Nationwide Life Insurance Company

June 12, 2002

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Subject: Request for comments on proposed rule revision to Form N-4
File No. S7-07-02

Dear Mr. Katz:

This letter is submitted on behalf of Nationwide Life Insurance Company ("Nationwide"), a stock life insurance company organized under the laws of the State of Ohio in 1929. Nationwide offers a complete line of insurance products including fixed and variable annuities and variable life policies. It is admitted to do business in all states, the District of Columbia and Puerto Rico.

Nationwide commends your review of, and proposed revisions to, the underlying mutual fund expense table presentation and expense example of Form N-4. We also share your view of having conformity, where possible, among Form N-4, Form N-1A and newly adopted Form N-6, and, at the same time, making the prospectuses easier for investors to understand. We are pleased to have the opportunity to comment on the proposed revisions to Form N-4. Nationwide has been active in the variable product market for over 30 years, and currently offers over 50 different variable annuity and life insurance products. Nationwide's variable products are distributed through career agents/registered representatives, unaffiliated broker/dealers, financial planners and joint venture partners. Nationwide will comment on one of the proposed revisions to Form N-4 -- the range of underlying mutual fund expenses.

Currently, Form N-4 requires the Registrant to show expenses for each underlying mutual fund in the variable annuity. The proposed rule articulated in SEC Release No. 33-8087 would, instead, require disclosure of the range of expenses for all underlying mutual funds offered through the variable annuity. According to the proposed instructions, the Registrant should disclose the minimum and maximum expenses for three subcategories: management fees, 12b-1 fees and other expenses. Then, the total annual underlying mutual fund expenses should also be disclosed.

While we support the concept of disclosing the range of expenses for all underlying mutual funds, we strongly believe that only disclosing the range of total annual operating expenses, rather than the range for each of the subcategories of management, 12b-1, other and total expenses, would make the prospectuses much easier for investors to understand. The proposed tabular format effectively would consist of three columns and four rows, with the expense subcategories to the left, and then, the representative minimum and maximum percentages to the right of the corresponding subcategories, respectively. Using the Commission's sample expense numbers will help illustrate Nationwide's position and highlight the difficulties with the proposed expense presentation.

Assume the Registrant has three underlying mutual funds: Company 1 has management fees of 0.50%, 12b-1 fees of 0.25%, other expenses of 0.30%, and total expenses of 1.05%; Company 2 has management fees of 0.90%, 12b-1 fees of 0.00%, other expenses of 0.25% and total expenses of 1.15%; Company 3 has management fees of 1.00%, 12b-1 fees of 0.00%, other expenses of 0.25% and total expenses of 1.25%.

Under the Commission's proposed revisions, these expenses would be shown as follows:

Range of Underlying Mutual Fund Expenses

  Minimum Maximum
Management Fees 0.50% 1.00%
12b-1 0.00% 0.25%
Other 0.25% 0.35%
Total 1.05% 1.25%

Disclosing these minimum and maximum percentage ranges for each of the subcategories of all underlying mutual fund expenses will result in two columns of numbers that will not add up. Investors will, in the natural course, examine this chart and question why the numbers do not add up to 0.75% and 1.55% respectively. We believe this will very likely cause more confusion than comprehension as investors attempt to digest the prospectus. What most variable annuity investors really want to know, besides product feature costs, is the total charge for that underlying mutual fund.

Nationwide believes the preferable approach is to show the minimum and maximum total expenses. In lieu of listing the subcategories, we feel a narrative discussion of the subcategories, following the total expenses will be more useful to the investor. Such a discussion may explain how management fees, 12b-1 fees and other expenses make up the total annual mutual fund expenses. A statement referring investors to the underlying fund prospectus for additional information would follow this narrative description of underlying fund expenses.

It seems clear that with the proposed revisions the Commission intends for investors to refer to the prospectuses of mutual funds that are underlying investment options of variable products for greater detail regarding fund level fees and expenses. The Commission's elimination of the exclusion from the fee table requirement for mutual funds that offer shares exclusively to insurance company separate accounts supports this conclusion. It is true, and it has always been true, that to be completely and wholly informed as to the intricacies of a variable insurance product offering, familiarity with both product (contract or policy) prospectus and underlying fund prospectus is necessary. Implicitly, the Commission's proposal reinforces this view. If that is indeed the case, then the presentation of any category of fund level expense other than total fund expenses will merely create an added level of complexity that can be more appropriately and straightforwardly addressed at the underlying mutual fund prospectus level.

Nationwide further believes the approach we are suggesting for underlying mutual fund expenses should be subsequently adopted to Form N-6, allowing variable annuity and variable life products to have the same disclosure requirements.

Nationwide appreciates the Commission's attention to our views. If you have any questions about these comments, please feel free to call me at (614) 249-5276. Thank you.



Lisa Chatterton
Variable Products Securities Counsel
One Nationwide Plaza
Columbus, OH 43215