investment accounts of Nationwide Life Insurance Company:

Nationwide Multi-Flex Variable Account

Nationwide Variable Account-9

SDI also acts as principal underwriter and general distributor for contracts issued by the following separate investment accounts of Security Benefit Life Insurance Company:

SBL Variable Annuity Account I

SBL Variable Annuity Account III

SBL Variable Annuity Account IV

SBL Variable Life Insurance Account (Varilife)

Security Varilife Separate Account (Security Elite Benefit)

Security Varilife Separate Account (Security Varilife)

Variable Annuity Account VIII (Variflex Extra Credit)

Variable Annuity Account VIII (Variflex LS)

Variable Annuity Account VIII (Variflex Signature)

Variable Annuity Account IX

Variable Annuity Account XI (Scarborough Advantage Variable Annuity)

SBL Variable Annuity Account XIV (AdvisorDesigns Variable Annuity)

SBL Variable Annuity Account XIV (AEA Variable Annuity)

SBL Variable Annuity Account XIV (AdvanceDesigns Variable Annuity)

SBL Variable Annuity Account XIV (EliteDesigns Variable Annuity)

SBL Variable Annuity Account XIV (NEA Valuebuilder)

SBL Variable Annuity Account XIV (NEA Valuebuilder Retirement Income Director Variable Annuity)

SBL Variable Annuity Account XIV (SecureDesigns Variable Annuity)

SBL Variable Annuity Account XIV (Security Benefit Advisor Variable Annuity)

SBL Variable Annuity Account XVII (Classic Strategies Variable Annuity)

SBL Variable Annuity Account XVII (ThirdFed Variable Annuity)

Parkstone Advantage Variable Annuity

Variflex Separate Account (Variflex)

Variflex Separate Account (Variflex ES)

And of First Security Benefit Life Insurance and Annuity Company of New York:

Variable Annuity Account A (EliteDesigns Variable Annuity)

Variable Annuity Account A (AdvisorDesigns Variable Annuity)

Variable Annuity Account B (SecureDesigns Variable Annuity)

Variable Annuity Account B (AdvanceDesigns Variable Annuity)

(b) Directors and Officers of SDI:

Michael K. Reidy	President and Chairman of the Board
Lorette Ziegler	Treasurer
Justin Jacquinot	Senior Vice President, Direct Relationships
Kurt E. Auleta	Vice President and Director
Ken DiFrancesca	Vice President and Director
James J. Kiley	Vice President, Education Markets
Paula K. Dell	Vice President
Christopher D. Swickard	Vice President, Secretary and Director
Kevin M. Watt	Vice President
Donald A. Wiley	Vice President
James R. Schmank	Vice President
Mark Turner	Vice President
Ryan Johnson	Vice President
Yolande C. Nichols	Chief Compliance Officer

SDI's principal business address is One Security Benefit Place, Topeka, Kansas 66636-0001, except as indicated.

(c)

Name of Principal Underwriter	Net Underwriting Discounts and Commissions	Compensation on Redemption or Annuitization	Brokerage Commissions	Compensation
Security Distributors, Inc.	$333,602	$0	$0	$0

Item 30. Location of Accounts and Records

Timothy G. Frommeyer
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43215

Item 31. Management Services

Not Applicable

Item 32. Undertakings

The Registrant hereby undertakes to:

(a)	file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted;
(b)	include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and
(c)	deliver any Statement of Additional Information and any financial statements required to be made available under this form promptly upon written or oral request.

The Registrant represents that any of the contracts which are issued pursuant to Section 403(b) of the Internal Revenue Code, are issued by Nationwide through the Registrant in reliance upon, and in compliance with, a no-action letter issued by the Staff of the Securities and Exchange Commission to the American Council of Life Insurance (publicly available November 28, 1988) permitting withdrawal restrictions to the extent necessary to comply with Section 403(b)(11) of the Internal Revenue Code.

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 certifies that it meets the requirements of Rule 485(b) under the Securities Act of 1933 for effectiveness of the Registration Statement and has caused this Registration Statement to be signed by the undersigned, duly authorized, in the City of Columbus, and State of Ohio, on April 24, 2014.

Nationwide Multi-Flex Variable Account

(Registrant)

Nationwide Life Insurance Company

(Depositor)

By: /s/ JAMIE RUFF CASTO

Jamie Ruff Casto
Attorney-in-Fact

As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated, on April 24, 2014.

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
ERIC S. HENDERSON
Eric S. Henderson, Senior Vice President - Individual Products & Solutions and Director
JOHN L. CARTER
John L. Carter, Senior Vice President – Nationwide Retirement Plans and Director
STEPHEN S. RASMUSSEN
Stephen S. Rasmussen, Director
	By /s/ JAMIE RUFF CASTO
	Jamie Ruff Casto Attorney-in-Fact