<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES EXCHANGE
ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
NATIONWIDE SEPARATE ACCOUNT TRUST
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies: _______________________
2) Aggregate number of securities to which transaction applies: __________________________
3) Per unit price or other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how
it was determined): ___________________________________________________________________
4) Proposed maximum aggregate value of transaction: ______________________________________
5) Total fee paid: _______________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid: _______________________________________________________________
2) Form, Schedule or Registration Statement No.: _________________________________________
3) Filing Party: _________________________________________________________________________
4) Date Filed: ___________________________________________________________________________
</TABLE>
<PAGE> 2
NATIONWIDE SEPARATE ACCOUNT TRUST
Three Nationwide Plaza
Columbus, Ohio 43215
(800) 848-6331
July __, 2000
Dear Nationwide Balanced Fund Shareholders:
The enclosed information statement details a recent subadviser change for the
Nationwide Balanced Bond Fund (the "Fund"), a series of Nationwide Separate
Account Trust (the "Trust"). Specifically, the Trust's Board of Trustees has
selected J.P. Morgan Investment Management Inc. ("J. P. Morgan"), to manage the
Fund, replacing Salomon Brothers Asset Management ("SBAM"). The change was
effective May 1, 2000. The Fund has an exemptive order from the U.S. Securities
and Exchange Commission that allows this change to be made without shareholder
approval. The order instead requires that this information statement be sent to
you.
The Board replaced SBAM upon the recommendation of Villanova Mutual Fund Capital
Trust, the Fund's investment adviser. This recommendation was based on several
factors, including:
- the organization changes to SBAM as a result of its
acquisition in 1997 by Travelers Insurance and the merger of
Travelers Insurance with Citicorp in 1998;
- the turnover in the personnel at SBAM in charge of the Fund's
portfolio;
- the Fund's historical performance compared to its benchmark
and peer group; and
- J. P. Morgan' experience and success in managing balanced
funds such as the Fund.
Please read the enclosed document for additional information.
We look forward to continue serving you and the Fund in the future.
Sincerely,
James F. Laird, Jr.
Treasurer, Nationwide Separate Account Trust
<PAGE> 3
NATIONWIDE BALANCED FUND
A Series of Nationwide Separate Account Trust
Three Nationwide Plaza
Columbus, Ohio 43215
INFORMATION STATEMENT
The Board of Trustees of Nationwide Separate Account Trust (the "Board of
Trustees") is furnishing this Information Statement to all owners of variable
annuity contracts or variable life insurance policies ("Contract Owners") issued
by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance
Company (collectively, "Nationwide") who are entitled to give voting
instructions to the shareholders of the Nationwide Balanced Fund (the "Fund"), a
series of Nationwide Separate Account Trust (the "Trust"). The Information
Statement is being provided in lieu of a proxy statement pursuant to the terms
of an exemptive order the Trust received from the U.S. Securities and Exchange
Commission. The exemptive order permits the Fund's investment adviser to hire
new subadvisers and to make changes to existing subadvisory contracts with the
approval of the Board of Trustees, but without obtaining shareholder approval,
provided, among other things, the Fund sends its shareholders an information
statement describing a new subadviser within 90 days of hiring such subadviser.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement will be mailed to Contract Owners
on or about July __, 2000.
INTRODUCTION
The Fund is an investment portfolio or series of the Trust. The Trust, on behalf
of the Fund, initially entered into an Investment Advisory Agreement with
Nationwide Advisory Services, Inc. ("NAS") on November 1, 1997; on September 1,
1999, the investment advisory services being performed by NAS for the Fund were
transferred to Villanova Mutual Fund Capital Trust (the "Adviser"), an entity
under common control with NAS. Shareholder approval was not required in order to
transfer the investment advisory services from NAS to the Adviser because such
transfer did not result in a change in the actual control or management of the
Fund's investment adviser. Pursuant to the Investment Advisory Agreement, the
Adviser selects the subadvisers for and/or manages the investments of the Fund
and supervises the Fund's daily business affairs, subject to the supervision and
direction of the Board of Trustees. The Adviser selects subadvisers it believes
will provide the Fund with high quality investment services consistent with the
Fund's investment objectives. The Adviser is responsible for the overall
monitoring of the Fund's subadviser(s).
The current subadviser for the Fund is J. P. Morgan Investment Management Inc.
("J. P. Morgan"). J. P. Morgan began serving as subadviser on May 1, 2000,
following a decision by the Board of Trustees to (1) approve a new subadvisory
agreement with J. P. Morgan; and (2)
2
<PAGE> 4
terminate the Fund's then current subadvisory agreement with Salomon Brothers
Asset Management ("SBAM"). The decision by the Board of Trustees to replace SBAM
with J. P. Morgan, as well as other important information, is described in more
detail below.
RECOMMENDATION TO REPLACE SUBADVISERS
As part of the Adviser's duties to select and supervise the Fund's
subadviser(s), the Adviser is responsible for communicating performance
expectations and evaluations to the subadviser(s) and recommending to the Board
of Trustees whether a subadviser's contract with the Trust should be renewed,
modified or terminated. The Adviser regularly provides written reports to the
Board of Trustees describing the results of its evaluation and monitoring
functions. Prior to the transfer of the Investment Advisory Agreement, NAS
provided these services to the Fund.
Since the Fund's inception in November 1997, SBAM had gone through a series of
organizational changes. In 1997, SBAM was acquired by Travelers Insurance Group.
In 1998, Travelers Insurance Group and Citicorp merged. These changes prompted
the Adviser to review more closely the performance and management of SBAM. This
review was undertaken as part of the responsibility of the Adviser to recommend
to the Board of Trustees whether a subadvisory agreement should be terminated.
The Adviser decided to recommend that the subadvisory agreement with SBAM be
terminated because such changes had an impact on SBAM, including significant
personnel turnover with respect to management of the Fund and changes in
critical support staff, and the Fund had underperformed its benchmark and its
peer group since its inception.
Upon completion of its analysis, the Adviser decided to recommend that J. P.
Morgan replace SBAM. The Adviser based its decision to recommend J. P. Morgan on
a number of factors, including J. P. Morgan's investment process and management
style. The Adviser also considered J. P. Morgan's experience with managing
balanced funds similar to the Fund, and the Adviser's current relationship with
J. P. Morgan as the subadviser to the Prestige Balanced Fund, one series of
Nationwide Mutual Funds, another open-end, management investment company, and as
the subadviser to the Nationwide Global 50 Fund, another fund of the Trust.
BOARD OF TRUSTEES' CONSIDERATIONS
At a regular meeting of the Board of Trustees on March 2, 2000, the Board of
Trustees reviewed the Adviser's recommendations to hire J. P. Morgan as
subadviser and to terminate the subadvisory agreement with SBAM. The Board of
Trustees reviewed a report that described in detail the basis for such
recommendations and also reviewed the proposed subadvisory agreement with J. P.
Morgan and the proposed differences in subadvisory fees payable to SBAM to those
proposed to be paid to J. P. Morgan as follows:
SBAM
----
0.35% on assets up to $150 million
0.30% on assets of $150 million or more but less than $500
million
0.25% on assets of $500 million or more
3
<PAGE> 5
J. P. MORGAN
------------
0.35% on assets up to $100 million
0.30% on assets of $100 million or more
Having carefully considered the Adviser's recommendations and the reasons for
them, the Board of Trustees, including a majority of the Trustees who were not
interested persons of the Adviser, SBAM or J. P. Morgan, approved the
termination of the subadvisory agreement with SBAM and the appointment of J. P.
Morgan to serve as a new subadviser to the Fund. The termination of the
subadvisory agreement with SBAM and the appointment of J. P. Morgan as a
subadviser both took effect on May 1, 2000. The Board of Trustees also approved
the form of the subadvisory agreement among the Adviser, the Trust (acting on
behalf of the Fund) and J. P. Morgan. In doing so, the Board of Trustees found
that the compensation payable under the subadvisory agreement with J. P. Morgan
was fair and reasonable in light of the services to be provided and the expenses
to be assumed by J. P. Morgan under such agreement.
COMPARISON OF SUBADVISORY AGREEMENTS
The subadvisory agreement with J. P. Morgan (the "New Agreement") is the same in
all material respects as the subadvisory agreements with SBAM (the "Former
Agreement") except with respect to the fees payable thereunder. The Former
Agreement took effect on November 1, 1997, and was approved by the Fund's
initial shareholder on October 30, 1997. The Former Agreement has not been
submitted for shareholder approval since then. A comparison of the fees under
the Former Agreement and the New Agreement is set forth above under "BOARD OF
TRUSTEES' CONSIDERATIONS."
The Former Agreement had a two-year term and continued automatically for
successive one-year terms provided that its continuance was approved annually by
the Board of Trustees. The New Agreement is the same except that its two year
initial term began on May 1, 2000. Each Agreement can be terminated on 60 days'
notice and both terminate automatically if they are assigned to anyone else.
The Adviser's responsibilities under the Former Agreement and the New Agreement
are the same. Under each Agreement, the Adviser is responsible for assigning a
portion of the Fund's assets to the subadviser and for overseeing the review of
the performance of the subadviser. The duties of J. P. Morgan under the New
Agreement are the same as the duties required of SBAM under the Former
Agreement. J. P. Morgan is required to manage the portion of the Fund's
portfolio allocated to it (which constitutes all of the Fund's portfolio at this
time) in accordance with the Fund's investment objective and policies, subject
to the supervision and control of the Adviser and the Board of Trustees.
The brokerage provisions of the Former Agreement and the New Agreement are the
same in all material respects. Under the Former Agreement, SBAM was authorized
to purchase and sell securities on behalf of the Fund through brokers or dealers
and to negotiate commissions to be paid on such transactions. In doing so, SBAM
was required to use reasonable efforts to obtain
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<PAGE> 6
the most favorable price and execution available but was permitted, subject to
certain limitations, to pay brokerage commissions that were higher than what
another broker might have charged in return for brokerage and research services.
The New Agreement contains provisions that are the same in all material
respects.
The provisions of the Former Agreement and the New Agreement relating to
indemnification by and the liability of the subadviser are substantially the
same. Under the Former Agreement, SBAM and its affiliates and controlling
persons could not be held liable for any error of judgment or mistake of law to
the Adviser, the Trust, the Fund or the Fund's shareholders in the absence of
willful misfeasance, bad faith or gross negligence on the part of SBAM or a
reckless disregard of its duties under the Former Agreement. The Former
Agreement provided that nothing in such Agreement, however, relieved SBAM from
any of its obligations under federal and state securities laws and other
applicable law. The New Agreement contains provisions that are substantially the
same.
SBAM was required under its Former Agreement to indemnify the Adviser, the Trust
and their respective affiliates and controlling persons for any liability or
expenses sustained by them as a result of SBAM's willful misfeasance, bad faith,
gross negligence, reckless disregard of its duties or violation of applicable
law. The New Agreement contains provisions that are substantially the same. Each
of the Former Agreement and the New Agreement contains provisions pursuant to
which the Adviser is required to indemnify the subadviser in certain
circumstances.
The foregoing description of the Former Agreement and the New Agreement is only
a summary and is qualified in its entirety by reference to the text of the full
agreements. Copies of the Former Agreement and the New Agreement are on file
with the Commission. Copies of the Former Agreement and the New Agreement are
available 1) in person at the Commission's Public Reference Room in Washington,
DC; 2) by mail at the Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009 or 3) at the Commission's website - http://
www.sec.gov.
OTHER INFORMATION ABOUT J. P. MORGAN
J. P. Morgan, located at 522 Fifth Avenue, New York, New York 10036, is a
wholly-owned subsidiary of J. P. Morgan & Co. Incorporated, a bank holding
company located at 60 Wall Street, New York, New York 10260. J. P. Morgan offers
a wide range of investment management services and acts an investment adviser to
corporate and institutional clients. J. P. Morgan uses a sophisticated,
disciplined, collaborative process for managing all asset classes. As of June
30, 2000, J. P Morgan had in excess of $___ billion in assets under management.
The following table sets for the name, address and principal occupation of J. P.
Morgan's principal executive officer and directors.
5
<PAGE> 7
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
NAME TITLE WITH J. P. MORGAN PRINCIPAL OCCUPATION AND ADDRESS*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Keith M. Schappert President; Managing Director Managing Director of J. P. Morgan
----------------------------------------------------------------------------------------------------------------------
Kenneth W. Anderson Director; Managing Director Managing Director of J. P. Morgan
----------------------------------------------------------------------------------------------------------------------
Ronald R. Dewhurst Director; Managing Director Managing Director of J. P. Morgan
----------------------------------------------------------------------------------------------------------------------
Gerard W. Lillis Director; Managing Director Managing Director of J. P. Morgan
Akasaka Park Building
2-20, Akasaka 5-chome
Minato-ku, Tokyo, Japan
----------------------------------------------------------------------------------------------------------------------
John W. Schmidlin Director; Chief Operations Officer and Managing Director of J. P. Morgan
Managing Director
----------------------------------------------------------------------------------------------------------------------
Isabel H. Sloane Director; Managing Director Managing Director of J. P. Morgan
----------------------------------------------------------------------------------------------------------------------
Hendrik Van Riel Director; Managing Director Managing Director of J. P. Morgan
28 King Street
London, England SW1Y 6XA
----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Unless otherwise indicated, all of the above individuals can be contacted at
522 Fifth Avenue, New York, New York 10036.
J. P. Morgan currently serves as investment adviser or subadviser to several
institutional accounts and three other investment companies that have has
investment objectives similar to those of the Fund. The net assets and
investment advisory fees, as of June 30, 2000, for the three other investment
companies are set forth in the following table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Fund Net Assets Advisory Fees*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prestige Balanced Fund, one fund of $10 million 0.35% on the first $100 million; and
Nationwide Mutual Funds 0.30% on assets of $100 million or
more
----------------------------------------------------------------------------------------------------------------------
Pacific Select Fund - Multi- Strategy $766 million 0.45% on the first $100 million of
Portfolio assets; 0.40% on the next $100
million of assets; 0.35% on the next
$200 million of assets; 0.30% on the
next $350 million of assets; and
0.20% on assets of $750 million
or more
----------------------------------------------------------------------------------------------------------------------
The Diversified Portfolio $882 million 0.55%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
-------------------
*Calculated as an annual percentage of the Fund's average daily nets assets.
MORE ABOUT FEES AND EXPENSES
The Fund pays the Adviser an investment advisory fee at the annual rate of 0.75%
of the Fund's average daily net assets. The Adviser has agreed to voluntarily
waive all or part of its fees and
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<PAGE> 8
reimburse Fund expenses in order to limit the Fund's total operating expenses to
not more than 0.90% of the Fund's average daily net assets on an annual basis.
During the fiscal year ended December 31, 1999, the Adviser was entitled to
receive from the Fund advisory fees in the amount of $469,490, of which $57,656
was waived or reimbursed. This fee waiver is voluntary and may be terminated at
any time. Without waivers or reimbursements, total Fund expenses would have been
1.00% for the year ended December 31, 1999.
NAS and the Trust (acting on behalf of the Fund) entered into the Former
Agreement with SBAM pursuant to which SBAM managed all of the Fund's assets in
accordance with the Fund's investment objective and policies. SBAM made
investment decisions for the Fund and purchased and sold securities for the
Fund. For the investment management services it provided to the Fund, SBAM
received a fee from the Adviser in an amount equal to 0.35% on assets up to $150
million, 0.30% on assets of $150 million or more but less than $500 million, and
0.25% on assets of $500 million or more. During the year ended December 31,
1999, the Adviser paid SBAM a total of $219,095.
ADDITIONAL INFORMATION
As of July __, 2000, the Fund had issued and outstanding ________________ shares
of beneficial interest ("shares"). As of that date, to the Trust's knowledge,
the following are the only persons who had or shared voting or investment power
over more than 5% of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address Voting and Investment Power
---------------- ---------------------------
<S> <C>
Nationwide Variable Account-9 of Shared voting and investment power over
Nationwide Life Insurance Company ________________ shares of the Fund
representing One Nationwide Plaza _____% of the Fund's outstanding shares.
Columbus, Ohio 43215
Nationwide VLI Separate Account-4 of Voting and investment power over _____________
Nationwide Life Insurance Company shares of the Fund representing _____% of the
One Nationwide Plaza Fund's outstanding shares.
Columbus, Ohio 43215
</TABLE>
As of July __, 2000, the officers and Trustees of the Trust individually and as
a group owned less than 1% of the outstanding shares of the Fund.
Although Contract Owners are not being asked to vote on the replacement of SBAM
with J. P. Morgan, the Trust is required by the rules of the Commission to
summarize the voting rights of Contract Owners. Whenever a matter affecting the
Fund requires shareholder approval, a shareholder meeting generally will be held
and a proxy statement and proxy/voting instruction forms will be sent to the
Fund's shareholders and to Contract Owners who have selected the Fund as an
underlying mutual fund option. Contract Owners do not vote on such matters
directly because they are not shareholders of the Fund, but they will be asked
in the proxy statement to
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<PAGE> 9
give voting instructions to those separate accounts of Nationwide that are
shareholders of the Fund. These separate accounts will then vote the shares of
the Fund attributable to the Contract Owners in accordance with the voting
instructions received from the Contract Owners. If voting instructions are not
received, the separate accounts will vote the shares of the Fund for which
voting instructions have not been received in proportion (for, against or
abstain) to those for which timely voting instructions have been received. Each
share of the Fund is entitled to one vote, and each fraction of a share is
entitled to a proportionate fractional vote. Contract Owners will also be
permitted to revoke previously submitted voting instructions in accordance with
instructions contained in the proxy statement sent to the Fund's shareholders
and to Contract Owners.
The foregoing description of Contract Owner voting rights is only a brief
summary of these rights; whenever shareholder approval of a matter affecting the
Fund is required, the proxy statement sent to the Fund's shareholders and to
Contract Owners will fully describe the voting rights of Contract Owners and the
voting procedures that will be followed at the shareholder meeting.
Because the Fund is sold as an underlying mutual fund option in variable annuity
and insurance products, the Fund has no principal underwriter. However, NAS
provides marketing and wholesaling at no cost to the Fund. Villanova SA Capital
Trust, an affiliate of the Adviser and NAS, serves as the Fund's administrator.
The address for the Adviser, NAS and Villanova SA Capital Trust is Three
Nationwide Plaza, Columbus, Ohio 43215.
No officer or Trustee of the Trust is an officer, employee, or director of J. P.
Morgan, nor do any such officers or Trustees own securities issued by J. P.
Morgan or have any other material direct or indirect interest in J. P. Morgan.
THE TRUST WILL FURNISH, WITHOUT CHARGE, A COPY OF THE TRUST'S MOST RECENT ANNUAL
REPORT TO SHAREHOLDERS AND SEMI-ANNUAL REPORT TO SHAREHOLDERS SUCCEEDING THE
ANNUAL REPORT, IF ANY, UPON REQUEST. SUCH REQUEST MAY BE MADE EITHER BY WRITING
TO THE TRUST AT THE ADDRESS CONTAINED ON THE FIRST PAGE OF THIS INFORMATION
STATEMENT OR BY CALLING TOLL-FREE (800) 848-0920. THE ANNUAL REPORT AND THE
SEMI-ANNUAL REPORT WILL BE MAILED TO YOU BY FIRST-CALL MAIL WITHIN THREE
BUSINESS DAYS OF RECEIPT OF YOUR REQUEST.
By Order of the Board of Trustees,
Dina A. Tantra, Assistant Secretary
July __, 2000
8
