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SUPPLEMENT DATED JULY 23, 1997
TO PROSPECTUS DATED MAY 1, 1997
NATIONWIDE SEPARATE ACCOUNT TRUST
CAPITAL APPRECIATION FUND
TOTAL RETURN FUND
GOVERNMENT BOND FUND
MONEY MARKET FUND
Capitalized terms used herein have the meaning assigned to them in the
Prospectus.
SPECIAL MEETING OF SHAREHOLDERS
At a meeting of the Board of Trustees of Nationwide Separate Account
Trust (the "Trust") on July 18, 1997, the Board of Trustees approved the
submission of the following issues to the shareholders of the Funds for approval
at a Special Meeting of Shareholders to be held on September 26, 1997:
1. To elect a Board of Trustees;
2. To ratify the selection of KPMG Peat Marwick LLP, independent
public accountants, as auditors to be employed by the Trust
for the fiscal year ending December 31, 1997;
3. To approve a new Investment Advisory Agreement between the
Trust and Nationwide Advisory Services, Inc. ("NAS") with
respect to each Fund which, among others, will change the fees
paid by Shareholders of these Funds;
4. To approve the Trust's Bylaws as proposed to be amended; and
5. To approve certain modifications or reclassification of
certain fundamental investment policies of each Fund.
The record date for the Special Meeting is July 30, 1997. The owners of variable
annuity and variable life insurance contracts as of the record date ("variable
contracts") issued by Nationwide Life Insurance Company or Nationwide Life and
Annuity Insurance Company ("Nationwide") will be entitled to instruct Nationwide
as to the manner in which the Fund shares attributable to his or her contract
should be voted. Proxy materials containing more information about these
proposals are expected to first be sent to variable contract holders on or about
August 19, 1997. If approved by shareholders, the Investment Advisory Agreement
described in Proposal 3 and the amendments to the Funds' fundamental investment
policies would become effective on November 1,1997.
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Further Information about Proposal 3
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In approving the proposed Investment Advisory Agreement, the Trustees
approved revisions to the investment advisory and fund administration fees for
the Funds and decided to approve the separation of the investment advisory
services provided by NAS from the basic fund administration services that NAS
provides. Pursuant to the proposed Investment Advisory Agreement, NAS will
continue to provide the same types of investment advisory services that it
currently provides to the Funds under the current investment advisory agreement.
However, the fund administration services that NAS currently provides to the
Funds and is compensated for under the current investment advisory agreement
would be provided by NAS under a separate fund administration agreement (the
"Fund Administration Agreement"). The Fund Administration Agreement would also
cover the fund accounting services, including daily valuation and pricing,
provided by NAS for the Funds. Under the terms of the Fund Administration
Agreement, NAS would receive for its services to each Fund a fee, calculated
daily and paid monthly, at an annual rate of 0.05% of a Fund's average daily net
assets on assets up to $1 billion and 0.04% on assets of $1 billion and more.
The fees to be paid to NAS by each Fund under the proposed Investment
Advisory Agreement would also change from those currently charged. Each Fund is
currently charged a 0.50% annual fee on such Fund's average annual daily net
assets. Such investment advisory fees, expressed as an annual percentage of
average daily net assets, are set forth below and are in addition to the fees to
be charged under the Fund Administration Agreement:
<TABLE>
<CAPTION>
Fund Proposed Advisory Fees
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<S> <C>
Total Return Fund 0.60% on assets up to $1 billion
and Capital Appreciation 0.575% on assets over $1 billion but less
Fund than $2 billion
0.55% on assets over $2 billion but less
than $5 billion
0.50% for assets over $5 billion
Government Bond Fund 0.50% on assets up to $1 billion
0.475% on assets over $1 billion but less
than $2 billion
0.45% on assets over $2 billion but less
than $5 billion
0.40% for assets over $5 billion
Money Market Fund 0.40% on assets up to $1 billion
0.38% on assets over $1 billion but less
than $2 billion
0.36% on assets over $2 billion but less
than $5 billion
0.34% for assets over $5 billion
</TABLE>
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If the proposed Investment Advisory Agreement is approved by shareholders of a
Fund, NAS will implement it and the Fund Administration Agreement on behalf of
that Fund.
Further Information about Proposal 5
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Currently the Funds have fundamental investment restrictions that vary
between the Funds and those of other funds in the Nationwide family of mutual
funds. The Funds also have investment restrictions that reflect legal and other
requirements that are no longer applicable to the Funds. In the interests of
efficiency in fund management and compliance, NAS has analyzed the fundamental
investment limitations and policies of the Funds in an effort to formulate a
standard set of policies that reflect current industry practice and which will
allow the Funds to respond to changes in regulatory and industry practice
without the expense and delay of a shareholder vote. It should be noted that the
adoption of the proposed changes is not expected to substantially affect the way
in which the Funds are managed.
THIS SUPPLEMENT SHOULD BE RETAINED WITH
THE PROSPECTUS FOR FUTURE REFERENCE
