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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] 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
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 23, 1999
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 Form today in the enclosed postage-paid
envelope. If you sign, date and return the Form, 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 29, 1999
COVA SERIES TRUST
One Tower Lane, Suite 3000
Oakbrook Terrace, Illinois 60181-4644
(800) 831-5433
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 held by the separate
accounts in proportion to the instructions received from Variable Contract
Owners. Each 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, 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.
PROXY SUMMARY TABLE
The Proposals are to be voted upon by Shareholders of the Portfolios as follows:
PORTFOLIO TO WHICH
PROPOSALS EACH PROPOSAL APPLIES
- ------------- --------------------------
1. To approve or disapprove a New All Portfolios
Investment 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 Small Cap Stock Portfolio
Investment Advisory Corporation, Cova Large Cap Stock Portfolio
Series Trust and J.P. Morgan Investment Select Equity Portfolio
Management Inc. International Equity Portfolio
3. To approve or disapprove a New Sub- Bond Debenture Portfolio
Advisory Agreement among Cova Mid-Cap Value Portfolio
Investment Advisory Corporation, Cova Large Cap Research Portfolio
Series Trust and Lord, Abbett & Co. Developing Growth Portfolio
Lord Abbett Growth and
Income Portfolio
PORTFOLIO TO WHICH
PROPOSALS EACH PROPOSAL APPLIES
- ------------- --------------------------
4. To approve or disapprove a New Sub-
Advisory Agreement Balanced Portfolio
among Cova Equity Income Portfolio
Investment Advisory Corporation,
Cova Growth & Income Equity Series
Trust and Mississippi Valley Portfolio
Advisors Inc.
5. To approve or disapprove a New Sub- Riggs Stock Portfolio
Advisory Agreement among Cova Riggs U.S. Government
Investment Advisory Corporation, Securities Portfolio
Cova Series Trust and Riggs Bank N.A.
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.
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
August 7, 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 by 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 Independent Trustees,
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 $90,160
Small Cap Stock Portfolio $421,343
Large Cap Stock Portfolio $248,234
Select Equity Portfolio $649,033
International Equity Portfolio $495,276
Bond Debenture Portfolio $431,390
Mid-Cap Value Portfolio $69,289
Large Cap Research Portfolio $45,795
Developing Growth Portfolio $49,123
Balanced Portfolio $20,366
Equity Income Portfolio $22,635
Growth & Income Equity Portfolio $40,362
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:
SUB-ADVISER PORTFOLIOS
- ----------------- ------------------
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
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 on the later
of the date the Transaction closes or the date on which the shareholders of the
Portfolio approve such Agreement. The New Sub-Advisory Agreement 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 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 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 investment 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 Firstar Corporation, a $74 billion bank
holding company. As of December 31, 1998, MVA had approximately $9 billion in
assets under investment management.
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 8,979,927.145
Small Cap Stock Portfolio 6,330,714.100
Large Cap Stock Portfolio 12,580,614.525
Select Equity Portfolio 15,393,639.721
International Equity Portfolio 8,459,755.122
Bond Debenture Portfolio 13,642,371.759
Mid-Cap Value Portfolio 2,545,563.441
Large Cap Research Portfolio 2,265,585.122
Developing Growth Portfolio 2,122,662.221
Lord Abbett Growth and Income Portfolio 36,869,492.506
Balanced Portfolio 663,540.760
Equity Income Portfolio 472,749.194
NUMBER OF
PORTFOLIO OUTSTANDING SHARES
- ------------------ -------------------------
Growth & Income Equity Portfolio 1,063,023.991
Riggs Stock Portfolio 11,941.757
Riggs U.S. Government
Securities Portfolio 21,482.627
SHAREHOLDERS OF THE TRUST
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.
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 Years
(and Positions held with
Affiliated Persons or
Name, Address Position(s) Held Principal Underwriters
and Age with Registrant of the Registrant)
- --------------- ----------------- --------------------------
Lorry J. Stensrud President and Chief President of Cova Financial
One Tower Lane, Executive Officer Services Life Insurance
Suite 3000 Company ("Cova Life")
Oakbrook Terrace, since June, 1995; prior
IL 60181-4644 thereto, Executive Vice
Age: 50 President of Cova Life;
President and Director of
Cova Advisory
William C. Mair Vice President, Vice President of Cova Life;
One Tower Lane, Treasurer, Controller, Vice President and
Suite 3000 Chief Financial Officer, Director of Cova Advisory
Oakbrook Terrace, Chief Accounting
IL 60181-4644 Officer and Trustee
Age: 58
Bernard J. Spaulding Secretary Senior Vice President and
One Tower Lane, General Counsel (since
Suite 3000 March, 1999) and Secretary
Oakbrook Terrace, (since July, 1999) of
IL 60181-4644 Cova Life; General Counsel
Age: 56 and Secretary of Cova
Advisory
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 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 29, 1999
Oakbrook Terrace, Illinois
<TABLE>
<CAPTION>
APPENDIX AND ANNEX INDEX
APPENDIX APPENDIX DESCRIPTION
- ------------ ------------------------
<S> <C>
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:
Average Daily
Portfolio Net Assets % Per Annum
- ------------- ------------- --------------
Bond Debenture _______________ .75%
Quality Bond First $75 million .55%
Over $75 million .50%
Average Daily
Portfolio Net Assets % Per Annum
- ------------- ------------- --------------
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>
<CAPTION>
APPENDIX B
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF
COVA INVESTMENT ADVISORY CORPORATION
Position with
Cova Investment Principal
Name and Address* Advisory Corporation 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
Position with
Cova Investment Principal
Name and Address* Advisory Corporation Occupation
- ------------------ -------------------- -------------------
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
and Chief Financial President, Cova
Officer Financial Services
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:
Average Daily Sub-Advisory
Portfolio Net Assets Fee
- ------------- -------------- --------------
Bond Debenture ___________ .50%
Quality Bond First $75 million .30%
Over $75 million .25%
International Equity First $50 million .60%
Over $50 million .50%
Average Daily Sub-Advisory
Portfolio Net Assets Fee
- ------------- -------------- --------------
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%
APPENDIX D
OTHER INFORMATION REGARDING
J.P. MORGAN INVESTMENT MANAGEMENT INC.
The principal executive officers and directors of J.P. Morgan Investment
Management Inc. are listed below.
NAME POSITION WITH SUB-ADVISER
- -------------------- ------------------------------
Kenneth W. Anderson Director; Managing Director
Anthony Paul Della Pietra Jr. Secretary and Chief Legal Officer;
Managing Director
Jeff Michael Garrity Director; Managing Director
David M. Pfeffer Vice President & Chief
Financial Officer
Keith M. Schappert President and Director;
Managing Director
John William Schmidlin Chief Operating Officer and Director;
Managing Director
Isabel Hoyt Sloane Director; Managing Director
NAME POSITION WITH SUB-ADVISER
- -------------------- ------------------------------
Gilbert Van Hassel Director; Managing Director
Hendrik van Riel Director; Managing Director
Thomas J. Smith Vice President and Chief
Compliance Officer
J.P. Morgan Investment Management Inc. also serves as adviser or sub-adviser to
other investment companies having similar investment objectives and policies to
those of the Portfolios for which J.P. Morgan Investment Management Inc. serves
as sub-adviser. The following table lists these other investment companies, 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 Investment
Management Inc. (as a percentage of average daily net assets).
CONTRACTUAL
FUND NAME NET ASSETS MANAGEMENT FEE
- -------------- ------------ ---------------------------
COVA SERIES TRUST -
QUALITY BOND PORTFOLIO
Caterpillar $161,457,933 .25% on the first $75 million
Investment .225% on the next $75 million
Management .175% on the next $150 million
Preferred Fixed .125% on the next $100 million
Income Fund .10% on the balance
J.P. Morgan $1,442,006,844 .30%
Investment
Management
The Bond Portfolio
EQ Financial $101,492, 333 .30% on the first $125 million
Consultants, Inc. .25% on the next $75 million
EQ Advisors Trust - .22% on the next $150 million
JPM Core Bond Portfolio .15% on the balance
COVA SERIES TRUST -
LARGE CAP STOCK PORTFOLIO
Endeavor $64,823,002 .35%
Investment Advisors
Endeavor Series Trust -
Enhanced Index Portfolio
J.P. Morgan $597,315,872 .35%
Investment
Management
The Disciplined
Equity Portfolio
CONTRACTUAL
FUND NAME NET ASSETS MANAGEMENT FEE
- -------------- ------------ ---------------------------
Advantus Capital $11, 038, 985 .45%
Management, Inc.
(Minnesota Mutual)
Advantus Series Fund, Inc. -
Macro-Cap Value Portfolio
COVA SERIES TRUST -
SELECT EQUITY PORTFOLIO
J.P. Morgan $726,173,893 .40
Investment
Management
The U.S. Equity Portfolio
Northwest Mutual $48,247,996 .45% on the first $100 million
Investment Services .40% on the next $100 million
Mason Street .35% on the next $200 million
Growth and Income .30% on the balance
Stock Fund
Northwest Mutual $570,360,076 Same as above
Series Fund
Growth and Income
Stock Portfolio
Pacific Mutual $1,261,463,742 .45% on the first $100 million
Life Insurance Co. .40% on the next $100 million
Pacific Select Fund - .35% on the next $200 million
Equity Income Portfolio .30% on the next $350 million
.20 on the balance
COVA SERIES TRUST -
SMALL CAP STOCK PORTFOLIO
J.P. Morgan $491,084,074 .60%
Investment
Management
The U.S. Small
Company Portfolio
COVA SERIES TRUST -
INTERNATIONAL EQUITY PORTFOLIO
J.P. Morgan $436,329,751 .60%
Investment
Management
The International
Equity Portfolio
APPENDIX E
OTHER INFORMATION REGARDING
LORD, ABBETT & CO.
Each of the individuals listed below is a partner of Lord, Abbett & Co.
NAME POSITION WITH SUB-ADVISER
- -------------------- ---------------------------------
Stephen I. Allen National Sales Manager
Zane E. Brown Director of Fixed Income
Daniel E. Carper Partner in Charge of Retail
Sales & Marketing
Robert S. Dow Managing Partner
John E. Erard Central Division Sales Director
Robert P. Fetch Portfolio Manager
Daria L. Foster Partner in Charge of Institutional
Marketing and Client Service
Robert I. Gerber Director of High-Grade Fixed Income
Paul A. Hilstad General Counsel
W. Thomas Hudson, Jr. Portfolio Manager
Stephen I. McGruder Senior Portfolio Manager
Michael B. McLaughlin Director of Marketing
Robert G. Morris Director of Equity Investments
Robert J. Noelke National Sales Manager
Mark R. Pennington Northeast Division Sales Director
Christopher J. Towle Portfolio Manager
John J. Walsh Portfolio Manager
Lord, Abbett & Co. also serves as adviser or sub-adviser to other investment
companies having similar investment objectives and policies to those of the
Portfolios for which Lord, Abbett &Co. serves as sub-adviser. The following
table lists these other investment companies, the approximate net assets of each
investment company as of October 31, 1999, and the annual advisory or
sub-advisory fee received by Lord, Abbett & Co. (as a percentage of average
daily net assets).
CONTRACTUAL
FUND NAME NET ASSETS MANAGEMENT FEE
- -------------- ------------ ---------------------------
COVA SERIES TRUST -
LORD ABBETT GROWTH
AND INCOME PORTFOLIO
Lord Abbett $10,080,753,778 .50% on the first $200 million
Affiliated Fund, Inc. .40% on the next $300 million
.375% on the next $200 million
.35% on the next $200 million
.30% over $900 million
CONTRACTUAL
FUND NAME NET ASSETS MANAGEMENT FEE
- -------------- ------------ ---------------------------
COVA SERIES TRUST -
DEVELOPING
GROWTH PORTFOLIO
Lord Abbett $2,197,455,513 .75% on the first $100 million
Developing Growth .50% over $100 million
Fund, Inc.
COVA SERIES TRUST -
MID-CAP VALUE
PORTFOLIO
Lord Abbett Mid-Cap $384,543,834 .75% on the first $200 million
Value Fund, Inc. .65% on the next $300 million
.50% over $500 million
COVA SERIES TRUST -
LARGE CAP
RESEARCH PORTFOLIO
Lord Abbett Research $245,848,543 .75% of the average
Fund, Inc. Large-Cap daily net assets
Series
COVA SERIES TRUST -
BOND DEBENTURE
PORTFOLIO
Lord Abbett Bond- $3,743,855,984 .50% on the first $500 million
Debenture Fund, Inc. .45% over $500 million
COVA SERIES TRUST -
LORD ABBETT GROWTH
AND INCOME PORTFOLIO
Lord Abbett Series $28,108,036 .50% of the average daily net assets
Fund, Inc. -
Growth & Income
Portfolio
COVA SERIES TRUST -
BOND DEBENTURE
PORTFOLIO
Lord Abbett Series _________ .50% of the average daily net assets
Fund, Inc. - Bond
Debenture Portfolio
COVA SERIES TRUST -
MID-CAP VALUE
PORTFOLIO
Lord Abbett Series $493,658 .75% of the average daily net assets
Fund, Inc. - Mid-Cap
Value Portfolio
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.
NAME AND POSITION
WITH SUB-ADVISER PRINCIPAL OCCUPATION
- -------------------- -----------------------------
John Q. Arnold Chief Investment Officer of Sub-Adviser
Chairman
John H. Blixen II President of Sub-Adviser
President
Ralph W. Webster, III Executive Associate and Chief
Secretary/Treasurer Financial Officer of Sub-Adviser
David C. Higgins Retired
Director
Charles C. Hager, Jr. Executive VP & COO of
Director Hagar Hinge Company
Carroll F. McMahon President, Loy Lange
Director Box Company
Mississippi Valley Advisors Inc. also serves as adviser or sub-adviser to other
investment companies having similar investment objectives and policies to those
of the Portfolios for which Mississippi Valley Advisors, Inc. serves as
sub-adviser. The following table lists these other investment companies, 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).
CONTRACTUAL
FUND NAME NET ASSETS MANAGEMENT FEE
- -------------- ------------ ---------------------------
COVA SERIES TRUST -
GROWTH & INCOME
EQUITY PORTFOLIO
Growth & Income $515,867,798 .55%
Equity Fund
COVA SERIES TRUST -
EQUITY INCOME
PORTFOLIO
Equity Income Fund $114,727,033 .75%
COVA SERIES TRUST -
BALANCED PORTFOLIO
Balanced Fund $119,516,718 .75%
APPENDIX G
OTHER INFORMATION REGARDING
RIGGS BANK N.A.
The principal executive officers and directors of Riggs Bank N.A. are listed
below.
NAME POSITION WITH SUB-ADVISER
- -------------------- ---------------------------------
Joe L. Allbritton Chairman of the Board and CEO
Barbara Allbritton Director
Joseph W. Barr EVP Retail Division
Joseph M. Cahill EVP Legal Affairs
Charles A. Camalier, III Director
John L. Davis EVP Finance & Accounting and CFO
Jacqueline C. Duchange Director
Henry A. Dudley, Jr. EVP, Chief Trust Officer,
Financial Services
James R. Eads SVP & President Broker/Dealer
Thomas F. Fitzgerald Director
Heather S. Foley Director
Mark Hendrix EVP, Sr. Marketing Officer,
Marketing Division
Michael J. Jackson Director
Dr. Joyce A. Ladner Director
Raymond M. Lund EVP, International & Embassy
Robert C. Roane EVP COO Senior Management Division
and Director
John A. Sargent Director
William E. Savage, Jr. EVP Sr Mgr. Venture Capital Subsidiary
David W. Scott EVP Chief Credit Officer,
Credit Division
Alfred J. Serafino EVP Commercial Banking
Stephen J. Trachtenberg Director
Riggs Bank N.A. also serves as adviser or sub-adviser to other investment
companies having similar investment objectives and policies to those of the
Portfolios for which Riggs Bank N.A. serves as sub-adviser. The following table
lists these other investment companies, 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).
CONTRACTUAL
FUND NAME NET ASSETS MANAGEMENT FEE
- -------------- ------------ ---------------------------
COVA SERIES TRUST -
RIGGS U.S. GOVERNMENT
SECURITIES PORTFOLIO
Riggs U.S. $37,600,000 .75%
Government
Securities Fund
COVA SERIES TRUST -
RIGGS STOCK PORTFOLIO
Riggs Stock Fund $101,600,000 .75%
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:____________________________________________
EXHIBIT A
COVA SERIES TRUST
BOND DEBENTURE PORTFOLIO
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.
EXHIBIT B
COVA SERIES TRUST
QUALITY BOND PORTFOLIO
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%
EXHIBIT C
COVA SERIES TRUST
SELECT EQUITY PORTFOLIO
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%
EXHIBIT D
COVA SERIES TRUST
LARGE CAP STOCK PORTFOLIO
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.
EXHIBIT E
COVA SERIES TRUST
SMALL CAP STOCK PORTFOLIO
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.
EXHIBIT F
COVA SERIES TRUST
INTERNATIONAL EQUITY PORTFOLIO
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 .65% 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 U.S. 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' reports 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].
Attest: COVA INVESTMENT ADVISORY
CORPORATION
______________________________ By: ___________________________
Attest: J.P. MORGAN INVESTMENT
MANAGEMENT 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 at the end of each calendar month equal to a
percentage of the average daily net assets of the Sub-Trusts as follows:
Portfolio Average Daily Net Assets % Per Annum
- --------------- ------------------------- -------------
Quality Bond Portfolio First $75 million .30 of 1%
Over $75 million .25 of 1%
International First $50 million .60 of 1%
Equity Portfolio Over $50 million .50 of 1%
Select Equity Portfolio First $50 million .50 of 1%
Over $50 million .40 of 1%
Large Cap .40 of 1%
Stock Portfolio
Small Cap .60 of 1%
Stock Portfolio
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, 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 (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-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 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.
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 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 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 the
Sub-Trusts 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 of 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-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-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-Trusts to pay a
broker-dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a 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
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) is 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 FINANCIAL SERVICES 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 FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned hereby instructs Cova Financial Services 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.
RECEIPT OF THE NOTICE OF THE SPECIAL MEETING AND THE ACCOMPANYING PROXY
STATEMENT IS HEREBY ACKNOWLEDGED.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
VOTE VIA THE TELEPHONE: 1-800-697-7836
CONTROL NUMBER: 999 9999 9999 999
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.
------------------------------------
Signature
------------------------------------
Signature (if held jointly)
------------------------------------
Date
(Please see reverse side)
INSTRUCTIONS SOLICITED ON BEHALF OF COVA FINANCIAL SERVICES LIFE INSURANCE
COMPANY
COVA FINANCIAL SERVICES 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.
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.
Mark [ ] To Vote FOR ALL Proposals. (No other vote is necessary.)
1. To approve a New Investment Advisory Agreement between Cova
Investment Advisory Corporation and Cova Series Trust.
Mark [ ] To Vote All FOR; or [ ] To Vote All AGAINST; or [ ] To
Abstain Vote For All; or Vote Separately By Portfolio Below.
FOR AGAINST ABSTAIN
JPMIM INT'L EQUITY [ ] [ ] [ ]
JPMIM LRG CAP STOCK [ ] [ ] [ ]
JPMIM QLTY BOND [ ] [ ] [ ]
JPMIM SLCT EQTY [ ] [ ] [ ]
JPMIM SM CAP STK [ ] [ ] [ ]
LA BOND DEBNTR [ ] [ ] [ ]
LA DEVLP GRWTH [ ] [ ] [ ]
LA GRWTH & INCM [ ] [ ] [ ]
LA LRG CAP RSRCH [ ] [ ] [ ]
LA MID CAP VALUE [ ] [ ] [ ]
MVA BALANCED [ ] [ ] [ ]
MVA EQUITY INCM [ ] [ ] [ ]
MVA GRWTH & INCM [ ] [ ] [ ]
RIGGS US GOV'T SEC [ ] [ ] [ ]
RIGGS STOCK [ ] [ ] [ ]
2. To approve a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and J.P. Morgan Investment
Management Inc.
Mark [ ] To Vote All FOR; or [ ] To Vote All AGAINST; or [ ] To
Abstain Vote For All; or Vote Separately By Portfolio Below.
FOR AGAINST ABSTAIN
JPMIM INT'L EQUITY [ ] [ ] [ ]
JPMIM LRG CAP STOCK [ ] [ ] [ ]
JPMIM QLTY BOND [ ] [ ] [ ]
JPMIM SLCT EQTY [ ] [ ] [ ]
JPMIM SM CAP STK [ ] [ ] [ ]
3. To approve a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and Lord, Abbett & Co.
Mark [ ] To Vote All FOR; or [ ] To Vote All AGAINST; or [ ] To
Abstain Vote For All; or Vote Separately By Portfolio Below.
FOR AGAINST ABSTAIN
LA BOND DEBNTR [ ] [ ] [ ]
LA DEVLP GRWTH [ ] [ ] [ ]
LA GRWTH & INCM [ ] [ ] [ ]
LA LRG CAP RSRCH [ ] [ ] [ ]
LA MID CAP VALUE [ ] [ ] [ ]
4. To approve a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and Mississippi Valley
Advisors Inc.
Mark [ ] To Vote All FOR; or [ ] To Vote All AGAINST; or [ ] To
Abstain Vote For All; or Vote Separately By Portfolio Below.
FOR AGAINST ABSTAIN
MVA BALANCED [ ] [ ] [ ]
MVA EQUITY INCM [ ] [ ] [ ]
MVA GRWTH & INCM [ ] [ ] [ ]
5. To approve a New Sub-Advisory Agreement among Cova Investment
Advisory Corporation, Cova Series Trust and Riggs Bank N.A.
Mark [ ] To Vote All FOR; or [ ] To Vote All AGAINST; or [ ] To
Abstain Vote For All; or Vote Separately By Portfolio Below.
FOR AGAINST ABSTAIN
RIGGS US GOV'T SEC [ ] [ ] [ ]
RIGGS STOCK [ ] [ ] [ ]
IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE
BEFORE MAILING.
