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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>
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NATIONWIDE SEPARATE ACCOUNT TRUST
1200 River Road
Conshohocken, Pennsylvania 19428
(800) 848-6331
December __, 2000
Dear Nationwide Small Cap Growth Fund Shareholders:
The enclosed information statement details a recent subadviser change for the
Nationwide Small Cap Growth Fund (the "Fund"), a series of Nationwide Separate
Account Trust (the "Trust"). Specifically, the Trust's Board of Trustees has
selected Waddell & Reed Investment Management Company ("Waddell & Reed"), to
manage a portion of the Fund, replacing Franklin Advisers, Inc. ("Franklin").
The change was effective October 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 Franklin upon the recommendation of Villanova Mutual Fund
Capital Trust, the Fund's investment adviser (the "Adviser"). This
recommendation was based on several factors, including:
- Franklin's reaching its capacity to manage small cap growth stocks of
the type invested in by the Fund;
- The portion of the Fund's portfolio managed by Franklin periodically
being invested in securities or levels of cash which the Adviser
believed were not consistent with the Fund's investment strategy; and
- Waddell & Reed's experience and success in managing other small cap
growth funds and accounts.
Please read the enclosed document for additional information.
We look forward to continuing to serve you and the Fund in the future.
Sincerely,
[Signature Block]
Kevin S. Crossett
Secretary, Nationwide Separate Account Trust
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NATIONWIDE SMALL CAP GROWTH FUND
A Series of Nationwide Separate Account Trust
1200 River Road
Conshohocken, Pennsylvania 19428
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 Small Cap Growth 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 December __, 2000.
INTRODUCTION
The Fund is one 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 May 1, 1999; 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).
One of the current subadvisers for the Fund is Waddell & Reed Investment
Management Company ("Waddell & Reed"). Waddell & Reed began serving as a
subadviser on October 1, 2000, following a decision by the Board of Trustees to
(1) approve a new subadvisory
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agreement with Waddell & Reed; and (2) terminate the Fund's then current
subadvisory agreement with Franklin Advisers, Inc. ("Franklin"). The decision by
the Board of Trustees to replace Franklin with Waddell & Reed, 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 subadvisers,
the Adviser is responsible for communicating performance expectations and
evaluations to the subadvisers and recommending to the Board of Trustees whether
a subadviser's contract with the Trust should be renewed, modified or
terminated. The Adviser periodically 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.
Franklin had advised the Adviser that it was managing a substantial amount of
assets in the small cap growth style to such an extent that it had become
difficult for Franklin to effectively manage that amount of assets due to the
limited size of the small cap growth securities market and the limitations
placed on Franklin's ability to take positions in any one particular small cap
growth security. As a result, the portion of the Fund's portfolio managed by
Franklin periodically was invested in securities or had levels of cash which the
Adviser believed were not consistent with the Fund's investment strategy. This
situation prompted the Adviser to review more closely the performance of
Franklin and its overall management of that portion of the Fund assigned to it.
As a result of this review, which was undertaken as part of the Adviser's
responsibility to make recommendations about the Fund's subadvisers to the Board
of Trustees, the Adviser decided to recommend that the subadvisory agreement
with Franklin be terminated because the Adviser was concerned about Franklin's
ability to conform to the Fund's investment strategy.
Upon completion of its analysis of Franklin, the Adviser reviewed possible
replacements and decided to recommend that Waddell & Reed replace Franklin. The
Adviser based its decision to recommend Waddell & Reed on a number of factors,
including Waddell & Reed's experience and past performance in managing small cap
growth investments and the Adviser's belief that Waddell & Reed's investment
style will complement that of the other subadvisers to the Fund.
BOARD OF TRUSTEES' CONSIDERATIONS
At a regular meeting of the Board of Trustees on August 8, 2000, the Board of
Trustees reviewed the Adviser's recommendations to terminate the subadvisory
agreement with Franklin and to hire Waddell & Reed as a subadviser. The Board of
Trustees reviewed a report that described in detail the basis for such
recommendations and also reviewed the proposed subadvisory agreement with
Waddell & Reed.
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, Franklin or Waddell & Reed, approved the
termination of the subadvisory agreement with Franklin and the appointment of
Waddell & Reed to serve as a new subadviser to the Fund. The
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termination of the subadvisory agreement with Franklin and the appointment of
Waddell & Reed as a subadviser both took effect on October 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 Waddell & Reed. In doing so, the
Board of Trustees found that the compensation payable under the subadvisory
agreement with Waddell & Reed was fair and reasonable in light of the services
to be provided and the expenses to be assumed by Waddell & Reed under such
agreement.
COMPARISON OF SUBADVISORY AGREEMENTS
The subadvisory agreement with Waddell & Reed (the "New Agreement") is the same
in all material respects as the subadvisory agreements with Franklin (the
"Former Agreement"), including the fees payable thereunder. The Former Agreement
took effect on May 1, 1999, and was approved by the Fund's initial shareholder
on ____________, 1999. The Former Agreement has not been submitted for
shareholder approval since then.
The Former Agreement had a two-year term and would have 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 October 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 substantially 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 Waddell & Reed
under the New Agreement are the same as the duties required of Franklin under
the Former Agreement. Waddell & Reed is required to manage the portion of the
Fund's portfolio allocated to it (which constitutes approximately 38% 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, Franklin 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, Franklin was required to use reasonable efforts to obtain 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, Franklin and its affiliates and controlling
persons could not be held liable for any error of judgement 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 Franklin or
reckless disregard of its duties under the Former Agreement. The Former
Agreement provided that
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nothing in such Agreement, however, relieved Franklin 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.
Franklin was required under its Former Agreement to indemnify the Adviser, the
Trust, the Fund and their respective affiliates and controlling persons for any
liability or expenses sustained by them as a result of Franklin'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 WADDELL & REED
Waddell & Reed, located at 6300 Lamar Avenue, Overland Park, Kansas 66202, is an
indirect, wholly owned subsidiary of Waddell & Reed Financial, Inc., a publicly
held company. Originally founded in 1937, Waddell & Reed offers a broad array of
investment products and provides investment advice to both registered investment
companies and separate accounts. As of August 31, 2000, Waddell & Reed had in
excess of $39 billion in assets under management.
The following table sets forth the name, address and principal occupation of the
principal executive officer and each of the Directors of Waddell & Reed.
<TABLE>
<CAPTION>
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NAME TITLE WITH WADDELL & REED PRINCIPAL OCCUPATION AND ADDRESS*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Keith Albert Tucker Director Chairman of Waddell & Reed Financial,
Inc.
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Robert Lee Hechler Executive Vice President, Treasurer, President and Chief Executive Officer
Director and Chief Financial Officer of Waddell & Reed, Inc.
----------------------------------------------------------------------------------------------------------------------
Henry John Herrmann Director, President, Chief Executive President and Chief Executive Officer
Officer, and Chief Investment Officer of Waddell & Reed
----------------------------------------------------------------------------------------------------------------------
</TABLE>
*Unless otherwise indicated, all of the above individuals can be contacted at
6300 Lamar Avenue, Overland Park, Kansas 66202.
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Waddell & Reed currently serves as investment adviser to another fund which has
investment objectives similar to those of the Fund: the W&R Small Cap Growth
Fund, one series of W&R Funds, Inc. As of ____________, 2000, the W&R Small Cap
Growth Fund had net assets of $_________________. In payment for its services as
investment adviser to the W&R Small Cap Growth Fund, Waddell & Reed receives an
annual investment advisory fee, based on such Fund's average daily net assets,
equal to 0.85% of the first $1 billion, 0.83% of the second $1 billion, 0.80% of
the third $1 billion and 0.76% of average daily net assets in excess of $3
billion.
MORE ABOUT FEES AND EXPENSES
The Fund pays the Adviser an investment advisory fee at the annual rate of 1.10%
of the Fund's average daily net assets. The Adviser has agreed to voluntarily
waive all or part of its fees and reimburse Fund expenses in order to limit the
Fund's total operating expenses to not more than 1.30% of the Fund's average
daily net assets on an annual basis. During its first fiscal period ended
December 31, 1999, the Adviser was entitled to receive from the Fund advisory
fees in the amount of $47,647, of which 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 3.40% for the fiscal period
ended December 31, 1999.
NAS and the Trust (acting on behalf of the Fund) entered into the Former
Agreement with Franklin pursuant to which Franklin managed a portion of the
Fund's assets as allocated to it by the Fund's investment adviser in accordance
with the Fund's investment objective and policies. Franklin made investment
decisions for the Fund and purchased and sold securities for the Fund. For the
investment management services it provided to the Fund, Franklin received a fee
from the Adviser in an amount equal to 0.60% on the Fund's assets which it
managed. During the fiscal period ended December 31, 1999, the Adviser paid
Franklin a total of $25,989. If Waddell & Reed had been a subadviser for the
Fund for the fiscal period ended December 31, 1999, it would have earned the
same subadvisory fees.
ADDITIONAL INFORMATION
As of September 15, 2000, the Fund had issued and outstanding 4,285,952.002
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 3,134,155.362 shares of the Fund representing
One Nationwide Plaza 73.13% of the Fund's outstanding shares.
Columbus, Ohio 43215
Nationwide Variable Account-II of Voting and investment power over 436,512.946
Nationwide Life Insurance Company shares of the Fund representing 10.18% of the
One Nationwide Plaza Fund's outstanding shares.
Columbus, Ohio 43215
</TABLE>
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As of September 15, 2000, the officers and Trustees of the Trust 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
Franklin with Waddell & Reed, 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 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 and Villanova SA Capital Trust is 1200 River Road,
Conshohocken, Pennsylvania 19428. The address for NAS is One Nationwide Plaza,
Columbus, Ohio 43215.
No officer or Trustee of the Trust is an officer, employee, or director of
Waddell & Reed, nor do any such officers or Trustees own securities issued by
Waddell & Reed or have any other material direct or indirect interest in Waddell
& Reed.
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, 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-CLASS MAIL WITHIN THREE BUSINESS DAYS OF
RECEIPT OF YOUR REQUEST.
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By Order of the Board of Trustees,
[Signature Block]
Kevin S. Crossett, Secretary
December __, 2000
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