UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-6

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 File No.  333-164119

Pre-Effective Amendment No. o o

Post-Effective Amendment No. 5 þ

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 File No.  811-04460

Amendment No. 165 þ

(Check appropriate box or boxes.)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT   1

(Exact Name of Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Name of Depositor)

(Formerly Issued by Nationwide Life Insurance Company of America)

One Nationwide Plaza, Columbus, Ohio 43215

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

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

Robert W. Horner, III

Vice President Corporate Governance and Secretary

One Nationwide Plaza

Columbus, Ohio 43215

(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:  May 1, 201 2

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

o           Immediately upon filing pursuant to paragraph (b)

þ           On May 1, 201 2 pursuant to paragraph (b)

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

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

If appropriate, check the following box:

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

Options Plus

INDIVIDUAL FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY

ISSUED BY

NATIONWIDE LIFE INSURANCE COMPANY

Service Center:   P.O. Box 182928, Columbus, Ohio  43218-2928

Corporate Headquarters:  One Nationwide Plaza, Columbus, Ohio 43215

Telephone:   1- 800 - 688-5177

Fax : 1-888-677-7393

www.nationwide.com

Prospectus: May 1, 201 2

The Policies were sold on a continuous basis until December 31, 2008, by licensed insurance agents in those states where the Policies could lawfully be sold. Beginning January 1, 2009, no new policies will be sold, but agents may continue to accept additional premium on existing Policies.  This Prospectus describes an individual flexible premium adjustable variable life insurance policy (the "Policy") originally offered by Nationwide Life Insurance Company of America ("NLICA").  The Policy has an insurance component and an investment component.  The primary purpose of the Policy is to provide insurance coverage for the lifetime of the Insured.  The Policy gives the policyowner (the "Owner") the right to vary the frequency and amount of premium payments, to choose among investment alternatives with different investment objectives and to increase or decrease the death benefit payable under the Policy.

Effective following the close of business on December 31, 2009, Nationwide Life Insurance Company of America ("NLICA") merged with and into Nationwide Life Insurance Company ("NLIC").  Upon consummation of the merger, NLICA's separate corporate existence ceased by operation of law, and NLIC assumed legal ownership of all of the assets of NLICA, including the separate accounts funding the flexible premium adjustable survivorship variable life insurance policies (each a "Policy") formerly issued by NLICA, and the assets of those separate accounts.  As a result of the merger, NLIC became responsible for all liabilities and obligations of NLICA, including those created under the Policies; and the separate account that funds the benefits for your Policy, became a separate account of NLIC.  The Policies have thereby become variable life insurance policies funded by a separate account of NLIC, and each Policy Owner has become a Policy Owner of NLIC.

Please note:  The merger will not affect your rights under the Policy; there are no income tax consequences for you as a result of the merger; and you will not be charged any additional fees or expenses as a result of the merger.

Before January 1, 2010, the Policies were issued by NLICA, at that time a wholly owned subsidiary of Nationwide Financial Services, Inc. ("NFS"), a holding company.  NLICA was chartered by the Commonwealth of Pennsylvania in 1865 under the name Provident Mutual Life Insurance Company ("PMLIC").  On October 1, 2002, PMLIC converted from a mutual insurance company to a stock insurance company, changed its name to NLICA , and became a wholly owned subsidiary of NFS, pursuant to terms of a sponsored demutualization.  Also, as a part of the sponsored demutualization, the Provident Mutual Variable Life Separate Account changed its name to the Nationwide Provident VLI Separate Account 1 (the "Separate Account").  

Nationwide Life Insurance Company ("NLIC") is a stock life insurance company organized under Ohio law in March, 1929, with its Main Administrative Office at One Nationwide Plaza, Columbus, Ohio 43215.  NLIC provides life insurance, annuities and retirement products.  NLIC is a wholly owned subsidiary of NFS.  NLIC is an indirect wholly owned subsidiary, and NFS a direct wholly owned subsidiary, of Nationwide Mutual Insurance Company.

After certain deductions are made, Net Premiums are allocated to the Separate Account.  The Separate Account is divided into subaccounts (the " Subaccounts "), which invest in shares of a designated corresponding investment Portfolio that is part of one of the mutual fund companies (the "Funds") listed below.  For a complete list of the available Subaccounts see "Appendix A: Portfolio Information."  For more information refer to the Fund's prospectus.

· Alger Portfolios

· AllianceBernstein Variable Products Series Fund, Inc.

· American Century Variable Portfolios II, Inc.

· American Century Variable Portfolios, Inc.

· Dreyfus

· Dreyfus Investment Portfolios

· Dreyfus Variable Investment Fund

· Federated Insurance Series

· Fidelity Variable Insurance Products Fund

· Franklin Templeton Variable Insurance Products Trust

· Invesco

· Janus Aspen Series

· MFS® Variable Insurance Trust

· MFS® Variable Insurance Trust II

· Nationwide Variable Insurance Trust

· Neuberger Berman Advisers Management Trust    

· Oppenheimer Variable Account Funds

· PIMCO Variable Insurance Trust

· Putnam Variable Trust

· T. Rowe Price Equity Series, Inc.

· The Universal Institutional Funds, Inc.

· Van Eck VIP Trust

The accompanying prospectuses for the Funds describe the investment objectives and the attendant risks of the Portfolios.  The Policy Account Value will reflect monthly deductions and certain other fees and charges.  Also, a surrender charge may be imposed if, during the first 10 Policy Years or within 10 years after a Face Amount increase, the Policy lapses or the Owner decreases the Face Amount.  Generally, during the first two Policy Years, the Policy will remain in force as long as the Minimum Guarantee Premium is paid or there is sufficient value in the Policy to pay certain monthly charges imposed under the Policy.  After the second Policy Year, the Policy will only remain in force if there is sufficient value to pay the Monthly Deductions and other charges under the Policy.

The Owner should consider the Policy in conjunction with other insurance he or she owns.  It may not be advantageous to replace existing insurance with the Policy, or to finance the purchase of the Policy through a loan or through withdrawals from another policy.

This prospectus must be accompanied or preceded by current prospectuses for the Funds.  Please read this prospectus carefully and retain it for future reference.

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

The Securities and Exchange Commission ("SEC") has not approved or disapproved these securities or the accuracy or adequacy of this prospectus.  Any representation to the contrary is a criminal offense.  The Policy is not a deposit or obligation of any bank, and no bank endorses or guarantees the Policy or Policy values.  Neither the Federal Deposit Insurance Corporation nor any federal agency insures or guarantees Policy values or an Owner's investment in the Policy.

You should read your Policy along with this prospectus.

Table of Contents

	Page
Policy Benefits/Risks Summary	1
Policy Benefits	1
The Death Benefit
Flexibility to Adjust Amount of Death Benefit
Transfers
Free Look
Loan Privilege
Partial Withdrawal of Net Cash Surrender Value
Surrender of the Policy
Accelerated Death Benefit
Long-Term Care Benefit Riders
Personalized Illustrations
Policy Risks	3
Investment Risk
Risk of Increase in Current Fees and Charges
Risk of Lapse
Tax Risks
Withdrawal and Surrender Risks
Loan Risks
Portfolio Risks	4
Fee Table	4
The Policy	9
The Company, Separate Account and Funds	9
The Company
The Separate Account
The Funds
Additional Information About the Funds and Portfolios
Addition, Deletion, or Substitution of Investments
Detailed Description of Policy Provisions	11
Death Benefit
Ability to Adjust Face Amount
Insurance Protection
Payment and Allocation of Premiums
Policy Account Value
Policy Duration
Disruptive Trading
Transfers of Policy Account Value
Free Look Privileges
Loan Privileges
Surrender Privilege
Partial Withdrawal Privilege
Accelerated Death Benefit Rider
Long-Term Care Benefit Riders
Charges and Deductions	22
Premium Expense Charge
Surrender Charges
Monthly Deductions
Face Amount Increase Charge
Partial Withdrawal Charge
Transfer Charge
Mortality and Expense Risk Charge
Short-Term Trading Fees
Loan Interest Charge
Other Charges
The Guaranteed Account	26
Minimum Guaranteed and Current Interest Rates
Transfers from the Guaranteed Account
Ownership and Beneficiary Rights	27
Modifying the Policy	27
Contacting the Service Center	27

Table of Contents (continued)
	Page
Split Dollar Arrangements	28
Dividends	28
Supplementary Benefits	28
Federal Income Tax Considerations	29
Tax Treatment of Policy Benefits
Special Considerations For Life Insurance Policies Owned by Corporations or Other Employers
Split Dollar Arrangements
Voting Rights	33
Distribution of Policies	33
Policy Pricing
Information on Portfolio Payments
State Variations	35
Legal Proceedings	35
Financial Statements	37
Definitions	38
Appendix A: Portfolio Information	41

POLICY BENEFITS/RISKS SUMMARY

The Policy is a n individual flexible premium adjustable variable life insurance policy.  The Policy is built around its Policy Account Value.  The Policy Account Value will increase or decrease depending on the investment performance of the Subaccounts , the amount of interest NLIC credits to the Guaranteed Account, the premiums the Owner pays, the Policy fees and charges NLIC deducts, and the effect of any Policy transactions (such as transfers, partial withdrawals, and loans).  NLIC does not guarantee any minimum Policy Account Value.  The Owner could lose some or all of his or her money.

This summary describes the Policy's benefits and risks.  The sections in the prospectus following this summary discuss the Policy's benefits and other provisions in more detail.  The Definitions at the end of the prospectus define certain words and phrases used in this prospectus.

POLICY BENEFITS

The Death Benefit

As long as the Policy remains in force, NLIC will pay the Insurance Proceeds to the Beneficiary upon receipt of due proof of the death of the Insured.  The Insurance Proceeds will consist of the Policy's Death Benefit, plus any additional benefits provided by a supplementary benefit rider, less any outstanding Policy loan and accrued interest, less any unpaid Monthly Deductions.

There are two Death Benefit options available.  Death Benefit Option A provides a Death Benefit equal to the greater of:  (a) the Face Amount; and (b) the specified percentage of the Policy Account Value.  Death Benefit Option B provides a Death Benefit equal to the greater of: (a) the Face Amount plus the Policy Account Value; and (b) the specified percentage of the Policy Account Value (see "Death Benefit").  The Owner chooses at the time of application one of the two Death Benefit options.  NLIC will not issue the Policy until the Owner has elected a Death Benefit option.

Flexibility to Adjust Amount of Death Benefit

After the second Policy Year, the Owner has significant flexibility to adjust the Death Benefit by changing the Death Benefit option or by increasing or decreasing the Face Amount of the Policy (see "Death Benefit" and "Ability to Adjust Face Amount").  The minimum amount of a requested increase in Face Amount is $25,000 (or such lesser amount required in a particular state) and any requested increase may require Evidence of Insurability.  Any decrease in Face Amount must be for at least $25,000 (or such lesser amount required in a particular state) and cannot result in a Face Amount less than the Minimum Face Amount available.  NLIC reserves the right to establish different Minimum Face Amounts for Policies issued in the future.

Any change in Death Benefit option or in the Face Amount may affect the charges under the Policy.  Any increase in the Face Amount will result in an increase in the Monthly Deductions and any increase in Face Amount will also increase the Surrender Charges which are imposed upon lapse or surrender of the Policy or the pro rata Surrender Charges imposed upon a decrease in Face Amount within the relevant ten-year period.  For any decrease in Face Amount, that part of the Surrender Charges attributable to the decrease will reduce the Policy Account Value, and the Surrender Charges will be reduced by this amount.  A decrease in Face Amount may also affect cost of insurance charges (see "Monthly Deductions").  A change in Death Benefit option or Face Amount may have tax consequences.

To the extent that a requested decrease in Face Amount would result in cumulative premiums exceeding the maximum premium limitations applicable under the Internal Revenue Code of 1986 (the "Code") for life insurance, NLIC will not effect the decrease.

Where state law requires a return of premiums paid when a Policy is returned under the Free-Look provision, any portion of Net Premiums received before the expiration of a 15-day period beginning on the later of the Policy Issue Date or the date NLIC receives the Minimum Initial Premium, which are to be allocated to the Separate Account will be allocated to the Money Market Subaccount .  At the end of the 15-day period, Policy Account Value in the Money Market Subaccount is allocated to the Subaccounts as indicated in the Application (see "Payment and Allocation of Premiums").

Transfers

The Owner may make transfers of the amounts in the Subaccounts and Guaranteed Account.  Transfers between and among the Subaccounts or into the Guaranteed Account are made as of the date NLIC receives the request.  NLIC requires a minimum amount for each such transfer, usually $1,000.  Transfers out of the Guaranteed Account may only be made within 30 days of a Policy Anniversary and are limited in amount.  If the Owner makes more than 12 transfers in a Policy Year, a Transfer Charge of $25 will be deducted from the amount being transferred (see "Transfers of Policy Account Value").  We may restrict the quantity and/or the mode of communication of transfer requests to prohibit disruptive trading that is deemed potentially harmful to Policy Owners.

Free Look

The Policy provides for an initial Free Look period.  The Owner may cancel the Policy before the later of: (a) 45 days after Part I of the Application for the Policy is signed; (b) 10 days after the Owner receives the Policy; and (c) 10 days after NLIC mails or personally delivers a Notice of Withdrawal Right to the Owner.  Upon returning the Policy to NLIC or to an agent of NLIC within

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such time with a written request for cancellation, the Owner will receive a refund equal to the sum of: (i) the Policy Account Value as of the date NLIC receives the returned Policy; (ii) the amount deducted for premium taxes; (iii) any Monthly Deductions charged against the Policy Account Value; and (iv) an amount reflecting other charges directly or indirectly deducted under the Policy.  Where state law requires, the refund will instead equal the premiums paid (see "Free Look Privileges").

A Free Look privilege also applies after a requested increase in Face Amount is issued (See "Free Look For Increase in Face Amount").

If the Policy is canceled, we will treat the Policy as if it was never issued.  If we do not receive your Policy at our home office on the close of business on the date the free look period expires, you will not be allowed to cancel your Policy free of charge.

Loan Privilege

The Owner may obtain Policy loans in a minimum amount of $500 (or such lesser minimum as may be required in a particular state) but not exceeding, in the aggregate, the Net Cash Surrender Value.  Policy loans will bear interest at a fixed rate of 6% per year, payable at the end of each Policy Year.  If interest is not paid when due, it will be added to the outstanding loan balance, beginning 23 days after the Policy Anniversary.  Policy loans may be repaid at any time and in any amount prior to the Final Policy Date.  NLIC transfers Policy Account Value in an amount equal to the loan (adjusted by the earned interest rate and charged interest rate to the next Policy Anniversary) to the Loan Account where it becomes collateral for the loan.  The transfer is made pro rata from each Subaccount and the Guaranteed Account unless the Owner specifies otherwise.  This collateral in the Loan Account earns interest at an effective annual rate of at least 4% (see "Loan Privileges").

Depending upon the investment performance of the Subaccounts and the amounts borrowed, loans may cause a Policy to lapse.  Lapse of the Policy with outstanding loans may result in adverse tax consequences (see "Tax Treatment of Policy Benefits").

Partial Withdrawal of Net Cash Surrender Value

After the first Policy Year, the Owner may, subject to certain restrictions, withdraw part of Net Cash Surrender Value.  The minimum amount for such withdrawal is $1,500.  An expense charge of $25 will be deducted from the Policy Account Value for each withdrawal.  The withdrawal amount and expense charge is allocated to the Subaccounts and the Guaranteed Account based on the proportion that the value in each account bears to the total unloaned Policy Account Value unless the Owner specifies otherwise.  If Death Benefit Option A is in effect, NLIC will reduce the Face Amount by the amount of the withdrawal (see "Partial Withdrawal Privilege").  A withdrawal may have tax consequences.

Surrender of the Policy

The Owner may at any time surrender the Policy and receive the entire Net Cash Surrender Value (see "Surrender Privilege").  A surrender may have tax consequences.

Accelerated Death Benefit

Under the Accelerated Death Benefit ("ADB") Rider, an Owner may receive, at his or her request and upon approval by NLIC, accelerated payment of part of the Policy's Death Benefit if the Insured develops a terminal illness .   F or Owners who elected the ADB Rider prior to November 13, 2001 (or such other date pursuant to state availability), an accelerated payment of part of the Policy’s Death Benefit may by payable if the Insured either developed a terminal illness or is permanently confined to a nursing care facility.  NLIC will deduct an administrative charge from the accelerated death benefit at the time it is paid (see "Accelerated Death Benefit").  The federal income tax consequences associated with adding the Accelerated Death Benefit Rider or receiving the accelerated death benefit are uncertain.  The Owner should consult a tax advisor before adding the Accelerated Death Benefit Rider to the Policy or requesting an accelerated death benefit.

Long-Term Care Benefit Riders

Under the Long-Term Care Benefit Riders, the Owner may receive periodic payments of a portion of the death benefit and waiver of Monthly Deductions if the Insured becomes "chronically ill."  NLIC imposes a monthly charge if the Owner elects any of these riders (see "Long-Term Care Benefit Riders").  There may be federal income tax consequences associated with the Long-Term Care Benefit Riders.  The Owner should consult a tax advisor before adding the Long-Term Care Benefit Riders to the Policy.

Personalized Illustrations

Owners will receive personalized illustrations that reflect their own particular circumstances.  These illustrations may help Owners to understand the long-term effects of different levels of investment performance and the charges and deductions under the Policy.  They also may help Owners compare the Policy to other life insurance policies.  These illustrations also show the value of premiums accumulated with interest and demonstrate that the Policy Account Value may be low (compared to the premiums paid plus accumulated interest) if an Owner surrenders the Policy in the early Policy Years.  Therefore, an Owner should not purchase the Policy as a short-term investment.  The personalized illustrations are based on hypothetical rates of return and are not a representation or guarantee of investment returns or Policy Account Value.

2

POLICY RISKS

Investment Risk

If the Owner invests his or her Policy Account Value in one or more Subaccount , then he or she will be subject to the risk that investment performance will be unfavorable and that the Policy Account Value will decrease.  In addition, NLIC deducts Policy fees and charges from the Policy Account Value, which can significantly reduce the Policy Account Value.  During times of poor investment performance, this deduction will have an even greater impact on the Policy Account Value.  The Owner could lose everything he or she invests and the Policy could lapse without value, unless he or she pays additional premiums.

Frequent trading in the Subaccounts may dilute the value of your Subaccount units, cause the Subaccount to incur higher transaction costs, and interfere with the Subaccount 's ability to pursue its stated investment objective.  This disruption to the Subaccount trading may result in lower investment performance and Policy Account Value .  We have instituted procedures to minimize disruptive trading transfers, including, but not limited to, transfer restrictions and short-term trading fees.  While we expect these procedures to reduce the adverse effect of disruptive transfers, we cannot assure you that we have eliminated these risks.

Risk of Increase in Current Fees and Charges

Certain fees and charges are currently assessed at less than their maximum levels.  NLIC may increase these current charges in the future up to the guaranteed maximum levels.  If fees and charges are increased, the Owner may need to increase the amount and/or frequency of premiums to keep the Policy in force.

Risk of Lapse

If the Net Cash Surrender Value is insufficient to pay the Monthly Deductions and other charges under the Policy, the Policy may enter a 61-day Grace Period.  NLIC will notify the Owner that the Policy will lapse (terminate without value) unless the Owner makes a sufficient payment during the Grace Period.  The Policy generally will not lapse: (1) during the first 2 Policy Years if the Minimum Guarantee Premium has been paid; or (2) if the Owner pays sufficient premium before the end of the Grace Period.

Tax Risks

This is a general description of the tax risks associated with the Policy as we understand them.  This is not a guarantee of the Policy’s tax treatment and you should discuss any particular questions or concerns with a tax advisor.

NLIC anticipates that a Policy will be deemed a life insurance contract under federal tax law.  However, due to limited guidance, there is some uncertainty about the application of the federal tax law to the Policy, particularly if the Owner of the Policy pays the full amount of premiums permitted under the Policy.  An Owner of a Policy may, however, adopt certain self-imposed limitations on the amount of premiums paid for such a Policy, which should cause the Policy to meet the definition of a life insurance contract.  Any Owner contemplating the adoption of such limitations should consult a tax advisor.  In addition, if the Owner elects the Accelerated Death Benefit Rider or a Long-Term Care Benefit Rider, the tax qualification consequences associated with continuing the Policy after a distribution is made are unclear.  The Owner should consult a tax advisor about these consequences.

Assuming that a Policy qualifies as a life insurance contract for federal income tax purposes, a Policy Owner should not be deemed to be in constructive receipt of Policy Account Value under a Policy until there is a distribution from the Policy.  Moreover, Death Benefits payable under a Policy should be excludable from the gross income of the Beneficiary.  As a result, the Beneficiary should not have to pay U.S. federal income tax on the Death Benefit, although other taxes, such as estate taxes, may apply (see "Tax Status of the Policy").

Under certain circumstances, a Policy may be treated as a "Modified Endowment Contract."  If the Policy is a Modified Endowment Contract, then all pre-death distributions, including Policy loans, will be treated first as a distribution of taxable income and then as a return of basis or investment in the Policy.  In addition, prior to age 59½ any such distributions generally will be subject to a 10% penalty tax (see "Tax Treatment of Policy Benefits").

If the Policy is not a Modified Endowment Contract, distributions generally will be treated first as a return of basis or investment in the contract and then as disbursing taxable income.  Moreover, loans generally will not be treated as distributions, although there is some uncertainty with regard to the tax treatment of Policy loans outstanding after the later of the 10th Policy Anniversary or Attained Age 60.  Finally, neither distributions nor loans from a Policy that is not a Modified Endowment Contract are subject to the 10% penalty tax (see "Distributions Other Than Death Benefits from Policies that are not Modified Endowment Contracts").

Withdrawal and Surrender Risks

The Surrender Charge under the Policy applies for 10 Policy Years after the Policy Date.  It is possible that the Owner will receive no Net Cash Surrender Value if the Policy is surrendered in the first few Policy Years.  A prospective Owner should purchase the Policy only if he or she has the financial ability to keep it in force for a substantial period of time.  A prospective Owner should not purchase the Policy if he or she intends to surrender all or part of the Policy Account Value in the near future.  NLIC designed the Policy to meet long-term financial goals.  The Policy is not suitable as a short-term investment.  Partial withdrawals are not permitted during the 1st Policy Year.  A surrender or partial withdrawal may have tax consequences.

3

Loan Risks

A Policy loan, whether or not repaid, will affect Policy Account Value over time because NLIC subtracts the amount of the loan from the Subaccounts and/or the Guaranteed Account as collateral and holds it in the Loan Account.  This loan collateral does not participate in the investment performance of the Subaccounts or receive any higher current interest rate credited to the Guaranteed Account.  NLIC reduces the amount it pays on the Insured's death by the amount of any outstanding Policy loans and accrued interest.  The Policy may lapse (terminate without value) if any outstanding Policy loans and accrued interest reduce the Net Cash Surrender Value to 0.

A loan may have tax consequences.  In addition, if a Policy that is not a Modified Endowment Contract is surrendered or lapses while a Policy loan is outstanding, the amount of the loan, to the extent it has not previously been taxed, will be added to any amount received and taxed accordingly.

PORTFOLIO RISKS

A comprehensive discussion of the risks of each Portfolio may be found in each Portfolio's prospectus.  Please refer to the Portfolios' prospectuses for more information.  There is no assurance that any Portfolio will achieve its stated investment objective.

FEE TABLE

The following tables describe the fees and expenses that an Owner will pay when buying, owning, and surrendering the Policy.  The first table describes the fees and expenses that an Owner will pay at the time that he or she buys the Policy, surrenders the Policy, takes a partial withdrawal, or transfers Policy Account Value among the Subaccounts and the Guaranteed Account.

Transaction Fees
Charge	When Charge is Deducted	Amount Deducted
		Guaranteed Charge	Current Charge
Maximum Charge Imposed on Premiums (Premium Expense Charge):
Premium Tax Charge1	Upon receipt of each premium payment	0-4% of each premium payment depending on Insured's state of residence	0-4% of each premium payment, depending on Insured's state of residence
Percent of Premium Sales Charge	Upon receipt of each premium payment	3% of premium payments	1.5% of premium payments
Maximum Deferred Surrender Charge:
Deferred Sales Charge2	Upon surrender, lapse, or decrease in Face Amount during the first 10 Policy Years	The lesser of: (1) 27% of all premiums received during the first Policy Year up to the Target Premium plus 6% of all other premiums paid to the date of surrender or lapse; or (2) 50% of the Target Premium for the Initial Face Amount	The lesser of: (1) 27% of all premiums received during the first Policy Year up to the Target Premium plus 6% of all other premiums paid to the date of surrender or lapse; or (2) 50% of the Target Premium for the Initial Face Amount
Deferred Administrative Charge3	Upon surrender, lapse, or decrease in Face Amount during the first 10 Policy Years	$3.00 per $1,000 of Face Amount	$3.00 per $1,000 of Face Amount
Maximum Deferred Additional Surrender Charge (Additional Deferred Sales Charge)4	Upon surrender, lapse, or decrease in Face Amount during the first 10 years following an increase in Face Amount	The lesser of: (1) 27% of all premiums received for the increase up to the first Target Premium for that increase during the first 12 Policy months after the increase plus 6% of all other premiums paid to the date of surrender or lapse; or (2) 50% of the Target Premium for each increase in Face Amount.	The lesser of: (1) 27% of all premiums received for the increase up to the first Target Premium for that increase during the first 12 Policy months after the increase plus 6% of all other premiums paid to the date of surrender or lapse; or (2) 50% of the Target Premium for each increase in Face Amount.
Face Amount Increase Charge5	Upon increase in Face Amount	$50.00 plus $3.00 per $1,000 of Face Amount increase	$0.00

4

Transaction Fees
Charge	When Charge is Deducted	Amount Deducted
		Guaranteed Charge	Current Charge
Other Withdrawal/Surrender Fees	Upon partial withdrawal	$25 per withdrawal	$25 per withdrawal
Transfer Fees6	Upon transfer	$25 per transfer	$25 per transfer
Short-Term Trading Fee7	Upon transfer of Subaccount value out of a Subaccount within 60 days after allocation to that Subaccount	1% of the amount transferred from the Subaccount within 60 days of allocation to that Subaccount	1% of the amount transferred from the Subaccount within 60 days of allocation to that Subaccount
Accelerated Death Benefit Rider	At the time the accelerated death benefit is paid	$250	$100

The next table describes the fees and expenses that a Policy Owner will pay periodically during the time that he or she owns the Policy, not including Portfolio fees and expenses.

Periodic Charges Other Than Portfolio Operating Expenses
Charge	When Charge is Deducted	Amount Deducted
		Guaranteed Charge	Current Charge
Cost of Insurance:8 Minimum and Maximum Charge	On Policy Date and monthly on Policy Processing Day	$0.06 - $420.82 per $1,000 of Net Amount at Risk per month	$0.04 - $113.16 per $1,000 of Net Amount at Risk per month during Policy Years 11 and later
Charge for a male Insured, Attained Age 45, in the nonsmoker Premium Class and within the first 10 Policy Years	On Policy Date and monthly on Policy Processing Day	$0.52 per $1,000 of Net Amount at Risk per month	$0.26 per $1,000 of Net Amount at Risk per month
Initial Administrative Charge9	On Policy Date and monthly on Policy Processing Day	$17.50	$17.50
Monthly Administrative Charge	On Policy Date and monthly on Policy Processing Day	$12	$11.0010
Mortality and Expense Risk Charge	Daily	Annual rate of 0.90% of the average daily net assets of each Subaccount in which the Owner is invested	Annual rate of 0.65% of the average daily net assets of each Subaccount in which the Owner is invested
Loan Interest Charge	On Policy Anniversary or earlier, as applicable11	Annual rate of 6.00% of the loan amount	Annual rate of 6.00% of the loan amount

5

Periodic Charges For Riders
Charge	When Charge is Deducted	Amount Deducted
		Guaranteed Charge	Current Charge
Optional Charges:12
Change of Insured Rider	N/A	None	None
Children's Term Insurance Rider	On rider policy date and monthly on Policy Processing Day	$0.52 per $1,000 of rider coverage amount per month	$0.52 per $1,000 of rider coverage amount per month
Disability Waiver Benefit Rider: Minimum and Maximum Charge	On rider policy date and monthly on Policy Processing Day	$0.01 - $1.76 per $1,000 Net Amount at Risk per month	$0.01 - $1.76 per $1,000 Net Amount at Risk per month
Charge for an Insured, Attained Age 42	On rider policy date and monthly on Policy Processing Day	$0.01 per $1,000 Net Amount at Risk per month	$0.01 per $1,000 Net Amount at Risk per month
Disability Waiver of Premium Benefit Rider: Minimum and Maximum Charge	On rider policy date and monthly on Policy Processing Day	2% - 23.2% of the monthly benefit amount per month	2% - 23.2% of the monthly benefit amount per month
Charge for an Insured, Issue Age 37	On rider policy date and monthly on Policy Processing Day	3.1% of the monthly benefit amount per month	3.1% of the monthly benefit amount per month
Final Policy Date Extension Rider	N/A	None	None
Long-Term Care Benefit Riders:
1.Long-Term Care Acceleration Benefit Rider13 Minimum and Maximum Charge	On rider policy date and monthly on Policy Processing Day	No maximum amount is guaranteed	$0.0214 - $3.2415 per $1,000 of Net Amount at Risk per month
Charge for a male Insured, Attained Age 55 with a 4% Acceleration Benefit Rider	On rider policy date and monthly on Policy Processing Day	No maximum amount is guaranteed	$0.20 per $1,000 of Net Amount at Risk per month
2.Long-Term Care Waiver Benefit Rider16 Minimum and Maximum Charge	On rider policy date and monthly on Policy Processing Day	No maximum amount is guaranteed	$0.01 - $3.47 per $1,000 of Net Amount at Risk per month
Charge for a male Insured, Attained Age 55	On rider policy date and monthly on Policy Processing Day	No maximum amount is guaranteed	$0.01 per $1,000 Net Amount at Risk per month

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Periodic Charges For Riders
Charge	When Charge is Deducted	Amount Deducted
		Guaranteed Charge	Current Charge
3.Long-Term Care Extended Insurance Benefit Rider17 Minimum and Maximum Charge	On rider policy date and monthly on Policy Processing Day	No maximum amount is guaranteed	$0.0118 - $8.7219 per $1,000 of rider coverage amount per month
Charge for a male Insured, Issue Age 55 with a 4% Extended Insurance Benefit Rider, assuming no inflation or nonforfeiture protection (as described in the rider), and assuming lifetime payments	On rider policy date and monthly on Policy Processing Day	No maximum amount is guaranteed	$0.28 per $1,000 of rider coverage amount per month
Other Insured Convertible Term Life Insurance Rider Minimum and Maximum Charge	On rider policy date and monthly on Policy Processing Day	$0.09 - $420.82 per $1,000 of rider coverage amount per month	$0.06 - $113.17 per $1,000 of rider coverage amount per month
Charge for a female Insured, Attained Age 42, in the nonsmoker Premium Class	On rider policy date and monthly on Policy Processing Day	$0.20 per $1,000 of rider coverage amount per month	$0.14 per $1,000 of rider coverage amount per month

The next item shows the minimum and maximum Total Annual Portfolio Annual Expenses, as of December 31, 2011 , charged by the Subaccount Portfolios that you may pay periodically during the time that you own the Policy.  The table does not reflect Short-Term Trading Fees.  More detail concerning each Portfolio's fees and expenses is contained in the prospectus for each Portfolio.  Please contact us, at the telephone numbers or address on the cover page of this prospectus, for free copies of the prospectus for the mutual funds available under this policy.

	Minimum		Maximum
Total Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets, including management fees, distribution and/or service (12b-1) fees, and other expense, as a percentage of average Portfolio assets)	0.27 %	–	2.20 %

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

1 NLIC does not deduct a premium tax charge in jurisdictions that impose no premium tax.  Kentucky imposes an additional city premium tax that applies only to first year premium.  This tax varies by municipality and is no greater than 12%.

 

2 The Deferred Sales Charge may increase if additional premiums are paid after Policy Year 1, as the charge for each Policy Year after the first Policy Year (until Policy Year 11) equals the prior Policy Year's charge plus 6% of all other premiums paid to the date of surrender or lapse (if greater than the specified percentage of Target Premium for the Initial Face Amount).  The Deferred Sales Charge is 0% after the 10th Policy Year.  The Deferred Sales Charge is reduced by any Deferred Sales Charges previously paid at the time of any prior decrease in Face Amount.  Upon a decrease in Face Amount, NLIC deducts a portion of this charge.

 

3 Beginning in the 7th Policy Year, the Deferred Administrative Charge decreases each Policy Year to $0 after the 10th Policy Year.  The charge varies by Issue Age, and is lower for Issue Ages under 35.  Upon a decrease in Face Amount, NLIC deducts a portion of this charge.

 

4 The Additional Deferred Sales Charge may increase if additional premiums are paid more than one year following the increase, as the charge for each year following the increase (until Policy Year 11) equals the prior year's charge plus 6% of all other premiums paid to the date of surrender or lapse (if greater than the specified percentage of Target Premium for each increase in Face Amount).  The Additional Deferred Sales Charge is 0% after the 10th Policy Year.  The Additional Deferred Sales Charge is reduced by any Additional Deferred Sales Charges previously paid at the time of any prior decrease in Face Amount.  Upon a decrease in Face Amount, NLIC deducts a portion of this charge.

 

5 The $0.00 current charge applies to increases made on or after July 25, 2007, for all policies.  We may begin taking a current charge again at any time on a prospective basis for face amount increase

6 NLIC does not assess a transfer charge for the first 12 transfers each Policy Year.

 

7 The Short-Term Trading Fee is only assessed in connection with those Portfolios that assess a redemption fee to the Variable Account.   Subaccounts that may assess a Short-Term Trading Fee are identified in the "Appendix A: Portfolio Information" section of this prospectus.

 

8 Cost of insurance charges vary based on the Insured's Attained Age, sex, Premium Class, Policy Year, and Net Amount at Risk.  The cost of insurance charges shown in the table may not be typical of the charges the Owner will pay.  The Policy's specifications page will indicate the guaranteed cost of insurance charge applicable to the Policy, and more detailed information concerning the Owner's cost of insurance charges is available on request from the Service Center.  Also, before the Owner purchases the Policy, NLIC will provide the Owner with personalized illustrations of future benefits under the Policy based upon the Insured's Issue Age and Premium Class, the Death Benefit option, Face Amount, Planned Periodic Premiums, and riders requested.

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9 NLIC only deducts the Initial Administrative Charge on the first 12 Policy Processing Days.

 

10 Effective on the later of June 7, 2010, or the date of any required state regulatory approval, the current Monthly Administrative Charge is increased from $7.50 to $11.00, $9.50 for policies issued in New York.

 

11 While a Policy is outstanding, loan interest is payable in arrears on each Policy Anniversary or, if earlier, on the date of loan repayment, lapse, surrender, Policy termination, or the Insured's death.

12 Charges for the Disability Waiver Benefit Rider, Disability Waiver of Premium Benefit Rider, Long- Term Care Benefit Riders, and Other Insured Convertible Term Life Insurance Rider may vary based on the Insured's Issue or Attained Age, sex, Premium Class, Policy Year, Face Amount, and Net Amount at Risk.  Charges based on Attained Age may increase as the Insured ages.  The rider charges shown in the table may not be typical of the charges the Owner will pay.  The Policy's specifications page will indicate the rider charges applicable to the Policy, and more detailed information concerning these rider charges is available on request from the Service Center.  Also, before the Owner purchases the Policy, NLIC will provide personalized illustrations of future benefits under the Policy based upon the Insured's Issue Age and Premium Class, the Death Benefit option, Face Amount, Planned Periodic Premiums, and riders requested.

 

13 NLIC may increase the rates for the Long-Term Care Acceleration Benefit Rider charge on a class basis.  NLIC waives this rider's charge during the time NLIC pays benefits under the rider.

 

14 Based on the selection of the 2% Long-Term Care Acceleration Benefit Rider.

 

15 Based on the selection of the 4% Long-Term Care Acceleration Benefit Rider.

 

16 NLIC may increase the rates for the Long-Term Care Waiver Benefit Rider charge on a class basis.

17 NLIC may increase the rates for the Long-Term Care Extended Insurance Benefit Rider charge on a class basis.  NLIC waives this rider's charge during the time NLIC pays benefits under the rider.

 

18 Based on the selection of the 2% Long-Term Care Extended Insurance Benefit Rider, without inflation or nonforfeiture protection (as described in the Rider), and with a fixed extension period.

 

19 Based on the selection of the 4% Long-Term Care Extended Insurance Benefit Rider, with inflation and nonforfeiture protection (as described in the Rider), and with a lifetime extension period.

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THE POLICY

The Individual Flexible Premium Adjustable Variable Life Insurance Policy offered by this prospectus is issued by NLIC.  The Policy is similar in many ways to a fixed benefit life insurance policy.  This prospectus discloses all material provisions of the Policy.  In addition to the terms and conditions of the Policy, Policy Owner rights are governed by this prospectus and protected by federal securities laws and regulations.  As with a fixed-benefit life insurance policy, the Owner of a Policy makes premium payments in return for insurance coverage on the person insured.  Also, like many fixed-benefit life insurance policies, the Policy provides for accumulation of Net Premiums and a Net Cash Surrender Value that is payable if the Policy is surrendered during the Insured's lifetime.  As with many fixed-benefit life insurance policies, the Net Cash Surrender Value during the early Policy Years is likely to be substantially lower than the aggregate premium payments made.

However, the Policy differs from a fixed-benefit life insurance policy in several important respects.  Unlike a fixed-benefit life insurance policy, under the Policy, the Death Benefit may, and the Policy Account Value will, increase or decrease to reflect the investment performance of any Subaccount to which Policy Account Value is allocated.  Also, unless the entire Policy Account Value is allocated to the Guaranteed Account, there is no guaranteed minimum Net Cash Surrender Value.  If Net Cash Surrender Value is insufficient to pay charges due, then, after a Grace Period, the Policy may lapse without value (see "Policy Duration").  However, NLIC guarantees that the Policy will remain in force during the first two Policy Years as long as certain requirements related to the Minimum Guarantee Premium have been met (see "Policy Lapse").  If a Policy lapses while loans are outstanding, certain amounts may become subject to income tax (see "Federal Income Tax Considerations").

The Policy is called "flexible premium" because there is no fixed schedule for premium payments, even though the Owner may establish a schedule of Planned Periodic Premiums.  The Policy is described as "adjustable" because the Owner may, within limits, increase or decrease the Face Amount and may change the Death Benefit options.

The Policy is designed to provide lifetime insurance benefits and long-term investment of Policy Account Value.  A prospective Owner should evaluate the Policy in conjunction with other insurance coverage that he or she may have, as well as their need for insurance and the Policy's long-term investment potential.  It may not be advantageous to replace existing insurance coverage with the Policy.  In particular, replacement should carefully be considered if the decision to replace existing coverage is based solely on a comparison of Policy illustrations.

This Policy is issued for Insureds with Issue Ages zero through eighty-five .  The benefits described in the Policy and this prospectus, including any optional riders or modifications in coverage, may be subject to our underwriting and approval.  We reserve the right to reject any application for any reason permitted by law. Additionally, we reserve the right to modify our underwriting standards on a prospective basis to newly issued policies at any time.  The Minimum Face Amount is $100,000.  We reserve the right to modify the minimum Face Amount on a prospective basis to newly issued policies at any time (for a Policy issued in New York State the maximum Face Amount at issue is $2,500,000).

NLIC offers other variable life insurance policies that have different Death Benefits, policy features, and optional programs.  However, these other policies also have different charges that would affect the Owner's Subaccount performance and Policy Account Value.  To obtain more information about these other policies, contact NLIC's Service Center or the Owner's agent.

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

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

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

THE COMPANY, SEPARATE ACCOUNT AND FUNDS

The Company

Nationwide Life Insurance Company ("NLIC") is a stock life insurance company organized under Ohio law in March 1929, with its Main Administrative Office at One Nationwide Plaza, Columbus, Ohio 43215.  We provide life insurance, annuities and retirement products.  We are admitted to do business in all states, the District of Columbia and Puerto Rico.

NLIC is a wholly owned subsidiary of Nationwide Financial Services, Inc. ("NFS"), a holding company.  NLIC is an indirect wholly owned subsidiary, and NFS a direct wholly owned subsidiary, of Nationwide Mutual Insurance Company.

Before January 1, 2010, the Policies were issued by Nationwide Life Insurance Company of America ("NLICA"), at that time a wholly owned subsidiary of NFS.  NLICA was chartered by the Commonwealth of Pennsylvania in 1865 under the name Provident Mutual Life Insurance Company ("PMLIC").  On October 1, 2002, PMLIC converted from a mutual insurance company to a stock insurance company, changed its name to Nationwide Life Insurance Company of America, and became a wholly owned subsidiary of NFS, pursuant to terms of a sponsored demutualization.  Effective following the close of business on December 31, 2009, NLICA merged with and into NLIC, and NLIC was the surviving company.

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The Separate Account

The Separate Account is a separate investment account to which assets are allocated to support the benefits payable under the Policies as well as other variable life insurance policies NLIC may issue.  The assets of the Separate Account are owned by NLIC.  However, these assets are held separate from other assets and are not part of NLIC's General Account.  NLIC is obligated to pay all benefits under the Policies.  The portion of the Separate Account's assets equal to the reserves and other liabilities under the Policies (and other policies) supported by the Separate Account are not chargeable with liabilities arising out of any other business that NLIC may conduct.  NLIC may transfer to its General Account any assets of the Separate Account that exceed the reserves and Policy liabilities of the Separate Account (which will always be at least equal to the aggregate Policy Account Value allocated to the Separate Account under the Policies).  The income, gains and losses, realized or unrealized, from the assets allocated to the Separate Account are credited to or charged against the Separate Account without regard to other income, gains or losses of NLIC.  NLIC may accumulate in the Separate Account the accrued charges for mortality and expense risks and investment results attributable to assets representing such charges.

The Separate Account is a separate investment account originally established under Delaware law.  Upon closure of the merger of NLICA into NLIC on December 31, 2009, the Separate Account became subject to, and will be operated in compliance with, Ohio law.  The Separate Account is registered with the SEC under the Investment Company Act of 1940 (the "1940 Act") as a unit investment trust type of investment company.  Such registration does not involve any supervision of the management or investment practices or policies of the Separate Account by the SEC.  The Separate Account meets the definition of a "Separate Account" under federal securities laws.  The Separate Account has Subaccounts which each invest exclusively in Portfolios of the Mutual Funds.

NLIC reserves the right to make structural and operational changes affecting the Separate Account (see "Addition, Deletion, or Substitution of Investments").

NLIC does not guarantee any money that the Owner places in the Subaccounts .  The value of each Subaccount will increase or decrease, depending on the investment performance of the corresponding Portfolio.  The Owner could lose some or all of his or her money.

The Funds

Each of the Funds offered in the Policy is registered with the SEC under the 1940 Act as an open-end management investment company.  The SEC does not, however, supervise the management or the investment practices and policies of the Funds or their Portfolios.  The assets of each Portfolio are separate from the assets of other portfolios of that Fund and each Portfolio has separate investment objectives and policies.  Some of the Funds may, in the future, create additional Portfolios.  The investment experience of each Subaccount depends on the investment performance of its corresponding Portfolio.  For more detail about each Portfolio, refer to each Portfolio's prospectus and/or "Appendix A: Portfolio Information" later in this prospectus.

These Portfolios are not available for purchase directly by the general public, and are not the same as other mutual fund portfolios with very similar or nearly identical names that are sold directly to the public.  However, the investment objectives and policies of certain Portfolios available under the Policy are very similar to the investment objectives and policies of other portfolios that are or may be managed by the same investment advisor or manager.  Nevertheless, the investment performance of the Portfolios available under the Policy may be lower or higher than the investment performance of these other (publicly available) portfolios.

There can be no assurance, and NLIC makes no representation, that the investment performance of any of the Portfolios under the Policy will be comparable to the investment performance of any other portfolio, even if the other portfolio has the same investment advisor or manager, the same investment objectives and policies, and a very similar name.

Additional Information About the Funds and Portfolios

No one can assure that any Portfolio will achieve its stated objectives and policies.

More detailed information concerning the investment objectives, policies and restrictions of the Portfolios, the expenses of the Portfolios the risks attendant to investing in the Portfolios and other aspects of the Funds' operations can be found in the current prospectus for each Fund and the current Statement of Additional Information for the Funds.  The Funds' prospectuses should be read carefully and kept for future reference before any decision is made concerning the allocation of Net Premium or transfers of Policy Account Value among the Subaccounts .

NLIC (or an affiliate) may receive compensation from a Fund or its investment advisor or distributor (or affiliates thereof) in connection with administration, distribution, or other services provided with respect to the Funds and their availability through the Policies.  The amount of this compensation is based upon a percentage of the assets of the Fund attributable to the Policies and other policies issued by NLIC (or an affiliate).  These percentages differ, and some Funds, advisors, or distributors (or affiliates) may pay NLIC more than others.  NLIC also may receive 12b-1 fees.

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Addition, Deletion, or Substitution of Investments

Where permitted by applicable law, NLIC reserves the right to make certain changes to the structure and operation of the Separate Account without the Owner's consent, including, among others, the right to:

1. remove, combine, or add Subaccounts and make the new Subaccount available to the Owner at NLIC's discretion;

2. substitute shares of another registered open-end management company, which may have different fees and expenses, for shares of a Subaccount at NLIC's discretion;

3. substitute or close Subaccounts to allocations of premiums or Policy Account Value, or both, and to existing investments or the investment of future premiums, or both, at any time in NLIC's discretion;

4. transfer assets supporting the Policies from one Subaccount to another or from the Separate Account to another separate account;

5. combine the Separate Account with other separate accounts, and/or create new separate accounts;

6. deregister the Separate Account under the 1940 Act, or operate the Separate Account as a management investment company under the 1940 Act, or as any other form permitted by law; and

7. modify the provisions of the Policy to reflect changes to the Subaccounts and the Separate Account and to comply with applicable law.

The particular Portfolios available under the Policies may change from time to time.  Specifically, Portfolios or Portfolio share classes that are currently available may be removed or closed off to future investment.  New Portfolios or new share classes of currently available Portfolios may be added.  Policy Owners will receive notice of any such changes that affect their Policy.  Additionally, not all of the Portfolios are available in every state.

The Funds, which sell their shares to the Subaccounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Subaccounts .  NLIC will not make any such changes without receiving any necessary approval of the SEC and applicable state insurance departments.  NLIC will notify the Owner of any changes.

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 Policy Owners will be notified in the event there is a substitution, elimination or combination of shares.

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

Deregistration of the Separate Account. Nationwide may deregister Nationwide Provident VLI Separate Account 1 under the 1940 Act in the event the separate account meets an exemption from registration under the 1940 Act, if there are no shareholders in the separate account or for any other purpose approved by the SEC.

No deregistration may take place without the prior approval of the SEC.  All Policy Owners will be notified in the event Nationwide deregisters Nationwide Provident VLI Separate Account 1.

DETAILED DESCRIPTION OF POLICY PROVISIONS

Death Benefit

General.  As long as the Policy remains in force, the Insurance Proceeds of the Policy will, upon due proof of the Insured's death (and fulfillment of certain other requirements), be paid to the Beneficiary in accordance with the designated Death Benefit option.  The Insurance Proceeds will be determined as of the date of the Insured's death and will be equal to:

1. the Death Benefit; plus

2. any additional benefits due under a supplementary benefit rider attached to the Policy; minus

3. any loan and accrued loan interest on the Policy; minus

4. any overdue deductions if the death of the Insured occurs during the Grace Period.

The Insurance Proceeds may be paid in cash or under one of the settlement options set forth in the Policy.

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Death Benefit Options.  The Policy provides two Death Benefit options: Option A and Option B.  The Owner designates the Death Benefit option in the Application and may change it as described in "Change in Death Benefit Option."  Under either option, the duration of the Death Benefit coverage depends upon the Policy's Net Cash Surrender Value (see "Policy Duration").

Option A.  The Death Benefit is equal to the greater of: (a) the Face Amount of the Policy; and (b) the Policy Account Value as of the date of the Insured's death if this day is a Valuation Day, otherwise on the Valuation Day next following the Insured's date of death multiplied by the specified percentage shown in the table below:

Attained Age	Percentage	Attained Age	Percentage
40 and under	250%	60	130%
45	215%	65	120%
50	185%	70	115%
55	150%	75 through 90	105%
		95 through 99	100%

For Attained Ages not shown, the percentages decrease pro rata for each full year.

Illustration of Option A - For purposes of this illustration, assume that the Insured is under Attained Age 40 and there is no Policy loan outstanding.

Under Option A, a Policy with a Face Amount of $200,000 will generally pay a Death Benefit of $200,000.  The specified percentage for an Insured under Attained Age 40 on the Policy Anniversary prior to the date of death is 250%.  Because the Death Benefit must be equal to or be greater than 2.50 times the Policy Account Value, any time the Policy Account Value exceeds $80,000 the Death Benefit will exceed the Face Amount.  Each additional dollar added to the Policy Account Value will increase the Death Benefit by $2.50.  Thus, a 35 year old Insured with a Policy Account Value of $150,000 will have a Death Benefit of $375,000 (2.50 x $150,000); a Policy Account Value of $300,000 will yield a Death Benefit of $750,000 (2.50 x $300,000); a Policy Account Value of $400,000 will yield a Death Benefit of $1,000,000 (2.50 x $400,000).

Similarly, any time the Policy Account Value exceeds $80,000, each dollar taken out of the Policy Account Value will reduce the Death Benefit by $2.50.  If at any time, however, the Policy Account Value multiplied by the specified percentage is less than the Face Amount, the Death Benefit will be the Face Amount of the Policy.

Option B.  The Death Benefit is equal to the greater of: (a) the Face Amount of the Policy plus the Policy Account Value; and (b) the Policy Account Value multiplied by the specified percentage shown in the table above.  (The Policy Account Value in each case is determined as of the date of the Insured's death if this day is a Valuation Day, otherwise on the Valuation Day next following the Insured's date of death.)

Illustration of Option B - For purposes of this illustration, assume that the Insured is under Attained Age 40 and there is no outstanding Policy loan.

Under Option B, a Policy with a Face Amount of $200,000 will generally pay a Death Benefit of $200,000 plus the Policy Account Value.  Thus, for example, a Policy with a $50,000 Policy Account Value will have a Death Benefit of $250,000 ($200,000 plus $50,000); and a Policy Account Value of $100,000 will yield a Death Benefit of $300,000.  Since the specified percentage is 250%, the Death Benefit will be at least 2.50 times the Policy Account Value.  As a result, if the Policy Account Value exceeds $133,333, the Death Benefit will be greater than the Face Amount plus the Policy Account Value.  Each additional dollar added to the Policy Account Value above $133,333 will increase the Death Benefit by $2.50.  An Insured with a Policy Account Value of $150,000 will therefore have a Death Benefit of $375,000 (2.50 x $150,000); a Policy Account Value of $300,000 will yield a Death Benefit of $750,000 (2.50 x $300,000); and a Policy Account Value of $500,000 will yield a Death Benefit of $1,250,000 (2.50 x $500,000).

Similarly, any time the Policy Account Value exceeds $133,333, each dollar taken out of the Policy Account Value will reduce the Death Benefit by $2.50.  If at any time, however, the Policy Account Value multiplied by the applicable percentage is less than the Face Amount plus the Policy Account Value, the Death Benefit will be the Face Amount plus the Policy Account Value.

Which Death Benefit Option to Choose.  If an Owner prefers to have premium payments and favorable investment performance reflected partly in the form of an increasing Death Benefit, the Owner should choose Option B.  If an Owner is satisfied with the amount of the Insured's existing insurance coverage and prefers to have premium payments and favorable investment performance reflected to the maximum extent in the Policy Account Value, the Owner should choose Option A.

Change in Death Benefit Option.  After the second Policy Year at any time when the Death Benefit would be the Face Amount (if Option A is in effect) or the Face Amount plus the Policy Account Value (if Option B is in effect), the Owner may change the Death Benefit option in effect by sending NLIC a completed application for change.  No charges will be imposed to make a change in the Death Benefit option.  The effective date of any such change will be the Policy Processing Day on or next following the date NLIC receives the completed application for change.

If the Death Benefit option is changed from Option A to Option B, on the effective date of the change, the Death Benefit will not change and the Face Amount will be decreased by the Policy Account Value on that date.  However, this change may not be made if it would reduce the Face Amount to less than the Minimum Face Amount.

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If the Death Benefit option is changed from Option B to Option A, on the effective date of the change, the Death Benefit will not change and the Face Amount will be increased by the Policy Account Value on that date.

A change in the Death Benefit option may affect the Net Amount at Risk over time, which, in turn, would affect the monthly cost of insurance charge.  Changing from Option A to Option B will generally result in a Net Amount at Risk that remains level.  Such a change will result in a relative increase in the cost of insurance charges over time because the Net Amount at Risk will, unless the Death Benefit is based on the applicable percentage of Policy Account Value, remain level rather than decreasing as the Policy Account Value increases.  Unless the Death Benefit is based on the applicable percentage of Policy Account Value, changing from Option B to Option A will, if the Policy Account Value increases, decrease the Net Amount at Risk over time, thereby reducing the cost of insurance charge.

The effects of these Death Benefit option changes on the Face Amount, Death Benefit and Net Amount at Risk can be illustrated as follows.  Assume that a contract under Option A has a Face Amount of $500,000 and a Policy Account Value of $100,000 and, therefore, a Death Benefit of $500,000 and a Net Amount at Risk of $400,000 ($500,000 - $100,000).  If the Death Benefit option is changed from Option A to Option B, the Face Amount will decrease from $500,000 to $400,000 and the Death Benefit and Net Amount at Risk would remain the same.  Assume that a contract under Option B has a Face Amount of $500,000 and a Policy Account Value of $50,000 and, therefore, the Death Benefit is $550,000 ($500,000 + $50,000) and a Net Amount at Risk of $500,000 ($550,000 - $50,000).

If the Death Benefit option is changed from Option B to Option A, the Face Amount will increase to $550,000, and the Death Benefit and Net Amount at Risk would remain the same.

If a change in the Death Benefit option would result in cumulative premiums exceeding the maximum premium limitations under the Internal Revenue Code for life insurance, NLIC will not effect the change.

A change in the Death Benefit option may have federal income tax consequences.  The Owner of a Policy should consult a tax advisor before changing the Death Benefit option.

How the Death Benefit May Vary.  The amount of the Death Benefit may vary with the Policy Account Value.  The Death Benefit under Option A will vary with the Policy Account Value whenever the specified percentage of Policy Account Value exceeds the Face Amount of the Policy.  The Death Benefit under Option B will always vary with the Policy Account Value because the Death Benefit equals the greater of: (a) the Face Amount plus the Policy Account Value; and (b) the Policy Account Value multiplied by the specified percentage.

Ability to Adjust Face Amount

Subject to certain limitations, an Owner may generally, at any time after the 2nd Policy Year, increase or decrease the Policy's Face Amount by submitting a written application to NLIC.  The effective date of the increase or decrease will be the Policy Processing Day on or next following NLIC's approval of the request.  An increase or decrease in Face Amount may have tax consequences (see "Tax Treatment of Policy Benefits").  The Owner of a Policy should consult a tax advisor before increasing or decreasing the Face Amount.  The effects of changes in Face Amount on Policy charges, as well as other considerations, are described below.

Increase.  A request for an increase in Face Amount may not be for less than $25,000 (or such lesser amount required in a particular state).  The Owner may not increase the Face Amount after the Insured's Attained Age 75 or if the Face Amount was increased during the prior 12-month period.  To obtain the increase, the Owner must submit an application for the increase and provide Evidence of Insurability satisfactory to NLIC.

On the effective date of an increase, and taking the increase into account, the Net Cash Surrender Value must be equal to the Monthly Deductions then due and the expense charge for the increase in Face Amount.  If the Net Cash Surrender Value is not sufficient, the increase will not take effect until the Owner makes a sufficient additional premium payment to increase the Net Cash Surrender Value.

An increase in the Face Amount will generally affect the total Net Amount at Risk, which will increase the monthly cost of insurance charges.  An increase in Face Amount will increase the amount of any Additional Surrender Charge.  A Face Amount increase expense charge will also be deducted (see "Face Amount Increase Charge").  In addition, different cost of insurance rates may apply to the increase in insurance coverage (see "Monthly Deductions").

After increasing the Face Amount, the Owner will have the right: (a) during the Free-Look period following the effective date of the increase, to have the increase canceled and receive a credit or refund equal to the cost of insurance charge and the increase charge deducted for the increase; and (b) during the first 24 months following the increase, to exchange the increase in Face Amount for a fixed benefit permanent life insurance policy issued by NLIC (see "Transfers of Policy Account Value").

Decrease.  The amount of a Face Amount decrease must be for at least $25,000 (or such lesser amount required in a particular state).  The Face Amount after any decrease may not be less than the Minimum Face Amount.  A decrease in Face Amount will not be permitted if the Face Amount was increased during the prior 12-month period.  To the extent a decrease in the Face Amount could result in cumulative premiums exceeding the maximum premium limitations applicable for life insurance under the Code, NLIC will not affect the decrease.

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A decrease in the Face Amount generally will decrease the total Net Amount at Risk, which will decrease an Owner's monthly cost of insurance charges.  A decrease in the Face Amount may result in the imposition of a Surrender Charge as of the Policy Processing Day on which the decrease becomes effective (see "Surrender Charges").

Any Surrender Charge applicable to a decrease will be deducted from the Policy Account Value and the remaining Surrender Charge will be reduced by the amount deducted.  The Surrender Charge will be deducted from each Subaccount and the Guaranteed Account based on the proportion that the value in such account bears to the total unloaned Policy Account Value.

For purposes of determining the cost of insurance charge and Surrender Charges, any decrease in the Face Amount will reduce the Face Amount in the following order: (a) the Face Amount provided by the most recent increase; (b) the next most recent increases, successively; and (c) the Initial Face Amount.

Insurance Protection

An Owner may increase or decrease the insurance protection provided by the Policy (i.e., the Net Amount at Risk) in one of several ways, as insurance needs change.  These ways include increasing or decreasing the Face Amount, changing the level of premium payments, and by making a partial withdrawal of Net Cash Surrender Value.  The consequences of each are summarized below.

A decrease in Face Amount will decrease the insurance protection.  It will not reduce the Policy Account Value, except for the deduction of any Surrender Charge applicable to the decrease.  The Monthly Deductions will generally be correspondingly lower following the decrease.

An increase in Face Amount will generally increase the amount of insurance protection, depending on the Policy Account Value and specified percentage.  If the insurance protection is increased, Monthly Deductions will increase as well.

Under Death Benefit Option A, until the specified percentage of Policy Account Value exceeds the Face Amount, then: (a) if the Owner increases the premium payments from the current level, the amount of insurance protection will generally be reduced; and (b) if the Owner reduced the premium payments from the current level, the amount of insurance protection will generally be increased.

Under Death Benefit Option B, until the specified percentage of Policy Account Value exceeds the Face Amount plus the Policy Account Value, the level of premium payments will not affect the amount of insurance protection.  However, both the Policy Account Value and Death Benefit will be increased if premium payments are increased and reduced if premium payments are reduced.

Under either Death Benefit option, if the Death Benefit is the specified percentage of Policy Account Value, then: (a) if the Owner increases premium payments from the current level, the amount of insurance protection will increase; and (b) if the Owner reduces the premium payments from the current level, the amount of insurance protection will decrease.

A partial withdrawal of Net Cash Surrender Value will reduce the Death Benefit.  If Death Benefit Option A is in effect, the withdrawal will decrease the Policy's Face Amount by the amount withdrawn plus the partial withdrawal expense charge.  If Death Benefit Option B is in effect, it will not reduce the amount of insurance protection unless the Death Benefit is based on the specified percentage of Policy Account Value.  In this event, however, the decrease in the Death Benefit will be greater than the amount of a withdrawal.

An increase or decrease in the Policy's insurance protection may have tax consequences.  The Owner of a Policy should consult a tax advisor before increasing or decreasing the insurance protection.

Payment and Allocation of Premiums

Issuance of a Policy.  In order to purchase a Policy, an individual must submit an Application to NLIC through a licensed NLIC agent who is also a registered representative.  If NLIC accepts the Application, a Policy will be issued in consideration of payment of the Minimum Initial Premium set forth in the Policy.  The Minimum Face Amount of a Policy is $100,000.  If the applicant submits the Application and/or initial premium to his or her agent, NLIC will not begin processing the purchase order until NLIC receives the Application and initial premium from the agent's broker-dealer.

NLIC reserves the right to revise its rules from time to time to specify a different Minimum Face Amount for subsequently issued Policies.  The maximum Face Amount for a Policy in New York State is $2,500,000.  A Policy will be issued only with respect to Insureds who have an Issue Age of 80 or less and who provide NLIC with satisfactory Evidence of Insurability.  Acceptance is subject to NLIC's underwriting rules.  NLIC reserves the right to reject an Application for any reason permitted by law (see "Distribution of Policies").

At the time the Application for a Policy is signed, an applicant can, subject to NLIC's underwriting rules, obtain temporary insurance protection, pending issuance of the Policy.  The amount of temporary insurance protection provided by NLIC may be less than the full amount of coverage that the Owner later receives.

Amount and Timing of Premiums.  No insurance will take effect until the Minimum Initial Premium is paid, the underwriting process has been completed, the Application has been approved, and the proposed Insured is alive and in the same condition of health as described in the Application.  We begin to deduct monthly charges from the Policy Account Value on the Policy Issue Date.  Prior to the Final Policy Date and while the Policy is in force, an Owner may make additional premium payments at any time and in any amount, subject to the limitations set forth below.  Each premium payment must be for at least $25.  If the Owner submits a premium payment to his or her agent, NLIC will not begin processing the premium until NLIC receives it from the agent's broker-dealer.  

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Subject to certain limitations described below, an Owner has considerable flexibility in determining the amount and frequency of premium payments.

At the time of application, each Owner will select a Planned Periodic Premium schedule, based on a periodic billing mode of annual, semi-annual, or quarterly payment.  The Owner is entitled to receive a premium reminder notice from NLIC at the specified interval.  The Owner may change the Planned Periodic Premium frequency and amount.  Also, under the automatic payment plan, the Owner can select a monthly payment schedule pursuant to which premium payments will be automatically deducted from a bank account or other source, rather than being "billed."

Any payments made while there is an outstanding Policy loan are considered loan repayments, unless NLIC is notified in writing that the amount is to be applied as a premium payment.  The Owner is not required to pay the Planned Periodic Premiums in accordance with the specified schedule.  The Owner has the flexibility to alter the amount and frequency of premium payments.  However, payment of the Planned Periodic Premiums does not guarantee that the Policy will remain in force.  Instead, the duration of the Policy depends upon the Policy's Net Cash Surrender Value.  Thus, even if Planned Periodic Premiums are paid, the Policy may lapse whenever the Net Cash Surrender Value is insufficient to pay the Monthly Deductions and any other charges and if a Grace Period expires without an adequate payment by the Owner.

Premium Limitations.  The Code provides for exclusion of the death benefit from a beneficiary's gross income if total premium payments do not exceed certain stated limits.  In no event can the total of all premiums paid under a policy exceed such limits.  NLIC has established procedures to monitor whether aggregate premiums paid under a Policy exceed those limits.  If a premium is paid which would result in total premiums exceeding such limits, NLIC will accept only that portion of the premium that would make total premiums equal the maximum amount that may be paid under the Policy.  NLIC will notify the Owner of available options with regard to the excess premium.  If a satisfactory arrangement is not made, NLIC will refund this excess to the Owner.  If total premiums do exceed the maximum premium limitations established by the Code, however, the excess of a Policy's Death Benefit over the Policy's Cash Surrender Value should still be excludable from gross income.

The maximum premium limitations set forth in the Code depend in part upon the amount of the death benefit at any time.  As a result, any Policy changes that affect the amount of the Death Benefit may affect whether cumulative premiums paid under the Policy exceed the maximum premium limitations.  To the extent that any such change would result in cumulative premiums exceeding the maximum premium limitations, NLIC will not effect such change (see "Federal Income Tax Considerations").  NLIC reserves the right to require satisfactory Evidence of Insurability before accepting a premium payment that would increase the Net Amount at Risk.

Refund of Excess Premium for Modified Endowment Contracts.  At the time a premium is credited which would cause the Policy to become a Modified Endowment Contract ("MEC"), NLIC will notify the Owner that the Policy will become a MEC unless the Owner requests a refund of the excess premium within 30 days after receiving the notice.  If the Owner requests a refund, NLIC will deduct the Policy Account Value attributable to the excess premium , including any interest or earnings on the excess premium , from the Subaccounts and/or the Guaranteed Account in the same proportion as the premium was initially allocated to the Subaccounts and/or the Guaranteed Account.  The excess premium paid, including any interest or earnings on the excess premium , will be returned to the Owner (see "Federal Income Tax Considerations").

Allocation of Net Premiums.  The Owner indicates in the Application how Net Premiums should be allocated among the Subaccount and/or the Guaranteed Account.  The percentages of each Net Premium that may be allocated to any account must be in whole numbers and the sum of the allocation percentages must be 100%.  NLIC allocates the Net Premiums as of the date it receives such premium at its Service Center according to the Owner's current premium allocation instructions, unless otherwise specified.

The values of the Subaccounts will vary with their investment experience and the Owner bears the entire investment risk.  Owners should periodically review their allocation schedule in light of market conditions and the Owner's overall financial objectives.

Delay in Allocation.  Certain states require NLIC to refund all payments , less any partial withdrawals and indebtedness , in the event the Owner cancels the Policy during the Free-Look period (see "Free-Look Privileges").  In those states, NLIC will allocate to the Money Market Subaccount any premiums the Owner requests be allocated to Subaccount (s) which are received at our Service Center within 15 days from the later of: (1) the Policy Issue Date; or (2) the date NLIC receives the Minimum Initial Premium.  After this 15-day period ends, the value in the Money Market Subaccount is allocated among the Subaccounts as indicated in the Application.  NLIC invests all Net Premiums paid thereafter based on the allocation percentages then in effect.

Replacement of Existing Insurance.  It may not be in an Owner's best interest to surrender, lapse, change, or borrow from existing life insurance policies or annuity contracts in connection with the purchase of the Policy.  Owners should compare their existing insurance and the Policy carefully.  Owners should replace their existing insurance only when they determine that the Policy is better for them.  Owners may have to pay a surrender charge on their existing insurance, and the Policy will impose a new Surrender Charge period.  Owners should talk to their financial professional or tax advisor to make sure the exchange will be tax-free.  If an Owner surrenders his or her existing policy for cash and then buys the Policy, he or she may have to pay a tax, including possibly a penalty tax, on the surrender.  Because NLIC will not issue the Policy until NLIC has received an initial premium from the Owner's existing insurance company, the issuance of the Policy may be delayed.

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Policy Account Value

The Policy Account Value is the total amount of value held under the Policy at any time.  It is equal to the sum of the Policy's values in the Subaccounts , the Guaranteed Account and the Loan Account.  Policy Account Value varies from day to day, depending on the investment performance of the Subaccounts chosen by the Owner, interest NLIC credits to the Guaranteed Account, charges NLIC deducts, and any other transactions (e.g., transfers, partial withdrawals, and loans).  Net Premiums are credited to the Policy Account Value on the basis of the unit value of a Subaccount next determined after NLIC's receipt of the Net Premium.  NLIC does not guarantee a minimum Policy Account Value.  The Policy Account Value minus any applicable Surrender Charge or Additional Surrender Charge is the Cash Surrender Value.

The Policy Account Value and Cash Surrender Value will reflect the investment performance of the chosen Subaccounts , the crediting of interest in excess of 4% (the guaranteed minimum) for the Guaranteed Account and the Loan Account, any Net Premiums paid, any transfers, any partial withdrawals, any loans, any loan repayments, any loan interest paid, and any charges assessed in connection with the Policy.

Calculation of Policy Account Value.  The Policy Account Value is determined first on the Policy Date and thereafter at the close of each Valuation Day.  On the Policy Date, the Policy Account Value equals the Net Premiums received less any Monthly Deductions on the Policy Date.  On each Valuation Day after the Policy Date, the Policy Account Value is equal to:

1. the Policy Account Value in each Subaccount , determined by multiplying the number of units of the Subaccount by the Subaccount 's unit value on that date;

2. the Policy Account Value in the Guaranteed Account; plus

3. the Policy Account Value in the Loan Account.

Determination of Number of Units.  Allocated Net Premiums, or Policy Account Value transferred to a Subaccount are used to purchase units of that Subaccount ; units are redeemed when amounts are deducted, transferred or withdrawn.  The number of units of a Subaccount at any time equals the number of units purchased minus the number of units redeemed up to such time.  For each Subaccount , the number of units purchased or redeemed in connection with a particular transaction is determined by dividing the dollar amount by the unit value.

Determination of Unit Value.  The unit value of a Subaccount on any Valuation Day is equal to the unit value on the immediately preceding Valuation Day multiplied by the net investment factor for that Subaccount on that Valuation Day.

Net Investment Factor.  The net investment factor for each Subaccount measures the investment performance of a Subaccount from one Valuation Day to the next.

The factor increases to reflect investment income and capital gains, realized and unrealized, for the shares of the underlying Portfolio.  The factor decreases to reflect any capital losses, realized or unrealized, for the shares of the underlying Portfolio as well as the asset charge for mortality and expense risks.

The asset charge for mortality and expense risks will be deducted in determining the applicable net investment factor.

Policy Duration

Policy Lapse.  The Policy will remain in force as long as the Net Cash Surrender Value of the Policy is sufficient to pay the Monthly Deductions and other charges under the Policy.  When the Net Cash Surrender Value is insufficient to pay the charges and the Grace Period expires without an adequate premium payment by the Owner, the Policy may lapse and terminate without value.  If the Policy enters a Grace Period, NLIC will mail a notice to the Owner's last known address.  Notwithstanding the foregoing, during the first 2 Policy Years the Policy will not lapse if the Minimum Guarantee Premium has been paid.

The Policy provides for a 61-day Grace Period that is measured from the date on which notice is sent by NLIC indicating that the Grace Period has begun.  Thus, the Policy does not lapse, and the insurance coverage continues, until the expiration of this Grace Period.  To prevent lapse, the Owner must, during the Grace Period, make a premium payment equal to three Monthly Deductions.  The notice sent by NLIC will specify the payment required to keep the Policy in force.  If the Insured dies during the Grace Period, NLIC will pay the Insurance Proceeds.

Reinstatement.  A Policy that lapses may be reinstated at any time within 3 years (or longer period required in a particular state) after the expiration of the Grace Period and before the Final Policy Date by submitting Evidence of Insurability satisfactory to NLIC and payment of an amount sufficient to keep the Policy in force for at least three months following the date that the reinstatement application is approved.  Upon reinstatement, the Policy Account Value is based upon the premium paid to reinstate the Policy.  A reinstated Policy has the same Policy Date as it had prior to the lapse.

Disruptive Trading

Neither the Policies nor the Portfolios are designed to support active trading strategies that require frequent movement between or among Subaccounts, sometimes referred to as market-timing, short-term trading, or disruptive trading.  We discourage , and will take action to deter , disruptive trading in the Policies because the frequent movement between or among Subaccounts may negatively impact other Policy Owners.  Short-term trading can result in:

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· the dilution of the value of Policy Owners' interests in the Portfolio;

· Portfolio managers taking actions that negatively impact performance (keeping a larger portion of the Portfolio's assets in cash or liquidating investments prematurely in order to support redemption requests); and

· increased administrative costs due to frequent purchases and redemptions.

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

Redemption Fees.  Some Portfolios assess a short-term trading fee in connection with transfers from a Subaccount that occur within 60 days after the date of the allocation to that Subaccount .  The fee is assessed against the amount transferred and is paid to the Portfolio.  Redemption fees compensate the Portfolio for any negative impact on fund performance resulting from short-term trading (see "Short-Term Trading Fees").

U.S. Mail Restrictions. We monitor exchange activity in order to identify those who may be engaged in disruptive trading practices.  Transaction reports are produced and examined.  Generally, a Policy may appear on these reports if the Policy Owner (or a third party acting on their behalf) engages in a certain number of transfers in a given period.  We consider each telephone, fax, email, or written request to be a single transfer, regardless of the number of Subaccounts (or the Guaranteed Account) involved.

As a result of this monitoring process, we may restrict the method of communication by which transfer orders will be accepted.  In general, we will adhere to the following guidelines:

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

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

Each January 1st, we will re start the monitoring, so that each Policy starts with 0 transfers at the beginning of each calendar year (see "Other Restrictions").

Managers of Multiple Policies. Some investment advisors/representatives manage the assets of multiple NLIC policies and/or contracts pursuant to trading authority granted or conveyed by multiple Policy Owners.  We will automatically require these multi-contract advisors to submit all transfer requests via U.S. mail.

Other Restrictions.  We reserve the right to refuse or limit transfer requests, or take any other action deemed necessary, in order to protect Policy Owners, Payees, and Beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some Policy Owners , or third parties acting on their behalf.  In particular, trading strategies designed to avoid or take advantage of our monitoring procedures , and other measures aimed at curbing harmful trading practices , that are determined by us to constitute harmful trading practices, may be restricted.  In the event a restriction we impose results in a transfer request being rejected, we will notify you that your transfer request has been rejected.  If a short-term trading fee is assessed on your transfer, we will provide you a confirmation of the amount of the fee assessed.

Any restrictions that we implement will be applied consistently and uniformly.  Some transfers do not count as transfers for purposes of monitoring for disruptive trading (see "Transfers of Policy Account Value").

Portfolio Restrictions and Prohibitions.Pursuant to regulations adopted by the SEC, we are required to enter into written agreements with the Portfolios which allow them to:

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

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

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

We are required to provide such transaction information to the Portfolios upon their request.  In addition, we are required to restrict or prohibit further purchases or exchange requests upon instruction from the Portfolios.  We and any affected policy owner may not have

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advance notice of such instructions from a Portfolio to restrict or prohibit further purchases or exchange requests.  If a Portfolio refuses to accept a purchase or exchange request submitted by us, we will keep any affected policy owner in their current Portfolio allocation.

Transfers of Policy Account Value

Transfers.  The Owner may transfer the Policy Account Value between and among the Subaccounts and the Guaranteed Account by making a transfer request to NLIC.  The amount transferred must be at least $1,000, unless the total value in an account is less than $1,000, in which case the entire amount may be transferred.

After 12 transfers have been made in any Policy Year, a $25 transfer charge will be deducted from each transfer during the remainder of such Policy Year.  All transfers included in each telephone, fax, email, or written request are treated as one transfer.  Transfers are made as of the date NLIC receives a written request at its Service Center.  Some transfers are not subject to a transfer charge and do not count as 1 of the 12 "free" transfers in any Policy Year.  We may restrict the quantity and the mode of communication of transfer requests to prohibit disruptive trading that is deemed potentially harmful to Policy Owners (see "Disruptive Trading").  Under present law, transfers are not taxable transactions.

Special Transfer Right.  During the first two years following the Issue Date, the Owner may, on one occasion, transfer the entire Policy Account Value in the Subaccounts to the Guaranteed Account.  The transfer will not count as a transfer for purposes of assessing a transfer fee or for purposes of monitoring for disruptive trading.

Conversion Privilege for Increase in Face Amount.  During the first 2 years following an increase in Face Amount, the Owner may, on one occasion, without Evidence of Insurability, exchange the amount of the increase in Face Amount for a fixed-benefit permanent life insurance policy.  Such an exchange may, however, have federal income tax consequences (see "Tax Treatment of Policy Benefits").  Premiums under this new policy will be based on the sex, Attained Age and Premium Class of the Insured on the effective date of the increase in the Face Amount of the Policy.  The new policy will have the same face amount and issue date as the amount and effective date of the increase.  NLIC will refund the Monthly Deductions for the increase made on each Policy Processing Day between the effective date of the increase to the date of conversion and the expense charge for such increase.  The transfer will not count as a transfer for purposes of assessing a transfer fee or for purposes of monitoring for disruptive trading.

Transfer Right for Change in Investment Policy of a Subaccount .  If the investment policy of a Subaccount is materially changed, the Owner may transfer the portion of the Policy Account Value in such Subaccount to another Subaccount or to the Guaranteed Account.  We will not assess a transfer charge in connection with the transfer and the transfer will not count as a transfer for purposes of assessing a transfer fee.  However, the transfer will count as a transfer for purposes of monitoring for disruptive trading.

Automatic Asset Rebalancing.  Automatic Asset Rebalancing is a feature, which, if elected, authorizes periodic transfers of Policy Account Values among the Subaccounts in order to maintain the allocation of such values in percentages that match the then current premium allocation percentages.  NLIC reserves the right to suspend Automatic Asset Rebalancing at any time, for any class of Policies, for any reason.  There is no additional charge for this program.  Automatic asset rebalancing transfers do not count as transfers for purposes of assessing the transfer fee.  However, automatic asset rebalancing transfers do count as transfers for purposes of monitoring for disruptive trading.

Dollar Cost Averaging.  Dollar Cost Averaging is a program that, if elected, enables the Owner to systematically and automatically transfer, on a monthly basis, specified dollar amounts from any selected Subaccount to any other Subaccount or the Guaranteed Account.  By allocating on a regularly scheduled basis as opposed to allocating the total amount at one particular time, an Owner may be less susceptible to the impact of short-term market fluctuations.  NLIC, however, makes no guarantee that Dollar Cost Averaging will result in a profit or protect against loss.  There is no additional charge for this program.  NLIC reserves the right to discontinue offering automatic transfers upon 30 days written notice to the Owner.  Dollar cost averaging transfers do not count as transfers for purposes of assessing the transfer fee and do not count as transfers for purposes of monitoring for disruptive trading.

Free Look Privileges

Free Look for Policy.  The Policy provides for an initial Free Look period.  The Owner may cancel the Policy until the latest of: (a) 45 days after Part I of the Application for the Policy is signed; (b) 10 days after the Owner receives the Policy; or (c) 10 days after NLIC mails the Notice of Withdrawal Right to the Owner.  Upon giving written notice of cancellation and returning the Policy to NLIC's Service Center, to one of NLIC's other offices, or to the NLIC representative from whom it was purchased, the Owner will receive a refund equal to the sum of: (i) the Policy Account Value as of the date the returned Policy is received by NLIC at its Service Center or the NLIC representative through whom the Policy was purchased; (ii) any Premium Expense Charges deducted from premiums paid; (iii) any Monthly Deductions charged against the account; (iv) any mortality and expense risk charges deducted from the value of the net assets of the Separate Account; and (v) any advisory fees and any other fees and expenses of the Funds.  A refund of all premiums paid is made for Policies delivered in states that require such a refund.  NLIC may postpone payment of the refund under certain conditions. If the policy is canceled, we will treat the policy as if it was never issued.  If we do not receive your policy at our home office on the close of business on the date the free look period expires, you will not be permitted to cancel your policy free of charge.  If the Policy is cancelled, we will treat the Policy as if it was never issued.

Free Look for Increase in Face Amount.  Any requested increase in Face Amount is also subject to a Free Look privilege.  The Owner may cancel a requested increase in Face Amount until the latest of: (a) 45 days after the application for the increase is signed; (b) 10

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days after the Owner receives the new Policy schedule pages reflecting the increase; or (c) 10 days after NLIC mails a Notice of Withdrawal Right to the Owner.  Upon requesting cancellation of the increase, an amount equal to all cost of insurance charges attributable to the increase plus the Face Amount increase charge will be credited to the accounts in the same proportion as they were deducted, unless the Owner requests a refund of such amount.  NLIC may postpone payment of the refund under certain conditions. If the Face Amount increase is canceled, we will treat the Face Amount increase as if it was never issued.  If we do not receive your requested cancellation of the increase in Face Amount at our home office on the close of business on the date the free look period expires, you will not be allowed to cancel your policy free of charge.

Loan Privileges

General.  The Owner may at any time after the Issue Date borrow money from NLIC sing the Policy Account Value as the security for the loan.  The Owner may obtain Policy loans in a minimum amount of $500 (or such lesser minimum required in a particular state) but not exceeding the Policy's Net Cash Surrender Value on the date of the loan.  While the Insured is living, the Owner may repay all or a portion of a loan and accrued interest.

Interest Rate Charged.  Interest is charged on Policy loans at an effective annual rate of 6%.

Allocation of Loans and Collateral.  The Owner may specify that NLIC transfer the amount of a Policy loan from specific Subaccounts , but may not request that NLIC transfer this amount from the Guaranteed Account.  However if the Owner does not specify Subaccounts , NLIC will allocate the amount of a Policy loan among the Subaccounts and/or the Guaranteed Account based upon the proportion that the value of the Subaccounts and/or the Guaranteed Account Value bear to the total unloaned Policy Account Value at the time the loan is made.  Transfers to and from the Loan Account do not count as transfers for purposes of assessing a transfer fee or for purposes of monitoring for disruptive trading.

The collateral for a Policy loan is the loan amount plus accrued interest to the next Policy Anniversary, less interest at an effective annual rate of 4%, which is earned to such Policy Anniversary.  At any time, the amount of the outstanding loan under a Policy equals the sum of all loans (including due and unpaid interest added to the loan balance) minus any loan repayments.

Interest Credited to Loan Account.  As long as the Policy is in force, NLIC credits the amount in the Loan Account with interest at effective annual rates it determines, but not less than 4% or such higher minimum rate required under state law.  The rate will apply to the calendar year that follows the date of determination.  Loan interest credited is transferred to the accounts: (a) when loan interest is added to the loaned amount; (b) when a loan repayment is made; and (c) when a new loan is made.  NLIC currently credits 4.5% interest annually to the amount in the Loan Account until the Policy's 10th anniversary or until Attained Age 60, whichever is later, and 5.75% annually thereafter.  The tax consequences of a Policy loan after the later of a Policy's 10th anniversary or Attained Age 60 are less clear.  Owners should consult a tax advisor with respect to such consequences.

Effect of Policy Loans.  A loan, whether or not repaid, affects the Policy, the Policy Account Value, the Net Cash Surrender Value, and the Death Benefit.  Loan amounts are not affected by the investment performance of the Subaccounts and may not be credited with the interest rates accruing on the Guaranteed Account.  The amount of any outstanding Policy loan and accrued interest will be deducted in determining the Net Cash Surrender Value or Insurance Proceeds at death.

Loan Repayments.  An Owner may repay all or part of a Policy loan at any time while the Insured is alive and the Policy is in force.  Unless prohibited by a particular state, NLIC will assume that any payments made while there is an outstanding loan is a loan repayment, unless it receives written instructions that the payment is a premium payment.  Repayments up to the amount of the outstanding loan are allocated to the accounts based on the amount of the outstanding loan allocated to each account as of the date of repayment; any repayment in excess of the amount of the outstanding loan will be allocated to the accounts based on the amount of interest due on the portion of the outstanding loan allocated to each account.  For this purpose, the amount of the interest due is determined as of the next Policy Anniversary.  Failure to repay a loan or to pay loan interest will not cause the Policy to lapse unless the Net Cash Surrender Value on the Policy Processing Day is less than the Monthly Deduction due (see "Policy Duration").

Tax Considerations.  Any loans taken from a Modified Endowment Contract will be treated as a taxable distribution.  In addition, with certain exceptions, a 10% additional income tax penalty will be imposed on the portion of any loan that is included in income (see "Distributions from Policies Classified as Modified Endowment Contracts").  Depending upon the investment performance of the Subaccounts and the amounts borrowed, loans may cause the Policy to lapse.  If the Policy is not a Modified Endowment Contract, lapse of the Policy with outstanding loans may result in adverse tax consequences (see "Tax Treatment of Policy Benefits").

Surrender Privilege

At any time before the earlier of the death of the Insured and the Final Policy Date, the Owner may surrender the Policy for its Net Cash Surrender Value.  You must complete and sign our surrender form and send it to us at our Service Center.  You may obtain the surrender form by calling us at (800) 688-5177.  The Net Cash Surrender Value is determined as of the date we receive the surrender form at our Service Center if it received on a Valuation Day.  Otherwise, the Net Cash Surrender Value will be determined on the Valuation Day next following NLIC's receipt of the surrender form.  At the time the Net Cash Surrender Value is determined, coverage under the Policy will end.  NLIC generally will pay the Net Cash Surrender Value to the Owner within seven days after NLIC receives the signed surrender request.  NLIC may postpone payment of surrenders under certain conditions.  NLIC will assess a Surrender Charge if the Policy is surrendered before the 10th Policy Year (see "Surrender Charges").  A surrender may have adverse federal income tax consequences (see "Tax Treatment of Policy Benefits").

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

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

Partial Withdrawal Privilege

After the first Policy Year, at any time before the earlier of the death of the Insured and the Final Policy Date, the Owner may withdraw a portion of the Policy's Net Cash Surrender Value.  The minimum amount that may be withdrawn is $1,500.  A withdrawal charge will be deducted from the Policy Account Value.  A partial withdrawal will not result in the imposition of Surrender Charges.

NLIC will process each partial withdrawal on the date it receives the Owner's request if this is a Valuation Day, otherwise on the Valuation Day next following NLIC's receipt of the request.  NLIC generally will pay a partial withdrawal request within seven days after the Valuation Day when NLIC receives the request.  NLIC may postpone payment of partial withdrawals under certain conditions.

The Owner may specify that NLIC allocate the withdrawn amount and withdrawal charge from specific Subaccounts but may not request that NLIC allocate this amount from the Guaranteed Account.  If the Owner does not specify any Subaccounts , the withdrawn amount and withdrawal charge will be allocated based on the proportion that the Policy Account Value in any Subaccounts and the Guaranteed Account bear to the total unloaned Policy Account Value.

The effect of a partial withdrawal on the Death Benefit and Face Amount will vary depending upon the Death Benefit option in effect and whether the Death Benefit is based on the applicable percentage of Policy Account Value (see "Death Benefit Options").

Option A.  The effect of a partial withdrawal on the Face Amount and Death Benefit under Option A can be described as follows:

· if the Death Benefit equals the Face Amount, a partial withdrawal will reduce the Face Amount and the Death Benefit by the amount of the partial withdrawal.

· for the purposes of this illustration (and the following illustrations of partial withdrawals), assume that the Attained Age of the Insured is under 40 and there is no indebtedness.  The applicable percentage is 250% for an Insured with an Attained Age under 40.

· under Option A, a Policy with a Face Amount of $300,000 and a Policy Account Value of $30,000 will have a Death Benefit of $300,000.  Assume that the Owner takes a partial withdrawal of $10,000.  The partial withdrawal will reduce the Policy Account Value to $19,975 ($30,000 - $10,000 - $25) and the Death Benefit and Face Amount to $290,000 ($300,000 - $10,000).

· if the Death Benefit immediately prior to the partial withdrawal is based on the applicable percentage of Policy Account Value, the Face Amount will be reduced by an amount equal to the amount of the partial withdrawal.  The Death Benefit will be reduced to equal the greater of: (a) the Face Amount after the partial withdrawal; and (b) the applicable percentage of the Policy Account Value after deducting the amount of the partial withdrawal and expense charge.

· under Option A, a Policy with a Face Amount of $300,000 and a Policy Account Value of $300,000 will have a Death Benefit of $750,000.  Assume that the Owner takes a partial withdrawal of $49,975.  The partial withdrawal will reduce the Policy Account Value to $250,000 ($300,000 - $49,975 - $25) and the Face Amount to $250,025 ($300,000 - $49,975).  The Death Benefit is the greater of: (a) the Face Amount of $250,025; and (b) the applicable percentage of the Policy Account Value $625,000 ($250,000 x 2.5).  Therefore, the Death Benefit will be $625,000.

Option B.  The effect of a partial withdrawal on the Face Amount and Death Benefit under Option B can be described as follows:

· the Face Amount will never be decreased by a partial withdrawal.  A partial withdrawal will, however, always decrease the Death Benefit.

· if the Death Benefit equals the Face Amount plus the Policy Account Value, a partial withdrawal will reduce the Policy Account Value by the amount of the partial withdrawal and expense charge and thus the Death Benefit will also be reduced by the amount of the partial withdrawal and the expense charge.

· under Option B, a Policy with a Face Amount of $300,000 and a Policy Account Value of $90,000 will have a Death Benefit of $390,000 ($300,000 + $90,000).  Assume the Owner takes a partial withdrawal of $20,000.  The partial withdrawal will reduce the Policy Account Value to $69,975 ($90,000 - $20,000 - $25) and the Death Benefit to $369,975 ($300,000 + $69,975).  The Face Amount is unchanged.

· if the Death Benefit immediately prior to the partial withdrawal is based on the applicable percentage of Policy Account Value, The Death Benefit will be reduced to equal the greater of: (a) the Face Amount plus the Policy

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 Account Value after deducting the partial withdrawal and expense charge; and (b) the applicable percentage of Policy Account Value after deducting the amount of the partial withdrawal and the expense charge.

· under Option B, a Policy with a Face Amount of $300,000 and a Policy Account Value of $300,000 will have a Death Benefit of $750,000 ($300,000 x 2.5).  Assume the Owner takes a partial withdrawal of $149,975.  The partial withdrawal will reduce the Policy Account Value to $150,000 ($300,000 - $149,975 - $25) and the Death Benefit to the greater of: (a) the Face Amount plus the Policy Account Value $450,000 ($300,000 + $150,000); and (b) the Death Benefit based on the applicable percentage of the Policy Account Value $375,000 ($150,000 x 2.5).  Therefore, the Death Benefit will be $450,000.  The Face Amount is unchanged.

Any decrease in Face Amount due to a partial withdrawal will first reduce the most recent increase in Face Amount, then the most recent increases, successively, and lastly, the Initial Face Amount.

Because a partial withdrawal can affect the Face Amount and the Death Benefit as described above, a partial withdrawal may also affect the Net Amount at Risk, which is used to calculate the cost of insurance charge under the Policy (see "Cost of Insurance").

A request for partial withdrawal may not be allowed if or to the extent that such withdrawal would reduce the Face Amount below the Minimum Face Amount for the Policy.  Also, if a partial withdrawal would result in cumulative premiums exceeding the maximum premium limitations applicable under the Code for life insurance, NLIC will not allow such partial withdrawal.

A partial withdrawal of Net Cash Surrender Value may have federal income tax consequences (see "Tax Treatment of Policy Benefits").

Accelerated Death Benefit Rider

Under the Accelerated Death Benefit Rider, the Owner may receive an accelerated payment of part of the Policy's Death Benefit in the form of a Policy loan when the Insured develops a non-correctable medical condition that is expected to result in his or her death within 12 months.  For Owners who elected the Rider prior to November 13, 2001 (or such other date pursuant to state availability), the Rider also permits the Owner to receive this accelerated payment if the Insured has been confined to a nursing care facility for at least 180 consecutive days and is expected to remain in such a facility for the remainder of his or her life.

There is no additional charge for this Rider.  However an administrative charge, currently $100 and not to exceed $250, will be deducted from the accelerated death benefit at the time it is paid.   Additionally, since the benefit is made in the form of a Policy loan, interest is payable on the outstanding Policy loan and on the Death Benefit lien.   The federal income tax consequences associated with adding the Accelerated Death Benefit Rider or receiving the accelerated death benefit are uncertain.  The Owner should consult a tax advisor before adding the Accelerated Death Benefit Rider to the Policy or requesting an accelerated death benefit.

Long-Term Care Benefit Riders

NLIC offers three Long-Term Care Benefit Riders under the Policy: the Long-Term Care Acceleration Benefit Rider ("LTC Acceleration Rider"), the Long-Term Care Waiver Benefit Rider ("LTC Waiver Rider"), and the Long-Term Care Extended Insurance Benefit Rider ("LTC Extended Rider").  If the Owner elects to add the LTC Acceleration Rider to the Policy, the LTC Waiver Rider is also added.   T he Owner may also elect the LTC Extended Rider.  The Owner cannot elect to add either the LTC Waiver Rider or the LTC Extended Rider alone.

Under these riders, the Owner may receive periodic payments of a portion of the Death Benefit if the Insured becomes "chronically ill" so that the Insured:

1. is unable to perform at least 2 activities of daily living without substantial human assistance for a period if at least 90 days due to a loss a functional capacity; or

2. requires substantial supervision to protect the Insured from threats to heath and safety due to his or her own severe cognitive impairment.

The Long-Term Care Benefit Riders also provide for the payment of monthly premiums (equal on an annual basis to the Minimum Annual Premium specified on the Policy schedule) up to the date specified on the Policy schedule, and the waiver of Monthly Deductions after that date, as well as a residual Death Benefit.

Additionally, these provide for periodic reimbursements of expenses incurred for "qualified long-term care services" following the full payment of the acceleration death benefit.

Each of the Long-Term Care Benefit Riders imposes a monthly charge on either the Net Amount at Risk under the Policy or the coverage amount of the rider.  Depending on the rider, the charge may be at a rate that varies based on the Attained Age and sex of the Insured and increases annually as the Insured ages, or may be level for the duration of the rider based on the age of the Insured when the rider is issued.  If the Owner increases the rider coverage amount, a new charge based on the Attained Age of the Insured at that time may apply to the increase.  NLIC may increase the rates for these charges on a class basis.  Once NLIC begins to pay benefits, NLIC waives the charge under certain of the riders until the Insured no longer qualifies for rider benefits and is not chronically ill.

There may be federal income tax consequences associated with the Long-Term Care Benefit Riders.  NLIC believes that benefits payable under the LTC Acceleration Rider and the LTC Extended Rider should be excludable from gross income under the Code.  The

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exclusion of the LTC Acceleration Rider and the LTC Extended Rider benefit payments from taxable income, however, is contingent on each rider meeting specific requirements under the Code.  While guidance is limited, NLIC believes that the LTC Acceleration and the LTC Extended Riders should each satisfy these requirements.

The Owner will be deemed to have received a distribution for tax purposes each time a deduction is made from the Policy Account Value to pay charges for the LTC Acceleration Rider or the LTC Extended Rider.  The distribution will generally be taxed in the same manner as any other distribution under the Policy.  In addition, the implications to the Policy's continued qualification as a life insurance contract for federal tax purposes due to any reductions in Death Benefits under the Policy resulting from a benefit payment under the LTC Acceleration Rider are unclear.  Owners should consult a tax advisor before adding the Long-Term Care Benefit Riders to the Policy.

CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate NLIC for: (a) providing the insurance benefits set forth in the Policy; (b) administering the Policy; (c) assuming certain risks in connection with the Policy; and (d) incurring expenses in distributing the Policy.  In the event that there are any profits from fees and charges deducted under the Policy, including but not limited to mortality and expense risk charges, such profits could be used to finance the distribution of the contracts.

Premium Expense Charge

Prior to allocation of Net Premiums, premiums paid are reduced by a Premium Expense Charge, which consists of:

Premium Tax Charge.  Various states and some of their subdivisions impose a tax on premiums received by insurance companies.  A charge is deducted from each premium payment to compensate NLIC for paying state premium taxes.  Premium taxes vary from state to state but range from 0% to 4.0% of each premium payment.  (Kentucky imposes an additional city premium tax that applies only to first year premium.  This tax varies by municipality and is no greater than 12%).  A deduction of a percentage of the premium will be made from each premium payment.  The applicable percentage will be based on the rate for the Insured's residence.

Percent of Premium Sales Charge.  A percent of premium charge not to exceed 3% is deducted from each premium payment to partially compensate NLIC for federal taxes and the cost of selling the Policy.  Currently, NLIC deducts 1.5% percent from each premium payment.

The Premium Expense Charge is a percentage of each premium payment.  This means that the greater the amount and frequency of premium payments the Owner makes, the greater the amount of the Premium Expense Charge NLIC will assess.

Surrender Charges

A Surrender Charge, which consists of a Deferred Administrative Charge and a Deferred Sales Charge, is imposed if the Policy is surrendered or lapses at any time before the end of the tenth Policy Year.  A portion of this Surrender Charge will be deducted if the Owner decreases the Initial Face Amount before the end of the 10th Policy Year.  An Additional Surrender Charge, which is an Additional Deferred Administrative Charge and an Additional Deferred Sales Charge, is imposed if the Policy is surrendered or lapses at any time within 10 years after the effective date of an increase in Face Amount.  A portion of an Additional Surrender Charge also is deducted if the related increase of Face Amount is decreased within ten years after such increase took effect.

These surrender charges are designed partially to compensate NLIC for the cost of administering, issuing and selling the Policy, including agent sales commissions, the cost of printing the prospectuses and sales literature, any advertising costs, medical exams, review of Applications for insurance, processing of the Applications, establishing Policy records and Policy issue.  NLIC does not expect the surrender charges to cover all of these costs.  To the extent that they do not, NLIC will cover the shortfall from its General Account assets, which may include profits from the mortality and expense risk charge and cost of insurance charge.

Deferred Administrative Charge.  The Deferred Administrative Charge is as follows:

	Charge per $1,000 Face Amount
	Issue Ages
Policy Year	1-5	15	25	35-80
1-6	0	$1.00	$2.00	$3.00
7	0	0.80	1.60	2.40
8	0	0.60	1.20	1.80
9	0	0.40	0.80	1.20
10	0	0.20	0.40	0.60
11	0	0	0	0

For Issue Ages not shown, the charge will increase pro rata for each full year.

The actual Deferred Administrative Charge is the charge described above less the amount of any Deferred Administrative Charge previously paid at the time of a decrease in Face Amount.

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Deferred Sales Charge.  The Deferred Sales Charge will not exceed the maximum Deferred Sales Charge specified in the Policy.  The Deferred Sales Charge equals the lesser of a or b (and less any Deferred Sales Charge previously paid at the time of any prior decrease in Face Amount), where:

 a =  27% of all premiums received during the 1st Policy Year up to the Target Premium plus 6% of all other premiums paid to the date of surrender or lapse; or

b = the following percentage of Target Premium:

Policy Year	% of Target Premium for the Initial Face Amount
1-6	50%
7	40%
8	30%
9	20%
10	10%
11+	0%

Additional Deferred Sales Charge.  An Additional Deferred Sales Charge is associated with each increase in Face Amount.  Each Additional Deferred Sales Charge is calculated in a manner similar to the Deferred Sales Charge associated with the Initial Face Amount.  The Additional Deferred Sales Charge equals the lesser of a or b (and less any Additional Deferred Sales Charge for such increase previously paid at the time of any prior decrease in Face Amount), where:

a = 27% of all premiums received for the increase up to the first Target Premium for that increase during the first 12 Policy months after the increase plus 6% of all premiums thereafter; or

b = the following percentage of Target Premium:

Policy Year	% of Target Premium for the Initial Face Amount
1-6	50%
7	40%
8	30%
9	20%
10	10%
11+	0%

The maximum Target Premium for any Policy is $65.76 per $1,000 of Face Amount.

Surrender Charge Upon Decrease in Face Amount.  A Surrender Charge may be deducted on a decrease in Face Amount.  In the event of a decrease, the Surrender Charge deducted is a fraction of the charge that would apply to a full surrender of the Policy.  If there have been no increases in Face Amount, the fraction will be determined by dividing the amount of the decrease by the current Face Amount and multiplying the result by the Surrender Charge.  If more than one Surrender Charge is in effect (i.e., pursuant to one or more increases in Face Amount), the Surrender Charge will be applied in the following order: (1) the most recent increase; followed by (2) the next most recent increases, successively; and (3) the Initial Face Amount.  Where a decrease causes a partial reduction in an increase or in the Initial Face Amount, a proportionate share of the Surrender Charge for that increase or for the Initial Face Amount will be deducted.

Allocation of Surrender Charges.  The Surrender Charge and any Additional Surrender Charge will be deducted from the Policy Account Value.  For Surrender Charges resulting from Face Amount decreases, that part of any such Surrender Charge will reduce the Policy Account Value and will be allocated among the accounts based on the proportion that the value in each of the Subaccounts and the Guaranteed Account bear to the total unloaned Policy Account Value.

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

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

· you have not elected any of these Riders:

1. Disability Waiver of Premium Rider,

2. Disability Waiver Benefit Rider; or

3. any Long-term Care Benefit Rider.

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

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Monthly Deductions

Charges will be deducted from the Policy Account Value on the Policy Date and on each Policy Processing Day to compensate NLIC for administrative expenses and for the insurance coverage provided by the Policy.  The Monthly Deduction consists of four components – (a) the cost of insurance; (b) administrative charges; (c) insurance underwriting and expenses in connection with issuing the Policy (Initial Administrative Charge); and (d) the cost of any additional benefits provided by rider.  Because portions of the Monthly Deduction, such as the cost of insurance, can vary from month to month, the Monthly Deduction may vary in amount from month to month.  The Monthly Deduction is deducted from the Subaccounts and the Guaranteed Account in accordance with the allocation percentages for Monthly Deductions chosen by the Owner at the time of application, or as later changed by NLIC pursuant to the Owner's written request.  If NLIC cannot make a Monthly Deduction on the basis of the allocation schedule then in effect, NLIC makes the deduction based on the proportion that the Owner's Guaranteed Account value and the value in the Owner's Subaccounts bear to the total unloaned Policy Account Value.

Cost of Insurance.  Because the cost of insurance depends upon several variables, the cost for each Policy Month can vary.  NLIC will determine the monthly cost of insurance charge by multiplying the applicable cost of insurance rate or rates by the Net Amount at Risk for each Policy month.

The Net Amount at Risk on any Policy Processing Day is the amount by which the Death Benefit exceeds the Policy Account Value.  The Net Amount at Risk is affected by investment performance, loans, payments of premiums, Policy fees and charges, the Death Benefit option chosen, partial withdrawals, and decreases in Face Amount.  The Net Amount at Risk is determined separately for the Initial Face Amount and any increases in Face Amount.  In determining the Net Amount at Risk for each increment of Face Amount, the Policy Account Value is first considered part of the Initial Face Amount.  If the Policy Account Value exceeds the Initial Face Amount, it is considered as part of any increases in Face Amount in the order such increases took effect.

A cost of insurance is also determined separately for the Initial Face Amount and any increases in Face Amount.  In calculating the cost of insurance charge, the rate for the Premium Class on the Policy Date is applied to the Net Amount at Risk for the Initial Face Amount.  For each increase in Face Amount, the rate for the Premium Class applicable to the increase is used.  If, however, the Death Benefit is calculated as the Policy Account Value times the specified percentage, the rate for the Premium Class for the most recent Face Amount increase will be used for the amount of the Death Benefit in excess of the total Face Amount.

Any change in the Net Amount at Risk will affect the total cost of insurance charges paid by the Owner.  NLIC expects to profit from cost of insurance charges and may use these profits for any lawful purpose including covering distribution expenses.

Cost of Insurance Rate.  The cost of insurance rate is based on the Attained Age, sex, Premium Class of the Insured and Duration.  The actual monthly cost on insurance rates will be based on NLIC's expectations as to future mortality and expense experience.  They will not, however, be greater than the guaranteed maximum cost of insurance rates set forth in the Policy.  These guaranteed maximum rates are based on the Insured's Attained Age, Sex, Premium Class, and the 1980 Commissioners Standard Ordinary Smoker and Nonsmoker Mortality Table.  For Policies issued in states that require "unisex" policies (currently Montana) or in conjunction with employee benefit plans, the maximum cost of insurance charge depends only on the Insured's Age, Premium Class and the 1980 Commissioners Standard Ordinary Mortality Table NB and SB.  Any change in the cost of insurance rates will apply to all persons of the same Attained Age, sex, and Premium Class and Duration.

Premium Class.  The Premium Class of the Insured will affect the cost of insurance rates.  NLIC uses an industry-standard method of underwriting in determining Premium Classes, which are based on the health of the Insured.  NLIC currently places Insureds into one of three standard classes – preferred, nonsmoker, and smoker – or into classes with extra ratings, which reflect higher mortality risks and higher cost of insurance rates.

Initial Administrative Charge.  An Initial Administrative Charge of $17.50 is deducted from Policy Account Value on the Policy Date and on each of the next eleven Policy Processing Days.

Monthly Administrative Charge.  A Monthly Administrative Charge is deducted from the Policy Account Value on the Policy Date and each Policy Processing Day as part of the Monthly Deduction.  Effective on the later of June 7, 2010, or the date of any required state regulatory approval, the current Monthly Administrative Charge is increased from $7.50 to $11.00, $9.50 for policies issued in New York.  This charge may be increased, but in no event will it be greater than $12 per month.  This charge is intended to reimburse NLIC for ordinary administrative expenses expected to be incurred, including record keeping, processing claims and certain Policy changes, preparing and mailing reports, and overhead costs.

Additional Benefit Charges.  The Monthly Deduction will include charges for any additional benefits added to the Policy.  The monthly charges will be specified in the applicable rider.

Face Amount Increase Charge

If the Face Amount is increased, an increase charge may be deducted from the Policy Account Value on the effective date of such increase.  This charge is currently $0.00. This charge may be increased, but in no event will it be greater than $50 plus $3.00 per $1,000 Face Amount increase.  Any face amount increase charge will be deducted from the accounts based on the allocation for Monthly Deductions in effect at such time. This charge is intended to reimburse NLIC for administrative expenses in connection with the Face Amount increase, including medical exams, review of the application for the increase, underwriting decisions and processing of the application, and changing Policy records and the Policy.

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Partial Withdrawal Charge

A charge of $25 will be deducted from the Policy Account Value for each partial withdrawal of Net Cash Surrender Value.  This charge is intended to compensate NLIC for the administrative costs in effecting the requested payment and in making all calculations that may be required by reason of the partial withdrawal.

Transfer Charge

After 12 transfers have been made in any Policy Year, a transfer charge of $25 will be deducted for each transfer during the remainder of such Policy Year to compensate NLIC for the costs of processing such transfers.

The transfer charge will be deducted from the amount being transferred.  The transfer charge will not apply to transfers resulting from Policy loans, Automatic Asset Rebalancing, Dollar Cost Averaging, the exercise of special transfer rights and the initial reallocation of account values from the Money Market Subaccount to other Subaccounts .  These transfers will not count against the 12 free transfers in any Policy Year.

Mortality and Expense Risk Charge

A daily charge will be deducted from the value of the net assets of the Subaccounts to compensate NLIC for mortality and expense risks assumed in connection with the Policy.  This charge currently is deducted at an annual rate of 0.65% (or a daily rate of .0017808%) of the average daily net assets of each Subaccount .  This charge may be increased, but in no event will it be greater than an annual rate of 0.90% of the average daily net assets of each Subaccount .  The mortality risk assumed by NLIC is that Insureds may live for a shorter time than projected and, therefore, greater death benefits than expected will be paid in relation to the amount of premiums received.  The expense risk assumed is that expenses incurred in issuing and administering the Policies will exceed the administrative charges provided in the Policy.

If the mortality and expense risk charge proves insufficient, NLIC will provide for all death benefits and expenses and any loss will be borne by NLIC.  Conversely, NLIC will realize a gain from this charge to the extent all money collected from this charge is not needed to provide for benefits and expenses under the Policies.

Short-Term Trading Fees

Some Portfolios may assess (or reserve the right to assess) a short-term trading fee (or "redemption fee") in connection with transfers from a Subaccount that occur within 60 days after the date of allocation to the Subaccount .

Short-Term Trading Fees are intended to compensate the Portfolio (and Policy Owners with interests allocated in the Portfolio) for the negative impact on fund performance that may result from frequent, short-term trading strategies.  Short-Term Trading Fees are not intended to affect the large majority of Policy Owners not engaged in such strategies.

Any Short-Term Trading Fee assessed by any Portfolio available in conjunction with the Policies described in this prospectus will equal 1% of the amount determined to be engaged in short-term trading.  Short-Term Trading Fees will only apply to those Subaccounts corresponding to Portfolios that charge such fees (see Portfolio prospectus).  Any Short-Term Trading Fees paid are retained by the Portfolio and are part of the Portfolio's assets.  Policy Owners are responsible for monitoring the length of time allocations are held in any particular Subaccount .  We will not provide advance notice of the assessment of any applicable Short-Term Trading Fee.

For a complete list of the Portfolios offered under the Policy that assess (or reserve the right to assess) a Short-Term Trading Fee, please refer to the list of available Portfolios in "Appendix A: Portfolio Information."

If a redemption fee is assessed, the Portfolio will charge the Variable Account 1% of the amount determined to be engaged in short-term trading.  The Variable Account will then pass the Short-Term Trading Fee on to the specific Policy Owner that engaged in short-term trading by deducting an amount equal to the redemption fee from that Policy Owner's Subaccount value.  All such fees will be remitted to the Portfolio; none of the fee proceeds will be retained by the Variable Account or us.

When multiple Net Premiums (or exchanges) are made to a Subaccount that is subject to Short-Term Trading Fees, transfers will be considered to be made on a first in/first out (FIFO) basis for purposes of determining Short-Term Trading Fees.  In other words, units held the longest time will be treated as being transferred first, and units held for the shortest time will be treated as being transferred last.

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

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

· Policy loans or surrenders; and

· payment of the Insurance Proceeds upon the Insured's death.

New share classes of certain currently available Portfolios may be added as investment options under the Policy.  These new share classes may require the assessment of Short-Term Trading Fees.  When these new share classes are added, new Net Premiums and exchange reallocations to the Portfolios in question may be limited to the new share class.

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Loan Interest Charge

Loan interest is charged in arrears on the amount of an outstanding Policy loan.  Loan interest that is unpaid when due will be added to the amount of the loan on each Policy Anniversary and will bear interest at the same rate.  NLIC charges an annual interest rate of 6.00% on Policy loans.

After offsetting the 4.00% interest NLIC guarantees it will credit to the Loan Account, the maximum guaranteed net cost of loans is 2.00% (annually).  Moreover:

· after offsetting the 4.50% NLIC currently credits to the Loan Account during the first 10 Policy Years or until Attained Age 60, whichever is later, the net cost of loans is 1.50% (annually); and

· after offsetting the 5.75% interest NLIC currently credits to the Loan Account after the 10th Policy Anniversary or Attained Age 60, whichever is later, the net cost of loans is 0.25% (annually).

Other Charges

The Separate Account purchases shares of the Funds at net asset value.  The net asset value of those shares reflect management fees and expenses already deducted from the assets of the Funds' Portfolios.  The fees and expenses for the Funds and their Portfolios are described in the Funds' prospectuses.

THE GUARANTEED ACCOUNT

An Owner may allocate some or all of the Net Premiums and transfer some or all of the Policy Account Value to the Guaranteed Account, which is part of NLIC's General Account and pays interest at declared rates guaranteed for each calendar year (subject to a minimum guaranteed interest rate of 4%).  The principal, after deductions, is also guaranteed.  NLIC's General Account supports its insurance and annuity obligations.  The Guaranteed Account has not, and is not required to be, registered with the SEC under the Securities Act of 1933, and neither the Guaranteed Account nor NLIC's General Account has been registered as an investment company under the Investment Company Act of 1940.  Therefore, neither NLIC's General Account, the Guaranteed Account, nor any interest therein are generally subject to regulation under the 1933 Act or the 1940 Act.  The disclosures relating to these accounts that are included in this prospectus are for prospective Owners' information and have not been reviewed by the SEC.

The portion of the Policy Account Value allocated to the Guaranteed Account will be credited with rates of interest, as described below.  Since the Guaranteed Account is part of NLIC's General Account, NLIC assumes the risk of investment gain or loss on this amount.  All assets in the General Account are subject to NLIC's general liabilities from business operations.

Minimum Guaranteed and Current Interest Rates

The Guaranteed Account value is guaranteed to accumulate at a minimum effective annual interest rate of 4%.  NLIC will credit the Guaranteed Account value with current rates in excess of the minimum guarantee but is not obligated to do so.  These current interest rates are influenced by, but do not necessarily correspond to, prevailing general market interest rates.  Since NLIC, in its sole discretion, anticipates changing the current interest rate from time to time, different allocations to and from the Guaranteed Account will be credited with different current interest rates.  The interest rate to be credited to each amount allocated or transferred to the Guaranteed Account will apply to the end of the calendar year in which such amount is received or transferred.  At the end of the calendar year, NLIC reserves the right to declare a new current interest rate on such amount and accrued interest thereon (which may be a different current interest rate than the current interest rate on new allocations to the Guaranteed Account on that date).  The rate declared on such amount and accrued interest thereon at the end of each calendar year will be guaranteed for the following calendar year.  Any interest credited on the amounts in the Guaranteed Account in excess of the minimum guaranteed rate of 4% per year will be determined in the sole discretion of NLIC.  The Owner assumes the risk that interest credited may not exceed the guaranteed minimum rate.

Amounts deducted from the Guaranteed Account for partial withdrawals, Policy loans, transfers to the Subaccount , Monthly Deductions or other changes are currently, for the purpose of crediting interest, accounted for on a last-in, first-out ("LIFO") method.

NLIC reserves the right to change the method of crediting interest from time to time, provided that such changes do not have the effect of reducing the guaranteed rate of interest below 4% per annum or shorten the period for which the interest rate applies to less than a calendar year (except for the year in which such amount is received or transferred).

Calculation of Guaranteed Account Value.  The Guaranteed Account value at any time is equal to amounts allocated and transferred to it plus interest credited to it, minus amounts deducted, transferred or withdrawn from it.

Interest will be credited to the Guaranteed Account on each Policy Processing Day as follows: for amounts in the account for the entire Policy Month, from the beginning to the end of the month; for amounts allocated to the account during the prior Policy Month, from the date the Net Premium or loan repayment is allocated to the end of the month; for amounts transferred to the account during the Policy Month, from the date of transfer to the end of the month; and for amounts deducted or withdrawn from the account during the prior Policy Month, from the beginning of the month to the date of deduction or withdrawal.

Surrenders and partial withdrawals from the Guaranteed Account may be delayed for up to six months (see "Payment of Policy Benefits").

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Transfers from the Guaranteed Account

Within 30 days prior to or following any Policy Anniversary, one transfer is allowed from the Guaranteed Account to any or all of the Subaccounts .  The amount transferred from the Guaranteed Account may not exceed 25% of the value of such account.  If the request for such transfer is received within 30 days prior to the Policy Anniversary, the transfer will be made as of the Policy Anniversary; if the written request is received within 30 days after the Policy Anniversary, the transfer will be made as of the date NLIC receives the request at its Service Center.

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

OWNERSHIP AND BENEFICIARY RIGHTS

The Owner is the Insured unless a different Owner is named in the Application or thereafter changed.  While the Insured is living, the Owner is entitled to exercise any of the rights stated in the Policy or otherwise granted by NLIC.  If the Insured and Owner are not the same, and the Owner dies before the Insured, these rights will vest in the estate of the Owner, unless otherwise provided.  The principal rights of the Owner include selecting and changing the Beneficiary, changing the Owner, and assigning the Policy.  Changing the Owner or assigning the Policy may result in tax consequences.

The principal right of the Beneficiary is the right to receive the Insurance Proceeds under the Policy.

MODIFYING THE POLICY

Any modification or waiver of NLIC's rights or requirements under the Policy must be in writing and signed by NLIC's president or a vice president.  No agent may bind NLIC by making any promise not contained in the Policy.

Upon notice to the Owner, NLIC may modify the Policy:

· to conform the Policy, NLIC's operations, or the Separate Account's operations to the requirements of any law (or regulation issued by a government agency) to which the Policy, NLIC, or the Separate Account is subject;

· to assure continued qualification of the Policy as a life insurance contract under the federal tax laws; or

· to reflect a change in the Separate Account's operation.

If NLIC modifies the Policy, NLIC will make appropriate endorsements to the Policy.  If any provision of the Policy conflicts with the laws of a jurisdiction that govern the Policy, NLIC reserves the right to amend the provision to conform with these laws.

CONTACTING THE SERVICE CENTER

Written requests for transactions, information, paperwork or other services are accepted at NLIC’s Service Center at P. O. Box 182928, Columbus, Ohio 043218-2-28.

In addition to written requests, NLIC may accept telephone, fax, and email instructions from the Owner or an authorized third party regarding transfers, Dollar Cost Averaging, Automatic Asset Rebalancing, loans (excluding 403(b) plans), exercise of the Special Transfer Right and Partial Withdrawals (fax and email only), provided the appropriate election has been made at the time of application or proper authorization is provided to NLIC.  NLIC reserves the right to suspend telephone, fax, and email privileges at any time for any class of Policies, for any reason.   Contact the Service Center for telephone requests at 1-800-688-5177 and at 1-888-677-7393 for fax requests.

NLIC will employ reasonable procedures to confirm that instructions communicated by telephone, fax, and email are genuine, and if NLIC follows such procedures, it will not be liable for any losses due to authorized or fraudulent instructions.  NLIC, however, may be liable for such losses if it does not follow those reasonable procedures.  The procedures NLIC will follow for telephone, fax, and email transactions include requiring some form of personal identification prior to acting on instructions, providing written confirmation of the transaction, and making a tape-recording of any instructions given by telephone.

Telephone, fax, and email may not always be available.  Any telephone, fax, or computer system, whether it is the Owner's, the Owner's service provider's or agent's, or NLIC's, can experience outages or slowdowns for a variety of reasons.  These outages or slowdowns may delay or prevent the processing of a request.  Although NLIC has taken precautions to help its systems handle heavy use, NLIC cannot promise complete reliability under all circumstances.  If problems arise, the request should be made in writing to the Service Center.

If the Owner is provided a personal identification number ("PIN") in order to execute electronic transactions, the Owner should protect his or her PIN because self-service options will be available to the Owner's agent of record and to anyone who provides the Owner's PIN.  NLIC will not be able to verify that the person providing instructions by telephone, fax, or email is the Owner or is authorized by the Owner.

All service and transaction requests will generally be processed on the Valuation Period 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

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form acceptable to us.  If a request is not in good order, we 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.  We reserve the right to process any transaction request sent to a location other than the Service Center on the Valuation Period it is received at the Service Center.

SPLIT DOLLAR ARRANGEMENTS

The Owner or Owners may enter into a split dollar arrangement between each other or another person or persons whereby the payment of premiums and the right to receive the benefits under the Policy (i.e., Net Cash Surrender Value or Policy proceeds) are split between the parties.  There are different ways of allocating such rights.

For example, an employer and employee might agree that under a Policy on the life of the employee, the employer will pay the premiums and will have the right to receive the Net Cash Surrender Value.  The employee may designate the Beneficiary to receive any death proceeds in excess of the Net Cash Surrender Value.  If the employee dies while such an arrangement is in effect, the employer would receive from the death proceeds the amount that he would have been entitled to receive upon surrender of the Policy and the employee's Beneficiary would receive the balance of the proceeds.

No transfer of Policy rights pursuant to a split dollar arrangement will be binding on NLIC unless in writing and received by NLIC.

New Guidance on Split Dollar Arrangements.  On July 30, 2002, President Bush signed into law significant accounting and corporate governance reform legislation, known as the Sarbanes-Oxley Act of 2002 (the "Act").  The Act prohibits, with limited exceptions, publicly traded companies, including non-U.S. companies that have securities listed on exchanges in the United States, from extending, directly or through a subsidiary, many types of personal loans to their directors or executive officers.  It is possible that this prohibition may be interpreted as applying to split dollar life insurance policies for directors and executive officers of such companies, since such insurance arguably can be viewed as involving a loan from the employer for at least some purposes.

Although the prohibition on loans is generally effective as of July 30, 2002, there is an exception for loans outstanding as of the date of enactment, so long as there is no material modification to the loan terms and the loan is not renewed after July 30, 2002.  Any affected business contemplating the payment of a premium on an existing Policy, or the purchase of a new Policy, in connection with a split dollar life insurance arrangement should consult legal counsel.

In addition, the IRS and Treasury Department have recently issued guidance that substantially affects the tax treatment of split dollar arrangements.  The parties who elect to enter into a split dollar arrangement should consult their own tax advisors regarding the tax consequences of such an arrangement, and before entering into or paying additional premiums with respect to such arrangements.

DIVIDENDS

The Policy is participating; however, no dividends are expected to be paid on the Policy.  If dividends are ever declared, they will be paid under one of the following options:

(a) paid in cash; or

(b) applied as Net Premium.

The Owner must choose an option at the time the Application for the Policy is signed.  If no option is chosen, any dividend will be applied as a Net Premium payment.  The Owner may change the option by giving written notice to NLIC.

SUPPLEMENTARY BENEFITS

The following riders offer other supplementary benefits.  Most are subject to various age and underwriting requirements and most must be purchased when the Policy is issued.  The cost of each rider is included in the Monthly Deduction.  (See the Fee Table for more information concerning rider expenses.)

An Owner's agent can help determine whether any of the riders are suitable.  For example, an Owner should consider a number of factors when deciding whether to purchase coverage under the base Policy only or in combination with the Other Insured Convertible Term Life Insurance rider.  Even though the death benefit coverage may be the same (regardless of whether an Owner purchases coverage under the Policy only or in combination with this rider), there may be important cost differences between the Policy and the rider.  The most important factors that will affect an Owner's decision are: (a) the amount of premiums an Owner pays; (b) the cost of insurance charges under the Policy and under the rider; (c) the investment performance of the Subaccounts in which an Owner allocates premiums; (d) an Owner's level of risk tolerance; and (e) the length of time an Owner plans to hold the Policy.  Owners should carefully evaluate all of these factors and discuss all of these options with their agents.  For more information on electing a rider, contact the Service Center for a free copy of the SAI and for personalized illustrations that show different combinations of the Policy with various riders.  These riders may not be available in all states.  Please contact the Service Center for further details.

NLIC currently offers the following riders under the Policy:

· Accelerated Death Benefit;

· Disability Waiver Benefit;

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· Disability Waiver of Premium Benefit;

· Change of Insured;

· Children's Term;

·      Long-Term Care Benefit, which includes:

o Long-Term Care Acceleration Benefit;

o Long-Term Care Waiver Benefit; and

o Long-Term Care Extended Insurance Benefit;

· Other Insured Convertible Term Life Insurance; and

· Final Policy Date Extension.

FEDERAL INCOME TAX CONSIDERATIONS

The following summarizes some of the basic federal income tax considerations associated with a Policy and does not purport to be complete or to cover all situations.  This discussion is not intended as tax advice.  Please consult counsel or other qualified tax advisors for more complete information.  We base this discussion on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (the "IRS").  Federal income tax laws and the current interpretations by the IRS may change.

Tax Status of the Policy.  A policy must satisfy certain requirements set forth in the Internal Revenue Code ("Code") in order to qualify as a life insurance policy for federal income tax purposes and to receive the tax treatment normally accorded life insurance policies.  The manner in which these requirements are to be applied to certain features of the policy are not directly addressed by the Code, and there is limited guidance as to how these requirements are to be applied.  We anticipate that a policy should satisfy the applicable Code requirements.  Because of the absence of pertinent interpretations of the Code requirements, there is, however, some uncertainty about the application of these requirements to the policy, particularly if you pay the full amount of premiums permitted under the policy.  In addition, if you elect the Accelerated Death Benefit Rider, LTC Acceleration Rider or LTC Extended Rider, the tax qualification consequences associated with continuing the policy after a distribution is made are unclear.  Please consult a tax advisor on these consequences.  If it is subsequently determined that a policy does not satisfy the applicable requirements, we may take appropriate steps to bring the policy into compliance with these requirements and we reserve the right to restrict policy transactions in order to do so.

In certain circumstances, owners of variable life insurance policies have been considered for federal income tax purposes to be the owners of the assets of the separate account supporting their policies due to their ability to exercise investment control over those assets.  Where this is the case, the policy owners have been currently taxed on gains attributable to the separate account assets.  There is little guidance in this area, and some features of the policies, such as the flexibility to allocate premiums and policy account values, have not been explicitly addressed in published rulings.  While we believe that the policy does not give you investment control over Separate Account assets, we reserve the right to modify the policy as necessary to prevent you from being treated as the owner of the Separate Account assets supporting the policy.

In addition, the Code requires that the investments of the Separate Account be "adequately diversified" in order to treat the policy as a life insurance policy for federal income tax purposes.  We intend that the Separate Account, through the portfolios, will satisfy these diversification requirements.

The following discussion assumes that the policy will qualify as a life insurance policy for federal income tax purposes.

Tax Treatment of Policy Benefits

In General.  The death benefit under a policy should be excludible from the beneficiary's gross income.  Federal, state, and local transfer, and other tax consequences of ownership or receipt of policy proceeds depend on your circumstances and the beneficiary's circumstances.  You should consult a tax advisor on these consequences.

Generally, you will not be deemed to be in receipt of the policy account value until there is a distribution.  When distributions from a policy occur, or when loans are taken out from or secured by a policy (e.g., by assignment), the tax consequences depend on whether the policy is classified as a modified endowment contract ("MEC").

Modified Endowment Contracts.  Under the Code, certain life insurance policies are classified as MECs, which have less favorable income tax treatment than other life insurance policies.  Due to the policy's flexibility as to premiums and benefits, each policy's individual circumstances will determine whether the policy is classified as a MEC.  In general, a policy will be classified as a MEC if the amount of premiums paid into the policy causes the policy to fail the "7-pay test."  A policy will fail the 7-pay test if at any time in the first 7 policy years, the amount paid into the policy exceeds the sum of the level premiums that would have been paid at that point under a policy that provided for paid-up future benefits after the payment of 7 level annual payments.

If there is a reduction in the benefits under the policy during the first 7 policy years, for example, as a result of a partial withdrawal, the 7-pay test will have to be reapplied as if the policy had originally been issued at the reduced face amount.  If there is a "material

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change" in the policy's benefits or other terms, the policy may have to be retested as if it were a newly issued policy.  A material change may occur, for example, when there is an increase in the death benefit that is due to the payment of an unnecessary premium.  Unnecessary premiums are premiums paid into the policy which are not needed in order to provide a death benefit equal to the lowest death benefit that was payable in the first 7 policy years.  To prevent your policy from becoming a MEC, it may be necessary to limit premiums or to limit reductions in benefits.  A current or prospective Owner should consult a tax advisor to determine whether a policy transaction will cause the policy to be classified as a MEC.

Distributions from Modified Endowment Contracts.  Policies classified as MECs are subject to the following tax rules:

· All distributions other than death benefits from a MEC, including distributions upon surrender and partial withdrawals, will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the unloaned policy account value immediately before the distribution plus prior distributions over the owner's total investment in the policy at that time.  They will be treated as tax-free recovery of the owner's investment in the policy only after all such excess has been distributed.  "Total investment in the Policy" means the aggregate amount of any premiums or other considerations paid for a policy, plus any previously taxed distributions.

· Loans taken from such a policy (or secured by such a policy, e.g., by pledge or assignment) are treated as distributions and taxed accordingly.

· A 10% additional income tax penalty is imposed on the amount includible in income except where the distribution or loan is made after you have attained age 59½ or are disabled, or where the distribution is part of a series of substantially equal periodic payments for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and the beneficiary.

If a policy becomes a MEC, distributions that occur during the policy year will be taxed as distributions from a MEC.  In addition, distributions from a policy within 2 years before it becomes a MEC will be taxed in this manner.  This means that a distribution from a policy that is not a MEC at the time when the distribution is made could later become taxable as a distribution from a MEC.

Distributions from Policies that are not Modified Endowment Contracts.  Distributions other than death benefits from a policy that is not a MEC are generally treated first as a recovery of your investment in the policy, and then as taxable income after the recovery of all investment in the policy.  However, certain distributions which must be made in order to enable the policy to continue to qualify as a life insurance policy for federal income tax purposes if policy benefits are reduced during the first 15 policy years may be treated in whole or in part as ordinary income subject to tax.

Loans from or secured by a policy that is not a MEC are generally not treated as distributions.

Finally, distributions from, and loans from (or secured by), a policy that is not a MEC are not subject to the 10% additional tax.

Exchanging the Policy for Another Life Insurance Policy.   Generally, policy owners will be taxed on amounts received in excess of premium payments when the policy is surrendered in full.  If, however, the policy is exchanged for another life insurance policy, modified endowment contract, or annuity contract, the transaction will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035.  To meet Section 1035 requirements, the insured named in the policy must be the insured for the new policy.  Generally, the new policy or contract will be treated as having the same issue date and tax basis as the old policy or contract.

If the policy or contract is subject to a policy indebtedness that is discharged as part of the exchange transaction, the discharge of the indebtedness may be taxable.  Policy owners should consult with their personal tax or legal advisors in structuring any policy exchange transaction.

Additional Medicare Tax . The 2010 Health Care Act added Section 1411 to the Code, which imposes an additional tax of  3.8% on certain unearned income of individuals, trusts and estates, for tax years commencing after December 31, 2012.  The additional tax will apply to the lesser of (a) the taxpayer’s net investment income and (b) the excess of the taxpayer’s modified adjusted gross income over a threshold amount (the threshold amount is $250,000 in the case of a joint return or surviving spouse; $125,000 in the case of a married individual filing a separate return; and $200,000 in any other case). “Net investment income” is equal to the sum of (i) gross income from interest, dividends, annuities, royalties, and rents (other than income derived from any trade or business to which the tax does not apply), (ii) other gross income derived from any business to which the tax applies, and (iii) net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business to which the tax does not apply, less (iv) deductions properly allocable to such income.  Although no official guidance has been provided, it appears that any amounts that are treatable as taxable distributions when they are paid from a life insurance policy would be included in the computation of net investment income.

Sale of a Life Insurance Policy. If a life insurance policy is sold for a gain, all or a portion of the gain will be treated as ordinary income.  In Revenue Ruling 2009-13, the IRS concluded that the amount of gain realized from the sale of a life insurance policy is equal to the amount received (which can include relief from, or assumption of, debt) over the owner's basis in the policy.  The portion of the gain that is equal to the excess of the cash surrender value over the investment in the policy would be treated as ordinary income; any additional gain would be short or long-term capital gain, depending on the holding period.  The ruling also concluded that the amount of gain resulting from the sale of a life insurance policy is equal to the excess of the amount received over the owner's basis in the policy (the investment in the contract reduced by the cost of insurance previously paid out of the cash value).  Consequently, a sale may result in more gain than a surrender for the same amount.

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Multiple Policies.  All MECs that we and/or our affiliates issue to the same owner during any calendar year are treated as one MEC for purposes of determining the amount includible in the owner's income when a taxable distribution occurs.

Policy Loans.  In general, interest you pay on a loan from a policy will not be deductible.  If a loan from a policy that is not a MEC is outstanding when the policy is canceled or lapses, the amount of the outstanding indebtedness will be added to the amount distributed and will be taxed accordingly.  Before taking out a policy loan, you should consult a tax advisor as to the tax consequences.

Business Uses of the Policy.  The policy may be used in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans, and others.  The tax consequences of these plans may vary depending on the particular facts and circumstances of each individual arrangement.  The IRS has also recently issued new guidance on split dollar insurance plans.  In addition,  Code Section 409A, which sets forth new rules for taxation of nonqualified deferred compensation, was added to the Code for deferrals after December 31, 2004.  Therefore, if you are contemplating using the policy in any arrangement the value of which depends in part on its tax consequences, you should be sure to consult a tax advisor as to tax attributes of the arrangement.  In recent years, moreover, Congress has adopted new rules relating to life insurance owned by businesses.  Any business contemplating the purchase of a new policy or a change in an existing policy should consult a tax advisor.

Tax Shelter Regulations.  Prospective owners should consult a tax advisor about the treatment of the policy under the Treasury Regulations applicable to tax shelters.

Withholding.  To the extent that policy distributions are taxable, they are generally subject to withholding for the recipient's federal income tax liability.  Recipients can generally elect, however, not to have tax withheld from distributions.

Alternate Minimum Tax.  There may be an indirect tax upon the income in the policy or the proceeds of a policy under the federal corporate alternative minimum tax, if the owner is subject to that tax.

Continuation of Policy Beyond Age 100.  The tax consequences of continuing the policy beyond the Insured's 100th year are unclear.  You should consult a tax advisor if you intend to keep the policy in force beyond the Insured's 100th year.

Other Policy Owner Tax Matters.  The transfer of the policy or designation of a beneficiary may have federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes.  For example, the transfer of the policy to, or the designation as a beneficiary of, or the payment of proceeds to, a person who is assigned to a generation which is two or more generations below the generation assignment of the owner may have gift, estate, and/or generation-skipping transfer tax consequences under federal tax law.  The individual situation of each owner or beneficiary will determine the extent, if any, to which federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of the policy proceeds will be treated for purposes of federal, state, and local estate, inheritance, generation-skipping, and other taxes.

Possible Tax Law Changes.  While the likelihood of legislative or other changes is uncertain, there is always a possibility that the tax treatment of the policy could change by legislation or otherwise.  It is even possible that any legislative change could be retroactive (effective prior to the date of the change).  You should consult a tax advisor with respect to legislative developments and their effect on the policy.

Special Rules for Pension and Profit-Sharing Plans.  If a policy is purchased by a pension or profit-sharing plan, or similar deferred compensation arrangement, the federal, state and estate tax consequences could differ.  A competent tax advisor should be consulted in connection with such a purchase.

The amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan are limited.  The current cost of insurance for the net amount at risk is treated as a "current fringe benefit" and must be included annually in the plan participant's gross income.  The amount of this cost should be reported to the participant annually.  If the plan participant dies while covered by the plan and the policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the policy account value is not subject to the federal income tax.  However, the policy account value will generally be taxable to the extent it exceeds the participant's cost basis in the policy.  Policies owned under these types of plans may be subject to restrictions under the Employee Retirement Income Security Act of 1974 ("ERISA").  You should consult a qualified tax advisor regarding ERISA.

Department of Labor ("DOL") regulations impose requirements for participant loans under retirement plans covered by ERISA.  Plan loans must also satisfy tax requirements to be treated as nontaxable.  Plan loan requirements and provisions may differ from policy loan provisions.  Failure of plan loans to comply with the requirements and provisions of the DOL regulations and of tax law may result in adverse tax consequences and/or adverse consequences under ERISA.  Plan fiduciaries and participants should consult a qualified tax advisor before requesting a loan under a policy held in connection with a retirement plan.

Special Rules for 403(b) Arrangements.  If a policy is purchased in connection with a Section 403(b) tax-sheltered annuity program, the "Special Rules for Pension and Profit-Sharing Plans" discussed above may be applicable.  In July, 2007, the IRS and the Treasury Department released final regulations that prohibit the purchase of a life insurance policy in a 403(b) plan after September 23, 2007.  In addition, premiums, distributions and other transactions with respect to the policy must be administered, in coordination with the Section 403(b) annuity, to comply with the requirements of Section 403(b) of the Code.  A competent tax advisor should be consulted.

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Foreign Tax Credits.  To the extent that any underlying eligible portfolio makes the appropriate election, certain foreign taxes paid by the Portfolio will be treated as being paid by us, and we may deduct or claim a tax credit for such taxes.  The benefits of any such deduction or credit will not be passed through to policy owners.

Accelerated Death Benefit Rider.  The federal income tax consequences associated with the Accelerated Death Benefit Rider are uncertain.  You should consult a qualified tax advisor about the consequences of requesting payment under this Rider (see "Death Benefit – Accelerated Death Benefit").

Long-Term Care Benefit Riders.  For a discussion of the tax consequences associated with the Long-Term Care Benefit Riders offered under the policy, (see "Death Benefit – Long-Term Care Benefits").

Other Supplemental Benefits and Riders.  A further discussion of the tax consequences associated with particular supplemental benefits and riders available under the policy can be found in the SAI.

Special Considerations For Life Insurance Policies Owned By Corporations or Other Employers.

Sections 101(j) and 6039I of the Code provide special rules regarding the tax treatment of death benefits that are payable under life insurance policies owned by the employer of the insured. These provisions are generally effective for life insurance policies issued after August 17, 2006.  However, policies issued after that date pursuant to a Section 1035 exchange are excluded from the operation of these new provisions, provided that the policy received in the exchange does not have a material increase in death benefit or other material change with respect to the old policy.

New Section 101(j) provides the general rule that, with respect to an employer-owned life insurance policy, the amount of death benefit payable directly or indirectly to the employer that may be excluded from income cannot exceed the sum of premiums and other payments paid by the policyholder for the policy.  Consequently, under this general rule, the entire death benefit, less the cost to the policyholder, will be taxable.  Although Section 101(j) is not clear, if lifetime distributions from the policy are made as a nontaxable return of premium, it appears that the reduction would apply for Section 101(j) purposes and reduce the amount of premiums for this purpose.

There are 2 exceptions to this general rule of taxability, provided that statutory notice, consent, and information requirements are satisfied.  First, if proper notice and consent are given and received, and if the insured was an employee at any time during the 12-month period before the insured's death, then new Section 101(j) would not apply.

Second, if proper notice and consent are given and received and, at the time that the policy is issued the insured is either a director, a "highly compensated employee" (within the meaning of Section 414(q) of the Code without regard to paragraph (a)(B)(ii) thereof), or a "highly compensated individual" (within the meaning of Section 105(h)(5), except "35%" is substituted for "25%" in paragraph (C) thereof), then the new Section 101(j) would not apply.

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

It is the employer’s responsibility to (a) provide the proper notice to each insured, (b) obtain the proper consent from each insured, (c) inform each insured in writing that the employer-owner will be the beneficiary of any proceeds payable upon the death of the insured, and (d) file the annual return required by Section 6039I.  If the employer-owner fails to provide the necessary notice and information, or fails to obtain the necessary consent, the death benefit will be taxable to you when received.  If the employer-owner fails to file a properly completed return under Section 6039I, a penalty may apply.

Split Dollar Arrangements

You may enter into a split dollar arrangement with another owner or another person(s) whereby the payment of premiums and the right to receive the benefits under the policy (i.e., net cash surrender value or insurance proceeds) are split between the parties.  There are different ways of allocating these rights.  For example, an employer and employee might agree that under a policy on the life of the employee, the employer will pay the premiums and will have the right to receive the net cash surrender value.  The employee may designate the beneficiary to receive any insurance proceeds in excess of the net cash surrender value.  If the employee dies while such an arrangement is in effect, the employer would receive from the Insurance proceeds the amount that he would have been entitled to receive upon surrender of the policy and the employee's beneficiary would receive the balance of the proceeds.

No transfer of policy rights pursuant to a split dollar arrangement will be binding on us unless in writing and received by us at our Service Center.

The Sarbanes-Oxley Act of 2002 (the "Act") prohibits, with limited exceptions, publicly traded companies, including non-U.S. companies that have securities listed on exchanges in the United States, from extending, directly or through a subsidiary, many types of personal loans to their directors or executive officers.  It is possible that this prohibition may be interpreted as applying to split

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dollar life insurance policies for directors and executive officers of such companies, since such insurance arguably can be viewed as involving a loan from the employer for at least some purposes.

Although the prohibition on loans is generally effective as of July 30, 2002, there is an exception for loans outstanding as of the date of enactment, so long as there is no material modification to the loan terms and the loan is not renewed after July 30, 2002.  Any affected business contemplating the payment of a premium on an existing policy, or the purchase of a new policy, in connection with a split dollar life insurance arrangement should consult legal counsel.

In addition, the IRS and Treasury Department issued guidance that substantially affects the tax treatment of split dollar arrangements.  The parties who elect to enter into a split dollar arrangement should consult their own tax advisors regarding the tax consequences of such an arrangement, and before entering into or paying additional premiums with respect to such arrangements.

Possible Tax Law Changes .  While the likelihood of legislative or other changes is uncertain, there is always a possibility that the tax treatment of the Policy could change by legislation or otherwise.  It is even possible that any legislative change could be retroactive (effective prior to the date of the change).   You should consult a tax adviser with respect to legislative developments and their effect on the Policy.

VOTING RIGHTS

All of the assets held in the Subaccounts of the Separate Account will be invested in shares of corresponding Portfolios of the Funds.  The Funds do not hold routine annual shareholders' meetings.  Shareholders' meetings will be called whenever each Fund believes that it is necessary to vote to elect the Board of Directors of the Fund and to vote upon certain other matters that are required by the 1940 Act to be approved or ratified by the shareholders of a mutual fund.  NLIC is the legal owner of Fund shares and as such has the right to vote upon any matter that may be voted upon at a shareholders' meeting.  However, in accordance with its view of present applicable law, NLIC will vote the shares of the Funds at meetings of the shareholders of the appropriate Fund or Portfolio in accordance with instructions received from Owners.  Fund shares held in each Subaccount for which no timely instructions from Owners are received will be voted by NLIC in the same proportion as those shares in that Subaccount for which instructions are received.

Each Owner having a voting interest will be sent proxy material and a form for giving voting instructions.  Owners may vote, by proxy or in person, only as to the Portfolios that correspond to the Subaccounts in which their Policy values are allocated.  The number of shares held in each Subaccount attributable to a Policy for which the Owner may provide voting instructions will be determined by dividing the Policy's value in that account by the net asset value of one share of the corresponding Portfolio as of the record date for the shareholder meeting.  Fractional shares will be counted.  For each share of a Portfolio for which Owners have no interest, NLIC will cast votes, for or against any matter, in the same proportion as Owners vote.  What this means to you is that when only a small number of policy owners vote, each vote has a greater impact on, and may control the outcome of the vote.

If required by state insurance officials, NLIC may disregard voting instructions if such instructions would require shares to be voted so as to cause a change in the investment objectives or policies of one or more of the Portfolios, or to approve or disapprove an investment policy or investment advisor of one or more of the Portfolios.  In addition, NLIC may disregard voting instructions in favor of changes initiated by an Owner or the Fund's Board of Directors provided that NLIC's disapproval of the change is reasonable and is based on a good faith determination that the change would be contrary to state law or otherwise inappropriate, considering the Portfolio's objectives and purposes, and the effect the change would have on NLIC.  If NLIC does disregard voting instructions, it will advise Owners of that action and its reasons for such action in the next semi-annual report to Owners.

The voting rights described in this prospectus are created under applicable federal securities laws and regulations.  If these laws or regulations change to eliminate the necessity to solicit voting instructions from Owners or restrict voting rights, NLIC reserves the right to proceed in accordance with any such changed laws or regulations.

DISTRIBUTION OF POLICIES

Policy Pricing

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

We make many assumptions and account for many economic and financial factors when we establish the Policy's fees and charges.

The following is a discussion of some of the factors that are relevant to the Policy's pricing structure.

Distribution, Promotional, and Sales Expenses.  Commissions to broker-dealer firms are one of the promotional and sales expenses we incur when distributing the Policy.  During the first Policy Year, the maximum sales commission payable to firms will be approximately 91% of premiums paid up to a specified amount, and 2% of premiums paid in excess of that amount.  During Policy Years 2 through 10, the maximum sales commission will not be more than 2% of premiums paid, and after Policy Year 10, the

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maximum sales commission will be 0% of premiums paid.  Further, for each premium received within 10 years following an increase in Face Amount, a commission on that premium will be paid up to the specified amount for the increase in each year; the commission

will be calculated using the commission rates for the corresponding Policy Year.  Expense allowances and bonuses may also be paid, and firms may receive annual renewal compensation of up to 0.25% of the unloaned Policy Account Value.  Firms may be required to return first year commission (less the deferred sales charge) if the Policy is not continued through the first Policy Year.  In lieu of these premium-based commissions, we may pay an equivalent asset-based commission, or a combination of the two.  Individual registered representatives typically receive a portion of the commissions paid to their broker-dealer firm, depending on their particular arrangement.  The amount of commissions we pay depends on factors such as the amount of premium we receive from the broker-dealer firm and the scope of the services they provide.

In addition to commissions, we may also furnish marketing and expense allowances to certain broker-dealer firms based on our assessment of that firm's capabilities and demonstrated willingness to promote and market our products.  The firms determine how these allowances are spent.  If you would like to know the exact compensation arrangement associated with this product, you should consult your registered representative.

Information on Portfolio Payments

Our Relationship with the Portfolios.  The Portfolios incur expenses each time they sell, administer, or redeem their shares.  The separate account aggregates Policy owner purchase, redemption, and transfer requests and submits net or aggregated purchase/redemption requests to each Portfolio daily.  The separate account (not the Policy Owners) is the Portfolio shareholder.  When the separate account aggregates transactions, the Portfolio does not incur the expense of processing individual transactions it would normally incur if it sold its shares directly to the public.  We incur these expenses instead.

We also incur the distribution costs of selling the Policy, which benefit the Portfolios by providing Policy Owners with Subaccount options that correspond to the Portfolios.

An investment advisor or subadvisor of a Portfolio or its affiliates may provide us or our affiliates with wholesaling services that assist in the distribution of the Policy and may pay us or our affiliates to participate in educational and/or marketing activities.  These activities may provide the advisor or subadvisor (or their affiliates) with increased exposure to persons involved in the distribution of the Policy.

Types of Payments We Receive.  In light of the above, the Portfolios or their affiliates make certain payments to us or our affiliates (the "payments").  The amount of these payments is typically based on a percentage of assets invested in the Portfolios attributable to the policies and other variable policies we and our affiliates issue, but in some cases may involve a flat fee.  These payments may be used by us for any corporate purpose, which include reducing the prices of the policies, paying expenses that we or our affiliates incur in promoting, marketing, and administering the policies and the Portfolios, and achieving a profit.

We or our affiliates receive the following types of payments:

· Portfolio 12b-1 fees, which are deducted from Portfolio assets;

· sub-transfer agent fees or fees pursuant to administrative service plans adopted by the Portfolio, which may be deducted from Portfolio assets; and

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

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

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

Amount of Payments We Receive.  For the year ended December 31, 201 1 , the Portfolio payments we and our affiliates received from the Portfolios did not exceed 0.60% (as a percentage of the average daily net assets invested in the Portfolios) offered through this Policy or other variable policies that we and our affiliates issue.  Payments from investment advisors or subadvisors to participate in educational and/or marketing activities have not been taken into account in this percentage.

Most Portfolios or their affiliates have agreed to make payments to us or our affiliates, although the applicable percentages may vary from Portfolio to Portfolio and some may not make any payments at all.  Because the amount of the actual payments we or our affiliates receive depends on the assets of the Portfolios attributable to the Policy, we and our affiliates may receive higher payments from Portfolios with lower percentages (but greater assets) than from Portfolios that have higher percentages (but fewer assets).

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Identification of Portfolios.We may consider several criteria when identifying the Portfolios, including some or all of the following:  investment objectives, investment process, investment performance, risk characteristics, investment capabilities, experience and resources, investment consistency, and fund expenses.  Another factor we consider during the identification process is whether the Portfolio's advisor or subadvisor is one of our affiliates or whether the Portfolio, its advisor, its subadvisor(s), or an affiliate will make payments to us or our affiliates.

There may be Portfolios with lower fees, as well as other variable policies that offer Portfolios with lower fees.  You should consider all of the fees and charges of the Policy in relation to its features and benefits when making your decision to invest.  Please note that higher Policy and Portfolio fees and charges have a direct effect on your investment performance.

STATE VARIATIONS

Any state variations in the Policy are covered in a special Policy form for use in that state.  The prospectus and SAI provide a general description of the Policy.  An Owner's actual Policy and any endorsements or riders are the controlling documents.  To review a copy of his or her Policy and its endorsements and riders, if any, the Owner should contact NLIC's Service Center.

LEGAL PROCEEDINGS

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

The Company is subject to legal and regulatory proceedings in the ordinary course of its business. The Company's legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates.  The Company's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted.  Regulatory proceedings also could affect the outcome of one or more of the Company's 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 financial services industry has been the subject of increasing scrutiny on a broad range of issues by regulators and legislators.  The Company and/or its affiliates have been contacted by, self reported or received subpoenas from state and federal regulatory agencies, including the Securities and Exchange Commission, and other governmental bodies, state securities law regulators and state attorneys general for information relating to, among other things, sales compensation, the allocation of compensation, unsuitable sales or replacement practices, and claims handling and escheatment practices.  The Company is cooperating with and responding to regulators in connection with these inquiries and will cooperate with Nationwide Mutual Insurance Company (NMIC) in responding to these inquiries to the extent that any inquiries encompass NMIC's operations.

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 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, subject to the Circuit Courts' approval.  The Courts have approved the settlement and the settlement amounts have been paid, but have not yet been distributed to class members.  On February 28, 2011, the Court in the Gwin case entered an Order permitting ASEA/PEBCO to assert indemnification claims for attorneys' fees and costs, but barring them from asserting any other claims for indemnification.  On April 22, 2011, ASEA and PEBCO filed a second amended cross claim complaint in the Gwin case against NRS and NLIC seeking indemnification.  These claims seeking indemnification remain severed.   On April 29, 2011, the Companies filed a motion to dismiss ASEA’s and PEBCO’s amended cross

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complaint or alternatively for summary judgment.   On December 6, 2011 the Court entered an Order that NRS owes indemnification to ASEA and PEBCO for the Coker (Gwin) class action, that NRS does not have a duty to indemnify ASEA and PEBCO for fees associated with the Interpleader action that NRS filed in Montgomery County and dismissing NLIC.  On December 31, 2011, the Court denied the Company’s motion to certify this order for an interlocutory appeal.  NRS continues to defend this case vigorously.

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company.   In the plaintiffs' sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees under 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 plaintiff's motion for class certification and certified a class of "All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participants had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009".  On October 20, 2010, the Second Circuit Court of Appeals granted NLIC's 23(f) petition agreeing to hear an appeal of the District Court's order granting class certification.  On October 21, 2010, the District Court dismissed NFS from the lawsuit.  On October 27, 2010, the District Court stayed the underlying action pending a decision from the Second Circuit Court of Appeals.  On February 6, 2012, the Second Circuit Court of Appeals vacated the class certification order that was issued on November 6, 2009 and remanded the case back to the District Court for further consideration.  The plaintiffs have renewed their motion for class certification. On March 30, 2012 the Company filed its brief in opposition to the class certification motion. NLIC continues to defend this lawsuit vigorously.

On May 14, 2010, NLIC was named in a lawsuit filed in the Western District of New York entitled Sandra L. Meidenbauer, on behalf of herself and all others similarly situated v. Nationwide Life Insurance Company .  The plaintiff claims to represent a class of all individuals who purchased a variable life insurance policy from NLIC during an unspecified period.  The complaint claims breach of contract, alleging that NLIC charged excessive monthly deductions and costs of insurance resulting in reduced policy values and, in some cases, premature lapsing of policies.  The complaint seeks reimbursement of excessive charges, costs, interest, attorney's fees, and other relief.  NLIC filed a motion to dismiss the complaint on July 23, 2010.  NLIC filed a motion to disqualify the proposed class representative on August 27, 2010.  Plaintiff filed a motion to amend the complaint on September 17, 2010, and NLIC filed an opposition to the motion to amend on November 2, 2010.   On October 13, 2011, plaintiff voluntarily dismissed the lawsuit without prejudic e. In other non-Nationwide cases, plaintiff's counsel has re-filed actions. The Company will continue to monitor developments, but will conclude this matter.

On October 22, 2010, NRS was named in a lawsuit filed in the U.S. District Court, Middle District of Florida, Orlando Division entitled Camille McCullough, and Melanie Monroe, Individually and on behalf of all others similarly situated v. National Association of Counties, NACO Research Foundation, NACO Financial Services Corp., NACO Financial Center, and Nationwide Retirement Solutions, Inc.   The Plaintiffs' First Amended Class Action Complaint and Demand for Jury Trial was filed on February 18, 2011.  If the Court determined that the Plan was governed by ERISA, then Plaintiffs sought to represent a class of "All natural persons in the U.S. who are currently employed or previously were employed at any point during the six years preceding the date Plaintiffs filed their Original Class Action Complaint, by a government entity that is or was a member of the National Association of Counties, and who participate or participated in the Section 457 Deferred Compensation Plan for Public Employees endorsed by the National Association of Counties and administered by Nationwide Retirement Solutions, Inc."  If the Court determined that the Plan was not governed by ERISA, then the Plaintiffs sough to represent a class of " All natural persons in the U.S. who are currently employed or previously were employed at any point during the four years preceding the date Plaintiffs filed their Original Class Action Complaint, by a government entity that is or was a member of the National Association of Counties, and who participate or participated in a Section 457 Deferred Compensation Plan for Public Employees endorsed by the National Association of Counties and administered by Nationwide Retirement Solutions, Inc."  The First Amended Complaint alleged ERISA Violation, Breach of Fiduciary Duty - NACO, Aiding and Abetting Breach of Fiduciary Duty - Nationwide, Breach of Fiduciary Duty - Nationwide, and Aiding and Abetting Breach of Fiduciary Duty - NACO.  The First Amended Complaint asked for actual damages, lost profits, lost opportunity costs, restitution, and/or other injunctive or other relief, including without limitation (a) ordering Nationwide and NACO to restore all plan losses, (b) ordering Nationwide to refund all fees associated with Nationwide's Plan to Plaintiffs and Class members, (c) ordering NACO and Nationwide to pay the expenses and losses incurred by Plaintiffs and/or any Class member as a proximate result of Defendants' breaches of fiduciary duty, (d) forcing NACO to forfeit the fees that NACO received from Nationwide for promoting and endorsing its Plan and disgorging all profits, benefits, and other compensation obtained by NACO from its wrongful conduct, and (e) awarding Plaintiff and Class members their reasonable and necessary attorney's fees and cost incurred in connection with this suit, punitive damages, and pre-judgment and post judgment interest, at the highest rates allowed by law, on the damages awarded.   On March 21, 2011, the Company filed a motion to dismiss the plaintiffs' first amended complaint.   On July 1, 2011, the plaintiffs filed their motion for class certification and later sought to amend their complaint.  On November 25, 2011 the District Court entered an Order granting NACO's motion to dismiss, NRS's motion to dismiss, denying plaintiffs' motion to file an amended complaint, that all other remaining pending motions are moot, dismissing the class-wide claims with prejudice, dismissing individual claims without prejudice, and ordering the Clerk to close this case.  On December 27, 2011, the plaintiffs filed a notice of appeal.  The parties have agreed to resolve

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the dispute on an individual basis and as part of that settlement will not pursue any further appeal. The Company intends to defend this case vigorously.

On December 27, 2006, NLIC and NRS were named as defendants in a lawsuit filed in Circuit Court, Cole County Missouri entitled State of Missouri, Office of Administration, and Missouri State Employees Deferred Comp Plan v. NLIC and NRS.   The complaint seeks recovery for breach of contract and breach of the implied covenant of good faith and fair dealing against NLIC and NRS as well as a breach of fiduciary duty against NRS.  The complaint seeks to recover the amount of the market value adjustment withheld by NLIC ($19 million), prejudgment interest, loss of investment income from ING due to the Companies’ assessment of the market value adjustment.  On March 8, 2007 the Companies filed a motion to remove this case from state court to federal court in Missouri.  On March 20, 2007 the State filed a motion to remand to state court and to stay court order.  On April 3, 2007 the case was remanded to state court.  On June 25, 2007 the Companies filed an Answer.  On October 16, 2009, the plaintiff filed a partial motion for summary judgment.  On November 20, 2009, the Companies filed a response to the plaintiff's motion for summary judgment and also filed a motion for summary judgment on behalf of the Companies.  On February 26, 2010, the court denied Missouri's partial motion for summary judgment and granted the Companies’ motion for summary judgment and dismissed the case.  On March 8, 2011, the Missouri Court of Appeals reversed the granting of the Companies’ motion for summary judgment and directed the trial court to enter judgment in favor of the State and against the Companies in the amount of $19 million, plus statutory interest at the rate of 9% per annum from June 2, 2006.  On March 22, 2011, the Companies filed with the Missouri Court of Appeals, a motion for rehearing and an application for transfer to the Supreme Court of Missouri.  On May 3, 2011, the Missouri Court of Appeals for the Western District overruled the Companies’ motion for rehearing and denied the motion to transfer the case to the Missouri Supreme Court.  On June 28, 2011, the Companies’ application to the Missouri Supreme Court to hear a further appeal was denied.  On July 1, 2011, the Companies paid the amount of the judgment plus simple interest at 9%.  On August 9, 2011, the plaintiffs filed a Satisfaction of Judgment.

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 Clark, on their behalf and on behalf of the class defined herein v.   Nationwide Mutual Insurance Company and Nationwide Life Insurance Company .  The complaint alleges that Nationwide has 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 Nationwide is not conducting such a review.  The complaint seeks injunctive relief and declaratory judgment requiring Nationwide to conduct such a review, and alleges Nationwide has violated the covenant of good faith and fair dealing and has been unjustly enriched by not having conducted such reviews.  The complaint seeks certification as a class action.  Nationwide removed the case to federal court on July 6, 2011.  Plaintiffs filed a motion to remand to state court on August 8, 2011.  On October 26, 2011, the Northern District of Ohio remanded the case to Ohio State court.  Nationwide appealed the order to remand on November 4, 2011.  Including Andrews, there are four similar class actions in Ohio: two against Western & Southern; one against Cincinnati Life.  At the case management conference on November 21, 2011, the State Court ordered Plaintiffs to file an opposition to the motion to dismiss that Nationwide filed in federal court.  Plaintiffs filed their opposition to Nationwide’s motion to dismiss on December 19, 2011.  By order dated January 18, 2012, the State Court issued an order dismissing the lawsuit.  The court issued its opinion on January 23, 2012.  On January 30, 2012, plaintiffs filed their appeal.

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

FINANCIAL STATEMENTS

NLIC's consolidated financial statements and the financial statements of the Separate Account are contained in the SAI.  NLIC's consolidated financial statements should be distinguished from the Separate Account's financial statements and Owners should consider NLIC's consolidated financial statements only as bearing upon its ability to meet its obligations under the Policies.  For a free copy of these consolidated financial statements and/or the SAI, Owners should call or write to NLIC at its Service Center.

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DEFINITIONS

Additional Surrender Charge	The separately determined deferred administrative charge and deferred sales charge deducted from the Policy Account Value upon surrender or lapse of the Policy within 10 years of the effective date of an increase in Face Amount.  A pro rata Additional Surrender Charge will be deducted for a reduction in Face Amount within 10 years of the effective date of a Face Amount increase.  The maximum Additional Surrender Charge will be shown in the Policy schedule pages reflecting the Face Amount increase.
Application	The application the Owner must complete to purchase a Policy plus all forms required by NLIC or applicable law.
Attained Age	The Issue Age of the Insured plus the number of full Policy Years since the Policy Date.
Beneficiary	The person(s) or entity(ies) designated to receive all or some of the Insurance Proceeds when the Insured dies.  The Beneficiary is designated in the Application or if subsequently changed, as shown in the latest change filed with NLIC.  If no Beneficiary survives and unless otherwise provided, the Insured's estate will be the Beneficiary.
Cash Surrender Value	The Policy Account Value minus any applicable Surrender Charge or Additional Surrender Charge.
Death Benefit	Under Option A, the greater of the Face Amount or a percentage of the Policy Account Value on the date of death; under Option B, the greater of the Face Amount plus the Policy Account Value on the date of death, or a percentage of the Policy Account Value on the date of death.
Duration	The number of full years the insurance has been in force for the Initial Face Amount, measured from the Policy Date; for any increase in Face Amount, measured from the effective date of such increase.
Evidence of Insurability	The medical records or other documentation that NLIC may require to satisfy the Policy's underwriting standards.  NLIC may require different and/or additional evidence depending on the Insured's Premium Class; for example, NLIC generally requires more documentation for Insureds in classes with extra ratings.  NLIC also may require different and/or additional evidence depending on the transaction requested; for example, NLIC may require more documentation for the issuance of a Policy than for an increase in Face Amount.
Face Amount	The Initial Face Amount plus any increases in Face Amount and minus any decreases in Face Amount.
Final Policy Date	The Policy Anniversary nearest the Insured's Attained Age 100 at which time the Policy Account Value, if any, (less any outstanding Policy loan and accrued interest) will be paid to the Owner if the Insured is living.  The Policy will end on the Final Policy Date.
Grace Period	The 61-day period allowed for payment of a premium following the date NLIC mails notice of the amount required to keep the Policy in force.
Initial Face Amount	The Face Amount of the Policy on the Issue Date.  The Face Amount may be increased or decreased after issue.

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Insurance Proceeds	The net amount to be paid to the Beneficiary when the Insured dies.
Insured	The person whose life we insure under the policy, and whose death triggers payment of the Death Benefit.
Issue Age	The age of the Insured at his or her birthday nearest the Policy Date.  The Issue Age is stated in the Policy.
Loan Account	The account to which the collateral for the amount of any Policy loan is transferred from the Subaccounts and/or the Guaranteed Account.
Minimum Annual Premium	The annual amount that is used to determine the Minimum Guarantee Premium.  This amount is stated in each Policy.
Minimum Face Amount	The Minimum Face Amount is $50,000 for all Premium Classes except preferred.  For the preferred Premium Class, the Minimum Face Amount is $100,000.
Minimum Guarantee Premium	The Minimum Annual Premium multiplied by the number of months since the Policy Date (including the current month) divided by 12.
Minimum Initial Premium	Equal to the Minimum Annual Premium multiplied by the following factor for the specified premium mode at issue: Annual-1.0; Semi-annual-0.5; Quarterly-0.25; Monthly-0.167.
Monthly Deductions	The amount deducted from the Policy Account Value on each Policy Processing Day.  It includes the monthly administrative charge, the initial administrative charge, the monthly cost of insurance charge, and the monthly cost of any benefits provided by riders.
Net Amount at Risk	The amount by which the Death Benefit exceeds the Policy Account Value.
Net Cash Surrender Value	The Cash Surrender Value minus any outstanding Policy loans and accrued interest.
Net Premiums	The remainder of a premium after the deduction of the Premium Expense Charge.
Owner (also Policy Owner, You and Your)	The person or entity named as the owner in the application, or the person assigned ownership rights.
Planned Periodic Premium	The premium amount that the Owner plans to pay at the frequency selected.  The Owner is entitled to receive a reminder notice and change the amount of the Planned Periodic Premium.  The Owner is not required to pay the Planned Periodic Premium.
Policy Account Value	The sum of the Policy's values in the Separate Account, the Guaranteed Account, and the Loan Account.
Policy Anniversary	The same day and month as the Policy Date in each later year.
Policy Date	The date set forth in the Policy that is used to determine Policy Years and Policy Processing Days.  The Policy Date is generally the same as the Policy Issue Date but may be another date mutually agreed upon by NLIC and the proposed Insured.
Policy Issue Date	The date on which the Policy is issued.  It is used to measure suicide and contestable periods.
Policy Processing Day	The day in each calendar month which is the same day of the month as the Policy Date.  The first Policy Processing Day is the Policy Date.

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Policy Year	A year that starts on the Policy Date or on a Policy Anniversary.
Premium Class	The classification of the Insured for cost of insurance purposes.  The standard classes are: non-smoker, smoker, and preferred.  There also are classes with extra ratings.
Premium Expense Charge	The amount deducted from a premium payment, which consists of the Premium Tax Charge and the Percent of Premium Sales Charge.
SAI	The Statement of Additional Information ("SAI") that contains additional information regarding the Policy.  The SAI is not a prospectus, and should be read together with the prospectus.  Owners may obtain a copy of the SAI by writing or calling NLIC at the Service Center.
Separate Account	The Nationwide Provident VLI Separate Account 1.
Service Center	The department of NLIC responsible for receiving all service and transaction requests relating to the policy.  For service and transaction requests submitted other than by telephone (including fax requests), the Service Center is our mail and document processing facility.  For service and transaction requests communicated by telephone, the Service Center is our operations processing facility.
Surrender Charge	The amount deducted from the Policy Account Value upon lapse or surrender of the Policy during the first 10 Policy Years.  A pro rata Surrender Charge will be deducted upon a decrease in the Initial Face Amount during the first 10 Policy Years.  The maximum Surrender Charge is shown in the Policy.  The Surrender Charge is determined separately from the Additional Surrender Charge.
Target Premium	An amount of premium payments, computed separately for each increment of Face Amount, used to compute Surrender Charges and Additional Surrender Charges.
Valuation Day	Each day that the New York Stock Exchange is open for business and any other day on which there is a sufficient degree of trading with respect to a Subaccount 's portfolio of securities to materially affect the value of that Subaccount .  As of the date of this prospectus, NLIC is open whenever the New York Stock Exchange is open, other than the Fridays following Thanksgiving and Christmas.
Valuation Period	The period beginning at the close of business on one Valuation Day (which is when the New York Stock Exchange closes, usually 4:00 pm, EST) and continuing until the close of business on the next Valuation Day.  Each Valuation Period includes a Valuation Day and any non-Valuation Day or consecutive non-Valuation Days immediately preceding it.

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APPENDIX A: PORTFOLIO INFORMATION

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

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

Designations Key:

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

FF:           The underlying mutual fund corresponding to this Subaccount 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 Subaccount may incur higher charges than if the assets were invested in an underlying mutual fund that does not invest in other mutual funds.  Please refer to the prospectus for this underlying mutual fund for more information.

Alger Portfolios - Alger Small Cap Growth Portfolio: Class I-2 Shares

This Portfolio is only available in Policies issued before May 1, 2003

Investment Advisor:	Fred Alger Management, Inc.
Investment Objective:	Long-term capital appreciation.

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

This Portfolio is only available in Policies issued before May 1, 2004

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

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

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

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

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

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

This Portfolio is only available in Policies issued before May 1, 2004

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

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

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

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

Investment Advisor:	The Dreyfus Corporation
Investment Objective:	To match performance of the S&P SmallCap 600 Index®.

Dreyfus Stock Index Fund, Inc.: Initial Shares

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.

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

This Portfolio is only available in Policies issued before May 1, 2004

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

Federated Insurance Series - Federated Capital Appreciation Fund II: Primary Shares

This Portfolio is only available in Policies issued before May 1, 2004

Investment Advisor:	Federated Equity Management Company of Pennsylvania
Investment Objective:	Capital appreciation.

Federated Insurance Series - Federated Quality Bond Fund II: Primary Shares

This Portfolio is only available in Policies issued before May 1, 2008

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

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

This Portfolio is only available in Policies issued before May 1, 2003

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

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

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

Designation: STTF

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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.

Fidelity Variable Insurance Products Fund - VIP Growth 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 International Investment Advisors, Fidelity International Investment Advisors (U.K.) Limited, Fidelity Investments Japan Limited
Investment Objective:	Capital appreciation.

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2007

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.

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

This Portfolio is only available in Policies issued before May 1, 2003

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.

Designation: STTF

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

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

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

Investment 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:	Long-term growth of capital.

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

Investment Advisor:	Fidelity Management & Research Company
Sub-advisor:	Fidelity Research & Analysis Company
Investment Objective:	Long-term capital growth.

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

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

Designation: STTF

Fidelity Variable Insurance Products Fund - VIP Value Strategies Portfolio: Service Class

This Portfolio is only available in Policies issued before May 1, 2006

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, FidelityInternational Investment Advisors, Fidelity International Investment Advisors (U.K.) Limited
Investment Objective:	Capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Rising Dividends Securities Fund: Class 1

This Portfolio is only available in Policies issued before May 1, 2006

Investment Advisor:	Franklin Advisory Services, LLC
Investment Objective:	Long-term capital appreciation.

Franklin Templeton Variable Insurance Products Trust - Franklin Small Cap Value Securities Fund: Class 1

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

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

This Portfolio is only available in Policies issued before May 1, 2008

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

Designation: STTF

Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 1

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

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

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

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

Invesco - Invesco Van Kampen V.I. American Franchise Fund: Series I (formerly, Invesco - Invesco Van Kampen V.I. Capital Growth Fund: Series I)

Investment Advisor:	Van Kampen Asset Management
Investment Objective:	Capital appreciation.

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Invesco - Invesco Van Kampen V.I. Mid Cap Growth Fund: Series I

Investment Advisor:	Invesco Advisers, Inc.
Investment Objective:	Capital growth.

Janus Aspen Series - Balanced Portfolio: Service Shares

This Portfolio is only available in Policies issued before May 1, 2004

Investment Advisor:	Janus Capital Management LLC
Investment Objective:	Long-term capital growth, consistent with preservation of capital and balanced by current income.

Janus Aspen Series - Forty Portfolio: Service Shares

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

Janus Aspen Series - Global Technology Portfolio: Service Shares

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

Janus Aspen Series - Overseas Portfolio: Service Shares

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

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

This Portfolio is only available in Policies issued before May 1, 2006

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

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

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

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

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

Nationwide Variable Insurance Trust - American Century NVIT Growth Fund: Class IV

Investment Advisor:                                                          Nationwide Fund Advisors

Sub-advisor:	American Century Investment Management, Inc.
Investment Objective:	The Fund seeks long-term capital appreciation.

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

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

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2005

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 - Federated NVIT High Income Bond Fund: Class III

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

Designation: STTF

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 II

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

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

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

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	The Boston Company Asset Management, LLC
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	The Boston Company Asset Management, LLC
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.

Designation: STTF

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

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.

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The Fund seeks long-term capital growth by investing primarily in equity securities of companies in Europe, Australasia, the Far East and other regions, including developing countries.

Designation: STTF

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

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

Designation: FF

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

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

Designation: FF

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

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

Designation: FF

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

I

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

Designation: FF

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

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

Designation: FF

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

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

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

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 Sector Bond Fund: Class I

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

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

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

Designation: STTF

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

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

Designation: STTF

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

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

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 Large Cap Value Fund: Class I

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Goldman Sachs Asset Management, L.P.; Wellington Management Company, LLP; The Boston Company Asset Management, LLC
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:	American Century Investment Management, Inc.; Neuberger Berman Management LLC; Wells Capital Management, Inc.
Investment Objective:	The fund seeks long-term capital growth.

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

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

48

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

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

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

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

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Aberdeen Asset Management, Inc.; Morgan Stanley Investment Management; Neuberger Berman Management, Inc.; Putnam Investment Management, LLC; and Waddell & Reed Investment Management Company
Investment Objective:	The Fund seeks capital appreciation.

Nationwide Variable Insurance Trust - NVIT Nationwide Fund: Class IV

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

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

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

Nationwide Variable Insurance Trust - NVIT S&P 500 Index Fund: Class IV

This Portfolio is only available in Policies issued before May 1, 2003

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	BlackRock Investment Management, LLC
Investment Objective:	The Fund seeks long-term capital appreciation.

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

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

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

Investment Advisor:	Nationwide Fund Advisors
Sub-advisor:	Invesco Advisers, Inc.
Investment Objective:	The Fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks, and convertible securities.

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

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

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

This Portfolio is only available in Policies issued before May 1, 2008

Investment Advisor:	Neuberger Berman Management LLC
Sub-advisor:	Neuberger Berman, LLC
Investment Objective:	Long-term capital growth.

Neuberger Berman Advisers Management Trust - AMT Socially Responsive Portfolio: I Class

This Portfolio is only available in Policies issued before May 1, 2008

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

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

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

Designation: STTF

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

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

Oppenheimer Variable Account Funds - Oppenheimer High Income Fund/VA: Class 3

This Portfolio is only available in Policies issued before May 1, 2009

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

Designation: STTF

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

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2007

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

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

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

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

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

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 objectivesby 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.

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Putnam Variable Trust - Putnam VT Growth & Income Fund: Class IB

This Portfolio is only available in Policies issued before May 1, 2005

Investment Advisor:	Putnam Investment Management, LLC
Sub-advisor:	Putnam Investments Limited
Investment Objective:	Capital growth and current income.

Putnam Variable Trust - Putnam VT International Equity Fund: Class IB

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

Investment Advisor:	Putnam Investment Management, LLC
Sub-advisor:	Putnam Investments Limited and Putnam Advisory Company, LLC
Investment Objective:	Capital appreciation.

Putnam Variable Trust - Putnam VT Voyager Fund: Class IB

This Portfolio is only available in Policies issued before May 1, 2005

Investment Advisor:	Putnam Investment Management, LLC
Sub-advisor:	Putnam Investments Limited
Investment Objective:	Capital appreciation.

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

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

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

This Portfolio is only available in Policies issued before May 1, 2009

Investment Advisor:	Morgan Stanley Investment Management Inc.
Investment Objective:	Above-average total return over a market cycle of three to five years by investingprimarily in a diversified portfolio of fixed income securities.

The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio: Class I

This Portfolio is no longer available to accept transfers or new premium payments effective May 1, 2004

Investment Advisor:	Morgan Stanley Investment Management Inc.
Investment Objective:	High total return by investing primarily in fixed income securities of government and government-related issuers and, to a lesser extent, of corporate issuers in emerging market countries.

Van Eck VIP Trust - Van Eck VIP Emerging Markets Fund: Initial Class

Investment Advisor:	Van Eck Associates Corporation
Investment Objective:	Long-term capital appreciation by investing primarily in equity securities in emerging markets around the world.

Van Eck VIP Trust - Van Eck VIP Global Bond Fund: Initial Class

Investment Advisor:	Van Eck Associates Corporation
Investment Objective:	High total return – income plus capital appreciation – by investing globally, primarily in a variety of debt securities.

Van Eck VIP Trust - Van Eck VIP Global Hard Assets Fund: Initial Class

Investment Advisor:	Van Eck Associates Corporation
Investment Objective:	Long-term capital appreciation by investing primarily in hard asset securities.

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To learn more about this policy, the Owner should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus.  For a free copy of the SAI, to receive personalized illustrations of Death Benefits, Net Cash Surrender Values, and Policy Account Values , and to request other information about the policy please call our Service Center at 1-800-688-5177 (TDD: 1-800-238-3035) or write us at our Service Center at P. O. Box 182928, Columbus, Ohio 43 218-2928. .

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

Investment Company Act of 1940 Registration File No. 811-04460

Securities Act of 1933 Registration File No. 333-164119

52

Options Plus

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

Main Administrative Office:

One Nationwide Plaza

Columbus, Ohio 43215

(614) 249-7111

Service Center:

P.O. Box 182928

Columbus, Ohio  43218-2928

Telephone: 1-800- 688-5177

Fax: 1-888-677-7393

www.nationwide.com

STATEMENT OF ADDITIONAL INFORMATION

Individual Flexible Premium Adjustable Variable Life Insurance Policy

This Statement of Additional Information ("SAI") contains additional information regarding the individual flexible premium adjustable variable life insurance policy (the "Policy") offered by Nationwide Life Insurance Company ("NLIC").  This SAI is not a prospectus, and should be read together with the prospectus for the Policy dated May 1, 201 2 and the prospectuses for the Funds.  The Owner may obtain a copy of these prospectuses FREE OF CHARGE by writing or calling NLIC at our Service Center .  Capitalized terms in this SAI have the same meanings as in the prospectus for the Policy.  No information is incorporated by reference into this SAI.

The date of this Statement of Additional Information is May 1, 201 2 .

TABLE OF CONTENTS
Additional Policy Information	2	Accelerated Death Benefit Rider
The Policy		Other Riders
Temporary Insurance Coverage		Illustrations	10
Right to Contest		Performance Data	10
Misstatement of Age or Sex		Rating Agencies
Suicide Exclusion		Money Market Yields
Assignments		Historical Performance of the Subaccount s
Beneficiary		Standard & Poor's	10
Change of Owner or Beneficiary		Additional Information	11
Premium Classes		Potential Conflicts of Interest
Loan Interest		Policies Issued in Conjunction with Employee Benefit Plans
Effect of Policy Loans		Legal Developments Regarding Unisex Actuarial Tables
Allocations of Policy Account Value and Subsequent   Premium Payments		Safekeeping of Account Assets Policy Reports
Delays in Payments of Policy Benefits		Records
Dollar Cost Averaging		Independent Registered Public Accounting Firm
Automatic Asset Rebalancing		Additional Information About the Company
Charge Discounts for Sales to Certain Policies		Additional Information About the Separate Account Underwriters
Benefit Payable on Final Policy Date		Other Information
Settlement Options		Financial Statements	13
Policy Termination
Policy Restoration Procedures
Supplemental Benefits and Riders	6
Long-Term Care Benefit Riders

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ADDITIONAL POLICY INFORMATION

The Policy

The Policy and the Application(s) attached thereto are the entire contract.  Only statements made in the Applications can be used to void the Policy or deny a claim.  NLIC assumes that all statements in an Application are made to the best of the knowledge and belief of the person(s) who made them, and, in the absence of fraud, those statements are considered representations and not warranties.  NLIC relies on those statements when it issues or changes a Policy.  Only the President or a Vice President of NLIC can agree to change or waive any provisions of the Policy and only in writing.  As a result of differences in applicable state laws, certain provisions of the Policy may vary from state to state.

Temporary Insurance Coverage

At the time the Application for the Policy is signed, an applicant can, subject to NLIC's underwriting rules, obtain temporary insurance protection, pending issuance of the Policy, by answering "no" to the health questions of the temporary agreement and submitting payment of the Minimum Initial Premium with the Application, but only if the Application is dated the same day as, or earlier than, the temporary insurance agreement.  Temporary insurance coverage will take effect as of the date of the temporary insurance agreement.

The amount of temporary insurance coverage under the agreement is the lesser of the Face Amount applied for or $500,000.  Temporary coverage under the agreement will end on the earliest of: (a) the 90th day from the date of the agreement; (b) the date that insurance takes effect under the Policy; (c) the date a policy, other than as applied for, is offered to the Applicant; or (d) 5 days from the date that NLIC mails a notice of termination coverage.

Right to Contest

NLIC has the right to contest the validity of a Policy based on material misstatements made in the Application for the Policy or a change.  However, unless prohibited by state law, NLIC will not contest the Policy (or any change) after it (or the change) has been in force during the Insured's lifetime for two years from the Policy Issue Date.

Misstatement of Age or Sex

If the Insured's age or sex has been misstated in the Application, the Death Benefit and any benefits provided by riders will be such as the most recent Monthly Deductions would have provided at the correct age and sex.  No adjustment will be made to the Policy Account Value.

Suicide Exclusion

In the event of the Insured's suicide within two years from the Issue Date of the Policy (except where state law requires a shorter period) NLIC's liability is limited to the payment to the Beneficiary of a sum equal to the premiums paid less any Policy loan and accrued interest and any partial withdrawals.

If the Insured commits suicide within two years (or shorter period required by state law) from the effective date of any Policy change which increases the Death Benefit, the amount which NLIC will pay with respect to the increase will be the Monthly Deductions for the cost of insurance attributable to such increase and the expense charge for the increase.

Assignments

The Owner may assign any and all rights under the Policy.  No assignment binds NLIC unless in writing and received by NLIC at its Service Center.  NLIC assumes no responsibility for determining whether an assignment is valid and the extent of the assignee's interest.  All assignments will be subject to any Policy loan, Policy liens, garnishments, court orders, or any previous assignments.  The interest of any Beneficiary or other person will be subordinate to any assignment.  A Beneficiary may not commute, encumber, or alienate Policy benefits, and to the extent permitted by applicable law, such benefits are not subject to any legal process for the payment of any claim against the payee.

Beneficiary

The Beneficiary is designated in the Application for the Policy, unless thereafter changed by the Owner during the Insured's lifetime by written notice to NLIC.  Any Insurance Proceeds for which there is not a designated Beneficiary surviving at the Insured's death are payable in a single sum to the Insured's executors or administrators.

Change of Owner or Beneficiary

As long as the Policy is in force, the Owner or Beneficiary may be changed by written request in a form acceptable to NLIC.  If two or more persons are named as Beneficiaries, those surviving the Insured will share the Insurance Proceeds equally, unless otherwise stated.  The change will take effect as of the date it is signed, whether or not the Insured is living when the request is received by

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NLIC.  NLIC will not be responsible for any payment made or action taken before it receives the written request.  A change in the Policy's ownership may have federal income tax consequences.

Premium Classes

NLIC currently places each Insured into one of three standard Premium Classes – preferred, nonsmoker, and smoker – or into a Premium Class with extra ratings.  In an otherwise identical Policy, an Insured in the standard class will have a lower cost of insurance rate than an Insured in a class with extra ratings.  The preferred Premium Class is only available if the Face Amount equals or exceeds $100,000.  Nonsmoking Insureds generally will incur lower cost of insurance rates than Insureds who are classified as smokers in the same Premium Class.  Preferred Insureds generally will incur lower cost of insurance rates than Insureds who are classified as nonsmokers.

Since the nonsmoker designation is not available for Insureds under Attained Age 21, shortly before an Insured attains age 21, NLIC may notify the Insured about possible classification as a nonsmoker.  If the Insured does not qualify as a nonsmoker or does not respond to the notification, cost of insurance rates will remain as shown in the Policy.  However, if the Insured does respond to the notification and qualifies as a nonsmoker, the cost of insurance rates will be changed to reflect the nonsmoker classification.

Loan Interest

Interest Rate Charged.  Interest is due at the end of each Policy Year.  If interest is not paid when due, it is added to the loan balance and bears interest at the same rate beginning 23 days after the Policy Anniversary.  Unpaid interest is allocated based on the Owner's written instructions.  If there are no written instructions or the Policy Account Value in the specified Subaccount s is insufficient to allow the collateral for the unpaid interest to be transferred, the interest is allocated based on the proportion that the Guaranteed Account value and the value of the Subaccount s under a Policy bear to the total unloaned Policy Account Value.

Allocation of Loan Collateral.  NLIC will deduct the collateral for a Policy loan from the Subaccount s and/or the Guaranteed Account based upon the proportion that the value of the Subaccount s and/or the Guaranteed Account value bear to the total unloaned Policy Account Value, and transfer this amount to the Loan Account.  The collateral is recalculated: (a) when loan interest is repaid or added to loaned amount; (b) when a new loan is made; and (c) when a loan repayment is made.  A transfer to or from the Loan Account will be made to reflect any recalculation of collateral.

Effect of Policy Loans

Policy loans, whether or not repaid, will have a permanent effect on the Policy Account Value, the Cash Surrender Value, and Net Cash Surrender Value and may permanently affect the Death Benefit under the Policy.  The effect on the Policy Account Value and Death Benefit could be favorable or unfavorable, depending on whether the investment performance of the Subaccount s and the interest credited to the Guaranteed Account is less than or greater than the interest being credited on the assets in the Loan Account while the loan is outstanding.  Compared to a Policy under which no loan is made, values under a Policy will be lower when the credited interest rate is less than the investment experience of assets held in the Subaccount s and interest credited to the Guaranteed Account. The longer a loan is outstanding, the greater the effect of a Policy loan is likely to be.  The death proceeds will be reduced by the amount of any outstanding Policy loan.

Allocations of Policy Account Value and Subsequent Premium Payments

A special method is used to allocate a portion of the existing Policy Account Value to an increase in Face Amount and to allocate subsequent premium payments between the Initial Face Amount and the increase.  The Policy Account Value is allocated according to the ratio between the guideline annual premium for the Initial Face Amount and the guideline annual premium for the total Face Amount on the effective date of the increase before any deductions are made.  For example, if the guideline annual premium is equal to $4,500 before an increase and is equal to $6,000 after an increase, the Policy Account Value on the effective date of the increase would be allocated 75% ($4,500/$6,000) to the Initial Face Amount and 25% to the increase.  Premium payments made on or after the effective date of the increase are allocated between the Initial Face Amount and the increase using the same ratio as is used to allocate the Policy Account Value.  In the event there is more than one increase in Face Amount, guideline annual premiums for each increment of Face Amount are used to allocate Policy Account Values and premium payments among the various increments of Face Amounts.

Delays in Payments of Policy Benefits

Insurance Proceeds under a Policy will ordinarily be paid to the Beneficiary within 7 days after NLIC receives proof of the Insured's death at its Service Center and all other requirements are satisfied.  Insurance Proceeds will be paid in a single sum unless an alternative settlement option has been selected.

If Insurance Proceeds are payable in a single sum, interest at the annual rate of 3% or any higher rate declared by NLIC or required by law is paid on the Insurance Proceeds from the date of death until payment is made.

Any amounts payable as a result of surrender, partial withdrawal, or Policy loan will ordinarily be paid within 7 days of receipt of the payment request at NLIC's Service Center in a form satisfactory to NLIC.

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Generally, the amount of a payment from the Subaccount s will be determined as of the date of receipt by NLIC of all required documents.  However, NLIC may defer the determination or payment of such amounts if the date for determining such amounts falls within any period during which: (1) the disposal or valuation of a Subaccount 's assets is not reasonably practicable because the New York Stock Exchange is closed or conditions are such that, under the SEC's rules and regulations, trading is restricted or an emergency is deemed to exist; or (2) the SEC by order permits postponement of such actions for the protection of NLIC policyholders.  As to amounts allocated to the Guaranteed Account, NLIC may defer payment of any withdrawal or surrender of Net Cash Surrender Value and the making of a loan for up to 6 months after NLIC receives a payment request at its Service Center.  NLIC will pay interest, at a rate of 3% a year, on any payment NLIC defers for 30 days or more as described above.

Due to federal laws designed to counter terrorism and prevent money laundering by criminals, NLIC may be required to reject a premium payment.  NLIC also may be required to provide additional information about an Owner's account to government regulators.  In addition, NLIC also may be required to block an Owner's account and thereby refuse to pay any request for transfers, withdrawals, surrenders, loans, or Death Benefits, until instructions are received from the appropriate regulator.

The Owner may decide the form in which proceeds will be paid.  During the Insured's lifetime, the Owner may arrange for the Insurance Proceeds to be paid in a lump sum or under a settlement option.  These choices are also available upon surrender of the Policy for its Net Cash Surrender Value and for payment of the Policy Account Value on the Final Policy Date.  If no election is made, payment will be made in a lump sum.  The Beneficiary may also arrange for payment of the Insurance Proceeds in a lump sum or under a settlement option.  If the Beneficiary is changed, any prior arrangements with respect to the payment option will be canceled.

Dollar Cost Averaging

If the Owner elects the Dollar Cost Averaging program, specified dollar amounts will be systematically and automatically transferred, on a monthly basis, from a selected Subaccount to any other Subaccount or the Guaranteed Account.  Transfers may not come from the Guaranteed Account.  Dollar Cost Averaging may be elected for a period of 6, 12, 18, 24, 30 or 36 months.  To qualify for Dollar Cost Averaging, the following minimum amount of Policy Account Value must be allocated to a Subaccount : 6 months-$3,000; 12 months-$6,000; 18 months-$9,000; 24 months-$12,000; 30 months-$15,000; 36 months-$18,000.  At least $500 must be transferred from the Subaccount each month.  The amount required to be allocated to the Subaccount can be made from an initial or subsequent investment or by transferring amounts into the Subaccount from the other Subaccount s or from the Guaranteed Account.  Each monthly transfer is split among the Subaccount s or the Guaranteed Account based upon the percentages elected.  Dollar Cost Averaging may not be elected if Automatic Asset Rebalancing has been elected or if a Policy loan is outstanding.

Dollar Cost Averaging may be elected in the Application or by completing an election form and returning it to NLIC by the beginning of the month.  When an election form is received, Dollar Cost Averaging will commence on the first Policy Processing Day after the later of: (a) the Policy Date; (b) the 15-day period when premiums are allocated to the Money Market Subaccount in certain states; or (c) when the Subaccount value equals or exceeds the greater of the minimum amount stated above and the amount of the first monthly transfer.

Once Dollar Cost Averaging transfers have commenced, they occur monthly on the Policy Processing Day until the specified number of transfers has been completed, or: (a) a Policy loan is requested; (b) the Policy goes into the Grace Period; or (c) there is insufficient value in the Subaccount to make the transfer.  The Owner may instruct NLIC in writing to cancel Dollar Cost Averaging transfers at any time.

Transfers made under the Dollar Cost Averaging program do not count toward the 12 transfers permitted each Policy Year without imposing the transfer charge.  NLIC reserves the right to discontinue offering automatic transfers upon 30 days written notice to the Owner.  Written notice will be sent to the Owner confirming each transfer and when the Dollar Cost Averaging program is terminated.  The Owner and agent are responsible for reviewing the confirmation to verify that the transfers are being made as requested.

Automatic Asset Rebalancing

If the Owner elects the Automatic Asset Rebalancing program, periodic transfers of Policy Account Value will be made among the Subaccount s in order to maintain the allocation of such values in percentages that match the then current premium allocation percentages.  Election of this feature may be made in the Application or at any time after the Policy is issued by properly completing the election form and returning it to NLIC.  The election may be revoked at any time.

Rebalancing may be done quarterly or annually.  Rebalancing terminates when the total value in the Subaccount s is less than $1,000; a transfer is made; a change is made to the current premium allocation instructions; or NLIC receives a written request to terminate the program.  NLIC reserves the right to suspend Automatic Asset Rebalancing at any time, for any class of Policies, for any reason.

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Charge Discounts for Sales to Certain Policies

The Policy is available for purchase by individuals, corporations, and other groups.  NLIC may reduce or waive certain charges (such as the Premium Expense Charge, Surrender Charge, monthly administration charge, monthly cost of insurance charge, or other charges) where the size or nature of such sales results in savings to NLIC with respect to sales, underwriting, administrative, or other costs.  NLIC also may reduce or waive charges on Policies sold to officers, directors, and employees of NLIC or its affiliates.  The extent and nature of the reduction or waiver may change from time to time, and the charge structure may vary.

Generally, NLIC reduces or waives charges based on a number of factors, including:

· the number of Insureds;

· the size of the group of purchasers;

· the total premium expected to be paid;

· total assets under management for the Owner;

· the nature of the relationship among individual Insureds;

· the purpose for which the Policies are being purchased;

· the expected persistency of individual Policies; and

· any other circumstances which are rationally related to the expected reduction in expenses.

Reductions or waivers of charges will not discriminate unfairly among Owners.

Benefit Payable on Final Policy Date

If the Insured is living on the Final Policy Date (at Insured's Attained Age 100), NLIC will pay the Owner the Policy Account Value less any outstanding Policy loan and accrued interest and any unpaid Monthly Deductions.  Insurance coverage under the Policy will then end.  Payment will generally be made within seven days of the Final Policy Date.

Settlement Options

In lieu of a single sum payment on death or surrender, an election may be made to apply the Insurance Proceeds under any one of the fixed-benefit settlement options provided in the Policy.  The options are briefly described below.  Please refer to the Policy for more details.  As part of NLIC's General Account assets, settlement option proceeds may be subject to claims of creditors.  Even if the Death Benefit under the Policy is excludible from income, payments under settlement options may not be excludible in full.  This is because earnings on the Death Benefit after the Insured's death are taxable and payments under the settlement options generally include such earnings.  Owners should consult a tax adviser as to the tax treatment of payments under settlement options.

Proceeds at Interest Option.  Left on deposit to accumulate with NLIC with interest payable at a rate of at least 3% per year.

Installments of a Specified Amount Option.  Payable in equal installments of the amount elected with NLIC's consent at 12, 6, 3, or 1-month intervals, as elected until Insurance Proceeds applied under the option and interest on the unpaid balance at 3% per year and any additional interest are exhausted.

Installments for a Specified Period Option.  Payable in the number of equal monthly installments set forth in the election.  Payments may be increased by additional interest, which would increase the installments certain.  The guaranteed interest rate is 3% per year.

Life Income Option.  Payable in equal monthly installments during the payee's life.  Payments will be made either with or without a guaranteed minimum number.  If there is to be a minimum number of payments, they will be for either 120 or 240 months or until the Insurance Proceeds applied under the option are exhausted, as elected.

Joint and Survivor Life Income.  Payable in equal monthly installments, with a number of installments certain, during the joint lives of the payee and one other person and during the life of the survivor.  The minimum number of payments will be for either 120 or 240 months, as elected.

NLIC may also agree to other arrangements, including those that offer check-writing capabilities with non-guaranteed interest rates.

Policy Termination

The Policy will terminate on the earliest of: (a) the Final Policy Date; (b) the end of the Grace Period without a sufficient payment; (c) the date the Insured dies; or (d) the date the Policy is surrendered.

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Policy Restoration Procedure

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

· the request must be in writing and signed by the policy owner (if the surrender was a Code Section 1035 exchange to a new policy with a different insurer, the signature of an officer of the replacing insurer is also required);

· the written request must be received by us within 30 days of the date the policy was surrendered (periods up to 60 days will be permitted based on the right to examine period applicable to replaced life insurance policies in the state where the policy was issued);

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

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

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

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

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

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

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

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

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

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

SUPPLEMENTAL BENEFITS AND RIDERS

Long-Term Care Benefit Riders

NLIC offers the following three Long-Term Care Benefit Riders:

(1) Long-Term Care Acceleration Benefit Rider ("LTC Acceleration Rider")

(2) Long-Term Care Waiver Benefit Rider ("LTC Waiver Rider")

(3) Long-Term Care Extended Insurance Benefit Rider ("LTC Extended Rider")

If the Owner elects to add the LTC Acceleration Rider to the Policy, the Owner must also add the LTC Waiver Rider, while the Owner may also add the LTC Extended Rider.  The Owner cannot elect to add either the LTC Waiver Rider or the LTC Extended Rider alone.

The riders have conditions that may affect other rights and benefits that the Owner has under the Policy.  For example, NLIC restricts the ability of the Owner to allocate premiums and Policy Account Value to the Separate Account while benefits are being paid.  In addition, each rider imposes a separate monthly charge that will be deducted from the Policy Account Value as part of the Monthly Deduction.

Owners residing in states that have approved the Long-Term Care Benefit Riders may generally elect to add them to their Policy at any time, subject to NLIC receiving satisfactory additional Evidence of Insurability and increasing the Face Amount.  The Long-Term Care Benefit Riders are not yet available in all states and the terms under which they are available may vary from state to state.  There is no assurance that the Long-Term Care Benefit Riders will be approved in all states or that they will be approved under the terms described herein.

These riders may not cover all of the long-term care expenses incurred by the Insured during the period of coverage.  Each rider contains specific details that the Owner should review before adding the rider to the Policy.  The Owner should consult a tax advisor before adding the LTC Acceleration Rider or the LTC Extended Rider to the Policy.

1. Long-Term Care Acceleration Benefit Rider

Operation of the Long-Term Care Acceleration Benefit Rider.  The LTC Acceleration Rider provides for periodic payments to the Owner of a portion of the Death Benefit if the Insured becomes "chronically ill" so that the Insured:

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(1) is unable to perform at least 2 activities of daily living without substantial human assistance for a period of at least 90 days due to a loss of functional capacity; or

(2) requires substantial supervision to protect the Insured from threats to health and safety due to his or her own severe cognitive

impairment.

Benefits under this rider will not begin until NLIC receives proof that the Insured is chronically ill and 90 calendar days have elapsed since receiving "qualified long-term care service" as defined in the rider, while the Policy was in force (the "elimination period").  The Owner must continue to submit periodic evidence of the Insured's continued eligibility for rider benefits.

NLIC determines a maximum amount of Death Benefit that NLIC will pay for each month of qualification.  This amount, called the "Maximum Monthly Benefit," is the acceleration death benefit, as defined in the rider, divided by the minimum months of acceleration benefits stated in the Policy schedule.  The actual amount of any benefit is based on the expense incurred by the Insured, up to the Maximum Monthly Benefit, for qualified long-term care service in a calendar month.  Certain types of expenses may be limited to a stated percentage of the Maximum Monthly Benefit.  Expenses incurred during the elimination period, however, are excluded from any determination of a benefit.

Each benefit payment reduces the remaining Death Benefit under the Policy, and causes a proportionate reduction in the Face Amount, Policy Account Value, and Surrender Charge.  If the Owner has a Policy loan, NLIC will use a portion of each benefit to repay indebtedness.  NLIC will recalculate the Maximum Monthly Benefit if the Owner makes a partial withdrawal of Policy Account Value, and for other events described in the rider.

Restrictions on Other Rights and Benefits.  Before NLIC begins paying any benefits, NLIC will transfer all Policy Account Value from the Separate Account to the Guaranteed Account.  In addition, the Owner will not be permitted to transfer Policy Account Value or allocate any additional premiums to the Separate Account while rider benefits are being paid.  The Owner's participation in any of the automatic investment plans (such as Dollar Cost Averaging) will also be suspended during this period.  If the Death Benefit on the Policy is Option B, NLIC will change it to Option A.

If the Insured no longer qualifies for rider benefits, is not chronically ill, and the Policy remains in force, the Owner will be permitted to allocate new premiums or transfer existing Policy Account Value to the Separate Account, and to change the Death Benefit option.  NLIC will waive restrictions on transfers from the Guaranteed Account to the Separate Account in connection with such transfers.

Charges for the Rider.  The LTC Acceleration Rider imposes a monthly charge on the Net Amount at Risk under the Policy.  This charge is at a rate that varies based on the age and sex of the Insured, and increases annually as the Insured ages.  NLIC may increase the rates for this charge on a class basis.  Once NLIC begins to pay benefits, the LTC Acceleration Rider waives this charge until the Insured no longer qualifies for rider benefits and is not chronically ill.

Termination of the Rider.  The rider will terminate when the acceleration death benefit is zero, the Policy terminates, or the Owner requests to terminate the rider.

2. Long-Term Care Waiver Benefit Rider

Operation of the Long-Term Care Waiver Benefit Rider.  After the elimination period noted above, the LTC Waiver Rider provides for the payment of monthly premiums (equal on an annual basis to the Minimum Annual Premium specified on the Policy schedule) up to the date specified in the Policy schedule, and the waiver of Monthly Deductions after that date.  This rider also provides a residual Death Benefit.  The LTC Waiver Rider is nonseverable from the LTC Acceleration Rider.

Charges for the Rider.  The LTC Waiver Rider imposes a monthly charge on the Net Amount at Risk under the Policy.  This charge is at a rate that varies based on the age and sex of the Insured, and increases annually as the Insured ages.

Termination of the Rider.  The LTC Waiver Rider will terminate when the Policy terminates (other than as a result of the complete payment of the Death Benefit through acceleration payments under the LTC Acceleration Rider), the LTC Acceleration Rider terminates (other than as a result of the complete payment of the Death Benefit through acceleration payments), or on the Policy Anniversary when the Insured's Attained Age is 100.

3. Long-Term Care Extended Insurance Benefit Rider

Operation of the Long-Term Care Extended Insurance Benefit Rider.  Following the full payment of the acceleration death benefit provided under the LTC Acceleration Rider, the LTC Extended Rider provides for periodic reimbursements of expenses incurred for qualified long-term care services, as defined in the rider.  There is no new elimination period under this rider if benefits are continuous.  The Owner must continue to submit periodic evidence of the Insured's eligibility for rider benefits.

NLIC determines a maximum amount of benefit that NLIC will pay for each month of qualification.  This amount, called the "Maximum Monthly Benefit," is the rider coverage amount divided by the minimum months of acceleration benefits shown on the Policy schedule.  The actual amount of any benefit is based on the expense incurred by the Insured, up to the Maximum Monthly Benefit, for qualified long-term care service in a calendar month.  Certain types of expenses may be limited to a stated percentage of the Maximum Monthly Benefit.  The LTC Extended Rider also offers an optional nonforfeiture benefit and an optional inflation benefit.

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Charges for the Rider.  The LTC Extended Rider imposes a monthly charge on the coverage amount of the rider.  This charge is level for the duration of the rider and based on the Issue Age of the Insured when the rider is issued.  If the Owner increases the rider coverage amount, a new charge based on the Issue Age of the Insured at that time will apply to the increase.  NLIC may increase the rates for this charge on a class basis.  Once NLIC begins to pay benefits under the LTC Acceleration Rider, NLIC waives this charge until the Insured no longer qualifies for benefits under the LTC Acceleration Rider or the LTC Extended Rider and is not chronically ill.

Termination of the Rider.  The LTC Extended Rider will terminate when benefits under the rider have been fully paid, when the Policy terminates (other than as a result of the complete payment of the Death Benefit through acceleration payments under the LTC Acceleration Rider), the LTC Acceleration Rider terminates (other than as a result of the complete payment of the Death Benefit through acceleration payments), or the Owner requests to terminate the rider.

Accelerated Death Benefit Rider

Owners residing in states that have approved the Accelerated Death Benefit rider (the "ADB Rider") may generally elect to add it to their Policy at any time, subject to NLIC receiving satisfactory additional Evidence of Insurability.  The ADB Rider is not yet available in all states and the terms under which it is available may vary from state to state.  There is no assurance that the ADB Rider will be approved in all states or that it will be approved under the terms described herein.

The ADB Rider permits the Owner to receive, at his or her request and upon approval by NLIC, an accelerated payment of part of the Policy's Death Benefit generally when the Insured develops a non-correctable medical condition that is expected to result in his or her death within 12 months.  For Owners who elected the ADB Rider prior to November 13, 2001 (or such other date pursuant to state availability), the ADB rider also permits the Owner to receive this accelerated payment if the Insured has been confined to a nursing care facility for 180 consecutive days and is expected to remain in such a facility for the remainder of his or her life.

There is no charge for adding the ADB Rider to a Policy but there is a charge if it is invoked. .   An administrative charge, currently $100 and not to exceed $250, will be deducted from the accelerated death benefit at the time it is paid.   Additionally, since the benefit is made in the form of a Policy loan, interest is payable on the outstanding Policy loan and on the Death Benefit lien.

Tax Consequences of the ADB Rider.  The federal income tax consequences associated with adding the ADB Rider or receiving the accelerated death benefit are uncertain.  Accordingly, Owners should consult a tax adviser before adding the ADB Rider to a Policy or requesting an accelerated death benefit.

Amount of the Accelerated Death Benefit.  The ADB Rider provides for a minimum accelerated death benefit payment of $10,000 and a maximum benefit payment equal to 75% of the eligible Death Benefit less 25% of any outstanding Policy loans and accrued interest.  The ADB Rider also restricts the total of the accelerated death benefits paid from all life insurance policies issued to an Owner by NLIC and its subsidiaries to $250,000.  This $250,000 maximum may be increased, as provided in the ADB Rider, to reflect inflation.  The term eligible Death Benefit under the ADB Rider means:

The Insurance Proceeds payable under a Policy if the Insured died at the time a claim for an accelerated death benefit is approved by NLIC, minus:

(1) any dividend accumulations;

(2) any dividends due and not paid;

(3) any dividend payable at death if the Insured died at such time;

(4) any premium refund payable at death if the Insured died at such time; and

(5) any insurance payable under the terms of any other rider attached to a Policy.

An Owner must submit written notice to request the accelerated death benefit. The Owner may only request the accelerated death benefit once, except additional accelerated death benefits may be requested to pay premiums and Policy loan interest.  There are no restrictions on the Owner's use of the benefit.  An Owner may elect to receive the accelerated death benefit as a lump sum or in 12 or 24 equal monthly installments.  If installments are elected and the Insured dies before all of the payments have been made, the present value (at the time of the Insured's death) of the remaining payments and the remaining Insurance Proceeds at death under the Policy will be paid to the Beneficiary in a lump sum.

Conditions for Receipt of the Accelerated Death Benefit.  In order to receive an accelerated death benefit payment, a Policy must be in force other than as extended term insurance and an Owner must submit due proof of eligibility and a completed claim form to NLIC at its Service Center.  Due proof of eligibility means a written certification (described more fully in the ADB Rider) in a form acceptable to NLIC, from a treating physician stating that the Insured has a terminal illness or, if applicable, is expected to be permanently confined to a nursing care facility.

NLIC may request additional medical information from an Owner's physician and/or may require an independent physical examination (at its expense) before approving the claim for payment of the accelerated death benefit.  NLIC will not approve a claim for an accelerated death benefit payment if a Policy is assigned in whole or in part, if the terminal illness or permanent confinement is

8

the result of intentionally self-inflicted injury or if the Owner is required to elect it in order to meet the claims of creditors or to obtain a government benefit.

Operation of the ADB Rider.  The accelerated death benefit is made in the form of a Policy loan up to the amount of the maximum loan available under a Policy at the time the claim is approved, resulting in a Policy loan being made in the amount of the requested benefit.  This Policy loan operates as would any loan under the Policy.

To the extent that the amount of the requested accelerated death benefit exceeds the maximum available loan amount, the benefit will be advanced to the Owner and a lien will be placed on the Death Benefit payable under the Policy (the "death benefit lien") in the amount of this advance.  Interest will accrue daily, at a rate determined as described in the ADB Rider, on the amount of this advance and upon the death of the Insured the amount of the advance and accrued interest thereon will be subtracted from the amount of Insurance Proceeds at death.

Effect on Existing Policy.  The Insurance Proceeds at death otherwise payable under a Policy at the time of an Insured's death will be reduced by the amount of any death benefit lien and accrued interest thereon.  In addition, if the Owner makes a request for a surrender, a Policy loan or a withdrawal, the Policy's Net Cash Surrender Value and loan value will be reduced by the amount of any outstanding death benefit lien plus accrued interest.  Therefore, depending upon the size of the death benefit lien, this may result in the Net Cash Surrender Value and the loan value being reduced to 0.

Premiums and Policy loan interest must be paid when due.  However, if requested with the accelerated death benefit claim, future Periodic Planned Premiums and Policy loan interest may be paid automatically through additional accelerated death benefits.

In addition to lapse under the applicable provisions of the Policy, a Policy will also terminate on any Policy Anniversary when the death benefit lien exceeds the Insurance Proceeds at death.

Other Riders

In addition to the ADB Rider and Long-Term Care Benefit Riders, the following riders offer other supplementary benefits.  Most are subject to various age and underwriting requirements and, unless otherwise indicated, must be purchased when the Policy is issued.  The cost of each rider is included in the Monthly Deduction.

Disability Waiver Benefit.  A Disability Waiver Benefit Rider provides that in the event of the Insured's total disability before Attained Age 60 and continuing for at least six months, NLIC will apply a premium payment to the Policy on each Policy Processing Day during the first two Policy Years (the amount of the payment will be based on the Minimum Annual Premium).  NLIC will also waive all Monthly Deductions after the commencement of and during the continuance of such total disability after the first two Policy Years.

Disability Waiver of Premium Benefit.  A Policy may include the Disability Waiver of Premium Benefit Rider that provides that, in the event of the Insured's total disability before Attained Age 60 and continuing for at least 180 days, NLIC will apply a premium payment to the Policy on each Policy Processing Day prior to Insured's Attained Age 65 and while the Insured remains totally disabled.

At the time of application, the Owner selects a monthly benefit amount.  This amount is generally intended to reflect the amount of the premiums expected to be paid monthly.  In the event of Insured's total disability the amount of the premium payment applied on each Policy Processing Day will be the lesser of: (a) the monthly benefit amount; or (b) the monthly average of the premium payments less partial withdrawals for the Policy since its Policy Date.  An Owner cannot elect this rider and another disability waiver benefit rider with the same Policy.

This supplementary benefit must be selected at the time of application and cannot be added after issue.  However, for Policies issued prior to the date the Disability Waiver of Premium Benefit Rider is approved in a particular state, the rider can be added as a supplementary benefit to the Policy within 6 months after state approval.  NLIC reserves the right to require Evidence of Insurability to add this rider to an existing Policy.

Change of Insured.  A Change of Insured Rider permits the Owner to change the Insured, subject to certain conditions and Evidence of Insurability.  The Monthly Deduction for the cost of insurance is adjusted to that for the new Insured as of the effective date of the change.  A change of Insured is a taxable event.

Children's Term Rider.  A Children's Term Insurance Rider provides level term insurance on each insured child until the earlier of age 25 of the child or the Policy Anniversary nearest the Insured's 65th birthday.  When the term insurance expires on the life of an insured child, it may be converted without Evidence of Insurability to a whole life policy providing a level face amount of insurance and a level premium.  The new policy may be up to five times the amount of the term insurance.  The rider is issued to provide between $5,000 and $15,000 of term insurance on each insured child.  Each insured child under a rider will have the same amount of insurance.  This rider must be selected at the time of application for the Policy or an increase in Face Amount.

Other Insured Convertible Term Life Insurance.  An Other Insured Convertible Term Life Insurance Rider provides additional term insurance on an insured other than the Insured, on whom the Insured has an insurable interest.  This rider will terminate at the earlier of Attained Age 100 (80 in New York) of the other Insured or at the termination or maturity of the Policy.  If the Policy is extended by the Final Policy Date Extension Rider, the Convertible Term Life Insurance Rider will terminate on the original maturity date.

9

Final Policy Date Extension.  A Final Policy Date Extension Rider extends the Final Policy Date of a Policy 20 years from the original Final Policy Date.  It may only be added on or after the anniversary nearest the Insured's 90th birthday.  There is no charge for adding this rider.  The Death Benefit after the original Final Policy Date will be the Policy Account Value.  All other riders attached and in effect on the original Final Policy Date will terminate on the original Final Policy Date.

The tax consequences of: (1) adding a Final Policy Date Extension Rider to the Policy; and (2) the Policy continuing in force after the Insured's 100th birthday are uncertain.  Prospective Owners and Owners considering the addition of a Final Policy Date Extension Rider to a Policy should consult their own legal or other advisors as to such consequences.

ILLUSTRATIONS

Before you purchase the Policy and after the first Policy Anniversary, upon your request, you may ask for an illustration of future benefits under the Policy based upon the proposed Insured's Issue Age and Premium Class, the Death Benefit option, Face Amount, Planned Periodic Premiums, and riders requested.  Illustrations are provided free of charge.

PERFORMANCE DATA

Rating Agencies

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

Money Market Yields

We may advertise the "yield" and "effective yield" for the Money Market Subaccount .  Yield and effective yield are annualized, which means that it is assumed that the Portfolio 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 Portfolio'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 Subaccount s

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

STANDARD & POOR'S

"Standard & Poor's®," "S&P®," "S&P 500®," "Standard & Poor's 500," and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by NLIC and the Nationwide Variable Insurance Trust.  Neither the Policy nor the S&P 500 Index Fund is sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P").

S&P makes no representation or warranty, express or implied, to the Owners of the Policy and the S&P 500 Index Fund or any member of the public regarding the advisability of investing in securities generally or in the Policy and the S&P 500 Index Fund particularly or the ability of the S&P 500 Index to track general stock market performance.  S&P's only relationship to NLIC and Nationwide Variable Insurance Trust is the licensing of certain trademarks and trade names of S&P and of the S&P 500 Index, which is determined, composed and calculated by S&P without regard to NLIC, Nationwide Variable Insurance Trust, the Policy, or the S&P 500 Index Fund.  S&P has no obligation to take the needs of NLIC, Nationwide Variable Insurance Trust, or the Owners of the Policy or the S&P 500 Index Fund into consideration in determining, composing or calculating the S&P 500 Index.  S&P is not responsible for and has not participated in the determination of the prices and amount of the Policy or the S&P 500 Index Fund or the timing of the issuance or sale of the Policy or the S&P 500 Index Fund or in the determination or calculation of the equation by which the Policy or the S&P 500 Index Fund are to be converted into cash.  S&P has no obligation or liability in connection with the administration, marketing or trading of the Policy or the S&P 500 Index Fund.

S&P does not guarantee the accuracy and/or the completeness of the S&P 500 Index or any data included therein and S&P shall have no liability for any errors, omissions, or interruptions therein.  S&P makes no warranty, express or implied, as to results to be obtained by NLIC, Nationwide Variable Insurance Trust, Owners of the Policy and the S&P 500 Index Fund, or any other person or entity from the use of the S&P 500 Index or any data included therein.  S&P makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to

10

the S&P 500 Index or any data included therein.  Without limiting any of the foregoing, in no event shall S&P have any liability for any special, punitive, indirect, or consequential damages (including lost profits), even if notified of the possibility of such damages.

ADDITIONAL INFORMATION

Potential Conflicts of Interest

Shares of the Funds are sold to separate accounts of insurance companies that are not affiliated with NLIC or each other, a practice known as "shared funding."  They are also sold to separate accounts to serve as the underlying investment for both variable annuity contracts and variable life insurance policies, a practice known as "mixed funding."  As a result, there is a possibility that a material conflict may arise between the interest of Owners whose Policy Account Values are allocated to the Subaccount s and of owners of other contracts or policies whose values are allocated to one or more other separate accounts investing in any one of the Portfolios.

Shares of some of the Funds may also be sold directly to certain pension and retirement plans qualifying under Section 401 of the Code.  As a result, there is a possibility that a material conflict may arise between the interest of Owners or owners of other policies or contracts (including policies issued by other companies), and such retirement plans or participants in such retirement plans.  In the event of any such material conflicts, NLIC will consider what action may be appropriate, including removing the Portfolio as an investment option under the Policies or replacing the Portfolio with another portfolio.  There are certain risks associated with mixed and shared funding and with the sale of shares to qualified pension and retirement plans, as disclosed in each Fund's prospectus.

Policies Issued in Conjunction with Employee Benefit Plans

Policies may be acquired in conjunction with employee benefit plans ("EBS Policies"), including the funding of qualified pension plans meeting the requirements of Section 401 of the Code.  For EBS Policies, the maximum mortality rates used to determine the monthly cost of insurance charge are based on the Commissioners' 1980 Standard Ordinary Mortality Tables NB and SB.  Under these tables, mortality rates are the same for male and female Insureds of a particular Attained Age and Premium Class.  Illustrations reflecting the premiums and charges for EBS Policies will be provided upon request to purchasers of these Policies.  There is no provision for misstatement of sex in the EBS Policies.  Also, the rates used to determine the amount payable under a particular settlement option will be the same for male and female Insureds.

Legal Developments Regarding Unisex Actuarial Tables

In 1983, the United States Supreme Court held in Arizona Governing Committee v. Norris that optional annuity benefits provided under an employee's deferred compensation plan could not, under Title VII of the Civil Rights Act of 1964, vary between men and women on the basis of sex.  In that case, the Supreme Court applied its decision only to benefits derived from contributions made on or after August 1, 1983.  Subsequent decisions of lower federal courts indicate that, in other factual circumstances, the Title VII prohibition of sex-distinct benefits may apply at an earlier date.  In addition, legislative, regulatory, or decisional authority of some states may prohibit the use of sex-distinct mortality tables under certain circumstances.  The Policies, other than Policies issued in states that require "unisex" policies (currently Montana) and EBS Policies are based upon actuarial tables that distinguish between men and women and, thus, the Policy provides different benefits to men and women of the same age.  Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of these authorities on any employment-related insurance or benefits program before purchasing the Policy and in determining whether an EBS Policy is appropriate.

Safekeeping of Account Assets

NLIC holds the Separate Account's assets physically segregated and apart from the General Account.  NLIC maintains records of all purchases and sale of Portfolio shares by each of the Subaccount s.  A fidelity bond in the amount of $25 million per occurrence and $50 million in the aggregate covering NLIC's officers and employees has been issued by Fidelity and Deposit Insurance Company (a division of Zurich American Insurance Company).

Policy Reports

At least once each Policy Year a statement will be sent to the Owner describing the status of the Policy, including setting forth the Face Amount, the current Death Benefit, any Policy loans and accrued interest, the current Policy Account Value, the Guaranteed Account value, the Loan Account value, the value in each Subaccount , premiums paid since the last report, charges deducted since the last report, any partial withdrawals since the last report, and the current Net Cash Surrender Value.  At the present time, NLIC plans to send these Policy statements on a quarterly basis.  In addition, a statement will be sent to an Owner showing the status of the Policy following the transfer of amounts from one Subaccount to another (excluding automatic rebalancing of Policy Account Value), the taking of a loan, a repayment of a loan, a partial withdrawal and the payment of any premiums (excluding those paid by bank draft or otherwise under the automatic payment plan).  An Owner may request that a similar report be prepared at other times.  NLIC may charge a reasonable fee for such requested reports and may limit the scope and frequency of such requested reports.

An Owner will be sent semi-annual reports containing the financial statements of each Portfolio in which he or she is invested.

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Records

NLIC will maintain all records relating to the Separate Account and the Guaranteed Account at the Service Center.

Independent Registered Public Accounting Firm

The financial statements of Nationwide Provident VLI Separate Account - 1 and the consolidated financial statements and schedules of Nationwide Life Insurance Company and subsidiaries for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.  KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215.

Additional Information About the Company

Nationwide Life Insurance Company (“NLIC”) is a stock life insurance company organized under Ohio law in March 1929, with its Main Administrative Office at One Nationwide Plaza, Columbus, Ohio 43215.  NLIC provides life insurance, annuities and retirement products.  NLIC is admitted to do business in all states, the District of Columbia and Puerto Rico.  NLIC is a member of the Nationwide group of companies, which is comprised of Nationwide Mutual Insurance Company (“NMIC”) and all of its subsidiaries and affiliates.  NLIC is a wholly owned subsidiary of Nationwide Financial Services, Inc. (“NFS”), a holding company.  NLIC is an indirect wholly owned subsidiary, and NFS a direct wholly owned subsidiary, of NMIC.

On January 1, 2009, NFS became a private wholly owned subsidiary of NMIC.  NFS is the holding company of NLIC and other companies that comprise the retirement savings operations of the Nationwide group of companies.  The Nationwide group of companies is one of America’s largest insurance and financial services family of companies, with combined assets of over $148.7 billion as of December 31, 2010.

Before January 1, 2010, the Policies were issued by Nationwide Life Insurance Company of America (“NLICA”), at that time a wholly owned subsidiary of NFS.  NLICA was chartered by the Commonwealth of Pennsylvania in 1865 under the name Provident Mutual Life Insurance Company (“PMLIC”).  On October 1, 2002, PMLIC converted from a mutual insurance company to a stock insurance company, changed its name to Nationwide Life Insurance Company of America, and became a wholly owned subsidiary of NFS, pursuant to terms of a sponsored demutualization.  Effective following the close of business on December 31, 2009, NLICA merged with and into NLIC, and NLIC was the surviving company.

NLIC submits annual statements on our operations and finances to insurance officials in all states and jurisdictions in which it does business.  NLIC has filed the Policy with insurance officials in those jurisdictions in which the Policy is sold.

NLIC intends to reinsure a portion of the risks assumed under the Policies.

Underwriters

The current distributor of the Policies is Nationwide Investment Services Corporation ("NISC"), located at One Nationwide Plaza, Columbus, Ohio 43215, an affiliate of NLIC.  Until May 1, 2009, the Policies were distributed by Nationwide Securities, LLC ("NSLLC") (formerly, 1717 Capital Management Company), located at One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned indirect subsidiary of NLIC.

The Policies were sold on a continuous basis until December 31, 2008, by licensed insurance agents in those states where the Policies could lawfully be sold. Beginning January 1, 2009, no new policies will be sold, but agents may continue to accept additional premium on existing Policies.  Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the Financial Industry Regulatory Authority ("FINRA").

Gross first year commissions paid by NLIC on the sale of these Policies provided by NISC are approximately 91% of the target premium plus 2% of any excess premium payments.  We pay gross renewal commissions in years 2 through 10 on the sale of the Policies provided by NISC that will not exceed 2% of actual premium payment, and will be 0% in policy years 11 and thereafter.  Expense allowances and bonuses may also be paid, and firms may receive annual renewal compensation of up to 0.25% of the unloaned Policy Account Value.

NISC received no compensation as principal underwriter of variable life insurance policies and variable annuity contracts offered by insurance company subsidiaries of Nationwide Financial Services, Inc. during 2011, 2010, or 2009.  NSLLC received $0, $0, and $6,996,236 during 2011, 2010 and 2009, respectively, as principal underwriter of the Policies and of other variable life insurance policies and variable annuity contracts offered by NLIC and its affiliates.  However, NSLLC did not retain any of the compensation it received as principal underwriter during the past 3 fiscal years.

Additional Information About the Separate Account

On October 1, 2002, in connection with the sponsored demutualization (whereby NLICA converted from a mutual insurance company to a stock life insurance company, became a wholly-owned subsidiary of NFS, and changed its name from Provident Mutual Life Insurance Company to Nationwide Life Insurance Company of America), the Provident Mutual Variable Life Separate Account changed its name to the Nationwide Provident VLI Separate Account 1.

12

Other Information

A registration statement has been filed with the SEC under the Securities Act of 1933, as amended, with respect to the Policies.  Not all the information set forth in the registration statement, and the amendments and exhibits thereto, has been included in the prospectus and this SAI.  Statements contained in this SAI concerning the content of the Policies and other legal instruments are intended to be summaries.  For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC at 100 F Street NE Washington, DC 20549.

FINANCIAL STATEMENTS

All financial statements included in the SAI should be considered only as bearing on our ability to meet our obligations under the Policies.  They should not be considered as bearing on the investment performance of the assets held in the Separate Account.

13

Report of Independent Registered Public Accounting Firm

The Board of Directors of Nationwide Life Insurance Company and Subsidiaries and

Contract Owners of Nationwide Provident VLI Separate Account 1:

We have audited the accompanying statement of assets, liabilities and contract owners’ equity of Nationwide Provident VLI Separate Account 1 (comprised of the sub-accounts listed in note 1(b), (collectively, “the Accounts”)) as of December 31, 2011, 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 audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2011, 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, 2011, 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, 2012

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2011

Assets:
Investments at fair value:
Small Cap Growth Portfolio: Class I-2 Shares (AASCO)
	725,107 shares (cost $14,557,514)	$	22,500,064
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)
	56,693 shares (cost $891,269)		841,894
Stock Index Fund, Inc. - Initial Shares (DSIF)
	242,010 shares (cost $7,035,570)		7,134,443
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
	83,247 shares (cost $2,325,385)		2,309,274
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
	107,735 shares (cost $3,403,264)		3,524,011
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)
	126,597 shares (cost $628,262)		668,432
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
	40,265 shares (cost $206,643)		208,171
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
	145,204 shares (cost $6,734,177)		5,465,493
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
	39,039 shares (cost $1,722,944)		1,460,833
Investors Growth Stock Series - Initial Class (MIGIC)
	69,032 shares (cost $683,182)		760,048
Value Series - Initial Class (MVFIC)
	203,740 shares (cost $2,360,529)		2,583,420
Variable Insurance Trust II - International Value Portfolio - Service Class (MVIVSC)
	36,100 shares (cost $569,738)		541,140
Core Plus Fixed Income Portfolio - Class I (MSVFI)
	71,501 shares (cost $713,393)		728,594
Emerging Markets Debt Portfolio - Class I (MSEM)
	58,766 shares (cost $475,821)		488,349
U.S. Real Estate Portfolio - Class I (MSVRE)
	45,903 shares (cost $478,697)		622,910
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
	423,750 shares (cost $5,924,902)		5,932,505
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
	24,835 shares (cost $411,295)		428,159
American Funds NVIT Bond Fund - Class II (GVABD2)
	35,358 shares (cost $371,543)		404,143
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
	56,307 shares (cost $1,059,678)		1,104,735
American Funds NVIT Growth Fund - Class II (GVAGR2)
	20,349 shares (cost $957,948)		1,050,232
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
	5,340 shares (cost $177,670)		190,652
Federated NVIT High Income Bond Fund - Class I (HIBF)
	63,094 shares (cost $429,099)		412,636
Federated NVIT High Income Bond Fund - Class III (HIBF3)
	243,454 shares (cost $1,607,836)		1,589,757
NVIT Emerging Markets Fund - Class I (GEM)
	117,658 shares (cost $1,239,855)		1,195,402
NVIT Emerging Markets Fund - Class III (GEM3)
	298,040 shares (cost $3,083,098)		3,022,124
NVIT International Equity Fund - Class III (GIG3)
	10,304 shares (cost $86,472)		82,532
Gartmore NVIT International Equity Fund - Class VI (NVIE6)
	39,589 shares (cost $313,993)		315,920
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
	1,474,048 shares (cost $11,436,604)		11,482,834
Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)
	16,736 shares (cost $174,420)		166,356
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)
	23,854 shares (cost $207,414)		192,979
NVIT Cardinal Balanced Fund - Class I (NVCRB1)
	1,468 shares (cost $15,482)		14,654

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2011

NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)
	5,184 shares (cost $54,236)	49,297
NVIT Cardinal Moderate Fund - Class I (NVCMD1)
	61,204 shares (cost $568,460)	597,350
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)
	100,553 shares (cost $900,212)	923,074
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)
	3,024 shares (cost $29,909)	30,690
NVIT Core Bond Fund - Class I (NVCBD1)
	27,636 shares (cost $296,236)	300,960
NVIT Core Plus Bond Fund - Class I (NVLCP1)
	3,327 shares (cost $37,862)	38,227
NVIT Fund - Class IV (TRF4)
	9,406,874 shares (cost $100,112,490)	85,132,208
NVIT Government Bond Fund - Class I (GBF)
	43,878 shares (cost $519,861)	523,461
NVIT Government Bond Fund - Class IV (GBF4)
	1,610,584 shares (cost $18,891,954)	19,214,267
American Century NVIT Growth Fund - Class IV (CAF4)
	1,226,306 shares (cost $13,451,110)	16,873,973
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
	506,109 shares (cost $4,746,226)	4,428,453
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
	1,465 shares (cost $19,388)	18,786
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
	397 shares (cost $5,825)	5,481
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
	287,698 shares (cost $2,898,012)	2,934,521
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
	4,139,097 shares (cost $36,251,504)	42,756,870
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
	2,211,129 shares (cost $23,588,036)	22,044,956
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
	210,331 shares (cost $2,154,282)	2,185,343
NVIT Mid Cap Index Fund - Class I (MCIF)
	196,867 shares (cost $3,214,331)	3,455,014
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
	175,507 shares (cost $1,430,520)	1,533,927
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
	1,637,180 shares (cost $20,200,957)	13,654,084
NVIT Multi-Manager International Value Fund - Class IV (GVDIV4)
	1,496,558 shares (cost $20,453,875)	12,526,190
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
	385,081 shares (cost $3,513,168)	3,592,808
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)
	309,025 shares (cost $2,778,857)	2,490,744
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
	4,320,861 shares (cost $30,708,097)	44,029,569
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
	477,727 shares (cost $4,066,285)	4,743,828
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
	126,858 shares (cost $1,668,077)	1,944,728
NVIT Multi-Manager Small Cap Value Fund - Class IV (SCVF4)
	1,649,985 shares (cost $17,662,552)	16,285,353
NVIT Multi-Manager Small Company Fund - Class IV (SCF4)
	916,374 shares (cost $16,938,288)	15,541,703
NVIT Multi-Sector Bond Fund - Class I (MSBF)
	200,049 shares (cost $1,658,732)	1,734,425
NVIT S&P 500 Index Fund - Class IV (GVEX4)
	13,274,645 shares (cost $104,788,756)	116,020,397
NVIT Short Term Bond Fund - Class II (NVSTB2)
	200,630 shares (cost $2,079,846)	2,068,492
NVIT Large Cap Growth Fund - Class I (NVOLG1)
	5,675,920 shares (cost $85,917,708)	83,379,269

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2011

Templeton NVIT International Value Fund - Class III (NVTIV3)
	14,453 shares (cost $182,906)	153,635
Van Kampen NVIT Comstock Value Fund - Class IV (EIF4)
	1,491,477 shares (cost $16,263,454)	14,556,813
NVIT Real Estate Fund - Class I (NVRE1)
	368,656 shares (cost $2,672,938)	3,340,024
NVIT Money Market Fund - Class IV (SAM4)
	42,281,193 shares (cost $42,281,193)	42,281,193
VPS Growth and Income Portfolio - Class A (ALVGIA)
	83,335 shares (cost $1,373,286)	1,504,191
VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)
	168,092 shares (cost $2,316,789)	2,598,700
VP Income & Growth Fund - Class I (ACVIG)
	211,679 shares (cost $1,336,578)	1,299,706
VP Inflation Protection Fund - Class II (ACVIP2)
	292,276 shares (cost $3,129,755)	3,434,246
VP International Fund - Class I (ACVI)
	44,037 shares (cost $315,360)	327,192
VP Mid Cap Value Fund - Class I (ACVMV1)
	59,205 shares (cost $761,403)	799,272
VP Ultra(R) Fund - Class I (ACVU1)
	4,236 shares (cost $35,602)	40,154
VP Vista(SM) Fund - Class I (ACVVS1)
	12 shares (cost $153)	177
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
	504,215 shares (cost $4,909,589)	6,136,294
Appreciation Portfolio - Initial Shares (DCAP)
	65,282 shares (cost $2,181,238)	2,480,700
Opportunistic Small Cap Portfolio: Initial Shares (DSC)
	9,310 shares (cost $264,614)	244,469
Capital Appreciation Fund II - Primary Shares (FVCA2P)
	16,167 shares (cost $92,570)	97,325
Quality Bond Fund II - Primary Shares (FQB)
	246,168 shares (cost $2,756,839)	2,759,543
Equity-Income Portfolio - Initial Class (FEIP)
	4,224,713 shares (cost $93,471,066)	78,959,884
High Income Portfolio - Initial Class (FHIP)
	1,630,530 shares (cost $8,750,611)	8,788,556
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)
	2,191,944 shares (cost $30,869,065)	30,248,832
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
	93,043 shares (cost $1,601,324)	1,741,758
VIP Fund - Equity-Income Portfolio - Service Class (FEIS)
	201,942 shares (cost $3,851,013)	3,762,171
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
	69,790 shares (cost $709,986)	718,837
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
	162,358 shares (cost $1,599,161)	1,656,053
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
	130,348 shares (cost $1,267,034)	1,263,070
VIP Fund - Growth Portfolio - Initial Class (FGP)
	2,827,200 shares (cost $86,316,135)	104,295,421
VIP Fund - Growth Portfolio - Service Class (FGS)
	59,924 shares (cost $1,998,948)	2,205,794
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)
	790,190 shares (cost $4,304,508)	4,243,323
VIP Fund - Investment Grade Bond Portfolio - Initial Class (FIGBP)
	2,708,474 shares (cost $33,822,940)	35,128,911
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
	118,054 shares (cost $1,469,112)	1,518,169
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
	371,542 shares (cost $10,692,480)	10,748,707
VIP Fund - Overseas Portfolio - Initial Class (FOP)
	867,203 shares (cost $15,916,151)	11,819,976
VIP Fund - Overseas Portfolio - Initial Class R (FOPR)
	1,358,636 shares (cost $24,682,952)	18,477,445

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2011

VIP Fund - Overseas Portfolio - Service Class (FOS)
	3,905 shares (cost $76,935)	53,026
VIP Fund - Overseas Portfolio - Service Class R (FOSR)
	156,704 shares (cost $2,604,715)	2,123,334
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
	221,723 shares (cost $1,715,895)	1,942,292
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)
	320,164 shares (cost $5,070,190)	6,406,484
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)
	325,825 shares (cost $4,616,215)	5,154,555
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
	235,768 shares (cost $2,164,663)	2,206,784
Templeton Foreign Securities Fund - Class 1 (TIF)
	90,574 shares (cost $1,245,476)	1,157,535
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
	137,936 shares (cost $2,457,264)	2,503,538
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
	3,902 shares (cost $28,029)	29,614
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)
	810,956 shares (cost $9,479,577)	8,750,214
International Portfolio - S Class Shares (AMINS)
	227 shares (cost $2,188)	1,914
Mid-Cap Growth Portfolio - I Class Shares (AMCG)
	10,786 shares (cost $243,536)	297,141
Partners Portfolio - I Class Shares (AMTP)
	274,979 shares (cost $2,264,741)	2,747,040
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
	38,615 shares (cost $418,274)	468,400
Socially Responsive Portfolio - I Class Shares (AMSRS)
	42,055 shares (cost $501,632)	603,483
Global Securities Fund/VA - Class 3 (OVGS3)
	277,532 shares (cost $8,233,123)	7,673,766
Global Securities Fund/VA - Non-Service Shares (OVGS)
	42,976 shares (cost $1,211,563)	1,180,116
High Income Fund/VA - Class 3 (OVHI3)
	178,180 shares (cost $323,964)	342,106
High Income Fund/VA - Non-Service Shares (OVHI)
	50,231 shares (cost $101,333)	95,439
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
	103,087 shares (cost $2,163,286)	2,134,932
Main Street Small- & Mid-Cap Fund(R)/VA - Non-Service Shares (OVSC)
	64,644 shares (cost $943,486)	1,109,940
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)
	18,610 shares (cost $213,171)	224,990
Low Duration Portfolio - Administrative Class (PMVLDA)
	54,074 shares (cost $563,892)	561,283
Total Return Portfolio - Administrative Class (PMVTRA)
	41,754 shares (cost $468,557)	460,132
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
	12,916 shares (cost $191,048)	197,617
Putnam VT International Equity Fund - IB Shares (PVTIGB)
	7,352 shares (cost $71,949)	69,768
Putnam VT Voyager Fund - IB Shares (PVTVB)
	23,079 shares (cost $829,232)	733,001
V.I. Basic Value Fund - Series I (AVBVI)
	25,277 shares (cost $131,136)	154,698
V.I. Capital Appreciation Fund - Series I (AVCA)
	12,423 shares (cost $266,514)	266,106
V.I. Capital Development Fund - Series I (AVCDI)
	96,013 shares (cost $1,260,280)	1,195,357
Health Sciences Portfolio - II (TRHS2)
	17,993 shares (cost $305,717)	288,793
VIP Trust - Global Bond Fund: Class R1 (VWBFR)
	404,445 shares (cost $4,634,385)	4,736,047

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS’ EQUITY

December 31, 2011

VIP Trust - Global Bond Fund: Initial Class (VWBF)
	266,603 shares (cost $3,027,761)		3,121,924
VIP Trust - Emerging Markets Fund: Class R1 (VWEMR)
	1,042,239 shares (cost $10,606,158)		10,828,860
VIP Trust - Emerging Markets Fund: Initial Class (VWEM)
	1,027,690 shares (cost $12,579,107)		10,687,971
VIP Trust - Global Hard Assets Fund: Class R1 (VWHAR)
	347,120 shares (cost $10,460,051)		10,684,347
VIP Trust - Global Hard Assets Fund: Initial Class (VWHA)
	185,233 shares (cost $5,839,813)		5,695,918
Vanguard(R) Variable Insurance Funds - Equity Income Portfolio (VVEI)
	117,296 shares (cost $1,713,792)		1,868,530
Vanguard(R) Variable Insurance Funds - High Yield Bond Portfolio (VVHYB)
	160,124 shares (cost $1,137,835)		1,236,157
Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)
	227,819 shares (cost $3,028,148)		3,301,098
Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)
	93,045 shares (cost $1,074,897)		1,156,543
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
	32,837 shares (cost $313,963)		299,074
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
	50,800 shares (cost $809,277)		1,085,602
Advantage VT Opportunity Fund - Class 2 (SVOF)
	25,475 shares (cost $354,780)		442,753
Advantage VT Small Cap Growth Fund - Class 2 (WFVSCG)
	13,331 shares (cost $107,592)		102,381
Total Investments		$	1,102,492,288
Accounts Receivable-Templeton NVIT International Value Fund - Class III (NVTIV3)			52,435
Accounts Receivable-VP Vista(SM) Fund - Class I (ACVVS1)			58
Accounts Receivable-Total Return Portfolio - Administrative Class (PMVTRA)			274,872
Accounts Payable-NVIT Core Plus Bond Fund - Class I (NVLCP1)			(37,873)
Other Accounts Payable			(251,739)
		$	1,102,530,041
Contract Owners’ Equity:
Accumulation units			1,102,530,041
Total Contract Owners’ Equity (note 7)		$	1,102,530,041

See accompanying notes to financial statements.

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		Total		AASCO		MLVGA2		DSIF		JABS		JACAS		JAGTS2		JAGTS
Reinvested dividends	$		16,905,227		-		18,505		139,971		63,581		10,683		-		-
Mortality and expense risk charges (note 5)			(6,769,578)		(144,157)		(7,178)		(55,434)		(18,820)		(31,846)		(5,723)		(1,544)
Net investment income (loss)			10,135,649		(144,157)		11,327		84,537		44,761		(21,163)		(5,723)		(1,544)
Realized gain (loss) on investments			(817,443)		2,318,834		39,303		(223,230)		110,894		(259,604)		118,863		30,745
Change in unrealized gain (loss) on investments			(49,672,115)		(3,008,347)		(107,498)		172,168		(290,785)		(53,262)		(191,924)		(51,971)
Net gain (loss) on investments			(50,489,558)		(689,513)		(68,195)		(51,062)		(179,891)		(312,866)		(73,061)		(21,226)
Reinvested capital gains			3,259,206		-		19,380		51,709		139,160		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(37,094,703)		(833,670)		(37,488)		85,184		4,030		(334,029)		(78,784)		(22,770)
Investment Activity:		JAIGS2		JAIGS		MIGIC		MVFIC		MVIVSC		MSVFI		MSEM		MSVRE
Reinvested dividends	$		27,742		9,324		4,447		41,685		5,834		26,957		17,977		5,581
Mortality and expense risk charges (note 5)			(51,722)		(16,217)		(5,233)		(19,671)		(268)		(5,478)		(3,151)		(4,152)
Net investment income (loss)			(23,980)		(6,893)		(786)		22,014		5,566		21,479		14,826		1,429
Realized gain (loss) on investments			(501,450)		(278,893)		9,615		(110,707)		7,499		(25,439)		35,292		119,242
Change in unrealized gain (loss) on investments			(2,327,792)		(655,048)		(12,727)		52,055		(36,839)		41,873		(21,735)		(77,743)
Net gain (loss) on investments			(2,829,242)		(933,941)		(3,112)		(58,652)		(29,340)		16,434		13,557		41,499
Reinvested capital gains			73,921		24,524		-		11,275		-		-		5,600		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(2,779,301)		(916,310)		(3,898)		(25,363)		(23,774)		37,913		33,983		42,928

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		NVAMV1		GVAAA2		GVABD2		GVAGG2		GVAGR2		GVAGI2		HIBF		HIBF3
Reinvested dividends	$		104,849		4,462		8,575		11,383		3,078		1,925		39,970		138,943
Mortality and expense risk charges (note 5)			(47,608)		(2,613)		(2,790)		(8,974)		(8,680)		(1,480)		(3,117)		(11,589)
Net investment income (loss)			57,241		1,849		5,785		2,409		(5,602)		445		36,853		127,354
Realized gain (loss) on investments			20,889		25,946		5,390		(18,747)		(56,629)		7,980		(2,477)		94,406
Change in unrealized gain (loss) on investments			(114,890)		(24,276)		6,720		(102,735)		2,155		(14,196)		(21,381)		(172,881)
Net gain (loss) on investments			(94,001)		1,670		12,110		(121,482)		(54,474)		(6,216)		(23,858)		(78,475)
Reinvested capital gains			16,333		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(20,427)		3,519		17,895		(119,073)		(60,076)		(5,771)		12,995		48,879
Investment Activity:		GEM		GEM3		GIG3		NVIE6		NVNMO1		NVNSR2		NVCRA1		NVCRB1
Reinvested dividends	$		10,492		26,136		709		4,138		78,225		1,012		3,883		188
Mortality and expense risk charges (note 5)			(10,044)		(24,882)		(358)		(2,706)		(71,640)		(1,058)		(1,482)		(66)
Net investment income (loss)			448		1,254		351		1,432		6,585		(46)		2,401		122
Realized gain (loss) on investments			(13,428)		(706,111)		(10,588)		39,011		369,331		4,146		48,406		60
Change in unrealized gain (loss) on investments			(374,044)		(200,035)		(3,940)		(67,758)		(2,111,217)		(17,364)		(64,799)		(1,057)
Net gain (loss) on investments			(387,472)		(906,146)		(14,528)		(28,747)		(1,741,886)		(13,218)		(16,393)		(997)
Reinvested capital gains			-		-		-		-		106,324		-		2,744		93
Net increase (decrease) in contract owners’ equity resulting from operations	$		(387,024)		(904,892)		(14,177)		(27,315)		(1,628,977)		(13,264)		(11,248)		(782)

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		NVCCA1		NVCCN1		NVCMD1		NVCMA1		NVCMC1		NVCBD1		NVLCP1		TRF4
Reinvested dividends	$		591		276		12,568		24,092		805		8,764		987		1,038,344
Mortality and expense risk charges (note 5)			(562)		(93)		(3,650)		(7,171)		(222)		(1,975)		(277)		(193,511)
Net investment income (loss)			29		183		8,918		16,921		583		6,789		710		844,833
Realized gain (loss) on investments			51,669		1,397		9,075		15,836		207		2,078		(21)		(4,954,670)
Change in unrealized gain (loss) on investments			(47,306)		(1,591)		(35,416)		(89,938)		(1,271)		7,512		1,293		4,587,409
Net gain (loss) on investments			4,363		(194)		(26,341)		(74,102)		(1,064)		9,590		1,272		(367,261)
Reinvested capital gains			317		66		3,065		8,675		180		-		35		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		4,709		55		(14,358)		(48,506)		(301)		16,379		2,017		477,572
Investment Activity:		GBF		GBF4		CAF4		GVIDA		NVDBL2		NVDCA2		GVIDC		GVIDM
Reinvested dividends	$		16,045		592,785		106,098		85,139		259		205		43,501		963,389
Mortality and expense risk charges (note 5)			(3,975)		(101,032)		(103,422)		(33,746)		(114)		(75)		(11,568)		(208,505)
Net investment income (loss)			12,070		491,753		2,676		51,393		145		130		31,933		754,884
Realized gain (loss) on investments			588		163,673		874,450		(299,586)		(80)		66		56,261		680,447
Change in unrealized gain (loss) on investments			19,744		640,142		(1,067,622)		43,513		(603)		(992)		(51,864)		(1,665,477)
Net gain (loss) on investments			20,332		803,815		(193,172)		(256,073)		(683)		(926)		4,397		(985,030)
Reinvested capital gains			1,649		58,024		-		-		24		12		5,199		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		34,051		1,353,592		(190,496)		(204,680)		(514)		(784)		41,529		(230,146)

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		GVDMA		GVDMC		MCIF		NVMIG3		GVDIV3		GVDIV4		NVMLG1		NVMLV1
Reinvested dividends	$		486,390		50,743		28,616		22,004		297,397		278,602		277		26,388
Mortality and expense risk charges (note 5)			(172,585)		(15,735)		(26,121)		(11,674)		(87,294)		(75,249)		(27,913)		(19,716)
Net investment income (loss)			313,805		35,008		2,495		10,330		210,103		203,353		(27,636)		6,672
Realized gain (loss) on investments			(1,020,211)		(21,331)		12,405		68,801		(1,745,861)		(529,043)		200,078		(6,309)
Change in unrealized gain (loss) on investments			70,792		15,658		(192,844)		(253,959)		(1,151,542)		(2,291,995)		(235,679)		(308,570)
Net gain (loss) on investments			(949,419)		(5,673)		(180,439)		(185,158)		(2,897,403)		(2,821,038)		(35,601)		(314,879)
Reinvested capital gains			-		-		57,038		-		-		-		-		90,261
Net increase (decrease) in contract owners’ equity resulting from operations	$		(635,614)		29,335		(120,906)		(174,828)		(2,687,300)		(2,617,685)		(63,237)		(217,946)
Investment Activity:		NVMMG1		NVMMV2		SCGF		SCVF4		SCF4		MSBF		GVEX4		NVSTB2
Reinvested dividends	$		-		41,962		-		78,338		91,863		78,319		2,086,134		30,046
Mortality and expense risk charges (note 5)			(245,829)		(36,799)		(14,874)		(109,078)		(100,586)		(12,589)		(748,174)		(13,031)
Net investment income (loss)			(245,829)		5,163		(14,874)		(30,740)		(8,723)		65,730		1,337,960		17,015
Realized gain (loss) on investments			2,577,810		153,922		(62,118)		(527,365)		(924,147)		(45,963)		1,593,999		2,431
Change in unrealized gain (loss) on investments			(4,480,472)		(332,963)		57,534		(454,656)		(115,685)		66,732		(1,346,361)		(13,059)
Net gain (loss) on investments			(1,902,662)		(179,041)		(4,584)		(982,021)		(1,039,832)		20,769		247,638		(10,628)
Reinvested capital gains			-		21,404		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(2,148,491)		(152,474)		(19,458)		(1,012,761)		(1,048,555)		86,499		1,585,598		6,387

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		NVOLG1		NVTIV3		EIF4		NVRE1		SAM4		ALVGIA		ALVSVA		ACVIG
Reinvested dividends	$		631,152		4,180		210,032		30,356		31		22,722		14,262		20,718
Mortality and expense risk charges (note 5)			(558,359)		(877)		(92,347)		(24,719)		(255,146)		(11,903)		(19,860)		(9,572)
Net investment income (loss)			72,793		3,303		117,685		5,637		(255,115)		10,819		(5,598)		11,146
Realized gain (loss) on investments			193,752		(930)		(107,742)		215,062		-		(222,657)		124,961		(83,284)
Change in unrealized gain (loss) on investments			(2,878,260)		(22,892)		(418,586)		(39,860)		-		301,601		(378,869)		105,273
Net gain (loss) on investments			(2,684,508)		(23,822)		(526,328)		175,202		-		78,944		(253,908)		21,989
Reinvested capital gains			327,407		184		-		14,207		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(2,284,308)		(20,335)		(408,643)		195,046		(255,115)		89,763		(259,506)		33,135
Investment Activity:		ACVIP2		ACVI		ACVMV1		ACVU1		ACVVS1		DVSCS		DCAP		DSC
Reinvested dividends	$		129,065		5,322		11,579		-		-		39,209		42,384		1,015
Mortality and expense risk charges (note 5)			(22,216)		(2,118)		(6,175)		(272)		(1)		(45,811)		(17,788)		(1,730)
Net investment income (loss)			106,849		3,204		5,404		(272)		(1)		(6,602)		24,596		(715)
Realized gain (loss) on investments			33,878		29,150		85,654		5,243		41		(464,869)		(75,084)		16,109
Change in unrealized gain (loss) on investments			154,741		(75,161)		(127,132)		(3,800)		(48)		479,054		257,955		(43,716)
Net gain (loss) on investments			188,619		(46,011)		(41,478)		1,443		(7)		14,185		182,871		(27,607)
Reinvested capital gains			37,133		-		23,513		-		-		15,684		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		332,601		(42,807)		(12,561)		1,171		(8)		23,267		207,467		(28,322)

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		FVCA2P		FQB		FEIP		FHIP		FAMP		FNRS2		FEIS		FF10S
Reinvested dividends	$		753		150,704		2,064,781		610,459		624,709		16,437		94,023		14,631
Mortality and expense risk charges (note 5)			(743)		(19,909)		(474,410)		(48,037)		(172,430)		(13,618)		(27,782)		(4,559)
Net investment income (loss)			10		130,795		1,590,371		562,422		452,279		2,819		66,241		10,072
Realized gain (loss) on investments			5,339		73,919		628,526		(222,932)		693,363		(66,383)		(184,808)		(7,015)
Change in unrealized gain (loss) on investments			(11,797)		(157,053)		(1,793,745)		(9,648)		(2,241,784)		(73,023)		131,782		(12,498)
Net gain (loss) on investments			(6,458)		(83,134)		(1,165,219)		(232,580)		(1,548,421)		(139,406)		(53,026)		(19,513)
Reinvested capital gains			-		-		-		-		152,346		-		-		3,705
Net increase (decrease) in contract owners’ equity resulting from operations	$		(6,448)		47,661		425,152		329,842		(943,796)		(136,587)		13,215		(5,736)
Investment Activity:		FF20S		FF30S		FGP		FGS		FHIPR		FIGBP		FIGBS		FMCS
Reinvested dividends	$		34,982		26,092		407,683		6,101		306,968		1,136,261		48,126		17,862
Mortality and expense risk charges (note 5)			(12,296)		(9,769)		(628,317)		(17,265)		(32,204)		(222,702)		(10,912)		(89,431)
Net investment income (loss)			22,686		16,323		(220,634)		(11,164)		274,764		913,559		37,214		(71,569)
Realized gain (loss) on investments			(44,654)		(61,109)		1,929,130		32,310		391,611		377,223		6,784		(132,584)
Change in unrealized gain (loss) on investments			(13,255)		295		(2,046,462)		(38,004)		(511,229)		124,587		8,017		(1,287,143)
Net gain (loss) on investments			(57,909)		(60,814)		(117,332)		(5,694)		(119,618)		501,810		14,801		(1,419,727)
Reinvested capital gains			6,332		3,818		394,663		7,970		-		953,740		39,131		20,467
Net increase (decrease) in contract owners’ equity resulting from operations	$		(28,891)		(40,673)		56,697		(8,888)		155,146		2,369,109		91,146		(1,470,829)

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		FOP		FOPR		FOS		FOSR		FVSS		FTVRDI		FTVSVI		FTVDM3
Reinvested dividends	$		195,801		298,079		819		31,626		19,357		105,661		52,050		26,029
Mortality and expense risk charges (note 5)			(81,830)		(121,155)		(519)		(17,469)		(15,740)		(44,379)		(39,793)		(18,535)
Net investment income (loss)			113,971		176,924		300		14,157		3,617		61,282		12,257		7,494
Realized gain (loss) on investments			820,588		(688,428)		(5,597)		(88,027)		3,551		460,941		(295,163)		109,377
Change in unrealized gain (loss) on investments			(3,565,883)		(3,308,252)		(7,295)		(364,106)		(219,724)		(165,596)		33,240		(583,603)
Net gain (loss) on investments			(2,745,295)		(3,996,680)		(12,892)		(452,133)		(216,173)		295,345		(261,923)		(474,226)
Reinvested capital gains			29,933		42,428		140		4,336		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(2,601,391)		(3,777,328)		(12,452)		(433,640)		(212,556)		356,627		(249,666)		(466,732)
Investment Activity:		TIF		FTVGI3		FTVFA2		AMTB		AMINS		AMCG		AMTP		AMFAS
Reinvested dividends	$		26,460		143,374		9		346,862		133		-		-		-
Mortality and expense risk charges (note 5)			(8,652)		(18,473)		(359)		(57,445)		(11)		(2,041)		(19,131)		(3,801)
Net investment income (loss)			17,808		124,901		(350)		289,417		122		(2,041)		(19,131)		(3,801)
Realized gain (loss) on investments			(108,502)		36,648		542		(362,410)		61		9,986		187,828		(22,697)
Change in unrealized gain (loss) on investments			(57,736)		(224,219)		(2,851)		58,015		(447)		(8,855)		(530,192)		21,625
Net gain (loss) on investments			(166,238)		(187,571)		(2,309)		(304,395)		(386)		1,131		(342,364)		(1,072)
Reinvested capital gains			-		16,705		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(148,430)		(45,965)		(2,659)		(14,978)		(264)		(910)		(361,495)		(4,873)

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		AMSRS		OVGS3		OVGS		OVHI3		OVHI		OVGI		OVSC		PMVFBA
Reinvested dividends	$		2,164		106,518		20,775		30,705		17,193		20,057		8,722		4,416
Mortality and expense risk charges (note 5)			(4,382)		(61,440)		(9,738)		(2,493)		(877)		(16,838)		(9,148)		(1,653)
Net investment income (loss)			(2,218)		45,078		11,037		28,212		16,316		3,219		(426)		2,763
Realized gain (loss) on investments			(14,182)		(111,728)		(73,808)		(40,146)		9,411		(47,580)		(39,188)		7,450
Change in unrealized gain (loss) on investments			(11,958)		(669,652)		(43,979)		2,785		(24,257)		19,654		10,925		5,261
Net gain (loss) on investments			(26,140)		(781,380)		(117,787)		(37,361)		(14,846)		(27,926)		(28,263)		12,711
Reinvested capital gains			-		-		-		-		-		-		-		712
Net increase (decrease) in contract owners’ equity resulting from operations	$		(28,358)		(736,302)		(106,750)		(9,149)		1,470		(24,707)		(28,689)		16,186
Investment Activity:		PMVLDA		PMVTRA		PVGIB		PVTIGB		PVTVB		AVBVI		AVCA		AVCDI
Reinvested dividends	$		10,087		3,840		2,990		2,783		-		1,521		477		-
Mortality and expense risk charges (note 5)			(4,498)		(349)		(1,555)		(537)		(5,297)		(1,009)		(2,149)		(9,664)
Net investment income (loss)			5,589		3,491		1,435		2,246		(5,297)		512		(1,672)		(9,664)
Realized gain (loss) on investments			8,041		(106)		1,642		3,909		13,376		27,018		(11,644)		(29,054)
Change in unrealized gain (loss) on investments			(10,994)		(8,425)		(13,603)		(20,814)		(185,424)		(32,159)		(12,666)		(64,878)
Net gain (loss) on investments			(2,953)		(8,531)		(11,961)		(16,905)		(172,048)		(5,141)		(24,310)		(93,932)
Reinvested capital gains			-		6,356		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		2,636		1,316		(10,526)		(14,659)		(177,345)		(4,629)		(25,982)		(103,596)

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		TRHS2		VWBFR		VWBF		VWEMR		VWEM		VWHAR		VWHA		VVEI
Reinvested dividends	$		-		358,175		267,344		144,461		154,313		158,152		88,392		42,192
Mortality and expense risk charges (note 5)			(1,261)		(21,009)		(18,182)		(71,705)		(71,951)		(64,780)		(41,636)		(17,226)
Net investment income (loss)			(1,261)		337,166		249,162		72,756		82,362		93,372		46,756		24,966
Realized gain (loss) on investments			5,364		(4,341)		21,648		(285,739)		(1,108,009)		(70,152)		259,419		(76,502)
Change in unrealized gain (loss) on investments			(16,605)		(94,592)		(93,464)		(3,616,807)		(2,893,798)		(2,407,123)		(1,551,175)		215,623
Net gain (loss) on investments			(11,241)		(98,933)		(71,816)		(3,902,546)		(4,001,807)		(2,477,275)		(1,291,756)		139,121
Reinvested capital gains			-		91,314		68,157		-		-		170,145		94,646		-
Net increase (decrease) in contract owners’ equity resulting from operations	$		(12,502)		329,547		245,503		(3,829,790)		(3,919,445)		(2,213,758)		(1,150,354)		164,087
Investment Activity:		VVHYB		VVMCI		VVHGB		WRASP		SVDF		SVOF		WFVSCG		NVAGF3
Reinvested dividends	$		92,387		34,659		38,999		4,927		-		712		-		4,103
Mortality and expense risk charges (note 5)			(12,058)		(32,605)		(11,107)		(3,141)		(7,118)		(3,147)		(765)		(322)
Net investment income (loss)			80,329		2,054		27,892		1,786		(7,118)		(2,435)		(765)		3,781
Realized gain (loss) on investments			(22,764)		(120,676)		16,642		37,090		50,117		83,314		3,882		(20,362)
Change in unrealized gain (loss) on investments			14,057		32,131		21,075		(53,731)		(51,738)		(107,486)		(11,623)		13,140
Net gain (loss) on investments			(8,707)		(88,545)		37,717		(16,641)		(1,621)		(24,172)		(7,741)		(7,222)
Reinvested capital gains			-		-		10,592		-		-		-		-		5,599
Net increase (decrease) in contract owners’ equity resulting from operations	$		71,622		(86,491)		76,201		(14,855)		(8,739)		(26,607)		(8,506)		2,158

(Continued)    

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENT OF OPERATIONS

Year Ended December 31, 2011

Investment Activity:		NVAGF6
Reinvested dividends	$	14,122
Mortality and expense risk charges (note 5)		(501)
Net investment income (loss)		13,621
Realized gain (loss) on investments		(43,524)
Change in unrealized gain (loss) on investments		17,533
Net gain (loss) on investments		(25,991)
Reinvested capital gains		20,831
Net increase (decrease) in contract owners’ equity resulting from operations	$	8,461

See accompanying notes to financial statements.

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		Total				AASCO				MLVGA2				DSIF
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		10,135,649		7,975,896		(144,157)		(151,655)		11,327		5,152		84,537		78,775
Realized gain (loss) on investments			(817,443)		(42,683,430)		2,318,834		2,438,067		39,303		13,237		(223,230)		(206,534)
Change in unrealized gain (loss) on investments			(49,672,115)		202,622,483		(3,008,347)		3,134,203		(107,498)		44,375		172,168		1,089,982
Reinvested capital gains			3,259,206		4,117,552		-		-		19,380		4,947		51,709		-
Net increase (decrease) in contract owners’ equity resulting from operations			(37,094,703)		172,032,501		(833,670)		5,420,615		(37,488)		67,711		85,184		962,223
Equity transactions:
Purchase payments received from contract owners			136,470,718		266,285,262		1,910,504		1,999,836		355,105		846,088		1,155,021		1,275,614
Transfers between funds (note 5)			(994,812)		(1,315,787)		(26,274)		(52,070)		-		(11)		138		(22)
Surrenders and Death Benefits (notes 3 and note 5)			(179,877,071)		(309,584,057)		(2,990,204)		(3,611,253)		(356,849)		(351,978)		(1,262,440)		(908,350)
Net policy repayments (loans) (note 4)			4,136,129		(55,313)		45,410		(39,766)		(2,041)		(2,182)		(97,639)		(28,126)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(97,036,008)		(100,127,047)		(1,831,600)		(1,849,793)		(87,215)		(40,204)		(550,517)		(574,162)
Adjustments to maintain reserves			522,226		(715,063)		(116,322)		16,253		(66)		30,444		(85)		(19,158)
Net equity transactions			(136,778,818)		(145,512,005)		(3,008,486)		(3,536,793)		(91,066)		482,157		(755,522)		(254,204)
Net change in contract owners’ equity			(173,873,521)		26,520,496		(3,842,156)		1,883,822		(128,554)		549,868		(670,338)		708,019
Contract owners’ equity beginning of period			1,276,403,562		1,249,883,066		26,343,396		24,459,574		970,493		420,625		7,804,777		7,096,758
Contract owners’ equity end of period	$		1,102,530,041		1,276,403,562		22,501,240		26,343,396		841,939		970,493		7,134,439		7,804,777
CHANGES IN UNITS:
Beginning units			4,975,815		5,258,938		127,524		149,187		7,341		3,470		48,256		50,267
Units purchased			721,669		1,564,446		11,427		14,623		2,713		7,220		8,044		9,273
Units redeemed			(1,254,829)		(1,847,569)		(26,239)		(36,286)		(3,396)		(3,349)		(11,704)		(11,284)
Ending units			4,442,655		4,975,815		112,712		127,524		6,658		7,341		44,596		48,256

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		JABS				JACAS				JAGTS2				JAGTS
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		44,761		51,357		(21,163)		(21,861)		(5,723)		(5,063)		(1,544)		(1,317)
Realized gain (loss) on investments			110,894		15,964		(259,604)		(119,783)		118,863		(10,912)		30,745		847
Change in unrealized gain (loss) on investments			(290,785)		134,599		(53,262)		400,990		(191,924)		187,210		(51,971)		43,229
Reinvested capital gains			139,160		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			4,030		201,920		(334,029)		259,346		(78,784)		171,235		(22,770)		42,759
Equity transactions:
Purchase payments received from contract owners			376,395		1,218,978		424,717		983,909		256,779		247,531		88,568		95,360
Transfers between funds (note 5)			29		-		154		10		-		-		21		-
Surrenders and Death Benefits (notes 3 and note 5)			(691,186)		(969,402)		(1,058,947)		(469,349)		(274,558)		(194,400)		(94,650)		(23,945)
Net policy repayments (loans) (note 4)			(33,982)		(17,202)		(38,830)		(18,678)		(3,755)		(43,932)		(9,993)		(4,445)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(187,105)		(177,929)		(311,277)		(294,366)		(55,926)		(44,382)		(15,873)		(13,923)
Adjustments to maintain reserves			(245)		38,451		492		19,491		37		31,013		(277)		(2,260)
Net equity transactions			(536,094)		92,896		(983,691)		221,017		(77,423)		(4,170)		(32,204)		50,787
Net change in contract owners’ equity			(532,064)		294,816		(1,317,720)		480,363		(156,207)		167,065		(54,974)		93,546
Contract owners’ equity beginning of period			2,840,838		2,546,022		4,842,599		4,362,236		824,618		657,553		263,500		169,954
Contract owners’ equity end of period	$		2,308,774		2,840,838		3,524,879		4,842,599		668,411		824,618		208,526		263,500
CHANGES IN UNITS:
Beginning units			11,918		12,140		25,408		24,248		5,088		5,013		845		797
Units purchased			1,615		5,883		2,827		5,970		1,734		2,320		104		212
Units redeemed			(4,967)		(6,105)		(8,631)		(4,810)		(2,268)		(2,245)		(262)		(164)
Ending units			8,566		11,918		19,604		25,408		4,554		5,088		687		845

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		JAIGS2				JAIGS				MIGIC				MVFIC
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(23,980)		(13,475)		(6,893)		(2,364)		(786)		(1,538)		22,014		23,080
Realized gain (loss) on investments			(501,450)		(148,547)		(278,893)		(103,858)		9,615		(5,357)		(110,707)		(220,962)
Change in unrealized gain (loss) on investments			(2,327,792)		2,146,425		(655,048)		681,471		(12,727)		82,694		52,055		502,793
Reinvested capital gains			73,921		-		24,524		-		-		-		11,275		-
Net increase (decrease) in contract owners’ equity resulting from operations			(2,779,301)		1,984,403		(916,310)		575,249		(3,898)		75,799		(25,363)		304,911
Equity transactions:
Purchase payments received from contract owners			984,205		2,105,666		383,000		696,370		181,907		180,309		464,243		752,306
Transfers between funds (note 5)			(8)		(2)		7		(4)		(1)		-		82		(3)
Surrenders and Death Benefits (notes 3 and note 5)			(1,529,426)		(2,111,763)		(957,867)		(462,465)		(119,365)		(154,278)		(577,971)		(847,662)
Net policy repayments (loans) (note 4)			(8,785)		(42,388)		(30,988)		(73,404)		(10,287)		30,830		(16,656)		(5,323)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(488,523)		(520,363)		(142,272)		(147,857)		(74,587)		(63,641)		(206,367)		(227,327)
Adjustments to maintain reserves			(733)		3,480		(1,293)		(107,108)		(328)		(5,624)		(1,224)		56,191
Net equity transactions			(1,043,270)		(565,370)		(749,413)		(94,468)		(22,661)		(12,404)		(337,893)		(271,818)
Net change in contract owners’ equity			(3,822,571)		1,419,033		(1,665,723)		480,781		(26,559)		63,395		(363,256)		33,093
Contract owners’ equity beginning of period			9,288,177		7,869,144		3,125,971		2,645,190		786,900		723,505		2,946,229		2,913,136
Contract owners’ equity end of period	$		5,465,606		9,288,177		1,460,248		3,125,971		760,341		786,900		2,582,973		2,946,229
CHANGES IN UNITS:
Beginning units			31,882		33,537		4,134		3,810		3,983		4,471		14,394		15,134
Units purchased			4,597		8,785		343		1,164		1,428		1,107		2,142		4,735
Units redeemed			(8,560)		(10,440)		(1,826)		(840)		(1,597)		(1,595)		(3,828)		(5,475)
Ending units			27,919		31,882		2,651		4,134		3,814		3,983		12,708		14,394

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		MVIVSC				MSVFI				MSEM				MSVRE
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		5,566		(97)		21,479		37,888		14,826		12,355		1,429		8,874
Realized gain (loss) on investments			7,499		1,106		(25,439)		(25,297)		35,292		33,556		119,242		70,636
Change in unrealized gain (loss) on investments			(36,839)		8,241		41,873		33,903		(21,735)		(13,750)		(77,743)		69,224
Reinvested capital gains			-		-		-		-		5,600		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(23,774)		9,250		37,913		46,494		33,983		32,161		42,928		148,734
Equity transactions:
Purchase payments received from contract owners			20,256		38,703		127,010		195,750		251,485		179,233		97,484		216,534
Transfers between funds (note 5)			515,293		43,216		13		-		3		-		52		(1)
Surrenders and Death Benefits (notes 3 and note 5)			(34,646)		(7,931)		(137,725)		(112,356)		(174,065)		(143,429)		(177,733)		(145,731)
Net policy repayments (loans) (note 4)			(5,708)		86		(11,238)		(12,573)		-		(11,464)		(1,942)		425
Redemptions to pay cost of insurance charges and administration charges (note 5)			(12,365)		(968)		(91,260)		(85,226)		(37,714)		(26,298)		(52,030)		(45,455)
Adjustments to maintain reserves			(660)		126		72		(9,643)		(1,741)		144		815		26,338
Net equity transactions			482,170		73,232		(113,128)		(24,048)		37,968		(1,814)		(133,354)		52,110
Net change in contract owners’ equity			458,396		82,482		(75,215)		22,446		71,951		30,347		(90,426)		200,844
Contract owners’ equity beginning of period			82,482		-		803,778		781,332		415,297		384,950		714,297		513,453
Contract owners’ equity end of period	$		540,878		82,482		728,563		803,778		487,248		415,297		623,871		714,297
CHANGES IN UNITS:
Beginning units			368		-		5,985		5,802		914		909		577		529
Units purchased			609		453		1,031		1,674		158		209		104		233
Units redeemed			(113)		(85)		(1,538)		(1,491)		(215)		(204)		(175)		(185)
Ending units			864		368		5,478		5,985		857		914		506		577

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		NVAMV1				GVAAA2				GVABD2				GVAGG2
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		57,241		8,608		1,849		1,320		5,785		4,433		2,409		480
Realized gain (loss) on investments			20,889		2,578		25,946		(9,897)		5,390		(3,588)		(18,747)		(38,749)
Change in unrealized gain (loss) on investments			(114,890)		122,393		(24,276)		34,504		6,720		15,759		(102,735)		156,967
Reinvested capital gains			16,333		16,194		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(20,427)		149,773		3,519		25,927		17,895		16,604		(119,073)		118,698
Equity transactions:
Purchase payments received from contract owners			505,715		7,548,476		258,929		105,155		69,807		154,131		197,861		310,153
Transfers between funds (note 5)			146		-		-		-		2		-		4		-
Surrenders and Death Benefits (notes 3 and note 5)			(1,794,659)		(38,360)		(69,710)		(62,075)		(30,470)		(86,754)		(140,673)		(85,927)
Net policy repayments (loans) (note 4)			29,285		3,013		776		(1,503)		(195)		(1,968)		1,297		(2,770)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(435,535)		(28,758)		(39,782)		(24,164)		(23,839)		(50,035)		(84,657)		(85,309)
Adjustments to maintain reserves			(1,152)		526		(39)		(7,708)		(46)		(948)		(15)		2,611
Net equity transactions			(1,696,200)		7,484,897		150,174		9,705		15,259		14,426		(26,183)		138,758
Net change in contract owners’ equity			(1,716,627)		7,634,670		153,693		35,632		33,154		31,030		(145,256)		257,456
Contract owners’ equity beginning of period			7,648,927		14,257		274,470		238,838		370,947		339,917		1,250,075		992,619
Contract owners’ equity end of period	$		5,932,300		7,648,927		428,163		274,470		404,101		370,947		1,104,819		1,250,075
CHANGES IN UNITS:
Beginning units			49,756		114		2,613		2,528		3,304		3,185		10,796		9,470
Units purchased			4,143		50,107		2,483		1,236		627		1,401		1,829		3,087
Units redeemed			(14,481)		(465)		(1,027)		(1,151)		(501)		(1,282)		(2,025)		(1,761)
Ending units			39,418		49,756		4,069		2,613		3,430		3,304		10,600		10,796

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		GVAGR2				GVAGI2				HIBF				HIBF3
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(5,602)		(6,068)		445		674		36,853		43,133		127,354		135,148
Realized gain (loss) on investments			(56,629)		(89,410)		7,980		(13,250)		(2,477)		107,808		94,406		(54,215)
Change in unrealized gain (loss) on investments			2,155		261,222		(14,196)		34,264		(21,381)		(80,948)		(172,881)		115,639
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(60,076)		165,744		(5,771)		21,688		12,995		69,993		48,879		196,572
Equity transactions:
Purchase payments received from contract owners			201,083		186,056		32,144		79,419		89,623		383,524		362,138		479,412
Transfers between funds (note 5)			5		-		5		-		(10)		(1)		-		-
Surrenders and Death Benefits (notes 3 and note 5)			(197,195)		(155,271)		(17,182)		(99,790)		(78,172)		(852,070)		(340,654)		(619,258)
Net policy repayments (loans) (note 4)			1,825		1,386		4		(1)		(41,300)		(583)		(14,136)		(18,799)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(51,111)		(46,474)		(11,442)		(13,811)		(49,109)		(39,336)		(103,754)		(119,555)
Adjustments to maintain reserves			(72)		(19,060)		(39)		(890)		130		69,400		64		1,759
Net equity transactions			(45,465)		(33,363)		3,490		(35,073)		(78,838)		(439,066)		(96,342)		(276,441)
Net change in contract owners’ equity			(105,541)		132,381		(2,281)		(13,385)		(65,843)		(369,073)		(47,463)		(79,869)
Contract owners’ equity beginning of period			1,155,814		1,023,433		192,953		206,338		478,346		847,419		1,637,352		1,717,221
Contract owners’ equity end of period	$		1,050,273		1,155,814		190,672		192,953		412,503		478,346		1,589,889		1,637,352
CHANGES IN UNITS:
Beginning units			11,279		11,716		2,232		2,629		1,509		2,426		11,917		14,045
Units purchased			2,051		2,131		375		998		80		307		2,746		3,871
Units redeemed			(2,496)		(2,568)		(334)		(1,395)		(405)		(1,224)		(3,440)		(5,999)
Ending units			10,834		11,279		2,273		2,232		1,184		1,509		11,223		11,917

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

	11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368
		GEM				GEM3				GIG3				NVIE6
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		448		(8,476)		1,254		(26,293)		351		-		1,432		193
Realized gain (loss) on investments			(13,428)		(325,930)		(706,111)		(661,198)		(10,588)		-		39,011		20,251
Change in unrealized gain (loss) on investments			(374,044)		555,207		(200,035)		1,333,611		(3,940)		-		(67,758)		19,507
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(387,024)		220,801		(904,892)		646,120		(14,177)		-		(27,315)		39,951
Equity transactions:
Purchase payments received from contract owners			149,253		550,793		472,114		669,140		44,480		-		118,332		142,721
Transfers between funds (note 5)			19		(1)		(267,774)		325,240		-		-		7		-
Surrenders and Death Benefits (notes 3 and note 5)			(408,728)		(290,318)		(731,708)		(888,881)		55,118		-		(179,895)		(186,755)
Net policy repayments (loans) (note 4)			(8,991)		(22,116)		15,604		(3,388)		(57)		-		2,142		(12,067)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(78,909)		(71,762)		(283,857)		(320,158)		(2,810)		-		(31,318)		(41,006)
Adjustments to maintain reserves			(946)		(6,175)		3,152		40,877		(3,263)		-		(29)		(10,968)
Net equity transactions			(348,302)		160,421		(792,469)		(177,170)		93,468		-		(90,761)		(108,075)
Net change in contract owners’ equity			(735,326)		381,222		(1,697,361)		468,950		79,291		-		(118,076)		(68,124)
Contract owners’ equity beginning of period			1,931,694		1,550,472		4,718,938		4,249,988		-		-		433,977		502,101
Contract owners’ equity end of period	$		1,196,368		1,931,694		3,021,577		4,718,938		79,291		-		315,901		433,977
CHANGES IN UNITS:
Beginning units			2,239		1,819		18,214		19,865		-		-		5,491		7,127
Units purchased			83		769		3,038		4,494		1,747		-		1,806		1,861
Units redeemed			(350)		(349)		(5,440)		(6,145)		(805)		-		(2,828)		(3,497)
Ending units			1,972		2,239		15,812		18,214		942		-		4,469		5,491

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

	11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368
		NVNMO1				NVNSR2				NVCRA1				NVCRB1
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		6,585		(58,162)		(46)		77		2,401		(1,142)		122		34
Realized gain (loss) on investments			369,331		391,507		4,146		504		48,406		21,915		60		615
Change in unrealized gain (loss) on investments			(2,111,217)		452,979		(17,364)		6,214		(64,799)		884		(1,057)		(49)
Reinvested capital gains			106,324		1,264,317		-		-		2,744		24,592		93		-
Net increase (decrease) in contract owners’ equity resulting from operations			(1,628,977)		2,050,641		(13,264)		6,795		(11,248)		46,249		(782)		600
Equity transactions:
Purchase payments received from contract owners			1,040,078		1,129,988		161,228		27,849		14,006		86,732		13,486		1,184
Transfers between funds (note 5)			(107,017)		(905,290)		-		-		-		-		-		-
Surrenders and Death Benefits (notes 3 and note 5)			(2,135,836)		(2,129,277)		(23,240)		-		(152,217)		(28,055)		(201)		(5,273)
Net policy repayments (loans) (note 4)			106,355		(37,428)		(409)		2		21,085		(19,987)		-		-
Redemptions to pay cost of insurance charges and administration charges (note 5)			(1,177,409)		(1,226,756)		(8,461)		(1,924)		(26,620)		(32,387)		(872)		(1,152)
Adjustments to maintain reserves			1,801		50,622		1,703		(1,714)		(12)		(264)		15		(21)
Net equity transactions			(2,272,028)		(3,118,141)		130,821		24,213		(143,758)		6,039		12,428		(5,262)
Net change in contract owners’ equity			(3,901,005)		(1,067,500)		117,557		31,008		(155,006)		52,288		11,646		(4,662)
Contract owners’ equity beginning of period			15,384,728		16,452,228		48,803		17,795		347,960		295,672		3,012		7,674
Contract owners’ equity end of period	$		11,483,723		15,384,728		166,360		48,803		192,954		347,960		14,658		3,012
CHANGES IN UNITS:
Beginning units			138,039		162,175		496		222		3,721		3,609		29		81
Units purchased			13,482		14,877		1,587		297		1,008		1,479		125		13
Units redeemed			(36,450)		(39,013)		(321)		(23)		(2,513)		(1,367)		(10)		(65)
Ending units			115,071		138,039		1,762		496		2,216		3,721		144		29

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

	11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368		11,196,368
		NVCCA1				NVCCN1				NVCMD1				NVCMA1
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		29		128		183		69		8,918		767		16,921		(221)
Realized gain (loss) on investments			51,669		1,420		1,397		81		9,075		9,808		15,836		5,460
Change in unrealized gain (loss) on investments			(47,306)		34,626		(1,591)		418		(35,416)		35,340		(89,938)		102,456
Reinvested capital gains			317		16		66		194		3,065		-		8,675		-
Net increase (decrease) in contract owners’ equity resulting from operations			4,709		36,190		55		762		(14,358)		45,915		(48,506)		107,695
Equity transactions:
Purchase payments received from contract owners			53,780		51,372		-		414		162,083		154,985		152,155		308,709
Transfers between funds (note 5)			-		-		-		-		-		-		-		(4)
Surrenders and Death Benefits (notes 3 and note 5)			(350,154)		(12,248)		(12,622)		-		-		(18,650)		(52,253)		-
Net policy repayments (loans) (note 4)			-		-		-		-		9		-		-		-
Redemptions to pay cost of insurance charges and administration charges (note 5)			(11,746)		(5,804)		(514)		(610)		(44,266)		(38,207)		(66,288)		(47,534)
Adjustments to maintain reserves			(17)		-		(39)		82		(36)		125		15		1,295
Net equity transactions			(308,137)		33,320		(13,175)		(114)		117,790		98,253		33,629		262,466
Net change in contract owners’ equity			(303,428)		69,510		(13,120)		648		103,432		144,168		(14,877)		370,161
Contract owners’ equity beginning of period			352,758		283,248		13,120		12,472		493,922		349,754		938,030		567,869
Contract owners’ equity end of period	$		49,330		352,758		-		13,120		597,354		493,922		923,153		938,030
CHANGES IN UNITS:
Beginning units			3,546		3,178		121		122		4,860		3,806		9,650		6,581
Units purchased			519		572		-		5		1,645		1,653		1,576		3,608
Units redeemed			(3,548)		(204)		(121)		(6)		(447)		(599)		(1,199)		(539)
Ending units			517		3,546		-		121		6,058		4,860		10,027		9,650

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		NVCMC1				NVCBD1				NVLCP1				TRF4
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		583		115		6,789		6,495		710		963		844,833		555,879
Realized gain (loss) on investments			207		246		2,078		11,893		(21)		4,509		(4,954,670)		(7,012,074)
Change in unrealized gain (loss) on investments			(1,271)		1,836		7,512		(5,367)		1,293		(3,045)		4,587,409		17,497,077
Reinvested capital gains			180		47		-		3,014		35		1,017		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(301)		2,244		16,379		16,035		2,017		3,444		477,572		11,040,882
Equity transactions:
Purchase payments received from contract owners			4,598		25,534		66,740		309,024		3,373		66,626		5,716,673		6,223,977
Transfers between funds (note 5)			-		-		-		-		-		-		(645,320)		(1,413,388)
Surrenders and Death Benefits (notes 3 and note 5)			-		1		(57,881)		(172,311)		(2,346)		(50,950)		(10,596,215)		(11,816,514)
Net policy repayments (loans) (note 4)			3		-		2,175		(2,828)		-		-		2,526,695		2,894,493
Redemptions to pay cost of insurance charges and administration charges (note 5)			(2,408)		(2,425)		(27,077)		(28,059)		(3,228)		(5,931)		(6,067,223)		(6,081,708)
Adjustments to maintain reserves			7		62		62		75		35,748		2,142		492,718		(93,947)
Net equity transactions			2,200		23,172		(15,981)		105,901		33,547		11,887		(8,572,672)		(10,287,087)
Net change in contract owners’ equity			1,899		25,416		398		121,936		35,564		15,331		(8,095,100)		753,795
Contract owners’ equity beginning of period			28,822		3,406		300,608		178,672		40,536		25,205		93,411,273		92,657,478
Contract owners’ equity end of period	$		30,721		28,822		301,006		300,608		76,100		40,536		85,316,173		93,411,273
CHANGES IN UNITS:
Beginning units			273		35		2,643		1,671		329		220		106,143		120,329
Units purchased			46		262		600		2,767		313		776		12,591		15,682
Units redeemed			(25)		(24)		(743)		(1,795)		(57)		(667)		(25,815)		(29,868)
Ending units			294		273		2,500		2,643		585		329		92,919		106,143

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		GBF				GBF4				CAF4				GVIDA
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		12,070		11,650		491,753		550,815		2,676		(589)		51,393		40,658
Realized gain (loss) on investments			588		2,899		163,673		171,824		874,450		748,830		(299,586)		(499,174)
Change in unrealized gain (loss) on investments			19,744		(13,108)		640,142		(560,890)		(1,067,622)		2,312,769		43,513		1,060,869
Reinvested capital gains			1,649		19,538		58,024		832,303		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			34,051		20,979		1,353,592		994,052		(190,496)		3,061,010		(204,680)		602,353
Equity transactions:
Purchase payments received from contract owners			152,909		120,460		2,215,998		2,750,831		1,896,021		1,627,018		518,085		663,462
Transfers between funds (note 5)			(18)		(1)		121,811		(25,803)		31,648		(48,960)		(1)		(17)
Surrenders and Death Benefits (notes 3 and note 5)			(135,878)		(63,706)		(5,513,181)		(3,896,029)		(2,337,315)		(2,557,541)		(372,886)		(562,231)
Net policy repayments (loans) (note 4)			(4)		(845)		206,437		167,542		84,079		(59,702)		4,398		(35,125)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(61,315)		(66,325)		(1,581,494)		(1,706,953)		(1,470,086)		(1,504,520)		(348,770)		(451,634)
Adjustments to maintain reserves			(1)		9,321		47,899		(45,480)		(61,825)		(10,427)		582		3,546
Net equity transactions			(44,307)		(1,096)		(4,502,530)		(2,755,892)		(1,857,478)		(2,554,132)		(198,592)		(381,999)
Net change in contract owners’ equity			(10,256)		19,883		(3,148,938)		(1,761,840)		(2,047,974)		506,878		(403,272)		220,354
Contract owners’ equity beginning of period			533,778		513,895		22,409,933		24,171,773		18,922,510		18,415,632		4,832,410		4,612,056
Contract owners’ equity end of period	$		523,522		533,778		19,260,995		22,409,933		16,874,536		18,922,510		4,429,138		4,832,410
CHANGES IN UNITS:
Beginning units			4,003		4,008		52,763		59,941		122,486		140,849		28,338		30,827
Units purchased			1,198		1,129		7,958		9,726		15,056		15,593		3,538		4,533
Units redeemed			(1,513)		(1,134)		(20,876)		(16,904)		(28,581)		(33,956)		(4,645)		(7,022)
Ending units			3,688		4,003		39,845		52,763		108,961		122,486		27,231		28,338

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		NVDBL2				NVDCA2				GVIDC				GVIDM
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		145		-		130		21		31,933		22,238		754,884		637,807
Realized gain (loss) on investments			(80)		-		66		6		56,261		68,983		680,447		(1,662,381)
Change in unrealized gain (loss) on investments			(603)		-		(992)		653		(51,864)		(12,488)		(1,665,477)		5,397,352
Reinvested capital gains			24		-		12		10		5,199		3,636		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(514)		-		(784)		690		41,529		82,369		(230,146)		4,372,778
Equity transactions:
Purchase payments received from contract owners			22,236		-		5,288		7,169		1,810,736		827,923		4,408,527		5,385,602
Transfers between funds (note 5)			-		-		-		-		-		-		32,012		701,163
Surrenders and Death Benefits (notes 3 and note 5)			-		-		(6,697)		-		(288,215)		(376,377)		(4,504,807)		(5,413,600)
Net policy repayments (loans) (note 4)			-		-		-		-		(5,795)		56,966		994,419		(209,110)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(2,935)		-		(1,068)		(157)		(260,407)		(244,202)		(3,721,746)		(3,620,481)
Adjustments to maintain reserves			47		-		(73)		(18)		671		(1,104)		(30,414)		99,251
Net equity transactions			19,348		-		(2,550)		6,994		1,256,990		263,206		(2,822,009)		(3,057,175)
Net change in contract owners’ equity			18,834		-		(3,334)		7,684		1,298,519		345,575		(3,052,155)		1,315,603
Contract owners’ equity beginning of period			-		-		8,777		1,093		1,636,040		1,290,465		45,817,656		44,502,053
Contract owners’ equity end of period	$		18,834		-		5,443		8,777		2,934,559		1,636,040		42,765,501		45,817,656
CHANGES IN UNITS:
Beginning units			-		-		65		9		12,238		10,112		185,044		199,162
Units purchased			172		-		38		57		14,498		7,151		26,965		37,332
Units redeemed			(23)		-		(62)		(1)		(5,207)		(5,025)		(36,810)		(51,450)
Ending units			149		-		41		65		21,529		12,238		175,199		185,044

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		GVDMA				GVDMC				MCIF				NVMIG3
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		313,805		279,330		35,008		25,166		2,495		17,474		10,330		1,022
Realized gain (loss) on investments			(1,020,211)		(1,262,392)		(21,331)		(21,798)		12,405		(77,096)		68,801		53,903
Change in unrealized gain (loss) on investments			70,792		3,763,692		15,658		149,136		(192,844)		817,995		(253,959)		156,839
Reinvested capital gains			-		-		-		-		57,038		3,631		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(635,614)		2,780,630		29,335		152,504		(120,906)		762,004		(174,828)		211,764
Equity transactions:
Purchase payments received from contract owners			2,830,196		3,671,891		243,226		567,665		874,678		552,235		279,635		329,928
Transfers between funds (note 5)			251		18		-		-		474		(6)		101		(18)
Surrenders and Death Benefits (notes 3 and note 5)			(2,868,890)		(3,740,861)		(104,418)		(47,735)		(583,799)		(733,902)		(200,724)		(313,718)
Net policy repayments (loans) (note 4)			(168,465)		(378,572)		(9,430)		(7,387)		(31,203)		(6,112)		(15,639)		(19,740)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(1,990,897)		(2,162,292)		(147,478)		(143,126)		(226,064)		(219,730)		(145,292)		(149,237)
Adjustments to maintain reserves			(487)		110,204		(777)		(549)		(786)		(18,807)		45		2,350
Net equity transactions			(2,198,292)		(2,499,612)		(18,877)		368,868		33,300		(426,322)		(81,874)		(150,435)
Net change in contract owners’ equity			(2,833,906)		281,018		10,458		521,372		(87,606)		335,682		(256,702)		61,329
Contract owners’ equity beginning of period			24,880,243		24,599,225		2,174,740		1,653,368		3,542,110		3,206,428		1,790,751		1,729,422
Contract owners’ equity end of period	$		22,046,337		24,880,243		2,185,198		2,174,740		3,454,504		3,542,110		1,534,049		1,790,751
CHANGES IN UNITS:
Beginning units			146,811		163,399		13,771		11,111		15,092		16,859		19,096		20,886
Units purchased			17,967		25,694		1,608		4,108		3,675		2,848		3,320		4,274
Units redeemed			(31,177)		(42,282)		(1,561)		(1,448)		(3,309)		(4,615)		(4,237)		(6,064)
Ending units			133,601		146,811		13,818		13,771		15,458		15,092		18,179		19,096

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		GVDIV3				GVDIV4				NVMLG1				NVMLV1
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		210,103		273,501		203,353		289,089		(27,636)		(19,330)		6,672		(5,138)
Realized gain (loss) on investments			(1,745,861)		(2,111,772)		(529,043)		(201,574)		200,078		213,513		(6,309)		181,070
Change in unrealized gain (loss) on investments			(1,151,542)		2,705,522		(2,291,995)		767,139		(235,679)		144,784		(308,570)		(105,088)
Reinvested capital gains			-		-		-		-		-		197,422		90,261		74,832
Net increase (decrease) in contract owners’ equity resulting from operations			(2,687,300)		867,251		(2,617,685)		854,654		(63,237)		536,389		(217,946)		145,676
Equity transactions:
Purchase payments received from contract owners			1,926,866		2,535,624		325,945		251,420		533,612		2,985,360		345,510		2,130,002
Transfers between funds (note 5)			(86,592)		(525,404)		(101,002)		(74,396)		7		(55)		(43)		(2)
Surrenders and Death Benefits (notes 3 and note 5)			(1,876,435)		(2,149,386)		(2,026,072)		(2,692,743)		(589,470)		(587,041)		(493,250)		(504,673)
Net policy repayments (loans) (note 4)			105,585		66,400		112,244		15,250		(1,598)		(4,117)		(3,791)		(14,735)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(1,126,581)		(1,136,365)		(1,221,862)		(1,337,746)		(309,387)		(271,775)		(227,334)		(201,967)
Adjustments to maintain reserves			(2,866)		20,384		(55,177)		(29,374)		(42,781)		(119,724)		25,030		66,109
Net equity transactions			(1,060,023)		(1,188,747)		(2,965,924)		(3,867,589)		(409,617)		2,002,648		(353,878)		1,474,734
Net change in contract owners’ equity			(3,747,323)		(321,496)		(5,583,609)		(3,012,935)		(472,854)		2,539,037		(571,824)		1,620,410
Contract owners’ equity beginning of period			17,400,156		17,721,652		18,119,961		21,132,896		4,096,325		1,557,288		3,032,512		1,412,102
Contract owners’ equity end of period	$		13,652,833		17,400,156		12,536,352		18,119,961		3,623,471		4,096,325		2,460,688		3,032,512
CHANGES IN UNITS:
Beginning units			122,147		127,317		37,983		47,692		40,292		19,082		30,780		17,619
Units purchased			21,774		27,640		801		1,019		6,127		31,056		4,491		21,835
Units redeemed			(29,410)		(32,810)		(8,194)		(10,728)		(9,350)		(9,846)		(8,521)		(8,674)
Ending units			114,511		122,147		30,590		37,983		37,069		40,292		26,750		30,780

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		NVMMG1				NVMMV2				SCGF				SCVF4
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(245,829)		(275,342)		5,163		30,969		(14,874)		(12,098)		(30,740)		(10,089)
Realized gain (loss) on investments			2,577,810		2,360,475		153,922		142,859		(62,118)		(81,581)		(527,365)		(1,417,048)
Change in unrealized gain (loss) on investments			(4,480,472)		9,075,049		(332,963)		474,245		57,534		500,097		(454,656)		5,600,868
Reinvested capital gains			-		-		21,404		242,982		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(2,148,491)		11,160,182		(152,474)		891,055		(19,458)		406,418		(1,012,761)		4,173,731
Equity transactions:
Purchase payments received from contract owners			3,099,268		3,558,105		365,713		385,950		338,402		374,055		1,346,429		1,481,435
Transfers between funds (note 5)			28,862		(385,803)		9		(5)		79		-		(22,610)		(206,775)
Surrenders and Death Benefits (notes 3 and note 5)			(5,512,057)		(7,497,565)		(441,468)		(646,556)		(362,652)		(168,677)		(1,902,926)		(3,112,897)
Net policy repayments (loans) (note 4)			114,639		(80,663)		(39,196)		(31,794)		(8,110)		(8,138)		16,412		(47,642)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(3,253,019)		(3,386,269)		(412,947)		(444,612)		(118,360)		(99,578)		(1,273,393)		(1,361,692)
Adjustments to maintain reserves			(79,051)		(224,393)		(44)		(1,319)		(204)		1,227		(44,937)		40,314
Net equity transactions			(5,601,358)		(8,016,588)		(527,933)		(738,336)		(150,845)		98,889		(1,881,025)		(3,207,257)
Net change in contract owners’ equity			(7,749,849)		3,143,594		(680,407)		152,719		(170,303)		505,307		(2,893,786)		966,474
Contract owners’ equity beginning of period			51,780,950		48,637,356		5,424,440		5,271,721		2,115,386		1,610,079		19,180,175		18,213,701
Contract owners’ equity end of period	$		44,031,101		51,780,950		4,744,033		5,424,440		1,945,083		2,115,386		16,286,389		19,180,175
CHANGES IN UNITS:
Beginning units			360,069		428,454		52,421		60,511		13,293		12,896		88,987		105,222
Units purchased			29,635		39,838		4,276		4,856		2,326		2,481		8,693		10,178
Units redeemed			(75,293)		(108,223)		(9,424)		(12,946)		(3,032)		(2,084)		(18,137)		(26,413)
Ending units			314,411		360,069		47,273		52,421		12,587		13,293		79,543		88,987

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		SCF4				MSBF				GVEX4				NVSTB2
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(8,723)		(60,801)		65,730		99,871		1,337,960		1,336,438		17,015		8,892
Realized gain (loss) on investments			(924,147)		(1,878,004)		(45,963)		(64,150)		1,593,999		(2,804,052)		2,431		2,603
Change in unrealized gain (loss) on investments			(115,685)		5,847,540		66,732		129,317		(1,346,361)		17,522,189		(13,059)		7,714
Reinvested capital gains			-		-		-		-		-		-		-		2,641
Net increase (decrease) in contract owners’ equity resulting from operations			(1,048,555)		3,908,735		86,499		165,038		1,585,598		16,054,575		6,387		21,850
Equity transactions:
Purchase payments received from contract owners			1,471,075		1,411,895		325,251		520,126		11,293,565		11,872,055		1,300,952		544,197
Transfers between funds (note 5)			(213,942)		(87,099)		134		-		(135,249)		(806,452)		-		-
Surrenders and Death Benefits (notes 3 and note 5)			(1,941,984)		(3,075,165)		(236,062)		(335,354)		(13,183,394)		(14,247,403)		(534,397)		(330,834)
Net policy repayments (loans) (note 4)			(84,440)		(29,287)		(65,677)		(12,449)		122,377		1,030		14,349		1,948
Redemptions to pay cost of insurance charges and administration charges (note 5)			(1,398,327)		(1,460,793)		(152,496)		(136,892)		(11,065,393)		(11,333,741)		(142,755)		(113,470)
Adjustments to maintain reserves			(112,468)		5,164		262		40,919		(290,426)		(2,824)		(92)		49,130
Net equity transactions			(2,280,086)		(3,235,285)		(128,588)		76,350		(13,258,520)		(14,517,335)		638,057		150,971
Net change in contract owners’ equity			(3,328,641)		673,450		(42,089)		241,388		(11,672,922)		1,537,240		644,444		172,821
Contract owners’ equity beginning of period			18,870,454		18,197,004		1,776,573		1,535,185		127,700,930		126,163,690		1,424,080		1,251,259
Contract owners’ equity end of period	$		15,541,813		18,870,454		1,734,484		1,776,573		116,028,008		127,700,930		2,068,524		1,424,080
CHANGES IN UNITS:
Beginning units			84,028		102,250		10,261		9,975		292,943		331,907		13,296		11,884
Units purchased			9,104		10,540		2,069		3,528		28,832		39,709		12,774		5,822
Units redeemed			(19,507)		(28,762)		(2,570)		(3,242)		(60,914)		(78,673)		(6,863)		(4,410)
Ending units			73,625		84,028		9,760		10,261		260,861		292,943		19,207		13,296

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		NVOLG1				NVTIV3				EIF4				NVRE1
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		72,793		(31,160)		3,303		1,132		117,685		137,315		5,637		37,728
Realized gain (loss) on investments			193,752		38,563		(930)		473		(107,742)		(268,396)		215,062		167,852
Change in unrealized gain (loss) on investments			(2,878,260)		328,630		(22,892)		(6,633)		(418,586)		2,342,436		(39,860)		336,912
Reinvested capital gains			327,407		27,050		184		11,242		-		-		14,207		265,495
Net increase (decrease) in contract owners’ equity resulting from operations			(2,284,308)		363,083		(20,335)		6,214		(408,643)		2,211,355		195,046		807,987
Equity transactions:
Purchase payments received from contract owners			6,443,252		90,494,535		103,243		103,084		1,358,780		1,312,916		489,724		711,158
Transfers between funds (note 5)			(1,623,924)		12,948,735		-		-		(71,153)		(325,059)		8		1
Surrenders and Death Benefits (notes 3 and note 5)			(14,158,824)		(1,370,862)		(10,329)		(27,230)		(1,485,109)		(2,249,308)		(572,457)		(606,410)
Net policy repayments (loans) (note 4)			17,516		(18,275)		318		(2,458)		11,891		32,640		(26,019)		(4,964)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(6,947,248)		(468,541)		(5,491)		(4,926)		(1,188,584)		(1,258,172)		(238,293)		(266,727)
Adjustments to maintain reserves			(115,644)		12,638		(52,515)		82		(53,484)		(43,548)		(36)		(14,351)
Net equity transactions			(16,384,872)		101,598,230		35,226		68,552		(1,427,659)		(2,530,531)		(347,073)		(181,293)
Net change in contract owners’ equity			(18,669,180)		101,961,313		14,891		74,766		(1,836,302)		(319,176)		(152,027)		626,694
Contract owners’ equity beginning of period			102,054,160		92,847		86,309		11,543		16,393,684		16,712,860		3,492,111		2,865,417
Contract owners’ equity end of period	$		83,384,980		102,054,160		101,200		86,309		14,557,382		16,393,684		3,340,084		3,492,111
CHANGES IN UNITS:
Beginning units			543,621		389		639		89		91,133		106,165		37,019		39,256
Units purchased			45,379		557,433		341		818		10,101		11,468		5,622		9,196
Units redeemed			(129,838)		(14,201)		(117)		(268)		(18,772)		(26,500)		(9,157)		(11,433)
Ending units			459,162		543,621		863		639		82,462		91,133		33,484		37,019

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		SAM4				ALVGIA				ALVSVA				ACVIG
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(255,115)		(329,800)		10,819		(12,727)		(5,598)		(6,269)		11,146		10,431
Realized gain (loss) on investments			-		-		(222,657)		(324,806)		124,961		(375,768)		(83,284)		(92,887)
Change in unrealized gain (loss) on investments			-		-		301,601		541,326		(378,869)		1,029,870		105,273		247,817
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(255,115)		(329,800)		89,763		203,793		(259,506)		647,833		33,135		165,361
Equity transactions:
Purchase payments received from contract owners			19,393,057		21,629,718		164,503		238,986		588,490		1,249,865		150,323		184,988
Transfers between funds (note 5)			919,087		883,091		(58)		-		69		11		-		-
Surrenders and Death Benefits (notes 3 and note 5)			(20,506,127)		(27,101,336)		(368,333)		(330,916)		(855,360)		(1,113,344)		(137,692)		(186,999)
Net policy repayments (loans) (note 4)			201,860		(522,696)		(7,379)		1,733		3,136		(17,013)		(5,689)		1,482
Redemptions to pay cost of insurance charges and administration charges (note 5)			(5,718,495)		(6,981,006)		(206,575)		(184,892)		(237,672)		(225,299)		(104,288)		(109,511)
Adjustments to maintain reserves			1,676,164		(64,349)		202		1,967		(1,819)		69,337		(155)		6,393
Net equity transactions			(4,034,454)		(12,156,578)		(417,640)		(273,122)		(503,156)		(36,443)		(97,501)		(103,647)
Net change in contract owners’ equity			(4,289,569)		(12,486,378)		(327,877)		(69,329)		(762,662)		611,390		(64,366)		61,714
Contract owners’ equity beginning of period			46,585,485		59,071,863		1,832,879		1,902,208		3,360,793		2,749,403		1,364,008		1,302,294
Contract owners’ equity end of period	$		42,295,916		46,585,485		1,505,002		1,832,879		2,598,131		3,360,793		1,299,642		1,364,008
CHANGES IN UNITS:
Beginning units			205,359		261,369		12,005		13,714		11,808		11,860		8,751		9,279
Units purchased			97,577		112,916		1,227		2,020		2,069		4,371		1,097		1,516
Units redeemed			(114,381)		(168,926)		(3,862)		(3,729)		(4,425)		(4,423)		(1,410)		(2,044)
Ending units			188,555		205,359		9,370		12,005		9,452		11,808		8,438		8,751

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		ACVIP2				ACVI				ACVI3				ACVMV1
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		106,849		29,849		3,204		7,658		-		-		5,404		12,133
Realized gain (loss) on investments			33,878		21,223		29,150		(70,474)		-		3		85,654		55,865
Change in unrealized gain (loss) on investments			154,741		81,166		(75,161)		108,757		-		(4)		(127,132)		70,089
Reinvested capital gains			37,133		-		-		-		-		-		23,513		-
Net increase (decrease) in contract owners’ equity resulting from operations			332,601		132,238		(42,807)		45,941		-		(1)		(12,561)		138,087
Equity transactions:
Purchase payments received from contract owners			685,070		922,711		117,688		68,611		-		-		211,574		452,056
Transfers between funds (note 5)			100		(3)		30		-		-		-		3		-
Surrenders and Death Benefits (notes 3 and note 5)			(406,073)		(606,049)		(113,472)		(159,683)		-		(140)		(280,116)		(329,718)
Net policy repayments (loans) (note 4)			(37,997)		(53,660)		(147)		(2,515)		-		16		(3,146)		(14,442)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(216,969)		(204,693)		(18,068)		(22,932)		-				(52,920)		(52,240)
Adjustments to maintain reserves			637		1,127		(786)		7,352		-		125		68		(1,590)
Net equity transactions			24,768		59,433		(14,755)		(109,167)		-		1		(124,537)		54,066
Net change in contract owners’ equity			357,369		191,671		(57,562)		(63,226)		-		-		(137,098)		192,153
Contract owners’ equity beginning of period			3,077,359		2,885,688		384,270		447,496		-		-		936,472		744,319
Contract owners’ equity end of period	$		3,434,728		3,077,359		326,708		384,270		-		-		799,374		936,472
CHANGES IN UNITS:
Beginning units			18,942		17,921		442		544		-		-		6,248		5,878
Units purchased			4,277		6,114		145		60		-		2		1,518		3,444
Units redeemed			(4,471)		(5,093)		(141)		(162)		-		(2)		(2,357)		(3,074)
Ending units			18,748		18,942		446		442		-		-		5,409		6,248

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		ACVU1				ACVV				ACVVS1				DVSCS
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(272)		(56)		-		46,274		(1)		(3)		(6,602)		(8,607)
Realized gain (loss) on investments			5,243		12,849		-		(1,049,441)		41		631		(464,869)		(823,129)
Change in unrealized gain (loss) on investments			(3,800)		(5,859)		-		1,529,786		(48)		(130)		479,054		2,123,470
Reinvested capital gains			-		-		-		-		-		-		15,684		-
Net increase (decrease) in contract owners’ equity resulting from operations			1,171		6,934		-		526,619		(8)		498		23,267		1,291,734
Equity transactions:
Purchase payments received from contract owners			3,489		7,390		-		489,808		-		-		875,370		1,485,540
Transfers between funds (note 5)			63		(5)		-		(1)		-		-		36		1
Surrenders and Death Benefits (notes 3 and note 5)			(16,660)		(77,168)		-		(6,322,761)		-		(11,559)		(796,957)		(1,067,489)
Net policy repayments (loans) (note 4)			(50)		(4,949)		-		(48,121)		-		-		(43,327)		(31,388)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(6,799)		(5,592)		-		(338,514)		(46)		(77)		(469,911)		(466,092)
Adjustments to maintain reserves			116		(5,145)		-		(24,327)		(88)		(8)		433		10,665
Net equity transactions			(19,841)		(85,469)		-		(6,243,916)		(134)		(11,644)		(434,356)		(68,763)
Net change in contract owners’ equity			(18,670)		(78,535)		-		(5,717,297)		(142)		(11,146)		(411,089)		1,222,971
Contract owners’ equity beginning of period			58,406		136,941		-		5,717,297		261		11,407		6,547,508		5,324,537
Contract owners’ equity end of period	$		39,736		58,406		-		-		119		261		6,136,419		6,547,508
CHANGES IN UNITS:
Beginning units			61		391		-		39,978		2		107		30,428		30,885
Units purchased			4		9		-		4,342		-		-		4,885		7,554
Units redeemed			(22)		(339)		-		(44,320)		(1)		(105)		(6,441)		(8,011)
Ending units			43		61		-		-		1		2		28,872		30,428

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		DCAP				DSC				FVCA2P				FQB
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		24,596		35,522		(715)		455		10		124		130,795		122,566
Realized gain (loss) on investments			(75,084)		(103,908)		16,109		(46,571)		5,339		(5,415)		73,919		49,114
Change in unrealized gain (loss) on investments			257,955		395,981		(43,716)		76,890		(11,797)		19,159		(157,053)		48,516
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			207,467		327,595		(28,322)		30,774		(6,448)		13,868		47,661		220,196
Equity transactions:
Purchase payments received from contract owners			496,270		443,761		129,150		223,182		11,077		62,129		610,822		1,665,490
Transfers between funds (note 5)			42		-		-		-		(1)		-		16		(8)
Surrenders and Death Benefits (notes 3 and note 5)			(535,661)		(505,104)		(88,527)		(128,534)		(8,661)		(47,696)		(572,613)		(1,450,625)
Net policy repayments (loans) (note 4)			(3,472)		(10,093)		(139)		(3,351)		(223)		1,121		(15,243)		(7,567)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(203,706)		(208,415)		(15,068)		(13,808)		(12,639)		(22,180)		(273,470)		(281,438)
Adjustments to maintain reserves			(219)		(517)		644		6,858		411		463		910		(20,262)
Net equity transactions			(246,746)		(280,368)		26,060		84,347		(10,036)		(6,163)		(249,578)		(94,410)
Net change in contract owners’ equity			(39,279)		47,227		(2,262)		115,121		(16,484)		7,705		(201,917)		125,786
Contract owners’ equity beginning of period			2,519,668		2,472,441		247,232		132,111		114,355		106,650		2,961,969		2,836,183
Contract owners’ equity end of period	$		2,480,389		2,519,668		244,970		247,232		97,871		114,355		2,760,052		2,961,969
CHANGES IN UNITS:
Beginning units			17,801		19,586		1,459		1,120		728		767		18,478		17,378
Units purchased			2,455		3,527		852		1,326		97		484		3,715		8,030
Units redeemed			(5,032)		(5,312)		(487)		(987)		(169)		(523)		(5,391)		(6,930)
Ending units			15,224		17,801		1,824		1,459		656		728		16,802		18,478

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FEIP				FHIP				FAMP				FCP
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		1,590,371		1,002,180		562,422		676,710		452,279		365,305		-		(510,183)
Realized gain (loss) on investments			628,526		(3,733,075)		(222,932)		(316,890)		693,363		57,973		-		(7,358,272)
Change in unrealized gain (loss) on investments			(1,793,745)		14,227,109		(9,648)		869,716		(2,241,784)		3,687,749		-		20,727,132
Reinvested capital gains			-		-		-		-		152,346		169,675		-		32
Net increase (decrease) in contract owners’ equity resulting from operations			425,152		11,496,214		329,842		1,229,536		(943,796)		4,280,702		-		12,858,709
Equity transactions:
Purchase payments received from contract owners			7,002,382		7,661,609		523,221		994,363		2,630,647		2,927,901		-		6,650,679
Transfers between funds (note 5)			220,503		26,997		102,928		18,284		(135,280)		(94,619)		-		(12,478,401)
Surrenders and Death Benefits (notes 3 and note 5)			(10,790,147)		(11,310,241)		(1,288,907)		(1,911,475)		(3,235,041)		(3,422,610)		-		(98,406,389)
Net policy repayments (loans) (note 4)			296,329		10,422		63,844		99,920		64,324		(5,410)		-		(92,817)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(7,223,216)		(7,404,198)		(750,556)		(807,088)		(2,957,154)		(2,959,143)		-		(6,495,493)
Adjustments to maintain reserves			96,638		(53,658)		37,147		(17,792)		21,991		(240,821)		-		(75,942)
Net equity transactions			(10,397,511)		(11,069,069)		(1,312,323)		(1,623,788)		(3,610,513)		(3,794,702)		-		(110,898,363)
Net change in contract owners’ equity			(9,972,359)		427,145		(982,481)		(394,252)		(4,554,309)		486,000		-		(98,039,654)
Contract owners’ equity beginning of period			88,957,490		88,530,345		9,770,982		10,165,234		34,802,694		34,316,694		-		98,039,654
Contract owners’ equity end of period	$		78,985,131		88,957,490		8,788,501		9,770,982		30,248,385		34,802,694		-		-
CHANGES IN UNITS:
Beginning units			194,717		222,747		24,846		30,990		80,861		91,759		-		264,822
Units purchased			19,793		25,523		781		1,229		8,303		9,983		-		24,052
Units redeemed			(45,391)		(53,553)		(5,273)		(7,373)		(16,897)		(20,881)		-		(288,874)
Ending units			169,119		194,717		20,354		24,846		72,267		80,861		-		-

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FNRS2				FEIS				FF10S				FF20S
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		2,819		(5,337)		66,241		34,629		10,072		9,057		22,686		23,415
Realized gain (loss) on investments			(66,383)		(347,020)		(184,808)		(182,599)		(7,015)		(30,884)		(44,654)		(32,172)
Change in unrealized gain (loss) on investments			(73,023)		592,942		131,782		615,777		(12,498)		64,628		(13,255)		184,876
Reinvested capital gains			-		-		-		-		3,705		9,803		6,332		11,750
Net increase (decrease) in contract owners’ equity resulting from operations			(136,587)		240,585		13,215		467,807		(5,736)		52,604		(28,891)		187,869
Equity transactions:
Purchase payments received from contract owners			815,681		535,823		719,323		703,524		198,006		387,987		163,924		458,329
Transfers between funds (note 5)			(20)		-		(12)		(30)		-		-		(2)		-
Surrenders and Death Benefits (notes 3 and note 5)			(418,237)		(586,098)		(338,914)		(273,573)		(64,971)		(117,387)		30,638		(70,502)
Net policy repayments (loans) (note 4)			5,362		(14,342)		(29,787)		(13,812)		(27)		(89)		(54,036)		(5,369)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(161,386)		(147,648)		(340,036)		(358,298)		(59,081)		(38,946)		(136,714)		(84,881)
Adjustments to maintain reserves			(219)		(3,629)		-		(1,640)		(54)		126		(125)		484
Net equity transactions			241,181		(215,894)		10,574		56,171		73,873		231,691		3,685		298,061
Net change in contract owners’ equity			104,594		24,691		23,789		523,978		68,137		284,295		(25,206)		485,930
Contract owners’ equity beginning of period			1,637,235		1,612,544		3,738,461		3,214,483		650,703		366,408		1,681,298		1,195,368
Contract owners’ equity end of period	$		1,741,829		1,637,235		3,762,250		3,738,461		718,840		650,703		1,656,092		1,681,298
CHANGES IN UNITS:
Beginning units			9,261		10,790		25,901		25,434		4,999		3,157		12,878		10,411
Units purchased			4,534		3,955		5,191		5,717		1,512		3,165		1,811		3,804
Units redeemed			(3,326)		(5,484)		(5,054)		(5,250)		(932)		(1,323)		(1,764)		(1,337)
Ending units			10,469		9,261		26,038		25,901		5,579		4,999		12,925		12,878

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FF30S				FGP				FGS				FHIPR
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		16,323		14,447		(220,634)		(361,021)		(11,164)		(11,279)		274,764		320,863
Realized gain (loss) on investments			(61,109)		(102,539)		1,929,130		(5,453,925)		32,310		(14,229)		391,611		42,752
Change in unrealized gain (loss) on investments			295		232,711		(2,046,462)		28,575,162		(38,004)		459,143		(511,229)		177,945
Reinvested capital gains			3,818		8,656		394,663		361,248		7,970		6,915		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(40,673)		153,275		56,697		23,121,464		(8,888)		440,550		155,146		541,560
Equity transactions:
Purchase payments received from contract owners			304,059		251,175		11,149,713		10,716,033		337,090		372,542		1,208,560		2,296,099
Transfers between funds (note 5)			19		3		(120,269)		(631,222)		(3)		4		(4)		(4)
Surrenders and Death Benefits (notes 3 and note 5)			(173,782)		(215,930)		(14,525,886)		(14,265,469)		(218,403)		(139,502)		(1,422,324)		(1,767,031)
Net policy repayments (loans) (note 4)			242		(5,813)		423,129		(138,120)		(8,106)		(8,318)		(28,774)		(24,189)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(64,842)		(52,894)		(10,286,045)		(10,296,877)		(210,651)		(206,634)		(429,323)		(375,784)
Adjustments to maintain reserves			(131)		304		(438,498)		(102,965)		(9)		1,592		(2,851)		13,346
Net equity transactions			65,565		(23,155)		(13,797,856)		(14,718,620)		(100,082)		19,684		(674,716)		142,437
Net change in contract owners’ equity			24,892		130,120		(13,741,159)		8,402,844		(108,970)		460,234		(519,570)		683,997
Contract owners’ equity beginning of period			1,238,180		1,108,060		118,054,719		109,651,875		2,314,800		1,854,566		4,763,162		4,079,165
Contract owners’ equity end of period	$		1,263,072		1,238,180		104,313,560		118,054,719		2,205,830		2,314,800		4,243,592		4,763,162
CHANGES IN UNITS:
Beginning units			9,590		9,881		287,279		333,190		15,750		15,534		40,155		38,892
Units purchased			2,356		2,079		31,393		39,585		2,412		3,132		10,368		21,983
Units redeemed			(1,820)		(2,370)		(68,325)		(85,496)		(3,062)		(2,916)		(15,899)		(20,720)
Ending units			10,126		9,590		250,347		287,279		15,100		15,750		34,624		40,155

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FIGBP				FIGBS				FMCS				FOP
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		913,559		1,055,625		37,214		39,806		(71,569)		(52,092)		113,971		121,950
Realized gain (loss) on investments			377,223		157,802		6,784		11,105		(132,584)		(535,042)		820,588		981,138
Change in unrealized gain (loss) on investments			124,587		1,017,148		8,017		25,160		(1,287,143)		3,625,725		(3,565,883)		723,446
Reinvested capital gains			953,740		395,611		39,131		15,792		20,467		40,942		29,933		30,156
Net increase (decrease) in contract owners’ equity resulting from operations			2,369,109		2,626,186		91,146		91,863		(1,470,829)		3,079,533		(2,601,391)		1,856,690
Equity transactions:
Purchase payments received from contract owners			4,549,654		5,731,427		241,964		241,084		1,324,906		2,610,931		609,061		1,122,654
Transfers between funds (note 5)			650,414		158,785		-		4		325		(1)		(37,880)		(37,637)
Surrenders and Death Benefits (notes 3 and note 5)			(6,459,313)		(6,656,180)		(126,841)		(83,000)		(2,459,305)		(2,404,178)		(1,938,211)		(2,873,761)
Net policy repayments (loans) (note 4)			44,934		(285,492)		(6,025)		(10,882)		13,058		(96,816)		19,012		75,125
Redemptions to pay cost of insurance charges and administration charges (note 5)			(3,038,816)		(3,181,601)		(118,861)		(121,814)		(805,353)		(836,753)		(1,188,430)		(1,314,662)
Adjustments to maintain reserves			21,405		113,851		82		1,213		1,422		55,693		(102,171)		(11,696)
Net equity transactions			(4,231,722)		(4,119,210)		(9,681)		26,605		(1,924,947)		(671,124)		(2,638,619)		(3,039,977)
Net change in contract owners’ equity			(1,862,613)		(1,493,024)		81,465		118,468		(3,395,776)		2,408,409		(5,240,010)		(1,183,287)
Contract owners’ equity beginning of period			36,991,612		38,484,636		1,436,819		1,318,351		14,145,259		11,736,850		17,060,462		18,243,749
Contract owners’ equity end of period	$		35,128,999		36,991,612		1,518,284		1,436,819		10,749,483		14,145,259		11,820,452		17,060,462
CHANGES IN UNITS:
Beginning units			114,694		128,777		10,358		10,156		39,764		44,102		42,101		55,221
Units purchased			17,504		25,339		1,780		1,990		4,877		7,864		1,375		3,544
Units redeemed			(33,241)		(39,422)		(1,852)		(1,788)		(10,243)		(12,202)		(9,417)		(16,664)
Ending units			98,957		114,694		10,286		10,358		34,398		39,764		34,059		42,101

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FOPR				FOS				FOSR				FVSS
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		176,924		173,594		300		395		14,157		13,056		3,617		(6,100)
Realized gain (loss) on investments			(688,428)		(551,861)		(5,597)		(916)		(88,027)		(107,239)		3,551		(474,135)
Change in unrealized gain (loss) on investments			(3,308,252)		2,970,641		(7,295)		8,727		(364,106)		353,134		(219,724)		974,276
Reinvested capital gains			42,428		42,042		140		140		4,336		4,224		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(3,777,328)		2,634,416		(12,452)		8,346		(433,640)		263,175		(212,556)		494,041
Equity transactions:
Purchase payments received from contract owners			2,262,845		3,015,714		1,699		1,581		361,998		435,381		195,020		860,372
Transfers between funds (note 5)			(590,689)		879,449		-		-		(3)		(14)		51		-
Surrenders and Death Benefits (notes 3 and note 5)			(1,827,784)		(3,730,399)		(7,313)		(834)		(31,460)		(138,374)		(385,729)		(777,961)
Net policy repayments (loans) (note 4)			46,375		54,059		635		(873)		(7,004)		(2,227)		(1,670)		(13,093)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(1,441,221)		(1,473,397)		(8,740)		(9,372)		(192,527)		(199,582)		(152,567)		(154,782)
Adjustments to maintain reserves			2,021		(6,899)		(72)		(50)		(4)		(29)		449		(4,813)
Net equity transactions			(1,548,453)		(1,261,473)		(13,791)		(9,548)		131,000		95,155		(344,446)		(90,277)
Net change in contract owners’ equity			(5,325,781)		1,372,943		(26,243)		(1,202)		(302,640)		358,330		(557,002)		403,764
Contract owners’ equity beginning of period			23,802,040		22,429,097		79,202		80,404		2,426,107		2,067,777		2,499,009		2,095,245
Contract owners’ equity end of period	$		18,476,259		23,802,040		52,959		79,202		2,123,467		2,426,107		1,942,007		2,499,009
CHANGES IN UNITS:
Beginning units			136,711		149,431		403		458		17,337		16,574		9,259		10,974
Units purchased			24,093		27,368		13		16		3,825		3,915		829		2,584
Units redeemed			(27,863)		(40,088)		(88)		(71)		(2,675)		(3,152)		(2,207)		(4,299)
Ending units			132,941		136,711		328		403		18,487		17,337		7,881		9,259

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FTVRDI				FTVSVI				FTVDM3				TIF
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		61,282		59,069		12,257		14,514		7,494		24,627		17,808		18,566
Realized gain (loss) on investments			460,941		(243,395)		(295,163)		(419,307)		109,377		(493,983)		(108,502)		(43,945)
Change in unrealized gain (loss) on investments			(165,596)		1,325,159		33,240		1,857,992		(583,603)		918,057		(57,736)		125,113
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			356,627		1,140,833		(249,666)		1,453,199		(466,732)		448,701		(148,430)		99,734
Equity transactions:
Purchase payments received from contract owners			1,640,173		1,773,789		844,443		1,083,121		302,063		1,070,413		208,849		215,516
Transfers between funds (note 5)			131		18		51		1		21		23		66		-
Surrenders and Death Benefits (notes 3 and note 5)			(1,935,807)		(1,639,754)		(1,405,014)		(1,600,297)		(586,016)		(874,537)		(196,595)		(215,945)
Net policy repayments (loans) (note 4)			(45,950)		9,473		13,275		(69,884)		6,109		(48,944)		6,315		2,050
Redemptions to pay cost of insurance charges and administration charges (note 5)			(504,646)		(523,092)		(411,650)		(446,910)		(200,131)		(205,399)		(135,070)		(116,367)
Adjustments to maintain reserves			188		295		(1,051)		(55,970)		29		5,215		(648)		1,751
Net equity transactions			(845,911)		(379,271)		(959,946)		(1,089,939)		(477,925)		(53,229)		(117,083)		(112,995)
Net change in contract owners’ equity			(489,284)		761,562		(1,209,612)		363,260		(944,657)		395,472		(265,513)		(13,261)
Contract owners’ equity beginning of period			6,896,501		6,134,939		6,363,695		6,000,435		3,151,548		2,756,076		1,423,155		1,436,416
Contract owners’ equity end of period	$		6,407,217		6,896,501		5,154,083		6,363,695		2,206,891		3,151,548		1,157,642		1,423,155
CHANGES IN UNITS:
Beginning units			37,619		39,612		24,769		30,252		16,171		16,508		2,683		2,527
Units purchased			8,452		11,373		4,188		4,719		1,946		6,704		159		677
Units redeemed			(14,307)		(13,366)		(7,898)		(10,202)		(4,565)		(7,041)		(687)		(521)
Ending units			31,764		37,619		21,059		24,769		13,552		16,171		2,155		2,683

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FTVGI3				FTVFA2				AMTB				AMINS
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		124,901		15,078		(350)		968		289,417		493,522		122		199
Realized gain (loss) on investments			36,648		34,408		542		374		(362,410)		(394,240)		61		103
Change in unrealized gain (loss) on investments			(224,219)		221,104		(2,851)		4,165		58,015		416,512		(447)		45
Reinvested capital gains			16,705		5,560		-		5		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(45,965)		276,150		(2,659)		5,512		(14,978)		515,794		(264)		347
Equity transactions:
Purchase payments received from contract owners			682,354		647,813		840		50,061		1,166,087		2,241,628		1,666		858
Transfers between funds (note 5)			-		(1)		-		-		137,051		372,302		1		-
Surrenders and Death Benefits (notes 3 and note 5)			(351,687)		(436,230)		(23,283)		(1,531)		(2,258,148)		(2,755,660)		(195)		(5)
Net policy repayments (loans) (note 4)			(9,407)		(8,755)		-		-		(21,749)		(65,105)		-		-
Redemptions to pay cost of insurance charges and administration charges (note 5)			(162,937)		(126,984)		(4,372)		(3,784)		(969,973)		(1,018,197)		(1,112)		(1,014)
Adjustments to maintain reserves			74		(37,032)		(72)		814		9,449		8,190		3		123
Net equity transactions			158,397		38,811		(26,887)		45,560		(1,937,283)		(1,216,842)		363		(38)
Net change in contract owners’ equity			112,432		314,961		(29,546)		51,072		(1,952,261)		(701,048)		99		309
Contract owners’ equity beginning of period			2,391,162		2,076,201		59,120		8,048		10,703,567		11,404,615		1,767		1,458
Contract owners’ equity end of period	$		2,503,594		2,391,162		29,574		59,120		8,751,306		10,703,567		1,866		1,767
CHANGES IN UNITS:
Beginning units			13,949		13,754		631		94		48,811		54,523		14		15
Units purchased			4,021		4,126		11		590		6,503		11,910		14		9
Units redeemed			(3,140)		(3,931)		(319)		(53)		(17,081)		(17,622)		(11)		(10)
Ending units			14,830		13,949		323		631		38,233		48,811		17		14

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		AMCG				AMTP				AMFAS				AMSRS
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(2,041)		(1,298)		(19,131)		1,988		(3,801)		(3,814)		(2,218)		(3,749)
Realized gain (loss) on investments			9,986		25,413		187,828		188,983		(22,697)		(81,051)		(14,182)		(105,182)
Change in unrealized gain (loss) on investments			(8,855)		26,247		(530,192)		291,017		21,625		178,424		(11,958)		220,948
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(910)		50,362		(361,495)		481,988		(4,873)		93,559		(28,358)		112,017
Equity transactions:
Purchase payments received from contract owners			27,930		191,563		874,306		244,215		163,482		140,570		116,311		113,382
Transfers between funds (note 5)			95		1		5,070		(176)		(19)		-		10		1
Surrenders and Death Benefits (notes 3 and note 5)			(4,709)		(72,911)		(1,068,585)		(490,151)		(274,423)		(176,033)		(50,495)		(187,968)
Net policy repayments (loans) (note 4)			(70)		376		4,064		(5,617)		1,326		(145)		(6,067)		(6,293)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(30,645)		(22,160)		(266,378)		(181,721)		(61,840)		(52,542)		(43,681)		(38,950)
Adjustments to maintain reserves			(43)		196		41,187		(54,960)		150		(3,215)		(199)		(39,272)
Net equity transactions			(7,442)		97,065		(410,336)		(488,410)		(171,324)		(91,365)		15,879		(159,100)
Net change in contract owners’ equity			(8,352)		147,427		(771,831)		(6,422)		(176,197)		2,194		(12,479)		(47,083)
Contract owners’ equity beginning of period			306,411		158,984		3,519,068		3,525,490		644,400		642,206		615,873		662,956
Contract owners’ equity end of period	$		298,059		306,411		2,747,237		3,519,068		468,203		644,400		603,394		615,873
CHANGES IN UNITS:
Beginning units			611		203		4,584		5,536		3,754		4,775		2,757		3,912
Units purchased			31		474		459		851		946		711		469		588
Units redeemed			(32)		(66)		(1,012)		(1,803)		(1,874)		(1,732)		(504)		(1,743)
Ending units			610		611		4,031		4,584		2,826		3,754		2,722		2,757

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		OVGR				OVGS3				OVGS				OVHI3
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		-		(17,213)		45,078		51,181		11,037		12,948		28,212		13,922
Realized gain (loss) on investments			-		165,181		(111,728)		(250,835)		(73,808)		(64,221)		(40,146)		(92,496)
Change in unrealized gain (loss) on investments			-		90,266		(669,652)		1,342,417		(43,979)		287,100		2,785		116,131
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		238,234		(736,302)		1,142,763		(106,750)		235,827		(9,149)		37,557
Equity transactions:
Purchase payments received from contract owners			-		549,601		982,027		1,232,359		40,617		242,469		64,051		77,076
Transfers between funds (note 5)			-		(6)		(7)		(12)		72		-		-		-
Surrenders and Death Benefits (notes 3 and note 5)			-		(4,123,563)		(517,201)		(790,469)		(364,645)		(317,083)		(18,834)		(19,751)
Net policy repayments (loans) (note 4)			-		(7,348)		(69,182)		(83,487)		(9,722)		850		(4,108)		4,279
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		(284,366)		(603,254)		(637,362)		(112,599)		(116,555)		(23,389)		(19,308)
Adjustments to maintain reserves			-		(8,787)		(241)		(16,718)		(1,407)		(4,067)		28		(1,473)
Net equity transactions			-		(3,874,469)		(207,858)		(295,689)		(447,684)		(194,386)		17,748		40,823
Net change in contract owners’ equity			-		(3,636,235)		(944,160)		847,074		(554,434)		41,441		8,599		78,380
Contract owners’ equity beginning of period			-		3,636,235		8,618,236		7,771,162		1,734,031		1,692,590		333,513		255,133
Contract owners’ equity end of period	$		-		-		7,674,076		8,618,236		1,179,597		1,734,031		342,112		333,513
CHANGES IN UNITS:
Beginning units			-		31,241		55,968		58,101		4,265		4,877		11,550		10,062
Units purchased			-		5,288		8,328		9,902		159		313		2,420		3,341
Units redeemed			-		(36,529)		(9,568)		(12,035)		(1,243)		(925)		(1,808)		(1,853)
Ending units			-		-		54,728		55,968		3,181		4,265		12,162		11,550

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		OVHI				OVGI				OVSC				PMVFBA
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		16,316		6,733		3,219		8,871		(426)		28		2,763		958
Realized gain (loss) on investments			9,411		(82,605)		(47,580)		(68,182)		(39,188)		(87,862)		7,450		782
Change in unrealized gain (loss) on investments			(24,257)		94,039		19,654		384,759		10,925		377,595		5,261		10,343
Reinvested capital gains			-		-		-		-		-		-		712		1,694
Net increase (decrease) in contract owners’ equity resulting from operations			1,470		18,167		(24,707)		325,448		(28,689)		289,761		16,186		13,777
Equity transactions:
Purchase payments received from contract owners			83,163		116,062		239,499		297,096		106,520		135,650		76,827		159,572
Transfers between funds (note 5)			(37)		-		-		-		2		4		-		-
Surrenders and Death Benefits (notes 3 and note 5)			(152,339)		(33,129)		(346,786)		(261,469)		(338,499)		(342,574)		(71,256)		(37,349)
Net policy repayments (loans) (note 4)			(4,360)		(1,801)		(22,208)		(12,161)		5,194		21,861		568		(4,099)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(29,256)		(23,708)		(180,258)		(193,575)		(94,435)		(104,183)		(14,152)		(12,372)
Adjustments to maintain reserves			35		184		(61)		(10,155)		(1,149)		(9,439)		(8)		8,050
Net equity transactions			(102,794)		57,608		(309,814)		(180,264)		(322,367)		(298,681)		(8,021)		113,802
Net change in contract owners’ equity			(101,324)		75,775		(334,521)		145,184		(351,056)		(8,920)		8,165		127,579
Contract owners’ equity beginning of period			196,701		120,926		2,470,139		2,324,955		1,460,218		1,469,138		216,825		89,246
Contract owners’ equity end of period	$		95,377		196,701		2,135,618		2,470,139		1,109,162		1,460,218		224,990		216,825
CHANGES IN UNITS:
Beginning units			2,190		2,287		17,422		18,999		6,244		7,566		1,829		818
Units purchased			346		487		1,865		2,605		533		1,033		650		1,567
Units redeemed			(1,132)		(584)		(4,185)		(4,182)		(1,766)		(2,355)		(717)		(556)
Ending units			1,404		2,190		15,102		17,422		5,011		6,244		1,762		1,829

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		PMVLDA				PMVTRA				PVGIB				PVTIGB
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		5,589		5,138		3,491		-		1,435		1,561		2,246		2,988
Realized gain (loss) on investments			8,041		3,824		(106)		-		1,642		(29,906)		3,909		5,280
Change in unrealized gain (loss) on investments			(10,994)		10,490		(8,425)		-		(13,603)		48,421		(20,814)		1,158
Reinvested capital gains			-		2,042		6,356		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			2,636		21,494		1,316		-		(10,526)		20,076		(14,659)		9,426
Equity transactions:
Purchase payments received from contract owners			275,063		825,166		191,076		-		80,536		82,712		2,329		6,527
Transfers between funds (note 5)			-		-		270,951		-		(1)		-		-		(1)
Surrenders and Death Benefits (notes 3 and note 5)			(263,308)		(287,039)		-		-		(39,962)		(37,870)		(11,349)		(20,719)
Net policy repayments (loans) (note 4)			(36,169)		(10,015)		206		-		1,248		(129)		-		-
Redemptions to pay cost of insurance charges and administration charges (note 5)			(61,968)		(39,313)		(5,894)		-		(34,654)		(19,863)		(4,971)		(5,262)
Adjustments to maintain reserves			38		(3,339)		(272,395)		-		(122)		486		307		151
Net equity transactions			(86,344)		485,460		183,944		-		7,045		25,336		(13,684)		(19,304)
Net change in contract owners’ equity			(83,708)		506,954		185,260		-		(3,481)		45,412		(28,343)		(9,878)
Contract owners’ equity beginning of period			644,991		138,037		-		-		201,131		155,719		97,886		107,764
Contract owners’ equity end of period	$		561,283		644,991		185,260		-		197,650		201,131		69,543		97,886
CHANGES IN UNITS:
Beginning units			5,616		1,256		-		-		1,468		1,290		337		383
Units purchased			2,477		7,432		1,882		-		254		696		2		5
Units redeemed			(3,223)		(3,072)		(40)		-		(225)		(518)		(65)		(51)
Ending units			4,870		5,616		1,842		-		1,497		1,468		274		337

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		PVTVB				AVBVI				AVCA				AVCDI
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(5,297)		8,376		512		(54)		(1,672)		(15)		(9,664)		(8,861)
Realized gain (loss) on investments			13,376		122,620		27,018		31,477		(11,644)		(22,615)		(29,054)		(166,634)
Change in unrealized gain (loss) on investments			(185,424)		(21,479)		(32,159)		(15,843)		(12,666)		56,694		(64,878)		378,374
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(177,345)		109,517		(4,629)		15,580		(25,982)		34,064		(103,596)		202,879
Equity transactions:
Purchase payments received from contract owners			498,924		173,483		15,855		43,699		66,168		55,192		104,216		82,594
Transfers between funds (note 5)			-		2		(4)		-		-		(5)		-		-
Surrenders and Death Benefits (notes 3 and note 5)			(100,112)		(768,653)		(55,941)		(86,297)		(26,227)		(49,585)		(47,476)		(187,701)
Net policy repayments (loans) (note 4)			1,582		(33,407)		(49)		(4,556)		(718)		140		(4,098)		(10,168)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(42,188)		(40,882)		(8,623)		(11,047)		(27,978)		(29,733)		(63,231)		(58,452)
Adjustments to maintain reserves			296		4,469		(239)		261		(362)		3,353		2,456		(3,394)
Net equity transactions			358,502		(664,988)		(49,001)		(57,940)		10,883		(20,638)		(8,133)		(177,121)
Net change in contract owners’ equity			181,157		(555,471)		(53,630)		(42,360)		(15,099)		13,426		(111,729)		25,758
Contract owners’ equity beginning of period			551,898		1,107,369		207,824		250,184		280,976		267,550		1,306,644		1,280,886
Contract owners’ equity end of period	$		733,055		551,898		154,194		207,824		265,877		280,976		1,194,915		1,306,644
CHANGES IN UNITS:
Beginning units			2,813		4,172		271		323		2,003		2,200		6,860		7,877
Units purchased			1,590		1,091		29		53		526		502		688		523
Units redeemed			(516)		(2,450)		(122)		(105)		(452)		(699)		(752)		(1,540)
Ending units			3,887		2,813		178		271		2,077		2,003		6,796		6,860

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		TRBCG2				TREI2				TRHS2				TRLT2
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		-		(7,715)		-		9,690		(1,261)		(49)		-		16
Realized gain (loss) on investments			-		75,314		-		(128,155)		5,364		1,967		-		7
Change in unrealized gain (loss) on investments			-		101,389		-		329,815		(16,605)		(319)		-		(2)
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		168,988		-		211,350		(12,502)		1,599		-		21
Equity transactions:
Purchase payments received from contract owners			-		292,515		-		290,913		352,617		66,153		-		-
Transfers between funds (note 5)			-		(17)		-		-		10		-		-		-
Surrenders and Death Benefits (notes 3 and note 5)			-		(1,539,868)		-		(2,244,524)		(71,386)		(25,965)		-		-
Net policy repayments (loans) (note 4)			-		(152)		-		(6,750)		(305)		-		-		-
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		(78,651)		-		(134,924)		(21,012)		(410)		-		-
Adjustments to maintain reserves			-		154		-		3,810		34		32		-		(21)
Net equity transactions			-		(1,326,019)		-		(2,091,475)		259,958		39,810		-		(21)
Net change in contract owners’ equity			-		(1,157,031)		-		(1,880,125)		247,456		41,409		-		-
Contract owners’ equity beginning of period			-		1,157,031		-		1,880,125		41,409		-		-		-
Contract owners’ equity end of period	$		-		-		-		-		288,865		41,409		-		-
CHANGES IN UNITS:
Beginning units			-		10,571		-		18,737		391		-		-		-
Units purchased			-		2,891		-		3,123		2,904		659		-		-
Units redeemed			-		(13,462)		-		(21,860)		(808)		(268)		-		-
Ending units			-		-		-		-		2,487		391		-		-

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		VWBFR				VWBF				VWEMR				VWEM
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		337,166		147,193		249,162		115,599		72,756		(533)		82,362		10,154
Realized gain (loss) on investments			(4,341)		(15,653)		21,648		(30,001)		(285,739)		(1,957,566)		(1,108,009)		(2,941,033)
Change in unrealized gain (loss) on investments			(94,592)		117,225		(93,464)		111,366		(3,616,807)		5,253,940		(2,893,798)		6,629,324
Reinvested capital gains			91,314		-		68,157		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			329,547		248,765		245,503		196,964		(3,829,790)		3,295,841		(3,919,445)		3,698,445
Equity transactions:
Purchase payments received from contract owners			526,682		545,605		170,171		277,908		1,335,531		1,651,190		390,424		865,807
Transfers between funds (note 5)			280,550		96,204		(1,011)		(461)		(155,414)		(239,108)		(49,753)		(98,784)
Surrenders and Death Benefits (notes 3 and note 5)			(556,177)		(850,878)		(414,336)		(742,432)		(1,358,459)		(2,140,080)		(1,911,356)		(3,512,897)
Net policy repayments (loans) (note 4)			(29,979)		(37,993)		5,245		7,363		49,497		(90,379)		(250,812)		(93,779)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(363,361)		(347,797)		(290,115)		(259,674)		(778,970)		(793,820)		(674,229)		(772,894)
Adjustments to maintain reserves			(647)		(53,488)		9,041		(6,040)		5,053		(32,646)		(70,463)		18,402
Net equity transactions			(142,932)		(648,347)		(521,005)		(723,336)		(902,762)		(1,644,843)		(2,566,189)		(3,594,145)
Net change in contract owners’ equity			186,615		(399,582)		(275,502)		(526,372)		(4,732,552)		1,650,998		(6,485,634)		104,300
Contract owners’ equity beginning of period			4,550,582		4,950,164		3,398,403		3,924,775		15,560,212		13,909,214		17,173,355		17,069,055
Contract owners’ equity end of period	$		4,737,197		4,550,582		3,122,901		3,398,403		10,827,660		15,560,212		10,687,721		17,173,355
CHANGES IN UNITS:
Beginning units			22,637		26,836		6,861		8,890		41,617		46,050		29,643		36,924
Units purchased			3,834		4,497		164		310		6,934		7,097		529		1,329
Units redeemed			(5,895)		(8,696)		(1,333)		(2,339)		(8,643)		(11,530)		(5,508)		(8,610)
Ending units			20,576		22,637		5,692		6,861		39,908		41,617		24,664		29,643

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		VWHAR				VWHA				VVEI				VVHYB
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		93,372		(26,687)		46,756		(16,539)		24,966		31,005		80,329		66,194
Realized gain (loss) on investments			(70,152)		38,787		259,419		33,589		(76,502)		(80,816)		(22,764)		(12,107)
Change in unrealized gain (loss) on investments			(2,407,123)		3,017,437		(1,551,175)		1,710,175		215,623		261,612		14,057		66,330
Reinvested capital gains			170,145		-		94,646		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(2,213,758)		3,029,537		(1,150,354)		1,727,225		164,087		211,801		71,622		120,417
Equity transactions:
Purchase payments received from contract owners			1,424,559		2,038,394		515,454		1,128,172		235,960		298,651		194,780		235,045
Transfers between funds (note 5)			214,891		591,607		2,723		(2,631)		(13)		(1)		-		(1)
Surrenders and Death Benefits (notes 3 and note 5)			(1,984,800)		(1,307,858)		(1,029,282)		(1,204,279)		(163,706)		(111,060)		(156,873)		(68,057)
Net policy repayments (loans) (note 4)			(62,341)		(110,008)		(43,479)		(2,503)		(12,981)		(4,875)		(3,211)		(1,478)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(636,434)		(555,091)		(467,357)		(321,353)		(152,671)		(164,553)		(103,914)		(106,117)
Adjustments to maintain reserves			(3,200)		(58,600)		(4,877)		(24,000)		19		1,275		75		922
Net equity transactions			(1,047,325)		598,444		(1,026,818)		(426,594)		(93,392)		19,437		(69,143)		60,314
Net change in contract owners’ equity			(3,261,083)		3,627,981		(2,177,172)		1,300,631		70,695		231,238		2,479		180,731
Contract owners’ equity beginning of period			13,941,416		10,313,435		7,875,356		6,574,725		1,797,857		1,566,619		1,233,721		1,052,990
Contract owners’ equity end of period	$		10,680,333		13,941,416		5,698,184		7,875,356		1,868,552		1,797,857		1,236,200		1,233,721
CHANGES IN UNITS:
Beginning units			29,000		27,655		7,256		8,720		11,762		11,643		7,735		7,329
Units purchased			4,347		7,489		222		556		1,536		2,252		1,305		1,848
Units redeemed			(7,232)		(6,144)		(1,989)		(2,020)		(2,106)		(2,133)		(1,723)		(1,442)
Ending units			26,115		29,000		5,489		7,256		11,192		11,762		7,317		7,735

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		VVMCI				VVHGB				WRASP				SVDF
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		2,054		(742)		27,892		30,072		1,786		1,247		(7,118)		(5,313)
Realized gain (loss) on investments			(120,676)		(119,483)		16,642		16,076		37,090		(2,774)		50,117		87,689
Change in unrealized gain (loss) on investments			32,131		803,479		21,075		15,607		(53,731)		38,115		(51,738)		168,329
Reinvested capital gains			-		-		10,592		2,011		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			(86,491)		683,254		76,201		63,766		(14,855)		36,588		(8,739)		250,705
Equity transactions:
Purchase payments received from contract owners			454,484		535,100		151,249		205,871		145,595		332,711		171,382		397,301
Transfers between funds (note 5)			(42)		(4)		(1)		(1)		-		-		737		-
Surrenders and Death Benefits (notes 3 and note 5)			(260,571)		(208,520)		(141,192)		(190,216)		(277,978)		(12,567)		(16,853)		(253,639)
Net policy repayments (loans) (note 4)			(20,762)		(9,315)		(3,810)		220		10,547		(43,808)		(236)		173
Redemptions to pay cost of insurance charges and administration charges (note 5)			(283,079)		(279,916)		(109,476)		(114,008)		(33,155)		(28,159)		(49,635)		(40,935)
Adjustments to maintain reserves			(28)		709		100		614		(20)		25,640		(21,176)		(2,149)
Net equity transactions			(109,998)		38,054		(103,130)		(97,520)		(155,011)		273,817		84,219		100,751
Net change in contract owners’ equity			(196,489)		721,308		(26,929)		(33,754)		(169,866)		310,405		75,480		351,456
Contract owners’ equity beginning of period			3,497,838		2,776,530		1,183,581		1,217,335		468,991		158,586		1,009,951		658,495
Contract owners’ equity end of period	$		3,301,349		3,497,838		1,156,652		1,183,581		299,125		468,991		1,085,431		1,009,951
CHANGES IN UNITS:
Beginning units			17,134		16,890		8,615		9,346		3,652		1,332		4,693		3,356
Units purchased			2,581		3,104		1,364		2,081		1,230		3,179		658		3,070
Units redeemed			(3,050)		(2,860)		(2,084)		(2,812)		(2,353)		(859)		(306)		(1,733)
Ending units			16,665		17,134		7,895		8,615		2,529		3,652		5,045		4,693

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		SVOF				WFVSCG				NVAGF3				NVAGF6
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		(2,435)		810		(765)		(429)		3,781		11,762		13,621		21,248
Realized gain (loss) on investments			83,314		41,993		3,882		5,795		(20,362)		3,882		(43,524)		1,739
Change in unrealized gain (loss) on investments			(107,486)		67,354		(11,623)		5,168		13,140		(11,095)		17,533		(13,862)
Reinvested capital gains			-		-		-		-		5,599		4,974		20,831		9,160
Net increase (decrease) in contract owners’ equity resulting from operations			(26,607)		110,157		(8,506)		10,534		2,158		9,523		8,461		18,285
Equity transactions:
Purchase payments received from contract owners			130,182		47,670		83,272		54,693		2,262		153,439		2,623		247,126
Transfers between funds (note 5)			1,525		-		-		-		-		-		(142,370)		118,009
Surrenders and Death Benefits (notes 3 and note 5)			(102,158)		(160,321)		(21,186)		(45,203)		(237,915)		(33,419)		(297,548)		(36,232)
Net policy repayments (loans) (note 4)			1,551		3,244		43		(1,027)		263		(2,860)		(160)		(953)
Redemptions to pay cost of insurance charges and administration charges (note 5)			(40,703)		(42,416)		(8,860)		(3,872)		(2,086)		(11,306)		(3,633)		(9,222)
Adjustments to maintain reserves			(19,338)		(9,784)		(89)		(1,184)		(89)		137		(551)		1,305
Net equity transactions			(28,941)		(161,607)		53,180		3,407		(237,565)		105,991		(441,639)		320,033
Net change in contract owners’ equity			(55,548)		(51,450)		44,674		13,941		(235,407)		115,514		(433,178)		338,318
Contract owners’ equity beginning of period			498,872		550,322		57,683		43,742		235,407		119,893		433,178		94,860
Contract owners’ equity end of period	$		443,324		498,872		102,357		57,683		-		235,407		-		433,178
CHANGES IN UNITS:
Beginning units			1,056		1,478		349		333		1,926		1,055		487		87
Units purchased			213		173		487		370		28		1,345		3		568
Units redeemed			(210)		(595)		(182)		(354)		(1,954)		(474)		(490)		(168)
Ending units			1,059		1,056		654		349		-		1,926		-		487

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		GVGU1				GVGU				BF4				JARLCS
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		-		2,173		-		5,604		-		-		-		44
Realized gain (loss) on investments			-		(212,617)		-		(378,484)		-		-		-		8,146
Change in unrealized gain (loss) on investments			-		195,297		-		336,335		-		-		-		(5,723)
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		(15,147)		-		(36,545)		-		-		-		2,467
Equity transactions:
Purchase payments received from contract owners			-		78,898		-		31,901		-		452		-		-
Transfers between funds (note 5)			-		2		-		-		-		(12,761)		-		-
Surrenders and Death Benefits (notes 3 and note 5)			-		(416,985)		-		(1,031,366)		-		7		-		(29,108)
Net policy repayments (loans) (note 4)			-		4		-		(3,680)		-		441		-		-
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		(7,047)		-		(25,876)		-		12,444		-		(602)
Adjustments to maintain reserves			-		(69,319)		-		(6,819)		-		(583)		-		366
Net equity transactions			-		(414,447)		-		(1,035,840)		-		-		-		(29,344)
Net change in contract owners’ equity			-		(429,594)		-		(1,072,385)		-		-		-		(26,877)
Contract owners’ equity beginning of period			-		429,594		-		1,072,385		-		-		-		26,877
Contract owners’ equity end of period	$		-		-		-		-		-		-		-		-
CHANGES IN UNITS:
Beginning units			-		645		-		6,858		-		-		-		19
Units purchased			-		5		-		238		-		2		-		-
Units redeemed			-		(650)		-		(7,096)		-		(2)		-		(19)
Ending units			-		-		-		-		-		-		-		-

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		MLSZB				GVGF1				GVGH1				SGRF4
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		-		-		-		218		-		417		-		-
Realized gain (loss) on investments			-		-		-		(11,120)		-		(15,792)		-		-
Change in unrealized gain (loss) on investments			-		-		-		13,780		-		20,291		-		-
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		-		-		2,878		-		4,916		-		-
Equity transactions:
Purchase payments received from contract owners			-		-		-		6,318		-		62,895		-		3,222
Transfers between funds (note 5)			-		(112)		-		-		-		-		-		(17,204)
Surrenders and Death Benefits (notes 3 and note 5)			-		-		-		(170,552)		-		(359,163)		-		310
Net policy repayments (loans) (note 4)			-		106		-		134		-		2,102		-		1,945
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		56		-		(3,354)		-		(4,191)		-		5,977
Adjustments to maintain reserves			-		(50)		-		418		-		387		-		5,750
Net equity transactions			-		-		-		(167,036)		-		(297,970)		-		-
Net change in contract owners’ equity			-		-		-		(164,158)		-		(293,054)		-		-
Contract owners’ equity beginning of period			-		-		-		164,158		-		293,054		-		-
Contract owners’ equity end of period	$		-		-		-		-		-		-		-		-
CHANGES IN UNITS:
Beginning units			-		-		-		964		-		1,036		-		-
Units purchased			-		-		-		8		-		45		-		27
Units redeemed			-		-		-		(972)		-		(1,081)		-		(27)
Ending units			-		-		-		-		-		-		-		-

(Continued)  

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		GGTC				GVUG1				WSCP				VWRER
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		-		(570)		-		(2,707)		-		-		-		(1)
Realized gain (loss) on investments			-		9,447		-		(243,619)		-		-		-		-
Change in unrealized gain (loss) on investments			-		(1,666)		-		303,183		-		-		-		-
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		7,211		-		56,857		-		-		-		(1)
Equity transactions:
Purchase payments received from contract owners			-		50,215		-		29,506		-		-		-		1,064
Transfers between funds (note 5)			-		-		-		-		-		-		-		(9,103)
Surrenders and Death Benefits (notes 3 and note 5)			-		(294,801)		-		(1,231,834)		-		-		-		10,537
Net policy repayments (loans) (note 4)			-		(1,979)		-		(3,617)		-		-		-		54
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		(4,535)		-		(29,055)		-		-		-		(1,879)
Adjustments to maintain reserves			-		(1,387)		-		1,036		-		-		-		(672)
Net equity transactions			-		(252,487)		-		(1,233,964)		-		-		-		1
Net change in contract owners’ equity			-		(245,276)		-		(1,177,107)		-		-		-		-
Contract owners’ equity beginning of period			-		245,276		-		1,177,107		-		-		-		-
Contract owners’ equity end of period	$		-		-		-		-		-		-		-		-
CHANGES IN UNITS:
Beginning units			-		578		-		7,453		-		-		-		-
Units purchased			-		166		-		228		-		-		-		1
Units redeemed			-		(744)		-		(7,681)		-		-		-		(1)
Ending units			-		-		-		-		-		-		-		-

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		VWRE				GVGFS				GVGHS				GGTC3
		2011		2010		2011		2010		2011		2010		2011		2010
Investment activity:
Net investment income (loss)	$		-		-		-		322		-		345		-		(1,311)
Realized gain (loss) on investments			-		-		-		79,677		-		(11,251)		-		(14,032)
Change in unrealized gain (loss) on investments			-		-		-		(73,748)		-		16,799		-		30,615
Reinvested capital gains			-		-		-		-		-		-		-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		-		-		6,251		-		5,893		-		15,272
Equity transactions:
Purchase payments received from contract owners			-		15		-		42,355		-		18,125		-		136,738
Transfers between funds (note 5)			-		13		-		-		-		-		-		-
Surrenders and Death Benefits (notes 3 and note 5)			-		(30)		-		(380,897)		-		(440,922)		-		(678,861)
Net policy repayments (loans) (note 4)			-		-		-		39		-		(8,113)		-		(3,447)
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		(20,536)		-		(6,846)		-		(10,141)		-		(18,293)
Adjustments to maintain reserves			-		9,800		-		(42)		-		(8,345)		-		(6,094)
Net equity transactions			-		(10,738)		-		(345,391)		-		(449,396)		-		(569,957)
Net change in contract owners’ equity			-		(10,738)		-		(339,140)		-		(443,503)		-		(554,685)
Contract owners’ equity beginning of period			-		10,738		-		339,140		-		443,503		-		554,685
Contract owners’ equity end of period	$		-		-		-		-		-		-		-		-
CHANGES IN UNITS:
Beginning units			-		-		-		3,182		-		4,136		-		5,068
Units purchased			-		-		-		109		-		205		-		1,344
Units redeemed			-		-		-		(3,291)		-		(4,341)		-		(6,412)
Ending units			-		-		-		-		-		-		-		-

(Continued)   

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

STATEMENTS OF CHANGES IN CONTRACT OWNERS’ EQUITY

Years Ended December 31, 2011 and 2010

		FALF
		2011		2010
Investment activity:
Net investment income (loss)	$		-		744
Realized gain (loss) on investments			-		(9,161)
Change in unrealized gain (loss) on investments			-		10,081
Reinvested capital gains			-		-
Net increase (decrease) in contract owners’ equity resulting from operations			-		1,664
Equity transactions:
Purchase payments received from contract owners			-		4,002
Transfers between funds (note 5)			-		-
Surrenders and Death Benefits (notes 3 and note 5)			-		(47,257)
Net policy repayments (loans) (note 4)			-		67
Redemptions to pay cost of insurance charges and administration charges (note 5)			-		(1,732)
Adjustments to maintain reserves			-		182
Net equity transactions			-		(44,738)
Net change in contract owners’ equity			-		(43,074)
Contract owners’ equity beginning of period			-		43,074
Contract owners’ equity end of period	$		-		-
CHANGES IN UNITS:
Beginning units			-		389
Units purchased			-		39
Units redeemed			-		(428)
Ending units			-		-

See accompanying notes to financial statements.

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

(1) Organization

The Nationwide Provident VLI Separate Account 1 (the Account) was established by Nationwide Life Insurance Company of America (Nationwide Provident) under the provisions of the Pennsylvania Insurance Law. The Account is a separate investment account to which assets are allocated to support the benefits payable under single premium, modified premium, scheduled premium and flexible premium adjustable variable life insurance policies (the Policies). The Nationwide NVIT Nationwide Fund Class IV, Nationwide NVIT Money Market Fund Class IV, Nationwide NVIT Government Bond Fund Class IV and J.P. Morgan NVIT Balanced Fund Class IV subaccounts are the only subaccounts available with single premium and scheduled premium policies.

On December 31, 2009 NLICA merged with Nationwide Life and Insurance Company (NLIC or the Company) with NLIC as the surviving entity.

With certain exceptions, contract owners in either the accumulation or the payout phase may invest in the following:

ALGER AMERICAN FUNDS

Small Cap Growth Portfolio: Class I-2 Shares (AASCO)

BLACKROCK FUNDS

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

DREYFUS CORPORATION FUNDS

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

JANUS FUNDS

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

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

Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)

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

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

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

MASSACHUSETTS FINANCIAL SERVICES CO.

Investors Growth Stock Series - Initial Class (MIGIC)

Value Series - Initial Class (MVFIC)

Variable Insurance Trust II - International Value Portfolio - Service Class (MVIVSC)

MORGAN STANLEY

Core Plus Fixed Income Portfolio - Class I (MSVFI)

Emerging Markets Debt Portfolio - Class I (MSEM)

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

NATIONWIDE FUNDS GROUP

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

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

American Funds NVIT Bond Fund - Class II (GVABD2)

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

American Funds NVIT Growth Fund - Class II (GVAGR2)

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

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

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

NVIT Emerging Markets Fund - Class I (GEM)

NVIT Emerging Markets Fund - Class III (GEM3)

NVIT International Equity Fund - Class III (GIG3)

Gartmore NVIT International Equity Fund - Class VI (NVIE6)

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

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

NVIT Cardinal Aggressive Fund - Class I (NVCRA1)

NVIT Cardinal Balanced Fund - Class I (NVCRB1)

NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)

NVIT Cardinal Conservative Fund - Class I (NVCCN1)*

NVIT Cardinal Moderate Fund - Class I (NVCMD1)

NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)

NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)

NVIT Core Bond Fund - Class I (NVCBD1)

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

NVIT Core Plus Bond Fund - Class I (NVLCP1)

NVIT Fund - Class IV (TRF4)

NVIT Government Bond Fund - Class I (GBF)

NVIT Government Bond Fund - Class IV (GBF4)

American Century NVIT Growth Fund - Class IV (CAF4)

NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)

NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)

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

NVIT Investor Destinations Conservative Fund - Class II (GVIDC)

NVIT Investor Destinations Moderate Fund - Class II (GVIDM)

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

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

NVIT Mid Cap Index Fund - Class I (MCIF)

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

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

NVIT Multi-Manager International Value Fund - Class IV (GVDIV4)

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

NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)

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

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

NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)

NVIT Multi-Manager Small Cap Value Fund - Class IV (SCVF4)

NVIT Multi-Manager Small Company Fund - Class IV (SCF4)

NVIT Multi-Sector Bond Fund - Class I (MSBF)

NVIT S&P 500 Index Fund - Class IV (GVEX4)

NVIT Short Term Bond Fund - Class II (NVSTB2)

NVIT Large Cap Growth Fund - Class I (NVOLG1)

Templeton NVIT International Value Fund - Class III (NVTIV3)

Van Kampen NVIT Comstock Value Fund - Class IV (EIF4)

NVIT Real Estate Fund - Class I (NVRE1)

NVIT Money Market Fund - Class IV (SAM4)

PORTFOLIOS OF THE ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.

VPS Growth and Income Portfolio - Class A (ALVGIA)

VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)

PORTFOLIOS OF THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

VP Income & Growth Fund - Class I (ACVIG)

VP Inflation Protection Fund - Class II (ACVIP2)

VP International Fund - Class I (ACVI)

VP International Fund - Class III (ACVI3)*

VP Mid Cap Value Fund - Class I (ACVMV1)

VP Ultra(R) Fund - Class I (ACVU1)

VP Vista(SM) Fund - Class I (ACVVS1)

PORTFOLIOS OF THE DREYFUS INVESTMENT PORTFOLIOS

Small Cap Stock Index Portfolio - Service Shares (DVSCS)

PORTFOLIOS OF THE DREYFUS VARIABLE INVESTMENT FUND

Appreciation Portfolio - Initial Shares (DCAP)

Opportunistic Small Cap Portfolio: Initial Shares (DSC)

PORTFOLIOS OF THE FEDERATED INSURANCE SERIES

Capital Appreciation Fund II - Primary Shares (FVCA2P)

Quality Bond Fund II - Primary Shares (FQB)

PORTFOLIOS OF THE FIDELITY(R) VARIABLE INSURANCE PRODUCTS

Equity-Income Portfolio - Initial Class (FEIP)

High Income Portfolio - Initial Class (FHIP)

VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)

VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)

VIP Fund - Equity-Income Portfolio - Service Class (FEIS)

VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)

VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)

VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

VIP Fund - Growth Portfolio - Initial Class (FGP)

VIP Fund - Growth Portfolio - Service Class (FGS)

VIP Fund - High Income Portfolio - Initial Class R (FHIPR)

VIP Fund - Investment Grade Bond Portfolio - Initial Class (FIGBP)

VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)

VIP Fund - Mid Cap Portfolio - Service Class (FMCS)

VIP Fund - Overseas Portfolio - Initial Class (FOP)

VIP Fund - Overseas Portfolio - Initial Class R (FOPR)

VIP Fund - Overseas Portfolio - Service Class (FOS)

VIP Fund - Overseas Portfolio - Service Class R (FOSR)

VIP Fund - Value Strategies Portfolio - Service Class (FVSS)

PORTFOLIOS OF THE FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)

Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)

Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)

Templeton Foreign Securities Fund - Class 1 (TIF)

Templeton Global Bond Securities Fund - Class 3 (FTVGI3)

VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)

PORTFOLIOS OF THE NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST

Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)

International Portfolio - S Class Shares (AMINS)

Mid-Cap Growth Portfolio - I Class Shares (AMCG)

Partners Portfolio - I Class Shares (AMTP)

Regency Portfolio - S Class Shares (AMRS)*

Small-Cap Growth Portfolio - S Class Shares (AMFAS)

Socially Responsive Portfolio - I Class Shares (AMSRS)

PORTFOLIOS OF THE OPPENHEIMER VARIABLE ACCOUNT FUNDS

Global Securities Fund/VA - Class 3 (OVGS3)

Global Securities Fund/VA - Non-Service Shares (OVGS)

High Income Fund/VA - Class 3 (OVHI3)

High Income Fund/VA - Non-Service Shares (OVHI)

Main Street Fund(R)/VA - Non-Service Shares (OVGI)

Main Street Small- & Mid-Cap Fund(R)/VA - Non-Service Shares (OVSC)

PORTFOLIOS OF THE PIMCO VARIABLE INSURANCE TRUST

Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)

Low Duration Portfolio - Administrative Class (PMVLDA)

Total Return Portfolio - Administrative Class (PMVTRA)

PORTFOLIOS OF THE PUTNAM VARIABLE TRUST

Putnam VT Growth and Income Fund - IB Shares (PVGIB)

Putnam VT International Equity Fund - IB Shares (PVTIGB)

Putnam VT Voyager Fund - IB Shares (PVTVB)

PORTFOLIOS OF THE VAN KAMPEN LIFE INVESTMENT TRUST

V.I. Basic Value Fund - Series I (AVBVI)

V.I. Capital Appreciation Fund - Series I (AVCA)

V.I. Capital Development Fund - Series I (AVCDI)

T. ROWE PRICE

Health Sciences Portfolio - II (TRHS2)

Limited-Term Bond Portfolio - II (TRLT2)*

VAN ECK ASSOCIATES CORPORATION

VIP Trust - Global Bond Fund: Class R1 (VWBFR)

VIP Trust - Global Bond Fund: Initial Class (VWBF)

VIP Trust - Emerging Markets Fund: Class R1 (VWEMR)

VIP Trust - Emerging Markets Fund: Initial Class (VWEM)

VIP Trust - Global Hard Assets Fund: Class R1 (VWHAR)

VIP Trust - Global Hard Assets Fund: Initial Class (VWHA)

VANGUARD GROUP OF INVESTMENT COMPANIES

Vanguard(R) Variable Insurance Funds - Equity Income Portfolio (VVEI)

Vanguard(R) Variable Insurance Funds - High Yield Bond Portfolio (VVHYB)

Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)

Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

WADDELL & REED, INC.

Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)

WELLS FARGO FUNDS

Advantage Funds Variable Trust - VT Discovery Fund (SVDF)

Advantage VT Opportunity Fund - Class 2 (SVOF)

Advantage VT Small Cap Growth Fund - Class 2 (WFVSCG)

*At December 31, 2011, contract owners were not invested in the fund.

The policyholder’s equity is affected by the investment results of each fund, equity transactions by policyholders and certain contract expenses (see note 5).

Net premiums from in force policies are allocated to the subaccounts in accordance with policyholder instructions and are recorded as policyholders net premiums in the accompanying statements of changes in net assets. Such amounts are used to provide money to pay benefits under the policies. The Account’s assets are the property of the Company.

Transfers between investment portfolios include transfers between the subaccounts and the Guaranteed Account (not shown), which is part of the Company’s general account.

A policyholder may choose from among a number of different underlying mutual fund options. The underlying mutual fund options are available through the variable life policy and therefore, not available to the general public directly.

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

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

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.

(2) Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies followed by the Account in preparing the accompanying financial statements.

(a) Investment Valuation

Investments in underlying mutual funds are valued at the closing net asset value per share at December 31, 2011 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.

(b) Federal Income Taxes

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

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

(c) Estimates

The preparation of the accompanying financial statements required 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 from operations and policy transactions during the reporting period. Actual results could differ from those estimates.

(d) Recently Issued Accounting Standards

FASB ASC 820 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Account adopted FASB ASC 820 effective January 1, 2008. The adoption of FASB ASC 820 did not have a material impact on the Account’s financial position or results of operations.

In September 2009 the FASB issued ASU 2009-12, which amends FASB ASC 820, Fair Value Measurements and Disclosures. This guidance applies to reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or nonrecurring basis if the investment does not have a readily determinable fair value and the investee has attributes of an investment company. For these investments, this update allows, as a practical expedient, the use of net asset value (NAV) as the basis to estimate fair value as long as it is not probable, as of the measurement date that the investment will be sold and NAV is not the value that will be used in the sale. The NAVs must be calculated consistent with the American Institute of Certified Public Accountants Audit and Accounting Guide, Investment Companies, which generally requires these investments to be measured at fair value. Additionally, the guidance provided updated disclosures for investments within its scope and noted that if the investor can redeem the investment with the investee on the measurement date at NAV, the investment should likely be classified as Level 2 in the fair value hierarchy.

Investments that cannot be redeemed with the investee at NAV would generally be classified as Level 3 in the fair value hierarchy. If the investment is not redeemable with the investee on the measurement date, but will be at a future date, the length of time until the investment is redeemable should be considered in determining classification as Level 2 or 3. This guidance is effective for interim and annual periods ending after December 15, 2009 with early adoption permitted. The Account adopted this guidance effective the period ending December 31, 2009. The adoption of this guidance did not have a material impact on the financial statements of the Account.

In January 2010, the FASB issued ASU 2010-06, which amends FASB ASC 820, Fair Value Measurement and Disclosures. This guidance requires new disclosures and provides amendments to clarify existing disclosures. The new requirements include disclosing transfers in and out of Levels 1 and 2 fair value measurements, the reasons for the transfers, and further disaggregating activity in level 3 fair value measurements. The clarification of existing disclosure guidance includes further disaggregation of fair value measurement disclosures for each class of assets and liabilities and providing disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the new disclosures regarding the activity in Level 3 measurements, which shall be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Account adopted this guidance effective January 1, 2010, except for the new disclosure regarding the activity in Level 3 measurements, which the Account adopted for the fiscal period beginning January 1, 2011.

In May 2011, the FASB issued ASU 2011-04, which amends existing guidance in Accounting Standards Codification (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 ASU will require reporting entities to disclose quantitative information about the unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. The Account will adopt this guidance prospectively for the annual period beginning January 1, 2012. The adoption of this guidance will result in increased disclosures and will have an immaterial impact on the Account’s financial statements.

(e) Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued with the SEC.

(3) Death Benefits

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

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

(4) Policy Loans

Policy provisions allow policyholders to borrow up to the policy’s non-loaned surrender value (90% of cash surrender value for Options policies). Interest is charged on the outstanding loan and is due and payable at the end of each policy year or when the loan is repaid. Any unpaid interest is added to the loan balance and bears interest at the same loan rate.

At the time the loan is granted, the amount of the loan is transferred from the Account to the Company’s general account as collateral for the outstanding loan. Collateral amounts in the general account are credited with the stated rate of interest in effect at the time the loan is made. Interest credited is paid by Nationwide Provident’s general account to the Account. Loan repayments result in a transfer of collateral including interest back to the Account.

(5) Expenses and Related Party Transactions

(a) Deductions from Premiums

Nationwide Provident makes certain deductions from premiums before amounts are allocated to each subaccount selected by the policyholder. The deductions may include (1) state premium taxes (0-4% of premium/scheduled premium payments depending on the Insured state of residence), (2) premiums for supplementary benefits, (3) sales charges (5% of each scheduled base/unscheduled premium for Options policies only) and (4) premium processing charges and Federal tax charges (1.5-10% of premiums). Premiums adjusted for these deductions are recorded as net premiums in the statements of changes in net assets.

For the period ended December 31, 2011 total front-end sales charge deductions were $3,263,618 and was recognized as a reduction of purchase payments on the Statement of Changes in Contract Owners’ Equity.

For the periods ended December 31, 2011 and 2010, total transfers between the Account and the Company were $5,363,292 and $4,070,829, respectively. Transfers to and from the Account to the fixed account are included in either redemptions, or transfers between funds on the accompanying Statements of Changes in Contract Owners’ Equity.

(b) Mortality and Expense Charges

In addition to the aforementioned charges, each subaccount is charged for mortality and expense risks assumed by the Company. The annual rates charged to cover these risks range from 0.00% to 1.00% of the average daily net assets held for the benefit of policyholders. These charges are assessed through the daily unit value calculation.

(c) Cost of Insurance

Each subaccount is also charged by the Company for the cost of insurance protection, which is based on a number of variables such as issue age, sex, premium class, policy year and net amount at risk (death benefit less total policy account value). For single premium policies, the charge is accrued daily and deducted annually from the amount invested. For scheduled premium, modified premium and flexible premium adjustable policies, the charge is deducted monthly. The amount of the charge is computed based upon the amount of insurance provided during the year and the insured’s attained age. The cost of insurance charge is assessed monthly against each policy by liquidating units.

(d) Administrative Charges

Depending upon the type of policy, additional recurring monthly deductions may be made for (1) administrative charges (current charges ranging from $3.25-$11.00; guaranteed maximum charges ranging from a flat fee of $16 to a range of $3.25 plus $0.015 per $1,000 of face amount to $12 plus $0.03 per $1,000 of face amount), (2) first year policy charges (current charges ranging from $5.00-$17.50; guaranteed maximum charges ranging from a flat fee of $5.00 to $17.50 or $17.50 plus an amount per $1,000 of Face Amount (ranging from $0-0.11 per $1,000 of face amount) and (3) supplementary charges (ranging from $0-0.11 per $1,000 of face amount).

(Continued) 

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

Optional monthly deductions for additional riders may be made for (1) disability waiver benefit rider which waives monthly deductions in the event of disability (current and guaranteed maximum charge ranging from $.01-$1.76 per $1,000 of net amount at risk), (2) disability waiver of premium benefit waives agreed upon premium in the event of disability (current and guaranteed maximum charges range from 2% to 23.2% of agreed upon premium amount to an annual rate of $0.17 - $5.32 per $1,000 of Face Amount added to each scheduled premium payment. If the Special Premium Payment Provision is in effect, an annual rate of $0.16 - $4.92 per $1,000 of Face Amount), (3) children’s term insurance rider which provides a death benefit for a covered child ($.52 per $1,000 of coverage), (4) additional insurance benefit rider or term insurance rider (current charge of $.02-$115.10 per $1,000 of coverage for single life policies and $0-$20.79 for survivorship policies; guaranteed maximum charge of $0.09 - $420.82 per $1,000 of Rider coverage amount per month), (5) convertible term life insurance rider for term insurance on someone other than the primary insured individual (current charges of $.06-$113.17 per $1,000 of rider coverage; guaranteed maximum charge of $0.09 - $420.82 per $1,000 of Rider Coverage amount per month), (6) minimum death benefit which guarantees a death benefit if specified premiums are paid (current and guaranteed maximum charges are $.01 per $1,000 of Guaranteed Minimum Death Benefit), (7) long term care accelerated benefit which pays an accelerated death benefit in the event of a covered illness ($.02-$3.24 per $1,000 of net amount at risk; no maximum amount is guaranteed), (8) long term care waiver benefit waives monthly deductions in the event of a covered illness ($.01-$3.47 per $1,000 of net amount at risk; no maximum amount is guaranteed), (9) long term care extended insurance benefit rider provides additional benefits after accelerated benefits are exhausted ($.01-$8.72 per $1,000 of rider coverage) and (10) four years survivorship term life insurance provides additional death benefits in the first four years of the policy (current charges ranging from $.03-$.15 per $1,000 of rider coverage; guaranteed maximum charge ranging from $0.03 - $2.75 per $1,000 of Rider coverage amount per month).

A face amount increase charge is made upon an increase in face amount (current charges are as low as $0.00; guaranteed maximum charges range from $50-$300 plus $0-$3 per $1,000 of face amount increase). During any given policy year, the first four or twelve transfers (depending on the policy) by a policyholder of amounts in the subaccounts are free of charge. A fee of $25 is assessed for each additional transfer. These charges are included in the Statements of Changes in Contract Owner’s Equity and are assessed against each policy by liquidating units.

The policies provide for an initial free-look period. If a policy is cancelled within certain time constraints, the policyholder will receive a refund equal to the policy account value plus reimbursements of certain deductions previously made under the policy. Where state law requires a minimum refund equal to gross premiums paid, the refund will instead equal the gross premiums paid on the policy and will not reflect investment experience.

If a policy is surrendered within the first 9-15 policy years (depending on the policy), a contingent deferred sales load charge and/or contingent deferred administrative charge is assessed. The deferred administrative charge ranges from $0-$5 per $1,000 face amount. The deferred sales load charge ranges from 6-35% of premiums paid up to the sales surrender cap. A deferred sales charge and/or a deferred administrative charge will be imposed if certain policies are surrendered or lapse at any time within 10-15 years after the effective date of an increase in face amount (similar charges applied to surrenders/lapses for the initial face amount are applied to the premiums related to the increase in face amount).

A portion of the deferred sales charge and/or deferred administrative charge will be deducted if the face amount is decreased in the first 10-15 years or the related increment of face amount is decreased within 10-15 years after such increase took effect. These charges are included with administrative charges in the Statements of Changes in Contract Owner’s Equity and are assessed against each policy by liquidating units. Upon the transfer of the subaccount value out of a subaccount within 60 days after allocation to that subaccount, certain subaccounts charge a fee of 1% of the amount transferred. These amounts are paid directly to the fund company, and are shown as an investment expense in the statements of operations.

The Company made a daily asset charge against the assets of the Zero Coupon Bond 2007 Series Subaccount. The charge was to reimburse the Company for the transaction charge paid directly by the Company to Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPFS) on the sale of the Zero Coupon Trust units to the Zero Coupon Bond 2007 Series Subaccount. The Company paid these amounts from general account assets. The amount of the asset charge currently was equivalent to an effective annual rate of .25% of the average daily net assets of each Subaccount. The charge was cost based (taking into account the loss of interest) with no anticipated element of profit for the Company. These charges were included in the statements of changes in net assets and were assessed against each policy by liquidating units.

The Company, or an affiliate, may receive compensation from a fund or its investment adviser or distributor (or affiliates thereof) in connection with administration, distribution, or other services provided with respect to the funds and their availability through the policies. The amount of this compensation is based upon a percentage of the assets of the fund attributable to the policies and other policies issued by the Company (or an affiliate). These percentages differ, and some funds, advisers, or distributors (or affiliates) may pay the Company more than others. The Company also may receive 12b-1 fees.

(Continued) 

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

(6) Fair Value Measurement

FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Account generally uses the market approach as the valuation technique due to the nature of the mutual fund investments offered in the Account. This technique maximizes the use of observable inputs and minimizes the use of unobservable inputs.

In accordance with FASB ASC 820, the Account categorized its financial instruments into a three level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Account categorizes financial assets recorded at fair value as follows:

• Level 1 - Unadjusted quoted prices accessible in active markets 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.

• Level 2 - Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means.

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

The Account recognizes significant transfers between fair value hierarchy levels at the reporting period end. There were no significant transfers between Level 1 and 2 as of December 31, 2011.

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2011:

	Level 1		Level 2	Level 3	Total
Separate Account Investments	$	1,102,492,288	$0	$0	$	1,102,492,288

The Account did not have any assets or liabilities reported at fair value on a nonrecurring basis required to be disclosed under FASB ASC 820.

The cost of purchases and proceeds from sales of Investments for the year ended December 31, 2011 are as follows:

	Purchases of     Investments		Sales of   Investments
Small Cap Growth Portfolio: Class I-2 Shares ( AASCO)	$	605,406	$	3,759,591
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II ( MLVGA2)		368,677		429,022
Stock Index Fund, Inc. - Initial Shares ( DSIF)		991,573		1,605,282
Janus Aspen Series - Balanced Portfolio - Service Shares ( JABS)		470,924		822,854
Janus Aspen Series - Forty Portfolio - Service Shares ( JACAS)		235,984		1,241,648
Janus Aspen Series - Global Technology Portfolio - Service II Shares ( JAGTS2)		241,767		325,012
Janus Aspen Series - Global Technology Portfolio - Service Shares ( JAGTS)		91,140		125,253
Janus Aspen Series - Overseas Portfolio - Service II Shares ( JAIGS2)		777,096		1,770,412
Janus Aspen Series - Overseas Portfolio - Service Shares ( JAIGS)		396,174		1,127,663
Investors Growth Stock Series - Initial Class ( MIGIC)		211,466		234,562
Value Series - Initial Class ( MVFIC)		392,218		695,205
Variable Insurance Trust II - International Value Portfolio - Service Class ( MVIVSC)		550,680		62,555
Core Plus Fixed Income Portfolio - Class I ( MSVFI)		114,395		205,705
Emerging Markets Debt Portfolio - Class I ( MSEM)		270,900		210,856
U.S. Real Estate Portfolio - Class I ( MSVRE)		121,101		253,419
American Century NVIT Multi Cap Value Fund - Class I ( NVAMV1)		516,516		2,139,004
American Funds NVIT Asset Allocation Fund - Class II ( GVAAA2)		254,985		102,979

(Continued) 

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

American Funds NVIT Bond Fund - Class II (GVABD2)	75,878	54,836
American Funds NVIT Global Growth Fund - Class II (GVAGG2)	168,784	192,642
American Funds NVIT Growth Fund - Class II (GVAGR2)	180,093	231,181
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)	31,792	27,861
Federated NVIT High Income Bond Fund - Class I (HIBF)	126,930	168,577
Federated NVIT High Income Bond Fund - Class III (HIBF3)	460,179	429,413
NVIT Emerging Markets Fund - Class I (GEM)	154,850	501,581
NVIT Emerging Markets Fund - Class III (GEM3)	425,012	1,217,735
NVIT International Equity Fund - Class III (GIG3)	160,972	63,912
Gartmore NVIT International Equity Fund - Class VI (NVIE6)	120,814	210,156
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)	697,393	2,940,245
Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)	141,839	12,787
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)	95,314	233,934
NVIT Cardinal Balanced Fund - Class I (NVCRB1)	13,576	958
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)	54,767	362,554
NVIT Cardinal Conservative Fund - Class I (NVCCN1)	341	13,233
NVIT Cardinal Moderate Fund - Class I (NVCMD1)	164,193	34,420
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)	168,515	109,338
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)	5,610	2,665
NVIT Core Bond Fund - Class I (NVCBD1)	68,717	78,003
NVIT Core Plus Bond Fund - Class I (NVLCP1)	4,789	6,254
NVIT Fund - Class IV (TRF4)	4,478,138	12,388,410
NVIT Government Bond Fund - Class I (GBF)	138,422	168,984
NVIT Government Bond Fund - Class IV (GBF4)	2,297,114	6,333,871
American Century NVIT Growth Fund - Class IV (CAF4)	1,045,208	2,907,104
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)	438,233	586,503
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)	22,457	2,988
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)	5,450	7,785
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)	1,760,083	466,851
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)	3,329,128	5,420,867
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)	2,957,127	4,841,548
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)	232,555	215,416
NVIT Mid Cap Index Fund - Class I (MCIF)	826,518	732,416
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)	253,266	324,923
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)	1,560,539	2,458,351
NVIT Multi-Manager International Value Fund - Class IV (GVDIV4)	455,422	3,216,482
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)	378,472	2,103,989
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)	1,690,099	724,232
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)	1,144,519	7,030,526
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)	269,214	770,761
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)	326,075	491,476
NVIT Multi-Manager Small Cap Value Fund - Class IV (SCVF4)	695,199	2,616,285
NVIT Multi-Manager Small Company Fund - Class IV (SCF4)	704,148	2,996,376
NVIT Multi-Sector Bond Fund - Class I (MSBF)	336,274	399,016
NVIT S&P 500 Index Fund - Class IV (GVEX4)	4,702,379	16,653,778
NVIT Short Term Bond Fund - Class II (NVSTB2)	1,314,756	659,701
NVIT Large Cap Growth Fund - Class I (NVOLG1)	2,648,914	18,621,980
Templeton NVIT International Value Fund - Class III (NVTIV3)	108,018	16,811
Van Kampen NVIT Comstock Value Fund - Class IV (EIF4)	975,976	2,296,704
NVIT Real Estate Fund - Class I (NVRE1)	377,717	705,057
NVIT Money Market Fund - Class IV (SAM4)	11,719,647	16,043,984
VPS Growth and Income Portfolio - Class A (ALVGIA)	111,116	517,838
VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)	462,422	969,553
VP Income & Growth Fund - Class I (ACVIG)	127,735	210,136
VP Inflation Protection Fund - Class II (ACVIP2)	729,785	562,050
VP International Fund - Class I (ACVI)	127,760	142,605
VP International Fund - Class III (ACVI3)	-	-
VP Mid Cap Value Fund - Class I (ACVMV1)	202,734	298,533
VP Ultra(R) Fund - Class I (ACVU1)	4,842	24,272

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

VP Value Fund - Class I (ACVV)	3,649	5,356
VP Vista(SM) Fund - Class I (ACVVS1)	2	167
Small Cap Stock Index Portfolio - Service Shares (DVSCS)	647,144	1,070,558
Appreciation Portfolio - Initial Shares (DCAP)	396,188	624,055
Opportunistic Small Cap Portfolio: Initial Shares (DSC)	131,669	107,010
Capital Appreciation Fund II - Primary Shares (FVCA2P)	10,393	21,018
Quality Bond Fund II - Primary Shares (FQB)	542,024	661,527
Equity-Income Portfolio - Initial Class (FEIP)	4,539,379	13,414,895
High Income Portfolio - Initial Class (FHIP)	1,034,118	1,776,498
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)	1,986,430	4,998,047
VIP Fund - Contrafund Portfolio - Initial Class (FCP)	85,940	170,354
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)	718,622	474,716
VIP Fund - Equity-Income Portfolio - Service Class (FEIS)	555,509	477,829
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)	212,506	124,893
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)	245,512	212,821
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)	317,083	231,385
VIP Fund - Growth Portfolio - Initial Class (FGP)	4,004,309	17,643,933
VIP Fund - Growth Portfolio - Service Class (FGS)	217,353	319,998
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)	1,080,956	1,480,174
VIP Fund - Investment Grade Bond Portfolio - Initial Class (FIGBP)	5,076,137	7,452,288
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)	255,770	189,009
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)	848,551	2,825,294
VIP Fund - Overseas Portfolio - Initial Class (FOP)	475,020	2,993,705
VIP Fund - Overseas Portfolio - Initial Class R (FOPR)	2,178,443	3,595,634
VIP Fund - Overseas Portfolio - Service Class (FOS)	2,762	15,747
VIP Fund - Overseas Portfolio - Service Class R (FOSR)	362,380	212,898
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)	158,872	500,094
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)	1,369,010	2,153,094
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)	639,522	1,584,618
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)	231,579	702,249
Templeton Foreign Securities Fund - Class 1 (TIF)	213,152	312,137
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)	719,734	419,991
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)	849	28,030
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares (AMTB)	1,156,291	2,817,283
International Portfolio - S Class Shares (AMINS)	1,782	1,412
Mid-Cap Growth Portfolio - I Class Shares (AMCG)	13,553	23,090
Partners Portfolio - I Class Shares (AMTP)	144,485	577,483
Small-Cap Growth Portfolio - S Class Shares (AMFAS)	176,905	346,528
Socially Responsive Portfolio - I Class Shares (AMSRS)	106,509	92,777
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)	1	190
Global Securities Fund/VA - Class 3 (OVGS3)	780,423	942,251
Global Securities Fund/VA - Non-Service Shares (OVGS)	88,084	525,217
High Income Fund/VA - Class 3 (OVHI3)	84,490	38,013
High Income Fund/VA - Non-Service Shares (OVHI)	100,652	187,122
Main Street Fund(R)/VA - Non-Service Shares (OVGI)	166,369	473,216
Main Street Small- & Mid-Cap Fund(R)/VA - Non-Service Shares (OVSC)	92,597	414,268
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)	80,206	84,773
Low Duration Portfolio - Administrative Class (PMVLDA)	262,815	343,686
Total Return Portfolio - Administrative Class (PMVTRA)	474,115	5,452
Putnam VT Growth and Income Fund - IB Shares (PVGIB)	78,072	69,543
Putnam VT International Equity Fund - IB Shares (PVTIGB)	5,050	16,742
Putnam VT Voyager Fund - IB Shares (PVTVB)	487,934	135,066
V.I. Basic Value Fund - Series I (AVBVI)	16,948	64,409
V.I. Capital Appreciation Fund - Series I (AVCA)	60,330	50,831
V.I. Capital Development Fund - Series I (AVCDI)	102,792	123,104
Blue Chip Growth Portfolio - II (TRBCG2)	-	161
Equity Income Portfolio - II (TREI2)	2	291
Health Sciences Portfolio - II (TRHS2)	350,616	91,958
VIP Trust - Global Bond Fund: Class R1 (VWBFR)	1,180,315	896,763

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

VIP Trust - Global Bond Fund: Initial Class (VWBF)		430,797		641,674
VIP Trust - Emerging Markets Fund: Class R1 (VWEMR)		1,180,244		2,066,975
VIP Trust - Emerging Markets Fund: Initial Class (VWEM)		368,305		2,851,551
VIP Trust - Global Hard Assets Fund: Class R1 (VWHAR)		1,477,069		2,277,070
VIP Trust - Global Hard Assets Fund: Initial Class (VWHA)		599,798		1,492,773
Vanguard(R) Variable Insurance Funds - Equity Income Portfolio (VVEI)		182,483		249,895
Vanguard(R) Variable Insurance Funds - High Yield Bond Portfolio (VVHYB)		225,493		213,913
Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)		324,308		431,982
Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)		162,404		226,871
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)		151,620		304,890
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)		170,303		100,801
Advantage VT Opportunity Fund - Class 2 (SVOF)		153,317		183,423
Advantage VT Small Cap Growth Fund - Class 2 (WFVSCG)		81,482		28,994
AllianceBernstein NVIT Global Fixed Income Fund - Class III(obsolete) (NVAGF3)		11,914		240,030
AllianceBernstein NVIT Global Fixed Income Fund - Class VI(obsolete) (NVAGF6)		36,592		444,036
Total	$	99,716,853	$	223,807,998

(7) Financial Highlights

The Company offers several variable life products through the Account that have unique combinations of features and fees that are assessed to the contract owner. Differences in fee structures result in a variety of contract expense rates, unit fair values and total returns. The following tabular presentation is a summary of units, unit fair values, contract owners’ equity outstanding and contract expense rates for variable annuity contracts as of December 31, 2011, and the investment income ratio and total return for each of the periods in the five year period ended December 31, 2011. The information is presented as a range of minimum to maximum values based upon product grouping. The range is determined by identifying the lowest and the highest contract expense rate for contracts with units outstanding as of the balance sheet date. The unit fair values and total returns related to these identified contract expense rates are also disclosed as a range below. Accordingly, some individual contract amounts may not be within the ranges presented. Total return and investment income ratio for periods with no ending contract owners’ equity were considered to be irrelevant, and therefore are not presented.

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
SmallCap Growth Portfolio - Class O Shares (AASCO)
	2011		0.60% to 0.75%		112,712		$ 1,525.94 to $ 149.05	$	22,501,240		0.00%		-3.76% to -3.90%
	2010		0.60% to 0.75%		127,524		1,585.57 to $ 155.10		26,343,396		0.00%		24.54% to 24.36%
	2009		0.60% to 0.75%		149,187		1,273.09 to 124.72		24,454,761		0.00%		44.64% to 44.42%
	2008		0.60% to 0.75%		172,061		880.2 to 86.36		19,374,622		0.00%		-46.92% to -47%
	2007		0.60% to 0.75%		183,894		1658.29 to 162.95		39,481,884		0.00%		16.54% to 16.36%
Variable Series Funds, Inc. - Global Allocation V.I. Fund - Class II (MLVGA2)
	2011		0.75%		6,658		126.46		841,939		1.91%		-4.35%
	2010		0.75%		7,341		132.20		970,493		1.81%		9.06%
	2009		0.75%		3,470		121.22		420,625		2.38%		21.22%	****
Janus Aspen Series - Balanced Portfolio - Service Shares (JABS)
	2011		0.60% to 0.75%		8,566		1,717.43 to 169.53		2,308,774		2.26%		0.75% to 0.60%
	2010		0.60% to 0.75%		11,918		1,704.65 to 168.52		2,840,838		2.69%		7.47% to 7.31%
	2009		0.60% to 0.75%		12,140		1586.12 to 157.03		2,546,022		3.15%		24.83% to 24.64%
	2008		0.60% to 0.75%		9,537		1270.61 to 125.99		1,400,772		2.83%		-16.56% to -16.69%
	2007		0.60% to 0.75%		5,511		1522.83 to 151.22		1,032,293		2.32%		9.62% to 9.46%
Janus Aspen Series - Forty Portfolio - Service Shares (JACAS)
	2011		0.60% to 0.75%		19,604		1,596.76 to 157.38		3,524,879		0.24%		-7.50% to -7.64%
	2010		0.60% to 0.75%		25,408		1,726.18 to 170.39		4,842,599		0.26%		5.84% to 5.68%
	2009		0.60% to 0.75%		24,248		1630.89 to 161.22		4,355,169		0.02%		45.14% to 44.92%
	2008		0.60% to 0.75%		19,072		1123.66 to 111.25		2,416,800		0.01%		-44.64% to -44.73%
	2007		0.60% to 0.75%		17,297		2029.84 to 201.27		4,181,145		0.20%		35.81% to 35.61%
Janus Aspen Series - Global Technology Portfolio - Service II Shares (JAGTS2)
	2011		0.65% to 0.75%		4,554		147.46 to 146.33		668,411		0.00%		-9.40% to -9.49%
	2010		0.65% to 0.75%		5,088		162.75 to 161.67		824,618		0.00%		23.71% to 23.59%
	2009		0.65% to 0.75%		5,013		131.56 to 130.82		657,526		0.00%		56.08% to 55.92%
	2008		0.65% to 0.75%		4,559		84.29 to 83.9		383,203		0.09%		-44.26% to -44.32%
	2007		0.65% to 0.75%		4,592		151.22 to 150.67		693,195		0.59%		20.96% to 20.84%
Janus Aspen Series - Global Technology Portfolio - Service Shares (JAGTS)
	2011		0.60% to 0.75%		687		1,453.41 to 143.25		208,526		0.00%		-9.20% to -9.34%
	2010		0.60% to 0.75%		845		1,600.72 to 158.00		263,500		0.00%		23.65% to 23.47%
	2009		0.60% to 0.75%		797		1294.53 to 127.97		167,470		0.00%		55.96% to 55.72%
	2008		0.60% to 0.75%		1,026		830.05 to 82.18		98,533		0.08%		-44.31% to -44.39%
	2007		0.60% to 0.75%		1,416		1490.41 to 147.78		235,882		0.34%		20.97% to 20.78%
Janus Aspen Series - INTECH Risk-Managed Core Portfolio - Service Shares (obsolete) (JARLCS)
	2009		0.60%		19		1414.58		26,877		1.15%		21.82%
	2008		0.60% to 0.75%		1,151		1161.19 to 115.14		154,480		0.70%		-36.62% to -36.72%
	2007		0.60% to 0.75%		1,135		1832.2 to 181.94		243,433		0.48%		5.49% to 5.34%
Janus Aspen Series - Overseas Portfolio - Service II Shares (JAIGS2)
	2011		0.65% to 0.75%		27,919		196.42 to 194.93		5,465,606		0.37%		-32.77% to -32.84%
	2010		0.65% to 0.75%		31,882		292.18 to 290.24		9,288,177		0.58%		24.22% to 24.10%
	2009		0.65% to 0.75%		33,537		235.21 to 233.88		7,869,144		0.45%		77.91% to 77.73%
	2008		0.65% to 0.75%		32,523		132.21 to 131.59		4,290,799		2.99%		-52.52% to -52.57%
	2007		0.65% to 0.75%		24,230		278.44 to 277.43		6,734,353		0.44%		27.24% to 27.11%
Janus Aspen Series - Overseas Portfolio - Service Shares (JAIGS)
	2011		0.60% to 0.75%		2,651		2,108.84 to 207.85		1,460,248		0.37%		-32.74% to -32.84%
	2010		0.60% to 0.75%		4,134		3,135.45 to 309.49		3,125,971		0.58%		24.27% to 24.08%
	2009		0.60% to 0.75%		3,810		2,523.11 to 249.42		2,631,286		0.47%		78.00% to 77.73%
	2008		0.60% to 0.75%		4,620		1417.47 to 140.34		1,627,041		2.83%		-52.51% to -52.59%
	2007		0.60% to 0.75%		5,892		2985.08 to 295.98		3,941,557		0.43%		27.25% to 27.06%
Investors Growth Stock Series - Initial Class (MIGIC)
	2011		0.60% to 0.75%		3,814		1,499.62 to 148.03		760,341		0.58%		-0.02% to -0.17%
	2010		0.60% to 0.75%		3,983		1,499.96 to 148.28		786,900		0.52%		11.80% to 11.63%
	2009		0.60% to 0.75%		4,471		1341.62 to 132.83		723,505		0.77%		38.72% to 38.51%
	2008		0.60% to 0.75%		4,507		967.15 to 95.9		507,212		0.59%		-37.25% to -37.35%
	2007		0.60% to 0.75%		4,862		1541.29 to 153.05		862,693		0.32%		10.69% to 10.52%
Value Series - Initial Class (MVFIC)
	2011		0.60% to 0.75%		12,708		1,730.27 to 170.79		2,582,973		1.45%		-0.90% to -1.05%
	2010		0.60% to 0.75%		14,394		1,745.94 to 172.60		2,946,229		1.58%		10.87% to 10.70%
	2009		0.60% to 0.75%		15,134		1574.81 to 155.91		2,912,845		1.35%		21.98% to 21.8%
	2008		0.60% to 0.75%		16,210		1291.03 to 128.01		2,558,791		1.31%		-32.99% to -33.09%
	2007		0.60% to 0.75%		18,297		1926.52 to 191.31		4,318,143		0.94%		7.26% to 7.1%
Variable Insurance Trust II - International Value Portfolio - Service Class (MVIVSC)
	2011		0.60% to 0.75%		864		1,054.50 to 105.19		540,878		1.44%		-2.36% to -2.51%
	2010		0.60% to 0.75%		368		1,080.03 to 107.90		82,482		0.00%		8.00% to 7.90%	****
Core Plus Fixed Income Portfolio - Class I (MSVFI)
	2011		0.60% to 0.75%		5,478		1,288.21 to 127.16		728,563		3.49%		5.02% to 4.86%
	2010		0.60% to 0.75%		5,985		1,226.66 to 121.26		803,778		6.04%		6.50% to 6.34%
	2009		0.60% to 0.75%		5,802		1151.76 to 114.03		781,170		9.56%		8.99% to 8.83%
	2008		0.60% to 0.75%		9,326		1056.77 to 104.78		1,308,628		4.68%		-10.74% to -10.88%
	2007		0.60% to 0.75%		9,965		1183.94 to 117.57		1,564,281		3.46%		4.82% to 4.66%

(Continued) 

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
Emerging Markets Debt Portfolio - Class I (MSEM)
	2011		0.60% to 0.75%		857		$ 2,055.04 to $ 202.85	$	487,248		3.59%		6.39% to 6.24%
	2010		0.60% to 0.75%		914		1,931.53 to 190.94		415,297		3.91%		9.09% to 8.92%
	2009		0.60% to 0.75%		909		1770.61 to 175.3		384,950		8.41%		29.43% to 29.24%
	2008		0.60% to 0.75%		1,163		1368 to 135.64		365,135		7.77%		-15.49% to -15.61%
	2007		0.60% to 0.75%		1,307		1618.66 to 160.74		467,623		6.93%		5.89% to 5.73%
U.S. Real Estate Portfolio - Class I (MSVRE)
	2011		0.60% to 0.75%		506		2,459.66 to 242.79		623,871		0.81%		5.29% to 5.13%
	2010		0.60% to 0.75%		577		2,336.14 to 230.94		714,297		2.24%		29.18% to 28.99%
	2009		0.60% to 0.75%		529		1808.38 to 179.04		513,453		5.76%		27.59% to 27.4%
	2008		0.60% to 0.75%		17,854		1417.37 to 140.54		2,819,856		3.47%		-38.27% to -38.36%
	2007		0.60% to 0.75%		23,396		2295.96 to 228		5,815,477		1.10%		-17.57% to -17.69%
AllianceBernstein NVIT Global Fixed Income Fund - Class III (obsolete) (NVAGF3)
	2010		0.65% to 0.75%		1,926		122.27 to 122.06		235,407		8.61%		7.54% to 7.43%
	2009		0.65% to 0.75%		1,055		113.70 to 113.62		119,893		6.73%		13.70% to 13.62%	****
AllianceBernstein NVIT Global Fixed Income Fund - Class VI (obsolete) (NVAGF6)
	2010		0.60% to 0.75%		487		1,218.29 to 121.52		433,178		9.24%		7.11% to 6.95%
	2009		0.60% to 0.75%		87		1,137.41 to 113.63		94,860		7.10%		13.74% to 13.63%	****
American Century NVIT Multi Cap Value Fund - Class I (NVAMV1)
	2011		0.60% to 0.75%		39,418		1,412.07 to 140.64		5,932,300		1.54%		0.05% to -0.10%
	2010		0.60% to 0.75%		49,756		1,411.43 to 140.79		7,648,927		2.08%		12.79% to 12.62%
	2009		0.65% to 0.75%		114		125.10 to 125.02		14,257		0.64%		25.10% to 25.02%	****
American Funds NVIT Asset Allocation Fund - Class II (GVAAA2)
	2011		0.75%		4,069		105.23		428,163		1.26%		0.18%
	2010		0.75%		2,613		105.04		274,470		1.53%		11.18%
	2009		0.75%		2,528		94.48		238,838		0.09%		22.49%
	2008		0.75%		2,079		77.13		160,345		3.69%		-30.3%
	2007		0.75%		1,044		110.66		115,502		2.96%		5.34%
American Funds NVIT Bond Fund - Class II (GVABD2)
	2011		0.75%		3,430		117.81		404,101		2.28%		4.94%
	2010		0.75%		3,304		112.27		370,947		2.20%		5.20%
	2009		0.75%		3,185		106.72		339,917		0.37%		11.31%
	2008		0.75%		2,962		95.88		284,015		5.63%		-10.55%
	2007		0.75%		2,900		107.18		310,864		10.19%		2.21%
American Funds NVIT Global Growth Fund - Class II (GVAGG2)
	2011		0.75%		10,600		104.23		1,104,819		0.94%		-9.99%
	2010		0.75%		10,796		115.79		1,250,075		0.94%		10.47%
	2009		0.75%		9,470		104.82		992,619		0.00%		40.55%
	2008		0.75%		6,303		74.58		470,075		2.92%		-39.10%
	2007		0.75%		3,650		122.45		446,988		3.19%		13.51%
American Funds NVIT Growth Fund - Class II (GVAGR2)
	2011		0.75%		10,834		96.94		1,050,273		0.26%		-5.40%
	2010		0.75%		11,279		102.47		1,155,814		0.19%		17.31%
	2009		0.75%		11,716		87.35		1,023,433		0.00%		37.75%
	2008		0.75%		9,249		63.42		586,558		2.57%		-44.63%
	2007		0.75%		2,536		114.53		290,487		0.70%		11.06%
American Funds NVIT Growth-Income Fund - Class II (GVAGI2)
	2011		0.75%		2,273		83.89		190,672		0.96%		-2.96%
	2010		0.75%		2,232		86.45		192,953		1.24%		10.15%
	2009		0.75%		2,629		78.49		206,338		0.00%		29.71%
	2008		0.75%		1,478		60.51		89,399		2.37%		-38.53%
	2007		0.75%		738		98.43		72,608		1.83%		-1.57%	****
Federated NVIT High Income Bond Fund - Class I (HIBF)
	2011		0.60% to 0.75%		1,184		1,676.23 to 165.46		412,503		8.30%		3.20% to 3.04%
	2010		0.60% to 0.75%		1,509		1,624.29 to 160.57		478,346		7.72%		12.48% to 12.31%
	2009		0.60% to 0.75%		2,426		1444.1 to 142.97		847,125		11.21%		45.12% to 44.91%
	2008		0.60% to 0.75%		2,375		995.07 to 98.66		331,329		8.94%		-28.42% to -28.53%
	2007		0.60% to 0.75%		3,159		1390.16 to 138.05		630,844		7.16%		2.51% to 2.36%
Federated NVIT High Income Bond Fund - Class III (HIBF3)
	2011		0.65% to 0.75%		11,223		142.10 to 141.16		1,589,889		8.36%		3.14% to 3.03%
	2010		0.65% to 0.75%		11,917		137.78 to 137.01		1,637,352		9.33%		12.43% to 12.32%
	2009		0.65% to 0.75%		14,045		122.55 to 121.98		1,717,221		10.87%		45.13% to 44.99%
	2008		0.65% to 0.75%		8,474		84.44 to 84.13		714,145		8.93%		-28.56% to -28.64%
	2007		0.65% to 0.75%		9,487		118.21 to 117.89		1,119,687		7.54%		2.5% to 2.39%
Gartmore NVIT Emerging Markets Fund - Class I (GEM)
	2011		0.60% to 0.75%		1,972		3,034.54 to 299.54		1,196,368		0.67%		-22.84% to -22.95%
	2010		0.60% to 0.75%		2,239		3,932.70 to 388.77		1,931,694		0.07%		15.48% to 15.31%
	2009		0.60% to 0.75%		1,819		3405.51 to 337.16		1,550,472		1.41%		62.34% to 62.09%
	2008		0.60% to 0.75%		2,027		2097.81 to 208		924,864		1.16%		-58.01% to -58.08%
	2007		0.60% to 0.75%		2,485		4996.54 to 496.17		2,614,716		0.70%		44.7% to 44.49%

(Continued) 

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
Gartmore NVIT Emerging Markets Fund - Class III (GEM3)
	2011		0.60% to 0.75%		15,812		$ 640.71 to $ 183.88		$              3,021,577		0.68%		-22.86% to -22.97%
	2010		0.60% to 0.75%		18,214		830.53 to 238.72		4,718,938		0.07%		15.52% to 15.35%
	2009		0.60% to 0.75%		19,865		718.95 to 206.96		4,249,988		1.39%		62.51% to 62.26%
	2008		0.60% to 0.75%		21,925		442.42 to 127.54		2,801,405		1.22%		-55.76% to -58.15%
	2007		0.65% to 0.75%		22,669		305.85 to 304.73		6,918,910		0.70%		44.6% to 44.46%
NVIT International Equity Fund - Class III (GIG3)
	2011		0.75%		942		84.17		79,291		0.84%		-15.83%	****
Gartmore NVIT Global Utilities Fund - Class I (obsolete) (GVGU1)
	2009		0.60% to 0.75%		645		1915.58 to 189.65		429,550		4.22%		7.36% to 7.2%
	2008		0.60% to 0.75%		734		1784.21 to 176.91		411,192		3.18%		-33.34% to -33.44%
	2007		0.60% to 0.75%		1,139		2676.63 to 265.8		876,435		2.65%		19.71% to 19.53%
Gartmore NVIT Global Utilities Fund - Class III (GVGU)
	2009		0.65% to 0.75%		6,858		156.82 to 155.94		1,072,385		4.04%		7.28% to 7.17%
	2008		0.65% to 0.75%		8,429		146.18 to 145.5		1,229,538		3.27%		-33.34% to -33.4%
	2007		0.65% to 0.75%		10,028		219.28 to 218.48		2,195,734		2.46%		19.61% to 19.49%
Gartmore NVIT International Equity Fund - Class VI (NVIE6)
	2011		0.65% to 0.75%		4,469		70.81 to 70.55		315,901		1.09%		-10.58% to -10.67%
	2010		0.65% to 0.75%		5,491		79.19 to 78.98		433,977		0.82%		12.27% to 12.16%
	2009		0.65% to 0.75%		7,127		70.53 to 70.41		502,101		0.32%		28.61% to 28.48%
	2008		0.65% to 0.75%		669		54.80 to 54.84		36,687		2.21%		-45.16% to -45.2%	****
Neuberger Berman NVIT Multi Cap Opportunities Fund - Class I (NVNMO1)
	2011		0.60% to 0.75%		115,071		792.32 to 78.80		11,483,723		0.56%		-12.15% to -12.28%
	2010		0.60% to 0.75%		138,039		901.86 to 89.83		15,384,728		0.20%		14.92% to 14.74%
	2009		0.60% to 0.75%		162,175		784.80 to 78.28		16,452,228		0.13%		52.05% to 51.82%
Neuberger Berman NVIT Socially Responsible Fund - Class II (NVNSR2)
	2011		0.65% to 0.75%		1,762		94.63 to 94.28		166,360		0.70%		-3.89% to -3.99%
	2010		0.65% to 0.75%		496		98.46 to 98.20		48,803		1.10%		22.76% to 22.64%
	2009		0.65% to 0.75%		222		80.20 to 80.07		17,795		0.41%		30.42% to 30.29%
	2008		0.65% to 0.75%		137		61.46 to 61.50		8,436		0.41%		-38.54% to -38.50%	****
NVIT Cardinal Aggressive Fund - Class I (NVCRA1)
	2011		0.75%		2,216		87.07		192,954		1.87%		-6.89%
	2010		0.75%		3,721		93.51		347,960		0.52%		14.14%
	2009		0.75%		3,609		81.93		295,672		1.36%		28.33%
	2008		0.75%		3,325		63.84		212,266		1.27%		-36.16%	****
NVIT Cardinal Balanced Fund - Class I (NVCRB1)
	2011		0.75%		144		101.79		14,658		2.09%		-2.00%
	2010		0.75%		29		103.87		3,012		1.40%		9.64%
	2009		0.75%		81		94.74		7,674		5.65%		18.99%
	2008		0.75%		14		79.62		1,140		0.74%		-20.38%	****
NVIT Cardinal Capital Appreciation Fund - Class I (NVCCA1)
	2011		0.75%		517		95.42		49,330		0.75%		-4.09%
	2010		0.75%		3,546		99.48		352,758		0.84%		11.62%
	2009		0.75%		3,178		89.13		283,248		3.76%		23.32%
	2008		0.75%		326		72.27		23,569		1.33%		-27.73%	****
NVIT Cardinal Conservative Fund - Class I (NVCCN1)
	2010		0.75%		121		108.43		13,120		1.30%		6.07%
	2009		0.75%		122		102.23		12,472		2.59%		12.37%
	2008		0.75%		120		90.97		10,896		0.70%		-9.03%	****
NVIT Cardinal Moderate Fund - Class I (NVCMD1)
	2011		0.75%		6,058		98.61		597,354		2.52%		-2.98%
	2010		0.75%		4,860		101.63		493,922		1.09%		10.59%
	2009		0.75%		3,806		91.9		349,754		2.59%		21.09%
	2008		0.75%		1,060		75.89		80,383		0.63%		-24.11%	****
NVIT Cardinal Moderately Aggressive Fund - Class I (NVCMA1)
	2011		0.75%		10,027		92.07		923,153		2.49%		-5.29%
	2010		0.75%		9,650		97.21		938,030		0.88%		12.65%
	2009		0.75%		6,581		86.29		567,869		4.04%		25.74%
	2008		0.75%		337		68.62		23,111		1.89%		-31.38%	****
NVIT Cardinal Moderately Conservative Fund - Class I (NVCMC1)
	2011		0.75%		294		104.49		30,721		2.68%		-1.03%
	2010		0.75%		273		105.58		28,822		1.48%		8.50%
	2009		0.75%		35		97.31		3,406		2.27%		16.76%
	2008		0.75%		62		83.34		5,187		1.46%		-16.66%	****
NVIT Core Bond Fund - Class I (NVCBD1)
	2011		0.65% to 0.75%		2,500		120.55 to 120.11		301,006		3.01%		5.91% to 5.80%
	2010		0.65% to 0.75%		2,643		113.83 to 113.53		300,608		3.11%		6.36% to 6.26%
	2009		0.65% to 0.75%		1,671		107.02 to 106.84		178,672		2.98%		8.08% to 7.97%
	2008		0.65% to 0.75%		1,889		99.02 to 98.96		187,031		2.12%		-0.98% to -1.04%	****
NVIT Core Plus Bond Fund - Class I (NVLCP1)
	2011		0.75%		585		130.08		76,100		2.43%		5.58%
	2010		0.75%		329		123.21		40,536		3.19%		7.55%
	2009		0.75%		220		114.57		25,205		3.58%		15.75%
	2008		0.75%		433		98.98		42,858		1.75%		-1.02%	****

(Continued) 

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
NVIT Fund - Class IV (TRF4)
	2011		0.00% to 0.75%		92,919		$ 8,261.41 to $ 282.52		$            85,316,173		1.14%		0.63% to -0.12%
	2010		0.00% to 0.75%		106,143		8,209.33 to 282.85		93,411,273		1.03%		13.48% to 12.63%
	2009		0.00% to 0.75%		120,329		7234.28 to 251.13		92,619,075		1.36%		25.94% to 25%
	2008		0.00% to 0.75%		134,973		5744.05 to 200.9		82,191,405		1.44%		-41.55% to - 41.99%
	2007		0.00% to 0.75%		149,511		9827.16 to 346.3		153,166,807		1.06%		8.18% to 7.37%
NVIT Global Financial Services Fund - Class I (obsolete) (GVGF1)
	2009		0.60% to 0.75%		964		1,465.04 to 145.05		164,101		1.29%		30.97% to 30.77%
	2008		0.60% to 0.75%		1,077		1118.65 to 110.92		143,104		1.93%		-46.6% to -46.68%
	2007		0.60% to 0.75%		1,185		2094.7 to 208.01		292,425		2.66%		-1.65% to -1.8%
NVIT Global Financial Services Fund - Class III (obsolete) (GVGFS)
	2009		0.65% to 0.75%		3,182		106.78 to 106.18		339,140		1.19%		31.08% to 30.95%
	2008		0.65% to 0.75%		3,336		81.46 to 81.08		271,329		2.09%		-46.56% to -46.62%
	2007		0.65% to 0.75%		2,656		152.44 to 151.88		404,427		3.30%		-1.77% to -1.86%
NVIT Government Bond Fund - Class I (GBF)
	2011		0.75%		3,688		141.95		523,522		3.04%		6.46%
	2010		0.75%		4,003		133.34		533,778		3.48%		4.00%
	2009		0.75%		4,008		128.22		513,895		4.13%		1.92%
	2008		0.75%		5,626		125.80		707,775		4.32%		6.91%
	2007		0.75%		5,229		117.66		615,277		4.49%		6.35%
NVIT Government Bond Fund - Class IV (GBF4)
	2011		0.00% to 0.75%		39,845		6,650.75 to 289.33		19,260,995		2.88%		7.34% to 6.55%
	2010		0.00% to 0.75%		52,763		6195.53 to 271.55		22,409,933		2.97%		4.78% to 4.00%
	2009		0.00% to 0.75%		59,941		5912.80 to 261.11		24,159,764		3.51%		2.69% to 1.92%
	2008		0.00% to 0.75%		62,329		5758.07 to 256.19		25,195,143		4.25%		7.62% to 6.81%
	2007		0.00% to 0.75%		71,643		5350.61 to 239.85		25,907,305		4.46%		7.26% to 6.46%
NVIT Growth Fund - Class IV (CAF4)
	2011		0.60% to 0.75%		108,961		1,158.24 to 113.47		16,874,536		0.58%		-1.28% to -1.43%
	2010		0.60% to 0.75%		122,486		1,173.31 to 115.12		18,922,510		0.64%		18.53% to 18.36%
	2009		0.60% to 0.75%		140,849		989.86 to 97.27		18,405,225		0.58%		32.82% to 32.62%
	2008		0.60% to 0.75%		158,183		745.25 to 73.34		15,578,987		0.26%		-39.15% to -39.24%
	2007		0.60% to 0.75%		170,866		1224.77 to 120.71		27,660,164		0.18%		18.84% to 18.66%
NVIT Health Sciences Fund - Class I (obsolete) (GVGH1)
	2009		0.60% to 0.75%		1,036		1464.09 to 144.95		293,054		0.28%		18.45% to 18.27%
	2008		0.60% to 0.75%		1,869		1236.04 to 122.56		372,913		0.29%		-25.66% to -25.77%
	2007		0.60% to 0.75%		2,103		1662.75 to 165.12		559,904		0.06%		12.48% to 12.31%
NVIT Health Sciences Fund - Class III (obsolete) (GVGHS)
	2009		0.65% to 0.75%		4,136		107.63 to 107.02		443,503		0.31%		18.34% to 18.22%
	2008		0.65% to 0.75%		5,513		90.95 to 90.52		499,743		0.30%		-25.72% to -25.79%
	2007		0.65% to 0.75%		4,539		122.43 to 121.98		554,249		0.08%		12.49% to 12.38%
NVIT Investor Destinations Aggressive Fund - Class II (GVIDA)
	2011		0.60% to 0.75%		27,231		1,639.66 to 160.52		4,429,138		1.81%		-4.50% to -4.65%
	2010		0.60% to 0.75%		28,338		1,717.01 to 168.34		4,832,410		1.93%		13.94% to 13.77%
	2009		0.60% to 0.75%		30,827		1506.9 to 147.96		4,612,056		1.27%		26.44% to 26.26%
	2008		0.60% to 0.75%		32,813		1191.75 to 117.19		3,890,635		2.14%		-37.22% to -37.32%
	2007		0.60% to 0.75%		30,001		1898.33 to 186.96		5,696,603		1.96%		5.32% to 5.16%
NVIT Investor Destinations Balanced Fund - Class II (NVDBL2)
	2011		0.75%		149		126.41		18,834		1.26%		0.13%
NVIT Investor Destinations Capital Appreciation Fund - Class II (NVDCA2)
	2011		0.75%		41		132.77		5,443		2.01%		-1.67%
	2010		0.75%		65		135.03		8,777		1.58%		11.19%
	2009		0.75%		9		121.44		1,093		0.72%		21.44%	****
NVIT Investor Destinations Conservative Fund - Class II (GVIDC)
	2011		0.60% to 0.75%		21,529		1,361.52 to 135.66		2,934,559		2.60%		2.32% to 2.16%
	2010		0.60% to 0.75%		12,238		1,330.70 to 132.78		1,636,040		2.41%		5.26% to 5.10%
	2009		0.60% to 0.75%		10,112		1264.21 to 126.34		1,290,185		2.47%		8.43% to 8.27%
	2008		0.60% to 0.75%		8,067		1165.91 to 116.69		956,120		3.33%		-6.58% to -6.73%
	2007		0.60% to 0.75%		3,953		1248.09 to 125.1		517,209		3.85%		4.75% to 4.59%
NVIT Investor Destinations Moderate Fund - Class II (GVIDM)
	2011		0.00% to 0.75%		175,199		2669.01 to 151.20		42,765,501		2.12%		-0.04% to -0.79%
	2010		0.00% to 0.75%		185,044		2,670.09 to 152.40		45,817,656		2.10%		10.25% to 10.09%
	2009		0.00% to 0.75%		199,162		2407.38 to 138.44		44,488,278		1.58%		20.37% to 18.25%
	2008		0.60% to 0.75%		115,641		1179.33 to 117.08		14,101,689		2.88%		-23.66% to -23.77%
	2007		0.60% to 0.75%		103,981		1544.74 to 153.58		16,636,748		2.72%		5.02% to 4.87%
NVIT Investor Destinations Moderately Aggressive Fund - Class II (GVDMA)
	2011		0.60% to 0.75%		133,601		1,610.79 to 158.19		22,046,337		2.02%		-2.71% to -2.86%
	2010		0.60% to 0.75%		146,811		1,655.67 to 162.84		24,880,243		2.17%		12.16% to 11.99%
	2009		0.60% to 0.75%		163,399		1,476.18 to 145.40		24,599,225		1.53%		23.65% to 23.46%
	2008		0.60% to 0.75%		163,360		1193.85 to 117.77		19,852,890		2.52%		-31.8% to -31.9%
	2007		0.60% to 0.75%		155,909		1750.56 to 172.95		27,852,303		2.29%		5.51% to 5.35%
NVIT Investor Destinations Moderately Conservative Fund - Class II (GVDMC)
	2011		0.60% to 0.75%		13,818		1,463.98 to 145.40		2,185,198		2.31%		1.45% to 1.30%
	2010		0.60% to 0.75%		13,771		1,443.01 to 143.54		2,174,740		2.33%		7.87% to 7.71%
	2009		0.60% to 0.75%		11,111		1337.76 to 133.27		1,653,186		1.99%		13.88% to 13.71%
	2008		0.60% to 0.75%		15,086		1174.75 to 117.2		1,935,339		3.18%		-15.55% to -15.68%
	2007		0.60% to 0.75%		14,050		1391.1 to 139		2,137,412		3.26%		5.22% to 5.06%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
NVIT Mid Cap Index Fund - Class I (MCIF)
	2011		0.60% to 0.75%		15,458		$ 2,053.18 to $ 202.67		$3,454,504		0.78%		-3.13% to -3.27%
	2010		0.60% to 0.75%		15,092		2,119.43 to 209.52		3,542,110		1.38%		25.45% to 25.26%
	2009		0.60% to 0.75%		16,859		1,689.50 to 167.27		3,206,050		1.10%		35.94% to 35.73%
	2008		0.60% to 0.75%		18,702		123.23 to 1,242.85		2,580,573		1.28%		-36.94% to -36.84%
	2007		0.60% to 0.75%		20,047		195.42 to 1,967.89		4,364,270		1.35%		6.75% to 6.91%
NVIT Multi-Manager International Growth Fund - Class III (NVMIG3)
	2011		0.65% to 0.75%		18,179		84.56 to 84.25		1,534,049		1.31%		-9.95% to -10.04%
	2010		0.65% to 0.75%		19,096		93.91 to 93.66		1,790,751		0.82%		13.30% to 13.18%
	2009		0.65% to 0.75%		20,886		82.89 to 82.75		1,729,422		0.91%		35.57% to 35.44%
	2008		0.65% to 0.75%		40		61.10 to 61.14		2,462		0.36%		-38.90% to -38.86%	****
NVIT Multi-Manager International Value Fund - Class III (GVDIV3)
	2011		0.60% to 0.75%		114,511		974.40 to 96.33		13,652,833		1.83%		-16.61% to -16.74%
	2010		0.60% to 0.75%		122,147		1,168.55 to 115.69		17,400,156		2.35%		5.48% to 5.32%
	2009		0.60% to 0.75%		127,317		1107.86 to 109.85		17,721,652		2.26%		29.06% to 28.87%
	2008		0.60% to 0.75%		140,630		858.4 to 85.24		14,971,527		1.81%		-46.65% to -46.73%
	2007		0.60% to 0.75%		148,290		1609.12 to 160.03		29,225,522		2.07%		2.31% to 2.16%
NVIT Multi-Manager International Value Fund - Class IV (GVDIV4)
	2011		0.60% to 0.75%		30,590		2,389.74 to 231.85		12,536,352		1.74%		-16.66% to -16.78%
	2010		0.60% to 0.75%		37,983		2,867.37 to 278.61		18,119,961		2.12%		5.56% to 5.40%
	2009		0.60% to 0.75%		47,692		2716.39 to 264.34		21,124,806		2.13%		29.11% to 28.92%
	2008		0.60% to 0.75%		59,201		2103.89 to 205.04		20,061,144		1.78%		-46.67% to -46.75%
	2007		0.60% to 0.75%		72,492		3944.99 to 385.05		44,468,736		2.11%		2.28% to 2.12%
NVIT Multi-Manager Large Cap Growth Fund - Class I (NVMLG1)
	2011		0.60% to 0.75%		37,069		1,059.63 to 90.12		3,623,471		0.01%		-3.49% to -3.63%
	2010		0.60% to 0.75%		40,292		1,097.90 to 93.52		4,096,325		0.10%		9.79% to 14.65%	****
	2009		0.65% to 0.75%		19,082		81.71 to 81.57		1,557,288		1.00%		28.94% to 28.81%
	2008		0.65% to 0.75%		4		63.37 to 63.33		229		0.18%		-36.63% to -36.67%	****
NVIT Multi-Manager Large Cap Value Fund - Class I (NVMLV1)
	2011		0.60% to 0.75%		26,750		980.41 to 84.01		2,460,688		0.93%		-6.39% to -6.53%
	2010		0.60% to 0.75%		30,780		1,047.36 to 89.88		3,032,512		0.58%		4.74% to 12.20%	****
	2009		0.65% to 0.75%		17,619		80.24 to 80.10		1,412,102		1.54%		26.77% to 26.64%
	2008		0.65% to 0.75%		507		63.29 to 63.25		32,070		0.81%		-36.71% to -36.75%	****
NVIT Multi-Manager Mid Cap Growth Fund - Class I (NVMMG1)
	2011		0.60% to 0.75%		314,411		1,483.87 to 94.33		44,031,101		0.00%		-4.80% to -4.94%
	2010		0.60% to 0.75%		360,069		1,558.71 to 99.23		51,780,950		0.00%		26.06% to 25.87%
	2009		0.60% to 0.75%		428,454		1236.48 to 78.84		48,628,166		0.00%		23.65% to 26.17%	****
	2008		0.65% to 0.75%		4		62.52 to 62.48		220		0.00%		-37.48% to -37.52%	****
NVIT Multi-Manager Mid Cap Value Fund - Class II (NVMMV2)
	2011		0.65% to 0.75%		47,273		100.60 to 100.24		4,744,033		0.81%		-2.95% to -3.05%
	2010		0.65% to 0.75%		52,421		103.67 to 103.39		5,424,440		1.43%		18.86% to 18.74%
	2009		0.65% to 0.75%		60,511		87.22 to 87.07		5,271,721		1.29%		29.62% to 29.49%
	2008		0.65% to 0.75%		18		67.29 to 67.24		1,190		1.70%		-32.71% to -32.76%	****
NVIT Multi-Manager Small Cap Growth Fund - Class I (SCGF)
	2011		0.60% to 0.75%		12,587		1,417.06 to 139.88		1,945,083		0.00%		-1.24% to -1.39%
	2010		0.60% to 0.75%		13,293		1,434.87 to 141.85		2,115,386		0.00%		24.70% to 24.51%
	2009		0.60% to 0.75%		12,896		1150.68 to 113.92		1,610,079		0.00%		26.7% to 26.51%
	2008		0.60% to 0.75%		12,402		908.2 to 90.05		1,216,928		0.00%		-46.74% to -46.82%
	2007		0.60% to 0.75%		11,510		1705.23 to 169.33		2,114,898		0.00%		9.09% to 8.93%
NVIT Multi-Manager Small Cap Value Fund - Class IV (SCVF4)
	2011		0.60% to 0.75%		79,543		1,648.92 to 161.55		16,286,389		0.43%		-5.73% to -5.87%
	2010		0.60% to 0.75%		88,987		1,749.17 to 171.62		19,180,175		0.63%		25.85% to 25.66%
	2009		0.60% to 0.75%		105,222		1,389.90 to 136.58		18,206,897		0.63%		25.65% to 25.47%
	2008		0.60% to 0.75%		122,276		1106.13 to 108.86		17,192,696		1.09%		-32.68% to -32.78%
	2007		0.60% to 0.75%		142,316		1643.02 to 161.94		29,870,553		1.18%		-7.48% to -7.62%
NVIT Multi-Manager Small Company Fund - Class IV (SCF4)
	2011		0.60% to 0.75%		73,625		1,599.76 to 156.73		15,541,813		0.52%		-6.13% to -6.27%
	2010		0.60% to 0.75%		84,028		1,704.15 to 167.21		18,870,454		0.30%		24.59% to 24.40%
	2009		0.60% to 0.75%		102,250		1367.82 to 134.41		18,194,207		0.29%		33.8% to 33.6%
	2008		0.60% to 0.75%		123,710		1022.25 to 100.6		16,027,358		0.82%		-38.56% to -38.65%
	2007		0.60% to 0.75%		142,233		1663.76 to 163.98		29,899,031		0.11%		1.54% to 1.39%
NVIT Multi-Sector Bond Fund - Class I (MSBF)
	2011		0.60% to 0.75%		9,760		1,447.06 to 142.84		1,734,484		4.30%		4.92% to 4.76%
	2010		0.60% to 0.75%		10,261		1,379.24 to 136.35		1,776,573		6.91%		9.93% to 9.76%
	2009		0.60% to 0.75%		9,975		1254.7 to 124.22		1,534,940		10.39%		23.64% to 23.45%
	2008		0.60% to 0.75%		9,850		1014.84 to 100.62		1,295,458		7.30%		-17.79% to -17.91%
	2007		0.60% to 0.75%		12,772		1234.39 to 122.58		1,891,433		4.01%		4% to 3.84%
NVIT S&P 500 Index Fund - Class IV (GVEX4)
	2011		0.60% to 0.75%		260,861		3,377.47 to 328.54		116,028,008		1.69%		1.15% to 0.99%
	2010		0.60% to 0.75%		292,943		3,339.22 to 325.31		127,700,930		1.81%		14.04% to 13.87%
	2009		0.60% to 0.75%		331,907		2928.05 to 285.68		126,149,138		2.38%		25.46% to 25.28%
	2008		0.60% to 0.75%		374,555		2333.76 to 228.04		113,036,809		1.92%		-37.66% to -37.76%
	2007		0.60% to 0.75%		410,597		3743.89 to 366.38		196,671,685		1.60%		4.48% to 4.32%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
NVIT Short Term Bond Fund - Class II (NVSTB2)
	2011		0.65% to 0.75%		19,207		$ 107.89 to $ 107.50		$2,068,524		1.59%		0.64% to 0.54%
	2010		0.65% to 0.75%		13,296		107.21 to 106.92		1,424,080		1.41%		1.76% to 1.65%
	2009		0.65% to 0.75%		11,884		105.35 to 105.18		1,251,259		2.94%		6.42% to 6.31%
	2008		0.65% to 0.75%		270		99 to 98.94		26,727		1.58%		-1% to -1.06%	****
NVIT Technology & Communications Fund - Class I (obsolete) (GGTC)
	2009		0.60% to 0.75%		578		1455.77 to 144.13		244,940		0.00%		51.55% to 51.33%
	2008		0.60% to 0.75%		597		960.56 to 95.24		148,925		0.00%		-48.88% to -48.96%
	2007		0.60% to 0.75%		1,072		1878.98 to 186.59		442,262		0.00%		19.37% to 19.19%
NVIT Technology & Communications Fund - Class III (obsolete) (GGTC3)
	2009		0.65% to 0.75%		5,068		109.92 to 109.3		554,685		0.00%		51.46% to 51.31%
	2008		0.65% to 0.75%		4,263		72.58 to 72.24		308,542		0.00%		-48.92% to -48.97%
	2007		0.65% to 0.75%		4,082		142.08 to 141.56		578,394		0.00%		19.4% to 19.28%
NVIT U.S. Growth Leaders Fund - Class I (GVUG1)
	2009		0.60% to 0.75%		7,453		1462.55 to 144.8		1,177,107		0.00%		25.09% to 24.9%
	2008		0.60% to 0.75%		10,337		1169.24 to 115.93		1,289,547		0.00%		-41.64% to -41.73%
	2007		0.60% to 0.75%		10,241		2003.6 to 198.96		2,207,661		0.00%		21.75% to 21.57%
Oppenheimer NVIT Large Cap Growth Fund - Class I (NVOLG1)
	2011		0.60% to 0.75%		459,162		1,367.14 to 136.17		83,384,980		0.67%		-2.82% to -2.96%
	2010		0.60% to 0.75%		543,621		1,406.78 to 140.33		102,054,160		0.06%		8.15% to 7.99%
	2009		0.60% to 0.75%		389		1300.78 to 129.95		92,847		0.20%		30.08% to 29.95%	****
Templeton NVIT International Value Fund - Class III (NVTIV3)
	2011		0.65% to 0.75%		863		93.34 to 118.99		101,200		3.35%		-12.99% to -13.08%
	2010		0.65% to 0.75%		639		107.28 to 136.89		86,309		2.93%		7.28% to 5.55%	****
	2009		0.75%		89		129.69		11,543		0.37%		29.69%	****
Van Kampen NVIT Comstock Value Fund - Class IV (EIF4)
	2011		0.60% to 0.75%		82,462		1,339.04 to 131.19		14,557,382		1.32%		-2.90% to -3.05%
	2010		0.60% to 0.75%		91,133		1,379.06 to 135.31		16,393,684		1.58%		14.95% to 14.78%
	2009		0.60% to 0.75%		106,165		1199.68 to 117.89		16,697,703		1.21%		27.92% to 27.73%
	2008		0.60% to 0.75%		125,870		937.84 to 92.3		15,634,305		2.06%		-37.34% to -37.44%
	2007		0.60% to 0.75%		141,480		1496.75 to 147.52		28,436,288		1.73%		-2.77% to -2.92%
Van Kampen NVIT Real Estate Fund - Class I (NVRE1)
	2011		0.65% to 0.75%		33,484		100.02 to 99.65		3,340,084		0.87%		5.81% to 5.71%
	2010		0.65% to 0.75%		37,019		94.52 to 94.27		3,492,111		2.15%		29.34% to 29.21%
	2009		0.65% to 0.75%		39,256		73.08 to 72.96		2,865,417		2.46%		29.99% to 29.86%
	2008		0.65% to 0.75%		234		56.22 to 56.18		13,169		3.57%		-43.78% to -43.82%	****
NVIT Money Market Fund - Class IV (SAM4)
	2011		0.00% to 0.75%		188,555		3,297.33 to 165.16		42,295,916		0.00%		-0.00% to -0.75%
	2010		0.00% to 0.75%		205,359		3297.33 to 166.40		46,585,485		0.00%		-0.60% to -0.75%
	2009		0.00% to 0.75%		261,369		3297.32 to 167.66		59,063,759		0.10%		0.09% to -0.66%
	2008		0.00% to 0.75%		277,875		3294.21 to 168.77		62,691,091		2.11%		2.15% to 1.38%
	2007		0.00% to 0.75%		279,843		3224.87 to 166.47		59,782,181		4.82%		4.94% to 4.14%
Advisers Management Trust - Short Duration Bond Portfolio - I Class Shares  (AMTB)
	2011		0.60% to 0.75%		38,233		$ 1,728.76 to $ 168.36		8,751,306		3.63%		-0.31% to -0.46%
	2010		0.60% to 0.75%		48,811		1,734.12 to 169.13		10,703,567		5.24%		4.66% to 4.50%
	2009		0.60% to 0.75%		54,523		1656.99 to 161.85		11,404,615		8.04%		12.65% to 12.48%
	2008		0.60% to 0.75%		58,973		1470.93 to 143.89		10,686,079		4.73%		-13.95% to -14.08%
	2007		0.60% to 0.75%		68,845		1709.33 to 167.47		14,668,779		2.74%		4.14% to 3.98%
V.I. Basic Value Fund - Series I (AVBVI)
	2011		0.60% to 0.75%		178		1,244.28 to 122.82		154,194		0.91%		-3.63% to -3.77%
	2010		0.60% to 0.75%		271		1,291.13 to 127.64		207,824		0.60%		6.71% to 6.55%
	2009		0.60% to 0.75%		323		1209.95 to 119.79		250,184		0.43%		47.12% to 46.9%
	2008		0.60% to 0.75%		15,197		822.44 to 81.55		1,415,463		0.90%		-52.06% to -52.13%
	2007		0.60% to 0.75%		15,703		1715.45 to 170.35		3,049,274		0.60%		0.93% to 0.78%
V.I. Capital Appreciation Fund - Series I (AVCA)
	2011		0.60% to 0.75%		2,077		1,203.93 to 118.84		265,877		0.16%		-8.46% to -8.60%
	2010		0.60% to 0.75%		2,003		1,315.20 to 130.02		280,976		0.81%		14.80% to 14.63%
	2009		0.60% to 0.75%		2,200		1145.66 to 113.43		267,550		0.72%		20.35% to 20.17%
	2008		0.60% to 0.75%		2,258		951.9 to 94.38		226,808		0.00%		-42.84% to -42.92%
	2007		0.60% to 0.75%		2,256		1665.25 to 165.36		390,640		0.00%		11.34% to 11.17%
V.I. Capital Development Fund - Series I (AVCDI)
	2011		0.60% to 0.75%		6,796		1,679.41 to 165.77		1,194,915		0.00%		-7.71% to -7.85%
	2010		0.60% to 0.75%		6,860		1,819.78 to 179.90		1,306,644		0.00%		18.07% to 17.89%
	2009		0.60% to 0.75%		7,877		1541.3 to 152.6		1,280,886		0.00%		41.52% to 41.31%
	2008		0.60% to 0.75%		8,221		1089.11 to 107.99		944,198		0.00%		-47.34% to -47.42%
	2007		0.60% to 0.75%		3,391		2068.32 to 205.39		864,111		0.00%		10.18% to 10.01%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
VPS Growth and Income Portfolio - Class A (ALVGIA)
	2011		0.60% to 0.75%		9,370		$ 1,468.71 to $ 144.97		$        1,505,002		1.34%		5.68% to 5.52%
	2010		0.60% to 0.75%		12,005		1,389.74 to 137.38		1,832,879		0.00%		12.42% to 12.25%
	2009		0.60% to 0.75%		13,714		1236.25 to 122.39		1,902,208		4.39%		20.1% to 19.92%
	2008		0.60% to 0.75%		17,672		1029.34 to 102.06		2,049,646		2.11%		-40.96% to -41.05%
	2007		0.60% to 0.75%		20,678		1743.46 to 173.13		4,016,345		1.43%		4.49% to 4.33%
VPS Small/Mid Cap Value Portfolio - Class A (ALVSVA)
	2011		0.60% to 0.75%		9,452		2,080.12 to 205.33		2,598,131		0.49%		-8.94% to -9.07%
	2010		0.60% to 0.75%		11,808		2,284.27 to 225.82		3,360,793		0.55%		26.15% to 25.96%
	2009		0.60% to 0.75%		11,860		1810.77 to 179.27		2,749,403		1.17%		42% to 41.79%
	2008		0.60% to 0.75%		14,011		1275.17 to 126.44		2,157,791		0.75%		-35.96% to -36.06%
	2007		0.60% to 0.75%		13,917		1991.27 to 197.74		3,263,027		0.94%		1.09% to 0.94%
VP Income & Growth Fund - Class I (ACVIG)
	2011		0.60% to 0.75%		8,438		1,491.43 to 144.02		1,299,642		1.54%		2.50% to 2.34%
	2010		0.60% to 0.75%		8,751		1,455.11 to 140.72		1,364,008		1.72%		13.46% to 13.29%
	2009		0.60% to 0.75%		9,279		1,282.44 to 124.21		1,299,283		5.39%		17.39% to 17.21%
	2008		0.60% to 0.75%		8,662		1092.46 to 105.97		1,026,660		2.12%		-34.98% to -35.08%
	2007		0.60% to 0.75%		10,248		1680.14 to 163.22		1,839,959		1.74%		-0.67% to -0.82%
VP Income & Growth Fund - Class III (ACVIG3)
	2007		0.68%		13,575		185.44 to 184.76		2,512,359		0.63%		17.29% to 17.17%
VP Inflation Protection Fund - Class II (ACVIP2)
	2011		0.60% to 0.75%		18,748		1,492.45 to 147.31		3,434,728		4.02%		11.08% to 10.91%
	2010		0.60% to 0.75%		18,942		1,343.61 to 132.81		3,077,359		1.79%		4.49% to 4.33%
	2009		0.60% to 0.75%		17,921		1285.88 to 127.3		2,885,688		1.90%		9.55% to 9.39%
	2008		0.60% to 0.75%		16,799		1173.74 to 116.37		2,345,551		4.77%		-2.18% to -2.33%
	2007		0.60% to 0.75%		13,169		1199.89 to 119.15		1,854,054		4.49%		8.83% to 8.67%
VP International Fund - Class I (ACVI)
	2011		0.60% to 0.75%		446		1,353.54 to 133.40		326,708		1.50%		-12.57% to -12.70%
	2010		0.60% to 0.75%		442		1,548.09 to 152.81		384,270		2.52%		12.62% to 12.45%
	2009		0.60% to 0.75%		544		1374.67 to 135.89		444,321		2.44%		32.96% to 32.77%
	2008		0.60% to 0.75%		1,782		1033.86 to 102.36		462,358		0.88%		-45.15% to -45.24%
	2007		0.60% to 0.75%		2,778		1885.02 to 186.91		1,188,729		0.64%		17.35% to 17.17%
VP International Fund - Class III (ACVI3)
	2008		0.65% to 0.75%		13,738		101.65 to 101.18		1,392,618		0.84%		-45.18% to -45.24%
VP Mid Cap Value Fund - Class I (ACVMV1)
	2011		0.65% to 0.75%		5,409		148.35 to 147.36		799,374		1.31%		-1.34% to -1.43%
	2010		0.65% to 0.75%		6,248		150.36 to 149.51		936,472		2.58%		18.48% to 18.36%
	2009		0.65% to 0.75%		5,878		126.9 to 126.31		744,319		3.88%		29.1% to 28.97%
	2008		0.65% to 0.75%		5,470		98.3 to 97.94		536,858		0.07%		-24.84% to -24.91%
	2007		0.65% to 0.75%		3,449		130.78 to 130.43		450,566		0.72%		-2.94% to -3.04%
VP Ultra(R) Fund - Class I (ACVU1)
	2011		0.60% to 0.75%		43		1,169.20 to 115.24		39,736		0.00%		0.46% to 0.31%
	2010		0.60% to 0.75%		61		1,163.82 to 114.88		58,406		0.45%		15.39% to 15.22%
	2009		0.60% to 0.75%		391		1008.59 to 99.7		131,903		0.57%		33.68% to 33.47%
	2008		0.60% to 0.75%		17,502		754.51 to 74.7		1,359,258		0.00%		-41.83% to -41.92%
	2007		0.60% to 0.75%		17,069		1297.1 to 128.61		2,338,237		0.00%		20.29% to 20.11%
VP Value Fund - Class I (ACVV)
	2009		0.60% to 0.75%		39,978		1282.88 to 126.82		5,713,475		6.21%		19.15% to 18.97%
	2008		0.60% to 0.75%		44,924		1076.73 to 106.6		5,284,098		2.49%		-27.21% to -27.32%
	2007		0.60% to 0.75%		50,637		1479.32 to 146.68		8,195,665		1.62%		-5.71% to -5.85%
VP Vista(SM) Fund - Class I (ACVVS1)
	2011		0.75%		1		119.28		119		0.00%		-8.58%
	2010		0.75%		2		130.48		261		0.00%		22.96%
	2009		0.65% to 0.75%		107		106.62 to 106.12		11,407		0.00%		21.68% to 21.55%
	2008		0.65% to 0.75%		4,165		87.62 to 87.3		364,258		0.00%		-49.01% to -48.96%
	2007		0.65% to 0.75%		3,062		171.66 to 171.21		525,010		0.00%		38.72% to 38.86%
Small Cap Stock Index Portfolio - Service Shares (DVSCS)
	2011		0.60% to 0.75%		28,872		2,084.53 to 204.04		6,136,419		0.61%		-0.04% to -0.19%
	2010		0.60% to 0.75%		30,428		2,085.31 to 204.42		6,547,508		0.68%		25.07% to 24.89%
	2009		0.60% to 0.75%		30,885		1667.26 to 163.69		5,322,363		2.96%		24.28% to 24.09%
	2008		0.60% to 0.75%		31,726		1341.55 to 131.91		4,393,379		0.87%		-31.33% to -31.43%
	2007		0.60% to 0.75%		33,536		1953.53 to 192.37		6,785,668		0.37%		-1.25% to -1.4%
Stock Index Fund, Inc. - Initial Shares (DSIF)
	2011		0.60% to 0.75%		44,596		$ 1,522.22 to $ 150.26		$          7,134,439		1.82%		1.27% to 1.12%
	2010		0.60% to 0.75%		48,256		1,503.14 to 148.59		7,804,777		2.09%		14.15% to 13.98%
	2009		0.60% to 0.75%		50,267		1,316.79 to 130.37		7,092,217		2.43%		25.58% to 25.39%
	2008		0.60% to 0.75%		53,706		1048.58 to 103.97		6,171,647		2.11%		-37.52% to -37.61%
	2007		0.60% to 0.75%		61,314		1678.21 to 166.65		11,148,730		1.73%		4.62% to 4.46%
Appreciation Portfolio - Initial Shares (DCAP)
	2011		0.60% to 0.75%		15,224		1,451.43 to 143.05		2,480,389		1.68%		8.36% to 8.20%
	2010		0.60% to 0.75%		17,801		1,339.44 to 132.21		2,519,668		2.46%		14.63% to 14.46%
	2009		0.60% to 0.75%		19,586		1168.52 to 115.51		2,472,441		3.09%		21.83% to 21.64%
	2008		0.60% to 0.75%		23,951		959.17 to 94.96		2,404,848		2.17%		-29.97% to -30.08%
	2007		0.60% to 0.75%		31,661		1369.71 to 135.81		4,641,082		1.54%		6.49% to 6.33%
Developing Leaders Portfolio - Initial Shares (DSC)
	2011		0.60% to 0.75%		1,824		1,183.41 to 116.81		244,970		0.39%		-14.36% to -14.49%
	2010		0.60% to 0.75%		1,459		1,381.84 to 136.60		247,232		1.09%		30.37% to 30.17%
	2009		0.60% to 0.75%		1,120		1059.97 to 104.94		132,111		1.78%		25.28% to 25.1%
	2008		0.60% to 0.75%		993		846.06 to 83.89		100,867		0.88%		-37.97% to -38.06%
	2007		0.60% to 0.75%		879		1363.87 to 135.44		147,110		0.81%		-11.59% to -11.73%
Capital Appreciation Fund II - Primary Shares (FVCA2P)
	2011		0.60% to 0.75%		656		1,372.71 to 135.50		97,871		0.70%		-5.86% to -6.00%
	2010		0.60% to 0.75%		728		1,458.14 to 144.15		114,355		0.93%		12.40% to 12.23%
	2009		0.60% to 0.75%		767		1297.3 to 128.44		106,650		0.91%		12.8% to 12.63%
	2008		0.60% to 0.75%		559		1150.08 to 114.03		63,754		0.36%		-29.79% to -29.9%
	2007		0.60% to 0.75%		770		1638.05 to 162.66		125,461		0.84%		9.22% to 9.05%
Clover Value Fund II - Primary Shares (obsolete) (FALF)
	2009		0.65% to 0.75%		389		111.47 to 110.73		43,074		3.16%		13.97% to 13.86%
	2008		0.60% to 0.75%		547		980.85 to 97.25		53,326		1.93%		-34.19% to -34.29%
	2007		0.60% to 0.75%		612		1490.41 to 148		90,737		1.32%		-10.21% to -10.34%
Quality Bond Fund II - Primary Shares (FQB)
	2011		0.60% to 0.75%		16,802		1,379.67 to 140.87		2,760,052		5.31%		1.66% to 1.51%
	2010		0.60% to 0.75%		18,478		1,357.11 to 138.77		2,961,969		5.29%		7.86% to 7.69%
	2009		0.60% to 0.75%		17,378		1258.27 to 128.86		2,835,959		7.17%		19.71% to 19.54%
	2008		0.60% to 0.75%		19,621		1051.06 to 107.8		2,290,947		5.19%		-7.84% to -7.98%
	2007		0.60% to 0.75%		24,177		1140.51 to 117.15		2,967,644		4.41%		4.75% to 4.59%
Equity-Income Portfolio - Initial Class (FEIP)
	2011		0.60% to 0.75%		169,119		3,290.04 to 320.04		78,985,131		2.41%		0.37% to 0.22%
	2010		0.60% to 0.75%		194,717		3,277.95 to 319.34		88,957,490		1.85%		14.46% to 14.29%
	2009		0.60% to 0.75%		222,747		2863.82 to 279.41		88,514,803		2.32%		29.43% to 29.24%
	2008		0.60% to 0.75%		259,698		2212.64 to 216.2		79,594,296		2.48%		-43% to -43.08%
	2007		0.60% to 0.75%		289,559		3881.67 to 379.86		153,737,798		1.78%		0.92% to 0.77%
High Income Portfolio - Initial Class (FHIP)
	2011		0.60% to 0.75%		20,354		2,299.79 to 217.03		8,788,501		6.47%		3.41% to 3.26%
	2010		0.60% to 0.75%		24,846		2,223.94 to 210.19		9,770,982		7.56%		13.14% to 12.97%
	2009		0.60% to 0.75%		30,990		1965.61 to 186.05		10,157,812		7.82%		43.1% to 42.88%
	2008		0.60% to 0.75%		43,872		1373.62 to 130.21		8,959,756		8.33%		-25.43% to -25.55%
	2007		0.60% to 0.75%		54,865		1842.15 to 174.89		14,349,789		7.52%		2.17% to 2.01%
VIP Fund - Asset Manager Portfolio - Initial Class (FAMP)
	2011		0.60% to 0.75%		72,267		2,645.22 to 257.31		30,248,385		1.89%		-3.14% to -3.29%
	2010		0.60% to 0.75%		80,861		2,731.04 to 266.06		34,802,694		1.71%		13.58% to 13.41%
	2009		0.60% to 0.75%		91,759		2,404.48 to 234.60		34,309,106		2.46%		28.34% to 28.15%
	2008		0.60% to 0.75%		101,048		1873.52 to 183.07		29,440,111		2.63%		-29.15% to -29.25%
	2007		0.60% to 0.75%		115,363		2644.16 to 258.76		45,597,418		6.09%		14.81% to 14.64%
VIP Fund - Contrafund Portfolio - Initial Class (FCP)
	2009		0.60% to 0.75%		264,822		3568.22 to 268.67		98,025,774		1.45%		34.9% to 34.7%
	2008		0.60% to 0.75%		305,223		2032.93 to 199.47		83,226,683		0.99%		-42.86% to -42.94%
	2007		0.60% to 0.75%		329,483		3557.68 to 349.6		156,880,654		0.94%		16.88% to 16.71%
VIP Fund - Energy Portfolio - Service Class 2 (FNRS2)
	2011		0.65% to 0.75%		10,469		167.07 to 165.96		1,741,829		0.85%		-5.81% to -5.91%
	2010		0.65% to 0.75%		9,261		177.38 to 176.38		1,637,235		0.38%		18.39% to 18.27%
	2009		0.65% to 0.75%		10,790		149.83 to 149.13		1,612,544		0.27%		46.62% to 46.47%
	2008		0.65% to 0.75%		9,988		102.19 to 101.82		1,018,628		0.00%		-54.7% to -54.75%
	2007		0.65% to 0.75%		8,579		225.59 to 224.99		1,933,441		0.12%		44.69% to 44.55%
VIP Fund - Equity-Income Portfolio - Service Class (FEIS)
	2011		0.75%		26,038		144.49		3,762,250		2.50%		0.11%
	2010		0.75%		25,901		144.34		3,738,461		2.23%		14.23%
	2009		0.75%		25,434		126.36		3,213,783		2.96%		29.06%
	2008		0.75%		25,036		97.91		2,450,897		2.59%		-43.13%
	2007		0.75%		22,053		172.17		3,796,843		1.82%		0.66%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
VIP Fund - Freedom Fund 2010 Portfolio - Service Class (FF10S)
	2011		0.65% to 0.75%		5,579		$ 129.07 to $ 128.21		$          718,840		2.12%		-0.93% to -1.03%
	2010		0.65% to 0.75%		4,999		130.28 to 129.54		650,703		2.57%		12.01% to 11.89%
	2009		0.65% to 0.75%		3,157		116.31 to 115.77		366,408		4.03%		23.35% to 23.23%
	2008		0.65% to 0.75%		3,319		94.29 to 93.95		312,524		2.45%		-25.56% to -25.64%
	2007		0.65% to 0.75%		4,370		126.67 to 126.34		553,045		3.35%		7.94% to 7.83%
VIP Fund - Freedom Fund 2020 Portfolio - Service Class (FF20S)
	2011		0.65% to 0.75%		12,925		128.68 to 127.83		1,656,092		2.01%		-1.76% to -1.86%
	2010		0.65% to 0.75%		12,878		130.99 to 130.25		1,681,298		2.65%		13.78% to 13.67%
	2009		0.65% to 0.75%		10,411		115.13 to 114.59		1,195,368		4.98%		27.94% to 27.81%
	2008		0.65% to 0.75%		8,101		89.99 to 89.66		727,539		2.71%		-33.15% to -33.21%
	2007		0.65% to 0.75%		6,538		134.6 to 134.25		878,659		2.43%		9.45% to 9.34%
VIP Fund - Freedom Fund 2030 Portfolio - Service Class (FF30S)
	2011		0.65% to 0.75%		10,126		125.39 to 124.56		1,263,072		1.94%		-3.33% to -3.42%
	2010		0.65% to 0.75%		9,590		129.70 to 128.97		1,238,180		2.36%		15.25% to 15.13%
	2009		0.65% to 0.75%		9,881		112.54 to 112.02		1,108,060		2.77%		30.55% to 30.42%
	2008		0.65% to 0.75%		8,736		86.2 to 85.89		751,003		2.15%		-38.48% to -38.54%
	2007		0.65% to 0.75%		8,209		140.12 to 139.75		1,147,827		2.68%		10.48% to 10.37%
VIP Fund - Growth Portfolio - Initial Class (FGP)
	2011		0.60% to 0.75%		250,347		2,997.36 to 291.57		104,313,560		0.35%		-0.40% to -0.54%
	2010		0.60% to 0.75%		287,279		3,009.27 to 293.16		118,054,719		0.28%		23.43% to 23.25%
	2009		0.60% to 0.75%		333,190		2438.03 to 237.87		109,607,553		0.45%		27.52% to 27.33%
	2008		0.60% to 0.75%		380,893		1911.89 to 186.82		98,116,407		0.82%		-47.48% to -47.56%
	2007		0.60% to 0.75%		417,459		3640.57 to 356.27		203,857,644		0.82%		26.2% to 26.01%
VIP Fund - Growth Portfolio - Service Class (FGS)
	2011		0.75%		15,100		146.08		2,205,830		0.26%		-0.61%
	2010		0.75%		15,750		146.97		2,314,800		0.23%		23.13%
	2009		0.75%		15,534		119.36		1,854,183		0.44%		27.19%
	2008		0.75%		16,514		93.85		1,549,717		0.78%		-47.63%
	2007		0.75%		14,322		179.19		2,566,418		0.58%		25.92%
VIP Fund - High Income Portfolio - Initial Class R (FHIPR)
	2011		0.65% to 0.75%		34,624		122.82 to 122.24		4,243,592		6.60%		3.37% to 3.27%
	2010		0.65% to 0.75%		40,155		118.81 to 118.37		4,763,162		8.54%		13.14% to 13.03%
	2009		0.65% to 0.75%		38,892		105.01 to 104.73		4,079,165		8.46%		42.88% to 42.74%
	2008		0.65% to 0.75%		33,979		73.49 to 73.37		2,495,409		9.07%		-25.37% to -25.44%
	2007		0.65% to 0.75%		34,486		98.48 to 98.41		3,395,178		10.69%		-1.52% to -1.59%	****
VIP Fund - Investment Grade Bond Portfolio - Initial Class (FIGBP)
	2011		0.60% to 0.75%		98,957		2,697.03 to 262.65		35,128,999		3.12%		6.69% to 6.53%
	2010		0.60% to 0.75%		114,694		2,527.84 to 246.55		36,991,612		3.58%		7.16% to 7.00%
	2009		0.60% to 0.75%		128,777		2358.94 to 230.42		38,476,630		9.25%		15.03% to 14.86%
	2008		0.60% to 0.75%		138,130		2050.71 to 200.61		35,209,804		4.47%		-3.83% to -3.97%
	2007		0.60% to 0.75%		181,072		2132.34 to 208.91		46,640,056		4.31%		3.72% to 3.56%
VIP Fund - Investment Grade Bond Portfolio - Service Class (FIGBS)
	2011		0.75%		10,286		147.61		1,518,284		3.30%		6.41%
	2010		0.75%		10,358		138.72		1,436,819		4.33%		6.87%
	2009		0.75%		10,156		129.79		1,318,177		10.81%		14.81%
	2008		0.75%		10,024		113.05		1,133,223		3.99%		-4.07%
	2007		0.75%		10,782		117.84		1,270,541		4.04%		3.43%
VIP Fund - Mid Cap Portfolio - Service Class (FMCS)
	2011		0.60% to 0.75%		34,398		2,495.74 to 246.35		10,749,483		0.14%		-11.25% to -11.38%
	2010		0.60% to 0.75%		39,764		2,812.09 to 277.99		14,145,259		0.29%		27.93% to 27.74%
	2009		0.60% to 0.75%		44,102		2198.09 to 217.62		11,734,551		0.64%		39.18% to 38.97%
	2008		0.60% to 0.75%		50,517		1579.35 to 156.6		9,557,589		0.36%		-39.87% to -39.96%
	2007		0.60% to 0.75%		52,370		2626.58 to 260.83		16,478,100		0.71%		14.79% to 14.62%
VIP Fund - Overseas Portfolio - Initial Class (FOP)
	2011		0.60% to 0.75%		34,059		1,758.05 to 171.21		11,820,452		1.29%		-17.66% to -17.78%
	2010		0.60% to 0.75%		42,101		2,135.07 to 208.24		17,060,462		1.35%		12.44% to 12.27%
	2009		0.60% to 0.75%		55,221		1898.89 to 185.48		18,231,555		2.10%		25.77% to 25.58%
	2008		0.60% to 0.75%		69,280		1509.77 to 147.69		17,824,415		2.52%		-44.14% to -44.23%
	2007		0.60% to 0.75%		88,555		2702.85 to 264.8		37,847,405		3.27%		16.61% to 16.43%
VIP Fund - Overseas Portfolio - Initial Class R (FOPR)
	2011		0.60% to 0.75%		132,941		1,171.26 to 115.79		18,476,259		1.36%		-17.64% to -17.76%
	2010		0.60% to 0.75%		136,711		1,422.12 to 140.80		23,802,040		1.46%		12.40% to 12.23%
	2009		0.60% to 0.75%		149,431		1265.25 to 125.45		22,429,097		2.34%		25.85% to 25.66%
	2008		0.60% to 0.75%		154,536		1005.39 to 99.84		18,340,348		2.72%		-44.15% to -44.23%
	2007		0.60% to 0.75%		150,134		1800.2 to 179.03		32,578,014		3.27%		16.65% to 16.47%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
VIP Fund - Overseas Portfolio - Service Class (FOS)
	2011		0.75%		328		$161.46		$              52,959		1.16%		-17.85%
	2010		0.75%		403		196.53		79,202		1.49%		12.15%
	2009		0.75%		458		175.24		80,261		2.26%		25.49%
	2008		0.75%		634		139.64		88,602		2.25%		-44.28%
	2007		0.75%		948		250.64		237,571		3.11%		16.33%
VIP Fund - Overseas Portfolio - Service Class R (FOSR)
	2011		0.75%		18,487		114.86		2,123,467		1.33%		-17.92%
	2010		0.75%		17,337		139.94		2,426,107		1.73%		12.17%
	2009		0.75%		16,574		124.76		2,067,777		2.93%		25.55%
	2008		0.75%		15,108		99.37		1,500,769		2.85%		-44.3%
	2007		0.75%		12,637		178.4		2,254,519		3.20%		16.34%
VIP Fund - Value Strategies Portfolio - Service Class (FVSS)
	2011		0.60% to 0.75%		7,881		1,802.86 to 177.96		1,942,007		0.83%		-9.39% to -9.53%
	2010		0.60% to 0.75%		9,259		1,989.74 to 196.70		2,499,009		0.47%		25.70% to 25.51%
	2009		0.60% to 0.75%		10,974		1582.95 to 156.72		2,094,978		0.63%		56.46% to 56.22%
	2008		0.60% to 0.75%		10,420		1011.76 to 100.32		1,220,851		0.68%		-51.47% to -51.54%
	2007		0.60% to 0.75%		11,327		2084.71 to 207.02		2,741,821		0.81%		4.96% to 4.81%
Franklin Rising Dividends Securities Fund - Class 1 (FTVRDI)
	2011		0.60% to 0.75%		31,764		1,706.62 to 168.46		6,407,217		1.62%		5.66% to 5.50%
	2010		0.60% to 0.75%		37,619		1,615.22 to 159.68		6,896,501		1.77%		20.22% to 20.04%
	2009		0.60% to 0.75%		39,612		1343.59 to 133.02		6,134,939		1.83%		16.97% to 16.79%
	2008		0.60% to 0.75%		49,884		1148.67 to 113.89		6,575,907		2.05%		-27.38% to -27.49%
	2007		0.60% to 0.75%		55,089		1581.75 to 157.07		9,896,092		2.41%		-3% to -3.15%
Franklin Small Cap Value Securities Fund - Class 1 (FTVSVI)
	2011		0.60% to 0.75%		21,059		2,122.26 to 209.49		5,154,083		0.89%		-4.10% to -4.25%
	2010		0.60% to 0.75%		24,769		2,213.06 to 218.78		6,363,695		1.01%		27.72% to 27.53%
	2009		0.60% to 0.75%		30,252		1732.72 to 171.55		6,000,085		2.20%		28.77% to 28.58%
	2008		0.60% to 0.75%		33,596		1345.61 to 133.42		5,159,296		1.44%		-33.27% to -33.37%
	2007		0.60% to 0.75%		35,735		2016.55 to 200.25		8,178,342		0.86%		-2.72% to -2.87%
Templeton Developing Markets Securities Fund - Class 3 (FTVDM3)
	2011		0.65% to 0.75%		13,552		163.39 to 162.31		2,206,891		0.97%		-16.40% to -16.49%
	2010		0.65% to 0.75%		16,171		195.45 to 194.35		3,151,548		1.74%		16.75% to 16.64%
	2009		0.65% to 0.75%		16,508		167.41 to 166.63		2,756,076		4.61%		71.52% to 71.34%
	2008		0.65% to 0.75%		13,515		97.61 to 97.25		1,316,120		2.88%		-52.98% to -53.03%
	2007		0.65% to 0.75%		13,184		207.58 to 207.02		2,732,875		2.14%		27.86% to 27.73%
Templeton Foreign Securities Fund - Class 1 (TIF)
	2011		0.60% to 0.75%		2,155		1,862.22 to 183.82		1,157,642		1.91%		-10.98% to -11.11%
	2010		0.60% to 0.75%		2,683		2,091.89 to 206.80		1,423,155		2.10%		8.03% to 7.86%
	2009		0.60% to 0.75%		2,527		1936.48 to 191.72		1,436,416		3.79%		36.52% to 36.32%
	2008		0.60% to 0.75%		3,391		1418.46 to 140.65		1,116,918		2.62%		-40.59% to -40.68%
	2007		0.60% to 0.75%		4,015		2387.69 to 237.1		2,157,443		2.10%		15.09% to 14.92%
Templeton Global Bond Securities Fund - Class 3 (FTVGI3)
	2011		0.65% to 0.75%		14,830		169.51 to 168.39		2,503,594		5.53%		-1.47% to -1.57%
	2010		0.65% to 0.75%		13,949		172.04 to 171.07		2,391,162		1.48%		13.64% to 13.52%
	2009		0.65% to 0.75%		13,754		151.4 to 150.69		2,076,201		15.63%		17.92% to 17.8%
	2008		0.65% to 0.75%		12,536		128.39 to 127.92		1,605,824		3.93%		5.52% to 5.41%
	2007		0.65% to 0.75%		7,296		121.68 to 121.35		886,275		2.83%		10.31% to 10.2%
VIP Founding Funds Allocation Fund - Class 2 (FTVFA2)
	2011		0.75%		323		91.56		29,574		0.02%		-2.28%
	2010		0.75%		631		93.69		59,120		5.39%		9.43%
	2009		0.75%		94		85.62		8,048		8.69%		29.28%
	2008		0.75%		5		66.23		351		2.64%		-33.77%	****
International Portfolio - S Class Shares (AMINS)
	2011		0.75%		17		109.76		1,866		6.63%		-12.99%
	2010		0.65% to 0.75%		14		126.86 to 126.14		1,767		16.87%		21.22% to 21.10%
	2009		0.75%		15		104.16		1,458		0.02%		33.51%
	2008		0.65% to 0.75%		4,896		78.31 to 78.02		382,454		0.00%		-46.78% to -46.84%
	2007		0.65% to 0.75%		7,201		147.15 to 146.76		1,057,420		2.69%		2.54% to 2.44%
Mid-Cap Growth Portfolio - I Class Shares (AMCG)
	2011		0.60% to 0.75%		610		2,107.51 to 208.03		298,059		0.00%		-0.13% to -0.28%
	2010		0.60% to 0.75%		611		2,110.16 to 208.60		306,411		0.00%		28.32% to 28.13%
	2009		0.60% to 0.75%		203		1,644.39 to 162.80		158,984		0.00%		30.81% to 30.62%
	2008		0.60% to 0.75%		6,626		1257.07 to 124.64		1,051,885		0.00%		-43.71% to -43.79%
	2007		0.60% to 0.75%		5,229		2233.14 to 221.76		1,539,406		0.00%		21.79% to 21.61%
Partners Portfolio - I Class Shares (AMTP)
	2011		0.60% to 0.75%		4,031		1,219.30 to 119.45		2,747,237		0.00%		-11.89% to -12.02%
	2010		0.60% to 0.75%		4,584		1,383.79 to 135.77		3,519,068		0.69%		14.97% to 14.80%
	2009		0.60% to 0.75%		5,536		1203.56 to 118.27		3,518,851		0.73%		55.14% to 54.91%
	2008		0.60% to 0.75%		129,860		1583.72 to 76.35		15,078,612		0.53%		-52.68% to -52.75%
	2007		0.60% to 0.75%		138,527		3346.72 to 161.58		34,328,717		0.64%		8.68% to 8.51%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
Regency Portfolio - S Class Shares (AMRS)
	2008		0.65% to 0.75%		2,174		$   70.37 to $ 70.11		$          152,658		1.08%		-46.3% to -46.35%
	2007		0.65% to 0.75%		1,683		131.03 to 130.68		220,309		0.43%		2.38% to 2.28%
Small-Cap Growth Portfolio - S Class Shares (AMFAS)
	2011		0.60% to 0.75%		2,826		1,281.72 to 126.52		468,203		0.00%		-1.65% to -1.80%
	2010		0.60% to 0.75%		3,754		1,303.24 to 128.83		644,400		0.00%		18.90% to 18.72%
	2009		0.60% to 0.75%		4,775		1096.12 to 108.52		637,906		0.00%		22.02% to 21.84%
	2008		0.60% to 0.75%		5,711		898.31 to 89.07		602,443		0.00%		-39.84% to -39.93%
	2007		0.60% to 0.75%		6,024		1493.1 to 148.27		1,034,107		0.00%		-0.09% to -0.24%
Socially Responsive Portfolio - I Class Shares (AMSRS)
	2011		0.60% to 0.75%		2,722		1,648.93 to 162.76		603,394		0.33%		-3.66% to -3.80%
	2010		0.60% to 0.75%		2,757		1,711.55 to 169.20		615,873		0.04%		22.12% to 21.94%
	2009		0.60% to 0.75%		3,912		1401.53 to 138.76		662,956		2.45%		30.64% to 30.44%
	2008		0.60% to 0.75%		5,980		1072.82 to 106.37		679,510		2.18%		-39.81% to -39.9%
	2007		0.60% to 0.75%		5,851		1782.24 to 176.98		1,100,244		0.09%		6.97% to 6.8%
Capital Appreciation Fund/VA - Non-Service Shares (OVGR)
	2009		0.60% to 0.75%		31,241		1095.29 to 108.28		3,632,481		0.39%		43.65% to 43.44%
	2008		0.60% to 0.75%		39,286		762.45 to 75.49		3,146,181		0.15%		-45.84% to -45.93%
	2007		0.60% to 0.75%		41,017		1407.89 to 139.6		6,162,511		0.22%		13.46% to 13.29%
Global Securities Fund/VA - Class 3 (OVGS3)
	2011		0.65% to 0.75%		54,728		141.08 to 140.01		7,674,076		1.25%		-8.86% to -8.95%
	2010		0.65% to 0.75%		55,968		154.80 to 153.77		8,618,236		1.58%		15.22% to 15.11%
	2009		0.65% to 0.75%		58,101		134.35 to 133.59		7,771,162		2.60%		38.79% to 38.65%
	2008		0.65% to 0.75%		67,077		96.8 to 96.35		6,469,687		1.53%		-40.58% to -40.64%
	2007		0.65% to 0.75%		68,253		162.91 to 162.32		11,090,536		1.24%		5.64% to 5.54%
Global Securities Fund/VA - Non-Service Shares (OVGS)
	2011		0.60% to 0.75%		3,181		1,598.90 to 157.59		1,179,597		1.36%		-8.84% to -8.97%
	2010		0.60% to 0.75%		4,265		1,753.90 to 173.12		1,734,031		1.52%		15.27% to 15.10%
	2009		0.60% to 0.75%		4,877		1521.54 to 150.41		1,687,533		2.59%		38.94% to 38.73%
	2008		0.60% to 0.75%		7,895		1095.14 to 108.42		1,622,746		1.59%		-40.55% to -40.64%
	2007		0.60% to 0.75%		9,126		1842.01 to 182.64		3,048,495		1.29%		5.68% to 5.52%
High Income Fund/VA - Class 3 (OVHI3)
	2011		0.65% to 0.75%		12,162		28.22 to 28.09		342,112		8.77%		-2.51% to -2.61%
	2010		0.65% to 0.75%		11,550		28.95 to 28.84		333,513		6.45%		13.94% to 13.83%
	2009		0.65% to 0.75%		10,062		25.40 to 25.34		255,133		0.00%		25.93% to 25.8%
	2008		0.65% to 0.75%		8,100		20.17 to 20.14		163,198		6.96%		-79.03% to -79.05%
	2007		0.65% to 0.75%		2,821		96.19 to 96.13		271,194		0.00%		-3.81% to -3.87%	****
High Income Fund/VA - Non-Service Shares (OVHI)
	2011		0.60% to 0.75%		1,404		387.71 to 38.27		95,377		12.44%		-2.92% to -3.07%
	2010		0.60% to 0.75%		2,190		399.37 to 39.48		196,701		6.63%		14.13% to 13.96%
	2009		0.60% to 0.75%		2,287		349.94 to 34.65		120,926		0.00%		24.57% to 24.38%
	2008		0.60% to 0.75%		3,768		280.92 to 27.85		130,648		8.28%		-78.8% to -78.83%
	2007		0.60% to 0.75%		4,957		1325.08 to 131.58		757,773		7.95%		-0.7% to -0.85%
Main Street Fund(R)/VA - Non-Service Shares (OVGI)
	2011		0.60% to 0.75%		15,102		1,252.78 to 123.47		2,135,618		0.85%		-0.61% to -0.76%
	2010		0.60% to 0.75%		17,422		1,260.48 to 124.42		2,470,139		1.24%		15.41% to 15.24%
	2009		0.60% to 0.75%		18,999		1092.14 to 107.96		2,320,394		2.14%		27.52% to 27.33%
	2008		0.60% to 0.75%		22,083		856.46 to 84.79		2,101,015		1.61%		-38.84% to -38.93%
	2007		0.60% to 0.75%		24,468		1400.32 to 138.85		3,829,040		0.95%		3.8% to 3.64%
Main Street Small Cap Fund(R)/VA - Non-Service Shares (OVSC)
	2011		0.60% to 0.75%		5,011		2,021.18 to 199.51		1,109,162		0.65%		-2.80% to -2.94%
	2010		0.60% to 0.75%		6,244		2,079.32 to 205.55		1,460,218		0.73%		22.67% to 22.48%
	2009		0.60% to 0.75%		7,566		1695.08 to 167.82		1,469,138		1.03%		36.38% to 36.17%
	2008		0.60% to 0.75%		10,063		1242.95 to 123.24		1,379,569		0.51%		-38.2% to -38.29%
	2007		0.60% to 0.75%		11,379		2011.29 to 199.73		2,555,347		0.32%		-1.8% to -1.95%
Foreign Bond Portfolio (Unhedged) - Administrative Class (PMVFBA)
	2011		0.75%		1,762		127.69		224,990		2.00%		7.71%
	2010		0.75%		1,829		118.55		216,825		1.64%		8.66%
	2009		0.75%		818		109.10		89,246		0.76%		9.10%	****
Low Duration Portfolio - Administrative Class (PMVLDA)
	2011		0.75%		4,870		115.25		561,283		1.67%		0.35%
	2010		0.75%		5,616		114.85		644,991		2.11%		4.50%
	2009		0.75%		1,256		109.90		138,037		1.56%		9.90%	****
Total Return Portfolio - Administrative Class (PMVTRA)
	2011		0.65% to 0.75%		1,842		100.64 to 100.57		185,260		2.00%		0.64% to 0.57%	****
Putnam VT Growth and Income Fund - IB Shares (PVGIB)
	2011		0.60% to 0.75%		1,497		1,303.73 to 128.69		197,650		1.37%		-5.21% to -5.35%
	2010		0.60% to 0.75%		1,468		1,375.39 to 135.97		201,131		1.79%		13.69% to 13.52%
	2009		0.60% to 0.75%		1,290		1209.74 to 119.77		155,719		3.07%		29.04% to 28.84%
	2008		0.60% to 0.75%		2,001		937.52 to 92.96		198,497		2.18%		-39.06% to -39.16%
	2007		0.60% to 0.75%		2,406		1538.53 to 152.78		404,763		1.47%		-6.6% to -6.74%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
Putnam VT International Equity Fund - IB Shares (PVTIGB)
	2011		0.60% to 0.75%		274		$ 1,399.70 to $ 138.16		$          69,543		3.28%		-17.43% to -17.55%
	2010		0.60% to 0.75%		337		1,695.16 to 167.58		97,886		3.70%		9.37% to 9.20%
	2009		0.60% to 0.75%		383		1549.96 to 153.45		107,636		0.00%		23.89% to 23.7%
	2008		0.60% to 0.75%		524		1251.09 to 124.05		170,221		2.08%		-44.29% to -44.37%
	2007		0.60% to 0.75%		560		2245.59 to 222.99		289,937		2.71%		7.72% to 7.55%
Putnam VT Voyager Fund - IB Shares (PVTVB)
	2011		0.60% to 0.75%		3,887		1,423.43 to 140.50		733,055		0.00%		-18.34% to -18.46%
	2010		0.60% to 0.75%		2,813		1,743.10 to 172.32		551,898		1.66%		20.08% to 19.90%
	2009		0.60% to 0.75%		4,172		1451.67 to 143.72		1,107,276		0.66%		62.92% to 62.67%
	2008		0.60% to 0.75%		3,194		891.06 to 88.35		307,684		0.00%		-37.41% to -37.5%
	2007		0.60% to 0.75%		3,387		1423.61 to 141.37		494,816		0.00%		4.89% to 4.73%
Blue Chip Growth Portfolio - II (TRBCG2)
	2009		0.65% to 0.75%		10,571		109.78 to 109.26		1,157,031		0.00%		40.87% to 40.73%
	2008		0.65% to 0.75%		13,346		77.93 to 77.64		1,037,913		0.09%		-43.02% to -43.08%
	2007		0.65% to 0.75%		16,056		136.76 to 136.4		2,193,719		0.10%		11.76% to 11.64%
Equity Income Portfolio - II (TREI2)
	2009		0.65% to 0.75%		18,737		100.70 to 100.23		1,880,125		1.92%		24.44% to 24.32%
	2008		0.65% to 0.75%		18,840		80.92 to 80.62		1,520,540		2.18%		-36.68% to -36.74%
	2007		0.65% to 0.75%		19,103		127.79 to 127.45		2,436,788		1.52%		2.36% to 2.26%
Health Sciences Portfolio - II (TRHS2)
	2011		0.65% to 0.75%		2,487		116.15 to 115.96		288,865		0.00%		9.67% to 9.56%
	2010		0.65% to 0.75%		391		105.91 to 105.84		41,409		0.00%		5.91% to 5.84%	****
Limited-Term Bond Portfolio - II (TRLT2)
	2008		0.65% to 0.75%		10,415		109.66 to 109.25		1,140,127		3.63%		0.65% to 0.55%
	2007		0.65% to 0.75%		3,708		108.95 to 108.66		403,165		4.02%		4.54% to 4.43%
Worldwide Insurance Trust - Worldwide Bond Fund - Class R1 (VWBFR)
	2011		0.60% to 0.75%		20,576		1,541.64 to 152.40		4,737,197		7.71%		7.49% to 7.33%
	2010		0.60% to 0.75%		22,637		1,434.15 to 141.99		4,550,582		3.79%		5.56% to 5.41%
	2009		0.60% to 0.75%		26,836		1358.56 to 134.71		4,950,164		3.97%		5.35% to 5.19%
	2008		0.60% to 0.75%		28,883		1289.6 to 128.06		4,954,047		7.27%		3.08% to 2.93%
	2007		0.60% to 0.75%		26,479		1251.06 to 124.42		4,015,337		5.76%		9.16% to 8.99%
Worldwide Insurance Trust - Worldwide Bond Fund - Initial Class (VWBF)
	2011		0.60% to 0.75%		5,692		2,549.64 to 248.30		3,122,901		8.07%		7.49% to 7.33%
	2010		0.60% to 0.75%		6,861		2,371.88 to 231.33		3,398,403		3.80%		5.56% to 5.40%
	2009		0.60% to 0.75%		8,890		2246.92 to 219.47		3,920,034		3.91%		5.35% to 5.19%
	2008		0.60% to 0.75%		10,846		2132.87 to 208.65		4,376,847		8.56%		2.99% to 2.83%
	2007		0.60% to 0.75%		13,677		2070.99 to 202.9		4,795,909		6.13%		9.05% to 8.89%
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Class R1 (VWEMR)
	2011		0.60% to 0.75%		39,908		2,180.00 to 215.51		10,827,660		1.06%		-26.20% to -26.31%
	2010		0.60% to 0.75%		41,617		2,953.91 to 292.45		15,560,212		0.61%		26.11% to 25.92%
	2009		0.60% to 0.75%		46,050		2342.41 to 232.26		13,909,214		0.17%		112.12% to 111.8%
	2008		0.60% to 0.75%		53,636		1104.29 to 109.66		7,283,105		0.00%		-64.96% to -65.01%
	2007		0.60% to 0.75%		49,551		3151.67 to 313.44		19,841,880		0.40%		36.74% to 36.53%
Worldwide Insurance Trust - Worldwide Emerging Markets Fund - Initial Class (VWEM)
	2011		0.60% to 0.75%		24,664		2,346.01 to 229.15		10,687,721		1.09%		-26.18% to -26.29%
	2010		0.60% to 0.75%		29,643		3,178.07 to 310.89		17,173,355		0.64%		26.08% to 25.89%
	2009		0.60% to 0.75%		36,924		2520.65 to 246.95		17,037,479		0.18%		111.9% to 111.58%
	2008		0.60% to 0.75%		46,592		1189.54 to 116.71		9,570,941		0.00%		-64.99% to -65.04%
	2007		0.60% to 0.75%		56,497		3397.77 to 333.88		31,998,127		0.43%		36.79% to 36.58%
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Class R1 (VWHAR)
	2011		0.60% to 0.75%		26,115		3,027.95 to 299.34		10,680,333		1.19%		-16.90% to -17.02%
	2010		0.60% to 0.75%		29,000		3,643.56 to 360.73		13,941,416		0.35%		28.48% to 28.29%
	2009		0.60% to 0.75%		27,655		2835.84 to 281.19		10,313,435		0.25%		56.68% to 56.44%
	2008		0.60% to 0.75%		26,325		1809.99 to 179.74		6,301,428		0.34%		-46.42% to -46.5%
	2007		0.60% to 0.75%		24,100		3378.1 to 335.96		11,151,910		0.11%		44.45% to 44.24%
Worldwide Insurance Trust - Worldwide Hard Assets Fund - Initial Class (VWHA)
	2011		0.60% to 0.75%		5,489		4,323.98 to 421.09		5,698,184		1.23%		-16.95% to -17.07%
	2010		0.60% to 0.75%		7,256		5,206.45 to 507.79		7,875,356		0.37%		28.46% to 28.27%
	2009		0.60% to 0.75%		8,720		4052.89 to 395.88		6,557,816		0.27%		56.59% to 56.36%
	2008		0.60% to 0.75%		9,861		2588.17 to 253.19		4,997,263		0.30%		-46.45% to -46.53%
	2007		0.60% to 0.75%		11,498		4832.97 to 473.49		9,777,657		0.13%		44.48% to 44.27%
Worldwide Insurance Trust - Worldwide Real Estate Fund - Class R1 (obsolete) (VWRER)
	2008		0.60% to 0.75%		24,291		904.64 to 89.83		2,867,887		5.55%		-55.37% to -55.44%
	2007		0.60% to 0.75%		24,320		2027.19 to 201.61		6,617,437		0.95%		0.35% to 0.19%

(Continued)

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1 NOTES TO FINANCIAL STATEMENTS December 31, 2011

		Contract         Expense Rate*		Units		Unit Fair Value		Contract owners’ equity		Investment     Income Ratio**		Total Return***		Inception   Date****
Vanguard(R) Variable Insurance Funds - Equity Income Portfolio (VVEI)
	2011		0.95%		11,192		$166.95		$            1,868,552		2.30%		9.23%
	2010		0.95%		11,762		152.85		1,797,857		3.56%		13.63%
	2009		0.95%		11,643		134.52		1,566,225		6.47%		15.67%
	2008		0.95%		12,814		116.30		1,490,261		3.62%		-31.57%
	2007		0.95%		12,966		169.95		2,203,522		2.32%		3.54%
Vanguard(R) Variable Insurance Funds - High Yield Bond Portfolio (VVHYB)
	2011		0.95%		7,317		168.95		1,236,200		7.27%		5.93%
	2010		0.95%		7,735		159.50		1,233,721		8.34%		11.04%
	2009		0.95%		7,329		143.63		1,052,698		10.32%		37.54%
	2008		0.95%		6,995		104.43		730,479		7.84%		-22.69%
	2007		0.95%		6,190		135.08		836,154		6.36%		0.98%
Vanguard(R) Variable Insurance Funds - Mid-Cap Index Portfolio (VVMCI)
	2011		0.95%		16,665		198.10		3,301,349		1.00%		-2.96%
	2010		0.95%		17,134		204.15		3,497,838		1.17%		24.18%
	2009		0.95%		16,890		164.39		2,776,530		2.28%		39.05%
	2008		0.95%		17,877		118.23		2,113,587		1.59%		-42.37%
	2007		0.95%		15,734		205.14		3,227,558		1.17%		5.13%
Vanguard(R) Variable Insurance Funds - Total Bond Market Index Portfolio (VVHGB)
	2011		0.95%		7,895		146.50		1,156,652		3.33%		6.64%
	2010		0.95%		8,615		137.39		1,183,581		4.25%		5.49%
	2009		0.95%		9,346		130.23		1,217,146		5.74%		4.94%
	2008		0.95%		9,239		124.10		1,146,560		4.16%		4.23%
	2007		0.95%		10,397		119.06		1,237,874		3.74%		5.97%
Ivy Fund Variable Insurance Portfolios, Inc. - Asset Strategy (WRASP)
	2011		0.75%		2,529		118.28		299,125		1.17%		-7.90%
	2010		0.75%		3,652		128.42		468,991		1.31%		7.86%
	2009		0.75%		1,332		119.06		158,586		0.00%		19.06%	****
Advantage Funds Variable Trust - VT Discovery Fund (SVDF)
	2011		0.60% to 0.75%		5,045		885.96 to 87.06		1,085,431		0.00%		-0.18% to -0.33%
	2010		0.60% to 0.75%		4,693		887.53 to 87.34		1,009,951		0.00%		34.73% to 34.53%
	2009		0.60% to 0.75%		3,356		658.74 to 64.92		658,495		0.00%		39.46% to 39.26%
	2008		0.60% to 0.75%		124,354		472.33 to 46.62		6,135,522		0.00%		-44.69% to -44.77%
	2007		0.60% to 0.75%		133,855		853.97 to 84.42		11,868,973		0.00%		21.59% to 21.41%
Advantage Funds Variable Trust - VT Opportunity Fund (SVOF)
	2011		0.60% to 0.75%		1,059		1,418.78 to 139.42		443,324		0.14%		-6.08% to -6.22%
	2010		0.60% to 0.75%		1,056		1,510.68 to 148.67		498,872		0.81%		23.02% to 22.83%
	2009		0.60% to 0.75%		1,478		1228.04 to 121.03		542,984		0.00%		46.85% to 46.63%
	2008		0.60% to 0.75%		51,776		836.24 to 82.54		4,552,777		1.91%		-40.46% to -40.55%
	2007		0.60% to 0.75%		58,374		1404.42 to 138.83		8,644,715		0.60%		5.99% to 5.83%
Advantage Funds Variable Trust - VT Small Cap Growth Fund (WFVSCG)
	2011		0.75%		654		156.51		102,357		0.00%		-5.31%
	2010		0.75%		349		165.28		57,683		0.00%		25.83%
	2009		0.75%		333		131.36		43,742		0.00%		31.36%	****
J.P. Morgan NVIT Balanced Fund - Class IV (obsolete) (BF4)
	2008		0.35% to 0.75%		48,504		3524.27 to 227.22		26,513,389		2.74%		-25.82% to -26.11%
	2007		0.35% to 0.75%		54,224		4750.87 to 307.54		39,307,336		2.20%		4.28% to 3.86%
NVIT Mid Cap Growth Fund - Class IV (obsolete) (SGRF4)
	2008		0.60% to 0.75%		83,922		278.05 to 4,197.82		36,215,004		0.00%		-46.43% to -46.51%
	2007		0.60% to 0.75%		90,685		7835.48 to 519.78		72,826,749		0.00%		8.38% to 8.22%
Worldwide Insurance Trust - Worldwide Real Estate Fund - Initial Class (obsolete) (VWRE)
	2008		0.60% to 0.75%		9,119		1240 to 122.03		1,682,574		5.75%		-55.39% to -55.45%
	2007		0.60% to 0.75%		11,517		2779.38 to 273.94		4,616,515		1.07%		0.28% to 0.13%
	2011		Contract owners equity:						$  1,102,530,041
	2010		Contract owners equity:						$  1,276,403,562
	2009		Attributable to Nationwide Life and Annuity Company of America:						401,816
	2009		Total Contract Owners’ Equity:						$  1,249,883,066
	2008		Attributable to Nationwide Life and Annuity Company of America:						298,851
	2008		Total Contract Owners’ Equity:						$  1,091,757,848
	2007		Attributable to Nationwide Life and Annuity Company of America:						590,772
	2007		Total Contract Owners’ Equity:						$  1,907,552,148

Report of Independent Registered Public Accounting Firm

*	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 owners’ accounts through the redemption of units.
**	This represents the ratio of dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by 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 contractholder accounts through reductions in unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest.
***	This represents the range of minimum and maximum total returns for the period indicated, including changes in the value of the underlying mutual fund, which reflects the reduction of unit values for expenses assessed. The total returns do not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Total return is not annualized if the underlying mutual fund option is initially offered, funded, or both, during the period presented. Minimum and maximum ranges are not shown for underlying mutual fund options for which a single contract expense rate (product option) exists. In such cases, the total return presented is representative of all units issued and outstanding at period end.
****	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. Total return is not annualized if the underlying mutual fund option is initially offered, funded, or both, during the period presented.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder

Nationwide Life Insurance Company:

We have audited the accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations, changes in equity and cash flows for each of the years in the three-year period ended December 31, 2011. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index.  These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011, 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

March 1, 2012

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

 Consolidated Statements of Operations

(in millions)

	Years ended December 31,
	2011	2010	2009
Revenues
Policy charges	$        1,506	$          1,399	$          1,245
Premiums	531	484	470
Net investment income	1,844	1,825	1,879
Net realized investment (losses) gains	(1,609)	(236)	454
Other-than-temporary impairment losses
Total other-than-temporary impairment losses	(162)	(394)	(992)
Non-credit portion of loss recognized in other comprehensive income	95	174	417
Net other-than-temporary impairment losses recognized in earnings	(67)	(220)	(575)
Other revenues	3	2	(4)
Total revenues	$        2,208	3,254	3,469
Benefits and expenses
Interest credited to policyholder account values	$        1,033	$          1,056	$          1,100
Benefits and claims	1,062	873	812
Policyholder dividends	67	78	87
Amortization of deferred policy acquisition costs	76	396	466
Amortization of value of business acquired and other intangible assets	11	18	63
Interest expense	70	55	55
Other expenses, net of deferrals	609	574	579
Total benefits and expenses	$        2,928	3,050	3,162
(Loss) income before federal income taxes and noncontrolling interests	$          (720)	$             204	$             307
Federal income tax (benefit) expense	(382)	24	48
Net (loss) income	$          (338)	$             180	$             259
Less:  Net loss attributable to noncontrolling interest	(56)	(60)	(52)
Net (loss) income attributable to Nationwide Life Insurane Company	$          (282)	$             240	$             311

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Balance Sheets

(in millions, except for share and per share amounts)

	December 31,
	2011	2010
Assets
Investments
Fixed maturity securities, available-for-sale	$         29,201	$           26,434
Equity securities, available-for-sale	20	42
Mortgage loans, net of allowance	5,748	6,125
Policy loans	1,008	1,088
Short-term investments	1,125	1,062
Other investments	566	558
Total investments	$         37,668	$           35,309
Cash and cash equivalents	49	337
Accrued investment income	560	459
Deferred policy acquisition costs	4,425	3,973
Value of business acquired	238	259
Goodwill	200	200
Other assets	4,348	1,985
Separate account assets	65,194	64,875
Total assets	$      112,682	$         107,397
Liabilities and Equity
Liabilities
Future policy benefits and claims	$         35,252	$           32,676
Short-term debt	777	300
Long-term debt	991	978
Other liabilities	4,316	2,429
Separate account liabilities	65,194	64,875
Total liabilities	$      106,530	$         101,258
Shareholder's equity:
Common stock  ($1 par value; authorized - 5,000,000 shares, issued
and outstanding - 3,814,779 shares)	$                   4	$                    4
Additional paid-in capital	1,718	1,718
Retained earnings	3,459	3,741
Accumulated other comprehensive income	626	321
Total shareholder's equity	$           5,807	$             5,784
Noncontrolling interest	345	355
Total equity	$           6,152	$             6,139
Total liabilities and equity	$      112,682	$         107,397

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Changes in Equity

(in millions)

	Common stock	Additional paid-in  capital	Retained earnings	Accumulated other comprehensive income (loss)	Total shareholder's equity	Non-controlling interest	Total  equity
Balance as of December 31, 2008	$           4	$     1,698	$    2,952	$            (1,361)	$           3,293	$          416	$    3,709
Cumulative effect of adoption of accounting principle, net of taxes	-	-	250	(250)	-	-	-
Capital contributed by NFS	-	20	-	-	20	-	20
Comprehensive income (loss):
Net income (loss)	-	-	311	-	311	(52)	259
Other comprehensive income	-	-	-	1,345	1,345	-	1,345
Total comprehensive income (loss)	-	-	311	1,345	1,656	(52)	1,604
Change in noncontrolling interest	-	-	-	-	-	(13)	(13)
Other, net	-	-	(3)	-	(3)	-	(3)
Balance as of December 31, 2009	$           4	$     1,718	$    3,510	$               (266)	$           4,966	$          351	$    5,317
Cumulative effect of adoption of accounting principle, net of taxes	-	-	(9)	9	-	46	46
Comprehensive income (loss):
Net income (loss)	-	-	240	-	240	(60)	180
Other comprehensive income	-	-	-	578	578	-	578
Total comprehensive income (loss)	-	-	240	578	818	(60)	758
Change in noncontrolling interest	-	-	-	-	-	18	18
Balance as of December 31, 2010	$           4	$     1,718	$    3,741	$                321	$           5,784	$          355	$    6,139
Comprehensive loss:
Net loss	-	-	(282)	-	(282)	(56)	(338)
Other comprehensive income	-	-	-	305	305	-	305
Total comprehensive income (loss)	-	-	(282)	305	23	(56)	(33)
Change in noncontrolling interest	-	-	-	-	-	46	46
Balance as of December 31, 2011	$           4	$     1,718	$    3,459	$                626	$           5,807	$          345	$    6,152

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Consolidated Statements of Cash Flows

(in millions)

	Years ended December 31,
	2011	2010	2009
Cash flows from operating activities:
Net (loss) income	$        (338)	$           180	$           259
Adjustments to net (loss) income
Net realized investment losses (gains)	1,609	236	(454)
Net other-than-temporary impairment losses recognized in earnings	67	220	575
Interest credited to policyholder accounts	1,033	1,056	1,100
Capitalization of deferred policy acquisition costs	(741)	(634)	(513)
Amortization of deferred policy acquisition costs	76	396	466
Amortization and depreciation	48	(2)	51
Deferred tax (benefit) expense	(437)	115	(117)
Changes in:
Policy liabilities	(608)	(579)	(725)
Other, net	(632)	(302)	(30)
Net cash provided by operating activities	$            77	$           686	$           612
Cash flows from investing activities:
Proceeds from maturity of available-for-sale securities	$      2,705	$        3,251	$        3,889
Proceeds from sale of available-for-sale securities	1,585	2,168	4,211
Proceeds from sales/repayments of mortgage loans	1,124	996	773
Purchases of available-for-sale securities	(6,176)	(5,910)	(9,206)
Issuance and purchases of mortgage loans	(751)	(373)	(36)
Net (increase) decrease in short-term investments	(61)	(44)	1,910
Collateral received (paid), net	359	(23)	(869)
Other, net	104	(29)	208
Net cash (used in) provided by investing activities	$     (1,111)	$             36	$           880
Cash flows from financing activities:
Net change in short-term debt	$          477	$           150	$         (100)
Proceeds from issuance of long-term debt	13	272	-
Investment and universal life insurance product deposits and other additions	5,314	4,540	3,877
Investment and universal life insurance product withdrawals and other deductions	(5,024)	(5,405)	(5,301)
Other, net	(34)	9	39
Net cash provided by (used in) financing activities	$          746	$         (434)	$      (1,485)
Net (decrease) increase in cash and cash equivalents	$        (288)	$           288	$               7
Cash and cash equivalents, beginning of period	337	49	42
Cash and cash equivalents, end of period	$            49	$           337	$             49

See accompanying notes to consolidated financial statements.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements

December 31, 2011, 2010 and 2009

(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, 2011 include Nationwide Life and Annuity Insurance Company (NLAIC) and Nationwide Investment Services Corporation (NISC).  NLAIC offers universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) and individual annuity contracts on a non-participating basis.  NISC is a registered broker-dealer.

The Company is a leading provider of long-term savings and retirement products in the United States of America (U.S.).  The Company develops and sells a diverse range of products 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.

On December 31, 2009, NLIC merged with its affiliate, Nationwide Life Insurance Company of America and subsidiaries (NLICA), with NLIC as the surviving entity.  In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, Nationwide Life and Annuity Company of America (NLACA), effective as of December 31, 2009, with NLAIC as the surviving entity.  The mergers were completed to streamline the enterprise's capital structure and create operational efficiencies.  See Note 2 for further information.

As of December 31, 2011 and 2010, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region of the U.S.  Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. in which business is conducted that makes it overly vulnerable to a single event which could cause a severe impact to the Company’s financial position.

(2) Summary of Significant Accounting Policies

Use of Estimates

The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions affecting the amounts reported in the financial statements and accompanying notes.  Significant estimates include the balance and amortization of deferred policy acquisition costs (DAC), investment impairment losses, valuation allowances for mortgage loans, certain investment and derivative valuations, future policy benefits and claims liabilities 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 may differ significantly from those estimates.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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). Entities in which NLIC does not have a controlling interest but in which the Company has significant influence over the operating and financing decisions and certain other investments are reported using the equity method. All significant intercompany accounts and transactions have been eliminated.

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

Revenues and Benefits

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

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

Future Policy Benefits and Claims

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

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

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

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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 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 guarantee 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 amortization of DAC, value of business acquired (VOBA) and unearned revenue reserves. Refer to Note 4 for discussion of these guarantees.

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

The Company’s guaranteed minimum accumulation benefit (GMAB) and guaranteed living withdrawal benefit (GLWB) living benefit riders represent an embedded derivative in a variable annuity contract that is required to be separated from, and valued apart from, the host variable annuity contract.  The embedded derivatives are carried at fair value.  Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses.  The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivative incorporate numerous assumptions including, but not limited to, expectations of contractholder persistency, contractholder withdrawal patterns, risk neutral market returns, correlations of market returns and market return volatility.

Reinsurance ceded

The Company cedes insurance to other companies in order to limit potential losses and to diversify its exposures. Such agreements do not discharge 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 generally 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

Investment and universal life insurance products.  The Company has deferred certain costs that vary with and primarily relate to acquiring business, consisting principally of commissions, premium taxes, certain expenses of the policy issue and underwriting department, certain variable sales expenses that relate to and vary with the production of new and renewal business and other acquisition expenses net of those acquisition costs ceded to reinsurers. In addition, the Company defers sales inducements, such as interest credit bonuses and jumbo deposit bonuses.  The methods and assumptions used to amortize and assess recoverability of DAC depend on the type of insurance product.

Investment products primarily consist of individual and group variable and fixed deferred annuities in the Individual Investments and Retirement Plans segments. Universal life insurance products include universal life insurance, variable universal life insurance, COLI, BOLI and other interest-sensitive life insurance policies in the Individual Protection segment.  For these products, the Company amortizes DAC with interest over the lives of the policies in relation to the present value of estimated gross profits from projected interest margins, policy charges, and net realized investment gains and losses less policy benefits and policy maintenance expenses.  DAC for investments 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The Company adjusts the DAC asset related to investment and universal life insurance products to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale with the corresponding adjustment recorded in accumulated other comprehensive income (AOCI). The adjustment to DAC represents the change in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines.

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

In addition to the comprehensive annual study of assumptions, management evaluates the appropriateness of the individual variable annuity DAC balance quarterly within pre-set parameters.  These parameters are designed to appropriately reflect the Company’s long-term expectations with respect to individual variable annuity contracts while also evaluating the potential impact of short-term experience on the Company’s recorded individual variable annuity DAC balance.  If the recorded balance of individual variable annuity DAC falls outside of these parameters for a prescribed period, or if the recorded balance falls outside of these parameters and management determines it is highly improbable to get back within the parameters during this time period, assumptions are required to be unlocked, and DAC is recalculated using revised best estimate assumptions.  When DAC assumptions are unlocked and revised, the Company continues to use the reversion to the mean process.

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

Traditional life insurance products. Generally, DAC is amortized with interest over the premium-paying period of the related policies in proportion to the ratio of actual annual premium revenue to the anticipated total premium revenue.  Such anticipated premium revenue is estimated using the same assumptions as those used for computing liabilities for future policy benefits at issuance.  Under existing accounting guidance, the concept of DAC unlocking does not apply to traditional life insurance products, although evaluations of DAC for recoverability at the time of policy issuance and loss recognition testing at each reporting period are required.

See Note 5 for a discussion of assumption changes that impacted DAC amortization and related balances.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Investments

Purchases and sales of securities are recorded on the trade date. Realized gains and losses on sales of fixed maturity and equity securities are recognized in income based on the specific identification method. Interest and dividend income are recognized when earned.

Available-for-sale securities. Available-for-sale securities are reported at fair value, with unrealized holding gains and losses reported as a separate component of other comprehensive income, net of adjustments for DAC and VOBA, future policy benefits and claims, policyholder dividend obligations, and deferred federal income taxes.

To determine the fair value of securities for which market quotations are available, independent pricing services are most often utilized. For these securities, the Company obtains the pricing services’ methodologies, inputs and assumptions and classifies the investments accordingly in the fair value hierarchy. As of December 31, 2011 and 2010, 82% and 81%, respectively, of fixed maturity securities were priced using independent pricing services.

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. Broker quotes are considered unobservable inputs, and these securities are classified accordingly 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 such that generally only one quotation is available.As the brokers often do not provide the necessary transparency into their quotes and methodologies, the Company periodically performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value.

For certain fixed maturity securities not valued using independent pricing services or broker quotes, a corporate pricing matrix or internally developed pricing model is most often used. The corporate pricing matrix is developed using private spreads for corporate securities with varying weighted average lives and credit quality ratings. The weighted average life and credit quality rating of a 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.

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.

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. All other investment income is recorded using the effective-yield method without anticipating the impact of prepayments.

Mortgage loans, net of allowance.  The Company holds commercial mortgage loans that are collateralized by properties throughout the U.S. Mortgage loans held-for-investment are carried at amortized cost less a valuation allowance.

The Company maintains a valuation allowance comprised of specific reserves for impaired loans and non-specific reserves for losses inherent in the balance of the portfolio. Specific reserve changes are included in other-than-temporary impairment losses, while changes in non-specific reserves are recorded in net realized investment gains and losses.

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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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

Short-term investments.  Short-term investments consist of highly liquid mutual funds and government agency discount notes with original maturities of less than twelve months. The Company and various affiliates entered into 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,  hedge funds and trading securities.

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 continues to recognize loaned securities in either available-for-sale or short-term investments, and 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.  The Company considers many factors when determining whether it is  the primary beneficiary of a VIE.  The 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. Also reviewed are whether the contractual or ownership interest in the entity changes with the change in fair value of the entity and the extent to which, through the variable interest, the Company has the power to direct the activities that most significantly impact the entity’s performance and the obligation to absorb significant losses of the entity, or the right to receive significant benefits from the entity.  The Company is not required, and does not intend, to provide financial or other support outside contractual requirements to any VIE.

The majority of the VIEs consolidated by the Company are due to providing guarantees to limited partners related to the after tax yields by the Low-Income-Housing Tax Credit Funds (LIHTC Funds).  The results of operations and  financial position of each VIE for which the Company is the primary beneficiary are included along with corresponding noncontrolling interests in the accompanying consolidated financial statements.  Ownership interests held by unrelated third parties in consolidated entities are presented as noncontrolling interests in equity.

The Company invests in fixed maturity securities that could qualify as VIEs, including corporate securities, mortgage-backed securities, and asset-backed securities.  The Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impacts the entities’ 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.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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, obligations of states and political subdivisions, and debt securities issued by foreign governments for other-than-temporary impairment by examining similar characteristics referenced above for corporate debt securities.

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

For all debt securities evaluated for other-than-temporary impairment (for which the Company does not have the intent to sell and it is not more likely than not that it will be required to sell the security before the recovery of its amortized cost basis), the Company considers the timing and present value of the cash flows. The Company evaluates its intent to sell on an individual security basis. To the extent that the present value of cash flows generated by a debt security is less than the amortized cost, an other-than-temporary impairment is recognized through earnings.

Other-than-temporary impairment losses on securities (where the Company does not intend to sell the security and it is not more likely than not it will be required to sell the security prior to recovery of the security’s amortized cost 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.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time, and the Company’s ability and intent to hold the security to recovery.

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.

Derivative Instruments

The Company uses derivative instruments to manage exposures and mitigate risks associated with interest rates, equity markets, foreign currency and credit.  These derivative instruments primarily include interest rate swaps, futures contracts and options.  Certain features embedded in the Company’s investments, market-indexed life and annuity contracts and certain variable life and annuity contracts require derivative accounting.  All derivative instruments are carried at fair value and are reflected as assets or liabilities in the consolidated balance sheets.

Fair value of derivative instruments is determined using various valuation techniques relying predominately 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.

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 (e.g., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the hedged item, to the extent of the risk being hedged, are recognized in net realized investment gains and losses.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

For derivative instruments that are designated and qualify for cash flow hedge accounting (e.g., hedging the exposure to the variability in expected future cash flows that is attributable to interest rate risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction impacts earnings in the same line item associated with the forecasted transaction. The ineffective portion of the derivative’s change in value, if any, along with any of the derivative’s change in value that is excluded from the assessment of hedge effectiveness, are recorded in net realized investment gains and losses.

The Company’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.

The Company invests in certain structured securities that contain embedded credit derivatives.  These securities are referred to as synthetic collateralized debt obligations and have maturity dates ranging from one to ten years.  The credit derivatives embedded in these securities have not been separated from their host contracts for separate fair value reporting; rather, the Company has elected to carry the entire security at fair value with any changes in fair value included in net realized investment gains and losses.  Effective July 1, 2010, these securities were transferred from available-for-sale securities to other investments.

Fair Value of Financial Instruments

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 including market, income and cost approaches.

The Company categorizes its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.

The Company categorizes financial assets and liabilities carried 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.

· 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The Company reviews its fair value hierarchy classifications for financial 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.

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 and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when management determines it is more likely than not that all or some portion of the deferred tax assets will not be realized. Interest expense and any associated penalties are shown 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 or release of administrative guidance or rendering of a court decision affecting a particular tax issue.

NLIC files a separate consolidated federal income tax return, with its subsidiaries, and is eligible to join the NMIC consolidated tax return group in 2014.

Cash and Cash Equivalents

Cash and cash equivalents, which include highly liquid investments with original maturities of less than three months, are carried at cost, which approximates fair value.

Value of Business Acquired

As a result of the acquisition of Provident Mutual Life Insurance Company (Provident) in 2002 and the application of purchase accounting, the Company reports an intangible asset representing the fair value of the business in force and the portion of the purchase price that was allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts existing as of the closing date of the Provident acquisition.  The value assigned to VOBA was supported by an independent valuation study commissioned by the Company and executed by a team of qualified valuation experts, including actuarial consultants.

VOBA represents the actuarially-determined value of future cash flows for acquired insurance contracts. Expected future cash flows are determined based on projected future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, changes in reserves, operating expenses, investment income and other factors. Amortization of VOBA occurs with interest over the anticipated lives of the major lines of business to which it relates in relation to estimated gross profits, gross margins or premiums, as appropriate. VOBA is adjusted for unrealized gains and losses on available-for-sale securities for changes in amortization that would have been required had such unrealized amounts been realized. In the event actual experience differs or assumptions are revised, an increase or decrease in VOBA amortization expense is recorded, which could be significant.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Goodwill

In connection with acquisitions of operating entities, the Company recognizes the excess of the purchase price over the fair value of net assets acquired as goodwill.  Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually.  Goodwill of a reporting unit 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 carrying value is less than its fair value, the Company will perform an impairment evaluation. This evaluation utilizes an income approach to develop the implied fair value. An impairment is recognized on a reporting unit for the amount that the carrying value of its goodwill exceeds the implied fair 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 2011 annual impairment test and determined that no impairment was required.

Closed Block

In connection with the sponsored demutualization of 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.

If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income.  This is because the excess cumulative earnings over expected cumulative earnings, which represents undistributed accumulated earnings attributable to policyholders, is recorded as a policyholder dividend obligation.  Therefore, the excess will be paid to closed block policyholders as an additional policyholder dividend expense in the future unless it is otherwise offset by future performance of the closed block that is less favorable than originally expected.  If actual cumulative performance is less favorable than expected, actual earnings will be recognized in income.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholder benefits, policyholder dividends, premium taxes and income taxes.  The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions and net investment income and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies for the purpose of the amortization of VOBA.  See Note 10 for further disclosure.

        Separate Accounts

Separate account assets and liabilities represent contractholders’ funds that have been legally segregated into accounts with specific investment objectives.  Separate account assets are comprised of public, privately registered and non-registered mutual funds and investments in securities.Separate account assets are recorded at fair value and the Company primarily uses net asset value (NAV) to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values.  The Company also uses market quotations to determine the underlying fair value of mutual funds when available.  The value of separate account liabilities is set to equal the fair value for separate account assets.  Investment income and realized investment gains or losses of these accounts accrue directly to the contractholders.

Participating Business

Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 5% of the Company’s life insurance in force in 2011 (5% in 2010 and 6% in 2009), 42% of the number of life insurance policies in force in 2011 (45% in 2010 and 48% in 2009).  The provision for policyholder dividends was based on then current dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets.

NLICA and Subsidiaries Merger

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity.  In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity.  The merger was accounted for at historical cost in a manner similar to a pooling of interests because the involved entities were under common control.  NLICA and subsidiaries are reflected in the Company’s prior year consolidated financial statements at the historical cost of the transferred net assets to provide comparative information as though the companies were combined for all periods presented.  This presentation is consistent for both GAAP and Statutory reporting.  Since NLICA and NLACA were wholly-owned subsidiaries, there was no noncontrolling interest impact.

The Company has presented its consolidated financial statements and accompanying notes as applicable for 2009 and prior to reflect the NLICA merger.

The following table summarizes the impact of the merger with NLICA on the consolidated statement of operations for the year ended December 31:

(in millions)	2009
Total revenues	$                  375
Total benefits and expenses	$                  357
Federal income tax benefit	$                    (5)
Net income	$                    23

The impact of the merger on shareholder’s equity was $1.0 billion as of December 31, 2009 and 2008, respectively.

Subsequent events

The Company evaluated subsequent events through March 1, 2012, the date the consolidated financial statements were issued.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(3)      Recently Issued Accounting Standards

Adopted Accounting Standards

In April 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-02, which amends the factors a creditor should consider to determine whether a restructuring constitutes a troubled debt restructuring in Accounting Standards Codification (ASC) 310, Receivables.  The Company will adopt this guidance for interim and annual periods beginning June 15, 2011. The adoption of this guidance will have an immaterial impact on the Company’s consolidated statements of operations and consolidated balance sheets.

On December 31, 2010, the Company adopted new disclosure requirements regarding the credit quality of its financing receivables (e.g., commercial mortgage loans) and the related allowance for credit losses within ASU 2010-20, which amends FASB ASC 310, Receivables. The adoption of this guidance resulted in increased disclosures only and had no impact on the Company's consolidated statements of operations or consolidated balance sheets.

On January 1, 2010, the Company adopted ASU 2010-06, except for the new disclosure providing disaggregated information related to the activity in Level 3 fair value measurements, which the Company adopted effective January 1, 2011.

On July 1, 2010, the Company adopted ASU 2010-11, which clarifies the guidance and application of the scope exception for embedded credit derivatives contained within FASB ASC 815-15, Embedded Derivatives. This scope exception allows for embedded credit derivative features related only to the transfer of credit risk in the form of subordination of one financial instrument to another to not be subject to potential bifurcation and separate accounting.  The guidance also allowed companies to irrevocably elect to apply the fair value option to any investment in a beneficial interest in securitized financial assets.  The Company recorded an impact of adoption of $9 million, net of taxes, as a decrease to retained earnings with a corresponding increase to accumulated other comprehensive income on the consolidated statements of equity.\

On January 1, 2010, the Company adopted guidance under FASB ASC 810, Consolidation, resulting in an increase to noncontrolling interest of $46 million on the consolidated statements of equity.  This guidance changes the consolidation guidance applicable to a VIE.  It also amends the guidance governing the determination of whether an entity is the VIE’s primary beneficiary (the reporting entity that must consolidate the VIE) by requiring a qualitative analysis rather than a quantitative analysis.

In April 2009, the FASB issued guidance under FASB ASC 320, Investments – Debt and Equity Securities.  This guidance is designed to create greater clarity and consistency in accounting for and presentation of impairment losses on debt securities.  This guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted.  As of the beginning of the interim period of adoption, this guidance requires a cumulative-effect adjustment to reclassify the non-credit component of previously recognized other-than-temporary impairment losses on debt securities from retained earnings to the beginning balance of AOCI.  The Company adopted this guidance as of January 1, 2009.  The adoption of this guidance resulted in a cumulative-effect adjustment of $250 million, net of taxes, as an increase to the opening balance of retained earnings with a corresponding decrease to the opening balance of AOCI.

Pending Accounting Standard

In September 2011, the FASB issued ASU 2011-08, which amends existing guidance in ASC 350, Intangibles-Goodwill and Other.  The amended guidance allows an entity to conduct a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value before performing the two-step goodwill impairment test.  If the qualitative assessment indicates that it is not more likely than not that the fair value of a particular reporting unit is less than its carrying value, then the entity is not required to perform the two-step goodwill impairment test.  The Company will adopt this guidance prospectively for the annual period beginning January 1, 2012. The adoption of this guidance will have no impact on the Company's consolidated statements of operations or consolidated balance sheets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

In May 2011, the FASB issued 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 will adopt this guidance prospectively for the annual period beginning January 1, 2012.  The adoption of this guidance will result in increased disclosures and will have an immaterial impact on the Company’s consolidated statements of operations or consolidated balance sheets.

In October 2010, the FASB issued ASU 2010-26, which amends FASB ASC 944, Financial Services - Insurance. This amends prior guidance by modifying the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal contracts. The amendments are required to be applied prospectively with retrospective application permitted. The Company will adopt this guidance retrospectively, effective January 1, 2012. The Company is currently in the process of determining the impact of adoption. The adoption of this guidance is expected to have a material impact to DAC and retained earnings.

In June 2011, the FASB issued 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.  In December 2011, the FASB issued ASU 2011-12, which defers certain changes in ASU 2011-05 related to the presentation of reclassification adjustments out of accumulated other comprehensive income.  The Company will adopt both updates retrospectively, effective December 31, 2012.  The adoption of this guidance will impact the presentation of the Company’s consolidated financial statements.

In December 2011, the FASB issued 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 will adopt this guidance retrospectively for interim and annual periods beginning January 1, 2013.  The adoption of this guidance will result in increased disclosures only and will have no impact on the Company's consolidated statements of operations or consolidated balance sheets.

(4)       Certain Long-Duration Contracts

Variable Annuity Contracts

The Company issues variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder.  The Company also provides various forms of guarantees to benefit the related contractholders.  The Company provides five primary guarantee types of variable annuity contracts:  (1) GMDB; (2) GMIB; (3) GMAB; (4) GLWB; and (5) a hybrid guarantee with GMAB and GLWB.

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 and have the death benefit paid into the contract and a second death benefit paid upon the survivor’s death.

The GMIB, which was offered as a rider to several variable annuity contracts, is a living benefit that provides the contractholder with a guaranteed annuitization value.

The GMAB, offered in the Company’s Capital Preservation Plus contract rider, is a living benefit that provides the contractholder with a guaranteed return of 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 rider and continue the variable annuity contract without the GMAB.  In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The GLWB, offered in the Company’s Lifetime Income contract rider (L.inc), is a living benefit that provides for enhanced retirement income security without the liquidity loss associated with annuitization.  The withdrawal rates vary based on the age when withdrawals begin and are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder.  The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a feature driven by account performance and policy duration.  L.inc is the only living benefit guarantee offered on new variable annuity contract sales.

The following table summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts as of December 31 (a contract may contain multiple guarantees):

			2011			2010
				Wtd. avg.				Wtd. avg.
	General	Separate	Net	attained	General	Separate	Net	attained
	account	account	amount	age of	account	account	amount	age of
(in millions)	value	value	at risk1	contractholders	value	value	at risk1	contractholders
Return of net deposits:
In the event of death	$   1,562	$11,749	$    175	63	$       832	$    8,039	$       39	62
Accumulation at specified date	$      342	$   4,138	$    149	65	$       558	$    5,394	$     108	65
Minimum return or anniversary contract value :
In the event of death	$   3,600	$28,754	$ 1,882	67	$    2,604	$  30,970	$  1,271	67
At annuitization	$      430	$18,089	$    574	65	$       342	$  12,806	$     431	65

__________

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

Net amount at risk is highly sensitive to changes in financial market movements. See Note 7,for a discussion of the Company’s risk management practices with respect to financial market exposure.

The following table summarizes the reserve balances, for variable annuity contracts with guarantees as of December 31:

(in millions)	2011	2010
Accumulation and withdrawal benefits	$               1,842	$                    168
GMDB	$                     80	$                      46
GMIB	$                       3	$                        2

The following table summarizes paid claims for variable annuity contracts with guarantees as of December 31:

(in millions)	2011	2010
Accumulation and withdrawal benefits	$                     10	$                         -
GMDB	$                     40	$                      62
GMIB	$                        -	$                        3

Universal and Variable Universal Life Insurance Contracts

The Company offers certain universal life and variable universal life insurance products with secondary guarantees.  This no lapse guarantee provides that a policy will not lapse so long as the policyholder makes minimum premium payments.   The reserve balances on these guarantees were $162 million and $87 million as of December 31, 2011 and 2010, respectively.  Paid claims on contracts maintained in force by these guarantees were immaterial for the years ended December 31, 2011 and 2010, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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 December 31:

	2011			2010
			Wtd. avg.			Wtd. avg.
		Net	attained		Net	attained
	Account	amount	age of	Account	amount	age of
(in millions)	value	at risk1	contractholders	value	at risk1	contractholders
No lapse guarantees	$          1,154	$          9,777	58	$          1,065	$          8,099	58

__________

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

Related Separate Accounts

The following table summarizes account balances of deferred variable annuity, variable single premium immediate annuity and variable universal life insurance contracts that were invested in separate accounts as of December 31:

(in millions)	2011	2010
Mutual funds:
Bond	$               5,604	$                 5,364
Domestic equity	34,612	33,254
International equity	2,812	3,437
Total mutual funds	$             43,028	$               42,055
Money market funds	1,530	1,457
Total	$             44,558	$               43,512

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, 2011 and 2010.

(5)      Deferred Policy Acquisition Costs and Value of Business Acquired

Deferred Policy Acquisition Costs

The following table presents a reconciliation of DAC for the years ended December 31:

(in millions)	2011	2010	2009
Balance at beginning of year	$                3,973	$                3,983	$                4,524
Capitalization of DAC	741	634	513
Amortization of DAC, excluding unlocks	(239)	(385)	(606)
Amortization of DAC related to unlocks	163	(11)	140
Adjustments to DAC related to unrealized gains and losses on securities available-for-sale	(213)	(248)	(588)
Balance at end of year	$                4,425	$                3,973	$                3,983

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The most significant contributor to the favorable unlock recorded during 2011 was the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by favorable equity market performance compared to assumed net separate account returns and resulted in a decrease in DAC amortization of $111 million.

During 2011, 2010 and 2009, the Company conducted its annual comprehensive review of model assumptions and unlocked assumptions related to interest spread, mortality, lapse and market performance assumptions.

During 2009, the Company’s recorded balance of individual variable annuity DAC fell outside the Company’s preset parameters for the prescribed period, which primarily was driven by favorable equity market performance compared to assumed net separate account returns and resulted in a decrease in DAC amortization of $219 million.

Based upon the market performance in the second half of 2011, the DAC balance for variable annuities is currently outside of the preset parameters.  Accordingly, future periods may incur additional amortization of DAC if the Company’s actual returns are less than the assumed net separate account performance.

Value of Business Acquired

The following table presents a reconciliation of VOBA for the years ended December 31:

(in millions)	2011	2010	2009
Balance at beginning of year	$             259	$             277	$             334
Amortization of VOBA, excluding unlocks	(29)	(33)	(36)
Amortization of VOBA related to unlocks	16	13	(13)
Net realized gains on investments	2	1	1
Adjustments to VOBA related to unrealized gains and losses on securities
available-for-sale	(10)	1	(9)
Balance at end of year	$             238	$             259	$             277

Interest on the unamortized VOBA balance (at interest rates ranging from 4.50% to 7.56%) is included in amortization and was $17 million, $18 million, and $20 million during the years ended December 31, 2011, 2010 and 2009, respectively. Additionally, the VOBA gross carrying amount was $585 million and $595 million and accumulated amortization of $347 million and $336 million for the years ended December 31, 2011 and 2010, respectively. The initial useful life related to the VOBA balances is 28 years.

Based on current assumptions, which are subject to change, the following table summarizes estimated amortization of VOBA for the next five years ended December 31:

(in millions)	VOBA
2012	$              21
2013	$              19
2014	$              16
2015	$              14
2016	$              13

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(6)      Investments

Available-for-Sale Securities

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

		Gross	Gross
	Amortized	unrealized	unrealized	Fair
(in millions)	cost	gains	losses	value
December 31, 2011
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$          506	$         124	$               -	$         630
Obligations of states and political subdivisions	1,501	177	-	1,678
Debt securities issued by foreign governments	102	18	-	120
Corporate public securities	14,132	1,336	111	15,357
Corporate private securities	3,998	327	27	4,298
Residential mortgage-backed securities	5,280	255	311	5,224
Commercial mortgage-backed securities	1,347	64	32	1,379
Collateralized debt obligations	410	17	125	302
Other asset-backed securities	201	16	4	213
Total fixed maturity securities	$     27,477	$      2,334	$         610	$    29,201
Equity securities	19	2	1	20
Total available-for-sale securities	$     27,496	$      2,336	$         611	$    29,221
December 31, 2010
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$            497	$             87	$               -	$           584
Obligations of states and political subdivisions	1,410	15	48	1,377
Debt securities issued by foreign governments	110	13	-	123
Corporate public securities	11,921	879	84	12,716
Corporate private securities	4,038	257	47	4,248
Residential mortgage-backed securities	5,811	183	355	5,639
Commercial mortgage-backed securities	1,167	51	32	1,186
Collateralized debt obligations	365	13	126	252
Other asset-backed securities	294	19	4	309
Total fixed maturity securities	$       25,613	$        1,517	$           696	$      26,434
Equity securities	39	3	-	42
Total available-for-sale securities	$       25,652	$        1,520	$           696	$      26,476

The fair value of the Company’s investments may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads.  While the Company has the ability and intent to hold equity securities until recovery, and the Company does not have the intent to sell, nor is it more likely than not it will be required to sell fixed maturity securities in unrealized loss positions, investment losses may be realized to the extent liquidity needs require the disposition of securities in unfavorable interest rate, liquidity or credit spread environments. 

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes the amortized cost and fair value of fixed maturity securities, by maturity, as of December 31, 2011.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without early redemption penalties.

	Amortized	Fair
(in millions)	cost	value
Fixed maturity securities:
Due in one year or less	$                   963	$                   982
Due after one year through five years	6,817	7,215
Due after five years through ten years	7,699	8,478
Due after ten years	4,760	5,408
Subtotal	$             20,239	$             22,083
Residential mortgage-backed securities	5,280	5,224
Commercial mortgage-backed securities	1,347	1,379
Collateralized debt obligations	410	302
Other asset-backed securities	201	213
Total fixed maturity securities	$             27,477	$             29,201

The following table summarizes components of net unrealized gains and losses on available-for-sale securities, as of December 31:

(in millions)	2011	2010 1
Net unrealized gains, before adjustments, taxes and fair value hedging	$          1,725	$             824
Change in fair value attributable to fixed maturities designated in fair value hedging
relationships	(8)	(20)
Net unrealized gains, before adjustments and taxes	1,717	804
Adjustment to DAC and VOBA	(439)	(216)
Adjustment to future policy benefits and claims	(183)	27
Adjustment to policyholder dividend obligation	(132)	(90)
Deferred federal income tax expense	(329)	(184)
Net unrealized gains on available-for-sale securities	$             634	$             341

__________

1 Includes the $9 million, net of taxes, cumulative effect of adoption of accounting principle as of July 1, 2010 for the adoption of ASU 2010-11.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizesthe change in net unrealized gains and losses on available-for-sale securities reported in accumulated other comprehensive income, as of December 31:

(in millions)	2011	2010
Balance at beginning of year	$             341	$           (228)
Cumulative effect of adoption of accounting principle	-	9
Adjusted balance, beginning of period	$             341	$           (219)
Unrealized gains and losses arising during the period:
Net unrealized gains before adjustments	896	1,039
Non-credit impairments and subsequent changes in fair value of those debt securities	(11)	131
Net adjustments to DAC and VOBA	(223)	(247)
Net adjustment to future policy benefits and claims	(210)	7
Net adjustment to policyholder dividend obligation	(42)	(73)
Related federal income tax expense	(135)	(300)
Change in unrealized gains on available-for-sale securities	$             275	$             557
Reclassification adjustments to net investment losses, net of taxes ($(10)         and $(2) as of December 31, 2011 and 2010, respectively)	(18)	(3)
Change in net unrealized gains on available-for-sale securities	$             293	$             560
Balance at end of year	$             634	$             341

The following table summarizes available-for-sale securities, by asset class, in a gross 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
		Gross	Number		Gross	Number		Gross	Number
	Fair	unrealized	of	Fair	unrealized	of	Fair	unrealized	of
(in millions, except number of securities)	value	losses	securities	value	losses	securities	value	losses	securities
December 31, 2011
Fixed maturity securities:
Obligations of states and
political subdivisions	$        31	$              -	6	$           5	$             -	1	$          36	$              -	7
Corporate public securities	1,460	62	150	309	49	54	1,769	111	204
Residential mortgage-backed securities	278	9	52	1,339	302	240	1,617	311	292
Collateralized debt obligations	78	2	10	137	123	39	215	125	49
Other asset-backed securities	470	15	48	352	48	52	822	63	100
Total fixed maturity securities	$  2,317	$          88	266	$   2,142	$        522	386	$     4,459	$        610	652
Equity securities	7	1	10	-	-	31	7	1	41
Total	$  2,324	$          89	276	$   2,142	$        522	417	$     4,466	$        611	693
December 31, 2010
Fixed maturity securities:
Obligations of states and
political subdivisions	$       814	$           48	77	$             -	$              -	-	$         814	$            48	77
Corporate public securities	1,009	28	109	528	56	107	1,537	84	216
Residential mortgage-backed securities	562	13	41	1,765	342	281	2,327	355	322
Collateralized debt obligations	1	-	2	180	126	46	181	126	48
Other asset-backed securities	458	28	51	465	55	74	923	83	125
Total fixed maturity securities	$    2,844	$         117	280	$     2,938	$         579	508	$      5,782	$          696	788
Equity securities	3	-	3	2	-	40	5	-	43
Total	$    2,847	$         117	283	$     2,940	$         579	548	$      5,787	$          696	831

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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

	December 31, 2011			December 31, 2010
	Less	More		Less	More
	than or	than		than or	than
	equal to	one		equal to	one
(in millions)	one year	year	Total	one year	year	Total
99.9% - 80.0%	$         83	$      158	$  241	$        100	$      251	$      351
Less than 80.0%
Residential mortgage-backed securities	-	191	191	-	173	173
Collateralized debt obligations	1	121	122	-	113	113
Other	5	52	57	17	42	59
Total	$         89	$      522	$  611	$        117	$      579	$      696

These unrealized losses represent temporary fluctuations in economic factors that are not indicative of other-than-temporary impairment.

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 ratio at origination and prepayment speeds. Cash flows generated by the collateral are then utilized, along with consideration for the issue’s position in the overall structure, to determine cash flows associated with the security.

Collateralized debt obligations are assessed for impairment using expected cash flows based on various inputs including default estimates based on the underlying corporate securities and 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.

Management believes unrealized losses on available-for-sale securities do not represent other-than-temporary impairments as the Company does not intend to sell the securities, it is not more likely than not that the Company will be required to sell the securities before recovery of their amortized cost basis or the present value of estimated cash flows were equal to or greater than the amortized cost basis of the securities.

Mortgage Loans, Net of Allowance

The Company’s investments in mortgage loans consist primarily of first lien and collateral dependent commercial mortgage loans.  These mortgage loans are further segregated into the following classes based on the unique risk profiles of the underlying property types: office, warehouse, retail, apartment and other.

The collectability of a mortgage loan is based on the ability of the borrower to repay and/or the value of the underlying collateral.  The quality of a loan is generally defined by the specific financial position and condition of a borrower and the underlying collateral. Many of the Company’s mortgage loans are structured with balloon payment maturities, exposing the Company to risks associated with the borrowers’ ability to make the balloon payment or refinance the property.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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

Mortgage loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  When management determines that a loan is impaired, a provision for loss is established equal to the difference between the carrying value and either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

In addition to the loan-specific reserves, the Company maintains a non-specific reserve for losses developed based on loan surveillance categories and property type classes and reflects management’s best estimate of probable credit losses 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.

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, for the years ended December 31:

(in millions)	2011	2010
Amortized cost:
Loans with non-specific reserves	$             5,672	$               5,952
Loans with specific reserves	136	269
Total amortized cost	$             5,808	$               6,221
Valuation allowance:
Non-specific reserves	$                   33	$                    47
Specific reserves	27	49
Total valuation allowance	$                   60	$                    96
Mortgage loans, net of allowance	$             5,748	$               6,125

The following table summarizes activity in the valuation allowance for mortgage loans for the years ended December 31:

(in millions)	2011	2010
Balance at beginning of year	$                   96	$                    77
Additions	25	66
Deductions	(61)	(47)
Balance at end of year	$                   60	$                    96

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes impaired mortgage loans by class for the years ended December 31:

(in millions)	Office	Warehouse	Retail	Apartment	Other	Total
2011
Amortized cost	$           8	$              31	$         20	$                -	$          77	$          136
Specific reserves	(1)	(9)	(8)	-	(9)	$           (27)
Impaired mortgage loans, net of allowance	$           7	$              22	$         12	$                -	$          68	$          109
2010
Amortized cost	$            8	$               52	$          49	$             23	$         137	$           269
Specific reserves	(1)	(8)	(14)	(4)	(22)	$            (49)
Impaired mortgage loans, net of allowance	$            7	$               44	$          35	$             19	$         115	$           220

As of December 31, 2011, the Company’s mortgage loans classified as delinquent and/or in non-accrual status were immaterial in relation to the total mortgage loan portfolio.  The Company had no mortgage loans 90 days or more past due and still accruing interest.

The following table summarizes average recorded investment and interest income recognized for impaired mortgage loans by class for the year ended December 31, 2011:

(in millions)	Office	Warehouse	Retail	Apartment	Other	Total
Average recorded investment	$           7	$              39	$         33	$               4	$          93	$          176
Interest income recognized	$           1	$                5	$           3	$                -	$            8	$            17

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Management uses an internal credit quality rating process to reflect an internal view of the credit risk associated with individual loans, as well as the portfolio as a whole.  This process considers a number of relevant loan quality measurements and factors, including loan-to-value ratio (LTV), debt service coverage ratio (DSC), current market rent expectations, economic vacancy, property characteristics, market area, and borrower strength.  LTV is calculated as a ratio of the amortized cost of a loan to the estimated value of the underlying collateral.  DSC is the amount of cash flow generated by the underlying collateral of the mortgage loan available to meet periodic interest and principal payments of the loan.  This process yields an individual internal credit quality rating score for substantially all of the Company’s mortgage loans which is then translated to a credit quality rating ranging from 1 to 5, with 1 representing the lowest risk profile and lowest potential for loss and 5 representing the highest risk profile and highest potential for loss.  These internal ratings by property are updated at least annually.

The following table summarizes the amortized cost of mortgage loans by internal credit quality rating and by class as of the dates indicated:

(in millions)	Office	Warehouse	Retail	Apartment	Other	Total
December 31, 2011
Rated 1	$      112	$              51	$       120	$            10	$           14	$         307
Rated 2	242	494	933	433	153	2,255
Rated 3	372	626	1,108	664	87	2,857
Rated 4	35	86	63	25	22	231
Rated 5	14	30	21	7	86	158
Total mortgage loans	$      775	$        1,287	$   2,245	$       1,139	$         362	$      5,808
December 31, 2010
Rated 1	$            4	$                  -	$            1	$                -	$               -	$              5
Rated 2	173	173	571	108	24	1,049
Rated 3	523	1,065	1,643	935	144	4,310
Rated 4	66	173	105	202	281	827
Rated 5	16	6	5	-	3	30
Total mortgage loans	$        782	$          1,417	$     2,325	$        1,245	$          452	$       6,221

Internal credit quality ratings are not used to establish the valuation allowance; however, there is a strong correlation between the two processes.  For example, mortgage loans in the category receiving the highest loss factors for determination of the valuation allowance are generally rated with an internal credit quality rating of 4 or 5, while mortgage loans in the category receiving the lowest loss factors for determination of the valuation allowance are generally rated 1, 2 or 3.

While the internal credit ratings reflect management’s assessment of relative credit risk in the mortgage loan portfolio for the date indicated based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible.

Securities Lending

The fair value of loaned securities was $103 million and $269 million as of December 31, 2011 and 2010, respectively.  The Company received $105 million and $276 million of cash collateral on securities lending as of December 31, 2011 and 2010, respectively. The Company did not receive any non-cash collateral on securities lending as of the balance sheet dates.

Assets on Deposit, Held in Trust and Pledged as Collateral

Fixed maturity securities with an amortized cost of $8 million were on deposit with various regulatory agencies as required by law as of December 31, 2011 and 2010.  These securities continue to be included in fixed maturity securities on the consolidated balance sheets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Tax Credit Funds and Variable Interest Entities

The Company has sold $796 million and $747 million in LIHTC Funds to unrelated third parties as of December 31, 2011 and 2010.  The Company has guaranteed cumulative after-tax yields to the third party investors ranging from 1.00% to 7.75% through periods ending in 2027.  As of December 31, 2011 and 2010, the Company held guarantee reserves totaling $6 million on these transactions.  These guarantees are in effect for periods of approximately 15 years each.  The LIHTC Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital.  If the tax benefits are not sufficient to provide these cumulative after-tax yields, 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 $770 million.  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. The Company does not anticipate making any material payments related to the guarantees.

The Company has relationships with VIEs where the Company is the primary beneficiary.  Net assets of all consolidated VIEs totaled $345 million and $355 million as of December 31, 2011 and 2010, respectively, which was composed primarily of other long-term investments of $310 million and $315 million at December 31, 2011 and 2010, respectively.  As of December 31, 2011 and 2010, the total exposure to loss on VIEs was immaterial (except for the impact of guarantees disclosed above). The Company’s general credit is not exposed to the creditors or beneficial interest holders of these consolidated VIEs.

During 2010, two LIHTC Funds were consolidated as a result of the adoption of guidance under FASB ASC 810, Consolidation.  Previously, the Company was not deemed the primary beneficiary.  As the managing member of the LIHTC funds, the Company has the power to direct the activities that most significantly impact the economic power of the entities and consolidated the funds.  The impact of consolidation was an increase to noncontrolling interest of $46 million.

In addition to the consolidated VIEs described above, the Company holds investments in variable interests in LIHTC Funds where the Company is not the primary beneficiary. The carrying value of these investments was $178 million and $157 million as of December 31, 2011 and 2010, respectively. The total exposure to loss on these investments was $309 million and $218 million as of December 31, 2011 and 2010, respectively. The total exposure to loss is determined by adding any unfunded commitments to the carrying value of the VIEs.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Net Investment Income

The following table summarizes net investment income by investment type for the years ended December 31:

(in millions)	2011	2010	2009
Fixed maturity securities, available-for-sale	$               1,502	$                 1,474	$                 1,465
Equity securities, available-for-sale	1	2	2
Mortgage loans	370	396	445
Policy loans	56	55	61
Other	(35)	(43)	(38)
Gross investment income	$               1,894	$                 1,884	$                 1,935
Investment expenses	50	59	56
Net investment income	$               1,844	$                 1,825	$                 1,879

Net Realized Investment Gains and Losses

The following table summarizes net realized investment gains and losses, by source, for the years ended December 31:

(in millions)	2011	2010	2009
Net derivative gains (losses)	$           (1,636)	$                (385)	$                  400
Realized gains on sales	64	176	192
Realized losses on sales	(45)	(43)	(113)
Other	8	16	(25)
Net realized investment (losses) gains	$           (1,609)	$                (236)	$                  454

In 2011, interest rate declines and equity market volatility resulted in net realized derivative losses. Refer to Note 7 for further discussion on the Company’s derivative portfolio and related activity.

Proceeds from the sale of available-for-sale securities were $1.6 billion, $2.2 billion and $4.2 billion during the years ended December 31, 2011, 2010 and 2009, respectively.  Gross gains of $50 million, $172 million and $189 million and gross losses of $39 million, $17 million and $70 million were realized on those sales during the years ended December 31, 2011, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Other-Than-Temporary Impairment Losses

The following table summarizes other-than-temporary impairments for the years ended December 31:

(in millions)	Total	Included in other comprehensive income	Net
2011
Fixed maturity securities	$            135	$                (95)	$               40
Mortgage loans	25	-	25
Other	2	-	2
Other-than-temporary impairment losses	$            162	$                (95)	$               67
2010
Fixed maturity securities	$              330	$               (174)	$              156
Equity securities	5	-	5
Mortgage loans	59	-	59
Other-than-temporary impairment losses	$              394	$               (174)	$              220
2009
Fixed maturity securities	$              907	$               (417)	$              490
Equity securities	7	-	7
Mortgage loans	72	-	72
Other	6	-	6
Other-than-temporary impairment losses	$              992	$               (417)	$              575

The following table summarizes the non-credit portion of other-than-temporary impairments, which have credit losses in earnings, and any subsequent changes in the fair value of those debt securities recognized in other comprehensive income, before federal income taxes, for the years ended December 31:

(in millions)	2011	2010	2009 1
Balance at beginning of year	$           (215)	$              (346)	$                 -
Net activity in the period	(11)	131	(346)
Balance at end of year	$           (226)	$              (215)	$          (346)

__________

1 Includes the $384 million cumulative effect of adoption of accounting principle as of January 1, 2009 for the adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes the cumulative 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 it is not more likely than not the Company will be required to sell the security prior to recovery of the amortized cost basis, for the years ended December 31:

(in millions)	2011	2010	2009
Cumulative credit loss at beginning of year	$            340	$             417	$             507
New credit losses	8	31	168
Incremental credit losses	29	116	72
Losses related to securities included in the beginning balance sold or paid       down during the period	(49)	(202)	(267)
Losses related to securities included in the beginning balance for which there       was a change in intent	-	(22)	(63)
Cumulative credit loss at end of year	$            328	$             340	$             417

(7) Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations which are managed by 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 a hedge against the negative impact of higher interest rates on the Company’s statutory capital position.

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.  In an effort to mitigate this risk, the Company uses cross-currency swaps.  As foreign exchange rates change, the increase or decrease in the cash flows of the derivative instrument generally offsets the changes in the functional-currency equivalent cash flows of the hedged item.

Credit risk management:  The Company enters into credit derivative contracts, primarily credit default swaps, under which the Company buys and sells credit default protection on standardized credit indices, which are established baskets of creditors, or on specific corporate creditors.  These derivatives allow the Company to manage or modify its credit risk profile in general or its credit exposure to specific creditors.

Equity market risk management:  The Company has a variety of variable annuity products with guaranteed benefit features. Refer to Note 4 for description of these guarantees.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Derivatives Qualifying for Hedge Accounting

The Company uses derivative instruments that are designated and qualify as fair value hedges in various financial transactions as follows:

· interest rate swaps are used to hedge certain fixed rate investments such as mortgage loans and  certain fixed maturity securities, and

· cross-currency swaps are used to hedge foreign currency-denominated fixed maturity securities.

The Company uses derivative instruments that are designated and qualify as cash flow hedges in various financial transactions as follows:

· interest rate swaps are used to hedge cash flows from variable rate investments such as mortgage loans and certain fixed maturity securities and to hedge payments of certain funding agreement liabilities,

· cross-currency swaps are used to hedge interest payments and principal payments on foreign currency-denominated financial instruments.

Derivatives Not Qualifying for Hedge Accounting

The Company uses derivatives not qualifying for hedge accounting in various financial transactions as follows:

· futures, options, interest rate swaps and total return swaps are used to hedge certain guaranteed benefit rider obligations included in variable annuity products,

· interest rate swaps, futures and options are used to hedge portfolio duration and other interest rate risks to which the Company is exposed,

· cross-currency swaps are used to hedge foreign currency-denominated assets and liabilities, and

· credit default swaps are used to either buy or sell credit protection on a credit index or specific creditor.

Credit Risk Associated with Derivatives Transactions

The Company periodically evaluates the risks within the derivative portfolios due to credit exposure.  When evaluating this risk, the Company considers several factors which include, but are not limited to, the counterparty 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 effect the Company’s exposure to credit risk could have on the effectiveness of the Company’s hedging relationships is considered.  As of December 31, 2011 and 2010, 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes the fair value of derivative instruments, the related notional amounts of the derivative instruments and the related accrued interest, collateral and master netting agreement amounts as of the dates indicated:

	Derivative assets		Derivative liabilities
(in millions)	Fair value	Notional	Fair value	Notional
December 31, 2011
Derivatives designated and qualifying as hedging instruments	$            11	$          145	$            29	$          310
Derivatives not designated and qualifying as hedging instruments:
Interest rate contracts	$      2,182	$    21,732	$      2,142	$    20,957
Equity contracts	1,004	7,265	21	1,661
Credit default swaps	1	13	1	17
Other derivative contracts	10	892	43	2,409
Gross derivative positions1	$      3,208	$    30,047	$      2,236	$    25,354
Accrued interest	$          172		$          179
Less:
Cash collateral received/paid2	$      1,028		$          223
Master netting agreements	$      2,158		$      2,158
Net uncollateralized derivative positions	$          194		$            34
December 31, 2010
Derivatives designated and qualifying as hedging instruments	$             27	$           210	$             55	$           931
Derivatives not designated and qualifying as hedging instruments:
Interest rate contracts	$           556	$      10,944	$           418	$      10,225
Equity contracts	212	2,484	20	1,124
Credit default swaps	1	20	-	17
Other derivative contracts	42	1,329	53	1,263
Gross derivative positions1	$           838	$      14,987	$           546	$      13,560
Accrued interest	$             99		$           106
Less:
Cash collateral received/paid3	$           351		$             76
Master netting agreements	$           551		$           551
Net uncollateralized derivative positions	$             35		$             25

 __ _______

1 Assets and liabilities included in other assets and other liabilities, respectively in the consolidated balance sheets.

2 Excludes $1 million and $152 million of securities received and posted, respectively, as collateral on derivative transactions.

3 Excludes $8 million and $28 million of securities received and posted, respectively, as collateral on derivative transactions.

The fair value of embedded derivatives on annuity programs were $1.9 billion and $226 million as of December 31, 2011 and 2010, respectively, which are included in future policy benefits and claims in the consolidated balance sheets.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes realized gains and losses for derivative instruments recognized in net realized investment gains and losses in the consolidated statements of operations for the years ended December 31:

(in millions)	2011	2010	2009
Derivatives designated and qualifying as hedging instruments	$              (4)	$               (9)	$             (25)
Derivatives not designated and qualifying as hedging instruments:
Interest rate contracts	$            (44)	$             (39)	$           (197)
Equity contracts	(45)	(389)	(739)
Credit default swaps	-	(5)	8
Other derivative contracts	(23)	(151)	9
Net interest settlements	34	16	(151)
Total derivative losses1	$            (82)	$           (577)	$        (1,095)
Embedded derivatives on guaranteed benefit annuity programs	(1,674)	98	1,432
Other revenue on guaranteed benefit annuities	120	94	63
Change in embedded derivative liabilities and related fees	$      (1,554)	$            192	$         1,495
Net realized derivative (losses) gains	$      (1,636)	$           (385)	$            400

_________

1 Included in total derivative losses are economic hedging gains of $1.0 billion, losses of $347 million and $1.1 billion related to guaranteed benefit annuity program as of December 31, 2011, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(8)      Fair Value of Financial Instruments

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

(in millions)	Level 1	Level 2	Level 3	Total
Assets
Investments:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$        620	$             6	$             4	$        630
Obligations of states and political subdivisions	-	1,678	-	1,678
Debt securities issued by foreign governments	120	-	-	120
Corporate public securities	1	15,239	117	15,357
Corporate private securities	-	3,089	1,209	4,298
Residential mortgage-backed securities	563	4,653	8	5,224
Commercial mortgage-backed securities	-	1,377	2	1,379
Collateralized debt obligations	-	55	247	302
Other asset-backed securities	-	209	4	213
Total fixed maturity securities at fair value	$     1,304	$  26,306	$     1,591	$  29,201
Equity securities	1	14	5	20
Short-term investments	23	1,102	-	1,125
Trading securities	-	-	38	38
Total other investments at fair value	$          24	$     1,116	$          43	$     1,183
Investments at fair value	$     1,328	$  27,422	$     1,634	$  30,384
Cash and cash equivalents	49	-	-	49
Derivative assets	-	2,204	1,004	3,208
Separate account assets	62,242	1,000	1,952	65,194
Assets at fair value	$  63,619	$  30,626	$     4,590	$  98,835
Liabilities
Future policy benefits and claims:
Living benefits	$              -	$              -	$   (1,842)	$   (1,842)
Equity indexed annuities	-	-	(63)	(63)
Total future policy benefits and claims	$              -	$              -	$   (1,905)	$   (1,905)
Derivative liabilities	(21)	(2,209)	(6)	(2,236)
Liabilities at fair value	$         (21)	$   (2,209)	$   (1,911)	$   (4,141)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes changes in fair value measurements for which the Company used significant unobservable inputs (Level 3) to determine fair value for the year ended December 31, 2011:

	Balance as of					Transfers	Transfers	Balance as of
	December 31,	Net gains (losses)				into	out of	December 31,
(in millions)	2010	In earnings1	In OCI	Purchases	Sales	Level 3	Level 3	2011
Assets
Investments:
Fixed maturity securities:
Corporate public securities	$            114	$                -	$          4	$         41	$     (43)	$          1	$           -	$             117
Corporate private securities	1,161	(10)	26	161	(242)	163	(50)	1,209
Residential mortgage-backed securities	9	-	-	-	-	-	(1)	8
Commercial mortgage-backed securities	2	-	-	-	-	-	-	2
Collateralized debt obligations	191	(2)	5	87	(34)	-	-	247
Other fixed maturity securities	18	5	-	16	(20)	3	(14)	8
Total fixed maturity securities at fair value	$         1,495	$             (7)	$        35	$       305	$   (339)	$      167	$       (65)	$          1,591
Other investments at fair value	45	(4)	-	5	(3)	-	-	43
Derivative assets	211	131	-	719	(57)	-	-	1,004
Separate account assets	1,805	147	-	-	-	-	-	1,952
Assets at fair value	$         3,556	$           267	$        35	$    1,029	$   (399)	$      167	$       (65)	$          4,590
Liabilities
Future policy benefits and claims:
Living benefits	$          (168)	$      (1,674)	$           -	$            -	$         -	$           -	$           -	$        (1,842)
Equity indexed annuities	(58)	(5)	-	-	-	-	-	(63)
Total future policy benefits and claims	$          (226)	$      (1,679)	$           -	$            -	$         -	$           -	$           -	$        (1,905)
Derivative liabilities	(4)	(2)	-	-	-	-	-	(6)
Liabilities at fair value	$          (230)	$      (1,681)	$           -	$            -	$         -	$           -	$           -	$        (1,911)

__________

1 Net gains and losses included in earnings are reported in net realized investment gains and losses, other-than-temporary impairment losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets is attributable to contractholders, and therefore, is not included in the Company’s earnings. The change in unrealized gains (losses) in earnings on assets and liabilities still held at the end of the year was $(6) million for other investments, $154 million for derivative assets and $(1.7) billion for future policy benefits and claims.

Transfers into and out of Level 3 during the year ended December 31, 2011 represent changes in the sources used to price certain securities.  There were no significant transfers between Levels 1 and 2 during the year ended December 31, 2011, except certain separate accounts previously included in Level 2.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:

(in millions)	Level 1	Level 2	Level 3	Total
Assets
Investments:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies	$         572	$           10	$             2	$         584
Obligations of states and political subdivisions	-	1,377	-	1,377
Debt securities issued by foreign governments	123	-	-	123
Corporate public securities	2	12,600	114	12,716
Corporate private securities	-	3,087	1,161	4,248
Residential mortgage-backed securities	540	5,090	9	5,639
Commercial mortgage-backed securities	-	1,184	2	1,186
Collateralized debt obligations	-	61	191	252
Other asset-backed securities	-	293	16	309
Total fixed maturity securities at fair value	$      1,237	$    23,702	$      1,495	$    26,434
Equity securities	10	32	-	42
Short-term investments	25	1,037	-	1,062
Trading securities	-	-	45	45
Total other investments at fair value	$           35	$      1,069	$           45	$      1,149
Investments at fair value	$      1,272	$    24,771	$      1,540	$    27,583
Cash and cash equivalents	337	-	-	337
Derivative assets	-	627	211	838
Separate account assets	12,325	50,745	1,805	64,875
Assets at fair value	$    13,934	$    76,143	$      3,556	$    93,633
Liabilities
Future policy benefits and claims:
Living benefits	$              -	$              -	$        (168)	$        (168)
Equity indexed annuities	-	-	(58)	(58)
Total future policy benefits and claims	$              -	$              -	$        (226)	$        (226)
Derivative liabilities	(18)	(524)	(4)	(546)
Liabilities at fair value	$          (18)	$        (524)	$        (230)	$        (772)

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes changes in fair value measurements for which the Company used significant unobservable inputs (Level 3) to determine fair value for the year ended December 31, 2010:

	Balance as of				Transfers	Transfers	Balance as of
	December 31,	Net gains (losses)		Activity	into	out of	December 31,
(in millions)	2009	In earnings1	In OCI	in period	Level 3	Level 3	2010
Assets
Investments:
Fixed maturity securities:
Corporate public securities	$              215	$                1	$                  4	$       (15)	$          1	$       (92)	$             114
Corporate private securities	1,187	3	31	(268)	311	(103)	1,161
Residential mortgage-backed securities	2,034	(1)	4	(12)	2	(2,018)	9
Commercial mortgage-backed securities	405	-	1	-	-	(404)	2
Collateralized debt obligations	240	(27)	29	(67)	16	-	191
Other fixed maturity securities	169	(9)	8	(11)	-	(139)	18
Total fixed maturity securities at fair value	$           4,250	$            (33)	$                77	$     (373)	$      330	$  (2,756)	$          1,495
Other investments at fair value	56	10	-	(20)	-	(1)	45
Derivative assets	331	(91)	-	(29)	-	-	211
Separate account assets	1,628	177	-	-	-	-	1,805
Assets at fair value	$           6,265	$              63	$                77	$     (422)	$      330	$  (2,757)	$          3,556
Liabilities
Future policy benefits and claims:
Living benefits	$            (266)	$              98	$                   -	$           -	$           -	$           -	$           (168)
Equity indexed annuities	(45)	(13)	-	-	-	-	(58)
Total future policy benefits and claims	$            (311)	$              85	$                   -	$           -	$           -	$           -	$           (226)
Derivative liabilities	(2)	(2)	-	-	-	-	(4)
Liabilities at fair value	$            (313)	$              83	$                   -	$           -	$           -	$           -	$           (230)

__________

1 Net gains and losses included in earnings are reported in net realized investment gains and losses, other-than-temporary impairment losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets is attributable to contractholders, and therefore, is not included in the Company’s earnings. The change in unrealized gains (losses) in earnings on assets and liabilities still held at the end of the year was $(2) million for other investments, $(69) million for derivative assets, $85 million for future policy benefits and claims and $(2) million for derivative liabilities.

At December 31, 2009, most of the Company’s investments in residential mortgage-backed securities backed by Alt-A and sub-prime collateral were categorized as Level 3 financial assets because there was little market activity in these securities.   During 2010, market activity increased in these securities such that they are no longer considered inactive.  As such, these securities were transferred out of Level 3 and into Level 2. Additionally, many of the Company’s investments in below investment-grade commercial mortgage-backed securities, which were categorized as Level 3 financial assets as of December 31, 2009 were transferred to Level 2 in 2010. This was primarily due to an increase in the observable valuation inputs of market activity and availability of higher quality independent pricing data.

There were no significant transfers between Levels 1 and 2 during the year ended December 31, 2010.

Fair Value Option

The Company assesses the fair value option election for newly acquired financial assets or liabilities on a prospective basis. Except for synthetic collateralized debt obligations, there are no material assets or liabilities for which the Company elected the fair value option.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

Use of Net Asset Value for Estimating Fair Value

The Company uses net asset value to estimate the underlying fair value for certain mutual funds that do not have readily determinable fair values, which are included in separate accounts.

All but one of these mutual fund investments are included in Level 2 and had fair values totaling $50.0 billion as of December 31, 2010. These funds have no unfunded commitments or restrictions and the Company always has the ability to redeem the separate account investment in these funds with the investee at net asset value daily. These mutual funds are primarily invested in domestic and international equity funds.

The Company’s separate account assets include an investment in a mutual fund that may not be redeemed until a seven year guarantee period expires in 2016; however, net asset value has been used to estimate the fair value of this investment as a practical expedient. This fund has no unfunded commitments or other restrictions. The investment strategy of this fund is to build a portfolio where the assets shall be sufficient to achieve a target portfolio value by the end of the seven year guarantee period. The net asset value of this fund reported in separate account assets was $1.3 billion as of December 31, 2011 and 2010, respectively, and is included in Level 3.

Contractholders have the ability to select and change investment categories, which will result in the underlying mutual funds being purchased and sold in the future.

Fair Value on a Nonrecurring Basis

The Company measured certain mortgage loans at fair value, or fair value of the collateral for collateral dependent loans, on a non-recurring basis subsequent to their initial recognition, due to impairments or foreclosures recorded during the year. In determining the fair value for these mortgage loans, the Company primarily uses the direct capitalization method based on management’s view of current market capitalization rates.  Alternatively, the Company may use a discounted cash flow methodology or an independently provided appraisal of value.  Each of these methodologies is considered to represent a Level 3 fair value measurement.  Refer to Note 6 for further discussion of the carrying value of impaired mortgage loans.

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 December 31.  The valuation techniques used to estimate these fair values are described below.

	2011		2010
	Carrying	Fair	Carrying	Fair
(in millions)	value	value	value	value
Assets
Investments:
Mortgage loans held-for-investment	$                5,748	$            5,861	$        6,125	$         5,863
Policy loans	$                1,008	$            1,008	$        1,088	$         1,088
Liabilities
Investment contracts	$              18,318	$         17,992	$      17,962	$       17,618
Short-term debt	$                   777	$               777	$           300	$            300
Long-term debt	$                   991	$            1,081	$           978	$         1,039

Mortgage loans held-for-investment:  The fair values of mortgage loans held-for-investment are estimated using discounted cash flow analyses based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.

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

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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.

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

Long-term debt:  The fair values for long-term debt are based on estimated market prices using observable inputs from similar debt instruments.

(9) Goodwill

The following table summarizes changes in the carrying value of goodwill by segment for the years indicated:

	Retirement	Individual
(in millions)	Plans	Protection	Total
Balance as of December 31, 2009	$               25	$             175	$             200
Adjustments	-	-	-
Balance as of December 31, 2010	$               25	$             175	$             200
Adjustments	-	-	-
Balance as of December 31, 2011	$              25	$            175	$            200

The Company’s annual impairment testing did not result in any impairment on existing goodwill during 2011, 2010 and 2009.  As of the 2011, 2010 and 2009 annual impairment testing, the fair value of the reporting units with goodwill was in excess of the carrying value.  The goodwill balances as of December 31, 2011 and 2010 have not been previously impaired.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(10)       Closed Block

The amounts shown in the following tables for assets, liabilities, revenues and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following table summarizes financial information for the closed block as of December 31:

(in millions)	2011	2010
Liabilities:
Future policyholder benefits	$           1,761	$            1,794
Policyholder funds and accumulated dividends	143	143
Policyholder dividends payable	27	28
Policyholder dividend obligation	156	121
Other policy obligations and liabilities	26	13
Total liabilities	$           2,113	$            2,099
Assets:
Fixed maturity securities available-for-sale	$           1,424	$            1,312
Mortgage loans, net	210	224
Policy loans	170	186
Other assets	105	162
Total assets	$           1,909	$            1,884
Excess of reported liabilities over assets	204	215
Portion of above representing other comprehensive income:
Increase in unrealized gain on fixed maturity securities available-for-sale	$                42	$                 73
Adjustment to policyholder dividend obligation	(42)	(73)
Total	$                    -	$                    -
Maximum future earnings to be recognized from assets and liabilities	$              204	$               215
Other comprehensive income:
Fixed maturity securities available-for-sale:
Fair value	$           1,424	$            1,312
Amortized cost	1,292	1,222
Shadow policyholder dividend obligation	(132)	(90)
Net unrealized appreciation	$                   -	$                    -

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes closed block operations for the years ended December 31:

(in millions)	2011	2010	2009
Revenues:
Premiums	$           77	$            83	$            90
Net investment income	102	101	106
Realized investment (losses) gains	(3)	(3)	2
Realized losses credited to policyholder benefit obligation	(1)	(1)	(7)
Total revenues	$         175	$          180	$          191
Benefits and expenses:
Policy and contract benefits	$         145	$          131	$          133
Change in future policyholder benefits and interest credited to
policyholder accounts	(35)	(23)	(24)
Policyholder dividends	55	56	59
Change in policyholder dividend obligation	(8)	(3)	4
Other expenses	1	1	1
Total benefits and expenses	$         158	$          162	$          173
Total revenues, net of benefits and expenses, before federal income
tax expense	$           17	$            18	$            18
Federal income tax expense	6	6	6
Revenues, net of benefits and expenses and federal income tax
expense	$           11	$            12	$            12
Maximum future earnings from assets and liabilities:
Beginning of period	$         215	$          227	$          239
Change during period	(11)	(12)	(12)
End of period	$         204	$          215	$          227

Cumulative closed block earnings from inception through December 31, 2011, 2010 and 2009 were higher than expected as determined in the actuarial calculation.  Therefore, policyholder dividend obligations (excluding the adjustment for unrealized gains on available-for-sale securities) were $23 million, $31 million and $32 million as of December 31, 2011, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(11) Short-Term Debt

The following table summarizes short-term debt and weighted average annual interest rates as of December 31:

(in millions)	2011	2010
$600 million commercial paper program (0.30% and 0.35%, respectively)	$                   300	$                    300
$600 million promissory note and line of credit (1.73% in 2011)	$                   477	$                         -
Total short-term debt	$                   777	$                    300

In May 2011, NMIC, NFS, and NLIC entered into a $600 million revolving credit facility upon expiration of its existing facility of the same amount. The new facility matures in May 2015 and is subject to various covenants, as defined in the agreement.  NLIC had no amounts outstanding under the new or existing facilities as of December 31, 2011 and December 31, 2010.

In April 2011, the Company entered into a $600 million unsecured revolving promissory note and line of credit agreement with its parent company, NFS. Outstanding principal balances of the line of credit bear interest at the rate of six-month U.S. London Interbank Offered Rate (LIBOR) plus 1.25%. Interest is due and payable as of the last day of each interest period, as defined in the agreement, while there are outstanding principal balances. Under the terms of the agreement, NLIC may borrow, repay and re-borrow advances under the line of credit at any time prior to the termination of the note, which, among other conditions, is April 2012, subject to automatic renewal for additional one year periods unless either party terminates the agreement.

In June 2010, NLIC entered into an agreement reducing the commercial paper program from $800 million to $600 million.  The rating agency guidelines recommend that NLIC maintain minimum liquidity backup, which includes cash and liquid assets as well as committed bank lines, equal to 50% of any amounts outstanding under the commercial paper program.  Therefore, availability under the aggregate $600 million credit facility is reduced by the amount outstanding in excess of available cash and liquid assets.

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, 2011 and 2010.

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, 2011 and 2010.

The amount of interest paid on short-term debt was $5 million in 2011 and immaterial in 2010 and 2009.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(12)       Long-Term Debt

The following table summarizes long-term debt as of December 31:

(in millions)	2011	2010
8.15% surplus note, due June 27, 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, due December 31, 2040	285	272
Other	6	6
Total long-term debt	$                   991	$                    978

On December 31, 2010, Olentangy Reinsurance, LLC, a special purpose financial captive insurance 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.  The note is redeemable in full or partial amount at any time subject to proper notice and approval.  A redemption premium shall be payable if the note is redeemed on or prior to the third anniversary date of the note’s issuance. The note bears interest at the rate of three-month U.S. LIBOR plus 2.80% payable quarterly.  Olentangy Reinsurance, LLC agrees to draw down or reduce principal amounts in accordance with the terms outlined in the purchase agreement.  The maximum amount outstanding under the agreement is $313 million in 2016.  The Company made interest payments on this surplus note of $9 million during 2011. 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 in 2011, 2010 and 2009.  Payments of interest and principal under the notes require the prior approval of the ODI.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(13) Federal Income Taxes

The following table summarizes the federal income tax (benefit) expense attributable to (loss) income before income attributable to noncontrolling interests, for the years ended December 31:

(in millions)	2011	2010	2009
Current tax expense (benefit)	$                   55	$                  (91)	$                  165
Deferred tax (benefit) expense	(437)	115	(117)
Total tax (benefit) expense	$               (382)	$                    24	$                    48

Total federal income tax (benefit) expense differs from the amount computed by applying the U.S. federal income tax rate to (loss) income before federal income taxes and noncontrolling interests, as follows for the years ended December 31:

		2011			2010			2009
(in millions)		Amount	%		Amount	%		Amount	%
Rate reconciliation:
	Computed (expected tax (benefit) expense)	$    (252)	35	%	$         71	35	%	$       107	35	%
	Dividend received deduction	(99)	14	%	(50)	(25)	%	(56)	(18)	%
	Impact of noncontrolling interest	20	(3)	%	21	10	%	18	6	%
	Tax credits	(30)	4	%	(27)	(13)	%	(21)	(7)	%
	Change in tax contingency reserve	(15)	2	%	(5)	(2)	%	5	2	%
	Other, net	(6)	1	%	14	7	%	(5)	(2)	%
	Total	$    (382)	53	%	$         24	12	%	$         48	16	%

The Company’s current federal income tax receivable (liability) was $16 million and $(50) million as of December 31, 2011 and 2010, respectively.

Total federal income taxes paid (refunded) were $121 million, $(35) million, and $(59) million during the years ended December 31, 2011, 2010, and 2009, respectively.

During 2011, the Company recorded a tax benefit of $10 million primarily related to differences between the 2010 estimated tax liability and the amounts reported on the Company’s 2010 tax return. These changes in estimates were primarily driven by the Company’s separate account dividends received deduction (DRD).  During 2010, there were no material federal income tax expense adjustments.

During 2009, the Company recorded $9 million of net federal income tax expense adjustments primarily related to differences between the 2008 estimated tax liability and the amounts reported on the Company’s 2008 tax returns.  These changes in estimates were primarily driven by the Company’s separate account dividends received deduction (DRD) and foreign tax credit.

As of December 31, 2011, the Company no longer has a capital loss carryforward.  The Company has $59 million in low-income-housing credit carryforwards, which expire between 2026 and 2031 and $126 million in alternative minimum tax credit carryforwards, which have an unlimited carryforward. The Company expects to fully utilize all carryforwards.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31:

(in millions)	2011	2010
Deferred tax assets:
Future policy benefits and claims	$               1,193	$                 1,030
Derivatives	574	27
Capital loss carryforwards	-	178
Tax credit carryforwards	185	145
Other	323	236
Gross deferred tax assets	$               2,275	$                 1,616
Valuation allowance	(18)	(24)
Net deferred tax assets	$               2,257	$                 1,592
Deferred tax liabilities:
Deferred policy acquisition costs	(1,291)	$               (1,071)
Available-for-sale securities	(764)	(670)
Value of business acquired	(86)	(89)
Other	(217)	(150)
Gross deferred tax liabilities	$              (2,358)	$               (1,980)
Net deferred tax liability	$                 (101)	$                  (388)

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 $18 million and $24 million as of December 31, 2011 and 2010, respectively.  The change in valuation allowance for the year ended December 31, 2011 was $6 million, while there was no change in the valuation allowance for the year ended December 31, 2010 or 2009.  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.

A rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties, is as follows:

(in millions)	2011	2010	2009
Balance at beginning of period	$              119	$                 95	$                 44
Additions for current year tax positions	9	18	37
Additions for prior years tax positions	-	19	15
Reductions for prior years tax positions	(52)	(13)	(1)
Balance at end of period	$                76	$               119	$                 95

The Company believes it is reasonably possible that approximately $48 million of unrecognized tax benefits will be recognized during 2012, mostly as a result of an industry issue resolution program with the Internal Revenue Service (IRS).  These tax benefits are primarily bad debt deductions related to certain investment impairments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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. The IRS is conducting an examination of the Company’s U.S. income tax returns for the years 2006 through 2008.  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 and its life subsidiary 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.  Statutory accounting practices focus on insurer solvency and materially differ from GAAP.  The principal differences include charging policy acquisition and certain sales inducement costs to expense as incurred, establishing future policy benefits and claims reserves using different actuarial assumptions, excluding certain assets from statutory admitted assets; and valuing investments and establishing deferred taxes on a different basis.  The following tables summarize the statutory net income (loss) and statutory capital and surplus for the Company and its primary insurance subsidiary for the years ended December 31:

(in millions)	2011	2010	2009
Statutory net income (loss)
NLIC	$            18	$               560	$               397
NLAIC	$          (61)	$                (50)	$                (61)
Statutory capital and surplus
NLIC	$      3,591	$            3,686	$            3,130
NLAIC	$          302	$               287	$               214

On December 31, 2009, NLIC merged with its affiliate, NLICA, with NLIC as the surviving entity.  In addition, NLIC’s subsidiary, NLAIC, merged with a subsidiary of NLICA, NLACA, effective as of December 31, 2009, with NLAIC as the surviving entity.  See Note 2 for details on the accounting treatment of this transaction.

Dividend Restrictions

The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state.  The State of Ohio insurance laws require Ohio-domiciled life insurance companies to seek prior regulatory approval to pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer for the prior year.   During the year ended December 31, 2011, 2010 and 2009, NLIC did not pay any dividends to NFS.  As of January 1, 2012, NLIC has the ability to pay dividends to NFS totaling $359 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The Company currently does not expect such regulatory requirements to impair its 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 were developed by the NAIC.  The formulas 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, each of which requires specified corrective action.  NLIC and NLAIC each exceeded the minimum RBC requirements for all periods presented herein.

(15)       Other Comprehensive Income

The Company’s other comprehensive income and loss includes net income (loss) and certain items that are reported directly within separate components of shareholder’s equity that are not recorded in net income.

The following table summarizes the Company’s other comprehensive income for the years ended December 31:

(in millions)	Unrealized gains on available-for-sale securities	Unrealized gains (losses) on derivatives used in cash flow hedging relationships	Other unrealized losses	Total other comprehensive income
Year ended December 31, 2011
Other comprehensive income before federal income taxes	438	18	-	456
Federal income tax expense	(145)	(6)	-	(151)
Total other comprehensive income	293	12	-	305
Year ended December 31, 20101
Other comprehensive income before federal income taxes	862	27	-	889
Federal income tax expense	(302)	(9)	-	(311)
Total other comprehensive income	560	18	-	578
Year ended December 31, 20092
Other comprehensive income (loss) before federal income taxes	2,088	(4)	(14)	2,070
Federal income tax (expense) benefit	(731)	1	5	(725)
Total other comprehensive income (loss)	1,357	(3)	(9)	1,345

_______

1 During 2010, the adoption of ASU 2010-11 resulted in a cumulative effect adjustment of $9 million, net of taxes, to retained earnings with a corresponding adjustment to AOCI, which is excluded from the table above.

2 The adoption of guidance impacting FASB ASC 320-10, Investments – Debt and Equity Securities during 2009 resulted in a cumulative-effect adjustment of $250 million, net of taxes, to reclassify the non-credit component of previously recognized other-than-temporary impairment losses from the beginning balance of retained earnings to AOCI, which is excluded from the table above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(16) 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 leases, and agreements related to reinsurance, cost sharing, administrative services, marketing, intercompany loans, intercompany repurchases, cash management services and software licensing.  Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, the number of full-time employees, commission expense and other methods agreed to by the participating companies.

In addition, Nationwide Services Company, LLC (NSC), a subsidiary of NMIC, provides data processing, systems development, hardware and software support, telephone, mail and other services to the Company, based on specified rates for units of service consumed.  For the years ended December 31, 2011, 2010, and 2009, the Company made payments to NMIC and NSC totaling $241 million, $250 million, and $241 million, respectively.

The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates.  Total account values of these contracts were $3.0 billion as of December 31, 2011 and 2010.  Total revenues from these contracts were $148 million, $139 million, and $143 million for the years ended December 31, 2011, 2010, and 2009, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees.  Total interest credited to the account balances was $122 million, $115 million, and $116 million for the years ended December 31, 2011, 2010, and 2009, respectively.  The terms of these contracts are materially consistent with what the Company offers to unaffiliated parties.

The Company leases office space from NMIC.  For the years ended December 31, 2011, 2010 and 2009, the Company made lease payments to NMIC of $14 million, $20 million, and $21 million, respectively.  In addition, the Company leases office space to an affiliate of NMIC.

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, 2011, 2010, and 2009 were $203 million, $209 million, and $177 million, respectively, while benefits, claims and expenses ceded during these years were $212 million, $241 million, and $196 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, 2011, 2010, and 2009, customer allocations to NFG funds totaled $21.9 billion, $30.5 billion, and $23.7 billion, respectively.  For the years ended December 31, 2011, 2010, and 2009, NFG paid the Company $129 million, $103 million, and $79 million, respectively, for the distribution and servicing of these funds.

Amounts on deposit with NCMC for the benefit of the Company were $994 million and $762 million as of December 31, 2011 and 2010, 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 for the years ended December 31, 2011, 2010, and 2009 were $64 million, $61 million, and $48 million, respectively.

During 2009, NLIC received a $20 million capital contribution from NFS.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

During 2011 and 2010, the Company sold, at fair value, commercial mortgage loans with a carrying value of $41 million and $117 million, respectively, to NMIC.  The sales resulted in a net realized loss of $5 million and $21 million in 2011 and 2010, respectively.

(17) Contingencies

Legal and Regulatory Matters

The Company is a subject to legal and regulatory proceedings in the ordinary course of its business. The Company’s legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates.  The Company’s litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted.  Regulatory proceedings also could affect the outcome of one or more of the Company’s litigations matters.  Furthermore, it is often not possible to determine the ultimate outcomes of the pending regulatory investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty.  Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages.  In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period.  In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available.  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 financial services industry has been the subject of increasing scrutiny on a broad range of issues by regulators and legislators. The Company and/or its affiliates have been contacted by, self reported or received subpoenas from state and federal regulatory agencies, including the Securities and Exchange Commission, and other governmental bodies, state securities law regulators and state attorneys general for information relating to, among other things, sales compensation, the allocation of compensation, unsuitable sales or replacement practices, and claims handling and escheatment practices.  The Company is cooperating with and responding to regulators in connection with these inquiries and will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass NMIC’s operations.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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 stipulation of settlement that agrees to certify a class for settlement purposes only, that provides for payments to the settlement class, and that provides for releases, certain bar orders, and dismissal of the case, subject to the Circuit Courts' approval. The Courts have approved the settlement and the settlement amounts have been paid, but have not yet been distributed to class members. On February 28, 2011, the Court in the Gwin case entered its Order permitting ASEA/PEBCO to assert indemnification claims for attorneys’ fees and costs, but barring them from asserting any other claims for indemnification. On April 22, 2011, ASEA and PEBCO filed a second amended cross claim complaint in the Gwin case against NLIC and NRS seeking indemnification. These claims seeking indemnification remain severed. On April 29, 2011, the Companies filed a motion to dismiss ASEA’s and PEBCO’s amended cross complaint or alternatively for summary judgment. On December 6, 2011 the Court entered an Order that NRS owes indemnification to ASEA and PEBCO for the Coker (Gwin) class action, that NRS does not have a duty to indemnify ASEA and PEBCO for fees associated with the Interpleader action that NRS filed in Montgomery County and dismissing NLIC. On December 31, 2011, the Court denied NRS’s motion to certify this order for an interlocutory appeal. NRS continues to defend this case vigorously.

On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. In the plaintiffs' sixth amended complaint, filed November 18, 2009, they amended the list of named plaintiffs and claim to represent a class of qualified retirement plan trustees under 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 plaintiff's motion for class certification and certified a class of “All trustees of all employee pension benefit plans covered by ERISA which had variable annuity contracts with NFS and NLIC or whose participants had individual variable annuity contracts with NFS and NLIC at any time from January 1, 1996, or the first date NFS and NLIC began receiving payments from mutual funds based on a percentage of assets invested in the funds by NFS and NLIC, whichever came first, to the date of November 6, 2009". On October 20, 2010, the Second Circuit Court of Appeals granted NLIC's 23(f) petition agreeing to hear an appeal of the District Court's order granting class certification. On October 21, 2010, the District Court dismissed NFS from the lawsuit. On October 27, 2010, the District Court stayed the underlying action pending a decision from the Second Circuit Court of Appeals. On February 6, 2012, the Second Circuit Court of Appeals vacated the class certification order that was issued on November 6, 2009.  NLIC continues to defend this lawsuit vigorously.

On May 14, 2010, NLIC was named in a lawsuit filed in the Western District of New York entitled Sandra L. Meidenbauer, on behalf of herself and all others similarly situated v. Nationwide Life Insurance Company. The plaintiff claims to represent a class of all individuals who purchased a variable life insurance policy from NLIC during an unspecified period. The complaint claims breach of contract, alleging that NLIC charged excessive monthly deductions and costs of insurance resulting in reduced policy values and, in some cases, premature lapsing of policies. The complaint seeks reimbursement of excessive charges, costs, interest, attorney's fees, and other relief. NLIC filed a motion to dismiss the complaint on July 23, 2010. NLIC filed a motion to disqualify the proposed class representative on August 27, 2010. Plaintiff filed a motion to amend the complaint on September 17, 2010, and NLIC filed an opposition to the motion to amend on November 2, 2010. On October 13, 2011, plaintiff voluntarily dismissed the lawsuit without prejudice.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

On October 22, 2010, NRS was named in a lawsuit filed in the U.S. District Court, Middle District of Florida, Orlando Division entitled Camille McCullough, and Melanie Monroe, Individually and on behalf of all others similarly situated v. National Association of Counties, NACo Research Foundation, NACo Financial Services Corp., NACo Financial Center, and Nationwide Retirement Solutions, Inc.  The Plaintiffs’ First Amended Class Action Complaint and Demand for Jury Trial was filed on February 18, 2011. If the Court determines that the Plans at issue in this case are governed by ERISA, then pursuant to FED. R. CIV. P. 23, Plaintiffs seek certification of a class defined as: All natural persons in the United States who were employed at any point after October 29, 2004 by a government entity that is or was a member of the National Association of Counties, and who participate or participated in a Section 457 Deferred Compensation Plan administered by NRS under the National Association of Counties Deferred Compensation Program.  Alternatively, if the Court determines that the Plans are not governed by ERISA, then pursuant to FED. R. CIV. P. 23, Plaintiffs seek certification of a class defined as: All natural persons in the United States who are currently employed or previously were employed at any point after October 29, 2006, by a government entity that is or was a member of the National Association of Counties (NACo), and who participate or participated in a Section 457 Deferred Compensation Plan administered by NRS under the National Association of Counties Deferred Compensation Program. The First Amended Complaint alleges ERISA Violation, Breach of Fiduciary Duty - NACo, Aiding and Abetting Breach of Fiduciary Duty - NRS, Breach of Fiduciary Duty - NRS, and Aiding and Abetting Breach of Fiduciary Duty - NACo. The First Amended Complaint asks for actual damages, lost profits, lost opportunity costs, restitution, and/or other injunctive or other relief, including without limitation (a) ordering NRS and NACo to restore all plan losses, (b) ordering NRS to refund all fees associated with NRS’s Plan to Plaintiffs and Class members, (c) ordering NACo and NRS to pay the expenses and losses incurred by Plaintiffs and/or any Class member as a proximate result of Defendants’ breaches of fiduciary duty, (d) forcing NACo to forfeit the fees that NACo received from NRS for promoting and endorsing its Plan and disgorging all profits, benefits, and other compensation obtained by NACo from its wrongful conduct, and (e) awarding Plaintiff and Class members their reasonable and necessary attorney’s fees and cost incurred in connection with this suit, punitive damages, and pre-judgment and post judgment interest, at the highest rates allowed by law, on the damages awarded.  On March 21, 2011, NRS filed a motion to dismiss the plaintiffs' first amended complaint.  On July 1, 2011, the plaintiffs filed their motion for class certification and later sought to amend their complaint. On November 25, 2011 the District Court entered an Order granting NACO's motion to dismiss, NRS's motion to dismiss, denying plaintiffs' motion to file an amended complaint, that all other remaining pending motions are moot, dismissing the class-wide claims with prejudice, dismissing individual claims without prejudice, and ordering the Clerk to close this case. On December 27, 2011, the plaintiffs filed a notice of appeal. NRS intends to defend this case vigorously.

On December 27, 2006, NLIC and NRS were named as defendants in a lawsuit filed in Circuit Court, Cole County Missouri entitled State of Missouri, Office of Administration, and Missouri State Employees Deferred Comp Plan v NLIC and NRS.  The complaint seeks recovery for breach of contract and breach of the implied covenant of good faith and fair dealing against NLIC and NRS as well as a breach of fiduciary duty against NRS.  The complaint seeks to recover the amount of the market value adjustment withheld by NLIC ($19 million), prejudgment interest, loss of investment income from ING due to the Companies’ assessment of the market value adjustment.  On March 8, 2007 the Companies filed a motion to remove this case from state court to federal court in Missouri.  On March 20, 2007 the State filed a motion to remand to state court and to stay court order.  On April 3, 2007 the case was remanded to state court.  On June 25, 2007 the Companies filed an Answer.  On October 16, 2009, the plaintiff filed a partial motion for summary judgment.  On November 20, 2009, the Companies filed a response to the plaintiff's motion for summary judgment and also filed a motion for summary judgment on behalf of the Companies.  On February 26, 2010, the court denied Missouri's partial motion for summary judgment and granted the Companies’ motion for summary judgment and dismissed the case.  On March 8, 2011, the Missouri Court of Appeals reversed the granting of the Companies’ motion for summary judgment and directed the trial court to enter judgment in favor of the State and against the Companies’ in the amount of $19 million, plus statutory interest at the rate of 9% per annum from June 2, 2006. On March 22, 2011, the Companies filed with the Missouri Court of Appeals, a motion for rehearing and an application for transfer to the Supreme Court of Missouri. On May 3, 2011, the Missouri Court of Appeals for the Western District overruled the Companies motion for rehearing and denied the motion to transfer the case to the Missouri Supreme Court. On June 28, 2011, the Companies application to the Missouri Supreme Court to hear a further appeal was denied. On July 1, 2011, the Companies paid the amount of the judgment plus simple interest at 9%. On August 9, 2011, the plaintiffs filed a Satisfaction of Judgment.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

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 Clark, on their behalf and on behalf of the class defined herein 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 complaint seeks certification as a class action.    On July 13, 2011, NMIC and NLIC filed a motion to dismiss the case.    Plaintiffs filed their opposition to NMIC and NLIC’s motion to dismiss on December 19, 2011.  By order dated January 18, 2012, the State Court issued an order dismissing the lawsuit.  The State Court issued its opinion on January 23, 2012.  Plaintiffs filed a Notice of Appeal to the Eighth District Court of Appeals on January 30, 2012.

Tax Matters

The Company’s federal income tax returns are routinely audited by the IRS. Management has established tax reserves as described in Note 2. Management believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years.

In July 2009, the IRS completed an audit of the Company’s tax years 2003 to 2005 and issued a Revenue Agent’s Report (RAR) and 30-Day Letter.  The RAR challenged the Company’s dividends received deduction which the Company appealed based on the technical merits.  In 2011, the Company favorably settled this position through IRS Appeals and as a result recorded previously unrecognized tax benefits.

Indemnifications

In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous transactions, including acquisitions, divestitures and leases. The types of indemnifications typically provided include indemnifications for 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.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(18)       Reinsurance

The following table summarizes the effects of reinsurance on life, accident and health insurance in force and premiums for the years ended December 31:

(in millions)	2011	2010	2009
Premiums
Direct	$                   832	$                    808	$                    761
Assumed	-	5	12
Ceded	(301)	(329)	(303)
Net	$                   531	$                    484	$                    470
Life, accident and health insurance in force
Direct	$           209,732	$             208,920	$             208,485
Assumed	5	10	8
Ceded	(60,499)	(64,755)	(76,136)
Net	$           149,238	$             144,175	$             132,357

Total amounts recoverable under reinsurance contracts totaled $704 million, $739 million and $755 million as of December 31, 2011, 2010 and 2009, respectively.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

(19)       Segment Information

Management views the Company’s business primarily based on its underlying products and uses this basis to define its four reportable segments:  Individual Investments, Retirement Plans, Individual Protection, and Corporate and Other.

The primary segment profitability measure that management uses is 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 (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment, trading portfolio realized gains and losses, trading portfolio valuation changes, net realized gains and losses related to hedges on GMDB contracts and securitizations); (2) other-than-temporary impairment losses; (3) the adjustment to amortization of DAC and VOBA related to net realized investment gains and losses; and (4) net loss attributable to noncontrolling interest.

Individual Investments

The Individual Investments segment consists of individual annuity products marketed under the Nationwide DestinationSM and other Nationwide-specific or private label brands.  Deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life.  In addition, deferred variable annuity contracts provide the customer with access to a wide range of investment options and asset protection features, while deferred fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. Immediate annuities differ from deferred annuities in that the initial premium is exchanged for a stream of income for a certain period or for the owner’s lifetime without future access to the original investment.    The majority of assets and recent sales for the Individual Investments segment consist of deferred variable annuities.

Retirement Plans

The Retirement Plans segment is comprised of the Company’s private and public sector retirement plans business.  The private sector primarily includes Internal Revenue Code (IRC) Section 401 fixed and variable group annuity business, and the public sector primarily includes IRC Section 457 and Section 401(a) business in the form of full-service arrangements that provide plan administration and fixed and variable group annuities as well as administration-only business.

Individual Protection

The Individual Protection segment consists of life insurance products, including individual variable, COLI and BOLI products; traditional life insurance products; and universal life insurance products.  Life insurance products provide a death benefit and generally allow the customer to build cash value on a tax-advantaged basis.

Corporate and Other

The Corporate and Other segment includes 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 certain living benefits; other-than-temporary impairment losses, and other revenues and expenses not allocated to other segments.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

The following tables summarize the Company’s business segment operating results for the years ended December 31:

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2011
Revenues:
Policy charges	$           781	$             96	$           629	$                -	$         1,506
Premiums	234	-	297	-	531
Net investment income	527	715	533	69	1,844
Non-operating net realized investment losses1	-	-	-	(1,546)	(1,546)
Other-than-temporary impairment losses	-	-	-	(67)	(67)
Other revenues2	(59)	-	-	(1)	(60)
Total revenues	$       1,483	$           811	$       1,459	$      (1,545)	$         2,208
Benefits and expenses:
Interest credited to policyholder accounts	$           374	$           441	$           198	$             20	$         1,033
Benefits and claims	476	-	598	(12)	1,062
Policyholder dividends	-	-	67	-	67
Amortization of DAC	96	19	103	(142)	76
Amortization of VOBA and other intangible assets	1	-	12	(2)	11
Interest expense	-	-	-	70	70
Other operating expenses	182	158	181	88	609
Total benefits and expenses	$       1,129	$           618	$       1,159	$             22	$         2,928

Income (loss) before federal income taxes
and noncontrolling interests	$           354	$           193	$           300	$      (1,567)	$           (720)
Less:  non-operating net realized investment losses1	-	-	-	1,546
Less:  non-operating net other-than-temporary            impairment losses	-	-	-	67
Less:  adjustment to amortization of DAC and other            related to net realized investment gains and losses
	-	-	-	(156)
Less:  net loss attributable to noncontrolling interest	-	-	-	56
Pre-tax operating earnings (loss)	$           354	$           193	$           300	$           (54)
Assets as of year end	$     58,218	$     25,211	$     22,959	$       6,294	$    112,682

_________

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).

2 Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2010
Revenues:
Policy charges	$            646	$              98	$            652	$                3	$         1,399
Premiums	209	-	275	-	484
Net investment income	569	691	510	55	1,825
Non-operating net realized investment losses1	-	-	-	(177)	(177)
Other-than-temporary impairment losses	-	-	-	(220)	(220)
Other revenues2	(82)	-	-	25	(57)
Total revenues	$         1,342	$            789	$         1,437	$          (314)	$         3,254
Benefits and expenses:
Interest credited to policyholder accounts	$            391	$            424	$            199	$              42	$         1,056
Benefits and claims	354	-	524	(5)	873
Policyholder dividends	-	-	78	-	78
Amortization of DAC	231	30	184	(49)	396
Amortization of VOBA and other intangible assets	1	-	19	(2)	18
Interest expense	-	-	-	55	55
Other operating expenses	180	143	172	79	574
Total benefits and expenses	$         1,157	$            597	$         1,176	$            120	$         3,050
Income (loss) before federal income taxes
and noncontrolling interests	$            185	$            192	$            261	$          (434)	$            204
Less:  non-operating net realized investment losses1	-	-	-	177
Less:  non-operating net other-than-temporary            impairment losses	-	-	-	220
Less:  adjustment to amortization of DAC and other            related to net realized investment gains and losses
	-	-	-	(59)
Less:  net loss attributable to noncontrolling interest	-	-	-	60
Pre-tax operating earnings (loss)	$            185	$            192	$            261	$            (36)
Assets as of year end	$       53,113	$       25,599	$       22,874	$         5,811	$     107,397

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).

2 Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Notes to Consolidated Financial Statements, Continued

December 31, 2011, 2010 and 2009

	Individual	Retirement	Individual	Corporate
(in millions)	Investments	Plans	Protection	and Other	Total
2009
Revenues:
Policy charges	$            522	$              93	$            634	$              (4)	$         1,245
Premiums	191	-	279	-	470
Net investment income	562	679	492	146	1,879
Non-operating net realized investment gains1	-	-	-	619	619
Other-than-temporary impairment losses	-	-	-	(575)	(575)
Other revenues2	(168)	-	-	(1)	(169)
Total revenues	$         1,107	$            772	$         1,405	$            185	$         3,469
Benefits and expenses:
Interest credited to policyholder accounts	$            394	$            433	$            201	$              72	$         1,100
Benefits and claims	247	-	538	27	812
Policyholder dividends	-	-	87	-	87
Amortization of DAC	(1)	45	158	264	466
Amortization of VOBA and other intangible assets	1	9	45	8	63
Interest expense	-	-	-	55	55
Other operating expenses	178	149	184	68	579
Total benefits and expenses	$            819	$            636	$         1,213	$            494	$         3,162
Income (loss) before federal income taxes
and noncontrolling interests	$            288	$            136	$            192	$          (309)	$            307
Less:  non-operating net realized investment gains1	-	-	-	(619)
Less:  non-operating net other-than-temporary            impairment losses	-	-	-	575
Less:  adjustment to amortization of DAC and other            related to net realized investment gains and losses
	-	-	-	297
Less:  net loss attributable to noncontrolling interest	-	-	-	52
Pre-tax operating earnings (loss)	$            288	$            136	$            192	$              (4)
Assets as of year end	$       48,891	$       25,035	$       22,115	$         2,948	$       98,989

1 Excluding operating items (periodic net amounts paid or received on interest rate swaps that do not qualify for hedge accounting treatment and net realized gains and losses related to hedges on GMDB contracts and securitizations).

2 Includes operating items discussed above.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule I                      Consolidated Summary of Investments – Other Than Investments in Related Parties

As of December 31, 2011 (in millions)

Column A	Column B	Column C	Column D
			Amount at
			which shown
			in the
		Fair	consolidated
Type of investment	Cost	value	balance sheet
Fixed maturity securities, available-for-sale:
Bonds:
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies	$             506	$             630	$                 630
Obligations of states and political subdivisions	1,501	1,678	1,678
Debt securities issued by foreign governments	102	120	120
Public utilities	2,429	2,687	2,687
All other corporate	22,939	24,086	24,086
Total fixed maturity securities, available-for-sale	$        27,477	$       29,201	$           29,201
Equity securities, available-for-sale:
Common stocks:
Industrial, miscellaneous and all other	$                  6	$                  6	$                      6
Nonredeemable preferred stocks	13	14	14
Total equity securities, available-for-sale	$                19	$               20	$                   20
Trading assets	49	38	38
Mortgage loans, net of allowance	5,801		5,748
Policy loans	1,008		1,008
Other investments	528		528
Short-term investments	1,125		1,125
Total investments	$        36,007		$           37,668

__________

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), hedges and commitment hedges on mortgage loans.

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule III                      Supplementary Insurance Information

As of December 31, 2011, 2010 and 2009 and for each of the years then ended (in millions)

Column A	Column B	Column C	Column D	Column E	Column F
	Deferred	Future policy
	policy	benefits, losses,		Other  policy
	acquisition	claims and	Unearned	claims and	Premium
Year:  Segment	costs	loss expenses	premiums1	benefits payable1	revenue
2011
Individual Investments	$          2,709	$                    12,550			$            234
Retirement Plans	269	12,638			-
Individual Protection	1,877	9,338			297
Corporate and Other	(430)	726			-
Total	$          4,425	$                    35,252			$            531
2010
Individual Investments	$           2,126	$                      10,541			$              209
Retirement Plans	269	11,874			-
Individual Protection	1,795	9,163			275
Corporate and Other	(217)	1,098			-
Total	$           3,973	$                      32,676			$              484
2009
Individual Investments	$           1,911	$                      10,871			$              191
Retirement Plans	271	11,703			-
Individual Protection	1,770	8,745			279
Corporate and Other	31	1,831
Total	$           3,983	$                      33,150			$              470
Column A	Column G	Column H	Column I	Column J	Column K
	Net	Benefits, claims,	Amortization	Other
	investment	losses and	of deferred policy	operating	Premiums
Year:  Segment	income2	settlement expenses	acquisition costs	expenses2	written
2011
Individual Investments	$             527	$                         850	$                      96	$                    183
Retirement Plans	715	441	19	158
Individual Protection	533	863	103	193
Corporate and Other	69	8	(142)	156
Total	$          1,844	$                      2,162	$                      76	$                    690
2010
Individual Investments	$              569	$                           745	$                     231	$                     181
Retirement Plans	691	424	30	143
Individual Protection	510	801	184	191
Corporate and Other	55	37	(49)	132
Total	$           1,825	$                        2,007	$                     396	$                     647
2009
Individual Investments	$              562	$                           641	$                        (1)	$                     179
Retirement Plans	679	433	45	158
Individual Protection	492	826	158	229
Corporate and Other	146	99	264	131
Total	$           1,879	$                        1,999	$                     466	$                     697

________

1   Unearned premiums and other policy claims and benefits payable are included in Column C amounts.

2   Allocations of net investment income and certain operating expenses are based on numerous assumptions and estimates, and reported segment operating results would change if different methods were applied.

See accompanying notes to consolidated financial statements and report of independent registered public accounting firm.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule IV                      Reinsurance

As of December 31, 2011, 2010 and 2009 and for each of the years then ended (in millions)

Column A	Column B	Column C	Column D	Column E	Column F
					Percentage
		Ceded to	Assumed		of amount
	Gross	other	from other	Net	assumed
	amount	companies	companies	amount	to net
2011
Life, accident and health
insurance in force	$     209,732	$      (60,499)	$                  5	$     149,238	-
Premiums:
Life insurance 1	$             596	$              (65)	$                   -	$             531	-
Accident and health insurance	236	(236)	-	-	-
Total	$             832	$            (301)	$                   -	$             531	-
2010
Life, accident and health
insurance in force	$        208,920	$        (64,755)	$                 10	$        144,175	-
Premiums:
Life insurance 1	$               570	$               (88)	$                   1	$               483	0.2%
Accident and health insurance	238	(241)	4	1	NM
Total	$               808	$             (329)	$                   5	$               484	1.0%
2009
Life, accident and health
insurance in force	$        208,485	$        (76,136)	$                   8	$        132,357	-
Premiums:
Life insurance 1	$               549	$               (80)	$                   -	$               469	-
Accident and health insurance	212	(223)	12	1	NM
Total	$               761	$             (303)	$                 12	$               470	2.6%

__________

1 Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment and universal life insurance products.

NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES

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

Schedule V                      Valuation and Qualifying Accounts

Years ended December 31, 2011, 2010, and 2009 (in millions)

Column A	Column B	Column C		Column D	Column E
	Balance at	Charged to	Charged to		Balance at
	beginning	costs and	other		end of
Description	of period	expenses	accounts	Deductions1	period
2011
Valuation allowances - mortgage loans	$                96	$                25	$                   -	$                61	$                60
2010
Valuation allowances - mortgage loans	$                 77	$                 66	$                    -	$                 47	$                 96
2009
Valuation allowances - mortgage loans	$                 42	$                 85	$                    -	$                 50	$                 77

__________

1 Amounts generally represent payoffs, sales and recoveries.

PART C

OTHER INFORMATION

Item 26.  Exhibits

 (a)             Board of Directors Resolutions

1.   Resolution adopted by the Board of Directors of Provident Mutual Life Insurance Company authorizing establishment of the Provident Mutual Variable Growth Separate Account, Provident Mutual Variable Money Market Separate Account, Provident Mutual Variable Bond Separate Account, Provident Mutual Variable Managed Separate Account, and Provident Mutual Variable Zero Coupon Bond Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

2.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company establishing the Provident Mutual Variable Aggressive Growth Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

3.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company establishing the Provident Mutual Variable International Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

4.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company establishing the Provident Mutual Variable Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

5.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company Approving Creation of additional Sub accounts of Provident Mutual Variable Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

6.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company Approving Creation of additional Sub accounts of Provident Mutual Variable Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

7.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company Approving Creation of Additional Sub accounts of Provident Mutual Variable Life Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 1, filed on April 25, 2000, File No. 333-71763.

8.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company Approving Reorganization of the Provident Mutual Variable Growth Separate Account, Provident Mutual Variable Money Market Separate Account, Provident Mutual Variable Bond Separate Account, Provident Mutual Variable Zero Coupon Bond Separate Account, Provident Mutual Variable Aggressive Growth Separate Account, Provident Mutual Variable International Separate Account, Provident Mutual Variable Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 1, filed on April 25, 2000, File No. 333-71763.

9.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company Approving Creation of Additional Sub accounts of Provident Mutual Variable Life Separate Account.  Incorporated herein by reference to Post-Effective Amendment No. 5, filed on April 19, 2002, File No. 333-71763.

10.   Resolution of the Board of Directors of Provident Mutual Life Insurance Company authorizing the filing of Registration Statements and Post-Effective Amendments.  Incorporated herein by reference to the Initial Filing of the Registration Statement, filed on April 5, 2001, File No. 333-58308.

11.   Resolution of the Board of Directors of Nationwide Life Insurance Company of America Approving Creation of Additional Sub accounts of Nationwide Provident VLI Separate Account 1.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

(b) Custodian Agreements. Not applicable.

(c)   Underwriting Contracts

1.   Underwriting Agreement among Nationwide Life Insurance Company of America, Nationwide Life and Annuity Company of America, Nationwide Investment Services Corporation, and Nationwide Provident Variable Separate Accounts.  Incorporated herein by reference to Post-Effective Amendment No. 28, filed on April 29, 2009, File No. 33-42133.

2.   Amendment to Underwriting Agreement.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

3.   Amendment to Underwriting Agreement.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

4.   Amendment to Underwriting Agreement.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

5.   Amendment to Underwriting Agreement.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

6. Distribution Agreement by and among Nationwide Life Insurance Company of America, Nationwide Life and Annuity Company of America, and 1717 Capital Management Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitc6.htm" and hereby incorporated by reference.

7. Assignment and Assumption of Distributor’s Interest Under Distribution Agreement by and between Nationwide Securities, LLC and Nationwide Investment Services Corporation. Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitc7.htm" and hereby incorporated by reference..

(d) Contracts

1.   Individual Flexible Premium Adjustable Variable Life Insurance Policy Forms (C126, C126A, C127, C127A & C128).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

2.   Children’s Term Rider (C306).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

3.   Convertible Term Life Rider (C308).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

4.   Extension of Final Policy Date Rider (C822).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

5.   Qualify as part of Section 403(b) Rider (C827).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

6.   Change of Insured Rider (C901).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

7.   Disability Waiver Benefit Rider (C902).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

8.   Disability Waiver of Premium Rider (C903).  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

9.   Accelerated Death Benefit Rider (C/D904).  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

10.   Form of Illustration of Death Benefits, Policy Account Values and Net Cash Surrender Values.  Incorporated herein by reference to Post-Effective Amendment No. 15, filed on April 23, 2001, File No. 133-42133.

11.   Long-Term Care Acceleration Benefit Rider (Form R1100).  Incorporated herein by reference to Post-Effective Amendment No. 2, filed on February 8, 2001, File No. 333-71763.

12.   Long-Term Care Extended Insurance Benefit Rider (Form R1102).  Incorporated herein by reference to Post-Effective Amendment No. 2, filed on February 8, 2001, File No. 333-71763.

13.   Long-Term Care Waiver Benefit Rider (Form 1101).  Incorporated herein by reference to Post-Effective Amendment No. 2, filed on February 8, 2001, File No. 333-71763.

14.   Accelerated Death Benefit Rider (Form R1904).  Incorporated herein by reference to Post-Effective Amendment No. 2, filed on February 8, 2001, File No. 333-71763.

(e)           Applications

1.   Form of Application.  Incorporated herein by reference to Post-Effective Amendment No. 2, filed on April 24, 2000, File No. 333-67775.

2.   Application for Flexible Premium.  Incorporated herein by reference to Post-Effective Amendment No. 11, filed on May 1, 1998, File No. 33-42133.

3.   Initial Allocation Selection.  Incorporated herein by reference to Post-Effective Amendment No. 18, filed on May 1, 1998, File No. 33-2625.

(f) Depositor’s Certificate of Incorporation and By-Laws

1.   Amended Articles of Incorporation for Nationwide Life Insurance Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitf1.htm" and hereby incorporated by reference..

2.   Amended and Restated Code of Regulations of Nationwide Life Insurance Company.  Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitf2.htm" and hereby incorporated by reference..

3.   Articles of Merger of Nationwide Life Insurance Company of America with and into Nationwide Life Insurance Company, effective December 31 2009. Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitf3.htm" and hereby incorporated by reference..

 (g)           Reinsurance Contracts

1.   Single Life Permanent Pool (ERC). Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

2.   Single Life Permanent Pool (RGA).  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

3.   Automatic and Facultative YRT Reinsurance Agreement between Provident Mutual Life Insurance Company, Providentmutual Life and Annuity Company of America, and RGA Reinsurance Company.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

4.   Addendum to the Automatic and Facultative Reinsurance Agreement between Provident Mutual Life Insurance Company, Providentmutual Life and Annuity Company of America, and RGA Reinsurance Company.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

5.   Automatic Reinsurance Agreement No. 2727 between Provident Mutual Life Insurance Company and Phoenix Home Life Mutual Insurance Company.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

6.   Amendment Number 3 to the Reinsurance Agreement No. 2727 between Provident Mutual Life Insurance Company and ERC Life Reinsurance Corporation.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

7.   Amendment Number 4 to the Reinsurance Agreement No. 2727 between Provident Mutual Life Insurance Company and ERC Life Reinsurance Corporation.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

8.   Automatic Yearly Renewable Term Reinsurance Agreement No. P226-105 between Provident Mutual Life Insurance Company and General & Cologne Life Re of America.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

9.   Automatic Yearly Renewable Term Reinsurance Agreement No. P226-106 between Provident Mutual Life Insurance Company and General & Cologne Life Re of America.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

10.   YRT Agreement No. 5918-14 between Provident Mutual Life Insurance Company and AUSA Life Insurance Company, Inc.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

11.   YRT Agreement No. 5918-15 between Provident Mutual Life Insurance Company and AUSA Life Insurance Company, Inc.  Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on December 16, 2002, File No. 333-98629.

(h)           Participation Agreements.

1. Fund Participation Agreement with AIM Variable Insurance Funds, AIM Advisors, Inc., and AIM Distributors dated January 6, 2003.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

2. Fund Participation Agreement (Amended and Restated) with Alliance Capital Management L.P. and Alliance-Bernstein Investment Research and Management, Inc. dated June 1, 2003.  Incorporated herein by reference to Pre-Effective Amendment no. 3, filed on September 27, 2007, File No. 333-137202.

3. Amended and Restated Fund Participation and Shareholder Services Agreement with American Century Investment Services, Inc. dated September 15, 2004, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

4. Restated and Amended Fund Participation Agreement with The Dreyfus Corporation dated January 27, 2000, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

5. Fund Participation Agreement with Federated Insurance Series and Federated Securities Corp. dated April 1, 2006, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

6. 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.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

7. Amended and Restated Fund Participation Agreement with Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc. dated May 1, 2003, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

8. Fund Participation Agreement with Fred Alger Management, Inc., Fred Alger & Company Incorporated dated October 1, 2004. Incorporated herein by reference to Post-Effective Amendment no. 3, filed on April 26, 2011, File No. 333-164118.

9. Fund Participation Agreement, Service and Institutional Shares, with Janus Aspen Series, dated December 31, 1999.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

10. Fund Participation Agreement, Service II Shares, with Janus Aspen Series, dated May 5, 2002.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

11. Amended and Restated Fund Participation Agreement with MFS Variable Insurance Trust and Massachusetts Financial Services Company dated February 1, 2003, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

12. Fund Participation Agreement with Nationwide Variable Insurance Trust (formerly, Gartmore Variable Insurance Trust) dated May 2, 2005, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

13. Fund Participation Agreement with Neuberger Berman Advisers Management Trust / Lehman Brothers Advisers Management Trust (formerly, Neuberger Berman Advisers Management Trust) dated January 1, 2006.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

14. Fund Participation Agreement with Oppenheimer Variable Account Funds and Oppenheimer Funds, Inc. dated April 13, 2007.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

15. Fund Participation Agreement with PIMCO Variable Insurance Trust and PIMCO Funds Distributors, LLC, dated March 28, 2002.  Incorporated herein by reference to Pre-Effective Amendment no. 3, filed on September 27, 2007, FILE No. 333-137202.

16 Fund Participation Agreement with Putnam Variable Trust and Putnam Retail Management, L.P., dated February 1, 2002.  Incorporated herein by reference to Pre-Effective Amendment no. 3, filed on September 27, 2007, File No. 333-137202.

17. Fund Participation Agreement with T. Rowe Price Equity Series, Inc., T. Rowe Price International Series, Inc., T. Rowe Price Fixed Income Series, Inc., and T. Rowe Price Investment Services, Inc. dated October 1, 2002, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

18. Fund Participation Agreement with The Universal Institutional Funds, Inc., Morgan Stanley Distribution, Inc., and Morgan Stanley Investment Management, Inc. dated February 1, 2002, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 1, filed on July 17, 2007, File No. 333-140608.

19. Fund Participation Agreement Van Eck Investment Trust, Van Eck Associates Corporation, Van Eck Securities Corporation dated September 1, 1989, as amended.  Incorporated herein by reference to Pre-Effective Amendment no. 3, filed on September 27, 2007, File No. 333-137202.

 (i)           Administrative Contracts. Not applicable.

(j)           Other Material Contracts. Not applicable.

(k) Legal Opinion. Filed previously with initial registration statement (333-164119) on January 4, 2010 as document "exhibitk.htm" and hereby incorporated by reference..

(l)           Actuarial Opinion. Not applicable.

(m)           Calculations.  Not applicable.

(n)           Other Opinions

1.   Consent of Independent Registered Public Accounting Firm.  Attached hereto.

(o)           Omitted Financial Statements.  Not applicable.

(p)           Initial Capital Agreements.  Not applicable.

(q) Redeemability Exemption. Attached hereto as document "item26q.htm".

(99) Power of Attorney. Attached hereto.

Item 27. Directors and Officers of the Depositor

President and Chief Operating Officer and Director	Kirt A. Walker
Executive Vice President-Chief Legal and Governance Officer	Patricia R. Hatler
Executive Vice President	Terri L. Hill
Executive Vice President-Finance	Lawrence A. Hilsheimer
Executive Vice President-Chief Marketing & Strategy 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	Steven M. English
Senior Vice President	Harry H. Hallowell
Senior Vice President and Treasurer	David LaPaul
Senior Vice President-Business Transformation Office	Robert P. McIsaac
Senior Vice President-Chief Claims Officer	David A. Bano
Senior Vice President-Chief Compliance Officer	Sandra L. Rich
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 ACS	Daniel G. Greteman
Senior Vice President-CIO Enterprise Applications	Mark A. Gaetano
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 Marketing	Gordon E. Hecker
Senior Vice President-Corporate Strategy	Katherine M. Liebel
Senior Vice President-Deputy General Counsel	Thomas W. Dietrich
Senior Vice President-Deputy General Counsel	Sandra L. Neely
Senior Vice President-Distribution and Sales	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	Jeff M. Rommel
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 Strategic Initiatives	Robert J. Dickson
Senior Vice President-Nationwide Financial	Steven C. Power
Senior Vice President-Nationwide Financial Network	Peter A. Golato
Senior Vice President-NF Brand Marketing	William J. Burke
Senior Vice President-NI Brand Marketing	Jennifer M. Hanley
Senior Vice President-NW Retirement Plans	Anne L. Arvia
Senior Vice President-PCIO Sales Support	Melissa D. Gutierrez
Senior Vice President-President-Nationwide Bank	J. Lynn Greenstein
Senior Vice President-Property and Casualty Commercial/Farm Product Pricing	W. Kim Austen
Vice President-Corporate Governance and Secretary	Robert W. Horner, III
Director	Stephen S. Rasmussen

The business address of the Directors and Officers of the Depositor is:

One Nationwide Plaza, Columbus, Ohio 43215

Item 28.                      Persons Controlled by or Under Common Control with the Depositor or Registrant.

*	Subsidiaries for which separate financial statements are filed
**	Subsidiaries included in the respective consolidated financial statements
***	Subsidiaries included in the respective group financial statements filed for unconsolidated subsidiaries
****	Other subsidiaries
COMPANY		STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
1492 Capital, LLC		Ohio	The company acts as an investment holding company.
AGMC Reinsurance, Ltd.		Turks & Caicos Islands	The company is in the business of reinsurance of mortgage guaranty risks.
ALLIED General Agency Company		Iowa	The company acts as a managing general agent and surplus lines broker for property and casualty insurance products.
ALLIED Group, Inc.		Iowa	The company is a property and casualty insurance holding company.
ALLIED Insurance Company of America		Ohio	The company is organized to write commercial lines insurance business.
ALLIED Property and Casualty Insurance Company		Iowa	The company underwrites general property and casualty insurance.
ALLIED Texas Agency, Inc.		Texas	The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company.
AMCO Insurance Company		Iowa	The company underwrites general property and casualty insurance.
American Marine Underwriters, Inc.		Florida	The company is an underwriting manager for ocean cargo and hull insurance.
Champions of the Community, Inc.		Ohio	The company raises money to enable it to make gifts and grants to charitable organizations.
Colonial County Mutual Insurance Company*		Texas	The company underwrites non-standard automobile and motorcycle insurance and other commercial liability coverages in Texas.
Crestbrook Insurance Company		Ohio	The company is a multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance.
Depositors Insurance Company		Iowa	The company underwrites general property and casualty insurance.
DVM Insurance Agency, Inc.		California	The company places non-California pet insurance business not written by Veterinary Pet Insurance Company.
Farmland Mutual Insurance Company		Iowa	The company provides property and casualty insurance primarily to agricultural businesses.
Freedom Specialty Insurance Company		Ohio	The company operates as a multi-line insurance company.
Gates McDonald of Ohio, LLC		Ohio	The company provided services to employers for managing workers’ and unemployment compensation matters and employee benefit costs.  The company is currently winding down to permit its eventual dissolution.
Gates, McDonald & Company of New York, Inc.		New York	The company provides workers’ compensation and self-insured claims administration services to employers with exposure in New York.
GatesMcDonald Health Plus, LLC		Ohio	The company provided medical management and cost containment services to employers.  The company is currently winding down to permit its eventual dissolution.
Insurance Intermediaries, Inc.		Ohio	The company is an insurance agency and provides commercial property and casualty brokerage services.

COMPANY	STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
Life Reo Holdings, LLC	Ohio	The company is an investment holding company.
Lone Star General Agency, Inc.	Texas	The company acts as general agent to market nonstandard automobile and motorcycle insurance for Colonial County Mutual Insurance Company.
National Casualty Company	Wisconsin	The company underwrites various property and casualty coverage, as well as some individual and group accident and health insurance.
National Casualty Company of America, Ltd.	England	This is a limited liability company organized for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds.  The company is currently inactive.
Nationwide Advantage Mortgage Company*	Iowa	The company makes residential mortgage loans.
Nationwide Affinity Insurance Company of America	Ohio	The company is a property and casualty insurer that writes personal lines business.
Nationwide Agribusiness Insurance Company	Iowa	The company provides property and casualty insurance primarily to agricultural businesses.
Nationwide Arena, LLC*	Ohio	The purpose of the company is to develop Nationwide Arena and to engage in related development activity.
Nationwide Asset Management, LLC	Ohio	The company provides investment advisory services as a registered investment advisor to affiliated and non-affiliated clients.
Nationwide Assurance Company	Wisconsin	The company underwrites non-standard automobile and motorcycle insurance.
Nationwide Bank*	United States	This is a federally chartered savings bank supervised by 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 Better Health (Ohio), LLC	Ohio	The company provided employee population health management.  The company is currently winding down to permit its eventual dissolution.
Nationwide Better Health Holding Company, LLC	Ohio	The company is a holding company.  The company is currently winding down to permit its eventual dissolution.
Nationwide Cash Management Company	Ohio	The company buys and sells investment securities of a short-term nature as the agent for other corporations, foundations and insurance company separate accounts.
Nationwide Community Development Corporation, LLC	Ohio	The company holds investments in low-income housing funds.
Nationwide Corporation	Ohio	The company acts as a holding company.
Nationwide Emerging Managers, LLC	Delaware	The company acts as a holding company.
Nationwide Exclusive Agent Risk Purchasing Group, LLC	Ohio	The company’s purpose is to provide a mechanism for the purchase of group liability insurance for insurance agents operating nationwide.
Nationwide Financial Assignment Company	Ohio	The company is an administrator of structured settlements.
Nationwide Financial General Agency, Inc. (fka 1717 Brokerage Services, Inc.)	Pennsylvania	The company is a multi-state licensed insurance agency.
Nationwide Financial Institution Distributors Agency, Inc.	Delaware	The company is an insurance agency.
Nationwide Financial Services Capital Trust	Delaware	The trust’s sole purpose is to issue and sell certain securities representing individual beneficial interests in the assets of the trust.
Nationwide Financial Services, Inc.*	Delaware	The company acts primarily as a holding company for companies within the Nationwide organization that offer or distribute life insurance, long-term savings and retirement products.

COMPANY	STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
Nationwide Financial Structured Products, LLC	Ohio	The company captures and reports the results of the structured products business unit.
Nationwide Fund Advisors (fka Gartmore Mutual Fund Capital Trust)	Delaware	The trust acts as a registered investment advisor.
Nationwide Fund Distributors LLC (successor to Gartmore Distribution Services, Inc.)	Delaware	The company is a limited purpose broker-dealer.
Nationwide Fund Management LLC (successor to Gartmore Investors Services, Inc.)	Delaware	The company provides administration, transfer and dividend disbursing agent services to various mutual fund entities.
Nationwide General Insurance Company	Ohio	The company transacts a general insurance business, except life insurance, and primarily provides automobile and fire insurance to select customers.
Nationwide Global Holdings, Inc.	Ohio	The company acts as a holding company.
Nationwide Global Ventures, Inc.	Delaware	The company acts as a holding company.
Nationwide Indemnity Company*	Ohio	The company is involved in the reinsurance business and assumes business from Nationwide Mutual Insurance Company and other insurers within the Nationwide insurance organization.
Nationwide Insurance Company of America	Wisconsin	The company is an independent agency personal lines underwriter of property and casualty insurance.
Nationwide Insurance Company of Florida*	Ohio	The company transacts general insurance business, except life insurance.
Nationwide Insurance Foundation*	Ohio	The company contributes to non-profit activities and projects.
Nationwide Investment Advisors, LLC	Ohio	The company provides investment advisory services.
Nationwide Investment Services Corporation**	Oklahoma	This is a limited purpose broker-dealer and distributor of variable annuities and variable life products for Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company.  The company also provides educational services to retirement plan sponsors and its participants.
Nationwide Life and Annuity Insurance Company*	Ohio	The company engages in underwriting life insurance and granting, purchasing and disposing of annuities.
Nationwide Life Insurance Company*	Ohio	The company provides individual life insurance, group life and health insurance, fixed and variable annuity products and other life insurance products.
Nationwide Lloyds	Texas	The company markets commercial and property insurance in Texas.
Nationwide Mutual Fire Insurance Company	Ohio	The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Mutual Insurance Company*	Ohio	The company engages in a general insurance and reinsurance business, except life insurance.
Nationwide Private Equity Fund, LLC	Ohio	The company invests in private equity funds.
Nationwide Property and Casualty Insurance Company	Ohio	The company engages in a general insurance business, except life insurance.
Nationwide Property Protection Services, LLC	Ohio	The company provides alarm systems and security guard services.
Nationwide Realty Investors, Ltd.*	Ohio	The company is engaged in the business of developing, owning and operating real estate and real estate investment.

COMPANY	STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
Nationwide Realty Services, Ltd.	Ohio	The company provides relocation services to Nationwide associates.
Nationwide Retirement Solutions, Inc.*	Delaware	The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Arizona	Arizona	The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions, Inc. of Ohio	Ohio	The company provides retirement products, marketing and education and administration to public employees.
Nationwide Retirement Solutions, Inc. of Texas	Texas	The company markets and administers deferred compensation plans for public employees.
Nationwide Retirement Solutions Insurance Agency, Inc.	Massachusetts	The company markets and administers deferred compensation plans for public employees.
Nationwide SA Capital Trust	Delaware	The trust acts as a holding company.
Nationwide Sales Solutions, Inc.	Iowa	The company engages in the direct marketing of property and casualty insurance products.
Nationwide Securities, LLC	Delaware	The company is a registered broker-dealer.
Nationwide Services Company, LLC	Ohio	The company performs shared services functions for the Nationwide organization.
Newhouse Capital Partners, LLC	Delaware	The company is an investment holding company.
Newhouse Capital Partners II, LLC	Delaware	The company is an investment holding company.
NFS Distributors, Inc.	Delaware	The company acts primarily as a holding company for Nationwide Financial Services, Inc. companies.
NWD Asset Management Holdings, Inc.	Delaware	The company acts as a holding company.
NWD Investment Management, Inc.	Delaware	The company acts as a holding company and provides other business services for the NWD Investments Management group of companies.
NWD Management & Research Trust	Delaware	The company acts as a holding company for the NWD Investments Management group.
Olentangy Reinsurance, LLC	Vermont	The company is a captive life reinsurance company.
Pension Associates, Inc.	Wisconsin	The company provides pension plan administration and recordkeeping services, and pension plan and compensation consulting.
Premier Agency, Inc.	Iowa	The company is an insurance agency.
Privilege Underwriters, Inc.	Delaware	The company acts as a holding company for the PURE Group of insurance companies.
Privilege Underwriters, Reciprocal Exchange	Florida	The company acts as a reciprocal insurance company.
Pure Insurance Company	Florida	The company acts as a captive reinsurance company.
Pure Risk Management, LLC	Florida	The company acts as an attorney-in-fact for Privilege Underwriters Reciprocal Exchange.
Registered Investment Advisors Services, Inc.	Texas	The company is a technology company that facilitates third-party money management services for registered investment advisors.
Retention Alternatives, Ltd.*	Bermuda	The company is a captive insurer and writes first dollar insurance policies in workers’ compensation, general liability and automobile liability for its affiliates in the United States.
Riverview International Group, Inc.	Delaware	The company is an inactive shell company.

COMPANY	STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
Scottsdale Indemnity Company	Ohio	The company is engaged in a general insurance business, except life insurance.
Scottsdale Insurance Company	Ohio	The company primarily provides excess and surplus lines of property and casualty insurance.
Scottsdale Surplus Lines Insurance Company	Arizona	The company provides excess and surplus lines coverage on a non-admitted basis.
THI Holdings (Delaware), Inc.	Delaware	The company acts as a holding company.
Titan Auto Insurance of New Mexico, Inc.	New Mexico	The company is an insurance agency that operates employee agent storefronts.
Titan Indemnity Company	Texas	The company is a multi-line insurance company that operates primarily as a property and casualty insurance company.
Titan Insurance Company	Michigan	The company is a property and casualty insurance company.
Titan Insurance Services, Inc.	Texas	The company is a Texas grandfathered managing general agency.
Veterinary Pet Insurance Company*	California	The company provides pet insurance.
Victoria Automobile Insurance Company	Indiana	The company is a property and casualty insurance company.
Victoria Fire & Casualty Company	Ohio	The company is a property and casualty insurance company.
Victoria National Insurance Company	Ohio	The company is a property and casualty insurance company.
Victoria Select Insurance Company	Ohio	The company is a property and casualty insurance company.
Victoria Specialty Insurance Company	Ohio	The company is a property and casualty insurance company.
VPI Services, Inc.	California	The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance Company policies, including pet indemnification and a lost pet recovery program.
Western Heritage Insurance Company	Arizona	The company underwrites excess and surplus lines of property and casualty insurance.
Whitehall Holdings, Inc.	Texas	The company acts as a holding company for the Titan group.
W.I. of Florida (d.b.a. Titan Auto Insurance)	Florida	The company is an insurance agency.

COMPANY	STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
MFS Variable Account*	Ohio	Issuer of variable annuity contracts.
Nationwide Multi-Flex Variable Account*	Ohio	Issuer of variable annuity contracts.
Nationwide VA Separate Account-A*	Ohio	Issuer of variable annuity contracts.
Nationwide VA Separate Account-B*	Ohio	Issuer of variable annuity contracts.
Nationwide VA Separate Account-C*	Ohio	Issuer of variable annuity contracts.
Nationwide VA Separate Account-D*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-II*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-3*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-4*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-5*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-6*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-7*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-8*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-9*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-10*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-11*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-12*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-13*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-14*	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-15	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-16	Ohio	Issuer of variable annuity contracts.
Nationwide Variable Account-17	Ohio	Issuer of variable annuity contracts.
Nationwide Provident VA Separate Account 1*	Pennsylvania	Issuer of variable annuity contracts.
Nationwide Provident VA Separate Account A*	Delaware	Issuer of variable annuity contracts.
Nationwide VL Separate Account-A	Ohio	Issuer of variable life insurance policies.

COMPANY	STATE/COUNTRY OF ORGANIZATION	PRINCIPAL BUSINESS
Nationwide VL Separate Account-C*	Ohio	Issuer of variable life insurance policies.
Nationwide VL Separate Account-D*	Ohio	Issuer of variable life insurance policies.
Nationwide VL Separate Account-G*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account-2*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account-3*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account-4*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account-5*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account-6*	Ohio	Issuer of variable life insurance policies.
Nationwide VLI Separate Account-7*	Ohio	Issuer of variable life insurance policies.
Nationwide Provident VLI Separate Account 1*	Pennsylvania	Issuer of variable life insurance policies.
Nationwide Provident VLI Separate Account A*	Delaware	Issuer of variable life insurance policies.

The ownership and control of each of the companies/entities listed above (including the percentage of voting securities owned or other basis of control) is shown in the following organizational chart.

Item 29.  Indemnification

Ohio's General Corporation Law expressly authorizes and Nationwide Life Insurance Company’s Amended and Restated Code of Regulations provides for indemnification by Nationwide Life Insurance Company of any person who, because such person is or was a director, officer or employee of Nationwide Life Insurance Company was or is a party; or is threatened to be made a party to:

·   any threatened, pending or completed civil action, suit or proceeding;

·   any threatened, pending or completed criminal action, suit or proceeding;

·   any threatened, pending or completed administrative action or proceeding;

·   any threatened, pending or completed investigative action or proceeding.

·   any threatened, pending or completed civil action, suit or proceeding;

The indemnification will be for actual and reasonable expenses, including attorney's fees, judgments, fines and amounts paid in settlement by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the Ohio's General Corporation Law.

Although Nationwide Life Insurance Company is of the opinion that the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding is permitted, Nationwide Life Insurance Company has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide Life Insurance Company for liabilities arising under the Securities Act of 1933 (“Act”) is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act. Nationwide Life Insurance Company and the directors, officers and/or controlling persons will be governed by the final adjudication of such issue.  Nationwide Life Insurance Company will not be required to seek the court’s determination if, in the opinion of Nationwide Life Insurance Company’s counsel, the matter has been settled by controlling precedent.

Item 30.  Principal Underwriter

(a) Nationwide Investment Services Corporation ("NISC") serves as principal underwriter and general distributor for the following separate investment accounts of Nationwide or its affiliates:

MFS Variable Account	Nationwide VA Separate Account-D
Multi-Flex Variable Account	Nationwide VLI Separate Account
Nationwide Variable Account	Nationwide VLI Separate Account-2
Nationwide Variable Account-II	Nationwide VLI Separate Account-3
Nationwide Variable Account-3	Nationwide VLI Separate Account-4
Nationwide Variable Account-4	Nationwide VLI Separate Account-5
Nationwide Variable Account-5	Nationwide VLI Separate Account-6
Nationwide Variable Account-6	Nationwide VLI Separate Account-7
Nationwide Variable Account-7	Nationwide VL Separate Account-A
Nationwide Variable Account-8	Nationwide VL Separate Account-C
Nationwide Variable Account-9	Nationwide VL Separate Account-D
Nationwide Variable Account-10	Nationwide VL Separate Account-G
Nationwide Variable Account-11	Nationwide Provident VA Separate Account 1
Nationwide Variable Account-12	Nationwide Provident VA Separate Account A
Nationwide Variable Account-13	Nationwide Provident VLI Separate Account 1
Nationwide Variable Account-14	Nationwide Provident VLI Separate Account A
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C

(b) Directors and Officers of NISC:

President	Robert O. Cline
Vice President, Treasurer and Director	Keith L. Sheridan
Vice President-Chief Compliance Officer	James J. Rabenstine
Associate Vice President and Secretary	Kathy R. Richards
Associate Vice President-Finance Operations and Assistant Treasurer	Terry C. Smetzer
Associate Vice President	John J. Humphries, Jr.
Assistant Treasurer	J. Morgan Elliott
Assistant Treasurer	Jerry L. Greene
Director	John L. Carter
Director	Eric S. Henderson

The business address of the Directors and Officers of Nationwide Investment Services Corporation is:

 One Nationwide Plaza, Columbus, Ohio 43215

(c)

Name of Principal Underwriter	Net Underwriting Discounts and Commissions	Compensation on Redemption	Brokerage Commissions	Compensation
Nationwide Investment Services Corporation	N/A	N/A	N/A	N/A

Item 31.  Location of Accounts and Records

Timothy G. Frommeyer

Nationwide Life Insurance Company

One Nationwide Plaza

Columbus, OH  43215

Item 32.  Management Services

All management contracts are discussed in Part A or Part B.

Item 33.  Fee Representation

Nationwide Life Insurance Company hereby represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Nationwide Life Insurance Company.

SIGNATURES

As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, Nationwide Provident VLI Separate Account 1, certifies that it meets the requirement of the Securities Act Rule 485(b) for effectiveness of the Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of Columbus, and State of Ohio, on this 24 th   day of April, 2012 .

NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT 1

(Registrant)

NATIONWIDE LIFE INSURANCE COMPANY

(Depositor)

By:  /s/ TIMOTHY D. CRAWFORD

Timothy D. Crawford

Pursuant to the requirements of the Securities Act, the registration statement has been signed below by the following persons in the capacities indicated on the 24 th   day of April, 2012 .

KIRT A. WALKER
Kirt A. Walker, President, Chief Operating Officer, and Director
MARK R. THRESHER
Mark R. Thresher, Executive Vice President and Director
TIMOTHY G. FROMMEYER
Timothy G. Frommeyer, Senior Vice President-Chief Financial Officer and Director
ERIC S. HENDERSON
Eric S. Henderson, Senior Vice President-Individual Products & Solutions and Director
STEPHEN S. RASMUSSEN
Stephen S. Rasmussen, Director
	By:  /s/TIMOTHY D. CRAWFORD
	Timothy D. Crawford
	Attorney-in-Fact