SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cova Series Trust
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Blazzard, Grodd & Hasenauer, P.C.
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
_______________________________________________________________
COVA SERIES TRUST
ONE TOWER LANE, SUITE 3000
OAKBROOK TERRACE, ILLINOIS 60181-4644
(800) 831-5433
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF COVA SERIES TRUST:
Notice is hereby given to the holders of shares of beneficial interest (the
"Shares") of Cova Series Trust (the "Trust"), a Massachusetts business trust,
that a Special Meeting of the Shareholders of the Trust (the "Meeting") will be
held at the offices of the Trust, One Tower Lane, Suite 3000, Oakbrook Terrace,
Illinois 60181-4644 on Thursday, December 23, 1999, at 10:00 a.m., local time,
for the following purposes:
1. To approve or disapprove a New Investment Advisory Agreement between Cova
Investment Advisory Corporation and Cova Series Trust, such New Investment
Advisory Agreement to contain the same terms and conditions as the current
Investment Advisory Agreement except for the dates of execution, effectiveness
and termination.
2. To approve or disapprove a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and J. P. Morgan Investment Management
Inc., such New Sub-Advisory Agreement to contain the same terms and conditions
as the current Sub-Advisory Agreement except for the dates of execution,
effectiveness and termination.
3. To approve or disapprove a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and Lord, Abbett & Co., such New
Sub-Advisory Agreement to contain the same terms and conditions as the current
Sub-Advisory Agreement except for the dates of execution, effectiveness and
termination.
4. To approve or disapprove a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and Mississippi Valley Advisors Inc.,
such New Sub-Advisory Agreement to contain the same terms and conditions as the
current Sub-Advisory Agreement except for the dates of execution, effectiveness
and termination.
5. To approve or disapprove a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and Riggs Bank N.A., such New
Sub-Advisory Agreement to contain the same terms and conditions as the current
Sub-Advisory Agreement except for the dates of execution, effectiveness and
termination.
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Trustees has fixed the close of business on November 15, 1999 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting or any adjournment thereof.
Please refer to the accompanying Proxy Statement for more information about the
proposals to be considered and acted upon at the Meeting. As a contract owner,
you are entitled to instruct us how to vote the shares of the Trust funding your
contract. Your voting instructions are very important, regardless of the number
of Trust shares attributed to your contract. Please complete, date, sign and
return the enclosed Voting Instructions Card today in the enclosed postage-paid
envelope. If you sign, date and return the Card, but give no voting
instructions, your shares will be voted in favor of all proposals noticed above.
By Order of the
Board of Trustees
Bernard J. Spaulding
Secretary
November __, 1999
COVA SERIES TRUST
One Tower Lane, Suite 3000
Oakbrook Terrace, Illinois 60181-4644
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 23, 1999
This Proxy Statement is furnished in connection with the solicitation by
the Board of Trustees (the "Board" or "Trustees") of Cova Series Trust (the
"Trust"), a Massachusetts business trust, of proxies to be voted at a Special
Meeting of the Shareholders of the Trust, and at any and all adjournments
thereof (the "Meeting"), to be held at One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181- 4644, on Thursday, December 23, 1999 at 10:00 a.m.
local time. The approximate mailing date of this Proxy Statement and
accompanying form of proxy is November 30, 1999.
The Board has fixed the close of business on November 15, 1999, as the
record date (the "Record Date") for the determination of holders of shares of
beneficial interest ("Shares") of the Trust entitled to vote at the Meeting.
Shareholders on the Record Date will be entitled to one vote for each full Share
held and a fractional vote for each fractional Share.
The Trust is comprised of 15 operational Portfolios. Shares of each
Portfolio currently are offered to insurance company separate accounts to serve
as an investment medium for variable annuity contracts and variable life
insurance policies ("Variable Contracts") issued by Cova Financial Services Life
Insurance Company and its affiliated insurance companies. In accordance with
interpretations of the Investment Company Act of 1940, as amended (the "1940
Act"), each insurance company ("Participating Insurance Company") issuing a
Variable Contract funded by a separate account registered with the Securities
and Exchange Commission ("Commission") as a unit investment trust, for which the
Trust serves as an investment medium,is required to request voting instructions
from the owners of the Variable Contracts ("Variable Contract Owners") and to
furnish a copy of this Proxy Statement to Variable Contract Owners. Further,
each such Participating Insurance Company will vote Shares or other voting
interests in the separate accounts in proportion to the instructions received
from Variable Contract Owners. The Participating Insurance Company is also
required to vote Shares of the Portfolio held in each registered separate
account for which it has not received signed instructions in the same proportion
as it votes Shares held by that separate account for which it has received
instructions. Shares held by a Participating Insurance Company in its general
account, if any, will be voted in the same proportion as the votes cast with
respect to Shares held in all of the insurer's registered separate accounts, in
the aggregate. Variable Contract Owners permitted to give instructions for the
Portfolios and the number of shares for which such instructions may be given for
purposes of voting at the Meeting, and at any adjournment thereof, will be
determined as of the Record Date for the Meeting. In connection with the
solicitation of such instructions from Variable Contract Owners, the
Participating Insurance Companies will furnish a copy of this Proxy Statement to
Variable Contract Owners. The Participating Insurance Companies have fixed the
close of business on December 17, 1999, as the last day on which voting
instructions will be accepted. Voting instructions may be revoked at any time
prior to the close of business on December 17, 1999 (the deadline set forth
above for timely receipt of voting instructions), by executing and delivering
later-dated signed voting instructions to your insurance company. In addition to
the solicitation of voting instructions by mail, voting instructions may be
solicited by officers and employees of the Trust or Participating Insurance
Companies or their agents or affiliates personally or by telephone. All expenses
in connection with the solicitation of voting instructions will be borne by
Metropolitan Life Insurance Company and/or Cova Financial Services Life
Insurance Company (and/or one of its affiliates).
VOTING.
Shares which represent interests in a particular Portfolio of the Trust
vote separately on those matters which pertain only to that Portfolio. These
matters are Proposals 1 through 5 and, as appropriate, any other business which
may properly come before the Meeting. With respect to such matters, a vote of
all Shareholders of the Trust may not be binding on a Portfolio whose
Shareholders have not approved such matter. The voting requirement for approval
of each proposal requires a vote of the "majority of the outstanding voting
securities" of a Portfolio, which means the lesser of: (i) 67% or more of the
voting Shares of each Portfolio present at the Meeting, if the holders of more
than 50% of the outstanding voting Shares of the Portfolio are present or
represented by proxy; or (ii) more than 50% of the outstanding voting Shares of
the Portfolio.
A Sub-Advisory Agreement must be approved separately by each Portfolio to
which the Sub-Advisory Agreement pertains. Approval of each Sub-Advisory
Agreement is contingent upon approval of the New Investment Advisory Agreement
(as defined below) by the shareholders of the pertinent Portfolio. If the New
Investment Advisory Agreement is approved and the New Sub-Advisory Agreements
are each approved by a majority vote of the outstanding Shares of the applicable
Portfolio, the New Sub-Advisory Agreements will take effect concurrently with
the New Investment Advisory Agreement. If the shareholders of a Portfolio should
fail to approve either the New Investment Advisory Agreement or the New
Sub-Advisory Agreement, the Board shall meet to consider appropriate action. If
the shareholders of a Portfolio should fail to approve a New Sub-Advisory
Agreement that pertains to more than one Portfolio, the Sub-Adviser may serve
under the Sub- Advisory Agreement with respect to any Portfolio whose
shareholders have approved the Sub-Advisory Agreement. In such event, the Board
shall meet to consider appropriate action.
In the event that a quorum is present at the Meeting but sufficient votes
to approve any of the proposals are not received, the persons named as proxies
may propose one or more adjournments of such Meeting to permit further
solicitation of proxies provided they determine that such an adjournment and
additional solicitation is reasonable and in the interest of the shareholders
based on a consideration of all relevant factors including the nature of the
relevant proposal, the percentage of votes then cast, the percentage of negative
votes then cast, the nature of the proposed solicitation activities and the
nature of the reasons for such solicitation. A vote may be taken on a proposal
in this Proxy Statement for the Trust prior to any adjournment if sufficient
votes have been received for approval of that proposal.
The presence in person or by proxy of the holders of a majority of the
outstanding Shares is required to constitute a quorum at the Meeting. As of the
Record Date, the sole shareholders of the Trust were Participating Insurance
Companies. Since Participating Insurance Companies are the legal owners of the
Shares, attendance by the Participating Insurance Companies at the meeting will
constitute a quorum under the Trust's Declaration of Trust. Shares beneficially
held by Variable Contract Owners will be counted for the purpose of calculating
the votes cast on the issues before the Meeting.
The Trust knows of no items of business other than those described in
Proposals 1 through 5 of the Notice which will be presented for consideration at
the Meeting. If any other matters are properly presented, it is the intention of
the persons named as proxies to vote proxies in accordance with their best
judgment.
<TABLE>
<CAPTION>
PROXY SUMMARY TABLE
The Proposals are to be voted upon by Shareholders of the
Portfolios as follows:
PORTFOLIO TO WHICH EACH
PROPOSALS PROPOSAL APPLIES
- ---------- -------------------------
<S> <C>
1. To approve or disapprove a New Investment All Portfolios
Advisory Agreement between Cova Investment
Advisory Corporation and Cova Series Trust
2. To approve or disapprove a New Sub- Quality Bond Portfolio
Advisory Agreement among Cova Investment Small Cap Stock Portfolio
Advisory Corporation, Cova Series Trust and Large Cap Stock Portfolio
J.P. Morgan Investment Management Inc. Select Equity Portfolio
International Equity Portfolio
3. To approve or disapprove a New Sub- Bond Debenture Portfolio
Advisory Agreement among Cova Investment Mid-Cap Value Portfolio
Advisory Corporation, Cova Series Trust Large Cap Research Portfolio
and Lord Abbett & Co. Developing Growth Portfolio
Lord Abbett Growth and Income Portfolio
4. To approve or disapprove a New Sub- Balanced Portfolio
Advisory Agreement among Cova Investment Equity Income Portfolio
Advisory Corporation, Cova Series Trust Growth & Income Equity Portfolio
and Mississippi Valley Advisors Inc.
5. To approve or disapprove a New Sub- Riggs Stock Portfolio
Advisory Agreement among Cova Investment Riggs U.S. Government Securities
Advisory Corporation, Cova Series Trust Portfolio
and Riggs Bank N.A.
</TABLE>
Cova Investment Advisory Corporation ("Cova Advisory"), One Tower Lane, Suite
3000, Oakbrook Terrace, Illinois 60181-4644, is the Trust's investment adviser.
The Trust, the assets of which totaled approximately $1.8 billion as of
September 30, 1999, is the sole entity for which Cova Advisory acts as
investment adviser. See Appendix B for a list of the directors and principal
executive officers of Cova Advisory. Cova Advisory is a wholly-owned subsidiary
of Cova Life Management Company, a Delaware corporation, which in turn, is a
wholly-owned subsidiary of Cova Corporation, a Missouri corporation. Cova
Corporation is a wholly-owned subsidiary of General American Life Insurance
Company ("General American"), a Missouri stock life insurance company wholly-
owned by GenAmerica Corporation ("GAC").
On August 10, 1999 following a request by General American, the Missouri
Department of Insurance (the "Department") placed General American under
administrative supervision. The immediate cause of the supervision order was
General American's inability to satisfy approximately $4 billion in surrenders
by the holders of certain funding agreements. The effect of administrative
supervision is that General American began to operate under the Department's
supervision in order to preserve General American's assets against large
immediate cash demands and to protect the interests of General American's
approximately 300,000 policyholders.
In response to this liquidity issue, the Department worked closely with General
American to explore possible solutions. A reorganization plan (the
"Reorganization Plan") was developed, involving the sale by General American
Mutual Holding Company ("GAMHC") of all of the outstanding common stock of its
direct wholly owned subsidiary GAC (and, accordingly, indirect ownership and
control of all of GAC's subsidiaries) to Metropolitan Life Insurance Company
("MetLife") (the "Transaction"), pursuant to the stock purchase agreement dated
as of August 26, 1999, as modified or amended from time to time (the "Stock
Purchase Agreement"). The Transaction is expected to occur during December 1999
or during the first quarter of 2000.
Cova Advisory currently anticipates no changes in the personnel responsible for,
nor in the management of, the Trust as a result of the Reorganization Plan.
PROPOSAL NO.1
APPROVAL OR DISAPPROVAL OF INVESTMENT ADVISORY AGREEMENT
Under Proposal No. 1, each Portfolio's shareholders, voting separately, are
being asked to approve or disapprove for the Portfolio a new investment advisory
agreement (the "New Investment Advisory Agreement") between the Trust and Cova
Advisory. The Board is seeking approval of the New Investment Advisory Agreement
to permit each Portfolio's management to continue providing uninterrupted
service to the Portfolio after the Transaction. This is necessary because the
current investment advisory agreement dated April 1, 1996, as amended (the
"Current Advisory Agreement"), may terminate automatically as a result of the
Transaction.
The Transaction between GAMHC and MetLife is scheduled to close during December
1999 or during the first quarter of 2000. Cova Advisory's change in ownership
resulting from this transaction may be deemed to be an assignment of the Current
Investment Advisory Agreement within the meaning of the 1940 Act. And, in the
event of an assignment, the Current Investment Advisory Agreement terminates
automatically. Accordingly, the New Investment Advisory Agreement between the
Trust and Cova Advisory, on behalf of the Portfolios, is proposed for approval
by each Portfolio's shareholders to replace the Current Investment Advisory
Agreement. A form of the New Investment Advisory Agreement is attached as Annex
A to this Proxy Statement. The New Investment Advisory Agreement is identical to
the Current Investment Advisory Agreement in all material provisions, including
the advisory fees payable to, and the duties and responsibilities of, Cova
Advisory, except for the dates in the Agreement.
Exemptive Order
Cova Advisory has applied for an exemptive order (the "Order") from the
Commission permitting the implementation of the New Investment Advisory
Agreement without prior shareholder approval. The Order would cover an interim
period of up to 150 days, commencing on the later of (1) the date the
Transaction occurs or (2) the date the Commission issues the Order, and
continuing through the date a Portfolio's shareholders approve or disapprove the
New Investment Advisory Agreement (but in any event not later than 150 days from
the issuance of the Order (the "Period")).
If the Order is issued and any advisory fees become payable to Cova Advisory
under the New Investment Advisory Agreement during the Period, such fees will be
paid into an interest-bearing escrow account maintained pursuant to the Order.
The amount in the escrow account (including any interest earned) will be paid:
(1) to Cova Advisory if a Portfolio's shareholders approve the New Investment
Advisory Agreement by the end of the Period; or (2) except for an amount equal
to the actual out-of-pocket costs to Cova Advisory for providing advisory
services to that Portfolio during the Period (which amount will be paid to Cova
Advisory), to the Portfolio if the Portfolio's shareholders do not approve the
New Investment Advisory Agreement by the end of the Period. Before any such
payment is made, the Board will be notified.
Cova Advisory has agreed to take all appropriate steps to ensure that the scope
and quality of investment advisory services provided during the Period will be
at least equivalent, in the judgment of the Board, to the scope and quality of
services Cova Advisory provides under the Current Investment Advisory Agreement.
Representatives of Cova Advisory have advised the Trust's Board that currently
no change is expected in investment advisory or other personnel in connection
with the Transaction and that it is currently anticipated that the same persons
responsible for management of the Portfolios under the Current Investment
Advisory Agreement will continue to be responsible under the New Investment
Advisory Agreement. Cova Advisory does not anticipate either that the
Transaction will cause any reduction in its resources or the quality of services
now provided to the Portfolios or that it will have any adverse effect on Cova
Advisory's ability to fulfill its obligations to the Portfolios.
The Current Investment Advisory Agreement was approved by shareholders of the
Trust at a Special Meeting of Shareholders held on February 9, 1996. An
Amendment to the Current Investment Advisory Agreement providing for the
addition of eight new Portfolios to the Agreement was approved by the Board of
Trustees of the Trust on April 22, 1997 and by Cova Financial Services Life
Insurance Company, as sole shareholder of the eight new Portfolios, on April 28,
1997. An Amendment to the Current Advisory Agreement providing for the addition
of the Riggs Stock and Riggs U.S. Government Securities Portfolios was approved
by the Board of Trustees of the Trust on May 20, 1999 and by Cova Financial
Services Life Insurance Company, as sole shareholder of the two Portfolios, on
____________, 1999.
The Board, including the Trustees who were not parties to the Current Investment
Advisory Agreement or "interested persons" of any such party (the "Independent
Trustees"), last approved the continuation of the Current Investment Advisory
Agreement at the Board meeting held on March 5, 1999.
At the November 12, 1999 Board meeting, the Board, including the Independent
Trustees, unanimously approved the New Investment Advisory Agreement. Further,
the Board, including the Independent Trustees, unanimously approved the
submission of the New Investment Advisory Agreement for approval by the
shareholders of each Portfolio. Only shareholders of a Portfolio vote to approve
the New Investment Advisory Agreement for that Portfolio.
If a Portfolio's shareholders approve the New Investment Advisory Agreement, it
will take effect on the later of the date the Transaction closes or the date on
which the shareholders of that Portfolio approve the New Investment Advisory
Agreement. The New Investment Advisory Agreement will have an initial term of
two years and, thereafter, will continue in effect from year to year, with
respect to each Portfolio, provided that each such continuance is approved
annually: (1) by the Board or by the vote of a majority of the outstanding
voting securities of the particular Portfolio and, in either case, (2) by a
majority of the Independent Trustees.
Provisions of the New Investment Advisory Agreement
The provisions of the New Investment Advisory Agreement are the same in all
material respects as those of the Current Investment Advisory Agreement. The New
Investment Advisory Agreement requires Cova Advisory to act as the investment
adviser to the Trust and, subject to the supervision of the Board, to provide
general, overall advice and guidance with respect to each Portfolio and provide
advice and guidance to the Trustees. The Agreement also requires that Cova
Advisory oversee the management of the investments of each Portfolio and the
composition of each Portfolio's securities and investments, including cash, and
the purchase, retention and disposition of such securities and cash, all in
accordance with each Portfolio's investment objectives and policies as stated in
the Trust's current registration statement. Additionally, Cova Advisory has
agreed to select and recommend for consideration by the Board investment
advisory firms to provide investment advice to one or more of the Portfolios,
and, at the expense of Cova Advisory, to engage such investment advisory firms
("the Sub- Advisers") to render investment advice and management of the
investments of such Portfolios. Under the New Investment Advisory Agreement, all
services provided by Cova Advisory would continue.
Pursuant to the Current Investment Advisory Agreement, neither Cova Advisory nor
its officers, directors, or employees shall be subject to any liability for, or
any damages, expenses, or losses incurred in connection with any act or omission
connected with or arising out of any services rendered under the Current
Investment Advisory Agreement, except by reason of willful misfeasance, bad
faith, or gross negligence in the performance of Cova Advisory's duties, or by
reason of reckless disregard of Cova Advisory's obligations and duties under the
Current Investment Advisory Agreement. Under the New Investment Advisory
Agreement, the same standards will be imposed on Cova Advisory.
The Current Investment Advisory Agreement provides that it may be terminated at
any time without payment of any penalty, by Cova Advisory or the Board of
Trustees, or by a vote of a majority of the outstanding voting shares of each
Portfolio. Additionally, the Current Investment Advisory Agreement automatically
and immediately terminates in the event of its assignment.
As compensation for the actions of Cova Advisory, under the Current Investment
Advisory Agreement, the Trust pays Cova Advisory a fee at an annual rate equal
to a percentage of the average daily net assets of each Portfolio, which fee is
computed and accrued daily and paid monthly. The fee rates are shown in Appendix
A.
Under the New Investment Advisory Agreement, the schedule of compensation
payable to Cova Advisory will not change. For the year ended December 31, 1998,
the Trust paid Cova Advisory, pursuant to the scheduled compensation described
in Appendix A, the following fee amounts:
PORTFOLIO ADVISORY FEE
--------- -------------
Quality Bond Portfolio $ 165,294
Small Cap Stock Portfolio $ 596,903
Large Cap Stock Portfolio $ 402,802
Select Equity Portfolio $1,023,054
International Equity Portfolio $ 717,933
Bond Debenture Portfolio $ 647,086
Mid-Cap Value Portfolio $ 92,358
Large Cap Research Portfolio $ 61,036
Developing Growth Portfolio $ 67,992
Balanced Portfolio $ 27,149
Equity Income Portfolio $ 30,163
Growth & Income Equity Portfolio $ 53,799
Cova Advisory received no advisory fee with respect to the Lord Abbett Growth
and Income Portfolio, Riggs Stock Portfolio and Riggs U.S. Government Securities
Portfolio through December 31, 1998 in that these Portfolios had not yet
commenced investment operations as of that date.
Since May 1, 1996, Cova has been reimbursing the Portfolios of the Trust for all
operating expenses (exclusive of the management fees) in excess of approximately
.10%. This reimbursement arrangement for the Select Equity, Small Cap Stock and
International Equity Portfolios was discontinued effective May 1, 1999.
Effective May 1, 1999, Cova reimburses the Mid-Cap Value, Large Cap Research and
Developing Growth Portfolios for all operating expenses (exclusive of the
management fees) in excess of approximately .30% (instead of .10% as had been
the case prior to May 1, 1999). Riggs Bank N.A. reimburses the Trust for all
operating expenses of the Riggs Stock Portfolio and the Riggs U.S. Government
Securities Portfolio (exclusive of the management fees) in excess of
approximately .10% per Portfolio.
BOARD OF TRUSTEES' EVALUATION. The Board, including the Independent Trustees,
has determined that, by approving the New Investment Advisory Agreement on
behalf of the Trust, the Trust can best assure itself that the services
currently provided by Cova Advisory will continue after the Transaction without
interruption. The Board has determined that, as with the Current Investment
Advisory Agreement, the New Investment Advisory Agreement will enable the Trust
to obtain services of high quality at costs deemed appropriate, reasonable and
in the best interests of the Trust and its Shareholders.
IN EVALUATING THE NEW INVESTMENT ADVISORY AGREEMENT, THE BOARD TOOK INTO ACCOUNT
THAT, EXCEPT FOR THE DATES OF EXECUTION, EFFECTIVENESS AND TERMINATION, THERE
ARE NO DIFFERENCES BETWEEN THE TERMS AND CONDITIONS OF THE TRUST'S CURRENT
INVESTMENT ADVISORY AGREEMENT AND THE NEW INVESTMENT ADVISORY AGREEMENT,
INCLUDING THE TERMS RELATING TO THE SERVICES TO BE PROVIDED THEREUNDER BY COVA
ADVISORY AND THE FEES AND EXPENSES PAYABLE BY THE TRUST.
In evaluating the terms of the New Investment Advisory Agreement, the Board also
considered the possible effects of the Transaction upon the Trust and Cova
Advisory's organization and upon the ability of Cova Advisory to provide an
appropriate range of management and administration services, the performance
record of Cova Advisory, the financial condition of Cova Advisory, and the
anticipated working relationship between Cova Advisory and MetLife. The Trustees
also considered the financial resources and business reputation of MetLife. The
Trustees were informed by personnel of Cova Advisory that management currently
anticipated no changes in the day to day management of the Trust after the
closing of the Transaction. In light of the circumstances, the Trustees
concluded that the terms of the New Investment Advisory Agreement are fair and
reasonable.
Vote Required
Shareholders of each Portfolio must separately approve the applicable New
Investment Advisory Agreement for that Portfolio. Approval of Proposal No. 1 by
a Portfolio requires an affirmative vote of the lesser of: (i) 67% or more of
the voting Shares of each Portfolio present at the Meeting, if the holders of
more than 50% of the outstanding voting Shares of the Portfolio are present or
represented by proxy; or (ii) more than 50% of the outstanding voting Shares of
the Portfolio.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW INVESTMENT ADVISORY AGREEMENT,
RECOMMENDS APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST
AND COVA ADVISORY.
PROPOSALS 2, 3, 4 and 5
APPROVAL OF NEW SUB-ADVISORY AGREEMENTS
As stated above, the Transaction will result in a change of control of Cova
Advisory and may operate to terminate automatically the Sub-Advisory Agreements
currently applicable (collectively, the "Current Sub-Advisory Agreements"). In
order for the management of each Portfolio to continue uninterrupted after the
Transaction, shareholder approval of "New Sub-Advisory Agreements" is being
sought.
Each of the Current Sub-Advisory Agreements requires the Sub-Adviser to
provide, subject to supervision of the Board and Cova Advisory, a continuous
investment program for the Portfolio and to determine the composition of the
assets of the Portfolio, including determination of the purchase, retention, or
sale of the securities, cash, and other investments contained in the Portfolio.
Generally, the Current Sub-Advisory Agreements state that the Sub-Adviser will
provide investment research and conduct a continuous program of evaluation,
investment, sales, and reinvestment of the Portfolio's assets by determining the
securities and other investments that shall be purchased and sold for the
Portfolio, when these transactions should be executed, and what portion of the
assets of the Portfolio should be held in the various securities and other
investments in which it may invest, all in accordance with the Portfolio's
investment objectives and policies. Under the New Sub-Advisory Agreements, all
services and responsibilities of the Sub-Advisers would continue.
Pursuant to each of the Current Sub-Advisory Agreements, a Sub-Adviser is
not subject to liability for, or subject to any damages, expenses, or losses in
connection with, any error of judgment or mistake of law, or for any loss
suffered by the Trust, except for a loss from willful misfeasance, bad faith, or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties under the Agreement. Under the New
Sub-Advisory Agreements, the same responsibilities will be imposed on the
Sub-Advisers.
Each of the Current Sub-Advisory Agreements provides that it will terminate
automatically in the event of its "assignment," as that term is defined in the
1940 Act. In addition, each Current Sub-Advisory Agreement may be terminated by
Cova Advisory or by the Sub-Adviser upon 60 days' written notice to the other
parties, and by the Trust upon the vote of a majority of the Board or a majority
of the outstanding Shares of the applicable Portfolio, upon 60 days' written
notice to Cova Advisory and the Sub-Adviser.
For the services provided by the Sub-Advisers pursuant to each of the
Current Sub-Advisory Agreements, Cova Advisory, and not the Trust, pays a fee at
an annual rate equal to a percentage of the average daily net assets of each
Portfolio. The fee rates are shown in Appendix C.
Under the New Sub-Advisory Agreements, the schedule of compensation payable to
the Sub-Advisers will not change.
Fees paid by Cova Advisory to the Sub-Advisers for their services under the
Current Sub-Advisory Agreements for the year ended December 31, 1998, were as
follows:
PORTFOLIO SUB-ADVISORY FEE
- --------- ----------------
Quality Bond Portfolio $__________
Small Cap Stock Portfolio $__________
Large Cap Stock Portfolio $__________
Select Equity Portfolio $__________
International Equity Portfolio $__________
Bond Debenture Portfolio $__________
Mid-Cap Value Portfolio $__________
Large Cap Research Portfolio $__________
Developing Growth Portfolio $__________
Balanced Portfolio $__________
Equity Income Portfolio $__________
Growth & Income Equity Portfolio $__________
THE NEW SUB-ADVISORY AGREEMENTS. The New Sub-Advisory Agreements (as are the
Current Sub-Advisory Agreements) will be among the Trust, Cova Advisory and each
of the following:
<TABLE>
<CAPTION>
SUB-ADVISOR PORTFOLIOS
----------- ----------
<S> <C>
J.P. Morgan Investment Management Inc. Quality Bond Portfolio
Small Cap Stock Portfolio
Large Cap Stock Portfolio
Select Equity Portfolio
International Equity Portfolio
Lord, Abbett & Co. Bond Debenture Portfolio
Mid-Cap Value Portfolio
Large Cap Research Portfolio
Developing Growth Portfolio
Lord Abbett Growth and Income Portfolio
Mississippi Valley Advisors Inc. Balanced Portfolio
Equity Income Portfolio
Growth & Income Equity Portfolio
Riggs Bank N.A. Riggs Stock Portfolio
Riggs U.S. Government Securities Portfolio
</TABLE>
At the November 12, 1999 meeting of the Board of Trustees, the Board,
including the Independent Trustees, unanimously approved each of the New
Sub-Advisory Agreements. Further, the Board, including the Independent Trustees,
unanimously approved the submission of the New Sub-Advisory Agreements for
approval by the shareholders of each Portfolio. The New Sub-Advisory Agreements
are included as Annex B through Annex E.
Vote Required
The New Sub-Advisory Agreement for each Portfolio, as approved by the
Board, is submitted for approval by the shareholders of the Portfolio to which
the New Sub-Advisory Agreement applies. The New Sub-Advisory Agreements must be
voted upon separately by the Portfolio to which a New Sub- Advisory Agreement
pertains. If the New Sub-Advisory Agreement is approved by the vote of a
majority of the outstanding shares of the applicable Portfolio, it will take
effect upon the closing of the Transaction and will continue in effect for two
years and thereafter for successive annual periods as long as such continuance
is approved in accordance with the 1940 Act. For this purpose, the vote of the
holders of a majority of the Portfolio's outstanding Shares means the lesser of:
(i) 67% or more of the voting Shares of each Portfolio present at the Meeting,
if the holders of more than 50% of the outstanding voting Shares of the
Portfolio are present or represented by proxy; or (ii) more than 50% of the
outstanding voting Shares of the Portfolio. If the shareholders of a Portfolio
should fail to approve the New Sub- Advisory Agreement that pertains to that
Portfolio, the Sub- Adviser may continue to serve in that capacity with respect
to any other Portfolio whose shareholders approve the New Sub- Advisory
Agreement. In such an event, the Board shall meet to consider appropriate
action.
THE TERMS OF EACH OF THE NEW SUB-ADVISORY AGREEMENTS ARE IDENTICAL IN ALL
MATERIAL RESPECTS, INCLUDING THE FEES PAYABLE TO THE SUB-ADVISERS, TO THE TERMS
OF THE CURRENT SUB- ADVISORY AGREEMENTS.
PROPOSAL 2
APPROVAL OF SUB-ADVISORY AGREEMENT
WITH J.P. MORGAN INVESTMENT MANAGEMENT INC.
INFORMATION ABOUT J.P. MORGAN
INVESTMENT MANAGEMENT INC.
J.P. Morgan Investment Management Inc. ("JPMIM"), 522 Fifth Avenue, New York,
New York 10036, a Delaware corporation, and a wholly-owned subsidiary of J.P.
Morgan & Co., Incorporated, is the Sub-Adviser for the Quality Bond,
International Equity, Select Equity, Large Cap Stock and Small Cap Stock
Portfolios of the Trust. JPMIM manages the assets of these Portfolios pursuant
to the Current Sub-Advisory Agreement dated April 1, 1996 between the Trust,
Cova Advisory and JPMIM. This Agreement was most recently reapproved by the
Board of Trustees, including a majority of the Independent Trustees, on March 5,
1999. Cova Financial Services Life Insurance Company, as sole shareholder of the
Portfolios for which JPMIM acts as Sub-Adviser, initially approved the Current
Sub-Advisory Agreement by way of corporate resolutions.
The New Sub-Advisory Agreement is included as Annex B. See Appendix D for a list
of the directors and principal executive officers of JPMIM and a table setting
forth the other investment companies with similar objectives to the Portfolios
of the Trust advised or sub-advised by JPMIM, including the fees payable by such
investment companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2
In determining whether to approve the New Sub-Advisory Agreement for the
Portfolios sub-advised by JPMIM and to recommend approval to shareholders, the
Board, including the Independent Trustees, considered various matters and
materials provided by Cova Advisory and JPMIM. Information considered by the
Trustees included, among other things, the following: (1) the compensation to be
received by JPMIM for its sub-advisory services and the fairness and
reasonableness of such compensation, and that the fee under the New Sub-Advisory
Agreement is the same as that under the Current Sub- Advisory Agreement; (2) the
nature and the quality of the sub-advisory services rendered under the Current
Sub-Advisory Agreement and expected to be rendered under the New Sub-Advisory
Agreement; (3) the background and prior experience of JPMIM; and (4) the
financial condition of JPMIM.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT AMONG THE TRUST, COVA
ADVISORY AND JPMIM.
PROPOSAL 3
APPROVAL OF SUB-ADVISORY AGREEMENT WITH
LORD, ABBETT & CO.
INFORMATION ABOUT LORD, ABBETT & CO.
Lord, Abbett & Co. ("Lord Abbett"), The General Motors Building, 767 Fifth
Avenue, New York, New York 10153-0203, has been an investment manager for over
68 years and currently manages approximately $25 billion in a family of mutual
funds and other advisory accounts. Lord Abbett is the Sub-Adviser for the Bond
Debenture, Mid-Cap Value, Large Cap Research, Developing Growth and Lord Abbett
Growth and Income Portfolios. Lord Abbett manages the assets of these Portfolios
pursuant to the Current Sub-Advisory Agreement effective April 1, 1996 between
the Trust, Cova Advisory and Lord Abbett. This Agreement was reapproved by the
Board of Trustees, including a majority of the Independent Trustees, on March 5,
1999. Cova Financial Services Life Insurance Company, as sole shareholder of the
Portfolios for which Lord Abbett acts as Sub-Adviser, initially approved the
Current Sub-Advisory Agreement by way of corporate resolutions.
The New Sub-Advisory Agreement is included as Annex C. See Appendix E for a list
of the partners and principal executive officers of Lord Abbett and a table
setting forth the other investmet companies with similar objectives to the
Portfolios of the Trust advised or sub-advised by Lord Abbett, including the
fees payable by such investment companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 3
In determining whether to approve the New Sub-Advisory Agreement for the
Portfolios sub-advised by Lord Abbett and to recommend approval to shareholders,
the Board, including the Independent Trustees, considered various matters and
materials provided by Cova Advisory and Lord Abbett. Information considered by
the Trustees included, among other things, the following: (1) the compensation
to be received by Lord Abbett for its sub-advisory services and the fairness and
reasonableness of such compensation, and that the fee under the New Sub-
Advisory Agreement is the same as that under the Current Sub-Advisory Agreement;
(2) the nature and the quality of the sub-advisory services rendered under the
Current Sub-Advisory Agreement and expected to be rendered under the New
Sub-Advisory Agreement; (3) the background and prior experience of Lord Abbett
and (4) the financial condition of Lord Abbett.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT AMONG THE TRUST, COVA
ADVISORY AND LORD ABBETT.
PROPOSAL 4
APPROVAL OF SUB-ADVISORY AGREEMENT WITH
MISSISSIPPI VALLEY ADVISORS INC.
INFORMATION ABOUT MISSISSIPPI VALLEY ADVISORS INC.
Mississippi Valley Advisors Inc. ("MVA"), One Mercantile Center, Seventh &
Washington Streets, St. Louis, Missouri 63101, is the Sub-Adviser for the
Balanced, Equity Income and Growth & Income Equity Portfolios. MVA is a
wholly-owned indirect subsidiary of Mercantile Bancorporation Inc. As of
December 31, 1998, MVA had approximately $9 billion in assets under investment
management.
On ____________, 1999, Mercantile Bancorporation Inc. merged with Firstar
Corporation.
MVA manages the assets of the three Portfolios pursuant to the Current
Sub-Advisory Agreement dated June 15, 1997 between the Trust, Cova Advisory and
MVA. This Agreement was reapproved by the Board of Trustees, including a
majority of the Independent Trustees, on March 5, 1999. Cova Financial Services
Life Insurance Company, as sole shareholder of the Portfolios for which MVA acts
as Sub-Adviser, initially approved the Current Sub-Advisory Agreement by way of
corporate resolutions.
The New Sub-Advisory Agreement is included as Annex D. See Appendix F for a list
of the directors and principal executive officers of MVA and a table setting
forth the other investment companies with similar objectives to the Portfolios
of the Trust advised or sub-advised by MVA, including the fees payable by such
investment companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 4
In determining whether to approve the New Sub-Advisory Agreement for the
Portfolios sub-advised by MVA and to recommend approval to shareholders, the
Board, including the Independent Trustees, considered various matters and
materials provided by Cova Advisory and MVA. Information considered by the
Trustees included, among other things, the following: (1) the compensation to be
received by MVA for its sub- advisory services and the fairness and
reasonableness of such compensation, and that the fee under the New Sub-Advisory
Agreement is the same as that under the Current Sub-Advisory Agreement; (2) the
nature and the quality of the sub-advisory services rendered under the Current
Sub-Advisory Agreement and expected to be rendered under the New Sub-Advisory
Agreement; (3) the background and prior experience of MVA; and (4) the financial
condition of MVA.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT AMONG THE TRUST, COVA
ADVISORY AND MVA.
PROPOSAL 5
APPROVAL OF SUB-ADVISORY AGREEMENT WITH
RIGGS BANK N.A.
INFORMATION ABOUT RIGGS BANK N.A.
Riggs Bank N.A. ("Riggs"), 6805 Old Dominion Drive, McLean, VA 22101, is the
Sub-Adviser for the Riggs Stock and Riggs U.S. Government Securities Portfolios.
Riggs manages the assets of these Portfolios pursuant to the Current
Sub-Advisory Agreement dated October 22, 1999 between the Trust, Cova Advisory
and Riggs. This Agreement was approved by the Board of Trustees, including a
majority of the Independent Trustees, on May 20, 1999. Cova Financial Services
Life Insurance Company, as sole shareholder of the Portfolios for which Riggs
acts as Sub-Adviser, initially approved the Current Sub-Advisory Agreement by
way of corporate resolutions.
The New Sub-Advisory Agreement is included as Annex E. See Appendix G for a list
of the directors and principal executive officers of Riggs and a table setting
forth the other investment companies with similar objectives to the Portfolios
of the Trust advised or sub-advised by Riggs, including the fees payable by such
investment companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 5
In determining whether to approve the New Sub-Advisory Agreement for the
Portfolios sub-advised by Riggs and to recommend approval to shareholders, the
Board, including the Independent Trustees, considered various matters and
materials provided by Cova Advisory and Riggs. Information considered by the
Trustees included, among other things, the following: (1) the compensation to be
received by Riggs for its sub- advisory services and the fairness and
reasonableness of such compensation, and that the fee under the New Sub-Advisory
Agreement is the same as that under the Current Sub-Advisory Agreement; (2) the
nature and the quality of the sub-advisory services rendered under the Current
Sub-Advisory Agreement and expected to be rendered under the New Sub-Advisory
Agreement; (3) the background and prior experience of Riggs; and (4) the
financial condition of Riggs.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THE APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT AMONG THE TRUST, COVA
ADVISORY AND RIGGS.
GENERAL INFORMATION
Other Matters to Come Before the Meeting
The Trust's management does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxy holders will vote thereon in
accordance with their best judgment.
Section 15(f) of the 1940 Act
MetLife and GAMHC have agreed to use their best efforts to assure compliance
with the conditions of Section 15(f) of the 1940 Act. Section 15(f) provides a
non-exclusive safe harbor for an investment adviser or any affiliated persons
thereof to receive any amount or benefit in connection with a transaction that
results in a change in control of or identity of the investment adviser to an
investment company as long as two conditions are met. First, no "unfair burden"
may be imposed on the investment company as a result of the transaction relating
to the change of control or any express or implied terms, conditions or
understandings applicable thereto. As defined in the 1940 Act, the term "unfair
burden" includes any arrangement during the two-year period after the change in
control whereby the investment adviser (or predecessor or successor adviser), or
any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services), or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter of the
investment company). Second, during the three-year period immediately following
the change of control, at least 75% of the investment company's board of
directors must not be "interested persons" of the investment adviser or the
predecessor investment adviser within the meaning of the 1940 Act.
Voting Rights
This Proxy Statement, and the accompanying solicitation of voting instructions,
is being sent to Variable Contract Owners whose policies or contracts are funded
by the separate accounts that invest in the Trust. The number of shares as to
which voting instructions may be given under a policy or contract is determined
by the number of full and fractional shares of each Portfolio held in a separate
account with respect to that particular policy or contract.
Each Portfolio's shareholders of record (which are the insurance companies that
invest in the shares) at the close of business on November 15, 1999 (the "Record
Date") will be entitled to be present and vote at the Meeting with respect to
shares of the Portfolio owned as of such Record Date. For each Portfolio, as of
the Record Date, the total number of shares outstanding and entitled to vote
was:
NUMBER OF
PORTFOLIO OUTSTANDING SHARES
- --------- ------------------
Quality Bond Portfolio _________
Small Cap Stock Portfolio _________
Large Cap Stock Portfolio _________
Select Equity Portfolio _________
International Equity Portfolio _________
Bond Debenture Portfolio _________
Mid-Cap Value Portfolio _________
Large Cap Research Portfolio _________
Developing Growth Portfolio _________
Lord Abbett Growth and Income Portfolio _________
Balanced Portfolio _________
Equity Income Portfolio _________
Growth & Income Equity Portfolio _________
Riggs Stock Portfolio _________
Riggs U.S. Government Securities
Portfolio _________
SHAREHOLDERS OF THE TRUST.
As of the Record Date, the following persons were known to the Trust to be the
beneficial owner of more than 5% of the shares of the Trust: [ADD]
To the knowledge of management of the Trust, as of November 15, 1999, no Trustee
of the Trust owned 1% or more of the outstanding shares of any Portfolio, and
the officers and Trustees of the Trust own, as a group, less than 1% of the
shares of each Portfolio.
<TABLE>
<CAPTION>
OFFICERS OF THE TRUST.
The principal executive officers of the Trust and their ages and principal
occupations for the past five years, unless otherwise noted, are set forth
below. The executive officers of the Trust are elected annually and serve until
their successors shall have been fully elected and qualified.
Principal Occupation During Past Five
Position(s) Held Years (and Positions held with Affiliated
Name, Address and Age with Registrant Persons or Principal Underwriters of the Registrant)
- -------------------- --------------- ----------------------------------------------------
<S> <C> <C>
Lorry J. Stensrud President and Chief President of Cova Financial Services Life Insurance
One Tower Lane, Suite 3000 Executive Officer Company ("Cova Life") since June, 1995; prior
Oakbrook Terrace, IL 60181- thereto, Executive Vice President of Cova Life;
4644 President and Director of Cova Advisory
Age: 50
William C. Mair Vice President, Vice President of Cova Life; Vice President and
One Tower Lane, Suite 3000 Treasurer, Controller, Director of Cova Advisory
Oakbrook Terrace, IL 60181- Chief Financial Officer,
4644 Chief Accounting Officer
Age: __ and Trustee
Bernard J. Spaulding Secretary Senior Vice President and General Counsel (since
One Tower Lane, Suite 3000 March, 1999) and Secretary (since July, 1999) of
Oakbrook Terrace, IL 60181- Cova Life; General Counsel and Secretary of Cova
4644 Advisory
Age: __
</TABLE>
ADJOURNMENT.
In the event that sufficient votes in favor of any of the proposals set forth in
the Notice of the Meeting are not received by the time scheduled for the
Meeting, the persons named as Proxies may propose one or more adjournments of
the Meeting after the date set for the original Meeting to permit further
solicitation of proxies with respect to any such proposals. In addition, if, in
the judgment of the persons named as Proxies, it is advisable to defer action on
one or more proposals, the persons named as Proxies may propose one or more
adjournments of the Meeting for a reasonable time. Any such adjournments will
require the affirmative vote of a majority of the votes cast on the questions in
person or by proxy at the session of the Meeting to be adjourned. The persons
named as Proxies will vote in favor of such adjournment those Proxies which they
are entitled to vote in favor of such proposals. They will vote against any such
adjournment those Proxies required to be voted against any of such proposals.
Any proposals for which sufficient favorable votes have been received by the
time of the Meeting will be acted upon and such action will be final regardless
of whether the Meeting is adjourned to permit additional solicitation with
respect to any other proposal.
VOTING INSTRUCTIONS
Cova Life and affiliated insurance companies, through certain of their separate
accounts, own all of the shares of each Portfolio and each has undertaken to
vote its shares in accordance with voting instructions received on a timely
basis from the holders of Variable Contract Owners who have allocated amounts to
one or more of the separate account sub- accounts, that invest in each
Portfolio. Voting Instruction Forms that are properly executed and returned but
that have no voting designation with respect to a Proposal will be voted "For"
the proposal.
Voting instructions may be revoked at any time prior to the close of business on
December 17, 1999 (the deadline set forth above for timely receipt of voting
instructions), by executing and delivering later- dated signed voting
instructions to your insurance company.
Expenses
Cova Life, or an entity controlling, controlled by, or under common control with
Cova Life or MetLife, will pay the Trust's expenses in connection with the
notice, this Proxy Statement and the Meeting including the printing, mailing,
solicitation and vote tabulation expenses, legal fees, and out-of-pocket
expenses. Neither the Trust nor the Variable Contract owners will bear any costs
associated with the Meeting, any additional proxy solicitation or any adjourned
session.
Service Providers
The Trust has no underwriter or distributor. Investors Bank & Trust Company
("IBT"), 200 Clarendon Street, Boston, Massachusetts 02116, is the Trust's
custodian. IBT also provides fund administration and accounting services to the
Trust and is the Trust's transfer agent.
Annual Report
The Trust's 1998 Annual Report to Shareholders was mailed to shareholders on or
about February 28, 1999. IF YOU SHOULD DESIRE AN ADDITIONAL COPY OF AN ANNUAL
REPORT, IT CAN BE OBTAINED, WITHOUT CHARGE, BY CALLING COVA LIFE AT (800)
831-LIFE.
Shareholder Proposals
Pursuant to the applicable laws of the Commonwealth of Massachusetts, the
Declaration of Trust and the By-Laws of the Trust, the Trust need not hold
annual or regular shareholder meetings, although special meetings may be called
for a specific Portfolio, or for the Trust as a whole, for purposes such as
electing or removing Trustees, changing fundamental policies or approving a
contract for sub-advisory services. Therefore, it is probable that no annual
meeting of shareholders will be held in 2000 or in subsequent years unless so
required by the 1940 Act or other applicable laws. For those years in which
annual shareholder meetings are held, proposals which shareholders of the Trust
intend to present for inclusion in the proxy materials with respect to the
annual meeting of shareholders must be received by the Trust within a reasonable
period of time before the solicitation is made.
PLEASE COMPLETE THE ENCLOSED VOTING INSTRUCTION FORM AND RETURN IT PROMPTLY IN
THE ENCLOSED SELF-ADDRESSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT
ANY TIME PRIOR TO THE MEETING BY WRITTEN NOTICE TO THE TRUST OR BY SUBMITTING A
VOTING INSTRUCTION FORM BEARING A LATER DATE.
By Order of the Board
of Trustees
Bernard J. Spaulding
Secretary
November __, 1999
Oakbrook Terrace, Illinois
<TABLE>
<CAPTION>
APPENDIX AND ANNEX INDEX
<S> <C>
APPENDIX APPENDIX DESCRIPTION
- ---------- ---------------------
A Rate of Compensation Earned by
Cova Investment Advisory Corporation
Under Current Investment Advisory Agreement
B Directors and Principal Executive Officers
of Cova Investment Advisory Corporation
C Rate of Compensation Earned by
Each Sub-Adviser Under Current Sub-Advisory
Agreements
D Other Information Regarding J. P. Morgan
Investment Management Inc.
E Other Information Regarding Lord, Abbett & Co.
F Other Information Regarding Mississippi Valley
Advisors Inc.
G Other Information Regarding Riggs Bank N.A.
ANNEX ANNEX DESCRIPTION
- ------- -------------------
A Investment Advisory Agreement
B Sub-Advisory Agreement - J. P. Morgan Investment
Management Inc.
C Sub-Advisory Agreement - Lord, Abbett & Co.
D Sub-Advisory Agreement - Mississippi Valley
Advisors Inc.
E Sub-Advisory Agreement - Riggs Bank N.A.
</TABLE>
APPENDIX A
RATE OF COMPENSATION EARNED BY
COVA INVESTMENT ADVISORY CORPORATION
UNDER CURRENT INVESTMENT ADVISORY AGREEMENT
Under the Current Investment Advisory Agreement, the Trust is obligated to pay
the Adviser a monthly fee at the following annual rates based on the average
daily net assets of a Portfolio:
<TABLE>
<CAPTION>
Average Daily
Portfolio Net Assets % Per Annum
- ---------------------- ------------------ ------------
<S> <C> <C>
Bond Debenture _______________ .75%
Quality Bond First $75 million .55%
Over $75 million .50%
International Equity First $50 million .85%
Over $50 million .75%
Select Equity First $50 million .75%
Over $50 million .65%
Small Cap Stock _______________ .85%
Large Cap Stock _______________ .65%
Mid-Cap Value _______________ 1.00%
Large Cap Research _______________ 1.00%
Developing Growth _______________ .90%
Lord Abbett
Growth and Income _______________ .65%
Balanced _______________ 1.00%
Equity Income _______________ 1.00%
Growth & Income Equity _______________ 1.00%
Riggs Stock _______________ .95%
Riggs U.S. Government
Securities Portfolio _______________ .75%
</TABLE>
APPENDIX B
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF
COVA INVESTMENT ADVISORY CORPORATION
<TABLE>
<CAPTION>
Position with
Cova Investment
Name and Address* Advisory Corporation Principal Occupation
- ------------------- --------------------- --------------------------
<S> <C> <C>
Lorry J. Stensrud President and Director President, Cova Financial
Services Life Insurance
Company
William C. Mair Vice President and Vice President, Cova
Director Financial Services Life
Insurance Company
Bernard J. Spaulding General Counsel and Senior Vice President,
Secretary General Counsel and
Secretary, Cova Financial
Services Life Insurance
Company
Douglas R. Koester Chief Investment Officer Vice President, General
and Director American Investment
Management Co.
William H. Wilton Vice President and First Vice President and
Associate Investment Actuary, Cova Financial
Officer Services Life Insurance
Company
Mark E. Reynolds Executive Vice President Executive Vice President,
and Chief Financial Cova Financial Services
Officer Life Insurance Company
Joann T. Tanaka Vice President Senior Vice President,
Cova Financial Services
Life Insurance Company
</TABLE>
- ---------------
*The address of all of the officers listed above is One Tower Lane, Suite 3000,
Oakbrook Terrace, IL 60181-4644, with the exception of Mr. Koester whose address
is 700 Market Street, St. Louis, MO 63101.
APPENDIX C
RATE OF COMPENSATION EARNED BY
EACH SUB-ADVISER UNDER THE CURRENT
SUB-ADVISORY AGREEMENTS
Under the terms of each Current Sub-Advisory Agreement, the Adviser shall pay to
each Sub-Adviser, as full compensation for services rendered under the
Sub-Advisory Agreement with respect to each Portfolio, monthly fees at the
following annual rates based on the average daily net assets of each Portfolio:
<TABLE>
<CAPTION>
Average Daily Sub-Advisory
Portfolio Net Assets Fee
- ---------------------- ------------------ -------------
<S> <C> <C>
Bond Debenture _______________ .50%
Quality Bond First $75 million .30%
Over $75 million .25%
International Equity First $50 million .60%
Over $50 million .50%
Select Equity First $50 million .50%
Over $50 million .40%
Large Cap Stock __________________ .40%
Small Cap Stock __________________ .60%
Mid-Cap Value __________________ .75%
Large Cap Research __________________ .75%
Developing Growth __________________ .65%
Lord Abbett Growth and
Income __________________ .40%
Balanced __________________ .75%
Equity Income __________________ .75%
Growth & Income Equity __________________ .75%
Riggs Stock __________________ .70%
Riggs U.S. Government
Securities __________________ .50%
</TABLE>
APPENDIX D
OTHER INFORMATION REGARDING
J. P. MORGAN INVESTMENT MANAGEMENT INC.
The principal executive officers and directors of J. P. Morgan Investment
Management Inc. and their principal occupations are listed below. The business
address of each such person, unless otherwise indicated, is 522 Fifth Avenue,
New York, NY 10036.
NAME AND POSITION WITH
SUB-ADVISER PRINCIPAL OCCUPATION
- ------------------------ ----------------------
J. P. Morgan Investment Management Inc. also serves as adviser or sub-adviser to
other investment companies. The following table lists the other investment
companies for which J. P. Morgan Investment Management Inc. serves as adviser or
subadviser, the approximate net assets of each investment company as of December
31, 1998, and the annual advisory or sub-advisory fee received by J. P. Morgan
Management Inc. (as a percentage of average daily net assets).
FUND NAME NET ASSETS CONTRACTUAL MANAGEMENT FEE
- ---------- ----------- ---------------------------
APPENDIX E
OTHER INFORMATION REGARDING
LORD, ABBETT & CO.
The principal executive officers and partners of Lord, Abbett & Co. and their
principal occupations are listed below. The business address of each such
person, unless otherwise indicated, is General Motors Building, 767 Fifth
Avenue, New York, New York 10153-0203.
NAME AND POSITION WITH
SUB-ADVISER PRINCIPAL OCCUPATION
- ------------------------ ----------------------
Lord, Abbett & Co. also serves as adviser or sub-adviser to other investment
companies. The following table lists the other investment companies for which
Lord, Abbett & Co. serves as adviser or subadviser, the approximate net assets
of each investment company as of December 31, 1998, and the annual advisory or
sub-advisory fee received by Lord, Abbett & Co. (as a percentage of average
daily net assets).
FUND NAME NET ASSETS CONTRACTUAL MANAGEMENT FEE
- ---------- ----------- ---------------------------
APPENDIX F
OTHER INFORMATION REGARDING
MISSISSIPPI VALLEY ADVISORS INC.
The principal executive officers and directors of Mississippi Valley Advisors
Inc. and their principal occupations are listed below. The business address of
each such person, unless otherwise indicated, is One Mercantile Center, Seventh
& Washington Streets, St. Louis, Missouri 63101.
NAME AND POSITION WITH
SUB-ADVISER PRINCIPAL OCCUPATION
- ------------------------ ----------------------
Mississippi Valley Advisors Inc. also serves as adviser or sub-adviser to other
investment companies. The following table lists the other investment companies
for which Mississippi Valley Advisors Inc. serves as adviser or subadviser, the
approximate net assets of each investment company as of December 31, 1998, and
the annual advisory or sub-advisory fee received by Mississippi Valley Advisors
Inc. (as a percentage of average daily net assets).
FUND NAME NET ASSETS CONTRACTUAL MANAGEMENT FEE
- ---------- ----------- ---------------------------
APPENDIX G
OTHER INFORMATION REGARDING
RIGGS BANK N.A.
The principal executive officers and directors of Riggs Bank N.A. and their
principal occupations are listed below. The business address of each such
person, unless otherwise indicated, is 6805 Old Dominion Drive, McLean, VA
22101.
NAME AND POSITION WITH
SUB-ADVISER PRINCIPAL OCCUPATION
- ------------------------ ----------------------
Riggs Bank N.A. also serves as adviser or sub-adviser to other investment
companies. The following table lists the other investment companies for which
Riggs Bank N.A. serves as adviser or subadviser, the approximate net assets of
each investment company as of December 31, 1998, and the annual advisory or
sub-advisory fee received by Riggs Bank N.A. (as a percentage of average daily
net assets).
FUND NAME NET ASSETS CONTRACTUAL MANAGEMENT FEE
- ---------- ----------- ---------------------------
ANNEX A
MARKED TO SHOW CHANGES
FROM CURRENT INVESTMENT
ADVISORY AGREEMENT;
DELETIONS IN BRACKETS;
ADDITIONS UNDERLINED
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT dated as of ________, [May 1, 1996], by and
between COVA SERIES TRUST (the "Trust"), a Massachusetts business trust, and
COVA INVESTMENT ADVISORY CORPORATION (the "Advisor"), an Illinois corporation.
1. (a) Retention of Advisor by Trust. The Trust hereby employs the
Advisor to act as the investment advisor for and to (i) manage the investment
and reinvestment of the assets of the Quality Bond Portfolio, Small Cap Stock
----------------------------------------
Portfolio, Large Cap Stock Portfolio, Select Equity Portfolio, International
- ------------------------------------------------------------------------------
Equity Portfolio, Bond Debenture Portfolio, Mid-Cap Value Portfolio, Large Cap
- ------------------------------------------------------------------------------
Research Portfolio, Developing Growth Portfolio, Lord Abbett Growth and Income
- -------------------------------------------------------------------------------
Portfolio, Balanced Portfolio, Equity Income Portfolio, Growth & Income Equity
- --------------------------------------------------------------------------------
Portfolio, Riggs Stock Portfolio and Riggs U.S. Government Securities Portfolio
- --------------------------------------------------------------------------------
[Quality Income Portfolio, High Yield Portfolio, Growth and Income Portfolio,
Money Market Portfolio, Stock Index Portfolio, World Equity Portfolio and the
Utility Portfolio], each being a sub-trust of the Trust (hereinafter referred to
individually as the "Sub-Trust"), in accordance with each such Sub-Trust's
investment objective and policies and limitations, or (ii) in the event the
Advisor shall retain a sub-advisor in accordance with the provisions of
sub-paragraph (b) hereunder, to supervise and implement the investment
activities of any Sub-Trust for which such sub-advisor has been retained,
including responsibility for overall management and administrative support
including managing, providing for and compensating any sub-advisors; and to
administer its affairs to the extent requested by, and subject to the review and
supervision of, the Board of Trustees of the Trust for the period and upon the
terms herein set forth. The Advisor shall select the entities with or through
which the purchase, sale or loan of securities is to be effected; provided that
the Advisor will place orders pursuant to its investment determinations either
directly with the issuer or with a broker or dealer, and if with a broker or
dealer, (a) will attempt to obtain the best net price and most favorable
execution of its orders, and (b) may nevertheless in its discretion purchase and
sell portfolio securities from and to brokers and dealers who provide the
Advisor with research, analysis, advice and similar services and pay such
brokers and dealers in return a higher commission or spread than may be charged
by other brokers or dealers.
The Trust hereby authorizes any entity or person associated with the
Advisor or any sub-advisor retained by Advisor pursuant to this Agreement, which
is a member of a national securities exchange, to effect any transaction on the
exchange for the account of the Trust which is permitted by Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust
hereby consents to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(a)(iv).
The investment of funds shall be subject to all applicable restrictions of
applicable law and of the Declaration of Trust and By-Laws of the Trust, and
resolutions of the Board of Trustees of the Trust with respect to each Sub-Trust
as may from time to time be in force and delivered or made available to the
Advisor.
(b) Advisor's Acceptance of Employment. The Advisor accepts such employment
and agrees during such period to render such services, to select, retain and
compensate any sub-advisors, to supply investment research and portfolio
management (including without limitation the selection of securities for each
Sub-Trust to purchase, hold or sell and the selection of brokers through whom
such Sub-Trust's portfolio transactions are executed, in accordance with the
policies adopted by the Sub-Trust and its Board of Trustees), to administer the
business affairs of each Sub-Trust, to furnish offices and necessary facilities
and equipment to each Sub-Trust, to provide administrative services for each
Sub-Trust, to render periodic reports to the Board of Trustees of the Trust with
respect to each Sub-Trust, and to permit any of its officers or employees, or
those of any sub-advisor to serve without compensation as trustees or officers
of the Sub-Trust if elected to such positions.
(c) Independent Contractor. The Advisor and any sub-advisors shall be
deemed to be independent contractors under this Agreement and any sub-advisory
agreements with the Advisor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Trust or any
Sub-Trust in any way or otherwise be deemed an agent of the Trust or any
Sub-Trust.
(d) Non-Exclusive Agreement. The services of the Advisor to any Sub-Trust
under this Agreement are not to be deemed exclusive, and the Advisor shall be
free to render similar services or other services to others so long as its
services hereunder are not impaired thereby.
2. (a) Fee. For the services and facilities described in Section 1, each
Sub-Trust will pay to the Advisor at the end of each calendar month an
investment management fee equal to a percentage of the average daily net assets
of such Sub-Trust as set forth in Schedules A through O [A through G]
- ---------------------
attached hereto and incorporated by reference herein.
(b) Determination of Net Asset Value. The net asset value of each Sub-Trust
shall be calculated as of the close of the New York Stock Exchange (the
"Exchange") on each day the Exchange is open for trading or such other time or
times as the trustees may determine in accordance with the provisions of
applicable law and of the Declaration of Trust and By-Laws of the Trust, and
resolutions of the Board of Trustees of the Trust as from time to time in force.
For the purpose of the foregoing computations, on each day when net asset value
is not calculated, the net asset value of a share of beneficial interest of each
Sub-Trust shall be deemed to be the net asset value of such share as of the
close of business of the last day on which such calculation was made.
(c) Proration. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
Advisor's fee on the basis of the number of days that the Agreement is in effect
during such month and year, respectively.
3. Expenses. In addition to the fee of the Advisor, the Sub-Trust shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of such Sub-Trust's securities or other property, for keeping its
books of account, for any other charges of the custodian and for calculating the
net asset value of the Sub-Trust as provided above. Neither the Advisor nor any
sub-advisor shall be required to pay, and each Sub-Trust shall assume and pay,
the charges and expenses of its operations, including compensation of the
trustees of the Trust (other than those who are interested persons of the
Advisor or any sub-advisor and other than those who are interested persons of
the principal underwriter of the Sub-Trust but not of the Advisor or any
sub-advisor, if the principal underwriter has agreed to pay such compensation),
charges and expenses of independent accountants, of legal counsel and of any
transfer or dividend disbursing agent, costs of acquiring and disposing of
portfolio securities, interest (if any) on obligations incurred by such
Sub-Trust, costs of share certificates, membership dues in the Investment
Company Institute or any similar organization, costs of reports and notices to
shareholders, costs of registering shares of such Sub-Trust under the federal
securities laws, miscellaneous expenses and all taxes and fees to federal, state
or other governmental agencies on account of the registration of securities
issued by such Sub-Trust, filing of corporate documents or otherwise. Neither
the Trust nor any Sub-Trust shall pay or incur any obligation for any management
or administrative expenses for which the Trust or such Sub-Trust intends to seek
reimbursement from the Advisor without first obtaining the written approval of
the Advisor. The Advisor shall arrange, if desired by the Trust, for officers or
employees of the Advisor or any sub-advisor to serve, without compensation from
the Trust, as trustees, officers or agents of the Trust if duly elected or
appointed to such positions and subject to their individual consent to any
limitations imposed by law.
4. Interested Persons. Subject to applicable statutes and regulations, it
is understood that trustees, officers, shareholders and agents of the Trust or
any Sub-Trust are or may be interested in the Advisor or any sub-advisor as
trustees, directors, officers, shareholders, agents or otherwise and that the
trustees, directors, officers, shareholders and agents of the Advisor may be
interested in the Trust and any Sub-Trust as trustees, officers, shareholders,
agents or otherwise.
5. Liability. The Advisor shall not be liable for any error in judgment or
of law, or for any loss suffered by the Trust or any Sub-Trust in connection
with the matters to which this Agreement or any sub-advisory agreement relates,
except (1) a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Advisor in the performance of its obligations and
duties, or (2) by reason of its reckless disregard of its obligations and duties
under this Agreement.
6. (a) Term. This Agreement shall become effective on the date hereof and
shall remain in full force until ____________ [April 1, 1998] unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter, but only as long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940, as amended (the "Investment Company Act"). Any sub-advisory agreement
between the Advisor and any sub-advisor shall remain in full force and effect
from its date of effectiveness until the second anniversary of such date unless
sooner terminated as hereinafter provided. Any such sub-advisory agreement shall
continue in force from year to year thereafter, but only as long as such
continuance is specifically approved at least annually in the manner required by
the Investment Company Act.
(b) Termination. This Agreement, and any sub-advisory agreement between the
Advisor and any sub-advisor, shall be submitted to the shareholders of the Trust
and each Sub-Trust for approval at a shareholders' meeting and shall
automatically terminate if not approved by a majority of the shares of the
Sub-Trust present and voting at such meeting. This Agreement, and any
sub-advisory agreement between the Advisor and any sub-advisor, shall
automatically terminate in the event of its assignment. This Agreement, and any
sub-advisory agreement between the Advisor and any sub-advisor, may be
terminated at any time without the payment of any penalty by a majority of the
Board of Trustees of the Trust, by vote of the outstanding shares of beneficial
interest of any Sub-Trust or, in the case of this Advisory Agreement only, by
the Advisor or, in the case of a sub-advisory agreement between the Advisor and
any sub-advisor, the sub-advisor, on sixty (60) days written notice to the other
party. The Trust or any Sub-Trust may effect termination by action of the Board
of Trustees or by vote of a majority of the outstanding shares of beneficial
interest of such Sub-Trust, accompanied by appropriate notice. No sub-advisory
agreement shall be cancelable by the Advisor without the approval of a majority
of the Board of Trustees of the Trust. Any sub-advisory agreement will terminate
automatically in the event of the termination of this Agreement.
(c) Payment upon Termination. Termination of this Agreement shall not
affect the right of the Advisor to receive payment on any unpaid balance of the
compensation described in Section 2 earned prior to such termination.
7. Consistency with Sub-Advisory Agreements. The Advisor shall not enter
into any sub-advisory agreement with any sub-advisor respecting the management
of assets of any Sub-Trust which is inconsistent with the terms hereof or with
the Investment Company Act or the Investment Advisers Act of 1940.
8. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
9. Notices. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
10. Disclaimer. The Advisor acknowledges and agrees that, as provided by
Section 5.5 of the Declaration of Trust of the Trust, the shareholders,
trustees, officers, employees and other agents of the Trust and any Sub-Trust
shall not personally be bound by or liable hereunder, nor shall resort be had to
their private property for the satisfaction of any obligation or claim
hereunder.
IN WITNESS WHEREOF, the Trust and the Advisor have caused this Agreement to
be executed on the day and year first above written.
COVA INVESTMENT ADVISORY CORPORATION
By:____________________________________________
COVA SERIES TRUST
By:____________________________________________
COVA SERIES TRUST
BOND DEBENTURE PORTFOLIO
EXHIBIT A
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_____________ [May 1, 1996], the Bond Debenture Portfolio shall pay to the
Advisor at the end of each calendar month an investment management fee equal to
.750 of 1% of the average daily net assets of the Bond Debenture Portfolio.
COVA SERIES TRUST
QUALITY BOND PORTFOLIO
EXHIBIT B
In accordance with Section 2(a) of the Investment Advisory Agreement dated
____________ [May 1, 1996, as amended], the Quality Bond Portfolio shall pay to
the Advisor at the end of each calendar month an investment management fee equal
to a percentage of the average daily net assets of the Quality Bond Portfolio as
follows:
Average Daily Net Assets % Per Annum
------------------------ -------------
First $75 Million .550 of 1%
Over $75 Million .500 of 1%
COVA SERIES TRUST
SELECT EQUITY PORTFOLIO
EXHIBIT C
In accordance with Section 2(a) of the Investment Advisory Agreement dated
______________ [May 1, 1996, as amended], the Select Equity Portfolio shall pay
to the Advisor at the end of each calendar month an investment management fee
equal to a percentage of the average daily net assets of the Select Equity
Portfolio as follows:
Average Daily Net Assets % Per Annum
------------------------ -------------
First $50 Million .750 of 1%
Over $50 Million .650 of 1%
COVA SERIES TRUST
LARGE CAP STOCK PORTFOLIO
EXHIBIT D
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_______________ [May 1, 1996], the Large Cap Stock Portfolio shall pay to the
Advisor at the end of each calendar month an investment management fee equal to
.650 of 1% of the average daily net assets of the Large Cap Stock Portfolio.
COVA SERIES TRUST
SMALL CAP STOCK PORTFOLIO
EXHIBIT E
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_______________ [May 1, 1996], the Small Cap Stock Portfolio shall pay to the
Advisor at the end of each calendar month an investment management fee equal to
.850 of 1% of the average daily net assets of the Small Cap Stock Portfolio.
COVA SERIES TRUST
INTERNATIONAL EQUITY PORTFOLIO
EXHIBIT F
In accordance with Section 2(a) of the Investment Advisory Agreement dated
______________ [May 1, 1996], the International Equity Portfolio shall pay to
the Advisor at the end of each calendar month an investment management fee equal
to a percentage of the average daily net assets of the International Equity
Portfolio as follows:
Average Daily Net Assets % Per Annum
------------------------ -------------
First $50 Million .850 of 1%
Over $50 Million .750 of 1%
EXHIBIT G
COVA SERIES TRUST
MID-CAP VALUE PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_________________ [May 1, 1996, as amended], the Mid-Cap Value Portfolio shall
pay to the Advisor at the end of each calendar month an investment management
fee of 1.00% of the average daily net assets of the Mid-Cap Value Portfolio.
EXHIBIT H
COVA SERIES TRUST
LARGE CAP RESEARCH PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
______________ [May 1, 1996, as amended], the Large Cap Research Portfolio shall
pay to the Advisor at the end of each calendar month an investment management
fee of 1.00% of the average daily net assets of the Large Cap Research
Portfolio.
EXHIBIT I
COVA SERIES TRUST
DEVELOPING GROWTH PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_______________ [May 1, 1996, as amended], the Developing Growth Portfolio shall
pay to the Advisor at the end of each calendar month an investment management
fee of .90% of the average daily net assets of the Developing Growth Portfolio.
EXHIBIT J
COVA SERIES TRUST
LORD ABBETT GROWTH AND INCOME PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_________________ [May 1, 1996, as amended], the Lord Abbett Growth and Income
Portfolio shall pay to the Advisor at the end of each calendar month an
investment management fee of .75% of the average daily net assets of the Lord
Abbett Growth and Income Portfolio.
EXHIBIT K
COVA SERIES TRUST
BALANCED PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
______________ [May 1, 1996, as amended], the Balanced Portfolio shall pay to
the Advisor at the end of each calendar month an investment management fee of
1.00% of the average daily net assets of the Balanced Portfolio.
EXHIBIT L
COVA SERIES TRUST
EQUITY INCOME PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
__________________ [May 1, 1996, as amended], the Equity Income Portfolio shall
pay to the Advisor at the end of each calendar month an investment management
fee of 1.00% of the average daily net assets of the Equity Income Portfolio.
EXHIBIT M
COVA SERIES TRUST
GROWTH & INCOME EQUITY PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_________________ [May 1, 1996, as amended], the Growth & Income Equity
Portfolio shall pay to the Advisor at the end of each calendar month an
investment management fee of 1.00% of the average daily net assets of the Growth
& Income Equity Portfolio.
EXHIBIT N
COVA SERIES TRUST
RIGGS STOCK PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_______________ [May 1, 1996, as amended], the Riggs Stock Portfolio shall pay
to the Advisor at the end of each calendar month an investment management fee of
.95% of the average daily net assets of the Riggs Stock Portfolio.
EXHIBIT O
COVA SERIES TRUST
RIGGS U.S. GOVERNMENT SECURITIES PORTFOLIO
In accordance with Section 2(a) of the Investment Advisory Agreement dated
_____________________ [May 1, 1996, as amended], the Riggs U.S. Government
Securities Portfolio shall pay to the Advisor at the end of each calendar month
an investment management fee of .75% of the average daily net assets of the
Riggs Government Securities Portfolio.
ANNEX B
MARKED TO SHOW CHANGES
FROM CURRENT SUB-ADVISORY
AGREEMENT; DELETIONS IN
BRACKETS; ADDITIONS
UNDERLINED
COVA SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between COVA INVESTMENT ADVISORY CORPORATION, an
Illinois corporation, having its principal place of business in Oakbrook
Terrace, Illinois (hereinafter referred to as the "Advisor"), J.P. Morgan
Investment Management Inc., a Delaware corporation, having its principal place
of business in New York, New York (hereinafter referred to as the "Sub-Advisor")
and Cova Series Trust, a Massachusetts business trust (hereinafter referred to
as the " Trust ") .
WHEREAS, the Trust, an open-end diversified management investment company,
as that term is defined in the Investment Company Act of 1940, as amended (the
"Act"), that is registered as such with the Securities and Exchange Commission
has appointed Advisor as investment adviser for and to the Quality Bond
Portfolio, the International Equity Portfolio, the Select Equity Portfolio, the
Large Cap Stock Portfolio and the Small Cap Stock Portfolio, each being a
sub-trust of the Trust (referred to individually as the "Sub-Trust"), pursuant
to the terms of an investment advisory agreement between the Trust and Advisor
("Investment Advisory Agreement");
WHEREAS, Sub-Advisor is engaged in the business of rendering investment
management services; and
WHEREAS, Advisor desires to retain Sub-Advisor to provide certain
investment management services for the Sub-Trusts as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Retention of Sub-Advisor. Advisor hereby retains Sub-Advisor to assist
Advisor in its capacity as investment adviser for the Sub-Trusts. Subject to the
oversight and review of Advisor and the Board of Trustees of the Trust,
Sub-Advisor shall manage the investment and reinvestment of the assets of the
Sub-Trusts. Sub-Advisor will determine in its discretion, subject to the
oversight and review of Advisor, the investments to be purchased or sold, will
provide Advisor with records concerning its activities which Sub-Advisor is
required to maintain by applicable law or regulation, and will render regular
reports as Advisor may reasonably request to Advisor and to officers and
Trustees of the Trust concerning its discharge of the foregoing
responsibilities.
Subject to paragraph 5 hereof, Sub-Advisor, in its supervision of the
investments of the Sub-Trusts, will be guided by each Sub-Trust's investment
objectives and policies and the provisions and restrictions contained in the
Declaration of Trust and By-Laws of the Trust and as set forth in the
Registration Statement and exhibits as may be on the file with the Securities
and Exchange Commission, all as communicated by Advisor to Sub-Advisor.
Sub-Advisor shall be deemed to be an independent contractor under this Agreement
and, unless otherwise expressly provided or authorized, shall have no authority
to act for or represent the Trust or any Sub-Trust in any way or otherwise be
deemed an agent of the Trust or any Sub-Trust.
2. Fee. Advisor shall pay to Sub-Advisor, for all services rendered to the
Sub-Trusts by Sub-Advisor hereunder, the sub-advisory fees set forth in Exhibit
A attached hereto. During the term of this Agreement, Sub-Advisor will bear all
expenses incurred by it in the performance of its duties hereunder. The expenses
not to be borne by the Sub-Advisor include, without limitation, the following:
organizational costs, taxes, interest, brokerage fees and commissions,
Directors' fees, Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining existence, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing stockholders, costs of
stockholders' resorts and meetings, and any extraordinary expenses.
3. Term. The term of this Agreement shall begin on the date of its
execution and shall remain in effect for two years from that date and from year
to year thereafter, subject to the provisions for termination and all of the
other terms and conditions hereof, if such continuation is specifically approved
at least annually in the manner required by the Act. This Agreement shall be
submitted to the shareholders of the Trust and each Sub-Trust for approval at a
shareholders' meeting and shall automatically terminate if not approved by a
majority of the shares of the Sub-Trust present and voting at such meeting.
4. Termination. This Agreement may be terminated at any time without the
payment of any penalty, by a majority of the Board of Trustees of the Trust, by
a vote of the majority of the outstanding shares of beneficial interest of any
Sub-Trust or by the Sub-Advisor on sixty (60) days written notice to the
Advisor.
This Agreement will terminate five (5) business days after the Sub-Advisor
receives written notice of the termination of the Investment Advisory Agreement.
Notwithstanding any provision of this Agreement, this Agreement may not be
canceled by the Advisor without the approval of a majority of the Board of
Trustees of the Trust.
This Agreement shall automatically terminate in the event of its assignment (as
defined in the Act). The Sub-Advisor may employ or contract with any other
person, persons, corporation, or corporations at its own cost and expense as it
shall determine in order to assist it in carrying out its obligations and duties
under this Agreement.
5. Guidelines and Reports. The Advisor agrees on an on-going basis to
provide or cause to be provided to the Sub-Advisor guidelines, which may include
each Sub-Trust's current prospectus and statement of additional information, to
be revised as provided below (the "Guidelines"), setting forth limitations by
dollar amount or percentage of net assets, on the types of securities in which
the Sub-Trusts are permitted to invest or investment activities in which the
Sub-Trusts are permitted to engage. Among other matters, the Guidelines shall
set forth clearly the limitations imposed upon the Sub-Trusts as a result of
relevant diversification requirements under state and federal law pertaining to
insurance products, including, without limitation, the provisions of Section
817(h) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Guidelines shall remain in effect until 12:00 p.m. on the third business day
following actual receipt by the Sub-Advisor of a written notice, denominated
clearly as such, setting forth revised Guidelines. Sub-Advisor agrees to provide
quarterly reports to Advisor, executed by a duly authorized officer of
Sub-Adviser, within ten (10) business days of the close of each calendar quarter
certifying as to compliance with said Guidelines. In addition to the quarterly
reports, Advisor may request and Sub-Advisor agrees to provide Section 817
diversification compliance reports at more frequent intervals, as reasonably
requested by Advisor.
The Advisor agrees to cause to be delivered to a person designated in writing
for such purpose by the Sub-Advisor, within ten (10) business days after each
quarter end and within ten (10) business days after each month end when the
result of the prior quarter's test reflected short-three income exceeding 20% of
total income, or more often as necessary, a written report dated the date of its
delivery (the "Report") with respect to each Sub-Trust's compliance for its
current fiscal year with the short-three test set forth in Section 851 (b)(3) of
the Code (the "short-three test"). The Report shall include in chart form the
Sub-Trust's gross income (within the meaning of Section 851 of the Code) from
the beginning of the current fiscal year to the date of the Report and its
cumulative income and gains described in Section 851 (b)(3) of the Code for such
period. The Report shall be required only as long as the short-three test
remains a requirement of the Code. The Trust and the Advisor agree that the
Sub-Advisor may rely on the Guidelines and the Report without independent
verification of their accuracy.
6. Liability and Indemnification. The Sub-Advisor shall not be liable for
any error in judgment or of law, or for any loss suffered by the Trust or any
Sub-Trust in connection with the matters to which this Agreement relates, except
(1) a loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Sub-Advisor in the performance of its obligations and duties or
(2) by reason of its reckless disregard of its obligations and duties under this
Agreement. The Advisor agrees to indemnify and hold harmless the Sub-Advisor
from and against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses), howsoever arising, from
or in connection with this Agreement or the performance by the Sub-Advisor of
its duties hereunder, provided, however, that nothing contained herein shall
require that the Sub-Advisor be indemnified for any loss suffered by the Trust
or the Advisor due to the Sub-Advisor's willful misfeasance, bad faith or gross
negligence on its part in the performance of its obligations and duties or from
reckless disregard of its obligations and duties under this Agreement.
7. Brokerage. The Sub-Advisor shall place all orders for the purchase and
sale of portfolio securities for the accounts of the Sub-Trusts with
broker-dealers selected by the Sub-Advisor. In executing portfolio transactions
and selecting broker-dealers, the Sub-Advisor will use its best efforts to seek
best execution on behalf of the Sub-Trusts. In assessing the best execution
available for any transaction, the Sub-Advisor shall consider all factors it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the
broker-dealer, and the reasonableness of the commission, if any (all for the
specific transaction and on a continuing basis). In evaluating the best
execution available, and in selecting the broker-dealer to execute a particular
transaction, the Sub-Advisor may also consider the brokerage and research
services (as those terms are used in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Sub-Trusts and/or other accounts over which the
Sub-Advisor or an affiliate of the Sub-Advisor (to the extent permitted by law)
exercises investment discretion. The Sub-Advisor is authorized to cause the
Sub-Trusts to pay a broker-dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Sub-Trusts
which is in excess of the amount of commission another broker-dealer would have
charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker-dealer
viewed in terms of that particular transaction or in terms of all of the
accounts over which investment discretion is so exercised.
8. Amendment. This Agreement may be amended at any time by agreement of the
parties, provided that the amendment shall be approved in the manner required by
the Act.
9. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Illinois.
10. Registration as an Investment Advisor. Advisor and Sub-Advisor hereby
acknowledge each is registered as an investment adviser under the Investment
Advisers Act of 1940, it will use its reasonable best efforts to maintain such
registration, and it will promptly notify the other if it ceases to be so
registered, if its registration is suspended for any reason, or if it is
notified by any regulatory organization or court of competent jurisdiction that
it should show cause why its registration should not be suspended or terminated.
11. Services to Other Companies or Accounts. The Trust and the Adviser
understand that the Sub-Adviser now acts, will continue to act and may act in
the future as investment adviser to fiduciary and other managed accounts and as
investment adviser to other investment companies, and the Trust and the Adviser
have no objection to the Sub-Adviser so acting, provided that whenever a
Sub-trust and one or more other accounts or investment companies advised by the
Sub-Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a methodology believed
to be equitable to each entity. The Sub-Adviser agrees to allocate similar
opportunities to sell securities. The Trust and the Adviser recognize that, in
some cases, this procedure may limit the size of the position that may be
acquired or sold for a Sub-Trust. In addition, the Trust understands that the
persons employed by the Sub-Adviser to assist in the performance of the
Sub-Adviser's duties hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or restrict the right of
the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and devote time
and attention to other business or to render services of whatever kind or
nature.
12. Books and Records. In compliance with the requirements of Rule 31a-3
under the Act, the Sub-Adviser hereby agrees that all records which it maintains
for the Sub-Trusts are the property of the Trust and further agrees to surrender
promptly to the Trust copies of any of such records upon the Trust's or the
Adviser's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the Act the records relating to its activities
hereunder required to be maintained by Rule 31a-1 under the Act and to preserve
the records relating to its activities hereunder required by Rule 204-2 under
the Investment Advisers Act of 1940, as amended, for the period specified in
said Rule.
13. Disclosure. Neither the Trust nor the Advisor shall, without the prior
written consent of the Sub-Adviser, make representations regarding the
Sub-Adviser or any affiliates in any disclosure document, advertisement, sales
literature or other promotional materials. Sub-Adviser shall respond in writing
within ten ( 10) business days of any such request for prior written consent
from Adviser or any affiliate and in the event Sub-Adviser does not respond in
writing, Sub-Adviser shall be deemed to have disapproved the disclosure
document, advertisement, sales literature or other promotional materials
submitted to Sub- Adviser.
14. Miscellaneous. All notices provided for by this Agreement shall be in
writing and shall be deemed given when received, against appropriate receipt, by
the President in the case of the Sub-Adviser, the President in the case of the
Adviser, and the Trust's Secretary in the case of the Trust, or such other
person a party shall designate by notice to the other parties. No provision of
this Agreement may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. This Agreement constitutes
the entire agreement among the parties hereto and supersedes any prior agreement
among the parties relating to the subject matter hereof. The paragraph headings
of this Agreement are for convenience of reference and do not constitute a part
hereof.
Witness the due execution hereof this _____ day of __________ [1st day of
April, 1996].
<TABLE>
<CAPTION>
<S> <C>
Attest: COVA INVESTMENT ADVISORY
CORPORATION
- - ------------------------- By: ----------------------------
Attest: J.P. MORGAN INVESTMENT
MANAGEMENT. INC.
- - ------------------------- By: -----------------------------
Attest: COVA SERIES TRUST
- - ------------------------- By: -----------------------------
</TABLE>
EXHIBIT A
COVA SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Advisor hereunder, Advisor shall pay to
Sub-Advisor and Sub-Advisor agrees to accept as full compensation for all
services rendered hereunder, fees at the end of each calendar month equal to a
percentage of the average daily net assets of the Sub-Trusts as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Portfolio Average Daily Net Assets % Per Annum
- - ------------------------------ ------------------------ ------------
Quality Bond Portfolio First $75 million .30 of 1 %
Over $75 million .25 of 1%
International Equity Portfolio First $50 million .60 of 1 %
Over $50 million .50 of 1 %
Select Equity Portfolio First $50 million .50 of 1 %
Over $50 million .40 of 1%
Large Cap Stock Portfolio .40 of 1%
Small Cap Stock Portfolio .60 of 1 %
</TABLE>
ANNEX C
MARKED TO SHOW CHANGES
FROM CURRENT SUB-ADVISORY
AGREEMENT; DELETIONS IN
BRACKETS; ADDITIONS
UNDERLINED
COVA SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between COVA INVESTMENT ADVISORY CORPORATION, an
Illinois corporation, having its principal place of business in Oakbrook
Terrace, Illinois (hereinafter referred to as the "Advisor"), Lord Abbett & Co.,
a New York partnership, having its principal place of business in New York, New
York (hereinafter referred to as the "Sub-Advisor") and Cova Series Trust, a
Massachusetts business trust (hereinafter referred to as the "Trust") and is
effective _____________ [April 1, 1996].
WHEREAS, the Trust, an open-end diversified management investment
company, as that term is defined in the Investment Company Act of 1940, as
amended (the "Act"), that is registered as such with the Securities and
Exchange Commission has appointed Advisor as investment adviser for and to the
Bond Debenture Portfolio, Mid-Cap Value Portfolio, Large Cap Research
---------------------------------------------
Portfolio, Developing Growth Portfolio and Lord Abbett Growth and Income
- --------------------------------------------------------------------------
Portfolio (referred to as the "Sub-Trust"), pursuant to the terms of an
- ---------
investment advisory agreement between the Trust and Advisor ("Investment
Advisory Agreement");
WHEREAS, Sub-Advisor is engaged in the business of rendering investment
management services; and
WHEREAS, Advisor desires to retain Sub-Advisor to provide certain
investment management services for the Sub-Trust as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Retention of Sub-Advisor. Advisor hereby retains Sub-Advisor to assist
Advisor in its capacity as investment adviser for the Sub-Trust. Subject to the
oversight and review of Advisor and the Board of Trustees of the Trust,
Sub-Advisor shall manage the investment and reinvestment of the assets of the
Sub-Trust. Sub-Advisor will determine in its discretion, subject to the
oversight and review of Advisor, the investments to be purchased or sold, will
provide Advisor with records (if any) concerning its activities pursuant to the
agreement and will render regular reports to Advisor and to officers and
Trustees of the Trust concerning its discharge of the foregoing
responsibilities.
Sub-Advisor, in its supervision of the investments of the Sub-Trust, will
be guided by the Sub-Trust's investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statement and exhibits as may be
on the file with the Securities and Exchange Commission, all as communicated by
Advisor to Sub-Advisor.
Sub-Advisor shall be deemed to be an independent contractor under this
Agreement and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Trust or any Sub-Trust in any way or
otherwise be deemed an agent of the Trust or any Sub-Trust.
2. Fee. Advisor shall pay to Sub-Advisor, for all services rendered to the
Sub-Trust by Sub-Advisor hereunder, the sub-advisory fees set forth in Exhibit A
attached hereto. During the term of this Agreement, Sub-Advisor will bear all
expenses incurred by it in the performance of its duties hereunder.
3. Term. The term of this Agreement shall begin on the date of its
execution and shall remain in effect for two years from that date and from year
to year thereafter, subject to the provisions for termination and all of the
other terms and conditions hereof, if such continuation is specifically approved
at least annually in the manner required by the Act. This Agreement shall be
submitted to the shareholders of the Trust and each Sub-Trust for approval at a
shareholders' meeting and shall automatically terminate if not approved by a
majority of the shares of the Sub-Trust present and voting at such meeting.
4. Termination. This Agreement may be terminated at any time without the
payment of any penalty, by a majority of the Board of Trustees of the Trust, by
a vote of the majority of the outstanding shares of beneficial interest of the
Sub-Trust or by the Sub-Advisor on sixty (60) days written notice to the
Advisor.
This Agreement will terminate automatically in the event of the termination
of the Investment Advisory Agreement
Notwithstanding any provision of this Agreement, this Agreement may not be
canceled by the Advisor without the approval of a majority of the Board of
Trustees of the Trust.
This Agreement shall automatically terminate it the event of its
assignment. The Sub-Advisor may employ or contract with any other person,
persons, corporation, or corporations at its own cost and expense as it shall
determine in order to assist it in carrying out its obligations and duties under
this Agreement.
5. Sub-Advisor's Representations. Sub-Advisor represents and warrants that
the Sub-Trust will at all times be invested in such a manner as to ensure
compliance with Subchapter M of the Internal Revenue Code, relating to the
diversification requirements for regulated investment companies. Sub-Advisor
will be held harmless when direction from the Advisor or Trust causes non-
compliance. Sub-Advisor agrees to provide quarterly reports to Advisor, executed
by a duly authorized officer to Sub-Advisor, within seven (7) days of the close
of each calendar quarter certifying as to compliance. In addition to the
quarterly reports, Advisor may request and Sub-Advisor agrees to provide
diversification compliance reports at more frequent intervals, as reasonably
requested by Advisor.
6. Liability. The Sub-Advisor shall not be liable for any error in judgment
or of law, or for any loss suffered by the Trust or any Sub-Trust in connection
with the matters to which this Agreement relates, except (1) a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Sub-Advisor in the performance of its obligations and duties or (2) by reason of
its reckless disregard of its obligations and duties under this Agreement.
7. Brokerage. The Sub-Advisor shall place all orders for the purchase and
sale of portfolio securities for the accounts of the Sub-Trust with
broker-dealers selected by the Sub-Advisor. In executing portfolio transactions
and selecting broker-dealers, the Sub-Advisor will use its best efforts to seek
best execution on behalf of the Sub-Trust. In assessing the best execution
available for any transaction, the Sub-Advisor shall consider all factors it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the
broker-dealer, and the reasonableness of the commission, if any (all for the
specific transaction and on a continuing basis). In evaluating the best
execution available, and in selecting the broker-dealer to execute a particular
transaction, the Sub-Advisor may also consider the brokerage and research
services (as those terms are used in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Sub-Trust and/or other accounts over which the
Sub-Advisor or an affiliate of the Sub-Advisor (to the extent permitted by law)
exercises investment discretion. The Sub-Advisor is authorized to cause the
Sub-Trust to pay a broker-dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Sub-Trust
which is in excess of the amount of commission another broker-dealer would have
charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker-dealer
viewed in terms of that particular transaction or in terms of all of the
accounts over which investment discretion is so exercised.
8. Amendment. This Agreement may be amended at any time by agreement of the
parties, provided that the amendment shall be approved in the manner required by
the Act.
9. Services to Other Customers and Accounts. It is understood that the
services of the Sub-Advisor are not deemed to be exclusive, and nothing in this
Agreement shall prevent the Sub-Advisor, or any officer, director, partner or
employee thereof, from providing similar services to other companies and other
clients (whether or not their investment objectives and policies are similar to
those of the Trust) or to engage in other activities. When other clients of the
Sub-Advisor desire to purchase or sell the same portfolio security at the same
time as the Trust, it is understood that such purchases and sales will be made
as nearly as practicable on a pro rata basis in proportion to the amounts
desired to be purchased or sold by each client.
10. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Illinois.
11. Registration as an Investment Advisor. Advisor and Sub-Advisor hereby
acknowledge each is registered as an investment adviser under the Investment
Advisers Act of 1940, it will use its reasonable best efforts to maintain such
registration, and it will promptly notify the other if it ceases to be so
registered, if its registration is suspended for any reason, or if it is
notified by any regulatory organization or court of competent jurisdiction that
it should show cause why its registration should not be suspended or terminated.
Witness the due execution hereof this _____ day of ___________ [1st day of
April, 1996].
Attest: COVA INVESTMENT ADVISORY
CORPORATION
- - ------------------------ By: ----------------------------
Attest: LORD ABBETT & CO.
- - ------------------------ By: ----------------------------
Attest: COVA SERIES TRUST
- - ------------------------ By: ----------------------------
EXHIBIT A
COVA SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Advisor hereunder, Advisor shall pay to
Sub-Advisor and Sub-Advisor agrees to accept as full compensation for all
services rendered hereunder, fees at the end of each calendar month equal to a
percentage of the average daily net assets of the Sub-Trusts as follows:
Portfolio % Per Annum
----------------------- -----------
Bond Debenture Portfolio .50 of 1 %
Mid-Cap Value Portfolio .75 of 1%
Large Cap Research Portfolio .75 of 1%
Developing Growth Portfolio .65 of 1%
Lord Abbett Growth and Income Portfolio .40 of 1%
ANNEX D
MARKED TO SHOW CHANGES
FROM CURRENT SUB-ADVISORY
AGREEMENT; DELETIONS IN
BRACKETS; ADDITIONS
UNDERLINED
SUB-ADVISORY AGREEMENT
This Agreement is made between COVA INVESTMENT ADVISORY CORPORATION, an
Illinois corporation, having its principal place of business in Oakbrook
Terrace, Illinois (hereinafter referred to as the "Advisor"), MISSISSIPPI VALLEY
ADVISORS INC., a Missouri corporation, having its principal place of business in
St. Louis, Missouri (hereinafter referred to as the "Sub-Advisor") and COVA
SERIES TRUST, a Massachusetts business trust (hereinafter referred to as the
"Trust").
WHEREAS, the Trust, an open-end diversified management investment company,
as that term is defined in the Investment Company Act of 1940, as amended (the
"Act"), that is registered as such with the Securities and Exchange Commission,
has appointed Advisor as investment adviser for and to the Balanced Portfolio,
Equity Income Portfolio and Growth & Income Equity Portfolio [Small Cap Equity
Portfolio], each being a sub-trust of the Trust (referred to individually as a
"Sub-Trust" and collectively as the "Sub-Trusts"), pursuant to the terms of an
investment advisory agreement dated as of ____________ [May 1, 1997] between the
Trust and Advisor ("Investment Advisory Agreement");
WHEREAS, Sub-Advisor is engaged in the business of rendering investment
management services; and
WHEREAS, Advisor desires to retain Sub-Advisor to provide certain
investment management services for the Sub-Trusts as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Retention of Sub-Advisor. Advisor hereby retains Sub-Advisor to assist
Advisor in its capacity as investment adviser for the Sub-Trusts. Subject
to the oversight and review of Advisor and the Board of Trustees of the
Trust, Sub-Advisor shall manage the investment and reinvestment of the
assets of the Sub-Trusts. Sub-Advisor will determine in its discretion,
subject to the oversight and review of Advisor, the investments to be
purchased or sold, will provide Advisor with records concerning its
activities which Advisor or the Trust is required to maintain and will
render regular reports to Advisor and to officers and Trustees of the Trust
concerning its discharge of the foregoing responsibilities.
Sub-Advisor, in its supervision of the investments of the Sub-Trusts, will
be guided by the Sub-Trusts' investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and
By-Laws of the Trust and as set forth in the Registration Statement and
exhibits as may be on file with the Securities and Exchange Commission, all
as communicated by Advisor to Sub-Advisor. Advisor hereby undertakes to
provide Sub-Advisor with copies of such Declaration of Trust and ByLaws and
Registration Statement and exhibits as well as any amendments as the same
become available from time to time.
Sub-Advisor shall be deemed to be an independent contractor under this
Agreement and, unless otherwise expressly provided or authorized, shall
have no authority to act for or represent the Trust or any Sub-Trust in any
way or otherwise be deemed an agent of the Trust or any Sub-Trust.
The services furnished by Sub-Advisor hereunder are deemed not to be
exclusive, and nothing in this Agreement shall (i) prevent Sub-Advisor or
any affiliated person (as defined in the Act) of Sub-Advisor from acting as
investment adviser or manager for any other person or persons, including
other management investment companies with investment objectives and
policies the same as or similar to those of the Sub-Trusts, or (ii) limit
or restrict Sub-Advisor or any such affiliated person from buying, selling
or trading any securities or other investments (including any securities or
other investments which the Sub-Trusts are eligible to buy) for its or
their own accounts or for the accounts of others for whom it or they may be
acting; provided, however, that Sub-Advisor agrees that it will not
undertake any activities which, in its reasonable judgment, will adversely
affect the performance of its obligations to the Sub-Trusts under this
Agreement and provided that all such activities are in conformity with all
applicable provisions of the Trust's Registration Statement.
2. Fee. Advisor shall pay to Sub-Advisor, for all services rendered to the
Sub-Trusts by Sub-Advisor hereunder, the sub-advisory fees set forth in
Exhibit A attached hereto. During the term of this Agreement, Sub-Advisor
will bear all expenses incurred by it in the performance of its duties
hereunder, other than the cost of securities, commodities and other
investments (including brokerage, commissions and other charges, if any)
purchased for the Sub-Trusts.
3. Term. The term of this Agreement shall begin on the date of its execution
and shall remain in effect for two years from that date and from year to
year thereafter, subject to the provisions for termination and all of the
other terms and conditions hereof, if such continuation is specifically
approved at least annually in the manner required by the Act. This
Agreement shall be submitted to the shareholders of the Trust and each
Sub-Trust for approval and shall automatically terminate if not approved by
a majority of the shares of the Sub-Trust.
4. Termination. This Agreement may be terminated at any time without the
payment of any penalty, by a majority of the Board of Trustees of the
Trust, by a vote of the majority of the outstanding shares of beneficial
interest of any Sub-Trust or by the Sub-Advisor on sixty (60) days written
notice to the Advisor.
This Agreement will terminate automatically in the event of the termination
of the Investment Advisory Agreement.
Notwithstanding any provision of this Agreement, this Agreement may not be
cancelled by the Advisor without the approval of a majority of the Board of
Trustees of the Trust.
This Agreement shall automatically terminate in the event of its
assignment. The Sub-Advisor may employ or contract with any other person,
persons, corporation, or corporations at its own cost and expense as it
shall determine in order to assist it in carrying out its obligations and
duties under this Agreement.
5. Sub-Advisor's Representations. Sub-Advisor represents and warrants that
each Sub-Trust will at all times be invested in such a manner as to
ensure compliance with Section 817(h) of the Internal Revenue Code of 1986,
as amended, and Treasury Regulations, Section 1.817-5, relating to the
diversification requirements for variable annuity endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulation. Sub-Advisor will be relieved of this obligation and
shall be held harmless when direction from the Advisor or Trustees causes
non-compliance with Section 817(h) and/or Regulation Section 1.817-5.
Sub-Advisor agrees to provide quarterly reports to Advisor, executed by a
duly authorized officer of Sub-Advisor, within seven (7) days of the close
of each calendar quarter certifying as to compliance with said Section or
Regulations. In addition to the quarterly reports, Advisor may request and
Sub-Advisor agrees to provide Section 817 diversification compliance
reports at more frequent intervals, as reasonably requested by Advisor.
6. Liability. The Sub-Advisor shall not be liable for any error in judgment or
of law, or for any loss suffered by the Trust or any Sub-Trust in
connection with the matters to which this Agreement relates, except (1) a
loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Sub-Advisor in the performance of its obligations and
duties or (2) by reason of its reckless disregard of its obligations and
duties under this Agreement. Notwithstanding the foregoing, it is agreed
that the relative investment performance of the Sub-Trusts shall not
constitute a breach by Sub-Advisor of its obligations under this Agreement.
7. Portfolio Transactions Brokerage. Investment decisions for the Sub-Trusts
shall be made by Sub-Advisor independently from those for any other
investment companies and accounts advised or managed by Sub-Advisor. The
Sub-Trusts and such investment companies and accounts may, however, invest
in the same securities. When a purchase or sale of the same security is
made at substantially the same time on behalf of a Sub-Trust and/or another
investment company or account, the transaction will be averaged as to
price, and available investments allocated as to amount, in a manner which
Sub-Advisor believes to be equitable to the Sub-Trust and such other
investment company or account. In some instances, this investment procedure
may adversely affect the price paid or received by the Sub-Trust or the
size of the position obtained or sold by the Sub-Trust. To the extent
permitted by law, Sub-Advisor may aggregate the securities to be sold or
purchased for the Sub-Trusts with those to be sold or purchased for other
investment companies or accounts in order to obtain best execution.
Sub-Advisor shall place all orders for the purchase and sale of portfolio
securities for the accounts of the Sub-Trusts with broker-dealers selected
by the Sub-Advisor. In executing portfolio transactions and selecting
broker-dealers, the Sub-Advisor will use its best efforts to seek best
execution on behalf of the Sub-Trusts. In assessing the best execution
available for any transaction, the Sub-Advisor shall consider all factors
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability of
the broker-dealer, and the reasonableness of the commission, if any (all
for the specific transaction and on a continuing basis). In evaluating the
best execution available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Advisor may also consider the brokerage and
research services (as those terms are used in Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Sub-Trusts
and/or other accounts over which the Sub-Advisor or an affiliate of the
Sub-Advisor (to the extent permitted by law) exercises investment
discretion. The Sub-Advisor is authorized to cause the Sub-Trusts to pay a
broker-dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Sub-Trusts which
is in excess of the amount of commission another broker-dealer would have
charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker-dealer viewed in terms of that particular transaction or in terms of
all of the accounts over which investment discretion is so exercised.
8. Amendment. This Agreement may be amended at any time by agreement of the
parties, provided that the amendment shall be approved in the manner
required by the Act.
9. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Illinois.
10. Registration as an Investment Advisor. Advisor and Sub-Advisor each hereby
acknowledges that it is registered as an investment adviser under the
Investment Advisers Act of 1940, that it will use its reasonable best
efforts to maintain such registration, and that it will promptly notify the
other if it ceases to be so registered, if its registration is suspended
for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its
registration should not be suspended or terminated.
Witness the due execution hereof this ______ day of ___________ [15th day of
June, 1997].
Attest: COVA INVESTMENT ADVISORY
CORPORATION
__________________________ By:______________________________________
Attest: MISSISSIPPI VALLEY ADVISORS INC.
__________________________ By:______________________________________
Attest COVA SERIES TRUST
__________________________ By:______________________________________
EXHIBIT A
COVA SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Advisor hereunder, Advisor shall pay to
Sub-Advisor and Sub-Advisor agrees to accept as full compensation for all
services rendered hereunder, fees accrued daily and paid at the end of each
calendar month equal to a percentage of the average daily net assets of the
Sub-Trusts as follows:
Portfolio % Per Annum
_______________________________ _______________
Balanced Portfolio .75 of 1%
Equity Income Portfolio .75 of 1%
Growth & Income Equity Portfolio .75 of 1%
[Small Cap Equity Portfolio .75 of 1%]
ANNEX E
MARKED TO SHOW CHANGES
FROM CURRENT SUB-ADVISORY
AGREEMENT; DELETIONS IN
BRACKETS; ADDITIONS
UNDERLINED
SUB-ADVISORY AGREEMENT
This Agreement is made between COVA INVESTMENT ADVISORY CORPORATION, an
Illinois corporation, having its principal place of business in Oakbrook
Terrace, Illinois (hereinafter referred to as the "Advisor"), RIGGS BANK N.A., a
national banking association, having its principal place of business in
Washington, D.C. (hereinafter referred to as the "Sub-Advisor") and COVA SERIES
TRUST, a Massachusetts business trust (hereinafter referred to as the "Trust").
WHEREAS, the Trust, an open-end diversified management investment company,
as that term is defined in the Investment Company Act of 1940, as amended (the
"Act"), organized under the laws of Massachusetts as a business trust and a
series type of investment company issuing separate classes (or series) of
shares, that is registered as such with the Securities and Exchange Commission
("SEC"), has appointed Advisor as investment adviser for and to Riggs Stock
Portfolio and Riggs U.S. Government Securities Portfolio (referred to
individually as a "Portfolio" and collectively as the "Portfolios"), pursuant to
the terms of an investment advisory agreement dated as of _____________________
[May 1, 1996 as amended] between the Trust and Advisor ("Investment Advisory
Agreement");
WHEREAS, Advisor is an investment adviser, registered with the SEC under
the Investment Advisers Act of 1940 ("Advisers Act");
WHEREAS, Sub-Advisor, which provides investment management services to
clients, is a national banking association that is not required to register with
the SEC under the Advisers Act;
WHEREAS, Advisor desires to retain Sub-Advisor to provide certain
investment management services for the Portfolios as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Retention of Sub-Advisor. Advisor hereby retains Sub-Advisor to assist
Advisor in its capacity as investment adviser for the Portfolios. Subject
to the oversight and review of Advisor and the Board of Trustees of the
Trust, Sub-Advisor shall manage the investment and reinvestment of the
assets of the Portfolios and shall, in the name of the Portfolios, place
orders for the execution of the Portfolios' portfolio transactions.
Sub-Advisor will maintain records adequately demonstrating Sub-Advisor's
compliance with its obligations under this Agreement and will furnish to
Advisor and the Trust's Board of Trustees such periodic and special reports
as each may reasonably request.
Sub-Advisor, in its supervision of the investments of the Portfolios, will
be guided by the Portfolios' investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and
By-Laws of the Trust and as set forth in the Registration Statement and
exhibits as may be on file with the SEC, all of which have been provided by
Advisor to Sub-Advisor as of the date this Agreement is executed by the
parties hereto. Advisor hereby undertakes to provide Sub-Advisor with
copies of such Declaration of Trust and Bylaws and Registration Statement
and exhibits as well as any amendments as the same become available from
time to time.
Sub-Advisor shall be deemed to be an independent contractor under this
Agreement and, unless otherwise expressly provided or authorized, shall
have no authority to act for or represent the Trust or any Portfolio in any
way or otherwise be deemed an agent of the Trust or any Portfolio.
The services furnished by Sub-Advisor hereunder are deemed not to be
exclusive, and nothing in this Agreement shall (i) prevent Sub-Advisor or
any affiliated person (as defined in the Act) of Sub-Advisor from acting as
investment adviser or manager for any other person or persons, including
other management investment companies with investment objectives and
policies the same as or similar to those of the Portfolios, or (ii) limit
or restrict Sub-Advisor or any such affiliated person from buying, selling
or trading any securities or other investments (including any securities or
other investments which the Portfolios are eligible to buy) for its or
their own accounts or for the accounts of others from whom it or they may
be acting; provided, however, that Sub-Advisor agrees that, in performing
its obligations under this Agreement, Sub-Advisor will not take any action,
which in Sub-Advisor's reasonable judgment, would be adverse to the
interests of the Portfolios and Sub-Advisor's activities shall conform with
all applicable provisions of the Trust's Registration Statement.
Advisor shall furnish Sub-Advisor, copies of all prospectuses, statements
of additional information, proxy statements, reports to shareholders, sales
literature, or other material prepared for distribution to interest holders
of the Trust or the public that refer in any way to Sub-Advisor, prior to:
(i) filing with the SEC or the National Association of Securities Dealers
("NASD"), and (ii) distribution. Advisor agrees that such material shall
not be filed or distributed, if Sub-Advisor reasonably objects in writing
within ten (10) business days (or such other time as may be mutually
agreed) after receipt thereof. In the event this Agreement is terminated,
Advisor will continue to furnish to Sub-Advisor copies of any of the
above-mentioned materials that refer in any way to Sub-Advisor, in
accordance with the provisions hereof.
Sub-Advisor is authorized to honor and act on any written notice,
instruction or confirmation given by Advisor, on behalf of the Trust, that
is signed by any person authorized by Advisor to provide instructions to
Sub-Advisor ("Authorized Person"). The names, addresses and specimen
signatures of Authorized Persons will be provided by Advisor to Sub-Advisor
from time to time. Sub-Advisor shall not be liable for acting in good faith
upon the instructions, confirmation or authority of Authorized Persons,
notwithstanding that it shall be subsequently be shown that the same was
not given or signed or sent by an Authorized Person.
2. Fee. Advisor shall pay to Sub-Advisor, for all services rendered to the
Portfolios by Sub-Advisor hereunder, a monthly sub-advisory fee based on
the value of the average daily net assets of each Portfolio, computed in
accordance with the compensation schedule set forth in Exhibit A attached
hereto. During the term of this Agreement, Sub-Advisor will bear all
expenses incurred by it in the performance of its duties hereunder, other
than the cost of securities, commodities and other investments (including
brokerage, commissions and other charges, if any) purchased for the
Portfolios.
3. Term. The term of this Agreement shall begin on the date of its
execution and shall remain in effect for two years from that date and from
year to year thereafter, subject to the provisions for termination and
other terms and conditions hereof, if such continuation is specifically
approved at least annually (a) either (i) by the Trust's Board of Trustees
or (ii) a majority of the outstanding voting securities of each Portfolio,
as defined in Section 2(a)(42) of the Act; and (b) by the affirmative vote
of a majority of the Trustees who are not parties to this Agreement or
"interested persons" of a party to this Agreement, within the meaning of
Section 2(a)(19) of the Act, other than as Trustees of the Trust, by votes
cast in person at a meeting specifically called for such purpose.
4. Termination. This Agreement may be terminated with respect to a
Portfolio at any time without the payment of any penalty, by a vote of a
majority of the Board of Trustees of the Trust, by a vote of the majority
of the outstanding shares of beneficial interest of a Portfolio or by
Sub-Advisor on sixty (60) days written notice to Advisor.
This Agreement will terminate automatically in the event of the termination
of the Investment Advisory Agreement.
Notwithstanding any provision of this Agreement, this Agreement may not be
canceled by Advisor without the approval of a majority of the Board of
Trustees of the Trust.
This Agreement shall automatically terminate in the event of its
assignment. Sub-Advisor may employ or contract, at its own costs and
expense, with any other person, persons, corporation, or corporations as it
shall determine in order to assist it in carrying out its obligations and
duties under this Agreement.
5. Representations. (a) Sub-Advisor represents, warrants, and agrees as
follows: (1) Sub-Advisor (i) is a national bank that is excluded from the
definition of an investment adviser, under Section 202(a)(11) of the
Advisers Act, and is not required to register with the SEC thereunder; (ii)
is not prohibited by the Act or the Advisers Act from performing the
services contemplated by this Agreement; (iii) has met, and will continue
to meet for so long as this Agreement remains in effect, any applicable
federal or state requirements or the requirements of any regulatory or
industry self-regulatory agency, necessary in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and
perform the services contemplated by this Agreement; and (v) will
immediately notify the Trust and Advisor of the occurrence of any event
that would disqualify Sub-Advisor from serving as an investment adviser for
a registered investment company pursuant to Section 9(a) of the Act or
otherwise.
(b) Advisor represents, warrants, and agrees as follows: (1) Advisor (i) is
registered as an investment adviser under the Advisers Act and will
continue to be so registered for so long as this Agreement remains in
effect; (ii) is not prohibited by the Act or the Advisers Act from
performing the services contemplated by this Agreement; (iii) has met, and
will continue to meet for so long as this Agreement remains in effect, any
applicable federal or state requirements or the requirements of any
regulatory or industry self-regulatory agency, necessary in order to
perform the services contemplated by this Agreement; (iv) has the authority
to enter into and perform the services contemplated by this Agreement; and
(v) will immediately notify the Trust and Sub-Advisor of the occurrence of
any event that would disqualify Advisor from serving as an investment
adviser for an investment company pursuant to Section 9(a) of the Act, or
otherwise.
(c) The Trust represents, warrants and agrees as follows: (1) the Trust (i)
is an open-end registered management investment company registered under
the Securities Act of 1933 and the Act, and will continue to be so
registered for so long as this Agreement remains in effect; (ii) is not
prohibited by the Act or by its Declaration of Trust or By-Laws from
entering into this Agreement; (iii) has the authority to enter into this
Agreement; and (iv) will immediately notify Advisor and Sub-Advisor in the
event that (x) it shall apply to the SEC for an order declaring that it
shall cease to be an investment company under the Act, (y) the Board of
Trustees shall determine to terminate a Portfolio by merger, substitution
or otherwise, or (z) the SEC commences or initiates any action or
proceeding against the Trust for violations of any federal securities law
or regulation, or which might have a material adverse effect on the Trust's
activities as described in the registration statement pertaining to the
Trust filed with the SEC.
6. Compliance with Section 817(h). Sub-Advisor represents and warrants
that such Portfolio will at all times be invested in such a manner as to
ensure compliance with Section 817(h) of the Internal Revenue Code of 1986,
as amended, and Treasury Regulations Section 1.817-5, relating to the
diversification requirements for variable annuity endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulation. Sub-Advisor will be relieved of this obligation and
shall be held harmless when direction from Advisor or Trustees causes
non-compliance with Section 817(h) and/or Regulation Section 1.817-5.
Sub-Advisor agrees to provide quarterly reports to advisor, executed by a
duly authorized officer of Sub-Advisor, within seven (7) days of the close
of each calendar quarter certifying as to compliance with said Section or
Regulations. In addition to the quarterly reports, Advisor may request and
Sub-Advisor agrees to provide Section 817 diversification compliance
reports at more frequent intervals, as reasonably requested by Advisor.
7. Liability. Sub-Advisor shall not be liable to Advisor or the Trust for
any act, omission or any error in judgment or of law, or for any loss
suffered by the Trust or any Portfolio in connection with the matters to
which this Agreement relates, except (1) a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of Sub-Advisor in
the performance of its obligations and duties hereunder or (2) by reason of
the Sub-Advisor's reckless disregard of its obligations and duties under
this Agreement. Notwithstanding the foregoing, it is agreed that the
investment performance of the Portfolios shall not be used to determine
whether there has been a breach by Sub-Advisor of its obligations under
this Agreement.
8. Portfolio Transactions Brokerage. Investment decisions for the
Portfolios shall be made by Sub-Advisor independently from those for any
other investment companies and accounts advised or managed by Sub-Advisor.
The Portfolios and such other investment companies and accounts may,
however, invest in the same securities as those acquired for the
Portfolios. When a purchase or sale of the same security is made at
substantially the same time on behalf of a Portfolio and/or another
investment company or account, the transaction will be averaged as to
price, and available investments allocated as to amount, in a manner which
Sub-Advisor believes to be equitable to the Portfolio and such other
investment company or account. Advisor expressly understands and agrees
that in some instances, this investment procedure may adversely affect the
price paid or received by the Portfolio or the size of the position
obtained or sold by the Portfolio. To the extent permitted by law,
Sub-Advisor may aggregate the securities to be sold or purchased for the
Portfolios with those to be sold or purchased for other investment
companies or accounts in order to obtain best execution.
Sub-Advisor shall place all orders for the purchase and sale of portfolio
securities for the accounts of the Portfolios with broker-dealers selected
by Sub-Advisor. In executing portfolio transactions and selecting
broker-dealers, Sub-Advisor will use its best efforts to seek best
execution on behalf of the Portfolios. In assessing the best execution
available for any transaction, Sub-Advisor shall consider all factors it
deems relevant, including the breadth of the market in the security, the
price of the security, financial condition and execution capability of the
broker-dealer, and the reasonableness of the commission, if any (all for
the specific transaction and on a continuing basis). In evaluating the best
execution available, and in selecting the broker-dealer to execute a
particular transaction, Sub-Advisor may also consider the brokerage and
research services (as those terms are used in Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Portfolios
and/or other accounts over which Sub-Advisor or an affiliate of Sub-Advisor
(to the extent permitted by law) exercises investment discretion.
Sub-Advisor is authorized to cause the Portfolios to pay a broker-dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolios which is in excess of
the amount of commission another broker-dealer would have charged for
effecting that transaction if, but only if, Sub-Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer viewed in
terms of that particular transaction or in terms of all of the accounts
over which investment discretion is so exercised.
9. Amendment. This Agreement may be amended at any time by agreement of the
parties, provided that the amendment shall be approved in the manner
required by the Act.
10. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Illinois, except to the extent that
federal law governs the transactions contemplated hereby.
Witness the due execution hereof this ______ day
of _____________ [22nd day of October, 1999].
Attest: COVA INVESTMENT ADVISORY
CORPORATION
By:______________________________________
Attest: RIGGS BANK, N.A.
By:_______________________________________
Attest: COVA SERIES TRUST
By:______________________________________
EXHIBIT A
COVA SERIES TRUST
SUB-ADVISORY COMPENSATION
Advisor shall pay to Sub-Advisor and Sub-Advisor agrees to accept as full
compensation for all services rendered hereunder, fees accrued daily and paid 30
days after the end of each calendar month, computed as follows: Portfolio net
assets (before advisory fee) x annual advisory fee rate/365 x number of days in
period. The daily fee for non-business days (weekends and holidays) are included
in the calculation for the next business day.
Portfolio % Per Annum
- --------- -----------
Riggs Stock Portfolio .70 of 1%
Riggs U.S. Government Securities Portfolio .50 of 1%
No Sub-Advisory fees shall be paid under this Agreement until all working
capital contributions made by Advisor and/or its affiliates have been withdrawn
from the Portfolios and repaid to the contributing party.
PROXY
________ PORTFOLIO
OF
COVA SERIES TRUST
SPECIAL MEETING OF SHAREHOLDERS
December 23, 1999
KNOW ALL MEN BY THESE PRESENTS that the undersigned shareholder(s) of the
______ Portfolio of Cova Series Trust ("Trust") hereby appoints _______________,
or any one of them true and lawful attorneys with power of substitution of each,
to vote all shares which the undersigned is entitled to vote, at the Special
Meeting of Shareholders of the Trust to be held on December 23, 1999 at the
offices of Cova Investment Advisory Corporation, One Tower Lane, Suite 3000,
Oakbrook Terrace, Illinois 60181-4644 at 10:00 a.m., local time, and at any
adjournment thereof ("Meeting"), as follows:
1. To approve a New Investment Advisory Agreement between Cova Investment
Advisory Corporation and Cova Series Trust, such New Investment Advisory
Agreement to contain the same terms and conditions as the current
Investment Advisory Agreement except for the dates of execution,
effectiveness and termination.
FOR ( ) AGAINST ( ) ABSTAIN ( )
2. To approve a New Sub-Advisory Agreement among Cova Investment Advisory
Corporation, Cova Series Trust and J. P. Morgan Investment Management Inc.,
such New Sub-Advisory Agreement to contain the same terms and conditions as
the current Sub-Advisory Agreement except for the dates of execution,
effectiveness and termination.
FOR ( ) AGAINST ( ) ABSTAIN ( )
3. To approve a New Sub-Advisory Agreement among Cova Investment Advisory
Corporation, Cova Series Trust and Lord, Abbett & Co., such New
Sub-Advisory Agreement to contain the same terms and conditions as the
current Sub-Advisory Agreement except for the dates of execution,
effectiveness and termination.
FOR ( ) AGAINST ( ) ABSTAIN ( )
4. To approve a New Sub-Advisory Agreement among Cova Investment Advisory
Corporation, Cova Series Trust and Mississippi Valley Advisors Inc., such
New Sub-Advisory Agreement to contain the same terms and conditions as the
current Sub-Advisory Agreement except for the dates of execution,
effectiveness and termination.
FOR ( ) AGAINST ( ) ABSTAIN ( )
5. To approve a New Sub-Advisory Agreement among Cova Investment Advisory
Corporation, Cova Series Trust and Riggs Bank N.A., such New Sub-Advisory
Agreement to contain the same terms and conditions as the current
Sub-Advisory Agreement except for the dates of execution, effectiveness and
termination.
FOR ( ) AGAINST ( ) ABSTAIN ( )
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Meeting.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
Dated: ____________________, 1999
Cova ______________ Life Insurance Company
---------------------------------------------------
Name of Insurance Company
---------------------------------------------------
Name and Title of Authorized Officer
---------------------------------------------------
Signature of Authorized Officer
___________ PORTFOLIO
Name(s) of Separate Account(s)
of the Insurance Company
Owning Shares in this Portfolio:
- -----------------------------------
[NAME OF PORTFOLIO]
INSTRUCTIONS TO COVA _____________ LIFE INSURANCE COMPANY
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF
COVA SERIES TRUST TO BE HELD ON DECEMBER 23, 1999
INSTRUCTIONS SOLICITED ON BEHALF OF
COVA ____________ LIFE INSURANCE COMPANY
The undersigned hereby instructs Cova __________Life Insurance Company (the
"Company") to vote all shares of the above-referenced Portfolio of COVA SERIES
TRUST (the "Trust") represented by units held by the undersigned at a special
meeting of shareholders of the Trust to be held at 10:00 a.m., local time, on
December 23, 1999, at the offices of Cova Investment Advisory Corporation, One
Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181-4644 and at any
adjournment thereof, as indicated on the reverse side.
Dated: ________________________, 1999
_____________________________________
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD. When signing as
attorney, executor, administrator, trustee, guardian, or as custodian for a
minor, please sign your name and give your full title as such. If signing on
behalf of a corporation, please sign the full corporate name and your name and
indicate your title. If you are a partner signing for a partnership, please sign
the partnership name, your name and indicate your title. Joint owners should
each sign this proxy. Please sign, date and return.
INSTRUCTIONS SOLICITED ON BEHALF OF COVA ______________ LIFE INSURANCE COMPANY
COVA __________ LIFE INSURANCE COMPANY WILL VOTE SHARES HELD ON BEHALF OF THE
CONTRACT OWNER AS INDICATED BELOW OR FOR ANY PROPOSAL FOR WHICH NO CHOICE IS
INDICATED.
RECEIPT OF THE NOTICE OF THE SPECIAL MEETING AND THE ACCOMPANYING PROXY
STATEMENT IS HEREBY ACKNOWLEDGED.
IF THIS INSTRUCTION FORM IS SIGNED AND RETURNED AND NO SPECIFICATION IS MADE,
THE COMPANY SHALL VOTE FOR ALL THE PROPOSALS. IF THIS INSTRUCTION CARD IS NOT
RETURNED OR IS RETURNED UNSIGNED, THE COMPANY SHALL VOTE YOUR SHARES IN THE SAME
PROPORTION AS IT VOTES THE SHARES FOR WHICH IT HAS RECEIVED INSTRUCTIONS.
Please vote by filling in the appropriate boxes below.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a New Investment Advisory [ ] [ ] [ ]
Agreement between Cova Investment
Advisory Corporation and Cova Series
Trust, such New Investment Advisory
Agreement to contain the same terms
and conditions as the current
Investment Advisory Agreement except
for the dates of execution,
effectiveness and termination.
2. To approve a New Sub-Advisory [ ] [ ] [ ]
Agreement among Cova Investment
Advisory Corporation, Cova Series
Trust and J. P. Morgan Investment
Management Inc., such New Sub-Advisory
Agreement to contain the same terms
and conditions as the current
Sub-Advisory Agreement except for
the dates of execution, effectiveness
and termination.
3. To approve a New Sub-Advisory [ ] [ ] [ ]
Agreement among Cova
Investment Advisory Corporation,
Cova Series Trust and Lord, Abbett &
Co., such New Sub-Advisory Agreement
to contain the same terms and conditions
as the current Sub-Advisory Agreement
except for the dates of execution,
effectiveness and termination.
4. To approve a New Sub-Advisory [ ] [ ] [ ]
Agreement among Cova Investment
Advisory Corporation, Cova Series
Trust and Mississippi Valley Advisors
Inc., such New Sub-Advisory Agreement
to contain the same terms and
conditions as the current Sub-Advisory
Agreement except for the dates of
execution, effectiveness and termination.
5. To approve a New Sub-Advisory [ ] [ ] [ ]
Agreement among Cova Investment
Advisory Corporation, Cova Series
Trust and Riggs Bank N.A., such New
Sub-Advisory Agreement to contain the
same terms and conditions as the current
Sub-Advisory Agreement except for the
dates of execution, effectiveness and
termination.
IMPORTANT: Please sign on the reverse side.
