February 1, 1996
Dear Contract Owners:
In 1995, as the Fed started the year with a rate hike, it appeared the market
would continue down the same abysmal path it took in 1994. As it turned out,
nothing was farther from the truth.
Starting the year at an opening mark of 3834, the Dow Jones Industrial Average
seldom stopped to breathe as it closed the year at 5117, setting a record high
of 5216 on December 16. Following suit, the S&P 500 also registered record
highs, rising from an opening_year figure of 459 to close at 615.
In the almost festive atmosphere provided by the stock market, the bond market
was nearly overshadowed, though it provided a stellar performance of its own.
The long_term Treasury index, for example, was up 31%. Factors driving the
bond market in 1995 were a slowing economy that produced only modest growth,
falling inflation and lower interest rates.
We are pleased with what the overall market returned in 1995 and look forward
to the opportunities in store for us in 1996. What follows are reports from
the portfolio managers along with the performance data of each portfolio in
the Cova variable annuity.
Sincerely,
L. J. Stensrud
President
<PAGE>
February 1, 1996
Dear Contract Owners:
In 1995, as the Fed started the year with a rate hike, it appeared the market
would continue down the same abysmal path it took in 1994. As it turned out,
nothing was farther from the truth.
Starting the year at an opening mark of 3834, the Dow Jones Industrial Average
seldom stopped to breathe as it closed the year at 5117, setting a record high
of 5216 on December 16. Following suit, the S&P 500 also registered record
highs, rising from an opening_year figure of 459 to close at 615.
In the almost festive atmosphere provided by the stock market, the bond market
was nearly overshadowed, though it provided a stellar performance of its own.
The long_term Treasury index, for example, was up 31%. Factors driving the
bond market in 1995 were a slowing economy that produced only modest growth,
falling inflation and lower interest rates.
We are pleased with what the overall market returned in 1995 and look forward
to the opportunities in store for us in 1996. What follows is a report from
Peter Hegel who oversees the Strategy Asset Allocation Model, and reports from
the portfolio managers along with the performance data of each portfolio.
Sincerely,
L. J. Stensrud
President
<PAGE>
February 1, 1996
Dear Contract Owners:
In 1995, as the Fed started the year with a rate hike, it appeared the market
would continue down the same abysmal path it took in 1994. As it turned out,
nothing was farther from the truth.
Starting the year at an opening mark of 3834, the Dow Jones Industrial Average
seldom stopped to breathe as it closed the year at 5117, setting a record high
of 5216 on December 16. Following suit, the S&P 500 also registered record
highs, rising from an opening_year figure of 459 to close at 615.
In the almost festive atmosphere provided by the stock market, the bond market
was nearly overshadowed, though it provided a stellar performance of its own.
The long_term Treasury index, for example, was up 31%. Factors driving the
bond market in 1995 were a slowing economy that produced only modest growth,
falling inflation and lower interest rates.
We are pleased with what the overall market returned in 1995 and look forward
to the opportunities in store for us in 1996. What follows is a report from
Don Hays, Director of Investment Strategy at Wheat First Butcher Singer,
discussing the asset allocation model, and reports from the portfolio managers
along with the performance data of each portfolio.
Sincerely,
L. J. Stensrud
President
KPMG Peat Marwick LLP
1010 Market Street
St. Louis, MO 63101-2085
INDEPENDENT AUDITOR'S REPORT
The Contract Owners of Cova Variable
Annuity Account One
Cova Financial Services Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of the
Quality Income, High Yield, Growth and Income, Money Market, and Stock Index
sub-accounts (investment options within the Van Kampen Merritt Series Trust)
and the Growth and Income and Global Equity sub-accounts (investment options
within the Lord Abbett Series Fund, Inc.) of Cova Variable Annuity Account One
of Cova Financial Services Life Insurance Company (the Separate Account) as of
December 31, 1995, and the related statement of operations for the year then
ended, and the statement of changes in contract owners' equity for each of the
two years in the period then ended, and the financial highlights for each of
the periods presented. These financial statements and financial highlights
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned at December 31, 1995 by correspondence with the Van Kampen Merritt
Series Trust and the Lord Abbett Series Fund, Inc. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
sub-accounts of Cova Variable Annuity Account One of Cova Financial Services
Life Insurance Company as of December 31, 1995, and the results of their
operations for the year then ended, the changes in their contract owners'
equity for each of the two years in the period then ended, and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.
By: /s/ KPMG PEAT MARWICK LLP
___________________________
KPMG Peat Marwick LLP
February 9, 1996
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
ASSETS
INVESTMENTS:
<TABLE>
<CAPTION>
<S> <C>
VAN KAMPEN MERRITT SERIES TRUST:
Quality Income Portfolio - 3,795,029 shares at a net asset value of $10.87 per share (cost $39,788,169) $ 41,257,437
High Yield Portfolio - 3,495,538 shares at a net asset value of $10.45 per share (cost $36,977,062) 36,515,856
Growth and Income Portfolio - 1,568,033 shares at a net asset value of $12.51 per share (cost $17,983,818) 19,619,568
Money Market Portfolio - 34,132,295 shares at a net asset value of $1.00 per share (cost $34,132,295) 34,132,295
Stock Index Portfolio - 6,195,688 shares at a net asset value of $13.84 per share (cost $74,796,201) 85,772,259
LORD ABBETT SERIES FUND, INC:
Growth and Income Portfolio - 12,510,916 shares at a net asset value of $15.24 per share (cost $168,182,678) 190,651,303
Global Equity Portfolio - 218,212 shares at a net asset value of $11.46 per share (cost $2,347,939) 2,500,282
--------------
TOTAL ASSETS $ 410,449,000
LIABILITIES AND CONTRACT OWNERS' EQUITY
FEES PAYABLE TO COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY $ 46,951
CONTRACT OWNERS' EQUITY:
Trust Quality Income - 2,690,633 accumulation units at $15.331971 per unit 41,252,707
Trust High Yield - 1,870,232 accumulation units at $19.522535 per unit 36,511,673
Trust Growth and Income - 1,342,833 accumulation units at $14.608904 per unit 19,617,323
Trust Money Market - 2,987,132 accumulation units at $11.425133 per unit 34,128,376
Trust Stock Index - 5,436,980 accumulation units at $15.773906 per unit 85,762,417
Fund Growth and Income - 8,947,108 accumulation units at $21.306277 per unit 190,629,558
Fund Global Equity - 172,206 accumulation units at $14.517502 per unit 2,499,995
--------------
TOTAL CONTRACT OWNERS' EQUITY 410,402,049
--------------
TOTAL LIABILITIES AND CONTRACT OWNERS' EQUITY $ 410,449,000
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
VAN KAMPEN MERRITT
LORD ABBETT
SERIES TRUST
SERIES FUND, INC.
<TABLE>
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK GROWTH & GLOBAL
INCOME YIELD INCOME MARKET INDEX INCOME EQUITY
----------- ------------ ---------- ----------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 2,492,472 $ 2,739,550 $1,564,298 $ 3,041,467 $ 3,700,759 $ 14,542,511 $187,705
----------- ------------ ---------- ----------- ----------- ------------ --------
Total Income 2,492,472 2,739,550 1,564,298 3,041,467 3,700,759 14,542,511 187,705
EXPENSES:
Mortality and Expense
Risk Fee 486,430 363,864 172,191 646,185 737,442 1,822,160 34,676
Administrative Fee 58,371 43,664 20,663 77,542 88,493 218,659 4,161
Total Expenses 544,801 407,528 192,854 723,727 825,935 2,040,819 38,837
Net Investment Income 1,947,671 2,332,022 1,371,444 2,317,740 2,874,824 12,501,692 148,868
Net Realized Gain/(Loss)
on Investments 16,010 (117,175) 45,687 _ _ 2,588,787 382,600 62,728
Net Change in Unrealized
Gain on Investments 3,599,953 1,785,959 2,247,668 109,903 11,838,391 22,183,647 5,346
Net Realized and Unrealized
Gain on Investments 3,615,963 1,668,784 2,293,355 109,903 14,427,178 22,566,247 68,074
Net Increase in Contract
Owners' Equity Resulting
From Operations $5,563,6343 $4,000,8066 $3,664,799 $2,427,6433 $17,302,002 $35,067,9399 $216,942
=========== ============ ========== =========== =========== ============ ========
TOTAL
------------
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 28,268,762
------------
Total Income 28,268,762
EXPENSES:
Mortality and Expense
Risk Fee 4,262,948
Administrative Fee 511,553
Total Expenses 4,774,501
Net Investment Income 23,494,261
Net Realized Gain/(Loss)
on Investments 2,978,637
Net Change in Unrealized
Gain on Investments 41,770,867
Net Realized and Unrealized
Gain on Investments 44,749,504
Net Increase in Contract
Owners' Equity Resulting
From Operations $68,243,7655
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Year Ended December 31, 1995
VAN KAMPEN MERRITT
LORD ABBETT
SERIES TRUST
SERIES FUND, INC.
________________________________________________________
___________________
<TABLE>
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK GROWTH &
INCOME YIELD INCOME MARKET INDEX INCOME
------------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net Investment Income $ 1,947,671 $ 2,332,022 $ 1,371,444 $ 2,317,740 $ 2,874,824 $ 12,501,692
Net Realized Gain/(Loss)
on Investments 16,010 (117,175) 45,687 _ _ 2,588,787 382,600
Net Unrealized Gain
on Investments 3,599,953 1,785,959 2,247,668 109,903 11,838,391 22,183,647
NET INCREASE IN CONTRACT
Owners' Equity
Resulting from
Operations 5,563,634 4,000,806 3,664,799 2,427,643 17,302,002 35,067,939
From Account Unit Transactions:
Redemptions by Cova
Financial Services Life
Insurance Company _ _ _ _ _ _ _ _ _ _ _ _
Proceeds from Units of
the Account Sold 2,609,198 3,648,081 2,179,253 27,608,801 2,384,152 29,457,859
Payments for Units of the
Account Redeemed (5,173,896) (2,111,627) (717,441) (4,508,332) (4,199,482) (18,058,651)
Account Transfers 4,321,271 11,321,086 3,550,031 (67,277,501) 33,469,082 29,746,158
Net Increase/(Decrease) in
Contract Owners' Equity
From Account Unit
Transactions 1,756,573 12,857,540 5,011,843 (44,177,032) 31,653,752 41,145,366
Net Increase/(Decrease) in
Contract Owners' Equity 7,320,207 16,858,346 8,676,642 (41,749,389) 48,955,754 76,213,305
Contract Owners' Equity:
Beginning of Period 33,932,500 19,653,327 10,940,681 75,877,765 36,806,663 114,416,253
End of Period $41,252,7077 $36,511,673 $19,617,323 $ 34,128,376 $85,762,417 $190,629,558
============= ============ ============ ============= ============ =============
GLOBAL
EQUITY TOTAL
------------ -------------
<S> <C> <C>
FROM OPERATIONS:
Net Investment Income $ 148,868 $ 23,494,261
Net Realized Gain/(Loss)
on Investments 62,728 2,978,637
Net Unrealized Gain
on Investments 5,346 41,770,867
NET INCREASE IN CONTRACT
Owners' Equity
Resulting from
Operations 216,942 68,243,765
From Account Unit Transactions:
Redemptions by Cova
Financial Services Life
Insurance Company (131,875) (131,875)
Proceeds from Units of
the Account Sold 686,017 68,573,361
Payments for Units of the
Account Redeemed (1,244,057) (36,013,486)
Account Transfers (135,353) 14,994,774
Net Increase/(Decrease) in
Contract Owners' Equity
From Account Unit
Transactions (825,268) 47,422,774
Net Increase/(Decrease) in
Contract Owners' Equity (608,326) 115,666,539
Contract Owners' Equity:
Beginning of Period 3,108,321 294,735,510
End of Period $ 2,499,995 $410,402,049
============ =============
</TABLE>
See accompanying notes to financial statements.
VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Year Ended December 31, 1994
VAN KAMPEN MERRITT
LORD ABBETT
SERIES TRUST
SERIES FUND, INC.
TOTAL
$12,184,894
(2,376,747)
(12,420,870)
(2,612,723)
(165,388)
51,347,975
(17,333,821)
3,525,880
37,374,646
34,761,923
259,973,587
$294,735,510
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
VAN KAMPEN MERRITT SERIES TRUST - QUALITY INCOME PORTFOLIO
For the Year For the Year For the Year
Ended Ended Ended
12/31/95 12/31/94 12/31/93
-------------- -------------- --------------
<S> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 13.17 $ 13.97 $ 12.75
Net Investment Income .72 .60 1.00
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 1.44 (1.40) .22
Total from Investment Operations Operations1.38(.80)1.22.73.140 O 2.16 (.80) 1.22
- -------------------------------------------------------------------
Accumulation Unit Value,
End of Period $ 15.33 $ 13.17 $ 13.97
============== ============== ==============
Total Return* 16.41% 5.70% 9.50%
Contract Owners Equity ,
End of Period (in thousands) $ 41,253 $ 33,933 $ 51,111
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 4.99% 4.48% 8.30%
Number of Units Outstanding
at End of Period 2,690,633 2,576,412 3,659,656
For the Year For the Year
Ended Ended
12/31/92 12/31/91
-------------- --------------
<S> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 12.02 $ 10.62
Net Investment Income .64 .67
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions .09 .73
Total from Investment Operations Operations1.38(.80)1.22.73.140 O .73 1.40
- -------------------------------------------------------------------
Accumulation Unit Value,
End of Period $ 12.75 $ 12.02
============== ==============
Total Return* 6.10% 13.20%
Contract Owners Equity ,
End of Period (in thousands) $ 24,124 $ 6,779
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 5.45% 6.09%
Number of Units Outstanding
at End of Period 1,891,499 563,960
<FN>
* Investment returns do not reflect any annual contract maintenance fees
or withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
VAN KAMPEN MERRITT SERIES TRUST - HIGH YIELD PORTFOLIO
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 16.98 $ 18.02 $ 14.99 $ 12.75 $ 10.06
-------------- -------------- -------------- -------------- --------------
Net Investment Income 1.44 1.38 1.80 2.26 1.14
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 1.10 (2.42) 1.23 (.02) 1.55
Total from Investment Operations 2.54 (1.04) 3.03 2.24 2.69
Accumulation Unit Value,
End of Period $ 19.52 $ 16.98 $ 18.02 $ 14.99 $ 12.75
============== ============== ============== ============== ==============
Total Return* 14.99% (5.79)% 20.21% 17.53% 26.73%
Contract Owners Equity ,
End of Period (in thousands) $ 36,512 $ 19,653 $ 18,846 $ 5,416 $ 3,803
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 7.98% 7.92% 13.05% 16.04% 9.83%
Number of Units Outstanding
at End of Period 1,870,232 1,157,642 1,045,815 361,296 298,202
<FN>
* Investment returns do not reflect any annual contract maintenance fees or
withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
VAN KAMPEN MERRITT SERIES TRUST - GROWTH & INCOME PORTFOLIO
For the Period From
For the Year For the Year For the Year 5/1/92
Ended Ended Ended (Commencement of Operations)
12/31/95 12/31/94 12/31/93 Through 12/31/92
<S> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 11.20 $ 11.92 $ 10.47 $ 10.00
-------------- -------------- -------------- -----------------------------
Net Investment Income 1.02 .19 .54 .19
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 2.39 (.91) .91 .28
Total from Investment Operations 3.41 (.72) 1.45 .47
Accumulation Unit Value,
End of Period $ 14.61 $ 11.20 $ 11.92 $ 10.47
============== ============== ============== =============================
Total Return** 30.49% (6.07)% 13.84% 7.09%*
Contract Owners Equity ,
End of Period (in thousands) $ 19,617 $ 10,941 $ 6,528 $ 2,627
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 9.92% 2.05% 7.54% 3.82%*
Number of Units Outstanding
at End of Period 1,342,833 977,209 574,643 250,919
<FN>
* Annualized
** Investment returns do not reflect any annual contract maintenance fees or
withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
VAN KAMPEN MERRITT SERIES TRUST - MONEY MARKET PORTFOLIO
For the Year Months For the Year For the Year For the Year
Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 10.90 $ 10.61 $ 10.46 $ 10.21
--------------------- -------------- -------------- --------------
Net Investment Income .50 .30 .19 .25
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions .03 (.01) (.04) --
Total from Investment Operations .53 .29 .15 .25
Accumulation Unit Value,
End of Period $ 11.43 $ 10.90 $ 10.61 $ 10.46
===================== ============== ============== ==============
Total Return** 4.85% 2.70% 1.45% 2.44%
Contract Owners Equity ,
End of Period (in thousands) $ 34,128 $ 75,878 $ 6,552 $ 4,031
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 4.48% 2.90% 1.78% 2.46%
Number of Units Outstanding
at End of Period 2,987,132 6,963,421 617,575 385,448
For the Period
From 11/1/91
Through 12/31/91 12/31/91
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 10.00
--------------------------
Net Investment Income .21
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions --
Total from Investment Operations .21
Accumulation Unit Value,
End of Period $ 10.21
==========================
Total Return** 4.19%*
Contract Owners Equity ,
End of Period (in thousands) $ 5,386
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 4.04%*
Number of Units Outstanding
at End of Period 527,571
<FN>
* Annualized
** Investment returns do not reflect any annual contract maintenance
fees or withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
VAN KAMPEN MERRITT SERIES TRUST - STOCK INDEX PORTFOLIO
For the Year Months For the Year For the Year For the Year For the Period
Ended Ended Ended Ended From 11/1/91
12/31/95 12/31/94 12/31/93 12/31/92 Through 12/31/91
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 11.68 $ 11.87 $ 11.05 $ 10.55 $ 10.00
--------------------- -------------- -------------- -------------- ------------------
Net Investment Income .51 .37 .22 .52 (.02)
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 3.58 (.56) .60 (.02) .57
Total from Investment Operations 4.09 (.19) .82 .50 .55
Accumulation Unit Value,
End of Period $ 15.77 $ 11.68 $ 11.87 $ 11.05 $ 10.55
===================== ============== ============== ============== ==================
Total Return** 35.06% (1.58)% 7.35% 4.75% 38.03%*
Contract Owners Equity ,
End of Period (in thousands) $ 85,762 $ 36,807 $ 91,269 $ 34,979 $ 6,753
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 4.85% 2.10% 2.99% 10.02% (1.40)%*
Number of Units Outstanding
at End of Period 5,436,980 3,151,443 7,691,151 3,164,251 639,923
<FN>
* Annualized
** Investment returns do not reflect any annual contract maintenance
fees or withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
LORD ABBETT SERIES FUND, INC. - GROWTH AND INCOME PORTFOLIO
For theYear For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 16.64 $ 16.42 $ 14.50 $ 12.73 $ 10.15
------------- -------------- -------------- -------------- --------------
Net Investment Income 1.37 .76 .88 1.06 .85
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 3.30 (.54) 1.04 .71 1.73
Total from Investment Operations 4.67 .22 1.92 1.77 2.58
------------- -------------- -------------- -------------- --------------
Accumulation Unit Value,
- ---------------------------------
End of Period $ 21.31 $ 16.64 $ 16.42 $ 14.50 $ 12.73
- --------------------------------- ============= ============== ============== ============== ==============
Total Return* 28.03% 1.32% 13.24% 13.98% 25.42%
- --------------------------------- ------------- -------------- -------------- -------------- --------------
Contract Owners Equity ,
- ---------------------------------
End of Period (in thousands) $ 190,630 $ 114,416 $ 82,033 $ 37,146 $ 18,154
- --------------------------------- ------------- -------------- -------------- -------------- --------------
Ratio of Expenses to Average
- ---------------------------------
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
- --------------------------------- ------------- -------------- -------------- -------------- --------------
Ratio of Net Investment Income
- ---------------------------------
to Average Contract
- ---------------------------------
Owners' Equity 8.57% 5.40% 8.12% 10.59% 9.05%
- --------------------------------- ------------- -------------- -------------- -------------- --------------
Number of Units Outstanding
- ---------------------------------
at End of Period 8,947,108 6,875,139 4,994,582 2,560,999 1,426,577
- --------------------------------- ------------- -------------- -------------- -------------- --------------
<FN>
* Investment returns do not reflect any annual contract maintenance
fees or withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
LORD ABBETT SERIES FUND, INC. - GLOBAL EQUITY PORTFOLIO
For the Year Months For the Year For the Year For the Year For the Year
--------------------- -------------- -------------- -------------- --------------
Ended Ended Ended Ended Ended
--------------------- -------------- -------------- -------------- --------------
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
--------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
- ---------------------------------
Beginning of Period $ 13.33 $ 13.29 $ 10.64 $ 10.97 $ 9.79
- --------------------------------- --------------------- -------------- -------------- -------------- --------------
Net Investment Income .91 1.45 .24 .18 .14
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions .28 (1.41) 2.41 (.51) 1.04
Total from Investment Operations 1.19 .04 2.65 (.33) 1.18
--------------------- -------------- -------------- -------------- --------------
Accumulation Unit Value,
- ---------------------------------
End of Period $ 14.52 $ 13.33 $ 13.29 $ 10.64 $ 10.97
- --------------------------------- ===================== ============== ============== ============== ==============
Total Return* 8.91% .27% 24.91% (2.98)% 12.02%
- --------------------------------- --------------------- -------------- -------------- -------------- --------------
Contract Owners Equity ,
- ---------------------------------
End of Period (in thousands) $ 2,500 $ 3,108 $ 3,635 $ 3,249 $ 4,292
- --------------------------------- --------------------- -------------- -------------- -------------- --------------
Ratio of Expenses to Average
- ---------------------------------
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
- --------------------------------- --------------------- -------------- -------------- -------------- --------------
Ratio of Net Investment Income
- ---------------------------------
to Average Contract
- ---------------------------------
Owners' Equity 5.36% 9.78% 1.88% 1.38% 2.19%
- --------------------------------- --------------------- -------------- -------------- -------------- --------------
Number of Units Outstanding
- ---------------------------------
at End of Period 172,206 233,186 273,399 305,314 391,234
- --------------------------------- --------------------- -------------- -------------- -------------- --------------
<FN>
* Investment returns do not reflect any annual contract maintenance
fees or withdrawal charges.
</TABLE>
See accompanying notes to financial statements.
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995 and 1994
1. ORGANIZATION:
Cova Variable Annuity Account One, (formerly Xerox Variable Annuity Account
One) (the "Separate Account") is a separate investment account established by
a resolution of the Board of Directors of Cova Financial Services Life
Insurance Company ("Cova Life") formerly known as Xerox Financial Services
Life Insurance Company (Xerox Life). On June 1, 1995, a subsidiary of General
American Life Insurance Company (GALIC) purchased Xerox Life under the terms
of a stock purchase agreement. After closing of the sale transaction, Xerox
Life and the Separate Account were renamed. Operations of the separate
account were not affected by this transaction. The Separate Account operates
as a Unit Investment Trust under the Investment Company Act of 1940.
The Separate Account is divided into sub-accounts, with the assets of each
sub-account invested in either the Van Kampen Merritt Series Trust ("Trust")
or the Lord Abbett Series Fund, Inc. ("Fund"). The Trust is managed by Van
Kampen American Capital Investment Advisory Corp. During 1995 and prior, the
Trust consisted of five portfolios available for investment; the Quality
Income, High Yield, Growth & Income, Money Market, and Stock Index Portfolios.
The Fund had two portfolios available for investment during and prior to
1995; the Growth and Income Global Equity Portfolios. Not all portfolios of
the Trust and Fund are available for investment depending upon the nature and
specific terms of the different contracts currently being offered for sale.
Both the Trust and Fund are diversified, open-end, management investment
companies which are intended to meet differing investment objectives.
The Trust Quality Income Portfolio invests in U.S. Government issued debt
obligations and in various investment-grade debt instruments, including
mortgage pass-through obligations and collateralized mortgage obligations.
The Trust High Yield Portfolio invests in medium and lower-grade debt
securities and futures and options contracts. The Trust Growth and Income
Portfolio invests in common stocks and futures and options contracts. The
Trust Money Market Portfolio invests in short-term money market instruments.
The Trust Stock Index Portfolio invests in common stocks, stock index futures
and options, and short-term securities. The Fund Growth and Income Portfolio
invests in common stocks. The Fund Global Equity Portfolio invests in both
domestic and foreign common stocks and forward currency contracts.
In order to satisfy diversification requirements and provide for optimum
policyholder returns, Cova Life has made periodic contributions to the Trust
and Fund to provide for the initial purchases of investments. In return, Cova
Life has been credited with accumulation units of the Separate Account. As
additional funds were received through policyholder deposits, Cova Life has,
at its discretion and without adversely impacting the investment operations of
the Trust and Fund, removed its capital investment in the Separate Account by
liquidating all of its remaining accumulation units at December 31, 1995.
2. SIGNIFICANT ACCOUNTING POLICIES:
A. INVESTMENT VALUATION
Investments in shares of the Trust and Fund are carried in the statement of
assets and liabilities at the underlying net asset value of the Trust and
Fund. The net asset value of the Trust and Fund has been determined on the
market value basis and is valued daily by the Trust and Fund investment
managers. Realized gains and losses are calculated by the average cost
method.
B. REINVESTMENT OF DIVIDENDS
Dividends received from net investment income and net realized capital gains
are reinvested in additional shares of the portfolio of the Trust or Fund
making the distribution or, at the election of the Separate Account, received
in cash. Dividend income and capital gain distributions are recorded as
income on the ex-dividend date.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995 and 1994
C. FEDERAL INCOME TAXES
Operations of the Separate Account form a part of Cova Life, which is taxed as
a "Life Insurance Company" under the Internal Revenue Code ("Code"). Under
current provisions of the Code, no Federal income taxes are payable by Cova
Life with respect to earnings of the Separate Account.
Under the principles set forth in Internal Revenue Ruling 81-225 and Section
817(h) of the Code and regulations thereunder, Cova Life believes that it will
be treated as the owner of the assets invested in the Separate Account for
Federal income tax purposes, with the result that earnings and gains, if any,
derived from those assets will not be included in a contract owners' gross
income until amounts are withdrawn or received pursuant to an Optional Payment
Plan.
3. CONTRACT CHARGES:
There are no deductions made from purchase payments for sales charges at the
time of purchase. However, if all or a portion of the contract value is
withdrawn, a withdrawal charge is calculated and deducted from the contract
value. The withdrawal charge is imposed on withdrawals of contract values
attributable to purchase payments within five years after receipt and is equal
to 5% of the purchase payment withdrawn. After the first contract
anniversary, provided that the contract value prior to withdrawal exceeds
$5,000, an owner may make a withdrawal each contract year of up to 10% of the
aggregate purchase payments free from withdrawal charges. An annual contract
maintenance charge of $30 is imposed on all contracts with contract values
less than $50,000 on their policy anniversary. The charge covers the cost of
contract administration for the previous year and is prorated between the
sub-accounts to which the contract value is allocated.
Mortality and expense risks assumed by Cova Life are compensated by a charge
equivalent to an annual rate of 1.25% of the value of net assets. The
mortality risks assumed by Cova Life arise from its contractual obligation to
make annuity payments after the annuity date for the life of the annuitant,
and to waive the withdrawal charge in the event of the death of the contract
owner.
In addition, the Separate Account bears certain administration expenses, which
are equivalent to an annual rate of .15% of net assets. These charges cover
the cost of establishing and maintaining the contracts and Separate Account.
Cova Life currently advances any premium taxes due at the time purchase
payments are made and then deducts premium taxes from the contract value at
the time annuity payments begin or upon withdrawal if Cova Life is unable to
obtain a refund. Cova Life, however, reserves the right to deduct premium
taxes when incurred.
4. ACCOUNT TRANSFERS:
Subject to certain restrictions, the contract owner may transfer all or a part
of the accumulated value of the contract among other offered and available
account options of the Separate Account and fixed rate annuities of Cova Life.
If more than 12 transfers have been made in the contract year, a transfer fee
of $25 per transfer or, if less, 2% of the amount transferred will be deducted
from the account value. If the owner is participating in the Dollar Cost
Averaging program, such related transfers are not taken into account in
determining any transfer fee.
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995 and 1994
5. GAIN/(LOSS) ON INVESTMENTS:
The table below summarizes realized and unrealized gains and losses on
investments:
<TABLE>
<CAPTION>
REALIZED GAIN/(LOSS) ON INVESTMENTS:
FOR THE YEAR FOR THE YEAR
ENDED ENDED
12/31/95 12/31/94
<S> <C> <C>
Trust Quality Income Portfolio:
Aggregate Proceeds From Sales $ 21,222,667 $ 55,910,839
Aggregate Cost 21,206,657 58,510,084
Net Realized Gain/(Loss) on Investments $ 16,010 $ (2,599,245)
============== ==============
Trust High Yield Portfolio:
Aggregate Proceeds From Sales $ 1,956,676 $ 9,145,332
Aggregate Cost 2,073,851 9,508,299
Net Realized Loss on Investments $ (117,175) $ (362,967)
============== ==============
Trust Growth and Income Portfolio:
Aggregate Proceeds From Sales $ 1,127,323 $ 1,423,903
Aggregate Cost 1,081,636 1,445,563
-------------- --------------
Net Realized Gain/(Loss) on Investments $ 45,687 $ (21,660)
- ------------------------------------------ ============== ==============
Trust Money Market Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 71,027,222 $ 60,198,925
- ------------------------------------------ -------------- --------------
Aggregate Cost 71,027,222 60,198,925
- ------------------------------------------ -------------- --------------
Net Realized Gain/(Loss) on Investments _ _ --
- ------------------------------------------ ============== ==============
Trust Stock Index Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 19,096,794 $ 67,994,793
- ------------------------------------------ -------------- --------------
Aggregate Cost 16,508,007 67,715,975
- ------------------------------------------ -------------- --------------
Net Realized Gain on Investments $ 2,588,787 $ 278,818
- ------------------------------------------ ============== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995 and 1994
5. GAIN/(LOSS) ON INVESTMENTS, CONTINUED:
<TABLE>
<CAPTION>
REALIZED GAIN/(LOSS) ON INVESTMENTS:
FOR THE YEAR FOR THE YEAR
Ended Ended
12/31/95 12/31/94
<S> <C> <C>
Fund Growth and Income Portfolio:
Aggregate Proceeds From Sales $ 4,042,598 $ 3,887,963
Aggregate Cost 3,659,998 3,701,950
Net Realized Gain on Investments $ 382,600 $ 186,013
============== ==============
Fund Global Equity Portfolio:
Aggregate Proceeds From Sales $ 945,473 $ 738,271
Aggregate Cost 882,745 595,977
Net Realized Gain on Investments $ 62,728 $ 142,294
============== ==============
UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- ------------------------------------------------------
Trust Quality Income Portfolio:
End of Period $ 1,469,268 $ (2,130,685)
Beginning of Period (2,130,685) (687,104)
Net Change in Unrealized Gain/(Loss) on Investments $ 3,599,953 $ (1,443,581)
============== ==============
Trust High Yield Portfolio:
End of Period $ (461,206) $ (2,247,165)
Beginning of Period (2,247,165) 278,327
Net Change in Unrealized Gain/(Loss) on Investments $ 1,785,959 $ (2,525,492)
============== ==============
Trust Growth and Income Portfolio:
End of Period $ 1,635,750 $ (611,918)
Beginning of Period (611,918) 168,575
Net Change in Unrealized Gain/(Loss) on Investments $ 2,247,668 $ (780,493)
============== ==============
Trust Money Market Portfolio:
End of Period _ _ $ (109,903)
Beginning of Period (109,903) (32,286)
Net Change in Unrealized Gain/(Loss) on Investments $ 109,903 $ (77,617)
============== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995 and 1994
5. GAIN/(LOSS) ON INVESTMENTS, CONTINUED:
<TABLE>
<CAPTION>
UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
FOR THE YEAR FOR THE YEAR
ENDED ENDED
12/31/94
<S> <C> <C> 12/31/95 12/31/94
Trust Stock Index Portfolio:
End of Period $ 10,976,058 $ (862,333)
Beginning of Period (862,333) 2,144,041
Net Change in Unrealized Gain/(Loss) on Investments $ 11,838,391 $ (3,006,374)
============== ==============
Fund Growth and Income Portfolio:
End of Period $ 22,468,625 $ 284,978
Beginning of Period 284,978 4,422,497
Net Change in Unrealized Gain/(Loss) on Investments $ 22,183,647 $ (4,137,519)
============== ==============
Fund Global Equity Portfolio:
End of Period $ 152,343 $ 146,997
Beginning of Period 146,997 596,791
Net Change in Unrealized Gain/(Loss) on Investments $ 5,346 $ (449,794)
============== ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995 and 1994
6. ACCOUNT UNIT TRANSACTIONS:
The change in the number of accumulation units resulting from account unit
transactions is as follows:
VAN KAMPEN
MERRITT LORD ABBETT
SERIES TRUST SERIES FUND,
INC.
_______________________________________
___________ __________________
<TABLE>
__
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK GROWTH & GLOBAL
INCOME YIELD INCOME MARKET INDEX INCOME EQUITY TOTAL
----------- ---------- ---------- ----------- ----------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1993 3,659,656 1,045,815 547,643 617,575 7,691,151 4,994,582 273,399 18,829,821
Redemptions by
Cova Life -- -- -- -- -- (10,000) -- (10,000)
Units Sold 254,048 200,146 151,404 2,494,509 272,775 783,757 -- 4,156,639
Units Redeemed (226,584) (78,180) (25,238) (367,835) (345,996) (264,803) (36,859) (1,345,495)
Units Transferred (1,110,708) (10,139) 303,400 4,219,172 (4,466.487) 1,371,603 (3,354) 303,487
Balances at
December 31, 1994 2,576,412 1,157,642 977,209 6,963,421 3,151,443 6,875,139 233,186 21,934,452
Redemptions by Cova Life -- -- -- -- -- -- (10,000) (10,000)
Units Sold 181,275 195,356 162,687 2,450,650 163,890 1,505,688 50,282 4,709,828
Units Redeemed (362,174) (114,779) (55,487) (405,521) (300,704) (940,462) (91,135) (2,270,262)
Units Transferred 295,120 632,013 258,424 (6,021,418) 2,422,351 1,506,743 (10,127) (916,894)
Balance at
December 31, 1995 2,690,633 1,870,232 1,342,833 2,987,132 5,436,980 8,947,108 172,206 23,447,124
</TABLE>
7. SUBSEQUENT EVENTS:
On February 9, 1996, the Board of Trustees of Van Kampen Merritt Series Trust
voted to change the name of the Trust to Cova Series Trust, replace Van Kampen
American Capital Investment Advisory Corp. with Cova Investment Advisory Corp.
as Trust manager, and engage Van Kampen American Capital Investment Advisory
