<PAGE> 1
SUPPLEMENT DATED OCTOBER 1, 1997
TO PROSPECTUS DATED MAY 1, 1997
NATIONWIDE SMALL COMPANY FUND
At a Special Meeting of Shareholders held on September 26, 1997, Shareholders of
the Nationwide Small Company Fund (the "Fund") approved a proposal which
authorizes the Board of Trustees to appoint, replace or terminate subadvisers
without the approval of the Fund's shareholders; the order would also allow
Nationwide Advisory Services, Inc. ("NAS") to revise a subadvisory agreement
without shareholder approval. This authorization will only be utilized if an
exemptive order which NAS and Nationwide Separate Account Trust (the "Trust"),
on behalf of the Fund , have applied for is granted by the Securities and
Exchange Commission. If the order is granted, any change in subadvisers will be
communicated to shareholders within 60 days of such changes and all changes will
be approved by the Trust's Board of Trustees, including a majority of the
Trustees who are not interested persons of the Trust or NAS. The order, if
granted, is intended to facilitate the efficient operation of the Fund and
afford the Trust increased management flexibility. Prior to receiving the
exemptive order, NAS will not appoint, replace or terminate any subadvisers or
materially amend any subadvisory agreement without obtaining the approval of
shareholders.
The following FINANCIAL HIGHLIGHTS table replaces the table on page 2 of the
prospectus:
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
selected data for a share outstanding throughout each period
- -------------------------------------------------------------------------------------------------------------------------------
Period from
October 23, 1995
Six months Year (commencement of
ended ended operations) through
June 30, December 31, December 31,
1997 1996 1995
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 13.89 $ 11.42 $ 10.00
Net investment income 0.02 0.06 0.02
Net realized gain (loss) and unrealized appreciation on
investments and translation of assets and liabilities in
foreign currencies 1.25 2.55 1.42
----------- -------- --------
Total from investment operations 1.27 2.61 1.44
----------- -------- --------
Dividends from net investment income --- (0.06) (0.02)
Dividends in excess of net realized gain from investment
transactions and foreign currencies --- (0.08) ---
----------- -------- --------
Total distributions --- (0.14) (0.02)
----------- -------- --------
Net increase in net asset value 1.27 2.47 1.42
----------- -------- --------
NET ASSET VALUE -- END OF PERIOD $ 15.16 $ 13.89 $ 11.42
=========== ======== ========
Total Return 9.14%* 22.83% 14.38%*
Ratios and supplemental data:
Net Assets, end of period (000) $ 241,923 $ 80,840 $17,155
Ratio of expenses to average net assets 1.10%* 1.20% 1.25%*
Ratio of expenses to average net assets** 1.10%* 1.20% 1.74%*
Ratio of net investment income to average net assets .27%* .60% 1.32%*
Ratio of net investment income to average net assets** .27%* .60% 0.83%*
Portfolio turnover 67.23%* 136.74% 9.03%*
Average commission rate paid*** 2.5800(cent) 2.8802(cent) ---
</TABLE>
- ------------------------------------------------------------------------------
* Ratios are annualized for periods of less than one year. Total return and
portfolio turnover are not annualized
** Ratios calculated as if no fees were waived or expenses reimbursed.
*** Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by
the Fund for which commissions were charged.
<PAGE> 2
The information in the Financial Highlights, except for the six months ended
June 30, 1997, has been audited by KPMG Peat Marwick LLP, independent auditors,
whose report on the financial statements appears in the Statement of Additional
Information. The Statement of Additional Information and the Annual Report for
the Fund which contains further information about the Fund's performance may be
obtained free of charge by calling (614) 249-5134. These Financial Highlights
should be read in conjunction with the audited financial statements of the Fund.
SUMMARY OF FUND EXPENSES
The tables below summarize various cost and expenses an investor will bear,
directly or indirectly when investing in the Small Company Fund:
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<S> <C>
Advisory Fees 1.00%
Other Expenses 0.10%
----
Total Fund Operating Expenses 1.10%
====
</TABLE>
Example:
You could pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C>
$11 $35 $61 $134
</TABLE>
The expenses shown above in the chart and example do not include
variable contract charges, if applicable. The example should not be
considered a representation of past or future expenses. Actual expenses
may be greater or less than those shown.
Under the heading SALE OF FUND SHARES on page 3 of the Prospectus, the first
sentence of the paragraph is hereby deleted and replaced by the following:
Shares of the Funds may be sold to life insurance company separate accounts (the
"Accounts") to fund the benefits of variable life insurance policies or annuity
contracts (the "Contracts") issued by life insurance companies, as well as to
other open-end investment companies (each a "Fund of Funds") created by
Nationwide Advisory Services, Inc., the Fund's investment advisor.
Under the heading INVESTMENT IN FUND SHARES on page 15 of the Prospectus, the
second paragraph is hereby deleted and replaced by the following: Shares of the
Funds may be sold to the Accounts to fund the benefits of Contracts issued by
Nationwide Life Insurance and Nationwide Life and Annuity Insurance Companies,
as well as to Funds of Funds created by Nationwide Advisory Services, Inc., the
Fund's investment advisor.
Under the heading OTHER SERVICES on page 14 of the Prospectus, the following is
added as the last sentence: For these services, NISI receives a fee, calculated
daily and paid monthly, at an annual rate of .01% of the Fund's average daily
net assets.
THIS SUPPLEMENT SHOULD BE RETAINED WITH THE PROSPECTUS FOR FUTURE REFERENCE
<PAGE> 3
SUMMARY OF FUND EXPENSES
The tables below summarize the various cost and expenses an investor will bear,
directly or indirectly based on fees in effect November 1, 1997, when investing
in the Funds:
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Capital Total Government Money
Appreciation Return Bond Market
<S> <C> <C> <C> <C>
Advisory Fees .60% .60% .50% .40%
Administration Fees .05% .05% .05% .05%
All Other Expenses .03% .02% .02% .02%
--- --- --- ---
Total Fund Operating Expenses .68% .67% .57% .47%
=== === === ===
</TABLE>
Example:
You could pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 year $ 7 $ 7 $ 6 $ 5
3 years $22 $21 $18 $15
5 years $38 $37 $32 $26
10 years $85 $83 $71 $59
</TABLE>
The expenses shown in the chart and example do not include variable
contract charges, if applicable. The example should not be considered a
representation of past or future expenses. Actual expenses may be
greater or less than those shown.
Under the heading SALE OF FUND SHARES on page 3 of the Prospectus, the first
sentence of the paragraph is hereby deleted and replaced by the following:
Shares of the Funds may be sold to life insurance company separate accounts (the
"Accounts") to fund the benefits of variable life insurance policies or annuity
contracts ("Contracts") issued by life insurance companies, as well as to other
open-end investment companies (each a "Fund of Funds") created by Nationwide
Advisory Services, Inc., the Funds' investment advisor.
Under the heading INVESTMENT IN FUND SHARES on page 9 of the Prospectus, the
second paragraph is hereby deleted and replaced by the following: Shares of the
Funds may be sold to the Accounts to fund the benefits of Contracts issued by
Nationwide Life Insurance and Nationwide Life and Annuity Insurance Companies,
as well as to Funds of Funds created by Nationwide Advisory Services, Inc., the
Funds' investment advisor.
THIS SUPPLEMENT SHOULD BE RETAINED WITH THE PROSPECTUS FOR FUTURE REFERENCE
<PAGE> 4
SUPPLEMENT DATED OCTOBER 1, 1997
TO PROSPECTUS DATED MAY 1, 1997
NATIONWIDE SEPARATE ACCOUNT TRUST
CAPITAL APPRECIATION FUND
TOTAL RETURN FUND
GOVERNMENT BOND FUND
MONEY MARKET FUND
At a Special Meeting of Shareholders held on September 26, 1997, Shareholders of
the Capital Appreciation Fund, Total Return Fund, Government Bond Fund and Money
Market Fund ("the Funds") approved a new Investment Advisory Agreement with
Nationwide Advisory Services, Inc.("NAS").
The new Investment Advisory Agreement changes the advisory fees paid to NAS
effective November 1, 1997 from 0.50% of each Fund's average annual daily net
assets to the following fees expressed as an annual percentage of average daily
net assets:
Fund Advisory Fees
---- -------------
Total Return Fund and 0.60% on assets up to $1 billion
Capital Appreciation Fund 0.575% on assets of $1 billion
and more but less than $2 billion
0.55% on assets of $2 billion and
more but less than $5 billion
0.50% for assets of $5 billion
and more
Government Bond Fund 0.50% on assets up to $1 billion
0.475% on assets of $1 billion and
more but less than $2 billion
0.45% on assets of $2 billion and
more but less than $5 billion
0.40% for assets of $5 billion and
more
Money Market Fund 0.40% on assets up to $1 billion
0.38% on assets of $1 billion and
more but less than $2 billion
0.36% on assets of $2 billion and
more but less than $5 billion
0.34% for assets of $5 billion and
more
In addition, effective November 1, 1997, fund accounting and administrative
services for the Funds will be provided by NAS under a separate Fund
Administration Agreement. Under the terms of the Fund Administration Agreement,
NAS will receive a fee from each Fund, calculated daily and paid monthly, at an
annual rate of 0.05% of each Fund's average daily net assets up to $1 billion
and 0.04% on assets of $1 billion and more.
NAS, through its wholly-owned subsidiary Nationwide Investors Services, Inc.
("NISI"), also serves as transfer and dividend disbursing agent for the Funds
pursuant to a Transfer and Dividend Disbursing Agent Agreement. Under the terms
of the agreement , effective November 1, 1997, NAS will receive a fee,
calculated daily and paid monthly, at an annual rate of 0.01% of each Fund's
average daily net assets.
<PAGE> 5
The following unaudited Financial Highlights for the six months ended June 30,
1997 is inserted under the heading FINANCIAL HIGHLIGHTS on page 2 of the
Prospectus for each Fund after the line for the year ended December 31, 1996.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout the period)
Net
Realized Distributions
Net Gain From Net
Asset (Loss) & Total Distributions Realized
Value Net Unrealized From From Net Gain From
Beginning Investment Appreciation Investment Investment Investment Total
of Period Income (Depreciation) Operations Income Transactions Distributions
-------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL RETURN
FUND $13.27 $.13 $2.44 $2.57 ($.13) --- ($.13)
CAPITAL
APPRECIATION
FUND 16.28 .18 3.28 3.46 (.18) --- (.18)
GOVERNMENT
BOND FUND 11.04 .35 (.04) .31 (.35) --- (.35)
MONEY MARKET
FUND 1.00 .03 --- .03 (.03) --- (.03)
</TABLE>
<TABLE>
<CAPTION>
Net
Net Investment
Asset Expenses Income to Net Assets
Value to Average Average Average at End of
End of Total Net Net Portfolio Commission Period
Period Return Assets Assets Turnover Rate Paid (000's) Year
---------------------------------------------------------------------------------------------------------------
RATIOS & SUPPLEMENTAL DATA NET ASSETS
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL RETURN
FUND $15.71 19.41% .51%* 1.83%* 6.3% 4.3819(cent) $1,563,874 1997+
CAPITAL
APPRECIATION
FUND 19.56 20.80 .51* 1.21* 4.7 5.9652(cent) 337,824 1997+
GOVERNMENT
BOND FUND 11.00 2.84 .51* 6.29* 41.8 --- 431,593 1997+
MONEY MARKET
FUND 1.00 2.54 .51* 5.09* --- --- 999,882 1997+
</TABLE>
* Annualized. Total Return and portfolio turnover are not annualized.
+ Six months ended June 30, 1997.
